FINANCIAL PERFORMANCE

Financially, 2000–01 has been another positive year for the Department. Finance has continuously improved its financial performance in the past three years. A summary of our key financial information since 1998–99 is provided at Figure 3.

The operating surplus for the year ending 30 June 2001 was $187.6 million. This compares favourably to the operating surplus of $142 million budgeted in the 2000–01 Portfolio Additional Estimates Statements (PAES). The primary reason for this higher than budgeted operating surplus was several relatively large one-off items—a $51.3 million reversal of a loss on valuation of the property portfolio and an increase in revenue of $17.9 million due to a change in the accounting treatment of unearned appropriations. This was offset in large part by a $10 million write-off of work in progress associated with property assets and a net payment of $7.7 million arising from settlement of negotiations on the DASFLEET tied contract.

Both revenue and expenses were lower in 2000–01 compared with the previous year. This reflects primarily the sale of Removals Australia and the divestment of property both of which reduced revenue and expenses. The Department's total revenue for the year was $694.3 million, compared to the prior year's actual revenue of $902.2 million. The Department's total expenses for the year totalled $506.6 million, compared to the previous year of $657.8 million.

This is a pleasing result, and follows from a focus on cost control and improved financial management skills and reporting.

In 2000–01 the Department reaffirmed its commitment to reducing debt, retiring promissory notes at a cost of $222 million issued to finance property development under the previous cash budget regime. The result was a saving of some $3 million in net present value terms.

FINANCIAL PERFORMANCE 1998–99 to 2000–01 ($million)

REDUCTION IN TOTAL DEBT 1998–99 to 2000–01 ($million)

CUMULATIVE RETURNS TO GOVERNMENT 1998–99 to 2000–01 ($million)

Finance returned $390 million to the Government in 2000–01, comprising a dividend of $142 million, asset sales of $198 million and an additional return of capital of $50 million. This is recognition of continuing efficiencies in Departmental operations and better management of our balance sheet. Our financial performance over the last three years has enabled Finance to return approximately $1.2 billion to the Government for use in other areas.

Finance's overall performance in terms of outcomes reflects the above results, although actual and budgeted individual outcomes varied. Service charges for Departmental overheads were further refined and re-allocated to better reflect the total cost of outputs for Business Groups.

This year saw the further refinement and consolidation of our Departmental financial management reporting. An improved reporting framework assists good management decision-making, positioning the Department to deliver its outcomes more effectively. The work undertaken to improve budgeting reporting frameworks has further raised the level of financial awareness throughout the Department. Leveraging off our strong financial base, Finance has the opportunity to continue to deliver a strong operating result for the Commonwealth.