Report on financial performance

The 2015–16 Budget included additional funding to continue Australia’s diplomatic presence in Afghanistan and Iraq in support of international efforts to combat terrorism; to expand Australia’s diplomatic footprint overseas to advance trade and investment opportunities for Australia and provide a greater level of consular assistance; to promote Australia’s free trade agreements; and to support the continued investment in Australia’s diplomatic property portfolio overseas.

The department demonstrated strong financial performance in 2015–16. The financial statements reported an operating deficit of $128.3 million, including depreciation and amortisation expenses of $147.7 million.

See also Management of financial resources and the financial statements.

The department reported $1,518.4 million of revenue in the Statement of Comprehensive Income, comprised of:

• $1,381.7 million of appropriation revenue from Government; and
• $136.7 million of own source income including gains.

This represents an increase of $89.9 million over 2014–15. The main factors contributing to this movement were additional funding provided to the department in the 2015–16 Budget and Additional Estimates and increased revenues for services provided to attached agencies at overseas posts, including rental revenue, for which the department also incurred increased expenses.

The department also reported $241.9 million of other comprehensive income arising from asset revaluation movements in the Statement of Financial Position. This is recorded directly as equity and is not incorporated into the departmental operating result.

The department reported $1,646.8 million of expenses in the Statement of Comprehensive Income. This represents an increase of $111.4 million over
2014–15.

The main factors contributing to the movement in 2015–16 were:

• increases in staff expenses attributable to a minor increase in the full-time equivalent staffing level, the enterprise agreement pay rise, increased superannuation contribution rates and valuation adjustments to employee entitlement provisions;
• increased supplier expenses due to the impact of the decrease in the value of the Australian dollar, particularly for contracts denominated in US dollars, inflationary increases, increased property-related costs and an increase in passports issued in 2015–16; and
• increased depreciation and amortisation expenses due to the increased value of the department’s asset holdings, and write-down and impairments costs after annual reviews of assets, including assets under construction.

The department reported a strong net asset position of $4,090.8 million in the Statement of Financial Position, with liabilities equating to less than 10 per cent of the total asset base.

This is an increase of $362.7 million over 2014–15. The main factors contributing to the movement in 2015–16 were the significant increase in the value of physical and intangible non-financial assets, due to new purchases and developments, and revaluation movements.

2015–16 expenses administered by the department on behalf of Government were $3,827.7 million, a decrease of $970.5 million over 2014–15. The majority of this was due to decreases in international development assistance expenses.

The aid program reflects the different development and economic trajectories across the region and continues the Government’s commitment to development in the Pacific. Recognising the economic growth trajectory of the Asia region, the aid program will focus on building partnerships to strengthen the private sector and underpin economic growth in Asian nations.

The department also administered a range of other administered programs. The majority of these expenses support Australian membership of critical international organisations ($142.5 million, an increase of $16.6 million from 2014–15), advancing Australia’s  foreign, trade and investment, development and security interests in international forums, and supporting the crucial work of global UN peacekeeping operations ($233.4 million, an increase of $38.8 million from 2014–15).

2015–16 income administered by the department on behalf of Government was $611.1 million which is $277.1 million less than 2014–15. The movement is due predominantly to decreases from the valuation at year end for International Development Association and Asian Development Fund subscriptions of $338.2 million, which has been partially offset by an increase of $62.5 million in the amount of passport and consular fees that the department collects on behalf of Government.