Introduction and purpose
The purpose of this guide is to help readers navigate the Statement 10 - Australian Government General Government Sector Balance Sheet in Budget Paper No.1 (BP1). The guide aims to assist readers in identifying and locating available public information to better understand the nature of the assets and liabilities reported.
Links to defined budget and accounting terms are made throughout the guide where possible. Other websites and budget guides may also be helpful in conjunction with this guide, including the following:
- Department of Finance (Finance) website, including:
- Australian Accounting Standards Board (AASB) Glossary of Defined Terms
Australian Government Balance Sheet
The BP1 Statement 10 balance sheet provides a snapshot of the Australian Government’s estimated financial position, showing economic resources (assets) owned, amounts owed to external entities (liabilities) and the government’s equity (the residual interest in assets after liabilities have been deducted). The operating statement and balance sheet are prepared on an accrual basis, where transactions are recognised as resources are transferred, created or consumed rather than when the corresponding cash flows occur.
Balance Sheet BasicsThe balance sheet is a snapshot of the entity's financial position at a point in time. Assets = Liabilities + Equity | |
Assets (A)What monetary or non-monetary resources the entity owns, including:
| Liabilities (L)What the entity owes, including:
Equity (E)What is the entity's residual net worth (E=A-L) |
The financial statements in BP1 provide users with information about the Australian Government’s financial position and performance and its stewardship of General Government Sector (GGS) resources. The operating and cash flow statements in particular highlight the macroeconomic impact of the Budget and the sustainability of taxation and expenditure programs. The balance sheet shows the Australian Government’s short term liquidity as well as its ability to meet longer term financial obligations and capital investment needs. The balance sheet also shows the Australian government's resilience to fiscal shocks such as Covid 19 and the Global Financial Crisis.
Reporting Standards
The Charter of Budget Honesty Act 1998 (the CBH) requires that Australian Government budget financial statements be prepared consistent with external reporting standards. These comprise:
- Australian Accounting Standards (AAS), issued by the AASB and broadly consistent with international accounting standards issued by the International Accounting Standards Board; and
- Government Finance Statistics (GFS), issued by the Australian Bureau of Statistics and consistent with International Monetary Fund (IMF) GFS.
Scope of Commonwealth Budget Financial Statements
The CBH specifies that the Australian Government’s GGS is the budget sector. The GGS broadly encompasses the government’s budget funded, non commercial operations. Budgeted financial statements within BP1 as well as the Mid Year Economic and Fiscal Outlook (MYEFO) and corresponding monthly actual financial statements and Final Budget Outcome (FBO) actual annual financial statements therefore only encompass the consolidation of Australian GGS entities, after elimination of internal GGS transactions and balances.
Individual GGS entity budget financial statements are available within their Portfolio Budget Statements (PBS) or Portfolio Additional Estimate Statements (PAES), which are available on the Transparency portal. PBS and PAES financial statements are prepared consistent with AAS, but are not audited.
Financial statements for the entire Australian Government, including GGS, Public Non-Financial Corporations (PNFC) and Public Financial Corporations (PFC) sectors, are published in the Consolidated Financial Statements (CFS). The CFS combine the audited actual financial statements of all Commonwealth entities, after internal eliminations. The CFS is prepared consistent with AAS requirements and is audited by the Australian National Audit Office (ANAO).
Individual entity financial statements are prepared consistent with AAS requirements. Under section 43 of the Public Governance, Performance and Accountability (PGPA) Act 2013, the ANAO is required to audit the financial statements of all Australian Government entities on an annual basis. Audited entity annual financial statements are available on the Transparency Portal. Summaries of audits undertaken and the issues identified by the ANAO in the interim and final stages of their financial statement audits of Commonwealth entities are available on the ANAO website.
GFS SectorsAustralian Government activities may be classified into the following three GFS sectors:
Definitions for each sector are available on the Finance PGPA Glossary. The PGPA Act flipchart lists all Australian Government entities under the PGPA Act and the GFS sector they are classified to. The CFS includes a note that lists all consolidated Australian Government reporting entities by portfolio, including their GFS sector classification. Appendix A of BP1 Statement 10 also lists Commonwealth entities outside the GGS (PNFC’s and PFC’s). |
Budget Estimate UpdatesUnder the CBH the Australian Government maintains a rolling five year series of financial statement estimates which reflect current Government agreed policy decisions. Estimates are typically updated and published throughout the annual budget cycle as follows: Proposed expenditures
Actual expenditures
All budget documents are available at Budget.gov.au |
Information on the main categories of assets and liabilities of the Australian Government is presented below.
Financial Assets
Explanation:
Cash balances are reported at nominal (current year price) amounts. Balances are dispersed widely across entities within the Commonwealth.
Further Information
CFS Note 5A Advances paid and receivables
BP1 Statement 10, Note 13: Advances paid and other receivables
BP1 Statement 9 and Part 6 MYEFO Statement of Risks (Loans)
FBO Table 3.24 Other financial flows - estimated advances, repayment of advances and interest payments
Entity financial statements within annual reports available on the Transparency Portal
Explanation:
Table 9.3 Summary of Australian Government loans exceeding $200m within Statement 9 Statement of Risks in BP1 (Table 6.3 in the MYEFO) outlines loans issued over $200m, including the purpose of the loan schemes, borrowers, interest rates, loan terms and outstanding amounts.
Estimated net cash flows relating to loans made for policy purposes are also outlined in the BP1 Table 3.5 Reconciliation of general government sector underlying and headline cash balance estimates (Table 3.7 in MYEFO).
Table 3.24 Other financial flows – estimated advances, repayment of advances and interest payments in the FBO outlines estimated advances, repayments and interest by loan program by state for the financial year.
Advances are reported in financial statements at either fair value (estimated market value) or amortised cost, which incorporates adjustments for present value discount rates and expected credit losses. Student loan advances are mainly reported by the Department of Education. Other advances reflect the loan programs of various Departments and other Commonwealth entities, whose annual reports and PBS are available at transparency.gov.au.
Further Information
CFS Note 5B Investments, loans and placements
BP1 Statement 10, Note 14: Investments, loans and placements
BP1 Statement 10 Appendix B
Australian Government Investment Funds
Future Fund Year in Review and Annual Reports
Future Fund Quarterly Portfolio Updates
Entity financial statements within annual reports available on the Transparency Portal
Explanation:
Investments, loans and placements are reported at either fair value or amortised cost, which incorporates present value and expected credit loss adjustments.
Investments – deposits are held by various Commonwealth Departments and agencies. The IMF quota is reported by the Treasury. Other investments, loans and placements are mainly held by the Future Fund Management Agency (FFMA) and Finance investment funds. Some Future Fund and other investment fund investments are held through Collective Investment Vehicles (CIV's). CIV's are entities that enable investors to pool funds to invest in a range of assets, rather than buying securities directly.
Finance investment fund special accounts include the Medical Research Future Fund, Disability Care Australia Fund, Future Drought Fund, Emergency Response Fund and the Aboriginal and Torres Strait Islander Land and Sea Future Fund. Transactions and estimates for the Future Fund and other investment fund special accounts are outlined in the FFMA and Finance annual reports and PBS, available on www.transparency.gov.au
Information on each investment fund special account is also available in BP1 Statement 10 Appendix B and on the Finance website. Details include the investment mandate, cumulative transfers to the fund and investment performance. Investment performance is also published by the FFMA for each investment fund (including Finance investment funds where FFMA acts as fund manager).
Further Information
CFS Note 5A Advances paid and receivables
BP1 Statement 10, Note 13: Advances paid and other receivables
Explanation:
Other receivables are reported at nominal amounts, after impairment allowances. Balances are mainly held by the Australian Taxation Office (ATO), Department of Social Services and various other Commonwealth entities.
Further Information
CFS Note 5C Equity Investments
Australian Government Investment Funds
Future Fund Year in Review and FFMA Annual Reports
Entity financial statements within annual reports available on the Transparency Portal
Explanation:
Investments in other public sector entities reflect investments in Commonwealth PFC or PNFC entities (investee entities outside the GGS budget sector). A flipchart of all Commonwealth entities is available at PGPA Act Flipchart and List.
Portfolio departments report Administered investments within their annual financial statements for each portfolio corporate entity (irrespective of the investees GFS sector). These investments are reported at fair value (generally based on the investees net assets or on a discounted cash flow basis). Supporting financial statement disclosures in entity annual reports explain the valuation judgements and assumptions made. Annual reports of all government entities are available at transparency.gov.au.
The fair value of each investment as reported in Portfolio department annual reports can be compared to the Government’s cumulative investment (contributed equity) in those investee entities, which is available from the investee corporate entity’s Statement of Changes in Equity within their annual report financial statements.
Share investments are reported at fair value and are mainly held by the FFMA and Finance investment fund special accounts. For actual transactions and financial estimates on each special account, refer to the Finance and FFMA websites, annual reports and PBS on www.transparency.gov.au.
Non-Financial Assets
Further Information
CFS Note 5D Land and buildings, plant, equipment and infrastructure, heritage and cultural assets and intangibles
BP1 Statement 10, Note 15: Non-financial assets
Entity financial statements within annual reports available on the Transparency Portal.
Explanation:
Land, buildings, plant and equipment and infrastructure assets are generally held at fair value. These assets are dispersed widely across the Commonwealth, with significant balances held by the Department of Defence (Defence), Department of Foreign Affairs and Trade (overseas property portfolio), Finance (domestic property portfolio), Defence Housing Authority and National Capital Authority.
Heritage and cultural assets are predominantly reported by the National Gallery of Australia, National Archives of Australia, Australian War Memorial and National Library of Australia and other Australian Government cultural collection institutions, whose annual reports are available at www.transparency.gov.au
Interest Bearing Liabilities
Further Information
CFS Note 6A Deposit liabilities
Explanation:
Deposits held are reported at nominal amounts. Balances are held mainly by the ATO and Finance.
Further Information
CFS Note 6B Government securities
BP1 Statement 3 and MYEFO Part 3 Fiscal Strategy and Outlook Budget.gov.au
BP1 Statement 7 and MYEFO Part 4 Debt Statements Budget.gov.au
BP1 Statement 11 Table 11.5 Australian Government GGS face value of AGS on issue and interest paid Budget.gov.au
Entity financial statements within annual reports available on the Transparency Portal
Explanation:
Australian Government Securities (AGS) are reported by the Australian Office of Financial Management at fair value.
Statement 7 in BP1 and Part 4 of MYEFO estimates the face and market value of AGS on issue, as well as estimated interest receipts, revenue, payments and expenses.
Table 11.5 within BP1 Statement 11 (Table E.5 in MYEFO and Table B.5 in the FBO) outlines the face value of AGS on issue and interest paid over the last 50 years, as well as estimates for the forward estimate years.
Further Information
CFS Notes 6C Loans and 6E Other interest bearing liabilities;
BP1 Statement 10, Note 16: Loans
Loans are reported for example in the Treasury and Export Finance Insurance Commission annual reports, available at www.transparency.gov.au.
Further Information
CFS Note 6D Leases
Entity financial statements within annual reports on the Transparency Portal
Explanation:
Lease liabilities reflect the present value of contracted future lease payments and are widely dispersed across the Commonwealth.
Provisions and Payables
Further Information
BP1 Statement 10 Appendix B, Budget.gov.au
Finance PSS and CSS Long Term Cost Reports
Australian Government Actuary (AGA) Military Superannuation Schemes: Review of long term costs
Entity financial statements within annual reports are available on the Transparency Portal
Explanation:
Superannuation liabilities are reported at the estimated present value of unfunded benefit entitlements accrued. Liabilities are mainly reported by Finance and Defence, whose annual reports are available at www.transparency.gov.au. Information on the Commonwealth’s superannuation liabilities is also available in BP1 Statement 10 Appendix B.
The Public Sector Superannuation Scheme (PSS) and Commonwealth Superannuation Scheme (CSS) Long Term Cost Report (LTCR) is prepared by scheme actuaries every three years and is available on the Finance website. The report estimates the unfunded liability for the PSS and CSS civilian defined benefit superannuation schemes and includes assumptions made in estimating long-term costs and a sensitivity analysis on those assumptions.
The LTCR for the military superannuation schemes is available on the AGA website. The report covers the Australian Defence Force Cover Scheme, the MSBS, the Defence Force Retirement and Death Benefits Scheme and the Defence Forces Retirement Benefits Scheme. The military defined benefit superannuation schemes LTCR is prepared by scheme actuaries every three years and estimates the unfunded liability, including assumptions made in estimating long-term costs and a sensitivity analysis on those assumptions.
Further Information
CFS Note 6F Employee benefits
BP1 Statement 10, Note 17: Employee and Superannuation Liabilities
Explanation:
Short term accrued employee liabilities are generally recognised at nominal amounts, whereas long term benefits such as long service and some annual leave entitlements may be recognised at present value amounts. Accrued employee entitlements are dispersed across all Commonwealth entities.
Refer to Comcare’s annual reports for outstanding workers compensation claims and to Department of Veterans Affairs (DVA) annual reports for military compensation claims, available at www.transparency.gov.au.
