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Our planning and finances

Highlights

  • With the introduction of the Public Governance, Performance and Accountability Act 2013 we revised or updated our internal financial policies, procedures and guidance.
  • Began implementing the new internal resource management framework, which highlighted areas where financial management services can be improved and streamlined
  • Re-developed internal management reporting to further integrate non-financial performance measures and enable flexible and adaptive planning.
  • We began a review of project management and reporting arrangements to ensure appropriate governance and reporting mechanisms underpinned access and use of project support arrangements.

Business planning

The MDBA carries out complex cross-jurisdictional activities requiring high levels of collaboration and program planning. The efficient and effective delivery of these activities is supported by our integrated planning and reporting framework and annual business planning process.

Our strategic framework incorporates a multi-year strategic plan, a corporate plan which outlines our planned activity for the next financial year and the three out years, and business plans at the sub-program level. Individual performance discussions complete the loop by linking individual activity and performance with broader program and organisational plans, see Figure 3.6.

Responsibility for setting MDBA's strategic direction, outlined formally through our strategic plan, rests with the MDBA Executive and consultation with key stakeholders. The MDBA Executive take account of obligations under the Water Act, including Schedule 1 (the MDBA Agreement) and decisions of the Ministerial Council.

Business planning is critical to the success of our programs, and in an effort to strengthen our standard in planning, program management and delivery, we are developing an enterprise-wide electronic planning and reporting system, which we plan to have in place by early 2016.

Corporate plan

The Water Act requires the MDBA to prepare a corporate plan each year and provide it to the Minister.

The plan covers a period of four years and sets out:

  • the objectives of the MDBA
  • the planned activities of the MDBA for the current financial year, and three out years, relating to its functions. This includes new capital works and operational and maintenance programs to be carried out under the Murray–Darling Basin Agreement
  • the budget for those activities.

The MDBA 2014–15 corporate plan was adopted by the Authority on 1 July 2014, for the Australian Government funded activities, and Ministerial Council on 28 August 2014, for jointly funded activities.

During 2014–15, the MDBA committed to working with Basin governments and the people who live and work in the Basin to implement the Basin Plan and deliver the joint programs.

Key implementation priorities were to:

  • continue to work collaboratively with the states, the Commonwealth Environmental Water Office and Basin communities to implement the Basin Plan
  • progress arrangements for the accreditation of state water resource plans
  • develop the Basin-wide environmental watering strategy, the constraints management strategy, the sustainable diversion limit adjustment mechanism, and the northern Basin work program
  • efficiently and effectively deliver the joint programs agreed by contracting governments
  • manage the River Murray system assets in accordance with the asset management plan
  • deliver states' water shares and agreed environmental outcomes
  • progress the Environmental Works and Measures Program towards completion in 2015–16.

Infographic showing the relationship of our strategic plan, corporate plan, business plan and performance management plan

Figure 3.6 The relationship of key planning processes within the MDBA

Review of the joint activities

Over the last three years, state government contributions to the joint activities has declined from $107 million, in 2011–12, to $64 million in 2014–15, a reduction of about $43 million, in four years.

In response to the funding reductions all joint activities have been reviewed and assessed, with significant savings and efficiencies achieved.

The reviews included:

  • a cost share review — which concluded that the cost sharing arrangements agreed to in 2006 between the joint partner governments were still appropriate and should be maintained
  • the building blocks and efficiency review of River Murray Operations — which found that River Murray Operations is managed efficiently, and compares well with similar organisations for cost and technical efficiency. Recommendations were made on how the MDBA could improve its reporting of risks and costs
  • The Living Murray Review — which considered the devolvement of The Living Murray water portfolio and program in an effort to streamline the program and identify cost savings. The 2014–15 budget required reductions across all The Living Murray program areas.

The challenge for the joint programs is to continue finding cost savings within a tight fiscal environment without jeopardising the viability of the programs. Stable multi-year funding is critical to the ongoing viability and management of the programs. The continued year-to-year budget cycle raises significant issues with regard to asset risk, program delivery and cost management.

In providing support and advice to our partner governments during 2014–15, the MDBA carried out the delivery of its goals and objectives in an efficient and effective way. This included being flexible and adaptive, building on the capability, and competency of its employees and implementing best practice management systems.

In 2015–16 the MDBA will manage two additional reviews requested by the Murray–Darling Basin Ministerial Council:

  • a review to fully scope the work required to implement key recommendations from the River Murray Operations efficiency review
  • a review into financial and institutional options for managing cost spikes in River Murray Operations budgets.

Performance reporting

Performance reporting is an essential aspect of the Commonwealth Public Management Reform Agenda Performance Framework, supported by the Public Governance, Performance and Accountability Act.

Organisational performance reporting is also an important management activity within the MDBA. It provides essential feedback ensuring that organisational effort is directed towards the right objectives in the right way, to deliver desired outcomes.

To ensure there is appropriate oversight in delivering the MDBA's Australian Government and jointly funded programs, we operate a comprehensive performance reporting process. Quarterly performance reports are provided to the Executive team, the Authority, the Basin Officials Committee and Ministerial Council.

The reports provide a mechanism to review program activity and provide feedback to support day-to-day management and continuous improvement in our program management standards.

All performance reports outline information on financial and non-financial performance, and include performance against budgets, deliverables, key performance indicators, risks and pressures, and proposed remedial actions.

In the ongoing effort to improve the efficiency and effectiveness of performance reporting, we are reviewing opportunities to invest in an enterprise-wide planning and reporting system that integrates financial and non-financial information seamlessly.

We are planning to implement the system in early 2016.

Project management framework

During 2014–15 the project management framework, supported by the electronic project registration and reporting system, continued to support the initiation and management of MDBA projects.

The usefulness and capabilities of the project management framework is promoted through the graduate and leadership development programs, as well as providing internal group project management training sessions and individual mentoring.

During 2014–15, we began a review of project management and reporting arrangements to ensure appropriate governance and reporting mechanisms underpinned access and use of project support arrangements.

As a result changes will be made to the project management framework and arrangements in early 2015–16.

Financial management

During this year our focus has shifted from developing a new internal Resource Management Framework to implementing it.

The new framework highlighted a number of areas where financial management services can be improved and streamlined. A financial services program of works was developed and is currently being deployed.

The main focus of this program is on reducing red tape and updating outdated systems. The MDBA is actively engaged in evaluating shared service solutions for many back office activities. Internal systems are being aligned with standardised packages to enable a smooth transition to sharing financial management services.

Internal management reporting is also being redeveloped to further integrate non-financial performance measures and enable flexible and adaptive planning. Internal reporting is being aligned with business processes and aims to increase organisational awareness of the Public Governance, Performance and Accountability legislation.

Financial performance

Revenues

From 1 July 2014, due to the introduction of the Public Governance, Performance and Accountability Act 2013 (PGPA Act), funding for the South Australian Riverland Floodplains Integrated Infrastructure Project is being recorded as revenue from government, and expenses are recorded as a grant expense in the MDBA's Statement of Comprehensive Income. The project was previously recorded as an administered item.

During 2014–15, the MDBA received $55.6 million (compared to $47.8 million in 2013–14) as revenues from government, including the $7 million South Australian Riverland Floodplains Integrated Infrastructure Project funding .

Another outcome associated with the introduction of the PGPA Act; was that on 30 June 2014 the MDBA elected to fully draw-down the $91.427 million Special Account balance and transfer these monies to 'Cash at bank'.

This was to facilitate the subsequent transfer of these funds on 1 July 2014 to a new, interest bearing, operating bank account that functions outside of the Official Public Account.

As of 1 July 2014, The Murray–Darling Basin Special Account (established under the Water Act 2007, section 209) for the purposes of the Financial Management and Accountability Act 1997 ceased to exist.

Other revenues of $6.9 million (compared to $5.3 million in 2013–14) included $2.2 million of interest receipts from this new operating bank account and the MDBA no longer receives interest equivalency payments due to the abolition of the Special Account.

Expenditure

The MDBA's total expenditure for 2014–15 was $137.9 million (compared to $169.3 million in 2013–14). Table 3.6 outlines the main features of our financial performance.

Financial position

The MDBA's net equity position was reduced in 2014–15 by $11.2 million, to $63.1 million. This reduction was caused by an operating deficit of $11.2 million, funded from equity. The operating deficit and reduction in cash resources reflects planned activity relating to Environmental Works and Measures Program, see page 78.

Assets and asset management

The MDBA's financial and non-financial assets at the end of 2014–15 were $85.3 million and $11.4 million respectively. Our financial assets consist of cash and cash equivalents, trade and other receivables. Our non-financial assets consist of ICT infrastructure, office fit-out and equipment, and intangibles including datasets.

Liabilities

Liabilities administered directly by the MDBA at the end of 2014–15 amounted to $33.6 million. Our liabilities mainly consist of amounts owing to suppliers and provisions for employee entitlements.

Total equity

The MDBA ended the year with a total equity of $63.1 million, see Table 3.7, consisting mainly of cash resources, minor fixed assets offset by trade creditors and employee liabilities.

Managed assets: joint ventures

The MDBA is the appointed manager for the following classes of assets:

  • infrastructure assets under River Murray Operations
  • water entitlements under The Living Murray Initiative.

These assets are controlled through two unincorporated joint ventures. Both joint ventures were established through separate agreements between partner governments:

  • the Asset Agreement for River Murray Operations assets
  • Further Agreement on Addressing Water Overallocation and Achieving Environmental Objectives in the Murray–Darling Basin — Control and Management of The Living Murray Assets.

At 30 June 2015, the River Murray Operations assets joint venture held net assets of $2.6 billion. The Living Murray joint venture held net assets of $535.9 million, comprising gross investment in water recovery measures of $693 million and accumulated impairment losses of $157.1.

Table 3.6 MDBA financial performance from 2010–11 to 2014–15

MDBA

2010–11 Actuals $'000

2011–12 Actuals $'000

2012–13 Actuals $'000

2013–14 Actuals $'000

2014–15 Actuals

$'000

2014–15 Variance $'000

Outcome 1 and total departmental

Revenue

175,687

172,170

155,802

137,434

127,058

(3,632)

Expenses

218,588

199,512

204,729

169,274

138,244

(12,708)

Surplus (deficit)

(42,901)

(27,342)

(49,126)

(31,876)

(11,186)

(16,340)

Table 3.7 MDBA equity 2010–11 to 2014–15

Measurement

2010–11

2011–12

2012–13

2013–14

2014–15

Assets

227,653

207,879

154,456

108,038

96,695

Liabilities

45,039

52,607

48,310

33,768

33,611

Total equity

182,614

155,272

106,146

74,270

63,084

Procurement, grants and contract administration activities

Procurement

The MDBA's policies, practices and approach to procuring goods and services, including consultancies, is consistent with:

  • all relevant Commonwealth legislation
  • the Public Governance, Performance and Accountability Act 2013 and Rules, including the Commonwealth Procurement Rules
  • the Accountable Authority Instructions and relevant MDBA policies.

These rules are applied to activities through the Accountable Authority Instructions, supporting operational guidelines and a procurement framework, which are underpinned by the core principle of value for money.

Officials may seek advice from the MDBA's Procurement and Contracts Unit on compliance with frameworks and procedures, government policies or the tendering process.

The MDBA advertises tender opportunities through the AusTender website and all contracts with a value of $10,000 (inclusive of GST), or more, were reported on AusTender during 2014–15.

The MDBA's annual procurement plan is a rolling document that is updated regularly and is available on the AusTender website at <www.tenders.gov.au>. The plan outlines the planned procurement for the forthcoming year, giving prospective suppliers the opportunity to prepare for potential work with the MDBA. It consists of a short strategic procurement outlook for the MDBA, supported by details on planned strategic and major procurements.

No contracts of $100,000 (inclusive of GST), or more, were let during 2014–15 that did not provide for the Auditor-General to have access to the contractor's premises.

No contracts in excess of $10,000 (inclusive of GST) or standing offers were exempted by the Accountable Authority from being published on AusTender on the basis that they would disclose exempt matters under the Freedom of Information Act 1982.

Consultancy Services

The MDBA engages consultants when it requires specialist expertise or when independent research, review or assessment is required. Consultants are typically engaged to investigate a defined issue; carry out defined reviews or evaluations; or provide independent expert advice, information or creative solutions to assist in the MDBA's decision making.

The decision to engage a consultant is made in accordance with the Public Governance, Performance and Accountability Act 2013 and related regulations, including the Commonwealth Procurement Rules and relevant internal policies.

All new consultancy contracts entered into in 2014–15 valued at $400,000 (inclusive of GST), or more, are published on the AusTender website, <www.tenders.gov.au>.

This annual report contains information about actual expenditure on contracts for consultancies. Information on the value of contracts for consultancies is available on the AusTender website, <www.tenders.gov.au>.

Procurement initiatives to support small business

The MDBA supports small business participation in the Australian Government procurement market. Small and medium enterprises and small enterprise statistics are available on the Department of Finance's website <www.finance.gov.au/procurement/statistics-on-commonwealth-purchasing-contracts/>.

Our procurement processes support small and medium enterprises by:

  • following the small business engagement principles (outlined in the government's industry innovation and competitiveness agenda), such as communicating in clear, simple language and presenting information in an accessible format
  • using electronic systems or other processes to facilitate on-time payment performance, including the use of payment cards.

Grants

Information on grants awarded by the MDBA during 2014–15 is available on our website at <www.mdba.gov.au/about-mdba/tenders-grants>.

Accommodation

The MDBA has two offices in Canberra, located at 40 and 51 Allara Street, Canberra City. The combined premises are managed to meet the MDBA's existing and foreseeable accommodation needs.

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Updated: 18 Jan 2016