Stephens, David: What a difference seven months makes: value of War Memorial equity in October Budget $50m less than in March

David Stephens*

‘What a difference seven months makes: value of War Memorial equity in October Budget $50m less than in March’, Honest History, 28 October 2022 updated

Update 3 May 2023: FOI claim on War Memorial delivers heavily redacted version of Memorial’s briefing notes for this Estimates hearing (Ref No. 2022-23-08). Very little information provided but has hints that the $50m referred to below was shuffled into various votes.

Update 8 December 2022: Report to Public Works Committee has heavy hints that Memorial may need to ask for more money – but fudges the question of how the Memorial absorbed the previous $50m.

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Honest History/Heritage Guardians has taken a close interest in the financing of the big holes being dug in Canberra suburb, Campbell, to be eventually filled with 2.5 hectares of new space for the Australian War Memorial. Our campaign diary has followed the twists and turns over three years. Our post in May wondered about the disclosures in the March Budget. Our later three part investigation showed that $50m of extra project funding was disguised as an equity injection and kept secret for nearly four months.

Now that we have a second Budget, we can compare some figures. The short story: the Memorial’s ‘total equity’ is shown as $50m less in the October Budget Papers than in the March Budget Papers.

The longer story follows. Capital expenditure on the War Memorial project is covered by Appropriation Bill No. 2 in successive Budgets. The Budget Papers for the March 2022-23 (Morrison) Budget say that the Memorial’s ‘total equity of $1.85 billion in 2022-23 is an increase of $170 million from 2021-22, represented by the increase in equity injections to fund capital expenditure’ (DVA, Portfolio Budget Statements March 2022-23, para 3.1.2, ‘Explanatory notes and analysis of budgeted financial statements’).

By comparison with the above, the Budget Papers for the October (Albanese) Budget 2022-23 say the Memorial’s ‘total equity of $1.8 billion in 2022-23 is an increase of $121 million from 2021-22, represented by the increase in equity injections to fund capital expenditure’ (DVA, Portfolio Budget Statements October 2022-23, para 3.1.2, ‘Explanatory notes and analysis of budgeted financial statements’). So, comparing October with March, the increase in equity since 2021-22 is $49m less in the October Papers than in the March Papers and total equity is $50m less.

Table 3.3 ‘Departmental statement of changes in equity – summary of movement (Budget year 2022-23)’ allows a more detailed comparison. This Table in the March Budget Papers shows ‘Contributions by owners: Equity injection: $181,569,000. This Table in the October Budget Papers shows ‘Contributions by owners: Equity injection $131,563,000. The difference between the two equity injection figures is $50,006,000.

Putting all this another way, given that the Memorial claims it got an extra $50m in project funding from the then government in March this year, the official October Budget paperwork no longer tries to hide this $50m as equity, in the way disclosed in our earlier post. In that post, the second of our three-part series, we quoted a letter to us from the Minister’s Chief of Staff as follows:

Honest History/Heritage Guardians letter of 4 August

1. Is it the case that the March 2022 Project funding increase of $50m is included in the ‘increase in equity injections to fund capital expenditure’ mentioned in DVA, Portfolio Budget Statements 2022-23, para 3.1.2, ‘Explanatory notes and analysis of budgeted financial statements’?

Minister’s CoS reply of 5 September

1. Yes, the additional $50 million provided to the Memorial was included as an equity injection in the overall Department of Veterans’ Affairs budget for 2022-23.

The October Budget Papers seem to have reversed that ploy of March: the equity injection has been reduced by $50m. Whereabouts in the October Budget Papers the $50m now appears (is hidden?), we have yet to establish; perhaps the Memorial can help. (As always, we will print without amendment any comment that the Memorial cares to provide. No comments have been forthcoming on our earlier work.)

[Note: Entities pay for capital works through retained earnings, debt finance (borrowings), and equity finance (money sourced from within the entity, including in this case equity injections from government, the ‘owner’ of the entity, the War Memorial). More.]