about us - queensland building and construction commission · 2014-06-03 · helping queenslanders...

63

Upload: others

Post on 02-Feb-2020

1 views

Category:

Documents


0 download

TRANSCRIPT

Page 1: About us - Queensland Building and Construction Commission · 2014-06-03 · Helping Queenslanders Build Better About usAbout us ABOUT BSA BSA is a statutory authority, and is part
Page 2: About us - Queensland Building and Construction Commission · 2014-06-03 · Helping Queenslanders Build Better About usAbout us ABOUT BSA BSA is a statutory authority, and is part
Page 3: About us - Queensland Building and Construction Commission · 2014-06-03 · Helping Queenslanders Build Better About usAbout us ABOUT BSA BSA is a statutory authority, and is part

Helping Queenslanders Build Better �

About usAbout us

ABOUT BSA

BSA is a statutory authority, and is part of the portfolio of the Minister for Public Works, Housing and Racing the Honourable Robert Schwarten. BSA was established under the Queensland Building Services Authority Act 1991, to regulate the building industry.

Our Charter is to regulate the building industry by: licensing builders, trade contractors, designers and certifiers; educating consumers about their rights and obligations; making licensees aware of their legal rights and responsibilities; handling disputes fairly and equitably; protecting consumers against loss through home warranty insurance; implementing and enforcing legislative reforms; and where necessary prosecuting persons not complying with the law.

In 2004/05, BSA had 2�0.8 full time equivalent positions. Our income was $44.802M and our operating expenditure was $�5.722M. We provided our services to customers across Queensland through our Brisbane head office and seven regional offices.

COMMUNICATION OBJECTIVE

BSA’s communication objective is to report performance, financial management and progress towards achieving its vision for the building industry, to the Minister for Public Works, Housing and Racing, Parliament, builders, trade contractors and other members of the building industry including consumers, community organisations and industry associations.

Our Vision“Add value to the building industry and effectively protect consumers.”

Our Mission“To improve standards, equity and confidence in the building industry.”

Our Values“To be: respected and trusted; accountable for our actions; innovative and continually improving; and consultative.”

BSA Performance 2

Value for Money �

Chairman’s Report 4

General Manager’s Report 5

Corporate Governance 6

Customers 17

Regulation 2�

People 29

Financial Overview �6

Financial Statements 40

Index 59

CONTENTS

Page 4: About us - Queensland Building and Construction Commission · 2014-06-03 · Helping Queenslanders Build Better About usAbout us ABOUT BSA BSA is a statutory authority, and is part

Helping Queenslanders Build Better 4

PerformanceCritical area Targets 2004/05 Achievements 2004/05

Corporate GovernanceMaintain a corporate governance model which is focused on accountability and valid, effective, efficient and consistent decisions.

Full compliance with statutory requirements.

Unqualified audit report.Compliant with all statutory requirements.

Customer RelationshipsCreate and deliver customer value to achieve and sustain excellent service delivery. Inform and educate the public and licensees on the building process and their responsibilities.

Positive movement in the continuums for all key stakeholders.

Licensee commitment 4.45 (200�/04: 4.44).Homeowner commitment 4.40 (200�/04: 4.�6).Industry commitment 4.75 (200�/04: 4.55).

RegulationIn consultation with stakeholders review, design and implement legislation and policy.

Legislative and Policy amendments implemented in accordance with timetable.

Implemented new rectification of building work policy.

StaffCreate an innovative, team oriented environment where staff are developed, informed, involved and are recognised and rewarded.

75% staff commitment and engagement.

Staff turnover <6%.

Employee Survey Index average 4.51.(200�/04:4.58).

Staff turnover 7.1% (200�/04: 7.7%).

Financial Viability and Effective SystemsManage the General Fund in accordance with the financial management plan.Manage the Insurance Fund in accordance with prudential, actuarial and APRA standards.Build on our business systems to ensure infrastructure is contemporary, cost effective and efficient.Systems support the role and direction of BSA.

Improvement in net asset position of General Fund of $0.4M.

Meet APRA Prudential Standards: liabilities based upon a 75% probability factor.

Net asset position of Insurance Fund of >$5M.

Information systems availability (98%).

Customer satisfaction continuum measure “Easy to get access to BSA and its services” 5.47.

Net asset improvement General Fund $0.798M.

APRA Prudential Standards met - 75% probability factor provided.

Net asset position of Insurance Fund $16.191M.

Information systems availability (98.9%).

Customer satisfaction continuum measure “Easy to get access to BSA and its services” 5.55.

BSA Performance

Page 5: About us - Queensland Building and Construction Commission · 2014-06-03 · Helping Queenslanders Build Better About usAbout us ABOUT BSA BSA is a statutory authority, and is part

Helping Queenslanders Build Better 5

LICENSING

BSA’s annual renewal fees are the lowest in Australia. BSA’s extensive range of technical and non-technical services provides excellent value for money for Queensland contractors.

Comparison of licence fees in financial category SC2*

* SC2 – self certification – builders & trade contractors with allowable annual turnover of $250 000.** Victoria charge $90 per year for each additional licence class held and a levy of 0.128% on building contracts. Queensland charges one fee irrespective of the number of licence classes held.

INSURANCE

Despite the increase in the number of underwriters providing home warranty insurance interstate and a return to “competitive” premiums, Queenslanders continued to enjoy cost effective home warranty premiums.

The range of interstate figures provided is across all licence categories interstate. Rates are effective 1 July 2005.

Premium Comparison with interstate

COMPLAINTS

The allocation of additional resources and complexity of some investigations resulted in the average cost of resolving a complaint increasing to $1 041 (2003/04: $978).

Value Annual

Licence FeeQLD*$225

VIC**$180

WA$255

NSW$��0

SA$�41

ACT$�6�

TAS$495

Contract Value$

Qld Premium$

Interstate Premium Range $

20 000 145 561 - 69�

50 000 �62 651 - 69�

100 000 725 808 - 904

175 000 1 269 1 028 - 1 10�

200 000 1 450 1 028 - 1 102

250 000 1 450 1 19� - 1 270

500 000 1 450 1 689 - 1 96�

750 000 1 450 2 095 - 2 194

1 000 000 1 450 2 �10 - 2 456

Higher values 1 450 POA

Value for money

Page 6: About us - Queensland Building and Construction Commission · 2014-06-03 · Helping Queenslanders Build Better About usAbout us ABOUT BSA BSA is a statutory authority, and is part

Helping Queenslanders Build Better 6

ChairmanThe Board is confident that the system will directly address issues of non-payment and is already making a significant difference to the working and payment culture of the industry.

While the system is still in its infancy and is available to be used by any party carrying out construction work or the supplying of related goods and services, the Board is pleased to note that a number of small subcontractors have already successfully used the adjudication process to obtain payment.

The buoyant nature of the Queensland building industry was the key driver in recording a net surplus of $9.080M (General Fund $0.798M and Insurance Fund $8.282M). These results were achieved through continued high levels of activity in the Queensland building industry and higher than forecast licence and insurance premium income. Expenses were contained within budget.

A major review of BSA’s investment strategy resulted in cash investments being placed in a higher performing fund and the Insurance Fund’s investments being balanced between cash and managed funds.

The Board continued its monitoring of BSA’s home warranty insurance scheme particularly the financial position of the Insurance Fund, insurance premium structure, reinsurance, home warranty policy and processes. Such monitoring of the scheme will ensure its status as the benchmark for home warranty insurance in Australia.

We have continued to execute strategies, deliver legislative reforms that hold licensees accountable as well as strengthen BSA’s financial position. Our successes and progress have come about through the commitment of fellow directors and BSA staff. Congratulations to everyone for the outcomes we have achieved.

Improved industry accountability and consumer confidence will ensure 2005/06 is a year of achievement in helping Queenslanders build better.

Garry RossowChairman

Six years ago, it was apparent that changes and long term agenda setting were required to ensure the Board continued to add value to the Queensland building industry. In the ensuing years we’ve achieved our objectives.

The strong alignment between the Board, BSA and industry has resulted in legislative amendments and Board policies that work for the mutual benefit of industry and consumers.

On 1 September 2004 the Queensland Building Services Board (the Board) introduced a Rectification of Building Work policy designed to increase building contractor accountability for footing and slab construction and improve the relevant skills level. Under the policy the building contractor’s responsibilities include provision of information to the design engineer of all relevant information and conditions to enable site identification and investigation. The contractor must comply with the engineer’s design and the relevant Australian Standard, during and on completion of construction. State wide education awareness seminars were conducted prior to the policy’s introduction.

The Board hold the view that poor supervision is a key contributor to poor quality building work. BSA conducted a major research project which indicated 61% of seriously defective building work reported to BSA could be attributed to poor supervision. Many licensees did not understand their legal obligation to ensure work carried out under their licence is adequately supervised. The research showed the licensing requirements for supervisors, other than nominees, should be refined to ensure closer alignment with their responsibilities. Industry consultation will commence in August 2005.

In early 2004/05, BSA commenced work on a proposal to amend the Financial Requirements for Licensing. The proposed amendments focus on increasing the level of capitalisation for contractors and improving the rate of recovery in the event of a contractor’s liquidation. A discussion paper will be released in July 2005.

The year has also seen BSA progress a statutory system of rapid adjudication. The system ensures the quick resolution of payment disputes on an interim basis by an appropriately qualified and independent adjudicator.

Chairman’s Report

Page 7: About us - Queensland Building and Construction Commission · 2014-06-03 · Helping Queenslanders Build Better About usAbout us ABOUT BSA BSA is a statutory authority, and is part

Helping Queenslanders Build Better 7

GeneralGeneral Manager’sReport

Last year, I indicated my focus in 2004/05 would be on delivering initiatives designed to improve the customer experience and developing our people and systems.

To improve the customer experience, BSA has been mindful of customer needs and what constitutes value in the eyes of the customer. Our relationship building initiatives, research and positive approach to customers continues to provide positive feedback on their commitment and satisfaction with BSA services and staff.

A buoyant Queensland building industry resulted in the number of licensed contractors reaching a record 60 589 (200�/04: 56 4�8) while the average time to process an application was reduced to 29 days (200�/04:50 days). Low interest rates, an underlying housing shortage due in part to high levels of interstate migration and high levels of building activity, drove premium receipts for insurable work to $4�.1M (200�/04: $42.5M).

5 094 new complaints were received (200�/04: 5 611). The decrease in complaints reflects more stringent legislation and policy and BSA’s initiatives for educating industry as ways to achieve quality building work. Heightened consumer expectation of a satisfactory outcome, complexity of complaints and changes in building technology are growing trends facing BSA. Our focus on achieving a quality outcome resulted in 78% of complaints being satisfactorily resolved (200�/04: 7�%).

The sound performance of BSA’s home warranty insurance scheme ensured the commencement on 1 July 2004 of a new 2 year reinsurance agreement with Munich Reinsurance, Employers Reinsurance and Suncorp Metway Insurance Limited.

BSA’s compliance program continued to focus on contractors who did not possess the appropriate licence to perform building work or who display poor contractual behaviour. The program targeted licensees who displayed signs of financial distress and those performing grossly defective building work. A Minister approved audit of the Kitchen, Bathroom and Laundry sector and the Sheds, Carports and Garages sector of the industry provided an

insight into the low levels of compliance with legislation and the need to undertake a comprehensive education program of contractors on their obligations.

In line with its ongoing commitment to regulation of the certification profession, BSA increased the resources to undertake audits of certifier inspection protocols and conducted administrative and technical audits. BSA worked collaboratively with other jurisdictions to identify national inconsistencies in the legislation governing private building certification and move toward the development of a standard Australasian model.

A comprehensive research study on change revealed that BSA is effectively sustaining change through its communication, leadership, culture, continuous improvement, learning and development, customer and community relationship management strategies. BSA’s employee survey indicated staff continued to support the strategic direction of BSA and were very positive about their work environment, learning and development opportunities.

2004/05 has been a successful year with solid performances right across BSA. My thanks to all staff for their efforts and commitment to the challenges that lie ahead.

Ian JenningsGeneral Manager

Page 8: About us - Queensland Building and Construction Commission · 2014-06-03 · Helping Queenslanders Build Better About usAbout us ABOUT BSA BSA is a statutory authority, and is part

Helping Queenslanders Build Better 8

Corporate GovernanceGoal To deliver a high standard of corporate practice and conduct.

Highlights/OverviewCompliant with all statutory requirementsUnqualified audit reportLicensees and homeowners see BSA as a trustworthy, professional organisation.*

*Customer Continuum Study March 2005

Buisiness Improvement Council (BIC) members (L to R) Lewis Hayes, Kathleen Norman, Ian Jennings, Sue Crawford and Carol Leung engaged in one of BIC’s regular meetings.

Page 9: About us - Queensland Building and Construction Commission · 2014-06-03 · Helping Queenslanders Build Better About usAbout us ABOUT BSA BSA is a statutory authority, and is part

Helping Queenslanders Build Better 9

ROLES AND RESPONSIBILITIES OF THE BOARD

The Queensland Building Services Board is a non-executive Board charged with making and reviewing policies governing the administration of the Queensland Building Services Authority Act 1991, and in conjunction with the General Manager, establishing the strategic direction for BSA.

The Board is charged with providing guidance and leadership to the General Manager (refer to Role of the General Manager on page 10).

The Board is responsible for advising the Minister on issues affecting the building industry and consumers, as well as for the administration of the Act. To ensure independence, the Board’s Charter enables it to advise the Minister regarding policy matters.

The Board has eight members. The composition of the Board ensures appropriate representation of stakeholder interests, and provides a balance of skills and experience. Three members represent licensees, two members represent consumers, one member represents either the general insurance industry or accounting profession or both, one member represents the building and

construction unions and there is one public service officer (who does not have voting powers). Members are appointed by the Governor in Council upon recommendation from the Minister for Public Works, Housing and Racing for a term of no longer than three years. The Minister may give a direction to the Board or General Manager on matters relating to the administration of the Queensland Building Services Authority Act.

The Board and General Manager establish BSA’s strategic direction in consultation with stakeholders. Operational planning, for the achievement of corporate goals consistent with the strategic direction, is undertaken at the organisational level and involves staff input. BSA’s performance and achievement of target outcomes is monitored by its executive team, and reviewed by the Board at its regular meetings.

Three committees have been established to assist the Board in its role - the Finance,Audit and Risk Committee, the Policy Committee and Insurance Committee (referpage 11 for details).

Corporate Governance

Roles and Responsibilities of the Board

Page 10: About us - Queensland Building and Construction Commission · 2014-06-03 · Helping Queenslanders Build Better About usAbout us ABOUT BSA BSA is a statutory authority, and is part

Helping Queenslanders Build Better 10

Garry Rossow ChairRepresentative of licensed buildersGarry has over thirty-nine years’ experience in the building, construction, property development and subcontracting industries in Queensland and the USA. He is a Director of the Building Unions Superannuation Scheme Queensland (BUSSQ) and several private companies. He has served as Queensland Vice President of the Australian Institute of Building and is a Past President of the Queensland Master Builders Association. Garry is a Fellow of the Australian Institute of Building, an Associate of the Australian Institute of Arbitrators and Mediators, a Justice of the Peace and a licensed builder.

Jeannie AlthoffRepresentative of licensed contractors other than buildersJeannie is the Director of the licensed trade contractor company – E.A. & S. Plaster Company Pty Ltd, a Past President of the Housing Industry Association of Queensland and President of the Wall and Ceiling Association of Australia. Since 1990, she has held positions on the Housing Industry Association’s Industrial Relations and Legal Committee, Technical Committee and Training Committee.

Pauline PenderRepresentative of the accounting professionPauline is a Fellow of the Institute of Chartered Accountants in Australia. She has considerable commercial experience in providing internal financial management strategies and reporting, and is currently the General Manager, Finance and Asset Management, Department of Primary Industries and Fisheries.

Kevin ThompsonRepresentative of licensed contractors other than buildersKevin is an experienced trade contractor. He is a Past President of the Air Conditioning and Mechanical Contractors Association and a member of the Queensland Fire Protection Industry Association. He is the owner and Managing Director of the Brisbane-based company - Beyfield Pty Ltd, which trades as East Coast Mechanical Services.

Board Self-assessment

The Board conducted a self –assessment of its role and performance against BSA’s governance framework which aligns with the Australian Corporate Governance Council’s Principles of Good Corporate Governance and best practice recommendations.The assessment indicated a strong governance model was in place with particular strengths in decision making, functioning as a Board and strategy. The assessment identified consideration be placed on attracting and retaining staff to ensure the long term growth of the business.

Board Induction and Training

On appointment, Board members are provided with a kit of reference materials, that assists them in understanding the role and operations of the Board and BSA. They take part in an induction program which involves other members of the Board, the General Manager and the executive team. BSA’s executive team meet with the Board regularly to provide comprehensive overviews on emerging industry issues, program functions and performance.

Board Remuneration

The Governor in Council determines remuneration to Board members. Allowance paid to the Board members totalled $25 192. The allowance excludes travel and associated expenses incurred in the course of their duties.

Page 11: About us - Queensland Building and Construction Commission · 2014-06-03 · Helping Queenslanders Build Better About usAbout us ABOUT BSA BSA is a statutory authority, and is part

Helping Queenslanders Build Better 11

Corporate Governance

Board Self-assessment

Board Induction and Training

Board Remuneration

The Board

Tracey WilsonRepresentative of consumersTracey has over twenty-four years’ community development and business experience throughout the Northern Territory, New South Wales and Queensland. She owns and operates Working Visions which specialises in sustainable community development and capacity building projects, training, and human resource management services. Tracey is a Certified Professional of the Australian Human Resource Institute, a member of the Recruitment and Consulting Services Association and the Institute for Sustainable Regional Development.

Jim Russell Representative of consumersJim has extensive experience in the insurance industry and as a Board Director. He was a member of the Builders Registration Board of Queensland until he joined the Queensland Building Services Board in 1991. Jim was State Manager of Mercantile Mutual Life, is a past Queensland Chairman of the Life Insurance Federation of Australia, and former Chairman of the Sisters of Charity and Holy Spirit Health Service Queensland Limited.

Wally TrohearRepresentative of building and construction unionsWally has over thirty years’ experience in the building industry. He is State Secretary of the Construction, Forestry, Mining and Energy Union and Secretary of the Building Trades Group of Unions. He is Junior Vice Chair of the Australian Council of Trade Unions Queensland and Chair of the Workplace Health and Safety Construction Sector Standing Committee. Wally is also a Director of the Building Unions Superannuation Scheme Queensland (BUSSQ) and a Director of QLeave.

Max SmithPublic Service Member (non-voting)Max is the Deputy Director-General, Department of Public Works. He has extensive experience in public sector administration, including the management of commercialised business units. Max is a Civil Engineer and a Fellow of the Institution of Engineers – Australia, a Registered Practising Engineer in Queensland, a Fellow of the Australian Institute of Company Directors and the Australian Institute of Building.

Page 12: About us - Queensland Building and Construction Commission · 2014-06-03 · Helping Queenslanders Build Better About usAbout us ABOUT BSA BSA is a statutory authority, and is part

Helping Queenslanders Build Better 12

EXECUTIVE TEAM

Ian JenningsIan is BSA’s General Manager.Ian has over eleven years’ experience in the building industry, and has previously held the positions of Deputy General Manager, QLeave for four years and General Manager, QLeave for two years.

Col WrightCol is BSA’s Deputy General Manager. Col has twenty-four years’ experience with BSA and its predecessor the Builders’ Registration Board of Queensland.

Ian WhiteIan is Executive Manager, Dispute Management. Ian has over forty-five years’ experience in the building industry as a builder and building surveyor.

Jason SmithJason is Executive Manager, Licensing.Jason has ten years’ experience in the building industry, including six years as a practising solicitor specialising in Building and Construction Law and Insolvency Law.

Mandy McCoskerMandy is Executive Manager, Insurance.Mandy has over twenty-five years’ experience in the insurance industry including underwriting, claims and risk management.

Brad PerryBrad is Executive Manager Building Information. Brad has twenty-nine years’ experience in the public sector specialising in information and educational resource development, marketing, research and community consultation.

Lewis HayesLewis is Executive Manager, Corporate Services.Lewis has over sixteen years’ experience managing corporate services functions in government organisations.

ROLE OF THE GENERAL MANAGER

The General Manager has all executive powers and is responsible for the overall management of BSA. The General Manager’s role is to provide leadership, ensure conformity with statutory and accountability requirements, and advise the Minister on BSA’s performance and key issues facing the industry. The General Manager is independent of the Board. However, the position reports regularly to the Board on the administration of legislation and BSA’s performance. The General Manager must give effect to the Board’s policies.

Organisation chart

Gold Coast

Page 13: About us - Queensland Building and Construction Commission · 2014-06-03 · Helping Queenslanders Build Better About usAbout us ABOUT BSA BSA is a statutory authority, and is part

Helping Queenslanders Build Better 1�

Insurance Committee

The Insurance Committee advises the Board on the performance of the home warranty insurance scheme and the issues confronting it. The committee is chaired by Jim Russell and includes Board members Tracey Wilson, Pauline Pender and BSA’s General Manager, Ian Jennings. Deputy General Manager, Col Wright, and Executive Manager Insurance, Mandy McCosker, act as advisors to the committee.

The committee considered the financial position of the Insurance Fund, insurance premium structure, reinsurance issues, home warranty policy wording and process amendments as well as carrying out preparatory work for the implementation of International Financial Reporting Standards.

Finance, Audit and Risk Committee

The Finance, Audit and Risk Committee oversee the internal audit functions, including strategic management responses to the internal auditor’s recommendations for improvement and strategic risk management.

The committee is independent of management and reports directly to the Board. The committee is chaired by Pauline Pender and includes Board members Jim Russell and Jeannie Althoff. BSA’s General Manager, Ian Jennings, Deputy General Manager, Col Wright, Executive Manager Corporate Services, Lewis Hayes and Acting Manager Finance, Roland Levick assisted the committee.

The meetings are held bi-monthly reflecting the committee’s commitment and recognition of the need for timely resolution of issues.

Finance Committee

The committee monitored BSA’s financial performance and viability and reviewed financial statements and analysis prepared by management. The committee considered and endorsed the outcomes of the mid-year budget reviews to the Board and assessed and approved the proposed 2005/06 budget. Financial reporting to the committee and Board was enhanced through the inclusion of key budget driver information that links operational information to budget performance.

Corporate Governance

Role of the General Manager

Executive Team

Organisation Chart

Board Committees:

Policy

Insurance Finance, Audit and Risk

Finance

Policy Committee

The Policy Committee advises the Board on the need for amendments to the legislation administered by BSA and is instrumental in developing new policies relating to the building industry. The committee is chaired by Gary Rossow and includes Kevin Thompson and Wally Trohear. Non-Board members of the committee include Graham Cuthbert (Executive Director, Queensland Master Builders Association), Rick Wiley (Executive Director, Housing Industry Association, Queensland Branch), Peter Morrison (former President, Association of Wall and Ceiling Contractors Queensland), Jeff Wood (Vice President, Queensland Fire Protection Industry), Cherie Dalley (President, Queensland Consumers Association), BSA’s General Manager, Ian Jennings and Executive Manager Licensing, Jason Smith. Manager, Policy and Legislation, Ian Grant, acts as an advisor to the committee.

The committee considered a major research project on supervision of building work and made recommendations to the Board on future legislative amendments to improve the quality of supervision in the building industry. It also considered changes to the Rectification of Building Work policy designed to increase building contractor accountability for footing and slab construction and looked at problems and researched solutions in relation to construction management contracts.

BOARD COMMITTEES

Page 14: About us - Queensland Building and Construction Commission · 2014-06-03 · Helping Queenslanders Build Better About usAbout us ABOUT BSA BSA is a statutory authority, and is part

Helping Queenslanders Build Better 14

Investments

The committee assists in developing BSA’s investment policy and strategies by regularly monitoring the performance of its fund managers, Queensland Investment Corporation and Queensland Treasury Corporation. In doing so the committee considers advice from BSA’s actuaries, fund managers, BSA management, and information from other relevant sources. With the assistance of the Queensland Investment Corporation, a major review of BSA’s investment strategy resulted in cash investments being placed in a higher performing fund and the Insurance Fund’s investments being balanced between cash and managed funds. BSA’s investment strategy was endorsed as appropriate for balancing risk and liabilities to projected yields.

Board and committee meetings

*Due to changes in responsibilities, Max Smith attended on behalf of Mr Waters.

RISK MANAGEMENT

The risk management strategy assesses the adequacy of the risk management framework and risk policies that deal with all facets of BSA operations.

A risk analysis compliant with Australian/New Zealand Risk Management Standard 4�60:1999 formed the basis for the committee creating and monitoring a risk register.

BSA’s project management methodology has been strengthened by requiring risk issues to be clearly identified during the project planning phase and incorporated in project reporting.

STRATEGIC BUSINESS PLANNING AND BUDGETING

The strategic planning framework aligns operations, human and financial resources with the long-term strategic objectives of BSA’s Corporate Plan 2004/08. Short-term goals that support these objectives are set and communicated to all levels of BSA. The planning framework provides for a comprehensive monitoring regime that allows BSA to assess its performance throughout the year and respond appropriately.

Funds invested as at 30 June

MONITORING, ACCOUNTABILITy AND RISK MANAGEMENT

Internal audit is an independent function responsible for the systematic review and appraisal of the efficiency, economy and effectiveness of BSA operations. It is instrumental in promoting and improving internal controls, accountability and operational efficiency. BSA uses internal audit as a constructive value adding element in the governance and administration of the organisation.

Deloitte Touche Tohmatsu provide BSA’s internal audit function. The General Manager is administratively responsible for the function and reports through the Finance, Audit and Risk Committee to the Board. Internal Audit has free access to the committee and the Board.

BSA’s strategic audit plan covering a � year period and its annual audit plan are developed according to the identified risks and issues. The executive team contributed to the development of the plans, which are approved by the Finance, Audit & Risk Committee. The internal audit function also assists in the examination of BSA’s annual accounts by the external auditors.

Audit reports considered by the committee included the findings of the internal auditors and management’s responses. Internal audit attend meetings and address the committee on reports.

Throughout the year the committee monitors the implementation of audit recommendations and the annual external audit co-ordinated by the Queensland Audit Office.

At each meeting, the committee monitors BSA’s efficiency in managing identified risks through reported progress on implemention of mitigation strategies and updating the register.

FULLBOARD

POLICyCOMMITTEE

INSURANCECOMMITTEE

FINANCE AUDIT

AND RISKCOMMITTEE

NO. OF MEETINGS HELD 10 4 4 5

Garry Rossow 9 4

Jim Russell 10 4 5

Pauline Pender 8 � 4

Wally Trohear 6 1

Tracey Wilson 7 �

Tony Waters*(Max Smith – �)(Proxy – Don Allan – 1)

4

Kevin Thompson 8 4

Jeannie Althoff 9 5

04/05$M

03/04$M

VALUE OF INVESTMENT 77 86� 57 0�4

Returns

Cash funds 800 1 02�

Managed funds 6 185 4 444

TOTAL 6 985 5 467

Page 15: About us - Queensland Building and Construction Commission · 2014-06-03 · Helping Queenslanders Build Better About usAbout us ABOUT BSA BSA is a statutory authority, and is part

Helping Queenslanders Build Better 15

CorporateGovernance

Investments

Board and Committee Meetings

Risk Management

Strategic Business Planning and Budgeting

Monitoring, Accountability and Risk Management

Planning and Reporting Framework

Audits and Investigations

AUDITS AND INVESTIGATIONS

Results of 2004/05 internal audit program

# - Implementation in progress 3- Implemented

scan

Corporate plan

Information, communication

strategic plan

Assetstrategic plan

Marketing plan

strategic plan

Operational plan

Resource allocation budget

Trainingplan

Staff performance development

plan

Monthly reports Annual report

Planning and reporting framework

and technology

Workforce

What our direction and priorities are for the

next four years. What are individuals planning to do and what are development options?

What our direction and priorities are for the

next four years.

Environmental

What are the critical factors identified by our

stakeholders?

What issues should we be concerned about?

What are we funding next twelve months and

forward estimates?

How are we performing against our plans and

targets?

Public communication of performance.

Area Objective Status

IS Redevelopments

Review two key IS projects to ensure appropriate development processes and controls are in place.

Pre and post implementation reviews of Adjudication system and CMS release management.

#

Information Security Assess confidentiality, integrity, availability, accountability and auditability of IS systems at BSA and incorporate an assessment.

#

Regional OfficesAssess two regional offices (Cairns & Townsville) for compliance with BSA policies and procedures and determine if the offices are managed consistently.

3

PayrollPerform a review of BSA’s payroll processes to assess the effectiveness of payroll controls following the introduction of new payroll application.

3

Phone PayReview of security of information held by BSA associated with payment of insurance premiums and licence renewals.

3

Cash Handling Review of cash handling procedures at Townsville Regional office. 3

Finance Branch Review of financial controls, procedures and practices. 3

Investment Strategy Review the consistency of the investment portfolio with investment and risk management strategies. #

Balance Sheet Reconciliations

High level review of the significant balance sheet (asset and liability) reconciliations prepared by BSA. 3

Follow up of 200�-04 audits.

Review progress with implementation of recommendations of previous audits. #

Page 16: About us - Queensland Building and Construction Commission · 2014-06-03 · Helping Queenslanders Build Better About usAbout us ABOUT BSA BSA is a statutory authority, and is part

Helping Queenslanders Build Better 16

Priority areas for internal audit in 2005/06

Area Focus

IS Redevelopments Review two key IS projects to ensure appropriate development processes and controls are in place.

Contractor Licensing Integrity and Ongoing Monitoring Assess the integrity and ongoing monitoring of contractor licensing.

Finance Department Health Check Assess compliance with BSA policies and procedures, adequacy and frequency of reconciliations and level of management review.

Regional Offices Assess two regional offices for compliance with BSA policies and procedures and determine if the offices are managed consistently.

Business Continuity Planning Assess business continuity processes and plans across BSA at organisational and business unit levels, against accepted risk management and business continuity standards.

Accounts Payable Examine current processes for efficiency and effectiveness and ascertain the adequacy of the control framework.

Insurance Review

Review controls within the insurance function focusing on accounting for insurance premiums, trade contractor insurance premiums, accuracy and completeness of reinsurers’ statements and recovery of claims costs from reinsurers.

Information Systems Security Assess confidentiality, integrity, availability, accountability and auditablity of the Contractor Management System (CMS) and Finance One System.

Knowledge Management Assess how BSA is collecting, storing and disseminating information learned from the business functions experience of staff members.

Follow up of 2004-05 audits. Review progress with implementation of recommendations from previous audits.

CODE OF CONDUCT

BSA’s Code of Conduct applies to all Board members and employees. The code provides the ethical framework for behaviour, actions and decisions within BSA and plays an integral role in supporting BSA values. It enables consistent standards and approaches to be adopted in all our dealings with customers and stakeholders. The code is communicated initially to new staff through the induction

process and periodic briefings for all staff when there are significant updates.

A major review of the Code was undertaken this year to ensure it remains contemporary and awareness sessions for staff will be held next year.

Page 17: About us - Queensland Building and Construction Commission · 2014-06-03 · Helping Queenslanders Build Better About usAbout us ABOUT BSA BSA is a statutory authority, and is part

Helping Queenslanders Build Better 17

Corporate Governance

Audits and Investigations cont..

Code of Conduct

Freedom of Information

Whistleblowers Protection Act

Information Privacy

Information Systems

Environment

FREEDOM OF INFORMATIONBSA is committed to openness and accountability for its actions. 22� applications were processed within the legislative timeframes.

Whistleblowers Protection Act 1994

BSA received one disclosure under the Whistleblowers Protection Act 1994. This matter was handled in accordance with the Act and after an independent investigation was solved to the satisfaction of all parties.

INFORMATION PRIVACy

BSA complied with the State Government’s Information Standard 42 in relation to the collection, storage, use and disclosure of personal information.

INFORMATION SySTEMS

BSA’s information systems progressed towards full compliance with Federal and State legislative requirements including Queensland Government Information Standard 18 and International Standard – ISO 17799 for Information Security Management.

BSA carried out a strategic review of the contractor management system application, developed a database to support the information needs of licensees and homeowners and implemented network upgrades. To minimise business risks and improve return on investment, BSA increased its in-house capability to develop and manage information systems.

ENVIRONMENT

BSA continued to focus its efforts on recycling through a greater use of web-based information resources, DVD educational presentations and monitoring of paper-based information, educational resources and forms. Energy consumption declined and was driven by BSA’s light and power audit and staff awareness and actions to reduce expenditure. To minimise the impact of its fleet on the environment, BSA implemented an ethanol blended fuel usage strategy.

Applications Number % Documents Number %Administrative 81 �5.5 Full Access �5 8�7 85Personal 99 4�.5 Partial Access 1 248 �Non-Personal 48 21 Access refused 4 8�1 12Total 228 100 Total 41 916 100Withdrawn 15 6.5

Page 18: About us - Queensland Building and Construction Commission · 2014-06-03 · Helping Queenslanders Build Better About usAbout us ABOUT BSA BSA is a statutory authority, and is part

Helping Queenslanders Build Better 18

OUTLOOK

We will continue to work with the industry in a true partnership to ensure that there is strong strategic progression of the industry. We will place an emphasis on forecasting and identifying factors likely to affect the industry.

We intend to build on our corporate governance framework, ensuring accountability and limiting risk exposure to our business. We will enhance our balanced score card approach to strategic reporting and refine our project management systems and processes.

Regional Managers gather for their Annual Conference. L to R - Brian Hicks - Mackay, Tom Sargent - Cairns, David Benson - Townsville, Mick Davis - Toowoomba, Bob Semmens - Gold Coast, Graham Ives - Rockhampton, Steve Robinson - Sunshine Coast.

Page 19: About us - Queensland Building and Construction Commission · 2014-06-03 · Helping Queenslanders Build Better About usAbout us ABOUT BSA BSA is a statutory authority, and is part

Helping Queenslanders Build Better 19

Highlights/OverviewEase of access to BSA and its services was endorsed by licensees and homeowners.*The home warranty insurance scheme continued to provide the most effective level of protection in Australia.Licensees, homeowners and industry see BSA as a good mediator.**Customer Continuum Study March 2005

CustomersGoal To be a quality service provider responsive to customer needs and build better relationships with customers.

Customer Contact Centre co-ordinators Natalie Sauvage (left ) and Sharon Gregory (right) convene a feedback session for Customer Service Officers

Page 20: About us - Queensland Building and Construction Commission · 2014-06-03 · Helping Queenslanders Build Better About usAbout us ABOUT BSA BSA is a statutory authority, and is part

Helping Queenslanders Build Better 20

LICENSEE DATABASE

By �0 June 2005, BSA had licensed 60 589 contractors (200�/04: 56 4�8). The increase reflects the buoyant nature of the Queensland building and construction industry, the high levels of demand for trades and interstate contractors moving to Queensland.

APPLICATION PROCESS

Improvements to BSA’s application processing system and print materials resulted in the average time to process a licence application decreasing to 29 days (200�/04: 50 days).

OWNER BUILDERS

The high levels of building activity resulted in an increase in owner builder permits (2004/05: 4 568, 200�/04: 4 280). � 427 permits (75%) were issued where the value of work exceeded $11 000.

The percentage of owner builders building new premises accounted for �5% of all permits with the remainder undertaking alterations and additions.

% and % change Owner Builder Permits (OBP’s) issued and Construction Notification (CN’s) by year

Between 2000/01 and 2004/05 owner builder permits as a percentage of construction has increased from 3.79% to 5.57%.

ONLINE LICENCE SEARCH

In its first full year of operation, 1�2 000 licence searches were conducted on BSA’s website. The free on line search provides a vital link to summary information on a licensee’s residential construction activity, any directions issued to the licensee by BSA or the Commercial and Consumer Tribunal, any convictions recorded against BSA legislation, any demerit points, any licence cancellation including

cancellation for defective work or the licensee being an excluded person.

CUSTOMER LOyALTy AND COMMITMENT

BSA conducted a statewide telephone survey of licensees and homeowners to gauge movement in its customer loyalty and satisfaction measures. Licensee and homeowner commitment to BSA was 4.45 and 4.40 respectively (200�/04 4.44 and 4.�6). Measures greater than 4 indicate BSA services, as seen through the eyes of its customers, are adding value to the industry. Industry association loyalty and commitment to BSA was 4.75 (200�/04: 4.55).

ADVICE AND INFORMATION

Demand for telephone advice remained strong at 168 5�8 (200�/04:165 18�) and reflected an increasing need from homeowners and licensees for technical and non-technical information on building issues and changes to BSA policy.

RESOLVING COMPLAINTS

5 094 new complaints were received (200�/04: 5 611). The decrease in complaints reflects changes to legislation and policy and BSA’s initiatives for educating industry on ways to achieve quality building work. The distribution of complaints across Queensland has remained constant over the past three years with 82% occurring in the south east of the state.

Improved administrative processes and building inspectors having remote access to BSA’s database not only reduced the time taken to resolve complaints but continued to reduce the complaint backlog. (2004/05: 5 4�6; 200�/04: 5 606).

Amidst a growing trend of changes in building technology and practices, complexity of complaint and heightened homeowner expectations of a satisfactory resolution, BSA has continued to focus its complaint resolution processes on achieving a quality outcome. 78% of complaints were satisfactorily resolved (200�/04: 7�%).

yearCN’s

NumberOBP’s

Number%OBP’s to

CN’s% Change

04/05 82 065 4 568 5.57 0.74

0�/04 88 582 4 280 4.8� 1.05

02/0� 72 �41 2 7�� �.78 0.�2

01/02 64 278 2 221 �.46 -0.��

00/01 45 582 1 728 �.79 0.�9

Page 21: About us - Queensland Building and Construction Commission · 2014-06-03 · Helping Queenslanders Build Better About usAbout us ABOUT BSA BSA is a statutory authority, and is part

Helping Queenslanders Build Better 21

Complaints received/finalised compared to building activity

BUILDING DEFECTS

BSA and industry’s collaborative approach to raising the standard of building work continued with the examination of issues including building regulation, manufacturer’s recommendations, competency levels, Australian Standards, technical publications and licensing provisions. Early signs in the numbers for some defect types are encouraging. The complex nature of technical issues usually requires a lengthy time period to fully consider options and measure the impact of changes to legislation, standards and practices. BSA is confident that progress and improvements to the standard of building work can be achieved in the long term.

Top ten defects

No Category 04/05 03/0499/00 to 03/04

1 Wall and ceiling plasterboard installation �77 4�6 �76

2 Ceramic floor tiles installation �07 �10 2�8

� Concrete driveways, paths and landscaping 25� 26� 2�7

4 Shower recess waterproofing 229 �0� ��9

5 Internal paint application 197 259 18�

6 Aluminium windows and doors installation 189 184 154

7 Footings and foundations 184 194 26�

8 Timber windows and doors installation 181 2�4 165

9 Roof flashing and drainage 170 20� 22�

10 External painting application 159 170 197

Customers

Licensee Database

Application Process

Owner Builder

Online Licence Search

Customer Loyalty and Commitment

Advice and Information

Resolving Complaints

Building Defects

‘000

0

6.0

1.5

3.0

90

70 4.5

30

50

rInsurance policies by construction yeaFinalisedReceived‘000

00/01

01/02

02/03

03/04

0

Complaints received and finalised compared to building activity has stabilised. Complaints are received with an average lag of between 1 and 2 years from when the building work was carried out.

/

Page 22: About us - Queensland Building and Construction Commission · 2014-06-03 · Helping Queenslanders Build Better About usAbout us ABOUT BSA BSA is a statutory authority, and is part

Helping Queenslanders Build Better 22

INSURING CUSTOMERS

BSA issued 82 065 policies with premium receipts of $4�.1M (200�/04: 88 582 $42.5M). This outcome was driven by sustained low interest rates, an underlying housing shortage (due in part to high levels of interstate migration) and high levels of building activity.

Since 2000/01, alterations and additions policies have grown from 49.7% of total policies issued to 60.�% in 2004/05 demonstrating the growth in the home renovation industry. The new housing market declined to �1 051 homes constructed (200�/04: �9 6�6).

BSA’s PhonePay system continued to provide the fastest, most convenient method of paying BSA insurance. 85.��% of policies were processed through PhonePay (200�/04: 8�.6%). The Home Warranty Insurance Scheme continued to provide the most effective level of protection in Australia with 99.7% of consumers being fully compensated for their losses (200�/04: 99%). 90% of the 1 268 claims finalised were accepted (200�/04: 92% 1 574).

MANAGING CONSUMER CLAIMS

Despite increased levels of building activity, only 1 194 claims were received (200�/04: 1 441). Policy development in relation to supervision of building work, a more stringent subsidence policy and a collaborative approach with industry to reduce recurring defects have contributed to this outcome.

REINSURANCE On 1 July 2004 BSA commenced a new 2 year reinsurance agreement with Munich Reinsurance, Employers Reinsurance and Suncorp Metway Insurance Limited. The scheme’s continued sound performance ensured the renewal of the second year of this agreement. In August 2004, Suncorp Metway Insurance Limited conducted a due diligence audit of BSA’s integrated regulatory model and insurance program. The audit recognised the strength of BSA’s model, operational management and statistical data systems.

PREMIUM STRUCTURE In 200� and 2004, the Queensland building industry was at the height of a building boom. Material and labour costs escalated. BSA’s claim rectification costs reflected the impact of the boom along with the cost imposition of GST on the scheme since 2000.

As part of an overall strategy to manage the scheme through periods of heightened activity and ensure premiums collected are sufficient to satisfy the cost of administering the scheme and claims, BSA conducted a comprehensive review of the insurance premium structure. The review identified that while premiums had been indexed by CPI they had not kept pace with the rising cost of building work.

year/Claim Type

Non-completion Defects Subsidence

Approval No.

$MApproval

No.$M

Approval No.

$M

04/05 269 5.75 957 7.6� 758 4.52

0�/04 666 7.19 1 045 7.88 729 7.07

02/0� 291 �.�� 1 044 6.�4 1 004 5.75

Claim payments by type

Page 23: About us - Queensland Building and Construction Commission · 2014-06-03 · Helping Queenslanders Build Better About usAbout us ABOUT BSA BSA is a statutory authority, and is part

Helping Queenslanders Build Better 2�

The scheme’s actuary analysed the outcome of the premium review and concurred with BSA that as well as adopting certain strategies designed to contain growth in claim expenditure, premiums needed to increase by 10% from 1 August 2004.

RESTRUCTURE OF INSURANCE TENDER PANELS

In accordance with the Queensland Building Services Authority Act 1991 BSA maintains tender panels for the purpose of calling quotations for completion of works, rectifying defective work and subsidence. Following feedback received from licensees and consumers, BSA carried out a major review of its tender panels.

A specialist subsidence rectification panel selected against stringent criteria was established. An under $10 000 minor works panel was also created. The immediate impact of the implementation of these panels was a 17% saving in the average cost of claims.

INSURANCE SCHEME VIABILITy

Following the withdrawal in October 2004 of Mellon from providing actuarial services to the general insurance market, BSA appointed Bendzulla Actuarial Pty Ltd in December 2004 as consulting actuaries. To ensure a solid financial framework for its insurance operations, BSA continued to adopt the Australian Prudential Regulatory Authority (APRA) standards for general insurance. BSA uses APRA’s 75% probability requirement for calculating the scheme’s future claims provisions and maintains its free reserves in excess of the required $5M.

INTERNATIONAL FINANCIAL REGULATORy STANDARDS (IFRS)

BSA conducted an analysis of the expected impact of the International Financial Regulatory Standards (IFRS) on the scheme and carried out preparatory work to ensure BSA’s financial statements 2005/06 comply with the new standards.

Customers

Insuring Customers

Managing Consumer Claims

Reinsurance

Premium Structure

Restructure of Insurance Tender Panels

Insurance Scheme Viability

International Financial Regulatory Standards (IFRS)

Page 24: About us - Queensland Building and Construction Commission · 2014-06-03 · Helping Queenslanders Build Better About usAbout us ABOUT BSA BSA is a statutory authority, and is part

Helping Queenslanders Build Better 24

OUTLOOK

BSA will continue to focus on building commitment, loyalty

and satisfaction with homeowners and licensees. In order to

enhance commitment and loyalty, a marketing campaign will

be launched to raise awareness of the need to engage a

licensed contractor. BSA will undertake technical awareness

campaigns for licensees on the Building Code of Australia,

recurring defects and contractual responsibilities.

BSA’s information systems will be reviewed and new systems

implemented to provide improved access to voice and data

systems for homeowners and licensees.

Customer Service Officer Leisa Navarro deep in concentration at an Adjudication Registry information session.

Page 25: About us - Queensland Building and Construction Commission · 2014-06-03 · Helping Queenslanders Build Better About usAbout us ABOUT BSA BSA is a statutory authority, and is part

Helping Queenslanders Build Better 25

RegulationGoal To ensure stakeholders understand and comply with their statutory responsibilities.

Highlights/Overview

Rectification of Building Work policy designed to increase building contractor accountability for footing and slab construction introduced.Licensees and homeowners understand why the building industry needs BSA.*Scope of compliance activities broadened to focus on the contractual behaviour of the industry.*Customer Continuum Study March 2005

Contractor Education Project team members (L to R) Ravi Iyer, Geoff Barrett , Chris Boyle and Gary Stick discuss project tasks

Page 26: About us - Queensland Building and Construction Commission · 2014-06-03 · Helping Queenslanders Build Better About usAbout us ABOUT BSA BSA is a statutory authority, and is part

Helping Queenslanders Build Better 26

LICENCE CLASS REVIEW

On 1 September 200�, BSA implemented a new licensing system which reduced the number of licence classes available to new applicants from 111 to 56 and where possible, linked licence classes to national training outcomes under the Australian Qualifications Framework.

The new licensing system enabled the vast majority of licensees to automatically move to a new licence class on 1 September 200�. 14 19� licensees holding the classes of House Building, Structural Landscaping, Shopfitting and Refrigeration, Air Conditioning & Mechanical Services are required to transition to their new licence class by �1 August 2005.

RECTIFICATION OF BUILDING WORK POLICy

Defective footing and slab construction (subsidence) has become a significant issue for the residential building sector. Since 1 July 200�, BSA has received over 650 subsidence related complaints involving claim payments in excess of $10M by BSA’s Home Warranty Insurance Scheme.

On 1 September 2004 the Queensland Building Services Board introduced a Rectification of Building Work policy designed to increase building contractor accountability for footing and slab construction and improve the relevant skills level. Under the policy the building contractor’s responsibilities include provision to the design engineer of all relevant information and conditions to enable site identification and investigation. Written confirmation from the engineer that relevant requirements have been met by the engineer in completing the slab and footing design is also required. The contractor must comply with the engineer’s design and the relevant Australian Standard, during and on completion of construction.

A series of state wide education awareness seminars were conducted prior to the policy’s introduction.

SUPERVISION OF BUILDING WORK

Under the Queensland Building Services Authority Act 1991 (QBSA Act) a licensed contractor is required to ensure that building work carried out under their licence is adequately supervised. In the case of a licensed company this obligation falls on the nominee. The QBSA Act also requires that all building work must be personally supervised by an appropriately licensed person.

BSA conducted a major research project to investigate the Queensland Building Services Board’s concern with the quality of supervision of building work. The research indicated 61% of seriously defective building work reported to BSA could be attributed to poor supervision. Many licensees did not understand their legal obligation to ensure work carried out under their licence is adequately supervised. The research showed the licensing requirements for supervisors, other than nominees, should be refined to ensure closer alignment with their responsibilities.

RAPID ADJUDICATION

After some 12 months of hard work the Building and Construction Industry Payments Act 2004 came into effect for construction contracts signed on or after 1 October 2004.

The Act establishes a statutory based system of rapid adjudication for the quick resolution of payment disputes on an interim basis by an appropriately qualified and independent adjudicator. Substantial effort was placed on educating the industry to ensure they were well aware of the legislation.

More detail on the Building and Construction Industry Payments Act 2004 is contained in the Building and Construction Industry Payments Agency Annual Report available at BSA offices or from www.bcipa.qld.gov.au

Page 27: About us - Queensland Building and Construction Commission · 2014-06-03 · Helping Queenslanders Build Better About usAbout us ABOUT BSA BSA is a statutory authority, and is part

Helping Queenslanders Build Better 27

COMPLIANCE

BSA’s compliance program continued to focus on contractors who did not possess the appropriate licence to perform building work or displayed poor contractual behaviour. The program also targeted licensees who displayed signs of financial distress and those performing grossly defective building work.

Compliance activitiesRegulation

Licence Class Review

Rectification of Building Work Policy

Supervision of Building Work

Rapid Adjudication

Compliance

Activity Outcome Comment

Grossly defective work(3 year bans)

2 Three Year BansLicensees who perform Tier 1 - grossly defective work that is likely to cause death or grievous bodily harm, face a ban from holding a BSA licence for three years.

Anti Phoenix Provisions(5 year bans)

85 licensees comprising 51 individuals and �4 companies

Any licensee who fails financially or is a director, secretary or influential person of a failed company is excluded from holding a BSA licence or from being a director, secretary or influential person for a licensed company for 5 years.

Anti Phoenix Provisions(life bans)

12 licenseesLicensees who fail financially on two occasions are permanently excluded from holding a BSA licence.

Demerit Points(contractual offences)2 – 6 points

66 contractors

Contractors are issued with between 2 and 6 demerit points for failing to comply with the contractual provisions of the Domestic Building Contracts Act 2000 or part 4A of the Queensland Building Services Authority Act 1991.

Demerit Points(unsatisfied judgement debts)10 or more points

26 contractorsContractors who fail to pay on a judgement debt order from a Court are awarded 10 points for every judgement debt not paid.

Unlicensed Contracting 817 investigations commenced

Contractors performing “building work” to a value in excess of $1 100 who do not hold a BSA licence commit an offence and are prosecuted by BSA.

Licensing Audits

2 State wide audits1�1 suspected unlicensed contractors detected (detection rate 2.6%; 200�/04 1.2%)

Two major licensing audits in November 2004 and February 2005 were conducted on building sites across Queensland. 4 979 contractors were interviewed.

Page 28: About us - Queensland Building and Construction Commission · 2014-06-03 · Helping Queenslanders Build Better About usAbout us ABOUT BSA BSA is a statutory authority, and is part

Helping Queenslanders Build Better 28

MINISTER APPROVED AUDIT

During the year, BSA conducted its first Minister approved audit of the Kitchen, Bathroom and Laundry sector and the Sheds, Carports and Garages sector of the industry. Pursuant to section 50A of the Queensland Building Services Authority Act 1991, the Minister has power to approve an audit program. Poor contractual management in these sectors including the failure of Retail Renovations Pty Ltd trading as Impala Kitchens and Simply Kitchens, prompted BSA to undertake the Minister approved audit.

The purpose of the audit was to establish whether licensees in these sectors had been complying with the Domestic Building Contracts Act 2000. BSA targeted licensees who had an annual turnover greater than $1M.

BSA audited 41 licensees in the Builder – Restricted to Kitchen, Bathroom and Laundry Installation licence class and 11 licensees in the Sheds, Carports and Garages licence class.

Only 19% of the Kitchen, Bathroom and Laundry sector fully complied with their obligations under the Domestic Building Contracts Act 2000. 0% of the Sheds, Carports and Garages sector fully complied and �4 demerit points, warning notices were issued. Educational material was also provided to the audited licensees.

Based on the results of the audit BSA intends to undertake a major awareness and education campaign on the Domestic Building Contracts Act 2000.

Contractual investigations

The number of investigations, warning notices and contractors issued with demerit points increased due to BSA’s focus on the contractual behaviour of the industry such as inadequate detail in building contracts.

ActivityKitchen,

Bathroom & Laundry sector

Sheds, Carports & Garages

sector

Numbers audited 41 11

% fully compliant 19 0

Contracts reviewed 4�� 198

Infringement Notices issued 52 26

Licensees allocated demerit points

10 7

No of demerit points allocated 20 14

Activity 04/05 03/04

Domestic Building Contracts

Act

QBSA Act

Part 4A

Domestic Building Contracts

Act

QBSA Act

Part 4A

Audits 14 0 9 2

Investigations 204 25 1�9 8

Licensees issued with a warning notice as a result of an audit or investigation

46 8 �7 0

Number of contractors issued with infringement notices for breaches

�56 16 1�0 9

Number of infringement notices issued

49� 28 2�1 11

Page 29: About us - Queensland Building and Construction Commission · 2014-06-03 · Helping Queenslanders Build Better About usAbout us ABOUT BSA BSA is a statutory authority, and is part

Helping Queenslanders Build Better 29

RECOVERIES

BSA holds licensees accountable for debts relating to insurance claim payments and/or court prosecutions.

BSA recovered $1.51M from insurance claims and $108 000 from Commercial and Consumer Tribunal disciplinary orders and Magistrates Court fines (200�/04: $1.�51M and $129 84�).

PRIVATE BUILDING CERTIFICATION

In February 2005, BSA attended a forum involving all Australian states and New Zealand to discuss private building certification. The outcome was an agreement in principle to identify national inconsistencies in the legislation governing private building certification and move toward the development of a standard Australasian model.

INDUSTRy EDUCATION

BSA conducted a series of seminars designed to minimise defective construction of fire separating walls in townhouse developments. 1 4�6 licensees attended seminars conducted throughout Queensland.

ACCREDITATION AND AUDITS

As at �0 June 2005 there were �78 accredited building certifiers, 286 holding private endorsement (200�/04: �7� and 286). The total number of building certifiers has remained stable for the past three and a half year.

In line with its ongoing commitment to regulation of the certification profession, BSA increased resources to undertake audits of certifier inspection protocols. 81 administrative audits were carried out in the south east corner of the state. No major incidents were detected. Two statewide certifier audits involving 529 inspections of onsite technical requirements for townhouses and units resulted in water proofing, roof flashings and fire protection issues being detected.

Private certification – complaints received

Technical and standard building regulation complaints were major complaint areas.

Regulation

Minister Approved Audit

Contractual Investigations

Recoveries

Private Building Certification

Industry Education

Accreditation and Audits

Private Certification Complaints Received

Type 04/05 03/04

Town planning 16 27

Technical (BCA) �4 12

Standard building regulation 22 ��

Conflict of interest 0 0

Inconsistent with other approvals 6 1

Administration 4 4

Total 82 77

Page 30: About us - Queensland Building and Construction Commission · 2014-06-03 · Helping Queenslanders Build Better About usAbout us ABOUT BSA BSA is a statutory authority, and is part

Helping Queenslanders Build Better �0

Private certification – complaint status

The time taken to finalise investigations increased due to the complexity associated with certification complaints.

OUTLOOK

We need to ensure that our activities, legislation and policy are consistent with the needs of the industry and community. The Building and Construction Industry Payments Act 2004 and Subcontractors Charges Act 1974 will be reviewed to ensure they are achieving their objectives.

The Financial Requirements for Licensing will be amended to ensure ongoing viability of licensees.

It is also intended to continually promote the legislation and policy and ensure consumers and the industry are aware of their rights and responsibilities. As part of this initiative emphasis will be placed on enhancing the technical skills of licensees with due consideration to recurring defects, the Building Code of Australia and Australian Standards.

Type 04/05 03/04

Finalised complaints by BSA 28 �8

Current complaints < �0 days old 5 6

Current complaints > �0 days old 49 ��

Total 82 77

BSA’s Research and Review team (L to R) David Fraser, Steve Mamczur, John Klemm, Mathew Hopwood, Jenny Watts and Manager Tony Townshend discuss installation of Fire Separating Walls.

Page 31: About us - Queensland Building and Construction Commission · 2014-06-03 · Helping Queenslanders Build Better About usAbout us ABOUT BSA BSA is a statutory authority, and is part

Helping Queenslanders Build Better �1

PeopleGoal Strengthen our position as a people-orientated employer where staff are developed, valued and involved.

Highlights/OverviewBSA staff are very positive about their work environment, learning and development opportunities.Licensees and homeowners see BSA staff as competent people with the right skills.*Staff separation 7.1%*Customer Continuum Study March 2005

Freedom of Information Officer Joan Norman explains FOI procedures to Records Officer Willy Chu

Page 32: About us - Queensland Building and Construction Commission · 2014-06-03 · Helping Queenslanders Build Better About usAbout us ABOUT BSA BSA is a statutory authority, and is part

Helping Queenslanders Build Better �2

CHANGE MANAGEMENT

A comprehensive research study on sustaining change in BSA was conducted by a Queensland University of Technology post graduate program. The study revealed that BSA is effectively sustaining change through its communication, leadership, culture, continuous improvement, learning and development, customer and community relationship management strategies. The study findings were confirmed through BSA’s Employee Survey in which staff indicated they were positive about the changes that had occurred.

KNOWLEDGE MANAGEMENT

In response to an ageing workforce, predicted skills shortage and a loss of knowledge critical to future business outcomes, BSA has commenced development of a knowledge management framework. Workforce capability strategies focussing on succession planning, career management, mentoring and cross functional job placement have been implemented and will be evaluated in 2005/06.

LEADERSHIP DEVELOPMENT PROGRAM

BSA managers, team leaders and future leaders were involved in a leadership development program focusing on leading change; self awareness and behavioural styles; relationship building and high performing teams.

An independent evaluation of the leadership development program conducted by the University of Queensland indicated a skills improvement of 92%, tangible business outcomes of 82% and a 100% return on investment.

A formal mentoring program was conducted for seven middle managers. Significant outcomes for this program have been improved internal relationships, team management and the deployment and sharing of resources.

RELATIONSHIP MANAGEMENT

Relationship management as a key strategic learning and development area is delivered through the Creating Business Relationship Program. This program has resulted in improved complaint resolution rates for homeowners (2004/05: 78%; 200�/04: 7�%) and a stable licensee measure for loyalty and commitment. (2004/05: 4.45, 200�/04: 4.44).

PEOPLE AND TEAM DEVELOPMENT

BSA continued to provide a broad range of programs and develop staff and teams to meet customer needs and accept shared leadership and mutual accountability. Programs delivered included project management, business writing skills through to financial management, coaching and mentoring.

Page 33: About us - Queensland Building and Construction Commission · 2014-06-03 · Helping Queenslanders Build Better About usAbout us ABOUT BSA BSA is a statutory authority, and is part

Helping Queenslanders Build Better ��

RETURN ON INVESTMENT

BSA continued to use the Kirkpatrick’s Four Level Evaluation model to gauge the linkagebetween training activities and corporate goals.

# measured through pre and post training surveys to evaluate the extent to which participants changed attitudes, improved knowledge and increased skill. * BSA has partnered with the University of Queensland Teaching and Education Development Institute to design holistic online evaluation surveys to measure significant business impact from courses at 3, 6 and 12 month intervals after training.

BSA’s commitment to training resulted in 1 015 training days being delivered which equated to $1 286 or 4.�5 days per staff member. (200�/04: 9�0; $1 �02; 4.4 days).

17 staff were provided with the opportunity to obtain formal recognition of existing knowledge and skills obtained in the workplace through the Public Service Training Package (Australian Qualifications Framework Level �, 4 and 5) (200�/04: 21). BSA’s Research Assistance Scheme supported 11 staff in undergraduate and postgraduate tertiary studies.

PERFORMANCE MANAGEMENT

Development of an online performance management system was commenced using BSA’s Performance Management and Development Scheme competencies and accountabilities. When introduced staff will be able to self select learning and development opportunities and manage their careers. A �60-degree feedback process to support learning and responsiveness to customers was conducted for regional managers.

12 staff were recognised for excellence in service at the Australia Day awards. Results from the annual staff survey show that staff have a very clear understanding of what is expected in their current roles and are committed to continually improving service delivery.

Modules OverviewSkills

Improved(%)#

Tangible Business

Outcomes*

Degree of transfer of learning*

ROI(%)

Leadership Development

Developing current and future leaders to an international standard.

5% 71% 92% 75%

Presentation and Facilitation Skills

Developing skills that aid in industry presentations and promotion of BSA.

9�% 81% 92% 28%

People

Change Management

Knowledge Management

Leadership Development Program

Relationship Management

People and Team Development

Return on Investment

Performance Management

Page 34: About us - Queensland Building and Construction Commission · 2014-06-03 · Helping Queenslanders Build Better About usAbout us ABOUT BSA BSA is a statutory authority, and is part

Helping Queenslanders Build Better �4

EMPLOyEE RELATIONS

BSA as a party to the Queensland Government Core Agencies Agreement resulted in staff maintaining parity of salaries and conditions with Queensland Public Sector standards. These outcomes have been an important factor in attracting and retaining staff from across the Queensland Public Sector.

A new Equal Employment Opportunity Management Plan 2005/08 was implemented. The plan provides for an equitable workplace and recruitment strategies and includes career development initiatives targeting women, people with a disability, people from a non-English speaking background and Aboriginal and Torres Strait Islanders.The plan details strategies for a workplace free from all forms of discrimination and harassment and seeks to promote a balance between work and family responsibilities.

In 2004/05, there were no days lost through industrial disputation.

Staff as at 30 June 2005

Number of Women as % of Total Workforce

Workforce Diversity

WORKPLACE HEALTH AND SAFETy

A Corporate Health Policy was rolled out to cover some existing and additional programs, including corporate gym memberships, Hepatitis A & B immunisation, influenza immunisation, lunch time Yoga Chi Gung; and promoting participation in corporate games. BSA’s employee survey indicated 64% of staff agreed that an improved work life balance had been achieved in 2004/05.

No major incidents were reported in 2004/05 and the number of working days lost through compensable accident or injury was 17 days. No incidents of work related stress or repetitive strain injury were reported (200�/04: 22 days

0 incidents).

Male Female TotalEEO TargetGroups

Administration AO1 - AO� 18 7�.9 91.9 17

Officers AO4 - AO5 51.1 40.2 91.� 8

Middle Management AO6 - AO8 �6.6 4 40.6 4

Executive Management SO2 - SES

6 1 7 0

Total 111.7 119.1 2�0.8 29

There was a decline in the representation of women in BSA’s workforce. Strategies to increase the representation of women in senior management roles have been identified.

04/05 03/04 02/03

Aboriginal and Torres Strait Islander

� 5 5

People With a Disability 7 9 12

Non English Speaking Background

20 22 18

There was a decline in target group representation. Strategies to redress this situation are being developed as part of BSA’s Equal Employment Opportunity Management Plan.

04/05 03/04 02/03

Women 50.9%(112.1)

5�.9% (12�)

52.5% (114)

Page 35: About us - Queensland Building and Construction Commission · 2014-06-03 · Helping Queenslanders Build Better About usAbout us ABOUT BSA BSA is a statutory authority, and is part

Helping Queenslanders Build Better �5

KEy WORKFORCE STATISTICS AND INDICATORS

The number of full time equivalent staff (FTE) was 2�0.8 (200�/04 225.1). The increase was necessary to support operational priorities, information technology and communications platforms and a proactive approach to defective building work.

In 2004/05, the separation rate was 7.1% (200�/04 7.7%). The rate continues to reflect a stable workforce in a buoyant building industry labour market where technically skilled staff are in high demand.

EMPLOyEE SURVEy

BSA’s employee survey was administered by the University of Queensland. The findings indicated staff continued to support the strategic direction of BSA and were very positive about their work environment, learning and development opportunities. The results indicated that staff had high commitment levels.

Areas requiring strategy development for improvement included ongoing team work initiatives, improved communication across BSA and change management.

Employee survey ratings*

* Results were positive across all attributes. A 1-6 Likert scale was used.

Learning and development opportunities 4.21 Consultation 4.5�

Performance management �.98 Teamwork 4.67

Job satisfaction 4.69 Executive management communication 4.65

Organisational commitment 4.75 Manager/ Team leader communication 4.95

Work environment 4.14 Co-worker communication 4.82

Customer orientation – overall 4.79 Organisational-wide communication 4.14

Customer orientation – internal 5.00 Strategic direction 4.56

Customer orientation – external 4.69 Employee control �.98

Change management 4.21

People

Employee Relations

Workplace Health and Safety

Key Workforce Statistics and Indicators

Employee Survey

Page 36: About us - Queensland Building and Construction Commission · 2014-06-03 · Helping Queenslanders Build Better About usAbout us ABOUT BSA BSA is a statutory authority, and is part

Helping Queenslanders Build Better �6

OUTLOOK

A committed workforce with values of continuous

improvement, learning, respect and trust is the key in

helping Queenslanders build better. We will focus

on progressing effective leadership through coaching

and mentoring and develop individuals, teams and

organisational capability.

We will continue to ensure that staff are provided

development opportunities and are rewarded and

recognised for their achievements. We will also progress

the development of a �60 degree feedback system to assist

in the identification of development needs.

Customer Contact Centre Co-ordinator Natalie Sauvage and Phone Pay Officer Kate Harrison discuss Insurance and Licensing Phone Pay access on the centre’s new dual screen operating system.

Page 37: About us - Queensland Building and Construction Commission · 2014-06-03 · Helping Queenslanders Build Better About usAbout us ABOUT BSA BSA is a statutory authority, and is part

Helping Queenslanders Build Better �7

Financial Overview

*Customer Continuum Study March 2005

Acting Finance Manager Roland Levick (centre) and finance team members (L to R) Ray Gayton, Marilyn Boyce and Benjamin Wash.

Page 38: About us - Queensland Building and Construction Commission · 2014-06-03 · Helping Queenslanders Build Better About usAbout us ABOUT BSA BSA is a statutory authority, and is part

Helping Queenslanders Build Better �8

FINANCIAL OVERVIEW

BSA recorded a positive result with a net surplus $9.080M (General Fund $0.798M and Insurance Fund $8.282M). These results were achieved through continued high levels of activity in the Queensland building industry and higher than forecast licence and insurance premium income. General Fund expenses were contained within budget while a reduction in claims expenses to budget assisted the Insurance Fund.

The overall financial position improved with consolidated net assets of $28.410M . The net assets of the General Fund and Insurance Fund increased to $12.219M and $16.191M respectively.

FINANCIAL MANAGEMENT

To ensure alignment of operations and finances, program operational plans and 2004/05 budgets were based on the agreed strategic priorities for the year.

Budget control was maintained by the production of monthly financial statements and reports and quarterly budget reviews for the Board and executive management.

Financial controls were reviewed and strengthened during the year. Enhancements to reconciliations, month end procedures and maintenance of general ledger accounts were implemented. The Finance, Audit and Risk Committee met bi-monthly to ensure timely consideration of issues.

Version 10.2 of Finance 1 was implemented with enhanced reporting and workflow capabilities.

An assessment of the impacts of the convergence to the Australian Equivalents of the International Financial Reporting Standards was completed. The most significant issue related to the treatment of leases for office accommodation under AASB 116 – Property, Plant and Equipment. It is estimated that the impact of taking up the provision for restoration of leased premises will be $0.148M (refer note 1 (t)).

Several other policy matters of a minor nature were identified and actioned. These are not expected to have a material effect.

The fair value accounting for insurance contracts (AASB 102� – General Insurance Contracts) has been deferred to �1 December 2007. Until determinations are issued on this matter, an assessment cannot be made.

STATEMENT OF FINANCIAL PERFORMANCE

Net surplus rose by $�.281M to $9.080M (200�/04: $5.799M). The forecast result for the year was a surplus of $7.729M. General Fund surplus was $0.798M (200�/04: $�.190M) while the Insurance Fund surplus was $8.282M (200�/04: $2.609M). It should be noted that these results include repayment of the 2001/02 surcharge of $2.769M from the General Fund to the Insurance Fund

REVENUE

Revenue increased by $�.879M with all main revenue sources performing strongly. Fees were increased by 2.5% (CPI) in accordance with Government policy.

Page 39: About us - Queensland Building and Construction Commission · 2014-06-03 · Helping Queenslanders Build Better About usAbout us ABOUT BSA BSA is a statutory authority, and is part

Helping Queenslanders Build Better �9

Licence renewal and application fees (Note 2) increased by $1.485M due to higher than forecast levels of building activity.

Accrued underwriting premiums (Note �.1) increased by $0.25�M while gross premiums rose by $0.�61M to $�1.177M (200�/04:$�0.816M). The sustained activity levels are a result of continuing low interest rates and an underlying housing shortage due to high levels of migration.

Investments (Note 4) provided extraordinary returns with revenue increasing by $1.518M. Cash investment returns remained consistent with an average yield of 5.92% (200�/04: 5.20%). Gross cash yield decreased as funds were redirected to managed fund investments.

Managed fund investments yielded 15.5�% for the year (200�/04: 17.10% 2002/0�: -1.21%). The strong performance of Australian equities was largely responsible for this result with other assets classes performing well.

Net Administration Fees (Note �.2) increased by $0.05�M, associated with increased premiums for the year.

Other revenue (Note 5) increased by $0.570M to $2.796M, (200�/04: $2.226M).

Court fines awarded increased by $0.�75M to $0.914M (200�/04: $0.5�9M), reflecting a number of significant decisions in BSA’s favour. Owner builder fees increased by $0.096M to $1.0�5M (200�/04: $0.9�9M), due to the continuing high levels of building activity.

EXPENSES

Administrative expenses (Note 7) increased by $0.8�2M to $7.758M (200�/04 : $6.926M). Office rentals and outgoings increased by $0.122M to $1.677M (200�/04: $1.555M) due to annual rental increases and additional costs in servicing plant in the Brisbane Head Office. Legal fees increased by $0.124M to $0.4�5M (200�/04: $0.�11M) and reflected costs associated with the successful conduct of two major cases.

Financial Overview

Overview

Financial Management

Statement of Financial Performance

Revenue

Expenses

Page 40: About us - Queensland Building and Construction Commission · 2014-06-03 · Helping Queenslanders Build Better About usAbout us ABOUT BSA BSA is a statutory authority, and is part

Helping Queenslanders Build Better 40

Consultant costs increased substantially by $0.462M to $0.645M (200�/04: $018�M). Internal audit costs increased substantially due to a number of special audits to support further strengthening of the finance function. Human resources consultancies increased in line with several staff matters while information technology consultancies rose to assist with the development of major projects.

The effectiveness of BSA’s dispute resolution processes resulted in underwriting claims expenses (Note �.1) decreasing by $1.417M to $10.997M (200�/04: $12.414M). As a result, 11�5 claims were processed during the year (200�/04: 1441), the lowest in five years.

Employment expenses (Note 8) increased by $1.�40M to $15.56�M (200�/04: $14.22�M). The additional costs were as a result of the �.8% enterprise agreement salary increase. In real terms, employment expenses increased by 5.6%, reflecting growth in BSA’s staff establishment with additional positions targeted to priority areas such as building research and review, compliance, information technology and a special project team for the development and implementation of the customer access strategy.

Other expenses (Note 9) decreased by $0.157M to $1.404M (200�/04: $1.561M), principally due to decreases in doubtful/bad debts and amortisation.

Financial indicators

STATEMENT OF FINANCIAL POSITION

The financial position of BSA continued to improve with net assets increasing by $9.080M to $28.410M (200�/04: $19.��0M). General Fund net assets increased by $0.798M to $12.219M (200�/04: $11.420M) while Insurance Fund net assets increased by $8.282M to $16.191M (200�/04: $7.910M). These results reflect the surplus from ordinary activities.

Total assets increased by $24.746M to $162.04�M (200�/04: $1�7.297M).

Current assets increased by $15.849M to $112.670M (200�/04: $96.821M) principally as a result of movements in other financial assets (transfer of cash reserves to investment accounts – Note 12) and prepayments (reinsurers share of unearned income – Note 15).

Non-current assets increased by $8.897M to $49.�7�M (200�/04: $40.476M) mainly due to the movement in reinsurance receivable (Note 14).

Total liabilities increased by $15.666M to $1��.6��M (200�/04: $117.967M).

Current liabilities decreased by $�.600M to $50.89�M (200�/04: $54.49�M) with decreases in payables (Note 18), provisions (Note 19) and future claims (Note 21) while unearned premiums increased (Note 20).

Non-current liabilities increased by $19.266M to $82.740M (200�/04: $6�.474M) with the major movement ($18.202M based on actuarial advice) being in future claims (Note 21).

04/05 03/04

Net Assets ($) 28.41M 19.��M

Profit/Loss ($) 9.08M 5.80M

Current Ratio 2.21 1.78

Page 41: About us - Queensland Building and Construction Commission · 2014-06-03 · Helping Queenslanders Build Better About usAbout us ABOUT BSA BSA is a statutory authority, and is part

Helping Queenslanders Build Better 41

STATEMENT OF CASH FLOWS

Strong cash flows were reported with net cash from operating activities of $10.449M (200�/04: $15.�28M). Cash at the end of the financial year was $6.124M (200�/04: $11.250M).

BSA reports its investments with Queensland Investment Corporation (QIC) as “Financial Assets” and not as cash or bank account balances.

In order to maximise its returns, BSA invested $14.769M with QIC cash and trust funds. As a result these financial assets are recorded cash balances and this accounts for the apparent decrease in cash, with the QIC investments recorded as an outflow of funds.

These funds are readily accessible at 24 hours notice.

Financial Overview

Expenses cont...

Statement of Financial Position

Statement of Cash Flows

Outlook

OUTLOOK

The outlook at the consolidated level and individual Fund level is positive. Through stable income from licence fees and robust financial control, the General Fund is well placed to improve its long term viability. The Insurance Fund will continue to meet the Australian Prudential Regulatory Authority’s prudential requirements.

Over the next few years more emphasis will be placed on forecasting out from an income and expense prospective across both funds to insure that the business continues to be well placed to help Queenslanders build better.

Page 42: About us - Queensland Building and Construction Commission · 2014-06-03 · Helping Queenslanders Build Better About usAbout us ABOUT BSA BSA is a statutory authority, and is part

42

Note 2005 2004

$’000 $’000

Operating revenues from ordinary activities

Licence renewal and application fees 2 17 099 15 614

Underwriting premiums �.1 8 487 8 2�4

Investment revenue 4 6 985 5 467

Administration fees �.2 9 4�5 9 �82

Other revenue 5 2 796 2 226

Total operating revenues from ordinary activities 44 802 40 923

Operating expenses from ordinary activities

Administrative expenses 7 7 758 6 926

Underwriting claims �.1, 24 10 997 12 414

Employment expenses 8 15 56� 14 22�

Other expenses 9 1 404 1 561

Total operating expenses from ordinary activities 35 722 35 124

Profit from ordinary activities 11 9 080 5 799

Queensland Building Services AuthorityStatement of Financial PerformanceFor the year ended 30 June 2005

The above Statement of Financial Performance is to be read in conjunction with the Notes to and forming part of the Financial Statements.

Page 43: About us - Queensland Building and Construction Commission · 2014-06-03 · Helping Queenslanders Build Better About usAbout us ABOUT BSA BSA is a statutory authority, and is part

43

Note 2005 2004

$’000 $’000

Current assets

Cash 1(p), 28 6 124 11 250

Receivables 1� � �10 4 �15

Reinsurance receivable 14 1� 526 1� 927

Other financial assets 12 77 86� 57 0�4

Prepayments 15 11 847 10 295

Total current assets 112 670 96 821

Non-current assets

Reinsurance receivable 14 46 515 �7 415

Plant and equipment 16 1 484 1 556

Intangibles 17 1 �74 1 505

Total non-current assets 49 373 40 476

Total assets 162 043 137 297

Current liabilities

Payables 18 1� 19� 14 500

Provisions 19 1 650 2 �1�

Future claims and associated costs 21 20 102 22 779

Unearned premiums 20 15 948 14 901

Total current liabilities 50 893 54 493

Non-current liabilities

Provisions 19 1 661 597

Future claims and associated costs 21 81 079 62 877

Total non-current liabilities 82 740 63 474

Total liabilities 133 633 117 967

Net assets 28 410 19 330

Equity

Reserves 10 526 526

Retained profits 11 27 884 18 804

Total equity 28 410 19 330

Queensland Building Services AuthorityStatement of Financial PositionFor the year ended 30 June 2005

The above Statement of Financial Position is to be read in conjunction with the Notes to and forming part of the Financial Statements.

Page 44: About us - Queensland Building and Construction Commission · 2014-06-03 · Helping Queenslanders Build Better About usAbout us ABOUT BSA BSA is a statutory authority, and is part

44

Note 2005 2004

$’000 $’000

Cash flows from operating activities

Received from renewal and licence fees 18 146 15 927

Received from administration fees 10 989 11 188

Received from interest 800 1 02�

Received from other revenue 499 2 077

GST receipts 4 671 4 977

35 105 35 192

Payments to creditors (7 098) (6 268)

GST payments (� 747) (4 856)

Payments to employees (14 978) (15 850)

(25 823) (26 974)

9 282 8 218

Received from premiums �2 756 �1 08�

Payments to reinsurers (25 729) (20 89�)

Claims paid (16 845) (18 510)

Received from reinsurers 10 985 15 4�0

1 167 7 110

Net cash provided by operating activities 27 10 449 15 328

Cash flows from investing activities

Payments for plant and equipment and intangibles ( 806) (1 064)

Investment in government & semi-government stock (14 769) (22 514)

Proceeds from sale of plant and equipment - �85

Net cash used in investing activities (15 575) (23 193)

Net decrease in cash held (5 126) (7 869)

Cash at the beginning of the financial year 11 250 19 119

Cash at the end of the financial year 28 6 124 11 250

Non-cash investing activities

Payments for plant, equipment and intangibles disclosed above are stated net of consideration on motor vehicles traded to the value of $400.

Queensland Building Services AuthorityStatement of Cash FlowsFor the year ended 30 June 2005

The above Statement of Cash Flows is to be read in conjunction with the Notes to and forming part of the Financial Statements.

Page 45: About us - Queensland Building and Construction Commission · 2014-06-03 · Helping Queenslanders Build Better About usAbout us ABOUT BSA BSA is a statutory authority, and is part

45

Note 1 Summary of significant accounting policies

(a) Basis of preparation

The financial report is a general purpose financial report that has been prepared in accordance with applicable Australian Accounting Standards and other mandatory professional reporting requirements (Urgent Issues Group Consensus Views) and the requirements prescribed by:

- the Queensland Building Services Authority Act 1991;- section 46F of the Financial Administration and Audit Act 1977; and- the Financial Management Standard 1997

The financial report is prepared in accordance with the historical cost convention and does not take into account changing money values or except where stated, current valuations of other financial assets. The accounting policies adopted are consistent with those of previous years unless otherwise stated. Comparative information is reclassified where appropriate to enhance comparability.

The Queensland Building Services Authority (BSA) is comprised of a General Statutory Fund and an Insurance Fund as stipulated by Sections 25 and 26 of the Queensland Building Services Authority Act 1991. The financial statements of the Authority have been prepared as a consolidation of both Funds. The balances and effects of transactions between the Funds included in the consolidated financial statements have been eliminated. Note 2�, Segment information, shows the results and financial position of each Fund as at �0 June 2005.

Because of the nature of the general insurance business conducted by the Authority, certain disclosures have been made in the Statement of Financial Performance and Statement of Financial Position, which are additional to those required by the Financial Management Standard 1997.

(b) Ministerial portfolio

BSA is a statutory body within the portfolio of the Minister for Public Works, Housing and Racing. The principal place of business for BSA is 11 Edmondstone Street, South Brisbane, Queensland.

(c) Premium revenue

Insurance premiums comprise amounts charged to policyholders. The earned portion of premiums received is recognised as revenue. Premium is treated as earned from the date of attachment of risk.

The pattern of recognition of income over the policy of indemnity period is based on time, where this closely approximates the pattern of risk underwritten. Unearned premiums are determined by apportioning the premiums written in the year, using the one twenty-fourth method for reinsurance business, over the period of indemnity from the attachment of the risk.

(d) Outward reinsurance

Premiums ceded to reinsurers are recognised as an expense in accordance with the pattern of reinsurance services received. Accordingly, owing to the method in which premium income is earned, a portion of outward reinsurance premiums is treated at the balance date as a prepayment.

(e) Claims

Claims expenses and a liability for outstanding claims are recognised in respect of direct insurance business. The liability covers claims reported but not yet paid, incurred but not reported (IBNR) and the anticipated direct and indirect costs of settling those claims. Claims outstanding are assessed by review of individual claim files and estimating changes in the ultimate cost of settling claims, IBNR’s and settlement costs using statistics based on past experience and trends. Outstanding claims relating to “long-tail” classes are subject to independent actuarial assessment. “Long-tail” classes refer to claims not settled within one year of the incidence of risk.

The liability for outstanding claims for “long-tail” classes is measured as the present value of the expected future payments. These payments are estimated on the basis of the ultimate cost of settling claims, which is affected by factors arising during the period to settlement such as inflation. Such estimates are subject to uncertainty due to variations of both a random and non-random nature, which may affect components of the estimates. The expected future payments are discounted to present value at the balance date using market determined, risk adjusted discount rates. The details of rates applied are included in Note 21, Future claims and associated costs. The liability for outstanding claims is calculated using a “best estimate” methodology, which is a central estimate of likely future claim payments. This central estimate is intended to be neither optimistic nor pessimistic about the development of claims in the future. Goods and services tax (GST) on claims expenditure BSA incurs GST for which it is currently unable to claim a decreasing adjustment, in accordance with Division 78 of “A New Tax System (Goods and Services Tax) Act 1999” on all claim settlements made from and including 1 July 2000. For claims settled after �0 June 2000 for events which occurred before 1 July 2000 BSA is able to claim a percentage of the GST paid (in accordance with the participation rates as detailed in Note �, Underwriting) from its reinsurers. A percentage of the GST paid cannot be passed to the reinsurers for claims for which the event occurred after �0 June 2000. (f) Reinsurance and other recoveries receivable Reinsurance and other recoveries receivable on paid claims, reported claims not yet paid and IBNR’s are recognised as revenue. Recoveries receivable are assessed in a manner similar to the assessment of outstanding claims. Recoveries receivable in relation to “long-tail” classes are measured as the present value of the expected future receipts, which are calculated on the same basis as the liability for outstanding claims. The details of discount and inflation rates applied are included in Note 21, Future claims and associated costs. (g) Receivable and revenue recognition Insurance claims recoverable from licensed builders are recognised when a claim paid to a consumer is finalised. Tribunal fines receivables are recognised when an order from the Tribunal is

Queensland Building Services AuthorityNotes to and forming part of the financial statementsFor the year ended 30 June 2005

Page 46: About us - Queensland Building and Construction Commission · 2014-06-03 · Helping Queenslanders Build Better About usAbout us ABOUT BSA BSA is a statutory authority, and is part

46

issued in favour of BSA. Magistrates Court fines receivables are recognised when a conviction from the Magistrates Court is issued in favour of BSA. Appraisals of government contracts receivable are recognised when the services provided by BSA are invoiced at the end of each month. Licence fees consist of two components an application fee and a renewal fee. Application fees are recognised upon receipt. Renewal fees are due on each renewal anniversary or upon approval of an application for a licence and are recognised on the due date of the renewal. In the case of an application recognition occurs on the date of approval of the application. Debtors are reviewed on an ongoing basis. Debts, which are known to be uncollectible, are written off. A provision for doubtful debts is raised where some doubt exists. (h) Non-current assets Actual cost is used for the initial recording of all asset acquisitions. Cost is determined as the value given as consideration plus costs incidental to the acquisition, including all other costs incurred in getting the assets ready for use, including architects’ fees and engineering design fees. The threshold for recognising non-current physical assets in the financial statements on acquisition is $1 000. (i) Operating leases Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor, are charged as expenses in the periods in which they are incurred. (j) Depreciation and amortisation Depreciation and amortisation are provided as appropriate on all non-current assets, other than land, using a straight line method of calculation at rates determined by the estimated useful life of the assets to BSA commencing from the time the asset is held ready for use. Estimates of remaining useful lives are made on a regular basis for all assets, with annual reassessment for major items. Depreciation commences from the date an asset is controlled, serviceable and ready for use. The rates of each class of asset are: Office Furniture and Equipment 2% - ��% Motor Vehicles 15% Computer Equipment ��% Leasehold Improvements depreciated over the life of the applicable lease agreement or the estimated useful life of the improvement to the economic entity, whichever is the shorter. The rates are varied between 16% –50% Software acquired 20% Software developed ��%

Gains or losses arising from the sale or disposal of non-current assets are brought to account in the determination of the operating result for the year in which the sale or disposal took place.

(k) Other financial assets Overnight facilities in both funds are recorded at cost. Government and semi-government stock facilities in both funds are measured at their net market value at each balance date. Changes in the net market values of investments (or cost of acquisition, if acquired during the financial year) are recognised as revenue or expenses in the Statement of Financial Performance. Income derived from investments is brought to account when earned. (l) Employee leave and retirement benefits Wages, salaries, annual leave and sick leave The provisions for employee entitlements to wages, salaries, annual leave and sick leave represent the amount which BSA has a present obligation to pay resulting from employees’ services provided up to the balance date. The provisions have been calculated at the nominal amounts based on the expected settlement amounts and include related on-costs. Long service leave The liability for employee entitlements to long service leave represents the present value of the estimated future cash outflows to be made by BSA resulting from employees’ services provided up to the balance date. Liabilities for employee entitlements which are not expected to be settled within twelve months are discounted using the rates attaching to national government securities at balance date, which most closely match the terms of maturity of the related liabilities. In determining the liability for employee entitlements, consideration has been given to future increases in wage and salary rates, and the BSA’s experience with staff separations. Related on-costs have also been included in the liability. The long service leave provision also takes into account recognition of employees’ prior service in other state, local or federal government entities. Recognition of prior service has been agreed as part of the Enterprise Development Agreement for BSA. Superannuation fund Superannuation contributions made by BSA are contributed to an employee superannuation scheme and to other funds on behalf of its Board Members as required under applicable award legislation. These contributions are expensed when incurred. BSA has no obligation to cover any shortfall in any of the funds’ obligations to provide benefits to employees or Board members on retirement.

Queensland Building Services AuthorityNotes to and forming part of the financial statementsFor the year ended 30 June 2005

Page 47: About us - Queensland Building and Construction Commission · 2014-06-03 · Helping Queenslanders Build Better About usAbout us ABOUT BSA BSA is a statutory authority, and is part

47

(m) Payables These amounts represent liabilities for goods and services provided to the economic entity prior to the end of the financial year and which are unpaid. The amounts are unsecured and are usually paid within �0 days of recognition. (n) Intangible assets and expenditure carried forward Costs associated with the computer system development project are capitalised and amortised on a straight-line basis over the period of their expected benefit, which is three years. (o) Reserves A contractor and consumer education reserve has been established for the purpose of encouraging and assisting education and research related to the building industry as allowed under the Queensland Building Services Authority Act 1991, subsection 25(5). Transfers to this reserve are determined by the General Statutory Fund’s profits.

The asset revaluation reserves were created in prior years to record increments in the value of property, plant and equipment. (p) Cash Cash balances in BSA’s General and Insurance bank accounts are cleared to QTC Cash Fund overnight to maximise investment returns. Consequently, period end Cash at Bank may reflect a negative balance due to the timing of unpresented cheques. BSA does not have an overdraft facility and is precluded from doing so by legislation. For purposes of the statement of cash flows, cash includes deposits at call which are readily convertible to cash on hand and are subject to insignificant risk of changes in value. BSA holds moneys in trust on behalf of parties in dispute over building matters. These funds are not included in these accounts. As at �0 June 2005, the balance of this trust account amounted to $91 �59. (q) Goods and Services Tax (GST) Revenues (including earned premiums), expenses and assets are recognised net of the amount of GST unless (in relation to expenses and assets) the amount of GST incurred is not recoverable from the Australian Tax Office (ATO). In these instances the GST is recognised as part of the amount of the expense or is recognised as part of the cost of acquisition of the asset. Receivables and payables are recognised inclusive of the amount of GST that is receivable or payable. An allowance for GST payable on future claims has been included in the provision for future claims. Cash flows are included in the Statement of Cash Flows on a gross basis with the GST components of the cash flows shown as separate line items. The GST components of cash flows arising from investing and financing activities which are recoverable from, or payable to, the ATO are classified as operating cash flows. (r) Income taxation BSA is exempt from income taxation pursuant to Division 1AB, Subdivision A Sections 24AK to 24AV of the Income Tax Assessment Act 1936.

(s) Rounding Amounts have been rounded to the nearest thousand dollars, except where otherwise indicated. (t) International Financial Reporting Standards The Financial Reporting Council has determined that all entities preparing general purpose financial statements will apply the Australian equivalents to International Financial Reporting Standards (AEIFRS) for reporting periods beginning on or after 1 January 2005. The BSA established an AEIFRS Steering Committee and Work Group to assist in the implementation of the new reporting requirements. All Australian equivalents to IFRS’s have been reviewed for implications in regard to policies, procedures, systems and financial impacts arising from such changes. The following disclosure outlines the likely impacts on the financial position of BSA, had the financial statements been prepared using AEIFRS, based on BSA’s accounting policy decisions current at the date of this financial report. Readers of the financial report should note that further developments in AEIFRS (for example, the release of further pronouncements by the Australian Accounting Standards Board and the Urgent Issues Group), if any, may result in changes to the accounting policy decisions made by BSA and, consequently, the likely impacts outlined in the following disclosure. • In accordance with AASB 116 - Property, Plant and Equipment, a provision for restoration of leased premises must be established. This provision will consist of the expected costs to restore at the expected date of restoration. The provision will be discounted back to the transition date of 1 July 2004. At subsequent reporting dates, this provision must be reassessed for ongoing accuracy. The unwinding of the discount is treated as a finance charge. It is expected that the financial impact of recognising this provision will be a decrease in retained earnings of $148 598, an increase in provisions of $245 019 and an increase in property, plant and equipment of $96 421.

• In accordance with the requirements of AASB 117 - Leases, lease payments (excluding costs for services such as insurance and maintenance) must be recognised as an expense on a straight-line basis over the term of the lease, even if the payments are not on that basis. The financial impact of this change will result in a decrease in retained earning and an increase in liabilities of $142 659. • On the basis that fair value accounting for insurance contracts (Phase II of the insurance project) has been deferred until at least �1 December 2007 and that no committed date for Phase II has been made by either the International Accounting Standards Board (“IASB”) or the Australian Accounting Standards Board (“AASB”), BSA has not yet quantified the impact of this change under Australian equivalents to IFRS.

• The introduction of AASB 1�6 - Impairment of Assets requires an annual impairment test to be performed on all non-current physical and intangible assets. The assets of BSA are currently valued at written-down replacement cost and the effect of this Standard is expected not to be material.

Queensland Building Services AuthorityNotes to and forming part of the financial statementsFor the year ended 30 June 2005

Page 48: About us - Queensland Building and Construction Commission · 2014-06-03 · Helping Queenslanders Build Better About usAbout us ABOUT BSA BSA is a statutory authority, and is part

48

Note 2005 2004

$’000 $’000

Note 2 Licence renewal and application fees

Renewal fees 14 974 1� 456

Application fees 2 125 2 158

17 099 15 614

Note 3 Underwriting

3.1 Underwriting premiums

Premiums received �1 177 �0 816

Less: Outward reinsurance premium expense (2� 222) (20 908)

BSA’s share of premiums 7 955 9 908

Less: Unearned premiums at end of year (4 204) (4 7�6)

Total premiums received and earned during the year � 751 5 172

Add: Unearned premiums at beginning of year 4 7�6 � 062

Underwriting premiums 8 487 8 234

Underwriting claims

Claims approved and charged �1 912 �8 288

Less: Reinsurance and other recoveries revenue (20 915) (25 874)

Underwriting claims 24 10 997 12 414

Loss on underwriting (2 510) (4 180)

Participation in the Insurance Scheme

Date BSA Brokers/Reinsurers

Pre - 01/07/91 10.0% 90.0%

01/07/91 - �0/06/98 25.0% 75.0%

01/07/98 - �0/09/99 �0.0% 70.0%

01/10/99 - �0/06/0� 25.0% 75.0%

01/07/0� - �0/06/04 �2.5% 67.5%

01/07/04 - �0/06/05 25.0% 75.0%

3.2 Administration Fees

Administration fees received 10 992 11 189

Movement in the provision for future claims processing (1 557) (1 807)

Administration fees after provision for future claims

processing 9 435 9 382

Queensland Building Services AuthorityNotes to and forming part of the financial statementsFor the year ended 30 June 2005

Page 49: About us - Queensland Building and Construction Commission · 2014-06-03 · Helping Queenslanders Build Better About usAbout us ABOUT BSA BSA is a statutory authority, and is part

49

Note 2005 2004

$’000 $’000

Note 4 Investment revenue

Interest 800 1 02�

Changes in net market value of

investments - unrealised 6 185 4 444

6 985 5 467

Note 5 Other revenue

Court fines awarded 914 5�9

Search fees 168 2�4

Owner builder fees 1 0�5 9�9

Gain / (Loss) on sale of non-current assets 6 ( 2�) ( 16)

Appraisal of Government Contracts �46 27�

Other �56 257

2 796 2 226

Note 6 Gain on disposal of non-current assets

Proceeds from sale of non-current assets 400 �85

Carrying value of non-current assets sold or disposed ( 42�) ( 401)

Gain on disposal 5 ( 23) ( 16)

Note 7 Administrative expenses

Equipment maintenance 91 87

Information Systems Maintenance 702 656

Computer lease rentals 757 708

Miscellaneous office equipment 74 �2

Office rentals and outgoings 1 677 1 555

Legal fees 4�5 �11

Engineering and other commission fees 975 1 104

Consultants fees 645 18�

Printing and stationery 494 524

Travelling expenses 111 1�1

Motor vehicle expenses 177 1�7

Postage and telephones 858 810

Advertising 116 109

Financial & insurance costs 646 579

7 758 6 926

Queensland Building Services AuthorityNotes to and forming part of the financial statementsFor the year ended 30 June 2005

Page 50: About us - Queensland Building and Construction Commission · 2014-06-03 · Helping Queenslanders Build Better About usAbout us ABOUT BSA BSA is a statutory authority, and is part

50

Note 2005 2004

$’000 $’000

Note 8 Employment expenses

Salary costs 11 �41 10 ��0

Oncosts � 029 2 762

Taxation 718 699

Training 41� ��9

Recruitment and other costs 62 9�

15 563 14 223

Note 9 Other expenses

Auditors remuneration - audit of financial statements �1 44

Board members’ fees and functions 77 92

Doubtful debts and bad debts 298 �60

Depreciation 16 410 402

Amortisation 588 66�

1 404 1 561

The actual audit fee for the 2005 year amounts to $54 000.

Note 10 Reserves

Consumer and contractor education reserve 1(o) 82 82

Asset revaluation reserve 444 444

526 526

Contractor and consumer education reserve

Balance at beginning of year 82 82

Add: funds transferred from retained profits - -

Less: funds transferred to retained profits - -

Balance at end of year 82 82

Asset revaluation reserve

Balance at beginning of year 444 444

Add: Revaluation of assets - -

Less: decrement on write down of assets - -

Balance at end of year 444 444

Queensland Building Services AuthorityNotes to and forming part of the financial statementsFor the year ended 30 June 2005

Page 51: About us - Queensland Building and Construction Commission · 2014-06-03 · Helping Queenslanders Build Better About usAbout us ABOUT BSA BSA is a statutory authority, and is part

51

Note 2005 2004

$’000 $’000

Note 11 Retained profits

Balance at beginning of year 18 804 1� 005

Profit from ordinary activities 9 080 5 799

Balance at end of the year 27 884 18 804

Note 12 Other financial assets

Government and semi-government stock - at market value 77 86� 57 0�4

77 863 57 034

Note 13 Receivables

Current

Sundry debtors 22 665 26 949

Less: Provision for doubtful debts (19 �55) (22 6�4)

3 310 4 315

Note 14 Reinsurance receivable

Current

Reinsurers’ share of future claims provision 13 526 13 927

Non-Current

Reinsurers’ share of future claims provision 46 515 37 415

Note 15 Other assets

Current

Prepayments 10� 1�0

Prepayments - outward reinsurance on unearned premiums 20 11 744 10 165

11 847 10 295

Note 16 Plant and equipment

At cost � 028 2 8�1

Less: Accumulated depreciation (1 544) (1 28�)

1 484 1 548

Capital prepayment - 8

1 484 1 556

Movement in carrying amount of plant and equipment

Leasehold Plant &

Improvements Equipment Total

$’000 $’000 $’000

Carrying amount at beginning of year 411 1 1�7 1 548

Acquisitions 127 642 769

Carrying value of non-current assets sold or disposed - ( 42�) ( 42�)

Depreciation ( 152) ( 258) ( 410)

Carrying amount at end of year 386 1 098 1 484

Queensland Building Services AuthorityNotes to and forming part of the financial statementsFor the year ended 30 June 2005

Page 52: About us - Queensland Building and Construction Commission · 2014-06-03 · Helping Queenslanders Build Better About usAbout us ABOUT BSA BSA is a statutory authority, and is part

52

Note 2005 2004

$’000 $’000

Note 17 Intangibles

Non-current

Computer systems redevelopment costs 1(n) 4 618 4 160

Less: Amortisation (� 244) (2 655)

1 374 1 505

Note 18 Payables

Current

Sundry creditors 12 81� 1� 669

Accruals 284 700

GST collected on premiums 96 1�1

13 193 14 500

Note 19 Provisions

Current

Long service leave 144 1 061

Annual leave 1 506 1 252

1 650 2 313

Non-Current

Long service leave 1 661 597

1 661 597

Note 20 Unearned premiums

BSA’s share � 4 204 4 7�6

Reinsurers’ share 15 11 744 10 165

15 948 14 901

Queensland Building Services AuthorityNotes to and forming part of the financial statementsFor the year ended 30 June 2005

Page 53: About us - Queensland Building and Construction Commission · 2014-06-03 · Helping Queenslanders Build Better About usAbout us ABOUT BSA BSA is a statutory authority, and is part

53

2005 2004

$’000 $’000

Note 21 Future claims and associated costs

Expected future claims payments 125 072 104 972

Discount to present value (2� 891) (19 �16)

Liability for outstanding claims 101 181 85 656

Current 20 102 22 779

Non-Current 81 079 62 877

101 181 85 656

Represented by:

Future claims provision 90 85� 76 884

Future claims processing provision 10 �28 8 772

101 181 85 656

The following average inflation rate and discount rates were

used in the measurement of outstanding claims:

For the succeeding year

Inflation rate �.0% �.5%

Discount rate 5.0% 5.5%

For subsequent years

Inflation rate �.0% �.5%

Discount rate 5.0% 5.5%

The weighted average expected term of settlement of the

outstanding claims from the balance date is estimated to be: �.� years �.1 years

2005 2004

$’000 $’000

Note 22 CommitmentsOperating lease commitments

Total operating lease expenditure, exclusive of GST, contracted for at balance date but not provided for in the accounts payable:

- not later than one year 1 64� 1 956

- later than one year and not later than five years 1 �4� � �01

- later than five years - -

2 986 5 257

BSA leases property, plant and equipment under operating leases expiring from 1 to 5 years. Property leases generally provide BSA with a right of renewal at which time all terms are renegotiated. Lease payments are generally fixed, but with inflation escalation clauses on which contingent rentals are determined.

Queensland Building Services AuthorityNotes to and forming part of the financial statementsFor the year ended 30 June 2005

Page 54: About us - Queensland Building and Construction Commission · 2014-06-03 · Helping Queenslanders Build Better About usAbout us ABOUT BSA BSA is a statutory authority, and is part

54

Note 23 Segment information As stated in Note 1(a) BSA is comprised of a General Statutory Fund and an Insurance Fund. The General Statutory Fund derives the majority of its revenue from fees received from building industry contractors to obtain and renew licences required under the Queensland Building Services Authority Act 1991 The Insurance Fund derives its revenue from underwriting premiums and administration fees from operating the insurance scheme.

Queensland Building Services AuthorityNotes to and forming part of the financial statementsFor the year ended 30 June 2005

Primary reporting segments

2005 2004 2005 2004 2005 2004

$’000 $’000 $’000 $’000 $’000 $’000

Revenue

Revenue from external sources 20 �70 18 126 24 4�2 22 797 44 802 40 92�

Total segment revenue 20 �70 18 126 24 4�2 22 797 44 802 40 92�

Expenditure

Expenditure from external sources 16 80� 14 9�6 18 919 20 188 �5 722 �5 124

Total segment expenditure 16 80� 14 9�6 18 919 20 188 �5 722 �5 124

Segment results from ordinary activities � 567 � 190 5 51� 2 609 9 080 5 799

Repayment of 2001/2002 surcharge (2 769) - 2 769 - - -

Net segment result 798 � 190 8 282 2 609 9 080 5 799

Assets

Segment assets 16 450 15 �60 145 59� 121 9�7 162 04� 1�7 297

Liabilities

Segment liabilities 4 2�1 � 940 129 402 114 027 1�� 6�� 117 967

Net assets

Segment net assets 12 219 11 420 16 191 7 910 28 410 19 ��0

Other segment information

Acquisition of non-current segment assets 1 224 995 � 61 1 227 1 056

Depreciation and amortisation of non-current segment assets 918 974 80 91 998 1 065

Other non-cash segment expenses/(gains) �65 ��7 (2 466) 8 585 (2 101) 8 922

General Statutory Fund Insurance Fund Consolidated Entity

Page 55: About us - Queensland Building and Construction Commission · 2014-06-03 · Helping Queenslanders Build Better About usAbout us ABOUT BSA BSA is a statutory authority, and is part

55

Note 24 Net claims incurred

Current period claims relate to risks borne in the current reporting period. Prior period claims relate to a reassessment of the

2005 2004

Current Prior Total Current Prior Total

year years $’000 year years $’000

$’000 $’000 $’000 $’000

Gross claims incurred and related expenses - undiscounted 18 816 17 114 �5 9�0 19 0�9 25 545 44 584

Reinsurance and other recoveries - undiscounted (12 829) (11 007) (2� 8�6) (11 68�) (17 417) (29 100)

Net claims incurred - undiscounted 5 987 6 107 12 094 7 �56 8 128 15 484

Discount and discount movement - gross claims incurred (5 154) 1 408 (� 746) (� 417) (2 879) (6 296)

Discount and discount movement - reinsurance and other recoveries � 6�0 ( 702) 2 928 2 097 1 965 4 062

Net discount movement (1 524) 706 (818) (1 �20) ( 914) (2 2�4)

Total discounted net incurred claims 4 46� 6 81� 11 276 6 0�6 7 214 1� 250

Explanation of material variances:

Subsidence claims reached a peak in 200�/04. A new industry standard introduced by BSA and stable climatic conditions have resulted in a reduction in failures and associated claims. Stabilisation in the industry following a boom construction cycle has reduced the incidence of contractor failure.

Note 2005 2004

$’000 $’000

Other recoveries undiscounted

Claims recoverable from Licensees 1� 097 15 758

Provision for doubtful debts (12 008) (1� 989)

1 089 1 769

Reinsurers’ portion ( 810) ( 9��)

Total undiscounted recoveries 279 836

Total discounted net incurred claims 11 276 1� 250

Less: other recoveries undiscounted (279) ( 8�6)

Underwriting claims �.1 10 997 12 414

Queensland Building Services AuthorityNotes to and forming part of the financial statementsFor the year ended 30 June 2005

risks borne in the previous reporting period.

Page 56: About us - Queensland Building and Construction Commission · 2014-06-03 · Helping Queenslanders Build Better About usAbout us ABOUT BSA BSA is a statutory authority, and is part

56

Note 25 Contingent liability - consolidated revenue grant During the 1998/99 financial year BSA received a $1.45M grant from the State Government Consolidated Revenue. The grant was made to provide short-term funding support for BSA pending resolution of BSA’s long-term funding strategy through the Government’s Better Building Industry reforms. The grant was treated as income in BSA’s accounts and as a general expense in the Government’s accounts for 1998/99. As a result of a subsequent Cabinet Decision, the Government requires the grant to be repaid on a future date. Treasury advice is that the funds are to be repaid as a dividend, with the timing of this repayment dependent on BSA’s capacity to do so and to be examined in subsequent annual budget development processes. As at �0 June 2005, the value of the contingent liability remained at $1.45M. Provision for payment of the contingent liability, in full or part, was not made in the 2005/06 BSA budget. Professional indemnity insurance

BSA has notified its insurers of seven potential claims which could give rise to professional indemnity liabilities. As at �0 June 2005 five of the potential claims had a combined potential amount outstanding of approximately $180 000 attached. BSA is unable to assess the amount of the liability attaching to the other two potential claims.

Note 26 Financial instruments BSA invests in Queensland Investment Corporation (QIC) Cash Trust, QIC Investment Trust and Queensland Treasury Corporation (QTC) Cash Fund. The investment managers of the pooled investment vehicles have invested in a variety of financial instruments, including derivatives, which expose BSA’s investment to a variety of investment risks, including interest rate risk, credit risk, market risk and currency risk. BSA obtains regular reports from each investment manager on the nature of the investment made and the associated risks and returns. The BSA seeks information from the investment managers of each proposed collective investment, and may also seek independent advice from other qualified persons, so as to determine the nature and extent of risk, and expected returns associated with each investment prior to determining its suitability as an investment for BSA. This includes the receipt of a formal Risk Management Statement from each manager.

a) Interest Rate Risk Exposures

BSA’s exposure to interest rate risk and the effective weighted average interest rate for each class of financial assets and financial liabilities is set out below.

2005 2004

Floating Non- Floating Non-

interest interest Total interest interest Total

rate Bearing rate Bearing

$’000 $’000 $’000 $’000 $’000 $’000

Financial Assets

Cash - �77 �77 - ( 881) ( 881)

Receivables - � �10 � �10 - 4 �15 4 �15

Investments

- At call deposits 5 747 - 5 747 12 1�1 - 12 1�1

- QIC stock 77 86� - 77 86� 57 0�4 - 57 0�4

8� 610 � 687 87 297 69 165 � 4�4 72 599

Weighted average return 10.18% 8.41%

Financial Liabilities

Payables - (1� 19�) (1� 19�) - (14 500) (14 500)

Net Financial Assets / (Liabilities) 8� 610 (9 506) 74 104 69 165 (11 066) 58 099

Queensland Building Services AuthorityNotes to and forming part of the financial statementsFor the year ended 30 June 2005

Page 57: About us - Queensland Building and Construction Commission · 2014-06-03 · Helping Queenslanders Build Better About usAbout us ABOUT BSA BSA is a statutory authority, and is part

57

Note 26 Financial instruments (continued)

b) Credit risk exposures The credit risk on financial assets of BSA that have been recognised in the Statement of Financial Position is generally the carrying amount, net of any provisions for loss. BSA does not have any material credit risk exposure to any single debtor, or group of debtors, under financial instruments entered into by BSA. The credit risk exposure does not take into account the value of any security held in the event other parties fail to perform their obligations under a financial instrument. Note 27 Reconciliation of net cash provided by operating activities to operating profit from ordinary activities

c) Net fair value of financial assets and liabilities The net fair value of cash and cash equivalents and non-interest bearing monetary financial assets and financial liabilities approximates their carrying value. The net fair value of other monetary financial assets, being Queensland Investment Corporation Stock is based on the quoted market price provided by QIC.

2005 2004

$’000 $’000

Net cash provided by operating activities 10 449 15 �28

Non-cash items in operating surplus:

Provisions for doubtful debts � 279 (5 001)

Provision for employee entitlement ( 401) ( 404)

Depreciation and amortisation ( 998) (1 065)

Net gain on sale of plant and equipment ( 2�) ( 16)

Changes in net market value of investments 6 072 4 444

Net change in operating assets and liabilities:

Increase / (decrease) in receivables 4 415 16 5�9

Increase / (decrease) in other current assets ( 27) 58

(Increase) / decrease in sundry creditors and accruals 1 �07 (4 475)

(Increase) / decrease in accrued claims (15 525) (17 9�4)

(Increase) / decrease in unearned premiums ( 1 047) (2 655)

Increase / (decrease) in prepayments - outward reinsurance 1 579 980

Profit from ordinary activities 9 080 5 799

Queensland Building Services AuthorityNotes to and forming part of the financial statementsFor the year ended 30 June 2005

Page 58: About us - Queensland Building and Construction Commission · 2014-06-03 · Helping Queenslanders Build Better About usAbout us ABOUT BSA BSA is a statutory authority, and is part

58

Note 28 Reconciliation of cash

Note 2005 2004

$’000 $’000

For the purposes of the Statement of Cash Flows, cash includes cash on hand and on deposit with financial institutions for operating activities. Cash at the end of the financial year as shown in the Statement of Cash Flows is reconciled to the Statement of Financial Position as follows:

Cash 1(p) �77 ( 881)

Deposits at call 12 5 747 12 1�1

Total cash and cash equivalents 6 124 11 250

The Queensland Building Services Authority Act 1991 requires the cash and cash equivalents to the General Statutory Fund and Insurance Fund to remain separate. The cash and cash equivalent balance of the two funds as at �0 June 2005 is:

General Statutory Fund

Cash 62 154

Deposits at call 1 901 5 882

Insurance Fund

Cash �15 (1 0�5)

Deposits at call � 846 6 249

Queensland Building Services AuthorityNotes to and forming part of the financial statementsFor the year ended 30 June 2005

Page 59: About us - Queensland Building and Construction Commission · 2014-06-03 · Helping Queenslanders Build Better About usAbout us ABOUT BSA BSA is a statutory authority, and is part

59

Certificate of the Queensland Building Services Authority

We have prepared the following consolidated financial statements pursuant to the provisions of the Financial Administration and Audit Act 1977, Financial Management Standard 1997 and other prescribed requirements and certify that in our opinion: (a) the prescribed requirements in respect of the establishment and the keeping of accounts have been complied with in all material respects; (b) the statements have been drawn up to present a true and fair view, in accordance with prescribed accounting standards, of the transactions of the Queensland Building Services Authority for the financial year ended �0 June 2005 and of the financial position of the Authority at the end of that year.

Garry Rossow Chairman Ian Jennings General Manager Brisbane September 2005

Page 60: About us - Queensland Building and Construction Commission · 2014-06-03 · Helping Queenslanders Build Better About usAbout us ABOUT BSA BSA is a statutory authority, and is part

60

INDEPENDENT AUDIT REPORT QUEENSLAND BUILDING SERVICES AUTHORITy Scope The financial report The financial report of Queensland Building Services Authority consist of the statement of financial performance, statement of financial position, statement of cash flows, notes to and forming part of the financial statements and certificates given by the Chairperson and the General Manager of Queensland Building Services Authority, for the year ended �0 June 2005. The Authority’s responsibility The Authority is responsible for the preparation and true and fair presentation of the financial report, the maintenance of adequate accounting records and internal controls that are designed to prevent and detect fraud and error, and for the accounting policies and accounting estimates inherent in the financial report. Audit approach As required by law, an independent audit was conducted in accordance with QAO Auditing Standards to enable me to provide an independent opinion whether in all material respects the financial report is presented fairly, in accordance with the prescribed requirements, including any mandatory financial reporting requirements as approved by the Treasurer for application in Queensland. Audit procedures included - . examining information on a test/sample basis to provide evidence supporting the amounts and disclosures in the financial report, . assessing the appropriateness of the accounting policies and disclosures used and the reasonableness of significant accounting estimates made by the Authority, . obtaining written confirmation regarding the material representations made in conjunction with the audit, and . reviewing the overall presentation of information in the financial report. Independence The Financial Administration and Audit Act 1977 promotes the independence of the Auditor-General and QAO authorised auditors. The Auditor-General is the auditor of all public sector entities and can only be removed by Parliament. The Auditor-General may conduct an audit in any way considered appropriate and is not subject to direction by any person about the way in which powers are to be exercised. The Auditor-General has for the purposes of conducting an audit, access to all documents and property and can report to Parliament matters which in the Auditor-General’s opinion are significant. Audit Opinion In accordance with section 46G of the Financial Administration and Audit Act 1977 -

(a) I have received all the information and explanations which I have required; and (b) in my opinion - (i) the prescribed requirements in respect of the establishment and keeping of accounts have been complied with in all material respects; and (ii) the financial report has been drawn up so as to present a true and fair view, in accordance with the prescribed accounting standards of the transactions of the Queensland Building Services Authority for the financial year 1 July 2004 to �0 June 2005 and of the financial position as at the end of that year.

Page 61: About us - Queensland Building and Construction Commission · 2014-06-03 · Helping Queenslanders Build Better About usAbout us ABOUT BSA BSA is a statutory authority, and is part

61

About BSA ..................................................................1

Accreditation and Audits .............................................27

Advice and Information ...............................................18

Audits and Investigations..............................................13

Board induction and training..........................................8

Board Remuneration......................................................8

Board Roles and Responsibilities.....................................7

Board Self Assessment...................................................8

BSA Performance .........................................................2

Budgeting (Strategic Business Planning and)...................12

Building Defects .........................................................19

Chairman’s Report .......................................................4

Change Management..................................................30

Code of Conduct .......................................................14

Communication Objective .............................................1

Complaints.................................................................18

Compliance................................................................25

Composition of the Board..............................................8

Corporate Governance..................................................6

Customer Loyalty and Commitment................................18

Customers..................................................................17

Employee Relations......................................................32

Employee Survey.........................................................33

Environment...............................................................15

Executive Team...........................................................10

Finance, Audit and Risk Committee...............................11

Finance Committee......................................................11

Financial Management.................................................36

Financial Overview......................................................35

Freedom of Information................................................15

General Manager’s Report.............................................5

Highlights.............................................Inside Front Cover

Industry Education.......................................................27

Information Privacy......................................................15

Information Systems.....................................................15

Insurance Committee...................................................11

Insurance scheme viability............................................21

Insuring customers.......................................................20

International Financial Regulatory Standards (IFRS)..........21

Investments.................................................................12

Key Workforce Statistics and Indicators..........................33

Knowledge Management.............................................30

Leadership Development Program.................................30

Licence Application Process..........................................18

Licence Class Review...................................................24

Licensee Database.......................................................18

Managing Consumer Claims........................................20

Minister Approved Audits.............................................26

Mission........................................................................1

Monitoring, Accountability and Risk Management..........12

On Line Licence Search................................................18

Owner Builder............................................................18

People.......................................................................29

People and Team Development.....................................30

Performance................................................................2

Performance Management...........................................31

Policy Committee........................................................11

Premium Structure........................................................20

Private Building Certification.........................................27

Rapid Adjudication.....................................................24

Index Index

Page 62: About us - Queensland Building and Construction Commission · 2014-06-03 · Helping Queenslanders Build Better About usAbout us ABOUT BSA BSA is a statutory authority, and is part

62

Recoveries..................................................................27

Rectification of Building Work Policy..............................24

Regulation..................................................................23

Reinsurance................................................................20

Relationship Management............................................30

Resolving Complaints..................................................18

Restructure of Insurance Tender Panels...........................21

Return on Investment....................................................31

Revenue.....................................................................36

Risk Management.......................................................12

Role of the General Manager ......................................10

Statement of Cashflows................................................39

Statement of Financial Performance...............................36

Statement of Financial Position......................................38

Strategic Business Planning and Budgeting.....................12

Supervision of Building Work........................................24

Value for Money...........................................................3

Values.........................................................................1

Vision.........................................................................1

Whistleblowers Protection Act 1994.............................15

Workplace Health and Safety.................................................32

DIAGRAMS

Organisational Chart.................................................................10

Planning and reporting framework..........................................13

CHARTS

Complaints received/finalised compared to

building activity...........................................................................19

TABLES

Claim payments by type...........................................................20

Insurance policies by construction year..................................19

% and % change Owner Builder Permits (OBP’s) issued

and Construction Notifications (CN’s) by year.....................18

Board and committee meetings...............................................12

Comparison of licence fees in financial category SC2.........3

Compliance activity and outcomes.........................................25

Consolidated outcomes..................................Inside Front Cover

Contractual investigations.........................................................26

Employee survey ratings............................................................33

Financial indicators....................................................................38

Freedom of Information applications......................................15

Funds invested as at 30 June...................................................12

Minister approved audit results................................................26

Number of Women as a % of total workforce......................32

Performance - Critical Areas.......................................................2

Premium comparison Qld and interstate..................................3

Priority areas for 2005/06 internal audit..............................14

Private certification – complaints received.............................27

Private certification – complaint status....................................28

Results of 2004/05 internal audit program...........................13

Return on investment..................................................................31

Staff as at 30 June 2005..........................................................32

Top ten defects............................................................................19

Workforce diversity.....................................................................32

Index Index

Page 63: About us - Queensland Building and Construction Commission · 2014-06-03 · Helping Queenslanders Build Better About usAbout us ABOUT BSA BSA is a statutory authority, and is part