Productivity Commission
Section 1:  Overview, appropriations and budget measures summary
Overview
The Productivity Commission (PC) is the Commonwealth Government’s principal review and advisory body on microeconomic policy and regulation. The PC’s work covers all sectors of the economy. It extends to the public and private sectors and focuses on areas of Commonwealth as well as State and Territory responsibility.
As a review and advisory body the PC does not have responsibility for implementing government programmes. It carries out research, inquiry, advising and incidental functions prescribed under the Productivity Commission Act 1998.
The PC contributes to well-informed policy decision-making and public understanding on matters relating to Australia’s productivity and living standards, based on independent and transparent analysis from a community‑wide perspective. It does this by undertaking:
•	government  commissioned projects;
•	performance reporting and other services to government bodies;
•	regulation review activities;
•	competitive neutrality complaints activities; and
•	supporting research and activities and statutory annual reporting.
Appropriations
The total appropriations for the PC in the 2001-02 Budget are $22.6 million (see Table 1.1 on the following page).

Part C:  Agency Budget Statements — PC

Productivity Commission — appropriations 2001-02
Table 1.1:  Appropriations and other revenue

216

(1)	C1 and E1 refer to information provided in Table 2.1. K1 refers to information provided in Table 3.1.
(2)	Revenue from other sources includes other revenue from government (for example, resources free of charge) and revenue from other sources (for example, sales of goods and services).
*	Percentage figures indicate the percentage contribution of revenue from government (agency appropriations) to the total price of outputs, by outcome.

Administered capital and agency equity injections and loans
The PC does not have an appropriation for an equity injection or loan or an appropriation for administered capital in 2001-02.
Section 2:  Outcomes and outputs information
Outcomes and output groups
The map on the following page shows the relationship between Government outcomes and the contributing outputs for the Productivity Commission (PC). Financial detail for Outcome 1 by output appears in Table 2.1 while non‑financial information for Outcome 1 appears in Table 2.2.

Part C:  Agency Budget Statements — PC

Chart 6:  Outcomes and output groups

218

Changes to outcomes and outputs
There are no proposed changes in outcomes or outputs since the previous year.
Outcome 1 — Description
Well-informed policy decision-making and public understanding on matters relating to Australia’s productivity and living standards, based on independent and transparent analysis from a community-wide perspective.
Measures affecting Outcome 1
There are no measures for the PC in the 2001-02 Budget.

Outcome 1 — Resourcing
Table 2.1:  Total resources for Outcome 1

(1)	C1 and E1 — see Table 1.1.

Outcome 1 — Contribution of outputs
The PC’s five outputs derive from its statutory functions. The quantum and scope of the work under each output is largely determined externally (for example, government commissioned projects, regulation impact statement assessments, competitive neutrality complaints investigations). In view of this, the PC requires the flexibility to vary resources amongst its various outputs.
The effectiveness with which the PC’s outputs contribute to achievement of the outcome is difficult to assess. The PC is but one source of policy advice on matters relating to Australia’s productivity and living standards and many issues are complex and long term. The PC aims to demonstrate its effectiveness by reporting annually on the relevance, quality, timeliness and cost‑effectiveness of its outputs.
An elaboration of the activities covered by each of the outputs is as follows:
Output 1:	Government commissioned projects
Public inquiries (for example, telecommunications competition and regulation, access to essential infrastructure, cost recovery by government agencies), case studies (such as private sector contribution to biodiversity) and other commissioned work (such as international pharmaceutical price differences).
Output 2:	Performance reporting and other services to government bodies
Government services performance reports, performance monitoring and related research on government trading enterprises, as well as international benchmarking of economic infrastructure.
Output 3:	Regulation review activities
Assessments of regulation impact statements, a range of associated activities such as annual reporting, research, advice and education.
Output 4:	Competitive neutrality complaints activities
Investigations of competitive neutrality complaints and associated activities such as research, advice and education.
Output 5:	Supporting research and activities and statutory annual reporting
Statutory annual reporting, research and working papers and associated activities such as submissions, conferences and speeches.

Table 2.2:  Performance information for Outcome 1
Performance information for agency outputs	
Output Group 1.1 — Productivity Commission	
Output 1.1.1 — Government commissioned 	projects	Capacity to undertake projects to a cost of $9.7 million.

Projects of a high standard, useful to government, undertaken in accordance with required processes and on time.	
Output 1.1.2 — Performance reporting and other 	services to government bodies	Capacity to provide reports and services to a cost of $3.1 million.

Reports of a high standard, useful to government and completed on time.	
Output 1.1.3 — Regulation review activities	Capacity to undertake Regulation Impact Statement assessments and associated activities to a cost of $2.1 million.

Regulation Impact Statement assessments and associated activities of a high standard, advice useful to government and on time.	
Output 1.1.4 — Competitive neutrality complaints 	activities	Capacity to undertake activities to a cost of $0.3 million.

Competitive neutrality complaints successfully resolved within 90 days; associated activities of a high standard and useful to government.	
Output 1.1.5 — Supporting research and activities 	and statutory annual reporting	Capacity to undertake annual reporting, research projects and associated activities to a cost of $7.8 million.

Reports, projects and associated activities of a high standard, useful to government, raising community awareness and on time.	

Evaluations
Evaluation of actual levels of achievement will be shown in the PC’s 2001-02 Annual Report. The framework for evaluation is described in the 1999-2000 Annual Report, and will be updated in the 2000-01 Annual Report.
Competitive tendering and contracting
The PC is reviewing its information technology function in accordance with government policy, and has scheduled reviews of its other corporate services functions and agency banking arrangements.

Section 3:  Budgeted financial statements
The budgeted financial statements will form the basis of the financial statements that will appear in the Productivity Commission (PC)’s 2001-02 Annual Report and form the basis for the input into the Whole of Government Accounts. The financial statements should be read in conjunction with the accompanying notes.
The financial statements are prepared consistent with Goods and Services Tax (GST) accounting requirements, as outlined by the Urgent Issues Group (UIG) of the Australian Accounting Standards Board. The UIG consensus requires that expenses and assets be accounted for net of recoverable GST, revenues be accounted for net of GST payable and that cash flows and accounts payable and receivable are reported gross. Appropriations are thus net of recoverable GST amounts.
Agency statements
Budgeted agency statement of financial performance
This statement provides a picture of the expected financial results for the PC by identifying full accrual expenses and revenues, which highlights whether the PC is operating at a sustainable level.
Budgeted agency statement of financial position 
This statement shows the financial position of the PC. It enables decision makers to track the management of the PC’s assets and liabilities.
Budgeted agency statement of cash flows 
This statement identifies expected cash flows from operating activities, investing activities and financing activities.
Agency capital budget statement 
This statement shows all proposed capital expenditure funded through the Budget as appropriations or from internal sources.
Agency non-financial assets — summary of movement
This statement shows the movement in the PC’s non-financial assets over the Budget year 2001-02.
Table 3.1:  Budgeted agency statement of financial performance
for the period ended 30 June

(1)	K1 — see Table 1.1.

Table 3.2:  Budgeted agency statement of financial position
as at 30 June

Table 3.3:  Budgeted agency statement of cash flows
for the period ended 30 June

Table 3.4:  Agency capital budget statement

Table 3.5:  Agency non-financial assets — summary of movement (Budget year 2001-02)

228

Part C:  Agency Budget Statements — PC

Notes to the financial statements
Basis of accounting
These financial statements have been prepared on a full accrual basis with the PC being funded accordingly from 2000‑01 onwards.
Non-financial assets consist mainly of Leasehold Improvements to the PC’s leased accommodation and are being depreciated over the period of the leases. As no major capital expenditure is being proposed during the current estimating period through to year 2004-05, the written-down value is decreasing annually. Conversely the PC’s financial assets are increasing through the funding of depreciation and will be available when required for future improvements.
Performance against outcomes and outputs
Performance information is included earlier under Table 2.2.

Appendix 1
Non-appropriation agency revenue