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Tuesday, 26 May 2009
Page: 4420


Mr Hockey asked the Minister for Finance and Deregulation, in writing, on 1 December 2008:

(1)   Did he approve any departments and agencies to budget for an operating loss in the 2007-08 financial year; if so,

(i)   which departments and agencies, and

(ii)   what reasons did each provide for the operating loss?

(2)   Did any departments and agencies have an operating loss in the 2007-08 financial year that was not approved to budget by the (then) Minister for Finance and Administration; if so,

(i)   which departments and agencies, and

(ii)   what reasons did each provide for the operating loss?

(3)   Has he approved any departments and agencies to budget for an operating loss in the 2008-09 financial year; if so,

(i)   which departments and agencies, and

(ii)   what reasons did each provide for needing to budget for an operating loss during this period?

(4)   Has he not approved any requests from departments and agencies to budget for an operating loss in the 2008-09 financial year; if so,

(i)   which departments and agencies, and

(ii)   what were his reasons for not approving each request to operate at a loss during this period?

(5)   For every Government portfolio in the 2007-08 financial year, what sum of money was returned to budget following underspends in programs?

(6)   From December 2007 to June 2008, what sum of depreciation funding was used for recurrent spending by departments and agencies?

(7)   For the 2008-09 Budget, how many policy proposals were costed by the Budget Group of his department; and what was the average length of time spent by Budget Group officers on costing each policy proposal for this period?

(8)   From 1 January to 30 June 2008, how much time off in lieu was accrued by staff in the Budget Group of his department?

(9)   In the 2007-08 financial year, what sum of non-taxation revenue was collected from outside the general government sector, and then subsequently spent by departments and agencies under section 31 of the Financial Management and Accountability Act 1997 (FMA Act)?

(10)   What decisions were too late for inclusion in the Mid-Year Economic and Fiscal Outlook 2008-09 (MYEFO) individual agency estimates and were instead included in the Contingency Reserve (MYEFO 2008-09, page 68)?

(11)   What is the effect on the Budget and Forward Estimates of economic parameter revisions received late in the preparation of the MYEFO 2008-09; and which were not available to be allocated to individual agencies or functions (Mid-Year Economic and Fiscal Outlook 2008-09, page 68)?

(12)   What provision has been made in the Contingency Reserve of the MYEFO 2008-09 for future increases in Australia’s official development assistance?

(13)   Which events that were reasonably expected to affect the Budget Estimates were included in the Contingency Reserve in the MYEFO 2008-09 instead of being allocated to individual programs (Mid-Year Economic and Fiscal Outlook 2008-09, page 68); and what sum of money was allocated for each of these events?

(14)   Is there any provision in the Contingency Reserve for any expenditure for the Commonwealth in relation to the emissions trading scheme; if so, what sum of money has been made available?


Mr Tanner (Minister for Finance and Deregulation) —The answer to the honourable member’s question is as follows:

(1)   I approved 34 entities to budget for an operating loss in 2007-08 compared to 15 entities in 2006-07. The reasons for the approvals in 2007-08 were (see explanations of reasons* below):

Department/Agency

Reason for Loss

Cotton Research and Development Corporation

Other

Australian Pesticides and Veterinary Medicines Authority

Other

Export Wheat Commission

Other

Land and Water Australia

Timing

Australian Commission for Law Enforcement Integrity

Higher net expenditure, Accounting

Federal Court of Australia

One-off costs, Accounting

Australian Crime Commission

Timing

Australian Federal Police

Accounting, Timing

Attorney-General's Department

Timing

Australian Fisheries Management Authority

One-off costs

Australian War Memorial

Accounting

Department of Veterans’ Affairs

One-off costs

Film Australia

Accounting

Sydney Harbour Federation Trust

Higher net expenditure

Director of National Parks

Timing

Australian Film Commission

Timing, Other

Australia Council

Timing

Indigenous Land Corporation

Timing

Office of Commonwealth Ombudsman

Timing

Aged Care Standards and Accreditation Agency

Timing

Australian Sports Anti-Doping Authority

Timing

Cancer Australia

Higher net expenditure

Australian Sports Commission

One-off costs

Private Health Insurance Administration Council

Timing

Department of Health and Ageing

Higher net expenditure

Centrelink

Other

Commonwealth Rehabilitation Services Australia

Other

Department of Human Services

Timing

Medicare Australia

Other

Australian National Audit Office

Timing

Australian Public Service Commission

Accounting

Australian Taxation Office

One-off costs

Australian Competition and Consumer Commission

Accounting

Australian Bureau of Statistics

Higher net expenditure

* Explanation of reasons:

Timing - Losses usually resulting from differences in timing between revenue and expenses - for example, an agency may have been asked to perform additional duties to be funded in another financial year.

Accounting - Adjustments to non-cash expenses due to accounting treatments such as revaluations, write-downs or recalculation of accrued employee entitlements or depreciation are classified under this category.

One-Off Costs - These are losses resulting from one-off factors, such as the spending of cash reserves to fund new systems or office relocation costs.

Higher net expenditure (financial health) - These losses may be due to a number of factors and are likely to be an indicator that the erosion of equity will continue in the future.

Other - Losses that do not fit into the above four categories. This may include reasons such as lower than budgeted income (eg a reduction in the total amount of levies collected from industry as a result of the drought), or higher than expected costs.

(2)   Yes. The following departments and agencies incurred operating losses in 2007-08 without my prior approval for the following reasons:

Department/Agency

Reason for Loss

Australian Communications and Media Authority

Higher net expenditure

Austrade

Higher net expenditure

Department of Families, Housing, Community Services and Indigenous Affairs

Other

Child Support Agency

Higher net expenditure

General Practice Education and Training Limited

Other

(3)   Yes. As at 18 March 2008, I had approved the following departments and agencies to budget for operating losses in the 2008-09 financial year for the following reasons:

Department/Agency

Reason for Loss

Cotton Research and Development Corporation

Other

Australian Pesticides and Veterinary Medicines Authority

Other

Australian Fisheries Management Authority

One-off costs

Australian Transactions Report and Analysis Centre

One-off costs

Federal Court of Australia

One-off costs, Accounting

Human Rights and Equal Opportunity Commission

Timing

Australian Institute of Aboriginal and Torres Strait Islander Studies

Timing, accounting

Geoscience Australia

Timing

Department of Transport and Regional Services

Other

Australian Maritime Safety Authority

Accounting

Australia Council

Timing

National Museum of Australia

Timing

Australian Public Service Commission

Accounting

Administrative Appeals Tribunal

Other

(4)   Yes. I did not approve requests from two agencies to budget for operating losses for the following reasons:

Agency

Reason

Office of Parliamentary Counsel (OPC)

As approval would have locked in higher than sustainable expenses, it was suggested that a more appropriate funding structure be sought.

Australian Institute of Health and Welfare (AIHW)

As a large percentage of AIHW's revenue comes from the provision of services to predominantly government agencies, it was suggested that a reassessment of cost of services and levels of services provided be undertaken.

(5)   For the 2007-08 financial year, I have adjusted the appropriations available to agencies pursuant to section 8 (1) of the Appropriation Act (No. 1) 2007-08 and have withheld the issuing of a total amount of $3.2 billion, spread among various agencies. This amount represents annual administered appropriations which remained unexpensed at the end of the 2007-08 financial year and has effectively been returned to the budget.

(6)   It is generally not possible for a department or agency to use depreciation funding to increase other operating expenses above budgeted levels without incurring an operating loss. One of the key controls in the budget framework is the limits on the capacity of agencies to budget for, and incur, operating losses. The framework does not allow an agency to budget for a loss without seeking the approval of the Finance Minister. This process is one of the ways that the Department and the Finance Minister are able to examine an agency’s financial situation, including any indication that agencies are not overspending on the amount of recurrent funding they have received. In terms of expenditure, agencies are currently funded for depreciation as well as other operating costs and such funding is appropriated as a single amount for each entity. Each dollar of funding is not, however, separately tracked to determine the specific accounting line to which it relates. Nevertheless, as part of the accountability and transparency of their operations, agencies are required to prepare financial statements on an annual basis and include detailed data such as cash flow by item as well as a breakdown of depreciation expenses.

(7)   Neither the number of policy proposals costed by Budget Group nor the average length of time spent by relevant officers on costing each policy proposal for the 2008-09 Budget are statistics that are recorded by my Department.

(8)   Budget Group staff accrued a total of 5,056 hours of formal Time Off In Lieu (TOIL) from 1 January to 30 June 2008. Formal TOIL reflects those additional hours of work which are formally approved by managers and entered into a central Finance records system. Managers may also provide informal TOIL but Finance holds no central records of informal TOIL hours.

(9)   The amount of revenue spent by agencies pursuant to section 31 of the Financial Management and Accountability Act 1997 is not collected centrally. However, this information is available for each agency in their financial statements.

(10)   The Contingency Reserve (CR) includes Government decisions if they occur late in the process, and are reasonably expected to affect the budget estimates but cannot be reliably allocated to individual programs. Such estimates are included in the CR but are not published separately. This reflects the fact that disclosure of specific amounts could jeopardise the integrity of commercial-in-confidence or national security-in-confidence items included in the CR.

(11)   The CR includes economic parameter revisions if they occur late in the process, and are reasonably expected to affect the budget estimates but cannot be reliably allocated to individual programs. Such estimates are included in the CR but are not published separately. This reflects the fact that disclosure of specific amounts could jeopardise the integrity of commercial-in-confidence or national security-in-confidence items included in the CR.

(12)   The provisions in the CR for Official Development Assistance (ODA) are consistent with the Government target of achieving its target of ODA being 0.5 per cent of Gross National Income by 2015-16. The proportions relating to each of the forward estimates were published on pages 6-7 and 6-8 of Budget Paper No. 1 2008-09. Relevant amounts will be transferred from the CR into agency estimates following Government decisions to provide new funding to implement ODA eligible measures.

(13)   The CR makes provision for events that are reasonably expected to affect the budget estimates but cannot be reliably allocated to individual programs. Amounts allocated to those items in the CR are not typically published individually. This reflects the fact that disclosure of specific amounts could jeopardise the integrity of commercial-in-confidence or national security-in-confidence items included in the CR. As indicated on page 68 of MYEFO 2008-09, an example of an event reasonably expected to affect the budget estimates is the continuation of the Government’s support for the Northern Territory Emergency Response beyond 2008-09.

(14)   No. As at 1 December 2008, there was no provision in the CR for any expenditure relating to the Carbon Pollution Reduction Scheme.