Rural Business Development Corporation

(1)

Part 11 Minister for Agriculture and Food; Fisheries

Appropriations, Expenses and Cash Assets

2013-14 Actual

$’000

2014-15 Budget

$’000

2014-15 Estimated

Actual

$’000

2015-16 Budget Estimate

$’000

2016-17 Forward Estimate

$’000

2017-18 Forward Estimate

$’000

2018-19 Forward Estimate

$’000

DELIVERY OF SERVICES

Item 64 Net amount appropriated to

deliver services ... 4,518 223 223 232 233 233 239 Total appropriations provided to deliver

services ... 4,518 223 223 232 233 233 239

TOTAL APPROPRIATIONS ... 4,518 223 223 232 233 233 239

EXPENSES

Total Cost of Services ... 6,699 2,393 1,100 705 600 600 499

Net Cost of Services

^(a)

... 2,875 (370) 80 685 580 580 499

CASH ASSETS

^(b)

... 5,222 3,819 5,365 4,912 4,565 4,218 3,958

(a) Represents Total Cost of Services (expenses) less retained revenues applied to the agency’s services. Reconciliation to the ‘Total appropriations provided to deliver services’ includes adjustments related to movements in cash balances and other accrual items such as resources received free of charge, receivables, payables and superannuation.

(b) As at 30 June each financial year.

Spending Changes

All recurrent spending changes, other than cashflow timing changes and non-discretionary accounting adjustments, impacting on the agency’s Income Statement since presentation of the 2014-15 Budget to Parliament on 8 May 2014, are outlined below:

2014-15 Estimated

Actual

$’000

2015-16 Budget Estimate

$’000

2016-17 Forward Estimate

$’000

2017-18 Forward Estimate

$’000

2018-19 Forward Estimate

$’000

2015-16 Streamlined Budget Process Incentive Funding ... - 5 - - -

Significant Issues Impacting the Agency

• The Government has created a number of assistance schemes through the Rural Business Development Corporation Act 2000 that are administered by the Corporation. These assistance schemes include the Commonwealth Government initiated concessional loans schemes.

• The Commonwealth Farm Finance Concessional Loans Scheme commenced taking applications in Western Australia in

January 2014. Funding of $50 million ($25 million per annum for 2013-14 and 2014-15) has been made available to

Western Australia to assist farm businesses experiencing debt servicing difficulties, through the provision of

concessional interest rate loans for productivity enhancement activities. In early 2015, it was amended to include debt

restructuring of up to $1 million (for up to 50% of eligible farm debt).

(2)

• In February 2014, the Commonwealth Government announced a package of measures offering financial, social and mental health support to farming families, farm businesses and rural communities suffering from drought.

These measures include up to $280 million in concessional loans to eligible drought affected farm businesses for debt restructuring, operating expenses and drought recovery activities across all Australian States and Territories.

On 23 September 2014, the Commonwealth Government’s Drought Concessional Loans Scheme opened in Western Australia, with the Corporation administering this $20 million Scheme.

• Most Western Australian Wheatbelt businesses experienced a very good 2013 grain harvest with record deliveries in many areas, and had a better than average finish to 2014.

• In the shires of Yilgarn and Westonia (and surrounds) in the eastern Wheatbelt of Western Australia, there has been a run of below average to well below average growing seasons rainfall since the 2010 season. This has resulted in many grain growers in that area experiencing five consecutive below average production years. This in turn has caused increasing debt levels, falling land values, and an increasing number of farm businesses not being able to obtain sufficient carry on finance to implement their 2015 cropping program. The State’s pastoral region has also seen continuing dry seasons since 2013 and in 2015, shires from Northampton to Exmouth have experienced some financial difficulty in relation to the ongoing dry conditions.

• In response to the dry seasonal situation, the Government approved the Farm Business Assessment 2014 Scheme in 2014 and has extended the 2014 Scheme into 2015. The Scheme provides farm businesses that are experiencing some degree of financial hardship or difficulty servicing their debt, up to $10,000 in grants, to employ independent professional advice to help them to look at their financial options.

• In addition to the shires of Yilgarn and Westonia (and surrounds) included in the original 2014 Scheme , the extension of the Scheme into 2015 has seen the further inclusion of the shires of Chapman Valley, Shark Bay, Murchison, Upper Gascoyne, Carnarvon, Mount Marshall, Morawa, Dalwallinu, Koorda, Northampton, Perenjori, Exmouth, and the City of Greater Geraldton.

Resource Agreement

The following performance information (financial and non-financial) is the subject of a Resource Agreement signed by the Minister, Accountable Authority and Treasurer under Part 3, Division 5 of the Financial Management Act 2006.

Outcomes, Services and Key Performance Information Relationship to Government Goals

Broad government goals are supported at agency level by specific outcomes. Agencies deliver services to achieve these outcomes. The following table illustrates the relationship between the agency’s service and desired outcome, and the government goal it contributes to. The key effectiveness indicators measure the extent of impact of the delivery of services on the achievement of desired outcomes. The key efficiency indicators monitor the relationship between the service delivered and the resources used to produce the service.

Government Goal Desired Outcome Service

Stronger Focus on the Regions:

Greater focus on service delivery, infrastructure investment and economic development to improve the overall quality of life in remote and regional areas.

Improved ecologically sustainable development of agri-industry.

1. Farm Business Development

Service Summary

Expense

2013-14 Actual

$’000

2014-15 Budget

$’000

2014-15 Estimated

Actual

$’000

2015-16 Budget Estimate

$’000

2016-17 Forward Estimate

$’000

2017-18 Forward Estimate

$’000

2018-19 Forward Estimate

$’000

1. Farm Business Development ... 6,699 2,393 1,100 705 600 600 499

Total Cost of Services ... 6,699 2,393 1,100 705 600 600 499

(3)

Outcomes and Key Effectiveness Indicators ^(a)

2013-14 Actual

2014-15 Budget

2014-15 Estimated

Actual

2015-16 Budget Target

Note

Outcome: Improved ecologically sustainable development of agri-industry:

The extent to which recipients were satisfied with the way schemes are

administered ... 93% 91% 91% 91%

(a) Further detail in support of the key effectiveness indicators is provided in the agency’s Annual Report.

Services and Key Efficiency Indicators 1. Farm Business Development

This service provides financial support to farmers who have been significantly impacted by exceptional seasonal events.

It assists them to enhance their skills in order to improve and sustain long-term profitability and be better equipped to deal with risks inherent in farming.

This service contributes to the ecologically sustainable development of agri-industry in a number of ways.

The Corporation aims to implement the industry support within the funding guidelines to maximise the protection of the resources of the agri-industries.

2013-14 Actual

2014-15 Budget

2014-15 Estimated

Actual

2015-16 Budget Target

Note

$’000 $’000 $’000 $’000

Total Cost of Service ... 6,699 2,393 1,100 705 1

Less Income ...

3,824 2,763 1,020 20 2 Net Cost of Service ... 2,875 (370) 80 685

Efficiency Indicators

Proportion of Expenditure as Administrative Expenditure ... 7.4% 10% 32% 13.2% 3

Explanation of Significant Movements (Notes)

1. The Total Cost of Service for the 2014-15 Estimated Actual is lower than the 2014-15 Budget due to a change in the accounting treatment of interest expense associated with the Commonwealth Farm Finance Concessional Loans and Drought Concessional Loans Schemes. Further detail will be provided in the full audited financial statements published in the Corporation’s 2014-15 Annual Report.

The estimated decrease in the Total Cost of Service for the 2015-16 Budget Target compared to the 2014-15 Estimated Actual relates primarily to the decrease in administration relating to the Commonwealth Farm Finance Concessional Loans and Drought Concessional Loans Schemes, as these Schemes move from loan application to management of the loan book.

2. Income for the 2014-15 Estimated Actual is lower than the 2014-15 Budget due to a change in the accounting treatment of interest revenue associated with the Commonwealth Farm Finance Concessional Loans and Drought Concessional Loans Schemes. Further detail will be provided in the full audited financial statements published in the Corporation’s 2014-15 Annual Report.

The estimated decrease in income for the 2015-16 Budget Target compared to the 2014-15 Estimated Actual relates primarily to the upfront administration fees received from the Commonwealth Government in 2013-14 and 2014-15 to finance the administration of the Commonwealth Farm Finance Concessional Loans and Drought Concessional Loans Schemes over the five year term of the Schemes.

3. The efficiency indicator relates only to the administration expenses incurred on the various grant programs.

Administration expenditure on the Commonwealth Farm Finance Concessional Loans and Drought Concessional

Loans Schemes is not included in the calculation of this efficiency indicator due to the loans having a different cost

structure and being managed over a five year term. The Proportion of Expenditure as Administrative Expenditure

in the 2014-15 Estimated Actual is relatively high reflecting the scaling down of administrative overheads from a

significant grants program in 2013-14. The ongoing reduction in administration expenses is reflected in the

2015-16 Budget Target.

(4)

Financial Statements

Income Statement Expenses

The estimated decrease in the Total Cost of Services of $0.4 million (35.9%) for the 2015-16 Budget Estimate compared to the 2014-15 Estimated Actual relates primarily to decrease in administration expenses relating to the Commonwealth Farm Finance Concessional Loans and Drought Concessional Loans Schemes, as these Schemes move from loan application to management of the loan book.

Income

The estimated decrease in total income of $1 million (98%) for the 2015-16 Budget Estimate compared to the 2014-15 Estimated Actual primarily reflects the upfront receipt of the administration fees for the Commonwealth Farm Finance Concessional Loans and Drought Concessional Loans Schemes. These administration fees have been received in 2013-14 and 2014-15 with the expenditure to be incurred over the five year term of the loans.

Statement of Financial Position

The estimated decrease in the total assets of $0.5 million (8.2%) for the 2015-16 Budget Estimate compared to the 2014-15 Estimated Actual relates to the reduction in cash. This relates to the administration expenditure for the Commonwealth Farm Finance Concessional Loans and Drought Concessional Loans Schemes where the cash was received upfront in 2013-14 and 2014-15.

The estimated decrease in current assets and current liabilities of $50 million for the 2014-15 Estimated Actual compared to the 2014-15 Budget is due to a change in the accounting treatment of loans associated with the Commonwealth Farm Finance Concessional Loans and Drought Concessional Loans Schemes.

Statement of Cashflows

The movement in payments and receipts are similar to the movements in expenses and income in the Income Statement

listed above.

(5)

INCOME STATEMENT

^(a)

(Controlled)

2013-14 Actual

$’000

2014-15 Budget

$’000

2014-15 Estimated

Actual

$’000

2015-16 Budget Estimate

$’000

2016-17 Forward Estimate

$’000

2017-18 Forward Estimate

$’000

2018-19 Forward Estimate

$’000

COST OF SERVICES

Expenses

Employee benefits ... - 8 8 8 8 8 8

Grants and subsidies

^(b)

... 5,723 400 400 300 200 200 200

Supplies and services ... 845 - - 5 - - -

Other expenses ... 131 1,985 692 392 392 392 291

TOTAL COST OF SERVICES ... 6,699 2,393 1,100 705 600 600 499

Income

Grants and subsidies ... 2,077 - - - - - -

Other revenue ... 1,747 2,763 1,020 20 20 20 -

Total Income... 3,824 2,763 1,020 20 20 20 -

NET COST OF SERVICES ... 2,875 (370) 80 685 580 580 499

INCOME FROM STATE GOVERNMENT

Service appropriations ... 4,518 223 223 232 233 233 239

Resources received free of charge ... 80 - - - - - -

TOTAL INCOME FROM STATE

GOVERNMENT ... 4,598 223 223 232 233 233 239

SURPLUS/(DEFICIENCY) FOR THE PERIOD ... 1,723 593 143 (453) (347) (347) (260)

(a) Full audited financial statements are published in the agency’s Annual Report.

(b) Refer to the Details of Controlled Grants and Subsidies table below for further information.

DETAILS OF CONTROLLED GRANTS AND SUBSIDIES

2013-14 Actual

$’000

2014-15 Budget

$’000

2014-15 Estimated

Actual

$’000

2015-16 Budget Estimate

$’000

2016-17 Forward Estimate

$’000

2017-18 Forward Estimate

$’000

2018-19 Forward Estimate

$’000

Climate Adaptation Assistance Scheme ... 40 - - - - - -

Farm Business Assessment 2014 Scheme... - 300 300 - - - -

Future Rural Support Schemes ... - - - 200 100 100 200

Research Grants ... - 100 100 100 100 100 -

Rural Financial Counselling Service Scheme ... 200 - - - - - -

Subsidised Interest Rate Scheme -

Live Cattle Exports to Indonesia ... 74 - - - - - -

State Assistance Package for Farmers ... 3,606 - - - - - -

Western Australian Pilot of Drought Reform

Measures ... 1,773 - - - - - -

Western Australian Pilot of Drought Reform

Measures Phase 2 ... 30 - - - - - -

TOTAL ... 5,723 400 400 300 200 200 200

(6)

STATEMENT OF FINANCIAL POSITION

^(a)

(Controlled)

2013-14 Actual

$’000

2014-15 Budget

$’000

2014-15 Estimated

Actual

$’000

2015-16 Budget Estimate

$’000

2016-17 Forward Estimate

$’000

2017-18 Forward Estimate

$’000

2018-19 Forward Estimate

$’000

CURRENT ASSETS

Cash assets ... 5,222 3,819 5,365 4,912 4,565 4,218 3,958

Receivables ... 98 - 98 98 98 98 98

Other ... 36 50,506 36 36 36 36 36

Total current assets ... 5,356 54,325 5,499 5,046 4,699 4,352 4,092 TOTAL ASSETS ... 5,356 54,325 5,499 5,046 4,699 4,352 4,092 CURRENT LIABILITIES

Payables ... 90 - 90 90 90 90 90

Other ... 639 50,000 639 639 639 639 639

Total current liabilities ... 729 50,000 729 729 729 729 729

TOTAL LIABILITIES... 729 50,000 729 729 729 729 729

EQUITY

Contributed equity ... (2) - (2) (2) (2) (2) (2)

Accumulated surplus/(deficit) ... 4,629 4,325 4,772 4,319 3,972 3,625 3,365 Total equity ... 4,627 4,325 4,770 4,317 3,970 3,623 3,363

TOTAL LIABILITIES AND EQUITY ... 5,356 54,325 5,499 5,046 4,699 4,352 4,092

(a) Full audited financial statements are published in the agency’s Annual Report.

(7)

STATEMENT OF CASHFLOWS

^(a)

(Controlled)

2013-14 Actual

$’000

2014-15 Budget

$’000

2014-15 Estimated

Actual

$’000

2015-16 Budget Estimate

$’000

2016-17 Forward Estimate

$’000

2017-18 Forward Estimate

$’000

2018-19 Forward Estimate

$’000 CASHFLOWS FROM STATE

GOVERNMENT

Service appropriations ... 4,518 223 223 232 233 233 239

Net cash provided by State Government ... 4,518 223 223 232 233 233 239

CASHFLOWS FROM OPERATING ACTIVITIES

Payments

Employee benefits ... - (8) (8) (8) (8) (8) (8)

Grants and subsidies ... (6,826) (400) (400) (300) (200) (200) (200)

Supplies and services ... (846) - - (5) - - -

Other payments... (1,005) (1,985) (692) (392) (392) (392) (291) Receipts

Grants and subsidies ... 2,077 - - - - - -

GST receipts ... 956 - - - - - -

Other receipts ... 1,683 2,313 1,020 20 20 20 -

Net cash from operating activities ... (3,961) (80) (80) (685) (580) (580) (499) CASHFLOWS FROM FINANCING

ACTIVITIES

Other payments... - (35,000) - - - - -

Other proceeds ... - 25,000 - - - - -

Net cash from financing activities... - (10,000) - - - - -

NET INCREASE/(DECREASE) IN CASH

HELD ... 557 (9,857) 143 (453) (347) (347) (260)

Cash assets at the beginning of the reporting

period ... 4,665 13,676 5,222 5,365 4,912 4,565 4,218

Cash assets at the end of the reporting

period ... 5,222 3,819 5,365 4,912 4,565 4,218 3,958

(a) Full audited financial statements are published in the agency’s Annual Report.