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MEDIA RELEASE SENATOR NICK MINCHIN Minister for Finance and Administration 3 August 2006 45/2006 AUSTRALIAN GOVERNMENT MONTHLY FINANCIAL STATEMENTS May 2006 KEY POINTS The underlying cash balance for the 2005-06 year to 31 May 2006 was a surplus of $18,039 million. The fiscal balance for the 2005-06 year to 31 May 2006 was a surplus of $17,851 million. The operating result for the 2005-06 year to 31 May 2006 was a surplus of $16,646 million. The difference between the fiscal and underlying cash balances is largely attributable to increases in taxation receivables (see note 4). As foreshadowed in the 2006-07 Budget forecast, a range of one off payments are scheduled in June 2006 such as the Auslink program and grants to the Murray Darling Commission together with June having three pension paydays and three public service paydays. ACTUAL 2005-2006 May ESTIMATE 2005-2006 FULL YEAR* $m ACTUAL 2005-2006 Year to Date May $m Underlying Cash Balance Fiscal Balance Headline Cash Balance 1,275 -523 732 18,039 17,851 17,764 14,805 15,966 13,497 Income Expenses Operating Result 18,009 17,019 991 206,679 190,033 16,646 225,786 209,388 16,397 204,115 202,422 1,693 204,115 202,422 1,693 204,027 201,478 2,549 AGGREGATES Assets Liabilities Net Assets $m * As published in the 2006-07 Budget. Care needs to be taken when comparing monthly or cumulative data across years and to full year estimates. Revenues and expenses do vary from month-to-month. Factors such as The New Tax System, and the accrual framework including the timing of payments and policy decisions, can have a large impact on fiscal aggregates from one year to the next and on year-to-date outcomes. The May 2006 monthly financial statements were produced under the Australian Equivalents to International Financial Reporting Standards (AEIFRS). Consistent with the market basis of valuation of assets adopted under AEIFRS, the basis of valuation of the Government's investment in Telstra Corporation Limited and other Commonwealth entities has changed 3 August 2006 Contact: Office of the Minister for Finance and Administration (02) 6277 7400 1 from cost to fair value. The financial effect of this change is recognised in the Statement of Changes in Equity. Following advice from the Australian Bureau of Statistics on the recognition of education grants expenses under Government Finance Statistics, fiscal balance records education grant expenses from April 2006 when cash flows rather than when the Ministerial determination is signed. Refer to note 4 for the impact of the different recognition basis between GFS and AEIFRS for education grants expense. FISCAL OUTCOMES Underlying Cash Balance The main components of the underlying cash balance are cash from operations and cash movements in the net investment in non-financial assets. The underlying cash balance for the year to 31 May 2006 was a surplus of $18,039 million. This underlying cash balance is $4,468 million higher than the May pro-rata (a surplus of $13,571 million) of the Revised Budget estimate for 2005-06 of $14,805 million. The difference reflects a number of individual variations including the following: Movements in underlying cash receipts: Lower receipts from: Taxation in line with the usual monthly fluctuations in revenue. Higher receipts from: Dividends due to: the receipt of the RBA dividend in August each year; and Movements in underlying cash payments: Lower payments for: Grants due to: likely underspends in some programmes; Payments to suppliers due to: likely underspends in some defence related programmes; Personal benefits due to: - seasonality and timing of pension payments combined with the one off carers payment to be paid in June; and - lower than anticipated demand for Youth Allowance. Foreign aid, specifically payments for AusAID's three country and regional programmes (PNG & Pacific; East Asia; and South Asia, Africa and Other). Also, as the Emergency, Humanitarian and Refugee Aid and NGO, Volunteer and Community programmes are not incurred on a pro rata basis, due to timing of activities, requirements of partner Governments and organisations, and the unpredictable nature of expenditure on emergencies. Higher payments for: A number of education grants being paid biannually. 3 August 2006 Contact: Office of the Minister for Finance and Administration (02) 6277 7400 2 Personal benefits claimed through the tax system. Suppliers, due to payment for procurement of the Defence Materiel Organisation’s C17 project. Fiscal Balance The fiscal balance for the year to 31 May 2006 was a surplus of $17,851 million. The main components of the fiscal balance are the GFS net operating balance, which was a surplus of $18,304 million, and a net capital investment of $453 million for the year to 31 May 2006 (refer to the Reconciliation of the Operating Result to Fiscal Balance on page 10 for further detail). FINANCIAL OUTCOMES Actual expenses are $1,907 million lower when compared with a pro-rata of the revised Budget estimate. The main reasons for the higher fiscal result, provided by function, are due to: Education function – higher grant expenses as education grants are expensed in January. Partially offset by: Social Security and Welfare function – lower personal benefits expenses due to seasonal variation and the timing of pension paydays. Transport function – lower expenses mainly attributable to AusLink and other transport programmes as the level of these expenses does not occur equally each month but when State and/or Local Governments make claims for payment. Health function – lower grant expenses due to underspends in a range of health programmes. Assets and Liabilities The net asset balance within the General Government sector is a positive net asset position of $1,693 million at 31 May 2006, including the impact of a change in accounting policy under AEIFRS to recognise investments in Telstra and other Australian Government entities at fair value. Nick Minchin Minister for Finance and Administration 3 August 2006 I J Watt Secretary to the Department of Finance and Administration 3 August 2006 Contact: Senator Minchin’s Office: Department of Finance and Administration: Michael Brennan (02) 6277 7400 Anne Hazell (02) 6215 3650 Chief Financial Officer Australian Government Reporting 3 August 2006 Contact: Office of the Minister for Finance and Administration (02) 6277 7400 3 AUSTRALIAN GOVERNMENT GENERAL GOVERNMENT SECTOR – INCOME STATEMENT ACTUAL ACTUAL 2005-2006 2005-2006 May Year to Date May Note Revenues Taxation Income tax Indirect tax GST Fringe Benefits Tax Other taxes Total Taxation Revenue Non-Taxation Sales of goods and services Interest and dividends Other sources of non-tax revenue Total Non-Tax Revenue Total Revenue 1 2 1 3 Gains Net foreign exchange gains Net gains from sale of assets Other gains Total Gains Income Expenses Goods and Services Employees Suppliers Depreciation and amortisation Net write-down and impairment of assets and fair value losses Net foreign exchange losses Net losses from sale of assets Other goods and services expenses Total Goods and Services Subsidies Benefits and Grants Personal benefits Subsidies Grants Total Subsidies Benefits and Grants Borrowing costs Interest Other borrowing costs Total Borrowing costs Total Expenses Operating Result ESTIMATE 2005-2006 FULL YEAR* $m $m $m 14,121 2,178 0 345 202 16,846 158,445 25,610 0 3,417 2,117 189,588 173,760 28,231 0 3,300 2,242 207,533 454 377 331 1,162 18,008 4,336 7,942 3,506 15,784 205,373 4,898 8,691 3,502 17,092 224,625 -2 -70 73 1 18,009 78 21 1,208 1,307 206,679 85 99 977 1,161 225,786 2,240 1,925 337 21,111 15,675 3,879 22,789 18,487 4,554 -107 0 0 717 5,113 2,444 0 0 6,643 49,752 3,085 0 0 7,649 56,564 8,410 960 2,075 11,445 84,980 9,895 39,997 134,872 93,371 11,004 42,501 146,876 460 1 461 17,019 991 5,371 37 5,409 190,033 16,646 5,932 17 5,949 209,388 16,397 * As published in the 2006-07 Budget. 3 August 2006 Contact: Office of the Minister for Finance and Administration (02) 6277 7400 4 AUSTRALIAN GOVERNMENT GENERAL GOVERNMENT SECTOR – BALANCE SHEET ACTUAL 2005-2006 May $m ESTIMATE 2005-2006 FULL YEAR* $m 910 32,843 92,786 399 506 -2 127,442 1,785 32,069 89,829 399 563 17 124,663 20,109 40,447 1,865 7,615 110 0 3,937 1,769 822 76,673 204,115 19,558 40,031 1,916 7,723 851 0 4,625 4,596 62 79,364 204,027 58,884 4,224 142 128 0 1,442 64,820 59,547 4,224 233 405 0 1,099 65,508 103,313 2,677 1,977 1,466 11,169 17,000 137,602 0 202,422 103,948 2,680 6,290 1,313 10,209 11,529 135,970 0 201,478 1,693 2,549 -27,446 29,138 0 1,693 -55,956 58,505 0 2,549 -36,831 16,646 -8,895 30,772 1,693 -36,490 16,397 -198 22,840 2,549 Note Assets Financial assets Cash Receivables Investments Equity Accounted Investments Accrued revenue Other financial assets Total financial assets Non-financial assets Land and buildings Infrastructure Intangibles Heritage and cultural Investment Property Biological Assets Inventories Other non-financial assets Assets held for sale Total non-financial assets Total assets Liabilities Debt Government securities Loans Leases Deposits Overdrafts Other debt Total debt Provisions and payables Employees Suppliers Personal benefits payable Subsidies payable Grants payable Other provisions and payables Total provisions and payables Liabilities associated with assets held for sale Total liabilities Net Assets Equity Accumulated results Reserves Capital Total equity Opening net assets ** Operating Result Asset revaluation reserve Other movements Closing net assets * As published in the 2006-07 Budget. ** For May, FBO 2004-05 net asset position adjusted for AEIFRS impacts as disclosed in the FBO 2004-05 notes. 3 August 2006 Contact: Office of the Minister for Finance and Administration (02) 6277 7400 5 AUSTRALIAN GOVERNMENT GENERAL GOVERNMENT SECTOR STATEMENT OF CHANGES IN EQUITY Accumulated Results ACTUAL 2005-2006 Year to Date May Asset Revaluation Reserve ESTIMATE ACTUAL 2005-2006 2005-2006 FULL YEAR* Year to Date May Other Reserves ESTIMATE ACTUAL 2005-2006 2005-2006 FULL YEAR* Year to Date May Contributed equity/capital ESTIMATE ACTUAL 2005-2006 2005-2006 FULL YEAR* Year to Date May Total Equity ESTIMATE ACTUAL 2005-2006 2005-2006 FULL YEAR* Year to Date May ESTIMATE 2005-2006 FULL YEAR* $m $m $m $m $m $m $m $m $m $m -74,934 418 30,469 -74,934 -1,014 23,127 16,586 -113 16,939 -222 21,518 7 21,505 -9 0 0 0 0 -36,831 312 30,469 -36,490 -1,246 23,127 -44,048 -52,822 16,473 16,717 21,525 21,496 0 0 -6,050 -14,609 0 0 -8,733 -28 -15 68 0 -8,733 -28 0 -15 68 -8,761 53 0 0 -8,761 53 16,646 16,397 0 7,885 16,451 0 0 707 2,549 Opening Balance Balance carried forward from previous period ** Adjustment for errors / Entity Adjustments Adjustment for changes in accounting policy Adjusted Opening Balance Income and Expense Revenues and Expenses Recognised Directly in Equity Currency Translation gain (loss) Financial Asset Revaluations Non-Financial Asset Revaluations Total Revenues and Expenses Recognised Directly in Equity 0 0 Net Operating Result 16,646 16,397 Total Income and Expenses 16,646 16,397 -8,761 53 0 0 5 0 -50 -19,978 0 446 -1 0 -21 224 0 -253 -5 0 -73 19,754 0 514 0 0 0 0 -144 -27,446 -55,956 7,691 16,741 21,447 41,764 0 0 1,693 Transfers between reserves Dividends Other movements Closing balance * As published in the 2006-07 Budget. ** For May, FBO 2004-05 closing balance adjusted to reflect AEIFRS impacts as disclosed in the FBO 2004-05 notes. 3 August 2006 Contact: Office of the Minister for Finance and Administration (02) 6277 7400 6 0 0 0 AUSTRALIAN GOVERNMENT GENERAL GOVERNMENT SECTOR – CASH FLOW STATEMENT ACTUAL ACTUAL 2005-2006 2005-2006 May Year to Date May $m $m ESTIMATE 2005-2006 FULL YEAR* $m Operating Activities Cash received Taxes Sales of goods and services Interest Dividends GST receipts Other (a) Total operating cash received 17,528 448 365 2 178 460 18,982 185,107 4,565 3,777 4,338 2,619 3,215 203,621 204,012 5,204 4,308 4,341 2,973 3,026 223,865 Cash used Payments to employees Payments to suppliers Subsidies paid Personal benefits Grant payments Interest and other financing costs GST payments Other Total operating cash used Net Cash from (used by) Operating Activities 1,845 1,656 938 7,736 3,304 584 6 607 16,676 2,306 17,402 18,053 9,372 83,492 39,130 6,192 94 6,557 180,292 23,329 19,953 21,643 10,451 92,382 44,559 6,744 86 7,144 202,963 20,901 Investing Activities Net Cash received/(used) Proceeds from asset sales programme Proceeds from sales of property, plant and equipment and intangibles Net loans, advances and HECS Purchase of property, plant and equipment and intangibles Other investing cash receipts/(payments) Net Cash from (used by) Investing Activities 0 1 -543 -1,011 -3,670 -5,223 0 220 -119 -5,449 -17,683 -23,031 0 224 -1,238 -6,188 -12,418 -19,620 217 490 707 647 -1,833 -1,186 0 -1,296 -1,296 -2,210 -888 -14 Financing Activities Net Cash received/(used) Net repayments of borrowings Other financing cash receipts/(payments) Net cash from (used by) Financing Activities Net increase / (decrease) in cash held * As published in the 2006-07 Budget. (a) Negative movement due to reclassifcation of receipts by a number of agencies. 3 August 2006 Contact: Office of the Minister for Finance and Administration (02) 6277 7400 7 AUSTRALIAN GOVERNMENT GENERAL GOVERNMENT SECTOR – INCOME STATEMENT BY FUNCTION Note Income by Source Taxation Non-taxation Gains Income Expenses by Purpose General Public Services Defence Public Order and Safety Education Health Social Security and Welfare Housing and Community Amenities Recreation and Culture Fuel and Energy Agriculture, Forestry and Fishing Mining and Mineral Resources (other than fuels); Manufacturing and Construction Transport and Communication Other Economic Affairs Other Purposes Public Debt Interest Nominal Superannuation Interest General Purpose InterGovernment Transactions Natural Disaster Relief Contingency Reserve Asset Sales Total Expenses 4 Operating Result ACTUAL ACTUAL ESTIMATE 2005-2006 2005-2006 2005-2006 May Year to Date FULL YEAR May $m $m $m 16,846 1,162 1 18,009 189,588 15,784 1,307 206,679 207,533 17,092 1,161 225,786 869 1,530 254 -634 3,879 7,761 290 246 338 -117 12,624 12,499 2,462 16,996 34,314 78,642 2,061 2,312 3,616 1,699 14,561 15,209 2,807 16,228 37,623 86,268 2,322 2,695 4,018 2,415 212 400 577 1,509 2,316 5,171 1,851 3,102 5,174 451 452 5,037 4,975 5,475 5,583 470 38 0 4 17,019 3,595 166 0 38 190,033 3,655 359 33 8 209,388 991 16,646 16,397 This table is prepared on an AEIFRS basis. 3 August 2006 Contact: Office of the Minister for Finance and Administration (02) 6277 7400 8 AUSTRALIAN GOVERNMENT GENERAL GOVERNMENT SECTOR – RECONCILIATION OF THE OPERATING RESULT TO FISCAL BALANCE ACTUAL ACTUAL ESTIMATE 2005-2006 2005-2006 2005-2006 May Year to Date FULL YEAR* May $m $m $m 16,646 991 16,397 0 164 258 0 1 184 -107 2,444 3,085 -221 514 713 2 -78 -85 -1,080 1,313 -833 -71 24 122 175 1,969 2,513 767 3,290 3,321 -494 18,303 16,847 Operating result less assets recognised for the first time plus actuarial revaluations plus writedown of assets/bad and doubtful debts less mutually agreed writedowns plus net foreign exchange losses plus other economic revaluations (a)(b) less profit (loss) on the sale of assets plus Defence weapons platform depreciation less Defence weapons platform investment GFS Net Operating Balance less purchase of property plant and equipment and intangibles less net assets acquired under finance leases less other non-financial assets less increase in inventories plus proceeds from sales of property, plant and equipment plus Defence weapons platform investment plus depreciation and amortisation excl weapons Fiscal Balance (GFS Net Lending) 1,037 1 -13 -66 5,442 16 101 315 6,169 12 138 148 1 767 162 -523 220 3,290 1,910 17,850 224 3,321 2,041 15,966 * Data in this table are consistent with that published in the 2006-07 Budget. (a) Net repurchase premia (accruals basis), net losses/gains on swap transactions, cost of asset sales and International Development Association/Asian Development Fund payments. (b) Includes the change in expense recognition for education grants, see page 1 for more details. AUSTRALIAN GOVERNMENT GENERAL GOVERNMENT SECTOR – DERIVATION OF UNDERLYING AND HEADLINE BALANCE ACTUAL ACTUAL 2005-2006 2005-2006 May Year to Date May $m $m Net cash from operating activities Plus: Payments classified as GFS adjustments Plus: Net cash from investments in non-financial assets Proceeds from sales of property, plant and equipment and intangibles Less: Purchase of property, plant and equipment and intangibles Less: Finance leases and similar arrangements GFS cash surplus/deficit Less: Future Fund Earnings Underlying Cash Balance Plus: Net Advances Proceeds from asset sales program Net advance receipts/(payments) (a) Plus: Future Fund Earnings Equals Headline Cash Balance ESTIMATE 2005-2006 FULL YEAR* $m 2,306 -20 23,329 -45 20,901 -38 1 1,011 1 1,275 0 220 5,449 16 18,039 0 224 6,188 12 14,888 83 1,275 0 0 -543 0 732 18,039 0 0 -275 0 17,764 14,805 0 0 -1,390 83 13,497 * Data in this table are consistent with that published in the 2006-07 Budget. (a) Includes transactions classified as net advances for GFS purposes such as Higher Education Contribution Scheme loans and loans to other levels of Government (State, Local and Multi-jurisdictional) for policy purposes. 3 August 2006 Contact: Office of the Minister for Finance and Administration (02) 6277 7400 9 NOTES: The accounting policies in this part are generally consistent with the requirements of AEIFRS. While the scope for financial reporting recommended by AEIFRS and AAS 31 is the whole of government (that is, the Australian Government public sector), the Financial Management and Accountability Act 1997 requires monthly financial statements to be consistent with the budget estimates. Accordingly and pursuant to the Charter of Budget Honesty Act 1998, this presentation covers the general government sector only. This publication does not include full note disclosures. With the introduction of Business Activity Statements and Instalment Activity Statements in 2000-2001, taxpayers provide information on payments associated with several types of tax when lodging the statement and paying the aggregate net tax amount. Thus, while total tax collections are known with certainty at the end of each month, the distribution across the relevant heads of revenue cannot be finalised until all statements are received and processed. The outcomes for some revenue items provided in this statement are thus estimates, in accordance with the best judgement of the Taxation Commissioner, and subject to revision. The taxation revenue items not affected are: Petroleum Resource Rent Tax, Excise duty, Customs duty, Other Taxes and Individuals Refunds. The sum of the revenue accrued in the month and the revisions to prior periods equals the revenue reported in the Statement of Revenue and Expenses. All taxation items in these notes are reported on an AEIFRS basis, unless otherwise indicated. NOTE 1: INCOME TAX ACTUAL ACTUAL 2005-2006 2005-2006 May Year to Date May $m $m INDIVIDUALS AND OTHER WITHHOLDING TAX Gross income tax withholding Gross other individuals Less refunds Total individuals and other withholding tax OTHER SOURCES Companies Superannuation funds (a) Petroleum Resource Rent Tax (b) Total income tax from other sources Total income tax Fringe Benefits tax ESTIMATE 2005-2006 FULL YEAR* $m 8,721 3,748 810 11,659 95,179 24,299 14,659 104,819 103,830 26,410 15,350 114,890 2,142 327 -6 2,462 - 45,420 6,298 1,908 53,626 50,480 6,420 1,970 58,870 14,121 345 158,445 173,760 3,417 3,300 ACTUAL ACTUAL 2005-2006 2005-2006 May Year to Date May $m $m ESTIMATE 2005-2006 FULL YEAR* $m * As published in the 2006-07 Budget. (a) Includes superannuation contributions surcharge. (b) Negative collections indicate refunds exceed collections. NOTE 2: INDIRECT TAX Excise duty Customs duty Other indirect tax Total indirect tax revenue 1,677 431 71 2,178 20,088 4,537 984 25,610 21,900 5,171 1,160 28,231 * As published in the 2006-07 Budget. 3 August 2006 Contact: Office of the Minister for Finance and Administration (02) 6277 7400 10 NOTE 3: GOODS AND SERVICES TAX In regard to GST revenue, AAS would suggest the gross amount of GST be included in the Australian Government’s Financial Statements. However, the clear policy intent of the Intergovernmental Agreement on the Reform of Australian Government-State Financial Relations is that the GST is a State tax collected by the Australian Government in an agency capacity. Therefore, accrued GST revenues and associated payments to the States and Territories are not recognised in these statements. ACTUAL ACTUAL 2005-2006 2005-2006 May Year to Date May $m $m GST Revenue (a) (collected on behalf of the States) 2,791 ESTIMATE 2005-2006 FULL YEAR* $m 36,589 37,860 * As published in the 2006-07 Budget. (a) GST revenue is presented in this note on an accrual basis. This differs from GST cash receipts, on which payments to the States and Territories are based. NOTE 4: ADJUSTMENT FOR EDUCATION GRANT EXPENDITURE In regard to education grant expenditure, adherence to AAS results in fewer education expenses being reported until the signing of the Ministerial determination, which normally occurs between December and March each year. This produces a bunching of expenses such that the full year's expense is recognised at that time and remains relatively constant until June. The table below provides details of the cash paid by DEST and attributable to the Education function for the year to date. ACTUAL 2005-2006 Year to Date May $m Opening grants payable for DEST 7,145 less closing grants payable for DEST 8,532 plus grant expenses for DEST 15,416 Cash payments for grants attributable to the Education function 14,029 NOTE: Style Conventions (1) Figures in tables and generally in the text have been rounded. Discrepancies in tables between totals and sums of components are due to rounding. International Monetary Fund (IMF) Special Data Dissemination Standards (SDDS) (2) In accordance with the IMF's SDDS, quarter ahead notice of the date of release of the data on central government operations, which is contained in the Australian Government Financial Statements, is given on the IMF's Data Dissemination Bulletin Board at http//dsbb.imf.org. (3) Monthly and quarterly data on debt guaranteed by the Australian Government (central) government that meet the coverage and timeliness requirements of the SDDS are published on the AOFM website at http://www.aofm.gov.au/content/borrowing/commonwealth.asp?NavID=32. In accordance with the IMF SDDS, the approximate date of release of the data on debt guaranteed by the Australian Government (central) government, is given on the IMF's Data Dissemination Advance Release Calender http://dsbb.imf.org. 3 August 2006 Contact: Office of the Minister for Finance and Administration (02) 6277 7400 11