Joint Departmental Information Centre Level 5, 1 Macarthur Street A EAST MELBOURNE VIC 3002 Ph: 03 9651 5660 Fax: 03 9651 5659 f^ Joint Depart'l Info. Centre ir, finii r Victoria J001847 O O 8 O 0 • A [¡m&fjfam&jp? Wmañam G3 O 8 8 O CD O Ut» ipMfiíík limÚLXitítifp -te í^MSiiay si©! ia3 l^Hiiìriiaiiì^ ièsbisid^ ana lamuss # Lissas (BÈ© mima ®W}Mßl SKii^earr uite»® lito (WNffîimiïiiitiailiB miutsr©«^ mm mbWfrmM Department of Treasury and Finance 1 Treasury Place Melbourne Victoria 3002 Telephone: (03) 9651 5111 Vic JOl Facsimile: (03) 6954 7215 Nr INF0 DTS 753 DX21 cifrar. DEC The Honourable Steve Bracks MP The Honourable John Brumby MP LEVEL 3, 1 macart, Treasurer Minister for Finance Assistant Treasurer 1 Treasury Place MELBOURNE VIC 3002 Dear Ministers In accordance with Section 45 of the Financial Management Act, I have much pleasure In submitting the Department of Treasury and Finance Annual Report for the year ending 30 June 1999 for you to present to Parliament. 1998-99 was another year of significant achievement for the Department. During the year, the Government's reform and privatisation programs were significantly progressed In the public transport sector and were completed in the electricity and gas industries. These programs have Introduced competitive pressures to major components of the Victorian economy, and generated privatisation proceeds of $31.6 billion. The April 1999 Budget delivered real gains in services and reduced taxes from within a sound financial framework. Public sector debt has now fallen to less than 20 per cent of its June 1993 level, and Victoria has lost the tag of being Australia's highest taxing State. Key strategic advice was provided during 1998-99 on national tax reform, superannuation reform, ensuring Winter 1999 gas supplies, the millennium bug and many other Issues. Further progress was also made in the transition to an accruals output-based management system. Lastly, may I put on the record my deep appreciation of the day-in-day-out commitment of the Department's staff, without whom none of the Department's achievements would have been possible. Yours sincerely Ian Little Secretary CONTENTS Vision, Mission and Objectives 4 Vision, Mission and Objectives 4 Contribution to Government Outcomes 5 Highlights of 1998-99 6 The Organisation 8 Portfolio of Treasury and Finance 8 Structure and Management 8 Strategic Objectives and Results 10 Objective 1 : Achieve Excellence in Core Central Agency Activities 10 Objective 2: Locking in Public Sector Reform 12 Objective 3: Generate and Implement New Economic Reform Initiatives for Government 14 Internal Priorities and Achievements During 1998-99 20 Continue Improvements to Communication 21 Align Resourcing with our Business Agenda 21 Improve Services within the Department 21 Financial Statements 23 Statement of Financial Position 24 Operating Statement 25 Statement of Cash Flows 26 Notes to and forming part of the Financial Statements 27 Appendices 57 Appendix 1 Directory 58 Appendix 2 Functions & Services of the Department 61 Appendix 3 Boards & Committees 62 Appendix 4 Performance against Output Targets as Specified In the 1998-99 State Budget 66 Appendix 5 Workforce Data 71 Appendix 6 Information Available on Request & Compliance Index 73 Appendix 7 Regulatory & Legislative Changes 75 Appendix 8 Building Act Compliance 77 Appendix 9 Progress In Implementing National Competition Policy 78 Appendix 10 Freedom of Information 83 Appendix 11 Consultants Engaged 85 Appendix 12 Year 2000 Compliance 86 00 0000 MISSION 11® ®^"!Eliïl'ilSitï ai TïSËSUiiy áliiy I^BKUIBííg} íltaBüi The Department's Mission is: To Provide Leadership in Economic, Financial and Resource Management lì® Scarlatti fe«®®'M«íííb i^fltMiPli $ 'iìltjì 'jiy pjMtjRi® ijSlifilil The Department provides leadership in economic, «¡SliiBliilIiì. 'ittKUttfê]; ¿mí! 'GHaiBBà iiiHU^Jitf financial and resource management and delivers Mil lo un, flwiiiMüi ani«) core central agency services In these areas, ismsfipnaifi ptasffit, mu in®© áffiataíE snsi a® including Government financial accounting, liability fS&SM ÜStífi© $SM!0% management, budget production and risk management. The Department is also primarily responsible for driving key strategic reforms in these areas. OBJECTIVES The Department's key objectives for 1998-99 were to: • Achieve excellence In core central agency activities; • Lock In public sector reform; and • Generate and implement new major economic reform recommendations for Government. CONTRIBUTION TO GOVERNIVI E NTOUTCOMES During 1998-99 the outputs and initiatives of the Department contributed to the achievement of the Government's desired outcomes of: • efficient and effective Government; • a more effective public sector; and • making Victoria an even better place to live, invest and do business. Outputs The contribution of Departmental outputs to outcomes for Victorians is depicted below, while performance against output targets as specified in the 1998-99 State Budget is provided in Appendix 4. Strategic Output Groups Outcomes/Public Benefit Core Output Groups Strategic Initiatives The Department undertook a number of key strategic initiatives for 1998-99, specifically aimed at contributing to the Government's required outcomes. These included the implementation of national tax reform and further reform measures In the gas, water and transport sectors. The Department successfully achieved the majority of these key strategic initiatives for 1998-99, although external events necessitated adjustments to a small number of planned activities. Details regarding the Department's achievements in respect of Its strategic initiatives are available in the Strategic Objectives and Results section of this report. HIGHLIGHTS OF 19 98-99 Privatisation Sales Implementing accrual based budget Reform and Franchise Public Transport management and production of State Budget Significant progress was made in the Government's The Department successfully completed the first public transport reform program during 1998-99, stages of the implementation of an accrual output- with franchise sales finalised early in 1999-2000. based budget management system in partnership with other departments. All departments now V/Line freight was sold for $163 million. Preferred provide accrual-based financial reports to DTF. bidders for Yarra Trams, Swanston Trams, Bayside Trains & V/Line Passenger trains were announced The 1999-2000 State Budget handed down on in June 1999, and for Hillside Trains in early July 4 May 1999 was delivered on time and within 1999. The contracts for the five passenger Government fiscal targets. Government was able to businesses were subsequently executed on increase spending in priority areas, while reducing 29 August 1999 under franchising arrangements taxes and State debt. which specify passenger service requirements, and Ensuring Winter Gas supplies offer financial incentives to the operators to Following the Longford incident, the Department increase patronage and improve performance successfully undertook to develop and implement an above benchmark levels. Integrated solution to ensure gas supply in Winter Franchising will significantly reduce the unit cost of 1999. This included the commissioning of additional public transport services, and the new operators capacity for the interconnect pipeline between New will invest in excess of $1.6 billion in upgraded South Wales and Victoria, and accelerating the Infrastructure, and new or refurbished rolling stock. construction of the South-West pipeline. Electricity National Tax Reform The Government's stake In the Hume Power The Department took a leading role in preparation Station was sold for almost $8 million. The of proposals for State taxes and finances and in the Victorian Network Switching Centre (VNSC) was Commonwealth/State working parties preparing the sold for $8 million. The gas-fired power stations Intergovernmental Agreement on National Tax trading as Ecogen Energy were sold for $350 Reform. • million. The Department was responsible for development Gas and introduction of Victorian Government policies to The operation of a wholesale spot market for support National Tax Reform and examining the impact gas commenced during 1998-99 - a world first. of the Commonwealth Goods and Services Tax (GST]. Most policy issues were resolved during 1998-99. The privatisation program was completed by" year-end. Transmission Pipelines Australia was Superannuation reform sold for $1.02 billion. Westar/Kinetik was sold The Department continued to play a lead role in the for $1.62 billion. Multinet/lkon was sold for development and implementation of the Government's $1.97 billion. Stratus/Energy 21 was sold for superannuation reform during 1998-99. $1.67 billion. Separate administrators were established for the Aluminium Victorian Superannuation Fund (a growing Aluminium Smelters of Victoria Pty Ltd (Aluvic), accumulation fund, now under Commonwealth the holder of the State's 25 per cent interest in the supervision) and the State Superannuation Fund (a Portland aluminium smelter, was sold for $502 closed defined benefit fund, now administered by million. the Government Superannuation Office). Victorian Plantations Corporation With State Government net debt now at one-fifth of The Victorian Plantations Corporation (VPC) was its 1993 high, $2,574 billion of privatisation sold for $550 million, a substantial premium above proceeds in 1998-99 were allocated to the State VPC's book value of $352 million. Superannuation Fund to reduce the State's unfunded superannuation liability. This liability now The privatisation of the VPC is expected to enhance stands at $11.5 billion, compared to $18.4 billion Investment and export prospects for the State's In June 1993. timber industry. Financial Results The Department ended the 1998-99 financial year with a net surplus of $3.19 billion compared to $326 million in the last financial year. This was largly attributable to net abnormal revenue of $2.59 billion, which mainly reflects funding for significant additional payments to reduce the Unfunded Superannuation Liabilities of the Budget Sector. Partly offsetting the Increased abnormal revenue was: • a reduction in the Department's operating revenues of $100.3 million due principally to outsourcing the management of leasehold properties. Consequently, the Department no longer collects rental income from tenants. • a change in the classification of some grants and transfer payments from administered expenses to controlled expenses resulting in an increase in operating expenses of $35.7 million; and • the introduction of a capital assets charge on Government Departments to recognise the government's cost of capital Invested in non-current assets also increased operating expenses by $40.1 million. The net liability position of the Department improved due to the significant additional repayments made to reduce the Unfunded Superannuation Liability of the Budget Sector. THE ORGANISATION report does not refer to the activities of these authorities or enterprises. Refer to Appendix 1 for addresses and contact telephone numbers for these organisations. Structure and Management The Department of Treasury and Finance is headed by Ian Little, the Departmental Secretary who reported to the Treasurer and the Minister for Finance and Minister for Gaming during 1998-1999. The Department is managed by the Senior Executive Group comprising the head of each of the Department's divisions. The role of the Senior Executive Group is to set, monitor and review the strategic direction of the Department. As at 30 June 1999, there were 1017 staff located at 1 Treasury Place, 1 Macarthur Street, 35 Spring Street and 505 Little Collins Street, Melbourne. In 1998 the Department undertook a major services and processes review aimed at identifying immediate internal opportunities to improve overall organisational performance and establishing a program to develop a continuous improvement The S culture. The review provided recommendations on i to fi (standing) The Portfolio of Treasury and Finance processes and systems that support and/or Deborah Clark, Chief Executive Officer, Corporate Services Centre For the purpose of 1998-99 Budget appropriations, influence the Department's operations including John Perham, Deputy Secretary, Commercial Policy & Projects the Department comprised the: corporate support services, organisational L to R (sitting) structures, work practices and culture, Chloe Munro, Deputy Secretary, Economic and Financial Policy Department of Treasury and Finance Ian Little, Secretary communication mechanisms, HR policy and Victorian Government Purchasing Board Grant Hehir, Deputy Secretary, Budget and Financial Management strategy, and IT & T strategy. Ministerial Offices of the Treasurer, Minister for Laurinda Gardner, Executive Director, Strategic Management Finance and Gaming In the light of this review and the refocusing of the State Revenue Office Department's objectives, the Department undertook Victorian Casino and Gaming Authority a restructuring of its organisation in 1998-99. Office of the Chief Electrical Inspector Restructures Office of Gas Safety The restructuring of the Department during 1998- Office of the Regulator-General 99 and in early 1999-2000 was designed to better The reporting of the results relative to objectives in support the Department's current business needs the unaudited section of this annual report focuses and ensure the achievement of its strategic primarily on the first three entities. Information on objectives. the activities of the State Revenue Office, the Changes to the Department's organisational Victorian Casino and Gaming Authority, the Office of structure during 1998-99 were: the Regulator-General, the Office of Gas Safety and • The Budget Resource Management and Financial the Office of the Chief Electrical Inspector is Management Divisions were amalgamated to provided in annual reports produced by each of form the Budget and Financial Management these organisations. Division. This will facilitate the implementation of The audited financial information in this report the next phase of the Management Reform pertains only to the first five entities. In relation to Program across Departments and enable the Office of the Regulator-General, the Office of integration of the new reporting systems with the the Chief Electrical Inspector and the Office of Gas Budget process. Safety, only transfer payments from the Department • The Corporate Services Centre (CSC) is a shared to these entities are included in the financial service division of the Departments of Treasury information. and Finance, Premier and Cabinet and their The portfolio also includes a wide variety of portfolio agencies. It was formed on 29 January statutory authorities and government business 1999 as a result of the consolidation of enterprises which are not budget funded, but are corporate services previously provided by the accountable to one of the portfolio Ministers. This Departments of Treasury and Finance, Premier and Cabinet and CSC's predecessor, the Changes to the Structure as at 1 July 1999: Corporate Resource Agency. CSC provides a • The Privatisation and Industry Reform Division broad range of strategic and operational and the Energy Projects Division were combined corporate services to these Departments and to form the Commercial Policy and Projects their portfolio agencies. The vision of CSC Is to (CPP) Division effective from 1 July 1999. The provide high quality, leading edge corporate role of the CPP Division is to promote services to enable the Departments to achieve generally accepted commercial principles and their goals. practices across the Government sector. • A Gaming Policy Unit was established to provide The following organisation chart reflects the policy advice on the economic and social structure of the organisation as at 30 June 1999 implications of the gaming industry and the with a dotted line to indicate changes effective from regulatory and policy framework. 1 July 1999. The chart provides information on the functions and services provided by the Department • A new unit was established to monitor whole-of- for 1999-2000. For more detailed information, refer government risks associated with Year 2000 to Appendix 2: Functions and Services of the (Y2K) issues. Department. The Department's Organisation Structure as at 30 June 1999 Policy & Legal Compliance Customer Relations Budget and Financial Economic and Privatisation & Strategic Corporate Services Energy Projects Management Financial Policy Industry Reform Management Centre Budget & Financial Economic Policy & Financial Reform Policy Energy Policy Corporate Communications Corporate Financial Services Management Reform GBE Reform Management Unit Corporate Planning Information Technology & Budget & Financial Reporting & Financial & Liability Management Water Reform Project Management Ministerial & Legal Services Telecommunications Co-ordination Gaming Policy Transport Reform Unit Reform & Privatisation Corporate Administrative Business Management Intergovernment Financial Business Enterprises Services Financial Management Relations Project & Outstanding Systems Risk & Insurance Management Development Government Accommodation Taxation & Revenue Policy Program Directorate GST Implementation Victorian Government Portfolio Analysis Property Group Public Sector Employee Relations Year 2000 Risk Management Commercial Policy & Projects as at 1/7/99 Commercial Governance Industry Policy Procurement Projects Resources Transport STRATEGIC OBJECTIVES A H D RESULTS The Department undertook a number of key Objective 1 : Achieve Excellence in Core strategic initiatives for 1998-99, specifically aimed Central Aqency Activities at contributing to the Government's required The.Oepartment's core activities include financial, outcomes. • risk andresource management, and regulatory and taxation services. The non completion of a few of the initiatives was due to resources being diverted to deal with By achieving excellence in these central agency national tax reform issues (GST) and the disruption activities, including the provision of key services to the Longford gas supply. Initiatives that were not and advice as well as the production of the State fully completed during the 1998-99 year will be Budget, the:Department provides a significant completed early In 1999-2000. contribution to the delivery of efficient and effective government for Victoria - a key desired The following table provides the performance . "outcome of the Government. results for 1998-99 and shows the linkages between the Department's objectives, the strategic - Cost savings have been made in these activities as initiatives and the Government's stated outcomes. the need for financial and risk management Government Outcome Objective Initiative Milestones Achieved (%) Efficient and effective Government for Victoria Achieve excellence in Make recommendations for enhancing public services 100 A more effective public sector Core Central Agency activities without jeopardising budget stability Re-setting long-term budget targets 100 Provide gaming policy advice 100 Make Victoria an even better place to live, Lock in Public Sector reform Communicating the benefits of reform 100 invest and do business Efficient and effective Government for Victoria Work with Departments to implement 100 accrual output-based budget management A more effective public sector Promote contestablllty principles within the public sector 100 Assist Departments to identify opportunities for 100 private provisioning of public infrastructure Efficient and effective Government for Victoria Generate and implement Developing options for Government to boost Victorians' 50 A more effective public sector major new economic reform incomes by facilitating the creation of an internationally initiatives for Government competitive economy able to sustain high growth rates Implement national tax reform (NTR) 100 Research and advice on the merits of a fiscal 100 responsibility mechanism Reform and privatise public transport 85 Privatise energy businesses 100 Implement energy reform 100 Ensure winter gas supply 100 Develop a regulatory framework for the 80 water industry Promote & implement proposals for the future 80 use of privatisation proceeds and the next stage of superannuation reform Privatise the Victorian Plantations Corporation (VPC) 100 Staff from Portfolio Analysis, Budget & Financial Management Division LtoR Chad Pappas, Anna Hooi, Stuart Wilson te gtoTMiai& mas^ sjfóiEgg « amaa») i nsîsrenaîai'.sBBgiMîiïË tapial lìlìitaaifisalìBKi toaii inaat» ft&gmtiia fe ]«i»[i|ißt )ÍMHMMÉÜfill i IKäV iï«H iCitelillliôMÎ'MïUiaiBBV fôrilt •MMIfit/ Síf IBMSSHll Mil ¡«Hlf^í ®MiItlÍ7 Äi JÄ IIP SM »iniiaiiiäjasemiiaii' i© s®® fiMMîan® iMtää! söip s&MHM ÌBB JBtìfclSMÌÌilfi) ®ââÉ ili Ï siiitaaiiííasí in ttiiitï«i f lit» amîaaî' ^ìffimui summum «iganiiíWi _ «•SBiSI älilil •BJÏÏfiiJriHtfieiïïLMiliïi i^gmniaiii ®ì W Hpi 'MP® ¡§W?I!ralíJ. Ü© JHIiB&t Staff from the Finance & Liability Management Branch, Economic S Financial irtiflaffltei fönniilffiiJ MiTO s) linrîftpii sefiflf Policy Division, responsible for the policy development, supervision and «mm iteiriBWídM1®! management of the State's liabilities. ¡HI (M «Mí LtoR Rick Impala, Artemisia Kousis, Anne Messenger Long-term objective Medium-term objective Maintain a sustainable budget surplus sufficient to fully fund infrastructure investment Maintain public sector debt at levels consistent Privatisation proceeds applied to with a triple-A credit rating reduce net debt and other liabilities Provide quality, value-for-money services relevant to community needs Ensure adequate infrastructure to support service Budget sector investment to be delivery and economic growth at a minimum 1 per cent of GSP Bring Victoria's tax rates into alignment with the national average The Department has conducted considerable service providers will generate greater consumer research on the impacts of reform both in terms of choice and thereby lead to the provision of services quantitative data and anecdotal evidence In the which meet customer needs. electricity, water, ports and grain handling Market-based mechanisms to deliver high quality, industries. Notable activities undertaken during value-for-money services and infrastructure have 1998-99 included: show-casing of reform results at been harnessed in the areas of social welfare, the June 1999 Department of Treasury and Finance health, education, justice and infrastructure. Open Day, running seminars to present case studies on outsourcing and private provisioning, and Assist Departments to identify opportunities for setting up special interest network groups to private provisioning of public infrastructure encourage agencies to learn from each others' The continual expansion and refreshment of successes. economic and social infrastructure is critical to sustaining and enhancing growth In Victoria and In addition, the Department produced two creating a 'leading edge' business and community publications during the year, the Passengers' environment. Charter, outlining the benefits for Victorians of public transport reform, and a paper on the reform Economic infrastructure, particularly transport and of Victoria's ports entitled The Reform and Sale of communication, is critical to economic growth and Ports in Victoria. the attraction of industry to Victoria. In recent years the Government has facilitated the involvement of Work with Departments to implement accrual the private sector in the financing and construction output-based budget management of significant infrastructure projects. The Implementation of accrual output-based management has provided the foundations for a robust accountability framework within the public sector. Through the introduction of the Management Reform Program (MRP), the Department has worked to protect the significant improvements made In the effectiveness of the public sector, another key desired outcome of Government. The MRP will allow the Government to make decisions based on a choice between desired outputs, rather than simply on Input costs. It will assist the Introduction of contestable services through the generation of unit prices for public sector outputs that can be compared with prices tendered by private and not-for-profit providers. MRP also focuses the attention of the public sector on better management of assets, through publication of balance sheets, not just income statements. These reforms will be targeted at improving service for people and businesses, as well as generating productivity benefits. Outstanding accrual output management issues in the budget context were resolved during the year. Departments now provide monthly accrual-based reports to the Department of Treasury and Finance. Promote contestability principles within the public sector Contestability Involves exposing service areas that are traditionally within the domain of Government agencies to competition with alternative service providers. It is about making it easier for all capable public, not-for-profit and private sector providers to meet the needs of the community. A contestable Staff from the Budget and Financial Reporting and Co-ordination Branch, Budget and Financial Management Division environment which attracts a diversity of competing L to R Gerard Porter, Ed Chan, Kevin Sullivan, Arthur Sarantis and Chiang Yip The $2.0 billion CityLink project is the principal Victoria by ensuring the appropriate allocation of risk example. Other projects also include water and and financial return. wastewater treatment plants, the Onelink ticketing During 1998-99, the Department's key activities in system and integrated emergency response this area were: services. • Assisting with arrangements for the private The creation and enhancement of social provision of hospital services in relation to infrastructure is also critical to the quality of life of Mildura Base Hospital, Berwick Community Victorians and of business and industry. Hospital, the new Austin and Repatriation Governments have to varying degrees also used the Medical Centre and Mercy Hospital for Women; private sector to supply social infrastructure, from which community services are delivered. The first • Providing advice to Government on managing examples related to office and commercial buildings the Onelink, CityLink, Docklands and Transport where the State became a tenant rather than a reform projects; and landlord. More recently, the Government has gone • Monitoring progress on reforms in the prisons, to the private sector to provide both a facility and ports and County Court projects. service solution. Principle examples include three correctional services facilities, the La Trobe, Mildura Objective 3: Generate and Implement Major and Berwick Hospitals and the proposed new New Economic Reform Initiatives for County Court. Government In order to meet the Department's mission of providing The Department in 1998-99 worked with other leadership in economic, financial and resource Government agencies and Government Business management, the Department must conduct research Enterprises to identify and market opportunities for on an ongoing basis. With the State debt and budget private provisioning. position under control, more of this effort can be The Department managed this role through the directed towards developing and implementing reforms application of the Infrastructure Investment Policy aimed at creating an internationally competitive economy. for Victoria which outlined the Government's Strategic Initiatives objectives In seeking private sector involvement in economic and social service based infrastructure Developing options for Government-to boost projects where the private sector can demonstrate Victorians' incomes by facilitating the creation a better outcome than public provision. The of an internationally competitive economy able Department sought to obtain the best result for to sustain high growth rates. Research was undertaken through the year on responsibility mechanism for Victoria. This research government policy assessment techniques and, as examined specific legislation at the Commonwealth a result, a technique was developed to rank major level, and in some other State and international public investment/expenditure proposals on the jurisdictions, where it was introduced to encourage basis of their contribution to the creation of an transparent and prudent financial management by internationally competitive economy. Scanning of future governments. options has taken place from within the public Reform and privatise public transport sector. Reform of public transport businesses progressed The initial project involved the development of a significantly in 1998-99 and was finalised early in ranked menu of options to create a competitive 1999-2000. economy. This Included the canvassing of potential During 1998-99 V/Line Freight was sold for $163 opportunities within and outside the public sector, million. Preferred bidders for four of the five Taxation & Revenue Policy Branch, Economic & Financial Policy Division and providing Government with the tools to analyse Ron Ben-David their potential contribution to increasing Victoria's competitive economic position within prudent fiscal parameters. Implement National Tax Reform Beginning in 1998-99, implementation of national tax reform has become a key priority for the Victorian Government with significant implications for Commonwealth/State relations. The Commonwealth Government's tax reform package will give Victoria and other States and Territories access to a broad-based revenue stream, providing greater scope for them to meet the service delivery needs of their citizens in the future. The Department has overall responsibility for the development and Introduction of policies and systems to support the implementation of national tax reform, including the impact of the GST, to the best advantage of all Victorians. Following the federal election in October 1998, the Department's focus on developing alternatives for State tax reform and for the restructure of Commonwealth/State financial relations was superseded by a need to implement national tax reform. The Initiative was well on track in 1998-99, Staff from Taxation & Revenue Policy Branch, Economic & Financial Policy Division with most policy issues related to national tax LtoR Bill Phillips, Andrew Trembath, James Tucker reform being resolved through the year. The Department took a leading role in the preparation of reform proposals for State taxes and State finances. It took part in the Commonwealth/State working parties preparing the Intergovernmental Agreement on National Tax Reform signed at the April 1999 Premiers' Conference, and re-signed in late June 1999 after changes were made to the GST design. Delays in Commonwealth legislation prevented completion of the project by year-end. A plan for implementing the GST within the Victorian public sector was finalised by 30 July 1999. Research and advice on the merits of a fiscal responsibility mechanism In 1998-99, the Department undertook research and analysis on the possible merits of a fiscal businesses were announced in June 1999 - Yarra Gas privatisations: Trams, Swanston Trams, Bayside Trains and V/Line In November 1998 the assets and development Passenger trains. The successful bidder for Hillside rights of the Western Underground Gas Storage Trains was announced in early July 1999. project at Port Campbell were sold to Texas Utilities Australia for $58 million. Between January and Franchising involves transferring the management March 1999, the Government sold the three of rail and tram operations to the private sector, 'stapled' gas distribution/retail businesses. with the Government buying back services on Westar/Kinetik Energy was purchased by Texas behalf of the public. The five franchise business Utilities for $1.62 billion; Multlnet/lkon Energy was contracts vary in term between 10 and 15 years, purchased by The Energy Partnership, which is with operators required (as a minimum) to provide jointly owned by Utlilcorp United Inc. and AMP, for the existing overall level of service. Fares will be $1.97 billion; and Stratus Networks/Energy 21 was capped in line with Inflation and existing purchased by Boral Energy and Envestra Limited for concessions will be protected. $1.67 billion. The public transport franchising program will In May 1999, Victoria's high pressure, gas reduce unit costs to Government while also transmission pipeline company, Transmission securing an investment of some $1.6 billion in new Pipelines Australia Pty Ltd (TPA) was sold to GPU rolling stock and infrastructure. In addition, service Inc. for $1.02 billion. levels will be expanded, in part to cater for a projected increase in patronage of about 50 per During 1998-99 five of the seven Gas Services cent over the next 10 years. Businesses were sold. These were:- Privatise energy businesses • Cathodic Protection Systems (CPS), the In 1998-99 the Government successfully completed provider of corrosion protection services to the planned privatisation program of State-owned pipeline operators, to Abigroup; energy businesses. GCI Consulting International (GCI), provider Electricity Privatisations: of engineering and project management In September 1998, the Government's stake in the services, to JP Kenny; Hume Power station was sold for nearly $8 million Energy Information Solutions (EIS), provider to Pacific Power, thereby eliminating Victoria's . of IT services and system integration for the future liabilities for maintenance and upgrade of the disaggregated gas industry; plant. In November 1998, Victorian Network Switching Centre (VNSC) was sold to GPU Pipex, provider of 'hot stopping' and PowerNet, owner of Victoria's high voltage network, pipeline maintenance and surveillance; and for $8 million. In March 1999, the Government Land Remediation, provider of consulting announced the sale of Generation Victoria's gas- services on remediation of former Gas & fired power stations (Newport and Jeeralang) Fuel sites. trading as Ecogen Energy for $350 million to the AES Corporation's subsidiary, AES Transpower In June 1999, the rights to the 'gas release Holding Pty Ltd. program' (allowing purchase of 10 petajoules of gas a year from GASCOR) were sold to ENERGEX's Government opened the 151 kilometre interconnect subsidiary Allgas Energy Ltd for $29.25 million. pipeline between New South Wales and Victoria in August 1998. This will diversify the supply of Aluminium privatisation natural gas and Increase competition between In August 1998, Aluminium Smelters of Victoria Pty primary producers. Ltd (Aluvic), the holder of the State's interests In the Ensure winter gas supply Portland smelter, was sold for $502 million to the Following the Longford incident, the Department existing joint venture partners. As part of the sale undertook to develop and implement an integrated the State settled foreign exchange hedges held by solution to ensure security of gas supply In Winter Aluvic at a cost of $101 million. This sale of the State's aluminium interests has eliminated taxpayer exposure to commercial risks associated with fluctuations in world aluminium prices and foreign exchange rates. Implement energy reform Electricity reform Led by the Department of Treasury and Finance, the electricity sector has been the subject of restructuring and reform. This reform program has resulted In lower prices, more efficent delivery of services and increased choice. In July 1998, another segment of the Victorian electricity industry was made contestable. Victorian electricity consumers using greater than 160MWh per annum (e.g. single-storey offices and fast food restaurants) are now able to choose from among 24 competing electricity retailers. The commencement in December 1998 of the National Electricity Market has Increased the competitiveness of the Victorian electricity industry. Gas reform During 1998-99, the Department provided strategic advice to the Government enabling it to complete a range of competitive reforms to the gas industry. Staff from Transport Reform Unit, Commercial Poiicy & Projects Division These reforms are designed to deliver lower prices, LtoR Jenny Melican, Tim Arbuckle, Jonathan Myers better services and ensure the long-term security of gas supply to customers. Key gas Initiatives during the year included: A world first, the Victorian wholesale spot market for gas was developed and commenced operation on 15 March 1999. This will provide gas industry participants with information to enable them to make better investment, consumption and operational decisions. Following the resolution of outstanding regulatory issues, the Government announced the staged introduction of contestability In retail gas markets from October 1999 (for large contract customers) to September 2001 (for all gas consumers). As a result of the overall gas strategy, natural gas supplies are being extended to parts of regional Victoria with no previous access. Supplies were extended to Horsham, Staweil, Torquay and Jan Juc during the year. In line with moves towards a national market, the Staff from Commercial Branch, Commercial Policy & Projects Sandra Denis, Cameron Borschman 1999-2000 Budget to the State Superannuation Fund to reduce the State's unfunded superannuation liability. The Government established separate administrators for the (now-closed) defined benefits schemes of the State Superannuation Fund and the Victorian Superannuation Fund, which is an accumulation scheme. The Victorian Superannuation Fund was transferred to Commonwealth supervision from 1 July 1999. The State Superannuation Office is now administered by a new agency, the Government Superannuation Office (GSO), which was formally Staff from the Commercial Branch, Commercial Policy and established as at 1 July 1999. Projects Division 1999. Work in this area has carried into 1999-2000. L to R Deborah Radford & Rica Conci During the course of the year, state legislative Projects undertaken as part of this initiative control over the fully-funded Hospitals included the acceleration of the building, ownership Superannuation Fund was also removed to allow it and operation of the Western Underground Gas to transfer to Commonwealth prudential supervision Storage; expansion of the Victoria-NSW from 1 January 1999. The fund now operates as interconnect pipeline; and the construction of the Health Super Pty Ltd. South-West Pipeline from Port Campbell to Lara connecting south west Victoria to the major Privatise the Victorian Plantations Corporation transmission network. In December 1998 the Victorian Plantations Corporation (VPC) was sold to Hancock Victorian Develop a regulatory framework for Plantations Pty Ltd (Hancock) for $550 million, a the water industry substantial premium above VPC's book value of The Department has developed and implemented a $352 million. series of structural reforms to Victoria's state- The privatisation was facilitated by the sale of a owned metropolitan and non-metropolitan water licence to the 170,000 hectares of land. The businesses that have resulted in lower water prices licence grants Hancock the right to operate a and increases in the level and quality of services plantation business on the land In perpetuity. Along since 1995. with the licence, all of VPC's other assets, liabilities In Melbourne, there has been continued and timber supply contracts were transferred to improvement in the already high quality of drinking Hancock. water. Water supply reliability has also Increased, The privatisation of the VPC is expected to enhance with the number of supply disruptions declining by investment and export prospects for the State's 10 per cent during 1998-99. The pricing reform timber industry. Hancock, as one of the largest package, announced in October 1997, provided managers of tlmberland investments in the world, $850 million of financial assistance to bring the has bought an international perspective to the approach to metropolitan water pricing into line management of the VPC, which will provide a with other utility industries and provided an average model or demonstration effect for other plantation 18 per cent reduction in bills to over 85 per cent of operators. domestic properties. In addition, water customers across regional Victoria have received an average The sale has removed the State Government from 18 per cent reduction in their residential water bills an already highly competitive market, thus allowing as part of the Government's $450 million regional the industry to operate in an environment free from water reform package. political considerations. The continuing development of water trading In regional Victoria has resulted in substantial benefits by moving water to where farmers and other primary producers can make a better return from their investments. Promote and implement proposals for the future use of privatisation proceeds and the next stage of superannuation reform With public sector debt substantially reduced, $2.6 billion of privatisation proceeds was allocated in the INTERNAI PRIORITIES ANS ACHIEVEMENTS DURING 1998 - 99 Department of Treasury and Finance Open Day Continue Improvements to Communication staff, increasing the number of first aid officers The Department enhanced its communications from six to twenty five. capability by centralising all communications activity During 1998-99 the Department launched an and continuing senior executive involvement on Employee Assistance Program (EAP) available to all both Internal and external communication activities. staff. The EAP is a confidential, professional Attention was focused on the quality of the advisory service to assist individuals in resolving Department's communication products, and any work or work related personal problems. The information for the Treasurer and the Minister. EAP reinforces the Department's commitment to Two successful Open Days were held in November employee health and well being. and June. These days provide opportunities for the Training and Development Department to communicate to the broader public Training and Development is strongly encouraged to sector the reforms in financial and asset assist staff to develop and enhance the skills and management, national tax reform and implementing knowledge necessary to meet the Department's GST. objectives, both for their current roles and in Align Resourcing with our Business Agenda preparation for future roles. A focus for 1998-99 was developing a culture and An Executive Capability Program was launched. ability to allocate people to priority projects and This provides an assessment of personal activities. A human resources strategy for the capabilities against identified Departmental Department was developed around the two capabilities and assists executives in preparing principles of "agility" and "professional service". targeted development programs. These principles will be used to guide people management and ensure a greater connection with Eleven VPS staff were granted undergraduate and the Department's business priorities. The postgraduate scholarships to further their Department demonstrated its agility through professional development. restructuring divisions to meet changes in operational focus and its professional service through Its leadership role in national tax reform. Improve Services within the Department During 1998-99 the Department continued to give priority to the improvement of services to support its overall business needs. Key areas in which the Department focused its internal service Improvement efforts during the year were: IT Environment Considerable effort was expended during the year to ensure the Department's IT environment enables greater information sharing and is Year 2000 prepared. All Departmental staff now have a common desktop software. Occupational Health and Safety In partnership with the Department of Premier and Cabinet, a revamped and comprehensive approach to Occupational Health and Safety has been established. This includes a joint Occupational Health and Safety commitment by the two Secretaries. Health and safety Is being integrated into all management functions and staff and managers are encouraged to actively maintain and promote health and safety In the workplace. Innovative and preventative health programs were developed including vision testing and subsidised eyewear, ergonomie workstation assessments and fully subsidised flu vaccinations. A Hazard Audit was also completed as part of the Safety Map Audit. The Department offered first aid training to Staff for the Year 2000 Risk Management Unit, I Financial Management Division LtoR Adam Todhunter& Paul Williams © DEPARTMENT OF TREASURY AND FINANCE STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 1999 1999 1998 Notes $'000 $'000 Current Assets Cash 14 - 14,783 Trust Funds 15 11,318 29,217 Investments 15 1,281 1,952 Inventories 16 112 608 Receivables 17 69,119 2,663 Prepayments 1,191 914 Surplus Land For Resale 38,406 21,541 Total Current Assets 121,427 71,678 Non-Current Assets Investments 18 135,893 257,893 Land and Buildings 19 286,321 290,633 Plant and Equipment 20 230,866 223,121 Total Non-Current Assets 653,080 771,647 Total Assets 774,507 843,325 Current Liabilities Bank Overdraft 14 18,642 - Funds held in Trust 15 12,599 31,169 Creditors and Accruals 21 51,784 8,679 Lease Liabilities 22 7,932 35,596 Provision for Employee Entitlements 23 5,464 4,733 Unfunded Superannuation 24 241,995 906,131 Other 1,707 209 Total Current Liabilities 340,123 986,517 Non-Current Liabilities Lease Liabilities 22 294,474 307,789 Provision for Employee Entitlements 23 9,328 9,946 Unfunded Superannuation Liability 24 10,821,405 13,458,569 Total Non-Current Liabilities 11,125,207 13,776,304 Total Liabilities 11,465,330 14,762,821 Net Assets/(Liabilities) (10,690,823) (13,919,496) Equity Accumulated Deficit (10,715,442) (13,948,789) Asset Revaluation Reserve 24,619 29,293 Total Equity 25 (10,690,823) (13,919,496) The Statement of Financial Position should be read in conjunction with the accompanying notes. DEPARTMENT OF TREASURY AND FINANCE OPERATING STATEMENT FOR THE YEAR ENDED 30 JUNE 1909 1999 1998 Notes $'000 ¡'000 Operating Revenue User Charges 11 52,214 125,566 Interest 3 12,226 Resources Received Free of Charge 66,537 6,148 Other 12 1,345;; 48,054 Total Operating Revenue 120,099 191,994 Government Revenue Output Appropriations 324,073 766,818 Special Appropriations 634,308 478,233 Additions to Net Asset Base Appropriations 2,280 36,557 Receipts forwarded to Consolidated Fund (25,010) (94,840) Total Government Revenue 935,651 1,186,768 Total Revenues 1,055,750 1,378,762 Operating Expenses Employee costs 61,843 62,004 Supplies and Services 177,560 201,469 Depreciation and Amortisation 27,510 22,903 Superannuation 46,363 573,258 Resources Provided Free of Charge 24,582 13,159 Transfer Payments 35,722 Capital Assets Charge 40,676 Other 10 40,062 : 26,517 Total Operating Expenses 454,318 899,310 Net Surplus Before Abnormal Items 601,432 479,452 Abnormal Items 13 2,591,355 (153,000) Increase in Net Assets 3,192,787 326,452 The Operating Statement should be read in conjunction with the accompanying notes. DEPARTMENT OF TREASURY AND FINANCE STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 1999 1999 1998 Notes $'000 $'000 Cash Flows from Operating Activities Payments Employee Costs 61,298 61,129 Supplies and Services 198,402 211,488 Superannuation 3,960,300 1,063,202 Other 53,065 34,167 Total Payments 4,273,065 1,369,986 Receipts User Charges 29,219 105,719 Interest 3 12,380 Other 2,869 62,238 Total Receipts 32,091 180,337 Cash Flows From Government Special Appropriations 3,960,290 478,233 Provision of Outputs 324,073 766,818 Additions to Net Asset Base Appropriations 2,280 36,557 Transfers Between Funds (65,776) (94,840) Total Cash Flows From Government 4,220,867 1,186,768 Net Cash Flows From/(Used In) Operating Activities 26 (20,107) (2ÜT) Cash Flows From Investing Activities Payments Purchase of Assets 5,184 32,175 Return of Capital 3,633 Repayment of Lease Liabilities 16,468 Total Payments 5,184 52,276 Receipts Investments 671 3 Disposal of Assets 36,259 Total Receipts 671 36,262 Net Cash From/(Used In) Investing Activities (4,513) (16,014) Net lncrease/(Decrease) in Cash Held (24,620) (18,895) Cash at the Beginning of the Financial Year 14,783 33,678 Amounts Transferred to State Administration Unit (8,805) Cash/(Overdraft) At The End Of The Financial Year 14 (18,642) 14,783 The Statement of Cash Flows should be read in conjunction with the accompanying notes. NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS AT 30 1UNE 1900 1. Summary of significant accounting policies (a) Basis of Accounting The Financial Statements have been prepared on the accrual basis of accounting in accordance with the Financial Management Act 1994, Accounting and Financial Reporting Bulletins and other accounting policy papers issued under the Direction of the Minister for Finance under the Financial Management Act 1994, applicable Australian Accounting Standards and other mandatory reporting requirements (Urgent Issues Group Consensus View). The Financial Statements have been prepared on an historical cost basis, except for certain assets which are at current cost valuation and long service leave liabilities which are measured at the present value of expected future payments. (b) The Reporting Entity The following entities/business units have been aggregated in these Financial Statements: State Revenue Office State Government Vehicle Pool Corporate Services Centre The following entities, which are part of the Department's portfolio, prepare separate annual Financial Statements and therefore are not included in the Department's Financial Statements: Office of the Regulator-General Office of the Chief Electrical Inspector Office of Gas Safety Victorian Casino and Gaming Authority (c) Administered Resources The Department administers certain resources on behalf of the Victorian Government, for example, taxes raised by the State Revenue Office. It is accountable for the transactions involving those administered resources, but does not have the discretion to deploy the resources for the achievement of the Department's objectives. The accrual basis of accounting has been used in accounting for administered resources. Transactions and balances relating to these administered resources are not recognised as Departmental revenues, expenses, assets or liabilities, but are disclosed in the Financial Statements at Note 3. (d) Trust Funds The Department has received monies in a trustee capacity for various trusts as set out in Note 15. As these trusts relate to Departmental activities, they are brought to account In the Statement of Financial Position. Revenues and expenses associated with trust funds/working accounts which are integral to the operations of the Department have been recognised in the Operating Statement and Statement of Cash Flows. Assets and Liabilities associated with these trust funds have been included in the Statement of Financial Position. (e) Revenues User Charges User charges controlled by the Department are recognised as revenues. User charges raised by business units are controlled by the Department where they can be deployed for the achievement of Departmental objectives. Revenue Is recognised when the services are provided, or when the fee In respect of services provided is receivable. Administered Revenues Taxes, Public Authority dividends, fines and fees collected but not controlled by the Department, are not recognised as revenues in the Operating Statement or Statement of Cash Flows, but are reported as administered revenues in the Output Groups Schedule (Note 3). Revenues received in lieu of the States' constitutional inability to collect franchise fees are received from the Commonwealth Government in the form of a grant and disclosed as Taxation revenue. Taxation State taxation and fee revenue is recognised upon the earlier of receipt by the State on a tax-payer's self assessment basis or the time the taxpayer's obligation to pay arises, pursuant to the issue of an assessment. Revenue for Petroleum, Tobacco and Liquor fees is received from the Commonwealth Government under revenue replacement arrangements, which were established in August 1997 in lieu of the former State Business Franchise Fees. Fines and Regulatory Fees Revenue is recognised at the time the fine or regulatory fee is issued. Investment Income Investment income is recognised on an accrual basis and dividend income is recognised when dividends are declared. NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS AT 30 JUNE 1990 1. Summary of significant accounting policies - continued (f) Appropriations Amounts appropriated for controlled transactions are recognised as Government Revenue in the Operating Statement. Appropriations are recognised upon output delivery. Amounts appropriated for administered transactions, eg. payments made on behalf of the State, are not recognised in the Operating Statement or Statement of Cash Flows, but are reported as administered revenue in the Output Groups Schedule Note 3. Appropriations are recognised when expenditure Is incurred. (g) Acquisitions of Assets The cost method of accounting is used for the initial recording of all acquisitions of assets controlled by the Department. Cost is determined as the fair value of the assets given as consideration plus costs Incidental to the acquisition, including architects' fees and engineering design fees and all other costs incurred in getting the assets ready for use. The capitalisation threshold Is $1,000. Assets acquired at no cost, or for nominal consideration, are recognised as assets and revenues at their fair value at the date of acquisition. Fair value Is the amount for which an asset could be exchanged between a knowledgeable, willing buyer and a knowledgeable, willing seller in an . arm's length transaction. (h) Revaluations of Non-current Assets All non-current assets, other than receivables and investments, are revalued to their written-down replacement cost every 5 years with the exception of Land and Buildings which are revalued at least every 3 years. Revaluation increments are credited directly to the Asset Revaluation Reserve while decrements are expensed to the Operating Statement, unless previous revaluations resulted in a valuation increment, in which case the subsequent decrement is offset against the Asset Revaluation Reserve. (i) Depreciation of Non-current Assets Depreciation is calculated on a straight line basis to write off the net cost or revalued amount of a non-current asset over its expected useful life. Estimates of remaining useful lives are made on a regular basis for all assets, with annual reassessments for major Items. Land is not depreciated. The Department has adopted the following depreciation rates and useful lives for the following categories of assets: Depreciation/Asset category Average Useful life Amortisation Rate % Computers and Equipment - Other 3 years 33.3 - Generic Revenue Collection System 7 years 14.3 Leased Equipment 5 years 20.0 Municipal Valuations - Metropolitan 4 years 25.0 - Non Metropolitan 6 years 16.7 Office Equipment 4 years 25.0 Plant, Furniture & Equipment 10 years 10.0 Leasehold Improvements/Fitouts 10 years 10.0 Leased Motor Vehicles 2.4 years 41.0 Buildings 23 years 4.3 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS AT 30 JONE 1999 1. Summary of significant accounting policies - continued (j) Surplus Land and Buildings Surplus land and buildings which fall within the Government's Asset Sales Program and which are not controlled by the Department, are reported by the relevant agency and not by this Department. Responsibility for these assets remains with the relevant agency until the total sale price is fully discharged. Public Transport Corporation properties which are surrendered to the Crown prior to disposal are treated as controlled assets in the Department's Statement of Financial Position and shown as Surplus Land for Resale. (k) Employee Entitlements (i) Wages and Salaries and Annual Leave Liabilities for wages and salaries and annual leave are recognised and measured as the amount unpaid at the reporting date at current pay rates in respect of employees' services up to that date. (ii) Sick Leave As it is considered that non-vesting sick leave to be taken In future reporting periods will not exceed entitlements which are expected to accrue In those periods, no provision has been made. (iii) Long Service Leave A liability for long service leave is recognised for all staff and Is measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date. Consideration is given, when assessing expected future payments, to expected future wage and salary levels, experience of employee departures and periods of service. The current portion of the liability reflects the amount estimated to be paid within 12 months. Expected future payments are discounted using interest rates attaching, as at the reporting date, to Commonwealth Government guaranteed securities with terms to maturity that match, as closely as possible, the estimated future cash outflows. The following assumptions were adopted in measuring present value: 1999 1998 Weighted average rates of increase in annual employee entitlements to settlement of the liabilities 4.4% 4.9% Weighted average discount rates 5.9% 5.4% Average terms to settlement of the liabilities 17 years 14 years (iv) Superannuation During the year the Department made superannuation contributions to a number of private sector funds as elected by employees. Superannuation expense relates to the reporting period and represents the Department's contributions In respect of departmental staff as determined under various Superannuation Acts (Refer to Note 4). There were no outstanding contributions at 30 June 1999. NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS AT 30 JUNE 1909 1. Summary of significant accounting policies - continued (I) Unfunded Superannuation Liability An unfunded superannuation liability exists because funds' assets are not sufficient to cover members' accrued benefits as actuarially assessed at 30 June 1999. Government policy in relation to this liability is that the net unfunded amount for the entire budget sector should be taken up in the accounts of the Department of Treasury and Finance (Refer to Note 24). (m) Investments Investments are brought to account at the lower of cost or their net realisable market value. Interest revenues are recognised as they accrue. Investments and investment income are disclosed as administered items in the Output Groups Schedule (Note 3), with the exception of Accelerated Infrastructure Program Bonds which are reported as controlled in the Statement of Financial Position. (n) Leases A distinction is made between finance leases, which effectively transfer from the lessor to the lessee substantially all the risks and benefits incidental to ownership of leased non-current assets, and operating leases under which the lessor effectively retains substantially all such risks and benefits. Where a non-current asset is acquired by means of a finance lease, the asset is established at its fair value at the inception of the lease. The liability is established at the same amount. Lease payments are allocated between the principal and interest expense. On 3 July 1997 the State of Victoria sold the majority of its motor vehicle fleet and entered into a Master Lease Agreement to enable Departments and public bodies to lease and replace vehicles under a short-term operating lease for each vehicle. The Master Lease Agreement has been recognised as a finance lease (non-current asset and related liability) in the financial statements of this Department (Refer to Note 20). The Department has recognised (as a non-current asset and related liability), finance leases relating to buildings constructed under the Accelerated Infrastructure Program. The Program was established in 1990/91 in conjunction with a major private bank, to provide accommodation for certain government agencies, principally police stations and law courts (Refer to Note 19). Operating lease payments are representative of the pattern of benefits derived from the leased assets and accordingly are charged to the Operating Statement in the periods in which they are incurred. (o) Capital Assets Charge The Capital Assets Charge, introduced during the 1998/99 financial year, was calculated at 8% on the net book value of non-current assets, excluding investments. These charges represent the opportunity cost of capital invested in non-current assets and used in the provision of outputs. (p) Resources Provided/Received Free of Charge In order to reflect the total cost of service delivery, resources provided free of charge to other departments have been separately reflected within the Department's expenses. In the case of an asset provided free of charge, an adjustment is made in the asset and accumulated depreciation account to reflect the transfer of the asset. Resources received free of charge from other departments have been separately shown within the Department's revenues, (q) Financial Instruments The accounting policies and terms and conditions of each class of financial asset and liability, both recognised and unrecognised at the balance date as required under AAS 33, are as follows: NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS AT 30 JONE 1090 1. Summary of significant accounting policies - continued Financial Instrument Accounting Policy and Terms and Conditions Financial Assets Deposits with the • Recorded at cost subject to set-off arrangements against liabilities owed to the Commonwealth. Commonwealth (Debt > The outstanding principal is used to retire financial obligations of the State of Retirement Reserve Victoria owed to the Commonwealth. Trust Account) » Calculated on the basis of compounding interest. • Redulrement for annual contribution from the State and monthly contribution from the Commonwealth. Cash Equivalents • Cash includes cash on hand, deposits held at call and cash equivalents, being highly liquid investments with short periods to maturity. The carrying amounts reported in the Statement of Financial Position approximate their net market value. • The maximum credit risk is assessed as equal to the carrying amount of cash and cash equivalents. Receivables • Receivables represent amounts fixed in currency which are to be received from customers and other outside entities. The collectability of debts Is assessed at balance date and provision made for any doubtful accounts. The carrying amounts reported in the Statement of Financial Position approximate their net market value. State Administration Unit • Represents balance of annual appropriations relating to expenses Incurred in provision of outputs and payments on behalf of the State, for which payments are yet to be disbursed. Financial Liabilities Fixed interest borrowings • Recorded at book value based on principal outstanding with discounts and premiums amortised over the life of the Instrument. • Interest is paid In arrears based on a fixed interest rate. • Principal is repaid as per an amortising schedule over the life of the Instrument or at maturity. • Maturities for fixed interest borrowings range from 1999-00 to 2026-27. Advances from the Commonwealth • Recorded at book value based on principal outstanding. • Interest is paid in arrears based on a fixed interest rate. • Principal is repaid as per an amortising schedule over the life of the instrument or at maturity. • Maturities range from 2003-04 to 2030-31. CPI indexed borrowings • Recorded at book value based on principal outstanding with discounts and premiums (Indexed Annuities) amortised over the life of the instrument. • Interest is indexed to the CPI and paid in arrears. • Principal is repaid over the life of the instrument as per an amortising schedule. • Maturities range from 1999-00 to 2030-31. CPI indexed borrowings • Recorded at book value based on indexed principal outstanding with discounts (Capital Indexed Bonds) and premiums amortised over the life of the instrument. • Principal outstanding is indexed in accordance with the movement in the CPI. • Interest Is paid in arrears at a fixed rate based on the indexed face value of the bond. • The indexed face value is repaid at maturity. • Maturities range from 2002-03 to 2020-21. Overnight borrowings • Valued at cost being the principal outstanding. • Interest is based on Treasury Corporation of Victoria's overnight borrowing rate and paid monthly in arrears. • Principal is repayable at 11 am the following day. Interest Rate Swaps • The net swaps Interest cost/benefit is off-set against the interest cost of the hedged liability. • Fixed cash flows are swapped Into floating cash flows under the swap arrangement. • The net swap interest cost/benefit is paid/received on a monthly basis. • The swap contract matures in May 2001. NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS AT 30 IONE 1909 1. Summary of significant accounting policies - continued Financial Instrument Accounting Policy and Terms and Conditions Finance lease liabilities • Recorded at the present value of minimum lease payments due at the inception of the lease, with subsequent adjustments made for additions and disposals of assets held under lease. • Interest Is charged at the interest rate implicit in the lease agreement. • Principal Is repaid as per an amortising schedule over the life of the lease. Creditors and Accruals Creditors and accruals represent amounts that are to be paid to suppliers and other outside entities. The carrying amounts reported in the Statement of Financial Position approximate their net market value. No interest is paid in respect of payables. (r) Public Account Liabilities In its Schedule of Administered Transactions, the Department has recognised certain liabilities which exist in the Public Account as at 30 June 1999. These are the outstanding liability to other Departments in respect of amounts appropriated from the Consolidated Fund but remaining undrawn as at the end of the year, and the temporary Public Account advance, funded from Trust Fund balances, which was used to cover the cash shortfall in the Consolidated Fund. (s) Reclassification of Administered and Controlled Transactions In accordance with the Financial Management Act 1994, the Department has reviewed the accounting treatment of various administered and controlled transactions and re-categorised some Items. (t) Comparative Figures The Department has reclassified certain items In reporting for the current financial year. Comparative figures have been adjusted to achieve consistency In disclosure. (u) Rounding Unless otherwise shown, all amounts have been rounded to the nearest thousand dollars. 2. Output Groups of the Department The identity and description of the Department's Output Groups for the year ended 30 June 1999 are summarised below. Output Group 711 - Strategic Policy Advice The provision of objective, timely and relevant advice to the Treasurer of Victoria, Minister for Finance and Minister for Gaming and appropriate Parliamentary and Cabinet Committees on the economic, financial and budgetary aspects of Government strategic policy formulation. Output Group 712 - Financial Management Services The provision of services to Government related to financial accounting, reporting and control, and monitoring of financial performance of Government departments, agencies and corporatised Government Business Enterprises. Output Group 713 - Risk Management Services The development, communication and compliance monitoring of risk management policies appropriate to various activities of Government departments, agencies, and Government Business Enterprises. Output Group 714 - Privatisation Services The Implementation of Government policy on privatisation of Government Business Enterprises and private provision of public sector goods and services where appropriate and practical. Output Group 716 - Reform Services The provision of advice on options and Issues, and management of the Implementation process for major Government endorsed reform objectives for which the Treasurer of Victoria and/or Minister for Finance have responsibility. NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS AT 30 IONE 1999 2. Output Groups of the Department - continued Output Group 718 - Resource Management Services The provision of centralised management of selected key Internal support services for the whole of the budget sector. Output Group 719 - Regulatory Services The Victorian Casino and Gaming Authority monitors and regulates Victoria's gambling activities to ensure that It Is fair, crime free, and optimises the benefits for Victorians. The Office of the Chief Electrical Inspector ensures minimum standards for the safety, supply and use of electricity throughout Victoria and the energy efficiency of electrical appliances. The Office of Gas Safety establishes and maintains control of safety over all gas fuels in their supply, distribution and utilisation. Output Group 720 - Taxation Management Services The primary objectives of the State Revenue Office in the delivery of outputs are: • ensure the efficient collection of revenue to fund Government services; • maximising compliance with taxation laws at minimum cost to clients and the State Revenue Office; • provision of advice on establishing a competitive taxation regime and administrative support framework; and • provision of the highest standard of client services to taxpayers. 3. Departmental and Administered Transactions Activities Administered by the Department In addition to the specific Departmental operations which are included In the Statement of Financial Position, Operating Statement and Statement of Cash Flows, the Department administers or manages activities on behalf of the State. The transactions relating to these State activities are reported as Administered In this note. Administered transactions give rise to revenues, expenses, assets and liabilities and are determined on an accrual basis. Administered revenues include taxes, fees and fines and the proceeds from the sale of administered surplus land and buildings. Administered liabilities include government expenses incurred but yet to be paid. Administered assets Include government revenues earned but yet to be collected. Administered Borrowings The borrowings of the Budget Sector Debt Portfolio (BSDP), classified In this note as 'Borrowings' and 'Advances Received', was $6,516 million (1998 $10,998 million). The $6,516 million had a face value of $6,431 million (1998 $11,040 million) and a market value of $6,883 million (1998 $11,684 million) - refer to Note 32 for further discussion on BSDP borrowings. Departmental controlled and administered transactions are disclosed by class and also by Output Groups for controlled transactions in the following tables: NOTES TO AND FORMINO PART OF THE FINANCIAL STATEMENTS AT 30 IONE 1909 3. Departmental and Administered Transactions - continued Output Groups Schedule - Revenues and Expenses for the year ended 30 June 1999 Output Output Output Output Group 71 I Group 7I2 Group 713 Group 714 1999 1998 1999 1998 1999 1998 1999 1998 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 Departmental Expenses and Revenues Expenses Employee Costs 6,573 7,282 5,948 8,976 3,103 2,321 5,679 2,793 Supplies and Services 10,894 3,881 3,415 94,751 6,990 2,124 84,336 38,053 Depreciation and Amortisation 360 343 757 4,707 223 111 496 370 Superannuation ------ Resources Provided Free of Charge 21 - 21 4,483 24 - 150 18 Transfer Payments - - 64 - 10,165 - 14,782 - Capita] Assets Charge 182 - 440 - 242 - 1,221 - Other 300 128 3,342 24,784 147 - 13,484 215 Abnormal Loss - • - " Total 18,330 11,634 13,987 137,701 20,894 4,556 120,148 41,449 Revenues User Charges - - - 123,413 - - - - Interest - - - 12,032 - - - - Resources Received Free of Charge - - 1 5,901 9 - 53,466 - Special Appropriations ------Output Appropriations 18,230 11,482 14,814 584,108 21,621 22,670 98,578 43,345 Additions to Net Asset Base Appropriations - - - 12,045 - - - - Receipts Forwarded to Consolidated Funds - - - (92,634) - - - - Other - 373 - 31,612 - 232 576 - Abnormal Revenue ------ Total 18,230 11,855 14,815 676,477 21,630 22,902 152,620 43,345 Revenues Less Expenses (100) 221 828 538,776 736 18,346 32,472 1,896 Output Groups Schedule - Assets and Liabilities as at 30 June 1999 Output Output Output Output Group 71 I Group 7I2 Group 713 Group 714 1999 1998 1999 1998 1999 1998 1999 1998 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 Departmental Assets and Liabilities Assets Current Assets 3,304 81 2,553 68,831 3,874 60,707 Non - Current Assets 279 136,108 658,774 327 30,217 25 Total Assets 3,583 81 138,661 727,605 4,201 90,924 25 Liabilities Current Liabilities 3,621 2,797 63,587 4,244 982 24,396 226 Non - Current Liabilities 410 317 221,578 481 2,726 Total Liabilities 4,031 3,114 285,165 4,725 982 27,122 226 Net Assets/(Liabilities) (448) 81 135,547 442,440 (524) (982) 63,802 (201) Output Output Output Output Other Not Departmental Group 716 Group 718 Group 719 Group 720 Attributable Total 1999 1998 1999 1998 1999 1998 1999 1998 1999 1998 1999 1998 $>000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 5,841 5,882 7,394 8,069 367 - 26,938 26,681 - - 61,843 62,004 26,133 28,603 19,489 12,562 255 26 26,048 21,469 - - 177,560 201,469 450 365 19,204 11,525 129 92 5,891 5,390 - - 27,510 22,903 - - 46,363 573,258 46,363 573,258 19 - 24,237 8,658 19 - 91 - - - 24,582 13,159 3,435 - - - 4,308 - 2,968 - - - 35,722 - 216 - 36,648 - 260 - 1,467 - - - 40,676 - 247 21,552 12 37 1 953 1,377 - - 40,062 26,517 - - - 734,627 153,000 734,627 153,000 36,341 34,850 128,524 40,826 5,375 119 64,356 54,917 780,990 726,258 1,188,945 1,052,310 - - 50,124 26 - 2,090 2,127 - 52,214 125,566 - - 3 194 - - - - 3 12,226 - - 13,061 247 - - - - 66,537 6,148 ------634,308 478,233 634,308 478,233 35,701 35,614 69,476 21,146 5,599 539 60,054 47,914 - 324,073 766,818 - - - 21,271 - 2,280 3,241 - 2,280 36,557 - - (24,009) - - (1,001) (2,206) - (25,010) (94,840) 10 319 759 15,257 182 - 79 - 1,345 48,054 ------3,325,982 - 3,325,982 - 35,711 35,933 109,414 58,141 5,599 721 63,423 51,155 3,960,290 478,233 4,381,732 1,378,762 (630) 1,083 (19,110) 17,315 224 602 (933) (3,762) 3,179,300 (248,025) 3,192,787 326,452 Output Output Output Output Other Not Departmental Group 716 Group 718 Group 719 Group 720 Attributable Total 1999 1998 1999 1998 1999 1998 1999 1998 1999 1998 1999 1998 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 6,607 77 31,678 1 1,014 11,690 2,688 121,427 71,678 557 480,813 103,995 85 4,694 8,853 653,080 771,647 7,164 77 512,491 103,996 1,099 16,384 11,541 774,507 843,325 7,239 - 41,914 11,922 1,111 - 12,806 3,669 241,995 906,131 340,123 986,517 821 - 297,469 92,117 126 - 1,452 4,040 10,821,405 13,458,569 11,125,207 13,776,304 8,060 339,383 104,039 1,237 14,258 7,709 11,063,400 14,364,700 11,465,330 14,762,821 (896) 77 173,108 (43) (138) 2,126 3,832 (11,063,400) (14,364,700) (10,690,823) (13,919,496) HOTES TO AND FORMING PART OF THE F I H A H C I A L STATEMENTS AT 30 I 0 H E 1999 3. Departmental and Administered Transactions - continued Administered Revenues and Expenses for the year ended 30 June 1999 ¡'000 $'000 Administered Revenues Special Appropriations 5,284,103 3,846,417 Payments on Behalf of the State Appropriations 1,331,584 1,320,141 Additions to Net Asset Base Appropriations 26,805 Receipts Forwarded to Consolidated Fund (21,368,631) (15,708,056) Commonwealth Grants 3,591,579 3,655,568 Taxation 10,218,857 7,851,639 Dividends 1,006,971 1,241,791 Other Revenue • 1,913,488 754,070 Abnormal Items 4,373,622 1,305,730 Total Administered Revenues 6,351,573 4,294,105 Administered Expenses Transfer Payments 350,580 716,858 Financing Costs 200,664 413,278 Interest Expense 645,628 761,924 Taxation Expense 101,023 135,470 Other 434 566,125 Total Administered Expenses 1,298,329 2,593,655 Appropriations applied in excess of State revenues collected 1,727,799 Revenues Less Expenditure 3,325,445 1,700,450 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS AT 30 i 0 N E 1090 3. Departmental and Administered Transactions - continued Administered Assets and Liabilities as at 30 June 1999 1999 1998 $'000 $'000 Current Assets Cash 551,899 194,767 Receivables 498,221 217,040 Investments 33,048 Inventories 4,997 7,168 1,088,165 418,975 Total Current Assets Non-Current Assets Receivables 399,313 674,990 Investments 15,806 567,295 Infrastructure Assets 32,851 7,473 Total Non-Current Assets 447,970 1,249,758 Total Assets 1,536,135 1,668,733 Current Liabilities Creditors & Accruals 37.158 50,694 SAU Liability"' 613,368 Trust Fund Borrowings <*> 778,537 Borrowings 865,314 949,844 Other 7,921 7,671 2,302,298 1,008,209 Total Current Liabilities Non-Current Liabilities Borrowings 5,650,773 10,047,781 Other 169,798 230,102 Total Non-Current Liabilities 5,820,571 10,277,883 Total Liabilities 8,122,869 11,286,092 Net Assets/(Li a b i I ¡ties) (6,586,734) (9,617,359) (1) Parliamentary appropriations applied, from which funds have not been issued from the consolidated fund (2) Public account advance from Trust Fund balances to the consolidated fund NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS AT 30 JUNE 1999 1999 1998 $'000 $'000 4. Employee Costs Wages and Salaries 51,730 50,102 Superannuation Expense Related to Departmental Staff 3,619 5,103 Termination Payments 441 1,557 Other Employee Related Expenses 6,053 5,242 61,843 62,004 5. Supplies and Services Accommodation/Rent and Outgoings* 4,969 88,713 Contract Services and Consultancies 131,189 75,178 Electronic Data Processing Expenses 3,801 10,934 Building Services and Utilities 8,513 9,551 Marketing and Promotion 4,651 1,278 Postal and Telephone 2,606 2,435 Office Requisites 2,111 3,013 Staff Development and Recruitment 2,011 2,448 Ex-Gratia Payments 1,333 361 Other 16,376 7,558 177,560 201,469 * The variance reflects the outsourcing of the management of leasehold properties to Global Property Solutions, effective as from May 1998. 6. Depreciation and Amortisation Expense Depreciation and amortisation were charged In respect of: Buildings 6,099 11,122 Intellectual Property 5,003 4,915 Computers and Communication Equipment 3,779 2,422 Leased Assets 11,558 4,087 Office Equipment and Furniture and Fittings 332 335 Other 739 22 27,510 22,903 7. Superannuation 46,363 573,258 46,363 573,258 The 1997/98 figure represents pensions and lump sum payments for the entire budget sector. In 1998/99 the lump sum payments were made against the Unfunded Superannuation Liability, with a revaluation based on Actuarial assessment being recognised as abnormal expenditure. 8. Resources Provided Free of Charge Fitout Costs 15,487 6,947 Building Services and Utilities - 833 Other Assets 9,095 5,379 24,582 13,159 9. Transfer Payments* Victorian Government Business Enterprises 7,775 Other Victorian Government Entities 20,829 Other Governments 3,234 Other Non Government 3,884 35,722 * There were no transfer payments deemed to be controlled in 1997/98. With the introduction of Output budgeting in 1998/99, a number of transfer payments were determined to be part of output funding. NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS AT 30 JUNE 1999 1999 1998 $'000 $'000 10. Other Expenses Finance Lease Interest 16,094 9,061 Decrement resulting from Revaluation of Buildings 13,966 Audit Fees: • Internal 481 263 • External - Annual Financial Statements and Departmental Financial Report 700 641 - Other 424 3Û1 Net Value of Assets Sold* 18,168 Other 4,195 2,285 40,062 26,517 * Net value of assets sold relate mainly to net book value of surplus real estate properties disposed during the year. 11. User Charges Rental Accommodation and Associated Recoupments* 15,713 96,216 Imputed Lease Rentals 23,264 15,931 Lease Co-ordination Fee 6,172 6,083 Other 7,065 7,336 52,214 125,566 * The variance reflects the outsourcing of the management of leasehold properties to Global Property Solutions, effective as from May 1998. 12. Other Operating Revenue* Transfer of Funds - 192 Surplus on Sale of Fixed Assets - 20,192 Incentive Payments from Landlords - 7,290 Superannuation Recoupments - 6,227 Administrative Recoupments - 5,314 Miscellaneous 1,345 8,839 1,345 48,054 • The Financial Management Act (FMA) requires that all revenue, except trust revenue, is to be remitted to the Consolidated Fund. Revenue subject to Section 29 of the FMA is treated as controlled revenue and consequently, is shown as an appropriation when taken up as revenue in the accounts of the Department. This has meant that amounts previously reported as controlled revenues are now classified as administered revenues. 13. Abnormal Items Revenue • Appropriations for Unfunded Superannuation Liability Transactions 3,325,982 3,325,982 I Expenditure • Restatement of Unfunded Superannuation Liability* 612,627 153,000 • Provision for Diminution of Investment 122,000 734,627 153,000 2,591,355 (153,000) * Restatement based on actuarial assessment NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS AT 30 JUNE 1909 1999 1998 $'000 $'000 14. Cash/Bank Overdraft Rental Trust Accounts 9,271 Working Accounts - Business Units 4,177 Public Account - Salaries & Wages in Suspense 1,319 Other 16 Bank Overdraft (18,642) : (18,642) 14,783 * With the introduction of the State Administration Unit accounting, some SAU and trust balances previously recognised under cash have now been reported as Receivables, eg. working account balances 15. Trust Funds Finance Agency Trust 7,378 8,619 Natural Disasters Trust* - 6,431 Treasury Trust Funds 3,379 5,310 Creditors Suspense Account - 3,943 Asset Sales Deposit Trust Account 561 3,446 Snowy Reform Project Trust - 247 Performance Incentive Trust 203 Other Trust Funds - 1,018 11,318 29,217 Investment re Performance Incentive Trust 1,281 1,952 12,599 31,169 The Department has separately recognised monies held In trust on behalf of other parties as current liabilities. * Natural Disasters Trust has been reclassified as an Administered Trust due to this account being of a multi-user nature. 16. Inventories Stationery & Office Supplies 112; 69 Work in Progress - 539 112 608 17. Receivables State Administration Unit* 68,153 Fees Receivable by Business Units 1.009 2,738 Provision for Doubtful Debts (43) (75) 69,119 2,663 * Represents balance of annual appropriation relating to expenses incurred in the provision of outputs, for which payments are yet to be disbursed. 18. Investments Debt Securities 257,893 : 257,893 Provision for Diminution of Investment (122.000) - 135,893 257,893 This amount represents the cost of bonds purchased by the Department in respect of the Accelerated Infrastructure Program after a provision for the diminution in their value was made. The proceeds of the bonds (issued by a special purpose public company - Property Leasing Limited) were used to finance the construction of police stations, court buildings and other buildings for government use. The bonds have been purchased to facilitate a restructure of the leasing arrangements related to those buildings. In view of the potential loss following the restructure of the Accelerated Infrastructure Program, the Department has made a provision of $122m to account for possible decrement in the carrying value of these bonds (refer also note 13). NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENT AT 30 JONE 1999 1999 1998 $'000 $'000 19. Land and Buildings Land 89,901 68,429 Land & Improvements - at Valuation 89,901 68,429 Buildings 59,955 62,432 Buildings at Valuation (2,721) (1,015) Accumulated Depreciation 57,234 61,417 Written Down Value Building Improvements at Cost 10,171 280 Accumulated Depreciation (29) Written Down Value 9,191 251 Fitouts at Cost 34,811 37,881 Accumulated Depreciation (6,319) (3,110) Written Down Value 28,492 34,771 Constructions in Progress 5,142 21,770 Written Down Value 5,142 21,770 Leased Buildings 103,995 103,995 Accumulated Depreciation (7,634) Written Down Value 96,361 103,995 Total Written Down Value - Buildings 196,420 222,204 Total Written Down Value of Land and Buildings at Department's Valuation 286,321 290,633 Valuations of land and buildings were determined by the Valuer-General's Office in June 1998. Valuations were carried out in conformity with the accounting policy "Recognition and Valuation of Non-Current Physical Assets" issued by the Budget and Financial Management Division of the Department of Treasury and Finance. NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS AT 30 JUNE 1909 1999 1998 I'OOO $'000 20. Plant and Equipment Office Equipment Office Equipment 2,638 2,673 Accumulated Depreciation (1,700) (1,430) Written Down Value 938 1,243 Intellectual Property - Generic Revenue Collection System Generic Revenue Collection System at Cost 12,241 12,241 Accumulated Depreciation (11,630) (10,329) Written Down Value 611 1,912 Intellectual Property - Municipal Valuations Database Municipal Valuations Database at Cost 13,242 11,762 Accumulated Amortisation (10,144) (6,441) Written Down Value 3,098 5,321 Computer Equipment Computer Equipment at Cost 15,070 13,235 Accumulated Depreciation (9,766) (6,030) Written Down Value 5,304 7,205 Construction in Progress Construction in Progress 9,720 Written Down Value 9,720 Leased Assets Plant and Equipment at Cost 10,231 10,231 Accumulated Amortisation (10,144) (9,795) Written Down Value 87 436 Motor Vehicles - Leased 215,865 210,563 Accumulated Amortisation (4,757) (3,559) Wriitten Down Value 211,108 207,004 Total Written Down Value of Plant and Equipment 230,866 223,121 21. Creditors & Accruals Supplies and Services 50,840 7,099 Employee Costs 944 1,580 51,784 8,679 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS AT 30 IONE 1900 1999 1998 $'000 $>000 22. Commitments for Expenditure (a) Finance Leases Current 7,932 35,596 Non-current 294,474 307,789 302,406 343,385 Commitments under finance leases at the reporting date are payable as follows: Not later than one year 23,566 37,721 Later than one year and not later than 5 years 272,098 274,162 Later than 5 years 112,983 129,626 Minimum lease payments 408,647 441,509 Less: Future finance charges 106,241 98,124 302,406 343,385 (b) Operating Leases Commitments under non-cancellable operating leases at the reporting date (which are not recognised as liabilities In the Financial Report) are payable as follows: Not later than one year 5,344 4,566 Later than one year and not later than 5 years 14,120 12,109 Later than 5 years 3,676 5,222 23,140 21,897 (c) Capital Commitments Capital expenditure contracted for at the reporting date but not recognised as liabilities In the Financial Report. These commitments will be Incurred during the next financial year: Building improvements, fit-outs and maintenance 5,967 4,810 5,967 4,810 23. Provision for Employee Entitlements Current Employee Entitlements Recreational Leave Liability 4,227 4,319 Long Service Leave Liability 1,036 414 Other Employee Entitlements 201 5,464 4,733 Non-Current Employee Entitlements Long Service Leave Liability 9,328 9,946 9,328 9,946 14,792 14,679 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS AT 30 IONE 1999 24. Unfunded Superannuation Liability The gross unfunded liability at 30 June 1999 of superannuation funds operated principally for budget sector employees was $11,997 million, as shown below. This liability represents the shortfall between the total net assets of the State's budget sector superannuation funds at 30 June 1999 and the total benefits that members have accrued up to that date, determined by an actuarial assessment. Not all of the $11,997 million is to be met from superannuation outlays of the budget. An amount of $1,069 million is to be met from the revenues of Commonwealth funded agencies (e.g. universities) and self-funded entities. In accordance with the State Superannuation Act 1988 the Government, through the Consolidated Fund, is primarily responsible for meeting the employer's share of the unfunded liability of the State Superannuation Fund. However, under the terms of that Act, the Minister for Finance can effectively pass this unfunded liability to individual authorities. In addition, the Department has recognised a liability of $135 million for accrued benefits arising from pension entitlements under constitutionally protected schemes operated principally for judges. As no assets are held in respect of these schemes, they are therefore unfunded and pensions become directly payable from the Consolidated fund. The liability has been calculated by the Superannuation Policy Unit of the Department. At 30 June 1999 the total unfunded liability to be met from non-budget revenue was $1,069 million and to be met by the Department was $11,063 million, as shown below. 1999 1998 $ Million $ Million Fund State Superannuation Fund 11,825 14,995 Emergency Services Superannuation Fund 196 365 Parliamentary Contributory Superannuation Fund (24) (14) Sub Total 11,997 15,346 Constitutionally Protected Schemes 135 120 Sub Total 12,132 15,466 Liabilities to be met from Non-Budget Revenue, (1,069) (1,101) 11,063 14,365 Liabilities to be met from Budget Superannuation Outlays - Current 242 906 Liabilities to be met from Budget Superannuation Outlays - Non-Current 10,821 13,459 11,063 14,365 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS AT 30 JONE 1999 Accumulated Asset Total Surplus/(Deficit) Revaluation Equity $'000 $'000 $'000 25. Changes in Equity Balance at the beginning of the Financial Year (13,948,789) 29,293 (13,919,496) Increase in Net Assets 3,192,787 - 3,192,787 Change in Asset Revaluation Reserve (4,674) (4,674) Transitional adjustments 3,685 - 3,685 Equity Adjustment* 36,875 ; 36,875 Balance at the end of the Financial Year (10,715,442) 24,619 (10,690,823) * Relates to reclassification of items between controlled and administered. The major item relates to Transport Finance Leases, which are aggregated as part of the Budget Sector Debt Portfolio and have been reclassified as administered to achieve consistency. 26. Reconciliation of Increase in Net Assets to Net Cash Outflow to Operating Activities Increase in Net Assets 3,192,787 326,452 Depreciation 27,510 22,903 Lease Transactions (7,547) Diminution in Value of Investment 122,000 Gain on Disposal of Non-Current Assets (24,926) (20,192) Increases - Employee Entitlements 313 875 (lncrease)/Decrease in Receivables 322 2,321 Increase In other Current Assets (17,579) (548) Decrease In Prepayments (278) 109 Decrease in Creditors and Accruals 47,255 (10,372) lncrease/(Decrease) in other Current Liabilities 209 lncrease/(Decrease) in Unfunded Superannuation (3,301,300) (337,000) Assets not previously recognised adjusted against equity 12,362 Balances Held in State Administration Unit (58,664) Net Cash flows from/(used in) Operating Activities (20,107) (2,881) 27. Contingent Liabilities Contingent liabilities arise from guarantees, indemnities and other forms of support provided by the Government through the Treasurer of Victoria. They also arise from legal disputes and other claims against the Government. Contingent liabilities, by definition, are not actual liabilities. They are amounts relating to circumstances under which there is the possibility, due to some future event, that an actual liability could arise. A conservative approach has been used so that amounts shown below represent the maximum potential liability, without taking into account any offsetting asset or security values. The following table summarises quantifiable contingent liabilities relating to the Department of Treasury and Finance. NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS AT 30 JUNE 1900 1999 1998 $ Million $ Million Budget Sector State Financial Enterprises 365.0 465.0 Specific Guarantees and Indemnities under Statute 305.6 379.0 Monash Medical Centre 20.9 123.5 Litigation against State Revenue Office 112.2 94.1 Other 7J> 20.9 Total Budget Sector* 811.2 1,082.5 Non-Budget Sector 2,707.1 4,212.3 Total 3,518.3 5,294.8 • The decrease in the total amount compared with 1998 mainly reflects a reduction in Treasurer's indemnities/guarantees for Co-operative Housing Societies and the restructuring of the financial arrangement relating to the Monash Medical Centre. Public Transport Corporation Lease Arrangements Under various transport lease arrangements made by the Public Transport Corporation, the State of Victoria indemnified the lessors against adverse tax rulings and third party personal injury claims, where the third party is injured by the operation of the equipment during the period of the lease. As at 30 June 1999, all of these lease arrangements have been terminated. The normal statute of limitations for tax claims Is five years and for personal Injury claims is six years. Gas Supply Incident The State and a number of its instrumentalities have been named as cross respondents in a representative proceeding before the Federal Court arising from the fire and explosion at Esso's gas processing plant at Longford. The proceeding was instituted against Esso Australia Ltd and Esso Australia Resources Ltd (together "Esso") on behalf of gas users and stood down workers who are alleged to have suffered losses during the incident. Esso has in turn cross-claimed against the State and a number of its instrumentalities. The State and its instrumentalities have denied any liability in respect of Esso's cross claim and are vigorously defending the cross claim. The State and a number of its instrumentalities have also issued a further cross claim against BHP Petroleum (Bass Strait) Pty Ltd for contribution and Indemnity. There is a dispute with insurers as to the extent of insurance cover. A claim has been made for indemnity by a number of the State's instrumentalities. A further proceeding has been commenced in the Supreme Court of Victoria against some of the State's instrumentalities, but no document has been served. A further proceeding has also been commenced in the County Court against some of the State's instrumentalities and this is In the process of being settled. Transmission of Business Under Section 149 of The Workplace Relations Act 1996 As a result of the outsourcing of governmental functions, contractors now performing those functions following acceptance of their tenders, have often engaged staff on lesser rates and conditions than those which previously applied under Awards for public sector employees. Recent Federal Court decisions have indicated that previous award rates and conditions may apply to the contractor's employees performing what was previously a. government function. The application of this principle requires transfer of part of the business (of the Government) and the test which Is generally applied is whether there is a "substantial identity" between the activities before and after the outsourcing. If applicable, the principle would generally cause increases in employment costs for the contractor. The Federal Court decision is subject to an application for leave to appeal to the High Court by the State of Victoria. The financial implications on the State of the transmission of business applications under the Workplace Relations Act are unclear pending the appeal. Land Remediation - Environmental Concerns A number of properties have been identified as potentially contaminated sites. The State does not admit any liability In respect of these sites, however, remedial expenditure may be incurred to restore the sites to an acceptable environmental standard In the event of future development taking place. Other Contingent Liabilities not quantified There are other commitments, which have been made by Government, many of which are unquantifiable arising from: • Indemnities provided in relation to financing arrangements, consultancy services, directors and administrators; • Performance Guarantees; • Deeds in respect of certain obligations of the Docklands Authority. • Outstanding unclaimed monies which may be subject to future claims by the general public against the State. NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS AT 30 1UNE 1999 28. Disclosures Relating to Ministers and Accountable Officer In accordance with the directions of the Minister for Finance under the Financial Management Act 1994, the following related disclosures are made for Ministers and the Accountable Officer for the reporting period. (a) Names Persons who held the above positions in the Department are shown below. The Hon A R Stockdale MP Treasurer of Victoria The Hon R M Hallam MLC Minister for Finance Mr I Little Secretary (b) Remuneration Remuneration received or receivable by the Accountable Officer in connection with the management of the Department during the reporting period was in the range: $310,000 - $319,999 (1997/98 $520,000 - $529,999)* Amounts relating to Ministers are reported in the Financial Statements of the Department of Premier and Cabinet. * Includes end-of-contract payments to the previous Accountable Officer for accumulated bonuses over the five years of his contract and for unused leave. (c) Other Transactions Other related transactions and loans requiring disclosure under the Directions of the Minister for Finance have been considered and there are no matters to report. 29. Executive Officers' Remuneration The numbers of executive officers, other than Ministers and the accountable officers, whose total remuneration exceeded $100,000 during the reporting period are shown in their relevant income bands in the first two columns of the table below. The base remuneration for these executive officers is shown in the third and fourth columns. Base remuneration is exclusive of bonus payments and accrued leave entitlements. The increase of 19 in the number of executives receiving total remuneration of greater than $100,000 reflects the move to pay performance bonuses on an annual basis rather than at the end of the contract. This meant that during 1998/99 more executives with base remuneration below $100,000 received sufficient bonuses to increase their total remuneration beyond $100,000. The total number of executive officers (including those receiving less than $100,000) as at 30 June 1999 was 113 compared with 107 the previous year, an increase of 3. Total Remuneration Base Remuneration 1999 1998 1999 1998 No No No No $10,000- 19,999 - - - 1 $40,000 - 49,999 - - 1 1 $60,000 - 69,999 - - - 1 $70,000 - 79,999 - - 1 3 $80,000 - 89,999 - - 5 2 $90,000 - 99,999 - - 18 8 $100,000 - 109,999 20 15 20 16 $110,000 - 119,999 18 14 23 18 $120,000 - 129,999 15 9 3 5 $130,000 - 139,999 10 8 6 4 $140,000 - 149,999 . 3 5 5 2 $150,000- 159,999 7 5 - 2 $160,000- 169,999 3 1 - 1 $170,000 - 179,999 3 4 1 - $180,000- 189,999 2 2 1 2 $190,000 - 199,999- 1 1 - - $200,000 - 209,999 - 1 1 1 - $210,000- 219,999 1 - - - $220,000 - 229,999 1 - - - $270,000 - 279,999 - 1 - - Total Numbers 85 66 85 66 Total Amount - $000's 11,134 8,827 9,528 7,304 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS AT 30 IONE 1909 30. Compliance with Financial Directives (a) Summary of compliance with annual Parliamentary appropriations for the year ended 30 June 1999 Annual Parliamentary Appropriations Appropriation Act Financial Management Act 1994 Total Appropriations Annual Payment from Section 29 Section 30 Section 32 Section 35 Parliamentary Applied Variance Appropriations Advance to Authority 1999 Treasurer Budget Actual $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 (i) Provision of outputs 307,745 25,585 2,259 5,146 4,315 3,552 348,602 334,282 14,320 (ii) Additions to net assets 881 - - (881) 19,621 1,221 20,842 2,280 18,562 (Hi) Payments made on behalf of State 1,613,637 5,612 - (4,265) 28,218 1,149 1,644,351 1,331,584 312,767 Total 1,922,263 31,197 2,259 - 52,154 5,922 2,013,795 1,668,146 345,649 Explanations of variances between annual parliamentary appropriations and appropriations applied (i) Major variance in Provision of Outputs • Payments for Professional and Outsourced Services were approximately $12m below budget. This was largely due to an under expenditure on consultancies and contractors engaged as part of the Government's industry reform and privatisation initiative. (ii) Major variances in Addition to Net Asset Base for 1998-99 • Project: Government Office Accommodation - City Precinct Plan - ($11.2m) The under expenditure is principally due to re-scheduling of the following major projects: • Environment Protection Authority Laboratory Relocation of $5.9m • Department of Education - Board of Studies of $1.2m Delays by clients in agreeing to new leasing arrangements have also caused delays to other projects. • Project: Country Offices Upgrade - ($1.8m) The under expenditure is principally due to delays caused by changes in the scope of projects requested by clients. (iii) Major variances on Payments made on behalf of the State • The variance is mainly due to under expenditure on the following items: • $193m on the provision for termination of structured financing facilities. The termination has been delayed until 99/00 financial year. • $85m on public transport reform costs due to delays in the franchising and privatisation of the transport businesses. • $58m on superannuation payments. • $34m on Winter Power Bonus Payments. • $14m on Microeconomic Reform Projects for all Departments. • The under expenditure was offset by a $101 m foreign exchange book settlement with TCV and Macquarie Bank, as part of the Aluvic sale in August 1998. NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS AT 30 JUNE 1900 (b) Summary of compliance with special appropriations for the year ended 30 June 1999. Special Appropriations Appropriations Appropriations Authority Purpose Applied 1999 Applied 1998 $'000 $'000 Act Nos. 6282/7705/8731 Special Appropriations - Pensions 37 28 Chairman General Sessions Act No. 8750 of 1975 Special Appropriations - Pensions 344 322 Constitution (Governors Pension) Act No. 6230 Judges County Court Act Special Appropriations - Pensions 3,056 2,767 Act No 8750 Judges Supreme Court Special Appropriations 2,489 2,199 Act No 6323 Section 3 The Mint Special Appropriations 86 83 Act No. 50 of 1988 Section 90(2) Special Appropriations 858,945 472,900 The Superannuation Fund - Contributions State Superannuation Act No. 50 Special Appropriations - Pensions 3,054,982 - of 1988 Section 90 (1) Reduction in Unfunded Superannuation Liabilities Act No. 80 of 1992 Section 38 1998-99 Sp Apps - Debt Charges 5,179,638 3,229,963 Budget Sector Debt Retirement State Owned Enterprises Act Special Appropriations - Other Services - 1,563 49,039 No. 90 of 1992 Section 88 State Equivalent Tax Refund Act No. 35 of 1986 Section 11 Special Appropriations - Other Services 1,020 1,530 Taxation (Interest on Overpayments) Act No. 6226, Section 77(2) Special Appropriations 102 279 Co-Operative Housing Act No. 6232 Crown Proceedings Special Appropriations 97 627 Gaming and Betting Act No.37 Expenses of Victorian Casino & 15,812 14,565 of 1994, Section 94 Gaming Authority Section 17 Business Franchise Safety Net Payments 21,174 68,712 Fees Act 1997 - Liquor Section 17 Business Franchise Safety Net Payments 79,000 63,689 Fees Act 1997 - Petroleum Business Franchise Fees Special Appropriations - Other 849 - (Petroleum Products) Act No.9272 of Services Safety Net Payments 1979, Section 13(2) Financial Management Act No. 18 Debt Charges Interest on Advance 8,011 2,622 of 1994, Section 39 Financial Management Act No. 18 Transport Leases 33,000 - of 1994, Section 28 Water Acts (further Amendment) - 410,000 Act No. 110 of 1997, Section 23 TOTAL 9,260,205 4,319,325 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS AT 30 JONE 1999 1998 $'000 Intra Inter Intra Inter Assets 213,310 424,286 8,365,914 689,684 Liabilities 6,510,876 9,146 9,869,613 207 Revenues 2,642,522 1,550,925 2,716,452 1,123,959 Expenses 879,124 110,786 927,461 30,141 'Intra' transactions are between entities within the Department's portfolio. 'Inter' transactions are with entities outside the Department's portfolio controlled by the Victorian Government. 32. Financial Instruments Interest rate risk Management of the Budget Sector Debt Portfolio is based on the key objectives of achieving relative certainty of interest costs, while minimising net borrowing costs and refinancing risk, and conservatively managing the financial operational risks of the budget sector treasury operations. In December 1996, the Budget Sector Debt Portfolio was divided into two portfolios, the Core Borrowing Portfolio (CBP) and the Debt Retirement Portfolio (DRP) to manage the conflicting risk management objectives of on-going funding requirements and debt retirement arising from the application of privatisation proceeds. During 1998-99 the remaining debt in DRP was fully repaid using the proceeds from the sale of gas businesses. The ongoing CBP is primarily comprised of fixed rate borrowing facilities which have an even maturity profile across the yield curve. This ensures that a relatively small proportion of the CBP is subject to repricing In any one period. Since borrowings in the CBP will be held to maturity, the CBP is accounted for on an historical cost basis. The interest rate risk profile of financial assets and liabilities held by the Department Is detailed below as per the face value of debt outstanding at balance date. NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS AT 30 JUN E 1999 1999 Fixed Interest Rate 1999 1999 Variable 1 year Over 1 year More than 1999 1999 Weighted Average Interest or less to 5 years 5 years Non-Interest Total Interest Rate (%) Rate bearing $'000 $'000 $'000 $'000 $'000 $'000 Financial Assets Investments with the Commonwealth 4.65% 5,894 - - 5,894 (Debt Retirement Reserve Trust Account) Receivables 4.60% 89,956 _ 824,037 913,993 Investment - 25,744 - 17,216 42,960 Prepayment - - - 769 769 Trust Funds - 534,671 - - 534,671 Administered 656,265 - 842,022 1,498,287 Trust Funds _ 11,318 _ 11,318 Investment - 137,173 - - 137,173 Receivables - 68,153 - 966 69,119 Departmental 216,644 - 966 217,610 Total Financial Assets 872,909 - 842,988 1,715,897 Financial Liabilities Fixed interest borrowings 7.13% - 299,981 1,843,304 2,780,386 - 4,923,671 Advances from the Commonwealth 4.20% - 710 2,897 6,283 - 9,890 CPI indexed borrowings 6.60% 970,431 - - 970,431 Overnight borrowings 4.80% 526,963 - - 526,963 SAU Liability - 613,368 - - 613,368 Trust Fund Borrowings - 778,537 - - 778,537 Creditors and Accruals - - - 29,450 29,450 Funds in Trusts - 7,708 - 7,708 Other - - - 177,719 177,719 Administered 2,897,007 300,691 1,846,201 2,786,669 207,169 8,037,737 Bank Overdraft _ 18,642 _ 18,642 Funds in Trusts - 12,599 - - 12,599 Creditors and Accruals - - 51,784 51,784 Lease Liabilities - 302,406 - - 302,406 Employee Entitlements - - - 14,792 14,792 Departmental 333,647 - 66,576 400,223 Total Financial Liabilities 3,230,654 300,691 1,846,201 2,786,669 273,745 8,437,960 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS AT 30 JUNE 1999 1998 Fixed Interest Rate 1998 1998 Variable 1 year Over 1 year More than 1998 1998 Weighted Average Interest or less to 5 years 5 years Non-Interest Total Interest Rate (%) Rate bearing $'000 $'000 $'000 $'000 $'000 $'000 Financial Assets Cash at bank - 1,540 - - - - 1,540 Deutschemark term deposit 7.70% - - 8,791 - - 8,791 Receivables 4.60% 789,032 - - - 332,733 1,121,765 Investment 4.70% 522,304 - - - - 522,304 Administered 1,312,876 - 8,791 - 332,733 1,654,400 Cash _ _ 14,783 14,783 Trust Funds - 29,217 - - - - 29,217 Investment 6.20% 259,845 - - - - 259,845 Receivables - - - - - 2,663 2,663 Departmental 289,062 - - - 17,446 306,508 Total Financial Assets 1,601,938 - 8,791 - 350,179 1,960,908 Financial Liabilities Fixed interest borrowings 7.10% - 204,165 2,982,154 4,559,028 - 7,745,347 Advances from the Commonwealth 4.40% - 27,340 120,112 1,278,769 - 1,426,221 CPI indexed borrowings 6.00% 1,013,777 - - - - 1,013,777 Floating rate borrowings 5.40% 412,415 - - - - 412,415 Overnight borrowings 5.10% 420,000 - - - - 420,000 Finance lease liabilities - 22,265 - - - - 22,265 Creditors and Accruals - - - - - 50,694 50,694 Administered 1,868,457 231,505 3,102,266 5,837,797 50,694 11,090,719 Funds in Trusts 31,169 _ _ 31,169 Creditors and Accruals - - - - - 8,679 8,679 Lease Liabilities - 343,385 - - 343,385 Departmental 374,554 8,679 383,233 Total Financial Liabilities 2,243,011 231,505 3,102,266 5,837,797 59,373 11,473,952 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS AT 30 JUNE 1990 Net fair value for financial assets and liabilities The carrying amounts of the Department's financial assets are valued at cost which approximates their net fair value. The net fair value of financial liabilities is determined by the net present value of expected future cash flows discounted at Treasury Corporation of Victoria's rate for similar securities at balance date. The net fair value of DTF's financial assets and liabilities are detailed below: 1999 1999 1998 1998 Reported Value Net Fair Value Reported Value Net Fair Value $'000 $'000 $'000 $'000 Financial Assets Overnight Investment 229,735 229,735 Short term money market trust 349,219 349,219 Deutschemark term deposit 8,483 8,483 Cash 1,540 1,540 Receivables 913,993 913,993 892,030 892,030 Investment 48,854 48,854 173,085 173,085 Prepayment 769 769 Trust Funds 534,671 534,671 - Administered 1,498,287 1,498,287 1,654,092 1,654,092 Cash 14,783 14,783 Trust Funds 11,318 11,318 29,217 29,217 Investment 137,173 137,173 259,845 259,845 Receivables 69,119 69,119 2,663 2,663 Departmental 217,610 217,610 306,508 306,508 Total Financial Assets 1,715,897 1,715,897 1,960,600 1,960,600 Financial Liabilities Fixed interest borrowings 4,884,205 5,106,618 7,815,974 8,341,186 Advances from the Commonwealth 9,889 8,036 1,175,525 1,173,941 CPI indexed borrowings 1,095,030 1,241,610 1,147,861 1,310,639 Overnight borrowings 526,963 526,963 420,000 420,000 Floating rate borrowings 416,000 416,000 Finance lease liabilities 22,265 21,809 Creditors and Accruals 29,450 29,450 50,694 67,133 SAU Liability 613,368 613,368 Trust Fund Borrowings 778,537 778,537 Funds in Trusts 7,708 7,708 Other 177,719 177,719 237,773 237,773 Administered 8,122,869 8,490,009 11,286,092 11,988,481 Bank Overdraft 18,642 18,642 Funds in Trusts 12,599 12,599 31,169 31,169 Creditors and Accruals 51,784 51,784 8,679 8,679 Lease Liabilities 302,406 302,406 343,385 344,040 Employee Entitlements 14,792 14,792 14,679 14,679 Departmental 400,223 400,223 397,912 398,567 Total Financial Liabilities 8,523,092 8,890,232 11,684,004 12,387,048 NOTES TO AND FORMING PART IF THE FINANCIAL STATEMENTS AT 30 IONE 1999 Foreign Exchange Risk In 1998-99 the Department redeemed a Deutschemark term deposit and closed out its cross currency swap contracts to sell Australian dollars and buy Deutschemarks. The deposit and swap contracts were established to hedge Deutschemark exposures under various cross-border leasing arrangements. With the termination of these leasing arrangements, the Department is not exposed to any foreign exchange risk. Off Balance Sheet Risk Objective The Department has an amortising interest rate swap arrangement with Treasury Corporation of Victoria (TCV) for the purpose of hedging the interest rate exposure resulting from the Victorian Government Motor Vehicle Leasing Facility (Facility). The Facility operates under a sale and leaseback arrangement whereby the State's motor vehicle fleet is owned by the Commonwealth Bank and leased back to the Department. Individual vehicles are leased with a fixed interest cost component over the life of the vehicles whilst the Department pays floating interest based on the 30 day bank bill rate. Interest rate risk The interest rate swap allows the Department to swap its fixed cash flows into floating rates. The fixed portion of the swap contract matures in May 2001 and the floating portion is reset monthly. The notional principal outstanding at balance date was $97,603,295. The contract involves monthly payment or receipt of the net amount of interest. As at 30 June 1999, the fixed rate was 5.28% and the floating rate was at the bank bill rate of 5.025%. Net fair value The net fair value at 30 June 1999 of the interest rate swap was ($106,845). This value reflects the amount which the Department expects to pay to terminate the contract or replace the contract at current market rates as at reporting date. NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS AT 30 JUNE 1999 Certification We certify that the accompanying Financial Statements for the Department of Treasury and Finance have been prepared in accordance with Part 9 of the Directions of the Minister for Finance under the Financial Management Act 1994, applicable Australian Accounting Standards and other mandatory reporting requirements. We further state that, in our opinion, the Financial Statements and Notes To and Forming Part of the Financial Statements, present fairly the financial transactions during the year ended 30 June 1999, and financial position of the Department as at that date. We are not aware of any circumstance, which would render any particulars included In the Financial Statements to be misleading or inaccurate. Peter Goddard Ian Little Chief Financial Officer Secretary Department of Treasury and Finance Department of Treasury and Finance Melbourne 5 November 1999 VICTORIAN AUDITOR- GENERAL'S OFFICE Auditing in the Public Interest AUDITOR-GENERAL'S REPORT To the Members of the Parliament of Victoria, the responsible Ministers and the Secretary of the Department of Treasury and Finance. Audit Scope The accompanying financial report of the Department of Treasury and Finance for the financial year ended 30 June 1999 comprising a statement of financial position, operating statement, statement of cash flows and notes to the financial statements, has been audited. The Secretary of the Department is responsible for the preparation and presentation of the financial report and the information it contains. An independent audit of the financial report has been carried out in order to express an opinion on it to the Members of the Parliament of Victoria, the responsible Ministers and the Secretary of the Department as required by the Audit Act 1994. The audit has been conducted in accordance with Australian Auditing Standards to provide reasonable assurance as to whether the financial report is free of material misstatement. The audit procedures included an examination, on a test basis, of evidence supporting the amounts and other disclosures in the financial report, and the evaluation of accounting policies and significant accounting estimates. These procedures have been undertaken to form an opinion as to whether, in all material respects, the financial report is presented fairly in accordance with Australian Accounting Standards and other mandatory professional reporting requirements and complies with the requirements of the Financial Management Act 1994, so as to present a view which is consistent with my understanding of the Department's financial position, the results of its operations and its cash flows. The audit does not provide any assurances that the Department's systems, or any other systems that the Department relies on in the conduct of its activities such as those of suppliers and service providers are year 2000 compliant, or whether plans and associated actions are adequate to address the year 2000 issue. The year 2000 issue has been addressed only in the context of existing audit responsibilities under Australian Auditing Standards to express an opinion on the financial report. Note 1 to the financial statements outlines the basis used by the Department for the catergorisation of its transactions and balances between controlled and administered for the relevant year, as required by Australian Accounting Standards, notwithstanding that the Department legally administers all its activities on behalf of the Crown. The audit opinion expressed in this report has been formed on the above basis. Audit Opinion In my opinion the financial report presents fairly the financial position of the Department of Treasury and Finance as at 30 June 1999 and the results of its operations and its cash flows for the year ended on that date in accordance with Australian Accounting Standards and other mandatory professional reporting requirements and complies with the requirements of the Financial Managem¿r-*1004 MELBOURNE J. W. CAMERON 8/11/99 Auditor-General Level 14, 222 Exhibition Street, Melbourne, Victoria 3000 Email: [email protected] Tel (03) 9651 6012 Fax (03) 9651 6050 Internet: http://www. audit, vie. gov. au APPENDICES 1998-1999 APPENDIX 1 DIRECTORY (as at end October 1999) Department of Treasury and Finance Portfolio Analysis Executive Director Commercial Director 1 Treasury Place Melbourne 3002 Mr Brett Rowse Ms Deborah Radford (DX 210759) Level 4,1 Treasury Place Melbourne 3002 Level 5,1 Treasury Place Melbourne 3002 Tel: (03) 9651 0165 Fax: (03) 9651 1030 Tel: (03) 9651 6551 Fax: (03) 9651 0034 Secretary Secretary to Treasury and Finance Portfolio Analysis Director Governance Director Mr Ian Little Mr Jeff Rosewarne Mr Alan Hawkes Level 4,1 Treasury Place Melbourne 3002 Level 4,1 Treasury Place Melbourne 3002 Level 3, 35 Spring Street Melbourne 3000 Tel: (03) 9651 6239 Fax: (03) 9651 5027 Tel: (03) 9651 6462 Fax: (03) 9651 1030 Tel: (03) 9651 2691 Fax: (03) 9654 6861 Office of the Secretary Director Public Sector Employee Relations Director Industry Executive Director Mr Chris O'Farrell Mr Richard Henderson Mr Richard Clarke Level 4,1 Treasury Place Melbourne 3002 Level 8,1 Macarthur Street Melbourne 3002 Level 3, 35 Spring Street Melbourne 3000 Tel: (03) 9651 2208 Fax: (03) 9651 5027 Tel: (03) 9651 5250 Fax: (03) 9654 6427 Tel: (03) 9651 2557 Fax: (03) 9651 0890 Budget and Financial Management Division Year 2000 Risk Management Executive Director Energy Policy Director Deputy Secretary Mr Adam Todhunter Mr John Robinson Mr Grant Hehir Level 5, 35 Spring St Melbourne 3000 Level 3, 35 Spring Street Melbourne 3000 Level 4,1 Treasury Place Melbourne 3002 Tel: (03) 9651 2700 Fax: (03) 9651 0724 Tel: (03) 9651 3240 Fax: (03) 9651 3192 Tel: (03) 9651 2134 Fax: (03) 9651 2195 Economic and Financial Policy Division Policy Director Principal Consultant Deputy Secretary Dr Stephen Rlmmer Mr Tom Martin Ms Chloe Munro Level 5,1 Treasury Place Melbourne 3002 Level 4,1 Treasury Place Melbourne 3002 Level 5,1 Treasury Place Melbourne 3002 Tel: (03) 9651 2060 Fax: (03) 9651 5575 Tel: (03) 9651 5113 Fax: (03) 9651 5414 Tel: (03) 9651 5095 Fax: (03) 9651 0920 Procurement Director Budget and Financial Management Reform Economic Policy and Financial Strategy Director Mr John Rickard Financial Management Reform Director Dr Michael Kirby Level 11,1 Macarthur Street Melbourne 3002 Mr Adrian Nye Level 5,1 Treasury Place Melbourne 3002 Tel: (03) 9651 2162 Fax: (03) 9651 2161 Tel: (03) 9651 5543 Fax: (03) 9651 5414 Level 4,1 Treasury Place Melbourne 3002 Projects Director Tel: (03) 9651 5222 Fax: (03) 9651 1231 Finance and Liability Management Director Mr John Rose Budget Reform Director Ms Helen Davison Level 5,1 Treasury Place Melbourne 3002 Mr Steve Gurr Level 5,1 Treasury Place Melbourne 3002 Tel: (03) 9651 5349 Fax: (03) 9651 6425 Tel: (03) 9651 5300 Fax: (03) 9651 5334 Level 4,1 Treasury Place Melbourne 3002 Resources Director Tel: (03) 9651 1069 Fax: (03) 9651 0920 Gaming Policy Director Ms Jo Beatty Budget and Financial Reporting and Ms Una Gold Level 5,1 Treasury Place Melbourne 3002 Coordination Director Level 13, Tel: (03) 9651 0743 Fax: (03) 9651 6487 1 Macarthur Street Melbourne 3002 Mr Murray Jones Transport Reform Executive Director Tel: (03) 9651 5620 Fax: (03) 9651 2048 Level 4,1 Treasury Place Melbourne 3002 Mr Jim McMeckan (until 29 October 1999) Tel: (03) 9651 2645 Fax: (03) 9651 2293 Intergovernment Financial Relations Director Level 12,1 Macarthur Street Melbourne 3002 Business Management Director Mr Stein Helgeby Tel: (03) 9651 5586 Fax: (03) 9651 2877 Level 5,1 Treasury Place Melbourne 3002 Mr Nick Daicos Victorian Government Property Group Director Tel: (03) 9651 5887 Fax: (03) 9651 0960 Level 4,1 Treasury Place Melbourne 3002 Mr Peter Carroll Tel: (03) 9651 5411 Fax: (03) 9651 2195 Risk and Insurance Management Director Level 10,1 Macarthur Street Melbourne 3002 Financial Management Systems Director Ms Elizabeth Eldridge Tel: (03) 9651 2177 Fax: (03) 9651 2169 Mr Mike De Jong Level 5,1 Treasury Place Melbourne 3002 Strategic Management Division Level 4,1 Macarthur Street Melbourne 3002 Tel: (03) 9651 5327 Fax: (03) 9651 2321 Executive Director Tel: (03) 9651 5477 Fax: (03) 9651 0036 Taxation and Revenue Policy Director Ms Laurinda Gardner Government Accommodation Acting Director Mr Vin Martin Level 3,1 Treasury Place Melbourne 3002 Mr David Aughterson Level 4,1 Macarthur Street Melbourne 3002 Tel: (03) 9651 5288 Fax: (03) 9651 2132 Tel: (03) 9651 6470 Fax: (03) 9651 6495 Level 10,1 Macarthur Street Melbourne 3002 Corporate Communications Acting Director Tel: (03) 9651 2168 Fax: (03) 9651 2167 Commercial Policy and Projects Division Ms Annette Glenister GST Implementation Executive Director Deputy Secretary Level 3,1 Treasury Place Melbourne 3002 Mr Neil Taylor Mr John Perham Tel: (03) 9651 5422 Fax: (03) 9651 5810 Level 9,1 Macarthur Street Melbourne 3002 Level 5,1 Treasury Place Melbourne 3002 Tel: (03) 9651 5066 Fax: (03) 9651 2400 Tel: (03) 9651 5369 Fax: (03) 9651 6487 Corporate Planning Director Victorian Casino and Gaming Authority Office of Gas Safety Mr Paul Eyres Director of Gaming and Betting Level 1, Wool House, 369 Royal Parade Level 3,1 Treasury Place Melbourne 3002 Mr Bill Lahey Parkville 3052 Tel: (03) 9651 0723 Fax: (03) 9651 2132 Level 5, 35 Spring Street Melbourne 3000 Tel: (03) 9341 3800 Fax: (03) 9341 3850 Tel: (03) 9651 3118 Fax: (03) 9651 3777 General Inquiries: 1800 069 588 Ministerial and Legai Services Director Technical Inquiries: 1800 652 563 Solicitor to Treasury and Finance Statutory Bodies and Business Enterprises Mr Ian Gibson Audit Victoria Office of the Administrator SECV Level 3,1 Treasury Place Melbourne 3002 Level 34,140 William Street Melbourne 3000 Level 5, 452 Flinders Street Melbourne 3000 Tel: (03) 9651 5714 Fax: (03) 9651 5951 Tel: (03) 9601 7000 Fax: (03) 9601 7010 Tel: (03) 9679 4777 Fax: (03) 9679 4747 Corporate Services Centre City West Water Limited Office of the Administrator GASCOR & GTC Chief Executive Officer St Albans Road Sunshine 3020 Level 6, 45 William Street, Melbourne 3000 Ms Deborah Clark Tel: (03) 9313 8422 Fax: (03) 9313 8417 Tel: (03) 9932 7841 Fax: (03) 9652 4783 Level 5,1 Macarthur Street Melbourne 3002 Coal Mine Workers' Pension Tribunal Office of the Chief Electrical Inspector Tel: (03) 9651 5145 Fax: (03) 9651 0724 35 Spring Street, Melbourne 3000 3rd Floor, Building 2, 4 Riverside Quay Corporate Financial Services Tel: (03) 9651 3368 Southbank 3006 Chief Financial Officer Tel: (03) 9203 9700 Fax: (03) 9686 2197 Electrical Appeals Board Mr Peter Goddard Level 5,1 Macarthur Street Melbourne 3001 Office of the Regulator-General Level 5,1 Macarthur Street Melbourne 3002 Tel: (03) 9651 0911 Fax: (03) 9651 0724 Level 1, 35 Spring Street Melbourne 3000 Tel: (03) 9651 2663 Fax: (03) 9651 0724 Tel: (03) 9651 0222 Fax: (03) 9651 3688 Emergency Services Superannuation Board Corporate Information Technology and Level 6, 4 Riverside Quay South Bank 3006 Old Treasury Building Reserve Committee of Telecommunications Tel: (03) 9698 6444 Fax: (03) 9645 5911 Management Incorporation Chief Information Officer Old Treasury Building Mr Adam Todhunter Gas Appeals Board Spring Street Melbourne 3000 Level 5,1 Macarthur Street Melbourne 3002 Level 5,1 Macarthur Street Melbourne 3001 Tel: (03) 9651 2233 Fax: (03) 9651 2288 Tel: (03) 9651 2700 Fax: (03) 9651 0724 Tel: (03) 9651 0911 Fax: (03) 9651 0724 Parliament Trustee Corporate Administrative Services Director Gascor Pty Ltd Level 10, 35 Spring Street Melbourne 3000 Mr Lionel Newman Level 6, 45 William St Melbourne 3000 Tel: (03) 9651 3353 Fax: (03) 9651 3699 Level 5,1 Macarthur Street Melbourne 3002 Tel: (03) 9932 7829 Fax: (03) 9652 4783 Tel: (03) 9651 6230 Fax: (03) 9651 0724 Rural Finance Corporation Gas services business Level 15, 350 Collins Street Melbourne 3000 State Revenue Office Level 2,196 Flinders Street Melbourne 3000 Tel: (03) 9243 2600 Fax: (03) 9243 2700 Commissioner Tel: (03) 9652 5705 Fax: (03) 9652 5300 Dr David Pollard State Trustees Limited Government Superannuation Office 505 Little Collins Street Melbourne 3000 168 Exhibition Street Melbourne 3000 35 Spring Street Melbourne 3000 Tel: (03) 9628 0505 Fax: (03) 9628 0501 Tel: (03) 9667 6444 Fax: (03) 9663 4260 Tel: (03) 9651 5111 Fax: (03) 9651 7215 Executive Team South East Water Limited Hardship Relief Boards (Land Tax, Probate Duty) Mr Rod Rogers - Chief Adviser to the Commissioner 20 Corporate Drive Moorabbin 3189 505 Little Collins Street Melbourne 3000 Tel: (03) 9628 0506 Fax: (03) 9628 0501 Tel: (03) 9552 3000 Fax: (03) 9552 3001 Tel: (03) 9628 0000 Fax: (03) 9628 0501 Mr Paul Broderick - Divisional Manager, South Eastern Medical Complex Limited Met Train 1 Customer Relations C/-Blake Dawson Waldron Level 15, 589 Collins Street Melbourne 3000 Tel: (03) 9628 0510 Fax: (03) 9628 0501 101 Collins Street Melbourne 3000 Tel: (03) 9619 1709 Fax: (03) 9619 4420 Tel: (03) 9722 1750 Fax: (03) 9722 2084 Mr Rob Dickens - Divisional Manager, Met Train 2 Policy & Legal Transport Accident Commission (TAC) Level 15, 589 Collins Street Melbourne 3000 Tel: (03) 9628 0508 Fax: (03) 9628 0501 222 Exhibition Street Melbourne 3000 Tel: (03) 9619 1709 Fax: (03) 9619 4420 Tel: (03) 9664 6666 Fax: (03) 9664 6668 Mr Peter Hiland - Divisional Manager, Compliance Met Tram 1 Tel: (03) 9628 0511 Fax: (03) 9628 0501 Treasury Corporation Victoria (TCV) Level 15, 589 Collins Street Melbourne 3000 222 Exhibition Street Melbourne 3000 Mr Rod Smith - Divisional Manager, Tel: (03) 9619 1709 Fax: (03) 9619 4420 Tel: (03) 9664 6666 Fax: (03) 9664 6668 Information Technology Met Tram 2 Tel: (03) 9628 0509 Fax: (03) 9628 0501 Tricontinental Holdings Limited Level 15, 589 Collins Street Melbourne 3000 Level 15, 350 Collins Street Melbourne 3000 Ms Kathy Duffy - Director, Quality Tel: (03) 9619 1709 Fax: (03) 9619 4420 Tel: (03) 9670 2000 Fax: (03) 9600 1295 and Human Resources Tel: (03) 9628 0512 Fax: (03) 9628 0501 APPENDIX 1 DIRECTORY continued VicFleet Pty Ltd Yarra Valley Water Limited Melbourne Water Corporation Level 10,1 Macarthur Street East Melbourne 3002 Lucknow Street Mltcham 3132 607 Bourke Street, Melbourne 3000 Tel: (03) 9651 2150 Fax: (03) 9651 2571 Tel: (03) 9874 2122 Fax: (03) 9872 1353 Tel: (03) 9235 7100 Fax (03) 9235 7200 V/Line Passenger Young Farmers' Finance Council Multinet Gas Level 15, 589 Collins Street Melbourne 3000 Level 15, 350 Macarthur Street, Melbourne 3002 16 Kaikoura Avenue, East Hawthorn 3123 Tel: (03) 9619 1709 Fax: (03) 9619 4420 Tel: (03) 9651 2150 Fax: (03) 9651 2571 Tel: (03) 9652 4000 Fax: (03) 9652 4100 Victorian Energy Networks Corporation (VENCorp) Businesses sold, wound up or transferred to Transmission Pipelines Australia Pty Ltd (TPA) 433 Smith Street North Fitzroy 3068 other Departments during 1998-99 180 Greens Rd Dandenong 3175 Tel: (03) 9481 9222 Fax: (03) 9481 9269 Tel: (03) 9797 5222 Fax: (03) 9797 5295 Aluminium Smelters of Victoria Pty Ltd (Aluvic) Victorian Funds Management Corporation Level 9, Blue Office Tower, The Como Centre Urban Land Corporation Level 10, 60 Collins Street Melbourne 3000 644 Chapel Street South Yarra 3141 Level 11, Melbourne Central, Tel: (03) 9207 2900 Fax: (03) 9207 2967 Tel: (03) 9825 2900 Fax: (03) 9825 2940 360 Elizabeth Street Melbourne 3000 Tel: (03) 9664 8444 Fax: (03) 9662 1666 Victorian Government Purchasing Board Ecogen Energy (Generation Victoria) 1 Macarthur Street East Melbourne 3002 Level 5, 416 Collins Street Melbourne 3000 Victorian Channels Authority Tel: (03) 9651 2268 Fax: (03) 9651 2161 Tel: (03) 9679 4600 Fax: (03) 9679 4619 Level 6, 99 King Street Melbourne 3000 Tel: (03) 9612 3512 Fax: (03) 9612 3599 Victorian Managed Insurance Authority Energy 21 Level 4, 446 Collins Street Melbourne 3000 Level 5,196 Flinders Street Melbourne 3000 Westar Tel: (03) 8061 5900 Fax: (03) 8601 5949 Tel: (03) 9652 5555 Fax: (03) 9652 5577 470 Ballarat Road Ardeer 3022 Tel: (03) 9361 7222 Fax (03) 9361 7332 Victorian Plantations Corporation Hastings Port (Holding) Corporation Level 3, 517 Flinders Lane Melbourne 3000 Level 5, 452 Flinders Street Melbourne 3000 Tel: (03) 9289 1400 Fax: (03) 9629 1552 Tel: (03) 9679 4777 Fax (03) 9679 4747 Victorian Power Exchange (VPX) Ikon Energy Level 14, 452 Flinders Street Melbourne 3000 Level 8, IBM Building, 60 City Road Tel: (03) 9691 4000 Fax: (03) 9691 4100 Southbank 3006 Victorian Rail Track Toll Free: 132 692 Fax: (03) 9926 5580 Level 17, 589 Collins Street Melbourne 3000 Kinetik Energy Tel: (03) 9619 8850 Fax: (03) 9619 8851 Level 19, East Tower HWT Building, Victorian WorkCover Authority 40 City Road Southbank 3006 (incorporating WorkCover Conciliation Service Tel: (03) 9299 2666 Fax: (03) 9299 2777 and WorkCover Medical Panels) Melbourne Port Corporation Level 3, 485 La Trobe Street Melbourne 3000 Level 48, Rialto South Tower, Tel: (03) 9641 1555 Toll Free: (1800) 136 089 525 Collins Street Melbourne 3000 Fax: (03) 9641 1222 Tel: (03) 9628 7555 Fax (03) 9628 7550 APPENDIX 2 FUNCTIONS & SERVICES OF THE DEPARTMENT as at 1 July 1999 The Budget and Financial • develops and implements debt, superannuation The Corporate Services Centre: Management Division: and risk management strategies; and • provides corporate services to the Departments • develops the State's annual Budget and short- • monitors Public Financial Enterprises (PFEs). of Treasury and Finance and Premier and term forward estimate strategy; Cabinet and their portfolio agencies; The Commercial Policy and Projects Division: • monitors and analyses Budget outcomes and • provides strategic financial planning & budget The amalgamation of the Privatisation and Industry provides advice on outlays policy to all services, financial reporting & analysis (including Reform Division and the Energy Projects Division to Government agencies; BERC submissions), APU support & advice and a form the Commercial Policy and Projects Division • develops and communicates financial and broad range of accounting services including took place effective from 1 July 1999. The management reform policy and advice to asset management; Commercial Policy and Projects Division: Government agencies; • provides direction and assistance with IT&T • coordinates and promotes best practice • provides strategic advice to Government on strategic planning and technical advice, employee relations outcomes in the public the application of commercial principles evaluation of new technologies, project sector; and practices; management and Information and Research • oversees the fitout, refurbishment and • promotes and Implements commercial principles services. This branch also co-ordinates the management of the Government's office and practices throughout the Government Government Online program for the Department; accommodation portfolio; sector; • provides Facilities Management services, • establishes accounting, financial, risk and asset • provides advice to Government departments and OH&S services, coordinates the delivery of HR management standards; agencies on private sector involvement in Services, the Gymnasium Service and Couriers, • maintains the State's general ledger; infrastructure and service provision; provides divisional quality assurance, Year 2000 • provides leadership in Government Financial • implements the Government's reform policies in Project, Purchasing Improvement and divisional Reporting; the water and energy industries; planning; and • provides accounting policy and other financial • manages the Government's shareholder interests • provides secretariat support to the Electricity and management policy advice; in private and public sector industries; Gas Appeals Boards, and manages the tender • provides timely and accurate information on the • implements National Competition Policy reforms box arrangements for the Department. State's financial operations; and operates Victoria's Competitive Neutrality The State Revenue Office (Service Agency): • provides leadership in the provision of financial Complaints Unit; has overall responsibility for managing the systems to the budget sector; • implements a performance monitoring regime collection of Victorian State taxes and the provision • promotes management reform in the for Government Business Enterprises; of revenue management services. These taxes and public sector; • manages the Government's property portfolio duties include: • manages the Government's daily cash position; and and asset sales program; • administers the Unclaimed Moneys Act 1962. • provides Government and Government • Payroll Tax; departments and agencies with advice on • Land Tax; The Economic and Financial Policy Division: purchasing, procurement and E-commerce; and • Stamp Duty; • provides advice to the Government on • manages the Whole of Government motor • Financial Institutions Duty; taxation policy; vehicle fleet. • Debits Tax; and • provides advice to the Government on longer • First Home Owners Scheme (GST). term economic development and financial The Strategic Management Division: strategy objectives; provides corporate strategies and professional • provides advice to the Government on services in the areas of: gaming policy; • Corporate Communication; • monitors and forecasts revenue flows, interest • Corporate Business Planning and Reporting, and superannuation expenses; Internal Audit, Risk, HR Strategy and Business • monitors and forecasts trends in State and Assurance; and national economies; • Parliamentary and Ministerial processes, • manages State/Commonwealth government Law and Freedom of Information financial relationships; • monitors contingent liabilities APPENDIX 3 BOARDS & COMMITTEES as at 1 July 1999 Senior Executive Group Objective The Senior Executive Group (SEG) is the primary decision-making group of the Department. SEG set, monitor and review the strategic direction of the Department. Chairperson Ian Little, Secretary Members John Perham, Deputy Secretary, Commercial Policy and Projects Grant Hehir, Deputy Secretary, Budget and Financial Management Chloe Munro, Deputy Secretary, Economic and Financial Policy Laurlnda Gardner, Executive Director, Strategic Management Deborah Clark, Chief Executive Officer, Corporate Services Centre Secretary Chris O'Farrell, Director, Office of the Secretary Human Resources and Remuneration Committee Objective To undertake consistent and rigorous decision making in Departmental HR management matters and ensure the HR management policies and practices are consistent with the Department's mission, structure and environment. Chairperson Ian Little, Secretary Members John Perham, Deputy Secretary, Commercial Policy and Projects Grant Hehir, Deputy Secretary, Budget and Financial Management Chloe Munro, Deputy Secretary, Economic and Financial Policy, Laurinda Gardner, Executive Director, Strategic Management, Deborah Clark, Chief Executive Officer, Corporate Services Centre Secretary Paul Eyres, Director, Corporate Planning Audit Committee Objective To assist the Secretary, the Treasurer, the Minister for Finance and the Minister for Gaming In fulfilling their responsibilities by reviewing the systems of internal controls which management has established, the audit process and the financial information which will be provided to Parliament and others. Chairperson John Perham, Deputy Secretary, Commercial Policy and Projects Members Grant Hehir, Deputy Secretary, Budget and Financial Management Brett Rowse, Executive Director, Portfolio Analysis Deborah Clark, Chief Executive Officer, Corporate Services Centre Sam Moshinsky (External Member) John Warburton (External Member) Secretary Colin McCann, Risk Management and Internal Audit, Corporate Planning Communications Committee Objective To be a conduit for communication issues as they arise in the Department, to monitor the range of communication activities within the Department and propose ways of building on the most effective elements and to sponsor working parties or other new initiatives oriented towards improvement In Departmental communication. Chairperson Chloe Munro, Deputy Secretary, Economic and Financial Policy Members John Perham, Deputy Secretary, Commercial Policy and Projects Laurinda Gardner, Executive Director, Strategic Management Deborah Radford, Director, Commercial, Commercial Policy and Projects Secretary Rob Williams, Acting Corporate Communications Advisor, Corporate Communications Information Technology and Telecommunications Steering Committee Objective To determine the Department's information technology and telecommunications policies and strategies, ensuring consistency with business strategy and plans and with whole of government IT&T policies and initiatives, and individual major IT&T projects approval, prloritisation and periodic review. Chairperson John Perham, Deputy Secretary, Commercial Policy and Projects Members Neil Taylor, Executive Director, GST Implementation Laurlnda Gardner, Executive Director, Strategic Management Grant Hehir, Deputy Secretary, Budget and Financial Management Deborah Clark, Chief Executive Officer, Corporate Services Centre Secretary Robert Cook, Chief Information Officer, Corporate IT&T Services Business Planning and Reporting Committee Objective To focus on the Department's Business plan and reporting. In the short term - the Committee would focus on the 1999-2000 Business plan and presentation to BERC by Ministers. In the long term - the Committee would focus on bringing DTF planning and reporting up to Management Reform Program standards. Chairperson Grant Hehir, Deputy Secretary, Budget and Financial Management Members Laurinda Gardner, Executive Director, Strategic Management Deborah Clark, Chief Executive Officer, Corporate Services Centre Peter Goddard, Chief Financial Officer, Corporate Financial Services Richard Clarke, Executive Director, Industry, Commercial Policy and Projects Secretary Paul Eyres, Director, Corporate Planning Balance Sheet Management Committee Objective To oversee the continuing development of risk management policies for the State. The BSMC approves various treasury and risk management policies for the State and is responsible for the development of principles and guidelines for balance sheet management. Chairperson Chloe Munro, Deputy Secretary, Economic and Financial Policy Members Ian Little, Secretary John Perham, Deputy Secretary, Commercial Policy and Projects Grant Hehir, Deputy Secretary, Budget and Financial Management Secretary Ian McLean, Assistant Director, Finance and Liability Management Staff Consultative Committee Objective This Committee was set up as part of the AWA process. The functions of the Committee are to discuss and make suggestions to the Department Head on any matter relating to the administration and practice of workplace relations within the Department and on any matter referred to it by the Department Head. Chairperson Chloe Munro, Deputy Secretary, Economic and Financial Policy Members Laurinda Gardner, Executive Director, Strategic Management Brian Tressidder, Assistant Director, Public Sector Employee Relations Ron Ben-David, Policy Analyst, Taxation and Revenue Policy Garry Meiler, Departmental Liaison Officer, Cash Ledger Management Greg Lavis, Administration Coordinator, Corporate Planning Valerie Cheong, Projects, Senior Project Analyst, Projects Ian Gibson, Director; Solicitor of Treasury & Finance, Ministerial and Legal Robyn Martin, Resources, Commercial Policy and Projects Llndy Franklyn, Facilities Management Coordinator, Corporate Administrative Services Secretary Jayne Jennings, Senior HR Consultant Accredited Purchasing Unit Objective DTF and DPC have established a joint APU in response to reforms introduced by the VGPB. The role of the APU is to coordinate and oversee purchasing practices and reform within the two Departments. Chairperson Grant Hehir, Deputy Secretary, Budget and Financial Management Joint Chairs Greg Hyams (DPC), First Assistant Secretary, Office of State Administration APPENDIX 3 BOARDS & COMMITTEES asatuuiyiggg continued Members Deborah Clark, Chief Executive Officer, Corporate Services Centre Dennis Carmody (DPC), General Manager, Arts Agencies & Executive Services Kevin Love (DPC), Assistant Secretary, Resources & Infrastructure Vacant at present (SRO) Neil Taylor, Executive Director, GST Implementation Peter Goddard, Chief Financial Officer, Corporate Financial Services Jo Beatty, Director, Resources, Commercial Policy and Projects (Bob Venables, Project Management, Policy & Review advisor from Victorian Government Purchasing Board) Secretary Maggie Liakopoulos, Manager Financial Operations, Corporate Financial Services Accommodation Committee Objective To review accommodation within the Department in accordance with changing requirements. Chairperson John Perham, Deputy Secretary, Commercial Policy and Projects Members Grant Hehir, Deputy Secretary, Budget and Financial Management Deborah Clark, Chief Executive Officer, Corporate Services Centre Year 2000 Steering Committee Objective Provide a coordinated leadership, direction and guidance for the DPC/DTF Year 2000 Program Office in it's activities of Year 2000 remediation and year 2000 risk mitigation across these Departments, facilitation of agency reporting to Cabinet and provide Briefings to ministers. Chairperson Deborah Clark, Chief Executive Officer, Corporate Services Centre Members Laurinda Gardner, Executive Director, Strategic Management Adam Todhunter, Executive Director, Year 2000 Risk Management Unit Mike De Jong, Director, Financial Management Systems Lionel Newman, Director, Corporate Administrative Services Greg Hyams (DPC), First Assistant Secretary, Office of State Administration Secretary Shelagh Goodey, Year 2000 Portfolio Administrator, Corporate Administrative Services The Department of Treasury and Finance either sponsors or has representation on the following committees: All States Fringe Benefits Tax (FBT) Consultation Forum APU Chairs Group Austin & Repatriation Medical Centre/Mercy Redevelopment Steering Committee Australian Procurement and Construction Council (APCC) Australian Procurement and Construction Council Electronic Commerce Action Group Australian Society Certified Practising Accountants Electronic Commerce Cell Australian Society Certified Practising Accountants Information Management & Technology Centre of Excellence Australian Statistical Advisory Council Automated Ticketing Sub-Committee Bureau of Emergency Services Telecommunications (BEST) Ministerial Steering Committee Bus Contracts Committee CityLink Tollways inter-departmental Steering Committee Central Government Response Centre Competitive Neutrality Steering Committee Council of Australian Governments (COAG) Steering Committee for the Review of Commonwealth/State Service Provision DTF/Audltor-General's Consultative Committee DTF/DHS Committee: Disclosure of Government Commitments in Contracts with the Private Sector Education - Steering Party Accrual Based Management Reporting •Emergency Management Steering Committee Energy Industry Response Committee Energy Markets Group External Reporting Centre of Excellence Australian Society of CPA's • Facility Managers' Network • Gas Reform Implementation Group • Greenhouse Steering Committee • Heads of Treasuries Committee • Heads of Treasuries Accounting and Reporting Advisory Committee • Heads of Treasuries Fiscal Reporting Committee • Indicative Planning Council for the Housing Industry (Victorian State Committee) • Inter-Departmental Multicultural Services Advisory Committee (IMSAC) • Interjurisdictional Committee for National Electricity Market (NEM)I • Finance Committee of the Anti-Cancer Council Victoria • Melbourne 2006 Commonwealth Games Bid • Melbourne 2006 Commonwealth Games Bid - Finance Sub-Committee • Mildura Base Hospital Steering Committee • Minister's Delegates (NEM) • National Gas Pipeline Advisory Committee • National Electricity Market Interjurisdictional Liaison Group • National Health Ministers' Benchmarking Working Group • National Tax Reform Implementation Steering Committee • Office of the Public Service Commissioner Joint Advisory Panel • Office of Regulator-General Customer Consultative Committee • Operational Safety and Tactics Training (OSTT) Steering Committee • Powerllnes Relocation Committee • Prison Capacity Expansion Project Steering Committee • Public Sector Accountant Committee of the Australian Society of CPAs • Shrine of Remembrance Trustees • Snowy Mountains Council • Snowy Mountains Council Finance Committee • SSJ Administration Committee • State Emergency Recovery Planning Committee • State-Owned Enterprises Employee Entitlements Committee • Standing Committee on Local Government Financial Management • Steering Committee on National Performance Monitoring of Government Trading Enterprises • Utility Regulators' Forum • Very High Speed Train Inter-departmental Working Group • Victorian Emergency Management Council • Victorian Accelerated Infrastructure Program (VAIP) Steering Committee • Victorian County Court Project Steering Committee • Victorian Government Oracle User Group • Victorian Government Purchasing Board (Secretariat) • Victorian Government Purchasing Development Committee • Victorian Grants Commission • Victorian Ports Strategic Study Steering Committee • Victorian Statistical Advisory Committee APPENDIX 4 PERFORMANCE AGAINST OUTPUT TARGETS AS SPECIFIED IN THE 19 08-90 STATE RUDGET Output Group Measure Target 98-99 Performance Strategic Policy Advice Expertise and knowledge to deliver strategic policy advice not assessable not assessable Quarterly peer review (%) 80 72' Ministerial satisfaction (annual) 80 80 Financial Management Services Government Financial Production of major whole of government reports not assessable not assessable Accounting, Reporting & Control Unqualified audit opinion (yes/no) yes yes User/reader satisfaction (%) 90 90 Reports completed within target days from end of period: Annual (days) 77 85 Monthly (days) 15 16.4 Cash Management Services Value of transactions of the Central Sector Bank Account managed annually ($m) (annual) 50,000 42,523 Average daily balance of the budget sector within target range (million) <0.2 0.106 Department's cash requirements met (yes/no) yes yes Unclaimed Moneys Administration of Unclaimed Moneys Act 1961 not assessable not assessable Administration DTF compliance with the objectives of the Unclaimed Moneys Act 1961 yes yes Organisations complying with the Unclaimed Moneys Act 1961 yes yes All verified claims processed within target period (weeks) 2 2 Liabilities Management Services Expertise and knowledge to manage and monitor not assessable not assessable major liabilities of the State Manage and reduce growth in superannuation liabilities (yes/no) yes yes Budget sector debt portfolio effectively managed and debt levels within target (%) <5 3.22 Interest bill within forecast range ($m) <850 733 Reduce contingent liabilities (yes/no) yes yes Effective relations maintained with ratings agencies, resulting in positive ratings outlook/achievement of AAA (yes/no) yes yes Achieving quarterly/monthly targets within agreed framework (annual Ministerial satisfaction) 80 80 Taxation Monitoring Services Expertise and knowledge to monitor the taxation receipts of the State not assessable not assessable Major problems without contingency plans (number) nil nil Annual customer (Treasurer) satisfaction survey 80 80 Targeted tax receipts achieved $m (annual) 8,734 8,742 Monthly reports on year to date revenue against Budget to the 80 80 Treasurer as agreed (Ministerial satisfaction survey) (% annual) Departmental Performance 12 reports of plans and performance of the 8 Departments (no. - annual) 12 12 Analysis and Review Annual customer (Treasurer/Minister for Finance) satisfaction survey (%) 80 80 Deadlines met within timeframes agreed with Treasurer/Minister for 90 80 Finance (Ministerial satisfaction survey) (% annual) Government Business Analysis and review of plans and performance of GBEs not assessable not assessable Enterprise Quarterly customer satisfaction (Treasurer/Minister for Finance) 80 80 Performance satisfaction survey (%) Monitoring Services Target dates met for GBE dividend payments (% annual) 100 100 Deadlines met for providing advice to the Treasurer under the 80 80 Corporate Planning and Reporting cycle (Quarterly satisfaction survey with the Treasurer/Minister for Finance) Output Group Measure Target 98-99 Performance Risk Management Services Risk Management Policy Advice Expertise and knowledge to deliver policy advice on public sector not assessable not assessable and Prudential Supervision Services risk management and prudential supervision of public financial enterprises and public sector superannuation funds with assets totalling around $50 000 million No surprises (number) nil nil Contingency plans (yes/no) yes yes Quarterly peer review assessment (%) 80 72' Annual customer (Treasurer/Minister for Finance) satisfaction survey (%) 80 100 Quarterly reports to Treasurer/Minister for Finance as 80 100 agreed (annual survey %) Infrastructure Project The expertise and knowledge to deliver infrastructure not assessable not assessable Policy Advice & Implementation policy advice and implementation Quarterly Peer review (%) 80 72' Annual customer (Ministerial) satisfaction (%) 80 100 Treasurer receives advice in time to enable adequate consideration 80 100 of issues prior to approval (Ministerial satisfaction survey) Energy Sector Risk Maximise the State's net financial position (yes/no) yes yes Management Minimise the State's expected value of financial liabilities (yes/no) yes yes Minimise the extent ongoing liabilities requiring yes yes intensive management (yes/no) Achieved to schedule agreed between the Department 100 100 and the Treasurer (%) Y2K Risk Monthly reports delivered to Cabinet 12 12 Management Services Meets Cabinet's reporting requirements and objectives (yes/no) yes yes (new output) Reports delivered within agreed timelines to allow 80 80 adequate consideration of issues (%) Privatisation Services Privatisation of Planned sales (number)(annual) 7 7 Energy Businesses Probity: Bidders satisfaction with the process nil nil (actionable complaints/criticisms) (number) Process auditor sign-off yes yes Warranties and indemnities minimised in relation to sale value (%) <1.5 <1.5 Improved overall position of the State's net financial position as measured by asset valuation vs agreed price positive positive Achieved to schedule agreed with Treasurer yes yes Privatisation of non- Privatisation of public transport businesses and not assessable not assessable energy Government Victorian Plantations Corporation Business Enterprises Probity auditor sign off yes yes Customer (Ministerial) satisfaction survey (%) 80 100 Achieved to agreed schedule (customer satisfaction survey) 80 100 Advice to Departments Promotion of outsourcing through forums, publications not assessable not assessable on and other activities Outsourcing of Customer (Ministerial) satisfaction survey (%) 80 100 Government Services Services delivered as agreed (ministerial satisfaction survey) 80 100 Sale of Surplus Sales target achieved ($m) (annual) 50 105 Government Property Customer (Ministerial) satisfaction survey (%) 80 100 Meets agreed schedule (Ministerial satisfaction survey) 80 100 APPENDIX 4 PERFORMANCE AGAINST OUTPUT TARGETS AS SPECIFIED IN THE 1 090-09 STATE DUDGET continued Output Group Measure Target 98-99 Performance Reform Services Financial Management Reform Planned 1998-99 milestones are: • Quarterly acquittal of output delivery performance completed completed • Ownership monitoring framework completed by Qtr 3 completed • Development of cash management, corporate governance regimes completed completed • Review Financial Management legislation ongoing ongoing • Refine incentives regime for government resource use ongoing ongoing • External review of Financial Management Framework commence by Qtr 4 commenced Affected parties receive appropriate consultation (yes/no) yes yes Audit report on reform (yes/no) yes yes Significant benefits, risks and material options yes yes identified to Government (yes/no) Planned 1998-99 milestones met 80 80 (Ministerial satisfaction survey) (annual %) Energy Industry Reform Reform progressed in 1998-99: • Implementation of gas market arrangement (date) September 1998 15 March 1999 • Corporatisation of Snowy Mountains Hydro-Electric Authority (date) June 1999 not achieved due to NSW jurisdictional issues All significant benefits, risks and material options identified (%) 100 100 All relevant parties receive appropriate consultation (%) 100 100 Planned 1998-99 milestones of 3 year plan delivered on time (%) 100 90 National Competition Delivery of advice on/implementation of national competition policy not assessable not assessable Policy and and GBE reform programs Government Quarterly peer review assessment 80 721 Business Enterprise Customer (Ministerial) satisfaction survey (%) 80 100 Reform Meets set timelines (Ministerial satisfaction survey) 80 100 Advice on Tax Reform The expertise and knowledge to deliver strategic not assessable not assessable taxation reform policy advice Quarterly peer review assessment (%) 80 721 Annual customer (Treasurer/Minister for Finance) satisfaction survey (%) 80 100 Agreed milestones met (%) (Treasurer/Minister satisfaction) 80 100 Resource Management Services Purchasing and The framework and guidelines to operate the Government's not assessable not assessable Procurement Services purchasing procurement framework Aggregate savings to Government ($m) 5.5 6 End user survey on usefulness advice/training provided (%) 78 81.5 Major milestones met as agreed for 1989-99 80 100 (Ministerial satisfaction survey) (%) Accommodation Total area managed (City Precinct Strategic Plan) (m2) 363,000 363,000 Services Dead rent - government leased accommodation (%) 2 0.66 Dead rent - government owned accommodation (%) 4 0.76 Accommodation available for clients when agreed (%) 90 90 Public Sector Employee Relations Expertise and knowledge to service Government and client organisations not assessable not assessable Services Annual customer (Minister for Finance and client organisations) 80 90 satisfaction survey (%) Services/advice received by clients when agreed (%) 80 80 Government Land Research and Advice on land and property issues not assessable not assessable and Property Customer (Ministerial) satisfaction survey (%) 80 80 Services Minister receives advice in time to meet agreed milestones and 80 80 enable adequate consideration of issues prior to approval (Ministerial satisfaction survey) Output Group Measure Target 98-99 Performance Budget Development Development and production of State Budget 4 May TBA Delivered and Production Reform Readers satisfied with accuracy, completeness and 80 65 presentation of Budget Papers (%) Annual customer (Treasurer/Minister for Finance) satisfaction survey (%) 80 80 Milestones met as agreed with Treasurer/Minister for 80 80 Finance (Ministerial satisfaction survey) Regulatory Services Regulation of Gambling Number of licences (number)(annual) 19,200 18,793 Compliance services (compliance audits and inspections, 8,360 8,499 investigation, revenue verification, operator procedures and rule approvals) (number)(annual) Licences - processing procedures are completed accurately (%) 95 95 Compliance Services - ensure preventable Incidents and 95 Data capture processes and irregularities do not occur in gaming operations (%) systems being established. Licences - processed within target time (%) 80 91 Compliance services - performed within target time (%) 95 Data Capture processes and systems being established. Policy Advice on Advice on issues (number - annual) 505 345 YTD Casino and Gaming Legislation (number - annual) 4 2 Matters Research projects (number - annual) 6 13 Advice on issues - provide appropriate and strategic, 90 100 to meet Ministerial and Board satisfaction (%) Legislation - implement legislation, which is effective 90 100 in achieving, desired goals. (%) Research Projects - Investigate social & economic 90 100 impacts of gambling (%) Advice on Issues - provide on a timely basis (%) 90 100 Legislation - implement to meet Ministerial and 90 100 Government requirements. (%) Research projects - results released on time (%) 100 1003 Services to Users of Electrical fatalities, excluding wilful Incidents, expressed per million 1.5 1.44 Electricity of Victorian population (based on a 3 year average) (number) Unfortunately 7 fatalities have been recorded for the year. Licence and registration applications assessed (number annual) 11,500 na4 Electrical products on display in Victorian retail outlets carrying 98 97 an accurate energy rating label where required (%) Customers satisfied with the level of service provided (%) 80 75.3 • Supply Safety • Installation safety • Equipment safety/efficiency • Electrolysis • Communications Victorians who know the meaning of the energy rating label (%) 785 na Compliance of industry with relevant safety codes and regulations - 95 95 % of audit samples Index of several measures of community reach (%) 68 75 Compliance of manufacturers and retailers with energy efficiency 95 97 testing and labelling regulations - % of audit samples Reduction in expenditure compared with previous year (%) 13 10.5 APPENDIX 4 PERFORMANCE AGAINST OUTPUT TARGETS AS SPECIFIED IN THE 1 90 0-90 STATE RUDGET continued Output Group Measure Target 98-99 Performance Economic Regulatory Services Approval and monitoring of prices in accordance with the June 1999 met Electricity Tariff Order and relevant industry specific legislation Approve gas network access arrangements in accordance with June 1999 met relevant state and national legislation and codes Issue periodic reports on the performance of regulated industries June 1999 met Issue revised industry codes, guidelines and standards June 1999 met Effective and open consultation with industry participants and June 1999 met stakeholders in relation to determinations issued by the Office Issue a consultation paper on the conduct of the June 1999 met electricity distribution price review Issue further discussion papers on key issues for the electricity June 1999 met distribution price review Timely and efficient collection and analysis of regulatory data June 1999 met Implementation of revised performance-reporting regimes June 1999 met Issue a paper setting out the framework, policies and principles Dec 1998 met for the conduct of the electricity price review Achieve deadlines in accordance with statutory requirements (%) 100 100 Services to Users of Gas Ensure all gas appliances sold and/or used in Victorian gas installations 100 98 are subject to appropriate approval scheme (%) Gas incidents reported downstream of consumer's <4 8 meter per month (number) Injuries/fatalities downstream of consumer's meter (number) nil nil Gas incidents reported in systems upstream of consumer's <5 6 meter per month (number) Level 2 & 3 incidents injuries/fatalities reported in systems upstream of consumer's nil nil meter (number) Faults (failed audits) per Type A installation inspection <0.25 (<25%) 12.9% completed (%) Faults per Type B installation inspection completed (number) <2 1.8 Maintain community confidence in safety of gas system 90 n.a.6 (annual survey completed)(%) Audit of Plumbing Industry Board certification compliance scheme (%) 99 KPMG audit completed Safety cases submitted by ail gas companies 100 100 (include retailers, distributors, transmitters) Taxation Management Services Taxpayer/Customer Expertise and knowledge to deliver taxpayer/customer advice not assessable not assessable Advice and Support and support services Services Customer satisfaction with education and compliance 95 98 programs provided (%) Customer satisfaction with public rulings and publications 95 95 Section 97 certificates issued within 5 days (%) 99 96.4 7 Refunds within 60 days (%) 100 95.2 8 Timely handling of objections within 60 days 100 98.7 9 Taxation Management Revenue collected within agreed budget set (%) +/- 5 -0.2 Services to Ratio of outstanding debt to total revenue (%) <2 0.95 Government Accuracy of cash flow projection (%) +/-5 4.59 Revenue received within 2 days of due date (%) 90 95.1 Revenue banked on day of receipt (%) 99 99 Meet Cabinet & Parliament timeframes in legislation (%) 100 100 1 Target was set prior to the commencement of the process and before any benchmark was set. 72% represented an average score achieved over the year. The Department considers that the process provides a learning outcome and a means for continuous improvement. 2 Calculated using General Government Net Debt. 3 Target is based on 11 projects being undertaken as part of the 1998-99 research program to be competed over a two year period. The remaining 10 projects are to be completed in accordance with funding grant guidelines. 4 This measure is no longer represented at the corporate level. 5 This measure is now collected and reported by Energy Efficiency Victoria. 6 A survey of general community confidence in gas system safety was not conducted on behalf of the Office of Gas Safety (OGS). Industry-based surveys were conducted and indicated that, on average, 77% of gas plumbers and owner/operators of complex gas installations consider the OGS a necessary safety 'watchdog', and 85% of natural gas supply businesses were satisfied with the performance of the OGS. 7 Redirection of resource earlier in the year caused target to be missed, currently processing 99% within 5 days. 8 The target was not achieved due to instances where there was need to request additional data and verification from the customer. 9 Branch experienced unprecedented workloads due to major changes to the Land Tax Act and had difficulties in filling a number of positions with experienced staff. APPENDIX 5 WORKFORCE DATA Total Staff as at 30 June 1999 Variation from from previous year Total staff 1017 -9 Full time 966 -20 Part time 51 +11 Full time equivalent 1000 -14.29 Break Down by Gender Male Variation from Female Variation from Total Staff Variation from previous year previous year previous year Full-time 569 +3 397 -23 966 -20 Part-time 8 +6 43 +5 51 +11 Total 577 440 1017 Breakdown By Division and Service Agencies as at 30 June 1999 Total EFT Budget and Financial Management 165 164 Corporate Services Centre 80 79 Economic and Financial Policy 68 68 Privatisations and Industry Reform 113 113 Energy Projects Division 20 20 State Revenue Office 523 509 Strategic Management* 48 47 Total 1017 1000 * Staff numbers shown for Strategic Management include staff in the offices of the Treasurer, the Minister and the Secretary. Profile of Executive Officers as at 30 June 1999' Classification Male Variation from Female Variation from Total Variation from previous year previous year previous year EO-1 4 +1 1 Nil 5 +1 EO-2 17 +3 6 +2 23 +5 EO-3 79 +5 15 -3 94 +2 Total 100 22 122 Profile of VPS Staff as at 30 June 19992 Classification Full Time Part Time Male Female Total Male Female Total VPS-5 98 30 128 0 5 5 VPS-4 106 57 163 1 9 10 VPS-3 148 124 272 1 18 19 VPS-2 76 117 193 1 7 8 VPS-1 35 41 76 4 4 8 Total 463 369 832 7 43 50 Profile of Other Staff as at 30 June 1999 Full Time Part Time Male Female Total Male Female Total Total 6 6 12 1 Nil 13 1 This does not include the Government Superannuation Office (GSO) which was formed on 1 July 1999 with a complement of seven (7) Executive Officers 2 This does not include VPS staff on extended leave as at 30 June 1999 APPENDIX 5 WORKFORCE DATA continued Selecting on Merit Upholding Public Sector Conduct Employee Relations The Department is committed to ensuring the best The Department ensures all staff are made aware of The Department experienced no lost time due to available people are recruited and selected for their obligations under the VPS Code of Conduct. industrial disputes during the period. advancement. During the period the Department The Code is available 'on line' for ease of access Training and Development advertised 103 roles. The Secretary approved the and a copy is provided to all new staff at Induction. filling of 14 vacancies by internal appointment All executives, and other staff as necessary, Training and Development is strongly encouraged to without advertisement on the grounds that there complete a Declaration of Private Interests form on assist staff to develop and enhance the skills and was no infringement of the merit and equity appointment and annually thereafter. The knowledge necessary to meet the Department's principles. The table below summarises the reasons declaration form was reviewed during the year. objectives, both for their current roles and in for non-advertisement. preparation for future roles. Occupational Health and Safety Reason for Non Advertisement No. The Department is committed to providing, An Executive Capability Program was launched. This Reclassification of role 5 maintaining and continuously improving a healthy provides an assessment of personal capabilities Specialised duties 5 and safe working environment. against identified Departmental capabilities and Graduate recruitment 2 assists executives in preparing targeted The Occupational Health and Safety Committee Ongoing role becomes vacant 1 development programs. continues to develop innovative and preventative Succession planning 1 health programs including vision testing and 11 VPS staff were granted undergraduate and All staff will be advised of planned exemptions from subsidised eyewear, ergonomic workstation postgraduate scholarships to further their advertisement through the Department's recently assessments and fully subsidised flu vaccinations. A professional development. developed electronic internal news bulletin. Hazard Audit was also completed as part of the Graduate Recruitment Scheme Safety Map Audit. The Department offered first aid Reviewing Personal Grievances training to staff, increasing the number of first aid The Department participated in the VPS Graduate The Department has a comprehensive grievance officers from six to twenty five, following a First Aid Recruitment Scheme, run by the Office of the process to ensure staff concerns are dealt with Audit of the Department. Commissioner for Public Employment. This scheme fairly and promptly. plays an important part in attracting and developing The Department launched an Employee Assistance No grievances were lodged during the period. staff to meet the Department's current and future Program (EAP) available to all staff, which provides needs. Six 1998 Graduate Scheme members Managing and Valuing Diversity a confidential, professional advisory service to assist rejoined the Department in February 1999 at which The Department is committed to merit and equity individuals in resolving any work or business related time nine economics and accounting graduates principles. They are integral to all aspects of human problems. commenced their first placements with the resource management. The Department developed WorkCover Department. a comprehensive HR Strategy during the year. The The Department continues to provide advice to staff strategy has four key objectives: The Department also introduced an Economics on WorkCover and health and safety issues as graduate recruitment program to attract and • To know the skills and capabilities we need required. Nine WorkCover claims were lodged develop high quality economic graduates in 2000 • To select and retain the people we need during the reporting period compared to three in the and beyond. • To develop our people last period. The Victorian WorkCover Authority • To recognise and reward our people reported that the Department's WorkCover claims Flexible Work Practices performance over the past three years is ranked in The Department offers a wide range of flexible work The strategies adopted In meeting these objectives the best 25 per cent of Victorian businesses in the practices to enable staff to balance work and private are based on the principle of merit and are aimed relevant Industry group. life. During 1998-99 a study of usage of these at enhancing the productivity of all staff while arrangements was undertaken. A set of guidelines recognising inherent differences. Health and safety is being integrated into all and 'case studies' has been developed to management functions and staff and managers are The Department surveyed staff on a range of HR encourage and guide staff and managers in encouraged to actively maintain and promote health issues. The feedback received is used In the maximising the benefits available to staff and and safety in the workplace. development of policies and processes that positive business outcomes. implement the HR Strategy across all aspects of people management. APPENDIX 6 INFORMATION AVAILABLE ON REQUEST & COMPLIANCE INDEX Information available on request: The Financial Management Act 1994 determines the nature of information that must be included in a Department's Annual Report. Under Ministerial Direction 9.1.3(iv) certain additional information is required to be held by the Department and made available, within the limitations of the Freedom of Information Act 1982. Some of this additional data is Included within the appendices of the report as general Information. Further requests for information may be made of the Freedom of Information Officer on telephone (03) 9651 2115, or in writing to: Freedom of Information Officer Department of Treasury and Finance Level 3 1 Treasury Place Melbourne Vic 3002 Compliance index to disclosure requirements 1998-99 The Annual Report of the entity is prepared in accordance with the Financial Management Act 1994 and the Directions of the Minister for Finance. This index has been prepared to facilitate identification of compliance with statutory disclosure and other requirements. Clause Disclosure Page Report of Operations Charter and purpose 9.1.3 (I) (a) Manner of establishment and Relevant Minister 8-9 9.1.3 0 (b) Objectives, functions, powers and duties 4 & 10 9.1.3 0(c) Services provided and persons or sections of community served 61 Management and structure 9.1.3 0(d) (i) Names of governing board members, audit committee and chief executive officer 62-65 9.1.3 0(d) (ii) Names of senior office holders and brief description of each office 58-59 9.1.3 0(d) (iii) Chart setting out organisational structure 9 9.1.3 0(e) Workforce data and application of merit and equity principles 71-72 9.1.3 0(f) Application and operation of FOI Act 1982 83-84 Financial and other information 9.1.3 (ii) (a) Summary of financial results with previous four year comparatives n/a 9.1.3 (ii) (b) Summary of significant changes in financial position n/a 9.1.3 (ii)(c) Operational and budgetary objectives for the year and performance against those objectives 66-70 9.1.3 (ii) (d) Major changes or factors affecting achievement of objectives 66-70 9.1.3 (ii) (e) Events subsequent to balance date n/a 9.1.3 (ii)(f) Consultancies > $100,000 - Full details of each consultancy 85 9.1.3 (ii) (g) Consultancies < $100,000 - Number and total cost of consulting engagements 85 9.1.3 (ii) (h) Extent of compliance with Building Act 1993 77 9.1.3 (ii) (i) Statement that Information listed in Part 9.1.3 (iv) is available on request 73 9.1.3 (ii) (k) Statement on Implementation and compliance with National Competition Policy 78-82 Financial Statements Preparation 9.2.2 (ii) (a) Statement of preparation on an accrual basis 27 9.2.2 (ii) (b) Statement of compliance with Australian Accounting Standards and associated pronouncements 27 9.2.2 (ii) (c) Statement of compliance with accounting policies issued by the Minister for Finance 27 Statement of financial operations 9.2.2 (i) (a) A statement of financial operations for the year 25 9.2.3 (ii) (a) Operating revenue by class 39 9.2.3 (ii) (b) Investment income by class n/a 9.2.3 (ii) (c) Other material revenue by class including sale of non-goods assets and contributions of assets 39 9.2.3 (ii) (d) Material revenues arising from exchanges of goods or services 39 9.2.3 (ii) (e) Depreciation, amortisation or diminution In value 38 9.2.3 (ii) (f) Bad and doubtful debts n/a 9.2.3 (II) (g) Financing costs 39 9.2.3 (ii) (h) Net increment or decrement on the revaluation of each category of assets 45 9.2.3 (ii) (i) Auditor-General's fees 39 APPENDIX 6 INFORMATION AVAILABLE ON REQUEST & COMPLIANCE INDEX continued Statement of financial position Page 9.2.2 (i) (b) A statement of financial position for the year 24 Assets 9.2.3 (¡ii) (a) (i) Cash at bank or in hand 40 9.2.3 (iii) (a) (ii) Inventories by class 40 9.2.3 (iii) (a) (iii) Receivables, including trade debtors, loans and other debtors 40 9.2.3 (iii) (a) (iv) Other assets, including prepayments n/a 9.2.3 (iii) (a) (v) Investments by class 40 9.2.3 (iii) (a) (vi) Property, plant and equipment 41 & 42 9.2.3 (iii) (a) (vii) Intangible assets n/a Liabilities 9.2.3 (iii) (b) (i) Overdrafts 40 9.2.3 (iii) (b) (ii) Bank loans, bills payable, promissory notes, debentures and other loans n/a 9.2.3 (iii) (b) (iii) Trade and other creditors 42 9.2.3 (iii) (b) (iv) Finance lease liabilities 43 9.2.3 (iii) (b) (v) Provisions, including employee entitlements 43 Equity 9.2.3 (iii) (c) (i) Authorised capital n/a 9.2.3 (iii) (c) (ii) Issued capital n/a 9.2.3 (iii) (d) Reserves, and transfers to and from reserves (shown separately) 45 Statement of cash flows 9.2.2 (i) (c) A statement of cash flows for the year 26 Notes to the financial statements 9.2.2 (i) (d) Ex-gratla payments 38 9.2.2 (i) (d) Amounts written off n/a 9.2.3 (iv) (a) Charges against assets n/a 9.2.3 (iv) (b) Contingent liabilities 46 9.2.3 (iv) (c) Commitments for expenditure 43 9.2.3 (iv) (d) Government grants received or receivable and source n/a 9.2.3 (iv) (e) Employee superannuation funds 44 9.2.3 (iv) (f) Assets received without adequate consideration n/a 9.4.2 Transactions with responsible persons and their related parties n/a 9.6.2 Progress towards Year 2000 compliance 86 9.7.2 Motor vehicle lease commitments 42 APPENDIX 7 REGULATORY & LEGISLATIVE CHANGES Spring 1998 Autumn 1999 State Taxation Acts (Amendment) Act 1999 New or Amending Acts of the Treasurer: New or Amending Acts of the Treasurer: • to amend the Debits Tax Act 1990, the Financial Institutions Duty Act 1982, the Gaming Machine Electricity Acts (Amendment) Act 1998 Appropriation (1999/2000) Act 1999 Control Act 1991, the Pay-roll Tax Act 1971, the • to make further provision about the separation • to make provision for the appropriation of certain Stamps Act 1958, the Tattersall Consultations of the generation and distribution sectors of the sums out of the Consolidated Fund in respect of Act 1958, the Taxation Administration Act 1997 electricity industry; the financial year 1999/2000. and the Taxation (Interest on Overpayments) Act • to make certain amendments to the Electricity Appropriation (Parliament 1999/2000) Act 1999 1986 and for other purposes. Safety Act 1998; • to make provision for the appropriation of certain • to repeal certain provisions of the State State Trustees (State Owned Company) sums out of the Consolidated Fund for the Electricity Commission Act 1958. (Amendment) Act 1999 Parliament in respect of the financial year • to transfer unallocated capital held in certain Gas Industry Acts (Amendment) Act 1998 1999/2000. funds to the general funds of State Trustees; and • to make further amendments to the Gas Industry Commonwealth Places • to make amendments of a statute law Act 1994; (Mirror Taxes Administration) Act 1999 revision nature. • to amend the Gas Pipelines Access (Victoria) Act • to provide for the administration and operation 1998 to make transitional provisions in respect Tattersall Consultations (Amendment) Act 1999 of State taxing laws that are applied as of access arrangements under the Gas Industry • to provide further for lotteries and games without Commonwealth laws in relation to Act 1994 and access arrangements under the the issue of tickets to subscribers. Commonwealth places. National Third Party Access Code for Natural Transport Accident (Further Amendment) Act 1999 Gas Pipelines systems; Electricity Industry Acts (Amendment) Act 1999 • to amend section 60 of the Transport Accident • to amend the Gas Safety Act 1997 to improve • to make certain amendments to the Electricity Act 1986. the operation of that Act. Industry Act 1993 and the Electricity Safety Act 1998. New or Amending Acts of the Rail Corporations (Further Amendment) Act 1998 Minister for Finance: • to make further amendments to the Rail Financial Sector Reform (Victoria) Act 1999 Corporations Act 1996 and the Transport Act • to facilitate the registration of building societies, Office of the Regulator General 1983. credit unions and friendly societies and related (Amendment) Act 1999 bodies as companies under the Corporations • to amend the Office of the Regulator-General Act State Taxation (Further Amendment) Act 1998 Law in accordance with amendments made by 1994 to provide for certain procedural matters • to make certain amendments to the Business the Financial Sector Reform (Amendments and relating to appeal panels. Franchise (Petroleum Products) Act 1979, the Transitional Provisions) Act (No. 1) 1999 of the Financial Institutions Duty Act 1982, the Land Government Superannuation Act 1999 Commonwealth; and Tax Act 1958, the Liquor Control Act 1987, the • establish the Government Superannuation Office; • to enact transitional and ancillary provisions; and Pay-roll Tax Act 1971, the Stamps Act 1958 • facilitate the transfer of the Victorian • to amend the Co-operative Housing Societies and the Taxation Administration Act 1997. Superannuation Fund to Commonwealth Act 1958. supervision; New or Amending Acts of the Gas Industry Acts (Further Amendment) Act 1999 • repeal the Public Sector Superannuation Minister for Finance: • to make further amendments to the Gas Industry (Administration) Act 1993 and consequentially Accident compensation (Amendment) Act 1998 Act 1994, the Gas Pipelines Access (Victoria) Act amend the Borrowing and Investment Powers • to amend the Accident Compensation 1998, the Gas Safety Act 1997 and certain other Act 1987, the State Employees Retirement (WorkCover Insurance) Act 1993 and the Acts. Benefits Act 1979, the State Superannuation Act Accident Compensation Act 1985 and certain 1988, the Superannuation (Portability) Act 1989, Rail Corporations and Transport other Acts. the Transport Superannuation Act 1988 and the Acts (Amendment) Act 1999 Victorian Funds Management Corporation Act • to establish the Spencer Street Station Authority; Superannuation Acts (Amendment) Act 1998 1994. • to make miscellaneous amendments to specified and Superannuation Acts. • to make further amendments to the Rail Superannuation Acts Corporations Act 1996; and (Further Amendment) Act 1999 New or Amending Acts of the • to extend the operation of Part VII of the • make miscellaneous amendments to specified Minister for Gaming: Transport Act 1983 to bus companies; and Superannuation Acts; and • to make further provision for authorised persons • amend the Magistrates' Court Act 1989 in Gaming Acts (Further Amendment) Acts 1998 under Part VII of the Transport Act 1983. relation to the pension entitlements of the Chief • to amend the Casino Control Act 1991, the Magistrate. Casino (Management Agreement) Act 1993, the Rural Finance (Amendment) Act 1999 Year 2000 Information Disclosure Act 1999 Club Keno Act 1993, the Gaming and Betting • to amend the Rural Finance Corporation's • to encourage the voluntary disclosure and Act 1994, the Gaming Machine Control Act deposit-taking powers. exchange of information about year 2000 1991, the Gaming No. 2 Act 1997 and the Stamps (Amendment) Act 1999 computer problems and remediation efforts. Tattersall Consultations Act 1958. • to make miscellaneous amendments to the Stamps Act 1958. APPENDIX 7 REGULATORY & LEGISLATIVE CHANGES continued New or Amending Acts for Efficiency) Regulations 1999 Sums) Regulations 1999 the Minister for Gaming: 49/99 Electricity Safety (Installations) 63/99 State Superannuation (Revised Scheme Interactive Gaming (Player Protection) Act 1999 Regulations 1999 Medical Classifications) Regulations 1999 • to make provision for the protection of persons participating in interactive games by regulating 50/99 Electricity Safety (Stray Current 84/99 Occupational Health and Safety the provision of interactive gaming services. Corrosion) Regulations 1999 (Manual Handling) Regulations 1999 New Regulations of the 64/99 Transport Accident (Amendment) 85/99 Subordinate Legislation (Dangerous Treasurer in 1998-1999: Regulations 1999 Goods (Explosives) Regulations 1988 - 61/98 Subordinate Legislation (State Electricity Extension of Operation) Regulations 1999 Commission (Cathodic Protection) 65/99 Transport Accident (Impairment) Regulations 1988 - Extension of Regulations 1999 86/99 Subordinate Legislation (Occupational Operation) Regulations 1998 Health and Safety (Lead Control) 66/99 Transport Accident (Charges) Regulations 1988 - Extension of 90/98 Financial Institutions Duty (Further (Amendment) Regulations 1999 Operation) Regulations 1999 Amendment) Regulations 1998 76/99 Gas Industry (Authorisation) New Regulations of the Minister 99/98 State Electricity Commission (Licensing Regulations 1999 for Gaming in 1998-1999: of Electrical Mechanics Exemptions) 77/99 Gas Industry (Appeal Tribunal) 108/98 Gaming Machine Control (Fees) (Amendment) Regulations 1998 Regulations 1999 (Amendment) Regulations 1998 123/98 Debits Tax (Amendment) 89/99 Financial Institutions Duty 109/98 Machine Control (Jackpots) (Amendment) Regulations 1998 (Amendment) Regulations 1999 Regulations 1998 124/98 Financial Institutions Duty (Further New Regulations of the Minister for 128/98 Casino Control (Junkets and Premium Amendment No 2) Regulations 1998 Finance in 1998-1999: Players) (Interim) Regulations 1998 149/98 Pay Roll Tax Regulations 1998 88/98 Accident Compensation (General 15/99 Club Keno (Amendment) Regulations 1999 Amendment) Regulations 1998 156/98 Land Tax (Equalisation Factors) 35/99 Casino Control (Junkets and Premium Regulations 1998 97/98 Subordinate Legislation (Occupational Players) Regulations 1999 Health and Safety (Manual Handling) 3/99 Pay Roll Tax (Employment Agency Regulations 1988 - Extension of Contracts) Regulations 1999 Operation) Regulations 1998 6/99 Gas Safety (Gas Installation) 118/98 Transport Superannuation Regulations 1999 Regulations 1998 4/99 Gas Safety (Gas Quality) 138/98 Occupational Health and Safety Regulations 1999 (Plant) (Amendment) Regulations 1998 5/99 Gas Safety (Safety Case) 154/98 Dangerous Goods (Storage and Handling) Regulations 1999 (Amendment) Regulations 1998 19/99 Gas Industry (MSO Rules) 153/98 Dangerous Goods (Transport Regulations 1999 by Rail) Regulations 1998 46/99 Electricity Safety (Electrical 8/99 Accident Compensation (Consequential Appeals Board) Regulations 1999 Amendment) Regulations 1999 47/99 Electricity Safety (Equipment) 11 /99 Audit (Public Bodies) (Amendment) Regulations 1999 Regulations 1999 48/99 Electricity Safety (Equipment 12/99 State Superannuation (Greater Lump APPENDIX 8 BUILDING ACT COMPLIANCE Standards for Publicly Owned Buildings Major works (>$50,000) not subject to Number of buildings conforming with Building The Victorian Government Accommodation Group certification of plans, mandatory inspections Standards (VGAG), Department of Treasury and Finance, of the works and issue of Occupancy Permits All buildings conform with exception of: provides management, through an external service or Final Certificate • Some unoccupied areas of one country building. provider Global Property Solutions Pty Ltd, of the Nil. This building is listed for disposal upon the Government owned office accommodation portfolio Mechanisms for inspection, reporting, relocation of the remaining occupant late 1999. including compliance with standards for publicly scheduling and carrying out of rectification • Some building services in one city building, The owned buildings. and maintenance works on existing buildings non-compliant services were identified in an At 30 June 1999 VGAG was responsible for 28 The mechanisms established for inspection, Occupational Health and Safety report by Government owned buildings. reporting, scheduling and carrying out of engineering consultants. Rectification works are rectification and maintenance works on existing planned to be completed by October 1999. Mechanisms to ensure that buildings buildings comprise three parts: conform with Building Standards Number of buildings which have been All building works which require a building permit • provision and management of maintenance brought into conformity under the Building Act 1993 and are undertaken on service contracts for all owned buildings; Nil. However, upgrade and maintenance works behalf of VGAG, are certified by a building surveyor throughout the buildings portfolio have improved the • building inspections, liaison with tenants and as conforming with building regulations and VGAG level of safety and standard of accommodation. responses to issues identified; and project managers are instructed accordingly. Year all buildings are expected to be brought Tenants undertaking works within Government • commissioning formal condition, maintenance into conformity owned premises are required to provide a building and compliance reports on buildings. 1999. surveyor's certification of conformity as part of the Global Property Solutions Pty Ltd currently manage conditions of the owner's consent to the work. Arrangements to ensure that only registered the service maintenance contracts for the building practitioners are engaged for public VGAG has not sought to exempt works from Government owned premises on behalf of VGAG. sector works application of the 10 year liability cap. The responsibilities of this role include identification VGAG engages building practitioners listed on the and prioritisation of works required in consultation Major works projects (>$50,000) register established by the Office of Building, with VGAG, managing rectification works and There have been several major works completed Department of Infrastructure. conducting regular inspections to ensure that work this financial year and all have been issued with a is performed to the standard required. Number of cases and circumstances where Certificate of Occupancy or certification by a Quality assurance measures have been built into registered building practitioners became building surveyor and a Final Certificate. Major the contract with Global Property Solutions Pty Ltd. deregistered works Include: Nil. Condition assessments and maintenance reports • 1 Macarthur St - refurbishment of level 13. and specifications for the maintenance of • 28 Clarendon St- upgrade of lifts and lobby. engineering services have been received for all core • 402-406 Mair St, Ballarat - upgrade and buildings and the necessary rectification works are compliance works. being undertaken progressively. • 83 Gellibrand St, Colac - compliance and airconditioning works. • 1 -3 McCallum St, Swan Hill - upgrade and compliance works. • 1 Macarthur St - upgrade of State Film Theatre. APPENDIX 9 PROGRESS IN IMPLEMENTING NATIONAL COMPETITION POLICY Legislation Review Under its commitment to National Competition Policy (NCP), the Government is obliged to review and reform, where appropriate, all laws which restrict competition. Review and reform is to be completed by the end of 2000. The guiding principle for NCP legislation review is that restrictive legislation is justified only when the benefits of restrictions outweigh the costs of the increased legislation, and if the objectives of the legislation can only be achieved by restricting competition in that area. All reviews of legislation are required to follow five steps: • identify the objectives of the legislation; • identify the nature of the restriction on competition; • consider the likely effect of the restriction on competition and on the economy more generally; • consider the costs and benefits of the restriction; and • Identify alternative means to achieve the same result, including non-legislative approaches. The removal of unwarranted restrictions on competition confers a number of significant benefits to the economy and the community more generally. Enhanced competition can result in lower business costs, lower prices, an expansion of consumer choice, increased competitiveness and increased flexibility to take advantage of new technologies and market opportunities. An assessment of the role of legislation reviews, as part of the Government's wider reform agenda, can be found in Chapter 7, Budget Paper No 2, 1999-2000 Budget Statements. The table below lists legislation under the Treasury and Finance portfolio that was scheduled for review under National Competition Policy in 1998-99. Reviews that were completed prior to 1998-99 have been listed in previous Annual Reports and have not been listed again in this compendium. Once the NCP Review Report has been completed, the Government usually prepares a formal response to the recommendations of the review. In cases where reform options require amendment to legislation, legislative amendments are subsequently drafted for consideration by Parliament. Legislation Progress Achieved in 1998-99 Gaming Machine Control Act 1991 Review postponed until 1999-2000 Lotteries, Gaming and Betting Act 1966 Part of this Act will be included in the above review; part is included in the review of the Racing Act 1958 Racing Act 1958 Review completed (Department of State Development) New Legislation New legislation introduced in 1998-99 complies with the guiding principle that legislation should not restrict competition unless it can be demonstrated that: (i) the benefits of the restriction to the community as a whole outweigh the costs; and (li) the objectives of the legislation can only be achieved by restricting competition. Competitive Neutrality Policy Competitive neutrality requires government agencies to ensure that where services compete or potentially compete with the private sector, they remove any advantages that arise solely due to their government ownership. This Is achieved by requiring government agencies to cost these services as if they were privately owned. Implementation of competitive neutrality policy provides government agencies with a tool to identify the most cost-effective provider of the service. Government agencies may have several competitive advantages over private firms that arise solely from their government ownership. These advantages are usually in the form of exemptions from various taxes and charges, and no requirement to earn a rate of return on their assets. Competitive neutrality pricing takes into account these advantages, and requires agencies to adjust pricing so that private and public sector organisations can compete on equal terms. This enables government agencies to compare their efficiency with private sector providers. The competitive neutrality pricing principles extend from a commitment by the State and Commonwealth Governments to implement competitive neutrality policy. This is a part of a wider range of reforms aimed at improving the efficiency and effectiveness of government activities, for example, moving to accrual accounting, outsourcing non-core functions and various management improvement initiatives. It is also a part of the Government's commitments under NCP. There are two models for applying Victorian competitive neutrality policy. Model 1 is full corporatlsation, which changes the business environment of the enterprise. Model 2 involves the examination of the activities of government agencies and applying appropriate pricing principles to their business activities to offset any net competitive advantages of a publicly owned business. This policy does not override other policy objectives of Government, rather the policy enables agencies to assess the most efficient and effective provider by comparing the cost and quality of these services with alternative providers. State and Local Taxes From 1 July 1998 nominated Government Business Enterprises (GBEs) were subject to the following State taxes/Local Government rate equivalents: • the Victorian Plantations Corporation, Victorian Channels Authority and Rural Finance Corporation became liable for land tax; • all connected properties in the metropolitan area owned by Victorian GBEs became liable for water and sewerage charges; • the Victorian Plantations Corporation, Victorian Channels Authority, Transport Accident Commission and Urban Land Corporation became liable for drainage and park rates and the Melbourne Water Corporation for park rates; and • the Melbourne Water Corporation, Urban Land Corporation, Victorian Plantations Corporation, Victorian Channels Authority and Transport Accident Commission became liable for Local Government rate equivalents. The removal of ownership based tax exemptions can help achieve tax neutrality between GBEs and their private sector counterparts. The policy involves the removal only of exemptions due to Government ownership. It does not affect use-related tax exemptions, in particular, exemptions from property based taxes and charges with respect to public open space and parklands will be maintained. Nor does it apply to competitive advantages that are not due to government ownership. Commonwealth Tax Equivalents Victoria's Tax Equivalent System applying to significant GBEs commenced in 1993-94 with eight GBEs made subject to income tax equivalents. A sales tax equivalent system was introduced in the following year. With the ongoing reform, commercialisation and privatisation of Victorian GBEs over the last six years, there are now currently 16 GBEs subject to the Tax Equivalent System. The Tax Equivalent System is administered by the Taxation and Revenue Policy Branch of the Department of Treasury and Finance. Financial Accommodation Levy The Financial Accommodation Levy applies to all significant Victorian GBEs that have financial accommodation in excess of $5 million. Consistent with the Competitive Neutrality Policy Statement, the following entities were subject to the Financial Accommodation Levy (FAL) as at 30 June 1999: • Melbourne Water Authority; • City West Water; • Yarra Valley Water; • South East Water; • Melbourne Port Corporation; • Gas Services Business Pty Ltd; and • Victorian Energy Networks Corporation. Competitive Neutrality Complaints Unit The Competitive Neutrality Complaints Unit, located in the Department of Treasury and Finance, finalised investigations relating to ten complaints lodged during the 1998-99 financial year. Eight complaints investigated by the Complaints Unit related to activities potentially covered by Model 2 of the Victorian Government policy, such as those of government departments, local governments, universities, TAFEs or hospital networks. Two complaints covered by Model 1 have been lodged relating to activities of Government Business Enterprises. The childcare sector had the most complaints investigated (two in 1998-99). The Complaints Unit has engaged in the following activities during 1998-99 to promote awareness of and compliance with the Government's competitive neutrality policy: • amended its complaints handling procedures to seek information from agencies, within three months of the investigation where a breach of policy has been found, on how compliance with competitive neutrality policy has been achieved. The procedures were amended in response to concerns that government agencies may not be applying competitive neutrality policy after a breach of policy has been found; • amended its complaints handling procedures to ensure that the identity of the complainants remains confidential; • amended its complaints handling procedures to allow for publication of the final investigation report via the World Wide Web. The procedures were amended to assist In increasing understanding of the Government's competitive neutrality policy and the approach of the Complaints Unit in conducting investigations; • contributed to sessions convened by the Municipal Association of Victoria's (MAV) Local Government Compliance Working Party on the implementation of competitive neutrality pricing by local government; • developed best practice guidelines on competitive neutrality for Victorian Government purchasing. The guidelines advise on the preparation of Registration of Interest (ROI) and Request for Tender (RFT) documentation when Victorian government agencies are among the likely bidders for Victorian Government contracts. They were developed In response to requests for assistance by government agencies on applying competitive neutrality during their tender evaluation processes; • organised and participated In Roundtable sessions of officers from competitive neutrality complaints mechanisms in all Australian jurisdictions, to help clarify common issues; • commenced the preparation of case studies, in consultation with the MAV, in relation to the implementation of competitive neutrality by local councils. The case studies are to be published to provide informed advice to councils on whether their implementation of competitive neutrality is consistent with the Victorian Government's policy and to provide examples of 'best practice'; and • improving and expanding Information available on the existing Victorian Government's competitive neutrality website at: http://www.vic.gov.au/ncp/default.htmi Further information on competitive neutrality, including its role in the Government's wider reform agenda can be found in Chapter 7, Budget Paper No 2, 1999- 2000 Budget Statements. As well as undertaking formal investigations, the Complaints Unit continuously deals with inquiries from: • Victorian government agencies and councils and consultants for information on the application and Implementation of competitive neutrality policy; and • potential complainants to provide information about the complaints process. In a number of these cases, the Complaints Unit has undertaken initial inquiries to establish whether or not grounds for further investigation exist. APPENDIX 9 PROGRESS IN IMPLEMENTING NATIONAL COMPETITION POLICY Summary of all complaints for non-compliance with competitive neutrality policy completed in Victoria in 1998-99 Date of report Focus of Complaint Summary of Complaint Finding 14/7/98 Shire of Campaspe Echuca War Complainant alleged that the Aquatic Centre The Complaints Unit found that the Council has not Memorial Aquatic Centre offered gymnasium and aerobics activities applied competitive neutrality principles to the for less than full cost recovery and benefited gym/aerobics facility. However, as the existing from a number of competitive advantages. management contract was entered into prior to 1 July 1997, when the policy came into operation, no breach of the policy was found. The Complaints Unit recommended that if competitive neutrality principles can be accommodated in the existing contract that this proceed. Any new, future contract should be consistent with the policy. 14/7/98 Victorian non-metropolitan Complainant alleged that Victorian non- The Complaints Unit recommended that competitive water authorities metropolitan water authorities require neutrality principles be applied to the water authorities connection to the reticulated sewerage system by separating the regulatory and business and are not approving alternative waste activities of water authorities. This would reduce treatment systems. the perception that water authorities may be exercising an unfair advantage over potential competitors. 5/8/98 Ambulance Service Victoria Complainant alleged that level 2 The Complaints Unit found that: (ASV) - North Eastern Region; first aid courses offered by the three • The ASV is required to apply the policy to first Goulburn Ovens Institute government entities are priced at well aid courses. The ASV was found in breach of TAFE; and below market rates and may be In breach of the policy because the Complaints Unit found Goulburn Ovens Murray of competitive neutrality policy. that there were problems in the way in Regional Council of which the ASV applied the policy; Adult, Community and • the TAFE is not required to apply competitively Further Education neutral pricing to the delivery of centrally funded courses because the courses offered by the TAFE are centrally funded. As a result, it was not in breach of the policy; and • the regional council was not in breach of the policy because it does not directly provide first aid courses. 27/8/98 CityWide Service Solutions Complainant(s) alleged that CltyWide's The Complaints Unit found no breach of the Pty Ltd (CityWide) / lower prices for two recycling bids may be policy but recommended that the City of Melbourne: City of Melbourne due to CityWide not implementing competitive • improve the transparency of CityWide's tax neutrality costing and pricing policies. equivalent payments by undertaking a tax audit on CityWide under the tax equivalent policy; and • review the ownership of CityWide to (1) reduce the commercial risk to the City of Melbourne of CityWide's business activities and (2) reduce the cost to CityWide of its current borrowing constraints. 19/11/98 Baw Baw Shire Council The complainant alleged that: The Complaints Unit found there had been no breach • the Council had agreed to subsidise of the policy. This was because the saleyards were the operation of the saleyards while they to be sold and the benefits offered to the single remained in Council ownership; and operator were not due to government ownership that the Council's offer had been made to a but had been made available by the Shire to other single operator only and had not been privately owned businesses. subject to competition. However, the Complaints Unit recommended that councils conducting similar asset sales in future should carefully consider how they manage the sale so as to obtain the most cost-effective result and ensure community confidence in the integrity and fairness of the sale process. Date of report Focus of Complaint Summary of Complaint Finding 30/11/98 Department of Human Services The complainant alleged that: The Complaints Unit found that, in the absence • government-owned childcare centres were of any underlying policy reasons for targeting eligible for higher subsidies from the funding arrangements under the Youth and Department of Human Services than private Family Services program specifically to non-profit providers; and service providers, the Department of Human • some funding programs operated by the Services had breached the policy by not Department of Human Services were not allowing existing private sector providers available to private sector providers. to apply for funding. The Complaints Unit also examined some issues related to Commonwealth Disadvantaged Area Subsidy and Childcare Assistance programs. These were found to be outside the scope of the Victorian complaints mechanism and the matter was referred to the Commonwealth complaints mechanism. 18/12/98 Gascor/Department of The complainant alleged that health card The Complaints Unit found that there was no breach Treasury and Finance holders could only be reimbursed for repairs of the policy because of the unusual circumstances and replacement of hot water systems If they under which the decision was made and evidence that were Gasmart customers. there were implicit policy objectives of responding quickly and cost-effectively to cases of genuine hardship caused by the gas shutdown. But the Complaints Unit recommended that In future, government agencies should ensure that alternative methods of providing financial assistance are assessed so that the most cost-effective provider is selected. 11/2/99 City of Port Phillip The complainant alleged that the City of Port The Complaints Unit found that the City of Port Phillip Phillip provided competitive advantages to has breached the Victorian Government's competitive not for profit and council operated chlldcare neutrality policy because it has: centres that were not available to private sector • provided financial assistance to council managed childcare centres, Including access to funding childcare centres which is not available to and use of rent free buildings and facilities. competing private sector centres; and • not applied competitive neutrality pricing principles In estimating the full cost of its childcare services. 12/2/99 Landata The complainant alleged that Landata provided The Complaints Unit found that: exclusive rights to data to two of the • Landata pricing has not breached competitive business activities of the Titles Office and that neutrality pricing principles; and competitive neutrality costing and pricing was • Landata has breached the competitive neutrality not being applied. structural review requirements due to the absence of adequate policy documentation to justify the decision not to implement the principal recommendations of a structural review of Landata's ongoing service delivery arrangements. 22/3/99 Building Services Agency The complainant alleged that the BSA The Complaints Unit concluded that the BSA has not (BSA), Department (within the Department of Infrastructure) had complied with the Victorian Government's of Infrastructure not costed its contract architectural and other competitive neutrality policy because it has: professional services consistent with • not explicitly estimated the competitive advantages competitive neutrality principles. arising from its government ownership and taken these into account when determining the price of its services; • claimed competitive disadvantages which are not substantiated in a manner consistent with the Victorian Government's policy; and • not set a gross profit margin, which is sufficient to fully cover all of its costs after taking into account its competitive advantages and disadvantages arising from its government ownership. APPENDIX 9 PROGRESS IN IMPLEMENTING NATIONAL COMPETITION POLICY continued Application of Competitive Neutrality to significant business activities Completed Investigations Investigations in progress as at 24 August 1999 Upheld (Breach) Dismissed (no breach found) Average time to recommend State Government 5 1 9 weeks 4 Local Government 1 3* 8 weeks 5 Total 6 4 9 weeks 9 * One investigation resulted in no breach findings on technical grounds - that is, the complaint covered matters undertaken prior to the date by which the government business was required to adopt competitive neutrality policies. APPENDIX 10 FREEDOM OF INFORMATION This information is required to be included in the Annual Report pursuant to State Revenue Office s.7(4) of the Freedom of Information Act 1982 (the Act). 505 Little Collins Street Melbourne Vic 3000 Requests for access to documents in the possession of the Department (excluding the State Revenue Office (SRO) and the Victorian Casino and Gaming Victorian Casino and Gaming Authority Authority (VCGA)) are dealt with centrally by the Department's FOI officers. 35 Spring Street Requests for access to documents In the possession of SRO and the VCGA are Melbourne Vic 3000 dealt with by the respective FOI Officers of these administrations. Decision-Making Powers Affecting Members of the Public Making a Request Decision-making powers are contained in Acts or Regulations for which the FOI requests must be In writing. Requests fall within three categories: Treasurer, the Minister for Finance or the Minister for Gaming have responsibility. A full list of these Acts is provided in Appendix 7 of this Report. • requests for access to documents of the Agency or the Minister, as the case may be. These requests must contain sufficient Information to Identify the Categories of Documents documents sought; Description of Record Keeping Systems • requests for amendment of personal records. These requests must sufficiently The Department (excluding some divisions and offices that have their own identify the record Involved and specify the amendments sought; and record keeping systems) has two separate filing systems. These are the • requests for Internal review of a decision made on an earlier request. It Is Personnel and the Departmental Records Management filing systems. helpful, but not obligatory, for these requests to Identify the basis upon which Current and recent files are held at 1 Macarthur Street, Melbourne. Older files the internal review is sought. are stored either In off-site secondary storage or at the Public Record Office In The listings under Categories of Documents (see below) may be of assistance in Laverton. identifying the category of documents for which access is sought. It should be noted that the Act does not entitle applicants to be given access to documents The following bodies have their own filing systems: created prior to July 1978 unless the documents relate to the personal affairs of • State Revenue Office the applicant. • Victorian Casino and Gaming Authority Fees and Charges For further details on the particular categories of documents held by these A request must be accompanied by an application fee of $20.00. This fee may bodies, please contact the responsible FOI Officer or the relevant Director of be waived or reduced if payment would cause hardship to the applicant. the division or office. The Act also prescribes fees for the provision of documents, based on the Department of Treasury and Finance schedule of charges detailed in the FOI (Access Charges) Regulations 1993. The The Department of Treasury and Finance has prepared the following report on main charges relate to search time (at $20 per hour) and photocopying (at 20 Freedom of Information. cents per page). The VCGA provides its own administrative services and reports as a separate entity. Further Information regarding the application of the Freedom of Information Act 1982 may be obtained from: Requests Received 1. the Act Itself; New requests for access to documents: 68 2. various regulations made under the Act; and Requests from previous year finalised 3. the Department of Justice website at www.justice.vic.gov.au and particularly in 1998-99: 63 at www.justlce/foireport.gov.au. All the publications listed above are available for purchase from Information Total 131 Victoria, 356 Collins Street, Melbourne, 3000, tel: 1300 366 356. Outcome of Requests Granted in full: 9 FOI Officers Granted in part: 16 The authorised officer for the Department is Mrs Karen Macdonald Denied: 11 (tel: 9651 2115). Transferred in full: 10 For the State Revenue Office, the authorised FOI Officer Is Ms Linda Nemeth Transferred in part: nil (tel: 9628 0515) and for the VCGA, the authorised officer is Mr Bill Lahey Withdrawn: 16 (tel: 9651 3333). Pending a FOI decision as at 30 June 1999: 12 No document in existence: 17 Requests for documents should be made in writing and addressed to either the Total (exclusive of VCAT appeals): 91 Principal Officer of the Agency or the Minister, as the case requires, at the Fees & charges collected: $521.80 respective addresses: Department of Treasury and Finance 1 Treasury Place Melbourne Vic 3002 APPENDIX 10 DIRECTORY Review Process Outcome of Requests Internal Reviews sought 5 Granted in full 7 Original decision confirmed 4 Granted in part 17 Original decision overturned nil Denied 20 Original decision varied 1 Transferred in full 0 Withdrawn nil Transferred In part 0 Charges reduced nil Withdrawn 0 Charges not reduced nil Pending at 30 June 1999 0 Not completed at 30 June 1999 nil No document in existence 17 Total 61 Victorian Civil & Administrative Tribunal Applications for review lodged 45 Fees and charges collected $1,220 VCAT granted full access 1 Review Process VCAT granted part access 1 Internal Reviews sought 44 VCAT refused access 1 Granted in full 8 Nil documents decision 14 Granted in part 22 Decided at preliminary conference nil Denied 14 Withdrawn prior to hearing 32 Withdrawn 0 Withdrawn at hearing nil Not completed at 30 June 1999 0 Settled between parties nil Awaiting hearing at 30 June 1999 6 Victorian Civil And Administrative Tribunal State Revenue Office Reviews sought 22 Requests Received Decided at preliminary conference 0 New requests for access to documents 60 Withdrawn prior to hearing 0 Requests from previous year Settled between parties 0 finalised in 1998/99 1 Awaiting hearing at 30 June 1999 1 Total 61 Library The Joint Departmental Information Centre (Library) is open to members of the public by appointment only on Tuesdays from 10 am to 4 pm. Telephone Mr Lance Deveson on 9651 5661. APPENDIX 11 CONSULTANTS ENGAGED Consultancy Engagements - 1998-99 Consultancies over $100,000 Consultant Purpose Amount Paid ($) Future Commitments ($) Andersen Consulting Review of Victorian Government purchasing arrangements 354,095 0 and the Victorian Government Purchasing Board Arthur Andersen Year 2000 - Risk Management 476,230 0 Deloitte & Touche Consulting Group Information Technology - Tender Costs / Outsourcing Project 216,186 0 Engineered Solution (Aust) Pty Ltd Victorian Government Accommodation Group - Y2K Compliance Project 112,327 0 PriceWaterhouseCoopers Cash & Banking Review 184,470 0 Stratcom Communique (Vic) Pty Ltd Development of a Communications Strategy for Government - 102,243 0 Year 2000 Compliance Unisys Australia Ltd Standard Operating Environment Project 162,400 0 Total 1,607,951 0 Engagement of Consultants less than $100,000. There were 144 consultancies engaged during 1998-99 at a total cost of $1,818,286. APPENDIX 12 YEAR 2000 COMPLIANCE The Year 2000 problem has the ability to affect all forms of technology, not only computers or computer-based systems, but also equipment such as building control systems. Consequently, the Year 2000 problem is more than just an IT issue - it Is also a business issue. To address the Year 2000 problem, the Department of Treasury and Finance and the Department of Premier and Cabinet established a joint Year 2000 Program in late 1997, and a Steering Committee consisting of representatives from DTF and DPC was formed to oversee the program and provide direction and guidance to the Project Team. A prime objective of the joint Year 2000 Program Office is to ensure that there are no failures to Business Critical Functions before, during or after the Year 2000 as a result of a two-digit date processing problem. The results of the initial testing conducted in November 1998 indicate that there were no significant issues which were unable to be addressed. However, because the environment Is constantly changing, the Year 2000 Steering Committee together with the DTF Senior Executive Group approved the Year 2000 Program Office recommendation for a repeat test in September 1999. The repeat test will ensure that nothing has changed to alter the initial test results, allowing enough time to repair any systems as required. An external audit of the Year 2000 Program was undertaken by Arthur Andersen in June 1999, providing an Independent review of the Year 2000 Risk Management Process, which has been adopted as the basis for the development of Year 2000 Contingency Plans. The audit has identified that the Year 2000 Risk Management Process has developed and implemented a best practice risk management methodology for Business Continuity Planning. Further development and testing of the Year 2000 Contingency Plans in the 4th quarter of 1999 will ensure that DTF and DPC are well placed for the transition into the new millennium. While the focus of the project has essentially shifted from testing and remediation activities, to monitoring and reporting, the Arthur Andersen audit has highlighted the need for focus and momentum to be maintained into 2000. To ensure this focus is maintained within the Central Agencies, the Year 2000 Steering Committee has committed to providing ongoing advice and direction into the 21st Century. Year 2000 Schedule for the Department Critical Business Description of Critical Business System/Function Scheduled/Actual System/Function Name Date for Year 2000 Compliance Oracle Financials Financial Management System used to record and report all financial transactions including: • Accounts payable 22/11/1998 • Accounts receivable • General Ledger • Assets • Purchasing CHRIS A human resource system which maintains employee benefits and entitlements, 22/11/1998 including terms and conditions of employment. It is also responsible for the calculation of employee remuneration and disbursement of funds. IT&T Infrastructure Desktop 30/06/1999 Network 31/10/1999 RECFIND Electronic records management system 31/03/1999 Streamlink On-line electronic procurement system for all goods and services 22/11/1998 Public Ledger Oracle financials general ledger for whole of government reporting 30/12/1998 Data Exchange Web based product which enables Victorian Government departments, statutory and 30/12/1998 Facility (DXF) corporatised bodies to exchange financially related information with DTF Forward Estimate Budgeting system for budget projections, and for monthly/quarterly analysis September 1999 System variance between the Amalgamated Financial Systems and the Public Ledger Contingent Liabilities Oracle database fed by DXF to record, report and monitor contingent liabilities for the State. 30/11/1998 Cash Management Oracle financials general ledger for whole of government cash management and reporting 30/11/1998 System Premises Buildings, security, office technology and life support systems managed or leased by 30/09/1999 Victorian Government Accommodation Group (VGAG). Suppliers of Goods All contracts managed by the Victorian Government Purchasing Board (VGPB) and 30/06/1999 and Services corporate support services provided by the Corporate Services Centre (CSC). Contingency Plan Organisation-wide Year 2000 Business Continuity and Resumption Plans 30/06/1999 Department of Treasury and Finance 1 Department of Treasury and Finance
Ir, Finii R Victoria J001847 O O 8 O 0 •
