Financial Performance - Departmental

Departmental Operating ResultThe Department of Health and Ageing recorded a consolidated 2011-12 operating deficit of $28.597 million under the net cash appropriation model, introduced by the Commonwealth in 2010-11. On elimination of unfunded depreciation and the increase in employee provisions as a result of discount rate movements, the consolidated group recorded an operating surplus of $0.194 million.

The Department has recorded a consolidated operating surplus in nine of the last ten years.

Departmental Revenue

During 2011-12, revenue from Government increased by 6.0% ($35.938 million) to $636.121 million.

The Department’s 2011-12 departmental appropriation revenue has been adjusted as a result of:

• prior year departmental measure movements (decrease of $28.213 million);
• new departmental budget funding (increase of $59.656 million); less
• Section 32 transfers of funding to National Health Reform agencies ($0.333 million).

During 2011-12, revenue from the sale of goods and rendering of services increased by 2.7% ($3.703 million) to $139.425 million primarily from:

• an increase of $10.114 million (9.6%) in TGA; offset by
• a decrease in the core Department of $6.190 million (26.5%).

Other revenue increased significantly ($20.566 million) as a result of recoveries for payments made on behalf of portfolio agencies under a shared services agreement. The total value of such recoveries is $28.644 million which is offset in expenses.

Departmental Expenses

Operating expenses increased by 9.8% ($74.822 million) during 2011-12 to $837.178 million (2010-11: $762.356 million).

The major contributing factors for the increase included:

• an increase in employee expenses ($54.522 million) of which $13.138 million resulted from the increase in employee provisions due to discount rate movements; and
• a result of expenses incurred for payments made on behalf of portfolio agencies under a shared services agreement. The total value of such expenses is $28.644 million which is offset in revenue.

Departmental total assets increased by 13.5%

Departmental assets and liabilities

Total assets have increased by $62.541 million to $524.405 million (2010-11: $461.864 million).The major contributors were:

• intangible assets increased by $68.934 million primarily due to the purchase and development of software holdings, including those related to the National Health Reform agenda;
• increase in property, plant and equipment of $13.387 million including an upgrade to the Department’s IT desktop infrastructure; offset by
• decrease in receivables of $19.074 million as a result of drawdowns to fund capital expenditure.

Total liabilities have increased by $65.737 million to $328.621 million (2010-11: $262.884 million). The major contributors were:

• suppliers increasing by $40.244 million to $93.539 million, including year-end accruals for capital expenditure and IT services; and
• an increase in employee provisions of $12.364 million, of which $13.138 million is due to movements in the discount rate.

The Department’s equity position has improved over the last ten years

Sustainability

A ten year summary of the Department’s assets, liabilities and equity position is provided in the graph below.

Text version of Figure 4

The Department’s net equity has improved over the last ten years primarily through equity injections by Government to support IT software development.