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
2014–15 ($’000) | 2015–16 ($’000) | 2016–17 ($’000) | 2017–18 ($’000) | 2018-19 ($’000) | 2019-20 ($’000) | ||
|---|---|---|---|---|---|---|---|
| Navigational infrastructure (Marine Navigation Levy) | |||||||
| Expenses (X) | 35,264 | 34,580 | 41,134 | 31,874 | 35,567 | 37,164 | |
| Revenue (Y)* | 32,314 | 32,993 | 34,091 | 34,651 | 36,539 | 36,281 | |
| Balance (Y - X) | (2,950) | (1,587) | (7,043) | 2,777 | 972 | (883) | |
| Explain material variances: | In 2016-17 and 2019-20, provision for removal of lead paint and asbestos content in AMSA’s aids to navigation sites (predominately lighthouses) was increased. The approximate movement in the provision during 2016-17 was $7.1 million and totalled $4.9 million in 2019-20. We are currently 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) | 32,795 | 34,654 | 29,128 | 30,219 | 62,707 | 29,686 | |
| Revenue (Y)* | 31,268 | 37,259 | 34,068 | 36,494 | 39,234 | 48,156 | |
| Balance (Y - X) | (1,527) | 2,605 | 4,940 | 6,275 | (23,473) | 18,470 | |
| Explain material variances: | There are natural timing variances associated with environmental emergencies, as clean-up operation costs incurred immediately from the date of an incident, whereas insurance recoveries typically received four to six years afterwards. For example, in 2015-16 AMSA received $4.3 million in recoveries from an incident that occurred in 2009-10. 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 containers that fell overboard from the MV Efficiency in June 2018. This clean-up operation finished in June 2020, with actual expenditure of $15.7 million, with the excess provision of $11.4 million reversed and recognised as revenue in 2019-20. | ||||||
| Seafarer ship safety under Navigation Act 2012 and other Acts (Regulatory Functions Levy) | |||||||
| Expenses (X) | 46,501 | 44,781 | 38,218 | 43,142 | 35,507 | 50,433 | |
| Revenue (Y) | 48,349 | 49,266 | 51,211 | 52,488 | 53,470 | 54,949 | |
| Balance (Y - X) | 1,848 | 4,485 | 12,993 | 9,346 | 17,963 | 4,516 | |
| 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 domestic sector due to unexpected level of transitional workloads associated with full-service delivery of the National System. | ||||||
| Marine services under Navigation Act 2012 and ship registration | |||||||
| Expenses (X) | 5,823 | 5,632 | 10,891 | 5,560 | 5,995 | 10,897 | |
| Revenue (Y) | 3,658 | 4,631 | 4,849 | 3,959 | 3,813 | 2,959 | |
| Balance (Y - X) | (2,165) | (1,001) | (6,042) | (1,601) | (2,182) | (7,938) | |
| Explain material variances: | Initial analysis indicates that the under recovery is largely within qualifications for seafarers and pilots, and inspections and surveys on international vessels. We are currently seeking to understand processes to determine whether costs are efficient or not. Depending on results of this analysis, AMSA will work with stakeholders and government to consider appropriate future arrangements. | ||||||
| Marine services for National System | |||||||
| Expenses (X) | - | - | 625 | 867 | 6,359 | 7,256 | |
| Revenue (Y) | - | - | 73 | 119 | 3,360 | 2,988 | |
| Balance (Y - X) | - | - | (552) | (748) | (2,999) | (4,268) | |
| Explain material variances: | Three components appear to be driving the 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 subsequent to full service delivery on 1 July 2018. The reduction in revenue for 2019-20 was largely the result of bushfire and COVID-19 relief provided to industry. | ||||||
*Re venue includes insurance recoveries 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
2014–15 ($’000) | 2015–16 ($’000) | 2016–17 ($’000) | 2017–18 ($’000) | 2018-19 ($’000) | 2019-20 ($’000) | |
|---|---|---|---|---|---|---|
| Expenses (X) | 120,383 | 119,647 | 119,996 | 111,662 | 146,135 | 135,436 |
| Revenue (Y) | 115,589 | 124,149 | 124,292 | 127,711 | 136,416 | 145,333 |
| Balance (Y - X) | (4,794) | 4,502 | 4,296 | 16,049 | (9,719) | 9,897 |
| Cumulative | (4,794) | (292) | 4,004 | 20,053 | 10,334 | 20,231 |
The cumulative balance for regulatory charging activity outputs from 2014-15 to 2019-20 is a $20.2 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 the activity-based costing and zero-based budget exercise, we are now in a position to analyse business processes and corporate overheads to understand reasons for the imbalances (under and over recovery) of regulatory charging. As part of the upcoming government review, AMSA will develop strategies to address these imbalances, with extensive stakeholder consultation on any proposed changes.