Our Finances

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How we are funded

Parliament provides PM&C with two types of funding: departmental and administered.

We use departmental resources to produce goods and services (outputs) at a quantity, quality and price endorsed by government.

We also administer payments, revenues and other resources on behalf of government, which controls how we use them and requires us to account for them separately.

PM&C's outputs and administered items for 2005–06 are detailed in Table 9.2 overleaf.

A shaded background indicates that information relates to an administered resource, both in the table and in the formal financial statements that follow it.

How we measure our performance

We published detailed financial forecasts throughout the year as part of the Budget Papers. Key reference points include:

  • our Portfolio Budget Statements, released on Budget night, and
  • our Portfolio Additional Estimates Statements.

Our overall focus is on providing accurate estimates, achieving a break-even financial position, and maintaining a strong balance sheet.

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Key results in 2005–06

In 2005–06 PM&C continued to manage the resources entrusted to it efficiently, effectively and ethically. For our departmental resources, key results included:

  • Income & expenditure growth—these grew significantly in the context of APEC 2007 and COAG decisions
  • An operating surplus—we achieved a surplus of $18.7 million, in line with the forecast in our 2006–07 Portfolio Budget Statements, and
  • An increase in net equity—net equity increased to $45.1 million, due to not only the retained operating surplus but also equity injections associated with construction of our new building at One National Circuit.

Feedback on our financial management practices has been positive, in the form of an unqualified audit report from the Australian National Audit Office (ANAO).

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Departmental finances

At the beginning of 2005–06, we expected to receive and spend $87.5 million, with 97 per cent of our income as revenue from government. These estimates changed during the year, largely due to government decisions to:

  • recognise the workload impact of decisions of the Council of Australian Governments (COAG, see page 16)
  • expand our responsibility for organising APEC 2007 (page 48), and
  • provide an equity injection for infrastructure, plant and equipment associated with our new building.

We finished the year with an operating surplus of $18.7 million, in line with the forecast in our 2006–07 Portfolio Budget Statements.

This result largely reflects a $19 million underspend on APEC 2007, but will not affect our long-term finances—any surplus funds remaining at the end of the APEC project are to be returned to government.

If the APEC underspend was excluded, we would be have incurred an operating deficit of $0.3 million in 2005–06.

Significant shifts in our income, expenses and balance sheet were recorded:

  • Income rose 58 per cent overall to $99.6 million, largely due to increased revenue from government for APEC 2007 activities.
  • Expenses rose 30 per cent to $80.9 million. Employees remained our largest single expense but the largest growth was in supplier expenses.
  • Liabilities rose 22 per cent to $20.7 million. Again, while employee provisions remained our largest single liability, the largest growth was in payments due to suppliers.
  • Assets in the form of cash and appropriation receivables rose substantially due to the combined impact of equity injections and our operating surplus for 2005–06.

The overall strength of our balance sheet improved substantially—as at 30 June 2006 our assets exceeded our quantifiable liabilities by a ratio of over 3:1.

Details of trends in departmental finances are provided in Table 9.1 below.

Table 9.1—Trends in departmental finances*
2004–05 $m 2005–06 $m Change last year
Revenue from government 58.9 95.0 61% Up
Other revenues 4.3 4.6 7% Up
TOTAL INCOME 63.2 99.6 58% Up
Employee expenses 37.3 43.9 18% Up
Supplier expenses 19.7 30.4 54% Up
Other expenses 5.3 6.7 27% Up
TOTAL EXPENSES 62.3 80.9 30% Up
OPERATING RESULT 0.9 18.7 >100% Up
Financial assets A 14.8 52.5 >100% Up
Non-financial assets B 10.8 13.3 22% Up
Liabilities C 16.9 20.7 22% Up
NET ASSETS = A + B + C 8.7 45.1 >100% Up

* historical data reflect the comparative figures signed off by the AnAo as part of our 2005–06 financial statements.

Table 9.2—PM&C outputs and administered programmes in 2005–06
  2005–06 Budgeta $,000 2005–06 Actualb $,000 Variancec More information
OUTPUT GROUP 1
1.1 economic & industry policy 13 486   13 784   2% Up page 19
OUTPUT GROUP 2
2.1 Social policy 10 938   10 954   0%   page 29
OUTPUT GROUP 3
3.1 International policy 5 063   4 150   18% Down page 37
3.2 National security policy 9 283   9 585   3% Up page 37
Administered item— National Counter Terrorism Committee 97   77   21% Down page 41
3.3 APEC Taskforce 34 332   15 439   55% Down page 48
OUTPUT GROUP 4
4.1 Cabinet secretariate 4 002 } 6 289 } 5% Up page 53
4.2 Cabinet implementation unite 2 015 }   }      
4.3 Machinery of government 8 875   8 602   3% Down page 56
Administered item— National Australia Day Council 1 856   1 856   0%   page 59
4.4 Government communications 4 193   5 725   37% Up page 60
4.5 Official establishments 620   668   8% Up page 62
Administered item— Prime Minister's official residences 1 712   1 391   19% Down page 62
4.6 Support for ministerial offices 2 628   2 375   10% Down page 72
Administered item— Allowances & support for former Governors-General 1 977   1 620   18% Down page 68
4.7 Ceremonial and hospitality 3 345   3 355   0%   page 64
Administered item— State occasions & official visits 2 897   5 214   80% Up page 64
TOTAL DEPARTMENTAL RESOURCES 98 780   99 612   1% Up page 104
Less resources available to be usedd 3 793   4 625   22% Up  
Net cost to government (appropriation) 95 772   94 987   1% Down  
TOTAL ADMINISTERED ITEMS 8 539   10 158   19% Up page 105
Plus other expenses 3 998   4 198   5% Up  
Total administered operating expenses 12 537   14 356   15% Up  
AVERAGE STAFFING LEVELS 475   443   7% Down page 80
  1. the budget shown for 2005–06 is, as required, the revised budget published in our 2005–06 portfolio Additional estimates Statements.
  2. the actual shown is the total expense recorded against each output or item in our financial statements.
  3. the variance is the difference between our 2005–06 budget and our 2005–06 actual, expressed as a proportion of our 2005–06 budget.
  4. Resources available to be used include resources received free of charge, payments from special accounts, the sale of goods and services, and the sale of assets.
  5. As of 1 July 2006 the Cabinet Secretariat and Cabinet implementation unit outputs were merged into a single output, Cabinet Support, and remaining outputs were renumbered accordingly.

Administered finances

At the beginning of 2005–06 we expected to spend $11.9 million on grants, suppliers and other expenses we administer on behalf of the Australian Government.

We revised this estimate up by $0.6 million at Additional estimates, to reflect increases in the annual grant payable to the National Australia Day Council (see page 59) and in allowances payable to former Governors-General (page 68).

Actual expenditure of $14.4 million was incurred, more than forecast. This result was due to an increase in spending under the State Occasions and Official Visits item, reflecting an increase in the number and complexity of events staged. All other programmes either underspent or came in on target.

Expenditure was, however, still substantially less than in 2004–05 due to some one-off grant payments and the transfer of women's programmes to the Department of Family and Community Services and Indigenous Affairs in 2004–05.

Revenue collected on behalf of government rose to $6.8 million, due to increased revenue from commissions paid into the Media Commissions Special Account.

Net assets fell due to an increase in payables to trade creditors and a decrease in receivables from the Australian Taxation Office and others.

The Prime Minister's official residences—valued at $32 million—continued to comprise the vast majority of the assets we administered (see also page 62).

Details of trends in administered finances are provided in Table 9.3 below.

Table 9.3—Trends in administered finances*
2004–05 $m 2005–06 $m Change last year
TOTAL REVENUE 5.0 6.8 36% Up
Grants 11.7 1.9 84% Down
Suppliers 10.5 10.8 3% Up
Other expenses 5.1 1.7 67% Down
TOTAL EXPENSES 27.3 14.4 47% Down
Financial assets A 2.5 0.7 72% Down
Non-financial assets B 32.4 32.5 –  
Liabilities C 13.5 14.4 7% Up
NET ASSETS = A+B–C 21.3 18.8 12% Down

* historical data reflect the comparative figures signed off by the AnAo as part of our 2005–06 financial statements.

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Understanding our financial statements

The content and format of our financial statements is prescribed by the Minister for Finance and Administration under the Financial Management and Accountability Act 1997. Our statements include:

  • An income statement. This shows our income and running costs. It is prepared on an accrual basis so some income and costs may not yet have been received or paid for.
  • A balance sheet. This details our assets and liabilities, as well as the amount of the Australian Government's equity at year end.
  • A statement of cash flows. This shows where the cash we used during the year came from, and how we used it.
  • A statement of changes in equity. This shows how the Australian Government equity we hold has changed due to changes in asset valuations, accumulated surpluses and capital transactions.

More information is provided in the accompanying schedules and explanatory notes. Information on related topics is available elsewhere in this report as follows:

  • executive remuneration policies (page 86)
  • procurement policies and practices (page 98)
  • consultancies (page 99), and
  • payments for market research and advertising (page 99).
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Last Updated: 5 December, 2006