Download Report
04 Appendices

Appendix E: Summary of Operating Costs and Expenses and Benchmark

Under the CEFC Act, the Corporation must include in its Annual Report:

  • The Corporation’s operating costs and expenses for the financial year
  • A benchmark of the Corporation’s operating costs and expenses for the financial year against the operating costs and expenses of other comparable entities for that financial year.

The Corporation’s operating costs and expenses for the financial year are reported in the Financial Statements and Notes and are also reproduced below in extract for convenience.

About the CEFC Structure

The CEFC is a corporate Commonwealth entity with an independent Board that makes investment decisions to invest in renewable and low carbon technologies according to Ministerial directions supplied by an Investment Mandate. The CEFC’s investment focus is on debt and equity that is solely or mainly Australian-based. The CEFC cannot invest directly in non-financial assets and does not have a large cash investment function. At 30 June 2018, the CEFC had 93 employees (including 91.5 full-time equivalent) based in Sydney (headquarters), Brisbane and Melbourne. The CEFC has drawing rights against the Clean Energy Finance Corporation Special Account maintained by the Department of the Environment and Energy.

Note on Comparisons

Direct comparisons of the CEFC with other entities are difficult because:

  1. There are very few Government-owned public purpose entities that perform the type of function the CEFC does at a similar scale.
  2. Current financial year data on other entities is not necessarily readily available.

Data is not always reported using the same expense categories across different entities.

Entities for Comparison

In order to provide some meaningful comparison as required under Section 74 of the CEFC Act, the Corporation has compared its 2017-18 operating costs and expenses against the latest publicly-available information for the Future Fund Board of Guardians as supported by the Future Fund Management Agency (Future Fund), the Export Finance and Insurance Corporation (Efic) and the Northern Australia Infrastructure Fund (NAIF) (all Government-owned entities formed for public purpose with a commercial mode of operation). More information about these entities is provided below.

Future Fund Management Agency (Future Fund) – Structure

The Future Fund was established under Division 2 of Part 5 of the Future Fund Act 2006 and is governed by an independent Board, which makes investment decisions according to ministerial directions supplied by an Investment Mandate. It is not geographically nor sector-limited to renewable and low carbon technology in the same way as the CEFC. The Future Fund pursues a broad sectoral spread in a range of investments: Australian equities (6.3 per cent), global equities (27 per cent), private equity (12.8 per cent), property (5.8 per cent), infrastructure and timberland (7.8 per cent), alternative assets (15.5 per cent), debt securities (10 per cent) and cash (14.8 per cent) at 31 March 2018. It had circa AUD$141 billion funds under management invested in Australia and overseas at 31 March 2018. For more information visit www.futurefund.gov.au

Export Finance and Insurance Corporation (Efic) – Structure

Like the CEFC, Efic is a corporate Commonwealth entity governed by an independent Board. Efic operates on a commercial basis and partners but does not compete with banks. Efic has four key functions under its enabling legislation:

  • To facilitate and encourage Australian export trade by providing insurance and financial services and products to persons involved directly or indirectly in such trade
  • To encourage banks and other financial institutions in Australia to finance or assist in financing exports
  • To manage the Australian Government’s aid-supported mixed credit program (a facility which has now been discontinued, although loans are still outstanding under it)
  • To provide information and advice regarding insurance and financial arrangements to support Australian exports.

Efic’s investment function is primarily related to the issuing of insurance and security guarantees, working capital guarantees and longer-term finance guarantees within these functions. Efic is headquartered in Sydney. It provided facilities of $396 million during 2016‑17 and had exposures of some $2.6 billion at 30 June 2017 (made up of circa $1.9 billion on the Commercial Account and $0.7 billion on the National Interest Account). For more information visit www.efic.gov.au

The Northern Australia Infrastructure Facility (NAIF) – Structure

NAIF was established on 1 July 2016 as a corporate Commonwealth entity under the Northern Australia Infrastructure Facility Act 2016 (NAIF Act). A commercially focused independent Board oversees the NAIF and is responsible for making investment decisions to deploy finance.

The NAIF offers up to $5 billion in debt or alternative financing mechanisms, which may be on concessional terms, to benefit northern Australia. It is designed to be a key catalyst for longer-term transformation of the northern Australian economy and population through the construction of infrastructure in northern Australia. This may include developments in airports, communications, energy, pipelines, ports, roads, rail and water. NAIF investments may support growth in sectors across the north, such as food and agribusiness, international education, medical research, tourism, energy and resources. For more information visit www.naif.gov.au

  CEFC 2017-18 FUTURE-FUND 2016-17(c) EFIC 2016-17(c),(d) NAIF 2016-17(c)
  $'000 % $'000 % $'000 % $'000 %
Employee benefit expenses                
Wages and salaries 22,535   39,834   18,300   1,278  
Superannuation 1,374   2,414   1,800   117  
Leave and other entitlements 512   1,104   500      
Other expenses     1,000   335  
Total Employee Benefit Expenses 24,421 43 43,352 14 21,600 12 1,730 30
Board remuneration                
Wages and salaries 394   785          
Superannuation 39   81          
Total Board Remuneration 433 1 866 0 0 0
Total Employee and Board Remuneration and Benefits 24,854 44 44,218 14 21,600 12 1,730 30
Other costs                
Interest expense 0     134,100 76    
Provision for impairment and irrevocable loan commitments 10,308 18     7,500 4    
Concessional loan discount (b) 11,972 21            
Professional fees and expenses 2,059 4 226,044 72 1,400 1 1,010 18
Other investment portfolio expenses 815 1 18,414 6 200 0 430 8
Travel and incidentals 924 2     900 1 347 6
Office facility costs 1,956 4     1,180 1 153 3
Insurance 196 0         103 2
Marketing and Communication 448 1     2,200 1 200 4
Depreciation and amortisation 892 2 2,341 1 5,100 2    
Auditors’ remuneration 175 0 217 0 220 0    
Administrative, IT and other expenses 1,858 3 22,443 7 2,300 1 1,740 30
Total Expenses 56,457 100 313,677 100 176,700 100 5,713 100
Figure 26: CEFC operating costs and expenses benchmark – Comparison with Annual Reports (a)

 

   CEFC 2017-18 (ACTUAL) FUTURE FUND 2017-18 (ESTIMATE)(e) NAIF 2017-18 (ESTIMATE)(f)
  $'000 % $'000 % $'000 %
Employee benefits 24,854 44 43,985 8 4,720 43
Supplier costs 8,431 15 477,349 91 6,219 57
Depreciation and amortisation 892 2 2,898 1    
Concessional loan discount (b) 11,972 21        
Allowance for impairment of assets and irrevocable loan commitments 10,308 18        
Total Expenses 56,457 100 524,232 100 6,111 100
Figure 27: Operating costs and expenses benchmark – Comparison with Portfolio Budget Statements


Notes:

(a) Like for like comparisons are not strictly possible since different entities group and report costs differently 

(b) Non-cash charge that reverses over the life of the underlying loans

(c) From 2016-17 Annual Report since 2017-18 Information is not available at the time of preparing this report

(d) Costs are shown gross before National Interest Account allocation

(e) From Portfolio Budget Statements 2018-19 for the Finance Portfolio

(f) From Portfolio Budget Statements 2018-19 for the Industry, Innovation and Science Portfolio

(g) Efic does not appear separately in the 2018-19 Portfolio Budget Statements and its 2017-18 Corporate Plan does not provide this level of detail.

Share