Annual Report 2004-05

Overview of the Defence Outcomes and Outputs

Defence outcomes are the results that the Government seeks from Defence, and are achieved through the successful delivery of outputs, to the standards set in the Portfolio Budget Statements 2004-05 and, where applicable, revised in the Portfolio Additional Estimates Statements 2004-05 and the two Portfolio Supplementary Additional Estimates. The Defence Annual Report 2004-05 reports our achievement against these targets, in both financial and non-financial terms.

In 2003-04 Defence moved to a new outcome and output structure, involving six Departmental outcomes and one Administered outcome. For the Portfolio Additional Estimates Statements 2004-05 the structure was amended to cover 28 Departmental outputs and three Administered outputs. There have been four main structural changes since 2003-04, they are as follows:

• Air Force Capability now has four outputs from five in 2003-04. The new output is Output 4.3 - Capability for Surveillance and Response Operations. This is the result of an amalgamation of the Capability for Strategic Surveillance (previously Output 4.3) and Capability for Maritime Patrol Aircraft (previously Output 4.4). Air Force Capability has also revised the title of Output 4.4 from Capability for Air Lift to Capability for Air Lift Operations. This change more accurately reflects the current nature of the output.
• Outcome Five - Strategic Policy has renamed its two outputs. Output 5.1 has changed from Strategic and International Policy, Activities and Engagement to International Policy, Activities and Engagement. Output 5.2 has changed from Military Strategy and Capability Analysis to Strategic Policy and Military Strategy. These reflect changes in responsibilities as a result of Defence reorganisation.
• Outcome Three - Army Capability has revised the titles of four of its outputs. Output 3.1 - Capability for Special Forces Operations has changed to Capability for Special Operations. Output 3.2 - Capability for Mechanised Operations has changed to Capability for Medium Combined Arms Operations. Output 3.3 - Capability for Light Infantry Operations has changed to Capability for Light Combined Arms Operations. Output 3.9 - Capability for Motorised Infantry Operations has changed to Capability for Motorised Combined Arms Operations.
• Outcome Seven, Defence's administered outcome, has been broken down into three outputs. This is to better reflect the different elements and reporting of the outcome.

Defence's departmental outcomes exceeded the revised estimate by $795m as detailed in Table 4.1. The variation is a reflection of the operating loss which is described in the financial overview and results mainly from the significant accrual adjustments, in particular write down of assets through inventory stocktaking, stratification of inventory and revaluation of the estate.

The seventh outcome, Superannuation and Housing Support Services for Current and Retired Defence Personnel, covers activities not directly connected to the delivery of the capability outcomes and outputs. Outcome Seven and its three outputs are described on p. 228.

Defence continues to refine its cost attribution rules in order to improve the accuracy of its output costs. There are a number of variables that can influence output costs, including changes to preparedness levels and activity rates, operations, and redirecting funds to meet changing priorities and emergent cost pressures. Changes in the distribution of the workforce and technical adjustments aimed at improving the accounting for Defence's assets and liabilities can have a major impact.

Some of the variations evident between the projected and actual result reflect accounting adjustments and refinements to attribution rules. There have been few changes to preparedness and activity levels from that which were planned, and which cause variations between the projected and actual result.