Controlled Note Index

Note 1. Objectives of the Health Directorate

Operations and Principal Activities

The Directorate partners with the community and consumers for better health outcomes by:

  • delivering patient and family centred care;
  • strengthening partnerships;
  • promoting good health and wellbeing;
  • improving access to appropriate healthcare; and
  • having robust safety and quality systems.

We aim for sustainability and improved efficiency in the use of resources, by designing sustainable services to deliver outcomes efficiently, and embedding a culture of research and innovation.

The Directorate continues to strengthen clinical governance of its processes, and strives to be accountable to both the government and the community.

The Directorate aims to support our people and strengthen teams, by helping staff to reach their potential, promoting a learning culture and providing high-level leadership.

Note 2. Summary of Significant Accounting Policies

(a) Basis of Preparation

The Financial Management Act 1996 (FMA) requires the preparation of annual financial statements for ACT Government Agencies.

The FMA and the Financial Management Guidelines issued under the Act, requires the Health Directorate’s (the Directorate’s)  financial statements to include:

  1. an Operating Statement for the year;
  2. a Balance Sheet at the end of the year;
  3. a Statement of Changes in Equity for the year;
  4. a Cash Flow Statement for the year;
  5. a Statement of Appropriation for the year;
  6. an Operating Statement for each class of output for the year;
  7. a summary of the significant accounting policies adopted for the year; and
  8. such other statements as are necessary to fairly reflect the financial operations of the Directorate during the year and its financial position at the end of the year.

These general-purpose financial statements have been prepared to comply with ‘Generally Accepted Accounting Principles’ (GAAP) as required by the FMA.  The financial statements have been prepared in accordance with:

  1. Australian Accounting Standards; and
  2. ACT Accounting and Disclosure Policies.

As at 30 June 2015, the Directorate’s current liabilities ($284.1 million) exceed current assets ($144.9  million) by $139.2 million. However, this is not considered to be a liquidity risk as its cash needs are funded through appropriation from the ACT Government on a cash-needs basis.  This is consistent with the Whole-of-Government cash management regime, which requires excess cash balances to be held centrally rather than within individual Directorate bank accounts.

The financial statements have been prepared using the accrual basis of accounting, which recognises the effects of transactions and events when they occur.  The financial statements have also been prepared according to the historical cost convention, except for assets such as those included in assets held for sale, property, plant and equipment and financial instruments which were valued at fair value in accordance with the (re)valuation policies applicable to the Directorate during the reporting period.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.  Fair value is measured using the market approach, the cost approach or the income approach valuation techniques as appropriate.  In estimating the fair value of an asset or liability, the Directorate takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at measurement date.

The above approach to fair value measurement does not apply to leasing transactions within the scope of AASB 117 Leases or measurements that have some similarities to fair value but are not fair value, such as net realisable value in AASB 102 Inventories or value in use in AASB 136 Impairment of Assets.

For disclosure purposes fair value measurements are categorised into Level 1, 2 or 3 based on the extent to which the inputs to the valuation techniques are observable and the significance of the inputs to the fair value measurement in its entirety.  The Fair Value Hierarchy is made up of the following three levels:

  • Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities that the Directorate can access at the measurement date;
  • Level 2 - inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and
  • Level 3 - inputs for the asset or liability that are not based on observable market data (unobservable inputs) that are unobservable for particular assets or liabilities.

These financial statements are presented in Australian dollars, which is the Directorate’s functional currency.

The Directorate is an individual reporting entity.

 (b) Controlled and Territorial Items

The Directorate produces Controlled and Territorial financial statements.  The Controlled financial statements include income, expenses, assets and liabilities over which the Directorate has control.  The Territorial financial statements include income, expenses, assets and liabilities that the Directorate administers on behalf of the ACT Government, but does not control.

The purpose of the distinction between Controlled and Territorial is to enable an assessment of the Directorate’s performance against the decisions it has made in relation to the resources it controls, while maintaining accountability for all resources under its responsibility.

The basis of preparation described in Note 2(a) above applies to both Controlled and Territorial financial statements except where specified otherwise.

(c) The Reporting Period

These financial statements state the financial performance, changes in equity and cash flows of the Directorate for the year ending 30 June 2015 together with the financial position of the Directorate as at 30 June 2015.

(d) Comparative Figures

Budget Figures

To facilitate a comparison with Budget Papers, as required by the Financial Management Act 1996, budget information for 2014-15 has been presented in the financial statements. Budget numbers in the financial statements are the original budget numbers that appear in the Budget Papers.

Prior Year Comparatives

Comparative information has been disclosed in respect of the previous period for amounts reported in the financial statements, except where an Australian Accounting Standard does not require comparative information to be disclosed.

Where the presentation or classification of items in the financial statements is amended, the comparative amounts have been reclassified where practical. Where a reclassification has occurred, the nature, amount and reason for the reclassification is provided.

(e) Rounding

All amounts in the financial statements have been rounded to the nearest thousand dollars ($’000).  Use of the “‑” symbol represents zero amounts or amounts rounded up or down to zero.

 (f) Revenue Recognition

Revenue is recognised at the fair value of the consideration received or receivable in the Operating Statement. All revenue is recognised to the extent that it is probable that the economic benefits will flow to the Directorate and the revenue can be reliably measured. In addition, the following specific recognition criteria must also be met before revenue is recognised:

Government Payment for Outputs and Payment for Expenses on Behalf of the Territory

Government Payment for Outputs and Payment for Expenses on Behalf of the Territory are recognised as revenues when the Directorate gains control over the funding.  Control over appropriated funds is obtained upon the receipt of cash.

ACT Government User Charges

The Directorate receives funding from the Local Hospital Network Directorate (LHN). The funding received from the LHN by the Health Directorate is based on the historical costs of the Directorate adjusted for growth in services provided and inflation. Funding from the LHN is recognised as revenue when the Directorate gains control over the funding. Control over LHN funding is obtained upon the receipt of cash.

Service Revenue

Revenue from the rendering of services is recognised when the stage of completion of the transaction at the reporting date can be measured reliably and the costs of rendering those services can be measured reliably.

Inventory Sales

Revenue from inventory sales is recognised as revenue when the significant risks and rewards of ownership of the goods has transferred to the buyer, the Directorate retains neither continuing managerial involvement nor effective control over the goods sold and the costs incurred in respect of the transaction can be measured reliably.

Amounts Received for Highly Specialised Drugs

Revenue from the supply of highly specialised drugs is recognised as revenue when the drugs have been supplied to the patients.

Inpatient Fees

For the hospital treatment of chargeable patients, inpatient fees are recognised as revenue when the services have been provided.

Revenue related to hospital services provided to the Department of Veterans Affairs patients is recognised when the number of patients and complexities of the treatments provided can be measured reliably and the contract price for such services is agreed with the Department of Veterans Affairs.  Actual patient numbers and services are settled following an acquittal process undertaken in subsequent years and variations to the revenue recognised are accounted for in the year of settlement with the Department of Veterans Affairs.

Facilities Fees

Facilities fees are generated from the provision of facilities to enable specialists and senior specialists to exercise rights of private practice in the treatment of chargeable patients at a Health Directorate facility.  They are recognised as revenue when the amount of revenue can be measured reliably.

Distribution

Distribution revenue is received from investments with the Territory Banking Account. This is recognised on an accrual basis.

Grants

Grants are non-reciprocal in nature and are recognised as revenue in the year in which the Directorate obtains control over them.

Where grants are reciprocal in nature, the revenue is recognised over the term of the funding arrangements.

Interest

Interest revenue is recognised using the effective interest method.

Revenue Received in Advance

Revenue received in advance is recognised as a liability if there is a present obligation to return the funds received, otherwise all are recorded as revenue.

 (g) Resources Received and Provided Free of Charge

Resources received free of charge are recorded as a revenue and expense in the Operating Statement at fair value.  The revenue is separately disclosed under resources received free of charge, with the expense being recorded in the line item to which it relates. Goods and services received free of charge from ACT Government agencies are recorded as resources received free of charge, whereas goods and services received free of charge from entities external to the ACT Government are recorded as donations. Services that are received free of charge are only recorded in the Operating Statement if they can be reliably measured and would have been purchased if not provided to the Directorate free of charge.

Resources provided free of charge are recorded at their fair value in the expense line items to which they relate.

(h) Repairs and Maintenance

The Directorate undertakes major cyclical maintenance on its assets. Where the maintenance leads to an upgrade of the asset, and increases the service potential of the existing asset, the cost is capitalised. Maintenance expenses which do not increase the service potential of the asset are expensed.

(i) Borrowing Costs

Borrowing costs are expensed in the period in which they are incurred.

 (j) Waivers of Debt

Debts that are waived during the year under Section 131 of the Financial Management Act 1996 are expensed during the year in which the right to payment was waived.  Further details of waivers are disclosed at
 Note 20:  Waivers, Impairment Losses and Write-offs. 

 (k) Current and Non-Current Items

Assets and liabilities are classified as current or non-current in the Balance Sheet and in the relevant notes.  Assets are classified as current where they are expected to be realised within 12 months after the reporting date. Liabilities are classified as current when they are due to be settled within 12 months after the reporting date or when the Directorate does not have an unconditional right to defer settlement of the liability for at least 12 months after the reporting date. 

Assets or liabilities which do not fall within the current classification are classified as non-current.

 (l) Impairment of Assets

The Directorate assesses, at each reporting date, whether there is any indication that an asset may be impaired. Assets are also reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. However, intangible assets that are not yet available for use are tested annually for impairment regardless of whether there is an indication of impairment, or more frequently if events or circumstances indicate they might be impaired.

Any resulting impairment losses, for land, buildings, and leasehold improvements, are recognised as a decrease in the Asset Revaluation Surplus relating to these classes of assets. This is because these asset classes are measured at fair value and have an Asset Revaluation Surplus attached to them.  Where the impairment loss is greater than the balance in the Asset Revaluation Surplus for the relevant class of asset, the difference is expensed in the Operating Statement. Impairment losses for plant and equipment and intangible assets are expensed in the Operating Statement, as plant and equipment and intangibles are carried at cost. Also, the carrying amount of the asset is reduced to its recoverable amount.

An impairment loss is the amount by which the carrying amount of an asset (or a cash-generating unit) exceeds its recoverable amount.  The recoverable amount is the higher of the asset’s ‘fair value less costs of disposal’ and its ‘value in use’.  An asset’s ‘value in use’ is its depreciated replacement cost, where the asset would be replaced if the Directorate were deprived of it.  Non-financial assets that have previously been impaired are reviewed for possible reversal of impairment at each reporting date.

 (m) Cash and Cash Equivalents

For the purposes of the Cash Flow Statement and the Balance Sheet, cash includes cash at bank and cash on hand. Directorate money held in the Territory Banking Account Cash Fund is classified as a Cash Equivalent.

Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

 (n) Receivables

Accounts receivable (including trade receivables and other trade receivables) are initially recognised at fair value and are subsequently measured at amortised cost, with any adjustments to the carrying amount being recorded in the Operating Statement.

Trade receivables arise in the normal course of selling goods and services to other agencies and to the public. Trade receivables are payable within 30 days after the issue of an invoice or the goods/services have been provided under a contractual arrangement. In some cases, the Directorate has entered into contractual arrangements with some customers allowing it to charge interest at commercial rates where payment is not received within 90 days after the amount falls due, until the whole of the debt is paid.

Other trade receivables arise outside the normal course of selling goods and services to other agencies and to the public. Other trade receivables are payable within 30 days after the issue of an invoice or the goods/services have been provided under a contractual arrangement. If payment has not been received within 90 days after the amount falls due, under the terms and conditions of the arrangement with the debtor, the Directorate is able to charge interest at commercial rates until the whole amount of the debt is paid.

The allowance for impairment losses represents the amount of trade receivables and other trade receivables the Directorate estimates will not be repaid. The allowance for impairment losses is based on objective evidence and a review of overdue balances. The Directorate considers the following is objective evidence of impairment:

  • becoming aware of financial difficulties of debtors;
  • default payments; or
  • debts more than 90 days overdue.

The amount of the allowance is the difference between the asset’s carrying amount and the present value of the estimated future cash flows, discounted at the original effective interest rate. Cash flows relating to short‑term receivables are not discounted if the effect of discounting is immaterial. The amount of the allowance is recognised in the Operating Statement. The allowance for impairment losses is written off against the allowance account when the Directorate ceases action to collect the debt as it considers that it will cost more to recover the debt than the debt is worth.

Receivables that have been renegotiated because they are past due or impaired are accounted for based on the renegotiated terms.

 (o) Investments

The Directorate holds one long-term investment. It is held with the Territory Banking Account in a unit trust called the Cash Enhanced Fund. Investments are measured at fair value with any adjustments to the carrying amount recorded in the Operating Statement. Fair value is based on an underlying pool of investments which have quoted market prices as at the reporting date.

(p) Inventories

Inventories are stated at the lower of cost and net realisable value. Cost comprises the purchase price of inventories as well as transport, handling and other costs directly attributable to the acquisition of inventories. Trade discounts, rebates and similar items are deducted in determining the costs of purchase. The cost of inventories is assigned using the cost weighted average method.

Net realisable value is determined using the estimated sales proceeds less costs incurred in marketing, selling and distribution to customers.

(q) Assets Held for Sale

Assets held for sale are assets that are available for immediate sale in their present condition, and their sale is highly probable.

Assets held for sale are measured at the lower of the carrying amount and fair value less costs to sell. An impairment loss is recognised for any initial or subsequent write down of the asset to fair value less cost to sell. Assets held for sale are not depreciated.

(r) Acquisition and Recognition of Property, Plant and Equipment

Property, plant and equipment is initially recorded at cost. Cost includes the purchase price, directly attributable costs and the estimated cost of dismantling and removing the item (where, upon acquisition, there is a present obligation to remove the item).

Where property, plant and equipment is acquired at no cost, or minimal cost, cost is its fair value as at the date of acquisition. However property, plant and equipment acquired at no cost or minimal cost as part of a Restructuring of Administrative Arrangements is measured at the transferor’s book value.

Where payment for property, plant and equipment is deferred beyond normal credit terms, the difference between its cash price equivalent and the total payment is measured as interest over the period of credit. The discount rate used to calculate the cash price equivalent is an asset specific rate.

Property, plant and equipment with a minimum value of $5,000 is capitalised.

(s) Measurement of Property, Plant and Equipment after Initial Recognition

Property, plant and equipment is valued using the cost or revaluation model of valuation.  Land, buildings and leasehold improvements are measured at fair value. The Directorate measures its plant and equipment at cost.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

Fair value for land and non-specialised buildings is measured using the market approach valuation technique. This approach uses prices and other relevant information generated by market transactions involving identical or similar assets.

Fair value for specialised buildings and leasehold improvements is measured by reference to the cost of replacing the remaining future economic benefits embodied in the asset (i.e depreciated replacement cost). This is the cost approach valuation technique. 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 economic benefits, expired economic benefits or obsolescence of the asset.  Current replacement cost is determined by reference to the cost of a substitute asset of comparable utility, the gross project size specifications or the historical cost, adjusted by relevant indices. 

Land, buildings and leasehold improvements are revalued every 3 years. However, if at any time management considers that the carrying amount of an asset materially differs from its fair value, then the asset will be revalued regardless of when the last valuation took place. Any accumulated depreciation relating to buildings and leasehold improvements at the date of revaluation is written-back against the gross carrying amount of the asset and the net amount is restated to the revalued amount of the asset.

The cost of plant and equipment comprises the purchase price, any directly attributable costs, and the initial estimate of the cost of dismantling and removing the plant and equipment and restoring the site on which it is located.

 (t) Intangible Assets

The Directorate’s intangible assets comprise internally developed and externally acquired software for internal use. Externally acquired software is recognised and capitalised when:

  1. it is probable that the expected future economic benefits that are attributable to the software will flow to the Directorate;
  2. the cost of the software can be measured reliably; and
  3. the acquisition cost is equal to or exceeds $50,000.

Internally generated software is recognised when it meets the general recognition criteria outlined above and where it also meets the specific recognition criteria relating to internally developed intangible assets.

Capitalised software has a finite useful life. Software is amortised on a straight-line basis over its useful life, over a period not exceeding 5 years.

Intangible assets are measured at cost.

(u) Depreciation and Amortisation of Non-Current Assets

Non-current assets with a limited useful life are subject to systematic depreciation/amortisation over their useful lives in a manner that reflects the consumption of their service potential.  The useful life commences when an asset is ready for use. When an asset is revalued, it is subject to depreciation/amortisation over its newly assessed remaining useful life. Amortisation is used in relation to intangible assets while depreciation is applied to physical assets such as buildings and plant and equipment.

Land has an unlimited useful life and is therefore not depreciated.

Leasehold improvements and motor vehicles under a finance lease are depreciated over the estimated useful life of each asset improvement, or the unexpired period of the relevant lease, whichever is shorter.

All depreciation is calculated after first deducting any residual values which remain for each asset.

Depreciation/amortisation for non-current assets is determined as follows.

Class of Asset Depreciation/Amortisation Method Useful Life (Years)
Buildings Straight Line 40-80
Leasehold Improvements Straight Line 2-10
Plant and Equipment Straight Line 2-20
Externally Purchased Intangibles Straight Line 2-5
Internally Generated Intangibles Straight Line 2-5
Land improvements are included with buildings.

The useful lives of all major assets held are reassessed on an annual basis.

 (v) Payables

Payables are a financial liability and are initially recognised at fair value based on the transaction cost and subsequent to initial recognition at amortised cost, with any adjustments to the carrying amount being recorded in the Operating Statement. All amounts are normally settled within 30 days after the invoice date.

Payables include Trade Payables, Accrued Expenses and Other Payables.

Trade Payables represent the amounts owing for goods and services received prior to the end of the reporting period and unpaid at the end of the reporting period and relating to the normal operations of  the Directorate.

Accrued Expenses represent goods and services provided by other parties during the period that are unpaid at the end of the reporting period and where an invoice has not been received by period end.

Other Payables are those unpaid invoices that do not directly relate to the normal operations of the Directorate. 

(w) Leases

The Directorate has entered into finance leases and operating leases. 

Finance Leases

Finance leases effectively transfer to the Directorate substantially all the risks and rewards incidental to ownership of the assets under a finance lease. The title may or may not eventually be transferred. Finance leases are initially recognised as an asset and a liability at the lower of the fair value of the asset (AASB 13 Fair Value Measurement definition of fair value does not apply – see AASB 117.6A) and the present value of the minimum lease payments each being determined at the inception of the lease. The discount rate used to calculate the present value of the minimum lease payments is the interest rate implicit in the lease. Assets under a finance lease are depreciated over the shorter of the asset’s useful life or lease term. Assets under a finance lease are depreciated on a straight-line basis. Each lease payment is allocated between interest expense and reduction of the lease liability. Lease liabilities are classified as current and non-current.

Operating Leases

Operating leases do not effectively transfer to the Directorate substantially all the risks and rewards incidental to ownership of the asset under an operating lease. Operating lease payments are recorded as an expense in the Operating Statement on a straight-line basis over the term of the lease.

Motor Vehicle Leasing Arrangements 2014-15

Changes were made to the whole-of-government motor vehicle leasing arrangements with SG Fleet as a result of which all such leases were classified as operating leases rather than finance leases from 23 April 2015.  The leased vehicles held as Property, Plant and Equipment (under the previous finance lease arrangement with SG Fleet) were derecognised and the associated loss on the derecognition of the leased vehicle assets reflected under Other Expenses (refer to Note 19: Other Expenses).  The corresponding finance lease liability (current and non-current) was also derecognised and the associated gain from the derecognition of the liability reflected under Other Gains (refer to Note 11: Other Gains).  Accordingly, gross amounts for the loss on the derecognition of the leased vehicles and the gain on the derecognition of the finance lease liability have been reported separately rather than on a net basis, in these financial statements. 

 (x) Employee Benefits

Employee benefits include:

Short-term employee benefits such as wages and salaries, annual leave loading, and applicable on-costs, if expected to be settled wholly before twelve months after the end of the annual reporting period in which the employees render the related services;
Other long-term benefits such as long service leave and annual leave; and
Termination benefits.

On‑costs include annual leave, long service leave, superannuation and other costs that are incurred when employees take annual and long service leave.

Wages and Salaries

Accrued wages and salaries are measured at the amount that remains unpaid to employees at the end of the reporting period.

Annual and Long Service Leave

Annual and long service leave including applicable on-costs that are not expected to be wholly settled before twelve months after the end of the reporting period when the employees render the related service are measured at the present value of estimated future payments to be made in respect of services provided by employees up to the end of the reporting period.  Consideration is given to the future wage and salary levels, experience of employee departures and periods of service.  At the end of each reporting period, the present value of future annual leave and long service leave payments is estimated using market yields on Commonwealth Government bonds with terms to maturity that match, as closely as possible, the estimated future cash flows. 

Annual leave liabilities have been estimated on the assumption that they will be wholly settled within three years.  In 2014-15 the rate used to estimate the present value of future payments for annual leave is 101.0% (100.9% in 2013-14).

In 2014-15, the rate used to estimate the present value of future payments for long service leave is 104.2% (103.5% in 2013-14).

The long service leave liability is estimated with reference to the minimum period of qualifying service.  For employees with less than the required minimum period of 7 years of qualifying service, the probability that employees will reach the required minimum period has been taken into account in estimating the provision for long service leave and applicable on-costs.  

The provision for annual leave and long service leave includes estimated on-costs.  As these on-costs only become payable if the employee takes annual and long service leave while in-service, the probability that employees will take annual and long service leave while in service has been taken into account in estimating the liability for on-costs.

The significant judgements and assumptions included in the estimation of annual and long service leave liabilities are determined by an actuary.  The Australian Government Actuary performed this assessment in May 2014.  The assessment by an actuary is performed every 5 years.  However, it may be performed more frequently if there is a significant contextual change in the parameters underlying the 2014 report.  The next actuarial review is expected to be undertaken by May 2019.  Further information about this estimate is provided in Note 2(ad): Significant Accounting Judgements and Estimates.

Annual leave and long service leave liabilities are classified as current liabilities in the Balance Sheet where there are no unconditional rights to defer the settlement of the liability for at least 12 months.  Conditional long service leave liabilities are classified as non-current because the Directorate has an unconditional right to defer the settlement of the liability until the employee has completed the requisite years of service.

(y) Superannuation

The Directorate receives funding for superannuation payments as part of the Government Payment for Outputs.

The Directorate then makes payments on a fortnightly basis to the Territory Banking Account, to cover the Directorate’s superannuation liability for the Commonwealth Superannuation Scheme (CSS) and the Public Sector Superannuation Scheme (PSS).  This payment covers the CSS/PSS employer contribution, but does not include the productivity component. The productivity component is paid directly to Comsuper by the Directorate. The CSS and PSS are defined benefit superannuation plans meaning that the defined benefits received by employees are based on the employee’s years of service and average final salary.

Superannuation payments have also been made directly to superannuation funds for those members of the Public Sector who are part of superannuation accumulation schemes. This includes the Public Sector Superannuation Scheme Accumulation Plan (PSSAP) and schemes of employee choice.

Superannuation employer contribution payments, for the CSS and PSS, are calculated, by taking the salary level at an employee’s anniversary date and multiplying it by the actuarially assessed nominal CSS or PSS employer contribution rate for each employee. The productivity component payments are calculated by taking the salary level, at an employee’s anniversary date, and multiplying it by the employer contribution rate (approximately 3%) for each employee. Superannuation payments for the PSSAP are calculated by taking the salary level, at an employee’s anniversary date, and multiplying it by the appropriate employer contribution rate. Superannuation payments for fund of choice arrangements are calculated by taking an employee’s salary each pay and multiplying it by the appropriate employer contribution rate.

The total Territory superannuation liability for the CSS, PSS, and Comsuper is recognised in the Chief Minister, Treasury and Economic Development Directorate’s Superannuation Provision Account and the external schemes recognise the superannuation liability for the PSSAP and other schemes respectively. This superannuation liability is not recognised at individual agency level.

The ACT Government is liable for the reimbursement of the emerging costs of benefits paid each year to members of the CSS and PSS in respect of the ACT Government service provided after 1 July 1989. These reimbursement payments are made from the Superannuation Provision Account.

(z) Equity Contributed by the ACT Government

Contributions made by the ACT Government, through its role as owner of the Directorate, are treated as contributions of equity.

Increases or decreases in net assets as a result of Administrative Restructures are also recognised in equity.

 (aa) Insurance

Major risks are insured through the ACT Insurance Authority. The excess payable, under this arrangement, varies depending on each class of insurance held.

(ab) Third Party Monies

The Directorate holds third party monies in a trustee capacity for the Health Directorate Human Research Ethics Committee and for residents of its Mental Health facilities.  The Directorate also holds third party monies in an administrative capacity which is principally derived from patients treated by salaried specialists.

Third party transactions are excluded from the Directorate’s financial statements. Details of third party monies are shown at Note 44: Third Party Monies.

(ac) Budgetary Reporting

Explanations of major variances between the 2014-15 original budget and the 30 June 2015 actual results are discussed in Notes 45 (Controlled) and 59 (Territorial): Budgetary Reporting.  

The definition of ‘major variances’ is provided in Note 2(ad): Significant Accounting Judgements and Estimates – Budgetary Reporting.  

Original budget refers to the original budgeted financial statements presented to the Legislative Assembly in a form that is consistent with the Directorate’s annual financial statements.  The 2014-15 budget numbers have not been audited.

Budgetary reporting is disclosed for both controlled and territorial financial statements with the exception of Statement of Changes in Equity as relevant line items are included in other financial statements.

 (ad) Significant Accounting Judgements and Estimates

In the process of applying the accounting policies listed in this note, the Directorate has made the following judgements and estimates that have the most significant impact on the amounts recorded in the financial statements:

  1. Fair Value of Assets: the Directorate has made a significant estimate regarding the fair value of its assets.  Land and Leasehold Improvements have been recorded at market value of similar properties as determined by an independent valuer.  Buildings have been recorded at fair value based on a depreciated replacement cost as determined by an independent valuer.  This valuation is determined by reference to the new cost of the buildings less depreciation for their physical, functional and economic obsolescence.
  2. Employee Benefits: significant judgements have been applied in estimating the liability for employee benefits. The estimated liability for annual and long service leave requires a consideration of the future wages and salary levels, experience of employee departures, probability that leave will be taken in service and periods of service. The estimate also includes an assessment of the probability that employees will meet the minimum service period required to qualify for long service leave and that on‑costs will become payable. Further information on this estimate is provided in Note 2 (x): Employee Benefits.
  3. Depreciation and Amortisation: the Directorate has made a significant estimate in the lengths of useful lives over which its assets are depreciated and amortised.  This estimation is the period in which utility will be gained from the use of the asset, based on either estimates from officers of the Directorate or an independent valuer.
  4. Contingent Liabilities: contingent liabilities are an estimate provided by the ACT Government Solicitor of the likely liability for legal claims against the Directorate.
  5. Budgetary Reporting: Significant judgements have been applied in determining what variances are considered as ‘major variances’ requiring explanations in Notes 45 (Controlled) and 59 (Territorial): Budgetary Reporting.   Variances are considered to be major variances if both of the following criteria are met:
    • The line item is a significant line item:  the line item actual amount accounts for more than 10% of the relevant associated category (Income, Expenses and Equity totals) or sub-element      (e.g. Current Liabilities and Receipts from Operating Activities totals) of the financial statements; and
    • The variances (original budget to actual) are greater than plus (+) or minus (-) 10% for the budget for the financial statement line item.

Further information on this is provided in Note 2(ac): Budgetary Reporting.

 (ae) Impact of Accounting Standards Issued but yet to be Applied

The following new and revised accounting standards and interpretations have been issued by the Australian Accounting Standards Board but do not apply to the current reporting period. These standards and interpretations are applicable to future reporting periods. The Directorate does not intend to adopt these standards and interpretations early. Where applicable, these Australian Accounting Standards will be adopted from their application date.

  • AASB 9 Financial Instruments (December 2014) (application date 1 January 2018);

This standard supersedes AASB 139 Financial Instruments: Recognition and Measurement. The main impact of AASB 9 is that it will change the classification, measurement and disclosure of financial assets.  No material financial impact on the Directorate is expected.

  • AASB 15 Revenue from Contracts with Customers (application date 1 January 2017);

AASB 15 is the new standard for revenue recognition. It establishes a comprehensive framework for determining whether, how much and when revenue is recognised. It replaces AASB 111 Construction Contracts and AASB 118 Revenue.  The Directorate has assessed the impact of this standard and has identified there could be a potential impact on the timing of the recognition of revenue for user charges. This impact is not expected to be material.

Note 3. Change in Accounting Policy and Accounting Estimates, and Correction of Prior Period Errors

Change in Accounting Policy and Accounting Estimates

The Directorate had no changes in Accounting Policy or Accounting Estimates during the reporting period.

Correction of Prior Period Errors

The Directorate had no correction of prior period errors during the reporting period.

Note 4. Government Payment for Outputs

Government Payment for Outputs (GPO) is revenue received from the ACT Government to fund the costs of delivering outputs.  The ACT Government pays GPO appropriation on a fortnightly basis.

 

2015
$’000

2014
$’000

Revenue from the ACT Government

 

 

Government Payment for Outputs a

252,617

229,062

Total Government Payment for Outputs

252,617

229,062

  1. The increase relates to funding for growth in services, salary increases and indexation for non labour expenses.

Note 5. User Charges

User charge revenue is derived by providing goods and services to other ACT Government agencies and to the public.  User charge revenue is not part of ACT Government appropriation and is paid by the user of the goods or services.  This revenue is driven by consumer demand and is commercial in nature.

  2015
'0000
2014
'0000
User Charges - ACT Government    
Local Hospital Network Fundinga 760,262 717,273
Service Revenueb 332 743
Total User Charges - ACT Government 760,594 718,016
     
User Charges - Non-ACT Government    
Service Revenuec 12,422 11,032
Amounts Received for Highly Specialised Drugsd 16,102 17,602
Cross Border (Interstate) Health Revenuee - 4,726
Inpatient Feesf 36,906 31,677
Facilities Feesg 26,590 24,382
Non-inpatient Fees 1,056 866
Inventory Salesh 12,285 13,279
Accommodation and Meals 3,653 3,813
Total User Charges - Non-ACT Government 109,014 107,377
     
Total User Charges 869,608 825,393
  1. The increase mainly relates to inflation, growth in services provided and additional activities now covered under the National Health Reform.
  2. The decrease is largely the result of $0.4m revenue for aero-medical services that was shown as revenue from Justice and Community Safety Directorate in 2013-14 and is now paid by ACT & South East NSW Aero Medical Services LTD and is shown as ‘User Charges non-ACT Government’  revenue.
  3. The increase is mainly due to $0.4m revenue for aero-medical services that was shown as revenue from Justice and Community Safety Directorate in 2013-14 and is now paid by ACT & South East NSW Aero Medical Services LTD and is shown as ‘User Charges non-ACT Government’, increased revenue from sterilising services provided to other hospitals, increases in pathology services and an increase in commercial space rentals.
  4. 2013-14 included revenue that related to 2012-13 that had not previously been recognised.
  5. The decrease is due to the changed funding arrangements for the treatment of interstate patients in ACT hospitals following the implementation of the National Health Reform Agreement. This revenue is now collected through the ACT Local Health Network Directorate. The amounts for 2013-14 relate to prior year activity confirmed through an annual acquittal process with the New South Wales Ministry of Health.
  6. The increase is largely attributable to an increase in compensable and private patients and prior year revenues related to Department of Veterans Affairs patients that had not previously been recognised.
  7. The increase mainly relates to increased private patient activities in Pathology, Oncology and Medical Imaging specialities.
  8. This is mainly due to a fall in volume of consumables sold to the private hospitals.

Note 6. Interest

 

2015
$’000

2014
$’000

Revenue from Non-ACT Government Entities

 

 

Interest Revenue

70

97

Total Interest Revenue from Non-ACT Government Entities

70

97

 

 

 

Total Interest Revenue

70

97

 

 

 

Total interest revenue from financial assets not at fair value through profit and loss.

70

97

Note 7. Distribution from Investments with the Territory Banking Account

 

2015
$’000

2014
$’000

Revenue from ACT Government Entities

 

 

Distribution from Investments with the Territory Banking Account

97

98

Total Distribution from Investment with the Territory Banking Account

97

98

Note 8. Resources Received Free of Charge

Resources received free of charge relate to goods and/or services being provided free of charge from other agencies within the ACT Government.  Goods and services received free of charge from entities external to the ACT Government are classified as donations.  Donations are shown in Note 11: Other Gains.

 

2015
$’000

2014
$’000

Revenue from ACT Government Entities

 

 

Legal Servicesa

1,359

1,479

Other Resources Received Free of Chargeb

112

139

Total Resources Received Free of Charge

1,471

1,618

  1. The decrease is due to requests for legal advice reducing from 116 in 2013-14 to 111 in 2014-15.
  2. The decrease is due to reduced instances of room hire for patient education and training.

Note 9. Other Revenue

Other Revenue arises from the core activities of the Directorate.  Other Revenue is distinct from Other Gains, as Other Gains are transactions that are not part of the core activities of the Directorate.

  2015
$'000
2014
$'000
Revenue from Non-ACT Government Entities    
Grantsa 16,493 18,184
Otherb 3,267 2,444
Total Other Revenue from Non-ACT Government Entities 19,760 20,628
     
Total Other Revenue 19,760 20,628
  1. The reduction mainly relates to special purpose grants for medical research which fluctuate from year to year.
  2. The increase mainly relates to insurance claims revenue in relation to spoilage of pharmacy stock, receipt of prior year worker’s compensation claims and reimbursement of prior year expenses.

The Directorate has received grants from various entities which must be spent on specific purposes.

  2015 2014
  $’000 $’000
Contribution Analysis - Grants    
Contributions which have conditions of expenditure still required to be met:    
Contributions recognised as revenue during current year for which    expenditure in manner specified had not occurred as at balance date 3,479 1,610
Contributions recognised in previous years which were not expended in the    current financial year 7,653 8,167
     
Total amount of unexpended contributions as at balance date 11,132 9,777

Note 10. Gains on Investments

2015
$’000

2014
$’000

Revenue from ACT Government Entities

 

 

Unrealised Gains on Investmentsa

12

4

Total Gains on Investments

12

4

  1. The rate of investment return for 2014-15 was higher than that for the previous year.

Note 11. Other Gains

Other gains are transactions that are not part of the Directorate’s core activities.  Other gains are distinct from other revenue, as other revenue arises from the core activities of the Directorate.

2015
$’000

2014
$’000

Gains from the Sale of Assets

82

85

Assets Transferred from Other Entitiesa

485

-

Donationsb

1,032

1,309

Gain from De-recognition of Finance Lease Liabilityc

5,469

-

Total Other Gains

7,068

1,394

  1. In 2014-15 land was transferred to the Directorate from ACT Property Group for the purpose of building a Secure Mental Health Facility in Symonston.
  2. The reduction in donations is a result of one-off amounts received in 2013-14 that were for the Centenary Hospital for Women and Children.
  3. The gain from de-recognition of lease vehicles liabilities is in accordance with the whole-of-government vehicle leasing arrangements, which took effect on 23 April 2015. The net impact of the gross loss of $5.29 million on the derecognition of the leased vehicles (refer to Note 19: Other Expenses) and the gross gain of $5.47 million on the derecognition of the finance lease liability was a net gain of $0.18 million.  Also refer to Note 2(w): Summary of Significant Accounting Polices – leases.

The Directorate has received donations from organisations and the general public which must be spent on specific purposes.

 

2015
$’000

2014
$’000

Contribution Analysis - Donations

 

 

Contributions which have conditions of expenditure still required to be met:

 

 

Contributions recognised as revenues during current year for which

   expenditure in manner specified had not occurred as at balance date

427

918

Contributions recognised in previous years which were not expended in the

   current financial year

2,730

2,975

Total amount of unexpended contributions as at balance date

3,157

3,893

Note 12. Employee Expenses

 

2015
$’000

2014
$’000

Wages and Salariesa

582,352

549,176

Annual Leave Expenseb

16,523

14,905

Long Service Leave Expensec

14,054

11,876

Workers' Compensation Insurance Premium

20,457

20,355

Termination Payment Expense

718

2,066

Other Employee Benefits and On-Costsd

9,007

8,002

Total Employee Expenses

643,111

606,380

 

 

 

 

No.

No.

Average full-time equivalent staff levels during the year were:

6,092

5,873

  1. The increase in Wages and Salaries mainly relates to pay rises under collective agreements and increases in staff numbers related to growth in services in acute services, mental health, community health centres, the Centenary Hospital for Women and Children, the Canberra Region Cancer Centre, community nursing, emergency department, and outpatient and imaging services.
  2. The increase is mainly due to the impact of collective agreement pay rises, an increase in staff numbers related to growth in services provided to patients and the growth in liability due to leave earned exceeding leave taken.
  3. The increase in Long Service Leave is mainly due to an increase in the rate used to estimate the present value of Long Service Leave payments from 103.5% to 104.2% and the effect of pay rises under the collective agreements.
  4. The increase is mainly due to an increase in the number of staff on paid maternity leave and increased recruitment agency costs.

Note 13. Superannuation Expenses

 

2015
$’000

2014
$’000

Superannuation Contributions to the Territory Banking Account

38,040

38,526

Productivity Benefit

4,976

5,066

Superannuation Payment to ComSuper (for the PSSAP)

3,460

3,467

Superannuation to External Providers a

34,567

29,384

Total Superannuation Expenses

81,043

76,443

  1. The increase is due to pay rises under collective agreements and that most additional employees are members of superannuation schemes managed by external providers.

Note 14. Supplies and Services

2015
$’000

2014
$’000

Audit Expenses

454

459

Blood Products

8,856

8,494

Clinical Expenses/Medical Surgical Suppliesa

64,034

59,487

Communicationsb

3,617

4,171

Computer Expensesc

38,281

33,742

Contractors and Consultants

7,578

7,229

Domestic Services, Food and Utilitiesd

33,509

32,025

General Administration

18,194

17,516

Hire and Rental Charges

4,216

4,279

Insurance

30,993

31,181

Minor Capitale

4,054

3,341

Non-Contract Servicesf

4,718

5,130

Operating Lease Rental Paymentsg

7,170

6,415

Pharmaceuticalsh

37,834

35,476

Printing and Stationery

2,529

2,566

Property and Rental Expensesi

2,305

2,717

Public Relationsj

686

898

Publications

1,348

1,299

Repairs and Maintenancek

17,023

15,851

Staff Development and Recruitment

6,973

6,682

Travel and Accommodation

1,013

1,152

Vehicle Expensesl

1,207

1,490

Visiting Medical Officersm

27,279

29,076

Total Supplies and Services

323,871

310,676

  1. The increase in clinical expenses/medical surgical supplies is mainly due to inflation and growth in patient activity in acute care services, mental health, community health centres, the Centenary Hospital for Women and Children, the Canberra Region Cancer Centre, community nursing, emergency department, and outpatient and imaging services.
  2. The decrease in communications charges is due to lower postage costs from fewer mail outs and reduced landline charges due to savings through a new whole-of-government contract.
  3. The increase in computer expenses is due to a combination of factors, including inflation, increase in staff numbers, support costs for projects that became operational during the year such as the Digital Mammography, Calvary PAS Integration and Clinical Portal Suites software packages and $1.5m expenses relating to a prior year which was accounted for as a prepayment instead of being expensed in that year.
  4. The increase in domestic services, food and utilities is for water and sewerage rates and cleaning services from a full year effect of new buildings beginning operation. These new buildings are the Belconnen Community Health Centre, the Centenary Hospital for Women and Children, the Canberra Region Cancer Centre and the expanded Tuggeranong Community Health Centre.
  5. The increase in minor capital is due to a rise in the purchase of furniture and fittings, and medical and surgical assets under the capitalisable threshold of $5,000.
  6. The reduction in non-contract services is due to lower use of registered nurses from external labour providers.
  7. The increase in operating lease rental payments is a result of changing motor vehicle leases from finance leases to operating leases from 23 April 2015.
  8. The increase in pharmaceuticals is due to inflation and an increase in the use of high cost drugs.
  9. The reduction in property and rental is due to the cessation of renting office space at Swanson Plaza in Belconnen and the cessation of renting additional office space for staff while construction work was in progress.
  10. The reduction in public relations is due to cost savings for promotional activities including refreshments and displays/events.
  11. The increase in repairs and maintenance is due to the need for repairs on ageing assets and inflation.
  12. The reduction in vehicle expenses is due to the change in motor vehicle lease type from finance leases to operating leases with these costs now reflected as operating lease rental payments, as well as lower fuel charges in 2014-15.
  13. 2013-14 included $1.1 million relating to services from 2012-13 and in 2014-15 several visiting medical officers were replaced by salaried specialists.

Note 15. Depreciation and Amortisation

2015
$’000

2014
$’000

Depreciation

 

 

Buildingsa

22,665

15,096

Plant and Equipment

10,643

10,763

Leasehold Improvementsb

3,088

1,783

Total Depreciation

36,396

27,642

 

 

 

Amortisation

 

 

Intangible Assetsc

10,190

4,841

Total Amortisation

10,190

4,841

 

 

 

Total Depreciation and Amortisation

46,586

32,483

  1. The increase mainly relates to accelerated depreciation for building 15 at the Canberra Hospital which has been demolished. There is also the full year effect of depreciation for new buildings that were completed in 2013-14 which are the Centenary Hospital for Women and Children, the Belconnen Community Health Centre, the Tuggeranong Community Health Centre, the Canberra Region Cancer Centre, and the Canberra Hospital emergency department intensive care unit expansion.
  2. The increase relates to works at North Curtin offices which is leased by the Directorate.
  3. The increase is a result of finalised computer software projects which became new assets in 2014-15. These computer software packages are Canberra Hospital eProcurement, Single Sign On/Rapid Access, Canberra Hospital Priority Systems, My Shift eRostering, Renal Dialysis System, Clinical Portal Suites, Order Entry, Identity and Access Management, Radiology Information System Upgrade, Digital Mammography and Calvary Patient Administration System Integration.

Note 16. Grants and Purchased Services

Grants are sums of money provided to organisations or individuals for a specified purpose directed at achieving goals and objectives consistent with Government policy on health promotion.

Purchased Services are amounts paid to obtain services by the Directorate from other ACT Government agencies and external parties. They may be for capital, current or recurrent purposes and they are usually subject to terms and conditions set out in a contract, agreement, or by legislation.

Non-Government Organisation service providers provide services in a range of areas including Home and Community Care, Alcohol and Drug, Community Mental Health, Women’s Health, Aged Care and Aboriginal Health.

Purchased Services from Calvary Hospital is for the provision of healthcare in the ACT.

Cross Border Health Costs relates to costs incurred by ACT residents in interstate hospitals.

Expenditure to Other Service Providers are mainly for the provision of elective surgery procedures by private hospitals.        

 

2015
$’000

2104
$’000

Grants

 

 

Grants

2,161

2,509

Total Grants

2,161

2,509

 

 

 

Purchased Services

 

 

Calvary Hospitala

4,086

3,121

Non-Government Organisations

64,387

63,544

Cross Border Health Costs

24

32

Otherb

7,685

3,471

Total Purchased Services

76,182

70,168

 

 

 

Total Grants and Purchased Services

78,343

72,677

  1. The increase in funding to Calvary Public Hospital is largely related to inflation and growth in service provision.
  2. The increase relates to a dedicated hip and knee joint replacement program in 2014-15 at Calvary John James Hospital for elective surgery patients in which a total of 355 procedures were performed.

Note 17. Borrowing Costs

Borrowing costs are finance charges in respect of finance leases for the Directorate’s fleet of vehicles and clinical equipment. Due to a change in the Whole of Government vehicle leasing arrangements with SG Fleet, from 23 April 2015 all such leases for the Directorate will be classified as operating leases (whose costs appear in supplies and services) rather than finance leases.  There will be no borrowing costs in respect of the Directorate’s fleet of vehicles in the next financial year.

2015
$’000

2014
$’000

Finance Charges

262

351

Finance Cost on Make Gooda

43

200

Total Borrowing Costs

305

551

  1. In 2013-14 there was a catch up of the discounting for make good provision to cover multiple years which increased the expenditure in that year.

Note 18. Cost of Goods Sold

Cost of Goods Sold represents hospital supplies sold to private hospitals.

2015
$’000

2014
$’000

Cost of Goods Solda

9,295

10,339

Total Cost of Goods Sold

9,295

10,339

a. The decrease is due to a reduction in medical supplies purchased by private hospitals.

Note 19. Other Expenses

2015
$’000

2014
$’000

Miscellaneous Expensesa

3,302

1,004

Legal Settlementsb

1,935

2,999

Waivers, Impairment Losses and Write-offs (see Note 20)

2,244

2,338

Loss on Sale of Assets

12

49

Loss on De-recognition of Motor Vehicle Under a Finance Leasec

5,286

-

Total Other Expenses

12,779

6,390

  1. The increase relates to the write off of audio visual equipment that was bought for the Telehealth project for use throughout Southern New South Wales and for the return of grant money to Health Workforce Australia that related to clinical training subsidies.
  2. 2013-14 included medical negligence legal claims settled in 2013‑14 due to the civil blitz arrangements introduced by the ACT Courts resulting in better case management of older claims and court ordered mediations.
  3. The loss on de-recognition of motor vehicle under a finance lease is in accordance with the whole-of-government vehicle leasing arrangements, which took effect on 23 April 2015. The net impact of the gross loss of $5.29 million on the derecognition of the leased vehicles and the gross gain of $5.47 million on the derecognition of the finance lease liability (refer to Note 11: Other Gains) was a net gain of $0.18 million.  Also refer to Note 2(w): Summary of Significant Accounting Polices – leases.

Note 20. Waivers, Impairment Losses and Write-Offs

Under Section 131 of the Financial Management Act 1996 the Treasurer may, in writing, waive the right to payment of an amount payable to the Territory.

A waiver is the relinquishment of a legal claim to a debt over which the Directorate has control.  The write‑off of a debt is the accounting action taken to remove a debt from the books but does not relinquish the legal right of the Directorate to recover the amount.  The write‑off of debts may occur for reasons other than waivers.

The waivers, impairment losses and write-offs listed below have occurred during the reporting period for the Directorate.

 

No.

2015
$’000

No.

2014
$’000

Waivers

 

 

 

 

Waivers

-

-

-

-

Total Waivers

-

-

-

-

 

 

 

 

 

Impairment Losses

 

 

 

 

Impairment Loss from Receivables

 

 

 

 

Trade Receivablesa

194

431

178

653

Total Impairment Loss from Receivables

194

431

178

653

Impairment Loss from Property, Plant and Equipment

 

 

 

 

Plant and Equipmentb

19

217

61

530

Total Impairment Losses from Property, Plant and Equipment

19

217

61

530

Total Impairment Losses

213

648

239

1,183

 

 

 

 

 

Write-Offs

 

 

 

 

Irrecoverable Debtsc

2,742

1,596

2,469

1,155

Total Write-Offs

2,742

1,596

2,469

1,155

 

 

 

 

 

Total Waivers, Impairment Losses and Write-Offs

2,955

2,244

2,708

2,338

  1. This decrease is largely attributable to a reduction of Medicare ineligible patient debts that have been impaired following assessment of receivables in 2014-15.
  2. The decrease is mainly attributable to less medical and surgical equipment that has been assessed as not operating efficiently, is under repair or cannot be located within the Directorate than the previous year.
  3. The increase mainly relates to an increase in write offs of debts for Medicare ineligible patients.

Note 21. Auditor’s Remuneration

Auditor’s remuneration represents fees charged by the ACT Audit Office for financial audit services provided to the Directorate.

 

2015
$’000

2014
$’000

Audit Services

 

 

Audit Fees Paid or Payable to the ACT Audit Office

223

208

Total Audit Services

223

208

No other services were provided by the ACT Audit Office.

Note 22. Act of Grace Payments

Under Section 130 of the Financial Management Act 1996 the Treasurer may, in writing, authorise Act of Grace Payments be made by the Directorate.  Act of Grace Payments are a method of providing equitable remedies to entities or individuals that may have been unfairly disadvantaged by the Government but have no legal claim to the payment. 

The Directorate made no Act of Grace Payments during the reporting period or the prior period.

Note 23. Cash and Cash Equivalents

The Directorate holds a number of bank accounts, as part of the whole-of-government banking arrangements, with Westpac Banking Corporation and previously with the Commonwealth Bank. The Directorate received interest at the rate of 3.10% (3.45% in 2014).  These funds are able to be withdrawn upon request.

2015
$’000

2014
$’000

Cash on Hand

44

44

Cash at Bank

105,025

107,212

Total Cash and Cash Equivalents

105,069

107,256

Note 24. Receivables

2015
$’000

2014
$’000

Current Receivables

 

 

Trade Receivables

1,103

1,203

Trade Receivables - Patient Fees

8,359

8,447

 

9,462

9,650

Less: Allowance for Impairment Losses

(2,781)

(2,591)

 

6,681

7,059

Other Trade Receivablesa

11,311

8,863

Less: Allowance for Impairment Losses

(450)

(209)

 

10,861

8,654

Net GST Receivable

3,622

3,718

Accrued Revenueb

6,068

4,027

Total Current Receivables

27,232

23,458

Total Receivables

27,232

23,458

  1. The increase mainly relates to an increase in receivables from Calvary Health Care for cost reimbursements of Directorate doctors seconded to Calvary Hospital.
  2. The increase mainly relates to an increase in accrued revenue for chargeable patient fees due to an increase in patient numbers.

 

Not Overdue

Overdue

Overdue

Overdue

Total

Ageing of Receivables

 

Less than
30 days
$'000

30 to 60
days
$'000

Greater
Than
60 days
$'000 

 

2015

 

 

 

 

 

Not Impaired

 

 

 

 

 

Receivablesa

21,050

1,811

782

3,589

27,232

Impaired

 

 

 

 

 

Receivables

-

-

-

3,232

3,232

 

 

 

 

 

 

2014

 

 

 

 

 

Not Impaired

 

 

 

 

 

Receivables

18,442

2,087

553

2,376

23,458

Impaired

 

 

 

 

 

Receivables

-

-

-

2,800

2,800

Receivables are written-off during the year in which they are considered to become uncollectible.

  1. ‘Not Overdue’ component of Receivables largely consist of Goods and Services Input Tax receivable from the Australian Taxation Office and private patient fees accrued in June. ‘Overdue – Greater than 60 Days’ are mostly third party, workers’ compensation or public liability transactions which have become the subject of legal claims as to responsibility for the payment. Substantial delays can therefore occur before liability for such debts is determined. This also includes amounts receivable from Calvary Health Care for medical officers seconded from the Directorate.
  2. 'Not Overdue' component of Receivables largely consist of Goods and Services Input Tax receivable from the Australian Taxation Office and private patient fees accrued in June.

'Past Due – Greater Than 60 Days' are mostly third party, workers’ compensation or public liability transactions which have become the subject of legal claims as to responsibility for the payment. Substantial delays can therefore occur before liability for such debts is determined. This also includes amounts receivable from Calvary Health Care for medical officers seconded from Canberra Hospital and Health Services.

 

2015
$’000

2014
$’000

Reconciliation of the Allowance for Impairment Losses

 

 

Allowance for Impairment Losses at the Beginning of the Reporting Period

2,800

2,146

Additional Allowance and Impairment Losses Recognised

431

654

Reduction in Allowance

-

-

Allowance for Impairment Losses at the End of the Reporting Period

3,231

2,800

 

 

 

Classification of ACT Government/Non-ACT Government Receivables

 

 

Receivables from ACT Government Entities

 

 

Net Trade Receivables

61

59

Net Other Trade Receivables

98

112

Accrued Revenue

-

7

Net Goods and Services Tax Receivable

50

52

Total Receivables from ACT Government Entities

209

230

 

 

 

Receivables from Non-ACT Government Entities

 

 

Net Trade Receivables

6,170

7,000

Net Other Trade Receivables

11,213

8,542

Net Goods and Services Tax Receivable

3,572

3,666

Accrued Revenue

6,068

4,020

Total Receivables from Non-ACT Government Entities

27,023

23,228

 

 

 

Total Receivables

27,232

23,458

Note 25. Inventories

The Directorate’s inventory consists of Pharmaceuticals, Medical and Surgical Supplies, Pathology Supplies and general consumables.

2015
$’000

2014
$’000

Current Inventory

 

 

Purchased Items - Costa

8,655

7,806

Total Current Inventory

8,655

7,806

Total Inventory

8,655

7,806

  1. The increase mainly relates to pharmaceuticals. Pharmacy has commenced carrying several new highly specialised high cost drugs including, a new medication for Hep C (simeprevir) and new antiretrovirals. Inflation and an increase in stock holdings to cater for higher turnover and higher acuity of patients also have contributed to this increase.

Note 26. Assets Held for Sale

Due to a change in the Whole of Government vehicle leasing arrangements with SG Fleet, from 23 April 2015 all such leases for the Directorate will be classified as operating leases rather than finance leases.  As such there are no vehicles classified as plant and equipment held for sale as at 30 June 2015.

2015
$’000

2014
$’000

Plant and Equipment Held for Sale

-

29

Total Assets Held for Sale

-

29

Fair Value Hierarchy

Details of the Directorate’s assets held for sale at fair value and information about the Fair Value Hierarchy as at 30 June 2015 are as follows

Classification According to Fair Value Hierarchy

 

Level 1

Level 2

Level 3

Total

2015

$’000

$’000

$’000

$’000

Assets Held for Sale at Fair Value

 

 

 

 

Plant and Equipment

-

-

-

-

 

-

-

-

-

Details of the Directorate's assets held for sale at fair value and information about the Fair Value Hierarchy as at 30 June 2014 are as follows

Classification According to Fair Value Hierarchy

 

Level 1

Level 2

Level 3

Total

2014

$’000

$’000

$’000

$’000

Assets Held for Sale at Fair Value

 

 

 

 

Plant and Equipment

-

29

-

29

 

-

29

-

29

The Fair Value Hierarchy is discussed in Note 28: Property, Plant and Equipment.

Transfers Between Categories

There were no transfers between Levels 1, 2 and 3 during the current and previous reporting period.

Valuation Techniques, Inputs and Processes

Level 2 fair values of assets held for sale are derived using the market approach.  These assets 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.  Assets held for sale represent a non-recurring fair value measurement.

Note 27. Investments

Non-Current Investments

2015
$’000

2014
$’000

Investments with the Territory Banking Account - Cash Enhanced Fund at Fair Value

3,027

3,015

Total Non-Current Investments

3,027

3,015

Total Investments

3,027

3,015

Note 28. Property, Plant and Equipment

Property, plant and equipment includes the following classes of assets – land, buildings, leasehold improvements and plant and equipment.  Property, plant and equipment does not include assets held for sale.

Land includes leasehold land held by the Directorate.

Buildings include hospital buildings, community health centres and a multi storey car park. 

Leasehold improvements represent capital expenditure incurred in relation to leased assets.  The Directorate has fit-outs in its leased buildings.

Plant and equipment includes medical equipment, motor vehicles, mobile plant, air conditioning and heating systems, office and computer equipment, furniture and fittings, and other mechanical and electronic equipment.

  2015
$’000
2014
$’000
Land and Buildings    
Land at Fair Value 40,645 40,250
Total Land Assets 40,645 40,250
Buildings at Fair Value a 815,234 771,290
Less: Accumulated Depreciation (16,416) -
Total Written Down Value of Buildings 798,818 771,290
Total Land and Written Down Value of Buildings 839,463 811,540
     
Leasehold Improvements    
Leasehold Improvements at Fair Valueb 6,527 4,811
Less: Accumulated Depreciation (3,088) -
Total Written Down Value of Leasehold Improvements 3,439 4,811
     
Plant and Equipment    
Plant and Equipment at Costc 110,130 107,993
Less: Accumulated Depreciation (66,464) (64,714)
Less: Accumulated Impairment Losses (439) (530)
Total Written Down Value of Plant and Equipment 43,227 42,749
     
Total Written Down Value of Property, Plant and Equipment 886,129 859,100

Assets Under a Finance Lease

Due to a change in Whole-of-Government vehicle leasing arrangements with SG Fleet, from 23 April 2015 vehicle leases for the Directorate are now classified as operating leases.

Carrying Amount of Assets Under a Finance Lease

 

 

Plant and Equipment Under a Finance Lease

-

8,271

Accumulated Depreciation of Plant and Equipment under a Finance Lease

-

(2,307)

Total Written Down Value of Assets Under a Finance Lease

-

5,964

Reconciliation of Property, Plant and Equipment

The following table shows the movement of Property, Plant and Equipment during 2014-2015.

 

Land
$'000

Buildings
$'000

Leasehold
Improvements
$'000

Plant and
Equipment
$'000

Total
$'000

Carrying Amount at 1 July 2014

40,250

771,290

4,811

42,749

859,100

Additions

485

50,193

1,716

17,172

69,566

Revaluation (Decrement)

(90)

-

-

-

(90)

Assets Classified as Held for Sale

-

-

-

-

-

Disposals

-

-

-

(6,999)

(6,999)

Depreciation

-

(22,665)

(3,088)

(10,643)

(36,396)

Depreciation Write Back for Asset Disposals

-

-

-

6,143

6,143

Impairment Losses Recognised in the

   Operating (Deficit)

-

-

-

(217)

(217)

Reversal of Impairment Losses Recognised in

   the Operating (Deficit)

-

-

-

308

308

Other Movements

-

-

-

(5,286)

(5,286)

Carrying Amount at 30 June 2015

40,645

798,818

3,439

43,227

886,129

The following table shows the movement of Property, Plant and Equipment during 2013-14.

 

Land
$'000

Buildings
$'000

Leasehold
Improvements
$'000

Plant and
Equipment
$'000

Total
$'000

Carrying Amount at 1 July 2013

36,827

620,486

6,629

43,978

707,919

Additions

360

183,394

275

11,182

195,212

Revaluation Increments/(Decrement)

3,063

(17,494)

(310)

-

(14,741)

Assets Classified as Held for Sale

-

-

-

(29)

(29)

Disposals

-

-

-

(7,431)

(7,431)

Depreciation

-

(15,096)

(1,783)

(10,763)

(27,642)

Depreciation Write Back for Asset Disposals

-

-

-

5,221

5,221

Impairment Losses Recognised in the

   Operating (Deficit)

-

-

-

(530)

(530)

Reversal of Impairment Losses Recognised in

   the Operating (Deficit)

-

-

-

1,121

1,121

Carrying Amount at 30 June 2014

40,250

771,290

4,811

42,749

859,100

Valuation of Non-Current Assets

Certified practicing registered valuers AON Risk Solutions performed an independent valuation of the Directorate’s Land, Buildings and Leasehold Improvements as at 30 June 2014.  Names and qualifications of the valuers are:

  1. Mr Geoff Pyman FAPI, MRICS – Certified Practising Valuer
  2. Mr Michael Farley – Certified Practising Valuer

The next valuation will be undertaken during 2016-17.

Fair Value Hierarchy

The Directorate is required to classify property, plant and equipment into a fair value hierarchy that reflects the significance of the inputs used in determining their fair value. The fair value hierarchy is made up of the following three levels:

  • Level 1 – quoted prices (unadjusted) in active markets for identical assets or liabilities that the Directorate can access at the measurement date;
  • Level 2 – inputs other than quoted prices included within Level 1 that are observable for asset or liability, either directly or indirectly; and
  • Level 3 – inputs that are unobservable for particular assets or liabilities.

Details of the Directorate’s property, plant and equipment at fair value and information about the fair value hierarchy as at 2014-2015 are as follows:

Classification According to Fair Value Hierarchy 2015

 

Level 1

Level 2

Level 3

Total

 

$’000

$’000

$’000

$’000

Property, Plant and Equipment at Fair Value

 

 

 

 

Land

-

-

40,645

40,645

Buildings

-

2,845

795,973

798,818

Leasehold Improvements

-

-

3,439

3,439

 

-

2,845

840,057

842,902

Details of the Directorate's property, plant and equipment at fair value and information about the Fair Value Hierarchy as at 30 June 2014 is as follows:

Classification According to Fair Value Hierarchy 2014

 

Level 1

Level 2

Level 3

Total

 

$’000

$’000

$’000

$’000

Property, Plant and Equipment at Fair Value

 

 

 

 

Land

-

-

40,250

40,250

Buildings

-

2,845

768,445

771,290

Leasehold Improvements

-

-

4,811

4,811

 

-

2,845

813,506

816,351

Transfers between Categories

There have been no transfers between Levels 1, 2 and 3 during the current and previous reporting period.

Valuation Techniques, Inputs and processes

Level 2 Valuation Techniques and Inputs

Valuation Technique: the technique used to value land and buildings is the market approach that reflects recent transaction prices for similar properties and buildings (comparable in location and size).

Inputs: Prices and other relevant information generated by market transactions involving comparable land and buildings were considered. Regard was taken of the Crown Lease terms and tenure, the Australian Capital Territory Plan and the National Capital Plan, where applicable, as well as current zoning.

Level 3 Valuation Techniques and Inputs

Valuation Technique: Land where there is no active market or significant restrictions is valued through the market approach which values a selection of land with similar approximate utility.

Inputs: In determining the value of land with similar approximate utility significant adjustments to market based data was required.

Valuation Technique: Buildings and Leasehold Improvements were considered specialised assets by the valuers and measured using the cost approach that reflects the cost to a market participant to construct assets of comparable utility adjusted for obsolescence. For buildings historical cost per square metre of floor area was also used in measuring fair value.

Inputs: In determining the value of buildings and leasehold improvements regard was given to the age and condition of the assets, their estimated replacement cost and current use. This required the use of data internal to the Directorate.

There has been no change to the above valuation techniques during the year.

Fair Value measurements using significant unobservable inputs (Level 3)

2015

Land
$’000

Buildings
$’000

Leasehold
Improvements
$’000

Fair Value at beginning of the reporting period

40,250

768,445

4,811

Additions

485

50,193

1,716

Revaluation increments/(decrements) recognised in Other

   Comprehensive Income

(90)

-

-

Depreciation

-

(22,665)

(3,088)

Fair Value at end of the reporting period

40,645

795,973

3,439

2014

Land
$’000

Buildings
$’000

Leasehold
Improvements
$’000

Fair Value at beginning of the reporting period

36,827

620,486

6,629

Additions

360

180,549

275

Revaluation increments/(decrements) recognised in Other

   Comprehensive Income

3,063

(17,494)

(310)

Depreciation

-

(15,096)

(1,783)

Fair Value at end of the reporting period

40,250

768,445

4,811

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

Item Fair Value as at 30 June Significant
Unobservable Inputs
Range of  Unobservable Inputs
(Weighted Average)
Relationship of Unobservable Inputs to Fair Value
2015
$000
2014
$000
2015 2014
Valuation Technique: Market Approach
Land 40,645 40,250 Selection of land with similar approximate utility and permissible usage $0.40 - $1,200 per m2 $0.40 - $1,200 per m2 Higher value of comparable land increases values
Valuation Technique: Depreciated Replacement Cost
Buildings 795,973 768,445 Consumed physical, functional and economic obsolescence  0% - 92%  0% - 92% Greater consumption of obsolescence reduces values
Leasehold Improvements 3,439 4,811 Consumed physical, functional and economic obsolescence 29% - 88% 29% - 88% Greater consumption of obsolescence reduces values

Note 29. Intangible Assets

The Directorate has only internally generated software.  This software consists mainly of ‘the patient administration system software’.

2015
$’000

2014
$’000

Computer Software

 

 

Internally Generated Software

 

 

Computer Software at Costa

65,797

39,957

Less: Accumulated Amortisationb

(43,214)

(33,024)

Total Internally Generated Software

22,583

6,933

Total Computer Software

22,583

6,933

 

 

 

Total Intangible Assets

22,583

6,933

  1. The increase is due to completed internally generated software projects including TCH eProcurement, Single Sign On/Rapid Access, TCH Priority Systems, My Shift eRostering, Renal Dialysis System, Clinical Portal Suites, Order Entry, Identity and Access Management, Radiology Information System Upgrade, Digital Mammography and Calvary Patient Administration System Integration.
  2. The increase directly relates to amortisation cost for the new software applications listed above.

Reconciliation of Intangible Assets

The following table shows the movement of internally generated Intangible Assets from the beginning to the end of 2014-15. There was no externally purchased software during this period.

 

Internally
Generated
Software
$’000

Total
$’000

Carrying Amount at 1 July 2014

6,933

6,933

Additions

25,840

25,840

Amortisation

(10,190)

(10,190)

Carrying Amount at 30 June 2015

22,583

22,583

Reconciliation of Intangible Assets

The following table shows the movement of internally generated Intangible Assets from the beginning to the end of 2013-14. There was no externally purchased software during this period.

 

Internally
Generated
Software
$’000

Total
$’000

Carrying Amount at 1 July 2013

11,636

11,636

Additions

138

138

Amortisation

(4,841)

(4,841)

Carrying Amount at 30 June 2014

6,933

6,933

Note 30. Capital Works in Progress

Capital Works in Progress are assets being constructed over periods of time in excess of the present reporting period.  These assets often require extensive installation work or integration with other assets, and contrast with simpler assets that are ready for use when acquired, such as motor vehicles and equipment.  Capital Works in Progress are not depreciated as the Directorate is not currently deriving any economic benefits from them.

Assets, which are under construction in 2014-15, include hospital buildings, community health centres and computer software.

 

2015
$'000

2014
$'000

Building Works in Progressa

82,785

79,626

Plant and Equipment Works in Progressb

227

2,186

Computer Software Works in Progressc

48,687

65,914

Other Works in Progress

57

57

Total Capital Works in Progress

131,756

147,783

  1. The increase in building works in progress is a result of ongoing capital projects. These include the Calvary Public Hospital Car Park, the Secure Mental Health Unit, the University of Canberra Public Hospital, the Canberra Hospital Emergency Department expansion, various works throughout the Canberra Hospital campus and other capital upgrade projects.
  2. The decrease in plant and equipment works in progress is due to the completion of the Improving Critical Care Outreach and Training in the ACT and Southern NSW Project.  This project is to provide access to a range of visual and audio communication tools to assist in the decision making and provision of medical care for patients.
  3. The decrease in computer software works in progress is due to the implementation of several computer software projects including TCH eProcurement, Single Sign On/Rapid Access, TCH Priority Systems, My Shift eRostering, Renal Dialysis System, Clinical Portal Suites, Order Entry, Identity and Access Management, Radiology Information System Upgrade, Digital Mammography and Calvary Patient Administration System Integration.

Reconciliation of Capital Works in Progress

The following table shows the movement of Capital Works in Progress during 2014-2015.

 

Buildings
Works in
Progress
$’000

Plant and
Equipment
Works in
Progress
$’000

Computer
Software
Works in
Progress
$’000

Other
Works in
Progress
$’000

Total
$’000

Carrying Amount at 1 July 2014

79,626

2,186

65,914

57

147,783

Additions

55,434

8,163

8,613

-

72,210

Capital Works Expensed

(366)

(1,800)

-

-

(2,166)

Capital Works in Progress

   Completed and Transferred to

   Property, Plant and Equipment

(51,909)

(8,322)

(25,840)

 

(86,071)

Carrying Amount at 30 June 2015

82,785

227

48,687

57

131,756

Reconciliation of Capital Works in Progress

The following table shows the movement of Capital Works in Progress during 2013-14.

 

Buildings
Works in
Progress
$’000

Plant and
Equipment
Works in
Progress
$’000

Computer
Software
Works in
Progress
$’000

Other
Works in
Progress
$’000

Total
$’000

Carrying Amount at 1 July 2013

186,265

915

54,398

57

241,635

Additions

77,742

1,271

12,472

-

91,485

Capital Works Expensed

(711)

-

(956)

-

(1,667)

Capital Works in Progress

   Completed and Transferred to

   Property, Plant and Equipment

(183,670)

-

-

-

(183,670)

Carrying Amount at 30 June 2014

79,626

2,186

65,914

57

147,783

Note 31. Other Assets

2015
$’000

2014
$’000

Current Other Assets

 

 

Prepaymentsa

3,939

3,391

Total Current Other Assets

3,939

3,391

Total Other Assets

3,939

3,391

  1. The increase mainly relates to Information and Communication Technology Service Level Agreement charges paid to Shared Services Information and Communication Technology.

Note 32. Payables

2015
$’000

2014
$’000

Current Payables

 

 

Trade Payables

3,633

4,099

Other Payables

24

19

Accrued Expenses a

50,612

38,529

Total Current Payables

54,269

42,647

 

 

 

Total Payables

54,269

42,647

  1. The increase is mainly due to an increase in accrued capital works expenses ($7.0 million), increases in accruals for visiting medical officers cost ($2.0 million) and Pharmaceuticals costs ($2.0 million).

 

2015
$’000

2014
$’000

Payables are aged as followed

 

 

Not Overdue

53,016

41,371

Overdue for Less than 30 Days

1,165

767

Overdue for 30 to 60 Days

10

337

Overdue for More than 60 Days

78

172

Total Payables

54,269

42,647

 

 

 

Classification of ACT Government/Non-ACT Government Payables

 

 

Payables with ACT Government Entities

 

 

Trade Payables

-

-

Accrued Expenses

3,607

8,563

Total Payables with ACT Government Entities

3,607

8,563

 

 

 

Payables with Non-ACT Government Entities

 

 

Trade Payables

3,633

4,099

Other Payables

24

19

Accrued Expenses

47,005

29,966

Total Payables with Non-ACT Government Entities

50,662

34,084

 

 

 

Total Payables

54,269

42,647

Note 33. Finance Leases

Due to a change in the Whole-of-Government vehicle leasing arrangements with SG Fleet, from 23 April 2015 all such leases for the Health Directorate are classified as operating leases rather than finance leases.

2015
$’000

2014
$’000

Current Finance Leases

 

 

Secured

 

 

Finance Leases

-

2,156

Total Current Finance Leases

-

2,156

 

 

 

Non-Current Finance Leases

 

 

Secured

 

 

Finance Leases

-

4,042

Total Non-Current Finance Leases

-

4,042

 

 

 

Total Finance Leases

-

6,198

Secured Liability

The Directorate’s finance lease liability is effectively secured because if the Directorate defaults, the assets under a financial lease revert to the lessor.

 

2015
$’000

2014
$’000

Finance lease commitments are payable as follows:

 

 

Within one year

-

2,437

Later than one year but not later than five years

-

4,199

Minimum Lease Payments

-

6,636

Less: Future Finance Lease Charges

-

(438)

Amount Recognised as a Liability

-

6,198

Add: Lease incentive involved with non-cancellable operating lease

-

-

Total Present Value of Minimum Lease Payments

-

6,198

 

 

 

The present value of the minimum lease payments are as follows:

 

 

Within one year

-

2,437

Later than one year but not later than five years

-

3,761

Total Present Value of Minimum Lease Payments

-

6,198

 

 

 

Classification on the Balance Sheet

 

 

Finance Leases

 

 

Current Finance Leases

-

2,156

Non-Current Finance Leases

-

4,042

Total Finance Leases

-

6,198

Note 34. Employee Benefits

2015
$’000

2014
$’000

Current Employee Benefits

 

 

Annual Leave a

97,797

90,413

Long Service Leave b

97,218

86,752

Accrued Salaries c

34,281

30,599

Other Benefits

210

243

Total Current Employee Benefits

229,506

208,007

 

 

 

Non-Current Employee Benefits

 

 

Long Service Leave d

14,529

14,044

Total Non-Current Employee Benefits

14,529

14,044

 

 

 

Total Employee Benefits

244,035

222,051

  1. The increase is mainly due to the impact of collective agreement pay rises, an increase in staff numbers for growth in services provided to patients and the growth in liability due to leave earned exceeding leave taken.
  2. The increase is mainly due to the impact of collective agreement pay rises, an increase in staff numbers for growth in services provided to patients and the growth in liability due to leave earned exceeding leave taken. An increase in the rate used to estimate the present value of future long service leave payments from 103.5% to 104.2% also contributed to this variance.
  3. The increase is due to pay rises accrued for Medical staff whose collective agreements have not been finalised and the cost of an additional day’s pay accrued in 2015 compared to 2014 which were partially offset by pay rises accrued in 2014 that were settled in 2015.
  4. The increase is mainly due to an increase in the rate used to estimate the present value of future long service leave payments from 103.5% to 104.2%.

Estimate of when Leave is Payable

2015
$’000

2014
$’000

Estimated Amount Payable within 12 months

 

 

Annual Leave

54,021

50,646

Long Service Leave a

7,312

7,420

Accrued Salaries

34,281

30,599

Other Benefits

210

243

Total Employee Benefits Payable within 12 months

95,824

88,908

 

 

 

Estimated Amount Payable after 12 months

 

 

Annual Leave

43,776

39,767

Long Service Leave a

104,435

93,376

Total Employee Benefits Payable after 12 months

148,211

133,143

 

 

 

Total Employee Benefits

244,035

222,051

Note 35. Other Provisions

Provision for Make Good

The Directorate entered into lease agreements for some office space in Civic and Belconnen.  There are clauses within the lease agreements which require the Directorate, upon cessation of the tenancy, to return the office space to the condition it was in before it was leased (this is referred to as ‘make good’). The tenancies run for 5 years.

2015
$’000

2014
$’000

Non-Current Other Provisions

 

 

Provision for Make Good at the beginning of the Reporting Perioda

1,375

1,503

Increase in Provision due to unwinding of discountb

43

200

Make good charges incurred

-

(76)

Decrease due to revaluation

-

(252)

Total Other Provisions

1,418

1,375

  1. The reduction relates to a terminated lease at Swanson Plaza Belconnen and Level 5, 1 Moore Street Civic.
  2. In 2013-14 there was a catch up of the discounting for make good provision to cover multiple years which increased the expenditure in that year.

Note 36. Other Liabilities

2015
$’000

2014
$’000

Current Other Liabilities

 

 

Revenue Received in Advance

370

523

Total Current Other Liabilities

370

523

 

 

 

Total Other Liabilities

370

523

Note 37. Equity

2015
$’000

2014
$’000

Balance at the Beginning of the Reporting Period

129,518

144,007

(Decrement)/Increment in Land due to Revaluation

(90)

3,063

(Decrement) in Buildings due to Revaluation

-

(17,494)

(Decrement) in Leasehold Improvements due to Revaluation

-

(58)

Total (Decrease) in the Asset Revaluation Surplus

(90)

(14,489)

Balance at the End of the Reporting Period

129,428

129,518

Note 38. Restructure of Administrative Arrangements

Restructure of Administrative Arrangements 2014-2015

On 15 December 2014, Administrative Arrangements 2014 (No 2) (Notifiable Instrument NI2014-654) came into effect. This instrument transferred the Public Health Protection and Regulation function from the Health Directorate to the Chief Minister, Treasury and Economic Development Directorate as part of the establishment of Access Canberra.

The following table shows the income and expense items associated with this transfer of function.

 

Amounts Relating to
Function when held by
Chief Minister, Treasury and
Economic Development
$’000

Amounts Relating to
Function when held by
Health Directorate$’000

Total
$’000

Revenue

 

 

 

Government Payment for Outputs

 382

 324

 706

Total Revenue

 382

 324

 706

 

 

 

 

Expenses

 

 

 

Employee Expenses

 16

 305

 321

Superannuation Expenses

 1

 19

 20

Grants and Purchased Services

 365

 -

 365

Total Expenses

 382

 324

 706

Note 39. Financial Instruments

Details of the significant policies and methods adopted, including the criteria for recognition, the basis of measurement, and the basis on which income and expenses are recognised, with respect to each class of financial asset and financial liability are disclosed in Note 2:  Summary of Significant Accounting Policies.

Interest Rate Risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates.

The Directorate does not hold any financial liabilities with floating interest rates, the Directorate is therefore not exposed to movements in interest payable. The Directorate is, however, exposed to movements in interest rates on amounts held in Cash at Bank.

Interest rate risk for financial assets is managed by the Directorate by only investing in floating interest rate investments that are low risk. There have been no changes in risk exposure or processes for managing risk since last financial reporting period.

A sensitivity analysis has not been undertaken as it is considered that the Directorate's exposure to this risk is insignificant and would have an insignificant impact on the financial results.

Credit Risk

Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss.  The Directorate’s credit risk is limited to the amount of the financial assets it holds net of any allowance for impairment.  The Directorate expects to collect all financial assets that are not past due or impaired.

Credit risk is managed by the Directorate for cash at bank by holding bank balances with the ACT Government’s banker, Westpac Banking Corporation (Westpac).  Westpac holds a AA- issuer credit rating with Standard and Poors. An AA credit rating is defined as ‘very strong capacity to meet financial commitments’.

Credit risk is managed by the Directorate for investments by only investing surplus funds with the Territory Banking Account, which has appropriate investment criteria for the external fund manager engaged to manage the Territory's surplus funds.

The Directorate's receivables are predominantly from ACT Government, Commonwealth Government and insurance companies for compensable patients. As the Commonwealth Government has a AAA credit rating it is considered that there is a very low risk of default for those receivables.

There has been no change in credit risk exposure since last reporting period.

Liquidity Risk

Liquidity risk is the risk that the Directorate will encounter difficulties in meeting obligations associated with financial liabilities that are settled by delivering cash or other financial assets.  The Directorate's financial obligations relate to the payment of grants and the purchase of supplies and services.  Grants are paid on a quarterly basis and purchases of supplies and services are paid within 30 days of receiving the goods or services.

The main source of cash to pay these obligations is user charges revenue from the ACT Local Health Network Directorate and appropriation from the ACT Government which is paid on a fortnightly basis during the year. The Directorate manages its liquidity risk through forecasting appropriation drawdown requirements to enable payment of anticipated obligations. See the maturity analysis provided later in this note for further details of when financial assets and liabilities mature.

The Directorate's exposure to liquidity risk is considered insignificant based on experience from prior years and the current assessment of risk.

Price Risk

Price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices (other than those arising from interest rate risk or currency risk), whether these changes are caused by factors specific to the individual financial instrument or its issuer, or by  factors affecting all similar financial instruments traded into the market. The only price risk the Directorate is exposed to results from its investment in the Cash Enhanced Fund. The Directorate has units in the Cash Enhanced Fund that fluctuate in value. The price fluctuation in the units of the portfolio is caused by movements in the underlying investments of the portfolio. The underlying investments are managed by an external fund manager who invests in a variety of different securities, including bonds issued by the Commonwealth Government, the state Government guaranteed treasury corporations and semi-government authorities, as well as investment‑grade corporate issues.

The Directorate's exposure to price risk and the management of this risk has not changed since last reporting period.

A sensitivity analysis has not been undertaken for the price risk of the Directorate as it has been determined that the possible impact on profit and loss or total equity from fluctuations in price is immaterial.

Fair Value of Financial Assets and Liabilities

The carrying amounts and fair values of financial assets and liabilities at the end of the reporting period are:

 

Carrying
Amount
2015
$'000

Fair Value
Amount
2015
$'000

Carrying
Amount
2014
$'000

Fair Value
Amount
2014
$'000

Financial Assets

 

 

 

 

Cash and Cash Equivalents

105,069

105,069

107,256

107,256

Receivables

23,610

23,610

19,740

19,740

Investment with the Territory Banking Account

3,027

3,027

3,015

3,015

Total Financial Assets

131,706

131,706

130,011

130,011

 

 

 

 

 

Financial Liabilities

 

 

 

 

Payables

54,269

54,269

42,647

42,647

Finance Leases

-

-

6,198

6,198

Total Financial Liabilities

54,269

54,269

48,845

48,845

Fair Value Hierarchy

The carrying amount of financial assets measured at fair value, as well as the methods used to estimate the fair value are summarised in the table below.  All other financial assets and liabilities are measured, subsequent to initial recognition, at amortised cost and as such are not included in the table below.

2015

Classification According to Fair Value Hierarchy

Level 1
$’000

Level 2
$’000

Level 3
$’000

Total
$’000

Financial Assets

 

 

 

 

Investment with the Territory Banking Account -

  Cash Enhanced Fund

-

3,027

-

3,027

Total Financial Assets

-

3,027

-

3,027

 

 

 

 

 

2014

Classification According to Fair Value Hierarchy

Level 1
$’000

Level 2
$’000

Level 3
$’000

Total
$’000

Financial Assets

 

 

 

 

Investment with the Territory Banking Account -

  Cash Enhanced Fund

-

3,015

-

3,015

Total Financial Assets

-

3,015

-

3,015

Transfer Between Categories

There have been no transfers of financial assets or liabilities between Level 1 and Level 2 during the current and previous reporting period.

The following table sets out the Directorate’s maturity analysis for financial assets and liabilities as well as the exposure to interest rates, including weighted average interest rates by maturity period as at 30 June 2015.  Except for non-current payables, financial assets and liabilities which have a floating interest rate or are non-interest bearing will mature in 1 year or less.  All amounts appearing in the following maturity analysis are shown on an undiscounted cash flow basis.

 

Note
No.

Weighted
Average
Interest
Rate

Floating
Interest
$'000

Fixed Interest Maturing In:

Non-Interest
Bearing
$'000

Total
$'000

 

1 Year
or Less
$'000

Over 1 Year
to 5 Years

Over
5 Years

Financial Instruments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial Assets

 

 

 

 

 

 

 

 

Cash and Cash Equivalents

23

 

-

-

-

-

105,069

105,069

Receivables

24

 

-

-

-

-

23,610

23,610

Investments with the Territory Banking

   Account

27

3.10%

3,027

-

-

-

-

3,027

Total Financial Assets

 

 

3,027

-

-

-

128,679

131,706

 

 

 

 

 

 

 

 

 

Financial Liabilities

 

 

 

 

 

 

 

 

Payables

32

 

-

-

-

-

54,269

54,269

Finance Leases

33

5.62%

-

-

-

-

-

-

Total Financial Liabilities

 

 

-

-

-

-

54,269

54,269

 

 

 

 

 

 

 

 

 

Net Financial Assets / (Liabilities)

 

 

3,027

-

-

-

74,410

77,437

The following table sets out the Directorate’s maturity analysis for financial assets and liabilities as well as the exposure to interest rates, including weighted average interest rates by maturity period as at 30 June 2014.  Except for non-current payables, financial assets and liabilities which have a floating interest rate or are non-interest bearing will mature in 1 year or less.  All amounts appearing in the following maturity analysis are shown on an undiscounted cash flow basis.

 

Note
No.

Weighted
Average
Interest
Rate

Floating
Interest
$'000

Fixed Interest Maturing In:

Non-Interest
Bearing
$'000

Total
$'000

 

1 Year
or Less
$'000

Over 1 Year
to 5 Years

Over
5 Years

Financial Instruments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial Assets

 

 

 

 

 

 

 

 

Cash and Cash Equivalents

23

 

-

-

-

-

107,256

107,256

Receivables

24

 

-

-

-

-

19,740

19,740

Investments with the Territory Banking

   Account

27

3.45%

3,015

-

-

-

-

3,015

Total Financial Assets

 

 

3,015

-

-

-

126,996

130,011

 

 

 

 

 

 

 

 

 

Financial Liabilities

 

 

 

 

 

 

 

 

Payables

32

 

-

-

-

-

42,647

42,647

Finance Leases

33

5.62%

-

2,437

4,199

-

-

6,636

Total Financial Liabilities

 

 

-

2,437

4,199

-

42,647

49,283

 

 

 

 

 

 

 

 

 

Net Financial Assets / (Liabilities)

 

 

3,015

(2,437)

(4,199)

-

84,349

80,728

Carrying Amount of Each Category of Financial Asset and Financial Liability

2015
$'000

2014
$'000

Financial Assets

 

 

Loans and Receivables Measured at Amortised Cost

23,610

19,740

Financial Assets at Fair Value through the Profit and Loss Designated

   upon Initial Recognition

3,027

3,015

Financial Liabilities

 

 

Financial Liabilities Measured at Amortised Cost

54,269

48,845

 

 

 

Gains/(Losses) on Each Category of Financial Asset and Financial Liability

 

 

 

 

 

Gains/(Losses) on Financial Assets

 

 

Financial Assets at Fair Value through the Profit and Loss Designated

   upon Initial Recognition

97

98

Note 40. Commitments

Capital Commitments

Capital commitments, contracted at reporting date, include the Secure Mental Health Unit, the Canberra Hospital Redevelopment, University of Canberra Public Hospital, Clinical Services and Inpatient Unit Design and Infrastructure Expansion, Calvary Hospital Car Park, Aboriginal and Torres Strait Islander Residential Alcohol and Other Drug Rehabilitation Facility, an e-Healthy Future, the Canberra Hospital Essential Infrastructure and Engineering Works and other minor new works construction projects.  These have not been recognised as liabilities.

2015
$’000

2014
$’000

Capital Commitments - Property, Plant and Equipment

 

 

Payable:

 

 

Within One Year a

179,753

102,335

Later than one year but not later than five years

61,455

77,637

Total Capital Commitments - Property, Plant and Equipment

241,208

179,972

Total Capital Commitments

241,208

179,972

  1. The increase is due to capital works that will be continuing for 2015-16 including the Canberra Hospital Emergency Department expansion, Secure Mental Health Unit, University of Canberra Public Hospital, Calvary Public Hospital Car Park, Ngunnawal Bush Healing Farm and various other works around the Canberra Hospital and Health Services campus.

Operating Lease Commitments

The Directorate has several non-cancellable operating leases for buildings.  The operating lease agreements give the Directorate the right to renew the leases.  Renegotiations of the lease terms occur on renewal of the leases.  The Directorate also has non-cancellable operating leases with Shared Services for IT equipment.  Contingent rental payments have not been included in the commitments below.

 

2015
$’000

2014
$’000

Non-Cancellable operating commitments are committed as follows:

 

 

Within one yeara

6,940

8,343

Later than one year but not later than five years

22,779

22,911

Later than five years

249

422

Total Operating Lease Commitments

29,968

31,676

Other Commitments

Other commitments contracted at reporting date mainly relate to grants to Non-Government Organisations that have not been recognised as liabilities.

 

2015
$’000

2014
$’000

Non-cancellable other commitments are payable as follows:

 

 

Within one year

49,993

55,615

Later than one year but not later than five years b

110

38,829

Total Other Commitments

50,103

94,444

Operating Lease Commitments - Motor Vehicle

Due to a change in the Whole-of-Government car leasing arrangements with SG Fleet on 23 April 2015, all such leases for the Directorate are now classified as operating leases rather than finance leases. As a result of this change there are no prior year comparable figures.

 

2015
$’000

2014
$’000

Non-cancellable other commitments are payable as follows:

 

 

Within one year

2,471

-

Later than one year but not later than five years

2,200

-

Total Operating Lease Commitments - Motor Vehicle

4,671

-

  1. The reduction in operating commitments is due to the property lease for 11 Moore Street expiring on 31 October 2015 and a reduction in the commitment for computer asset leases.
  2. The reduction is due to the majority of current contracts with non-government organisations for provision of services expiring in June 2016.

Note 41. Contingent Liabilities and Contingent Assets

Contingent Liabilities

The Directorate is subject to 137 legal actions (2014 - 115 actions). The Directorate’s maximum exposure under the ACT Insurance Authority insurance policy is estimated at $6,150,000 (2014 - $5,490,000), which has not been provided for in the accounts.

There were no contingent assets as at 30 June 2015.

Note 42. Cash Flow Reconciliation

(a) Reconciliation of Cash and Cash Equivalents at the end of the reporting period in the Cash Flow Statement to the equivalent items in the Balance Sheet

 

2015
$’000

2014
$’000

Cash and Cash Equivalents Disclosed in the Balance Sheet

105,069

107,256

Cash and Cash Equivalents at the End of the Reporting Period as Recorded in the Cash Flow Statement

105,069

107,256

(b) Reconciliation of Net Cash Inflows/(Outflows) from Operating Activities to the Operating (Deficit)

Operating (Deficit)

(44,630)

(37,645)

Add/(Less) Non-Cash Items

 

 

Depreciation of Property, Plant and Equipment

36,396

27,642

Amortisation of Intangibles

10,190

4,841

Bad and Doubtful Debts

2,026

1,808

Asset Book Value Written Down

837

16

Impairment Loss of Non-Current Assets

217

530

Assets transferred from Other ACT Government Entities

(485)

-

Add/(Less) Items Classified as Investing or Financing

 

 

Unrealised Gain on Investments

(12)

(4)

Gain from Derecognition of Finance Lease Liability

(5,469)

-

Loss on Derecognition of Motor Vehicles under a Finance Lease

5,286

-

Cash Before Changes in Operating Assets and Liabilities

4,356

(2,812)

 

 

 

 

Changes in Operating Assets and Liabilities

 

 

(Increase)/Decrease in Receivables

(3,774)

102,415

(Increase)/Decrease in Inventories

(849)

306

(Increase) in Other Assets

(548)

(716)

Increase/(Decrease) in Payables

6,095

(18,407)

Increase in Other Provisions

22,027

29,071

(Decrease) in Other Liabilities

(154)

(1,701)

Net Changes in Operating Assets and Liabilities

22,797

110,969

 

 

 

 

Net Cashflows from Operating Activities

27,154

108,157

 

 

 

 

(c) Non-Cash Financing and Investing Activities

Due to a change in the whole of Government vehicle leasing arrangements with SG Fleet, from 23 April 2015 all such leases for the  Directorate are classified as operating leases rather than finance leases.

 

 

2015
$’000

2014
$’000

Acquisition of Motor Vehicles by Means of Finance Lease

1,703

2,322

Note 43. Events Occurring After Balance Date

There were no events occurring after the balance date, which would affect the financial statements as at 30 June 2015, or in the future reporting periods.

Note 44. Third Party Monies

The Directorate held funds in trust relating to the activities of the Health Directorate Human Research Ethics Committee.

2015
$’000

2014
$’000

Human Research Ethics Committee Account

 

 

Balance at the Beginning of the Reporting Period

517

563

Cash Receipts

855

1,077

Cash Payments

(880)

(1,123)

Balance at the End of the Reporting Period

492

517

The Directorate held funds in trust relating to residents of its Mental Health Facilities.

 

2015
$’000

2014
$’000

Mental Health Account

 

 

Balance at the Beginning of the Reporting Period

33

36

Cash Receipts

111

322

Cash Payments

(101)

(325)

Balance at the End of the Reporting Period

43

33

The Directorate held funds relating to the activities of Salaried Specialists.

 

2015
$’000

2014
$’000

Private Practice Fund

 

 

Balance at the Beginning of the Reporting Period

26,497

24,836

Cash Receipts

27,672

23,835

Cash Payments

(25,659)

(22,174)

Balance at the End of the Reporting Period

28,510

26,497

Note 45. Budgetary Reporting – Explanations of Major Variances Between Actual Amounts and Original Budget Amounts

The following are brief explanations of major line item variances between budget estimates and actual outcomes.  Variances are considered to be major variances if both of the following criteria are met:

  1. The line item is a significant line item:  the line item actual amount accounts for more than 10% of the relevant associated category (Income, Expenses and Equity totals) or sub-element (e.g. Current Liabilities and Receipts from Operating Activities totals) of the financial statements; and
  2. The variances (original budget to actual) are greater than plus (+) or minus (-) 10% of the budget for the financial statement line item.

Operating Statement Line Items

Actual
2014-15
$’000

Original
Budget1
2014-15
$’000

Variance
$’000

Variance
%

Variance Explanation

Grants and Purchased Services

78,343

92,810

(14,467)

(15.59)

Lower than budgeted Grants and Purchased Services  is mainly due to work being performed within the Directorate instead of being paid to external organisations.

1 Original Budget refers to the amounts presented to the Legislative Assembly in the original budgeted financial statements in respect of the reporting period (2014-15 Budget Statements).  These amounts have not been adjusted to reflect supplementary appropriation or appropriation instruments.

Balance Sheet Line Items

Actual
2014-15
$’000

Original
Budget1
2014-15
$’000

Variance
$’000

Variance
%

Variance Explanation

Cash and Cash Equivalents

105,069

42,075

62,994

149.7

Higher than anticipated cash and cash equivalent is largely the result of:

- higher opening balance of $42 million due to early settlement of cross border

  receivables in 2013-14;

- higher net cash flow from operating activities of $40 million;

- higher capital injection than capital works expenses due to timing delay $7m;

  partially offset by the return of surplus cash of $27 million to the ACT Government.

Receivables - Current

27,232

73,236

(46,004)

(62.8)

Lower receivable balance is mainly due to early settlement of cross border receivables.

Property, Plant and Equipment

886,129

1,015,328

(129,199)

(12.7)

This is due to the deferral of capital works projects from 2014-15 to 2015-16 and

2016-17. The major deferrals from 2014-15 into future years are:

- $10.2 million moved out of this financial year for the Calvary Car Park due to delays in

  excavation works;

- $9.6 million moved out of this financial year from postponement of Hospital Road

  works due to road closures associated with Building 15 demountable installation;

- $8.0 million moved out of this financial year for the E-Health ICT project due to

  lengthy delays in contract negotiations which delayed Electronic Medication

  Management & Clinical Records Information System Replacement Projects; and

- $7.4 million moved out of this financial year from the clinical services

  redevelopment – phase 3 project due to delays with procurement of generators.

1 Original Budget refers to the amounts presented to the Legislative Assembly in the original budgeted financial statements in respect of the reporting period (2014-15 Budget Statements).  These amounts have not been adjusted to reflect supplementary appropriation or appropriation instruments.

Balance Sheet Line Items

Actual
2014-15
$’000

Original
Budget1
2014-15
$’000

Variance
$’000

Variance
%

Variance Explanation

Payables - Current

54,269

88,172

(33,903)

(38.5)

Current payables were lower largely due to early settlement of cross border health costs and capital works invoices.

Finance Leases - Current

-

2,515

(2,515)

(100.0)

Finance leases are nil due to a change in leasing arrangements at a whole-of-government level. Motor vehicles are now classified as operating leases.

Employee Benefits - Current

229,506

187,149

42,357

22.6

Employee benefits are higher mainly due to accrued pay rises for Medical Officers, impacts of change in present value, discounting factors , impact of higher than budgeted pay rise rates

Finance Leases - Non Current

-

4,362

(4,362)

(100.0)

Finance leases are nil due to a change in leasing arrangements at a whole-of-government level. Motor vehicles are now classified as operating leases.

Accumulated Funds

758,870

861,215

(102,345)

(11.9)

Accumulated funds are lower mainly due to lower than budgeted capital injection of $58 million and $27 million of surplus cash returned to ACT Government.

Asset Revaluation Surplus

129,428

144,007

(14,579)

(10.1)

The accumulated revaluation surplus is lower mainly due to lower than anticipated asset values when the buildings were revalued in 2013-14.

Statement of Changes in Equity

 

 

 

 

These line items are covered in other financial statements

1 Original Budget refers to the amounts presented to the Legislative Assembly in the original budgeted financial statements in respect of the reporting period (2014-15 Budget Statements).  These amounts have not been adjusted to reflect supplementary appropriation or appropriation instruments.

Cash Flow Statement Line Items

Actual
2014-15
$'000

Original
Budget1
2014-15
$’000

Variance
$’000

Variance
%

Variance Explanation

Goods and Services Tax Input Tax Credits from the Australian Taxation Office

39,346

49,100

(9,754)

(19.9)

This is mainly due to timing of the GST refund from the Australian Tax Office

Goods and Services Tax Paid to Suppliers

43,826

54,400

(10,574)

(19.4)

The reduction is mainly due to lower capital works invoices paid.

Payments for Capital Works

66,894

132,251

(65,357)

(49.4)

This is due to delays in some capital projects and timing of payment of capital works invoices.

Capital Injections

74,041

132,251

(58,210)

(44.0)

This is due to the deferral of capital works projects from 2014-15 to 2015-16 and

2016-17. The major deferrals from 2014-15 into future years are:

- $10.2 million moved out of this financial year for the Calvary Car Park due to delays in

  excavation works;

- $9.6 million moved out of this financial year from postponement of Hospital Road

  works due to road closures associated with Building 15 demountable installation;

- $8.0 million moved out of this financial year for the E-Health ICT project due to

  lengthy delays in contract negotiations which Electronic Medication Management &

  Clinical Record Information System Replacement Projects; and

- $7.4 million moved out of this financial year from the clinical services

  redevelopment – phase 3 project due to delays with procurement of generators.

Cash Flow Statement Line Items

Actual
2014-15
$’000

Original
Budget1
2014-15
$’000

Variance
$’000

Variance
%

Variance Explanation

Cash and Cash Equivalents at the Beginning of the Reporting Period

107,256

64,816

42,440

65.5

Higher than anticipated cash and cash equivalent is largely the result of:

- higher opening balance of $42million due to early settlement of cross border

   receivables in 2013-14;

- higher than budgeted net cashflow from operating activities of $40million; and

- timing of capital expenses $10m; partially offset by the return of surplus cash of

  $27million to the ACT Government.

1 Original Budget refers to the amounts presented to the Legislative Assembly in the original budgeted financial statements in respect of the reporting period (2014-15 Budget Statements).  These amounts have not been adjusted to reflect supplementary appropriation or appropriation instruments.