Annual Report 2016-17

Chapter 4 - Financial performance

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Summary

As at 30 June 2017, the Defence departmental net cash spend was $31.9 billion. This was an underspend of $30.5 million when compared to the revised estimate in the Defence Portfolio Budget Statements 2017–18.

Table 4.1 contains the Defence resource statement for 2016–17. Expenses by outcomes are detailed in tables 4.2 to 4.6, while the cost of operations is shown in tables 4.7 and 4.8.

Table 4.1: Defence resource statement, 2016–17

	Actual available appropriation for 2016–17 $’000	Payments made 2016–17 $’000	Balance remaining 2016–17 $’000
ORDINARY ANNUAL SERVICES
Outcome 1	30,020,611	30,020,529	82
Outcome 2	774,101	774,101	–
Outcome 3	22,462	22,462	–
Total departmental outputs	30,817,174	30,817,092	82
Total ordinary annual services	30,817,174	30,817,092	82
OTHER SERVICES
Departmental non-operating
Equity injection	1,064,704	1,064,704	–
Total departmental non-operating	1,064,704	1,064,704	–
Total other services	1,064,704	1,064,704	–
Total available annual appropriation	31,881,878	31,881,796	82
SPECIAL APPROPRIATIONS
Special appropriations limited by criteria/entitlement
Defence Force Retirement Benefits Act 1948, Part 1, s. 15D and VIC, s. 82ZJ	14,122	14,100	22
Defence Force Retirement and Death Benefits Act 1973, Part XII, s. 125	1,504,600	1,498,604	5,996
Military Superannuation and Benefits Act 1991, Part V, s. 17	6,091,696	6,335,668	(243,972)
Defence Force (Home Loan Assistance) Act 1990, Part IV, s. 38	618	587	31
Australian Defence Force Cover Act 2015	110,070	21,500	88,570
Defence Home Ownership Assistance Scheme Act 2008, Part VI, s. 84	104,867	97,816	7,051
Other administered	–	338	(338)
Total special appropriations	7,825,973	7,968,613	(142,640)
Total appropriations	39,707,851	39,850,409	(142,558)
Funding from other sources	2,158,128	2,454,100	(295,972)
Returns to the Official Public Account (net)	(1,560,915)	(1,720,246)	159,331
Previous years’ outputs (appropriation receivable)	687,345	425,991	261,354
Cash available	47,597	88,823	(41,226)
Total other available resources	1,332,155	1,248,668	83,487
Total resourcing	41,040,006	41,099,077	(59,071)
Special accounts
Opening balance	72,661	72,661	–
Appropriation receipts	–	–	–
Appropriation receipts—other agencies	–	–	–
Non-appropriation receipts to special accounts	27,924	53,840	(25,916)
Total special accounts	100,585	126,501	(25,916)

Expenses by outcomes

Table 4.2: Total cost of Defence outcomes on an accrual basis, 2016–17

	2016–17 budget estimate 1 $’000	2016–17 revised estimate 2 $’000	2016–17 actual result $’000	Variation $’000	Variation %
Outcome 1: The protection and advancement of Australia’s national interests through the provision of military capabilities and the promotion of security and stability
Departmental net cost of service	29,256,090	30,019,342	29,872,915	(146,427)	–
Administered net cost of service	3,861,024	6,288,467	6,375,559	87,092	1
Net cost of service for Outcome 1	33,117,114	36,307,809	36,248,474	(59,336)	–
Outcome 2: The advancement of Australia’s strategic interests through the conduct of military operations and other tasks as directed by Government
Net cost of service for Outcome 2	737,973	774,135	796,575	22,440	3
Outcome 3: Support for the Australian community and civilian authorities as requested by Government
Net cost of service for Outcome 3	22,462	22,462	30,922	8,460	38
Net cost of service for Defence outcomes
Departmental net cost of service	30,016,525	30,815,939	30,700,412	(115,527)	–
Administered net cost of service	3,861,024	6,288,467	6,375,559	87,092	1
Total cost of Defence outcomes	33,877,549	37,104,406	37,075,971	(28,435)	–

Notes:

1. As published in the Portfolio Budget Statements 2016–17.
2. As published in the Portfolio Budget Statements 2017–18.

Table 4.3: Overall cost to government of Defence outcomes (departmental and administered), 2016–17

	Outcome 1 $’000	Outcome 2 $’000	Outcome 3 $’000	Total $’000
Departmental
Expenses
Employees	11,277,742	105,188	10,391	11,393,321
Suppliers	12,725,745	606,003	20,531	13,352,279
Grants	27,775	105,876	–	133,651
Depreciation and amortisation	5,462,402	–	–	5,462,402
Finance cost	124,430	–	–	124,430
Write-down of assets and impairment of assets	909,831	–	–	909,831
Net foreign exchange losses	7,826	–	–	7,826
Net losses from sale of assets	15,007	–	–	15,007
Other expenses	163,185	2	–	163,187
Total expenses	30,713,943	817,069	30,922	31,561,934
Income
Revenue
Goods and services	436,359	20,494	–	456,853
Rental income	6,414	–	–	6,414
Other revenue	36,954	–	–	36,954
Total revenue	479,727	20,494	–	500,221
Gains
Reversals of previous asset write-downs	214,703	–	–	214,703
Other gains	146,598	–	–	146,598
Total gains	361,301	–	–	361,301
Total income	841,028	20,494	–	861,522
Net cost of departmental outcomes	29,872,915	796,575	30,922	30,700,412
Administered
Expenses	7,968,613	–	–	7,968,613
Revenue	1,593,054	–	–	1,593,054
Net cost of administered outcomes	6,375,559	–	–	6,375,559
Total departmental and administered outcomes	36,248,474	796,575	30,922	37,075,971

Table 4.4: Total cost of Defence Outcome 1

	2016–17 budget estimate 1 $’000	2016–17 revised estimate 2 $’000	2016–17 actual result 3 $’000	Variation $’000	Variation %
Program 1.1 – Strategic Policy and Intelligence
Revenues from other sources	2,095	6,758	4,164	(2,594)	(38)
Departmental outputs	866,778	909,177	973,489	64,312	7
Program 1.2 – Navy Capabilities
Revenues from other sources	86,984	69,396	17,167	(52,229)	(75)
Departmental outputs	5,917,270	6,144,236	6,016,328	(127,908)	(2)
Program 1.3 – Army Capabilities
Revenues from other sources	45,773	35,712	34,395	(1,317)	(4)
Departmental outputs	7,329,033	7,876,185	6,997,631	(878,554)	(11)
Program 1.4 – Air Force Capabilities
Revenues from other sources	79,271	62,060	68,856	6,796	11
Departmental outputs	5,829,941	6,270,942	5,962,665	(308,277)	(5)
Program 1.5 – Joint Operations Command
Revenues from other sources	–	–	249	249	–
Departmental outputs	48,775	44,640	50,042	5,402	12
Program 1.6 – Vice Chief of the Defence Force
Revenues from other sources	216,540	218,584	166,241	(52,343)	(24)
Departmental outputs	1,466,071	1,344,496	2,057,112	712,616	53
Program 1.7 – Capability Acquisition and Sustainment
Revenues from other sources	2,596	2,596	322	(2,274)	(88)
Departmental outputs	692,055	614,095	541,452	(72,643)	(12)
Program 1.8 – Defence Executive Support
Revenues from other sources	9,912	10,837	22,845	12,008	111
Departmental outputs	194,155	204,608	255,910	51,302	25
Program 1.9 – Estate and Infrastructure
Revenues from other sources	345,225	338,855	469,044	130,189	38
Departmental outputs	4,145,448	4,148,791	4,221,148	72,357	2
Program 1.10 – Chief Information Officer
Revenues from other sources	72	4,546	15,717	11,171	246
Departmental outputs	1,632,688	1,246,811	1,714,596	467,785	38
Program 1.11 – Defence People
Revenues from other sources	–	–	80	80	–
Departmental outputs	510,647	481,197	515,343	34,146	7
Program 1.12 – Defence Science and Technology
Revenues from other sources	3,631	4,607	6,555	1,948	42
Departmental outputs	438,140	447,468	470,718	23,250	5
Program 1.13 – Chief Finance Officer
Revenues from other sources	4,818	4,933	35,393	30,460	617
Departmental outputs	185,089	286,696	96,481	(190,215)	(66)
Program 1.14 – Defence Force Superannuation Benefits
Defence Forces Retirement Benefits Act 1948, Part 1, s. 15D and VIC, s. 82ZJ(1)	–	–	–	–	–
Defence Force Retirement and Death Benefits Act 1973, Part XII, s. 125(3)	88,954	177,952	172,604	(5,348)	(3)
Military Superannuation and Benefits Act 1991, Part V, s. 17	1,472,240	4,038,303	4,281,668	243,365	6
Australian Defence Force Cover Act 2015	–	108,614	21,200	(87,414)	(80)
Total administered expenses	1,561,194	4,324,869	4,475,472	150,603	3
Administered revenue from other sources	1,358,948	1,416,269	1,462,077	45,808	3
Total Program 1.14	202,246	2,908,600	3,013,395	104,795	4
Program 1.15 – Defence Force Superannuation Nominal Interest
Defence Forces Retirement Benefits Act 1948, Part 1, s. 15D and VIC, s. 82ZJ(1)	23,601	14,122	14,100	(22)	–
Defence Force Retirement and Death Benefits Act 1973, Part XII, s. 125(3)	1,745,927	1,326,648	1,326,000	(648)	–
Military Superannuation and Benefits Act 1991, Part V, s. 17	1,899,314	2,053,393	2,054,000	607	–
Australian Defence Force Cover Act 2015	–	1,456	300	(1,156)	(79)
Total administered expenses	3,668,842	3,395,619	3,394,400	(1,219)	–
Administered revenue from other sources	–	–	–	–	–
Total Program 1.15	3,668,842	3,395,619	3,394,400	(1,219)	–
Program 1.16 – Housing Assistance
Defence Force (Home Loans Assistance) Act 1990, Part IV, s. 38	775	618	587	(31)	(5)
Defence Home Ownership Assistance Scheme Act 2008, Part VI, s. 84	110,852	104,867	97,816	(7,051)	(7)
Total administered expenses	111,627	105,485	98,403	(7,082)	(7)
Administered revenue from other sources	15,644	15,178	16,871	1,693	11
Total Program 1.1616-17	95,983	90,307	81,532	(8,775)	(10)
Program 1.17 – Other Administered16-17
Expenses16-17	–	–	338	338	–
Administered revenue from other sources16-17	106,047	106,059	114,106	8,047	8
Total Program 1.1716-17	(106,047)	(106,059)	(113,768)	(7,709)	7
Total resourcing16-17
Total departmental outputs16-17	29,256,090	30,019,342	29,872,915	(146,427)	–
Total administered	3,861,024	6,288,467	6,375,559	87,092	1
Total departmental revenue from other sources16-17	796,917	758,884	841,028	82,144	11
Total administered revenue from other sources16-17	1,480,639	1,537,506	1,593,054	55,548	4
Equity injection	2,321,327	1,064,704	1,064,704	–	–
Total resources for Outcome 1	37,715,997	39,668,903	39,747,260	78,357	–

Notes:

1. As published in the Portfolio Budget Statements 2016–17, table 12.
2. As published in the Portfolio Budget Statements 2017–18, table 15.
3. At the program level, departmental revenues from other sources include minor reclassifications from expenses.

Table 4.5: Total cost of Defence Outcome 2

	2016–17 budget estimate 1 $’000	2016–17 revised estimate 2 $’000	2016–17 actual result $’000	Variation $’000	Variation %
Program 2.1 – Operations Contributing to the Security of the Immediate Neighbourhood
Revenues from other sources	–	–	26	26	–
Departmental outputs	1,023	1,050	3,904	2,854	272
Program 2.2 – Operations Supporting Wider Interests
Revenues from other sources	15,589	15,644	20,468	4,824	31
Departmental outputs	736,950	773,085	792,671	19,586	3
Total resourcing
Total departmental outputs	737,973	774,135	796,575	22,440	3
Total departmental revenue from other sources	15,589	15,644	20,494	4,850	31
Total resources for Outcome 2	753,562	789,779	817,069	27,290	3

Note: This table excludes capital payments for outcomes.

1. As published in the Portfolio Budget Statements 2016–17, table 38.
2. As published in the Portfolio Budget Statements 2017–18, table 11.

Table 4.6: Total cost of Defence Outcome 3

	2016–17 budget estimate 1 $’000	2016–17 revised estimate 2 $’000	2016–17 actual result $’000	Variation $’000	Variation %
Program 3.1 – Defence Contribution to National Support Tasks in Australia
Revenues from other sources	–	–	–	–	–
Departmental outputs	22,462	22,462	30,922	8,460	38
Total resourcing
Total departmental outputs	22,462	22,462	30,922	8,460	38
Total departmental revenue from other sources	–	–	–	–	–
Total resources for Outcome 3	22,462	22,462	30,922	8,460	38

Note: This table excludes capital payments for outcomes.

1. As published in the Portfolio Budget Statements 2016–17, table 41.
2. As published in the Portfolio Budget Statements 2017–18, table 11.

Cost of operations

Table 4.7: Net additional cost of operations, 1999–2000 to 2020–21

	1999–2000 to 2015–16 actual result $m	2016–17 actual result $m	2017–18 budget estimate $m	2018–19 forward estimate $m	2019–20 forward estimate $m	2020–21 forward estimate $m	Total $m
Operation Slipper	7,202.6	109.4	–	–	–	–	7,312.0
Operation Manitou1	73.0	44.9	54.2	10.0	..	–	182.1
Operation Accordion	289.9	173.3	222.2	27.7	23.1	–	736.2
Operation Highroad	243.7	113.6	83.5	2.7	1.8	–	445.3
Operation Resolute2,3	251.1	30.6	55.6	..	–	–	337.3
Operation Okra	446.0	368.4	453.6	64.2	29.8	–	1,362.0
Defence Support to the 2018 Commonwealth Games4	–	..	33.9	0.3	–	–	34.2
Total net additional costs	8,506.3	840.2	903.1	105.0	54.7	–	10,409.3
Sources of funding for operations
Government supplementation	8,506.3	840.2	903.1	105.0	54.7	–	10,409.3
Total cost	8,506.3	840.2	903.1	105.0	54.7	–	10,409.3

Notes: This table reflects ongoing and new operations funded under ‘no win, no loss’ arrangements. Double period (..) indicates ‘not zero, but rounded to zero’.

1. The value of this Operation Manitou measure in 2019–20 is $0.001 million.
2. Includes funding for expanded activities under Operation Sovereign Borders.
3. The value of this Operation Resolute measure in 2018–19 is $0.047 million.
4. The value of Defence Support to the 2018 Commonwealth Games 2016–17 actual result is $0.004 million.

Table 4.8: Net additional cost of operations, 2016–17

	2016–17 budget estimate 1 $m	2016–17 estimated actual 2 $m	2016–17 actual result $m	Variation $m
Operation Slipper	103.9	103.9	109.4	5.5
Operation Manitou	40.2	40.2	44.9	4.7
Operation Accordion	179.4	179.4	173.3	(6.1)
Operation Highroad	59.0	95.0	113.6	18.6
Operation Resolute 3	22.5	22.5	30.6	8.1
Operation Okra	353.0	353.0	368.4	15.4
Defence Support to the 2018 Commonwealth Games 4	–	–	..	..
Total net additional costs	757.9	794.0	840.2	46.2

Note: This table reflects ongoing and new operations funded under ‘no win, no loss’ arrangements. Double period (..) indicates ‘not zero, but rounded to zero’.

1. As published in the Portfolio Budget Statements 2016–17, table 4.
2. As published in the Portfolio Budget Statements 2017–18, table 3.
3. Includes funding for expanded activities under Operation Sovereign Borders.
4. The value of Defence Support to the 2018 Commonwealth Games 2016–17 actual result is $0.004 million.