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Note 21: Equity Accounted Investments

Note 21: Equity Accounted Investments
Forecast
30 June 2012 		Actual
Budget 11
$m 		Budget 12
$m 		30 June
2012
$m 		30 June
2011
$m
8,178 8,133 Tertiary Education Institutions 7,915 7,968
1,435 1,623 Other 1,568 1,333
9,613 9,756 Total equity accounted investments 9,483 9,301

Tertiary Education Institutions (TEIs)

TEIs are Crown entities, and the Government has a number of legislative powers with respect to them in the interests of public accountability and has some significant reserve controls in the event of an institution facing financial risk. However, the Government does not determine the operating and financing policies of TEIs, if they are not at financial risk, but rather is committed to safeguarding their academic freedom and autonomy. By so doing, the Government obtains the benefits of an effective tertiary education sector. Their relationship to the Crown is managed by a plan agreed between them and the Tertiary Education Commission.

The applicability of the test for consolidation in accounting standards as it applies to TEIs and the Government is unclear, and is still under consideration by the relevant accounting authorities. In the interim the TEIs have been included in the accounts as a 100% equity accounted investment.

The financial year of TEIs is the academic year ending 31 December. Half-year information is used to incorporate TEI information into the financial statements. All other associates have a 30 June balance date.

Summarised financial information in respect of TEIs is set out below:

Tertiary Education Institutions (TEIs)
Forecast
30 June 2012 		Actual
Budget 11
$m 		Budget 12
$m 		30 June
2012
$m 		30 June
2011
$m
Operating Results  
2,206 2,217 Revenue from Crown 2,203 2,200
1,954 2,227 Other revenue 2,316 2,217
(3,954) (4,275) Expenses (4,386) (4,249)
206 169 Net surplus 133 168
Net worth  
Assets  
1,435 1,450 Financial assets 1,355 1,450
8,071 8,031 Property, plant and equipment 8,024 7,867
290 323 Other assets 307 322
9,796 9,804 Total assets 9,686 9,639
Liabilities  
242 228 Borrowings 238 228
1,376 1,443 Other liabilities 1,533 1,443
1,618 1,671 Total liabilities 1,771 1,671
8,178 8,133 Net worth 7,915 7,968

Local Government Funding Agency (LGFA)

The Government holds $5 million of the $25 million paid-up capital of LGFA. The investment has been classified as an equity accounted investment as, although the Government does not have direct representation on the LGFA Board of Directors, it may solely appoint, remove and replace one member of the Shareholders' Council, which, in turn makes recommendations to Shareholders as to the appointment, removal, re-election, replacement and remuneration of Directors. The Government is not a guarantor of the LGFA and has no share of any contingent liabilities of the LGFA.

For the year ended 30 June 2012, LGFA recognised revenue of $10.9 million and a deficit of $4.2 million. The Agency's assets and liabilities were $943.0 million and $922.3 million respectively.

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