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Chapter 4 - Financial performance


Summary

As at 30 June 2017, the Defence departmental net cash spend was $31.9 billion. This was an underspend of $30.5 million when compared to the revised estimate in the Defence Portfolio Budget Statements 2017–18.

Table 4.1 contains the Defence resource statement for 2016–17. Expenses by outcomes are detailed in tables 4.2 to 4.6, while the cost of operations is shown in tables 4.7 and 4.8.

Table 4.1: Defence resource statement, 2016–17

Actual available appropriation for 2016–17
$’000
Payments made 2016–17
$’000
Balance remaining 2016–17
$’000
ORDINARY ANNUAL SERVICES
Outcome 1
30,020,611
30,020,529
82
Outcome 2
774,101
774,101
Outcome 3
22,462
22,462
Total departmental outputs
30,817,174
30,817,092
82
Total ordinary annual services
30,817,174
30,817,092
82
OTHER SERVICES
Departmental non-operating
Equity injection
1,064,704
1,064,704
Total departmental non-operating
1,064,704
1,064,704
Total other services
1,064,704
1,064,704
Total available annual appropriation
31,881,878
31,881,796
82
SPECIAL APPROPRIATIONS
Special appropriations limited by criteria/entitlement
Defence Force Retirement Benefits Act 1948, Part 1, s. 15D and VIC, s. 82ZJ
14,122
14,100
22
Defence Force Retirement and Death Benefits Act 1973, Part XII, s. 125
1,504,600
1,498,604
5,996
Military Superannuation and Benefits Act 1991, Part V, s. 17
6,091,696
6,335,668
(243,972)
Defence Force (Home Loan Assistance) Act 1990, Part IV, s. 38
618
587
31
Australian Defence Force Cover Act 2015
110,070
21,500
88,570
Defence Home Ownership Assistance Scheme Act 2008, Part VI, s. 84
104,867
97,816
7,051
Other administered
338
(338)
Total special appropriations
7,825,973
7,968,613
(142,640)
Total appropriations
39,707,851
39,850,409
(142,558)
Funding from other sources
2,158,128
2,454,100
(295,972)
Returns to the Official Public Account (net)
(1,560,915)
(1,720,246)
159,331
Previous years’ outputs (appropriation receivable)
687,345
425,991
261,354
Cash available
47,597
88,823
(41,226)
Total other available resources
1,332,155
1,248,668
83,487
Total resourcing
41,040,006
41,099,077
(59,071)
Special accounts
Opening balance
72,661
72,661
Appropriation receipts
Appropriation receipts—other agencies
Non-appropriation receipts to special accounts
27,924
53,840
(25,916)
Total special accounts
100,585
126,501
(25,916)

Expenses by outcomes

Table 4.2: Total cost of Defence outcomes on an accrual basis, 2016–17

2016–17 budget estimate 1
$’000
2016–17 revised estimate 2
$’000
2016–17 actual result
$’000
Variation
$’000
Variation
%
Outcome 1: The protection and advancement of Australia’s national interests through the provision of military capabilities and the promotion of security and stability
Departmental net cost of service
29,256,090
30,019,342
29,872,915
(146,427)
Administered net cost of service
3,861,024
6,288,467
6,375,559
87,092
1
Net cost of service for Outcome 1
33,117,114
36,307,809
36,248,474
(59,336)
Outcome 2: The advancement of Australia’s strategic interests through the conduct of military operations and other tasks as directed by Government
Net cost of service for Outcome 2
737,973
774,135
796,575
22,440
3
Outcome 3: Support for the Australian community and civilian authorities as requested by Government
Net cost of service for Outcome 3
22,462
22,462
30,922
8,460
38
Net cost of service for Defence outcomes
Departmental net cost of service
30,016,525
30,815,939
30,700,412
(115,527)
Administered net cost of service
3,861,024
6,288,467
6,375,559
87,092
1
Total cost of Defence outcomes
33,877,549
37,104,406
37,075,971
(28,435)

Notes:

  1. As published in the Portfolio Budget Statements 2016–17.
  2. As published in the Portfolio Budget Statements 2017–18.

Table 4.3: Overall cost to government of Defence outcomes (departmental and administered), 2016–17

 
Outcome 1
$’000
Outcome 2
$’000
Outcome 3
$’000
Total
$’000
Departmental
Expenses
Employees
11,277,742
105,188
10,391
11,393,321
Suppliers
12,725,745
606,003
20,531
13,352,279
Grants
27,775
105,876
133,651
Depreciation and amortisation
5,462,402
5,462,402
Finance cost
124,430
124,430
Write-down of assets and impairment of assets
909,831
909,831
Net foreign exchange losses
7,826
7,826
Net losses from sale of assets
15,007
15,007
Other expenses
163,185
2
163,187
Total expenses
30,713,943
817,069
30,922
31,561,934
Income
Revenue
Goods and services
436,359
20,494
456,853
Rental income
6,414
6,414
Other revenue
36,954
36,954
Total revenue
479,727
20,494
500,221
Gains
Reversals of previous asset write-downs
214,703
214,703
Other gains
146,598
146,598
Total gains
361,301
361,301
Total income
841,028
20,494
861,522
Net cost of departmental outcomes
29,872,915
796,575
30,922
30,700,412
Administered
Expenses
7,968,613
7,968,613
Revenue
1,593,054
1,593,054
Net cost of administered outcomes
6,375,559
6,375,559
Total departmental and administered outcomes
36,248,474
796,575
30,922
37,075,971

Table 4.4: Total cost of Defence Outcome 1

 
2016–17 budget estimate 1
$’000
2016–17 revised estimate 2
$’000
2016–17 actual result 3
$’000
Variation
$’000
Variation
%
Program 1.1 – Strategic Policy and Intelligence
Revenues from other sources
2,095
6,758
4,164
(2,594)
(38)
Departmental outputs
866,778
909,177
973,489
64,312
7
Program 1.2 – Navy Capabilities
Revenues from other sources
86,984
69,396
17,167
(52,229)
(75)
Departmental outputs
5,917,270
6,144,236
6,016,328
(127,908)
(2)
Program 1.3 – Army Capabilities
Revenues from other sources
45,773
35,712
34,395
(1,317)
(4)
Departmental outputs
7,329,033
7,876,185
6,997,631
(878,554)
(11)
Program 1.4 – Air Force Capabilities
Revenues from other sources
79,271
62,060
68,856
6,796
11
Departmental outputs
5,829,941
6,270,942
5,962,665
(308,277)
(5)
Program 1.5 – Joint Operations Command
Revenues from other sources
249
249
Departmental outputs
48,775
44,640
50,042
5,402
12
Program 1.6 – Vice Chief of the Defence Force
Revenues from other sources
216,540
218,584
166,241
(52,343)
(24)
Departmental outputs
1,466,071
1,344,496
2,057,112
712,616
53
Program 1.7 – Capability Acquisition and Sustainment
Revenues from other sources
2,596
2,596
322
(2,274)
(88)
Departmental outputs
692,055
614,095
541,452
(72,643)
(12)
Program 1.8 – Defence Executive Support
Revenues from other sources
9,912
10,837
22,845
12,008
111
Departmental outputs
194,155
204,608
255,910
51,302
25
Program 1.9 – Estate and Infrastructure
Revenues from other sources
345,225
338,855
469,044
130,189
38
Departmental outputs
4,145,448
4,148,791
4,221,148
72,357
2
Program 1.10 – Chief Information Officer
Revenues from other sources
72
4,546
15,717
11,171
246
Departmental outputs
1,632,688
1,246,811
1,714,596
467,785
38
Program 1.11 – Defence People
Revenues from other sources
80
80
Departmental outputs
510,647
481,197
515,343
34,146
7
Program 1.12 – Defence Science and Technology
Revenues from other sources
3,631
4,607
6,555
1,948
42
Departmental outputs
438,140
447,468
470,718
23,250
5
Program 1.13 – Chief Finance Officer
Revenues from other sources
4,818
4,933
35,393
30,460
617
Departmental outputs
185,089
286,696
96,481
(190,215)
(66)
Program 1.14 – Defence Force Superannuation Benefits
Defence Forces Retirement Benefits Act 1948, Part 1, s. 15D and VIC, s. 82ZJ(1)
Defence Force Retirement and Death Benefits Act 1973, Part XII, s. 125(3)
88,954
177,952
172,604
(5,348)
(3)
Military Superannuation and Benefits Act 1991, Part V, s. 17
1,472,240
4,038,303
4,281,668
243,365
6
Australian Defence Force Cover Act 2015
108,614
21,200
(87,414)
(80)
Total administered expenses
1,561,194
4,324,869
4,475,472
150,603
3
Administered revenue from other sources
1,358,948
1,416,269
1,462,077
45,808
3
Total Program 1.14
202,246
2,908,600
3,013,395
104,795
4
Program 1.15 – Defence Force Superannuation Nominal Interest
Defence Forces Retirement Benefits Act 1948, Part 1, s. 15D and VIC, s. 82ZJ(1)
23,601
14,122
14,100
(22)
Defence Force Retirement and Death Benefits Act 1973, Part XII, s. 125(3)
1,745,927
1,326,648
1,326,000
(648)
Military Superannuation and Benefits Act 1991, Part V, s. 17
1,899,314
2,053,393
2,054,000
607
Australian Defence Force Cover Act 2015
1,456
300
(1,156)
(79)
Total administered expenses
3,668,842
3,395,619
3,394,400
(1,219)
Administered revenue from other sources
Total Program 1.15
3,668,842
3,395,619
3,394,400
(1,219)
Program 1.16 – Housing Assistance
Defence Force (Home Loans Assistance) Act 1990, Part IV, s. 38
775
618
587
(31)
(5)
Defence Home Ownership Assistance Scheme Act 2008, Part VI, s. 84
110,852
104,867
97,816
(7,051)
(7)
Total administered expenses
111,627
105,485
98,403
(7,082)
(7)
Administered revenue from other sources
15,644
15,178
16,871
1,693
11
Total Program 1.1616-17
95,983
90,307
81,532
(8,775)
(10)
Program 1.17 – Other Administered16-17
Expenses16-17
338
338
Administered revenue from other sources16-17
106,047
106,059
114,106
8,047
8
Total Program 1.1716-17
(106,047)
(106,059)
(113,768)
(7,709)
7
Total resourcing16-17
Total departmental outputs16-17
29,256,090
30,019,342
29,872,915
(146,427)
Total administered
3,861,024
6,288,467
6,375,559
87,092
1
Total departmental revenue from other sources16-17
796,917
758,884
841,028
82,144
11
Total administered revenue from other sources16-17
1,480,639
1,537,506
1,593,054
55,548
4
Equity injection
2,321,327
1,064,704
1,064,704
Total resources for Outcome 1
37,715,997
39,668,903
39,747,260
78,357

Notes:

  1. As published in the Portfolio Budget Statements 2016–17, table 12.
  2. As published in the Portfolio Budget Statements 2017–18, table 15.
  3. At the program level, departmental revenues from other sources include minor reclassifications from expenses.

Table 4.5: Total cost of Defence Outcome 2

 
2016–17 budget estimate 1
$’000
2016–17 revised estimate 2
$’000
2016–17 actual result
$’000
Variation
$’000
Variation
%
Program 2.1 – Operations Contributing to the Security of the Immediate Neighbourhood
Revenues from other sources 26 26
Departmental outputs 1,023 1,050 3,904 2,854 272
Program 2.2 – Operations Supporting Wider Interests
Revenues from other sources 15,589 15,644 20,468 4,824 31
Departmental outputs 736,950 773,085 792,671 19,586 3
Total resourcing
Total departmental outputs 737,973 774,135 796,575 22,440 3
Total departmental revenue from other sources 15,589 15,644 20,494 4,850 31
Total resources for Outcome 2 753,562 789,779 817,069 27,290 3

Note: This table excludes capital payments for outcomes.

  1. As published in the Portfolio Budget Statements 2016–17, table 38.
  2. As published in the Portfolio Budget Statements 2017–18, table 11.

Table 4.6: Total cost of Defence Outcome 3

 
2016–17 budget estimate 1
$’000
2016–17 revised estimate 2
$’000
2016–17 actual result
$’000
Variation
$’000
Variation
%
Program 3.1 – Defence Contribution to National Support Tasks in Australia
Revenues from other sources
Departmental outputs
22,462
22,462
30,922
8,460
38
Total resourcing
Total departmental outputs
22,462
22,462
30,922
8,460
38
Total departmental revenue from other sources
Total resources for Outcome 3
22,462
22,462
30,922
8,460
38

Note: This table excludes capital payments for outcomes.

  1. As published in the Portfolio Budget Statements 2016–17, table 41.
  2. As published in the Portfolio Budget Statements 2017–18, table 11.

Cost of operations

Table 4.7: Net additional cost of operations, 1999–2000 to 2020–21

1999–2000 to 2015–16
actual result
$m

2016–17
actual result
$m

2017–18
budget estimate
$m

2018–19
forward estimate
$m

2019–20
forward estimate
$m

2020–21
forward estimate
$m

Total
$m

Operation Slipper
7,202.6
109.4
7,312.0
Operation Manitou1
73.0
44.9
54.2
10.0
..
182.1
Operation Accordion
289.9
173.3
222.2
27.7
23.1
736.2
Operation Highroad
243.7
113.6
83.5
2.7
1.8
445.3
Operation Resolute2,3
251.1
30.6
55.6
..
337.3
Operation Okra
446.0
368.4
453.6
64.2
29.8
1,362.0
Defence Support to the 2018 Commonwealth Games4
..
33.9
0.3
34.2
Total net additional costs
8,506.3
840.2
903.1
105.0
54.7
10,409.3
Sources of funding for operations
Government supplementation
8,506.3
840.2
903.1
105.0
54.7
10,409.3
Total cost
8,506.3
840.2
903.1
105.0
54.7
10,409.3

Notes: This table reflects ongoing and new operations funded under ‘no win, no loss’ arrangements. Double period (..) indicates ‘not zero, but rounded to zero’.

  1. The value of this Operation Manitou measure in 2019–20 is $0.001 million.
  2. Includes funding for expanded activities under Operation Sovereign Borders.
  3. The value of this Operation Resolute measure in 2018–19 is $0.047 million.
  4. The value of Defence Support to the 2018 Commonwealth Games 2016–17 actual result is $0.004 million.

Table 4.8: Net additional cost of operations, 2016–17

 
2016–17 budget estimate 1
$m
2016–17 estimated actual 2
$m
2016–17 actual result
$m
Variation
$m
Operation Slipper
103.9
103.9
109.4
5.5
Operation Manitou
40.2
40.2
44.9
4.7
Operation Accordion
179.4
179.4
173.3
(6.1)
Operation Highroad
59.0
95.0
113.6
18.6
Operation Resolute 3
22.5
22.5
30.6
8.1
Operation Okra
353.0
353.0
368.4
15.4
Defence Support to the 2018 Commonwealth Games 4
..
..
Total net additional costs
757.9
794.0
840.2
46.2

Note: This table reflects ongoing and new operations funded under ‘no win, no loss’ arrangements. Double period (..) indicates ‘not zero, but rounded to zero’.

  1. As published in the Portfolio Budget Statements 2016–17, table 4.
  2. As published in the Portfolio Budget Statements 2017–18, table 3.
  3. Includes funding for expanded activities under Operation Sovereign Borders.
  4. The value of Defence Support to the 2018 Commonwealth Games 2016–17 actual result is $0.004 million.