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This section provides an overview of Finance’s financial performance during 2015–16 for both departmental and administered activities.
The department’s financial statements are presented in Part 4. The Australian National Audit Office issued an unqualified audit opinion for these statements on 29 August 2016.
Finance’s financial performance is summarised in Table 5. The department’s entity resource statement and tables showing expenses by outcome are presented in Appendix E.
Departmental resourcing includes assets, liabilities, revenues and expenses that Finance controls directly and uses to produce outcomes on behalf of the government.
For 2015–16, the department recorded an operating surplus of $113.5 million. This is $72.8 million more than the revised surplus estimate of $40.7 million published in the Portfolio Budget Statements 2016–17. The increase was mainly due to higher valuations of investment properties and lower insurance claims.
The operating surplus of $113.5 million in 2015–16 compares to an operating surplus of $56.4 million in 2014–15. Finance has budgeted for an operating surplus of $18.1 million in 2016–17.
Operating expenses were $5.8 million higher than in 2014–15. This was primarily due to an increased provision for insurance claims and an increase in expenditure on centralised procurement.
Write-down and impairment of assets decreased by $43.0 million. This was primarily due to a reduction in the revaluation decrement for buildings and investment properties from $55.3 million in 2014–15 to $13.2 million in 2015–16.
The increase in own-source revenue of $103.0 million was primarily due to increased centralised procurement resulting from additional support and licensing arrangements and an increase in insurance premium revenue from Commonwealth entities.
Revenue from government decreased by $124.1 million, primarily because the 2014–15 figure contained a number of one-off budget items such as the sale of Medibank Private Limited, and funding for remediation of land at Cox Peninsula.
Table 5: Departmental financial performance
|30 June 16
|30 June 15
|Write-down and impairment of assets||14,741||57,686||(42,945)|
|Net cost of services||153,997||333,044||(179,047)|
|Revenue from government||271,315||395,370||(124,055)|
|Income tax equivalent||(3,843)||(5,905)||2,062|
|Operating surplus (deficit)||113,475||56,421||57,054|
|Changes in asset revaluation surplus||25,133||16,445||8,688|
|Total comprehensive income (loss)||138,608||72,866||65,742|
Figure 5 outlines the department’s departmental financial performance over the past four years and the budget for 2016–17.
Figure 5: Departmental financial performance, 2012–13 to 2016–17 ($ million)
The financial performance of Finance’s administered activities for 2015–16 is summarised in Table 6. Administered items are assets, liabilities, revenues and expenses that are managed or overseen by Finance on behalf of the government.
Table 6: Administered financial performance
|30 June 16
|30 June 15
|Expenses administered on behalf of the government||9,509,540||10,512,964||(1,003,424)|
|Income administered on behalf of the government||1,906,567||8,004,016||(6,097,449)|
Finance incurred $9.5 billion of expenses on behalf of the government. This was $1.0 billion less than in 2014–15 due to a reduction in the distributions to portfolio special accounts associated with the Australian Government investment funds.
Finance recognised $1.9 billion of income on behalf of the government. This was $6.1 billion less than in 2014–15, noting that the 2014–15 figure contained the proceeds from the sale of Medibank Private Limited.
Figure 6 outlines the financial performance of the department’s administered activities over the past four years and the budget for 2016–17.
Figure 6: Financial performance of administered activities, 2012–13 to 2016–17 ($ million)
Table 7: Financial summary, 2012–13 to 2015–16
|Departmental summary of financial statements||2012–13
|Write-down and impairment of assets||1.09||118.92||57.69||14.75|
|Rendering of services||111.56||143.02||152.82||230.94|
|Reinsurance and other recoveries||5.15||6.59||0.00||1.50|
|Total own-source revenue||260.2||293.71||337.50||440.45|
|Net cost of services||206.28||352.89||333.04||153.99|
|Revenue from government||274.45||261.69||395.37||271.32|
|Income tax equivalent expense||5.54||5.86||5.91||3.84|
|Net surplus (deficit)||62.63||(97.06)||56.42||113.49|
|Net operating cash flow||13.75||47.89||64.20||69.70|
|Returns to government||33.82||11.14||111.26||73.92|
a In 2014–15 initially a provision of $18.7 million was raised for the cash return. However, changes in estimates and assumptions used have resulted in an adjustment to the 2014–15 figure to reflect the revised amount of $55.1 million.
Table 8: Economic performance summary
|Total own-source income||484,036|
|Total net cost of service||153,997|
Significant non-compliance with finance law
The department did not report any significant issues relating to non-compliance with the finance law to the Finance Minister under section 19(1)(e) of the PGPA Act in 2015–16.
Finance manages the government’s non-defence domestic property portfolio of some 170 properties, with a value of approximately $1.6 billion (at 30 June 2016). Finance, with its private sector partner, manages these assets strategically to ensure that they are efficient and able to meet the government’s needs.
In 2015–16 new long-term leases were finalised which provide the opportunity to improve the quality and amenity of the portfolio in line with modern workforce standards. This will result in improved whole-of-government efficiency through full utilisation of assets.
Performance measures for the management of the domestic property portfolio are included in the annual performance statements in Annual Performance Statements.
Information on grants awarded by Finance during the period 1 July 2015 to 30 June 2015 is available on our website at http://www.finance.gov.au/publications/grants/.
The department’s approach to procuring goods and services, including consultancies, is consistent with, and reflects the principles of, the Commonwealth Procurement Rules. These rules are applied to activities through the department’s accountable authority instructions, supporting operational guidelines and procurement framework.
No contracts of $100,000 or more (inclusive of GST) were let during 2015–16 that did not provide for the Auditor-General to have access to the contractor’s premises.
No contracts in excess of $10,000 (inclusive of GST) or standing offers were exempted by the Secretary from being published on AusTender on the basis that they would disclose exempt matters under the Freedom of Information Act 1982.
Information on procurements expected to be undertaken in 2015–16 is in the department’s annual procurement plan, available from the AusTender website (www.tenders.gov.au).
The department supports small business participation in the Commonwealth Government procurement market. Participation statistics for small and medium enterprises and small enterprises are available on the department’s website at www.finance.gov.au/procurement/statistics-on-commonwealth-purchasing-contracts.
The department recognises the importance of ensuring that small businesses are paid on time. The results of the survey of Australian Government payments to small business are available on the Department of the Treasury’s website (www.treasury.gov.au).
The department’s support for small business includes using the Commonwealth contractingsuite for low-risk procurements valued under $200,000.
The department engages consultants when it requires specialist expertise or when independent research, review or assessment is required. Decisions to engage consultants during 2015–16 were made in accordance with the PGPA Act and related regulations, including the Commonwealth Procurement Rules and relevant internal policies.
During 2015–16, the department entered into 218 new consultancy contracts involving total actual expenditure of $12.4 million. In addition, 58 ongoing consultancy contracts were active during 2015–16, involving total actual expenditure of $18.5 million.
Annual reports contain information about actual expenditure on contracts for consultancies. Information on the value of contracts and consultancies is available on the AusTender website (www.tenders.gov.au).
Table 9: Expenditure on consultancy contracts, 2013–14 to 2015–16
|Total actual consultancy expenditure||9.2||33.4||30.9|
Last updated: 18 November 2016