Part C

Agency Budget Statements

Page
Department of the Treasury	9
Australian Bureau of Statistics	49
Australian Competition and Consumer Commission	69
Australian Office of Financial Management	93
Australian Prudential Regulation Authority	117
Australian Securities and Investments Commission	141
Australian Taxation Office	163
Corporations and Markets Advisory Committee	201
National Competition Council	217
Productivity Commission	231

Department of the Treasury
Section 1:  Overview, appropriations and budget measures summary
Department overview
The Department of the Treasury seeks to promote a sound macroeconomic environment; effective government spending and taxation arrangements; and well functioning markets, by providing sound and timely advice to the Government and assisting Treasury Ministers in the administration of their responsibilities and in the implementation of Government decisions.
Appropriations
The total appropriations for the Department of the Treasury in the 2002‑03 Budget are $32,356.8 million. Table 1.1 on the following page shows the total by administered appropriations, price of output appropriations and administered capital.

Department of the Treasury — appropriations 2002-03
Table 1.1:  Appropriations and other revenue ($‘000)

1.	C1, E1 and I1 refer to information provided in Table 2.1.1, Table 2.1.2 and Table 2.1.3 respectively. K1 and K2 refer to information provided in Table 3.1 and Table 3.7 respectively. K3 refers to information provided in Table 3.10.
2.	Under the appropriation structure, Bill No. 2 includes Specific Purpose Payments (SPP’s), New Agency Outcomes (NAO’s) and administered capital. 
3.	Refer to Budgeted Statement of Financial Performance in Table 3.1 for application of agency revenue.
4.	Revenue from other sources includes revenue from sources other then government (for example, sales of goods and services). Departmental and administered revenues are detailed in Appendix 1.
5.	Estimated expenses from individual special appropriations are shown in Appendix 2.
Note:  Percentage figures indicate the percentage contribution of revenue from government (departmental appropriations) to the total price of outputs.

Measures — Department summary
Table 1.2:  Summary of measures disclosed in the 2002-03 Budget

Table 1.2:  Summary of measures disclosed in the 2002-03 Budget (continued)

*	The nature of the measure is such that a reliable estimate cannot be provided.

Administered capital and departmental equity injections and loans
The Department of the Treasury will receive administered capital appropriations of $162.555 million in 2002‑03. Of this amount $155.225 million is funded through special appropriations and $7.330 million through Appropriation Bill No. 2. These capital appropriations relate to financial assets. See Table 3.10.
The special appropriation amount relates to capital payments for the Asian Development Bank and the HIH Assistance Scheme. The Appropriation Bill No. 2 item relates to capital payments to the European Bank for Reconstruction and Development and Australia’s contribution to the International Monetary Fund’s Poverty Reduction and Growth Facility. 
The Department of the Treasury will receive no departmental equity injection or loan in 2002‑03.
 
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 Department of the Treasury. Financial details for Outcomes 1, 2 and 3, by output, appear in Tables 2.1.1, 2.1.2 and 2.1.3 respectively, while non‑financial information for the three outcomes appear in Tables 2.2.1, 2.2.2 and 2.2.3 respectively.

Map 2:  Outcomes and output groups

Changes to outcomes and outputs
The Actuarial services output, previously under Outcome 2 (output 2.1.5), has been moved to Outcome 3 (output 3.1.4). This is to more accurately reflect the services provided by the Australian Government Actuary.
Sub‑output 2.1.4 has been expanded to include taxation legislation functions previously located within the Australian Taxation Office (ATO).
The taxation legislative design function will be transferred from the ATO to the Department of the Treasury with effect from 1 July 2002.
Outcome 1 — Description
Sound macroeconomic environment
A sound macroeconomic environment is an essential foundation for strong sustainable economic growth and the improved wellbeing of Australians. The Department of the Treasury provides ongoing policy advice to Treasury portfolio Ministers to assist them in developing and implementing policies to achieve this outcome.
A sound macroeconomic environment is characterised by stable prices, low interest rates, healthy economic and employment growth and a sustainable external position. As there are many influences on macroeconomic outcomes beyond the control of the Government, policy is aimed at improving the prospects for the Australian economy, rather than targeting specific outcomes for major economic indicators. Success is judged more by medium‑term to long‑term performance relative to Australia’s past and to other countries, than by particular results in any year.
Measures affecting Outcome 1
There are no measures affecting Outcome 1 in the 2002‑03 Budget.

Outcome 1 — Resourcing
Table 2.1.1 shows how the 2002‑03 appropriations translate to total resourcing for Outcome 1, including administered expenses, revenue from government (appropriation), revenue from other sources, and the total price of outputs.
Table 2.1.1:  Total resources for Outcome 1 ($’000) 

(1)	C1, E1 and I1 show the links back to Table 1.1.

Outcome 1 — Contribution of outputs
The Department of the Treasury aims to contribute to a sound macroeconomic environment by monitoring and assessing economic conditions and prospects, both in Australia and overseas, and by providing advice on the formulation and implementation of effective macroeconomic policy, including monetary and fiscal policy, and labour market issues.

The Department of the Treasury provides advice on advancing Australia’s interests at international fora such as the International Monetary Fund, the World Bank, the Asian Development Bank, the European Bank for Reconstruction and Development, the Group of Twenty, the Organisation for Economic Cooperation and Development, Asia‑Pacific Economic Cooperation, the Financial Stability Forum, the Manila Framework Group, and the Pacific Islands Forum Economic Ministers’ Meeting. Australia is making a significant contribution to international efforts to sustain international economic stability and growth through these fora. The Department of the Treasury also provides bilateral financial and technical assistance in support of economic reform and strengthened economic governance, in particular to Papua New Guinea.
The effectiveness of the Department of the Treasury’s contribution to a sound macroeconomic environment is judged primarily by feedback from Treasury portfolio Ministers on the quality and relevance of advice.
Performance information for Outcome 1
Table 2.2.1:  Performance information for Outcome 1

Evaluations
Feedback will be sought from key clients on a regular basis on the effectiveness of policy advice.
Outcome 2 — Description
Effective government spending and taxation arrangements
Government spending and taxation arrangements contribute to the overall fiscal outcome but also have their own influence on the goal of strong sustainable economic growth and the improved wellbeing of Australians.
Spending measures should be effective in meeting their stated objectives, minimise other behavioural distortions and deliver value for money. Taxation measures should meet revenue objectives (or other public policy objectives) and have regard to the principles of economic efficiency, horizontal and vertical equity, certainty and transparency whilst minimising compliance and administrative costs. By meeting these aims, taxation measures contribute to the wellbeing of Australians, either directly or by providing the revenue base to finance government services.
Policy advice to Treasury portfolio Ministers promotes Government decisions which further these objectives and thereby contribute to this outcome.
Measures affecting Outcome 2
Establishment of the Office of the Inspector General of Taxation
The Government will provide funding of $8 million over four years to create an Office of the Inspector General of Taxation to provide advice to Government on tax administration and to act as an advocate for all taxpayers. This position will report to the Parliament through the Treasurer and will provide a new source of independent advice.
Intergovernmental Agreement — enhanced resources for GST administration  — Reduction in Budget Balancing Assistance
The Government has accepted the recommendation of the independent pricing review of the Australian Taxation Office (ATO) for additional funding for tax administration functions, including GST administration.
Under the Intergovernmental Agreement on the Reform of Commonwealth‑State Financial Arrangements, all GST revenue is provided to the States and Territories (the States) and collected on their behalf on a fee for service basis by the ATO. 

The Commonwealth and the States at the Ministerial Council meeting of 22 March 2002 agreed additional funding will be provided to the ATO to manage greater than anticipated GST workloads and to enhance small business (goods and services tax) field services and compliance capabilities (identified by the independent pricing review as an area warranting further investment). The States pay the Commonwealth for these costs. 
Under the Intergovernmental Agreement, agreed GST administration costs are included as a component of each State’s Guaranteed Minimum Amount (GMA). For each State, where that State’s share of GST revenue is less than the GMA, the Commonwealth pays Budget Balancing Assistance (BBA).  The combined effect of the additional GST revenue available to the States from the increased ATO funding, and the change in the States’ GMA as a result of administration costs determines the variation in the BBA required to be paid by the Commonwealth to the States.
Further details may be found in Budget Paper No. 3. 
See also the related expense measure titled Intergovernmental Agreement — enhanced resources for GST administration and the revenue measure titled Additional reimbursements from the States and Territories in the Treasury portfolio in Budget Paper No. 2.
Reduction in Budget Balancing Assistance as a result of not indexing petroleum Revenue Replacement Payments forgone
From 1 July 2002, indexation will not be included in the calculation of petroleum Revenue Replacement Payments forgone, a component of each State’s Guaranteed Minimum Amount (GMA). The adjustment is consistent with the Commonwealth Government’s decision of March 2001 to abolish indexation of fuel excise rates.
This adjustment will have the effect of lowering each State’s GMA which reduces the amount of Budget Balancing Assistance paid by the Commonwealth to the States in 2002‑03 and the forward estimates.
Further details may be found in Budget Paper No. 3, and the Treasurer’s press release of 22 March 2002.
Reduction in Budget Balancing Assistance resulting from the National Excise Scheme for Low Alcohol Beer
At the meeting of the Ministerial Council for Commonwealth‑State Financial Relations on 22 March 2002, the Commonwealth and the States and Territories (the States) agreed to implement a National Excise Scheme For Low Alcohol Beer from 1 July 2002. The scheme will replace a range of existing State subsidies with a nationally uniform and administratively efficient concession in the rate of excise on low alcohol beer.

The Commonwealth will deduct from each State’s Budget Balancing Assistance (BBA) an amount commensurate with its current subsidies, indexed for inflation, for as long as each State continues to receive BBA. After the transition period, when all States no longer require BBA, the Commonwealth will be fully funding the Scheme.
Further details may be found in Budget Paper No. 3, and the Treasurer’s press release of 22 March 2002. See also the related revenue measure titled National Excise Scheme for Low Alcohol Beer in the Treasury portfolio in Budget Paper No. 2.
Outcome 2 — Resourcing
Table 2.1.2 shows how the 2002‑03 appropriations translate to total resourcing for Outcome 2, including administered expenses, revenue from government (appropriation), revenue from other sources, and the total price of outputs. The total resources for 2002‑03 include the taxation legislation functions previously located within the ATO.
Table 2.1.2:  Total resources for Outcome 2 ($’000)

(1)	C1, E1 and I1 show the links back to Table 1.1.

Outcome 2 — Contribution of outputs
Effective government spending and taxation arrangements are crucial to achieving the Government’s objectives for the economy and the wellbeing of Australians. Ongoing advice to the portfolio Ministers from the Department of the Treasury assists in formulating, implementing and explaining government spending and taxation decisions which meet this objective.
More specifically, in the coming year the Department of the Treasury will provide advice on:
•	budget policies, including arrangements for the distribution of resources between the Commonwealth and other levels of government, which are consistent with sustainable public finances and macroeconomic objectives;
•	government expenditure programmes, with a focus on those programmes with significant economic or budgetary implications;
•	taxation policies and legislative design proposals which contribute to the reform of the Australian taxation system in terms of efficiency, equity and administrative simplicity; 
•	policies to promote the efficient and sustainable use of resources and to improve the competitiveness and productivity of Australian industries, thereby promoting higher levels of sustainable economic growth; and
•	development and implementation of policies relating to retirement incomes, including superannuation and the age pension, and other income support arrangements intended to promote the wellbeing of Australians.
At present, the Department of the Treasury is devoting significant resources to the implementation of the Government’s business taxation reform agenda and the implementation of superannuation election commitments. Priority is also being given to the Government’s review of international tax arrangements.
From 1 July 2002, responsibility for the design of taxation legislation will be transferred from the ATO to the Department of the Treasury.
The effectiveness of the contribution of these outputs to the outcome will be gauged primarily in terms of feedback from Treasury portfolio Ministers as to whether advice meets their needs in formulating, implementing and explaining government spending and taxation decisions.

Performance information for Outcome 2
Table 2.2.2:  Performance information for Outcome 2

Evaluations
Feedback will be sought from key clients on a regular basis on the effectiveness of policy advice and payments to State and Territory Governments. Results of evaluations will be presented, as appropriate, in the Department of the Treasury’s Annual Report.
Outcome 3 — Description
Well functioning markets
Well functioning markets contribute to the achievement of high sustainable economic and employment growth and the wellbeing of Australians, by enabling resources to flow to those parts of the economy where they can be used most productively. Well functioning markets operate when investors and consumers have confidence and certainty about the regulatory framework and are able to make decisions that are well informed and free of market distortions and impediments.
The Department of the Treasury provides advice on policy processes and reforms that promote a secure financial system and sound corporate practices, remove impediments to competition in product and services markets and safeguard the public interest in matters such as consumer protection and foreign investment.
Measures affecting Outcome 3
United Medical Protection (UMP)/ Australasian Medical Insurance Ltd (AMIL) insolvency adviser
The Government will provide funding of $2 million to engage external experts (for example legal and insolvency experts and appropriate actuarial advisers) to assist the Government in relation to the issues surrounding United Medical Protection (UMP) and its wholly owned subsidiary Australasian Medical Insurance Limited (AMIL).
See related expense measure titled United Medical Protection (UMP)/Australasian Medical Insurance Ltd (AMIL) guarantee.
United Medical Protection (UMP)/ Australasian Medical Insurance Ltd (AMIL) Guarantee
The Government has written to members insured by United Medical Protection/Australasian Medical Insurance Limited (UMP/AMIL) stating that the Commonwealth will guarantee to the provisional liquidator, or to any other subsequently appointed liquidator, the obligations of UMP/AMIL to pay any amount properly payable in the period 29 April to 30 June 2002 in respect of claims under a current or past policy. The Commonwealth has stated that it will also provide a guarantee to the provisional liquidator or to any subsequently appointed liquidator to enable the provision of cover in respect of valid claims that arise at any time for: holders of a current policy, for events that occur between 29 April and 30 June 2002; and holders of a policy that expires and is renewed by the provisional liquidator between 29 April and 30 June 2002, for insured events that occur before 30 June 2002. These proposed guarantees will apply to the extent that the provisional liquidator is unable to meet UMP/AMIL’s obligations under these policies from UMP/AMIL’s assets. The Government will ensure that these proposed guarantees are contractually binding on future governments, and will legislate to confirm the effect of the proposed guarantees.
Outcome 3 — Resourcing
Table 2.1.3 shows how the 2002‑03 appropriations translate to total resourcing for Outcome 3, including administered expenses, revenue from government (appropriation), revenue from other sources, and the total price of outputs.
Table 2.1.3:  Total resources for Outcome 3 ($’000)

(1)	C1, E1 and I1 show the links back to Table 1.1.
*	Average staffing level includes Royal Australian Mint.

Outcome 3 — Contribution of outputs
The Department of the Treasury provides advice to portfolio Ministers to assist them in carrying out their responsibilities in formulating, implementing and explaining the policies needed to achieve well functioning markets — markets that are competitive, efficient, informed, fair and transparent.
Advice is provided to the Government on foreign investment proposals and on general foreign investment policy matters, including Australia’s participation in multilateral and bilateral agreements on investment. In addition, awareness and understanding of the Government’s foreign investment policy is fostered in the community and in the business sector, both in Australia and overseas, and compliance with policy is monitored.
In relation to the financial system, the Department of the Treasury provides policy advice on the legislative framework for prudential supervision of financial institutions (including in the areas of banking, insurance and superannuation) by the Australian Prudential Regulation Authority and other regulation of those institutions. It monitors issues and developments in the financial sector, and provides advice on their policy implications. In 2002‑03, the Department will continue to provide advice on policy issues emerging in the general insurance sector and options to improve the safety of superannuation.
The Department of the Treasury is responsible for administering the Government’s programme to promote Australia as a financial centre, through Axiss Australia.
The Department of the Treasury participates with other government departments and agencies in formulating policy for the progress of structural reform in key sectors of the economy, including energy, transport and communications. The Department of the Treasury is responsible for providing advice on competition policy matters, monitoring the effectiveness of the competition, consumer protection and pricing provisions in the Trade Practices Act 1974 and the Prices Surveillance Act 1983, and advising on legislative amendments. In 2002‑03, the Government will undertake a review of the competition provisions of the Trade Practices Act and their administration.
In the coming year, the Government will monitor the transition into the new system of financial services regulation, which commenced on 11 March 2002, and will consult on and develop options for a compensation regime to support the new framework. The Government will continue to develop reforms to ensure that Australia’s regulatory framework remains at the cutting edge of world's best practice. 

The Department of the Treasury will provide advice on possible reforms covering independence of auditors as well as issues surrounding directors’ duties and corporate governance more broadly. Advice will also be provided to government on possible reforms to Australia’s corporate insolvency.
The Department of the Treasury will continue to progress reforms to reduce the paper compliance burden on Australian companies and enable the Australian Securities and Investments Commission to make greater use of communications technology. It is proposed that fees currently levied under the Corporations Law will be altered as part of this process.
The Department of the Treasury will continue to provide secretariat services to the Financial Reporting Council, which is responsible for overseeing Australia’s accounting standard setting arrangements.
There will be ongoing involvement in progressing international cooperation — particularly in the Asian region — in financial market regulation, corporate governance, financial reporting and corporate insolvency. A priority in this regard will be bilateral efforts to promote the harmonisation of national regulatory frameworks covering financial products and service providers.
Consumer affairs policy advice will be directed to the continuing implementation of government commitments on consumer affairs. This includes promoting effective self‑regulation, particularly in the context of electronic commerce. Consumer protection interests will also be promoted through the Trade Practices Act 1974, dissemination of consumer information and advice and actions to ensure the safety of consumer products.
The Department of Treasury will continue to provide policy advice to the Government relating to the HIH Assistance Scheme.
The Australian Government Actuary (AGA) will provide services relating to financial matters:  for example, benefits depending on contingencies such as injury, death or retirement. The AGA also aids departments and agencies on policy development in areas where it has specialist expertise.
The Royal Australian Mint (RAM) is an operating division of the Department of the Treasury, with responsibility for producing circulating and numismatic coin for Australia. The Department of the Treasury will continue to chair the RAM Advisory Board and also provide advice relating to the currency system. 
Performance information for Outcome 3
Table 2.2.3:  Performance information for Outcome 3

Table 2.2.3:  Performance information for Outcome 3 (continued)

Table 2.2.3:  Performance information for Outcome 3 (continued)

Evaluations
Feedback will be sought from key clients on a regular basis on the effectiveness of policy advice.
In relation to companies regulation compensation payments to the States and the Northern Territory, there will be an evaluation of the accuracy of calculation and the timeliness of payments.
There is ongoing evaluation of foreign investment policy administration in the context of statutory deadlines and target response rates.
Results of evaluations will be presented, as appropriate, in the Department of the Treasury’s Annual Report.

Section 3:  Budgeted financial statements
The budgeted financial statements have been prepared in accordance with the goods and services tax (GST) accounting guidelines of 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 be reported gross. Appropriations are thus net of recoverable GST amounts.
Departmental Financial Statements
Budgeted departmental statement of financial performance
This statement provides a picture of the expected financial results for the Department of the Treasury by identifying full accrual expenses, revenues and capital use charge, which highlights whether the Department is operating at a sustainable level.
Budgeted departmental statement of financial position 
This statement shows the financial position of the Department of the Treasury. It helps decision‑makers to track the management of assets and liabilities.
Budgeted departmental statement of cash flows 
Budgeted cash flows, as reflected in the statement of cash flows, provide important information on the extent and nature of cash flows by categorising them into expected cash flows from operating activities, investing activities and financing activities.
Departmental capital budget statement 
Shows all planned departmental capital expenditure (capital expenditure on non‑financial assets), whether funded either through capital appropriations for additional equity or borrowings, or from funds from internal sources.
Departmental non-financial assets — summary of movement
Shows budgeted acquisitions and disposals of non-financial assets during the budget year.

Notes of Administered Activity
Note of budgeted administered financial performance
This note identifies the main revenues and expenses administered on behalf of the Government. It also discloses administered revenues from government and transfers to the Public Account.
Note of budgeted administered financial position
This note shows the assets and liabilities administered on behalf of the Government.
Note of budgeted administered cash flows
This note shows cash flows administered on behalf of the Government.
Note of administered capital budget
This note shows details of planned administered capital expenditure.

Table 3.1:  Budgeted Departmental Statement of Financial Performance
for the period ended 30 June

(1)	K1 — shows the link back to Table 1.1.

Table 3.2:  Budgeted Departmental Statement of Financial Position
as at 30 June

*	No provision has been made for accrued leave entitlements for ATO officers transferred to Department of the Treasury as part of the taxation law design function.

Table 3.3:  Budgeted Departmental Statement of Cash Flows
for the period ended 30 June

Table 3.4:  Departmental Capital Budget Statement

Table 3.5:  Departmental Non-financial Assets — Summary of Movement (Budget year 2002-03)

Table 3.7:  Note of Budgeted Financial Performance Administered on behalf of Government for the period ended 30 June

(1)	K2 — shows the link back to Table 1.1.

Table 3.8:  Note of Budgeted Financial Position Administered on behalf of Government as at 30 June

Table 3.9:  Note of Budgeted Administered Cash Flows
for the period ended 30 June

Table 3.10:  Note of Administered Capital Budget

(1)	K3 — shows the link back to Table 1.1.

Notes to the Financial Statements
Basis of accounting
The Department of the Treasury’s budget statements have been prepared on an accrual basis in accordance with historical cost convention, except for certain assets which are at valuation.
All financial information presented in the statements represents the net cost to the Commonwealth; the figures are exclusive of any GST which may be payable by the Commonwealth and which is recoverable as an input tax credit.
Departmental and administered financial statements
Under the Commonwealth’s accrual budgeting framework, and consistent with Australian Accounting Standards, transactions that agencies control (departmental transactions) are separately budgeted for and reported on from transactions agencies do not have control over (administered transactions). This ensures that agencies are only held accountable for the transactions over which they have control.
Departmental assets, liabilities, revenues and expenses in relation to an agency are those which are controlled by the agency. Departmental expenses include employee and supplier expenses and other administrative costs, which are incurred by the agency in providing its goods and services.
Administered items are revenues, expenses, assets or liabilities which are managed by an agency on behalf of the Government according to set Government directions. Administered expenses include subsidies, grants, and personal benefit payments and administered revenues include taxes, fees, fines and excises.
Royal Australian Mint
The Department of the Treasury’s departmental budget statements are aggregated to include the financial operations of the Royal Australian Mint (RAM). Any profit earned by RAM, taking into account working capital requirements, is returned to the Commonwealth.
Seignorage is collected by RAM on behalf of the Commonwealth. Seignorage represents the difference between the face value of coinage sold to the Reserve Bank of Australia and its cost of production to RAM. Seignorage is treated as an administered item within the Department of the Treasury budget statements.
Capital use charge
A capital use charge is levied on the Department of the Treasury to reflect the cost of the Commonwealth’s investment in the Department of the Treasury. It is levied on the closing balance of departmental net assets (equity) at a rate of 11 per cent.
Funding for the capital use charge is included in the departmental price of outputs appropriation. The capital use charge is accounted for as a ‘below operating result line’ expense.
GST revenue payments
For constitutional reasons the GST is levied by the Commonwealth, and can therefore be technically considered Commonwealth revenue under the reporting standards. However the clear policy intent of the Intergovernmental Agreement on the Reform of Commonwealth-State Financial Relations (the IGA) is that it is a State tax collected by the Commonwealth in an agency capacity. Accordingly, GST payments are treated as negative revenue in these financial statements representing the transfer of taxes to State and Territory Governments. This fully offsets GST revenue recorded by the Australian Taxation Office so that at a consolidated level the GST is not recorded as Commonwealth revenue.

Appendix 1:  Departmental and administered revenue
Departmental and administered revenue

Appendix 2:  Estimates of expenses from special appropriations
Estimates of expenses from special appropriations