Fewer staff and contractors lead to APRA $45.2m surplus

The superannuation funds, insurers and banks which pay levies to help fund the operations of the Australian Prudential Regulation Authority (APRA) might be pleased to know it finished last financial year with an operating surplus of $45.2 million.

There were numerous contributing factors which generated the surplus but, in general terms, it the regulator benefited from lower staffing and contractor levels over the period.

The good news for APRA-regulated entities is that the surplus will likely feed into lower levies in the current 12 month period.

APRA’s annual report explained the surplus in the following terms:

Expenses: Total expenses were $34.1m below budget, primarily attributable to the following factors:

– Employee Benefits: Underspend of $21.0m, reflecting lower-than-budgeted average staffing levels and the deferral of certain project related activities to the 2025–26 financial year.

– Supplier Expenses: Underspend of $14.0m, due to contractor labour market constraints and the deferral of certain project related activities to the 2025–26 financial year.

– Depreciation and Amortisation: Lower than budget by $2.2m, driven by reduced capitalisation driven expenditure and the renewal of office lease arrangements.

– Asset Write-offs: Totalled $2.1m, relating to the disposal of leasehold improvements and computer hardware following a reduction in office space and the renewal of the Sydney office lease during the reporting period.

Own-Source Revenue: Own-source revenue exceeded budget by $10.2m, primarily due to:

– The reversal of previously anticipated restoration costs reflects the removal of restoration obligations under the terms of the renewed office lease.

– Higher-than-expected cost recoveries for services provided, including secondments to other government agencies and capital adequacy review for Authorised Deposit-taking Institutions (ADIs) under Basel requirements.

Revenue from Government: – Revenue from Government was $3.8m above budget, reflecting a higher-than-projected asset growth rate in the superannuation industry during the June 2024 quarter. This over-collection will be returned to industry through the 2025–26 levy collection process.

Operating Result: – The operating surplus of $45.2m was $48.1m higher than budget, driven by the variances outlined above.