Media Release

03/2008
1 February 2008

Australian Government Monthly Financial Statements
October 2007

KEY POINTS

The underlying cash balance for the 2007-08 year to 31 October 2007 was a surplus of $3,104 million.
The fiscal balance for the 2007-08 year to 31 October 2007 was a surplus of $6,491 million.

AGGREGATES	ACTUAL 2007-2008 YTD September $m	ACTUAL 2007-2008 October $m	ACTUAL 2007-2008 YTD October $m	MYEFO ESTIMATE 2007-2008 FULL YEAR* $m
Revenue	65447	34046	99493	295415
Expenses	66520	26123	92643	277860
Net operating balance	-1073	7923	6850	17554
Net capital investment	293	66	359	1592
Fiscal balance	-1366	7857	6491	15962
Underlying cash balance	-3272	6376	3104	14834
Headline cash balance	-1884	6352	4468	22766
Total assets	213245	6738	219984	235584
Total liabilities	204388	-2268	202119	208739
Net worth	8858	9007	17864	26845
Net debt	-22687	-5568	-28256	-16094

* As published in the 2007-2008 MYEFO

The Australian Government monthly financial statements for 2007-08 have been re-designed to provide Government Finance Statistics (GFS) information only, whilst past statements included an AAS based set of statements, all analysis and commentary was on a GFS basis.

As a result of a change in accounting policy by the Australian Government which was included in the Consolidated Financial Statements 2006-07 published on 20 December 2007, these statements now include GST as an Australian Government tax with associated payments to the States and Territories treated as a grant expense.

Care needs to be taken when comparing monthly or cumulative data across years and to full year estimates. Revenues and expenses do vary from month-to-month. The accrual framework, including the timing of payments and policy decisions, can have a large impact on fiscal aggregates from one year to the next and on year-to-date outcomes.

FISCAL OUTCOMES

Underlying Cash Balance

The main components of the underlying cash balance are cash from operations and cash movements in the net investment in non-financial assets.

The underlying cash balance for the year to 31 October 2007 was a surplus of $3,104 million. This underlying cash balance is $1,841 million lower than the 2007-08 MYEFO pro rata. The difference reflects a number of individual variations including the following:

Movements in underlying cash receipts:

Lower receipts compared to pro rata MYEFO estimates from:

Taxation due to collections typically commencing from the second quarter of the year.

Movements in underlying cash payments:

Higher payments compared to pro rata MYEFO estimates for:

Personal benefit payments mainly influenced by seasonality factors; and
Education grants due to the timing of school and educational training payments.

Fiscal Balance

The fiscal balance for the year to 31 October 2007 was a surplus of $6,491 million. This fiscal balance is $1,170 million higher than the 2007-08 MYEFO pro rata estimate.

FINANCIAL OUTCOMES

Revenues and Expenses

GFS Expenses are $23 million higher when compared with a pro rata of the 2007-08 MYEFO estimate whilst GFS Revenue is $1,022 million higher when compared with a pro rata of the 2007-08 MYEFO estimate.

The main reason for the higher expenses is due to the timing of grant and supplier payments whilst higher revenue is due to the seasonality of revenue collections.

Assets and Liabilities

The net worth balance within the General Government sector is a positive net asset position of
$17,864 million at 31 October 2007.

Lindsay Tanner MP Minister for Finance and Deregulation 1 February 2008	I J Watt Secretary to the Department of Finance and Deregulation 1 February 2008
Contact: Lindsay Tanner MP’s Office: George Wright - 0419 556 616 Department of Finance and Deregulation: Tim Youngberry (02) 6215 2660 First Assistant Secretary Financial Reporting and Cash Management

Australian Government General Government Sector – INCOME STATEMENT

	ACTUAL 2007-2008 YTD September $m	ACTUAL 2007-2008 October $m	ACTUAL 2007-2008 YTD October $m	MYEFO ESTIMATE 2007-2008 FULL YEAR* $m
GFS revenue
Taxation revenue	60,334	32,854	93,188	279,401
Current grants and subsidies	0	0	0	0
Sales of goods and services	1,352	409	1,761	5,191
Interest income	1,189	332	1,522	4,663
Dividend income	1,597	166	1,763	2,707
Other	975	284	1,259	3,451
Total GFS revenue	65,447	34,046	99,493	295,415
GFS expenses
Gross operating expenses
Depreciation	618	221	839	2,483
Superannuation	679	253	932	2,675
Salaries and wages	3,706	1,395	5,100	15,093
Payment for supply of goods and services	12,772	4,537	17,308	58,056
Other operating expenses	922	386	1,308	3,314
Total gross operating expenses	18,696	6,791	25,487	81,620
Nominal superannuation interest expense	1,504	496	2,000	6,276
Other interest expenses	1,044	327	1,371	3,992
Other property expenses	0	0	0	0
Current transfers
Grant expenses	21,215	10,129	31,344	87,139
Subsidy expenses	1,723	732	2,456	7,314
Personal benefit payments in cash	21,214	7,223	28,438	84,487
Other current transfers	0	0	0	0
Total current transfers	44,152	18,085	62,237	178,940
Capital transfers	1,124	424	1,548	7,031
Total GFS expenses	66,520	26,123	92,643	277,860
Net operating balance	-1,073	7,923	6,850	17,554
Net acquisition of non-financial assets
Purchases of non-financial assets	813	236	1,049	3,715
less Sales of non-financial assets	34	21	55	256
less Depreciation	618	221	839	2,483
plus Change in inventories	80	57	137	238
plus Other movements in non-financial assets	51	15	66	378
Total net acquisition of non-financial assets	293	66	359	1,592
Net lending/fiscal balance	-1,366	7,857	6,491	15,962

Australian Government General Government Sector – BALANCE SHEET

	ACTUAL 2007-2008 YTD September $m	ACTUAL 2007-2008 YTD October $m	MYEFO ESTIMATE 30-Jun-08 $m
GFS assets
Financial assets
Cash and deposits	694	569	1,043
Advances paid	21,875	22,167	25,013
Investments, loans and placements	65,127	67,769	57,039
Other non-equity assets	38,078	39,791	30,625
Equity	39,318	41,271	72,191
Total financial assets	165,092	171,567	185,911
Non-financial assets
Land	6,836	6,840	6,940
Buildings	16,708	16,833	16,981
Plant, equipment and infrastructure	10,292	10,312	10,931
Inventories	3,305	3,366	3,486
Heritage and cultural assets	8,215	8,221	8,245
Other non-financial assets	2,797	2,844	3,090
Total non-financial assets	48,153	48,417	49,673
Total GFS assets	213,245	219,984	235,584
GFS liabilities
Deposits held	227	295	263
Advances received	0	0	0
Government securities	58,782	56,013	59,288
Loans	5,614	5,556	7,085
Other borrowings	385	385	365
Superannuation liability	103,794	104,131	106,879
Other employee entitlements and provisions	8,455	8,446	8,479
Other non-equity liabilities	27,130	27,292	26,381
Total GFS liabilities	204,388	202,119	208,739
Net worth	8,858	17,864	26,845
Net financial worth	-39,296	-30,552	-22,828
Net debt	-22,687	-28,256	-16,094

Australian Government General Government Sector – CASH FLOW STATEMENT

	ACTUAL 2007-2008 YTD September $m	ACTUAL 2007-2008 October $m	ACTUAL 2007-2008 YTD Ocotber $m	MYEFO ESTIMATE 2007-2008 FULL YEAR* $m
Cash receipts from operating activities
Taxes received	59,284	30,618	89,902	274,115
Receipts from sales of goods and services	1,253	609	1,861	5,188
Grants and subsidies received	0	0	0	0
Interest receipts	1,179	273	1,452	4,482
Dividends	1,582	181	1,763	2,692
GST input credits received by general government	0	0	0	0
Other receipts	882	256	1,138	3,150
Total operating receipts	64,180	31,936	96,116	289,628
Cash payments for operating activities
Payments for goods and services	-12,250	-4,881	-17,131	-57,977
Grants and subsidies paid	-24,057	-11,038	-35,095	-98,849
Interest paid	-931	-226	-1,157	-3,646
Personal benefit payments	-21,569	-7,752	-29,321	-83,983
Salaries, wages and other entitlements	-4,754	-1,806	-6,560	-20,044
GST payments by general government to taxation authority	0	0	0	0
Other payments for operating activities	-1,013	-375	-1,389	-3,272
Total operating payments	-64,575	-26,078	-90,653	-267,771
Net cash flows from operating activities	-394	5,858	5,463	21,857
Cash flows from investments in non-financial assets
Sales of non-financial assets	37	21	58	301
Purchases of non-financial assets	-1,797	398	-1,399	-3,938
Net cash flows from investments in non-financial assets	-1,761	419	-1,341	-3,637
Net cash flows from investments in financial assets for policy purposes	283	78	361	4,550
Cash flows from investments in financial assets for liquidity purposes
Increase in investments	-574	-3,869	-4,443	-24,884
Net cash flows from investments in financial assets for liquidity purposes	-574	-3,869	-4,443	-24,884
Cash flows from financing activities
Advances received (net)	0	0	0	0
Borrowing (net)	2,137	-2,794	-656	2,542
Deposits received (net)	-34	68	35	0
Other financing (net)	-118	115	-3	-540
Net cash flows from financing activities	1,986	-2,610	-624	2,002
Net increase/decrease in cash held	-460	-125	-584	-112
Net cash from operating activities and investments in non-financial assets	-2,155	6,277	4,122	18,220
Finance leases and similar arrangements	-12	-3	-15	-4
GFS cash surplus(+)/deficit(-)	-2,167	6,274	4,107	18,216
less Future Fund earnings	1,105	-102	1,003	3,382
Equals underlying cash balance	-3,272	6,376	3,104	14,834
plus net cash flows from investments in financial assets for policy purposes	283	78	361	4,550
plus Future Fund earnings	1,105	-102	1,003	3,382
Equals headline cash balance	-1,884	6,352	4,468	22,766

Australian Government General Government Sector – STATEMENT OF OTHER ECONOMIC FLOWS

	ACTUAL 2007-2008 YTD September $m	ACTUAL 2007-2008 YTD October $m	MYFEO ESTIMATE 2007-2008 FULL YEAR* $m
Opening net worth	2,689	2,689	2,689
Opening net worth adjustments(a)	8,291	8,291	8,291
Adjusted opening net worth	10,980	10,980	10,980
Change in net worth from operating transactions	-1,073	6,850	17,554
Change in net worth from other economic flows
Revaluation of equity(b)	-479	407	608
Net writedowns of assets (including bad and doubtful debts)	-1,345	-1,039	-2,229
Assets recognised for the first time	-53	-68	7
Liabilities recognised for the first time	0	0	0
Actuarial revaluations	0	0	0
Net foreign exchange gains	164	-41	0
Net swap interest received	-16	-25	-113
Market valuation of debt	-133	-147	-381
Other economic revaluations(c)	813	947	419
Total other economic flows	-1,050	34	-1,689
Closing net worth	8,858	17,864	26,845

(a) Change in net worth arising from a change in 05-06 outcomes
(b) Revaluations of equity reflects changes in the market valuation of commercial entities. This line also reflects any
equity revaluations at the point of disposal or sale.
(c) Largely reflects revaluation of assets and liabilities.

Australian Government General Government Sector – INCOME STATEMENT BY FUNCTION

	ACTUAL 2007-2008 YTD September $m	ACTUAL 2007-2008 October $m	ACTUAL 2007-2008 YTD October $m	MYEFO ESTIMATE 2007-2008 FULL YEAR $m
GFS Expenses by Purpose
General Public Services	4,588	1,120	5,708	15,973
Defence	3,523	1,634	5,157	19,243
Public Order and Safety	935	351	1,286	3,772
Education	4,707	2,543	7,250	17,386
Health	10,683	3,755	14,438	43,357
Social Security and Welfare	23,901	8,236	32,137	95,132
Housing and Community Amenities	555	186	741	3,345
Recreation and Culture	681	226	907	2,861
Fuel and Energy	1,175	421	1,596	5,310
Agriculture, Forestry and Fishing	756	335	1,091	3,685
Mining and Mineral Resources (other than fuels); Manufacturing and Construction	401	143	544	2,046
Transport and Communication	817	448	1,264	4,484
Other Economic Affairs	1,623	546	2,168	6,122
Other Purposes
Public Debt Interest	860	296	1,157	3,517
Nominal Superannuation Interest	509	170	679	6,276
General Purpose Inter-Government Transactions	10,677	5,668	16,345	44,965
Natural Disaster Relief	118	41	159	103
Contingency Reserve (a)	12	4	16	282
Total GFS Expenses	66,520	26,123	92,643	277,860

(a) Asset sale related expenses are now treated as a component of the contingency reserve

NOTES:

The framework used a basis for these statements and notes is generally consistent with the requirements of GFS. The Financial Management and Accountability Act 1997 requires monthly financial statements to be consistent with the Budget estimates, accordingly, and pursuant to the Charter of Budget Honesty Act 1998, this presentation covers the General Government sector on a GFS basis.

With the introduction of Business Activity Statements and Instalment Activity Statements in 2000-2001, taxpayers provide information on payments associated with several types of tax when lodging the statement and paying the aggregate net tax amount. Thus, while total tax collections are known with certainty at the end of each month, the distribution across the relevant heads of revenue cannot be finalised until all statements are received and processed. The outcomes for some revenue items provided in this statement are thus estimates, in accordance with the best judgement of the Taxation Commissioner, and subject to revision. The taxation revenue items not affected are: Petroleum Resource Rent Tax, Excise duty, Customs duty, Other Taxes and Individuals Refunds.

The sum of the revenue accrued in the month and the revisions to prior periods equals the revenue reported in the Statement of Revenue and Expenses.

Note 1: Income Tax

	ACTUAL 2007-2008 YTD September $m	ACTUAL 2007-2008 October $m	ACTUAL 2007-2008 YTD October $m	MYEFO ESTIMATE 2007-2008 FULL YEAR* $m
INDIVIDUALS AND OTHER WITHHOLDING TAX
Gross income tax withholding	28,423	9,204	37,627	113,330
Gross other individuals	5,523	3,280	8,803	28,110
Less refunds	9,350	2,409	11,760	19,790
Total individuals and other withholding tax	24,596	10,075	34,671	121,650
OTHER SOURCES
Companies	13,374	10,847	24,221	65,250
Superannuation funds (a)	2,927	1,827	4,754	10,130
Petroleum Resource Rent Tax	492	554	1,046	2,060
Fringe Benefits tax (b)	752	827	1,578	3,970
Total income tax from other sources	17,544	14,055	31,599	81,410
Total income tax	42,140	24,129	66,270	203,060

* As published in the 2007-2008 MYEFO
(a) Includes superannuation contributions surcharge.
(b) Negative collections indicate refunds exceed collections.

Note 2: Indirect Tax

	ACTUAL 2007-2008 YTD September $m	ACTUAL 2007-2008 October $m	ACTUAL 2007-2008 YTD October $m	MYEFO ESTIMATE 2007-2008 FULL YEAR* $m
Excise duty	5,626	2,423	8,049	23,090
Customs duty	1,427	552	1,979	6,010
Other indirect tax (including GST)	11,140	5,750	16,890	47,241
Total indirect tax revenue	18,194	8,725	26,919	76,341