Department of Agriculture and Food

Final report

2017 Focused on business growth

Supporting your success Contents Overview Performance Significant issues Disclosures and compliance Appendix 2

Department of Agriculture and Food, Western Australia Statement of compliance

For year ended 30 June 2017 Hon. Alannah MacTiernan MLC Minister for Agriculture and Food In accordance with section 63 of the Financial Management Act Final report 2006, I hereby submit for your information and presentation to Parliament, the final report of the Department of Agriculture and Food, Western Australia for the financial year ended 30 June 2017. The final report has been prepared in accordance with the provisions of the Financial Management Act 2006 and any other 2017 relevant written law.

Mandy Taylor Reporting Officer

Department of Agriculture and Food, Western Australia | Final report 2017 Contents Overview Performance Significant issues Disclosures and compliance Appendix 3

Contact Important disclaimer The Chief Executive Officer of the Department of Agriculture and Food Postal: Locked Bag 4, Bentley Delivery Centre WA 6983 and the State of Western Australia accept no liability whatsoever by Street address: 3 Baron-Hay Court, South Perth WA 6151 reason of negligence or otherwise arising from the use or release of this Internet: agric.wa.gov.au information or any part of it. Email: [email protected] Compliments/complaints Telephone: +61 (0)8 9368 3333 We would like to receive any feedback you have on this report. ISSN 1834-3740 Compliments or complaints can be provided by completing the Creative Commons Licence feedback form on our website or by emailing us at [email protected]. The DAFWA final report is licensed under a Creative Commons Attribution 3.0 Australian Licence. Copies of this document are available in alternative formats upon request. You are free to reuse the work under that licence on the condition that you attribute the Western Australian Agriculture Authority (Department If you have a hearing or speech impairment, you can contact us through of Agriculture and Food, Western Australia) as an author; indicate the National Relay Service: if changes were made; and otherwise comply with these licence • TTY or computer with modem users, phone 133 677 conditions. • Speak and listen users, phone 1300 555 727 License URL: https://creativecommons.org/licenses/by/3.0/au/legalcode • SMS relay, phone 0423 677 767 Attribution: © Western Australian Agriculture Authority (Department of If you require the assistance of an interpreter, please contact us through Agriculture and Food, Western Australia) 2017 Translating and Interpreting Service (TIS) National on 131 450. Notice identifying other material and/or rights in this publication: The Creative Commons licence does not apply to the Department of Agriculture and Food, Western Australia logo or the State Coat of Arms. Permission to reuse the logo must be obtained from the Department of Agriculture and Food, Western Australia.

Department of Agriculture and Food, Western Australia | Final report 2017 Contents Overview Performance Significant issues Disclosures and compliance Appendix 4

Guide to this report

This report presents the statutory compliance, performance and operational reporting for the financial year ending 30 June 2017. It consists of four principal sections and an appendix: Overview — provides a snapshot of the year in review and outlines who we are and what we do, the industries and communities we support, and how we go about our business. Agency performance — outlines what we have achieved along with details of how we performed against targets for the year. Significant issues — describes current and emerging issues and trends affecting the agrifood sector and our operations. Disclosures — details our financial situation and performance against our key performance indicators (KPIs) along with reports on staffing, governance and compliance issues. These reports demonstrate how we ensure our operations are ethically, socially and environmentally responsible. Appendix — Statement by the Commissioner of Soil and Land Conservation (as required under the Soil and Land Conservation Act 1945). In this report, we refer to the Department of Agriculture and Food, Western Australia as ‘the department’ or ‘DAFWA’. A list of acronyms used is provided on the following page.

Department of Agriculture and Food, Western Australia | Final report 2017 Contents Overview Performance Significant issues Disclosures and compliance Appendix 5

Acronyms

ABS Australian Bureau of Statistics FOI freedom of information APC Agricultural Produce Commission FPC Forest Products Commission AEGIC Australian Export Grains Innovation Centre FTE full-time equivalent (staff hours) AHA Animal Health Australia GRDC Grains Research and Development Corporation BJD bovine Johne’s disease GVAP gross value of agricultural production CSIRO Commonwealth Scientific and Industrial Research KPI key performance indicator Organisation LCDs Land Conservation Districts DAA Department of Aboriginal Affairs (WA) NFP not-for-profit DAWR Department of Agriculture and Water Resources NCoS net cost of service (Commonwealth) NRM natural resource management DAIP Disability access and inclusion plan OSH occupational safety and health DAFWA Department of Agriculture and Food, Western Australia RfR Royalties for Regions DFES Department of Fire and Emergency Services (WA) R&D research and development DoL Department of Lands (WA) RSPCA Royal Society for the Prevention of Cruelty to Animals DoP Department of Planning (WA) TPP tomato potato psyllid DoW Department of Water (WA) UWA University of Western Australia DPIRD Department of Primary Industries and Regional Development (new department as of 1 July 2017) WA Western Australia DPW Department of Parks and Wildlife (WA) WAAFFFI Western Australia’s Agrifood, Fibre, Fisheries and Forestry Industries (document) DRD Department of Regional Development (WA) WANDRRA Western Australian Natural Disaster Relief and EDRMS electronic document and records management system Recovery Arrangements EEO equal employment opportunity WARMS WA Rangeland Monitoring System

Department of Agriculture and Food, Western Australia | Final report 2017 Contents Overview Performance Significant issues Disclosures and compliance Appendix 6

Contents

Statement of compliance 2 Disclosures and legal compliance 59 Guide to this report 4 Financial statements 60 Acronyms 5 Index of notes to the financial statements 75 Overview 7 Additional key performance indicator information 139 Executive summary 8 Ministerial directives 154 Operational structure 15 Other financial disclosures 154 Performance management framework 26 Governance disclosures 159 Shared responsibilities with other agencies 28 Other legal requirements 161 Agency performance 31 Government policy requirements 168 Report on operations 32 Appendix 177 Financial targets 36 Financial performance 38 Key financial ratios 40 Summary of key performance indicators (KPIs) 42 Significant issues impacting the agency 53 Current and emerging issues and trends 54

Department of Agriculture and Food, Western Australia | Final report 2017 Contents Overview Performance Significant issues Disclosures and compliance Appendix 7

Focused on business growth

Overview

Frost agronomy trial plots

Department of Agriculture and Food, Western Australia | Final report 2017 Contents Overview Performance Significant issues Disclosures and compliance Appendix 8

Executive summary Year at a glance

Established SoilsWest Alliance with UWA Facilitated establishment of Australia’s first Implemented new Aboriginal producer group Workforce and Diversity (page 173) Plan to help develop our Relaunched WAAFFFI staff Unveiled six new publication featuring subterranean clovers at valuable industry statistics Dowerin field days

Recorded 70% increase Awarded 20 grants Released Western in website visitors for 2016 totalling $6.7m to Welcomed two new Australian Biosecurity grower groups as part Ran inaugural Pantry Blitz detector dogs to Strategy of Agricultural Sciences community biosecurity Quarantine WA service R&D Fund project program (page 41) Opened Western Australian Premium Food Centre in Manjimup

2016

July August September October November December

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Set up incident response to high rainfall and flooding Completed infrastructure across state Welcomed latest Graduate stage of Gascoyne Food program intake Bowl Initiative (page 52) Hosted inaugural State Horticulture Update Appointed 10 new crop research agronomists Initiated national incident response to tomato potato psyllid (page 58)

Mapped barley genome for the first time (page 49) Ran skin cancer screening Began 40th year of program for staff Installed final of three Appointed new director to European wasp surveillance (page 170) Doppler radars in the drive animal welfare reform Ran WA’s Celebrity and eradication Wheatbelt (page 35) Signature Dish competition

2017

January February March April May June

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Director General’s report Focused on business growth

The 2016/17 financial year has proven to While the amalgamation announcement was significant, it did not be an historic one for our department and outshine the many projects and services our department continued the agriculture and food sector we serve. to deliver in 2016/17 across the state to grow and protect our state’s agrifood sector. As the year ended, DAFWA was preparing to join the departments of Fisheries and In particular, we undertook a significant amount of work to determine Regional Development and nine Regional where and how we need to target our available resources to best Development Commissions to form the support farm businesses and the agribusinesses that make up the new Department of Primary Industries sector. and Regional Development (DPIRD) as of This work included focusing on DAFWA’s role following the Stocktake 1 July 2017. and Future Directions review (see below) and consolidating evidence to develop a clearer picture of the opportunities for the state’s The amalgamation, announced in late April as part of the incoming agribusinesses and industries. government’s public sector reforms, will mark the end of more than 120 years of a standalone agriculture department in WA (the last state in We progressed a range of major projects (including those funded by Australia to have one). Royalties for Regions) to grow the knowledge and capability of business and industry. This included installing three Doppler radars across the It also signals the beginning of an exciting new journey as we form part Wheatbelt to provide more precise weather information to help growers of a larger department that will provide a stronger, more unified, service with decision making; and completing the Gascoyne Food Bowl project, to WA’s vital primary industries and regions. which opened up an additional 400ha for irrigated agriculture. We also reconfirmed our commitment to conducting R&D that supports the economic development of the sector. A key achievement was mapping the barley genome through our partnership with Murdoch University and an international consortium to enable breeders to better develop new and improved barley varieties. Additionally, we continued to make use of technological advances, including the use of drones to survey land for pest animals and plants and to assess damage following natural disasters.

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Taking stock of our role Connecting with our clients In October 2016, we received the report and recommendations A key focus for the year was on better connecting with our clients to following the Stocktake and Future Directions Review initiated by the ensure we understand their needs and that industry and the community previous government. understand the value we can provide. We encouraged staff to increase their engagement with businesses The independent review looked at the critical and core functions of the and industry representatives to talk about our projects and services department and our capacity to deliver on the government’s priorities. and demonstrate how we are delivering major benefits for the agrifood The review recognised DAFWA’s critical role to grow and protect the sector. agriculture and food sector. It also highlighted the impact of recent Communicating our role will be even more important as we merge into budget and staff cuts on our capacity and capability. DPIRD. We need to show our clients that agriculture will continue to be at the forefront of the new department’s operations. We examined each of the recommendations and will implement a new approach, with a focus on ensuring that science, innovation and industry partnerships strengthen our capacity. Stepping up emergency response

We also recognised the importance of ensuring that the opportunities Our emergency response resources were tested during 2016/17 as we and challenges facing the agrifood sector are understood and responded to a number of serious biosecurity threats and incursions. addressed across government and industry. We established four separate incident responses in the second half of As a result, we initiated discussions with key departments — including 2016 to help the sector manage the threats of Russian wheat aphid, Premier and Cabinet, Regional Development, Water and Planning — to Australian plague locusts, cucumber green mottle mosaic virus and develop a whole-of-government shared vision for the sector and ensure green snail. our collective efforts are targeted, coordinated and effective. We plan to progress this as part of DPIRD in 2017/18.

Focused on business growth

Department of Agriculture and Food, Western Australia | Final report 2017 Contents Overview Performance Significant issues Disclosures and compliance Appendix 12

In early 2017, we set up a national incident response after the Pleasingly, we met all three of our key performance indicator targets detection of tomato potato psyllid (TPP) — the first time the psyllid has relating to how businesses rate our influence on the profitability, been found in Australia — which has caused massive losses to the sustainability and innovativeness of their industry. In previous years, horticulture industries in New Zealand since its arrival there. decreasing budgets and staff numbers had affected our ability to meet these targets. However, we are now starting to see the benefits While these incidents stretched our capabilities and resources, they will of the department’s new approach to its business relationships and ultimately strengthen our capacity to effectively respond to agricultural engagement with industry, as well as growing confidence and optimism emergencies through the development and implementation of better about the future within the sector. policies and procedures. We also ended the financial year in a sound financial position, with a Our response was backed by 137 staff completing nationally accredited $12.8 million surplus, largely driven by the capitalisation of expenses emergency response training during the year. It is the efforts of these associated with the Gascoyne Food Bowl Initiative. and all of our staff across the state that ensure our department continues to effectively protect the sector. Their professional approach Overall, this final report of DAFWA provides a good insight into what and commitment to the task at hand has been outstanding. I would we have achieved and how we have performed as we look forward to also like to acknowledge the strong support from WA industry that has continuing to support agribusiness growth as part of DPIRD in 2017/18 worked professionally alongside DAFWA staff during these incidents. and beyond.

Analysing our performance and finances To improve our performance reporting, we implemented a revised outcome-based management framework, including increasing the number of services we report against from three to six to better reflect Mark Webb the breadth of our functions and activities. A/Director General

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Key numbers Revenue $213M Our operating revenues totalled $213 million Staff 990 Expenditure We had an average of 990 full-time equivalent staff as at 30 June 2017 $200M Our total operating expenses were $200 million

Assets Effectiveness M $405 We met 3 out of 4 key effectiveness We had total assets of $405 million indicators

Efficiency We met 8 out of 12 key efficiency indicators

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Award-winning efforts July 2016 November 2016 Senior Veterinary Officer Michael Paton Our Finance team was acknowledged by was presented with the Australian and New the Auditor General as one of the top 20 best Zealand College of Veterinary Scientists practice agencies in the state for financial (ANZCVS) President’s Award for Distinguished reporting and controls in relation to our 2016 Service as a Member of Council. Annual report.

September 2016 Michael Paton March 2017 Senior Development Officer Caroline Peek Research Officer Steve Davies was received the Ag Institute of Australia WA announced the winner of the 2017 Division’s Award of Excellence in recognition GRDC Western Region Seed of Light of more than 30 years of applied research and award for making a major contribution to extension in agriculture and NRM. communicating the outcomes of grains R&D in WA. October 2016 Steve Davies Principal research officers Dr Abul Hashem Pest Diagnostics Imaging Officer Pia Scanlon and Dr Ross Brennan accepted an award earned a place in the top 20 of the Nikon on behalf of DAFWA for an outstanding International Small World competition for a contribution to the Conservation Agriculture microscope photo of a leaf beetle, magnified and Farm Mechanisation project in 40 times. Bangladesh.

November 2016 Pia Scanlon May 2017 DAFWA’s inaugural Pantry Blitz program, Research Officer Brenton Leske was which encouraged ‘citizen scientists’ to awarded one of three four-year postgraduate identify and report pests in their pantry using research scholarships (provided as part of a trap and mobile phone app, won the Rural DAFWA’s Boosting Grains Research and Media Association of Western Australia’s Best Development project and valued at $190 000 Communications Campaign award. each) to increase the scientific research capability of the grains industry. Brenton Leske (left)

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Operational structure

Enabling legislation The Department of Agriculture and Food, Western Australia was established in 1894 and operates under the Public Sector Management Act 1994.

Responsible Minister The Hon. Alannah MacTiernan MLC Minister for Agriculture and Food; Regional Development Minister Assisting the Minister for State Development, Jobs and Trade

DAFWA’s Buy West Eat Best program developed the ‘Good Choice’ campaign during the year to encourage WA consumers to buy local

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Department profile

Our role Our support for the agrifood sector DAFWA forms part of the state government’s effort to develop and Western Australia’s agrifood sector comprises thousands of production, diversify the WA economy. processing, marketing and related businesses. DAFWA is part of the sector, driving government’s role in helping the sector to grow and We work in partnership with businesses, communities and other prosper in ways that benefit the state as a whole. governments to help grow and protect our agriculture and food (agrifood) sector in ways that offer long-term benefits to all Western We work with industry, governments and others to help agrifood Australians. businesses grow while nurturing the land and water resources entrusted to them. Our work is increasingly targeted at working with those We focus equally on growing the sector’s economic contribution to WA businesses committed to expanding their operations in markets — and protecting its reputation as a world-class producer of premium and with products — that best play to WA’s strengths. The increased quality agrifood products. economic activity and business resilience that this generates will benefit This role is expected to evolve in 2017/18 to reflect the new state all Western Australians — especially those in the agricultural and government’s emphasis on job creation and the broader role of the new pastoral regions. Department of Primary Industries and Regional Development. Our support for the wider community Our vision Our skills and resources allow us to minimise the impact of exotic pests and diseases that would otherwise threaten human health and amenity; A progressive, innovative and profitable agrifood sector that benefits and our environmental capabilities enable us to manage a range of WA. natural resource issues that affect the state as a whole.

Our purpose Our partners To lead the state government’s efforts to ensure that our agrifood We work closely with agrifood industries and businesses, from suppliers sector — at all points along the value chain — has the legislative of raw materials through to producers, processors, marketers and framework, policy settings, capabilities, resources, knowledge and consumers. We partner with scientists, innovators and regulators intergovernmental relations it needs to grow profitably and responsibly. throughout the world to make the best use of global advances in agriculture and food. We also work with people considering a business, investment or career in the sector, and those concerned about agricultural practices or food issues.

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Celebrating our history

Our department, under a variety of names, has supported the development and growth of WA’s agrifood sector for 123 years, operating alongside hard-working and innovative agriculture industries and communities. As our staff prepare to join the new Department of Primary Industries and Regional Development on 1 July, we are celebrating the department’s history and achievements as a standalone agriculture department. Below is a timeline of key facts, events and achievements. Significant parts are sourced from the book In response to need – a history of the Western Australian Department of Agriculture from 1984 to 2008 by former department employee Noel Fitzpatrick.

Timeline 1894 – Premier John Forrest established the Bureau of Agriculture to guide, regulate and protect the state’s expanding agricultural industry. We began publishing the Journal of Agriculture, which ran until 1909 and then from 1924 to 2000. 1896/97 – A serious yet unsuccessful attempt was made to eradicate Mediterranean fruit fly, which remains a significant pest today. 1898 – The bureau became the Department of Agriculture and was placed under the control of the Minister for Lands, Forests and Agriculture. The Hamel Field Station (WA’s first research station) was established near Waroona. 1902 – Construction started on the rabbit-proof fence. Maintaining the fence became a major undertaking for the department. 1909 – We took on the responsibility of providing water supplies and road clearing in advance of settlement to aid settlement in outlying areas. The Bureau of Agriculture was first established in St Georges Terrace, Perth

DepartmentDepartment of ofAgriculture Agriculture and and Food, Food, Western Western Australia Australia | Annual | Final report 2017 Contents Overview Performance Significant issues Disclosures and compliance Appendix 18

1914–18 – Ninety-seven officers (50% of the male staff) enlisted in World War I. Seven won Military Medals and one, Alfred E Gaby, was posthumously awarded a Victoria Cross. 1918 – Inspections of grain for export began. 1921 – A cadetship scheme started that produced 63 veterinarians, 129 agricultural scientists and 10 medical laboratory technologists between 1921 and 1977. 1920s/30s – We increased our focus on science-based research and extension. 1926 – Muresk Agricultural College opened at Northam. The college was handed over to the WA Institute of Technology (now Curtin University) in 1969. Early 1930s – Animal production research began with a focus on fat lamb production. Minister for Agriculture, Mr EK Hoare, laid the foundation stone for the first buildings for 1930s – The department had dramatic success in solving serious health the new South Perth headquarters in 1956 problems in sheep and cattle in the medium and higher rainfall districts. 1939–45 – Throughout World War II, the department focused on 1957–61 – New offices at South Perth were completed progressively. supporting the war effort and keeping the economy running. This Most head office staff had transferred from the city to South Perth by included maximising vegetable production and publishing a vegetable the end of 1959. growing guide for home gardeners. 1964 – We started publishing Agricultural Memo (AgMemo), initially 1950s/60s – The department expanded substantially. Rural research from Esperance, to stay connected with farmers across the regions. funding and the Commonwealth Extension Services Grant provided AgMemo still exists today, now as an e-newsletter. additional funding for research, extension and training. 1970s – We developed the Cripps Pink (marketed as Pink LadyTM) and Cripps Red (marketed as Sundowner™ in most places) apple varieties. Pink Lady, in particular, has become an international success story in more than 70 countries.

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1977 – The European wasp surveillance program was established to 2006 – The department was renamed the Department of Agriculture eradicate incursions and prevent the wasp from establishing in WA. The and Food, Western Australia, reflecting an increasing focus on the food successful program continues to this day. industry. 1979 – Prince Charles visited the (former) Avondale Research Station to 2009 – The award-winning Indigenous Landholder Service was open an historic machinery exhibition, celebrating the 150th anniversary established to provide support to Indigenous landholders (now run of WA’s foundation. through the Aboriginal Business Development unit). 1980 – The first open day 2007/08 – The first commercial wheat breeding company, InterGrain Pty was held at our South Perth Ltd, was established in partnership with GRDC. headquarters. An estimated 8000 2008 – The Buy West Eat Best food marketing program was launched people attended, including the to encourage the community to buy local produce. Premier, a number of ministers and 1000 school children. 2008/09 – We oversaw the establishment of the first trials of genetically modified (GM) canola to be permitted in WA. 1987 – The department moved into farm management extension, 2012 – In collaboration with the GRDC, the Australian Export Grains which proved successful. Innovation Centre (AEGIC) was officially opened to support the trade and use of Australian grains across the world. 1995 – The department was renamed Agriculture Western 2014 – The world’s first vaccine for the major sheep parasite Barber’s Australia following amalgamation pole worm — developed by the department in conjunction with with the Agriculture Protection the Moredun Research Institute in Edinburgh — was launched for Board and the Rural Adjustment commercial use. and Finance Corporation. 2016 – Launched new BravoTM apple variety, the culmination of more 1995–2008 – We increased our Prince Charles (left) at the former Avondale than two decades of R&D. The variety provides an excellent export focus on the specific needs of Research Station opportunity. markets and opportunities. 2017 – The state government announced DAFWA would be 2002 – A Food Program was developed to provide greater value to amalgamated into DPIRD from 1 July. agricultural industries through work beyond the farm gate.

DepartmentDepartment of ofAgriculture Agriculture and and Food, Food, Western Western Australia Australia | Annual | Final report 2017 Contents Overview Performance Significant issues Disclosures and compliance Appendix 20

Organisation chart

A/Director General Mark Webb

Biosecurity and Business Support Grains and Livestock Grains R&D Irrigated Agriculture Regulation Industries Transformation Strategy and Executive Director Executive Director Executive Director Jim Eftos Executive Director Executive Director John Ruprecht Governance Kevin Chennell Peter Metcalfe Mark Sweetingham

• Animal Welfare • Communications and • Beef Industry • Grains R&D Business • Horticulture Science and Audit and Regulation Promotion Development Development Industry Development Integrity • Border Biosecurity • Emergency Management • Food and Industry • Grains Research and • Irrigation Development • DAFWA Diagnostic Capability Development Innovation and Agribusiness Laboratory Services • Finance • Grains and Livestock • Land and Water • Invasive Species • Information Policy, Strategy and Assessment Administration • Livestock Biosecurity • Legal and Commercial • Regional Operations and • Regional Operations and Business Development, • Plant Biosecurity • People Business Development, Northern Region • Regulatory Policy and • Projects and Contracts Central Region Standards • State NRM Office • Regional Operations and • Soil Commissioner Business Development, Southern Region • Livestock Industry Development

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Corporate executive team

Our extended Executive team: Standing (from left) Irrigated Agriculture Executive Director John Ruprecht, Grains and Livestock Executive Director Peter Metcalfe, People Director Kim Waller, Business Support Executive Director Jim Eftos, A/Director General Mark Webb, Audit and Integrity Director Alexandra Filipe, Grains R&D Transformation Executive Director Mark Sweetingham and Corporate Communications Director Scott Heffernan. Focused on business growth Sitting (from left) Finance Director Mandy Taylor, Biosecurity and Regulation Executive Director Kevin Chennell and Strategy and Governance Director Catherine Lyons

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Executive team

Mark Webb A/Director General: Kevin Chennell, Executive Director: Mark has a Degree in Science (Agriculture) Hons from Kevin has qualifications in veterinary radiology, education the University of Western Australia and a Postgraduate and management. He worked in private practice and in Certificate in Cross-sector Partnership from the University a range of senior government and industry roles before of Cambridge (UK). He was appointed A/Director General joining DAFWA in 2008. Kevin is passionate about leading of DAFWA in March 2016 after being Chief Executive Officer of the change, innovation and building relationships with industry and other Botanic Gardens and Parks Authority for 12 years. Mark was previously key stakeholders. employed by DAFWA for more than 15 years and worked in South Biosecurity and Regulation: The directorate’s actions underpin Perth, Manjimup, Kununurra and Albany. He has extensive experience production, market access, competitiveness and assuredness. We in horticultural research, public and private sector management, maintain WA’s favourable biosecurity status and market access by farming and business. He also sits on a number of local, national and reducing the risk of pest and disease incursions, by developing and international committees and boards. implementing surveillance techniques and by instituting rapid response capabilities for animal and plant biosecurity hazards. Additionally, the directorate administers regulations that provide evidence of food safety and integrity, ensures the animal welfare status in WA, and facilitates prevention and mitigation of land degradation through the Soil and Land Conservation Act 1945.

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Jim Eftos, Executive Director: Mark Sweetingham, Executive Director: Jim has more than 17 years’ senior executive experience. Mark has long been involved in the Australian grains He joined the department in February 2015 from industry and is internationally recognised in the fields of Polytechnic West, where he was General Manager, crop protection, farming systems, crop genetics and plant Resources and Corporate Services. He has significant biosecurity. Throughout his career, he has been passionate knowledge and experience in forming public policy, financial about increasing the value of the grains industry, in partnership with management, human resources, workforce planning, governance and industry, through R&D and innovation activities. compliance, communications, and information and business systems. Grains R&D Transformation: The directorate is responsible for Business Support: The directorate’s primary task is to provide the grains R&D, including projects in partnership with the GRDC and services and resources necessary for DAFWA to achieve its strategic collaborators such as universities, CSIRO, grower groups, and other priorities. Key services include financial management, people, state government departments. The projects focus on enabling WA communications and marketing, legal and commercial services, as grain growers to increase their business productivity and profitability. well as improving our facilities and information and business systems, The directorate is also supporting the transition of grains R&D delivery and emergency management response capability. The directorate also to a new model with greater industry involvement and private sector incorporates the State Natural Resource Management Office, which investment. facilitates the coordinated delivery of NRM in WA.

Peter Metcalfe, Executive Director: John Ruprecht, Executive Director: Peter’s farming background and Bachelor of Business John has more than 30 years’ experience in agriculture (Agriculture), combined with a career spanning more than and resource management spanning a range of senior 35 years with DAFWA, confirms his commitment to the management and policy positions concerning water state’s agrifood sector. He works with key policy makers, resource assessment, engineering and remediation, industry leaders and funding bodies both with and outside Australia to urban development, sustainable agriculture, and biosecurity. John is create a more sustainable agrifood sector. Peter’s focus on enabling committed to working with industry to increase the value of horticulture development has seen him oversee the creation of the southern and ensuring the productive capacity of our soil and water resources. hemisphere’s largest automatic weather station network across WA. Irrigated Agriculture: The directorate is responsible for land and water Grains and Livestock Industries Development: The directorate assessment, horticulture industry development, irrigation development works with businesses that produce, process and market grains, meat, and agribusiness, and regional development and operations for dairy, poultry (eggs and meat), bees and honey, intensely processed northern WA. food products and fibre, and who are committed to, and capable of, contributing to doubling the value of the agriculture and food sector by 2025, as well as other relevant public stakeholders. Department of Agriculture and Food, Western Australia | Final report 2017 Contents Overview Performance Significant issues Disclosures and compliance Appendix 24

Administered legislation The Minister for Agriculture and Food is responsible for administering the following Acts: Aerial Spraying Control Act 1966 Agricultural and Veterinary Chemicals (Taxing) Act 1995 Agricultural and Veterinary Chemicals (WA) Act 1995 Agricultural Produce Commission Act 1988 Agriculture and Related Resources Protection Act 1976 Animal Welfare Act 2002 Biological Control Act 1986 Biosecurity and Agriculture Management Act 2007 Biosecurity and Agriculture Management Rates and Charges Act 2007 Biosecurity and Agriculture Management (Repeal and Consequential Provisions) Act 2007 Bulk Handling Act 1967 Exotic Diseases of Animals Act 1993 Gene Technology Act 2006 Industrial Hemp Act 2004 Loans (Co-operative Companies) Act 2004 Ord River Dam Catchment Area (Straying Cattle) Act 1967 Royal Agricultural Society Act 1926 Royal Agricultural Society Act Amendment Act 1929 Rural Business Development Corporation Act 2000 Soil and Land Conservation Act 1945 Tree Plantation Agreements Act 2003 Veterinary Chemical Control and Animal Feeding Stuffs Act 1976 Veterinary Surgeons Act 1960 Western Australian Meat Industry Authority Act 1976

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Other key legislation impacting on activities We comply with the following Acts in performing our functions: Conservation and Land Management Act 1984 Public Interest Disclosure Act 2003 Contaminated Sites Act 2003 Public Sector Management Act 1994 Corruption and Crime Commission Act 2003 Salaries and Allowances Act 1975 Disability Services Act 1993 State Administrative Tribunal Act 2004 Electoral Act 1907 State Records Act 2000 Electronic Transactions Act 2011 State Superannuation Act 2000 Emergency Management Act 2005 State Supply Commission Act 1991 Environmental Protection Act 1986 Transfer of Land Act 1893 Equal Opportunity Act 1984 Waterways Conservation Act 1976 Financial Management Act 2006 Wildlife Conservation Act 1950 Firearms Act 1973 Workers’ Compensation and Injury Management Act 1981 Forest Products Act 2000 Freedom of Information Act 1992 Government Employees’ Housing Act 1964 Health (Miscellaneous Provisions) Act 2016 Industrial Relations Act 1979 Land Administration Act 1997 Library Board of Western Australia Act 1951 Medicines and Poisons Act 2014 Minimum Conditions of Employment Act 1993 Occupational Safety and Health Act 1984 Occupiers’ Liability Act 1985 Parliamentary Commissioner Act 1971

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Performance management framework

Changes to our management framework Outcome-based management framework In January 2016, DAFWA adopted a new parliamentary reporting The department contributes to three government goals: Stronger Focus structure — formally known as an outcome-based management on the Regions; Social and Environmental Responsibility; and Financial framework — which was first presented in the 2016/17 State Budget. and Economic Responsibility. The principal changes in the new structure are: We seek to bring about one outcome: ‘A profitable, innovative and • replacement of the existing three services with six new services sustainable agrifood sector that benefits Western Australia’; and we do this by way of six services. These are shown — along with the • inclusion of a third government goal — ‘Financial and Economic indicators by which we assess our performance — in Table 1. Responsibility’. The revised structure provides greater detail and more meaningful Both our effectiveness in achieving this outcome and our efficiency information to stakeholders on our services and activities, and in performing the services are detailed in the Summary of key reinforces our focus on supporting and enabling the growth of the performance indicators (p. 42) and the Detailed information in support agrifood sector, while protecting the state’s resources. of key performance indicators (p. 139) sections of this report.

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Table 1 Outcome-based management framework

Government goals Desired outcome Effectiveness indicators Services Efficiency indicators 1. Market development, investment and market access Stronger focus on the Helping WA agrifood businesses increase their regions attractiveness to markets by developing the marketing Greater focus on service 1. Proportion of and business arrangements they need to remain The efficiency with delivery, infrastructure co-investment in competitive in global and domestic markets which DAFWA investment and economic DAFWA-led initiatives 2. Productivity improvement and innovation undertakes each development to improve Helping businesses optimise the technical side of of its six services the overall quality of life in 2. Proportion of is estimated by the businesses that their business by increasing the volume and cost remote and regional areas effectiveness of their products same two indicators consider DAFWA has (i.e. a total of 12 Social and environmental 3. Business development and promotion positively influenced efficiency indicators responsibility Commercial components needed for success — the profitability of the reported on). Ensuring that economic A profitable, sector facilitating investment-ready value chains, and business activity is managed in a innovative and skills and knowledge based on the latest information socially and environmentally sustainable agrifood 3. Proportion of Two indicators: responsible manner for the sector that benefits businesses that 4. Productive natural resources long-term benefit of the state Western Australia consider DAFWA has Supporting the productive capacity of the natural 1. Net service cost fostered innovation in resources and biological assets that underpin the as a factor of Financial and economic the sector economic development of the sector the gross value responsibility of agricultural Responsibly managing the 4. Proportion of 5. Biosecurity and product integrity production state’s finances through businesses that DAFWA’s legislative and regulatory responsibilities the efficient and effective consider DAFWA has (such as biosecurity, animal welfare and emergency 2. Co-investment delivery of services, positively influenced response); and its role in developing product integrity — in DAFWA-led encouraging economic the sustainability of the one of our foremost advantages in global agrifood trade. initiatives related to activity and reducing sector 6. A business environment for growth net cost of service regulatory burdens on the DAFWA’s leadership in partnering with stakeholders private sector across the regulatory, policy and planning settings affecting the agrifood sector.

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Shared responsibilities with other agencies

We work with a range of national, state and local agencies to serve agrifood industries, related communities and the state. Our major shared responsibilities are outlined below. Table 2 DAFWA’s shared responsibilities with other agencies Area Collaborating agencies Mechanisms Animal welfare RSPCA; Federal Department of Agriculture and Water National animal welfare policies, standards and guidelines; Resources (DAWR); Animal Health Australia (AHA); state promoting livestock stewardship. Ethical use of animals for agency jurisdictions; industry scientific research; Recommendations of Easton review (2015) Beef industry development Queensland Department of Agriculture and Fisheries; Northern Beef Futures RfR project (including market and supply Northern Territory Department of Primary Industry and chain development; Indigenous participation; capacity and Fisheries; DAWR; Department of State Development leadership; mosaic agriculture; infrastructure development and (overseas trade missions) practice change on-station) Dairy industry Dairy Australia, Western Dairy, South West Catchment Western Australian Dairy Industry Growth Steering Committee development Council and supply chain stakeholders Emergency management Office of Emergency Management (OEM), state and local State Emergency Management Committee (SEMC); emergency government authorities management plans, including Hazard Specific Plans (Westplans); support plans and national plans European house borer Forest Products Commission (FPC); Building Commission European House Borer Program (within Department of Commerce) Export of plant-based DAWR; state and territory quarantine authorities Assessing and addressing regional pest risks associated with commodities and equipment exporting plant commodities and associated equipment Fertiliser use Department of Water (DoW); Department of Planning (DoP); Vasse Taskforce; Swan–Canning Water Quality Improvement Plan Swan River Trust Import pest risk analysis DAWR; state and territory quarantine authorities; industry Assessing and addressing international and national pest risks and subsequent import associated with importing plant commodities and associated conditions equipment

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Table 2 DAFWA’s shared responsibilities with other agencies (cont.) Area Collaborating agencies Mechanisms Land information and DoW; DoP; Department of Fire and Emergency Services Geographic Information Services (GIS); Shared Land Information inventories (DFES); Department of Parks and Wildlife (DPW); Landgate; Platform (SLIP); Kimberley and Nullarbor land inventories Department of Regional Development (DRD) National Australian Queensland Department of Agriculture and Fisheries; National Australian Biosecurity Framework surveillance, Biosecurity Framework Northern Territory Department of Primary Industry and diagnostics, Indigenous rangers Fisheries; DAWR National industry biosecurity DAWR; AHA; Plant Health Australia (PHA); state and territory Identification of key national pests and diseases and development plans government agencies of industry biosecurity plans; plans to manage biosecurity incident response and initial recovery Natural disaster relief and DFES; WA Police; DPW; Main Roads WA; Department for Coordination of natural disasters under the Western Australian recovery arrangements Child Protection and Family Services; Department of Health; Natural Disaster Relief and Recovery Arrangements (WANDRRA); Department of Local Government and Communities; Water membership of state and district emergency management Corporation committees Natural resource DPW; FPC; DoP; DoW; Department of Aboriginal Affairs State NRM Program through the NRM Office and management of management (DAA); Department of Fisheries; State NRM Office the Community Capability Grants and Community Action Grants programs Plant and livestock DAWR; state and territory quarantine authorities; AHA; PHA Response to incursion of national and regional quarantine pests. biosecurity incident Framework for shared funding and action in emergency outbreaks response and planning Rural water DoW; Water Corporation; Wheatbelt shires Rural Water Council

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DAFWA works with Dairy Australia, Western Dairy, the South West Catchment Council and supply chain stakeholders to help develop the state’s dairy industry

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Focused on business growth

Agency performance

DAFWA’s South Perth headquarters

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Report on operations Key achievements Growing markets Our key achievements for 2016/17 are reported under the four growth • We opened the Western Australian Premium Food Centre in areas set out in our Agrifood 2025+ Strategic plan 2014–17 (markets, Manjimup to help premium food producers to capture identified profitability, productivity and people) and our commitment to biosecurity domestic and international market opportunities, upscale and and natural resource management. coordinate production methods, and enhance promotional material. • We attained trademark protection in Australia for the DAFWA- bred Bravo® apple, which is the premium fruit from ANABP 01 trees. Fruit West Co-operative Limited, which has been granted an exclusive licence by DAFWA to grow, pack and market Bravo® in Australia, negotiated with Woolworths to sell Bravo® apples across WA stores. • We hosted WA’s Celebrity Signature Dish competition where four media, lifestyle and sporting personalities competed in a 60-minute cook-off at Elizabeth Quay as part of WA Day celebrations. The event, run through our Buy West Eat Best food labelling program, highlighted the premium produce that regional WA has to offer through significant media and social media coverage. • We worked effectively with the strawberry industry to reestablish interstate trade following the detection of green snails in a consignment of WA strawberries in August 2016. We developed a green snail protocol that reopened trade within four weeks, and developed an online green snail inspector’s course and compliance arrangements to support property inspections. • We funded a market development officer with vegetablesWA to work with growers to identify and achieve new opportunities in local, national or export markets. The role has been critical in resolving interstate trade issues associated with the insect pest tomato potato psyllid (TPP).

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Growing profitability Growing productivity • We installed three Doppler radars across the Wheatbelt to give • We worked with an international team to map the barley genome, farm businesses access to improved weather data, enabling them from which molecular markers and genomic breeding tools can be to make more informed decisions to increase profitability and developed to enhance future barley varieties, and ultimately create reduce business risk (see p. 35). better beer and whisky (see p. 49). • We commissioned the Asian market success – premium agrifood • We completed water and power infrastructure under the Gascoyne market opportunity report that identified 20 high-growth, high- Food Bowl Initiative that will allow a further 400ha to be opened up value premium food and beverage opportunities at the intersection for irrigated agriculture (see p. 52). of what Asian consumers want and what WA can produce. The • We assisted the state government to deregulate the potato combined market value of these products could add an extra industry, including overseeing legal, financial and human resource $4 billion to the agrifood sector. matters related to the closure of the Potato Marketing Corporation. • We progressed our working alliance with the Agricultural Produce Deregulation provides growers with greater choice and flexibility to Commission (APC) citrus subcommittee to grow the value of the pursue higher value markets and value-adding opportunities. citrus industry from $14 million in 2016 to a potential • We bolstered resistance to the wheat disease, yellow spot, through $29.6 million. After 18 months, 90% of oranges now meet fruit the discovery of 11 new genes that will help make future wheat quality specifications, and export volume has tripled. varieties less susceptible to the fungal pathogen. This offers wheat • We undertook a Northern Beef Infrastructure Review, which breeders additional material from which to develop varieties with identified priority projects to help increase the value of the beef higher and more durable levels of resistance to yellow spot. industry in the Kimberley and Pilbara. As a result, a $500 000 grant • We released the new Durack oat variety, which has the potential was approved to develop a domestic cattle clearing and holding to open up new areas of oat production in low–medium rainfall yard in Broome. regions. This was complemented by the release of a milling oat • We established the SoilsWest Alliance with UWA to use our variety guide and a successful tender to host the International Oats combined scientific and research capabilities to develop the Conference in Perth in 2020. long-term future of soil science in WA, enhancing soil fertility and sustainability, and crop profitability.

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Growing people Boosting biosecurity and sustaining natural resources • We facilitated the establishment of Australia’s first Indigenous • We launched the Western Australian Biosecurity Strategy — producer group, Noongar Land Enterprises (NLE), through the state’s first — which sets the direction for management of our Aboriginal Business Development (South) project. NLE biosecurity issues affecting agriculture, fisheries, forests and allows Aboriginal land managers in the south-west to seek new biodiversity up to 2025. investment and business opportunities (see p. 173) • We successfully ran emergency incident responses to a range of • We delivered workshops and training to agronomists, agribusiness biosecurity threats, including Australian plague locust, cucumber consultants and grain growers on crop protection, agronomy and green mottle mosaic virus, green snails and the first discovery of soil management, improving knowledge to facilitate robust and tomato potato psyllid (TPP) in Australia, helping to minimise the integrated crop management by grain-growing businesses. impact on industry and the community (see p. 58). • We had 137 staff complete either a Diploma or Certificate III in • We helped implement controls on the invasive weed, water Public Safety (Biosecurity Response Management/Operations), hyacinth, in the south-west by commissioning drones to take aerial enhancing our ability to respond to major animal or plant pest or photographs along the Serpentine River and sending images to disease incursions. Landcare Serpentine–Jarrahdale to inspect for the presence of the weed. • We appointed 10 regionally based, early-career R&D staff to improve grain science depth and capacity and awarded • We supported industry with the development of a Wild Dog Action postgraduate research scholarships, valued at $190 000 each, Plan 2016–21 to reduce the impact of wild dogs on agricultural to three early-career scientists to increase the scientific research industries. capability of the grains industry. • We gave the ‘all clear’ to the last of six Kimberley properties • We established the Sheep Meat Value Chain training program that had been quarantined after receiving infected bulls from as part of the Sheep Industry Business Innovation project. Queensland in 2012. The all-clear followed an extensive testing This program created learning experiences for employees, program and close liaison with industry and affected producers to professionals, undergraduates and recent graduates, resulting in a rule out the presence of bovine Johne’s disease (BJD), which is not significant number of new professional entrants to the industry. known to occur in WA.

Department of Agriculture and Food, Western Australia | Final report 2017 Contents Overview Performance Significant issues Disclosures and compliance Appendix 35 New radars strengthen Wheatbelt weather data

Technology plays an increasing Information from Doppler radars, role in boosting the international combined with data from the competitiveness of the agrifood department’s 175 automatic sector. weather stations, provides farm businesses with more precise In focus The state government invested information on rainfall, wind, $23 million for DAFWA to temperature and soil moisture. construct three Doppler radar towers at Newdegate, South Farm business can use the Doodlakine and Watheroo data, which is updated on during 2016/17 to keep the our weather website every six local agricultural industry at the minutes, to make more informed on critical factors such as forefront of climate technology. on-farm business decisions sowing dates, variety selection, input application rates and yield potential, improving farm production and profitability. They I’ve been waiting for this for years. I will be able to track a can also precisely determine the cold front as it comes in and know how long I have to move rainfall history of any point on their property. livestock or plan my spray program.” – Cam Gethin, Hines Hill broadacre producer Doppler upgrades are planned “ for existing weather radars at Geraldton, Esperance and Albany. Once completed, the Under the radar: DAFWA Grains and Livestock Industries Executive Director WA Wheatbelt will have the most Pete Metcalfe, Agriculture and Food Minister Alannah MacTiernan and Bureau of comprehensive radar coverage in Meteorology A/WA Regional Director Grahame Reader at the opening of the Watheroo the southern hemisphere. Doppler radar in June

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Financial targets

Table 3a Financial targets 2016/17 2016/17 2016/17 Variation Explanation of variation (2) Target (1) Actual $’000 $’000 $’000 Total cost of services 219 033 200 405 (18 628) Total cost of services is lower than budget estimates. This relates to underspend on (expense limit) externally funded projects that are carried over to the new financial year as well as a (details from Statement of $15.2 million variance for the capitalisation of water infrastructure costs associated comprehensive income) with the Gascoyne Food Bowl Initiative (refer to note 8 of the financial statements on p. 98). Net cost of services 166 903 150 879 (16 024) The net cost of service is mainly impacted by underspends on externally funded (details from Statement of projects that are carried over to the new financial year and the capitalisation of comprehensive income) $15.2 million of expenses associated with the Gascoyne Food Bowl Initiative.

Total equity 340 491 369 149 28 658 The variance between actual and budget estimates has occurred as a result of the (details from Statement of capitalisation of $15.2 million of expenses associated with the Gascoyne Food Bowl financial position) Initiative, RfR-funded capital items delayed until the 2018/19 year, and actual-to- estimate variances in the opening equity position at 1 July 2016. Net increase / (decrease) (8 037) (4 294) (3 743) The budget estimates did not include restricted cash on hand of $9.9 million relating to in cash held (details from RfR projects. The lower than expected cash outflow is due to a variety of operational Statement of cash flows) factors but principally the result of lower than budgeted expenses for supplies and services. Approved salary expense 99 477 99 145 332 The 2016/17 salary expense level is within 1% of target. level

1. As specified in the Budget Statements. 2. Further explanations are contained in note 39 of the financial statements.

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Table 3b Working cash targets 2016/17 2016/17 Target Variation Explanation of variation (2) Agreed Limit (1) / Actual $’000 $’000 $’000 Agreed working cash limit 10 338 10 338 N/A (at Budget) Agreed working cash limit The variation is mainly due to savings generated throughout the year and 11 632 9 889 1 743 (at Actuals) reductions in expenditure on supplies and services. 1. As specified in the Budget Statements. 2. Further explanations are contained in note 39 of the financial statements.

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Financial performance 300 Total actual Total actual revenueTotal actual expenses revenue 2016/17 Operating result 250 The operating surplus for the year was $12.8 million ($5.8m for 2015/16). The difference from the previous year is largely due to the 200 $213M capitalisation of costs associated with the Gascoyne Food Bowl 150 Initiative. $ million 100 Equity: what we’re worth Total actual 50 expenses 2016/17 Equity is net worth, which is calculated by what we ‘own’ (total assets of $405m) less what we ‘owe’ (total liabilities of $36m). At 30 June 2017, 0 our equity was $369 million. 2011/12 2012/13 2013/14 2014/15 2015/162016/17 $200M Figure 1 Total revenue and expenses 2012–17 Assets: what we own At 30 June 2017, we had total assets of $405 million –– a slight increase from 30 June 2016. Property, plant and equipment account for 38% of our assets; restricted cash accounts for 17% of our assets.

Revenue: where the dollars came from Our total operating revenues for 2017 amounted to $213 million. While total revenues are flat year on year, a decrease in both non-government revenue and appropriations from state government were offset by an Commonwealth grants and contributions (1%) increase in RfR funding. Non-government grants and subsidies (10%) User charges and fees (6%) Other revenue (incl. interest) (6%) Royalties for Regions (22%) Revenue from state government (55%)

Figure 2 Sources of funding

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Expenses: how the dollars were spent Leave liability

Our total operating expenses for 2017 amounted to $200 million Throughout 2016/17 we ee 12 across our services. The decrease of 4% ($8m) is the result of the strengthened the management oy 10 capitalisation of costs associated with the Gascoyne Food Bowl of our leave outside of guidelines 8 Initiative. policy by reducing the carryover of accrued annual leave of staff. 6 Our main areas of expenditure were our people, contracts and grants. Reduced by future booked leave, 4 this represents 6% of our leave 2 Market development, investment

liability. erage weeks per empl and market access (12%) 0 Av 2013 2014 2015 2016 2017 Productivity improvement and Staff were offered the opportunity innovation (18%) to cash out accrued annual leave Figure 5 Leave liability 2013–17 Business development and and long service leave in December promotion (8%) 2016. Productive natural resources The combined average for accrued annual and long service leave has fallen (6%) from 8.7 average weeks per FTE employee as at 30 June 2016 to 7.3 weeks Biosecurity and product integrity per employee as at 30 June 2017. (32%) A business environment for growth Management strategies to reduce our department’s leave liability will continue (24%) throughout 2017/18. Figure 3 Expenditure by service

Liabilities: what we owe Depreciation (4%) At 30 June 2017, we had total liabilities of $36 million –– which are flat year Grants and subsidies (14%) on year. Our liabilities comprise Supplies and services (22%) payables (salary and other accruals Other (5%) and payables) and provisions (largely Employees (55%) associated with annual leave and long service leave liabilities). Figure 4 Main areas of expenditure 2017

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Key financial ratios

Financial ratios provide a useful snapshot of the department’s financial status and trends, and measure our performance in achieving financial management objectives. Table 4 Key financial ratios Ratio and formula Measure description 2016/17 2015/16 Interpretation of result Working capital Our ability to meet 4.4 times 2.8 times The ratio has increased as a result of the transfer of the South Current assets v. current liabilities current commitments Perth headquarters from non-current assets into current assets due to its planned sale under the state government’s Land Asset Sale Program. Government contribution Our dependence on 76% 75% The department continues to rely on state government funding. A Income from state government v. state government decrease in other income was offset by an increase in RfR funding, total income revenue meaning total income was stable year on year.

Labour ratio Our commitment to 55% 52% This ratio is significantly impacted by the department’s RfR Labour expenses v. total expenses staff projects. Expenditure on these projects impacts on the ratio, depending on how expenditure is allocated between supplies and services, and labour expenses. Net worth movement Growth in net assets 102% 103% There has been no significant change in the net worth of the Current year equity v. prior year department. equity Current asset movement Growth in current 159% 104% The ratio has increased as a result of the transfer of the South Current year current assets v. prior assets Perth headquarters from non-current assets into current assets due year current assets to its planned sale under the state government’s Land Asset Sale Program. Current liabilities movement Growth in current 99% 74% Current year liabilities from 2016 to 2017 are stable. Current year current liabilities v. liabilities prior year current liabilities

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Blitz shows biosecurity begins at home

Everyone can play a part in protecting our food production Pantry Blitz is a great initiative that achieves community industries from harmful or engagement and participation in biosecurity surveillance In focus damaging pests. for pests that would have a significant impact on the state’s This was highlighted during our grain industry.” – Dr Simon McKirdy, WA Biosecurity Council inaugural Pantry Blitz in August “ and September 2016, which smart phones to create and send The blitz will be back in late 2017 encouraged residents to become and will extend to South Australia ‘citizen scientists’ and place a reports of any unusual insect, as well as across WA. free trap in their kitchen pantry or weed or animal back to us for expert identification. household cupboard and report Growing an audience: any pests they caught. To encourage residents to We developed The aim was to enhance participate in Pantry Blitz, we Facebook and community biosecurity surveillance developed and implemented a Twitter messages to and provide data that supports three-month communications maintain community WA’s claims of area freedom for campaign that included media momentum for the Pantry Blitz certain exotic pests, which in releases, printed materials, social turn ensures access to important media posts, attendance at export markets for agrifood. agricultural field days and shows, mail-outs and online information. The activity was a great success with 1877 participants registering The campaign won the Rural for a free trap. We subsequently Media Association of Western received 2252 biosecurity Australia’s Best Communications surveillance reports. Campaign award. Residents were able to easily The Pantry Blitz was an initiative report their pest finds using our of our Boosting Biosecurity MyPestGuide Reporter app. The Defences project and was funded app allows people to use their by National Science Week.

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Summary of key performance indicators (KPIs) Our outcome and services statements reflect our role as an economic development department. Effectiveness indicators help us assess the extent to which we are successful in achieving our outcome, and efficiency indicators let us benchmark our expenditure against the value of the sector. Indicators and results are outlined in Table 5, and explanations of the results are provided in the Detailed information in support of key performance indicators section on p. 139. Table 5 Key effectiveness and efficiency indicator targets, results and variations Outcome: A profitable, innovative and sustainable agrifood sector that benefits Western Australia 2016/17 2016/17 Variation Target Target Actual met Key effectiveness indicators (impact scored at 5 or above) Proportion of co-investment in DAFWA-led initiatives (%) 25.0 22.7 –2.3 û Proportion of businesses that consider DAFWA has positively influenced the profitability of the sector (%) 40.0 41.5 1.5 ü Proportion of businesses that consider DAFWA has fostered innovation (%) 40.0 43.7 3.7 ü Proportion of businesses that consider DAFWA has positively influenced sustainability (%) 43.0 47.7 4.7 ü Service 1 Market development, investment and market access Key efficiency indicators Net service cost as a factor of gross value of agricultural production (GVAP) (%) 0.30 0.26 –0.04 ü Public and private sector co-investment in DAFWA-led initiatives related to this service as a factor of the net cost 15.0 11.6 –3.4 û of this service (%) Service 2 Productivity improvement and innovation Key efficiency indicators Net service cost as a factor of GVAP (%) 0.30 0.27 –0.03 ü Public and private sector co-investment in DAFWA-led initiatives related to this service as a factor of the net cost 45.0 69.7 24.7 ü of this service (%)

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Table 5 Key effectiveness and efficiency indicator targets, results and variations (cont.) Outcome: A profitable, innovative and sustainable agrifood sector that benefits Western Australia 2016/17 2016/17 Variation Target Target Actual met Service 3 Business development and promotion Key efficiency indicators Net service cost as a factor of GVAP (%) 0.20 0.16 –0.04 ü Public and private sector co-investment in DAFWA-led initiatives related to this service as a factor of the net cost 25.0 21.7 –3.3 û of this service (%) Service 4 Productive natural resources Key efficiency indicators Net service cost as a factor of GVAP (%) 0.20 0.07 –0.13 ü Public and private sector co-investment in DAFWA-led initiatives related to this service as a factor of the net cost 35.0 100.1 65.1 ü of this service (%) Service 5 Biosecurity and product integrity Key efficiency indicators Net service cost as a factor of GVAP (%) 0.80 0.64 –0.16 ü Public and private sector co-investment in DAFWA-led initiatives related to this service as a factor of the net cost 25.0 11.0 –14.0 û of this service (%) Service 6 A business environment for growth Key efficiency indicators Net service cost as a factor of GVAP (%) 0.50 0.53 0.03 ü Public and private sector co-investment in DAFWA-led initiatives related to this service as a factor of the net cost 10.0 7.8 –2.2 û of this service (%)

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Supporting information regarding our effectiveness 1. Supporting information regarding our impact on indicators profitability We assess our effectiveness primarily on the extent to which business Driving profitability in the agrifood sector is at the core of our work. owners and managers believe we have positively influenced their The following commentary highlights some of the many ways we have industry over the past 12 months. These three KPIs are derived from helped agribusinesses to thrive. We have achieved this by developing an annual survey of producers, intermediaries (such as processors and and improving access to local and international markets, upskilling exporters) and agrifood consultants. growers and business owners, and improving the ways we engage with Respondents are asked to score our impact on the profitability, industry to ensure we develop practical services and support. environmental sustainability and innovativeness of their industries on a scale of zero to 10, where zero represents no impact, five is moderate, Growing and developing markets and scores of six or above are deemed significant. We have continued to grow existing markets and develop new markets Results of our 2017 survey — and how they compared with previous for agrifood products to support industry’s target of doubling the real- results and our 2016/17 target — are outlined in the detailed information term value of sales by 2025. in support of key performance indicators section on p. 139. Key to finding new opportunities is understanding new and emerging markets. To aid this knowledge, a number of market access reports were published to support businesses in finding the right market opportunities for their products. Reports on seed potatoes, fruits and horticulture exports were developed, highlighting where we can make a difference to growers’ bottom lines. More locally, six Transperth buses were used to jumpstart a program that educates the community about the benefits of supporting local food businesses. The Good Choice campaign, developed in collaboration with industry, reenergises our long-running Buy West Eat Best program. It aims to remind consumers that buying local not only supports local producers and retailers but also reaps other benefits such as the promotion of freshness and quality in local produce.

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To help grow the value of the citrus industry from $14 million in 2016 In conjunction with the department’s Aboriginal Business Development to a potential $29.6 million, we teamed up with the APC’s citrus team, our Sheep Industry Business Innovation project delivered practical subcommittee to create a working alliance based on an annual livestock management training to Aboriginal landowners. Delivered in six contribution of $100 000. After 18 months, 90% of oranges now meet sessions over 12 months, the course covered topics such as weaning fruit quality specifications, export volumes have tripled, and the industry and preparing ewes for next year’s joining, and an economic analysis of has become more cohesive through regular communication. different feeding strategies. Twenty new projects will benefit from grants announced as part of the department’s $22.1 million Agricultural Sciences Research and Development Fund project, funded by RfR. The first round of funding from the Grower Group R&D Grants program focused on increasing economic growth in regional communities to drive agricultural growth.

People and training We held our first ‘horticulture update’ for WA businesses in April 2017, with more than 120 people attending. The update focused on identifying strategies to support local business to achieve industry growth and international competitiveness. We established a Cattle, Sheep and Goat Biosecurity Consultative Group with representation from key livestock industry stakeholders and government agencies. The department chairs the group, which will meet twice a year to discuss current and future biosecurity issues. Meanwhile, our Grains and Livestock Industries directorate has provided ongoing support and leadership to the Cattle Industry Funding Scheme management committee as it considers options to manage the continued threat of bovine Johne’s disease (BJD) to WA.

Agriculture Produce Commission Executive Officer Nardia Stacy talks about the BravoTM apple at the State Horticulture Update

Department of Agriculture and Food, Western Australia | Final report 2017 Contents Overview Performance Significant issues Disclosures and compliance Appendix 46 Making ‘BIG’ improvements to beef enterprises

DAFWA has supported WA’s Futures project’s Business improvement themes emerging northern beef businesses to Improvement Grants (BIG) across participating businesses. make improvements to better program. meet market specifications for The BIG program is facilitating beef and live cattle. The grants provide an incentive of practice change by presenting In focus up to $25 000 to access business the opportunity for northern beef Fifty-four businesses — about advice and implement business producers to engage a consultant half of all eligible businesses in improvements that enhance their for mentoring and building the the Pilbara and Kimberley — competitiveness and prospects capacity of both producers and applied for the Northern Beef for growth. consultants. Of the participants, 40 have been Through BIG, our department approved to progress or are is leaving a legacy in which realising their chosen business continuous improvement is a improvements. standard business process that enables new markets to be met Improving herd productivity, with diversified beef and cattle fencing and water systems, products. and technology to capture data on livestock and business performance are key

The process of working with a business consultant has changed the way we do business.” – Mark Bettini, DeGrey Station owner-manager

“Farming duo Mark and Narelle Bettini run DeGrey station, east of Port Hedland

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2. Supporting information regarding our impact on Our Geographic Information Services (GIS) streamlined the process innovation for reporting the impact of emergencies on properties in regional and remote areas. The team developed an online program that automatically Today’s farms and stations are using a heady mix of data, math, generates a full report on the impact of a fire. Meanwhile, we rolled out hardware and software, sensors and analysis that go beyond what the a new digital mobile mapping solution, Collector, which revolutionised eye can see. This technology provides new and exciting opportunities our ability to detect and report instances of European House Borer, a for farmers to increase production. We see our department’s role in serious pest of seasoned softwood timber. innovation as exploring new ideas and helping businesses to adopt new technology — drones, apps, moisture sensors, smart irrigation, self- 21st century farming driving and GPS enabled tractors, and new plant varieties — to produce food more profitably and sustainably. Building on the success of previous years, we expanded our department’s range of mobile applications (apps), with several new Harnessing technology tools developed. A soil sample app, for example, brought together all available soil information for R&D purposes. The app opens the door We commissioned an unmanned drone to detect the invasive weed, for new research opportunities to improve our understanding of soils, water hyacinth, along a 27km stretch of the Serpentine River. Landcare investigating soil constraints and identifying opportunities to improve Serpentine–Jarrahdale narrowed down the 16 000 images collected plant production. to 105 images that pinpointed infestations for removal. Water hyacinth has the potential to block large sections of river and spread to other Our digital farming tools were popular in the past year and were on waterways. Similarly, we attracted federal funding when we led a trial display at the 2016 Perth Royal Show. Using digital technology to using thermal sensors attached to aircraft and drones to detect feral improve farming practices was also a feature of our display at the pigs. If not managed, it is estimated that feral pigs could cause average Dowerin GWN7 Machinery Field Days. Visitors to both events were able production losses of $4.6 million a year in south-west WA alone. The to learn more about the way forward in digital farming and could view, trial aimed to strengthen the management of significant pest animals in download and test our new smartphone apps. Meanwhile, our PestFax Australia. service was kept busy in 2016 with more than 1100 reports of pests and diseases in grain-growing areas. Small-scale pig owners and livestock industries have benefited from an engagement website, PigCentral, which provides a one-stop shop Construction and installation of new Doppler radars at Newdegate, for pig keepers’ information needs. PigCentral was a 12-month activity South Doodlakine and Watheroo were completed in the past year. under the Boosting Biosecurity Defences project, made possible by The $23 million investment, made possible through RfR, will provide RfR. It provided information on biosecurity, general animal health and advanced Doppler radar technology across the wheatbelt (see p. 35). management information.

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New products With innovation comes new products which, in turn, create new opportunities for success. In 2016/17, we developed and distributed a new oat variety, revised decision-support tools and created new variety- specific management packages for wheat, barley, oat, lupin, field pea and quinoa. In collaboration with Murdoch University scientists, we played a key role in mapping the barley genome for the first time, enabling breeders to develop new and improved barley varieties that can be used for clearer, tastier beers (see p.49). Building on the launch of the Bravo® apple, we obtained Australian trademark protection in March 2017. Bravo apples — which have a unique sweetness, moderate to high crisp and crunch and a striking burgundy colour — are now available for purchase from various retailers. DAFWA also supported the development of a number of entirely new products, the latest being jujubes (Chinese dates), with nutrient testing under way in WA orchards as part of a broader program to grow the industry. The jujube fruit grows on the Ziziphus jujuba tree and tastes crisp (like an apple) when fresh or sweet and chewy when dried. It has potential to be a new profitable agricultural business to meet the requirements of domestic and overseas markets. DAFWA continued to support the growth of the jujube industry in WA

Department of Agriculture and Food, Western Australia | Final report 2017 Contents Overview Performance Significant issues Disclosures and compliance Appendix 49 Breaking the code for better barley The development of new and The alliance worked in from which genetic ‘words’ and improved barley varieties is set to partnership with scientists from ‘sentences’ can be produced that accelerate after DAFWA played a 10 countries, including Germany, identify the genes that control key role in mapping the complete the US, China and Switzerland, traits such as grain yield, grain In focus barley genome for the first time. as part of the Barley Genome quality, adaption to climate, and Sequence Consortium. This pest and disease resistance. The Western Barley Genetics research was so large and Alliance, a partnership between complex that no single country The research lays the foundations DAFWA and Murdoch University, had the capacity to complete it. for plant breeders to target was a major contributor to the and combine more favourable The benefits of this research will be international research, assisted Mapping the barley genome gene combinations to develop far reaching, from improving WA by co-funding from GRDC. effectively provides a ‘dictionary’ new high-performance barley malt and feed barley production varieties, tailored to local to assisting food production in environments and markets. developing countries.

At last the genetic basis of the many traits that influence successful barley variety development is at our fingertips, providing almost limitless possibilities.” – David Moody, “ barley breeder, InterGrain and GIWA barley council member DAFWA Principal Research Officer Chengdao Li and Agriculture and Food Minister Alannah MacTiernan celebrate the mapping of the barley genome

Department of Agriculture and Food, Western Australia | Final report 2017 Contents Overview Performance Significant issues Disclosures and compliance Appendix 50

3. Supporting information regarding our impact on In 2016 an industry-led Wild Dog Action Plan was released. The sustainability 77-page plan aligns with the National Wild Dog Action Plan and was developed under the direction of an industry working group, affected Our goal of growing the agrifood sector is underpinned by landholders, regional communities and other interested parties. Wild environmentally sustainable practices, which involves us working in dog predation on livestock takes a heavy economic and emotional toll partnership with like-minded organisations and businesses that share on livestock producers in affected pastoral and agricultural areas. our passion and energy for the sector. In the past year, our exacting biosecurity standards and practices have led to the detection of several Partnerships exotic pests. The SoilsWest Alliance was established as a partnership between Responding to pests, diseases and industry emergencies DAFWA and UWA. Soil science researchers combined scientific research capabilities to develop the long-term future of soil science Staff from across the department came together to respond to in WA. This relationship is part of a range of new partnerships with the detection of the damaging insect pest, tomato potato psyllid universities and agribusinesses in R&D to improve crop productivity and (TPP), in the Perth area in February 2017, the first time the psyllid profitability. has been found in Australia. Our response to this incident drew together significant staff and resources at our emergency control We collaborated with the Ord River District Co-operative Ltd (ORDCO) centre at the South Perth head office. Forward command posts were and the Northern Australia Crop Research Alliance partners to submit also established at Albany, Manjimup and Carnarvon (see p. 58). two applications to the Grower Group R&D grants program for priority Additionally, we led responses to eradicate or manage numerous other research in the Ord Irrigation Area. plant or animal pests and diseases, including Russian wheat aphid, Overseas, relations with the Japan Ministry of Agriculture, Fisheries and Australian plague locust, cucumber green mottle mosaic virus, and Forestry have progressed with Irrigated Agriculture Executive Director green snails in strawberries. John Ruprecht attending a forum in Tokyo to foster industry knowledge Successful negotiations with the Commonwealth Government resulted and commitment to a global value-chain strategy. Our department also in the protection of Australia’s bee industry, and saw the launch of a took part in an international seed conservation project that aims to revised Biosecurity (Prohibited and Conditionally Non-prohibited Goods) insure against the loss of plant germplasm during large-scale regional Determination by the Commonwealth. The determination includes new or global crises. import conditions to protect the WA bee industry’s freedom from the potentially devastating European foulbrood disease. More broadly, the efforts of our quarantine team resulted in more than 45 000 tonnes of quarantine-risk material being intercepted in the past financial year.

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Supporting infrastructure DAFWA has reached the practical completion stage of establishing water and power infrastructure in the Gascoyne irrigation area as part of the Gascoyne Food Bowl Initiative. This included the construction of a 25km collector main in the northern borefield to deliver water from 35 new bores and four sand spears (see p. 52). Also in the north of the state, the Pilbara Hinterland Agricultural Development Initiative successfully delivered the Woodie Woodie pilot site research program, a centre-pivot irrigation system that uses surplus dewater from an adjacent mine site.

The Woodie Woodie irrigation trial site at Warrawagine Station near Marble Bar

Department of Agriculture and Food, Western Australia | Final report 2017 Contents Overview Performance Significant issues Disclosures and compliance Appendix 52 Project provides pipeline to horticulture growth The groundworks, which included • installing four sand spears Our department is creating developing 35 production bores to extract water from the a more exciting future for in the new northern borefield river sands when conditions Carnarvon’s horticulture industry to access fresh-water aquifers, are conducive, and also to after completing the infrastructure has created the opportunity to monitor the water stored in phase of the $25m Gascoyne open up an additional 400ha the sands at any given time In focus Food Bowl Initiative. of land suitable for horticultural • investigating the potential development. for a future extension to the Other work included: northern borefield. • installing 30km of high- The identified area of just over 400ha suitable for horticulture The expansion of voltage power line to service the new and existing has now been included in the the land and water northern borefield, reducing Carnarvon Town Planning Scheme and approved by the will allow growers the cost of water extraction by more than 30% Western Australian Planning “ to capture new Commission. domestic and • surveying the Gascoyne River and surrounds by air The longer-term objective is to export market to gain a much-improved increase the annual gross value opportunities.” understanding of the of production of Carnarvon’s horticultural industry by about – Chris Collins, Chair aquifers, resulting in a 35% or $30 million. Gascoyne Water significant increase in drilling success rate and an increase Cooperative in flow rate from production wells • installing 25km of collector main pipeline capable of delivering irrigation water at 400 litres per second Test drilling for production bores as part of the Gascoyne Food Bowl Initiative

Department of Agriculture and Food, Western Australia | Final report 2017 Contents Overview Performance Significant issues Disclosures and compliance Appendix 53

Focused on business growth Significant issues impacting the agency

New Doppler radar at Newdegate

Department of Agriculture and Food, Western Australia | Final report 2017 Contents Overview Performance Significant issues Disclosures and compliance Appendix 54

Current and emerging issues and trends A range of significant issues and forces influenced our efforts in growing Growing worldwide demand for food and protecting the WA agrifood sector in 2016/17. Around the world, hundreds of millions of people, particularly in Asia, We focused our efforts on maximising the value we can deliver to are rising to middle-class status. This means people are eating more businesses and industries within the sector using available resources. and have more money to spend on quality food products. The rising demand provides WA’s agrifood sector with opportunities to expand. DAFWA supports productivity increases and the expansion of markets and trade so the sector can take advantage of these potential opportunities. Most fundamentally, we released key research reports highlighting opportunities available to WA businesses, including the Investment Ready: WA Agribusiness report, which identified options for agrifood businesses to attract additional capital to grow. We also established the Western Australian Premium Food Centre in Manjimup to identify markets for premium agrifood products and assist businesses statewide to upscale and coordinate production and promotion of high-value, low-input products. Additionally, we funded six in-market development officers in China, Indonesia, India, Singapore and the Middle East to help WA exporters access new markets and develop premium products to meet consumer needs. Project Officer Amelia de Groot, Food Industry Innovation Project Manager Kim Antonio and Manager Patricia Elphinstone at the new Premium Food Centre in Manjimup

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Science and innovation We also provided support following unseasonal widespread rainfall across the south coast and Great Southern in January and February Science, technology and innovation in agriculture is pivotal to our 2017 that damaged agricultural land. We set up an incident response success in increasingly competitive domestic and international markets. and worked with local governments in the affected areas and other In 2016/17 we continued to deliver highly targeted, world-class R&D government departments to provide support to affected landholders. to accelerate the growth of the sector and economy, with key partners Our staff carried out flood impact assessments, which formed an such as the GRDC, Meat & Livestock Australia and Horticulture integral part of the case to the Commonwealth to provide Western Innovation Australia Ltd. Australia Natural Disaster Relief and Recovery Arrangements This included working with an international consortium to complete the (WANDRRA) funding to affected producers. We also set up a hotline map of the barley genome to accelerate the development of new and and hosted a dedicated email and flood and cyclone recovery webpage improved barley varieties (see p. 49). We also worked with Japanese to allow landholders to report damage and provide information to help scientists and WA universities to crack the genome sequence of the them recover. subterranean clover, which will revolutionise the development of new At the other end of the scale, we set up an incident response in late and improved forage legumes, ultimately leading to better livestock June to coordinate support to landholders affected by expected below- productivity. average rainfall during the 2017 growing season. By 30 June, we had Beyond the farm, we continued to complement our production research established an incident response team, including technical specialists, with a growing focus on value-chain analytics and business and value and set up a dedicated resources webpage, including agronomic, chain development. livestock and wellbeing information.

Changing climate and variable weather

WA’s changing climate is elevating the frequency and severity of extreme weather such as frost, floods and bushfires. Technology and agricultural production systems designed to anticipate, prepare for and Focused on business growth respond to these changes are essential for a growing agrifood sector.

During 2016/17, we installed three Doppler weather radars — which offer real-time information on weather systems and rainfall intensity — in the Wheatbelt to help farm businesses to make more informed decisions (see p. 35).

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Animal welfare Our department has also faced a number of operational challenges unique to our business. A number of biosecurity incidents during The demands on our department in effectively administering the 2016/17 have threatened the productivity, sustainability and Animal Welfare Act 2002 have steadily increased since we took over competitiveness of WA’s agrifood sector. As a result, significant responsibility in 2011. resources were reprioritised within the department to address these incidents, impacting our delivery in other business areas. During the year, we appointed an Animal Welfare Director at a time when animal welfare regulation in WA was undergoing significant The caretaker period immediately before the 2017 election ensured change following key recommendations of the 2015 Animal Welfare no major policy or funding decisions were made. The subsequent Review. machinery of government changes, including the amalgamation of DAFWA into DPIRD, has required a significant commitment of The director has taken the lead on some critical initiatives, such as additional resources to support planning and implementation activities. a review of the Animal Welfare Act 2002, implementation of national welfare standards and guidelines for livestock, and the development of Nonetheless, and as supported by our 2016/17 KPI results, our a state animal welfare strategy and policy, and inspector governance department has successfully managed these challenges while frameworks. delivering its services and functions to industry and government.

We are also building our animal welfare compliance team and focusing on improving community and industry awareness and engagement. Changes in government/department amalgamation Tightening finances and resources Following the election of the new state government in March 2017 and its announcement of public sector reforms, we have undertaken Reduced resources and funding as a result of the state government’s substantial work to prepare for our amalgamation into DPIRD, with challenge in paying down debt, and a difficult economic environment, key DAFWA staff joining the DPIRD Project Management Office to has placed increased pressure on agencies to deliver their services help determine the roles, structure, functions and systems required. and functions more efficiently. While not alone, responding to this This work will continue throughout 2017/18 as we fully integrate our environment has proved challenging for our department, which resources and activities with the other amalgamating agencies. has been subject to state government savings measures that are considered above the public sector’s average.

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The new department will continue to have a strong focus on agriculture Threats from pests, weeds and diseases and food, with the agrifood sector’s importance highlighted by the Premier hosting key agribusiness leaders in June 2017 as part of his The profitability of the agrifood sector relies on our state’s freedom from Industry Engagement Consortia series. Consortium members confirmed many of the pests and diseases found elsewhere in the world, including the growth opportunities facing the sector, and stressed the importance other states of Australia. This is a result of our isolation and stringent of a strong partnership between industry and government to be able to biosecurity measures. capture those opportunities. The detailed findings of that meeting will We continued to allocate significant resources to biosecurity, including be a major input into future planning in DPIRD. through our robust quarantine and border operations (Quarantine WA) at targeted road checkpoints, airports, train stations and ports Reducing red tape to increase competitiveness throughout WA. One example was appointing two new detector dogs to sniff out quarantine risk material at Perth Domestic Airport. Removing restrictions that make it difficult for industry to grow and take advantage of market opportunities is important, especially in the face of Trade and travel continued to increase with 122 306 vehicles, 2 144 464 increased competition from low-cost producing countries. airline passengers, 175 803 lines of imported produce and seed, and 11 493 head of imported livestock inspected. Our Regulatory Burden Reduction project taskforce continued to explore opportunities to reduce barriers for business to drive economic We seized 45 384kg of biosecurity risk material in 2016/17 (including growth. This included drafting regulatory changes to aerial spraying 4086kg of honey/apiary products), and a further 8283kg of produce legislation aimed at removing onerous administrative requirements for was voluntarily dropped into amnesty bins at Perth Domestic Airport. aircraft pilots and spraying companies. Our inspection services resulted in 85 significant intercepts of pests, including coffee bean weevil, bulb mite and sweet potato weevil. The introduction of DAFWA’s online grant management system, SmartyGrants, has also generated significant time-savings. Processing Prevention and eradication are not always possible and so we also applications under declared WANDRRA events allows rural businesses boosted our emergency response capabilities. This included putting to return to productivity faster after times of crisis. nearly 140 staff through accredited emergency response training; and setting up an emergency operations centre at our South Perth We assisted the state government with the deregulation of the potato headquarters (on the back of hosting Exercise APOLLO — a cross- industry, overseeing legal, financial and human resource matters agency emergency response scenario — in May 2016). related to the closure of the Potato Marketing Corporation. This removed a 70-year restriction for growers, providing them with greater The skills and facilities were put to good use during our responses choice and flexibility to pursue higher-value markets and value-adding to five biosecurity threats over the year, including the first discovery opportunities. of tomato potato psyllid (TPP) in Australia, to minimise the impact on industry and the community (see p. 58).

Department of Agriculture and Food, Western Australia | Final report 2017 Contents Overview Performance Significant issues Disclosures and compliance Appendix 58 Taking the lead on tackling exotic plant pest

The tomato potato psyllid involved the state’s horticulture screening test of potato tubers (TPP) may be small in size industries and community. for the presence of CLso. Some but has the potential to inflict 33 100 tubers, equating to TPP attacks a range of vegetable enormous damage to horticultural 6.6 tonnes of potatoes, have crops, including tomato, industries. been tested to date with no eggplant, capsicum, chilli, detection of CLso. After the plant pest was detected tamarillo and sweet potato, and In focus on commercial and residential can significantly affect plant A quarantine area notice was also properties in WA in February 2017 production. declared under the Biosecurity — for the first time in Australia It can also carry the bacterium and Agriculture Management Act — we set up and led a national 2007. biosecurity response that also Candidatus Liberibacter solanacearum (CLso), which During the response, 1427 is associated with the potato properties across WA were disease ‘zebra chip’. surveyed; 9000 sticky traps Our incident response involved were set up to capture TPP around 230 staff (nearly a for identification and testing; quarter of DAFWA employees), information was provided to including many who had assist producers with on-farm received accredited emergency biosecurity; and interstate trade management training under the movement restrictions were Boosting Biosecurity Defences put in place to protect other project, and activated our new jurisdictions. emergency control centre at By 30 June 2017, we had moved South Perth. from an incident response Forward command posts were to developing a transition to Above: Close-up of TPP on a leaf established in Albany, Manjimup management plan following a Left: Plant Biosecurity Technical Officer and Carnarvon; and an annex national decision that it is not David Cousins collects TPP samples was established at our Bunbury technically feasible to eradicate office to undertake the initial TPP in WA.

Department of Agriculture and Food, Western Australia | Final report 2017 Contents Overview Performance Significant issues Disclosures and compliance Appendix 59

Focused on business growth Disclosures and legal compliance

DAFWA manages the Sheep Industry Business Innovation (SIBI) project

Department of Agriculture and Food, Western Australia | Final report 2017 Contents Overview Performance Significant issues Disclosures and compliance Appendix 60

Financial statements

Certification of financial statements For the year ended 30 June 2017 The accompanying financial statements of the Department of Agriculture and Food, Western Australia have been prepared in compliance with the provisions of the Financial Management Act 2006 from proper accounts and records to present fairly the financial transactions for the financial year ended 30 June 2017 and the financial position as at 30 June 2017. At the date of signing, we are not aware of any circumstances which would render any particulars included in the financial statements misleading or inaccurate.

Mandy Taylor Reporting Officer 15 August 2017

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Department of Agriculture and Food, Western Australia | Final report 2017 Contents Overview Performance Significant issues Disclosures and compliance Appendix 62

Department of Agriculture and Food, Western Australia | Final report 2017 Contents Overview Performance Significant issues Disclosures and compliance Appendix 63

Department of Agriculture and Food, Western Australia | Final report 2017 Contents Overview Performance Significant issues Disclosures and compliance Appendix 64

Department of Agriculture and Food, Western Australia | Final report 2017 Contents Overview Performance Significant issues Disclosures and compliance Appendix 65

Department of Agriculture and Food, Western Australia | Final report 2017 Contents Overview Performance Significant issues Disclosures and compliance Appendix 66

Statement of comprehensive income for the year ended 30 June 2017 2017 2016 Note $’000 $’000 Cost of services Expenses Employee benefits expense 6 110,315 108,710 Supplies and services 8 43,953 61,165 Depreciation and amortisation expense 9 7,925 11,403 Share of loss in joint venture entities using the equity method 2,776 6,221 Other expenses 10 6,891 1,571 Grants and subsidies paid 11 27,305 19,114 Loss on disposal of non-current assets 17 1,240 - Total cost of services 200,405 208,184 Income Revenue User charges and fees 13 13,067 11,361 Commonwealth grants and contributions 14 3,389 3,530 Grants and subsidies received 15 20,782 26,283 Interest revenue 960 661 Gain on disposal of non-current assets 17 - 16 Other revenue 16 11,328 12,658 Total revenue 49,526 54,509 Total income other than income from state government 49,526 54,509 Net cost of services 150,879 153,675 Income from state government 18 Service appropriations 116,535 121,924 Resources received free of charge 626 965 Royalties for Regions Fund 46,478 36,624 Total Income from state government 163,639 159,513 Surplus for the period 12,760 5,838 Other comprehensive income Items not subsequently reclassified to net cost of services Changes in asset revaluation surplus (10,412) 982 Gains/(losses) recognised directly in equity - 19 Total other comprehensive income 33 (10,412) 1,001 Total comprehensive income for the period 2,348 6,839 The Statement of comprehensive income should be read in conjunction with the accompanying notes. See also the ‘Schedule of income and expenses by service’.

Department of Agriculture and Food, Western Australia | Final report 2017 Contents Overview Performance Significant issues Disclosures and compliance Appendix 67

Statement of financial position as at 30 June 2017 2017 2016 Note Assets $’000 $’000 Current assets Cash and cash equivalents 19 2,542 10,310 Restricted cash and cash equivalents 20 68,182 64,953 Biological assets 21 1,151 1,231 Agricultural produce 171 145 Inventories 22 633 573 Receivables 23 4,004 5,279 Amounts receivable for services 24 2,589 3,975 Assets classified as held for distribution to owners 26 59,711 - Other current assets 25 1,160 1,779 Total current assets 140,143 88,245 Non-current assets Restricted cash and cash equivalents 20 245 - Amounts receivable for services 24 72,897 65,660 Other non-current assets 25 7,423 22,648 Assets classified as held for distribution to owners 26 15,470 2,749 Investments accounted for using the equity method 27 11,669 9,451 Property, plant and equipment 28 153,080 208,233 Intangible assets 30 4,297 2,836 Total non-current assets 265,081 311,577 Total assets 405,224 399,822 Liabilities Current liabilities Payables 31 8,609 6,100 Provisions 32 23,033 25,741 Total current liabilities 31,642 31,841 Non-current liabilities Provisions 32 4,433 4,345 Total non-current liabilities 4,433 4,345 Total liabilities 36,075 36,186 Net assets 369,149 363,636 Equity Contributed equity 82,310 79,145 Reserves 225,192 235,604 Accumulated surplus 61,647 48,887 Total equity 33 369,149 363,636

The Statement of financial position should be read in conjunction with the accompanying notes. See also the ‘Schedule of assets and liabilities by service’.

Department of Agriculture and Food, Western Australia | Final report 2017 Contents Overview Performance Significant issues Disclosures and compliance Appendix 68

Statement of changes in equity for the year ended 30 June 2017

Accumulated Contributed Reserves surplus/ Total equity Note equity deficit $’000 $’000 $’000 $’000 Balance at 1 July 2015 33 74,986 234,622 43,030 352,638 Surplus/(deficit) for the period - - 5,838 5,838 Other comprehensive income - 982 19 1,001 Total comprehensive income for the period - 982 5,857 6,839 Transactions with owners in their capacity as owners: Capital appropriations 6,006 - - 6,006 Other contributions from owners 914 - - 914 Distribution to owners (2,761) - - ( 2,761) Total 4,159 - - 4,159 Balance at 30 June 2016 79,145 235,604 48,887 363,636

Balance at 1 July 2016 79,145 235,604 48,887 363,636 Surplus/(deficit) for the period 12,760 12,760 Other comprehensive income - (10,412) - (10,412)

Total comprehensive income for the period - (10,412) 12,760 2,348 Transactions with owners in their capacity as owners: Capital appropriations 3,493 - - 3,493 Other contributions from owners 182 - - 182 Distribution to owners (510) - - (510) Total 3,165 - - 3,165 Balance at 30 June 2017 33 82,310 225,192 61,647 369,149

The Statement of changes in equity should be read in conjunction with the accompanying notes.

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Statement of cash flows for the year ended 30 June 2017 2017 2016 Note $’000 $’000 Cash flow from state government Service appropriations 106,709 113,468 Capital contributions 3,675 6,006 Holding account drawdown 3,975 3,675 Royalties for Regions Fund 46,478 36,624 Net cash provided by state government 160,837 159,773 Utilised as follows: Cash flows from operating activities Payments Employee benefits (111,070) (117,651) Supplies and services (53,597) (64,797) GST payments on purchases (8,043) (8,871) GST payments to taxation authority (253) (177) Other payments (5,298) (345) Grants and subsidies (27,173) (19,114) Receipts User charges and fees 12,958 13,410 Commonwealth grants and contributions 3,257 3,530 Interest received 977 1,042 GST receipts on sales 3,009 3,366 GST receipts from taxation authority 6,585 3,939 Other receipts 32,504 38,405 Net cash used in operating activities 34 (146,144) (147,263) Cash flows from investing activities Payments Investment in joint ventures (4,994) (5,491) Purchase of non-current assets (13,995) (8,222) Receipts Proceeds from sale of non-current physical assets 2 665 Net cash used in investing activities (18,987) (13,048) Net (decrease)/increase in cash and cash equivalents (4,294) (538) Cash and cash equivalents at the beginning of period 75,263 75,801 Cash and cash equivalents at the end of period 34 70,969 75,263

The Statement of cash flows should be read in conjunction with the accompanying notes.

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Schedule of income and expenses by service for the year ended 30 June 2017

Market Productivity Business A business development, Productive Biosecurity and improvement and development and environment for Total investment and natural resources product integrity innovation promotion growth market access 2017 2017 2017 2017 2017 2017 2017 Cost of services $’000 $’000 $’000 $’000 $’000 $’000 $’000 Expenses Employee benefits expense 10,866 20,356 7,940 13,425 38,803 18,925 110,315 Supplies and services 7,416 7,258 4,949 (4,564) 17,940 10,954 43,953 Depreciation and amortisation expense 868 1,120 605 1,003 2,600 1,729 7,925 Share of loss in joint venture entities using the equity method 926 - 848 - - 1,002 2,776 Other expenses 633 3,409 873 397 1,532 47 6,891 Grants and subsidies paid 3,471 3,886 766 1,395 2,582 15,205 27,305 Loss on disposal of non-current assets 123 283 99 164 340 231 1,240 Total cost of services 24,303 36,312 16,080 11,820 63,797 48,093 200,405

Income Revenue User charges and fees 1,471 1,251 280 1,115 7,017 1,933 13,067 Commonwealth grants and contributions 46 169 - 667 1,469 1,038 3,389 Grants and subsidies received 1,394 11,079 1,839 3,037 2,122 1,311 20,782 Interest revenue 185 165 160 106 138 206 960 Gain on disposal of non-current assets ------Other revenue 1,137 2,440 972 1,269 3,118 2,392 11,328 Total revenue 4,233 15,104 3,251 6,194 13,864 6,880 49,526 Total income other than income from state government 4,233 15,104 3,251 6,194 13,864 6,880 49,526 Net cost of services 20,070 21,208 12,829 5,626 49,933 41,213 150,879

Income from state government Service appropriation 12,579 16,221 8,767 15,069 38,381 25,518 116,535 Resources received free of charge 69 88 48 79 205 137 626 Royalties for Regions Fund 7,623 5,842 3,036 3,990 7,374 18,613 46,478 Total income from state government 20,271 22,151 11,851 19,138 45,960 44,268 163,639 Surplus / (deficit) for the period 201 943 (978) 13,512 (3,973) 3,055 12,760

The Schedule of income and expenses by service should be read in conjunction with the accompanying notes.

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Schedule of income and expenses by service for the year ended 30 June 2017

Business & supply chain Transformational Resource risk Total development development management

2016 2016 2016 2016 Cost of services $’000 $’000 $’000 $’000 Expenses Employee benefits expense 46,507 18,087 44,116 108,710 Supplies and services 23,047 25,491 12,627 61,165 Depreciation and amortisation expense 4,817 2,827 3,759 11,403 Share of loss in joint venture entity using the equity method 4,977 622 622 6,221 Other expenses 799 270 502 1,571 Grants and subsidies paid 9,525 5,769 3,820 19,114 Loss on disposal of non-current assets - - - - Total cost of services 89,672 53,066 65,446 208,184

Income Revenue User charges and fees 2,863 639 7,859 11,361 Commonwealth grants and contributions 509 368 2,653 3,530 Grants and subsidies received 18,625 4,041 3,617 26,283 Interest revenue 229 218 214 661 Gain on disposal of non-current assets (2) 1 17 16 Other revenue 7,294 2,958 2,406 12,658 Total revenue 29,518 8,225 16,766 54,509 Total income other than income from state government 29,518 8,225 16,766 54,509 Net cost of services 60,154 44,841 48,680 153,675

Income from state government Service appropriation 50,160 22,338 49,426 121,924 Resources received free of charge 408 239 318 965 Royalties for Regions Fund 12,082 17,764 6,778 36,624 Total income from state government 62,650 40,341 56,522 159,513 Surplus for the period 2,496 (4,500) 7,842 5,838

The Schedule of income and expenses by service should be read in conjunction with the accompanying notes.

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Schedule of assets and liabilities by service as at 30 June 2017

Market Productivity Business Productive A business development, Biosecurity and improvement development natural environment for Total investment and product integrity and innovation and promotion resources growth market access 2017 2017 2017 2017 2017 2017 2017 $’000 $’000 $’000 $’000 $’000 $’000 $’000

Assets Current assets 9,705 55,723 5,000 20,861 35,474 13,380 140,143 Non-current assets 27,678 52,569 19,956 43,006 69,600 52,272 265,081 Total assets 37,383 108,292 24,956 63,867 105,074 65,652 405,224

Liabilities Current liabilities 3,475 1,726 2,359 7,260 10,099 6,723 31,642 Non-current liabilities 486 626 339 561 1,454 967 4,433 Total liabilities 3,961 2,352 2,698 7,821 11,553 7,690 36,075

Net assets 33,422 105,940 22,258 56,046 93,521 57,962 369,149

The Schedule of assets and liabilities by service should be read in conjunction with the accompanying notes.

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Schedule of assets and liabilities by service as at 30 June 2017

Business & supply Transformational Resource risk Total chain development development management 2016 2016 2016 2016 $’000 $’000 $’000 $’000

Assets Current assets 34,542 25,749 27,954 88,245 Non-current assets 121,963 90,915 98,699 311,577 Total assets 156,505 116,664 126,653 399,822

Liabilities Current liabilities 12,464 9,291 10,086 31,841 Non-current liabilities 1,702 1,267 1,376 4,345 Total liabilities 14,166 10,558 11,462 36,186

Net assets 142,339 106,106 115,191 363,636 The Schedule of assets and liabilities by service should be read in conjunction with the accompanying notes.

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Summary of consolidated account appropriations and income estimates for the year ended 30 June 2017

Estimate Actual Actual Actual Variance Variance 2017 2017 2017 2016 Delivery of services $’000 $’000 $’000 $’000 $’000 $’000 Item 65 Net amount appropriated to deliver services 114,669 114,408 (261) 114,408 120,307 (5,899) Amount authorised by Other Statutes – Biosecurity and Agriculture Management Act 2007 1,235 1,734 499 1,734 1,235 499 – Salaries & Allowances Act 1975 393 393 - 393 382 11 Total appropriations provided to deliver services 116,297 116,535 238 116,535 121,924 (5,389) Capital Item 137 Capital appropriations 301 301 - 301 4,877 (4,576)

Administered transactions Item 66 Amount provided for Administered Grants, Subsidies and Transfer Payments 1,600 1,600 - 1,600 1,600 - Total administered transactions 1,600 1,600 - 1,600 1,600 - Grand total 118,198 118,436 238 118,436 128,401 (9,965) Details of expenses by service Market development, investment and access(1) 26,469 24,303 (2,166) 24,303 25,873 (1,570) Productivity, improvement and innovation(1) 38,735 36,312 (2,423) 36,312 42,511 (6,199) Business development and promotion(1) 20,772 16,080 (4,692) 16,080 16,944 (864) Productive natural resources(1) 26,254 11,820 (14,434) 11,820 32,711 (20,891) Biosecurity and product integrity(1) 66,208 63,797 (2,411) 63,797 56,961 6,836 A business environment for growth(1) 40,595 48,093 7,498 48,093 33,184 14,909 Total cost of services 219,033 200,405 (18,628) 200,405 208,184 (7,779) Less total income 52,130 49,526 (2,604) 49,526 54,509 (4,983) Net cost of services 166,903 150,879 (16,024) 150,879 153,675 (2,796) Adjustments(2) (50,606) (34,344) 16,262 (34,344) (31,751) (2,593) Total appropriations provided to deliver services 116,297 116,535 238 116,535 121,924 (5,389) Capital expenditure Purchase of non-current assets 13,026 25,700 12,674 25,700 9,136 16,564 Adjustment for other funding sources (12,725) (25,399) (12,674) (25,399) (4,259) (21,140) Capital appropriations 301 301 - 301 4,877 (4,576) Detail of income estimates Income disclosed as administered income (refer note 49) 8,917 9,670 753 9,670 8,785 885 8,917 9,670 753 9,670 8,785 885 (1) 2016 comparatives for ‘Details of expenses by service’ have been reclassified to align with the six lines of service in 2017. (2) Adjustments are related to Royalties for Regions income and movements in cash balances and other accrual items such as receivables, payables and superannuation. Note 39 ’Explanatory statement’ provides details of any significant variations between estimates and actual results for 2017 and between the actual results for 2017 and 2016.

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Index of notes to the financial statements for the year ended 30 June 2017

Subject Policy Note Note title Subject Policy Note Note title General 1 Australian Accounting Standards Income 2(e) 13 User charges and fees General 2 Summary of significant accounting policies Income 14 Commonwealth grants and contributions General 2(a) General statement Income 15 Grants and subsidies received General 2(b) Basis of preparation Income 2(e) 16 Other revenue General 2(c) Reporting entity Income/expense 2(e) 17 Net gain/(loss) on disposal of non-current assets General 2(d) Contributed equity Income 2(e) 18 Income from state government Income 2(e) Income Asset 2(l) 19 Cash and cash equivalents Income 2(e) Revenue recognition Asset 2(l) 20 Restricted cash and cash equivalents Income 2(e) Sale of goods Asset 2(o) 21 Biological assets Income 2(e) Interest Asset 2(o) 22 Inventories Income 2(e) Service appropriations Asset 2(p) 23 Receivables Income 2(e) Net appropriation determination Asset 2(n) 24 Amounts receivable for services (holding account) Income 2(e) Grants, donations, gifts and other non-reciprocal contributions Asset 25 Other assets Income 2(e) Gains Asset 2(i) 26 Assets classified as held for distribution to owners Assets 2(f) Property, plant and equipment and infrastructure Asset 27 Investments accounted for using the equity method Assets 2(g) Intangible assets Asset 2(f) 28 Property, plant and equipment Assets 2(h) Impairment of assets Asset 29 Fair value measurements Assets 2(i) Assets classified as held for distribution to owners Asset 2(g) 30 Intangible assets Assets/liability 2(j) Leases Liability 2(q) 31 Payables Assets/liability 2(k) Financial instruments Liability 2(r) 32 Provisions Assets 2(l) Cash and cash equivalents Equity 2(d) 33 Equity Assets/liability 2(m) Accrued salaries Cash flow 34 Notes to the statement of cash flows Assets 2(n) Amounts receivable for services (holding account) Expense 35 Services provided free of charge Assets 2(o) Inventories and biological assets General 36 Commitments Assets 2(p) Receivables General 37 Contingent liabilities and contingent assets Liability 2(q) Payables General 38 Events occurring after the balance sheet date Liability 2(r) Provisions General 39 Explanatory statement Expense 2(s) Superannuation expense General 40 Remuneration of auditors Revenue/asset 2(t) 18 Resources received free of charge or for nominal cost General 2(c) 41 Related bodies General 2(u) Joint arrangements General 42 Affiliated bodies General 2(v) Comparative figures General 2(u) 43 Jointly controlled assets General 2(w) Memorandum of understanding General 2(k) 44 Financial instruments General 3 Judgements made by management in applying accounting policies General 2(k) 44(a) Financial risk management objectives and policies General 4 Key sources of estimation uncertainty General 2(k) 44(b) Categories of financial instruments General 5 Disclosure of changes in accounting policy and estimates General 2(k) 44(c) Financial instrument disclosures General 5 Initial application of an Australian Accounting Standard General 45 Supplementary financial information General 5 Future Impact of Australian Accounting Standards not yet operative External 46 Indian Ocean Territories Service Level Agreement Expense 6 Employee benefits expense External 47 Special purpose accounts Expense 7 Compensation of key management personnel External 2(e) 48 Disclosure of administered income and expenses by service Expense 8 Supplies and services External 49 Explanatory statement for administered items Expense 9 Depreciation and amortisation expense External 50 Disclosure of administered assets and liabilities by service Expense 10 Other expenses Expense 11 Grants and subsidies paid General 12 Related party transactions

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Notes to the financial statements for the year ended 30 June 2017 1 Australian Accounting Standards General The financial statements of the Department of Agriculture and Food, Western Australia (the department) for the year ended 30 June 2017 have been prepared in accordance with Australian Accounting Standards. The term ‘Australian Accounting Standards’ includes standards and interpretations issued by the Australian Accounting Standard Board (AASB). The department has adopted any applicable new and revised Australian Accounting Standards from their operative dates.

Early adoption of standards The department cannot early adopt an Australian Accounting Standard unless specifically permitted by Treasurer’s Instruction 1101 Application of Australian Accounting Standards and Other Pronouncements. There has been no early adoption of any Australian Accounting Standard that has been issued or amended (but not operative) by the department for the annual reporting period ended 30 June 2017.

2 Summary of significant accounting policies (a) General statement The department is a not-for-profit reporting entity that prepares general purpose financial statements in accordance with the Australian Accounting Standards, the Framework, Statements of Accounting Concepts and other authoritative pronouncements of the AASB as applied by the Treasurer’s Instructions. Several of these are modified by the Treasurer’s Instructions to vary application, disclosure, format and wording. The Financial Management Act 2006 and the Treasurer’s Instructions impose legislative provisions that govern the preparation of financial statements and take precedence over Australian Accounting Standards, the Framework, Statements of Accounting Concepts and other authoritative pronouncements of the AASB. Where modification is required and has had a material or significant financial effect upon the reported results, details of that modification and the resulting financial effect are disclosed in the notes to the financial statements.

(b) Basis of preparation The financial statements have been prepared on the accrual basis of accounting using the historical cost convention, except for land, buildings and biological assets which have been measured at fair value. The accounting policies adopted in the preparation of the financial statements have been consistently applied throughout all periods presented unless otherwise stated.

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Notes to the financial statements for the year ended 30 June 2017

As disclosed in Note 38, on 1 July 2017 the departments of Agriculture and Food, Regional Development and Fisheries and the nine Regional Development Commissions were amalgamated to form the new Department of Primary Industries and Regional Development. The financial statements have been prepared on a going concern basis as the net assets of the department have been transferred to the new department that will continue to provide the department’s services. The financial statements are presented in Australian dollars and all values are rounded to the nearest thousand dollars ($’000). Note 3 ‘Judgements made by management in applying accounting policies’ discloses judgements that have been made in the process of applying the department’s accounting policies resulting in the most significant effect on amounts recognised in the financial statements. Note 4 ‘Key sources of estimation uncertainty’ discloses key assumptions made concerning the future, and other key sources of estimation uncertainty at the end of the reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.

(c) Reporting entity The reporting entity comprises the department and bodies listed at note 41 ‘Related bodies’.

Mission The department’s mission is to work with our partners to develop the WA agriculture and food sector; and to effectively manage risks to the natural and biological resources on which it relies. The department is predominantly funded by Parliamentary appropriations. It provides some services on a fee-for-service basis. The fees charged are determined by prevailing market forces. The financial statements encompass all funds through which the department controls resources to carry on its functions.

Services The department provides the following services: – Service 1: Market development, investment and market access – Service 2: Productivity improvement and innovation – Service 3: Business development and promotion – Service 4: Productive natural resources – Service 5: Biosecurity and product integrity – Service 6: A business environment for growth

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Notes to the financial statements for the year ended 30 June 2017

The department administers assets, liabilities, income and expenses on behalf of government which are not controlled by, nor integral to, the function of the department. These administered balances and transactions are not recognised in the principal financial statements of the department but schedules are prepared using the same basis as the financial statements and are presented at note 48 ‘Disclosure of administered income and expenses by service’ and note 50 ‘Disclosure of administered assets and liabilities by service’.

(d) Contributed equity AASB Interpretation 1038 Contributions by owners made to wholly-owned public sector entities requires transfers in the nature of equity contributions, other than as a result of a restructure of administrative arrangements, to be designated by the government (the owner) as contributions by owners (at the time of, or prior to transfer) before such transfers can be recognised as equity contributions. Capital appropriations have been designated as contributions by owners according to Treasurer’s Instruction 955 Contribution by owners made to wholly owned public sector entities and have been credited directly to Contributed Equity. The transfers of net assets to/from other agencies, other than as a result of a restructure of administrative arrangements, are designated as contributions by owners where the transfers are non-discretionary and non-reciprocal. See note 33 ‘Equity’.

(e) Income

Revenue recognition Revenue is recognised and measured at the fair value of consideration received or receivable. Revenue is recognised for the major business activities as follows:

Sale of goods Revenue is recognised from the sale of goods and disposal of other assets when the significant risks and rewards of ownership transfer to the purchaser and can be measured reliably.

Interest Revenue is recognised as the interest accrues.

Service appropriations Service appropriations are recognised as revenues at fair value in the period in which the department gains control of the appropriated funds. The department gains control of appropriated funds at the time those funds are deposited to the department’s bank account or credited to the ‘Amounts receivable for services’ (holding account) held at Treasury. See note 18 ‘Income from state government’ for further information.

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Notes to the financial statements for the year ended 30 June 2017

Net appropriation determination The Treasurer may make a determination providing for prescribed receipts to be retained for services under the control of the department. In accordance with the determination specified in the 2016/17 Budget Statements, the department retained $96.6m in 2017 ($93.1m in 2016) from the following: – proceeds from fees and charges – sale of goods – Commonwealth – specific purpose grants and contributions – one-off gains with a value of less than $10,000 derived from the sale of property other than real property – revenues from services provided through the establishment of memorandum of understandings – other departmental revenue.

Grants, donations, gifts and other non-reciprocal contributions Revenue is recognised at fair value when the department obtains control over the assets comprising the contributions, usually when cash is received. Other non-reciprocal contributions that are not contributions by owners are recognised at their fair value. Contributions of services are only recognised when a fair value can be reliably determined and the services would be purchased if not donated. Royalties for Regions funds are recognised as revenue at fair value in the period in which the department obtains control over the funds. The department obtains control of the funds at the time the funds are deposited into the department’s bank account.

Gains Realised or unrealised gains are usually recognised on a net basis. These include gains arising on the disposal of non-current assets and some revaluations of non-current assets.

(f) Property, plant and equipment and infrastructure

Capitalisation/expensing of assets Items of property, plant and equipment and infrastructure costing $5,000 or more are recognised as assets and the cost of utilising assets is expensed (depreciated) over their useful lives. Items of property, plant and equipment and infrastructure costing less than $5,000 are immediately expensed direct to the Statement of comprehensive income (other than where they form part of a group of similar items which are significant in total).

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Notes to the financial statements for the year ended 30 June 2017

Initial recognition and measurement Property, plant and equipment and infrastructure are initially recognised at cost. For items of property, plant and equipment and infrastructure acquired at no cost or for nominal consideration, the cost is their fair value at the date of acquisition.

Subsequent measurement Subsequent to initial recognition as an asset, the revaluation model is used for the measurement of land and buildings, and historical cost for all other property, plant and equipment and infrastructure. Land and buildings are carried at fair value less accumulated depreciation (buildings only) and accumulated impairment losses. All other items of property, plant and equipment and infrastructure are stated at historical cost less accumulated depreciation and accumulated impairment losses. Where market-based evidence is available, the fair value of land and buildings is determined on the basis of current market buying values determined by reference to recent market transactions. In the absence of market-based evidence, fair value of land and buildings is determined on the basis of existing use. This normally applies where buildings are specialised or where land use is restricted. Where the fair value of buildings is determined on the depreciated replacement cost basis, the accumulated depreciation is restated proportionately with the change in the gross carrying amount of the asset. Fair value for existing use assets is determined by reference to the cost of replacing the remaining future economic benefits embodied in the asset, i.e. the depreciated replacement cost. Fair value for restricted use land is determined by comparison with market evidence for land with similar appropriate utility (high restricted use land) or market value of comparable unrestricted land (low restricted use land). When buildings are revalued, the accumulated depreciation is eliminated against the gross carrying amount of the asset and the net amount restated to the revalued amount. Land and buildings are independently valued annually by Landgate and recognised annually to ensure that the carrying amount does not differ materially from the asset’s fair value at the end of the reporting period. The most significant assumptions in estimating fair value are made in assessing whether to apply the existing use basis to assets and in determining estimated useful life. Professional judgement by the valuer is required where the evidence does not provide a clear distinction between market type assets and existing use assets.

Derecognition Upon disposal or derecognition of an item of land and buildings, any revaluation surplus relating to that asset is retained in the asset revaluation surplus.

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Notes to the financial statements for the year ended 30 June 2017

Asset revaluation surplus The asset revaluation surplus is used to record increments and decrements on the revaluation of non-current assets as described in note 28 ‘Property, plant and equipment’.

Depreciation All non-current assets having a limited useful life are systematically depreciated over their estimated useful lives in a manner that reflects the consumption of their future economic benefits. Depreciation is calculated using the straight line method, using rates which are reviewed annually. Estimated useful lives for each class of depreciable asset are: Asset category Life (years) Buildings 20 to 40 and/or estimated useful life Computer and communications equipment 3 to 5 Office and other equipment 5 to 10 Plant and machinery 5 to 20 Vehicles and buses 5 to 10 Infrastructure 20 to 50 Land is not depreciated.

(g) Intangible assets

Capitalisation/expensing of assets Acquisitions of intangible assets costing $5,000 or more and internally generated intangible assets costing $50,000 or more are capitalised. The cost of utilising the assets is expensed (amortised) over their useful lives. Costs incurred below these thresholds are immediately expensed directly to profit or loss in the Statement of comprehensive income. All acquired and internally developed intangible assets are initially recognised at cost. For assets acquired at no cost or for nominal cost, the cost is their fair value at the date of acquisition. Subsequent to initial recognition, the asset is carried at cost less any accumulated amortisation and accumulated impairment losses. Amortisation for intangible assets with finite useful lives is calculated for the period of the expected benefit (estimated useful life which is reviewed annually) on the straight line basis. All intangible assets controlled by the department have a finite useful life and zero residual value.

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Notes to the financial statements for the year ended 30 June 2017

The expected useful lives for each class of intangible asset are: Asset category Life (years) Licences up to 10 Development costs 3 to 5 (a) Software 3 to 5 Website costs 3 to 5 (a) Software that is not integral to the operation of any related hardware.

Licences Licences have a finite useful life and are carried at cost less accumulated amortisation and accumulated impairment losses.

Development costs Research costs are expensed as incurred. Development costs incurred for an individual project are carried forward when the future economic benefits can reasonably be regarded as assured and the total project costs are likely to exceed $50,000. Other development costs are expensed as incurred.

Computer software Software that is an integral part of the related hardware is treated as property, plant and equipment. Software that is not an integral part of the related hardware is treated as an intangible asset. Software costing less than $5,000 is expensed in the year of acquisition.

Website costs Website costs are charged as expenses when they are incurred unless they relate to the acquisition or development of an asset when they may be capitalised and amortised. Generally, costs in relation to feasibility studies during the planning phase of a website, and ongoing costs of maintenance during the operating phase are expensed. Costs incurred in building or enhancing a website, to the extent that they represent probable future economic benefits that can be reliably measured, are capitalised.

(h) Impairment of assets Property, plant, equipment and infrastructure are tested for any indication of impairment at the end of each reporting period. Where there is an indication of impairment, the recoverable amount is estimated. Where the recoverable amount is less than the carrying amount, the asset is considered impaired and is written down to the recoverable amount and an impairment loss is recognised. As the department is a not-for-profit entity, unless an asset has been identified as a surplus asset, the recoverable amount is the higher of an asset’s fair value less costs to sell and depreciated replacement cost.

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Notes to the financial statements for the year ended 30 June 2017

The risk of impairment is generally limited to circumstances where an asset’s depreciation is materially understated, where the replacement cost is falling or where there is a significant change in useful life. Each relevant class of assets is reviewed annually to verify that the accumulated depreciation/amortisation reflects the level of consumption or expiration of the asset’s future economic benefits and to evaluate any impairment risk from falling replacement costs. Intangible assets with an indefinite useful life and intangible assets not yet available for use are tested for impairment at the end of each reporting period irrespective of whether there is any indication of impairment. The recoverable amount of assets identified as surplus assets is the higher of fair value less costs to sell and the present value of future cash flows expected to be derived from the asset. Surplus assets carried at fair value have no risk of material impairment where fair value is determined by reference to market-based evidence. Where fair value is determined by reference to depreciated replacement cost, surplus assets are at risk of impairment and the recoverable amount is measured. Surplus assets at cost are tested for indications of impairment at the end of each reporting period.

(i) Assets classified as held for distribution to owners Assets held for distribution to owners are recognised at the lower of carrying amount and fair value less costs to sell, and are disclosed separately from other assets in the Statement of financial position. Assets classified as held for distribution to owners are not depreciated or amortised. All Crown land holdings are vested in the department by the government. The Department of Lands (DoL) is the only agency with the power to sell Crown land. The department transfers the Crown land and any attached buildings to DoL when the land becomes available for sale.

(j) Leases Operating leases are expensed on a straight line basis over the lease term as this represents the pattern of benefits derived from the leased properties.

(k) Financial instruments In addition to cash, the department has three categories of financial instrument: • Loans and receivables • Available for sale financial instruments • Financial liabilities measured at amortised costs

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Notes to the financial statements for the year ended 30 June 2017

Financial instruments have been disaggregated into the following classes: • Financial assets – Cash and cash equivalents – Restricted cash and cash equivalents – Receivables – Amounts receivable for services – Available for sale financial assets

• Financial liabilities – Payables Initial recognition and measurement of financial instruments is at fair value which normally equates to the transaction cost or the face value. Subsequent measurement is at amortised cost using the effective interest method, with the exception of available for sale financial assets which are measured at fair value with movements recognised in other comprehensive income. The fair value of short-term receivables and payables is the transaction cost or the face value because there is no interest rate applicable and subsequent measurement is not required as the effect of discounting is not material.

(l) Cash and cash equivalents For the purpose of the Statement of cash flows, cash and cash equivalent (and restricted cash and cash equivalent) assets comprise cash on hand and short-term deposits with original maturities of three months or less that are readily convertible to a known amount of cash and which are subject to insignificant risk of changes in value.

(m) Accrued salaries Accrued salaries (see note 31 ‘Payables’) represent the amount due to staff but unpaid at the end of the financial year. Accrued salaries are settled within a fortnight of the financial year end. The department considers the carrying amount of accrued salaries to be equivalent to its fair value. The accrued salaries suspense account (see note 20 ‘Restricted cash and cash equivalents’) consists of amounts paid annually, from departmental appropriations for salaries expense, into a Treasury suspense account over a period of 10 financial years to largely meet the additional cash outflow for employee salary payments every 11th financial year when 27 pay days occur instead of the normal 26. No interest is received on this account.

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Notes to the financial statements for the year ended 30 June 2017

(n) Amounts receivable for services (holding account) The department receives funding on an accrual basis. The appropriations are paid partly in cash and partly as an asset (holding account receivable). The accrued amount receivable is accessible on the emergence of the cash funding requirement to cover leave entitlements and asset replacement. See also note 18 ‘Income from state government’ and note 24 ‘Amounts receivable for services (holding account)’.

(o) Inventories and biological assets Inventories are measured at the lower of cost and net realisable value. The cost of inventory is based on the first-in first-out basis. Biological assets comprising livestock and field crops are valued at fair value less estimated point of sale costs and costs necessary to get them to market. A gain or loss on valuation is recognised in the Statement of comprehensive income. See note 21 ‘Biological assets’. Inventories not held for resale are measured at cost unless they are no longer required, in which case they are valued at net realisable value. See note 22 ‘Inventories’.

(p) Receivables Receivables are recognised at original invoice amount less an allowance for any uncollectible amounts (i.e. impairment). The collectability of receivables is reviewed on an ongoing basis and any receivables identified as uncollectible are written off against the allowance account. The allowance for uncollectible amounts (doubtful debts) is raised when there is objective evidence that the department will not be able to collect the debts. The carrying amount is equivalent to fair value as it is due for settlement within 30 days. See also note 44 ‘Financial instruments’ and note 23 ‘Receivables’.

(q) Payables Payables are recognised at the amounts payable when the department becomes obliged to make future payments as a result of a purchase of assets or services. The carrying amount is equivalent to fair value, as they are generally settled within 30 days. See also note 44 ‘Financial instruments’ and note 31 ‘Payables’.

(r) Provisions Provisions are liabilities of uncertain timing and amount and are recognised where there is a present legal or constructive obligation as a result of a past event and when the outflow of resources embodying economic benefits is probable and a reliable estimate can be made of the amount of the obligation. Provisions are reviewed at the end of each reporting period. See also note 32 ‘Provisions’.

(i) Provisions – Employee benefits All annual leave and long service leave provisions are in respect of employees’ services up to the end of the reporting period.

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Notes to the financial statements for the year ended 30 June 2017

Annual leave Annual leave is not expected to be settled wholly within 12 months after the end of the reporting period and is therefore considered to be ‘other long-term employee benefits’. The annual leave liability is recognised and measured at the present value of amounts expected to be paid when the liabilities are settled using the remuneration rate expected to apply at the time of settlement. When assessing expected future payments, consideration is given to expected future wage and salary levels including non-salary components such as employer superannuation contributions, as well as the experience of employee departures and periods of service. The expected future payments are discounted using market yields at the end of the reporting period on national government bonds with terms to maturity that match, as closely as possible, the estimated future cash outflows. The provision for annual leave is classified as a current liability as the department does not have an unconditional right to defer settlement of the liability for at least 12 months after the end of the reporting period.

Long service leave Long service leave is not expected to be settled wholly within 12 months after the end of the reporting period and is therefore recognised and measured at the present value of amounts expected to be paid when the liabilities are settled using the remuneration rate expected to apply at the time of settlement. When assessing expected future payments, consideration is given to expected future wage and salary levels, including non-salary components such as employer superannuation contributions, as well as the experience of employee departures and periods of service. The expected future payments are discounted using market yields at the end of the reporting period on national government bonds with terms to maturity that match, as closely as possible, the estimated future cash outflows. Unconditional long service leave provisions are classified as current liabilities as the department does not have an unconditional right to defer the settlement of the liability for at least 12 months after the end of the reporting period. Pre-conditional and conditional long service leave provisions are classified as non-current liabilities because the department has an unconditional right to defer the settlement of the liability until the employee has completed the requisite years of service.

Sick leave Liabilities for sick leave are recognised when it is probable that sick leave paid in the future will be greater than the entitlement that will accrue in the future. Past history indicates that on average, sick leave taken each reporting period is less than the entitlement accrued. This is expected to continue in future periods. Accordingly, it is unlikely that existing accumulated entitlements will be used by employees and no liability for unused sick leave entitlements is recognised. As sick leave is non vesting, an expense is recognised in the Statement of comprehensive income for this leave as it is taken.

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Notes to the financial statements for the year ended 30 June 2017

Deferred leave The provision for deferred leave relates to public service employees who have entered into an agreement to self-fund an additional 12 months’ leave in the fifth year of the agreement. The provision recognises the value of salary set aside for employees to be used in the fifth year. This liability is measured on the same basis as annual leave. Deferred leave is reported as a current provision as employees can leave the scheme at their discretion at any time.

Purchased leave The provision for purchased leave relates to public service employees who have entered into an agreement to self-fund up to an additional 10 weeks’ leave per calendar year. The provision recognises the value of salary set aside for employees and is measured at the nominal amounts expected to be paid when the liabilities are settled. This liability is measured on the same basis as annual leave.

Superannuation The Government Employees Superannuation Board (GESB) and other fund providers administer public sector superannuation arrangements in Western Australia in accordance with legislative requirements. Eligibility criteria for membership in particular schemes for public sector employees varies according to commencement and implementation dates. Eligible employees contribute to the Gold State Superannuation Scheme (GSS), a defined benefit lump sum scheme closed to new members since 1995. Employees commencing employment prior to 16 April 2007 who were not members of the GSS became non-contributory members of the West State Superannuation Scheme (WSS). Employees commencing employment on or after 16 April 2007 became members of the GESB Super Scheme (GESBS). From 30 March 2012, existing members of the WSS or GESBS and new employees became able to choose their preferred superannuation fund. The department makes concurrent contributions to GESB or other funds on behalf of employees in compliance with the Commonwealth Government’s Superannuation Guarantee (Administration) Act 1992. Contributions to these accumulation schemes extinguish the department’s liability for superannuation charges in respect of employees who are not members of the GSS Scheme. The pre-transfer benefit for employees who transferred to the GSS is a defined benefit scheme. These benefits are wholly unfunded and the liabilities for future payments are provided at the end of the reporting period. The liabilities under the GSS are calculated annually by actuaries using the projected unit credit method. The expected future payments are discounted to present value using market yields at the end of the reporting period on national government bonds with terms to maturity that match, as closely as possible, the estimated future cash outflows. The GSS, the WSS and the GESB, where the current service superannuation charge is paid by the department to the GESB, are defined contribution schemes. The liabilities for current service superannuation charges under the GWS, the WSS and the GESB schemes are extinguished by the concurrent payment of employer contributions to the GESB.

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Notes to the financial statements for the year ended 30 June 2017

The GSS is a defined benefit scheme for the purposes of employees and whole-of-government reporting. However, from an agency perspective, apart from the pre-transfer benefits, it is a defined contribution plan under AASB 119.

(ii) Provisions – Other

Employment on-costs Employment on-costs, including workers’ compensation insurance, are not employee benefits and are recognised separately as liabilities and expenses when the employment to which they relate has occurred. Employment on-costs are included as part of ‘Other expenses’ and are not included as part of the department’s ‘Employee benefits expense’. The related liability is included in ‘Employment on-costs provision’. See notes 10 ‘Other expenses’ and 32 ‘Provisions’.

(s) Superannuation expense The superannuation expense is recognised in the Statement of comprehensive income in profit or loss for defined contribution plans, including the concurrent payment of employer contributions to the GSS scheme, as and when the contributions fall due. For defined benefits plans (being the pre-transfer component of the GSS), changes in the defined benefit obligation are recognised in the Statement of comprehensive income either in profit or loss, or other comprehensive income as follows: Profit or loss: – current service cost – past service cost – interest cost Other comprehensive income: – actuarial gains and losses

(t) Resources received free of charge or for nominal cost Assets or services received free of charge or for nominal cost are recognised as income at the fair value of the assets and/or the fair value of those services that can be reliably measured and the department would otherwise pay for. A corresponding expense is recognised for services received. Receipts of assets are recognised in the Statement of financial position. Assets or services received from other state government agencies are separately disclosed under Income from state government in the Statement of comprehensive income.

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Notes to the financial statements for the year ended 30 June 2017

(u) Joint arrangements The department has interests in a number of joint arrangements, some of which are classified as joint operations and others as joint ventures. A joint operation is an arrangement in which the department has joint control, whereby the department has direct rights to its assets and obligations for its liabilities. The department recognises its share of any joint operation assets and liabilities to the extent of its interest (refer to note 43). A joint venture is an arrangement in which the department has joint control, whereby the department has rights to the net assets of the arrangement, rather than rights to its assets and obligations for its liabilities. The department recognises its investment in joint ventures using the equity method of accounting (refer to note 27). (v) Comparative figures Comparative figures are, where appropriate, reclassified to be comparable with the figures presented in the current financial year.

(w) Memorandum of understanding During the year, the department had a memorandum of understanding with the Agricultural Produce Commission and the Rural Business Development Corporation. The objective of these arrangements is to establish the types and standards of services to be provided, the basis for determining the level and the costs of services and responsibilities of the parties to the memorandum.

3 Judgements made by management in applying accounting policies In preparing these financial statements, management has made judgements, estimates and assumptions that affect the application of the department’s accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised prospectively. Information about critical judgements in applying accounting policies that have the most significant effect on the amounts recognised in the consolidated financial statements is included in the following notes: Note 27 and 43 – Classification of joint arrangements

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Notes to the financial statements for the year ended 30 June 2017

4 Key sources of estimation uncertainty Key estimates and assumptions concerning the future are based on historical experience and various other factors that have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities within the next financial year, and are detailed in the following notes: Note 37 – Contaminated sites Note 29 – Land and buildings measured at fair value

Measurement of fair values A number of the department’s accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assets and liabilities. Landgate provide valuation services for the department’s land and buildings. The department provides the remaining useful life and depreciated book value to Landgate to assist them in their calculation of Level 3 fair value. When measuring the fair value of an asset or a liability, the department uses market observable data as far as possible. Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows: • Level 1 – quoted prices (unadjusted) in active markets for identical assets or liabilities • Level 2 – inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices) • Level 3 – inputs for the asset or liability that are not based on observable market data (unobservable inputs) If the inputs used to measure the fair value of an asset or a liability might be categorised in different levels of the fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement. The department recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.

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Notes to the financial statements for the year ended 30 June 2017

5 Disclosure of changes in accounting policy and estimates Initial application of an Australian Accounting Standard The department has applied the following Australian Accounting Standards effective, or adopted, for annual reporting periods beginning on or after 1 July 2016 that impacted on the department.

AASB 1057 Application of Australian Accounting Standards This standard lists the application paragraphs for each other standard (and interpretation), grouped where they are the same. There is no financial impact.

AASB 2014-3 Amendments to Australian Accounting Standards—Accounting for Acquisitions of Interests in Joint Operations [AASB 1 and 11] The department establishes joint operations in pursuit of its objectives and does not routinely acquire interests in joint operations. Therefore, there is no financial impact on application of the standard.

AASB 2014-4 Amendments to Australian Accounting Standards—Clarification of Acceptable Methods of Depreciation and Amortisation [AASB 116 and 138] The adoption of this standard has no financial impact for the department as depreciation and amortisation is not determined by reference to revenue generation, but by reference to consumption of future economic benefits.

AASB 2014-9 Amendments to Australian Accounting Standards—Equity Method in Separate Financial Statements [AASB 1, 127 and 128] This standard amends AASB 127, and consequentially amends AASB 1 and AASB 128, to allow entities to use the equity method of accounting for investments in subsidiaries, joint ventures and associates in their separate financial statements. As the department already follows the equity method of accounting for joint ventures and associates, the application of the standard has no financial impact.

AASB 2015-1 Amendments to Australian Accounting Standards—Annual Improvements to Australian Accounting Standards 2012-2014 Cycle [AASB 1, 2, 3, 5, 7, 11, 110, 119, 121, 133, 134, 137 and 140] These amendments arise from the issuance of International Financial Reporting Standard Annual Improvements to IFRSs 2012- 2014 Cycle in September 2014 and editorial corrections. The department has determined that the application of the standard has no financial impact.

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Notes to the financial statements for the year ended 30 June 2017

5 Disclosure of changes in accounting policy and estimates (continued)

AASB 2015-2 Amendments to Australian Accounting Standards—Disclosure Initiative: Amendments to AASB 101 [AASB 7, 101, 134 and 1049] This standard amends AASB 101 to provide clarification regarding the disclosure requirements in AASB 101. Specifically, the standard proposes narrow-focus amendments to address some of the concerns expressed about existing presentation and disclosure requirements and to ensure entities are able to use judgement when applying a standard in determining what information to disclose in their financial statements. There is no financial impact.

AASB 2015-6 Amendments to Australian Accounting Standards—Extending Related Party Disclosures to Not-for-Profit Public Sector Entities [AASB 10, 124 and 1049] The amendments extend the scope of AASB 124 to include application by not-for-profit public sector entities. Implementation guidance is included to assist application of the standard by not-for-profit public sector entities. There is no financial impact.

AASB 2015-10 Amendments to Australian Accounting Standards—Effective Date of Amendments to AASB 10 and 128 This standard defers the mandatory effective date (application date) of amendments to AASB 10 and 128 that were originally made in AASB 2014-10 so that the amendments are required to be applied for annual reporting periods beginning on or after 1 January 2018 instead of 1 January 2016. There is no financial impact.

Future impact of Australian Accounting Standards not yet operative The department cannot early adopt an Australian Accounting Standard unless specifically permitted by TI 1101 Application of Australian Accounting Standards and Other Pronouncements or by an exemption from TI 1101. By virtue of a limited exemption, the department has early adopted AASB 2015-7 Amendments to Australian Accounting Standards—Fair Value Disclosures of Not-for-Profit Public Sector Entities. Where applicable, the department plans to apply the following Australian Accounting Standards from their application date.

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Notes to the financial statements for the year ended 30 June 2017

5 Disclosure of changes in accounting policy and estimates (continued) Operative for reporting periods Future impact of Australian Accounting Standards not yet operative (continued) beginning on/after AASB 9 Financial instruments 1 Jan 2018 This standard supersedes AASB 139 Financial Instruments: Recognition and Measurement, introducing a number of changes to accounting treatments. The mandatory application date of this standard is currently 1 January 2018 after being amended by AASB 2012-6, AASB 2013-9 and AASB 2014-1 Amendments to Australian Accounting Standards. The department has not yet finalised the application or the potential impact of the standard. The standard moves to an ‘expected loss model’ approach to calculating impairment provisions. No material financial impact is expected as the department already calculates the impairment provision on a prospective basis. AASB 15 Revenue from Contracts with Customers 1 Jan 2019 This standard establishes the principles that the department shall apply to report useful information to users of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows arising from a contract with a customer. The department’s income is principally derived from appropriations which will be measured under AASB 1058 income of not-for-profit entities and will be unaffected by this change. However, the department has not yet determined the potential impact of the standard on ‘user charges and fees’ and ‘sales revenues’. In broad terms, it is anticipated that the terms and conditions attached to these revenues will defer revenue recognition until the department has discharged its performance obligations. AASB 16 Leases 1 Jan 2019 This standard introduces a single lessee accounting model and requires a lessee to recognise assets and liabilities for all leases with a term of more than 12 months, unless the underlying asset is of low value. The department currently discloses its future lease commitments up to five years. Upon application of the standard, the present value of the non-cancellable lease payments will be recognised as a liability on the department’s balance sheet. A right-to-use asset will also be recognised at the value of the non-cancellable lease payments plus any additional direct costs associated with the lease. The right to use asset will be depreciated over the lease term and any changes in the fair value of the lease liability will flow through to the income statement as an interest charge in the period.

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Notes to the financial statements for the year ended 30 June 2017

5 Disclosure of changes in accounting policy and estimates (continued) Operative for reporting periods Future impact of Australian Accounting Standards not yet operative (continued) beginning on/after AASB 1058 Income of Not-for-Profit Entities 1 Jan 2019 This standard clarifies and simplifies the income recognition requirements that apply to not-for-profit (NFP) entities, more closely reflecting the economic reality of NFP entity transactions that are not contracts with customers. Timing of income recognition is dependent on whether such a transaction gives rise to a liability or other performance obligation (a promise to transfer a good or service), or a contribution by owners, related to an asset (such as cash or another asset) received by an entity. The department has not yet determined the application or the potential impact of the standard. AASB 2010-7 Amendments to Australian Accounting Standards arising from AASB 9 (December 2010) [AASB 1, 3, 1 Jan 2018 4, 5, 7, 101, 102, 108, 112, 118, 120, 121, 127, 128, 131, 132, 136, 137, 139, 1023 and 1038 and Int 2, 5, 10, 12, 19 and 127] This standard makes consequential amendments to other Australian Accounting Standards and Interpretations as a result of issuing AASB 9 in December 2010. The mandatory application date of this standard has been amended by AASB 2012-6 and AASB 2014-1 to 1 January 2018. The department has not yet determined the application or the potential impact of the standard. AASB 2014-1 Amendments to Australian Accounting Standards 1 Jan 2018 Part E of this standard makes amendments to AASB 9 and consequential amendments to other standards. It has not yet been assessed by the department to determine the application or potential impact of the standard. AASB 2014-5 Amendments to Australian Accounting Standards arising from AASB 15 1 Jan 2018 This standard gives effect to the consequential amendments to Australian Accounting Standards (including Interpretations) arising from the issuance of AASB 15. The department has not yet determined the application or the potential impact of the standard. AASB 2014-7 Amendments to Australian Accounting Standards arising from AASB 9 (December 2014) 1 Jan 2018 This standard gives effect to the consequential amendments to Australian Accounting Standards (including interpretations) arising from the issuance of AASB 9 (December 2014). The department has not yet determined the application or the potential impact of the standard.

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Notes to the financial statements for the year ended 30 June 2017

Operative for 5 Disclosure of changes in accounting policy and estimates (continued) Operative for reporting periods reporting periods beginning on/after Future impact of Australian Accounting Standards not yet operative (continued) beginning on/after AASB 1058 Income of Not-for-Profit Entities 1 Jan 2019 AASB 2014-10 Amendments to Australian Accounting Standards—Sale or Contribution of Assets between an 1 Jan 2018 Investor and its Associate or Joint Venture [AASB 10 and 1281] This standard clarifies and simplifies the income recognition requirements that apply to not-for-profit (NFP) entities, more closely reflecting the economic reality of NFP entity transactions that are not contracts with This standard amends AASB 10 and AASB 128 to address an inconsistency between the requirements in customers. Timing of income recognition is dependent on whether such a transaction gives rise to a liability AASB 10 and those in AASB 128 (August 2011), in dealing with the sale or contribution of assets between or other performance obligation (a promise to transfer a good or service), or a contribution by owners, an investor and its associate or joint venture. related to an asset (such as cash or another asset) received by an entity. The department has not yet The mandatory application date of this standard has been amended by AASB 2015 10 to determined the application or the potential impact of the standard. 1 January 2018. While the department has an interest in joint ventures and associates, the application of AASB 2010-7 Amendments to Australian Accounting Standards arising from AASB 9 (December 2010) [AASB 1, 3, 1 Jan 2018 the standard is not expected to have a material financial impact. 4, 5, 7, 101, 102, 108, 112, 118, 120, 121, 127, 128, 131, 132, 136, 137, 139, 1023 and 1038 and Int 2, 5, AASB 2015-8 Amendments to Australian Accounting Standards—Effective Date of AASB 15 1 Jan 2017 10, 12, 19 and 127] This standard amends the mandatory effective date (application date) of AASB 15 Revenue from Contracts This standard makes consequential amendments to other Australian Accounting Standards and with Customers so that AASB 15 is required to be applied for annual reporting periods beginning on or after Interpretations as a result of issuing AASB 9 in December 2010. 1 January 2018 instead of 1 January 2017. The department has not yet determined the application or the potential impact of AASB 15. The mandatory application date of this standard has been amended by AASB 2012-6 and AASB 2014-1 to 1 January 2018. The department has not yet determined the application or the potential impact of the AASB 2016-2 Amendments to Australian Accounting Standards—Disclosure Initiative: Amendments to AASB 107 1 Jan 2017 standard. This standard amends AASB 107 Statement of Cash Flows (August 2015) to require disclosures that enable AASB 2014-1 Amendments to Australian Accounting Standards 1 Jan 2018 users of financial statements to evaluate changes in liabilities arising from financing activities, including both Part E of this standard makes amendments to AASB 9 and consequential amendments to other standards. changes arising from cash flows and non-cash changes. There is no financial impact. It has not yet been assessed by the department to determine the application or potential impact of the AASB 2016-3 Amendments to Australian Accounting Standards—Clarifications to AASB 15 1 Jan 2018 standard. AASB 2014-5 Amendments to Australian Accounting Standards arising from AASB 15 1 Jan 2018 This standard clarifies identifying performance obligations, principal versus agent considerations, timing of recognising revenue from granting a licence, and provides further transitional provisions to AASB 15. The This standard gives effect to the consequential amendments to Australian Accounting Standards (including department has not yet determined the application or the potential impact. Interpretations) arising from the issuance of AASB 15. The department has not yet determined the application or the potential impact of the standard. AASB 2016-4 Amendments to Australian Accounting Standards—Recoverable Amount of Non-Cash-Generating 1 Jan 2017 AASB 2014-7 Amendments to Australian Accounting Standards arising from AASB 9 (December 2014) 1 Jan 2018 Specialised Assets of Not-for-Profit Entities This standard gives effect to the consequential amendments to Australian Accounting Standards (including This standard clarifies that the recoverable amount of primarily non-cash-generating assets of not-for-profit interpretations) arising from the issuance of AASB 9 (December 2014). The department has not yet entities, which are typically specialised in nature and held for continuing use of their service capacity, is determined the application or the potential impact of the standard. expected to be materially the same as fair value determined under AASB 13 Fair Value Measurement. The department has not yet determined the application or the potential impact.

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Notes to the financial statements for the year ended 30 June 2017

5 Disclosure of changes in accounting policy and estimates (continued) Operative for reporting periods Future impact of Australian Accounting Standards not yet operative (continued) beginning on/after AASB 2016-7 Amendments to Australian Accounting Standards—Deferral of AASB 15 for Not-for-Profit Entities 1 Jan 2017 This standard amends the mandatory effective date of AASB 15 for not-for-profit entities so that AASB 15 is required to be applied by such entities for annual reporting periods beginning on or after 1 January 2019 instead of 1 January 2018. There is no financial impact. AASB 2016-8 Amendments to Australian Accounting Standards—Australian Implementation Guidance for Not-for- 1 Jan 2019 Profit Entities This standard inserts Australian requirements and authoritative implementation guidance for not-for-profit entities into AASB 9 and AASB 15. This guidance assists not-for-profit entities in applying those standards to particular transactions and other events. There is no financial impact. AASB 2017-2 Amendments to Australian Accounting Standards—Further Annual Improvements 2014-2016 Cycle 1 Jan 2017 This standard clarifies the scope of AASB 12 by specifying that the disclosure requirements apply to an entity’s interests in other entities that are classified as held for sale, held for distribution to owners in their capacity as owners or discontinued operations in accordance with AASB 5. There is no financial impact.

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Notes to the financial statements for the year ended 30 June 2017 2017 2016 6 Employee benefits expense $’000 $’000 Wages and salaries(a)(b) 85,570 82,210 Superannuation—defined contribution plans(c) 10,036 9,644 Long service leave 1,592 2,228 Annual leave 8,524 10,219 Other related expenses 4,593 4,409 110,315 108,710

(a) Includes the value of the fringe benefit to the employee plus the fringe benefit tax component, leave entitlements including superannuation contribution component. (b) Voluntary severance expenditure $2,426,500 (2016: $3,774,000). (c) Defined contribution plans include West State, Gold State and GESB Super Scheme (contributions paid). Employment on-costs expenses are included at note 10 ‘Other expenses’. Employment on-costs liability is included at note 32 ‘Provisions’.

7 Compensation of key management personnel The department has determined that key management personnel include Cabinet Ministers and senior officers of the department. However, the department is not obligated to reimburse for the compensation of Ministers and therefore no disclosure is required. The disclosures in relation to Ministers’ compensation may be found in the Annual Report on State Finances.

Total compensation of senior officers of the department for the reporting period is presented within the following bands:

Compensation band ($) 2017 2016 0 – 190,000 1 2 210,001 – 220,000 1 3 220,001 – 230,000 4 2 240,001 – 250,000 - - 280,001 – 290,000 - 1 350,001 – 360,000 - - 360,001 – 370,000 1 - $’000 $’000 Short-term employee benefits 1,496 1,508 Post-employment benefits 170 174 Other long-term benefits - - Termination benefits - - Total compensation of senior officers 1,666 1,682

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Notes to the financial statements for the year ended 30 June 2017 2017 2016 8 Supplies and services $’000 $’000 Professional services(a) (b) 11,955 31,512 Travel 3,219 3,270 Communications 1,623 1,664 Consumables 12,271 9,744 Lease, rent and hire costs 3,359 4,027 Consultancies expense 1,663 1,940 Utilities, rates and charges 2,413 2,545 Insurance 651 722 Licences, fees and registration 2,297 1,878 Advertising 310 398 General administration costs 4,192 3,465 43,953 61,165

(a) Professional services expenses in 2017 have been reduced by $11.7m as a result of the recognition of a capital work-in-progress asset relating to the Gascoyne Food Bowl Initiative. The Gascoyne Food Bowl Initiative is a Royalties for Regions project which commenced in the year to 30 June 2012. It is about the development of land and water infrastructure for a sustainable enlarged irrigation precinct to enable horticulture expansion in Carnarvon. The water infrastructure associated with the Gascoyne Food Bowl Initiative was to be granted to the Gascoyne Water Cooperative and as such all costs associated with the project have been expensed historically. However, during the current year to 30 June 2017 a decision was made to delay this transfer indefinitely and the state government through the department will retain ownership and control. The department has therefore recognised the fair value of the water infrastructure as a work-in-progress asset on its balance sheet with a corresponding reduction in current year professional services costs. The $11.7m is the value of professional services costs expensed in prior years and the total value of the asset recognised is $15.2m including current year costs of $3.5m. The project is expected to reach practical completion in the year to 30 June 2018 when the work-in-progress asset will be transferred to fixed assets under the infrastructure category and depreciated over a useful life of 50 years. (b) Includes audit fee, see also note 40 ‘Remuneration of auditors’.

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Notes to the financial statements for the year ended 30 June 2017 2017 2016 9 Depreciation and amortisation expense $’000 $’000 Depreciation Buildings 3,237 6,273 Computer and communications equipment 697 1,462 Office and other equipment 96 76 Plant and machinery 2,212 1,840 Infrastructure 481 472 Vehicles and buses 218 321 Total depreciation 6,941 10,444

Amortisation Intangible assets 984 959 Total amortisation 984 959 Total depreciation and amortisation expense 7,925 11,403

2017 2016 10 Other expenses $’000 $’000 Doubtful debts expense 4 (467) Employment on-costs 628 1,152 Return of unused grants 4,720 603 Miscellaneous other 1,539 283 6,891 1,571

2017 2016 11 Grants and subsidies paid $’000 $’000 Recurrent Grant payments 27,140 18,774 Donations and sponsorships 165 340 27,305 19,114

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Notes to the financial statements for the year ended 30 June 2017

12 Related party transactions The department is a wholly-owned public sector entity that is controlled by the state of Western Australia. Related parties of the department include: • all Ministers and their close family members, and their controlled or jointly controlled entities • all senior officers and their close family members, and their controlled or jointly controlled entities • other departments and statutory authorities, including their related bodies, that are included in the whole-of-government consolidated financial statements • associates and joint ventures of an entity that are included in the whole-of-government consolidated financial statements • the Government Employees Superannuation Board (GESB).

Significant transactions with government-related entities Significant transactions include: • service appropriation (refer summary of consolidated account appropriations and income estimates) • capital appropriation (refer summary of consolidated account appropriations and income estimates) • services received free of charge from various state agencies (Note 18) • services provided free of charge to various state agencies (Note 35) • Royalties for Regions Fund (Note 18) • superannuation payments to GESB (Note 6) • lease rental receipts from the Department of Parks and Wildlife (Merredin) of $52,360 • lease rental receipts from the Forest Products Commission of $166,071 • lease rental receipts from Midwest Ports of $123,530 • lease rentals payments to the Department of Finance (State Fleet) of $1,743,462 • regional accommodation lease payments to the Department of Housing of $800,378 • licensing fees paid to the Department of Lands of $62,685 • unspent grant payments returned to the Department of Regional Development of $136,760 • unspent grant receipts returned from the Department of Water of $1,899,873 • reimbursement of international Agribusiness Development Managers to the Department of State Development of $508,594 • insurance recoveries from RiskCover of $288,574 • vehicle registrations payable to the Department of Transport of $161,518 • regional utility expenses payable to Horizon Power of $239,801 • regional support services payable to the Pilbara Development Commission of $88,000

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Notes to the financial statements for the year ended 30 June 2017

12 Related party transactions (continued) • utility expenses payable to Synergy of $512,891 • advisory services payable to the Public Sector Commission of $77,582 • utility charges payable to the Water Corporation of $297,397 • fees collected on behalf of the Agricultural Produce Commission of $281,313 • construction and project management fees paid to the Department of Finance of $11,929,003 • remuneration for services provided by the Auditor General (note 40). Material transactions with related parties During the year the department increased its shareholding in InterGrain Pty Ltd (InterGrain) through the purchase of 4,770,471 shares from Monsanto Australia Limited (Monsanto) for $1,430,000. In addition to the purchase of shares the department also purchased a convertible preference note that Monsanto held in InterGrain for the face value of $3,000,000. The department now holds a 61.67% equity interest in InterGrain as set out in note 27. The department also paid InterGrain $275,000 for the final two milestone payments under the Barley Research Collaboration Agreement. There are no other material transactions with related parties.

2017 2016 13 User charges and fees $’000 $’000 User charges and fees 11,915 10,054 Memorandum of understanding—services provided Agricultural Produce Commission 651 593 Rural Business Development Corporation 501 714 13,067 11,361

2017 2016 14 Commonwealth grants and contributions $’000 $’000 Commonwealth National Partnership Agreements 1,599 1,459 Commonwealth Agriculture Activity Grants 1,658 2,071 Other grants from the Commonwealth 132 - 3,389 3,530

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Notes to the financial statements for the year ended 30 June 2017

2017 2016 15 Grants and subsidies received $’000 $’000 Agriculture Research Grants Account No. 1 Rural industry research funds - - Meat and Livestock Australia 1,248 1,048 Grains Research and Development Corporation 12,852 16,328 Rural Industry Research and Development Corporation 593 489 Australian Wool Innovation Pty Ltd 92 - Australian Centre for International Agricultural Research - 38 Cooperative Research Centres research grants 507 747 Commercial grants 4,979 5,852 Agriculture Research Grants Account No. 2 Horticulture industry 243 918 Other grants and subsidies - 630 Miscellaneous grants 268 233 Total grants and subsidies from non-government sources 20,782 26,283

2017 2016 16 Other revenue $’000 $’000 Levies, rates and licences 6,331 4,994 Return of grant allocations 25 1,011 Royalties 1,336 2,579 Rents and leases 1,845 1,617 Other 1,791 2,457 11,328 12,658

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Notes to the financial statements for the year ended 30 June 2017

2017 2016 17 Net gain/(loss) on disposal of non-current assets $’000 $’000 Proceeds from disposal of non-current assets Land - 2,110 Buildings - - Non-current assets classified as held for distribution to owners - 651 Computer and communications equipment - - Vehicles and buses - 82 Infrastructure - - Plant and machinery 2 47 Available for sale financial assets - 536 2 3,426 Carrying amount of non-current assets disposed Land - 2,110 Buildings 1,148 51 Non-current assets classified as held for distribution to owners - 651 Computer and communications equipment 14 - Office equipment 2 - Vehicles and buses - 10 Infrastructure - - Plant and machinery 78 52 Available for sale financial assets - 536 1,242 3,410 Net (loss)/gain (1,240) 16

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Notes to the financial statements for the year ended 30 June 2017

18 Income from state government 2017 2016 Appropriation received during the period: $’000 $’000 Service appropriation(a) 116,535 121,924 Resources received free of charge(b) Landgate 281 537 State Solicitor’s Office 316 170 Department of Finance 29 241 Department of Water - 17 626 965 Royalties for Regions fund:(c) through Department of Water 2,142 1,728 Regional community services fund Boosting Grains Research and Development (R&D) 3,965 675 eConnected Grainbelt - 2,512 Regional Men’s Health Initiative 800 800 Regional Workers Incentives Allowance Payments 181 230 Wild Dog Management Program 750 466 Wild Dog Action Plan 760 - Potato Industry Adjustment 12,820 - Seizing the Opportunity Agriculture Agricultural Science R&D 4,875 4,643 Asian Market Success 2,065 2,000 Boosting Biosecurity Defences 6,515 6,651 Food Industry Innovation 863 700 Northern Beef Futures 3,648 3,665 Sheep Industry Business Innovation 3,342 2,116 Regional infrastructure and headworks fund Gascoyne Food Bowl Initiative 1,926 5,504 New regional and statewide initiatives—Radar as an enabling technology project - 200 Pilbara cities strategic infrastructure—Pilbara Hinterland Agricultural Development Initiative 1,826 1,550 Regional natural resource management—Carbon farming - 834 Regional natural resource management—Water efficiency - 417 Regional economic development water opportunities—La Grange - 1,933 46,478 36,624 Total income from state government 163,639 159,513

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Notes to the financial statements for the year ended 30 June 2017

18 Income from state government (continued) (a) Service appropriations fund the net cost of services delivered. Appropriation revenue comprises a cash component and a receivable (asset). The receivable (holding account) comprises the budgeted depreciation expense for the year and any agreed increase in leave liabilities during the year. (b) Assets or services received free of charge or for nominal cost are recognised as revenue at fair value of the assets and/or services that can be reliably measured and which would have been purchased if they were not donated. Contributions of assets or services in the nature of contributions by owners are recognised directly in equity. (c) This is a sub-fund within the overarching ‘Royalties for Regions fund’. The recurrent funds are committed to projects and programs in WA regional areas.

2017 2016 19 Cash and cash equivalents $’000 $’000 Cash advances 17 25 Cash at bank 2,525 10,285 Cash and cash equivalents 2,542 10,310

2017 2016 20 Restricted cash and cash equivalents $’000 $’000 Current Royalties for Regions fund(a) 9,877 7,495 Potato Marketing Corporation 519 - Funds for capital purposes(b) 1,519 4,278 Special purpose accounts(c) Agriculture Research Grants Account No. 1 (non-interest bearing) 16,887 18,560 Agriculture Research Grants Account No. 2 3,151 4,103 Commonwealth Agriculture Activity Grants (non-interest bearing) 4,552 3,042 Declared Pest Account 2,794 1,917 Land Conservation Districts Fund 144 42 Plant Research and Development 11,391 10,342 Cattle Industry Funded Scheme 5,578 5,475 Grain, Seeds and Hay Industry Funded Scheme 9,756 7,740 Sheep and Goats Industry Funded Scheme 2,014 1,959 Total current 68,182 64,953 Non-current Accrued salaries suspense account(d) 245 - Total non-current 245 - Total restricted cash and cash equivalents 68,427 64,953

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Notes to the financial statements for the year ended 30 June 2017

20 Restricted cash and cash equivalents (continued) (a) Unspent funds are committed to projects and programs in WA regional areas. (b) Funds for capital purposes are restricted by the fact that these amounts are specifically appropriated by Treasury for capital spend. (c) Receipts and disbursements are disclosed in note 47 in accordance with Treasurer’s Instruction 1103(15). (d) Funds held in the suspense account are to be used only for the purpose of meeting the 27th pay in a financial year that occurs every 11 years. 2017 2016 21 Biological assets $’000 $’000 Livestock 686 665 Field crops 465 566 1,151 1,231

2017 2016 22 Inventories $’000 $’000 Inventories held for resale Raw materials and stores 633 573 633 573

2017 2016 23 Receivables $’000 $’000 Current Receivables 2,905 2,967 Allowance for impairment of receivables (178) (288) Accrued revenue 27 35 GST receivable 1,078 2,376 Interest receivable 172 189 Total current receivables 4,004 5,279

Reconciliation of changes in the allowances for impairment of receivables: Balance at start of period 288 861 Doubtful debt expense 4 (467) Amounts written off during the period (114) (106) Balance at end of period 178 288 The department does not hold any collateral or other credit enhancements as security for receivables. See also note 2(p) ‘Receivables’ and note 44 ‘Financial instruments’.

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Notes to the financial statements for the year ended 30 June 2017 2017 2016 24 Amounts receivable for services (holding account) $’000 $’000 Current 2,589 3,975 Non-current 72,897 65,660 75,486 69,635 Represents the non-cash component of service appropriations. It is restricted in that it can only be used for asset replacement or payment of leave liability. See note 2(n) ‘Amounts receivable for services (holding account)’.

The reconciliation at the beginning and end of the current year and previous year is set out below. Opening balance of holding account 69,635 64,854 Non-cash appropriation 9,826 8,456 Departmental drawdown (3,975) (3,675) Closing balance of holding account 75,486 69,635

2017 2016 25 Other assets $’000 $’000 Current Lease rentals 34 95 Goods and services 45 969 Doppler radar maintenance 530 - Held for sale - - Registrations 551 715 Total current assets 1,160 1,779

Non-current Doppler radar 7,268 22,593 Goods and services 100 - Available for sale financial assets Unlisted shares 55 55 Total non-current assets 7,423 22,648

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Notes to the financial statements for the year ended 30 June 2017 2017 2016 26 Assets classified as held for distribution to owners $’000 $’000 Land and buildings Current 59,711 - Non-current 15,470 2,749 75,181 2,749

Opening balance 2,749 3,400 Revaluation of land and buildings distributed (3,230) - Assets reclassified as held for distribution to owners 75,982 - Total assets classified as held for distribution to owners 75,501 3,400 Less assets distributed (320) (651) Closing balance 75,181 2,749

2017 2016 27 Investments accounted for using the equity method $’000 $’000 Investment in joint ventures at initial cost of investment 31,014 29,212 Share of profit/(loss) using the equity method (28,160) (24,972) Recognition of gain on dilution 4,924 4,924 7,778 9,164 Loan to InterGrain Pty Ltd 3,891 287 11,669 9,451 The Western Australian Agriculture Authority (WAAA), a body corporate established under the Biosecurity and Agriculture Management Act 2007, is a joint venturer in:

InterGrain Pty Ltd InterGrain Pty Ltd was incorporated on 26 October 2007 and is resident in Australia. The principal activity of the joint venture is to commercialise the research from wheat and barley breeding. As at 30 June 2017, WAAA holds a 61.67% (2016: 48.67%) equity interest in InterGrain Pty Ltd. The department regards the investment in InterGrain Pty Ltd as a joint venture, due to the contractually agreed sharing of control over economic activity and the financial and operating decisions relating to the activity requiring the unanimous consent of the shareholders. Australian Export Grains Innovation Centre Ltd (Limited by Guarantee) (AEGIC) AEGIC was incorporated on 24 October 2012. The primary aim of the joint venture is to lead the establishment and operation of a centre of science, technology and innovation to facilitate the competitiveness of the Australian grains industry with a particular focus on export markets.

The department has no obligations with respect to liabilities incurred by InterGrain Pty Ltd and AEGIC.

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Notes to the financial statements for the year ended 30 June 2017

27 Investments accounted for using the equity method (continued)

Summary financials of equity accounted investees Summary financials from the management accounts for equity accounted investees, not adjusted for the percentage ownership by the department: 2017 2016 $’000 $’000 $’000 $’000 InterGrain AEGIC InterGrain AEGIC

Current assets 10,673 12,671 5,274 20,923 Non-current assets 2,219 1,121 2,846 610 Total assets 12,892 13,792 8,120 21,533

Current liabilities 5,018 1,490 2,318 1,224 Non-current liabilities 8,312 - 7,074 - Total liabilities 13,330 1,490 9,392 1,224

Net (liabilities)/assets (438) 12,302 (1,272) 20,309

Revenue 14,639 2,690 6,988 3,413 Expenses (14,265) (10,602) (11,310) (10,266) Net gain/(loss) 374 (7,912) (4,322) (6,853)

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Notes to the financial statements for the year ended 30 June 2017 2017 2016 28 Property plant and equipment $’000 $’000 Land At fair value 49,777 130,009

Buildings At fair value 57,738 65,327 Accumulated depreciation (2,380) (6,339) 55,358 58,988 Computer and communications equipment At cost 8,376 10,175 Accumulated depreciation (7,452) (8,469) 924 1,706 Office and other equipment At cost 913 1,138 Accumulated depreciation (759) (939) 154 199 Plant and machinery At cost 47,592 35,449 Accumulated depreciation (27,128) (27,980) 20,464 7,469 Vehicles and buses At cost 10,356 10,683 Accumulated depreciation (10,009) (10,090) 347 593 Infrastructure At cost 11,385 11,215 Accumulated depreciation (3,630) (3,149) 7,755 8,066 Capital works in progress Buildings 3,130 940 Gascoyne Food Bowl Initiative 15,171 - Other - 263 18,301 1,203 Total property, plant and equipment 153,080 208,233

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Notes to the financial statements for the year ended 30 June 2017

28 Property plant and equipment (continued) Computer and Office Capital Plant and Vehicles Infra- Land Buildings communi- and other works in Total machinery and buses structure cations equipment progress equipment 2017 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 Carrying amount at start of period 130,009 58,988 1,706 199 7,469 593 8,066 1,203 208,233 Additions - 3,995 5 22 498 12 74 17,685 22,291 Disposals - (1,148) (5) (2) (9) - - - (1,164) Transfers(a) (73,942) (2,348) (76) 31 14,787 (40) 96 (587) (62,079) Revaluations increments (6,290) (892) ------(7,182) Depreciation - (3,237) (697) (96) (2,212) (218) (481) - (6,941) Write-off of assets - - (9) - (69) - - - (78) Carrying amount at end of period 49,777 55,358 924 154 20,464 347 7,755 18,301 153,080

2016 Carrying amount at start of period 133,243 60,600 1,916 289 8,077 693 7,404 47 212,269 Additions 915 1,691 1,226 58 1,142 298 1,108 1,156 7,594 Disposals (2,110) (51) - - (52) (36) 26 - (2,223) Transfers(a) - - 26 (72) 142 (41) - - 55 Revaluations increments (2,039) 3,021 ------982 Depreciation - (6,273) (1,462) (76) (1,840) (321) (472) - (10,444) Write-off of assets - Carrying amount at end of period 130,009 58,988 1,706 199 7,469 593 8,066 1,203 208,233

(a) The balance in transfers includes transfers to assets held for distribution (note 26).

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Notes to the financial statements for the year ended 30 June 2017

Fair value 29 Fair value measurements Level 1 Level 2 Level 3 at end of period 2017 $’000 $’000 $’000 $’000 Assets held for sale (note 26) - 25 75,156 75,181 Land (note 28) - 14,373 35,404 49,777 Buildings (note 28) - 2,972 52,386 55,358 - 17,370 162,946 180,316

2016 Non-current assets held for sale (note 26) - 345 2,404 2,749 Land (note 28) - 5,125 124,884 130,009 Buildings (note 28) - 3,266 55,722 58,988 - 8,736 183,010 191,746 Transfers into and transfers out of the fair value hierarchy level are recognised at the end of the financial reporting period. There were no transfers between Levels 1, 2 or 3 during the current period.

Valuation techniques to derive Level 2 fair values

Level 2 fair values of land and buildings are derived using the market approach. Market evidence of sales prices of comparable land and buildings in close proximity is used to determine price per square metre.

Non-current assets held for distribution to owners have been written down to fair value less costs to sell. Fair value has been determined by reference to market evidence of sales prices of comparable assets.

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Notes to the financial statements for the year ended 30 June 2017 29 Fair value measurements (continued)

Fair value measurements using significant unobservable inputs (Level 3) The following table presents the changes in the fair value of assets measured using significant unobservable inputs (Level 3) for recurring fair value measurements: Held for Land Buildings sale 2017 $’000 $’000 $’000 Fair value at start of period 2,404 124,884 55,722 Additions 82,712 - 3,995 Revaluation increments/(decrements) recognised in Other comprehensive income (3,230) (7,958) (827) Transfers (from/(to) Level 2) - (7,580) - Other transfers (6,310) (73,871) (2,777) Disposals - (71) (1,126) Depreciation expense (420) - (2,601) Fair value at end of period 75,156 35,404 52,386

2016 Fair value at start of period 2,965 127,540 57,063 Additions - 915 1,687 Revaluation increments/(decrements) recognised in Other comprehensive income - (1,461) 3,106 Other transfers - - (4) Disposals (561) (2,110) (51) Depreciation expense - - (6,079) Fair value at end of period 2,404 124,884 55,722

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Notes to the financial statements for the year ended 30 June 2017

29 Fair value measurements (continued) Information about significant unobservable inputs (Level 3) in fair value measurements

Valuation processes There were no changes in valuation techniques during the period. Transfers in and out of a fair value level are recognised on the date of the event or change in circumstances that caused the transfer. Transfers are generally limited to assets newly classified as non-current assets held for distribution as Treasurer’s instructions require valuations of land and buildings to be categorised within Level 3 where the valuations will utilise significant Level 3 inputs on a recurring basis. Land (Level 3 fair values) Fair value for restricted use land is based on comparison with market evidence for land with low level utility (high restricted use land). The relevant comparators of land with low level utility is selected by Landgate and represents the application of a significant Level 3 input in this valuation methodology. The fair value measurement is sensitive to values of comparator land, with higher values of comparator land correlating with higher estimated fair values of land. Buildings (Level 3 fair values) Fair value for existing use specialised buildings is determined by reference to the cost of replacing the remaining future economic benefits embodied in the asset, i.e. the depreciated replacement cost. Depreciated replacement cost is the current replacement cost of an asset less accumulated depreciation calculated on the basis of such cost to reflect the already consumed or expired economic benefit, or obsolescence, and optimisation (where applicable) of the asset. Current replacement cost is generally determined by reference to the market observable replacement cost of a substitute asset of comparable utility and the gross project size specifications. The Level 3 input used in the valuation process is estimated by Landgate. The Level 3 input is based upon the estimated consumed economic benefit/obsolescence of the asset concerned. The fair value measurement is sensitive to the estimate of consumption/obsolescence, with higher values of the estimate correlating with lower estimated fair values of buildings and infrastructure.

Basis of valuation In the absence of market-based evidence, due to the specialised nature of some non-financial assets, these assets are valued at Level 3 of the fair value hierarchy on an existing use basis. The existing use basis recognises that restrictions or limitations have been placed on their use and disposal when they are not determined to be surplus to requirements. These restrictions are imposed by virtue of the assets being held to deliver a specific community service.

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Notes to the financial statements for the year ended 30 June 2017 2017 2016 30 Intangible assets $’000 $’000 Computer software At cost 7,392 6,778 Accumulated amortisation (5,932) (4,948) 1,460 1,830 Capital works in progress At cost 2,837 1,006 Total intangible assets 4,297 2,836

Reconciliation Computer software Carrying amount at start of period 1,830 1,771 Additions 389 640 Transfers from capital works in progress 225 378 Amortisation expense (984) (959) Carrying amount at end of period 1,460 1,830

Capital works in progress Carrying amount at start of period 1,006 482 Additions 3,020 902 Provision for impairment (964) - Transfers from property, plant and equipment - - Transfers to computer software (225) (378) Carrying amount at end of period 2,837 1,006

2017 2016 31 Payables $’000 $’000 Current Trade payables 1,150 181 Accrued expenses 3,888 4,640 Accrued salaries 2,070 - Other payables 1,501 1,279 Total current 8,609 6,100 See also note 2(q) ‘Payables’ and note 44 ‘Financial instruments’.

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Notes to the financial statements for the year ended 30 June 2017 2017 2016 32 Provisions $’000 $’000 Current Annual leave(a) 8,629 10,230 Long service leave(b) 11,979 12,762 Total current employee benefits provision 20,608 22,992 Employee on-costs(c) 2,425 2,749 Total current other provisions 2,425 2,749 Total current provisions 23,033 25,741 Non-current Long service leave(b) 3,933 3,862 Total non-current employee benefits provision 3,933 3,862 Employee on-costs(c) 500 483 Total non-current other provisions 500 483 Total non-current provisions 4,433 4,345

(a) Annual leave liabilities have been classified as current as there is no unconditional right to defer settlement for at least 12 months after the end of the reporting period. Assessments indicate that 2017 2016 actual settlement of the liabilities is expected to occur as follows: $’000 $’000 Within 12 months of the end of the reporting period 6,483 7,058 More than 12 months after the reporting period 2,146 3,172 8,629 10,230 (b) Long service leave liabilities have been classified as current where there is no unconditional right to defer settlement for at least 12 months after the end of the reporting period. Assessments indicate that actual settlement of the liabilities is expected to occur as follows: Within 12 months of the end of the reporting period 4,490 4,577 More than 12 months after the reporting period 11,422 12,047 15,912 16,624 (c) The settlement of annual and long service leave liabilities gives rise to the payment of employment on-costs including workers’ compensation insurance. The provision is the present value of expected future payments. The associated expense, apart from the unwinding of the discount, is disclosed in note 10 ‘Other expenses’.

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Notes to the financial statements for the year ended 30 June 2017 32 Provisions (continued) Movements in other provisions Movements in each class of provisions during the financial year, other than employee benefits are set out below: 2017 2016 Employment on-cost provision $’000 $’000 Carrying amount at start of period 3,232 3,621 Additional provisions recognised (307) (389) Carrying amount at end of period 2,925 3,232

33 Equity The Western Australian Government holds the equity interest in the department on behalf of the community. Equity represents the residual interest in the net assets of the department. The asset revaluation reserve represents that portion of equity resulting from the revaluation of non-current assets. 2017 2016 Contributed equity $’000 $’000 Balance at start of period 79,145 74,986 Contributions by owners Capital appropriation(a) 301 4,877 Other contributions by owners Royalties for Regions Fund—Regional Infrastructure and Headworks Account 3,192 1,129 Transfers from other agencies 182 914 Distributions to owners(b) Transfer of assets to other agencies: Land held for distribution transferred to the Department of Lands (510) (2,761) Balance at end of period 82,310 79,145

(a) Capital contributions (appropriations) and non-discretionary (non-reciprocal) transfers of net assets between state government agencies have been designated as contributions by owners in Treasurer’s Instruction 955 ‘Contributions by Owners Made to Wholly Owned Public Sector Entities’. (b) Treasurer’s Instruction 955 requires non-reciprocal transfers of net assets to government to be accounted for as distribution to owners in accordance with AASB Interpretation 1038.

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Notes to the financial statements for the year ended 30 June 2017

33 Equity (continued) Asset revaluation surplus The asset revaluation reserve is used to record increments and decrements on the revaluation of 2017 2016 land and buildings, as described in accounting policy note 2(f) ‘Property, plant and equipment and infrastructure’. $’000 $’000 Balance at start of period 235,604 234,622 Land (6,290) (2,039) Buildings (892) 3,021 Non-current assets held for distribution to owners (3,230) - Net revaluation increments/(decrements): (10,412) 982 Balance at end of period 225,192 235,604

Accumulated surplus/(deficit) Balance at start of period 48,887 43,030 Result for the period 12,760 5,838 Other comprehensive income - 19 Balance at end of period 61,647 48,887

Total equity at end of period 369,149 363,636

34 Notes to the statement of cash flows 2017 2016 Reconciliation of cash $’000 $’000 Cash at the end of the financial year as shown in the Statement of cash flows is reconciled to the related

items in the Statement of financial position as follows: Cash and cash equivalents (note 19) 2,542 10,310 Restricted cash and cash equivalents: current (note 20) 68,182 64,953 Restricted cash and cash equivalents: non-current (note 20) 245 - 70,969 75,263

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Notes to the financial statements for the year ended 30 June 2017

34 Notes to the statement of cash flows (continued) 2017 2016 Reconciliation of net cost of services to net cash flows provided by/(used in) operating activities $’000 $’000 Net cost of services (150,879) (153,675) Non-cash items Net (gain)/loss on sale of assets (note 17 ‘Net gain/(loss) on disposal of non-current assets’) 1,240 (16) Depreciation and amortisation expense (note 9 ‘Depreciation and amortisation expense’) 7,925 11,403 Doubtful debts expense (note 10 ‘Other expenses’) 4 (467) Impairment expenses 964 - Resources received free of charge (note 18 ‘Income from state government’) 626 965 Other non-cash items (25,802) (572) Share of net (profit)/loss in joint ventures using equity method 2,776 6,221

(Increase)/decrease in assets Biological assets 80 188 Agricultural produce (26) 65 Inventories (60) 78 Receivables(a) 1,275 368 Available for sale financial assets - - Other assets 15,844 (644)

Increase/(decrease) in liabilities Payables(a) 2,509 (7,922) Provisions (2,620) (3,255) Net cash used in operating activities (146,144) (147,263)

(a) Note that the Australian Taxation Office (ATO) receivable/payable in respect of GST and the receivable/payable in respect of the sale/purchase of non-current assets are not included in these items as they do not form part of the reconciling items.

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Notes to the financial statements for the year ended 30 June 2017 2017 2016 35 Services provided free of charge $’000 $’000 During the period the following services were provided to other agencies free of charge for functions

outside the normal operations of the department. Agricultural Produce Commission 68 51 Department of Environment Regulation 1 1 Department of Fire and Emergency Services 1 2 Department of Fisheries 4 4 Department of Parks and Wildlife 41 41 Department of Planning - 2 Department of Regional Development 1 - Department of Water 3 5 Forest Products Commission - 8 Landgate 16 2 University of Western Australia 6 12 141 128 36 Commitments 2017 2016 The commitments below are inclusive of GST where relevant. $’000 $’000 Capital expenditure commitments Capital expenditure commitments, being contracted capital expenditure additional to the amounts

reported in the financial statements, are payable as follows: Within 1 year 528 370 Later than 1 year 201 - 729 370 Non-cancellable operating lease commitments Commitments for minimum lease payments are payable as follows: Within 1 year 1,905 1,991 Later than 1 year and not later than 5 years 2,887 2,677 Later than 5 years 253 24 5,045 4,692 The property leases are non-cancellable leases with five-year terms, with rents payable monthly in advance. Contingent rental provisions within the lease agreements require that the minimum lease payments shall be increased by the lower of CPI or 4% per annum. An option exists to renew the leases at the end of their five-year terms for an additional term of five years. A contractual arrangement exists between State Fleet and the department for the lease of vehicles based on both a vehicle kilometre specification and vehicle lease terms. Lease payments are made on a monthly basis. The department is responsible for registration, insurance and servicing of leased vehicles in line with the manufacturer’s recommendations, as well as the cost of refurbishment on return. State Fleet carries the residual risk on the sale of the vehicle.

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Notes to the financial statements for the year ended 30 June 2017

37 Contingent liabilities and contingent assets The following contingent liabilities are additional to the liabilities included in the financial statements. Litigation in progress The department has six pending litigation claims that may affect the financial position to the value of $3,900,000 pertaining to cases relating to alleged quarantine orders, incorrect advice given to eradicate plant pests and injury claims. These are currently with the State Solicitor’s Office. It is uncertain when the cases will be finalised. RiskCover is providing full indemnity in the event that the department is found to be liable.

Contaminated sites Under the Contaminated Sites Act 2003 (the Act), the department is required to report suspected contaminated sites to the Department of Environment Regulation (DER). In accordance with the Act, after specific site investigations, reports are submitted to DER to classify these sites. DER classifies these sites on the basis of the risk to human health and the environment. The department currently has fourteen sites registered with DER as possibly contaminated and one site registered as contaminated. Where a risk is identified, the department may have a responsibility for further investigation and possible site remediation, if the identified risk cannot be managed. The department adopts a risk management approach which sees properties retained and managed, rather than proceeding with site remediation. Currently the department is not planning or been directed by DER to remediate any specific sites. However, it is envisaged in the future some surplus ‘high value’ sites will require remediation to DER standards to allow the properties to proceed to sale through the Department of Lands. This future liability when known will be covered through the Department of Lands’ sale process.

38 Events occurring after the balance sheet date On the 1 July 2017 the departments of Agriculture and Food, Regional Development and Fisheries and the nine Regional Development Commissions were amalgamated to form the new Department of Primary Industries and Regional Development. The new department will combine the primary industries activities of the state and consolidate regional development functions. There were no other events that occurred after the end of the reporting period that would materially affect the financial statements or disclosures. 39 Explanatory statement

Significant variations between estimates and actual results for income and expense as presented in the financial statement titled ‘Summary of consolidated account appropriations and income estimates’ are shown below. Significant variations are generally considered to be those greater than 5% and $4 million for the Statement of comprehensive income and Statement of cash flow and greater than 5% and $8.1 million for the Statement of financial position.

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Notes to the financial statements for the year ended 30 June 2017

39 Explanatory statement (continued) 2017 2017 2016 Variance Variance Variance Original Estimate and Actual for Statement of comprehensive income Actual Actual note budget actual 2016 and 2017 Cost of service $’000 $’000 $’000 $’000 $’000 Expenses Employee benefits expense 1 114,671 110,315 108,710 (4,356) 1,605 Supplies and services 2 A 83,048 43,953 61,165 (39,095) (17,212) Depreciation and amortisation expense 9,826 7,925 11,403 (1,901) (3,478) Share of loss in joint venture entities using the equity method - 2,776 6,221 2,776 (3,445) Other expenses 3 B - 6,891 1,571 6,891 5,320 Grants and subsidies paid 4 C 11,488 27,305 19,114 15,817 8,191 Loss on disposal of non-current assets - 1,240 - 1,240 1,240 Total cost of service 219,033 200,405 208,184 (18,628) (7,779) Revenue User charges and fees 13,930 13,067 11,361 (863) 1,706 Commonwealth grants and contributions 1,766 3,389 3,530 1,623 (141) Grants and subsidies received 5 D 28,561 20,782 26,283 (7,779) (5,501) Interest revenue 858 960 661 102 299 Gain on disposal of non-current assets - - 16 - (16) Other revenue 6 7,015 11,328 12,658 4,313 (1,330) Total revenue 52,130 49,526 54,509 (2,604) (4,983) Total income other than income from state government 52,130 49,526 54,509 (2,604) (4,983) Net cost of service 166,903 150,879 153,675 (16,024) (2,796) Income from state government Service appropriations E 116,297 116,535 121,924 238 (5,389) Resources received free of charge 737 626 965 (111) (339) Royalties for Regions Fund F 44,414 46,478 36,624 2,064 9,854 Total Income from state government 161,448 163,639 159,513 2,191 4,126 Surplus/(deficit) for the period (5,455) 12,760 5,838 18,215 6,922 Other comprehensive income Items not subsequently reclassified to net cost of service Changes in asset revaluation surplus - (10,412) 982 (10,412) (11,394) Gains/(losses) recognised directly in equity - - 19 - (19) Total other comprehensive income - (10,412) 1,001 (10,412) (11,413) Total comprehensive income for the period (5,455) 2,348 6,839 7,803 (4,491)

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Notes to the financial statements for the year ended 30 June 2017

39 Explanatory statement (continued) 2017 2017 2016 Variance Variance 39 Explanatory statement (continued) 2017 2017 2016 Variance Variance Variance Original Estimate and Actual for Variance Original Estimate and Actual for Statement of comprehensive income Actual Actual Statement of financial position Actual Actual note budget actual 2016 and 2017 note budget actual 2016 and 2017 Cost of service $’000 $’000 $’000 $’000 $’000 Current assets $’000 $’000 $’000 $’000 $’000 Expenses Cash and cash equivalents 1 12,595 2,542 10,310 (10,053) (7,768) Employee benefits expense 1 114,671 110,315 108,710 (4,356) 1,605 Restricted cash and cash equivalents 2 35,868 68,182 64,953 32,314 3,229 Supplies and services 2 A 83,048 43,953 61,165 (39,095) (17,212) Biological assets 1,419 1,151 1,231 (268) (80) Depreciation and amortisation expense 9,826 7,925 11,403 (1,901) (3,478) Agricultural produce - 171 145 171 26 Share of loss in joint venture entities using the equity method - 2,776 6,221 2,776 (3,445) Inventories 861 633 573 (228) 60 Other expenses 3 B - 6,891 1,571 6,891 5,320 Receivables 4,409 4,004 5,279 (405) (1,275) Amounts receivable for services 2,589 2,589 3,975 - (1,386) Grants and subsidies paid 4 C 11,488 27,305 19,114 15,817 8,191 Assets classified as held for distribution to owners 3 A - 59,711 - 59,711 59,711 Loss on disposal of non-current assets - 1,240 - 1,240 1,240 Other current assets 4,870 1,160 1,779 (3,710) (619) Total cost of service 219,033 200,405 208,184 (18,628) (7,779) Total current assets 62,611 140,143 88,245 77,532 51,898 Revenue Non-current assets User charges and fees 13,930 13,067 11,361 (863) 1,706 Restricted cash and cash equivalents 319 245 - (74) 245 Commonwealth grants and contributions 1,766 3,389 3,530 1,623 (141) Amounts receivable for services 72,897 72,897 65,660 - 7,237 Grants and subsidies received 5 D 28,561 20,782 26,283 (7,779) (5,501) Other non-current assets 4 B 31,843 7,423 22,648 (24,420) (15,225) Interest revenue 858 960 661 102 299 Assets classified as held for distribution to owners 5 C - 15,470 2,749 15,470 12,721 Gain on disposal of non-current assets - - 16 - (16) Investment accounted for using equity method 14,611 11,669 9,451 (2,942) 2,218 Other revenue 6 7,015 11,328 12,658 4,313 (1,330) Property plant and equipment 6 D 197,756 153,080 208,233 (44,676) (55,153) Total revenue 52,130 49,526 54,509 (2,604) (4,983) Intangible assets 6,995 4,297 2,836 ( 2,698) 1,461 Total income other than income from state government 52,130 49,526 54,509 (2,604) (4,983) Total non-current assets 324,421 265,081 311,577 (59,340) (46,496) Net cost of service 166,903 150,879 153,675 (16,024) (2,796) Total assets 387,032 405,224 399,822 18,192 5,402 Current liabilities Income from state government Payables 13,898 8,609 6,100 (5,289) 2,509 Service appropriations E 116,297 116,535 121,924 238 (5,389) Provisions 28,411 23,033 25,741 (5,378) (2,708) Resources received free of charge 737 626 965 (111) (339) Total current liabilities 42,309 31,642 31,841 (10,667) (199) Royalties for Regions Fund F 44,414 46,478 36,624 2,064 9,854 Non-current liabilities Total Income from state government 161,448 163,639 159,513 2,191 4,126 Provisions 4,232 4,433 4,345 201 88 Surplus/(deficit) for the period (5,455) 12,760 5,838 18,215 6,922 Total non-current liabilities 4,232 4,433 4,345 201 88 Other comprehensive income Total liabilities 46,541 36,075 36,186 (10,466) (111) Items not subsequently reclassified to net cost of service Net assets 340,491 369,149 363,636 28,658 5,513 Changes in asset revaluation surplus - (10,412) 982 (10,412) (11,394) Equity Gains/(losses) recognised directly in equity - - 19 - (19) Contributed equity 87,674 82,310 79,145 (5,364) 3,165 Total other comprehensive income - (10,412) 1,001 (10,412) (11,413) Reserves 7 E 234,586 225,192 235,604 (9,394) (10,412) Total comprehensive income for the period (5,455) 2,348 6,839 7,803 (4,491) Accumulated surplus 8 18,231 61,647 48,887 43,416 12,760 Total equity 340,491 369,149 363,636 28,658 5,513

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Notes to the financial statements for the year ended 30 June 2017

39 Explanatory statement (continued) 2017 2017 2016 Variance Variance Variance Original Estimate and Actual for Statement of cash flows Actual Actual note budget actual 2017 and 2016 Cash flow from state government $’000 $’000 $’000 $’000 $’000 Service appropriation A 106,471 106,709 113,468 238 (6,759) Capital contributions 301 3,675 6,006 3,374 (2,331) Holding account drawdown 3,975 3,975 3,675 - 300 Royalties for Regions Fund B 49,742 46,478 36,624 (3,264) 9,854 Net cash provided by state government 160,489 160,837 159,773 348 1,064 Utilised as follows: Cash flows from operating activities Payments Employee benefits C (110,293) ( 111,070) ( 117,651) ( 777) 6,581 Supplies and services 1 D (85,626) ( 53,597) ( 64,797) 32,029 11,200 GST payments on purchases (5,132) ( 8,043) ( 8,871) ( 2,911) 828 GST payments to taxation authority 2 (5,941) ( 253) ( 177) 5,688 ( 76) Other payments 3 E (357) ( 5,298) ( 345) ( 4,941) ( 4,953) Grants and subsidies 4 F (10,488) ( 27,173) ( 19,114) ( 16,685) ( 8,059) Receipts User charges and fees 16,008 12,958 13,410 ( 3,050) ( 452) Commonwealth grants and contributions 1,766 3,257 3,530 1,491 ( 273) Interest received 858 977 1,042 119 ( 65) GST receipts on sales 5,132 3,009 3,366 ( 2,123) ( 357) GST receipts from taxation authority 5,941 6,585 3,939 644 2,646 Other receipts G 32,632 32,504 38,405 ( 128) ( 5,901) Net cash used in operating activities (155,500) (146,144) (147,263) 9,356 1,119 Cash flows from investing activities Payments Investment in joint ventures 5 - ( 4,994) ( 5,491) ( 4,994) 497 Purchase of non-current assets H (13,026) ( 13,995) ( 8,222) ( 969) ( 5,773) Receipts Proceeds from sale of non-current physical assets - 2 665 2 ( 663) Net cash used in investing activities (13,026) (18,987) (13,048) (5,961) (5,939)

Net increase/(decrease) in cash held (8,037) ( 4,294) ( 538) 3,743 ( 3,756) Cash and cash equivalents at the beginning of the reporting period 56,819 75,263 75,801 18,444 ( 538) Cash and cash equivalents at the end of the reporting period 48,782 70,969 75,263 22,187 (4,294)

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Notes to the financial statements for the year ended 30 June 2017

39 Explanatory statement (continued) Major variance narratives

Statement of comprehensive income

Variances between estimate and actual ($’000s) (continued) 1) Employee benefits expense—$4,356 variance. The reduction in employee-related costs reflects the lower average number of employees compared to estimate. 2) Supplies and services—$39,095 variance. This relates to underspend on externally funded projects which are carried over to the new financial year, and some expenditure being incurred as grants and subsidies rather than supplies and services as well as a $15,171 reduction in 2016/17 costs following the reversal of expenses as a result of capitalising water infrastructure associated with the Gascoyne Food Bowl Initiative (note 8). 3) Other expenses—$6,891 variance. This is predominantly due to the return of funds to Treasury which were provided to the department in prior periods. 4) Grant and subsidies paid—$15,817 variance. The increase in grants and subsidies as compared to estimate relates to other expenditure being incurred as grants and subsidies rather than supplies and services. 5) Grants and subsidies received—$7,779 variance. The reduction compared to estimate is due to reduced funding from the Grains Research and Development Corporation as well as other miscellaneous Commonwealth funding that was included in the estimate but not received. 6) Other revenue—$4,313 variance. The increase compared to estimate is due to higher contributions following the record season experienced by the BAMA Industry Funding Schemes.

Variances between 2017 and 2016 ($’000s) A) Supplies and services—$17,212 variance. During 2017 $15,171 of costs associated with the Gascoyne Food Bowl Initiative (note 8) were capitalised with the balance related to a higher level of project underspend. B) Other expenses—$5,320 variance. The increase in other expenses is predominantly due to the return of funds to Treasury which were provided to the department in prior periods. C) Grants and subsidies paid—$8,191 variance. The increase in grants paid is predominantly due to the support provided to the potato industry as part of its deregulation. D) Grants and subsidies received—$5,501 variance. This reduction is predominantly due to the stage and timing of projects funded through the Grains Research and Development Corporation as well as a lower level of general commercial grants especially in the horticulture sector.

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Notes to the financial statements for the year ended 30 June 2017

39 Explanatory statement (continued) Statement of comprehensive income (continued)

E) Service appropriations—$5,389 variance. The variance between 2017 and 2016 is due to the reduction in state government appropriation year on year. F) Royalties for Regions Fund—$9,854 variance. This increase reflects the higher level of planned spend on RfR-funded projects during the year including the $12.8m funding to support the potato industry through its deregulation.

Statement of financial position

Variances between estimate and actual ($’000s) 1) Cash and cash equivalents—variance of $10,053. The reduction compared to estimate is due to higher than expected payments for goods and services in the last quarter of the financial year. 2) Restricted cash and cash equivalents—variance of $32,314. The estimate did not include restricted cash on hand of $9,521 relating to the Royalties for Regions projects. The estimates also included an assumption that the special purpose accounts would be drawn down throughout the financial year—as this did not occur, fund balances have remained stable. 3) Current assets classified as held for distribution to owners—$59,711 variance. The variance between actual and estimate has occurred as a result of the South Perth location, which we have received instruction will be transferred to Landcorp imminently as part of the state government’s Land Asset Sales Program. 4) Other non-current assets—variance of $24,420. Doppler radar ($14,600) was classified as a prepayment in 2016 and assumed to stay there in the 2017 estimate. Instead, Doppler radar has been commissioned and the underlying assets transferred to property, plant and equipment in 2017 actuals. The balance of the variance relates to other RfR-funded capital items which have been delayed until the 2018/19 year. 5) Non-current assets classified as held for distribution to owners—$15,470 variance. The variance is a result of new regional locations identified as surplus to requirements and available for sale. The sales process is not expected to materialise during the 2017/18 period. 6) Property, plant and equipment—variance of $44,676. The 2016/17 actuals has $75,200 transferred out to assets held for distribution as above, $14,600 transferred in for Doppler radar and $15,171 transferred in for Gascoyne Infrastructure. 7) Reserves—variance of $9,394. This reduction reflects the latest land and building valuations provided by Landgate to the department. 8) Accumulated surplus—variance of $43,416. Please refer to the variances explained in the Statement of comprehensive income previously to obtain an understanding of the variance in the accumulated surplus. There was also a variance due to the understatement of the 2016 forecast closing accumulated surplus position which carried forward into the 2017 estimate.

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Notes to the financial statements for the year ended 30 June 2017

39 Explanatory statement (continued) Statement of financial position (continued) Variances between 2017 and 2016 ($’000s) A) Current assets classified as held for distribution to owners—$59,711 variance. The variance between 2017 and 2016 is due to the planned sale of the South Perth location (refer above). B) Other non-current assets—variance of $15,225. Doppler radar has transferred to property, plant and equipment in 2017 (see item 4 above). C) Assets classified as held for distribution to owners—variance of $12,721. The variance is a result of new regional locations identified as surplus to requirements and available for sale. D) Property, plant and equipment—variance of $55,153. The 2016/17 actuals has $75,200 transferred out to assets held for distribution as above less $15,171 transferred in for Gascoyne Infrastructure, $14,600 for Doppler radar and approximately $10,000 for other additions during the year. E) Reserves—variance of $10,412. This reduction reflects the latest land and building valuations provided by Landgate to the department.

Statement of cash flows Variances between estimate and actual ($’000s) 1) Supplies and services—$32,029 variance. This relates to underspend on externally funded projects which are carried over to the new financial year, some expenditure being incurred as grants and subsidies rather than supplies and services as well as the capitalisation of costs associated with the Gascoyne Food Bowl Infrastructure. 2) GST payments to taxation authority—$5,688 variance. This is due to an overstatement in the estimate. 3) Other payments—$4,941 variance. This is due to to the return of funds to Treasury which were provided to the department in prior periods. 4) Grant and subsidies—variance of $16,685. The increase in grants and subsidies as compared to the estimate relates to other expenditure being incurred as grants and subsidies rather than supplies and services including support provided to the potato industry post deregulation. 5) Investment in joint ventures—$4,994 variance. This reflects the additional investment in Intergrain Pty Ltd during the year which is discussed in Notes 12 and 27.

Variances between 2017 and 2016 ($’000s) A) Service appropriation—$6,759 variance. The variance between 2017 and 2016 is due to a reduction in state government appropriation year on year. B) Royalties for Regions Fund—$9,854 variance. The increase in 2017 is due to the increased RfR project activity including the potato industry adjustment initiative.

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Notes to the financial statements for the year ended 30 June 2017

39 Explanatory statement (continued) Statement of cash flows Variances between 2017 and 2016 ($’000s) (continued) C) Employee benefits—$6,581 variance. The reduction in employee costs reflects the reduced staffing level of the department. D) Supplies and services—$11,200 variance. The reduction relates to underspend on externally funded projects which are carried over to the new financial year and the capitalisation of costs associated with the Gascoyne Food Bowl Infrastructure. E) Other payments—$4,953 variance. The increased cash outflow reflects the return of funds to Treasury which were provided to the department in prior periods. F) Grants and subsidies—$8,059 variance. The variance between 2017 and 2016 is due to the timing and quantum of grant payments including the potato industry adjustment initiative of $12m. G) Other receipts—$5,901 variance. The variance between 2017 and 2016 is due to the reduced level of grants and subsidies received in 2017. H) Purchase of non-current assets—$5,773 variance. The increased spend in the current year is due to the capital spend by the department in areas such as the Northam offices, the Gascoyne Food Bowl Initiative, the upgrades to the finance and HR systems as well as several other smaller projects. 2017 2016 40 Remuneration of auditors $’000 $’000 Remuneration paid or payable to the Auditor General in respect of the audit for the current financial year

is as follows: Auditing the accounts, financial statements and performance indicators 395 397 The amount above includes the fee for the audit of the Royalties for Regions annual certificates, amounting to $80,000 (2016: $86,000). The expense is included in note 8 ‘Supplies and services’. 41 Related bodies The following industry funding schemes are deemed to be related bodies by the Treasurer: – The Cattle Industry funding scheme – The Grains, Seeds and Hay Industry funding scheme – The Sheep and Goat Industry funding scheme The funds of the three schemes are reported as Restricted cash and cash equivalents (note 20) and movements in Special purpose accounts (note 47). The transactions and results of these related bodies have been included in the financial statements.

42 Affiliated bodies The department had no affiliated bodies during the financial year.

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Notes to the financial statements for the year ended 30 June 2017

43 Jointly controlled assets The department has shared ownership of Crown land and buildings with the Department of Environment Regulation. The following amounts represent the fair value of the assets employed in the joint ownership: 2017 2016 Non-current assets $’000 $’000 Land 9,500 7,580 Building 30 1,195 9,530 8,775 The department’s share of these assets has been included in property, plant and equipment. The shared ownership of Crown land and buildings with the Department of Environment Regulation relates to the following sites: (a) Ravensthorpe was established as a purpose built co-located facility. Both parties meet all costs equally with regards to proposed future developments. The department is responsible for all costs associated with the disposal of the site should it be deemed surplus to requirements. (b) Forrestfield was established in 1993 to protect fauna and flora located on the site and the department has been responsible for all costs in regards to maintaining the site and any proposed future developments.

44 Financial instruments (a) Financial risk management objectives and policies Financial instruments held by the department are cash and cash equivalents, restricted cash and cash equivalents, Treasurer’s Advances, receivables, payables and listed and unlisted investments. The department has limited exposure to financial risks. The department’s overall risk management program focuses on managing the risks identified below. Credit risk Credit risk arises when there is the possibility of the department’s receivables defaulting on their contractual obligations resulting in financial loss to the department. The maximum exposure to credit risk at the end of the reporting period in relation to each class of recognised financial assets is the gross carrying amount of those assets inclusive of any allowance for impairment as shown in note 23 ‘Receivables’. Credit risk associated with the department’s financial assets is minimal because the main receivable is the amount receivable for services (holding accounts). For receivables other than government, the department trades only with recognised, creditworthy third parties. The department has policies in place to ensure that sales of products and services are made to customers with an appropriate credit history. In addition, receivable balances are monitored on an ongoing basis with the result that the department’s exposure to bad debts is minimal. At the end of the reporting period there was no significant concentration of credit risk.

Allowance for impairment of financial assets is calculated based on objective evidence, such as observable data in client credit ratings. For financial assets that are either past due or impaired, refer to note 44(c) ‘Financial instrument disclosures’.

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Notes to the financial statements for the year ended 30 June 2017

44 Financial instruments (continued)

Liquidity risk Liquidity risk arises when the department is unable to meet its financial obligations as they fall due. The department is exposed to liquidity risk through its trading in the normal course of business. The department has appropriate procedures to manage cash flows including drawdown of appropriations by monitoring forecast cash flows to ensure that sufficient funds are available to meet its commitments. Market risk Market risk is the risk that changes in market prices such as foreign exchange rates and interest rates will affect the department’s income or the value of its holdings of financial instruments. The department does trade in foreign currency but values are not considered material. The department is not materially exposed to other price risks (for example, equity securities or commodity prices changes). Other than as detailed in the interest rate sensitivity analysis at note 44(c), the department is not exposed to interest rate risk because apart from certain balances of restricted cash, all other cash and cash equivalents and restricted cash are non-interest bearing and there are no borrowings. (b) Categories of financial instruments The carrying amounts of each of the following categories of financial assets and financial liabilities at the end of the reporting period are as follows: 2017 2016 Financial assets $’000 $’000 Cash and cash equivalents 2,542 10,310 Restricted cash and cash equivalents 68,427 64,953 Loans and receivables(a) 82,303 72,538 Available for sale financial assets 55 55

Financial liabilities Financial liabilities measured at amortised cost 8,609 6,100

(a) Service appropriations fund the net cost of services delivered. Appropriation revenue comprises a cash component and a receivable (asset). The receivable (holding account) comprises the budgeted depreciation expense for the year and any agreed increase in leave liabilities during the year. (c) Financial instrument disclosures Credit risk The following details the department’s maximum exposure to credit risk and the ageing analysis of financial assets. The department’s maximum exposure to credit risk at the end of the reporting period is the carrying amount of financial assets as shown below. Disclosed below is the ageing of financial assets that are past due but not impaired and impaired financial assets. It is based on information provided to senior management of the department.

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Notes to the financial statements for the year ended 30 June 2017

44 Financial instruments (continued)

The department does not hold any collateral as security or other credit enhancements relating to the financial assets it holds.

2017 2016 The ageing of trade and other receivables was as follows: $’000 $’000 Neither past due nor impaired 2,173 1,482 Up to 1 month past due 144 744 1–3 months past due 259 165 3–12 months past due 78 237 1–5 years past due 73 51 Impaired trade and other receivables 178 288 2,905 2,967 Liquidity risk and interest rate exposure All the department’s financial instruments are non-interest bearing with the exception of restricted cash and cash equivalents of $34,819,637 2016: $31,578,000) which earns interest at a variable rate. The maturity date of all financial instruments is 30 days.

Interest rate sensitivity analysis The department is exposed to interest rate risk on its restricted cash and cash equivalents of $34,819,637 (2016: $31,578,000). The weighted average interest rate for restricted cash and cash equivalents is 1.975% (2016: 2.257%). A 1% change in interest rates at reporting period end would result in an increase/decrease in profit or loss and equity of $348,196 (2016: $315,780) depending upon whether interest rates increased/decreased. It is assumed that the change in interest rates is held constant throughout the reporting period.

Fair values All financial assets and liabilities recognised in the Statement of financial position, whether they are carried at cost or fair value, are recognised at amounts that represent a reasonable approximation of fair value unless otherwise stated in the applicable notes.

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Notes to the financial statements for the year ended 30 June 2017 2017 2016 45 Supplementary financial information $’000 $’000 (a) Write-offs Non-current assets During the financial year $78,298 (2016: $0) was written off the department’s asset register under

the authority of: The accountable authority 78 - The Minister - - 78 - Irrecoverable amounts and inventory During the financial year $136,423 (2016: $107,812) was written off in bad debts and inventory

under the authority of: The accountable authority 136 108 The Minister - - 136 108 Biological assets During the financial year $60,000 (2016: $30,000) was written off the department’s ledger under

the authority of: The accountable authority 60 30 The Minister - - 60 30 (b) Losses through theft, defaults and other causes Losses of public moneys and public and other property through theft or default - - Amounts recovered—insurance - - - -

2017 2016 46 Indian Ocean Territories Service Level Agreement $’000 $’000 The provision of services to the Indian Ocean territories are recouped from the Commonwealth

Government. Opening balance 35 (63) Receipts 132 228 Payments (105) (130) Closing balance 62 35

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Notes to the financial statements for the year ended 30 June 2017 47 Special purpose accounts 2017 2016 Agriculture Research Grants Account No. 1 (non-interest bearing) $’000 $’000 The purpose of the fund is to receive and disperse funds from industry and other organisations in

support of agricultural research projects. Balance at start of period 18,560 16,270 Receipts 31,629 33,297 Payments (33,302) (31,007) Balance at end of period 16,887 18,560

Agriculture Research Grants Account No. 2 The purpose of the fund is to receive and disperse funds from industry and other organisations in

support of agricultural research projects. Balance at start of period 4,103 3,244 Receipts 733 3,714 Payments (1,685) (2,855) Balance at end of period 3,151 4,103

Commonwealth Agriculture Activity Grants (non-interest bearing) The purpose of the fund is to receive and disperse funds to conduct Commonwealth-funded activities. Balance at start of period 3,042 1,308 Receipts 3,604 3,357 Payments (2,094) (1,623) Balance at end of period 4,552 3,042

Plant Research and Development The purpose of the fund is to receive and disperse funds to conduct plant research and development in

Western Australia. Balance at start of period 10,342 8,655 Receipts 1,228 1,822 Payments (179) (135) Balance at end of period 11,391 10,342

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Notes to the financial statements for the year ended 30 June 2017 47 Special purpose accounts (continued) 2017 2016 Cattle Industry Funded Scheme $’000 $’000 The purpose of the fund is to receive and disperse funds from the cattle industry to enable industry to self-determine and self-fund appropriate responses to serious pest and disease incursions which

predominantly impact on the industry sector and which are not otherwise covered under existing arrangements at the national level. Balance at start of period 5,475 5,447 Receipts 395 334 Payments (292) (306) Balance at end of period 5,578 5,475

Declared Pest Account The purpose of the fund is to receive and disperse funds collected to carry out measures to control

declared pests on and in relation to areas for which the rates were collected. Balance at start of period 1,917 1,838 Receipts 3,557 2,192 Payments (2,680) (2,113) Balance at end of period 2,794 1,917

Land Conservation Districts Fund The purpose of the fund is to promote soil conservation through research and implementation of soil and

conservation measures and practices. Balance at start of period 42 41 Receipts 164 63 Payments (62) (62) Balance at end of period 144 42

Grain, Seeds and Hay Industry Funded Scheme The purpose of the fund is to receive and disperse funds from the grain, seeds and hay industry to enable the industry to self-determine and self-fund appropriate responses to serious pest and disease incursions

which predominantly impact on the industry sector and which are not otherwise covered under existing arrangements at the national level. Balance at start of period 7,740 7,631 Receipts 5,394 4,016 Payments (3,378) (3,907) Balance at end of period 9,756 7,740

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Notes to the financial statements for the year ended 30 June 2017 47 Special purpose accounts (continued) Sheep and Goats Industry Funded Scheme 2017 2016 $’000 $’000 The purpose of the fund is to receive and disperse funds from the sheep and goats industry to enable the industry to self-determine and self-fund appropriate responses to serious pest and disease incursions which predominantly impact on the industry sector and which are not otherwise covered under existing arrangements at the national level. Balance at start of period 1,959 1,623 Receipts 872 895 Payments (817) (559) Balance at end of period 2,014 1,959

48 Disclosure of administered income and expenses by service Co-operative loans Commonwealth grants State NRM program Total 2017 2016 2017 2016 2017 2016 2017 2016 Cost of service $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 Expenses Grants, subsidies & transfer - - 2,863 4,475 8,096 4,372 10,959 8,847 payment Interest payments 997 647 - - - - 997 647 Other expenses 370 1,034 - - 647 648 1,017 1,682 Total administered expenses 1,367 1,681 2,863 4,475 8,743 5,020 12,973 11,176

Income Service appropriation - - - - 1,600 1,600 1,600 1,600 Royalties for Regions - - - - 6,195 6,330 6,195 6,330 Interest revenue 1,367 882 98 189 - - 1,465 1,071 Other revenue - 20 384 (314) 26 78 410 (216) Total administered income 1,367 902 482 (125) 7,821 8,008 9,670 8,785

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Notes to the financial statements for the year ended 30 June 2017

49 Explanatory statement for administered items Variance 2017 Variance Variance actual Original 2017 Actual 2016 Actual estimate note 2017 and budget and actual 2016 Cost of service $’000 $’000 $’000 $’000 $’000 Expenses Grants, subsidies & transfer payment 1, A 8,297 10,959 8,847 2,662 2,112 Interest payments 2, B 871 997 647 126 350 Other expenses C 1,044 1,017 1,682 (27) (665) Total administered expenses 10,212 12,973 11,176 2,761 1,797 Income Service appropriation 1,600 1,600 1,600 - - Interest revenue 3,D 1,122 1,465 1,071 343 394 Other revenue 4,E - 410 (216) 410 626 Royalties for Regions Fund—Regional Infrastructure 6,195 6,195 6,330 - (135) and Headworks Fund Total administered income 8,917 9,670 8,785 753 885

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Notes to the financial statements for the year ended 30 June 2017

49 Explanatory statement for administered items (continued)

Variances between estimate and actual ($’000s) 1) Grants, subsidies & transfer payment—variance of $2,662. This relates to grant payments from the Commonwealth Single Holdings Account (CSHA) not included in the current year budget. Funding decisions regarding the CSHA are made during the financial year. 2) Interest payments—variance of $126. New Co-operative loans issued during 2016/17 have resulted in higher interest payments being made based upon a higher loan principal amount outstanding. This is offset by higher interest receipts from loan recipients. 3) Interest revenue—variance of $343. Refer note 2 above. 4) Other revenue—variance of $410. This relates to the correction of an incorrect GST adjustment recorded against the CSHA other revenue in 2016.

Variances between 2017 and 2016 ($’000s) A) Grants, subsidies & transfer payment—variance of $2,112. This relates to additional grants paid from the CSHA in the current year. B) Interest payments—variance of $350. The average outstanding loan balance of the Co-operative loan scheme is higher than 2016, resulting in increased interest charges. This is offset by the higher interest earned on the increased principal amounts owing (see note D below). C) Other expenses—variance ($665). 2016 included operating expenses for previous years in relation to the Co-operative loan portfolio. The charge for 2017 is the normal annual charge. D) Interest revenue—variance of $394. Refer to note B above. This relates to the increased loans made available to loan recipients under the Co-operative loan scheme. E) Other revenue—variance of $626. This relates to the correction of an incorrect GST expense recorded against the CSHA in 2016.

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Notes to the financial statements for the year ended 30 June 2017

50 Disclosure of administered assets and liabilities by service Co-operative loans Commonwealth grants State NRM program Total 2017 2016 2017 2016 2017 2016 2017 2016 Statement of assets and liabilities $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

Current assets Cash and cash equivalents - - 2,643 5,016 5,981 6,709 8,624 11,725 Receivables 5,335 8,789 20 29 38 233 5,393 9,051 Total administered current assets 5,335 8,789 2,663 5,045 6,019 6,942 14,017 20,776

Non-current assets Loan 27,255 22,679 - - - - 27,255 22,679 Total administered non-current assets 27,255 22,679 - - - - 27,255 22,679

Total administered assets 32,590 31,468 2,663 5,045 6,019 6,942 41,272 43,455

Current liabilities Payables ------Borrowings 5,335 8,789 - - - - 5,335 8,789 Total administered current liabilities 5,335 8,789 - - - - 5,335 8,789

Non-current liabilities Borrowings 27,255 22,679 - - - - 27,255 22,679 Total administered non-current liabilities 27,255 22,679 - - - - 27,255 22,679 Total administered liabilities 32,590 31,468 - - - - 32,590 31,468

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Additional key performance indicator information

Certification of key performance indicators For the year ended 30 June 2017 I hereby certify that the key performance indicators are based on proper records, are relevant and appropriate for assisting users to assess the Department of Agriculture and Food, Western Australia’s performance, and fairly represent the performance of the department for the financial year ended 30 June 2017. At the date of signing, we are not aware of any circumstances which would render any particulars included in this section misleading or inaccurate.

Mandy Taylor Reporting Officer 15 August 2017

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Detailed information in support of key performance Table 6 shows that our expenditure of co-invested funds was 22.7%, indicators a reduction in comparison to our 2015/16 result (of 24.6%), and below our 2016/17 target of 25%. While we had success in encouraging significant investment in the Productive Natural Resources and Assessing our effectiveness Productivity Improvement and Innovation services, we were below target in relation to the remaining four services. Effectiveness indicator 1: Proportion of co-investment in DAFWA-led initiatives We attribute this to the completion of several major contracts; our primary focus on the Royalties for Regions (RfR) funded Seizing the This KPI allows us to understand our effectiveness in encouraging Opportunity initiative (which is not considered a co-investment as the industry and others to invest alongside the Western Australian funds stem from the state government); and the continuing decline Government in developing and promoting WA’s agrifood sector. in the department’s overall funding. We expect co-investment to Investment included under this KPI relates to both cash and in-kind increase in 2017/18 as new co-investments — currently in the pipeline resources for all work undertaken, or commissioned by us, and funded — come to fruition. Projects include enhanced agronomic strategies in part by the Western Australian Government, excluding those in which for improved crop performance on water repellent soils in WA in we play a purely administrative role. partnership with the Grains Research and Development Corporation (valued at over $1 million), and value chain capability development in This KPI includes co-investment through entities created as a means partnership with various research development corporations. of building collaboration, such as AEGIC Ltd, but excludes profit- oriented entities established to ensure the successful commercialisation of activities no longer receiving direct government support, such as InterGrain Pty Ltd.

Table 6 Proportion of co-investment in DAFWA-led initiatives 2013/14 2014/15 2015/16 2016/17 2016/17 Variation (%) (%) (%) Target Actual (%) (%) (%) Co-investment in DAFWA-led initiatives 33.8 25.0 24.6 25.0 22.7 –2.3 (percentage NCoS*) Source: DAFWA; *NCoS = net cost of service

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Effectiveness indicators 2–4: Industry views on our Table 7 Threshold stocking and production levels for producers effectiveness considered in the 2017 survey A further three effectiveness indicators are used to evaluate the Principal product type Threshold department’s impact on the profitability, innovativeness and environmental sustainability of the agrifood sector. These indicators Sheep >2000 head are determined by a survey of agrifood producers, intermediaries and Grain >500 tonnes harvested consultants undertaken each year in May, and captures the view of at Beef – agricultural >500 head least 400 respondents. Beef – pastoral >2500 head The survey Intensive livestock This year’s survey involved 401 respondents comprising 301 primary – Dairy >200 head producers, 67 intermediaries (primarily processors, marketers and – Pig (breeders) >50 sows exporters) and 33 agribusiness consultants. It was designed, executed and analysed by Painted Dog Research. Producer respondents were – Pig (growers) >1000 head drawn primarily from the state’s major agricultural industries — grains, – Poultry >10 000 head sheep, beef, dairy and horticulture. To the extent possible, the survey focused on larger producers, as per the threshold criteria set out in A new approach to our business Table 7. Scale criteria were not applied to horticultural producers, due to the diversity of their production systems, or to intermediaries or In 2015 and 2016, the department undertook an extensive review of consultants. its current functions and future direction in response to significant changes to the structure of the department and its available resources. Out of this, the department developed a new approach to its business relationship with industry, including: • a more effective partnership and vision with industry • a better relationship with those seeking to maintain their business at current levels • a focus on building the deep foundations for growth • better leveraging of the department’s skills, resources and linkages • stronger advocacy and representation of the sector.

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The department believes that this new approach has a direct bearing on Table 8 Respondent ratings of DAFWA’s impact (five or above) on this year’s effectiveness indicator results. profitability, sustainability and fostering innovation – actuals v. target Amended indicator benchmark 2016/17 2016/17 Impact scored 2013/14 2014/15 2015/16 Variation Respondents rated our impact on a scale from zero to 10, with Target Actual at 5 or above (%) (%) (%) (%) zero representing ‘no impact at all’ and a score of 10 indicating the (%) (%) department ‘had a very strong impact’. A score of five or above is Profitability 54.9 46.1 42.1 40.0 41.5 1.5 considered a ‘moderate to significant’ impact, and is now the formal benchmark for these indicators. In prior years, only scores of six or Innovativeness 54.2 45.8 40.5 40.0 43.7 3.7 above were considered, this being deemed a ‘significant’ impact. Sustainability 60.5 46.9 47.0 43.0 47.7 4.7 The change was made on the basis that, in previous years, scores of five and above had shown greater variation — and hence greater Table 9 Respondent ratings of DAFWA’s impact (six or above) on interpretative value — than when they were restricted to scores of six profitability, sustainability and fostering innovation – actuals v. and above. previous year actuals As this is the first time this amended benchmark is reported, both are 2016/17 Variation from shown, in separate tables, for comparison purposes. The latter table Impact scored 2013/14 2014/15 2015/16 Actual 2015/16 actual (Table 9) does not include a 2016/17 target. at 6 or above (%) (%) (%) (%) (%) Overall, we believe that this year’s survey results reinforce that the Profitability 29.3 24.6 24.6 27.2 2.6 department’s new approach and strategic direction has improved our engagement with stakeholders and our ability to respond to their Innovativeness 29.1 24.7 23.2 23.5 0.3 evolving needs. This year’s results appear to arrest the decline seen Sustainability 37.5 28.6 27.0 31.5 4.5 over the past three years, with all three indicators being roughly in line with our 2015/16 results (Table 8). All three results are above the The survey also highlighted growing confidence and optimism about 2016/17 target, which had been set in light of the preceding results. the future among respondents. This reflects a number of reasons, including current high produce prices, strong demand for products and confidence in the future of the industry.

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Key survey messages for each of the respondent groups Table 10 Respondent ratings of DAFWA’s impact on profitability (five or above) – actuals v. target • Where historically primary producers rate the department more favourably across all KPIs than intermediaries and consultants, 2016/17 2016/17 Impact scored 2013/14 2014/15 2015/16 Variation this year’s results showed a slight reduction in their rating of the Target Actual at 5 or above (%) (%) (%) (%) department’s influence on profitability and sustainability, and only a (%) (%) slight increase in innovation. Profitability 54.9 46.1 42.1 40.0 41.5 1.5 • There was a significant increase in intermediaries rating the department’s influence on sustainability and innovation, although Table 11 Respondent ratings of DAFWA’s impact on profitability (six a small reduction in profitability. This improvement is likely due to or above) – actuals v. previous year actuals the department’s suite of RfR projects which seek to improve its engagement with this group of clients. 2016/17 Variation from Impact scored 2013/14 2014/15 2015/16 Actual 2015/16 actual • Across all three KPIs, there was a significant improvement in at 6 or above (%) (%) (%) consultant’s ratings of the department’s influence. Our relationship (%) (%) with consultants is one in which many consultants use knowledge Profitability 29.3 24.6 24.6 27.2 2.6 and products created by the department with their clients. To further understand this KPI, respondents are also asked about their Effectiveness indicator 2: Proportion of businesses that aspirations for business growth, and whether they are seeking to grow, consider DAFWA has positively influenced the profitability of maintain or reduce their business. the sector The 2016/17 survey found that 53% of respondents are seeking to This year’s survey indicated that, across all respondents, 41.5% rated grow their business over the next three years, and 35% are seeking to the department as having a moderate to significant impact on the maintain their current business size and structure. Of those looking profitability of their industry over the past year. This result is marginally to increase, 43% rated the department’s influence on profitability as down on the 2015/16 result of 42.1%, but above the 2016/17 target of moderate to significant, in line with last year’s result of 44%. 40% (Table 10). Similarly, of those seeking to grow their businesses, it was again the There was significant improvement in terms of the rating received newer entrants to the sector that rated us most highly, continuing a from consultants, with 60% viewing the department’s influence on similar trend identified in last year’s report. Of respondents with 20 profitability as moderate to significant, compared to just 40% in years or less experience in the industry, 46% rated our impact on the 2015/16. Primary producers and intermediaries ratings were largely profitability of the sector as moderate to significant. consistent with last year’s results (further detail provided under effectiveness indicator 3).

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Effectiveness indicator 3: Proportion of businesses that Among the group of respondents seeking to grow their business, consider DAFWA has fostered innovation in the sector 44.8% rated the department’s impact on innovation in their industry as moderate to significant. This highlights that our impact on the key group The impact of the department on the ability of industry to make who will drive the future growth of the sector is positive. changes in the future is used as a proxy for the department fostering innovation in the sector. Our focus under this indicator is support to It is noted that there was a significant increase in the rating of the businesses to be able to make timely, locally relevant and evidence- department’s influence on innovation from both intermediaries (34%) based decisions. and consultants (51%), compared with 2015/16 results of 28% and 35% respectively. Primary producers ratings were little changed, at This year’s survey highlights that 43.7% of respondents rate the 45% to 44% for 2015/16 and 2016/17 respectively. The department department’s impact on their innovativeness as moderate to significant. considers it met this performance indicator. This is an improvement on last year’s result of 40.5%, and is higher than our 2016/17 target of 40.0% (Table 12). This is a positive sign, noting that although the department has had to reduce its total staff contingent, it is still able to deliver products and services which go beyond its core regulatory functions. Table 12 Respondent ratings of DAFWA’s impact on innovativeness (five or above) – actuals v. target Impact scored 2013/14 2014/15 2015/16 2016/17 2016/17 Variation at 5 or above (%) (%) (%) Target Actual (%) (%) (%) Innovativeness 54.2 45.8 40.5 40.0 43.7 3.7

Table 13 Respondent ratings of DAFWA’s impact on innovativeness (six or above) – actuals v. previous year actuals

Impact scored 2013/14 2014/15 2015/16 2016/17 Variation from at 6 or above (%) (%) (%) Actual 15/16 actual (%) (%) Innovativeness 29.1 24.7 23.2 23.5 0.3

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Effectiveness indicator 4: Proportion of businesses that The department’s work under this indicator has changed over the past consider DAFWA has positively influenced the sustainability few years, noting that structural change within the department resulted of the sector in it having to re-consider its approach to working with industry, while also delivering on its core regulatory functions such as biosecurity. The The final effectiveness KPI relates to our impact on the environmental department believes that its revised strategic direction and approach is sustainability of the agrifood sector. Of the total respondents, 47.7% a key factor improving its effectiveness in delivering targeted programs rated our impact as moderate to significant, a small increase over the and projects. The department considers it has met this performance 2015/16 result of 47%, and higher than our 2016/17 target of 43% indicator. (Table 14). Table 14 Respondent ratings of DAFWA’s impact on sustainability Assessing our efficiency (five or above) – actuals v. target The efficiency with which we undertake each of our Services is 2016/17 2016/17 estimated by the same two indicators: the net cost of each service as Impact scored 2013/14 2014/15 2015/16 Variation Target Actual a factor of the gross value of agricultural production (GVAP); and the at 5 or above (%) (%) (%) (%) (%) (%) extent of co-investment we attract to each Service. We first reported our performance against these KPIs in our 2012 report. Sustainability 60.5 46.9 47.0 43.0 47.7 4.7 Changes to our outcome based management framework Table 15 Respondent ratings of DAFWA’s impact on sustainability In January 2016, the department adopted a new parliamentary (six or above) – actuals v. previous year actuals reporting structure which was first presented in the 2016/17 State 2016/17 Variation from Budget. The principal changes included as part of the new structure Impact scored 2013/14 2014/15 2015/16 Actual 15/16 actual were the replacement of the existing three services with six new at 6 or above (%) (%) (%) (%) (%) services (detailed below), and the addition of a third state government goal — ‘Financial and Economic Responsibility’. The changes seek to Sustainability 37.5 28.6 27.0 31.5 4.5 provide parliament and our stakeholders with greater detail and more meaningful information on the department’s services. Unlike the effectiveness indicators, this report only considers the six new Services as there is no direct alignment between these and the former three Services. Therefore, we are unable to recast prior years’ comparatives.

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1. Net Service cost as a factor of GVAP 2. Co-investment in DAFWA-led initiatives related to net cost This indicator compares our investment in each Service area with the of service GVAP for Western Australia as calculated by the Australian Bureau of Co-investment is used here as an indicator of our efficiency in Statistics (ABS). leveraging the state government’s investment by partnering with other parties — across other governments, industry and the community — to The GVAP figure used in these KPIs of $7.8 billion represents the invest in the same strategic goals we seek to achieve. average of the past five years of published GVAP values. The average is used to minimise the annual variability that results from seasonal and We do not include funding from the RfR program as ‘co-investment’ in other influences. This value continues the upward trend of the GVAP this context because it is sourced from the state government. However, five-year average in WA. we do include third party funding linked to individual RfR projects. GVAP understates the overall economic activity of the sector, as it does Co-investments may be provided in the form of cash or in-kind not include activity that happens past the farm gate. However, it is the contributions. most consistent, independent and broadly based benchmark relevant to the sector. An increase in this KPI represents a more efficient service.

GVAP varies significantly between the years as a result of climatic, Service 1: Market development, investment and market marketing and other influences. WA’s GVAP for 2015/16 (the most access recent figure available) was $8.2 billion. Although lower than the 2013/14 result of $8.6 billion, it is an improvement on the 2014/15 result This Service is about helping WA agrifood businesses increase their of $7.9 billion. attractiveness to markets by developing the marketing and business arrangements they need to remain competitive in global and domestic The net cost of service represents funding provided to the department markets. by the state government, less revenue returned to government by the department through fees, charges and sales. This involves facilitating coordinated growth initiatives and aligning leading suppliers with the most capable in-market partners. The work A reduction in this KPI represents a more efficient service in that a across the value chain aims to ensure that markets see a strong value smaller investment by government is linked to increased economic proposition in dealing with WA companies. activity for the state.

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Efficiency indicators Service 2: Productivity improvement and innovation

1.1 Net service cost as a factor of GVAP This Service involves helping businesses optimise the technical side of their business by increasing the volume and cost effectiveness of their Table 16 shows that the net cost of this Service represented 0.26% of products. the gross value of Western Australia’s agricultural production. This is a better result than our target of 0.30%, and appears to be as a result It is aimed at helping businesses deliver the products that make the of a more efficient service delivery model, and an increase in Western best, sustainable use of their skills and resources. It involves working Australia’s GVAP five-year average. The department considers that it with producers and processors across the value chain to improve met this indicator. products and production systems, or adopt new ones, with greater potential for growth; and providing related decision-making tools. The 1.2 Public and private sector co-investment in DAFWA-led department considers that it met both efficiency indicators for this initiatives related to this Service as a factor of the net cost of service. this Service Efficiency indicators Co-investment in this Service was equivalent to 11.6% of the net funding provided by the state government, below our target of 15% 2.1 Net service cost as a factor of GVAP (Table 16). As we were 3.4% short of our 2016/17 target, we did not meet this indicator. Market development, investment and market access Supporting productivity improvement and innovation, such as the is considered critical to enabling the growth of the agrifood sector, use of technology and automation, is essential to driving growth particularly in Asia, and highlights the need for the department to play a and profitability across the agrifood sector. This year’s result of bigger role in attracting investment in this Service. 0.27% improved on our 2016/17 target of 0.30% (Table 17). While it is acknowledged that a lower net service cost as a factor of GVAP Table 16 Market development, investment and market access represents a more efficient service, we expect expenditure on this Service to increase in the future as we seek to increase the agrifood 2016/17 2016/17 Variation sector’s contribution to the state’s economy. Target Actual Net cost of service 0.30 0.26 –0.04 (% of GVAP) Co-investment in this 15.0 11.6 –3.4 service (% of NCoS*) Source: DAFWA, ABS; *NCoS = net cost of service

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2.2 Public and private sector co-investment in DAFWA-led Service 3: Business development and promotion initiatives related to this Service as a factor of the net cost of This Service relates to the department’s focus on the commercial this Service components needed for success — facilitating investment ready Table 17 shows that co-investment in this Service was equivalent value chains, and business skills and knowledge based on the latest to 69.7% of the net funding provided by the state government, well information. above our 2016/17 target of 45% (Table 17). Productivity improvement and innovation is a key service in supporting and enabling growth It involves working with agrifood businesses to refine their existing and productivity across the agrifood sector. This result highlights that commercial structures and arrangements or, where necessary, to adopt industry supports the state government’s investment in this service, and new ones better suited to their future needs. the growth and productivity outcomes that it delivers. The Service supports businesses in their efforts to increase the quality Table 17 Efficiency indicators for DAFWA’s Productivity and marketability of their existing and emerging products, and manage Improvement and Innovation Service associated business risks.

2016/17 2016/17 Variation Efficiency indicators Target Actual Net cost of service 0.30 0.27 –0.03 3.1 Net service cost as a factor of GVAP (% of GVAP) Table 18 shows that the net cost of this Service represented Co-investment in this 45.0 69.7 24.7 0.16% of the gross value of Western Australia’s agricultural service (% of NCoS*) production, an improvement on our 2016/17 target of 0.20%. Source: DAFWA, ABS; *NCoS = net cost of service We expect expenditure on this Service to increase in the future, with particular attention focused on developing a value-adding sector for exporting WA’s premium agricultural produce. The department considers that it met this indicator.

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3.2 Public and private sector co-investment in DAFWA-led Service 4: Productive natural resources initiatives related to this Service as a factor of the net cost of This Service is about supporting the productive capacity of the this Service natural resources and biological assets that underpin the economic Co-investment in this Service was equivalent to 21.7% of the net development of the sector. Healthy land, soil, water, native vegetation funding provided by the state government, below our target of 25% and biodiversity are essential to both the viability of the agrifood sector (Table 18). While we did not meet this KPI, we believe that we will be and its contribution to the state. able to better demonstrate to industry the benefits of investment in this Service to increase the effectiveness of their business systems, The department aims to ensure that industry is able to grow while practices and relationships. responsibly managing resources and biosecurity. This involves working with other agencies, industry and communities to develop coordinated Table 18 Efficiency indicators for DAFWA’s Business Development approaches to assessing, funding and managing critical threats. and Promotion Service Efficiency indicators 2016/17 2016/17 Variation Target Actual 4.1 Net service cost as a factor of GVAP Net cost of service 0.20 0.16 –0.04 The net cost to the state government of this Service in 2016/17 (% of GVAP) represented 0.07% of the gross value of Western Australia’s agricultural Co-investment in this 25.0 21.7 –3.3 production, a significant improvement on the 2016/17 target of 0.20% service (% of NCoS*) (Table 19). However, the reduction in net cost was largely due to costs associated with the RfR Gascoyne Food Bowl Initiative being Source: DAFWA, ABS; *NCoS = net cost of service capitalised rather than expensed. The target was set on the basis that these costs would be recorded as expenses. Further information on this change can be found in the notes to the financial statements section of this report. The department considers that it met both efficiency indicators for this Service.

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4.2 Public and private sector co-investment in DAFWA-led Service 5: Biosecurity and product integrity initiatives related to this Service as a factor of the net cost of This Service relates to the department’s legislative and regulatory this Service responsibilities (such as biosecurity, animal welfare and emergency Co-investment in this Service was equivalent to 100.1%, well above the response); and its role in developing product integrity – one of our 2016/17 target of 35% (Table 19). While we are satisfied with the level of foremost advantages in global agrifood trade. investment we were able to attract to this Service, and consider this KPI to be met, it is noted that the 2016/17 result is over-stated as a result It aims to provide the information and services stakeholders need of the RfR Gascoyne Food Bowl initiative being capitalised rather than to understand the value and potential of our agrifood products and expensed. industries. This includes addressing consumer preferences regarding food safety, reliability of supply and ethical production. Table 19 Efficiency indicators for DAFWA’s Productive Natural Resources Service Efficiency indicators 2016/17 2016/17 Variation Target Actual 5.1 Net service cost as a factor of GVAP Net cost of service Table 20 shows that the net cost to the state government of this Service 0.20 0.07 –0.13 (% of GVAP) in 2016/17 represented 0.64% of the gross value of Western Australia’s agricultural production, an improvement on the 2016/17 target of 0.80% Co-investment in this 35.0 100.1 65.1 (Table 20). As previously detailed, 2016/17 is the first year in which service (% of NCoS*) our department is reporting against a revised parliamentary reporting Source: DAFWA, ABS; *NCoS = net cost of service structure. While we met this KPI, we will continue to refine our targets to ensure we are delivering this Service as efficiently and effectively as possible.

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5.2 Public and private sector co-investment in DAFWA-led Service 6: A business environment for growth initiatives related to this Service as a factor of the net cost of This Service is about the department’s leadership in partnering with this Service stakeholders across the regulatory, policy and planning settings Table 20 shows that co-investment expenditure related to this Service affecting the agrifood sector. was equivalent to 11.0% of state government expenditure on this Service, well below our 2016/17 target of 25%. Our inability to meet It involves working with relevant organisations at all levels to ensure this KPI is likely a result of setting our 2016/17 target too high (noting legislation, policies and practices support sustained industry growth 2016/17 is the first time we have reported against this Service), with while safeguarding the long term interests of the sector and State. some biosecurity activities — such as supporting the productive It requires building the combined ability of governments, industry capacity of our natural resources — also being captured under Services and the broader community to develop the sector, while dealing with 2, 3 and 4. Nonetheless, we note the importance of biosecurity to biosecurity and natural resource risks. unlocking the growth potential of the agrifood sector, and acknowledge that we need to work harder to engage industry and ensure that Efficiency indicators biosecurity activities are adequately funded. We did not meet this KPI. Table 20 Efficiency indicators for DAFWA’s Biosecurity and Product 6.1 Net service cost as a factor of GVAP Integrity Service Table 21 shows that the net cost of this Service represented 0.53% of 2016/17 2016/17 the gross value of Western Australia’s agricultural production, higher Variation Target Actual than our 2016/17 target of 0.50%. This is primarily as a result of an increase in expenditure (of $12 million) to facilitate a potato industry Net cost of service 0.80 0.64 –0.16 adjustment payment, from the RfR fund, following the close of the (% of GVAP) Potato Marketing Authority. As this payment was not reflected in the Co-investment in this 2016/17 target, we did not meet this KPI. However, it is noted that if this 25.0 11.0 –14.0 service (% of NCoS*) one-off expense was removed from the net service cost, the 2016/17 actual would have equated to approximately 0.37%, better than our Source: DAFWA, ABS; *NCoS = net cost of service target of 0.50%.

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6.2 Public and private sector co-investment in DAFWA-led initiatives related to this Service as a factor of the net cost of this Service Co-investment expenditure related to this Service was equivalent to 7.8% of state government expenditure on this Service, and below our 2016/17 target of 10% (Table 21). While we did not meet this KPI, it is noted that the 2016/17 result was impacted by the potato industry adjustment payment (as detailed above), which was not factored into the 2016/17 target. It is noted that if we were to exclude this payment, co-investment would have equated to approximately 11.1% of expenditure, slightly better than our target of 10%). Table 21 Efficiency indicators for DAFWA’s Business Environment for Growth Service 2016/17 2016/17 Variation Target Actual Net cost of service 0.50 0.53 0.03 (% of GVAP) Co-investment in this 10.0 7.8 –2.2 service (% of NCoS*) Source: DAFWA, ABS; *NCoS = net cost of service

End of audited Additional KPI information section.

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Our department is getting phone app and an advanced as cameras and mini-computers smart when it comes to using identification tool — to improve linked to the internet, to allow technology to protect valuable early detection and diagnosis real-time identification of pests, crops against pests and diseases. of endemic crop pests and such as moths and aphids, In focus diseases. as well as the canola disease During the year, we explored sclerotinia. a high-tech,In multi-layered The automatic traps, which will approach — incorporating focus an be placed in crops around the The MyPestGuide CropScout array of automatic traps, a smart grainbelt, use technology such phone app — due for release in the second half of 2017 — beet western yellows virus in the has been developed to help field. LAMP detects plant viruses Technologies like Smart detection and diagnosis can grain growers to monitor crops at a molecular level, amplifying significantly aid extension capacity and return on over increasingly large farming DNA, to provide an early warning investment for growers who need real-time decision- properties. The app simplifies and system in association with accelerates surveying for cabbage traditional diagnosis tools. making tools.” – Tim Boyes, agVivo agronomist and turnip aphids in canola, and will be used as a model for future The research is part of the RfR- “ applications. funded Boosting Grains Research and Development project. We also started using Loop- mediated isothermal amplification It also links with a new Australian (LAMP) technology to increase Government Rural Research and the speed and accuracy of the Development for Profit project diagnosis of pests and diseases that will provide a foundation such as green peach aphid and for a nationwide surveillance network.

Smart array crop monitoring with Development Officer Dusty Severtson and Research Officer Brenda Coutts

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Ministerial directives No Ministerial directives were received during the financial year. Equipment replacement program and capital works Core research, business and field capital equipment, together Other financial disclosures with capital works, are procured and delivered through an annual rolling program. Completed capital works included upgrades related to laboratories, glasshouses and netted field plots at Pricing policies of services provided Northam and Katanning as well as staff accommodation and the power generation plant at the Eucla and Kununurra quarantine DAFWA charges on a full or partial cost recovery basis for some border checkpoints respectively. goods and services, with fees and charges determined in accordance with costing and pricing of government services published by the Property rationalisation program Department of Treasury. The 2016/17 list of fees and charges was implemented on 1 July 2016. Our Strategic Asset Plan identifies surplus properties in metropolitan and regional areas. Surplus properties are Services may be exempted from charges where, for example, services progressed for sale or transfer through the whole-of-government are deemed essential for a competent analysis of a problem by an property disposal program. officer; the service relates to an outbreak of a suspected exotic disease; or the service involves approved research or surveillance. Government Building Training Policy The department does not enter into building and construction contracts; these are managed by the Department of Finance, Building Management and Works (BMW), on our behalf and will therefore be reported on in their annual report. Capital works Minor maintenance work may be contracted in the regions but these contracts would be below the $2 million threshold. Table 22 Capital works projects Year of Approved budget Total cost Cost variation Explanation of variation completion 2016/17 (estimated) $’000 $’000 $’000 Capital projects completed Equipment Replacement 2017 4044 4169 125 Includes approved 2015/16 carry over of $125 000 Program & capital works

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Employment and industrial relations Corporate support reform Table 23 Staff profile and work classification profile (FTE) We are effectively managing our resources in response to the state’s budget position, including the agency expenditure review and the public Staff profile (average FTE over the year) 2017 2016 sector workforce renewal policy. Full-time permanent 713 729 Fourteen staff ceased employment in 2016/17 through voluntary Full-time contract 120 101 severance. Part-time permanent 97 95 The severance decisions were based on our department’s financial Part-time contract 49 36 position and identification of where effort should be reduced or ceased. On secondment in from other agencies 6 3 In the departure of these staff, we ensured ongoing communications between affected staff and unions, captured corporate knowledge, and On secondment out to other agencies 5 9 maintained key client relationships. Total 990 973 Through continued workforce planning, we are reassigning staff to support mission-critical positions and high-priority functions.

1500 Workplace reform 1200 Consistent with government policy on labour relations, we have an Agency Specific Agreement (ASA). This agreement provides our 900 department and staff with mutually beneficial conditions of employment and cost-effective work practices. A process of continuous review of 600 conditions of employment and work practices occurs in consultation Number of FTEs 300 with staff, managers and unions. The parties have agreed to continue the existing ASA arrangements. 0 2012 2013 2014 2015 2016 2017

Figure 6 FTE levels at 30 June 2012–17

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Employee development • building staff preparedness for change through support and training in the areas of personal financial management; selection We continue to develop and maintain a highly skilled, professional and criteria and resume writing skills; and building resilience through equitable workforce, able to adapt to changing technology, knowledge times of change and environments. • running the annual contact and grievance officer conference for Key activities during 2016/17 included: staff who volunteer to assist with the resolution of workplace grievances. The conference focused on workplace change • commencing the graduate development program for the and skills for adapting to change; as well as addressing sexual 2017 intake, focusing on developing their skills for working in harassment and bullying in the workplace organisations, such as influencing with tact and integrity and developing effective presentations. In addition, the five graduates • reviewing DAFWA policies, procedures and training manuals in gained an appreciation of the diversity of the agrifood sector and relation to staff recruitment and selection skills to ensure current a greater understanding of our efforts in delivering the Agrifood standards are maintained and to further develop the necessary 2025+ Strategic plan 2014–17 through a week-long tour of the skills in recruiting staff efficiently and effectively central and southern regional offices • increasing staff capability in technical and scientific writing to • maintaining strong commitment to building the leadership and ensure reports they write are clear, concise and technically sound management capabilities of our staff, in particular people leaders • commencing a policy capability initiative to develop and ensure and project managers, through the delivery and support of a policy excellence to support the achievement of our strategic number of programs, including the Certificate IV in Leadership direction. More than 80 staff have been trained in Ministerial writing and Management; Diploma of Project Management; Leadership and more than 40 staff in ‘Influencing for Impact, Designing for WA Signature and Rising Leadership; Public Sector Commission’s Success’, with particular focus on group facilitation. A professional Leadership and Management Essentials; Women in Leadership development network for policy staff has been established to Summit; and the CEDA Copland Leadership program provide regular updates and information on policy activities across • continuing to develop and refine units of competency within the our department Certificate III in Public Safety (Biosecurity Response Operations) • meeting or exceeding compliance rates for online essential training and the Diploma in Public Safety (Biosecurity Response and associated refresher programs, as shown in Table 24 on Management) by liaising with internal and external biosecurity p. 157. emergency response experts to further align the qualifications to the training needs of the agrifood sector. In 2016/17, 137 staff graduated with either a Certificate III or Diploma in Public Safety, strengthening DAFWA’s emergency response capabilities

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Table 24 Essential staff training completion rates Staff sustainability project Essential training Actual^ Target* This project is designed to attract, engage and retain a talented and % % committed workforce that meets our business needs. Our Quality of Life Accountable and ethical decision making 98 98 initiative promotes a working environment that is supportive of staff in Recordkeeping awareness 98 98 nine areas, including family, health, personal growth and community. Cultural awareness 98 98 Key achievements for 2016/17 were: EEO Awareness – general staff 98 98 • continued support for at-work flu vaccinations (almost 100 staff Driver safety 99 98 vaccinated) OSH 99 98 • provision of seminars, one-on-one sessions and information on superannuation and retirement planning to assist a positive ^ Actual as at 30 June 2017 transition to retirement * Excludes staff in DAFWA for less than six months, trainees, cadets and board • continued support of the Bank Your Blood program, in which staff members donate blood to the Australian Red Cross • promotion of salary packaging options • provision of one-on-one sessions and information on health insurance • completion of skin cancer checks for nearly 500 staff (see p. 170).

Department of Agriculture and Food, Western Australia | Final report 2017 Contents Overview Performance Significant issues Disclosures and compliance Appendix 158 On the road to strengthen animal disease surveillance

The workshop was excellent. My In focus sample selection “ techniques will In focus definitely improve and DAFWA’s support for testing and case follow-up WA’s reputation as a supplier of high-quality, disease-free livestock is very helpful.” relies on being able to show that – Dr Kerri Jurgens, Collie our state is free of trade-sensitive Veterinary Services animal diseases such as foot-and- mouth. DAFWA’s veterinary staff with private veterinarians and key stakeholders at the Surveillance training is an emergency animal disease workshop in Broome important tool in upholding this reputation. More than 70 vets joined training The workshops aimed to WA exported around 80% of In the past year, DAFWA workshops in Broome, Bunbury, strengthen the private sector’s livestock and livestock product veterinarians travelled across the Albany, Kojonup, Dongara and capacity to confirm the cause of worth $2 billion in 2015/16 — and state to run emergency animal Perth. on-farm animal health issues as access to overseas markets is disease and surveillance training well as reinforce the importance critical to livestock producers. The training covered topics such of ruling out certain diseases. This workshops for private vets and key as emergency animal disease In addition to workshop training, livestock industry stakeholders. increased capacity will help to recognition and investigation, improve the profitability of farm DAFWA continues to offer a subsidy Private vets are key partners at sample collection requirements businesses and support our market to producers that encourages the frontline of animal disease and practical techniques for field access for livestock by providing disease reporting through private surveillance. post-mortems. evidence of disease freedoms. veterinary investigation.

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Governance disclosures Table 25 Audit and Risk Committee members and meetings attended Contracts with senior officers Member Meetings attended No senior officers or firms of which senior officers are members, or 2016/17 entities in which senior officers have substantial interests, had any interests in existing or proposed contracts with our department during Mark Webb, A/Director General DAFWA 4 the financial year. Mark Sweetingham, A/Director General DAFWA 1 Keith Van Dongen, an independent member and Executive 3 Shares held by the department Director, Corporate Services, Department of Fisheries Our department does not hold shares in any subsidiary body as defined Alain St Flour, an independent member and Executive 4 by s. 60 of the Financial Management Act 2006. Director, Finance, North Metropolitan Health Service Andrew Harvey, an independent member and Deputy 2 Audit and Risk Committee Inspector, Office of the Inspector of Custodial Services Graham Edwards, an independent member and A/Director, 3 DAFWA’s Audit and Risk Committee advises the Director General and Corporate Services, Department of Parks and Wildlife the Executive on the application and promotion of good governance throughout the organisation. The committee’s role is to review and provide advice on governance processes with a focus on control, risk Enterprise risk management management, follow-up of audit recommendations and oversight of internal audit functions. DAFWA is committed to effective risk management to support our operational and project objectives. Our risk management framework is The committee meets quarterly with regular attendees, including a aligned to ISO 31000, Treasurer’s Instruction 825 and the Public Sector senior officer from the Office of the Auditor General, and the Director of Commissioner’s Good Governance Guide and Circulars. Audit and Integrity. Our Executive team and Audit and Risk Committee regularly monitor the Four Audit and Risk Committee meetings were held this year. completeness and effectiveness of the risk management framework.

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Finance Committee Unauthorised use of credit cards The Finance Committee was established in December 2009 and meets DAFWA is required to report on instances where a DAFWA-issued monthly. The committee members are the Director General, the Chief government purchasing card (‘a credit card’) was used for personal use. Finance Officer and all Executive Directors. The committee’s role is to: Table 26 Unauthorised use of credit cards 2016/17 • determine options to address funding pressures within the Description Quantity/value department 52 • provide advice with respect to making significant financial a) Number of instances credit card used for decisions personal use expenditure • understand the status of program, tactic and priority resource b) Aggregate amount of personal use expenditure $7015.34 investments, highlighting resourcing issues c) Aggregate amount of personal use expenditure $6515.56 • determine the disbursement of financial and FTE (people) settled by due date resources. d) Aggregate amount of personal use expenditure $499.78 settled after the due date e) Aggregate amount of personal use expenditure $0 outstanding at the end of the period

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Other legal requirements Compliance with public sector standards and Compliance issues that arose during 2016/17 regarding public sector ethical codes standards (i.e. discipline): a) One matter was dealt with in accordance with the breach of Compliance issues that arose during 2016/17 regarding public sector standards (i.e. breach claims): discipline process pursuant to the Public Sector Management Act 1994, which resulted in termination of employment. Table 27 Compliance issues/breach claims b) Action taken to monitor and ensure compliance included: 2015/16 2016/17 • reporting and monitoring misconduct matters through our Applications carried over 0 0 Integrity Committee to identify systemic issues New applications received 0 4 • a series of staff communications in November and December Total applications 0 4 2016 to provide guidance to staff on how to avoid situations that may compromise their integrity as a public servant or Breach claims lodged obligations under our Code of Conduct Recruitment, selection and appointment 0 4 • ongoing review and updating of internal policies to ensure Transfer 0 0 consistency with changes to legislative instruments that regulate public sector employment Grievance resolution 1 0 • review of our Code of Conduct Outcome of claims handled • mandatory requirement for all staff to complete the accountable Withdrawn in agency 0 1 and ethical decision-making online course annually Resolved in agency 0 1 • responding to allegations of misconduct as they arise. Still pending in agency 0 0 Referred to Public Sector Commission 1* 2* Total applications completed 1 4

* The Public Sector Commission dismissed these claims.

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Ethics and integrity notices in effect under the Biosecurity and Agriculture Management Act 2007 that might impact a new owner. After reviewing our practices DAFWA promotes ethical behaviour and integrity. All new employees are around the release of this type of information, DAFWA decided to make required to complete an online induction course that contains modules it publicly accessible via a Property Interest Report, which can be on ethics, integrity and the requirements of the Public Interest Disclosure purchased from Landgate. Act 2003 (PID Act). Table 28 Freedom of information applications 2016/17 All staff are required to complete the online training course in accountable and ethical decision-making annually in an effort to further FOI 2016/17 highlight the importance of the subject matter. We also require all Applications carried over 1 employees (with a refresher every three years) to complete the equal New applications received 149 employment opportunity (EEO) awareness course and recordkeeping awareness, which reinforce aspects of ethics and integrity. Training for Total applications 150 contact and grievance officers also includes modules on ethics and Application outcome integrity. Applications transferred in full 0 Our Integrity Committee provides assurance to the Director General Applications withdrawn 5 that matters relating to systemic risks are identified and managed. The Integrity Committee monitors issues including, but not limited to, Total applications completed 143 matters referred to the Corruption and Crime Commission, Public Sector Applications outstanding at 30 June 2 Commission or reported under the PID Act. Application types Personal information requests 2 Freedom of information Non-personal information requests 147 A description of the types of information and documents we hold and Request to amend personal information 0 how to access information under the Freedom of Information Act 1992 (FOI Act) is contained in the Information Statement available on our department’s website. There was a significant increase in applications received by DAFWA in 2016/17, mostly lodged by potential purchasers or lessees seeking information in relation to a particular property. Among other things, applicants were seeking information about whether a property had any

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Complaints handling Table 29 Complaints received 2016/17 Our Customer Complaints and Feedback Policy helps to ensure Types of complaints received 2016/17 complaints are handled fairly and efficiently. Customers are encouraged Regulatory 2 to lodge their concerns via the Customer complaint and feedback form on our website. Information accuracy and timeliness 1 Negligence/misconduct 7 Our complaints handling policy and procedures are consistent with principles outlined in AS ISO 10002-2014, as required by the Public Financial 0 Sector Commissioner’s Circular 2009-27. Total 10 Where a complaint is unable to be resolved at the initial point of contact, the department sends written acknowledgement to the We aim to resolve all complaints within 30 calendar days. Seven of the customer within five working days. The customer is notified of the complaints received in 2016/17 were resolved within this timeframe to name and title of the officer responsible for investigating their complaint the satisfaction of the complainant. These complaints brought issues to and the expected timeframe for resolution. Once an investigation has the department’s attention and in doing so allowed us to improve our been conducted, the complainant is advised of the resolution. If they service delivery. are dissatisfied with the outcome, they are referred to an appropriate Three complaints were outstanding as at 30 June 2017. external body. Our department also promotes the use of the National Relay Service Recordkeeping plans (NRS) on our website and intranet so people with speech, hearing and visual impairments have the same ability to make complaints as The DAFWA Recordkeeping Plan (RKP 2015029) was approved by everyone else. Our internal procedures remind staff of the availability of the State Records Commission in 2015. It is due for review by 26 the NRS should it be required. November 2020. Our Functional Retention and Disposal Schedule RD 2011014 was approved by the Commission in 2011 and was due for review in 2016. The update to the schedule began in late 2016 and was in progress as at 30 June 2017.

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DAFWA has a department-wide electronic document and records management system (EDRMS), which allows for efficient information sharing between staff and appropriate security and management of government records. Adjunct solutions adopted around the EDRMS allow secure sharing with external organisations and secure workflows for formal approval and endorsement of documents. The EDRMS contained 3.5 million objects as at 30 June 2017. The EDRMS was upgraded in June 2017 and now has additional functionality, including a web-based browser interface and improvements to the secure file-sharing module. All staff are required to undertake an online recordkeeping awareness course as part of the induction process. Further training and ongoing support is available from the document and records management team. Comprehensive information about recordkeeping policies and procedures, including statutory obligations, is available to staff via our intranet.

Research Library The DAFWA Library contains a considerable collection of historical and new research papers and other grey literature published by the department since its creation in 1898. This material is of considerable economic, educational and social value. To ensure the research can be accessed by researchers, industry, the public and other staff, the library has developed an online digital repository to house this collection. The DAFWA Research Library is accessible to the public from our website homepage. To date, 1560 resources have been added, with about 200 downloads a day.

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Expenditure on advertising Media advertising organisations $ In accordance with section 175ZE of the Electoral Act 1907, the Adcorp Australia Ltd 57 396 department reports incurring expenditure in relation to advertising Agricultural Publishers Pty Ltd 1 153 agencies, market research, polling, direct mail and media advertising organisations. Total expenditure for 2016/17 was $169 928. City of Greater Geraldton 15 Table 30 Expenditure on advertising, market research, polling, Facebook 692 direct mail and media advertising 2016/17 Fairfax Media 519 Advertising $ Farm Guide Pty Ltd 5 050 ASB Marketing Pty Ltd 11 309 Google 356 Carat Australia Media Services Pty Limited 30 990 Gumtree Australia 34 Cussons Media Pty Ltd 21 678 Kellerberrin Newsletter – The Pipeline 6 Offshoot Creative 19 127 Merredin Community Resource Centre Inc. 273 Ryan Media Pty Ltd 191 Shire of Trayning 18 Total 83 295 Market research organisations $ Southern Cross Austereo 708 Nil – Australian Veterinary Association 727 Polling organisations $ The Fence Post Newspaper Inc. 30 Nil – The West Australian 68 Direct mail organisations $ Windmill Community Newspaper Inc. 30 Campaignmonitor.co 542 Total 67 075 Createsend.com 1 895 Direct Mail Solutions 16 935 Email Media 150 SEM Distribution 36 Total 19 558

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Equity and diversity • developing an innovative new recruitment process for Aboriginal and Torres Strait Islander staff, incorporating targeted advertising In 2016/17 we continued to promote and encourage diversity within our and an application process briefing session. The process was workforce through three key plans, comprising the: successfully implemented for a technical officer position at • Workforce and diversity plan 2016–18 Northam during the year. • Disability access and inclusion plan 2015–19 Our Disability access and inclusion plan (DAIP) provides strategies for the inclusion of clients and staff with disability through improved access • Reconciliation action plan 2015–18. to information, services and facilities. Key achievements for 2016/17 were: Key achievements in relation to the DAIP include: • continuing to support the employment and career development of • maintaining the DAIP working group, comprising representatives youth and women with a graduate intake in February 2017. Five from all directorates who meet regularly to monitor the graduate positions were filled by women. Positions included a implementation of the DAIP 2015–19 client engagement support officer, veterinary officer, development officer and two policy support officers • hosting a trainee with a disability through the Public Sector Commission school-based trainee program. The trainee, who • celebrating women in leadership by hosting an event for will complete a Certificate II in Government, is based in the International Women’s Day, featuring a panel discussion with four Organisational Development and Training Unit and participates women recognised as leaders in WA’s agrifood sector in administrative tasks associated with equity and diversity and • requiring all staff to complete regular equity and diversity refresher corporate training training (first round completed by 30 June 2017) to support • continuing to support employment for people with disability by knowledge of relevant processes and legislation contracting two Western Australian Disability Enterprises: Intelife • celebrating NAIDOC Week, including a flag-raising ceremony as Group undertakes commercial cleaning services at our South Perth well as a Welcome to Country and didgeridoo playing by acclaimed site while Activ looks after garden and grounds maintenance at Aboriginal performer Olman Walley South Perth, Bunbury, Esperance and Geraldton • appointing a Level 1 Aboriginal youth via the Public Sector • issuing a series of staff communications to raise awareness and Commission’s Traineeship Transition to Employment, Recruitment promote our DAIP and the National Relay Service as well as provide and Referral Service (TTERRS) information on how to make events accessible and produce documents in alternative accessible formats

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• demonstrating our commitment to raising awareness of people with disability in the workplace and community as part of Disability Awareness Week (27 November – 3 December 2016) and International Day of People with Disability (3 December 2016) by holding a morning tea for staff at our South Perth office. It included an exhibition of artworks by artists with disability from a not-for- profit community arts and cultural development organisation. Regional locations also hosted a range of activities • reviewing online training courses to ensure they are accessible for staff with disability. Accessible online learning management system guidelines were developed and made available to all staff • planning and undertaking building works at our Central region offices (Geraldton and Northam), including: – upgrades to reception areas to include wheelchair access – maintenance of wheelchair access to entry points – upgrade and review of disability car parking – ensuring disability access is maintained during building works, including establishing ongoing communication processes and procedures for employees with disability. • having procedures in place to ensure the DAIP policy is referenced in relevant tender documents. We informed agents and contractors by providing a link to our DAIP on our website.

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Government policy requirements Occupational safety, health (OSH) and injury management

Performance Table 31 Occupational safety, health and injury management performance Performance measure 2014/15 2015/16 2016/17 2016/17 government target Target achieved Number of fatalities 0 0 0 0 Yes Lost time injury/disease incidence rate 1.03 0.62 0.51 0 or 10% improvement over 3 Yes years Lost time injury severity rate 27.3 33.3 20.0 As above Yes Percentage of injured workers returned to work within 26 weeks 961 752 823 Greater than or equal to 80% Yes return to work within 26 weeks Percentage of injured workers returned to work within 13 weeks 891 752 553 Actual percentage Yes Percentage of managers trained in OSH and injury management 97 99 99 80% or greater Yes Based on calendar year (1) 2014, (2) 2015, (3) 2016

Key achievements and initiatives in 2016/17 • revising processes and procedures for bushfire warnings The work of our OSH Unit included: • developing new site emergency information for our intranet and warning posters at South Perth. • implementing recommendations of driving fatality risks • completing review of quad bike fatality risks Our commitment to OSH and injury management • commencing review of tractor fatality risks DAFWA has a general OSH Policy, 30 other policies covering OSH • implementing high-risk controls for South Perth laboratories systems and hazards, and one policy on injury management and • commencing a risk review of the Albany laboratory workers’ compensation. Most of these policies have been in place for • carrying out skin cancer screening for 500 staff (see p. 170) more than a decade and are reviewed at least every three years. Any initiatives required for new or reviewed policies are determined by the • completing review of vehicle roo bar requirements OSH Policy Committee and are included in our annual OSH initiatives. • launching a customised OSH online course OSH and injury management targets are also included in the strategy.

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Changes to policy are communicated to all OSH committee chairs, Compliance with injury management requirements of OSH representatives and relevant managers immediately after each Workers’ Compensation and Injury Management Act policy committee meeting. All policies are available on our intranet and 1981 all new staff members are made aware of the location of policies and other OSH information through the induction process. Our department’s injury management system and return-to- work program are documented in our injury management policy Executive commitment is demonstrated by: and supporting guidelines. We have an early intervention injury • having defined Executive Director OSH roles and responsibilities management program that exceeds the requirements of the Act. • monitoring of quarterly and annual OSH performance reports OSH and injury management systems • prioritising funding for facilities, machinery and equipment An accredited consultant carried out a required five-yearly WorkSafe • supporting and participating in mandatory OSH training Plan assessment of our OSH systems in February 2013 and provided a • supporting annual OSH initiatives WorkSafe Plan score of 77%. • undertaking reviews of OSH systems. In July 2015 an external consultant completed a health and safety framework assessment of OSH management systems and culture for Consultation on OSH and injury management the Audit and Integrity branch. Our department has a two-tier system of consultation. The OSH Policy Committee is responsible for policy, strategy and monitoring OSH training performance. This committee comprises managers and regional OSH awareness training is mandatory for staff; 99% of staff had OSH representatives. The second tier comprises local committees in completed the training at 30 June 2017. OSH training has been larger regional offices and staff meetings in smaller offices. Quarterly delivered online since July 2016. committee and staff meetings consider incident, hazard and inspection reports and actions raised by the policy committee. We continue to provide two levels of driver training and a range of skills-based training related to the use of machinery, chemicals and There are elected OSH representatives in each regional office. other processes. Staff members are made aware of their local and regional OSH representatives through local OSH induction.

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With Australia having one of the The program not only helps us provided advice on how staff highest rates of skin cancer in the meet our duty of care to staff who could protect themselves from world, our department is doing its work outdoors, but also assists in sun exposure at work and home. bit to help protect staff. raising awareness among office staff. DAFWA has run the skin cancer In early 2017, we ran a free skin screening program four times cancer screening program at We used specialists Spotscreen since 2011 as part of our Quality In focus 15 offices across the state, with to conduct the screening at of Life initiative. almost 500 staff (about 50% of South Perth while local regional employees) taking the opportunity providers were used wherever Each time, there have been staff to get their skin checked. possible. who have had potentially life- threatening cancers identified. The consultants used state-of- the-art technology (SIAscope) to This year, 87 staff were referred to increase accuracy in identifying their GP for further assessment, and mapping lesions. including Plant Pathologist Geoff Thomas who had a melanoma They also showed staff what to identified, diagnosed and look for when self-checking and removed.

This screening hastened the discovery of this spot and has potentially been of significant benefit to my “ health.’ – Geoff Thomas

A Spotscreen consultant uses an SIAscope to look for suspicious spots

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Substantive equality Key achievements for 2016/17 Substantive equality means providing services in ways that consider The principles of substantive equality are reflected in our Strategic plan people with differing needs and that create equitable outcomes for all 2014–17 within our commitment to providing our services in ways that Western Australians as far as possible. are accessible to all Western Australians. We are committed to substantive equality, requiring all our programs to Our commitment to implementing the policy framework for substantive comply with the provision of the Equal Opportunity Act 1984. We seek to equality in 2016/17 was shown through: ensure that our services are designed and delivered in ways that meet • incorporating substantive equality requirements in central training the needs of all our clients by applying the following principles: programs, including corporate induction, the Diploma Project • serving members of the agriculture community regardless of age, Management and emergency management training race, culture, disability or gender • translating industry updates, FAQs and quarantine area notices • seeking to meet the diverse needs of our clients by continuous into Vietnamese for Vietnamese-speaking growers impacted by the review and development of service design and delivery discovery of the pest tomato potato psyllid (TPP) • ensuring substantive equality principles are incorporated into all • facilitating the establishment of the first Aboriginal producer group plans, procedures and practices in Australia, Noongar Land Enterprises (NLE) (see p. 173) • ensuring staff have the knowledge, skills and abilities to support • finalising a five-year beef backgrounding plan with the Beemurra the policy Aboriginal Corporation (BAC) to provide a clear business development pathway for 2017–22 • ensuring client services are developed and delivered appropriately and equitably. • facilitating mentorship for BAC members by a leading beef backgrounding business at Mingenew. (The mentoring resulted in BAC signing a contact with a client in February 2017 for 130 cows with calves on a summer grazing consignment.) • providing business governance and planning advice through the Aboriginal Business Development (ABD) project to directors at the East Kimberley Cattle Company Pty Ltd that assisted with multiple investment opportunities (equity share in herd development and agistment)

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• working with Aboriginal sheep producers to facilitate export supply chain linkages as part of the Sheep Industry Business Innovation (SIBI) project • working with the Department of Aboriginal Affairs, including providing advice on property planning processes and access to broad industry networks, to enable an Aboriginal pastoral station back into production, contributing to the Kimberley beef industry and regional economy • liaising with NLE through the eConnected Grainbelt project, which resulted in a new weather station at Wongutha Christian Aboriginal Parent-directed School to expose Aboriginal agricultural students to new technology and improve learning • awarding Business Improvement Grants to 16 Indigenous- owned and managed northern beef properties through the Northern Beef Futures (NBF) project • developing an NBF Indigenous strategy to engage 10 Indigenous beef enterprises in the Kimberley and Pilbara to develop a north– south supply chain and develop new supply chains for exporting heifers to Indonesia and Thailand.

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Aboriginal land managers across NLE has identified unique farming and the production of the south-west are now in a better investment solutions, which boronia flowers, sandalwood and position to pursue investment and include a honey production traditional Aboriginal bush foods. business opportunities. partnership with Australian– The group is on track to secure Chinese honey company, In focus During the year, our Aboriginal Australian Natural Biotechnology, extra funds to become self- Business Development (ABD) in which set-up costs will be sufficient. They have already project supported the formation covered for landholders. acquired more than $100 000 of Noongar Land Enterprises and will use this to employ an (NLE) — Australia’s first Aboriginal NLE has also explored other executive officer and maintain producer group. property diversification ventures, momentum. including agro-tourism, carbon The group brings together eight Indigenous land management groups who manage agricultural land from Bunbury to Esperance. We are excited to take this This has provided a much-needed next step and see Noongar unified voice for Noongar land farmers joining together managers to interact with industry as a collective to attract and government departments and “ to pursue collaborative economic investment to grow our development opportunities across businesses.” agrifood supply chains. – NLE Acting Chair Oral McGuire Our ABD project, which aims to assist the growth of Aboriginal agricultural businesses across the DAFWA’s Aboriginal Development state, secured funding for NLE to Project team with members of Noongar undertake strategic planning to Land Enterprises map out their vision, goals and structure.

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Board and committee remuneration Position Member Appointment $ paid in From to 2016/17 We support six government boards or committees. These bodies provide essential services and advice in regard to the ethical use of Biosecurity Council of Western Australia 113 956 animals in science, biosecurity policy and the management of industry Chair K Goss 3/2012 2/2018 28 308 funding schemes (IFS). Member D Jarvie 3/2012 2/2018 13 656 Members of these bodies are remunerated on a per-meeting basis, with Member M Allen 3/2008 12/2019 11 397 differing rates being applied to full and half-day meetings. Member T Thorne 1/2014 12/2019 13 656 Table 32 does not list ex officio members who are DAFWA staff. Member S McKirdy 1/2014 12/2019 13 656 Member B Large 3/2012 2/2018 15 546 Total remuneration across all boards for 2016/17 was $176 008. Member C Winfield 3/2015 2/2018 17 737 Table 32 Board and committee remuneration Cattle IFS* Management Committee 13 763 7/2016 6/2019 Position Member Appointment $ paid in Chair S Meerwald 1 470 From to 2016/17 Member C Forsyth 5/2012 6/2018 2 445 Member R Paliskis 7/2016 6/2019 228 Animal Ethics Committee 10 804 Member W Brockhurst 7/2013 6/2019 2 967 Member G Mabury 3/2017 2/2021 0 Member J Motter 7/2016 6/2019 2 475 Member I Robertson 12/2014 12/2017 1 838 Member G Nixon 7/2013 6/2019 1 620 Member S Vanstan 4/2012 2/2021 2 205 Member M Norton 7/2016 6/2019 2 558 Member S Leitch 8/2013 12/2017 3 086 Grains, Seed and Hay IFS* Management Committee 15 035 Member R Moore 4/2014 4/2018 3 675 Chair R Creagh 7/2013 6/2019 3 748 Member S Woods 7/2013 6/2019 1 900 Member R Day 7/2016 7/2019 1 760 Member R Beard 7/2015 6/2018 1 637 Member A Mutter 7/2016 6/2019 1 475 Member B Jones 7/2015 6/2018 1 646 Member J Sullivan 7/2015 6/2018 2 869

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Table 32 Board and committee remuneration (cont.)

Position Member Appointment $ paid in From to 2016/17 Sheep and Goat IFS* Management Committee 22 450 Chair E Rogister 7/2013 6/2019 8 653 Member J Jensen 7/2013 6/2019 3 598 Member D England 7/2016 6/2019 2 290 Member S McGuire 7/2016 6/2019 0 Member J Moyes 7/2013 6/2019 3 514 Member C Wass 7/2015 6/2018 3 435 Member G Bowen 7/2016 6/2019 960 IFS* Appointments Committee 0 Chair R Gillam 5/2015 4/2018 0 Member W Cox 5/2015 4/2018 0 Member T Fisher 5/2015 4/2018 0 Member A York 10/2016 4/2018 n/a Member A Seabrook 5/2015 4/2018 n/a *IFS = Industry Funding Scheme

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The Quarantine WA road checkpoint at Kununurra

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Focused on business growth

Appendix

Margaret River vineyards Photo courtesy UAV Resources and Frances Andrijich

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Statement from the Commissioner of Soil and Land Conservation Agreements to reserve and conservation covenants A report on the Commissioner’s operations for 2016/17 is submitted in accordance with Section 25 F of the Soil and Land Conservation Act During the year, the Commissioner registered one irrevocable 1945. Conservation Covenant that protects an environmental offset of 130.5ha in perpetuity. A further four conservation covenants totalling 62.28ha were executed and are pending lodgement at Landgate by Delegations the proponents. One Agreement to Reserve was varied to permit use The long-standing delegation of power under Part II of the Act to a by mountain bikes on a defined trail. A total of 1808 instruments under Regional Manager in the Department of Water (DoW) to administer the Act remain registered on certificates of title protecting 152 842ha of covenants under Part IV A ceased during the year. The Commissioner native and planted vegetation. continues to have delegated authority from the Minister for the Environment to issue woodchip permits. Soil conservation notices No soil conservation notices were issued during the year. Land clearing assessments Fifty-nine clearing area and purpose permit applications were assessed Land drainage for land degradation, with advice provided to the Department of Environment Regulation (DER) for agriculture purpose clearing or to In most districts, farmer interest in constructing deep drains for the other agencies for mining-related and infrastructure development. management and recovery of salt-affected land remains low. During 2016/17 only five landholders submitted Notices of Intention to Drain (NOI) and they were issued letters of ‘no objection’ to the proposed Compliance works. Pre-NOI inspections were carried out on six properties. The The Commissioner registered 29 complaints during the year comprising majority of these were in the Esperance district where farmer interest drainage (19), clearing (5), soil erosion (4) and nutrient export (1) in surface and subsurface drainage remains high following the wet complaints. Seven complaints are pending further investigation or winters recently experienced. The level of non-compliance with drainage monitoring of compliance with directions given. regulation remains unacceptably high in the Esperance district, despite local publicity and field days aimed at increasing awareness. Woodchip permits No woodchip permits were issued.

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Land Conservation District Committees (LCDCs) poor or very poor condition from a soil acidity perspective (Schoknecht et al. 2013). In 2016/17 farmers applied an estimated 1.25 million tonnes LCDCs are statutory committees created under Part III A of the Act to of lime. This is a reduction of about 230 000 tonnes on previous years manage projects and to promote practices that mitigate or prevent land and may be due to reduced extension effort and a tighter farm financial degradation. At the year’s close, there were 264 gazetted members of situation. The current level of lime application is about 50% of the 23 LCDCs active in the agricultural and rangeland regions. A further estimated annual requirement to raise soil pH to desirable levels over four committees are pending reappointment, 11 are in ‘recess’ and 25 the next 10 years. are pending abolition. Soil salinity Condition of the resource base Salinity continues to have a serious impact on agriculture and offsite natural assets. By 1998 when the last assessment was carried out, more Agricultural region than one million hectares of farmland were severely salt affected and more than 2.8 million hectares were developing shallow watertables and Agricultural activities are largely confined to the South West Land were at risk. The economic impact for the period 2009–13 is estimated Division and productivity is dependent upon the condition of the soil to be $519 million per annum or 7% of GVAP (A Bennett 2015, pers. resource. These soils are susceptible to salinisation, acidification, soil comm., 3 July) while off-site costs are estimated to be greater (Simons, erosion, water repellence and compaction. Waterways and wetlands George & Raper 2013). are also susceptible to acid groundwater discharge, salinity, nutrient export and sedimentation from agricultural land. The combination of Increased groundwater recharge resulted from unseasonal 2017 soil constraints, climate variability and increasing production costs is summer rainfall. An increase in the proportion of groundwater significantly impacting farm viability on the margins of the wheatbelt. monitoring bores with rising trends and associated salinity risk were observed in the Jerramungup Plain, Northern Zone of Ancient Drainage, Soil acidity Northern Zone of Rejuvenated Drainage, South-Eastern Zone of Ancient Drainage, South-Western Zone of Ancient Drainage and the Salmon Soil acidity occurs on much of the state’s agricultural land and is the Gums Mallee. It is likely that below-average winter rainfall experienced most serious, long-term and preventable land degradation threat to over much of the agricultural region in 2017 will moderate this risk. the state’s crop and pasture production. In 2015 the economic impact of soil acidity was estimated to be $1500 million per annum or about 20% of gross value of annual production (GVAP) (A Bennett 2015, pers. comm., 3 July; Peterson, E Nov., 2015). These estimates, based on field data, represent a two-fold increase over the earlier modelled impact. Most agricultural land, except the Esperance mallee district, is in either

Department of Agriculture and Food, Western Australia | Final report 2017 Contents Overview Performance Significant issues Disclosures and compliance Appendix 180

Soil erosion Rangelands region Water erosion is generally episodic and is caused by localised, high- intensity rainfall over the summer and autumn/early winter period. Pastoral rangelands Damage is greatest where protective vegetative cover has been Rangelands comprise 87% of the state, with pastoral leases covering removed by heavy grazing pressure or cultivation. about 35% (874 000km2) with Unallocated Crown Lands (UCL) and Widespread water erosion occurred following two intense rainfall events land vested for conservation and Indigenous purposes making up on 29 January to 1 February and 7–12 February 2017. Damage to the balance. Following the 2015 lease renewal process, there are 436 paddocks and infrastructure in the shires of Ravensthorpe and Lake registered pastoral stations on 491 pastoral leases. There are 152 Grace alone was estimated at $54 million (P Galloway 2017, pers. stations in the northern rangelands with 92 in the Kimberley and 60 in comm., 7 June). the Pilbara, while 284 stations are located in the southern rangelands (shrublands). The frequency of intense summer rainfall events appears to be increasing in the eastern and south-eastern wheatbelt where five events Rangeland resource condition assessment of between one-in-50 years and one-in-100 years annual exceedance probability have occurred during the past 20 years. Inappropriate Rangeland condition assessment in the Kimberley and much of the cultivation of waterways and some controlled traffic cropping practices Pilbara is based on the frequency of perennial grasses. The density were identified as factors contributing to the severe soil erosion of perennial shrubs is used to determine condition in the southern observed. rangelands. The key drivers for change in resource condition are seasonal conditions, grazing pressure and fire. Rivers and wetlands The Western Australian Rangeland Monitoring System (WARMS) was Diffuse nutrient pollution from agriculture is a serious land degradation established between 1993 and 1999 to monitor rangeland condition problem on sandy soils of the coastal estuary catchments. Soil test trend at a regional scale. There are 1608 sites — 625 grassland sites data indicate the majority of soil samples taken have phosphorus (pH) and 983 shrubland sites. Grassland sites are assessed on a three-yearly levels in excess of production requirements. The excessive application cycle and shrubland sites are assessed every five years. of farm fertilisers is a significant cost to agricultural industry in the This report incorporates data from 2016 when 356 sites were assessed south-west agricultural area ($400 million, Weaver & Summers 2013) as on 95 stations in the Kimberley, Pilbara and shrublands. well as having serious offsite environmental impacts.

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Seasonal conditions Plant trends The 2016/17 seasonal conditions were above average in the Kimberley. The summer rainfall, when compared with the long-term average, was Northern rangelands highest in the Derby – West Kimberley LCD with 1100mm compared The 2016 reassessments of WARMS sites were carried out in the Halls with the long-term average of 508mm and North Kimberley LCD with Creek – East Kimberley, Derby – West Kimberley and Roebourne LCDs. 1364mm (average 787mm). The next complete assessment (assessment 8) will be in 2017. In the Pilbara, 98% of sites were above average. A small number The 2016 data indicate a slight decrease (–3%) in desirable perennial of sites near Exmouth experienced average seasonal conditions. grass frequency in the Halls Creek – East Kimberley LCD to 76%. This contrasts with 2015/16, when 79% of WARMS sites were below average. The reassessment of the Roebourne LCD WARMS sites was completed in 2016. The data indicate that the frequency of desirable perennial Rainfall in the Pilbara is highly variable and the long-term grasses declined by 6% to 64% in the most recent cycle (2013–16). This average summer rainfall is about one-third of that received in the is slightly above the level when monitoring commenced (61%) in the Kimberley. LCD in 1998. Rainfall in the arid southern shrublands is also highly variable. In 2016, 47% of WARMS sites were above average and 47% of Southern rangelands sites were average. Parts of the Gascoyne–Wooramel (41%) and During 2016, the fifth assessment commenced, with only the North Shark Bay (36%) LCDs received below-average winter rainfall. Eastern Goldfields LCD having sufficient sites reassessed to provide an Seasonal quality is an estimate of the effectiveness of the rainfall indication of trend. The data indicate that the density of desirable shrubs received. increased by 6% over the 2011–16 period and by 26% since WARMS monitoring began in 1994. Table A1 Seasonal quality by region for WARMS sites in 2016/17 This trend contrasts with that of the Southern rangelands region as a whole. Analysis of data for the last complete assessment cycle Region Above average Average Below average (assessment 4) indicates the density of desirable shrubs has decreased (%) (%) (%) by 16% since WARMS monitoring began in 1994. Kimberley 100 0 0 Pilbara 98 2 0 Southern 47 47 6

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Cost of rangeland degradation • Salinity continues to expand in the South West Agricultural Region in catchments where clearing occurred in the past three-to-four The published inventory and condition surveys of the pastoral districts decades. The widespread rising ground water trend recently indicate that land degradation has reduced carrying capacity by about observed is attributed to unseasonal 2017 summer rainfall. 27%. Analysis of the data suggests that in aggregate, an average opportunity cost of land degradation is around $145 000 per annum per • The risk of wind erosion through loss of ground cover and tillage pastoral business (A Bennett 2015, pers. comm., 3 July). Rangeland is a persistent problem of the low rainfall margins of the wheatbelt. degradation has seriously undermined pastoral business viability and will Water erosion is insidious and episodic. The frequency of severe have ongoing impacts unless adequately managed. unseasonal rainfall events has increased over the past 20 years. • The Kimberley rangeland condition trend remains stable, while Rangeland degradation tends to be episodic in occurrence while the previously reported decline in desirable grass frequency in the recovery is slow where change is not permanent. Mitigation and Pilbara has halted in all LCDs, except Ashburton and Lyndon. recovery will require government intervention. • The decline in resource condition of much of the southern shrublands has continued since WARMS monitoring began in Conclusions 1994. Some of this change may reflect increased summer and declining winter rainfall. The monitoring data continue to point to critical areas where land degradation is undermining the sustainability of our agricultural industries: • Subsoil acidity is widespread and having a very significant economic impact. In aggregate, the level of lime application is Andrew Watson below that required to raise soil pH to acceptable levels. Long-term Commissioner of Soil and Land Conservation security of access to coastal lime resources remains a high priority for agriculture. • On-farm nutrient mapping highlights widespread inappropriate fertiliser management on the coastal plain and in the south-west that impacts farm profitability as well as causing significant offsite land degradation (eutrophication).

Department of Agriculture and Food, Western Australia | Final report 2017 Contents Overview Performance Significant issues Disclosures and compliance Appendix 183

Reference list Peterson, E 2015, Economic analysis of the impacts and management of subsoil constraints, Department of Agriculture and Food, Western Australia, Perth Schoknecht, N, Bicknell, D, Ruprecht, R, Smith F and Massenbauer A (eds.) 2013, Report card on sustainable natural resource use in agriculture, Department of Agriculture and Food, Western Australia, Perth Simons, J, George, R and Raper, P 2013, ‘Dryland salinity’, In: Report card on sustainable natural resource use in agriculture, Department of Agriculture and Food, Western Australia, Perth Weaver, D and Summers, R 2013, ‘Nutrient status (phosphorus)’, In: Report card on sustainable natural resource use in agriculture, Department of Agriculture and Food, Western Australia, Perth

Department of Agriculture and Food, Western Australia | Final report 2017 Focused on business growth