Chapter Four - Outcome Performance > Table of Explanations of Significant Variations across Defence Outcomes
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Table of Explanations of Significant Variations across Defence Outcomes

Table 4.26 Explanations of Common Variations Across Defence Outcomes
Explanation of Variation Outcome $m
One Two Three Four Five Six Total
Military Employees
An overestimate of the accrual leave expenses including bringing to account leave expenses in late 2003-04 rather than in 2004-05 as budgeted - there was no cash impact. -13.1 -51.6 -99.2 -49.3 -2.2 -2.2 -217.6
An overestimate of Employee Expenses in the original budget. -7.1 -28.0 -53.8 -26.8 -1.2 -1.2 -118.1
Lower than planned average funded strength across the Services. -2.4 -9.4 -18.0 -9.0 -0.4 -0.4 -39.6
A one time adjustment to Fringe Benefit Tax expenses to correct timing differences between the Fringe Benefit Tax year and the financial year. -1.9 -7.5 -14.4 -7.2 -0.3 -0.3 -31.6
Lower than expected Fringe Benefit Tax costs due in part to lower than anticipated staffing level. -1.5 -6.0 -11.5 -5.7 -0.3 -0.3 -25.2
Increases in health costs relating to medical and professional fees. 1.3 5.1 9.8 4.9 0.2 0.2 21.5
Reduced housing costs, due in part to lower than planned ADF strength. -1.2 -4.7 -9.1 -4.5 -0.2 -0.2 -19.9
Lower than anticipated expenditure on military employee allowances in relation to overseas operations with funds to be returned to Government under no win - no loss arrangements. -5.2 - - - - - -5.2
Lower than projected use of Reserve Days by non-Service Groups. -0.3 -1.2 -2.2 -1.1 - -0.1 -4.9
Error in attribution of operations costs in the original budget. 119.2 - -119.2 - - - -
Change in the methodology of personnel related attribution rules. 9.7 2.8 2.8 -19.8 2.8 1.7 -
Progressive refinement of Defence's cost attribution rules to reflect changes in workforce distributions and expenditure patterns and other variations. 9.1 -2.5 7.0 -29.7 8.1 8.1 -
Variation Military Employees 106.5 -102.9 -307.9 -148.2 6.6 5.3 -440.6
Civilian Employees
An overestimate of salary and allowances in the budget. -2.5 -8.9 -11.2 -9.2 -1.2 -4.3 -37.3
An overestimate of accrued leave expenses including booking the impact of the 2004-06 DECA in 2003-04 rather than as budgeted in 2004-05. -2.0 -7.3 -9.1 -7.5 -0.9 -3.5 -30.4
Lower than planned average full time equivalent civilian staffing strengths. -1.1 -3.8 -4.7 -3.9 -0.5 -1.8 -15.8
Other net variations including FBT payments in 2004-05. -0.4 -1.3 -1.6 -1.3 -0.2 -0.6 -5.3
Variation in civilian redundancies costs. 0.4 1.4 1.7 1.4 0.2 0.7 5.7
An increase in the Comcare Premium. 0.1 0.5 0.6 0.5 0.1 0.2 2.1
An increase in civilian health services expenses. 0.1 0.4 0.5 0.4 0.1 0.2 1.7
Change in the methodology of personnel related attribution rules. 2.9 -4.9 12.4 -12.2 1.4 0.4 -
Progressive refinement of Defence's cost attribution rules to reflect changes in workforce distributions and expenditure patterns and other variations. 2.7 8.3 -7.5 -4.4 -4.4 5.3 -
Variation Civilian Employees 0.2 -15.6 -18.9 -36.2 -5.5 -3.4 -79.3
Suppliers
Increased operational tempo combined with an understatement of the inventory consumption budget. 4.8 16.7 18.6 17.3 1.5 2.0 61.0
The impact of higher fuel prices. 3.4 11.8 13.1 12.2 1.1 1.4 43.0
Additional expenses for classified projects. - - - - - 14.0 14.0
Purchase rather than repair of rotable items, as maintenance of these items had become uneconomical. -2.9 -9.9 -11.0 -10.3 -0.9 -1.2 -36.1
The return of funding for a project which is being managed under no win - no loss arrangements. - - - - - -22.0 -22.0
The continued appreciation of the Australian Dollar relative to other currencies, and in particular the United States Dollar. -1.6 -5.5 -6.1 -5.7 -0.5 -0.7 -20.0
Lower than anticipated Air Force training activities due to higher operational temp and related aircraft availability. - - - -11.1 - - -11.2
Reduced property disposal cost in line with the reduction in property disposed of in 2004-05. -0.9 -3.0 -3.4 -3.1 -0.3 -0.4 -11.0
Change in attribution rules to increase costs. 10.0 -18.9 10.4 -15.4 18.9 -4.9 -
Progressive refinement of Defence's cost attribution rules to reflect changes in workforce distributions and expenditure patterns and other variations. -25.7 17.8 42.8 -69.8 7.7 27.1 -
Variation Suppliers -12.8 9.0 64.4 -85.8 27.5 15.4 17.7
Grants
The lower than anticipated expenditure on grants was a result of timing issues. -0.3 -1.7 -3.5 -1.8 - - -7.3
Variation Grants -0.3 -1.7 -3.5 -1.8 - - -7.3
Depreciation and Amortisation
The impact of extending the life of a number of ADF assets. -0.4 -10.7 -7.2 -13.9 -0.1 -0.7 -33.0
An overestimate of depreciation expense for infrastructure, plant and equipment due to a change in the asset recognition policy. -0.4 -10.4 -7.0 -13.5 -0.1 -0.7 -32.0
Progressive refinement of Defence's cost attribution rules to reflect changes in workforce distributions and expenditure patterns and other variations. -14.2 -74.3 47.5 52.9 0.1 -12.0 -
Variation Depreciation and Amortisation -15.1 -95.3 33.3 25.5 - -13.3 -65.0
Value of Assets Sold
Deferrals, into 2005-06 of a number of properties in the Property Sales Program, including Ermington, Maribyrnong and the Fremantle Oil Fuel Installation. -3.3 -17.1 -20.0 -28.3 -1.2 -1.4 -71.2
An overestimate of the value of other property, plant and equipment sold during the year. -0.4 -4.0 -4.5 -4.4 -0.1 -0.2 -13.7
Sale of housing for which Defence owes an annuity to the Defence Housing Authority. 0.8 3.5 6.5 3.4 0.1 0.2 14.5
Progressive refinement of Defence's cost attribution rules to reflect changes in workforce distributions and expenditure patterns and other variations. 0.7 -4.2 10.5 -9.4 1.8 0.6 -
Variation Value of Assets Sold -2.2 -21.8 -7.5 -38.7 0.7 -0.8 -70.3
Write Down of Assets
Extensive stocktaking undertaken throughout the year as part of remediation activity. 113.4 222.3 211.9 207.4 3.7 4.6 763.2
Inventory review identified items that are being held for contingency purposes, but are unlikely to be used. This includes excess items related to platforms scheduled to be withdrawn from service. 106.4 208.5 198.8 194.5 3.5 4.3 716.0
Adjustments following a review of financial records of completed estate infrastructure projects. 10.2 40.4 110.0 87.2 2.9 4.2 255.0
Write down of various infrastructure and plant & equipment, including items at RAAF base Curtin, Holsworthy and HMAS Stirling following revaluation of the estate. 3.6 14.1 38.4 30.4 1.0 1.5 89.0
Adjustments to Specialist Military Equipment, including assets under construction to align with the accumulated costs incurred to date. 13.2 25.8 24.6 24.1 0.4 0.5 88.7
A revaluation of the Defence estate by the Australian Valuation Office identified a number of assets required to be written down, including Holsworthy, RAAF bases Williamtown and Amberley and HMAS Albatross. 6.7 23.1 15.6 30.0 0.1 1.5 77.0
The write down of intangibles, including software that was previously capitalised. 0.7 2.5 1.7 3.3 - 0.2 8.5
Progressive refinement of Defence's cost attribution rules to reflect changes in workforce distributions and expenditure patterns and other variations. -8.1 65.0 46.6 -86.7 3.6 -20.3 -
Variation Write Down of Assets 246.1 601.7 647.6 490.3 15.4 -3.7 1,997.4
Other Expenses
Other expenses totalling $5m were incurred during 2004-05, including Defective Administration Scheme payments and other minor expenses. -0.2 1.7 2.6 1.0 - 0.1 5.1
Progressive refinement of Defence's cost attribution rules to reflect changes in workforce distributions and expenditure patterns and other variations. 1.1 -1.5 -0.3 0.3 0.2 0.1 -
Variation Other Expenses 0.9 0.2 2.3 1.3 0.2 0.2 5.1
Borrowing Cost
Borrowing cost expense was lower than anticipated due to the buy out of on base Defence Housing Authority annuities. 0.2 -1.3 -3.4 -2.1 0.2 0.1 -6.3
Variation Borrowing Cost 0.2 -1.3 -3.4 -2.1 0.2 0.1 -6.3
Revenue from Sale of Assets
Deferrals, into 2005-06, of a number of properties in the Property Sales Program, including Ermington, Maribyrnong and the Fremantle Oil Fuel Installation. 3.3 16.1 28.8 20.5 1.2 1.4 71.2
An overestimate of the proceeds from the sale of other property, plant and equipment. 0.3 1.7 3.1 2.2 0.1 0.1 7.6
Higher than anticipated sale proceeds from a number of properties in the Property Sales Program, including Wacol and Bandiana. -1.6 -8.1 -14.5 -10.3 -0.6 -0.7 -35.9
Revenue received from the sale of housing for which Defence owes an annuity to the Defence Housing Authority. -1.6 -8.0 -14.3 -10.2 -0.6 -0.7 -35.4
Progressive refinement of Defence's cost attribution rules to reflect changes in workforce distributions and expenditure patterns and other variations. -1.0 3.8 -11.4 8.7 -0.5 0.4 -
Variation Revenue from Sale of Assets -0.6 5.5 -8.3 10.8 -0.4 0.5 7.5
Net Foreign Exchange Gains
Net variations due to the timing difference between when invoices for transactions in foreign currencies are entered in the financial system for payment and the date they are paid. -1.2 -7.0 -6.0 -6.2 -0.3 -0.4 -21.2
Variation Net Foreign Exchange Gains -1.2 -7.0 -6.0 -6.2 -0.3 -0.4 -21.2
Assets Now Recognised
Land and Buildings, including at RAAF bases Townsville and Williamtown, Holsworthy, Robertson Barracks and HMAS Stirling. -9.5 -25.0 -143.7 -55.6 -2.3 -11.3 -247.4
Continued stocktake adjustments, and positive price adjustments to inventory records. -19.5 -64.5 -43.0 -64.5 -2.0 -2.0 -195.4
Recognition of other Infrastructure Plant and Equipment, including at Holsworthy, Shoal Bay Receiving Station, HMAS Stirling and RAAF base Edinburgh. -6.4 -16.8 -96.5 -37.3 -1.5 -7.6 -166.1
Recognition of a number of assets, including artefacts and memorabilia that are, or may be of, historical or cultural significance. -0.8 -2.1 -12.2 -4.7 -0.2 -1.0 -21.0
Lower than anticipated Specialist Military Equipment as a result of the continuing remediation work, which reflects increased controls on purchasing and accounting for Specialist Military Equipment as Defence continues to improve its stocktaking activities. 22.3 73.4 49.0 73.4 2.2 2.2 222.5
Progressive refinement of Defence's cost attribution rules to reflect changes in workforce distributions and expenditure patterns and other variations. 25.6 -6.0 -32.9 0.6 -3.4 16.1 -
Variation Assets Now Recognised 11.6 -40.9 -279.4 -88.1 -7.0 -3.5 -407.4
Other Revenue
Prior year adjustments, including the correction, based on audit advice, of the treatment of certain explosive ordinance expenses which should have been treated as prepayments. - -29.6 -36.3 -17.1 - - -83.0
Settlement of damages including in relation to Collins Class submarines and tactical air defence radar systems. -4.4 -22.1 -5.0 -4.1 - -0.4 -36.0
An actuarial gain due to Defence's asbestos related disease exposure liability being revised down during 2004-05. 0.7 -4.7 -7.1 -2.8 0.1 -0.2 -14.0
Higher than anticipated miscellaneous revenue. -0.4 -0.5 -0.4 -0.3 - - -1.7
Additional fuel excise refunds received. Also reflects incorrect attribution rule. -41.8 16.7 4.7 20.2 - - -
Progressive refinement of Defence's cost attribution rules to reflect changes in workforce distributions and expenditure patterns and other variations. -1.3 -2.3 11.5 -5.5 -0.4 -1.6 -
Variation Other Revenue -47.3 -42.5 -32.7 -9.5 -0.3 -2.3 -134.7
Total Outcome Variation 295.0 283.8 72.5 115.9 32.8 -5.9 794.1
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