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Australian Government monthly financial statements: October 2003.



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8 December 2003 37/2003

AUSTRALIAN GOVERNMENT MONTHLY FINANCIAL STATEMENTS

OCTOBER 2003

KEY POINTS • The underlying cash balance for the year to date 31 October 2003 was a surplus of $1,837 million.

• The fiscal balance for the year to date 31 October 2003 was a surplus of $8,353 million.

ACTUAL ACTUAL ESTIM ATE

2003-2004 2003-2004 2003-2004

AGGREGATES

October Year to Date October FULL YEAR* $m $m $m

Underlying Cash Balance 6,079 1,837 2,172

Fiscal Balance 8,233 8,353 711

Headline Cash Balance 6,053 2,246 1,471

Revenue (a) 21,882 64,593 181,666

Expenses (a) 13,562 56,506 180,561

Operating Result 8,319 8,086 1,105

Assets 138,294 138,294 126,411

Liabilities 178,318 178,318 174,949

Net Assets (a) -40,024 -40,024 -48,538

* As published in the Budget Strategy and Outlook 2003-04.

(a) Revenue, expenses and net assets are on a AAS31 basis, unless otherw ise indicated.

• The net operating result for the year to date 31 October 2003 was a surplus of $8,086 million.

Care needs to be taken when comparing monthly or cumulative data across years and to full year estimates. Revenue and expenses vary month-to-month and factors such as the introduction of The New Tax System, the accrual framework, the timing of payments and policy decisions, can also have a large impact on fiscal aggregates from one year to the next and on year-to-date outcomes.

8 December 2003 Contact: Office of the Minister for Finance and Administration (02) 6277 7400

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8 December 2003 Contact: Office of the Minister for Finance and Administration (02) 6277 7400

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FISCAL OUTCOMES

UNDERLYING CASH BALANCE

The main components of the underlying cash balance are cash from operations and cash movements in the net investment in non-financial assets.

The underlying cash balance for the year to 31 October 2003 was a surplus of $1,837 million. This underlying cash balance is $1,113 million higher than a pro-rata of the Budget estimate (which equals a surplus of $724 million). The difference reflects a number of larger individual variations including:

Movements in underlying cash receipts:

• higher non-taxation receipts from dividends, which have been paid as a lump sum to the Government this year and are therefore higher than a pro-rata estimate:

− 2002-03 dividend for the Reserve Bank of Australia, which was received in

August 2003; and

− 2002-03 dividend for Telstra and Australia Post, which was received in October 2003; and

• October taxation receipts were higher than the pro-rata estimate because Business Activity Statements for the September quarter were due in October and monthly taxation receipts tend to be higher in those months when quarterly Business Activity Statements are due.

Movements in underlying cash payments:

• lower payments for the Local Government Financial Assistance Grants, which are made quarterly, the next payment being due in November;

• higher payments for non-government schools and universities including a Higher Education Contribution Scheme (HECS) component:

− non-government schools have been paid 50 percent of their full year grant, 25 per cent of which was paid in October; and

− payments to universities are initially recorded as only grant related payments as HECS funding information is not initially known. This approach has an initial effect on underlying cash, which is revised when the HECS funding is known - ie in November/December and June each year.

• higher personal benefits payments:

− the number of actual scheduled benefit payments made have been greater than the pro-rata number of payments expected to be made to recipients in the period for a number of social welfare payments, particularly the Age Pension. In addition there have been changes in customer numbers and average rates for several payments including Age Pension, Parenting Payment Single and Newstart Allowance; and

− for Family Tax Benefit and Baby Bonus, which is primarily a timing issue for these payments related to the lodgement of tax returns;

• higher health care payments due to increased demand for veterans health care during winter months; and

• higher subsidies payments for the:

− Energy Grants Credit Scheme, due mainly to higher than expected claims relating to previous years; and

8 December 2003 Contact: Office of the Minister for Finance and Administration (02) 6277 7400

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− the Fuel Sales Grants Schemes subsidies has been influenced by increased sales of new vehicles and fuel consumption due to increased domestic tourism. This has meant year to date subsidies are above a pro-rata estimate.

FISCAL BALANCE

The fiscal balance for the year to date 31 October 2003 was a surplus of $8,353 million. The main components of the fiscal balance are the GFS net operating balance, which was a surplus of $8,344 million, and a negative net capital investment of $9 million for the year to date 31 October 2003 (refer to the Reconciliation of AAS31 Operating Result to Fiscal Balance on page 9 for further detail).

FINANCIAL OUTCOMES

OPERATING RESULT

The operating result for the year to date 31 October 2003 was a surplus of $8,086 million.

REVENUES

Total revenues for the year to date 31 October 2003 were $64,593 million, comprising $57,128 million in taxation revenue and $7,465 million in non-tax revenue.

The main components in taxation revenue were Gross Income Tax Withholding ($30,295 million), companies ($13,143 million), excise duty ($6,675 million), and individuals’ refunds ($7,484 million).

EXPENSES

Total expenses for the year to date 31 October 2003 were $56,506 million. Expenses for the year to date are not always directly comparable to full year estimates due to seasonal effects as many grant programmes are recorded on a quarterly basis in accordance with the terms of the grant agreement or upon completion of project milestones.

Actual expenses are $3,681 million lower when compared with a pro-rata of the Budget estimate. The main reasons for the lower result (including their impact by Function) are the net effect of:

• lower grant expenses for:

− most education expenses (schools, universities and vocational education) which are reported when the Ministerial determination is signed, between December and February each year (Education and General Public Services function);

− Local Government Financial Assistance Grants, which are made quarterly, the next payment being due in November (General Purpose Inter-Government Transactions function); and

− road infrastructure projects for the National Highway and Roads of National Importance Programme where expenses are incurred on the finalisation of project milestones, usually towards the end of the year (Transport and Communications function);

• lower supplier expenses due to longer than anticipated maintenance and repair cycles for specialist military equipment (Defence function);

• lower write down of Defence assets due to write downs usually occurring in the last quarter of the financial year (Defence function);

• higher grant expenses for the expensing of a prepayment for Budget Balancing Assistance grants made in 2002-2003 (General Purpose Inter-Government Transactions function);

• higher veterans health care due to higher demand during winter months (Health function);

• higher personal benefits expenses as a result of more Family Tax Benefits and Baby Bonus claims in the first half of the year linked to the lodgement of tax returns (Social Security and Welfare function); and

8 December 2003 Contact: Office of the Minister for Finance and Administration (02) 6277 7400

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• higher subsidies for the:

− Energy Grants Credit Scheme, due mainly to higher than expected claims relating to previous years (Fuel and Energy); and

− the Fuel Sales Grants Schemes subsidies, influenced by increased sales of new vehicles and fuel consumption due to increased domestic tourism (Fuel and Energy). This has meant year to date related subsidies are above a pro-rata estimate.

ASSETS AND LIABILITIES

The net asset balance within the General Government sector is a negative net asset position of $40,024 million at 31 October 2003.

Nick Minchin IJ Watt

Minister for Finance Secretary to the Department of

and Administration Finance and Administration

8 December 2003

Contact: Senator Minchin’s Office: Jennifer Eddy (02) 6277 7400 Department of Finance: Jim Kerwin (02) 6215 3769

AUSTRALIAN GOVERNMENT GENERAL GOVERNMENT SECTOR - STATEMENT OF FINANCIAL PERFORMANCE

ACTUAL ACTUAL ESTIM ATE

2003-2004 2003-2004 2003-2004

October Year to Date

October FULL YEAR*

Note $m $m $m

Revenues Taxation Income tax 1 17,093 46,300 134,230

Indirect tax 2 2,194 8,921 27,485

GST Fringe Benefits Tax 1 708 1,377 3,190

Other taxes 136 530 1,479

Total Taxation Revenue 3 20,131 57,128 166,384

Non-Taxation Sales of goods and services 318 1,317 4,081

Interest and dividends 1,108 4,171 6,440

Net foreign exchange gains 73 90 0

Proceeds from the sale of assets 45 1,000 1,182

Other sources of non-tax revenue 207 887 3,579

Total Non-Tax Revenue 1,751 7,465 15,282

Total Revenues 21,882 64,593 181,666

Expenses Goods and Services Employees 1,729 6,964 20,783

Suppliers 975 4,399 14,265

Depreciation and amortisation 339 1,337 4,087

Net write down of assets 177 518 1,761

Net foreign exchange losses 0 0 122

Value of assets sold 43 994 906

Other goods and services expenses 548 2,257 6,565

Total Goods and Services 3,812 16,469 48,489

Subsidies Benefits and Grants Personal benefits 6,655 27,025 80,589

Subsidies 805 3,167 9,113

Grants 1,802 7,843 36,612

Total Subsidies Benefits and Grants 9,262 38,036 126,314

Borrow ing costs Interest 488 1,998 5,724

Other borrow ing costs 1 4 34

T o t a l B o r r o w i n g c o s t s 489 2,002 5,758

Total Expenses 13,562 56,506 180,561

Operating Result 8,319 8,086 1,105

Extraordinary items 0 0 0

8,319 8,086 1,105

This table is prepared on a AAS 31 basis, unless otherw ise indicated. * As published in the Budget Strategy and Outlook 2003-04.

Operating r e s u l t a f t e r e x t r a o r d i n a ry items

8 December 2003 Contact: Office of the Minister for Finance and Administration (02) 6277 7400

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AUSTRALIAN GOVERNMENT GENERAL GOVERNMENT SECTOR - STATEMENT OF FINANCIAL POSITION

ACTUAL ESTIM ATE* as at as at

31-Oct-03 30-Jun-04

Note $m $m

Assets Financial assets Cash 1,776 2,346

Receivables 29,191 28,970

Investments 37,868 26,557

Accrued revenue 537 478

Equity Accounted Investments 126 -

Other financial assets 7 1

Total financial assets 69,505 58,369

Non-financial assets Land and buildings 18,211 16,460

Infrastructure 38,954 45,127

Intangibles 1,261 1,372

Heritage and cultural 4,588 -

Inventories 4,152 3,857

Other non-financial assets 1,623 1,226

Total non-financial assets 68,789 68,042

Total assets 138,294 126,411

Liabilities Debt Government securities 54,311 48,472

Loans 4,954 4,954

Leases 203 149

Deposits 380 300

Overdrafts 0 0

Other debt 2,203 1,840

Total debt 62,050 55,715

Provisions and payables Employees 98,126 99,083

Suppliers 1,484 2,019

Personal benefits payable 2,555 3,113

Subsidies payable 445 381

Grants payable 3,867 8,609

Other provisions and payables 9,791 6,029

Total provisions and payables 116,268 119,234

T o t a l l i a b i l i t i e s 178,318 174,949

Net Assets (a) -40,024 -48,538

Equity Accumulated results -73,381 -79,867

R e s e r v e s 33,356 31,329

Capital 0 0

Total equity -40,024 -48,538

(a) Opening net assets -47,147 -49,752

Operating result after extraordinary items 8,086 1,105

Asset revaluation reserve -28 37

Other movements -936 73

Closing net assets -40,024 -48,538

This table is prepared on a AAS 31 basis, unless otherw ise indicated. * As published in the Budget Strategy and Outlook 2003-04.

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8 December 2003 Contact: Office of the Minister for Finance and Administration (02) 6277 7400

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AUSTRALIAN GOVERNMENT GENERAL GOVERNMENT SECTOR - STATEMENT OF CASH FLOWS

ACTUAL ACTUAL ESTIM ATE 2003-2004 2003-2004 2003-2004

October Year to Date October FULL YEAR* $m $m $m

Operating Activities Cash received Taxes 19,485 55,842 164,750

Sales of goods and services 327 1,440 4,210

Interest 243 1,065 2,695

Dividends 893 2,215 3,074

GST receipts related to purchases/sales 220 785 2,277

Other 418 1,013 2,787

Total operating cash received 21,586 62,360 179,793

Cash used Payments to employees 1,474 6,105 18,189

Payments to suppliers 1,817 5,891 16,506

Subsidies paid 746 2,929 8,573

Personal benefits 6,841 27,388 80,465

Grant payments 3,351 12,402 36,318

Interest and other financing costs 436 2,120 5,691

GST payments related to purchases/sales 1 40 147

Other 496 2,226 6,612

Total operating cash used 15,162 59,101 172,501

Net Cash from Operating Activities 6,424 3,259 7,291

Investing Activities Net Cash received/(used) Proceeds from asset sales program 0 0 109

Proceeds from sales of property, plant and equipment and intangibles 67 175 1,073

Net loans, advances and HECS -8 483 -587

Purchase of property, plant and equipment and intangibles -386 -1,519 -6,076

Other investing cash receipts/(payments) -6,991 115 -237

Net Cash from Investing Activities -7,318 -746 -5,717

Financing Activities Net Cash received/(used) Net repayments of borrow ings 1,119 -3,819 -1,199

Other financing cash receipts/(payments) 184 746 -537

Net cash from Financing Activities 1,303 -3,073 -1,736

Net increase / (decrease) in cash held 409 -560 -162

This table is prepared on a AAS 31 basis, unless otherw ise indicated. * As published in the Budget Strategy and Outlook 2003-04.

8 December 2003 Contact: Office of the Minister for Finance and Administration (02) 6277 7400

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AUSTRALIAN GOVERNMENT GENERAL GOVERNMENT SECTOR - STATEMENT OF FINANCIAL PERFORMANCE BY FUNCTION

ACTUAL ACTUAL ESTIMATE 2003-2004 2003-2004 2003-2004

October Year to Date October FULL YEAR*

Note $m $m $m

Revenues by Source Taxation 20,131 57,128 166,384

Non-taxation 1,751 7,465 15,282

Total revenues 3 21,882 64,593 181,666

Expenses by Purpose General Public Services 1,001 3,457 11,659

Defence 727 4,070 13,363

Public Order and Safety 209 839 2,357

Education 4 39 879 13,418

Health 2,693 10,755 31,183

Social Security and Welfare 6,248 26,073 75,029

Housing and Community Amenities 161 610 2,123

Recreation and Culture 153 594 2,188

Fuel and Energy 297 1,226 4,436

Agriculture, Forestry and Fishing 204 496 1,975

Mining and Mineral Resources (other than fuels); Manufacturing and Construction 104 434 1,629

Transport and Communication 149 534 2,275

Other Economic Affairs 443 1,395 4,333

Other Purposes Public Debt Interest 472 1,902 5,494

Nominal Superannuation Interest 434 1,736 5,200

General Purpose Inter-Government Transactions 229 1,503 3,641

Natural Disaster Relief 0 3 107

Contingency Reserve 0 0 66

Asset Sales 0 1 84

Total Expenses 13,562 56,506 180,561

Operating Result 8,319 8,086 1,105

This table is prepared on a AAS 31 basis, unless otherwise indicated. * Data in this table are consistent with that published in the Budget Strategy and Outlook 2003-04.

8 December 2003 Contact: Office of the Minister for Finance and Administration (02) 6277 7400

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AUSTRALIAN GOVERNMENT GENERAL GOVERNMENT SECTOR - RECONCILIATION OF AAS31 OPERATING RESULT TO FISCAL BALANCE

ACTUAL ACTUAL ESTIM ATE

2003-2004 2003-2004 2003-2004

October Year to Date

October FULL YEAR*

$m $m $m

AAS31 Operating result 8,319 8,086 1,105

less assets recognised for the first time 0 19 281

plus revaluations / w ritedow ns from superannuation 0 0 0

plus w ritedow n of assets/bad and doubtful debts 177 518 1,761

less mutually agreed w ritedow ns 31 113 316

plus net foreign exchange losses -73 -90 122

plus other economic revaluations (a) -28 -179 -524

less profit (loss) on the sale of assets 2 7 281

plus Defence w eapons platform depreciation 216 731 2,179

less Defence w eapons platform investment 178 583 3,470

GFS Net Operating Balance 8,400 8,344 294

less purchase of property plant and equipment and intangibles 369 1,184 6,008

less net assets acquired under finance leases -1 -3 1

less other non-financial assets 9 47 72

less increase in inventories 86 107 -46

plus proceeds from sales of property, plant and equipment -5 155 1,073

plus Defence w eapons platform investment 178 583 3,470

plus depreciation and amortisation excl w eapons 123 606 1,908

Fiscal Balance (GFS Net Lending) 8,233 8,353 711

* Data in this table are consistent with that published in the Budget Strategy and Outlook 2003-04.

(a) Net repurchase premia (accruals basis), net losses/gains on sw ap transactions, cost of asset sales, International Development Association/Asian Development Fund payments and public non-financial corporations superannuation revenue are included in this item.

AUSTRALIAN GOVERNMENT GENERAL GOVERNMENT SECTOR - DERIVATION OF UNDERLYING AND HEADLINE BALANCE

ACTUAL ACTUAL ESTIM ATE 2003-2004 2003-2004 2003-2004

October Year to Date October FULL YEAR* $m $m $m

Net cash from operating activities 6,424 3,259 7,291

Plus: Payments classified as GFS adjustments (a) -27 -81 -115

Plus: Net cash from investments in non-financial assets

Proceeds from sales of property, plant and equipment and intangibles 67 175 1,073

Less: Purchase of property, plant and equipment and intangibles 386 1,519 6,076

Less: Finance leases and similar arrangements -1 -3 1

Underlying Cash Balance 6,079 1,837 2,172

Plus: Net Advances Proceeds from asset sales program 0 0 109

Net advance receipts/(payments) (b) -26 409 -810

Equals Headline Cash Balance 6,053 2,246 1,471

* Data in this table are consistent with that published in the Budget Strategy and Outlook 2003-04. (a) Includes public non-financial corporations principal repayments, cost of asset sales, sw ap transactions, International Development Association/Asian Development Fund and public debt interest adjustments.

(b) Includes transactions classified as net advances for GFS purposes such as Higher Education Contribution Scheme loans and loans to other levels of Government (State, Local and Multi-jurisdictional) for policy purposes.

8 December 2003 Contact: Office of the Minister for Finance and Administration (02) 6277 7400

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NOTES:

With the introduction of Business Activity Statements and Instalment Activity Statements in 2000-2001, taxpayers provide information on payments associated with several types of tax when lodging the statement and paying the aggregate net tax amount. Thus, while total tax collections are known with certainty at the end of each month, the distribution across the relevant heads of revenue cannot be finalised until all statements are received and processed. The outcomes for some revenue items provided in this statement are thus estimates, in accordance with the best judgement of the Taxation Commissioner, and subject to revision. The taxation revenue items not affected are: Petroleum Resource Rent Tax, Excise duty, Customs duty, Other Taxes and Individuals Refunds.

The sum of the revenue accrued in the month and the revisions to prior periods equals the revenue reported in the Statement of Revenue and Expenses.

All taxation items in these notes are reported on an AAS31 basis, unless otherwise indicated.

NOTE 1: INCOME TAX

ACTUAL ACTUAL ESTIM ATE

2003-2004 2003-2004 2003-2004

October Year to Date October FULL YEAR* $m $m $m

INDIVIDUALS AND OTHER WITHHOLDING TAX Gross income tax withholding (a) 7,901 30,295 88,650

Gross other individuals 2,973 7,417 19,130

Less refunds 1,634 7,484 12,200

Total individuals and other withholding tax 9,239 30,227 95,580

OTHER SOURCES Companies 6,352 13,143 32,370

Superannuation funds (b) 1,070 2,445 5,000

Petroleum Resource Rent Tax 431 485 1,280

Total income tax from other sources 7,854 16,073 38,650

Total income tax 17,093 46,300 134,230

F r i n g e B e n e f i t s t a x 7 0 8 1 , 3 7 7 3 ,

* As published in the Budget Strategy and Outlook 2003-04.

(a) Previously reported as Pay As You Go (Withholding) and other w ithholding. Other w ithholding w as previously reported under other sources of income tax, and includes amounts withheld for failure to quote a Tax File Number or an Australian Business Number, interest, dividends and royalty payments to non-residents, and payments to aboriginal groups for the use of land for mineral exploration and mining. (b) Includes superannuation contributions surcharge.

1 9 0

NOTE 2: INDIRECT TAX

ACTUAL ACTUAL ESTIM ATE 2003-2004 2003-2004 2003-2004

October Year to Date October FULL YEAR* $m $m $m

Excise duty 1,589 6,675 20,640

Customs duty 514 1,918 5,915

Other indirect tax 90 328 930

Total indirect tax revenue 2,194 8,921 27,485

* As published in the Budget Strategy and Outlook 2003-04.

8 December 2003 Contact: Office of the Minister for Finance and Administration (02) 6277 7400

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NOTE 3: GOODS AND SERVICES TAX

In regard to GST revenue, AAS31 and other relevant accounting standards would suggest the gross amount of GST be included in the Australian Government’s Financial Statements. However, the clear policy intent of the Intergovernmental Agreement on the Reform of Australian Government-State Financial Relations is that the GST is a State tax collected by the Australian Government in an agency capacity. Therefore, accrued GST revenues and associated payments to the States and Territories are not disclosed in these statements.

ACTUAL ACTUAL ESTIM ATE 2003-2004 2003-2004 2003-2004

October Year to Date October FULL YEAR* $m $m $m

(collected on behalf of the States)

* As published in the Budget Strategy and Outlook 2003-04. (a) GST revenue is presented in this note on an accrual basis. This differs from GST cash receipts, on w hich payments to the States and Territories are based.

32,050

GST Revenue (a)

4,969 12,884

NOTE 4: ADJUSTMENT FOR EDUCATION GRANT EXPENDITURE

In regard to education grant expenditure, adherence to AAS31 and other relevant accounting standards results in few education expenses being reported until the signing of the Ministerial determination, which normally occurs between December and February each year. This produces a bunching of expenses such that the full year's expense is recognised at that time and remains relatively constant until June. The table below provides details of the cash paid by DEST and ANTA and attributable to the Education function for the year to date.

ACTUAL 2003-2004 Year to Date October

$m

Opening g r a n t s payable for DEST and ANTA 5,881

less closing grants payable for DEST and ANTA 1,132

plus grant expenses for DEST and ANTA 158

Cash payments for grants attributable to the Education function. 4,907

NOTE: Style Conventions (1) Figures in tables and generally in the text have been rounded. Discrepancies in tables between totals and sums of components are due to rounding.

International Monetary Fund (IMF) Special Data Dissemination Standards (SDDS)

(1) In accordance with the IMF's SDDS, quarter ahead notice of the date of release of the data on central government operations, which is contained in the Australian Government Financial Statements, is given on the IMF's Data Dissemination Bulletin Board at http//dsbb.imf.org.

(2) Monthly and quarterly data on debt guaranteed by the Australian Government (central) government that meet the coverage and timeliness requirements of the SDDS are published on the AOFM website at http://www.aofm.gov.au/borrowing_programme/Australian GovernmentGovernmentSecurities.htm. In accordance with the IMF SDDS, quarter ahead notice of the approximate date of release of the data on debt guaranteed by the Australian Government (central) government, is given on the IMF's Data Dissemination Bulletin Board at http://dsbb.imf.org.

8 December 2003 Contact: Office of the Minister for Finance and Administration (02) 6277 7400

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