5.1 Department of Health and Ageing

The Department recorded a consolidated operating surplus for 2007–08.

Operating Result – Departmental

The Department of Health and Ageing achieved a consolidated 2007–08 operating surplus of $0.1 million.

The operating result was primarily driven by:

• a $10.9 million operating deficit for the core Department;
• a $10.9 million operating surplus for the Therapeutic Goods Administration;
• a $0.4 million operating deficit for the Office of the Gene Technology Regulator; and
• a $0.5 million operating surplus for the National Industrial Chemicals Notification and Assessment Scheme.

The 2007–08 core Department's operating deficit was primarily a result of the financial impact of expenditure on measures carried over from 2006–07; asset write downs and staff voluntary redundancy severance expenses.

The Therapeutic Goods Administration's operating surplus was a result of higher than expected application submission rates and the accompanying revenue for medical devices and prescription medicines industry sectors which was partly offset by additional expenditure for the impairment and write down of assets.

Total departmental revenue increased by 12% for 2007–08.

Revenue Departmental

During 2007–08, total revenue for the consolidated departmental entity increased by 12% ($74.6 million) from $629.9 million in 2006–07 to $704.5 million. The increase was largely attributable to:

• the Department receiving an additional $60 million in revenues from Government. The additional revenue was primarily due to funding provided to the core Department to perform a range of new policy measures including: Securing the future of Aged Care for Australia ($23.2 million); the Northern Territory Emergency Response ($10.2 million); the Fourth Community Pharmacy Agreement ($3.7 million); the Mersey Community Hospital ($3.5 million); and Indigenous Health ($3.3 million). In addition, the core Department received full year funding for the Aged Care and Complaints Resolution measure of $12.7 million; and
• the Department reporting a $16.7 million increase in sales of goods and services, which related to the Therapeutic Goods Administration reporting an additional $12.4 million for fees and charges.

Departmental net assets increased by 18%.

Assets and Liabilities – Departmental

The Department experienced growth in its net asset base with net assets increasing by $14.2 million to $94.0 million.

Total assets have increased by $38.3 million to $302.6 million (2006–07: $264.3 million). The major contributors were:

• a $34.6 million appropriation receivable (operational) increase to $163.8 million; and
• a $6.5 million appropriation receivable (equity injection) increase to $40.7 million which was primarily due to undrawn capital appropriation for major internally developed software, such as the Aged Care New Payment System and Improved Listing Processes on Pharmaceutical Benefits Scheme, and funds reserved for office accommodation projects.

Total liabilities have increased by $23.9 million to $208.5 million (2006–07: $184.6 million). The major contributors were:

• employee provisions increasing by $10.7 million to $111.9 million, which primarily related to the flow on impacts of an increase in staffing, the Collective Agreement and Senior Executive Service salary increases and voluntary redundancy severance liabilities; and
• suppliers liabilities increasing by $11.3 million to $66.4 million, this change mainly related to $5.8 million of undrawn appropriations related to funding provided on a no win/no loss basis for the Northern Territory Emergency Response ($2.5 million) and Independent Review (PBS) ($3.3 million), which will be returned to the Official Public Account.

Income administered on behalf of Government.

Administered Income

Total 2007–08 administered income was $397.7 million and major items include:

• Taxation revenue of $24.0 million, comprising the levy imposed on eligible doctors to raise revenue towards the Incurred But Not Reported (IBNR) liability for the UMP Support Payment ($0.1 million) and the Run Off Cover Scheme Support payment arrangements ($23.9 million);
• Sales of goods and rendering of services of $7.1 million;
• Recoveries of $54.6 million, which primarily relates to the collection of monies by Medicare Australia which is recoverable from individuals after the settlement of personal injury claims;
• Other revenue of $285.2 million, which mainly relates to revenues collected from the Private Health Insurance Administration Council for private health insurance administration levies; and
• Other gains of $26.8 million, which relates to the Department acquiring the Mersey Community Hospital on 1 November 2007.

Total administered assets increased by $338.9 million.

Assets and Liabilities – Administered

Total administered assets increased by $338.9 million to $734.9 million ($395.7 million in 2006–07). This is mainly a result of the $240.3 million administered investment in the Australian Sports Commission. The investment is a consequence of machinery of Government changes on 3 December 2007 whereby the Department acquired the sports function from the previous Department of Communications, Information Technology and the Arts.