Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
Department of Finance—Report for 2019-20


Download PDF Download PDF

Annual Report 2019-20

Contents

List of tables and figures 3

Secretary's review 5

Part 1: Overview 16

Part 2: Performance 28

Part 3 Management and accountability 76

Part 4: Our people 98

Part 5: Financial Statements 124

Part 6: Appendices 200

Part 7: Reference material 222

Annual Report 2019-20 1

© Commonwealth of Australia 2020

ISSN: 2203-8558 (print) ISSN: 2203-8566 (online)

With the exception of the Commonwealth Coat of Arms, all material presented in this document is provided under a Creative Commons Attribution 3.0 Australia licence https://creativecommons.org/licenses/by/3.0/au/legalcode.

To the extent that copyright subsists in a third party, permission will be required from the third party to reuse the material.

The document must be attributed as the Department of Finance Annual Report 2019-20.

Material used ‘as supplied’

Provided you have not modified or transformed the material in any way (including, for example, by changing the text, calculating percentage changes, graphing or charting data, or deriving new statistics from published statistics), the Department of Finance prefers the following attribution:

Source: The Australian Government Department of Finance.

Use of the Coat of Arms

The terms under which the Coat of Arms can be used are set out on the Department of the Prime Minister and Cabinet website (pmc.gov.au/government/commonwealth-coat-arms).

About this report

This is the Secretary’s report to the Minister for Finance on the performance of the Department of Finance (Finance) for the financial year 2019-20.

The report has been prepared in accordance with Resource Management Guide No. 135: Annual reports for non-corporate Commonwealth entities.

Accessing this report online

Further information about Finance and an online version of this report are available on the Finance website at finance.gov.au/publications.

The annual report can also be found at transparency.gov.au.

Feedback, enquiries and other uses

Finance welcomes comments on this report. If you have feedback and enquiries about any aspect of the report or any questions about the creative commons licence or any other use of this document, please contact Carolyn Driessen, Assistant Secretary, Parliamentary and Corporate Engagement Branch, on (02) 6215 2222.

Acknowledgements

Coordinators: Kate Charlton, Rachel Gabellone and Graham Robinson Design and typesetting: Jade Power Editing and indexing: Hit Send Printing: CanPrint Communications Special thanks go to staff involved in contributing, coordinating and clearing material.

Annual Report 2019-20 2

Annual Report 2019-20 List of tables and figures 3

List of tables and figures Tables

Table 1: Audit Committee membership, 2019-20 81

Table 2: Reportable consultancy contract expenditure 2019-20 91

Table 3: Top five consultants in 2019-20 92

Table 4: Reportable non-consultancy contract expenditure 2019-20 92

Table 5: Top five non-consultancy contracts entered into by Finance in 2019-20 92

Table 6: Environmental performance summary, 2018-19 and 2019-2020 95

Table 7: Staff numbers by employment type, classification and gender, at 39 June 2020 112

Table 8: Staff numbers by employment type, classification and gender, at 30 June 2019 113

Table 9: Staff numbers by attendance type and classification, at 30 June 2020 114

Table 10: Staff numbers by attendance type and classification, at 30 June 2019 115

Table 11: Staff numbers by employment type and attendance type, at 30 June 2020 115

Table 12: Staff numbers by employment type and attendance type, at 30 June 2019 115

Table 13: Staff number by employment type, location and gender, at 30 June 2020 116

Table 14: Staff numbers by employment type, location and gender, at 30 June 2019 117

Table 15: Staff numbers by employment type and location, at 30 June 2019 and 30 June 2020 118

Table 16: Ongoing and non-ongoing Aboriginal and Torres Strait Islander staff, at 30 June 2019 and 30 June 2020 118

Table 17: Proportion of ongoing staff with disability, at 30 June 2019 and 30 June 2020 118

Table 18: Proportion of women in the ongoing workforce, at 30 June 2019 and 30 June 2020 118

Table 19: Proportion of women in the ongoing SES workforce, at 30 June 2019 and 30 June 2020 118

Annual Report 2019-20 List of tables and figures 4

Table 20: Employment arrangements for SES and non-SES staff, at 30 June 2020 119

Table 21: Salary ranges by employment classification, at 30 June 2020 119

Table A1: Agency Resource Statement 2019-20 201

Table A2: Expenses for Outcome 1, 2019-20 202

Table A3: Expenses for Outcome 2, 2019-20 203

Table A4: Expenses for Outcome 3, 2019-20 207

Table B1: Advertising and market research expenditure 2019-20 210

Table B2: Information about remuneration for senior executives 212

Table B3: Information about remuneration for other highly paid staff 213

Table B4: Information about remuneration for key management personnel 214

Table B5: Information about remuneration for Audit Committee members 215

Table C1: Recoverable superannuation scheme payments - parliamentarians, judges and governors-general, 2018-19 and 2019-20 217

Figures

Figure 1: Outcome and program structure, 2019-20 20

Figure 2: Organisational structure, at 30 June 2020 27

Figure 3: Finance’s governance structure, at 30 June 2020 79

Figure 4: Finance’s planning and performance reporting cycle 83

Figure 5: Transforming Finance 100

Figure 6: Finance’s Sourcing Strategy 103

Annual Report 2019-20 Secretary's review 5

Secretary's review Rosemary Huxtable PSM The events of 2019-20 have coloured every aspect of government and, as a result, the organisational priorities and operations of the Department of Finance. The strength and adaptability of the Department’s organisational structures and leadership cohort has supported our portfolio ministers, government entities, partners and stakeholders in designing and delivering critical response and recovery measures during this period of unprecedented events.

Our advisory role in the management of the Commonwealth’s finances has been critical in supporting the Government’s response to COVID-19. Working with colleagues in the Treasury, we have assisted the Government to design and deliver historic relief and recovery measures. We have ensured the necessary financing of essential government services, developed appropriation bills, delivered Advances to the Finance Minister for urgent and unforeseen expenditure and supported business through rent relief policy for commercial tenants in Commonwealth properties and updated procurement guidance.

We ensured Australians had access to essential information through the Commonwealth’s COVID-19 advertising campaign, hosted the Department of Health and Smart Traveller websites, and enabled connectivity across government through our support of the National Telepresence System and GovTEAMS technology.

2019-20 has also meant continuing progress on APS reform and our own organisational transformation. The 2019 Independent Review of the Australian Public Service (the APS Review) commits to developing the professionalism, capability and governance of the APS.

Finance has important roles leading and contributing to initiatives arising from the Government’s response to the APS Review. This includes advancing joined-up approaches to the enabling services of government such as the whole-of-government Enterprise Resource Planning (GovERP) project and the relative prioritisation of capital expenditure projects. Finance has also established a small team to work across the APS to enhance evaluation capacity. The work leverages the Commonwealth performance framework requirement for entities to measure and assess performance in achieving their purposes, and to report performance expectations and outcomes in their corporate plans and annual performance statements.

An initial outcome of the APS Review was the establishment of a Chief Operating Officers’ Committee. This includes Chief Operating Officers (COOs) from all departments and major agencies, chaired in the reporting period by a Finance Deputy Secretary. The Committee was tasked with achieving an enterprise-wide approach to APS operations and management. With the onset of COVID-19, the Chief Operating Officers’ Committee quickly evolved to support the Government’s response, focusing on managing whole-of-APS operations.

The role of the APS was highlighted in 2019-20 as it supported the Australian community to grapple with the challenges of drought, bushfires and a worldwide pandemic. I commend the voluntary surge of many Finance staff in 2019-20 to entities under significant pressure, such as Services Australia, to support the delivery of emergency assistance to Australians in need.

Annual Report 2019-20 Secretary's review 6

This aligns with our transformation goal to be a high-performing, modern and efficient public sector organisation, able to respond to emerging priorities.

The Department will continue transforming, capturing the lessons learned and taking up the opportunities of a changed operating environment in support of the Government’s priorities. This will inform our future priorities and resource investments. The challenges will continue and we will remain responsive and committed to supporting the government and the Australian people.

I am pleased to present the Department of Finance 2019-20 Annual Report.

Our performance and achievements Finance's deliverables in 2019-20 have been achieved or substantially achieved against the backdrop of the Government response to national emergencies and the impacts of a global pandemic.

As a central agency, Finance’s ability to influence whole-of-government outcomes has enabled us to deliver ongoing value and improvements for the Government and the Australian community in line with our purpose in the 2019-20 Corporate Plan. This is outlined in the following highlights.

Fiscal management During the first six months of 2020, the Department provided policy and financial advice on spending proposals as the Government responded to the summer bushfires and the COVID-19 pandemic, lodging 158 Green Briefs for the Expenditure Review Committee of Cabinet.

Finance delivered the 2018-19 Final Budget Outcome in September 2019 and Consolidated Financial Statements in November 2019, earlier than usual, along with the 2019-20 Mid-Year Economic and Fiscal Outlook (MYEFO) in December 2019. Following the decision of the Government to defer the 2020-21 Budget to 6 October 2020, we supported the introduction and passage of three sets of extraordinary annual appropriation bills.

Additional funding was allocated through seven Advance to the Finance Minister (AFM) determinations, with $94 million provided to industry for fuel security purposes and $1,880 million provided to the Department of Health for personal protective equipment.

Finance supported the Government’s fiscal management of the COVID-19 pandemic through accurate and timely financial reporting of major COVID-19 expenditure programs including the Government’s COVID-19 response for health, aged care and social services payments as well as business support and child care.

Annual Report 2019-20 Secretary's review 7

Delivering for government and the community In 2019-20, Finance fast-tracked consideration of grant initiatives that supported bushfire-affected communities to recover from the last fire season, responded to the COVID-19 pandemic and improved responsiveness into the future.

The Department established a new property and governance arrangement to promote and facilitate discussion on whole-of-government property matters and completed the transition of the majority of non-corporate Commonwealth entities into the Whole-of-Government Property Services Arrangements.

We monitored the operational and financial impacts of the pandemic on Government Business Enterprises (GBEs) and provided advice on steps to support the continued delivery of critical services to Australians through:

● NBN Co helping end users stay online when connectivity was needed and offering free speed upgrades to healthcare providers for telehealth services

● Australia Post reacting quickly to an unprecedented increase in parcel deliveries—in the eight weeks following the official declaration of the pandemic, e-commerce grew by 80 per cent

● Snowy Hydro Limited taking early steps to mitigate risks to business continuity and safe operation of its assets, enabling system reliability and energy security to the National Electricity Market

● advising and supporting the Government on the voluntary administration of Virgin Australia in a rapidly evolving aviation sector.

Providing accessible funding We implemented key reforms to modernise Commonwealth cash management through the Near Real-time Funds (NeRF) project. Automation of the daily payment function enabled Commonwealth entities to access appropriations on a near real-time basis, including outside of normal banking hours, providing flexibility in the way entities deliver services and implement government policies.

Finance became the first entity to adopt e-invoicing through the Service Delivery Office (SDO) Shared Services Hub. E-invoicing improves productivity and data quality and reduces fraud.

Reducing administrative processes and working more efficiently through shared services is a priority for the Australian Government. The Shared Services Transformation Initiative is four years into the transformation of the shared service model for government and is driving productivity by reducing system duplication, enabling improved data collation and providing consistent customer experiences.

Annual Report 2019-20 Secretary's review 8

Enhancing information technology capability A whole-of-government cybersecurity program provided funding for the migration of 25 websites to the GovCMS SaaS (software as a service) platform, a project that forms part of the Department’s commitment to mitigating against cyber-attacks across government.

In support of staff seconded to Services Australia during the COVID-19 pandemic, the SDO released a new cloud-based service called HUB Cloud supporting secure and flexible access for staff to view payslips and enter attendance times when located within another entity, without the need to log into their home agency network.

Finance successfully implemented a new payment and information technology (IT) system to administer the pension schemes for former parliamentarians, federal judges and governors-general. The new system is cloud-based and provides modern capabilities to administer the defined benefit pension schemes within a secure operating environment.

We enhanced our internal capability to optimise business processes by removing inefficient and/or ineffective activities, ensuring consistency and standardisation. In the process automation space, 15 automations (or digital workers) have been implemented resulting in an annualised return of more than 6,000 hours to the Department.

Capability and enablers The Department's enabling factors in relation to people, financials, facilities, business continuity, and information and communications technology (ICT) remain central to our performance.

The events of 2019-20 highlighted the importance of a connected, mobile and responsive APS. These are key characteristics of Finance’s approach to the work we do, our outward-facing stewardship activities and how we operate internally.

To ensure Finance staff are able to respond as needed, the Department provided access to a highly functional IT platform through the ‘One Desktop’ project completed in December 2019. Use of common agile devices supported the rapid and successful transition to remote working arrangements for staff under Finance’s business continuity planning in response to COVID-19. In addition, Finance’s GovTEAMS platform, through its innovative videoconferencing functionality, has enabled staff to continue to work effectively in teams from various locations under flexible and remote working arrangements.

Finance’s experience during the COVID-19 pandemic has emphasised the importance of continued investment in workforce planning and capability to remain skilled, flexible and responsive to meet government priorities. The successful surge to areas of need across the APS, for which Finance staff volunteered at all levels, highlights the Department’s workforce flexibility and commitment to the values of stewardship across the public service. Underpinning this effort, a focus on business continuity has ensured continued delivery of departmental priorities, while business areas were supported to assess, identify and surge resources to wider APS-critical functions.

Our People Capability Framework, launched in 2019, is helping to drive operational efficiencies and achieve an uplift in performance. It clearly defines the performance expectations and required core capabilities. Finance is committed to supporting staff deliver to a high standard against emerging priorities and business-as-usual functions in a connected, collaborative and flexible way.

Annual Report 2019-20 Secretary's review 9

Outlook In 2020-21, Finance’s focus will be on delivering the multiple budget updates required in the financial year. These include the deferred 2020-21 Federal Budget, the 2020-21 Mid-Year Economic and Fiscal Outlook and the 2021-22 Federal Budget. In addition to budget and financial reporting, the Department will continue to respond to significant economic headwinds as they impact GBEs and other private sector partners.

While COVID-19 does not come with an ‘end date’, we are looking at what work in Finance looks like on the other side of the pandemic. The Government’s priority for the future will be on economic recovery. Finance's portfolio, with its diverse and influential responsibilities across the whole of government, will play a central role. We will continue assessing how best to embed the recent learnings from the COVID-19 response, including responses to future emerging priorities, enhancing the use of digital technology and building on flexible work practices, while ensuring the delivery of critical functions.

There will be a focus on maturing the way resources are mobilised to priorities and ensuring strong alignment of programs, outcomes and operations as we review Finance’s operating model in 2020-21. Collaboration across the APS and with the private sector to improve outcomes for the Australian public and support ongoing recovery efforts of the Government will continue. The Department’s role in essential whole-of-government service delivery in the areas of ICT and shared services will remain a key focus to support efficient and effective ongoing operations of the APS.

Finance’s ongoing leadership will be critically important through the economic recovery that lies ahead. As a central agency, we will focus on the external stewardship of core policy frameworks which set the parameters for effective and accountable decision-making in support of government policy. The Department will continue to build capability in advising on value in government expenditure and through fit-for-purpose governance frameworks, investment funds, GBEs and budget work.

Acknowledgements I would like to thank the Minister for Finance, Senator the Hon Mathias Cormann, and the Assistant Minister for Finance, Charities and Electoral Matters, Senator the Hon Zed Seselja, and their offices for the support that they have provided during 2019-20.

In July 2020, the Minister for Finance, Senator the Hon Mathias Cormann, announced his intention to step down from the ministry at the end of the year. I would particularly like to acknowledge the very significant contribution of Minister Cormann to the Finance portfolio over his more than seven years as Finance Minister and the highly collaborative and positive engagement that the Department has had with the Minister and his staff during this time.

The Department will support a successful ministerial transition in the portfolio to continue delivering for government on our purpose through 2020-21.

I would also like to acknowledge and thank all Finance staff for their commitment and constant professionalism in delivering the priorities and achievements outlined in this report, especially in an uncertain and challenging environment.

Annual Report 2019-20 Secretary's review 10

Annual Report 2019-20 Secretary's review 11

Annual Report 2019-20 Secr etary's review 12

Business of Finance

Annual Report 2019-20 Secretary's review 13

Annual Report 2019-20 Part 1: Overview 16

Part 1: Overview

Annual Report 2019-20 Part 1: Overview 17

The portfolio The following details provide an overview of the Finance portfolio and a summary of changes that occurred within the portfolio in 2019-20.

Portfolio ministers These ministers were responsible for the Finance portfolio and its agencies during the reporting period 2019-20:

Senator the Hon Mathias Cormann Minister for Finance

Senator the Hon Zed Seselja Assistant Minister for Finance, Charities and Electoral Matters

Portfolio structure The portfolio structure at 30 June 2020:

Department of State

Department of Finance Secretary: Rosemary Huxtable PSM

Non-corporate Commonwealth entities

Australian Electoral Commission Electoral Commissioner: Tom Rogers

Future Fund Management Agency Chair: The Hon Peter Costello AC Chief Executive Officer (Acting): Cameron Price

Independent Parliamentary Expenses Authority Chair: Jillian Segal AO Chief Executive Officer: Annwyn Godwin

Corporate Commonwealth entity

Commonwealth Superannuation Corporation Chair: Patricia Cross Chief Executive Officer: Peter Carrigy-Ryan

Commonwealth companies

ASC Pty Ltd Chair: Bruce Carter Chief Executive Officer: Stuart Whiley

Australian Naval Infrastructure Pty Ltd Chair: Lucio Di Bartolomeo Chief Executive Officer: Andrew Seaton

Annual Report 2019-20 Part 1: Overview 18

Changes to the portfolio in 2019-20 There have been no changes to the portfolio in 2019-20.

Role and functions As a central agency of the Australian Government, the Department of Finance has an influential role with responsibilities that span the whole of government. Finance works closely with the other central agencies, the Department of the Prime Minister and Cabinet and the Treasury, to provide support to government in its deliberations in Cabinet and its committees.

Finance’s leadership in the Budget process and for the finances of the Commonwealth enables us to assist the Government shape and deliver its fiscal and policy objectives, with a particular focus on ensuring public expenditure programs are effective and sustainable and deliver the best value to the Australian community.

Our responsibility for public sector frameworks and governance mechanisms is critical for the efficient operation of government. As stewards, Finance must ensure these frameworks are fit-for- purpose and deliver the desired outcomes for our stakeholders, both now and in the future.

The Department plays a key role in managing the Commonwealth’s commercial interests, supporting financial sustainability and economic growth through the delivery of significant projects, and supporting the Minister for Finance as shareholder minister for Government Business Enterprises (GBEs).

Finance has a diverse range of responsibilities that span the full range of public administration functions, from the earliest points of developing policy through to implementing and reviewing programs and delivering services. These responsibilities include:

● budget and economic updates and budget transparency

● GBE shareholder responsibilities

● insurance, investment funds and superannuation

● Resource Management Frameworks

● public sector productivity

● Commonwealth procurement, property and risk management

● whole-of-government ICT services

● shared services transformation

● supporting parliamentarians and their staff

● electoral policy

● discretionary compensation payments

● campaign advertising.

Annual Report 2019-20 Part 1: Overview 19

Purpose Finance assists the Australian Government to achieve its fiscal and policy objectives by advising on expenditure, managing sustainable public sector resourcing, driving public sector transformation and delivering efficient, cost-effective services to, and for, government.

Values Underpinning our work and our interactions are the Australian Public Service Values:

● Impartial

● Committed to service

● Accountable

● Respectful

● Ethical

Operating environment In an environment of increasing complexity, uncertainty and change, it is more important than ever that the Department is well equipped to support the Government to deliver on its priorities.

Finance's operating context was fundamentally altered through the course of 2019-20. Against the backdrop of the 2020 national bushfires, the COVID-19 pandemic presented significant challenges—government decision-making on health and economic matters demanded fast-paced and adaptive advice and the environment in which many of our partners operate dramatically altered.

Notwithstanding these significant events, we pursued further innovation and transformation during 2019-20 while managing risks associated with rapid change. The bar remains high for policy and service delivery in a context where discipline, good process and quality are rightly demanded by governments and those they represent.

Finance’s ability to be agile and responsive, supporting the needs of our partners in the public and the private sectors, has contributed to our success in 2019-20. This involves embracing evolving technology and anticipating shifting stakeholder needs. Building on and embedding the Department's internal transformation remained a priority in 2019-20 as was Finance’s stewardship role.

Annual Report 2019-20 Part 1: Overview 20

Outcomes and programs Figure 1: Outcome and program structure, 2019-20

Annual Report 2019-20 Part 1: Overview 21

Finance executive

Secretary Rosemary Huxtable PSM

Rosemary Huxtable has led Finance since October 2016 and was appointed Secretary in February 2017. As Secretary, Rosemary is responsible for all functions and services delivered by the Department, including supporting the delivery of the Australian Government Budget, overseeing the financial framework of Australian Government entities, providing shareholder oversight of GBEs, managing the Australian Government’s non-Defence domestic property portfolio and aspects of public sector modernisation.

Rosemary joined Finance in June 2013 as Deputy Secretary of Budget and Financial Reporting. Before that, Rosemary was a Deputy Secretary in the Department of Health and Ageing and was responsible for driving significant health and aged care reforms, particularly in the areas of Medicare, the Pharmaceutical Benefits Scheme, hospital financing, mental health and aged care.

Rosemary has worked extensively in the areas of budget management and health and community services across both public and private sectors. Rosemary has more than 28 years' experience in Commonwealth administration.

Rosemary received a Public Service Medal for her work on the Medicare program in 2005.

Annual Report 2019-20 Part 1: Overview 22

Deputy Secretary Matt Yannopoulos PSM

Matt Yannopoulos took up the role of Deputy Secretary Budget and Financial Reporting on 3 February 2020. Prior to this, he was the Chief Operating Officer in the Department of Health responsible for finance, legal, corporate services, the Department’s state network, human resources, communications and information technology. Mr Yannopoulos has held significant roles, including Senior Responsible Officer for the Child Care Reform Implementation at the Department of Education, Chief Information Officer at the Departments of Health and Immigration and Border Protection and as the Department of Defence's first Chief Technology Officer.

Mr Yannopoulos was awarded a Public Service Medal in January 2019 for his substantial achievements in the implementation of the government’s child care reforms across the Departments of Education, Human Services and Social Services.

Budget and Financial Reporting

Budget and Financial Reporting provides policy and financial advice on government expenditure and non-taxation revenue matters to the Minister for Finance, other senior ministers and the Expenditure Review Committee of Cabinet.

Budget and Financial Reporting supports the Government in its preparation, delivery and ongoing management of the Budget and assists agencies in meeting their financial management and reporting obligations. It aims to ensure that the analysis, policy advice and costing information provided to government support informed decision-making and that economic updates are delivered within timeframes and meet their legislative requirements.

Annual Report 2019-20 Part 1: Overview 23

Deputy Secretary Stein Helgeby

Dr Stein Helgeby was appointed Deputy Secretary of Governance and Resource Management in July 2019. Dr Helgeby joined Finance in February 2010 as the Deputy Secretary of the former Financial Management Group. Before this, Dr Helgeby worked in the Victorian Department of Treasury and Finance where he was responsible for budget and financial management, long-term policy research, taxation, business tax reform and intergovernmental relations. He also worked in the Department of Premier and Cabinet on national reform and climate change issues. Prior to joining the Victorian Public Service he held various Budget and corporate services senior executive positions within the then Commonwealth Department of Finance and Administration.

Governance and Resource Management

Governance and Resource Management develops policy and advises on the resource management and governance frameworks for public sector agencies, accounting policy, the Government’s investment funds and superannuation arrangements for members of parliament and Commonwealth employees. It also advises on and coordinates government information and advertising campaigns.

Additionally, Governance and Resource Management consolidates budget updates, contributes to the preparation of the budget statements and prepares the Commonwealth’s monthly and annual consolidated financial statements. It also provides policy and program leadership on initiatives aimed at modernising and increasing the public sector’s productivity, including major departmental investment, ICT budget advice and grants administration.

Annual Report 2019-20 Part 1: Overview 24

Deputy Secretary Andrew Jaggers

Andrew Jaggers was appointed Deputy Secretary of Commercial and Government Services in December 2018. He was previously the First Assistant Secretary of the Commercial Division in Finance where he was responsible for oversight of government businesses and major commercial transactions and scoping studies. Prior to that he was the Executive Director of the Infrastructure Investment Division at the Department of Infrastructure and Regional Development and was responsible for delivering the Infrastructure Investment Program including major road and rail projects and regional support programs.

Commercial and Government Services

Commercial and Government Services plays an important role in managing the Australian Government’s commercial interests with respect to property, government procurement, risk management and GBEs.

Commercial and Government Services works with entities across the Commonwealth to deliver value-for-money outcomes. It does this by managing the domestic non-Defence property portfolio, including coordinating whole-of-government service delivery, providing data and analysis and supporting government decision-making. The Group develops and maintains the Australian Government's procurement policy framework and manages the Australian Government’s special claims, insurance and risk management operations. It also supports the analysis and delivery of government investment through GBEs and other entities and provides oversight of GBEs delivering some of Australia’s largest infrastructure projects including the National Broadband Network (NBN), Inland Rail, Western Sydney Airport and shipbuilding infrastructure.

Annual Report 2019-20 Part 1: Overview 25

Acting Deputy Secretary David De Silva

David De Silva was the acting Deputy Secretary of Business Enabling Services as at 30 June 2020, following the promotion of Katherine Jones to the Department of Defence. David joined Finance in January 2019 as the First Assistant Secretary of the Ministerial and Parliamentary Services Division. Prior to that David held a range of senior executive positions in both the Australian and Victorian governments spanning education and training, child care, workplace relations and family violence and homelessness.

Business Enabling Services

Business Enabling Services works with the Secretary, Executive Board and other business groups within the Department to enhance, promote and sustain Finance's role as a trusted and professional adviser to the government. Business Enabling Services provides corporate services and information, technology and workplace support, and leads the implementation of Finance’s internal transformation program.

The Group also provides current parliamentarians, their staff and former senators and members with a range of facilities and services.

For the reporting period until 13 June 2020, the Deputy Secretary of Business Enabling Services was Ms Katherine Jones PSM.

Annual Report 2019-20 Part 1: Overview 26

Acting Deputy Secretary Lucelle Veneros

Lucelle Veneros joined the Department of Finance in 2017 and was appointed acting Deputy Secretary of Shared Services Transformation in December 2019. Prior to this appointment, Lucelle was Head of the Service Delivery Office (SDO), where she was responsible for the transformation of corporate transactional services for a range of Commonwealth entities.

Lucelle has more than 20 years’ experience working across a number of agencies in Commonwealth and state government in the areas of health, ageing, social services and disability.

Shared Services Transformation

Shared Services Transformation provides whole-of-government leadership for shared services, which aims to support a more efficient, innovative and collaborative APS. As part of the shared services program, the group is responsible for progressing GovERP, a whole-of-government Enterprise Resource Planning capability that is aiming to deliver more effective ways and means of achieving back office functions across the APS.

Additionally, within Shared Services Transformation, the SDO is one of the providers of shared services, providing corporate transactional and technical services to 15 Australian Government entities. To prepare for the future, process automation capability is being developed through the SDO’s Productivity and Automation Centre of Excellence (PACE).

Annual Report 2019-20 Part 1: Overview 27

Organisational structure Figure 2: Organisational structure, at 30 June 2020

Annual Report 2019-20 Part 2: Performance 28

Annual Report 2019-20 Part 2: Performance 29

Part 2 reports on the results achieved in 2019-20 against the purpose and performance information published in the Department's Corporate Plan 2019-20, the Portfolio Budget Statements 2019-20 and the Portfolio Additional Estimates Statements 2019-20. It includes Finance’s key priorities, activities and achievements during 2019-20 including our primary areas of focus in response to significant events including the COVID-19 pandemic.

Priorities for 2019-20 Finance's purpose is to achieve fiscal and policy objectives through advising on expenditure, managing sustainable public sector resourcing, driving public sector transformation and delivering efficient, cost-effective services to, and for, government.

Supporting our achievements in 2019-20, the Department advanced its internal transformation agenda in four key areas of people, stewardship, making business better and integrated business planning. These efforts supported our delivery of key priorities by enabling efficient management and prioritisation of human and financial resources, enhancing stewardship through greater self-service functionality and facilitating improved internal processes through process redesign, business optimisation and automation opportunities.

During 2019-20, Finance's key priorities and deliverables were:

1. advising on expenditure and managing sustainable public sector resourcing to assist the Government to achieve its fiscal and policy objectives

The Department provided policy and financial advice, management and reporting as mandated by the Charter of Budget Honesty Act 1998 and the Public Governance, Performance and Accountability Act 2013.

During the first six months of 2019-20, Finance provided advice on a range of significant spending proposals as the Government responded to the ongoing drought and the summer bushfires. From early 2020, we worked collaboratively with other portfolios to advise the Government on its response to the COVID-19 pandemic. Efforts included:

● 158 Green Briefs lodged for the Expenditure Review Committee of Cabinet to assist its policy deliberations

● working with the Treasury to manage both the Government’s decision to delay the annual federal Budget and deliver the July 2020 Economic and Fiscal Update (the EFU), as announced by the Government in April 2020.

In response to the emerging impact of the COVID-19 pandemic and following the parliament resolving on 23 March 2020 to adjourn both houses, Finance supported the introduction and passage of three sets of extraordinary annual appropriation bills over March and April 2020. In addition, our budget and cash management activities were supported by reforms implemented through the Near Real-time Funds (NeRF) project in 2019-20 which have transformed the way Commonwealth entities access their appropriations. NeRF has been instrumental in ensuring the business continuity of Commonwealth cash management, particularly during the rapid transition to remote work arrangements in the context of COVID-19.

Annual Report 2019-20 Part 2: Performance 30

2. driving public sector transformation and managing public sector frameworks and governance mechanisms across the whole-of-government, ensuring the sector is operating efficiently and has the organisational capability to respond to changing priorities

In 2019-20, the Department provided fit-for-purpose frameworks to empower entities and other stakeholders to deliver the desired outcomes for government including in response to the COVID-19 pandemic. Finance's stewardship model is integral to this work as our success is dependent on the quality of our relationships through:

● management of the Commonwealth’s commercial interests and supporting financial sustainability and economic growth through the delivery of significant projects

● support to the Minister for Finance as shareholder minister for GBEs to support the continued delivery of critical services to Australians

● Finance's Transparency Portal which began hosting the annual reports of all Commonwealth entities and companies commencing with the 2018-19 reporting cycle, providing an avenue to easily search and compare data and share information and analysis into the future

● the Productivity and Automation Centre of Excellence (PACE) which builds capacity for value- added work by streamlining manual processes, optimising business processes and supporting process automation in Finance and across government

● a range of secure telecommunications and ICT infrastructure such as the fibre optic Intra-government Communications Network (ICON) for government entities and GovLINK, which enabled secure communication between entities.

3. delivering cost-effective, productive and better-quality services to citizens and businesses

Finance has played a key role in supporting government services directed to those affected by the COVID-19 pandemic and natural disasters including through:

● GovTEAMS, Finance's collaboration and communication platform for government

● GovCMS, Finance's web-hosting platform, which proved its value during this period by ensuring Australians had access to key and up-to-date information relating to the pandemic, published on federal and state health and service delivery websites

● introduction of an automation to provide immediate payment terms for small and medium-sized enterprises (SMEs).

During 2019-20, the Department supported shared services provider hubs through:

● ongoing whole-of-government leadership for bringing together the capabilities required to deliver shared corporate service functions for non-corporate Commonwealth entities

● development of common corporate ICT platforms, including GovERP, to support a one-APS way of working

● supporting hubs with their adoption of e-invoicing capability to enable five-day payment terms for SMEs.

Annual Report 2019-20 Part 2: Performance 31

Finance continued to support parliamentarians and staff employed under the Members of Parliament (Staff) Act 1984 (MOP(S) Act) through:

● frameworks that administer remuneration, work expenses and other public resources, including the Parliamentary Expenses Management System (PEMS), a modern and streamlined solution allowing parliamentarians and their staff to claim and manage expenses on their computer or mobile device

● successful implementation of a new payment and administration IT system to administer the pension schemes for former parliamentarians, federal judges and governors-general providing Finance with higher levels of assurance and efficiencies due to common processes and functionalities from a single system

● implementation of the COMCAR Automated Resource System (CARS), the booking and dispatch system used to manage COMCAR’s car-with-driver and other ground transport services across Australia, which allows clients to manage their bookings using a mobile app or a web portal.

Annual Report 2019-20 Part 2: Performance 33

Finance's response to COVID-19

Annual Report 2019-20 Part 2: Performance 34

Annual Report 2019-20 Part 2: Performance 35

Support to the private sector through COVID-19

The COVID-19 pandemic has had wide-reaching personal, employment and economic impacts across Australian communities, business and industry sectors. The industry sector has had to respond and adapt quickly from a human, health and economic perspective.

The Government responded to the impact of COVID-19 through a number of assistance packages. This included providing immediate temporary fee and rent relief, decisions which acknowledge the particular concerns for some industries.

As the owner and steward of whole-of-government Resource Management Framework and relevant policy, Finance received a number of requests from entities for assistance for their stakeholders, including relief from charging arrangements. Industry bodies also sought advice on freezing government regulatory fees and charges.

The Department developed guidance and a support tool, released by the Minister for Finance, to assist Commonwealth entities and ministers to determine whether temporary fee relief was appropriate and, if so, for how long. The guidance supported appropriate fee relief to encourage economic recovery.

The key principles underpinning this guidance included:

● appropriateness—relief proportionate to the specific impact on the industry sector caused by the coronavirus pandemic

● authority—relevant policy and legislative authorities to implement fee relief

● fiscal impact—assess the fiscal impact to inform budget planning

● recovery pathway—a plan to return to normal charging arrangements.

Along with fee relief assistance, the Minister for Finance announced that, as of 24 March 2020, all non-corporate Commonwealth entities (NCEs) would provide rent relief to SMEs and not-for-profit tenants and licensees to provide further support to businesses impacted by the COVID-19 restrictions. The rent relief policy will remain in place until government-imposed restrictions are lifted.

Finance played a key role in the implementation of this policy by collaborating with entities through the Property Engagement Group and Property Reference Group, as well as through internal consultation to provide the most appropriate advice. This included written guidance outlining how to implement the policy and monitoring of implementation through regular reporting and information sessions for entities.

Finance demonstrated this policy in action by providing rent relief to 11 occupants. As at 30 June 2020, NCEs had supported over 85 eligible occupants by reducing rent to zero. In addition, due to our role in encouraging corporate Commonwealth entities to support the policy, 345 occupants were provided support.

Annual Report 2019-20 Part 2: Performance 36

To assist the Government to keep money flowing to businesses, the Service Delivery Office (SDO), a shared services provider hub within Finance, ensured SMEs received more immediate payment terms by reducing payment runs, from 20 days to immediate, for all invoices paid through its Enterprise Resource Planning (ERP) system.

To support the reduced payment terms, the SDO's PACE team built an automated process in under a week. The speed in which this automation was delivered reflects the capability within the SDO, which is now able to share this automation with other government departments using the same ERP technology.

Appropriation Bills, Supply Bills and extraordinary AFMs

On 23 March 2020, the Appropriation (Coronavirus Economic Response Package) Acts (Nos. 1 and 2) 2019-20 were introduced and passed through both the House of Representatives and the Senate. These Acts provided funding to deliver key elements of the Government’s COVID-19 economic and health response. Additionally, given the unique and evolving nature of the COVID-19 pandemic and the associated uncertainty around the Government’s necessary response, parliament supported Advance to the Finance Minister (AFM) provisions of $2 billion across these Acts. AFM provisions enable urgently required funding allocations to be issued to entities during the year.

In parallel, given the deferral of the 2020-21 Budget and to ensure funding for the ongoing business of government from 1 July 2020, Supply Acts (Nos. 1 and 2) 2020-21 and Supply (Parliamentary Departments) Act 2020-21 were introduced and passed by parliament on 23 March 2020. Through the Supply Acts, extraordinary AFM provisions of $40 billion were made available to the Government for the 2020-21 financial year. The extraordinary AFM provisions were established to address the risk that parliament may not be able to meet to consider urgent expenditure required for emerging health and economic impacts arising from the pandemic.

On 8 April 2020, to provide further urgently needed funding for the Government’s COVID-19 response, parliament passed Appropriation Acts (Nos. 5 and 6) 2019-20. AFM provisions totalling $40 billion were made available across these Acts, with any expenditure against these AFM provisions reducing the AFM available under the Supply Acts 2020-21.

During the final quarter of 2019-20, we supported the Minister for Finance to issue seven AFM determinations totalling $1.974 billion, providing critically needed funding for the purchase of medical and health equipment for the National Medical Stockpile and to meet Australia’s fuel security obligations.

The extraordinary AFM provisions are supported by strengthened accountability and transparency arrangements. The Australian National Audit Office (ANAO) reviewed each AFM determination made in 2019-20 and confirmed in a series of monthly reports to parliament that Finance’s AFM processes and controls were effective.

Annual Report 2019-20 Part 2: Performance 37

Monthly Financial Statements in a COVID-19 context

The Australian Government General Government Sector Monthly Financial Statements (MFS) are an important tool in supporting government to deliver fiscal targets and policy objectives by reporting how government is performing against budget estimates. To ensure that timely information is reported to the Minister, Finance commits to provide the MFS on average within 21 days of the end of the month after the release of the Final Budget Outcome.

During COVID-19, the timely delivery of the MFS took on greater importance as it became a primary reporting mechanism of the Government’s response to the crisis. This took on more significance when the Government announced that the 2020-21 Budget would be delayed until 6 October 2020.

In the early stages of COVID-19, the Department invoked our contingency plan to determine if reporting processes could be performed, including considering alternative reporting options. We liaised with entities and determined the challenges being faced as a result of the COVID-19 pandemic and how they could be addressed. As a result of the positive and influential relationships that Finance has developed with reporting entities, we were able to work with them to assist in adapting and providing high-quality financial information within the required timeframes. Despite the challenges and obstacles faced during this time, with the support of entities, the MFS as well as additional COVID-19 reporting to government were provided within the agreed timeframes.

COVID-19 expenditure reporting

In 2019-20, Finance supported the Government’s fiscal management of the COVID-19 pandemic through accurate and timely financial reporting of major COVID-19 expenditure programs. This helped ensure that the Government could plan for and allocate financial resources to support Australia’s COVID-19 response.

The Department reported consolidated financial information to provide a picture of fiscal expenditure trends and variances across major policy areas integral to the Government’s COVID-19 response including health, aged care, social services payments, business support and child care. This included overall expenditure trends in programs such as Medicare and pathology and other payments not directly impacted by the Government’s response, such as the age pension.

To support this work, we engaged collaboratively across government, including using its data analytics capability, to collect, present and interpret relevant data. This involved leveraging existing processes and the establishment of additional data collection from agencies, building on the monthly expenditure data collection process.

Annual Report 2019-20 Part 2: Performance 38

HUB Cloud

During the COVID-19 pandemic, the APS has exemplified the way it can respond most effectively and support Australians when they need it the most.

In support of staff seconded to Services Australia, and to provide continuity, the SDO released a new cloud-based service called HUB Cloud. HUB Cloud provides flexible access (via a URL on any computer or mobile phone) to the system that staff use to view payslips and enter attendance times, without the need to log into their home agency network.

HUB Cloud has enabled business continuity and connectivity for Finance staff during their secondments to other agencies, as well as for over 200 users from the Department of Education, Skills and Employment.

To ensure continuity, governance and security through a professional service that is accessible and flexible, the SDO will be progressing the release of this as an improved user experience for its clients. Once all client agency staff have onboarded, HUB Cloud will have over 7,000 users.

Commercial investment advice

Finance oversees the Commonwealth’s nine GBEs in partnership with joint shareholder departments and provides commercial investment advice to government and its entities.

COVID-19 has had a significant direct impact on a number of GBEs. The Department has closely monitored the operational and financial impacts of the pandemic on these businesses and provided advice to government on steps to support the continued delivery of critical services to Australians.

Broadband demand increased significantly during COVID-19 with community and business adoption of social distancing and working-from-home arrangements. NBN Co helped end users stay online when connectivity was needed and supported customers by providing additional capacity to retailers for free and offering free speed upgrades for healthcare providers providing telehealth services. The company released $150 million worth of relief and assistance packages to connect low-income families with school-aged children, support SMEs, and enable households to maintain connection while experiencing financial hardship.

Australia Post reacted quickly to an unprecedented increase in parcel deliveries. In the eight weeks following the official declaration of the pandemic, e-commerce grew by 80 per cent year on year. To provide Australia Post with the flexibility needed to meet the increased demand, the Government announced temporary regulatory relief for Australia Post’s letters business.

Further, through an agreement with The Pharmacy Guild of Australia and Woolworths, Australia Post has been able to offer community support by delivering medication and basic groceries to vulnerable Australians impacted by COVID-19.

Annual Report 2019-20 Part 2: Performance 39

Snowy Hydro Limited (SHL) took steps early to mitigate the risks associated with COVID-19 and to ensure business continuity and safe operation of its assets. These steps allowed SHL to continue providing system reliability and energy security to the National Electricity Market. SHL’s retail businesses, Red Energy and Lumo Energy, supported customers experiencing financial hardship as a result of the pandemic and bushfires.

Finance worked closely with portfolio departments to support rigorous, consistent and centralised approaches to commercial investment decision-making during the COVID-19 pandemic. We were part of the working group advising the Government on the voluntary administration of Virgin Australia. Finance contributed commercial advice to support the Government in a rapidly evolving aviation sector, ultimately meeting the Government’s objective to achieve a market-led solution to Virgin’s administration and maintain a competitive domestic aviation market in Australia. Bain Capital's acquisition of Virgin Australia, and commitment to honour all prepaid tickets and protect employee entitlements, demonstrated the benefit of this approach.

Support for parliamentarians and MOP(S) Act employees during COVID-19

Finance, in collaboration with other agencies, provided a range of supports and services to ministers, parliamentarians and their staff located right across Australia so their work could continue uninterrupted throughout the COVID-19 pandemic. From March to June 2020, the National Telepresence System hosted 430 meetings and 4,417 calls were made. This represents an increase of 309 and 211 per cent respectively, over the same period in 2019.

At the beginning of the COVID-19 pandemic, Finance established a COVID-19 taskforce to support 227 parliamentarians and around 2,000 MOP(S) Act staff during the pandemic. This included:

● developing a suite of materials and FAQs focused on health, COVID-safe practices and social distancing, wellbeing and support advice services

● implementing new arrangements, including working-from-home support and additional leave options for MOP(S) Act staff affected by COVID-19

● Work Health and Safety (WHS) training and assistance, including ergonomic assessments and additional mental health support

● additional support to electorate offices impacted by COVID-19, including additional cleaning in all offices and assisting with the temporary closure of offices

● expanded Help Desk functions to assist parliamentarians and MOP(S) Act employees to use GovTEAMS to assist with remote working capability

● regular updates and information as health advice changed.

We have continued to provide the full range of services to ministers, parliamentarians and their staff, including:

● access to Commonwealth Parliament Offices and COMCAR services which have operated, throughout the pandemic, in line with health guidelines and WHS requirements

● payroll and leave administration, including pay increments and retention payments

● processing office expense claims, including increased use of PEMS.

Annual Report 2019-20 Part 2: Performance 40

Finance's emergency response

Annual Report 2019-20 Part 2: Performance 41

Bushfire and COVID-19 grants guidelines reviews

Finance provides support and guidance to Australian Government entities in delivering hundreds of grants programs each year in accordance with the Commonwealth Grants Rules and Guidelines.

In 2019-20, we prioritised all COVID-19 and bushfire initiatives while managing other day-to-day grants activities within normal timeframes. Consideration of grant initiatives that supported bushfire-affected communities to recover from the last fire season were fast-tracked, as well as initiatives to respond to the COVID-19 pandemic and to improve responsiveness to such events in the future.

Finance worked with a number of Australian Government entities that play a role in the delivery of grant in order to streamline the process, identify challenges and risks to rapid implementation as well as comply with existing frameworks. This cross-portfolio collaboration included relevant policy departments, the Australian Government Solicitor and the grants hubs. The resulting cooperation and streamlined process enabled faster turnaround of grants advice and onboarding of programs to ensure immediate support to bushfire-affected areas.

This approach has since been further refined to support whole-of-government activities in the delivery of urgent grants initiatives as and when announced by the Government, particularly in relation to COVID-19. Over 30 grant opportunities have been stood up, at a total value of over $3 billion, including packages to support the aviation, freight, arts, aged care, tourism, health and health research sectors. Many of these have been delivered in record time. Finance reduced the timeframe for grant guidelines to be assessed, without compromising the quality of work completed.

For example, on 28 March 2020, the Government announced funding for Regional Airlines (Network Support Program). We received the draft guidelines on 1 April and reviewed and provided advice on the guidelines on the same day. Guidelines were publicly available within six days (on 3 April 2020).

During 2019-20, 86 per cent of all grant guideline review processes were completed within 10 business days. In response to the events of 2019-20, Finance was able to deliver 91 per cent of bushfire and COVID-19-related review processes within five business days, with 50 per cent of these grant guidelines reviewed in less than 24 hours.

All grant opportunity guidelines, including for bushfire relief and recovery and COVID-19, are published on GrantConnect. To provide ease of access to all those impacted, Finance placed a quick access link to COVID-19 specific grants on www.australia.gov.au a centralised location for all COVID-19-related information.

These tailored arrangements provide ongoing assurance and can be activated for critical and urgent events as required.

Annual Report 2019-20 Part 2: Performance 42

Bushfires and drought response

Throughout 2019-20, we worked closely and collaboratively with entities to provide policy and financial advice to inform the Government’s response to natural disasters, including the 2019-20 bushfires, the current drought and flood events.

Areas across Finance, in particular budget advice, appropriations, procurement and grants teams, worked collaboratively with counterparts across the Commonwealth, including the National Bushfire Recovery Agency (NBRA) and Emergency Management Australia, to streamline processes and enable rapid access to support for bushfire relief and recovery efforts. This work included advising on options to fund and distribute the Government’s $2 billion National Bushfire Recovery Fund.

The Department worked closely with 10 Commonwealth entities on the development of a range of measures which provided an additional $3.5 billion over five years from 2019-20 to support farmers and communities in drought, including supporting the establishment of the National Drought and North Queensland Flood Relief and Recovery Agency. We were a trusted adviser to the Department of Agriculture, Water and the Environment on the final design and costing of a range of programs and activities funded through the Future Drought Fund and concessional loan products through the Regional Investment Corporation. These commenced in 2020-21 and will enhance drought resilience, preparedness and response across Australia. In addition, two Finance Senior Executive Service (SES) staff have been seconded to the NBRA.

Annual Report 2019-20 Part 2: Performance 43

In focus Finance's ongoing business

Annual Report 2019-20 Part 2: Performance 44

Delivering the Economic and Fiscal Update

During the first six months of 2020, the Department provided policy and financial advice on a range of spending proposals as the Government responded to the 2019-20 bushfires and the COVID-19 pandemic, lodging 158 Green Briefs for the Expenditure Review Committee of Cabinet to assist its policy deliberation.

Finance’s advisory and technical support encompassed working with the Treasury to manage both the Government’s decision to delay the annual Budget, and the delivery of the EFU, announced by the Government in April 2020.

The July EFU reported 105 measures announced since the 2019-20 Mid-Year Economic and Fiscal Outlook (MYEFO), mainly related to the pandemic and the response to the 2019-20 bushfires. It also provided an update on the 2019-20 and 2020-21 budget estimates.

To support all entities to meet the challenges posed by the pace and scope of Government decision-making while maintaining the remote work arrangements necessitated by COVID-19, Finance:

● issued guidance on the requirements and timeframes for delivering the EFU

● streamlined, where possible, the work necessary to prepare the two-year estimates published therein.

The upfront communication and avoidance of unnecessary complexity enabled Commonwealth entities to remain focused on the response to the pandemic and immediate service delivery rather than the economic update process.

In June 2020, the Treasurer and the Minister for Finance deferred the EFU until 23 July 2020, meaning the publication would be released following the end of the 2019-20 financial year. We engaged with all portfolio entities to ensure the 2019-20 estimate was as robust and closely aligned to the final outcome as possible and ensured decisions and estimates up to the EFU’s publication date were captured and reconciled. During this time, preparations also continued for the 2020-21 Budget, the 2019-20 Final Budget Outcome and the 2019-20 Consolidated Financial Statements.

Annual Report 2019-20 Part 2: Performance 45

Commonwealth Investment Framework

To support the Government in ensuring realisation of the benefit of investments that utilise the Commonwealth balance sheet for Australian citizens, businesses and communities, Finance published the Commonwealth Investment Framework (CIF) in February 2020. The Framework includes a Resource Management Guide and a Toolkit of practical guidance materials and supporting resources. The CIF brings together policy and best practice guidance on different types of commercial investment and financing options, such as equity, guarantees, and loans, and when they could be used by Government to enable the delivery of a project or policy over the lifecycle of the investment, including:

● developing an investment proposal Business Case and Cabinet Submission

● implementing investment decisions

● managing investments, including exit

● reporting on investments.

The Department will continue the ongoing development of the CIF to assist the Government in the consideration, development and management of investments.

Implementation of a modern cloud-based IT superannuation administration system (Capital 11)

In 2019-20, in collaboration with Syncsoft Pty Ltd, Finance successfully implemented a new payment and administration IT system to administer the pension schemes for former parliamentarians, federal judges and governors-general. The new system is cloud-based and provides modern capabilities to administer the defined benefit pension schemes within a secure operating environment. As part of its implementation, the core product was customised to incorporate the requirements of the defined benefit schemes.

The new system provides integrated member and pensioner modules and automates core administration functions. This includes benefit payment calculations and processing and mandatory reporting to regulators including real-time reporting of member information to the Australian Taxation Office. In particular, the new system automates components which, under the previous system, required high levels of manual intervention and calculation. The use of a single system to administer all of the pension schemes provides Finance with higher levels of assurance and efficiencies due to common processes and functionalities across the schemes and direct interfaces with relevant institutions.

The new system will assist the Department to better meet its obligations as administrators of the superannuation schemes, as well as continuing to deliver efficient and reliable services to the 750 members in the schemes.

Annual Report 2019-20 Part 2: Performance 46

Implementation of Phase 1 of the Near Real-time Funds project

In 2019-20, Finance implemented key reforms to modernise Commonwealth cash management, through the NeRF project. These reforms included automation of the daily Official Public Account bank reconciliation in January 2020 (as noted in the section on page 47 on Business Optimisation) and automation of the daily payment function using the New Payments Platform (NPP) in March 2020.

Automation of the daily payment function has enabled Commonwealth entities to access their appropriations on a near real-time basis, including outside of normal banking hours, providing flexibility in the way entities deliver services and implement government policies.

On 11 March 2020, the Department of Health was able to draw funds from the Official Public Account using the NPP to access urgently required funding for the purchase of emergency health and medical equipment. Since this time, all payments from the Official Public Account to Commonwealth entities, including for COVID-19 responses, have been made in near real-time using the NPP.

GovERP

Reducing administrative process and working more efficiently through shared services is a priority for the Australian Government and the APS. The Shared Services Transformation Initiative is transforming the shared service model for government. This will drive productivity by reducing system duplication, enabling improved data collation and providing consistent user experiences.

Over the next eight years, most Commonwealth entities will need upgrades to their enabling corporate technologies. Collectively, these technologies comprise Enterprise Resource Planning (ERP) systems. The required upgrades represent a significant and unavoidable cost to government.

In recognition of this, the Government required shared services provider hubs to coordinate their investments in underlying platforms and software, reducing the number of platforms and hubs and achieving scale more quickly. Secretaries are working together to develop the ‘GovERP’ platform. GovERP provides the opportunity to design and invest once to a high standard and in a shareable way so that all entities are using a similar solution.

GovERP is managed by Finance, in collaboration with service provider hubs and consumer entities across the Commonwealth.

With Australia facing the devastating impacts and disruption of bushfires and COVID-19, the GovERP team is using lessons learned to meet future needs of the public service as it prepares itself to respond to the potential emerging priorities of government, including the evolving cybersecurity environment.

Annual Report 2019-20 Part 2: Performance 47

e-invoicing

To ensure delivery of the best outcomes for government and the community and, in support of the work of entities, the SDO has delivered a fully automated electronic invoicing (e-invoicing) solution that maximises public service productivity.

On 16 December 2019, Finance was the first entity to adopt e-invoicing through the SDO’s Shared Services Hub. E-invoicing improves productivity and data quality and reduces fraud. It enriches business-to-business, business-to-government and government-to-government interactions. E-invoicing also improves business cash flow through faster payment times and reduces the transaction costs and handling errors.

Finance and Services Australia were the first Commonwealth entities enabled to receive e-invoices from suppliers, making payments within five days as per the revised payments policy.

On 22 February 2019, the Australian and New Zealand Prime Ministers made a joint announcement of the intention to adopt the Pan-European Public Procurement On line (PEPPOL) interoperability framework for e-invoicing. PEPPOL e-invoicing is the ability to send an invoice digitally between the accounting systems of business suppliers and buyers, even if the buyer and supplier are using different systems, as long as both systems are PEPPOL e-invoicing-enabled.

In the first quarter of 2020-21, the Department of Education, Skills and Employment will become the second entity to adopt e-invoicing through the SDO.

Business optimisation

In 2019-20, the Department further enhanced its capability to optimise business processes. Along with digitising manual, paper-based processes and implementing process automation, this work is providing a ‘digital workforce’ that can be used for rules-based, repetitive activities.

The business optimisation function partnered with business areas across Finance to identify optimisation opportunities. Fifteen automations (or digital workers) were implemented resulting in an annualised return of more than 6,000 hours to the Department. This efficiency allows our staff to focus on more strategic and complex activities.

The automation of the daily Official Public Account reconciliation, implemented in January 2020 as part of the NeRF, reduced reliance on manual intervention and has increased accuracy. This efficiency has enabled resources to be redirected to key priorities including data analysis to support the Government’s COVID-19 response and improvements in whole-of-government just-in-time cash management.

Annual Report 2019-20 Part 2: Performance 48

Automation was also used to streamline aspects of machinery-of-government (MoG) changes. The MoG process previously required operators to manually identify and create cash data transfers, run data-intensive reports and toggle between interfaces while entities were locked out of the Central Budget Management System (CBMS) for extended periods. Automating these processes has significantly improved completion timeframes, reduced reliance on manual intervention, removed the CBMS lockout and decreased the risk of errors.

The benefits of this automation were evident in processing the significant MoG changes announced on 5 December 2019, which involved the transfer of 30 programs across 21 entities. Manually, these transfers took an estimated 20 days of person effort; however, through the use of a digital worker, this was reduced to a five-day person effort.

GovCMS: cybersecurity uplift

GovCMS, Finance's web-hosting platform for government, is used by 91 entities as of 30 June 2020 and hosts 328 websites, with 44 still in development. GovCMS provides cost savings to entities by reducing duplication of effort, providing a security-accredited platform, managing procurement, platform maintenance and centrally hosting website defences.

In 2019-20, a whole-of-government cybersecurity program provided funding for the migration of 25 websites to the GovCMS SaaS (software as a service) platform. This project was part of the Department’s commitment to mitigating against cyber-attacks across government. GovCMS provides web-protection services, security patching and 24/7 monitoring for all sites hosted on the SaaS platform. This project significantly increased the security of websites belonging to the 13 non- corporate Commonwealth entities that took part.

The willingness of entities to migrate their websites to GovCMS was high and the Department prioritised entities with:

● high-traffic websites that represented a greater reputational risk to government in the event of a cyber-incident

● websites that support service delivery to citizens

● websites hosted on end-of-life or unsupported content management systems

● infrastructure not patched against known security vulnerabilities.

The entities involved in the migration project joined a community that shares their expertise, collaborates to deliver shared features and solve common problems. Through GovCMS, Finance created a transferable set of skills across government. This breaks down barriers to collaboration and empowers entities to form surge teams when required, such as during the COVID-19 pandemic response.

The project was delivered in December 2019, within six months of its commencement and involved 10 suppliers coming in under budget at $2.4 million.

Annual Report 2019-20 Part 2: Performance 50

Annual performance statements

Annual Report 2019-20 Part 2: Performance 51

Purpose

Finance assists the Australian Government to achieve its fisca l and policy objectives by advising on expenditure, managing sustainable public sector resourcing, driving public sector transformation and delivering efficient, cost-effective services to, and for, government.

Overarching analysis of performance against Finance's purpose The 2019-20 annual performance statements detail how Finance has delivered against its purpose to achieve value in government expenditure and administration while supporting the Government’s and APS priorities. The wide ranging nature of Finance’s activities is highlighted in our achievements which span robust budget costing and assurance processes, policy and financial advice, fit-for-purpose operating frameworks, effective and efficient service delivery including to other government entities and parliamentarians, and whole-of-government ICT platforms.

Attention and investment over recent years in organisational capability ensured that Finance was well positioned to respond promptly and effectively to the 2019-20 bushfires and COVID-19 pandemic in circumstances which demanded a faster pace of advice and decision-making.

This preparedness and responsiveness is evidenced in our achievements against each of the 19 performance measures published in the 2019-20 Corporate Plan, with 13 out of 19 results assessed as fully achieved, four substantially achieved and two partially achieved.

Necessary reprioritisations of resources in response to the COVID-19 pandemic; government responses to the national drought and bushfires; and the impact on Commonwealth entities of the Canberra hailstorm did impact a number of measures assessed as partially or substantially achieved. Despite this, for most key activities a significant contribution towards our purpose was achieved because of the Department’s earlier work to anticipate and respond to emerging issues.

Finance’s accomplishments in 2019-20 can also be attributed to a strong culture and clear expectations of leadership. Significant investment in relationships through a stewardship agenda over recent years has been a further key contributor to the results achieved over this reporting period. Finance’s work in modernising and maturing the frameworks and processes that support government and the public sector has been impactful, including through a range of interdepartmental and cross-sectoral governance networks, such as the Chief Operating Officers' Committee. This has included leveraging commercial practices and expertise working in partnership with Government Business Enterprises.

Annual Report 2019-20 Part 2: Performance 52

An important aspect of our investment in organisational capability has been ensuring our workforce has access to modern ICT platforms that support collaboration and flexibility, reflecting an ongoing commitment to the Department's transformation goals including making business better. Inclusive in this approach has been work to build maturity in the use of data, systems and other innovations, such as support for e-invoicing, real-time cash management and financial reporting. Not only has this improved decisions and advice to government, in some instances it has contributed to improved direct support to businesses and the community.

These annual performance statements provide an accurate assessment of Finance’s delivery against the measures established in the 2019-20 Corporate Plan and the supporting mechanisms enabling achievement towards the Department’s overall purpose.

Annual Report 2019-20 Part 2: Performance 53

Advising on expenditure

Measure Budget updates and appropriation bills

Budget papers, related updates (e.g. the Mid-Year Economic and Fiscal Outlook) and appropriation bills are accurate, consistent with relevant accounting standards, delivered within required timeframes and meet the government's fiscal and policy objectives and legislative obligations.

Source 2019-20 Corporate Plan, pg 29-30

Result Substantially Achieved

Budget papers and related updates were produced in accordance with the timeframes and other requirements under the Charter of Budget Honesty Act 1998, including relevant accounting standards

● the 2018-19 Final Budget Outcome (FBO) was released on 19 September 2019

● the 2019-20 Mid-Year Economic and Fiscal Outlook (MYEFO) was released on 16 December 2019.

On 20 March 2020, the Government announced the 2020-21 Budget would be deferred until 6 October 2020 due to the COVID- 19 pandemic and the subsequent challenges in developing accurate economic and fiscal estimates. Fiscal estimates for 2019-20 and 2020-21 were next updated in the July 2020 Economic and Fiscal Update, delivered on 23 July 2020.

Appropriation bills were introduced into Parliament at times determined by the Government and in accordance with legislative requirements:

● Appropriation Bill (No. 1) 2019-2020, Appropriation Bill (No. 2) 2019-2020 and Appropriation (Parliamentary Departments) Bill (No. 1) 2019-2020 were introduced in the House of Representatives on 25 July 2019

● Appropriation Bill (No. 3) 2019-2020 and Appropriation Bill (No. 4) 2019-2020 were introduced in the House of Representatives on 13 February 2020

● Appropriation (Coronavirus Economic Response Package) Bill (No. 1) 2019-2020 and Appropriation (Coronavirus Economic Response Package) Bill (No. 2) 2019-2020 were introduced in the House of Representatives on 23 March 2020

● Supply Bill (No. 1) 2020-2021, Supply Bill (No.2) 2020-2021 and Supply (Parliamentary Departments) Bill (No. 1) 2020-2021 were introduced in the House of Representatives on 23 March 2020

● Appropriation Bill (No. 5) 2019-2020 and Appropriation Bill (No. 6) 2019-2020 were introduced in the House of Representatives on 8 April 2020.

Budget estimates were based on external reporting standards and any departures from external reporting standards were identified, consistent with requirements set out in the Charter of Budget Honesty Act 1998.

In relation to the accuracy of budget estimates, Finance reports the following results:

● the difference between first forward-year estimated expenses and the 2019-20 FBO was 1.0 per cent on an accrual basis (target of less than 2.0 per cent difference)

● the difference between Budget estimated expenses and the FBO was 0.1 per cent on an accrual basis (target of less than 1.5 per cent difference)

● the difference between revised estimated expenses at MYEFO and FBO was 0.2 per cent on an accrual basis (target of less than 1.0 per cent difference).

Finance is not able to report a result for the target of a 0.5 per cent difference between the 2019-20 estimates at budget time and Final Budget Outcome for the current year, due to the deferral of the 2020-21 Budget.

In determining the accuracy of budget estimates at a particular update, Finance measures the changes to program budget estimates for expenditure between each update. Finance does not include the effect of government decisions and economic parameter updates made at future updates, as these cannot be reasonably predicted by Finance.

Annual Report 2019-20 Part 2: Performance 54

Analysis

Advising on expenditure through the Budget process and related economic and fiscal updates is a core activity undertaken by Finance in the context of our purpose of supporting the Government to achieve its policy and fiscal objectives. Together with the preparation of budget estimates and appropriation bills, these activities are critical for ensuring supply for the ongoing delivery of government programs and services.

In 2019-20, the Australian bushfires and the COVID-19 pandemic further tested what is already a high-pressure and fast-paced business process. Some significant achievements of the Department reflected a high level of engagement across the APS to support the Government’s response including advising on the largest economic stimulus packages and government programs in Australia’s history. This included:

● providing advice outside of usual budget processes, to support rapid decision-making by the Governmentagile and responsive support from Finance ensured modified timeframes and processes continued to be underpinned by a rigorous approach that enshrined the principles of accountability and transparency

● delivering three sets of additional annual appropriation bills in record time to ensure entities had access to funds when they were needed, including for urgent delivery of the Government’s response to the COVID-19 pandemic

● supporting seven Advance to the Finance Minister allocations, enabling urgently required funding to be made available for the purchase of emergency medical and health equipment and to support Australia’s fuel security.

Business continuity and the ability to ensure delivery during such a challenging period is attributed to:

● the strength and responsiveness of Finance’s network managers in setting direction and clearly identifying critical functions

● the dedication of staff across the APS who recognised the critical importance of this work for the Australian community

● an enduring commitment within Finance to support a rigorous and disciplined budget decision-making process

● robust existing processes and systems that could be leveraged and hastened to meet the needs of government during the pandemic.

Annual Report 2019-20 Part 2: Performance 55

Measure Financial statements

The Government’s financial statements, including monthly statements, are complete, accurate and released publicly on timeframes agreed with the Government.

Source 2019-20 Corporate Plan, pg 30

Result Achieved

All of the Government’s financial statements were prepared in accordance with publicly agreed timeframes:

● the 2018-19 Final Budget Outcome (FBO) was released on 19 September 2019

● the 2019-20 monthly financial statements were provided to the Minister for Finance on average within 21 days of the end of each month since the release of the FBO.

The Government’s 2018-19 Consolidated Financial Statements (CFS) were signed by the Minister for Finance and received an unmodified report from the Auditor-General on 14 November 2019.

Analysis The timely public release of complete and accurate government financial statements is a critical component of Finance’s performance, and our achievements in this area underpin our ability to provide robust advice to the Government on expenditure matters.

Finance uses well-established and robust business processes to prepare the financial statements, working in close collaboration with all government entities, to produce the following key reporting outputs:

● monthly financial statements, which show how actual financial performance is tracking against monthly profiles and full-year estimates

● the FBO, which reports on full-year outcomes against budget by sector, including for the general government sector, public non-financial corporations sector and the public corporations sector

● the CFS, which presents consolidated and audited whole-of-government financial statements for the financial year.

Collectively, these statements are integral to the Commonwealth’s accrual budgeting and reporting framework and complement the budget process by providing outcomes against Budget estimates.

In the 2019-20 reporting cycle, there was a heightened level of interest in the monthly financial statements, initially to track the Government’s projected return to a budget surplus in 2019-20, and subsequently to understand the impact on government finances of the Australian bushfires and the COVID-19 pandemic. Ensuring continuity of this critical business function was a key priority for Finance following the transition to remote working arrangements for many staff across the APS from March 2020 due to the COVID-19 pandemic. Through effective engagement and cooperation with entities across the Commonwealth, and Finance’s stewardship work on the Chief Operating Officers’ Committee, all entities recognised the critical importance of robust, timely financial reporting to support the Government’s response to the COVID-19 pandemic. This is reflected in the achievement of this result, despite significant challenges in the operating environment in the last quarter of the reporting period.

Annual Report 2019-20 Part 2: Performance 56

Measure Daily disbursement of cash

Commonwealth entities have access to cash on a daily basis.

Source 2019-20 Corporate Plan, pg 31

Result Achieved

Since 1 July 2019, daily cash disbursement has been successful every business day.

Arrangements were put in place to ensure entities had access to cash during implementation of Phase 1 of the Near Real-time Funds (NeRF) project in March 2020. Since implementation of the NeRF project, entities have been accessing their funds in near real-time.

Cash management business continuity plans are current and continue to be tested twice a year.

Analysis Finance administers robust financial systems and frameworks to support the disbursement of cash through the Central Budget Management System (CBMS), which, through enabling the activities of all Commonwealth entities, is critical to achieving our purpose of supporting the Government to achieve its fiscal and policy objectives.

In 2019-20, Finance progressed significant work to transform the way Commonwealth entities access their appropriations and automate the daily whole-of-government payment run and reconciliation processes. Recognising the criticality of an effective transition, extensive due diligence and testing occurred in advance of the NeRF project being rolled out in March 2020. The benefits of this work have included:

● enabling Commonwealth departments to access their appropriations on a near real-time basis

● increasing government efficiency and reducing business continuity risk for Commonwealth cash management

● contributing to the Australian Public Service innovation and transformation agenda through the adoption of new technology.

In the context of supporting the Government’s response to the COVID-19 pandemic, operational benefits of the NeRF project were immediately apparent. System outages due to uneven remote IT access across the Commonwealth from March 2020, which previously would have impacted business continuity due to cash disbursements needing to occur in specific windows of time, were overcome by the flexibility introduced by the NeRF project, enabling cash to be drawn down outside of standard business hours. Finance’s ability to leverage these system improvements to support the Government achieve its objectives reflects our ongoing commitment to making business better.

Annual Report 2019-20 Part 2: Performance 57

Public sector resourcing and transformation

Measure Shared services policy-corporate services

Corporate service functions (e.g. financial, human resources and associated IT systems) for non-corporate Commonwealth agencies are provided through a shared services provider hub arrangement on common platforms and software.

Source 2019-20 Corporate Plan, pg 32

Result Achieved

During 2019-20, uptake of shared service arrangements for non-corporate Commonwealth entities has increased, with the Department of Industry, Science, Energy and Resources (DISER) Hub onboarding two entities for payroll services.

The DISER Hub has also undertaken a number of projects to increase efficiency in delivering corporate service functions including the:

● Aurion Standardisation Project to reduce administrative effort for clients and the Hub

● TechnologyOne OneGov Project to gain efficiencies across government and enhance the Financial Management Information System (FMIS) experience.

The Services Australia Hub has increased efficiency by extending ‘Mysupport’ functionality to include some corporate services requests.

Provider hubs have continued to contribute to the design and development of a common Government Enterprise Resource Planning (GovERP) platform for the APS, with the Service Delivery Office (SDO) supporting clients with the adoption of e-invoicing capabilities.

Analysis Shared services for corporate services across the APS aims to drive efficiencies through standardising common back office functions and is a long-term priority for the Australian Government. Finance has responsibility for the shared services program from a policy perspective, as well as the development of a whole-of-government enterprise resource platform, GovERP, and shared service delivery responsibilities through the SDO Hub.

In 2019-20:

● the establishment of the Shared Services Transformation Initiative (SSTI) brought together the Shared Services Program, the SDO Hub and GovERP to consolidate efforts and expertise under a single business group within Finance

● Finance continued to work with entities to develop the core underpinning technology and streamlined business processes necessary to support further advances in shared services, which will include adoption of common corporate systems, standardised processes and a skilled digital workforce

● Finance entered the preparation and planning phase for the GovERP platform, which has involved engaging with hubs and consulting with non-corporate Commonwealth entities and industry to confirm the best approach to deliver a user-friendly platform that addresses whole-of-government business needs, underpinned by good governance, the principles of co-design, and detailed consideration of related whole-of-government initiatives, including cybersecurity.

The COVID-19 pandemic has changed the way Australians work, putting mobility, online collaboration and the portability of data at the centre of discussions within the public service. The SSTI highlights the need for technologies that support the achievement of government priorities and drive efficiencies through standardisation and single investments that can be reused to reduce ongoing costs. Finance’s ongoing work on GovERP—including initiatives to consolidate ERP platforms, reuse a standardised technology solution across each hub, and create common business processes that enable smoother staff movements across the APS— aims to achieve a generational shift in how the APS jointly uses ERP capabilities to deliver a consistent, one-APS way of doing business.

Annual Report 2019-20 Part 2: Performance 58

Measure Data analytics to inform public policy

Finance participation in the Data Integration Partnership for Australia (DIPA) contributes to an increase in Commonwealth public sector analytics capability and use of data to inform public policy.

Source 2019-20 Corporate Plan, pg 32

Result Substantially Achieved

The DIPA initiative ended on 30 June 2020.

The Government Business Analytical Unit (GBAU) is delivering six projects under DIPA. Three of these are complete and will inform decision-makers in relation to:

● the drivers of public sector productivity based on analysis of available whole-of- government data (Productivity Pilot)

● an analysis of the patterns of APS workforce movements

● a geospatial view of Commonwealth owned, leased, and licensed landholdings.

Work is nearing completion to finalise the remaining three analytical projects (delays were caused by shifting government priorities in response to COVID-19) namely:

● estimating the cost of additional procurement processes

● maintaining a searchable dataset of Commonwealth bodies and companies

● mapping existing expenditure data by government functions.

The Government Protected Data Exchange (GovPDX) was delivered under the Modernisation Fund and improves the ability of Commonwealth entities to share protected data and reporting. The GBAU is using GovPDX to share results of agency comparisons of productivity survey results. Four agencies are onboarded to the platform, with an engagement plan developed to roll out to other agencies over the next three to six months.

Analysis

The GBAU was established in Finance in 2017 under the auspices of the DIPA, a three-year investment and whole-of-government collaboration to maximise the use and value of the Government’s data assets from 1 July 2017 to 30 June 2020.

Finance’s contributions to the outcomes of the DIPA are illustrated through the following key projects.

The Productivity Pilot (‘Pilot’) investigated the drivers of public sector productivity using available whole-of-government data held by Finance (procurement, property, travel and Comcover) and data from the APS employee census. A key component of the Pilot is the development of a data model of ‘teams’ to provide for a more nuanced analysis of APS employee census data as it helps to account for the considerable variation within agencies as experiences can differ between teams undertaking different functions (such as accounting or service delivery). The Pilot has delivered important insights into how productivity can be measured in the APS and confirmed employee engagement as the best available proxy measure for workforce productivity. In total, 45 entities participated in the Pilot representing over 90 per cent of APS staff and covering a broad cross-section of functions. Finance collated the results from across the Pilot and shared the data set and visualisation tool with all participating entities to enable access to comparative data and facilitate their own internal analysis using the GBAU ‘teams’ model.

The findings of the Pilot informed recent additional survey work to understand workforce productivity factors to support the Chief Operating Officers’ Committee. The GBAU ‘teams’ model also allows high-scoring teams to be identified across the APS to explore what traits they might share. In addition, analysis of the characteristics associated with the mobility of APS staff, including job roles, classification and geography, was undertaken by analysing approximately 50,000 staff movements over a five-year period. This included analysing promotions, transfers at level, and temporary transfers, across and within entities and their functions. The analysis supports senior leaders to better understand the current state of the APS workforces and to consider long-term workforce strategies to develop APS capability.

One of the GBAU’s other projects expanded the existing Commonwealth-owned land dataset to incorporate additional data on land that is leased or licensed by the Commonwealth.

Annual Report 2019-20 Part 2: Performance 59

This data has enhanced the Australian Government Property Register, a central database of information related to the Commonwealth’s property interests (including office space and land interests), and provides a more complete geospatial view of Commonwealth land for the first time. This work supports Finance’s role as owner and steward of the Commonwealth Property Management Framework. This expanded dataset can be linked to other Australian Government spatial datasets to provide comprehensive information including property boundaries and proximity to matters of national significance to assist in policy and decision- making.

The work of the GBAU illustrates Finance’s commitment to making business better. Through building and leveraging internal analytics capabilities, enhancing the value of existing information, and sourcing new data for policy and decision-making, Finance has supported a range of entities to achieve their policy and delivery outcomes in more efficient and effective ways.

Measure Governance and accountability

Finance ensures the Resource Management Framework is maintained as a fit-for-purpose framework for the proper use of public resources, under which Commonwealth entities and companies understand their governance and accountability obligations, and are equipped and supported to meet them.

Source 2019-20 Corporate Plan, pg 32-33

Result Achieved

The 2019 PGPA Entity Survey (the survey) was undertaken between November and December 2019.

Feedback on the operation of the Resource Management Framework was provided by 89 entities. Some of the main findings of the survey include:

● Flexible framework—99 per cent of respondents believed the PGPA Act provides a flexible framework enabling appropriate controls for their operating context

● High monitoring compliance—99 per cent of entities monitor their compliance with the PGPA Act

● General duties of officials—94 per cent of entities considered the general duties of officials in the PGPA Act are useful to promote the proper use of public resources and accountability

● Level of support provided to entities by Finance—85 per cent of entities rate the general support by Finance regarding the Commonwealth Resource Management Framework as good or satisfactory.

The results and comments from surveys also provide insights into entities' views on the Resource Management Framework, such as financial delegations, risk, audit, performance and communication by Finance to support entities to meet their obligations. These responses have been analysed and Finance has progressively enhanced its support to entities in 2019-20.

Analysis

The Resource Management Framework governs how officials in the Commonwealth public sector use and manage public resources. It is an important feature of an accountable and transparent public sector and informs the Australian people of the daily work of Commonwealth entities and their employees. With the framework now well-established, Finance’s work in the 2019-20 reporting period continued to focus on initiatives that maintain and strengthen existing arrangements, as well as addressing emerging issues.

The PGPA Entity Survey is one measure of how well Commonwealth entities and companies understand their obligations under the PGPA Act and are supported by Finance to meet these obligations.

The 2019 survey findings show similar trends to the 2018 PGPA Entity Survey, and reflect a number of the recommendations of the Independent Review into the operation of the Public Governance, Performance and Accountability Act 2013 and Rule (PGPA Review). Consistent themes include entities working to increase the maturity of their performance information and

Annual Report 2019-20 Part 2: Performance 60

the need for ongoing assistance from Finance to meet performance framework requirements. Entities also reconfirmed the value of ongoing support from Finance to meet the requirements of the Commonwealth Resource Management Framework in general.

The survey findings also show that Commonwealth entities and companies are evolving their management practices and internal controls, within the devolved framework. The results and comments from the survey show specific opportunities for Finance to enhance its support to entities, including:

Ongoing improvements to Finance’s guidance and tools—as part of Finance’s stewardship role and commitment to making business better, work was undertaken in 2019-20 to improve the quality and accessibility of guidance on Finance’s website. A new client-focused Finance website launched in November 2019 provides user-centred, evidence-driven insights to meet the needs of clients, stakeholders and departmental staff. It champions the principles of web best practice and self-service as a means for the right information to be easily accessible. Entity feedback will be used to develop new tools and interactive elements.

Practical guidance for the performance framework—a refresh of Finance’s guidance on corporate plans and performance measurement was completed in May 2020, which included better practice examples to provide more practical support to entities.

Management of audit committee—Finance undertook work in 2019-20 to:

● scope the delivery of an induction program for new audit committee members

● revise existing guidance for Commonwealth entities on audit committees

● support amendments to the PGPA Rule in relation to the composition and operation of audit committees (more detail provided against the PGPA Act and Rule performance measure)

● leverage the redeveloped website to produce a dedicated webpage for audit committee members, which consolidates relevant guidance and tools, PGPA legislation and information related to the requirements of their role, and complements existing Finance support and advisory services.

In the 2019-20 period, there was an increase in demand for Finance’s support across all elements of the Resource Management Framework as entities worked through the implications of the COVID-19 pandemic on their business operations and sought to contribute to the Government’s response. While specific achievements in individual policy areas are detailed against the relevant performance measures, overwhelmingly the various whole-of-government policy frameworks that make up the Resource Management Framework stood up well to the unprecedented demands. The capacity of these collective elements, administered and supported by Finance, to meet the operational needs of Commonwealth entities through a global crisis is a testament to the framework being fit-for-purpose.

Measure Confidence in the quality and accessibility of performance reporting across the Commonwealth

The Government and key parliamentary committees have confidence that public resources are used efficiently, effectively, economically and ethically, including through better performance information.

Source 2019-20 Corporate Plan, pg 33

Result Substantially Achieved

In 2019-20, the Joint Committee of Public Accounts and Audit (JCPAA) did not inquire into or release a report relating to the Commonwealth performance framework.

The Auditor-General tabled 42 Performance Audit Reports in 2019-20. One was specific to the performance framework, and 16 referred to and/or made commentary on the application of the performance framework by audited entities.

In ANAO Report No. 14 of 2019-20, the Auditor-General found Finance's design and selected entities’ implementation of the ‘clear read principle’ (summarised here as the extent to which performance information is presented clearly and consistently within and across reporting documents and cycles, and is comparable between entities) to be partially effective.

Annual Report 2019-20 Part 2: Performance 61

The recommendations specific to Finance’s responsibilities related to amending requirements and guidance, and monitoring advice provided to entities to improve implementation of the clear read principle. Finance agreed to these recommendations and has implemented them in full. All involve Finance activities aligned with ongoing efforts to improve the quality of performance information published by Commonwealth entities and companies.

The implementation of one recommendation relating to reciprocal reporting of linked programs would require government agreement and the amending of legislation. Finance noted this recommendation, and is considering its policy implications in light of recent amendments to the PGPA Rule that require cooperative arrangements used to achieve an entity’s purpose to be discussed in corporate plans.

It is noted that the Auditor-General is undertaking a pilot of an assurance audit of 2019-20 annual performance statements.

Analysis Reporting on the allocation and use of public resources, and the results being achieved is a critical feature of accountable government. There have been improvements in the quality of performance information under the PGPA framework, but ongoing work is needed to achieve consistently high standards across the Commonwealth.

Amendments to the PGPA Rule, tabled in February 2020, introduced a number of changes to requirements for corporate plans. These changes were designed to strengthen the quality of performance reporting published by Commonwealth entities and companies, and to support greater comparability and a clear read across reporting documents and reporting cycles. Changes take effect in the 2020-21 reporting year and require entities to:

● discuss key activities undertaken to achieve their purposes

● more fully discuss the context in which they operate, including the specific risks they manage and how they manage these

● discuss who they cooperate with to achieve their purposes.

The amendments also codified characteristics of performance information, providing certainty for entities when developing performance information. Enhancements were based on Finance’s assessments of the first four years of reporting under the framework, the Independent Review of the PGPA Act and Rule, and the recommendations of the JCPAA reports and Auditor-General performance audits over that period. Amendments were developed in consultation with all Commonwealth entities and companies, the JCPAA and the ANAO. Guidance was refreshed and updated and better practice examples were introduced to reflect the amendments.

In 2019-20, a pilot assessment of the maturity of the 2017-18 reporting cycle was completed. Learnings from the pilot informed amendments to the PGPA Rule in relation to requirements for corporate plans and performance measurement. As these amendments take effect in 2020-21 and set a new baseline for performance reporting in the Commonwealth, Finance will reconsider its approach to the ongoing assessment of the framework when reporting documents are available for the 2020-21 performance cycle.

Other initiatives undertaken in 2019-20 as part of Finance’s efforts to free up entity resources to focus on the Government’s response to the COVID-19 pandemic included:

● amending the PGPA Rule to allow entities impacted by the pandemic to delay publication of their 2020-21 corporate plans

● providing advice on existing legislative capacity to delay provision of 2019-20 annual reports to the responsible minister

● working to enhance the capacity of the Digital Annual Reporting Tool to produce 2019-20 annual reports in a more efficient way

● providing advice to enable rapid and effective responses to emerging issues related to performance reporting.

Annual Report 2019-20 Part 2: Performance 62

Measure Independent Review of the PGPA Act

The PGPA Act and Rule provisions, and Finance’s support services, enable achievement of the objectives of the PGPA Act.

Source 2019-20 Corporate Plan, pg 34

Result Substantially Achieved

Finance has actioned the 52 recommendations of the Independent Review into the operation of the PGPA Act and Rule (PGPA Review), which was completed in September 2018. As at 30 June 2020, the Government response is under consideration.

In 2019-20, Finance registered two key amendments to the PGPA Rule, implementing multiple recommendations of the PGPA Review. Extensive consultation with all relevant Commonwealth entities was conducted prior to finalising both amendments. Entity feedback informed the content of final amendments and shaped the guidance and assistance provided by Finance in support of the new requirements.

The Public Governance, Performance and Accountability Amendment (2020 Measures No. 1) Rules was registered on 27 February 2020. The amendment implements six recommendations from the PGPA Review, covering disclosure of audit committee information in the annual report, changes to audit committee membership, access to financial books by former directors, new requirements for granting indemnities, and improvements to performance statements and corporate plans. The changes have varying application dates between 2019 and 2021. Finance is providing ongoing support to entities to meet the new requirements.

The Public Governance, Performance and Accountability Amendment (Consultancy and Non- Consultancy Contract Expenditure Reporting) Rules 2020 was registered on 3 June 2020. The amendment implements Recommendation 38 of the PGPA Review and requires non-corporate Commonwealth entities to disclose information about consultancy and non-consultancy contract expenditure in annual reports. Based on feedback received during consultation and the disruptions caused by the COVID-19 pandemic, the JCPAA and the Minister for Finance agreed to delay the effect of the requirements until 1 July 2020.

Analysis The PGPA framework came into effect progressively from 1 July 2014. It was designed to support high-quality resource management and performance, immediately and into the future, and it represented a significant reform to the way that the Commonwealth operates. At its core, the PGPA Act signified a shift from a dual system of public sector management and accountability, where compliance and process were largely the focus, to a single, principles- based framework within which all Commonwealth entities have the flexibility to develop their own systems and processes to support their operations.

Built into the PGPA legislation was a requirement for an independent review to be undertaken three years post-implementation to ensure that the framework was fit-for-purpose and achieving the objects of the PGPA Act, and that Finance’s support to Commonwealth entities was adequate. This informed use of evaluation focused on identifying any legislative, policy or other changes that could enhance public sector productivity, governance, performance and accountability arrangements covered by the PGPA Act.

The PGPA Review found that the PGPA Act and Rule established a coherent, principles-based system of governance and accountability and a performance framework for the Commonwealth. It compares favourably with similar frameworks in other countries. The PGPA Review made 52 recommendations to further enhance the framework, and these have been progressively actioned since 2018.

The legislative amendments implemented in the 2019-20 reporting period effectively conclude a significant body of work managed by Finance over the last three years to further enhance and refine the PGPA framework, with residual matters to be managed as part of Finance’s ongoing continual improvement processes.

Annual Report 2019-20 Part 2: Performance 63

Measure Investment funds and civilian superannuation schemes

1. Investment mandates are set for each Australian Government Investment Fund which assists in achieving the financial and risk objectives and are consistent with the policy, regulatory and legislative framework.

2. The Commonwealth Government’s civilian superannuation schemes are administered effectively, in accordance with the applicable regulatory and legislative requirements.

Source 2019-20 Corporate Plan, pg 34

Result 1. Achieved

The Future Fund Portfolio Updates confirm that the benchmark rate of return for the Future Fund, the Medical Research Future Fund and the DisabilityCare Australia Fund managed by the Future Fund Board of Guardians have been met since inception of the Funds and within agreed risk tolerances.

2. Achieved

In 2019-20, Finance:

● provided advice to the Government on policy, legislative, governance and other matters relevant to the Commonwealth Superannuation Scheme (CSS), the Public Sector Superannuation Scheme (PSS), the Public Sector Superannuation Accumulation Plan (PSSap) and the pension schemes for former parliamentarians, federal judges and governors-general administered in-house

● processed pension payments on schedule during the year to around 650 retired parliamentarians, federal judges and governors-general or reversionary beneficiaries of deceased members in line with the schemes’ rules

implemented a new superannuation system, Capital 11, to administer the pension schemes for former parliamentarians, federal judges and governors-general in line with the schemes’ rules and other legislative obligations.

Analysis

1. Finance supports the Government through implementing a policy and legislative framework that assists in achieving the financial and risk objectives of the investment funds managed by the Future Fund Board of Guardians. These investment funds are designed to strengthen the Commonwealth’s long-term financial position by making investments that benefit future generations of Australians.

In 2019-20, Finance contributed to the following key initiatives:

● establishing the Future Drought Fund on 1 September 2019, which enhances the Government’s ability to make arrangements with, and grants to, persons and bodies in relation to drought resilience, preparedness and response by allowing $100 million to be drawn from the Fund each financial year

● establishing the Emergency Response Fund on 12 December 2019, which allows the Government to draw up to $200 million in any financial year beyond what is already available to fund emergency response and natural disaster recovery and preparedness, where it determines the existing recovery and resilience-building programs are insufficient to provide an appropriate response to natural disasters.

2. Finance supports the Government to maintain a policy and legislative framework for the Commonwealth civilian superannuation schemes that is consistent with the Government’s broader superannuation prudential requirements. The CSS, PSS, and PSSap are regulated superannuation schemes, and their legislation is reviewed, as needed, to ensure compliance with regulatory and legislative requirements.

In 2019-20, Finance provided advice to the Government assisting in the drafting of a number of legislative amendments designed to provide eligible individuals with greater choice and flexibility over their superannuation savings, simplify the transition of employees impacted by machinery-of-government changes, and allow early release of superannuation to eligible members who were affected by the COVID-19 pandemic.

Annual Report 2019-20 Part 2: Performance 64

This included work on the:

● Superannuation Amendment (PSSap Membership) Bill 2020

● Superannuation Amendment (PSSap Trust Deed—Superannuation Salary) Instrument 2020

● Parliamentary Contributory Superannuation (Early Release) Regulations 2020.

In 2019-20, Finance also:

● provided advice to the Minister for Finance on six appointments to the Board of CSC, which is the trustee and administrator of the CSS, PSS and PSSap

● successfully implemented a new superannuation administration system, Capital 11, for the Finance-administered pension schemes for former parliamentarians, federal judges and governors-general.

Measure Stewardship over procurement systems and policies

Finance works with external stakeholders to:

● provide stewardship over systems and policies to support a fair, efficient and transparent procurement framework

● implement and maintain Whole-of-Australian-Government (WoAG) procurement arrangements for non-ICT services (e.g. travel bookings and major office equipment) to generate price savings and operating efficiencies.

Source 2019-20 Corporate Plan, pg 35

Result Achieved

Engagement continues with various stakeholders through:

● the Secretary's Procurement Consultative Roundtable, Centre of Procurement Excellence Steering Group and Senior Procurement Officials Reference Group

● regular engagement with states and territories through multiple fora including membership of the Australasian Procurement and Construction Council

● continuous improvement program for self-help tools (e.g. contract templates) to take account of changes to legislative, policy and reporting requirements.

AusTender and associated data availability key performance indicators were met, with the system uptime during business hours available 99.9 per cent of the time.

Diners Club Pty Ltd, in collaboration with Citigroup Pty Limited, was appointed as the Australian Government’s provider of travel payment services and procurement payment services following a competitive, open approach to market process undertaken by Finance with assistance from a number of entities.

Extensions to the following WoAG coordinated procurement arrangements were exercised following reviews that confirmed that the arrangements are meeting their objectives and delivering value for money, and that the benefits of extending outweighed the costs and risks associated with approaches to market:

● travel management services

● accommodation management services

● stationery and office supplies

● major office machines.

Analysis The Commonwealth Procurement Rules govern how entities buy goods and services and are designed to ensure the Government and taxpayers get value for money. Finance looks after the Commonwealth Procurement Framework and assists both government and business through advice, support and services.

Procurement is strategically important to all government entities because it supports the delivery of government policies, programs and services. To give some context for the

Annual Report 2019-20 Part 2: Performance 65

magnitude of this work, in 2019-20 approximately 80,000 contracts and 1,700 approaches to market were published on AusTender, equating to approximately one transaction every minute during business hours.

The AusTender Help Desk responded to 10,775 enquiries in 2019-20. Volume is decreasing as the continuous improvement program delivers enhanced user experience and discoverability of information. There are currently over 66,000 registered public users.

As part of Finance’s work to support public sector resource management, we develop, implement and maintain systems and policies to support a fair, efficient and transparent procurement framework for the Australian Government and its suppliers.

In 2019-20, Finance’s activities included:

● supporting entities through the Commonwealth Procurement Rules and Finance’s support and advisory services to ensure that their business operational needs could be met

● further development of self-help procurement tools to take account of changes to legislation and policy, to improve usability and to streamline the procurement process

● regular communication with procurement officers across the APS through a monthly Procurement Bulletin

● participation in a number of small business trade fairs

● regular engagement with entities through the Centre of Procurement Excellence.

During the reporting period, there was an increased demand for support from Finance as a result of the COVID-19 pandemic, including supporting colleagues in entities undertaking procurements. Finance received numerous queries from suppliers of personal protective equipment which were triaged quickly and appropriately, ensuring all suppliers were treated transparently and equitably.

In June 2020, Finance also released a policy note to assist entities when undertaking procurements in the COVID-19 environment and which addressed contractual matters impacting affected suppliers, including payment times.

Measure Treatment of insurable risks and claims management

Comcover is effectively managed to ensure the fund is financially sustainable, insurable risks are appropriately managed and there is a consistent, WoAG approach to the management of claims.

Source 2019-20 Corporate Plan, pg 35

Result Achieved

As at 30 June 2020, Finance, had a claims liability of $588.0 million, with cash reserves of $672.3 million in the Comcover Special Account. It is anticipated that Finance will be able to meet the liabilities generated through the operation and management of Comcover when they fall due, with the cash balance adequate to cover at least four years of normal claims payment experience. Information on the financial performance and position of the scheme is included in Finance's financial statements.

There were no breaches of the Model Litigant Obligations of the Commonwealth in 2019-20.

As at 30 June 2020, 1,749 people had completed Finance's eLearning program with 76 people attending face-to- face workshops. To support ongoing learning during the COVID-19 pandemic, Finance developed four additional micro bites (short, online videos) that addressed important risk topics across the Commonwealth. These were viewed by over 2,000 people across the APS.

Analysis

Comcover is the Australian Government’s self-managed insurance fund. It is mandatory for all Commonwealth entities that are subject to the PGPA Act and classified in the General Government Sector to be members of the fund.

Annual Report 2019-20 Part 2: Performance 66

Finance achieved its performance in line with expectations in 2019-20. It has performed in a challenging environment, particularly as a result of natural disaster events and emergency management response required throughout the 2019-20 reporting period.

This environment has driven a higher claims liability result as at 30 June 2020, reflecting the impacts of the national summer bushfires and the January 2020 Canberra hailstorm event.

Finance supports entities to obtain the knowledge, skills and expertise they need to successfully implement and integrate risk management in their organisations. Finance has adapted to the environment created by the COVID-19 pandemic by introducing a new and innovative approach to educating APS officials on managing risk. With face-to-face learning no longer possible, Finance developed a series of microbites to communicate and educate APS staff on risk management. Microbite learning is a way of educating people by delivering content in small, very specific bursts that are accessible online at any time. Finance developed five microbites on:

● risk management in a crisis

● organisational resilience in a crisis

● risk appetite and tolerance—supporting effective decision-making in times of crisis

● building risk management capability

● embedding an active risk culture.

These topics were identified through Finance's liaison with APS entities. Each of the microbites has been designed to be presented differently to ensure continued engagement with the end users. They vary from being short learning pieces covering key principles, to an in-depth and detailed two-part interview-style approach.

Feedback on these online offerings has been positive, with statistics indicating that more than 95 per cent of people surveyed found this form of communication informative. Take-up reflects an ongoing commitment from staff across the Commonwealth to strengthening the risk management approaches used by their entity.

Measure Commonwealth property initiatives are efficient and effective

The management of Commonwealth property delivers efficiencies in relation to leasing and facilities management for non-corporate Commonwealth entities.

The footprint of the non-Defence property portfolio is reduced where appropriate.

Source 2019-20 Corporate Plan, pg 36

Result Achieved

The Commonwealth is continuing to better utilise leased office space, including through implementation of the whole-of-government Leasing Strategy and the coordinated procurement arrangements for leasing and property services. As at 30 June 2020, 89 per cent of non-corporate Commonwealth entities (NCEs), representing 99 per cent of properties, have transitioned to the coordinated arrangements.

The 2019 Australian Government Office Occupancy Report, published in June 2020, showed the APS reduced its leased office footprint from 17.1 square metres in 2017 to 16.1 square metres in 2019, with a continued trajectory towards the 14 square metre government target as inefficient leases expire and are replaced with more efficient leases.

The divestment program is ongoing. Since 1 January 2015, 149 properties have been sold, with gross proceeds of over $264.9 million. A further 28 properties are on the program for divestment.

Analysis Finance provides oversight, management and support to Commonwealth entities in relation to property management, including through policy advice on the Commonwealth Property Management Framework, coordinated procurement arrangements and the National Divestment Program. The reform of Commonwealth property asset management and

Annual Report 2019-20 Part 2: Performance 67

operations, led by Finance, has made a significant contribution to achieving public sector resourcing and transformation.

In 2019-20, Finance continued to:

● work with entities to manage their lease holdings effectively and efficiently—with 99 per cent of properties now transitioned to the coordinated procurement arrangements, Finance is demonstrating how this approach leads to more efficient utilisation of office space and is showcasing the benefits to other entities

● manage a significant and strategically important non-Defence property portfolio and the construction and delivery of domestic non-Defence major capital works projects

● reduce Commonwealth property holdings and related ongoing maintenance costs by divesting properties that are surplus to requirements.

Finance leveraged the Property Services Governance Network (a forum to support collaboration on whole-of-government policy initiatives) to quickly identify and respond to emerging critical issues during the severe 2019-20 bushfire season, the Canberra hailstorm in January 2020, and the COVID-19 pandemic.

Finance developed guidance materials and provided advice on managing office accommodation in a post COVID-19 context. This guidance provides advice on how entities should manage office accommodation to support a safe transition back into the office, and on issues such as additional hygiene measures, design of office fit-outs (and implementation of appropriate social distancing requirements), lift capacity, and managing shared spaces.

Finance consulted with partner entities, including Safe Work Australia, the APSC, and the Department of Health, and worked closely with entities with significant property portfolios, to ensure that guidance is fit-for-purpose. Through these multi-layered governance forums, Finance has provided strong leadership and policy support to entities so they can continue to meet the property management-related challenges presented by the COVID-19 pandemic and other natural disasters.

Measure Promote efficient, financially sustainable and sound governance arrangements for all Government Business Enterprises (GBEs)

Continue to encourage ongoing efficiency and financial sustainability in GBEs, including to facilitate and monitor GBE delivery of the Government’s key infrastructure priorities, including Western Sydney Airport, Inland Rail, Snowy Hydro and Naval Shipbuilding.

Source 2019-20 Corporate Plan, pg 36

Result Achieved

Finance continues to oversee GBEs’ financial and operational performance to ensure GBEs maintain a commercial focus.

Corporate plans provided by GBEs comply with the GBE guidelines. This is attributable to Finance’s collaboration with GBEs and shareholder departments, which included secondments into GBEs to get a detailed understanding of GBEs' financial performance, and to shareholder departments to ensure ministerial briefing is aligned.

Advice is provided on a regular basis to shareholder ministers on the compliance and performance of the GBEs based on information provided in corporate plans, quarterly reports and annual reports, as well as regular interactions with the GBEs.

Key infrastructure projects that will support the Australian economy and communities are being delivered by GBEs. In 2019-20, WSA Co Ltd achieved key milestones for the construction of Western Sydney International (Nancy-Bird Walton) Airport, including completion of early earthworks, commencement of bulk earthworks, completion of the Experience Centre and continued progress on procurements for key contracts.

Construction of the first section of Inland Rail, Parkes to Narromine, is largely complete, and delivery of the remaining sections is progressing. Snowy Hydro Limited recently received shareholder approval to commence main works for Snowy 2.0, following final environmental approvals in June 2020. Australian Naval Infrastructure Pty Ltd’s (ANI’s) greenfield works at

Annual Report 2019-20 Part 2: Performance 68

the Osborne South Shipbuilding Yard are complete. Remaining brownfield works for Osborne South are scheduled for completion over 2020-21 to 2022-23.

Analysis Government’s involvement in certain commercial enterprises, such as GBEs, aims to support the delivery of essential services and infrastructure to the Australian community. Currently there are nine GBEs prescribed under the PGPA Act (two corporate Commonwealth entities and seven Commonwealth companies).

Finance’s governance and oversight of GBEs contributes significantly to achievement of the public sector resourcing and governance element of our purpose. By executing these responsibilities, Finance assists the Government to achieve its fiscal and policy objectives.

Through 2019-20, Finance’s effective ongoing governance continued, including through regular reporting and accountability arrangements, set out in legislation, regulations and policy guidance and targeted stakeholder forums and engagement. Finance’s relationships with shareholder departments have been strengthened through these ongoing engagements. Some specific examples include:

● leading an Intergovernmental Community of Practice with state, territory and New Zealand government officials

● organising a biannual GBE Forum to promote shared learnings and experiences between GBEs

● a professional education program for Finance and shareholder departments

● secondments with GBEs and shareholder departments to strengthen professional relationships, enhance knowledge transfer and support well-informed reporting to government. Short-term secondments in 2019-20, with officers remaining attached to their departments, included:

 commercial analysts from Finance seconded to Defence Housing Australia in Quarter one 2019-20 and Moorebank Intermodal Company in Quarter three 2019-20

 an officer from the Department of Infrastructure, Transport, Regional Development and Communications, was seconded to Finance in Quarter three 2019-20.

The release in February 2020 of the Commonwealth Investment Framework brings together the underpinning policy and best practice guidance for entities to consider in the development, implementation and management of investment proposals. The Framework was developed to support the Australian Government realise the benefit of investments that utilise the Commonwealth balance sheet for Australian citizens, businesses and communities. This is an example of Finance’s stewardship approach.

Recognising the significant contribution of major infrastructure projects to the Government’s balance sheet, Finance provides oversight to GBEs responsible for these activities. This includes detailed financial analysis to support the Minister for Finance’s role as a shareholder minister.

In the context of the COVID-19 pandemic, Finance assisted the Government to temporarily adjust Australia Post’s performance standards to reflect the operating constraints and limitations that have resulted from the significantly changed environment in 2019-20. These adjustments provide Australia Post with flexibility to meet increased demand for online ordering and delivery as people practice social distancing.

Annual Report 2019-20 Part 2: Performance 69

Delivering effective services to, and for, government

Measure Shared services hub meets clients' needs

As a Shared Service hub, the Service Delivery Office (SDO) provides quality and efficient services to client entities.

Source 2019-20 Corporate Plan, pg 37

Result Achieved

The SDO continued to deliver on its agreed service outcomes for clients during 2019-20. The SDO:

● managed 1,282 credit cards per month, with 100 per cent service level achievement

● processed 5,953 payments received and debts per month, with 100 per cent service level achievement

● made 2,547 payments per month, with 95 per cent service level achievement

● had 7,300 active users of SDO's technology platform per month, with 100 per cent service level achievement

● managed 14,285 pays per pay period, with 99.9 per cent service level achievement.

In 2019-20, the volume of corporate and financial services provided by the SDO to its clients increased from the previous year. On average, there were 7,300 active users of SDO's technology platform per month, compared to an average of 5,919 users per month in the same period in 2018-19.

The SDO continues to work with the GovERP program by:

● contributing to scope and defining business requirements to help inform the design of the GovERP solution

● adopting the common language and framework for end-to-end corporate business processes.

In 2019-20, the SDO implemented a new comprehensive internal controls framework ensuring transparency and accountability against the agreed service outcomes.

Analysis

The SDO directly contributes to Finance’s delivery of efficient and cost-effective services to, and for, government, and to the transformation of the public sector through the shared use of common, standard and sustainable technologies and processes.

As one of the six service delivery hubs, the SDO continues to be a centre of excellence for shared services, developing innovative service delivery arrangements across entities. The SDO supports the whole-of-government agenda for standardising business systems and processes across the APS by consolidating service provision and increasing the use of automation.

During the 2019-20 reporting period, the SDO:

● continued to focus on building economies of scale by commencing the onboarding of the Bureau of Meteorology

● established a new service desk to better support clients and manage requests as a service provider to multiple entities

● developed an e-invoicing capability, with the Department of Finance being the first SDO client to adopt e-invoicing in December 2019through 2020-21, the SDO will progress the on-boarding of its other clients to this capability to improve payment times and cash flows for small to medium-sized businesses

● engaged with clients to facilitate their transition to the Expense and Travel Management Service as part of the on-boarding to common business processes. The Department of Finance was fully transitioned in 2019-20, with other clients to be transitioned by 30 December 2020.

Annual Report 2019-20 Part 2: Performance 70

In March 2020, in response to the COVID-19 pandemic and to ensure entities were well supported, the SDO:

● enacted its Business Continuity Plan to ensure critical staff and processes were enabled including undertaking, bilateral meetings with individual clients using the online GovTEAMS platform to support shared business continuity outcomes—this tailored engagement, reflecting Finance’s stewardship and commitment to making business better, has assisted with maintaining open communication, transparency and engagement with SDO’s clients through the disruption of the COVID-19 pandemic

● provisioned new technologies to support cross entity mobility at short notice—this was an important enabling element for the surge of secondments from across the Commonwealth to Services Australia in response to the level of demand for services during this period

● implemented further automation in finance invoice payment runs for client departments from 20 days to daily—this ensured small and medium-sized businesses received payments in a timely manner during the COVID-19 pandemic and further supported economic outcomes.

Measure GovTEAMS improves public sector productivity

Commonwealth entities and companies have access to GovTEAMS, a new generation platform to provide a single environment for both internal and external collaboration across government to improve public sector productivity.

Source 2019-20 Corporate Plan, pg 37-38

Result Achieved

GovTEAMS continues to rapidly increase its registered user count since commencing in January 2019. The platform reached over 87,000 registered users by 30 June 2020.

This is more than double the original target of 40,000 users for the 2019-20 reporting period. The system is regularly used by senior departmental leaders. GovTEAMS usage peaked during the reporting period at 1.7 million messages, 67,000 meetings and 46,000 calls.

Secretaries Board has regularly convened during the pandemic using PROTECTED GovTEAMS.

Analysis GovTEAMS substantially contributed to the achievement of Finance’s purpose in 2019-20, specifically in relation to delivering effective services to, and for, government. GovTEAMS supports Finance’s role as a steward of the public service, by providing an essential whole-of-government service, with diverse clients across the spectrum of government. Utilising the latest onshore cloud technology, GovTEAMS is a modern collaboration tool, which has proven highly valuable for government employees and their industry partners, especially over the course of the COVID-19 pandemic through this reporting period.

In a time where social distancing is required, GovTEAMS has allowed users to continue working remotely in a virtual, secure, and stable environment. Having launched successfully prior to the reporting period, 2019-20 began with a sustained increase in usage, culminating in a surge of demand onto the platform at the onset of the COVID-19 pandemic as the APS shifted to large-scale remote working.

To support the demand, Finance’s workload increased significantly to respond to queries from across the APS with more than 10,000 new users registering each week at the height of the crisis.

While an expected increase in the use of online collaborative platforms across the public sector was expected over time, the exponential increase in the rate of adoption in this reporting period, driven by necessity, will significantly impact the operations of the APS moving forward.

The regular use of PROTECTED GovTEAMS to support Secretaries Board meetings, for example, has contributed to a broad awareness among senior APS leaders that online collaboration platforms provide a legitimate alternative to traditional face-to-face approaches.

Annual Report 2019-20 Part 2: Performance 71

The post-pandemic steady state for GovTEAMS users is yet to be determined, noting reflection on future optimal business processes and working arrangements is already underway. However, it is clear that Finance’s contribution to supporting online collaboration across government is vital for driving public sector productivity improvements.

Measure: GovCMS supports creation of websites that better connect government with people

Commonwealth entities and companies have access to the GovCMS management and website hosting support platform to assist in the creation of modern, affordable and responsive websites that better connect government with people.

Source 2019-20 Corporate Plan, pg 38

Result Achieved

Platform availability continues to exceed target service level agreement even during increased load associated with the Government’s COVID-19 pandemic response.

Twelve NCEs joined GovCMS in the reporting period and four left the platform, of which three were disestablished as part of machinery-of-government changes. This brought the total number to 56, as at 30 June 2020. Seventeen other Commonwealth entities use GovCMS for hosting, with the total equating to 39 per cent of entities in the APS.

In 2019-20, 92 new NCE websites went live on the platform and 46 NCE websites ceased being hosted on the platform over the same period. Sites primarily ceased as a result of consolidation from machinery-of-government changes, beta websites being replaced by their finished live projects, and sites updating to the most recent version of the platform tools.

Analysis

GovCMS provides a common platform for hosting and management of government websites. It continues to demonstrate significant benefits and a return on investment for government as a key element of Finance’s achievement of ‘delivering services to, and for, government’.

During 2019-20, a priority for Finance was the deployment of GovCMS as part of the ‘cybersecurity uplift’ project, funded in the 2019-20 Federal Budget.

In addition to its business as usual activities, Finance transitioned 25 websites in six months through a collaborative and scaled approach, involving 13 different NCEs and multiple external suppliers. The centrally coordinated approach within Finance used consistent tools and methodologies, allowed for efficient procurements and flexible resourcing allocation across the different elements of the project.

During the COVID-19 pandemic, Finance’s GovCMS platform met and exceeded expectations, ensuring stability and resilience of high-traffic government websites (including the Department of Health, Services Australia, Smart Traveller and Safe Work Australia) during a period of unprecedented demand. During this event, the GovCMS platform experienced spikes of approximately 100,000 page views per minute.

Finance was well positioned to respond, having recently upgraded the underpinning technology. Finance anticipated and responded proactively to the needs of clients through this period, identifying which sites were likely to be heavily affected, initiating discussions with entities regarding upgrades that would be needed to infrastructure, and identifying and surging platform resources to their websites to support demand.

The GovCMS team also supported entities by forming 'surge teams' to assist entities publish information relating to the COVID-19 pandemic, particularly in anticipation of major government announcements.

Annual Report 2019-20 Part 2: Performance 72

Measure Services meet client needs

Services meet the needs of parliamentarians, their employees and others as required by the Australian Government.

Source 2019-20 Corporate Plan, pg 39

Result Achieved

Service standards set out in the 2019-20 Corporate Plan were met or exceeded for the full year period as follows:

● 96.1 per cent of client contacts were acknowledged within 24 hours and responded to within agreed timeframes (compared to the service standard of 95 per cent)

● 99.8 per cent of payments (including payroll) were made within agreed timeframes (compared to the service standard of 95 per cent)

● 100 per cent of office establishment and relocation projects were delivered in accordance with the National Fitout Standards (compared to 100 per cent)

● 99.7 per cent of COMCAR reservations were completed without service failure (compared to 99 per cent).

Analysis

Finance’s delivery of timely and efficient services, within our set standards to support current parliamentarians and former prime ministers and their employees under the Members of Parliament (Staff) Act 1984 (MOP(S) Act) is crucial to achieving our purpose.

Ministerial and Parliamentary Services (MaPS) oversees the provision of non-travel related expenses and services to parliamentarians and their respective employees. MaPS also provides high-quality, secure and confidential car-with-driver services (COMCAR) to a range of eligible clients, including the Governor-General, the Prime Minister’s Office, federal parliamentarians, the federal judiciary and heads of Commonwealth entities. COMCAR also facilitates delivery of transport services for Guest of Australian Government visits and major events.

Finance’s strong performance against this measure during the 2019-20 reporting period included managing the flow-on impact of the federal election held on 18 May 2019 which resulted in an increase in demand for payroll services, office establishments and general enquiries to support new parliamentarians.

The COVID-19 pandemic also had a significant impact, with Finance experiencing an increased number of enquiries. Finance continued to undertake significant outreach and provide knowledge management services online to MOP(S) Act staff during the pandemic.

Conversely, there was a significant reduction of demand on COMCAR reservations as a result of the suspension of parliamentary sittings and overall reduced travel for parliamentarians during the pandemic.

Finance responded to this situation by surging impacted COMCAR staff and drivers into other ongoing high-demand areas of work and emerging priority activities. This included providing outreach and services to support greater uptake of the Parliamentary Expenses Management System (PEMS—see below) and assisting Services Australia to support the Government’s response to COVID-19. In addition, Finance provided enhanced learning and development for both COMCAR staff and drivers to develop their capability, as well as for MOP(S) Act employees through the transition of the MOP(S) Professional Development Program (PDP) to provide online seminars/webinars and digital on-demand training to supporting MOP(S) Act employees working from home.

Annual Report 2019-20 Part 2: Performance 73

Measure Improve administration of parliamentary work expenses

The timeliness, efficiency, clarity and transparency of the administration of parliamentary work expenses is improved.

Source 2019-20 Corporate Plan, pg 40

Result Partially Achieved

During the 2019-20 reporting period, Parliamentary Expenses Management System (PEMS) portal access was delivered, allowing parliamentarians and their staff to access PEMS from any computer or mobile device, to lodge, monitor and certify expense claims, anywhere, anytime. SMS two-factor authentication was delivered in 2019-20 in response to client feedback, further enhancing the client experience.

A targeted support campaign was delivered in 2019-20 to all parliamentarians’ offices to better understand current usage patterns and how to tailor ongoing support and education material. The campaign further encouraged the adoption of a digital system that supports a flexible and often remote working environment.

This is particularly timely in response to the COVID-19 pandemic. End-of-year results showed that adoption continues to increase in response to the campaign and ongoing engagement with the PEMS User Reference Group, with:

● 61 per cent of parliamentarians having personally used PEMS to certify claim (office and travel)

● 84 per cent of parliamentarians’ offices having used PEMS to certify at least one claim (office and travel)

● the proportion of claims processed through PEMS (relating only to claims where PEMS functionality is available) reaching 59 per cent for office expenses

● the proportion of claims processed through PEMS (relating only to claims where PEMS functionality is available) reaching 37 per cent for travel expenses (noting that the Independent Parliamentary Expenses Authority has responsibility for travel claims).

Analysis The delivery of PEMS has been a high-priority activity for Finance over a number of reporting periods, recognising the importance of achieving improvements in timeliness, efficiency, clarity and transparency of the administration of parliamentary work expenses.

PEMS is a key element of the reforms to the parliamentary work expenses framework which have been delivered in response to the recommendations of the report: 'An Independent Parliamentary Entitlements System: Review'. The portal release during 2019-20 provides increased efficiencies and reduces the administrative burden on parliamentarians’ offices, while also allowing continued efficient operations in a changing environment impacted by COVID-19 restrictions. The full PEMS functionality is expected to be delivered in mid-2021. The revised timeline will ensure the PEMS solution is tested and available to users with supporting education and training.

While the progress of the project has been impacted by a range of factors, including finalising design issues and the deferral of user acceptance testing during the COVID-19 pandemic, significant milestones have been reached in 2019-20. Moreover, adoption levels went beyond that anticipated at the start of the year, attributable to Finance’s enhanced and targeted campaign coinciding with the COVID-19 pandemic.

This recognised the broader context of remote technologies being more in demand and also utilised available COMCAR staff, surging to provide direct engagement and ongoing support for all parliamentarians’ offices.

Annual Report 2019-20 Part 2: Performance 74

Measure Efficient management of Finance tenancies

Finance tenancies are managed efficiently.

Source 2019-20 Corporate Plan, pg 40

Result Partially Achieved

Finance exceeded the 14 square metre occupational density target at 30 June 2020. This is a consequence of:

● requiring staff to largely work from home under the COVID-19 Departmental Response Plan including in the last quarter of the reporting period to ensure adequate social distancing

● the return of 3,210 square metres of sub-leased office space in One Canberra Avenue being vacated and returned to Finance from the Department of Human Services on 27 April 2020.

Previously in the reporting period, Finance was on track as at December 2019 to meet this target with:

● its primary tenancy, One Canberra Avenue, recording a density of 13.71 square metres per occupied work point

● Government Network Services Branch (GNSB) at Symonston, recording a density of 13.66 square metres per occupied work point, noting GNSB have a requirement for the co-location of light industrial and office accommodation due to the nature of their business.

The broader efficient management of Finance’s tenancies throughout this period is demonstrated through the introduction of a range of property management initiatives in the last quarter of the reporting period to directly address Finance’s response to COVID-19. These initiatives included an enhanced social distancing strategy (where only every second work point can be occupied), a range of additional hygiene measures and ongoing support for remote working arrangements. These arrangements continue to be regularly monitored.

Analysis

The efficient management of Finance tenancies is an important component of the Department’s business enabling services, which, together with corporate services, information technology and workplace support, ensures Finance continues to meet its operational requirements. It is important to view these results in the context of the impacts that COVID-19 has had on all aspects of Finance’s business operations. The unique characteristics of a pandemic, require that essential functions continue to operate while measures are taken to protect staff safety and resources are potentially redeployed, as appropriate.

The occupational density—captured by the accommodation stocktakes undertaken throughout the year to assess achievement of this measure—confirmed Finance was on track to meet these property targets prior to the final quarter of the reporting period. However, with occupational density for Finance tenancies being above the Government’s target (14 square metres) at the end of the reporting period, this result is reported as partially achieved.

Importantly, Finance’s response to COVID-19 was managed in line with the Australian Government’s phases regarding response to a pandemic. Finance’s robust business continuity arrangements supported swift implementation of alternative working arrangements, ensuring staff health, safety and wellbeing and continued delivery of critical functions. Finance also redeployed staff to agencies including Services Australia which was delivering high-priority services to Australians as part of the Government’s COVID-19 response, further reducing its office footprint. Overall, these efforts together demonstrate the focus Finance maintained throughout this reporting cycle of ongoing efficient management of its tenancies and facilities with a strong view to the priority of staff health on premises supported by appropriate property initiatives.

Annual Report 2019-20 Part 2: Performance 75

Financial performance Finance’s financial statements are presented in Part 5 of this report with the Australian National Audit Office issuing an unmodified audit opinion on 28 August 2020.

A summary of Finance’s financial performance for Departmental and Administered activities are provided below.

Departmental activities The Department manages a diverse range of activities that are delivered for whole-of-government purposes and supported through special accounts. These activities are subject to external factors that can significantly impact the operating result in any given year. The 2019-20 operating deficit of $65.7 million (2018-19: surplus of $16.5 million) is primarily due to general insurance activities provided to Australian Government entities which were impacted by insurance claims arising from recent adverse weather events including the bushfires and Canberra hailstorm. This was partially offset with gains from the revaluation of investment properties.

Whilst the Department recognised an operating deficit in 2019-20 under the statement of comprehensive income, the statement of financial position remains strong. As at 30 June 2020, the Department held net assets of $2.3 billion which largely comprised the non-Defence property portfolio. Total assets increased by $0.6 billion mainly from the implementation of the new accounting standard AASB 16 Leases which capitalised operating leases as ‘right-of-use’ assets. Cash held by the Comcover Special Account also increased as a result of an equity injection to address the insurance claims. Total liabilities had a corresponding increase of $0.6 billion to provide for expected lease obligations and outstanding insurance claims still to be paid.

Administered activities on behalf of the Australian Government In 2019-20, Finance administered four programs on behalf of the Australian Government with expenses of $11.4 billion including:

● $8.3 billion in member benefits for Commonwealth defined benefit superannuation schemes

● $2.6 billion relating to the investment funds including distributions to portfolio special accounts

● $0.5 billion for ministerial and parliamentary services including entitlements, salaries for staff employed under the Members of Parliament (Staff) Act 1984, and COMCAR services.

Administered income of $2.4 billion comprises $1.2 billion of superannuation contributions and $1.2 billion of interest, dividends and distributions and gains from the investment funds.

At 30 June 2020, administered assets were $49.9 billion which largely consists of the investment funds and investments in Commonwealth entities and companies. Total assets increased 21.8 per cent from 2018-19, mainly due to government contributions to the investment funds.

Administered liabilities of $244.8 billion largely consist of member benefits for the Commonwealth defined benefit superannuation schemes. Superannuation liabilities increased by $8.7 billion from the previous year primarily as a result of changes to the discount rate used to value the liabilities.

Annual Report 2019-20 Part 3 Management and accountability 76

Part 3 Management and accountability

Annual Report 2019-20 Part 3 Management and accountability 77

Corporate governance This section discusses Finance's support services and governance structures, which provide a framework to promote accountability and overall effectiveness.

Enabling services The Corporate Services and Information and Communications Technology divisions, under the Department's Business Enabling Services, provide high-quality and efficient services to Finance. In addition to delivering these services, in line with compliance requirements and service standards, there is a strong focus on best practice delivery and looking ahead strategically to ensure services and technology remain fit-for-purpose for our clients.

The Department's internal transformation agenda provides direction for how we can improve service delivery with innovative and forward-looking initiatives.

Specifically, the Corporate Services Division provides strategic advice to the Secretary and Executive Board on corporate governance and departmental administration. The Division connects its operational delivery of corporate services with strategic organisational planning and reporting activities through the integrated business planning framework. The Division provides a range of services to the Department and our ministers including:

● parliamentary coordination and liaison

● human resource services

● financial advice and support

● in-house legal services

● facilities management and security

● corporate engagement (including communications) and media

● corporate planning and reporting

● advice and knowledge management.

The Information and Communications Technology Division delivers business services to the Department and other government entities. The Division supports the Chief Information Officer and Chief Information Security Officer functions of IT security, architecture, service and program delivery, as well as online, technical and government network services.

In 2019-20, the Division provided services to approximately 1,700 users to support Finance's operations. It provided a range of whole-of-government services that enhanced collaboration and connection by government entities. These services:

● provided online workspaces for over 86,000 people, 187 organisations and 12,865 communities

● hosted over 320 government websites

● enabled over 1,000 meetings via secure video for ministers and senior government officials.

Annual Report 2019-20 Part 3 Management and accountability 78

Governance Finance’s governance framework promotes the principles of good governance and supports our performance in line with government and organisational priorities. This is achieved through engaging with staff on risk management and accountability, and the transparent operation of the Executive Board and its committees. The framework incorporates integrated business planning to ensure decision-making on resourcing is aligned with Finance's priorities and management of risk and supports the Secretary in discharging her duties under the Public Governance, Performance and Accountability Act 2013 (PGPA Act) and the Public Service Act 1999.

Figure 3 (see page 79) shows Finance's governance structure at 30 June 2020.

Executive Board The Executive Board is the chief advisory and decision-making body in Finance. It supports the Secretary in discharging her duties under the PGPA Act. Members of the Board provide strategic leadership to ensure the Department delivers its purpose in keeping with the Government’s policy objectives. The Board also monitors performance and maintains accountability.

In addition to its decision-making role, the Board structures its business to ensure that it undertakes key strategic discussions, considers emerging risks and receives regular updates from the chairs of the subcommittees. The Board sets the direction of, and oversees progress made against, the Department’s transformation agenda to ensure we are a high-performing, modern, efficient and continuously improving public sector organisation delivering better and more efficient services to government and citizens.

The Secretary chairs the Executive Board, supported by the five Deputy Secretaries of the Department as permanent members. In addition, membership of the Board is offered for a period of nine months on a rotating basis to two senior members of staff—a First Assistant Secretary and an Assistant Secretary from across the Department.

These arrangements reflect the Executive’s commitment to encouraging a wide range of perspectives in Board deliberations and developing leadership capability among the Senior Executive Service (SES), including through exposure to robust decision-making at the highest level within the Department.

Finance's Executive Board model is flexible to support the pace and approach required for effective decision-making. During 2019-20, this was reflected in a significant increase in the frequency of meetings during the initial phases of the COVID-19 pandemic to ensure the Board could be responsive and make decisions in a timely fashion. The Board moved to a virtual meeting environment during the pandemic—ensuring its ability to continue to conduct business during a period of enhanced remote working arrangements—and this has been well supported by Finance's ICT infrastructure.

Annual Report 2019-20 Part 3 Management and accountability 79

Executive Board subcommittees In 2019-20, the Executive Board had three standing subcommittees:

● Senior Leadership Committee

● Risk Subcommittee

● Leadership and Remuneration Subcommittee.

The Senior Leadership Committee (SLC) consists of all Deputy Secretaries, all First Assistant Secretaries and those Assistant Secretaries who have organisational responsibility for human resources, internal budgets and the transformation agenda. The SLC is chaired by the Deputy Secretary of Business Enabling Services. The SLC ensures that the entire senior leadership cohort plays an active and collaborative role in shaping operational and strategic departmental issues including resourcing, people, communication and culture, business improvement and transformation issues.

The Risk Subcommittee is responsible for ensuring the Department has an effective (practical and adequate) risk management framework in place, together with the necessary capability to effectively manage its risks. The Risk Subcommittee is chaired by a Deputy Secretary and consists of officers across the Department from a range of levels and all business groups.

The Leadership and Remuneration Subcommittee is chaired by the Secretary and includes all the Deputy Secretaries. It is responsible for overseeing and providing advice on people management matters.

Additionally, the terms of reference of the Executive Board allow for the ad hoc creation of the Policy Working Group which is a topic-specific working group able to work flexibly to address emerging topical issues as required. The membership of the Policy Working Group is flexible based on the identified issue and would draw upon a diverse membership to enable strong engagement from leaders across the Department, harnessing their diverse policy expertise and experience.

Figure 3: Finance’s governance structure, at 30 June 2020

Annual Report 2019-20 Part 3 Management and accountability 80

Audit Committee The Audit Committee provides independent advice and assurance to the Secretary on the appropriateness of the Department's accountability and control framework—particularly those aspects concerning performance and financial reporting and systems relating to risk and control. It provides assurance on the adequacy of the Australian Government's consolidated financial statements production and risk planning process in Finance. The Audit Committee's functions are set out in its Charter www.finance.gov.au/publications/charter.

In 2019-20, the Audit Committee had four external members (including the independent Chair) and two departmental members. Mr Geoff Knuckey's term as independent Chair and external member concluded on 1 January 2020. Mr Brendan Sargeant commenced as independent Chair and external member on 2 January 2020. The Audit Committee met five times during the year.

The Audit Committee has two subcommittees, chaired by external members, to support it in performing its functions.

● The Financial Reporting Subcommittee (FRSC) maintains an ongoing review of the process for preparing the Department's annual financial statements. The FRSC met five times in 2019-20.

● The Performance Reporting Subcommittee (PRSC) assists the Audit Committee in meeting its performance reporting responsibilities under the PGPA Act. The PRSC met three times in 2019-20.

The Audit Committee works closely with the Risk Subcommittee on oversight of the Department's risk management framework, with the Audit Committee Chair attending the meetings of that subcommittee as an observer.

Table 1 shows Audit Committee membership during 2019-20 and the number of meetings attended by each member during the year.

Annual Report 2019-20 Part 3 Management and accountability 81

Table 1: Audit Committee membership, 2019-20

Name and position

Qualifications, knowledge, skills or experience (include formal and informal as relevant)

Meetings attended in 2019-20 Membership details

Mr Brendan Sargeant (external member) Chair, Audit Committee Chair, Financial Reporting Subcommittee (FRSC)

Mr Sargeant previously held the role of Associate Secretary, Department of Defence. In this role, Mr Sargeant was responsible for a major reform of Defence organisation and enterprise governance, planning, performance and risk management.

Audit Committee 2/2

Mr Sargeant joined the Audit Committee as Chair in January 2020.

FRSC 2/2

Mr Geoff Knuckey (external member) Chair, Audit Committee Chair, Financial Reporting Subcommittee (FRSC)

Mr Knuckey has extensive experience as a Director and serves on boards and audit committees of multiple private sector and government entities. Mr Knuckey has been a full-time company director and audit committee member since 2009 following a 32-year career with Ernst & Young, specialising in audit and assurance services in both public and private sectors across a range of industries.

Audit Committee 3/3 Mr Knuckey joined the Audit Committee in

October 2010 and was appointed as the Chair in January 2017. Mr Knuckey's term on the Committee concluded in January 2020.

FRSC 3/3

Ms Jennifer Clark (external member) Deputy Chair, Audit Committee Chair, Performance Reporting Subcommittee (PRSC)

Ms Clark has an extensive background in business, finance and governance through her career as a Non-Executive Director and investment banker. She has been the Chair or member of over 20 audit, risk and finance committees in the Commonwealth and private sectors over the past 30 years.

Audit Committee

5/5 Ms Clark joined the Audit Committee in December 2015 and was appointed as the Deputy Chair in March 2017. PRSC 3/3

Ms Gayle Ginnane (external member)

Ms Ginnane was the Chief Executive Officer of the Private Health Insurance Administration Council with regulatory responsibility for the private health insurance industry until May 2008. Ms Ginnane is also a member of a range of other boards and audit committees.

Audit Committee 5/5

Ms Ginnane joined the Audit Committee in January 2017.

Mr Ian McPhee AO PSM (external member)

From 2005 to 2015, Mr McPhee was the Auditor-General for Australia. Mr McPhee was responsible for discharging the responsibilities of the Auditor-General Act 1997 including the audits of the financial statements of all Australian Government controlled entities and a program of some 50 performance audits annually.

Audit Committee 5/5 Mr McPhee joined the

Audit Committee in January 2017. He is a member of the PRSC. PRSC 3/3

Dr Stein Helgeby (departmental member)

Dr Helgeby joined the Audit Committee in July 2012. He is the Deputy Secretary, Governance and Resource Management.

Audit Committee 5/5 Dr Helgeby, Deputy

Secretary, Governance and Resource Management, joined the Audit Committee in July 2012. He is a member of the PRSC.

PRSC 3/3

Ms Amanda Lee (departmental member)

Ms Lee joined the Audit Committee in January 2019. She is the First Assistant Secretary, Budget Policy and Coordination.

Audit Committee 5/5 Ms Lee, First Assistant

Secretary, Budget Policy and Coordination, joined the Audit Committee in January 2019. She is a member of the FRSC.

FRSC 2/5

Annual Report 2019-20 Part 3 Management and accountability 82

Integrated business planning framework Finance’s integrated business planning framework ensures alignment across domains of enterprise decision-making, including:

● Strategic Review and prioritisation

● enterprise risk framework

● corporate planning

● divisional business planning

● budgeting

● investment and resource planning.

Strategic reviews The Strategic Review cycle comprises three stages—Reset, Reflect and Review—and is the Department’s key business planning mechanism to guide prioritisation and resource allocation.

In 2019-20, the Strategic Review cycle provided the Executive Board with a comprehensive understanding of emerging priorities, risks and opportunities to inform departmental investment. The Executive Board engaged with divisions on immediate and future priorities, workforce management and opportunities for improvement and deregulation to enhance delivery of advice and services. Informed by the Strategic Review process, the Executive Board agreed that understanding and enhancing the Department's data maturity and further investing in business process optimisation were priorities.

The Strategic Review cycle has enhanced collaboration across the Department, ensuring that activities undertaken in divisions are aligned and integrated and take into account broader departmental strategy. The process has strengthened departmental governance, providing the Executive Board with regular insights in order to respond to emerging priorities and adapt accordingly to position Finance for the future.

Planning and performance reporting framework Finance has an integrated performance cycle, and the corporate plan is our pre-eminent planning document. The corporate plan brings together the core elements which allow us to deliver against our purpose. This is complemented by performance planning that occurs through regular budgeting processes and Finance’s Portfolio Budget Statements, and performance reporting in the annual report. Integrated business planning and governance processes, including strategic reviews, direct individual and teamwork activities to achieve our purpose. The relationship between elements included in Finance’s performance is illustrated in Figure 4.

Annual Report 2019-20 Part 3 Management and accountability 83

Figure 4: Finance’s planning and performance reporting cycle

Managing risk Finance’s risk management framework sets out the Department’s risk management policy and guides how we identify, manage and report risks where they may impact the achievement of our purpose. The Secretary and the Executive Board (through the Risk Subcommittee) oversee the framework.

The framework supports the Secretary to meet her duties under section 16 of the PGPA Act and complies with the Commonwealth Risk Management Policy.

In 2019-20, Finance continued to integrate risk considerations across our governance structures and business planning. Mr Andrew Jaggers, Deputy Secretary, Commercial and Government Services, continued his role as Chief Risk Officer and Chair of the Risk Subcommittee, supporting strategic consideration of opportunity, risk and innovation by the Executive Board and its subcommittees. Risk discussions were also integrated with our Strategic Review cycle, allowing prioritisation and deployment of resources in line with appropriate management of risk.

We continue to support a positive risk culture. We have developed educational materials dealing with transformation, innovation and risk and continued to support enhanced risk management capability across the Department through the Risk Engagement Group comprising representatives from each division. In particular, the Risk Engagement Group’s involvement in preparation for the Department’s Strategic Review process has strengthened the line of sight between strategic risk governance and everyday risk management by staff at all levels.

Annual Report 2019-20 Part 3 Management and accountability 84

Business continuity management Business continuity management (BCM) is a key element of the Department’s enterprise risk management arrangements. The BCM process in Finance involves development of comprehensive plans and procedures to enable the continuation or timely resumption of critical functions and eventual restoration to normal business operations following a business interruption event.

Under the BCM framework, if a business interruption occurs, a Central Control Team (CCT) is convened by the Deputy Secretary, Business Enabling Services. The CCT is the central point of communications and coordination for the Department’s response and recovery.

Business continuity plans are reviewed and tested annually to ensure that they meet business requirements.

The importance of effective business continuity arrangements has been highlighted in 2019-20 in response to a number of business interruption events including:

● air quality issues in Canberra-based tenancies resulting from bushfires surrounding the ACT from November 2019 through to February 2020

● damage to the Department’s One Canberra Avenue tenancy caused by a severe hailstorm in January 2020

● the COVID-19 pandemic.

In February 2020, as the risks of COVID-19 became apparent, Finance reviewed its readiness to respond to a pandemic and developed a COVID-19 Departmental Response Plan (Response Plan) focused on the safety and wellbeing of staff and the continued delivery of critical functions.

In March 2020, the Department activated its business continuity plans in line with the Response Plan and advice/instructions from the relevant authorities.

In preparation for an eventual return to normal business operations, the CCT developed a business-focused Recovery Strategy and Transition Plan aligned with the Government’s Roadmap to a COVIDSafe Australia, to safely return staff to the office.

The foundational work and preparedness of the Department enabled us to act quickly and confidently, ensuring the uninterrupted delivery of critical functions and normal operations over a prolonged period.

Fraud and risk certification The Department has zero tolerance for fraud and takes all reasonable measures to deal with fraud matters.

The Department's Fraud Control Framework aligns with the Commonwealth Fraud Control Framework. It includes a fraud control plan, the assessment of fraud risk and the mechanisms for the prevention, detection, monitoring, evaluation and reporting of fraud matters for the Department.

To support the system of internal control, the Department recognises the importance of being vigilant in relation to fraud risk and communicates expectations of fraud awareness and prevention to staff.

Annual Report 2019-20 Part 3 Management and accountability 85

Significant non-compliance issues with finance law In 2019-20, the Department reported one instance of significant non-compliance with the finance law to the Minister for Finance under paragraph 19(1)(e) of the PGPA Act. In response to the instance of non-compliance, the Department has established an Assurance Taskforce to review our approach to procurement governance and assurance and the way in which organisational values and behaviours are embedded. The Department is working with relevant parties in relation to contracts affected by the matter.

External scrutiny Finance’s operations are subject to scrutiny from a number of external bodies, among them the Australian National Audit Office, various parliamentary committees, the courts and administrative tribunals, the Australian Information Commissioner and Privacy Commissioner and the Commonwealth Ombudsman. This section reports on audits, inquiries, reviews and legal actions relevant to Finance in 2019-20.

Judicial and administrative decisions

Commonwealth of Australia v. Davis Samuel Pty Ltd & Ors

This matter relates to civil proceedings to recover $8.725 million that was fraudulently transferred from the Commonwealth in 1998 and subsequently distributed to several third parties. All criminal proceedings were completed in 2006.

The Commonwealth has been successful in its claims against 13 defendants (judgment for up to $18.6 million plus interests and costs) and has recovered more than $8.289 million as at 30 June 2020. The Commonwealth is continuing its recovery action against the remaining interest in land.

Recovery action has been taken against all judgment debtors who, except for one individual, are now under insolvent administration. The Commonwealth commenced fresh bankruptcy proceedings against four judgment debtors and three have been made bankrupt. The hearing of the bankruptcy petition for the remaining individual is pending.

Liverpool City Council and Canterbury-Bankstown City Council v. Commonwealth of Australia

On 8 February 2017, Liverpool City Council and Canterbury-Bankstown City Council commenced proceedings in the Supreme Court of New South Wales listing the Commonwealth as the defendant in relation to a dispute involving the Voyager Point footbridge project.

The project concerned the design and construction of a new footbridge across the Georges River from East Hills to Voyager Point to replace the previous footbridge which was closed because of safety issues. On completion, responsibility for the new footbridge was to be transferred to Liverpool City Council and Canterbury-Bankstown City Council. The matter was resolved in September 2019.

Annual Report 2019-20 Part 3 Management and accountability 86

Administrative tribunal decisions In 2019-20, there were no decisions of an administrative tribunal that had a significant effect on the operations of the Department.

Australian Information Commissioner decisions In 2019-20, there were no decisions by the Australian Information Commissioner that involved the Department or that had, or might have, a significant impact on the Department’s operations.

Australian Privacy Commissioner decisions In 2019-20, there were no decisions by the Australian Privacy Commissioner that involved the Department or that had, or might have, a significant impact on the Department’s operations.

Reports on the operations of the entity

Reports by the Auditor-General In 2019-20, the Australian National Audit Office tabled 11 reports in Parliament that involved the Department—six performance audits, two financial statements audits, two assurance reviews and one information report:

● ANAO Report No. 7: Government Advertising: June 2015 to April 2019

● ANAO Report No. 14: Commonwealth Resource Management Framework and the Clear Read Principle

● ANAO Report No. 16: Western Sydney Airport Procurement Activities

● ANAO Report No. 20: Audits of the Financial Statements of Australian Government Entities for the Period Ended 30 June 2019

● ANAO Report No. 23: Award of Funding Under the Community Sport Infrastructure Program

● ANAO Report No. 27: Australian Government Procurement Contract Reporting Update

● ANAO Report No. 31: Management of Defence Housing Australia

● ANAO Report No. 36: Advances to the Finance Minister for the Period 1 July 2019 to 24 April 2020

● ANAO Report No. 38: Interim Report on Key Financial Controls of Major Entities

● ANAO Report No. 40: Advances to the Finance Minister for the Period 25 April 2020 to 29 May 2020

● ANAO Report No. 41: Design and Establishment of the Regional Investment Corporation

Annual Report 2019-20 Part 3 Management and accountability 87

Parliamentary committees

Senate Standing Committees on Finance and Public Administration The Senate Standing Committees on Finance and Public Administration cover the Prime Minister and Cabinet and Finance portfolios. The work is divided between two committees—the Legislation Committee and the References Committee.

Legislation Committee Finance appeared before the Legislation Committee at its Senate Estimates hearings of 22 October 2019 and 3 March 2020.

On 25 September 2019, Finance and Emergency Management Australia within the Department of Home Affairs provided a joint submission to the inquiry into the Emergency Response Fund Bill 2019 and the Emergency Response Fund (Consequential Amendments) Bill 2019.

On 10 March 2020, Finance provided a submission to the inquiry into the Public Governance, Performance and Accountability Amendment (Tax Transparency in Procurement and Grants) Bill 2019.

References Committee Finance did not appear at the References Committee in 2019-20.

Joint Committee of Public Accounts and Audit The Public Accounts and Audit Committee Act 1951 constitutes the Joint Committee of Public Accounts and Audit (JCPAA). The JCPAA initiates inquiries into public administration matters and can conduct inquiries into matters referred to it by either house of Parliament.

During 2019-20, Finance had a series of engagements with the JCPAA as detailed below. Finance provided information to the Committee as part of its ongoing relationship, including responses to questions taken on notice during public hearings and provided in writing.

● On 20 September 2019, a Joint Executive Minute from the Secretary and the Australian Public Service Commissioner addressing Recommendation 15 of Report 472: Commonwealth Procurement—Second Report was provided to the JCPAA.

● On 7 February 2020, Finance attended the inquiry of the Review of the Operations of the Parliamentary Budget Office 2019-20.

● On 6 March 2020, Finance provided a submission to the inquiry into the Administration of Government Grants: Auditor-General’s Reports No. 5, 12 and 23 (2019-20).

● On 20 May 2020, Finance attended the inquiry into the 2018-19 Defence Major Projects Report and the Future Submarine Project—Transition to Design: Auditor-General’s Reports 19 and 22 (2019-20).

Annual Report 2019-20 Part 3 Management and accountability 88

The Department has an active relationship with the JCPAA in its general oversight role of the PGPA Act. The JCPAA is consulted on amendments to the rules under the PGPA Act and has a specific role in approving amendments that relate to the annual report rule under the PGPA Act.

Other committees Finance also attended hearings or provided submissions to the following parliamentary committees during 2019-20:

● Joint Standing Committee on Treaties: inquiry into the Free Trade Agreement between Australia and Hong Kong, China (A-HKFTA) (attended 9 September 2019)

● Senate Economics References Committee: inquiry into Australia’s sovereign naval shipbuilding capability (submission provided 29 November 2019)

● Senate Standing Committees on Rural and Regional Affairs and Transport: inquiry into the Management of the Inland Rail project by the Australian Rail Track Corporation and the Commonwealth Government (submission provided 29 November 2019)

● Parliamentary Joint Committee on Human Rights: Emergency Response Fund Bill 2019 and Emergency Response Fund (Consequential Amendments) Bill 2019 (submission provided 2 October 2019)

● Senate Select Committee on Financial Technology and Regulatory Technology: inquiry into Financial Technology and Regulatory Technology (attended 26 February 2020)

● Senate Select Committee on COVID-19: inquiry into the Australian Government's response to the COVID-19 pandemic (submission provided 11 May 2020)

● Joint Standing Committee on the National Broadband Network: inquiry into the business case for the NBN and the experiences of small businesses (attended 26 June 2020)

● Joint Standing Committee on Foreign Affairs, Defence and Trade: inquiry into the implications of the COVID-19 pandemic for Australia’s foreign affairs, defence and trade (submission provided 30 June 2020).

Finance’s submissions, responses to questions taken on notice (written and taken during hearings) and the transcripts of committee hearings are available on the Parliament of Australia website.

In addition to attending scheduled hearings, the Department participated in a number of private briefings with parliamentary committees during the reporting period.

Reports by the Commonwealth Ombudsman In 2019-20, the Commonwealth Ombudsman did not release any reports that involved the Department or that had, or might have, a significant impact on the Department’s operations.

Annual Report 2019-20 Part 3 Management and accountability 89

Asset management

Non-Defence domestic property portfolio Finance manages 61 properties and National Land interests in the Government’s non-Defence domestic property portfolio, including office buildings, law courts and other special-purpose facilities, heritage assets, vacant land and contaminated sites, with a value of approximately $1.9 billion at 30 June 2020. Finance, with its private sector property services providers, manages these assets to ensure they are efficient and able to meet the Government’s needs.

The portfolio is managed in accordance with the legislative framework for environment and heritage matters, including the Environment Protection and Biodiversity Conservation Act 1999. Finance considers potential environmental and heritage impacts when making decisions about each property, including maintenance, retention and divestment.

To improve the performance of the portfolio and in accordance with relevant asset management plans, Finance undertakes works in the buildings it manages to improve building and environmental performance and to meet leasing obligations.

As at 30 June 2020, 89 per cent of non-corporate Commonwealth entities had transitioned to the Whole-of-Government Property Services Coordinated Procurement arrangements, representing 99 per cent of the total properties to be transitioned.

In 2019-20, Finance continued the divestment of properties from the Finance property portfolio, with total sale proceeds of $42.4 million (exclusive of GST).

The Central Advertising System

Administration of the Central Advertising System Finance administers the Central Advertising System, which consolidates the Government’s buying power to support the proper use of public resources. A total of $160.1 million was expended across campaign and non-campaign advertising media through the Central Advertising System in 2019-20.

● Total campaign advertising media expenditure was $144.6 million, comprising $127.9 million by non-corporate Commonwealth entities and $16.7 million by corporate Commonwealth entities, Commonwealth companies and other bodies.

● Total non-campaign advertising media expenditure was $15.6 million, comprising $13.9 million by non-corporate Commonwealth entities and $1.7 million by corporate Commonwealth entities, Commonwealth companies and other bodies.

Annual Report 2019-20 Part 3 Management and accountability 90

Procurement

Performance assessment against the Commonwealth Procurement Rules The Department’s approach to procuring goods and services, including consultancies, is consistent with 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. Information on significant procurements expected to be undertaken in 2020-21 is in the Department’s annual procurement plan, available on the AusTender website, tenders.gov.au.

Exempt contracts 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.

Australian National Audit Office access clauses No contracts of $100,000 or more (inclusive of GST) were entered into during 2019-20 that did not provide for the Auditor-General to have access to the contractor’s premises.

Initiatives to support small and medium-sized enterprises and Indigenous business The Department supports small business participation in the Australian Government procurement market. Small and Medium Enterprises (SMEs) and Small Enterprise participation statistics are available on the Department's website.

The Department's measures to support SMEs include:

● complying with the Commonwealth Procurement Framework

● using standardised contracts for low-risk procurements valued under $200,000

● implementing the Indigenous Procurement Policy, noting that many Indigenous businesses are also SMEs

● using the Australian Industry Participation policies and programs to encourage SME engagement opportunities

● using credit cards for procurements valued below $10,000

● complying with the Government's Supplier Pay On-Time or Pay Interest Policy.

The Department recognises the importance of ensuring that small businesses are paid on time.

Annual Report 2019-20 Part 3 Management and accountability 91

The Pay On-Time survey performance report for 2019 is available on the Department of Industry website. This report shows that, for invoices under $1,000,000, Finance paid 94.8 per cent within 30 days and 67.9 per cent within 20 days in 2018-19.

The Department supports the goals of the Indigenous Procurement Policy (IPP). This is reflected in the IPP procurement statistics, which show Finance met its 2019-20 IPP target. Further details are available on the National Indigenous Australians Agency website niaa.gov.au.

Consultancies

Consultancy summary statement

The Department engages consultants when it requires specialist expertise or when independent research, review or assessment is required. Decisions to engage consultants during 2019-20 were made in accordance with the Public Governance, Performance and Accountability Act 2013 (PGPA Act) and related regulations, including the Commonwealth Procurement Rules and relevant internal policies. Finance uses consultants to manage discrete one-off projects when specialist expertise is required for a limited time.

As shown in Table 2, during 2019-20, 168 new reportable consultancy contracts were entered into valued at $13.9 million (see tenders.gov.au) with actual expenditure against these of $7.6 million (GST inclusive). In addition, 72 reportable consultancy contracts were ongoing from a previous period with actual expenditure of $3.4 million (GST inclusive).

Table 3 below shows the top five consultants (by value of spend) with Finance during 2019-20.

Table 2: Reportable consultancy contract expenditure 2019 -20

Reportable Consultancy Contracts

Number of

contracts

2019-20 expenses ($, including GST)

New contracts entered into during the period 168 7,609,185.02

Ongoing contracts entered into during a previous period 72 3,376,183.40

Total 240 10,985,368.42

Annual Report 2019-20 Part 3 Management and accountability 92

Table 3: Top five consultants in 2019-20

Top Five Consultants in 2019-20

Company Actual 2019-20 spend

($, including GST)

Proportion of 2019-20 total spend (%)

Deloitte Touche Tohmatsu 1,585,701 15.9

SAP Australia P/L 1,216,931 12.2

KPMG Australia 948,464 9.5

Bevington Group 521,641 5.2

Australian Government Solicitor 497,717 5.0

Total of top five consultants 4,770,455 47.8

Non-consultancy contracts During 2019-20, 899 new reportable non-consultancy contracts were entered into valued at $243.3 million (see tenders.gov.au) with actual expenditure of $67.4 million (GST inclusive). In addition, 397 reportable non-consultancy contracts were ongoing from a previous period with actual expenditure of $116.7 million (GST inclusive).

Table 5 below shows the top five non-consultancy contracts (by value of spend) with Finance during 2019-20.

Table 4: Reportable non-consultancy contract expenditure in 2019-20

Reportable Non-Consultancy Contracts

Number of contracts

2019-20 expenses ($, including GST)

New contracts entered into during the period 899 67,441,024.56

Ongoing contracts entered into during a previous period 397 116,668,269.06

Total 1,296 184,109,293.62

Table 5: Top five non-consultancy contracts entered into by Finance in 2019 -20

Top Five Non-Consultancy Contracts in 2019-20

Company

Actual 2019-20 spend

($, including GST)

Proportion of 2019- 20 total spend (%)

Willemsen Property Corporation Pty Ltd 14,959,469 8.1

Universal McCann 11,918,414 6.5

Gallagher Bassett Services Pty Ltd 10,878,958 5.9

ASG Group Limited 9,573,452 5.2

Broadspectrum Property Pty Ltd 9,050,267 4.9

Total of top five non-consultancy contracts 56,380,560 30.6

Annual Report 2019-20 Part 3 Management and accountability 93

Environmental performance This section describes the Department's environmental performance, its management of the non- Defence domestic portfolio in line with environmental legislation, and other cross-government environmental activities. The Department activated its business continuity plans in response to COVID-19 in March 2020. This disrupted normal business operations which is reflected in the Department's environmental performance indicators.

Departmental activities During 2019-20, Finance undertook environmental initiatives in areas such as office energy use, transport, resource efficiency and waste management. Table 6 summarises the Department's environmental performance in 2019-20 as compared with 2018-19.

Office energy use The Department reduces its consumption of office energy wherever possible, including by using automated light switching and the power management features of ICT equipment. The Department’s primary tenancy, One Canberra Avenue, uses 10 per cent GreenPower, which is sourced through a cooperative government arrangement.

Transport Finance employees are authorised to travel only when there is a demonstrated business need and when alternative communication tools, such as teleconferencing and videoconferencing, are an ineffective option. The Finance vehicle fleet is made up of departmental pool vehicles and executive vehicles. A subscription to Greenfleet offsets the associated vehicle emissions.

Resource efficiency and waste Finance provides a number of recycling streams (including co-mingled, cardboard and paper) in all of its tenancies.

Organic waste bins were introduced to Finance’s ACT tenancies in November 2016. This initiative has diverted almost 17 tonnes of general waste from landfill. The organic waste is collected by a worm-farming company to be recycled into organic fertiliser.

The Finance printing system is designed to purge print jobs that are not completed within a set timeframe. Print jobs totalling more than 351,000 pages of paper were automatically purged in 2019-20. The printer fleet’s default settings automatically print in grayscale on both sides of the page and all spent printer cartridges are recycled.

Depending on site requirements, Finance uses a mix of different types of flow restriction and water-efficient dual-flush toilets to minimise water use across its tenancies.

Annual Report 2019-20 Part 3 Management and accountability 94

Cross-government activities Finance contributes to environmental outcomes in a number of additional areas in line with government policy and relevant legislation. This includes managing the COMCAR vehicle fleet and providing electorate office accommodation for parliamentarians. These activities are additional to those listed in Table 6.

COMCAR In 2019-20, COMCAR continued to deliver on its strategy of ensuring an environmentally responsible fleet of vehicles. As at 30 June 2020, COMCAR has 37 petrol-powered sedans, 84 diesel-powered sedans, 10 petrol/hybrid-powered sedans and 17 diesel-powered people movers/vans in its fleet of 148 vehicles.

During the first half of 2020, COMCAR replaced 78 petrol-powered vehicles and 12 LPG-powered sedans with a mix of diesel-powered and petrol/hybrid vehicles. The changeover of the remaining petrol-powered sedans to the new vehicles is scheduled to be completed by early 2021.

The new diesel and petrol/hybrid-powered vehicles provide significant improvements in fuel economy and reduced CO2 outputs. In relation to the previous petrol variants, CO2 emissions have reduced by approximately 60 per cent. COMCAR continues to use E10 fuel for its petrol and petrol/hybrid-powered vehicles.

More than 60 per cent of the COMCAR fleet is regularly washed using harvested rainwater, which helps minimise potable water use.

Annual Report 2019-20 Part 3 Management and accountability 95

Table 6: Environmental performance summary, 2018-19 and 2019-2020

Indicator 2018-19 2019-20

Office energy use a, b

Total office tenant light and power energy consumption (kWh) 1,879,110 1,660,992

Total office tenant light and power energy consumption (MJ) 6,764,796 5,979,571

Office tenant light and power energy use per full-time equivalent (MJ/FTE) 4,741 4,143

Office tenant light and power use per square metre (MJ/m2) 286 239

Base/central building energy consumption (MJ) 108,627,418 101,265,207

Base/central building energy consumption per square metre (MJ/m2) 1,330 1,240

Greenhouse emissions attributed to office tenant light and power and base/central building energy use (tonnes CO2-e) 22,193 19,552

GreenPower purchased (kWh) 741,014 664,786

Non-office energy use

Greenhouse emissions attributed to non-office energy use (computer centres, other properties and uses) (tonnes CO2-e) 907 952

Vehicle fleet c, d

Total number of fleet vehicles 20 24

Total fuel purchased (litres) 19,477 16,655

Total distance travelled (kilometres) 184,052 163,332

Average fuel consumption of fleet vehicles (litres/100 kilometres) 10.58 10.20

Total direct greenhouse emissions of fleet (tonnes CO2-e) 46.41 38.81

Greenhouse emissions

Total greenhouse emissions (tonnes CO2-e) 23,147 20,513

Total greenhouse emissions per full-time equivalent (tonnes CO2-e/FTE) 16.22 14.21

Air travel c

Total number of flights 3,690 3,287

Total distance of flights (kilometres) 3,712,352 2,939,100

Potable water consumption b, e

Total potable water use (kilolitres) Finance Tenancies 11,877 9,004

Potable water use per full-time equivalent (kilolitres/FTE) Finance Tenancies 8.32 6.24

Potable water use per square metre (kilolitres/m2) Finance Tenancies 0.50 0.34

Potable water use (kilolitres) Finance Owned Estate 88,651 97,024

Potable water use per square metre (kilolitres/m2) Finance Owned Estate 0.45 0.49

Resource efficiency and waste

Total office paper purchased per full-time equivalent (A4 reams/FTE) 5.48 3.04

Percentage of office paper purchased with recycled content (%) 96% 100%

Office paper recycled (tonnes) 38.68 33.28

Total waste produced (tonnes) 177.05 149.26

Total waste produced per full-time equivalent (kilograms/FTE) 124.10 103.42

Percentage of waste diverted from landfill (%) 45.80% 47.90%

Annual Report 2019-20 Part 3 Management and accountability 96

kWh = kilowatt hour; MJ = megajoule; CO2-e = carbon dioxide equivalent.

a . In 2019-20, Finance's leased estate property footprint remained unchanged. Where Finance had a sub-tenant, that sub-tenant's energy usage was excluded from the figures above.

b . Where relevant, environmental performance data for 2018-19 has been restated to report on nine additional properties for electricity and gas and 10 additional properties for water, in line with the approach for the 2019-20 reporting period. These are properties for which Finance is the landlord and responsible for certain base building energy usage, but which were not included in the 2018-19 Annual Report.

c . The fleet and air travel data are for the period 1 April to 31 March in each year.

d . 24 vehicles were recorded in annual FBT reporting between 1 April 2019 to 31 March 2020 which included nine changeover or replacement vehicles. The Finance fleet totals 15 vehicles (excludes the COMCAR fleet).

e . Tenancy-specific water metering is not available in shared buildings, resulting in the use of estimates based on pro-rata calculations. The water data is also subject to adjustments for shortfalls in billing information where not yet available from the supplier at time of reporting.

Annual Report 2019-20 Part 4: Our people 98

Part 4: Our people

Annual Report 2019-20 Part 4: Our people 99

Our people In 2019-20, the Department managed the combined challenges that came from the early 2020 hailstorm in Canberra, bushfires around the country and a global pandemic. The pandemic, in particular, has significantly influenced Finance’s approach to managing and supporting our people in 2020. As the pandemic progresses, we will prioritise ways to leverage and embed the positive organisational changes made to respond to COVID-19.

Underpinning our response to COVID-19 has been a strengthened focus on communication to keep staff informed and supported. We have a COVID-19 hotline, inbox and intranet page and regularly distributed all-staff messages from the Secretary and Chief Operating Officer. A new weekly newsletter focused on staff productivity, engagement and wellbeing helped us ‘Keep Connected’, as did regular live GovTEAMS events where all staff were able to hear from and engage directly with the Secretary, members of the Executive Board and Business Continuity Planning team.

Acknowledging the critical role of managers, we engaged directly with them, providing tools and information they could draw on to support their staff. We talked openly with staff about the impact of ongoing uncertainty and anxiety on mental health. The Department offered a range of sessions to support resilience and wellbeing and made additional services available through the employee assistance program.

As we continued operating in the context of COVID-19, we asked staff to reflect on their experience to understand how the environment and the Department's response had impacted their productivity and engagement. Almost 700 staff participated in the 2020 pulse survey where 90 per cent of respondents reported that Finance was adequately prepared for remote working from an IT perspective, and 80 per cent found remote working effective. Importantly, 82 per cent of respondents indicated their productivity was unchanged or increased. Overall, respondents were most positive about management (89 per cent positive), communication (87 per cent) and health and wellbeing (86 per cent). This suggests staff generally feel informed and supported during this challenging time.

In June 2020, the Executive Board considered how we could leverage learnings from COVID-19 in the context of budgeting, planning and driving organisational strategy.

Further feedback from the survey to inform the Executive Board's consideration included that the Department:

● responded with agility

● reconsidered processes and delegated decision-making

● collected and used new data to inform policy and services

● used technology to underpin our operations, building new capability as a result

● increased the focus on communication and culture

● focused on outputs/outcomes rather than hours worked

● enhanced productivity.

Annual Report 2019-20 Part 4: Our people 100

Finance Transformation In 2019-20, Finance maintained its commitment to being a high-performing, modern, efficient and continuously improving public sector organisation—a transformative organisation that delivers government priorities more efficiently and effectively.

The Department’s transformation agenda is consistent with the Government’s deregulation agenda and its response to the APS Review. It focuses on four key elements—People, Stewardship, Making Business Better and Integrated Business Planning (see Figure 5). The Department's commitment to transformation is articulated in a Transformation Plan and is supported by a 12-month Action Plan that sets out practical initiatives to help deliver on our transformation objectives.

Figure 5: Transforming Finance

Annual Report 2019-20 Part 4: Our people 101

Through the 2019-20 Transformation Action Plan, Finance delivered a number of signature initiatives including:

● undertaking a departmental data maturity assessment to inform a strategy to guide improvements to the way we use data to inform policy and service advice

● redesigning the Finance website and content to enhance self-service functionality and better meet the needs of clients, stakeholders and departmental staff

● piloting a stakeholder feedback program with two stakeholder agencies to seek direct, qualitative feedback on our stewardship efforts, establish a benchmark, evaluate success and guide future improvements

● enhancing business processes through process redesign, digitisation and automation of core transactional workflows and processes

● implementing a refreshed People Capability Framework to articulate staff capability requirements and guide staff development in a simple, consistent and flexible way

● commencing a review of Finance’s Operating Model to examine how we work, identify improvements to business processes, empower staff, build organisational capability and optimise alignment across Finance.

Workforce planning Finance has driven its Workforce Plan further in the context of the COVID-19 pandemic, to align with the broader focus on APS reform and the need to operate differently in support of the Government's ongoing health and economic response.

The Department’s Workforce Plan is built around four key strategy areas to create our optimum workforce. These are:

● Bring (attracting and recruiting the right people)

● Build (building capability)

● Balance (workforce composition)

● Bind (focused on retention and talent management).

Each strategy area has been impacted and drawn upon as part of our COVID-19 response. COVID-19 presented particular opportunities around the Build and Bind strategic areas, as the Department mobilised our staff internally and externally. This provided support to the Government’s COVID-19 response and provided our staff with exposure to different work, including direct service delivery, that will enhance their policy and program advising capabilities into the future.

Annual Report 2019-20 Part 4: Our people 102

Workforce planning processes have been aligned to ensure an integrated approach to decision- making and prioritisation of resources. Our attention going forward will be to ensure our workforce planning is strategic and future-focused, particularly in supporting the Government’s response to COVID-19. This aligns with the broader APS focus on understanding and capturing the APS’s current workforce skill sets and capabilities. This will assist Finance and the broader APS to facilitate strategic mobility, particularly to support critical functions.

One mechanism to assist us in increasing understanding of our workforce’s current skills and capabilities is the implementation of the APS Job Family Model. The Job Family Model provides a standardised system for classifying and comparing roles across the APS and associated organisations. The Job Family Model is one of the APS’s key workforce planning tools and will allow us to better analyse and plan the Department’s workforce. Job Family data will help to create a more mobile workforce—one that can ‘surge’ quickly and efficiently as capacity and capability demand. Better information on the composition of the workforce will also allow for more strategic workforce practices, such as a contingent workforce, to be used at times of peak demand.

Sourcing strategy Finance’s people Sourcing Strategy supports our approach to workforce planning. The Department uses a range of sourcing options to attract the right people with the right skills in a timely way. This supports the Bring component of our Workforce Plan, which focuses on sourcing new talent and includes specific initiatives to address identified workforce gaps.

While mobility has always been a central objective of our approach to sourcing, in 2020 the COVID-19 pandemic—and the Prime Minister’s direction to redeploy staff on a temporary basis to support the delivery of critical services to the Australia public—placed greater focus on mobility in our Sourcing Strategy.

Annual Report 2019-20 Part 4: Our people 103

Figure 6: Finance’s Sourcing Strategy

The Department’s key objectives in its Sourcing Strategy are to:

● attract quality candidates and engage them early in their career through effective recruitment processes

● mobilise Finance staff in a timely manner and with streamlined processes

● bring quality people into the Department through Finance’s registers, merit pools and specialist recruitment processes

● engage effectively with entities across the APS to access quality people from merit pools, through talent management strategies and secondments.

Annual Report 2019-20 Part 4: Our people 104

Mobility The Department recognises that the key to a strong and sustainable workforce is giving staff the chance to build their skills and experience. Mobility gives staff the opportunity to develop capability in new areas and increases our overall capability. We provide opportunities for staff to gain different experiences through temporary or permanent moves within Finance and through secondments to other entities, and to undertake different types of work including project work, taskforces and surging to high-priority activities.

Business areas are assisted to identify the specific skills they need and to mobilise the right individuals to address their needs. Flexible sourcing strategies give business areas a range of options when filling vacant roles. This is particularly important to our ability to surge staff to support the Budget process. In 2020, given the changed budget timeline and the Government response to COVID-19, our ability to quickly and effectively mobilise staff to the Budget and Financial Reporting Group was critical.

The response to COVID-19, particularly in supporting the rollout of the JobSeeker payment through Services Australia, demonstrated the Department’s, and the broader APS's ability to identify priority areas and rapidly deploy staff to these priorities. The Department contributed 140 staff to secondments across the APS, including 124 to Services Australia and others to the Australian Public Service Commission, the Department of Health and the COVID-19 Coordination Commission.

The management of human resources—and, in particular, the way the Department provides mobility opportunities for staff and undertakes recruitment—has resulted in a highly capable and committed workforce that is flexible and able to respond to priorities such as the COVID-19 pandemic.

The mechanisms that Finance uses to promote mobility are outlined below.

Internal Opportunities Noticeboard The Internal Opportunities Noticeboard gives internal staff the opportunity to express their interest in short, medium, long-term or ongoing vacancies within the Department.

The Internal Opportunities Noticeboard was one way in which we identified interested staff with relevant skills and experience to deploy to critical functions within the APS during the COVID-19 pandemic. This initial expression of interest for mobility opportunities received a large number of applications and clearly demonstrated Finance staff’s commitment to supporting the response to COVID-19.

Annual Report 2019-20 Part 4: Our people 105

Stream recruitment Stream-based recruitment has changed the way the Department approaches recruitment to encompass broader resourcing needs and future workforce capability based on professional skills and experience. Stream recruitment focuses on the assessment of core capabilities and has improved the Department’s effectiveness and efficiency in recruiting high-quality and talented candidates. To support workforce planning, stream recruitment continues to be tailored to encompass the existing and forecast resourcing needs of business areas, making recruitment more efficient.

During 2019-20, Finance conducted recruitment processes for the following professional streams:

● data

● policy

● accounting and financial management.

In 2020, the Department moved to a fully virtual assessment process for stream recruitment. The assessment process included online testing and video interviews. The COVID-19 pandemic meant that we had to quickly pivot our approach to the assessment process. This necessary change has presented an opportunity to increase our candidate pool, as we have shown we can deliver a successful recruitment assessment process regardless of a candidate’s geographic location. The Department also moved to virtual information sessions as part of our attraction strategy, which again has increased the number and geographic location of candidates engaging in these sessions.

Surge Readiness Management Model Finance’s Surge Readiness Management Model supports the rapid mobilisation of staff to high- priority activities as and when required. It enables us to build capabilities and provides staff the opportunity to experience different, high-priority work within the Department for short periods.

In 2019-2020, the Surge Readiness Management Model supported additional work associated with the federal Budget, Finance's COVID-19 response and other critical priorities.

Secondment program Finance’s secondment program is designed to build the Department’s capability and assist business areas fill specialist roles with staff from within the APS or through private sector arrangements.

In 2019-20, other APS entities seconded staff to Finance in support of the Shared Services Transformation Initiative, the delivery of the federal Budget and other critical priorities.

Annual Report 2019-20 Part 4: Our people 106

Consistent with our commitment to stewardship and support for Commonwealth entities, in 2019-20 the Department seconded officers to:

● the National Bushfire Recovery Agency

● the Office of the Pacific within the Department of Foreign Affairs and Trade

● the 2020 Parliament of Australia Graduate Program working in the Parliamentary Budget Office

● the National COVID-19 Coordination Commission

● the Australian Public Service Commission

● the Department of Health for the COVID-19 Pandemic Response

● Services Australia to support the JobSeeker program.

Workforce diversity and inclusion Diversity and inclusion are critical to our organisational culture. As we progress through our COVID-19 Recovery Strategy and continue to support the Government's pandemic response, maintaining our focus on diversity and inclusion has been key. Recognising that different groups of staff have felt the impact of the COVID-19 pandemic in different ways, we have tailored support for staff, including through Finance's diversity networks. During this time, our networks have been a key support mechanism and have enhanced our staff’s connection to each other and the broader Department. As well as our networks, managers have been provided with a range of resources and training to assist them to have conversations with their staff including those who are at higher risk or who have caring responsibilities.

During 2019-20, we have progressed a range of initiatives to improve the Department’s diversity outcomes more broadly, including:

● seven staff networks that celebrate and support diversity across Finance—each network is championed by Senior Executive Service (SES) sponsors who provide strong leadership on diversity and inclusion

● various events to raise awareness of diversity, many of which were conducted online—for example, the Finance Network Market Day, National Reconciliation Week activities, Mental Health Week and International Women’s Day

● development of the Indigenous employment framework which focuses on the development and progression of Aboriginal and Torres Strait Islander employees

● cultural awareness and immersion activities, language classes and diversity training as part of ongoing learning and development offerings to all staff—training was delivered both online and through face-to-face forums

● participation in diversity-related entry-level programs (such as Indigenous development programs, trainee/internship programs for people with disability and the Finance Career Starter Program)

● participation in Australian Network on Disability PACE Mentoring Program (Positive Action towards Career Engagement)

● affirmative measures in all stream recruitment processes to address the under-representation of people with disability and/or Aboriginal and Torres Strait Islander people in the APS.

Annual Report 2019-20 Part 4: Our people 107

Finance was the winner of the 2019 Graeme Innes Disability Employment Award at the Australian Human Resource Institute awards. The award recognises the Department’s commitment to be an inclusive organisation where all staff can contribute to their full potential, particularly in relation to our initiatives to progress disability employment.

Throughout 2019-20, we collaborated with other APS entities to help develop the new APS-wide diversity and inclusion strategies, which include:

● the Commonwealth Aboriginal and Torres Strait Islander Workforce Strategy 2020-24

● the APS Disability Employment Strategy 2020-25

● the APS Gender Equality Strategy.

These strategies will inform the development of the new Finance Diversity and Inclusion Strategy.

Building capability The response to COVID-19 by the Department and the APS has reaffirmed the importance of understanding and capturing our current workforce skill sets and capabilities. This understanding has been critical to the efficient and effective redeployment of staff to support the Government’s response. The Department is drawing on mapping under the Job Family Model to better understand these skill sets and capabilities within our own workforce. From this, we continue to focus on building individual and organisational capability and enhancing performance. The Finance People Capability Framework is one mechanism to assist us to do this.

In 2019-20, we launched a refreshed People Capability Framework. The Framework is helping to drive operational efficiencies and achieve an uplift in performance by clearly defining the performance expectations and core capabilities required of our staff. It incorporates two elements:

1. core capabilities: Finance People Lead, Collaborate, Achieve, Think and Learn—a set of five capabilities defined by clear and consistent performance expectations for all classifications

2. professional/technical capabilities: Finance People Know—opportunity to incorporate the unique technical skills, professional qualifications and experience required of individual job roles.

Designed on the principle that it should be simple, consistent, futureproof and flexible, the Framework is providing a solid foundation for the design and implementation of capability development programs in the Department. It supports the work undertaken across the APS to enhance the professional skills of staff.

During the COVID-19 pandemic, we initiated a range of programs to support staff to adapt and remain healthy and productive. The Remote Ready program is an online program which supports managers and staff with training and tools to help them manage in the new working environment. Staff have also been provided with access to a series of resilience programs focused on equipping them with the tools to respond to change and proactively manage their mental health. These programs and other core skills development programs have been redesigned and are being delivered virtually through the GovTEAMS platform. This is providing a unique opportunity to expand offerings across the Department and support our ongoing commitment to flexible work.

While this period has created unique challenges for our delivery of learning and development, it has created an opportunity for the Department to innovate in our approach to delivery.

Annual Report 2019-20 Part 4: Our people 108

An example of this is the implementation of virtual security training and the new starter’s induction program. Through encouraging greater manager involvement in the staff induction and learning process and the creation of toolkits to assist managers, we have more fully catered to the learning and development needs and preferences of our workforce for facilitator-based training and online learning. It has meant that we have been able to support the majority of our staff working remotely, including new starters, by continuing to meet onboarding, induction, learning needs and other requirements.

As well as supporting specific workforce capability requirements during COVID-19, we have continued to work in conjunction with business areas to ensure development opportunities are relevant and contemporary, with content aligned to business priorities and Finance’s corporate objectives. We continue to enhance our learning offerings and rely on partnerships with academic institutions, stakeholder groups and our colleagues across the service to build capability and prepare our workforce for the future. In 2019-20, we:

● created a new mentoring framework: by applying a user-centred design approach, the framework incorporates enhanced communication, online support tools, training and events aimed at ensuring mentoring opportunities are available for all staff

● launched a new online Security Awareness training package to ensure all Finance staff understand their protective security obligations and responsibilities and to enhance Finance’s ongoing commitment to protecting the security of staff, the Department and the wider community

● implemented a number of new initiatives specifically targeted at building leadership and stewardship within the department including the EL LEAD program, leadership forums, and the Stakeholder Relationship Management program

● continued study assistance through paid study leave and financial assistance which allowed some employees to undertake tertiary education in subject areas such as commerce, economics, law, public policy and accounting and finance

● continued coaching whereby employees could undertake up to three one-hour coaching sessions to enhance their skills and build capability in leadership, productivity and career enhancement

● continued participation in the Graduate Certificate in Public Policy and Finance—purpose- built for the public sector, this program builds capability among emerging leaders at Finance and in the wider APS (in 2019-20, 13 Finance staff attended the program, with a total of 148 Commonwealth entity employees completing the program since its establishment in 2016)

● continued to implement core skill development programs focused on building manager capability, leadership, communication, resilience and career development skills.

Annual Report 2019-20 Part 4: Our people 109

Leadership and talent

Talent and leadership capability development

The Department continues to invest in developing current and future leaders through a range of internal initiatives and participation in a variety of external leadership programs, for example, the Institute of Public Administration Australia (IPAA) Future Leaders Program and the IPAA speaker series.

The emphasis during this period has been on executive level (EL) staff, acknowledging the leadership responsibility that sits with this cohort. During this period, we quickly moved our leadership programs to online platforms to ensure we were able to progress our leadership initiatives during the COVID-19 pandemic.

Finance’s increased focus on talent and leadership capability development, as highlighted in the Transformation Plan, has been evident in 2019-20, with the introduction of several initiatives:

● a Finance-owned EL leadership (EL LEAD) program

● the EL2 High Potential Program

● leadership forums for EL cohorts

● piloting a foundational leadership program for staff aspiring to be, or who are newly, leading others.

The EL LEAD program

Finance partnered with multiple providers to develop and deliver an in-house leadership program to EL staff. The design of the leadership program incorporated input from senior leaders within the Department as well as from research studies, while aligning with our People Capability Framework and leadership expectations. Participants undertake a series of learning and group coaching sessions and activities across three key themes:

● inclusive leadership

● the contemporary leader

● your legacy as a leader.

Throughout the program, participants have the opportunity to engage with SES program sponsors and to develop an action plan for behavioural change, identified throughout the program. The program has been delivered twice to 33 EL staff, with the second program delivered virtually to accommodate COVID-19 requirements and risks.

EL2 High Potential Program

Fourteen participants were selected through a competitive process for this program. The program aims to expedite readiness for more senior or complex roles. Over the initial six months of this program, participants completed leadership diagnostics, incorporating feedback from key stakeholders, which subsequently informed individualised career development plans. These plans identify a range of opportunities to provide exposure, education and experience tailored to their development.

Annual Report 2019-20 Part 4: Our people 110

As part of the program, participants have the opportunity to take part in a mentoring program for jobseekers with disability and engage with senior leaders of Finance on career development.

Existing initiatives

In addition to new talent initiatives, we have also expanded some of our existing initiatives, most notably our entry-level programs. In 2020, our entry-level program delivery was adapted in line with the COVID-19 pandemic and the need for staff to work remotely and training to be delivered virtually. In 2020, events, forums and training for entry-level programs were delivered online, and a number of our participants were given the opportunity to deploy to Services Australia to support the Government’s COVID-19 response. This has given our participants a unique understanding of the service delivery function of the APS.

The Career Starter Program provides career opportunities to recent secondary school graduates (within 12 months of graduation), where participants’ development is supported through formal training (Certificate IV in Government), forums, networking activities and on-the-job learning in an APS1 role. The program was opened to all government departments in 2019, with five departments participating. The same five departments participated again in the 2020 program along with four additional entities. As such, the 2020 program now hosts 62 participants across 10 entities, with 23 of these placed at Finance.

Finance continues to deliver a successful graduate program with generalist and ICT streams. The 2020 Graduate Program consists of 26 generalists who are undertaking the Australian Public Service Commission Graduate Development Program and six ICT graduates who are undertaking the Digital Transformation Agency (DTA) Graduate Development Program. To further support their development, graduates rotate through roles in two business areas, undertake a major project and have the opportunity to engage in a range of development activities.

In 2020, Finance and the APSC piloted the generalist Australian Government Graduate Recruitment stream (AGGR). The aim of the AGGR is to streamline the graduate recruitment process, by allowing applicants to complete a single application and assessment process and be considered by five different agencies (the National Indigenous Australians Agency, the Department of Veterans’ Affairs, the Australian Electoral Commission, the APSC and Finance). In light of the COVID-19 restrictions, we developed an innovative approach to recruitment, including delivering virtual career fairs and conducting a fully virtual assessment process. The AGGR pilot has been informed by engagement and collaboration across the participating agencies to share ideas, optimise graduate recruitment processes and improve the experience of applicants. The first cohort through the AGGR will commence from January 2021.

The Department participates in two additional programs with the DTA, with one apprentice undertaking a Certificate IV in Information Technology Networking and a cadet undertaking a Bachelor of Business Informatics.

At the senior executive level, career conversations are held annually for each SES staff where strengths and opportunities for further development are identified as a means of actively managing talent and succession planning.

Annual Report 2019-20 Part 4: Our people 111

Flexible working arrangements In 2017, the Department implemented the ‘flex by default’ policy. The Department’s flexible working arrangements have improved staff productivity and motivation and helped to retain high-performing employees. In 2020, the impact of the policy drove our ability to quickly mobilise our workforce to remote working which was critical in our response to COVID-19.

Since the launch of the policy, increasing the uptake of flexible work has been a focus for the Department. This focus has meant that a portion of our workforce had experience working flexibly prior to COVID-19. In the immediate response to the pandemic, Finance moved the majority of our workforce to remote working to ensure the continuity of our critical functions and to protect the health and wellbeing of our staff. Our work health and safety policies and guidance were reviewed to ensure staff had access to ergonomic equipment outside the office and access to virtual work station assessments.

In response to the COVID-19 pandemic, the approach to flexible work was strengthened to further enable our workforce to work remotely. Flexible work has been embedded as part of normal business through the implementation of the Flexible Work Policy and Guide. Our ‘if not, why not’ approach enables flexibility around when and where we work and how our roles are structured through access to working from home, part-time work, job-share arrangements and leave provisions. No one specific initiative has driven the improved take-up of flexible working arrangements within Finance. Rather, there has been a broad range of departmental priorities focusing on further supporting employees to manage their health, wellbeing and work-life balance.

Workforce statistics Tables 7 to 19 show our workforce statistics for 2019-20, including staffing numbers and whether they are ongoing, non-ongoing or casual, their substantive classification and their gender, as well as location and diversity.

Annual Report 2019-20 Part 4: Our people 112

Table 7: Staff numbers by employment type, classification and gender, at 30 June 2020

Grand total

3

15

49

171

400

306

207

140

132

279

30

1732

Total

Indeterminate

0 0 0 0 0 0 0 0 1 0 1 2

Female

0

8

26

85

209

177

125

83

68

64

17

862

Male

3

7

23

86

191

129

82

57

63

215

12

868

Casual

Indeterminate

0 0 0 0 0 0 0 0 0 0 0 0

Female

0

0

0

1

0

0

0

3

2

41

0

47

Male

0

0

0

1

0

0

0

7

1

202

0

211

Non

-ongoing

Indeterminate

0 0 0 0 0 0 0 0 1 0 0 1

Female

0

0

1

1

4

7

5

5

22

2

2

49

Male

0

0

0

0

3

5

2

3

34

3

1

51

Ongoing

Indeterminate

0

0

0

0

0

0

0

0

0

0

1

1

Female

0

8

25

83

205

170

120

75

44

21

15

766

Male

3

7

23

85

188

124

80

47

28

10

11

606

Classification

SES3

SES2

SES1

EL2

EL1

APS6

APS5

APS4

APS3

APS2

APS1

Total

Annual Report 2019-20 Part 4: Our people 113

Table 8: Staff numbers by employment type, classification and gender, at

30 June 2019

Ongoing Non-ongoing Casual Total

Classification Male Female Male Female Male Female Male Female

Grand total

SES3 3 1 0 0 0 0 3 1 4

SES2 5 8 1 0 0 0 6 8 14

SES1 27 21 0 0 0 0 27 21 48

EL2 81 82 1 0 0 1 82 83 165

EL1 191 204 2 4 0 0 193 208 401

APS6 116 162 2 3 0 0 118 165 283

APS5 85 118 2 1 0 0 87 119 206

APS4 48 74 5 4 5 2 58 80 138

APS3 30 44 4 2 2 1 36 47 83

APS2 6 21 1 0 171 39 178 60 238

APS1 8 15 0 1 0 0 8 16 24

Total 600 750 18 15 178 43 796 808 1604

Finance had no staff that are recorded in the human resource information system as Indeterminate, Intersex or Unspecified.

Annual Report 2019-20 Part 4: Our people 114

Table 9: Staff numbers by attendance type and classification, at 30 June 2020

Ongoing Non-ongoing

Classification Full- time Part-

time

Total ongoing Full- time

Part- time

Casual

Total

non-ongoing Grand total

SES3 3 0 3 0 0 0 0 3

SES2 15 0 15 0 0 0 0 15

SES1 46 2 48 1 0 0 1 49

EL2 157 11 168 1 0 2 3 171

EL1 335 58 393 6 1 0 7 400

APS6 264 30 294 11 1 0 12 306

APS5 182 18 200 6 1 0 7 207

APS4 110 12 122 8 0 10 18 140

APS3 70 2 72 37 20 3 60 132

APS2 28 3 31 1 4 243 248 279

APS1 26 1 27 2 1 0 3 30

Total 1236 137 1373 73 28 258 359 1732

In October 2019, Finance engaged 114 labour-hire contractors as non-ongoing (irregular or intermittent) casual employees working as COMCAR drivers. In April 2020, 49 non-ongoing (irregular or intermittent) casual employees were transitioned to non-ongoing (specified term) employment to take up secondments to Services Australia.

Annual Report 2019-20 Part 4: Our people 115

Table 10: Staff numbers by attendance type and classification, at 30 June 2019

Ongoing Non-ongoing Grand

total

Classification Full- time Part-

time

Total ongoing Full- time

Part- time

Casual

Total

non-ongoing

SES3 4 0 4 0 0 0 0 4

SES2 13 0 13 1 0 0 1 14

SES1 46 2 48 0 0 0 0 48

EL2 153 10 163 1 0 1 2 165

EL1 341 54 395 5 1 0 6 401

APS6 239 39 278 5 0 0 5 283

APS5 186 17 203 2 1 0 3 206

APS4 107 15 122 9 0 7 16 138

APS3 70 4 74 6 0 3 9 83

APS2 26 1 27 1 0 210 211 238

APS1 21 2 23 0 1 0 1 24

Total 1206 144 1350 30 3 221 254 1604

Table 11: Staff numbers by emplo yment type and attendance type,

at 30 June 2020

Employment type Full-time Part-time Casual Total

Ongoing 1236 137 0 1373

Non-ongoing 73 28 258 359

Total 1309 165 258 1732

Table 12: Staff numbers by employment type and attendance type, at

30 June 2019

Employment type Full-time Part-time Casual Total

Ongoing 1206 144 0 1350

Non-ongoing 30 3 221 254

Total 1236 147 221 1604

Annual Report 2019-20 Part 4: Our people 116

Table 13: Staff

numbers by employment type, location and gender, at 30 June 2020

Grand total

1559

57

4

28

18

3

47

16

1732

Indeterminate

Total Indeterminate

1 1 0 0 0 0 0 0 2

Casual

0 0 0 0 0 0 0 0 0

Non

-

ongoing

0

1

0

0

0

0

0

0

1

Ongoing

1

0

0

0

0

0

0

0

1

Female

Total female

813

11

2

11

8

1

11

5

862

Casual

28

3

0

3

4

0

6

3

47

Non

-

ongoing

41

3

0

3

1

0

1

0

49

Ongoing

744

5

2

5

3

1

4

2

766

Total male

745

45

2

17

10

2

36

11

868

Male

Casual

116

36

2

12

8

2

27

8

211

Non

-

ongoing

36

3

0

4

1

0

5

2

51

Ongoing

593

6

0

1

1

0

4

1

606

Location

ACT

NSW

NT

QLD

SA

TAS

VIC

WA

Total

Annual Report 2019-20 Part 4: Our people 117

Table 14: Staff numbers by employment type, location and gender, at 30 June 2019

Grand total

1454

54

3

23

13

3

36

18

1604

Finance had no staff recorded in the human

resource information system as Indeterminate, Intersex or Unspecified

.

Indeterminate

Total Indeterminate

0 0 0 0 0 0 0 0 0

Casual

0 0 0 0 0 0 0 0 0

Non

-

ongoing

0

0

0

0

0

0

0

0

0

Ongoing

0

0

0

0

0

0

0

0

0

Female

Total female

761

11

2

9

6

1

11

7

808

Casual

20

6

0

4

3

0

6

4

43

Non

-

ongoing

15

0

0

0

0

0

0

0

15

Ongoing

726

5

2

5

3

1

5

3

750

Total male

693

43

1

14

7

2

25

11

796

Male

Casual

92

36

1

12

6

1

21

9

178

Non

-

ongoing

17

0

0

0

0

0

1

0

18

Ongoing

584

7

0

2

1

1

3

2

600

Location

ACT

NSW

NT

QLD

SA

TAS

VIC

WA

Total

Annual Report 2019-20 Part 4: Our people 118

Table 15: Staff numbers by employment type and location, at 30 June 2019

and 30 June 2020

Location

Ongoing Non-ongoing Casual Total

2019 2020 2019 2020 2019 2020 2019 2020

ACT 1310 1338 32 77 112 144 1454 1559

NSW 12 11 0 7 42 39 54 57

NT 2 2 0 0 1 2 3 4

QLD 7 6 0 7 16 15 23 28

SA 4 4 0 2 9 12 13 18

TAS 2 1 0 0 1 2 3 3

VIC 8 8 1 6 27 33 36 47

WA 5 3 0 2 13 11 18 16

Total 1350 1373 33 101 221 258 1604 1732

Table 16: Ongoing and non-ongoing Aboriginal and Torres Strait Islander staff,

at 30 June 2019 and 30 June 2020

Employment type 2019 2020

Ongoing 40 44

Non-ongoing 1 1

Total 41 45

Table 17: Proportion of ongoing staff with disability, at 30 June 2019

and 30 June 2020

Employment type 2019 2020

Ongoing 4.4% 4.7%

Table 18: Proportion of women in the ongoing workforce, at 30 June 2019

and 30 June 2020

Employment type 2019 2020

Ongoing 55.6% 55.8%

Table 19: Proportion of women in the ongoing SES workforce, at

30 June 2019 and 30 June 2020

Employment type 2019 2020

Ongoing 46.2% 50.0%

Annual Report 2019-20 Part 4: Our people 119

Employment arrangements Remuneration and employment conditions for Finance’s APS and EL officers are determined under the Finance Enterprise Agreement 2019. The Enterprise Agreement operates in conjunction with Commonwealth legislation and Finance’s policies and guidelines to define the terms and conditions of employment for staff.

The Department at times uses individual flexibility arrangements to secure specific expertise or specialist skills critical to business needs.

SES remuneration and employment conditions are determined under subsection 24(1) of the Public Service Act 1999. These are supported by a remuneration model that determines pay levels within each SES level based on performance.

Table 20: Employment arrangements for SES and non -SES staff, at 30 June 2020

Arrangement SES Non-SES Total

Enterprise agreement 0 1665 1665

Individual flexibility arrangements 0 37 37

Determinations under subsection 24(1) of the Public Service Act 1999

67 0 67

Staff on individual flexibility arrangements are also included in the Enterprise Agreement total.

Table 21: Salary ranges by employment classification, at 30 June 2020

Salary ranges

Classification Minimum ($) Maximum ($)

SES3 359,500 386,348

SES2 251,551 289,949

SES1 195,326 233,175

EL2 134,040 166,976

EL1 109,791 141,641

APS6 84,817 110,513

APS5 77,095 86,506

APS4 69,133 78,905

APS3 61,291 70,701

APS2 55,138 63,101

APS1 48,019 55,380

All figures reflect base salary only and exclude superannuation.

SES salary includes a component for the Executive Vehicle Scheme effective from 1 September 2019.

The Secretary determines the salaries for SES staff.

Annual Report 2019-20 Part 4: Our people 120

APS performance pay Finance does not offer performance pay.

Non-salary benefits

The Department offers staff a number of additional benefits:

● annual influenza immunisation

● mentoring and coaching programs

● in-house capability development programs

● a confidential employee assistance program for employees and their immediate families

● access to a serious illness register

● study assistance to eligible employees

● access to flexible working arrangements

● contributions to relevant professional memberships.

Finance employees are eligible to participate in salary sacrifice arrangements for non-salary benefits such as novated car lease vehicles and additional employer superannuation contributions.

Performance management In 2019-20, a key focus was supporting employees and managers to manage performance remotely. This focus saw the implementation of regular manager sessions focused on managing virtual teams and having performance conversations virtually. The Department introduced a range of initiatives—and refreshed existing ones—to better support employees and managers in managing performance including:

● resources and tools to promote regular and meaningful performance conversations, owned jointly by employees and managers, that encourage high performance with a focus on the future

● workshops to provide guidance to staff and managers on Finance’s performance management processes and support resources

● resources and tools to encourage staff to build their capabilities, supported by learning and development offerings that provide opportunities through education, exposure and experience

● methods to provide and seek performance feedback from more than one manager and from team members, supporting a more holistic view of performance.

In 2019, the Department launched the refreshed People Capability Framework, which has better enabled employees and managers to define the skills, capabilities, knowledge and behaviour that they need to have or develop in order to perform and progress their career.

Recognition of outstanding performance

Finance recognises and rewards outstanding performance as a critical element in attracting and retaining the best people. Finance formally recognises exceptional contributions by staff by presenting the Secretary’s awards to teams and individuals whose work exemplifies Finance’s values and who make significant contributions to the Department’s outcomes.

Annual Report 2019-20 Part 4: Our people 121

Recipients of the 2019 Secretary’s awards, as well as staff who received 2020 Finance Australia Day awards and other external awards are listed in Appendix D.

Machinery-of-government changes No machinery-of-government changes affecting the Department of Finance occurred during 2019-20.

Work health and safety This section outlines Finance's work health and safety (WHS) performance in accordance with Part 4 of the Work Health and Safety Act 2011 (WHS Act). The COVID-19 pandemic presented a number of distinct WHS challenges for the Department, including moving the majority of staff to remote working and supporting staff within different work environments across the Department, including COMCAR operations. A continuing priority is maintaining the appropriate supports for our staff to enable remote working as well as supporting their mental health and wellbeing.

The Department recognises that, as part of its aspiration to be a leader in the public sector, it must exemplify good WHS practices. This includes having responsive and flexible safety and rehabilitation management systems.

Work health and safety initiatives within Finance In the context of the COVID-19 pandemic, the Department implemented a number of specific initiatives to support the health and safety of our staff including:

● promotion of a range of flexible working practices, such as part-time working, compressed hours job sharing and flexible start and end times

● implementing trained mental health advisers to provide practical intervention and support options to staff with mental health concerns—the advisers were provided with training specific to supporting staff during the COVID-19 pandemic

● implementing a work from home wellbeing check and continued provision of a confidential counselling service through the employee assistance program

● providing ergonomic equipment to support remote working during the COVID-19 pandemic

● providing a suite of mental health support and training for staff and managers.

In 2019-20, as well as the initiatives specific to COVID-19, the Department:

● provided WHS training and information for all staff, with a continued focus on mental health awareness training for managers and staff

● continued to promote a healthy lifestyle, including by providing influenza vaccinations and stretching at work presentations, as well as participating in the STEPtember challenge that raises funds for cerebral palsy

● carried out workstation assessments with a strengthened approach to reasonable adjustment

● undertook hazard inspections and implemented a corrective action plan to address findings.

Annual Report 2019-20 Part 4: Our people 122

In 2019-20, the Department was recognised by the ACT Government Healthier Work initiative for the Department's commitment to providing a healthy workplace for staff.

Results of work health and safety initiatives

Finance’s 2019-20 WHS initiatives resulted in:

● an increase in the uptake of flexible work arrangements

● successfully transitioning the majority of our workforce to remote working during the COVID-19 pandemic

● increased staff awareness of identifying and managing mental health in the workplace

● ongoing improvements to the Rehabilitation Management System (RMS) through implementing activities identified in the 2018-19 RMS audit corrective action plan

● increased focus on early intervention support

● increased support for employees who require reasonable adjustment.

Notifiable incidents

In 2019-20, Finance reported two notifiable incidents to Comcare under section 38 of the WHS Act—one serious illness incident involving a Finance staff member and one dangerous incident relating to a partial ceiling collapse at the One Canberra Avenue tenancy.

Work health and safety investigations

Under the WHS Act, Finance is required to provide statistics for any investigations or notices given at the workplace it manages. No investigations were conducted and no notices were given during 2019-20.

MOP(S) Act employees

Work health and safety initiatives

Finance and employing parliamentarians share duties under the WHS Act for health and safety in parliamentarians’ workplaces. This includes duties to all staff employed under the Members of Parliament (Staff) Act 1984 (MOP(S) Act). In 2019-20, Finance’s key WHS activities for MOP(S) Act employees were:

● provision of WHS advice and supports relating to COVID-19 and the workplace

● implementation of an early intervention program for MOP(S) Act employees

● provision of rehabilitation and injury management services to injured or ill MOP(S) Act employees

● updated WHS content on the Ministerial and Parliamentary Services website

● implementation of a mental health coaching program called NewAccess Workplaces

● enhancement of online learning and development for WHS training activities including sessions delivered by Comcare

Annual Report 2019-20 Part 4: Our people 123

● consultation with health and safety representatives through the Work Health and Safety Committee

● administering a Staff Assistance Officers program and developing a human resources (HR) Support Officer role to support MOP(S) Act employees experiencing bullying and/or harassment

● ongoing improvements to emergency management systems for parliamentarians’ workplaces

● provision of annual training for emergency officers, WHS site officers and first aid officers

● provision of a range of health and wellbeing services, including confidential counselling, through the employee assistance program

● conducting workstation and worksite assessments

● administering a WHS site officer program to support hazard and incident notification and access to first aid in parliamentarians’ workplaces.

Notifiable incidents

In 2019-20, Finance reported four notifiable incidents involving MOP(S) Act employees to Comcare under section 38 of the WHS Act. None involved a serious injury.

Investigations and notices

No investigations were conducted in relation to incidents involving MOP(S) Act employees during 2019-20.

The Comcare premium

Finance's 2019-20 workers compensation premium accounted for 0.55 per cent of its payroll (for both Finance and MOP(S) Act employees), a decrease from 0.65 per cent of its payroll in the previous year.

Annual Report 2019-20 Part 5: Financial Statements 124

Part 5: Financial Statements

Annual Report 2019-20 Part 5: Financial Statements 123 Annual Report 2019 -20 Part 5: Financial Statements 125

Auditor-General for Australia

GPO Box 707 CANBERRA ACT 2601 38 Sydney Ave FORREST ACT 2603 Phone (02) 6203 7300 Fax (02) 6203 7777

INDEPENDENT AUDITOR’S REPORT

To the Minister for Finance

Opinion

In my opinion, the financial statements of the Department of Finance (Finance) for the year ended 30 June 2020:

(a) comply with Australian Accounting Standards - Reduced Disclosure Requirements and the Public Governance, Performance and Accountability (Financial Reporting) Rule 2015; and

(b) present fairly the financial position of Finance as at 30 June 2020 and its financial performance and cash flows for the year then ended.

The financial statements of Finance, which I have audited, comprise the following statements as at 30 June 2020 and for the year then ended:

• Statement by the Secretary and Chief Financial Officer; • Statement of Comprehensive Income; • Statement of Financial Position; • Statement of Changes in Equity; • Cash Flow Statement; • Administered Schedule of Comprehensive Income; • Administered Schedule of Assets and Liabilities; • Administered Reconciliation Schedule; • Administered Cash Flow Statement; and • Notes to the financial statements, comprising a summary of significant accounting policies and other

explanatory information.

Basis for opinion

I conducted my audit in accordance with the Australian National Audit Office Auditing Standards, which incorporate the Australian Auditing Standards. My responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of my report. I am independent of Finance in accordance with the relevant ethical requirements for financial statement audits conducted by me. These include the relevant independence requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) to the extent that they are not in conflict with the Auditor-General Act 1997. I have also fulfilled my other responsibilities in accordance with the Code. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion.

Key audit matters

Key audit matters are those matters that, in my professional judgement, were of most significance in my audit of the financial statements of the current period. These matters were addressed in the context of my audit of the financial statements as a whole, and in forming my opinion thereon, and I do not provide a separate opinion on these matters.

Key Audit Matter

Valuation of the liability for outstanding insurance claims

Refer to Note C1 ‘General insurance activities’

How the audit addressed the matter

To address the key audit matter, I:

• evaluated Finance’s actuarial methodologies for reasonableness by assessing whether the key

Annual Report 2019-20 Part 5: Financial Statements 123 Annual Report 2019 -20 Part 5: Financial Statements 126

Finance provides insurance to Australian

Government entities. The estimation of outstanding insurance claims liability involves significant judgement given the inherent uncertainty in estimating the expected future payments for claims incurred.

I consider the estimation of the outstanding insurance claims liability for the Australian Government’s self-managed general insurance fund

to be a key audit matter due to:

• the balance being significant relative to Finance’s Statement of Financial Position ($590.6 million outstanding insurance claims liability as at 30 June 2020); and • the complex calculation of the liability that

involves assumptions requiring significant judgement.

assumptions (claim ratios, expected frequency of claims, severity of claims and discount rates), were consistent with those used in the industry and with prior periods by comparing to current and historical trends.

Key audit matter

Valuation of superannuation provisions

Refer to Note C3 ‘Superannuation’

Finance administers defined benefit schemes that entitle Australian Government employees to retirement benefits based on past service.

I consider the valuation of the superannuation provisions to be a key audit matter due to:

• the balance being significant relative to

Finance’s Administered Schedule of Assets and Liabilities ($241.8 billion as at 30 June 2020); and

• the measurement of the provision being complex, requiring significant professional judgement in the selection of long-term assumptions (including such matters as salary growth and discount rates), to which the valuation of the schemes is highly sensitive.

In addition, the Australian Accounting Standards include detailed requirements for the presentation and disclosure in respect of defined benefit plans.

How the audit addressed the matter

To address the key audit matter, I:

• assessed the design and operating effectiveness of internal controls over the management of defined benefit schemes including management of members’ data used in the valuation model;

• evaluated the reasonableness of the review performed by management’s actuary to confirm the integrity of the data used for estimating the defined benefit provision;

• evaluated the appropriateness of the

methodology and reasonableness of the key assumptions applied in estimating the

superannuation provision;

• assessed the reasonableness of the results of the valuation including the explanations for the changes in the valuation; and

• evaluated the appropriateness of the disclosure of the significant assumptions applied, including sensitivity analysis.

Key audit matter

Valuation of Properties

Refer to Note D5 ‘Non-financial assets’

Finance is responsible for the management of the Australian Government’s domestic non-defence property portfolio, including delivery of major capital works projects as directed by the Government.

Finance has determined the fair value of non-financial assets to be $435.5 million for land, $695.7 million for buildings and $854.0 million for

How the audit addressed the matter

To address the key audit matter, I:

• evaluated the appropriateness of Finance’s methodologies and the reasonableness of its key assumptions utilised in the valuation models. This included rental income and capital expenditure for investment properties and market value comparisons for land and building valuations;

• evaluated the competence, capabilities and objectivity of management’s valuers; and

Annual Report 2019-20 Part 5: Financial Statements 123 Annual Report 2019 -20 Part 5: Financial Statements 127

investment properties as at 30 June 2020.

I consider the valuation of Finance’s land, buildings and investment properties to be a key audit matter due to the valuations being dependent on

assumptions that require significant management judgement about capitalisation rates, fair market rents, discount rates and conditions of the use of the properties. Where observable market data is not available, the valuation is subject to a higher level of judgement. The impact of the COVID-19 pandemic increases the level of uncertainty over these assumptions and the associated disclosures.

• evaluated the appropriateness of the disclosure of the significant assumptions applied, including sensitivity analysis.

Accountable Authority’s responsibility for the financial statements

As the Accountable Authority of Finance, the Secretary is responsible under the Public Governance, Performance and Accountability Act 2013 (the Act) for the preparation and fair presentation of annual financial statements that comply with Australian Accounting Standards - Reduced Disclosure Requirements and the rules made under the Act. The Secretary is also responsible for such internal control as the Secretary determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the Secretary is responsible for assessing the ability of Finance to continue as a going concern, taking into account whether the Finance’s operations will cease as a result of an administrative restructure or for any other reason. The Secretary is also responsible for disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the assessment indicates that it is not appropriate.

Auditor’s responsibilities for the audit of the financial statements

My objective is to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes my opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance

with the Australian National Audit Office Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements.

As part of an audit in accordance with the Australian National Audit Office Auditing Standards, I exercise professional judgement and maintain professional scepticism throughout the audit. I also:

• identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for my opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control; • obtain an understanding of internal control relevant to the audit in order to design audit procedures that are

appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of Finance’s internal control; • evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Accountable Authority; • conclude on the appropriateness of the Accountable Authority’s use of the going concern basis of accounting

and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on Finance’s ability to continue as a going concern. If I conclude that a material uncertainty exists, I am required to draw attention in my auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify my opinion. My conclusions are based on the audit evidence obtained up to the date of my auditor’s report. However, future events or conditions may cause Finance to cease to continue as a going concern; and

Annual Report 2019-20 Part 5: Financial Statements 123 Annual Report 2019 -20 Part 5: Financial Statements 128

• evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

I communicate with the Accountable Authority regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that I identify during my audit.

From the matters communicated with the Accountable Authority, I determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. I describe these matters in my auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, I determine that a matter should not be communicated in my report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Australian National Audit Office

Grant Hehir Auditor-General

Canberra

28 August 2020

Annual Report 2019-20 Part 5: Financial Statements 123 Annual Report 2019 -20 Part 5: Financial Statements 129

Annual Report 2019-20 Part 5: Financial Statements 123 Annual Report 2019 -20 Part 5: Financial Statements 130

Financial Statements

TABLE OF CONTENTS

Departmental Primary Statements Statement of Comprehensive Income 131

Statement of Financial Position 132

Statement of Changes in Equity 133

Cash Flow Statement 134

Administered Primary Schedules Administered Schedule of Comprehensive Income 135

Administered Schedule of Assets and Liabilities 136

Administered Reconciliation Schedule 137

Administered Cash Flow Statement 138

Notes to the financial statements

A. About This Report

C. General Business Disclosures

140 B. Budgetary Variance Reporting

144 D. Operating Resources

142

167 E. Our People 185

C1 General insurance activities D1 Supplier expenses E1 Em ployee benefits

C2 Investment funds D2 Own source revenue E2 Key management personnel

remuneration

C3 Superannuation D3 Financial instruments E3 Rel ated parties

D4 Managing financial risk

D5 Non-financial assets

D6 Unearned Revenue

D7 Other provisions

F. Funding 188 G. Managing Other Uncertainties 197 H. Other Information 198

F1 Annual appropriations G1 Contingencies H1 Aggregate assets and

liabilities

F2 Special appropriations G2 Subsequent events H2 Other policy and disclosures

F3 Special accounts

Annual Report 2019-20 Part 5: Financial Statements 123 Annual Report 2019 -20 Part 5: Financial Statements 131

Department of Finance Departmental Primary Statements

Statement of Comprehensive Income for the period ended 30 June 2020

The above statement should be read in conjunction with the accompanying notes

Actuals Budget

30 June 30 June 30 June

2020 2019 2020

Note ref $'000 $'000 $'000

NET COST OF SERVICES Expenses Employee benefits E1.1 162,907 164,745 161,291

Suppliers D1 177,491 164,295 185,121

Insurance claims C1.1 B1 249,311 180,191 136,556

Competitive neutrality 3,278 3,216 2,784

Notional reinsurance expense C1.1 5,000 5,000 5,000

Depreciation and amortisation D5.1 47,266 45,602 44,904

Depreciation - right-of-use D5.2 B3 19,779 - -

Non-financial asset write-downs and impairments D5.1 B2 293 1,720 12,010

Impairment of financial assets D3.3 - 31 -

Losses from asset sales 721 - -

Interest on lease liabilities 7,907 11 -

Other expenses 196 5,116 -

Total expenses 674,149 569,927 547,666

Own-source income Own-source revenue Premium revenue C1.1 137,795 128,452 139,138

Reinsurance and other recoveries revenue C1.1 6,434 1,142 -

Rental income D2.1 78,527 79,301 73,936

Contracts with customers D2.2 74,804 73,472 68,632

Volunteer services H2 1,342 1,355 1,385

Interest D3.3 12 - -

Other revenue 5,168 126 -

Total own-source revenue 304,082 283,848 283,091

Gains Gains B2 24,267 47,674 17,563

Total gains 24,267 47,674 17,563

Total own-source income 328,349 331,522 300,654

Net cost of services (345,800) (238,405) (247,012)

Revenue from Government F1.1 283,779 258,962 268,648

Surplus before income tax on continuing operations (62,021) 20,557 21,636

Income tax equivalent 3,699 4,086 3,935

Surplus after income tax on continuing operations (65,720) 16,471 17,701

OTHER COMPREHENSIVE INCOME Items not subject to subsequent reclassification to net cost of services Changes in asset revaluation reserves D5.1 B2 (4,547) 162,345 -

Total comprehensive income (70,267) 178,816 17,701

Annual Report 2019-20 Part 5: Financial Statements 123 Annual Report 2019 -20 Part 5: Financial Statements 132

Department of Finance Departmental Primary Statements

Statement of Financial Position as at 30 June 2020

The above statement should be read in conjunction with the accompanying notes

Actuals Budget

30 June 30 June 30 June

2020 2019 2020

Note ref $'000 $'000 $'000

Assets

Financial assets Cash and cash equivalents Cash and cash equivalents D3.1 2,780 15,423 16,822

Special account cash held in OPA F3.1 B1 903,273 706,038 651,901

Trade and other receivables D3.1 19,445 27,307 9,707

Appropriations receivable Special account capital receivable F3.1 24,640 47,296 -

Other departmental undrawn F1.2 95,527 128,399 112,450

Reinsurance and other recoveries C1.3 2,603 2,258 3,760

Lease incentive assets 917 3,642 3,993

Other financial assets 3,283 2,371 2,041

Total financial assets 1,052,468 932,734 800,674

Non-financial assets Land D5.1 B2 435,522 431,194 343,015

Buildings D5.1 B2 695,722 685,733 610,836

Leasehold improvements D5.1 27,165 23,904 -

Investment property D5.1 B2 854,012 828,988 789,421

Plant and equipment D5.1 22,798 18,609 67,763

Intangibles D5.1 105,885 101,466 108,525

Right-of-use assets D5.2 B3 450,821 - -

Prepayments 9,037 11,100 7,989

Assets held for sale D5.3 247 38,160 28,154

Total non-financial assets 2,601,209 2,139,154 1,955,703

Total Assets 3,653,677 3,071,888 2,756,377

Liabilities

Trade creditors and accruals D3.1 38,372 35,749 49,634

Unearned revenue D6 15,823 20,770 16,968

Return of equity - special accounts B2 115,955 82,138 57,145

Outstanding insurance claims C1.4 B1 590,559 473,735 381,913

Employee provisions E1.2 63,538 64,104 66,708

Lease liabilities B3 462,238 1,022 3,737

Lease incentive liabilities B3 - 32,782 35,235

Other provisions D7 12,960 19,141 20,648

Other payables 5,243 2,121 4,061

Total liabilities 1,304,688 731,562 636,049

Net assets 2,348,989 2,340,326 2,120,328

Equity Retained earnings 518,345 551,328 566,804

Asset revaluation reserves B2 395,697 400,244 237,899

Contributed equity/capital 1,434,947 1,388,754 1,315,625

Total equity 2,348,989 2,340,326 2,120,328

Annual Report 2019-20 Part 5: Financial Statements 123 Annual Report 2019 -20 Part 5: Financial Statements 133

Department of

Finance

Departmental Primary Statements

Statement of Changes in Equity

for the period ended 30 June

2020

The above statement should be read in conjunction with the accompanying notes

Actuals

30 J

une 2020

30 June 2019

Retained earnings

Asset

revaluation reserves

Contributed equity/capital

Total

Retained earnings

Asset

revaluation reserves

Contributed equity/capital

Total

Note ref

$'000

$'000

$'000

$'000

$'000

$'000

$'000

$'000

Opening

balance

Balance carried forward

551,328

400,244

1,388,754

2,340,326

534,857

237,899

1,420,938

2,193,694

Adjustment on initial application of AASB 16

32,737

-

-

32,737

-

-

-

-

Adjusted opening balance

584,065

400,244

1,388,754

2,373,063

534,857

237,899

1,420,938

2,193,694

Comprehensive income

Surplus for the period

(65,720)

-

-

(65,720)

16,471

-

-

16,471

Other comprehensive income

-

(4,547)

-

(4,547)

-

162,345

-

162,345

Total

comprehensive income

(65,720)

(4,547)

-

(70,267)

16,471

162,345

-

178,816

Transactions with owners

Distributions to owners

Transfer of assets

-

-

-

-

-

-

(2,900)

(2,900)

Return of equity

- special accounts

-

-

(115,955)

(115,955)

-

-

(79,903)

(79,903)

Return of equity

- other

-

-

-

-

-

-

(80)

(80)

Contributions by owners

Departmental capital budget

F1.1

-

-

6,476

6,476

-

-

8,488

8,488

Equity injection

- appropriations

F1.1

-

-

155,672

155,672

-

-

42,211

42,211

Total transactions with owners

-

-

46,193

46,193

-

-

(32,184)

(32,184)

Closing balance

518,345

395,697

1,434,947

2,348,989

551,328

400,244

1,388,754

2,340,326

Budget 30 June 2020

Opening balance

549,103

237,899

1,363,716

2,150,718

469,150

199,141

1,473,038

2,141,329

Total comprehensive income

17,701

-

-

17,701

33,579

-

-

33,579

Total transactions with owners

-

-

(48,091)

(48,091)

(104,305)

-

31,045

(73,260)

Closing

balance

566,804

237,899

1,315,625

2,120,328

398,424

199,141

1,504,083

2,101,648

Annual Report 2019-20 Part 5: Financial Statements 123 Annual Report 2019 -20 Part 5: Financial Statements 134

Department of Finance Departmental Primary Statements

Cash Flow Statement for the period ended 30 June 2020

The above schedule should be read in conjunction with the accompanying notes

Actuals Budget

30 June 30 June 30 June

2020 2019 2020

Note ref $'000 $'000 $'000

OPERATING ACTIVITIES Cash received Contracts with customers 77,194 59,332 142,545

Revenue from Government 296,693 296,680 298,268

Insurance premiums 137,795 128,452 139,138

Reinsurance and other recoveries 6,089 1,917 -

Interest and dividends 12 - -

Rent received 78,527 79,301 -

Other 8,565 1,445 -

Total cash received 604,875 567,127 579,951

Cash used Employees 162,162 162,905 158,859

Suppliers 177,961 179,163 178,762

Insurance claims 132,487 87,585 136,556

Interest payments on lease liabilities 7,907 - -

Net GST paid 964 2,182 -

Other 8,461 13,343 10,952

Total cash used 489,942 445,178 485,129

Net cash received/(used) for operating activities 114,933 121,949 94,822

INVESTING ACTIVITIES Cash received Proceeds from sale of land and buildings 42,011 46,941 38,000

Proceeds from sale of investment property 420 - -

Proceeds from sale of financial investments 237 2,672 -

Total cash received 42,668 49,613 38,000

Cash used Purchase of land and buildings 40,638 36,187 12,131

Purchase of leasehold improvements - 207 -

Purchase of investment property 10,007 18,731 -

Purchase of plant and equipment 8,314 1,133 30,605

Purchase of intangibles 27,290 35,298 12,888

Total cash used 86,249 91,556 55,624

Net cash received/(used) for investing activities (43,581) (41,943) (17,624)

FINANCING ACTIVITIES Cash received Contributed equity 204,762 56,779 12,181

Total cash received 204,762 56,779 12,181

Cash used Return of contributed equity 82,138 187,618 60,272

Principal payments on lease liabilities 9,384 - -

Total cash used 91,522 187,618 60,272

Net cash received/(used) for financing activities 113,240 (130,839) (48,091)

Net increase/(decrease) in cash held 184,592 (50,833) 29,107

Cash and cash equivalents at the beginning of the reporting period 721,461 772,294 639,616

Cash and cash equivalents at the end of the reporting period D3.1 906,053 721,461 668,723

Annual Report 2019-20 Part 5: Financial Statements 123 Annual Report 2019 -20 Part 5: Financial Statements 135

Department of Finance Administered Primary Schedules

Administered Schedule of Comprehensive Income for the period ended 30 June 2020

The above schedule should be read in conjunction with the accompanying notes

Actuals Budget

30 June 30 June 30 June

2020 2019 2020

Note ref $'000 $'000 $'000

NET COST OF SERVICES Expenses Employee benefits E1.1 367,012 439,546 327,270

Superannuation expense C3.1 B4 8,276,144 8,435,190 8,340,603

Suppliers D1 117,565 158,667 158,794

Investment funds C2.1 B5 590,134 304,125 94,949

Investment funds distributions C2.1 1,997,374 2,294,618 2,154,073

Depreciation and amortisation D5.1 16,950 15,057 20,691

Depreciation - right-of-use D5.2 B3 42,894 - -

Non-financial asset write-downs and impairments D5.1 1,135 266 -

Impairment of financial assets D3.3 2 4 -

Grants 2,564 3,198 3,000

Interest on lease liabilities 3,548 - -

Other expenses 40 3,036 3,481

Total expenses 11,415,362 11,653,707 11,102,861

Income Non-taxation revenue Interest D3.3 21,331 29,151 13,170

Dividends D3.3 10,600 26,900 13,100

Investment funds C2.1 B5 242,784 443,200 1,040,060

Contracts with customers D2.2 5,652 3,061 3,904

Superannuation contributions C3.1 1,164,535 1,193,004 1,101,230

Volunteer services H2 4,659 4,581 4,455

Other revenue 1,961 2,572 9,310

Total revenues 1,451,522 1,702,469 2,185,229

Gains Investment funds C2.1 B5 924,129 897,361 125,136

Other gains 1,636 257 -

Total gains 925,765 897,618 125,136

Total income 2,377,287 2,600,087 2,310,365

Net cost of services (9,038,075) (9,053,620) (8,792,496)

OTHER COMPREHENSIVE INCOME Items not subject to subsequent reclassification to net cost of services Movement in carrying amount of superannuation C3.1 (5,412,650) (46,132,390) -

Changes in asset revaluation reserves D5.1 3,974 4,038 -

Items subject to subsequent reclassification to net cost of services Gains/(losses) in carrying amount of Commonwealth entities and companies D3.3 61,851 (18,309) -

Total other comprehensive loss (5,346,825) (46,146,661) -

Total comprehensive loss (14,384,900) (55,200,281) (8,792,496)

Annual Report 2019-20 Part 5: Financial Statements 123 Annual Report 2019 -20 Part 5: Financial Statements 136

Department of Finance Administered Primary Schedules

Administered Schedule of Assets and Liabilities as at 30 June 2020

The above schedule should be read in conjunction with the accompanying notes

Actuals Budget

30 June 30 June 30 June

2020 2019 2020

Note ref $'000 $'000 $'000

Assets Financial assets Cash and cash equivalents D3.1 3,497,785 2,407,972 -

Trade and other receivables D3.1 1,518 2,200 11,409

Investment funds C2.2 B5 44,243,924 37,109,160 35,034,945

State and territory government loans D3.1 118,831 126,152 118,828

Commonwealth entities and companies D3.1 1,570,611 1,188,009 1,624,068

Other financial assets 71,354 43,809 17,261

Total financial assets 49,504,023 40,877,302 36,806,511

Non-financial assets Leasehold improvements D5.1 29,498 23,694 20,025

Infrastructure D5.1 72,088 73,166 68,603

Plant and equipment D5.1 11,677 11,336 -

Intangibles D5.1 114 214 1,188

Right-of-use assets D5.2 B3 292,596 - -

Prepayments 3,720 4,552 3,324

Total non-financial assets 409,693 112,962 93,140

Total assets 49,913,716 40,990,264 36,899,651

Liabilities Trade creditors and accruals D3.1 14,776 12,707 12,140

Unearned revenue D6 52 - -

Investment funds C2.2 B5 299,579 215,296 -

OPA overnight cash payable D3.1 2,029,429 1,803,516 -

Employee provisions E1.2 317,383 325,692 235,867

Superannuation provisions C3.1 B4 241,754,395 233,052,709 137,491,900

Lease liabilities B3 299,221 - -

Other provisions D7 18,134 17,984 16,777

Other payables 27,707 38,074 12,277

Total liabilities 244,760,676 235,465,978 137,768,961

Net assets/(liabilities) (194,846,960) (194,475,714) (100,869,310)

Annual Report 2019-20 Part 5: Financial Statements 123 Annual Report 2019 -20 Part 5: Financial Statements 137

Department of Finance Administered Primary Schedules

Administered Reconciliation Schedule for the period ended 30 June 2020

The above schedule should be read in conjunction with the accompanying notes

Actuals

30 June 30 June

2020 2019

Note ref $'000 $'000

Opening assets less liabilities as at 1 July (194,475,714) (152,228,268)

Adjustment on initial application of AASB 16 2,716 -

Adjusted opening assets less liabilities (194,472,998) (152,228,268)

Net cost of services (9,038,075) (9,053,620)

Other comprehensive income/(loss) (5,346,825) (46,146,661)

Transfers (to)/from the Australian Government Appropriation transfers from OPA Annual appropriations F1.1 321,300 294,767

Administered assets and liabilities appropriations F1.1 333,911 312,826

Special appropriations F2.1 7,454,089 7,272,436

Contributions from Government to the investment funds F3.2 20,417,516 8,576,602

Other 3,741 (2,185)

Appropriation transfers to OPA Transfers to OPA (3,430,643) (3,683,996)

Investment funds return to Government F3.2 (11,946,438) -

OPA transfers with other Commonwealth entities Transfers to other Commonwealth entities H2 (835,637,415) (671,497,125)

Transfers from other Commonwealth entities H2 836,494,877 671,679,510

Closing assets less liabilities (194,846,960) (194,475,714)

Annual Report 2019-20 Part 5: Financial Statements 123 Annual Report 2019 -20 Part 5: Financial Statements 138

Department of Finance Administered Primary Schedules

Administered Cash Flow Statement for the period ended 30 June 2020

The above statement should be read in conjunction with the accompanying notes

Actuals Budget

30 June 30 June 30 June

2020 2019 2020

Note ref $'000 $'000 $'000

OPERATING ACTIVITIES Cash received Contracts with customers 5,303 3,974 3,902

Superannuation contributions - employers 1,136,878 1,174,734 1,101,230

Superannuation contributions - members 2,226,203 2,433,550 1,983,848

Net gains from sale of financial instruments 492,339 498,413 -

Interest and dividends 275,893 495,462 1,061,255

Realised exchange gains 304 - -

Net GST received 22 - -

Other 2,737 2,872 2,810

Total cash received 4,139,679 4,609,005 4,153,045

Cash used Employees 370,943 349,690 305,909

Suppliers 151,362 185,192 249,286

Investment fund distributions 1,997,374 2,294,618 2,154,073

Superannuation payments 7,213,311 7,015,454 7,166,429

Realised exchange losses 546,096 271,078 -

Grants 2,564 3,198 3,000

Interest payments on lease liabilities 3,548 - -

Net GST paid - 261 -

Other 710 488 3,906

Total cash used 10,285,908 10,119,979 9,882,603

Net cash received/(used) for operating activities (6,146,229) (5,510,974) (5,729,558)

INVESTING ACTIVITIES Cash received Proceeds from sale of financial investments 104,103,564 49,605,723 6,248,610

Repayments of advances and loans 12,399 12,178 12,400

Total cash received 104,115,963 49,617,901 6,261,010

Cash used Purchase of financial investments 110,729,723 56,530,848 9,411,638

Equity injections - CECs 331,750 312,450 332,700

Purchase of leasehold improvements 14,827 8,296 -

Purchase of infrastructure 1,717 1,692 -

Purchase of plant and equipment 2,341 6,501 13,605

Purchase of intangibles 167 142 -

Total cash used 111,080,525 56,859,929 9,757,943

Net cash received/(used) for investing activities (6,964,562) (7,242,028) (3,496,933)

Annual Report 2019-20 Part 5: Financial Statements 123 Annual Report 2019 -20 Part 5: Financial Statements 139

Department of Finance Administered Primary Schedules

Administered Cash Flow Statement for the period ended 30 June 2020

The above statement should be read in conjunction with the accompanying notes

Actuals Budget

30 June 30 June 30 June

2020 2019 2020

Note ref $'000 $'000 $'000

FINANCING ACTIVITIES Cash received Contributions to investment funds 20,417,516 8,576,602 12,317,990

Total cash received 20,417,516 8,576,602 12,317,990

Cash used Investment funds distributions to Government 11,946,438 - 7,946,000

Principal payments on lease liabilities 36,247 - -

Total cash used 11,982,685 - 7,946,000

Net cash received/(used) for financing activities 8,434,831 8,576,602 4,371,990

Net increase/(decrease) in cash held (4,675,960) (4,176,400) (4,854,501)

Cash and cash equivalents at the beginning of the reporting period 2,407,972 1,731,032 -

OPA transfers with other Commonwealth entities Transfers to other Commonwealth entities (835,411,502) (671,020,018) -

Transfers from other Commonwealth entities 836,494,877 671,679,510 -

Total cash from/(to) OPA 1,083,375 659,492 -

Finance administered transfers Appropriation transfers from OPA 8,113,041 7,877,844 7,656,784

Appropriation transfers to OPA (3,430,643) (3,683,996) (2,802,283)

Total cash from/(to) OPA 4,682,398 4,193,848 4,854,501

Cash and cash equivalents at the end of the reporting period D3.1 3,497,785 2,407,972 -

Annual Report 2019-20 Part 5: Financial Statements 123 Annual Report 2019 -20 Part 5: Financial Statements 140

Notes to and forming part of the financial statements A. About this Report

A. About This Report The Department of Finance (Finance) is an Australian Government controlled not-for-profit entity, its purpose being: to assist the Australian Government to achieve its fiscal and policy objectives by advising on expenditure, managing sustainable public sector resourcing, driving public sector transformation and delivering efficient, cost-effective services to, and for, the Government.

Finance is structured to fulfil its purpose through three outcomes, as set out in the 2019-20 Portfolio Budget Statements (PBS), these are:

Outcome 1: Support sustainable Australian Government finances through providing high quality policy advice and operational support to the government and Commonwealth entities to maintain effective and efficient use of public resources.

Outcome 2: Support an efficient and high-performing public sector through providing leadership to Commonwealth entities in ongoing improvements to public sector governance, including through systems, frameworks, policy, advice and service delivery.

Outcome 3: Support for parliamentarians and others as required by the Australian Government through the delivery of, and advice on, work expenses and allowances, entitlements and targeted programs.

Finance’s activities are classified as either Departmental or Administered. Departmental activities involve the use of assets, liabilities, incomes and expenses controlled or incurred by Finance in its own right.

Administered items are controlled by the Government and managed or overseen by Finance on behalf of the Government. These items are distinguished from Departmental items using shading.

Administered items include:

• Superannuation schemes for current and former civilian Australian Government employees, parliamentarians, current and former Governor-Generals, Federal Judges and Federal Circuit Court Judges

• Australian Government investment funds • Entitlements, allowances and work expenses provided to current and former members of parliament and their staff • Grants • State and territory government loans and interest • Investments in Commonwealth entities and companies. In some areas of this financial report, Departmental and Administered items are included in the same section, this is for presentation purposes only and these balances should not be compared.

The continued existence of Finance in its present form and with its present programs is dependent on government policy and on continued funding by Parliament.

Basis of preparation

The financial statements are general purpose financial statements required by section 42 of the PGPA Act. They have been prepared in accordance with the PGPA (Financial Reporting) Rule 2015 (FRR) and Australian Accounting Standards (AAS) and Interpretations issued by the Australian Accounting Standards Board (AASB) that apply for the reporting period. Finance has applied the Reduced Disclosure Requirements issued by the AASB as a minimum and has included additional disclosures for financial instruments, fair value and superannuation as required under subsection 18(3) of the FRR.

Basis of accounting

The financial statements have been prepared on an accrual basis and are in accordance with the historical cost convention, except for certain assets and liabilities at fair value.

All assets have been assessed for impairment at the end of the reporting period and no impairment indicators exist unless otherwise stated.

Annual Report 2019-20 Part 5: Financial Statements 123 Annual Report 2019 -20 Part 5: Financial Statements 141

Notes to and forming part of the financial statements A. About this Report

Comparative reclassifications

Minor changes were made to the comparatives in both the Departmental and Administered financial statements as a result of the reclassification or merging of some line items. There was no change to the comparative operating surplus or net assets reported.

How to read this report

The following pages set out the notes to the financial statements, which include further information required to understand the financial statements. This has been assessed against materiality and relevance to the operations, financial position and performance of Finance. All amounts are presented in Australian dollars (AUD).

Key judgements and estimates

In applying Finance's accounting policies, management has made a number of judgements and applied estimates and assumptions to future events. Judgements and estimates that are material to the financial statements are found in the following notes:

C1 General insurance activities C2 Investment funds C3 Superannuation D3 Financial instruments D5 Non-financial assets E1 Employee benefits

With the exception of judgements and estimates applied in the above notes, no allowance is made for the effect of changing prices on the results or the financial position.

New Australian Accounting Standards (AAS)

During 2019-20, Finance adopted all applicable AAS’s that became effective, the following applied from 1 July 2019:

• AASB 15 Revenue from Contracts with Customers establishes a comprehensive framework for determining whether, how much and when revenue is recognised. Revenue is recognised to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. Finance has adopted the modified retrospective application on transition and comparative information for the preceding periods are not restated. The initial application of AASB 15 does not result in any modifications to Finance’s contracts, therefore no adjustments to retaining earnings were made. Further details on contract with customer revenue are detailed in Note D2.2.

• AASB 1058 Income of Not-For-Profit Entities is relevant in circumstances where AASB 15 does not apply. AASB 1058 particularly applies to transactions where the consideration to acquire an asset is significantly less than fair value principally to enable the entity to further its objectives, and where volunteer services are received. Further information on volunteer services are detailed in Note H2.

• AASB 16 Leases provides a single lessee accounting model, requiring the recognition of assets and liabilities for all leases. Lessor accounting under AASB 16 remains substantially unchanged from the predecessor standard AASB 117 Leases. The details of the changes in accounting policies and impacts on initial application are disclosed in Note D5.

Annual Report 2019-20 Part 5: Financial Statements 123 Annual Report 2019 -20 Part 5: Financial Statements 142

Notes to and forming part of the financial statements B. Budgetary Variance Reporting

B. Budgetary Variance Reporting The below table provides explanations for significant variances between Finance’s original budget estimates, as published in the 2019-20 Portfolio Budget Statements and the actual financial performance and position for the year.

Note Reference Affected line Items Explanation

B1 General insurance activities Insurance claims expenses

Outstanding insurance claims

Special account cash held in the OPA

The outstanding insurance claims liability is independently valued each year and is subject to inherent uncertainty in the estimation process as the ultimate outcome of claims is subject to events that have not yet occurred.

Claim expenses were impacted in 2019-20 due to several large property claims arising from weather events including the Canberra hailstorms and national bushfires. These movements were partially offset by a general decrease in the amount provisioned in the Liability portfolio where overall experience for very large claims had been more favourable than expected.

The Comcover special account received an equity injection via Appropriation Act (No.6) 2019 to address the above claims.

B2 Non-defence domestic property portfolio

Non-financial asset write-downs and impairments

Gains

Land

Buildings

Investment property

Return of equity - special accounts

Asset revaluation reserve

Events that have impacted the financial performance associated with the Commonwealth's non-defence domestic property portfolio include:

• Revaluation movements from independent valuations for land, buildings and investment property due to a subdued property market. Main drivers of movements were Commonwealth Law Courts (various states) and Post Entry Quarantine facilities

• The divestment of properties including land in Barton (Canberra) with the proceeds payable to the Consolidated Revenue Fund forming part of a 'Return of equity - special accounts'.

B3: Leases Depreciation - right-of-

use*

Right-of-use assets*

Lease liabilities*

Lease incentive liabilities

AASB 16 Leases was implemented with effect from 1 July 2019 requiring operating leases to be recognised on the balance sheet as right-of-use assets and lease liabilities. Budgets estimates incorporating the new standard were first reported in the 2019-20 Portfolio Additional Estimates.

Transition arrangements on adoption of the new standard required the carrying amount of lease incentive liabilities to be adjusted against retained earnings. For more information on transition balances refer to Note D5.

* Explanation also applies to Administered line items.

Annual Report 2019-20 Part 5: Financial Statements 123 Annual Report 2019 -20 Part 5: Financial Statements 143

Notes to and forming part of the financial statements B. Budgetary Variance Reporting

Note Reference Affected line Items Explanation

B4 Superannuation Superannuation expense

Superannuation provisions

For budget reporting purposes, the discount rate used by actuaries in preparing the Long Term Cost Reports (LTCRs) is used to value the superannuation liability. The use of the LTCR rate reduces the volatility in reported liabilities that would occur from year to year if the long-term government bond rate were used. The rate used for 2019-20 was 5%.

Consistent with Australian Accounting Standards, the superannuation liability and expense are valued using the long-term government bond rate as at 30 June and 1 July respectively for the purpose of financial reporting.

Any change in the rates used for budget and financial reporting purposes significantly impacts on the superannuation provisions and superannuation expense.

B5 Investment funds Investment funds revenues, expenses and gains

Investment funds assets and liabilities

The net asset balance for the investment funds are higher than originally budgeted due to:

• The creation of the Future Drought Fund (FDF) and the Emergency Response Fund (ERF), as the estimates were held in the contingency reserve at original budget pending the passage of their enabling legislation

• Opening balance differences attributable to higher closing balances for the funds in 2018-19.

Annual Report 2019-20 Part 5: Financial Statements 123 Annual Report 2019 -20 Part 5: Financial Statements 144

Notes to and forming part of the financial statements C. General Business Disclosures

C. General Business Disclosures This section includes disclosures for operations which are significant in size and/or nature for Finance.

C1 General insurance activities

Finance provides insurance and risk management services to Australian General Government Sector entities. The classes of business cover include: Liability, Property, Motor Vehicle, and Personal Accident and Travel.

These services are funded from the Comcover Special Account, refer to Note F3.1.

Policy and measurement

Premium revenue Premium revenue includes amounts charged excluding Goods and Services Tax (GST). Premiums are recognised as revenue over the period insured which is from 1 July to 30 June each year.

Notional reinsurance expense A notional reinsurance charge of $5.0 million is paid to the Official Public Account (OPA) each year.

Reinsurance and other recoveries Reinsurance and other recoveries received or receivable in respect of gross claims paid and movements in reinsurance and other recovery assets are recognised as revenue in the year they occur.

Reinsurance and other recovery assets are actuarially assessed as the present value of the expected future receipts, calculated on the same basis as the outstanding claims liability.

Insurance claims expense and outstanding insurance claims liabilities Claims expense represents claims payments and the movement in the gross outstanding claims liability.

The outstanding insurance claims liability is actuarially assessed and measured at the central estimate of the present value of expected future payments of claims incurred at the reporting date with an additional risk margin to allow for inherent uncertainty in the central estimate. The expected future payments include those in relation to unpaid reported claims; claims incurred but not reported (IBNR); claims incurred but not enough reported (IBNER); and indirect expenses that are expected to be incurred in settling these claims. Changes in claims estimates are recognised in the surplus/(deficit) in the year in which the estimates are changed.

Assets backing general insurance liabilities The balance of the Comcover Special Account and receivables from insurance activities are held to back general insurance liabilities. For further information in relation to the Comcover Special Account, refer to Note F3.1.

Key judgements and estimates

Finance takes all reasonable steps to ensure that it has appropriate information regarding its claims exposures. The claim estimates and judgements are regularly evaluated and updated based on historical experience and other factors. However, given the uncertainty in the estimation process, it is likely that the final outcome will prove to be different from the original liability established.

Finance’s activities are classified into two main categories: Property (Property, Motor Vehicle and Personal Accident and Travel) and Liability. Different actuarial methods and assumptions are applied at a more granular level taking into account the characteristics of the class of business, claim type and the extent of the development of each past accident period.

The estimation of IBNR and IBNER are generally subject to a greater degree of uncertainty where claims notification and settlement may not happen for many years after the event giving rise to the claim. For this reason, Liability classes of business typically display greater variability between the initial estimates and final outcomes.

Annual Report 2019-20 Part 5: Financial Statements 123 Annual Report 2019 -20 Part 5: Financial Statements 145

Notes to and forming part of the financial statements C. General Business Disclosures

Key actuarial assumptions

The key actuarial assumptions for the determination of the outstanding claims liabilities are set out in the table below:

30 June 2020 30 June 2019

Property Liability Property Liability

Average discount rate 0.3% 0.4% 1.0% 1.0%

Average inflation rate 2.1% 2.8% 2.2% 3.2%

Average weighted term to settlement (years) 2.0 2.7 1.7 2.6

Expense rate 1.1% 2.3% 1.0% 1.6%

Risk margin 21.7% 22.6% 19.1% 19.3%

Process used to determine actuarial assumptions

Discount rate To allow for the time value of money, projected payments are discounted at a risk free rate derived from market yields on Australian Government securities at the reporting date.

Inflation rate Claims inflation is incorporated into the resulting projected payments to allow for both expected levels of economic inflation and superimposed inflation. Economic inflation is based on economic indicators such as the Consumer Price Index (CPI) and/or increases in average weekly earnings. Superimposed inflation is past claims inflation in excess of wage inflation. A review of past claims reveals no evidence of superimposed inflation.

Average weighted term to settlement

The average weighted term to settlement is based on historic payment patterns.

Expense rate Claims handling expenses are calculated by reference to Finance’s claims handling remuneration agreements for direct expenses and internal costs for indirect expenses.

Risk margin The risk margin is assessed by examining the historical variability of the claims experience, considering industry studies and benchmarks and applying actuarial judgement, especially in respect of uncertainties not reflected in the claims data. This assessment is performed for each class of business. Diversification benefit is allowed for, with consideration given to industry studies and benchmarks.

Sensitivity analysis

Finance has conducted sensitivity analysis to quantify the impact of changes in the key underlying assumptions on the surplus/(deficit). The sensitivity analysis has been performed for each variable independently of all other changes and is net of reinsurance and other recoveries. The table below describes how a change in each assumption will affect the surplus/(deficit).

30 June 2020 30 June 2019

Property Liability Property Liability

Assumption Movement $'000 $'000 $'000 $'000

Average discount rate

+1% 6,749 7,229 4,054 6,437

-1% (6,461) (6,857) (3,886) (6,122)

Average inflation rate

+1% (6,473) (6,848) (4,000) (6,302)

-1% 6,626 7,070 4,092 6,493

Average weighted term to settlement (years) +1 year (5,776) (6,093) (2,887) (5,336)

-1 year 5,536 7,246 3,482 5,634

Expense rate

+1% (3,258) (2,552) (2,284) (2,393)

-1% 3,258 2,552 2,284 2,393

Risk margin

+1% (2,707) (2,130) (1,936) (2,039)

-1% 2,707 2,130 1,936 2,039

The movements are the absolute movement in the assumption (e.g. +1% increase in the expense rate for Property from 1.1% to 2.1%).

Annual Report 2019-20 Part 5: Financial Statements 123 Annual Report 2019 -20 Part 5: Financial Statements 146

Notes to and forming part of the financial statements C. General Business Disclosures

Insurance risk management

Finance is exposed to insurance risk, which is discussed below.

Objectives, policies and processes for managing insurance risk Finance provides insurance and risk management services to deliver a net benefit to the Australian Government over the longer term. The transfer of insurance risk from participating General Government Sector entities offers the most comprehensive and cost effective approach to the management of risk exposures. The provision of a captive fund focuses on improving risk identification and management in entities and increases in transparency and accountability to the Australian Government and the public.

Key processes to manage the insurable risk exposure of the Commonwealth include:

• Detailed risk exposure surveys

• Actuarial modelling of claims history, exposures and industry experience to provide an estimate of expected claims costs for the insured year and to determine the annual premium collection

• Claim management and investigation processes

• Appointment of an independent actuary for valuation services of the outstanding claims liability

• Whole of government policy development and risk management advisory and education services to improve risk awareness and capability of Fund Members.

Concentration of insurance risk No reinsurance policies were placed in 2019-20 (2018-19: nil), reflecting the capacity of the Australian Government to cost-effectively self-insure against infrequent large claims.

C1.1 Underwriting result

Departmental 30 June 30 June

2020 2019

$'000 $'000

Direct premium revenue Premium revenue 137,795 128,452

Premium revenue eliminated on consolidation 1,252 1,139

Total direct premium revenue 139,047 129,591

Notional reinsurance expense (5,000) (5,000)

Net premium revenue 134,047 124,591

Net incurred claims Insurance claims (249,311) (180,191)

Reinsurance and other recoveries revenue 6,434 1,142

Total net claims (242,877) (179,049)

Other underwriting expenses (8,134) (8,863)

Underwriting result (116,964) (63,321)

Revenue from Government 8,191 7,743

Operating surplus/(deficit) (108,773) (55,578)

Annual Report 2019-20 Part 5: Financial Statements 123 Annual Report 2019 -20 Part 5: Financial Statements 147

Notes to and forming part of the financial statements C. General Business Disclosures

C1.2 Net claims incurred

30 June 2020 30 June 2019

Current year

Prior years Total

Current year

Prior years Total

$'000 $'000 $'000 $'000 $'000 $'000

Gross claims incurred Undiscounted 269,804 (31,013) 238,791 142,295 24,128 166,423

Discount and discount movement (2,652) 8,526 5,874 (3,748) 12,479 8,731

Gross claims incurred discounted 267,152 (22,487) 244,665 138,547 36,607 175,154

Reinsurance and other recoveries Undiscounted (1,270) (5,116) (6,386) (769) (197) (966)

Discount and discount movement - (48) (48) 2 (178) (176)

Reinsurance and other recoveries discounted (1,270) (5,164) (6,434) (767) (375) (1,142)

Net claims incurred 265,882 (27,651) 238,231 137,780 36,232 174,012

Claims handling expense 4,646 5,037

Total net claims 242,877 179,049

The $27.7m decrease in prior years net claims incurred is due to favourable claims experience in the Liability portfolio. The current year net claims incurred is impacted by adverse claims experience in the Property portfolio due to weather events.

C1.3 Reinsurance and other recoveries receivable

Departmental 30 June 30 June

2020 2019

$'000 $'000

Reinsurance and other recoveries Reinsurance and other recoveries 2,709 2,411

Discount to present value (106) (153)

Total reinsurance and other recoveries 2,603 2,258

C1.4 Outstanding insurance claims liability

Departmental 30 June 30 June

2020 2019

$'000 $'000

Gross claims liability - undiscounted 480,039 401,454

Discount to present value (4,127) (9,120)

Gross claims liability - discounted 475,912 392,334

Claims handling expense 7,818 5,130

Gross central estimate 483,730 397,464

Risk margin 106,829 76,271

Outstanding insurance claims liability 590,559 473,735

Risk margin adopted 22.1% 19.2%

Probability of adequacy of the risk margin 75% 75%

Annual Report 2019-20 Part 5: Financial Statements 123 Annual Report 2019 -20 Part 5: Financial Statements 148

Notes to and forming part of the financial statements C. General Business Disclosures

Reconciliation of the movement in discounted outstanding claims liability 30 June 30 June

2020 2019

Property Liability Total Total

$'000 $'000 $'000 $'000

Net outstanding claims liability at the beginning of the year 230,054 241,423 471,477 378,878 Incurred claims 182,080 83,802 265,882 137,780

Claims payments (74,621) (47,131) (121,752) (81,413)

Unwinding of discount 1,647 1,889 3,536 6,682

Risk margin release (12,144) (6,624) (18,768) (11,399)

Changes in assumptions and experience 1,810 (14,229) (12,419) 40,949

Net outstanding claims liability at the end of the year 328,826 259,130 587,956 471,477

Reinsurance and other recoveries 615 1,988 2,603 2,258

Gross outstanding claims liability at the end of the year 329,441 261,118 590,559 473,735

Annual Report 2019-20 Part 5: Financial Statements 123 Annual Report 2019 -20 Part 5: Financial Statements 149

Notes to and forming part of the financial statements

C. General Business Disclosures

C1.5 Claims development table

The following table shows the development of the

estimated undiscounted outstanding claims relative to the ultimate expected claims for the 10 most recent accident years.

Prior

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

Total

$'000

$'000

$'000

$'000

$'000

$'000

$'000

$'000

$'000

$'000

$'000

$'000

Estimate of net ultimate claims costs

At end of accident year

121,801

61,550

66,779

114,162

102,138

91,686

86,286

93,055

117,798

219,627

One year later

108,067

70,345

63,441

106,114

119,144

87,813

91,391

139,062

109,241

Two years later

100,453

67,843

65,399

96,653

218,627

96,971

89,415

159,898

Three years later

91,789

68,396

62,028

89,631

215,052

92,516

85,866

Four years later

84,123

67,312

58,498

82,685

205,636

80,781

Five years later

82,395

62,705

55,203

75,963

196,769

Six years later

80,279

59,872

54,526

69,127

Seven years later

80,399

61,182

52,551

Eight years later

85,097

61,165

Nine years later

85,916

Estimate of net ultimate claims costs

85,916

61,165

52,551

69,127

196,769

80,781

85,866

159,898

109,241

219,627

Cumulative payments

80,064

55,138

49,545

58,402

173,712

59,665

49,237

75,958

27,503

18,896

Net claims liability

-

undiscounted

4,935

5,852

6,027

3,006

10,725

23,057

21,116

36,629

83,940

81,738

200,731

477,756

Discount to present value

(15)

(22)

(24)

(6)

(29)

(113)

(107)

(229)

(550)

(804)

(2,142)

(4,041)

Net claims liability

- discounted

4,920

5,830

6,003

3,000

10,696

22,944

21,009

36,400

83,390

80,934

198,589

473,715

Claims handling expense

7,818

Net central estimate

481,533

Net risk margin

106,423

Total net outstanding claims liability

587,956

Reinsurance and other recoveries

2,603

Total gross outstanding claims liability

590,559

T

he claims development table discloses amounts net of reinsurance and other recoveries to give the most meaningful insight in

to the impact on surplus/(deficit).

Annual Report 2019-20 Part 5: Financial Statements 123 Annual Report 2019 -20 Part 5: Financial Statements 150

Notes to and forming part of the financial statements C. General Business Disclosures

C2 Investment funds

Finance provides advice on the investment mandates and governance arrangements for the investment funds. This includes advice on the credit of amounts to and debits of amounts from the investment funds. The Future Fund Board of Guardians (the Board), supported by the Future Fund Management Agency (FFMA), is responsible for the management and investment of the assets of the investment funds. The investment funds consist of the respective special accounts and the investments of the:

• Building Australia Fund (BAF) - an investment fund established by the Nation-building Funds Act 2008 (NBF Act) to make payments in relation to the creation or development of transport, communication, eligible national broadband network, energy and water infrastructure. The BAF was closed on 2 September 2019 by the Future Drought Fund (Consequential Amendments) Act 2019 with the balances of the BAF transferred to the Future Drought Fund.

• Education Investment Fund (EIF) - an investment fund established by the NBF Act to make payments in relation to the creation or development of higher education, research, vocational education and training, and eligible education infrastructure and to make transitional Higher Education Endowment Fund payments. The EIF was closed on 12 December 2019 by the Emergency Response Fund (Consequential Amendments) Act 2019 with the balances of the EIF transferred to the Emergency Response Fund.

• DisabilityCare Australia Fund (DCAF) - an investment fund established by the DisabilityCare Australia Fund Act 2013 to reimburse the Commonwealth, states and territories for costs incurred in relation to the National Disability Insurance Scheme Act 2013.

• Medical Research Future Fund (MRFF) - an investment fund established under the Medical Research Future Fund Act 2015 to support medical research and innovation into the future.

• Aboriginal and Torres Strait Islander Land and Sea Future Fund (ATSILSFF) - an investment fund established under the Aboriginal and Torres Strait Islander Land and Sea Future Fund Act 2018 to make annual and discretionary payments to the Indigenous Land and Sea Corporation.

• Future Drought Fund (FDF) - an investment fund established on 2 September 2019 under the Future Drought Fund Act 2019. On establishment, the FDF was credited with the balances of the BAF which has now closed. The FDF enhances the Commonwealth’s ability to make arrangements with, and grants to, persons and bodies in relation to drought resilience, preparedness and response.

• Emergency Response Fund (ERF) - an investment fund established on 12 December 2019 under the Emergency Response Fund Act 2019. On establishment, the ERF was credited with the uncommitted balances of the EIF which has now closed. The ERF allows the Government to draw up to $200 million in any given year, beyond what is already available to fund emergency response and natural disaster recovery and preparedness, where it determines the existing recovery and resilience-building programs are insufficient to provide an appropriate response to natural disasters.

Key judgements and estimates In applying Finance's accounting policies, management has made a number of judgements and applied estimates and assumptions to future events. Judgements and estimates which are material to the financial statements are located throughout the investment funds disclosure.

Policy and measurement

Investment mandate Each fund has an investment mandate that is determined by the responsible Ministers under legislation. For the BAF, EIF and DCAF the investment mandates set a target benchmark return of the Australian three month bank bill swap rate + 0.3% per annum calculated on a rolling 12 month basis (net of fees). The investment mandates also require the Board to invest in such a way as to minimise the probability of capital losses over a 12 month horizon.

The investment mandate for the MRFF sets an average return of at least the Reserve Bank of Australia (RBA) Cash Rate target + 1.5% to 2.0% per annum, net of investment fees, over a rolling 10 year term as the benchmark return on the Fund. In targeting the benchmark return, the Board must determine an acceptable but not excessive level of risk measured in terms such as the probability of losses in a particular year.

Annual Report 2019-20 Part 5: Financial Statements 123 Annual Report 2019 -20 Part 5: Financial Statements 151

Notes to and forming part of the financial statements C. General Business Disclosures

The investment mandate for the ATSILSFF, FDF and ERF sets out a benchmark return of CPI Index + 2.0% to 3.0% per annum, net of investment fees over the long term. In targeting the benchmark return, the Board must determine an acceptable but not excessive level of risk, including having regard to the plausible capital loss from investment return.

Investments All investments are designated as financial assets through profit and loss on acquisition. Subsequent to initial recognition, all investments held at fair value through profit and loss are measured at fair value with changes in their fair value recognised in the Administered Schedule of Comprehensive Income each reporting date.

Investments are recognised and derecognised on trade date where purchase or sale of an investment is under a contract whose terms require delivery of the investment within the timeframe established by the market concerned. Investments are initially measured at fair value, net of transaction costs that are directly attributable to acquisition or issue of the investment.

Investments in collective investment vehicles are recorded at fair value on the date which consideration is provided to the contractual counterparty under the terms of the relevant subscription agreement. Any associated due diligence costs in relation to these investments are expensed when incurred.

The following methods are adopted by the investment funds in determining the fair value of investments:

• Listed securities and investments in listed managed investment schemes including exchange traded futures and options are recorded at the quoted market prices on relevant stock exchanges.

• Unlisted managed investment schemes and collective investment vehicles are re-measured based on the estimated fair value of the net assets of each scheme or vehicle at the reporting date. Collective investment vehicles are entities that enable investors to pool their money and invest the pooled funds, rather than buying securities directly.

Collective investment vehicles are used to invest in private equity funds, hedge funds, debt funds, listed equity funds, infrastructure funds and property funds and are usually structured as interests in limited partnerships and limited liability companies.

In determining the fair value of the net assets of unitised unlisted managed investment schemes and collective investment vehicles, reference is made to the underlying unit price provided by the Manager (where available) and capital account statements and the most recent audited financial statements of each scheme or vehicle.

Manager valuation reports are reviewed to ensure the underlying valuation principles are materially compliant with Australian Accounting Standards and applicable industry standards including International Private Equity and Venture Capital Valuation Guidelines as endorsed by the Australian Private Equity and Venture Capital Association Limited.

Additional due diligence on manager valuation reports has been undertaken to ensure fair value estimates are a reasonable and appropriate reflection of the impact of COVID-19 on the Manager's underlying assets, given updates to values were applied by Managers outside their most recent audit period.

• Derivative instruments including forward foreign exchange currency contracts, interest rate swaps, credit default swaps, currency swaps, options, forward contracts on mortgage backed securities and futures are recorded at their fair value on the date the contract is entered into and are subsequently re-measured to their fair values at each reporting date. The investment funds have entered into derivative contracts to manage their exposure to foreign exchange risk, interest rate risk, equity market risk and credit risk. The investment funds also uses derivatives to gain indirect exposure to market risks. The use of derivative financial instruments by the investments funds is governed by the Nation-building Funds Act 2008, the Disability Care Australia Fund Act 2013, the Medical Research Future Fund Act 2015, the Aboriginal and Torres Strait Islander Land and Sea Future Fund Act 2018, the Future Drought Fund Act 2019 and the Emergency Response Fund Act 2019. Further disclosure regarding the use of derivatives by the investment funds is presented in Note C2.3.

• Interest bearing securities including asset backed securities, bank bills, negotiable certificates of deposit, mortgage backed securities, government securities and corporate debt securities which are traded in active markets are valued at the quoted market prices. Securities for which no active market is observable are valued at current market rates using broker sourced market quotations and/or independent pricing services as at the reporting date.

MRFF Investment Companies Whilst all investments are held by the Board in respect of the relevant Administered Investment Fund, some investments are indirectly held through wholly owned investment holding companies, MRFF Investment Companies (MRFFICs).

Annual Report 2019-20 Part 5: Financial Statements 123 Annual Report 2019 -20 Part 5: Financial Statements 152

Notes to and forming part of the financial statements C. General Business Disclosures

The MRFFICs are funded primarily via loan arrangements between the Board in respect of the MRFF and each respective MRFFIC. These loans are designated as financial assets and measured at fair value with changes in their fair value recognised in the Administered Schedule of Comprehensive Income each reporting date. Interest receivable at reporting date is included in the fair market value.

Loan assets are repayable on demand. Interest rates are set on the loans having regard to the 10 year government bond rate in the market in which the underlying investment is made.

As the MRFFICs hold a material portion of the investments of the investment funds, disclosures in the financial instruments and managing financial risk notes (Note C2.3) include the underlying investments of the MRFFICs on a look-through basis as this provides users of the information with more relevant information in relation to the investment portfolio.

Income Interest income is interest earned on cash and cash equivalents. Dividends, franking credits and distribution income are recognised when the right to receive payment is established.

Net realised gain/loss on investments held at fair value through profit or loss includes:

• Realised interest income including coupon payments received during the year • Net realised gains/losses including realised gains and losses as compared to the original cost of the investment • Net realised changes in the fair value includes the current year unrealised gain/loss on investments held as at reporting date.

Annual Report 2019-20 Part 5: Financial Statements 123 Annual Report 2019 -20 Part 5: Financial Statements 153

Notes to and forming part of the financial statements C. General Business Disclosures

C2.1 Investment funds operating results

30 June 30 June

2020 2019

Total Total

$'000 $'000

Revenue Interest 119,148 192,796

Dividends and distributions 123,636 250,404

Total revenue 242,784 443,200

Gains on financial investments 924,129 897,361

Total income 1,166,913 1,340,561

Expenses Supplier expenses 43,786 33,047

Foreign exchange losses 546,348 271,078

Total expenses 590,134 304,125

Net investment funds return 576,779 1,036,436

less investment funds distributions 1,997,374 2,294,618

Net surplus/(deficit)1 (1,420,595) (1,258,182)

Attributable to: BAF 11,523 90,950

EIF 25,984 88,124

DCAF (1,337,826) (1,756,298)

MRFF (363,408) 300,966

ATSILSFF (73,144) 18,076

FDF 164,837 -

ERF 151,439 -

Net surplus/(deficit)1 (1,420,595) (1,258,182)

1 Includes investment funds distributions for DCAF $1,550 million, MRFF $393 million, ATSILSFF $54 million (2019: DCAF $2,088 million, MRFF $205 million, EIF $2 million).

Annual Report 2019-20 Part 5: Financial Statements 123 Annual Report 2019 -20 Part 5: Financial Statements 154

Notes to and forming part of the financial statements C. General Business Disclosures

C2.2 Investment funds financial position

30 June 30 June

2020 2019

Total Total

$'000 $'000

Assets Financial assets measured at amortised cost Cash and cash equivalents 9,941,755 9,280,609

Cash held in OPA1 - 840,000

Other receivables 80,500 108,774

Total financial assets measured at amortised cost 10,022,255 10,229,383

Financial assets measured at FVPL Interest bearing securities 21,115,280 21,744,133

MRFFICs 4,173,062 1,796,135

Listed equities and managed investment schemes 5,289,594 1,638,076

Collective investment vehicles 2,861,761 1,533,097

Restricted cash 188,548 119,572

Derivatives 593,424 48,764

Total financial assets measured at FVPL 34,221,669 26,879,777

Total assets 44,243,924 37,109,160

Liabilities Financial liabilities measured at amortised cost Trade creditors and accruals 13,430 11,792

Unsettled purchases 119,497 118,114

Total financial liabilities measured at amortised cost 132,927 129,906

Financial liabilities measured at FVPL Derivatives 166,652 85,390

Total financial liabilities measured at FVPL 166,652 85,390

Total liabilities 299,579 215,296

Net assets 43,944,345 36,893,864

Attributable to:2 BAF - 3,956,732

EIF - 3,952,200

DCAF 16,507,380 17,204,618

MRFF 17,221,711 9,754,629

ATSILSFF 1,952,540 2,025,685

FDF 4,133,091 -

ERF 4,129,623 -

Total net assets 43,944,345 36,893,864

1 Administered special accounts (Note F3.2). 2 Details of the investment activity and performance of the funds are available on the FFMA's website.

Annual Report 2019-20 Part 5: Financial Statements 123 Annual Report 2019 -20 Part 5: Financial Statements 155

Notes to and forming part of the financial statements C. General Business Disclosures

Collective investment vehicles

The investment funds have committed to provide capital to various collective investment vehicles. The total of these commitments at reporting date is $1,920 million (2019: $1,303 million). The investment fund’s commitments, being capital calls, are set out in the various underlying subscription documents. While the actual timing of the capital calls to be made by the managers of these vehicles is uncertain, as it is dependent on the managers sourcing suitable investment opportunities. The investment funds have appropriate liquidity planning in place to ensure a suitable allocation of resources will be available to cover these future commitments of capital.

The table below provides more detailed information of collective investment vehicles at the reporting date:

30 June 2020

Description of underlying Strategy Capital committed local currency

Outstanding commitments AUD equivalent Net capital cost

AUD equivalent Fair value AUD equivalent

$'000 $'000 $'000 $'000

Directly held by MRFF Alternatives AUD 1,701,270 - 1,694,009 1,615,620

Alternatives USD 150,000 225,972 226,068

Debt AUD 275,000 - 275,025 287,138

Debt USD 173,450 108,202 142,474 130,139

Global Infrastructure AUD 275,752 - 274,862 270,435

Global Infrastructure EUR 22,310 39,978 36,265

Global Infrastructure USD 250,000 315,983 50,068 46,401

Listed Equities AUD 25,000 - 25,000 23,188

Property GBP 98,500 174,931 2,060 1,173

Property USD 335,911 282,099 200,222 225,334

Total 881,215 2,929,670 2,861,761

Via MRFFICs Alternatives AUD 796,306 95,109 710,156 693,329

Alternatives USD 311,000 - 439,829 460,579

Debt USD 40,000 30,644 26,705 29,017

Private equity AUD 100,706 32,034 58,731 54,788

Private equity EUR 52,526 14,444 21,872 36,952

Private equity USD 1,205,154 663,281 960,979 1,110,085

Property EUR 142,500 184,186 47,949 44,703

Property USD 21,589 17,848 10,920 10,865

Total 1,037,546 2,277,141 2,440,318

C2.3 Managing financial risk

The investment funds have entered into forward foreign exchange currency contracts to manage its exposure to foreign exchange risk. The investment funds also use interest rate futures and swaps to manage their exposure to interest rate risk and credit default swaps to manage their exposure to credit risk and/or gain indirect exposure to credit risk. The investment funds also use equity derivatives to manage market exposure to equity price risk.

C2.3.1 Market risk

Market risk is the risk of loss arising from movements in the prices of various assets flowing from changes in interest rates and foreign currency risk.

Annual Report 2019-20 Part 5: Financial Statements 123 Annual Report 2019 -20 Part 5: Financial Statements 156

Notes to and forming part of the financial statements C. General Business Disclosures

Interest rate risk

Interest rate risk exposure

The investment funds are exposed to risk of loss arising from movement in the prices of various assets flowing through interest rate changes. The total exposure for each class of financial asset is set out below.

Financial assets exposed to interest rate risk Variable interest rate Fixed

interest rate Non-interest bearing Total

30 June 2020 $'000 $'000 $'000 $'000

Cash and cash equivalents 9,941,755 - - 9,941,755

Interest bearing securities 4,090,581 17,459,972 - 21,550,553

Other financial assets - - 12,751,616 12,751,616

Total investment 14,032,336 17,459,972 12,751,616 44,243,924

Total Interest rate swaps (notional amount) - pay (5,561) (163) -

Total Interest rate swaps (notional amount) - receive 163 5,561 -

Currency swaps (notional amount) - pay (906,474) - -

Currency swaps (notional amount) - receive 1,246,026 - -

30 June 2019 Cash and cash equivalents 9,280,609 - - 9,280,609

Cash held in OPA - - 840,000 840,000

Interest bearing securities 4,577,795 17,215,252 - 21,793,047

Other financial assets - - 5,195,504 5,195,504

Total investment 13,858,404 17,215,252 6,035,504 37,109,160

Total Interest rate swaps (notional amount) - pay (140,943) (276,009) -

Total Interest rate swaps (notional amount) - receive 276,009 140,943 -

Interest rate derivative contracts

The investment funds had open positions in exchange traded interest rate futures contracts and interest rate swap agreements at the reporting date. Interest rate derivative contracts are used by the investment fund’s investment managers to manage the exposure to interest rate risk and to ensure it remains within approved limits. The notional value of the open contracts and their fair value are set out below.

30 June 2020 30 June 2019

Notional value Fair market value

Notional value Fair market value

$'000 $'000 $'000 $'000

Open contracts Buy domestic interest rate futures contracts 800,146 5,116 92,347 393

Sell domestic interest rate futures contracts - - (1,296,430) (707)

Buy international interest rate futures contracts 878,379 4,045 391,724 7,444

Sell international interest rate futures contracts (2,178,546) (6,721) (2,093,961) (10,856)

Receiver (fixed) interest rate swap agreements 5,561 50 (127,497) 3,979

Payer (fixed) interest rate swap agreements 163 (13) 276,009 (2,351)

Buy forward contracts on mortgage backed securities 185,922 (70) 166,796 228

Sell forward contracts on mortgage backed securities - - (32,369) (47)

Total open contracts 2,407 (1,917)

Annual Report 2019-20 Part 5: Financial Statements 123 Annual Report 2019 -20 Part 5: Financial Statements 157

Notes to and forming part of the financial statements C. General Business Disclosures

Interest rate sensitivity analysis

The investment funds are exposed to interest rate risk in relation to their investments. The impact of a change in interest rates is disclosed in the table below, with all other variables held constant. The table demonstrates the impact on the operating result of a 9 basis point (2019: 20 basis point) change in bond yields with all other variables held constant. It is assumed that the 9 basis point change occurs as at the reporting date and there are concurrent movements in interest rates and parallel shifts in the yield curves. A 9 basis point movement would impact on the debt portfolios' (including derivatives) contribution to the investment funds operating result. The impact on the operating result includes the increase/(decrease) in interest income on floating rate securities from the basis point change.

Sensitivity by year Risk variable Change in risk variable Net cost of services

$'000

2020 Discount rate +0.09% 20,130

-0.09% (20,113)

2019 Discount rate +0.2% 54,644

-0.2% (54,034)

Foreign currency risk

The investment funds undertake certain transactions denominated in foreign currencies and are therefore exposed to the effects of exchange rate fluctuations. Exposure to foreign currency risk is managed utilising forward foreign exchange contracts. The exposure in AUD equivalents to foreign currency risk at reporting date is as follows.

Financial assets exposed to currency risk USD EURO GBP Other Total

30 June 2020 $'000 $'000 $'000 $'000 $'000

Cash and cash equivalents 825,406 73,333 39,991 25,638 964,368

Interest bearing securities 3,308,806 754,612 682,791 1,395,222 6,141,431

Listed equities 2,463,948 356,138 163,717 1,877,499 4,861,302

Collective investment vehicles 2,238,488 117,921 1,173 - 2,357,582

Other investments 68,258 20,334 5,057 15,548 109,197

Receivables 17,003 3,069 535 7,025 27,632

Payables (112,605) (5,619) (813) (509) (119,546)

Swaps (902,082) 669 - (1,833) (903,246)

Total physical exposure 7,907,222 1,320,457 892,451 3,318,590 13,438,720

Forward exchange contracts Buy foreign currency 2,039,614 455,901 115,234 331,908 2,942,657

Sell foreign currency (7,085,044) (1,195,924) (870,594) (677,547) (9,829,109)

Total derivative exposure (5,045,430) (740,023) (755,360) (345,639) (6,886,452)

Net exposure 2,861,792 580,434 137,091 2,972,951 6,552,268

Financial assets exposed to currency risk 30 June 2019 Cash and cash equivalents 204,175 73,277 20,671 7,069 305,192

Interest bearing securities 2,653,071 855,210 1,219,104 1,034,808 5,762,193

Listed equities 924,357 137,983 81,092 595,125 1,738,557

Collective investment vehicles 852,920 41,768 - - 894,688

Other investments 21,510 14,820 831 7,195 44,356

Receivables 59,168 3,904 868 2,373 66,313

Payables (84,548) (10,848) (7,698) (13,106) (116,200)

Total physical exposure 4,630,653 1,116,114 1,314,868 1,633,464 8,695,099

Forward exchange contracts Buy foreign currency 1,102,601 326,347 26,437 182,833 1,638,218

Sell foreign currency (4,912,955) (1,283,496) (1,332,196) (1,026,280) (8,554,927)

Total derivative exposure (3,810,354) (957,149) (1,305,759) (843,447) (6,916,709)

Net exposure 820,299 158,965 9,109 790,017 1,778,390

Annual Report 2019-20 Part 5: Financial Statements 123 Annual Report 2019 -20 Part 5: Financial Statements 158

Notes to and forming part of the financial statements C. General Business Disclosures

Foreign currency sensitivity analysis

The sensitivity analysis table below demonstrates the impact on the operating result of a movement in the value of the AUD relative to the actual net exposures as at year end, with all other variables held constant.

Sensitivity by year Risk variable Change in risk variable Net cost of services

$'000

2020 Exchange rate +8.41% 803,421

-8.41% (803,421)

2019 Exchange rate +8.7% 291,826

-8.7% (291,826)

Other price risk

The investment funds are exposed to price risk arising from equity investments. The equity price risk is the risk that the value of the investment funds equity portfolio will decrease as a result of changes in the levels of equity indices and the price of individual stocks. The exposure to equity price risk at the reporting date was as follows:

30 June 2020 $'000

Domestic equities and managed investment schemes 1,535,659

International equities and managed investment schemes 3,753,935

Total equity price risk exposure 5,289,594

Equity derivative contracts

Equity futures are used to manage the exposure to equity price risk. The notional value and fair value of the open positions at the reporting date are set out in the following table. Notional value

Fair market value

30 June 2020 $'000 $'000

Buy domestic equity futures contracts 3,830 17

Sell domestic equity futures contracts (368,545) (1,538)

Buy international equity futures contracts 490,196 2,461

Total equity derivative contracts 125,481 940

Equity price sensitivity analysis

The analysis below demonstrates the impact on the operating result of the following movements: • +/- 20% on Australian equities • +/- 15% on International equities The sensitivity analysis has been performed to assess the direct risk of holding equity instruments. The analysis is undertaken on the base currency values of the underlying exposures.

Impact on operating results 30 June 2020 $'000

20% increase in Australian equities 436,947

15% increase in International equities 1,289,081

Total 1,726,028

20% decrease in Australian equities (436,957)

15% decrease in International equities (1,289,125)

Total (1,726,082)

Annual Report 2019-20 Part 5: Financial Statements 123 Annual Report 2019 -20 Part 5: Financial Statements 159

Notes to and forming part of the financial statements C. General Business Disclosures

C2.3.2 Liquidity risk

Liquidity risk is the risk that the investment funds will not be able to meet their obligations as they fall due. The investment funds must be in a position to meet the distribution payments required of it up to the amount periodically declared. This is managed by FFMA under the Short-term Liquidity Risk Policy which includes a short-term crash test which is applied to the portfolio of each investment fund to ensure they are able to meet their immediate cash flow obligations under a plausible but very severe market dislocation.

C2.3.3 Credit risk management

Credit risk is the risk of loss that arises from a counterparty failing to meet their contractual commitments in full and on time, or from losses arising from the change in value of a traded financial instrument as a result of changes in credit risk on that instrument. The Board sets limits on the credit ratings of debt investments when appointing investment managers. These limits are reflected in the underlying investment mandates and are monitored by FFMA with compliance reported to the Board. The investment funds maximum exposure to credit risk at reporting date in relation to each class of recognised financial asset is the carrying amount of those assets as indicated in the investment funds financial position.

30 June 30 June

2020 2019

Interest bearing securities issued by $'000 $'000 As at 30 June 2020, the investment

funds had an exposure of greater than 24% of its net assets to interest bearing securities issued by domestic banks and cash deposits held with banks. Exposures to domestic banks are identified in this table.

Commonwealth Bank of Australia 3,318,536 8,525,941

Westpac Banking Corporation 671,006 2,756,847

National Australia Bank 2,687,108 4,110,034

Australia and New Zealand Banking Group 3,835,059 5,723,329

Total 10,511,709 21,116,151

Credit exposure by credit rating

30 June 30 June

2020 2019

$'000 $'000

Long-term rated securities

The investment funds use Moody's and Standard & Poors credit rating scales to report exposure to credit risk. The long term credit risk exposures range from ‘AAA’ (extremely strong capacity to meet financial commitments) to ‘below investment grade/not rated’. The investments classified as below investment grade are held in debt mandates. This table provides information regarding the credit risk exposures of the debt instruments held by the investment funds at reporting date according to the credit ratings of the underlying debt instruments.

AAA 2,650,972 3,017,691

AA 8,961,491 10,191,578

A 5,835,081 2,081,814

BBB 837,920 238,683

Below investment grade/not rated 1,715,996 711,778

Short-term rated securities

A-1+ 11,006,669 13,614,394

A-1 58,748 817,799

A-2 - 92,918

Other

US Government Guaranteed 425,431 307,001

Total debt securities held 31,492,308 31,073,656

Other non-debt financial assets 12,751,616 6,035,504

Total financial assets 44,243,924 37,109,160

Annual Report 2019-20 Part 5: Financial Statements 123 Annual Report 2019 -20 Part 5: Financial Statements 160

Notes to and forming part of the financial statements C. General Business Disclosures

Credit risk derivatives

The investment funds managers utilise credit default swaps to gain exposure to, and to hedge, credit risk. The investment funds transact in credit default swaps in the form of centrally cleared over-the-counter contracts. Centrally cleared transactions are cash margined at least daily. Managers are required to fully cash back all sold credit protection positions. Outstanding positions are marked to market and collateralisation of out of the money positions is required by the central clearing exchange.

Notional value Fair market value 30 June 30 June

2020 2020

$'000 $'000

The notional value of the open credit default swap positions, the impact on increasing or reducing credit exposures and their fair value are set out in this table.

Buy credit protection 92,200 (1,284)

Sell credit protection (88,974) 1,555

Total 3,226 271

Annual Report 2019-20 Part 5: Financial Statements 123 Annual Report 2019 -20 Part 5: Financial Statements 161

Notes to and forming part of the financial statements C. General Business Disclosures

C3 Superannuation

C3.1 Overview of schemes

Finance administers the following defined benefit superannuation schemes on behalf of the Australian Government:

• Commonwealth Superannuation Scheme (CSS), including the 1922 Scheme • Public Sector Superannuation Scheme (PSS) • Parliamentary Contributory Superannuation Scheme (PCSS) • Governor-General Pension Scheme (G-GPS) • Judges' Pensions Scheme (JPS) • Federal Circuit Court Judges Death and Disability Scheme (FCCJDDS).

The CSS, PSS and PCSS are closed to new members.

Finance recognises an Administered liability for the present value of the Australian Government's expected future payments arising from the PCSS, JPS, G-GPS and FCCJDDS and the unfunded components of the CSS and PSS. These liabilities are based on an annual actuarial assessment. The funded components of these schemes are reported in the financial statements of the respective schemes. Finance also has the responsibility to record the Australian Government's transactions in relation to the above schemes.

Policy and measurement

Actuarial gains or losses are recognised in other comprehensive income (OCI) in the year in which they occur. Interest on the net defined benefit liability is recognised in the surplus/(deficit), the return on plan assets excluding the amount included in interest income is recognised in OCI.

Superannuation liabilities are calculated annually as the present value of future benefit obligations less the fair value of scheme assets. The rate used to discount future benefits is determined by reference to the government bond rate at the reporting date.

Amounts recognised in the Schedule of Comprehensive Income and Schedule of Assets and Liabilities Other

CSS PSS PCSS G-GPS JPS FCCJDDS Total

$'000 $'000 $'000 $'000 $'000 $'000 $'000

30 June 2020 Revenues 56,830 1,107,327 378 - - - 1,164,535

Expenses 1,704,212 6,425,875 30,261 6,453 108,372 971 8,276,144

OCI (1,274,833) (4,398,397) 99,764 3,550 156,298 968 (5,412,650)

Liabilities 94,766,023 143,944,373 1,275,686 24,253 1,743,593 467 241,754,395

30 June 2019 Revenues 70,520 1,121,948 536 - - - 1,193,004

Expenses 2,463,042 5,838,714 42,048 663 89,761 962 8,435,190

OCI (13,766,260) (31,832,327) (223,591) (1,918) (309,215) 921 (46,132,390)

Liabilities 95,503,267 134,289,616 1,389,754 23,232 1,845,902 938 233,052,709

The expected employer productivity contributions for 2021 are: $7.6 million for the CSS and $150.2 million for the PSS (2020 actual: $8.9 million for the CSS and $157.2 million for the PSS).

Annual Report 2019-20 Part 5: Financial Statements 123 Annual Report 2019 -20 Part 5: Financial Statements 162

Notes to and forming part of the financial statements C. General Business Disclosures

C3.2 Scheme information

The funding arrangements for the various schemes:

Scheme Funding arrangements

1922 Scheme Unfunded. There are no longer any members contributing under this Act. Benefits are paid to members from the Consolidated Revenue Fund (CRF).

CSS and PSS Partially funded. Contributions generally comprise basic member contributions and employer productivity (up to 3%) contributions. Benefits are paid to members from the CRF.

PCSS Unfunded. Member contributions are a fixed percentage of: parliamentary allowance; salary for Ministers of State; and allowance by way of salary for office holders, which is paid into the CRF. Benefits are paid to members from the CRF.

G-GPS, JPS and FCCJDDS Unfunded. Members are not required to contribute towards the cost of their benefit during their term of appointment. Benefits are paid to members from the CRF.

The nature of the benefits provided under the schemes:

Scheme Benefits Paid

1922 Scheme The benefit payable is a lifetime indexed pension (indexed in January and July in line with changes in the CPI). The payments and liabilities in respect of these members are included in the CSS amounts.

CSS The types of benefits payable are a lifetime indexed pension (indexed in January and July in line with changes in the CPI), a lifetime non-indexed pension and a lump sum payment. The main retirement benefit is the employer-financed indexed pension that is calculated by a set formula based on a member's age, years of contributory service and final salary.

Where a member has preserved their benefit in the scheme, when the benefit becomes payable the employer financed indexed pension is calculated by applying age-based factors to the amount of two and a half times the member's accumulated basic member contributions and interest.

Member’s basic contributions, employer productivity contributions and interest can be taken as a lump sum or an additional non-indexed lifetime pension. This benefit is determined by the value of contributions and investment returns, and in the case of the non-indexed pension by applying age-based factors.

PSS The types of benefits payable are a lifetime indexed pension (indexed in January and July in line with changes in the CPI) and a lump sum payment. On retirement a lump sum benefit is payable which is calculated based on the member’s length of contributory membership, their rate of member contributions and final average salary (average of a member’s superannuation salary on their last three birthdays).

Where a member preserves their benefit in the scheme, generally the member’s lump sum benefit at that time is crystallised with the funded component of the benefit accumulating with interest and the unfunded component accumulating with changes in the CPI, until the benefit becomes payable.

Generally members can convert 50% or more of their lump sum to a lifetime indexed pension. The indexed pension is calculated by applying age-based factors to the amount of the lump sum to be converted to a pension.

PCSS The benefit payable is a lifetime pension or lump sum depending on length of service and additional offices held.

Where a retiring member has sufficient parliamentary service to meet the pension qualification period for a lifetime pension (which is payable as set out in the Act), pension benefits are expressed as a percentage of the superannuation salary applicable for the PCSS and are indexed by movements in that superannuation salary.

Annual Report 2019-20 Part 5: Financial Statements 123 Annual Report 2019 -20 Part 5: Financial Statements 163

Notes to and forming part of the financial statements C. General Business Disclosures

A PCSS member who qualifies for a pension can also elect to convert up to half of their benefit to a lump sum. Lump sum benefits are payable to PCSS members who do not have sufficient parliamentary service to qualify for a lifetime pension.

G-GPS The benefit payable is a lifetime pension equal to 60% of the salary of the Chief Justice of the High Court of Australia.

There is no minimum qualification period.

JPS The benefit payable is a lifetime pension equal to 60% of the judicial salary, payable where a judge has 10 or more years’ service and is 60 years of age or older.

Provisions are made for part pension (pro-rated based on length of service) where a judge retires on reaching the maximum retirement age with at least 6 years but less than 10 years service.

FCCJDDS Federal Circuit Court Judges who retire due to permanent disability are provided with a pension equal to 60% of the salary the Judge would have received if they had not retired, and is payable until the earlier of the Judge attaining age 70, or his/her death.

In addition, a Judge continues to receive employer superannuation contributions in respect of this pension until they reach age 65.

Generally, benefits may also be payable to any surviving eligible spouse and children on the death of a member or pensioner.

Regulatory Framework

The following table details the enabling legislation for each of the individually disclosed defined benefit schemes and whether the scheme must comply with the requirements of the Superannuation Industry (Supervision) Act 1993, as well as a number of other Acts.

Scheme Enabling Act

Period open to new members Regulatory requirement

CSS Superannuation Act 1976 1 July 1976 to 30 June 1990 Compliance with the Superannuation Industry (Supervision) Act 1993 required for these schemes.

PSS Superannuation Act 1990 1 July 1990 to 30 June 2005

1922 Scheme

Superannuation Act 1922 1 July 1922 to 30 June 1976

These schemes are exempt from Superannuation Industry (Supervision) Act 1993.

PCSS

Parliamentary Contributory Superannuation Act 1948 Up to 8 October 2004

G-GPS Governor-General Act 1974 To present JPS Judges’ Pensions Act 1968 To present

FCCJDDS Federal Circuit Court of Australia Act 1999 To present

Governance

The Commonwealth Superannuation Corporation (CSC) was established under the Governance of Australian Government Superannuation Schemes Act 2011 and is the trustee for the CSS and PSS. CSC is responsible for:

• providing administration services for each scheme • management and investment of scheme assets • compliance with superannuation taxation and other applicable laws • compliance with relevant legislation including the Governance of Australian Government Superannuation Schemes

Act 2011.

CSC is supported by a custodian and other specialist providers.

The PCSS is administered by Finance on behalf of the Minister for Finance. The Parliamentary Retiring Allowances Trust (the Trust) has responsibility for matters where discretion has been given under the Parliamentary Contributory Superannuation Act 1948. The Trust consists of five trustees - the Minister for Finance (or a Minister authorised by the Minister for Finance) who is the presiding trustee, plus two Senators and two Members of the House of Representatives appointed by their respective Houses.

Annual Report 2019-20 Part 5: Financial Statements 123 Annual Report 2019 -20 Part 5: Financial Statements 164

Notes to and forming part of the financial statements C. General Business Disclosures

The enabling Acts for the ‘other’ defined benefit superannuation schemes confer certain powers to the Secretary of Finance in relation to administration of each scheme. Day-to-day administration of the schemes is undertaken by Finance.

C3.3 Risks and assumptions

The schemes are exposed to interest rate risk, investment risk, longevity risk and salary risk. The following pages identify and explain the amounts reported in these financial statements and detail the principal actuarial assumptions underpinning each of the major schemes, including an analysis of the sensitivity of changes in these assumptions to the amounts reported in the financial statements.

Composition of scheme assets

The fair value of scheme assets for CSS and PSS at 30 June 2020 is $20.8 billion (30 June 2019 was $21.8 billion). The assets are diversified in the following sectors:

CSS PSS

Australian equities 22% 23%

International equities 25% 26%

Private capital 6% 7%

Property and infrastructure 11% 12%

Corporate bonds 7% 7%

Alternative strategies 10% 10%

Cash and sovereign bonds 19% 15%

This includes $5.8 million (2019: $361.3 million) of Australian Government bonds.

Key judgements and estimates

CSS, PSS, and PCSS Assumptions have been made regarding rates of retirement, death (for active, preserved and pension members), mortality improvements, invalidity, resignation, retrenchment, retention and take up rates of pensions in the scheme. Assumptions have also been made for the ages of spouses and rates of member contributions. These assumptions are consistent to those used within the 2017 LTCRs.

Membership data as at 30 June 2019 has been rolled forward to 30 June 2020 by making allowance for estimated investment earnings, contributions, salary increases, benefit payments and benefit accruals, using the actuarial assumptions from the LTCRs where other information is not available. The defined benefit obligation calculated is based on the rolled forward membership data that was then adjusted to reflect the difference between expected benefit payments and actual benefit payments to 30 June 2020.

The fair value of scheme assets as at 30 June 2020 (CSS and PSS only) were estimated using the unaudited net scheme assets available to pay benefits at 31 May 2020 rolled forward to 30 June 2020 with cash flow items provided by the CSC. An estimate of the actual rate of investment return earned by the scheme during June 2020 was used in determining the fair value of scheme assets.

Other Schemes (G-GPS, JPS and FCCJDDS) Membership data as at 31 May 2020 has been rolled forward to 30 June 2020. Other actuarial assumptions are consistent to those used within the LTCRs.

Annual Report 2019-20 Part 5: Financial Statements 123 Annual Report 2019 -20 Part 5: Financial Statements 165

Notes to and forming part of the financial statements C. General Business Disclosures

Key actuarial assumptions

The key actuarial assumptions for the defined benefit obligation are set out in the table below: CSS PSS Other

Discount rate 1.4% 1.7% 1.7%

Salary growth rate up to June 2024 2.0% 2.0% 2.0%

Salary growth rate from July 2024 3.5% 3.5% 4.0%

Expected pension increase rate 1.7% 1.7% 2.0%

Maturity profile (years) 14.0 (CSS 1976) 22.1 16.4 (PCSS)

8.1 (CSS 1922) 11.2 (G-GPS)

15.3 (JPS) 0.5 (FCCJDDS)

Process used to determine actuarial assumptions

Discount rate The relevant Australian Government Treasury Bond rates were used for the

calculation of defined benefit obligation.

Salary growth rate For the CSS and PSS the short-term rate use is based on the government's current workplace bargaining policy plus assumed promotional increases. The long-term rate thereafter is determined by taking into consideration the duration of the salary linked liabilities, economy-wide wage growth, productivity growth and inflationary expectations plus assumed promotional increases.

The assumed rate for future salary increases has been determined having regards to the average expected long-term outlook for the national wage inflation.

The long-term rates are consistent with those used in the LTCRs for the schemes.

Expected pension increase rate For the CSS and PSS pensions are increased in line with changes in the CPI. For Other Schemes the assumed rate for the pension increases has been determined having regards to the average expected long-term outlook for the national wage inflation.

Maturity profile This reflects the weighted average duration of each schemes defined benefit obligation as at 30 June.

Sensitivity analysis for significant actuarial assumptions

Finance has conducted a sensitivity analysis to quantify the impact of changes in the key underlying assumptions on the defined benefit obligation. The defined benefit obligation has been recalculated by changing the assumptions as outlined below, whilst retaining all other assumptions.

CSS PSS Other

Assumption Movement $'000 $'000 $'000

Discount rate1

+ 0.5% (6,326,468) (16,002,021) (226,657)

- 0.5% 7,058,715 18,603,473 255,095

Salary growth rate

+ 0.5% 86,878 3,169,450 241,855

- 0.5% (82,238) (2,978,817) (217,666)

Pension increase rate

+ 0.5% 5,632,507 13,038,907 n/a

- 0.5% (5,130,752) (11,637,930) n/a

1 An increase in the discount rate between financial years generates a decrease in the defined benefit obligation and a gain in OCI. Conversely, a decrease in the discount rate between financial years causes an increase in the defined benefit obligation and a loss to OCI.

Annual Report 2019-20 Part 5: Financial Statements 123 Annual Report 2019 -20 Part 5: Financial Statements 166

Notes to and forming part of the financial statements

C. General Business Disclosures

C3.4 Superannuation Schemes

30 June 2020

30 June 2019

CSS

PSS

Other

Total

CSS

PSS

Other

Total

$'000

$'000

$'000

$'000

$'000

$'000

$'000

$'000

Reconciliation of the present value of the defined benefit obligation

Value at beginning of the year

97,774,221

153,837,624

3,259,826

254,871,671

85,515,007

116,390,016

2,691,057

204,596,080

Current service cost

114,223

3,891,640

85,106

4,090,969

115,268

2,842,106

51,543

3,008,917

Interest expense

1,625,097

2,900,439

60,951

4,586,487

2,418,143

3,575,243

81,891

6,075,277

Contribution from scheme participants

29,960

536,665

-

566,625

36,719

524,331

-

561,050

Productivity contribution

8,931

157,180

-

166,111

11,131

167,236

-

178,367

Actuarial losses/(gains) in liabilities arising from:

Changes in financial assumptions

1,585,136

3,333,201

(125,464)

4,792,873

13,862,530

31,875,054

540,946

46,278,530

Liability experience

(351,631)

604,088

(135,116)

117,341

(56,902)

726,046

(7,143)

662,001

Benefits paid

(4,135,163)

(2,388,383)

(101,304)

(6,624,850)

(4,125,905)

(2,237,026)

(98,468)

(6,461,399)

Taxes, premiums

and expenses paid

(1,376)

(23,263)

-

(24,639)

(1,770)

(25,382)

-

(27,152)

Closing value of the defined benefit obligation

96,649,398

162,849,191

3,043,999

262,542,588

97,774,221

153,837,624

3,259,826

254,871,671

Reconciliation of the

fair value of plan assets

Value at beginning of the year

2,270,954

19,548,008

-

21,818,962

2,619,759

18,909,288

-

21,529,047

Interest income

35,108

366,204

-

401,312

70,369

578,635

-

649,004

Actual return on scheme assets less interest income

(41,328)

(461,108)

-

(502,436)

39,368

768,773

-

808,141

Contribution from scheme participants

29,960

536,665

-

566,625

36,719

524,331

-

561,050

Productivity contribution

8,931

157,180

-

166,111

11,131

167,236

-

178,367

Net appropriation from the CRF

3,716,289

1,169,515

101,304

4,987,108

3,621,283

862,153

98,468

4,581,904

Benefits paid

(4,135,163)

(2,388,383)

(101,304)

(6,624,850)

(4,125,905)

(2,237,026)

(98,468)

(6,461,399)

Taxes, premiums and expenses paid

(1,376)

(23,263)

-

(24,639)

(1,770)

(25,382)

-

(27,152)

Closing fair value of plan assets

1,883,375

18,904,818

-

20,788,193

2,270,954

19,548,008

-

21,818,962

Closing value of the net defined benefit liability

94,766,023

143,944,373

3,043,999

241,754,395

95,503,267

134,289,616

3,259,826

233,052,709

The fair value of CSS and PSS scheme assets relates to investments in the Pooled Superannuation Trust (PST).

Annual Report 2019-20 Part 5: Financial Statements 123 Annual Report 2019 -20 Part 5: Financial Statements 167

Notes to and forming part of the financial statements D. Operating Resources

D. Operating Resources This section provides further information about major expenses, revenue, assets and liabilities held or administered by Finance, significant estimates and judgements made and the management of risk in relation to these items.

D1 Supplier expenses

Departmental Administered

30 June 30 June 30 June 30 June

2020 2019 2020 2019

$'000 $'000 $'000 $'000

Communication and information technology 57,121 51,018 31,112 27,358

Consultants and contractors 38,827 28,184 507 17

Domestic property portfolio expenses 32,541 34,481 - -

General supplier expenses 29,292 17,937 26,497 22,323

Office expenses - - 34,630 44,926

Superannuation administration costs - - 8,936 9,043

Master media agency services 10,937 9,483 - -

Property operating expenses 4,526 3,942 15,883 12,619

Training 3,004 3,505 - -

Travel 1,243 1,591 - -

Operating lease rentals - 14,154 - 42,381

Total supplier expenses 177,491 164,295 117,565 158,667

D2 Own source revenue

D2.1 Rental Income

Departmental Administered

30 June 30 June 30 June 30 June

2020 2019 2020 2019

$'000 $'000 $'000 $'000

Operating lease income 76,475 76,234 - -

Subleasing right-of-use assets 2,052 3,067 - -

Total rental income 78,527 79,301 - -

Lease income commitment receivables (including GST): Departmental Administered

30 June 30 June 30 June 30 June

2020 2019 2020 2019

$'000 $'000 $'000 $'000

Domestic property portfolio rent receivable 798,796 799,830 - -

Subleasing rent receivable - 7,700 - -

Total commitments receivable 798,796 807,530 - -

By maturity: Within one year 71,069 71,752 - -

One to two years 71,604 73,284 - -

Two to three years 73,233 73,102 - -

Three to four years 73,601 74,051 - -

Four to five years 75,153 71,550 - -

More than five years 434,136 443,791 - -

Total commitments receivables 798,796 807,530 - -

Annual Report 2019-20 Part 5: Financial Statements 123 Annual Report 2019 -20 Part 5: Financial Statements 168

Notes to and forming part of the financial statements D. Operating Resources

D2.2 Contracts with customers

Policy and measurement

Revenue from contracts with customers mainly relates to goods and services that Finance provides to other Australian Government entities in delivering Finance’s outcomes. Revenue is recognised when control has transferred to the customer at the transaction price to which Finance expects to be entitled in exchange for transferring promised goods or services. The consideration promised in a contract with a customer may include fixed amounts, variable amounts or both.

Information about Finance’s revenue from contracts with customers and performance obligations is summarised below:

Transforming government Revenues include annual subscriptions to the Parliamentary Document Management System to support ministerial level correspondence, briefings and submissions; parliamentary questions on notice; senate estimates briefings and questions on notice; executive level communications; and general communication and media enquiries. Fees are change annually in advance with performance obligations satisfied over time in line with consumption of the service.

Property and construction Revenues are primarily attributable to services charged on a cost recovery basis or contractual rights provided. Performance obligations are satisfied over time consistent with the consumption of resources. Payment may include amounts received in advance or on completion depending on the service provided.

Service Delivery Office The Service Delivery Office (SDO) provides management and project shared services for human resources, financial operations, and support of Enterprise Resource Planning systems to enable entities to focus on their core business.

Management services are specified for each customer service and charged on a per unit price basis. Fees for each service are estimated based on the customer’s consumption for the following 12 month period, invoiced quarterly in advance with adjustments for actual experience performed each month. Performance obligations are satisfied over time consistent with the expected consumption and adjustments for actual experience.

Project services are charged as a fixed fee with price variations above or below five percent subject to agreement by both parties. Performance obligations are attributed to the specified deliverable in the statement of work. The customer pays a deposit equal to 50 percent of the transaction price, recognised as a contract liability until earned, with the balance payable on completion. Revenue is recognised over time as the SDO’s performance does not create an asset with an alternate use, and is entitled to payment for its performance completed. The SDO measures its progress towards complete satisfaction of the performance obligation on the basis of an input model, such as actual costs incurred (generally labour hours) or a scheduled performance indicator as appropriate. Where actual costs is used, the completion percentage is tested with the project manager for impairment. Revenue recognised in excess of the 50 percent deposit is recognised as a contract asset until invoiced.

Technology and procurement Revenues include whole of government coordinated procurement arrangements and information and communication technology services.

Coordinated procurement arrangements (facilitated through the Coordinated Procurement Contracting Special Account) are established for commonly used goods or services by Australian Government entities including travel, campaign evaluation and market research, government advertising, major office machines equipment and support, motor vehicle leasing, stationary and office supplies. Administration fees are received from suppliers for participant entities accessing the services. The performance obligations are satisfied upon delivery of the service and payment generally due within 30 to 90 days from delivery.

Information and communication technology mainly includes GovCMS and GovTEAMS subscription services. Fees are payable in advance with performance obligations satisfied over time in line with the consumption of the service.

Ministerial and Parliamentary Services Revenues substantially comprise information and telecommunication services including the Intra-government Communications Network (ICON), Ministerial Communications Network, National Telepresence System and COMCAR driver services.

Information and telecommunication services are charged to agencies for connection, consumption, decommissioning and annual memberships. Performance obligations for connection and decommissioning services are satisfied when the associated action is complete and payment is due. Membership fees are charged up to 12 months in advance with the performance obligations satisfied over the subscription period.

Performance obligations for COMCAR and associated ground transport services are satisfied at the time of delivery, with payment generally due within 30 to 60 days.

Annual Report 2019-20 Part 5: Financial Statements 123 Annual Report 2019 -20 Part 5: Financial Statements 169

Notes to and forming part of the financial statements D. Operating Resources

Disaggregation of revenue from contracts with customers Departmental Administered

30 June 30 June 30 June 30 June

2020 2019 2020 2019

$'000 $'000 $'000 $'000

Program Technology and procurement 29,037 29,150 - -

Service Delivery Office 26,656 21,200 - -

Ministerial and Parliamentary Services 5,730 9,114 5,652 3,061

Transforming government 5,633 4,747 - -

Property and construction 5,151 5,802 - -

Other 2,597 3,459 - -

Total contracts with customers 74,804 73,472 5,652 3,061

Annual Report 2019-20 Part 5: Financial Statements 123 Annual Report 2019 -20 Part 5: Financial Statements 170

Notes to and forming part of the financial statements D. Operating Resources

D3 Financial instruments

Policy and measurement

Financial assets

Financial assets are classified in the following categories:

• Financial assets measured at amortised cost

• Financial assets at fair value through other comprehensive income (FVOCI)

• Financial assets at fair value through profit or loss (FVPL).

The classification is based on Finance's business model for managing the financial assets and contractual cash flow characteristics at the time of initial recognition. Financial assets are recognised when Finance becomes a party to the contract and, as a consequence, has a legal right to receive or a legal obligation to pay cash and derecognised when the contractual rights to the cash flows from the financial asset expire or are transferred upon trade date.

Financial assets at amortised cost Includes cash and cash equivalents which are readily convertible to cash, trade receivables, loans and other receivables with fixed or determinable payments that are not quoted in an active market. Amortised cost is determined using the effective interest rate.

Impairment is assessed at the end of the reporting period using the simplified approach for trade and other receivables which measures the loss allowance as the amount equal to the lifetime credit losses.

Income is recognised on an effective rate basis.

Financial assets at FVOCI Includes designated equity investments in Commonwealth entities and companies which are not held for trading. Any gains or losses as a result of a fair value measurement or recognition of an impairment loss allowance are recognised in other comprehensive income.

Financial assets at FVPL Includes financial assets that are not classified as financial assets at amortised cost or at FVOCI (i.e. mandatorily held at FVPL) and is generally held for trading. Any gains or losses as a result of a fair value measurement are recognised through profit and loss.

Financial liabilities

Financial liabilities are classified as either financial liabilities at FVPL or at amortised cost. Financial liabilities are recognised and derecognised upon trade date.

Financial liabilities at amortised cost Includes suppliers and other payables with a fixed or determinable amount to be paid that are not quoted in an active market. Financial liabilities are initially measured at fair value, net of transaction costs and are subsequently measured at amortised cost using the effective interest method.

Financial liabilities at FVPL Includes derivatives held by the investment funds. Financial liabilities are initially measured at fair value with subsequent adjustments recognised in profit and loss.

Annual Report 2019-20 Part 5: Financial Statements 123 Annual Report 2019 -20 Part 5: Financial Statements 171

Notes to and forming part of the financial statements D. Operating Resources

D3.1 Categories of financial instruments

Departmental Administered

30 June 30 June 30 June 30 June

2020 2019 2020 2019

Note ref $'000 $'000 $'000 $'000

Financial Assets Financial assets measured at amortised cost Cash and cash equivalents OPA balance H2 - - 3,497,598 2,405,081

Operating cash balance 1,144 10,616 187 2,891

Special account cash held by Finance F3.1 1,636 4,807 - -

Special account cash held in OPA F3.1 903,273 706,038 - -

Trade and other receivables Contract assets 4,601 5,290 - 15

Contract receivables 7,203 20,040 1,225 915

Other 7,641 1,977 293 1,270

Investment funds C2.2 - - 10,022,255 10,229,383

State and territory government loans - - 118,831 126,152

Total financial assets measured at amortised cost 925,498 748,768 13,640,389 12,765,707

Financial assets designated at FVOCI Commonwealth entities and companies - - 1,570,611 1,188,009

Total financial assets designated at FVOCI - - 1,570,611 1,188,009

Financial assets measured at FVPL Investment funds C2.2 - - 34,221,669 26,879,777

Total financial assets measured at FVPL - - 34,221,669 26,879,777

Total financial assets 925,498 748,768 49,432,669 40,833,493

Financial Liabilities Financial liabilities measured at amortised cost Trade creditors and accruals 38,372 35,749 14,776 12,707

Investment funds C2.2 - - 132,927 129,906

OPA overnight cash payable H2 - - 2,029,429 1,803,516

Lease liabilities1 - 1,022 - -

Total financial liabilities measured at amortised cost 38,372 36,771 2,177,132 1,946,129

Financial liabilities measured at FVPL

Investment funds C2.2 - - 166,652 85,390

Total financial liabilities measured at FVPL - - 166,652 85,390

Total financial liabilities 38,372 36,771 2,343,784 2,031,519

1 Finance lease under AASB 117.

Annual Report 2019-20 Part 5: Financial Statements 123 Annual Report 2019 -20 Part 5: Financial Statements 172

Notes to and forming part of the financial statements D. Operating Resources

D3.2 Fair value information by financial asset class

The following table sets out the fair value, valuation techniques and inputs used for Administered financial instruments. The techniques used to value financial instruments have not changed during the year. Financial instruments have been valued using inputs under the following fair value hierarchy: • Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities that Finance can access at

measurement date • Level 2: observable inputs that are derived from prices in active markets • Level 3: inputs that are not observable and involve significant judgement.

Fair value measurements at the end of the reporting period

Administered 30 June 30 June

Level

Inputs used

Valuation technique

2020 2019

$'000 $'000

Financial assets State and territory government loans 2 N/A Income approach 217,149 219,654

Investments in CECs 3 NET Cost approach 1,242,342 901,201

Investments in CECs 3 WACC Income approach 328,269 286,808

Investment funds Other investments 1 NET Market approach 6,631,244 2,316,674

Derivative assets 1 NET Market approach 8,601 -

Interest bearing securities 2 N/A Price Index1 21,412,370 21,642,238

Derivative assets 2 N/A Market approach 584,819 48,764

Other investments 3 NET Market approach 5,314,360 2,697,583

Interest bearing securities 3 NET Market approach 138,183 150,809

Derivative assets 3 NET Market approach 4 -

Total financial assets 35,877,341 28,263,731

Financial liabilities Investment funds - derivative liabilities 1 NET Market approach 10,237 -

Investment funds - derivative liabilities 2 N/A Market approach 156,415 85,390

Total financial liabilities 166,652 85,390

1 Price Index values based on observable market data relating to prices, industry accepted pricing models and broker/dealer quotes.

Annual Report 2019-20 Part 5: Financial Statements 123 Annual Report 2019 -20 Part 5: Financial Statements 173

Notes to and forming part of the financial statements D. Operating Resources

Key judgements and estimates

Loans to state and territory governments Concessional loan balances receivable from states and territories are measured at amortised cost and no security is held for these. Repayments are based on a reducing balance method. The amortised cost differs from the fair value disclosed in Note D3.2.

Investments in Commonwealth entities and companies (CECs) CECs are wholly owned by the Commonwealth and managed by Finance on behalf of the Commonwealth. CECs are not controlled by Finance and have been reported as investments and measured at FVOCI. The following are details of Finance’s CECs:

• CSC is a trustee and administrator of the Commonwealth superannuation schemes. The value of CSC has been measured using the net assets (NET) reported in its financial statements. A change in the net assets would result in an equal change in reported fair value.

• Australian Naval Infrastructure Pty Ltd (ANI) is a Commonwealth Company that is prescribed as a Government Business Enterprise (GBE). ANI’s primary objective is to support the Commonwealth’s naval shipbuilding program through acquiring, holding, managing and developing critical infrastructure and related facilities used in connection with this program. ANI is currently redeveloping the Osborne Naval Shipyard and will establish access arrangements with naval shipbuilding prime contractors in due course. The value of ANI has been measured using the net assets reported in its financial statements. A change in the net assets would result in an equal change in reported fair value.

• ASC Pty Ltd (ASC) is a Commonwealth Company that is prescribed as a GBE. ASC is responsible for the ongoing sustainment of the Collins Class submarine fleet and provides submariner-training services to the Royal Australian Navy. ASC is also responsible for the Hobart Class Air Warfare Destroyer (AWD) program - as part of the AWD Alliance - and delivery of the first two Arafura Class Offshore Patrol Vessels. The value of ASC has been measured using the estimated future cash flows of the company sourced from the 2019-24 Corporate Plan, discounted using a weighted average cost of capital (WACC). The WACC is calculated using inputs derived from either professional judgement or observable historical market data of comparable entities. The impact of WACC changes is included in the Market Risk analysis at Note D4.1.

ASC Shipbuilding Sovereign Share In December 2018, ASC Shipbuilding (which was a wholly owned subsidiary of ASC) was transferred by the Commonwealth to BAE Systems Australia Limited (BAE Systems) to support delivery of the Hunter Class Frigate program and develop sovereign naval shipbuilding capability that will be capable of independently designing, developing and leading the construction of complex, large naval warships. The Commonwealth retains a sovereign share in ASC Shipbuilding that provides a number of protective rights, whilst ensuring that BAE Systems is fully responsible and accountable for the delivery of the frigates. The Commonwealth also has a call option to re-purchase the ordinary shares in ASC Shipbuilding from BAE Systems at the end of the contract for a nominal amount.

Together, the sovereign share and call option ensure the retention in Australia of intellectual property, a highly skilled workforce and the associated equipment at the end of the program. For accounting purposes, the sovereign share and call option are recognised at nil fair value.

Annual Report 2019-20 Part 5: Financial Statements 123 Annual Report 2019 -20 Part 5: Financial Statements 174

Notes to and forming part of the financial statements D. Operating Resources

Movements of recurring level 3 financial assets

Administered 30 June 30 June

2020 2019

$'000 $'000

Opening balance of investments in CECs 1,188,009 904,868

Equity injections 320,751 301,450

Total gains/(losses) recognised in other comprehensive income 61,851 (18,309)

Closing balance of investments in CECs 1,570,611 1,188,009

Opening balance of investment funds - financial assets at FVPL 2,848,392 2,428,853

Purchase 3,318,631 839,906

Sales (627,853) (457,605)

Transfers into level 3 24,688 217

Total gains/(losses) recognised in net cost of services (58,713) 44,524

Transfers out of level 3 (52,598) (7,503)

Closing balance of investment funds - financial assets at FVPL 5,452,547 2,848,392

D3.3 Net gains or losses on financial assets

Departmental Administered

30 June 30 June 30 June 30 June

2020 2019 2020 2019

Note ref $'000 $'000 $'000 $'000

Financial assets at amortised cost Interest revenue earned on: OPA deposits - - 8,160 15,258

State and territory government loans - - 13,171 13,893

Other 12 - - -

Impairment of financial assets - (31) (2) (4)

Net gains/(losses) on financial assets at amortised cost 12 (31) 21,329 29,147

Financial assets at FVOCI Dividends - - 10,600 26,900

Gains/(losses) on Commonwealth entities and companies D3.2 - - 61,851 (18,309)

Net gains/(losses) on financial assets at FVOCI - - 72,451 8,591

Financial assets measured as FVPL Investment funds Interest C2.1 - - 119,148 192,796

Dividends and distributions C2.1 - - 123,636 250,404

Gains on financial investments C2.1 - - 924,129 897,361

Foreign exchange losses C2.1 - - (546,348) (271,078)

Net gains/(losses) on financial assets at FVPL - - 620,565 1,069,483

Net gains/(losses) on financial assets 12 (31) 714,345 1,107,221

Annual Report 2019-20 Part 5: Financial Statements 123 Annual Report 2019 -20 Part 5: Financial Statements 175

Notes to and forming part of the financial statements D. Operating Resources

D4 Managing financial risk

Finance is generally exposed to a low level of risk in relation to its financial instruments with the exception of the investment funds which are exposed to a moderate level of risk commensurate with the types of financial instruments held and the markets in which those instruments are traded. These risks are discussed as part of the investment funds (Note C2). Non-investment fund risks are discussed below.

D4.1 Market risk

Market risk refers to the risk that a change in market parameters will impact on assets held by Finance. Other than balances held by the investment funds, investments in CECs and the OPA which are exposed to interest rate risk and foreign currency risk, Finance holds basic financial instruments that are not exposed to market risks. The following table discloses market risks in relation to the OPA and investments in CECs. Disclosures in relation to the investment funds are included as part of Note C2.3.1.

Sensitivity analysis of interest rate risk exposure Effect on

Change in risk variable Surplus/ (deficit) Equity

30 June 2020 Risk variable % $'000 $'000

Overnight cash deposits with the RBA Deposit rate

+0.09% 2,445 -

-0.09% (2,167) -

Investments in CECs Discount rate

+0.09% - 2,100

-0.09% - (2,000)

30 June 2019

Overnight cash deposits with the RBA Deposit rate

+0.2% 2,481 -

-0.2% (2,481) -

Investments in CECs Discount rate

+0.2% - 2,271

-0.2% - (2,231)

D4.2 Liquidity risk

Liquidity risk is the risk that an entity will be unable to pay its debts when they fall due. As Finance is appropriation funded, the risk of not meeting its obligations associated with financial liabilities is highly remote. Internal policies and procedures are also in place to ensure there are appropriate resources available to meet obligations. Credit terms for goods and services are payment within 30 days. Disclosures in relation to the investment funds are included as part of Note C2.3.2.

D4.3 Credit risk

Credit risk is the risk that entities owing debts to Finance will not pay those debts as and when they fall due. Finance is exposed to a moderate level of credit risk in relation to the investment fund's assets; all other financial assets are considered to be low risk. Trade and other receivables (excluding state and territory government loans) have standard 30 day terms. Additional disclosures for the investment funds credit risk are included in Note C2.3.3.

Annual Report 2019-20 Part 5: Financial Statements 123 Annual Report 2019 -20 Part 5: Financial Statements 176

Notes to and forming part of the financial statements D. Operating Resources

D5 Non-financial assets

Non-defence domestic property portfolio

Finance manages a diverse portfolio of approximately 70 non-defence Commonwealth-owned properties in Australia. The portfolio includes office buildings, law courts, special purpose facilities, heritage assets, vacant land, contaminated sites and major capital works projects under construction.

Properties held for investment purposes are predominately leased to other Australian Government entities with rental income recognised systematically over the period of the lease. Where these properties operate in an active rental market, a competitive neutrality charge is applied to cover indirect taxes such as payroll tax, council rates, stamp duty, land tax and income tax which is paid to the OPA.

Surplus funds arising from property operations and divestment proceeds are paid to the OPA in the following financial year as a return of equity.

Policy and measurement

Non-financial assets (excluding assets held for sale) are not expected to be sold or realised within the next 12 months.

Asset recognition threshold Purchases of property, plant and equipment and intangibles are recognised where they meet an individual asset recognition threshold of $5,000. All purchases under this threshold are expensed in the year of acquisition, other than when they form part of a group of similar items which are significant in total in which case they are recognised on a group basis. The recognition and measurement policy for each asset class is outlined below:

Asset class (includes work in progress)

Initial Recognition Subsequent Recognition

Revaluation Frequency

Fair value measured at

Land

At cost Fair value

Assessed annually by management to determine whether it is likely that the carrying amount is materially different from fair value. If likely, revaluations are conducted by independent valuers and revaluation adjustments are made on a class basis.

Market selling price or discounted cash flows

Buildings

Market selling price, discounted cash flows or current replacement cost

Leasehold improvements

Current replacement cost

Infrastructure, plant and equipment

Market selling price or current replacement cost

Investment property

At cost, except where acquired at nominal cost, then fair value

Fair value Annually

Market selling price or discounted cash flows

Intangibles (including internally developed and externally acquired software)

At cost

Cost less accumulated amortisation and accumulated impairment losses

N/A N/A

Right-of-use assets

At cost

Cost less accumulated amortisation and accumulated impairment losses

N/A N/A

Revaluations Revaluation adjustments are made on a class basis. For property, plant and equipment, revaluation increments are credited to equity under the heading of asset revaluation reserve except to the extent it reverses a previous revaluation decrement of the same asset class that was recognised in the surplus/(deficit). Revaluation decrements for a class of assets are recognised directly in the surplus/(deficit) except to the extent that they reversed a previous revaluation increment for that class.

Annual Report 2019-20 Part 5: Financial Statements 123 Annual Report 2019 -20 Part 5: Financial Statements 177

Notes to and forming part of the financial statements D. Operating Resources

Gains or losses arising from changes in the fair value of investment property are recognised in the surplus/(deficit) in the year in which they arise.

Any accumulated depreciation as at the revaluation date is eliminated against the gross carrying amount of the asset and the asset is restated to the revalued amount.

Decontamination, restoration and decommissioning costs Obligations relating to the dismantling, removal, remediation and restoration are recognised in the cost of property, plant and equipment where reliably estimated, with a corresponding provision for remediation costs.

There are also a small number of properties with potential remediation issues that are currently subject to further investigation. A provision is recognised for remediation of these properties only when there is agreement from Government that Finance will meet the costs of the remediation, the liability can be reliably measured and the funding is legally available.

Depreciation/amortisation Depreciable assets are written down to their estimated residual values over their estimated useful lives using the straight line method of depreciation. Depreciation rates (useful lives), residual values and methods are reviewed at each reporting date and necessary adjustments are recognised in the current and future reporting periods as appropriate. Depreciation rates applying to each class of depreciable asset are based on the following useful lives:

Asset class 2020 and 2019 (no change)

Buildings on freehold land 3 to 100 years

Leasehold improvements Lesser of useful life or lease term

Intangibles 3 to 7 years

Infrastructure, plant and equipment 1 to 45 years Right-of-use Lesser of useful life or lease term

Assets held for sale Assets held for sale includes properties that have been fully prepared for sale, are being actively marketed at fair value and are likely to settle within the next 12 months. Also included are properties that are currently under offer or contract (contract issued or exchanged but not yet settled) as at the end of the reporting period. These properties are valued at the lower of carrying amount and fair value less costs to sell.

Right-of-use assets Right-of-use assets are capitalised at the commencement date of the lease and comprise of the initial lease liability amount, initial direct costs incurred when entering into the lease less any lease incentives received. These assets are disclosed separately from owned assets in the Statement of Financial Position and the Schedule of Administered Assets and Liabilities with details by class of underlying asset disclosed in Note D5.2.

On initial adoption of AASB 16, Finance has adjusted the right-of-use assets at the date of initial application by the amount of any provision for onerous leases recognised immediately before the date of initial application. Following initial application, an impairment review is undertaken for any right-of-use asset that shows indicators of impairment and an impairment loss is recognised against any right-of-use asset that is impaired.

Right-of-use assets continue to be measured at cost after initial recognition.

Initial application of AASB 16 Leases

Finance adopted AASB 16 using the modified retrospective approach, under which the cumulative effect of initial application is recognised in retained earnings as at 1 July 2019. Accordingly, the comparative information presented for 2019 is not restated, it is presented as previously reported under AASB 117 and related interpretations.

Finance applied the following practical expedients when applying AASB 16 to leases previously classified as operating leases under AASB 117:

• No re-assessment of whether a contract is, or contains a lease, as at the date of initial application • Exclude initial direct costs from the measurement of right-of-use assets at the date of initial application • Reliance on previous assessments on whether leases are onerous applying AASB 137 Provision, Contingent Liabilities and Contingent Assets as an alternative to preparing an impairment review

• Use of hindsight in applying AASB 16 on existing leases.

Annual Report 2019-20 Part 5: Financial Statements 123 Annual Report 2019 -20 Part 5: Financial Statements 178

Notes to and forming part of the financial statements D. Operating Resources

On adoption of AASB 16, Finance recognised right-of-use assets and lease liabilities in relation to:

• leases of office accommodation, data centres and vehicles for Finance business operations (Departmental) • leases of office accommodation for parliamentarians, former prime ministers, Commonwealth parliamentary offices and COMCAR depots (Administered)

• leases of equipment for parliamentarians and former prime ministers • vehicle leases for COMCAR operations (Administered)

The lease liabilities were measured at the present value of the remaining lease payments, discounted using the incremental borrowing rate as at 1 July 2019. The incremental borrowing rate is the rate at which a similar borrowing could be obtained from an independent creditor under comparable terms and conditions. The weighted-average rate applied was 1.5%.

The right-of-use assets were measured at an amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments.

Impact of transition

On transition to AASB 16, Finance recognised additional right-of-use assets, additional lease liabilities and adjusted retained earnings for the removal of lease incentives and straight-lining provisions. The impact is summarised below:

Departmental Administered 1 July 1 July

2019 2019

$’000 $'000

Right-of-use assets - property, plant and equipment 470,478 287,089

Lease liabilities 469,884 287,209

Retained earnings 32,737 2,716

Reconciliation of operating lease commitments to opening lease liabilities

The following table reconciles minimum lease commitments disclosed in the 2018-19 annual financial statements to the amount of lease liabilities recognised on 1 July 2019. Departmental Administered 1 July 1 July

2019 2019

$’000 $'000

Operating lease commitment at 30 June 2019 (GST inclusive) 334,250 151,159

Less: GST (30,386) (12,200)

Operating lease commitments (GST exclusive) 303,864 138,959

Leases not reported as commitments 99 4,144

Effect of extension options reasonably certain to be exercised 300,690 165,800

Effect of discounting using the incremental borrowing rate as at the date of initial application (135,791) (21,694)

Lease liabilities from operating lease commitments 468,862 287,209

Existing finance lease 1,022 -

Total lease liabilities recognised at 1 July 2019 469,884 287,209

Annual Report 2019-20 Part 5: Financial Statements 123 Annual Report 2019 -20 Part 5: Financial Statements 179

Notes to and forming part of the financial statements D. Operating Resources

Key judgements and estimates

Valuation of non-financial assets Independent valuations are obtained annually for all land, buildings and investment property with the exception of select low value properties which are internally valued. Where possible, assets are valued based upon observable inputs to the extent available. Where this information is not available, valuation techniques rely on unobservable inputs.

For land and buildings, the valuations include calculations of estimated market cash flows which are adjusted to take into account physical, economic and external factors such as sale prices of comparable assets, replacement cost, expected useful life and adjustments for obsolescence.

For investment property, judgements include income and expenditure, as well as average vacancy periods and costs of establishing a new tenant, as leases become due for renewal and properties become vacant.

Some properties within the portfolio are subject to remediation or have heritage value and this is taken into account by the valuer in assessing the market value of the property.

There are a small number of properties where the highest and best use differs from the current use. While the fair values for these properties have been measured in the financial statements using the highest and best use for each, they are not being utilised at their highest and best use as Finance is not in the business of property development.

Leasehold improvements and plant and equipment is subject to a formal independent valuation at least once every three years dependent upon an annual risk assessment. In years where a formal valuation is not undertaken, assets are subject to a desktop review. An independent valuation in relation to leasehold improvements and plant and equipment was undertaken as at 30 June 2020.

Finance reviews all reports received from independent valuers to ensure valuations align with its own assumptions and understanding of the respective assets and their circumstances.

Annual Report 2019-20 Part 5: Financial Statements 123 Annual Report 2019 -20 Part 5: Financial Statements 180

Notes to and forming part of the financial statements D. Operating Resources

D5.1 Property, infrastructure, plant and equipment and intangibles Departmental

Land Buildings

Leasehold improve- ments

Invest- ment property

Plant and equip- ment Intang-

ibles1 Total

Owned assets $’000 $’000 $’000 $’000 $’000 $’000 $’000

As at 1 July 2019 Gross book value 129,850 361,983 28,120 78,236 35,790 196,329 830,308

Accumulated depreciation, amortisation and impairment - - (4,216) - (17,181) (94,863) (116,260)

Total as at 1 July 2019 129,850 361,983 23,904 78,236 18,609 101,466 714,048

Adjustment on initial application of AASB 16 - - - - (1,616) - (1,616)

Adjusted total as at 1 July 2019 129,850 361,983 23,904 78,236 16,993 101,466 712,432

Additions 2,798 19,419 3,790 - 9,420 27,290 62,717

Revaluations recognised in OCI 7,625 6,216 1,083 - 1,599 - 16,523

Revaluations recognised in NCOS - - - 2,103 - - 2,103

Reversal of impairments recognised in NCOS - - - - - 58 58

Depreciation and amortisation - (6,496) (1,612) - (5,206) (22,929) (36,243)

Disposals Write-downs - - - - (8) - (8)

Other (4,371) - - - - - (4,371)

Total as at 30 June 2020 135,902 381,122 27,165 80,339 22,798 105,885 753,211

Represented by Gross book value 135,902 381,122 27,686 80,339 22,925 202,768 850,742

Accumulated depreciation, amortisation and impairment - - (521) - (127) (96,883) (97,531)

Total as at 30 June 2020 135,902 381,122 27,165 80,339 22,798 105,885 753,211

Assets under operating leases

As at 1 July 2019 Gross book value 301,344 323,750 - 750,752 - - 1,375,846

Total as at 1 July 2019 301,344 323,750 - 750,752 - - 1,375,846

Additions - 21,219 - 10,007 - - 31,226

Revaluations recognised in OCI (1,724) (19,346) - - - - (21,070)

Revaluations recognised in NCOS - - - 13,619 - - 13,619

Depreciation - (11,023) - - - - (11,023)

Disposals Write-downs - - - (285) - - (285)

Other - - - (420) - - (420)

Total as at 30 June 2020 299,620 314,600 - 773,673 - - 1,387,893

Represented by Gross book value 299,620 314,600 - 773,673 - - 1,387,893

Total as at 30 June 2020 299,620 314,600 - 773,673 - - 1,387,893

Total owned and leased assets As at 30 June 2020 435,522 695,722 27,165 854,012 22,798 105,885 2,141,104

As at 30 June 2019 431,194 685,733 23,904 828,988 18,609 101,466 2,089,894

1 The carrying amount of intangibles includes $105.4 million of internally developed software and $0.5 million of purchased software.

Annual Report 2019-20 Part 5: Financial Statements 123 Annual Report 2019 -20 Part 5: Financial Statements 181

Notes to and forming part of the financial statements D. Operating Resources

Capital commitments payable (GST inclusive) Departmental 30 June 2020 30 June 2019

Within one year

Between one and five years Total

Within one year

Between one and five years Total

$’000 $’000 $’000 $’000 $’000 $’000

Land and buildings 43,042 27,312 70,354 53,146 15,038 68,184

Intangible assets development 10,302 2,554 12,856 4,248 754 5,002

Total capital commitments 53,344 29,866 83,210 57,394 15,792 73,186

Administered

Leasehold improve- ments Infrastruct-

ure

Plant and equipment Intangibles1 Total

$’000 $’000 $’000 $’000 $’000

As at 1 July 2019 Gross book value 48,609 73,166 15,457 418 137,650

Accumulated depreciation, amortisation and impairment (24,915) - (4,121) (204) (29,240)

Total as at 1 July 2019 23,694 73,166 11,336 214 108,410

Additions 14,827 1,717 2,341 167 19,052

Revaluations recognised in OCI 3,344 (271) 901 - 3,974

Impairments recognised in NCOS (128) - (182) (183) (493)

Reversal of impairments recognised in NCOS - - - 26 26

Depreciation and amortisation (11,682) (2,524) (2,674) (70) (16,950)

Disposals - write-downs (557) - (45) (40) (642)

Total as at 30 June 2020 29,498 72,088 11,677 114 113,377

Represented by Gross book value 34,205 72,088 12,524 252 119,069

Accumulated depreciation, amortisation and impairment (4,707) - (847) (138) (5,692)

Total as at 30 June 2020 29,498 72,088 11,677 114 113,377

1 The carrying amount of intangibles includes internally developed software and purchased software.

Further information

Non-financial assets include ICON, leasehold improvements and Information Technology assets for electoral and state offices and to support Administered outcomes.

Capital commitments payable (GST inclusive) Administered 30 June 2020 30 June 2019

Within one year

Between one and five years Total

Within one year

Between one and five years Total

$’000 $’000 $’000 $’000 $’000 $’000

Land and buildings 9,743 218 9,961 - - -

Intangible assets development - - - 175 - 175

Infrastructure, plant and equipment 2,077 150 2,227 1,015 - 1,015

Total capital commitments 11,820 368 12,188 1,190 - 1,190

Annual Report 2019-20 Part 5: Financial Statements 123 Annual Report 2019 -20 Part 5: Financial Statements 182

Notes to and forming part of the financial statements D. Operating Resources

D5.2 Right-of-use assets

Departmental

Buildings Plant and equipment Motor

Vehicles Total

$’000 $’000 $’000 $’000

As at 1 July 2019 Recognition of right-of-use assets on initial application of AASB 16 467,510 2,894 74 470,478 Adjusted total as at 1 July 2019 467,510 2,894 74 470,478

Additions - - 171 171

Depreciation (17,552) (2,154) (73) (19,779)

Other movements - (49) - (49)

Carrying amount as at 30 June 2020 449,958 691 172 450,821

Represented by Gross book value 467,510 2,845 245 470,600

Accumulated depreciation, amortisation and impairment (17,552) (2,154) (73) (19,779)

Total as at 30 June 2020 449,958 691 172 450,821

Administered

Buildings Plant and equipment Motor

Vehicles Total

$’000 $’000 $’000 $’000

As at 1 July 2019 Recognition of right-of-use assets on initial application of AASB 16 282,202 4,190 697 287,089 Adjusted total as at 1 July 2019 282,202 4,190 697 287,089

Additions 21,165 1,119 4,828 27,112

Depreciation (40,791) (1,119) (984) (42,894)

Other movements 21,314 - (25) 21,289

Carrying amount as at 30 June 2020 283,890 4,190 4,516 292,596

Represented by Gross book value 324,681 5,309 5,500 335,490

Accumulated depreciation, amortisation and impairment (40,791) (1,119) (984) (42,894)

Total as at 30 June 2020 283,890 4,190 4,516 292,596

Annual Report 2019-20 Part 5: Financial Statements 123 Annual Report 2019 -20 Part 5: Financial Statements 183

Notes to and forming part of the financial statements D. Operating Resources

D5.3 Fair value information by non-financial asset class

Fair value measurements

Finance only holds non-financial assets in the following two levels of the fair value hierarchy:

• Level 2: observable inputs (other than quoted prices in active markets) are used to calculate the fair value of the asset • Level 3: inputs used to calculate the fair value are not observable.

The following tables set out (by asset class) the valuation technique, inputs used and the level of the fair value hierarchy per AASB 13 Fair Value Measurement.

Departmental Administered 30 June 2020 30 June

2019

30 June 2020 30 June 2019

Non-financial assets Level Inputs used Valuation technique $’000 $’000 $'000 $'000

Land 2 AMT Market approach 138,672 132,491 - -

Land 2 AMT Income approach 296,850 298,703 - -

Buildings 2 AMT Market approach - 25 - -

Buildings 2 AMT Income approach 327,929 323,751 - -

Buildings 2 RCN Cost approach 367,793 361,957 - -

Leasehold improvements 3 RCN, CEB Cost approach 27,165 23,904 29,498 23,694

Infrastructure 3 RCN, CEB Cost approach - - 72,088 73,166

Investment property 2 AMT Market approach 82,189 74,535 - -

Investment property 2 AMT Income approach 771,823 754,453 - -

Plant and equipment 2 AMT Market approach 16,160 11,436 2,413 2,767

Plant and equipment 3 RCN, CEB Cost approach 6,638 7,173 9,264 8,569

Assets held for sale - land 2 AMT Market approach 247 38,160 - -

Total fair value 30 June 2020 2,035,466 2,026,588 113,263 108,196

Inputs used

Adjusted Market Transactions (AMT): market transactions of comparable assets, adjusted to reflect differences in price sensitive characteristics.

Replacement Cost of New Assets (RCN): the amount a market participant would pay to acquire or construct a new substitute asset of comparable utility.

Consumed Economic Benefits (CEB): obsolescence of assets, physical deterioration, functional or technical obsolescence and conditions of the economic environment specific to the asset.

Annual Report 2019-20 Part 5: Financial Statements 123 Annual Report 2019 -20 Part 5: Financial Statements 184

Notes to and forming part of the financial statements D. Operating Resources

D6 Unearned Revenue

Departmental Administered

30 June 30 June 30 June 30 June

2020 2019 2020 2019

$'000 $'000 $'000 $'000

Contracts with customers 13,841 17,645 52 -

Other 1,982 3,125 - -

Total unearned revenue 15,823 20,770 52 -

D7 Other provisions

Policy and measurement

Finance recognises a provision when it has a legal or constructive obligation to make a payment, it is probable that payment will be made and the amount to be paid can be reliably measured.

Departmental Administered

30 June 30 June 30 June 30 June

2020 2019 2020 2019

$'000 $'000 $'000 $'000

Excess lease space - - - 120

Remediation costs 12,960 19,141 7,758 6,421

Act of Grace - - 8,576 9,618

Same-Sex Relationships Act - - 1,800 1,825

Total other provisions 12,960 19,141 18,134 17,984

Movements of other provisions Opening balance 19,141 20,648 17,984 17,350

Additional provisions made 6 - 2,362 2,501

Amounts used (6,187) (1,233) (1,753) (1,727)

Amounts reversed - (274) (459) (140)

Closing balance 12,960 19,141 18,134 17,984

Further information

Act of Grace The Act of Grace mechanism is a discretionary power found in section 65 of the PGPA Act, which allows payments to be made if it is appropriate and a decision maker considers there are special circumstances. In most cases these relate to pension payments to spouses of former members of the Commonwealth defined benefit superannuation schemes.

Same-Sex Relationships Act The Same-Sex Relationships (Equal Treatment in Commonwealth Laws - General Reform) Act 2008 removes discrimination against same-sex couples and their dependent children from a wide range of Commonwealth laws and programs. These relate to pension payments to partners of former members of the Commonwealth defined benefit superannuation schemes.

Annual Report 2019-20 Part 5: Financial Statements 123 Annual Report 2019 -20 Part 5: Financial Statements 185

Notes to and forming part of the financial statements E. Our People

E. Our People This section describes the employment and post-employment benefits provided to our people and our relationships with other key people.

Finance provides salary and related benefits to: • staff employed by current and former members of parliament under the Members of Parliament (Staff) Act 1984 (MOP(S) Act) • parliamentarians under the Parliamentary Business Resources Act 2017 (PBR Act).

Finance provides post-employment benefits to former prime ministers under the PBR Act.

E1 Employee benefits

Policy and measurement

Liabilities for short-term employee benefits and termination benefits expected within 12 months of the end of the reporting period are measured at their nominal amounts.

Other long-term employee benefits are measured at the present value of the defined benefit obligation at the end of the reporting period.

Leave The liability for employee benefits includes provision for annual leave and long service leave.

The liabilities are calculated on the basis of employees’ remuneration at the estimated salary rates that will be applied at the time the leave is taken, including Finance’s superannuation contribution rates to the extent that the leave is likely to be taken during service rather than paid out at termination.

Separation and redundancy Provision is made for separation and redundancy benefit payments. Finance recognises a provision for restructuring when it has a detailed formal plan for the restructuring and has informed those employees affected that it will carry out the restructuring.

Superannuation Finance employees are members of the CSS, PSS, PSS accumulation plan (PSSap) or other superannuation funds held outside the Australian Government.

The CSS and PSS are defined benefit schemes of the Australian Government. The PSSap is a defined contribution scheme. The liability for defined benefits is recognised in Finance’s Administered statements and reported in Note C3.

Finance makes employer contributions to the employees’ defined benefit superannuation schemes at rates determined by an actuary to be sufficient to meet the current cost to the Australian Government. Finance accounts for the contributions as if they were contributions to defined contribution plans.

Annual Report 2019-20 Part 5: Financial Statements 123 Annual Report 2019 -20 Part 5: Financial Statements 186

Notes to and forming part of the financial statements E. Our People

Key judgements and estimates

Leave The liability for long service leave has been determined by reference to an actuarial assessment. The estimate of the present value of the liability takes into account attrition rates and pay increases through promotion and inflation.

Leave liabilities for employees engaged under the MOP(S) Act are calculated with reference to an actuarial assessment. The estimate of the present value of the liability takes into account attrition rates and pay increases through promotion and inflation.

Separation and redundancy A provision for severance payments is made for employees engaged under the MOP(S) Act in the event their employment is terminated, other than through resignation. These are measured as the defined benefit obligation adjusted for future salary increases discounted back to present value using yields on government bonds.

Post-employment benefits Provision is made for certain entitlements for former prime ministers, including staff, office and vehicle costs. The liability is calculated with reference to an actuarial assessment for each former prime minister individually where future recurrent expenditure assumptions are set having regard to historical data adjusted for inflation.

E1.1 Employee benefit expenses

Departmental Administered

30 June 30 June 30 June 30 June

2020 2019 2020 2019

$'000 $'000 $'000 $'000

Wages and salaries 122,921 119,293 279,015 268,112

Superannuation expense Defined contribution plans 13,124 11,298 37,968 35,843

Defined benefit plans 10,836 11,636 5,922 5,878

Leave and other entitlements 15,749 22,263 19,928 22,156

Post-employment benefits - - (8,063) 84,682

Separation and redundancies - - 15,378 7,055

Other employee expenses 277 255 16,864 15,820

Total employee benefit expenses 162,907 164,745 367,012 439,546

E1.2 Employee provisions

Departmental Administered

30 June 30 June 30 June 30 June

2020 2019 2020 2019

$'000 $'000 $'000 $'000

Leave 63,411 61,604 46,643 46,889

Separation and redundancies 127 2,500 24,534 30,256

Post-employment benefits - - 246,206 248,547

Total employee provisions 63,538 64,104 317,383 325,692

Annual Report 2019-20 Part 5: Financial Statements 123 Annual Report 2019 -20 Part 5: Financial Statements 187

Notes to and forming part of the financial statements E. Our People

E2 Key management personnel remuneration

Key management personnel (KMP) are those persons having authority and responsibility for planning, directing and controlling the activities of Finance. Finance has determined the KMP to be the Finance Minister, the Assistant Minister for Finance and the members of Finance’s Executive Board which includes the Secretary, Deputy Secretaries and two SES on a rotational basis. KMP remuneration is reported in the table below.

Departmental 30 June 30 June

2020 2019

$'000 $'000

Short-term employee benefits 2,929 2,693

Post-employment benefits 460 436

Other long-term benefits 155 141

Total key management personnel remuneration1 3,544 3,270

Number of key management personnel included in the table above2 11 9

1 The above table excludes the remuneration and other benefits of the Finance Minister and the Assistant Minister for Finance whose remuneration and other benefits are set by the Remuneration Tribunal. 2 Represents the total number of persons who held a KMP position during the year, or part thereof (Finance’s Executive Board increased from seven to eight positions in December 2019 for a new Deputy Secretary, Shared Services Transformation Group).

E3 Related parties

Finance is an Australian Government controlled entity. Related parties to Finance are KMP, cabinet ministers and other Australian Government entities. KMP remuneration for members of the Executive Board is disclosed in Note E2.

Transactions with related parties

Finance undertakes a number of functions on behalf of the Australian Government, as detailed in the financial statements. In performing these functions, Finance transacts with other Australian Government controlled entities for normal day-to-day business operations provided under normal terms and conditions or on a cost recovery basis. This includes general insurance activities and the collection of rental income. Finance also administers payments for work expenses, allowances and entitlements of parliamentarians (including cabinet ministers). These payments are made in the normal course of Administered operations and are paid in accordance with legislation and appropriate frameworks.

Giving consideration to the relationships with related parties and the transactions entered into during the year, it has been determined that there were no related party transactions to be separately disclosed.

Annual Report 2019-20 Part 5: Financial Statements 123 Annual Report 2019 -20 Part 5: Financial Statements 188

Notes to and forming part of the financial statements F. Funding

F. Funding Departmental appropriations (adjusted for any formal additions and reductions) are recognised as revenue from Government when Finance gains control. Appropriations receivable are recognised at their nominal amounts.

Administered appropriations are not recognised as revenue in the Schedule of Comprehensive Income. They are included in the Administered Reconciliation Schedule at the date they are drawn down to Finance’s bank account for payment against the appropriation for annual and special appropriations, or the date stated in the determination for other Administered amounts.

F1 Annual appropriations

F1.1 Annual appropriations ('recoverable GST exclusive') Departmental Administered

30 June 30 June 30 June 30 June

2020 2019 2020 2019

$'000 $'000 $'000 $'000

Ordinary annual services Annual Appropriation Ordinary annual services 283,779 258,962 279,402 299,764

Capital budget 6,476 8,488 5,145 5,054

Section 74 receipts of PGPA Act 70,129 46,553 957 443

Total 360,384 314,003 285,504 305,261

Appropriation applied1 (375,651) (352,702) (321,300) (294,866)

Variance (15,267) (38,699) (35,796) 10,395

Other services Annual appropriation Equity injection 155,672 42,211 - -

Assets and liabilities - - 281,623 231,500

Total 155,672 42,211 281,623 231,500

Appropriation applied1 (197,821) (47,189) (333,911) (312,826)

Variance (42,149) (4,978) (52,288) (81,326)

1 Appropriation applied includes cash payments made from current and prior year appropriations. Differences between appropriation applied and the Administered Reconciliation Schedule are due to timing of payments.

CSC has spent money from the CRF on behalf of Finance. The money spent has been included in the table above.

Departmental and Administered capital budgets are appropriated through Appropriation Acts (No.1, 3, 5). They form part of ordinary annual services and are not separately identified in the Appropriation Acts.

Annual Report 2019-20 Part 5: Financial Statements 123 Annual Report 2019 -20 Part 5: Financial Statements 189

Notes to and forming part of the financial statements F. Funding

F1.2 Unspent annual appropriations ('recoverable GST exclusive') Departmental Administered

30 June 30 June 30 June 30 June

2020 2019 2020 2019

$'000 $'000 $'000 $'000

Appropriation Act (No. 1) 2019-201 19,160 n/a 6,014 n/a

Appropriation Act (No. 1) 2019-20 - Capital - n/a 3,001 n/a

Appropriation Act (No. 2) 2019-20 3,283 n/a 24,124 n/a

Appropriation Act (No. 3) 2019-20 31 n/a 1,691 n/a

Appropriation Act (No. 3) 2019-20 - Capital - n/a - n/a

Appropriation Act (No. 4) 2019-20 - n/a 1,639 n/a

Supply Act (No. 1) 2019-20 32,532 n/a 1,007 n/a

Supply Act (No. 1) 2019-20 - Capital 219 n/a 2,144 n/a

Supply Act (No. 2) 2019-20 2,365 n/a 62,251 n/a

Appropriation Act (No. 1) 2018-19 4,926 49,862 3,683 25,258

Appropriation Act (No. 1) 2018-19 - Capital - 1,183 392 3,792

Appropriation Act (No. 2) 2018-19 24,896 39,217 - 100,285

Appropriation Act (No. 3) 2018-19 - 1,292 245 25,579

Appropriation Act (No. 3) 2018-19 - Capital - 170 - -

Appropriation Act (No. 4) 2018-19 - - 470 40,476

Appropriation Act (No. 1) 2017-18 8 22,006 - 300

Appropriation Act (No. 1) 2017-18 - Capital - 1,183 - -

Appropriation Act (No. 2) 2017-182 39,853 64,202 - 10

Appropriation Act (No. 3) 2017-18 - 4,107 - -

Appropriation Act (No. 4) 2017-18 - 9,128 - -

Appropriation Act (No. 1) 2016-17 - - - 3,936

Total unspent appropriations 127,273 192,350 106,661 199,636

Reconciliation to appropriations receivable (other departmental undrawn) Departmental 30 June 30 June

2020 2019

$'000 $'000

Total unspent appropriations 127,273 192,350

Adjustments Cash at bank - 30 June (1,144) (10,616)

Expected GST refund outstanding at year end (3,146) (1,334)

Recorded against special accounts receivable in ledger (2,766) (4,655)

Recorded against capital receivable for special account in ledger (24,640) (47,296)

PGPA s 51 quarantine - modernisation fund reprioritisation (50) (50)

Closing appropriations receivable balance 95,527 128,399

1 The balance includes cash at bank as at 30 June 2020 of $1.1 million plus expected GST refund of $3.1 million (2019: cash at bank $10.6 million, GST refund $1.3 million).

2 The balance includes a quarantine for modernisation fund reprioritisation.

Annual Report 2019-20 Part 5: Financial Statements 123 Annual Report 2019 -20 Part 5: Financial Statements 190

Notes to and forming part of the financial statements F. Funding

F2 Special appropriations

F2.1 Special appropriations ('recoverable GST exclusive')

Appropriations applied 30 June 30 June

2020 2019

$'000 $'000

Administered Commonwealth of Australia Constitution Act s 66 (Ministers of State Act 1952 s 5)1 (4,795) (5,077) Federal Circuit Court of Australia Act 1999 (474) (465)

Governance of Australian Government Superannuation Schemes Act 2011 (298) (138)

Governor-General Act 1974 (1,882) (1,537)

Judges' Pensions Act 1968 (54,403) (53,267)

Medibank Private Sale Act 2006 (28) (20)

Parliamentary Business Resources Act 2017 (231,761) (234,813)

Parliamentary Contributory Superannuation Act 1948 (44,543) (43,253)

Parliamentary Entitlements Act 19902 - (154)

Parliamentary Superannuation Act 2004 (8,103) (7,358)

Public Governance, Performance and Accountability Act 2013 (PGPA Act) s 77 (24) (2,058)

Same-Sex Relationships (Equal Treatment in Commonwealth Laws - Superannuation) Act 2008 (63) (62)

Superannuation Act 1922 (60,570) (67,060)

Superannuation Act 19763 (4,481,645) (4,459,709)

Superannuation Act 19903 (2,565,500) (2,397,465)

Total special appropriations applied (7,454,089) (7,272,436)

1 For the 2019-20 reporting period this appropriation was limited to $5.7 million.

2 This Act was repealed on 1 January 2018, however the Parliamentary Business Resources (Consequential and Transitional Provisions) Act 2017 allows for payments to be made for expenses incurred prior to the date of repeal.

3 Payments include amounts that are not an additional cost to the Australian Government and are funded from a return of superannuation benefit funded component associated with retirements of scheme members and reimbursements from the emerging cost entities.

Third party drawing arrangements

Agency Appropriations drawn on (amounts included in the table above)

CSC Superannuation Act 1922, Superannuation Act 1976, Superannuation Act 1990,

Governance of Australian Government Superannuation Schemes Act 2011, PGPA Act, s 77, Same-Sex Relationships (Equal Treatment in Commonwealth Laws - Superannuation) Act 2008.

Department of the House of Representatives and the Department of the Senate

Parliamentary Superannuation Act 2004 Commonwealth of Australia Constitution Act s 66 (Ministers of State Act 1952) Parliamentary Business Resources Act 2017 (PBR Act)

Attorney-General’s Department and the Department of Parliamentary Services

Parliamentary Business Resources Act 2017 (PBR Act)

Fair Work Commission Judges Pension Act 1968

Annual Report 2019-20 Part 5: Financial Statements 123 Annual Report 2019 -20 Part 5: Financial Statements 191

Notes to and forming part of the financial statements F. Funding

The following special appropriations were not drawn upon in the current or prior year:

• ACT Government Loan Act 2014 • AIDC Sale Act 1997

• Airports (Transitional) Act 1996 • Lands Acquisition Act 1989

• Loans Securities Act 1919 • Moomba-Sydney Pipeline System Sale Act 1994

• Parliamentary Retiring Allowances (Increases) Act 1967 • Parliamentary Retiring Allowances (Increases) Act 1971 • Public Accounts and Audit Committee Act 1951 • Public Works Committee Act 1969 • Public Governance, Performance and Accountability (Consequential and Transitional Provisions) Act 2014

• Superannuation Legislation (Consequential Amendments and Transitional Provisions) Act 2011

• Transferred Officers’ Allowances Act 1948

Investments were made for the investment funds (under the Nation Building Funds Act 2008 s 32 and s 151), the MRFF (under the Medical Research Future Fund Act 2015 s 37) DCAF (under the DisabilityCare Australia Fund Act 2013 s 27), the FDF (under the Future Drought Fund Act 2019 s 39), the ERF (under the Emergency Response Fund Act 2019 s 37) and the ATSILSFF (under the Aboriginal and Torres Strait Islander Land and Sea Future Fund 2019 Act s 30). Please refer to note C2 for further information.

F2.2 Disclosure by agent in relation to annual and special appropriations ('recoverable GST exclusive') The following table discloses appropriations Finance drew on behalf of other agencies: Appropriations applied 30 June 30 June

2020 2019

Relationship $'000 $'000

Attorney-General's Department Total receipts Solicitors-General pension payments 3 -

Total payments (309) (460)

Annual Report 2019-20 Part 5: Financial Statements 123 Annual Report 2019 -20 Part 5: Financial Statements 192

Notes to and forming part of the financial statements F. Funding

F3 Special accounts

A special account is an appropriation mechanism that notionally sets aside an amount within the CRF to be expended for specific purposes. The type of appropriation provided by a special account is a special appropriation. The appropriation mechanism remains available until the special account is abolished. The amount of appropriation that may be drawn from the CRF, via a special account, is limited to the balance of the particular special account.

A special account can be established either by the Finance Minister making a determination under section 78 of the PGPA Act, or by legislation as recognised under section 80 of the PGPA Act.

F3.1 Departmental special accounts

Comcover Property CPCSA SDOSA Total

30 June 2020 $'000 $'000 $'000 $'000 $'000

Balance brought forward 518,264 197,697 39,620 2,560 758,141

Appropriations credited 158,191 65,051 1,200 - 224,442

Other receipts 161,609 145,172 22,307 26,852 355,940

Payments made (165,742) (200,266) (20,100) (22,866) (408,974)

Balance carried forward 672,322 207,654 43,027 6,546 929,549

Balance represented by Cash held by Finance 1,521 115 - - 1,636

Cash held in OPA 670,801 182,899 43,027 6,546 903,273

Capital appropriation receivable1 - 24,640 - - 24,640

Special account balance 672,322 207,654 43,027 6,546 929,549

30 June 2019 Balance brought forward 480,467 315,943 36,893 - 833,303

Appropriations credited 7,743 78,689 1,201 - 87,633

Other receipts 131,507 114,491 24,579 2,560 273,137

Payments made (101,453) (311,426) (23,053) - (435,932)

Balance carried forward 518,264 197,697 39,620 2,560 758,141

Balance represented by Cash held by Finance 1,793 315 229 2,470 4,807

Cash held in OPA 516,471 150,086 39,391 90 706,038

Capital appropriation receivable1 - 47,296 - - 47,296

Special account balance 518,264 197,697 39,620 2,560 758,141

1 These amounts have been specifically appropriated for the purposes of the Property Special Account but remain undrawn against Appropriation Acts 2 and 4.

Comcover Special Account Establishing instrument: PGPA Act Determination (Comcover Special Account 2018). Purpose: For receipts and expenditure relating to the promotion of risk management to General Government Sector entities to administer the Commonwealth’s general insurance fund and to make payments in respect of any uninsured superannuation liability claims against an insured Commonwealth entity. This account is non-interest bearing. The special account determination sunsets on 1 April 2029.

Property Special Account 2014 Establishing instrument: PGPA Act (Property Special Account 2014 - Establishment) Determination 04. Purpose: Facilitates the management of the Commonwealth's non-Defence domestic property portfolio. This account is non-interest bearing. The special account determination sunsets on 1 April 2025.

Coordinated Procurement Contracting Special Account (CPCSA) Establishing instrument: PGPA Act Determination (Coordinated Procurement Contracting Special Account 2018). Purpose: For expenditure relating to the whole of government contract for providing fleet management and leasing services, centralised government advertising activities and other coordinated procurement contracts for the benefit of government entities. The account is non-interest bearing. The special account determination sunsets on 1 October 2028.

Annual Report 2019-20 Part 5: Financial Statements 123 Annual Report 2019 -20 Part 5: Financial Statements 193

Notes to and forming part of the financial statements F. Funding

Service Delivery Office Special Account (SDOSA) Establishing instrument: PGPA Act Determination (SDO Special Account 2018). Purpose: To enable the Department of Finance to facilitate the activities of the Service Delivery Office, a provider hub under the government’s shared services program. The account is non-interest bearing. The special account determination sunsets on 1 April 2029.

Annual Report 2019-20 Part 5: Financial Statements 123 Annual Report 2019 -20 Part 5: Financial Statements 194

Notes to and forming part of the financial statements

F. Funding

F3.2 Administered special accounts

BAF

EIF

DCAF

MRFF

ATSILSFF

FDF

ERF

Total

30 June 2020

$'000

$'000

$'000

$'000

$'000

$'000

Balance brought forward

-

-

840,000

-

-

-

-

840,000

Contributions

from Government

-

-

4,640,588

7,830,490

-

3,968,254

3,978,184

20,417,516

Investments realised

4,510,780

6,902,461

28,281,909

41,566,910

3,852,492

6,896,353

585,624

92,596,529

Other receipts

45,550

75,507

108,419

144,574

8,290

28,768

15,374

426,482

Investment funds return to Government

(3,968,254)

(3,978,184)

(4,000,000)

-

-

-

-

(11,946,438)

Purchase of investments

(586,199)

(2,997,075)

(28,307,264)

(49,127,237)

(3,805,948)

(10,892,433)

(4,578,453)

(100,294,609)

Investment funds distributions

(1,550,529)

(392,703)

(54,142)

(1,997,374)

Other payments

(1,877)

(2,709)

(13,123)

(22,034)

(692)

(942)

(729)

(42,106)

Balance carried forward

-

-

-

-

-

-

-

-

30 June 2019

Balance brought forward

-

-

-

-

-

n/a

n/a

-

Contributions from Government

-

-

4,280,443

2,288,550

2,007,609

n/a

n/a

8,576,602

Investments realised

5,268,165

5,468,869

22,463,934

15,557,300

4,121,770

n/a

n/a

52,880,038

Other receipts

64,908

55,813

256,810

136,000

18,383

n/a

n/a

531,914

Purchase of investments

(5,329,786)

(5,518,796)

(24,065,213)

(17,763,978)

(6,147,619)

n/a

n/a

(58,825,392)

Investment funds distributions

-

(2,000)

(2,087,755)

(204,863)

-

n/a

n/a

(2,294,618)

Other payments

(3,287)

(3,886)

(8,219)

(13,009)

(143)

n/a

n/a

(28,544)

Balance carried forward

-

-

840,000

-

-

n/a

n/a

840,000

Balance represented by

Cash held in the OPA

-

-

840,000

-

-

n/a

n/a

840,000

Annual Report 2019-20 Part 5: Financial Statements 123 Annual Report 2019 -20 Part 5: Financial Statements 195

Notes to and forming part of the financial statements F. Funding

Building Australia Fund (BAF) Special Account Establishing instrument: Nation-building Funds Act 2008, s 13. Purpose: For making payments in relation to transport infrastructure, communications infrastructure (including the National Broadband Network), energy infrastructure and water infrastructure. The balance of the special account is invested by the Board. The Board may invest amounts standing to the credit of the special account in financial assets, although the special account itself is non-interest bearing. This special account ceased on 2 September 2019 with balances transferred to the FDF.

Education Investment Fund (EIF) Special Account Establishing instrument: Nation-building Funds Act 2008, s 132. Purpose: For making payments in relation to higher education infrastructure, research infrastructure, vocational education and training infrastructure and any other eligible education infrastructure. The balance of the special account is invested by the Board. The Board may invest amounts standing to the credit of the special account in financial assets, although the special account itself is non-interest bearing. This special account ceased on 12 December 2019 with balances transferred to the ERF.

DisabilityCare Australia Fund (DCAF) Special Account Establishing instrument: DisabilityCare Australia Fund Act 2013, s 11. Purpose: For making reimbursements to State, Territory and Commonwealth Governments in relation to expenditure incurred under the National Disability Insurance Scheme Act 2013. The balance of the special account is invested by the Board. The Board may invest amounts standing to the credit of the special account in financial assets, although the special account itself is non-interest bearing.

Medical Research Future Fund (MRFF) Establishing instrument: Medical Research Future Fund Act 2015, s 14. Purpose: For making payments in relation to medical research and medical innovation. The balance of the special account is invested by the Board. The Board invests amounts standing to the credit of the special account, although the special account itself is non-interest bearing.

Aboriginal and Torres Strait Islander Land and Sea Future Fund (ATSILSFF) Establishing instrument: Aboriginal and Torres Strait Islander Land and Sea Future Fund Act 2019, s 12. Purpose: For making payments to the Indigenous Land and Sea Corporation. The balance of the special account is invested by the Board. The Board may invest amounts standing to the credit of the special account in financial assets, although the special account itself is non-interest bearing. The ATSILSFF was established on 1 February 2019 with the balance of the Aboriginal and Torres Strait Islander Land Account transferred from the Department of Prime Minister and Cabinet to the ATSILSFF.

Future Drought Fund (FDF) Special Account Establishing Instrument: Future Drought Fund Act 2019, s 13. Purpose: To enhance the Commonwealth's ability to make arrangements with, and grants to, person and bodies in relation to drought resilience, preparedness and response. The balance of the special account is invested by the Board. The Board may invest amounts standing to the credit of the special account in financial assets, although the special account itself is non-interest bearing.

Emergency Response Fund (ERF) Special Account Establishing Instrument: Emergency Response Fund Act 2019, s 12. Purpose: For making payments up to $200 million in any given year to fund emergency response and natural disaster recovery and preparedness, where it determines the existing recovery and resilience-building programs are insufficient to provide an appropriate response to natural disasters. The balance of the special account is invested by the Board. The Board may invest amounts standing to the credit of the special account in financial assets, although the special account itself is non-interest bearing.

The following Special Accounts have not been used during the current and comparative years:

Lands Acquisition Special Account Establishing instrument: Lands Acquisition Act 1989, s 89A. Purpose: For holding amounts of compensation due to be paid to a person in respect of compulsory acquisition of land where the amount of compensation payable to the person has been determined under the Lands Acquisition Act 1989, but after three months the amount remains unpaid due to default or delay on the part of the claimant. To date there have been no transactions through this account.

Annual Report 2019-20 Part 5: Financial Statements 123 Annual Report 2019 -20 Part 5: Financial Statements 196

Notes to and forming part of the financial statements F. Funding

Services for Other Entities and Trust Moneys (SOETM) Special Account - Department of Finance Establishing instrument: Financial Management and Accountability (Establishment of SOETM Special Account - Finance) Determination 2012/08. Purpose: For the receipt of moneys temporarily held in trust for other persons other than the Commonwealth and for the payment to a person other than the Commonwealth, on behalf of the Government, that are not PGPA Act agencies, or as permitted by an Act. The account is non-interest bearing. This special account was established on 26 June 2012 and the determination will sunset on 1 October 2022.

Annual Report 2019-20 Part 5: Financial Statements 123 Annual Report 2019 -20 Part 5: Financial Statements 197

Notes to and forming part of the financial statements G. Managing Other Uncertainties

G. Managing Other Uncertainties This section includes additional information about other events that may have an impact on future financials. These amounts have not been recorded elsewhere in the statements.

G1 Contingencies

Contingent assets and contingent liabilities are not recognised in the Statement of Financial Position but are reported in the notes. They may arise from uncertainty as to the existence of an asset or liability, or represent an asset or liability in respect of which the amount cannot be reliably measured. Contingent assets are disclosed when settlement is probable but not virtually certain and contingent liabilities are recognised when settlement is greater than remote.

Finance does not have any significant quantifiable contingent assets or liabilities, nor does it have any unquantifiable contingent assets.

Unquantifiable contingent liabilities

In the normal course of business (including the non-defence domestic property portfolio and general insurance functions), Finance has a number of matters that are unquantifiable or subject to litigation. At the date of this report, Finance does not consider the outcome of any such matters likely to have a significant effect on its operations or financial position.

G2 Subsequent events

There were no subsequent events after the reporting period.

Annual Report 2019-20 Part 5: Financial Statements 123 Annual Report 2019 -20 Part 5: Financial Statements 198

Notes to and forming part of the financial statements H. Other Information

H. Other Information This section includes additional financial information which is considered relevant to assist users in understanding the financial statements.

H1 Aggregate assets and liabilities

Departmental Administered

30 June 30 June 30 June 30 June

2020 2019 2020 2019

$'000 $'000 $'000 $'000

Assets expected to be recovered in No more than 12 months 1,059,157 977,515 30,799,184 31,602,961

More than 12 months 2,594,520 2,094,373 19,114,532 9,387,303

Total assets 3,653,677 3,071,888 49,913,716 40,990,264

Liabilities expected to be settled in No more than 12 months 381,415 341,497 10,375,666 8,907,799

More than 12 months 923,273 390,065 234,385,010 226,558,179

Total liabilities 1,304,688 731,562 244,760,676 235,465,978

H2 Other policy and disclosures

This section of the report provides additional information in relation to line items in the primary statements that do not have specific disclosures in the preceding notes. They are additional disclosures directed at the interests of particular users and their needs.

Volunteer services

Volunteer services are recognised as revenue when, and only when, a fair value can be reliably determined and the services would be purchased if they had not been donated. Use of the resources is recognised as an expense. Volunteer services are recorded as either revenue or gains depending on their nature. Volunteer services relate to Australian National Audit Office audit fees for Finance’s financial statements and whole of government financial statements (2020: $1.3 million).

Volunteer services includes rent for office space in the Ministerial Wing of Parliament House.

Cash and cash equivalents

Cash and cash equivalents include cash on hand, cash held with outsiders, cash in special accounts and demand deposits in bank accounts with an original maturity of three months or less that are readily convertible to known amounts of cash and subject to an insignificant risk of changes in value. Cash is recognised at its nominal amount. Cash and cash equivalents held for investment purposes are classified as investments.

Official Public Account (OPA)

The OPA consists of the central bank accounts administered by Finance where the aggregate balance represents the government’s daily cash position. Cash in bank accounts held by non-corporate Commonwealth entities (NCCE) are consolidated in the OPA each night. The amounts to be returned to the NCEs before the next business day is reported in the Administered financial statements as OPA overnight cash payable. Transfers to and from the OPA with other Commonwealth entities represents receipts collected on behalf of the Commonwealth and the Commonwealth payments drawn from the Appropriation Acts.

Annual Report 2019-20 Part 5: Financial Statements 123 Annual Report 2019 -20 Part 5: Financial Statements 199

Notes to and forming part of the financial statements Glossary

Glossary

AAS Australian Accounting Standards IBNR Incurred But Not Reported

AASB Australian Accounting Standards Board IBNER Incurred But Not Enough Reported

AMT Adjusted Market Transactions ICON Intra-government Communications

Network

ANI Australian Naval Infrastructure Pty Ltd Investment funds Administered Investment Funds managed by the Future Fund Board of Guardians

ASC ASC Pty Ltd JPS Judges’ Pensions Scheme

ATSILSFF Aboriginal and Torres Strait Islander Land and Sea Future Fund KMP Key Management Personnel

AUD Australian Dollar LTCRs 2017 Long Term Cost Reports

BAF Building Australia Fund MOP(S)

Act

Members of Parliament (Staff) Act 1984

CEB Consumed Economic Benefits MRFF Medical Research Future Fund

CECs Commonwealth Entities and Companies MRFFICs Medical Research Future Fund Investment Companies

CRF Consolidated Revenue Fund NCCEs Non-Corporate Commonwealth Entities

CPCSA Coordinated Procurement Contracting Special Account NCOS Net Cost of Services

CPI Consumer Price Index NET Net Assets

CSC Commonwealth Superannuation Corporation OCI Other Comprehensive Income

CSS Commonwealth Superannuation Scheme OPA Official Public Account

DCAF DisabilityCare Australia Fund PBR Act Parliamentary Business Resources Act 2017

EIF Education Investment Fund PBS Portfolio Budget Statements

ERF Emergency Response Fund PGPA Act Public Governance, Performance and Accountability Act 2013

FCCJDDS Federal Circuit Court Judges Death and Disability Scheme PCSS Parliamentary Contributory Superannuation Scheme

FDF Future Drought Fund PSS Public Sector Superannuation Scheme

FFMA Future Fund Management Agency PSSap Public Sector Superannuation Accumulation Plan

FRR PGPA (Financial Reporting) Rule 2015 RBA Reserve Bank of Australia

FVOCI Fair Value through Other Comprehensive Income RCN Replacement Cost of New Assets

FVPL Fair Value through Profit or Loss SDO Service Delivery Office

GBE Government Business Enterprise SDOSA Service Delivery Office Special Account

GBP British Pound The Board Future Fund Board of Guardians

G-GPS Governor-General Pension Scheme USD United States Dollar

GST Goods and Services Tax WACC Weighted Average Cost of Capital

Annual Report 2019-20 Part 6: Appendices 200

Part 6: Appendices

Annual Report 2019-20 Part 6: Appendices 201

Appendix A: Entity resource statement and expenses by outcome

Table A1: Agency Resource Statement 2019-20

Actual available appropriatio n

- current year $'000 (A)

Payments Made $'000 (B)

Balance Remaining $'000 (A) - (B)

Departmental

Annual appropriations—ordinary annual servicesa, b 428,237 375,651 52,586

Annual appropriations—other services— non-operatingd 268,219 197,821 70,398

Total departmental annual appropriations 696,456 573,472 122,984

Special accounts 1,338,523 408,974 929,549

Total special accounts 1,338,523 408,974 929,549

Less departmental appropriations drawn from annual/special appropriations and credited to special accounts 224,442 - 224,442

Total departmental resourcing (A) 1,810,537 982,446 828,091

Administered

Annual appropriations—ordinary annual servicea, c 339,476 321,300 18,176

Annual appropriations—other services—non- operatingd 422,394 333,911 88,483

Total administered annual appropriations 761,870 655,211 106,659

Administered special appropriations 7,454,089

Total administered special appropriations 7,454,089

Special accounts 114,280,527 114,280,527

Total special accounts 114,280,527 114,280,527

Total administered resourcing (B) 115,042,397 122,389,827

Total resourcing and payments for Department of Finance (A + B) 116,852,934 123,372,273

a Appropriation Act (No.1) 2019-20 and Appropriation Act (No.3) 2019-20. The amount includes prior year departmental appropriations and section 74 retained revenue receipts.

b Includes an amount of $65.051 million that has been credited to the Property Special Account, $158.191 million that has been credited to the Comcover Special Account and $1.200 million that has been credited to the Co-ordinated Procurement Special Account.

Annual Report 2019-20 Part 6: Appendices 202

c Includes an amount of $5.145 million in 2019-20 for the administered capital budget. For accounting purposes, this amount has been designated as ‘contributions by owners’.

d Appropriation receipts from Appropriation Act (No.2), Appropriation Act (No.4) and Appropriation Act (No.6) included above.

Table A2: Expenses for Outcome 1, 2019-20

Outcome 1: Support sustainable Australian Government finances through providing high quality policy advice and operational support to the government and Commonwealth entities to maintain effective and efficient use of public resources.

Budgeta 2019-20 $'000 (a)

Actual expenses 2019-20 $'000

(b)

Variation 2019-20 $'000 (a)-(b)

Program 1.1: Budget and Financial Management

Departmental expenses

Departmental appropriationb

Budget advice 54,001 61,229 (7,228)

Financial reporting 28,071 33,490 (5,419)

Expenses not requiring appropriation in the budget yearc 22,699 18,138 4,561

Total for Program 1.1 104,771 112,857 (8,086)

Outcome 1 Totals by appropriation type

Departmental expenses

Departmental appropriationb 82,072 94,719 (12,647)

Expenses not requiring appropriation in the budget yearc 22,699 18,138 4,561

Total expenses for Outcome 1 104,771 112,857 (8,086)

2018-19 2019-20

Average staffing level (number)d 425 423

a Full-year budget, including any subsequent adjustments made in the 2019-20 Portfolio Additional Estimates.

b Departmental appropriation combines ordinary annual services (Appropriation Act Nos. 1 and 3) and retained revenue receipts under section 74 of the Public Governance, Performance and Accountability Act 2013.

c Expenses not requiring appropriation in the budget year is made up of depreciation and amortisation expenses, write-down and impairment of non-financial assets and volunteer services.

d Actual average staffing level (ASL) for 2018-19 and 2019-20.

Annual Report 2019-20 Part 6: Appendices 203

Table A3: Expenses for Outcome 2, 2019-20

Outcome 2: Support an efficient and high-performing public sector through providing leadership to Commonwealth entities in ongoing improvements to public sector governance, including through systems, frameworks, policy, advice and service delivery.

Budgeta 2019-20 $'000 (A)

Actual expenses 2019-20 $'000

(B)

Variation 2019-20 $'000 (A)-(B)

Program 2.1: Public Sector Governance

Administered expenses

Ordinary annual services (Appropriation Act Nos. 1 and 3)

Grant in Aid—Australian Institute of Policy and Science 38 38 -

Grant in Aid—Chifley Research Centre 243 243 -

Grant in Aid—Green Institute 91 91 -

Grant in Aid—Menzies Research Centre 243 243 -

Grant in Aid—Page Research Centre 117 117 -

Grant in Aid—Royal Humane Society of Australasiab 28 28 -

Grant in Aid—RSPCA Australia Inc 38 38 -

Departmental expenses

Departmental appropriationb

Financial framework 14,374 14,131 243

Government shareholder oversight 17,901 14,783 3,118

Special financial claims 2,857 3,382 (525)

Expenses not requiring appropriation in the budget yearc 1,079 1,404 (325)

Total for Program 2.1 37,009 34,498 2,511

Program 2.2: Transforming Government

Departmental expenses

Departmental appropriationb

Transforming the public sector 48,992 37,478 11,514

Expenses not requiring appropriation in the budget yearc 575 3,771 (3,196)

Total for Program 2.2 49,567 41,249 8,318

Program 2.3: Property and Construction

Departmental expenses

Special accounts

Property Special Accountd 106,507 76,347 30,160

Total for Program 2.3 106,507 76,347 30,160

Annual Report 2019-20 Part 6: Appendices 204

Program 2.4: Insurance and Risk Management

Departmental expenses

Special accounts

Comcover Special Account 148,425 261,147 (112,722)

Total for Program 2.4 148,425 261,147 (112,722)

Program 2.5: Technology and Procurement Services

Departmental expenses

Departmental appropriationb

Technology transformation 19,266 22,012 (2,746)

Procurement framework 9,971 11,763 (1,792)

Special accounts

Coordinated Procurement Contracting Special Account 25,839 23,741 2,098

Expenses not requiring appropriation in the budget yearc 2,860 2,008 852

Total for Program 2.5 57,936 59,524 (1,588)

Program 2.6: Service Delivery Office

Departmental expenses

Departmental appropriationb

Service Delivery Office 2,845 13,251 (10,406)

Special accounts

SDO Special Account 34,252 33,358 894

Expenses not requiring appropriation in the budget yearc 811 1,080 (269)

Total for Program 2.6 37,908 47,689 (9,781)

Program 2.7: Public Sector Superannuation

Administered expenses

Ordinary annual services (Appropriation Act Nos. 1 and 3)

Act of Grace 2,164 (62) 2,226

Compensation and legal expenses 500 443 57

Superannuation administration costs 8,936 8,936 -

Special appropriations

Federal Circuit Court of Australia Act 1999 970 971 (1)

Governance of Australian Government Superannuation Schemes Act 2011 1,000 298 702

Governor-General Act 1974 6,453 6,453 -

Annual Report 2019-20 Part 6: Appendices 205

Judges' Pensions Act 1968 108,372 108,372 -

Parliamentary Contributory Superannuation Act 1948 30,262 30,261 1

Parliamentary Superannuation Act 2004 7,727 8,103 (376)

Same-Sex Relationships (Equal Treatment in Commonwealth Laws General Law Reform) Act 2008 34 38 (4)

Superannuation Act 1922 9,575 9,575 -

Superannuation Act 1976 1,694,637 1,694,637 -

Superannuation Act 1990 6,425,875 6,425,875

-

Departmental expenses

Departmental appropriationb

Public Sector Superannuation 2,659 3,816 (1,157)

Expenses not requiring appropriation in the budget yearc 107 103 4

Total for Program 2.7 8,299,271 8,297,819 1,452

Program 2.8: Australian Government Investment Funds

Administered expenses

Special accounts

DisabilityCare Australia Fund Special Account 1,602,393 1,771,853 (169,460)

Medical Research Future Fund Special Account 452,292 720,898 (268,606)

Building Australia Fund Special Account 408 13,820 (13,412)

Education Investment Fund Special Account 1,103 23,343 (22,240)

Aboriginal and Torres Strait Islander Land and Sea Future Fund Special Account 61,098 54,967 6,131

Future Drought Fund 13,628 1,370 12,258

Emergency Response Fund - 1,257 (1,257)

Total for Program 2.8 2,130,922 2,587,508 (456,586)

Outcome 2 Totals by appropriation type

Administered expenses

Ordinary annual services (Appropriation Act Nos. 1 and 3) 12,398 10,115 2,283

Special appropriations 8,284,905 8,284,583 322

Special accounts 2,130,922 2,587,508 (456,586)

Departmental expenses

Departmental appropriationb 118,865 120,616 (1,751)

Special accounts 315,023 394,593 (79,570)

Annual Report 2019-20 Part 6: Appendices 206

Expenses not requiring appropriation in the budget yearc 5,432 8.366 (2,934)

Total expenses for Outcome 2 10,867,545 11,405,781 (538,236)

2018-19 2019-20

Average staffing level (number)e 615 634

a Full-year budget, including any subsequent adjustments made in the 2019-20 Portfolio Additional Estimates.

b Departmental appropriation combines ordinary annual services (Appropriation Act Nos. 1 and 3) and retained revenue receipts under section 74 of the Public Governance, Performance and Accountability Act 2013.

c Expenses not requiring appropriation in the budget year is made up of depreciation and amortisation expenses, write-down and impairment of non-financial assets and volunteer services.

d Excludes income tax equivalent expenses.

e Actual average staffing level (ASL) for 2018-19 and 2019-20.

Annual Report 2019-20 Part 6: Appendices 207

Table A4: Expenses for Outcome 3, 2019-20

Outcome 3: Support for Parliamentarians and others as required by the Australian Government through the delivery of, and advice on, work expenses and allowances, entitlements and targeted programs.

Budgeta 2019-20 $'000 (a)

Actual expenses 2019-20 $'000

(b)

Variation 2019-20 $'000 (a)-(b)

Program 3.1: Ministerial and Parliamentary Services

Administered expenses

Ordinary annual services (Appropriation Act Nos. 1 and 3)

Electorate and ministerial support costs

263,864 289,632 (25,768)

Australian Political Exchange Program

940 606 334

Australian Political Parties for Democracy Program 2,200 1,766 434

Special appropriations

Commonwealth of Australia Constitution Act (s.66) 5,372 4,795 577

Parliamentary Entitlements Act 1990

- - -

Parliamentary Business Resources Act 2017 230,927 213,613 17,314

Expenses not requiring appropriation in the budget yearb 7,057 22,744 (15,687)

Departmental expenses

Departmental appropriationc

Services to Senators, Members & their staff 31,940 34,639 (2,699)

Car-with-driver and associated transport services 347 381 (34)

Expenses not requiring appropriation in the budget yearb 1,434 2,697 (1,263)

Total for Program 3.1

544,081 570,873 (26,792)

Outcome 3 totals by appropriation type

Administered expenses

Ordinary annual services (Appropriation Act Nos. 1 and 3) 267,004 292,004 (25,000)

Special appropriations

236,299 218,408 17,891

Expenses not requiring appropriation in the budget yearb 7,057 22,744 (15,687)

Departmental expenses

Departmental appropriationc

32,287 35,020 (2,733)

Expenses not requiring appropriation in the budget yearb 1,434 2,697 (1,263)

Total expenses for Outcome 3 544,081 570,873 (26,792)

2018-19 2019-20

Average staffing level (number)d 173 126

Annual Report 2019-20 Part 6: Appendices 208

a Full-year budget, including any subsequent adjustments made in the 2019-20 Portfolio Additional Estimates.

b Expenses not requiring appropriation in the budget year is made up of depreciation and amortisation expenses, write-down and impairment of non-financial assets and volunteer services.

c Departmental appropriation combines ordinary annual services (Appropriation Act Nos. 1 and 3) and retained revenue receipts under section 74 of the Public Governance, Performance and Accountability Act 2013.

d Actual average staffing level (ASL) for 2018-19 and 2019-20.

Annual Report 2019-20 Part 6: Appendices 209

Appendix B: Other management matters

Grants Information on grants awarded by the Department of Finance during the period 1 July 2019 to 30 June 2020 is available on GrantConnect at grants.gov.au.

Disability reporting The National Disability Strategy 2010-2020 sets out a 10-year national policy framework for improving the lives of people with disability, promoting participation and creating a more inclusive society. A key initiative of the Strategy is the introduction of a periodic high-level report tracking progress against each of the six outcome areas in the Strategy. The report uses trend data based on the six outcome areas. The report is available on the Department of Social Services website.

Freedom of information Entities subject to the Freedom of Information Act 1982 are required to publish information for the public as part of the Information Publication Scheme. This requirement is in Part II of the Act and has replaced the former requirement to publish a section 8 statement in an annual report. Each entity must display on its website a plan showing what information it publishes in accordance with the Scheme’s requirements. The Department’s plan is available on the Finance website at finance.gov.au/about-us/freedom-information.

Members of the public can provide comments on the Department’s information publication plan to the Freedom of Information Team.

Advertising and market research During 2019-20, Finance's total expenditure for advertising and market research was $395,342.70.

Table B1 shows payments of $14,000 or more (GST inclusive) to advertising and market research, polling, direct mail and media advertising organisations, as required under section 311A of the Commonwealth Electoral Act 1918.

While Finance manages whole-of-government campaign and non-campaign advertising contracts, the lead entity responsible for specific advertising or market research contracts reports the relevant expenditure.

Annual Report 2019-20 Part 6: Appendices 210

Table B1: Advertising and market research expenditure 2019 -20

Organisation Purpose

Expenditure ($, including GST)

Market research organisations

Colmar Brunton Research Pty Ltd Customer survey and analysis services 45,670.00

Ebiquity Pty Ltd Industries advice for campaign

advertising 214,500.00

Media advertising organisations

Universal McCann Advertising in relation to electorate

offices 25,919.47

Universal McCann Advertising in relation to whole-of-

government generalist graduate recruitment process for 2021 39,632.34

Universal McCann Advertising for an approach to market

for Comcover contracts 16,220.80

Universal McCann Advertising in relation to a review of

the Lands Acquisition Act 20,069.49

Total reportable payments over $14,000 362,012.09

Annual Report 2019-20 Part 6: Appendices 211

Executive remuneration disclosure

Introduction

The category of officials covered by the disclosure are:

● Key management personnel

● Senior Executives

● Other highly paid staff, whose total remuneration exceeds the threshold remuneration amount for the reporting period.

Remuneration policy and practices

The Secretary's remuneration is set by the Remuneration Tribunal under section 13 of the Remuneration Tribunal Act 1973.

Remuneration for the Department's Senior Executive Service (SES) employees is established through individual determinations made under section 24(1) of the Public Service Act 1999.

● Salary levels for SES employees are generally set at rates within a salary band applicable to each SES classification.

The Finance Enterprise Agreement 2019 (Finance Agreement), provides remuneration and conditions for all non-SES employees.

● The Finance Agreement allows individual flexibility arrangements for remuneration arrangements, superannuation, working hours, leave, allowance, overtime rates and penalty rates.

Remuneration governance arrangements

The Leadership and Remuneration Subcommittee is a subcommittee of the Executive Board.

● The Subcommittee is responsible for overseeing the Department’s remuneration (all staff) and SES development and SES recruitment.

The Subcommittee comprises members from across the Department as follows:

● Chair (Secretary)

● Deputy Chair (Deputy Secretary)—nominated by the Chair when needed

● The Deputy Secretaries (position-based members)

● Assistant Secretary, HR Branch (ex-officio member, position-based).

Key management personnel

The key management personnel (KMP) for Finance include the Minister for Finance, the Assistant Minister for Finance, Charities and Electoral Matters and the members of the Finance Executive Board. The Secretary chairs the Executive Board, supported by the five Deputy Secretaries of the Department as permanent members. In addition, membership of the Board is offered for a period of nine months on a rotating basis to two senior members of staff—a First Assistant Secretary and an Assistant Secretary from across the Department. The rotations occurred in March 2020 for the First Assistant Secretaries and June 2020 for the Assistant Secretaries. Remuneration paid to members of the Finance Executive Board is disclosed in the information about remuneration for key management personnel in Table B4 below.

Annual Report 2019-20 Part 6: Appendices 212

T able B2:

Information about remuneration for senior executives

Total remuneration

Average total remuneration

127,894

231,646

261,614

279,801

303,920

325,832

362,663

382,735

The table includes all substantive senior executives who received remuneration during the

reporting period, including those who have been promoted,

transferred or ceased during the reporting period. Therefore more than one individual may have filled a single position over

the course of the year.

Average base salary includes a component for Exec

utive Vehicle Scheme effective from 1 September 2019.

Termination benefits

Average termination benefits

0

0

0

0

19,412

0

0

0

Average other

long

-term

benefits

0

0

0

0

0

0

0

0

Other long

-

term benefits

Average long service leave

5,599

5,143

14,529

20,761

27,218

32,810

34,576

39,702

Post

-

employment benefits

Average superannuation contributions

18,788

35,286

34,167

36,623

34,090

39,958

48,067

45,592

Short term benefits

Average other benefits and allowances

2,051

4,199

4,816

4,505

4,287

4,640

4,968

4,781

Average bonuses

0 0 0 0 0 0 0 0

Average base salary

101,456

187,018

208,102

217,912

218,913

248,425

275,053

292,660

Number of senior executives

20

10

14

8

6

4

7

2

Remuneration bands

$0

- $220,000

$220,001

- $245,000

$245,001

- $270,000

$270,001

- $295,000

$295,001

- $320,000

$320,001

- $345,000

$345,001

- $370,000

$370,001

- $395,000

Annual Report 2019-20 Part 6: Appendices 213

executives

Table B3: Information about remuneration for other highly paid staff

Total remuneration

Average total remuneration

233,793

257,122

281,230

316,043

360,601

The table includes other highly paid staff who received remuneration during the reporting period, including those who have be

en promoted, transferred or

ceased during the reporting period and individuals who were acting as SES for a

portion of the year. Eight others received a voluntary redundancy payment.

Termination benefits

Average termination benefits

61,027

81,119

128,318

139,297

161,870

Average other

long

-term

benefits

0

0

0

0

0

Other long

-

term benefits

Average long service leave

12,351

33,393

77,039

75,846

136,422

Post

-

employment benefits

Average superannuation contributions

21,990

17,519

5,561

11,898

1,098

Short term benefits

Average other benefits and allowances

13,212

2,005

0

0

2,180

Average bonuses

0

0

0

0

0

Average base salary

125,212

123,088

70,313

89,003

59,031

Number of highly paid staff

3

3

2

1

1

Remuneration bands

$225,001

- $245,000

$245,001

- $270,000

$270,001

- $295,000

$295,001

- $320,000

$345,001

- $370,000

Annual Report 2019-20 Part 6: Appendices 214

T able B4: Information about

remuneration for key management personnel

Total

remuneration

915,906

177,646

486,290

467,162

457,596

201,630

218,650

252,609

98,997

253,345

14,081

a Base salary includes salary paid and accrued, salary paid while on annual leave, salary paid while on personal leave, annual

leave accrued and higher duties

allowances. Average base salary includes a component for Executive Vehicle Scheme effective from 1

September 2019.

b Other benefits and allowances include monetary benefits such as car allowances and non

-monetary benefits such as provision of a carpark.

c

For individuals in a defined contribution scheme (for example PSSAp and super choice), superannuat

ion includes superannuation contribution amounts. For

individuals in a defined benefits scheme (for example CSS and PSS), superannuation includes the relevant Notional Employer Co

ntribution Rate and Employer

Productivity Superannuation Contribution.

d Long

service leave comprises the amount of leave accrued and taken in the period.

Termination benefits

Termination benefits

0

0

0

0

0

0

0

0

0

0

0

Other long

-term

benefits

Other

long

-

term benefit s

0

0

0

0

0

0

0

0

0

0

0

Long service leave

d

21,325

8,960

18,410

27,199

26,793

4,494

3,969

18,163

3,819

21,598

331

Post

-

employment benefits

Superannuation contributions

c

103,820

21,593

69,950

64,414

65,774

28,518

27,380

31,525

14,123

30,468

2,532

Short term benefits

Other benefits and allowances

b 0

10,198

4,831

4,831

4,831

0

0

4,831

0

4,313

0

Bonuses

0 0 0 0 0 0 0 0 0 0 0

Base salary

a

790,761

136,895

393,099

370,718

360,198

168,618

187,301

198,090

81,055

196,966

11,218

Term as KMP

1 July 2019

-

30 June 2020

1 July 2019

-

10 November

2019

1 July

2019

-

30 June 2020

1 July 2019

-

30 June 2020

1 July 2019

-

21 June 2020

3 February

2020

-

30 June 2020

11 December 2019

- 30 June

2020

1 July 2019

- 24

March 2020

24 March 2020

-

30 June 2020

1 July 2019

- 21

June 2020

5 June 2020

-

30 June 2020

Position title

Secretary

Deputy Secretary

Deputy Secretary

Deputy Secretary

Deputy Secretary

Deputy Secretary

Deputy Secretary (Acting)

First

Assistant Secretary

First

Assistant Secretary

Assistant Secretary

Assistant Secretary

Name

Rosemary Huxtable

David Fredericks

Stein Helgeby

Andrew Jaggers

Katherine Jones

Matthew Yannopoulos

Lucelle Veneros

Tracey Carroll

David De Silva

Scott Austin

Elizabeth Hickey

Annual Report 2019-20 Part 6: Appendices 215

Table B5: Information about remuneration for Audit Committee members

Name Total annual remuneration

Mr Brendan Sargeant (external member) Chair, Audit Committee Chair, Financial Reporting Subcommittee (FRSC) $14,636 ex GST Mr Geoff Knuckey (external member) Previous Chair, Audit Committee Previous Chair, FRSC $16,200 ex GST

Ms Jennifer Clark (external member) Deputy Chair, Audit Committee Chair, Performance Reporting Subcommittee (PRSC)

$34,375 ex GST

plus travel reimbursement

Mr Ian McPhee AO PSM (external member) Member, PRSC $26,000 ex GST

Ms Gayle Ginnane (external member) $20,975 ex GST

Dr Stein Helgeby (departmental member) Member, PRSC $0

Ms Amanda Lee (departmental member) Member, FRSC $0

Annual Report 2019-20 Part 6: Appendices 216

Appendix C: Information on recoverable payments

Information on recoverable payments The Department of Finance is responsible for administering:

● the Parliamentary Contributory Superannuation Scheme (PCSS)

● the Judges’ Pensions Scheme

● the Governors-General Pension Scheme

Legislation for these schemes requires that Finance report recoverable payments that arise from inadvertent overpayment of pension benefits (see Table C1).

Overpayments are most often a consequence of Finance receiving notification of an event that has a retrospective impact on an amount of pension already paid. In general, recoverable payments arise where:

● regular pension payments are made prior to receiving notification of the death of a member

● a PCSS member receives regular pension payments prior to providing notification of work undertaken in a recognised ‘office of profit’ position, which would have the effect of reducing the amount of pension paid in an earlier period

● there are incorrectly calculated pension benefits due to system or human error.

All amounts are recovered, although amounts paid and amounts recovered may not align where recovery was undertaken in subsequent financial years.

The number of recoverable payments and the amounts of those payments can vary significantly between financial years, particularly depending on the number of ‘office of profit’ positions held by retired parliamentarians in a relevant year.

Information relating to 2018-19 schemes was published in Finance’s 2018-19 Annual Report. Previous years’ reported information can change, for example when Finance is notified of the event after the relevant financial year.

The Commonwealth Superannuation Corporation has administrative responsibility for the Commonwealth civilian and military superannuation schemes and the reporting of recoverable payments for these schemes.

Annual Report 2019-20 Part 6: Appendices 217

Table C1: Recoverable superannuation scheme payments - parliamentarians,

judges and governors-general, 2018-19 and 2019-20.

2019-20 2018-19

Number of payments

Amount paid $’000

Amount recovered $’000 Number of

payments

Amount paid $’000

Amount recovered $’000

Legislation

Parliamentary Contributory Superannuation Act 1994

Death payments 18 43 50 28 58 62a

Other payments 94 132 160 128b 107b 69

Total 112 175 210 156 165 131

Judges’ Pensions Act 1968

Death payments 6 42 65 6 70c 45c

Other payments - - - - - -

Total 6 42 65 6 70 45

Governor-General Act 1974

Death payments - - - - - -

Other payments - - - - - -

Total - - - - - -

a The previously reported amount recovered was $67,000. However, this included an amount of $5,000 that was recovered in July 2019 and is attributable to the 2019-20 financial year.

b The previously reported number of payments was 96 and the amount paid was $94,000. The revised figures include additional 'office of profit' positions held in 2018-19 but notified to Finance in the subsequent financial year.

c The previously reported amount paid was $90,000 and the amount recovered was $95,000. The revised figures relate to reporting corrections of $20,000 for both paid and recovered amounts. The recovered amount also included $30,000 that was recovered in July 2019 and is attributable to the 2019-20 financial year.

Annual Report 2019-20 Part 6: Appendices 218

Appendix D: Staff achievements

Secretary's awards 2019 The following individuals and teams received Secretary's awards in 2019:

Elliot Zwangobani for leading the team to deliver the new property services contract, being part of the solution, prioritising collaboration and thinking innovatively.

CARS Project Team comprising Fran Sankey, Donna Osborne, Matthew Ryan, Nicholas Sykes, Mick Coleman, Alison McIntosh, Clonagh Riley, Andrew Sage, Brenda Chick, Chris Wade, Meredith Brosnan and Dave Domjan for excellence in the successful design, development and delivery of COMCAR's new booking and dispatch system.

Bek Hendriks for her strong support to the Aboriginal and Torres Strait Islander Staff Network and contribution in building the cultural capability of Finance employees and managers.

Capital Works and Land Remediation Team comprising Ross Stevens, Mick Armour, Clinton Heenan, Jessica Ting and Emma Tod for proactively engaging with, and seeking opportunities for, Indigenous businesses and communities to contract with government to build business capabilities and employment.

Brendan McNamara in his role as Assistant Manager in the NSW State Office for demonstrating outstanding leadership, strategic thinking and commitment to delivering exceptional service to members of parliament and their staff.

Vidya Vasudevan for going above and beyond in HR support.

Ceinwen Hiscock for excellence in stewardship on secondment to the Undersea Cables Taskforce in the Department of Foreign Affairs and Trade.

North Queensland Flood Recovery Team comprising Alan Francis, Nicholas Vorobieff, Bianca Jameson, Sweta Samanta, Salim Daizli, Alice Fenwick, Elise Aquilina, Dainia Mathieson, Amanda Cross, Marina Kim, Melissa Pan, Daniel Featherston, Adrian Rowles, Melissa Egan, Natasha Shahidullah, Joyce Lau, Easwar Vijay, Andrew Bourke, Jennifer Tunks, Clare Sorensen and Matt Lally for excellence in collaboration within Finance and across government to ensure the delivery of a timely, targeted reconstruction package for flood-affected North Queensland industries.

Shared Services Implementation Project Team comprising Diane Bodman, Ryan Cassidy, Steven Kuzmanoski, Emma Borough and Adrian Weir for successfully transitioning Finance's corporate services to the Service Delivery Office.

Sacha De Re for delivery of an innovative commercial solution as part of the successful separation of ASC Shipbuilding to BAE Systems.

Investment Strategy Team comprising Stephen Harris, Alexander Kearns, Martyn Robinson, Terry Bakkum and Charvi Handa for innovation and cross-agency collaboration in the development and trial of an enhanced whole-of-government approach to major investment in the public sector.

Sharyn Clarkson in her role as Assistant Secretary Online Services in the ICT Division for persistent and effective efforts to transform the Department and the APS through the use of agile project methodologies and user-focused design.

Annual Report 2019-20 Part 6: Appendices 219

Australia Day awards 2020 The following individuals and teams received Australia Day awards in 2020:

Patrice Fitzpatrick for commitment to delivery and willingness to go above and beyond in her role as Divisional Coordinator in Government and Defence Division including her outstanding capacity to anticipate and adapt quickly as circumstances change.

Leases Implementation Team comprising Harry Balian, Alex Berry, Dario Forner, Holly Hart, Niki Lee, Saritha Ligon, Mary Lin, Simon Murray, Michael Navaratnam, Vincent Padgham, Brendan Palazzi, Miranda Rooke, Christiana Thio, James Tyndall, Rob Tkalcevic, Orlando Xie and David Xu for their contribution to the implementation of the new leases accounting standard.

Bashir Yousufi for commitment to developing self and others by focusing on diversity and inclusion within Finance.

Annette Cannell for embodying leadership by focusing on how each and every staff member can make a valuable contribution and is worth investing in.

Social Services Branch comprising Damien Botte-Noyan, Rachael Kamols, Matt Lally, Kelly Midgley, Keldon Pattugalan and Tom Varendorff for commitment to the continuous development of core policy skills in Social Policy Division staff members.

Bronwyn McEvoy for outstanding collaboration across the Department to develop Finance's People Capability Framework.

Kerusha Ganess for making an outstanding contribution to Finance's stewardship role across government by supporting and influencing the development of a new funding model for the Australian Federal Police.

Finance Website Redevelopment Team comprising Meena Bainbridge, Stacey Dempsey, Silas Irvine, Tameena Jacob, Josephine Julian, Liam Madge, Heather Millard, Brian Nedic, Alistair O'Neill, Jade Power, Belinda Seaman, Brett Thomson and Minh Truong for outstanding achievement in the development and rollout of a new modern and client-focused website.

Whole-of-Australian-Government Procurement Team comprising Carl Fitzpatrick, Susan Jones, Sue Moore and Ken Skelton for successfully delivering a whole-of-government legal services arrangement through strong collaboration and an innovative approach to managing a large and complex process.

Jon-Paul Williams for outstanding leadership and excellence in delivering an innovative IT solution that significantly improves procurement data and whole-of-government AusTender reporting.

Australian Submarine Corporation Shareholder Team and Maritime Shipbuilding and Air Team comprising Sacha De Re, James Morison, Pascale de Souza Dromund, Adam Lasscock, Dave Hughes and Haylee Clancy for developing viable options for the Government to consider in relation to the location of Full Cycle Dockings for Collins Class Submarine Sustainment.

Agriculture Advice Unit and the Charging Policy Team comprising Belinda Apps, Annette Cannell, Nicole Hinton, Philip Nigg, Nicholas Vorobieff, Sweta Samanta and Matt Sproule for developing a biosecurity cost recovery package that maintains investment in Australia's biosecurity system while ensuring regulation is consistent with our international trade commitments.

Annual Report 2019-20 Part 6: Appendices 220

External awards The Institute for Governance Public Sector Excellence Awards Rosemary Huxtable PSM Awarded to outstanding Australian public servants at different levels of governance who demonstrate excellence in leadership, policy innovation and/or policy delivery that leads to positive social or economic outcomes for Australian citizens.

2019 Dean’s Excellence Award, University of Canberra Matt Hollis In recognition of hard work, commitment and academic excellence while undertaking the Graduate Certificate in Public Policy and Finance.

Outstanding Contribution in Public Administration Award, Chartered Accountants Australia and New Zealand Leadership in Government awards Rachael Spalding The award recognises exceptional achievements by leaders in the Australian Public Service.

2019 Commonwealth Procurement awards for Excellence Ken Skelton, Sue Moore, Susan Jones and Carl Fitzpatrick The Department of Finance and the Attorney-General’s Department received this award for delivering innovation through procurement.

Australian Human Resource Institute Graeme Innes Disability Employment Award Awarded to Finance in recognition of our commitment to be an inclusive organisation where all staff can contribute to their full potential, particularly in relation to initiatives to progress disability employment.

Annual Report 2019-20 Part 6: Appendices 221

Appendix E: Corrections to previous annual report Part 3: Management and accountability

Environmental performance

Page 89: Total distance of flights (kilometres) 2018-19 should read 3,712,352.

Annual Report 2019-20 Part 7: Reference material 222

Part 7: Reference material

Annual Report 2019-20 Part 7: Reference material 223

Glossary Term Meaning

accountable authority instructions Instructions issued to manage the affairs of an entity to promote the efficient, effective, economical and ethical use of Commonwealth resources.

act of grace payment A voluntary payment made by the Commonwealth to an individual or other body in special circumstances when a government entity’s conduct or Commonwealth legislation or policy has resulted in an unintended, inequitable, anomalous or otherwise unacceptable result. Act of grace payments must be authorised by the Minister for Finance or a delegate under section 65 of the Public Governance, Performance and Accountability Act 2013. An act of grace payment is used when the obligation to the applicant is moral, rather than legal.

administered items Items that are usually managed by an entity on behalf of the government. Entities do not have control over these items, which are normally related to activities governed by eligibility rules and conditions established by legislation (for example, grants, subsidies and benefit payments).

Advances to the Finance Minister

Funding provisions enable urgently required funding allocations to be issued to entities.

annual performance statements Commonwealth entities report, through their annual performance statements, on the extent to which they have fulfilled the purposes they articulate at the

beginning of a reporting year in their corporate plan. They must also report on performance criteria in the portfolio budget statements, portfolio additional estimates statements or other portfolio estimates statements.

appropriation Public monies the parliament authorises the Australian Government to withdraw from the Consolidated Revenue Fund for a specified purpose.

AusTender The central web-based facility for the publication of Australian Government procurement information, including business opportunities, annual procurement plans and procurement contracts awarded.

Australian Government Office Occupancy Report

Covers office accommodation with 500 square metres or more, which is owned or leased by the Commonwealth. The report sets out the occupational density for entities against the current target of 14 square metres of office space per occupied work point.

Budget Sets out the fiscal and economic outlook for Australia, and includes expenditure and revenue estimates for the current financial year, the budget year, and three forward financial years. It identifies the government’s social and political priorities and how they will be achieved. The Budget is usually announced in May each year.

career starter A person completing a Year 12 certificate or equivalent by the end of the relevant year, or who has completed a Year 12 certificate within the last 24 months.

Central Advertising System Coordinated procurement arrangement that consolidates government advertising expenditure and buying power to secure optimal media discounts on

Commonwealth-wide media rates.

central agencies The Department of the Prime Minister and Cabinet, the Treasury and the Department of Finance.

Annual Report 2019-20 Part 7: Reference material 224

Term Meaning

Central Budget Management System The IT system used to manage the flow of financial information between Finance and Commonwealth entities to facilitate cash and appropriations management,

the preparation of budget documentation, and financial reporting.

Charter of Budget Honesty Act 1998 Provides a legislative framework for the conduct and reporting of fiscal policy, government decisions and Commonwealth financial statements. It aims to

improve discipline, transparency and accountability in the conduct of fiscal policy.

COMCAR An Australian Government agency that provides car-with-driver and other ground transport services to the Prime Minister, the Governor-General, members of parliament, judges and international guests of government.

Comcover The Australian Government’s self-managed general insurance fund.

Commonwealth entity A department of state of the Commonwealth; a department of the Parliament; an executive agency, or statutory agency, within the meaning of the Public Service Act 1999.

Commonwealth Grants Rules and Guidelines (CGRGs)

Establish the Commonwealth grants policy framework. The CGRGs contain the key legislative and policy requirements and explain the better practice principles of grants administration. They apply to grants administration performed by ministers’ accountable authorities, officials as well as third parties who undertake grants administration on behalf of the Commonwealth.

Commonwealth Procurement Rules Rules representing the government policy framework under which Commonwealth entities undertake their own procurement in line with both

Australia’s international obligations and good practice. They enable entities to design processes that are robust and transparent and instil confidence in the Australian Government’s procurement.

consolidated financial statements Statements that present the whole-of-government financial results inclusive of all Australian Government-controlled bodies, including bodies outside the general

government sector, such as Australia Post and the Reserve Bank of Australia.

Consolidated Revenue Fund Consists of all revenues and moneys raised or received by the executive government of the Commonwealth. The fund is self-executing in nature, which

means that all money received by the Commonwealth automatically forms part of the fund.

consultant A person or organisation providing professional, independent and expert advice or services. Typically the term is used to describe the application of expert skills to investigate or diagnose a defined issue or problem; carry out defined research, reviews or evaluations; or provide independent advice, information or creative solutions to assist an entity in management decision-making.

corporate plan The primary planning document of a Commonwealth entity that sets out the objectives and strategies the entity intends to pursue in achieving its purposes over at least four reporting periods. A corporate plan explains:

· what an entity’s purposes are

· what it will do to achieve its purposes

· how it will know that it has achieved its purposes.

costings or cost estimates

An assessment of the financial impact of a proposed policy change. Commonwealth entities are required to provide costings for any new policy

Annual Report 2019-20 Part 7: Reference material 225

Term Meaning

proposals and seek Cabinet endorsement. Finance must agree to these costings before they can be incorporated in a submission for Cabinet.

enterprise agreement An employment agreement made directly between an employer and employees.

Expenditure Review Committee of Cabinet The ministerial committee responsible for examining all proposals against the government’s overall fiscal strategy, advising Cabinet on budget spending

priorities and initiating reviews of individual ongoing programs.

Final Budget Outcome Encompasses Australian Government general government sector fiscal outcomes for the financial year and is based on external reporting standards. The Charter of Budget Honesty Act 1998 requires that a Final Budget Outcome be released no later than three months after the end of the relevant financial year. The financial statements in the Final Budget Outcome are similar to those in the Budget but provide actual outcomes rather than estimates.

fiscal policy The government’s approach to taxation and spending, both of which can affect the economy.

fraud Dishonestly obtaining a benefit, or causing a loss, by deception or other means. Accountable authorities of Commonwealth entities must take all reasonable measures to prevent, detect and deal with fraud in accordance with section 10 of the Public Governance, Performance and Accountability Rule 2014.

Future Fund A government fund established for accumulating assets to offset future Australian Government superannuation liabilities.

GovTEAMS Finance's collaboration and communication platform for government.

GovCMS An open source web content management and hosting service developed to help agencies create modern, affordable and responsive websites, making it easier to collaborate and innovate. GovCMS helps reduce the technology and compliance burden on Commonwealth entities.

government business enterprise A Commonwealth entity or Commonwealth company that is prescribed as a government business enterprise by the rules of the Public Governance,

Performance and Accountability Act 2013.

GrantConnect A single online point of discovery for information about all government grants. Individuals and organisations are able to register to receive notifications on grant opportunities relevant to them. Information on grant opportunities is presented to the public in a standard and consistent format.

green brief A summary of a proposal and the associated financial implications, and Finance and central agency views on a proposal to be considered by the Expenditure Review Committee of Cabinet.

Independent Parliamentary Expenses Authority

Audits and reports on parliamentarians’ work expenses. Provides advice to parliamentarians and their staff on travel and work-related expenses to support them in undertaking their duties, requiring that taxpayer funds be spent appropriately and in compliance with the relevant principles and regulations.

Indigenous Procurement Policy A mandatory procurement-connected policy to leverage the Commonwealth’s annual multibillion dollar procurement spend to drive demand for Indigenous

goods and services, stimulate Indigenous economic development and grow the Indigenous business sector.

Annual Report 2019-20 Part 7: Reference material 226

Term Meaning

The policy has three main parts:

· a target number of contracts that need to be awarded to Indigenous businesses

· a mandatory amount set aside for remote contracts and contracts valued between $80,000 and $200,000

· minimum Indigenous participation requirements in contracts valued at or above $7.5 million in certain industries.

measure A policy or decision of the government that affects revenues, expenses or capital.

Mid-Year Economic and Fiscal Outlook Provides an update of the government’s budget estimates by examining expenses and revenues in the year to date, as well as provisions for new

decisions taken since the Budget to allow assessment of the government’s fiscal performance against the fiscal strategy statement. The Treasurer is required to publicly release and table in parliament a Mid-Year Economic and Fiscal Outlook report by the end of January each year, or within six months after the Budget, whichever is later.

Near Real-time Funds Automation of a daily payment function to enable Commonwealth entities to access their appropriations on a near real-time basis.

non-ongoing staff member

A person engaged as an employee under paragraph 22(2)(b) or (c) of the Public Service Act 1999.

ongoing staff member A person engaged as an ongoing employee under paragraph 22(2)(a) of the Public Service Act 1999.

outcome A government objective in a portfolio area. Outcomes are desired results, impacts or consequences for the Australian community influenced by the actions of the Australian Government. Actual outcomes are the results or impacts actually achieved.

performance information

Evidence about performance that is collected and used systematically. It relates to appropriateness, effectiveness and efficiency and the extent to which an outcome can be attributed to an intervention.

portfolio budget statements

Statements that inform parliamentarians and the public of the proposed allocation of resources to government outcomes. They also assist the Senate standing committees with their examination of the government’s Budget. Portfolio budget statements are tabled in parliament on Budget night and published as Budget- related papers.

procurement Encompasses the whole process of acquiring goods and services. The process begins when a need is identified and a decision made on the acquisition requirements. It continues through to risk assessment, awarding of a contract, delivery of and payment for the goods and services and, where relevant, the ongoing management of the contract and consideration of disposal.

program Actions taken by the government to deliver stated outcomes.

Public Service Modernisation Fund Identifies and recommends transformation initiatives across government for investment through the Modernisation Fund announced in the 2017-18 Budget,

which provided $500 million of projected savings to be reinvested in reforms ‘such as automation of public services and business re-engineering’.

Annual Report 2019-20 Part 7: Reference material 227

Term Meaning

purpose In the context of the Public Governance, Performance and Accountability Act 2013, purposes include the objectives, functions or role of a Commonwealth entity. Finance’s purposes are described in the Corporate Plan 2017-18.

Resource Management Framework Governs how the Commonwealth public sector uses and manages public resources. The Public Governance, Performance and Accountability Act 2013 is

the cornerstone of the framework.

risk management The systematic application of policies, procedures and practices to clearly identify, analyse, evaluate, treat and monitor risks associated with identified opportunities. Risk is broadly defined as the effect of uncertainty on objectives or the impacts of unforeseen events or undesirable outcomes.

rule A legislative instrument made by the Finance Minister under sections 101 to 105 of the Public Governance, Performance and Accountability Act 2013 (PGPA Act) prescribing matters:

· required or permitted by the PGPA Act, or

· necessary or convenient to be prescribed for carrying out or giving effect to the PGPA Act.

The Public Governance, Performance and Accountability Rule 2014 supports the operation of the PGPA Act.

Service Delivery Office Provides corporate transactions services to other Australian Government entities. The office is one of six hubs under the Shared Services Program.

shared services program

A whole-of-government initiative that is transforming the way the public service operates by consolidating and standardising the delivery of corporate services through designated shared services hubs.

transformation Embedding a culture of continuous improvement in Finance to anticipate and respond to change, identify opportunities to do things better, build our capabilities and invest in our relationships.

transformation program Aims to help public sector entities deliver their services more efficiently through policies and frameworks and more connected ways of working. Finance has a lead role in the program and works collaboratively with entities on:

· the size, efficiency and connectedness of government, including through common approaches, processes and systems

· assisting entities to implement projects/programs, including work to streamline our processes and impact on entities.

Transparency portal A central repository of publicly available corporate information for all Commonwealth bodies.

Annual Report 2019-20 Part 7: Reference material 228

Abbreviations and acronyms AFM Advance to the Finance Minister

AGGR Australian Government Graduate Recruitment stream

ANAO Australian National Audit Office

APS Australian Public Service

APSC Australian Public Service Commission

BCM business continuity management

CARS COMCAR Automated Resource System

CBMS Central Budget Management System

CCT Central Control Team

COO Chief Operating Officer

DIPA Data Integration Partnership for Australia

DTA Digital Transformation Agency

EFU Economic and Fiscal Update

EL executive level

ERP Enterprise Recourse Planning

Finance Department of Finance

FRSC Financial Reporting Subcommittee

GBAU Government Business Analytical Unit

GBE Government Business Enterprise

GovERP whole-of-government Enterprise Resource Planning

GovPDX Government Protected Data Exchange

HR human resources

ICON Intra-government Communications Network

ICT information and communications technology

IPAA Institute of Public Administration Australia

IPP Indigenous Procurement Policy

IT information technology

JCPAA Joint Committee of Public Accounts and Audit

KMP key management personnel

MaPS Ministerial and Parliamentary Services

MFS General Government Sector Monthly Financial Statements

MoG Machinery of Government

MOP(S) Act Members of Parliament (Staff) Act 1984

MYEFO Mid-Year Economic and Fiscal Outlook

Annual Report 2019-20 Part 7: Reference material 229

NBN National Broadband Network

NBRA National Bushfire Recovery Agency

NCE non-corporate Commonwealth entity

NeRF Near Real-time Funds project

NPP New Payments Platform

PACE Productivity and Automation Centre of Excellence

PCSS Parliamentary Contributory Superannuation Scheme

PEMS Parliamentary Expenses Management System

PEPPOL Pan-European Public Procurement Online interoperability framework for e-invoicing

PGPA Act Public Governance, Performance and Accountability Act 2013

PGPA Rule Public Governance, Performance and Accountability Rule 2014

PRSC Performance Reporting Subcommittee

RMS Rehabilitation Management System

SaaS software as a service

SDO Service Delivery Office

SES Senior Executive Service

SHL Snowy Hydro Limited

SLC Senior Leadership Committee

SME small and medium-sized enterprises

SSTI Shared Services Transformation Initiative

WHS work health and safety

WHS Act Work Health and Safety Act 2011

Annual Report 2019-20 Part 7: Reference material 230

List of requirements Description Requirement Page

Letter of transmittal

A copy of the letter of transmittal signed and dated by accountable authority on date final text approved, with statement that the report has been prepared in accordance with section 46 of the Act and any enabling legislation that specifies additional requirements in relation to the annual report.

Mandatory 2

Aids to access

Table of contents. Mandatory -

Alphabetical index. Mandatory 234

Glossary of abbreviations and acronyms. Mandatory 233

List of requirements. Mandatory 230

Details of contact officer. Mandatory 1

Entity’s website address. Mandatory 1

Electronic address of report. Mandatory 1

Review by accountable authority

A review by the accountable authority of the entity. Mandatory 5

Overview of the entity

A description of the role and functions of the entity. Mandatory 18

A description of the organisational structure of the entity. Mandatory 27

A description of the outcomes and programmes administered by the entity. Mandatory 20

A description of the purposes of the entity as included in corporate plan. Mandatory 19

Name of the accountable authority or each member of the accountable authority. Mandatory 21

Position of the accountable authority or each member of the accountable authority. Mandatory 21

Period as the accountable authority or member of the accountable authority within the reporting period. Mandatory 21

An outline of the structure of the portfolio of the entity. Portfolio

departments - mandatory

17

Where the outcomes and programs administered by the entity differ from any Portfolio Budget Statement, Portfolio Additional Estimates Statement or other portfolio estimates statement that was prepared for the entity for the period, include details of variation and reasons for change.

If applicable, Mandatory

N/A

Report on the Performance of the entity

Annual Performance Statements

Annual performance statement in accordance with paragraph 39(1)(b) of the Act and section 16F of the Rule. Mandatory 50

Report on Financial Performance

A discussion and analysis of the entity’s financial performance. Mandatory 75

A table summarising the total resources and total payments of the entity. Mandatory 201

If there may be significant changes in the financial results during or after the previous or current reporting period, information on those changes, including: the cause of any operating loss of the entity; how the entity has responded to the loss and the actions that have been taken in relation to the loss; and any

If applicable, Mandatory.

N/A

Annual Report 2019-20 Part 7: Reference material 231

Description Requirement Page

matter or circumstances that it can reasonably be anticipated will have a significant impact on the entity’s future operation or financial results.

Management and Accountability

Corporate Governance

Information on compliance with section 10 (fraud systems). Mandatory 84

A certification by accountable authority that fraud risk assessments and fraud control plans have been prepared. Mandatory 2

A certification by accountable authority that appropriate mechanisms for preventing, detecting incidents of, investigating or otherwise dealing with, and recording or reporting fraud that meet the specific needs of the entity are in place.

Mandatory 2

A certification by accountable authority that all reasonable measures have been taken to deal appropriately with fraud relating to the entity. Mandatory 2

An outline of structures and processes in place for the entity to implement principles and objectives of corporate governance. Mandatory 77

A statement of significant issues reported to Minister under paragraph 19(1)(e) of the Act that relates to non-compliance with Finance law and action taken to remedy non-compliance.

If applicable, Mandatory

85

Audit Committee

A direct electronic address of the charter determining the functions of the entity’s audit committee. Mandatory 80

The name of each member of the entity’s audit committee. Mandatory 81

The qualifications, knowledge, skills or experience of each member of the entity’s audit committee. Mandatory 81

Information about the attendance of each member of the entity’s audit committee at committee meetings. Mandatory 81

The remuneration of each member of the entity’s audit committee. Mandatory 215

External scrutiny

Information on the most significant developments in external scrutiny and the entity's response to the scrutiny. Mandatory 85

Information on judicial decisions and decisions of administrative tribunals and by the Australian Information Commissioner that may have a significant effect on the operations of the entity.

If applicable, Mandatory

85

Information on any reports on operations of the entity by the Auditor-General (other than report under section 43 of the Act), a Parliamentary Committee, or the Commonwealth Ombudsman.

If applicable, Mandatory

86

Information on any capability reviews on the entity that were released during the period. If applicable, Mandatory

N/A

Management of Human Resources

An assessment of the entity’s effectiveness in managing and developing employees to achieve entity objectives. Mandatory 99

Statistics on the entity’s employees on an ongoing and non-ongoing basis, including the following: (a) statistics on full-time employees; (b) statistics on part-time employees; (c) statistics on gender; (d) statistics on staff location.

Mandatory 112

Statistics on the entity’s APS employees on an ongoing and non-ongoing basis; including the following: Mandatory 112

Annual Report 2019-20 Part 7: Reference material 232

Description Requirement Page

Statistics on staffing classification level; Statistics on full-time employees; Statistics on part-time employees; Statistics on gender; Statistics on staff location; Statistics on employees who identify as Indigenous.

Information on any enterprise agreements, individual flexibility arrangements, Australian workplace agreements, common law contracts and determinations under subsection 24(1) of the Public Service Act 1999.

Mandatory 119

Information on the number of SES and non-SES employees covered by agreements etc identified in paragraph 17AG(4)(c). Mandatory 119

The salary ranges available for APS employees by classification level. Mandatory 119

A description of non-salary benefits provided to employees. Mandatory 120

Information on the number of employees at each classification level who received performance pay. If applicable, Mandatory

N/A

Information on aggregate amounts of performance pay at each classification level. If applicable, Mandatory

N/A

Information on the average amount of performance payment, and range of such payments, at each classification level. If applicable, Mandatory

N/A

Information on aggregate amount of performance payments. If applicable, Mandatory N/A

Assets Management

An assessment of effectiveness of assets management where asset management is a significant part of the entity’s activities. If applicable, Mandatory

89

Purchasing

An assessment of entity performance against the Commonwealth Procurement Rules

Mandatory 90

Consultants

A summary statement detailing the number of new contracts engaging consultants entered into during the period; the total actual expenditure on all new consultancy contracts entered into during the period (inclusive of GST); the number of ongoing consultancy contracts that were entered into during a previous reporting period; and the total actual expenditure in the reporting year on the ongoing consultancy contracts (inclusive of GST).

Mandatory 91

A statement that “During [reporting period], [specified number] new consultancy contracts were entered into involving total actual expenditure of $[specified million]. In addition, [specified number] ongoing consultancy contracts were active during the period, involving total actual expenditure of $[specified million]”.

Mandatory 91

A summary of the policies and procedures for selecting and engaging consultants and the main categories of purposes for which consultants were selected and engaged.

Mandatory 91

A statement that “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.”

Mandatory 91

Australian National Audit Office Access Clauses

If an entity entered into a contract with a value of more than $100 000 (inclusive of GST) and the contract did not provide the Auditor-General with access to the contractor’s premises, the report must include the name of the

If applicable, Mandatory

90

Annual Report 2019-20 Part 7: Reference material 233

Description Requirement Page

contractor, purpose and value of the contract, and the reason why a clause allowing access was not included in the contract.

Exempt contracts

If an entity entered into a contract or there is a standing offer with a value greater than $10 000 (inclusive of GST) which has been exempted from being published in AusTender because it would disclose exempt matters under the FOI Act, the annual report must include a statement that the contract or standing offer has been exempted, and the value of the contract or standing offer, to the extent that doing so does not disclose the exempt matters.

If applicable, Mandatory

90

Small business

A statement that “[Name of entity] supports small business participation in the Commonwealth Government procurement market. Small and Medium Enterprises (SME) and Small Enterprise participation statistics are available on the Department of Finance’s website.”

Mandatory 90

An outline of the ways in which the procurement practices of the entity support small and medium enterprises. Mandatory 90

If the entity is considered by the Department administered by the Finance Minister as material in nature—a statement that “[Name of entity] 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 Treasury’s website.”

If applicable, Mandatory

90

Financial Statements

Inclusion of the annual financial statements in accordance with subsection 43(4) of the Act. Mandatory 125

Executive Remuneration

Information about executive remuneration in accordance with Subdivision C of Division 3A of Part 2-3 of the Rule. Mandatory 211

Other Mandatory Information

If the entity conducted advertising campaigns, a statement that “During [reporting period], the [name of entity] conducted the following advertising campaigns: [name of advertising campaigns undertaken]. Further information on those advertising campaigns is available at [address of entity’s website] and in the reports on Australian Government advertising prepared by the Department of Finance. Those reports are available on the Department of Finance’s website.”

If applicable, Mandatory

210

If the entity did not conduct advertising campaigns, a statement to that effect. If applicable, Mandatory N/A

A statement that “Information on grants awarded by [name of entity] during [reporting period] is available at [address of entity’s website].” If applicable, Mandatory

209

Outline of mechanisms of disability reporting, including reference to website for further information. Mandatory 209

Website reference to where the entity’s Information Publication Scheme statement pursuant to Part II of FOI Act can be found. Mandatory 209

Correction of material errors in previous annual report. If applicable,

mandatory

221

Information required by other legislation. Mandatory N/A

Annual Report 2019-20 Part 7: Reference material 234

Index

A

abbreviations and acronyms 228-9 achievements See performance and achievements Advance to the Finance Minister (AFM) 5, 6, 36, 54, 86, 223, 228 advertising and market research 4, 18, 209-10

Central Advertising System 89, 223 AFM See Advance to the Finance Minister (AFM) AGGR See Australian Government Graduate Recruitment stream (AGGR) ANAO See Australian National Audit Office annual performance statements 50-74

purpose 51-52 Appropriation Acts (Nos. 5 and 6) 2019-20 36 Appropriation (Coronavirus Economic Response Package) Acts (Nos. 1 and 2) 2019-20 36 APS See Australian Public Service APS Disability Employment Strategy 107 APS Gender Equality Strategy 107 APS Review 5, 100 APSC See Australian Public Service Commission asset management 89 Assistant Minister for Finance, Charities and Electoral Matters 9, 17, 211 See also Minister for

Finance

Audit Committee 79, 80-1 membership 81, 215 Auditor-General 55, 60-1, 81, 86-7, 90 See also Australian National Audit Office Aurion Standardisation Project 57 AusTender 64-65, 90, 219, 223 Australasian Procurement and Construction Council 64 Australia Day awards (Finance) 219 Australia Post 7, 34, 38, 68 Australian Electoral Commission 17, 110 Australian Government Graduate Recruitment stream (AGGR) 110 Australian Government Office Occupancy Report 66, 223 Australian Government Property Register 59 Australian Government Solicitor 41 Australian Human Resource Institute awards 107 Australian National Audit Office (ANAO) 36, 60, 61, 75, 85, 86, 88-9 See also Auditor-General Australian Naval Infrastructure Pty Ltd 17, 67 Australian Network on Disability PACE Mentoring Program 106 Australian Public Service (APS) 5, 8-9, 30, 38, 46, 51, 54-55, 57-8, 67, 69, 105, 106

APS Disability Employment Strategy 107 APS Gender Equality Strategy 107 APS Review (2019) 5, 100 Australian Government Graduate Recruitment stream (AGGR) 110 Australian Government Office Occupancy Report 66, 223 COVID-19, impact of 35, 41, 57, 60, 65, 66, 67, 70, 104, 110 diversity and inclusion See diversity and inclusion Job Family Model 102, 107 Productivity Pilot 55 reform 5, 46, 101 Workforce Management Taskforce 33 Australian Public Service Commission (APSC) 33, 67, 104, 106, 110 Australian Public Service Commission Graduate Development Program 110 Australian Taxation Office 45

Annual Report 2019-20 Part 7: Reference material 235

B

Bachelor of Business Informatics 110 BCM See business continuity management Budget and Financial Reporting Group 22, 27, 104 Budget (federal) See federal Budget Bureau of Meteorology 69 bushfires 5, 6, 19, 29, 39, 42, 44, 49, 46, 51, 54, 55, 66, 75, 84, 99

Finance response to 29, 40-42 business continuity management (BCM) 7, 8, 38, 70, 74, 84 See also Risk Subcommittee Business Continuity Plan 70, 84, 93, 99 Business Continuity Planning Taskforce 33 Business Enabling Services Group 25, 74, 77, 79 business of Finance 12-13

C

capability and enablers 7 capability building (workforce) 107-11 flexible working arrangements 8, 9, 38, 73, 105, 111, 120, 121, 122 leadership and talent See leadership and talent (workforce)

Capital 11 (superannuation system) 45, 63, 64 Career Starter Program 106, 110 CBMS See Central Budget Management System Central Advertising System 89, 223 Central Budget Management System (CBMS) 48, 56 Central Cash Management System 54 Central Control Team (CCT) 84 Centre of Procurement Excellence 64, 65 Certificate IV in Information Technology Networking 110 CFS See Consolidated Financial Statements Charter of Budget Honesty Act 1998 29, 53 Chief Operating Officers' (COO) Committee 5, 51, 55, 58 Citigroup Pty Limited 64 COMCAR 31, 39, 72, 73, 75, 94, 96, 114, 121, 224 Automated Resource System (CARS) 31 Comcare 122, 123 Comcover 58, 65, 75, 224 Commercial and Government Services Group 24, 27, 83 Commonwealth Aboriginal and Torres Strait Islander Workforce Strategy 107 Commonwealth Electoral Act 1918 209 Commonwealth Fraud Control Framework 84 Commonwealth Grants Rules and Guidelines 41 Commonwealth Investment Framework 45, 68 Commonwealth Procurement Framework 64, 90 Commonwealth Procurement Rules 64, 65, 90, 91, 224 Commonwealth Property Management Framework 59, 66 Commonwealth Risk Management Policy 83 Commonwealth Superannuation Corporation 17, 216 Consolidated Financial Statements (CFS) 6, 44, 55, 80 consultancies 62, 90, 91-2, 221

non-consultancy contracts 62, 92 summary statement 91-2 COO Committee See Chief Operating Officers' Committee corporate governance 77-85 Audit Committee See Audit Committee enabling services See Business Enabling Services Group Executive Board See Executive Board Fraud Control Framework 84 governance framework 78 integrated business planning framework 29, 77, 78, 82

Annual Report 2019-20 Part 7: Reference material 236

managing risk See Risk Subcommittee non-compliance issues 85 planning and performance reporting framework 82-3 strategic reviews 84 Corporate Plan 8, 31, 53, 54, 175, 229 See also performance and achievements annual performance statements 55-76 COVID-19 pandemic,

Australia Post 9, 40, 70 Australian Public Service (APS) 7, 21, 58, 106, 108, federal Budget See federal Budget Finance response See COVID-19 pandemic (Finance response) Government Business Enterprises 9 Joint Standing Committee on Foreign Affairs, Defence and Trade 90 National Coordination Commission 31, 102, 104 National Medical Stockpile 38 NBN Co 9, 40 Senate Select Committee on COVID-19 90 Snowy Hydro Limited 9, 40 Virgin Australia 9, 41 COVID-19 pandemic (Finance response) 8, 9, 10, 21, 31, 32, 37, 38, 39, 40, 41, 43, 46, 50, 53, 56-59, 62-

63, 65, 67, 68, 70, 72-75, 80, 86, 103-104, 106-109, 111-113, 123-124 advertising campaign 7 annual performance statements, and 52-76 Appropriation Bills, Supply Bills, AFMs 38 commercial investment advice 40 COVID-19 hotline 101 COVID-19 Management Group 31 COVID-19 Pandemic Response Plan 31, 72, 82 COVID-19 Recovery Strategy 108 Executive Board 80, 101 expenditure reporting 39 Finance workforce 91, 97, 99-100, 102-9, 119-20 grants guidelines reviews 43 HUB Cloud 10, 40, 36 Monthly Financial Statements (MFS) 39 parliamentarians and employees, support for 37 private sector, support to 37 pulse survey 101

Workforce Plan 103-104 cybersecurity 10, 48, 50, 59, 73 GovCMS 10, 32, 50, 73

D

Data Integration Partnership for Australia (DIPA) 60 Defence Housing Australia 70, 88 Department of Agriculture, Water and the Environment 44 Department of Defence 27, 83 Department of Foreign Affairs and Trade 108 Department of Health 7, 8, 23, 24, 48, 69, 73,106, 108 Department of Human Services 76 Department of Industry, Science, Energy and Resources Hub 59 Department of Infrastructure, Transport, Regional Development and Communications 70 Department of Social Services 211 Department of the Prime Minister and Cabinet 3, 20, 225 Department of Veterans’ Affairs 112 Digital Annual Reporting Tool 63 Digital Transformation Agency (DTA) 112

Graduate Development Program 112 Diners Club Pty Ltd 66 DIPA See Data Integration Partnership for Australia disability 28, 108-109, 112, 165

Annual Report 2019-20 Part 7: Reference material 237

reporting 211, 235 diversity and inclusion 108-109, 221 disability See disability

Indigenous employment framework 108 drought 7, 31, 44, 53, 65, 152, 197 Finance response to 27, 40 DTA See Digital Transformation Agency

E

e-invoicing 9, 32, 49, 54, 59, 71 Economic and Fiscal Update (EFU) 31, 46, 55 EFU See Economic and Fiscal Update EL2 High Potential Program 111 EL LEAD program 110, 111 Emergency Management Australia 44, 89 Emergency Response Fund 65, 89-90, 145, 152 Emergency Response Fund Bill 2019 89, 90 Emergency Response Fund (Consequential Amendments) Bill 2019 89, 90 employment arrangements (workforce) 121

APS performance pay 122 Finance Enterprise Agreement 2019 121, 213 machinery-of-government (MoG) changes 50, 65, 73, 123 non-salary benefits 122, 234 performance management 122 Enterprise Resource Planning (ERP) system 38, 48 entity resource statement 203 Environment Protection and Biodiversity Conservation Act 1999 87 environmental performance 91, 95, 97-98, 223 COMCAR See COMCAR

cross-government activities 96 office energy use 95, 97 resource efficiency and waste 95, 97 summary 97 transport 95 Executive Board 27, 79-81, 84-85, 101, 189, 213 subcommittees 80-82, 85 executive remuneration disclosure 213 Expenditure Review Committee (Cabinet) 8, 24, 31, 46, 227

Green Briefs 8, 31, 46 Expense and Travel Management Service 71 external awards 123, 222 external scrutiny 87, 233

Australian Information Commissioner 87- 88 Australian National Audit Office (ANAO) 38, 77, 87-88, 92, 127, 129, 200 Australian Privacy Commissioner 88 Commonwealth Ombudsman 87, 90 judicial and administrative decisions 87 parliamentary committees 62, 87, 89-90

Annual Report 2019-20 Part 7: Reference material 238

F

FBO See Final Budget Outcome federal Budget 11, 31, 73, 107 COVID-19 pandemic, impact of 37, 153 Final Budget Outcome (FBO) 8, 39, 46, 55, 57, 227 Finance Enterprise Agreement 2019 121, 213 Finance Network Market Day 108 Financial Reporting Subcommittee (FRSC) 82-83, 217 financial statements 25, 39, 57, 67, 77, 82-83, 88, 126-127, 129-130, 132, 142-201, 226, 235 flexible working arrangements (workforce) 113, 122 Fraud Control Framework 86 freedom of information 211 Freedom of Information Act 1982 92, 211 Freedom of Information Team 211 FRSC See Financial Reporting Subcommittee Future Drought Fund 44, 65 Future Fund 19, 65, 152,

G GBAU See Government Business Analytical Unit GBEs See Government Business Enterprises glossary 223-7 GNSB See Government Network Services Branch GovCMS 8, 30, 48, 71, 225 Governance and Resource Management Group 23, 27, 81 Government Business Analytical Unit (GBAU) 58 Government Business Enterprises (GBEs) 7, 9, 18, 21, 24, 30, 38, 51, 67-8 Government Network Services Branch (GNSB) 74 Government Protected Data Exchange (GovPDX) 58 Governors-General Pension Scheme 216 GovERP See whole-of-government Enterprise Resource Planning (GovERP) project GovLINK 30 GovPDX See Government Protected Data Exchange GovTEAMS platform 5, 8, 30, 31, 39, 70-1, 99, 107, 225 Graduate Certificate in Public Policy and Finance 108 GrantConnect 41, 209 grants 33, 209

guidelines, review of 41 Green Briefs 6, 29, 44, 225 Greenfleet 93

H

hailstorm (Canberra) 51, 66-7, 75, 84, 99

Annual Report 2019-20 Part 7: Reference material 239

I

ICON See Intra-government Communications Network Independent Review of the Australian Public Service (2019) 5, 100 Indigenous employment framework 106 Indigenous Procurement Policy (IPP) 91 Information Publication Scheme 209 information technology (IT) 8, 25, 31, 56, 77, 99

Capital 11 (superannuation system) 45, 63-4 COMCAR Automated Resource System (CARS) 31 cybersecurity See cybersecurity GovCMS 8, 30, 48, 71, 225 GovERP project 5, 24, 30, 46, 57, 69 GovLINK 30 GovTEAMS platform 5, 8, 30, 39, 70-1, 99, 107, 225 Intra-government Communications Network (ICON) 30 'One Desktop' project 8 Parliamentary Expenses Management System (PEMS) 31, 39, 72, 73 Inland Rail 24, 67, 88 integrated business planning framework 29, 77, 82, 100 Intergovernmental Community of Practice 68 International Women’s Day 106 Intra-government Communications Network (ICON) 30 IPP See Indigenous Procurement Policy

J

JCPAA See Joint Committee of Public Accounts and Audit Job Family Model (APS) 104, 109 JobSeeker program 108 Joint Committee of Public Accounts and Audit (JCPAA) 62, 89, Joint Standing Committee on Foreign Affairs, Defence and Trade 90 Joint Standing Committee on the National Broadband Network 90 Joint Standing Committee on Treaties 90 Judges' Pensions Scheme 163, 201, 218,

L

Leadership and Remuneration Subcommittee 81, 213 leadership and talent (workforce) 111 Australian Government Graduate Recruitment stream (AGGR) 112 Career Starter Program 108, 112

EL2 High Potential Program 111 EL LEAD program 110-111 entry-level programs 108, 112 existing initiatives 112 Graduate Program (2020) 108, 112 Letter of transmittal 2 list of requirements 232-235

Annual Report 2019-20 Part 7: Reference material 240

M machinery-of-government (MoG) changes 50 management and accountability 64, 78, 223, 233 asset management 91

Central Advertising System 91, 225 corporate governance See corporate governance environment See environmental performance external scrutiny See external scrutiny procurement See procurement market research See advertising and market research Members of Parliament (Staff) Act 1984 33, 74, 77, 124, 185,

work health and safety 113, 123-125 Mental Health Week 108 MFS See Monthly Financial Statements Mid-Year Economic and Fiscal Outlook (MYEFO) 8, 11, 46, 55, 228, Minister for Finance 3, 11, 19, 20, 24, 32, 37-38, 46, 57, 64, 66, 70, 87, 127, 165, 189, 213, 225

See also Assistant Minister for Finance, Charities and Electoral Matters mobility (workforce) 60, 72, 104, 106, Internal Opportunities Noticeboard 106 secondment program 107

stream-based recruitment 107 Surge Readiness Management Model 107 MoG changes See machinery-of-government (MoG) changes Monthly Financial Statements (MFS) 39, 57 Moorebank Intermodal Company 70 MOP(S) Act See Members of Parliament (Staff) Act 1984 MYEFO See Mid-Year Economic and Fiscal Outlook

N

National Broadband Network See NBN Co National Bushfire Recovery Agency (NBRA) 44, 108 National Bushfire Recovery Fund 44 National COVID-19 Coordination Commission 108 National Disability Strategy 2010-2020 211 National Divestment Program 68 National Drought and North Queensland Flood Relief and Recovery Agency 44 National Indigenous Australians Agency 93, 112, National Reconciliation Week 108 National Telepresence System 7, 41, 170 natural disasters 32, 44, 65, 69, 65, 152, 197

bushfires See bushfires drought See drought hailstorm (Canberra) 53, 68-69, 77, 86, 101, 144 NBN Co 9, 40 NBRA See National Bushfire Recovery Agency NCEs See non-corporate Commonwealth entities Near Real-time Funds (NeRF) project 9, 31, 58 NeRF See Near Real-time Funds (NeRF) project non-corporate Commonwealth entities (NCEs) 37, 68

Annual Report 2019-20 Part 7: Reference material 241

O Office of the Pacific 108 Official Public Account 48, 49, 146, 200 'One Desktop' project 10 ongoing business 38, 45

business optimisation 31, 48-49 Capital 11 (superannuation system) 47, 65-66 Commonwealth Investment Framework 47, 70 cybersecurity See cybersecurity e-invoicing 9, 32, 49, 54, 59, 71 Economic and Fiscal Update (EFU) 31, 46, 55-56 GovERP project 7 Near Real-time Funds (NeRF) project 9, 31, 58 operating environment 8, 10, 21, 47, 57, organisational structure 29 outcomes and programs 22 outlook 11 overview 18-29

Executive 19, 23-27, 44 Ministers See Assistant Minister for Finance, Charities and Electoral Matters; Minister for Finance operating environment 21 organisational structure 29 outcomes and programs 22 portfolio structure 19 purpose 21, 31, 53-54 role and functions 20

P

PACE See Productivity and Automation Centre of Excellence Pan-European Public Procurement Online (PEPPOL) interoperability framework 47 Parliament of Australia Graduate Program 106 Parliamentary Contributory Superannuation (Early Release) Regulations 2020 64 Parliamentary Contributory Superannuation Scheme (PCSS) 161-3, 216 Parliamentary Expenses Management System (PEMS) 31, 39, 72, 73 Parliamentary Joint Committee on Human Rights 88 Pay On-Time or Pay Interest Policy 90 Pay On-Time survey 91 PEMS See Parliamentary Expenses Management System people See workforce People Capability Framework 8, 101, 107, 109, 120performance and achievements 6-8, 28-75

accessible funding, provision for 7 annual performance statements See annual performance statements COMCAR Automated Resource System (CARS) 31 Corporate Plan See Corporate Plan emergency response See bushfires; COVID-19 pandemic (Finance response); drought; hailstorm

(Canberra)

financial performance summary 75 fiscal management 6 GovCMS 8, 30, 48, 71, 225 government and community, delivering for 7 GovERP project 5, 26, 30, 46, 57, 69 GovLINK 30 information technology See information technology Intra-government Communications Network (ICON) 30 ongoing business See ongoing business Parliamentary Expenses Management System (PEMS) 31, 39, 72, 73 priorities for 2019-20 29-31 Productivity and Automation Centre of Excellence (PACE) 26, 30, 36 Transparency Portal 30, 227

Annual Report 2019-20 Part 7: Reference material 242

Performance Reporting Subcommittee (PRSC) 79, 80, 81, 215 PGPA Act See Public Governance, Performance and Accountability Act 2013 PGPA Entity Survey 59-60 PGPA Review 59, 62 PGPA Rule See Public Governance, Performance and Accountability Rule 2014 Pharmacy Guild of Australia 38 planning and performance reporting framework 82-3 Policy Working Group 79 Portfolio Additional Estimates Statements 29 Portfolio Budget Statements 29, 82 portfolio structure 17-18 priorities for 2019-20 29-31 procurement 24, 42, 58, 64-5, 66, 87, 90-2

ANAO access clauses 90 AusTender 64, 65, 90, 223 Commonwealth Procurement Framework 64, 90 Commonwealth Procurement Rules 64, 65, 90, 91, 224 consultancies See consultancies exempt contracts 90 Indigenous Procurement Policy (IPP) 90 Pay On-Time or Pay Interest Policy 91 Pay On-Time survey 91 small and medium-sized enterprises (SMEs) 30, 35, 36, 38, 69, 70, 90-1 Whole-of-Australian-Government (WoAG) procurement 64, 65 Procurement Consultative Roundtable 64 Productivity and Automation Centre of Excellence (PACE) 26, 30, 36 Property Engagement Group 35 Property Reference Group 35 Property Services Governance Network 67 PRSC See Performance Reporting Subcommittee Public Accounts and Audit Committee Act 1951 87 Public Governance, Performance and Accountability Act 2013 27, 59, 60, 61, 62, 65, 68, 78, 80, 83, 85,

88, 91, 229 PGPA Entity Survey 59-60 PGPA Review 59, 62 Public Governance, Performance and Accountability Amendment (Consultancy and Non-Consultancy

Contract Expenditure Reporting) Rules 2020 62 Public Governance, Performance and Accountability Amendment (2020 Measures No. 1) Rules 62 Public Governance, Performance and Accountability Rule 2014 60, 61, 62 Public Service Act 1999 78, 119, 211, 224, 226 purpose 19, 51

R

recoverable payments 216-17 Regional Airlines (Network Support Program) 41 Regional Investment Corporation 42, 86 Remuneration Tribunal 211 Remuneration Tribunal Act 1973 211 Resource Management Framework 18, 35, 59, 60, 86 Risk Engagement Group 83 Risk Subcommittee 79, 80, 83 See also Business Continuity Management (BCM); Fraud Control

Framework

role and functions 18

Annual Report 2019-20 Part 7: Reference material 243

S

Safe Work Australia 67, 71 SDO See Service Delivery Office Secretary 17, 21, 64, 77, 78, 79, 80, 83, 87, 90, 99, 119, 127, 211 2019-20 review 5-9

awards 120-21, 218 Letter of transmittal 2 Secretary's awards 120-21, 218 Senate Economics References Committee 88 Senate Select Committee on COVID-19 88 Senate Select Committee on Financial Technology and Regulatory Technology 88 Senate Standing Committees on Finance and Public Administration 87 Senate Standing Committees on Rural and Regional Affairs and Transport 88 Senior Leadership Committee (SLC) 79 Senior Procurement Officials Reference Group 64 Service Delivery Office (SDO) 26, 36, 57, 69-70 e-invoicing 7, 30, 47, 52, 57, 69 Enterprise Resource Planning (ERP) system 36, 57 HUB Cloud 8, 34, 38 Productivity and Automation Centre of Excellence (PACE) 26, 30, 36 Shared Services Hub 7, 47, 57, 69 Services Australia 47, 57, 70, 71, 72, 74 staff seconded to 5, 8, 31, 38, 70, 74, 104, 106, 110 Shared Services Program 57, 227 Shared Services Transformation Group 26, 27 Shared Services Transformation Initiative (SSTI) 7, 46, 57, 105 SLC See Senior Leadership Committee small and medium-sized enterprises (SMEs) 30, 35, 36, 38, 69, 70, 90-1 Smart Traveller website 5, 71 SMEs See small and medium-sized enterprises Snowy Hydro Limited 7, 34, 38, 67 SSTI See Shared Services Transformation Initiative Stakeholder Relationship Management 108 STEPtember challenge 121 strategic reviews 82 Superannuation Amendment (PSSAP Membership) Bill 2020 63 Superannuation Amendment (PSSAP Trust Deed—Superannuation Salary) Instrument 2020 64 superannuation schemes (civilian) 63-4 Supply Acts (Nos. 1 and 2) 2020-21 36, 53 Supply (Parliamentary Departments) Act 2020-21 36, 53 Surge Readiness Management Model 104, 105

T

TechnologyOne OneGov Project 57 Transformation Plan 100, 109 Transparency Portal 30, 227 Treasury 5, 18, 29, 44

V

Virgin Australia 7, 33, 34, 39

Annual Report 2019-20 Part 7: Reference material 244

W Western Sydney Airport 24, 67, 86 Whole-of-Australian-Government (WoAG) procurement 64, 65 whole-of-government Enterprise Resource Planning (GovERP) project 5, 26, 30, 46, 57, 69 Whole-of-Government Property Services Arrangements 7, 66, 89 WHS See work health and safety WoAG See Whole-of-Australian-Government (WoAG) procurement Woolworths 38 Work Health and Safety Act 2011 121, 122, 123 work health and safety (WHS) 39, 111, 121-23

Comcare premium 123 investigations and notices 122, 123 MOP(S) Act employees 122-3 notifiable incidents 122, 123 workforce 10-11, 98-123

capability building See capability building (workforce) COVID-19, response to 99, 101-102, 104-11, 121-22 diversity and inclusion 106-7, 111 employment arrangements See employment arrangements (workforce) mobility See mobility (workforce) People Capability Framework 8, 101, 107, 109, 120 Sourcing Strategy 102-3 staff achievements 218-20 statistics 111-18 transformation agenda 100-101 Transformation Plan 100-101, 109 Workforce Plan 101-103 workforce planning 8, 82, 101-103 Workforce Management Taskforce (APS) 33 Workforce Plan 101-103