Media Release

26/2008
18 July 2008

Australian Government Monthly Financial Statements
May 2008

KEY POINTS

The underlying cash balance for the 2007-08 year to 31 May 2008 was a surplus of $18,708 million.
The fiscal balance for the 2007-08 year to 31 May 2008 was a surplus of $28,771 million.

AGGREGATES	ACTUAL 2007-2008 May $m	ACTUAL 2007-2008 YTD May $m	BUDGET ESTIMATE 2007-2008 FULL YEAR* $m
Revenue	26,860	283,403	303,831
Expenses	23,955	253,155	281,070
Net operating balance	2,905	30,249	22,762
Net capital investment	371	1,478	2,318
Fiscal balance	2,534	28,771	20,443
Underlying cash balance	2,221	18,708	16,815
Headline cash balance	7,321	28,743	25,380
Total assets	3,692	242,932	239,484
Total liabilities	128	206,834	209,776
Net worth	3,563	36,098	29,709
Net debt	-14,844	-50,019	-42,639

*These numbers are budget estimates presented on a GFS basis, consistent with the 2007-08 Budget. They differ from the figures presented in the 2008-09 Budget which were based on the new harmonised ABS GFS and accounting standard (AASB 1049) for the first time.
** As published in Budget Paper 1 Statement 9 on page 9-3.

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.

The 2008-09 Budget adopted a new accounting standard, AASB1049, which harmonises the two standards used in government reporting, GFS and Australian Accounting Standards (AAS). To ensure consistency across the 2007-08 financial year, the monthly financial statements will only reflect this change from 1 July 2008. The primary difference between GFS and AASB1049 is due to the accounting treatment of Defence Weapons Platforms (DWP). Under GFS, DWP are treated as expenses rather than assets, whilst under AASB1049 DWP are treated as assets. This change does not affect the underlying cash balance.

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 May 2008 was a surplus of $18,708 million. This underlying cash balance is $3.3 billion higher than the 2008-09 Budget pro rata. The difference reflects a number of individual variations including the following:

Movements in underlying cash receipts:

Higher taxation receipts compared to pro rata Budget estimates.

Movements in underlying cash payments:

Higher payments compared to pro rata Budget estimates for:

Education grants due to the timing of higher education payments.

Lower payments compared to pro rata Budget estimates for:

Payment to suppliers primarily due to the timing of payments; and
Personal benefit payments mainly influenced by seasonality factors.

Fiscal Balance

The fiscal balance for the year to 31 May 2008 was a surplus of $28,771 million. This fiscal balance is $10.0 billion higher than the 2008-09 Budget pro rata estimate.

FINANCIAL OUTCOMES

Revenues and Expenses

GFS Expenses are $4,493 million lower when compared with a pro rata of the 2008-09 Budget estimate whilst GFS Revenue is $4,891 million higher when compared with a pro rata of the 2008-09 Budget estimate.

The main reason for the lower expenses are due to the timing of payments to suppliers and personal benefit 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 $36,098 million at 31 May 2008.

Lindsay Tanner MP Minister for Finance and Deregulation 18 July 2008	I J Watt Secretary to the Department of Finance and Deregulation 18 July 2008
Contact: Lindsay Tanner MP’s Office: Nardia Dazkiw - (02) 6277 7400 Department of Finance and Deregulation: Davina Cassell - (02) 6215 3557

Australian Government General Government Sector – INCOME STATEMENT

	ACTUAL 2007-2008 May $m	ACTUAL 2007-2008 YTD May $m	BUDGET ESTIMATE 2007-2008 FULL YEAR* $m
GFS revenue
Taxation revenue	25,487	267,174	286,382
Sales of goods and services	483	5,002	5,369
Interest income	545	4,793	5,195
Dividend income	84	2,863	2,904
Other	260	3,570	3,982
Total GFS revenue	26,860	283,403	303,831
GFS expenses
Gross operating expenses
Depreciation	228	2,318	2,117
Superannuation	191	2,367	2,765
Salaries and wages	1,306	13,421	14,958
Payment for supply of goods and services	4,791	49,954	56,307
Other operating expenses	360	3,569	3,895
Total gross operating expenses	6,877	71,630	80,043
Nominal superannuation interest expense	500	5,505	6,210
Other interest expenses	336	3,796	4,118
Current transfers
Grant expenses	7,536	82,788	94,691
Subsidy expenses	588	6,633	7,222
Personal benefit payments in cash	7,654	76,430	86,170
Total current transfers	15,778	165,851	188,083
Capital transfers	463	6,372	2,617
Total GFS expenses	23,955	253,155	281,070
Net operating balance	2,905	30,249	22,762
Net acquisition of non-financial assets
Purchases of non-financial assets	551	3,273	3,492
less Sales of non-financial assets	-22	174	248
less Depreciation	228	2,318	2,117
plus Change in inventories	61	590	807
plus Other movements in non-financial assets	-36	107	384
Total net acquisition of non-financial assets	371	1,478	2,318
Net lending/fiscal balance	2,534	28,771	20,443

Australian Government General Government Sector – BALANCE SHEET

	ACTUAL 2007-2008 YTD May $m	BUDGET ESTIMATE 30 June 2008 $m
GFS Assets
Financial assets
Cash and deposits	866	1,928
Advances paid	18,662	24,811
Investments, loans and placements	95,391	82,251
Other non-equity assets	38,755	29,838
Equity	39,196	45,108
Total financial assets	192,870	183,937
Non-financial assets
Land	7,458	6,946
Buildings	17,245	17,014
Plant, equipment and infrastructure	10,496	10,979
Inventories	3,540	6,355
Heritage and cultural assets	8,288	8,249
Other non-financial assets	3,034	6,004
Total non-financial assets	50,062	55,547
Total GFS assets	242,932	239,484
GFS liabilities
Deposits held	318	263
Advances received	0	0
Government securities	57,743	59,195
Loans	6,431	6,538
Other borrowings	408	356
Superannuation liability	106,179	108,114
Other employee entitlements and provisions	8,241	8,545
Other non-equity liabilities	27,514	26,765
Total GFS liabilities	206,834	209,776
Net worth(a)	36,098	29,709
Net financial worth	-13,964	-25,838
Net debt	-50,019	-42,639

Australian Government General Government Sector – CASH FLOW STATEMENT

	ACTUAL 2007-2008 May $m	ACTUAL 2007-2008 YTD May $m	BUDGET ESTIMATE 2007-2008 FULL YEAR* $m
Cash receipts from operating activities
Taxes received	23,617	255,808	278,536
Receipts from sales of goods and services	427	4,908	5,340
Interest receipts	1,047	4,527	5,102
Dividends	53	2,670	2,904
Other receipts	348	3,259	3,486
Total operating receipts	25,492	271,172	295,368
Cash payments for operating activities
Payments for goods and services	-3,146	-47,039	-56,413
Grants and subsidies paid	-8,763	-95,309	-101,480
Interest paid	-333	-3,596	-3,788
Personal benefit payments	-7,082	-77,317	-85,768
Salaries, wages and other entitlements	-1,967	-18,023	-20,140
Other payments for operating activities	-946	-4,116	-3,651
Total operating payments	-22,237	-245,401	-271,240
Net cash flows from operating activities	3,256	25,771	24,127
Cash flows from investments in non-financial assets
Sales of non-financial assets	-22	179	254
Purchases of non-financial assets	-728	-3,688	-3,818
Net cash flows from investments in non-financial assets	-750	-3,509	-3,564
Net cash flows from investments in financial assets for policy purposes	4,813	6,579	4,848
Cash flows from investments in financial assets for liquidity purposes
Increase in investments	-6,775	-30,217	-26,332
Net cash flows from investments in financial assets for liquidity purposes	-6,775	-30,217	-26,332
Cash flows from financing activities
Borrowing (net)	-763	911	1,807
Deposits received (net)	33	57	0
Other financing (net)	589	119	-115
Net cash flows from financing activities	-140	1,087	1,693
Net increase/decrease in cash held	405	-288	772
Net cash from operating activities and investments in non-financial assets	2,506	22,262	20,564
Finance leases and similar arrangements	2	-99	-32
GFS cash surplus(+)/deficit(-)	2,508	22,163	20,532
less Future Fund earnings	287	3,455	3,717
Equals underlying cash balance (c)	2,221	18,708	16,815
plus net cash flows from investments in financial assets for policy purposes	4,813	6,579	4,848
plus Future Fund earnings	287	3,455	3,717
Equals headline cash balance	7,321	28,743	25,380

Australian Government General Government Sector – STATEMENT OF OTHER ECONOMIC FLOWS

	ACTUAL 2007-2008 YTD May $m	BUDGET ESTIMATE 2007-2008 FULL YEAR* $m
Opening net worth	2,689	2,689
Opening net worth adjustments(a)	8,291	39,853
Adjusted opening net worth	10,980	42,542
Change in net worth from operating transactions	30,249	22,762
Change in net worth from other economic flows
Revaluation of equity(b)	965	-1,994
Net writedowns of assets (including bad and doubtful debts)	-4,607	-3,117
Assets recognised for the first time	60	235
Actuarial revaluations	0	-1,423
Net foreign exchange gains	46	202
Net swap interest received	-153	-178
Market valuation of debt	60	-662
Other economic revaluations(c)	-1,501	-28,658
Total other economic flows	-5,131	-35,595
Closing net worth	36,098	29,709

*These numbers are budget estimates presented on a GFS basis, consistent with the 200708 Budget. They differ from the figures presented in the 2008-09 Budget which were based on the new harmonised ABS GFS and accounting standard (AASB 1049) for the first time.
(a) Change in net worth arising from a change in 06-07 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 May $m	ACTUAL 2007-2008 YTD May $m	BUDGET ESTIMATE 2007-2008 FULL YEAR* $m
GFS Expenses by Purpose
General Public Services	991	16,469	16,631
Defence	2,301	17,181	17,885
Public Order and Safety	299	3,267	3,788
Education	1,340	18,566	18,620
Health	3,712	39,608	44,455
Social Security and Welfare	8,484	86,723	97,230
Housing and Community Amenities	197	2,422	3,083
Recreation and Culture	183	2,296	2,826
Fuel and Energy	416	4,520	5,103
Agriculture, Forestry and Fishing	307	3,314	4,085
Mining and Mineral Resources (other than fuels); Manufacturing and Construction	105	1,315	1,846
Transport and Communication	322	3,547	4,486
Other Economic Affairs	344	5,298	6,467
Other Purposes
Public Debt Interest	308	3,240	3,538
Nominal Superannuation Interest	170	1,873	6,210
General Purpose Inter->Government Transactions	4,278	42,934	45,493
Natural Disaster Relief	196	574	99
Contingency Reserve (a)	1	8	-776
Total GFS Expenses	23,955	253,155	281,070

*These numbers are budget estimates presented on a GFS basis, consistent with the 2007-08 Budget. They differ from the figures presented in the 2008-09 Budget which were based on the new harmonised ABS GFS and accounting standard (AASB 1049) for the first time.
(a) Asset sale related expenses are now treated as a component of the contingency reserve.

NOTES:

The framework used as 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 May $m	ACTUAL 2007-2008 YTD May $m	BUDGET ESTIMATE 2007-2008 FULL YEAR* $m
INDIVIDUALS AND OTHER WITHHOLDING TAX
Gross income tax withholding	10,499	106,325	114,610
Gross other individuals	4,960	27,476	30,130
Less refunds	970	18,265	19,640
Total individuals and other withholding tax	14,490	115,536	125,100
OTHER SOURCES
Companies	3,238	62,427	66,480
Superannuation funds (a)	822	11,801	11,710
Petroleum Resource Rent Tax	- 25	1,775	1,840
Fringe Benefits tax (b)	294	3,764	3,900
Total income tax from other sources	4,328	79,767	83,930
Total income tax	18,818	195,303	209,030

*These numbers are budget estimates presented on a GFS basis, consistent with the 2007-08 Budget.
They differ from the figures presented in the 2008-09 Budget which were based on the new harmonised ABS GFS and accounting standard (AASB 1049) for the first time.
(a) Includes superannuation contributions surcharge.
(b) Negative collections indicate refunds exceed collections.

Note 2: Indirect Tax

	ACTUAL 2007-2008 May $m	ACTUAL 2007-2008 YTD May $m	BUDGET ESTIMATE 2007-2008 FULL YEAR* $m
Excise duty	1,868	21,384	23,390
Customs duty	509	5,552	5,990
Other indirect tax (including GST)	4,292	44,935	47,972
Total indirect tax revenue	6,669	71,871	77,352

Note 3: Goods and Services Tax

	ACTUAL 2007-2008 May $m	ACTUAL 2007-2008 YTD May $m	BUDGET ESTIMATE 2007-2008 FULL YEAR* $m
GST Revenue (a)	4,004	41,623	44,370

*These numbers are budget estimates presented on a GFS basis, consistent with the 2007-08 Budget. They differ from the figures presented in the 2008-09 Budget which were based on the new harmonised ABS GFS and accounting standard (AASB 1049) for the first time.
(a) GST revenue is presented in this note on an accrual basis. This differs from GST cash receipts, on which payments to the States and Territories are based.

NOTE:

Style Conventions

Figures in tables and generally in the text have been rounded. Discrepancies in tables between totals and sums of components are due to rounding.

International Monetary Fund (IMF) Special Data Dissemination Standards (SDDS)

In accordance with the IMF's SDDS, quarter ahead notice of the date of release of the data on central government operations, which is contained in the Australian Government Financial Statements, is given on the IMF's Data Dissemination Bulletin Board at http//dsbb.imf.org.
Monthly and quarterly data on debt guaranteed by the Australian Government (central government) that meet the coverage and timeliness requirements of the SDDS are published on the AOFM website at http://www.aofm.gov.au/content/borrowing/commonwealth.asp?NavID=32. In accordance with the IMF SDDS, the approximate date of release of the data on debt guaranteed by the Australian Government (central government), is given on the IMF's Data Dissemination Advance Release Calender http://dsbb.imf.org.