Departmental finances

Operating result

Our agency achieved an operating surplus of $0.825 million (before depreciation and amortisation) in 2015–16 compared with a $2.032 million deficit in 2014–15. The surplus can be attributed to lower supplier expenses following the successful implementation of the Emissions Reduction Fund in 2014–15 and an associated decrease in the use of short-term contract resources. This was partially offset by an increase in employee provisions as a result of the change in the bond rate from 3.0 per cent to 2.0 per cent during the year.

Figure 10: Operating result (excluding depreciation/amortisation) from 2011–12 to 2015–16 ($ million)

Income

In 2015–16 the agency received revenue from government totalling $72.974 million compared with $76.648 million in 2014–15. The reduction in funding reflects the transition from a start-up agency to a more mature agency. Some of Australian Government savings measures and efficiency dividends have also contributed to this reduction.

The decrease in other comprehensive income ($0.095 million) reflects changes in the make good provision for the potential restoration of the leased office building at the completion of the lease in May 2017.

Expenses

The agency's expenses have decreased by $6.253 million (seven per cent) from $91.943 million in 2014–15 to $85.690 million in 2015–16. The decrease is primarily due to a reduction in supplier expenses and lower impairment and write-down of assets during the year, partly offset by an increase in employee benefits. The reduction in supplier expenses is associated with lower contractor costs as a result of the successful implementation of the Emissions Reduction Fund during 2014–15.

Figure 11: Expenses by classification from 2011–12 to 2015–16 ($ million)

Figure 12: Supplier expense for 2015–16

Administered finances

Our agency administered the Emissions Reduction Fund, Renewable Energy Target, and residual items relating to the carbon pricing mechanism on behalf of the government in 2015–16.

Administered income

Administered income decreased by $52.270 million (78 per cent) in 2015–16 as the result of:

• Other taxes decreasing by $10.715 million (67 per cent), represented by the following significant items:
  • $13.441 million decrease in shortfall charges and penalties under the carbon pricing mechanism due to the repeal of legislation on 17 July 2014 and the decrease in residual items being accounted for, and
  • a net increase of $2.726 million for shortfall charges under the Renewable Energy Target, particularly in relation to shortfall charges of $4.450 million incurred by entities under the large-scale generation scheme, partially offset by a decrease in charges under the small-scale scheme.
• Fees and fines decreasing by $2.543 million (20 per cent), represented by the following significant items:
  • $1.378 million in lower receipts from the registration of certificates due to the large number of Regulator created renewable energy certificates issued through the clearing house, which remained in deficit at year end (more buyers than sellers of certificates)
  • $1.194 million in lower receipts from the surrender of certificates due to an amendment to the Renewable Energy (Electricity) Act 2000 in June 2015 to allow for full exemption from liability for emissions-intensive trade exposed activities (previously partially exempt), and
  • offset by $0.202 million increase in other fees which primarily relates to increased interest revenue from the small-scale technology clearing house (from December 2015 interest revenue from this account was swept directly to the Official Public Account and was not recognised as an administered revenue by the agency).
• Other gains decreased to nil in 2015–16 (100 per cent) from $39.012 million in 2014–15, which relates to the one-off receipt of payments in 2014–15 relating to the true-up process for the carbon pricing mechanism.

Administered expenses

Administered expenses have decreased by $27.507 million (16 per cent) largely driven by:

• a decrease in subsidies expense to nil in 2015–16 (100 per cent) as a result of the repeal of the carbon pricing mechanism removing any need to purchase free carbon units during 2015–16
• a $125.376 million increase in the purchase of carbon credit units, reflecting the full year of operating the Emissions Reduction Fund in 2015–16
• a reduction of $2.536 million (79 per cent) in the write-down and impairment of assets, and
• a decrease in 'Other' expenses of $133.656 million (99 per cent) reflecting a one-off adjustment to the accrued carbon price revenue estimate made in 2014–15 following the repeal of the carbon pricing mechanism.