Notes 31 to 35

​DEPARTMENT OF AGRICULTURE, FISHERIES AND FORESTRY
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS

for the period ended 30 June 2012

Note 31. Reporting of Outcomes

The department uses a cost allocation system based on standard drivers to determine the attribution of its shared items. The basis of attribution in the table below is consistent with the basis used for the 2011-12 Budget.

Note 31A: Net Cost of Outcome Delivery
  Outcome 1 Outcome 2 Total
  2012
$'000
2011
$'000
2012
$'000
2011
$'000
2012
$'000
2011
$'000

Expenses
Administered ( 866 893) ( 923 789) ( 16 383) ( 31 072) ( 883 276) ( 954 861)
Departmental ( 153 058) ( 157 476) ( 572 810) ( 506 449) ( 725 868) ( 663 925)
Total (1 019 951) (1 081 265) ( 589 193) ( 537 521) (1 609 144) (1 618 786)

Income from non-government sector
Departmental





Goods and services 5 756 4 435 304 841 264 142 310 597 268 577
Levies - 9 411 9 134 - 9 134 9 411
Total 5 756 13 846 313 975 264 142 319 731 277 988

Other own-source income
Administered 395 192 427 880 635 685 395 827 428 565
Departmental 27 357 36 855 8 755 5 945 36 112 42 800
Total 422 549 464 735 9 390 6 630 431 939 471 365

Net cost of outcome delivery
( 591 646) ( 602 684) ( 265 828) ( 266 749) ( 857 474) ( 869 433)

Note 31B: Major Classes of Departmental Expense Income Assets and Liabilities by Outcome

Outcome 1 Outcome 2 Total
  2012
$'000
2011
$'000
2012
$'000
2011
$'000
2012
$'000
2011
$'000

Departmental Expenses:
Employees ( 100 082) ( 126 852) ( 397 707) ( 309 759) ( 497 789) ( 436 611)
Suppliers ( 47 254) ( 22 743) ( 155 141) ( 180 984) ( 202 395) ( 203 727)
Grants ( 1 627) ( 1 169) ( 2 078) ( 6 245) ( 3 705) ( 7 414)
Depreciation and amortisation ( 2 661) ( 6 080) ( 12 109) ( 7 752) ( 14 770) ( 13 832)
Other ( 1 434) ( 632) ( 5 775) ( 1 709) ( 7 209) ( 2 341)
Total ( 153 058) ( 157 476) ( 572 810) ( 506 449) ( 725 868) ( 663 925)

Departmental Income:
Revenue from Government 110 002 100 768 217 534 253 227 327 536 353 995
Sales of goods and services 32 003 34 983 304 841 264 142 336 844 299 125
Other non-taxation revenue 1 110 15 718 17 889 5 945 18 999 21 663
Total 143 115 151 469 540 264 523 314 683 379 674 783

Departmental Assets
Cash and cash equivalents 304 4 030 3 128 2 212 3 432 6 242
Trade and other receivables 51 860 57 000 107 697 107 725 159 557 164 725
Investments - - 15 000 17 000 15 000 17 000
Accrued revenue 907 1 044 6 375 6 818 7 282 7 862
Land and buildings 30 598 33 687 21 469 21 953 52 067 55 640
Property, Plant and equipment 5 959 3 726 5 313 6 801 11 272 10 527
Inventories - 19 2 911 2 670 2 911 2 689
Intangibles 23 275 4 904 31 870 23 730 55 145 28 634
Other non-financial assets 3 735 2 501 1 300 1 080 5 035 3 581
Total 116 638 106 911 195 063 189 989 311 701 296 900

Departmental Liabilities
Suppliers ( 3 847) ( 2 087) ( 1 177) ( 6 002) ( 5 024) ( 8 089)
Other payables ( 30 401) ( 23 071) ( 26 467) ( 19 486) ( 56 868) ( 42 557)
Leases ( 991) ( 1 202) ( 2 402) ( 3 062) ( 3 393) ( 4 264)
Employee provisions ( 39 924) ( 32 698) ( 98 553) ( 85 997) ( 138 477) ( 118 695)
Other provisions ( 12 236) ( 10 386) ( 8 789) ( 8 332) ( 21 025) ( 18 718)
Interest bearing liabilities ( 11 448) ( 6 023) ( 126) ( 6 715) ( 11 574) ( 12 738)
Total ( 98 847) ( 75 467) ( 137 514) ( 129 594) ( 236 361) ( 205 061)

Outcomes 1 and 2 are described in Note 1.1. Net costs shown include intra-government costs that are eliminated in calculating the actual Budget outcome.

Note 31C: Major Classes of Administered Expenses, Income, Assets, and Liabilities by Outcomes
  Outcome 1 Outcome 2 Total
  2012
$'000
2011
$'000
2012
$'000
2011
$'000
2012
$'000
2011
$'000

Administered Expenses:
Grants ( 514 624) (470 792) ( 30 166) (21 408) ( 544 790) ( 492 200)
Personal benefits ( 64 780) (186 688) - - ( 64 780) ( 186 688)
Suppliers ( 20 893) (23 270) ( 1 223) (9 604) ( 22 116) ( 32 874)
Write-down of assets ( 965) ( 714) - ( 60) ( 965) ( 774)
CAC Act body payment items ( 249 052) (242 325) - - ( 249 052) ( 242 325)
Other ( 1 573) - - - ( 1 573) -
Total ( 851 887) ( 923 789) ( 31 389) ( 31 072) ( 883 276) ( 954 861)

Administered Income:
Taxes, levies, fees and charges 392 367 419 890 - - 392 367 419 890
Other non-taxation revenue 2 825 7 990 635 685 3 460 8 675
Total 395 192 427 880 635 685 395 827 428 565

Administered Assets
Cash and cash equivalents 423 683 - - 423 683
Receivables 16 398 10 813 - 5 632 16 398 16 445
Investments 226 167 207 703 - - 226 167 207 703
Accrued revenue 58 495 73 449 - - 58 495 73 449
Other non-financial assets 555 528 - - 555 528
Total 302 038 293 176 - 5 632 302 038 298 808

Administered Liabilities
Suppliers ( 6 596) (6 732) ( 117) ( 845) ( 6 713) ( 7 577)
Personal benefits ( 3 497) (2 076) - - ( 3 497) ( 2 076)
Grants ( 83 537) (64 966) ( 846) (2 497) ( 84 383) ( 67 463)
Other payables ( 6) ( 9) - - ( 6) ( 9)
Total ( 93 636) ( 73 783) ( 963) ( 3 342) ( 94 599) ( 77 125)

Outcomes 1 and 2 are described in Note 1.1.

Note 32. Receipts Subject to Cost Recovery Policy


2012 2011

$'000 $'000

Significant cost recovery arrangements
Amendment of Fees for the Live Animal Export Program 5 026 3 145
Grain and Plant Products 2011-12 25 122 8 913
Horticulture 6 130 3 397
Import Clearance Program 164 429 159 332
Meat 2011-12 50 694 39 612
Portfolio Cost Recovery Impact Statement 11 962 18 411
Post Entry Animal Quarantine Program Fees - April 2009 7 728 6 156
Seaports Program 17 183 16 926

Other cost recovery arrangements
Dairy 2009-10 2 158 1 361
Fees charged for the management of beef, sheepmeat and goatmeat export quota 498 327
Horse Imports Program Fees 2 313 2 548
Non-prescribed Goods 2009-10 2 321 1 527
Quota administration fees for European Union and United States of America dairy tariff rate quotas 177 199
Seafood 2011-12 2 372 1 998
Total receipts subject to cost recovery policy 298 113 263 852

Note 33. Net Cash Appropriation Arrangements

2012 2011
$'000 $'000
Total comprehensive income (loss) less depreciation/amortisation expenses previously funded through revenue appropriations 1 ( 37 082) 18 087
Plus: depreciation/amortisation expenses previously funded through revenue
appropriation (5,407) ( 4 592)
Total comprehensive income (loss) - as per the Statement of
Comprehensive Income ( 42 489) 13 495

1. From 2010-11, the Government introduced net cash appropriation arrangements, where revenue appropriations for depreciation/amortisation expenses ceased. Entities now receive a separate capital budget provided through equity appropriations. Capital budgets are to be appropriated in the period when cash payment for capital expenditure is required.

The department does not receive departmental capital budget funding to replace non-financial assets held by the Australian Quarantine and Inspection Service (AQIS). Depreciation and amortisation charges for assets held by AQIS in 2012 is $9 363 000 (2011: $9 240 000).

Note 34. Interest in Cooperative Research Centres

The Cooperative Research Centres Program, launched in 1990 by the Commonwealth Government, was established to assist two or more collaborators to carry out research contributing to the development of internationally competitive industry sectors. The program supports long term high quality research, improved links between research and application, and stimulation of education and training.

The original agreement, Cooperative Research Centre for National Plant Biosecurity was for seven years. That expired on 1 July 2012 and is replaced with a five year agreement, now called Plant Biosecurity Cooperative Research Centres.

The department has recognised contingent liabilities in relation to the one Cooperative Research Centre it currently contributes to under the program. Refer to Note 12 for remote contingent liabilities.


2012 2011

Department's
% interest
Department's
% interest
Plant Biosecurity Cooperative Research Centres 3 2

During the financial year the department's total cash and in kind contributions to the Cooperative Research Centre listed above from its own resources is estimated at $198 598 (2011 actual: $141 050). The department's contributions and expenses are included in the Statement of Comprehensive Income. The department's total contribution for the life of the Cooperative Research Centre listed above has amounted to $2 256 942 (2011: $2 058 344).

Note 35. Compliance with Statutory Conditions for Payments from the Consolidated Revenue Fund

Section 83 of the Constitution provides that no amount may be paid out of the Consolidated Revenue Fund except under an appropriation made by law. The Department of Finance and Deregulation provided information to all agencies in 2011 regarding the need for risk assessments in relation to compliance with statutory conditions on payments from special appropriations, including special accounts. The possibility of this being an issue for the department was reported in the notes to the 2010-11 financial statements and the department undertook to investigate the issue during 2011-12.

It is important to note that it is impossible to fully remove the potential for section 83 breaches for payments. In some cases, the department relies on information provided by third parties which may not always be accurate, thus this may result in potential breaches of section 83. The actual and potential section 83 breaches represent only a very small proportion of total payments, both in value and number.

During 2011-12, the department undertook a review of its exposure to risks of not complying with statutory conditions on payments from appropriations. The review involved:

  • identifying each special appropriation and special account;
  • determining the risk of non-compliance by assessing the difficulty of administering the statutory conditions and assessing the extent to which existing payment systems and processes satisfy those conditions;
  • determining procedures to confirm risk assessments in medium risk cases and to quantify the extent of non-compliance, if any, in higher risk situations;
  • obtaining legal advice to resolve questions of potential non-compliance;
  • seek an assurance certificate from the Department of Human Services confirming no breaches of section 83 have been identified for programs being administered on the department's behalf; and
  • implementing legislative and procedural changes.
As at 30 June 2012 this work has been completed in respect of all appropriations with statutory conditions for payment, representing approximately $1.2 billion in expenditure in 2011–12.

The agency identified 38 appropriations involving statutory conditions for payment, comprising:

  • 35 special appropriations; and
  • 3 special accounts.
Of the 38 appropriations, the following were assessed as higher or medium risk of the potential for section 83 breaches (refer summary provided at Table A):

Higher

  • Australian Animal Health Council (Livestock Industries) Funding Act 1996
  • Australian Meat and Livestock Industry Act 1997
  • Farm Household Support Act 1992
  • Horticultural Marketing and Research and Development Services Act 2000
  • Primary Industries and Energy Research and Development Act 1989
  • Wine Australia Corporation Act 1980
  • National Residue Survey Administration Act 1992

Medium

  • Dairy Produce Act 1986
  • Egg Industry Service Provision Act 2002
  • Forestry Marketing and Research and Development Services Act 2007
  • Pig Industry Act 2001
  • Plant Health Australia (Plant Industries) Funding Act 2002
  • Wool Services Privatisation Act 2000

For the higher risk appropriations, a detailed review was undertaken and legal advice was sought on potential section 83 breaches.

For the medium risk appropriations, a risk management approach was undertaken where a desktop analysis of processes, including testing of a sample of payments against the relevant legislation was completed to ensure that payments are being made in accordance with the law. Legal advice was also sought for medium risk appropriations on reducing future potential for section 83 breaches.

Changes were made to legislation as part of the Financial Framework Legislation Amendment Bill (No.2) 2012 which was introduced in the House of Representatives on 30 May 2012. The Acts amended by the Bill were:

  • Australian Meat & Live-stock Industry Act 1997
  • Horticulture Marketing & Research & Development Service Act 2000
  • Primary Industries & Energy Research & Development Act 1989
  • Dairy Produce Act 1986
  • Egg Industry Service Provision Act 2002
  • Forestry Marketing and Research and Development Services Act 2007
  • Pig Industry Act 2001
  • Australian Animal Health Council (Livestock Industries) Funding Act 1996
  • Wool Services Privatisation Act 2000
  • The National Residue Survey Administration Act 1992.

To date 19 instances have been identified under the Australian Animal Health Council (Livestock Industries) Funding Act 1996 where payments were made without legal authority and are in contravention of section 83 of the Constitution. The breaches occurred due to the (then) current practice of paying out levies in full and subsequently billing for the cost of providing the collection service under the Australian Animal Health Council (Livestock Industries) Funding Act 1996. A total of $83 702.61 was paid out in 2011–12 in this manner and subsequently recovered by the department.

The department will continue to monitor its level of compliance with section 83 of the Constitution across all legislation for which it is administratively responsible.

Table A - Summary
Appropriations identified as subject to conditions Expenditure in 2012 Review complete? (Yes/No) Breaches identified to 30 June 2012 Potential breaches to date yet to be resolved Remedial action taken of proposed 1
$'000 Number Total $'000 Incorrect $'000 Recovered / offset as at 30 June 2012 $'000 Yes / No Indicated extent
SPECIAL APPROPRIATIONS  
Australian Animal Health Council (Livestock Industries Funding Act 1996 6 229 Yes 19 83 N/A 83 N/A2 N/A2 LM
Australian Meat and Livestock Industry Act 1997 150 464 Yes Nil N/A N/A N/A N/A2 N/A2 LM
Dairy Produce Act 1986 48 636 Yes Nil N/A N/A N/A N/A2 N/A2 LM
Egg Industry Service Provision Act 2002 7 936 Yes Nil N/A N/A N/A N/A2 N/A2 LM
Farm Household Support Act 1992 Yes Nil N/A N/A N/A N/A2 N/A2 N/A N/A
Forestry Marketing and Research and Development Services Act 2007 8 851 Yes Nil N/A N/A N/A N/A2 N/A2 LM
Horticultural Marketing and Research and Development Services Act 2000 76 847 Yes Nil N/A N/A N/A N/A2 N/A2 LM
National Residue Survey Administration Act 1992 9 187 Yes Nil N/A N/A N/A N/A2 N/A2 LM
Pig Industry Act 2001 15 341 Yes Nil N/A N/A N/A N/A2 N/A2 LM
Plant Health Australia (Plant Industries) Funding Act 2002 1 616 Yes Nil N/A N/A N/A N/A2 N/A2 LM
Primary Industries and Energy Research and Development Act 1989 228 050 Yes Nil N/A N/A N/A N/A2 N/A2 LM
Wine Australia Corporation Act 1980 5 547 Yes Nil N/A N/A N/A N/A2 N/A2 N/A
Wool Services Privatisation Act 2000 60 800 Yes Nil N/A N/A N/A N/A2 N/A2 LM
Financial Management and Accountability Act 1997 16 090 Yes Nil N/A N/A N/A N/A2 N/A2 N/A
SPECIAL ACCOUNTS N/A2 N/A2
Australian Quarantine Inspection Service Special Account 490 992 Yes Nil N/A N/A N/A N/A N/A N/A
National Residue Survey Special Account 28 060 Yes Nil N/A N/A N/A N/A N/A N/A
Natural Resources Management Special Account 41 623 Yes Nil N/A N/A N/A N/A N/A N/A

1 L = legislative change; S – systems change; P = planned; M = made (e.g. SM, or LP)

2 As at 30 June 2012, the department is unaware of any section 83 breaches requiring further treatment. It is impossible to fully remove the potential for section 83 breaches for payments. In some cases, the department relies on information provided by third parties which may not always be accurate.

Last reviewed: 4 November 2019
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