229

PART D:CENTRELINK

Budget Statement

231

SECTION 1: AGENCY OVERVIEW

OVERVIEW

Centrelink’s purpose is to provide exceptional service to the community by linking Australiangovernment services and to achieve best practice in service delivery. Centrelink’s vision is tomake a positive difference to Australian individuals, families and communities duringtransitional periods in their lives.

Centrelink delivers information, payments and services detailed in Business PartnershipAgreements or other agreements on behalf of the following client agencies:

� Commonwealth Department of Family and Community Services (FaCS);

� Commonwealth Department of Employment and Workplace Relations (DEWR);

� Commonwealth Department of Education, Science and Training (DEST);

� Commonwealth Department of Agriculture, Fisheries and Forestry Australia (AFFA);

� Commonwealth Department of Communications, Information Technology and the Arts(DoCITA);

� Commonwealth Department of Finance and Administration (Finance);

� Commonwealth Department of Foreign Affairs and Trade (DFaT);

� Commonwealth Department of Health and Ageing (DoHA), including the Office ofHearing Services;

� Commonwealth Department of Immigration and Multicultural and Indigenous Affairs(DIMIA);

� Commonwealth Department of Transport and Regional Services (DoTARS);

� Commonwealth Department of Veterans’ Affairs (DVA);

� Australian Taxation Office (ATO);

� Child Support Agency (CSA);

� Australian Dairy Corporation;

� Dairy Adjustment Authority;

� Australian Electoral Commission;

� New South Wales State Government; and

� all state and territory housing authorities.

Centrelink acts in partnership with other levels of government and the broader Australiancommunity and distributes payments to Australian families, communities and individuals.These payments include income support and family assistance payments and payments under arange of rural assistance measures. The outcomes relate to government welfare priorities.

232

APPROPRIATIONS

Centrelink is a service provider operating under purchaser–provider arrangements. The majorityof Centrelink’s funding is appropriated to its client departments and then paid to Centrelinkaccording to either Business Partnership Agreements or Service Level Agreements (refer toTable 2.2).

Centrelink receives direct appropriations for funding relating to equity injections anddepartmental loans. In 2002–03, Centrelink has $8.7 million appropriated as an equity injection(refer to Tables 1.2 and 3.4) and $250,000 for Compensation for Detriment caused by DefectiveAdministration (CDDA) (refer to Tables 1.1 and 2.1). Table 1.1, on the following page, showsthe total revenue for Centrelink for 2002–03 by government outcome.

233

Table 1.1: Centrelink Appropriations 2002–03 ($’000) 1

OUTCOMES TOTALAPPROPRIATIONS

Revenue Price of Special Totalfrom Other Outputs Approps AdministeredSources 2 Appropriations

Bill No. 1 Total Bill No. 1 Bill No. 2

(C = A+B) (E = C+D) (I = F+G+H) (J=C+I)(A) (B) (C) (D) (E) (F) (G) (H) (I) (J)

Outcome 1: 250 - 250 1,965,721 1,965,971 - - - - 250Effective 0.01% 99.99%delivery ofCommonwealthservices to eligible customersTotal 250 - 250 1,965,721 1,965,971 - - - - 250

(K1) (K1) (K1)

Amounts in shading are included in annual appropriation bills Departmental Capital (Equity Injections and Loans) (K2) 8,701

Administered Capital -TOTAL APPROPRIATIONS 8,951

(Appropriations) Appropriations

Special Approp

DEPARTMENTAL (PRICE OF OUTPUTS) ADMINISTERED

Revenue from Government Annual

1. Figures in columns A to I are provided in the resourcing table (Table 2.1). Figures marked K1 are found in the Budgeted Statement of Financial Performance(Table 3.1). K2 is found in the Capital Budget Statement (Table 3.4). Percentage figures indicate the proportional contribution of Revenues from government andRevenues from Other Sources to the Price of Outputs.

2. Revenue from Other Sources includes sale of goods and services to agencies such as the Department of Family and Community Services and the Department ofEmployment and Workplace Relations, and other revenue such as interest earned.

234

BUDGET MEASURES – OVERVIEW

2002–03 Budget Measures

Australians Working Together

Elements of the Australians Working Together package announced in the 2001–02 Budget willbe rescheduled to better ensure their successful implementation and effectiveness. The WorkingCredit initiative will be delayed from 20 September 2002 to 28 April 2003 as part of a strategyto ensure people understand the measure and are able to take full advantage of it.

International Measures

The current network of international social security agreements will be extended to includeCroatia, Norway, Slovenia and Switzerland. Further funding has been provided to coveradministrative costs under the changed Social Security Agreement with New Zealand.

Recognising and Improving the Work Capacity of People with a Disability

The package Recognising and Improving the Work Capacity of People with a Disability willbuild on the Australians Working Together package. It will focus on developing and improvingthe work capacity of people claiming or receiving DSP and keeping those with substantialcapacity better engaged in the labour market. It will also focus on better recognising thecapacity of people of mature age and improving administrative assessments of people’s workcapacity with re-training.

Compliance Measures

Prevention and Detection

The government will put in place new strategies for minimising fraud and incorrect payments ofbenefits by:

� increasing by 100,000 the number of reviews of Rent Assistance payments each year;

� piloting the widening of the data matching selection criteria;

� building the whole of government approach to targeting the cash economy in relation tocompliance cross-agency investigations and data-matching;

� increasing the accountability of nominees by making them responsible for notifyingCentrelink of changes in a benefit recipient’s circumstances;

� providing a mechanism to improve processes for updating recipient information; and

� automating the linking of Youth Allowance records of parents and siblings who are pensionor other social security payment recipients.

235

Assurance, Research and Development

The government will provide funding for research and development into new areas ofcompliance activity. This will involve:

� extending the rolling program of random sample surveys of benefit recipients. The surveyswill provide continuous data on the level and reasons for incorrect payments and theeffectiveness of the overall control framework for managing payments; and

� piloting data matching techniques between Australia and The Netherlands. The pilot willidentify people receiving pensions from The Netherlands that have not been declared toCentrelink. It will also identify any cases of pension payments continuing to deceasedpeople.

Non-Budget Measures

Better Monitoring of Preparing for Work Activity Agreements – There will be formal reviews ofthe Activity Agreements that job seekers are required to negotiate when receiving Newstart orYouth Allowance. The reviews will take place whenever a job seeker exits an approved activity,leading to better Agreements and increasing employment prospects for these job seekers.

Reduced Penalties for Non-attendance at Interviews – For job seekers failing to attend jobinterviews, payments will be suspended until they contact Centrelink to explain their non-compliance, at which time Centrelink will decide whether a breach penalty is warranted. Jobseekers incurring a breach will be subject to an administrative breach, which is lighter than theactivity test breach penalty currently applicable.

Ex-gratia Payments to Volunteer Firefighters for Lost Income – NSW Bushfires 2001–02 –Payments will be made to volunteer bushfire fighters who were members of recognisedfirefighting organisations and who lost employment income during the declared New SouthWales bushfire emergency period (24 December 2001 –16 January 2002).

Other Portfolio Measures Affecting FaCS

Exceptional Circumstances in the Northern Wheatbelt Region in Western Australia –Assistance through interest rate subsidies and Income Support will provide short term supportto cope with the impact of exceptional climatic events.

Increase in the Permanent Migrant Intake – The government will increase the permanentmigration non-humanitarian program for 2002–03 to a base level of 105,000 places, with anadditional reserve of 5,000 places to facilitate effective management of the program to meetskill shortages, regional or other demand requirements and to provide opportunities for migrantfamilies to reunite in Australia.

Index the Ceiling Rate of Income Support Supplement for War Widows – The maximum incomesupport payable to war widow/ers will be indexed in line with service pension indexation.

236

ADMINISTERED CAPITAL, DEPARTMENTAL EQUITY INJECTIONS ANDLOANS

A departmental equity injection of $8.7 million is provided in the 2002–03 Budget as indicatedin Table 1.1 and as accounted for in the Capital Budget (see Tables 3.4 and 3.5), andAppropriation Bill (No. 2), 2002–03. $8.7 million is for the implementation of previous budgetmeasures including Australians Working Together.

Table 1.2: Centrelink Summary of Equity Injections

2002–03 ($'000)Previous Budget measures 8,7012002–03 Budget initiatives nilTotal 8,701

237

SECTION 2: OUTCOMES AND OUTPUTS

OUTCOMES AND OUTPUT GROUPS

Centrelink has one government outcome: ‘Effective delivery of Commonwealth services toeligible customers’. The outcome is supported by the output: ‘Efficient delivery ofCommonwealth services to eligible customers’. Centrelink’s output consists of a range ofbusiness outcomes aligned to its strategic goals and contributes to the outcomes of all its clientagencies.

Chart 2.1 shows the relationship between the one government outcome and the contributingoutput for Centrelink.

Financial details for outcome by output appear in Table 2.1 while performance informationappears in Table 2.4.

Chart 2.1: Centrelink Outcome and Output Group

Total Resources $1,966m

Total Resources $1,966m

Total Resources $1,966m

Efficient delivery of Commonwealth services to eligible customers

Centrelink

Chief Executive Officer: Ms Sue Vardon

Outcome 1

Effective delivery of Commonwealth services to eligible customers

Output Group 1.1

238

TRENDS IN RESOURCING ACROSS OUTCOMES

Table 2.1: Centrelink Total Resources for Outcome 1

Final Budgetestimates estimates2001–02 2002–03

$'000 $'000

Total Administered Resourcing (A) 0 0

Services to Eligible Customers250 250250 250

Revenue from Other SourcesFamily and Community Services 1,689,516 1,799,848Employment and Workplace Relations 122,307 106,101Education, Science and Training 12,921 32,344Health and Ageing 3,902 3,415Agriculture, Fisheries and Forestry Australia 6,128 3,966Other 24,418 20,047

Total Revenue from Other Sources (C) 1,859,192 1,965,721

1,859,442 1,965,971

1,859,442 1,965,971

Average Staffing Level (units) 22,307 22,833

Total Price of Departmental Outputs (B+C)(Total revenue from Government and from other sources)

Total Estimated Resourcing for Outcome 1 (A+B+C)(Total price of outputs and admin expenses)

ADMINISTERED APPROPRIATIONS

DEPARTMENTAL APPROPRIATIONSOutput Group 1.1 - Efficient Delivery of Commonwealth

Total Revenue from Government (Appropriations) (B)Subtotal Output Group 1.1

Revenue from other sources includes anticipated revenue from new business outside existingBusiness Partnership Arrangements or Service Level Agreements with other client agencies.

239

Table 2.2: Centrelink Summary of Future Revenue

2002–03 2003–04 2004–05 2005–06$'000 $'000 $'000 $'000

FaCS 1,799,848 1,852,956 1,899,762 1,902,052DEWR 1 106,101 115,800 117,108 117,108DEST 32,344 13,231 13,431 13,558DoHA 3,415 3,074 3,110 2,625AFFA 3,966 3,038 0 0Subtotal Service Delivery 1,945,674 1,988,099 2,033,411 2,035,343Revenue from other sources 2 20,297 22,032 22,192 22,923

Total 1,965,971 2,010,131 2,055,603 2,058,266

1. Revenue from DEWR is subject to the finalisation of the Centrelink Funding model.2. Revenue from other sources includes amounts directly appropriated to Centrelink and anticipated

revenue from new business outside existing Business Partnership Arrangements or Service LevelAgreements with other client agencies.

Chart 2.2: Centrelink Summary of 2002–03 Revenue

FaCS91.6%

DEST1.6%

DoHA0.2%

AFFA0.2%

Other1.0%

DEWR5.4%

240

Chart 2.3: Trends in Centrelink Service Delivery Revenue

1,859 1,966 2,010 2,056 2,058

0

500

1,000

1,500

2,000

2,500

2001–02 2002–03 2003–04 2004–05 2005–06

Financial Years

$ m

illio

ns

The increase in revenue from 2002–03 onwards is attributed to the implementation and ongoingworkload for the Australians Working Together package announced in the 2001–02 Budget.

241

CONTRIBUTION OF OUTPUTS TO OUTCOME 1

Centrelink’s output of efficient delivery of Commonwealth services to eligible customersreflects the government’s objective to provide improved service delivery to individuals and thebroader community, and to do this with increasing effectiveness.

Centrelink will work in partnership with client agencies, human service providers andcommunity organisations to achieve seamless delivery of services appropriate to thecircumstances and needs of people in the Australian community.

Centrelink has two major roles:

� paying benefits and allowances to entitled Australians on behalf of its client agencies; and

� providing Australians with options from a range of services provided by federal, state andlocal governments or community service organisations. Centrelink delivers servicesthrough Customer Service Officers and specialist staff in Customer Service Centres, CallCentres and via a network of agents.

In this capacity Centrelink:

� delivers a wide range of services to match the needs of the diversity of people within theAustralian community;

� identifies customers who have additional needs and refers them to specialist federal, stateand local government or community based agencies;

� assesses customer entitlements on the basis of current government policy;

� pays appropriate benefits and allowances accurately on time; and

� prevents and detects fraud.

CENTRELINK’S DEVELOPMENT

The stages of Centrelink’s development are as follows:

Stage 1: The transition to, and creation of, Centrelink (completed in June 1998). The creation ofCentrelink was part of the Commonwealth Government’s public sector reforms designed toproduce more efficient and streamlined government services via a one-stop-shop, and throughthe innovative use of Information and Technology.

Stage 2: The consolidation phase (1998–99 to 2000–01). Centrelink focused on ensuring thatcurrent work was undertaken accurately and effectively, and continued to develop its capacityin areas that require improvement. The period was important in Centrelink’s development –demonstrating its commitment to continuous improvement in standards of service to clientagencies, customers and the community.

By listening to customers, Centrelink has learnt that clients value an organisation that is easy todeal with, which treats them as individuals, values their time, and minimises the complexity ofdealing with government. At the same time, the government and Centrelink client agencieswant to see the delivery of efficient and effective services for customers that clearlydemonstrate value for money.

242

Stage 3: Centrelink’s service delivery model is based on customers’ ‘life events’. Access willbe designed to balance customer preferences and usage of the most effective channels forservices offered. Centrelink will improve its systems and processes to enable the government toenhance access to a wider range of service offers into the future.

Centrelink has commenced the transition from delivering services predominantly through itsCustomer Service Centres and Call Centres to a mix of physical and e-business service andinformation delivery.

Centrelink will also expand its existing role in the human services sector, to establish newrelationships with community organisations, other levels of government and otherorganisations, to effect seamless processes across these sectors. Centrelink will achieve thisthrough the brokerage of innovative solutions tailored to individual and family needs.

By 30 June 2002, Centrelink will have returned $826 million in efficiency dividends since itsinception, while improving progressively on overall performance during this period.

GOALS AND STRATEGIES

The Centrelink Strategic Directions 2002–2007 is the key document that engages Centrelink’speople in a common purpose and approach. The document explains Centrelink’s purpose,vision, mission and goals, and the underlying details necessary to achieve them. The CentrelinkBusiness Plan at the corporate level and Business Improvement Plans at the local level supportthe Strategic Directions.

Six goals will guide Centrelink to achieve its commitments to government, client agencies,customers, Centrelink people and the community. The details to achieve each goal, as well asthe areas of focus for the financial year 2002–03, are outlined below.

243

GOAL: CLIENT PARTNERSHIPSTo build partnerships with client agencies that deliver the required results and provide value formoney

Details Focus in 2002–03

Retain current business by delivering agreedbusiness outcomes.

Market Centrelink’s capabilities.

Explore possibilities for new business.

Build partnerships and alliances for effectiveprogram development and service delivery.

Build effective and balanced communicationmechanisms with client agencies.

Build and maintain optimum competitiveadvantage.

Ensure the integrity of the social securitysystem.

Effective delivery of client agency outputs.

Providing value for money for stakeholders.

Providing input for policy development.

Building and maintaining a strong competitiveadvantage.

Increasing and diversifying business.

Partnering across sectors to deliver a greaterrange of government services.

Developing more sophisticated client agencypartnerships and alliances with an outcomefocus.

Centrelink is already an integral part of the delivery of federal government services to theAustralian community. As new initiatives are introduced, Centrelink will maintain and improveits core service responsibilities and integrate new policy initiatives into the changing serviceoffer from government. At a whole of government level, this connectedness is essential for acoherent and seamless presentation, and will be complemented by supporting individual clientagencies’ initiatives and program outcomes.

Centrelink is a valuable source of information for client agencies to formulate policy anddelivery options. Effective feedback processes within Centrelink will enable meaningfulcommunity engagement and input into government policy directions. As Centrelink’s businessgrows in complexity, both in terms of the number of programs it delivers and in the deliverychannels it makes available, so the need for strong integrated and aligned business managementsystems will grow.

244

GOAL: CUSTOMER AND COMMUNITYTo increase customer and community involvement and satisfaction with services

Details Focus in 2002–03

Maintain customer and community focus.

Connect the citizens of Australia tocommunity and government services.

Simplify and personalise service.

Effectively integrate and target servicedelivery channels.

Ensure equity of access to services for allcustomers.

Promote Centrelink’s image in thecommunity.

Strengthening and supporting the life eventsapproach.

Making it easier to do business with us.

Tailoring service offers.

Becoming a Premier Broker.

Integrating service delivery channels.

Connecting the public to federal, state andlocal government, business and communitybased organisations.

Designing and implementing thegovernment’s Australians Working Togetherinitiatives.

Establishing a civic entrepreneur role to workwith business and the community to addresssocial issues.

Centrelink was established to be the face of government services to the Australian community.A continual focus will be required to improve service delivery today while introducinginnovative and collaborative solutions to meet the growing expectations of government and theAustralian community for tomorrow.

Centrelink will offer customers a new and wider range of choice for accessing serviceswherever they choose, with a wide range of contact hours. Electronically, this will be throughmultiple channels including the internet, short message services, call centres and personallythrough enhanced flexibility in office opening hours. There will be a greater degree ofself-service allowing Centrelink people to focus on the more complex interactions and offer animproved level of assessment and support.

Centrelink will develop an enhanced service offer that will include customer planning andreferral across a range of both government and community support agencies to increase thevalue of outcomes for customers. These changes will support the introduction of thegovernment’s Australians Working Together initiatives.

245

GOAL: CENTRELINK PEOPLETo provide Centrelink people with confidence, knowledge, skills and tools to meet thechallenges of current and future business and their own career aspirations.

Details Focus in 2002–03

Employ people who have the appropriateexperience, commitment and skills mix toperform their jobs effectively.

Continually provide Centrelink people and ouragents with skills, knowledge and toolsrequired to do their jobs and to realise theircareer aspirations.

Promote a high-performance culture in whichpeople demonstrate high levels ofresponsibility and accountability.

Ensure Centrelink is an employer committedto providing an excellent workingenvironment.

Strengthen leadership and succession planningat all levels.

Training and developing people for theircurrent and future roles.

Increasing recognition for high performance.

Strengthening the leadership framework andimplementing workforce planning.Increasing flexibility in the workforcestructure.

Centrelink will have an increasing focus on supporting employees to be able to deliver excellentservices to customers. Centrelink people will work from varying facilities – in offices, in callcentres, and in situations suiting customers. Centrelink people will use increasing levels ofelectronic support tools, including decision support systems and connections to a range ofcommunity and government resources. To achieve this, new skills to use such tools quickly andflexibly to deliver services will be required. In addition, continued building of personalisedindividual services to the full diversity of Centrelink customers and the Australian communitywill be required.

A particular focus will be on IT staff skills development to ensure IT staff are up to date withnew technologies and can develop the new tools required by customers and staff.

246

GOAL: COST-EFFICIENCYTo manage our business efficiently and return a dividend to government.

Details Focus in 2002–03

Enhance business management systems andunderstand costs at all levels acrossCentrelink.

Adopt best practice in financial systemsfundamentals to provide better decisionsupport.

Enhance business culture that reduces costwhile maintaining satisfactory service levels.

Promote efficient, effective and ethical use ofresources including alternative sourcingarrangements and service delivery channels.

Using effective business pricing, funding anddistribution models.

Increasing Call Centre automation access.

Implementing business transition strategiesand job redesign.

Increasing accuracy and reducing rework fromthe Getting it Right strategy.

Applying strategic sourcing principles to ITservices and products.

Centrelink will continue to improve its operations, reducing the annual cost of service deliveryand indirect and support costs, improving productivity and the quality of services to expectedlevels, and increasing the responsiveness with which it meets new government and clientagency demands.

In this context, Centrelink will continue to streamline and re-engineer its business processes byexploiting the value and application of information technology. The emphasis will be ondelivering lower prices to client agencies while at the same time delivering higher qualityservices to customers.

Centrelink has already reduced the annual cost of service delivery by approximately$240 million from 2001–02. This is expected to rise to $302 million by 2005–06, returned asefficiency dividends to government. This will result in cumulative savings to the Budget of$1.939 billion over the period 1997–98 to 2005–06. Centrelink is implementing a strategic costmanagement strategy, designed to further increase efficiency and effectiveness over three years.Table 2.3 provides a summary of all efficiency dividends returned to government sinceCentrelink’s inception and expected returns for the next three years.

Table 2.3: Summary of Centrelink’s Efficiency Dividends

1997–2001 2001–02 2002–03 2003–04 2004–05 2005–06$'000 1 $'000 $'000 $'000 $'000 $'000

Standard ED -154.0 -76.0 -91.0 -106.0 -121.0 -138.0Special ED -376.1 -139.4 -139.4 -139.4 -139.4 -139.4IT Dividend -56.1 -24.8 -24.8 -24.8 -24.8 -24.8Annual Total -586.2 -240.2 -255.2 -270.2 -285.2 -302.2Cumulative Total -586.2 -826.4 -1,081.6 -1,351.8 -1,637.0 -1,939.2

1. These figures are a cumulative total for four financial years from 1997–98 to 2000–01.

247

The efficiency dividends reflect a range of factors, including the continuation of productivityimprovements being achieved through measures such as:

� changes from business process re-engineering work being undertaken by review of existingprocedures;

� the reduction and elimination of unnecessary re-work through the Getting it Right strategy;and

� efficiency gains delivered through the funding and implementation of a range of capabilityprojects.

GOAL: INNOVATIONTo provide innovative and personalised solutions consistent with government policy.

Details Focus in 2002–03

Exploit new and emerging technologies andmethods to support our goals.

Explore and develop new markets, productsand services.

Capitalise on Centrelink’s intellectualproperty.

Actively support and promote innovation andcreativity in Centrelink people.

Explore innovative business partnerships andstrategic alliances with federal, state and localgovernment, business and community basedorganisations.

Optimising innovation to personalise serviceand support staff decision-making.

Developing ways for citizens to accessgovernment services and information througha range of organisations and websites.

Exploring new partnership and collaborativealliances for competitive advantage andservice enhancement.

Capitalising on Centrelink’s intellectualproperty.

Using technology to optimise service deliveryand government processes through use ofinformation and digital technologies.

Centrelink will be a leader for the government’s online strategy by providing a primary gatewayfor Australians who wish to access government services, working in association with theNational Office for the Information Economy. As a face of government, Centrelink’s physicaland electronic network will help government agencies and community organisations to extendand integrate their reach into rural, remote and outer metropolitan areas.

Centrelink will form partnerships and outsourcing arrangements with private and public sectororganisations to develop innovative and cost effective service delivery capabilities for citizensand in association with community and business sectors.

248

GOAL: BEST PRACTICETo be first choice and benchmarked as the best practice in service delivery.

Details Focus in 2002–03

Establish a systematic approach to benchmarkCentrelink business and services.

Share and implement best practice throughoutCentrelink.

Maximise learning through links with otherorganisations.

Ensure effective internal and externalgovernance and accountability arrangements.

Exploring internal and external benchmarking.

Increasingly benchmarked as best practice.

Sharing best practice with stakeholders.

Promoting effective governance andaccountability arrangements.

Centrelink will continue to focus on identifying best practice, using internal benchmarkingtogether with benchmarking of relevant national and international organisations, to setappropriate standards.

Centrelink is an organisation committed to quality. The Quality First Policy is a structured wayof thinking about providing quality customer service. The policy is based upon a plan, whichprovides a systematic and participative approach to the way day-to-day work is performed.

249

PERFORMANCE INFORMATION FOR OUTCOME 1

Table 2.4 below lists the performance information that Centrelink will use to assess theachievement of its Outcome during 2002–03. Achievement against planned performance will bereported in the Centrelink Annual Report.

Table 2.4: Centrelink Performance Information for Outcome 1

CENTRELINK BALANCED SCORECARD

Contribution of Strategic Goals to Output 1 – Efficient delivery of Commonwealth Services toeligible customers.

Goal Outcome

Client Partnerships Business Partnership Agreements

Number of measurable Key Performance Indicators metwithin the standards set out in the BPAs.

Customer and Community Customer satisfaction with overall service

Percentage of customers rating their satisfaction with theoverall quality of Centrelink’s people, services andinformation as ‘good’ or ‘very good’.

Customer satisfaction with service delivery channels

Percentage of customers rating their satisfaction with theservice provided by Centrelink (including the quality ofpeople, services and information) as ‘good’ or ‘very good’.

Centrelink People An environment which develops our people’s skills andcommitment to service

An improvement in the Centrelink People performancemeasures result as compared with the previous year’s result.

Cost Efficiency Return required efficiency dividends to government

Centrelink’s operational expenses are managed withinrevenue from client agencies, government and other sources.

Innovation Qualitative review of new developments.

The Balanced Scorecard measures performance against Centrelink’s first five strategic goals.The sixth goal, Best Practice, is not measured individually as it is the sum of the achievementagainst the other five goals.

EVALUATIONS FOR OUTCOME 1

Proposed evaluations within Centrelink form part of an annual evaluation strategy, which isapproved by the Centrelink Board. The strategy is developed on the basis of a risk assessmentbased upon consultation with key stakeholders, including client agencies.

250

COMPETITIVE TENDERING AND CONTRACTING

Centrelink will continue its ongoing program of competitive tendering and contracting on afunction by function basis as it becomes clear that there is a business case to do so and asbusiness opportunities arise.

Centrelink is also testing current contractual arrangements as they become due for renewal andis always looking for opportunities to maximise contractual effectiveness.

IT sourcing is in accordance with the sourcing policy approved by the Centrelink Board.

251

SECTION 3: BUDGETED FINANCIAL STATEMENTS

Budgeted Statement of Financial Performance

The statement provides a picture of the expected financial results for Centrelink by identifyingfull accrual expenses and revenues, which highlights whether Centrelink is operating at asustainable level.

Budgeted Statement of Financial Position

The statement shows the financial position of Centrelink. It helps decision-makers to track themanagement of Centrelink’s assets and liabilities.

Budgeted Statement of Cash Flows

Budgeted cash flows, as reflected in the statement of cash flows, provides importantinformation on the extent and nature of cash flows by categorising them into expected cashflows from operating activities, investing activities and financing activities.

Capital Budget Statement

The statement shows all planned Centrelink capital expenditure (capital expenditure onnon-financial assets), whether funded through capital appropriations for additional equity orborrowings, or from funds from internal sources.

Non-financial Assets – Summary of Movement

The summary shows budgeted acquisitions and disposals of non-financial assets during thebudget year.

252

Table 3.1: Centrelink Budgeted Statement of Financial Performance for the periodended 30 June

Estimated Budget Forward Forward Forwardactual estimate estimate estimate estimate

2001–02 2002–03 2003–04 2004–05 2005–06$'000 $'000 $'000 $'000 $'000

Revenues from ordinary activitiesRevenues from government 250 250 250 250 250Sales of goods and services 1,848,327 1,954,098 1,998,237 2,043,618 2,046,182Interest 6,000 6,697 6,656 6,685 6,721Dividends - - - - -Proceeds from sales of assets - - - - -Net foreign exchange gains - - - - -Other 4,865 4,926 4,988 5,050 5,113

Total revenues fromordinary activities 1,859,442 1,965,971 2,010,131 2,055,603 2,058,266

Expenses from ordinary activities(excluding borrowing costsexpense)Employees 1,165,809 1,216,450 1,236,689 1,268,080 1,263,448Suppliers 619,940 663,820 679,675 691,594 696,178Grants - - - - -Depreciation and amortisation 70,283 82,337 90,939 92,936 95,789Write-down of assets 2,000 2,000 2,000 2,000 2,000Value of assets sold - - - - -Net foreign exchange losses - - - - -Other - - - - -

Total expenses from ordinaryactivities (exluding borrowingcosts expense) 1,858,032 1,964,607 2,009,303 2,054,610 2,057,415Borrowing costs expense 1,031 639 246 - -

Net surplus or deficit fromordinary acitivities 379 725 582 993 851Gain or loss on extraordinary items - - - - -

Net surplus or deficit 379 725 582 993 851Capital use charge - - - - -

Net surplus or defecitafter capital use charge 379 725 582 993 851

253

Table 3.2: Centrelink Budgeted Statement of Financial Position as at 30 June

Estimated Budget Forward Forward Forwardactual estimate estimate estimate estimate

2001–02 2002–03 2003–04 2004–05 2005–06$'000 $'000 $'000 $'000 $'000

ASSETSFinancial assets

Cash 73,705 58,639 101,668 75,950 89,137Receivables 18,145 19,701 20,407 20,968 21,076Investments - - - - -Accrued revenues - - - - -Other - - - - -

Total financial assets 91,850 78,340 122,075 96,918 110,213Non-financial assets

Land and buildings 74,661 81,446 79,388 76,118 73,840Infrastructure, plant and equipment 75,495 90,971 80,798 77,478 88,406Inventories - - - - -Intangibles 199,696 196,561 181,861 176,825 159,415Other 54,852 55,655 55,879 56,107 56,334

Total non-financial assets 404,704 424,633 397,926 386,528 377,995Total assets 496,554 502,973 520,001 483,446 488,208

LIABILITIESDebt

Loans 12,466 6,233 - - -Leases - - - - -Deposits - - - - -Overdrafts - - - - -Other - - - - -

Total debt 12,466 6,233 - - -Provisions and payables

Employees 322,914 331,349 344,243 305,769 309,136Suppliers 15,746 17,152 17,748 18,044 18,218Grants - - - - -Other 43,352 36,737 37,985 38,615 38,985

Total provisions and payables 382,012 385,238 399,976 362,428 366,339Total liabilities 394,478 391,471 399,976 362,428 366,339

EQUITYCapital 71,409 80,110 88,051 88,051 88,051Reserves 2,467 2,467 2,467 2,467 2,467Accumulated surpluses or deficits 28,200 28,925 29,507 30,500 31,351

Total equity 102,076 111,502 120,025 121,018 121,869

Current liabilities 175,295 176,020 182,192 142,923 144,179Non-current liabilities 219,183 215,451 217,784 219,505 222,160Current assets 146,702 133,995 177,954 153,025 166,547Non-current assets 349,852 368,978 342,047 330,421 321,661

254

Table 3.3: Centrelink Budgeted Statement of Cash Flows for the period ended 30 June

Estimated Budget Forward Forward Forwardactual estimate estimate estimate estimate

2001–02 2002–03 2003–04 2004–05 2005–06$'000 $'000 $'000 $'000 $'000

OPERATING ACTIVITIESCash received

Appropriations for outputs 250 250 250 250 250Sales of goods and services 1,905,331 2,018,214 2,064,865 2,111,642 2,115,148Interest 6,000 6,697 6,656 6,685 6,721Other 3,376 1,894 1,575 1,568 1,568

Total cash received 1,914,957 2,027,055 2,073,346 2,120,145 2,123,687Cash used

Employees 1,163,328 1,208,015 1,223,795 1,306,554 1,260,081Suppliers 681,409 721,039 740,373 754,431 759,824Grants - - - - -Interest 1,031 639 246 - -Other 17,827 11,433 1,602 1,569 1,568

Total cash used 1,863,595 1,941,126 1,966,016 2,062,554 2,021,473

Net cash from operating activities 51,362 85,929 107,330 57,591 102,214

INVESTING ACTIVITIESCash received

Proceeds from sales of property, - - - - -plant and equipment - - - - -

Repayments of loans made - - - - -Other - - - - -

Total cash received - - - - -Cash used

Purchase of property, plantand equipment 119,773 103,463 66,009 83,309 89,027

Loans made - - - - -Other - - - - -

Total cash used 119,773 103,463 66,009 83,309 89,027Net cash used by investing activities

-119,773 -103,463 -66,009 -83,309 -89,027

FINANCIAL ACTIVITIESCash received

Proceeds from issuing equityinstruments 24,250 8,701 7,941 - -

Proceeds from debt - - - - -Other - - - - -

Total cash received 24,250 8,701 7,941 - -Cash used

Repayments of debt 6,233 6,233 6,233 - -Capital use and dividends paid - - - - -Other - - - - -

Total cash used 6,233 6,233 6,233 - -

Net cash from financing activities 18,017 2,468 1,708 - -

Net (decrease) increasein cash held -50,394 -15,066 43,029 -25,718 13,187Cash at the beginning of the

reporting period 124,099 73,705 58,639 101,668 75,950Cash at the end of the

reporting period 73,705 58,639 101,668 75,950 89,137

255

Table 3.4: Centrelink Capital Budget Statement

Estimated Budget Forward Forward Forwardactual estimate estimate estimate estimate

2001–02 2002–03 2003–04 2004–05 2005–06$'000 $'000 $'000 $'000 $'000

CAPITAL APPROPRIATIONSTotal equity injections 24,250 8,701 7,941 - -Total loans - - - - -

Represented by:Purchase of non-current assets 24,250 8,701 7,941 - -Other - - - - -

Total 24,250 8,701 7,941 - -PURCHASE OF NON-CURRENT

ASSETSFunded by capital appropriation 24,250 8,701 7,941 - -Funded internally by - - - - -

departmental resources 95,523 94,762 58,068 83,309 89,027

256

Table 3.5: Centrelink Non-Financial Assets – Summary of Movement (Budget Year 2002–03)

Land Buildings Total land Specialist Other Total Intangibles Totaland buildings military Infrastructure Infrastructure

equipment plant and plant andequipment equipment

$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000Carrying amount at the start of year 2,159 72,502 74,661 - 75,495 75,495 199,696 349,852

Additions - 30,140 30,140 - 47,618 47,618 25,705 103,463Disposals - - - - - - - -Revaluation increments - - - - - - - -Recoverable amount wirte-downs - - - - - - - -Net transfers free of charge - - - - - - - -Depreciation/amortisation expense - -22,855 -22,855 - -31,642 -31,642 -27,840 -82,337Write-off of assets - -500 -500 - -500 -500 -1,000 -2,000

Carrying amount at the end of year 2,159 79,287 81,446 - 90,971 90,971 196,561 368,978

Total additionsSelf funded - 30,140 30,140 - 47,618 47,618 17,004 94,762Appropriations - - - - - - 8,701 8,701

Total - 30,140 30,140 - 47,618 47,618 25,705 103,463

257

NOTES TO THE FINANCIAL STATEMENTS

The projected financial statements reflect the entries in the Accrual Information ManagementSystem (AIMS) as at April 2002.

Budgeted Statement of Financial Performance

Centrelink estimates an operating surplus of $379,000 for 2001–02. This represents a movementof less than 1.3 per cent from the anticipated $30 million deficit reported in the PortfolioAdditional Estimates Statements 2001–02. The movement in expected operating position isprimarily due to delays in the implementation of a number of initiatives includingimplementation of the New Zealand agreement and further measures to reduce costs withoutreducing customer service levels.

Budgeted Statement of Financial Position

The movement in capital purchases is the main contributor to the changes in each of the cashpositions. Capital purchases are expected to peak in 2001–02 and 2002–03 as a result ofpayments for deferred capital purchases and an accelerated personal computer replacementprogram in 2001–02, and the establishment of purpose built file storage facilities in 2002–03.

The 1998–99 loan of $31.2 million is expected to be repaid in full by 30 June 2004. The interestrate is charged quarterly at the 10-year bond rate. No additional cash borrowings are anticipatedfor the foreseeable future.

Budgeted Statement of Cash Flows

Positive cash positions have been forecast for 2002–03 and each of the forward years.

Cross Agency Overview

Centrelink provides services to FaCS, which are outlined in Part C, Section 5 of this statement.

Cross agency arrangements that exist between Centrelink and other agencies are outlined in PartD, Section 1 of this statement.

Responsibility

The responsibilities of Centrelink regarding the Department of Family and Community Servicesare set out in Part C of this Portfolio Budget Statement. Responsibilities regarding otherpurchasing departments are set out in their respective Portfolio Budget Statements.

Control Arrangements

Centrelink was established as a statutory authority on 1 July 1997. It provides a range ofservices formerly delivered by a number of separate government agencies.

As at March 2002 the Centrelink Board comprised:

258

� Mr John Pascoe AM (Chairman);

� Ms Sue Vardon (Chief Executive Officer, Centrelink);

� Mr Don Fraser (Director);

� Ms Chris Gillies (Director); and

� Mr John Thame (Director).

Centrelink operates under the Commonwealth Service Delivery Agency Act 1997. Legislationapplying to agencies within the Commonwealth Budget Sector, such as the FinancialManagement and Accountability Act 1996 and the Privacy Act 1988, also apply to Centrelink.

Centrelink operates under a purchaser–provider framework and derives its funding throughBusiness Partnership Agreements and other agreements, on a fee for service basis, with clientagencies that purchase its services.

Regular reporting arrangements include:

� statements on Centrelink’s delivery performance in terms of agreed measures and standardsfor each program and service delivered; and

� an explanation of performance variances and future performance outlooks.

In addition, Centrelink provides reports on specific programs and activities, where appropriate.

Resourcing

Refer to Part D, Table 2.2 for summary of revenue from client departments.

Performance against Outcomes and Outputs

Centrelink’s performance is measured by a ‘Balanced Scorecard’ outlined in Part D, Table 2.4.