Notes to and Forming Part of the Financial Statements

Date



For the year ended 30 June 1999


Note No.

Description

1

Reporting Entity and Objectives

2

Summary of Significant Accounting Policies

3

Events Occurring After Balance Date

4

Goods and Services Expenses

5

Grants

6

Extraordinary Items

7

Non-taxation Revenue

8

Reconciliation of Revenues from Independent Sources

9

Revenues from Government

10

Debt

11

Provisions and Payables

12

Equity

13

Financial Assets

14

Non-Financial Assets

15

Cash Flow Reconciliation

16

Administered Remote Contingencies

17

Receipts of the Consolidated Revenue Fund

18

Expenditure from Special Appropriations

19

Expenditure from Annual Appropriations

20

Reconciliation of Agency Running Costs

21

Receipts and Expenditure of the Commercial Activities, Reserved Money Fund and Special Public Money

22

Appropriation for Future Reporting Periods

23

Related Party Transaction

24

Payments to the Commonwealth from Business Operations

25

Executive Remuneration

26

Services Provided by the Auditor-General

27

Act of Grace Payments, Waivers and amounts Written-Off

28

Average Staffing Levels

29

Financial Instruments: Departmental

30

Financial Instruments: Administered

 

Note 1: Reporting Entity and Objectives

The reporting entity comprises the Department of the Treasury, the Foreign Investment Review Board, the Loan Council and the Royal Australian Mint (the Mint), hereafter referred to as

the Department. In these statements, the Department does not correspond with the Department of the Treasury.

The Department comprises two programs:

Program 1: Treasury (including the secretariats of the Foreign Investment Review Board and the Loan Council).

Program 2: Royal Australian Mint.

The objectives of these programs are respectively:

Program 1: To improve the wellbeing of the Australian community through high, sustainable economic and employment growth with low inflation and efficient and sustainable use of resources.

Program 2: To produce and supply Australia

s coinage needs and to pursue ancillary commercial opportunities in a way that maximises returns to Government

Treasury is funded predominantly by Parliamentary appropriations. The Mint operates as a government business, and seeks to make a commercial return on investment.

The financial report encompasses various trust accounts and all the Funds through which the Department controls resources to carry on its functions. In the process of reporting on the Department as a single entity all transactions and balances within that entity have been eliminated.

 

Note 2: Summary of Significant Accounting Policies

2.1 Basis of Accounting

The financial statements are required by section 49 of the Financial Management and Accountability Act 1997 and are a general purpose financial report.

The financial statements have been prepared in accordance with Schedule 2 to the Financial Management and Accountability (FMA) Orders made by the Minister for Finance and Administration in December 1998.

The financial statements have been prepared:

    • in compliance with Australian Accounting Standards, other authoritative pronouncements of the Australian Accounting Standards Boards and the Consensus Views of the Urgent Issues Group; and
    • having regard to Statements of Accounting Concepts.

The financial statements have been prepared on an accrual basis and in accordance with historical cost convention except for certain assets which, as noted, are at valuation. Except where stated, no allowance is made for the effect of changing prices on the results or the financial position.

The continued existence of the Department in its present form, and with its present programs, is dependent on Government policy and on continuing appropriations by Parliament for the Department

s administration and programs.

2.2 Agency and Administered Items

Agency assets, liabilities, revenues and expenses are those items that are controlled by the Department including:

    • computers, plant and equipment used in providing goods and services;
    • liabilities for employee entitlements;
    • revenues from running cost appropriations;
    • revenues from user charging, etc, where the proceeds are deemed appropriated under section 31 of the Financial Management and Accountability Act 1997; and
    • employee expenses and other administrative expenses incurred in providing goods and services.

Administered items are those items which are controlled by the Government and managed or overseen by the Department on behalf of the Government. These items include grant payments to other governments, interest on public debt and dividend revenue from financial institutions.

The purpose of the separation of administered and agency items is to enable assessment of the administrative efficiency of the Department in providing goods and services. The basis of accounting described in Note 2.1 applies to both agency and administered items.

Administered items are distinguished from agency items in the financial statements by shading.

2.3 Changes in Accounting Policy

Changes in accounting policy have been identified in this note under their appropriate headings.

2.4 Principles of Aggregation

In the process of reporting the Department as a single unit, and in preparation of the program statements, all intra- and inter-program transactions and balances have been eliminated in full.

The financial statements of the Mint are aggregated into the Department’s financial statements. Where accounting policies differ between the business operations and the Department, adjustments are made on aggregation to bring any dissimilar accounting policies into alignment.

Administered investments in controlled entities are not consolidated on a line-by-line basis because their aggregation is relevant only on the Whole of Government level (see note 2.21).

2.5 Revenues from Government

Revenues from government are revenues relating to the core operating activities of the Department, except to the extent that they represent the receipt of assets arising from a restructuring of administrative arrangements.

Agency Appropriations

Appropriations for agency operations other than running costs are recognised as revenue to the extent that the appropriations are spent.

Appropriations for agency running costs have, until 1998-99, been recognised as revenue in the year of appropriation, except to the extent that:

    • amounts unspent at year end are not automatically carried over into the new financial year, and
    • the appropriations involve running costs borrowings, the repayment of which has effected by an appropriate reduction in the appropriation actually received in the year of repayment. (Interest may also be charged on borrowings).

With the introduction of accrual budgeting by the Commonwealth for 1999-2000, any re-appropriation to the Department of the automatic running costs carryover for 1999-2000 will be by way of a capital rather than a revenue appropriation. Accordingly, the carryover is not recognised as revenue but is included directly in equity in the financial statements for 1998-99.

Administered Appropriations

Administered appropriations are recognised as revenue only to the extent that

    • cash is transferred from the Official Commonwealth Public Account to enable ad
      ministered liabilities to be settled; and
    • special appropriations expenses have been incurred but no payment has been made at balance date.

The amount of revenue is disclosed as ‘transfers – cash from Official Commonwealth Public Account’ and ‘Special Appropriations Accrued’ in the statement of Administered Revenues and Expenses. The ‘Special Appropriations Accrued’ gives rise to an Appropriation Receivable as disclosed in the statement of Administered Assets and Liabilities.

Resources Received Free of Charge

Services received free of charge are recognised in the statement of Agency Revenues and Expenses as revenue when and only when a fair value can be reliably determined and the services would have been purchased if they had not been donated. Use of those resources is recognised in the ‘Net cost of services’.

2.6 Other Revenue

Revenue from the sale of goods is recognised upon the delivery of goods to customers. Interest revenue is recognised on a proportional basis taking into account the interest rates applicable to the financial assets. Dividend revenue is recognised when the right to receive a dividend has been established. Revenue from disposal of non-current assets is recognised when control of the asset is passed to the buyer.

All revenues described in this note are revenues relating to the core operating activities of the Department, whether in its own right or on behalf of the Commonwealth, except for gains from the sale of agency assets. Details of revenue amounts are given in Note 7.

2.7 Grants (Administered)

The Treasury Department administers a number of grant schemes on behalf of the Commonwealth. Grants are generally expensed when the payment is made. That is, there is no liability recognised. However, the Department recognises a liability for future grant payments to the International Monetary Fund (IMF) Enhanced Structural Adjustment Facility. In 1997-98, the Department of the Treasury agreed to contribute $30,000,000 in twelve annual installments of $2,500,000 to the IMF’s Enhanced Structural Adjustment Facility. The Department has made two payments and has a liability of $25,000,000.

2.8 Revenue Replacement Payments

The Commonwealth collects a number of revenue replacement taxes as an agent for the States and Territories. These taxes have replaced constitutionally invalid business franchise fees and are passed directly by the Commonwealth to the State and Territory Governments, with an adjustment for administration costs. Reflecting the Commonwealth’s agency role in the collection of these taxes, they have not been recognised in these financial statements. Under the previous accounting policy, the revenue replacement payments were treated on a gross basis. The relevant amounts for 1997-98 and 1998-99 are outlined in the table below.




1998-99
$’000


1997-98
$’000


Transfers to the States and Territories in relation to revenue replacement payments

6,751,952


5,217,767

Cash from the Official Commonwealth Public Account in relation to revenue replacement payments

6,751,952


5,217,767


 

2.9 Mirror taxes collected by State and Territory Governments

The Commonwealth imposes mirror taxes on behalf of the States which replace constitutionally invalid State taxes on Commonwealth places. Mirror taxes are collected by the States and will be passed to the Commonwealth and immediately repaid to the States. The State Governments bear the administration costs of collecting mirror taxes. There has to date been no mirror taxes paid to the Commonwealth by the States as not all States have yet passed legislation facilitating such payment.

2.10 Employee Entitlements

Leave

The liability for employee entitlements includes provisions for annual leave and long service leave. No provision is made for sick leave as all sick leave is non-vesting and the average sick leave taken in future years by employees of the Department is estimated to be less than the annual entitlement for sick leave.

The liability for annual leave reflects the value of total annual leave entitlements of all employees at 30 June 1999 and is recognised at the nominal amount.

The non-current portion of the liability for long service leave is recognised and measured at the present value of the estimated future cash flows to be made in respect of all employees at 30 June 1999. In determining the present value of the liability, the Department has taken into account attrition rates and pay increases through promotion and inflation.

Separation and Redundancy

Provision is also made for separation and redundancy payments in circumstances where the Department has formally identified positions as excess to requirements and a reliable estimate of the amount of the payments can be determined.

Superannuation

Staff of the Department contribute to the Commonwealth Superannuation Scheme and the Public Sector Superannuation Scheme. Employer contributions amounting to $3,509,235 have been expensed in these financial statements.

No liability is shown for superannuation in the statement of Agency Assets and Liabilities as the employer contributions fully extinguish the accruing liability, which is assumed by the Commonwealth.

Employer Superannuation Productivity Benefit contributions totalled $680,005.

2.11 Leases

A distinction is made between finance leases, which effectively transfer from the lessor to the lessee substantially all the risks and benefits incidental to ownership of leased non-current assets, and operating leases under which the lessor effectively retains substantially all such risks and benefits.

Where a non-current asset is acquired by means of a finance lease, the asset is capitalised at the present value of minimum lease payments at the inception of the lease and a liability recognised for the same amount. Leased assets are amortised over the period of the lease. Lease payments are allocated between the principal component an
d the interest expense.

Operating lease payments are charged to the statement of Agency Revenues and Expenses on a basis which is representative of the pattern of benefits derived from the leased assets.

2.12 Cash

Cash includes notes and coins held, deposits held at call with a bank or financial institution and balances of commercial trust accounts held in the Official Commonwealth Public Account (CPA).

2.13 Financial Instruments and Specific Disclosures by Financial Institutions

The Department is complying with the requirements of the following Australian Accounting Standards:

(a) AAS 23 Set-off and Extinguishment of Debt;

(b) AAS 32 Specific Disclosures by Financial Institutions; and

(c) AAS 33 Presentations and Disclosure of Financial Instruments.

Where practicable, comparative information has been disclosed. Accounting policies for financial instruments are stated at notes 29 and 30A.

2.14 Acquisition of Assets

Assets are recorded at cost on acquisition except as stated below. The cost of acquisition includes the fair value of assets transferred in exchange and liabilities undertaken.

Assets acquired at no cost or for nominal consideration are initially recognised as assets and revenue at their fair value at the date of acquisition, unless acquired as a consequence of restructuring administrative arrangements. In the latter case, assets are initially recognised at the amounts at which they were recognised in the transferor agency’s accounts immediately prior to the restructuring.

2.15 Property Plant and Equipment

Asset Recognition Threshold

Purchases of property, plant and equipment are recognised initially at cost in the statement of Agency Assets and Liabilities, except for purchases costing less than $2,000 which are expensed in the year of acquisition (other than where they form part of a group of similar items which are significant in total).

Revaluation

Schedule 2 of the FMA Orders requires that property, plant and equipment be progressively revalued in accordance with the ‘deprival’ method of valuation by 1 July 1999. Thereafter they are to be revalued progressively on that basis every three years.

Revaluations of property, plant and equipment are accounted for by separately restating the gross amount and the related accumulated depreciation of the revalued asset.

The carrying amounts of property, plant and equipment held by the Mint have been reviewed to determine whether they are in excess of their recoverable amounts. In assessing recoverable amounts the relevant cash flows have not been discounted to their present value.

The Department is implementing its progressive revaluations as follows:

    • leasehold improvements are to be revalued every three years
    • plant and equipment has been revalued over the financial year 1998-99, and will be revalued in successive three-year periods.

Assets in each class acquired after the commencement of the progressive revaluation cycle will be reported on the basis of the value initially recognised on acquisition for the duration of the progressive revaluation then in progress.

The financial effect of the move to progressive revaluation is that the carrying amounts of assets will reflect current values and depreciation charges will reflect the current cost of the service potential consumed in each period.

Intangible Assets

Where recognised, intangible assets are reported at the lower of cost, recoverable amount or valuation. They are amortised on a straight line basis over their anticipated useful lives.

Depreciation and Amortisation

Depreciable property, plant and equipment are written off to their estimated residual values over their estimated useful lives to the Department using the straight line method of depreciation. Leasehold improvements are amortised on a straight line basis over the lesser of the estimated useful life of the improvements or the unexpired period of the lease.

Depreciation and amortisation rates applying to each class of depreciable assets are as follows:




1998-99


1997-98


Computers, plant and equipment

3 - 20 years


3 - 20 years

Leasehold improvements

5 - 10 years


5 years

Motor vehicles

4 years


7 years

Office equipment

5 years


5 years

Capitalised software

3 - 5 years


3 - 5 years


Depreciation and amortisation rates and methods are reviewed at each balance date and necessary adjustments are recognised in the current and future reporting periods as appropriate.

The aggregate amount of depreciation allocated for each class of asset during the reporting period is disclosed in Note 14B.

2.16 Inventories

Inventories are brought to account at the lower of cost and net realisable value. Work in progress and finished goods are brought to account at actual costs to include direct costs and a proportion of direct labour and overhead. All precious metals are purchased and brought to account at cost and expensed as used. Indirect materials are expensed at the time of purchase.

2.17 Taxation

The Department of the Treasury is exempt from all forms of taxation except for Fringe Benefits Tax. The Mint is liable for all forms of taxation including Payroll tax, Companies profit tax, fringe benefit tax and sales tax on non-coin products.

2.18 Insurance

A new Commonwealth insurable risk managed fund called ‘Comcover’, commenced operations as from 1 July 1998. From that date, the Department has insured with the fund for risks other than workers compensation, which is dealt with via continuing arrangements with Comcare.

The new arrangements replace the previous policy of non-insurance and require the systematic identification, quantification, reporting and management of risk across the department.

2.19 Bad and Doubtful Debts

Bad debts are written off during the year in which they are identified to the extent to which they have not been provided for.

A provision is raised for any doubtful debts based on a review of all outstanding accounts as at year end.

2.20 Comparative Figures

Where necessary, comparative figures have been adjusted to conform to changes in presentation within these financial statements.

2.21 Statement of Significant Accounting Policies for Administered Items

Administered items include:

Unclaimed Moneys

Moneys from bank accounts inactive for seven years are transferred to the Commonwealth from banking institutions. These unclaimed moneys are deposited in the Consolidated Revenue Fund and are recognised as administered revenue. A provision representing the expected recovery of these moneys less refunds paid, based on an analysis of historical transactions, is recognised.

Guarantees

Guarantees provided under legislation within the portfolio responsibility of the Treasurer are recognised as liabilities when it is probable that the guarantee will be called and it can be reliably measured. In all other instances such guarantees are disclosed in statement of Administered Remote Contingencies (Note 16).

State and Territory Advances

Advances made to the States and Territories are recognised at their expected recoverable amount at balance date.

Royal Australian Mint Seigniorage and Repurchase of Circulating Coins

Seigniorage is collected by the Mint on behalf of the Commonwealth. Seigniorage represents the difference between the face value of coinage sold to the Reserve Bank of Australia and its cost of production to the Mint.

The Mint repurchases circulating coins on behalf of the Commonwealth. The costs incurred by the Mint in repurchasing circulating coins are offset to an extent by the sale of scrap metal and the balance is supplemented by the Commonwealth via a reduction in the total amount paid to the Commonwealth by the Mint.

Loan Consolidation and Investment Reserve

The value of Commonwealth issued securities held in the Loan Consolidation and Investment Reserve is deducted from the face value of the administered borrowings liability. Any gain or loss on repurchase is reported in the statement of Administered Revenues and Expenses. The net effect is to report the impact of transactions with external parties.

Reserve Bank of Australia Dividend

In these accounts, the treatment of the Reserve Bank of Australia dividend has been changed, reflecting a change in the revenue recognition standard (AAS 15/AASB 1004) for 1998-99. This means that revenue, including dividends, can now only be brought to account once the right to control the income stream is established. On this basis, the RBA’s dividend for 1998-99 will be recognised in Treasury’s accounts in 1999-2000. An amount of $2,725,982,788 (Note 17) was received in 1998-99 representing the balance of the dividend receivable at 30 June 1998.

Investments

Development Banks

Investments in development banks are classified as non-monetary assets.

Where the information is available, these investments are recognised at historical cost. Where historical cost records are not readily obtainable, a notional cost has been established at 30 June 1993 by reference to the Development Banks

financial statements and exchange rates at that time.

The investment in the European Bank for Reconstruction and Development (EBRD) is recognised at historical cost, whereas the investments in the Asian Development Bank (ADB), the International Finance Corporation (IFC), the Multilateral Investment Guarantee Agency (MIGA) and the International Bank for Reconstruction and Development (IBRD) are recognised at notional cost.

Owing to their nature, these investments are only revalued periodically.

International Monetary Fund (IMF)

The quota is the current value in Australian dollars of Australia

s subscription to the IMF.

The Special Drawing Rights (SDR) allocation liability reflects the current value in Australian dollars of the liability to repay to the IMF Australia

s cumulative allocation of SDRs, and is classified as an Other Provisions and Payables.

Portfolio Agencies

The Commonwealth’s investment in other controlled authorities and companies in this portfolio is valued at the aggregate of the Commonwealth’s share of the net assets and net liabilities of each entity as at 30 June 1997.

Promissory Notes

Promissory notes which have been issued in foreign currencies are translated at the spot rate at balance date. Foreign currency gains and losses are recognised where applicable. Promissory notes have been issued to the International Monetary Fund, International Bank for Reconstruction and Development, the European Bank for Reconstruction and Development, the Asian Development Bank and the Multilateral Investment Guarantee Agency.

Payments to the States

Grants are recognised as expenses at the time that conditions under the grant agreement have been satisfied or payment has been made.

Borrowings

Borrowings are measured at face value. Premiums and discounts in relation to borrowings are netted and amortised over the life of the borrowings on a straight line basis.

Borrowings are recognised on a gross basis, including borrowings on behalf of the State and Territory Governments. Receivables relating to borrowings on behalf of the State and Territory Governments are recognised as administered assets.

Foreign Currency Transactions

Transactions denominated in a foreign currency are converted at the exchange rate at the date of the transaction. Foreign currency receivables and payables are translated at the exchange rates current as at balance date.

Where a purchase denominated in foreign currency is specifically hedg
ed, exchange gains or losses on hedging transactions arising up to the date of purchase or sale and costs, premiums and discounts relative to the hedging transactions are included with the purchase or sale. Exchange gains and losses arising on the hedge transactions after that date are taken to the statement of Revenues and Expenses.

Derivative Transactions

The Department undertakes derivative transactions on behalf of the Commonwealth to assist with the management of market risk associated with the Commonwealth debt portfolio. The Department manages this market risk by entering into interest rate swaps and cross-currency swaps.

Swap principal associated with cross-currency swaps is recognised on a net basis using the cost method. The notional principal associated with interest rate swaps is not recognised as assets or liabilities.

Swap interest payable and receivable in relation to interest rate and cross-currency swaps is also recognised on a net basis.

Prior to 1997/98, swap contracts were recognised on a gross cost basis.

Mortgage Insurance Policies Written by Housing Loans Insurance Corporation (HLIC) up to 12 December 1997

The HLIC was sold by the Commonwealth on 12 December 1997. Terms and conditions of the sale included that the Commonwealth shall remain responsible for the mortgage insurance policies written up to the time of the sale.

The sale of the HLIC was conducted by the Office of Asset Sales and Information Technology Outsourcing.

Accounting policies adopted are:

Premiums

Premiums comprise amounts charged to the policyholder or other insurer, excluding amounts collected on behalf of third parties, principally stamp duties. The earned portion of premiums received and receivable is recognised as revenue. Premiums are treated as earned from the date of attachment of risk.

Premiums received in respect of insured loans are apportioned over a number of years in accordance with an actuarial determination of the pattern of risk in relation to the loans. Premium amounts carried forward in this way are credited to

Provision for unearned premiums.

Claims

Claims incurred expense and a liability for outstanding claims are recognised in respect of insurance policies. The liability is assessed on an actuarial basis and covers claims incurred but not yet paid, incurred but not yet reported and the anticipated direct and indirect costs of settling those claims.

Acquisition Costs

A portion of acquisition costs relating to unearned premium revenue is deferred in recognition that it represents future benefits. Deferred acquisition costs are amortised on an actuarial basis over the reporting periods expected to benefit from the expenditure.

2.22 Investment in Sydney 2000 Olympic Coin Program (STOCP)

General

The Royal Australian Mint and the Perth Mint have formed a partnership to market and distribute Sydney 2000 Olympic Coins. This partnership will conclude in 2001 after the Sydney Olympics.

The Royal Australian Mint

s interest in STOCP is carried at the recoverable amount.

The Sydney 2000 Olympic Coin Program consists of 28 base metal coins, 16 silver coins and 8 gold coins.

Profit Distribution

The distribution of any profit is made on the following basis:




Royal Australian Mint


Perth Mint


Base metal

60%


40%

Silver

40%


60%

Gold

40%


60%


Foreign Currency Hedge

The STOCP entered into a foreign currency hedge (the hedge) on 25 June 1997 to the value of $US34 million for the purpose of reducing the risk of foreign currency exposure on overseas sales. The currency hedge matures on 31 December 2000 and is expected to cover all overseas revenues. At present the STOCP has a commitment to the hedge of $US26 million.

The hedge has been accounted for in accordance with AAS 20 (Part A)

Foreign Currency Transactions. Pursuant to this accounting standard the hedge has been classified as a specific hedge, being a specific hedge of all future overseas sales of the STOCP.

2.23 Rounding

Amounts are rounded to the nearest $1,000 except in relation to the following items:

    • transactions of the Consolidated Revenue Fund , the Commercial Activities Fund, the Reserved Money Fund and Special Public Moneys;
    • act of grace payments, waivers and write-offs;
    • remuneration of executives; and
    • remuneration of auditors.

It should be noted that in some cases totals may not add due to rounding.

 

Note 3: Events Occurring After Balance Date

1. The Government has introduced an accrual budgeting framework with effect from 1 July 1999. Under this framework, among other things:

  • departmental annual appropriations will be paid into a bank account controlled by the Department and will not lapse at year-end; as a result in future years the practice of carrying over revenue to the new financial year becomes redundant. Accounting for carryovers to 1999-2000 is affected by the re-appropriation of the carryover as a capital rather than a revenue appropriation in 1999-2000 (refer note 2.5);
  • the Commercial Activities Fund and the Reserved Money Fund are abolished and consolidated into the Consolidated Revenue Fund (CRF); components of these funds as at 30 June 99 become ‘special accounts’ within the CRF, the funds of which are hypothecated for the purposes of each account.


  1. The Australian Office of Financial Management (AOFM) is an independent Treasury Agency within the Treasury portfolio, having been established as a ‘prescribed agency’ under the Financial Management and Accountability Act (FMAA) as of the 1 July, 1999. The AOFM assumed all functions formerly carried out by the Debt Management Office within Treasury from that date. The AOFM is responsible for all aspects of the Commonwealth’s funding, debt redemption and risk management functions. The AOFM’s objective is to raise, manage and retire Commonwealth government security debt at the lowest possible long-term cost, consistent with an acceptable degree of risk exposure.
  2. The Reserve Bank of Australia declared a dividend of $3,676 million as at 30 June 1999 in respect of its results for the year ended on that date. The Treasurer ratified the payment of this amount on 12 August 1999 in accordance with the recommendation of the RBA’s Board of Directors. Treasury will record an amount of $3,000 million as Dividend Income received and an amount of $676 million as Dividends receivable in its accounts for the year ended 30 June 2000 in accordance with its accounting policy (Note 2.21).

 

Note 4: Goods and Services Expenses




1998-99


1997-98


$’000


$’000


Note 4A: Employee expenses
Remuneration (for services provided)

35,675


31,470

Separation and redundancy

567


416


Total employee expenses

36,242


31,886


Note 4B: Suppliers expenses
Supply of goods and services

15,745


13,654

Operating lease rentals

857


3,797


Total supplier expenses

16,602


17,451


Note 4C: Depreciation and amortisation
Depreciation of property, plant and equipment

1,651


1,546

Amortisation of leased assets

298


97


Total expenses

1,949


1,643


Note 4D: Expenses of businesses operations
Royal Australian Mint
Employees

5,906


6,007

Suppliers

24,444


17,811

Write down of assets


18

Interest


Depreciation and amortisation

458


500

Prior year adjustment to seigniorage abnormal expense


184


Total expenses of businesses operations

30,808


24,520


Note 4F: Interest and other financing costs
Government securities

7,283,049


7,942,026

Swaps

1,266,788


786,464


Total interest and other financing costs

8,549,837


8,728,490


Note 4G: Other administered expenses
Revenue replacement payments under safety net
arrangements with States and Territories


5,217,767

Payments to States in lieu of stamp duty on airport sales


94,400

Assumption of debt of Australian National Railways
Commission

230,101


460,812

Premium paid on redemption of debt

508,127


1,302,973

Debt waiver – Victoria

180,411


Other

80,482


49,057


Total other administered expenses

999,121


7,125,009


 

 

Note 5: Grants




1998-99


1997-98


$’000


$’000


Grants to other sectors
(appropriations to other Commonwealth entities)

330,708


258,573

Grants to State and Territory governments

17,062,716


16,672,977

Other

793



Total Grants

17,394,217


16,931,550


 

Note 6: Extraordinary Items

Note 6A: Restructuring

During the year, the Consumer Affairs Division was transferred to the Treasury Department.

Assets with a gross value of $608,000 and a written down value of $184,000 were transferred during 1998-99.

As a result of the restructuring of administrative arrangements the Treasury Department assumed responsibility on 21 October from Department of Industry Science & Resources.

In respect of the programs assumed the following assets and liabilities were recognised at the date of transfer:



Provisions and Payables

683,000

Infrastructure, plant and equipment

184,000


Net assets transferred

(499,000)




1998-99


1997-98

Consumer Affairs Division

$’000


$’000


Revenues
Recognised by Department of Industry, Science and Resources

841


Recognised by Department of Treasury

1,899



Total Revenues

2,740



Expenses
Recognised by Department of Industry, Science and Resources

615


Recognised by Department of Treasury

1,845



Total Expenses

2,460



Note 6B: Capitalisation of Assets



1998-99


1997-98


$’000


$’000

Capitalisation of assets

7,652



7,652


The above amount represents the value of assets not capitalised in prior years.

Note 7: Non-taxation Revenue



1998-99


1997-98


$’000


$’000

Note 7A: Net gains from sale of assets
Net gains from sale of assets


2

Note 7B: Revenues of business operations
Sales of goods and services

30,930


23,583

Other


1,729

Total revenues of business operations

30,930


25,312

Note 7C: Administered interest revenue
Interest from other governments:
Housing agreements

223,085


241,894

State and Territory debt

174,927


473,827

Total interest from other governments

398,012


715,721

Interest from other sources:
Other loans


3,578

Swaps

1,480,773


973,525

Other

1,853


89

Total interest from other sources

1,482,626


977,192

Total interest revenue

1,880,638


1,692,913

Note 7D: Administered dividend revenue
Commonwealth authorities


2,729,654

Total dividend revenue


2,729,654

Note 7E: Revenues arising from securities other than trading securities
Amortisation of premiums for Commonwealth Government
Securities on issue

281,139


246,267

Note 7F: Other administered revenue
Transfer from Consolidated Revenue Fund
to Trust Fund (LCIR)

8,544,540


8,305,125

Australian Securities and Investments Commission regulation fees
and receipts

331,778


326,015

State Fiscal Contributions

199,584


406,593

Other

261,810


98,782

Total other administered revenue

9,337,712


9,136,515

 

Note 8: Reconciliation of Revenues from Independent Sources



1998-99


1997-98


$’000


$’000

Gross revenue earned:
Sale of goods and services

653


568

Other

1,540


404

Other Revenues from independent sources

2,193


972

 

Note 9: Revenues from Government



40


1998-99


1997-98


$’000


$’000

Note 9A: Ordinary annual services
Appropriations

50,449


46,294

Parliamentary appropriations carried over to following year


3,843

Net Appropriations

50,449


50,137

Note 9B: Resources received free of charge
ANAO Audit fees

215


200

OPG: Contribution to lease payments


61

Australian Archives: File storage

18


18

Attorney General’s: Legal advice

DOFA: Internal audit


200

DOFA: Payroll, accounting and printing


15

DOFA: Comcover premium

60



293


534

 

Note 10: Debt




1998-99


1997-98


$’000


$’000


Note 10A: Leases
Finance Lease Commitments:
Not later than one year

653


22

Later than one year and not later than two years

644


Later than two years and not later than five years

310



Minimum lease payments

1,607


22

Deduct: future finance charges

(106)



Lease liability

1,501


22


Total Lease liability is represented by:
Current

589


22

Non-current

912



Lease liability

1,501


22


Note 10B: Government securities
Government securities:
Securities issued on behalf of the Commonwealth

85,897,242


94,514,019

Securities issued on behalf of the States and Territories

1,796,458


1,890,552



87,693,700


96,404,571

Unamortised net premiums on Commonwealth Government
Securities on issue

1,359,804


1,341,803


Total government securities

89,053,504


97,746,374


Maturity schedule for government secur
ities as at 30 June 1999 is as follows:
Payable:
within one year

17,081,236


19,405,769

in one to two years

12,580,412


9,825,720

in two to five years

16,503,480


23,077,014

in more than five years

41,528,572


44,096,068



87,693,700


96,404,571


Note 10C: Loans
Loans

36,522


43,943

IMF Promissory Notes

4,310,199


3,480,020



4,346,721


3,523,963


Maturity schedule for loans is as follows:
Payable:
within one year

11,686


7,728

in one to two years

6,988


12,554

In two to five years

15,038


18,836

in more than five years

2,810


4,825

IMF Promissory notes payable on demand

4,310,199


3,480,020



4,346,721


3,523,963


 

Note 11: Provisions and Payables



1998-99


1997-98


$’000


$’000

Note 11A: Employee liabilities
Salaries and wages

597


599

Annual leave

4,473


4,310

Long service leave

8,236


7,666

Superannuation

102


74

Separation and redundancies


93

Total employee entitlement liability

13,408


12,742

Note 11B: Suppliers
Trade creditors

1,126


1,044

Total suppliers

1,126


1,044

Note 11C: Other
Other creditors

4,965


1,110

Unearned income


37

Total other

4,965


1,147

Note 11D: Grants
Grants – IMF – Enhanced Structural Adjustment Facility

25,000


27,500

Maturity schedule for grants is as follows:
Payable:
within one year

2,500


2,500

in one to two years

2,500


2,500

in two to five years

7,500


7,500

in more than five years

12,500


15,000


25,000


27,500

Note 11E: Payables due to other financial institutions
Swap principal

1,396,333


2,761,134

Swap interest

10,501


22,493

Total Payables

1,406,834


2,783,627

Maturity schedule for payables due to other financial institutions as at 30 June 1999 is as follows:
Payable:
within one year

181,667


632,273

in one to two years

110,575


288,373

in two to five years

774,765


926,968

in more than five years

339,827


936,013


1,406,834


2,783,627

NOTE 11F: Provisions and payables Other
Interest payable

2,788,392


3,083,987

IMF SDR allocation

954,065


1,019,157

Provisions for unclaimed moneys repayments

48,975


41,392

Provision for insurance claims

20,894


29,533

Provision for unearned premiums

87,749


141,384

Other

5,332


7,569

Total Other

3,905,407


4,323,022

Note 12: Equity



Item

Accumulated results


Asset revaluation reserve


Total equity


1998-99
$’000


1997-98
$’000


1998-99
$’000


1997-98
$’000


1998-99
$’000


1997-98
$’000


Note 12A: Equity – Agency
Balance 1 July 1998

8,340


6,845


4,463


4,463


12,803


11,308

Operating result

(3,049)


1,495




(3,049)


1,495

Capitalisation of assets

7,652





7,652


Net asset revaluation reserve



1,210



1,210


Carry forward appropriation

3,763





3,763



Balance 30 June 1999

16,706


8,340


5,673


4,463


22,379


12,803


Note 12B: Equity – Administered
Balance 1 July 1998

(92,453,310)


(127,687)


8,039,640


8,112,510


(84,413,670)


7,984,823

Net change in administered net assets

10,186,896


8,769,984




10,186,896


8,769,984

Net revaluation increase




229



229

Net decrease in investment




(73,099)



(73,099)

Change in accounting policy


(101,095,607)





(101,095,607)


Balance 30 June 1999

(82,266,414)


(92,453,310)


8,039,640


8,039,640


(74,226,774)


(84,413,670)


Note 13: Financial Assets




1998-99


1997-98


$’000


$’000


Note 13A: Cash
Cash at bank and on hand

547


36


Note 13B: Receivables
Trade debtors

1,007


1,414

Other debtors

3,802


3,856

Less: Provision for Doubtful Debts

(77)


(24)

Total receivables

4,732


5,246

Receivables (gross) are aged as follows:
Over due by:
Less than 30 days

4,614


4,911

30 to 60 days

84


133

More than 60 days

111


226


4,809


5,270

Note 13C: Investments
RAM Interest in the STOCP at cost


618

RAM Interest in ITBs


750



1,368

Note 13D: Administered Financial Assets Cash
Cash at bank

3,626


8,792

Cash in trust accounts

9,155


2,641


12,781


11,433

Note 13E: Administered Financial assets
Receivables due from other financial institutions
Swap principal

54,810


26,899

Swap interest

93,557


62,120

Total receivables

148,367


89,019

Maturity schedule for receivables due from
other financial institutions as at 30 June 1999 is as follows:
Payable:
Within one year

93,557


65,592

In one to two years


In two to five years

24,736


In more than five years

30,074


23,427


148,367


89,019


 

Note 13: Financial Assets (continued)



1998-99


1997-98


$’000


$’000

Note 13F: Administered Financial assets
Loans and advances
Loans to State and Territory governments

5,783,453


7,305,705

Less provision for doubtful debts


Total Loans and Advances

5,783,453


7,305,705

Maturity schedule for Loans to State and Territory governments as at 30 June 1999 is as follows:
Payable:
Within one year

708,966


125,910

In one to two years

564,926


731,613

In two to five years

710,756


974,304

In more than five years

3,798,805


5,473,878


5,783,453


7,305,705

Note 13G: Administered Financial assets
Other receivables
Appropriation Receivable

3,195,537


APRA Supervisory levies

11,106


Profit transfer/Dividends owing


2,726,000

IMF related moneys owing

10,647


7,411

Interest receivable

69,224


71,520

Other

711


1,136

Total Other receivables

3,287,225


2,806,067

Note 13H: Administered financial assets Investments
International financial institutions
Asian Development Bank

281,430


281,430

European Bank for Reconstruction and Development

51,486


51,486

International Finance Corporation

61,180


52,760

International Bank for Reconstruction and Development

265,082


265,082

Multilateral Investment Guarantee Agency

5,819



664,997


650,758

Quota
International Monetary Fund

6,562,044


5,053,498

Investment in Commonwealth entities
Reserve Bank of Australia

8,035,041


8,035,041

Australian Securities and Investments Commission

4,267


4,267

Companies and Securities Advisory Committee

332


332


8,039,640


8,039,640

Government securities
Internal Treasury Bills


12,880

Total investments

15,266,681


13,756,776


 

 

 

Note 14: Non-financial Assets



1998-99


1997-98


$’000


$’000

Note 14A: Infrastructure, plant and equipment
Computers, plant and equipment at valuation

7,458


6,284

Accumulated depreciation

(975)


(2,220)


6,483


4,064

Computers, plant and equipment at cost

3,124


6,842

Accumulated depreciation

(1,247)


(3,422)


1,877


3,420

Computers, plant and equipment under finance lease

2,177


35

Accumulated amortisation

(298)


(13)


1,879


22

Leasehold improvements at valuation


897

Accumulated amortisation


(732)



165

Leasehold improvements at cost

414


910

Accumulated amortisation

(77)


(496)


337


414

Total infrastructure, plant and equipment

10,576


8,085

Intangibles

8,135


787

Accumulated amortisation

(630)


(421)


7,505


366

Total infrastructure, Plant and Equipment and intangibles

18,081


8,451

 

 

Note 14: Non-financial Assets (continued)

Note 14B: Analysis of Infrastructure, Plant, Equipment and Intangibles

Table A: Movement summary 1998-99 for all assets irrespective of valuation basis


Item

Leasehold improvements


Computers, plant
& equipment


Intangibles


Total


$’000


$’000


$’000


$’000

Gross value as at 1 July 1998

1,807


13,159


787


15,753

Additions

221


3,779


7,510


11,510

Disposals

(1,614)


(1,134)


(132)


(2,880)

Revaluations


(3,045)


(30)


(3,075)

Gross value as at 30 June 1999

414


12,759


8,135


21,308

Accumulated
depreciation/amortisation
as at 1 July 1998

1,228


5,654


421


7,303

Depreciation/amortisation
charge for assets held
1 July 1998

346


1,337


59


1,742

Depreciation/amortisation
charge for additions


315


306


621

Adjustment for disposals

(1,497)


(642)


(133)


(2,272)

Revaluations


(4,144)


(23)


(4,167)

Accumulated
depreciation/amortisation
as at 30 June 1999

77


2,520


630


3,227

Net book value as at
30 June 1999

337


10,239


7,505


18,081

Net book value as at 1 July 1998

579


7,506


366


8,451

 

Table B: Summary of balances of assets at valuation as at 30 June 1999


Item

Infrastructure, plant & equipment


$’000

As at 30 June 1999
Gross value 7,458
Accumulated depreciation/amortisation (975)
Net book value 6,483
As at 30 June 1998
Gross value 7,181
Accumulated depreciation/amortisation (2,952)
Net book value 4,229

 

Note 14: Non-financial Assets (continued)

Note 14B: Analysis of Infrastructure, Plant, Equipment and Intangibles (continued)

Table C: Summary of balances of assets held under finance lease as at 30 June 1999


Item

Computer, Plant & Equipment


$’000

As at 30 June 1999
Gross value 2,177
Accumulated depreciation/amortisation (298)
Net book value 1,879
As at 30 June 1998
Gross value 35
Accumulated depreciation/amortisation (13)
Net book value 22

Note 14: Non-financial Assets (continued)



1998-99


1997-98


$’000


$’000

Note 14C: Inventories
All Departmental inventories are current assets.
Raw materials

7,031


3,559

Work in progress (cost)

1,281


165

Finished goods (cost)

4,881


2,238

Total inventories

13,193


5,962

Note 14D: Other
Coin collection

3,660


3,100

Prepayments

3,166


3,595

Total other

6,826


6,695

 

Note 15: Cash Flow Reconciliation



1998-99


1997-98


$’000


$’000

Note 15A: Departmental reconciliation
Reconciliation of net cost of services to net cash provided
by operating activities:
Net cost of services including business operations

(53,044)


(49,227)

Revenue from government (Appropriation Receipts)

50,799


50,250

Abnormal item – Company profits tax (Royal Australian Mint)

(598)


Resources received free of charge

293


534

Extraordinary item restructuring

(499)


(62)

Operating re
sult

(3,049)


1,495

Profit distribution

618


(618)

Depreciation/amortisation

2,407


2,143

Asset write-off (Olympic Coin project costs)

64


72

Transfer of inventory to coin collection

2


(4)

Loss of sale on disposal of infrastructure, plant and
equipment

556


Profit on sale of infrastructure, plant and equipment


(47)

Changes in assets and liabilities
Decrease in receivables

943


(1,332)

Increase in other assets

(131)


(2,273)

Increase in inventories

(7,231)


(1,389)

Increase in employee liabilities

666


(221)

Increase in suppliers

82


(1,588)

Increase in other liabilities

3,818


(32)

Increase in finance lease liability

1,479


(46)

Asset adjustments


(20)

Net cash provided by operating activities

224


(3,615)

 

Note 15: Cash Flow Reconciliation (continued)



1998-99


1997-98


$’000


$’000

Note 15B: Administered reconciliation
Reconciliation of net change in administered assets
to net cash provided by operating activities:
Net cost to government

(14,857,490)


(21,678,093)

Cash from the Commonwealth Public Account - gross

101,178,986


106,369,105

Special Appropriation Accrued

3,195,537


Cash to the Commonwealth Public Account - gross

(79,330,137)


(76,016,938)

Net revenue from extraordinary items


95,910

Net change in administered net assets

10,186,896


8,769,984

Cash from the Official Commonwealth Public Account

(74,512,272)


(74,527,726)

Cash to the Official Commonwealth Public Account

74,003,248


71,259,019

Transfer of funds from Consolidated Revenue to Trust Fund

(8,544,540)


(8,305,125)

Assumption of non cash assets of Housing Loans Insurance

Corporation



(38,686)

Assumption of liabilities of Housing Loans Insurance Corporation


204,449

Assumption of debt of Australian National Railways Commission

230,101


460,812

Waiver of debt - Victoria

180,411


Foreign exchange losses/(gains)

(586,197)


2,698,393

Amortisation of net premium on issue of debt

(281,139)


(246,267)

Premium on redemption of debt

508,127


1,302,973

Other


5,128

Change in assets and liabilities:
(Increase)/decrease in dividend and interest receivables

2,696,859


(724,379)

(Increase)/decrease in IMF remuneration receivables

(3,216)


(5,467)

(Increase)/decrease in premiums receivable

386


9,312

(Increase)/decrease in appropriations receivable

(3,195,537)


(Increase)/decrease in other financial assets

(11,040)


(Increase)/decrease in non-financial assets

9,631


7,173

Increase/(decrease) in insurance claims and unearned
premium provisions and payables

(62,279)


(33,532)

Increase/(decrease) in unclaimed moneys provisions and
payables

7,583


6,871

Increase/(decrease) in grant provisions and payables

(2,500)


(2,500)

Increase/(decrease) in interest provisions and payables

(307,587)


(743,464)

Increase/(decrease) in IMF provisions and payables

(2,263)


1,806

Net Cash from operating activities

314,672


98,774

 

Note 16: Administered Remote Contingencies

The following borrowings have been guaranteed by the Commonwealth in respect of authorities within the Treasury portfolio:


Borrower Legislation authorising
guarantee

Balance
outstanding


Balance
outstanding


1998-99


1997-98


$’000


$’000

Papua New Guinea PNG Act 1949-75 & PNG
Loans Guarantee Act 1975

5,775


5,775

Commonwealth Bank of Australia (a) CBA Act 1959 s117

94,124,900


99,745,900

Commonwealth Bank of Australia Officers’ of Superannuation Fund (a)
CBA Act 1959 s117

(d)


4,017,000

Commonwealth Development Bank (a) CBA Act 1959 s117

272,600


472,500

Reserve Bank of Australia (b) RBA Act s77

38,160,000


34,755,086

Housing Loans Insurance Corporation (c) HLIC Act 1965 s30, 31(b)


(a) In relation to the Commonwealth Bank of Australia, the Commonwealth Bank of Australia Officers’ of Superannuation Fund and the Commonwealth Development Bank, the Commonwealth guarantees all moneys that are, or may at any time become, payable to a person other than the Commonwealth. Such guarantee will be progressively phased out following the Government sell-down on 19 July 1996.

(b) In relation to the Reserve Bank of Australia, the Commonwealth guarantees all moneys that are, or may at any time become, payable to a person other than the Commonwealth.

(c) The HLIC was sold last year and residual contingencies have been assumed by the Commonwealth. The principal amount covered by the guarantee and the balances outstanding are unable to be reliably measured. The guarantee relates essentially to the Housing Loans Insurance Corporations (HLIC) contracts of mortgage insurance and any borrowings approved by the Treasurer up to 12 December 1997.

(d) At the finalisation of these statements this figure was unavailable.

 

Note 17: Receipts of the Consolidated Revenue Fund



1998-99
Budget
$


1998-99
Actual
$


1997-98
Actual
$

Receipts
Advances to the
Australian Capital Territory

Interest


3,321,000


3,320,582


3,320,582

Advances to the States under the
Housing Agreements

Interest
Principal


142,818,000
73,301,000


133,121,241
847,554,007


145,687,049
70,432,056

Advances to the
Northern Territory for Housing

Interest
Principal


1,591,000
392,000


1,591,175
391,747

1,608,044
374,878

Advances to the States under the
Housing Assistance Act 1973

Interest
Principal


200,000
100,000


188,201
1,038,161


203,438
96,022

Advances to the States under the
States (Works and Housing Assistance) Acts

Interest
Principal


93,627,000
17,849,000


88,184,418
430,364,355


94,395,361
17,080,548

Advances to the States under the
War Service Lands Settlements Acts Principal

764,000


763,663


736,060

Australian National Railways Commission

Debt repayment


58,000,000


230,103,846


460,812,450

Australian Prudential Regulation Authority
Supervisory levies

65,659,000


62,767,351

Banking Act 1959 — Unclaimed moneys

15,000,000


31,029,923


16,803,384

Bank dividends

2,600,000,000


2,725,982,788


1,700,000,000

Borrowing levy and guarantee
charge on borrowings by
Commonwealth Government Enterprises



5,256,153

Fiscal contributions by State Government


199,583,520


406,592,890

Housing Loans Insurance Corporation —
Dividend and special annual payment

Payment of reserves to the
Consolidated Revenue Fund

Payment of balance liquidation
account to CRF
Premiums from old book stock
Recoveries from old book stock






3,000,000





5,885,935
1,048,998
2,243,987


6,728,000

251,672,927



8,561,778
1,737,339

Interest paid by States and the
Northern Territory on other loans

316,958,000


173,902,925


566,898,890

Interests on Financial Assets
Remuneration

214,000,000
23,089,000



52,817,681



2,915,156

 

Note 17: Receipts of the Consolidated Revenue Fund (continued)



1998-99
Budget
$


1998-99
Actual
$


1997-98
Actual
$

Loan management expenses —
recoveries from the States
and the Northern Territory

 

75,000


 

44,289


 

81,570

Loans Securities Amendment Act 1988 —
receipts from swap counterparties

5,550,000,000


5,035,530,178


3,277,578,379

Loan to Papua New Guinea

Interest

Principal




3,578,426

69,400,000

Loan to Brazil — Principal


161,621,012


Regulation of companies and securities

326,863,000


331,778,258


326,015,066

Royal Australian Mint and Coinage Trust
Account — moneys in excess of
requirements

 

65,600,000


 

63,300,000


 

49,000,000

Seigniorage payments Gold Corporation

750,000


680,800


818,806

Miscellaneous


80,563


125,827

Section 31 of the Financial Management and
Accountability Act 1997
— to be credited to
Running Costs — Division 670

 

991,000


 

653,045


 

928,913

Total receipts

9,573,948,000


10,585,572,647


7,489,439,992

 

 

Note 18: Expenditure from Special Appropriations



1998-99
Budget
$


1998-99
Actual
$


1997-98
Actual
$

Expenditure from Special Appropriations:
Airports (Transitional) Act 1996 — former
debts of the Federal Airports Corporation
— Interest

 

51,900,000


 

52,457,364


 

51,133,618

Commonwealth Inscribed Stock Act 1911,
Loans Securities Act 1919, Loans Redemption & Conversion Act 1921

 

8,243,025,000


 

7,806,844,638


 

15,141,784,855

Loans Securities Amendment Act 1988
payments to swap counterparties

7,398,000,000


5,413,262,843


3,118,861,511

Financial Agreement Act 1994
Assistance for Debt Redemption

28,100,000


81,692,916


62,265,944

Loans Redemption and
Conversion Act 1921

5,000



Moomba — Sydney Pipeline
System Sale Act 1994

19,070,000


19,061,690


18,936,779

Financial Agreement Act 1994 —
Commonwealth contribution to Debt
Retirement Reserve Trust Account on
State and Northern Territory Debt

8,270,000


5,182,953


10,395,310

Interest on Debt Retirement
Reserve Trust Account Balances

829,000


386,014


269,233

Payment of Tax Receipt (Victoria) Act 1996



States Grants (General Purposes)
Act 1993 and 1994

23,237,843,000


23,702,792,607


21,783,582,539

Asian Development Bank
(Additional Subscription) Act 1995

2,352,000


2,686,812


2,424,381

Banking Act 1959

15,000,000


10,569,949


10,006,817

Commonwealth Inscribed Stock Act 1911,
Treasury Bills Act 1914
— Payment of
Special Bond premiums on redemption

5,000


71


149

Life Insurance Act 1995

1,200,000


2,700,000


International Monetary
Agreements Act 1947

522,695,000


1,264,716,623


726,603,211

Multilateral Investment
Guarantee Agency Act 1996


2,909,680


Qantas Sale Act 1992 — Qantas
Debt S
ervicing

336,984,000


352,234,973


70,188,194

Total expenditure from special
appropriations

39,865,278,000


38,717,499,133


40,996,452,541

Note 19: Expenditure from Annual Appropriations




1998-99
Budget
Estimates


1998-99
Additional Appropriations


1998-99
Advance to the Minister for Finance


1998-99
Total Appropriations


1998-99
Actual Expenditure


1997-98
Actual Expenditure

Ordinary Annual Services of Government Appropriation Act

Act No 1
$


Act No 3
$


$


$


$


$


Division 670 – Administrative
1 Running Costs

52,921,045


2,362,000



55,283,045


54,944,631


50,555,856

2 Other Services

01. Compensation and legal expenses


943,000




943,000


350,065


112,748

02. Loan management expenses

3,153,000




3,153,000


2,739,558


2,581,443

03. Overseas bond issues – Payments in respect of lapsed coupons

10,000




10,000



6,583

04. Australian National Railways Commission – Debt acquisition

118,100,000


247,500,000



365,600,000


284,332,939


923,812,450

05. Proposed new Housing Loans Insurance Company – Payments in respect of insurance claims

26,000,000



1,468,233


27,468,233


27,468,232


18,408,127

06. International Finance Corporation – Capital subscription

7,350,000


1,071,000



8,421,000


8,420,622


6,892,163

07. International Bank for Reconstruction and Development – Capital subscription

4,427,000


824,000



5,251,000


5,174,734


4,303,056

08. Contributions to the International Monetary Fund - Enhanced Structural Adjustment Facility

2,500,000




2,500,000


2,500,000


2,500,000

09. Ex-Gratia payment to approved charitable organisations or trust funds in memory of the Princess of Wales

793,000




793,000


793,000



Note: Budget estimates include section 31 deemed appropriation.

 

Note 19: Expenditure from Annual Appropriations (continued)




1998-99
Budget
Estimates


1998-99
Additional Appropriations


1998-99
Advance to the Minister for Finance


1998-99
Total Appropriations


1998-99
Actual Expenditure


1997-98
Actual Expenditure

Ordinary Annual Services of Government Appropriation Act

Act No 1
$


Act No 3
$


$


$


$


$


Division 673 – Australian Securities and Investments Commission
01. For expenditure under the Australian
Securities and Investments Commission Act 1989

134,830,000




134,830,000


134,830,000


119,433,000

Division 674 – Companies and Securities Advisory Committee
01. For expenditure under Part 9 of the Australian Securities and Investments Commission Act 1989

816,000




816,000


816,000


811,000

Division 677 – Australian Prudential Regulation Authority
1 Running Costs

61,264,000




61,264,000


61,264,000


41,824,000

2 Other Services
01. Compensation and legal expenses

319,000




319,000


319,000


333,000


Total – Appropriations Acts No 1 and 3

359,562,000


249,395,000


1,468,233


610,425,233


528,658,085


1,120,904,822


 

Note 19: Expenditure from Annual Appropriations (continued)




1998-99
Budget
Estimates


1998-99
Additional Appropriations


1998-99
Advance to the Minister for Finance


1998-99
Total Appropriations


1998-99
Actual Expenditure


1997-98
Actual Expenditure

Ordinary Annual Services of Government Appropriation Act

Act No 1
$


Act No 3
$


$


$


$


$


Division 976 – Capital Works and Services
1 Australian Securities and Investments Commission
For expenditure under the Australian Securities and Investments Commission Act 1989






5,778,000

Division 977 – Payments to or for the States, the Northern Territory and the Australian Capital Territory
01. Australian Capital Territory – Special revenue assistance

25,000,000




25,000,000


25,000,000


34,500,000

02. Companies and securities regulation – Compensation for loss of revenue

134,805,000




134,805,000


133,478,817


132,550,960

04. Payments to State Governments in lieu of stamp duty on airport sales






94,400,000

Division 978 – Other Services
01. Community education and information program on the tax system

19,443,000



19,443,000


12,801,286


57,194


Total – Appropriations Acts No 2 and 4

159,805,000


19,443,000



179,248,000


171,280,103


267,286,154


Note 20: Reconciliation of Agency Running Costs



1998-99


1997-98


Actual


Actual


$


$

Running cost appropriation spent (Div 670-1)

54,944,631


50,555,856

Less: appropriation under the FMA Act section 31

(653,044)


(928,913)


54,291,587


49,626,943

Add carryover 30 June


3,843,057

Less carryover 1 July

(3,843,057)


3,333,170


(3,843,057)


509,887

Revenue from Government (per operating statement)

50,448,530


50,136,830

Note 21: Receipts and Expenditure of the Commercial Activities, Reserved Money Fund and Special Public Money

Loan Fund

 


1998-99


1997-98


Actual


Actual


$


$

Receipts and Payments of Loan Fund
Receipts
Treasury Bonds

3,896,387,000


4,503,634,000

Treasury Notes

45,064,391,363


50,631,650,942

Treasury Bills – Internal

18,935,000,000


11,895,600,000

Treasury Indexed Bonds

550,300,000


695,727,157

Treasury (Adjustable Rate) Bonds


Premiums on issue of Commonwealth Securities

299,139,229


801,815,117

Total Loan Fund Receipts

68,745,217,592


68,528,427,216

Expenditure
Financial Agreement Act 1928, 1929,1944, 1966 and 1976
Loan Flotation Expenses

120,974


121,046

Loans Redemption and Conversion Act 1921
Treasury Notes

48,282,258,502


53,540,947,994

Australian Savings Bonds

378,300


342,400

Special Bonds

2,360


3,670

Treasury (Adjustable Rate) Bonds

120,782,630


3,697,602,779

Foreign currency redemptions

212,151,916


230,619,753

Other

28


318

Treasury Bonds

7,596,839,204


4,768,015,625

Treasury Bills Internal

11,895,600,000


1,463,000,000

Premiums on redemptions Treasury Bonds

324,419,659


301,785,571

Premiums on redemptions Treasury (adjustable rate) Bonds

80,015,508


23,434,902

Discount on redemptions Foreign currency

931,576


744,414

Total redemptions

68,513,379,683


64,026,497,424

Total loan fund expenditure

68,513,500,657


64,026,618,470

 

 

Note 21: Receipts and Expenditure of the Commercial Activities, Reserved Money Fund and Special Public Money (continued)

Other Trust Moneys

  • Legal Authority - Financial Management and Accountability Act 1997, section 20.
  • Purpose for the receipt of moneys temporarily held in trust for other persons.

1998-99


1998-99


1997-98


Budget


Actual


Actual


$


$


$

Balance at beginning of reporting period

13,000


13,000


13,000

Receipts

2,000



Expenditure

2,000



Balance at end of reporting period

13,000


13,000


13,000

Investment Transactions Account




1998-99


1997-98


Actual


Actual


$


$


Investment balance at beginning of reporting period

10,000


Purchase of investments


10,000

Realisation of investments

10,000



Invested balance at end of reporting period


10,000


Cash balance at end of reporting period

13,000


3,000


 

Note 21: Receipts and Expenditure of the Commercial Activities, Reserved Money Fund and Special Public Money (continued)

Services for other government and non-departmental bodies

  • Legal Authority Financial Management and Accountability Act 1997, section 20.
    • Purpose for the payment of moneys in connection with services performed on behalf of other governments and non-departmental bodies.



    1998-99


    1998-99


    1997-98


    Budget


    Actual


    Actual


    $


    $


    $

    Balance at beginning of reporting period

    19,463


    19,463


    13,301

    Receipts

    402,000


    514,041


    333,550

    Expenditure

    402,000


    448,181


    327,388

    Balance at end of reporting period

    19,463


    85,323


    19,463

    Investment Transactions Account



    1998-99


    1997-98


    Actual


    Actual


    $


    $

    Investment balance at beginning of reporting period

    10,000


    Purchase of investments


    10,000

    Realisation of investments

    10,000


    Invested balance at end of reporting period


    10,000

    Cash balance at end of reporting period

    85,323


    9,463

     

     

    Note 21: Receipts and Expenditure of the Commercial Activities, Reserved Money Fund and Special Public Money (continued)

    Lloyds Deposit Trust Fund

    • Legal Authority Insurance Laws Amendment Act 1998, Schedule 2.
      • Purpose to meet the cost of judicial management and wind-up in the event the company ceases to trade.



      1998-99


      1998-99


      1997-98


      Budget


      Actual


      Actual


      $


      $


      $

      Balance at beginning of reporting period

      564,000


      564,000


      564,000

      Receipts


      3,330


      Expenditure



      Balance at end of reporting period

      564,000


      567,330


      564,000

      Investment Transactions Account




      1998-99


      1997-98


      Actual


      Actual


      $


      $

      Investment balance at beginning of reporting period

      564,000


      564,000

      Purchase of investments

      567,330


      Realisation of investments

      564,000


      Invested balance at end of reporting period

      567,330


      564,000

      Cash balance at end of reporting period

      Investments

      The balance of investments at 30 June 1999 includes the following investments held in the corporate name of the Treasurer of the Commonwealth pursuant to subsection 93(1) of the Insurance Act 1973 on behalf of the Trust.


      Rate of Interest

      %


      Date of Maturity


      Face Value of Investment

      $


      Cost of Investment

      $

      9.5

      31 March 2002


      500,000


      567,330

       

      Note 21: Receipts and Expenditure of the Commercial Activities, Reserved Money Fund and Special Public Money (continued)

      Services for other government and non-departmental bodies
      Australian Securities and Investments Commission

      • Legal Authority Financial Management and Accountability Act 1997, section 60.
        • Purpose for the payment of moneys in connection with services performed on behalf of the Australian Securities and Investments Commission.



        1998-99


        1998-99


        1997-98


        Budget


        Actual


        Actual


        $


        $


        $

        Balance at beginning of reporting period

        668,595


        668,595


        157,702

        Receipts

        69,300,000


        66,224,203


        64,124,315

        Expenditure

        69,300,000


        66,129,648


        63,613,422

        Balance at end of reporting period

        668,595


        763,150


        668,595

        Investment Transactions Account



        1998-99


        1997-98


        Actual


        Actual


        $


        $

        Investment balance at beginning of reporting period

        660,000


        Purchase of investments


        660,000

        Realisation of investments

        660,000


        Invested balance at end of reporting period


        660,000

        Cash balance at end of reporting period

        763,150


        8,595

         

         

        Note 21: Receipts and Expenditure of the Commercial Activities, Reserved Money Fund and Special Public Money (continued)

        Revenue Replacement Payments

        • Legal Authority States Grants (General Purposes) Act 1994, Schedule 5.
          • Purpose for the payment of moneys to the States and Territories in connection with constitutionally invalid business franchise fees.



          1998-99


          1998-99


          1997-98


          Budget


          Actual


          Actual


          $


          $


          $

          Receipts from CRF

          6,480,002,000


          6,751,952,078


          5,217,767,098

          Payments to States and Territories

          6,480,002,000


          6,751,952,078


          5,217,767,098

          Balance at end of reporting period



          Accrued Liability due to adjustments


          27,101,556


           

          Note 21: Receipts and Expenditure of the Commercial Activities, Reserved Money Fund and Special Public Money (continued)

          Trustee Companies (ACT) Deposits Trust Fund

          • Legal Authority Financial Management and Accountability Act 1997, section 20.
          • Purpose for the purpose of the Australian Capital Territory Ordinance in relation to Trustee Companies.


          • 1998-99


            1998-99


            1997-98


            Budget


            Actual


            Actual


            $


            $


            $

            Balance at beginning of reporting period

            123,791


            123,791


            121,213

            Receipts


            572


            32,993

            Expenditure



            30,415

            Balance at end of reporting period

            123,791


            124,363


            123,791

            Investment Transactions Account



            1998-99


            1998-99


            1997-98


            Budget


            Actual


            Actual


            $


            $


            $

            Invested Balance at beginning of
            Reporting period

            123,591


            123,591


            121,013

            Purchase of investment


            21,124


            32,993

            Realisation of investment


            20,352


            30,415

            Invested balance at end of
            reporting period

            123,591


            124,363


            123,591

            Cash balance at end of
            reporting period

            200



            200

            Investments

            The balance of investments at 30 June 1999 includes the following investments held in the corporate name of the Treasurer of the Commonwealth pursuant to subsection 10 (1) of the Trustee Companies Ordinance 1947 on behalf of the Trust.



            Rate of Interest


            Date of Maturity


            Face Value of Investment


            Cost of Investment


            %


            $


            $

            7.0 April 2000

            20,000


            21,124

            7.0 April 2000

            20,000


            19,999

            10.0 October 2002

            20,000


            20,599

            9.5 August 2003

            10,000


            12,119

            7.5 July 2005

            30,000


            30,313

            7.5 July 2005

            20,000


            20,209


            Total


            120,000


            124,363

            Note 21: Receipts and Expenditure of the Commercial Activities, Reserved Money Fund and Special Public Money (continued)

            Royal Australian Mint and Coinage Trust Account

            • Legal Authority Financial Management and Accountability Act 1997, section 21.
            • Purpose (a) payment for goods and services and salaries, wages and other expenses incurred for the production, supply, sale and distribution of coinage, medals, dies, plaques and other like items, and for any other activity entered into by the Royal Australian Mint as approved by the Treasurer, and (b) repayment of capital funds and payment of moneys in excess of requirements to the Consolidated Revenue Fund.


            • 1998-99


              1998-99


              1997-98


              Budget


              Actual


              Actual


              $


              $


              $

              Balance at beginning of reporting period

              759,241


              759,241


              6,028,893

              Receipts

              79,000,000


              78,379,679


              58,984,306

              Expenses

              79,000,000


              78,637,934


              64,253,958

              Balance at end of reporting period

              759,241


              500,986


              759,241

              Investment Transactions Account



              1998-99


              1997-98


              Actual


              Actual


              $


              $

              Investment balance at beginning of reporting period

              750,000


              Purchase of investments


              750,000

              Realisation of investments

              750,000


              Invested balance at end of reporting period


              750,000

              Cash balance at end of reporting period

              500,986


              9,241

               

               

              Note 21: Receipts and Expenditure of the Commercial Activities, Reserved Money Fund and Special Public Money (continued)

              Debt Retirement Reserve Trust Account

              • Legal Authority Financial Management and Accountability Act 1997, section 20.
              • Purpose for the payment and receipt of moneys in accordance with the Financial Agreement Act 1994.


              • 1998-99


                1998-99


                1997-98


                Budget


                Actual


                Actual


                $


                $


                $

                Balance at beginning of reporting period

                12,880,608


                12,880,608


                5,210,334

                Receipts

                76,112,000


                61,565,464


                2,045,394,033

                Expenses

                67,724,000


                67,314,152


                2,037,723,759

                Balance at end of reporting period

                21,268,608


                7,131,920


                12,880,608

                Investment Transactions Account



                1998-99


                1997-98


                Actual


                Actual


                $


                $

                Investment balance at beginning of reporting period

                12,880,000


                Purchase of investments


                12,880,000

                Realisation of investments

                12,880,000


                Invested balance at end of reporting period


                12,880,000

                Cash balance at end of reporting period

                7,131,920


                608

                 

                 

                Note 21: Receipts and Expenditure of the Commercial Activities, Reserved Money Fund and Special Public Money (continued)

                Loan Consolidation and Investment Reserve Trust Account

                • Legal Authority Loan Consolidation and Investment Reserve Act 1955.
                • Purpose for repurchasing or redeeming securities which represent a portion of the public debt of the Commonwealth.


                • 1998-99


                  1998-99


                  1997-98


                  Budget


                  Actual


                  Actual


                  $


                  $


                  $

                  Balance at beginning of reporting period

                  12,221,183,774


                  12,221,183,774


                  3,827,132,114

                  Receipts

                  372,200,000


                  8,869,739,812


                  8,398,067,144

                  Expenses


                  5,111,041


                  4,015,484

                  Balance at end of reporting period

                  12,593,383,774


                  21,085,812,545


                  12,221,183,774

                  Investment Transactions Account



                  1998-99


                  1997-98


                  Actual


                  Actual


                  $


                  $

                  Invested balance at beginning of reporting period

                  12,218,735,086


                  1,527,178,532

                  Purchase of investment

                  17,402,897,030


                  12,172,495,623

                  Realisation of investment

                  8,537,842,808


                  1,480,939,069

                  Invested balance at end of reporting period

                  21,083,789,308


                  12,218,735,086

                  Cash balance at end of reporting period

                  2,023,236


                  2,448,688

                   

                   

                  Note 21: Receipts and Expenditure of the Commercial Activities, Reserved Money Fund and Special Public Money (continued)

                  Investments

                  The balance of investments at 30 June 1999 includes the following investments in Commonwealth Government Inscribed Stock held in the corporate name of the Treasurer of the Commonwealth pursuant to sub section 6(3) of the Loan Consolidation and Investment Reserve Act 1955.



                  Rate of
                  Interest


                  Date of
                  Maturity


                  Face Value of
                  Investment


                  Cost of
                  Investment


                  %


                  $


                  $

                  Treasury Fixed
                  Coupon Bonds
                  13.00 15 Feb 00

                  123,685,000


                  143,480,802

                  13.00 15 May 00

                  69,261,148


                  80,611,986

                  7.00 15 Feb 01

                  42,556,200


                  44,083,823

                  10.00 15 Oct 02

                  885,000,000


                  1,041,068,327

                  5.25 15 July 03

                  27,123,600


                  25,421,909

                  6.50 15 July 03

                  1,563,700


                  1,611,300

                  5.40 15 May 04

                  10,500


                  8,478

                  9.00 15 Sept 04

                  760,000,000


                  889,372,140

                  6.00 15 July 05

                  9,528,000


                  9,572,822

                  7.00 15 July 05

                  2,000


                  1,927

                  10.00 15 Feb 06

                  2,057,890,000


                  2,625,446,077


                  3,976,620,148


                  4,860,649,591

                  Internal Treasury Bills
                  1.00 30 Jun 2000

                  16,205,000,000


                  16,205,000,000

                  Total Australian Dollar
                  Denominated Securities

                  20,181,620,148


                  21,065,649,591

                  Dutch Guilder Loans(a)
                  8.25 1 Nov 1999

                  11,126,841


                  10,079,810

                  7.25 1 Jan 2001

                  9,857,722


                  8,059,907

                  Total Foreign
                  Currency Denominated
                  Securities

                  20,984,563


                  18,139,716

                  Total investments

                  20,202,604,711


                  21,083,789,308

                  (a) Converted at $A=NLG 1.4057

                   

                  Note 22: Appropriation for Future Reporting Periods

                  The following table summarises appropriations for the 1999-00 financial year at 30 June 1999:



                  1999-2000


                  1998-99


                  $


                  $

                  Special Appropriations

                  26,713,062,000


                  38,717,499,133

                  Appropriation Act No 1 Note (a)

                  99,678,000


                  528,658,085

                  Appropriation Act No 2 Note (a)

                  238,012,000


                  171,280,103


                  27,050,752,000


                  39,417,437,321

                  Note (a): Appropriations for 1998-99 include Appropriations Acts No. 3 & 4.

                  Note 23: Related Party transactions

                  The related party transactions with STOCP are as follows:



                  1998-99


                  1997-98


                  $’000


                  $’000

                  Sale of goods and services
                  coin sales

                  2,670


                  2,080

                  Other income
                  profit share

                  1,183


                  618

                  administration fee

                  357


                  357

                  Expenditure paid on behalf of the STOCP
                  that has been or is to be reimbursed

                  370


                  1,297

                  Receivables
                  coin sales

                  177


                  196

                  administration fee

                  89


                  89

                  reimbursable expenditure

                  149


                  266

                  Note 24: Payments to the Commonwealth from Business Operations



                  1998-99


                  1997-98


                  $’000


                  $’000

                  Seigniorage

                  63,980


                  47,434

                  Royalty on Numismatic Coin Sales

                  801


                  756

                  STOCP royalty to Treasury

                  1,850


                  763

                  Loss from withdrawn circulating coin

                  (780)


                  (458)

                  Trust Fund surplus

                  (3,503)


                  321

                  Prior year adjustment to seigniorage

                  952


                  184

                  Actual surplus funds paid to the Commonwealth

                  63,300


                  49,000

                   

                  Note 25: Executive Remuneration

                  The number of executive officers that received or were due to receive total remuneration of $100,000 or more:




                  1998-99


                  1997-98


                  Number


                  Number


                  $100,000 to $110,000

                  4


                  15

                  $110,001 to $120,000

                  5


                  14

                  $120,001 to $130,000

                  15


                  4

                  $130,001 to $140,000

                  3


                  2

                  $140,001 to $150,000

                  3


                  3

                  $150,001 to $160,000


                  1

                  $160,001 to $170,000

                  2


                  $170,001 to $180,000

                  2


                  $180,001 to $190,000

                  1


                  $230,001 to $240,000


                  1

                  $240,001 to $250,000


                  $260,001 to $270,000


                  1

                  $280,001 to $290,000

                  1




                  36


                  41

                  The aggregate amount of total remuneration of
                  executive officers shown above

                  $4,831,318


                  $5,086,764

                  The aggregate amount of performance pay paid
                  during the year to executive officers shown above


                  The aggregate amount of separation and redundancy
                  payments to the executive officers shown above


                  $82,120


                  The definition of executive officer in the FMO effectively requires the number of qualifying positions to be reported, rather than individuals (ie individuals were not necessarily remunerated at the levels shown). This means that the remuneration for each position will reflect that of the substantive occupant and any officers who acted in the position.

                  Total remuneration includes actual salary, higher duties allowance, part day travelling allowance, employer superannuation component, separation and redundancy payments and an estimate of the non-salary component of the SES package.

                  In light of changes to SES salary arrangements resulting from the Treasury Certified Agreement, it was decided that no payment of performance based pay would be made for the cycle payable in 1998-99.

                   

                  Note 26: Services Provided by the Auditor-General

                  Financial statement audit services are provided free of charge to the Department. The trust account business, Royal Australian Mint, is required to remit an amount equivalent to the cost of its audit into the Consolidated Revenue Fund. The fair value of audit services provided was:



                  1998-99


                  1997-98


                  $


                  $

                  Royal Australian Mint

                  60,000


                  70,000

                  Treasury

                  215,000


                  200,000


                  275,000


                  270,000

                  No other services were provided by the Auditor-General.

                  Note 27: Act of Grace Payments, Waivers and Amounts Written Off




                  1998-99


                  1997-98


                  $


                  $


                  Agency

                  No Act of Grace payments were made during the reporting period

                  No waivers of amounts owing to the Commonwealth were made pursuant to subsection 34(1) of the Financial Management and Accountability Act 1997
                  Amounts written off in accordance with subsection 47 (1) of the Financial Management and Accountability Act 1997
                  Theft of cash advance for travel


                  4,279




                  1998-99


                  1997-98


                  $


                  $


                  Administered
                  Waivers
                  Waivers of amounts owing to the Commonwealth were made pursuant to subsection 70C(2) of the Audit Act 1901. These were amounts payable by South Australia in relation to Commonwealth advances under the States (Works and Housing) Assistance Acts and Commonwealth-State Housing Agreements.


                  328,938,649

                  Waivers of amounts owing to the Commonwealth were made pursuant to subsection 70C(2) of the Audit Act 1901. These were amounts payable by Victoria in relation to Commonwealth advances under the States (Works and Housing) Assistance Acts and Commonwealth-State Housing Agreements.

                  180,411,000



                   

                  Note 28: Average Staffing Levels

                  Average staffing levels by program and in total were as follows



                  1998-99


                  1997-98


                  Number


                  Number

                  Program 1: Treasury

                  498


                  480

                  Program 2: Royal Australian Mint

                  121


                  127

                  Total

                  619


                  607

                  Note 29: Financial Instruments Departmental


                  Financial Instruments

                  Notes

                  Accounting Policies and Methods
                  (including recognition criteria and measurement basis)
                  Nature of underlying instruments
                  (including significant terms and conditions affecting
                  the amount, timing and certainty of cash flows)
                  Financial Assets Financial assets are recognised when control over future economic benefits is established and the amount of the benefit can be reliably measured.
                  Cash at bank Deposits are recognised at their nominal amounts. Cash is received during day-to-day operations by the Collector of Public Money. The Department of Treasury maintains a bank account with the Reserve Bank of Australia for the administration of petty cash and for the receipt and payment of moneys. The Royal Australian Mint maintains its own commercial accounts for the conduct of its business operations.
                  Receivables for goods and services These receivables are recognised at the nominal amounts due less any provision for bad and doubtful debts. Collectability of debts is reviewed at balance date. Provisions are made when collection of the debt is judged to be less rather than more likely. Credit sales are normally on 30 day terms.
                  Investments The Royal Australian Mint and the Perth Mint have formed a partnership to market and distribute Sydney 2000 Olympic Coins. The Royal Australian Mints 50 per cent interest in the STOCP is carried at the recoverable amount. The terms of the partnership are that any annual surplus will be retained in the partnership unless unanimously agreed by the partners.
                  Financial Liabilities Financial liabilities are recognised when a present obligation to another party is entered into and the amount of the liability can be reliably measured.
                  Trade creditors and accruals

                  (a)

                  Creditors and accruals are recognised at their nominal amounts, being the amounts at which the liabilities will be settled. Liabilities are recognised to the extent that the goods or services have been received (and irrespective of having been invoiced). Trade liabilities are normally settled on 30 day terms.
                  Finance lease liabilities Liabilities are recognised at the present value of minimum lease payments at the beginning of the lease. The discount rates used are estimates of the interest rates implicit in the leases. 1998-99 is the final year of the lease and covers the lease of three photocopiers.

                  (a) Credit Risk: The maximum exposure to credit risk at the reporting date in relation to each class of recognised financial asset is the carrying amount of those assets as indicated in the balance sheet. The Department does not have any significant exposures to any concentrations of credit risk. The maximum value of credit risk exposure does not take into account the value of any collateral or other security.

                   

                  Note 30: Financial Instruments Administered

                  Note 30A: Terms, Conditions and Accounting Policies


                  Financial Instruments

                  Notes

                  Accounting Policies and Methods Nature of underlying instruments
                  Financial Assets Financial assets are recognised when control over future economic benefits is established and the amount of the benefit can be reliably measured.
                  Cash at bank Deposits are recognised at their nominal amounts. The Department maintains two bank accounts with a commercial bank for the purposes of administering mortgage insurance policies written by the Housing Loans Insurance Corporation (HLIC) up to 12 December 1997 and a bank account for administering the wrap-up of the final accounts and other minor details up to the point of sale of the HLIC.
                  Cash in trust accounts Deposits are recognised at their nominal amounts. The Department maintains two trust accounts within the Commonwealth Public Account. The Debt Retirement Reserve Trust Account (DRRTA) is held for the purposes of payment and receipt of moneys in relation to the redemption of Commonwealth Government Securities (CGS) on issue for the States and Territories. Interest earned is based on the RBA's Target Cash Rate and is paid monthly in arrears. Moneys are also held in the Loan Consolidation and Investment Reserve (LCIR) for the purpose of repurchase and redemption of CGS on behalf of the Commonwealth. Interest earned on the LCIRs cash balances is included in the interest paid by the RBA to the Commonwealth on its overall cash balances.
                  Interest and dividends receivable Interest is credited to revenue as it accrues. Dividends from the Reserve Bank of Australia are recognised when determination is made by the Treasurer. Interest is receivable on Commonwealth Government Securities, Swaps and other loans. The basis of payment of dividends is a memorandum of understanding with the Treasurer.

                   

                  Note 30A: Terms, Conditions and Accounting Policies (continued)


                  Financial Instruments

                  Notes

                  Accounting Policies and Methods Nature of underlying instruments
                  International Monetary Fund moneys owing Amounts owing from the International Monetary Fund are credited to revenue as they accrue. Where the IMFs holdings of Australian dollars fall below a specified level, it pays remuneration on Australias average remunerated reserve tranche position. The rate of remuneration is equal to the Special Drawing Rights (SDR) interest rate (this rate is then adjusted for burden sharing). Remuneration is calculated and paid at the end of the IMFs financial quarters.
                  Loans to State and Territory governments Loans are recognised at the amounts lent. Interest is credited to revenue as it accrues. In relation to non Commonwealth Government Securities collectability of amounts outstanding is reviewed at balance date. Provision is made for bad and doubtful loans where collection of the loan or part thereof is judged to be less rather than more likely. In rare circumstances, loan repayments may be waived. Until July 1990, the Commonwealth borrowed on behalf of the State and Territory Governments and allocated a portion of the proceeds of its Treasury Fixed Coupon Bond raisings to t
                  hose Governments to fund the redemption of previous allocations of Commonwealth Government Securities (CGS). The States and Territories are responsible for meeting all obligations as to interest and principal on the CGS on allocation to them in accordance with the provisions of the Financial Agreement Act 1994. In addition to the CGS, there are outstanding balances of loans raised specifically for the States. State and Territory Government loans include advances, not evidenced by the issue of securities, made for housing and specific purpose capital payments.

                   

                   

                  Note 30A: Terms, Conditions and Accounting Policies (continued)


                  Financial Instruments

                  Notes

                  Accounting Policies and Methods Nature of underlying instruments
                  Swaps

                  (b)

                  Swap principal associated with cross-currency swaps is recognised on a net basis using the cost method. Interest revenue and expense is recognised in the accounts as it accrues. The notional principal associated with interest rate swaps is not recognised as assets or liabilities. The Treasury undertakes derivative transactions on behalf of the Commonwealth to assist with the management of market risk associated with the Commonwealth debt portfolio. The two main sources of market risk in respect of the Commonwealth debt portfolio are interest rate risk and exchange rate risk. The Treasury manages this market risk by managing the Commonwealth debt portfolio to a benchmark which reflects a portfolio composition that, ex ante, can be expected to minimise the cost of Commonwealth debt over the long term, subject to an acceptable degree of volatility in annual debt service costs. Derivative transactions offer a cost-effective means of managing the Commonwealth debt portfolio more closely in line with the benchmark than would otherwise be possible. Derivative transactions are currently limited to interest rate swaps and cross-currency swaps.
                  Investments Quota-International Monetary Fund The investment is recognised as a monetary asset. It is denominated in Special Drawing Rights and is valued at the Australian dollar equivalent. Dividend income is not earned from this investment. The Quota represents Australias membership subscription to the International Monetary Fund (IMF). Each member is required to pay to the IMF the amount of its initial quota and subsequent increases partly in the members own currency and the remainder in the form of reserve assets. A members quota is not increased until the member has consented to the increase.
                  Investments International financial institutions These investments are classified as non-monetary assets and recognised as at historical cost. Dividend income is not earned from these investments. These investments represent Australias membership shareholding in the Asian Development Bank, the International Bank for Reconstruction and Development, the International Finance Corporation and the European Bank for Reconstruction and Development.

                  NOTES

                  b) Interest Rate Risk: The net fair values of cash and non-interest bearing monetary financial assets approximates their carrying value.

                   

                  Note 30A: Terms, Conditions and Accounting Policies (continued)


                  Financial Instruments

                  Notes

                  Accounting Policies and Methods Nature of underlying instruments
                  Financial Liabilities Financial liabilities are recognised when a present obligation to another party is entered into and the amount of the liability can be reliably measured.
                  Grant liabilities Grants are recognised as liabilities and expensed in the year in which the grant agreements are made. This represents Australias contribution to the Enhanced Structural Adjustment Facility (ESAF) of the IMF. The ESAF will enable the IMF to provide concessional funding to support medium term macroeconomic adjustment and structural reforms in low income members of the IMF facing protracted balance of payment problems. The ESAF will assist Australia to promote its international economic and aid interests with developing countries in the Asian region. Australias contribution involves $30 million to be paid in annual instalments of $2.5 million over a 12 year period.
                  Interest payable Interest expense is recognised as it accrues. Interest is payable on Commonwealth Government Securities, swaps and other loans.
                  International Monetary Fund (IMF) Special Drawing Right (SDR) allocation liability This liability is recognised as a monetary liability. It is valued at the Australian dollar equivalent of its liability in Special Drawing Rights. Interest expense is recognised as it accrues. The SDR allocation liability reflects the current value in Aust
                  ralian dollars of the Department
                  s liability to repay to the IMF Australias cumulative allocations of SDRs. Interest is payable to the IMF in relation to the amount of SDR holdings that are below Australias net cumulative allocations.
                  Provision for unclaimed moneys repayments A provision is recognised at a nominal value representing the expected recovery of these moneys less refunds already made, based on an analysis of historical transactions. This comprises moneys which have been paid to the Commonwealth Government as unclaimed moneys in accordance with Section 69 of the Banking Act 1959. These moneys may be claimed by depositors or their legal representatives by applying to the bank concerned. Interest is not paid by the Commonwealth in relation to these moneys.

                   

                   

                  Note 30A: Terms, Conditions and Accounting Policies (continued)


                  Financial Instruments

                  Notes

                  Accounting Policies and Methods Nature of underlying instruments
                  Commonwealth Government Securities Debt is measured at face value. Premiums and discounts in relation to such borrowings are netted and amortised over the life of the borrowing on a straight line basis. The Department is responsible for advising the Treasurer on all aspects of debt management on behalf of the Commonwealth, including the issue of various borrowing instruments and the administration of the redemption of debt. The Department also administers the redemption of Commonwealth Government security debt on allocation to the States and Territories.
                  Loans promissory notes The promissory notes are measured at nominal face value. The Department has on issue promissory notes to the International Monetary Fund (IMF), the International Bank for Reconstruction and Development (IBRD) and the Asian Development Bank (ADB). These promissory notes are in relation to undrawn paid-in capital subscriptions. Promissory notes to the value of $3,480 million do not possess established drawdown schedules. The promissory notes are non-interest bearing.

                  Note 30B: Derivatives Notional Principal Amounts


                  (i) Interest Rate Swap Contracts
                  The Department has entered into interest rate swap contracts under which it is obliged to receive and pay interest at fixed and/or floating interest rates.
                  As at 30 June 1999, the notional principal amounts of the interest rate swaps, which have not been recognised as assets or liabilities, and their associated maturity were as follows:

                  30 June 1999


                  30 June 1998


                  $'000


                  $'000

                  Less than 1 year

                  500,000


                  259,501

                  1 - 2 years

                  1,500,000


                  500,000

                  2 - 3 years

                  600,000


                  500,000

                  3 - 4 years

                  2,625,000


                  600,000

                  4 - 5 years

                  2,650,000


                  1,750,000

                  5 years and over

                  9,050,000


                  4,350,000


                  16,925,000


                  7,959,501

                  (ii) Cross-Currency Swap Contracts
                  Swap principal and interest payable/receivable in relation to cross-currency swaps are disclosed in the financial statements on a net basis.
                  The gross amounts together with their carrying amounts in the financial statements are as follows:

                  Total Carrying


                  Gross Amount


                  Amount


                  (Cost)


                  30 June 1999 30 June 1998

                  30 June 1999 30 June 1998

                  $,000 $’000


                  $,000 $’000

                  Financial assets
                  Swaps

                  54,810


                  26,899


                  10,301,893


                  11,272,792

                  Interest receivable Swaps

                  43,122


                  62,120


                  196,997


                  349,665


                  148,367


                  89,019


                  10,737,812


                  11,622,457

                  Financial liabilities
                  Swaps

                  1,396,333


                  2,761,134


                  11,643,416


                  14,007,028

                  Interest payable Swaps

                  10,411


                  22,493


                  164,286


                  310,039


                  1,406,834


                  2,783,627


                  11,996,279


                  14,317,067

                   

                  Note 30C: Foreign Exchange Risk


                  The Department is open to foreign exchange risk as a result of contractual obligations in relation to:
                  - cross-currency swap contracts;
                  - promissory note liabilities in foreign denominations; and
                  - foreign currency loans.
                  The exposure to the movement in the Australian dollar has not been hedged against. As at 30 June 1999, the following foreign currency assets and liabilities were not hedged:

                  30 June 1999


                  30 June 1998


                  AUD $'000


                  AUD $'000

                  Mon
                  etary liabilities
                  Current
                  United States Dollars

                  207,709


                  1,039,917

                  Pounds Sterling

                  4,639


                  1,517

                  Hong Kong Dollars


                  17,021

                  Euro

                  2,570

                  Japanese Yen

                  164


                  19,684

                  Swiss Francs

                  50


                  33

                  Deutsche Marks

                  9


                  10

                  Netherlands Guilders

                  62,069


                  95,885

                  Special Drawing Rights

                  5,306


                  7,569


                  282,516


                  1,181,636

                  Non-current
                  United States Dollars

                  1,714,014


                  2,690,954

                  Pounds Sterling

                  103,404


                  117,646

                  Euro

                  100,000


                  100,000

                  Japanese Yen

                  37,660


                  34,819

                  Netherlands Guilders

                  56,898


                  127,835

                  Special Drawing Rights

                  954,065


                  1,019,157


                  2,966,041


                  4,090,411

                  Total monetary liabilities

                  3,248,557


                  5,272,047

                  Monetary assets
                  Current
                  United States Dollars

                  9,292


                  3,472

                  Special Drawing Rights

                  10,647


                  7,411

                  Netherlands Guilders

                  640


                  3,634


                  20,579


                  14,517

                  Non-current
                  United States Dollars

                  642


                  Special Drawing Rights

                  6,583,265


                  5,053,498


                  6,562,686


                  5,053,498

                  Total monetary assets

                  6,583,265


                  5,068,015

                  Note 30D: Interest Rate Exposures

                  The Department’s exposure to interest rate risk and the effective weighted average interest rate for each class of financial assets and financial liabilities is set out below

                  30d.gif (164721 bytes) click to enlarge

                  Note 30D: Interest Rate Exposures (continued)

                  30d2.gif (191610 bytes) click to enlarge

                  Note 30E: Net Fair Values of Administered Financial Assets and Liabilities



                  Total carrying


                  Aggregate net


                  Amount


                  Fair value


                  30 June 1999


                  30 June 1998


                  30 June 1999


                  30 June 1998


                  $'000


                  $'000


                  $'000


                  $'000

                  Financial assets
                  Cash

                  12,781


                  11,433


                  12,781


                  11,433

                  Interest receivable

                  162,781


                  133,640


                  162,781


                  133,640

                  IMF moneys owing

                  10,647


                  7,411


                  10,647


                  7,411

                  Swaps

                  54,810


                  26,899


                  11,069


                  238,209

                  Loans to State and
                  Territory Governments

                  5,783,453


                  7,305,705


                  5,783,453


                  7,305,705

                  Other receivables

                  11,817


                  750


                  11,817


                  750

                  Investments

                  7,227,042


                  5,717,136


                  7,253,598


                  5,778,053


                  13,263,331


                  13,202,974


                  13,246,146


                  13,475,201

                  Financial liabilities
                  Grant liabilities

                  25,000


                  27,500


                  25,000


                  27,500

                  Swaps

                  1,396,333


                  2,761,134


                  1,390,750


                  2,173,947

                  Interest payable

                  2,798,893


                  3,106,480


                  2,798,893


                  3,106,480

                  IMF allocation liability

                  954,065


                  1,019,157


                  954,065


                  1,019,157

                  Provision for unclaimed moneys repayments

                  48,975


                  41,392


                  48,975


                  41,392

                  Commonwealth Government Securities

                  87,693,700


                  96,404,571


                  97,191,300


                  109,744,500

                  Loans promissory notes

                  4,346,721


                  3,523,963


                  4,346,721


                  3,523,964

                  Other

                  5,332


                  7,569


                  5,332


                  7,569


                  97,269,019


                  106,891,766


                  106,761,036


                  119,644,509

                  Note 30F: Credit Risk Exposures


                  The Department’s exposure to credit risk at reporting date in relation to each class of recognised financial assets is the aggregate net fair value of those assets as indicated in Note 30 (E).

                  There is no credit risk exposure in relation to the notional principal associated with interest rate swaps.

                  The credit risk associated with Commonwealth Guarantees in respect of authorities within the Treasury Portfolio is shown in Note 16.

                   

                   

                  Note 30G: Net Fair Values of Financial Assets and Liabilities



                  1998-99


                  1997-98


                  Total Carrying Amount


                  Aggregate
                  Net Fair Value


                  Total Carrying Amount


                  Aggregate
                  Net Fair Value


                  Note


                  $'000


                  $'000


                  $'000


                  $'000

                  Departmental financial assets
                  Cash at bank

                  547


                  547


                  36


                  36

                  Receivables for goods and services

                  13A


                  4,809


                  4,732


                  5,270


                  5,246

                  Total financial assets

                  5,346


                  5,279


                  5,306


                  5,282

                  Financial liabilities (recognised)
                  Finance lease liabilities

                  10A


                  1,501


                  1,501


                  22


                  22

                  Trade creditors

                  11B


                  1,126


                  1,126


                  1,044


                  1,044

                  Total financial liabilities (recognised)

                  2,627


                  2,627


                  1,066


                  1,066

                  Financial liabilities (unrecognised)
                  Indemnity on land sale




                   

                  Note 30H: Credit Risk Exposures

                  The Department’s maximum exposures to credit risk at reporting date in relation to each class of recognised financial assets is the carrying amount of those assets as indicated in the Statement of Assets and Liabilities.