Historical financial performance of AMSA’s regulatory charging activity outputs, from 2014-15 to 2019-20, are shown in Table 10, including explanations of material variances. The cumulative results for regulatory charging activity outputs are included in Table 11.
Table 10: Historical performance of AMSA’s regulatory charging activities by output
| 2016–17 ($’000) | 2017–18 ($’000) | 2018-19 ($’000) | 2019-20 ($’000) | 2020-21 ($’000) |
Navigational infrastructure (Marine Navigation Levy) | |||||
Expenses (X) | 41,134 | 31,874 | 35,567 | 37,164 | 41,294 |
Revenue (Y)* | 34,091 | 34,651 | 36,539 | 36,281 | 38,146 |
Balance (Y - X) | (7,043) | 2,777 | 972 | (883) | (3,148) |
Explain material variances: | In 2016-17, 2019-20, and 2020-21, provisions for removal of lead paint and asbestos content in aids to navigation sites (predominately lighthouses) were increased as further evidence and substantiation of existence become known. The approximate movement in the provision for 2016-17 was $7.1 million, 2019-20 was $4.9 million, and 2020-21 was $6.3 million. We are working through each of the identified sites through a program of scheduled works to remediate sites and reduce this provision each year. | ||||
Environmental marine protection (Protection of the Sea Levy) | |||||
Expenses (X) | 29,128 | 30,219 | 62,707 | 29,686 | 25,311 |
Revenue (Y)* | 34,068 | 36,494 | 39,234 | 48,156 | 49,773 |
Balance (Y - X) | 4,940 | 6,275 | (23,473) | 18,470 | 24,462 |
Explain material variances: | There are natural timing variances associated with environmental emergencies, as clean-up operation costs are incurred immediately from date of an incident, whereas insurance recoveries or legal settlements typically received four to six years afterwards. As AMSA has a constructive obligation to meet clean-up costs from ship-sourced marine pollution, in 2018-19 we booked a $27.1 million provision associated with an incident that occurred in June 2018. This clean-up operation finished in June 2020, with actual expenditure of $15.7 million, with excess provision of $11.4 million reversed and recognised as revenue in 2019-20. In 2020-21 we received insurance recoveries and legal settlements from incidents that occurred in prior years. Further, there was a reduction in crisis preparedness training expenditure and other National Plan related activities as a result of Covid-19 restrictions. | ||||
Seafarer ship safety under Navigation Act 2012 and other Acts (Regulatory Functions Levy) | |||||
Expenses (X) | 38,218 | 43,142 | 35,507 | 50,433 | 47,343 |
Revenue (Y) | 51,211 | 52,488 | 53,470 | 54,949 | 56,724 |
Balance (Y - X) | 12,993 | 9,346 | 17,963 | 4,516 | 9,381 |
Explain material variances: | In 2016-17 AMSA undertook a workforce planning exercise, building capability to minimise duplication and increase collaboration across domestic and international areas of responsibility. An internal restructure carried out to support a more flexible and responsive organisation, resulting in a notable reduction in staff costs. For 2017-18 to 2018-19 there was a redirection of resources towards the domestic commercial sector due to unexpected level of transitional workloads associated with full-service delivery of the National System, with 2019-20 reverting back to normal services. However, in 2020-21 there is a reduction in expenditure predominately related to Covid-19 disruptions and delays for regulatory function activities. We expect this to reverse (increase in expenditure) from 2021-22 as pandemic disruptions largely cease and work-force strategy planning is undertaken to identify the efficient and effective usage of resources in provision of regulatory functions across both domestic and international sector. | ||||
Marine services under Navigation Act 2012 and ship registration | |||||
Expenses (X) | 10,891 | 5,560 | 5,995 | 10,897 | 9,000 |
Revenue (Y) | 4,849 | 3,959 | 3,813 | 2,959 | 2,930 |
Balance (Y - X) | (6,042) | (1,601) | (2,182) | (7,938) | (6,070) |
Explain material variances: | An analysis of these under-recoveries indicates that it largely within qualifications for seafarers and pilots, and inspections and surveys on international vessels. We are understanding processes to determine whether costs are efficient or not. Depending on results of this analysis, we will work with stakeholders and government to consider appropriate future arrangements. | ||||
Marine services for National System | |||||
Expenses (X) | 625 | 867 | 6,359 | 7,256 | 7,772 |
Revenue (Y) | 73 | 119 | 3,360 | 2,988 | 3,098 |
Balance (Y - X) | (552) | (748) | (2,999) | (4,268) | (4,674) |
Explain material variances: | There are three components driving under-recovery, lower volumes (and revenue) than was originally anticipated, an increase in expected level of service delivery, and temporary inefficiencies as business processes are developed and refined after full-service delivery in 2018-19. The reduction in revenue for 2019-20 is largely the result of bushfire and COVID-19 relief provided to industries. | ||||
* Revenue includes insurance recoveries and legal settlements for aids to navigation assets and environmental emergency pollution responses. In relation to environmental emergencies, there is typically a four to six year delay in incurring expenditure associated with operational costs, which occurs immediately after an incident, and any eventually insurance recovery or legal settlement.
Table 11: Cumulative performance of AMSA’s regulatory charging activity outputs
| 2016–17 ($’000) | 2017–18 ($’000) | 2018-19 ($’000) | 2019-20 ($’000) | 2020-21 ($’000) |
Expenses (X) | 119,996 | 111,662 | 146,135 | 135,436 | 130,720 |
Revenue (Y) | 124,292 | 127,711 | 136,416 | 145,333 | 150,671 |
Balance (Y - X) | 4,296 | 16,049 | (9,719) | 9,897 | 19,951 |
Cumulative | 4,296 | 20,345 | 10,626 | 20,523 | 40,474 |
The cumulative balance for regulatory charging activity outputs from 2016-17 to 2020-21 is a $40.5 million surplus. This balance has been used in part to fund the development and implementation of a modern regulatory infrastructure framework applicable for both international and domestic commercial vessels.
Following two years of detailed activity-based costing and zero-based budgeting exercises, we are progressing over the next few years to understand processes and corporate overheads. As part of the government review, AMSA will develop strategies to address imbalances, with extensive stakeholder consultation on any proposed changes.