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Note 8. Other information

This section provides other disclosures relevant to DVA's financial information environment for the year.

Note 8.1. Explanations of Major Departmental Budget Variances

Explanations are provided for major variances between actual results and the original budget. Variances are considered to be 'major' based on the following criteria:

  • the variance between budget and actual is greater than 10% for departmental; and
  • the variance between budget and actual is greater than 2% for administered; or
  • an item below this threshold but is considered important for the readers' understanding or is relevant to an assessment of the discharge of accountability and to an analysis of performance of DVA.
Explanation of major variances Affected line items (and schedule)
Trade and other receivables are higher than budget $66.1 million, largely reflect the appropriations receivable ($28.3 million) and timing relating to payment of suppliers ($39.5 million). Cash and cash equivalents and Trade and other receivables (Statement of Financial Position)
The variance of $8.8 million for land and building, property, plant and equipment, intangibles and the related depreciation and amortisation is a result of timing of capital projects. Land and buildings (Statement of Financial Position), Changes in asset revaluation surplus (Statement of Comprehensive Income), Equity Reserves (Statement of Financial Position), Depreciation and amortisation (Statement of Comprehensive Income), Property, Plant and Equipment and Intangibles (Statement of Financial Position)
Premium increases were implemented from 1 January 2018 with an average increase of 4% applied. DSHIS also trialled a dedicated sales team which has had great success in selling new policies. This has resulted in higher than budgeted unearned revenue. Premiums and recoveries receivable (Statement of Financial Position) Unearned premiums (Statement of Financial Position).
No budget was provided against the land, reclassified in 2015–16 to assets held for sale. Assets held for sale (Statement of Financial Position).
The suppliers cost is higher than budget $54.5 million which reflects the additional costs associated with project related work and timing of payments. Suppliers, Other payables (Statement of Financial Position).
DSHIS’ claims expenses were lower than budget due to a benign claims experience, There were no major catastrophe events during 2017-18. However due to Cyclone Debbie occurring late in 2016-17 there were a higher than budgeted amount of claim payments paid in 2017-18 as these claims were finalised. Claims expense (Statement of Comprehensive Income), Claim payments (Cash Flow Statement).
Other payables are higher than originally budgeted by $4.6 million which relate to separations and redundancies Other payables (Statement of Financial Position)
Employee expenditure is $10.9 million above the original budget due to budgeting for reductions in FTE numbers. Employee expense (Statement of Comprehensive Income), Employee provision (Statement of Financial Position).
DSHIS’ outstanding claims provision is lower than budget ($7.7 million) due to a lack of catastrophe events as discussed above. There were only a small number of claims relating to previous years outstanding which has also reduced the amount of the provision. Gross outstanding claims (Statement of Financial Position).
DSHIS’ rate of return on the investment portfolio has been higher than budgeted due to recent changes in the investment policy which allows more of the portfolio to be invested in term deposits. Interest (Statement of Comprehensive Income), Interest (Cash Flow Statement).

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Note 8.2. Explanations of Major Administered Budget Variances

Explanations are provided for major variances between actual results and the original budget. Variances are considered to be 'major' based on the following criteria:

  • the variance between budget and actual is greater than 10% for departmental; and
  • the variance between budget and actual is greater than 2% for administered; or
  • an item below this threshold but is considered important for the readers' understanding or is relevant to an assessment of the discharge of accountability and to an analysis of performance of DVA.
Explanation of major variances Affected line items (and schedule)
The variance of $1,496 million is mainly related to the movements for the following personal benefits programs:
  • Adjustment to the Military Rehabilitation and Compensation Acts — Income Support and Compensation. The increase of $1,172 million reflects the military compensation liability provision adjustment calculated by the Australian Government Actuary (AGA) outlined at Note 4.4A.
  • Military Rehabilitation and Compensation Acts — Income Support and Compensation. The $298 million overspend is mainly related to the increased Permanent Impairment payments driven by the increased number of claims and improvements in claims processing times.
Personal Benefits (Administered Schedule of Comprehensive Income).
The variance of $359 million is mainly related to the movements for the following health care programs:
  • Adjustment to the Military and Compensation Acts Liability Provision — Health and Other Care Services. The increase of $730 million reflects the military compensation liability provision adjustment calculated by the AGA outlined at Note 4.4B.
  • Veterans' Hospital Services. There was a $104 million underspend due to a declining treatment population and price stability for public hospitals.
  • Veterans' Community Care and Support. There was a $150 million underspend mainly due to Residential Care. This is consistent with the decreasing number of veteran clients in residential aged care.
  • Veterans' Counselling and Other Health Services. The decrease of $76 million was mainly due to an underspend of $42 million related to the British Nuclear Tests health care program, as well as reduced frequency of claims by providers and veterans in the Travel for Treatment program ($30 million).
  • Veterans' Pharmaceuticals Benefits. There was a $32 million underspend due to a decline in the treatment population combined with the ongoing impact of reduction in prices for the Pharmaceuticals Benefits items.
  • Veterans' Counselling and Other Health Services. There was an underspend of $42 million mainly due to Travel for Treatment. This was a result of the implementation of new contracts with taxi and hire car providers which have lower fare structures than previously estimated.
Health care payments (Administered Schedule of Comprehensive Income)
The increase of $19 million includes an additional cash drawdown that occurred on 30 June 2018, as well as the recognition of special accounts balances as cash as a result of changes in the special accounts reporting requirements. Cash and cash equivalents (Administered Statement of Financial Position).
The decrease of $57 million is primarily driven by the reduction of cash advances ($28 million) to the Repatriation Pharmaceutical Benefits Scheme in relation to pharmaceutical and medical payments made to clients, reclassification of $9 million as a result of change in special accounts reporting requirements, $14 million decrease in the debt recoveries, and $5 million reduction in relation to residential care. Receivables (Administered Statement of Financial Position).
The variance of $65 million represents the increase in the Asset Under Construction balance in relation to the Sir John Monash Centre. Non-financial assets (Administered Statement of Financial Position); Revaluations transferred from reserves (Administered Statement of Comprehensive Income).
The increase of $147 million primarily reflects the increase in the net asset position of the Australian War Memorial as at 30 Jun 2018.
Equity accounted investments (Administered Statement of Financial Position); Revaluations transferred from Reserves (Administered Statement of Comprehensive Income).
The variance is mainly related to the adjustment to the military compensation provisions calculated by the AGA as outlined in Note 4.4. Provisions and payables (Administered Statement of Financial Position).

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