Part 4: Financial statements (continued)

Notes to and forming part of the financial statements
for the period ended 30 June 2012

Note 3: Operating expenses

	2012 $'000	2011 $'000
Note 3A: Employee Benefits
Wages and salaries	94,753	90,482
Superannuation:
Defined contribution plans	5,035	4,474
Defined benefit plans	10,407	11,671
Redundancies	5,563	-
Leave and other entitlements1	16,663	9,620
Other	2,965	3,306
Total employee benefits	135,386	119,553
Note 3B: Suppliers
Goods and services
Information communication technology	4,856	4,749
Conferences and Training	2,397	2,708
Consultants and Contractors	7,280	8,868
Fees — Audit, Accounting, Bank and Other	1,116	1,235
Insurance	1,009	949
Legal	1,810	1,459
Printing	631	643
Property operating expenses	10,899	11,759
Publications and Subscriptions	1,427	1,558
Travel	5,273	5,276
Other	2,965	3,754
Total goods and services	39,663	42,958
Goods and services are made up of:
Provision of goods from:
related entities	64	2
external entities	2,511	2,411
Rendering of services from:
related entities	7,502	6,857
external entities	20,632	24,022
Operating lease rentals:2
related entities	482	212
external entities	7,683	8,755
Workers compensation premiums	789	699
Total supplier expenses	39,663	42,958
Note 3C: Grants
Grants paid
Public sector:
Australian Government entities (related entities)	78	152
Private sector:
Non-profit organisations	4,031	2,925
Total grants	4,109	3,077

1 The increase in leave and other entitlements was primarily a result of a significant decrease in the bond rate, which is used to discount long service leave liability.
2 Operating lease rentals comprise minimum lease payments only.

Note 3: Operating expenses (continued)

	2012 $'000	2011 $'000
Note 3D: Depreciation and amortisation
Depreciation
Plant and equipment	2,568	2,119
Buildings — leasehold improvements	2,365	1,889
Total depreciation	4,933	4,008
Amortisation
Intangibles — computer software	8,485	7,973
Assets held under finance lease	-	34
Total amortisation	8,485	8,007
Total depreciation and amortisation	13,418	12,015
Note 3E: Finance costs
Leases	17	56
Total finance costs	17	56
Note 3F: Write-down and impairment of assets
Financial assets
Receivables — bad and doubtful debts	-	3
Non-financial assets
Plant and equipment	245	55
Intangibles	-	50
Total write-down and impairment of assets	245	108

Note 4: Income

	2012 $'000	2011 $'000
Note 4A: Sale of goods and rendering of services
Rendering of services to:
related entities	7,852	7,387
external entities	387	1,153
Operating lease rental — external entities	94	83
Total sale of goods and rendering of services	8,333	8,623
Note 4B: Other revenue
MCCA contributions received	500	706
Other	368	20
Total other revenues	868	726
Note 4C: Sale of assets
Plant and equipment
Proceeds from sale	11	22
Net book value of assets disposed	(7)	-
Net gain from sale of assets	4	22
Note 4D: Other gains
Resources received free of charge	526	549
Total other gains	526	549
Note 4E: Revenue from Government
Appropriations
Departmental appropriation	158,119	158,268
Total revenue from Government	158,119	158,268

Note 5: Financial assets

	2012 $'000	2011 $'000
Note 5A: Cash and cash equivalents
Cash
Special Accounts	296	85
Cash on hand or on deposit	812	751
Total cash and cash equivalents	1,108	836
Note 5B: Trade and other receivables
Goods and Services:
related entities	790	2,914
external parties	1,128	623
Total goods and services	1,918	3,537
Appropriations Receivable:
for existing outputs	51,933	73,988
for Departmental Capital Budget	-	239
Total appropriations receivable	51,933	74,227
Other receivables:
Net GST receivable from the ATO	1,290	447
Total other receivables	1,290	447
Total trade and other receivables (net)	55,141	78,211
All receivables are current assets
Receivables (gross) are aged as follows:
Not overdue	54,844	76,572
Overdue by:
0 to 30 days	176	1,293
31 to 60 days	85	219
61 to 90 days	16	77
More than 90 days	20	50
Total receivables (gross)	55,141	78,211

Credit terms for goods and services were with 30 days (2011:30 days)

Note 6: Non-financial assets

	2012 $'000	2011 $'000
Note 6A: Land and buildings
Buildings — Leasehold improvements — fair value
Under construction	747	-
At fair value	8,644	19,653
Accumulated depreciation	(2,363)	(11,775)
Total buildings — leasehold improvements — fair value	7,028	7,878
Total land and buildings	7,028	7,878
No indicators of impairment were found for land and buildings. All revaluations are independent and are conducted in accordance with the revaluation policy stated at Note 1.17.
Note 6B: Plant and equipment
Plant and equipment — fair value
Under construction	6,297	742
At fair value	9,157	12,860
Accumulated depreciation	(2,527)	(5,207)
Total plant and equipment — fair value	12,927	8,395
Plant and equipment under finance lease
Under finance lease	-	53
Accumulated depreciation	-	(53)
Total plant and equipment — fair value	-	-
Total plant and equipment	12,927	8,395
No indicators of impairment were found for plant and equipment. All revaluations are independent and are conducted in accordance with the revaluation policy stated at Note 1.17.
Note 6C: Intangibles
Computer software — at cost
Internally developed — in progress	538	1,728
Internally developed — in use	40,237	36,551
Purchased	3,176	3,129
Accumulated amortisation	(18,240)	(10,291)
Total computer software — at cost	25,711	31,117
Total intangibles	25,711	31,117

No indicators of impairment were found for Intangibles.
No intangibles are expected to be sold or disposed of within the next 12 months.

(18,240)

Note 6: Non-financial assets (continued)
Table A: Reconciliation of the opening and closing balances of property, plant and equipment (2011-12)

	Buildings — leasehold improvements $’000	Plant and equipment $’000	Computer software $’000	Total $’000
As at 1 July 2011
Gross book value	19,653	13,655	41,408	74,716
Accumulated depreciation and impairment	(11,775)	(5,260)	(10,291)	(27,326)
Net book value 1 July 2011	7,878	8,395	31,117	47,390
Additions	1,687	7,232	3,087	12,006
Revaluations and impairments recognised in other comprehensive income	(172)	112	-	(60)
Depreciation / amortisation expense	(2,365)	(2,568)	(8,485)	(13,418)
Disposals				-
Other disposals	-	(244)	(8)	(252)
Net book value 30 June 2012	7,028	12,927	25,711	45,666
Net book value as of 30 June 2012 represented by:
Gross book value	9,391	15,454	43,951	68,796
Accumulated depreciation and impairment	(2,363)	(2,527)	(23,130)
Net book value 30 June 2012	7,028	12,927	25,711	45,666

A revaluation of Treasury’s buildings — leasehold improvement and plant and equipment was conducted on 1 July 2011.

Note 6: Non-financial assets (continued)
Table A: Reconciliation of the opening and closing balances of property, plant and equipment (2010-11)

	Buildings — leasehold improvements $’000	Plant and equipment $’000	Computer software $’000	Total $’000
As at 1 July 2010
Gross book value	18,600	11,473	39,913	69,986
Accumulated depreciation and impairment	(9,886)	(3,853)	(3,202)	(16,941)
Net book value 1 July 2010	8,714	7,620	36,711	53,045
Additions	1,208	2,829	2,428	6,465
Depreciation / amortisation expense	(1,889)	(2,153)	(7,973)	(12,015)
Disposals
Other disposals	-	(55)	(50)	(105)
Transfers	(155)	154	1	-
Net book value 30 June 2011	7,878	8,395	31,117	47,390
Net book value as of 30 June 2011 represented by:
Gross book value	19,653	13,655	41,408	74,716
Accumulated depreciation and impairment	(11,775)	(5,260)	(10,291)	(27,326)
Net book value 30 June 2011	7,878	8,395	31,117	47,390

Note 6: Non-financial assets (continued)

	2012 $'000	2011 $'000
Note 6D: Other non-financial assets
Prepayments	2,502	2,336
Total other non-financial assets	2,502	2,336
Other non-financial assets are expected to be recovered in:
No more than 12 months	2,055	1,888
More than 12 months	447	448
Total other non-financial assets	2,502	2,336

No indicators of impairment were found for other non-financial assets.

Note 7: Payables

	2012 $'000	2011 $'000
Note 7A: Suppliers
Trade creditors
related entities	112	461
external entities	199	1,962
external entities — non-operating	-	781
Total trade creditors	311	3,204
Total supplier payables	311	3,204
All supplier payables are expected to be settled within 12 months
Note 7B: Other payables
Salaries and wages	2,313	2,209
Superannuation	411	375
Other creditors	1,393	3,104
Prepayments received	3,161	2,505
Total other payables	7,278	8,193
Other payables are expected to be settled in:
No more than 12 months	7,278	8,191
More than 12 months	-	2
Total other payables	7,278	8,193

Employee provisions are expected to be settled in:

Note 8: Provisions

	2012 $'000	2011 $'000
Note 8A: Employee provisions
Leave	41,771	38,586
Other employee entitlements	105	128
Total employee provisions	41,876	38,714
No more than 12 months	12,860	10,323
More than 12 months	29,016	28,391
Total employee provisions	41,876	38,714

Note 9: Restructuring

	2012 $'000	2011 $'000
Note 9A: Departmental Restructuring
Housing policy
Assets recognised
Appropriation receivable	161	-
Total assets recognised	161
Liabilities recognised
Employer payables	312
Supplier payables	5	-
Total liabilities recognised	317	-
Net assets/(liabilities) assumed	(156)	-
Income
Recognised by the receiving entity	1,115
Recognised by the losing entity	1,445
Total Income	2,560	-
Expenses
Recognised by the receiving entity	1,007	-
Recognised by the losing entity	1,445	-
Total Expenses	2,452	-

The Treasury assumed responsibility for the housing policy function from the Department of Sustainability Environment Water Population and Communities (SEWPaC) due to administrative arrangement restructuring on 27 January 2012.

Note 10: Cash flow reconciliation

	2012 $'000	2011 $'000
Reconciliation of cash and cash equivalents as per
Balance Sheet to Cash Flow Statement
Cash and cash equivalents as per:
Cash flow statement	1,108	836
Balance sheet	1,108	836
Reconciliation of net cost of services to net cash from operating activities:
Net cost of services	(24,988)	(9,579)
Adjustments for non-cash items
Depreciation / amortisation	13,418	12,015
Net write down of non-financial assets	245	108
Gain on disposal of assets	(4)	(22)
Loss on disposal of non-current assets	-	-
Changes in assets / liabilities
(Increase) / decrease in net receivables	17,102	(718)
(Increase) / decrease in other non financial assets	(166)	(537)
Increase / (decrease) in provisions	3,162	(396)
Increase / (decrease) in other payables	(915)	(1,973)
Increase / (decrease) in supplier payables	(2,112)	760
Net cash from / (used by) operating activities	5,742	(342)

Note 11: Contingent assets and liabilities

	Studies Assistance		Total
	2012 $'000	2011 $'000	2012 $'000	2011 $'000
Contingent liabilities
Balance from previous period	300	272	300	272
New	297	286	297	286
Liabilities recognised	-	-	-	-
Obligations expired / crystalised	(300)	(258)	(300)	(258)
Total contingent liabilities	297	300	297	300
NET CONTINGENT LIABILITIES	297	300	297	300

Quantifiable contingencies

The schedule of contingencies reports liabilities of $297,389 (2011: $299,963). This amount represents an estimate of the Treasury’s liability in respect of studies assistance.

Remote contingencies

The Treasury’s lease on its current premises contains a make good clause which has been estimated by an independent valuer at $2.7 million. The Treasury has assessed the likelihood of the make good provision being required and has deemed it as remote.

As at 30 June 2012, the Treasury has a number of contracts which may give rise to contingent liabilities based on certain events occurring. The Treasury has assessed the likelihood of such events occurring as being remote and unquantifiable.

Senior executive remuneration
Note 12A: Senior executive remuneration expense for the reporting period

	2012 $	2011 $
Short-term employee benefits
Salary	18,874,942	17,276,068
Annual leave accrued	285,042	61,781
Allowances	1,261,848	1,085,577
Total short-term employee benefits	20,421,832	18,423,426
Post-employment benefits
Superannuation	2,705,122	2,654,245
Total post-employment benefits	2,705,122	2,654,245
Other long-term benefits
Long-service leave	2,099,405	642,167
Total other long-term benefits	2,099,405	642,167
Termination benefits	481,476	-
Total employment benefits	25,707,835	21,719,838

Notes:
1. Note 12A is prepared on an accrual basis. No performance bonuses were paid in 2012 (2011: Nil).
2. Note 12A excludes acting arrangements and part-year service where total remuneration expensed for a senior executive was less than $150,000
3. The comparative figures have been revised and do not match what was published in the 2010-11 financial statements due to new disclosure requirements.
4. Note 12A includes employees posted overseas.
5. The increase in long-service leave includes the result of a significant decrease in the bond rate, which is used to discount the long-service leave provision.

Note 12:Senior executive remuneration (continued)
Note 12B: Average annual reportable remuneration paid to substantive senior executives during the reporting period

	2012
Average annual reportable remuneration1	Senior Executives No.	Reportable salary2 $	Contributed superannuation3 $	Reportable allowances4 $	Total $
Total remuneration (including part-time arrangements):
less than $150,000	17	63,547	16,625	-	80,172
$150,000 to $179,999	5	149,672	21,384	-	171,056
$180,000 to $209,999	17	173,026	28,279	-	201,305
$210,000 to $239,999	32	184,649	39,302	-	223,951
$240,000 to $269,999	10	207,070	45,484	-	252,554
$270,000 to $299,999	6	245,183	42,876	-	288,059
$300,000 to $329,999	3	261,674	47,624	-	309,298
$330,000 to $359,999	3	301,700	37,340	-	339,040
$360,000 to $389,999	5	332,615	47,591	-	380,206
$390,000 to $419,999	1	329,282	74,086	-	403,368
$540,000 to $579,999	1	439,927	114,300	-	554,227
Total	100

Notes:
1. This table reports substantive senior executives who received remuneration during the reporting period. Each row is an averaged figure based on headcount for individuals in the band.
2. 'Reportable salary' includes the following:
   a) gross payments;
   b) reportable fringe benefits (at the net amount prior to 'grossing up' to account for tax benefits); and
   c) exempt foreign employment income
3. The 'contributed superannuation' amount is the average actual superannuation contributions paid to staff in that reportable remuneration band during the reporting period, including any salary sacrificed amounts, as per the individuals' payslips.
4. 'Reportable allowances' are the average actual allowances paid as per the 'total allowances' line on individuals' payment summaries.
5. No bonuses wer
e paid in 2012.
6. Various salary sacrifice arrangements were available to senior executives including superannuation, motor vehicle and expense payment fringe benefits. Salary sacrifice benefits are reported in the 'reportable salary' column, excluding salary sacrificed superannuation, which is reported in the 'contributed superannuation' column.
7. Employees posted overseas are included in this table.

Note 12: Senior executive remuneration (continued)

	2011
Average annual reportable remuneration1	Senior Executives No.	Reportable salary2 $	Contributed superannuation3 $	Reportable allowances4 $	Total $
Total remuneration (including part-time arrangements):
less than $150,000	32	65,218	13,250	-	78,467
$150,000 to $179,999	3	133,275	29,255	-	162,531
$180,000 to $209,999	16	166,537	29,556	-	196,093
$210,000 to $239,999	32	182,552	39,727	-	222,279
$240,000 to $269,999	14	208,928	46,105	767	255,799
$270,000 to $299,999	5	254,499	35,497	-	289,995
$330,000 to $359,999	3	300,116	40,872	-	340,988
$360,000 to $389,999	4	295,761	79,216	-	374,977
$420,000 to $449,999	1	322,408	109,428	-	431,836
$480,000 to $509,999	1	478,224	25,282	-	503,505
Total	111

Notes:
1. This table reports substantive senior executives who received remuneration during the reporting period. Each row is an averaged figure based on headcount for individuals in the band.
2. 'Reportable salary' includes the following:
   a) gross payments;
   b) reportable fringe benefits (at the net amount prior to 'grossing up' to account for tax benefits); and
   c) exempt foreign employment income
3. The 'contributed superannuation' amount is the average actual superannuation contributions paid to staff in that reportable remuneration band during the reporting period, including any salary sacrificed amounts, as per the individuals' payslips.
4. 'Reportable allowances' are the average actual allowances paid as per the 'total allowances' line on individuals' payment summaries
5. No bonuses were paid in 2011.
6. Various salary sacrifice arrangements were available to senior executives including superannuation, motor vehicle and expense payment fringe benefits. Salary sacrifice benefits are reported in the 'reportable salary' column, excluding salary sacrificed superannuation, which is reported in the 'contributed superannuation' column.
7. Employees posted overseas are included in this table.
8. The comparative figures have been revised and do not match what was published in the 2010-11 financial statements due to new disclosure requirements. The reporting requirements can be found in the Finance Ministers Orders, which are available on www.finance.gov.au.

Note 12: Senior executive remuneration (continued)
Note 12C: Other highly paid staff

	2012
Average annual reportable remuneration1	Staff No.	Reportable salary2 $	Contributed superannuation3 $	Reportable allowances4 $	Total $
Total remuneration (including part-time arrangements):
$150,000 to $179,999	59	131,369	25,494	48	156,911
$180,000 to $209,999	2	172,821	26,712	-	199,533
$300,000 to $329,999	1	290,314	21,034	-	311,348
Total	62

Notes:
1. This table reports staff:
   a) who were employed by the entity during the reporting period;
   b) whose reportable remuneration was $150,000 or more for the financial period; and
   c) were not required to be disclosed in Tables A or B.
Each row is an averaged figure based on headcount for individuals in the band.
2. 'Reportable salary' includes the following:
   a) gross payments;
   b) reportable fringe benefits (at the net amount prior to 'grossing up' to account for tax benefits); and
   c) exempt foreign employment income
3. The 'contributed superannuation' amount is the average actual superannuation contributions paid to staff in that reportable remuneration band during the reporting period, including any salary sacrificed amounts, as per the individuals' payslips.
4. 'Reportable allowances' are the average actual allowances paid as per the 'total allowances' line on individuals' payment summaries.
5. No bonuses were paid in 2012.
6. Various salary sacrifice arrangements were available to other highly paid staff including superannuation, motor vehicle and expense payment fringe benefits. Salary sacrifice benefits are reported in the 'reportable salary' column, excluding salary sacrificed superannuation, which is reported in the 'contributed superannuation' column.
7. Employees posted overseas are included in this table.

Note 12: Senior executive remuneration (continued)

	2011
Average annual reportable remuneration1	Staff No.	Reportable salary2 $	Contributed superannuation3 $	Reportable allowances4 $	Total $
Total remuneration (including part-time arrangements):
$150 ,000 to $179,999	38	124,519	31,627	-	156,146
$330,000 to $359,999	1	283,638	52,592	-	336,229
Total	39

Notes:
1. This table reports staff:
   a) who were employed by the entity during the reporting period;
   b) whose reportable remuneration was $150,000 or more for the financial period; and
   c) were not required to be disclosed in Tables A or B.
Each row is an averaged figure based on headcount for individuals in the band.
2. 'Reportable salary' includes the following:
   a) gross payments;
   b) reportable fringe benefits (at the net amount prior to 'grossing up' to account for tax benefits); and
   c) exempt foreign employment income
3. The 'contributed superannuation' amount is the average actual superannuation contributions paid to staff in that reportable remuneration band during the reporting period, including any salary sacrificed amounts, as per the individuals' payslips.
4. 'Reportable allowances' are the average actual allowances paid as per the 'total allowances' line on individuals' payment summaries.
5. No bonuses were paid in 2011.
6. Various salary sacrifice arrangements were available to other highly paid staff including superannuation, motor vehicle and expense payment fringe benefits. Salary sacrifice benefits are reported in the 'reportable salary' column, excluding salary sacrificed superannuation, which is reported in the 'contributed superannuation' column.
7. Employees posted overseas are included in this table.

Note 13: Remuneration of auditors

	2012 $'000	2011 $'000
Financial statement audit services were provided free of charge to the Treasury.
The fair value of the services provided was:
Financial statement audit services	398	434
Total	398	434

Note: The above amounts are exclusive of GST. No other services were provided by the Auditor General.

Note 14: Financial instruments

	2012 $'000	2011 $'000
Note 14A: Categories of Financial Instruments
Financial Assets
Loans and receivables
Cash and cash equivalents	1,108	836
Trade receivables	1,918	3,537
Carrying amount of financial assets	3,026	4,373
Financial Liabilities
Liabilities at amortised cost
Supplier payables	311	3,204
Other payables — other creditors	1,393	3,104
Carrying amount of financial liabilities	1,704	6,308
Note 14B: Net income and expense from financial liabilities
Liabilities — at amortised cost
Interest expense	(17)	(56)
Net gain/(loss) from financial liabilities — at amortised cost	(17)	(56)
Net gain/(loss) from financial liabilities	(17)	(56)

Note 14C: Fair value of financial instruments

The net fair values of the Treasury's financial assets and financial liabilities are approximated by their carrying amounts.

The financial assets and financial liabilities as disclosed in Note 14A are measured under Level 2 of the fair value hierarchy as they are based on observable inputs. There have been no reclassifications between levels of the fair value hierarchy.

Note 14D: Credit risk

The Treasury is exposed to minimal credit risk as financial assets only include cash and trade receivables. The maximum exposure to credit risk is the risk that arises from potential default of a debtor. This amount is equal to the total amount of trade receivables (2012: $1,918,669 and 2011: $3,537,308). The Treasury has assessed the risk of default on payment as being minimal.

Other government agencies and staff members make up the majority of the Treasury’s debtors. To aid the Treasury to manage its credit risk there are internal policies and procedures that guide employees on debt recovery techniques that are to be applied.

The Treasury holds no collateral to mitigate against credit risk.

Credit quality of financial instruments not past due or individually determined as impaired
		Not past due nor impaired 2012 $'000	Not past due nor impaired 2011 $'000	Past due or impaired 2012 $'000	Past due or impaired 2011 $'000
Loans and receivables
Cash and cash equivalents		1,108	836	-	-
Trade receivables		1,620	1,898	298	1,639
Total		2,728	2,734	298	1,639
Ageing of financial assets that were past due but not impaired for 2012
	0 to 30 days $'000	31 to 60 days $'000	61 to 90 days $'000	90+ days $'000	Total $'000
Loans and receivables
Trade receivables	176	86	16	20	298
Total	176	86	16	20	298
Ageing of financial assets that were past due but not impaired for 2011
	0 to 30 days $'000	31 to 60 days $'000	61 to 90 days $'000	90+ days $'000	Total $'000
and receivables
Trade receivables	1,293	219	77	50	1,639
Total	1,293	219	77	50	1,639

Note 14E: Liquidity risk

The Treasury’s financial liabilities are payables. The exposure to liquidity risk is based on the notion that the Treasury will encounter difficulty in meeting its obligations associated with financial liabilities. This is highly unlikely due to the appropriation funding mechanisms available to the Treasury and internal policies and procedures put in place to ensure there are appropriate resources to meet its financial obligations.

The Treasury is appropriated funding from the Australian Government. The Treasury manages its budgeted funds to ensure it has adequate funds to meet payments as they fall due. In addition, the Treasury has policies in place to ensure timely payments are made when due and has no past experience of default.

Maturities for non-derivative financial liabilities 2012
	On demand $'000	Within 1 year $'000	1 to 2 years $'000	2 to 5 years $'000	> 5 years $'000	Total $'000
Liabilities at amortised cost
Payables — suppliers	-	311	-	-	-	311
Other payables	-	1,393	-	-	-	1,393
Total	-	1,704	-	-	-	1,704
Maturities for non-derivative financial liabilities 2011
	On demand $'000	Within 1 year $'000	1 to 2 years $'000	2 to 5 years $'000	> 5 years $'000	Total $'000
Liabilities at amortised cost
Payables — suppliers	-	3,204	-	-	-	3,204
Other payables	-	3,102	2	-	-	3,104
Total	-	6,306	2	-	-	6,308

Note 14F: Market risk

The Treasury holds only basic financial instruments that do not expose the department to certain market risks.

Note 15: Financial assets reconciliation

	Notes	2012 $'000	2011 $'000
Financial assets
Total financial assets as per balance sheet		56,249	79,047
Less: non-financial instrument components
Appropriation receivables	5B	51,933	74,227
GST receivable from the ATO	5B	1,290	447
Total non-financial instrument components		53,223	74,674
Total financial assets as per financial instruments note	14A	3,026	4,373