Choose from 5 options:
4. Financial estimates
Financial estimates and underlying assumptions for the 2023-24 budget and forward years are set out in Table 4 (below), prepared on an accrual basis7.
Table 4 - Financial estimates for budget year and forward estimates ($’000)
| 2023-24 budget | 2024-25 forward estimate | 2025-26 forward estimate | 2026-27 forward estimate | |
|---|---|---|---|---|
| Operational Expenses (A) | 21,628 | 22,179 | 22,696 | 23,227 |
| Cost Recovered Revenue – includes fees for services and levies (B)8 | 20,880 | 20,880 | 20,880 | 20,880 |
| Government appropriation - interest equivalency payment (C) | 753 | 753 | 753 | 753 |
| Balance = (B+C)-(A) | 5 | -546 | -1,062 | -1,594 |
| Cumulative balance | 27,131 | 26,585 | 25,523 | 23,929 |
Material variance commentary: The financial estimates are based on predicted levels of fee for service applications and the number of expected registrants at each level. The estimates also include a substantial increase to appropriation funding in the form of an interest equivalency payment from interest earned on funds held in the Industrial Chemicals Special Account. Revenue forecast for 2023-24 are subject to fluctuations in:
- numbers of fees for services applications
- number of companies per level listed on the Register of Industrial Chemical Introducers
The annual rolling CRIS and future pricing reviews will ensure transparency and ongoing accuracy of revenue and expenditure and detect any upward or downward variations.
Balance Management Strategy: A reserve is used as a risk mitigation measure to allow established charging arrangements to balance and lessen the impact of variable demand on the ongoing delivery of regulatory activities. The AICIS Reserve is fully committed to the following three components, which are maintained to facilitate business continuity requirements, to help fund the ongoing resourcing requirements of AICIS and to allow the scheme to operate in a sustainable manner:
- Capital investment (51%): Includes costs recovered in regulatory charges where funding for replacement or enhancement to a capital asset has been provided by government. This revenue will be maintained in reserves earmarked to support future replacement or enhancements to capital assets;
- Three months operating reserves (27%); and
- Employee entitlements (22%): consistent with best practice, the reserve retains employee entitlements such as leave provisions’.
Note: Higher than anticipated number of registrants at the higher registration levels has resulted in an accumulation of prior year revenue. The further reduction in levy charges in 2023-24 is anticipated to prevent further accumulation.
7 Figures reported in the Portfolio Budget Statements may differ as they are reported on a cash basis in accordance with the Public Governance, Performance and Accountability (Financial Reporting) Rule 2015.
8 Projected revenue does not reflect any adjustment made to recover CPI and wage growth currently included within the projected cost base. AICIS will continue to consult with industry on how the indexed costs should be recovered across the forward years as part of future annual CRIS updates in accordance with the Charging Framework.