Financial Overview

Administered Items

Administered Revenue

The revenues administered on behalf of the Government are the dividend from the Defence Housing Authority, military employee superannuation contributions and other non-taxation revenues including reimbursement from the United Nations for costs associated with East Timor. Once collected by Defence, all of these revenues are returned to the Government through the Official Public Account.

Administered Expenses - Special Appropriation

These expenses, administered on behalf of the Government, are comprised as follows:

• Administered superannuation expenses representing members' accrual expenses and interest expenses for the two military superannuation schemes (Defence Force Retirement and Death Benefits and Military Superannuation and Benefits Schemes). The cash payments of benefits paid under these schemes are subject to biannual indexation of benefits, similar to the Australian Public Service superannuation schemes.
• The Defence Home Owner Scheme, which provides assistance to current and retired Defence personnel. This scheme provides a subsidy on the interest payable on a home loan for members of the ADF under the Defence Force (Home Loans Assistance) Act 1990.
• The retention benefit, which is a lump sum of one times salary paid directly to military personnel who, on completion of 15 years service, undertake to complete a further five years service. It is not a superannuation benefit, but is an incentive payment made via the administered accounts.

Sydney Harbour Federation Trust

Defence was transferred a number of properties from the Defence Housing Authority. These assets, valued at $84m, have now been passed on to the Sydney Harbour Federation Trust, at the Government's direction, from the administered accounts in 2002-03 (gazetted in April 2003).

Financial Results

Recent years' achievement and the comparison of 2002-03 financial results in comparison to the projected outcome are shown in Table 1.15.

Table 1.15: Revenues and Expenses Administered on Behalf of Government

	1999-2000	2000-01	2001-02	2002-03
	Result	Result	Result	Revised Estimate	Projected Result	Result	Variation
	$'000	$'000	$'000	$'000	$'000	$'000	$'000
Revenues Administered on Behalf of Government
Interest	2,665	661	8,604	-	-	1,114	1,114
Housing dividends	21,984	24,000	88,636	361,900	361,900	373,525	11,625
Military superannuation contributions	584,918	557,423	607,195	606,497	606,497	551,849	-54,648
Foreign government and United Nations reimbursement for East Timor	79,520	127,361	123,364	76,000	76,000	59,285	-16,715
Assets now recognised - retention benefit prepayment	-	-	-	-	-	56,918	56,918
Other	1,766	1,322	22,450	-	-	-	-
Total revenues administered on behalf of Government	690,853	710,767	850,249	1,044,397	1,044,397	1,042,691	-1,706
Expenses Administered on Behalf of Government
Military superannuation benefits	2,614,386	2,657,356	2,240,395	2,200,000	2,200,000	2,477,497	277,497
Retention benefits	18,865	22,013	30,560	30,600	30,600	21,162	-9,438
Housing subsidies	4,625	6,555	6,411	5,700	5,700	7,394	1,694
Other	3,498	-	12,269	181	181	88,604	88,423
Total expenses from ordinary activities	2,641,374	2,685,924	2,289,635	2,236,481	2,236,481	2,594,657	358,176

Significant variations, compared with the 2002-03 projected result, include:

• Retention benefit payments (+$57m) from 1 July 2002 are recorded as prepayments instead of expenses. The change has been made to recognise the nature if these payments;
• United Nations reimbursements (-$17m) arising from the phasing down of activity in East Timor and more accurate recognition of revenues anticipated from the United Nations;
• Military superannuation benefits (+$277m) reflecting the more recent Australian Government Actuary's assessment of superannuation liability than was available at the time of projected outcome development. The revised actuarial assessment reflects higher consumer price index and wage growth than was anticipated in the previous actuarial report; and
• Other expenses (+$88m) predominantly due to the downward revision of the United Nations receivable account to correctly reflect the amount outstanding from the United Nations.