Assessment task 2 Title: Assignment 2 Recommend a strategy for improving Public Financial Management of the Central Government of Indonesia Due date: Tuesday 24 October 2015 Details of task: 1. What should be the objectives for improving PFM in the Central GoI based on your analysis in assignment 1? 2. Present a strategy to achieve the objectives. 3. Take one system of Government (e.g. accounting, budgeting, law, internal audit, etc.) and discuss what should be done. 8 mAssessment Requirements Word limit: 3000 words (suggested) Weighting/Value: 50% Presentation requirements: The assignment should be in the form of a report (rather than an essay) and may make use of numbering, dot points, graphical or table information etc. It must include a list of sources consulted, referenced in conformity with the Q Manual. Public Sector Financial Management Topic 8 Management Reporting and Control: Costing Handout B “Service Costing” [Source: New South Wales Treasury, tpp 07-3, Service Costing in General Government Sector Agencies Activities, June 2007, Appendix A] Stephen Peterson August 15, 2015 june 07 tpp 07-3 Service Costing in General Government Sector Agencies OFFICE OF FINANCIAL MANAGEMENT Policy & Guidelines Paper Service Costing in General Government Sector Agencies tpp 07-3 Appendix A Hypothetical case study – Service Costing Scenario The Agency is developing a Results and Services Plan (RSP) for the forthcoming Budget cycle. The agency has to determine the full cost of each of its services for inclusion in the RSP. The Department is organised into three functional areas: The agency uses a “Responsibility Centre” identifier in its general ledger to track actual costs to each of these functional areas during the year, but the calculation of service costs has to be done through spreadsheets. Division Responsibilities Service Delivery Division Responsible for the delivery of a range of different services to a number of different clients including. Regulation and Policy Development Division Responsible for : ƒ Regulatingcertainindustrypractitioners; ƒ PolicyadvicetotheMinister,Executive,Service Delivery Division and the rest of the agency; ƒ In-housetechnicaltraining. The Division earns some user charge revenue through the conduct of training seminars to private sector companies (based on the expertise gained in developing in-house training programs). Corporate Services Division Responsible for all corporate services to the agency including finance, human resources, IT and asset management. The Division earns some user charges revenue through renting building and computer surplus capacity to a small private sector company. New South Wales Treasury 39 page 39 Service Costing in General Government Sector Agencies tpp 07-3 The budgeted operating statement for the department and for each of the three Divisions is set out below. Government Department Budgeted Statements of Financial Performance Agency $’000 125,000 Service Delivery Division $’000 89,200 Regulation and Policy Services $’000 $’000 Employee Related Expenses Salaries and wages 27,200 8,600 Overtime 2,500 1,800 500 200 Worker’s compensation Fringe Benefits Tax Payroll tax Superannuation and LSL Other Operating Expenses Advertising and promotion Auditor’s remuneration 1,500 500 7,500 10,000 1,100 300 5,400 7,200 300 100 100 100 1,700 400 2,200 600 147,000 105,000 32,000 10,000 New South Wales Treasury 40 page 40 Corporate Division Division 1,250 750 750 250 250 250 250 250 Consultancies 2,500 1,500 500 500 Courier and freight 500 300 100 100 Electricity 1,000 700 200 100 Insurance 1,000 700 200 100 Operating lease – MV Property rentals 3,000 25,000 2,000 18,000 500 500 5,000 2,000 Telephone 3,500 2,000 1,000 500 Travel and accommodation 4,000 Other expenses 2,500 3,000 1,500 600 400 700 300 45,000 30,700 9,300 5,000 Maintenance 10,000 - - 10,000 Depreciation 17,000 - - 17,000 Total Expenses Retained Revenue Fees for Services Other Revenue Total Revenues Net Cost of Services 219,000 10,000 7,000 17,000 202,000 135,700 - - - 135,700 41,300 42,000 10,000 - - 7,000 10,000 7,000 31,300 35,000 FTE Employees 2,850 2,040 620 190 The Department does not allocate the costs of corporate services to the operational divisions. Building costs (i.e. depreciation and maintenance) are all allocated to the Corporate Services Division. Service Costing in General Government Sector Agencies tpp 07-3 Step One: Specify all Services produced by the Agency A service is the ‘end product’ that your agency produces for consumption outside the department (by individual clients, the broader community or another Government agency). Guidance on specifying services is provided in the Treasury Working Paper What You Do and Why – An Agency Guide to Defining Results and Services.8 and the associated information sheets. The Agency has determined that it has the following services. Step Two: Trace direct costs to the services A direct cost is a cost that can be directly traced to a cost object in an economically feasible manner. Employee Related Costs is the major category of cost incurred by the department. The department’s management considers that it is cost beneficial to trace these costs to individual services. The department, however, does not currently have a formal time recording system in place. The directors of the two operational divisions requested all staff to record the time they apply to each service for a period of three months. The results of this sampling approach are considered to be a good approximation of the time applied for each service on an ongoing basis. The Divisional directors have now provided the following analysis of time spent on each service. 8 WhatYouDoandWhy–AnAgencyGuidetoDefiningResultsandServices(TreasuryPolicy Paper TPP 04-4, October 2004) Description Service 1 Industry Advisory Services Service 2 Community Education Service 3 Private Practitioner Accreditation Service 4 Portfolio-Wide Policy Advice & Coordination Service Delivery Division Regulation and Policy Division Service 1 : Industry Advisory Services 90% 10% Service 2 : Community Education 10% 30% Service 3 : Private Practitioner Accreditation - 50% Service 4 : Portfolio-Wide Policy Advice & Coordination - 10% New South Wales Treasury 41 page 41 Service Costing in General Government Sector Agencies tpp 07-3 Based on this analysis, Employee Related Costs are traced to services as follows. Costs Service 1 $’000 Service 2 $’000 Service 3 $’000 Service 4 $’000 Total $’000 Employee Related Expenses: Service Division 94,500 10,500 - - 105,000 Regulation and Policy Division 3,200 9,600 16,000 3,200 32,000 Total Direct Costs 97,700 20,100 16,000 3,200 137,000 For simplicity, all Employee Related Costs have been assumed to behave in the same way and traced to services on the same basis. That is, the impact of higher salaries earned by management is assumed not to affect our calculations. The time recording system could have been used to trace individual employee related costs in more detail. For example, tracing overtime payments may reveal that one service generates most of the overtime. It has been assumed that this is not cost beneficial in this example. Step Three: Allocate indirect costs to the services It is possible to trace a number of individual Other Operating Expenses of the two operational divisions to specific services, as was done for Employee Related Expenses. Employee related expenses account for approximately two thirds of the total expenses of the agency. Management does not consider it cost beneficial to establish systems to trace any of the expense categories that make up the remaining one third. Accordingly, Other Operating Expenses will be treated as indirect costs and allocated to the agency’s services. An indirect cost is a cost that cannot be directly traced to a cost object in an economically feasible manner. An analysis of the Other Operating Expenses reveals that they can be broadly categorised into those that are caused by: ƒ numberofemployees(administrationcosts);and ƒ floorareaoccupied(occupancycosts). Therefore, the Other Operating Expenses are aggregated in two cost pools: ƒ administrationcostpool;and ƒ occupancycostpool.Acostpoolisacollectionofcoststhatareallocatedtoa cost object using the same allocation basis. New South Wales Treasury 42 page 42 Service Costing in General Government Sector Agencies tpp 07-3 Total $’000 Service Regulation Delivery and Policy Division Division $’000 $’000 Administration cost pool Advertising and promotion 750 250 1,000 Auditor’s remuneration 250 250 500 Consultancies 1500 500 2,000 Courier and freight 300 100 400 Operating lease – MV 2,000 500 2,500 Telephone 2,000 1,000 3,000 Travel and accommodation 3,000 600 3,600 Other operating expenses 1,500 700 2,200 11,300 3,900 15,200 Occupancy cost pool Electricity 700 200 900 Insurance 700 200 900 Property rentals 18,000 5,000 23,000 Total other operating expenses 19,400 5,400 30,700 9,300 24,800 40,000 The other indirect costs are those of the Corporate Services Division. The support of this division is essential to enable the department to produce its services. The costs incurred by this division must be reflected in the costs of the department’s services (i.e. services). The Corporate Services Division manager has provided the following analysis of that Division’s Total Expenses of $42 million. $’000 Finance 5,250 Human resources Information technology Executive management Building costs (maintenance and depreciation) 3,000 4,500 2,250 27,000 42,000 The Corporate Services Division manager has also indicated that the following cost drivers are relevant (i.e. the major cause of the volume of costs) for each area of Corporate Services. Cost Finance Human resources Information technology Executive management Building costs (maintenance and depreciation) Cost Driver / Allocation base Number of employees (FTE) Number of employees (FTE) Number of personal computers Number of employees (FTE) Floor space occupied (square metres) New South Wales Treasury 43 page 43 Service Costing in General Government Sector Agencies tpp 07-3 Managers of the two operational divisions were then asked to quantify these cost drivers. For example, the managers were required to estimate what proportion of the 30,000 square metres of floor space occupied by the two operational divisions used to produce each service. Cost driver/ Allocation base Employees (FTE) Floor area (sq. metres) Personal computers Service 1 Service 2 Service 3 Service 4 Total 2,660 30,000 1,600 1,898 19,000 940 390 310 5,000 5,000 300 300 62 1,000 60 To understand the above numbers it is relevant to note that: ƒ TheFTEnumberisderivedbasedonthepercentageoftotalemployeerelated expenses allocated to each service in Step Two above. For example, ⎛⎜⎝97,700137,000⎞⎟⎠×2,660 =1,898; ƒ ServiceDivisionstaffspendalotoftimeoutoftheofficeandthereforethe average occupancy (i.e. square metres occupied per employee) is lower than for the Regulation and Policy Division; and ƒ similarly,therearefewercomputersperemployeeintheServiceDivisionthanin the Regulation and Policy Division. The next step is to allocate the indirect costs using the appropriate allocation base. Costs Branch indirect costs Admin cost pool Occupancy cost pool Allocation Service 1 Service 2 Service 3 Service 4 Total $’000 No. FTE 10,846 2,229 1,771 354 15,200 Floor area 15,707 4,133 4,133 827 24,800 Corporate Services Division No. FTE 3,746 770 612 122 5,250 No. FTE 2,141 440 350 69 3,000 No. PCs 2,644 844 844 168 4,500 No. FTE 1,605 330 262 53 2,250 Floor area 17,100 4,500 4,500 900 27,000 Finance Human resources Information Technology Executive Management Building costs Total Indirect Costs N.B. Calculations in this table include rounding. 53,789 13,246 12,472 2,493 82,000 Base $’000 $’000 $’000 $’000 Step Four: Add the direct and indirect costs for each service Costs Total Direct Costs Total Indirect Costs Total Cost Service 1 $’000 97,700 53,789 151,489 Service 2 $’000 20,100 13,246 33,346 Service 3 $’000 16,000 12,472 28,472 Service 4 $’000 3,200 2,493 5,693 Total $’000 137,000 82,000 219,000 The Total Expenses of the Agency of $219 Million, as reported in its operating statement, have now been disaggregated into the cost of each of the agency’s four services. New South Wales Treasury 44 page 44 Public Sector Financial Management Topic 8 Management Reporting and Control: Costing Handout D “Allocation of Indirect Costs -- Activity-Based Costing” [Source: Victorian Government -- Department of Treasury and Finance, Cost Recovery Guidelines, Jan. 2013, p. 42 - 44] ” Stephen Peterson August 15, 2015 1 Cost Recovery Guidelines January 2013 Incorporating the information formerly published in the Guidelines for Setting Fees and User-Charges Imposed by Departments and Central Government Agencies C. Allocation of Indirect Costs Step 6 in Chapter 4 outlined the two categories of approaches that might be adopted to allocate indirect costs to outputs – the activity based costing method, and the pro rata approach. This appendix provides further details of these two categories, and contains examples and case studies as further guidance. Activity based costing (ABC) method The activities that comprise the production process culminate in the delivery of outputs. ABC examines the activities undertaken within an organisation, determines why they are used in the production process, and then assigns costs to outputs according to the consumption of each activity in the production of the outputs. Each activity is costed on the basis of the resources consumed. Where products use common resources differently, a weighting is needed in the cost allocation process. The measure of the use of a shared activity by each of the products is known as the cost driver, which is the factor or variable that has the greatest effect on the level of activity. Examples of cost drivers are contained in Table A.1. Meanwhile, Box A.1 provides an example that illustrates the application of activity based costing in the case of allocating the indirect costs associated with human resources services. Table A.1: Examples of indirect cost drivers Possible cost Cost driver Comments Building costs, utilities, cleaning Depreciation, government financing charge, maintenance, leases, insurance Information technology Cost Recovery Guidelines January 2013 No. of employees Floor space (sq. metres) No. of outputs produced Floor space (sq. metres) No. of employees No. of personal computers CPU seconds used Data collection and cost allocation is simple. It is suited to processes where all staff occupy similar floor space. Applicable if floor space occupied by staff working on different output varies considerably. Data collection is more difficult than employee numbers. May present difficulties if individual major assets are used to produce a number of different outputs. A simple and useful driver to use for building and associated costs. Low cost to develop and maintain. Applicable where the number of terminals and level of IT support is similar for most employees. Not recommended if different activities require different systems and levels of support. Can be more accurate than using the ‘no. of employees’, but again not recommended if different activities require different systems and levels of support. Accurate and sensitive to change, but may be costly to develop and maintain. 42 Possible cost Cost driver Comments Communications (e.g. phone, fax, mail, courier) Customer inquiries Management salary Payroll services Human resources services Accounts payable services Vehicles No. of employees No. of outlets (e.g. no. of phones, fax machines) Actual usage No. of phone calls No. of outputs, assets employed, or linked to staff No. of employees Payroll amounts No. of payments processed No. of employees Payroll amounts No. of new recruits No. of fund transfers made No. of line items in invoices processed Link to driver’s salary and allocate in same way Time, recorded in log books Low cost and simple. Assumes use of communications by employees is similar. Low cost, relatively simple, but additional benefits may not outweigh costs of data collection compared to using no. of employees. Accurate and sensitive to change. Data generally available, as systems are capable of producing reports. Accurate, but would require a system to track calls and the output to which they related, which may encounter resistance. An estimate could be made or based on a sample of calls. The decision here should be guided by management’s role in an organisation (i.e. is more time spent managing outputs, assets or people?) Data simple to collect but may not accurately reflect costs if some groups of employees require greater level of payroll services. Simple, as data would be readily available, but the dollar amount for payroll amount may not accurately reflect time and cost associated with processing. Data collection simple, and probably more reliable than no. of employees. Data simple to collect. Data available, but unlikely there will be a strong cause and effect relationship between payroll and HR costs. Relevant as new recruits would take more time than dealing with existing staff. However, would not represent the resources devoted to existing employees. Would require a system to sum the number of payments for each charge code. Would require a system to sum the number of line items processed for each charge code. Simple and low-cost method. However, it is inaccurate if use of the vehicle varies between different outputs. Recording is difficult if more than one driver. Accurate and data can be used for fringe benefit tax purposes. Can be costly to implement and maintain, and there may be staff resistance. Source: Appendix B from DTF’s Output Costing Guide. Cost Recovery Guidelines January 2013 43 Example of activity based costing A government agency comprises two divisions which undertake two distinct outputs: (1) licensing of individuals to undertake a regulated activity, and (2) enforcement of the associated regulations. The human resources (HR) department of the agency has total annual costs of $300 000. The main functions of the HR department, and the staff estimates of the time spent on each of these functions, are presented in the table below. The table also identifies the cost driver that has the greatest influence on the level of each activity. Estimated % of Total cost of activity Activity effort ($) Cost driver Recruitment 30 Selection 20 Payroll processing 50 Total 100 90 000 60 000 150 000 300 000 No. of positions advertised No. of interviews No. of employees In the past year, the allocation of the HR department’s functions between the two divisions was as follows: Enforcement Activity Cost driver Licensing Division Division Agency Total Recruitment No. of positions 5 advertised Selection No. of interviews 20 Payroll processing No. of employees on 40 payroll 15 20 30 50 60 100 Equipped with this information, it is possible to allocate the indirect cost of the HR department’s services to each of the outputs of the agency as follows: Licensing Enforcement Agency Total Cost Activity Division Cost ($) Division Cost ($) ($) Recruitment Selection Payroll processing Total 22,500 (5/20 x $90 000) 24,000 (20/50 x $60 000) 60,000 (40/100 x $150 000) 106 500 67,500 (15/20 x $90 000) 36,000 (30/50 x $60 000) 90,000 (60/100 x $150 000) 193 500 90 000 60 000 150 000 300 000 44 Thus, using the activity based costing method, the allocation of the agency’s total HR (indirect) costs between its two outputs are $106 500 for the licensing output and $193 500 for the enforcement output. Cost Recovery Guidelines January 2013 MGF5440 S2 2015 Public Sector Financial Management Topic 8 Management Reporting and Control: Costing Handout Avoidable Costs: Guidelines for Pricing User Charges: NSW Stephen Peterson August 15, 2015 GUIDELINES FOR PRICING OF USER CHARGES TPP 01-02 June 2001 Office of Financial Management Policy & Guidelines Paper EXECUTIVE SUMMARY In many instances Government agencies supply goods and services on the open market in competition with private sector and other government businesses. Agencies entering into this type of commercial arrangement are required to price their goods and services on a competitively neutral basis. Competitive neutrality means the elimination of competitive advantages or disadvantages that arise solely through the public ownership status of an entity. Its purpose is to ensure that goods and services are produced efficiently. This may not be the case if, for example, public sector entities have lower costs simply as a result of their public ownership. The commitment to implement competitively neutral pricing arises from the Competition Principles Agreement signed by the Commonwealth and all the States and Territories. Government agencies that are part of the NSW Government’s Commercial Policy Framework already price goods and services on a competitively neutral basis. This Policy and Guidelines Paper provides guidance to all other NSW Government agencies on pricing goods and services on a competitively neutral basis. The Guidelines do not apply in setting taxes, fines and regulatory fees. These revenues can be distinguished from user charges in that they impose a degree of compulsion on the purchaser. There is little discretion in whether to participate in the transaction and an equivalent good or service is not provided in exchange for the payment. Agencies should set the price of a good or service, sold in a competitive market, at a level that at least covers the avoidable cost of its production. Avoidable costs are those that would be avoided if a good or service is not produced. The costs to consider in determining a price should include:  the costs actually incurred by the agency; and  an estimation of additional costs that the agency would incur if it were in private ownership. These estimated additional costs include:  the cost of capital that would be incurred if an agency had to fund its own assets through borrowings or investment from the owners; and  taxes and other charges which apply to the private sector but not to public sector entities. The approach adopted in these Guidelines is consistent with the Productivity Commission’s Cost Allocation and Pricing1 paper and current practice in the Commonwealth Government. Competitive neutrality pricing does not have to be applied where the agency can demonstrate that the benefits to be gained from implementation are less than the costs. Agencies should document this exercise as they will be required to present such information if a competitive neutrality complaint were to be made. 1 Wilson, S., Douglas, I., and Martyn, B., Cost Allocation and Pricing, Staff Working Paper, Productivity Commission, Canberra, 1998. 2. National Competition Policy and Competitive Neutrality In April 1995, the Council of Australian Governments ratified the National Competition Policy (NCP), including the Competition Principles Agreement (CPA) signed by the Commonwealth and all the States and Territories of Australia. One of the aims of NCP is to promote an economically efficient use of resources by increasing the extent that public sector providers of goods and services are exposed to competition. A key commitment of the New South Wales Government under National Competition Policy is the application of competitive neutrality to significant NSW Government businesses competing in markets2 or operating in contestable markets. An objective of competitive neutrality is to achieve an efficient allocation of resources between public and private businesses. This requires fair pricing and the elimination of resource allocation distortions. For government business activities, this means offsetting any net competitive advantages that arise simply as a result of public ownership. Typically, this means factoring into the price of a good or service an allowance for the following:  taxes that may not be paid by the government business but would be paid by the private sector competitor;  the cost of capital; and  any other material costs not borne by the government business purely as a result of its government ownership status. Details on how to determine competitively neutral prices are included later in these Guidelines. 1.1 Who Should Apply These Guidelines? The CPA requires all government agencies undertaking significant business activities in competitive or contestable markets to act in a competitively neutral way. The definition of a significant business activity is an important issue. The CPA does not formally define the term significant. An assessment of whether a business activity has a significant impact on a market can only be made on a case by case basis. Relevant considerations include the business’ size, its influence on the relevant market, the resources it commands and the effect of any poor performance. 2 See: NSW Government Policy Statement on the Application of Competitive Neutrality 2001 4. Applying Competitively Neutral Pricing The application of competitively neutral pricing involves:   determining the competitively neutral cost of the relevant goods or services by  identifying the cost derived from the accounting system; and  adjusting for the competitive advantages and disadvantages arising from Government ownership; setting the price of the goods or services to cover those costs (including a required rate of return). The steps required are summarised in Figure 1 below. Figure 1: Stages in Establishing Competitively Neutral Prices for Goods and Services Step 1 Step 2 Step 3 Step 4 Step 5 The adjustments required to derive the competitively neutral cost of the relevant good or service are addressed in the section “Costs That Need To Be Included In Agency Prices”. The determination of the appropriate cost allocation basis, both actual costs incurred by the agency and any notional costs, for goods or services subject to competitive neutrality is a critical issue. Guidelines for Pricing of User Charges (TPP 01-02) New South Wales Treasury 10 Define the Cost Objec t Determine costs Add net competitive advantages Determine competitively neutral cost Determine competitively neutral price An objective of competitive neutrality is to achieve an efficient allocation of resources between public and private sector businesses. It requires that government businesses set prices that at least cover costs (including a return on capital and all relevant taxes). The CPA describes this as “full cost attribution”. Following a recent review of the CPA, the term “full cost attribution” has been defined to accommodate a range of costing methodologies, including fully distributed cost, marginal cost, avoidable cost etc as is appropriate to particular circumstances. Fully distributed costs include both the direct costs of the production of a good or service and an allocation of indirect costs, such as capital costs and corporate support. Avoidable costs, on the other hand, are those costs that would be avoided by an agency if the good or service was not provided. If an entity could earn revenue equal to or in excess of its avoidable costs it would not impose any costs on any non-commercial activities of the agency. Avoidable costs are a close proxy for marginal costs because the cost saved by not producing a product or service is usually the same as the additional cost of making the product or service available, at least from a longer term perspective. The 2001 “NSW Government Policy Statement on the Application of Competitive Neutrality” has adopted the position that the efficient allocation of resources will be achieved if the prices charged for goods and services at least cover their avoidable costs. This approach is consistent with the Productivity Commission’s “Cost Allocation and Pricing” paper (referenced earlier) that advocates the use of an avoidable cost allocation method. The approach taken in this Policy and Guidelines Paper is that if a fully distributed cost base is used to set a minimum revenue target then an agency could neglect opportunities to efficiently supply goods and services. In effect, the fully distributed cost approach results in the allocation of overhead costs that would have been incurred anyway in running the non- commercial activities of the agency. It is important to recognise, however, that the covering of avoidable costs represents a minimum price that desirably should not continue beyond the short term unless there are other public policy reasons for doing so. In most circumstances (i.e. other than the provision of goods and services on an ad hoc basis) agencies in the longer term should endeavour to charge prices that cover the fully distributed costs of production. Specific issues relating to the use of the avoidable cost approach are addressed later in this Policy and Guidelines Paper under the section “What is Full Cost Attribution?”. Guidelines for Pricing of User Charges (TPP 01-02) New South Wales Treasury 11 6. What is Full Cost Attribution? As noted previously, an objective of competitive neutrality is to achieve an efficient allocation of resources between public and private sector businesses. It requires that government businesses set prices that at least cover costs (including a return on capital and all relevant taxes). The Competition Principles Agreement describes this as “full cost attribution.” The “NSW Government Policy Statement on the Application of Competitive Neutrality” has adopted the position that the efficient allocation of resources will be achieved if the prices charged for goods and services at least cover their avoidable cost. If an entity could earn revenue equal to or in excess of its avoidable costs it would not impose any costs on any non- commercial activities of the agency. The application of avoidable costs and some practical issues related to their use, are addressed below. In addressing these issues it is important to understand the four types of commercial operations (excluding those under the Commercial Policy Framework): 1) Standalonebusinessunitthatdoesnotshareanycommonassetsorotherresourceswith another entity (e.g. a government trading enterprise that is not part of the Commercial Policy Framework); 2) Businessunitofageneralgovernmentsectoragency,thatprovidesarangeofgoodsor services; 3) Generalgovernmentsectoragencythatprovidesacommercialgoodorserviceonanad hoc basis (e.g. by using the surplus capacity of a computer system acquired to support the agency’s core government services); and 4) In-housebusinessunitthattendersfortheprovisionofinternalservicesunderthe Government’s Service Competition Policy. 6.1 Stand Alone Business Unit The owners of a private sector business require that business to provide them with a commercial rate of return on their investment. Accordingly, if a stand alone government owned business unit, such as a public trading enterprise, were required to earn a commercial rate of return then it would be considered to be pricing in a competitively neutral way. “Stand alone” means that it does not share assets or other resources with other areas of an agency. In order to achieve a commercial rate of return, a private sector business will have to set prices that will, over the medium term, cover the full cost of service provision, including an appropriate rate of return on the assets employed. However, such businesses have considerable flexibility in pricing individual product lines. For example, market conditions may mean that one product will earn a return in excess of the minimum required by the owner while another product may earn a return below that required. Indeed, a product may initially be priced as a “loss leader” in order to build up brand knowledge and market share. Guidelines for Pricing of User Charges (TPP 01-02) New South Wales Treasury 12 A government owned business unit should be able to compete on the same basis as a private sector operator. Therefore, a stand alone business unit will be deemed to be pricing in a competitively neutral way if the business unit as a whole is earning a commercial rate of return over the medium term (i.e. around five years). In such cases, the avoidable cost and the fully distributed cost for the business unit as a whole are the same because of its stand alone nature. 6.2 Business Unit of a General Government Sector Agency In many cases a business unit is not a stand alone operation; the production of a good or service requires the use of assets (such as a computer system) or other resources (such as support for corporate services) controlled by the non-commercial operations of the agency. In such cases, it is clear that direct costs should be included in the cost of the good or service. Direct costs are those that can be economically traced to a given cost object, in this case the good or service. The key question is the method by which indirect costs are allocated to the cost of the good or service. Indirect costs are those that cannot be economically traced to a given cost object; these include capital costs and corporate overheads. These costs need to be allocated to the cost of the good or service. A private sector operator, which is effectively a stand alone business operation, would have to set prices at a sufficient level to cover the full costs of the business, including a return on the investor’s capital. In effect, the full cost of service delivery has to be fully distributed over the company’s whole product range. The fully distributed cost comprises all direct commercial costs and a share of the agency’s overheads and capital costs. For example, a computer system may be used 80 per cent of the timebynon-commercialactivitiesand20percentofthetimebycommercialactivities. Ina fully distributed cost approach, 20 per cent of the depreciation cost and 20 per cent of the capital charge would be allocated to the commercial activity. It could be argued that, from an “equity” or “level playing field” perspective, a government agency should be required to set the prices of commercial operations so that they cover the fully distributed cost of these activities. It is important, however, to re-iterate that an objective of competitive neutrality is the efficient allocation of resources. A public sector business unit that uses a fully distributed cost base to set a minimum revenue target could neglect opportunities to efficiently supply goods and services. In particular, the fully distributed cost approach results in the allocation of overhead costs that would have been incurred anyway in running the non-commercial activities of the agency. Therefore, if the fully distributed cost approach is applied all the time there may be opportunities lost to efficiently supply goods and services (i.e. that generate a positive cash flow). If a fully distributed cost allocation method were to be mandated, an agency may be forced to cease the production of a good or service that provides a positive economic benefit and that is allowable under competitive neutrality. Guidelines for Pricing of User Charges (TPP 01-02) New South Wales Treasury 13 In order to overcome this problem, the avoidable cost allocation method can be used. Under the avoidable cost method, the cost base of the commercial activities comprises all costs that the agency would avoid if the commercial goods or services were to cease being produced. In effect, avoidable costs are those that would be saved if the business unit were to cease operations, ie:  the costs of resources used exclusively by the business unit (including capital costs); and  the additional cost to the agency of the business unit using its resources. It is important to recognise that, in order to be considered to be pricing in a competitively neutral manner, prices should cover the avoidable costs of the business unit as a whole and not just of individual product lines. Some costs, which may be unavoidable at the single product level, may be avoidable at the business unit level. For example, the cessation of all of the business unit’s activities may result in the vacancy of office space sufficiently large to be sub- let, thereby earning revenue for the non-commercial activities (i.e. avoidable costs). The cessation of one commercial service is much less likely to achieve such savings for the non- commercial operations. The determination of what costs are avoidable can often involve significant judgement. This is particularly the case when determining whether or not capital costs are avoidable. Where an agency has made a sound investment in an asset to deliver its core, non-commercial activities, there may be valid reasons why the asset has surplus capacity that can be used for commercial purposes. These reasons include:  capital investment may be inherently “lumpy” because it may be difficult to acquire an asset whose capacity exactly matches the required usage;  the agency believes that the demands of the core government programs will increase in the future and therefore there is necessarily excess capacity in the short term; or  a poor investment decision was made. In these situations the avoidable capital cost of the commercial activity will be significantly less than the fully distributed cost (the avoidable cost may be zero in some circumstances). There may, however, be other reasons for the spare capacity such as:  a change in government policies or priorities; and/or  a change in the demand for the non-commercial services of the agency. In such circumstances, the agency may have the option of selling the asset. If the asset is retained for use by the business unit in such circumstances, then the government would expect that a commercial return be earned on the asset, ie allocation of costs on a fully distributed basis may be more appropriate. 6.3 Provision of a Commercial Good or Service on an ad hoc Basis An agency may provide a service on an ad hoc basis rather than through an ongoing business unit. For example, an agency may use the spare capacity of the computer system acquired to Guidelines for Pricing of User Charges (TPP 01-02) New South Wales Treasury 14 support its non-commercial activities to generate income by processing the transactions of another entity. The basic principles for costing ad hoc commercial services are the same as for a business unit of a general government sector agency, as noted above. However, as services are provided on an ad hoc basis, rather than as part of an ongoing business, the price of each ad hoc service would need to be determined by the avoidable cost of that good or service. Appendix A includes an example of how to cost a commercial activity on both a fully distributed cost basis and an avoidable cost basis. 6.4 In-house Bids Under Service Competition Policy The New South Wales Government’s Service Competition Guidelines include guidance on the costing of in-house bids for service delivery under Service Competition Policy. The net avoidable cost of the in-house bid is to be used when comparing with the bid prices of the external service providers. The Service Competition Guidelines define net avoidable cost as costs that would be avoided if performance of an activity were to be transferred to an external party. In other words, the recommended costing approaches for user charges and for Service Competition Policy are consistent. Figure 2: Assessing Whether an Activity’s Prices are Competitively Neutral Guidelines for Pricing of User Charges (TPP 01-02) New South Wales Treasury 15 Type of Business Activity Tests to Ensure Activity is Comment Competitively Neutral 1. Standalonebusinessunit. 2. Multi-productbusinessunit within a government agency predominantly supplying non- commercial services. 3. Agencysellingacommercial service on an ad-hoc basis. 4. Costingin-housebidsunder Service Competition Policy. Isitearningacommercialrateof return? Doesrevenueexceedthe avoidable cost of the business unit? Doesrevenueexceedthe avoidable cost of supplying the service? Pricesetequaltotheavoidable cost of supplying the service Ifacommercialrateofreturnis achieved then prices must cover all costs. Avoidablecostincludesarateof return on unit’s own assets and the avoidable cost of agency resources provided to the unit. Whereanagencysellsasingle product, the cost of the product and the cost of the commercial activity are the same. Forin-housebids,costusually sets the price rather than forming a floor to prices. Appendix A: Case Study Example Comparing Fully Distributed Costs and Avoidable Costs A Budget dependent General Government Sector agency has two divisions: one division provides its core government programs and the second provides all corporate support activities for the agency. The corporate support division is responsible for the operation of the agency’s computer system. The annual capital cost of the computer is $150,000. This comprises a depreciation charge of $100,000 and a capital charge of $50,000 (the computer cost $500,000, is estimated to have a useful life of 5 years and the agency has estimated that its cost of capital is 10 per cent). The computer is operated at approximately 80 per cent capacity. Such under utilisation is common and can arise for a number of reasons including:  capital investment may be inherently “lumpy” because it may be difficult to acquire an asset whose capacity exactly matches the required usage;  the agency believes that the demands of the core government programs will increase in the future and therefore there is necessarily excess capacity in the short term; or  a poor investment decision was made. The agency has accepted a one year contract to perform the data processing for another organisation. The contract will result in the full use of the remaining 20 per cent capacity of the computer. The corporate support division is expected to employ two extra employees (at an annual cost of $50,000 each) to assist with the extra processing that is required. In addition, the increased activity is expected to generate increased costs, ie telephone, etc ($3,000), electricity ($5,000), travel ($4,000) and training ($5,000). Table 1 following shows the agency’s total annual costs both before and after accepting the commercial contract. The costs include both those that it would find in its own chart of accounts as well as a notional capital charge. The agency has determined that the quantum of taxes such as sales tax, land tax and stamp duties that it would have to pay if it were a private sector business are immaterial. Table 2 compares the cost of the commercial activity based on the net avoidable cost methodology and on a fully distributed basis. The avoidable cost is $117,000 which is a little over half the fully distributed cost of $214,000. The bases used in the example to allocate costs to derive the fully distributed cost are fairly crude. However, the use of more sophisticated allocation bases, such as those available through an activity based costing system, would not produce a substantially different result. The fully distributed cost of the commercial activity is higher than the avoidable cost principally because, under the former approach, the activity is allocated a share of costs such as capital costs and rent that would have been incurred even if the commercial contract had not been incurred. It is economically efficient for the agency to accept a contract price above $117,000. Guidelines for Pricing of User Charges (TPP 01-02) New South Wales Treasury 20 Table 1: Costs of the Agency Guidelines for Pricing of User Charges (TPP 01-02) New South Wales Treasury 21 Commercial and Non-Commercial Activities Non-Commercial Activities $'000 Employees $'000 Employees Employee related costs service delivery programs 4,250 corporate support 750 Other operating expenses rent 1,000 telephone etc 250 electricity 200 travel 80 training 70 stationery 60 Depreciation and amortisation computer 100 Total agency costs (per financial statements) 6,760 Add: notional costs capital charge 50 taxes and other charges 1 0 "Competitively Neutral" Cost 6,810 85 15 100 4,250 85 850 17 1,000 253 205 84 75 60 100 6,877 50 0 6,927 102 1 The agency has determined that the quantum of taxes such as sales tax, land tax and stamp duties that it would have to pay if it were a private sector business are immaterial. Table 2: Comparison of Cost Allocation Methods Guidelines for Pricing of User Charges (TPP 01-02) New South Wales Treasury 22 Total Costs $'000 Employee Numbers Avoidable Costs FDC Allocation Basis to Determine Fully $'000 $'000 Distributed Cost Employee related costs service delivery programs 4,250 85 corporate support systems support 200 4 transaction processing 400 8 other (Executive etc) 250 5 Other operating expenses rent 1,000 telephone etc 253 electricity 205 travel 84 training 75 stationery 60 Depreciation and amortisation computer 100 Total agency costs 6,877 (per financial statements) Add: notional costs capital charge 50 taxes and other charges 0 0 0 fully allocated to non-commercial activities 40 100 100 5 0 20 3 5 5 4 allocated based on percentage of use (ie 20 %) cost of extra employees can be directly attributed to commeccial activity allocated on the basis of proportion of commercial employees to total (approx 2%) allocated on the basis of proportion of commercial employees to total (approx 2%) 4 4 extra cost can be directly attributed to commercial employees to total (approx 2%) allocated based on commercial use of the computer system (20%) 5 5 0 1 allocated on the basis of proportion of 0 20 117 204 allocated based on commercial use of the 0 10 computer system (20%) 0 0 commercial employees "Competitively Neutral" Cost 6,927 102 117 214 Guidelines for Pricing of User Charges (TPP 01-02) New South Wales Treasury 23 Public Sector Financial Management Topic 10 Performance Budgeting Handout “Performance Measures: Victoria State Budget (2015-2016)” Stephen Peterson August 22, 2015 Service Delivery 2015-16 Presented by Tim Pallas MP Treasurer of the State of Victoria for the information of Honourable Members Budget Paper No. 3 TABLE OF CONTENTS Chapter 1 – Output, asset investment, savings and revenue initiatives ........... 1 Whole of government – Family Violence.................................................................................. 4 Whole of government – Hazelwood mine fire inquiry............................................................ 12 Whole of government – Ice Action Plan ................................................................................. 16 Department of Economic Development, Jobs, Transport and Resources .............................. 19 Department of Education and Training .................................................................................. 47 Department of Environment, Land, Water and Planning ....................................................... 56 Department of Health and Human Services ........................................................................... 63 Department of Justice and Regulation ................................................................................... 83 Department of Premier and Cabinet ...................................................................................... 92 Department of Treasury and Finance ..................................................................................... 98 Parliament............................................................................................................................. 100 Courts.................................................................................................................................... 102 Revenue measures................................................................................................................ 104 Efficiency and expenditure reduction measures .................................................................. 105 Labor’s Financial Statement 2014 – summary report........................................................... 108 Outstanding capital commitments ....................................................................................... 109 Chapter 2 – Departmental performance statements ................................... 113 Department of Economic Development, Jobs, Transport and Resources ............................ 118 Department of Education and Training ................................................................................ 169 Department of Environment, Land, Water and Planning ..................................................... 192 Department of Health and Human Services ......................................................................... 218 Department of Justice and Regulation ................................................................................. 266 Department of Premier and Cabinet .................................................................................... 293 Department of Treasury and Finance ................................................................................... 315 Parliament (including Victorian Auditor-General’s office).................................................... 333 Courts.................................................................................................................................... 343 i Table contents (continued) Appendix A – Output performance measures for review by the Public Accounts and Estimates Committee ........................................................... 353 Department of Economic Development Jobs Transport and Resources .............................. 354 Department of Education and Training ................................................................................ 364 Department of Environment, Land, Water and Planning ..................................................... 373 Department of Health and Human Services ......................................................................... 376 Department of Justice and Regulation ................................................................................. 378 Department of Premier and Cabinet .................................................................................... 383 Department of Treasury and Finance ................................................................................... 396 Courts.................................................................................................................................... 401 Appendix B – Local government financial relations ..................................... 403 Improving service delivery to local communities ................................................................. 403 Creating liveable communities ............................................................................................. 405 Funding sources to local government in Victoria ................................................................. 405 2015-16 Budget initiatives .................................................................................................... 408 Style conventions....................................................................................... 411 Index ......................................................................................................... 413 ii 1 DEPARTMENT OF EDUCATION AND TRAINING Ministerial portfolios The Department supports the ministerial portfolios of families and children, education, and training and skills. Departmental mission statement The Department of Education and Training (formerly known as Education and Early Childhood Development) exists to support Victorians to build prosperous, socially engaged, happy and healthy lives. It does this by supporting lifelong learning, through strengthening families and helping people to gain the skills and knowledge they need to thrive and participate in a complex and challenging economy and society. The provision of high-quality education, training, development, wellbeing and child health services (i.e. learning and development services) is fundamental in building a society that has strong economic growth, productivity and employment, better health outcomes and greater social cohesiveness. The goals set, the changes implemented, the systems supported, and the services offered all must lead to improved learning and development outcomes. Departmental objectives, indicators and outputs The Department of Education and Training’s objectives, indicators and linked outputs are: Departmental objectives Indicators Outputs Achievement Raise standards of learning and development achieved by Victorians using education, training, development and child health services Children developmentally ‘on track’ on the Australian Early Development Index (AEDI) language and cognitive skills domains (a) Students meeting the expected standard in national and international literacy and numeracy assessment (b) Students meeting the expected standards in other key learning areas, such as science, arts, history and ICT (c) Year 12 or equivalent completion rates of young people (c) VET course completions Certificate III or above course completions Strategy, Review and Regulation Early Childhood Development School Education – Primary School Education – Secondary Support Services Delivery Support for Students with Disabilities Higher Education and Skills 2015-16 Service Delivery Education and Training 169 2 Departmental objectives Indicators Outputs Engagement Increase the number of Victorians actively participating in education, training, development and child health services Wellbeing Increase the contribution education, training, development and child health services make to good health and quality of life for all Victorians, particularly children and young people Productivity Increase the productivity of our services Participation in a kindergarten service in the year before school Participation in Maternal and Child Health Services Students with acceptable levels of school attendance (c) Students with a positive opinion of their school teachers providing a stimulating learning environment (c) VET enrolments by age and gender VET enrolments by administrative regions VET enrolments by skills shortage category courses VET enrolments by specialised category courses VET participation by learners facing barriers VET participation by unemployed learners Proportion of infants fully or partially breastfed at three and six months Children who have no development or behavioural issues on entry into Prep (a) Children developmentally ‘􏰀􏰁 t􏰂􏰃􏰄􏰅’ 􏰀􏰁 t􏰆􏰇 􏰈􏰉D􏰊 s􏰀􏰄􏰋􏰃􏰌 􏰄􏰀􏰍􏰎􏰇t􏰇􏰁􏰄􏰇 􏰃􏰁d 􏰇􏰍􏰀t􏰋􏰀􏰁􏰃􏰌 􏰍􏰃t􏰏􏰂􏰋t􏰐 d􏰀􏰍􏰃􏰋􏰁s (a) Students feeling connected to their school (c) Students with a positive opinion about their school providing a safe and orderly environment for learning (c) Level of student satisfaction with VET $ per kindergarten student per year (or ECIS or MCH) $ per primary school student per year (a) $ per secondary school student per year (a) $ per VET student contact hour Strategy, Review and Regulation Early Childhood Development School Education – 􏰑􏰂􏰋􏰍􏰃􏰂􏰐 􏰒􏰄􏰆􏰀􏰀􏰌 􏰉d􏰏􏰄􏰃t􏰋􏰀􏰁 – 􏰒􏰇􏰄􏰀􏰁d􏰃􏰂􏰐 􏰒􏰏􏰎􏰎􏰀􏰂t 􏰒􏰇􏰂􏰓􏰋􏰄􏰇s D􏰇􏰌􏰋􏰓􏰇􏰂􏰐 􏰒􏰏􏰎􏰎􏰀􏰂t 􏰔􏰀􏰂 􏰒t􏰏d􏰇􏰁ts 􏰕􏰋t􏰆 D􏰋s􏰃􏰖􏰋􏰌􏰋t􏰋􏰇s 􏰗􏰋􏰘􏰆􏰇􏰂 􏰉d􏰏􏰄􏰃t􏰋􏰀􏰁 􏰃􏰁d 􏰒􏰅􏰋􏰌􏰌s Strategy, Review and Regulation Early Childhood Development School Education – 􏰑􏰂􏰋􏰍􏰃􏰂􏰐 􏰒􏰄􏰆􏰀􏰀􏰌 􏰉d􏰏􏰄􏰃t􏰋􏰀􏰁 – 􏰒􏰇􏰄􏰀􏰁d􏰃􏰂􏰐 􏰒􏰏􏰎􏰎􏰀􏰂t 􏰒􏰇􏰂􏰓􏰋􏰄􏰇s D􏰇􏰌􏰋􏰓􏰇􏰂􏰐 􏰒􏰏􏰎􏰎􏰀􏰂t 􏰔􏰀􏰂 􏰒t􏰏d􏰇􏰁ts 􏰕􏰋t􏰆 D􏰋s􏰃􏰖􏰋􏰌􏰋t􏰋􏰇s 􏰗􏰋􏰘􏰆􏰇􏰂 􏰉d􏰏􏰄􏰃t􏰋􏰀􏰁 􏰃􏰁d 􏰒􏰅􏰋􏰌􏰌s Strategy, Review and Regulation Early Childhood Development School Education – 􏰑􏰂􏰋􏰍􏰃􏰂􏰐 􏰒􏰄􏰆􏰀􏰀􏰌 􏰉d􏰏􏰄􏰃t􏰋􏰀􏰁 – 􏰒􏰇􏰄􏰀􏰁d􏰃􏰂􏰐 􏰒􏰏􏰎􏰎􏰀􏰂t 􏰒􏰇􏰂􏰓􏰋􏰄􏰇s D􏰇􏰌􏰋􏰓􏰇􏰂􏰐 􏰒􏰏􏰎􏰎􏰀􏰂t 􏰔􏰀􏰂 􏰒t􏰏d􏰇􏰁ts 􏰕􏰋t􏰆 D􏰋s􏰃􏰖􏰋􏰌􏰋t􏰋􏰇s 􏰗􏰋􏰘􏰆􏰇􏰂 􏰉d􏰏􏰄􏰃t􏰋􏰀􏰁 􏰃􏰁d 􏰒􏰅􏰋􏰌􏰌s Source: Department of Education and Training 2014-18 Strategic Plan 170 Education and Training 2015-16 Service Delivery 3 Notes: (a) These indicators refer to government and non-government schools. (b) This indicator refers to government schools for the national assessments and both government and non-government schools for the international assessments. (c) These indicators refer to government schools. Changes to the output structure The Department of Education and Training reviews its output structure and performance measures regularly to ensure they continue to align with and support its objectives. There are no changes to the Department’s output structure for 2015-16. The following table summarises the Department’s total output cost by output group and by output for the School Education output group: Table 2.5: Output summary ($ million) 2014-15 2014-15 2015-16 Variation(a) budget revised budget % Strategy, Review and Regulation (b) 102.8 102.9 531.3 4411.9 3726.8 2424.1 275.3 835.5 12 307.8 101.9 -0.9 491.1 -6.0 4598.1 6.0 3866.2 5.3 2476.3 6.6 305.8 12.3 860.4 3.0 12 699.8 5.3 Early Childhood Development (c) School Education School Education – Primary (d) School Education – Secondary (e) Higher Education and Skills (f) Support Services Delivery (g) Support for Students with Disabilities (h) Total Source: Department of Education and Training 522.5 4336.5 3672.6 2323.3 272.4 835.5 12 065.6 Notes: (a) Variation between 2014-15 budget and 2015-16 budget. (b) The lower 2015-16 budget primarily reflects the lower amount of estimated carry forward from 2014-15 in comparison with the estimated carry forward from 2013-14 to 2014-15. (c) The lower 2015-16 budget primarily reflects the lower amount of estimated carry forward from 2014-15 in comparison with the estimated carry forward from 2013-14 to 2014-15. (d) The higher 2015-16 budget primarily reflects indexation, estimated school enrolment based funding for growth in 2015 and funding for new initiatives in the 2015-16 Budget. (e) The higher 2015-16 budget primarily reflects indexation, estimated school enrolment based funding for growth in 2015 and funding for new initiatives in the 2015-16 Budget. (f) The higher 2015-16 budget primarily reflects new funding approved for the TAFE Rescue Fund and indexation. A higher amount of the estimated carry forward from 2014-15 in comparison with the estimated carry forward from 2013-14 to 2014-15 also contributes to the increase. (g) The higher 2015-16 budget reflects funding for new initiatives in the 2015-16 budget and indexation. The increase is partly offset by the cessation of the Education Maintenance Allowance program from 1 January 2015. (h) The higher 2015-16 budget primarily reflects growth in the number of eligible students and increased delivery costs for the Program for Students with Disabilities and transport programs. This increase is partly offset by the completion of Schools Disabilities – Government Schools National Partnership. 2015-16 Service Delivery Education and Training 171 4 Amounts available The following tables detail the amounts available to the Department from Parliamentary authority and income generated through transactions. Table 2.6 outlines the Department’s income from transactions and 2.7 summarises the sources of Parliamentary authority available to the Department to fund the provision of outputs, additions to the net asset base and payments made on behalf of the State. Table 2.6: Income from transactions ($ million) 2013-14 2014-15 2014-15 2015-16 actual(a) budget(a) revised budget Output appropriations 10 516.9 Special appropriations 0.2 Interest 32.3 Sale of goods and services 691.1 Grants 103.6 Other income 545.2 Total income from transactions 11 889.3 Sources: Departments of Education and Training, and Treasury and Finance 10 817.9 13.0 35.2 687.6 20.1 577.4 12 151.3 10 979.8 13.0 30.1 710.6 26.5 582.8 12 342.9 11 407.8 13.0 29.1 764.5 8.4 593.5 12 816.2 Notes: (a) Figures for 2013-14 and 2014-15 budget reflect the operations of the former Department of Education and Early Childhood Development included in the 2013-14 Financial Report for the State of Victoria or the 2014-15 Budget, which do not include the impact of machinery of government changes effective from 1 January 2015. (b) The 2014-15 revised and 2015-16 budget reflect the full impact of machinery of government changes effective from 1 January 2015. Table 2.7: Parliamentary authority for resources ($ million) 2014-15 budget 2014-15 2015-16 revised budget 10 262.6 10 840.3 10 262.6 10 840.3 .. .. .. .. Annual appropriations 10 211.9 Provision of outputs 10 211.9 Additions to the net asset base .. Payments made on behalf of the State .. Receipts credited to appropriations 487.3 539.8 239.4 229.2 10.2 .. 11 041.8 13.0 2 756.0 13 810.8 507.7 117.0 117.0 .. .. 11 465.0 13.0 2 928.0 14 406.0 Unapplied previous years appropriation Provision of outputs Additions to the net asset base Accumulated surplus – previously applied appropriation Gross annual appropriation Special appropriations Trust funds Total parliamentary authority Sources: Departments of Education and Training and Treasury and Finance 170.0 170.0 .. .. 10 869.2 13.0 2 648.5 13 530.7 172 Education and Training 2015-16 Service Delivery 5 The following section provides details of the outputs provided to government, including