Annual reports

Department of the Environment, Water, Heritage and the Arts Annual Report 2009-10

Department of the Environment, Water, Heritage and the Arts, 2010
ISSN 1441-9335

Corporate Outcome - Improving organisational effectiveness (continued)

Financial performance

The two comparison tables below explain the main features of the department's financial performance in 2009-10.

Departmental
Department of the Environment, Water, Heritage and the Arts 2008–09 Actuals
$'000		 2009–10 Actuals
$'000		 2009–10 Variance
$'000
Departmental Outcome 1 Income 203,699 202,137 (1,562)
Expenses 200,968 204,660 3,692
Surplus/(Deficit) 2,731 (2,523) (5,254)
Departmental Outcome 2 Income 83,866 85,489 1,623
Expenses 89,204 89,382 178
Surplus/(Deficit) (5,338) (3,893) 1,445
Departmental Outcome 3 Income 120,733 127,796 7,063
Expenses 151,254 221,942 70,688
Surplus/(Deficit) (30,521) (94,146) (63,625)
Departmental Outcome 4 Income 66,667 74,781 8,114
Expenses 60,879 69,964 9,085
Surplus/(Deficit) 5,788 4,817 (971)
Departmental Outcome 5 Income 79,008 83,460 4,452
Expenses 81,219 77,377 (3,842)
Surplus/(Deficit) (2,211) 6,083 8,294
Total Departmental Income 553,973 573,663 19,690
Expenses 583,524 663,325 79,801
Surplus/(Deficit) (29,551) (89,662) (60,111)
Administered
Department of the Environment, Water, Heritage and the Arts 2008–09 Actuals
$'000		 2009–10 Actuals
$'000		 2009–10 Variance
$'000
Administered Outcome 1 Income 5,162 6,575 1,413
Expenses 472,345 314,727 (157,618)
Administered Outcome 2 Income 16,653 5,046 (11,607)
Expenses 481,494 2,410,264 1,928,770
Administered Outcome 3 Income - - -
Expenses - - -
Administered Outcome 4 Income 494,239 14,514 (479,725)
Expenses 269,018 443,538 174,520
Administered Outcome 5 Income 26,852 35,112 8,260
Expenses 290,615 280,729 (9,886)
Total Administered Income 542,906 61,247 (481,659)
Expenses 1,513,472 3,449,258 1,935,786
Summary resource tables
Key to column headings in the previous tables
2008-09 Actuals Actual Income and Expenses for 2008-09 as at 30 June 2009
2009-10 Actuals Actual Income and Expenses for 2009-10 as at 30 June 2010
2009-10 Variance The difference between the actual results for 2009-10 and 2008-09, i.e. 2009-10 Actuals minus 2008-09 Actuals

Comparison of Departmental financial performance with previous year

Funding Class Income Expenses
Departmental Outcome 1 Income decreased from 2008-09 by $1.6 million. It is noted that no significant factors account for this small change despite a reallocation of Caring for our Country funds being reclassified between Appropriation and Sale of Goods & Services. Expenses increased from 2008-09 largely due to additional funding provided to the Director of National Parks for the management of Commonwealth Reserves offset by reduced expenses across a number of DEWHA activities.
Departmental Outcome 2 Income increased from 2008-09 by $1.6 million due mainly to:
  • Measures for Energy Efficiency and Climate Change Action Program and increased funding to support the Management of Hazardous Waste, Substances and Pollutants Program, which totalled $2.2 million;
  • Offset by a net decrease in Own Source Revenue of $0.6 million, as licensing and associated tasks to cover Ozone and SGG Legislative requirements fell by $2.1 million, in accordance with a two year cycle and other revenue from various sources increased by $1.5 million.
 Expenses increased by $0.178 million from 2008-09 due to:
  • An increase in funding to support the Energy Efficiency and Climate Change Action Program, prior to transfer of the Energy Efficiency functions to Department of Climate Change and Energy Efficiency in accordance with Administrative Arrangement Orders;
  • Offset by cost reductions primarily for contractors involved in the Management of Hazardous Waste, Substances and Pollutants Program.
Departmental Outcome 3 Income increased from 2008-09 by a net amount of $7.1 million due to:
  • Funding to support the Antarctic Science, Policy and Presence Program having increased by $12.8 million;
  • Own source revenue from commercial activities for the provision of research having decreased by $6.7 million;
  • Other revenue having increased by $1 million mainly from insurance claims for oil spill remediation.
 Expenses increased from 2008-09 by $70.7 million and was mainly due to provisioning for make good of Antarctic regions. The costing model for calculating the provision was reviewed by an independent expert in 2009-10 and resulted in recognition of an additional $67.4 million.
Departmental Outcome 4 Income increased from 2008-09 by $8.1 million mainly due to funding for the Water Reform Program of $10.9 million, offset by a reduction in:
  • Own source revenue from the Natural Heritage Trust;
  • Other gains which included accounting adjustments in 2008-09 to derecognise liabilities.
 Expenses increased from 2008-09 by $9.1 million mainly due to increased funding to support the Water Reform Program.
Departmental Outcome 5 Income increased from 2008-09 by $4.5 million, which was mainly due to:
  • An increase in the Indigenous Heritage Program, and the Northern Territory Flexible Funding Pool Program;
  • Increased revenue from National Portrait Gallery as it was operating for 12 months in the financial year 2009-10 compared to a 7 months operating period in 2008-09.
 Expenses decreased from 2008-09 by $3.8 million mainly due to higher comparative operating costs for the opening of a new National Portrait Gallery building in December 2008 and reduced non-profit grant payments to the Kimberly Land Council.

Comparison of Administered financial performance with previous year

Funding Class Income Expenses
Administered Outcome 1 Income increased by $1.4 million from 2008-09 due mainly to grant repayments from the Community Water Grant and Envirofund project. Expenses decreased by $157.6 million from 2008-09 mainly due to the transfer of payments to the states and territories under Caring for our Country to the Department of the Treasury under the Federal Financial Relations Framework.
Administered Outcome 2 Income decreased from 2008-09 by $11.6 million due mainly to gains from assets now recognised for Halon inventory for the first time in 2008-09. Expenses increased from 2008-09 by $1,928 million due to increased funding for the Energy Efficiency and Climate Change Action Program, which included grant payments of $1,582 million for the Home Insulation Program in 2009-10.
Administered Outcome 3 Not applicable Not applicable
Administered Outcome 4 Income decreased by $479.7 million from 2008-09 as:
  • the accounting treatment to de-recognise the Murray Darling Basin Commission (MDBC) investment resulted in a one off gain of $431.1 million in 2008-09;
  • The gain result also included a significant value for initial recognition of jointly controlled assets in 2008-09 ($58.8 million) and the gain from on-going operations is $6.9 million in 2009-10;
  • These decreases were offset by a $3.2 million increase in the sale of goods and services.
 Expenses increased from 2008-09 by $174.5 million due mainly to:
  • The write down and impairment of water entitlement assets by $99.8 million in 2009-10;
  • Increased expenditure on grants of $59.7 million, which included $48.2 million in small block irrigator exit grants and additional funds for local, state and territory government projects;
  • Legal and conveyancing costs of $10.2 million relating to the acquisition of water entitlements by the Commonwealth and increased spending on consultants of $11.8 million primarily for the Menindee Lakes Broken Hill managed aquifer recharge (BHMAR) project;
  • Offset by reductions in other non-cash charges relating to assets of $6.98 million.
Administered Outcome 5 Income increased from 2008-09 by $8.3 million due mainly to:
  • The result for gains, which is $24.4 million up on the prior year as the Australian Film, Television and Radio school sold a building for $34.1 million in 2009-10;
  • Offset by a comparative reduction in other revenue of $16.2 million due to a grant for $15 million being repaid by the Point Nepean Community Trust in 2008-09.
 Expenses decreased from 2008-09 by $9.9 million and this movement reflects:
  • A net decrease in the associated costs involved in Indigenous Employment Flexible Funding Pool Program, National Arts and Crafts Industry Support (NACIS) Program, Cultural Development Program, Indigenous Broadcasting Program, Kokoda Track assistance Papua New Guinea, and Jobs Fund Heritage;
  • Offset by the Point Nepean asset that was transferred to Victoria Government in 2008-09.

Financial position

Measurement 2008–09 $ million 2009–10 $ million
Total Assets 651.442 633.709
Total Liabilities 354.251 438.822
Total Equity 297.191 194.887
Total Assets

The total asset base controlled by the department decreased by $17.7 million during 2009-10, to $633.7 million as at 30 June 2010 and the decrease is attributable to:

Total Liabilities

Total liabilities managed by the department increased by $84.6 million during 2009-10, to $438.8 million as at 30 June 2010. This increase is mainly due to a review of make good provisions in the Australian Antarctic Territory, which resulted in additional provisioning of $67.4 million and $16.3 million for a change in the discount rate applied to the provision calculation.

Total Equity

The department ended the year with total equity of $194.9 million, a decrease of $102.3 million from the equity of $297.2 million as at 30 June 2009.

Asset Management

The department's assets are located throughout Australia, with the majority located in the Australian Antarctic Territory and managed by the Australian Antarctic Division (AAD). The AAD manages and maintains Australia's Antarctic stations, Casey, Davis and Mawson, and a research station on sub-Antarctic Macquarie Island. The AAD has in place an asset management plan for each station.

Procurement activities

In 2009-10, the department was subject to a significant number of audits, inquiries and reviews critical of its procurement and purchasing activities. These reviews were targeted on energy efficiency programs, which have subsequently been transferred to the Department of Climate Change and Energy Efficiency (DCCEE), however, the reviews have a number of broader implications for the future administration of the department.

The findings from the audits, inquiries and reviews have been incorporated into the department's ongoing change management process initiated in 2009-10. Details of changes made and proposed improvements in the areas of procurement and purchasing are outlined below.

Improvements to the department's procurement operations

The department's key reforms, put in place at the end of 2009-10, include an improved governance framework with the establishment of a new Governance Branch to provide central procurement and contract advice; and the establishment of a new Finance and Operations Committee, which has oversight of the department's financial, budgetary, governance and procurement (including grants and contract management) frameworks, standards and related systems and corporate applications, including the monitoring of overall performance.

The department tightened expense delegations, particularly with respect to sole supplier delegation levels, and introduced enhanced mandatory training for all staff with delegations. An internal Ombudsman was appointed to provide staff with an additional pathway to raise concerns with management on program design, procurement and contract negotiation issues.

Improvements to be implemented during 2010-11 include an improved procurement system that will provide automated and timely identification of procurement activities that sit outside identified parameters; and a central register of contracts to replace decentralised arrangements. There will also be a greater role for internal audit and monitoring of procurement and contracting activities.

More detail on the key reforms are outlined in: 'Doing our Business Better', the department's response to the Review of the Administration of the Home Insulation Program (the Hawke Review); and to the Independent Inquiry into the Green Loans Program (the Faulkner Review), available on the department's website at www.environment.gov.au/about/publications/review/index.html

Department's performance against core purchasing policies

The department's procurement guidelines are set out in the Chief Executive Instructions and procurement policies, which are derived from the Commonwealth Procurement Guidelines (CPGs). Under the CPGs, the core principle underpinning procurement is value for money.

The department advertises tender opportunities through the AusTender website. The department's Annual Procurement Plan for 2009-10 was published on AusTender in June 2009 and updated throughout the year. The Annual Procurement Plan for 2010-11 was published on AusTender in June 2010.

Reporting

The department met the requirement to report on the AusTender website all contracts entered into in 2009-10 with a value of $10,000 or more.

The department met the requirement to report on the Senate Order on Departmental and Agency Contracts. All contracts over $100,000 for the current period are listed at www.environment.gov.au/about/contracts

The department met the requirement to report to the Department of Finance and Deregulation on arrangements requiring Regulation 10 authorisation.

Consultancy services4

During 2009-10, 168 new consultancy contracts were entered into involving total actual expenditure of $35.87 million. In addition, 59 ongoing consultancy contracts were active during the 2009-10 year, involving total actual expenditure of $24.44 million.

The list of consultancy contracts let in 2009-10 to the value of $10,000 or more is available at www.environment.gov.au/about/publications/annual-report/09-10

Annual reports contain information about actual expenditure on contracts for consultancies. Information on the value of contracts and is also available on the AusTender website at: www.tenders.gov.au 

Exempt contracts

During 2009-10 there were no standing offers or contracts in excess of $10,000 (inclusive of GST) exempted by the chief executive from being published on AusTender under the Freedom of Information Act 1982. Purchases of water entitlements valued at over $10,000 were reported on AusTender with the identity of the supplier withheld.

Access by the Auditor-General

The department's standard funding agreements and the standard long-form services agreement allow for access by the Auditor-General. The standard short-form services agreement does not include a provision allowing for Auditor-General access. There are a number of other program specific funding agreements, some of which do not specifically mention Auditor-General access.

Advertising and market research

This section is presented in accordance with the requirements of section 311A of the Commonwealth Electoral Act 1918.

Market research
Agency Purpose Expenditure $
(GST inclusive)
Woolcott Research Pty Ltd Developmental market research to inform Water for the Future communication activities. 271,150
Total   $271,150
Advertising - nil to report
Direct mail
Agency Purpose Expenditure $ (GST inclusive)
Canprint Communications Distribution of fact sheets, postcards, declaration forms for Green Loans program 374,000
Toll In2Store Printing and distribution of Ceiling Insulation letters and desktop audit mail-out for Home Insulation Program 5,000
National Mailing & Marketing Pty Ltd Distribution of roof inspection letters for Home Insulation Program 45,000
Australia Post Remittance advices not sent by email, letters to households for Home Insulation Program 28,000
Australia Post Notice of closure of Solar Homes & Communities Plan, requests for more information on incomplete applications, remittance advices not sent by email 19,000
Canberra Mailing & Envelopes Bulk mail-out to unregistered non-govt schools for National Solar Schools Plan 3,000
Australia Post Notification of successful applications for Solar Hot Water Initiative 53,000
Australia Post Mailing of materials related to other energy efficiency programs 3,000
Canberra Mailing and Marketing Mailing of August 2009 edition of Arts and Culture magazine to 6,500 recipients (note this was the final edition of the hard copy magazine) 9,548
Union Offset Printers World Heritage Education program mail out to all Australian primary and secondary schools (May 2010) 15,565
Total $555,113

Grant programs

Outcome 1

Australian Marine Mammal Grants

National Taxonomy Research Grant Program (NTRGP) administered by Australian Biological Resources Study

Natural Heritage Trust

Indigenous Protected Areas

National Reserve System

Community Coastcare

Open Grants

Reef Rescue

Facilitator Network

2009-10 Community Action Grants

2009-10 business plan - competitive

Australian Weeds Strategy

Indigenous Emissions Trading Scheme

Working on Country - National

Australian Government supported activities - baseline funding for World Heritage Areas, Macquarie Island Pest Eradication, Victorian Bushfire Recovery Support.

Environmental Stewardship

Multiple competitive rounds

2009-10 business plan - competitive

Working on Country

Working on Country NT

Working on Country - Regional

Working on Country - Flexible

Working on Country - Trainee

Working on Country - Mature Age

Working on Country - Rounds 1, 2, 3 & 4

C4oC-WoC Indigenous Rangers

Landcare (appropriated to Department of Agriculture, Forestry and Fisheries and jointly managed with Department of Environment, Water, Heritage and the Arts) Landcare Sustainable Practice Grants

Open Grants

2009-10 Community Action Grants

2009-10 business plan - competitive

National Network of Landcare Coordinators

Facilitator Network

Treasury

(Appropriated to Department of Treasury and jointly managed by DAFF and DEWHA)

Base-level funding to regional natural resource management organisations

Other grant programs in addition to Caring for our Country are:

A Sustainable Future for Tasmania - Private Land

Community Water Grants

Outcome 2

Ozone Protection and Synthetic Greenhouse Gas Account

Outcome 3

No grant programs for 2009-10

Outcome 4

Sustainable Rural Water Use and Infrastructure

Restoring the Balance in the Basin

Green Precincts

The Living Murray Initiative

Murray Environmental Flows

National Rainwater and Greywater Initiatives

National Urban Water and Desalination Plan

National Water Security Plan for Cities and Towns

Water Resources Assessment and Research

Water Smart Australia

Outcome 5

Heritage

Indigenous Heritage Program

Kokoda Track assistance Papua New Guinea

Historic Shipwrecks

Jobs Fund Heritage

Commemorating Eminent Australians

National Trusts Partnership Program

National Historic Sites

Arts and Culture

AusFilm

Australia Business Arts Foundation

Australian Ballet School

Australian Children's Television Foundation

Australian National Academy of Music

Australian Youth Orchestra

Bundanon Trust

Business Skills for Visual Artists

Contemporary Music Touring Program

Cultural Ministers Council

Distributed National Collection

Festivals Australia

Film Australia

Flying Fruit Fly Circus

National Aboriginal and Islander Skills Development Association

National Collections Program

National Institute of Circus Art

National Institute of Dramatic Art

Playing Australia

Regional Arts Fund

Visions of Australia: The National Touring Exhibitions Program

Visual Arts and Crafts Strategy

Books Alive

National Collecting Institutions' Touring and Outreach Program

Screen Australia

National Cultural Heritage Special Account

Cape York Welfare Reform

Indigenous Culture Support Program

Maintenance of Indigenous Languages and Records Program

National Arts and Crafts Industry Support

Northern Territory Jobs Package

National Jobs Package

Indigenous Broadcasting Program

National Indigenous Television

Return of Indigenous Cultural Property Program

Information on grants awarded by the Department of the Environment, Water, Heritage and the Arts during the period 1 July 2009 to 30 June 2010 is available at: www.environment.gov.au/about/grants/index.html

4 The definition of 'consultant' used by the department is the definition in the Requirements for Annual Reports published on the website of the Department of the Prime Minister and Cabinet at www.dpmc.gov.au/guidelines/index.cfm 

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