Chapter Two > Outcome Six: Intelligence > Price to Government

Outcome Six: Intelligence

Price to Government

Table 2.26 Outcome Six - Intelligence for the Defence of Australia and its Interests
Budget
Estimate
Revised Additional Estimate(1) Projected Result(2) Actual Result(3) Variation(5) Variation
2003-04
$'000
2003-04
$'000
2003-04
$'000
2003-04
$'000
2003-04
$'000
2003-04
%
Operating Expenses
Employees - Military 52,609 59,392 60,294 58,175 -2,119 -3.5
Employees - Civilian 137,583 140,683 139,125 152,894 13,769 9.9
Sub-Total Employees 190,192 200,075 199,419 211,069 11,650 5.8
Suppliers expense 138,446 157,388 159,266 154,350 -4,916 -3.1
Inventory consumption 593 1 1 - -1 -
Sub-Total Suppliers 139,038 157,389 159,268 154,350 -4,918 -3.1
Grants 143 10 30 122 92 306.7
Depreciation and amortisation 82,425 59,839 61,007 69,894 8,887 14.6
Value of assets sold - - 2,635 1,664 -971 -36.8
Write-down of assets 836 1,380 1,320 33,464 32,145 2,435.1
Borrowing costs 349 966 377 360 -17 -4.5
Other expenses -15 9 - 2,769 2,769 -
Total Operating Expenses from Ordinary Activities 412,969 419,669 424,055 473,693 49,637 11.7
Revenues
Sale of goods and services -6,694 -6,740 -3,232 -2,821 411 -12.7
Revenue from sale of assets - - -2,635 -2,497 138 -5.2
Assets now recognised -1,673 -910 -3,493 -5,958 -2,465 70.6
Other revenues(4) -1,516 -3,179 -1,587 -4,957 -3,370 212.4
Total Own Source Revenues -9,884 -10,829 -10,946 -16,232 -5,286 48.3
Price to Government for Outcome Six 403,085 408,839 413,109 457,460 44,351 10.7

Notes

  1. The Revised Additional Estimate figures have been adjusted since the Portfolio Additional Estimates Statements 2003-04 (p.47) to reflect an improved costing methodology.
  2. The Projected Result is consistent with the Portfolio Budget Statements 2004-05.
  3. The Actual Price to Government for Outcome Six, shown in this table ($457.460m), relates to Departmental expenses and revenues. The Actual Price to Government for Outcome Six does not include $0.146m of administered revenues. This amount relates to interest received from the foreign military sales account.
  4. The Actual Result amount for Other revenues includes interest and dividends, net foreign exchange gains/losses and resources received free of charge.
  5. The variation figures are the difference between the Actual Result and the Projected Result.

top of page

Explanation of Significant Variations

The overall price of Outcome Six was $44.4m greater than the 2003-04 projected result, representing an increase of 10.7 percent. The major variations were due to:

  • a net decrease in military employee expenses (-$2.1m) due to:

    Salary and allowances

    • an overestimate of long service and annual leave to be paid in 2003-04 (-$0.2m);
    • an overstatement of the military employees salaries estimates in 2003-04 (-$0.2m);
    • decreased take-up rate and overstatement of the estimate for the Home Purchase Assistance Scheme (-$0.1m);
    • an overstatement of salary advances (-$0.1m);
    Superannuation

    • the decision not to proceed with the proposed transfer of the liability for the Defence Force Retirement and Death Benefits Scheme 3 per cent productivity benefit from the administered to departmental accounts (-$2.3m);
    • an overstatement of military superannuation estimates in 2003-04 (-$0.1m);
    Housing

    • an increase in housing expenses including buy-out of old, on-base housing annuities and increased take-up rate by members without dependents using rental assistance rather than living-in accommodation (+$0.1m);
    Compensation

    • - a decrease in the number and value of claims for lump sum compensation for permanent impairment (-$0.1m);
    Health

    • increased health costs relating to medical and professional fees (+$0.2m);
    Fringe benefits tax

    • an underestimate of fringe benefits tax payable for rental allowance for members without dependants (+$0.3m); and
    Cost attribution

    • progressive refinement of Defence's cost attribution rules to reflect changes in workforce distributions and expenditure patterns and other variations (+$0.4m).
  • top of page

  • a net increase in civilian employee expenses (+$13.8m) due to:

    Salary and allowances

    • the recognition of Defence Integrated Distribution System redundancy costs in 2003-04, rather than in 2004-05 as originally planned (+$2.6m);
    • lower full-time equivalent-average personnel than projected in 2003-04 (-$0.3m);
    • an overstatement of the civilian employee salaries in 2003-04 (-$2.4m);
    Superannuation

    • payment to the University of New South Wales for Australian Defence Force Academy staff superannuation liabilities from supplier expenses rather than civilian employee expenses (-$3.4m);
    • an underestimate of the impact of the changing profile of members in the Commonwealth Superannuation Scheme and Public Sector Superannuation schemes (+$1.4m);
    Leave liability

    • an increase in the future leave liability costs resulting from the new Defence Employee Certified Agreement (+$3.4m);
    • an increase in the future leave liability costs resulting from the Commonwealth Superannuation Scheme/Public Sector Superannuation rate increases on leave liabilities (+$0.9m);
    • a recalculation of accrued leave balances arising from actuarial reviews and errors in certain aspects of the estimates (+$0.9m);
    Health

    • a variation in health costs reflecting more emphasis by Defence on the health and wellbeing of its civilian workforce (+$0.2m);
    Other

    • greater than planned per capita personnel costs (+$7.8m) offset in supplier expenses; and
    Cost attribution

    • progressive refinement of Defence's cost attribution rules to reflect changes in workforce distributions and expenditure patterns and other variations (+$2.7m).
  • a net decrease in supplier expenses (-$4.9m) due to:
    • payment to the University of New South Wales for Australian Defence Force Academy staff superannuation liabilities (+$0.6m);
    • changes in accounting treatment of revenue collected under garrison support contracts, which is no longer offset against expenses (+$0.2m);
    • the reduced level of expense by the Intelligence and Security Group to offset higher civilian employee expenses (-$7.8m);
    • lower levels of expenses incurred on Defence's recruitment contract due to improvement in separation rates (-$0.1m);
    • the rephasing of some information systems and business improvement projects to 2004-05 to reflect changed schedules for these projects (-$0.4m);
    • the redirection to inventory purchases as Defence progressively reduces backlogs in this area (-$2.9m); and
    • progressive refinement of Defence's cost attribution rules to reflect changes in workforce distributions and expenditure patterns and other variations (+$5.5m).
  • top of page

  • a net increase in grants expense (+$0.1m) due to reclassification of research agreements between the Defence Science and Technology Organisation and universities, the Point Nepean community grant, the Mornington Peninsula land grant and refinement to cost attribution rules (+$0.1m).
  • a net increase in depreciation and amortisation expenses (+$8.9m) due to:
    • net movements from asset revaluations, assets under construction roll-out, assets first recognised and property sale delays (+$1.8m);
    • a revaluation of buildings and infrastructure (+$0.9m);
    • a review of the useful life on the repairable items on a number of platforms (+$1.0m);
    • an understatement of the depreciation estimate (+$0.8m);
    • greater than anticipated adjustment in other property, plant and equipment required to correct an error in the migration of assets from Defence's legacy financial system (DEFMIS) to ROMAN (-$0.7m);
    • the reclassification of some operating leases into finance leases (+$0.7m);
    • the non-requirement to proceed with the anticipated adjustment in specialist military equipment relating to the migration of assets from Defence's legacy financial system (DEFMIS) to ROMAN (-$9.4m); and
    • progressive refinement of Defence's cost attribution rules to reflect changes in workforce distributions and expenditure patterns and other variations (+$13.8m).
  • a net decrease in the value of assets sold expense (-$1.0m) due to:
    • the value of assets sold for which Defence owes an annuity to Defence Housing Authority (+$0.3m);
    • an overestimation of the expected proceeds for other property, plant and equipment (-$0.4m);
    • the delay in the property sales program due to Government decisions, the need to refer works at Randwick, New South Wales, to the Public Works Committee, and variations in project scheduling for various reasons including the lead time required to consider local and State Government priority (-$2.6m); and
    • progressive refinement of Defence's cost attribution rules to reflect changes in workforce distributions and expenditure patterns and other variations (+$1.7m).
  • top of page

  • a net increase in the write-down of assets expense (+$32.1m) due to:
    • asset disposals including F/A-18 Hornet aircraft radars, Black Hawk helicopters and night vision goggles (+$5.9m);
    • the write-down of specialist military equipment assets (+$3.9m);
    • a large scale review of Defence's inventory holdings by the Defence Materiel Organisation which led to inventory being recognised as obsolete (+$2.9m);
    • the transfer of assets, including George's Heights and Chowder Bay to the Sydney Harbour Foreshore Trust (+$1.3m);
    • the flow through of improvements in the pricing of explosive ordnance, including inventory consumed throughout the year and inventory still to be consumed (+$2.1m);
    • an adjustment to account for the change from $1,000 to $2,000 in the asset threshold for administrative assets, and the removal of grouping of these assets (+$1.0m);
    • the reclassification of certain fixed assets in Standard Defence Supply System as inventory (+$0.8m);
    • an increase in inventory disposals (+$0.8m); and
    • progressive refinement of Defence's cost attribution rules to reflect changes in workforce distributions and expenditure patterns and other variations (+$13.4m).
  • a net increase in other expenses (+$2.8m) due to:
    • an increase in provision for Defence's share of the Commonwealth's common law liability for asbestos-related diseases (+$2.2m);
    • corrections arising from the reconciliation of Defence Housing Authority annuity balances (+$0.4m); and
    • the resolution of past errors in accounting for the transfer of expense and revenue items between departmental and special public monies accounts (items transferred after 30 June 2003 have been accounted for correctly) (+$0.2m).
  • top of page

  • a net decrease in revenue from sales of goods and services (+$0.4m) due to:
    • the sale of equipment to other government agencies (-$0.1m); and
    • progressive refinement of Defence's cost attribution rules to reflect changes in workforce distributions and expenditure patterns and other variations (+$0.5m).
  • a net decrease in revenue from sale of assets (+$0.1m) due to:
    • the delay in the Property Sales Program due to Government decisions, the need to refer works at Randwick, New South Wales, to the Public Works Committee, and variations in project scheduling for various reasons including the lead time required to consider local and state government priority sale proposals (+$2.2m);
    • an overestimation of the expected proceeds for other property, plant and equipment (+$0.4m);
    • the revenue received from the sale of housing for which Defence owes an annuity to Defence Housing Authority (-$0.3m); and
    • progressive refinement of Defence's cost attribution rules to reflect changes in workforce distributions and expenditure patterns and other variations (-$2.2m).
  • a net increase in revenue from assets now recognised (-$2.5m) due to:
    • assets identified following site audits and other remediation activities (-$1.0m);
    • the reclassification of certain fixed assets in Standard Defence Supply System as inventory (-$0.8m);
    • the reconciliation of the ROMAN fixed asset register to the Standard Defence Supply System - Defence's inventory management system - following the introduction of Standard Defence Supply System version 4 (-$1.6m); and
    • progressive refinement of Defence's cost attribution rules to reflect changes in workforce distributions and expenditure patterns and other variations (+$0.9m).
  • a net increase in other revenue (-$3.4m) due to:
    • Australian National Audit Office audit services received free of charge (-$0.1m);
    • changes in accounting treatment of revenue collected under garrison support contracts, which is no longer offset against expenses (-$0.2m);
    • net variations due to the timing difference between invoices for transactions in foreign currencies entering the system and being paid (-$0.5m); and
    • progressive refinement of Defence's cost attribution rules to reflect changes in workforce distributions and expenditure patterns and other variations (-$2.6m).

top of page

Table 2.27 Price Summary of Output for Outcome Six - Intelligence for the Defence of Australia and its Interests
Budget
Estimate
Revised
Additional Estimate(1)
Projected Result(2) Actual Result(3) Variation(4) Variation
2003-04
$'000
2003-04
$'000
2003-04
$'000
2003-04
$'000
2003-04
$'000
2003-04
%
Output 6.1 - Intelligence 403,085 408,839 413,109 457,460 44,351 10.7
Price to Government for Outcome Six 403,085 408,839 413,109 457,460 44,351 10.7

Notes

  1. The Revised Additional Estimate figures have been adjusted since the Portfolio Additional Estimates Statements 2003-04 to reflect an improved costing methodology.
  2. The Projected Result is consistent with the Portfolio Budget Statements 2004-05.
  3. The Actual Price to Government for Outcome Six, shown in this table ($457.460m), relates to Departmental expenses and revenues. The Actual Price to Government for Outcome Six does not include $0.146m of administered revenues. This amount relates to interest received from the foreign military sales account.
  4. The variation figures are the difference between the Actual Result and the Projected Result.

top of page

| « Previous | Home | Next »