Annual Report 2017-18 | Monash Health

Notes to the Financial Statements
Monash Health Annual Report 2017/2018
Note 6.3: Commitments for expenditure
a) Commitments other than public private partnerships
Consolidated Consolidated
2018 2017
$'000
$'000
Capital Expenditure Commitments
Payable:
Plant and equipment 29,987 37,728
Total Capital Expenditure Commitments 29,987 37,728
Operating Commitments
Payable:
Contracted services 100,074 108,854
Total Operating Commitments 100,074 108,854
Lease Commitments
Commitments in relation to leases contracted for at the
reporting date - cancellable 33,814 36,180
Total Lease Commitments 33,814 36,180
Total Commitments other than Public Private
Partnerships 163,875 182,762
All amounts shown in the commitments note are nominal amounts inclusive of GST.
Commitments for future expenditure include operating and capital commitments arising from contracts. These
commitments are disclosed by way of a note at their nominal value and are inclusive of the GST payable. In
addition, 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 on the balance sheet.
Service concession arrangements
Monash Health sometimes enters into certain arrangement with private sector participants to design and
construct or upgrade assets used to provide public services. These arrangements are typically complex and
usually include the provision of operational and maintenance services for a specified period of time. These
arrangements are often referred to as either public private partnerships or service concession arrangements
(SCAs). The State of Victoria is obliged to fund Quarterly Service Payments due under the Project Agreement
for the life of that Agreement, a period of up to 25 years. Monash Health expects that it will continue to
operate and control Casey Hospital at the expiry of the lease. The building has been componentised into 4
major asset classes, of which their estimated useful lives are between 22 to 70 years.
These SCAs usually take one of two main forms. In the more common form, Monash Health pays the operator
over the period of the arrangement, subject to specified performance criteria being met. At the date of
commitment to the principal provisions of the arrangement, these estimated periodic payments are allocated
between a component related to the design and construction or upgrading of the asset and components
related to the ongoing operation and maintenance of the asset. The former component is accounted for as a
lease payment in accordance with the lease policy (See Note 6.1). The remaining components are accounted
for as commitments for operating costs which are expensed in the comprehensive operating statement as
they are incurred.
116 Monash Health Annual Report 2017-18