Annual Report 2004-05

Financial Overview

Defence's Financial Position

Explanation of Major Variations

Total Liabilities (-$202m)

Liabilities were $202m lower than planned due to:

• Leases (-$94m) - Leases were lower than planned due to the buy-out from the Defence Housing Authority of on-base housing annuities.
• Employees (-$360m) - The decrease in employee liabilities was due to a number of factors, including:
  • an overestimate of the accrual leave expenses budget including the bringing to account of leave provisions late in 2003-04 rather than as budgeted in 2004-05 ( $248m);
  • a higher incidence of leave taken during the year as a result of Defence's leave management strategy ( $77m); and
  • variations related to pay day accruals, 27^th pay day and the lower than planned average funded strength (-$35m).
• Supplier Payables (+$167m) - The increase was mainly due:
  • higher than anticipated work-performed but not invoiced transactions (+$160m); and
  • other minor variations in non capital trade creditors (+$7m).
• Other Provisions and Payables (+$84m) - The variation relates to:
  • the booking of a provision to meet a potential liability to meet the cost of certain potential common law claims which might emerge in the Voyager/Melbourne cases (+$68m);
  • the provision for liabilities associated with the F-111 Deseal/Reseal project (+$21m); and
  • A decrease in other payables, including for asbestos related disease exposure on actuarial advice (-$5m).