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

Chief Financial Officer's Report

Page last updated: 29 October 2013

The Image is of John Barbeler, Chief Financial Officer.

I am pleased to provide this Chief Financial Officer Report including an overview of the Department’s 2012-13 financial results.

2012-13 Financial Results

The Department oversees 42 programs on behalf of Government. Major administered items for 2012-13 included:

  • Administered expenses of $51.2 billion primarily related to the payment of subsidies of $9.4 billion for residential, aged care and community programs; personal benefits of $33.7 billion for Medicare services, pharmaceutical services and affordability and choice of health care initiatives; and grants of $7.0 billion with the majority of these made to non-profit organisations ($4.7 billion).
  • Administered assets of $1.0 billion incorporating receivables of $0.4 billion, inventories of $0.2 billion predominantly being the National Medical Stockpile and $0.1 billion in internally developed software to support the Personally Controlled Electronic Health Record System.
  • Administered liabilities of $2.9 billion principally related to personal benefits of $1.1 billion and provisions for subsidies of $0.4 billion.

The Department successfully delivered its activities to support the 42 programs. A departmental operating deficit, prior to depreciation, of $9.0 million was reported primarily as a consequence of supporting a staff voluntary redundancy program.

The Auditor-General has provided the Department with an unmodified audit opinion for the 2012-13 financial statements. In conducting the 2012-13 financial statement audit the Auditor-General advised that the Department has in place appropriate financial controls which operate effectively.

The Department’s business planning and budgeting framework ensured departmental resources were allocated to meet the Government’s priorities.

Over the last 5 years the Department has proven its ability to support and respond effectively to a number of significant policy reforms while continuing to meet its financial obligations. Key trends for the Department’s financial position for the past 5 years are illustrated in Figures 1, 2 and 3.

Key Business Reforms

The Department is progressing key business reforms to be better placed to meet the financial challenges ahead. Key reforms include 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.

Figure 1: Revenue, Expenses and Operating ResultThe figure is a vertical column chart. The y-axis deNotes a range in $ millions from $(50) to 850 for revenue, expense, surplus and deficit. The x-axis represents financial years ranging from 2008-09 to 2012-13. The chart shows a peak in 2011-12 for revenue and expenses (approximately $800 million) dropping to below $800 million for both in 2012-13. The chart indicates that Surplus/Deficit remains fairly constant about $0 million across the range of years.

Note: Expenses from 2010-11 have been reported after the elimination of unfunded depreciation expense under the net cash appropriation framework.

Figure 2: Assets, Liabilities and Net Equity TrendThe figure is a vertical column chart. The y-axis denotes a range in $ millions from $(50) to 600 million for total assets, total liabilities and net equity. The x-axis denotes a range in financial years from 2008-09 to 2012-13. The chart shows a peak in 2011-12 for both Total Assets and Total Liabilities with a steady decline from a peak in 2010-11 to 2012-13 in Net Equity.

Figure 3: Current Assets and LiabilitiesThe figure is a horizontal bar graph. The y-axis represents a range in financial years from 2008-09 to 2012-13. The x-axis represents a range in millions up to 280. The figure shows a peak in both assets and liabilities in 2009-10. The 2012-13 bar indicates current assets of approximately of $220 million and current liabilities of approximately $140 million.

Challenges Ahead

The Department is facing a challenging environment in 2013-14 and over the forward estimates period and must continue pursuing all avenues for productivity and efficiency improvement.

The Department’s internal governance framework supports sound decision making which will be required to meet future financial challenges. The Department has a proven track record of sound financial performance.

The Department is taking steps to operate within agreed resources for 2013-14 through undertaking a program of key business reforms and process improvements and maintaining robust budgetary expense controls.

The Department’s limited capital budget requires strong governance over the prioritisation of projects to meet the challenge of maintaining the existing asset base and supporting business process improvement projects.

2012-13 Financial Statements

Information on the Department’s financial result can be obtained in Part 4 of the Annual Report including an analysis of the Department’s financial performance.

The image is of John Barbeler’s signature at the end of the Chief Financial Officer’s Report.

John Barbeler
Chief Financial Officer
October 2013