Output Three: Army Capabilities
Price to Government
| Adjusted Budget Estimate | Revised Estimate | Projected Result | Actual Result | Variation | |
|---|---|---|---|---|---|
| 2002-03 | 2002-03 | 2002-03 | 2002-03 | ||
| $'000 | $'000 | $'000 | $'000 | $'000 | |
| Operating Expenses | |||||
| Employees - Military | 1,140,690 | 1,117,821 | 1,164,009 | 1,057,916 | -106,093 |
| Employees - Civilian | 243,296 | 274,132 | 284,281 | 307,705 | 23,424 |
| Sub-total Employees | 1,383,986 | 1,391,953 | 1,448,290 | 1,365,621 | -82,669 |
| Suppliers - Non-inventory | 1,058,996 | 1,084,442 | 1,022,075 | 1,166,280 | 144,205 |
| Suppliers - Inventory | 235,488 | 233,953 | 212,128 | 238,922 | 26,794 |
| Sub-total Suppliers | 1,294,484 | 1,318,393 | 1,234,203 | 1,405,202 | 170,999 |
| Depreciation and amortisation | 991,731 | 886,701 | 1,006,469 | 888,766 | -117,703 |
| Value of assets sold | - | - | - | 138,335 | 138,335 |
| Write down of assets (includes net losses on sale of assets and net foreign exchange losses) | 16,161 | 203,859 | 228,525 | 212,738 | -15,787 |
| Other expenses (includes borrowing cost expense and Grants) | 6,766 | 6,736 | 6,688 | 80,551 | 73,863 |
| Total Operating Expenses From Ordinary Activities | 3,693,128 | 3,807,642 | 3,924,175 | 4,091,213 | 167,038 |
| Revenues | |||||
| Assets now recognised | 6,760 | -81,470 | -109,256 | -284,977 | -175,721 |
| Revenue from sale of assets | - | -3,815 | - | -165,334 | -165,334 |
| Other revenues | -55,248 | -68,274 | -62,617 | -72,730 | -10,113 |
| Total Own Source Revenues | -48,488 | -153,558 | -171,873 | -523,041 | -351,168 |
| Price to Government for Output Three | 3,644,640 | 3,654,084 | 3,752,300 | 3,568,172 | -184,128 |
Explanation Of Significant Variation
The overall price of Output Three was $452m higher than the 2002-03 projected result, representing an increase of ten per cent. The major variations were due to:
- a net increase in military employee expenses (+$78m) due to:
- an underestimation of the salary arrears estimates which has been corrected for future years (+$26m);
- an acceleration towards the White Paper workforce target of 26,000 to take advantage of favourable recruiting outcomes (+$26m);
- an overstatement of overseas allowances (+$13m); and
- other attributions variations (+$13m).
- an increase in civilian employee expenses (+$8m) due to higher than planned strength and per capita costs, together with refinement of the attribution rules including the allocation of security staff costs across all outputs;
- an increase in suppliers non-inventory expenses (+$188m) due to:
- a change in the accounting treatment between the capital and operating mix in the major capital equipment program (+$81m);
- additional logistic and operational requirements (+$104m); and
- accounting adjustments due to a correction of data reported in 2001-02 (+$3m).
- an increase in suppliers inventory expenses (+$125m) reflecting purchases of additional inventory items to meet logistic and operational requirements;
- a decrease in depreciation expenses (-$67m) due to a refinement of attribution rules to reflect a move from a generic to a more output-specific attribution of costs;
- an increase in the value of assets sold (+$273m) due to the Minister for Finance's new requirement in 2002-03 for Defence to separately disclose the value of both the assets sold and the revenue proceeds;
- a net increase in write down of assets expenses (+$107m) due to ongoing work to refine Defence's asset holdings and valuations;
- an increase in other expenses (+$153m) due to the recognition of Defence's potential liability for compensation claims arising from asbestos exposure that was identified in a recent whole-of-government actuarial report;
- an increase in assets now recognised revenue (-$124m) due to:
- the take-up of inventories recorded on the Army's Q-Store system into SDSS and additional inventory price adjustments (-$203m); and
- other variations due predominantly to the booking of the SDSS to ROMAN reconciliation (+$79m).
- an increase in revenue from sale of assets (-$311m) due predominantly to the Minister for Finance's new requirement in 2002-03 for Defence to separately disclose the value of both the assets sold and the revenue proceeds (-$273m); and
- a decrease in other revenue (+$22m) due to a variation in the revenue attributed to Output Three by Defence Groups, which has been corrected for future years.