Portfolio Additional Estimates Statements 2008-09 

• Section 1: Agency overview and resources
• 1.1 Strategic direction
• 1.2 Agency resource statement
• 1.3 Additional Estimates and variations to outcomes
• 1.4 Breakdown of Additional Estimates by Appropriation Bill
• Section 2: Revisions to agency outcomes and planned performance
• 2.1 Outcomes and performance information
• Section 3: Explanatory tables and budgeted financial statements
• 3.1 Explanatory tables
• 3.2 Budgeted financial statements

Section 1: Agency overview and resources

1.1 Strategic Direction

Indigenous Business Australia's (IBA) vision is for a nation in which the First Australians are economically independent and an integral part of the economy. IBA was established by the Aboriginal and Torres Strait Islander Commission Amendment Act 2001, which came into effect on 17 April 2001. IBA extends on the role of the former Aboriginal and Torres Strait Commercial Development Corporation.

IBA was created to assist and enhance Aboriginal and Torres Strait Islanders' economic advancement, primarily through facilitating Aboriginal and Torres Strait Islander equity involvement in sound commercial ventures. Under the enabling legislation, IBA is required to meet this role by accumulating and using a substantial capital asset base. The Aboriginal and Torres Strait Islander Commission Amendment Act 2001 specifically requires that IBA engages in commercial activities.

The Equity and Investments program invests directly in business opportunities with Indigenous Australians and organisations, usually through joint venture arrangements involving expert industry partners. Brokering and supporting industry partnerships with Indigenous businesses grows local economies, brings Indigenous Australians into the mainstream economy, and helps them accumulate assets for further investment.

With the passage of the Aboriginal and Torres Strait Islander Act 2005 in March 2005, IBA's responsibilities were expanded to include two new programs. These programs provide home loans and business loans, together with business development assistance.

The Home Ownership Program provides concessional loans to low income Indigenous Australians and their families to enable them to purchase or construct a home. The program can also provide loans to assist in essential repairs or improvements.

The Business Development Program provides concessional business loans and, in certain circumstances, business grants. The program meets costs associated with the assessment of loan applications, the provision of aftercare to borrowers and general mentoring support for Indigenous people in business. The program also supports the cost of research to improve knowledge of regional economic circumstances that could impact on small business viability.

The Home Ownership on Indigenous Land Program, which was first established in October 2005, provides subsidised loan and grant packages secured by a mortgage over a long-term lease on Indigenous land.

These programs form the basis of IBA's approach to Indigenous economic development. Our client base is mostly individuals and families who apply for loans through our home ownership or business development programs. The extension of home ownership to Aboriginal lands provides a further choice for Indigenous Australians who see the advantages in home ownership.

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1.2 Agency Resource Statement

The Agency resource statement details the resourcing for IBA at Additional Estimates. Table 1.1 outlines the total resourcing available from all sources for the 2008-09 Budget year, including variations through Appropriation Bills (No. 3).

Table 1.1: IBA resource statement - Additional Estimates for 2008-09 as at Additional Estimates December 2008

Source	Proposed at Budget 2008-09 $'000	+	Proposed Additional Estimates 2008-09 $'000	=	Total Estimate at Additional Estimates 2008-09 $'000	Total Available Appropriation 2007-08 $'000
Revenue from Government
Ordinary Annual Services1
Indigenous Business Australia	37,875		- 473		37,402	57,588
Total Ordinary Annual Services	37,875		- 473		37,402	57,588
Other services2
Non-Operating	41,508		-		41,508	52,454
Total other services	41,508		-		41,508	52,454
Total Annual Appropriations	79,383		- 473		78,910	110,042
Total funds from Government	79,383		- 473		78,910	110,042
Funds from other sources
Interest	44,901		-		44,901	44,747
Dividends	12,027		-		12,027	128,417
Sale of goods and services	130		-		130	50,263
Rents	158		-		158	1,215
Net gain on sale of assets	-		-		-	-
Other	25,765		-		25,765	262
Total	82,981		-		82,981	224,904
Total net resourcing for IBA	162,364		- 473		161,891	334,946

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1.3 Additional Estimates and variations to outcomes

Indigenous Business Australia has no Additional Estimates or variations from new measures. Table 1.4 details Additional Estimates or variations through other factors, such as parameter adjustments and efficiency dividends.

Table 1.2: Additional Estimates and variations to outcomes from other variations 

	Output Group	2008-09 ($'000)	2009-10 ($'000)	2010-11 ($'000)	2011-12 ($'000)
Outcome 1
Increase in estimates (departmental)
Indexation	1.2, 1.3	-	152	155	158
Decrease in estimates (departmental)
Efficiency Dividend	1.1 - 1.4	- 473	- 491	- 399	- 325
Net impact on estimates for Outcome 1 (departmental)		- 473	- 339	- 244	- 167

1.4 Breakdown of Additional Estimates by Appropriation Bill

The following table details the Additional Estimates sought for IBA through Appropriation Bills (No. 3).

Table 1.3: Appropriation Bill (No 3) 2008-09 

	2007-08 available ($'000)	2008-09 Budget ($'000)	2008-09 revised ($'000)	Additional estimates ($'000)	Reduced estimates ($'000)
Departmental outputs
Outcome 1
Indigenous Business Australia	57,588	37,875	37,402	-	- 473
Total	57,588	37,875	37,402	-	- 473

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Section 2: Revisions to agency outcomes and planned performance

2.1 Outcomes and Performance Information

Outcome 1

Outcome 1 Strategy

IBA creates opportunities for participation by Indigenous Australians in the mainstream economy by building their asset base.

IBA utilises a suite of commercially-focused Indigenous economic development programs to enhance Indigenous economic self-management and self-sufficiency. IBA delivers flexible and concessional interest rate loan products and aftercare support to improve Indigenous home ownership on freehold and Indigenous land. IBA also provides concessional interest rate business loans and business support to increase Indigenous ownership of small to medium sized enterprises. For larger investment projects, IBA brings together private sector capacity partners with Indigenous individuals and groups, co-investing in joint venture projects that provide both commercial returns and a direct transfer of business skills and acumen to Indigenous partners.

There has been no change to IBA's output groups since FaHCSIA's 2008-09 Portfolio Budget Statements (PBS).

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Section 3: Explanatory tables and budgeted financial statements

3.1 Explanatory Tables

3.1.1 Estimates of Special Account flows

IBA has no Special Account flows.

3.1.2 Estimates of variations to Average Staffing Level

Changes in Average Staffing Level (ASL) are presented in the Portfolio Additional Estimates Statements at the whole-of-agency level to demonstrate any movements since Budget. The ASL figures for Budget were reported in FaHCSIA's 2008-09 PBS in each Outcome Resourcing Table.

Table 3.1.1: Average Staffing Level (ASL)

	2008-09 Budget	2008-09 Revised	Variation
Outcome 1
Indigenous Business Australia	240	240	0
Total	240	240	0

3.2 Budgeted Financial Statements

3.2.1 Analysis of budgeted financial statements

The changes in IBA's Income Statement since FaHCSIA's 2008-09 PBS are:

• reversal of provisional appropriation for a lapsing measure affecting the forward years
• efficiency dividend application of 1.25%.

The changes in the Balance Sheet since FaHCSIA's 2008-09 PBS are due to the impact of the audited financial statements flowing through to the balance sheet for 2008-09 and out years. Cash, Receivables and Investments are the main categories that have changed.

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3.2.2 Budgeted financial statements

Departmental financial statements

Table 3.2.1: Budgeted departmental income statement (for the period ended 30 June)

	Actual 2007-08 $'000	Revised budget 2008-09 $'000	Forward estimate 2009-10 $'000	Forward estimate 2010-11 $'000	Forward estimate 2011-12 $'000
Income
Revenue
Revenues from Government	57,588	37,402	38,916	39,055	39,772
Goods and services	50,263	25,895	130	130	130
Interest	44,747	44,901	42,642	41,065	40,132
Dividends	128,417	12,027	13,384	16,251	17,879
Rents	1,215	158	-	-	-
Other	248	-	-	-	-
Total revenue	282,478	120,383	95,072	96,501	97,913
Gains
Other	14	-	-	-	-
Total gains	14	-	-	-	-
Total income	282,492	120,383	95,072	96,501	97,913
Expense
Employees	19,891	25,028	26,193	27,353	28,852
Suppliers	81,475	44,863	23,130	23,198	24,567
Grants	8,092	18,772	19,957	17,751	18,172
Depreciation and amortisation	777	1,495	1,483	1,472	1,487
Finance costs	71	60	60	60	60
Concessional loan discount	41,874	15,795	15,811	13,333	13,333
Write-down of assets and impairment of assets	9,453	1,050	855	677	514
Net losses from sale of assets	634	-	-	-	-
Total expenses	162,267	107,063	87,489	83,844	86,985
Share of operating results of associates and joint ventures accounted for using the equity method	2,370	-	-	-	-
Operating result before Income Tax	122,595	13,320	7,583	12,657	10,928
Net surplus or (deficit) attributable to the Australian Government	122,595	13,320	7,583	12,657	10,928

Prepared on Australian Accounting Standards basis.

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Table 3.2.2: Budgeted departmental balance sheet (as at 30 June)

	Actual 2007-08 $'000	Revised budget 2008-09 $'000	Forward estimate 2009-10 $'000	Forward estimate 2010-11 $'000	Forward estimate 2011-12 $'000
Assets
Financial assets
Cash and cash equivalents	56,323	30,921	9,025	20,019	9,073
Receivables	450,148	516,019	557,674	560,520	594,773
Investments accounted for under the equity method	29,386	29,386	29,386	29,386	29,386
Other investments	325,972	336,907	348,445	360,607	360,607
Accrued revenues	51,800	51,800	51,800	51,800	51,800
Total financial assets	913,629	965,033	996,330	1,022,332	1,045,639
Non-financial assets
Land and buildings	886	3,836	3,651	3,451	3,251
Infrastructure, plant and equipment	801	1,473	1,372	2,154	2,906
Investment properties	24,888	24,888	24,888	24,888	24,888
Intangibles	484	959	1,015	1,516	2,285
Other	108	108	108	108	108
Total non-financial assets	27,167	31,264	31,034	32,117	33,438
Total assets	940,796	996,297	1,027,364	1,054,449	1,079,077
Liabilities
Payables
Suppliers	9,608	20,675	10,289	10,289	10,289
Other payables	23,694	12,627	12,627	12,627	12,627
Total payables	33,302	33,302	22,916	22,916	22,916
Provisions
Employees	5,373	6,046	6,746	7,474	7,474
Other provisions	8,342	8,342	8,342	8,342	8,342
Total provisions	13,715	14,388	15,088	15,816	15,816
Total liabilities	47,017	47,690	38,004	38,732	38,732
Equity*
Parent entity interest
Contributed equity	686,996	728,504	761,674	775,374	789,074
Reserves	21,576	21,576	21,576	21,576	21,576
Retained surpluses or accumulated deficits	185,207	198,527	206,110	218,767	229,695
Total parent entity interest	893,779	948,607	989,360	1,015,717	1,040,345
Total equity	893,779	948,607	989,360	1,015,717	1,040,345
Current assets	348,658	391,008	384,365	403,226	399,130
Non-current assets	592,138	605,289	642,999	651,223	679,947
Current liabilities	46,420	47,025	37,262	37,910	37,910
Non-current liabilities	597	665	742	822	822

Prepared on Australian Accounting Standards basis.
Note: 'Equity' is the residual interest in assets after deduction of liabilities.

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Table 3.2.3: Budgeted departmental statement of cash flows (for the period ended 30 June)

	Actual 2007-08 $'000	Revised estimate 2008-09 $'000	Forward estimate 2009-10 $'000	Forward estimate 2010-11 $'000	Forward estimate 2011-12 $'000
Operating Activities
Cash received
Goods and services	37,150	26,053	130	130	130
Appropriations	61,160	37,402	38,916	39,055	39,772
Interest	196,218	44,901	42,642	41,065	40,132
Dividends	-	12,027	13,384	16,251	17,879
Other cash received	(442)	-	-	-	-
Total cash received	294,086	120,383	95,072	96,501	97,913
Cash used
Employees	18,454	24,417	25,555	26,687	28,915
Suppliers	80,340	44,860	33,515	23,136	24,504
Grants	8,092	18,772	19,957	17,811	18,232
Net GST paid	769	-	-	-	-
Other cash used	71	-	-	-	-
Total cash used	107,726	88,049	79,027	67,634	71,651
Net cash from or (used by) operating activities	186,360	32,334	16,045	28,867	26,262
Investing Activities
Cash received
Proceeds from sales of property, plant and equipment	3,000	-	-	-	-
Repayments of loans made	77,551	70,784	71,379	94,344	63,100
Total cash received	80,551	70,784	71,379	94,344	63,100
Cash used
Purchase of property, plant and equipment	7,298	5,593	1,252	2,555	2,808
Purchase of investments	213,194	10,935	11,538	12,162	-
Loans made	123,360	153,500	129,700	111,200	111,200
Total cash used	343,852	170,028	142,490	125,917	114,008
Net cash from or (used by) investing activities	(263,301)	(99,244)	(71,111)	(31,573)	(50,908)
Financing Activities
Cash received
Appropriations - contributed equity	59,949	41,508	33,170	13,700	13,700
Total cash received	59,949	41,508	33,170	13,700	13,700
Net cash from or (used by) financing activities	59,949	41,508	33,170	13,700	13,700
Net increase or (decrease) in cash held	(16,992)	(25,402)	(21,896)	10,994	(10,946)
Cash at the beginning of the reporting period	73,315	56,323	30,921	9,025	20,019
Cash at the end of the reporting period	56,323	30,921	9,025	20,019	9,073

Prepared on Australian Accounting Standards basis.

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Table 3.2.4: Departmental statement of changes in equity — summary of movement (Budget year 2008-09)

	Accumulated results $'000	Asset revaluation reserve $'000	Other reserves $'000	Contributed equity/capital $'000	Total equity $'000
Opening balance as at 1 July 2008
Balance carried forward from previous period	185,207	21,576	-	686,996	893,779
Opening balance adjustment	-	-	-	-	-
Adjusted opening balance	185,207	21,576	-	686,996	893,779
Income and expense
Income and expenses recognised directly in equity:	-	-	-	-	-
Gain/loss on revaluation of property	-	-	-	-	-
Sub-total income and expense	-	-	-	-	-
Net operating result	13,320	-	-	-	13,320
Total income and expenses recognised directly in equity	13,320	-	-	-	13,320
Transactions with owners
Distribution to owners
Returns of capital	-	-	-	-	-
Restructuring	-	-	-	-	-
Other	-	-	-	-	-
Contribution by owners
Appropriation (equity injection)	-	-	-	41,508	41,508
Other:	-	-	-	-	-
Restructuring	-	-	-	-	-
Sub-total transactions with owners	-	-	-	41,508	41,508
Transfers between equity components	-	-	-	-	-
Estimated closing balance as at 30 June 2009	198,527	21,576	-	728,504	948,607

Prepared on Australian Accounting Standards basis.

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Schedule of administered activity

IBA has no administered activity.

Notes to the financial statements

The budgeted financial statements have been prepared in accordance with the requirements of the Finance Minister's Orders issued by the Minister for Finance and Deregulation.

The statements have been prepared:

• on an accrual accounting basis
• in compliance with Australian Accounting Standards and Australian Equivalents to International Financial Reporting Standards (AEIFRS) and other authoritative pronouncements of the Australian Accounting Standards Board (AASB) and the Consensus Views of the Urgent Issues Group.

Revenue from Government

Represents appropriation from Government to Indigenous Business Australia for the delivery of IBA's four outputs in pursuit of its single outcome. Changes in the ordinary annual appropriations are a result of new measures and variations explained in Section 2.

Expenses - depreciation and amortisation

Property, plant and equipment assets are written-off to their estimated residual values over their estimated useful lives using, in all cases, the straight-line method of depreciation.

Depreciation/amortisation rates (useful lives) and methods are reviewed at each balance date and necessary adjustments are recognised in the current, or current and future reporting periods, as appropriate.

Write-down and impairment of assets

IBA continues to designate its loan portfolio at Fair Value through profit and loss per paragraph 11A of AASB 139 which provides for contracts with embedded derivatives, such as prepayment options, to be designated at Fair Value through profit and loss. The variation in the loan portfolio under Fair Value basis is written directly to the Income Statement.

Financial Assets - receivables

This includes loans and advances made by Indigenous Business Australia to clients in the delivery of its outputs, in addition to amounts owing to Indigenous Business Australia for delivery of goods and services, and dividends owed to Indigenous Business Australia from subsidiaries, associates and investments. Loans receivable are carried at Fair Value under AASB 139.

Assets - non-financial

Except for any re-valued assets, reported value of plant and equipment represents the purchase price paid less depreciation incurred.

Land and Building held for investment are carried at Fair Value.

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