Northern Territory Treasury

NORTHERN TERRITORY TREASURY

Annual Report 2006 - 07

Overview

3

Performance Reporting

11

Corporate Governance

35

Treasury People

53

Financial Performance

71

Northern Territory Treasury Financial Statements 2006-07

74

Central Holding Authority Financial Statements 2006-07

105

Appendixes

127

Glossary

146

List of Tables and Figures

149

Northern Territory Treasury 38 Cavenagh Street GPO Box 1974 Darwin NT 0801 General Enquiries Tel (08) 8999 7406 Business hours: 8:00 am to 4:30 pm

N o r t h e rn T e rr i t o r y Tr e a s u r y

Annual Report 2006-07

The Honourable Syd Stirling MLA Treasurer GPO Box 3146 DARWIN NT 0801 Dear Treasurer In accordance with the provisions of section 28 of the Public Sector Employment and Management Act, I am pleased to provide to you the Annual Report of Northern Territory Treasury for 2006-07 and to confirm that, in terms of that Act, all Employment Instructions have been satisfied. This report describes developments and operational outcomes during the year in a form intended to be informative to a wide range of readers including Parliamentarians, other Government agencies, the public and Treasury employees. Pursuant to the Financial Management Act, I advise that to the best of my knowledge and belief: (a) proper records of all transactions affecting Treasury are kept and that employees under my control observe the provisions of that Act, the Financial Management Regulations and the Treasurer’s Directions; (b) procedures within Treasury afford proper internal control, and that these procedures are recorded in the Accounting and Property Manual, which has been prepared in accordance with the requirements of the Financial Management Act; (c) no indication of fraud, malpractice, major breach of legislation or delegation, major error in or omission from the accounts and records exists; (d) in accordance with the requirements of section 15 of the Act, the internal audit capacity available to Treasury is adequate and the results of internal audits have been reported to me; (e) the financial statements included in the Annual Report have been prepared from proper accounts and records and are in accordance with Treasurer’s Directions; and (f) all Employment Instructions issued by the Commissioner for Public Employment have been satisfied. Yours sincerely

Jennifer Prince Under Treasurer 30 September 2007

iii

How to Use this Report

This report is designed to meet Northern Territory Treasury’s annual reporting requirements, as specified for public sector agencies in the Public Sector Employment and Management Act and the Financial Management Act. It reports our performance to the Treasurer, the Legislative Assembly, government agencies and other stakeholders. It reflects on Treasury’s many and varied endeavours during 2006-07, and provides information about Treasury’s culture, responsibilities and internal governance arrangements.

The Ointroduces Northern Territory Treasury, with a profile of the organisation and the Under Treasurer’s review of the year to June 2007. The corporate statement outlines our objectives and values. A summary of the past year’s achievements and the focus for the current year is also provided. Performance Reporting is a detailed account of Treasury’s performance in 2006-07 measured against achievement of the five strategic objectives. Output performance tables report on Treasury’s performance in terms of the measures published in Budget papers. Managing the organisation describes how Treasury functions as an organisation, its corporate governance arrangements and staffing. It also reports on our financial performance by providing financial statements for Treasury and the Central Holding Authority. The Appendixes provide further details of Treasury’s responsibilities, functions and structure. There is also a glossary of common Treasury terms and a list of tables and figures.

iv

Annual Report 2006-07

This year, the report is published in an electronic format (rather than in print), with limited use of graphics and illustrations to minimise download times. It is provided in PDF format with options for downloading the entire report or individual sections. Please consider the environment and avoid unnecessary paper usage before printing this document. If you need more information, please visit our website at www.nt.gov.au/ntt

Contents Overview

3

Treasury Profile

4

Under Treasurer’s Review

5

Corporate Statement

7

Summary of Results in 2006-07

9

Our Focus in 2007-08

10

Performance Reporting

11

Reporting Preface

12

Objectives 1. Public Policy Advice

13

2. Financial Management

17

3. Intergovernmental Relations

21

4. Revenue Management

23

5. Superannuation

26

Output Performance Tables

28

Managing the Organisation

35

Corporate Governance

35

Treasury People

53

Financial Performance

71

Financial Statements – Treasury’s Dual Role

72

Northern Territory Treasury Financial Statements 2006-07

74

Central Holding Authority Financial Statements 2006-07

105

Appendixes

127

1. Directory

128

2. Functions of Treasury

130

3. Treasury’s Organisational Chart

133

4. Corporate Governance Committees

134

5. Membership of Boards and Committees

137

6. Legislation Administered

139

7. Legislative Changes 2006-07

140

8. Competitive Neutrality

142

9. Publications

143

Glossary

146

List of Tables and Figures

149

Overview Treasury Profile

4

Under Treasurer’s Review

5

Corporate Statement

7

Summary of Results in 2006-07

9

Our Focus in 2007-08

10

Treasury Profile

Northern Territory Treasury was established at Self Government in 1978. We are a young organisation with an average age of 37 years and, in our 29 years of operation, we have developed a reputation for providing high quality, expert advice to Government on fiscal, economic and commercial issues. It is a reputation that we are proud of and work hard to maintain.

Our Role Treasury’s primary role is to provide specialist financial, economic and commercial policy advice and services to the Northern Territory Government to assist it in its responsibility to deliver services and infrastructure for the benefit of Territorians.



Annual Report 2006-07

Organisation

Our Services

Treasury reports to the Treasurer through the Under Treasurer. We employ 185 staff, located in Cavenagh House, Darwin.

The services Treasury provides include advice, analysis and administration of matters relating to:

Our business units are grouped into five output groups for budgeting and reporting purposes. Treasury is also responsible for two statutory offices: Northern Territory Treasury Corporation and the Utilities Commission. Although both produce their own annual reports, each forms part of Treasury for administrative purposes and so summary information about their performance is included in Treasury’s Annual Report. Further details of the functions of our business units and statutory authorities can be found in Appendix 2: Functions of Treasury. The contribution of business units to Treasury’s strategic objectives and output groups is illustrated on page 8.

• financial management and fiscal initiatives; • economic frameworks and the Territory economy; • commercial projects; • own-source revenue, including taxation; • public sector superannuation; • borrowing and investing on behalf of the Territory; and • grants, subsidies and community service obligations related to our responsibilities.

Under Treasurer’s Review

closely with the Australian Bureau of Statistics (ABS) for the last three years to achieve an improved Population Census in August 2006.

Treasury is committed to promoting sustainable fiscal strength, economic development and improved social wellbeing for Territorians by providing the best possible analysis, advice and services. This was again demonstrated in 2006‑07, with high quality outputs produced by all areas of Treasury and continued enhancement of our internal systems and processes. The Annual Report provides a detailed report on our performance and achievements in 2006-07, as well as highlighting the nature of our organisation and our strategic priorities.

National Reform Agenda Treasury contributed significantly to developing and implementing the Council of Australian Governments’ National Reform Agenda. Treasury represents the Territory in working groups in the three streams of human capital, competition and regulatory reform, with other reforms still being developed. The National Reform Agenda aims to secure future prosperity through further economic, social and environmental gains.

2006 ABS Census and Demographics Data from the Census determines distribution of GST and other revenues as well as providing essential information for planning government services. The Territory has worked

The 2006 Census data was incorporated into the Territory’s estimated resident population in June 2007, resulting in an increase of 4000 people – an important outcome for the Territory. Treasury continues to work closely with the ABS on several data analysis projects and is working with the ABS on improvements for the 2011 Census.

Financial Reporting The Budget represents one of our most significant contributions to the Government’s overall policy framework. The 2007-08 Budget was handed down in May 2007, incorporating an extensive infrastructure program, home ownership initiatives, ongoing service delivery priorities and tax reform, and was in line with the Government’s fiscal strategy. It also analysed the implications of demographic change for the Territory and provided a summary of the Indigenous Expenditure Review. The 2005-06 Treasurer’s Annual Financial Report and 2006-07 Mid‑Year Report were published, meeting the Territory’s reporting obligations under its own legislation as well as intergovernmental agreements. All these financial reports showed ongoing improvements in the Territory’s fiscal position and continued clarity and transparency in presentation.

Intergovernmental Relations The high cost of service delivery in the Territory and the relatively greater needs of our population mean that the Territory is more reliant than other jurisdictions on funding from the Australian Government. Thus, effective management of intergovernmental financial arrangements and, in particular, the application of horizontal fiscal equalisation by the Commonwealth Grants Commission, remain a high priority for Treasury. The Commission is undertaking a major review of relativities, to be completed by 2010, and Treasury has been heavily involved in the review process, making several submissions during the year on behalf of the Territory. Treasury continues to actively participate on matters such as the simplification of existing arrangements and the quality of data used in assessments that underpin the distribution of GST revenue.

Indigenous Expenditure Review The Territory has a large and geographically dispersed Indigenous population living in urban, rural and remote areas. The cost of delivering infrastructure and services to Indigenous Territorians, especially those in remote communities, can be significant. In September 2006, Treasury published the Indigenous Expenditure Review, which presents and analyses expenditure compared to funding received by the Territory for Indigenous-related purposes. The review is an important piece of work for the Territory and will be updated annually.

Overview



Motor Accidents Compensation The Motor Accidents (Compensation) Act (MACA) defines the statutory benefits available to people injured, or the dependants of people killed, in motor vehicle accidents in the Territory. Following a review and public consultation on proposed legislative amendments, a new MACA benefit structure was introduced, with effect from 1 July 2007.

Power and Water Corporation In addition to advising on various commercial projects and issues, Treasury is responsible for the financial management frameworks for government owned corporations. Following a review of Power and Water’s financial systems, a new Statement of Corporate Intent was negotiated detailing Power and Water’s operations and capital and maintenance programs for the next five years.

Contributing to Whole of Government Projects Treasury staff were involved in a number of strategic whole of government committees and reviews. This includes a review to improve the delivery of corporate services, the review of legislation for competition impacts and to reduce the regulatory burden on business, public sector wages policy and enterprise bargaining agreements and, most recently, the Territory’s Indigenous Generational Plan ‘Closing the Gap’.

Superannuation To fulfil Government’s enterprise bargaining commitments relating to superannuation, legislation has been drafted to formalise the death and invalidity scheme and to implement member investment choice and allocated pensions. The Australian Government’s superannuation reforms were implemented as they applied to the Territory’s public sector schemes.

Tax Administration Reflecting the Territory’s economic growth in 2006-07, Treasury administered and receipted over $500 million in own-source revenue. To simplify tax administration and make it more transparent, legislation was drafted for a new Taxation Administration Act after consulting with taxpayers and industry professionals. To achieve greater national payroll tax consistency, a review of other legislative provisions is also progressing.

Racing, Gaming and Licensing Late in 2006, the Government decided that the policy priorities and regulatory activities of the racing, gaming and licensing function were more aligned with the community safety responsibilities of the Department of Justice. This alignment has been especially important with the growing focus on liquor-related matters and, more recently, relating to the Australian Government’s emergency response legislation for the Territory.

Well Managed and Flexible Organisation More was achieved during the year in managing the organisation to improve our capability, responsiveness and culture. • Corporate governance arrangements were improved with the review of Treasury’s conflict of interest policy and new policies developed on flexible work arrangements, equity and diversity. • Continued efforts on recruiting staff to meet our ongoing needs included a large entry-level program in 2006‑07. This included 20 graduate trainees, eight cadets sponsored for their tertiary study and three apprentices. These programs are key elements in our long-term recruitment strategy. • To extend professional development, Treasury staff attended a range of conferences, seminars and other courses throughout the year. The Manager’s Toolkit was also developed to enhance the skills and expertise of our managers. Reflecting on the past year, Treasury has again achieved much as an organisation and I acknowledge the effort and expertise of our staff. With their continued commitment and hard work, I look to the challenges in the year ahead, confident that Treasury will continue to make significant contributions to the development of the Territory.

Jennifer Prince 30 September 2007



Annual Report 2006-07

Corporate Statement

Our Purpose

Our Values

Our Stakeholders

To promote sustainable fiscal strength and economic development of the Northern Territory, and contribute to improved social and fiscal wellbeing for Territorians.

Treasury’s values are underpinned by trust, integrity and professionalism.

Treasury services are delivered to:

• We are committed to providing frank, accurate and timely strategic advice.

• the Treasurer, Cabinet and Government agencies as part of Treasury’s whole of government and central agency responsibilities;

Our Strategic Objectives

• Treasury staff take responsibility for their work and behaviour and act in a collaborative way with integrity, respect and fairness.

• the Territory community, business groups and commentators through Treasury publications and commentary;

• We recognise the dedication and expertise of our staff and support them in balancing professional and personal priorities.

• the Legislative Assembly and the Auditor-General as part of Treasury’s statutory and administrative responsibilities; and

Governance Principles

• Treasury staff by providing a safe, professionally challenging and supportive organisation.

Treasury strives to provide: • quality analysis and public policy advice on economic, fiscal, social and commercial issues; • best practice financial management; • effective intergovernmental financial relations; • a fair and efficient Territory tax system; and • appropriate superannuation arrangements for the Territory public sector. Through a well-managed and flexible organisation, we: • recruit and retain high quality staff and provide professional training, development and encouragement; • maintain our commitment to high quality output; and • ensure a safe, supportive workplace that recognises diversity and respects every staff member.

We endeavour to consider each of these principles or criteria when making decisions and taking action on a day-to-day basis. The principles reflect Treasury’s values. • Accountability: Treasury and its employees take responsibility for their decisions and actions.

Figure 1 on page 8 illustrates how Treasury is organised to meet the five strategic objectives and how this is represented in Budget Papers in terms of budget outputs.

• Transparency: decisions, actions and advice are open to and can withstand scrutiny, necessary to ensure that stakeholders can have confidence in Treasury’s decisionmaking processes. • Leadership: modelling and fostering behaviour that supports Treasury values, inspires and influences others and shapes organisational culture. • Integrity: actively promote honesty and ethical conduct, by upholding appropriate standards of behaviour. • Equity: fairness and equity in decision making that is also free from bias

Overview



Figure 1: Our Purpose and Outputs

Our Purpose To promote sustainable fiscal strength and economic development of the Northern Territory, and contribute to improved social and fiscal wellbeing for Territorians.

Strategic Objectives

Business Units

Budget Outputs

Public Policy Advice

• Economic Policy and Frameworks

• Economic

Quality analysis and public policy advice on economic, fiscal, social and commercial issues

• Economic and Social Analysis

• Economic

• Commercial

• Commercial

• Financial Management

• Financial Management

• Territory Revenue Office

• Territory Revenue

• Superannuation Office

• Superannuation

Financial Management

• Financial Management

• Financial Management

Best practice financial management

• Treasury Corporation

• Treasury Corporation

• Public Finance

• Economic

• Territory Revenue Office

• Territory Revenue

• Superannuation Office

• Superannuation

• Treasury Services Group

• All output groups

Intergovernmental Relations Effective intergovernmental financial relations Revenue Management A fair and efficient Territory tax system Superannuation Appropriate public sector superannuation arrangements

Enable Treasury to achieve its objectives through a well-managed, flexible organisation



Annual Report 2006-07

Summary of Results in 2006-07

Performance Reporting

Page

• Significant contributions to developing the Council of Australian Governments’ National Reform Agenda

13

• Amended the Motor Accidents (Compensation) Act to reform the motor accident compensation scheme

14

• Commercial advice in relation to energy supply and performance of government owned corporations and commercial entities

14

• Significant involvement in developing the Power and Water Corporation 2007-08 Statement of Corporate Intent

14

• Successful development and presentation of the 2007-08 Budget

17

• Implemented refinancing and new borrowing program, with $338 million borrowed in 2006-07

18

• Published the Indigenous Expenditure Review, an analysis of the proportion of Territory Government revenue and expenditure which is Indigenous-related

21

• Implemented national tax reform initiatives, including the removal of stamp duty on hiring arrangements

23

• Progressed legislation for a new Taxation Administration Act

24

• Implemented a public sector death and invalidity scheme, and member investment choice and allocated pensions for NTGPASS members

26

• Implemented changes for Territory public sector superannuation arrangements in order to conform with new national requirements

26

Managing the Organisation • Senior Management Group and six corporate governance committees led the organisation

39

• Implemented the 2006-07 internal audit program

43

• Major review undertaken of security and management of Treasury information and changes implemented

47

• Treasury’s energy management targets were well exceeded with further reductions in energy consumption and greenhouse gas emissions

50

• Manager’s Toolkit developed to assist middle and senior level managers

57

• A record number of graduates, apprentices and cadets in 2006-07

62

Overview



Our Focus in 2007-08

In 2007-08, in addition to managing its ongoing responsibilities, Treasury will commence, or continue with, the following key projects and initiatives.

Priorities for Achieving Our Strategic Objectives • Oversee the implementation of major economic reform measures including National Reform Agenda and electricity market related initiatives. • Finalise the review of the Territory Insurance Office Act for relevance of current functions of the office and its operational environment. • Continue to enhance economic and demographic modelling capabilities. • Develop and publish the 2006-07 Treasurer’s Annual Financial Report, the 2007‑08 Mid-Year Report and the 2008-09 Budget. • Update the Indigenous Expenditure Review to include 2006-07 data and implement procedures to allow for annual updating of results. • Undertake discussions with, and prepare submissions to, the Commonwealth Grants Commission as part of the 2010 Major Review of Relativities, for the distribution of GST revenue from the Australian Government. • Implement the new Taxation Administration Act. • Implement legislation to achieve agreed national payroll tax consistency. • Implement new legislation for the Northern Territory Death and Invalidity Scheme and enhanced superannuation products. • Implement the allocated pensions product early in 2008.

Priorities for Managing the Organisation • Continued emphasis on professional and management development, and on entry-level employment programs, from apprenticeships through to the graduate program. • A range of corporate governance activities including finalising the 2007-08 Risk Register, implementing the internal audit plan and providing further staff training to maintain ethical standards. • Continued upgrading of systems and processes to ensure a high level of information management security.

10

Annual Report 2006-07

Performance Reporting Reporting Preface

12

Objectives 1. Public Policy Advice

13

2. Financial Management

17

3. Intergovernmental Relations

21

4. Revenue Management

23

5. Superannuation

26

Output Performance Tables

28

Reporting Preface

Treasury’s performance as an organisation is measured in terms of its five strategic objectives, in pursuit of promoting sustainable fiscal strength and economic development of the Northern Territory, and contribute to improved social and fiscal wellbeing for Territorians. 1. Quality analysis and public policy advice on economic, fiscal, social and commercial issues. 2. Best practice financial management. 3. Effective intergovernmental financial relations. 4. Management of a fair and efficient Territory tax system. 5. Appropriate public sector superannuation arrangements. This section reports on Treasury’s performance in delivering outputs to meet these strategic objectives. Details are provided on key projects and achievements during the year, with performance recorded for the priorities identified in last year’s annual report. Performance against the measures published in Budget Paper No. 3 is reported in the output performance tables. In almost all cases, measures were met or exceeded. Where performance did not meet the estimate, an explanation is provided. Performance reporting for the Utilities Commission is included in Treasury’s output performance tables, as performance measures are published in Budget Paper No. 3 as part of Treasury. Performance against Northern Territory Treasury Corporation’s business line measures is also included in this section. These two statutory offices form part of Treasury for administrative purposes, however full details of achievements in 2006-07 are reported in their own annual reports. In November 2006, responsibility for racing, gaming and licensing was transferred from Treasury to the Department of Justice. Performance reporting on racing, gaming and licensing functions for 2006-07 is included in the Department of Justice Annual Report.

12

Annual Report 2006-07

Objective 1:

Public Policy Advice Strategic Objective Quality analysis and public policy advice on economic, fiscal, social and commercial issues.

Outputs Delivered Analysis and policy advice on: • national and Territory economic, social, demographic policy and statistical issues including development and oversight of economic reforms and frameworks; • management of the Territory’s commercial activities and associated risks; • whole of government resource allocation including financial management frameworks, fiscal policy and fiscal strategy; • Territory revenue and tax-related subsidies framework; and • Territory Government superannuation arrangements.

Key Projects National Reform Agenda Treasury was an active participant in intergovernmental working groups established to advance the National Reform Agenda (NRA) of the Council of Australian Governments (CoAG). Treasury represented the Territory on working groups examining three streams of NRA reform initiatives – human capital, competition and regulatory reform. The NRA aims to increase the efficiency of the Australian economy, reduce the compliance burden of Government regulation on business, and increase labour force participation and productivity by improving national health, education and training standards. In April 2007, CoAG approved plans for implementing agreed NRA reforms, which have now commenced. Other reforms are still being developed.

Analysis from 2006 Population Census Conducting the Australian Population Census in the Territory is far more difficult than elsewhere because of the transient nature of the population and the high proportion of Indigenous people, many of whom live in remote areas. In 2005-06, Treasury worked closely with the Australian Bureau of Statistics (ABS) on a range of strategies to support the ABS in conducting the 2006 Census in the Territory. The Territory’s support was considered essential, given the data collected through the Census is used by the Australian Government to determine the distribution of untied GST revenue to the states and territories and for tied spending on programs such as those for schools, housing and health.

The first results from the 2006 Census were released in June 2007 with further, more detailed releases expected over the next 12 months. The Territory’s estimated resident population was increased by 4000 following incorporation of the Census data. Treasury is now working with ABS on a number of collaborative projects including analysis of data quality, housing and mobility. Discussions have commenced on improvements for the 2011 Census.

General Public Policy All Treasury’s functions involve providing public policy advice. In addition to the key projects presented under this objective, public policy advice is also provided under each of the other strategic objectives outlined in the Performance Reporting section.

Performance Reporting

13

Reform of Motor Accidents (Compensation) Act The Motor Accidents (Compensation) Act (MACA) defines the statutory benefits available to people injured, or the dependants of people killed, in motor vehicle accidents in the Territory. The Treasurer approved a major review of the structure of MACA benefits in April 2005. In response to the findings of the review, legislative amendments were drafted and the public consulted in November 2006. Following consultation, which involved soliciting input by key stakeholders, amendments were introduced during the February 2007 sittings of the Legislative Assembly. The new MACA benefit structure commenced on 1 July 2007.

Review of Electricity Supply Industry Regulatory Framework The current electricity regulatory framework has been in place for over five years. A review to assess its effectiveness and to consider options for reform has been under way since 2006. CoAG requested the Territory Government examine the merits of adopting the national regulatory framework for electricity, as part of broader national energy market reforms approved in April 2007. Treasury is currently coordinating this work, in consultation with national and Territory regulatory bodies, Power and Water Corporation and other stakeholders.

14

Annual Report 2006-07

Energy Supply Treasury has been a key specialist participant in all aspects of the ongoing and future supply of gas to the Territory, especially in relation to development of gas as an energy source for electricity generation. This includes assisting in the resolution of matters relating to the existing long‑term contracts for supply of gas from the Amadeus Basin and participating in negotiations with current and prospective suppliers of gas and with pipeline companies.

Commercial Issues Undertaking commercial analysis is one of the important tasks that Treasury performs, particularly on the delivery of a number of Government projects in 2006-07. These included commercial issues for Darwin Port, assessment of proposals to establish a tropical resort at Little Mindil and the new licence agreement to support the ongoing operation of the SkyCity Casino in Darwin. Treasury provided advice on the commercial, financial and corporate governance perspectives.

Government Owned Corporation The Power and Water Corporation continued to be the Territory’s only government owned corporation (GOC) in 2006-07. As part of managing the GOC framework, Treasury: • advised the shareholding Minister on Power and Water’s financial and non-financial performance and other GOC-related matters;

• managed an expert review of Power and Water’s financial systems; and • on behalf of the Treasurer, negotiated with Power and Water on its 2007-08 Statement of Corporate Intent (SCI). The SCI sets a new standard as informative, robust and transparent. It covers Power and Water’s operations, and its capital and maintenance programs for the next five years in detail, and also points to expectations for a further 15 years.

Whole of Government Policy Issues In its central agency role, Treasury provides advice and assistance to other agencies on a range of whole of government issues including: • comments on all Cabinet submissions; • the financial aspects of public sector wages policy with particular emphasis on strategic aspects of enterprise bargaining agreements; • information technology, including strategic directions and contract evaluations; • procurement policy and practices; • regulatory review of competition and business impacts for all new and amending legislation, pursuant to the National Reform Agenda; and • investment advice, such as for the Public Trustee and the Agents Licensing Fidelity Fund. Appendix 5 details the whole of government boards and committees on which Treasury is represented.

Treasury and NTG/CDU Partnership Agreement Four years into the Territory Government’s Partnership Agreement with Charles Darwin University (CDU), Treasury has a very productive engagement with the university. The focus has been predominantly, but by no means exclusively, in the areas of economics and demography including: • a three year research study into the mobility of the Territory’s people, in partnership with CDU and the Australian Bureau of Statistics – attracting a competitive Australian Research Council grant of $0.4 million; • a range of research projects on the demography of the Territory population through a $0.6 million research grant over three years from Treasury; • contracted services of Professor Tony Barnes, a Professorial Research Fellow, to strengthen the economic, social and demographic analysis capacity of Treasury; • scholarships and paid work experience to encourage enrolments in economics studies (see the Treasury People section of this report); • formal adjunct academic status with CDU for four Treasury staff (Dr Sarah Rummery, Ms Jenny Coccetti, Ms Mary Beneforti and Mr  Phillip Eatwell) to undertake teaching, research and other collaborative activities; • a $50 000 contribution to an Associate Professorship in Economics at CDU; and • delivery of Graduate Certificate in Public Governance to recent Treasury graduate trainees, including accrediting major elements of Treasury’s graduate development program towards the degree. It is anticipated similar arrangements will continue for the foreseeable future. In addition, Dr Ram Vemuri was appointed as an independent commissioner to determine annual contribution amounts to be paid by motorists under the Territory’s Motor Accidents Compensation Scheme.

Output Performance Priorities for 2006-07

Results in 2006-07

Oversight of significant micro-economic reform initiatives.

Achieved – Treasury represented the Territory in relevant intergovernmental working groups charged with developing reform measures and implementation plans under the CoAG National Reform Agenda.

Implementation of reforms for the Motor Accidents (Compensation) Act.

Achieved – New motor accident compensation benefits commenced on 1 July 2007.

Review of financial reporting processes for government owned corporations and refinement of financial reporting processes for government owned businesses.

Achieved – New frameworks for reporting processes for GOCs aligned with internal GOC reporting requirements.

Enhancements to current processes for analysis of financial aspects of gaming licence applications.

Achieved – Position papers on specific issues developed and used during negotiations, including the Darwin casino licence agreement.

Continued oversight of the Territory’s electricity supply industry regulatory framework.

Achieved – Review to assess effectiveness of existing regulatory regime and to assess options for reform completed. Review to assess effectiveness of adopting national law and rules for the Territory electricity market under way.

Performance Reporting

15

Output Performance (continued) Priorities for 2006-07

Results in 2006-07

Monitor and report on key economic indicators and industries.

Achieved – Economic Briefings and the Territory Economic Review published regularly.

Monitor and disseminate reports on key social issues.

Ongoing – Disseminated analysis of social and economic conditions to assist policy development.

Review of the Territory Insurance Office Act for relevance of current functions of the office and its operational environment.

In progress – Review commenced and scheduled to be completed by December 2007, with implementation to follow.

Enhance forecasting and economic and demographic modelling capacities.

In progress – Working with ABS to assess impacts of new Gross State Product measure to be released in November 2007. In progress – Continuing to work in collaboration with Charles Darwin University (CDU) to develop Territory population projection models.

Improve understanding of factors influencing population mobility and regional population growth.

In progress – Surveys and fieldwork completed as part of a research project with ABS and CDU.

Implement an inventory of economic and social data sources.

In progress – Specifications set and a database developed, with pilot testing commenced.

Investigate and analyse 2006 Census data and data quality.

In progress – A number of Census analysis projects are under way, with early results expected in first half of 2008.

Assist in organising the 2008 biennial conference of the Australian Population Association, as a major sponsor.

In progress – Planning for the conference, to be held 1-4 July 2008, is well advanced.

Future Priorities • Oversight of the implementation of major economic reform measures including CoAG National Reform Agenda and electricity market related initiatives. • Finalise the review of the Territory Insurance Office Act for relevance of current functions of the office and its operational environment. • Continue to enhance forecasting and economic and demographic modelling capacities. • Through the Statistical Liaison Committee, finalise an inventory of economic and social data sources. • Continue to improve understanding of factors influencing population mobility and regional population growth. • Enhance financial analysis and financial modelling capacities.

16

Annual Report 2006-07

Objective 2:

Financial Management Strategic Objective Best practice financial management.

Outputs Delivered Analysis on whole of government resource allocation and reporting of the Territory’s financial resources through: • whole of government budgeting and financial reporting; • monitoring agency financial and output performance, including analysis of agency budget proposals; • reporting and analysis of infrastructure budget requirements and coordination of the Infrastructure Program for Government; and • management of financial accountabilities as prescribed in the Financial Management Act. Prudent management of the Government’s loans, borrowings and investment program.1 1. Further details on achievements relating to loans, borrowing and investment programs can be found in the Northern Territory Treasury Corporation 2006-07 Annual Report.

Key Projects 2007-08 Budget Developing the Northern Territory’s Budget is one of Treasury’s primary roles and a major annual activity. The 2007-08 Budget was tabled in Parliament in May 2007, following intensive work and effort by a range of Treasury staff, in collaboration with agencies. Various processes were enhanced, resulting in improved timeliness and quality of financial and policy advice to Government, fostering better working relationships with agencies. Budget Papers focused on significant issues for the Territory, including analysis of the Territory’s demographic change and its implications for the future, and a summary of the Indigenous Expenditure Review methodology and results.

Treasurer’s Annual Financial Report 2005-06 The Treasurer’s Annual Financial Report 2005-06, which was finalised in September 2006 and tabled in the Legislative Assembly in October 2006, provides a full set of financial statements on a sectoral and whole of government basis, along with additional explanatory notes covering the transition to International Financial Reporting Standards. The Report was issued with an unqualified audit opinion against the Government Finance Statistics (GFS) standard, the Territory’s adopted reporting format which aligns with the Uniform Presentation Framework as adopted by all Australian jurisdictions.

2006-07 Mid-Year Report The Fiscal Integrity and Transparency Act requires the release of a mid‑year fiscal outlook report each year. The 2006-07 Mid-Year Report was tabled in the Legislative Assembly in November 2006, updating Budget projections from the May 2006 Budget by incorporating Government decisions and revised Australian Government revenue and Territory taxation revenue estimates. The Report also provides revised financial statements on a sectoral and whole of government basis, discussion on updated economic estimates and the fiscal strategy outlook for 2006-07 and three forward years.

Performance Reporting

17

Harmonisation of Whole of Government Reporting A project is under way to assure the Territory Government’s compliance with the proposed new Australian Accounting Standard on whole of government financial reporting. The new reporting format aims to harmonise the GFS model, currently used by the Territory, with Australian Accounting Standards. All Australian jurisdictions have agreed to adopt the new harmonised reporting standard, to take effect for the 2008‑09 Budget and final outcome reports. Changes are also expected to the Uniform Presentation Framework to allow for alignment with the new harmonised standard.

Financial Management Policy Development Treasury is responsible for administering the Territory’s financial management framework, including the Financial Management Act, the Fiscal Integrity and Transparency Act and the Treasurer’s Directions. As part of ongoing review of the framework, agency budget management and infrastructure principles have been identified as key areas requiring enhancement. In 2006-07, preliminary work began to expand Treasurer’s Directions to improve guidance for agencies on resource and infrastructure management, performance and governance practices.

18

Annual Report 2006-07

Corporate Services Review

Borrowing Program

Treasury provided advice and analysis, as a member of the Corporate Services Review Steering Group. The review reported on shared services arrangements operating for the Territory Government and recommended process and system changes to generate efficiencies and improve services to agencies.

As the Territory Government’s central financing authority, Treasury Corporation implemented the Government’s 2006-07 borrowing program. The requirement was lower than in recent years, with approximately $338 million raised to refinance maturing debt, compared with $593 million raised in 2005-06 and $373 million in 2004-05. The smaller program reflected a lower refinancing requirement in 2006-07.

Whole of Government Staffing The Office of the Commissioner for Public Employment and Treasury continued to provide Government with advice on whole of government staffing statistics, with particular emphasis on the budgetary implications of staffing movements.

Conditions of Service Reserve The Conditions of Service Reserve (COSR) is managed by Treasury Corporation on behalf of the Central Holding Authority. The funds are managed by three investment managers: AMP Capital Investors Limited, Colonial First State Investments Limited and MLC Implemented Consulting. The COSR fund has a long-term investment strategy orientated towards growth assets, such as property and shares, and is benchmarked against the InTech Investor Choice Performance Growth Survey. Over the year, the COSR fund earned an overall return of 16.7 per cent, 1.4 percentage points above the benchmark. Over a three year period, the fund has generated an average annual return of 18.0 per cent, 3.7 percentage points above its benchmark.

The entire borrowing requirement was met from domestic financial and retail markets. The bulk of funds was raised through a number of medium and long dated fixed interest securities, issued to institutional investors via private placement and public issues. Treasury Corporation’s retail funding source continues to provide a notable proportion of overall funding requirements, with almost 27 per cent of the borrowing program met from Territory Bonds and migration-linked investors.

Output Performance Priorities for 2006-07

Results in 2006-07

Continued focus on major projects including development and publication of whole of government financial information including the Budget, Treasurer’s Annual Financial Report and the Mid-Year Report.

Achieved • Treasurer’s Annual Financial Report 2005-06 released October 2006 • 2006-07 Mid-Year Report released November 2006 • Treasurer’s Quarterly Financial Report released November 2006, February 2007 and May 2007 • 2007-08 Budget Papers released 1 May 2007

Continue development and amendment of Treasurer’s Directions and financial management principles.

Ongoing – Expansion of new Treasurer’s Directions has begun, with a focus on improving guidance to agencies on financial management and performance practices.

Assess the effect of proposed new public sector reporting arrangements on Territory financial reports.

In progress – Awaiting the release of new harmonisation standards by the Australian Accounting Standards Board.

In conjunction with the Department of Planning and Infrastructure, continue the review of the Works Programming Procedures to update guidance for agencies on Infrastructure Program matters.

In progress – The joint project with the Department of Planning and Infrastructure will continue in 2007-08 with updated works programming principles to be included as part of the Treasurer’s Directions.

Ongoing review of Financial Management Act accountability processes and enhancements to supporting information management systems and processes.

In progress – Review has identified priority areas of agency budget management and infrastructure for continued policy and systems refinement in 2007-08.

Treasury Corporation will continue to develop its business continuity planning and corporate governance framework.

In progress – Business continuity plan developed. To be integrated with Treasury plan.

Borrowed $338 million to meet Government funding requirements.

Achieved – Lower refinancing rates achieved compared to budget forecast.

In progress – New vehicle gift and loan processes implemented. A revised approach to considering and managing government financial interests is being introduced, including streamlining the process for approving contingent liabilities.

Performance Reporting

19

Future Priorities • Continued focus on monitoring, development and publication of critical whole of government financial information in the Budget, Treasurer’s Annual Financial Report and the Mid-Year Report. • Ongoing development and amendment to Treasurer’s Directions, with improvement of the agency budget management and infrastructure sections as priorities for 2007-08. • Assessment of the new Australian Accounting Standard on harmonisation of whole of government reporting. This will encompass a staged implementation of the new reporting format for both budget and outcome reporting. • Evaluate opportunities for system modules enhancement to the whole of government Apex budget and reporting system. • Continue to review Financial Management Act accountability processes and supporting information management systems. • Implement the Government’s 2007-08 borrowing program. • Continue to develop Treasury Corporation’s business continuity planning and corporate governance framework.

20

Annual Report 2006-07

Objective 3:

Intergovernmental Relations Strategic Objective Effective intergovernmental financial relations.

Outputs Delivered Analysis and policy advice to Government on public finance issues including management of the Territory’s participation in major intergovernmental financial arrangements and other public finance matters.

Key Projects Commonwealth Grants Commission – 2010 Review The Commonwealth Grants Commission (CGC) is undertaking work on the next major review of state revenue sharing relativities to be completed by 2010. The review will examine all aspects of the CGC’s approach, including the application of the principle of horizontal fiscal equalisation and methods by which the calculation of relativities can be simplified. The Territory, represented by Treasury, participated in a number of working groups considering issues related to assessment structure, simplification of methodology and reliability of data and methods as part of the 2010 Review. Treasury made submissions on the Disaggregation of Revenue and Expenses, Socio-Demographic Composition and Location factors, and on Assessment Structure and Approaches, and provided data for the CGC 2007 Update.

Indigenous Expenditure Review

Specific Purpose Payment Revenues

Treasury published a detailed review of the proportions of Territory Government revenue and expenditure which are Indigenous-related. The purpose of the review was to provide an objective analysis of the surplus or deficit in the Territory’s Indigenousrelated expenditure when compared to the funding the Territory receives as a result of indigeneity. The review, published in September 2006, was conducted in consultation with all Territory Government agencies. The results and methodology are summarised in the Territory’s 2007-08 Budget Papers. The review is to be updated annually from 2007-08.

Treasury represented the Territory on the Heads of Treasuries Specific Purpose Payments Working Group. This involved the preparation of a report to the Australian Government on options for restructuring the Commonwealth-State Housing Agreement on behalf of the states.

Council of Australian Governments Working Groups Treasury represented the Territory on two working groups on Indigenous Generational Reform and Local Government. Treasury’s input to the groups focused on enhancing Indigenous outcomes and providing advice on the nature of, and trends in, revenue and expenditure of local government.

Advice was also provided to Government and agencies in relation to a range of intergovernmental agreements including Indigenous housing, Commonwealth-State and Territory Disability Agreement, Natural Resource Management programs and the Australian Health Care Agreement.

Goods and Services Tax Treasury continued to monitor changes in the underlying parameters that determine the Territory’s GST revenue. GST revenue parameters include population, national GST cash collections and CGC relativities. Treasury also provided advice to Government on a range of GSTrelated legislative proposals through the year in order to protect the GST base and therefore the Territory’s main source of revenue.

Performance Reporting

21

Output Performance Priorities for 2006-07

Results in 2006-07

Review of Territory Government’s expenditure and revenue related to the Indigenous population.

Achieved – Published Indigenous Expenditure Review in September 2006. Summary of results included in 2007-08 Budget Papers.

Preparation of submissions to the CGC.

Ongoing – Submissions in 2006-07 included those related to the Disaggregation of Revenue and Expenses, SocioDemographic Composition and Location factors, and Assessment Structure and Approaches.

Ongoing review of the Territory’s General Purpose Classifications to assist with CGC assessment of relativities.

Ongoing – Major review completed for the CGC 2007 Update.

Develop a framework for negotiation of a range of health specific purpose payments.

Ongoing – Treasury has worked with the Department of Health and Community Services to assist in developing the negotiation framework.

Future Priorities • Preparation of submissions to, and undertaking workplace discussions with, the CGC as part of the 2010 Review. • Updating the Indigenous Expenditure Review to include 2006-07 data and implementing procedures to allow for annual updating of the results.

22

Annual Report 2006-07

Objective 4:

Revenue Management Strategic Objective Management of a fair and efficient Territory tax system.

Outputs Delivered Management of the Territory’s revenue and tax-related subsidies framework, encompassing: • analysis and policy advice; • administration systems; • compliance activities; and • community awareness and advisory services.

Key Projects Budget Revenue Measures Revenue measures announced in the 2007-08 Budget were developed and implemented. These included: • the continued implementation of the Territory Government’s response to National Tax Reform, as detailed in the Intergovernmental Agreement on the Reform of Commonwealth-State Financial Relations, by abolishing stamp duty on hiring arrangements; • changes to the Territory’s home buyer incentive schemes, such as increasing the stamp duty first home owner concession from the first $225 000 of a property’s value (a concession of up to $8 015) to the first $350 000 of a property’s value (a concession of up to $15 312);

• abolition of stamp duty on the grant of a lease for nil or nominal consideration and on all types of guarantees; • clarification of the stamp duty valuation provisions; and • changes to the Territory’s land holder stamp duty provisions. Further details on these revenue measures can be found in Appendix 7: Legislative Changes 2006-07.

National Payroll Tax Consistency Project In March 2007, state and territory treasurers agreed to a national overhaul of payroll tax arrangements. The states and territories will adopt common provisions and definitions for the timing of lodgments, motor vehicle allowances, accommodation allowances, a range of fringe benefits, payroll tax imposed on work performed outside a jurisdiction, employee share acquisition schemes, superannuation contributions for non‑working directors and the grouping of businesses. Although provisions and definitions are to be harmonised, states and territories will continue to determine rates and thresholds applicable in their jurisdictions. These measures are currently being developed. It is proposed that the legislation will be implemented during 2007-08 to commence on 1 July 2008.

Performance Reporting

23

Proposed New Taxation Administration Arrangements

Internet-based Payroll Tax Return System

Further extensive consultation on a draft proposed new Taxation Administration Act occurred during 2006-07. The proposed Taxation Administration Act and legislation for consequential amendments is being introduced into the Parliament, with implementation on track for 1 January 2008.

During 2006-07, an electronic payroll tax payment and returns system, known as Territory Revenue Management electronic Returns (TRMeR), was fully implemented. The new system provides: • online calculation and easy lodgement of monthly and annual payroll tax returns; • the option of online electronic payment of payroll tax; • industry standard security and a secure payment gateway; • online calculation and lodgement of payroll tax annual reconciliations; and • the ability to view lodgement and payment history.

24

Annual Report 2006-07

It also provides the Territory Revenue Office with a new payroll tax administration system. Over half the employers in the Territory’s payroll tax base have registered to use TRMeR. From a survey of these taxpayers, 80 per cent of respondents found TRMeR easy to use. Enhancements to the system were designed and developed during 2006‑07 and these will be implemented in 2007‑08. As a result, businesses will benefit from lower compliance costs and streamlined administration.

Output Performance Priorities for 2006-07

Results in 2006-07

Finalise legislation for a new Taxation Administration Act.

In progress – Following further extensive consultation, the legislation was introduced into the Legislative Assembly in August 2007. To be implemented during 2007-08.

Implement the Territory’s response to the list of taxes for review, as detailed in the Intergovernmental Agreement on the Reform of Commonwealth-State Financial Relations.

Achieved – Stamp duty on hiring arrangements was abolished from 1 July 2007. The final agreed change, abolishing stamp duty on business property, excluding land, is scheduled for 2009.

Further develop and enhance revenue management systems and related information technology, including the implementation of an internet-based payroll tax return and payment system.

Achieved – Enhancements to TRMeR substantially developed during the year.

Enhance and implement communication strategies to increase taxpayer and subsidy recipient knowledge of the Territory’s tax system and tax-related grants and subsidies.

Achieved – Nine new and revised Commissioner’s Guidelines and Circulars were issued during the year. This information assists taxation practitioners, taxpayers and grant and subsidy recipients in their dealings with the Territory Revenue Office.

Future Priorities • Implement the new Taxation Administration Act. • Implement legislation to achieve national payroll tax consistency as part of an agreement between all jurisdictions to lower compliance costs for businesses. • Continue to develop and enhance revenue management systems and related information technology, including a new stamp duty administration system and an internet-based stamp duty lodgement and payment system. • Continue to enhance and implement communication strategies to increase taxpayer and subsidy recipient knowledge of the Territory’s tax system and tax-related grants and subsidies.

Performance Reporting

25

Objective 5:

Superannuation Strategic Objective Appropriate public sector superannuation arrangements.

Outputs Delivered Superannuation policy for Government and administration of the Government’s superannuation schemes, including the relationship between national and Territory legislation, and advice and assistance to investment and review boards.

Key Projects Northern Territory Death and Invalidity Scheme The 2004-2007 Enterprise Bargaining Agreement (EBA) included a commitment to provide a death and invalidity scheme for Northern Territory Public Sector employees engaged after 9 August 1999 in choice of fund superannuation arrangements. The scheme has been implemented, with formal commencement from 1 July 2007. Eligible employees who became totally and permanently incapacitated or died before 1 July 2007 have been covered under transitional arrangements.

Australian Government Better Super Reforms Legislation to implement the Australian Government Better Super reforms, designed to simplify superannuation and associated taxation, was passed in February 2007, with the majority of changes coming into effect from 1 July 2007. The Northern Territory Superannuation Office implemented the necessary changes for the Territory’s public sector schemes.

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Annual Report 2006-07

Actuarial Reviews

Actuary Panel

The rolling program of three-yearly reviews of the Territory Government’s superannuation schemes continued, with reviews of the Police Supplementary Benefit Scheme and the Commonwealth Super Scheme (CSS) completed in 2006-07. In the CSS review, the actuary recognised that a further 200 members had been identified as the Territory’s responsibility. This increased the Territory’s liability by $265 million and the Budget and forward estimates were adjusted accordingly. Also, the Government set aside $150 million in the Conditions of Service Reserve to ameliorate the future budget effects of the liability.

During 2006-07, the arrangements for engaging actuaries were reviewed and a new panel of actuaries was established. The panel will mainly provide superannuation-related actuarial advice, but will also be used for workers compensation, insurance and other matters across Government. The panel comprises:

LAMS Investment Management Following the successful move to using an implemented investment consultant to manage the NTGPASS fund, the Legislative Assembly Members’ Superannuation Trust also transitioned to implemented consultant funds management during 2006-07. MLC Implemented Consulting provides services to the Trust.

• Bendzulla Actuarial Pty Ltd; • Cumpston Sarjeant Pty Ltd; and • PricewaterhouseCoopers Securities Ltd.

Member Investment Choice The EBA included the introduction of member investment choice for Northern Territory Government and Public Authorities’ Superannuation Scheme (NTGPASS) members. It allows NTGPASS members the choice of five investment options, ranging from a conservative (low risk) option to an aggressive (high risk) option. Member investment choice development and testing was completed in 2006-07, with implementation from 1 July 2007.

Output Performance Priorities for 2006-07

Results in 2006-07

Development of processes and legislative amendments required to implement a death and invalidity scheme for employees in choice of fund superannuation arrangements, as well as to implement member investment choice and an allocated pension.

Achieved – Legislative amendments to formalise the death and invalidity scheme drafted, with passage of legislation anticipated in early 2007‑08.

Conduct information seminars for NTGPASS members on member investment choice and allocated pensions.

Member investment choice commenced on 1 July 2007. Education program completed in all regional centres. Allocated pension product on schedule for early 2008 commencement.

Continue working with the Territory’s counsel to finalise the NTGPASS court case.

Ongoing – During the year, the Community and Public Sector Union (CPSU) expanded the scope of the action. In November 2006, the Territory filed its defence. In May 2007 the matter was considered by the Court, which ordered limited discovery in relation to the CPSU’s claim. The matter has been further adjourned until November 2007.

Complete actuarial reviews of the Territory’s future liabilities for the Northern Territory Police Supplementary Benefit Scheme and the Commonwealth Superannuation Scheme.

Achieved – Actuarial reviews completed and future liabilities adjusted in the 2007-08 Budget and forward estimates.

Future Priorities • Information seminars to educate NTGPASS members about allocated pensions. • Implement legislation for the Northern Territory Death and Invalidity Scheme and new superannuation products. • Continue working with the Territory’s counsel to finalise legal action by CPSU on the closure of NTGPASS. • Complete actuarial reviews of NTGPASS, Northern Territory Supplementary Superannuation Scheme, Legislative Assembly Members’ Superannuation Trust, Administrators Pensions Scheme and Supreme Court (Judges’ Pensions) Scheme. • Continued system and administrative process changes to implement an allocated pension for NTGPASS members, including member information seminars. • Work with the trustees of the Government’s superannuation schemes to comply with the requirements of the Australian Government’s anti-money laundering and counter terrorist legislation.

Performance Reporting

27

Output Performance Tables

The following tables report the performance measures achieved by output in 2006‑07 against those published in Budget Paper No. 3. Table 1: Financial Management Output Performance Performance Measures

Unit of Measure

2006-07 Estimate

2006-07 Actual

Quantity Facilitate the development and presentation of 2007-08 Budget

number

1

1

Financial performance reporting – Treasurer’s Annual Financial Report, Mid‑Year Report, Treasurer’s Quarterly Financial Reports

number

5

5

– budget proposals and estimates

$ million

4.10

3.56

– agency expenses and revenues

$ million

1.76

1.53

– financial frameworks

$ million

1.22

1.06

yes/no

yes

yes

– fiscal policy advice

survey rating

≥5

5

– key financial reports and publications

survey rating

≥5

5

per cent

>85

85

Budget published by date set by Treasurer

yes/no

yes

yes

Treasurer’s Annual Financial Report published in accordance with legislation

yes/no

yes

yes

Mid-Year Report published in accordance with legislation

yes/no

yes

yes

Treasurer’s Quarterly Reports published in accordance with legislation

yes/no

yes

yes

Capacity to provide policy advice and analysis on:

Quality Acceptable audit opinion from Auditor-General for Annual Financial Report Stakeholder satisfaction1

Timeliness Timeframes met as agreed

1. Stakeholders are the Treasurer and Government agencies. Satisfaction ratings are: 1: Extremely Dissatisfied, 2: Dissatisfied, 3:  Somewhat Dissatisfied, 4: Somewhat Satisfied, 5: Satisfied, 6: Extremely Satisfied.

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Annual Report 2006-07

Table 2: Economic Output Performance Unit of Measure

2006-07 Estimate

2006-07 Actual

– micro-economic and regulatory framework issues

$ million

2.24

2.54

– macro-economic, demographic, statistical and social issues

$ million

2.66

2.05

– public finance issues

$ million

1.27

1.13

Contribution to Australian Taxation Office for GST collection costs

$ million

6.23

6.31

Community service obligation payment for uniform tariff subsidy

$ million

52.86

52.85

Publish Northern Territory Economy

number

1

1

Publish Territory Economic Review

number

11

11

– micro-economic and regulatory framework issues

survey rating

≥5

5

– macro-economic, demographic, statistical and social issues

survey rating

≥5

5

– public finance issues

survey rating

≥5

5

Stakeholder satisfaction1 with economic publications

survey rating

≥5

5

survey rating

≥5

5

Briefings on ABS economic data provided on day of release

per cent

100

100

Economic publications published by agreed date

per cent

100

100

Performance Measures Quantity Capacity to provide policy advice and analysis on:

Quality Stakeholder satisfaction1 with advice on:

Timeliness Timeframes met as agreed

1. Stakeholders are the Treasurer, relevant Government agencies and users of Treasury’s economic publications. Satisfaction ratings are: 1: Extremely Dissatisfied, 2: Dissatisfied, 3: Somewhat Dissatisfied, 4: Somewhat Satisfied, 5: Satisfied, 6: Extremely Satisfied.

Performance Reporting

29

Table 3: Commercial Output Performance Unit of Measure

2006-07 Estimate

2006-07 Actual

Capacity to provide policy advice and services on commercial dealings1

$ million

2.01

2.88

Information sessions on indemnities, guarantees and contingent liabilities held for Government agencies

number of participants

120

100

survey rating

≥5

5

survey rating

≥5

5

Performance Measures Quantity

Quality Stakeholder satisfaction2 with policy advice and services on commercial dealings Timeliness Timeframes met as agreed

1. Alice Springs Convention Centre Performance Incentive Grant not included. 2006‑07 includes one-off costs associated with a review of Power and Water’s financial systems. 2. Stakeholders include the Treasurer and Government agencies. Satisfaction ratings are: 1: Extremely Dissatisfied, 2: Dissatisfied, 3: Somewhat Dissatisfied, 4: Somewhat Satisfied, 5: Satisfied, 6: Extremely Satisfied.

Table 4: Superannuation Output Performance Performance Measures

Unit of Measure

2006-07 Estimate

2006-07 Actual

$ million

3.71

3.53

≥5

5.4

per cent

100

100

survey rating

≥5

5

days

30

10

$

78

82

Quantity Capacity to provide policy advice and services on superannuation Quality Stakeholder satisfaction1 with policy advice and services on superannuation survey rating Superannuation benefits paid accurately Timeliness Timeframes met as agreed Average days to make benefit payments

2

Average administration cost per superannuation scheme member

1. Stakeholders include the Treasurer, superannuation scheme members and associated boards. Satisfaction ratings are: 1: Extremely Dissatisfied, 2: Dissatisfied, 3:  Somewhat Dissatisfied, 4: Somewhat Satisfied, 5: Satisfied, 6: Extremely Satisfied. 2. The Australian superannuation industry standard is 30 days.

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Annual Report 2006-07

Table 5: Territory Revenue Output Performance Unit of Measure

Performance Measures

2006-07 Estimate

2006-07 Actual

Quantity Territory revenue collected1

$ million

498.6

508.3

Capacity to provide revenue management policy advice

$ million

1.03

0.90

Capacity to collect Territory revenue

$ million

5.24

5.15

Subsidy payments

$ million

13.08

11.88

Subsidy administration

$ million

0.33

0.32

per cent

±5

2.0

– taxpayers2

per cent

85

86

– Treasurer3

survey rating

≥5

6

Assessment accuracy4

per cent

≥99

99.9

Accuracy of first home owner grant (FHOG) payments processed

per cent

>98

100

per cent

>95

96.6

per cent

>95

99.7

Quality Territory revenue forecast accuracy Stakeholder satisfaction

Timeliness Revenue received within agreed timeframes Services completed within agreed service standards

5

1. Includes taxes, gambling revenue and mining royalties. Gambling revenue was previously recorded against the ‘Gambling, Liquor and Other Regulation’ output, which has since transferred from Treasury to the Department of Justice. However, gambling revenue collection remains a responsibility of Treasury, and is now reflected in this performance measure. 2. Taxpayer satisfaction is determined via an electronic and telephone survey to payroll taxpayers and professionals who had dealings with the Territory Revenue Office in 2006-07. A total of 101 responses were received to the survey. The survey questions related directly to assessing satisfaction with the services provided by the Territory Revenue Office with the following ratings: 1: Extremely Dissatisfied, 2: Dissatisfied, 3: Somewhat Dissatisfied, 4: Somewhat Satisfied, 5: Satisfied, 6: Extremely Satisfied. The result above is based on responses indicating a score of five or higher. This differs to last year’s ratings which used a scale of one to ten, with the result based on responses indicating a score of six or higher. The change in methodology brings the Territory Revenue output into line with other Treasury output reporting. 3. Treasurer’s satisfaction is determined via survey with the following ratings: 1: Extremely Dissatisfied, 2: Dissatisfied, 3: Somewhat Dissatisfied, 4: Somewhat Satisfied, 5: Satisfied, 6: Extremely Satisfied. 4. The target is expressed as a ratio of allowed objections to total assessments. 5. The result for 2006-07 is the weighted average performance of a series of lower level measures, included in the Service Charter (see page 32) being the proportion of stamp duty assessments assessed within five working days, the proportion of responses to written inquiries that were provided within 14 days of receipt, the proportion of audits completed within the required timeframe and the proportion of objections determined within 120 days.

Performance Reporting

31

Table 6: Standards Published in the Territory Revenue Office Service Charter 2006-07 Estimate

2006-07 Actual

%

%

90

90

100

93

Audits completed within the required timeframe

80

80

Objections determined within 120 days

80

100

Proportion of approved FHOG payments made within 24 hours of payment eligibility date

95

100

Proportion of wholesaler fuel subsidy applications and other grant and subsidy applications determined within five business days of receipt of all relevant information2

95

90

Stamp duty assessing document turnaround (proportion assessed within five working days) Response to written inquiries within 14 days of receipt1

1. TRO has not been able to meet the published standard and room for improvement exists. TRO continues to explore processes that will assist in delivering a service that meets the high standards set. 2. Staffing shortages and subsequent difficulties in recruiting during the months of May and June 2007 meant that this published standard dropped below its usual level. However, the standard was met for all other months in 2006-07.

Table 7: Economic Regulation Output Performance Unit of Measure

2006-07 Estimate

2006-07 Actual

Capacity to administer regulatory regime

$ million

0.49

0.44

Capacity to advise Regulatory Minister

$ million

0.12

0.11

survey rating

≥5

5

per cent

100

100

Performance Measures Quantity

Quality Stakeholder satisfaction1 Timeliness Determinations and approvals issued within statutory timeframes

1. Stakeholder is the Regulatory Minister. Satisfaction ratings are: 1: Extremely Dissatisfied, 2:  Dissatisfied, 3: Somewhat Dissatisfied, 4: Somewhat Satisfied, 5: Satisfied, 6: Extremely Satisfied.

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Annual Report 2006-07

Table 8: Northern Territory Treasury Corporation Business Line Performance Unit of Measure

2006-07 Estimate

2006-07 Actual

Capacity to provide borrowing services

$ million

2.21

1.99

Weighted average cost of borrowings during the year

per cent

6.15

6.13

Borrowing margin compared to industry peers

per cent variance

< 0.20

+0.10

Investment portfolio return above benchmark1

per cent

> indices

+0.03

Volatility of investment portfolio return against benchmark1

per cent

±0.25

-0.03

survey rating

≥5

6

Quotes issued within three days3

per cent

100

100

Funding available within five days

per cent

100

100

Performance Measures Quantity

Quality

Stakeholder satisfaction with borrowing service 2

Timeliness

1. The benchmark is measured against weighted relevant UBS Warburg Indices. 2. Stakeholders are the Treasurer, government owned corporations and agencies. Satisfaction ratings are: 1: Extremely Dissatisfied, 2: Dissatisfied, 3: Somewhat Dissatisfied, 4: Somewhat Satisfied, 5: Satisfied, 6: Extremely Satisfied. 3. A quote is the response to a request for financial information relating to a loan by a government business division or a government owned corporation.

Performance Reporting

33

Managing the Organisation: Corporate Governance Main Results Management Environment Governance Structure Risk Management Monitoring Risk Other Corporate Governance Matters

36 38 39 42 43 46

Corporate Planning Process

46

Communication

46

Information Management

47

Corporate Social Responsibility

49

Future Priorities

52

Corporate Governance

What is corporate governance? Corporate governance refers to Treasury’s internal controls, and decision-making and approval processes that support the organisation in achieving its desired objectives. This could also be expressed as our ‘self‑governing arrangements’. Corporate governance is the means by which Treasury directs and controls its operations to enable the organisation to achieve its objectives and meet its responsibilities to its stakeholders. It also ensures that decision making and operations are guided by a set of principles that maintain ethical standards.

Main Results • Treasury’s corporate governance committees continued to meet regularly and approve various organisational policies and procedures including monitoring the Territory’s fiscal strategy, reviewing Treasury’s risk register, approving various policies such as flexible work arrangements, probation procedure and equity and diversity framework, approving numerous study assistance applications, considering information technology (IT) services and business systems across the agency and continued monitoring of Treasury’s occupational health and safety (OH&S) arrangements. • Treasury’s conflict of interest policy remained a priority, with the policy being reviewed during the year. • 11 audits and 2 reviews were completed during the year on Treasury processes, procedures and financial reports, with no adverse findings. • Environmental management efforts resulted in a 38 per cent reduction in energy consumption and a 46 per cent reduction in paper use. • Staff support of community groups resulted in over $3000 being raised for various community organisations. This chapter describes and reports on Treasury’s corporate governance arrangements, referring to the principles that guide decision making and the structures in place to govern our organisation. Our arrangements are presented in diagrammatic form on page 37. Findings from audits and reviews conducted in 2006‑07 of Treasury operations and systems are reported in this section, reflecting the important role of risk management in corporate governance. The final part of this chapter contains information on other corporate governance issues. These matters endeavour to promote transparency in our internal processes and report on our corporate social responsibility to the environment and community.

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Annual Report 2006-07

Figure 2: Treasury’s Corporate Governance Arrangements

Strategic Objectives Values

Treasury strives to provide: • quality analysis and public policy advice on economic, fiscal, social and commercial issues;

Treasury’s values are underpinned by trust, integrity and professionalism.

• best practice financial management;

We are committed to providing frank, accurate and timely strategic advice.

• effective intergovernmental financial relations;

Treasury staff take responsibility for their work and behaviour and act in a collaborative way with integrity, respect and fairness.

• a fair and efficient Territory tax system; and • appropriate superannuation arrangements for the Territory public sector. Through a well-managed and flexible organisation, we:

We recognise the dedication and expertise of our staff and support them in balancing professional and personal priorities.

• recruit and retain high quality staff; and

s

e alu

V

Under Treasurer

S Ob trate jec gic tiv es

• are committed to high quality output in a safe, supportive workplace.

Directors and staff

Senior Management Group and subcommittees

Organisational structure

Responsible for strategic policy and operational planning, direction, corporate governance arrangements, corporate policies and procedures

Responsible for day-to-day operations, producing outputs to achieve outcomes

Corporate Governance Principles

Corporate Governance Principles We endeavour to consider each of these principles or criteria when making decisions and taking action on a day-to-day basis. • Accountability: Treasury and its employees take responsibility for their decisions and actions. • Transparency: decisions, actions and advice are open to and can withstand scrutiny, necessary to ensure that stakeholders can have confidence in Treasury’s decision-making processes. • Leadership: modelling and fostering behaviour that supports Treasury values, inspires and influences others and shapes organisational culture. • Integrity: actively promote honesty and ethical conduct, by upholding appropriate standards of behaviour. • Equity: fairness and equity in decision making that is also free from bias.

Managing the Organisation: Corporate Governance

37

Management Environment This section discusses the management environment Treasury has developed to ensure it operates in the public interest. Our management environment refers to the principles and values that guide our operations and our people and the committees responsible for decision making. The broad principles by which Treasury operates are reflective of Treasury’s values. These principles and values influence our operations and decision making and shape our corporate and personal behaviours. Maintenance of our management environment is achieved through staff training and awareness as explained in the corporate ethics section below. In this management environment section, you will be introduced to the individuals who comprise Treasury’s Senior Management Group (SMG). This group is responsible for making decisions about Treasury’s operations and internal processes. Details are provided on areas of responsibility, experience and qualifications, with achievements of the six SMG subcommittees reported.

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Annual Report 2006-07

As shown in figure 2, which depicts Treasury’s governance structure, SMG is responsible for decision making and policy setting, while managers and staff through the organisational structure are responsible for the day-to-day operations of Treasury to produce outputs. Treasury’s values govern all our structures and decisions, describing the personal behaviours we expect staff to demonstrate at all times. Treasury’s values direct our corporate governance principles, which describe how we expect management to go about making decisions

The binding nature of the Code of Conduct is explained to all new staff at induction programs and through Treasury’s Induction Manual. Treasury’s Performance Development Framework also clearly articulates Treasury’s expectation that all staff demonstrate behaviours which support Treasury values. Specific Treasury policies have been developed to guide employees in ethical issues such as engaging in outside employment, harassment in the workplace, addressing grievances and recognising and managing conflicts of interest.

Corporate Values

A key strategy in maintaining ethical standards is training staff in anti-discrimination, harassment, Indigenous and cross-cultural awareness. Treasury provides these courses on an ongoing basis, throughout the year, including refresher training. During 2006-07 anti-discrimination and cross-cultural awareness courses were held for staff.

Treasury’s values place expectations on how staff should behave, perform their duties and interact in the workplace. These values, outlined in the Corporate Statement are incorporated into Treasury’s core competencies matrix and Performance Development Framework, both of which are used to conduct regular staff performance reviews. Our values also articulate what stakeholders can expect from the organisation and its staff.

Corporate Ethics Treasury’s values are underpinned by the Northern Territory Public Sector (NTPS) Principles and Code of Conduct, which guide staff on a range of moral and ethical issues they may face during their employment in the NTPS. Agreement to abide by the Code of Conduct is a condition of employment and applies to all employees.

Treasury’s conflict of interest policy was reviewed during 2006-07 with a focus on streamlining internal processes for managing conflicts of interest, and raising staff awareness of their personal responsibilities in relation to conflicts of interest. In 2007-08, planned activity in this area includes information sessions for staff and managers and trialling revised conflict of interest declaration processes.

Governance Structure The Under Treasurer, Jennifer Prince, sets Treasury’s direction in response to Territory Government priorities and statutory responsibilities. She is supported by the Senior Management Group (SMG), Treasury Directors and several SMG subcommittees. SMG comprises the Under Treasurer, Deputy Under Treasurer, Assistant Under Treasurers and Executive Director Revenue, and is representative of all output groups. SMG focuses on strategic policy direction for the organisation, managing Treasury’s performance and improving management and business practices. The main role of SMG is corporate governance and developing Treasury’s corporate capabilities, such as people, systems and environment. SMG also determines operational policy and strategies to address strategic priorities, manage risks and improve organisational effectiveness. SMG usually meets fortnightly, though this can vary at Budget time. For administrative efficiency, SMG also sits, in effect, as the risk and audit, human resource management and information management subcommittees, previously separate to SMG.

Treasury’s directors are responsible for managing the day-to-day operations of business units and are accountable to their respective SMG members (see Organisation Chart at Appendix 3).

Under Treasurer Jennifer Prince has been Under Treasurer since 2002, following five years as Deputy Under Treasurer. As well as being the chief executive of Treasury, Jennifer is chair of the Treasury Corporation Board and is a member of the Charles Darwin University Council and Legislative Assembly Members’ Superannuation Trust. She also has responsibilities in a range of high level interagency committees including the Executive Remuneration Review Panel and the Capital Works Review Subcommittee. Jennifer joined the Territory public service in 1979, originally in the Department of Health, before transferring to Treasury in 1985. Jennifer’s experience relates to health policy issues and hospital management, and intergovernmental financial and budget policy matters. The Under Treasurer reports to the Treasurer.

Senior Executives Peter Caldwell is the Deputy Under Treasurer (Commercial and Economic). Peter has high level responsibilities for commercial and economic policy issues, and is directly involved in energy policy issues for the Territory. Peter has been Deputy Under Treasurer since 2003, after rejoining Treasury in 1992 as Principal Adviser. He has more than 40 years experience in a range of Territory and Australian government departments in economic, resources, trade and capital policy areas at senior management levels. Peter holds a Bachelor of Arts (with Honours in Economics) from the University of New England and was honoured with a Public Service Medal in 2006 for outstanding public service and contribution to the strategic development of the Northern Territory economy. Jodie Kirkman is Assistant Under Treasurer (Budgets and Finance), responsible for the Territory’s budget management and financial reporting at the whole of government level. Jodie was appointed in May 2007, after holding Director positions from 1999 and joining Treasury as a graduate in 1992. Her previous experience has primarily been in budgeting and financial management roles within the Northern Territory Government. She has a Bachelor of Business (Accounting) from Northern Territory University and is a Certified Practising Accountant.

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39

Tony Stubbin is Assistant Under Treasurer (Economic) responsible for economic, social and intergovernmental financial issues. He also represents Treasury on a range of intergovernmental and whole of government committees. Tony has been Assistant Under Treasurer since 2003, after joining Treasury in 1992. He has more than 20 years experience in a range of Territory, ACT and Australian government departments in economic policy and statistics. Tony has a Bachelor of Arts (Economics) from the University of Wollongong. Craig Vukman is Executive Director Revenue, Commissioner of Taxes and Mineral Royalty Secretary. Craig’s responsibilities include the administration of the Territory’s tax and royalty regimes and developing associated policy. Craig was appointed Senior Director Revenue in March 2002 and Commissioner of Taxes from 1 October 2004 after joining Treasury in July 1998 as Director Revenue Development and Assistant Commissioner. He previously worked in the Western Australian Department of Treasury and Finance in various positions within the Office of State Revenue and other areas. Craig has a Bachelor of Business (Accounting) from Edith Cowan University and is a Certified Practising Accountant.

Catherine Wauchope is Assistant Under Treasurer (Corporate and Superannuation). Catherine is responsible for corporate and executive services, ministerial liaison, corporate communications and publications, as well as high level management of the Northern Territory Superannuation Office. Catherine held positions at the director level, from 1998, in the financial management and public finance areas before appointment as Director Executive Support and Coordination in June 1999. The role has since expanded significantly to Assistant Under Treasurer level. Catherine joined Treasury in 1993 with a Bachelor of Economics from Flinders University, following earlier public sector roles. She also has a Master of Public Policy.

Corporate Governance Committees Six standing committees support the Senior Management Group (SMG) in carrying out its responsibilities in providing leadership on key issues affecting the organisation. These committees operate in the areas of risk and audit, human resource management policy, professional development, fiscal strategy, information management and occupational health and safety. Membership of each committee is reported in Appendix 4, with the risk and audit, human resource management policy and information management committees comprising all SMG members and relevant corporate services managers. SMG considers reports and briefings on each of the areas below and provides direction and approval of corporate policy or organisational projects. Each committee’s role, performance in 2006-07 and priorities in 2007-08 are outlined in Table 9.

Treasury’s Senior Management Group: (L-R) Tony Stubbin, Craig Vukman, Jennifer Prince, Peter Caldwell, Catherine Wauchope (inset: Jodie Kirkman).

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Annual Report 2006-07

Table 9: Corporate Governance Committees Committee

Role

2006-07 Performance

2007-08 Priorities

Fiscal Strategy

Development of strategic policy advice on the Territory’s fiscal, budgetary and economic position and monitor performance against the Government’s fiscal objectives.

Developed and monitored Increase the focus on accrual the Territory’s fiscal strategy, targets for whole of government which guided development of outcomes. the 2006-07 Mid-Year Report and the 2007-08 Budget. The outcome was reported in the 2005-06 Treasurer’s Annual Financial Report.

Risk and Audit

Oversee internal audit program, risk management and compliance with legislation.

Treasury’s Risk Register and internal audit plan updated for 2006-07.

Update Treasury’s Risk Register. Determined and implement internal audit plan for 2007‑08.

Refined conflict of interest policy and procedures.

Finalise conflict of interest policy and procedures. Business Continuity Plan – finalise and test; develop sub-plans. Monitor effectiveness of policies, identify priority areas and consider policy implications for Treasury.

Human Resource Provide strategic direction Management in the development and implementation of human resource management planning and policy in Treasury.

Approved various human resource policies and procedures, including flexible work practices, probation policy, and Manager’s Toolkit.

Professional Development

Responsible for Treasury’s study assistance policy including consideration of all applications for study assistance and professional development.

The committee met twice and Continue emphasis on approved 34 study assistance professional development applications in 2006-07. including sponsored study, tailored training and professional More details on the association activities. professional development of staff are covered in the Treasury People section.

Information Management

Provide advice on the development, management and use of Treasury’s information resources and technology.

Commenced review of IT and business application services in Treasury.

More details on achievements are reported in the Treasury People section.

Make structural changes to achieve efficiencies and prepare for full information audits.

Reviewed and implemented changes to Treasury’s information management security arrangements.

Continue regular meetings and Occupational Oversee and set direction for Committee met three times. Health and Safety occupational health and safety Achievements are reported in training as required. activities. the Treasury People section.

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Risk Management

Managing and Mitigating Risk

Considering potential risks and how to address them is an integral part of all Treasury’s activities and decision making.

Treasury manages its risk through understanding its functions and potential areas of exposure, implementing appropriate strategies to address these areas, and monitoring the progress and effectiveness of those strategies.

The Australian and New Zealand Standard on Risk Management AS/NZS 4360:2004 has been used as the framework for Treasury’s risk management process and can be applied at all levels and for all activities in the organisation. The emphasis is on proactively thinking about and managing risks in all work areas, rather than reacting to risks as they emerge.

The Risk and Audit Committee is responsible for overseeing internal review and quality assurance relating to financial management, risk management and fraud control, and considering how these can potentially impact on Treasury. The committee oversees the examination of priority risk areas and recommends review and remedial actions to the Under Treasurer.

Risk Environment

The process of identifying organisational risks involves reviewing individual business unit operations and considering what elements of their functions generate risks. These risks are categorised according to the consequence or effect on business if the risk was to eventuate (for example, extreme, high, medium, low) and the likelihood of the risk occurring (for example, almost certain, moderate, rare).

Risk Management Framework

Treasury operates in an environment where the main risks at an organisational level are: • external – failure to comply with processes, rules, regulations or laws, the effect of which could impact negatively on Treasury’s reputation or on that of the Treasurer and the Government; and • internal – the risk of not being able to recruit and retain appropriately qualified staff, or continue to maintain capability, the effect of which could impede Treasury’s ability to pursue its strategic objectives. There are also shorter term risks at the more operational or project-specific level. Specific strategies are being developed to address these and other risks.

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Annual Report 2006-07

Business unit directors and their SMG members review the functions of their areas every year, identify the elements of risk and discuss strategies and methods for limiting those risks. Treasury’s Risk Register and internal audit program is developed as a result of these discussions. The Auditor‑General also has a formal audit program that covers, in detail, all Treasury’s significant financial systems and accountabilities in the areas of the Territory Budget, Territory revenue, Treasury Corporation’s borrowings and investments and the Territory’s superannuation funds. Treasury’s Risk Register, internal audit plan and the Auditor‑General’s formal audit program are considered by the Risk and Audit Committee, to formulate Treasury’s annual audit program for the coming year.

Monitoring Risk During the year, several audits and reviews were undertaken as part of Treasury’s internal audit program. They are categorised as internal and external, where internal refers to reviews or audits instigated by Treasury, and external refers to audits programmed by the Auditor-General. Table 10 summarises all reviews and audits undertaken in 2006-07. Table 10: Audits and Reviews Area

Audit/Review

Audit Outcome/Review Recommendations

Northern Territory Treasury Corporation

Audit – final 2005-06 financial statements

Unqualified audit opinion issued. No significant matters were identified.

Audit – interim 2006-07 financial statements

Interim audit conducted to assist with end of year audit and to address control and compliance requirements. An unqualified audit opinion was issued and no significant matters were identified.

Financial Management Group

Audit – whole of government budget and reporting system (Apex)

The audit confirmed that the system and internal controls in place could be relied upon to provide reasonable assurance that the system would produce reliable reports with respect to the 2006‑07 Treasurer’s Annual Financial Statements.

Audit – Treasurer’s Annual Financial Statements – final 2005‑06

The audits found that the financial statements were presented fairly in accordance with the Financial Management Act and the Fiscal Integrity and Transparency Act. However, the Auditor‑General issued a qualified audit opinion in relation to noncompliance with Australian Accounting Standards (AAS). This qualification has no reflection on the accuracy of the numbers, rather, it informs the reader that the external reporting standards used by the Northern Territory do not conform to AAS, but do conform to the Territory’s adopted standard, the Government Finance Statistics.

External

Assessment of the new AAS on harmonisation of whole of government reporting is identified as a future priority for the Financial Management Group. This will encompass a staged implementation of the new reporting format for budget and outcome reporting. Audit – Treasurer’s Annual Financial Statements – interim 2006‑07

No major issues arose from the interim audit.

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43

Table 10: Audits and Reviews (continued) Area

Audit/Review

Audit Outcome/Review Recommendations

External (continued) Territory Revenue Office

Audit – taxes, royalties and tax-related subsidy schemes

The audit found that reasonable assurance can be given that all revenue due to the Northern Territory from taxes and royalties is being received into the Public Account and, if this is not the case, that appropriate recovery action is pursued; and taxrelated subsidy schemes are being paid correctly.

Superannuation Office

Audit – end of financial year reports – Northern Territory Government and Public Authorities’ Superannuation Scheme (NTGPASS), Legislative Assembly Members’ Superannuation (LAMS) Trust and the Police Supplementary Benefit Scheme (PSBS)

Unqualified audit opinions were issued for the financial statements of each scheme.

Review – Superannuation Office operating standards

No issues arose from audits which assessed whether the NTGPASS, LAMS Trust and PSBS schemes were administered in compliance with the Superannuation Industry Supervision Act.

Treasury Services Audit – Territory’s 2005-06 Natural Disaster Relief and Recovery Arrangements claim for assistance from the Australian Government

The audit found an overstatement of expenditure made by one agency. The amount was repaid to the Australian Government, and Treasury has implemented revised procedures and agency reporting requirements to ensure verification of future claims is easier and more accurate.

Whole of Treasury Audit – Agency Compliance Audit 2007

The audit found internal audits, scheduled or in the annual plan, were not being performed in a timely manner. It was recommended that the internal audit program be reviewed and adhered to.

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Annual Report 2006-07

Table 10: Audits and Reviews (continued) Area

Audit/Review

Audit Outcome/Review Recommendations

Internal Whole of Treasury Review – Treasury risk register

Treasury’s risk register is reviewed at least six‑monthly by SMG. Action for 2007-08 includes researching and considering methods of reporting risks at project or operational level, in addition to the strategic focus on risk reporting that presently occurs.

Territory Revenue Office

One document prepared for taxpayers was found to contain outdated information. The matter was subsequently resolved.

Review – internal review of taxpayer objections process

Policies and procedures were found to be appropriate, meeting legislative requirements and specified service standards. Response times for objections met published service standards. Northern Territory Treasury Corporation

Audit − six-monthly financial report; annual audit of the Corporation’s controls; half-yearly compliance report; six-monthly audit of Central Holding Authority investments

Treasury Corporation, as the Territory’s central financing authority, manages the Territory’s borrowing program. As part of its corporate governance and risk management framework, it engages private audit firms to conduct regular audits. The auditors identified no matters of significance in their reports to the Under Treasurer and the Corporation’s Advisory Board.

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Other Corporate Governance Matters This section covers other corporate governance matters on which Treasury reports as part of its commitment to accountability and transparency principles. In this section, information is provided on Treasury’s planning framework, communication policies and processes used to achieve effective internal and external communication, information management and Information Act reporting. Information is also provided on environmental management and community sponsorship as part of reporting on corporate social responsibility.

Corporate Planning Process Every year the Under Treasurer and Senior Management Group (SMG) outline Treasury’s Corporate Statement which sets Treasury’s strategic objectives or goals. These goals guide the direction of Treasury’s core business areas in the delivery of government outcomes.

As part of the process, business unit plans are developed annually according to strategic priorities identified for the coming year, and are aligned with the Corporate Statement. The business unit plans are designed to pursue the strategic goals set out in the Corporate Statement and may need to be adapted throughout the year in response to emerging issues and risks. Business unit plans are used to determine internal budget allocations and to direct individual work plans, developed between employees and their managers as part of the Performance Development Framework. Linking business plans to individual employee work plans ensures all Treasury employees know how their work contributes to Treasury’s business objectives and strategic goals.

Communication Corporate communication is an integral part of an effective corporate governance framework, ensuring that organisational messages, priorities and performance are communicated to stakeholders both internal and external to the organisation. Treasury has a number of communication processes, outlined below. Internal Treasury is a small organisation, where all staff are located in one building. This enables communications to be more direct, with the key methods for sharing corporate information being Treasury’s intranet site ‘InSite’, CEO emails to staff on important organisational issues, presentations to staff on major Treasury projects, or through SMG members briefing directors after SMG meetings or in response to specific issues or events.

Figure 3 outlines Treasury’s key corporate planning documents and shows the connection between corporate planning and individual workplace plans. Figure 3: Treasury’s Planning Process

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Annual Report 2006-07

Strategic Priorities − next 12 months

Identified by SMG at the start of the financial year.

Business Plans − next 12 months Business units identify key goals and outcomes to achieve organisational priorities.

Completed by business units at the start of the financial year.

Individual Workplace Plans − next 6 months Identifies for individuals their work and how it will contribute to the business unit and the organisation as a whole. Each staff member identifies the key work tasks and projects they will complete to assist the business unit in achieving desired outcomes.

Completed by managers and staff on a six-monthly basis as part of the Performance Development Framework.

InSite is the primary method of keeping staff continually updated on the latest developments in Treasury. The site is maintained by the Information Management and Systems Unit and informs staff of key corporate events, presentations, positions vacant, new or updated policies or procedures and any other general announcements affecting staff. During 2006-07, Treasury began trialling Microsoft SharePoint to explore new ways to collaborate on issues and disseminate information electronically within the agency. While not without its challenges, the trial was successful and Treasury will move to a production installation of SharePoint and develop greater use of the product in 2007-08. External Treasury has extranet and internet sites that are used to keep external stakeholders informed of various changes relating to financial management, taxation or economic issues. In addition Treasury prepares various guidelines, circulars and publications to keep external stakeholders informed of legislative, policy or procedural changes. Treasury’s methods of communicating externally include: Internet site – publicly accessible, providing information on all Treasury functions, publications and contacts. Extranet site – accessible by Territory public sector agencies, provides information on legislation and processes of government where Treasury has primary responsibility.

Treasury Circulars – provide whole of government advice to Territory public sector agencies on financial management processes, such as budget development and end of year financial reporting. Commissioner’s Guidelines – provide information to taxpayers on Territory tax legislation and processes. External stakeholders are able to subscribe to publicly released publications, reports and documents through Treasury’s Publication Management System. The system emails subscribers as soon as new content of interest becomes available and provides direct access via the internet.

Information Management Treasury continues to develop best practice information management solutions to ensure the integrity of its business information is protected through appropriate internal systems and controls. Treasury’s ultimate goal is compliance with the Code of Practice for Information Security Management (AS/NZS17799:2006). This is a medium-term strategic project with efforts to date including the development of a Treasury specific information security policy which covers issues such as physical and environmental security, business continuity management and access control. There will be significant work during 2007-08 to finalise the high level components of this project, including the development of an Information Technology (IT) Strategic Plan, and to implement these within the agency.

Changes in 2006-07 included moving Treasury to a Microsoft (MS) Exchange-based email and scheduling solution, allowing greater integration with the MS Office Suite and online collaboration through MS SharePoint. From a records and information management perspective, considerable work has been done to align records security with the requirements of the Information Act through caveats and access controls. Records and Archives Management The Information Act established records management standards for the Territory Government and requires public sector organisations to implement the necessary practices and procedures for managing their records. This is managed by the Northern Territory Archives Service. Treasury complies with the preliminary requirements established by Archives and has reported data to demonstrate its compliance in 2006-07. Achievements in 2006-07 include: • progressing a review of all existing records management categories and development of disposal schedules for all Treasury-specific records; and • Archives approved a retention and disposal schedule for the Northern Territory Superannuation Office in October 2006, with schedules for four superannuation boards approved in February 2007.

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47

A review of Tower Records and Information Management (TRIM) security commenced during 2006-07 to improve Treasury’s compliance with the Records Security and Access records management standard. As a result, security caveats were updated to reflect the exemptions provided under the Information Act. This simplifies the process of classifying information for Treasury staff and protects information requiring restricted access (such as the personal and business information of Territorians). These will be expanded further to create a definitive set of caveat descriptions to meet Treasury’s business and records management needs.

Applications Under the Information Act During 2006-07, Treasury processed eight requests to access personal information and one request to change personal information. No requests were received to access Government information. Seven of the requests received related to the business of Racing, Gaming and Licensing, a division of Treasury until November 2006, when it transferred to the Department of Justice. The status of requests is detailed in Table 11. Table 11: Information Act Requests in 2006-07 Applications Carried Over from 2005-06

0

Applications to Access Personal Information

9

– Applications to Access Personal Information for Racing, Gaming and Licensing

7

Applications to Access Government Information

0

Requests Withdrawn

0

Responses Completed Within 30 Day Period

9

Responses Completed, Exceeding 30 Day Period

0

Applications on Hand as at 30 June 2007

0

Website Links The Treasury website http://www.nt.gov.au/ntt/info_act/index.shtml assists members of the public who are considering applying to access information held by Treasury.

Contact Treasury’s Information Officer contact details are: Information Officer Northern Territory Treasury GPO Box 1974 DARWIN NT 0801 Telephone: +61 8 8999 6700 Facsimile: +61 8 8999 7150 Email: [email protected] website http://www.nt.gov.au/ntt/info_ act/index.shtml

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Annual Report 2006-07

This site presents Treasury’s policies and procedures, and the forms required to lodge a request to access Government or personal information. Also on the website are links to: • the Information Act and Regulations; • a public register of Government information held by Treasury, which describes the kinds of Government information usually held. The register will help an applicant decide if Treasury is likely to have the information they seek and specifies if it is available outside the formal process of lodging a request under the Information Act; • Northern Territory Treasury’s Annual Reports and other published information; • Northern Territory Treasury’s Organisational Chart; and • Information Commissioner’s website.

Corporate Social Responsibility Environmental Reporting This section reports on Treasury’s energy usage in relation to the Northern Territory Government Energy Smart Buildings Policy; as well as providing details on water and paper usage during 2006-07. The Energy Smart Buildings Policy aims to achieve and maintain best practice energy management in Government occupied buildings. The outcome of the policy is to reduce greenhouse gas emissions and save operating expenditure. Through efficiency targets, each agency’s performance is monitored and reported upon annually, as part of efforts to achieve a targeted 10 per cent reduction in energy use per square metre of floor area by 2011. Annual energy targets are identified in Table 12.

Treasury Accommodation The information on Treasury’s achievements in relation to electricity, water and paper use during 2006-07 is disaggregated by the two buildings that Treasury occupied for the majority of 2006-07, being Cavenagh House and Enterprise House. The presentation of this information varies from last year’s annual report, in which achievements were reported as a combined Treasury total. The separation of data by location provides for greater comparison of performance over the years. It should be noted that from 2007‑08, Treasury will only report on Cavenagh House, as all Treasury staff are now located in the same building, following the transfer of the Superannuation Office from Enterprise House to Cavenagh House in May 2007, and the transfer of the Racing, Gaming and Licensing (RGL) group to the Department of Justice in November 2006.

Table 12: Annual Energy Targets 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 Target1 (%)

1

1.5

3

5.5

8

10

1. Per cent reduction from 2004-05.

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49

2006-07 Achievements Treasury’s achievements in 2006-07 include: • 38 per cent reduction in electricity use per square metre of office space; • reduced greenhouse gas emissions; • reduction in water use; and • 46 per cent lower paper use. Figure 4 shows that Cavenagh House electricity use per square metre reduced by 18 per cent from 303 megajoules in 2005-06, to 249 megajoules in 2006-07, while electricity use per square metre in Enterprise House reduced by 6 per cent from 973 megajoules in 2005-06 to 910 megajoules in 2006‑07. Energy saving activities undertaken in 2006‑07 included upgrading computers, installing business hours timers as part of lighting initiatives and promoting good energy management practices to staff, such as turning off lights and computers at the end of the day. The airconditioning plant was also upgraded by the building owner.

Since monitoring of electricity use commenced in 2004-05, Treasury has reported a 23 per cent reduction for Cavenagh House and 7 per cent reduction for Enterprise House. As part of whole of government annual reporting on electricity use, Treasury’s 38 per cent reduction in energy use per square metre of floor area will be reported in the annual Building Energy and Greenhouse Report prepared by the Department of Planning and Infrastructure. Tables 13 and 14 provide further details of electricity and water use for Cavenagh House and Enterprise House. Information for each location is presented separately as the calculations for electricity usage differ, with Cavenagh House’s electricity usage figures including light, power and after hours airconditioning usage, while Enterprise House includes light, power and business hours airconditioning.

Figure 4: Electricity Use per Square Metre of Office Space MJ 1000 800 600 400 200 0

2004-05

2005-06 Cavenagh House

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Annual Report 2006-07

2006-07 Enterprise House

The inclusion of business hours airconditioning in Enterprise House’s figures accounts for the higher electricity used per square metre of office space in 2006‑07 (910 megajoules for Enterprise House compared to 249 megajoules for Cavenagh House). During the year, greenhouse gas emissions reduced by 8 per cent in Cavenagh House and 67 per cent in Enterprise House. The large decrease in Enterprise House reflects a shorter reporting period, with the figure of 174 greenhouse gas tonnes, reflecting emissions between July and November 2006. From November 2006, Enterprise House became the responsibility of the Department of Justice, and is now included in its environmental reporting.

Table 13: Cavenagh House Electricity and Water Use Description FTE

Full-time equivalent staff1

Electricity Light and power Variation from previous year

Unit

2006-07 2005-06 2004-05

 

161

174

187

GJ

921

1 076

1 160

%

-14

-7

GJ

5.7

6.2

%

-7

0

MJ

249

303

 

Use per FTE

 

Variation from previous year

 

Use per square metre of office space

 

Variation from previous year

%

-18

-7

 

Total associated greenhouse GHG gas emissions tonnes

217

235

Variation from previous year

%

-8

-2

Water

Total use

kL

4 674

5 482

 

Variation from previous year

%

-15

-8

 

Use per FTE

kL

29

32

 

Variation from previous year

%

-8

-1

Key kL= kilolitre GJ = gigajoule MJ = megajoule

6.2

GHG = greenhouse gas emissions 1 MJ = 1000 kilojoules

327

1000 MJ = 1 GJ

239

5 948 32

1. FTE figure excludes Superannuation and RGL staff as they are included in the Enterprise House figure. Some figures may not add up due to rounding.

Table 14: Enterprise House Electricity and Water Use Description FTE

Full-time equivalent staff

Electricity Light, power and airconditioning Variation from previous year

Unit

2006-07 2005-06 2004-05

%

241

72.92

77.22

GJ

7483

2 399

2 424

%

-69

-1

GJ

31

33

%

-5

5

MJ

910

973

%

-6

-1

 

Use per FTE

 

Variation from previous year

 

Use per square metre of office space

 

Variation from previous year

 

Total associated greenhouse GHG gas emissions tonnes

 

Variation from previous year

Water

3

174

525

%

-67

5

Total use

kL

5593

1 493

 

Variation from previous year

%

-63

-3

 

Use per FTE

kL

23

20

 

Variation from previous year

%

14

3

31 983

499

1 538 20

1. FTE figure represents Superannuation Office staff only. 2. FTE figures for 2004-05 and 2005-06 represent RGL and Superannuation staff. 3. Figure for period July 2006 to October 2006 only. From November 2006, the Department of Justice assumed responsibility for the building. Some figures may not add due to rounding.

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Figure 5 shows that over the last three years there have been changes in water usage, with Cavenagh House reducing its use of water by 8 per cent per FTE staff member, while Enterprise House increased its usage by 14 per cent per FTE from the previous year. Table 15 provides data on paper usage in Treasury. There was a reduction in the paper used between 2005-06 and 2006‑07 of 46 per cent. During this time Treasury staff have been encouraged to make more use of online rather than printed documents and are more aware of the need to conserve paper and as a consequence are printing double-sided. This will continue in 2007‑08 with greater use of Microsoft SharePoint for online collaboration within Treasury. Table 15: Paper Usage  Unit A4 paper

Reams1

FTE Use of A4 paper per FTE

Reams

Waste for recycling

Bins

2006-07

2005-06

Variation

4 452

8 286

-3 834

185

247

-62

24.06

33.56

-9.5

212

104

108

1. Ream = 500 sheets

Fundraising for Community Organisations The Treasury Social Club supports and coordinates a number of charitable and social events each year. The events are an important opportunity for staff to gather socially and to contribute toward national charity appeals and local community fundraising events. In 2006-07, the social club raised over $3000 for various charities including: • Cancer Council NT • SIDS and Kids NT • Leukaemia Foundation

Future Priorities • Staff training in maintaining ethical standards through anti-discrimination, harassment, Indigenous and cross-cultural awareness training sessions. • Finalise implementation of the conflict of interest policy. • Update Treasury’s Risk Register and implement the internal audit plan for 2007-08. • Continue with the project to achieve compliance with the Code of Practice for Information Security Management. • Continue staff awareness programs to promote efficient and wise use of resources such as paper, electricity and water.

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Annual Report 2006-07

Figure 5: Water Use per FTE Kilolitre 40 30 20 10 0

2004-05 2005-06 2006-07 Cavenagh House Enterprise House

Managing the Organisation: Treasury People Main Results Staffing Strategic Human Resource Issues Training and Development Employment Programs Equal Employment Opportunity (EEO) Industrial Relations Occupational Health and Safety Workers Compensation Employee Wellness Reporting Against Employment Instructions Future Priorities

54 54 57 59 62 64 65 65 65 66 67 70

Treasury People

Main Results • As at 30 June 2007, 185 staff were employed on a full-time equivalent basis in Treasury and Treasury Corporation. • 61 per cent of Treasury’s workforce were women, 3 per cent were Indigenous and 4 per cent were employed on a part-time basis. • 31 people or 17 per cent of Treasury staff were engaged in Treasury employment entry programs, including 20 graduates. • Strategic human resource focus remained on developing managerial capabilities and leadership, facilitating professional development for middle and senior managers, and expanding and promoting entry-level programs and career opportunities. • $0.28 million was spent on training and development in 2006-07, with expenditure per employee increasing 22 per cent to $1535. • A second group of staff was sponsored to undertake the Graduate Certificate in Public Governance through Charles Darwin University. • Under Treasury’s OH&S program, 15 staff were trained in risk assessment, 9 as fire wardens and 8 in first aid. • 34 per cent of staff took up the offer of free influenza vaccinations. • All Employment Instructions were satisfied.

Staffing • As at 30 June 2007, Treasury (including Northern Territory Treasury Corporation) employed 185 staff on a full-time equivalent (FTE) basis. All Treasury staff are located in Darwin, with the exception of two staff operating on home-based work arrangements. • Table 16 shows a decrease of 57 staff between 30 June 2006 and 2007. This reflects the 57 FTE staff who transferred to the Department of Justice with the racing, gaming and licensing (RGL) function and related corporate-type staff from Treasury Services. • Over the 26 pays for 2006-07, Treasury averaged 214 FTEs. In that time, there were 41 separations (excluding casual employees), a staff turnover rate for the year of 19.2 per cent. Although this figure appears high, it is well below the Northern Territory Public Sector (NTPS) turnover rate of 26 per cent for the same period.

54

Annual Report 2006-07

Table 16: FTE Staff by Gender and Classification as at 30 June Females Designation Trainee

2007 2006

Males Diff

2007 2006

Total Diff

2007 2006

Diff

1

7

-6

2

1

1

3

8

-5

10

4

6

10

3

7

20

7

13

AO1

0

0

0

1

0

1

1

0

1

AO2

3

4

-1

1

3

-2

4

7

-3

AO3

12

18

-6

0

2

-2

12

20

-8

AO4

21

30

-9

6

7

-1

27

37

-10

AO5

19

27

-8

6

13

-7

25

40

-15

AO6

19

17

2

14

22

-8

33

39

-6

AO7

11

15

-4

4

11

-7

15

26

-11

AO8

6

8

-2

16

17

-1

22

25

-3

EO1

3

3

0

2

4

-2

5

7

-2

ECO1

3

5

-2

4

9

-5

7

14

-7

ECO2

3

4

-1

3

1

2

6

5

1

ECO3

2

1

1

2

2

0

4

3

1

ECO4

0

0

0

1

1

0

1

1

0

ECO6

1

1

0

0

0

0

1

1

0

113

145

-32

72

97

-25

185

242

-57

Graduate

Total

Note: Figures may not add due to rounding to the nearest full-time equivalent. These figures do not include staff on leave without pay or staff who were employed, but unpaid (such as casuals), as at 30 June. Source: Personnel Integrated Payroll System (PIPS)

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55

Figure 6 compares gender for each individual classification level. Females occupy the majority of AO3 to AO5 positions, which include administrative and secretarial roles as well as recent graduates. The gender balance is fairly even in the middle and senior management levels from AO6 and above. As shown in Figure 7, over the ten years spanning 1997 to 2007, Treasury’s gender balance has remained steady at around the ratio of 6 females to every 4 males.

Of the 185 staff employed by Treasury as at 30 June 2007, 61 per cent of the workforce (113 staff) were women. The high proportion of females in Treasury is slightly lower than the NTPS proportion of 61.9 per cent of the workforce. The high female representation in the administrative stream (see Figure 6), especially AO3 to AO5 levels, reflects the trend across the NTPS. As at 30 June 2007, the proportion of executive women in Treasury was 49 per cent, well above the NTPS 2007 figure of 36 per cent.

Figure 6: Treasury Staff by Classification and Gender as at 30 June 2007

Figure 7: Overall 10 Year Gender Comparison 160

25

Male Female

20 15 10

Male

140 Number of Staff

Number of Staff

As illustrated in Figure 8, Treasury has a relatively young staff profile, with an average age of 37 years. Treasury’s young age is mostly attributed to its graduate, cadetship and apprenticeship programs which, as at 30 June 2007, represented 17 per cent of Treasury total staff. Although the majority of these are full-time graduate trainees (over 20 years of age), those in the 16- to 20-year-old age group are employed under Treasury’s various entry-level employment programs such as the National Indigenous Cadetship Project (NICP), Work Integrated Learning Scheme in Economics and vacation employment (work placements during university breaks), and apprentices employed under the New Apprenticeship Program (NAP).

Female

120 100 80 60 40

5

20 0

1997

1999

2001

2003

2005

2007

N

AP FO IT AO 1 AO 2 AO 3 AO 4 AO 5 AO 6 AO 7 AO 8 EO EO 1 1C EO 2 EO C 3C EO 4C EO 6C

0

Figure 8: Treasury Staff Age Profile as at 30 June 2007

10

Male Female

20 15 10 5

Male Female

9 Number of Staff

Number of Staff

25

Figure 9: Staff with Over 10 Years of Service in Treasury as at 30 June 2007

8 7 6 5 4 3 2 1

0

56

16-20 21-25 26-30 31-35 36-40 41-4546-50 51-55 56-60 61-65 66-70 Years of Age

Annual Report 2006-07

0

10-15

15-20

20-25 25-30 30-35 Years of Service

35-40

40-45

Figure 9 shows that, of Treasury’s 185 FTE staff, 14 per cent or 26 staff had completed more than 10 years service with the agency as at 30 June 2007, with 10 staff achieving impressive milestones of between 20 and 44 years of service. Treasury recognises the significant roles these staff have played in the agency, and their contribution to the Northern Territory Government.

Strategic Human Resource Issues During 2006-07, Treasury continued its efforts to be an employer of choice, through a well managed and flexible organisation that promotes the improvement of staff capability, and which values the dedication and expertise of its staff by supporting them in balancing professional and personal priorities.

Developing Managerial Capabilities and Leadership For 2006-07, the focus on enhancing management skills and expertise in the area of people management remained a key strategic priority. Activities in 2006‑07 included: • AO6 to AO8 staff invited to nominate for the Public Sector Management Program; • managers being provided with executive coaching, training courses, and advice and support from Human Resource staff, in recruitment and selection processes, and case management matters such as underperformance and grievance issues; and

The Manager’s Toolkit The Manager’s Toolkit provides a Treasury-specific reference manual for managers that consolidates many sources of information into one comprehensive document and provides links to more detailed information where required. The Toolkit explains the responsibilities of managers as they relate to Treasury policies and procedures and serves as a useful reference guide. Covering key aspects of how organisations operate (such as managing risk, finances, information, equipment, facilities and staff), the Toolkit assists managers with management and supervisory responsibilities.

• development of a Manager’s Toolkit to provide managers with practical assistance in carrying out management duties.

In 2006-07, Treasury focused on the following strategic human resource issues: • developing managerial capabilities and leadership; • promoting and facilitating learning and growth for middle and senior managers through Treasury’s mobility program; and • increasing and promoting career opportunities at entry level.

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57

Mobility In 2006-07, Treasury continued to support leadership development and mobility through the role of the Senior Ministerial Liaison Officer, with three staff completing placements in 2006‑07. The position offers Treasury staff from AO7 to ECO1 level a three- to six-month placement in the Executive area where they contribute to Treasury comments on all Cabinet submissions, contribute to the preparation of Ministerial briefings and are involved in organisational projects such as development of the Territory Budget papers, Estimates Committee briefings, Treasury’s annual report and executive conference.

Promoting Entry Level Programs and Career Opportunities In 2006-07 Treasury participated in a number of public events to promote the various career options available in Treasury and the public sector:

In 2006-07 Treasury also sponsored three awards for Casuarina Senior College’s Year 12 Graduation Awards Ceremony, donating $600 in prizes for excellence in mathematics, accounting and economics. In 2005-06 Treasury developed a half-day forum/mock budget for senior Darwin High School students. Based on the success of the first group in June 2006, Treasury continued the forum in 2006-07 in Darwin and Alice Springs with about 130 students taking part during the year. The forum promotes entry‑level programs in Treasury and government.

Treasury Forum and Mock Budget The Treasury forum is aimed at high school students of economics, accounting, politics and legal studies. It provides them with an opportunity to experience the dilemmas and conundrums of decision making in government, where there are limited resources and the impact on the community is a key consideration. Students take on the role of Budget Cabinet, working together to decide what priorities and projects they would fund with their limited budget. The session concludes with the students ‘handing down’ their budget in a speech to the group. The forum also informs students about employment programs offered by Treasury and wider career options in the public sector.

• the Territory show circuit; • Darwin and Alice Springs Careers Expos; and • Graduate Recruitment Fair at Charles Darwin University.

Students from Kormilda College participating in the 2007 Treasury Forum.

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Annual Report 2006-07

Training and Development The greater part of Treasury staff comprise employees who either have tertiary qualifications or are studying towards them. As a means of attracting and retaining staff, and in order to develop and promote staff, Treasury has developed systems to support and encourage further professional development and continuing education.

Professional Development and Training

Key areas of professional training and development were:

In 2006-07, $0.28 million was spent on professional development and training, through attendance at conferences, seminars and workshops, and assistance with formal study (see Table 17).

• professional conferences and seminars which focused on current issues in areas related to Treasury’s core business, namely accounting, commerce, economics, taxation, superannuation and public policy. This included seminars and one-day workshops with keynote speakers such as Barry Dunphy, of Clayton Utz Brisbane, who presented Advanced Government DecisionMaking. Other courses included the Taxation Institute GST seminar, BIS Shrapnel Business Forecasting Conference and short courses such as FBT 2007, CPA: Strategic Thinking and People Profiling, PS146 Superannuation Training, and Public Policy Program;

Although overall expenditure in 2006-07 was 2.4 per cent less than in the previous year, training and development costs as a percentage of personnel expenditure increased by 0.38 percentage points, as did training expenditure per employee, which increased by 22 per cent to $1535.

• tailored public sector academic courses such as the Public Sector Management Program and the Graduate Certificate in Public Governance; • equity and diversity awareness training, such as Indigenous cultural awareness, and anti-discrimination courses for new employees as well as refresher sessions tailored for managers; and

Table 17: Training and Development Expenditure 2006-07

2005-06

185

242

Total training and development expenditure

$284 021

$291 003

Total personnel expenditure

$15.19M

$19.54M

Training and development costs as a percentage of personnel expenditure

1.87%

1.49%

Training expenditure per employee

$1 535

$1 202

Total employees

• personal and skills development short courses, including project management, business writing and writing Ministerial briefings, information technology systems and computer training, and seminars with a health and lifestyle focus.

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Public Sector Management Program

Graduate Certificate in Public Governance

Treasury participation in the Public Sector Management Program (PSMP) continued in 2006-07 with three staff commencing the September 2006 program. Another two staff were sponsored for the fast track program commencing in August 2007, and a third will begin in November 2007.

The Graduate Certificate in Public Governance has been a means of enhancing Treasury’s already well respected graduate Finance Officer in Training (FOIT) program. In 2005, Charles Darwin University (CDU) recognised prior learning from the training and workshop component of the FOIT program and on-the-job work placements completed by graduates. That learning was credited as 20 ‘unspecified’ credit points towards a Graduate Certificate/Diploma or Masters in Public Governance, with ex‑FOITs only needing to undertake two further units: Policy Systems, Design and Analysis; and Financial and Economic Management, to complete the Graduate Certificate.

In 2007 another Treasury employee was able to graduate from the PSMP, following completion of her work‑based project. The project dealt with graduate retention issues in Treasury and recommended strategies to assist in improving graduates’ length of stay and enhancing the value of the current graduate program.

In 2006-07, 10 staff were sponsored to undertake the Graduate Certificate. This follows the first group of 20 ex‑FOITs that Treasury sponsored in 2005-06, when the program was first awarded recognition. All obtained a grade of distinction. Participants who successfully complete the program will be eligible to graduate with a Graduate Certificate in Public Governance by mid 2008.

60

Annual Report 2006-07

Study Assistance Formal study is strongly supported, with assistance for staff undertaking further study in areas relevant to Treasury’s core business. Study assistance consists of up to 2.5 hours paid study leave per week for staff to either attend lectures, tutorials and exams within working hours, or to study online or by distance learning. In addition, financial assistance is provided as reimbursement of course costs upon successful completion of units (capped at $1500 per unit). During 2006-07, 36 staff (including two NICP cadets) were approved to study, compared with 40 staff in 2005-06. Table 18 and Figure 10 show a decrease in the number of staff receiving assistance and total expenditure. However, at an individual level, there has been an increase in spending per employee in 2006-07 compared to the previous year.

Table 18: Study Fees Reimbursed 2006-07

2005-06

361,2

40

20

31

$40 656

$62 415

$2 033

$2 013

Number of employees receiving assistance Number of employees who applied for reimbursement by 30 June Total expenditure Average reimbursement per employee

1. Includes Racing, Gaming and Licensing staff who applied for study assistance prior to their transfer to the Department of Justice. 2. Of the 36 employees, only 20 submitted and received study reimbursements as at 30 June 2007, totalling $40 656. This is primarily due to some institutions issuing students’ results later, such that not all applications for reimbursement were received or processed before the end of the financial year. These reimbursements will be reflected in the 2007-08 Annual Report.

Treasury’s study assistance policy enabled staff to undertake studies towards the following qualifications: • Diploma of Business (Human Resources);

Professional Membership Assistance Treasury assisted staff by reimbursing 50 per cent of their membership fees for the following organisations:

• Bachelor Degrees (Business, Information Technology);

• CPA Australia;

• Certified Practising Accountant (CPA);

• Australian Institute of Company Directors;

• Chartered Accountants Program;

• Australian Institute of Management;

• Masters (Professional Accounting, Business Administration and Taxation); and

• Taxation Institute of Australia;

• Graduate Diploma (Legal Practice). Two staff members also undertook a Tertiary Enabling Program to develop the skills and knowledge to successfully complete tertiary studies and allow them to meet the minimum entry requirements for most CDU vocational education and training diplomas and bachelor degrees.

• Institute of Chartered Accountants;

• Australian Human Resources Institute; and

In 2006-07, $6295 was provided in professional membership reimbursements to 23 staff (2005‑06: 22) who are required to keep current professional memberships with registered industry bodies as part of their work. This is an increase from $5294 in 2005-06. The increase is mainly due to one employee seeking reimbursement for multiple memberships from the last two financial years. The lower spending for Training and Other Course Fees identified in Figure 10 is largely due to a number of courses being delivered agency‑wide during 2004-05. These courses included cross-cultural and Indigenous awareness training as well as anti-discrimination and harassment refresher courses, and formed part of a rolling schedule of training offered every 18 months. Consequently, these courses were not delivered again until 2007, by which time staffing numbers had decreased significantly since 2005 so the total cost was lower. At an individual level, spending per employee increased from $1317 in 2005 to $1535 in 2007.

• Institute of Public Administration Australia. Figure 10: Professional Development Expenditure as at 30 June $000 400 350 300 250 200 150 100 50 0

Professional Study Assistance Training and Membership (includes HECS) Other Course Fees 2005

2006

Total

2007

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61

Employment Programs As at 30 June 2007, 31 entry-level staff were employed by Treasury under the following programs: • New Apprentice Program (NAP) – 3 staff employed full-time while completing Certificate III; • National Indigenous Cadetship Project (NICP) – 1 student employed while studying business full time at undergraduate level at Charles Darwin University (CDU); • Work Integrated Learning Scholarship (WILS) in Economics – 7 students employed while studying economics full time at undergraduate level at CDU; and • Finance Officer in Training (FOIT) – 20 staff with a tertiary qualification employed full time in Treasury’s graduate training scheme.

Apprentices All agencies are strongly encouraged to participate in the Northern Territory Government’s New Apprenticeship Program (NAP) as host employers of apprentices, who are recruited and centrally managed through the Department of Corporate and Information Services (DCIS). Apprentices are engaged for 12 months and combine study towards a Certificate III, either through Group Training NT or CDU, with full‑time work. As part of on-thejob training during their 12-month contract, apprentices complete two six-month work placements in different areas of Treasury in order to provide them with the opportunity to develop a broad range of skills and knowledge that is not only relevant to their discipline but to the agency and the public sector.

Employment Programs

During 2006-07:

As described earlier in this section, Treasury has a range of employment programs that provide opportunities for participants to experience, first hand, work in Treasury and to learn about career options in the Territory public sector. These programs, particularly the cadetships and vacation employment programs are key elements in Treasury’s long-term strategy to recruit local people, rather than needing to rely on interstate recruits. A summary of achievements during the year is outlined above.

• Treasury employed one business administration apprentice and two information technology apprentices; and

National Indigenous Cadetship Project The National Indigenous Cadetship Project provides financial assistance and work experience to Indigenous students studying towards a degree, for the duration of their tertiary study. Treasury has participated in the program for several years, along with other Northern Territory Government agencies. During 2006-07: • of the three students, two were studying business degrees at CDU – one cadet majoring in management and the other in economics; while the third studied International Business at Flinders University in Adelaide. The two latter cadets subsequently withdrew from the program, in August 2006 and February 2007 respectively, to pursue studies in other fields. The former is on track to complete his degree in 2007; and • all three completed paid work experience placements during university breaks.

• of the eight apprentices employed in 2006, three successfully completed their apprenticeships in February 2007. Two transferred to the Department of Justice with Racing, Gaming and Licensing, and the third has been permanently placed in the Superannuation Office.

Samantha Brittain, business administration apprentice

62

Annual Report 2006-07

Cadetships and Scholarships for CDU Students In March 2007, the Work Integrated Learning Scholarship (WILS) in Economics commenced, replacing the Student Economist Scheme (SES) previously offered by Treasury. The structure of the program remained unchanged with students completing economics studies at CDU receiving scholarship payments and undertaking paid vacation work in Treasury while completing their degree. It is anticipated that in 2008, Treasury will also extend scholarships to students of accounting at CDU. During 2006‑07: • eight students were engaged as cadets under the SES program in 2006, six of whom received financial assistance as well as paid work experience, and two who undertook work placements only; • Treasury employed seven WILS students in 2007, three of whom were previously SES cadets; and • all cadets completed work experience placements in various Treasury business units during university breaks.

Graduate Program

Work Experience

The Finance Officer in Training (FOIT) program employs local and interstate graduates from a variety of disciplines, including accounting, economics and business law. The FOIT program is an important ongoing component of Treasury’s recruitment strategy and succession planning, and aims to fast track high quality graduates to middle and senior management capability.

In addition to cadets and scholarship holders sponsored by Treasury, work experience placements during holiday breaks were also provided to other university students during 2006-07:

During 2006-07: • six of the eight graduates from the 2006 FOIT program were appointed to permanent positions;

• five Northern Territory Government scholarship holders / vacation employees; and • five James Cook University economics students from Queensland. Students were employed for up to two months at the AO1/AO2 level in various Treasury areas.

• 20 graduates commenced the 2007 FOIT program (pictured below). This is by far the largest intake since the commencement of the program in 1998; and • the second Graduate Certificate in Public Governance program was delivered to graduates from the 2006 FOIT program and from previous years, and to other non‑FOITs.

2007 FOITs: back row (L-R): Solomon Gaturu, Sashi Kiran, Adam Harwood, Claire Zhu, Erin Stone, Craig Turner, James McLoughlin, HuiWen Wu, Kama McCarthy, Annie Richmond, Luke Belperio, Wendy Ho; front row (L-R): Anthony Parletta, Christopher Beagley, Kimberlee McKay, Kelly Combe (since withdrawn from program), Tenille Cahill, Ippei Okazaki, Sarah Jones, Joseph Kuhn

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63

Equal Employment Opportunity (EEO)

Indigenous Employment and Career Development

Treasury has a diverse workforce consisting of many highly skilled and qualified staff. Data from the Personnel Integrated Payroll System (PIPS) indicates that 82 per cent of Treasury staff had recorded their EEO details as at 30 June 2007. A Census Week was held in July 2007 to encourage staff to update their contact and next of kin details in PIPS and their EEO details. This forms part of a Government strategy to ensure that equal opportunity data is accurately recorded to assist in workforce planning, and also assists the Government in monitoring Indigenous staff numbers. Table 19 provides details of EEO data entered voluntarily by staff in PIPS.

Treasury continues to implement its Indigenous Employment and Career Development (IECD) strategy. Treasury’s 2004-06 strategy is currently undergoing evaluation and a revised strategy will be prepared in 2007-08. The following are achievements of the strategy during 2006-07. • Indigenous staff are represented on Treasury’s Indigenous Employment and Career Development Committee and the Occupational Health and Safety Committee. Input to policy and decision making is also made through Treasury’s Indigenous Discussion Group. • Indigenous staff have been encouraged and supported in further professional development: – one employee received assistance to undertake a Tertiary Enabling Program, the successful completion of which would allow her to meet the minimum entry requirements for most diploma and bachelor courses at CDU;

– through an entry-level program, one staff member will shortly complete his undergraduate degree; – one staff member commenced the Public Sector Management Program in September 2006; and – a placement was negotiated with the South Australian Department of Treasury and Finance for an employee, as a policy officer, while on leave without pay from the NTPS. Table 20 shows that as at 30 June 2007, seven staff members had self-identified as Aboriginal or Torres Strait Islander (although only six did so through PIPS). This represents a decrease of seven from the 14 reported at 30 June 2006. This occurred because four Indigenous staff transferred to other agencies and others ceased their employment program or contract during 2006‑07.

Table 20: Indigenous Employment as at 30 June Classification Trainees

Table 19: Equal Employment Opportunity Data as at 30 June Aboriginal and Non-English Torres Strait Speaking Islander Background1 EEO Status

2007

2006

1

4

1

3

AO1

Non-English Speaking Background2

Person with Disability

AO2 AO3

1

2007

2006

2007

2006

2007

2006

2007

2006

AO4

Male

2

3

2

5

0

0

2

1

AO5

Female

4

4

5

6

4

3

1

4

AO6

2

2

% total staff

3

3

4

5

2

1

2

2

Total

7

14

1. Identified as being of first generation non-English speaking background, where the first language is not English and neither parent’s first language is English. 2. Identified as second generation non-English speaking, where the first language spoken is not English, but the person was in Australia or came to Australia before the age of five, or at least one parent’s first language is English.

64

Annual Report 2006-07

3

3 1

Industrial Relations

Achievements during 2006-07:

All administrative staff in Treasury are covered by the NTPS 2004‑2007 Certified Agreement, which expired in August 2007 and will be renegotiated in 2007‑08. No industrial disputes were reported during the year, with Treasury’s efforts in 2006-07 focusing on improving human resources practices, management development, and professional development programs.

• training of 15 staff members in risk assessment, enabling these staff to conduct workstation assessments and provide advice to staff as required;

Recognising the need for employees to balance their work and family commitments, a Flexible Work Arrangements Policy was developed in 2006-07. The policy provides a framework for employees and their managers to negotiate arrangements that suit both the individual and the needs of the workplace, providing clarity and equity for those involved.

The value of claims in 2006-07 was 90 per cent lower than in 2005-06, and totalled $18 380. The higher expense in 2005-06 was due to a lump sum payment to one employee.

• OH&S training for 8 managers and supervisors;

The types of injuries for workers compensation claims either lodged or ongoing in 2006-07 were:

• selection and training of 8 first aid officers and 9 fire wardens; and

• falls on the same level – caused by wet or oily internal traffic areas;

• training of 4 staff in hazard identification, assessment and control.

• neck injury as a result of a car collision; and

Workers Compensation Two new workers compensation claims were lodged during 2006-07, bringing total claims to four. During the reporting period, one claim was resolved and two transferred to the Department of Justice with Racing, Gaming and Licensing.

• mental stress – aggravation of depression and anxiety. Table 21 compares 2006‑07 with 2005-06 workers compensation data.

Occupational Health and Safety Treasury’s Occupational Health and Safety (OH&S) Committee, established to examine OH&S issues that may affect Treasury employees, comprises staff ranging from AO3 to senior management levels. It regularly reports to the Senior Management Group. The committee focuses on safe workplaces and systems of work; developing, implementing and monitoring OH&S measures; advocating acceptable and responsible practices by employees and others; and promoting the health and safety ethos.

Table 21: Workers Compensation Claims 2006-07

2005-06

$18 380

$189 300

Claims as at 1 July

2

2

New claims

2

1

Claims resolved

1

1

Claims transferred with Racing, Gaming and Licensing

2

-

Claims as at 30 June

1

2

Number of staff receiving ongoing workers compensation payments

0

0

Total expenditure

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65

Employee Wellness

Table 22: Employee Assistance Program

Employee Assistance Program

Total expenditure for financial year

Treasury’s Employee Assistance Program (EAP) provides an important service to the agency’s employees and forms part of our OH&S commitments. From time to time, staff may be affected by personal, family or work-related issues and the EAP is one way that Treasury supports staff. The EAP offers up to five free confidential counselling sessions for employees and their family members, with either of Treasury’s EAP providers. EAP also provides coaching for supervisors and managers in dealing with difficult and sensitive staff issues in the workplace, by providing guidance and strategies, as well as mediation and dispute resolution services. In 2006-07 a total of 105 EAP sessions were taken up by Treasury staff and immediate family members, at a cost of $21 039. Although the utilisation rate remained steady with 46 people assisted by the EAP providers, fewer sessions were accessed overall. In 2006-07 only seven staff utilised the full five sessions available, compared to 18 in 2005‑06, with a number of employees accessing additional sessions in order to enable them to deal with their work-related issues or personal concerns.

2006-07

2005-06

$21 039

$38 077

Total number of people assisted by EAP providers

46

48

– Treasury employees – Immediate family members – Manager assistance, advice, coaching

32 7 7

37 8 3

105

194

Total number of sessions

Flu Vaccinations

Corporate Challenges

Free flu vaccinations for all Treasury staff were provided again in 2006-07, the fourth year the program has been offered. 34 per cent of staff received the vaccination, up from 30 per cent in 2005-06.

Staff are encouraged to become involved in Corporate Challenges, which provide unique opportunities for work colleagues to match their sporting skills against others in a fun and social atmosphere while enjoying the benefits of being active.

The value of the program in terms of reducing sickness is difficult to monitor, as staff are not required to provide reasons for sick leave absences, which precludes matching absences to vaccination status. Also, the vaccination does not provide immunity against all possible strains of influenza. Nonetheless Treasury will continue to offer this program to staff.

In 2006-07 Treasury sponsored several corporate teams in running and walking, soccer, netball and lawn bowls. The All Revved Up run/walk team took the top honours in the 2007 Run/Walk Corporate Challenge.

Details are summarised in Table 22.

Treasury’s All Revved Up run/walk team (L-R): Kristina Skipper, Jayne Balding, Nathan Schultz, Mathew Pickering, Felicity Wannan and James England

66

Annual Report 2006-07

Reporting Against Employment Instructions Under the Public Sector Employment and Management Act (PSEMA), 13 Employment Instructions provide direction to agencies on human resource management matters. Each instruction specifies required reporting in agency annual reports. Treasury’s performance against each instruction is reported below. Table 23: Employment Instructions, Annual Reporting Requirements and Agency Action Employment Instruction and Annual Reporting Requirements

Agency Action

Number 1 – Recruitment Agency to develop procedures on recruitment and selection for internal use.

Treasury’s recruitment policy was revised in 2006, with standard templates developed for each stage of the selection process for use by managers and selection panels.

CEO required to report annually on the number of employees in each designation and variations since last report.

Recruitment action undertaken during 2006-07 included advertising 73 vacancies, 75 staff commencing and 62 staff leaving Treasury. Two promotion appeals were lodged in 2006-07, with the Promotions Appeal Board finding them to be unsubstantiated. Staffing data is reported at the beginning of this section.

Number 2 – Probation CEO shall develop a probationary process for their agency and convey details of the probationary process to employees within their first week of reporting for duty.

Treasury’s probation policy and procedures were finalised in 2006-07, reflecting the improved processes that have been developed over the past year. It accommodates the necessary review processes for the relatively high number of staff on entry-level employment programs, who are (necessarily) engaged on temporary contracts. The policy outlines a process that ensures that both supervisors and employees understand the elements of probation, and their respective responsibilities when an employee is on probation. It also provides supporting documentation to complement the process, including revised three and six monthly probation reports, monthly reporting for graduates and other full-time trainees, and a Probation Commencement Form for supervisors to complete and provide to the probationer within one week of the probationer’s commencement with Treasury. New employees have also been advised of the probation process by DCIS Recruitment when undergoing E-Induction. New employees are then provided with a further explanation of the probation process by Treasury human resources (HR) staff at their internal induction training.

Number 3 – Natural Justice The principles of natural justice are followed in all dealings with The rules of natural justice to be observed in employees and are reflected in Treasury’s Corporate Governance all dealings with employees. principles, and all internal policies and procedures.

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67

Table 23: Employment Instructions, Annual Reporting Requirements and Agency Action (continued) Employment Instruction and Annual Reporting Requirements

Agency Action

Number 4 – Performance Management CEO is to report annually on management training and staff development programs.

Treasury provides this information through an annual report coordinated by OCPE, details of which are published in the State of the Service Report.

CEO shall develop and implement performance management systems for their agency.

Treasury’s Performance Development Framework (PDF) remains a fundamental element in developing our staff. It comprises a performance management system based on assessment against well established competencies, six-monthly feedback reviews, upward feedback from employees to managers and identification of development opportunities. To support this framework, Treasury’s HR Unit continues to monitor individual staff training needs and training that has been undertaken through its training database, and will soon be providing regular reports to managers. The PDF framework also guides staff and mangers in the event that performance recovery is required. HR staff also support managers in dealing with under-performance issues and assisting managers and staff in performance recovery efforts. Management training and staff development activities in 2006‑07 are reported earlier in this section.

Number 5 – Medical Incapacity No agency action or reporting requirements

Treasury rarely has a need relating to medical incapacity, however where advice is required, managers liaise directly with senior executives, Treasury’s HR Unit or the Office of the Commissioner for Public Employment (OCPE) seeking specific advice as required.

Number 6 – Medical Inability CEO to provide OCPE with information on the extent to which this Employment Instruction has been used by the agency.

Treasury provides this information through an annual report coordinated by OCPE, details of which are published in the State of the Service Report.

CEO may establish procedures regarding inability within their agency. Number 7 – Discipline CEO to provide OCPE with information on the extent to which this Employment Instruction has been used by the agency. CEO may establish procedures regarding discipline within their agency.

68

Annual Report 2006-07

Treasury rarely has a need relating to medical inability, however where advice is required, managers liaise directly with senior executives, Treasury HR or OCPE seeking specific advice as required. Treasury provides this information through an annual report coordinated by OCPE, details of which are published in the State of the Service Report. During 2006-07, disciplinary action was not taken against any employee.

Table 23: Employment Instructions, Annual Reporting Requirements and Agency Action (continued) Employment Instruction and Annual Reporting Requirements Number 8 – Grievances CEO shall establish written grievance setting procedures for the agency that should be available to employees and outline steps for dealing with grievances.

Agency Action Treasury’s Grievance Policy has been in place since 2004 and is available to all staff on the internal intranet site. Treasury HR provides advice and support to managers in dealing with grievances. There were no grievances lodged in 2006-07.

Number 9 – Now incorporated in Employment Instruction 1 Number 10 – Employee Records Agencies are required to maintain appropriate employee records and implement procedures for maintaining and accessing these records.

DCIS is responsible for storing all agency personnel files. Treasury follows DCIS policy in regard to accessing these files. Any requests to access employee records are made through the Manager HR.

Number 11 – Equal Employment Opportunity CEO to devise and implement programs to ensure equal employment opportunities and outcomes are achieved.

In 2006-07 Treasury’s workplace Equity and Diversity Framework was finalised. In support of Treasury’s Indigenous Employment and Career Development Strategy, the framework incorporates agency requirements under the PSEMA and the Anti-Discrimination Act, in addition to whole of government strategies, such as Willing and Able, to promote and encourage our diverse workforce.

CEO to report annually on programs and initiatives agency has developed. Report should also include reports detailing specific action in relation to Aboriginal Employment and Career Development, and also measures to enable employees to balance work and family responsibilities. Number 12 – Occupational Health and Safety CEO to develop programs to ensure employees are consulted in the development and implementation of occupational health and safety programs. CEO to report annually on occupation health and safety programs. Records must be kept on risk assessment, maintenance control and information, instruction and training provided to employees. Number 13 – Code of Conduct CEO may issue guidelines regarding acceptance of gifts and benefits to employees. CEO may issue agency specific Code of Conduct.

These documents are provided to staff through the internal intranet site. Details of Treasury’s programs and initiatives are reported earlier in this section. Treasury’s OH&S Committee comprises staff from AO3 to management level from all areas of Treasury. The committee deals with OH&S issues, including safe workplaces and systems and developing, implementing and monitoring OH&S measures. The Committee has developed a site on the internal intranet, which identifies the OH&S Committee, policies, training opportunities and related information and links, for example, to the DCIS OH&S newsletter. Details of Treasury’s programs and initiatives are provided earlier in this section of the annual report. New staff are provided with the Code of Conduct as part of their commencement package. New staff are also advised of their obligations at regular Treasury induction training. Other staff are reminded of their obligations at regular intervals and with each major exercise or project.

Managing the Organisation: Treasury People

69

Table 23: Employment Instructions, Annual Reporting Requirements and Agency Action (continued) Employment Instruction and Annual Reporting Requirements Number 14 – Part-Time Employment CEO to advise unions on a six-monthly basis of number of part-time employees by salary stream.

Agency Action Treasury’s Flexible Work Arrangements Policy is available on the internal intranet site. As at 30 June 2007, ten employees were working part-time, and two were working in home-based arrangements.

Future Priorities • Development of Treasury’s Performance Management System that will provide managers with the necessary skills and practical assistance to address underperformance, and will encompass the following elements: – Performance Development; – Professional and Career Development; and – Performance Recovery. • Further development of the leadership development and mobility program within Treasury to enhance professional development opportunities, management capabilities and generally broaden skills and expertise. • Completion of Treasury’s 2007-09 Indigenous Employment and Career Development Strategy in accordance with whole of government strategy. • Work Integrated Learning Scholarship to be expanded to include accounting in 2008. • Continued emphasis on professional and technical development, including sponsored study, tailored training and participation in professional body activities.

70

Annual Report 2006-07

Managing the Organisation: Financial Performance Financial Statements – Treasury’s Dual Role Reporting Preface

Northern Territory Treasury

72

Central Holding Authority

Overview

74

Overview

105

Certification of the Financial Statements

80

Certification of the Financial Statements

108

Financial Statements

81

Financial Statements

109

Notes to the Financial Statements

85

Notes to the Financial Statements

113

1. Objectives and Funding

85

1. Objectives and Funding

2. Statement of Significant Accounting Policies

85

2. Statement of Significant Accounting Policies 113

3. Operating Statement by Output Group

93

118

4. Goods and Services Received Free of Charge

95

3. Goods and Services Received Free of Charge 4. Cash and Deposits

118

5. Gain on Disposal of Assets

95

5. Receivables

118

6. Purchases of Goods and Services

95

6. Payables

118

7. Cash and Deposits

96

7. Borrowings and Advances

118

8. Receivables

96

8. Provisions

119

9. Property, Plant and Equipment

96

9. Superannuation Liability

119

10. Payables

97

10. Equity

121

11. Borrowings and Advances

97

11. Notes to the Cash Flow Statement

122

12. Provisions

98

12. Financial Instruments

122

13. Equity

98

13. Contingent Liabilities and Contingent Assets 125

14. Notes to the Cash Flow Statement

99

14. Events Subsequent to Balance Date

125

15. Financial Instruments

99

15. Write-offs, Postponements and Waivers

125

16. Commitments

101

17. Contingent Liabilities and Contingent Assets 102 18. Events Subsequent to Balance Date

102

19. Accountable Officer’s Trust Account

102

20. Write-offs, Postponements and Waivers

103

21. Schedule of Territory Items

104

113

Financial Statements – Treasury’s Dual Role

Reporting Preface Treasury is a central agency, whose primary function is providing advice to Government. Treasury’s policy role differs from many other agencies, whose activities predominantly involve the delivery of services directly to the public. Like all government agencies, Treasury’s activities are mainly funded by output and capital appropriations, as determined in the annual Budget. However, Treasury has an important dual role in that it is responsible for its own budget and accounts, but it also manages the Central Holding Authority (CHA) for the Government. The CHA is the Territory’s own entity that holds the revenue, expenses, assets and liabilities of the Territory and has a similar function to that of a parent company. Revenue is collected by agencies on behalf of the CHA. Funds are transferred from the CHA to agencies, according to appropriation amounts, for spending. Because of its central agency role, Treasury undertakes certain responsibilities on behalf of government, incurring Territory Government expenses through Treasury’s Operating Statement. These expenses include the Territory’s GST administration costs and payment of some community service obligations on behalf of the Government. Treasury also collects significant levels of Government revenue on behalf of the CHA for use across government. It is important, in reviewing Treasury’s financial statements, to understand the impacts these whole of government expenses and revenues have on Treasury’s accounts, and how this effect differs from most other agencies. Necessarily, Treasury’s agency accounts and the CHA are closely interrelated and reflect whole of government responsibilities beyond Treasury’s internal arrangements and operations. Figure 11 endeavours to illustrate the relationship and compare it to the CHA’s relationship with other agencies. It is worth noting that the Northern Territory Treasury Corporation, as the Government’s central financing authority, also has a unique financial relationship with the CHA. However, although it is part of Treasury for organisational purposes, Treasury Corporation is a government business division and reports separately under its own legislation. As a result of Treasury’s dual financial role, this section presents the 2006-07 financial statements for both Treasury and the CHA. A brief overview is provided with each set of accounts and their accompanying notes to assist the reader in understanding the performance of each entity and their unique relationship.

72

Annual Report 2006-07

Figure 11: Relationship Between the Central Holding Authority, Treasury and Other Agencies

Central Holding Authority On behalf of the Territory, records: − assets not assigned to agencies, eg. investments − liabilities not assigned to agencies, eg. borrowings, unfunded superannuation, long service leave

Treasury Receives:

− unti e d G ST − ow

n-sour ce

Other Agencies

Receives revenue, collected for the Territory through agencies: revenue

from Austra

-source itor y own r r e T e m o s −

lian Gover nment

revenue , eg. taxes

Receive:

stamp eg. vehicle

CHA

− agency-own revenue, eg. interest on loans to TIO transfers outp

Spends on: − operations on behalf of government (74%) eg. CSOs, GST administration payment, fuel subsidy, home owner grants and subsidies − own operations (26%) eg. salaries, operational costs

u t an d

c ap i t a

, revenue

es duty, fin

− tied grants from Australian Government − agency own-source revenue, eg. fees for service, charges l appr

o p r i at i o

n to agenc

On behalf of the Territory: − pays interest owed − pays out long service leave and superannuation benefits

ie s

Spend on: − own operations, eg. salaries, operational costs − some CSOs − grant programs

Northern Territory Treasury Financial Statements

73

Northern Territory Treasury Financial Statements 2006-07 – Overview Treasury’s financial performance in 2006-07 and comparatives for 2005-06 are reported in four financial statements: the Operating Statement, Balance Sheet, Statement of Changes in Equity and Statement of Cash Flows. These statements have been prepared in accordance with the whole of government financial management framework and the requirements of accounting standards.

Main Results • Treasury reported an operating surplus of $3.4 million in 2006-07, an improvement on the Budget estimate of $1.1 million. This was a result of lower than expected employee expenses and lower requirements for grants and subsidies. • Equity of $20.3 million at 30 June 2007 was $5.7 million less than the previous year, mainly the result of large cash balances transferring to the CHA following the repayment of the Motor Accidents Compensation Scheme (MACA) loan by the Territory Insurance Office (TIO). • Cash at 30 June 2007 was $1.3 million, $11.3 million less than 30 June 2006, reflecting the equity transfer to the CHA. • During 2006-07, the Racing, Gaming and Licensing function transferred from Treasury to the Department of Justice, involving 57 full‑time equivalent staff and $16.7 million in budget. The financial transfer is backcast in these statements with effect from 1 July 2006.

Operating Statement – Summary Table 24: Operating Statement Operating Statement Operating income Operating expenses

2006-07

2005-06

$000

$000

$000

101 278

128 221

-26 943

-21.0

97 880

128 100

-30 220

-23.6

3 398

121

3 277

2 708.3

Net operating surplus

Variation %

Treasury reported a net operating surplus of $3.4 million for 2006-07, compared to $0.12 million the previous financial year. This large variation in operating income and expenses was due to the transfer of Racing, Gaming and Licensing (RGL) to the Department of Justice, lower than expected employee costs due to difficulty recruiting to all vacant positions, lower grant and subsidy payments, and finalisation of the High Court case brought against the Territory by NT Power in 2005-06.

74

Annual Report 2006-07

Operating Income Table 25: Operating Income Operating Income

2006-07 2005-06 $000

$000

%

1 708

-1 708

-100.0

97 278

122 933

-25 655

-20.9

Goods and services received free of charge

2 172

2 509

- 337

-13.4

Other income

1 828

1 071

757

70.7

101 278

128 221

-26 943

-21.0

Taxation revenue Output revenue

Total

$000

Variation

Treasury’s principal source of revenue (96 per cent or $97 million) is appropriation transferred from the Central Holding Authority (output revenue). The remaining $4 million is sourced from (notional) revenue to meet the (notional) cost of services received free of charge from the Department of Corporate and Information Services (DCIS) and interest earned on loans to TIO (other income). The $26.9 million decrease in operating income since 2005-06 relates to lower output revenue requirements following the RGL transfer from Treasury and higher output revenue in 2005-06 due to legal costs, including settlement of $12 million related to the NT Power matter.

Operating Expenses Table 26: Operating Expenses Operating Expenses

2006-07 2005-06

Variation

$000

$000

$000

%

15 212

19 545

- 4 333

- 22.2

Purchases of goods and services

7 865

21 153

-13 288

- 62.8

DCIS services free of charge

2 172

2 509

- 337

- 13.4

GST administration

6 314

6 063

251

4.1

249

287

- 38

- 13.2

Grants and subsidies

66 068

78 543

-12 475

-15.9

Total

97 880

128 100

-30 220

-23.6

Employee expenses Administrative expenses

Other expenses

Expenses incurred by Treasury during the year were largely whole of government items paid from Treasury’s budget. Figure 12 shows that only 26 per cent or $26 million of the 2006-07 operating expenses related to Treasury’s own agency operations, while 74 per cent or $72 million were Territory Government expenses met by Treasury in its central agency role. As explained earlier in this section, while expenses on behalf of the Government are recorded in Treasury’s financial reports, Treasury has no discretion on how these resources will be spent and cannot divert these resources to its own operations.

Figure 12: Treasury’s Operating Expenses Expenses on behalf of Government $72.1M

74% 26% Treasury-own expenses $25.8M

Northern Territory Treasury Financial Statements

75

Treasury’s own expenses relate to employee and administrative costs (mostly for information technology and communications). The expenses on behalf of the Government arise from grants and subsidies such as community service obligation payments to maintain uniform tariffs for households and small businesses ($52.8 million) and payments to the Australian Government for the Territory’s share of GST administration costs ($6.3 million). Further commentary is provided below for each category of expense and reasons for variations during 2006-07. Employee Expenses This $4.3 million decrease in employee expenses in 2006-07 reflects vacant positions not filled as a result of difficulties recruiting professional staff and the transfer of RGL staff to the Department of Justice. Administrative Expenses Administrative expenses were lower in 2006-07 largely due to one-off legal costs in 2005-06, reported as a 63 per cent variation or $13.3 million reduction in expenses for this financial year. Grants and Subsidies Overall, Treasury paid $66 million in grants and subsidies in 2006‑07, a decrease of $12.5 million from 2005-06. Almost $53 million of the 2006-07 grants and subsidies related to community service obligation payments to subsidise uniform tariffs for electricity, water and sewerage for households, small businesses and Tranche 4 electricity customers. Also, RGL grants accounted for approximately $9.2 million in 2005-06. First home owner grants were also lower in 2006-07. Because of the magnitude of the grants and subsidies element of Treasury expenditures, it is useful to understand its components in more detail. This information is presented in Table 27.

76

Annual Report 2006-07

Table 27: Grants and Subsidies Grants and Subsidies

2006-07

2005-06

$000

$000

$000

%

52 805

54 937

-2 132

-3.9

First home owner grant

8 820

10 150

-1 330

-13.1

Fuel subsidy

3 060

3 138

-78

-2.5

Alice Springs Convention Centre subsidy

1 115

869

246

28.3

Charles Darwin University demographic research grants

268

213

55

25.8

0

9 236

-9 236

-100.0

66 068

78 543

-12 475

-15.9

Community service obligations

RGL grants and subsidies1 Total

Variation

1. The RGL transfer to the Department of Justice is treated with effect from 1 July 2006 for financial purposes.

Balance Sheet – Summary Table 28: Balance Sheet Balance Sheet Assets Liabilities Equity

2006-07

2005-06

Variation

$000

$000

$000

%

23 373

32 864

-9 491

-28.9

3 028

4 843

-1 815

-37.5

20 345

28 021

-7 676

-27.4

Table 28 shows that during 2006-07, assets and liabilities reduced. As the reduction of assets was larger than the reduction in liabilities this resulted in a lower level of equity. Treasury’s assets comprise mostly cash, deposits, advances and investments, with a small amount of property, plant and equipment which reflect Treasury’s policy advice rather than a service delivery role. Excess cash balances were transferred to the CHA following TIO’s repayment of the Motor Accidents Compensation Scheme (MACA) loan. The excess cash balances were not needed by Treasury to carry out its normal operations and were therefore transferred to the CHA as an equity withdrawal. Lower liabilities were mainly due to fewer outstanding creditors at the end of 2006-07, the repayment to the Australian Government of the Natural Disaster Relief and Recovery Arrangements loan, and a lower provision for employee entitlements at the end of the year, with the transfer of RGL staff to the Department of Justice.

Northern Territory Treasury Financial Statements

77

Statement of Cash Flows – Summary Table 29: Statement of Cash Flows Cash Flows

2006-07

2005-06

$000

$000

$000

%

12 564

3 936

8 628

219.2

Receipts

100 963

127 972

- 27 009

-21.1

Payments

99 201

127 597

-28 396

-22.3

Return on assets

-1 368

10 322

-11 690

-113.3

Equity withdrawals

11 660

2 069

9 591

463.6

1 298

12 564

-11 266

-89.7

Cash at beginning of the reporting period

Cash at end of reporting period

Variation

Figures in Table 29 reflect the expenses and revenues shown in the Operating Statement summary including necessary accrual adjustments (Table 24). The reduction in cash at the end of the year, compared to 2005-06, is mainly due to the equity withdrawal of the MACA loan repayment made to Treasury in 2005-06 and cash payment of accrual items from the 2005-06 financial year.

Collection of Territory Income Table 30: Total Income Collected by Treasury in 2006-07 Total Income Collected by Treasury Treasury – Agency Income – reported in Operating Statement

2006-07

% of Total

$000

%

101 278

4

Territory Income – reported in Note 21

2 534 575

96

Total Income Collected

2 635 853

100

During 2006-07, Treasury collected a total of $2.64 billion in income, however only 4 per cent of that income ($101 million) flowed back to Treasury for its own purposes. This 4 per cent or $101 million is the income figure reported in Treasury’s financial reports, with the remaining 96 per cent (or $2.53 billion) being Territory income, collected on behalf of, and recorded in, the Central Holding Authority. Accordingly, Territory income does not form part of income controlled by Treasury and is therefore not reported in Treasury’s financial reports. Rather, it is summarised by way of disclosure in Note 21 to the financial statements. Table 30 shows the total income collected by Treasury, categorised by agency income and Territory income, collected and administered on behalf of the Central Holding Authority.

78

Annual Report 2006-07

Summary In 2006-07, Treasury came in under budget, reporting a higher than expected surplus as a result of lower than anticipated employee expenses and lower than expected grant and subsidy payments. It is important to note that 74 per cent of Treasury’s expenses are managed on behalf of the Government in Treasury’s central agency role. Treasury’s surplus was generated from lower costs in both its central agency and own-agency operations. The RGL transfer, treated as occurring from the beginning of 2006-07, resulted in reduced income and expenses for Treasury, with commensurate movement of the Gambling, Liquor and Other Regulation output group to the Department of Justice’s budget.

Northern Territory Treasury Financial Statements

79

Certification of the Financial Statements

We certify that the attached financial statements for the Northern Territory Treasury have been prepared from proper accounts and records in accordance with the prescribed format, the Financial Management Act and Treasurer’s Directions. We further state that the information set out in the Operating Statement, Balance Sheet, Statement of Changes in Equity, Cash Flow Statement, and notes to and forming part of the financial statements, presents fairly the financial performance and cash flows for the year ended 30 June 2007 and the financial position on that date. At the time of signing, we are not aware of any circumstances that would render the particulars included in the financial statements misleading or inaccurate.

Jennifer Prince

Catherine Wauchope

Under Treasurer

Assistant Under Treasurer (Corporate and Superannuation)

30 September 2007

30 September 2007

80

Annual Report 2006-07

Operating Statement For the year ended 30 June 2007

Note

2007

2006

$000

$000

INCOME Taxation revenue

1 708

Grants and subsidies revenue Current Output revenue Sales of goods and services

30

45

97 278

122 933

316

Interest revenue Goods and services received free of charge

4

Gain on disposal of assets

5

Other income TOTAL INCOME

3

1 368

738

2 172

2 509 1

114

287

101 278

128 221

15 212

19 545

7 865

21 153

11

12

157

209

8 486

8 580

13 263

23 256

EXPENSES Employee expenses Administrative expenses Purchases of goods and services

6

Repairs and maintenance Depreciation and amortisation

9

Other administrative expenses

1

Grants and subsidies expenses Current Capital

350

Community service obligations Interest expenses

52 805

54 937

81

58

TOTAL EXPENSES

3

97 880

128 100

NET SURPLUS

13

3 398

121

1. Includes DCIS service charges.

The Operating Statement is to be read in conjunction with the notes to the financial statements.

Northern Territory Treasury Financial Statements

81

Balance Sheet As at 30 June 2007

Note

2007

2006

$000

$000

ASSETS Current assets Cash and deposits

7

1 298

12 564

Receivables

8

440

342

4 816

3 450

Prepayments

727

355

Other assets

-7

Advances and investments

Total current assets

7 274

16 711

15 423

15 423

676

730

Total non-current assets

16 099

16 153

TOTAL ASSETS

23 373

32 864

Non-current assets Advances and investments Property, plant and equipment

9

LIABILITIES Current liabilities Deposits held

151

Payables

10

790

1 391

Borrowings and advances

11

83

411

Provisions

12

1 557

2 076

2 430

4 029

598

814

598

814

3 028

4 843

20 345

28 021

6 019

17 093

Accumulated funds

14 326

10 928

TOTAL EQUITY

20 345

28 021

Total current liabilities Non-current liabilities Provisions

12

Total non-current liabilities TOTAL LIABILITIES NET ASSETS EQUITY Capital

13

The Balance Sheet is to be read in conjunction with the notes to the financial statements.

82

Annual Report 2006-07

Statement of Changes in Equity For the year ended 30 June 2007

Note

2007

2006

$000

$000

28 021

29 159

17 094

18 352

1 103

838

-12 178

-2 097

6 019

17 093

10 928

10 807

3 398

121

Balance at 30 June

14 326

10 928

BALANCE OF EQUITY AT 30 JUNE

20 345

28 021

BALANCE OF EQUITY AT 1 JULY Capital

13

Balance at 1 July Equity injections Equity withdrawals Balance at 30 June Accumulated Funds Balance at 1 July Surplus (+)/deficit(-) for the period

13

This Statement of Changes in Equity is to be read in conjunction with the notes to the financial statements.

Northern Territory Treasury Financial Statements

83

Cash Flow Statement For the year ended 30 June 2007

Note CASH FLOWS FROM OPERATING ACTIVITIES Operating receipts Taxes received Grants and subsidies received Current Output revenue received Receipts from sales of goods and services Other agency receipts Interest received Total operating receipts Operating payments Payments to employees Payments for goods and services Grants and subsidies paid Current Capital Community service obligations Interest paid TOTAL OPERATING PAYMENTS NET CASH FROM OPERATING ACTIVITIES 14 CASH FLOWS FROM INVESTING ACTIVITIES Investing receipts Repayment of advances Total investing receipts Investing payments Purchases of assets 9 Advances and investing payments Total investing payments NET CASH FROM INVESTING ACTIVITIES CASH FLOWS FROM FINANCING ACTIVITIES Financing receipts Proceeds of borrowings Deposits received Equity injections 13 Capital appropriation Other equity injections Total financing receipts Financing payments Repayment of borrowings Equity withdrawals 13 Total financing payments NET CASH FROM FINANCING ACTIVITIES Net increase(+)/decrease(-) in cash held Cash at beginning of financial year CASH AT END OF FINANCIAL YEAR 7

2007

2006

$000

$000

1 708 30 97 278

45 122 933

2 287 1 368 100 963

2 548 738 127 972

15 964 17 088

19 644 29 352

13 263

23 256 350 54 937 58 127 597 375

52 805 81 99 201 1 762

11 108 11 108

1 368 1 368 -1 368

54 732 786 10 322

- 150

903 - 358

329 664 843

390 325 1 260

329 12 174 12 503 -11 660 -11 266 12 564 1 298

1 232 2 097 3 329 -2 069 8 628 3 936 12 564

The Cash Flow Statement is to be read in conjunction with the notes to the financial statements.

84

Annual Report 2006-07

Notes to the Financial Statements For the year ended 30 June 2007

1. Objectives and Funding Treasury’s purpose is to promote sustainable fiscal strength and economic development of the Northern Territory, and contribute to improved social and fiscal wellbeing for Territorians. Treasury is predominantly funded by, and is dependent on, the receipt of Parliamentary appropriations. The financial statements encompass all funds through which the agency controls resources to carry on its functions and deliver outputs. For reporting purposes, outputs delivered by the agency are summarised into several Output Groups. Note 3 provides summary financial information in the form of an Operating Statement by Output Group.

2. Statement of Significant Accounting Policies (a) Basis of Accounting The financial statements have been prepared in accordance with the requirements of the Financial Management Act and related Treasurer’s Directions. The Financial Management Act requires Treasury to prepare financial statements for the year ended 30 June based on the form determined by the Treasurer. The form of agency financial statements is to include: (i) a Certification of the Financial Statements; (ii) an Operating Statement; (iii) a Balance Sheet; (iv) a Statement of Changes in Equity; (v) a Cash Flow Statement; and (vi) applicable explanatory notes to the financial statements. The form of agency financial statements is consistent with the accrual budget format and the requirements of Australian Accounting Standards, including AASB 101, AASB 107 and AAS 29. The format also requires additional disclosures specific to Territory Government entities. The financial statements have been prepared using the accrual basis of accounting, which recognises the effect of financial transactions and events when they occur, rather than when cash is paid out or received. As part of the preparation of the financial statements, all intra agency transactions and balances have been eliminated. Except where stated, the financial statements have also been prepared in accordance with the historical cost convention.

Northern Territory Treasury Financial Statements

85

Notes to the Financial Statements For the year ended 30 June 2007

(b) Agency and Territory Items The financial statements of Treasury include income, expenses, assets, liabilities and equity over which Treasury has control (agency items). Certain items, although managed by the agency, are controlled and recorded by the Territory rather than the agency (Territory items). Territory items are recognised and recorded in the Central Holding Authority as discussed below. Central Holding Authority The Central Holding Authority is the ‘parent body’ that represents the Government’s ownership interest in Government controlled entities. The Central Holding Authority also records all Territory items, such as income, expenses, assets and liabilities controlled by the Government and managed by agencies on behalf of the Government. The main Territory item is Territory income, which includes taxation and royalty revenue, Australian Government general purpose funding (such as GST revenue), fines, and statutory fees and charges. The Central Holding Authority also holds certain Territory assets not assigned to agencies, as well as certain Territory liabilities that are not practical or effective to assign to individual agencies, such as unfunded superannuation and long service leave. The Central Holding Authority recognises and records all Territory items and, as such, these items are not included in the agency’s financial statements. However, as the agency is accountable for certain Territory items managed on behalf of Government, these items have been separately disclosed in Note 21 – Schedule of Territory Items.

(c) Comparatives Where necessary, comparative information for the 2005-06 financial year has been reclassified to provide consistency with current year disclosures. Please note that 2005-06 financial year comparatives include the Gambling, Liquor and Other Regulation output group, which is no longer a Treasury function following its transfer to the Department of Justice.

(d) Presentation and Rounding of Amounts Amounts in the financial statements and notes to the financial statements are presented in Australian dollars and have been rounded to the nearest thousand dollars, with amounts of $500 or less being rounded down to zero.

(e) Changes in Accounting Policies There have been no changes to accounting policies adopted in 2006-07 as a result of management decisions.

86

Annual Report 2006-07

Notes to the Financial Statements For the year ended 30 June 2007

(f) Goods and Services Tax Income, expenses and assets are recognised net of the amount of Goods and Services Tax (GST), except where the amount of GST incurred on a purchase of goods and services is not recoverable from the Australian Taxation Office (ATO). In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of the expense. Receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from, or payable to, the ATO is included as part of receivables or payables in the Balance Sheet. Cash flows are included in the Cash Flow Statement on a gross basis. The GST components of cash flows arising from investing and financing activities which are recoverable from, or payable to, the ATO are classified as operating cash flows. Commitments and contingencies are disclosed net of the amount of GST recoverable or payable unless otherwise specified.

(g) Income Recognition Income encompasses both revenue and gains. Income is recognised at the fair value of the consideration received, exclusive of the amount of goods and services tax (GST). Exchanges of goods or services of the same nature and value without any cash consideration being exchanged are not recognised as income. Output Revenue Output revenue represents Government funding for agency operations and is calculated as the net cost of agency outputs after taking into account funding from agency income. The net cost of agency outputs for Output Appropriation purposes does not include any allowance for major non‑cash costs such as depreciation. Revenue in respect of this funding is recognised in the period in which the agency gains control of the funds. Grants and Other Contributions Grants, donations, gifts and other non-reciprocal contributions are recognised as revenue when the agency obtains control over the assets comprising the contributions. Control is normally obtained upon receipt. Contributions are recognised at their fair value. Contributions of services are only recognised when a fair value can be reliably determined and the services would be purchased if not donated. Sale of Goods Revenue from the sale of goods is recognised (net of returns, discounts and allowances) when control of the goods passes to the customer and specified conditions associated with the sale have been satisfied.

Northern Territory Treasury Financial Statements

87

Notes to the Financial Statements For the year ended 30 June 2007

Rendering of Services Revenue from rendering services is recognised on a stage of completion basis. Interest Revenue Interest revenue is recognised as it accrues, taking into account the effective yield on the financial asset. Disposal of Assets A gain or loss on disposal of assets is included as a gain or loss on the date control of the asset passes to the buyer, usually when an unconditional contract of sale is signed. The gain or loss on disposal is calculated as the difference between the carrying amount of the asset at the time of disposal and the net proceeds on disposal. Refer also to Note 5. Contributions of Assets Contributions of assets and contributions to assist in the acquisition of assets, being non-reciprocal transfers, are recognised, unless otherwise determined by Government, as gains when the agency obtains control of the asset or contribution. Contributions are recognised at the fair value received or receivable.

(h) Repairs and Maintenance Expenses Funding is received for repairs and maintenance works associated with agency assets as part of output revenue. Costs associated with repairs and maintenance works on agency assets are expensed as incurred.

(i) Interest Expenses Interest expenses include interest and finance lease charges. Interest expenses are expensed in the period in which they are incurred.

(j) Cash and Deposits For the purposes of the Balance Sheet and the Cash Flow Statement, cash includes cash on hand, cash at bank and cash equivalents. Cash equivalents are highly liquid short-term investments that are readily convertible to cash. Cash at bank includes monies held in the Accountable Officer’s Trust Account that are ultimately payable to the beneficial owner – refer also to Note 19.

(k) Receivables Receivables include accounts receivable and other receivables and are recognised at fair value less any allowance for uncollectible amounts. The collectibility of receivables is reviewed regularly, and part of this process is to assess, at reporting date, whether an allowance for doubtful debts is required. Accounts receivable are generally settled within 30 days.

88

Annual Report 2006-07

Notes to the Financial Statements For the year ended 30 June 2007

(l) Property, Plant and Equipment Acquisitions All items of property, plant and equipment with a cost, or other value, equal to or greater than $5000 are recognised in the year of acquisition and depreciated as outlined below. Items of property, plant and equipment below the $5000 threshold are expensed in the year of acquisition. The construction cost of property, plant and equipment includes the cost of materials and direct labour, and an appropriate proportion of fixed and variable overheads. Complex Assets Major items of plant and equipment comprising a number of components that have different useful lives, are accounted for as separate assets. The components may be replaced during the useful life of the complex asset. Subsequent Additional Costs Costs incurred on property, plant and equipment subsequent to initial acquisition are capitalised when it is probable that future economic benefits in excess of the originally assessed performance of the asset will flow to the agency in future years. Where these costs represent separate components of a complex asset, they are accounted for as separate assets and are separately depreciated over their expected useful lives. Construction (Work in Progress) As part of the Financial Management Framework, the Department of Planning and Infrastructure is responsible for managing general government capital works projects on a whole of government basis. Therefore appropriation for most capital works is provided directly to the Department of Planning and Infrastructure and the cost of construction work in progress is recognised as an asset of that Department. Once completed, capital works assets are transferred to the agency. Depreciation and Amortisation Items of property, plant and equipment, including buildings but excluding land, have limited useful lives and are depreciated or amortised using the straight line method over their estimated useful lives. Amortisation applies in relation to intangible non-current assets with limited useful lives and is calculated and accounted for in a similar manner to depreciation.

Northern Territory Treasury Financial Statements

89

Notes to the Financial Statements For the year ended 30 June 2007

The estimated useful lives for each class of asset are in accordance with the Treasurer’s Directions and are determined as follows:

Plant and Equipment

2007

2006

3-10 Years

4-10 Years

Assets are depreciated or amortised from the date of acquisition or from the time an asset is completed and held ready for use. Impairment of Assets An asset is said to be impaired when the asset’s carrying amount exceeds its recoverable amount. Non-current physical and intangible agency assets are assessed for indicators of impairment on an annual basis. If an indicator of impairment exists, the agency determines the asset’s recoverable amount. The asset’s recoverable amount is determined as the higher of the asset’s depreciated replacement cost and fair value less costs to sell. Any amount by which the asset’s carrying amount exceeds the recoverable amount is recorded as an impairment loss. Impairment losses are recognised in the Operating Statement unless the asset is carried at a revalued amount. Where the asset is measured at a revalued amount, the impairment loss is offset against the Asset Revaluation Reserve for that class of asset to the extent that an available balance exists in the Asset Revaluation Reserve. In certain situations, an impairment loss may subsequently be reversed. Where an impairment loss is subsequently reversed, the carrying amount of the asset is increased to the revised estimate of its recoverable amount. A reversal of an impairment loss is recognised in the Operating Statement as income, unless the asset is carried at a revalued amount, in which case the impairment reversal results in an increase in the Asset Revaluation Reserve.

(m) Operating Leases Operating lease payments made at regular intervals throughout the term are expensed when the payments are due, except where an alternative basis is more representative of the pattern of benefits to be derived from the leased property. Lease incentives under an operating lease of a building or office space are recognised as an integral part of the consideration for the use of the leased asset. The lease incentive is recognised as a deduction of the lease expense over the term of the lease.

(n) Payables Liabilities for accounts payable and other amounts payable are carried at cost which is the fair value of the consideration to be paid in the future for goods and services received, whether or not billed to the agency. Accounts payable are normally settled within 30 days. 90

Annual Report 2006-07

Notes to the Financial Statements For the year ended 30 June 2007

(o) Employee Benefits Provision is made for employee benefits accumulated as a result of employees rendering services up to the reporting date. These benefits include wages and salaries and recreation leave. Liabilities arising in respect of wages and salaries and recreation leave and other employee benefit liabilities that fall due within twelve months of reporting date are classified as current liabilities and are measured at amounts expected to be paid. Non-current employee benefit liabilities that fall due after twelve months of the reporting date are measured at present value, calculated using the Government long-term bond rate. No provision is made for sick leave, which is non-vesting, as the anticipated pattern of future sick leave to be taken is less than the entitlement accruing in each reporting period. Employee benefit expenses are recognised on a net basis in respect of the following categories: • wages and salaries, non-monetary benefits, recreation leave, sick leave and other leave entitlements; and • other types of employee benefits. As part of the Financial Management Framework, the Central Holding Authority assumes the long service leave liabilities of Government agencies, including Treasury and, as such, no long service leave liability is recognised in agency financial statements.

(p) Superannuation Employees’ superannuation entitlements are provided through the: • Northern Territory Government and Public Authorities Superannuation Scheme (NTGPASS); • Commonwealth Superannuation Scheme (CSS); or • non-government employee nominated schemes for those employees commencing on or after 10 August 1999. The agency makes superannuation contributions on behalf of its employees to the Central Holding Authority or non-government employee nominated schemes. Superannuation liabilities related to government superannuation schemes are held by the Central Holding Authority and, as such, are not recognised in agency financial statements.

Northern Territory Treasury Financial Statements

91

Notes to the Financial Statements For the year ended 30 June 2007

(q) Contributions by and Distributions to Government The agency may receive contributions from Government where the Government is acting as owner of the agency. Conversely, the agency may make distributions to Government. In accordance with the Financial Management Act and Treasurer’s Directions, certain types of contributions and distributions, including those relating to administrative restructures, have been designated as contributions by, and distributions to, Government. These designated contributions and distributions are treated by the agency as adjustments to equity. The Statement of Changes in Equity and Note 13 provide additional information in relation to contributions by, and distributions to, Government.

(r) Commitments Disclosures in relation to capital and other commitments, including lease commitments, are shown at Note 16 and are consistent with the requirements contained in AASB 101, AASB 117 and AAS 29. Commitments are those contracted as at 30 June where the amount of the future commitment can be reliably measured.

92

Annual Report 2006-07

Notes to the Financial Statements For the year ended 30 June 2007

3. O perating Statement by Output Group Financial Management

Economic

Territory Revenue

Commercial2

2007

2006

2007

2006

2007

2006

2007

2006

$000

$000

$000

$000

$000

$000

$000

$000

INCOME Taxation revenue Grants and subsidies revenue Current Output revenue

9

13

6

8

3

5 849

6 869

64 999

76 627

3 907

5 108

1 368

738

7

10

18 592

18 654

Sales of goods and services Interest revenue Goods and services received free of  charge

630

Gain on disposal of assets

716

456

448

217

41

543

583

1

Other income TOTAL INCOME

33

9

94

41

253

211

29

7

6 521

7 608

65 555

77 124

5 748

6 098

19 171

19 254

4 112

4 869

3 237

3 024

1 180

2 972

4 275

4 134

1 340

1 484

1 770

15 109

1 472

1 584

1 969

1 344

2

2

2

2

1

2

3

2

57

72

28

32

13

5

33

43

633

725

6 764

6 500

217

41

545

584

269

213

1 115

870

11 879

13 288

52 805

54 965 71

43

EXPENSES Employee expenses Administrative expenses Purchases of goods and services Repairs and maintenance Depreciation and amortisation Other administrative expenses

1

Grants and subsidies expenses Current Capital Community service obligations Interest expenses TOTAL EXPENSES NET SURPLUS(+)/DEFICIT(-)

4

6

3

3

1

6 148

7 158

64 878

79 848

3 999

5 474

18 775

19 438

373

450

677

-2 724

1 749

624

396

- 184

1. Includes DCIS service charges. 2. Superannuation has previously been included in the Commercial Services output group, however from 2006-07, reports separately.

Northern Territory Treasury Financial Statements

93

Notes to the Financial Statements For the year ended 30 June 2007

3. Operating Statement by Output Group (continued) Superannuation2

Gambling, Liquor and Other Regulation

Economic Regulation

Total

2007

2006

2007

2006

2007

2006

2007

2006

$000

$000

$000

$000

$000

$000

$000

$000

INCOME Taxation revenue

1 708

1 708

Grants and subsidies revenue Current Output revenue

4

9

1

1

4

3 401

616

530

534

14 525

30

45

97 278 122 933

Sales of goods and services Interest revenue Goods and services received free of charge

282

Gain on disposal of assets Other income TOTAL INCOME

449

44

43

229

1 368

738

2 172

2 509

1

1

18

6

3

1

12

430

287

3 705

1 081

578

579

2 064

344

265

4 271

15 212

19 535

1 155

159

245

1 377

7 865

21 143

4

11

12

16 478 101 278 128 221

EXPENSES Employee expenses Administrative expenses Purchases of goods and services Repairs and maintenance

3

Depreciation and amortisation

23

36

3

3

17

157

208

Other administrative expenses1

284

450

43

43

230

8 486

8 573

Current

8 885

13 263

23 256

Capital

350

Grants and subsidies expenses

Community service obligations Interest expenses TOTAL EXPENSES NET SURPLUS(+)/DEFICIT(-)

2

4

2

3 531

490

549

556

15 136

174

591

29

23

1 342

350 52 805

54 965

81

58

97 880 128 100 3 398

1. Includes DCIS service charges. 2. Superannuation has previously been included in the Commercial output group, however from 2006-07, reports separately. Note: Gambling, Liquor and Other Regulation transferred to the Department of Justice, backcast for 2006-07.

This Operating Statement by Output Group is to be read in conjunction with the notes to the financial statements.

94

Annual Report 2006-07

121

Notes to the Financial Statements For the year ended 30 June 2007

2007

2006

$000

$000

2 172

2 509

4. Goods and Services Received Free of Charge Recognised in the financial statements Corporate and information services Not recognised in the financial statements Internal audits and reviews

71

Total

2 172

2 580

5. Gain on Disposal of Assets Net proceeds from the disposal of non-current assets

1

Gain on the disposal of non-current assets

1

6. Purchases of Goods and Services The net surplus has been arrived at after charging the following expenses: Goods and services expenses: Consultants1

2 273

1 736

Advertising

47

68

Marketing and promotion3

86

65

Document production

360

335

Legal expenses

953

13 268

81

115

Training and study

284

294

Official duty fares

269

425

39

57

2

4

Recruitment

5

Travelling allowance

1. Includes marketing, promotion and information technology consultants. 2. Does not include recruitment advertising or marketing and promotion advertising. 3. Includes advertising for marketing and promotion but excludes marketing and promotion consultant expenses, which are incorporated in the consultants category. 4. Includes legal fees, claim and settlement costs. 5. Includes recruitment-related advertising costs.

Northern Territory Treasury Financial Statements

95

Notes to the Financial Statements For the year ended 30 June 2007

2007

2006

$000

$000

2

4

Cash at bank

1 296

12 560

Total cash and deposits

1 298

12 564

Accounts receivable

130

77

GST receivables

285

546

Other receivables

25

- 281

Total receivables

440

342

At cost

1 177

1 130

Less: Accumulated depreciation

- 535

- 459

642

671

248

277

- 214

- 218

34

59

676

730

7. Cash and Deposits Cash on hand

8. Receivables Current

9. Property, Plant and Equipment Plant and equipment

Computer Hardware At cost Less: Accumulated depreciation

Total property, plant and equipment

96

Annual Report 2006-07

Notes to the Financial Statements For the year ended 30 June 2007

2007

2006

$000

$000

671

698

9. Property, Plant and Equipment (continued) Reconciliations A reconciliation of the carrying amount of property, plant and equipment at the beginning and end of 2006-07 is set out below: Plant and equipment Carrying amount as at 1 July Disposals

38

Depreciation and amortisation

- 132

- 182

Additions from asset transfers

103

117

Carrying amount as at 30 June

642

671

59

70

Computer hardware Carrying amount as at 1 July Disposals

16

Depreciation and amortisation

- 25

- 27

Carrying amount as at 30 June

34

59

Accounts payable

295

572

Accrued expenses

495

819

Total payables

790

1 391

Loans and advances

83

411

Total borrowings and advances

83

411

10. Payables

11. Borrowings and Advances Current

Northern Territory Treasury Financial Statements

97

Notes to the Financial Statements For the year ended 30 June 2007

2007

2006

$000

$000

1 140

1 520

158

227

259

329

1 557

2 076

598

814

598

814

2 155

2 890

17 094

18 352

Capital appropriation

994

390

Equity transfers in

109

123

-12 174

-2 096

-4

-1

12. Provisions Current Employee benefits Recreation leave Leave loading Other current provisions Other provisions Non-current Employee benefits Recreation leave Total provisions

13. Equity Equity represents the residual interest in the net assets of the Treasury. The Government’s ownership interest in Treasury is held in the Central Holding Authority as described in Note 2(b). Capital Balance as at 1 July Equity injections

Equity withdrawals Capital withdrawal Equity transfers out Net effect of administrative restructure Balance as at 30 June

325 6 019

17 093

10 928

10 807

Surplus for the period

3 398

121

Balance as at 30 June

14 326

10 928

Accumulated funds Balance as at 1 July

98

Annual Report 2006-07

Notes to the Financial Statements For the year ended 30 June 2007

2007

2006

$000

$000

3 398

121

157

209

14. Notes to the Cash Flow Statement Reconciliation of net surplus to net cash from operating activities Net surplus Non-cash items: Depreciation and amortisation Asset write-downs

7

Asset donations/gifts

-1

Repairs and maintenance – minor new works – non cash

3

Changes in assets and liabilities: Decrease(+)/increase(-) in receivables

196

- 470

Decrease(+)/increase(-) in prepayments

- 371

234

Decrease(+)/increase(-) in other assets

- 287

294

Decrease(-)/increase(+) in payables

- 600

156

Decrease(-) in provision for employee benefits

- 676

- 121

Decrease(-) in other provisions

- 58

- 54

Net cash from operating activities

1 762

375

15. Financial Instruments A financial instrument is a contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. Financial instruments held by Treasury include cash and deposits, receivables, payables and finance leases. Treasury has limited exposure to financial risks as discussed below.

(a) Credit Risk Treasury has limited credit risk exposure (risk of default). In respect of any dealings with organisations external to Government, Treasury has adopted a policy of only dealing with creditworthy organisations and obtaining sufficient collateral or other security where appropriate, as a means of mitigating the risk of financial loss from defaults. The carrying amount of financial assets recorded in the financial statements, net of any allowances for losses, represents Treasury’s maximum exposure to credit risk without taking account of the value of any collateral or other security obtained.

Northern Territory Treasury Financial Statements

99

Notes to the Financial Statements For the year ended 30 June 2007

(b) Net Fair Value The carrying amount of financial assets and financial liabilities recorded in the financial statements approximates their respective net fair values. Where differences exist, these are not material.

(c) Interest Rate Risk Treasury has limited exposure to interest rate risk as agency financial assets and financial liabilities, with the exception of investments and borrowings, are non-interest bearing. Treasury’s exposure to interest rate risk and the average interest rate for classes of financial assets and financial liabilities are set out in the following tables. The average interest rate is based on the outstanding balance at the start of the year. Fixed Interest Maturity Weighted Average Interest Rate

Variable Interest

Under 1 year

1 to 5 years

Over 5 years

NonInterest Bearing

Total

%

$000

$000

$000

$000

$000

$000

1 298

1 298

440

440

2007 Financial assets Cash and deposits Receivables Advances and investments

7.215

Total financial assets

20 240 20 240

20 240 1 738

21 978

790

790

Financial liabilities Payables Borrowings and advances Total financial liabilities Net financial assets

100

Annual Report 2006-07

2.9

83

83

83

790

873

20 157

948

21 105

Notes to the Financial Statements For the year ended 30 June 2007

(c) Interest Rate Risk (continued) Fixed Interest Maturity Weighted Average Interest Rate

Variable Interest

Under 1 year

1 to 5 years

Over 5 years

NonInterest Bearing

Total

%

$000

$000

$000

$000

$000

$000

12 564

12 564

342

342

2006 Financial assets Cash and deposits Receivables Advances and investments

6.6

Total financial assets

18 873

18 873

18 873

12 906

31 779

151

151

1 391

1 391

Financial liabilities Deposits held Payables Borrowings and advances Total financial liabilities Net financial assets

2.6

411

411

411

1 542

1 953

18 462

11 364

29 826

16. Commitments Operating Lease Commitments

2007

2006

Treasury leases property under non-cancellable operating leases expiring from 1 to 5 years. Leases generally provide Treasury with a right of renewal at which time all lease terms are renegotiated, and relate to items of plant and equipment. Future operating lease commitments not recognised as liabilities are payable as follows:

$000

$000

Within one year

30

42

Later than one year and not later than five years

36

29

Total lease liability

66

71

Northern Territory Treasury Financial Statements

101

Notes to the Financial Statements For the year ended 30 June 2007

17. Contingent Liabilities and Contingent Assets (a) Contingent

Liabilities

Workers Compensation Insurance The Government has indemnified private sector insurers, which provided workers compensation insurance in the Territory. The indemnity covers insurers for losses which arise as a result of acts of terrorism. The resultant contingent liability is unquantifiable. Finance The Territory financial management framework is underpinned by centralised banking arrangements. The sole provider of banking related services has been granted indemnities under the whole of government banking contract. The contingent liability resulting from the indemnities is unquantifiable.

b) Contingent Assets The Northern Territory Treasury had no contingent assets as at 30 June 2007 or 30 June 2006.

18. Events Subsequent to Balance Date No events have arisen between the end of financial year and the date of this report that require adjustment to, or disclosure in, these financial statements.

19. Accountable Officer’s Trust Account In accordance with section 7 of the Financial Management Act, an Accountable Officer’s Trust Account has been established for the receipt of money to be held in trust. A summary of activity is shown below.

Nature of Trust Money

Receipts

$000

$000

Closing Balance Payments 30 June 2007 $000

NT TAB

73

73

Unclaimed money

78

78

151

151

Total

102

Opening Balance 1 July 2006

Annual Report 2006-07

$000

Notes to the Financial Statements For the year ended 30 June 2007

20. Write-offs, Postponements and Waivers Agency 2007 $000

No. of Trans.

Agency 2006 $000

No. of Trans.

Territory Items Territory Items 2007

No. of Trans.

$000

2006

No. of Trans.

$000

Write-offs, postponements and waivers under the Financial Management Act Amounts written off, postponed and waived by delegates Irrecoverable amounts payable to the Territory or an agency written off

5

16

6

7

Total written off, postponed and waived by delegates

5

16

6

7

213

10

131

6

Postponement or waiver of right to receive or recover money or property

2 816

6

1 356

3

Total written off, postponed and waived by the Treasurer

3 029

16

1 487

9

Total write-offs, postponements and waivers authorised

3 034

32

1 493

16

Amounts written off, postponed and waived by the Treasurer Irrecoverable amounts payable to the Territory or an agency written off

Northern Territory Treasury Financial Statements

103

Notes to the Financial Statements For the year ended 30 June 2007

21. Schedule of Territory Items The following Territory items are managed by the Northern Territory Treasury on behalf of the Government and are recorded in the Central Holding Authority (CHA) (refer Note 2(b)). 2007

2006

$000

$000

432 140

439 416

2 015 336

1 850 175

6 790

21 871

2 659

1 967

76 203

51 386

-7

1 361

2 533 121

2 366 176

CHA income transferred

2 533 121

2 366 176

Total expenses

2 533 121

2 366 176

1 458

679

50 370

44 050

TERRITORY INCOME AND EXPENSES Income Taxation revenue Grants and subsidies revenue GST revenue Current Sales of goods and services Fees from regulatory services Royalties and rents Other income Total income Expenses

Revenue less expenses TERRITORY ASSETS AND LIABILITIES Assets Accounts receivable Taxes receivable Other receivables Total assets

352 51 828

45 081

51 828

44 729

Liabilities CHA income payable Unearned CHA income Total liabilities Net assets

104

Annual Report 2006-07

352 51 828

45 081

Central Holding Authority Financial Statements 2006-07 – Overview This section of the report provides an analysis of the financial performance of the Central Holding Authority (CHA). The CHA is a key element of the Territory’s financial management framework and is similar in role to the parent entity in a group of companies. It records on behalf of the Territory: • assets which are not assigned to agencies, such as the Territory’s investment portfolio. The CHA does not hold physical assets such as land and buildings; • liabilities where it is not practical or effective to assign them to individual agencies. The CHA has two major liabilities – Territory borrowings and unfunded employee liabilities. Territory borrowings comprise the stock of general government debt that has accumulated since Self Government and has been used to fund the construction of major infrastructure in the Territory over this period. Unfunded employee liabilities are those which have accrued but are not yet due to be paid, such as superannuation and long service leave; • revenue collected by the CHA is regarded as Territory revenue, the main types being taxation, untied grants (predominantly GST revenue) and fines; and • expenses where the main expense is the payment of appropriation to agencies. Other significant expenses are interest on Territory borrowings, interest on cash balances of government business divisions and the government owned corporation, and the centrally-managed employee costs of superannuation and long service leave. The significant movements in these items are analysed below and incorporated in the Operating Statement, Balance Sheet, Statement of Changes in Equity and Cash Flow Statement of the accompanying financial statements.

Main Results • The CHA reported an operating surplus of $29 million in 2006-07, compared with $218 million in 2005-06. The reduction was a result of increased superannuation expenses following actuarial review, partially offset by increased revenue, predominantly GST. • The Conditions of Service Reserve (COSR) investments ($422 million) earned an overall return of 16.7 per cent during 2006-07, 1.4 percentage points above the benchmark. • Equity increased by $29 million to $1055 million in 2006-07, compared with $1026 million in 2005-06. • The CHA made additional contributions of $150 million towards the Territory’s superannuation liability, invested within the COSR.

Central Holding Authority Financial Statements

105

Operating Statement The CHA reported a net operating surplus of $29 million compared with a surplus of $218 million in 2006. The decline in operating surplus in 2007 resulted largely from an increase in superannuation expenses following actuarial review and appropriation to agencies reflecting increased service provision across government. This was partially offset by increases in revenue, predominantly related to GST received from the Australian Government.

Figure 13: Components of CHA Operating Revenue % Revenue 80 70 60

Operating Revenue

50

The CHA has revenue in excess of $2.7 billion of which the majority is Australian Government grants, predominantly GST and, to a lesser extent, Territory ownsource revenue. Total operating revenue increased by $180 million or 7 per cent compared with the previous year (see Table 31). Figure 13 indicates that the proportion of revenue by category has remained constant.

40 30 20 10 0

GST

Tax

2006-07

Royalties, Employer Other etc super 2005-06

Table 31: Significant Components of the $180 million Revenue Increase 2006-07

2005-06

Variation

$M

$M

$M

2 015

1 850

165

Payroll tax

187

181

6

Stamp duty on conveyances

113

137

- 24

Dividends and income tax equivalents

49

58

-9

Reduced amounts received from government trading entities, mainly Power and Water Corporation

Mining royalties

76

51

25

Increased commodity prices and strong production

GST revenue

Reason for Variation Increased GST revenue collected by the Australian Government combined with higher growth in Territory population Growth in employment across the Territory 2005-06 included a number of one-off transactions totalling $50 million; 2006-07 shows continued activity in business conveyancing albeit from a lower base

Operating Expenses The CHA had operating expenses of $2.7 billion in 2006-07, however the bulk of these were not for its own operations. In excess of 78 per cent was provided as appropriation to agencies to enable them to deliver government services across the Territory. A large proportion of the remainder relates to superannuation expenses and interest on borrowings. Total operating expenses increased by $369 million or 16 per cent compared to the previous year, largely the result of an increase in superannuation expense following actuarial reassessment and appropriation to agencies (see Table 32). Figure 14 indicates that the relative proportion of expenses by category, other than superannuation expense, has not changed significantly.

Figure 14: Components of CHA Operating Expenses % Expenses 90 80 70 60 50 40 30 20 10 0 -10

Output

Interest

2006-07

106

Annual Report 2006-07

Super 2005-06

Long Other service leave

Table 32: Significant Components of the $369 million Expenses Increase 2006-07

2005-06

$M

$M

2 128

2 073

55

425

111

314

Output appropriation Superannuation expense

Variation Reason for variation $M Increase to enable agencies to provide services across the Territory Increase following actuarial review

Balance Sheet As at 30 June 2007 net assets, being total assets less total liabilities, increased by $29 million to $1055 million, compared with $1026 million in 2005-06. Figures 15 and 16 compare the relative components of both assets and liabilities with the previous year. The most significant movement in assets relates to the increase in Advances and Investments of $212 million resulting from increased monies available for investment. In relation to liabilities, the most significant upward movement was an increase of $314 million in the level of superannuation liability following actuarial reassessment, largely related to the Commonwealth Superannuation Scheme. Figure 15: Components of CHA Operating Assets

% Assets 100 80 60 40 20 0

Figure 16: Components of CHA Operating Liabilities

Cash, etc 2006-07

Receivables Advances, etc 2005-06

Investments in agencies

% Liabilities 80

60

40

20

0

Deposits Borrowings Provisions held and advances 2006-07

Super liability

2005-06

Central Holding Authority Financial Statements

107

Certification of the Financial Statements

We certify that the attached financial statements for the Central Holding Authority have been prepared from proper accounts and records in accordance with the prescribed format, the Financial Management Act and Treasurer’s Directions. We further state that the information set out in the Operating Statement, Balance Sheet, Statement of Changes in Equity, Cash Flow Statement, and notes to and forming part of the financial statements, presents fairly the financial performance and cash flows for the year ended 30 June 2007 and the financial position on that date. At the time of signing, we are not aware of any circumstances that would render the particulars included in the financial statements misleading or inaccurate.

Jennifer Prince

David Braines-Mead

Under Treasurer

Senior Director Financial Management

30 September 2007

30 September 2007

108

Annual Report 2006-07

Operating Statement For the year ended 30 June 2007

Note

2007

2006

$000

$000

452 694

457 561

2 015 336

1 850 175

Current

6 790

21 871

Capital

8 436

INCOME Taxation revenue Grants and subsidies revenue GST revenue

Sales of goods and services Fees from regulatory services

13 638

11 810

Interest revenue

32 490

18 786

15

16

37 989

38 995

103 439

89 469

45 807

46 289

7 272

8 862

2 723 907

2 543 834

25 267

28 523

424 970

111 496

- 2 950

- 5 100

1 419

478

Interest expense

118 674

117 379

Output expense

2 127 603

2 073 400

TOTAL EXPENSES

2 694 983

2 326 176

28 924

217 658

Goods and services received free of charge

3

Unrealised gain on securities marked to market Royalties rents and dividends Employer superannuation contribution Other Income TOTAL INCOME EXPENSES Long service leave expense Superannuation expense

9

Workers compensation expense Administrative expenses Borrowing expenses

NET SURPLUS

10

The Operating Statement is to be read in conjunction with the notes to the financial statements.

Central Holding Authority Financial Statements

109

Balance Sheet As at 30 June 2007

Note

2007

2006

$000

$000

ASSETS Current assets Cash and deposits

4

61 387

37 755

Receivables

5

65 349

71 360

775 916

513 983

259

243

902 912

623 340

40 000

90 000

Investments in agencies

4 342 803

4 186 339

Total non-current assets

4 382 803

4 276 339

TOTAL ASSETS

5 285 715

4 899 679

327 656

289 446

Advances and investments Prepayments Total current assets Non-current assets Advances and investments

LIABILITIES Current liabilities Deposits held Payables

6

7 384

5 522

Borrowings and advances

7

861

799

Provisions

8

135 516

130 258

Superannuation liability

9

126 614

108 899

598 031

534 924

Total current liabilities Non-current liabilities Borrowings and advances

7

1 598 294

1 599 067

Provisions

8

73 610

75 310

Superannuation liability

9

1 960 773

1 664 297

Total non-current liabilities

3 632 677

3 338 674

TOTAL LIABILITIES

4 230 709

3 873 598

NET ASSETS

1 055 005

1 026 081

EQUITY Capital

590 252

Reserves Accumulated funds TOTAL EQUITY

10

1 055 005

435 829

1 055 005

1 026 081

The Balance Sheet is to be read in conjunction with the notes to the financial statements.

110

Annual Report 2006-07

Statement of Changes in Equity For the year ended 30 June 2007

Note BALANCE OF EQUITY AT 1 JULY

2007

2006

$000

$000

1 026 081

808 423

Balance at 1 July

590 252

590 252

Movement in year1

- 590 252

Capital

Balance at 30 June

10

590 252

Accumulated Funds Balance at 1 July

435 829

Movement in year

Surplus for the period Balance at 30 June BALANCE OF EQUITY AT 30 JUNE

218 171

590 252

1

10

28 924

217 658

1 055 005

435 829

1 055 005

1 026 081

1. A change in classification in preparation for adoption of Accounting Standard AASB 1049.

This Statement of Changes in Equity is to be read in conjunction with the notes to the financial statements.

Central Holding Authority Financial Statements

111

Cash Flow Statement For the year ended 30 June 2007

Note CASH FLOWS FROM OPERATING ACTIVITIES Operating receipts Taxes received Grants and subsidies received GST received Current Capital Royalties rent and dividends Agency superannuation contributions Other agency receipts Interest received Total operating receipts Operating payments Long service leave Superannuation benefits Payments for goods and services Interest paid Output payments Total operating payments Net cash from(+)/used(-) in operating 11 activities CASH FLOWS FROM INVESTING ACTIVITIES Investing receipts Equity sales or withdrawals Total investing receipts Investing payments Advances and investing payments Capital appropriation Equity acquisitions Total investing payments Net cash from(+)/used(-) in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Financing receipts Proceeds of borrowings Deposits received Total financing receipts Financing payments Repayment of borrowings Total financing payments Net cash from(+)/used(-) in financing activities Net increase(+)/decrease(-) in cash held Cash at beginning of financial year CASH AT END OF FINANCIAL YEAR 4

2007 $000

2006 $000

447 956

462 953

2 015 336 6 790 8 436 117 008 45 807 20 794 32 914 2 695 042

1 850 175 21 871

18 776 110 779 2 520 118 387 2 127 603 2 378 064 316 978

18 101 99 809 510 117 268 2 073 400 2 309 088 209 298

25 032 25 032

20 386 20 386

174 419 176 525 4 971 355 915 - 330 883

147 676 189 399 19 916 356 991 - 336 605

228 38 211 38 439

249 147 120 147 369

- 901 - 901 37 538 23 632 37 755 61 387

- 1 011 - 1 011 146 358 19 051 18 704 37 755

97 717 46 289 20 602 18 779 2 518 386

The Cash Flow Statement is to be read in conjunction with the notes to the financial statements. 112

Annual Report 2006-07

Notes to the Financial Statements For the year ended 30 June 2007

1. Objectives and Funding The Central Holding Authority (CHA) is the ‘parent body’ that represents the Government’s ownership interest in Government controlled entities. The CHA also records all Territory items. Territory items are revenues, expenses, assets and liabilities controlled by the Government and managed by agencies on behalf of the Government. The main Territory item is Territory revenue, which includes taxation and royalty revenue, Australian Government general purpose funding (such as GST revenue), fines and statutory fees and charges. The CHA also holds certain Territory assets not assigned to agencies as well as certain Territory liabilities that are not practical or effective to assign to individual agencies.

Territory items The CHA recognises all Territory items, therefore the Territory items managed by agencies on behalf of the Government are not recorded in their own financial statements. However, as agencies are accountable for the Territory items they manage on behalf of Government, these items have been separately disclosed in the notes of agency financial statements.

2. Statement of Significant Accounting Policies (a) Basis of Accounting The financial statements have been prepared in accordance with the requirements of the Financial Management Act and related Treasurer’s Directions. The Financial Management Act requires the CHA to prepare financial statements for the year ended 30 June 2007 based on the form determined by the Treasurer. The form of agency financial statements is to include: i) a Certification of the Financial Statements; ii) an Operating Statement; iii) a Balance Sheet; iv) a Statement of Changes in Equity; v) a Cash Flow Statement; and vi) applicable explanatory notes to the financial statements. The form of agency financial statements is consistent with the accrual budget format and the requirements of Australian Accounting Standards, including AASB 101, AASB 107 and AAS 29. The format also requires additional disclosures specific to Territory Government entities. The financial statements have been prepared using the accrual basis of accounting, which recognises the effect of financial transactions and events when they occur, rather than when cash is paid out or received.

Central Holding Authority Financial Statements

113

Notes to the Financial Statements For the year ended 30 June 2007

Except where stated, the financial statements have also been prepared in accordance with the historical cost convention.

(b) Comparatives Where necessary, comparative information for the 2005-06 financial year has been reclassified to provide consistency with current year disclosures.

(c) Presentation and Rounding of Amounts Amounts in the financial statements and notes to the financial statements are presented in Australian dollars and have been rounded to the nearest thousand dollars, with amounts of $500 or less being rounded down to zero.

(d) Changes in Accounting Policies There have been no changes to accounting policies adopted in 2006-07 as a result of management decisions.

(e) Goods and Services Tax Income, expenses and assets are recognised net of the amount of goods and services tax (GST), except where the amount of GST incurred on a purchase of goods and services is not recoverable from the Australian Taxation Office (ATO). In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of the expense. Receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from, or payable to, the ATO is included as part of receivables or payables in the Balance Sheet. Cash flows are included in the Cash Flow Statement on a gross basis. The GST components of cash flows arising from investing and financing activities which are recoverable from, or payable to, the ATO are classified as operating cash flows. Commitments and contingencies are disclosed net of the amount of GST recoverable or payable unless otherwise specified.

(f) Income Recognition Income encompasses both revenue and gains. Income is recognised at the fair value of the consideration received, exclusive of the amount of GST. Exchanges of goods or services of the same nature and value without any cash consideration being exchanged are not recognised as income.

114

Annual Report 2006-07

Notes to the Financial Statements For the year ended 30 June 2007

Grants and Other Contributions Grants, donations, gifts and other non-reciprocal contributions are recognised as revenue when the agency obtains control over the assets comprising the contributions. Control is normally obtained upon receipt. Contributions are recognised at their fair value. Contributions of services are only recognised when a fair value can be reliably determined and the services would be purchased if not donated. Taxation Territory taxation is recognised when the underlying transaction or event, which gives rise to the right to collect revenue, occurs and can be measured reliably. Government-assessed revenues, including payroll tax and stamp duty, are recognised when a taxpayer’s self-assessment is received. Additional revenues are recognised for assessments subsequently issued following review of returns lodged by taxpayers. In respect of taxation balances from government trading entities under the National Tax Equivalent Regime, only the current taxation receivable is recognised in these statements. Revenue from regulatory fees and fines is recognised at the time the fine or regulatory fee is issued. Sale of Goods Revenue from the sale of goods is recognised (net of returns, discounts and allowances) when control of the goods passes to the customer and specified conditions associated with the sale have been satisfied. Rendering of Services Revenue from rendering services is recognised on a stage of completion basis with respect to the contract. Interest Revenue Interest revenue is recognised as it accrues, taking into account the effective yield on the financial asset. Dividends Dividends revenue is recognised when control of the right to receive the dividend receivable from government trading entities is obtained by CHA.

(g) Interest Expenses Interest expenses include interest charges on borrowings and interest paid to government business divisions on cash holdings and are expensed in the period in which they are incurred.

Central Holding Authority Financial Statements

115

Notes to the Financial Statements For the year ended 30 June 2007

(h) Cash and Deposits For the purposes of the Balance Sheet and the Cash Flow Statement, cash includes cash on hand, cash at bank and cash equivalents controlled by the CHA. Cash equivalents are highly liquid short-term investments that are readily convertible to cash. Bank overdrafts are carried at the principal amount.

(i) Receivables Receivables include accounts receivable and other receivables and are recognised at fair value less any allowance for uncollectible amounts. The collectibility of receivables is reviewed regularly, and part of this process is to assess, at reporting date, whether an allowance for doubtful debts is required. Accounts receivable are generally settled within 30 days and other receivables within 30 days.

(j) Advances and Investments Advances include investment in financial assets for policy purposes and are recorded at cost. Investments include investments in financial assets for liquidity management purposes. Securities and investments are recorded at net market value, after deducting estimated costs of realisation at reporting date.

(k) Investments in Agencies This represents the contributed capital balances of the Territory’s investment in all its controlled entities.

(l) Deposits Held These represent amounts held on behalf of agencies, which are subsequently invested on their behalf.

(m) Payables Liabilities for accounts payable and other amounts payable are carried at cost which is the fair value of the consideration to be paid in the future for goods and services received, whether or not billed to the CHA. Accounts payable are normally settled within 30 days.

116

Annual Report 2006-07

Notes to the Financial Statements For the year ended 30 June 2007

(n) Provisions Employee Benefits As part of the introduction of Working for Outcomes, the CHA assumed the long service leave liabilities of Government agencies with the actual liability being transferred from agency ledgers during 2002-03. Liabilities arising in respect of long service leave due within twelve months of the reporting date are measured at their nominal amounts based on remuneration rates which are expected to be paid when the liability is settled. All other liabilities are measured at the present value of the estimated future cash outflow to be made in respect of services provided by employees up to the reporting date. Workers Compensation and Other Provisions Workers compensation and other provisions are measured at the present value of management’s best estimate of the expenditure required to settle the present obligation at the balance sheet date.

(o) Superannuation Liability Employees’ superannuation entitlements are provided through the: • Northern Territory Government and Public Authorities’ Superannuation Scheme (NTGPASS); • Commonwealth Superannuation Scheme (CSS); or • non-government employee nominated schemes for those employees commencing on or after 10 August 1999. Liability for government superannuation is met directly by the CHA. Agencies make superannuation contributions on behalf of their employees to the CHA or the non-government employee nominated schemes.

(p) Borrowings and Advances Borrowings represent funds raised for liquidity management purposes through the Northern Territory Treasury Corporation. Advances reflect loans received for policy purposes.

Central Holding Authority Financial Statements

117

Notes to the Financial Statements For the year ended 30 June 2007

2007

2006

$000

$000

3. Goods and Services Received Free of Charge Corporate and information services

15

16

Total

15

16

Cash and short-term deposits

61 387

37 755

Total cash and deposits

61 387

37 755

Taxes receivable

40 046

35 502

Royalties, rents and dividends receivable

21 867

32 983

Interest receivables

1 325

1 312

Other receivables

2 111

1 564

Total receivables

65 349

71 360

168

1 046

7 216

4 476

7 384

5 522

861

799

861

799

1 598 294

1 599 067

1 598 294

1 599 067

1 599 156

1 599 867

4. Cash and Deposits

5. Receivables

6. Payables Current Accounts payable Other payables

7. Borrowings and Advances Current Loans and advances Non-current Loans and advances Total borrowings and advances

118

Annual Report 2006-07

Notes to the Financial Statements For the year ended 30 June 2007

2007

2006

$000

$000

120 923

116 222

14 593

14 036

135 516

130 258

Long service leave

32 453

30 646

Workers compensation

41 157

44 664

73 610

75 310

209 126

205 568

Balance as at 1 July

58 700

63 800

Additional provisions recognised

11 643

8 936

Reductions arising from payments

- 14 593

- 14 036

55 750

58 700

8. Provisions Current Long service leave Workers compensation Non-current

Total provisions Reconciliations of provisions – workers compensation and other

Balance as at 30 June

9. Superannuation Liability Employees’ superannuation entitlements are provided through the: • NTGPASS; • CSS; or • non-government employee nominated schemes for those employees commencing on or after 10 August 1999. Liability for government superannuation is met directly by the CHA. Agencies make superannuation contributions on behalf of their employees to the CHA or the non-government employee nominated schemes. These benefits are largely unfunded and the liabilities for future payments are provided for at reporting date. The liabilities under these schemes have been calculated annually by various actuaries using the projected unit cost method. The expected future payments are discounted to present value using market yields at the reporting date on national government bonds with terms to maturity that match, as closely as possible, the estimated future cash outflows.

Central Holding Authority Financial Statements

119

Notes to the Financial Statements For the year ended 30 June 2007

2007

2006

%

%

Discount rate (gross of tax)

6.25

5.90

Salary rate

4.50

3.50

Expected return on plan assets

6.00

6.00

Inflation (pensions)

2.50

2.50

Imputed cost of interest

5.90

5.20

2007

2006

$000

$000

9. Superannuation Liability (continued) Key assumptions Key assumptions as at balance date and for following year expense:

Balance sheet amounts The amounts recognised in the balance sheet are determined as follows: Total defined benefit obligations

2 144 450

1 821 792

57 063

48 596

Deficit(+)/surplus(-)

2 087 387

1 773 196

Current net liability

126 614

108 899

Non-current net liability

1 960 773

1 664 297

Net liability

2 087 387

1 773 196

1 773 196

1 761 509

424 970

111 496

- 110 779

- 99 400

Scheme assets

Movement in net liability Net liability in balance sheet at end of prior year Expense recognised in operating statement Benefits paid Other Net liability in balance sheet at end of year

- 409 2 087 387

1 773 196

56 880

47 705

Other

183

891

Total

57 063

48 596

Plan assets The major categories of plan assets are as follows: Investment trust

120

Annual Report 2006-07

Notes to the Financial Statements For the year ended 30 June 2007

2007

2006

$000

$000

57 063

48 596

Unfunded

2 087 387

1 773 196

Total

2 144 450

1 821 792

Interest cost

104 800

96 103

Net actuarial losses(+)/gains(-) recognised in year

236 920

- 55 600

83 250

70 993

424 970

111 496

590 252

590 252

9. Superannuation Liability (continued) Funded status Defined benefit obligations: Funded

Income statement The amounts recognised in the income statement are as follows:

Past service cost Total included in superannuation expense

10. Equity Capital Balance as at 1 July Equity transfer out to accumulated funds1

- 590 252

Balance as at 30 June

590 252

Accumulated funds Balance as at 1 July

435 829

Equity transfer in from capital1

590 252

218 171

Surplus for the period

28 924

217 658

Balance as at 30 June

1 055 005

435 829

1. A change in classification in preparation for adoption of Accounting Standard AASB 1049.

Central Holding Authority Financial Statements

121

Notes to the Financial Statements For the year ended 30 June 2007

2007

2006

$000

$000

11. Notes to the Cash Flow Statement Reconciliation of cash The total of agency cash and deposits of $61.4 million (2006: $37.8 million) recorded in the Balance Sheet is consistent with that recorded as ‘cash’ in the Cash Flow Statement. Reconciliation of net surplus(+)/deficit(-) to net cash from operating activities Net surplus(+)

28 924

217 658

- 37 989

- 38 995

Amortisation on investments

475

370

Gain on extinguishment

- 38

- 53

6 011

11 253

- 16

- 243

1 863

878

320 699

23 529

- 2 950

- 5 100

316 978

209 298

Changes in assets and liabilities: Unrealised gain(-)/loss (+)on securities marked to market

Decrease(+)/increase(-) in receivables Decrease(+)/increase(-) in prepayments Decrease(-)/increase(+) in payables Decrease(-)/increase(+) in provision for employee benefits Decrease(-)/increase(+) in other provisions Net cash from operating activities

12. Financial Instruments A financial instrument is a contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. Financial instruments held by the CHA include cash and deposits, receivables, payables and finance leases. The CHA has limited exposure to financial risks as discussed below.

(a) Credit Risk The CHA has limited credit risk exposure (risk of default). In respect of any dealings with organisations external to Government, the agency has adopted a policy of only dealing with creditworthy organisations and obtaining sufficient collateral or other security where appropriate, as a means of mitigating the risk of financial loss from defaults. The carrying amount of financial assets recorded in the financial statements, net of any allowances for losses, represents the CHA’s maximum exposure to credit risk without taking account of the value of any collateral or other security obtained.

122

Annual Report 2006-07

Notes to the Financial Statements For the year ended 30 June 2007

(b) Net Fair Value The carrying amount of financial assets and financial liabilities recorded in the financial statements approximates their respective net fair values. Where differences exist, these are not material.

(c) Interest Rate Risk The CHA’s exposure to interest rate risk and the average interest rate for classes of financial assets and financial liabilities are set out in the following tables. The average interest rate is based on the outstanding balance at the start of the year. Fixed Interest Maturity Weighted Average NonInterest Variable Under 1 Over 1 to Over 2 to Over 3 to Over 4 to Over 5 Interest Rate Interest Year 2 Years 3 Years 4 Years 5 Years Years Bearing %

$000

$000

$000

$000

$000

$000

$000

$000

Total $000

2007 Financial assets Cash and deposits

6.25

61 387

61 387

Receivables

65 349

65 349

421 908

421 908

Advances and investments Unit trust investments Discount securities

6.39

324 099

Floating rate notes

6.56

5 000

5 000

4.03

24 958

9 983

19 967

61 387 354 057

14 983

19 967

Fixed interest securities Total financial assets

324 099 5 000

15 000 54 908

5 000

487 257

942 651

327 656

327 656

7 384

7 384

Financial liabilities Deposits held Payables Borrowings and advances Total financial liabilities Net financial assets(+)/ liabilities(-)

6.61

390 000 100 000 295 000 305 000

82 900 426 256

1 599 156

390 000 100 000 295 000 305 000

82 900 426 256 335 041 1 934 197

61 387 -35 942 -85 017 -275 033 -305 000 -77 900 -426 256 152 217 -991 544

Central Holding Authority Financial Statements

123

Notes to the Financial Statements For the year ended 30 June 2007

12. Financial Instruments (continued) Fixed Interest Maturity Weighted Average NonInterest Variable Under 1 Over 1 to Over 2 to Over 3 to Over 4 to Over 5 Interest Rate Interest Year 2 Years 3 Years 4 Years 5 Years Years Bearing %

$000

$000

$000

$000

$000

$000

$000

$000

Total $000

2006 Financial assets Cash and deposits

5.75

37 755

37 755

Receivables

71 360

71 360

233 483

233 483

Advances and investments Unit trust investments Discount securities

5.92

Floating rate notes

6.14

Fixed interest securities

280 500 5 000

5.80

Total financial assets

280 500

35 000 37 755 280 500

35 000

5 000

5 000

10 000

25 000

20 000

30 000

20 000

80 000 304 843

713 098

289 446

289 446

5 522

5 522

Financial liabilities Deposits held Payables Borrowings and advances

9.00

258 771 390 000 100 000 295 000 128 900 427 195

Total financial liabilities Net financial assets(+)/ liabilities(-)

124

Annual Report 2006-07

1 599 866

258 771 390 000 100 000 295 000 128 900 427 195 294 968 1 894 834 37 755

21 729 -355 000 -95 000 -265 000 -108 900 -427 195

9 875 -1 181 736

Notes to the Financial Statements For the year ended 30 June 2007

13. Contingent Liabilities and Contingent Assets The CHA had no contingent liabilities or contingent assets as at 30 June 2007 or 30 June 2006.

14. Events Subsequent to Balance Date No events have arisen between the end of the financial year and the date of this report that require adjustment to, or disclosure, in these financial statements.

15. Write-offs, Postponements and Waivers The CHA had no write-offs, postponements or waivers in 2006-07 or 2005‑06.

Central Holding Authority Financial Statements

125

Appendixes, Glossary and Lists Appendixes 1. Directory

128

2. Functions of Treasury

130

3. Treasury’s Organisational Chart

133

4. Corporate Governance Committees

134

5. Membership of Boards and Committees 137 6. Legislation Administered

139

7. Legislative Changes 2006-07

140

8. Competitive Neutrality

142

9. Publications

143

Glossary

146

List of Tables and Figures

149

Appendix 1:

Directory

Northern Territory Treasury 38 Cavenagh Street GPO Box 1974 Darwin NT 0801 (unless otherwise stated, please use this postal address) General Enquiries Tel (08) 8999 7406 Business hours: 8:00 am to 4:30 pm

Executive Under Treasurer Jennifer Prince 7th Floor, Cavenagh House Tel (08) 8999 6033 Fax (08) 8999 7150 Deputy Under Treasurer (Commercial and Economic) Peter Caldwell 7th Floor, Cavenagh House Tel (08) 8999 7087 Fax (08) 8999 7150 Manager Secretariat Felicity Wannan 7th Floor, Cavenagh House Tel (08) 8999 6700 Fax (08) 8999 7150

Financial Management Assistant Under Treasurer (Budgets and Finance) Jodie Kirkman 7th Floor, Cavenagh House Tel (08) 8999 7433 Fax (08) 8999 7150 Senior Director Financial Management David Braines-Mead, Bronwyn Riedel 6th Floor, Cavenagh House Tel (08) 8999 6110, (08) 8999 6611 Fax (08) 8999 5095

128

Annual Report 2006-07

Director Financial Reporting Lisa Strohfeldt 6th Floor, Cavenagh House Tel (08) 8999 6754 Fax (08) 8999 5095

Director Social Analysis Jenny Coccetti 5th Floor, Cavenagh House Tel (08) 8999 6255 Fax (08) 8999 6446

Director Budget Development Sibylle Brautigam, Amanda Balchin 6th Floor, Cavenagh House Tel (08) 8999 5586 Fax (08) 8999 5095

Director Economic Policy Rodney McComiskie 5th Floor, Cavenagh House Tel (08) 8999 6428 Fax (08) 8999 6446

Economic

Director Economic Frameworks Craig Graham 5th Floor, Cavenagh House Tel (08) 8999 7238 Fax (08) 8999 6446

Assistant Under Treasurer (Economic) Tony Stubbin 7th Floor, Cavenagh House Tel (08) 8999 6447 Fax (08) 8999 7150 Senior Director Commercial Anne Tan 5th Floor, Cavenagh House Tel (08) 8999 6812 Fax (08) 8999 6446 Senior Director Public Finance Bruce Michael 5th Floor, Cavenagh House Tel (08) 8999 6398 Fax (08) 8999 6446 Senior Director Economic and Social Analysis Tony Barnes 7th Floor, Cavenagh House Tel (08) 8999 6514 Fax (08) 8999 7150 Director Economic Analysis Sarah Rummery 5th Floor, Cavenagh House Tel (08) 8999 6546 Fax (08) 8999 6446

Territory Revenue Office GPO Box 154 Darwin NT 0801 General Enquiries Tel (08) 8999 7949 or 1300 305 353 Fax (08) 8999 6395 Executive Director Revenue Commissioner of Taxes Craig Vukman 9th Floor, Cavenagh House Tel (08) 8999 7935 Fax (08) 8999 6395 Director Revenue Collection Deputy Commissioner of Taxes Murray Hancock 9th Floor, Cavenagh House Tel (08) 8999 6326 Fax (08) 8999 6395 Director Revenue Development Assistant Commissioner of Taxes Ivan Basei 9th Floor, Cavenagh House Tel (08) 8999 6388 Fax (08) 8999 6395

Northern Territory Superannuation Office GPO Box 4675 Darwin NT 0801 General Enquiries Tel (08) 8901 4200 or 1800 631 630 Fax (08) 8901 4222 Commissioner of Superannuation Kathleen Clayden 1st Floor, Cavenagh House Tel (08) 8901 4272 Fax (08) 8901 4277

Treasury Services Group Assistant Under Treasurer (Corporate and Superannuation) Catherine Wauchope 7th Floor, Cavenagh House Tel (08) 8999 6691 Fax (08) 8999 7150

Statutory Offices Northern Territory Treasury Corporation Senior Director Funds Management John Montague 3rd Floor, Cavenagh House GPO Box 2035 Darwin NT 0801 Tel (08) 8999 7975 Fax (08) 8999 7449 Utilities Commission Commissioner Alan Tregilgas 9th Floor, Cavenagh House GPO Box 915 Darwin NT 0801 Tel (08) 8999 5480 Fax (08) 8999 6262

Director Corporate Support Sarah Temple 4th Floor, Cavenagh House Tel (08) 8999 5059 Fax (08) 8999 6150 Manager Communications and Information Services Richard Smith 7th Floor, Cavenagh House Tel (08) 8999 7911 Fax (08) 8999 7150

Appendixes

129

Appendix 2:

Functions of Treasury

The services Treasury provides include advice, analysis and administration of matters relating to: • financial management and fiscal initiatives; • economic frameworks and the Territory economy; • commercial projects; • own-source revenue including taxation; • public sector superannuation; • borrowing and investing on behalf of the Territory; and • grants, subsidies and community service obligations related to its responsibilities. Following are details of the functions and responsibilities of the groups and business units in Treasury. This is supplemented by the Organisational Chart at Appendix 3 which shows Treasury’s management reporting structure.

Financial Management Group The Financial Management Group is responsible for advice on and management of the Territory’s finances and related arrangements. It comprises a number of areas of expertise including: • budget development; • financial reporting; • policy analysis and development; • budgeting and reporting system (Apex); and • whole of government financial information requirements. In fulfilling its responsibility for the development and management of the Territory Budget, the group provides advice to the Treasurer, the Government and agencies on budget proposals, assists agencies and monitors agency performance in delivering outputs. It is also responsible for coordination, analysis and monitoring of the Territory’s Infrastructure Program. The group manages the preparation and analysis of both agency and whole of government financial statements in the development of the Budget and its monitoring throughout the year.

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It also manages the Central Holding Authority, is responsible for administering the Territory’s financial management framework and policies, developing and maintaining the whole of government budgeting and reporting system, meets the Territory’s external reporting requirements and plays a major role in developing and monitoring the Territory’s Fiscal Strategy. It also manages the Government’s commercial accountabilities and risks under the Financial Management Act.

Economic Group The Economic Group provides analysis and advice on economic and commercial issues. It comprises four business units: Commercial, Economic Policy and Frameworks, Economic and Social Analysis, and Public Finance.

Commercial Commercial provides commercial advice to Government. It administers the government owned corporations framework on behalf of the shareholding Minister and provides financial and commercial advice, particularly on major government projects and initiatives and public private partnership policy issues.

Economic Policy and Frameworks Economic Policy and Frameworks aims to ensure that the Territory’s economic resources are applied in a manner which promotes the Territory’s economic performance. The unit provides advice on economic policy and reform issues including the National Reform Agenda (legislative review, infrastructure regulation, transport and energy reform and competitive neutrality), government owned businesses, water reform, climate change, insurance and broader Government policy initiatives.

Economic and Social Analysis Economic and Social Analysis provides a quantitative view of the Territory economy and relevant social issues, as a basis for policy development by Government. The business unit monitors and analyses trends in macro-economic conditions, provides regular briefings for the Treasurer and senior officials and regularly publishes information and analysis on the Territory economy. It also analyses and provides advice on social statistics of significance in the Territory. It has responsibility for demographic analysis and research and oversees statistical coordination across Northern Territory Government agencies.

Public Finance Public Finance has its primary focus on intergovernmental financial arrangements, incorporating a wide spectrum of policy issues. Major activities include representation on national working groups on goods and services tax administration and specific purpose payments policy, analysis of whole of government financial issues, provision of strategic advice on intergovernmental financial relations, and management of submissions and data returns to the Commonwealth Grants Commission.

Territory Revenue Office Territory Revenue Office provides advice on the Territory’s taxes and charges regime, and administers Northern Territory taxes, tax-related grants and subsidies and mineral royalties in a fair and equitable manner. It comprises two business units: Revenue Collection and Revenue Development.

Revenue Collection Revenue Collection ensures the effective collection of Territory revenue in accordance with the relevant tax and royalty legislation and develops community understanding of revenue obligations. The area advises on and administers tax and royalty legislation, including identifying tax and royalty payers and minimising losses to revenue from avoidance practices. It also administers a number of subsidy schemes and grants, including the first home owner grant.

Revenue Development Revenue Development ensures the continuing relevance and efficacy of the Territory’s revenue regime. The area provides advice to Government on revenue policy and budgetary issues, undertakes revenue modelling and forecasting analysis, monitors revenue collections, reviews decisions made under tax and royalty legislation and manages the Territory Revenue Office’s information systems.

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Northern Territory Superannuation Office Northern Territory Superannuation Office is responsible for superannuation policy and legislation that meets statutory requirements of Territory and national superannuation legislation, member services, support services for the Trustee and Review Boards of various schemes, and the Northern Territory Government.

Treasury Services Group Treasury Services Group provides executive and corporate services to enable Treasury to fulfil its role as the key central agency for the provision of fiscal, economic and commercial advice.

Senior Executive The Under Treasurer, Deputy and Assistant Under Treasurers and Executive Director have whole of agency responsibilities and accountabilities, providing strategic direction and leadership for Treasury. They are also involved in high level whole of government projects and policy development.

Executive Support Executive Support provides support services to the Under Treasurer, senior executives and the Treasurer’s office. The area provides central coordination and liaison services for Treasury between the Treasurer’s office, other Ministers’ offices, the Cabinet Office, Legislative Assembly and other Government agencies on issues relating to Treasury responsibilities.

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Corporate Support Corporate Support provides services to Treasury business units to enable staff to concentrate on core business in their functional area. Services include human resource management, recruitment, staff development, finance and accounting, office accommodation, asset control and vehicles. The area also manages the Finance Officer in Training (FOIT) graduate employment program and other entry-level employment programs for Treasury.

Information Management and Systems Information Management and Systems also provides services to Treasury business units including internal and external communication activities; website management; publishing Budget Papers and other key Treasury publications, reports and documents; information and communications technology; building and internal access control; and records management. The Information Officer is part of Treasury Services and coordinates activities relating to Treasury’s Information Act responsibilities.

Statutory Offices The following statutory offices also fall within the administrative responsibility of Treasury, which provides support for these entities to conduct their business operations.

Northern Territory Treasury Corporation Northern Territory Treasury Corporation is the Territory Government’s central financing authority and borrows, lends and invests on behalf of the Territory. The Corporation provides loans to Government, its agencies, government owned corporations and, in certain circumstances, local governing authorities. It manages an average of $500 million in investments including investing the surplus cash balances in Government accounts.

Utilities Commission The Utilities Commission is the independent regulator established to oversee those industries declared to be regulated industries, currently the electricity and water supply and sewerage services industries. The Commission was established as a separate administrative unit within Treasury, has specific statutory powers and undertakes its considerations independently of Treasury. The Commission is responsible for promoting and safeguarding competition and fair and efficient market conduct or, in the absence of a competitive market, simulating competitive market conduct and preventing the misuse of monopoly power.

Appendix 3:

Treasury’s Organisational Chart at September 2007

Executive Director Revenue Craig Vukman

Territory Revenue Office Murray Hancock Ivan Basei

Commercial Anne Tan

Economic Policy and Frameworks

Under Treasurer Jennifer Prince

Assistant Under Treasurer (Economic) Tony Stubbin

Deputy Under Treasurer (Commercial and Economic)

Rodney McComiskie Craig Graham

Economic and Social Analysis Tony Barnes Sarah Rummery Jenny Coccetti

Public Finance

Peter Caldwell

Bruce Michael

Treasury Corporation John Montague

Financial Management Assistant Under Treasurer (Budgets and Finance) Jodie Kirkman

David Braines-Mead Bronwyn Riedel Lisa Strohfeldt Sibylle Brautigam Amanda Balchin

Superannuation Office Kathleen Clayden

Assistant Under Treasurer (Corporate and Superannuation) Catherine Wauchope

Corporate Support Sarah Temple

Information Management and Systems Richard Smith

Executive Support and Secretariat Senior Management Group

Felicity Wannan

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Appendix 4:

Corporate Governance Committees

Fiscal Strategy Committee Responsible for development of strategic policy advice on the Territory’s fiscal, budgetary and economic position, and monitoring performance against the Government’s fiscal objectives. Although the committee’s focus concerns issues unrelated to internal management, it is responsible for the management of strategic issues that draw on expertise from several areas across Treasury and which necessarily require a comprehensive (rather than narrow) approach. In this sense, it is an important element in Treasury’s governance arrangements and is regarded as one of Treasury’s corporate governance committees. Membership Assistant Under Treasurer (Budgets and Finance), Jodie Kirkman (Chair) Assistant Under Treasurer (Economic), Tony Stubbin Executive Director Revenue, Craig Vukman Senior Director Financial Management, David Braines-Mead

Risk and Audit Committee Responsible for: • monitoring business risk assessments and adequacy of internal controls established to manage identified risks and review the adequacy of policies, practices and procedures that impact on those controls; • overseeing the audit and risk management function within Treasury, including the development of internal audit and risk management programs, terms of reference, monitoring audit and risk management outcomes and the implementation of recommendations; • reviewing the effectiveness of structures and practices that support the key elements of Treasury’s corporate governance framework; and • reviewing the outcomes and monitoring responses to recommendations of external auditors. Membership Under Treasurer, Jennifer Prince Deputy Under Treasurer (Commercial and Economic), Peter Caldwell (Chair) Assistant Under Treasurer (Economic), Tony Stubbin Executive Director Revenue, Craig Vukman Assistant Under Treasurer (Corporate and Superannuation), Catherine Wauchope Assistant Under Treasurer (Budgets and Finance), Jodie Kirkman Director Corporate Support, Sarah Temple

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Human Resource Management Committee Responsible for guiding the development and implementation of human resource management policy and planning in Treasury. Membership Under Treasurer, Jennifer Prince (Chair) Deputy Under Treasurer (Commercial and Economic), Peter Caldwell Assistant Under Treasurer (Economic), Tony Stubbin Executive Director Revenue, Craig Vukman Assistant Under Treasurer (Corporate and Superannuation), Catherine Wauchope Assistant Under Treasurer (Budgets and Finance), Jodie Kirkman Director Corporate Support, Sarah Temple

Professional Development Committee Responsible for considering and setting policy relating to professional development of staff. Membership Assistant Under Treasurer (Corporate and Superannuation), Catherine Wauchope (Chair) Assistant Under Treasurer (Economic), Tony Stubbin Assistant Under Treasurer (Budgets and Finance), Jodie Kirkman

Information Management Committee Responsible for guiding development, management and use of Treasury’s information resources and technology. Membership Under Treasurer, Jennifer Prince (Chair) Deputy Under Treasurer (Commercial and Economic), Peter Caldwell Assistant Under Treasurer (Economic), Tony Stubbin Executive Director Revenue, Craig Vukman Assistant Under Treasurer (Corporate and Superannuation), Catherine Wauchope Assistant Under Treasurer (Budgets and Finance), Jodie Kirkman Manager Communications and Information Services, Richard Smith

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Occupational Health and Safety Committee Responsible for: • facilitating the provision of safe workplaces and systems of work through the cooperative efforts of Treasury and its employees; • developing, implementing and monitoring measures designed to ensure the health and safety of employees at work; and • advocating acceptable and responsible practices by employees and others and promoting the health and safety ethos for the workplace. Membership Manager Office Services, Peter Jones (Chair) Director Corporate Support, Sarah Temple Manager Communications and Information Services, Richard Smith Sharon Laughton (Superannuation) Christine Millowick (Revenue) Douglas Burns (Financial Management) Leigh Jenner (Treasury Services)

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Appendix 5:

Membership of Boards and Committees Northern Territory Public Sector Agents Licensing Fidelity Guarantee Fund Investment Board Asset Management Systems Review Steering Committee AustralAsia Railway Corporation Charles Darwin University Council

Inter-Departmental Committee on Corporate Taxation and Superannuation Advice Legal Practitioners Funds Management Committee

Major Projects Group

Regional Development InterDepartmental Committee

Major Projects Taskforces:

Chief Executives Taskforce on Indigenous Affairs

• Defence Support Industries

Competition Impact Analysis Committee Coordination Committee Coordination Committee – Capital Works Review Subcommittee Corporate Services Review Steering Group Corrective Services Working Group Darnor Pty Ltd Darwin Waterfront Corporation Enterprise Architecture Reference Group Executive Remuneration Review Panel Gasgo Pty Ltd Government Office Accommodation Committee Indigenous Economic Development Inter-Departmental Committee

Public Sector Consultative Council Public Trustee Investment Board

• AustralAsia Trade Route

Communications and Marketing Directors’ Forum

Public Housing Management in Remote Areas and Town Camps Working Group

Legislative Assembly Members’ Superannuation Trust

Charles Darwin University Audit and Risk Committee

Chief Finance Officers Forum

Procurement Review Board (Darwin)

• Darwin Waterfront Redevelopment

Secretariat Network Group Statistical Priorities Advisory Committee

• Onshore Gas Developments

Strategic Workforce Steering Committee

Measuring Indigenous Economic Development Steering Committee

Superannuation Investment Board

Northern Territory Government Census Steering Committee Northern Territory Government Information Management Committee

Territory Motor Sports Board Limited Territory Taxation Administration Liaison Committee

Northern Territory Government Information Management Committee – Records Management Subcommittee Northern Territory Police Legacy Board Northern Territory Police Supplementary Benefit Scheme Trust Northern Territory Population Intelligence Working Group Northern Territory Statistical Liaison Committee Northern Territory Treasury Corporation Advisory Board NT Build Board NT Gas Distribution Pty Ltd NT Gas Pty Ltd

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National Australian Bureau of Statistics 2006 Census Coordination Committee Australian Bureau of Statistics 2006 Census Indigenous Enumeration Committee Australian Bureau of Statistics Advisory Group on Aboriginal and Torres Strait Islander Statistics Australian Statistics Advisory Council Council of Australian Governments Indigenous Generational Reform Working Group Council of Australian Governments Local Government Working Group Goods and Services Tax Administration Subcommittee Goods and Services Tax Policy Advisory Group

Public Private Partnerships Working Party State Tax Commissioners Business Practices Subcommittee State Tax Commissioners Compliance Committee State Tax Commissioners Group State Tax Commissioners Information and Communication Technology Committee State Tax Commissioners National First Home Owner Grant Committee State Tax Commissioners Tax Law Committee State Tax Commissioners Training and Customer Education Committee Steering Committee for Review of Government Service Provision

Heads of Treasuries

Treasury Corporate Services Directors’ Forum

Heads of Treasuries Accounting and Reporting Advisory Committee

Uniform Presentation Framework Committee

Heads of Treasuries Budget and Financial Framework Advisory Committee

Utility Regulators Forum

Heads of Treasuries Specific Purpose Payments Working Group Heads of Treasuries Tax Equivalents Regime Working Party Natural Disaster Relief and Recovery Arrangements Stakeholder Group National Reform Agenda Competition and Regulation Working Group National Reform Agenda Human Capital Working Group

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Appendix 6:

Legislation Administered

Advance Bank Integration Act Appropriation Act Bank of South Australia (Merger with Advance Bank) Act Competition Policy Reform (Northern Territory) Act Debits Tax Act Electricity Networks (Third Party Access) Act Electricity Reform Act (economic regulation) Energy Resource Consumption Levy Act Energy Resource Consumption Levy (Waiver of Levy) Act Financial Agreement Between the Commonwealth, States and Territories (Approval) Act Financial Institutions Duty Act Financial Management Act Financial Relations Agreement (Consequential Provisions) Act First Home Owner Grant Act

Gaming Control Act (tax and levy provisions)

Soccer Football Pools Act (duty provisions)

Gaming Machine Act (tax, levy and fee provisions)

Stamp Duty Act

Government Owned Corporations Act McArthur River Project Agreement Ratification Act (royalty provisions)

Superannuation Act Superannuation Guarantee (Safety Net) Act Taxation (Administration) Act

Merlin Project Agreement Ratification Act (royalty provisions)

Territory Insurance Office Act

Mineral Royalty Act

Totalisator Licensing and Regulation Act (tax provisions)

Mining (Gove Peninsula Nabalco Agreement) Act (royalty provisions)

Utilities Commission Act

Motor Accidents (Compensation) Act

Water Supply and Sewerage Services Act (economic regulation)

Motor Vehicles Act (Part V) New Tax System Price Exploitation Code (Northern Territory) Act Northern Territory Treasury Corporation Act Pay-roll Tax Act Petroleum Act (royalty provisions) Racing and Betting Act (tax provisions) Revenue Units Act

Fiscal Integrity and Transparency Act Fuel Subsidies Act

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Appendix 7:

Legislative Changes 2006-07 Own-Source Revenue Stamp Duty Act and Taxation (Administration) Act Amendments commencing from 1 May 2007: • increased the first home owner stamp duty concession from the stamp duty payable on the first $225 000 of a home’s value (a concession of up to $8 015) to the first $350 000 (a concession of up to $15 312); and • prevented the use of the stamp duty corporate reconstruction exemption to frustrate the recovery of any stamp duty, tax or royalty payable to the Territory. Amendments commencing from 1 July 2007: • abolished stamp duty on hiring arrangements; • abolished stamp duty on the grant of a lease for nil or nominal consideration; • exempted all types of guarantees from stamp duty; • clarified that anything that is physically fixed to land is regarded as ‘land’ for the purposes of the stamp duty ‘land holder’ provisions; • clarified that the stamp duty valuation provisions imposed stamp duty on the full value and best use of land, which includes having regard to information that enhances the value of land;

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• clarified that the stamp duty treatment of mining information in relation to mines that are not subject to the Mining Act is the same as information relating to mines governed by the Mining Act; and • clarified that a person who has previously owned a home interstate under a long-term lease cannot qualify for the stamp duty first home owner concession on a subsequent home purchase. First Home Owner Grant Act Amendments commencing from 1 July 2007: • clarified that consideration needs to actually have been paid for the purchase of a home before an applicant can receive the first home owner grant; and • clarified that any overpayment of a first home owner grant can be recovered.

Motor Accidents Compensation Motor Accidents (Compensation) Act The Motor Accidents (Compensation) Act (MACA) prescribes compensation benefits for persons injured, or the dependants of persons killed, in motor vehicle accidents in the Territory. The MACA scheme is funded by contributions paid by motorists at the time of registering or re‑registering a motor vehicle. Following a comprehensive review of motor accident compensation benefits in 2006, involving an extensive public consultation process, MACA amendments commencing from 1 July 2007: • abolished common law damages for non residents, with benefits prescribed under MACA applying for all accidents in the Territory regardless of residency of the claimant or location of accident; • limited MACA benefits to accidents occurring within Australia (with provision for lump sum payment of benefits, in certain circumstances, where a claimant relocates overseas); • increased the cap on benefits for personal attendant care for the severely and permanently injured from 28 to 32 hours per week and to reduce the permanent impairment threshold for eligibility for benefits from 85 per cent to 60 per cent;

• introduced new benefits for seriously and permanently injured, including respite care (equal to two weeks attendant care benefits per year) and domestic services (such as home repairs, maintenance and cleaning); • introduced a new $4000 emergency travel payment to assist family members to visit a seriously injured relative;

Superannuation Northern Territory Police Supplementary Benefit Scheme Trust Deed The Northern Territory Police Supplementary Benefit Scheme Trust Deed was amended on 15 March 2007 to clarify that the application of interest to member accounts can be positive or negative.

• excluded the owner or driver from non-medical benefits if the motor vehicle was unregistered at the time of accident for more than three months; • linked the existing exclusion from non-medical benefits for accidents involving alcohol or drugs to relevant laws regulating road traffic and provided for reduced death benefits for accidents involving alcohol and drugs; • excluded non-medical benefits where a person engages in conduct that creates a substantial risk of injury and the person recklessly ignores that risk; and • reduced non-medical benefits by 25 per cent for persons not wearing a seat belt or helmet at the time of accident (where required to do so).

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Appendix 8:

Competitive Neutrality

Treasury is responsible for managing competitive neutrality policy development and monitoring for Northern Territory Government trading enterprises. Competitive neutrality aims to ensure that significant government businesses do not enjoy net competitive advantages over competitors simply by virtue of their public ownership. Implementation of competitive neutrality principles since 1995 has improved the transparency and accountability of government businesses and ensured that public resources are used efficiently. A key objective of competitive neutrality is to encourage fair and effective competition in the supply of goods and services across the economy. Competitive neutrality principles are implemented through provisions of the Financial Management Act and the Government Owned Corporations Act. Government businesses are required to operate with a commercial focus, to meet the same costs as privately owned firms (for example, taxes and charges), and to set prices that enable them to earn sufficient revenue to cover costs, including the cost of capital.

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Treasury manages the competitive neutrality complaints process and is responsible for monitoring government business divisions’ pricing policy and community service obligations. In August 2006, Treasury received a formal complaint that related to whether the Darwin Aquaculture Centre had an unfair competitive advantage in supplying barramundi larvae for a particular transaction. The complaint was investigated and dismissed on the basis that the complainant could not substantiate a material loss associated with the transaction.

Appendix 9:

Publications Northern Territory Budget Papers The 2007-08 Budget was handed down on 1 May 2007.

2007-08 Budget Budget Paper No. 1 Budget Speech The Treasurer’s speech to the Legislative Assembly describes the Government’s Budget strategy and key features of the 2007-08 Budget, together with the Bill presented to Parliament outlining appropriations for 2007-08. Budget Paper No. 2 Fiscal and Economic Outlook Meets the requirements of the Fiscal Integrity and Transparency Act. Includes a discussion of the Government’s fiscal strategy, the fiscal and economic outlook for 2007-08 and the forward estimates period, an overview of expenditure and revenue initiatives in the Budget, and current issues in public finance from the Territory’s perspective. The financial data provided meets the Territory’s obligations under the Uniform Presentation Framework (UPF) as agreed between governments. Budget Paper No. 3 The Budget Provides detailed information on the budgets of agencies and government business divisions in the Northern Territory budget sector, and focuses on the services and outputs delivered across Government. A summary of revenue information is also provided.

Budget Paper No. 4 The Infrastructure Program Presents a summary of the Government’s Infrastructure Program for all budget sector agencies, as well as detailed descriptions of 2007-08 capital projects for each agency. Expected committal dates for major projects in 2007-08 are also provided.

Related Papers Budget Overview Key features of the 2007-08 Budget are outlined. Northern Territory Economy A detailed assessment of the Territory economy, including recent performance and growth prospects, employment, population, trade, and Australian and international conditions. Includes chapters on the performance and outlook for major Territory industries. Economy Overview Presents a concise summary of each chapter within the Northern Territory Economy book. Regional Highlights A regional overview of the Government’s initiatives, programs and expenditures in the 2007-08 Budget. Business Highlights A summary of the Government’s initiatives, policies and programs designed to facilitate and assist the Territory business sector.

Treasurer’s Financial Reports 2005-06 Treasurer’s Annual Financial Report The Treasurer’s Annual Financial Report (TAFR) provides information about the financial performance and position of the Northern Territory Government. TAFR reports under the accrual framework and provides information on a sectoral basis (General Government, Public Non Financial Corporations, Non Financial Public Sector, Public Financial Corporations and Total Public Sector) in accordance with the Fiscal Integrity and Transparency Act and the UPF Agreement. It also includes notes to the accounts for the Total Public Sector and provides an explanation of key variations on an agency by agency basis in an unaudited section. 2006-07 Mid-Year Report The Fiscal Integrity and Transparency Act requires the Territory to publish a report before the end of February each year which revises the current year’s Budget projections and forward estimates. This interim report on the Territory’s Budget position also satisfies the Territory’s UPF reporting obligations. The report provides updated information to enable an assessment of the Government’s fiscal performance against the current fiscal strategy.

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Treasurer’s Quarterly Financial Reports These reports provide statements which summarise the quarterly and year to date financial transactions, from a whole of government perspective on a UPF basis. Reports were published for the quarters to 30 September 2006, 31 December 2006 and 31 March 2007. The June quarter results are incorporated into the Treasurer’s Annual Financial Report.

2005-06 Annual Reports Legislative Assembly Members’ Superannuation Trust Northern Territory Government and Public Authorities’ Superannuation Scheme Northern Territory Licensing Commission Northern Territory Police Supplementary Benefit Scheme Northern Territory Treasury Northern Territory Treasury Corporation Racing, Gaming and Licensing Utilities Commission

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Other Publications Indigenous Expenditure Review The Territory has a large and geographically dispersed Indigenous population living in urban, rural and remote areas. The cost of delivering infrastructure and services to Indigenous Territorians, especially those in remote communities, can be significant. The Indigenous Expenditure Review, commissioned by the Northern Territory Government’s Chief Executives Task Force on Indigenous Affairs, reviews and analyses expenditure to this group and compares it to funding received by the Territory for Indigenous-related purposes. Territory Economic Review This publication monitors the latest economic data and provides analysis of major Territory industries, consumption and investment, trade, external economic conditions, business sentiment, price and wage inflation and other topical issues as they develop. The review also presents a range of relevant time series data and state by state comparisons of major economic indicators. There are about ten editions each year. Northern Territory Economic Briefs Northern Territory Economic Briefs provide up to date analysis of the Territory economy and its performance in relation to the Australian economy. These briefs cover a broad range of economic and social indicators, drawing on various sources of data including the Australian Bureau of Statistics and Access Economics.

Grocery Price Survey The survey monitors grocery prices by measuring the cost of purchasing an average basket of goods at each major supermarket across the Territory and in comparable centres in north Queensland. The survey is conducted on a six-monthly basis and results are published on the Treasury website. Employers’ Guide to Payroll Tax in the Northern Territory An aid to employers who may have a liability for payroll tax, the guide comprehensively explains the basic provisions of the Pay-roll Tax Act and gives examples of how to calculate payroll tax. Stamp Duty Lodgement Guide The guide sets out taxpayer lodgement and information requirements for assessing certain duties imposed under the Stamp Duty Act. It is updated as necessary. TRMeR Manual The TRMeR Instruction Manual was designed to provide information on how to access and use the Territory Revenue Management electronic Returns (TRMeR) system for payroll tax returns. Although primarily designed to assist employers in the lodgement of their monthly and annual adjustment returns, TRMeR can also be used for a range of other functions, such as payment of liability by direct debit utilising the Northern Territory Government online banking facility, updating contact details, calculating the general exemption deduction, viewing lodgement and payment history and communicating with the Territory Revenue Office.

First Home Owner Concession Guide and Application Form The first home owner concession provides Territorians buying their first home or land to build their first home, with a concession on the stamp duty payable. The guide provides information on the concession and also informs applicants of the eligibility criteria. An application form is attached. Principal Place of Residence Rebate Guide and Application Form The principal place of residence rebate provides a stamp duty concession to Territorians buying a home or purchasing land to build a new home, where it is not their first home in Australia. The guide provides information on the rebate and also informs applicants of the eligibility criteria. An application form is attached. Northern Territory Government and Public Authorities’ Superannuation Scheme 2005-06 Report to Members The report provides information to members of the Northern Territory Government and Public Authorities’ Superannuation Scheme (NTGPASS) on the management, investment performance and financial position of the scheme in 2005-06, and on current superannuation issues. Similar reports are prepared for members of the Legislative Assembly Members’ Superannuation Trust and the Northern Territory Police Supplementary Benefit Scheme.

Member Investment Choice Booklet The booklet provides NTGPASS members with information about the different options available to them for investing their superannuation contribution balances. It details the investment asset classes of cash, fixed interest, property and shares and the associated levels of risk. Territory Talking This publication is aimed specifically at holders and prospective holders of Territory Bonds. Articles are prepared both in house and by interested external parties, such as the registry managers. Territory Bonds Prospectus Aimed at prospective holders of Territory Bonds, this publication provides background on Territory Bonds, and outlines the terms and conditions. An application form is attached.

Websites Northern Territory Treasury www.nt.gov.au/ntt Northern Territory Budget www.budget.nt.gov.au Northern Territory Superannuation Office www.nt.gov.au/ntt/super Northern Territory Treasury Corporation www.territorybonds.nt.gov.au Territory Revenue Office www.revenue.nt.gov.au Utilities Commission www.utilicom.nt.gov.au The papers and publications listed above are available online at www.nt.gov.au/ntt The Budget Papers can also be obtained from www.budget.nt.gov.au or purchased from: Northern Territory Government Printing Office Retail Sales Railway Street Parap NT 0820 or GPO Box 1447 Darwin NT 0801 Telephone: (08) 8999 4031 Facsimile: (08) 8999 4001

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Glossary

Accountable Officer’s Trust Account

Agency

Central Holding Authority

Established under section 7(1) of the Financial Management Act to enable agencies to hold money in trust for another person or entity. Transactions in these accounts are excluded from the Public Account.

A unit of government administration, office or statutory corporation, nominated in an Administrative Arrangements Order for the purposes of the Financial Management Act and includes a part or division of an agency.

Accounts payable

Appropriation

Refers to the value of short and long-term trade debt and accounts payable, interest payable and prepayments received.

An authority given by the Legislative Assembly to make payments, now or at some future time, for the purposes stated, up to the limit of the amount in the particular Act.

Created by section 5 of the Financial Management Act, the Central Holding Authority is a representation of the revenue, expenses, assets and liabilities of the Territory. Credited to this account is all money received by or on behalf of the Territory or an agency, except that required or permitted by or under that or any other Act to be credited to an Operating Account or to an Accountable Officer’s Trust Account.

Accounts receivable Refers to the value of short and long-term trade credit and accounts receivable, interest receivable and prepayments made.

Accrual

Appropriation Act Includes a Supply Act and an annual Appropriation Act or an additional Appropriation Act which authorises an amount to be allocated to a purpose.

In accounting, a recording method in which revenues, expenses, lending and borrowing are recognised as they are earned or incurred, regardless of when a cash payment is made or received.

Australian Accounting Standards

Administrative stream

Australian Bureau of Statistics

One of the Northern Territory Public Sector employee classification streams is administrative. Occupations in this stream include assistant directors, managers, analysts and officers.

Advances Amounts paid or received for policy purposes rather than for liquidity management purposes.

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Statements of accounting standards which can be applied in the preparation and presentation of financial statements.

Australia’s official national statistical agency. It provides statistics on economic and social matters, covering government, business and population.

Capital appropriation Represents an increase in the Government’s investment in an agency for asset purchases and capital works projects and is provided to agencies by the Central Holding Authority for capital items.

Commonwealth Grants Commission Body that advises on per capita relativities for distributing, among the states and territories, a pool of revenue from the Australian Government.

Community service obligations A community service obligation (CSO) arises when the Government requires a government business division or government owned corporation to carry out activities which it would not choose to do on a commercial basis or would only do so at higher commercial prices. CSO payments allow the Government to achieve identifiable community or social objectives that would not be achieved if left to commercial considerations.

Competencies Competencies are the skills, attributes and behaviours, specified for each employment level, that an employee needs in order to complete work to a high standard.

Contingent liability A potential financial obligation arising out of a condition, situation, guarantee or indemnity, the ultimate effect of which will be confirmed only on the occurrence or non-occurrence of one or more uncertain future events.

Corporate governance Corporate governance provides a structured framework through which Treasury is directed and controlled and guides how decisions are made, risks are managed and the organisation’s future is planned. These decisions in turn guide the necessary planning, budgeting and management of performance, and support Treasury’s Senior Management Group in its leadership of Treasury.

Council of Australian Governments The peak intergovernmental forum comprising the Prime Minister, Premiers, Chief Ministers and President of the Australian Local Government Association.

Employee assistance program Employer-provided counselling service aimed at assisting employees and their immediate family members experiencing work-related or personal problems. Government agencies are required to provide EAP services as identified in clause 21 of the Northern Territory Public Sector 2004-07 Certified Agreement.

Executive stream In comparison to the administrative stream, the executive stream comprises Northern Territory Public Sector employees at the level of Director and above.

Expense A cost or outflow of resources from an organisation.

Full-time equivalent Used in reference to staffing numbers where one FTE reflects one employee working full-time hours of 36.75 hours per week. Employees working part‑time or casual hours are represented as a fraction of this. For example, part‑time hours of 29.70 hours a week equates to 0.8 FTE.

Indemnity A written undertaking to compensate, protect or insure another person or entity against future financial loss, damage or liability.

International Financial Reporting Standards The term used to describe the move to standardise global international accounting standards. Australian equivalents of these new standards have been adopted for reporting periods on or after since 1 January 2005.

OCPE Office of the Commissioner for Public Employment, the statutory employer of all Northern Territory public sector staff, who is responsible for promoting the development and observance of the highest possible standards of human resource management practices in agencies.

Operating account A government business division operating account or an agency operating account established under section 6(1) of the Financial Management Act.

Goods and services tax revenue Revenue payments from the Australian Government return the goods and services tax (GST) revenue, collected by the Australian Taxation Office, to the states and territories.

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147

Outcomes Outcomes are expressions of the intended results, impacts or consequences on the Territory community of outputs provided by agencies. Outcomes should clearly represent the objectives the Government is seeking to achieve and reflect Government’s policy direction. Outputs need to align with outcomes, as outputs are the means through which outcomes are achieved.

Outputs Outputs are the services provided or the goods produced by an agency for users external to the agency.

Output appropriation The amount the government agrees to fund agencies to purchase their outputs net of any revenue earned by the agency. This is based on the purchaser/provider model where government (purchaser) purchases outputs from agencies (providers) on behalf of the community.

Output groups Output groups are combinations of like outputs, and are funded through the Budget.

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Performance Development Framework Treasury’s performance management system, where staff performance is reviewed and discussed between manager and staff member on a six-monthly basis against established competencies, and targets are set for the coming six months.

Provisions Amounts set aside by entities from current revenue or income for future payments.

Uniform Presentation Framework (UPF) A uniform reporting framework agreed by the Australian Loan Council in 2000, which is a revision of the agreement reached at the 1991 Premiers’ Conference. It specifies that the Australian, state and territory governments will present a minimum set of budget and financial outcome information on the Government Finance Statistics basis according to an agreed format and specified Loan Council reporting arrangements.

Revenue An inflow of resources into an organisation related to its operations.

Risk assessment Determining the nature and level of business risk to the organisation and business units.

Risk management The steps taken to manage risks, including identifying (both actual and potential), assessing, eliminating or controlling risks.

List of Tables and Figures

Tables Table 1: Financial Management Output Performance

28

Table 2: Economic Output Performance

29

Table 3: Commercial Output Performance

30

Table 4: Superannuation Output Performance

30

Table 5: Territory Revenue Output Performance

31

Table 6: Standards Published in the Territory Revenue Office Service Charter

32

Table 7: Economic Regulation Output Performance

32

Table 8: Northern Territory Treasury Corporation Business Line Performance 33 Table 9: Corporate Governance Committees

41

Table 10: Audits and Reviews

43

Table 11: Information Act Requests in 2006-07

48

Table 12: Annual Energy Targets

49

Table 13: Cavenagh House Electricity and Water Use

51

Table 14: Enterprise House Electricity and Water Use

51

Table 15: Paper Usage

52

Table 16: FTE Staff by Gender and Classification

55

Table 17: Training and Development Expenditure

59

Table 18: Study Fees Reimbursed

61

Table 19: Equal Employment Opportunity Data

64

Table 20: Indigenous Employment as at 30 June

64

Table 21: Workers Compensation Claims

65

Table 22: Employee Assistance Program

66

Table 23: Employment Instructions, Annual Reporting Requirements and Agency Action

67

Table 24: Operating Statement

74

Table 25: Operating Income

75

Table 26: Operating Expenses

75

Table 27: Grants and Subsidies

77

Table 28: Balance Sheet

77

Table 29: Statement of Cash Flows

78

Table 30: Total Income Collected by Treasury in 2006-07

79

Table 31: Significant Components of the $180 million Revenue Increase

106

Table 32: Significant Components of the $369 million Expenses Increase

107

List of Tables and Figures

149

Figures Figure 1: Our Purpose and Outputs

8

Figure 2: Treasury’s Corporate Governance Arrangements

37

Figure 3: Treasury’s Planning Process

46

Figure 4: Electricity Use per Square Metre of Office Space

50

Figure 5: Water Use per FTE

52

Figure 6: Treasury Staff by Classification and Gender as at 30 June 2007

56

Figure 7: Overall 10 Year Gender Comparison

56

Figure 8: Treasury Staff Age Profile as at 30 June 2007

56

Figure 9: Staff with Over 10 Years of Service in Treasury

56

Figure 10: Professional Development Expenditure

61

Figure 11: Relationship Between the Central Holding Authority, Treasury and Other Agencies

73

Figure 12: Treasury’s Operating Expenses

75

Figure 13: Components of CHA Operating Revenue

106

Figure 14: Components of CHA Operating Expenses

106

Figure 15: Components of CHA Operating Assets

107

Figure 16: Components of CHA Operating Liabilities

107

150

Annual Report 2006-07