Online version of the 2012-13 Department of Health and Ageing Annual Report

Financial Performance - Departmental

Page last updated: 29 October 2013

Departmental Operating Result

Operating Result

The Department of Health and Ageing recorded a consolidated 2012-13 operating deficit of $52.1 million under the net cash appropriation model, introduced by the Commonwealth in 2010-11. On elimination of unfunded depreciation, the consolidated group recorded an operating deficit of $9.0 million primarily as a consequence of supporting a staff voluntary redundancy program.

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

Departmental Revenue

Revenue from Government decreased by 1.8% for 2012-13

During 2012-13, revenue from Government decreased by 1.8% ($11.3 million) to $624.8 million.

The Department’s 2012-13 departmental appropriation revenue has been adjusted as a result of:

  • prior year departmental measure movements (decrease of
    $23.2 million);
  • new departmental budget funding (increase of $67.1 million); less
  • impact of the Strategic Review ($24.4 million);
  • additional efficiency dividends and whole of government saves measures ($17.5 million); and
  • Section 32 transfers of funding to National Health Reform agencies ($10.5 million).

Sale of goods and rendering of services increased by 4.4% for 2012-13

During 2012-13, revenue from the sale of goods and rendering of services increased by 4.4% ($6.1 million) to $145.6 million primarily from:

  • an increase of $3.2 million (2.8%) in Therapeutic Goods Administration; and
  • an increase of $4.1 million (43.5%) in National Industrial Chemicals Notification and Assessment Scheme.

Other revenue decreased significantly ($13.9 million) as a result of a reduction in the recoveries for payments made on behalf of portfolio agencies under a shared services agreement.

Departmental Expenses

Total departmental expenses increased by 0.2% for 2012-13

Operating expenses increased by a modest 0.2% ($1.8 million) during 2012-13 to $839.0 million (2011-12: $837.2 million). The major movements included:

  • an increase in depreciation expense of $26.0 million due to the capitalisation of departmental assets including the Enterprise Data Warehouse to support National Health Reform; offset by
  • a decrease in employee and supplier costs of $11.5 million (1.5%) consistent with decreased revenues from Government; and
  • a decrease in other expenses ($13.4 million) relating to payments made on behalf of portfolio agencies under a shared services agreement.

Departmental assets and liabilities

Movement in departmental assets and liabilities

Total assets have decreased by $24.5 million to $499.9 million (2011-12: $524.4 million). The major contributors were:

  • intangible assets increased by $15.8 million primarily due to the purchase and development of software holdings, including those related to the National Health Reform agenda; offset by
  • a decrease in land and buildings of $11.8 million as a result of depreciating existing assets; and
  • a decrease in receivables of $29.4 million as a result of drawdowns to fund capital expenditure.

Total liabilities have reduced by $3.6 million to $325.0 million (2011-12: $328.6 million). The major contributors were:

  • supplier liabilities reduced by $10.0 million to $83.6 million;
    offset by
  • an increase in employee provisions of $8.8 million due to the impact of annual pay increases.

Sustainability

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

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

The figure is a vertical column chart. The y-axis denotes the expenditure in millions incurred by the Department over total assets and total liabilities from 2008-09 through to 2012-13 (represented on x-axis). The chart shows that the Department’s net equity position has improved over the last five years.

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

Key Business Process Reform

The Department is progressing key reforms to be better placed to meet the financial challenges ahead and must continue persuing all avenues for productivity and efficiency improvement. Key reforms included automation of grants procurement and program funding in a single system, database alignment in the Department’s Enterprise Data Warehouse, improving IT Governance, expanding the number of agencies receiving services from the Department’s portfolio shared services centre and the introduction of a forecasting and budgeting tool to support improved resource management.