Notes to the financial statements

The Department of Premier and Cabinet
(the ‘department’) is a government department of the State of Victoria (the ‘state’) established pursuant to an order made by the Premier under the Administrative Arrangements Act 1983. It is an administrative agency acting on behalf of the Crown.

The principal address of the department is:

Department of Premier and Cabinet
1 Treasury Place
Melbourne VIC 3002

A description of the department’s operations and its principal activities are included in the Report of Operations, which does not form part of these financial statements.

Basis of preparation

These financial statements are in Australian dollars and the historical cost convention is used unless a different measurement basis is specifically disclosed in the note associated with the item measured on a different basis.

The accrual basis of accounting has been applied in preparing these financial statements whereby assets, liabilities, equity, income and expenses are recognised in the reporting period to which they relate, regardless of when cash is received or paid.

Consistent with the requirements of Australian Accounting Standards Board (AASB) 1004: Contributions, contributions by owners (that is, contributed capital and its repayment) are treated as equity transactions and, therefore, do not form part of the income and expenses of the department.

Additions to net assets that have been designated as contributions by owners are recognised as contributed capital. Other transfers that are in the nature of contributions to or distributions by owners have also been designated as contributions by owners.

Judgements, estimates and assumptions are required to be made about financial information being presented. The significant judgements made in preparing these financial statements are disclosed in the notes where amounts affected by those judgements are disclosed. The significant judgement applied to value property, plant and equipment is disclosed in Note 5.5 and Note 5.5.1 of the financial statements. Estimates and associated assumptions are based on professional judgements derived from historical experience and various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates.

Revisions to accounting estimates are recognised in the period in which those estimates are revised and in future periods that are affected by the revision. Judgements and assumptions made by management in applying Australian Accounting Standards that have significant effects on the financial statements and estimates are disclosed in the notes to which they relate.

These financial statements cover the department as an individual reporting entity and include all its activities. The results of the portfolio entities are not consolidated in the department’s financial statements because they prepare their own financial reports. The department’s portfolio results (including the portfolio entities) are included in Appendix 1: Budget portfolio outcomes, which does not form part of the financial statements and is not subject to audit by the Victorian Auditor-General’s Office.

Pursuant to section 53(1)(b) of the Financial Management Act 1994, the results of the following entities are reported in aggregate as part of the department’s financial statements:

• The Victorian Independent Remuneration Tribunal was established on 20 March 2019 under the Victorian Independent Remuneration Tribunal and Improving Parliamentary Standards Act 2019. It is included in the comparative figures to this report until 1 February 2024, when it was transferred to the Department of Treasury and Finance as part of machinery of government changes.
• Wage Inspectorate Victoria was established on 1 July 2021 under the Wage Theft Act 2020. It is included in the comparative figures to this report until 1 February 2024, when it was transferred to the Department of Treasury and Finance as part of machinery of government changes.
• The Victorian Multicultural Commission was established under the Multicultural Victoria Act 2011. It is included in this report from 1 February 2024, when it was transferred from the Department of Families, Fairness and Housing as part of machinery of government changes.
• The Parliamentary Workplace Standards and Integrity Commission was established on 31 December 2024 under the Parliamentary Workplace Standards and Integrity Act 2024 and is included in this report from that date.

The administered activities of the department and for the above entities are separately disclosed in Note 8.8 Administered items. The department remains accountable for administered items but does not recognise these in its financial statements.

Compliance information

These general-purpose financial statements have been prepared on a going concern basis in line with the Financial Management Act 1994 and applicable Australian Accounting Standards including interpretations issued by the AASB. They are presented in a manner consistent with the requirements of AASB 1049: Whole of Government and General Government Sector Financial Reporting.

Where appropriate, those Australian Accounting Standards paragraphs applicable to not-for-profit entities have been applied. Accounting policies selected and applied in these financial statements ensure the resulting financial information satisfies the concepts of relevance and reliability, thereby ensuring the substance of the underlying transactions or other events is reported.

Machinery of government changes

Transfers of net assets arising from administrative restructurings are treated as distributions to or contributions by owners. Transfers of net liabilities arising from administrative restructurings are treated as distributions to owners.

Rounding of amounts

All amounts in the financial statements have been rounded to the nearest $1,000 unless otherwise stated. Figures in the financial statements may not equate due to rounding.

Other accounting policies

Significant accounting policies that summarise recognition and measurement basis used and relevant to an understanding of these financial statements, are provided throughout the notes to the financial statements.

2.1 Income that funds the delivery of services

Appropriations

Once annual parliamentary appropriations are approved by the Treasurer, they become controlled by the department and are recognised as income when applied for the purposes defined under the relevant legislation governing the use of the appropriation.

The department receives the following forms of appropriation:

• Output appropriations - Income for the outputs (i.e. final products or goods and services) delivered on behalf of the government, which is recognised when those outputs have been delivered and the relevant minister has certified delivery is in line with specified performance criteria.
• Special appropriations - Income related to special appropriations are recognised when the expenditure relating to the amounts appropriated are paid by the department.

2.2 Summary of compliance with annual parliamentary and special appropriations

2.2.1. Summary of annual appropriations

The following table discloses the details of the various annual parliamentary appropriations the department received for the financial year.

In accordance with accrual output-based management procedures, ‘provision of outputs’ and ‘additions to net assets’ are disclosed as ‘controlled’ activities of the department. Administered transactions are those that are undertaken on behalf of the state over which the department has no control
or discretion.

2.2.2. Summary of special appropriations

The following table discloses the details of compliance with special appropriations.

3.1 Grant expenses

3.2 Employee expenses

3.3. Other operating expenses

Other operating expenses generally represent the day-to-day running costs incurred in normal operations and are recognised as expenses in the reporting period in which they are incurred.

4.1. Department outputs

The department supports the ministerial portfolios of Premier, Multicultural Affairs, and Treaty and First Peoples.

A description of the departmental outputs during the financial year ended 30 June 2025 and their objectives are summarised below.

Chief Parliamentary Counsel services

This output provides bills for introduction in Parliament, including providing quality and timely legislative drafting services; hard copy and electronic publication of Acts and statutory rules; and maintaining a database of Victorian legislation and legislative information at www.legislation.vic.gov.au.

Economic policy advice and support

This output contributes to delivering strategic, timely and comprehensive analysis and advice on economic policy to support government decision making.

Executive Government advice and services.

This output contributes to: providing strategic, timely and comprehensive support to Cabinet and Cabinet Committees; providing support to the Governor and maintaining Government House and its collections as a heritage asset of national importance; delivering analysis and advice to support evidence-based decision making across Industrial Relations

This output contributes to promote fair jobs and a positive industrial relations environment through sound industrial relations policy and advice to government. This includes oversight of enterprise bargaining across the Victorian public sector and support for Victoria’s participation in the national workplace relations system. This output was not delivered during the year as it was transferred out to Department of Treasury and Finance due to machinery of government changes effective from 1 February 2024.

Multicultural affairs policy and programs

This output provides policy advice on multicultural affairs and social cohesion in Victoria, including settlement coordination for newly arrived migrants and refugees and delivers a range of programs to directly support Victoria’s multicultural communities. It also supports Victoria’s whole-of-government approach to multiculturalism. The output includes monitoring of government departments’ responsiveness to Victorians from culturally, linguistically and religiously diverse backgrounds.

Public sector administration advice and support

This output provides advice and support on issues relevant to public sector administration, governance, service delivery and workforce matters, as well as to public sector professionalism and integrity. It includes related research, determinations, data collection, reporting and dissemination of information.

Self-determination policy and reform advice and programs

This output supports the Victorian Government’s commitment to self-determination for First Peoples and to improving long-term social and economic outcomes. This includes progress towards treaty; engaging with the Yoorrook Justice Commission; and work to reform government to enable self-determination as well as undertaking outcomes-focused reporting across the portfolio.

Social policy advice and intergovernmental relations

This output contributes to delivering strategic, timely and comprehensive analysis and advice on social policy and intergovernmental relations to support government decision-making.

This output also contributes to the strategic coordination of emergency management strategies and planning across the Victorian public sector.

Traditional owner engagement and cultural heritage management programs

This output supports the government’s commitment to protecting Aboriginal cultural rights, including supporting Traditional Owners and First Peoples organisations to deliver self-determined initiatives for their communities. This includes the protection and management of Aboriginal cultural heritage and strengthening Aboriginal community organisations.

4.2 Changes in department outputs

The 2023-24 output ‘Economic Policy Advice and Land Coordination’ was renamed to the ‘Economic Policy Advice and Support’ output in 2024-25 due to the transfer of the Precincts and Land Coordinator General functions to the Department of Transport and Planning on 1 November 2023.

This note and accompanying table below are presented at the output level, compared with the departmental objectives level presentation in prior years.

4.3 Departmental outputs - controlled income and controlled expenses

5.1. Property, plant and equipment

Key accounting recognition and measurement criteria

Items of property, plant and equipment are measured initially at cost and subsequently revalued at fair value less accumulated depreciation and impairment. Where an asset is acquired for nominal cost, the cost is its fair value at the date of acquisition. Assets transferred from/to other departments as part of machinery of government changes are transferred at their carrying amount.

The cost of leasehold improvements is capitalised and depreciated over the shorter of the remaining lease term or estimated useful life.

The initial cost of leased motor vehicles is measured at amounts equal to the fair value of the leased asset or, if lower, the present value of the minimum lease payments determined at the inception of the lease.

Leases recognised as right-of-use assets are initially measured at cost. This represents the present value of expected future payments resulting from the lease contracts.

In reporting periods subsequent to initial recognition, property, plant and equipment are measured at fair value less accumulated depreciation and impairment. Fair value is determined based on the asset’s highest and best use (considering legal or physical restrictions imposed on the asset, public announcements or commitments made in relation to the intended use of the asset) and is summarised by asset category.

Total property, plant and equipment

Land and buildings (including heritage buildings)

Land and buildings are classified as specialised land and specialised buildings due to restrictions on the use of these assets. They are valued at fair value. For land valuation purposes, the market approach is used, although this is adjusted for any community service obligations to reflect the specialised nature of the land being valued. Buildings are valued using the current replacement cost method and some components of Government House are valued using the reproduction cost method.

For more information on valuation techniques, inputs and processes, refer to Note 5.5.

Leasehold improvements

Leasehold improvements are valued using the historical cost method. Historical cost is used as a close proxy to the current replacement cost due to the short useful lives of these assets.

Office equipment and computer equipment

Fair value for office equipment and computer equipment that are specialised in use (such that it is rarely sold other than as part of a going concern) is determined using the current replacement cost method.

Motor vehicles

Vehicles are valued using the current replacement cost method. The department acquires new vehicles and at times disposes of them before the end of their economic life. The process of acquisition, use and disposal in the market is managed by departmental fleet managers, who set relevant depreciation rates during the life of the asset to reflect the use of the vehicles.

Other heritage assets

These assets are reported at fair value using the market approach. The market approach compares the value of the assets with comparable assets that have sold in the marketplace.

For more information on valuation techniques, inputs and processes, refer to Note 5.5.

Right-of-use assets acquired by lessees

The department initially recognises a right-of-use asset and a lease liability at the lease start date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for:

• any lease payments made at or before the start date less any lease incentive received
• any initial direct costs incurred
• an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located.

The department subsequently depreciates the right-of-use assets on a straight-line basis from the lease start date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The right- of-use assets are also subject to revaluation.

In addition, right-of-use assets are periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liabilities.

Refer to the table at 5.1.1.1 for reconciliation of movements in carrying amounts of the departments right-of-use assets.

5.1.1. Reconciliation of movements in carrying amount of property, plant and equipment

5.1.1.1. Reconciliation of movement in carrying amount of right-of-use assets: buildings and vehicles

The following table is a subset of buildings and leased motor vehicles included in Note 5.1.1 for right-of-use assets.

5.2 Intangible assets

Key accounting recognition and measurement criteria

Purchased intangible assets are initially recognised at cost. Subsequently, intangible assets with finite useful lives are carried at cost less accumulated amortisation and accumulated impairment losses. Depreciation and amortisation begin when the assets are available for use - that is, when they are in the location and condition necessary for them to be capable of operating in the manner intended by management.

Internally generated intangible assets arising from development (or from the development phase of an internal project) are recognised if, and only if, all the following are demonstrated:

• there is an intention to complete the intangible asset for use or sale
• there is an ability to use or sell the intangible asset
• the intangible asset will generate probable future economic benefits
• there is availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset
• there is an ability to reliably measure the expenditure attributable to the intangible asset during its development.

Internally generated intangible assets with finite useful lives, are amortised on a straight-line basis over their useful lives.

Intangible assets with indefinite useful lives (and intangible assets not yet available for use) are tested for impairment annually or whenever there is an indication that the asset may be impaired.

5.3 Depreciation and amortisation

All buildings, office and computer equipment and other non-financial physical assets that have finite useful lives are depreciated and intangible assets are amortised over their useful lives.

Depreciation and amortisation are generally calculated on a straight-line basis, at rates that allocate the asset’s value less any estimated residual value, to its useful life. Depreciation and amortisation begin when the asset is first available for use in the location and condition necessary for it to be capable of operating in the manner intended by the department.

Useful life of assets

Typical current and prior year estimated useful lives for the different asset classes are included in the table below.

Right-of-use assets are generally depreciated over the shorter of the asset’s useful life and the lease term. Where the department obtains ownership of the underlying leased asset or if the cost of the right-of-use asset reflects that the entity will exercise a purchase option, the entity depreciates the right-of-use asset over its useful life.

Impairment of intangible assets - Intangible assets are tested for impairment whenever there is an indication that the asset may be impaired.

The assets concerned are tested as to whether their carrying value exceeds their recoverable amount. Where an asset’s carrying value exceeds its recoverable amount, the difference is considered to be an impairment and is written off as an ‘other economic flow’ in the comprehensive operating statement, except to the extent that it can be offset against an asset revaluation surplus applicable to that class of asset.

The recoverable amount for most assets is measured at the higher of current replacement cost and fair value less costs to sell.

Impairment of property, plant and equipment - The recoverable amount of primarily non-cash-generating assets of not-for-profit entities, which are typically specialised in nature and held for continuing use of their service capacity, is expected to be materially the same as fair value determined under AASB 13 Fair Value Measurement, with the consequence that AASB 136 does not apply to such assets that are regularly revalued.

Assets subject to restriction on use - Heritage assets held by the department generally cannot be modified or disposed of unless ministerial approval is obtained.

5.4 Fair value determination

The department determines the policies and procedures for fair value measurements such as property, plant and equipment in line with the requirements of AASB 13 Fair Value Measurement and the relevant Financial Reporting Directions issued by the Department of Treasury and Finance.

In determining fair values, a number of inputs are used. To increase consistency and comparability in the financial statements, these inputs are categorised into three levels, also known as the fair value hierarchy:

• Level 1 — quoted (unadjusted) market prices in active markets for identical assets or liabilities.
• Level 2 — valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable.
• Level 3 — valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.

Fair value measurement hierarchy

There have been no transfers between levels during the period.

The department determines whether transfers have occurred between levels in the hierarchy by reassessing the categorisation at the end of each reporting period (based on the lowest level input that is significant to the fair value measurement as a whole).

The Valuer-General Victoria (VGV) is the department’s independent valuation agency. The department engages VGV to carry out professional valuations on a five-year cycle. In the interim years the department, in conjunction with VGV, monitors changes in the fair value of each class of asset through relevant data sources to determine whether a revaluation is required. If a valuation is required, then the department will either carry out a managerial valuation or engage with VGV to value those asset classes.

AASB 2022-10 Amendments to Australian Accounting Standards – Fair Value Measurement of Non-Financial Assets of Not-for-Profit Public Sector Entities amended AASB 13 by adding Appendix F Australian implementation guidance for not-for-profit public sector entities. Appendix F explains and illustrates the application of the principles in AASB 13 on developing unobservable inputs and the application of the cost approach. These clarifications are mandatory for annual reporting periods beginning on or after 1 January 2024.

FRD 103 permits the department to apply Appendix F of AASB 13 prospectively in its next scheduled formal revaluation or interim revaluation (whichever is earlier). In the current reporting period, a full revaluation is not required. The department conducted a fair value assessment using the regular indices for land and buildings from the VGV. Following the assessment and in accordance with FRD 103, a managerial valuation adjustment was done for buildings due to the movement in fair value exceeding 10 per cent but remaining under 40 per cent. In accordance with FRD 103, the department will apply Appendix F of AASB 13 prospectively in its next scheduled formal revaluation in 2027. The department does not expect the impact to be material to the financial statements.

The reconciliation of all movements of fair value assets is shown in the table at 5.1.1.

5.5 Valuation techniques, inputs and processes

Land and buildings (including heritage buildings)

The market approach is used to value land, although this is adjusted for any community service obligations to reflect the use of the land being valued.

The community service obligations adjustment reflects the valuer’s assessment of the impact of restrictions associated with an asset to the extent that it is equally applicable to market participants. This approach is in light of the highest and best use consideration required for fair value measurement. Relevant valuation factors include what is physically possible, legally permissible and financially feasible. Such adjustments of community service obligations are considered ‘significant unobservable inputs’; valuation of specialised land is classified at level 3 in the fair value measurement hierarchy.

For the department’s buildings, the current replacement cost method is used and reproduction cost method used for some components of Government House, adjusting for useful life and associated depreciation. Such adjustments are considered significant unobservable inputs; buildings are classified at level 3 in the fair value measurement hierarchy.

VGV performed an independent valuation of land and buildings. The effective date of the valuation was 30 June 2022.

Other heritage assets

Other heritage assets include artwork. For artwork, valuation of the assets is determined by a comparison with similar examples of the artist’s work in existence throughout Australia and research on recent prices paid for similar examples offered at auction or through art galleries.

These assets have been assessed with reference to similar assets and do not contain significant unobservable inputs. They are classified at level 2 in the fair value measurement hierarchy.

5.5.1. Description of significant unobservable inputs to level 3 valuations

6.1. Receivables

6.1.1. Ageing analysis of contractual receivables

The average credit period for sales of goods/services and for other receivables is 30 days. There are no material financial assets that are individually determined to be impaired. Currently the department does not hold any collateral as security nor credit enhancements relating to any of its financial assets.

6.2 Payables

6.3 Employee benefits

Key accounting recognition and measurement criteria

Provision is made for benefits payable to employees in respect of annual leave and long service leave for services rendered up to the reporting date.

The annual leave liability is classified as a current liability and measured at the undiscounted amount expected to be paid, because the department does not have an unconditional right to defer settlement of the liability for at least 12 months after the end of the reporting period.

No provision has been made for sick leave because all sick leave is non-vesting and it is not considered probable that the average sick leave taken in the future will be greater than the benefits accrued in future periods. Because sick leave is non-vesting, an expense is recognised in the comprehensive operating statement when sick leave is taken.

Unconditional long service leave is disclosed as a current liability, even where the department does not expect to settle the liability within 12 months because it will not have the unconditional right to defer the settlement of the entitlement should an employee take leave within 12 months.

The components of the current long service leave liability are measured at either:

• undiscounted value - if the department expects to wholly settle within 12 months
• present value - if the department does not expect to wholly settle within 12 months.

Conditional long service leave is disclosed as a non-current liability. There is a conditional right to defer the settlement of the entitlement until the employee has completed the requisite years of service. This non-current long service leave is measured at present value.

Any gain or loss following revaluation of the present value of the non-current long service leave liability is recognised in the comprehensive operating statement as a gain or loss from continuing operations, except to the extent that a gain or loss arises due to changes in bond interest rates for which it is then recognised as ‘other economic flow’ in the net result.

Employment on-costs such as payroll tax, workers compensation and superannuation are disclosed separately as a component of the provision for employee benefits.

The department does not recognise any superannuation fund defined benefit liabilities because it has no legal or constructive obligation to pay such future benefits to its employees. Instead, the Department of Treasury and Finance discloses in its annual financial statements the net defined benefit cost related to the members of these plans as an administered liability (on behalf of the State of Victoria as the sponsoring employer).

7.1. Borrowings

Key accounting recognition and measurement criteria

Borrowings are classified as financial instruments.

All interest-bearing borrowings are initially recognised at the fair value of the consideration received less directly attributable transaction costs. The measurement basis subsequent to initial recognition is at amortised cost. The classification depends on the nature and purpose of the interest-bearing liabilities. The department determines the classification of its interest-bearing liabilities at initial recognition.

Leases recognised under AASB 16 Leases are initially measured at the present value of the lease payments unpaid at the start date, discounted using an interest rate implicit in the lease if that rate is readily determinable or at the department’s incremental borrowing rate.

Interest expenses include costs incurred in connection with borrowing funds or the notional interest cost in leases recognised under AASB 16 Leases. Interest expenses are recognised in the period in which they are incurred.

The department leases various properties and motor vehicles. The lease contracts are typically made for fixed periods of 1–5 years (2024: 2–5 years) with an option to renew the lease after that date.

7.1.1 Right-of-use assets resulting from leases

Right-of-use assets are presented in Note 5.1.1.1.

7.1.2. Amounts recognised in the comprehension operating statement relating to leases

The following amounts are recognised in the comprehensive operating statement relating to leases.

7.1.3. Amounts recognised in the cash flow statement relating to leases

The following amounts are recognised in the cash flow statement relating to leases.

Leases

For any new contracts entered into, the department considers whether contracts contain leases. A lease is defined as a contract that conveys the right to use an asset (the underlying asset) for a period of time in exchange for consideration. To apply this definition the department assesses whether the contract meets the following three key evaluations:

• whether the contract contains an identified asset that is either explicitly identified in the contract or implicitly specified by being identified at the time the asset is made available to the department and for which the supplier does not have substantive substitution rights
• whether the department has the right to benefit from substantially all the economic benefits from using the asset throughout the contract period and has the right to direct the use of the asset throughout the contract period.
• whether the department has the right to make decisions in respect of ‘how and for what purpose’ the asset is used throughout the contract period.

This policy is applied to contracts entered into, or changed, on or after 1 July 2019.

Separation of lease and non-lease components

At inception or on reassessment of a contract that contains a lease component, the lessee is required to account separately for non-lease components within the contract and exclude these amounts when determining the lease liability and right-of-use asset amount.

Recognition and measurement of leases as a lessee

Lease payments included in measuring of the lease liability comprise:

• fixed payments (including in-substance fixed payments) less any lease incentive receivable
• variable payments based on an index or rate, initially measured using the index or rate on the start date
• amounts expected to be payable under a residual value guarantee
• payments arising from purchase and termination options reasonably certain to be exercised.

Subsequent to initial measurement, the liability is reduced for payments made and increased for interest charges. It is remeasured to reflect any reassessment or modification, or if there are changes in in-substance fixed payments.

When the lease liability is remeasured, the corresponding adjustment is reflected in the right-of-use asset or in the comprehensive operating statement if the right-of-use asset is already reduced to zero.

Short-term leases and leases of low-value assets

The department has elected to account for short-term leases and leases of low-value assets using the practical expedients. Instead of recognising a right-of-use asset and lease liability, the payments in relation to these are recognised as an expense in the comprehensive operating statement when the expenditure is incurred.

Presentation of right-of-use assets and lease liabilities

The department discloses right-of-use assets as ‘Property plant and equipment’. Lease liabilities are presented as ‘Borrowings’ in the balance sheet.

7.2. Cash balances and cash flow information

7.2.1. Cash balances

‘Cash at bank’ includes deposits at call held at the bank and trust account balances held in the State of Victoria’s bank account (‘public account’). Cash received by the department is paid into the public account. Similarly, expenditure for payments to suppliers and creditors are made via the public account. The public account remits to the department the cash required based on payments to suppliers or creditors.

7.2.2. Reconciliation of the net result for the period to the cash flow from operating activities

7.3 Financial instruments and financial risk management

Key accounting recognition and measurement criteria

Introduction

Financial instruments arise out of contractual agreements between entities, resulting in a financial asset of one entity and a financial liability or equity instrument of another entity. Due to the nature of the department’s activities, certain assets and liabilities arise under statute rather than a contract. Such assets and liabilities do not meet the definition of financial instruments in AASB 132 Financial Instruments: Presentation.

The department applies AASB 9 Financial Instruments and classifies all financial assets based on the business model for managing the assets and the assets’ contractual terms.

Financial assets at amortised cost

Financial assets are measured at amortised cost. These assets are initially recognised at fair value plus any directly attributable transaction costs and subsequently measured at amortised cost using the effective interest method less any impairment.

Financial assets at amortised cost include the department’s cash and deposits and trade receivables, but not statutory receivables.

Financial liabilities at amortised cost

Financial liabilities are initially recognised on the date they are originated. They are initially measured at fair value plus any directly attributable transaction costs. After initial measurement, these financial instruments are measured at amortised cost using the effective interest method.

Financial liabilities measured at amortised cost include all the department’s contractual payables and lease liabilities (borrowings).

Derecognition of financial assets

A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is derecognised when the rights to receive cash flows from the asset have expired.

Derecognition of financial liabilities

A financial liability is derecognised when the obligation under the liability is discharged or cancelled, or when it expires.

Offsetting financial instruments

Financial instrument assets and liabilities are offset and the net amount disclosed in the balance sheet when, and only when, there is a legal right to offset the amounts, and the department intends to settle on a net basis or to realise the asset and settle the liability simultaneously.

Categories of financial assets and liabilities

The following table shows the department’s categorisation of financial assets and financial liabilities:

The department’s main financial risks include credit risk, liquidity risk and market risk.

Credit risk - Credit risk refers to the possibility that a debtor will default on its financial obligations as and when they fall due. Credit risk associated with the department’s contractual financial assets is minimal because the main debtors are other Victorian Government entities. Credit risk is measured at fair value and is monitored on a regular basis.

Considering the minimal credit risk, there is no expected credit loss for contractual receivables as per AASB 9 Financial Instruments expected credit loss approach.

Liquidity risk - Liquidity risk arises when the department cannot meet its financial obligations as they fall due. The department’s exposure to liquidity risk is deemed insignificant based on a current assessment of risk.

The department is exposed to liquidity risk mainly through the financial liabilities as disclosed in the balance sheet. The department manages its liquidity risk by:

• maintaining an adequate level of uncommitted funds that can be drawn at short notice to meet its short-term obligations
• careful maturity planning of its financial obligations based on forecasts of future cash flows.

Market risk - The department’s exposure to market risk is primarily through interest rate risk. The department has no material exposure to foreign currency and other price risks.

Interest rate risk - The department’s exposure to interest rate risk is insignificant and arises primarily through the department's lease liabilities. The department manages the risk by undertaking interest-bearing liabilities, which are motor vehicles and accommodation leases under fixed-rate contracts.

7.4 Commitments for expenditure

Commitments for future expenditure include operating and capital commitments arising from contracts. These commitments are recorded at their nominal value and include GST. Net present values of significant individual projects are stated where it is considered appropriate and provides relevant information to users.

These future expenditures cease to be disclosed as commitments once the related liabilities are recognised in the balance sheet.

The department also has grant payment commitments. These commitments are unquantifiable since final grant payments to recipients are based on the achievement of performance milestones that may or may not be met and will affect the payment of those grants.

7.5 trust account balances

The department has trust account balances relating to trust accounts that are controlled and/or administered. Trust accounts controlled by the department are shown above. These trust balances are reported as cash at bank in Note 7.2.1. Administered trusts are disclosed in Note 8.7.

8.1. Other economic flows

Other economic flows are changes in the volume or value of an asset or liability that do not result from transactions. Gains/(losses) from other economic flows include the gains or losses from:

• the disposal of leased motor vehicles
• impairments of non-current physical and intangible assets
• the revaluation of the present value of the long service and annual leave liability due to changes in the bond interest rate.

8.2. Responsible persons

In keeping with the Ministerial Directions issued by the Minister for Finance under the Financial Management Act, the following disclosures are made regarding responsible persons for the reporting period.

Names

The people who held the position of Minister and Accountable Officer in the department (from 1 July 2024 to 30 June 2025 unless otherwise stated) are:

The people who acted in positions of Minister and Accountable Officer in the department (from 1 July 2024 to 30 June 2025) are:

Remuneration

Remuneration received or receivable by the Accountable Officer in connection with managing the department during the reporting period was in the range of $760,000 to $769,999 (2024: $740,000 to $749,999).

8.3. Executive remuneration

The number of senior executive service members, other than Ministers and Accountable Officers, and their total remuneration during the reporting period are shown in the table below. Total annualised employee equivalents provide a measure of full-time-equivalent executive officers over the reporting period.

Remuneration comprises employee benefits (as defined by AASB 119 Employee Benefits) in all forms of consideration paid, payable or provided by the department or on behalf of the department, in exchange for services rendered, and is disclosed in the following categories:

• Short-term employee benefits include amounts such as wages, salaries, annual leave or sick leave that are usually paid or payable on a regular basis, as well as non-monetary benefits such as allowances and free or subsidised goods or services.
• Post-employment benefits include pensions and other retirement benefits paid or payable on a discrete basis when employment has ceased.
• Other long-term benefits include long service leave, other long-service benefits or deferred compensation.
• Termination benefits include termination of employment payments.

8.4. Related parties

The department is a wholly owned and controlled entity of the State of Victoria.

The following agencies have been consolidated into the department’s financial statements pursuant to the determination made by the Minister for Finance under section 53(1)(b) of the Financial Management Act 1994 (FMA):

• Victorian Independent Remuneration Tribunal - comparative year until 1 February 2024
• Wage Inspectorate Victoria - comparative year until 1 February 2024
• Victorian Multicultural Commission - from 1 February 2024.

The related parties of the department and these agencies include:

• all key management personnel and their close family members and personal business interests (controlled entities, joint ventures and entities they have significant influence over)
• all Cabinet ministers and their close family members
• all departments and public sector entities that are controlled and included in the whole of state consolidated financial statements.

All related party transactions have been entered into on an arm’s length basis.

Significant transactions with government-related entities

The department received funding from the Consolidated Fund totalling $551.7 million (2024: $454.0 million). Refer to Note 2.1 for details.

Key management personnel

The department’s key management personnel from 1 July 2024 to 30 June 2025 included:

The Premier

• Hon Jacinta Allan MP

Portfolio Ministers

• The Hon Ben Carroll MP
• The Hon Natalie Hutchins MP
• Ingrid Stitt MP

Secretary

• Jeremi Moule

Deputy Secretaries

• Brigid Sunderland
• Terry Garwood PSM
• Jason Loos PSM
• Joshua Puls MVO
• Jeroen Weimar (1 July 2024 to 24 January 2025)
• Emma Cassar PSM (11 March 2025 onwards)
• Dannii de Kretser (16 October 2024 to
  10 March 2025)

Administrative offices

Key management personnel of the administrative offices included in the department’s financial statements and other statutory appointees that are material in terms of the department’s financial results include:

• Jonathan Burke - Official Secretary for the Office of the Governor.

The compensation detailed below excludes the salaries and benefits of portfolio ministers. Ministers’ remuneration and allowances are set by the Parliamentary Salaries and Superannuation Act 1968 and is reported in the State’s Annual Financial Report.

Transactions with key management personnel and other related parties

Given the breadth and depth of state government activities, related parties transact with the Victorian public sector on terms and conditions equivalent to those that prevail in arm’s-length transactions under the state’s procurement process. Further employment of processes within the Victorian public sector occurs on terms and conditions consistent with the Public Administration Act 2004, Code of Conduct and standards issued by the Victorian Public Sector Commission. Procurement processes occur on terms and conditions consistent with the Victorian Government Procurement Board requirements.

Outside of normal citizen-type transactions with the department, there were no other related party transactions that involved key management personnel or their close family members. No provision has been required, nor any expense recognised, for impairment of receivables from related parties.

8.5. Remuneration of auditors

8.6. Contingent assets and contingent liabilities

Contingent assets

Quantifiable contingent assets

Contingent liabilities

Non-quantifiable contingent liabilities - 2025 and 2024

First Peoples’ Assembly of Victoria

The state and the First People’s Assembly of Victoria (‘the Assembly’) have established, by agreement, a novel entity called the Treaty Authority to oversee Treaty negotiations in Victoria. The state and the Assembly have jointly appointed a panel to select the members to be appointed to the Treaty Authority. The department has a potential contingent liability arising from the panel members.

The Treaty Authority panel members are not employed by the state or the Assembly, nor is the panel a separate legal entity, meaning the panel members are not covered by the insurance policies of any existing entity. To mitigate any risks of panel members being personally liable for claims arising from their functions on the panel, the Minister for Treaty and First Peoples has agreed to provide ministerial indemnity to panel members as part of the ‘Instrument of Appointment’ to appoint panellists.

It is not feasible at this time to quantify any future liability.

Native Title

A number of claims have been filed with the Federal Court under the Commonwealth Native Title Act 1993 that affect Victoria. The outcomes of these claims and their financial impact cannot be reliably determined and measured at the balance date.

8.7. Ex gratia expenses

Ex gratia expenses are voluntary payments of money or other non-monetary benefits (e.g. write-offs) that are not made to acquire goods, services or other benefits for the entity, nor to meet a legal liability, or to settle or resolve a possible legal liability or claims against the entity.

DPC had no ex gratia expenses for the period ending 30 June 2025 (2024: nil).

8.8. Administered items

The transactions and balances below relate to administered items and are not included elsewhere in these financial statements because the department does not control these activities. However, the department remains accountable to the state for the transactions involving these administered resources even though it does not have the discretion to deploy these resources for its own benefit or to achieve its objectives.

The most significant transactions in this category include appropriations received and on-passed to the Victorian Electoral Commission for electoral entitlements, disposal of vehicles under leases, the Public Service Commuter Club and other Treasury and departmental trusts.

Administered trust account balances

The table below provides additional information on individual administered trust account balances.

8.9. Other accounting policies

Contributions by owners

In relation to machinery of government changes and consistent with the requirements of AASB 1004 Contributions, contributions by owners, contributed capital and its repayments are treated as equity transactions and do not form part of the department’s income and expenses.

Additions to net assets that have been designated as contributions by owners are recognised as contributed capital. Other transfers that are contributions to or distributions by owners are designated as contributions by owners.

Transfers of net assets or liabilities arising from administrative restructurings are treated as distributions to, or contributions by, owners.

Other non-financial assets

Prepayments represent payments in advance of receiving goods or services made in one accounting period covering a term extending beyond that period. Prepayments at the end of the financial year include accommodation, software and information technology payments made in advance.

Other provisions

Other provisions are recognised when the department has a present obligation, the future sacrifice of economic benefits is probable, and the amount of the provision can be measured reliably. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting date, considering the risks and uncertainties surrounding the obligation.

Grants

The department has determined that the operating grant income is earned as per AASB 1058 Income of Not-for-Profit Entities under arrangements that are either not enforceable or without any sufficiently specific performance obligations. This is recognised when the department has an unconditional right to receive cash which usually coincides with receipt of cash.

Income received from the Commonwealth Government as specific purpose grants for on-passing to other entities is recognised simultaneously as income and expenditure because the funds are immediately on-passed to the relevant recipient entities on receipt.

Resources received free of charge

Resources received free of charge or for nominal consideration are recognised under AASB 1058 at fair value when control is obtained over them, irrespective of whether these contributions are subject to restrictions or conditions over their use. The exception is when the resource is received from another government department (or agency) because of a restructuring of administrative arrangements. In this case the transfer will be recognised as a capital contribution transfer, in the transferring department or agency, and recorded at its carrying value.

The department’s resources received free of charge relates to corporate shared services received from the Department of Government Services.

Other income

Other income arises from the following transactions and other miscellaneous income and recovery of administration costs.

• Trust fund income: Trust fund income mostly includes fees collected from the Aboriginal Cultural Heritage Register and income from other external parties.
• Sponsorship income: Sponsorship income includes receipts from external parties for
  the Australia Day Fund.

8.10. Australian Accounting Standards issued but not yet effective

AASB 2024-2 Amendments to Australian Accounting Standards - Classification and Measurement of Financial Instruments

AASB 2024-2 amends AASB 7 Financial Instruments: Disclosures and AASB 9 Financial Instruments.

AASB 2024-2 amends requirements relating to:

• settling financial liabilities using an electronic payment system
• assessing contractual cash flow characteristics of financial assets with environmental, social and corporate governance and similar features
• disclosure requirements for investments in equity instruments designated at fair value through other comprehensive income and financial instruments with contingent features that do not relate directly to basic lending risks and costs.

This amendment applies to annual reporting periods beginning on or after 1 January 2026.

AASB 18 Presentation and Disclosure of Financial Statements

AASB 18 replaces AASB 101 Presentation of Financial Statements to improve how entities communicate in their financial statements, with
a particular focus on information about financial performance in the statement of profit or loss.

The key presentation and disclosure requirements established by AASB 18 is the presentation of newly defined subtotals in the statement of profit or loss.

AASB 18 applies to annual reporting periods beginning on or after 1 January 2027 for for-profit entities and applies to annual reporting periods beginning on or after 1 January 2028 for not-for-profit entities. The delayed date of one year will allow the AASB to consult with stakeholders and consider potential modifications for application by not-for-profit public sector entities.

8.11. Subsequent events

No significant events have occurred since 30 June 2025 that will have a material impact on the information disclosed in the financial statements.