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Workforce Overview

Employee Expenses

Table 5.6 Explanation of Variations in Employee Expenses
  2003-04
Budget
Estimate(1)
2003-04
Revised
Estimate
2003-04
Projected
Result
2003-04
Actual
Result
Variation Variation
  $m $m $m $m $m %
Salary and Allowances 3,451.5 3,413.0 3,416.8 3,143.7 -273.1 -8.0
Superannuation 658.0 658.0 901.9 671.5 -229.6 -25.5
Leave Liability 94.8 94.8 244.3 242.1 -2.2 -0.9
Housing 381.9 378.8 375.1 385.7 10.6 2.8
Compensation 134.2 144.3 143.2 451.9 308.7 215.6
Health 129.5 137.3 132.0 150.1 18.1 13.7
FBT 267.2 267.2 268.4 297.0 28.6 10.7
Sub Total Permanent ADF 5,117.1 5,093.3 5,481.7 5,342.0 -138.9 -2.5
Navy Reserves 12.8 12.0 13.5 13.3 -0.2 -1.5
Army Reserves 89.0 88.8 87.8 89.6 1.8 2.1
Air Force Reserves 14.7 17.0 15.8 18.5 2.7 17.1
Sub Total Reserves 116.5 117.8 117.1 121.4 4.3 3.7
Salary and Allowances 1,092.7 1,085.1 998.4 997.4 -1.0 -0.1
Superannuation 192.3 191.0 200.7 183.4 -17.3 -8.6
Leave Liability 38.2 38.0 114.8 161.4 46.6 40.6
Other Expenses 18.4 19.6 19.6 21.1 1.5 7.7
Sub Total APS 1,341.6 1,333.6 1,333.5 1,363.2 29.7 2.2
Total Employees 6,575.3 6,544.7 6,932.3 6,826.6 -105.7 0.0

Note

  1. The Budget Estimate above is the Adjusted Budget Estimate as published in the Portfolio Additional Estimates Statements 2003-04. This reflects the true budget estimate of ADF employees in 2003-04, as it does not include the $64.4m estimate of the reimbursement of the 2002-03 employee expenses for Operations Bastille and Falconer.

The actual result for employee expenses in 2003-04 totalled $6,826.6m, representing a decrease of $105.7m from the 2003-04 projected result of $6,932.3m which was within 1.5 per cent of the estimate. The variation comprises permanent military employees (-$139.7m), Reserve employees ($4.3m) and civilian employees ($29.7m).

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Permanent Military Employees (-$138.9m)

  • This decrease of $138.9m was due to:
    • 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 (-$220.0m);
    • overstatement of the military employees salaries and superannuation payments in 2003-04 (-$21.6m);
    • reduced salaries and allowance and superannuation payments due to the lower than planned average funded strength of 191 comprising Navy (12), Army (-177) and Air Force (-26) (-$18.4m);
    • an overestimate of long service and annual leave to be paid in 2003-04 (-$17.3m);
    • decreased take-up rate and overstatement of the estimate for the Home Purchase Assistance Scheme (-$11.4m);
    • an overstatement of the estimate for salary advances (-$10.0m);
    • a review of employee allowance entitlements recognising overpayment of Army military allowances (-$9.7m);
    • an adjustment for an actuary review of compensation expense which projected higher longer term incapacity payments (+5 per cent), higher medical payments (+25 per cent) and higher establishment costs for claims (+$121.0m);
    • decrease in the number and value of claims for lump sum compensation for permanent impairment (-$8.8m);
    • increase in housing expenses including buy-out of old base housing annuities and increased take-up rate of members without dependents using rental assistance rather than living-in accommodation (+$10.6m);
    • increased health costs principally relating to medical and professional fees (+$18.1m); and
    • an understatement of fringe benefits tax payable for rental allowance for members without dependants (+$28.6m).

Reserves Employees (+$4.3m)

ADF Reserves expenses totalled $121.4m, representing an increase of $4.3m from the 2003-04 projected result of $117.1m. This was primarily due to increased activity by officers and instructors of cadets (+$1.0m) and a higher than projected use of Reserve days by non-Service groups (+$3.4m).

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Civilian Employees (+$29.7m)

  • Civilian employee expenses totalled $1,363.2m, representing an increase of $29.7m on the projected result of $1,333.5m. The increase was mainly due to:
    • the recognition of Defence Integrated Distribution System redundancy costs in 2003-04, rather than in 2004-05 as originally planned (+$23.0m);
    • the increase in the future leave liability costs resulting from both the 2004-06 Defence Employees Certified Agreement (+$30.4m) and associated superannuation rate increases (+$8.2m);
    • an underestimate of the impact of the changing profile of members in the Commonwealth Superannuation and Public Sector Superannuation schemes (+$12.8m);
    • the recalculation of accrual leave balances arising from actuarial reviews and errors in certain aspects of the estimates (+$8.0m). There was no cash impact in 2003-04;
    • the payment of superannuation liabilities to the University of New South Wales at the Australian Defence Force Academy at a lower level than estimated and from supplier expenses rather than from civilian employees (-$30.1m). In the event, an interim payment of $20.0m was made pending finalisation of the final amount in 2004-05;
    • reduction due to lower numbers (53 less full-time equivalent average) than planned in 2003-04 (-$2.8m); and
    • an overstatement of the civilian employee salaries in 2003-04 and other minor variations (-$19.7m).

Costs of the Reserve

The Joint Standing Committee for Foreign Affairs, Defence and Trade, in its review of the Defence Annual Report 2001-02, recommended that greater visibility be provided of the personnel costs of the Reserves. Salaries and allowances costs for the Reserve are shown in Table 5.5 and Table 5.7 provides details of the costs in supplier expenses relating to the Reserves Enhancement Initiatives.

Table 5.7 Reserves Enhancement Initiatives
  2003-04
Budget
Estimate
2003-04
Revised
Estimate
2003-04
Projected
Result
2003-04
Actual
Result
Variation
  $m $m $m $m $m %
Reserve Enhancement 19.5 17.5 14.4 14.5 0.1 0.7

The Reserves Enhancement Initiative provided funds to make employer support payments, which help compensate employers who release employees for Reserve service.

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