DOFA further consolidated its financial performance following the
financial reforms introduced throughout the Commonwealth.
The operating surplus for 1999-2000 was $244.5 million, substantially
more than in 1998-99. It also exceeded the forecast in DOFA's 1999-2000
Portfolio Budget Statement by $88 million.
Operating revenues during the year improved markedly. Importantly,
dependence on government revenue was reduced significantly while
other revenue sources increased. The Property Group completed the
introduction of commercial rents for the non-Defence estate during
the year, and this contributed significantly towards DOFA's strong
performance. Good returns from the disposal of surplus property
and interest earnings arising from the first year of devolved banking
also contributed to the result.
Contract management initiatives and staffing rationalisation to
levels reflecting commercial reality lowered expenses by $189 million,
or some 30 per cent less than 1998-99 expenses. Reduced expenses
were in line with budget expectations.
DOFA's overall performance in terms of outcomes reflects the above
results, although actual and budgeted individual outcomes varied.
Service charges for departmental overheads were re-allocated to
better reflect use by business groups; this contributed to increases
over budget in the prices of Outcomes 1 and 3, and a decrease for
Outcome 2. However, the price for Outcome 2 increased by $41.6 million,
largely due to the disposal of surplus property, the introduction
of commercial rents and earnings on interest, as outlined above.
Based on overall performance, DOFA paid a dividend of $71.7 million
from the surplus to the Government. Further, a strong cash flow
resulting from the disposal of surplus property and careful management
of DOFA's working capital position saw the return of $382.6 million
in capital. DOFA now has a strong financial base, with the prospect
of ongoing operating surpluses. Continuing dividends to Government
are forecast for future years. A review of output pricing is scheduled
for 2000-01, and the results of the review will be taken into account
for the 2001-02 Budget.