North East Link State Tolling Corporation Annual Report 2021-2022

The North East Link State Tolling Corporation is a public entity but does not represent the Crown. Its principal address is:

Level 10, 80 Collins Street, Melbourne VIC 3000

ABN: 86 585 150 837

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 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 STC.

Additions to net assets which 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 the preparation of these financial statements are disclosed in the notes where amounts affected by those judgements are disclosed. 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 the estimate is revised and also in future periods that are affected by the revision.

These financial statements cover STC as an individual reporting entity.

All amounts in the financial statements have been rounded to the nearest $1,000 unless otherwise stated.

Going Concern

The financial statements have been prepared on a going concern basis, which assumes the continuity of normal operations, in particular over the next 12 months from the financial statements release date.

The Central Package of the North East Link project will be delivered as an availability Public-Private Partnership (PPP) under an Incentivised Target Cost (ITC) model with STC as the asset owner, assuming all payment obligations under the contract, and the North East Link Program (NELP), a division of the Major Transport Infrastructure Authority, acting as STC’s agent being the delivery agency.

As part of the arrangement, the Treasurer provided a guarantee to the proponent of the project to cover the risk of additional funding requirements during the construction and operation and maintenance phases of the project.

Compliance information

These general-purpose financial statements have been prepared in accordance with the Financial Management Act 1994 (FMA) and applicable Australian Accounting Standards (AASs), which include Interpretations, issued by the Australian Accounting Standards Board (AASB). In particular, they are presented in a manner consistent with the requirements of AASB 1049 Whole of Government and General Government Sector Financial Reporting. Accounting policies selected and applied in these financial statements ensure that the resulting financial information satisfies the concepts of relevance and reliability, thereby ensuring that the substance of the underlying transactions or other events is reported.

This section provides an account of the expenses incurred by STC in delivering services and outputs.

2.1 Expenses incurred in delivery of services

2022

2.2 Employee benefits in the comprehensive operating statement

2022

Employee expenses include all costs related to employment including wages and salaries, fringe benefits tax, leave entitlements, termination payments and WorkCover premiums. These costs relate to employees who have been seconded to STC, but are employed by the Department of Transport.

The amount recognised in the comprehensive operating statement in relation to superannuation is employer contributions for members of both defined benefit and defined contribution superannuation plans that are paid or payable during the reporting period. STC does not recognise any defined benefit liabilities because it has no legal or constructive obligation to pay future benefits relating 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 Victorian Government as the sponsoring employer).

2.3 Other operating expenses

2022

Other operating expenses generally represent the day-to-day running costs incurred in normal operations. Supplies and services are recognised as an expense in the reporting period in which they are incurred. Professional services relate to those services provided by professional service firms for the period to 30 June 2022.

STC controls infrastructure and other investments that are utilised in fulfilling its objectives and conducting its activities. They represent the resources that have been entrusted to STC for delivery of those outputs.

3.1 Property, plant, and equipment

2022

A service concession asset (SCA) under AASB 1059 Service Concession Assets: Grantors (AASB 1059) is an asset other than goodwill, to which a private operator has right of access to provide public services on behalf of the Grantor (STC) in a service concession arrangement.

Initial recognition

STC initially recognises a SCA at the commencement of construction at current replacement cost (CRC), calculated in accordance with the 'cost approach' to fair value measurement. The CRC reflects the amount that would be required currently to replace the service capacity of the asset. The assets recognised at the commencement of construction are reported as assets under construction until the project reaches commercial acceptance.

The CRC for the SCA includes the costs that are directly attributable to the design and construction of the SCA by the operator. AASB 116 Property, Plant and Equipment (AASB 116) is applied, which provides guidance on the elements of costs including: the purchase price costs directly attributable to bringing the asset to its location or condition necessary. This same principle applies to existing assets owned by STC and transferred to a SCA under a new or an existing service concession arrangement, with any difference between the fair value of the asset using current replacement cost and the carrying value of the asset being accounted for as if it were a revaluation - that is, taken to the asset revaluation reserve).

The financing cost to STC implied in the service concession arrangement contract during the construction of an SCA is used as a proxy of the financing cost incurred by the private sector constructing the asset. This financing cost is capitalized as part of the asset.

Subsequent measurement

Once the asset is operational, STC depreciates the SCA over its useful life using the principles in AASB 116. SCAs are subject to revaluation as required by Financial Reporting Direction 1031 Non-Financial Physical Assets (FRD 1031).

Impairment

Non-financial assets, including items of property, plant and equipment, are tested for impairment whenever there is an indication that the asset may be impaired.

3.1.1 Reconciliation of movements in carrying amount of property, plant, and equipment

2022

Introduction

This section sets out those assets and liabilities that arose from STC’s operations.

4.1 Accounts receivable

2022

Contractual receivables are classified as financial instruments and categorised as ‘financial assets at amortised cost’. They are initially recognised at fair value plus any directly attributable transaction costs. STC holds the contractual receivables with the objective to collect the contractual cash flows and therefore subsequently measured at amortised cost using the effective interest method, less any impairment.

Statutory receivables do not arise from contracts and are recognised and measured similarly to contractual receivables (except for impairment) but are not classified as financial instruments for disclosure purposes. STC applies AASB 9 for initial measurement of the statutory receivables and, as a result, statutory receivables are initially recognised at fair value plus any directly attributable transaction cost. Amounts recognised from the Victorian Government represent funding for all commitments incurred and are drawn from the Consolidated Fund as the commitments fall due.

4.2 Payables

2022

Contractual payables: Classified as financial instruments and measured at amortised cost. Accounts payable represent liabilities for goods and services provided to STC prior to the end of the financial year that are unpaid.

Payables for supplies and services have an average credit period of 30 days. No interest is charged on payables for the first 30 days from the date of the invoice. Thereafter, interest may be calculated as two per cent on the outstanding balance per annum.

The terms and conditions of amounts payable to the government and agencies vary according to the particular agreements and as they are not legislative payables, they are not classified as financial instruments.

4.3 Accrued expenses

2022

Accruals and other provisions are recognised when STC 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 reporting date, considering the risks and uncertainties surrounding the obligation.

Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows, using a discount rate that reflects the time, value of money and risks specific to the provision.

Introduction

This section provides information on the sources of finance utilised by STC during its operations, along with interest expenses (the cost of borrowings) and other information related to financing activities of STC.

This section includes disclosures of balances that are financial instruments (such as borrowings and cash balances). Notes 5.1 and 5.3 provide additional, specific financial instrument disclosures.

5.1 Borrowings

The State loan is provided by the Minister for Transport Infrastructure for and on behalf of the Crown in right of the State of Victoria and has a term of 39 years following Financial Close of the Central Package on 27 October 2021. The loan is subject to a fixed interest of 4.25 per cent.

Borrowings are classified as financial instruments. Interest bearing liabilities are recognised at amortised cost unless STC elects to irrevocably designate them at fair value through profit or loss at initial recognition. The election depends on the nature and purpose of the interest-bearing liabilities.

All interest-bearing borrowings are initially recognised at the fair value of the consideration received less directly attributable transaction costs and subsequently measured at amortised cost using the effective interest method.

For financial liabilities designated at fair value through net result, all transaction costs are expensed as incurred. They are subsequently measured at fair value with changes in fair value relating to STC’s own credit risk recognised in other comprehensive income and the remaining amount of changes in fair value recognised in net result. Amounts in other comprehensive income related to credit risk are not subject to recycling in profit and loss but are transferred to retained earnings when realised.

The service concession financial liability relates to the service concession arrangements recognised applying

AASB 1059. Interest is charged on the liability and capitalised within Road Assets. The liability is reduced over the term of the arrangement through cash payments to the operator.

Defaults and breaches: During the current period, there were no defaults and breaches of any of the loans.

Service concession arrangement liability

As outlined in Note 3.1 Service concession assets, the accumulation of costs incurred during construction results in a progressive build-up of the service concession asset (SCA). A corresponding liability is progressively recognised in line with the fair value of the SCA. The nature of the liability and the subsequent accounting depends on the consideration exchanged in reference to the contract arrangements between STC (on behalf of the Victorian Government) and the operator. An exception to this principle occurs when the grantor reclassifies an existing asset to a SCA.

Initial recognition

STC recognises a service concession liability (SCL) commensurate with the SCA, adjusted by the amount of any other consideration from STC to the operator, or from the operator to STC. Therefore, any Victorian Government contributions made prior to the recognition of the liability will reduce this amount.

However, when STC reclassifies an existing asset as a SCA, no liability is recognised unless additional consideration is provided by the operator. Instead, STC will recognise a SCA asset and a corresponding SCL for the amounts spent on upgrade/expansion work.

Subsequent measurement

After initial recognition, STC will determine if the liability represents a Financial liability, where STC has a contractual obligation to pay the operator for providing the SCA, it is measured as a liability in accordance with AASB 9 Financial Instruments. The liability will be increased by interest charges, based on the interest rate implicit in the arrangement. Where the interest rate is not specified in the arrangement, the prevailing market rate of interest for a similar instrument with similar credit ratings is used. Refer to Note 5.1 Borrowings for the amounts disclosed as financial liability.

Subsequently, the liability will also be reduced by any payments made by the Victorian Government to the operator if required by the contract.

STC has determined that the service concession liability represents a financial liability.

5.1.1 Maturity analysis of borrowings

2022

5.1.2 Interest capitalised

2022

‘Interest capitalised’ includes costs incurred in connection with the borrowing of funds and includes interest on the state loan and the service concession financial liability.

Interest capitalised is recognised in the period in which it is incurred and is capitalised to the service concession asset - road assets.

5.2 Cash flow information and balances

Cash and deposits, including cash equivalents, comprise cash on hand and cash at bank, deposits at call and those highly liquid investments with an original maturity of three months or less that are held for the purpose of meeting short- term cash commitments rather than for investment purposes, and are readily convertible to known amounts of cash and are subject to an insignificant risk of changes in value.

For cash flow statement presentation purposes, cash and cash equivalents include bank overdrafts, which are included as current borrowings on the balance sheet, as indicated in the reconciliation below.

The non-cash movements relate to payments made by the Department of Transport on behalf STC which were subsequently recharged against STC’s loan balance.

5.3 Commitments for expenditure

Commitments for future expenditure include operating and capital commitments arising from contracts. These commitments are recorded below at their nominal value and inclusive of GST. Where it is considered appropriate and provides additional relevant information to users, the net present values of significant individual projects are stated. These future expenditures cease to be disclosed as commitments once the related liabilities are recognised in the balance sheet.

Service concession arrangements

STC has entered into arrangements with an operator which give the operator the rights to provide public services to users for a specified ‘concession period’ using the relevant service concession assets (SCA).

The operator, based on the terms and conditions specified in the agreements, is:

• responsible for the design, construction, partial financing, operation and maintenance of the SCA during the concession period.
• subject to Key Performance Indicators (KPIs) and/or annual works programs which ensure a level of service delivery for users. The operator has the opportunity to rectify any performance issues where relevant.

STC has the contractual obligation to provide the operator access to the SCA for the performance of the required services.

STC has control over the services the operator provides with the SCA over the concession period. It is responsible for monitoring that the services are performed to specified standards - frequency, quality, etc. - and other contractual obligations are met, and will intervene as required to ensure safety for users of the assets as appropriate and to protect public interest.

At the end of the concession period, the rights and obligations provided to the operator during the concession period cease, and the SCA will be returned to STC.

Terminations are subject to standard commercial practices or under specified circumstances.

STC has recognised these arrangements in accordance with AASB 1059 Service Concession Arrangements: Grantors (AASB 1059).

AASB 1059 Service Concession Arrangements: Grantors

A financial liability is recognised where STC has a contractual obligation to pay the operator under the service concession arrangement for the provision of SCAs and/or services. It is recognised as a borrowing (Note 5.1). The liability is increased by interest charges (Note 5.1.2), based on the interest rate implicit in the arrangement. The liability is reduced by any payments made by STC to the operator as required by the contract. These payments take the form of capital contributions, usually during the construction phase of the SCA and other periodic payments during the operation phase of the SCA (referred to as ‘Service Payments’). The periodic payments compensate the operator for delivery of services that are subject to the operator meeting KPIs. Service payments may be quarterly (QSP), or other periodic intervals.

These payments comprise a capital component associated with the design, construction and financing of the service concession asset, and components relating to ongoing operation, maintenance and other costs. Payments may be impacted by failure to meet KPIs.

An exception to this principle occurs when an existing asset of STC is reclassified as a result of becoming part of a service concession arrangement. When this occurs, the asset is revalued to CRC with a corresponding adjustment to the asset revaluation reserve. A liability is not recognised unless additional consideration is provided by the operator. If the assets included in an SCA are upgraded or expanded, STC recognises a corresponding liability (either financial or Grant of a Right to the Operator (GORTO)) for the amounts spent on the upgrade/expansion work.

After initial recognition, SCAs are measured by applying the revaluation model for STC’s property, plant and equipment (Note 3.1).

The following material SCA’s existed at 30 June 2022. Unless noted in the arrangement specific disclosures below, no material changes have occurred during the period:

Note:

i) The present values of the liability for commissioned PPPs are recognised on the balance sheet (not disclosed as commitments).

ii) The discounted values of the 'expected liability at commission' for uncommissioned arrangements have been discounted to the expected dates of commissioning to reflect the liability balance at practical completion of the projects.

iii) Other commitments relate to operating and maintenance and lifecycle costs have been discounted to 30 June of the respective financial years.

iv) From the 2022 financial year, STC has applied the STC borrowing rate in the present value calculation of other commitments for all service concession arrangements.

v) Commitments nominal value includes the capital portion of the service concession liability that has been reported on the balance sheet.

Arrangement specific details

Operator: Spark

Concession period: 25 years Operational funding: MSP

On 28 October 2021, the Victorian Government and STC entered into a PPP with Spark North East Link Pty Ltd (Project Co or Spark) to deliver the North East Link Central Package (Project).

The Project was procured and is being delivered as an ‘availability-based’ PPP with an Incentivised Target Cost (ITC) regime that applies in respect of costs incurred during the design and construction phase of the Project.

STC’s monthly payments to the operator for the delivery of operating and maintenance services are subject to abatement in accordance with the terms and conditions of the Project Deed.

Introduction

STC is exposed to risk from its activities and outside factors. In addition, it is often necessary to make judgements and estimates associated with recognition and measurement of items in the financial statements. This section sets out financial instrument specific information, (including exposures to financial risks) as well as those items that are contingent in nature or require a higher level of judgement to be applied, which for STC related mainly to fair value determination.

6.1 Financial instruments specific disclosures

Introduction

Financial instruments arise out of contractual agreements that give rise to a financial asset of one entity and a financial liability or equity instrument of another entity. Due to the nature of STC’s activities, certain financial assets and financial liabilities arise under statute rather than a contract (for example taxes, fines, and penalties). Such assets and liabilities do not meet the definition of financial instruments in AASB 132 Financial Instruments: Presentation.

Categories of financial assets

Financial assets at amortised cost

Financial assets are measured at amortised cost if both of the following criteria are met, and the assets are not

designated as fair value through net result:

• the assets are held by STC to collect the contractual cash flows; and
• the assets’ contractual terms give rise to cash flows that are solely payments of principal and interest.

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.

STC recognises the following assets in this category:

• receivables (excluding statutory receivables); and
• cash and deposits

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. Subsequent to initial recognition, these financial instruments are measured at amortised cost with any difference between the initial recognised amount and the redemption value being recognised in profit and loss over the period of the interest-bearing liability, using the effective interest rate method. STC recognises the following liabilities in this category:

• payables; and
• borrowings

Financial risk management objectives and policies

As a whole, STC’s financial risk management program seeks to manage these risks and the associated volatility of its financial performance.

Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement, and the basis on which income and expenses are recognised, with respect to each class of financial asset, financial liability, and equity instrument above are disclosed in Note 1 to the financial statements.

The main purpose in holding financial instruments is to prudentially manage STC’s financial risks within the government policy parameters.

STC’s main financial risks include credit risk, liquidity risk and interest rate risk. STC manages these financial risks in accordance with its Treasury Management Policy.

STC uses different methods to measure and manage the different risks to which it is exposed. Primary responsibility for the identification and management of financial risks rests with the Acting Managing Director of STC.

Financial instruments: Credit risk

Credit risk refers to the possibility that a borrower will default on its financial obligations as and when they fall due. Credit risk is measured at fair value and is monitored on a regular basis. STC is not exposed to credit risk as it has no borrowers that it has provided loans to.

Financial instruments: Liquidity risk

Liquidity risk arises from being unable to meet financial obligations as they fall due. STC operates under the Government fair payments policy of settling financial obligations within 30 days and in the event of a dispute, making payments within 30 days from the date of resolution.

STC’s exposure to liquidity risk is deemed insignificant based on current assessment of risk.

Financial instruments: Market risk

STC’s exposures to market risk is primarily through interest rate risk. Objectives, policies, and processes used to manage each of these risks are disclosed below.

Interest rate risk

Fair value interest rate risk is the risk that the fair value of a financial instrument will fluctuate because of changes in market interest rates. STC does not hold any interest-bearing financial instruments that are measured at fair value, and therefore has no exposure to fair value interest rate risk.

The State loan and the service concession financial liability are both subject to fixed interest rate. Therefore, STC’s exposure to interest rate risk is minimal.

Interest rate exposure of financial instruments

Only the liabilities with a variable rate are subject to the sensitivity. As both liabilities are subject to a fixed rate, no impact has been calculated in the sensitivity analysis.

6.2 Fair value determination

This section sets out information on how STC determined fair value for financial reporting purposes. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

STC has determined there are no assets and liabilities at fair value.

How this section is structured

For those assets and liabilities for which fair values are determined, the following disclosures are provided:

• carrying amount and the fair value (which would be the same for those assets measured at fair value)
• which level of the fair value hierarchy was used to determine the fair value in respect of those assets and liabilities subject to fair value determination using Level 3 inputs
• a reconciliation of the movements in fair values from the beginning of the year to the end
• details of significant unobservable inputs used in the fair value determination.

This section is divided between disclosures in connection with fair value determination for financial instruments and non- financial physical assets.

Fair value determination of financial assets and liabilities

The fair values and net fair values of financial assets and liabilities are determined as follows:

• Level 1 – the fair value of financial instruments with standard terms and conditions and traded in active liquid markets are determined with reference to quoted market prices
• Level 2 – the fair value is determined using inputs other than quoted prices that are observable for the financial asset or liability, either directly or indirectly
• Level 3 – the fair value is determined in accordance with generally accepted pricing models based on discounted cash flow analysis using unobservable market inputs.

STC currently holds some financial instruments that are recorded in the financial statements where the carrying amounts approximate to fair value, due to their short-term nature or with the expectation that they will be paid in full by the end of the 2022-23 reporting period.

These financial instruments include:

Where the fair value of the financial instruments is different from the carrying amounts, the following information has been included to disclose the difference.

7.1. Contingent assets and contingent liabilities

Contingent assets and contingent liabilities are not recognised in the balance sheet but are disclosed and, if quantifiable, are measured at nominal value.

Contingent assets and liabilities are presented inclusive of GST receivable or payable respectively. STC held no contingent assets or contingent liabilities as of 30 June 2022.

Introduction

This section includes additional material disclosures required by accounting standards or otherwise, for the understanding of this financial report

8.1 Equity Disclosures

8.2 Responsible Persons

In accordance with the Ministerial Directions issued by the Assistant Treasurer under the Financial Management Act 1994 (FMA), the following disclosures are made regarding responsible persons for the reporting period.

Names

The persons who held the positions of Ministers and Accountable Officers in STC are as follows:

8.3 Remuneration

The Acting Managing Director performed her duties on a secondment basis from the Department of Treasury and Finance where her salary has been reported as part of the employee related disclosures. Remuneration received or receivable by the Acting Managing Director in connection with the management of STC during the reporting period was nil for the 16 months ended 30 June 2022.

Amounts relating to ministers are reported in the financial statements of the Department of Parliamentary Services. For information regarding related party transactions of ministers, the register of members’ interests is available from: parliament.vic.gov.au/publications/register-of-interests.

Remuneration of executives

During the period 1 March 2021 ending 30 June 2022, there were no other executive officers, other than Ministers and the Acting Managing Director.

8.4 Related parties

STC is a wholly owned and controlled entity of the Victorian Government. Related parties of STC 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 public sector entities that are controlled and consolidated into 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

During the financial period, the following aggregate transactions were undertaken, and balances held with other Victorian Government controlled entities. These transactions were undertaken in the ordinary course of operations.

Key management personnel of STC include the named responsible persons members of STC’s Board, the Acting Managing Director, which includes:

Remuneration of key management personnel

No remuneration was provided to key management personnel . The Minister’s remuneration and allowances is set by the Parliamentary Salaries and Superannuation Act 1968 and is reported within STC of Parliamentary Services’ Financial Report. The Acting Managing Director is employed by Department of Treasury and Finance and performs her responsibilities in this role on a secondment basis. The relevant salaries and benefits of the Acting Managing Director have been disclosed in the annual reports of Department of Treasury and Finance.

Transactions and balances with key management personnel and other related parties

Given the breadth and depth of the Victorian Government activities, related parties transact with the Victorian public sector in a manner consistent with other members of the public e.g., stamp duty and other government fees and charges. Further employment of processes within the Victorian public sector occurs on terms and conditions consistent with the Public Administration Act 2004 and Codes of Conduct and Standards issued by the Victorian Public Sector Commission. Procurement processes occur on terms and conditions consistent with the Victorian Government Purchasing Board requirements.

Outside of normal citizen type transactions with STC, there were no related party transactions that involved key management personnel, their close family members, and their personal business interests. No provision has been required, nor any expense recognised, for impairment of receivables from related parties.

No provision has been required, nor any expense recognised, for impairment of receivables from related parties.

8.5 Remuneration of auditors

8.6 Subsequent events

The policy in connection with recognising subsequent events that are for events that occur between the end of the reporting period and the date when the financial statements are authorised for issue is as follows:

• adjustments are made to amounts recognised in the financial statements where those events provide information about conditions that existed at the reporting date
• disclosure is made where the events relate to conditions that arose after the end of the reporting period that are of material interest.

No event has arisen since 30 June 2022 that have significantly affected or may significantly affect the operations, or results, or state of affairs of STC.

8.7 Other accounting policies

Contributions by owners

Consistent with the requirements of 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 STC.

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 have also been designated as contributions by owners.

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.

Australian Accounting Standards issued that are not yet effective

Certain new and revised accounting standards have been issued but are not effective for the 2022-2023 reporting period. These accounting standards have not been applied to the Model Financial Statements. The Victorian Government is reviewing its existing policies and assessing the potential implications of these accounting standards which includes:

AASB 2020-1 Amendments to Australian Accounting Standards – Classification of Liabilities as Current or Non-Current

This Standard amends AASB 101 to clarify requirements for the presentation of liabilities in the statement of financial position as current or non-current. It initially applied to annual reporting periods beginning on or after 1 January 2022 with earlier application permitted however the AASB has recently issued AASB 2020-6 Amendments to Australian Accounting Standards – Classification of Liabilities as Current or Non-current – Deferral of Effective Date to defer the application by one year to periods beginning on or after 1 January 2023. STC will not early adopt the Standard.

STC is in the process of analysing the impacts of these Standards. However, it is not anticipated to have a material impact.

Several other amending standards and AASB interpretations have been issued that apply to future reporting periods but are considered to have limited impact on STC’s reporting.

AASB 17 Insurance Contracts.

AASB 2020-3 Amendments to Australian Accounting Standards – Annual Improvements 2018-2020 and Other Amendments.

AASB 2021-2 Amendments to Australian Accounting Standards – Disclosure of Accounting Policies and Definitions of Accounting Estimates.

AASB 2021-5 Amendments to Australian Accounting Standards – Deferred Tax related to Assets and Liabilities arising from a Single Transaction.

AASB 2021-6 Amendments to Australian Accounting Standards – Disclosure of Accounting Policies: Tier 2 and Other Australian Accounting Standards.

AASB 2021-7 Amendments to Australian Accounting Standards – Effective Date of Amendments to AASB 10 and AASB 128 and Editorial Corrections.

Ex-gratia expenses

Ex gratia expenses are the voluntary payment of money or other non-monetary benefit - for example, a write off - that is not made either to acquire goods, services, or other benefits for the entity or to meet a legal liability, or to settle or resolve a possible legal liability or claim against the entity. STC had no ex-gratia expenses in the current 16-month period.