Financial & Other Disclosures

Financial Targets: Actuals Compared to Budget

The following table provides a comparison of the financial targets and outcomes against criteria included in the Resource Agreement between the Commissioner of Main Roads, Minister for Transport and the Treasurer.

(1) As specified in the Budgets Statements.
(2) Further explanations are contained in Note 9.12 ‘Explanatory statements (Controlled Operations)’ to the financial statements.
(a) The variation in Net Cost of Services is mainly due to grants and contributions from the Commonwealth Government during the year being reduced by $192.601 million.
(b) The variation in Total Equity is mainly due to:
– Infrastructure Asset Revaluation Reserve was overestimated by $2.1b (7.2%) during 2018/19 which was offset by the overestimate in the infrastructure assets, mainly due to a high estimated price of infrastructure and land under roads
– Surplus for the year was $61m higher than anticipated
– Contributed Equity was $88m higher than anticipated. This includes the equity transfer of Matagarup Bridge ($86m) from the Public Transport Authority.
(c) The variation in Salary Expense is mainly due to:
– a reduced Salary Expense Limit in 2018-19 relating to the Voluntary Targeted Separation Scheme in 2017-18 – a lower than estimated clearance of leave as a result of an increased Priority Projects Works Program
(d) Main Roads did not borrow any funds during the 2018-19 financial year.

Reporting to the Department of Treasury

We provide monthly, quarterly and annual financial statement information to the Department of Treasury, which is subject to external audit by the Office of the Auditor General. This is an independent check on the integrity of our financial reporting. We are also required to report annually against achievement of financial targets and financial measures in the Resource Agreement between the Commissioner of Main Roads, Managing Director of Main Roads, Minister for Transport and the Treasurer.

Management Reporting

Both Financial Reports and Program Management Reports are tabled monthly and quarterly at Corporate Executive. These report on projects and progress against key performance indicators. In addition, regions and branches conduct monthly finance reviews, with reports presented at Directorate Management meetings.

Accounting and Financial Management Policies

A comprehensive Financial Management Manual containing accounting and financial management policies and procedures is maintained together with Control Self- Assessment Checklists. These documents communicate accountability for procedures within responsibility areas and enhance the level of internal control. The Manual and Checklists enable management as well as internal and external auditors to monitor compliance with established policies and procedures and, together with the Financial Management Act 2006 (WA) and the Treasurer’s Instructions, are available online to all employees.

Capital Works

All disclosures in relation to capital works are included in the Financial Statements and Notes. Our annual Strategic Asset Plan details our 10-year investment needs and drivers. The Strategic Asset Plan adheres to the Department of Treasury’s Strategic Asset Management Framework. We assess projects for funding by submitting comprehensive business cases to the Investment Planning Committee and Main Roads Investment Executive, and according to their direct and in-direct economic, environmental and social impacts. Each capital project follows the national Austroads project evaluation methodology where a Benefit Cost Ratio (BCR) must be conducted and calculated. This incorporates quantifiable economic data and is supplemented by simplified economic, environmental and social assessments. 

The BCR records information on the benefits of a project on travel time savings, vehicle operating costs and smoother travel, safety, and maintenance. Other benefits and costs are considered via a multi-criteria analysis. Our approved priority capital projects are then submitted to the Transport Portfolio Investment Sub Committee for endorsement of rating and assessment against all Transport Portfolio priorities, with shortlisted priorities submitted to the Minister for Transport for approval as part of the Department of Treasury’s Annual Budget Cycle. Capital works financial progress is reported to the Corporate Executive on a monthly basis.

Main Roads has a Business Case Guidelines document which details the minimum requirements and outlines the preferred template for a business case. Both State and Commonwealth templates have a section on alignment to State Priorities, Government Goals and Main Roads outcomes.

The Infrastructure Australia template has a section on alignment to Government goals and other strategies. Indirect economic benefits (those that are outside the scope of the usual Benefit Cost Assessment) are now being measured through wider economic benefits – these are an attempt to monetarise the benefits a project delivers to the wider economy through enabling infrastructure.

Main Roads has adopted a post project evaluation framework to measure project success – to ensure we are achieving the intended KPI’s and outcomes from project investment. This Benefit Realisation Framework is endorsed by Australian Transport Assessment and Planning and is a key feature of ISCA’s Rating Tool, V2.0.

Sustainable Procurement, Buy Local and WA Industry Participation Strategy

The State Supply Commission policy on sustainable procurement requires us to demonstrate that we have considered sustainability in our procurement of goods and services. We have gone beyond the requirements of this policy to reflect this in not only our processes for procuring goods and services but also in procuring works.

We apply the Western Australian Government’s Buy Local Policy in the evaluation of tenders. With the introduction of the Western Australian Industry Participation Strategy, tenderers are required to submit local participation plans as part of their submission to demonstrate a commitment to involve local businesses, if awarded the contract.

In addition, we promote social procurement initiatives such as direct purchasing from Aboriginal businesses and Western Australian disability enterprises. Aboriginal procurement, employment and training targets are mandated in our major construction and maintenance contracts. Annual reporting outcomes is provided to the Department of Finance for publication (State Supply Commission) as required under the Buy Local Policy.

Ethical Procurement

Our procurement policies and procedures comply with the requirements of the State Supply Commission and are certified to AS/NZS 9001:2015.

These policies are contained in the Procurement Management Manual. Further guidelines of expected behaviours of officers involved in the tendering and evaluation process is documented in the Tendering and Contract Administration Manual and Integrity Framework. An ongoing compliance program is in place to ensure these policies and procedures are adhered to.

A Tender Committee, consisting of two experienced senior officers from our organisation and two senior external government officials, provides additional assurance that procurement actions comply with policies and standards for high-risk and potentially contentious procurements. External probity auditors are engaged for large, complex or controversial procurement activities.