Skip to content
Commonwealth of Australia - The Treasury

Annual Report 2014/15

Notes 21 – 30

On this page:

Note 21: Administered Payables

  2015
$’000
2014
$’000
Note 21A: Grants    
Public sector    
COAG grants payable 599,530 636,399
Other grants payable 395
Total grants 599,925 636,399
Grants are expected to be settled in no more than 12 months.
     
Note 21B: Other payables    
GST appropriation payable 761 9
IMF SDR allocation 5,633,420 5,054,379
IMF related monies owing 469 829
Suppliers 7,942
Total other payables 5,642,592 5,055,217
Total other payables expected to be settled    
No more than 12 months 9,172 838
More than 12 months 5,633,420 5,054,379
Total other payables 5,642,592 5,055,217
     
Note 21C: Unearned income    
Guarantee Scheme for Large Deposits and Wholesale Funding Contractual guarantee service obligation1 23,018
Guarantee of State and Territory Borrowing contractual guarantee service obligation1 77,019 113,217
Total unearned income 77,019 136,235
Total unearned income expected to be settled    
No more than 12 months 19,938 49,425
More than 12 months 57,081 86,810
Total unearned income 77,019 136,235

1. Refer Note 1.33 for details on accounting treatment and Note 20A for corresponding receivable.

Note 22: Administered Interest Bearing Liabilities

  2015
$’000
2014
$’000
Note 22A: Loans    
IMF promissory notes1 4,642,044 3,731,559
Other promissory notes1 182,660 171,981
Total loans 4,824,704 3,903,540
Loans expected to be settled    
Within 1 year
Between 1 to 5 years 124,839 124,839
More than 5 years 4,699,865 3,778,701
Total loans 4,824,704 3,903,540

1. Promissory notes held by the Treasury are at face value and have no interest rate associated.

Note 23: Administered Provisions

  2015
$’000
2014
$’000
Note 23A: Other provisions    
Provision for HCS Scheme1 3,765
NDRRA provision2 1,816,251 3,579,531
Queensland 1,523,777 3,354,497
New South Wales 110,473 114,600
Northern Territory 92,458 1,387
Victoria 77,246 103,251
Western Australia 8,566 2,644
South Australia 3,624 3,056
Tasmania 107 96
Australian Capital Territory
Total other provisions 1,816,251 3,583,296
Other provisions expected to be settled    
No more than 12 months 1,406,684 2,934,510
More than 12 months 409,567 648,786
Total other provisions 1,816,251 3,583,296
Reconciliation of movements in other provisions      
  Provision for HCS Scheme NDRRA provision Total
  $’000 $’000 $’000
Carrying amount 1 July 2014 3,765 3,579,531 3,583,296
Additional provisions made 419,760 419,760
Amounts used (3,765) (1,162,592) (1,166,357)
Amounts reversed3 (1,122,521) (1,122,521)
Unwinding of discount or change in discount rate 102,073 102,073
Closing balance 30 June 2015 1,816,251 1,816,251

1. Refer to Note 1.32 for details on the winding down of the Scheme.

2. Refer to Note 1.28 for details on the NDRRA provision.

3. The primary driver of the amounts reversed against the NDRRA provision is the close out of projects in Queensland. There is a level of uncertainty in the reconstruction cost estimates following natural disasters, reflecting the nature of such events. As projects are finalised, the estimation of expenditure moves to actual costs. The scale of the reduction is reflective of the scale of reconstruction projects being finalised.

Note 24: Administered Cash Flow Reconciliation

  2015
$’000
2014
$’000
Reconciliation of net cost of services to net cash from operating activities:    
Net cost of services (79,922,750) (89,591,099)
Adjustments for non-cash items    
Foreign exchange loss/(gain) (36,629) 420,777
Movements in assets and liabilities    
Assets    
(Increase)/decrease in net receivables (1,200,511) (580,127)
(Increase)/decrease in other non-financial assets 51 149,043
Liabilities    
Increase/(decrease) in grants payable (36,474) (131,992)
Increase/(decrease) in unearned income (59,216) (399,699)
Increase/(decrease) in other payables 8,334 282
Increase/(decrease) in other provisions (1,767,045) (2,170,321)
Net cash from (used by) operating activities (83,014,240) (92,303,136)

Note 25: Administered Contingent Assets and Liabilities

Quantifiable administered contingencies

Quantifiable administered contingencies that are not remote are disclosed in the schedule of administered items as quantifiable administered contingencies.

Commitments under expanded IMF New Arrangements to Borrow (NAB)

Australia has made a line of credit available to the IMF under its NAB since 1998. The NAB is a contingent loan to help ensure that the IMF has the resources available to maintain stability and support recovery in the global economy. The funds are drawn upon by the IMF as needed to supplement the IMF’s usual quota resources and will be repaid in full with interest.

An expanded NAB came into effect on 11 March 2011 and from that point Australia’s NAB credit arrangement increased from SDR 801.3 million (A$1,464.1 million as at 30 June 2015) to SDR 4,370.4 million (A$7,985.4 million as at 30 June 2015). NAB resources must be activated before they can be drawn on by the IMF. The NAB may be activated for a six month period and requires the approval of NAB participants providing at least 85 per cent of the resources.

IMF Bilateral Loan

On 18 July 2013, Australia entered into a contingent bilateral loan with the International Monetary Fund (IMF) to provide up to SDR 4.6 billion (A$8.4 billion as at 30 June 2015) in additional financial support for crisis prevention and resolution. It will be drawn upon by the IMF only if needed to supplement the IMF’s quota and New Arrangements to Borrow (NAB) resources, and any drawings would be repaid in full with interest. The loan was initially effective for two years and can be extended for up to a further two years. In September 2014 the loan was extended by one-year to 17 July 2016.

International financial institutions — uncalled capital subscriptions

The Australian Government has held an uncalled capital subscription in the International Bank for Reconstruction and Development (IBRD) since 1947. The Government is contributing additional resources to the IBRD as part of the general capital increase agreed in 2010. As part of this process, Australia will increase its uncalled capital subscription so that it totals US$3.6 billion (estimated value A$4.4 billion as at 30 June 2015).

The Australian Government has also held an uncalled capital subscription in the European Bank for Reconstruction and Development (EBRD) since 1991. Australia’s uncalled capital subscription to the EBRD totals EUR237.5 million (estimated value A$345 million as at 30 June 2015).

The Australian Government has further held an uncalled capital subscription in the Asian Development Bank (ADB) since 1966. Australia increased its uncalled capital subscription (effective 11 January 2010) to the ADB as part of its 2010 general capital increase, so that it totals US$7 billion (estimated value A$10.6 billion as at 30 June 2015).

The Australian Government has further held an uncalled capital subscription in the Multilateral Investment Guarantee Agency of US$26.5 million (estimated value A$34.4 million as at 30 June 2015).

None of these international financial institutions have ever drawn on Australia’s uncalled capital subscriptions.

Unquantifiable administered contingencies

Contingent Liabilities

Housing Loans Insurance Corporation (HLIC) — guarantee

The Australian Government sold HLIC on 12 December 1997 and has assumed all residual contingencies. The contingent liability relates to the HLIC’s contracts of mortgage insurance and any borrowings approved by the Treasurer up to the time of sale. The principal amount covered by the guarantee and the balances outstanding cannot be determined accurately.

Terrorism insurance — Australian Reinsurance Pool Corporation

The Terrorism Insurance Act 2003 established a scheme for replacement terrorism insurance covering damage to commercial property including associated business interruption and public liability. The Australian Reinsurance Pool Corporation (ARPC) uses reinsurance premiums paid by insurers to meet its administrative expenses and to build a reserve for claims and purchase retrocession to help meet future claims. The Act provides for an Australian Government guarantee of the liabilities of the ARPC, but the Treasurer must declare a reduced payout rate to insured parties if the Australian Government’s overall liability would otherwise exceed $10 billion. The Minister may vary the reduction percentage but only by making it smaller.

Commitments under expanded IMF New Arrangements to Borrow (NAB)

Australia has made a line of credit available to the IMF under its NAB since 1998. During 2014-15 Australia met three calls under the NAB totalling A$40.8 million (SDR 23 million) to support programs for Ukraine and Pakistan. In 2013-14 Australia provided A$209.5 million (SDR 126.4 million) under the NAB. These calls have been recognised as loans to the IMF at Note 23. The amount that will be called by the IMF in 2015-16 cannot be determined precisely as the Fund does not publish annual estimates. It does, however, provide estimates for calls in the coming quarter. Under the IMF’s most recent ‘Resource Mobilisation Plan’, it projects drawings for the period July to September 2015 to be SDR 62.4 million (A$114.0 million as at 30 June 2015). As at the completion of these statements, the IMF has not yet called on the NAB in the current financial year.

Grants to States and Territories

As the Treasury has responsibility for all payments to the States and Territories under the Federal Financial Relations Framework, remote and unquantifiable liabilities may exist in relation to some agreements between the relevant agency with policy responsibility and the States and Territories. Whilst the Treasury does not bear the risk of the contingent event, the resultant payment would be made and reported by the Treasury under the Federal Financial Relations Framework.

Loan to New South Wales for James Hardie Asbestos Injuries Compensation Fund

The Australian Government has agreed to lend up to $160 million to the State Government of New South Wales (NSW) to support the loan facility to top up the James Hardie Asbestos Injuries Compensation Fund. Draw down on the loan is subject to the James Hardie Asbestos Injuries Compensation Fund requiring funds to meet its liabilities and is contingent on NSW meeting a number of conditions under the loan agreement with the Australian Government. The timing and amounts that may be drawn down by NSW cannot be determined accurately. No new loans were provided to the State Government of NSW in respect of the loan facility in 2014-15 (2013-14: $25.3m).

Contingent Assets

HIH Claims Support Scheme (HCSS)

As an insured creditor in the liquidation of the HIH Group, the Australian Government is entitled to payments arising from the HCSS’s position in the Proof of Debt of respective HIH companies. The Treasury has received payments from the HIH Estate during 2014-15; however the timing and amount of future payments are unknown and will depend on the outcome of the estimation process and the completion of the liquidation of the HIH Group.

Burden sharing in the International Monetary Fund remuneration

Since 1986, the IMF has used its burden sharing mechanism to make up for the loss of income from unpaid interest charges on the loans of debtor members and to accumulate precautionary balances in a Special Contingent Account to protect the IMF against losses arising from the failure of a member to repay its overdue principal obligations.

The mechanism works by providing for additions to the rate of charge on IMF loans and deductions to the rate of remuneration for creditor members such as Australia. Resources collected from individual members under the burden sharing mechanism are refundable to them as arrears cases are resolved, or as may be decided by the IMF. Thus, resources collected for unpaid charges are refunded when these charges are eventually settled.

Likewise, precautionary balances held in the Special Contingent Account would be distributed back to members in proportion to their cumulative contributions when there are no overdue charges or principal balances. The IMF could also decide to make an early distribution.

As there is considerable and inherent uncertainty around the timing and amounts of burden sharing to be refunded to Australia this contingent asset cannot be reliably measured and as such is recorded as an unquantifiable contingent asset.

Significant Remote Administered Contingencies

Guarantees

The following borrowings have been guaranteed by the Australian Government and are the Treasury’s policy responsibility:

Borrower Legislation authorising guarantee Principal covered by guarantee Balance outstanding Balance outstanding
    2015
$’000
2015
$’000
2014
$’000
Papua New Guinea Papua New Guinea 1975
Papua New Guinea Loans Guarantee Act 1975
1,300 1,300 1,300
Commonwealth Bank of Australia1 Commonwealth Bank of Australia Act 1959 s117 498,457 498,457 735,333
Commonwealth Bank of Australia — Officers Superannuation Corporation1 Commonwealth Bank of Australia Act 1959 s117 4,449,300 4,449,300 4,356,800
Guarantee Scheme for Large Deposits and Wholesale Funding Guarantee Scheme for Large Deposits and Wholesale Funding Appropriation Act 2008 1,450,260 1,450,260 14,800,000
Guarantee of State and Territory Borrowing Guarantee of State and Territory Borrowing Appropriation Act 2009 11,721,890 11,721,890 15,700,000
Reserve Bank of Australia2 Reserve Bank of Australia Act 1959 s77 65,481,000 65,481,000 60,778,000
Total   83,602,207 83,602,207 96,371,433

1. Under the terms of the Commonwealth Bank Sale Act 1995, the Australian Government has guaranteed various liabilities of the Commonwealth Bank of Australia (CBA), and the Commonwealth Bank Officers’ Superannuation Corporation (CBOSC). The guarantee for the CBA relates to both on and off balance sheet liabilities. The guarantee of the CBOSC covers the due payments of any amount that is payable to or from Officers’ of the Superannuation Fund (the Fund), by CBOSC or by CBA, in respect of a person who was a member, retired member or beneficiary of the Fund immediately before 19 July 1996. The guarantee of the CBA and CBOSC reflected in the above table is the value at 30 June 2015.

2. The contingent liability for the RBA, relates to the Australian Government’s guarantee of the liabilities of the RBA. It is measured as the Bank’s total liabilities excluding the Bank’s distribution to the Commonwealth and Australian Government deposits. The major component of the Bank’s liabilities are notes (that is, currency) on issue.

Guarantee Scheme for Large Deposits and Wholesale Funding

The Australian Government announced the guarantee of eligible deposits and wholesale funding for authorised deposit taking institutions (ADIs) from 12 October 2008 under the Guarantee Scheme for Large Deposits and Wholesale Funding.

The Scheme closed to new deposits and new issuance from 31 March 2010. Since then, Australian authorised deposit-taking institutions have been prohibited from issuing any new guaranteed wholesale funding or accepting new guaranteed deposits above $1 million. The last series of wholesale funding liabilities that were guaranteed under the Scheme matured on 25 March 2015. Depositors who covered their balances above $1 million under the Guarantee Scheme can have those funds covered to maturity for term deposits up to five years, or until October 2015 for at call deposits.

The expected liability for the Government under the Guarantee Scheme is remote and unquantifiable. Australia’s financial system is considered among the strongest and best regulated in the world. Authorised deposit-taking institutions are subject to prudential regulation by APRA in accordance with international standards, which are designed to ensure that financial institutions have the capacity to meet their financial obligations. This framework requires institutions to be adequately capitalised and have appropriate risk management systems in place.

Government expenditure would arise under the guarantee only in the unlikely event that an institution failed to meet its obligations with respect to a commitment that was subject to the guarantee and the guarantee was called upon. The impact on the Government’s budget would depend on the extent of the institution’s default.

As at 30 June 2015, total liabilities covered by the Guarantee Scheme, comprised entirely of large deposits, were estimated at $1.45 billion.

Guarantee of State and Territory Borrowing

The Guarantee of State and Territory Borrowing commenced on 24 July 2009 and closed to new issuances of guaranteed liabilities on 31 December 2010. Securities covered by the guarantee will continue to be guaranteed until these securities either mature or are bought back and extinguished by the issuer.

The expected liability under the guarantee is remote and unquantifiable. Government expenditure would arise under the guarantee only in the unlikely event that a state or territory failed to meet its obligations with respect to a commitment that was subject to the guarantee and the guarantee was called upon. In such a case, the Government would likely be able to recover any such expenditure through a claim on the relevant state or territory at a future date. The impact on the Government’s budget would depend upon the extent of the default and the state or territory’s ability to meet the Government’s claim.

As at 30 June 2015, the face value of state and territory borrowings covered by the guarantee was $11.7 billion.

Note 26: Administered Investments

The principal activities of each of the Treasury’s administered investments are as follows:

Development Banks

The European Bank for Reconstruction and Development (EBRD) was established in 1991 to assist former communist eastern European countries committed to the principles of multi-party democracy, pluralism and market economies, to develop their private sector and capital markets. The EBRD currently operates in more than 30 countries from Central and Eastern Europe to Central Asia and the Southern and Eastern Mediterranean region. It provides project financing for banks, industries and businesses, both new ventures and investments in existing companies. It also works with publicly owned companies, to support privatisation, restructuring state-owned firms and improvement of municipal services. The EBRD uses its close relationship with governments in the region to promote policies that will bolster the business environment.

The Asian Development Bank (ADB) was established in 1966 and has a mandate to reduce poverty and promote economic development in its developing member countries in Asia and the Pacific. The ADB does this by financing (through a mix of loans, grants, guarantees and co-financing activities with both other donors and the private sector) public sector and private sector activities. It also provides technical assistance to developing member countries so they can improve their policy and business investment environments. A significant portion of the ADB’s activities are focused in the infrastructure, transportation and energy sectors.

The World Bank was established in 1944 and comprises the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA). The World Bank, alongside the International Finance Corporation (IFC), the Multilateral Investment Guarantee Agency (MIGA) and the International Centre for Settlement of Investment Disputes (ICSID), form the World Bank Group. The IBRD provides financing and technical assistance to middle income countries and creditworthy poor countries. The IDA provides grants, concessional finance and technical assistance to low income countries. The IFC supports the development of the private sector by providing direct finance to private sector operations. MIGA provides guarantee services for projects, which reduce the risks for other co-financing partners including the private sector. ICSID provides international facilities for conciliation and arbitration of investment disputes.

International Monetary Fund

The IMF is an organisation of 188 countries, working to foster global monetary cooperation and exchange rate stability, facilitate the balanced growth of international trade, and provide resources to help members in balance of payments difficulties or to assist with poverty reduction. The IMF undertakes surveillance and annual economic assessments, and provides technical assistance to member countries.

Australian Government entities

The Australian Government’s investments in controlled entities and companies in the Treasury portfolio are measured at their fair value. Fair value has been taken to be the net assets of the entities as at balance date.

Reserve Bank of Australia

The Reserve Bank of Australia is Australia’s central bank. Its duty is to contribute to the maintenance of price stability, full employment, and the economic prosperity and welfare of the Australian people. It does this by setting the cash rate to meet a medium-term inflation target, working to maintain a strong financial system and efficient payments system, and issuing the nation’s banknotes. The Bank provides selected banking services to the Australian Government and its agencies, and to a number of overseas central banks and official institutions. Additionally, it manages Australia’s gold and foreign exchange reserves.

Australian Reinsurance Pool Corporation

ARPC is a statutory authority established by the Terrorism Insurance Act 2003 to administer the terrorism reinsurance scheme, providing primary insurers with reinsurance for commercial property and associated business interruption losses arising from a declared terrorist incident.

Clean Energy Finance Corporation

The Clean Energy Finance Corporation (CEFC) operates under the Clean Energy Finance Corporation Act 2012 and invests using a commercial approach to overcome market barriers and mobilise investment in the renewables, energy efficiency and low emissions technology sectors in Australia. The CEFC’s purpose is to catalyse and leverage an increased flow of finance for the commercialisation and deployment of Australian based renewable energy, low emissions and energy efficiency technologies, thus preparing and positioning the Australian economy and industry to be competitive in a carbon constrained world. The CEFC’s Investment Mandate issued as Ministerial Direction sets the Corporation’s target portfolio benchmark rate of return.

Note 27: Administered Financial Instruments

  2015
$’000
2014
$’000
Note 27A: Categories of Financial Instruments    
Financial Assets    
Loans and receivables:    
Cash and cash equivalents 1,412
IMF related monies owing 55 217
Guarantee Scheme for Large Deposits and Wholesale Funding contractual fee receivable 23,018
Guarantee Scheme for Large Deposits and Wholesale Funding fee receivable 13 7,712
Guarantee of State and Territory Borrowing contractual fee receivable 77,019 113,217
Guarantee of State and Territory Borrowing fee receivable 1,765 2,365
IMF new arrangements to borrow loan 766,588 985,033
Loans to States and Territories 44,233 42,290
Dividends receivable 2,501,245 1,235,000
Other receivables 15,229 15,631
Total loans and receivables 3,406,147 2,425,895
Available-for-sale financial assets:    
International financial institutions 1,013,498 856,780
Australian Government entities 25,638,809 20,115,052
IMF Quota 5,913,393 5,305,574
Total available-for-sale financial assets 32,565,700 26,277,406
Total financial assets 35,971,847 28,703,301
Financial Liabilities    
Financial liabilities measured at amortised cost:    
Promissory notes 4,824,704 3,903,540
Grant liabilities 599,925 636,399
IMF SDR allocation liability 5,633,420 5,054,379
Other payables 8,411 829
Guarantee Scheme for Large Deposits and Wholesale funding contractual guarantee service obligation 23,018
Guarantee of State and Territory Borrowing contractual guarantee service obligation 77,019 113,217
Total financial liabilities measured at amortised cost 11,143,479 9,731,382
Total financial liabilities 11,143,479 9,731,382
     
Note 27B: Net Gains and Losses on Financial Assets    
Loans and receivables    
Guarantee Scheme for Large Deposits and Wholesale Funding fee 22,218 243,497
Guarantee of State and Territory Borrowing 23,763 37,058
Interest revenue 2,518 2,076
Net gains/(losses) from loans and receivables 48,499 282,631
Available for sale    
Interest revenue 648 1,227
Exchange gains/(loss) 626,351 (365,791)
Net gains/(losses) from available for sale 626,999 (364,564)
Net gains/(losses) from financial assets 675,498 (81,933)
     
Note 27C: Net Gains and Losses on Financial Liabilities    
Financial liabilities — at amortised cost    
IMF Charges 3,427 4,688
Exchange gains/(loss) (589,722) (54,986)
Net gains/(losses) financial liabilities — at amortised cost (586,295) (50,298)
Net gains/(losses) from financial liabilities (586,295) (50,298)

Note 27D: Credit risk

The maximum exposure to credit risk of the Treasury’s administered financial assets is the carrying amount of ‘loans and receivables’ (2015: $3.4 billion and 2014: $2.4 billion) and the carrying amount of ‘available for sale financial assets’ (2015: $32.6 billion and 2014: $26.3 billion).

The entities that Treasury holds its financial assets with, have a minimum of AA credit ratings. Therefore, the Treasury does not consider any of its financial assets to be at risk of default.

Note 27E: Liquidity risk

The Treasury’s administered financial liabilities are promissory notes, grant liabilities and the IMF SDR allocation. The contractual guarantee service obligation arising from the guarantee scheme for State and Territory borrowing is not included as there is no liquidity risk associated with this item. It is contingent on the value of the associated contractual fee receivable. The exposure to liquidity risk is based on the notion that the Treasury will encounter difficulty in meeting its obligations associated with administered financial liabilities. This is highly unlikely due to appropriation funding through special appropriations and non-lapsing capital appropriations as well as internal policies and procedures put in place to ensure there are appropriate resources for the Treasury to meet its financial obligations.

The following tables illustrate the maturities for non-derivative financial liabilities:

Maturities for financial liabilities in 2015
  On demand Within 1 year 1 to 2 years 2 to 5 years > 5 years Total
  $’000 $’000 $’000 $’000 $’000 $’000
Promissory notes       124,839 4,699,865 4,824,704
Grant liabilities   599,925       599,925
IMF SDR allocation liabilities         5,633,420 5,633,420
Other payables 8,411         8,411
Total 8,411 599,925 124,839 10,333,285 11,066,460
Maturities for financial liabilities in 2014
  On demand Within 1 year 1 to 2 years 2 to 5 years > 5 years Total
  $’000 $’000 $’000 $’000 $’000 $’000
Promissory notes       124,839 3,778,701 3,903,540
Grant liabilities   636,399       636,399
IMF SDR allocation liabilities         5,054,379 5,054,379
Other payables 829         829
Total 829 636,399 124,839 8,833,080 9,595,147

Note 27F: Market risk

Foreign currency risk refers to the risk that the fair value or future cash flows of a financial instrument will fluctuate due to changes in foreign exchange rates. The Treasury is exposed to foreign exchange currency risk primarily through undertaking certain transactions denominated in foreign currency.

The Treasury is exposed to foreign currency denominated in USD, EUR and SDR.

The following table details the effect on profit and equity as at 30 June 2015 from a 10.9 per cent (30 June 2014 from a 11.5 per cent) favourable/unfavourable change in AUD against the Treasury with all other variables held constant. The change in the risk variable has been determined by reference to standard parameters provided by the Department of Finance.

Sensitivity analysis of the risk that the entity is exposed to for 2015
      Effect on
  Risk variable Change in
risk variable
Profit and loss Equity
      2015 2015
    % $’000 $’000
IFI Investments Exchange rate 11 (99,613) (99,613)
IFI investments Exchange rate (11) 123,986 123,986
IMF related moneys owing Exchange rate 11 (5) (5)
IMF related moneys owing Exchange rate (11) 7 7
IMF new arrangements to borrow loan Exchange rate 11 (75,345) (75,345)
IMF new arrangements to borrow loan Exchange rate (11) 93,780 93,780
IMF Quota Exchange rate 11 (581,208) (581,208)
IMF Quota Exchange rate (11) 723,412 723,412
Promissory notes Exchange rate 11 (5,683) (5,683)
Promissory notes Exchange rate (11) 7,074 7,074
IMF SDR allocation liability Exchange rate 11 (553,691) (553,691)
IMF SDR allocation liability Exchange rate (11) 689,161 689,161
Other liabilities Exchange rate 11 (46) (46)
Other liabilities Exchange rate (11) 57 57
Sensitivity analysis of the risk that the entity is exposed to for 2014
      Effect on
  Risk variable Change in
risk variable
Profit and loss Equity
      2014 2014
    % $’000 $’000
IFI Investments Exchange rate 12 (88,367) (88,367)
IFI investments Exchange rate (12) 111,333 111,333
IMF related moneys owing Exchange rate 12 (22) (22)
IMF related moneys owing Exchange rate (12) 28 28
IMF new arrangements to borrow loan Exchange rate 12 (101,595) (101,595)
IMF new arrangements to borrow loan Exchange rate (12) 127,999 127,999
IMF Quota Exchange rate 12 (547,212) (547,212)
IMF Quota Exchange rate (12) 689,425 689,425
Promissory notes Exchange rate 12 (4,862) (4,862)
Promissory notes Exchange rate (12) 6,126 6,126
IMF SDR allocation liability Exchange rate 12 (521,304) (521,304)
IMF SDR allocation liability Exchange rate (12) 656,784 656,784
Other liabilities Exchange rate 12 (86) (86)
Other liabilities Exchange rate (12) 108 108

Note 28: Administered Financial Assets Reconciliation

  Notes 2015
$’000
2014
$’000
Financial assets      
Total financial assets per administered schedule of assets and liabilities   35,972,608 28,703,310
Less: non-financial instrument components      
GST receivable   (761) (9)
Total non-financial instrument components   (761) (9)
Total financial assets as per financial instruments note 27A 35,971,847 28,703,301

Note 29: Appropriations

Note 29A: Annual Appropriations (‘Recoverable GST exclusive’)

Annual Appropriations 2015
  Appropriation Act PGPA Act   Total appropriation   Appropriation applied in 2014
(current and prior years)
  Variance   Section 51 determinations
  Annual Appropriation AFM Section 74 Section 75
  $’000 $’000   $’000 $’000   $’000   $’000   $’000   $’000
DEPARTMENTAL                          
Ordinary annual services 178,400   15,425 (260)   193,565   (190,393)   3,172  
Other services                          
Equity 2,613   (2,613)     (1,595)   (1,595)  
Total departmental 181,013   15,425 (2,873)   193,565   (191,988)   1,577  
ADMINISTERED                          
Ordinary annual services                          
Administered items1 79 712   6 856   86 568   (72,859)   13 709  
Payments to Corporate Commonwealth Entities          
Other services                          
Administered assets and liabilities       (20)   (20)  
Total administered 79,712   6,856   86,568   (72,879)   13,689  

1. Variance relates to undrawn appropriation for the community engagement campaign on Australia’s economic challenges.

Annual Appropriations 2014
  Appropriation Act   FMA Act   Total appropriation   Appropriation applied in 2014
(current and prior years)
  Variance
  Annual Appropriation Appropriations reduced1 AFM2   Section 314 Section 325
  $’000 $’000 $’000   $’000 $’000   $’000   $’000   $’000
DEPARTMENTAL                        
Ordinary annual services 176,769   15,228   191,997   (190,117)   1,880
Other services                        
Equity 1,775     1,775   (180)   1,595
Total departmental 178,544   15,228   193,772   (190,297)   3,475
ADMINISTERED                        
Ordinary annual services                        
Administered items 8,805,808 (1,282)       100   8,804,626   (8,804,526)   100
Payments to CAC bodies 18,062             18,062   (8,000)   10,062
Other services                        
Administered assets and liabilities3 47,518             47,518   (25,784)   21,734
Total administered 8,871,388 (1,282)   100   8,870,206   (8,838,310)   31,896

1. Appropriation Acts (Nos. 1, 3) 2013-14: sections 10, 11, 12 and 15. Appropriation Acts (Nos. 2, 4) 2013-14: sections 13 and 14. Departmental appropriations do not lapse at financial year-end. However, the responsible Minister may decide that part or all of a departmental appropriation is not required and request that the Finance Minister reduce that appropriation. The reduction in the appropriation is effected by the Finance Minister’s determination and is disallowable by Parliament.
As with departmental appropriations, the responsible Minister may decide that part or all of an administered appropriation is not required and request that the Finance Minister reduce that appropriation. For administered appropriations reduced under section 11 of Appropriation Acts (Nos, 1, 3) 2013-14 and section 12 of Appropriation Acts (Nos. 2, 4) 2013-14, the appropriation is taken to be reduced to the required amount specified at Note 30F once the annual report is tabled in Parliament. All administered appropriations may be adjusted by a Finance Minister’s determination, which is disallowable by Parliament.

2. Advance to the Finance Minister (AFM) — Appropriation Acts (No. 1, 3) 2013-14: section 13 and Appropriation Acts (No. 2, 4) 2013-14: section 15.

3. Relates to payments to the Clean Energy Finance Corporation.

4. Variance relates to undrawn appropriations payable to NSW as a loan to support the James Hardie Asbestos Compensation Fund. NSW only required partial loan funding in 2013-14.

5. Relates to PGPA Act Section 75 Amendment Determination 2013-2014 from Department of Industry.

Note 29B: Departmental and Administered Capital Budgets (‘Recoverable GST exclusive’)

  2015 Capital Budget Appropriations   Capital Budget Appropriations applied in 2014-15
(current and prior years)
  Appropriation Act PGPA Act Total Capital
Budget Appropriations
  Payments for
non-financial assets2
Payments for
other purposes
Total payments Variance
  Annual Capital Budget Section 75
  $’000 $’000 $’000   $’000 $’000 $’000 $’000
Departmental                
Ordinary annual services                
Departmental Capital                
Budget1 5,373 5,373   5,373 5,373

1. Departmental Capital Budgets are appropriated through Appropriation Acts (No.1,3,5). They form part of ordinary annual services and are not separately identified in the Appropriation Acts. For more information on ordinary annual services appropriation, please see Table A: Annual appropriations. Treasury is not appropriated an Administered Capital Budget.

2. Payments made on non-financial assets include purchase of assets, expenditure on assets which have been capitalised, costs incurred to make good an asset to its original condition.

  2014 Capital Budget Appropriations   Capital Budget Appropriations applied in 2013-14
(current and prior years)
  Appropriation Act FMA Act Total Capital
Budget Appropriations
  Payments for
non-financial assets3
Payments for
other purposes
Total payments Variance
  Annual Capital Budget Appropriations reduced2 Section 32
  $’000 $’000 $’000 $’000   $’000 $’000 $’000 $’000
Departmental                  
Ordinary annual services                  
Capital Budget1 5,266 5,266   5,266 5,266

1. Departmental Capital Budgets are appropriated through Appropriation Acts (No.1,3,5). They form part of ordinary annual services and are no separately identified in the Appropriation Acts. For more information on ordinary annual services appropriation, please see Table A: Annual appropriations. Treasury is not appropriated an Administered Capital Budget.

2. Appropriations reduced under Appropriation Acts (No. 1,3,5) 2013-14: sections 10,11,12 and 15 or via a determination by the Finance Minister

3. Payments made on non-financial assets include purchase of assets, expenditure on assets which has been capitalised, costs incurred to make good an asset to its original condition, and the capital repayment component of finance leases.

Note 29C: Unspent annual appropriations (‘recoverable GST exclusive’)

Authority 2015
$’000
2014
$’000
Departmental    
Appropriation Act (No. 1) 2013-14 49,201
Appropriation Act (No. 3) 2013-14 7,473 7,473
Appropriation Act (No. 4) 2013-14 1,775
Appropriation Act (No. 1) 2014-151 51,843
Appropriation Act (No. 3) 2014-15 620
Total departmental 59,936 58,449
Authority 2015
$’000
2014
$’000
Administered    
Appropriation Act (No. 2) 2010-11 136 544
Appropriation Act (No. 2) 2011-12 61 997
Appropriation Act (No. 1) 2012-13 2 2
Appropriation Act (No. 2) 2012-13 42,705 42 705
Appropriation Act (No. 1) 2013-14 2 700
Appropriation Act (No. 2) 2013-14 47,101 47 121
Appropriation Act (No. 4) 2013-14 18 18
Appropriation Act (No. 1) 2014-152 2,304
Appropriation Act (No. 3) 2014-15 308
Appropriation Act (No. 5) 2014-15 13,798
Total administered 106,235 291,087

1. Cash held amounts (2015: $5.047 million, 2014: $0.567 million) are included in Appropriation Act (No. 1) for the relevant year. Includes quarantined funds of $1.531 million.

2. Cash held amounts (2015: $0, 2014: $1.412 million) are included in Appropriation Act (No. 1) for the relevant year.

Note 29D: Special Appropriations (‘Recoverable GST exclusive’)

The following table lists current special appropriations contained in legislation that the Treasury is responsible for administering.

The Treasury process to complete the 2014-15 financial statements identified no payments (2014: nil payments) made from the COAG Reform Fund special account that resulted in technical breaches of Section 83 of the Constitution (refer to Note 31 for more information).

Authority Type Purpose Appropriation applied
2015
$’000
2014
$’000
Asian Development Bank (Additional Subscription) Act 2009 (Administered) Limited Amount To provide an appropriation for an additional subscription to the ADB. Balance available is USD4.742m in callable shares. (16,979) (16,510)
Federal Financial Relations Act 2009 (Administered) Unlimited Amount To provide an appropriation for payments of financial assistance to the States and Territories. (73,296,353) (70,346,721)
International Monetary Agreements Act 1947 (Administered) Unlimited Amount To provide appropriation for Australia’s obligations as a participant in the IMF’s New Arrangements to Borrow and other IMF’s programs. (40,786) (209,461)
International Monetary Agreements Act 1947 (Administered) Unlimited Amount To provide an appropriation for the payment of Special Drawing Rights issued to Australia by the IMF. (3,350) (4,966)
International Monetary Agreements Act 1947 (Administered) Limited Amount To provide an appropriation for Australia’s purchase of additional shares in the International Bank for Reconstruction and Development. Balance available is USD3.426m in callable shares. (10,317) (10,534)
Clean Energy Finance Corporation Act 2012 (Administered) Limited Amount To provide an appropriation to facilitate increased flows of finance into the clean energy sector. (2,000,000) (2,000,000)
Commonwealth Places (Mirror Taxes) Act 1998 (Administered) Unlimited Amount To provide an appropriation for the purpose of paying compensation to the States in respect of constitutionally invalid state taxes on Commonwealth Places. (502,976) (498,150)
A New Tax System (Managing the GST Rate and Base) Act 1999 (Administered) Unlimited Amount To provide an appropriation for payments to States if a State was under paid (Administered) GST revenue in the 2008-09 financial year.
Public Governance, Performance and Accountability Act 2013 (Administered) Unlimited Amount To provide an appropriation which deals with repayments of amounts received by the Commonwealth. (2,871)
Asian Development Bank Act 1966 (Administered) Limited Amount To provide an appropriation for payments to establish the Bank. Balance available is USD43m in callable shares.
Asian Development Bank Act (Additional Subscription) Act 1972 (Administered) Limited Amount To provide an appropriation for the additional subscription to the ADB. Balance available USD102m in callable shares.
Asian Development Bank Act (Additional Subscription) Act 1977 (Administered) Limited Amount To provide an appropriation for the additional subscription to the ADB. Balance available USD258m in callable shares.
Asian Development Bank Act (Additional Subscription) Act 1983 (Administered) Limited Amount To provide an appropriation for the additional subscription to the ADB. Balance available USD498m in callable shares.
Asian Development Bank Act (Additional Subscription) Act 1995 (Administered) Limited Amount To provide an appropriation for the additional subscription to the ADB. Balance available USD1.210m in callable shares.
European Bank for Reconstruction and Development Act 1990 (Administered) Limited Amount To provide an appropriation for payments to establish the Bank. Balance available is EUR238m in callable shares.
Financial Agreements (Commonwealth Liability) Act 1932 (Administered) Unlimited Amount To provide an appropriation for payment of principal and interest on bonds issued under the Financial Agreement Validation Act 1929, consolidating State debts.
Financial Services Reform Act 2001 (Administered) Unlimited Amount To provide an appropriation for payment of compensation in respect to levies payable by participants in particular financial markets and losses that is connected with a financial market.
Guarantee Scheme for Large Deposits and Wholesale Funding Appropriation Act 2008 (Administered) Unlimited Amount To provide an appropriation for payment of claims under the Deed of Guarantee in accordance with the Guarantee Scheme for Large Deposits and Wholesale Funding.
Guarantee of State and Territory Borrowing Appropriation Act 2009 (Administered) Unlimited Amount To provide an appropriation for payment of claims under the Deed of Guarantee in accordance with the Guarantee of State and Territory Borrowing.
International Bank for Reconstruction and Development (Share Increase) Act 1988 (Administered) Limited Amount To provide an appropriation for the purchase of additional shares in the IBRD.
International Bank for Reconstruction and Development (General Capital Increase) Act 1989 (Administered) Limited Amount To provide an appropriation for the purchase of additional shares in the IBRD.
International Finance Corporation Act 1955 (Administered) Limited Amount To provide an appropriation for the subscription to the capital stock of the IFC.
International Finance Institutions (Share Increase) Act 1982 (Administered) Limited Amount To provide an appropriation for the purchase of additional shares in the IFC and the IBRD.
International Finance Institutions (Share Increase) Act 1986 (Administered) Limited Amount To provide an appropriation for the purchase of additional shares in The IFC and the IBRD.
International Monetary Agreements Act 1959 (Administered) Limited Amount To provide an appropriation for the increase in Australia’s quota in the IMF and increase in Australia’s capital stock in the IBRD.
International Monetary Agreements Act 1960 (Administered) Limited Amount To provide an appropriation for the increase in Australia’s quota in the IMF and increase in Australia’s capital stock in the IBRD.
Multilateral Investment Guarantee Agency Act 1997 (Administered) Limited Amount To provide an appropriation for payments to establish the Agency. Balance available USD26m in callable shares.
Papua New Guinea Loans Guarantee Act 1975 (Administered) Limited Amount To provide an appropriation for Australia’s guarantee of certain public loans raised by Papua New Guinea and. Balance available is AUD1.3m
State Grants Act 1927 (Administered) Limited Amount To provide an appropriation for the distribution of surplus revenue to the States.
Terrorism Insurance Act 2003 (Administered) Unlimited Amount To provide an appropriation for payments to the Australian Reinsurance Pool Corporation and compensation in the acquisition of property.
Total     (75,873,632) (73,086,342)

Note 29E: Disclosure by agent in relation to Annual and Special Appropriations (‘Recoverable GST exclusive’)

  Department of Education and Training Department of Education Employment and Workplace Relations Department of the Prime Minister and Cabinet Inspector-General of Taxation
  National Partnership Payments and Assistance to States and Territories for Non-Government Schools National Partnership Payments and Assistance to States and Territories for Non-Government Schools National Partnership Payments and Assistance to States and Territories for Non-Government Schools Transaction service provider
2015 $’000 $’000 $’000 $’000
Total receipts 15,635,076 2,786
Total payments 15,635,076 2,714
  Department of Education Department of Education Employment and Workplace Relations Department of the Prime Minister and Cabinet Inspector-General of Taxation
  National Partnership Payments and Assistance to States and Territories for Non-Government Schools National Partnership Payments and Assistance to States and Territories for Non-Government Schools National Partnership Payments and Assistance to States and Territories for Non-Government Schools Transaction service provider
2014 $’000 $’000 $’000 $’000
Total receipts 9,845,312 2,142,747 19,916 2,416
Total payments 9,845,312 2,142,747 19,916 2,469

Note 30: 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 Treasury has continued to review its exposure to risks of not complying with statutory conditions on payments from appropriations and testing has identified no payments were made in contravention of section 83 of the Constitution.

The Treasury continues to review its verification procedures, in consultation with the Portfolio Departments, regarding payments under the Federal Financial Relations Act 2009 and COAG Reform Fund Act 2008. During 2014-15, the Treasury implemented a risk assessment framework to determine the risk profile of each National Partnership agreement (NPA) and, based on this, what additional assurance may be required when making a payment.

Internal audit has reviewed the risk assessment framework and has made additional recommendations to strengthen the existing control framework for NPA payments, which the Treasury will implement during 2015-16. A key recommendation of the internal audit review is the escalation of monitoring and assurance activities where repeated issues are not addressed.

During 2014-15 the ANAO tabled a performance audit into the administration of the Natural Disaster Relief and Recovery Arrangements (NDRRA) by Emergency Management Australia (report no. 34). The audit highlighted a number of payments that may not be eligible under NDRRA, which as a result could be in contravention of s83 of the Constitution. The Treasury in conjunction with AGD will assess the size of any ineligible payments and the possible arrangements to recover the overpayments or offset them against future payments.

For the period ended 30 June 2015, no payments under the Federal Financial Relations Act 2009 in 2014-15 were made in in contravention of section 83 of the Constitution. Of the total payments made in 2014-15 under the COAG Reform Fund Act 2008, three payments totalling $14.1 million were identified to be in breach of section 83 of the Constitution. Details of the remedial actions to be taken in 2015-16 are included in the following table.

Appropriations Payment amount
2014-15
$’000
  Review complete?   Breaches identified   Potential breaches to date yet to be resolved   Remedial action taken or proposed
Special appropriations         Number Total $’000 Incorrect $’000 Recovered/offset
as at 30 June 2015
  Yes/No Indicative extent    
International Monetary Agreements Act 1947 s7     N/A     N/A N/A   N/A
International Monetary Agreements Act 1947 s8 3,350   Yes     N/A N/A   N/A
International Monetary Agreements Act 1947 s8B 40,786   Yes     N/A N/A   N/A
International Monetary Agreements Act 1947 s9 10,317   Yes     N/A N/A   N/A
Asian Development Bank (Additional Subscription) Act 2009 16,979   Yes     N/A N/A   N/A
Federal Financial Relations Act 2009 73,296,353   Yes     N/A N/A   N/A
Superannuation Industry (Supervision) Act 1993     N/A     N/A N/A   N/A
Special accounts                          
COAG Reform Fund Act 2008 11,521,643   Yes   1 47 Nil   N/A N/A   See note 1
2 14,064 Nil   N/A N/A   See note 2
Other appropriations                          
Long Service Leave (Commonwealth employees) Act 1976 3,696   Yes     N/A N/A   N/A

Note 1: A new funding agreement, covering the payment made in 2014-15 and the proposed payment for 2015-16, is expected to be finalised during 2015-16.

Note 2: The responsible department is obtaining further ministerial agreement to confirm the terms and conditions of these payments.