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P A R L I A M E N T O F T A S M A N I A

Budget Paper No 1

The Budget

Presented by

Lara Giddings MP, Treasurer, for the information of

Honourable Members, on the occasion of the Budget, 2013-14

Useful 2013-14 Budget and Government Web sites

www.budget.tas.gov.au Contains the 2013-14 Budget Paper documents and related

information including Budget Fact Sheets and Government Media

Releases.

www.treasury.tas.gov.au Contains the 2013-14 Budget Papers and Budget Paper archives.

www.tas.gov.au Provides links to the Websites of a wide range of Tasmanian public

and private sector organisations.

www.service.tas.gov.au Provides a comprehensive entry point to Government services in

Tasmania.

http://www.tas.gov.au/

http://www.service.tas.gov.au/

i

CONTENTS

1 The 2013-14 Budget

2 Tasmanian Economy

3 The Fiscal Strategy

4 General Government Revenue

5 General Government Expenses

6 Assets and Liabilities

7 Infrastructure Investment

8 Estimated Outcome Including March Quarterly Report

Appendix 1 Uniform Government Reporting

Appendix 2 Policy and Parameter Statement

Appendix 3 Consolidated Fund Estimates

iii

INDEX

1 The 2013-14 Budget 1.1

The 2013-14 Budget 1.2

Net Operating Balance 1.3

Fiscal Balance 1.4

Net Debt 1.4

Revenue Summary 1.5

Expenditure Summary 1.6

Infrastructure Investment 1.7

Economic Outlook 1.8

Appendix 1.1 Major Reforms and Budget Presentation Issues 1.9

Major Industry and Reform Issues 1.10

Budget Presentation and Accounting Issues 1.14

2 Tasmanian Economy 2.1

Current Environment – Overview 2.2

Global Conditions 2.2

Australian Conditions 2.3

Tasmanian Conditions 2.4

Economic Outlook 2.6

Summary of 2012-13 Estimates and 2013-14 Forecasts 2.7

Tasmania's Economic Outlook 2.8

Appendix 2.1 Tasmania's Recent Economic Performance – A Longer Term

Perspective

2.20

3 The Fiscal Strategy 3.1

The Fiscal Strategy 3.2

Fiscal Strategy Status 3.3

Fiscal Strategy Targets 3.5

A Sustainable Budget Position 3.5

Debt and Liability Reduction 3.6

A Competitive Business and Taxation Environment 3.7

iv

Ongoing Infrastructure Investment 3.8

Appendix 3.1 Credit Status of the State Public Sector 3.9

4 General Government Revenue 4.1

Overview 4.2

Grants 4.3

GST Revenue 4.4

Commonwealth Payments for Specific Purposes 4.5

State Taxation 4.10

Taxation Measures 4.12

Payroll Tax 4.13

Taxes on Property 4.14

Taxes on the Provision of Goods and Services 4.16

Taxes on the use of Goods and Services 4.18

Other Revenue Sources 4.19

Sales of Goods and Services 4.19

Fines and Regulatory Fees 4.20

Interest Income 4.21

Dividend, Tax and Rate Equivalent Income 4.21

Other Revenue 4.25

Statement of Risks and Sensitivities 4.26

Grants 4.26

State Taxes 4.28

Returns from Government Businesses 4.28

Appendix 4.1 Commonwealth-State Financial Relations 4.30

Major Issues 4.30

Commonwealth Grants Commission 2013 Update Report 4.31

Appendix 4.2 State Taxation 4.33

Taxation Reform 4.33

Taxation Competitiveness 4.33

5 General Government Expenses 5.1

Overview 5.2

Policy Decisions 5.3

v

6 Assets and Liabilities 6.1

Balance Sheet 6.2

Assets 6.4

Cash and Deposits 6.4

Investments 6.4

Equity Investment in PNFC and PFC Sectors 6.5

Other Equity Investments 6.5

Receivables 6.6

Other Financial Assets 6.6

Non-Financial Assets 6.6

Liabilities 6.8

Borrowings 6.8

Superannuation Liability 6.8

Employee Entitlements 6.12

Payables 6.12

Other Liabilities 6.12

Managing the State's Superannuation and Insurance Liabilities 6.13

General Government Superannuation Liability 6.13

Tasmanian Risk Management Fund 6.14

7 Infrastructure Investment 7.1

Overview 7.2

Infrastructure Investment Projects by Agency 7.5

Major Areas of Infrastructure Investment 7.10

Education 7.10

Hospitals and Health 7.11

Housing 7.12

Information Communications Technology Fund 7.13

Law and Order 7.13

Roads and Rail 7.13

Tourism, Recreation and Culture 7.14

Roads Program 7.15

vi

Reconciliation between Infrastructure Investment and Purchases of Non-Financial

Assets

7.19

8 Estimated Outcome Including March Quarterly Report 8.1

Introduction 8.2

Revenue 8.5

Expenses 8.7

Net Acquisition of Non-Financial Assets 8.11

General Government Balance Sheet 8.13

General Government Cash Flow Statement 8.15

Consolidated Fund 8.17

Appendix 1 Uniform Government Reporting A1.1

Introduction A1.2

Loan Council Allocation A1.2

Government Financial Estimates A1.4

Appendix 2 Policy and Parameter Statement A2.1

Introduction A2.2

Appendix 3 Consolidated Fund Estimates A3.1

Introduction A3.2

Consolidated Fund 2013-14 Budget and Forward Estimates A3.3

Expenditure A3.5

Reserved By Law Items A3.7


1 THE 2013-14 BUDGET

Features

The 2013-14 Budget continues to balance the impact of the current difficult financial and economic

environment with the provision of additional support for important government services and the

implementation of state and national reforms.

The Budget focuses on the achievement of the Government’s key priorities of Jobs - modernising the

economy; People - reducing inequality; and Opportunities - generating new opportunities for children.

Major reforms currently being progressed by the Government include education funding reform, the

National Disability Insurance Scheme, energy industry reform and forest industry reform.

In 2013-14, a General Government Net Operating Balance deficit of $266.9 million and a Fiscal

Balance deficit of $309.1 million are budgeted, with significant improvement in these measures

forecast over the Forward Estimates period.

Net Debt is forecast at $226.1 million in 2014, increasing slightly to $229.0 million in 2015, then

decreasing significantly in 2016 to $95.0 million, before being eliminated in 2017.

Due to the timing of the Australian Government’s Budget, this Budget Paper includes the impact of

updated GST information (which has resulted in a significant reduction in estimated GST receipts) but

does not include the impact of any changes to National Partnership Payments or Specific Purpose

Payments.

As well as achieving a significant improvement in the State’s financial position over the Forward

Estimates, the 2013-14 Budget continues to provide significant levels of funding for the ongoing

implementation of key Government services.

Over the 2013-14 Budget and Forward Estimates period, the Government will invest $1.4 billion in

infrastructure projects.

The Tasmanian economy has been undergoing a period of significant structural change as it adjusts to

a changing external environment.

The very strong Australian dollar continues to put pressure on many of Tasmania's export industries

but the prospects for some parts of Tasmania's agriculture industry continue to be strong and further

expansion in aquaculture and mining is expected.

1.2 The 2013-14 Budget

THE 2013-14 BUDGET The Government has faced a significant deterioration in the State's financial position since the global

economic downturn of 2008. The effect of strategies implemented by the Government in response to the

economic downturn continues to be reflected within the 2013-14 Budget; to ensure the State’s Budget is

returned to a sustainable position.

The Government's response to the fiscal challenge is based on:

returning the State's financial position to a sustainable position;

improving government services through the prioritisation of funding and increasing productivity; and

undertaking infrastructure investment that supports public and private sector productivity improvement

and long-term economic growth.

The 2013-14 Budget focuses on the achievement of the Government’s key priorities of Jobs - modernising

the economy; People - reducing inequality; and Opportunities - generating new opportunities for children. It

also continues the Government’s established strategy of responsible financial management while also

supporting important government services and significant state and national reforms by:

constraining expenditure growth over the Forward Estimates period;

ensuring appropriate levels of funding are provided for vital service areas such as health, education and

public safety;

providing funding to support major reforms in the areas of health, education, disability, energy and

forestry;

maintaining investment in critical infrastructure;

implementing tax reform to support business and ensure the State’s taxation competitiveness remains

strong;

obtaining an appropriate return from Government businesses; and

supporting job creation and innovation.

Table 1.1 details the Key Budget and Forward Estimate aggregates in the 2013-14 Budget.


Table 1.1: Key Budget and Forward Estimate Aggregates

2012-13) 2012-13) 2013-14) 2014-15) 2015-16) 2016-17)

Estimated) Forward) Forward) Forward)

Budget) Outcome) Budget) Estimate) Estimate) Estimate)

$m) $m) $m) $m) $m) $m)

GENERAL GOVERNMENT

Revenue 4 631.5 4 606.7 4 792.1 4 953.4 5 187.6 5 309.3

Expenses 4 914.5 5 032.4 5 059.0 5 117.9 5 221.5 5 299.4

Net Operating Surplus/(Deficit) (283.0) (425.7) (266.9) (164.5) (33.9) 9.9

Fiscal Surplus/(Deficit) (428.6) (441.0) (309.1) (215.2) (26.9) (18.7)

Net Debt at 30 June 134.2 16.4) 226.1 229.0 95.0) (47.0)

Infrastructure Investment 437.7 313.5 350.1 376.8 326.2 367.7

The Key Budget and Forward Estimate Aggregates are discussed further in this chapter.

Net Operating Balance

The Net Operating Balance is estimated to be a deficit of $266.9 million in 2013-14, a deficit of

$164.5 million in 2014-15, a deficit of $33.9 million in 2015-16 and a surplus of $9.9 million in 2016-17.

Chart 1.1 illustrates the Net Operating Balance since 2002-03.

Chart 1.1: Net Operating Balance1

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Actual Estimated Outcome Budget and Forward Estimates


Note: 1. The Estimated Outcome for 2012-13 includes the impact of significant unforseen expenditure such as the costs

associated with the January 2013 Bushfire Emergency.

Fiscal Balance

The Fiscal Balance is estimated to be a deficit of $309.1 million in 2013-14, $215.2 million in 2014-15,

$26.9 million in 2015-16 and $18.7 million in 2016-17.

The receipt of Australian Government funding for capital programs, particularly one-off major projects, has

the effect of inflating the Net Operating Balance outcome. The Net Operating Balance measure reflects the

receipt of revenue from the Australian Government but does not factor in the capital expenditure component

of these funds. The Fiscal Balance does not include this inflationary effect as it incorporates the expenditure

of capital funds, including those funded by the Australian Government.

Chart 1.2 illustrates the Fiscal Balance since 2002-03.

Chart 1.2: Fiscal Balance

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Net Debt

It is estimated that Net Debt will be $226.1 million as at 30 June 2014 and will increase in 2015 to

$229.0 million, before decreasing in 2016 to $95.0 million, with a negative Net Debt position of $47.0 million

forecast in 2017.

Chart 1.3 illustrates the Net Debt since 2003.


Chart 1.3: Net Debt, 2003 to 2017

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Revenue Summary

In 2013-14, General Government Sector total revenue is estimated to be $4 792.1 million, an increase of

$160.6 million or 3.5 per cent above the 2012-13 budgeted revenue of $4 631.5 million.

Chart 1.4 shows the estimated total revenue in 2013-14 and a percentage breakdown of the major revenue

categories.

Chart 1.4: General Government Revenue 2013-14

Grants$2 850.9m (59.5%)Interest Income

$13.8m (0.3%)

Taxation Revenue$940.0m (19.6%)

Fines and Regulatory Fees

$106.4m (2.2%)

Sales of Goods and Services

$354.9m (7.4%)

Dividend, Tax and Rate Equivalent

Income$330.1m (6.9%)

Other Revenue$195.9m (4.1%)


Chapter 4, General Government Revenue, of this Budget Paper provides a detailed explanation of the major

revenue items included in the 2013-14 Budget and over the Forward Estimates period.

Expenditure Summary

In 2013-14, General Government Sector total expenses are anticipated to be $5 059.0 million, an increase

of $144.5 million or 2.9 per cent above the 2012-13 budgeted expenses of $4 914.5 million.

Chart 1.5 provides a summary of General Government expenses by purpose. Further details of this expense

classification are provided in Appendix 1 of this Budget Paper.

Chart 1.5: General Government Expenses by Purpose, 2013-14

Education$1 349.2m

(26.7%)

Other$694.5m

(13.7%)

Housing and Community

Amenities$209.8m(4.1%)

Public Order and Safety

$447.5m(8.8%)

Social Security and Welfare

$435.7m(8.6%)

Transport and Communications

$255.7m (5.1%)

Health$1 398.3m (27.6%)

Nominal Interest on Superannuation

$268.2m(5.3%)

Chapter 5 General Government Expenses of this Budget Paper provides a detailed explanation of the major

expense items in 2013-14 and over the Forward Estimates period.


Infrastructure Investment

The planned level of infrastructure investment is $350.1 million in 2013-14, with a further $1.1 billion

estimated to be spent on General Government Sector infrastructure investment over the Forward Estimates

period. Chart 1.6 provides details of infrastructure investment expenditure by classification.

Chart 1.6: Infrastructure Investment Expenditure by Classification, 2013-14

Education$22.0m (6.3%)

Tourism, Recreation and

Culture$7.0m (2.0%)

Housing$27.8m (7.9%)

Other$21.2m (6.1%)

Roads$163.4m (46.7%)

Health$108.7m (31.0%)

Chapter 7 Infrastructure Investment of this Budget Paper provides a detailed explanation of the

Government’s investment in infrastructure.


ECONOMIC OUTLOOK Tasmania's economy has been undergoing a period of significant structural change as it adjusts to a

changing external environment.

The Tasmanian economy is highly exposed to the strong Australian dollar due to its industry mix, particularly

the types of manufactured products it exports. Some primary industries have also been facing major

challenges in remaining competitive in mainland and overseas markets. While some industries have been in

decline, others are set for growth, including Tasmania's dairy industry, aquaculture and some areas of high

value manufacturing.

The State's economy is estimated to grow by 2 per cent in 2013-14, which is approximately the long-term

growth rate.

The labour market is forecast to return to growth in 2013-14, with employment levels expected to increase

by ½ of one per cent or around 1 400 persons, from the 2012-13 year-average level. The unemployment

rate is expected to decrease to 6¾ per cent in 2013-14, with the participation rate stable at 60¼ per cent.

Population growth of 0.4 per cent is forecast in 2013-14.

A detailed examination of the Tasmanian economy is provided in Chapter 2 Tasmanian Economy of this

Budget Paper.


APPENDIX 1.1 MAJOR REFORMS AND

BUDGET PRESENTATION ISSUES This appendix provides an overview of a number of major industry and reform issues that have impacted or

may impact in the future on the Budget and Forward Estimates. The appendix also provides a summary of a

number of presentation and accounting issues that have been taken into account in the preparation of the

2013-14 Budget Papers.

Major industry and reform issues include:

Electricity Supply Industry Reform;

Electricity Prices;

Forest Industry Reform;

National Health Reform;

Education Funding Reform;

National Disability Insurance Scheme;

Major Taxation Initiative;

GST Distribution Review; and

Retirement Benefits Fund Strategic Review.

Budget presentation and accounting issues include those relating to:

the cessation of the payment of payroll tax by agencies;

accounting for Australian Government National Partnership Payments;

Goods and Services Tax Estimates;

2012-13 Budget superannuation funding changes;

Superannuation Guarantee Charge changes;

2012-13 closure of the Temporary Debt Repayment Account;

27th pay in 2015-16;

impact of the 2013-14 Australian Government Budget; and

Budget Paper assumptions and conventions.

1.10 The 2013-14 Budget

Major Industry and Reform Issues

Electricity Supply Industry Reform

In May 2012, the Government announced its reforms to the State’s electricity industry, which were

summarised in the paper Energy for the Future. The aim of the reforms is to ensure that electricity prices are

affordable and supplies are reliable while maintaining core electricity infrastructure in public ownership.

Parliament’s support for the reforms was obtained through the passing of the Electricity Reform Act 2012 by

both Houses. The Act detailed the reform objectives and measures and also provided the necessary powers

for their implementation.

Implementation of the reforms has progressed over 2012-13 and will be completed in 2013-14. The

Parliament has further supported the implementation of the reforms with the passing of the Electricity

Reform (Implementation) Act 2013. Major milestones in 2013-14 include the sale of Aurora Energy’s

customer base and the transition to full retail competition from 1 January 2014 and the merging of the

network functions of Aurora Energy and Transend Networks with a new merged Network business

commencing operations from 1 July 2014.

The reforms will have a structural impact on the State-owned electricity businesses and will therefore impact

on their financial returns. Estimates of financial returns to the Government from the State-owned electricity

businesses in terms of dividends, tax equivalents and guarantee fees have been determined on the basis of

likely future structures of the Government’s electricity business portfolio with returns from Aurora Energy and

Transend Networks ceasing in 2014-15 and replaced with aggregated returns from the New Network

Business from 2015-16. The full effects of the reforms on future financial returns will not be known until the

new business structures are in place and operational. The impact of the reforms on the Government’s

financial position will be appropriately reflected in future Budget documents.

Electricity Prices

In 2012-13, the Government revised the methodology for determining the wholesale energy price

component of regulated electricity prices for non-contestable customers. This had the effect of limiting price

increases for electricity consumers at a cost to the Budget of $37 million per annum.

There will be further downward pressure on electricity prices from 1 January 2014 following the

Government’s decision to move to a market based wholesale energy price as opposed to the current

arrangements where the wholesale energy price is calculated as the average of the market price and the

long run marginal cost of generation in Tasmania.

As in 2012-13, the Government will forgo revenue from the electricity businesses as a result of this

measure. This impacts predominantly on returns from Hydro Tasmania.

Forest Industry Reform

The forest industry in Tasmania is currently undergoing a period of significant change and transition in

response to current market conditions. The 2013-14 Budget includes significant funding and expenditure

that has been allocated to assist in this transition process. This includes funding and expenditure provided

under the terms of the original Intergovernmental Agreement signed between the Australian and State

Governments in 2011. It also includes funding committed by the State to facilitate the Tasmanian Forests

Agreement, but does not include the additional funding committed by the Commonwealth in the recently

The 2013-14 Budget 1.11

signed Intergovernmental Agreement. Combined, this funding will support the forest industry to

progressively transition to a more sustainable and diversified footing, to build regional economic diversity

and community resilience, and to deliver important conservation benefits. This expenditure is detailed in the

Budget information for the Department of Infrastructure, Energy and Resources and Finance-General.

As part of the broader forest industry reform process, work has commenced on the transition of Forestry

Tasmania following an independent strategic review commissioned by Government. Forestry Tasmania

continues to face significant challenges and risks, given global market pressures and the environment in

which it operates. It is anticipated that the transition will move Forestry Tasmania towards a more

sustainable financial position but without an improvement in market conditions Forestry Tasmania will

continue to face cash deficits. The Government also needs to ensure that the non-commercial activities

currently undertaken by Forestry Tasmania continue to be delivered as appropriate by Forestry Tasmania or

by other entities in the future. Funding has been provided within Finance-General to meet these anticipated

costs.

National Health Reform

National Health Reform was implemented in Tasmania from 1 July 2012 with the establishment of three

Tasmanian Health Organisations (THOs) under the Tasmanian Health Organisations Act 2011. Each THO

is a statutory authority with a Governing Council established under the Act. The functions of the THOs

include improving, promoting, protecting and maintaining the health of Tasmanians as required by their

service agreements; and managing public hospitals, health institutions, health services and health support

services.

The THOs replaced the Area Health Services previously managed directly by the Department of Health and

Human Services. This had a significant impact on the quantum and type of expenditure managed by the

Department and presented in its financial statements.

As a result of these significant changes, detailed information on the funding of health services in Tasmania

is provided in Budget Paper No 2 Government Services, Chapter 5 Department of Health and Human

Services and separate chapters for each THO (Chapters 21, 22 and 23).

Further information on National Health Reform is also provided at www.dhhs.tas.gov.au and

www.yourhealth.gov.au.

Tasmanian Education Funding Reform

The Government has made provision of $83.0 million in the Budget across the Forward Estimates for

funding improved education outcomes in Tasmanian schools.

It is intended that the funding will be used to implement the Tasmanian Government's response to the

reforms advocated by the Gonski panel in its Review of Funding for Schooling, to provide needs based

funding to Tasmanian schools. The Gonski reforms are intended to deliver equitable, high quality education

to young Tasmanians from all backgrounds and ensure students maximise their potential in life and gain the

skills and knowledge necessary to fully participate in the community.

The funding will ensure that students that are falling behind have the support and resources needed to

succeed through the provision of high quality teaching and learning, empowered school leadership,

improved targeting of resources to where they are needed most, and improved transparency and

accountability for the education outcomes of students.

1.12 The 2013-14 Budget

Tasmania remains in negotiation with the Australian Government regarding the Gonski reforms. Tasmania's

funding will be applied to improving education outcomes regardless of whether an agreement with the

Australian Government can be reached.

National Disability Insurance Scheme

The Tasmanian Government has signed an historic agreement with the Australian Government to

participate in the full NDIS scheme from 2016-17. Around 10 600 Tasmanians with a disability are expected

to benefit from the NDIS when fully implemented in July 2019.

Funding totalling $16.8 million over the next four years is being provided to assist with the introduction of the

NDIS in Tasmania. Tasmania has been chosen as a launch site for the NDIS commencing in July 2013.

This first stage will provide support to approximately 1 000 young people aged 15-24 with disability, who are

assessed as eligible. Tasmania is responsible for establishing an implementation team to work in

collaboration with the Australian Government's newly created NDIS organisation, known as DisabilityCare

Australia, the disability sector, clients, their families and carers to ensure Tasmania's successful launch and

readiness for the full scheme.

Major Taxation Initiative

From 1 July 2013, the payroll tax threshold will increase from $1.01 million to $1.25 million, the first such

increase for over 10 years. The new tax-free threshold will be the most generous of any state and more than

double the level in Victoria. This measure will provide direct tax relief to more than 2 250 businesses, which

between them employ around half of the Tasmanian workforce. As a result of this change, around 130

businesses will no longer need to pay payroll tax at all. This measure is expected to reduce revenue by

$40.8 million over four years but, in doing so, will help to encourage investment and create jobs.

Further information on this change in taxation arrangements is provided in Chapter 4 of this Budget Paper.

Goods and Services Tax (GST) Distribution Review

In March 2011, the Australian Government announced a Review of the Distribution of GST revenue. The

Review was tasked to consider whether the current methodology of sharing GST revenue among the states

would ensure that Australia is best placed to respond to structural and other challenges.

The Review was conducted in a number of stages, including the release of:

an Issues Paper in July 2011;

a supplementary terms of reference (November 2011);

a supplementary Issues Paper (December 2011);

the First Interim Report (April 2012);

the Second Interim Report (June 2012); and

the Final Report, released on 30 November 2012.

Further information can be found on the GST Distribution Review website at

www.gstdistributionreview.gov.au.

Tasmania has actively participated in all stages of the Review including providing written submissions at

each stage and consultation directly with the panel and secretariat.

http://www.gstdistributionreview.gov.au/

The 2013-14 Budget 1.13

The recommendations contained in the Final Report have been considered by the Standing Council on

Federal Financial Relations (SCFFR) and will inform the Commonwealth Grants Commission’s (CGC) 2015

methodology review.

The GST estimates included in the 2013-14 Budget assume a continuation of the methodology currently

used by the CGC. Any significant changes that may result from the CGC's 2015 methodology review will be

reflected in future Budget documents.

Retirement Benefits Fund (RBF) Strategic Review

The Government is undertaking a Strategic Review of the Retirement Benefits Fund to identify the most

appropriate means for Government to provide superannuation to its employees and members of the RBF

into the future. The key objectives for assessing future strategic options are:

protecting the interests of members;

minimising the financial risks to the Government from the operation of the RBF; and

ensuring the financial sustainability and productivity of the RBF business.

An independent consultant, PricewaterhouseCoopers Securities Ltd, has been appointed to undertake the

initial phase of the review process.

1.14 The 2013-14 Budget

Budget Presentation and Accounting Issues

Cessation of the Payment of Payroll Tax by Agencies

As previously detailed in the 2012-13 Revised Estimates Report, from 1 October 2012, most General

Government Sector entities are no longer required to pay payroll tax. This change should lead to

administrative efficiencies within agencies and improved national comparability of some agency costs,

particularly in the area of health and hospital services. The Tasmania Fire Service continues to pay payroll

tax pending the resolution of a number of outstanding issues.

This is an administrative change only and has no impact on the total funding available to agencies to

provide services to the Tasmanian community. The decrease in agency expenditure in 2013-14 and over

the Forward Estimates resulting from the abolition of the payroll tax payment is offset by a matching

reduction in the Consolidated Fund allocations to agencies.

As a result, the agency expenditure and revenue estimates are not directly comparable between the

2012-13 and 2013-14 Budgets.

Further information on the impact of this change on agency revenue and expenditure is provided in the

Introduction to Budget Paper No 2 Government Departments.

Accounting for Australian Government National Partnership Payments

From 1 July 2012, funding from the Australian Government for National Partnership Payments (NPP) are

receipted by Finance-General and then transferred to agency operating accounts based on agency

expenditure estimates. Prior to this, agencies were appropriated NPP funding. The majority of NPP funding

was removed from agency appropriations in the 2012-13 Budget, however, further adjustments have been

made in the current Budget to ensure that no NPP funding remains in agency appropriations.

In addition, following the 2012-13 Budget, Commonwealth Own Purpose Expenditure funding has also been

removed from agency appropriations. From 1 July 2012, agencies will receipt and expend this funding within

agency operating accounts.

While making no difference to the overall funding provided to agencies from National Partnership Payments,

these changes in accounting treatment do result in a reduction in agency Consolidated Fund appropriations.

This reduction is fully offset by an increase in agency grant revenue.

Further information on the impact of this change on agency revenue and expenditure is provided in the

Introduction to Budget Paper No 2 Government Departments.

Goods and Services Tax Estimates

Historically, Tasmania relied on Australian Government forecasts to determine State GST revenue

forecasts. The Australian Government projections of per capita relativities are based on a relatively simple

financial model that does not take into account changes in states’ fiscal capacities, or changes in the mix of

national partnership payments (NPP) received by the states. Over time, changes in states fiscal capacities

and the distribution of NPP have had material impacts on the movement in per capita relativities, and

ultimately the distribution of GST revenue between the states.

The 2013-14 Budget 1.15

Over the Budget and Forward Estimates period, the improvement in Western Australia’s relative fiscal

capacity (as a result of the mining boom) and the wind down in the Australian Government’s economic

stimulus and Royal Hobart Hospital payments to Tasmania are expected to have a considerable impact on

Tasmania’s relativity. As a result, the Department of Treasury and Finance has developed its own financial

model to forecast per capita relativities. This model, which was implemented in the 2012-13 Budget, seeks

to better replicate the Commonwealth Grants Commission’s (CGC) methodologies to calculate per capita

relativities and takes into consideration changes in states fiscal capacities, as well as the distribution of

NPPs.

Tasmania's GST revenue estimate in 2013-14 is linked directly to the State's share of the national

population; the size of the GST revenue pool; and Tasmania's relativity factor. GST revenue collections are

highly sensitive to changes in national consumer spending. GST revenue collection in 2013-14 and over the

Forward Estimates period will be dependent on the rate of growth in the Australian economy.

Tasmania's relativity factor (as recommended by the CGC) has been finalised for 2013-14.

Tasmania's relativity factors for 2014-15 to 2016-17 are based on Department of Treasury and Finance

modelling. Small variations in the relativity factor can have a large impact on forecast GST revenue. To the

extent that actual outcomes vary from the assumptions used in Treasury modelling, GST revenue will vary

accordingly.

For the remaining components of GST revenue to Tasmania, the national pool of GST available for

distribution to the states and Tasmania’s population share, Budget estimates rely on the estimates

published in the Commonwealth Government’s 2013-14 Budget Papers.

2012-13 Budget Superannuation Funding Changes

As part of the development of the 2012-13 Budget, the then existing process of seeking to fund the

unfunded superannuation liability associated with the now closed defined benefits scheme was reviewed.

This process was reflected in a past Fiscal Strategy objective to fully fund the Government’s unfunded

superannuation liability by a certain date. It was discontinued as an objective in the current Fiscal Strategy

in recognition of the provision not being fully cash backed and following consideration of whether the

objective was appropriate within the current fiscal environment.

As a result of this review, the Treasurer approved new superannuation funding arrangements. Under these

new arrangements, the Superannuation provision in the Special Deposits and Trust Fund is no longer set

aside and the emerging cash cost of the defined benefits superannuation scheme is met directly from the

Consolidated Fund.

2012-13 Budget Closure of the Temporary Debt Repayment Account

In conjunction with the implementation of an alternative funding model for the defined benefits

superannuation scheme (as outlined above), the credit balance of the Superannuation Provision Account

was offset against the overdrawn (debit) balance of the Temporary Debt Repayment Account, with both

accounts subsequently closed.

Instead of the previous Temporary Debt Repayment Account transactions, at the end of each financial year,

borrowings will now be undertaken to gross-up the Government's cash holdings to equate to the estimated

balance of accounts in the Special Deposits and Trust Fund. An end-of-year borrowing transaction such as

this was previously undertaken annually prior to 2002-03. The end-of-year borrowing is essentially a paper

transaction as the same amount as that borrowed will be invested overnight on 30 June with the Tasmanian

1.16 The 2013-14 Budget

Public Finance Corporation, grossing up the amount of cash held and borrowings. The end of year

borrowing has no impact on the Government’s Net Debt and improves the transparency of the

Government’s end-of-year financial transactions.

Superannuation Guarantee Charge Changes

The Australian Government has introduced a phased increase in the rate of the Superannuation Guarantee

Charge from 9 per cent to 12 per cent over the seven years ending on 1 July 2019. The initial increments

are 0.25 percentage points with effect on 1 July 2013 and 1 July 2014, with further increments of 0.5

percentage points applying annually until the SGC becomes 12 per cent on and from 1 July 2019. This

increase will only apply to members of accumulation schemes, as the employer contributions for members

of the closed Retirement Benefits Fund defined benefit scheme already exceed the SGC rate. As part of the

development of the 2013-14 Budget, the Government has determined that the funding requirements

associated with the phased increase in the superannuation guarantee rate will be met from within each

agency’s existing budget allocation.

27th Pay in 2015-16

Salary payments to employees in the General Government Sector are made fortnightly. This usually means

that there are 26 pay days in each year. However, approximately once every 11 or 12 years, there are

27 fortnightly pay days in a financial year. The next year with 27 pay days for agencies (other than the

Department of Health and Human Services) will be 2015-16. The Department of Health and Human

Services makes its salary payments on a different day each fortnight to the rest of the General Government

Sector, therefore, it also makes a 27th pay in a different year.

Additional funding is provided to agencies for this additional cost from the Consolidated Fund. On a cash

basis, this can be seen in the level of appropriation to agencies and in Employee Benefits on the agency

Cash Flow Statement. However, on an accrual basis there is no impact on the agency Income Statement as

the additional cash payment is offset by a downwards adjustment to accrued Employee Benefits expense.

This adjustment to accrued Employee Benefits expense can also be seen as a reduction in the liability for

Employee Benefits on the agency Balance Sheet.

Impact of the 2013-14 Australian Government Budget

As detailed above, the GST estimates presented in this Budget Paper include the impact of information

included in the Australian Government’s 2013-14 Budget Papers. The Australian Government’s 2013-14

Budget Papers also included changes to estimates for a range of National Partnership Payments and

Specific Purpose Payments to be made to Tasmania. Due to the timing of the Australian Government’s

Budget these changes have been unable to be included in these Budget Papers. These changes will be

reflected in the 2013-14 Revised Estimates Report.

Assumptions Underlying the 2013-14 Budget and Forward Estimates

There are a number of assumptions underlying the 2013-14 Budget and Forward Estimates.

The 2013-14 Budget 1.17

Revenue

Revenue estimates are prepared on the basis of a number of assumptions and use information provided to

Treasury by various entities, including government agencies, Government Business Enterprises (GBEs) and

State-owned Companies (SOCs). The 2013-14 Budget and Forward Estimates for revenues are prepared

on the following basis:

Grants are based on agreements with the Australian Government. It is assumed that, unless otherwise

stated, Specific Purpose Payments will be indexed as advised by the Australian Government;

All General Purpose Payments, including GST revenue, received from the Australian Government can be

used at the State's discretion;

Taxation revenue for the Forward Estimates utilises economic forecasts prepared by Treasury. Taxation

estimates reflect changes in tax policy up to and including any changes announced in the Budget;

Interest Income is estimated by Treasury and reflects anticipated cash holdings within the Public Account

and forecast interest rates; and

Sale of Goods and Services; Fines, Fees and Charges; and Other Revenue are based on the best

estimates of those agencies which provide the goods or services, or which actively manage the particular

revenue item.

Expenses

The 2013-14 Budget and Forward Estimates for expenses are prepared on the following basis:

projections over the Forward Estimates reflect the level and timing of expenditure anticipated by

agencies;

borrowing costs is estimated by Treasury and reflects anticipated borrowings within the Public Account

and forecast interest rates;

indexation on new wage agreements is provided at 2.0 per cent per annum across the Budget and

Forward Estimates period;

indexation of general operating expenses is provided at 2.5 per cent over the Forward Estimates period;

funding provided to the Department of Health and Human Services for medical and pharmaceutical

supplies is indexed at a rate of 4.0 per cent per annum; and

agencies are fully funded for expected changes in Administered Items.

1.18 The 2013-14 Budget

Conventions

The information provided in the Budget Papers has been prepared taking into account the following

conventions.

Figures in tables and in the text have been rounded. Discrepancies in tables between totals and sums of

component items reflect rounding. Percentage changes in all tables are based on the underlying

unrounded amounts.

The notation used in the Budget Papers is as follows:

na not available, or not applicable

…. zero, or rounded to zero

$'000 $ thousand

$m $ million

Tasmanian Economy 2.1

2 TASMANIAN ECONOMY

Features

The adverse external environment and the weaker conditions within Tasmania have led to lower levels

of domestic demand, including household consumption. As a result, the divergence between

Tasmania’s economic performance and national trends has become wider in recent quarters.

The very strong Australian dollar continues to put many of Tasmania's export industries under financial

pressure. Manufacturing, in particular, continues to decline and the domestic tourism market has

generally been subdued.

Tasmania’s forestry and forest products sector continues to face some major challenges, though many

participants in the sector will benefit from the structural adjustment and other programs arising from

the passage of the Tasmanian Forests Agreement Bill 2012 through Parliament.

By contrast, the prospects for some parts of Tasmania’s agriculture industry continue to be strong and

further expansion in aquaculture and mining is expected as a result of some regulatory approvals.

Private demand is expected to decline over 2012-13 before recovering in 2013-14. Dwelling

investment is expected to increase in 2013-14, supported by some jobs growth, the accumulation of

savings by households and the State Government’s First Home Builder Boost.

Export volumes have been increasing and this trend is expected to continue into 2013-14, mostly

through growth in interstate exports.

Public spending by all levels of Government is not expected to contribute significantly to economic

growth in Tasmania in the near term, though it will not have the same contractionary impact as in

2011-12 when the Australian Government’s stimulus package was wound down.

The State's economy is estimated to contract by ¾ of one per cent in 2012-13 and then increase by

2.0 per cent in 2013-14, which is around the long-term growth rate.

Weaker economic conditions in the labour market are expected to result in a decline in employment of

1.0 per cent or around 2 400 persons in 2012-13, followed by an increase of ½ of one per cent or

around 1 400 persons in 2013-14.

The unemployment rate is expected to be 7.0 per cent in 2012-13, in year-average terms, before

falling to 6¾ per cent in 2013-14.

2.2 Tasmanian Economy

CURRENT ENVIRONMENT – OVERVIEW

Global Conditions

Economic conditions continue to vary widely between countries and regions with no clear global trends

emerging. Despite some growth in a number of advanced economies and continued growth in most

developing economies, uncertainty over the pace of global activity recovery persists.

Developing economies continue to drive economic growth in the world economy, though the pace of growth

has recently eased. The International Monetary Fund estimates that Asia has driven two-thirds of global

economic growth over the past five years. Developing economies are forecast to grow by 5.3 per cent in

2013 and by 5.7 per cent in 2014, according to the IMF, which is higher growth than in 2012. Growth in

China, the largest developing economy, is expected to moderate slightly, as part of the plan to maintain a

more sustainable growth rate, but remain at around 8.0 per cent in 2013 and 2014. Some concern has been

expressed at the recent slowing in the growth of manufacturing in China, as this may reveal softer demand

conditions. The prospects for India appear to be improving, with the IMF recently forecasting growth of

5.7 per cent in 2013 and 6.2 per cent in 2014.

The European Union economy as a whole contracted in 2012 and is forecast to contract further in 2013.

Germany, Europe’s largest economy, has continued to grow very slowly. Conditions remain subdued in

France and the United Kingdom, while the economies of Portugal, Italy, Greece and Spain continue to

contract. The European Central Bank continues to introduce policy measures to stabilise the European

economy. Although economic fortunes within the European Union continue to diverge, concerns over the

economic and financial stability of the region have lessened.

In Japan, the government is implementing unprecedented measures to stimulate growth and boost inflation

in Japan to 2.0 per cent annually. The measures include actions to devaluate the yen in an effort to make

Japanese exports more competitive, which has prompted speculation of intervention in currency markets by

other countries.

The United States economy showed signs of moderate growth last year with increased consumer

confidence and business investment, and some recovery in the housing market. Unemployment has

continued to decline though the participation rate remains at low levels. As part of the policy to encourage

growth, the US Federal Reserve has committed to continue its expansionary monetary policy measures.

However, US government budget measures are expected to impede economic growth in the near term.

Forecasts for global economic growth remain relatively subdued as economies continue to contract in

Europe. The IMF forecasts global growth in 2013 of 3.3 per cent, which is close to the estimated growth in

2012, and 4.0 per cent growth is forecast in 2014.

Most global commodity prices remain at historically very high levels. There was some easing of mineral

prices in mid-2012, which coincided with a reassessment of some mining projects in Australia. The Reserve

Bank of Australia forecasts some easing of commodity prices in 2013, though prices are expected to remain

high over the near term. Global financial markets have improved over the past six months with growing

investor confidence, despite no significant recovery in many major developed economies.


Australian Conditions

Australia continues to outperform almost all other developed economies. Compared to other advanced

economies, the unemployment rate continues to be very low. The IMF estimates the Australian economy

grew by 3.6 per cent in 2012 and forecasts a slower growth rate of 3.0 per cent in 2013.

The national economy continues to be boosted by investment in the mining industry and earnings from

commodity exports, which has led business investment to record levels. Export volumes have increased as

new projects commence production, though export earnings have been declining due to weaker commodity

prices. The mining investment boom is expected to peak next year, though at a level lower than initially

anticipated. Some proposed major projects have been cancelled or are being revised, due to concerns over

rising costs and the easing in commodity prices.

The value of the Australian dollar remains high, trading above parity with the US dollar since early 2011,

despite some easing in key export commodity prices. This has been boosted by the confidence international

public and private investors place in Australian dollar assets, due to Australia’s relatively low sovereign debt

and robust banking system. Some commentators are expecting this effect to be temporary, and for the

Australian dollar value to decline to more closely reflect the terms of trade.

The high value of the Australian dollar continues to have a negative impact on trade-exposed industries,

such as manufacturing, tourism, some primary industries and some parts of retailing. Businesses have

sought to adjust to this changed environment. Employment in the manufacturing industry, in particular, has

fallen sharply as a result of very challenging external conditions.

Commodity prices are expected to decline further as global supply increases. It is not expected that the

value of the Australian dollar will remain at this high level for an extended period if Australia’s terms of trade

continue to decline.

Investment in non-mining industries has been declining as a share of economic activity. The near term

prospects appear weak, due to concerns over the overall strength of demand and uncertainty over the

economic outlook. One concern is whether private investment in Australia can be sustained once the

mining-related investment starts to decline. Household spending has been increasing at below trend rates

and the housing market has been weak.

Australia is one of only eight economies in the world with an AAA stable outlook rating from the three major

ratings agencies. However, this is not reflected in the levels of business confidence, which have fallen to

below average according to aggregate survey measures.

The Reserve Bank has held the cash rate at historically low levels for some time, even though inflation

continues to be within the Bank’s target band. This suggests some uncertainty over future prospects,

together with concerns that a higher interest rate would lead to further appreciation of the Australian dollar.

The national labour market remains very strong, by developed country standards, although there has been

some softening in the past year. The unemployment rate has been edging higher as the increase in the

labour force has not been matched by the increase in employment. Total hours worked in Australia

decreased in the past year and the majority of growth in employment has been in part-time work. The

Reserve Bank has forecast continued moderate growth in employment over the near term.


Forecasts of national economic growth have generally been revised downwards in recent months due to

concerns over the prospects of the non-resource industries, some of which relate to Australia’s international

price competitiveness due to the sustained high Australian dollar. Fiscal policy across Australia is also

expected to constrain national economic growth, as the Australian Government and many state

governments seek to reign in expenditure to manage the financial pressures they face.

Tasmanian Conditions

Until recently, the Tasmanian economy had been resilient, with private demand increasing to offset the

decline in public expenditure. Since then, the adverse external environment and the weaker conditions

within Tasmania have led to lower levels of domestic demand.

Tasmania’s economy is highly exposed to the strong Australian dollar due to its industry mix, particularly the

types of manufactured products it exports. The result has been a decline in manufacturing in the State,

which is estimated to have detracted from total economic activity in the State by around

one percentage point in both 2010-11 and 2011-12. Some primary industries have also been facing major

challenges in remaining competitive in mainland and overseas markets. The forestry and forest products

industry has been especially adversely affected by a range of external factors, resulting in a sharp decrease

in output and employment.

Mining and metal processing have an important role in Tasmania but these industries have not benefited

directly or indirectly from the national resources boom. The resources that Tasmania exports are generally

not those that have benefited from large price increases. For many important commodities, prices have

been falling in real terms over the past year.

Tasmania’s economy has been undergoing a period of significant structural change as it adjusts to a

changing external environment. While some industries have been in decline, others are set for growth,

including Tasmania’s dairy industry, with some major new projects planned or underway, aquaculture and

some areas of high value manufacturing. Many other businesses in service sectors have also been

expanding. These growing industries are becoming increasing reliant on skilled labour. Industries that have

been shedding jobs tend to have a relatively high share of unskilled and semi-skilled labour.

At the same time, domestic demand has been very subdued. Household consumption has been falling, in

real terms, in recent quarters and the retail sector had been very weak though there have been recent signs

of improvement. Consumer prices have been increasing more slowly in Tasmania than nationally, which

suggests the weak demand conditions have been reflected in retail prices. Tourism demand has generally

been flat, with the occupancy rate for hotels, motels and serviced apartments in Tasmania estimated to be

down by 2.5 per cent in the December quarter 2012 compared with the same period in the previous year.

These factors have resulted in low levels of business confidence and declining private investment in recent

quarters.

Tasmania’s construction sector, which had been supported by the Australian Government’s fiscal stimulus

package, has been facing much weaker conditions in the past two years. As a result, some large

construction businesses have recently ceased operating while others rely increasingly on major projects in

mainland states, to sustain operations and retain their workforce.


Household disposable income has been rising due to the cumulative reduction in the cash interest rate of

200 basis points by the Reserve Bank since November 2011. Treasury has estimated that this equates to a

reduction of around $120 per month in average loan home repayments if around two-thirds of the reductions

were passed on in the form of lower mortgage rates. It appears Tasmanian households have been

responding to this increase in their spending power by increasing their savings, or reducing their debts more

quickly.

Consumer caution is also reflected in the housing market, which has been sluggish for several years. The

supply of new dwellings has not kept pace with Tasmania’s recent population growth and the increase in

households. Underlying demand for housing has therefore been growing. The market is set to benefit from

the State Government’s recent First Home Builder Boost. As a result, the capacity for many households to

enter the housing market has been improving and a recovery is expected once household confidence is

restored.

Fiscal consolidation is evident at all levels of government in Tasmania in both recurrent and investment

expenditure. Public spending is not expected to contribute to economic growth in Tasmania in the near term,

though it will not have the same contractionary impact as in 2011-12 when the Australian Government’s

stimulus package was wound down.

The recent low levels of demand have been reflected in a weak labour market in Tasmania. Unemployment

has been increasing, with the gap between the Tasmanian unemployment rate and the national rate much

greater in the past two years than over the preceding decade.

This divergence in job opportunities between Tasmania and mainland Australia is likely to explain much of

the recent increase in net interstate out-migration, which has resulted in Tasmania’s population growth rate

declining in recent quarters. Some of this out-migration is associated with the major mining projects in

mainland states, investment in which is expected to peak next year.


ECONOMIC OUTLOOK Table 2.1 presents Treasury's estimates for key Tasmanian economic indicators for 2012-13, forecasts for

2013-14 and projections to 2016-17.

Changes in Gross State Product are derived from component-based estimates of household consumption,

private investment, government spending and net exports. This approach seeks to estimate movements in

the same measure that the Australian Bureau of Statistics reports in its Australian National Accounts.

Table 2.1: Tasmanian Economic Estimates, Forecasts and Projections

RER1 Budget 2013-14

2011-12 2012-13 2012-13 2013-14 2014-15 2015-16 2016-17

Actual Estimate Estimate Forecast Projections

Gross State Product 2,3,4 …. 1 -¾ 2 2 2 2

Employment5

-1.1 -¼ -1 ½ 1 1 1

Level of Employment6

234.5 234 232 234 236 239 241

Labour Force Participation Rate7 60.5 60½ 60¼ 60¼ 60¼ 60¼ 60¼

Unemployment Rate7 6.3 6¾ 7 6¾ 6¾ 6¾ 6¾

Consumer Price Index (Hobart)5

2.3 2½ 1½ 2½ 2½ 2½ 2½

Population5 0.3 0.3 0.3 0.4 0.4 0.4 0.4

Source: Data – ABS; Estimates Forecasts and Projections – Department of Treasury and Finance. Notes: 1. The 2012-13 Revised Estimates Report was released on 10 December 2012.

2. This GSP estimate is not intended to be benchmarked against the GSP estimates produced by the ABS due to ongoing concerns over the reliability of the ABS estimates of year on year changes in Tasmania's GSP.

3. The 2011-12 actual is unavailable. See note 2. 4. Real, percentage change. 5. Year-average, percentage change. 6. Year-average, '000s. 7. Year-average, percentage level.


Summary of 2012-13 Estimates and 2013-14 Forecasts

The data available for 2012-13 to date show that Tasmanian private sector activity has been weak. In

2012-13, for the first time in many years, Tasmania’s GSP is expected to decline. This is due to expected

decreases in household consumption, private investment and public expenditure, partly offset by an

expected modest increase in the value of exports.

Household consumption and business investment have been decreasing since 2011 and are expected to

detract from economic growth in 2012-13. Dwelling investment remains subdued over 2012-13 although the

First Home Builder Boost, which commenced in January 2013, is expected to start to have a positive impact

late in 2012-13.

The value of overseas exports is expected to grow slightly over 2012-13, and growth in exports to mainland

Australia is expected to continue. As in recent years, Tasmania’s exports to mainland Australia are likely to

be constrained because much of the growth in national activity is mining-related, where very few inputs are

sourced from Tasmania. Furthermore, households in mainland Australia are spending a smaller share of

their income on retail goods, which includes those exported from Tasmania.

A decline in employment levels of 1.0 per cent, or around 2 400 persons, is expected over 2012-13. Over

the year, a greater decline is expected in full-time employment, such that total hours worked are likely to

decline by more than the decline in employment.

The unemployment rate is expected to be 7.0 per cent, in year-average terms, in 2012-13, an increase from

6.3 per cent in 2011-12. At the same time, the participation rate is expected to be slightly lower at

60¼ per cent in 2012-13 in response to these subdued conditions.

Population growth is expected to remain below trend levels due to high net interstate out-migration to those

mainland states with greater employment opportunities than in Tasmania. Population growth is expected to

be 0.3 per cent over 2012-13, the same growth rate as in 2011-12.

The Tasmanian economy is expected to start to improve over 2013-14. Some recovery in household

consumption is expected and business investment is likely to improve, supported by projects, such as the

parliament square project and the new Myer development in Hobart. A return to modest growth in dwelling

investment is expected, in response to the growth in underlying demand and supported by low interest rates

and the State Government’s First Home Builder Boost.

Public spending is not expected to contribute significantly to economic growth in 2013-14 as the Australian

and State Governments respond to their budget challenges. The export sector is expected to continue to

improve in 2013-14, though the competitive pressures are expected to persist. Exports to mainland Australia

are expected to continue to grow, contributing to Tasmania’s economic growth in 2013-14.

The labour market is forecast to return to growth in 2013-14, with employment levels expected to increase

by ½ of one per cent, or almost 1 400 persons, from the 2012-13 year-average level. The unemployment

rate is expected to decrease marginally to 6¾ per cent in 2013-14, with the participation rate stable at

60¼ per cent. These forecasts take into account the impact of the Vodafone expansion at Kingston and the

impact of the State Government’s Tasmanian Jobs Package. They have not included any specific projects

funded under the Australian Government and State Government forestry industry structural adjustment and

regional development programs arising from the passage of the Tasmanian Forests Agreement Bill 2012

through Parliament.


Population growth of 0.4 per cent is forecast in 2013-14 and projected through subsequent years. This

slightly higher level from 2012-13 is expected as a result of the demand for labour for mining projects in

mainland Australia starting to decline.

Tasmania's Economic Outlook

State Final Demand and Gross State Product

The level of Tasmanian state final demand decreased over 2012. Chart 2.1 shows the diverging paths

between Tasmania’s state final demand and final demand nationally. Tasmania’s state final demand has

decreased by around 5.0 per cent since late 2011 while nationally, final demand has grown by around

4.6 per cent in the same period.

State final demand for 2012-13 is expected to decrease from the 2011-12 level, due to expected weak

outcomes in household consumption and private investment.

Chart 2.1: Diverging paths of Final Demand – Tasmania and Australia

95

100

105

110

115

Jun 2008 Jun 2009 Jun 2010 Jun 2011 Jun 2012 Jun 2013

Fin

al d

em

an

d,

real

qu

art

erl

y t

ren

d d

ata

(In

dex:

Ju

ne 2

008 =

100)

Tasmania Australia

Source: Australian National Accounts: National Income, Expenditure and Product, ABS Cat No 5206.0.

Tasmanian state final demand is expected to return to growth in 2013-14, principally due to the forecast

recovery in household consumption and private investment, including dwelling investment.

Tasmania’s economic growth has been modest in recent years, and well behind Australia’s economic

growth. Gross state product in Tasmania is estimated to decrease by ¾ of one per cent in 2012-13, but is

forecast to increase by 2.0 per cent in 2013-14, similar to Tasmania’s long-term growth rate. The key

elements of Tasmania’s gross state product are set out in more detail through the remainder of this Chapter.


Household Consumption

Household consumption declined in year-average terms in the year to the December quarter 2012 by

2.0 per cent, the first annual decline in Tasmania since 1986-87. Retail trade, which accounts for around

one-third of household spending, has been particularly weak until recently. Appendix 2.1 explains the factors

contributing to this situation.

During periods of economic uncertainty, households generally reprioritise their spending towards essential

items and away from discretionary items. This has been the recent experience in Tasmania. According to

retail trade data, expenditure on essential goods in Tasmania increased by an estimated 3.4 per cent in

March 2013 from the level recorded one year earlier, while expenditure on discretionary goods decreased

by 4.8 per cent in the same period. Tasmanian households have reduced their discretionary expenditure to

below the level before the global economic downturn in 2008 (Chart 2.2). Nationally, there has been much

less disparity in spending in these two categories.

This helps to explain why the Hobart Consumer Price Index increased by only 1.0 per cent in the

March quarter 2013 compared to the previous year, while nationally the increase was 2.5 per cent over the

same period. In Tasmania, it is likely that retailers and other sellers of goods and services have been

constrained from increasing prices due to weak demand.

Chart 2.2: Essential and Discretionary Retail Expenditure –Tasmania and Australia

85

90

95

100

105

110

115

120

125

Jun 2008 Jun 2009 Jun 2010 Jun 2011 Jun 2012 Jun 2013Valu

e o

f re

tail t

rad

e,

no

min

al

tren

d d

ata

,(I

nd

ex:

Ju

ne 2

008 =

100)

Tasmanian Essential Tasmanian Discretionary

Australian Essential Australian Discretionary

Source: Retail Trade, ABS Cat No 8501.0.

The value of personal finance commitments in Tasmania, an indicator of household consumption, has been

gradually easing since the global downturn, which suggests generally a lower willingness among

households and businesses to borrow to fund their expenditure. Further decline in household consumption

is expected in 2012-13.


A higher savings rate is one of the contributing factors to the expected decline in household consumption in

2012-13. The Australian net household savings ratio decreased from almost 20 per cent in the mid-1970s

and was negative by 2003. National household savings then started to increase and this became more

pronounced following the global economic downturn. Australian households are estimated to have saved

around 10 per cent of their net disposable income since mid-2012, the highest level since 1987. All evidence

suggests that Tasmanian households have demonstrated a similar pattern, with very low levels of savings

immediately before the onset of the 2008 global downturn and a significantly increased savings rate since

that time.

It remains unclear whether this high savings rate is a temporary response to the loss of household wealth

during the economic downturn or a more fundamental shift in household behaviour. The outcome in

Tasmania has been lower levels of household consumption and dwelling investment and therefore

economic activity. Relatively low levels of national household spending will continue to affect GST receipts,

and therefore the State Government’s GST payments. This, in turn, puts downward pressure on the State’s

economic activity as it severely constrains the expenditure capacity of the State Government.

Housing affordability in Tasmania as a whole has improved in recent quarters due to low interest rates.

However, the number of property sales remains well below trend. The housing market is an important

element of Tasmanian household wealth – the ABS estimates that property assets comprise 51 per cent of

all assets of the average Tasmanian household.

An increase in the construction of new dwellings is expected in 2013-14, assisted by the First Home Builder

Boost. This is likely to be associated with an increase in household spending on dwellings-related items,

such as white goods and furnishings, together with more spending on financial and legal services.

Part of the recent decline in household spending may be attributable to the lower population growth. In

particular, spending is likely to be affected by the increased out-migration to mainland Australia and the

increase in Fly-In Fly-Out workers from Tasmania, who spend part of their income outside the State. A

reduced rate of net out-migration from Tasmania to mainland states is expected in 2013-14, which would

have a positive impact on household spending in Tasmania.

Household spending is expected to recover in 2013–14 and be closer to longer term trend rates by the end

of this year. Two factors that are likely to sustain higher household spending in Tasmania are continued low

interest rates, which are yet to have any significant effect in stimulating demand, and the increase in

average household net wealth due to the accumulated savings and increase in equity prices.

Private Investment

Following a strong period of growth from mid-2010 to late 2011, the level of private investment has fallen

since late 2011 and is currently almost 30 per cent below the recent peak. This is largely due to a sharp

decline in business investment, which accounts for around two-thirds of private investment. In the

December quarter 2012, business investment was 20.6 per cent below the level of one year earlier

(Chart 2.3) and is equivalent to the levels in the mid-2000s.


Chart 2.3: Private Investment Activity – Tasmania

0

200

400

600

800

1 000

1 200

1 400

1 600


Investm

en

t exp

en

dit

ure

, re

al

qu

art

erl

y

tren

d d

ata

($ m

illio

n)

Dwelling Investment Business Investment Total Private Investment


Recent business confidence indicators suggest that business investment will decline in 2012-13. However,

confidence in some sectors is strong. The dairy and agriculture sectors in Tasmania have been underpinned

by significant investment in irrigation infrastructure. There appears to be solid growth prospects for exports

from Tasmanian agricultural, food and fishing sectors, mainly due to favourable prices and increasing global

demand for food and other primary products. Significant investment is being made in the dairy industry in

the State’s north-west to expand dairy farming in the region, with complementary investment occurring in

value adding processes, such as in cheese and milk powder production. The State’s aquaculture industry is

also set for further growth, following some recent regulatory approvals.

Demand for exploration licences and mining leases continues to be strong over the past year. The value of

mineral exploration expenditure has increased by 5.2 per cent in the year to the December quarter 2012

compared to the previous year. The prospects for mining-related investment in the State’s north-west have

been increased by the decision of the Australian Government Minister for the Environment,

the Hon Tony Burke MP, to restrict heritage listing in the area known as the Tarkine to some coastal zones.

The outlook for business investment in other industries is mixed. Some major commercial property

investment is also expected to commence through 2013-14 and a further boost is expected through the

parliament square project. However, several sectors are not well placed to expand, including manufacturing,

retail and tourism.

The Tasmanian forestry and forest products industries continue to face very difficult conditions. With the

passage of the Tasmanian Forest Agreement Bill 2012 through Parliament, funding for new investment will

be released by the Australian and State Governments as part of the industry restructuring and regional

development programs.

Business investment is expected to decline in 2012-13, before returning to growth in 2013-14.

Dwelling investment, which contributes around one-third of private investment, has not increased in recent

years and remains below the level before the economic downturn. Forward indicators of dwelling

investment, such as residential building approvals and housing finance, remain subdued, while rental

vacancy rates have increased over the past year.


Home purchases by first home buyers have halved following the cessation of the Australian Government’s

First Home Owner Boost in December 2009. The State Government First Home Builder Boost is designed to

stimulate demand for new dwellings from the first home buyers by increasing the total grants to $15 000

until 30 June 2014.

Near-term indicators suggest that dwelling investment in Tasmania is expected to decline over 2012-13.

There is evidence that Tasmania tends to follow the national trends in dwelling investment, which has

started to recover in recent quarters. Tasmania is expected to follow the national trend in 2013-14, with a

return to growth forecast.

Growth in private investment is therefore forecast to decline in 2012-13 and then increase in 2013-14 and

over the Forward Estimates period. The level of private investment during this period is unlikely to reach the

peak immediately before the 2008 global downturn.

Government Expenditure

Government expenditure is the aggregation of spending on government services and on social and welfare

payments (public consumption) and public investment in Tasmania by all levels of government – Local,

State and Australian Government.

Chart 2.4: Government Consumption and Investment – Tasmania

0

200

400

600

800

1000

1200

1400

1600


Pu

blic e

xp

ed

nit

ure

, re

al q

uart

erl

y t

ren

d

data

($ m

illio

n,

2010

-11 p

rices)

Public investment Public consumption


Government consumption has been steadily increasing since the 2008 global downturn. In the

December quarter 2012, government consumption was around 12.9 per cent higher than pre-downturn

levels in trend terms, based on the ABS data.

By contrast, public investment has decreased significantly since mid-2010. In the December quarter 2012,

public investment was 33.4 per cent below the peak level recorded in the first half of 2010 (Chart 2.4) at the

height of the Australian Government’s stimulus spending in response to the 2008 global downturn.

Over the medium-term, revenue pressures are expected to limit public consumption expenditure growth by

the State and Australian Government and, to a lesser extent, by councils.


Despite the forecast decline, there are some large projects supported by public funds that are expected to

sustain economic activity in Tasmania, such as the ongoing National Broadband Network rollout, the

investment program of the water and sewerage corporation and the development of the irrigation schemes

across Tasmania.

Exports

Interstate and international export industries are of key importance to Tasmania’s prosperity, accounting for

around 40 per cent of economic activity in the State. Interstate exports account for two-thirds of Tasmania’s

total exports and are critical for some industries, such as aquaculture’s Tassal, at times when international

conditions are unfavourable. Demand for interstate exports tends to be driven by economic conditions and

household spending patterns in mainland Australia. The sustained strong rates of national economic growth

have boosted interstate exports in recent years.

Tasmania’s international exports lost significant ground immediately following the 2008 global downturn and

are yet to fully recover. The continued strong Australian dollar presents major challenges to this sector. For

some businesses these have been exacerbated by the loss of direct international shipping services for

container freight. In addition, the forestry and forest products industry, which had been a major exporter, has

been facing some industry-specific problems, including the demise of PaperlinX and Gunns Ltd, the loss of

access to the Triabunna woodchip mill and export facilities, and reduced demand for woodchips from Japan.

Exports of services have retained a steady share of around 10 per cent of total Tasmanian international

exports over the past 20 years. Opportunities in the tourism and education sectors linked to the growth of

Asia provide potential to increase this share.

Chart 2.5: International Export Shares – Tasmania

0

10

20

30

40

50

60

Wood & Woodchips

Mineral related exports

Agriculture All Other

1999-00 2006-07 Year to March 2013

Perc

en

tag

e o

f an

nu

al

merc

han

dis

eexp

ort

s b

y v

alu

e

Source: International trade in goods and services, ABS Cat No 5368.0 (data on subscription).


The composition of Tasmania’s international exports has changed in recent years, most noticeably with the

increase in mineral-related exports and the decline in exports of wood and woodchips (Chart 2.5).

Mineral-related exports now account for over half of Tasmanian international exports. Almost 90 per cent of

these exports are sold to Asian countries. In the most recent year, the export value of wood and woodchips

was 85 per cent less than before the 2008 global downturn, with these products now accounting for only

3 per cent of Tasmanian exports. International agricultural exports have regained some export share over

the past few years. Exports of vegetables and fruit in the recent peak season have been particularly strong.

The declining global commodity prices and sustained strong value of the Australian dollar have resulted in

export sales declining even when volumes have been increasing. For example, in the year to

December 2012, international export volumes increased by 3.9 per cent according to the ABS. Over the

same period, the sale value of those exports decreased by 4.0 per cent. This has resulted in lower margins

for a large number of exporters, including those in the mineral-related industries.

International Trade with Asia

Around two-thirds of Tasmanian international exports are to Asian countries, of which around 40 per cent

are to China and to Hong Kong, which also operates as a gateway to southern China. Despite the rise of

Asia, the value of merchandise exports to Asia in 2011-12 was almost 20 per cent below the value of

five years earlier, due principally to the weakness in some metal-related prices, notably zinc, and the

reduced volume and price of woodchips.

Chart 2.6: Recent Changes in Export Shares to Asia – Tasmania

375

250

696

834

157

366

244

346

1 481

440

0 500 1 000 1 500 2 000

Food products

All other (including confidential)

Mineral ores and concentrates

Processed metals and metal products

Wood and paper products

Nominal, annual, original data ($ million)2006-07 2011-12

Source: International trade in goods and services, ABS Cat No 5368.0 (data on subscription).

In 2006-07, China (and Hong Kong) had become the largest importer of Tasmania’s exports and accounted

for 31 per cent of all goods exported to Asia. Japan was the second largest market, with almost 22 per cent

of exports to Asia, followed by South Korea with just over 12 per cent and Taiwan with just over 11 per cent.


Five years later in 2011-12, China’s share of Tasmania’s exports to Asia increased to almost 40 per cent,

Taiwan’s share increased to 13 per cent, while Japan’s share declined to around 10 per cent, to be level

with the export shares of India and Malaysia. According to more recent data, a further decline in exports to

Japan has left Japan as the fifth largest Asian destination for Tasmanian exports. India’s share has

remained relatively small over the five years, at just 10 per cent.

The mix of exports by value to Asia has changed significantly over this five year period (Chart 2.6). Exports

of processed metals and metals products have fallen sharply in value over this period due to zinc prices

halving and aluminium prices falling by 20 per cent. This was partially offset by increased sales of mineral

ores and concentrates, due to the price increases of iron and copper. The decline in forestry-related exports

is also evident, with the volume of woodchip and paper exports declining. In addition, the Japanese

woodchip market has contracted and Tasmania has been required to sell woodchips to China at

substantially lower prices than Japan was paying. The value of food exports to Asia was almost unchanged.

Exports directly to China have increased 140 per cent over the past five years, or an annualised rate of

19 per cent per year. However, if exports to Hong Kong are combined with Chinese exports, the total value

is little changed at around $900 million. The increase in the share of exports to China and Hong Kong in the

five years to 2011-12 is therefore principally due to the decline in the total value of export sales to Asia. This

apparent stability in export sales to China and Hong Kong masks a significantly altered composition of

exports by value; exports of processed metals and metal products have fallen by 45 per cent, while exports

of mineral ores and concentrates have increased by 200 per cent.

Export sales to Japan have declined by around 60 per cent over the past five years. Export sales have also

significantly declined to Korea, Taiwan and Indonesia, which is partly due to the fall in prices of processed

metals and metal products, while exports of mineral ores and concentrates to Malaysia have significantly

increased.

Tasmanian international visitor numbers have declined by around 10 per cent over the past five years.

During this time, tourist numbers from Asia have grown by around 9 per cent, increasing the share of

Tasmanian international tourists from Asia to 36 per cent of all international visitors to the State.

The rise of Asia as an economic region provides an important opportunity to increase the State’s prosperity

through access to growing export markets. The Asian middle class is growing at a rapid rate and is

estimated to increase from 500 million to around three billion people in the next 20 years. Of particular

interest is the small segment of the higher income Asian middle class whose incomes are around average

levels in developed economies.

The State Government’s Asian Century White Paper identifies key opportunities in high value products and

services, such as Tasmanian seafood, wines and other beverages, dairy products, tourism and education.

Goods exports in these categories currently comprise only 8.7 per cent of total international exports to Asia.

Most exports are mineral-related, and are therefore used for capital investment and for manufacturing.

Around 40 per cent of the high value products is accounted for by abalone and rock lobster exports, where

the harvest volumes are subject to total allowable catches to ensure the long term sustainability of these

resources. The prospects for additional output of these products, and therefore increased employment in

Tasmania, appear very low.


The markets identified in the White Paper are becoming increasingly competitive. This is already evident in

international education, where several countries including Canada, the United States and the United

Kingdom are implementing strategies to attract Asian students and researchers, and developing closer links

with universities in Asia. Further competition is also emerging within Asia itself.

The rapid growth and development in Asia will provide significant opportunities for a range of Tasmanian

products. However, Tasmanian businesses face major challenges in competing effectively in these markets,

including a strong exchange rate, high labour and other costs, and relatively high transport costs.

Developing these markets is a long-term proposition and may require the removal of some barriers to trade.

It is not expected that significant overall growth in export sales in these high value goods and services will

occur over the Forward Estimates period.

Labour Market

Tasmania’s total employment decreased over 2012, following a sustained increase from late 2009 to

early 2011. The current level of Tasmanian employment is below the level before the economic downturn. In

comparison, national employment has been growing steadily since late 2009.

A strong shift to part-time employment in Tasmania has emerged since the 2008 global downturn. This

pattern continued over the past year with full-time employment decreasing, while part-time employment

continued to increase. Male employment has also been decreasing, to be 7.1 per cent below the

pre-downturn level. Female employment increased by 0.4 per cent in the same period. These trends are

related as 78 per cent of male workers are currently in full-time positions, compared to only 44 per cent of

female workers.

In the year to March 2013, the number of total hours worked in Tasmania was estimated by the ABS to be

4.6 per cent below the level of one year earlier, compared to a national decrease of 1.9 per cent in the same

period (Chart 2.7). The actual decrease, both for Tasmania and Australia, is likely to be less than this

estimate due to the problems of estimating hours worked over the Easter period in these two years, but

nonetheless significant. This decline has been in response to lower demand and businesses seeking to

remain viable by increasing their productivity and reducing costs. The decrease in hours worked has been

significantly greater than the decrease in employment levels, indicating that conditions in the labour market

are softer than headline employment numbers suggest.


Chart 2.7: Full-time, Part-time and Total Aggregate Hours Worked – Tasmania

84

88

92

96

100

104

108

112


Full-time Part-time Total

Ag

gre

gate

ho

urs

wo

rked

, year-

avera

ge,

ori

gin

al

data

(In

dex:

2007–08 =

100)

Source: Labour Force Detailed, ABS Cat No 6291.0.55.001.

The industries most affected by the decline in demand have been manufacturing, forestry, construction and

retailing and this is likely to be reflected in employment trends. The level of employment directly and

indirectly related to public sector activity has also been easing. For some of these industries, especially

those in export and import competing sectors, these pressures are likely to continue in 2013-14.

The unemployment rate rose to 7.4 per cent in Tasmania in April 2013, which compares with the rate of

5.5 per cent nationally. Tasmania’s participation rate has been decreasing since mid-2010 and was

60.0 per cent in April 2013, well below the national rate of 65.3 per cent.

The year-average level of employment for 2012-13 is expected to be around 2 400 persons, or 1.0 per cent,

below the 2011-12 level. A year-average participation rate of 60¼ per cent is expected for 2012-13, and the

unemployment rate is estimated at 7.0 per cent, an increase from the year-average level of 6.3 per cent in

2011-12.

Some modest recovery in the labour market is expected in 2013-14 in line with increased demand.

Employment in 2013-14 is expected to increase by ½ of one per cent, or around 1 400 persons, from the

comparatively weak outcome expected in 2012-13. The parliament square project, the First Home Builder

Boost and the current Employment Incentive Scheme (Payroll Tax Rebate) are expected to contribute

positively to employment in 2013-14.

Employment is projected to increase by 1.0 per cent, or between 2 000 and 3 000 additional persons

employed, after 2013-14 in each year of the Forward Estimates period. An unemployment rate of

6¾ per cent and a participation rate of 60¼ per cent are forecast in 2013-14 and projected in the out-years.

Tasmania's Population

Population growth of 0.3 per cent was recorded in 2011-12, which was around half of the long-term average.

Population increase from the relatively strong net overseas in-migration and natural increase has been

increasingly offset by migration from Tasmania to the mainland states.


These trends are likely to have continued in 2012-13, with population growth expected to remain at

0.3 per cent.

Chart 2.8: Annual Population Growth since 1991-92 – Tasmania

-0.4

-0.2

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1991-92 1996-97 2001-02 2006-07 2011-12 2016-17

Forecastgrowth

Perc

en

tag

e c

han

ge i

n p

op

ula

tio

n c

om

pare

d t

o

sam

e q

uart

er

of

pre

vio

us y

ear

Source: Australian Demographic Statistics, ABS Cat No 3101.0.

In the year to the September quarter 2012, net interstate out-migration from Tasmania reached

2 748 persons, the highest net annual outflow since early 2000. This high level of net interstate

out-migration appears to be in response to the gap between Tasmanian labour market conditions and those

in mainland Australia, especially in the resource-rich states. This gap is expected to lessen, consistent with

Reserve Bank forecasts that mining investment is likely to peak before the end of 2013 and, as a result,

growth in demand for labour in the resource-rich states is likely to ease.

Tasmania’s population growth is forecast to increase to 0.4 per cent in 2013-14, reflecting expected lower

levels of interstate out-migration, and remain around this below trend rate over the Forward Estimates

period.

Monetary Conditions

The underlying inflation rate in Australia is currently around 2.4 per cent, well within the Reserve Bank’s

medium-term target band of between 2 and 3 per cent. The Reserve Bank forecasts underlying inflation to

remain within this band over the medium-term.

In 2012-13, Hobart’s Consumer Price Index is expected to increase by 1½ per cent in year-average terms,

as inflation to date has been lower than for Australia as a whole. This inflation rate is then expected to move

in line with national trends, increasing by 2½ per cent each year through the Forward Estimates period.

Over the past 12 months, the Reserve Bank has decreased the cash rate by 100 basis points. The cash rate

currently stands at 2.75 per cent, well below the long-term average of 5.5 per cent. Lenders have increased

the spread between the cash rate and their market rates, such that lending rates to households and smaller

businesses are closer to the medium-term average than might be expected and are not as low as in

mid-2009 when the cash rate was 3.0 per cent in response to the global economic downturn.


Most commentators expect interest rates to remain around these relatively low levels while overall

conditions in Australia’s non-mining sector remain subdued and there are concerns about the level of future

domestic demand once the mining investment phase winds down. In addition, the Reserve Bank will be

hesitant to increase interest rates while the Australian dollar remains at the current high level against most

currencies, particularly as some countries are considering measures to devalue their own currency as a way

to stimulate domestic activity.

Wage rates in Tasmania, as measured by the Wage Price Index, increased by 3.3 per cent in the year to the

March quarter 2013, the lowest growth of all Australian jurisdictions. Public sector wages growth, in

particular, has been moderating. The outlook is for further moderate wages growth as the weak labour

market conditions are expected to continue in the near term.


APPENDIX 2.1: TASMANIA’S RECENT ECONOMIC

PERFORMANCE – A LONGER TERM PERSPECTIVE Tasmania’s economic conditions are currently unfavourable, as this Chapter has shown. State final demand

has been in decline in recent quarters and the value of international exports remains well below the levels

before the global economic downturn. As a result, it is expected that Tasmania will experience negative

economic growth in 2012-13 and some further weakening in the labour market, following relatively modest

economic growth in recent years.

Some commentators make the comparison between the current economic climate in Tasmania and the

period of rapid growth from 2001 to 2006, when the growth rates of some key economic indicators, such as

investment, employment and final demand, were similar to that of Australia as a whole.

This section examines Tasmania’s recent economic performance against the longer term trends. Rather

than focusing on quarterly or annual changes in the key economic indicators for the State as a whole, the

approach taken has been to examine changes in the levels of these indicators as they affect Tasmanian

households.

Tasmanian households engage in the economy in three principal ways. Firstly, they offer labour. Secondly,

households purchase and consume goods and services. Thirdly, households benefit from services provided

by councils, the State Government and the Australian Government.

Over recent decades, the percentage of the population in employment has been very stable (Chart 2.9).

Chart 2.9: Employment per 1 000 People – Tasmania

0

100

200

300

400

500

600

Mar 1979

Mar 1981

Mar 1983

Mar 1985

Mar 1987

Mar 1989

Mar 1991

Mar 1993

Mar 1995

Mar 1997

Mar 1999

Mar 2001

Mar 2003

Mar 2005

Mar 2007

Mar 2009

Mar 2011

Mar 2013

Em

plo

ym

en

t p

er

1 0

00 p

eo

ple

, 12 m

on

th

mo

vin

g a

vera

ge,

ori

gin

al

data

Employment per 1 000 people Long-term average

Source: Calculated statistics based on Labour Force, ABS Cat No 6202.0 and Australian Demographic Statistics, ABS Cat No 3101.0.

The long-term average is around 425 persons per 1 000 people in the population, which includes children

under 15 years and those aged 65 years and over. In recent years, this number has been above the

long-term average, including the entire period since the global economic turndown in 2008.


A closer examination of the composition of employment in Tasmania since 1979 reveals that male

employment, as a share of the total population, has fallen, particularly males in full-time employment, while

female employment has increased markedly (Chart 2.10). The share of males employed fell from

27 per cent of the population in the March quarter 1979 to 24 per cent in the March quarter 2013, which was

more than offset by the increase in the share of females employed, from 13 per cent to 21 per cent.

Chart 2.10: Employment per 1 000 People by Sex and Status – Tasmania

0

100

200

300

400

500

600

Mar 1979

Mar 1981

Mar 1983

Mar 1985

Mar 1987

Mar 1989

Mar 1991

Mar 1993

Mar 1995

Mar 1997

Mar 1999

Mar 2001

Mar 2003

Mar 2005

Mar 2007

Mar 2009

Mar 2011

Mar 2013

Employed - part-time; Females Employed - full-time; Females

Employed - part-time; Males Employed - full-time; Males

Nu

mb

er

of

peo

ple

em

plo

yed

per

1 0

00 p

eo

ple

,12 m

on

th m

ovin

g a

vera

ge o

rig

inal

data

Source: Calculated statistics based on Labour Force Detailed, ABS Cat No 6291.0.55.001 and Australian Demographic

Statistics, ABS Cat No 3101.0.

These trends reveal an increase in employment opportunities overall for households over this period, and

greater engagement of households in the labour market. Importantly, there has been no sharp decline in

these trends in recent quarters and the current share of the total population in employment remains above

the long-term average.

There has been an increase in part-time employment for males and females. However, the average number

of hours worked per week each year, expressed in terms of Tasmania’s entire population and not just those

employed, has been higher in recent months than for many years since 1978-79. In March 2013, the

average number of hours worked per week was 13.6, not significantly below the average over the entire

period of 13.9 hours per week.

The overall trend has been some substitution of female employment for male employment within

households, with very little change in average number of hours worked, expressed in terms of the

population as a whole.

As the composition of the population changes over time, the size of the potential labour force will also

change. The participation rate measures the share of the working age population (which includes those

aged 65 years and over) that are in employment or are unemployed. This labour force participation,

expressed as a share of the total population, has been increasing in recent decades (Chart 2.11). The

increase is due, in part, to demographic change, with the share of persons aged under 15 years declining

sharply and the share of those aged 65 years and over accelerating over this period.


Chart 2.11: Labour Force Participation per 1 000 People – Tasmania

380

400

420

440

460

480

500

520

Ma

r 1

97

9

Ma

r 1

98

1

Ma

r 1

98

3

Ma

r 1

98

5

Ma

r 1

98

7

Ma

r 1

98

9

Ma

r 1

99

1

Ma

r 1

99

3

Ma

r 1

99

5

Ma

r 1

99

7

Ma

r 1

99

9

Ma

r 2

00

1

Ma

r 2

00

3

Ma

r 2

00

5

Ma

r 2

00

7

Ma

r 2

00

9

Ma

r 2

01

1

Ma

r 2

01

3

Participation Long-term averagePa

rtic

ipa

tio

n in

th

e la

bo

ur

forc

e p

er

1 0

00

pe

op

le,

12

mo

nth

mo

vin

g a

ve

rag

e o

rig

ina

l d

ata

Source: Calculated statistics based on Labour Force, ABS Cat No 6202.0 and Australian Demographic Statistics, ABS

Cat No 3101.0.

Despite the growth in the labour force and the weaker labour market in recent years, the number of persons

unemployed, expressed as share of the population, has been relatively low since 2003 (Chart 2.12).

Chart 2.12: Number of Unemployed per 1 000 People – Tasmania

0

10

20

30

40

50

60

70

Mar 1979

Mar 1981

Mar 1983

Mar 1985

Mar 1987

Mar 1989

Mar 1991

Mar 1993

Mar 1995

Mar 1997

Mar 1999

Mar 2001

Mar 2003

Mar 2005

Mar 2007

Mar 2009

Mar 2011

Mar 2013

Unemployed Long-term average

Un

em

plo

ym

en

t p

er

1 0

00 p

eo

ple

,12 m

on

th m

ovin

g a

vera

ge,

ori

gin

al

data

Source: Calculated statistics based on Labour Force, ABS Cat No 6202.0 and Australian Demographic Statistics, ABS

Cat No 3101.0.

The average number of unemployed persons, per 1 000 of the population, has been around 39 since 1979.

This reached as high as 58 persons in the December quarter 1993, after which the trend was downwards for

almost two decades to around 21 persons in the March quarter 2009. While the number has recently

increased, to 35 persons in the March quarter 2013, it remains below the long-term average.


The final factor in examining households’ engagement with the labour market is the real wage rate. Real

income, per hour worked, increases when the nominal wage rate increases by more than the rate of

increase in prices. Since 1997-98, the average wage rate in Tasmania has consistently increased by more

than the increase in the Consumer Price Index, except in 2000-01 (Chart 2.13). The CPI increase in

2000-01 was artificially high, due to the introduction of the GST, for which households were compensated by

lower income tax rates and the removal of some other taxes. This has meant that household real income

has been steadily increasing over this period, including in recent years.

Chart 2.13: Difference Between Growth of Wage Price Index and Consumer Price Index – Tasmania

-4.0

-3.0

-2.0

-1.0

0.0

1.0

2.0

3.0

1998-9

9

1999-0

0

2000-0

1

2001-0

2

2002-0

3

2003-0

4

2004-0

5

2005-0

6

2006-0

7

2007-0

8

2008-0

9

2009-1

0

2010-1

1

2011-1

2

WP

I an

d C

PI

gro

wth

rate

perc

en

tag

e

po

int

dif

fere

nce,

an

nu

al

ori

gin

al

data

Source: Calculated statistics based on Wage Price Index, ABS Cat No 6345.0 and Consumer Price Index, ABS Cat No

6401.0.

In summary, in recent decades there has been a gradual increase in the share of the population in

employment, with the number of hours worked remaining relatively stable and the real wage increasing

consistently over this period. In the recent years, this trend has continued, with very little change except for

the increase in the number unemployed, though this remains below the long-term average.

The growth in real household income, in average terms, is reflected in the very strong increase in real

household consumption. Since 1985-86, when the current series commenced, real per capita household

spending has increased by just under 55 per cent, from around $4 600 per quarter in late 1985 to $7 100 in

late 2012 (Chart 2.14). There has been a very recent decrease of just under 4 per cent from the peak of

$7 400 in early 2011.

Recent levels of real expenditure remain greater than in all the years before 2007. For some indicators there

has been little recent change, such as new motor vehicle sales (which includes fleet sales), where the

number of vehicles purchased in the December quarter 2012 was above the long-term average.


Chart 2.14: Consumption (Household and Government Spending by Households) per Person – Tasmania

0

1 000

2 000

3 000

4 000

5 000

6 000

7 000

8 000

9 000

10 000

Dec 1

985

Dec 1

988

Dec 1

991

Dec 1

994

Dec 1

997

Dec 2

000

Dec 2

003

Dec 2

006

Dec 2

009

Dec 2

012

Qu

art

erl

y r

eal

tren

d d

ata

($)

per

cap

ita

Government consumption Household consumption

Source: Calculated statistics based on Australian National Accounts: National Income, Expenditure and Product, ABS Cat No 5206.0.

Household living standards are determined, in part, by the government services that are provided, including

health and community services, education, housing support and welfare payments. The value of these

services provided to households has also increased in recent decades. Chart 2.14 also includes an

indicative estimate of the value of these services per person in Tasmania, set at 70 per cent of total public

consumption, and shows how the value of these services has increased since 1986. According to this

estimate, the total value of goods and services consumed per person has increased from around $5 700 in

late 1986 to a very recent peak of just over $9 500 in late 2010, with a decline of just under 2.0 per cent

from this level in late 2012. At the same time, the total savings by households in Tasmania has been

increasing sharply, as discussed below.

The data strongly suggest that the overall living standards of Tasmanian households have eased only very

marginally in recent quarters and they remain very high, when a long-term perspective is taken and

allowance is made for the increased household savings. This is consistent with the data on the engagement

of Tasmanian households with the labour market where, for most indicators, there has been only a very

modest decline recently.

This state-wide analysis does not reveal the range of outcomes for different household types. In particular,

many households face hardship as a result of personal circumstances as well as economic factors, such as

short-term cyclical trends that result in redundancies. In addition, structural changes arise as the Tasmanian

economy evolves and grows, which result in the growth of some industries but the decline of some others,

most recently manufacturing and forestry-related industries. While attention will always be paid to the needs

of those adversely affected by these changes, it remains important to identify the economy-wide trends and

to focus on areas of potential growth.

In the early 2000s, Tasmania entered a period of growth that was similar to that of Australia as a whole.

Between 2000-01 and 2005-06, private investment in Tasmania grew at almost twice the national rate, state

final demand grew more strongly than national final demand, and employment growth rates in Tasmania


and nationally were very similar. Business and consumer confidence levels were both high and much of this

growth was driven by strong household spending.

The first observation is that the period from 2000-01 and 2005-06 was characterised by strong growth in

household spending. This was due largely to the exceptionally low (and sometimes negative) net household

savings (Chart 2.15). This compares with savings rates that were close to 20 per cent in the 1970s and

averaged at around 8.0 per cent since 1979. This chart shows national household savings rates; Tasmanian

households demonstrated a very similar pattern.

Chart 2.15: Net Household Savings Ratio – Australia

-5

0

5

10

15

20

Mar 1979

Mar 1981

Mar 1983

Mar 1985

Mar 1987

Mar 1989

Mar 1991

Mar 1993

Mar 1995

Mar 1997

Mar 1999

Mar 2001

Mar 2003

Mar 2005

Mar 2007

Mar 2009

Mar 2011

Mar 2013

Net household savings ratio Long-term average

Net savin

gs a

s a

% o

f n

et

dis

po

sab

le i

nco

me,

qu

art

erl

y t

ren

d s

eri

es

Source: Calculated statistics based on Australian National Accounts: National Income, Expenditure and Product, ABS

Cat No 5206.0.

A large part of the recent reduction in expenditure by Tasmanian households is due to this increase in

household savings. In recent years, households have chosen to build up their assets, or reduce their debts

more quickly, rather than sustain very high levels of consumption.

In part, the reduction in net savings arose as a result of the sharp increase in household wealth, due to

strong growth in house prices and equity values. This wealth effect contributed to higher consumption and

encouraged households to convert some equity in dwellings into debt at a time when debt servicing costs

were relatively low. Household confidence levels were strong, supported by an expectation that property

prices would continue to increase.

An additional factor that stimulated household spending, and the housing sector in particular, was increased

interstate migration into Tasmania, which reached very high levels over this period and substantially

boosted Tasmania’s population growth rate.

The second observation is that house prices in Tasmania were very low at the start of this period. Prior to

2001, there had been an upward trend in mainland house prices, while in Tasmania there had been very

little movement. Relative to wages and employment opportunities, house prices were particularly low in

Tasmania compared to the mainland. There is some evidence that the disparity in housing affordability

contributed to the increase in migration into Tasmania.


House prices increased rapidly in the five years to 2006, with the median house price more than doubling

from $116 000 to $282 500 (Chart 2.16). There was also a sharp increase in the number of house sales. For

some periods, around one third of house sales in Tasmania were to interstate purchasers.

Chart 2.16: Median House Prices – Tasmania

0

50

100

150

200

250

300

350

400

Dec 1997 Dec 2000 Dec 2003 Dec 2006 Dec 2009 Dec 2012

Qu

art

erl

y m

ed

ian

ho

use p

rice (

$'0

00)

Tasmanian median house price

Source: Market Facts, Real Estate Institute of Australia.

The factors that led to the increase in house prices also fuelled strong growth in dwelling investment

(Chart 2.17), which stimulated the construction sector where employment increased sharply.

The increased purchases of dwellings also led to increased spending on housing-related items such as

white goods. In this period, spending on household goods was exceptionally high. The very large number of

house purchases also boosted spending on real estate and legal services.

Chart 2.17: Dwelling Investment per Capita – Tasmania

0

100

200

300

400

500

600

700

800

900

Dec 1

986

Dec 1

988

Dec 1

990

Dec 1

992

Dec 1

994

Dec 1

996

Dec 1

998

Dec 2

000

Dec 2

002

Dec 2

004

Dec 2

006

Dec 2

008

Dec 2

010

Dec 2

012

Dw

ellin

g in

vestm

en

t, d

ollars

per

cap

ita,

real q

uart

erl

y t

ren

d d

ata

, 2010

-11 p

rices

Tasmanian dwelling investment per capita

Source: Calculated statistics based on Australian National Accounts: National Income, Expenditure and Product, ABS Cat No 5206.0.


The cumulative effect of these influences was a large increase in household spending and dwelling

investment from 2000-01 to 2005-06. Business investment also doubled in real terms over this period,

increasing at a faster rate than nationally, and included some major energy-related projects such as the

construction of Basslink and the transmission and distribution system for natural gas. The low value of the

Australian dollar also encouraged some business investment, such as tourism-related ventures.

Employment growth was correspondingly high over this period (Chart 2.18). From 2003, business surveys

reported that employers were facing increasing skills shortages, and that this was the principal constraint on

further growth of their businesses.

Chart 2.18: Employment Levels – Tasmania

150

160

170

180

190

200

210

220

230

240

250

Mar 1997 Mar 2001 Mar 2005 Mar 2009 Mar 2013

Em

plo

ym

en

t, p

ers

on

s (

000s),

12 m

on

th m

ovin

g a

vera

ge o

rig

inal

data

Tasmanian employed persons

Source: Labour Force, ABS Cat No 6202.0.

Tasmania’s export sector did not contribute significantly to this period of rapid economic growth. The source

of most of this growth was increased private spending.

The improved economic conditions in Tasmania resulted in significantly increased State Government tax

receipts, particularly conveyance duty and land tax from the housing boom. At the same time, national

household spending grew strongly, which boosted the State’s GST payments. The result was a large

increase in State public spending, which provided further stimulus to the Tasmanian economy.

This period of growth arose due to some particular conditions that do not exist at the present time. Firstly,

there were the very low household savings rates, which arose as a result of very strong consumer

confidence from sustained growth in the value of household assets. The subsequent behaviour of

households since 2005, especially after the global economic downturn, suggests they have a more cautious

approach in their spending and investment decisions.

A second factor is the disparity in house prices between Tasmania and the mainland Australia. The rapid

growth in house prices was always going to cease once there was a return to some parity, in terms of

affordability, with mainland Australia. Average house prices in Tasmania have increased more slowly since

2005 and while they remain lower in Tasmania than in mainland states, the difference is relatively much

smaller than in 2001.


Thirdly, some of the major energy projects were, by their nature, “one-off” projects. As a result of price

increases and the impact of the decline in manufacturing in Australia, energy demand has fallen, Tasmania,

particularly, has an excess supply in generation capacity as a result. There are currently no confirmed new

initiatives in the energy sector of a similar magnitude.

Since the rapid growth from 2000-01 to 2005-06 the Tasmanian economy has been more subdued. This has

led to State Government tax receipts increasing more slowly. Revenue from conveyance duty, for example,

has been falling in recent years as the housing market has slowed. In addition, national GST receipts have

been substantially lower in recent years than anticipated, resulting in lower than projected GST payments to

the State. This has reduced the spending capacity of the Government.

Importantly, the major economic benefits from the early 2000s have largely continued through to the

present, as the earlier part of this section has demonstrated. Tasmania’s economic performance is currently

close to the very high levels of recent years. Households, in particular, have been building up their financial

assets through high levels of savings.

Consumer confidence remains relatively low in Tasmania and the media often reports the views of some

interest groups that Tasmania’s economy is in severe decline and is creating widespread hardship among

households. While many households do face very challenging financial conditions, the economic data reveal

that the State’s economic performance, and household living standards, remain generally rather higher on

the whole than these reports would suggest.


3 THE FISCAL STRATEGY Features

• The Fiscal Strategy increases accountability and guides the return of the State Budget towards a sustainable position.

• A new Fiscal Strategy was established in the 2011-12 Budget to reflect the difficult financial and economic position faced by the Government.

• Over the Budget and Forward Estimates two Fiscal Strategy targets are being achieved, one measure returns to target levels over the period and two targets are not being achieved.

• The Net Operating Surplus target is not achieved over the Budget and Forward Estimates, however, a surplus is achieved in 2016-17.

• The Net Debt target is not achieved over the Forward Estimates period, although the State does return to negative Net Debt in 2017 of $47 million.

• The Ratio of Non-Financial Liabilities to Revenue for Non-Financial Public Sector exceeds the upper limit of the Fiscal Strategy target in 2014-15 and 2015-16 before reducing to below the upper limit in 2016-17.

• By the end of the Forward Estimates period the Budget has been returned to a surplus position and there is no Net Debt, however, further action would be required to achieve annual targets that have been established in the Fiscal Strategy.

3.2 The Fiscal Strategy

THE FISCAL STRATEGY A fiscal strategy is an important planning tool for the Government and also performs an important role in providing clear signals to financial markets, the business sector and the community of the Government's financial objectives. The purpose of a fiscal strategy is to establish a benchmark for evaluation of the Government's fiscal performance and increase public awareness of its fiscal policies.

The current Fiscal Strategy was first presented in the 2011-12 Budget and prepared in response to the financial and economic challenges being faced by the State. The Fiscal Strategy was developed in accordance with the principles of sound fiscal management as specified in the Charter of Budget Responsibility Act 2007.

The Fiscal Strategy focuses on the following key aspects of financial management:

• the establishment of a sustainable Budget position;

• debt and liability reduction;

• maintaining a competitive business and tax environment; and

• ongoing infrastructure investment.

For each key financial management area, a guiding principle is established, financial measures identified and targets for those financial measures established.

Targets for four and eight years beyond the initial four year term of the Fiscal Strategy are also established.

The establishment of targets beyond the initial four year period increases the medium and long-term focus of the Government’s Fiscal Strategy and financial management in general. This extended period of focus is important for the establishment of the State’s long-term financial sustainability.


FISCAL STRATEGY STATUS Table 3.1 provides a summary of the current status of the Fiscal Strategy measures and targets. It shows that due to the difficult financial and economic environment the Net Operating Surplus and Net Debt targets will not be achieved over the Budget and Forward Estimates. However, these measures improve consistently across the Forward Estimates. The Ratio of Non-Financial Liabilities to Revenue for the Non-Financial Public Sector exceeds the established target in 2014-15 but returns to below target levels in 2016-17. Targets relating to tax competitiveness and infrastructure investment are being achieved. The Fiscal Strategy continues to represent an appropriate and responsible framework for the return of the State Budget to a sustainable position over the medium-term.

Table 3.1: Fiscal Strategy Status

2012-13 Estimated Outcome

2013-14 Budget

2014-15 Forward Estimate

2015-16 Forward Estimate

2016-17) Forward) Estimate)

2018-19 Target

2022-23 Target

A Sustainable Budget Position Net Operating Surplus1

Target ($m) >50 >50 >50 >50 >50 >100 >200

Estimated ($m) (426) (267) (165) (34) 10 ... ... Debt and Liability Reduction Ratio of Non-Financial Liabilities to

Revenue for the Non-Financial

Public Sector2

Target (%) <115 <115 <110 <110 <110 <110 <110

Estimated (%) 103 109 112 112 107 ... ... General Government Net Debt3

Target ($m) <0 <(150) <(300) <(300) <(300) <(900) <(1 500)

Estimated ($m) 16 226 229 95 (47) ... ... A Competitive Business and Taxation Environment Tasmania’s Tax Severity4

Target (Index) <100 <100 <100 <100 <100 <100 <100

Actual (Index) 90 ... ... ... ... ... ... Ongoing Infrastructure Investment Capital Expenditure in Excess of

Depreciation

Target ($m) >0 >0 >0 >0 >0 >0 >0

Estimated ($m) 49 69 87 20 51 ... ...

Sources: Department of Treasury and Finance, Commonwealth Grants Commission (CGC) and the Australian Bureau

of Statistics (ABS).


Notes: 1. The established targets represent a continuous improvement in the Net Operating Surplus from the achievement of a

surplus of better than $50 million in 2012-13 to a surplus of better than $200 million by 2022-23. 2. For the purposes of the Fiscal Strategy, Net Financial Liabilities represents Net Debt less Advances Paid plus the

Superannuation liability. Net Financial Liabilities is divided by Revenue from Transactions to derive the Net Financial Liabilities to Revenue Ratio.

3. The established targets represent a continuous improvement in the State’s General Government Net Debt position from being Net Debt free to having negative Net Debt of more than $1.5 billion.

4. In its most recent publication, the Report on GST Revenue Sharing Relativities – 2013 Update, the CGC has published total taxation severity ratios, allowing a direct comparison of tax severity to be made between states and territories. Tasmania has been assessed as having the third lowest taxation severity of all states and territories, based on the taxation arrangements in place in each jurisdiction in 2011-12.

A Sustainable Budget Position Table 3.1 shows that the Government established challenging targets for the Net Operating Balance over the Budget and Forward Estimates period and then over the medium to long-term.

While the Government will not meet established Net Operating Balance targets over the Budget and Forward Estimates period, it is projected that continuation of the Government’s Budget management strategies will return the State to surplus in the medium-term. It is anticipated that a Net Operating Surplus will be achieved in 2016-17 and will subsequently continue to grow to meet the established target level.

Over the long-term, the Government is targeting a surplus in excess of $200 million. Such a level of surplus is necessary to provide sufficient cash balances to fund infrastructure renewal and development; and meet other financial obligations.

Debt and Liability Reduction The change in the Net Debt position over the Budget and Forward Estimates reflects the ongoing improvement in the Net Operating Surplus position. Net Debt is expected to be $229 million in 2015 before improving to a negative position in 2017.

A Competitive Business and Taxation Environment The 2013-14 Budget includes two initiatives in relation to taxation: an increase in the payroll tax threshold of $240 000 to $1.25 million and the abolition of motor vehicle duty on caravans and camper trailers. It is expected that the level of tax severity in Tasmania will continue to remain below the average level of all states and territories.

Ongoing Infrastructure Investment Table 3.1 shows that the extent to which capital expenditure exceeds depreciation will remain steady over coming years.


FISCAL STRATEGY TARGETS The Fiscal Strategy targets determined for the 2011-12 Budget and the associated Forward Estimates period (2012-13 to 2014-15) will remain unchanged for the term of the Fiscal Strategy. This will provide for a straight-forward comparison between the Government’s target outcomes and the actual outcomes in each year.

At the end of the four year Fiscal Strategy period (2014-15), actual Budget performance will be assessed and new short, medium and long-term targets established.

A Sustainable Budget Position

Principle To achieve and maintain a sustainable Budget position.

Financial Measure Net Operating Balance

Net Operating Balance

Short-term Target 2011-12: > ($120 million)

Medium-term Target 2014-15: > $50 million

Long-term Target 2022-23: > $200 million

A key to maintaining a sustainable Government financial position is aligning expenditure growth and the need for infrastructure renewal and development, with long-term trend growth in revenue. This requires the maintenance of a Budget Net Operating Surplus, which ensures recurrent services can be fully funded from recurrent revenue. Achievement of a surplus of a sufficient magnitude also ensures the availability of funding to meet the cost of necessary infrastructure investment and other financial obligations. The Net Operating Surplus is the key measure that represents the ongoing sustainability of a government's financial position.

As has been highlighted in recent Budget Papers, the provision of significant levels of one-off Australian Government funding for specific capital programs has significantly impacted on the Government's Net Operating Balance. However, the corresponding capital expenditure is not included in the calculation of the Net Operating Balance. Accordingly, whilst the headline Net Operating Balance is calculated in accordance with accounting standards it may portray a position that is better than the Government's true underlying financial position.

For transparency, the Budget Papers present information on the Government’s Underlying Net Operating Balance. The Underlying Net Operating Balance removes the impact of the one-off Australian Government funding for specific infrastructure investment.

Table 3.2 shows the current Budget and Forward Estimate calculation of the Underlying Net Operating Balance.


Table 3.2: Underlying Net Operating Balance 2012-13 2013-14 2014-15 2015-16 2016-17 Estimated Forward Forward Forward Outcome Budget Estimate Estimate Estimate

$m $m $m $m $m

Net Operating Balance (425.7) (266.9) (164.5) (33.9) 9.9 ) Less One-off Australian Government Funding

Nation Building - Roads and Rail Funding 49.5 50.8 35.0 35.0 35.0 Royal Hobart Hospital Redevelopment .... .... .... .... 50.0 Water for the Future Funding 24.7 36.3 9.5 17.5 ....

74.1 87.1 44.5 52.5 85.0

Underlying Net Operating Balance (499.8) (354.0) (209.0) (86.4) (75.1)

Debt and Liability Reduction

Principle The debt and liability burden on the Tasmanian community will continue to be reduced over the longer term and financial risks will be prudently managed.

Financial Measures General Government Net Debt

Ratio of Net Financial Liabilities to Revenue for the Non-Financial Public Sector

General Government Net Debt

Short-term Target 2011-12: < $0

Medium-term Target 2014-15: < ($300 million)

Long-term Target 2022-23: < ($1 500 million)

Ratio of Net Financial Liabilities to Revenue for the Non-Financial Public Sector

Short-term Target 2011-12: < 115%

Medium-term Target 2014-15: < 110%

Long-term Target 2022-23: < 110%

While the General Government Sector is estimated to enter Net Debt for four years, the Government is moving to return the State’s debt and liability position to pre-GFC levels. The Government is also committed to achieving an improvement in the broader Non-Financial Public Sector through improving the financial position of Government businesses.


Keeping the General Government Sector Net Debt free has been a key focus of previous fiscal strategies. Achievement of a Net Debt free status is not by itself considered to be a sufficient debt and liability reduction target for the Government. The Fiscal Strategy, therefore, targets ongoing improvement in the General Government Net Debt position over the medium to long-term.

General Government Net Debt is a measure that focuses on a limited range of Government assets and liabilities. It is important that a broader more all encompassing debt/liability measure also be included in a fiscal strategy.

The ratio of Net Financial Liabilities to Revenue for the Non-Financial Public Sector, which was also included in the previous Interim Fiscal Strategy, is a broad debt and liability measure that increases financial accountability. It achieves this through the inclusion of a greater range of Government assets and liabilities (including the Government’s unfunded superannuation liability) and the extension of the measurement to the Non-Financial Public Sector rather than only the General Government Sector (thereby including the majority of the Government’s businesses).

The ratio of Net Financial Liabilities to Revenue for the Non-Financial Public Sector was one of the financial measures that was a key focus of international credit rating agency Standard and Poor’s. In April 2013, Standard and Poor’s released a statement indicating that the organisation was reducing its emphasis on this measure to assess a State’s debt burden. Consideration will be given to including further debt assessment measures in future fiscal strategies.

A Competitive Business and Taxation Environment

Principle A competitive business and taxation environment will be maintained.

Financial Measure Tasmania’s Tax Severity Index

Non-Financial Measure No new taxes and no increase in the rate of any existing State tax

Tasmania’s Tax Severity Index

Short-term Target 2011-12: < 100

Medium-term Target 2014-15: < 100

Long-term Target 2022-23: < 100

A competitive tax regime, which raises sufficient revenues to fund infrastructure and service delivery needs, while not hindering business expansion and economic growth, is seen as a key factor in fostering robust economic growth.

Data collected by the Commonwealth Grants Commission currently shows that the severity of taxes in Tasmania is well below the average of other jurisdictions. This reflects the current competitive nature of the Tasmanian tax system.

Over the period of the Fiscal Strategy, the Government is committed to maintaining Tasmania’s relative low tax status.


Ongoing Infrastructure Investment

Principle Investment in core General Government infrastructure will be maintained in real terms to support the delivery of Government services and to foster economic and industry development.

Financial Measure Level of Capital Expenditure in Excess of Depreciation

Capital Expenditure in Excess of Depreciation

Short-term Target 2011-12: > $0

Medium-term Target 2014-15: > $0

Long-term Target 2022-23: > $0

Ongoing strong investment in State infrastructure has been a key policy of the Government. Not only has this provided improved infrastructure for Tasmanians but, together with the injection of significant Australian Government funding, it has assisted in supporting the Tasmanian economy following the GFC.

While the State’s financial position will not enable recent above average infrastructure investment levels to continue, the Government believes that appropriate investment in infrastructure remains vital to the effective delivery of services to the community, to promote economic growth and to avoid asset erosion and the creation of financial burdens for future generations.

The investment in major infrastructure projects included in the Budget, such as the redevelopment of the Royal Hobart Hospital and the Community Roads Program together with significant ongoing investment in rail, irrigation, roads, health, housing and education infrastructure, represent critical infrastructure to support Tasmania's future economic and social development.

The Government’s level of infrastructure investment will continue to be measured by the extent to which capital expenditure exceeds depreciation. This is a commonly used measure amongst the states as it shows that the Government is continuing to grow the State’s infrastructure assets.


APPENDIX 3.1 CREDIT STATUS OF THE STATE PUBLIC SECTOR Since the mid 1980s, the two major rating agencies, Moody's Investors Service (Moody's) and Standard & Poor's (S&P) have progressively assigned a credit rating to each State. Tasmania was first rated in 1991. Both of the major rating agencies review the credit ratings of all states on an annual basis.

The current credit ratings for long-term domestic debt of the States and the Territories are detailed in Table 3.3.

Table 3.3 Government Ratings

Moody's Standard &

Poor's

New South Wales Aaa AAA

Queensland Aa1 AA+

Australian Capital Territory na AAA

Western Australia Aaa AAA

Victoria Aaa AAA

South Australia Aa1 AA

Tasmania Aa1 AA+

Northern Territory Aa1 na

General Government Revenue 4.1

4 GENERAL GOVERNMENT

REVENUE

Features

Total revenue is estimated to be $4 792.1 million in 2013-14, an increase of $160.6 million or

3.5 per cent above the 2012-13 Budget estimate of $4 631.5 million.

Payroll tax relief to 2 250 taxpayers has been provided by increasing the tax free threshold from

$1.01 million to $1.25 million.

Key components of the State's revenue in 2013-14 include:

GST revenue is estimated to be $1 800.5 million, an increase of $99.7 million or 5.9 per cent over the

2012-13 estimate of $1 700.8 million;

Australian Government payments for specific purposes are estimated to be $956.7 million, a decrease

of $85.4 million or 8.2 per cent below the 2012-13 estimate of $1 042.1 million;

Tasmania's share of revenue from Grants, including GST and Australian Government grants for

specific purposes, equates to 59.5 per cent of total General Government revenue;

Taxation revenue is estimated to be $940.0 million, a decrease of $0.9 million or 0.1 per cent below

the 2012-13 estimate of $940.9 million; and

Tasmania's tax competitiveness remains strong compared to other jurisdictions.

4.2 General Government Revenue

OVERVIEW Total revenue is estimated to be $4 792.1 million in 2013-14, an increase of $160.6 million or 3.5 per cent

above the 2012-13 Budget estimate of $4 631.5 million. Total revenue is anticipated to increase to

$5 309.3 million by 2016-17.

Table 4.1 lists the major General Government revenue sources.

Table 4.1: General Government Revenue

2012-13)

)

Budget)

2013-14)

)

Budget)

2014-15)

Forward)

Estimate)

2015-16)

Forward)

Estimate)

2016-17)

Forward)

Estimate)

$m) $m) $m) $m) $m)

Grants 2 876.5) 2 850.9) 2 961.9) 3 237.4) 3 387.3)

Taxation 940.9) 940.0) 970.9) 1 003.9) 1 039.8)

Sales of Goods and Services 313.8) 354.9) 358.1) 363.7) 367.1)

Fines and Regulatory Fees 106.9) 106.4) 110.7) 110.3) 111.8)

Interest Income 17.5) 13.8) 12.7) 16.2) 21.7)

Dividend, Tax and Rate Equivalent Income 233.0) 330.1) 337.9) 249.8) 177.8)

Other Revenue 142.9) 195.9) 201.4) 206.3) 203.8)

4 631.5) 4 792.1) 4 953.4) 5 187.6) 5 309.3)


GRANTS Grants primarily reflect transfers of funding from the Australian Government and are estimated to be

$2 850.9 million in 2013-14. This is a decrease of $25.6 million or 0.9 per cent below the 2012-13 Budget

estimate of $2 876.5 million.

Table 4.2: Grants

2012-13) 2013-14) 2014-15) 2015-16) 2016-17)

Budget) Budget)

Forward)

Estimate)

Forward)

Estimate)

Forward)

Estimate)

$m) $m) $m) $m) $m)

General Purpose Payments (Untied Funding) ) ) ) )

GST revenue 1 700.8 1 800.5 1 949.4 2 184.4 2 318.8

Payments for Specific Purposes (Tied Funding)

Specific Purpose Payments1

To the State2 499.5 495.2 524.0 559.4 562.7

Through the State 178.7 175.4 187.5 198.8 206.8

678.1 670.6 711.5 758.3 769.5

National Partnership Payments1

To the State 290.5 212.4 130.6 121.6 124.8

Through the State 73.5 73.8 76.5 79.1 80.3

364.0 286.2 207.0 200.7 205.0

Total Payments for Specific Purposes 1 042.1 956.7 918.6 959.0 974.5

Other Grants and Subsidies 133.6 93.7 93.9 94.0 94.0

Total 2 876.5 2 850.9 2 961.9 3 237.4 3 387.3

) )

Notes: 1. Estimates of Specific Purpose Payments and some National Partnership Payments may differ from those published

in the Australian Government's 2013-14 Budget due to the need to finalise State estimates before the release of the Australian Government Budget.

2. Includes National Health Reform funding, which replaced the National Healthcare SPP from 2012-13 onwards.

In 2013-14, it is estimated that total grants, including GST and Australian Government grants for specific

purposes, will equate to 59.5 per cent of Tasmania's total General Government revenue. In accordance with

the Intergovernmental Agreement on Federal Financial Relations (IGA), transfers from the Australian

Government fall into two categories:

General Purpose Payments, which are 'untied' payments that can be used at the State's discretion. The

GST distribution will be the only GPP received by Tasmania in 2013-14; and

conditional (tied) funding in the form of Specific Purpose Payments (SPPs), National Partnership

Payments (NPPs) and National Health Reform (NHR) funding. These payments must only be spent for

purposes as agreed with the Australian Government.


These transfers are discussed in further detail in the Guide to the Budget which can be found at

www.treasury.tas.gov.au.

GST Revenue

GST revenue is the largest single source of revenue for Tasmania. It is estimated that Tasmania's share of

GST revenue will be $1 800.5 million in 2013-14, an increase of $99.7 million or 5.9 per cent over the

2012-13 estimate of $1 700.8 million.

In accordance with the Intergovernmental Agreement on Federal Financial Relations (IGA), the states

receive all GST revenue collected by the Australian Government as GPPs. The states reimburse the

Australian Government for GST administration costs. The GST collections are distributed among the states

according to the Commonwealth Grants Commission's (CGC) methodology. Section 5 of the Guide to the

Budget provides further explanation of the CGC methodology.

Table 4.3 shows the sources of change in GST revenue estimates from the 2012-13 Budget to the

2013-14 Budget.

Table 4.3: Components of Change in GST Revenue

2013-14) 2014-15) 2015-16) 2016-17)

Budget)

Forward)

Estimate)

Forward)

Estimate)

Forward)

Estimate1

$m) $m) $m) $m)

GST revenue estimate – 2012-13 Budget 1 849.4) 2 059.3) 2 147.5) .... )

Change due to GST relativity (30.8)) (87.6)) 59.2) .... )

Change due to share of national population (0.2)) (10.2)) (22.1)) .... )

Change due to GST pool (17.9)) (12.2)) ....) .... )

GST revenue estimate – 2013-14 Budget 1 800.5) 1 949.4) 2 184.4) 2 318.8)

Note: 1. The 2012-13 Budget did not include Forward Estimates beyond 2015-16.

In comparison to the 2012-13 Budget, GST revenue forecasts have declined in 2013-14 and 2014-15 and

increased in 2015-16. The differences in the GST revenue estimates arising from changes in Tasmania's

population share and changes in the GST pool are the result of the revisions to these factors made in the

Australian Government's 2013-14 Budget.

Changes in the forecast per capita relativities have had the largest impact on the GST revenue estimates.

Since the 2012-13 Budget, the Department of Treasury and Finance has used its own financial model to

forecast per capita relativities over the Forward Estimates period. This model seeks to replicate the CGC's

methodologies to calculate per capita relativities.

The 2012-13 Budget forecasts the 2013-14 GST relativity factor at 1.64145. The CGC 2013 Update

determined that the actual 2013-14 GST relativity factor for Tasmania is 1.61454. The Tasmanian estimate

is marginally lower resulting in a fall in the GST revenue forecast in 2013-14. In contrast, the Australian

Government forecast for Tasmania's GST relativity factor for 2013-14 in its MYEFO was 1.51824.


The model relies on various data sources including all State and Territory Government Budgets and the

CGC annual Update reports. Since the 2012-13 Budget these data sources have been re-published. The

2013-14 Budget uses the latest available data. Data revisions between the 2012-13 and 2013-14 Budgets

are the main reason for the decrease in the 2014-15 relativity factor. In particular, variations in the estimates

of the quantum and distribution of Commonwealth payments and changes in States' and Territories'

forecasts for taxation revenues have impacted Tasmania's 2014-15 relativity factor.

As illustrated in Chart 4.1, after updating the relativity model for the latest data in the CGC: 2013 Update

Report and the latest revenue Forward Estimates for all States, total GST revenue over the Budget and

Forward Estimates is expected to be comparable to that predicted in the 2012-13 Budget.

Chart 4.1: GST Revenue to Tasmania, 2007-08 to 2016-17

1 500

1 600

1 700

1 800

1 900

2 000

2 100

2 200

2 300

2 400

20

07

-08

20

08

-09

20

09

-10

20

10

-11

20

11

-12

20

12

-13

20

13

-14

20

14

-15

20

15

-16

20

16

-17

$ m

illio

n

Actual 2012-13 Budget 2013-14 Budget2013-14 Budget 1

Sources: Tasmanian Government Budget Paper No 1 - The Budget (various years); Australian Government Final Budget Outcome (various years); Department of Treasury and Finance modelling.

Note: 1. The 2013-14 Budget includes the estimated outcome for GST Revenue for 2012-13.

Over the Budget and Forward Estimates period (from 2012-13) GST revenue is forecast to grow at a

compound annual growth rate of 8.1 per cent. This growth rate includes the impact of the forecast increase

in Tasmania's per capita relativity on top of a 5.3 per cent annual average growth in the total GST pool.

Commonwealth Payments for Specific Purposes

Specific Purpose Payments

In 2013-14, Tasmania will receive an estimated $670.6 million of the funding in SPPs. This is a decrease of

$7.5 million or 1.1 per cent below the $678.1 million estimated in the 2012-13 Budget. Over the Forward

Estimates period, the growth in SPPs reflect indexation arrangements, which is partially offset by the

transition to equal per capita distribution.


National Health Reform Funding

Under the National Health Reform Agreement Tasmania receives National Health Reform (NHR) funding for

the provision of public hospital services. This funding replaced the National Healthcare SPP as of

1 July 2012. In 2013-14, Tasmania will receive an estimated $311.7 million in NHR funding.

National Partnership Payments

In 2013-14, Tasmania will receive an estimated $286.2 million of funding in NPPs, a decrease of

$77.8 million or 21.4 per cent below the $364.0 million estimated for 2012-13. This primarily reflects

payment profiles agreed with the Australian Government, the cessation of a number of NPPs and the

reclassification of Home and Community Care funding from an NPP to a COPE.

Table 4.4 details the Payments for Specific Purposes that Tasmania will receive from the Australian

Government in 2013-14 and over the Forward Estimates period.


Table 4.4: Commonwealth Payments for Specific Purposes1

2012-13) 2013-14) 2014-15) 2015-16) 2016-17)

Budget) Budget)

Forward)

Estimate)

Forward)

Estimate)

Forward)

Estimate)

$m) $m) $m) $m) $m)

)


)

Education

)

National Schools - Government Schools 105.6 107.3 111.4 116.8 116.8

National Schools - Non-Government Schools 178.7 175.4 187.5 198.8 206.8

National Skills and Workforce Development 30.8 31.8 31.7 32.0 32.0

Total Education Specific Purpose Payments 315.0 314.5 330.6 347.6 355.6

)

Health and Human Services

National Health Reform2 298.8 311.7 338.3 366.7 370.4

National Disability Services 32.6 15.5 17.0 18.4 18.4

National Affordable Housing 31.7 28.9 25.6 25.5 25.2

Total Health and Human Services Specific Purpose

Payments

363.1 356.1 380.9 410.6 413.9

Total Specific Purpose Payments 678.1 670.6 711.5 758.3 769.5

National Partnership Payments3 ) ) ) )

Education ) ) ) )

Early Childhood Education 10.4 9.0 8.2 7.1 7.1

Reward Payments for Great Teachers .... 0.7 3.0 3.4 3.4

Empowering Local Schools .... .... .... 8.8 ....

Indigenous Early Childhood Development 1.2 2.0 .... .... ....

Trade Training Centres in Schools 4.8 3.0 2.3 2.4 ....

Supporting Students with Disabilities 1.6 0.8 .... .... ....

Smarter Schools

Low SES School Communities 17.0 10.4 7.9 .... 1.9

Improving Teacher Quality 4.2 4.2 .... .... ....

Literacy and Numeracy 4.5 .... .... .... ....

Other 7.3 2.9 1.0 0.3 0.3

Total Education National Partnerships 51.0 33.0 22.5 22.0 12.7

)


Table 4.4: Commonwealth Payments for Specific Purposes1 (continued)

2012-13) 2013-14) 2014-15) 2015-16) 2016-17)

Budget) Budget)

Forward)

Estimate)

Forward)

Estimate)

Forward)

Estimate)

$m) $m) $m) $m) $m)

Healthcare

National Health and Hospitals Network Package

Elective Surgery .... 0.9 0.9 0.9 ....

National Access Target for Emergency Departments 3.2 1.1 1.1 1.1 ....

Sub-Acute Beds 10.6 14.0 .... .... ....

Essential Vaccines 8.3 4.7 4.7 .... ....

Improving Health Services in Tasmania - Reducing .... 8.3 7.1 6.2 ....

Elective Surgery Lists

Supporting National Mental Health Reform .... 1.6 1.6 1.7 ....

Commonwealth Dental Health Program .... 5.5 4.3 .... ....

Royal Hobart Hospital Redevelopment .... .... .... .... 50.0

National Cancer System 2.3 6.6 6.8 0.5 ....

Other 11.1 6.3 2.0 1.6 0.6

Total Healthcare National Partnerships 35.4 49.0 28.4 12.0 50.6

Community Services (including Disability) )

Certain Concessions for Pensioners and Seniors Card

Holders 8.3 8.6 8.9 8.9 8.9

Other4 44.4 .... .... .... ....

Total Community Services (including Disability)

National Partnerships

52.7 8.6 8.9 8.9 8.9

Housing

Homelessness 2.6 .... .... .... ....

Indigenous Housing 1.4 2.9 .... .... ....

Total Housing National Partnerships 4.0 2.9 .... .... ....

)

Infrastructure

Abt Railway .... 6.0 .... .... ....

Nation Building (includes former Auslink)5 64.3 50.8 35.0 35.0 35.0

Other 4.2 .... .... .... ....

Total Infrastructure National Partnerships 68.5 56.8 35.0 35.0 35.0


Table 4:4: Commonwealth Payments for Specific Purposes1 (continued)

2012-13) 2013-14) 2014-15) 2015-16) 2016-17)

Budget) Budget)

Forward)

Estimate)

Forward)

Estimate)

Forward)

Estimate)

$m) $m) $m) $m) $m)

Skills and Workforce Development

Skills Reform (Vocational Education) 5.3 5.3 8.4 8.5 ....

Other 1.8 1.7 0.1 .... ....

Total Skills and Workforce Development National

Partnership Payments 7.1 7.0 8.5 8.5 ....

)

Environment

Caring for Our Country 6.7 4.6 3.4 3.4 3.4

Water for the Future

Sustainable Rural Water Use & Infrastructure 44.9 36.3 9.5 17.5 ....

National Framework for Compliance 0.6 0.8 0.6 0.2 ....

Tasmanian Forests Intergovernmental Agreement 7.2 7.4 7.6 7.8 7.8

Total Environment National Partnership Payments 59.4 49.1 21.0 28.9 11.2

Other Services

Financial Assistance Grants to Local Government 71.8 73.8 76.5 79.1 80.3

Legal Aid 5.9 6.0 6.2 6.3 6.4

Other 8.2 .... .... .... ....

Total Other Services National Partnership Payments 85.9 79.8 82.7 85.4 86.7

Total National Partnership Payments 364.0 286.2 207.0 200.7 205.0

TOTAL PAYMENTS FOR SPECIFIC PURPOSES 1 042.1 956.7 918.6 959.0 974.5

Total to the State 789.9 707.5 654.6 681.0 687.5

Total through the State 252.2 249.2 264.0 278.0 287.1

1 042.1 956.7 918.6 959.0 974.5

Notes: 1. Estimates of SPPs and some NPPs may differ from those published in the Australian Government's 2013-14 Budget

due to the need to finalise State estimates before the release of the Australian Government Budget. 2. National Health Reform (NHR) funding replaced the National Healthcare SPP from 1 July 2012 as part of the NHR

Agreement. Under the NHR Agreement, the Australian Government will continue to pay the states base funding equivalent to that paid under the National Healthcare SPP. From 1 July 2014, the Australian Government will contribute 45 per cent of the efficient growth funding for public hospital services, increasing to 50 per cent from 1 July 2017. The efficient growth component of NHR funding in 2014-15 is based upon the Australian Government estimate in MYEFO.

3. NPPs are received through time limited National Partnership agreements. The decrease in NPP funding reflects the cessation of existing agreements. The increase in 2016-17 is largely attributable to the additional $50.0 million funding for the Royal Hobart Hospital Development. Under the IGA, the Standing Council for Federal Financial Relations will make recommendations to the Council of Australian Governments (COAG) as to whether expiring NPPs should be continued, or converted into existing or new SPPs or general revenue assistance.

4. Other Community Services funding for 2012-13 includes Home and Community Care funding. From 2013-14, this funding has been reclassified as Commonwealth Own Purpose Expenditure (COPE) and is reported as part of the Tasmanian Health Organisation funding shown in Table 4.12: Other Revenue.


5. Negotiations are currently underway for a new funding agreement between the State and Australian Government in relation to roads funding. For the purpose of whole-of-government Budget and Forward Estimate development, it is estimated that $35 million per annum will be received from the Australian Government for Roads Program funding in the Forward Estimates period.

State Taxation

Total State taxation revenue for 2013-14 is estimated to be $940.0 million, a decrease of $0.9 million or

0.1 per cent below the 2012-13 Budget estimate of $940.9 million. Over the Budget and Forward Estimates

period (from 2012-13) taxation revenue is estimated to increase by a compound annual growth rate of

2.5 per cent per annum to $1 039.8 million in 2016-17.

Table 4.5 provides details of the components of State taxation in accordance with the Uniform Presentation

Framework. The components of State taxation revenue have been classified as:

payroll tax;

taxes on property;

taxes on the provision of goods and services; and

taxes on the use of goods and services.


Table 4.5: State Taxation

2012-13) 2013-14) 2014-15) 2015-16) 2016-17)

)

Budget)

)

Budget)

Forward)

Estimate)

Forward)

Estimate)

Forward)

Estimate)

$m) $m) $m) $m) $m)

) )

Payroll tax1 310.2) 303.9) 318.5) 331.1) 345.8)

) ) ) ) )

Taxes on property ) ) ) ) )

Land tax

88.1) 89.8) 91.6) 93.9) 96.2)

Fire service levies2 ) ) ) )

Fire service contribution 33.6) 34.9) 36.3) 38.1) 40.0)

Insurance fire levy 16.4) 17.8) 18.0) 18.2) 18.4)

Government guarantee fees3 34.5) 30.5) 30.9) 32.7) 34.9)

Taxes on financial and capital transactions ) )

Conveyance duty4 141.0) 131.5) 133.2) 136.8) 140.7)

Sundry legal documents duty5 ....) ....) ....) ....) ....)

313.6) 304.5) 310.1) 319.8) 330.3)

Taxes on the provision of goods and services )

Gambling taxes )

Casino tax and licence fees6 58.5) 57.9) 59.2) 60.8) 62.1)

Betting exchange taxes and levies

2.1) 2.8) 2.9) 3.0) 3.1)

Lottery tax 26.7) 29.7) 30.5) 31.2) 32.0)

Totalizator wagering levy 6.8) 6.9) 7.1) 7.3) 7.5)

Other gaming7 0.1) 0.1) 0.1) 0.1) 0.1)

Insurance duty8 70.9) 79.6) 83.1) 86.6) 90.2)

165.0) 177.0) 182.7) 188.9) 194.8)

Taxes on the use of goods and services ) )

Vehicle registration fees 34.0) 35.0) 36.0) 36.9) 37.8)

Motor vehicle fees and taxes ) ) ) ) )

Motor vehicle duty9 35.5) 35.9) 36.6) 37.5) 38.4)

Motor tax 75.7) 77.0) 79.7) 82.5) 85.4)

Motor vehicle fire levy2 6.8) 6.8) 7.3) 7.3) 7.3)

152.1) 154.6) 159.5) 164.1) 168.8)

)

TOTAL STATE TAXATION 940.9) 940.0) 970.9 1 003.9) 1 039.8)

Notes: 1. Payroll tax receipts in the 2013-14 Budget and Forward Estimates reduce as a result of an increase in the payroll tax

threshold from 1 July 2013. 2. Fire service levies are reported as a tax for the purposes of the Uniform Presentation Framework, however, all

revenues go directly to the Tasmania Fire Service. 3. Government guarantee fees from 2013-14 onwards have been calculated on an accrual basis. These estimates are

less than cash based estimates by $1.2 million in 2013-14, $896 000 in 2014-15, $630 000 in 2015-16 and $281 000 in 2016-17.

4. The decrease in Conveyance duty in 2013-14 is due to a lower than anticipated volume of property transactions in 2012-13, with lower sales activity expected to continue through 2013-14.


5. Duty from Sundry legal documents is forecast to be $40 000 across all years. This amount does not appear in the table due to rounding.

6. The decrease in Casino tax and licence fees in 2013-14 is due to lower than expected electronic gaming machine activity in 2012-13, which should continue through 2013-14 and the Forward Estimates. This will be partially offset by the increase in the tax payable on the gross profits from electronic gaming machines from 1 July 2013.

7. An amount of $50 000 is included for Other gaming in 2013-14 and over the Forward Estimates period. 8. The increase in Insurance duty receipts in 2013-14 reflect an increase in insurance premiums paid, as well as the

first full year of increases in the rates of duty on general insurance and Motor Accident Insurance Board premiums that commenced on 1 October 2012.

9. Motor vehicle duty receipts in the 2013-14 Budget and Forward Estimates include a slight reduction in receipts as a result of caravans and camper trailers being exempt from motor vehicle duty from 1 July 2013.

Chart 4.2 shows that the 2013-14 Budget and Forward Estimates are below the levels forecast in the

2012-13 Budget. This has been influenced by economic conditions such as projected lower expected growth

in employment levels and other key economic indicators impacting on tax receipts.

Chart 4.2: State Taxation Revenue, 2007-08 to 2016-17

700

750

800

850

900

950

1 000

1 050

1 100

20

07

-08

20

08

-09

20

09

-10

20

10

-11

20

11

-12

20

12

-13

20

13

-14

20

14

-15

20

15

-16

20

16

-17

$ m

illio

n

Actual 2012-13 Budget 2013-14 Budget2013-14 Budget 1

Note: 1. The 2013-14 Budget includes the estimated outcome for State Taxation Revenue for 2012-13.

Taxation Measures

As part of the Government's response to creating jobs and opportunities, some tax changes have been

made.

Increase of Payroll Tax Threshold

From 1 July 2013, the payroll tax threshold will increase from $1.01 million to $1.25 million, the first such

increase for over 10 years. The new tax-free threshold will be the most generous of any state and more than

double the level in Victoria. This measure will provide direct tax relief to more than 2 250 businesses, which

between them employ around half of the Tasmanian workforce. As a result of this change, around 130

businesses will no longer need to pay payroll tax at all.


This measure is estimated to cost the Government $9.7 million in 2013-14, increasing to $10.7 million in

2016-17. It is expected that the measure will help to encourage investment and create jobs.

Motor Vehicle Duty exemptions

From 1 July 2013, an application to transfer or register a caravan or camper trailer will be exempt from

motor vehicle duty. This exemption will not extend to motorised camper vans or motor homes. Motor vehicle

registration duty is imposed under the Duties Act 2001 and is paid at the time of initial registration and on

the application to transfer the beneficial ownership of the motor vehicle or trailer.

This measure is estimated to cost the Government $1.0 million in 2013-14, increasing to $1.1 million in

2016-17.

Payroll Tax

Revenue from payroll tax in 2013-14 is estimated to be $303.9 million, a decrease of $6.3 million or

2.0 per cent less than the 2012-13 Budget estimate of $310.2 million. The expected decrease in collections

in 2013-14 is due to lower employment levels and aggregate hours worked since the 2012-13 Budget was

developed. An increase in the tax free threshold has also contributed to the decline in the 2013-14 Budget

estimate. Over the Forward Estimates, employment growth rates and average weekly earnings are

expected to improve, which is reflected in modest growth in payroll tax revenue over this period.

Payroll tax is imposed under the Payroll Tax Act 2008 and is levied on employee wages and salaries,

commissions, bonuses, fringe benefits and allowances, directors' remuneration and employer

superannuation contributions paid to employees who provide services to their employer in Tasmania. The

tax also applies to contract payments (where an employer - employee relationship is deemed to exist) and

to employment agencies.

Tasmania's payroll tax arrangements are generally harmonised with other jurisdictions (Victoria and New

South Wales in particular), except in terms of the tax free threshold and the rate of tax which applies in each

state. In Tasmania, payroll tax has been levied at a rate of 6.1 per cent of an employer's taxable wages

above a $1.01 million tax free threshold. The tax free threshold will increase to $1.25 million from

1 July 2013.

Table 4.6 details the number of employers and the total tax assessed in each liability range in 2011-12.


Table 4.6: Assessed Payroll Tax, 2011-12

Number of Tax)

Tax Liability Range Employers

Assessed1

$ $m)

1 - 50 000 1 644 23.3)

50 001 - 100 000 262 18.3)

100 001 - 250 000 267 42.0)

250 001 - 500 000 105 37.0)

500 001 - 1 000 000 57 39.3)

1 000 001 and above 53 136.4)

Total 2 388 296.3)

Note: 1. Assessed payroll tax differs from tax collected (or budgeted) due to the timing of receipts and the application of

penalties and interest.

The third Employee Incentive Scheme Payroll Tax Rebate (EISPR), introduced as part of the Tasmanian

Jobs Package, provides a two year payroll tax rebate for new jobs created from 10 December 2012 up until

30 June 2014, provided these positions are maintained continuously until June 2015.

Rebates under the second EISPR expire on 30 June 2013.

Taxes on Property

Land Tax

It is expected that land tax collections in 2013-14 will be $89.8 million, an increase of $1.7 million or

1.9 per cent above the 2012-13 Budget estimate of $88.1 million. This small increase reflects the 2012-13

revised estimate, which was based on actual land tax demands issued.

Land tax is imposed under the Land Tax Act 2000 (with rates set by the Land Tax Rating Act 2000). In

2012-13 land tax was levied on the basis of three land categories: general; primary production and principal

residence land.

The principal residence category applies to land on which there is a dwelling or stratum unit that is occupied

as the principal residence of the owner, or a related person as defined by the Land Tax Act. This category

also includes retirement village units occupied as principal residences.

The primary production land category applies to land that is used substantially for the business of primary

production. It includes land that has been declared a private timber reserve under the

Forest Practices Act 1985, or a State forest under the Forestry Act 1920.

The rate of tax on both principal residence and primary production land has been set at zero since

1 July 1996, effectively exempting such land from land tax.

The general land classification includes all land that is not classified as principal residence or primary

production land, including commercial and industrial land, land used for the rental of residential housing and

vacant land.


Land tax is calculated on the assessed land value, as calculated by the Valuer-General, as at 1 July each

year.

Certain not-for-profit sporting organisations and bodies that control or promote horse racing, dog racing,

athletic sports or motor racing, are eligible for a concessional rate of land tax that is equal to 0.4 per cent of

the assessed land value.

Further information on land tax rates can be found on the State Revenue Office website at

www.sro.tas.gov.au.

Table 4.7 details the number of properties and the land tax assessed for each category of land in 2012-13.

Table 4.7: Land Tax Calculation, 2012-13

Principal Residence Primary Production General Land

Number of) Tax)

Number of) Tax

Number of) Tax)

Property Value Properties) Payable) Accounts2) Payable Accounts2) Payable1)

$

$m)

$m

$m)

)

less than - 25 000

2 503) .... )

33) ....

3 525) .... )

25 000 - 349 999

141 598) .... )

4 713) ....

54 538) 32.2)

350 000 - and over

4 423) .... )

4 521) ....

5 690) 55.5)

Total1

148 524) .... ) 9 267) .... 63 753) 87.7)

Notes: 1. The total assessed land tax for 2012-13 will differ from actual land tax collected in 2012-13 due to adjustments made

after the issuing of land tax assessment notices to reflect changes in property use and the timing of receipts. 2. Each account may include one or more properties.

Fire Service Levies

It is expected that revenue from fire service levies (including motor vehicle fire levy) will amount to

$59.5 million in 2013-14, an increase of $2.7 million or 5.0 per cent above the 2012-13 Budget estimate of

$56.8 million.

The major source of revenue for meeting the operational costs and capital needs of the Tasmanian Fire

Service is received via a number of levies applied in accordance with the Fire Service Act 1979. The levies

are a fire service contribution on property (levied on assessed annual values) that is collected by councils; a

fire levy on prescribed classes of insurance; and a motor vehicle fire levy on vehicle registrations, excluding

motor cycles (included under the heading 'Taxes on the use of goods and services' in Table 4.5).


Government Guarantee Fees

It is expected that revenue from guarantee fees will be $30.5 million in 2013-14 on an accrual basis

($31.7 million on a cash basis), a decrease of $4.0 million or 11.6 per cent below the 2012-13 Budget

estimate of $34.5 million (cash basis). Over the Forward Estimates, guarantee fee receipts will increase

gradually, to $34.9 million by 2016-17 ($35.2 million on a cash basis).

Guarantee fees are payable by Government Business Enterprises and State-owned Companies, on

financial accommodation (primarily loans obtained from the Tasmanian Public Finance Corporation) to offset

the borrowing cost advantage of public ownership. Without the payment of guarantee fees, Government

businesses would receive an unfair advantage over their private sector counterparts as they would be able

to access borrowings at lower costs given the implicit Government support.

Conveyance Duty

It is estimated that revenue from conveyance duty in 2013-14 will be $131.5 million, a decrease of

$9.5 million or 6.7 per cent below the 2012-13 Budget estimate of $141.0 million. This reflects lower than

anticipated activity in the property market during 2012-13 with transaction volumes and house prices

expected to remain low over the Forward Estimates. This decline will be partially offset by the first full year

of operation of increases in conveyance duty rates and thresholds that commenced on 1 October 2012.

These measures were announced in the 2012-13 Budget.

Duties are imposed under the Duties Act 2001. Conveyance duty is assessed on the transfer of all real

property, including vacant land, capital improved land and fixtures to land. Duty on the transfer of non-real

property business assets was abolished as part of the IGA reforms and is no longer payable. In some

cases, the transfer of shares will be subject to duty if those shares give the shareholder a land use

entitlement, or are in a company that has land holding as its predominant asset.

Duty is assessed on the purchase price, or the value, of the asset transferred, whichever is higher. Property

values determined by the Valuer-General are used by the Commissioner of State Revenue to establish the

dutiable value of a property.

Duty is a progressive tax, in that the rate of duty increases as the value of the asset transferred increases.

Details of rates and thresholds can be found on the State Revenue Office website at www.sro.tas.gov.au.

Taxes on the Provision of Goods and Services

Gambling Taxes

Taxation revenue from gambling taxes in 2013-14 is estimated to be $97.4 million, an increase of

$3.3 million or 3.5 per cent above the 2012-13 Budget estimate of $94.1 million. While the

2013-14 Budget estimate for Casino tax and licence fees is $0.6 million or 1.0 per cent less than the

2012-13 Budget estimate, this is offset by a $3.0 million or 11.2 per cent increase in the 2013-14 Lottery tax

Budget estimate. Gambling tax revenue in Tasmania covers activities associated with lotteries, casinos

(including table gaming, electronic gaming machines and keno), keno and electronic gaming machines in

hotels and clubs, betting exchanges and an annual wagering levy for the conduct of totalizator wagering (the

current licence is held by TOTE Tasmania Pty Ltd).


From 1 July 2013, the Casino tax payable from electronic gaming machines will be 25.88 per cent of the

monthly gross profits. This change to the tax arrangement will in part offset a fall in electronic gaming

machine turnover.

The Tasmanian Gaming Commission is responsible for the supervision of gambling activities in Tasmania.

Information about the operations of the Tasmanian Gaming Commission and the regulation of gambling

under the Gaming Control Act 1993 and TT-Line Gaming Act 1993 can be found on the Liquor and Gaming

website. These Acts also establish the arrangements for taxation of licensed gambling activities. Information

on tax rates and licence fees are also available on the Treasury website at www.treasury.tas.gov.au.

Four per cent of the gross profit derived from gaming machines in hotels and clubs in Tasmania is paid into

the Community Support Levy.

Chart 4.3 illustrates the components of gambling tax revenue in 2013-14.

Chart 4.3: Gambling Taxation Revenue, 2013-14

Betting exchanges $2.8m (2.9%)

Electronic gaming machines

$51.8m (53.2%)

Other casino taxes and licence fees

$6.1m (6.3%)

Lottery tax $29.7m (30.5%)

Totalizator wagering levy $6.9m (7.1%)

Insurance Duty

Taxation revenue from insurance duty in 2013-14 is estimated to be $79.6 million, an increase of

$8.7 million or 12.3 per cent above the 2012-13 Budget estimate of $70.9 million.

This increase is primarily due to an increase in insurance premiums paid as well as the first full year of

increases in the rates of duty on general insurance and Motor Accident Insurance Board premiums that

commenced on 1 October 2012. These measures were announced in the 2012-13 Budget.

Insurance duty is imposed under the Duties Act 2001. It is based on the premium paid for contracts of

general insurance that are applicable to property in Tasmania or a risk that may occur within Tasmania.

Insurance duty is also imposed on a contract for life insurance where the person or persons insured have

their principal place of residence in Tasmania at the time the policy of insurance is issued. Mortgage

insurance, term or temporary insurance and annuities are considered a form of life insurance.


The rates of duty charged on the different types of insurance are available on the State Revenue Office

website at www.sro.tas.gov.au.

Taxes on the use of Goods and Services

Vehicle Registration Fees

Total vehicle registration fees are estimated to be $35.0 million in 2013-14, an increase of $1.0 million or

2.9 per cent above the 2012-13 Budget estimate of $34.0 million.

Vehicle registration fees, payable in accordance with the Vehicle and Traffic Act 1999, are collected on the

initial and annual ongoing registration and transfer of vehicle ownership.

Motor Vehicle Duty

Motor vehicle duty is estimated to be $35.9 million in 2013-14, an increase of $0.4 million or 1.1 per cent

above the 2012-13 Budget estimate of $35.5 million. Motor vehicle duty has been in decline since 2004-05,

primarily due to a reduction in the turnover of motor vehicles. However, an increase in new car sales during

2012-13 has contributed to a small increase in motor vehicle duty for the 2013-14 Budget.

Motor vehicle registration duty is imposed under the Duties Act 2001 and is paid at the time of initial

registration and on the application to transfer ownership of a motor vehicle.

Motor vehicle registration duty is based on the type and dutiable value of the vehicle, being the greater of

the amount paid or the market value of the vehicle.

The Department of Infrastructure, Energy and Resources collects motor vehicle duty on behalf of the

Commissioner of State Revenue. Different rates of duty apply to passenger vehicles, vehicles subject to the

manufacturer's fleet discount and heavy vehicles with a mass greater than 4.5 tonnes, such as trucks, buses

and heavy trailers. Further details are provided at www.transport.tas.gov.au.

Motor Tax

Motor tax collections are estimated to be $77.0 million in 2013-14, an increase of $1.3 million or 1.7 per cent

above the 2012-13 Budget estimate of $75.7 million. The increase in the total number of motor vehicles

registered in 2012-13 was not as high as expected, resulting in a lower starting base for 2013-14. The

2013-14 Budget reflects the first full year of operation of the increase in the rate of motor tax on light

vehicles that commenced on 1 October 2012. These measures were announced in the 2012-13 Budget.

Motor tax is imposed under the Vehicle and Traffic Act 1999 when a vehicle (or trailer) is first registered and

each year thereafter. The amount of tax depends on the type of vehicle and other factors, such as the

number of cylinders, weight, seating capacity and/or the number of axles. The legislation specifies six

classes of vehicles, each attracting its own scale of rates. A rebate of 40 per cent is available in certain

cases to eligible pensioners owning commercial goods vehicles, provided they are not engaged in any trade

or business and commercial vehicles used predominantly for farming or horticultural purposes. Motor tax

rates are indexed annually.

Motor tax rates for heavy vehicles are based on National Transport Commission (NTC) rates. From

1 October 2012, the NTC adjusted the rates of motor tax on some classes of heavy vehicles to better reflect

recent research on fleet road wear. Tasmania, along with the other states, adjusted its rates in order to

maintain national harmonisation.


OTHER REVENUE SOURCES

Sales of Goods and Services

Revenue from the Sales of Goods and Services is estimated to be $354.9 million in 2013-14, an increase of

$41.1 million or 13.1 per cent above the 2012-13 Budget of $313.8 million.

Table 4.8 details the major components of revenue from the Sales of Goods and Services.

Table 4.8: Sales of Goods and Services1

2012-13) 2013-14) 2014-15) 2015-16) 2016-17)

Budget) Budget)

Forward)

Estimate)

Forward)

Estimate)

Forward)

Estimate)

$m) $m) $m) $m) $m)

Departmental Fees and Recoveries

Economic Development, Tourism and the

Arts 2.0 2.0 2.1 2.1 2.1

Education2 47.8 38.1 40.9 41.0 41.5

Finance-General 0.8 0.8 0.8 0.8 0.8

Health and Human Services3 104.6 121.7 117.6 117.6 119.1

Infrastructure, Energy and Resources 6.0 6.1 6.2 6.3 6.4

Justice 3.8 3.9 3.9 4.0 4.1

Marine and Safety Tasmania 4.5 3.8 5.4 4.7 4.1

Police and Emergency Management 0.2 0.2 0.2 0.2 0.2

Premier and Cabinet 9.4 10.3 10.2 10.4 10.6

Primary Industries, Parks, Water and

Environment 33.9 33.6 34.2 34.9 35.5

Tasmanian Audit Office 4.8 4.9 5.2 5.4 5.5

Tasmanian Skills Institute4 11.4 .... .... .... ....

TasTAFE5 .... 27.3 27.9 28.6 29.2

Tasmanian Health Organisation6

North 26.1 29.8 32.2 35.9 36.0

North-West 11.6 14.2 14.6 14.7 14.7

South 38.6 49.7 47.8 47.9 48.0

State Fire Commission 5.5 5.5 5.6 5.8 6.0

311.0 351.8 354.9 360.4 363.7

Other Sales of Goods and Services 2.9 3.0 3.2 3.3 3.4

TOTAL SALES OF GOODS AND

SERVICES 313.8 354.9 358.1 363.7 367.1


Notes: 1. The information provided in this section may differ from the Sales of Goods and Services for each agency in Budget

Paper No 2 Government Services due to the elimination of inter-agency transactions during the consolidation

process. 2. The decrease in Education in 2013-14 reflects the impact of the establishment of TasTAFE. 3. The increase in Health and Human Services primarily reflects revised accounting treatment for support services

provided to the the three Tasmanian Health Organisations. 4. The decrease in Tasmanian Skills Institute reflects cessation of this entity on 30 June 2013. 5. TasTAFE will commence operations on 1 July 2013. 6. The increase in the Tasmanian Health Organisations primarily reflects the recognition of revenue for the Private

Patients Scheme. This revenue is partially offset by additional expenditure.

Fines and Regulatory Fees

Revenue from Fines and Regulatory Fees is estimated to be $106.4 million in 2013-14, a decrease of

$0.5 million or 0.4 per cent above the 2012-13 Budget of $106.9 million. Table 4.9 details the major

components of Fines and Regulatory Fees.

Table 4.9: Fines and Regulatory Fees1

2012-13) 2013-14) 2014-15) 2015-16) 2016-17)

Budget) Budget)

Forward)

Estimate)

Forward)

Estimate)

Forward)

Estimate)

$m) $m) $m) $m) $m)

Fines 28.4) 26.0) 25.5) 25.6) 25.6)

Fees

Abalone Licences 6.0) 6.1) 6.3) 6.5) 6.7)

Water Licence Fees 1.9) 1.8) 1.9) 1.9) 1.9)

Environment Fees 3.8) 3.9) 3.9) 4.0) 4.1)

Certificate of Competency Fees 0.2) 0.2) 0.2) 0.2) 0.2)

Drivers Licences2 6.2) 5.9) 8.7) 8.4) 8.6)

Photo Licence Fees 1.5) 1.5) 1.5) 1.6) 1.6)

Vehicle Inspection Services Fees3 ....) ....). ....) ....) ....)

Quarantine Fees 1.8) 1.8) 1.8) 1.8) 1.8)

Consumer Affairs Office Fines and

Regulatory Fees 1.3) 0.6) 0.6) 0.6) 0.6)

Magisterial Courts Fines and Regulatory

Fees 0.9) 1.3) 1.3) 1.3) 1.3)

Registrar-General Fines and Regulatory

Fees 2.2) 2.2) 2.2) 2.2) 2.2)

Supreme Court Fines and Fees

Regulatory Fees 0.7) 0.8) 0.8) 0.8) 0.8)

Other4 52.4) 54.3) 55.9) 55.4) 56.3)

TOTAL FINES AND REGULATORY FEES 106.9) 106.4) 110.7) 110.3) 111.8)


Notes: 1. The information provided in this section will differ from the Fines and Regulatory Fees for each agency in Budget

Paper No 2 Government Services due to the elimination of inter-agency transactions during the consolidation

process. 2. The movement in Driver Licence Fees primarily reflects the five year licence renewal cycle and the revised estimates

for the number of learner drivers progressing to the Provisional licence level. 3. Vehicle Inspection Service Fees are estimated to be $43 000 in the 2012-13 Budget, increasing to $46 000 in the

2016-17 Forward Estimate. This amount does not appear in the table due to rounding. 4. Other includes: fees collected by the Asbestos Compensation Fund; the Tasmanian Economic Regulator; the

Community Support Levy; and various other fees collected by agencies, such as recreational fishing licence fees.

Interest Income

Interest Income is estimated to be $13.8 million in 2013-14, a decrease of $3.7 million or 21.1 per cent

below the 2012-13 Budget estimate of $17.5 million. This decrease in interest income reflects a decrease in

the anticipated level of cash held during the year.

Dividend, Tax and Rate Equivalent Income

Dividend, tax and rate equivalent income is estimated to be $330.1 million in 2013-14, an increase of

$97.1 million or 41.7 per cent compared to the 2012-13 Budget estimate of $233.0 million. In the

State-owned electricity business portfolio, higher dividends and tax equivalents are expected from Aurora

Energy. Higher dividends and tax equivalents are also expected from Hydro Tasmania due to the ability of

the business to maximise its carbon revenue through increased exports across Basslink.

This is also attributable to an increase in dividends from the Motor Accidents Insurance Board, largely due

to the above budget investment returns generated in the first three quarters of 2012-13. The Motor

Accidents Insurance Board's income tax equivalents have also increased in 2013-14, due to the carried

forward tax losses from previous years being extinguished. This has been partly offset by a decrease in tax

equivalents from Forestry Tasmania. The figure for 2012-13 reflected a once-off $10 million tax equivalent

payment forecast to be paid as the result of the sale of Forestry Tasmania's softwood joint venture.

Over the Forward Estimates period, dividend, tax and rate equivalent income is forecast to grow to

$337.9 million by 2014-15, and then decline to $177.8 million by 2016-17. This is largely due to reduced

revenues to Hydro Tasmania resulting from the removal of the fixed price carbon regime and the overall

softening of electricity prices in the National Electricity Market.

It should be noted that the impact of the current electricity reform process on the returns to Government

from the three existing electricity businesses, Aurora Energy, Hydro Tasmania and Transend Networks is

currently unclear. Going forward, these three businesses will be reduced to two in 2014-15, and Aurora

Energy and Transend Networks will not operate in their existing form. Although Hydro Tasmania will

continue as a business, it will be impacted by the reforms in the way it operates. The structural reform of the

electricity businesses means that the returns from the resultant businesses are not comparable on a year to

year basis at this stage.

For Budget purposes, returns from government businesses have previously been recognised in the General

Government Sector on a cash basis. Consistent with Australian Accounting Standard AASB 112 Income

Taxes, in the 2013-14 Budget, Income tax Equivalents and Guarantee Fees are presented on an accrual

basis. As a consequence, the revenue recognised in the General Government Sector Income Statement will

match the corresponding expense recorded in the Public Non-Financial Corporation and Public Financial

Corporation Sector statements less any payments to non-State Sector entities detailed in the Total State


Sector Statement. The PNFC and PFC Sectors must comply with the AASB 112. The Standard requires that

the Income tax expense is based on the accounting profit/loss, whereas the cash payment is based on the

taxable income, which adopts a cash basis for the treatment of most transactions. The differences in cash

and accrual based income tax will generate deferred tax assets or deferred tax liabilities. Generally, these

will cancel out over time. For the purposes of comparison to the 2012-13 Budget, Income tax equivalents

and Guarantee fees are shown on both a cash and accrual basis.

Table 4.10 provides a breakdown of dividend, tax and rate equivalent income.


Table 4.10: Dividend, Tax and Rate Equivalent Income1

2012-13) 2013-14) 2014-15) 2015-16) 2016-17)

Budget) Budget)

Forward)

Estimate)

Forward)

Estimate)

Forward)

Estimate)

$m) $m) $m) $m) $m)

Dividends

Aurora Energy Pty Ltd2 14.3 30.1 .... .... ....

Hydro Tasmania3 50.9 109.7 135.6 98.8 27.3

Motor Accidents Insurance Board4 8.4 18.6 23.6 19.9 18.9

New Network Business5 .... .... 57.6 51.6 45.7

Tasmanian Ports Corporation .... ....) ....) 0.5 0.5

Tasmanian Public Finance Corporation 3.6 0.8 2.8 3.3 0.9

The Public Trustee 0.1 .... .... .... ....

Transend Networks Pty Ltd2 28.9 26.9 .... .... ....

106.2 186.1 219.6 174.1 93.3

Taxation Equivalents

Aurora Energy Pty Ltd2 6.1 25.6) ....) .... ....)

Forestry Tasmania6 10.0 (2.4) (2.7) (3.1) (3.6)

Hydro Tasmania7 74.1 83.3) 60.5) 16.7) 22.3)

Metro Tasmania Pty Ltd6 .... (0.4) (0.4) (0.4) (0.4)

Motor Accidents Insurance Board8 .... 11.1) 11.6) 15.2) 15.7)

New Network Business5 .... ....) 40.8) 35.8) 41.7)

Tasmanian Irrigation Pty Ltd .... ....) 0.3) 0.6) 0.3)

Tasmanian Ports Corporation .... (0.6) 0.4) 0.6) 0.6)

Tasmanian Public Finance Corporation 1.6 2.2) 1.7) 4.1) 1.7)

The Public Trustee 0.1 0.1) 0.1) 0.1) 0.1)

Transend Networks Pty Ltd2 31.7 18.4) ....) ....) ....)

TT-Line Pty Ltd .... 3.0) 2.1) 2.1) 2.1)

123.5 140.3) 114.5) 71.8) 80.6)

Rates Equivalents

Hydro Tasmania 3.2 3.7 3.8 3.8 3.9

TOTAL DIVIDEND TAX AND RATE

EQUIVALENT INCOME 233.0 330.1 337.9 249.8 177.8

Notes: 1. In this table Tax Equivalent Income is reported on a cash basis in 2012-13 and an accrual basis in other years, while

Dividends and Rates Equivalents are reported on a cash basis for all years. 2. Dividends and Income Tax Equivalents from Aurora Energy and Transend Networks cease from 2014-15 onwards

reflecting the cessation of the businesses under the State's Electricity Reform. 3. The increase in Dividends from Hydro Tasmania in 2013-14 and 2014-15 reflects the business maximising its carbon

revenue through Basslink exports. The decrease in Dividends in 2015-16 and 2016-17 reflects a softening of demand across the national electricity market and reduction in forecast carbon prices.

4. The increase in Dividends from the Motor Accidents Insurance Board in 2013-14 and 2014-15 reflects the impact of the above-budget profit forecast for 2012-13 on its dividend policy, which is based on a five-year moving average of net profit after tax.


5. Dividends and Income Tax Equivalents from the New Network Business commence from 2014-15, reflecting the creation of a new electricity business under the State's Electricity Reform.

6. These negative tax equivalent amounts do not reflect returns to the business. Rather, they reflect that the business is forecasting a loss before tax in a particular year.

7. The decrease in Tax Equivalents from Hydro Tasmania from 2014-15 to 2016-17 reflects a softening of demand across the national electricity market, a reduction in forecast carbon prices and the impact of the transfer of a number of Aurora Energy's assets.

8. The increase in Tax Equivalents from the Motor Accidents Insurance Board in 2014-15 reflects the extinguishing of carried forward overpaid tax instalments that are expected to be absorbed during 2013-14, with a return to more normal tax equivalent payments in 2014-15.

Table 4.11 provides details of estimated government business taxation equivalents on a cash basis.

Information on accrual Guarantee Fees is provided in a note to Table 4.5.

Table 4.11: Tax Equivalent Income (Cash Basis)1

2012-13) 2013-14) 2014-15) 2015-16) 2016-17)

Budget) Budget)

Forward)

Estimate)

Forward)

Estimate)

Forward)

Estimate)

$m) $m $m) $m) $m)

Aurora Energy Pty Ltd2 6.1 22.2 .... .... ....

Forestry Tasmania4 10.0 .... .... .... ....

Hydro Tasmania5 74.1 104.7 102.1 72.5 44.1

Metro Tasmania Pty Ltd .... .... .... .... ....

Motor Accidents Insurance Board6 .... 4.4 10.0 9.3 11.4

New Network Business3 .... .... 82.4 72.4 61.4

Tasmanian Irrigation Pty Ltd .... .... .... .... ....

Tasmanian Ports Corporation .... 0.1 1.1 2.2 2.2

Tasmanian Public Finance Corporation 1.6 4.2 2.2 1.7 4.1

The Public Trustee 0.1 0.1 0.1 0.1 0.1

Transend Networks Pty Ltd2 31.7 26.4 .... .... ....

123.5 162.2 197.9 158.1 123.3

Notes: 1. From 2013-14 onwards Tax Equivalent Income will be reported on an accrual basis. This table is prepared for

comparison purposes only. 2. Income Tax Equivalents from Aurora Energy and Transend Networks cease from 2014-15 onwards reflecting the

cessation of the businesses under the State's Electricity Reform. 3. Income Tax Equivalents from the New Network Business commence from 2014-15, reflecting the creation of a new

electricity business under the State's Electricity Reform. 4. Forestry Tasmania forecast to pay $10.0 million in Tax Equivalents in 2012-13, reflecting the sale of the softwood

joint venture. 5. The increase in Tax Equivalents from Hydro Tasmania in 2013-14 reflects the business maximising its carbon

revenue through Basslink exports. The decrease in Tax Equivalents from 2014-15 to 2016-17 reflects a softening of demand across the national electricity market and a reduction in forecast carbon prices.

6. The increase in Tax Equivalents from the Motor Accidents Insurance Board in 2013-14 and 2014-15 reflects the extinguishing of carried forward overpaid tax instalments that are expected to be absorbed during 2013-14, with a return to more normal tax equivalent payments in 2014-15.


Other Revenue

Other Revenue is anticipated to be $195.9 million in 2013-14, an increase of $53.0 million or 37.1 per cent

above the 2012-13 Budget estimate of $142.9 million. The increase primarily reflects the reclassification and

update of Commonwealth Own Purpose Expenditure (COPE) funding from Grants Revenue to Other

Revenue by the three Tasmanian Health Organisations. Table 4.12 lists the sources of Other Revenue.

Table 4.12: Other Revenue1

2012-13) 2013-14) 2014-15) 2015-16) 2016-17)

Budget) Budget)

Forward)

Estimate)

Forward)

Estimate)

Forward)

Estimate)

$m) $m) $m) $m) $m)

Mineral Royalties2 55.4 49.0 53.9 53.9 53.9

Regional Water Authority Licence Fees 2.3 2.3 2.3 2.3 2.3

Other Revenue by Agency

Economic Development, Tourism and the Arts 1.3 1.4 1.4 1.4 1.4

Education 25.5 22.8 23.8 24.6 25.2

Finance-General 0.6 0.6 0.6 0.6 0.6

Health and Human Services3 6.4 17.7 21.2 23.3 21.5


Justice 12.6 13.9 13.2 14.5 13.8

Police and Emergency Management 5.0 4.1 4.2 4.2 4.2

Primary Industries, Parks, Water and Environment4 14.0 3.0 3.0 3.1 3.1

State Fire Commission 0.9 1.2 1.2 1.2 1.2

Treasury and Finance 0.8 1.4 0.8 0.8 0.8

Tasmanian Health Organisations5

North 5.6 24.5 24.6 24.8 24.1

North-West 3.9 14.2 13.3 13.4 13.0

South 6.7 37.5 35.7 35.9 36.4

Other 0.8 1.0 1.0 1.1 1.1

TOTAL OTHER REVENUE 142.9 195.9 201.4 206.3 203.8

Notes: 1. The information provided in this section will differ from Other Revenue estimates for each agency in Budget Paper

No 2 Government Services due to the elimination of inter agency transactions during the consolidation process. 2. The movement in Mineral Royalties primarily reflects temporary plant closures of two mine sites as a result of

seismic activity in 2012-13. 3. The increase in Health and Human Services in 2013-14 reflects the reclassification and update of Commonwealth

Own Purpose Expenditure (COPE) funding from Grants to Other Expenses and revisions to Housing Tasmania SDTF estimates.

4. The decrease in Primary Industries, Parks, Water and Environment in 2013-14 reflects a one-off major asset sale anticipated to occur in 2012-13.

5. The increase in the Tasmanian Health Organisations primarily reflects the reclassification and update of Commonwealth Own Purpose Expenditure (COPE) funding from Grants Revenue to Other Revenue by the three Tasmanian Health Organisations.


STATEMENT OF RISKS AND SENSITIVITIES To the degree possible, the 2013-14 Budget and Forward Estimates take into account known risk factors in

terms of the timing and level of revenue. However, these estimates are subject to uncertainty due to either

unforseen events or delays, or the realisation of risks to a greater or lesser extent than have been

anticipated. Specific factors that are considered potential risks to the revenue estimates are discussed

below.

Grants

Goods and Services Tax Revenue Grants

The risks to Tasmania's GST revenue estimate in 2013-14 are linked directly to the State's share of the

national population; the size of the GST revenue pool; and Tasmania's relativity factor. GST revenue

collections are highly sensitive to changes in national consumer spending. GST revenue collection in

2013-14 and over the Forward Estimates period will be dependent on the rate of growth in the Australian

economy.

Tasmania's relativity factor (as recommended by the CGC) has been finalised for 2013-14. Refer to

Appendix 4.1 of this chapter for a discussion of the 2013 CGC Update Report and the GST Distribution

Review.

Tasmania's relativity factors for 2014-15 to 2016-17 are based on Department of Treasury and Finance

modelling. Small variations in the relativity factor can have a large impact on forecast GST revenue. To the

extent that actual outcomes vary from the assumptions used in Treasury modelling, GST revenue will vary

accordingly.

For the remaining components of GST revenue to Tasmania, the national pool of GST available for

distribution to the states and Tasmania's population share, the above estimates rely on the estimates

published in the Commonwealth Government's 2013-14 Budget.

There is a one-to-one relationship between variations in the size of the national pool of GST available for

distributions to the states and consequent variations in GST revenue to Tasmania. For instance, a

one per cent variation in the GST pool would result in a $18.4 million variation in Tasmania's GST revenue

in 2013-14.

Other Australian Government Funding

Commonwealth-State funding arrangements are linked directly to arrangements under the

Intergovernmental Agreement on Federal Financial Relations agreed by Council of Australian Governments

in November 2008. The risks associated with Australian Government payments to Tasmania for specific

purposes vary depending on the type of payment.

In relation to all payments, the CGC assesses the level of total funding received by a state in determining

the relative financial needs and GST requirements of each state. Where Tasmania receives a level of

funding above the national average, or where it is the only recipient, the State's GST revenue share

decreases. This is outlined in further detail in the Guide to the Budget.



Under the IGA, Specific Purpose Payments (SPPs) are indexed so that the level of SPP funding moves

broadly in line with changes in the costs of providing services. This provides the states with some certainty

as to their future receipts of SPP funding. However, because SPP indexation is based on certain economic

and other parameters (such as cost indices), estimates of SPP revenue to Tasmania are moderately

sensitive to assumptions underlying these parameters. SPP estimates for the 2013-14 Budget and for the

Forward Estimates period are certain to change marginally once the actual parameters are known.

Indexation accounts for only a small proportion of total SPP funding and as such, this funding is very low

risk.


National Partnership Payments (NPPs) are provided to each state through time-limited National Partnership

Agreements, with the specifics of each payment generally written into the agreement itself. There are three

types of NPPs:

Facilitation payments – to assist a state to undertake priority reforms and pursue continuous

improvement in service delivery. Facilitation payments are paid in advance to facilitate progress and are

therefore low risk;

Project payments – to support the delivery of projects of national importance. Project payments are

generally based on the satisfactory attainment of minimum milestones by the State and therefore are

medium risk; and

Reward payments – contingent upon the State meeting ambitious milestones and performance targets.

Reward payments are high risk, but only account for a very small proportion of total NPP funding.

National Health Reform Funding

Under the National Health Reform (NHR) Agreement, Tasmania receives funding for the provision of public

hospital services. NHR funding replaced the National Healthcare SPP as of 1 July 2012.

The reforms outlined in the NHR Agreement are being phased in over the period 1 July 2012 to 1 July 2014

and seek to:

place public hospital funding onto a sustainable growth path by replacing block based funding with

activity based funding wherever possible; and

drive efficiencies through the NHR Agreement public transparency and accountability framework.

Under the NHR Agreement, the Australian Government will continue to pay the states funding equivalent to

that paid under the National Healthcare SPP (i.e. base funding). From 1 July 2014, the Australian

Government will contribute 45 per cent of the efficient growth funding for public hospital services, increasing

to 50 per cent from 1 July 2017. The efficient growth funding component of NHR funding disclosed in the

2014-15 estimate is based upon the Australian Government estimate in MYEFO. This estimate of efficient

growth funding is calculated on a per capita basis. The distribution of actual efficient growth funding will be

determined by efficient growth in each State.

The base funding component of NHR funding is low risk. There is a degree of risk associated with the

efficient growth component due to associated assumptions.


Further information on the NHR Agreement is available on the Standing Council for Federal Financial

Relations website at www.federalfinancialrelations.gov.au.

State Taxes

State tax revenue estimates are sensitive to changes in a range of economic parameters, such as

employment, wages growth and inflation, as well as prevailing economic conditions in Tasmania more

generally. These parameters can result in either more or less state taxation revenue being collected.

Payroll Tax

Payroll tax receipts are primarily driven by employment outcomes and wages growth within the Tasmanian

economy. Estimates of payroll tax revenue are, therefore, subject to risk in the form of wages or

employment outcomes that exceed, or fall short of, expectations.

It is estimated that a one per cent variation in the number of people employed within the Tasmanian

economy would result in a variation of $4.4 million in Tasmania's payroll tax revenue in 2013-14. Whereas, a

one per cent variation in average weekly earnings in Tasmania would result in an estimated variation of

$2.5 million in payroll tax receipts in 2013-14.

Conveyance Duty

Revenue from conveyance duty relies upon the number of dutiable property transfers as well as the value of

the property transferred.

Relatively small variations between forecasts and actual property market outcomes have the potential to

lead to appreciable variations in conveyance duty revenue. For instance, a 1.0 per cent variation in the

number of property sales, or the average value of properties sold, would lead to a $1.3 million variation in

conveyance duty revenue in 2013-14.

However, conveyance duty estimates are also susceptible to significant upside variability, in the form of

large, one-off commercial related transactions, which typically involve the transfer of significant business

assets or large scale infrastructure. It is not possible to anticipate these transactions when framing the

Budget.

Returns from Government Businesses

Government businesses are subject to a wide range of influences that can significantly impact their returns

to Government. These include market conditions, infrastructure investment requirements and the

implementation of major reform programs.

Given the Government's current electricity reform, returns to Government will be subject to a level of

uncertainty as the impacts of the restructuring of the businesses from three to two have yet to be fully

quantified. Uncertainty in relation to electricity consumption, which has increased at a slower pace in recent

years than originally expected, impacts revenue collection by the electricity businesses. This is reflected in

both the timing of revenue collections and operating margins. For Hydro Tasmania, lower demand across

the National Electicity Market (NEM) has depressed wholesale prices, which represents an ongoing risk.


The MAIB's operating results are largely driven by the performance of its investment portfolio and its claim

expenses each year. Investment revenue is forecast to remain positive in 2013-14 and result in an operating

profit in that year. However, the outlook for financial and equity markets remains unclear, which suggests a

wide range of possible outcomes for the MAIB in 2013-14 and hence its returns over the Forward Estimates

period.

Forestry Tasmania continues to face significant challenges and risks given global market pressures and the

industry environment in which it operates. Forestry Tasmania's financial returns to Government over the

Forward Estimates period reflect this difficult operating environment. Work has commenced on the transition

of Forestry Tasmania following the independent strategic review. It is anticipated that the transition will put

Forestry Tasmania in a more sustainable financial position, however with the current market conditions it is

not expecting to make dividend and tax equivalent payments over the Forward Estimates period.


APPENDIX 4.1 COMMONWEALTH-STATE

FINANCIAL RELATIONS

Major Issues

GST Distribution Review

In March 2011, the Australian Government announced a Review of the Distribution of GST revenue. The

Review was tasked to consider whether the current methodology of sharing GST revenue among the states

would ensure that Australia is best placed to respond to structural and other challenges.

The Review has been conducted in a number of stages, including the release of:

an Issues Paper in July 2011;

a supplementary terms of reference (November 2011);

a supplementary Issues Paper (December 2011);

the First Interim Report (April 2012);

the Second Interim Report (June 2012); and

the final Report, released on 30 November 2012.

Further information can be found on the GST Distribution Review website at

www.gstdistributionreview.gov.au.

Tasmania has actively participated in all stages of the review including providing written submissions at

each stage and consultation directly with the panel and secretariat.

National Reforms

The Australian and State Governments are currently negotiating the following major national reforms:


The Australian Government released the Productivity Commission's final report into Disability Care and

Support in August 2011, recommending, among other initiatives, the establishment of a National Disability

Insurance Scheme. The Council of Australian Governments (COAG) has since agreed that there is a need

for fundamental reform of disability services and support in Australia.

To this end a COAG Select Council of Disability Ministers and Treasurers was established to consider the

recommendations of the Productivity Commission's report and to progress the development of a NDIS.

http://www.gstdistributionreview.gov.au/


In late 2012/early 2013, the Commonwealth and the States reaffirmed their commitment to the

implementation of a National Disability Insurance Scheme (NDIS) in Australia by:

Commonwealth Parliament passing the National Disability Insurance Scheme Act 2013, which

establishes a framework for the launch of a national scheme and outlines key eligibility criteria and

definitional requirements;

COAG signing an intergovernmental agreement for the first stage of the NDIS. The agreement provides

the foundation for all governments to work together to develop and implement the initial phase of the

NDIS;

Tasmania, together with NSW, Victoria, SA and the ACT each signing bilateral agreements with the

Commonwealth, which confirm the operational and funding details for the rollout of the NDIS in each

launch site; and

NSW, SA and the ACT signing a Heads of Agreement to establish the full NDIS.

The Tasmanian launch site will provide individual care and support packages (ISPs) from 1 July 2013 for all

Tasmanians aged between 15-24 years who are assessed as eligible.

Tasmania has committed an additional $2.0 million per annum, in addition to its projected budgeted spend

on ISPs. The initial three year period covered by Tasmania's Bilateral Agreement is projected to cost

approximately $83.3 million in individual support packages, with Tasmania's contribution capped at

$49.5 million.

On 2 May 2013, Tasmania signed a Heads of Agreement to establish the full NDIS. From July 2016,

Tasmania will transition from the NDIS launch to the full NDIS. The scheme will be fully implemented in

2019.

Further information can be found on the NDIS website at www.ndis.gov.au and within the Department of

Health and Human Services Chapter 5 in Budget Paper No 2 Government Services.

Review of School Funding

The Australian Government released the final Review of Funding for Schooling Report in February 2012 and

has committed to developing the recommendations put forward by the Review Panel.

In April 2013, the Australian Government announced its position on a new school funding model and the

National Plan for School Improvement. The new funding model is based on a Schooling Resource Standard

that comprises a base amount for every primary and secondary school student and loadings for school and

student need. The Australian Government model outlines a total national funding commitment of

$14.5 billion over the next six years. Of this, Tasmania would receive $400.0 million in additional funding.

The model requires a substantial commitment from Tasmania to share this increased investment. Tasmania

is negotiating the details for the reforms with the Australian Government.

The Review of Funding for Schooling Final Report and the Australian Government's proposal can be found

on the Your School, Our Future website at www.schoolfunding.gov.au and within the Department of

Education Chapter 3 in Budget Paper No 2 Government Services.

http://www.ndis.gov.au/

http://www.schoolfunding.gov.au/


Commonwealth Grants Commission 2013 Update Report

The CGC's Report on GST Revenue Sharing Relativities – 2013 Update (2013 CGC Report) provides state

relativities used in determining the distribution of GST revenue amongst the states for 2013-14. The Report

shows that Tasmania's assessed per capita GST relativity has increased slightly since the 2012 CGC

Report. This means that Tasmania will receive more GST revenue for 2013-14 than it would have done if

the 2013-14 GST pool was distributed to the states according to the 2012-13 relativity.

The 2013-14 relativity is based on data from 2009-10 to 2011-12. The increase in Tasmania's 2013-14

Relativity primarily reflects:

Tasmania's increased service delivery costs due to the State's above average share of people of low

socio-economic status; and

Tasmania's below average increase in Commonwealth payments, particularly rail and road

infrastructure payments.

Tasmania has the second lowest assessed fiscal capacity. Western Australia has the strongest assessed

fiscal capacity. Tasmania has a higher per capita GST need than most other states and is a major

beneficiary of the equalisation process. Tasmania will receive more than one and a half times its population

share in GST revenue in 2013-14 because of the equalisation process. Tasmania's share of the GST Pool is

estimated to remain constant at 3.6 per cent from 2012-13 to 2013-14. This is reflective of the decrease in

Tasmania's share of the total population being offset by the increase in Tasmania's relativity.

Further information on the 2013 CGC Report can be found on the CGC website at www.cgc.gov.au.


APPENDIX 4.2 STATE TAXATION

Taxation Reform

Current budgetary pressures faced by State and Australian Governments, the challenging economic

conditions confronting businesses and individuals and the related cost of living pressures, are impacting the

opportunity for meaningful tax reform.

Meaningful state tax reform is best achieved by pursuing reform at a national level in cooperation with other

states and territories and the Australian Government.

State and territories are working together to engage with the Australian Government on a number of tax

reform options, including lowering the tax-free threshold for GST on overseas imports, further harmonising

payroll tax and greater use of the Australian Tax Office online reporting system to lower administrative costs

for businesses.

Taxation Competitiveness

State taxation revenue is an essential source of funds to support the provision of services to Tasmanians.

However, the capacity of Tasmania and the other states and territories to raise taxation revenues is

constrained by the Constitution and by Australia's Commonwealth-State financial arrangements. As a result,

the states are restricted in the range of taxes available to them, compared to the Australian Government. An

effective state taxation regime must balance the need to raise revenue with the need to foster a sound and

expanding business environment. This should be achieved while maintaining the lowest reasonable burden

of taxation on the community. Taxation competitiveness plays a key role in encouraging growth in the

business environment.

An independent measure of taxation competitiveness across jurisdictions, the taxation severity ratio, is

provided by the Commonwealth Grants Commission (CGC) in its annual reports and updates on state

relativities.

The taxation severity ratio is not a straightforward comparison of tax rates or the amount of tax collected in

different states. Rather, it is an assessment by the CGC of the 'effort' made by each state to raise taxation

as a ratio of its 'capacity' to raise taxes. A ratio greater than 100 indicates that the state or territory raised

more revenue than average relative to the underlying capacity of its tax base to yield revenue. A ratio less

than 100 indicates below average effort.

In its most recent publication, the Report on GST Revenue Sharing Relativities – 2013 Update, the CGC

has published total taxation severity ratios, allowing a direct comparison of tax severity to be made between

states and territories.

Tasmania has been assessed as having the third lowest taxation severity of all states and territories, based

on the taxation arrangements in place in each jurisdiction in 2011-12 (see Chart 4.4). This is a significant

turnaround from the mid-1990s, when Tasmania was the second least competitive state in terms of its

overall tax regime.


Since 2000-01, Tasmania's taxation severity has been assessed as being amongst the lowest three

jurisdictions and the State is one of only two jurisdictions that have been assessed as having taxation

severity below the national average in every year from 2000-01.

Chart 4.4: Taxation Severity, 2011-12

75

80

85

90

95

100

105

110

115

NSW Vic Qld WA SA Tas ACT NT

Ta

xa

tio

n S

ev

eri

ty

Source: Commonwealth Grants Commission - Report on GST Revenue Sharing Relativities - 2013 Update.

A sustained program of tax relief and tax abolition is the principal driver of Tasmania retaining its relatively

low taxation severity. In 1999-00, the year before the GST was introduced, Tasmania collected over

25 taxes. In 2013-14, the State will collect only 14 taxes.

In relation to nationally agreed tax reform, from 1 July 2005, Tasmania had fully met its obligations under the

Intergovernmental Agreement on the Reform of Commonwealth - State Financial Relations (IGA), having

abolished financial institutions duty, duties on quoted marketable securities and debits duty.

Tasmania, along with the other states and territories, also committed to abolish a range of taxes that were

originally listed in the IGA for review.

With the abolition of duty on non-real property (business) conveyances from 1 July 2008, Tasmania

abolished its final 'review' tax ahead of all other jurisdictions except Victoria. Several jurisdictions have not

yet abolished all of their review taxes and it is not certain that they will do so by 1 July 2013. The abolition of

these jurisdiction's final review taxes will be dependent on their fiscal positions. Therefore, the Tasmanian

business sector has received accelerated benefits from this national tax reform in comparison to most other

jurisdictions.

General Government Expenses 5.1

5 GENERAL GOVERNMENT EXPENSES

Features

• Total Expenses are anticipated to be $5 059.0 million in 2013-14, an increase of $144.5 million or 2.9 per cent above the 2012-13 budgeted expenses of $4 914.5 million.

• Over the Budget and Forward Estimates period (from 2012-13) expenditure is budgeted to grow at an average annual rate of 1.9 per cent.

• The 2013-14 Budget continues to provide significant levels of funding for the ongoing implementation of key Government services and initiatives, including:

− Education ($1.3 billion), including an additional allocation for Tasmanian Education Funding Reform;

− Health ($1.4 billion);

− Public Order and Safety ($447.5 million), including additional funding for frontline services; and

− Social Security and Welfare and Housing and Community Amenities ($645.5 million), including additional funding for the introduction of the National Disability Insurance Scheme.

• For further detail on expenditure by purpose refer to Table A1.17 in Appendix 1 of this Budget Paper.

5.2 General Government Expenses

OVERVIEW Total Expenses are anticipated to be $5 059.0 million in 2013-14, an increase of $144.5 million or 2.9 per cent above the 2012-13 budgeted expenses of $4 914.5 million.

Over the Budget and Forward Estimates period (from 2012-13) expenditure is budgeted to grow at an average annual rate of 1.9 per cent.

Table 5.1 provides a summary of the movement in General Government expenditure since the 2012-13 Budget.

Table 5.1: General Government Expenses – Summary

2012-13) Estimated) Outcome)

2013-14)

Budget)



2016-17) Forward)

Estimate1 $m) $m) $m) $m) $m) Forward Estimate (Expenses) as per the 2012-13

Budget 4 914.5) 4 872.1) 4 951.7) 5 012.8) ....) Policy Decisions 39.2) 95.5) 105.8) 98.4) 110.0) Parameter Movements2 78.7) 91.4) 60.4) 110.2) ....) Total Expense Variations 117.9) 186.9) 166.2) 208.6) ....) Forward Estimate (Expenses) as per the 2013-14

Budget 5 032.4) 5 059.0) 5 117.9) 5 221.5) 5 299.4)

Notes: 1. Parameter adjustments for 2016-17 are not reflected in the table as the 2016-17 Forward Estimate was not

published in the 2012-13 Budget. However, the full impact of policy adjustments on the Budget and Forward Estimates is shown.

2. Further detail on Parameter movements is provided in Appendix 2 Policy and Parameter Statement of this Budget Paper.


POLICY DECISIONS Table 5.2 provides details of the expense policy decisions by the Government since the 2012-13 Budget. A description of the policy movements follows the table.

Table 5.2: Policy Decisions 2012-13)

Estimated) Outcome)

2013-14)

Budget)



2016-17) Forward) Estimate

$m) $m) $m) $m) $m)

Economic Development, Tourism and the Arts

Asian Century Initiatives ….) 0.6) 0.3) 0.3) 0.3)

Aurora Stadium Lighting Upgrade 1.0) ….) ….) ….) ….)

Blundstone Arena Redevelopment ….) ….) 15.0) ….) ….)

Dairy Tas – Filling the Factories Conversion 0.4) ….) ….) ….) ….)

Hollybank Mountain Bike Park 0.8) ….) ….) ….) ….)

Lion Assistance Package ….) ….) 1.5) ….) ….)

Netball Tasmania Grant ….) 0.2) ….) ….) ….)

Seaport Boardwalk Expansion 1.0) ….) ….) ….) ….)

Tasmanian Government Innovation and

Investment Fund 2.5) 2.5) ….) ….) ….)

Tasmanian Museum and Art Gallery ….) 0.8) 0.8) 0.8) 0.8)

Theatre Royal Performing Arts and Education

Centre ….) ….) 10.8) 2.2) ….)

Tourism Marketing 1.0) 1.0) ….) ….) ….)

Trails and Bikeways Initiative ….) 0.5) 0.5) ….) ….)

Vodafone Call Centre Assistance ….) 1.2) 0.3) 2.7) 3.4)

6.7) 6.7) 29.2) 5.9) 4.5) Education

Tasmanian Education Funding Reform ….) 7.0) 19.0) 26.0) 31.0)

VET Reform Management Costs 1.4) ….) ….) ….) ….)

Year 11/12 Regional Education Initiative ….) 0.6) 0.1) 0.1) 0.1)

1.4) 7.6) 19.1) 26.1) 31.1) Finance-General

Boost for First Home Builders 2.5) 5.8) 5.7) ….) ….)

Electricity Reform Costs ….) 4.4) 4.0) 4.0) 4.0)

First Home Owner Grant on Established Homes

Abolition ….) ….) (11.0) (11.0) (11.0)

ICT Project Fund ….) 4.0) 6.0) 8.0) 10.0)

Payroll Tax Rebate ….) 0.5) 2.1) 1.4) ….)

Payroll Tax Rebate – Vodafone Call Centre ….) 1.5) 2.7) 0.3) ….)


Table 5.2: Policy Decisions (continued) 2012-13)

Estimated) Outcome)

2013-14)

Budget)




$m) $m) $m) $m) $m)

Finance-General (continued)

Ports Infrastructure Essential Maintenance ….) 0.5) 1.0) 8.5) 7.5)

Tasmanian Bushfire Recovery 22.0) 8.3) ….) ….) ….)

Tasmanian Forests Agreement ….) 17.4) 8.3) 7.3) 1.8)

Tasmanian Irrigation Pty Ltd - Enterprise

Suitability Mapping ….) 0.8) 0.3) 0.3) 0.3)

24.5) 43.1) 19.1) 18.8) 12.6) Health and Human Services

Apology for Forced Adoptions 0.1) 0.1) ….) ….) ….)

Checks for People Working with Children and

Vulnerable People ….) 0.7) 0.2) ….) ….)

Community Infrastructure 3.0) ….) ….) ….) ….)

Continuation of Reviews and Reforms Funding ….) 20.0) 20.0) 20.0) 20.0)

Equal Remuneration Order (ERO) Costs ….) 0.3) 2.5) 4.3) 9.2)

National Disability Insurance Scheme ….) 1.2) 2.0) 2.0) 11.6)

Preventative Health Initiatives ….) 0.5) 0.5) ….) ….)

Rural Breast Screening Clinics ….) 0.1) 0.1) 0.1) 0.1)

State-wide Cancer Centres ….) 0.8) ….) ….) ….)

3.1) 23.6) 25.3) 26.4) 41.0) Infrastructure, Energy and Resources

Abt Railway 3.0) .... ) .... ) 1.5) 1.5)

Infrastructure Maintenance – Additional Funding .... ) 1.5) 1.5) 1.5) 1.5)

3.0) 1.5) 1.5) 3.0) 3.0) Justice

Anti-Discrimination Commissioner .... ) 0.3) 0.3) 0.3) 0.3)

Criminal Justice Information Management

System Operational Funding .... ) .... ) .... ) 0.6) 0.6)

Mental Health Bill 2012 .... ) 0.5) 0.5) 0.5) 0.5)

Planning Reform Specialist Gap 0.3) 0.5) .... ) .... ) .... )

Prison Infrastructure Redevelopment Program

Stage D Operating Costs .... ) 0.2) 2.2) 4.4) 4.4)

0.3) 1.5) 3.0) 5.7) 5.7) Police and Emergency Management

Additional Funding for Frontline Services .... ) 4.5) 6.5) 10.6) 10.3)

.... ) 4.5) 6.5) 10.6) 10.3)


Table 5.2: Policy Decisions (continued) 2012-13)

Estimated) Outcome)

2013-14)

Budget)




$m) $m) $m) $m) $m)

Premier and Cabinet

Asia Institute .... ) 0.2) 0.2) 0.2) 0.2)

Coastal, Regional and Sector-based Climate

Change Adaptation Activities .... ) 0.2) 0.2) .... ) .... )

Community Engagement Strategy for the

Government's Agenda .... ) 0.1) .... ) .... ) .... )

Community Resilience and Recovery – No

Interest Loans Scheme (NILS) .... ) 0.3) 0.3) 0.3) 0.3)

Darrel Baldock Memorial .... ) 0.1) .... ) .... ) .... )

Integrated Tasmanian Government Contact

Centre Project Operational Cost .... ) 1.2) 1.1) 1.1) 1.0)

Jobs Website Redevelopment .... ) 0.3) .... ) .... ) .... )

King Island Council Partnership Agreement 0.3) 0.1) 0.1) .... ) .... )

Lesbian, Gay, Bisexual, Transgender and

Intersex Grant .... ) 0.1) 0.1) 0.1) 0.1)

Tasmanian Carers Council .... ) 0.1) 0.1) 0.1) 0.1)

0.3) 2.5) 2.0) 1.8) 1.6) Primary Industries, Parks, Water and

Environment

Intensive Animal Farming Industry Development .... ) 1.0) .... ) .... ) .... )

Mine Remediation and Innovation Centre of

Excellence Study .... ) 0.1) .... ) .... ) .... )

Port Arthur - Penitentiary Conservation Works .... ) 3.0) .... ) .... ) .... )

State Container Deposit Study .... ) 0.1) .... ) .... ) .... )

.... ) 4.2) .... ) .... ) .... ) Royal Tasmanian Botanical Gardens

Ongoing Sustainability and Tasmanian Seed

Conservation Centre .... ) 0.2) 0.2) 0.2) 0.2)

.... ) 0.2) 0.2) 0.2) 0.2)

Total Policy Decisions 39.2) 95.5) 105.8) 98.4) 110.0)



Asian Century Initiatives

Funding of $550 000 in 2013-14 and $250 000 per annum from 2014-15 onwards is provided to cover the implementation of approved recommendations within the White Paper on the Asian Century. China is now Tasmania’s primary trading partner and a significant source of investment. Scope for such trade and investment to grow is substantial. This funding will:

• establish a Tasmanian representative presence in China;

• improve signage at key arrival points and major attractions by incorporating Asian languages;

• support industry and Brand Tasmania to develop consistent ‘Tasmanian Gourmet’ food branding; and

• support cultural awareness training workshops for business, in partnership with the Australian Government and local industry representative bodies.

Aurora Stadium Lighting Upgrade

As part of the Tasmanian Jobs Package announced in December 2012, funding of $1.0 million was provided in 2012-13 to upgrade the lighting at Aurora Stadium to a broadcast standard for night time telecasts.

Blundstone Arena Redevelopment

Funding of $15.0 million in 2014-15, will be provided towards the upgrade of Blundstone Arena which will boost the ground's capacity from 15 000 to around 19 500.

The development will include the construction of a new Western Stand, a new concourse and gate entry area, a revamp of Southern Stand catering facilities and increased kiosk and toilet facilities on the hill.

Dairy Tas – Filling the Factories Conversion

As part of the Tasmanian Jobs Package announced in December 2012, funding of $400 000 was provided in 2012-13 to partner with Dairy Tasmania in developing dairy conversion plans. This initiative supports the industry driven “Filling the Factories” Program, which plans to secure another 355 mega litres of milk supply in Tasmania.

Hollybank Mountain Bike Park

As part of the Tasmanian Jobs Package announced in December 2012, funding of $800 000 was provided in 2012-13 for the development of eight kilometres of high quality mountain bike trails at the Hollybank Reserve in Northern Tasmania.


Lion Assistance Package

Funding of $1.5 million is provided in 2014-15 to support Lion’s investment of over $150 million in cheese manufacturing in Burnie and on King Island. Lion's investment will create 80 full-time jobs during construction and support the retention of 220 full-time staff when operational. Production of a range of high-value cheeses will rise from 11 000 tonnes to 18 000 tonnes by 2016, taking total factory capacity to 25 000 tonnes a year. The $1.5 million grant comprises:

• $600 000 towards a $14.0 million innovation and product development facility where new products and manufacturing processes will be developed and tested;

• $600 000 to support staff retraining (including through existing TasTAFE programs); and

• $300 000 contribution towards project design and planning, including waste management solutions.

Netball Tasmania Grant

Funding of $200 000 is provided in 2013-14 as an extension of the 2010 Election Commitment Netball Boost. The funding is to support a new phase in the development of the administration and promotion of grass-roots and elite netball.

Seaport Boardwalk Expansion

As part of the Tasmanian Jobs Package announced in December 2012, funding of $1.0 million was provided in 2012-13 for expansion of the boardwalk at the Launceston Seaport to create a versatile public place.

Tasmanian Government Innovation and Investment Fund

As part of the Tasmanian Jobs Package announced in December 2012, additional funding of $2.5 million in 2012-13 was provided for the Tasmanian Government Innovation and Investment Fund. Further funding of $2.5 million is provided in this Budget. The Fund will provide grant funds to support investments and new activities that will broaden Tasmania’s economy and deliver sustainable job creation consistent with the Economic Development Plan, particularly in regional areas of Tasmania.

Tasmanian Museum and Art Gallery

Stage 1 of the Tasmanian Museum and Art Gallery (TMAG) redevelopment was completed in early 2013. Additional funding of $800 000 has been provided for 2013-14 and over the Forward Estimates to meet additional operating costs associated with the redeveloped and expanded TMAG facility.

Theatre Royal Performing Arts and Education Centre

Funding of $9.9 million in 2014-15 and $2.2 million in 2015-16 is provided for the establishment of the Academy of Creative Industries and Performing Arts adjacent to the Theatre Royal. This funding will be paid as capital grants, with the project also receiving funding from the Australian Government of $30 million and the University of Tasmania of $20.0 million. Centre development will include the construction of a new Conservatorium of Music, two new flexible theatre spaces, greatly improved amenities, disabled access and expanded foyer space.

Additional funding of $900 000 is provided in 2014-15 contributing to archaeological excavation at the site.


Tourism Marketing

In response to the Tasmanian Access Study Report, funding of $1.0 million in 2012-13 was provided to Tourism Tasmania to assist in creating demand for increased air services coming online. A further $1.0 million in 2013-14 is to be provided to ensure the longer term sustainability of air access and to proactively undertake route development activity.

Trails and Bikeways Initiative

Funding of $500 000 in 2013-14 and 2014-15 is provided for the Trails and Bikeways Program to provide infrastructure for Tasmanians, contribute to Tasmania's liveability and encourage healthy, active and well-connected communities.

Vodafone Call Centre Assistance

Funding of $10.8 million over five years ($7.6 million over the Budget and Forward Estimates) is provided to secure an additional 750 jobs at Vodafone's Kingston Call Centre. The funding in 2013-14 includes a one-off grant of $850 000 for infrastructure upgrades. The majority of funding from 2015-16 onwards is provided to continue payroll tax rebates once rebates provided to Vodafone under the payroll tax rebate scheme announced as part of the Tasmanian Jobs package have ceased. The expansion of the centre in Kingston will increase FTEs from approximately 650 to 1 400.

Education

Tasmanian Education Funding Reform

The Government has made provision of $83.0 million in the budget across the Forward Estimates for funding improved education outcomes in Tasmanian schools.

It is intended that the funding will be used to implement the Tasmanian Government’s response to the reforms advocated by the Gonski panel in its Review of Funding for Schooling, to provide needs based funding to Tasmanian schools. The Gonski reforms are intended to deliver equitable, high quality education to young Tasmanians from all backgrounds and ensure students maximise their potential in life and gain the skills and knowledge necessary to fully participate in the community.

The funding will ensure that students that are falling behind have the support and resources needed to succeed through the provision of high quality teaching and learning, empowered school leadership, improved targeting of resources to where they are needed most, and improved transparency and accountability for the education outcomes of students.

Tasmania remains in negotiation with the Australian Government regarding the Gonski reforms. Tasmania’s funding will be applied to improving education outcomes regardless of whether an agreement with the Australian Government can be reached.

VET Reform Management Costs

Funding of $1.4 million was provided in 2012-13 to meet additional management costs incurred as part of the VET reform Project.


Year 11/12 Regional Education Initiative

Funding of $900 000 over four years has been provided to support government secondary schools and combined schools in regional Tasmania to work with senior secondary schools to enhance the delivery of senior secondary education and training programs. Funding of $600 000 will be spent on this program in 2013-14, with $100 000 being allocated in each of the outyears.

Finance-General

Boost for First Home Builders

Funding of $14.0 million is provided over three years to fund the First Home Builder Boost program which will apply to contracts entered into between I January 2013 and 30 June 2014. The funding, which is tied to eligibility for the First Home Owner Grant, will provide an additional $8 000 boost for first home owners purchasing a newly built home or who are owner/builders. Approved applicants are eligible for a combined Grant and Boost of up to $15 000.

Electricity Reform Costs

An amount of $4.4 million is to be provided in 2013-14 in respect of costs associated with the reform agenda together with a range of concessions which are currently provided by Aurora Energy Pty Ltd and for new concessions relating to electricity supply, which the Government will fund as a result of the move to full retail competition. This includes rebates for Tasmanians with a medical need for air conditioning, rebates for Tasmanians who require life support systems at home and a range of community support.

First Home Owner Grant on Established Homes Abolition

The Government has determined that the First Home Owner Grant (FHOG) for purchasers of established dwellings will cease from 30 June 2014. Thereafter, FHOG will only be available to eligible first home buyers who purchase or construct a new dwelling. A saving of $11.0 million per annum is anticipated from 2014-15.

ICT Project Fund

Funding for the Information Communications Technology (ICT) Project Fund will provide $28.0 million over the next four years to significant State Government ICT projects approved by the ICT Policy Board. Potential projects include the Integrated Tasmanian Government Contact Centre, Budget Information Management System, State Revenue Systems, Criminal Justice Information Management System, Emergency Dispatch System and Student Management System Replacement.

Payroll Tax Rebate

As part of the Tasmanian Jobs Package announced in December 2012, funding of $500 000 in 2013-14, $2.1 million in 2014-15 and $1.4 million in 2015-16 is provided to reintroduce the successful payroll tax rebate for all new jobs generated before 30 June 2014 and maintained until 30 June 2015.

Payroll Tax Rebate – Vodafone Call Centre

Funding of $1.5 million in 2013-14, $2.7 million in 2014-15 and $300 000 in 2015-16 is provided to support the creation of 750 jobs as Vodafone expands its Kingston Call Centre. This funding is provided for payroll tax rebates, as the Government will waive payroll tax for the new employees in line with the policy in the Tasmanian Jobs Package.


Ports Infrastructure Essential Maintenance

Funding of $17.5 million over the next four years ($500 000 in 2013-14, $1.0 million in 2014-15, $8.5 million in 2015-16 and $7.5 million in 2016-17) will be provided to the Tasmanian Ports Corporation Pty Ltd for remedial works at Sullivans Cove, Inspection Head, Stanley and Strahan. Remedial works include concrete and reinforcing repairs to the corrosion in the concrete and steel structures, and deterioration to timber elements. Funding of this remedial work will enable the continued use of these key community and tourist areas.

Tasmanian Bushfire Recovery

Funding of $22.0 million was provided in 2012-13 for costs incurred in relation to the Tasmanian Bushfires in January 2013. This includes funding for direct response costs incurred by the State Fire Commission, Forestry Tasmania and the Department of Primary Industries, Parks, Water and Environment; clean up costs; Police and Emergency Service costs as well as funding for the Port Arthur Historic Site Management Authority for providing a recovery centre. In addition there is a range of recovery costs including the provision of a temporary school at Dunalley, provision of replacement contents and clearing of the site; the provision of public health, and personal and social support; funding to help businesses rebuild; assistance in the re-establishment of property boundaries; funding to some non-government organisations; and administrative and support activities. Additional funding of $8.3 million is provided in 2013-14 to meet ongoing costs.

Tasmanian Forests Agreement (TFA)

Funding of $17.4 million in 2013-14, $8.3 million in 2014-15, $7.3 million in 2015-16 and $1.8 million in 2016-17 is provided in recognition of additional costs associated with new reserve management, assistance with industry reform and transition and worker and community support.

Part of this funding will be used to pay for alternative access roads required to avoid harvesting in areas to be set aside for reserves under the TFA, in order for Forestry Tasmania to meet its contractual obligation as well as assistance for the transport of residues.

Tasmanian Irrigation Pty Ltd - Enterprise Suitability Mapping

Funding of $750 000 in 2013-14 is provided to enable the Tasmanian Irrigation Pty Ltd to deliver five interrelated activities including; Investment attraction ($220 000), Market analysis ($50 000), Enterprise development ($180 000), Tas Grown Inc. Boot Camp, which is a high-level agribusiness executive workshop ($100 000) and new enterprise seed funding ($200 000).

Funding of $300 000 per annum is provided for three years from 2014-15 onwards for enterprise suitability mapping in critical agricultural areas, for a minimum of 20 representative crops. The result will be improved identification of potential new enterprises to inform immediate investment and future research and development and extension programs.


Apology for Forced Adoptions

Funding of $63 000 in 2012-13 and 2013-14 is to provide counselling services over a 12 month period to people affected by forced adoption.


Checks for People Working with Children and Vulnerable People

Funding of $900 000 over two years is being provided to assist with the establishment of a centralised unit for the background checking and risk assessment of people working with children and other vulnerable Tasmanians. The first phase of the project will be to establish a more comprehensive background checking and risk assessment process for people working with children to reduce the risk of sexual, physical, emotional and financial harm or neglect. A second phase will expand the process to include those working with vulnerable people.

Community Infrastructure

As part of the Tasmanian Jobs Package announced in December 2012, funding of $2.0 million was provided for the maintenance, renovation and upgrade of Tasmania's network of Community and Neighbourhood houses, additional funding of $1.0 million was also provided for the initial stages of the Church Street Youth Accommodation and Training Project.

Continuation of Reviews and Reforms Funding

Funding of $20 million per annum is provided as a continuation of the reviews and reforms funding for which the Department was provided with $80.0 million over four years as part of the 2008-09 Budget. Without the continuation of this funding it will not be possible to meet ongoing service requirements. This funding is split across various Health and Human Services as follows:

• Alcohol, Tobacco and Other Drugs Services ($6.2 million);

• Family Support Services ($8.1 million);

• Disability Services ($1.3 million); and

• Health Reform ($4.4 million).

Equal Remuneration Order (ERO) Costs

Additional ERO supplementation funding of almost $16.3 million over four years is being provided to community sector organisations on top of $30.0 million already committed in the 2012-13 Budget. Additional funds will enable community sector organisations to fully meet their obligations and requirements under the Fair Work Australia ERO. This additional supplementation includes $277 000 in 2013-14 and increases to $9.2 million in 2016-17. In total, the Tasmanian Government has now committed $58.3 million over the first five years of the ERO which is being implemented in nine instalments over eight years.


Funding totalling $16.8 million over the next four years is being provided to assist with the introduction of the NDIS in Tasmania. Tasmania has been chosen as a launch site for the NDIS commencing in July 2013. This first stage will provide support to approximately 1 000 young people aged 15-24 with disability, who are assessed as eligible. Tasmania is responsible for establishing an implementation team to work in collaboration with the Australian Government's newly created NDIS organisation, known as DisabilityCare Australia, the disability sector, clients, their families and carers to ensure Tasmania's successful launch and readiness for the full scheme.

The Tasmanian Government has signed an historic agreement with the Australian Government to participate in the full NDIS scheme from 2016-17. Around 10 600 Tasmanians with a disability are expected to benefit from the NDIS when fully implemented in July 2019.


Preventative Health Initiatives

Commencing in 2013-14, a total of $1.0 million in funding is being provided over two years to improve the health and wellbeing of people, communities and population groups that are considered at high risk. This includes measures to reduce smoking and to help young parents to connect with local support and initiatives that will support their health and wellbeing and that of their families.

Rural Breast Screening Clinics

Recurrent funding of $118 000 per annum from 2013-14 is provided to improve access to breast screening for rural and remote Tasmanians. The recurrent funding represents salary and supplies and consumables expenses.

State-wide Cancer Centres

Additional funding of $5.0 million in 2013-14 is provided for State-wide Cancer Centres to ensure that total funding meets the agreed amount set out in the National Partnership Agreement between the State and the Australian Government. $762 000 of this funding is provided for employee expenses related to the project. The remainder of this funding is for the purchase of non-financial assets.

Infrastructure, Energy and Resources

Abt Railway

Funding of $3.0 million in 2012-13 was provided to assist with maintaining the operations of the West Coast Wilderness Railway and preparing the railway for a new owner. In 2013-14, the Australian Government is providing $6.0 million to fund immediate maintenance needs, to be provided to the entity as a grant through the Department of Infrastructure, Energy and Resources. Additional funding of $1.5 million is also provided in 2015-16 and 2016-17 by the Tasmanian Government to help support the ongoing operational costs of the Railway. Other costs in 2013-14 and 2014-15 will be met within the existing Budget allocation of the Department of Infrastructure, Energy and Resources.

Infrastructure Maintenance

Additional funding of $1.5 million per annum is provided for additional road and bridge maintenance. The maintenance demands on Tasmania’s road system are projected to increase in future years through substantial increases in heavy traffic, changes in road use, increased tourism, demands for safer roads and increased community expectations.

Justice

Anti-Discrimination Commissioner

Funding of $300 000 per annum is provided to meet an increase in the level of demand and increasing costs experienced by the Office of the Anti-Discrimination Commissioner. The funding will allow the Anti-Discrimination Commissioner to continue to fulfil statutory responsibilities required under the Anti-Discrimination Act 1998.

Criminal Justice Information Management System Operational Funding

The Department of Justice is currently undertaking the Criminal Justice Information Management System Project. This system will create repositories for all documents that need to be stored and exchanged in the


Criminal Justice System. The funding of $573 000 per annum from 2015-16 onwards is provided for the ongoing management and maintenance of the system when operational. Separate capital funding will be sought from the ICT Project Fund for the development of the system.

Mental Health Bill 2012

Funding of $500 000 per annum is provided to cover additional costs associated with the implementation of the new Mental Health legislation, which is scheduled to come into effect on 1 January 2014. The policy changes proposed will result in a new Mental Health Tribunal, replacing the existing Mental Health Tribunal and Tasmanian Forensic Tribunal. The functions of the new Tribunal are more extensive; with the workload of the new Tribunal forecast to be approximately treble that of the existing bodies.

Planning Reform Specialist Gap

Funding of $250 000 in 2012-13 and $500 000 in 2013-14 is provided to meet a skill gap in assessing interim planning schemes as part of the Government’s Planning Reforms. The experience from the schemes already assessed has demonstrated that the Tasmanian Planning Commission needs additional specialist planning resources to enable the schemes to be assessed in a timely manner.

Prison Infrastructure Redevelopment Program Stage D Operating Costs

The construction of additional infrastructure at the Risdon Prison Complex as part of Stage D of the Prisons Infrastructure Redevelopment Program commenced during 2012-13. Funding of $235 000 in 2013-14, $2.2 million in 2014-15 and $4.4 million from 2015-16 onwards is provided to meet the operational costs of these facilities once commissioned. The funding reflects minor building costs in 2013-14; 50 per cent of the operational costs for these facilities from 1 July 2014; and 100 per cent of operational costs from 1 July 2015.

Police and Emergency Management

Additional Funding for Frontline Services

Funding of $4.5 million in 2013-14, $6.5 million in 2014-15, $10.6 million in 2015-16 and $10.3 million in 2016-17 has been provided to resume recruitment and employ additional police, as part of the Government's commitment to meeting the cost of maintaining Tasmania Police at 1 120 police officers, which will sustain a highly visible police presence that can continue to provide an effective, timely and flexible 24-hour response to incidents, emergencies and public events. The additional funding ensures a recruit course, comprising some 25 trainees, will commence training in the first quarter of the 2013-14 financial year and help Tasmania to maintain some of the lowest crime rates in Australia.

Premier and Cabinet

Asia Institute

Funding of $200 000 per annum is provided to partner with the University of Tasmania to establish an Asia Institute at the University, which was an approved recommendation within the White Paper on the Asian Century. The Asia Institute will bring together and augment the University’s existing expertise in the Asian region and undertake research, education and development activities.


Coastal, Regional and Sector-based Climate Change Adaptation Activities

Funding of $200 000 in 2013-14 and 2014-15 is provided to facilitate additional coastal vulnerability research and coordinate adaptation pathway planning and land use planning responses.

This project will take a whole-of-government approach to the Government’s work on coastal vulnerability and adaptation planning by facilitating activity to address current gaps and ensure a coordinated approach to all current, new and subsequent policy guidance for land use planning, land management and adaptation planning.

Community Engagement Strategy for the Government's Agenda

The new agenda for the Tasmanian Government sets out three priorities, modernising the economy, reducing inequality and investing in the next generation. Funding of $70 000 in 2013-14 is provided to roll out the community engagement strategy with the objective of encouraging Tasmanians to directly participate in the application of the agenda in their communities.

Community Resilience and Recovery – No Interest Loans Scheme (NILS)

Funding of $320 000 per annum is provided to continue the No Interest Loan Scheme, as the current arrangements expire in June 2013. NILS has demonstrated that it is both sustainable and effective in helping to build resilient individuals and families, which is critical for improving social inclusion and cost of living. This scheme will target communities in transition due to demographic and industry change, and communities experiencing socioeconomic disadvantage.

Darrel Baldock Memorial

Funding of $50 000 is provided in 2013-14 to construct a memorial in Latrobe to Darrel Baldock. The memorial will be at the entrance of the Latrobe Recreation ground and will include a life-size statue, memorial gates and interpretative panels of the life of this extraordinary Tasmanian. The funding will be provided to the Darrel Baldock Memorial Committee, which is administered by the Latrobe Council.

Integrated Tasmanian Government Contact Centre Project Operational Cost

Funding of $1.2 million in 2013-14, $1.1 million in 2014-15 and 2015-16 and $1.0 million in 2016-17 is being provided to implement a best practice integrated contact centre operation for Government. Presently, Government operates a number of disparate contact centres. This has led to duplication, inconsistent use of technologies, high operating costs for government and variable experiences for customers. The project will establish the Contact Centre for Government within the DPIPWE Service Tasmania Shop network. The aims of the project are to improve customer service delivery, making it easier for Tasmanians to conduct their business with Government over the phone and to ensure that Government contact centre services are cost effective and sustainable for the future. Capital funding for this project will be sought from the ICT Project Fund.

Jobs Website Redevelopment

Funding of $250 000 is provided in 2013-14 for redevelopment of the Tasmanian Government’s Jobs Website. The architecture that the Jobs website was constructed on (both front-end and back-end) was devised in 2003 and a rebuild of the website is required.


King Island Council Partnership Agreement

Funding of $300 000 in 2012-13 and $100 000 in 2013-14 and 2014-15 is provided for a partnership agreement between the State Government and the King Island Council which has been developed in response to the closure of the abattoir at Currie. The partnership aims to promote economic development and diversification on King Island.

Lesbian, Gay, Bisexual, Transgender and Intersex Grant

Funding of $50 000 per annum is provided to continue the Lesbian, Gay, Bisexual, Transgender and Intersex (LGBTI) Grants Program which provides grants to community organisations and tertiary institutions to produce evidence and data on LGBTI communities to assist in reducing discrimination and providing better access, development and communication of services.

Tasmanian Carers Council

Funding of $50 000 per annum is provided to establish the Tasmanian Carers Council, which will provide advice to the Minister and monitor the implementation of the Tasmanian Carer Recognition and Support Framework.

Primary Industries, Parks, Water and Environment

Intensive Animal Farming Industry Development

Additional funding of $1.0 million is provided in 2013-14 for the Animal Welfare Reform that commenced in 2012-13 which aims to increase the ability of Tasmanian egg and pork producers to respond to market trends that indicate consumers are increasingly sensitive to animal welfare. The reforms include reducing the number of hens in caged production systems and assisting pork producers change their pig management systems so sows spend a maximum of ten days in gestation stalls per oestrus cycle.

Mine Remediation and Innovation Centre of Excellence Study

Funding of $100 000 is provided in 2013-14 to investigate the feasibility of establishing a regionally-based Centre of Excellence and Innovation in mine remediation. The Centre would focus on the development of innovative solutions for dealing with historical and contemporary acid mine drainage, the recovery of minerals in tailings or other previously disturbed mining sites, as well as a range of other rehabilitation techniques.

Port Arthur - Penitentiary Conservation Works

Funding totalling $3.0 million is provided to Port Arthur Historic Site Management Authority for Penitentiary Conservation Works. This funding represents 50 per cent of the total project costs and will be provided to PAHSMA as a grant, with the remainder to be sought from the Australian Government.

State Container Deposit Study

Funding of $50 000 in 2013-14 is provided to carry out a Cost Benefit Study on a state-based Container Deposit System for Tasmania. The study will provide information on the public and private investment requirements for a model scheme.


Royal Tasmanian Botanical Gardens

Ongoing Sustainability and Tasmanian Seed Conservation Centre

The Government is providing additional funding of $175 000 per annum for the ongoing sustainability of Royal Tasmanian Botanical Gardens’ recurrent operations including the ongoing operation of the Tasmanian Seed Conservation Centre.

Assets and Liabilities 6.1

6 ASSETS AND LIABILITIES Features

• Net Worth is estimated to be $13 789.8 million as at 30 June 2014, an increase of $660.2 million or 5.0 per cent above the 2012-13 Budget estimate of $13 129.6 million. Net Worth is estimated to increase over the Forward Estimates period to $14 965.8 million by 30 June 2017.

• Net Financial Worth is estimated to be $1 635.7 million as at 30 June 2014, a decrease of $263.8 million or 13.9 per cent below the 2012-13 Budget estimate of $1 899.5 million. Net Financial Worth is anticipated to increase to $1 655.5 million by 30 June 2017.

• Net Financial Liabilities is estimated to be $4 992.3 million as at 30 June 2014, an increase of $353.9 million or 7.6 per cent above the 2012-13 Budget estimate of $4 638.4 million. Net Financial Liabilities are estimated to increase to $5 250.4 million by 30 June 2017.

• Net Debt is estimated to be $226.1 million as at 30 June 2014, an increase of $91.9 million or 68.5 per cent above the 2012-13 Budget estimate of $134.2 million. Net Debt is estimated to improve to negative Net Debt of $47.0 million by 30 June 2017.

6.2 Assets and Liabilities

BALANCE SHEET The Balance Sheet presented in this chapter provides a financial snap-shot of assets and liabilities taken at the end of the financial year and reports key indicators. By providing information on the nature of assets and liabilities held by the Government, this statement gives an indication of the State's financial strength.

The key measures presented in the Balance Sheet are Net Worth, Net Financial Worth, Net Financial Liabilities and Net Debt.

Table 6.1 details the estimated General Government Sector Balance Sheet as at 30 June from 2013 to 2017.


Table 6.1: General Government Balance Sheet as at 30 June

2013)

Budget1)

2014)

Budget)

2015) Forward) Estimate)



$m) $m) $m) $m) $m) Assets

Financial Assets

Cash and Deposits 914.9) 857.6) 706.2) 654.1) 599.8)

Investments 59.1) 42.4) 44.4) 45.7) 45.8)

Equity Investment in PNFC and PFC Sectors 6 537.9) 6 628.0) 6 728.6) 6 750.3) 6 905.9)

Other Equity Investments 8.0) 16.4) 19.4) 22.0) 24.0)

Receivables 214.5) 354.5) 354.1) 354.0) 354.4)

Other Financial Assets 1 137.6) 1 220.3) 1 168.4) 1 103.4) 1 099.2)

8 872.0) 9 119.2) 9 021.1) 8 929.5) 9 029.1)

Non-Financial Assets Land and Buildings 6 355.4) 6 948.3) 7 208.0) 7 394.1) 7 626.0)

Infrastructure 4 096.3) 4 390.1) 4 543.7) 4 724.7) 4 904.2)

Plant and Equipment 210.5) 240.5) 223.0) 203.4) 181.7)

Heritage and Cultural Assets 464.7) 473.9) 485.9) 498.0) 510.1)

Investment Property 13.9) 12.5) 12.8) 13.1) 13.4)

Intangibles 29.5) 34.6) 30.3) 25.9) 21.7)

Assets Held for Sale 23.5) 11.3) 10.4) 9.4) 8.4)

Other Non-Financial Assets 36.2) 42.8) 43.6) 44.2) 44.8)

11 230.0) 12 154.0) 12 557.6) 12 912.8) 13 310.2)

Total Assets 20 102.1) 21 273.2) 21 578.7) 21 842.3) 22 339.4) Liabilities

Borrowings 1 108.2) 1 126.1) 979.6) 794.7) 598.6)

Superannuation 4 977.2) 5 150.2) 5 282.1) 5 399.3) 5 509.2)

Employee Entitlements 520.4) 673.6) 690.7) 675.9) 695.4)

Payables 89.9) 115.6) 117.7) 120.2) 122.8)

Other Liabilities 276.8) 417.9) 427.2) 437.2) 447.5)

Total Liabilities 6 972.5) 7 483.4) 7 497.3) 7 427.4) 7 373.6)

NET ASSETS 13 129.6) 13 789.8) 14 081.5) 14 414.9) 14 965.8)


Table 6.1: General Government Balance Sheet as at 30 June (continued)

2013)

Budget)

2014)

Budget)




$m) $m) $m) $m) $m) Equity

Accumulated Funds 8 929.8) 9 035.3) 8 986.8) 8 969.1) 9 161.7)

Asset Revaluation Reserve 4 199.8) 4 754.5) 5 094.6) 5 445.8) 5 804.1)

Total Equity 13 129.6) 13 789.8) 14 081.5) 14 414.9) 14 965.8)

NET WORTH2 13 129.6) 13 789.8) 14 081.5) 14 414.9) 14 965.8) NET FINANCIAL WORTH3 1 899.5) 1 635.7) 1 523.8) 1 502.1) 1 655.5) NET FINANCIAL LIABILITIES4 4 638.4) 4 992.3) 5 204.8) 5 248.2) 5 250.4) NET DEBT5 134.2) 226.1) 229.0) 95.0) (47.0) Notes: 1. For comparison purposes and to ensure consistency with the presentation used in the Treasurer's Annual Financial

Report some assets and liabilities have been reclassified since the presentation of the 2012-13 Budget. 2. Net Worth represents Total Assets less Total Liabilities. 3. Net Financial Worth represents Financial Assets less Total Liabilities. 4. Net Financial Liabilities represents total liabilities less financial assets, excluding equity investments in Government

businesses. 5. Net Debt represents Borrowings less selected financial assets.

ASSETS Total assets are estimated to be $21 273.2 million as at 30 June 2014, an increase of $1 171.1 million or 5.8 per cent above the 2012-13 Budget estimate of $20 102.1 million.

Cash and Deposits Cash and Deposits is estimated to be $857.6 million as at 30 June 2014, a decrease of $57.3 million or 6.3 per cent below the 2012-13 Budget estimate of $914.9 million.

Investments Investments is estimated to be $42.4 million as at 30 June 2014, a decrease of $16.7 million or 28.3 per cent below the 2012-13 Budget estimate of $59.1 million.


Equity Investment in PNFC and PFC Sectors

This item consists of the Government's investment in the net assets of the Public Non-Financial Corporations (PNFC) and Public Financial Corporations (PFC) sectors.

Equity Investments is estimated to be $6 628.0 million as at 30 June 2014, an increase of $90.1 million, or 1.4 per cent above the 2012-13 Budget estimate of $6 537.9 million.

Chart 6.1 illustrates the components of the Government's Equity Investment holdings.

Chart 6.1: Equity Investments in PNFC and PFC Sectors as at 30 June 2014

Electricity$3 715.6m

(56.1%)

Resource Management

$106.9m(1.6%)

Financial $404.8m

(6.1%)Ports

$170.6m(2.6%)

Transport$362.8m

(5.4%)

Water and Sewerage1

$1 762.6m(26.6%)

Other$104.8m

(1.6%)

Note: 1. The net assets of the local government owned Water and Sewerage Corporation are included in the Government's

equity investments as a result of the Australian Bureau of Statistics' decision to include this corporation as part of the PNFC sector.

Other Equity Investments This item consists of other equity investments in private sector businesses. Other Equity Investments is estimated to be $16.4 million as at 30 June 2014, an increase of $8.4 million, or 105.0 per cent above the 2012-13 Budget estimate of $8.0 million. The increase in 2014 and through the Forward Estimates period primarily reflects the investment in properties under the HomeShare initiative by the Department of Health and Human Services.


Receivables Receivables is estimated to be $354.5 million as at 30 June 2014, an increase of $140.0 million or 65.3 per cent above the 2012-13 Budget estimate of $214.5 million. These figures vary from the 2012-13 Budget figure due to Accrued Revenue, GST Tax Payments and GST Tax Receipts previously classified as Other Financial Assets now being reclassified as Receivables. Receivables are expected to be stable over the Forward Estimates period. The increase in receivables primarily reflects the initial recognition of future fees by the Asbestos Compensation Fund within the Department of Justice.

Other Financial Assets Other Financial Assets include Income Tax Equivalents Receivable, Prepayments and Other Financial Assets. Table 6.2 provides a summary of Other Financial Assets.

Table 6.2: Other Financial Assets as at 30 June 2013)

Budget1)

2014)

Budget)




$m) $m) $m) $m) $m)

Income Tax Equivalents Receivable 1 119.3) 1 201.7) 1 149.5) 1 084.1) 1 079.5)

Prepayments 17.1) 18.1) 18.4) 18.8) 19.2)

Other Financial Assets 1.2) 0.5) 0.5) 0.5) 0.5)

1 137.6) 1 220.3) 1 168.4) 1 103.4) 1 099.2)

Note: 1. The presentation of 2013 Budget information has changed to reflect the opening balance information presented in

the 2011-12 Treasurer's Annual Financial Report. Accrued Revenue, GST Tax Payments and GST Tax Receipts were previously classified as Other Financial Assets but are now classified as Receivables.

Income Tax Equivalents Receivable Income Tax Equivalents Receivable is an asset held by the General Government Sector that mirrors the Income Tax Liabilities held by Government Business Enterprises and State-owned Companies within the PNFC and PFC sectors. The receivable reflects timing differences in the payment of income tax equivalents in accordance with Australian Accounting Standards.

Non-Financial Assets Non-Financial Assets is estimated to be $12 154.0 million as at 30 June 2014, an increase of $924.0 million or 8.2 per cent above the 2012-13 Budget estimate of $11 230.0 million.

Non-Financial Assets include the value of Crown Land and other land holdings, including national parks and conservation areas, schools, hospitals and other buildings held by the Government for the provision of goods and services. Non-Financial Assets also includes Intangibles, Assets Held for Sale and Other Non-Financial Assets.


Land and Buildings Land and Buildings is estimated to be $6 948.3 million as at 30 June 2014, an increase of $592.9 million or 9.3 per cent above the 2012-13 Budget estimate of $6 355.4 million. The increase in Land and Buildings primarily reflects revaluation and finalisation of the transfer of assets from the Department of Health and Human Services to the Tasmanian Health Organisations.

Infrastructure Infrastructure is estimated to be $4 390.1 million as at 30 June 2014, an increase of $293.8 million or 7.2 per cent above the 2012-13 Budget estimate of $4 096.3 million.

Information regarding infrastructure investment is provided in Chapter 7 Infrastructure Investment of this Budget Paper.

Plant and Equipment Plant and Equipment is estimated to be $240.5 million as at 30 June 2014, an increase of $30.0 million or 14.3 per cent above the 2012-13 Budget estimate of $210.5 million. The increase in Plant and Equipment primarily reflects a more accurate estimate based on 2012 balances.

Heritage and Cultural Assets Heritage and Cultural Assets is estimated to be $473.9 million as at 30 June 2014, an increase of $9.2 million or 2.0 per cent above the 2012-13 Budget estimate of $464.7 million.

Investment Property Investment Property is estimated to be $12.5 million as at 30 June 2014, a decrease of $1.4 million or 10.1 per cent below the 2012-13 Budget estimate of $13.9 million.

Intangibles Intangibles is estimated to be $34.6 million as at 30 June 2014, an increase of $5.1 million or 17.3 per cent above the 2012-13 Budget estimate of $29.5 million.

Assets Held for Sale Assets Held for Sale is estimated to be $11.3 million as at 30 June 2014, a decrease of $12.2 million or 51.9 per cent below the 2012-13 Budget estimate of $23.5 million. The decrease in Assets Held for Sale primarily reflects a more accurate estimate based on 2012 balances.

Other Non-Financial Assets Other Non-Financial Assets includes Inventories and Other Non-Financial Assets. Other Non-Financial Assets is estimated to be $42.8 million as at 30 June 2014, an increase of $6.6 million or 18.2 per cent above the 2012-13 Budget estimate of $36.2 million.


LIABILITIES Total Liabilities is estimated to be $7 483.4 million as at 30 June 2014, an increase of $510.9 million or 7.3 per cent above the 2012-13 Budget estimate of $6 972.5 million.

Borrowings

Borrowings is estimated to be $1 126.1 million as at 30 June 2014, an increase of $17.9 million or 1.6 per cent higher than the 2012-13 Budget estimate of $1 108.2 million.

The estimated Borrowings of $1 126.1 million as at 30 June 2014 includes an estimated end of year borrowing of $622.2 million to be undertaken on 30 June 2014. The end of year borrowing has no impact on the Government's net debt as the same amount will be borrowed and invested overnight on 30 June with the Tasmanian Public Finance Corporation, grossing up the amount of cash held and borrowings.

Superannuation Liability

General Government Sector The General Government Superannuation Liability arises from its defined benefit superannuation schemes, which are unfunded or partially unfunded in terms of employer contributions, with the employer share of benefits paid to scheme members being met on an emerging basis.

The unfunded liability is an estimate of accrued past service and expected future service benefits arising from current and former members of the defined benefit (contributory) scheme. The superannuation liability differs from most other financial liabilities, such as debt, which can be called on for repayment at any point in time.

The defined benefit (contributory) scheme was closed in May 1999, however, because of the long term nature of superannuation liabilities, the liability continues to grow as members accrue additional years of service as they approach retirement age. The liability is projected to grow until 2022-23 and then gradually decline over the following five or six decades.

The estimated General Government Superannuation Liability as at 30 June 2014 is $5 150.2 million, which is comprised of the estimated present value of the liability of $6 617.4 million less the estimated fair value of plan assets of $1 467.2 million. This is an increase of $139.2 million, or 2.8 per cent above the Estimated Outcome as at 30 June 2013 of $5 011.0 million.


Table 6.3: General Government Superannuation Liability as at 30 June

2013) Estimated) Outcome)

2014)

) Budget)




$m) $m) $m) $m) $m)

Present Value of Superannuation Liability 6 471.2 6 617.4 6 750.4 6 860.9 6 954.1

Fair Value of Plan Assets (1 460.2) (1 467.2) (1 468.3) (1 461.5) (1 444.9)

Total 5 011.0 5 150.2 5 282.1 5 399.3 5 509.2

Actuarial estimates of the superannuation liability are based on a wide range of economic, financial and demographic assumptions.

Over time, actual outcomes can vary from those assumed by the State Actuary due to factors such as salary growth, investment returns, the number of resignations and retirements, pensioner mortality, indexation rates applied to pensions (linked to the Consumer Price Index) and members' preferences for either lump sum benefits or pensions. The assumptions are therefore reviewed by the Actuary periodically.

Since 2009-10, due to the volatility of the bond market and the long-term nature of the liability, the Budget projections of the Superannuation Liability do not use the current Australian Government long-term bond rate. The 2012-13 Budget projections were based on an average discount rate of 6.0 per cent. The 2013-14 actuarial estimates of the present values of the unfunded Superannuation Liability are based on an average discount rate of 5.5 per cent. Treasury has revised this rate downwards by 50 basis points after an analysis of Reserve Bank of Australia historical data and consider that the revised discount rate appropriately reflects the average bond rate over the life of the superannuation liability.

There is a strong inverse relationship between the average discount rate and the valuation of the Superannuation Liability. Chart 6.2 shows the impact of an increase or decrease of one per cent in the average discount rate used to value the General Government Superannuation Liability.


Chart 6.2: Sensitivity Analysis of the General Government Superannuation Liability as at 30 June

5 500

6 000

6 500

7 000

7 500

8 000

2012-13 2013-14 2014-15 2015-16 2016-17

$ m

illio

n

Base Rate plus 1% Base Rate (5.5%) Base Rate minus 1%

While movements in discount rates will have a significant impact on the valuation of the Superannuation Liability at any point in time, these discount rate movements do not impact on the nominal cash flows required to meet the emerging cost of benefits payable to members.

The nominal cash flows required to meet the emerging cost of General Government superannuation benefits payable to members as at 30 June 2012 is provided on page 91 of the 2011-12 Treasurer's Annual Financial Report. A revised schedule of undiscounted cash flows will be provided in the 2012-13 Treasurer's Annual Financial Report to be published by 31 October 2013.

Further information regarding the General Government Superannuation Liability and the Government's strategies to manage the Liability is provided later in this chapter.


Total State Sector The estimated Total State Superannuation Liability as at 30 June 2014 is $5 722.2 million, which is comprised of the estimated present value of the liability of $7 350.3 million less the estimated fair value of plan assets of $1 628.1 million. This is an increase of $156.0 million, or 2.8 per cent above the Estimated Outcome as at 30 June 2013 of $5 566.2 million.

Table 6.4: Total State Superannuation Liability as at 30 June

2013) Estimated) Outcome)

2014)

) Budget)




$m) $m) $m) $m) $m)

Present Value of Superannuation Liability 7 186.2 7 350.3 7 499.3 7 623.4 7 727.9

Fair Value of Plan Assets (1 620.0) (1 628.1) (1 629.5) (1 622.1) (1 603.8)

Total 5 566.2 5 722.2 5 869.8 6 001.3 6 124.1

Chart 6.3 shows the impact of an increase or decrease of one per cent in the discount rate used to value the Total State Superannuation Liability.

Chart 6.3: Sensitivity Analysis of the Total State Superannuation Liability as at 30 June

5 500

6 000

6 500

7 000

7 500

8 000

8 500

9 000

2012-13 2013-14 2014-15 2015-16 2016-17

$ m

illio

n

Base Rate plus 1% Base Rate (5.5%) Base Rate minus 1%


The nominal cash flows required to meet the emerging cost of Total State superannuation benefits payable to members as at 30 June 2012 is provided on page 91 of the 2011-12 Treasurer's Annual Financial Report. A revised schedule of undiscounted cash flows will be provided in the 2012-13 Treasurer's Annual Financial Report to be published by 31 October 2013.

Employee Entitlements

This category includes provisions for accrued salaries, annual leave and long service leave.

Employee Entitlements is estimated to be $673.6 million as at 30 June 2014, an increase of $153.2 million or 29.4 per cent above the 2012-13 Budget estimate of $520.4 million. The increase in Employee Entitlements primarily reflects revaluation and finalisation of the transfer of liabilities from the Department of Health and Human Services to the Tasmanian Health Organisations.

Payables

Payables is estimated to be $115.6 million as at 30 June 2014, an increase of $25.7 million, or 28.6 per cent above the 2012-13 Budget estimate of $89.9 million. The increase primarily reflects a more accurate estimate, after taking into account 2012 actual balances that were not known at the time of preparing the 2012-13 Budget.

Other Liabilities Other Liabilities is estimated to be $417.9 million as at 30 June 2014, an increase of $141.1 million, or 51.0 per cent above the 2012-13 Budget estimate of $276.8 million. The increase primarily reflects recognition of the Asbestos Compensation Fund in the Department of Justice.


MANAGING THE STATE'S SUPERANNUATION AND INSURANCE LIABILITIES The following section provides further information on the State's Superannuation Liability and the management of the State's self insured risks through the Tasmanian Risk Management Fund.

General Government Superannuation Liability

The State's Superannuation Liability arises from its defined benefit superannuation schemes, which are unfunded or partially unfunded in terms of employer contributions, with the employer share of benefits paid to scheme members being met on an emerging basis. All defined benefits schemes have now been closed to new members.

The unfunded Superannuation Liability is an estimate with respect to accrued past service and expected future service benefits arising from current and former members of the Retirement Benefits Fund defined benefit (contributory) scheme. The Superannuation Liability differs from most other financial liabilities, such as debt, which can be called on for repayment at any particular point in time.

Given the magnitude of the longer–term funding obligation, due to ongoing growth in member benefit outlays, it is prudent for the Government to ensure that the emerging costs are appropriately budgeted for over the long term and the funding burden is spread as equitably as possible over time.

From 2012-13, the emerging cash cost of defined benefit superannuation payments is being met from the Consolidated Fund, funded partly by agency contributions and by an adjusted Reserved by Law contribution, which will comprise the balance of the Government's share of pension and lump sum benefit costs.

From a budget management perspective, the key funding responsibility is to meet this emerging cost over time. Table 6.5 shows the State Actuary's estimates of employer contribution payments for superannuation (including pensions and lump sum payments) in relation to General Government Sector defined benefit schemes.

Table 6.5: General Government Superannuation Payments

2011-12)

2012-13) Estimated)

2013-14)

2014-15) Forward)

2015-16) Forward)

2016-17) Forward)

Actual) Outcome) Budget) Estimate) Estimate) Estimate)

$m) $m) $m) $m) $m) $m)

Superannuation Payments 219.0 215.8 236.1 246.7 264.6 272.2

The Government remains committed to meeting its share of the cost of lump sum and pension payments to beneficiaries of the defined benefit (contributory) scheme.

In the 2013-14 Budget and over the Forward Estimates period, there are sufficient inflows from the Reserved by Law contribution and agency contributions to meet the emerging cost of benefits paid.


TASMANIAN RISK MANAGEMENT FUND Purpose of the Fund The Tasmanian Risk Management Fund was established on 1 January 1999 to provide a whole-of-government approach to funding and managing the insurable liabilities of inner-Budget agencies.

Agencies are covered for the majority of insurable risks to which they are exposed or for which they choose to accept responsibility and the Fund agrees to cover, including:

• personal injury (including workers' compensation and personal accident);

• property (including buildings and contents, business interruption, motor vehicles, machinery, marine hull, transit and fraud);

• liability (including public and products, professional, and directors' and officers' liability);

• medical liability; and

• travel.

All classes are self-insured by the Fund except for marine hull and travel, which remain insured through the private sector, as this is more cost-effective than self-insurance for these two categories of risk. The Fund also obtains external reinsurance for the Tasmanian Museum and Art Gallery collection to meet the cost of losses between $5 million and $45 million.

Performance of the Fund The Fund operates on a cost recovery basis with all inner-Budget agencies making contributions each year in order to build up reserves to meet current and emerging costs. Contributions are based on advice from an independent actuary and are adjusted over time according to the claims experience of agencies.

In recent years, agency contributions have remained relatively stable apart from general property and medical liability contributions. General property contributions have continued to increase significantly, mainly due to continuing poor claims experience with property losses being substantially higher than in previous years. A decline in the medical liability funding position resulted in a significant increase in contributions for 2012-13, ending several years of material contribution decreases in this category of risk.

In 2013-14, significant increases are expected in workers' compensation and medical liability contributions, with a moderate increase in general property contributions. The increase in workers' compensation contributions is mainly attributable to higher assumed claim costs, a higher expense loading and additional contributions to fund the current shortfall in assets in this risk area. The increase in both larger claims and in the average small claim size assumption has contributed to the weakening funding position of the medical liability risk category, resulting in a sharp increase in contributions. The trend of increasing general property contributions will continue in 2013-14, reflecting higher claim losses experienced in recent years and the need to rebuild the provision for significant claims.


Contributions for the other risk categories are expected to remain relatively consistent with the exception of motor vehicle contributions. The funding position in this risk category has been recognised with a modest decrease in contributions. Overall, total agency contributions are estimated to increase from $49.4 million in 2012-13 to $54.1 million in 2013-14.

In terms of the financial position of the Fund, it is expected that as at 30 June 2014 the Fund will have assets of $191.6 million and liabilities of $194.9 million. This will result in the Fund being in a net liability position of $3.3 million, as shown below in Table 6.6. This outcome is mainly attributable to increased outstanding liabilities in the personal injury and medical liability categories, resulting from unfavourable large claims experience in the medical liability risk area and generally higher claims costs experienced in recent periods for the workers' compensation portfolio. The Fund's Actuary takes into account the level of assets and liabilities in each risk category when determining annual contributions. The aim of matching assets and liabilities is reflected in the forward estimates in which the income derived from contributions and return rates will offset the increase in liabilities over time.

Table 6.6: Financial Position of the Tasmanian Risk Management Fund as at 30 June

2012 2013 2014 2015 2016 2017

Actual Estimated Outcome Budget

Forward Estimate

Forward Estimate

Forward Estimate

$m) $m) $m) $m) $m) Current Assets

Carried Forward Cash Equivalent Balance1 177.8 180.7 190.4 200.5 211.2 222.5

Receivables 1.2 1.2 1.2 1.2 1.2 1.2

179.0 181.9 191.6 201.7 212.4 223.7 Liabilities2

Personal Injury 80.7 84.8 89.5 94.2 98.9 103.7

Property 6.3 3.4 3.6 3.7 3.9 4.0

Motor Vehicle 0.2 0.2 0.2 0.2 0.2 0.3

Liability 8.8 9.7 10.1 10.5 10.9 11.3

Medical 70.2 85.4 89.3 93.4 97.8 102.6

Payables 2.2 2.2 2.2 2.2 2.2 2.2

168.4 185.7 194.9 204.2 213.9 224.1 Net Assets 10.6 (3.8) (3.3) (2.5) (1.5) (0.4)

Notes: 1. Includes the balance from the previous year's outcome with adjustments for expected returns on investments, with

return rates set to ensure the long-term matching of increases in liabilities as provided by the Fund's Actuary. 2. Liabilities are calculated by the Fund's Actuary as at 31 December 2012.


7 INFRASTRUCTURE

INVESTMENT

Features

In 2013-14, the planned level of infrastructure investment is $350.1 million and will include:

$22.0 million for schools and education infrastructure;

$108.7 million for hospitals and health infrastructure;

$27.8 million for housing;

$4.0 million for the ICT Fund;

$163.4 million for roads infrastructure;

$16.4 million for prisons;

$7.0 million for tourism, recreation and culture; and

$800 000 for other infrastructure.

In addition to the $350.1 million of planned infrastructure investment, it is estimated that $81.4 million

will be spent by agencies on general asset maintenance in 2013-14.

7.2 Infrastructure Investment

OVERVIEW In 2013-14, total expenditure by General Government Sector agencies on infrastructure related projects is

estimated to be is $350.1 million, while over the 2013-14 Budget and Forward Estimates period, the

Government will invest $1.4 billion in infrastructure projects.

The Government's Infrastructure Investment program is designed to support economic growth and jobs, and

maintain effective Government service delivery. To achieve these aims, the Government will invest in:

health and housing infrastructure;

road development and maintenance;

education infrastructure;

building construction and maintenance;

information technology systems and development; and

appropriate land acquisitions.

This chapter provides information on infrastructure investment in the General Government Sector.

Infrastructure investments made by Government Business Enterprises or State-owned Companies are

outside the General Government Sector and therefore not included in the definition of infrastructure

investment for the purpose of this chapter.

Ongoing strong investment in State infrastructure has always been a key policy of the Tasmanian

Government. This has provided improved infrastructure for Tasmania and supported the provision of a wide

range of services to the community. Together with the injection of significant Australian Government

funding, it has also assisted in supporting the Tasmanian economy.

The Government's Fiscal Strategy requires investment in core General Government infrastructure to be

maintained to support the delivery of Government services and to foster economic and industry

development. The Fiscal Strategy requires that the level of infrastructure investment is measured by the

extent to which capital expenditure exceeds depreciation.

Historically, annual infrastructure investment levels have been in the range of mid $100 million to high

$200 million. However, in 2009-10 and 2010-11 infrastructure investment was in the range of low to mid

$700 million. Infrastructure investment in both of these years was exceptionally high, particularly due to the

Australian Government's Nation Building – Economic Stimulus Plan. Infrastructure investment decreased in

2011-12 but still remained higher than historical levels prior to the Global Financial Crisis. While the State's

financial position will not enable recent above average infrastructure levels to continue, significant

infrastructure investment still remains at low to mid $300 million per annum, which is well above historic

averages.

Chart 7.1 outlines the actual infrastructure investment from 1998-99 to 2011-12 and the 2012-13 Budget

and Forward Estimates.


Chart 7.1: Infrastructure Investment, 1998-99 to 2016-17

0

100

200

300

400

500

600

700

800

19

98

-99

19

99

-00

20

00

-01

20

01

-02

20

02

-03

20

03

-04

20

04

-05

20

05

-06

20

06

-07

20

07

-08

20

08

-09

20

09

-10

20

10

-11

20

11

-12

20

12

-13

20

13

-14

20

14

-15

20

15

-16

20

16

-17

$ m

illio

n

Actual Infrastructure Investment Provision for Future Infrastructure Investment

Future Australian Government Road Funding Allocated Infrastructure Investment

Structured Infrastructure Investment Review Process

In 2010-11, the government introduced the Structured Infrastructure Investment Review Framework. The

Framework includes the Road Planning Process managed by the Department of Infrastructure, Energy and

Resources and the Structured Infrastructure Investment Review Process (SIIRP) managed by the

Department of Treasury and Finance.

SIIRP is a staged review and assessment process for General Government Sector infrastructure investment

proposals. The process ensures that infrastructure investment proposals, funded from the State Budget:

appropriately meet the needs of the community;

have been properly scoped and planned; and

are based on reliable and realistic cost estimates.

Infrastructure investment proposals are subject to a series of decision points prior to being considered for

funding and are required to meet reporting requirements during the development and following the

completion of the project. At each of the points an assessment is made as to whether the project should

proceed to the next stage or be required to undertake further work for assessment, or be abandoned.

Submissions for infrastructure investment proposals are requested annually and an allocation of $2.0 million

per annum is provided through Finance-General to support infrastructure investment proposal identification

and planning.

Further information on the SIIRP is provided at www.treasury.tas.gov.au.

http://www.treasury.tas.gov.au/


Infrastructure Investment Outside of the General Government Sector

Infrastructure investments made by Government Business Enterprises or State-owned Companies are

outside the General Government Sector and are therefore not included as infrastructure investment for the

purpose of this chapter.

The 2013-14 Budget does, however, include significant additional funding to assist two Government

businesses to undertake major infrastructure works.

Tasports

During 2013-14, the Government will provide $17.5 million over four years for remedial works at Sullivans

Cove, Inspection Head, Stanley and Strahan. Remedial works include concrete and reinforcing repairs to

the corrosion in the concrete and steel structures, and deterioration to timber elements. Funding of this

remedial work will enable the continued use of these key community and tourist areas.

Port Arthur Historic Site Management Authority (PAHSMA)

In 2013-14, the Government will provide $3.0 million to PAHSMA to address a number of concerns

regarding the structural integrity of the penitentiary building. PAHSMA is seeking a further $3.0 million

contribution from the Australian Government and an internal contribution of $2.3 million for a total

$8.3 million contribution to this project.


INFRASTRUCTURE INVESTMENT PROJECTS BY

AGENCY Table 7.1 details the infrastructure investment expenditure by agency, including the provision for future

infrastructure investment, while Table 7.2 details the estimated cost of individual infrastructure investment

projects by agency. Costs will vary as projects proceed to tender and some re-scheduling of individual

projects is likely to occur over the life of projects.

Table 7.1: Infrastructure Expenditure by Agency1

2012-13

Budget

2013-14

Budget

2014-15

Forward

Estimate

2015-16

Forward

Estimate

2016-17

Forward

Estimate

$m $m $m $m $m

Economic Development, Tourism and the Arts 11.3 0.3 0.3 .... ....

Education 37.4 22.0 16.4 10.4 16.2

Finance-General .... 4.0 6.0 8.0 10.0

Health and Human Services 200.5 136.5 196.5 153.6 171.6


Justice 15.4 16.4 .... .... ....

Police and Emergency Management 10.3 .... .... .... ....

Premier and Cabinet 0.3 0.3 0.3 0.3 0.3

Primary Industries, Parks, Water and Environment 13.6 7.3 11.8 1.7 0.6

ALLOCATED INFRASTRUCTURE EXPENDITURE 437.7 350.1 341.8 256.2 282.7

Provision for Future Infrastructure Investment2 .... .... .... 35.0 50.0

Estimated Future Australian Government Roads

Funding3 .... .... 35.0 35.0 35.0

TOTAL INFRASTRUCTURE EXPENDITURE 437.7 350.1 376.8 326.2 367.7

Notes: 1. This table includes expenditure (both purchases of non-financial assets and associated expenses) for all

infrastructure projects, but does not include minor asset purchases for non-infrastructure projects. For these reasons, the Table is not equivalent to the Net Acquisition of Non-Financial Assets presented in Appendix 1 - Uniform Government Reporting. Table 7.4 provides a reconciliation of Purchases of Non-Financial Assets to Total Infrastructure Expenditure.

2. In addition to the allocated infrastructure investment expenditure, the Government has set aside $85.0 million of capital provisions over the Forward Estimates period, which will be allocated to infrastructure investment projects that have met the requirements of the Structured Infrastructure Investment Review Process and also provide capacity to meet cost variation and re-scheduling of projects.

3. The existing five-year roads funding agreement with the Australian Government expires at the end of 2013-14. Negotiations between the State and Australian Governments are currently underway for a new agreement. Based on Australian Government road funding provided over the past ten years, an Estimated Future Australian Government Roads Funding allocation of $35.0 million per annum has been included in the Forward Estimates to provide a more accurate estimate of the likely level of infrastructure expenditure.


Table 7.2 provides infrastructure investment project details by agency.

Table 7.2: Infrastructure Investment Project Details by Agency1

Start Complete

Estimated

Total

Cost

2013-14

Budget

2014-15

Forward

Estimate

2015-16

Forward

Estimate

2016-17

Forward

Estimate

$m $m $m $m $m

DEPARTMENT OF ECONOMIC

DEVELOPMENT, TOURISM AND

THE ARTS

Silverdome Upgrade 2013 2015 0.6 0.3 0.3 .... ....

TOTAL 0.3 0.3 .... ....

DEPARTMENT OF EDUCATION

Bridgewater Child and Family

Centre2 2009 2013 8.0 1.0 .... .... ....

Brooks High School 2013 2015 9.3 1.2 8.1 .... ....

Devonport High School 2014 2015 0.9 .... 0.2 0.7 ....

George Town Child and Family

Centre3 2013 2014 3.3 3.3 .... .... ....

Glenorchy Primary School 2015 2017 4.0 .... .... 0.5 3.5

Kings Meadows High School 2015 2016 2.2 .... 0.1 2.1 ....

Lauderdale Primary School 2015 2016 1.6 .... 0.1 1.5 ....

LINC Tasmania - Learning and

Information Network Centres 2009 2014 14.6 3.6 .... .... ....

Montrose Bay High School 2015 2017 5.8 .... .... 1.2 4.6

New Town High School 2013 2015 2.8 0.8 2.0 .... ....

North West Special School 2016 2016 0.8 .... .... 0.3 0.6

Parklands High School 2015 2017 4.1 .... .... 0.5 3.6

Post Year 10 Infrastructure

Support2 Ongoing na 0.9 0.9 0.9 0.9

Renewing our Education System 2010 2014 1.2 1.2 .... .... ....

School Transition Fund 2012 2014 2.9 2.3 .... .... ....

Smithton High School 2013 2015 3.5 0.9 2.6 .... ....

South Hobart Primary School 2015 2017 3.6 .... .... 0.5 3.1

Trade Training Centres2 2011 2016 22.1 6.9 2.3 2.4 ....

TOTAL 22.0 16.4 10.4 16.2


Table 7.2: Infrastructure Investment Project Details by Agency

(continued)1

Start Complete

Estimated

Total

Cost

2013-14

Budget

2014-15

Forward

Estimate

2015-16

Forward

Estimate

2016-17

Forward

Estimate

$m $m $m $m $m

FINANCE-GENERAL

ICT Project Fund Ongoing na 4.0 6.0 8.0 10.0

4.0 6.0 8.0 10.0

DEPARTMENT OF HEALTH AND

HUMAN SERVICES

Housing Infrastructure

Church Street Youth

Accommodation and Training

Facility 2013 2015 10.4 3.4 7.0 .... ....

Housing Fund 2008 2023 60.0 3.8 1.4 0.9 1.0

Housing Program4 Ongoing na 20.6 18.7 16.5 15.6

27.8 27.1 17.4 16.6

Health Infrastructure

Flinders Island Multi Purpose

Centre Upgrade5 2010 2014 6.0 4.0 .... .... ....

Glenorchy – Tier Three Community

Health Services Facility 2010 2016 21.0 7.0 7.0 5.7 ....

Hospital Equipment Fund 2007 2014 25.0 4.1 .... .... ....

Kingston – Tier Three Community

Health Services Facility 2013 2016 6.5 2.3 3.3 0.9 ....

Latrobe Dental Clinic 2013 2014 0.4 0.4 .... .... ....

Launceston General Hospital Acute

Medical and Surgical Unit 2009 2014 40.0 14.0 0.7 .... ....

Launceston Integrated Care Centre

(ICC)6 2008 2014 22.5 1.6 .... .... ....

Mersey Hospital Upgrade 2013 2014 1.9 1.8 .... .... ....

National Health and Hospitals

Network Reform2 2010 2014 30.7 6.7 .... .... ....

Neighbourhood House Program 2013 2015 4.0 2.0 2.0 .... ....

Ravenswood Community Health

Centre 2013 2016 2.4 0.4 1.5 0.5 ....

Rural Breast Screening Clinics 2013 2015 1.3 0.8 0.5 .... ....

State-wide Cancer Services4,7 2010 2015 63.0 23.0 6.5 .... ....

68.1 21.5 7.1 ....



(continued)1

Start Complete

Estimated

Total

Cost

2013-14

Budget

2014-15

Forward

Estimate

2015-16

Forward

Estimate

2016-17

Forward

Estimate

$m $m $m $m $m

Royal Hobart Hospital

Redevelopment Funding

Royal Hobart Hospital (Hospitals

Capital Fund) 2009 2014 100.0 27.6 .... .... ....

Royal Hobart Hospital

Redevelopment4 2011 2017 365.0 .... 77.4 129.0 155.0

Royal Hobart Hospital Women's

and Children's Hospital2 2010 2015 100.0 13.0 70.6 .... ....

40.6 148.0 129.0 155.0

TOTAL 136.5 196.5 153.6 171.6

DEPARTMENT OF

INFRASTRUCTURE, ENERGY

AND RESOURCES

Roads Program Expenditure (for

details refer to Table 7.3) 163.4 110.6 82.3 84.0

TOTAL 163.4 110.6 82.3 84.0

DEPARTMENT OF JUSTICE

Launceston Reception Prison 2013 2014 1.0 1.0 .... .... ....

Medium Security Accommodation 2013 2014 0.5 0.5 .... .... ....

Prison Infrastructure

Redevelopment Program Stage D 2011 2014 20.2 14.9 .... .... ....

TOTAL 16.4 .... .... ....

DEPARTMENT OF PREMIER AND

CABINET

Service Tasmania Shops Capital

Investment 2006 Ongoing na 0.3 0.3 0.3

0.3

TOTAL 0.3 0.3 0.3 0.3



(continued)1

Start Complete

Estimated

Total

Cost

2013-14

Budget

2014-15

Forward

Estimate

2015-16

Forward

Estimate

2016-17

Forward

Estimate

$m $m $m $m $m

DEPARTMENT OF PRIMARY

INDUSTRIES, PARKS, WATER

AND ENVIRONMENT

Crown Land Services - Structural

Asset Upgrades Ongoing na 0.6 0.6 0.6 0.6

Three Capes Track4 2010 2015 25.3 6.7 11.3 1.2 ....

TOTAL 7.3 11.8 1.7 0.6

TOTAL ALLOCATED

INFRASTRUCTURE PROJECTS 350.1 341.8 256.2 282.7

Notes: 1. This table does not include expenditure from the Water Infrastructure Fund, as expenditure from the fund is in the

form of grants or equity injections outside of the General Government sector. 2. This project is fully funded by the Australian Government. 3. The funding for the Georgetown Child and Family Centre was previously allocated as part of the Child and Family

Centre (CFC) project to construct 11 CFCs around Tasmania. The CFC project ran between 2009-2013 with a final total project allocation of $31.1 million.

4. This project is funded by both the State and Australian Government. More details are provided in the relevant agency chapter in Budget Paper No 2 Government Services.

5. Total funding for the Flinders Island Multi Purpose Centre Upgrade is $6.2 million and includes an additional $200 000 contribution from THO-North.

6. Total funding for the Launceston Integrated Care Centre (ICC) is $22.5 million, consisting of $15.0 million from the Capital Investment Program, $4.5 million from the University of Tasmania and $3.0 million from the Infrastructure Tasmania Fund.

7. Total funding for State-wide Cancer Services is $63.0 million, consisting of $36.3 million from the Australian Government, $23.9 million from the State Government and donated contributions of $1.6 million from the Elphinstone Group Companies, $600 000 from the Menzies Centre and $600 000 from the Cancer Council.


MAJOR AREAS OF INFRASTRUCTURE

INVESTMENT The most significant areas of infrastructure expenditure are roads, hospitals and health infrastructure,

housing and education. This section provides details on the key projects in each of the areas of

infrastructure expenditure.

Education

In 2013-14, total education infrastructure expenditure is budgeted to be $22.0 million. The major

infrastructure projects include:

George Town Child and Family Centre

In 2013-14 capital funding of $3.3 million will be expended on the establishment of a state funded

Child and Family Centre in George Town. This finalises a $31.1 million state funded project to establish and

construct 11 Child and Family Centres across Tasmania. Centres have already been established and are

operating at Beaconsfield, Queenstown, East Devonport, Clarence Plains, Ravenswood, Risdon Cove,

Break O’Day, Chigwell, Derwent Valley and Burnie.

Staff in these centres are continuing to work with local schools, families, service providers, the local

community, and government and non-government organisations to provide quality, accessible and

integrated programs and services for children, their families and communities.

School Transition Fund

In 2013-14, $2.3 million will be available to support schools in partnership with their communities, that wish

to transition to a new way of delivering education. This is the second and final year of a $2.9 million program

that provides opportunities for schools and their communities to be at the centre of decision-making relating

to the future of their schools.

Learning and Information Network Centre Operations

In 2013-14, $3.6 million has been allocated for the construction of a LINC at George Town. This will be the

final LINC to be constructed under funding provided under a $14.6 million initiative to construct four LINCs in

regional centres. LINCs have already established in Bridgewater, Scottsdale and Queenstown under this

initiative. Construction works at George Town have been delayed while the community consultation process

is undertaken.

Trade Training Centres

In 2013-14, $6.9 million has been allocated to construct Trade Training Centres under the

Trade Training Centres in Schools National Partnership. $4.0 million of this funding will support the

finalisation of construction work at centres in Huonville, St Helens and the Southern project which includes

development at both Sorell and Triabunna. Centres are already operating in Huon Valley, Circular Head,

Break O’Day, Dorset, Bridgewater and George Town municipalities. The remaining $2.8 million will be

allocated to new projects that are currently being evaluated and will be announced during 2013.


Hospitals and Health

In 2013-14, total health infrastructure expenditure will be $108.7 million. The major infrastructure projects

include:

Glenorchy – Tier Three Community Health Services Facility – total funding from the State Government is

$21.0 million. The project will expand and replace the existing Glenorchy Community Health Centre on a

new greenfield site. It is planned for the Tier Three Integrated Care Centre to be a standalone facility

adjacent to the Glenorchy City Central Business District. It is estimated that $7.0 million of the

$21.0 million total allocation will be spent in 2013-14. The project is expected to be completed in 2016.

Launceston General Hospital Acute Medical and Surgical Unit - total funding of $40.0 million was

provided in 2009-10 by the Australian Government over four years for the construction of a new Acute

Medical Assessment Unit and the upgrade of the Surgical Services Unit and Intensive Care Unit.

Services proposed include providing patient assessment, early treatment and care planning. It is

estimated that $14.0 million of the total $40.0 million allocation will be spent during 2013-14, with the

project expected to be completed by 2014.

Royal Hobart Hospital Redevelopment – total funding of $565.0 million has been provided for

redevelopment of the Royal Hobart Hospital. Funding for this project is provided for three different

elements:

Royal Hobart Hospital Redevelopment - funding for a major redevelopment of the Royal Hobart

Hospital was secured following an application in late 2010 to the Board of the Health and Hospitals

Fund (HHF). The $365.0 million commitment to redevelop the Royal Hobart Hospital is a combined

Australian and State Government project, with $240.0 million being provided by the Australian

Government and $125.0 million provided by the State Government;

Royal Hobart Hospital Women's and Children's Precinct - $100.0 million has been provided by the

Australian Government to fund the construction of a Women's and Children's Precinct within the

broader redevelopment program of the Royal Hobart Hospital. In 2013-14, $13.0 million will be

available to commence construction stage 1 of the new inpatient precinct; and

Royal Hobart Hospital – in 2013-14, $27.6 million will be allocated from the State Government's

$100.0 million Hospitals Capital Fund to commence stage 1 of the new inpatient precinct.

State-wide Cancer Services - funding for cancer services at the Royal Hobart Hospital, the Launceston

General Hospital, the North West Regional Hospital and for a state-wide IT system has been secured to

build specialist Cancer Centres within those hospital precincts. The total commitment is $63.0 million,

with $36.3 million from the Australian Government, $23.9 million from the State and donated

contributions from the Elphinstone Group Companies ($1.6 million), the Menzies Centre ($600 000) and

the Cancer Council ($600 000). In 2013-14, funding of $23.0 million will be available. At the North West

Regional Hospital $21.3 million will be utilised on infrastructure for Magnetic Resonance Imagery (MRI)

diagnostic equipment, medical oncology and radiation therapy services, as well as associated education

and support facilities. The development of supporting IT technology for the Cancer Centres will receive

$1.7 million in 2013-14.

Neighbourhood Houses - Funding of $4.0 million is being provided to expand the current capital and

maintenance program across the state. Priorities for this funding will be agreed in collaboration with the


Tasmanian Association of Community Houses (TACH) and the centres themselves. In 2013-14, it is

anticipated that $2.0 million will be expended on the Neighbourhood House Program.

Housing

In 2013-14, total housing infrastructure funding is $27.8 million. This funding includes $3.4 million for the

Church Street Youth Accommodation and Training Facility, $3.8 million from the Housing Fund to increase

the supply of social housing and $20.6 million from the Housing Program.

Church Street Youth Accommodation and Training Facility.

Total funding of $10.4 million is provided by the State Government to construct the Church Street Youth

Accommodation and Training Facility. The project will deliver a mixed accommodation facility that will

provide tenants with stable, supported, long term accommodation, which will enable them to access key

services, to reconnect with their family and community and to focus on employment, education and training

opportunities. In 2013-14, it is anticipated that $3.4 million will be spent on the Church Street Youth

Accommodation and Training Facility project.

Housing Fund

The Housing Fund was established in 2007-08 with an allocation of $60.0 million for the purpose of

increasing the supply of affordable housing. In 2013-14, it is anticipated that $3.8 million will be spent from

the Housing Fund on public projects.

Major projects to be funded from the Housing Fund in 2013-14 include:

contributions towards Housing Reform which will support the development of non-government housing

organisations, through the progression of stock management under the Better Housing Futures program

and other strategies to increase the supply of social and affordable housing in Tasmania ($2.6 million);

the continuation of support for the National Rental Affordability Scheme ($900 000); and

the acquisition of land in the North West for the development of affordable housing sites ($300 000).

Housing Program

In 2013-14, it is anticipated that $20.6 million will be expended from the Housing Program. Major Housing

Program projects include:

the Stainforth Court Redevelopment project ($5.0 million);

provision of emergency accommodation facility ($1.2 million)

Huntingfield land subdivision ($1.0 million);

Somerset land subdivision ($1.0 million);

Watchorn Street, South Launceston ($1.6 million); and

contributions towards Housing Reform ($1.3 million).


Information Communications Technology Fund

The Tasmanian Government has traditionally employed an agency based model for managing and planning

most of its Information Communications Technology (ICT) projects. This model has suited government well

in the past. However, the development of a more coordinated and strategic approach to key elements of ICT

within government is required to meet a range of pressures including:

the challenges and opportunities facing the State are changing more rapidly;

state policy responses increasingly involve co-ordinated responses from many agencies;

national policy responses increasingly involve collaboration by many governments; and

Budget pressures are significant.

In 2013-14, the Government will establish an ICT Project Fund, with a funding allocation of $4.0 in 2013-14,

increasing to $10.0 million per annum in 2016-17. This initiative will establish a provision of funding for

significant State ICT projects.

The ICT Policy Board will be responsible for determining which projects will be funded from the ICT Project

Fund. Potential projects include: the Integrated Tasmanian Government Contact Centre, Budget Information

Management System, State Revenue Systems, Criminal Justice Information Management System,

Emergency Despatch System and Student Management System Replacement.

This funding is included in Finance-General for Budget purposes.

Law and Order

In 2013-14, the Department of Justice will invest $16.4 million in prison infrastructure. The projects include:

Launceston Reception Prison - The existing Launceston Reception Prison (LRP) facility was originally

built as a Police watch-house in the early 1970s as part of the Launceston Police Headquarters. The site

is now a Reception Prison and housing longer term prisoners. Due to the age of the facility there are both

safety issues for prisoners and security issues for staff of the complex. This funding is to address the

immediate security and safety issues at the complex.

Medium Security Accommodation - The original design of the medium security facility was intended to

provide a more 'normal' domestic environment for prisoners, with less structural fortification than the

maximum security area. Recent incidents in these units have however highlighted some security matters

that need to be addressed. This funding is to address these security requirements.

Prisons Infrastructure Redevelopment Program – Stage D - Construction of the facilities associated with

the Prisons Infrastructure Redevelopment Program Stage D commenced in 2012-13. Construction is

expected to be completed during 2014.

Roads and Rail

In 2013-14, total roads expenditure is $163.4 million. This includes State Government funding of

$132.5 million and Australian Government funding of $30.9 million. Further details of the Roads Program

are provided in a separate section of this chapter.


An equity contribution of $21.4 million will be provided in 2013-14 to the Tasmanian Rail Railway Pty Ltd for

the critical upgrade of the Tasmanian rail network infrastructure and the Company's rolling stock assets.

Tourism, Recreation and Culture

In 2013-14, total tourism, recreation and cultural infrastructure expenditure is $7.0 million. This includes

expenditure by the Department of Primary Industries, Parks, Water and Environment ($6.7 million), and

expenditure by the Department of Economic Development, Tourism and the Arts ($300 000). These projects

are described below.

Silverdome Capital Upgrade - The Silverdome is a key sporting and community asset located in the

Launceston municipality responsible for hosting a wide range of events. This project provides funding for

vital upgrades to ensure that the Silverdome complex complies with workplace health and safety

regulations.

Three Capes Track - Work on the Government's $12.8 million initiative to establish the Three Capes

Track will continue to be progressed in 2013-14. The State Government's funding will be matched by

Australian Government funding of $12.5 million. Ultimately the walk will take in dramatic vistas of three

capes in the Tasman National Park. The walk will increase Tasmania's profile as an iconic walking

destination and support the growth of tourism on the Tasman Peninsula. During 2013-14 and 2014-15 on

ground works will focus on the upgrading of the existing track and the construction of new track sections

on the eastern peninsula. Overnight hut nodes will be progressed. The target date for completion is

December 2015.


ROADS PROGRAM The Roads Program comprises new works projects and the upgrade and maintenance of established roads.

In 2013-14, total roads expenditure is $163.4 million. This includes a State Government allocation of

$132.5 million and an Australian Government allocation of $30.9 million.

Table 7.3: Roads Program Expenditure

Start Complete

Estimated

Total

Cost

2013-14

Budget

2014-15

Forward

Estimate

2015-16

Forward

Estimate

2016-17

Forward

Estimate

$m $m $m $m $m

STATE FUNDED

Environmental Management Ongoing na 0.5 0.5 0.5 0.6

0.5 0.5 0.5 0.6

Infrastructure Development

Arthur Highway1 2011 2015 18.0 9.0 7.5 .... ....

Bass Highway/Stanley Highway

Junction 2011 2015 1.5 1.1 0.2 .... ....

Bell Bay Intermodal Terminal2 2011 2015 3.9 3.6 .... .... ....

Bell Bay Main Road1 2012 2014 1.0 0.8 .... .... ....

Esk Main Road Upgrading1 2011 2014 5.0 0.4 .... .... ....

Ferry Main Road Kettering upgrade

and Waste Water Treatment

Plant1 2011 2015 8.0 5.1 0.3 .... ....

Infrastructure Development ongoing na 0.1 0.1 0.1 0.1

Huon Highway Upgrade1 2011 2015 8.0 2.0 4.7 .... ....

Mudwalls Road Pavement

Improvement1 2011 2014 8.0 0.4 .... .... ....

Murchison Highway Upgrade3 2011 2015 21.0 11.0 6.0 .... ....

North East Freight Roads2 2009 2014 8.5 4.0 .... .... ....

Port Sorell Main Road2 2012 2014 3.0 2.0 .... .... ....

Richmond Heavy Vehicle Link

Road1 2011 2015 6.0 2.5 2.2 .... ....

Rokeby Main Road1 2011 2015 10.0 7.5 3.3 .... ....

Tarkine Forest Drive 2012 2015 19.2 7.7 6.0 .... ....

Tasman Highway Scottsdale to

Launceston1 2012 2015 4.0 3.0 0.1 .... ....

West Tamar Highway upgrade

between Waldhorn Drive and

Brady's Lookout1 2012 2014 9.0 2.8 0.2 .... ....

63.0 30.5 0.1 0.1


Table 7.3: Roads Program Expenditure (continued)

Start Complete

Estimated

Total

Cost

2013-14

Budget

2014-15

Forward

Estimate

2015-16

Forward

Estimate

2016-17

Forward

Estimate

$m $m $m $m $m


Assistance to Local Government Ongoing na 0.2 0.2 0.2 0.2

Bridge Maintenance Ongoing na 5.3 5.9 6.0 6.0

Bridge Reinstatement

Arthur Highway, Iron Creek 2011 2014 4.5 3.7 .... .... ....

Bruny Main Road, Murphy's Creek

Bridge 2013 2014 0.7 0.3 .... .... ....

Emergency and Flood Repairs Ongoing na 0.5 0.9 0.9 0.9

Heavy Vehicle Bridge

Strengthening, Esk and Railton

Main Road 2013 2014 2.1 2.1 .... .... ....

Maintenance of Other

Infrastructure Ongoing na 0.1 0.1 0.1 0.1

Minor Bridge Reinstatement

Projects Ongoing na 1.8 2.9 3.0 3.0

Road and Bridge Lighting

Maintenance Ongoing na 1.3 1.1 1.1 1.2

Vehicle Mass and Dimension

Management Ongoing na 0.3 0.3 0.3 0.3

Road Reinstatement

Brooker Highway 2015 2016 2.0 .... 1.0 1.0 ....

Investigation and

Implementation of Priority


Lyell Highway 2015 2015 2.0 .... 2.0 .... ....

Midland Highway (between

Melton Mowbray and south of

Perth) 2011 2014 5.9 0.3 .... 1.9 ....

Minor Road Reinstatement


Nubeena Secondary Road (East

and West of Premaydena) 2015 2016 1.3 .... 0.7 0.6 ....

Road Routine Maintenance Ongoing na 17.7 16.6 17.1 17.8

Road Specific Maintenance Ongoing na 9.5 18.6 18.4 18.4

45.3 56.4 58.1 59.5



Start Complete

Estimated

Total

Cost

2013-14

Budget

2014-15

Forward

Estimate

2015-16

Forward

Estimate

2016-17

Forward

Estimate

$m $m $m $m $m

Other Roads Infrastructure

Infrastructure Policy and Planning Ongoing na 2.7 2.8 2.8 2.9

Program Management Ongoing na 2.2 2.3 2.3 2.4

Road Safety and Traffic

Management Ongoing na 6.2 5.3 5.5 5.6

Road Safety

Strategy - Infrastructure Ongoing na 7.5 7.5 7.5 7.5

Transport Infrastructure Ongoing na 5.1 5.2 5.4 5.4

23.7 23.1 23.5 23.8

TOTAL STATE FUNDED ROADS 132.5 110.6 82.3 84.0

AUSTRALIAN GOVERNMENT

FUNDED4

Nation Building Program

Infrastructure Development

Off Network

North East Freight Roads2 2009 2014 34.0 21.0 .... .... ....

Port Sorell Main Road2 2012 2014 1.0 1.0 .... .... ....

22.0 .... .... ....


Road Specific Maintenance Ongoing na 7.3 .... .... ....

7.3 .... .... ....

Other Roads Infrastructure

Road Safety and Traffic

Management Ongoing na 1.6 .... .... ....

1.6 .... .... ....

TOTAL AUSTRALIAN

GOVERNMENT FUNDED ROADS 30.9 .... .... ....



Start Complete

Estimated

Total

Cost

2013-14

Budget

2014-15

Forward

Estimate

2015-16

Forward

Estimate

2016-17

Forward

Estimate

$m $m $m $m $m

TOTAL ALLOCATED ROADS

PROGRAM EXPENDITURE 163.4 110.6 82.3 84.0

Estimated Future Australian

Government Roads Funding5 .... 35.0 35.0 35.0

TOTAL ROADS PROGRAM

EXPENDITURE 163.4 145.6 117.3 119.0

Notes: 1. Funding for these projects has been provided as part of the State Government's $90 million Community Roads

Program. 2. This project includes both State and Australian Government funding. 3. Funding for this project has been provided from the State Government's $21.0 million West Coast Roads Program. 4. $6.3 million of maintenance works previously scheduled for 2013-14 have been brought forward into the 2012-13

financial year. 5. The existing five-year roads funding agreement with the Australian Government expires at the end of 2013-14. At the

time of the finalisation of the Budget, negotiations between the State and Australian Governments were underway for a new agreement. Based on Australian Government road funding provided over the past ten years, an estimated future Australian Government Roads Funding allocation of $35.0 million has been included from 2014-15 onwards, to provide a more accurate estimate of the likely level of infrastructure expenditure that will occur in the Forward Estimates.


RECONCILIATION BETWEEN INFRASTRUCTURE

INVESTMENT AND PURCHASES OF

NON-FINANCIAL ASSETS Purchases of Non-Financial Assets is an accounting classification under the Australian Accounting

Standards. It appears on the Income Statement and Cash Flow Statement and reflects purchases of

non-financial assets such as land, buildings, plant and equipment, infrastructure, and intangible assets.

Whilst the majority of the Purchases of Non-Financial Assets is comprised of Infrastructure Investment

projects, there is a portion of Purchases of Non-Financial Assets expenditure which is not included in the

Infrastructure Investment Chapter. Such items include Budget allocations for:

the Government's fleet management services;

ambulance, surgical and medical equipment;

computer software; and

other smaller capital items.

Conversely, Infrastructure Investment projects can include allocations of expenditure which are not

classified as a Purchase of Non-Financial Assets under the Australian Accounting Standards but are directly

related to infrastructure projects. This expenditure can include items such as employee entitlements,

infrastructure maintenance, Australian Government Loan Repayments and other supplies and consumables.

Table 7.4 provides a reconciliation between the two measures.

Table 7.4: Reconciliation between Purchases of Non-Financial Assets and Infrastructure Investment

2012-13

Budget

2013-14

Budget

2014-15

Forward

Estimate

2015-16

Forward

Estimate

2016-17

Forward

Estimate

$m $m $m $m $m

Purchases of Non-Financial Assets 434.2 344.8 367.3 303.8 335.3

Less Purchases of Non-Financial Assets excluded from

Infrastructure Investment

67.9 53.0 57.1 47.1 39.6

Plus Infrastructure Investment not included in

Purchases of Non-Financial Assets

71.4 58.4 66.7 69.5 71.9

Equals TOTAL INFRASTRUCTURE EXPENDITURE 437.7 350.1 376.8 326.2 367.7

Estimated Outcome Including March Quarterly Report 8.1

8 ESTIMATED OUTCOME INCLUDING MARCH QUARTERLY REPORT

Features

• Following the passage of the Financial Management and Audit Amendment Act 2012, this chapter has been amended to include year-to-date actuals (for the nine months ending 31 March 2013) in accordance with the legislative requirement to present a March Quarterly Report.

• The estimated Net Operating Balance for 2012-13 is a $425.7 million deficit, a $142.6 million deterioration from the 2012-13 Budget estimate of a $283.0 million deficit.

• The estimated Fiscal Balance for 2012-13 is a $441.0 million deficit, a $12.3 million deterioration from the 2012-13 Budget estimate of a $428.6 million deficit.

• Total revenue for 2012-13 is estimated to be $4 606.8 million, $24.8 million or 0.5 per cent below the Budget estimate of $4 631.5 million.

• Total expenses for 2012-13 are estimated to be $5 032.4 million, $117.9 million or 2.4 per cent above the Budget estimate of $4 914.5 million. This includes $62.9 million of funding provided under the Supplementary Appropriation Bill.

The financial results for the General Government Sector include:

• a Net Operating Deficit for the nine months ending 31 March 2013 of $125.5 million;

• a Fiscal Deficit for the nine months ending 31 March 2013 of $42.3 million;

• Net Worth increased by $237.4 million from $11 066.0 million as at 30 June 2012 to $11 303.4 million as at 31 March 2013; and

• Net Debt was negative $352.1 million as at 31 March 2013, compared to negative $408.7 million as at 30 June 2012.

8.2 Estimated Outcome Including March Quarterly Report

INTRODUCTION This chapter presents the 2012-13 Estimated Outcome which is based on agency assessments of indicative additional funding requirements or potential savings and revised whole-of-government revenue estimates. The latest available information prior to the finalisation of the 2013-14 Budget Papers is used to form the Estimated Outcome. Estimates are determined using information from a number of sources including the latest State taxation estimates and advice from the Australian Government, Government Business Enterprises, State-owned Companies and agencies.

Detailed information on the final Outcome for 2012-13 will be published in:

• the Preliminary Outcomes Report, which will be published by 15 August 2013;

• the Treasurer's Annual Financial Report, which will be tabled in Parliament by 31 October 2013; and

• agency Annual Reports, which will be tabled in Parliament by 31 October 2013.

Table 8.1 provides details of the Estimated Outcome for 2012-13, compared to the 2012-13 Budget estimates.

This chapter also meets the information requirements for a March Quarterly Report as specified in Section 26C of the Financial Management and Audit Act 1990. It presents financial results for the nine months ending 31 March 2013 for the General Government Sector and the Consolidated Fund.

A March Quarterly Report is part of the new quarterly reporting framework, given legislative effect in the Financial Management and Audit Amendment Act 2012. The legislation requires that where the State Budget is released after 15 May (45 days before the end of the year), the March Quarterly Report is to be published within the Budget Papers.

The financial statements have been prepared in accordance with applicable Australian Accounting Standards including AASB 1049 Whole of Government and General Government Sector Financial Reporting. Preparation of the Report requires the application of estimation methods in accordance with the principles of AASB 134 Interim Financial Reporting.

As part of the new quarterly reporting framework, a Preliminary Outcomes Report will be issued by 15 August 2013 if the preliminary outcomes result differs materially from the Estimated Outcome published in this chapter.

Detailed information on the final Outcome for 2012-13 will be published in the Treasurer's Annual Financial Report which will be tabled in Parliament by 31 October 2013.


Table 8.1: General Government Income Statement 2012-13) 2012-13) 2012-13) Estimated) March YTD) Budget) Outcome) Actual)

$m) $m) $m) Revenue from Transactions

Grants 2 876.5) 2 790.9) 2 078.4)

Taxation 940.9) 918.9) 684.5)

Sales of Goods and Services 313.8) 336.2) 259.4)

Fines and Regulatory Fees 106.9) 99.8) 79.1)

Interest Income 17.5) 19.5) 14.7)

Dividend, Tax and Rate Equivalent Income 233.0) 230.2) 179.1)

Other Revenue 142.9) 211.3) 162.5)

4 631.5) 4 606.8) 3 457.7 Less Expenses from Transactions

Employee Expenses 2 026.4) 2 047.5) 1 567.5)

Superannuation 236.2) 218.2) 143.7)

Depreciation 248.1) 253.7) 201.8)

Supplies and Consumables 1 022.1) 1 068.5) 720.1)

Nominal Superannuation Interest Expense 260.2) 235.2) 176.4)

Borrowing Costs 14.1) 13.2) 9.6)

Grant Expenses 1 070.0) 1 151.9) 752.5)

Other Expenses 37.4) 44.2) 11.7)

4 914.5) 5 032.4) 3 583.2) Equals NET OPERATING BALANCE (283.0) (425.7) (125.5)

Plus Other Economic Flows - Included in Operating Result

Gain/(Loss) on Sale of Non-Financial Assets (0.2) 4.5) (6.4)

Movement in Equity Investment in the PNFC and PFC Sector 300.5) 199.0) 225.4)

Movements in Superannuation Liability1 ....) 2 035.3) .... )

Other Gains/(Losses) (17.5) 24.6) (35.2)

282.8) 2 263.4) 183.7)

Equals Operating Result (0.2) 1 837.8) 58.2)


Table 8.1: General Government Income Statement (continued) 2012-13) 2012-13) 2012-13) Estimated) March YTD) Budget) Outcome) Actual)

$m) $m) $m) Plus Other Economic Flows - Other Movements in Equity

Revaluations of Non-Financial Assets 248.8) 302.6) 227.0)

Other Non-Owner Movements in Equity (20.7) 442.9) 2.3)

228.1) 745.5) 229.3) Equals Comprehensive Result 227.9) 2 583.3) 287.5)

KEY FISCAL AGGREGATES

NET OPERATING BALANCE (283.0) (425.7) (125.5) Less Net Acquisition of Non-Financial Assets

Purchases of Non-Financial Assets 434.2) 302.5) 147.8)

Less Sales of Non-Financial Assets 40.5) 33.5) 29.3)

Less Depreciation 248.1) 253.7) 201.8)

145.6) 15.3) (83.3)

Equals FISCAL BALANCE (428.6) (441.0) (42.3)

Note: 1. Since 2009-10, due to the volatility of the bond market and the long-term nature of the liability, the Budget

projections of the Superannuation Liability do not use the current Australian Government long-term bond rate. The 2012-13 Budget projections were based on an average discount rate of 6.0 per cent, which was determined by Treasury in 2009-10 after an analysis of Reserve Bank of Australia historical data and, at that time, more appropriately reflected the average bond rate over the life of the liability, than a point of time bond rate. However, for financial reporting purposes, in accordance with AASB 119, the current Australian Government long-term bond rate as at 30 June each year is used. The increase in Movements in Superannuation Liability reflects the difference between the discount rate applied by the actuary in accordance with AASB 119 for financial reporting purposes and the long-term bond rate which was used for Budget purposes. As the Movement in Superannuation Liability relates to the 30 June 2013 actuarial estimate, there is no Other Economic Flow for the period ending 31 March 2013.


REVENUE Total revenue for 2012-13 is estimated to be $4 606.8 million, $24.8 million or 0.5 per cent below the Budget estimate of $4 631.5 million. The major revenue variations are described in Table 8.2.

Table 8.2: Major Revenue Variations Revenue Item Variance from Budget Reasons

Grants: $85.6 million lower Includes the impact of changes in GST receipts,

Intergovernmental Agreements and reclassification of

Commonwealth Own Purpose Expenditure estimates.

• General Purpose

Payments

$28.0 million higher GST revenue has been revised upwards by

$28.0 million to reflect the revisions made by the

Australian Government in the 2013-14 Budget. This

primarily reflects:

• an increase in the estimated GST pool for 2012-13;

• a marginal increase in Tasmania's share of the

national population; and

• an adjustment as a result of higher than anticipated

GST receipts in 2011-12.

• Specific Purpose

Payments

$18.9 million lower The decrease in SPPs primarily reflects reductions in

the National Disability SPP ($11.3 million), National

Health Reform Funding ($5.9 million) and National

Schools SPP ($2.4 million), partially offset by an

increase in the Skills and Workforce Development SPP

($1.0 million).

• National Partnership

Payments (NPPs)

$89.8 million lower The decrease in NPPs primarily reflects reductions in:

• Community Services NPP funding as a result of a

reclassification of Home and Community Care

funding from NPP funding to Commonwealth Own

Purpose Expenditure which is classified as Other

Revenue ($43.8 million);

• financial assistance grants to Local Government

which reflects an advance payment made in

2011-12 for 2012-13 ($36.2 million); and

• cashflows associated with the Water Infrastructure

Fund ($20.2 million).


Table 8.2: Major Revenue Variations (continued) Revenue Item Variance from Budget Reasons

• National Partnership

Payments (NPPs)

(continued)

These decreases in revenue are partially offset by

increases in revenue for:

• Statewide Cancer Services ($11.2 million); and

• Reducing Elective Surgery Waiting Lists

($8.8 million).

Taxation $22.0 million lower The decrease in Taxation primarily reflects a reduction

in estimated Duty on Conveyance ($9.5 million), Payroll

Tax ($5.5 million), Guarantee Fees ($5.4 million) and

Motor Tax ($3.9 million), which is partially offset by an

increase in Land Tax receipts ($1.7 million).

Sales of Goods and Services $22.4 million higher The increase in Sales of Goods and Services primarily

reflects an increase in estimated receipts within THO

South ($13.1 million), THO North ($4.2 million) and

THO North West ($3.5 million). These increases relate

to estimated receipts from the Private Patient Scheme

within each THO and estimated donations and legal

trust revenue within THO South.

Fines and Regulatory Fees $7.1 million lower The reduction in Fines and Regulatory Fees reflects a

decline in collection of fines and fees, based on

year-to-date receipts.

Other Revenue $68.4 million higher The increase in Other Revenue primarily reflects the

reclassification of Commonwealth Own Purpose

Expenditure receipts from Grants Revenue to Other

Revenue by the Department of Health and Human

Services and the Tasmanian Health Organisations.

This is partially offset by a decrease in Mineral

Royalties revenue ($23.4 million) which reflects

temporary plant closures of two mine sites as a result of

seismic activity in 2012-13.


EXPENSES Total expenses for 2012-13 are estimated to be $5 032.4 million, $117.9 million or 2.4 per cent above the Budget estimate of $4 914.5 million. The major expense variations by Agencies are described in Table 8.3.

Table 8.3: Major Expense Variations Agency Variance from Budget Reasons

Economic Development,

Tourism and the Arts

$8.3 million increase The increase in Economic Development, Tourism and

the Arts primarily reflects additional funding for the

following Tasmanian Jobs Package projects:

• Tasmanian Government Innovation and Investment

Fund ($2.5 million);

• Aurora Stadium Lighting Upgrade ($1 million);

• Seaport Boardwalk Expansion ($1 million);

• Tourism Marketing ($1 million);

• Hollybank Mountain Bike Park ($800 000); and

• Dairy Tas – Filling the Factories Dairy Conversion

($400 000).

Finance-General $33.6 million decrease The decrease in Finance-General primarily reflects

decreases in:

• financial assistance grants to Local Government

($36.2 million). This reflects an advance payment

made by the Australian Government in 2011-12 for

2012-13; and

• Superannuation ($17.6 million) and Nominal

superannuation interest expense ($25.3 million).

These variations reflect the latest actuarial

assessment of the Government's Superannuation

liability.

These decreases are partially offset by increased

expenditure relating to:

• additional funding provided under the Natural

Disaster Relief Scheme ($22.0 million) for costs

associated with the fires in southern Tasmania in

January 2013;

• funding for the Police Mobile Radio Network

Upgrade project ($10.0 million);


Table 8.3: Major Expense Variations (continued) Agency Variance from Budget Reasons

Finance-General (continued) • additional funding of $6.5 million for roading and

residue transport to support the implementation of

the Tasmanian Forests Agreement; and

• the Tasmanian Risk Management Fund as a result

of revised Actuarial estimates ($7.3 million).

Health and Human Services $22.7 million increase The increase in Health and Human Services primarily

reflects:

• increases in expenditure relating to Australian

Government funding received under National

Partnership Agreements including Reducing

Elective Surgery Waiting Lists ($8.8 million),

Longer Stay Older Patients ($2.8 million) and the

Commonwealth Dental Health Program

($2.5 million);

• additional funding provided due to an increase in

demand for out-of-home care and child protection

services ($7.7 million);

• costs associated with outstanding claims through

the Children Abused in Care Scheme ($3.2 million);

and

• additional funding for the Tasmanian Jobs Package

for Community Infrastructure ($3.0 million).

These increases are partially offset by decreases in

expenditure relating to:

• a reduction in revenue and expenditure due to the

transfer of funding for Home and Community Care

from the Department to the Tasmanian Health

Organisations;

• a reduction in revenue and expenditure relating to

the National Health Reform funding of which the

majority is now directly receipted by the Tasmanian

Health Organisations;

• a reduction in revenue and expenditure reflecting

the Australian Government's revised estimates for

the Disability Services SPP; and




(continued)

• reductions in expenditure due to cash flow

adjustments for the following projects:

Housing - New Projects; Hospitals Capital Fund;

and the Housing Fund.

Infrastructure, Energy and

Resources

$23.2 million increase The increase in Infrastructure, Energy and Resources

primarily reflects:

• additional expenditure reflecting the expenditure of

Australian Government funding received in

2011-12 for assistance payments to exporters to

mitigate freight costs ($16 million);

• a reallocation of capital funding to advance

Infrastructure Maintenance projects ($6.3 million)

due to delays in capital infrastructure projects in

2012-13; and

• funding provided in the 2012-13 Supplementary

Appropriation Bill for the Abt Railway to assist with

maintaining the operations of the railway and

preparing the railway for a new owner ($3 million).

These increases are partially offset by lower than

anticipated expenditure in 2012-13 for the Passenger

Transport Innovation program ($2.0 million) and the

Road Safety Initiative ($1.6 million) due to project

delays.

Justice $9.3 million increase The increase in Justice primarily reflects:

• estimates for the Asbestos Compensation Fund

($6.4 million); and

• additional funding provided for correctional services

to meet increased costs due to increased demand

for services ($2.5 million).



Primary Industries, Parks,

Water and Environment

$9.9 million increase The increase in Primary Industries, Parks, Water and

Environment primarily reflects:

• an increase in operational grant funding associated

with the Water Infrastructure Fund ($7.8 million);

and

• additional funding for compensation payments under the provisions of the Nature Conservation

Act 2002 ($3.8 million).

These increases are partially offset by decreases in

expenditure due to cash flow changes in the Battery

Hen Ban initiative ($750 000), Spatial Information

Foundations Project ($500 000) and the Plastic Bag

Ban initiative ($400 000).

Tasmanian Health

Organisations

$70.2 million increase The increase in the Tasmanian Health Organisations'

expenditure primarily reflects the recognition of

increased revenue and expenditure, including

Commonwealth Own Purpose Expenditure relating to

Home and Community Care and additional expenditure

funded from National Partnership Payments.

This is partially offset by a decrease in National Health

Reform funding.


NET ACQUISITION OF NON-FINANCIAL ASSETS Net Acquisition of Non-Financial Assets for 2012-13 is estimated to be $15.3 million, $130.3 million below the Budget estimate of $145.6 million. The major variations in the Net Acquisition of Non-Financial Assets are described in Table 8.4.

Table 8.4: Major Net Acquisition of Non-Financial Assets Variations Item Variance from Budget Reasons

Purchases of Non-Financial

Assets

$131.7 million decrease The decrease in Purchases of Non-Financial Assets

primarily reflects:

• revised cash flows for the Royal Hobart Hospital

Redevelopment project ($83.2 million), including

revised cash flows for the Women's and Children's

Precinct;

• revised cashflows for the Community and West

Coast Roads Program ($6.4 million); reduced

purchases due to project delays relating to the North

East Freight Roads, Port Sorell and Bell Bay

Intermodal projects ($6.3 million); and lower than

anticipated expenditure on the Tarkine Forest Drive

project ($6.0 million) and the Community Roads

Program ($1.2 million);

• revised cashflows for the Prisons Infrastructure

Redevelopment Program Stage D due to delays in

the construction schedule resulting from delays in

the tender process ($11.7 million);

• updated cashflow projections for the Three Capes

Track ($10.1 million); and

• savings as part of a reduction in the size of the

Government's motor vehicle fleet, and changes to

motor vehicle lease terms ($5.8 million).

Sales of Non-Financial

Assets

$7.0 million decrease The decrease in Sales of Non-Financial Assets

primarily reflects:

• a reduction in sales due to a reduction in the size

of the Government's motor vehicle fleet and

changes to motor vehicle lease terms

($5.2 million); and

• reduced sales relating to Housing projects

($1.2 million).


Table 8.4: Major Net Acquisition of Non-Financial Assets Variations (continued)

Item Variance from Budget Reasons

Depreciation $5.6 million increase The increase in Depreciation primarily reflects revised

depreciation of buildings; and plant and equipment

estimates for the Department of Health and Human

Services ($6.7 million).

The increase is partially offset by a reduction in the

plant and equipment depreciation estimates as a result

of a reduction in the size of the Government's Light

Vehicle Fleet ($1.1 million).


GENERAL GOVERNMENT BALANCE SHEET Table 8.5: General Government Balance Sheet 2013) 2013) 2013) ) Estimated) March YTD Budget) Outcome) Actual

$m) $m) $m) Assets

Financial Assets

Cash and Deposits 914.9) 1 009.1) 1 159.3

Investments 59.1) 49.3) 47.4

Equity Investment in PNFC and PFC Sectors 6 537.9) 6 507.2) 6 523.6

Other Equity Investments 8.0) 14.2) 5.4

Receivables 214.5) 353.6) 354.1

Other Financial Assets 1 137.6) 1 208.3) 1 066.6

8 872.0) 9 141.7) 9 156.4

Non-Financial Assets

Land and Buildings 6 355.4) 6 738.6 5 988.9

Infrastructure 4 096.3) 4 217.4 4 208.0

Plant and Equipment 210.5) 251.0 243.7

Heritage and Cultural Assets 464.7) 462.0 449.1

Investment Property 13.9) 12.2 11.9

Intangibles 29.5) 35.8 32.6

Assets Held for Sale 23.5) 11.9 15.9

Other Non-Financial Assets 36.2) 42.0 48.0

11 230.0) 11 770.9 10 998.2

Total Assets 20 102.1) 20 912.6) 20 154.6 Liabilities

Borrowings 1 108.2) 1 074.7) 854.5

Superannuation1 4 977.2) 5 011.0) 6 991.1

Employee Entitlements 520.4) 657.6) 532.1

Payables 89.9) 111.1) 80.5

Other Liabilities 276.8) 408.9) 392.9

Total Liabilities 6 972.5) 7 263.3) 8 851.2 NET ASSETS 13 129.6) 13 649.3) 11 303.4


Table 8.5: General Government Balance Sheet (continued) 2013) 2013) 2013) ) Estimated) March YTD Budget) Outcome) Actual

$m) $m) $m) Equity

Accumulated Funds 8 929.8) 9 221.0) 6 950.7

Asset Revaluation Reserve 4 199.8) 4 428.3) 4 352.7

Total equity 13 129.6) 13 649.3) 11 303.4


NET WORTH2 13 129.6) 13 649.3) 11 303.4 NET FINANCIAL WORTH3 1 899.5) 1 878.4) 305.2 NET FINANCIAL LIABILITIES4 4 638.4) 4 628.8) 6 218.4 NET DEBT5 134.2) 16.4) (352.1)

Notes: 1. The Superannuation liability as at 31 March 2013 is based on the actuarial valuation as at 30 June 2012 adjusted for

service costs and the nominal interest expense, based on actuarial advice for the nine months ending 31 March 2013. There is a difference of $1 980.1 million between the revised Budget estimate and the March year to date valuation of the Superannuation liability. This reflects the difference between the discount rate applied by the actuary, in accordance with the Australian Accounting Standard AASB 119 Employee Benefits, for financial reporting purposes and the long-term bond rate which is used for Budget purposes.

2. Net Worth represents total assets (both financial and non-financial) less total liabilities. 3. Net Financial Worth represents total financial assets less total liabilities. 4. Net Financial Liabilities represents total liabilities less financial assets, excluding equity investment in the PNFC and

PFC Sectors. 5. Net Debt represents borrowings less the sum of cash and deposits and investments.


GENERAL GOVERNMENT CASH FLOW STATEMENT Table 8.6: General Government Cash Flow Statement 2012-13) 2012-13) 2012-13) ) Estimated) March YTD Budget) Outcome) Actual

$m) $m) $m) Cash Flows from Operating Activities

Cash Received from Operating Activities

Grants Received 2 876.5 2 790.9 2 079.5

Taxation 940.9 919.1 667.0

Sales of Goods and Services 314.3 329.9 250.7

Fines and Regulatory Fees 105.6 98.6 66.6

Interest Received 18.2 18.6 15.1

Dividend, Tax and Rate Equivalents 233.0 207.3 184.0

Other Receipts 317.1 380.3 316.9

4 805.5 4 744.7 3 579.8

Cash Payments for Operating Activities

Employee Entitlements (2 014.2) (2 042.6) (1 577.7)

Superannuation (320.1) (332.1) (251.1)

Supplies and Consumables (1 029.3) (1 075.2) (709.0)

Borrowing Costs (13.8) (12.8) (2.7)

Grants and Subsidies Paid (1 069.9) (1 151.8) (788.1)

Other Payments (203.7) (213.0) (141.5)

(4 651.0) (4 827.5) (3 470.0)

Net Cash Flows from Operating Activities 154.5 (82.8) 109.8 Cash Flows from Investing Activities

Net Cash Flows from Non-Financial Assets

Purchase of Non-Financial Assets (434.2) (302.5) (147.8)

Sale of Non-Financial Assets 40.5 33.5 29.3

(393.7) (269.0) (118.5)

Net Cash Flows from Financial Assets (Liquidity Purposes) Net Purchase of Investments .... .... (1.0)

.... .... (1.0)


Table 8.6: General Government Cash Flow Statement (continued) 2012-13) 2012-13) 2012-13) ) Estimated) March YTD Budget) Outcome) Actual

$m) $m) $m)

Net Cash Flows from Financial Assets (Policy Purposes)

Equity Injections (90.1) (73.5) (50.1)

Net Advances Paid (5.6) 3.8 4.4

(95.7) (69.7) (45.7)

Net Cash Flows from Investing Activities (489.4) (338.7) (165.2) Net Cash Flows from Financing Activities

Net Borrowing 223.3 178.5) (37.5)

223.3 178.5) (37.5) Net Increase/(Decrease) in Cash Held (111.6) (243.1) (92.9) Cash at Beginning of the Year 1 026.5 1 252.2 1 252.2 Cash at End of the Year 914.9 1 009.1

1 159.3


Net Cash Flows from Operating Activities 154.5 (82.8) 109.8

Plus Net Cash from Investments in Non-Financial Assets (393.7) (269.0) (118.5)

Equals CASH SURPLUS/(DEFICIT) (239.2) (351.8) (8.7)


CONSOLIDATED FUND Table 8.7: Consolidated Fund Outcomes 2012-13 2012-13 2012-13 Estimated March YTD Budget Outcome Actual

$m $m $m Recurrent receipts

Australian Government sources

General purpose payments 1 700.8 1 728.8 1 323.3

Specific purpose payments 400.2 366.3 325.5

National partnership payments 124.5 43.9 25.1

Other grants and subsidies 3.6 1.3 ....

2 229.1 2 140.4 1 673.9 State sources

Taxation 942.3 839.3) 639.0

Receipts from government businesses 267.5 236.6) 200.6

Departmental fees and recoveries 87.8 86.2) 67.1

Recoveries of State debt charges 3.8 ....) ....)

Sale and rent of government property 5.4 5.4) ....)

Resource rents and royalties 59.3 35.9) 24.9

Other recurrent receipts 135.9 148.1) 101.8

1 502.0 1 351.5) 1 033.4 Capital receipts

State sources

Other capital receipts 0.2 0.7) ....)

0.2 0.7) ....)

Total Receipts 3 731.4 3 492.5) 2 707.3

Less Expenditure

Recurrent services

Appropriation Act 3 452.6 3 293.1) 2 464.5

Reserved by Law 255.8 256.4) 188.2

3 708.4 3 549.5) 2 652.7 Works and services

Capital Investment Program 171.4 154.2) 91.5

Hospitals Capital Fund 15.0 15.0) ....)

186.4 169.2) 91.5

Total Expenditure 3 894.9 3 718.7) 2 744.2

CONSOLIDATED FUND SURPLUS/(DEFICIT) (163.5) (226.2) (36.9)


Table 8.8: Consolidated Fund Expenditure1 2012-13 2012-13 2012-13 Estimated March YTD Budget Outcome Actual

$m $m $m Economic Development, Tourism and the Arts

Recurrent services 106.4 112.1) 77.7

106.4 112.1) 77.7 Education

Recurrent services 1 129.9 1 101.3) 909.5

Works and services 12.1 15.9) 10.0

1 142.0 1 117.2) 919.5 Finance-General


Works and services 15.0 15.0) ....

463.5 444.7) 249.7 Health and Human Services

Recurrent services 1 224.8 1 121.5) 816.0


1 232.8 1 137.2) 829.6 House of Assembly


7.6 7.6) 5.5 Infrastructure, Energy and Resources



316.5 300.6) 205.9 Integrity Commission


3.0 2.9) 1.9 Justice



141.0 129.7) 98.9 Legislative Council


6.4 6.4) 4.8 Legislature-General


5.8 5.9) 4.7


Table 8.8: Consolidated Fund Expenditure1 (continued) 2012-13 2012-13 2012-13 Estimated March YTD Budget Outcome Actual

$m $m $m Ministerial and Parliamentary Support


19.7 19.1) 15.2 Office of the Director of Public Prosecutions


7.5 7.2) 4.9 Office of the Governor


3.4 3.4) 2.4 Office of the Ombudsman


2.1 2.0) 1.6 Police and Emergency Management



196.9 191.9) 152.3 Premier and Cabinet



54.7 53.1) 40.4 Primary Industries, Parks, Water and Environment



142.6 135.7) 100.6 Tasmanian Audit Office


2.6 2.5) 1.9 Treasury and Finance


40.7 39.7) 26.7

TOTAL 3 894.9 3 718.7) 2 744.2

Note: 1. The decreases in expenditure in 2012-13 partly reflect the new payroll tax policy for agencies. Further information on

this policy change and its impact on agencies is included in the Introduction to Budget Paper No 2, Government Services.

Uniform Government Reporting A1.1

APPENDIX 1 UNIFORM GOVERNMENT REPORTING

Features

• The budgeted Net Operating Balance for 2013-14 is a deficit of $266.9 million for the General Government Sector, a surplus of $135.5 million for the PNFC Sector, a surplus of $25.9 million for the PFC Sector and a deficit of $105.5 million for the Total State Sector.

• The budgeted Fiscal Balance for 2013-14 is a deficit of $309.1 million for the General Government Sector, a deficit of $189.3 million for the PNFC Sector, a surplus of $25.7 million for the PFC Sector and a deficit of $472.7 million for the Total State Sector.

• Over the Forward Estimates period, the General Government Sector Fiscal Balance improves from an estimated deficit of $309.1 million in 2013-14 to an estimated deficit of $18.7 million in 2016-17.

• Between 30 June 2013 and 30 June 2014, General Government Net Debt is forecast to deteriorate from $16.4 million to $226.1 million, PNFC Net Debt is forecast to deteriorate from $2 533.8 million to $2 601.6 million, PFC Net Debt is forecast to improve from negative $1 293.0 million to negative $1 382.8 million and Total State Sector Net Debt is forecast to deteriorate from $1 257.1 million to $1 444.9 million.

• Over the Forward Estimates period, General Government Net Debt improves from an estimated $16.4 million at 30 June 2013 to negative $47.0 million by 30 June 2017, while Total State Sector Net Debt deteriorates from an estimated $1 257.1 million at 30 June 2013 to an estimated $1 283.4 million by 30 June 2017.

A1.2 Uniform Government Reporting

INTRODUCTION The financial information in this Appendix has been prepared in accordance with the Uniform Presentation Framework (UPF). This Appendix provides Income Statement, Balance Sheet and Cash Flow Statement estimates for the:

• General Government Sector;

• Public Non-Financial Corporations (PNFC) Sector;

• Total Non-Financial Public (TNFP) Sector;

• Public Financial Corporations (PFC) Sector; and

• Total State Sector.

The statements present the 2012-13 Estimated Outcome, the 2013-14 Budget Estimates and Forward Estimates for the period 2014-15 to 2016-17. For taxation information required under the UPF, refer to Chapter 4.

In accordance with the UPF, the final end of year results will be released in the Treasurer's Annual Financial Report 2012-13. The Report will be publicly released by no later than 31 October 2013.

Loan Council Allocation Under Loan Council arrangements, every year the Australian Government and each state and territory nominate a Loan Council Allocation (LCA). A jurisdiction's LCA incorporates:

• the estimated Cash Deficit/(Surplus) of the General Government and PNFC Sectors;

• net cash flows from investments in financial assets for policy purposes; and

• Memorandum Items, which are other financing transactions that are treated as borrowing equivalents for Loan Council purposes.

The Loan Council evaluates LCA nominations by referring to each jurisdiction's fiscal position and the macro-economic implications of the aggregate figure.


Table A1.1 compares Tasmania's 2013-14 LCA approved by the Loan Council in March 2013, with the revised LCA based on 2013-14 Budget estimates.

Table A1.1: Loan Council Allocation 2013-14 2013-14) 2013-14) ) Budget) Nomination) Estimate)

$m) $m) General Government Cash Deficit/(Surplus) (103.3) 136.4

Public Non-Financial Corporations Sector Cash Deficit/(Surplus) 156.9 132.5

Non-Financial Public Sector Cash Deficit/(Surplus) 53.6 268.9 Less Non-Financial Public Sector Net Cash Flows from Investments in Financial Assets for

Policy Purposes (8.3) (2.7)

Plus Memorandum Items1 26.0 23.9

Loan Council Allocation Deficit/(Surplus) 87.9 295.5

2013-14 Tolerance Limit2 185.1 166.0

Notes: 1. Memorandum items include borrowings by local government and the University of Tasmania. 2. The Tolerance Limit is equal to two per cent of Total Non-Financial Public Sector Cash Receipts from Operating

Activities, and applies from the time that the LCA is approved by the Loan Council until the budgeted LCA is released. The Tolerance Limit will change with each revision to the Budget. The Tolerance Band recognises that LCAs are nominated at early stages of the Budget process and that estimates are likely to change as a result.

The 2013-14 revised Budget estimate is a deficit of $295.5 million, a decline of $207.6 million which exceeds the Tolerance Limit of $185.1 million estimated for Tasmania in March 2013. If a jurisdiction is likely to exceed its Tolerance Limit, it must provide an explanation to Loan Council and make that explanation public.

The change of $207.6 million in the LCA between the 2013-14 nomination and the 2013-14 Budget estimate is primarily due to decreases in Grants Received of $98.8 million and Dividend, Tax and Rate Equivalents of $49.1 million in the General Government Sector.

The LCA Outcome for 2012-13 will be presented in the Treasurer's Annual Financial Report 2012-13.


GOVERNMENT FINANCIAL ESTIMATES Tables A1.2 to A1.16 provide details of the Income Statements, Balance Sheets and Cash Flow Statements for the General Government Sector, PNFC Sector, TNFP Sector, PFC Sector and Total State Sector respectively.

Table A1.2: General Government Income Statement 2012-13 2013-14 2014-15 2015-16 2016-17

Estimated)

Forward) Forward) Forward)

Outcome) Budget) Estimate) Estimate) Estimate)

$m $m $m $m $m

Revenue from Transactions

Grants 2 790.9 2 850.9 2 961.9 3 237.4 3 387.3

Taxation 918.9 940.0 970.9 1 003.9 1 039.8

Sales of Goods and Services 336.2 354.9 358.1 363.7 367.1

Fines and Regulatory Fees 99.8 106.4 110.7 110.3 111.8

Interest Income 19.5 13.8 12.7 16.2 21.7

Dividend, Tax and Rate Equivalent Income 230.2 330.1 337.9 249.8 177.8

Other Revenue 211.3 195.9 201.4 206.3 203.8

4 606.7 4 792.1 4 953.4 5 187.6 5 309.3 Less Expenses from Transactions

Employee Expenses 2 047.5 2 109.9 2 125.5 2 185.2 2 218.1

Superannuation 218.2 248.1 248.0 253.4 252.5

Depreciation 253.7 276.3 280.0 283.6 284.4

Supplies and Consumables 1 068.5 1 086.9 1 104.6 1 139.4 1 134.7

Nominal Superannuation Interest Expense 235.2 268.2 275.6 282.4 288.8

Borrowing Costs 13.2 11.9 11.3 10.9 10.6

Grant Expenses 1 151.9 1 025.9 1 043.1 1 038.3 1 083.6

Other Expenses 44.2 31.9 29.8 28.3 26.8

5 032.4 5 059.0 5 117.9 5 221.5 5 299.4 Equals NET OPERATING BALANCE (425.7) (266.9) (164.5) (33.9) 9.9

Plus Other Economic Flows - Included in Operating

Result

Gain/(Loss) on Sale of Non-Financial Assets 4.5 8.3 10.8 8.9 8.5

Movement in Investments in GBEs and SOCs 199.0 120.8 100.6 21.7 155.6

Movement in Superannuation Liability 2 035.3 .... .... .... ....

Other Gains/(Losses) 24.6 11.9 15.7 4.7 20.3

2 263.4 140.9 127.2 35.3 184.5 Equals Operating Result 1 837.8 (126.0) (37.3) 1.4 194.3


Table A1.2: General Government Income Statement (continued) 2012-13 2013-14 2014-15 2015-16 2016-17

Estimated)

Forward) Forward) Forward)


$m $m $m $m $m

Plus Other Economic Flows - Other Movements in Equity

Revaluations of Non-Financial Assets 302.6 326.1 340.2 351.2 358.3

Other Non-Owner Movements in Equity 442.9 (59.7) (11.2) (19.2) (1.7)

745.5 266.5 329.0 332.0 356.6 Equals Comprehensive Result 2 583.3 140.5 291.7 333.4 550.9

KEY FISCAL AGGREGATES NET OPERATING BALANCE (425.7) (266.9) (164.5) (33.9) 9.9 Less Net Acquisition of Non-Financial Assets

Purchase of Non-Financial Assets 302.5 344.8 367.3 303.8 335.3

Less Sale of Non-Financial Assets 33.5 26.3 36.6 27.2 22.4

Less Depreciation 253.7 276.3 280.0 283.6 284.4

15.3 42.2 50.7 (7.0) 28.5

Equals FISCAL BALANCE (441.0) (309.1) (215.2) (26.9) (18.7)


Table A1.3: General Government Balance Sheet as at 30 June 2013) 2014) 2015) 2016) 2017) Estimated) Forward) Forward) Forward) Outcome) Budget) Estimate) Estimate) Estimate)


Financial Assets

Cash and Deposits 1 009.1 857.6 706.2 654.1 599.8

Investments 49.3 42.4 44.4 45.7 45.8

Equity Investment in PNFC and PFC Sectors 6 507.2 6 628.0 6 728.6 6 750.3 6 905.9

Other Equity Investments 14.2 16.4 19.4 22.0 24.0

Receivables 353.6 354.5 354.1 354.0 354.4

Other Financial Assets 1 208.3 1 220.3 1 168.4 1 103.4 1 099.2

9 141.7 9 119.2 9 021.1 8 929.5 9 029.1

Non-Financial Assets Land and Buildings 6 738.6 6 948.3 7 208.0 7 394.1 7 626.0

Infrastructure 4 217.4 4 390.1 4 543.7 4 724.7 4 904.2

Plant and Equipment 251.0 240.5 223.0 203.4 181.7

Heritage and Cultural Assets 462.0 473.9 485.9 498.0 510.1

Investment Property 12.2 12.5 12.8 13.1 13.4

Intangibles 35.8 34.6 30.3 25.9 21.7

Assets Held for Sale 11.9 11.3 10.4 9.4 8.4

Other Non-Financial Assets 42.0 42.8 43.6 44.2 44.8

11 770.9 12 154.0 12 557.6 12 912.8 13 310.2

Total Assets 20 912.6 21 273.2 21 578.7 21 842.3 22 339.4 Liabilities

Borrowings 1 074.7 1 126.1 979.6 794.7 598.6

Superannuation 5 011.0 5 150.2 5 282.1 5 399.3 5 509.2

Employee Entitlements 657.6 673.6 690.7 675.9 695.4

Payables 111.1 115.6 117.7 120.2 122.8

Other Liabilities 408.9 417.9 427.2 437.2 447.5

Total Liabilities 7 263.3 7 483.4 7 497.3 7 427.4 7 373.6

NET ASSETS 13 649.3 13 789.8 14 081.5 14 414.9 14 965.8

Equity

Accumulated Funds 9 221.0 9 035.3 8 986.8 8 969.1 9 161.7

Asset Revaluation Reserve 4 428.3 4 754.5 5 094.6 5 445.8 5 804.1

Total Equity 13 649.3 13 789.8 14 081.5 14 414.9 14 965.8


Table A1.3: General Government Balance Sheet as at 30 June (continued)

2013 2014) 2015) 2016) 2017)

Estimated

Forward Forward Forward

Outcome Budget Estimate Estimate Estimate $m $m $m $m $m


NET WORTH1 13 649.3 13 789.8 14 081.5 14 414.9 14 965.8 NET FINANCIAL WORTH2 1 878.4 1 635.7 1 523.8 1 502.1 1 655.5 NET FINANCIAL LIABILITIES3 4 628.8 4 992.3 5 204.8 5 248.2 5 250.4 NET DEBT4 16.4 226.1 229.0 95.0 (47.0) Notes: 1. Net Worth represents Total Assets (both Financial and Non-Financial) less Total Liabilities. 2. Net Financial Worth represents Total Financial Assets less Total Liabilities. 3. Net Financial Liabilities represents Total Liabilities less Financial Assets, excluding Equity Investment in the PNFC

and PFC Sectors. 4. Net Debt represents Borrowings less the sum of Cash and Deposits and Investments.


Table A1.4: General Government Cash Flow Statement 2012-13) 2013-14) 2014-15) 2015-16) 2016-17) Estimated) ) Forward) Forward) Forward) Outcome) Budget) Estimate) Estimate) Estimate)

$m) $m) $m) $m) $m) Cash Flows from Operating Activities


Grants Received 2 790.9 2 850.9 2 961.9 3 237.4 3 387.3

Taxation 919.1 941.2 971.8 1 004.5 1 040.0



Interest Received 18.6 13.2 12.2 15.8 21.3

Dividend, Tax and Rate Equivalents 207.3 352.0 421.2 336.1 220.5

Other Receipts 380.3 365.1 372.0 377.6 375.1

4 744.7 4 982.5 5 206.5 5 444.0 5 521.8

Cash Payments for Operating Activities Employee Entitlements (2 042.6) (2 090.0) (2 106.6) (2 194.6) (2 197.3)

Superannuation (332.1) (375.5) (390.5) (420.9) (429.7)

Supplies and Consumables (1 075.2) (1 095.8) (1 113.2) (1 147.5) (1 142.8)

Borrowing Costs (12.8) (11.7) (11.2) (10.7) (10.4)

Grants and Subsidies Paid (1 151.8) (1 025.8) (1 043.0) (1 038.2) (1 083.5)

Other Payments (213.0) (201.6) (200.2) (199.5) (198.0)

(4 827.5) (4 800.4) (4 864.7) (5 011.4) (5 061.8)

Net Cash Flows from Operating Activities (82.8) 182.1 341.8 432.6 459.9 Cash Flows from Investing Activities

Net Cash Flows from Non-Financial Assets Purchase of Non-Financial Assets (302.5) (344.8) (367.3) (303.8) (335.3)

Sale of Non-Financial Assets 33.5 26.3 36.6 27.2 22.4

(269.0) (318.5) (330.7) (276.6) (312.9) Net Cash Flows from Financial Assets

(Policy Purposes) Equity Injections (73.5) (65.9) (12.5) (20.0) (2.0)

Net Advances Paid 3.8 (0.5) (3.5) (3.2) (3.3)

(69.7) (66.4) (16.0) (23.2) (5.3)

Net Cash Flows from Investing Activities (338.7) (384.9) (346.7) (299.8) (318.2)


Table A1.4: General Government Cash Flow Statement (continued) 2012-13) 2013-14) 2014-15) 2015-16) 2016-17) Estimated) ) Forward) Forward) Forward) Outcome) Budget) Estimate) Estimate) Estimate)

$m) $m) $m) $m) $m) Net Cash Flows from Financing Activities

Net Borrowing 178.5 51.3 (146.5) (184.8) (195.9)

178.5 51.3 (146.5) (184.8) (195.9) Net Increase/(Decrease) in Cash Held (243.1) (151.5) (151.4) (52.1) (54.2) Cash at Beginning of the Year 1 252.2 1 009.1 857.6 706.2 654.1 Cash at End of the Year 1 009.1 857.6 706.2 654.1 599.8 KEY FISCAL AGGREGATES Net Cash Flows from Operating Activities (82.8) 182.1 341.8 432.6 459.9

Plus Net Cash from Investments in Non-Financial

Assets (269.0) (318.5) (330.7) (276.6) (312.9)

Equals CASH SURPLUS/(DEFICIT) (351.8) (136.4) 11.1 156.0 147.0


Table A1.5: Public Non-Financial Corporations Sector Income Statement

2012-13 2013-14 2014-15 2015-16 2016-17

Estimated Forward Forward Forward

Outcome Budget Estimate Estimate Estimate

$m $m $m $m $m

Revenue from Transactions

Grants 238.5 171.8 145.3 139.7 140.6

Sales of Goods and Services 3 552.1 3 382.8 3 260.7 3 128.5 3 430.1

Interest Income 9.4 7.6 7.5 7.7 8.0

Other Revenue 41.6 42.3 44.9 46.7 47.0

3 841.6 3 604.5 3 458.4 3 322.5 3 625.7

Less Expenses from Transactions Employee Expenses 408.9 410.7 416.2 415.7 428.2

Superannuation 37.2 34.9 35.7 34.7 34.6

Depreciation 384.8 399.5 408.7 410.2 393.1



Borrowing Costs 200.6 216.3 203.3 214.9 228.5

Dividend and Income Tax Equivalent Expenses 226.8 320.5 322.3 232.9 166.3

Grant Expenses 35.0 17.9 .... .... ....

Other Expenses 40.3 40.8 41.6 43.5 44.1

3 543.3 3 469.0 3 360.3 3 359.3 3 525.2

Equals NET OPERATING BALANCE 298.4 135.5 98.0 (36.8) 100.5

Plus Other Economic Flows - Included in Operating Result

Gain/(Loss) on Sale of Non-Financial Assets (205.1) (0.1) (0.1) (0.1) (0.1)

Movement in Superannuation Liability 175.4 .... .... .... ....

Other Gains/(Losses) (96.7) (156.6) (40.8) (1.1) (10.8)

(126.4) (156.7) (40.9) (1.2) (10.9)

Equals Operating Result 172.0 (21.2) 57.1 (38.0) 89.5

Plus Other Economic Flows - Other Movements in Equity


Other Non-Owner Movements in Equity (91.4) 75.0 23.6 32.1 31.4

(68.1) 125.2 30.0 38.5 42.1

Equals Comprehensive Result 103.9 103.9 87.1 0.5 131.7


Table A1.5: Public Non-Financial Corporations Sector Income Statement (continued)

2012-13 2013-14 2014-15 2015-16 2016-17



$m $m $m $m $m


NET OPERATING BALANCE 298.4 135.5 98.0 (36.8) 100.5 Less Net Acquisition of Non-Financial Assets




233.7 324.8 96.8 92.3 131.3

Equals FISCAL BALANCE 64.7 (189.3) 1.2 (129.1) (30.8)

XXX


Table A1.6: Public Non-Financial Corporations Sector Balance Sheet as at 30 June

2013 2014 2015 2016 2017



$m $m $m $m $m

Assets Financial Assets

Cash and Deposits 189.1 159.5 162.4 168.3 175.6

Investments 4.0 1.0 2.5 4.0 ....


Receivables 443.1 272.6 279.4 277.3 280.1

Other Financial Assets 732.9 717.3 716.1 743.0 749.6

1 447.7 1 227.6 1 236.0 1 266.4 1 317.6


Land, Buildings and Biological Assets 319.9 306.4 318.6 328.8 338.9

Infrastructure 10 352.8 10 520.3 10 611.0 10 708.6 10 854.6




Intangible Assets 124.2 131.4 121.3 131.6 144.2

Assets Held for Sale .... 0.1 0.1 0.1 0.1


11 395.0 11 589.2 11 689.8 11 804.9 11 995.3

Total Assets 12 842.6 12 816.8 12 925.8 13 071.3 13 312.9

Liabilities

Borrowings 2 726.8 2 762.1 2 868.0 3 081.4 3 199.6

Superannuation 550.0 566.4 581.8 595.7 608.4


Payables 397.3 282.3 282.5 284.6 286.6

Other Liabilities 2 931.4 2 862.3 2 759.1 2 671.8 2 645.6

Total liabilities 6 723.4 6 593.6 6 615.5 6 760.4 6 870.4

NET ASSETS 6 119.2 6 223.2 6 310.3 6 310.8 6 442.5

Equity



Other Equity 3 329.9 3 609.4 3 693.7 3 786.7 3 843.9

Total Equity 6 119.2 6 223.2 6 310.3 6 310.8 6 442.5


Table A1.6: Public Non-Financial Corporations Sector Balance Sheet as at 30 June (continued)

2013 2014 2015 2016 2017



$m $m $m $m $m


NET WORTH1 6 119.2 6 223.2 6 310.3 6 310.8 6 442.5 NET FINANCIAL WORTH2 (5 275.7) (5 366.0) (5 379.5) (5 494.1) (5 552.8) NET FINANCIAL LIABILITIES3 5 275.7 5 366.0 5 379.5 5 494.1 5 552.8 NET DEBT4 2 533.8 2 601.6 2 703.0 2 909.1 3 024.0

Notes: 1. Net Worth represents Total Assets (both Financial and Non-Financial) less Total Liabilities. 2. Net Financial Worth represents Total Financial Assets less Total Liabilities. 3. Net Financial Liabilities represents Total Liabilities less Financial Assets. For the PNFC Sector this is equivalent to

negative Net Financial Worth. 4. Net Debt represents Borrowings less the sum of Cash and Deposits and Investments.


Table A1.7: Public Non-Financial Corporations Sector Cash Flow Statement

2012-13 2013-14 2014-15 2015-16 2016-17



$m $m $m $m $m

Cash Flows from Operating Activities


Grants Received 236.2 163.6 138.3 136.6 137.4



Other Receipts 200.5 144.8 85.5 78.4 81.0

4 029.3 3 878.6 3 549.0 3 429.9 3 731.3


Employee Entitlements (425.1) (429.1) (436.4) (434.4) (448.0)

Superannuation (52.3) (48.8) (48.9) (48.3) (48.9)


Borrowing Costs (189.5) (203.0) (189.7) (202.0) (215.2)

Grants and Subsidies Paid (35.0) (17.2) .... .... ....

Other Payments (204.1) (143.0) (104.0) (98.7) (96.7)

(3 189.5) (2 936.9) (2 745.1) (2 827.5) (3 073.5)

Net Cash Flows from Operating Activities 839.8 941.7 803.9 602.4 657.8

Cash Flows from Investing Activities


Sales of Non-Financial Assets 342.0 10.4 19.9 2.5 2.5

(618.5) (724.2) (505.6) (502.4) (524.4)

Net Cash Flows from Financial Assets (Policy

Purposes) Equity Injections 74.6 63.7 9.8 17.5 ....

74.6 63.7 9.8 17.5 .... Net Cash Flows from Financial Assets (Liquidity

Purposes) Net Purchase of Investments (25.9) 3.9 (0.5) (0.5) (35.7)

Net Cash Flows from Investing Activities (569.7) (656.6) (496.3) (485.4) (560.1)


Table A1.7: Public Non-Financial Corporations Sector Cash Flow Statement (continued)

2012-13 2013-14 2014-15 2015-16 2016-17



$m $m $m $m $m

Net Cash Flows from Financing Activities

Dividends and Tax Equivalents Paid (216.2) (350.0) (411.0) (324.6) (208.0)

Net Borrowing (154.8) 35.3 106.3 213.5 117.6

Net Cash Flows from Financing Activities (371.0) (314.7) (304.7) (111.1) (90.3)

Net Increase/(Decrease) in Cash Held (100.9) (29.6) 2.9 5.8 7.4

Cash at Beginning of the Year 289.9 189.1 159.5 162.4 168.3 Cash at End of the Year 189.1 159.5 162.4 168.3 175.6 KEY FISCAL AGGREGATES


Plus Net Cash Flows from Non-Financial Assets (618.5) (724.2) (505.6) (502.4) (524.4)

plus Dividends and Tax Equivalents Paid (216.2) (350.0) (411.0) (324.6) (208.0)

Equals CASH SURPLUS/(DEFICIT) 5.1 (132.5) (112.7) (224.7) (74.6)

xxxx


Table A1.8: Total Non-Financial Public Sector Income Statement 2012-13) 2013-14) 2014-15) 2015-16) 2016-17) Estimated) ) Forward) Forward) Forward) Outcome) Budget) Estimate) Estimate) Estimate)

$m) $m) $m) $m) $m) Revenue from Transactions

Grants 2 790.9 2 850.9 2 961.9 3 237.4 3 387.3

Taxation 870.9 890.2 920.1 950.8 983.9



Interest Income 28.9 21.4 20.2 23.9 29.8


Other Revenue 252.9 238.2 246.3 253.0 250.7



Superannuation 255.4 283.0 283.7 288.1 287.1

Depreciation 638.4 675.7 688.7 693.8 677.5



Borrowing Costs 184.7 197.7 183.7 193.1 204.2


Grant Expenses 948.3 872.0 897.8 898.6 943.0

Other Expenses 65.6 53.4 51.6 51.5 50.0

8 061.8 7 991.8 7 975.0 8 171.4 8 478.2

Equals NET OPERATING BALANCE (127.3) (131.4) (66.5) (70.7) 110.3


Result

Gain/(Loss) on Sale of Non-Financial Assets (200.7) 8.2 10.7 8.8 8.4

Movement in Investments in GBEs and SOCs 95.1 16.8 13.5 21.2 23.9


Other Gains/(Losses) (72.1) (144.7) (25.1) 3.6 9.5

2 033.1 (119.7) (0.9) 33.6 41.9

Equals Operating Result 1 905.9 (251.1) (67.3) (37.1) 152.2


Table A1.8: Total Non-Financial Public Sector Income Statement (continued)

2012-13) 2013-14) 2014-15) 2015-16) 2016-17) Estimated) ) Forward) Forward) Forward) Outcome) Budget) Estimate) Estimate) Estimate)

$m) $m) $m) $m) $m) Plus Other Economic Flows - Other Movements in

Equity


Other Flows 351.5 15.3 12.4 12.9 29.8

677.4 391.6 359.0 370.5 398.7

Equals Comprehensive Result 2 583.3 140.5 291.7 333.4 550.9

KEY FISCAL AGGREGATES NET OPERATING BALANCE (127.3) (131.4) (66.5) (70.7) 110.3 Less Net Acquisition of Non-Financial Assets

Purchase of Non-Financial Assets 1 262.9 1 079.4 892.7 808.7 862.3



249.0 367.0 147.5 85.3 159.8



Table A1.9: Total Non-Financial Public Sector Balance Sheet as at 30 June

2013) 2014) 2015) 2016) 2017)



$m) $m) $m) $m) $m)

Assets

Financial Assets

Cash and Deposits 1 198.1 1 017.1 868.6 822.3 775.4

Investments 53.3 43.4 46.9 49.7 45.9

Equity Investment in PFC Sector 388.0 404.8 418.3 439.5 463.4


Receivables 796.7 627.1 633.5 631.3 634.5


3 098.7 2 752.6 2 634.0 2 622.3 2 650.8


Land, Buildings and Biological Assets 7 058.5 7 254.7 7 526.5 7 722.9 7 964.9

Infrastructure 14 570.2 14 910.4 15 154.7 15 433.3 15 758.8




Intangibles 160.0 166.0 151.6 157.5 165.9



23 165.8 23 743.2 24 247.4 24 717.7 25 305.5

Total Assets 26 264.5 26 495.8 26 881.4 27 340.0 27 956.4

Liabilities

Borrowings 3 801.6 3 888.2 3 847.5 3 876.2 3 798.2

Superannuation 5 560.9 5 716.7 5 863.9 5 995.1 6 117.6


Payables 508.4 398.0 400.2 404.8 409.4



NET ASSETS 13 649.3 13 789.8 14 081.5 14 414.9 14 965.8


Table A1.9: Total Non-Financial Public Sector Balance Sheet as at 30 June (continued)

2013) 2014) 2015) 2016) 2017)



$m) $m) $m) $m) $m)

Equity



Total Equity 13 649.3 13 789.8 14 081.5 14 414.9 14 965.8


NET WORTH 1 13 649.3 13 789.8 14 081.5 14 414.9 14 965.8

NET FINANCIAL WORTH 2 (9 516.6) (9 953.4) (10 166.0) (10 302.8) (10 339.8)

NET FINANCIAL LIABILITIES 3 9 904.6 10 358.3 10 584.3 10 742.3 10 803.2

NET DEBT 4 2 550.1 2 827.7 2 932.0 3 004.1 2 976.9

Notes: 1. Net Worth represents Total Assets (both Financial and Non-Financial) less Total Liabilities. 2. Net Financial Worth represents Total Financial Assets less Total Liabilities. 3. Net Financial Liabilities represents Total Liabilities less Financial Assets, excluding Equity Investment in the PFC

Sector. 4. Net Debt represents Borrowings less the sum of Cash and Deposits and Investments.


Table A1.10: Total Non-Financial Public Sector Cash Flow Statement 2012-13) 2013-14) 2014-15) 2015-16) 2016-17) Estimated) ) Forward) Forward) Forward) Outcome) Budget) Estimate) Estimate) Estimate)


Cash Receipts from Operating Activities Grants Received 2 788.6 2 842.8 2 954.9 3 234.2 3 384.1

Taxation 870.9 890.2 920.1 950.8 983.9





Other Receipts 580.8 509.9 457.5 456.0 456.1

8 273.5 8 297.3 8 166.8 8 369.2 8 861.7

Cash Payments for Operating Activities Employee Entitlements (2 467.7) (2 519.1) (2 543.0) (2 628.9) (2 645.3)

Superannuation (384.4) (424.3) (439.4) (469.3) (478.7)


Borrowing Costs (173.0) (183.0) (169.0) (179.4) (190.5)

Grants and Subsidies Paid (948.2) (871.2) (897.7) (898.5) (942.9)

Other Payments (398.2) (325.3) (284.4) (277.8) (273.7)

(7 707.9) (7 497.4) (7 403.7) (7 636.2) (7 929.2)

Net Cash Flows from Operating Activities 565.7 799.9 763.1 733.1 932.5 Cash flows from Investing Activities

Net Cash Flows from Non-Financial Assets Purchase of Non-Financial Assets (1 262.9) (1 079.4) (892.7) (808.7) (862.3)


(887.5) (1 042.7) (836.3) (779.1) (837.4)

Net Cash Flows from Financial Assets (Policy Purposes) Equity Injections 1.2 (2.2) (2.7) (2.5) (2.0)


4.9 (2.7) (6.3) (5.7) (5.3)


Table A1.10: Total Non-Financial Public Sector Cash Flow Statement (continued)


$m) $m) $m) $m) $m)

Net Cash Flows from Financial Assets (Liquidity Purposes)

(25.8) 5.8 1.5 1.6 (33.6)

Net Cash Flows from Investing Activities (908.3) (1 039.6) (841.0) (783.2) (876.2) Net Cash Flows from Financing Activities

Dividends, Tax and Rate Equivalents Paid (24.9) (26.1) (28.4) (22.7) (22.7)

Net Borrowings 23.7 84.7 (42.2) 26.6 (80.4)

(1.2) 58.6 (70.5) 3.8 (103.1) Net Increase/(Decrease) in Cash Held (343.9) (181.1) (148.5) (46.3) (46.8) Cash at Beginning of the Year 1 542.1 1 198.1 1 017.1 868.6 822.3 Cash at End of the Year 1 198.1 1 017.1 868.6 822.3 775.4 KEY FISCAL AGGREGATES


Plus Net Cash Flows from Non-Financial Assets (887.5) (1 042.7) (836.3) (779.1) (837.4)

Plus Dividends, Tax and Rate Equivalents Paid (24.9) (26.1) (28.4) (22.7) (22.7)

Equals CASH SURPLUS/(DEFICIT) (346.7) (268.9) (101.5) (68.7) 72.4


Table A1.11: Public Financial Corporations Sector Income Statement 2012-13) 2013-14) 2014-15) 2015-16) 2016-17) Estimated) ) Forward) Forward) Forward) Outcome) Budget) Estimate) Estimate) Estimate)



Interest Income 360.7 353.6 353.7 362.3 354.6


Other Revenue 8.5 2.6 2.7 4.5 2.8

550.0 570.0 582.6 606.2 611.5 Less Expenses from Transactions

Employee Expenses 4.6 4.7 4.8 4.9 5.0

Superannuation 0.7 0.8 0.8 0.8 0.8

Depreciation 0.2 0.2 0.2 0.2 0.2

Supplies and Consumables 176.0 157.0 162.2 174.3 187.0

Borrowing Costs 337.2 340.2 341.9 341.9 341.9


Grant Expenses 4.6 4.9 5.1 5.4 5.7

Other Expenses 4.2 3.5 4.3 4.3 4.3

552.7 544.1 559.0 574.3 582.1

Equals NET OPERATING BALANCE (2.8) 25.9 23.7 31.8 29.4


Result

Other Gains/(Losses) 126.9 15.3 16.1 17.3 20.3

126.9 15.3 16.1 17.3 20.3

Equals Operating Result 124.1 41.2 39.8 49.2 49.7

Plus Other Economic Flows - Other Movements in

Equity

Other Flows (19.4) (24.4) (26.3) (28.0) (25.8)

(19.4) (24.4) (26.3) (28.0) (25.8)

Equals Comprehensive Result 104.7 16.8 13.5 21.2 23.9


Table A1.11: Public Financial Corporations Sector Income Statement (continued)


$m) $m) $m) $m) $m) KEY FISCAL AGGREGATES NET OPERATING BALANCE (2.8) 25.9 23.7 31.8 29.4 Less Net Acquisition of Non-Financial Assets




0.3 0.2 .... .... 0.1

Equals FISCAL BALANCE (3.1) 25.7 23.6 31.8 29.3


Table A1.12: Public Financial Corporations Sector Balance Sheet as at 30 June

2013) 2014) 2015) 2016) 2017) Estimated) Forward) Forward) Forward) Outcome) Budget) Estimate) Estimate) Estimate)


Financial Assets Cash and Deposits 27.1 28.8 30.7 32.8 35.1

Investments 8 346.5 6 900.8 6 844.1 7 215.5 8 151.5

Receivables 44.3 44.5 44.6 46.6 46.7


8 473.8 7 020.7 6 965.7 7 341.2 8 279.6

Non-Financial Assets Plant and Equipment 1.1 1.3 1.2 1.3 1.3


Intangible assets 0.4 0.3 0.3 0.2 0.1

16.5 16.6 16.5 16.5 16.5

Total Assets 8 490.4 7 037.4 6 982.2 7 357.7 8 296.1 Liabilities

Borrowings 7 080.6 5 546.8 5 401.9 5 669.1 6 493.1

Superannuation 5.2 5.5 5.9 6.2 6.5


Payables 2.2 2.2 2.2 2.2 2.2



NET ASSETS 388.0 404.8 418.3 439.5 463.4

Equity

Accumulated Funds 378.0 394.8 408.3 429.5 453.4

Other Equity 10.0 10.0 10.0 10.0 10.0

Total Equity 388.0 404.8 418.3 439.5 463.4


Table A1.12: Public Financial Corporations Sector Balance Sheet as at 30 June (continued)

2013) 2014) 2015) 2016) 2017) Estimated) Forward) Forward) Forward) Outcome) Budget) Estimate) Estimate) Estimate)

$m) $m) $m) $m) $m) KEY FISCAL AGGREGATES NET WORTH 1 388.0 404.8 418.3 439.5 463.4 NET FINANCIAL WORTH 2 371.5 388.2 401.8 423.0 447.0 NET FINANCIAL LIABILITIES 3 (371.5) (388.2) (401.8) (423.0) (447.0) NET DEBT 4 (1 293.0) (1 382.8) (1 472.9) (1 579.2) (1 693.5) Notes: 1. Net Worth represents Total Assets (both Financial and Non-Financial) less Total Liabilities. 2. Net Financial Worth represents Total Financial Assets less Total Liabilities. 3. Net Financial Liabilities represents Total Liabilities less Financial Assets. For the PFC Sector this is equivalent to

negative Net Financial Worth. 4. Net Debt represents Borrowings less the sum of Cash and Deposits and Investments.


Table A1.13: Public Financial Corporations Sector Cash Flow Statement


$m) $m) $m $m $m Cash Flows from Operating Activities

Cash Received from Operating Activities Sales of Goods and Services 155.7 162.3 171.2 180.7 190.8



Other Receipts 0.9 0.9 0.9 0.9 1.0

558.0 587.5 601.4 624.2 632.5 Cash Payments for Operating Activities

Employee Entitlements (4.8) (4.9) (5.0) (5.2) (5.3)

Superannuation (0.3) (0.3) (0.3) (0.3) (0.3)

Supplies and Consumables (97.1) (120.9) (124.1) (126.9) (134.1)

Borrowing Costs (341.2) (340.2) (341.9) (341.9) (341.9)


Other Payments (6.9) (10.5) (11.1) (8.8) (12.1)

(454.8) (482.0) (487.9) (488.7) (499.7)

Net Cash Flows from Operating Activities 103.2 105.5 113.5 135.5 132.8 Cash Flows from Investing Activities



(0.5) (0.4) (0.2) (0.2) (0.3) Net Cash Flows from Financial Assets (Liquidity

Purposes) (427.8) 1 458.5 72.0 (366.2) (918.8)

Net Cash Flows from Investing Activities (428.3) 1 458.1 71.8 (366.4) (919.1) Net Cash Flows from Financing Activities

Dividends and Tax Equivalents Paid (11.1) (28.1) (38.6) (34.2) (35.3)

Net Borrowing 362.6 (1 533.7) (144.9) 267.2 823.9

351.4 (1 561.8) (183.5) 233.0 788.6 Net Increase/(Decrease) in Cash Held 26.3 1.8 1.8 2.1 2.3 Cash at Beginning of the Year 0.8 27.1 28.8 30.7 32.8 Cash at End of the Year 27.1 28.8 30.7 32.8 35.1


Table A1.13: Public Financial Corporations Sector Cash Flow Statement (continued)


$m) $m) $m) $m) $m) KEY FISCAL AGGREGATES Net Cash Flows from Operating Activities 103.2 105.5 113.5 135.5 132.8

Plus Net Cash Flows from Non-Financial Assets (0.5) (0.4) (0.2) (0.2) (0.3)

Plus Dividends and Tax Equivalents Paid (11.1) (28.1) (38.6) (34.2) (35.3)

Equals CASH SURPLUS/(DEFICIT) 91.5 77.0 74.8 101.1 97.2


Table A1.14: Total State Sector Income Statement 2012-13) 2013-14) 2014-15) 2015-16) 2016-17) Estimated) ) Forward) Forward) Forward) Outcome) Budget) Estimate) Estimate) Estimate)


Grants 2 790.9 2 850.9 2961.9 3 237.4 3 387.3

Taxation 870.7 890.0 919.9 950.6 983.7



Interest Income 175.9 155.8 170.0 169.2 150.4


Other Revenue 261.4 240.8 249.0 257.5 253.6



Superannuation 256.1 283.7 284.5 288.9 287.9

Depreciation 638.6 675.9 688.9 693.9 677.7



Borrowing Costs 308.3 318.8 321.7 318.0 312.1


Grant Expenses 952.9 876.9 903.0 904.0 948.7

Other Expenses 69.6 56.6 55.6 55.5 54.0

8 375.4 8 283.8 8 290.1 8 485.9 8 788.9

Equals NET OPERATING BALANCE (130.0) (105.5) (42.8) (38.8) 139.7


Result

Gain/(Loss) on Sale of Non-Financial Assets (200.7) 8.2 10.7 8.8 8.4


Other Gains/(Losses) 45.2 (129.4) (8.9) 20.9 29.8

2 055.3 (121.3) 1.8 29.7 38.2

Equals Operating Result 1 925.3 (226.8) (41.0) (9.1) 178.0

Plus Other Economic Flows - Other Movements in

Equity


Other Flows 332.1 (9.1) (13.9) (15.1) 4.0

658.0 367.3 332.7 342.5 372.9

Equals Comprehensive Result 2 583.3 140.5 291.7 333.4 550.9


Table A1.14: Total State Sector Income Statement (continued) 2012-13) 2013-14) 2014-15) 2015-16) 2016-17) Estimated) ) Forward) Forward) Forward) Outcome) Budget) Estimate) Estimate) Estimate)

$m) $m) $m) $m) $m) KEY FISCAL AGGREGATES NET OPERATING BALANCE (130.0) (105.5) (42.8) (38.8) 139.7 Less Net Acquisition of Non-Financial Assets

Purchase of Non-Financial Assets 1 263.5 1 079.9 893.0 809.0 862.6



249.4 367.2 147.5 85.3 159.9



Table A1.15: Total State Sector Balance Sheet as at 30 June 2013) 2014) 2015) 2016) 2017)



$m) $m) $m) $m) $m)

Assets

Financial Assets

Cash and Deposits 170.0 139.0 148.0 172.0 156.0

Investments 4 802.0 3 302.5 3 279.3 3 600.2 4 632.4


Receivables 841.1 671.6 678.2 677.9 681.2


6 531.5 4 819.7 4 818.3 5 175.8 6 247.5


Land, Buildings and Biological Assets 7 058.5 7 254.7 7 526.5 7 722.9 7 964.9

Infrastructure 14 570.2 14 910.4 15 154.7 15 433.3 15 758.8




Intangibles 160.5 166.4 151.9 157.7 165.9



23 182.4 23 759.8 24 264.0 24 734.1 25 322.0

Total Assets 29 713.9 28 579.6 29 082.2 29 909.9 31 569.5

Liabilities

Borrowings 6 229.1 4 886.3 4 886.4 5 197.1 6 071.8

Superannuation 5 566.2 5 722.2 5 869.8 6 001.3 6 124.1


Payables 510.6 400.2 402.4 407.0 411.7



NET ASSETS 13 649.3 13 789.8 14 081.5 14 414.9 14 965.8


Table A1.15: Total State Sector Balance Sheet as at 30 June (continued)

2013) 2014) 2015) 2016) 2017)


Outcome) Budget) Estimate Estimate) Estimate)

$m) $m) $m) $m) $m)

Equity



Total Equity 13 649.3 13 789.8 14 081.5 14 414.9 14 965.8


NET WORTH 1 13 649.3 13 789.8 14 081.5 14 414.9 14 965.8

NET FINANCIAL WORTH 2 (9 533.1) (9 970.1) (10 182.5) (10 319.3) (10 356.2)

NET FINANCIAL LIABILITIES 3 9 533.1 9 970.1 10 182.5 10 319.3 10 356.2

NET DEBT 4 1 257.1 1 444.9 1 459.1 1 424.9 1 283.4

Notes: 1. Net Worth represents Total Assets (both Financial and Non-Financial) less Total Liabilities. 2. Net Financial Worth represents Total Financial Assets less Total Liabilities. 3. Net Financial Liabilities represents Total Liabilities less Financial Assets. For the Total State Sector this is equivalent

to negative Net Financial Worth. 4. Net Debt represents Borrowings less the sum of Cash and Deposits and Investments.


Table A1.16: Total State Sector Cash Flow Statement 2012-13) 2013-14) 2014-15) 2015-16) 2016-17) Estimated) ) Forward) Forward) Forward) Outcome) Budget) Estimate) Estimate) Estimate)


Cash Receipts from Operating Activities

Grants Received 2 788.6 2 842.8 2 954.9 3 234.2 3 384.1

Taxation 870.7 890.0 919.9 950.6 983.7





Other Receipts 581.7 510.8 458.4 457.0 457.1

8 619.3 8 652.8 8 541.5 8 756.6 9 239.1


Employee Entitlements (2 472.4) (2 524.0) (2 548.1) (2 634.1) (2 650.6)

Superannuation (384.7) (424.6) (439.7) (469.5) (479.0)


Borrowing Costs (313.4) (319.6) (322.9) (318.9) (312.8)


Other Payments (404.8) (335.6) (295.3) (286.3) (285.5)

(7 961.6) (7 775.5) (7 703.4) (7 922.2) (8 209.1)

Net Cash Flows from Operating Activities 657.7 877.3 838.0 834.4 1 030.0 Cash Flows from Investing Activities

Net Cash Flows from Non-Financial Assets

Purchase of Non-Financial Assets (1 263.5) (1 079.9) (893.0) (809.0) (862.6)


(888.0) (1 043.1) (836.5) (779.3) (837.6)

Net Cash Flows from Financial Assets (Policy Purposes)

Equity Injections 1.2 (2.2) (2.7) (2.5) (2.0)


4.9 (2.7) (6.3) (5.7) (5.3)


Table A1.16: Total State Sector Cash Flow Statement (continued) 2012-13) 2013-14) 2014-15) 2015-16) 2016-17) Estimated) ) Forward) Forward) Forward) Outcome) Budget) Estimate) Estimate) Estimate)

$m) $m) $m) $m) $m) Net Cash Flows from Financial Assets (Liquidity

Purposes) (408.9) 1 506.4 41.9 (313.3) (1 055.1)

Net Cash Flows from Investing Activities (1 291.9) 460.6 (800.8) (1 098.3) (1 898.0)

Net Cash Flows from Financing Activities

Dividends, Tax and Rate Equivalents Paid (24.9) (26.1) (28.4) (22.7) (22.7)

Net Borrowings 585.1 (1 342.8) 0.1 310.7 874.7

560.2 (1 368.9) (28.3) 287.9 852.0 Net Increase/(Decrease) in Cash Held (74.0) (31.0) 9.0 24.0 (16.0) Cash at Beginning of the Year 244.0 170.0 139.0 148.0 172.0 Cash at End of the Year 170.0 139.0 148.0 172.0 156.0 KEY FISCAL AGGREGATES

Net Cash Flows from Operating Activities 657.7 877.3 838.0 834.4 1 030.0

Plus Net Cash Flows from Non-Financial Assets (888.0) (1 043.1) (836.5) (779.3) (837.6)

Plus Dividends, Tax and Rate Equivalents Paid (24.9) (26.1) (28.4) (22.7) (22.7)

Equals CASH SURPLUS/(DEFICIT) (255.2) (191.9) (26.8) 32.4 169.6


Table A1.17: General Government Expenses from Transactions by Purpose 2012-13) 2013-14) 2014-15) 2015-16) 2016-17) Estimated) ) Forward) Forward) Forward) Outcome) Budget) Estimate) Estimate) Estimate)

$m) $m) $m) $m) $m) General Public Services 207.9 180.2 201.3 192.2 178.5

Public Order and Safety 440.4 447.5 455.1 470.0 476.3

Education 1 294.4 1 349.2 1 361.4 1 404.4 1 416.6

Health 1 406.5 1 398.3 1 415.5 1 472.3 1 517.7

Social Security and Welfare 387.1 435.7 447.6 455.0 481.7

Housing and Community Amenities 230.6 209.8 202.3 199.5 203.7

Recreation and Culture 171.3 171.1 183.7 171.3 169.0

Fuel and Energy 5.9 2.4 1.4 1.4 1.5

Agriculture, Forestry, Fishing and Hunting 162.5 122.7 106.4 106.2 101.1

Mining and Mineral Resources other than Fuels,

Manufacturing and Construction

6.5 6.2 5.6 5.7 5.8

Transport and Communications 278.9 255.7 246.7 245.9 248.2

Other Economic Affairs 116.7 101.2 110.6 100.7 96.1

Nominal Interest on Superannuation 235.2 268.2 275.6 282.4 288.8

Other Purposes 88.6 110.7 104.7 114.4 114.5

5 032.4 5 059.0 5 117.9 5 221.5 5 299.4

Table A1.17 presents General Government Expenses from Transactions classified by purpose. This is presented in accordance with the Government Purpose Classification (GPC), which is based on the Australian Bureau of Statistics classifications used as part of the Government Finance Statistics reporting framework. The GPC provides a standard framework to allocate Government expenditure according to functions. Disclosure of this information can assist users in identifying the resources committed to particular functions and the costs of service delivery that are attributable to those functions.

Policy and Parameter Statement A2.1

APPENDIX 2 POLICY AND

PARAMETER STATEMENT

Features

The Policy and Parameter Statement reflects changes between the Budget and Forward Estimates

reported in the 2012-13 Budget Papers and the 2013-14 Budget Papers.

Revenue policy decisions will result in a decrease in receipts to the State of $8.3 million in 2013-14,

rising to a decrease of $11.8 million in 2016-17. This primarily reflects the increase in the payroll tax

threshold.

Expense policy decisions result in an increase in expenditure of $95.5 million in 2013-14, increasing to

$110.0 million in 2016-17. This increase reflects the allocation of additional funding for a number of

important policy initiatives that are detailed in the Policy and Parameter Statement and Budget Paper

No 2 Government Services.

A2.2 Policy and Parameter Statement

INTRODUCTION The Policy and Parameter Statement (PPS) is a reconciliation of the major movements in the Net Operating

Balance and the Fiscal Balance between two points in time. The movements reflect changes between the

Budget and Forward Estimates reported in the 2012-13 Budget Papers and the 2013-14 Budget Papers.

The movements in the PPS are classified as revenue, expenses or net acquisition of non-financial assets,

and then further categorised as a policy or parameter change. The classification of a variation as a policy or

parameter change is a matter of judgment and it is recognised there may be some instances where part of a

Government initiative may have both policy and parameter components. In exercising judgement, Treasury

aims to ensure that Government decisions are made transparent.

Policy Variation

For the purpose of the PPS, a policy variation reflects a specific decision by the Government that has an

impact on the Budget and Forward Estimates and is related to a new policy or represents a change in the

Government's existing policy position since the previous Budget. A decision to change a Budget or Forward

Estimate aggregate, which is consistent with an existing policy, is not a policy decision.

Parameter Variation

A parameter variation reflects changes to the Budget and Forward Estimates due to the economic

environment, the agency operating environment or the timing of a transaction.

Parameter variations will reflect the impact of changes in taxes, grants or other income that do not arise

because of a Government decision; and demand and cost variations in agency service delivery, including

the provision of indexation. Variations resulting from the rollover of a new Forward Estimate year and

changes in accounting policies, such as a change in an agency depreciation policy, or the impact on

estimates of a change in an Australian Accounting Standard are classified as parameter variations.

Table A2.1 provides a summary of the policy and parameters changes detailed in Table A2.2 that have

impacted on the formulation of the 2013-14 Budget since the 2012-13 Budget.

Further Information

Additional information on revenue estimates is provided in Chapter 4 General Government Revenue of this

Budget Paper. Detailed information on agency expenditure estimates is included in Chapter 5 General

Government Expenses of this Budget Paper and in the relevant agency chapters in Budget Paper No 2

Government Services.


Table A2.1: Summary Policy and Parameter Statement

2012-13)

Estimated)

Outcome)

2013-14)

Budget)

2014-15)

Forward)

Estimate)

2015-16)

Forward)

Estimate)

2016-17)

Forward)

Estimate1)

$m) $m) $m) $m) $m)

Forward Estimates (Net Operating Balance) as per

the 2012-13 Budget (A) (283.0) 52.8) 240.7) 259.5) ....)

Forward Estimates (Fiscal Balance) as per the

2012-13 Budget (B) (428.6) (35.2) 202.7) 162.2) ....)

REVENUE

Policy Decisions 0.5) (8.3) (10.8) (11.4) (11.8)

Parameter Adjustments (25.3) (124.6) (228.2) (73.3) ....)

TOTAL REVENUE VARIATIONS (C) (24.8) (132.8) (239.0) (84.7) ....)

EXPENSES

Policy Decisions 39.2) 95.5) 105.8) 98.4) 110.0)

Parameter Adjustments 78.7) 91.4) 60.4) 110.2) ....)

TOTAL EXPENSES VARIATIONS (D) 117.9) 186.9) 166.2) 208.6) ....)

NET OPERATING BALANCE (A+C-D) (425.7) (266.9) (164.5) (33.9) 9.9)

less NET ACQUISITION OF NON-FINANCIAL

ASSETS

Purchases of Non-Financial Assets

Total Policy Decisions ....) 20.4) 24.4) 7.7) 15.4)

Total Parameter Adjustments (131.7) (44.9) 21.7) (84.2) ....)

(131.7) (24.5) 46.1) (76.5) ....)

Less Sales of Non-Financial Assets (7.0) (1.9) 9.3) 1.3) ....)

Less Depreciation - Total Parameter Adjustments 5.6) 23.2) 24.1) 26.4) ....)

NET ACQUISITION OF NON-FINANCIAL ASSETS

VARIATIONS (E) (130.3) (45.8) 12.7) (104.2) ....)

FISCAL BALANCE (B+C-D-E) (441.0) (309.1) (215.2) (26.9) (18.7)

Note: 1. The 2016-17 parameter adjustments are not reflected in the Table as the 2016-17 Forward Estimate was not

published in the 2012-13 Budget. However, policy adjustments are reflected to show their full impact on the Budget and Forward Estimates.


Table A2.2: Policy and Parameter Statement 2012-13 to 2016-17

2012-13)

Estimated)

Outcome)

2013-14)

Budget)

2014-15)

Forward)

Estimate)

2015-16)

Forward)

Estimate)

2016-17)

Forward)

Estimate1)

$m) $m) $m) $m) $m)

Forward Estimates (Net Operating Balance) as per

the 2012-13 Budget (A) (283.0) 52.8) 240.7) 259.5) ....)

Forward Estimates (Fiscal Balance) as per the

2012-13 Budget (B) (428.6) (35.2) 202.7) 162.2) ....)

REVENUE

Policy Decisions

Taxation Policy2

Boost for First Home Builders Additional Duties

Impact 0.5) 2.4) 0.3) ....) ....)

Duty on Transfer of Caravans and Campers

Abolition ....) (1.0) (1.0) (1.0) (1.1)

Payroll Tax Threshold Increase ....) (9.7) (10.0) (10.4) (10.7)

Total Policy Decisions 0.5) (8.3) (10.8) (11.4) (11.8)

Parameter Adjustments

Taxation

Betting Exchange Taxes and Levies 0.3) 0.2) 0.1) 0.1) ....)

Casino Tax and Licence Fees (4.0) (3.8) (4.2) (4.5) ....)

Duties3 (9.0) (15.8) (16.7) (18.0) ....)

Guarantee Fees (5.4) (8.7) (12.2) (14.1) ....)

Land Tax 1.7) (1.8) (3.5) (4.8) ....)

Lottery Tax 2.3) 2.4) 2.4) 2.5) ....)

Motor Taxation (3.9) (5.4) (6.7) (8.3) ....)

Payroll Tax4 (5.5) (12.5) (13.9) (17.8) ....)

State Fire Commission Receipts 1.0) 1.3) 1.4) 1.4) ....)

Totalizator Wagering Levy ....) ....) (0.1) (0.1) ....)

Total Taxation (22.5) (44.2) (53.4) (63.6) ....)

Dividend, Tax and Rate Equivalent Income

Dividend income

Aurora Energy Pty Ltd5 1.7) (9.5) (34.8) (15.7) ....)

Hydro Tasmania6 (0.7) (19.3) (13.2) (17.7) ....)

Motor Accidents Insurance Board (2.2) 3.9) 3.1) 2.1) ....)

New Network Business7 ....) ....) 57.6) 51.6) ....)

Tasmanian Public Finance Corporation (2.0) (3.2) (0.1) 0.4) ....)

The Public Trustee 0.1) (0.1) (0.1) (0.1) ....)

Transend Networks Pty Ltd5 (3.0) 5.3) (20.5) (19.2) ....)

(6.2) (22.8) (8.1) 1.4) ....)


Table A2.2: Policy and Parameter Statement 2012-13 to 2016-17 (continued)

2012-13)

Estimated)

Outcome)

2013-14)

Budget)

2014-15)

Forward)

Estimate)

2015-16)

Forward)

Estimate)

2016-17)

Forward)

Estimate)

$m) $m) $m) $m) $m)

Income Tax Equivalents

Aurora Energy Pty Ltd5 17.6) (20.0) (38.3) (13.4) ....)

Forestry Tasmania8 (16.5) (2.4) (2.7) (3.1) ....)

Hydro Tasmania6 (5.5) (36.4) (47.7) (67.6) ....)

Metro Tasmania Pty Ltd (0.3) (0.4) (0.4) (0.4) ....)

Motor Accidents Insurance Board9 13.2) 9.5) (1.0) 2.1) ....)

New Network Business7 .... ) .... ) 40.8) 35.8) ....)

Tasmanian Irrigation Pty Ltd 0.9) .... ) 0.3) 0.6) ....)

Tasmanian Public Finance Corporation 2.7) 0.4) (0.4) 2.0) ....)

Tasmanian Ports Corporation (0.7) (0.7) (0.7) (1.6) ....)

The Public Trustee 0.1) .... ) .... ) 0.1) ....)

Transend Networks Pty Ltd5 (12.5) (1.6) (17.4) (19.3) ....)

TT Line Pty Ltd 3.9) 3.0) 2.1) 2.1) ....)

3.1) (48.5) (65.3) (62.7) ....)

Rates Equivalent Payments

Hydro Tasmania 0.3) 0.3) 0.3) 0.3) ....)

Total Dividend, Tax and Rate Equivalent Income (2.8) (71.0) (73.0) (60.9) .... )

Interest Income 2.0) (1.5)) (12.1)) (19.3) .... )

Australian Government Grants

General Purpose Payments

GST Revenue10 28.0) (48.9) (110.0)) 36.9) ....)

28.0) (48.9) (110.0)) 36.9) ....)


Community Services11 (44.4) (29.0) (29.0) (29.0) ....)

Education 1.2) 4.4) (0.7) 1.8) ....)

Environment12 (20.2) 9.6) (6.5) 17.5) ....)

Healthcare 26.0) 20.6) 17.3) (45.0) ....)

Housing 1.4) 2.9) .... ) .... ) ....)

Infrastructure (17.0) 6.0) .... ) .... ) ....)

Other Services (36.5) (0.5) (0.4) (0.8) ....)

Skills and Workforce Development (0.1) (1.0) 2.2) 2.1) ....)

(89.8) 13.1) (17.1) (53.4) ....)



2012-13)

Estimated)

Outcome)

2013-14)

Budget)

2014-15)

Forward)

Estimate)

2015-16)

Forward)

Estimate)

2016-17)

Forward)

Estimate)

$m) $m) $m) $m) $m)


Schools (2.4) (10.5) (4.9) 8.1) ....)

Skills and Workforce Development 1.0) 0.5) (0.2) 0.1) ....)

National Disability Services (11.3) (16.7) (15.2) (13.8) ....)

National Affordable Housing (0.3) 0.6) (3.2) (3.3) ....)

National Health Reform (5.9) (8.1) (12.4) 16.0) ....)

(18.9) (34.2) (35.9) 7.0) ....)

Other13 (21.5) (30.4) (21.6) (22.2) ....)

Total Australian Government Grants (102.2) (100.4) (184.6) (31.7) ....)

Agency Revenue

Education14 ....) (13.8) (10.0) (9.5) ....)

Finance-General ....) (0.1) ....) ....) ....)

Health and Human Services15 26.3) 28.8) 27.4) 33.7) ....)

Infrastructure, Energy and Resources (8.5) (6.5) 0.1) 0.1) ....)

Inland Fisheries Service .... ) 0.5) 0.5) 0.5) ....)

Justice (6.7) (2.0) (2.5) (2.0) ....)

Marine and Safety Tasmania 0.1) (0.1) (0.2) (0.1) ....)

Office of the Ombudsman 0.1) 0.1) 0.1) 0.1) ....)

Police and Emergency Management (1.0) (1.1) (1.1) (1.1) ....)

Premier and Cabinet 0.4) 0.8) 1.0) 1.2) ....)

Primary Industries, Parks, Water and Environment 0.3) (3.3) (4.0) (4.7) ....)

Royal Tasmanian Botanical Gardens .... ) (0.3) (0.3) (0.3) ....)

State Fire Commission 0.5) 0.2) 0.4) 0.5) ....)

Tasmanian Audit Office (0.1) 0.1) 0.1) 0.2) ....)

Tasmanian Health Organisations ....)

North-West15 15.3) 12.7) 11.5) 11.5) ....)

South15 46.0) 41.2) 36.8) 36.8) ....)

North15 24.4) 20.9) 21.0) 21.2) ....)

TasTAFE14 .... ) 53.8) 54.8) 55.9) ....)

Tasmanian Skills Institute14 .... ) (39.6) (40.3) (41.0) ....)

Treasury and Finance 3.3) 0.1) (0.2) (0.7) ....)

Total Agency Revenue 100.2) 92.6) 95.0) 102.5) ....)



2012-13)

Estimated)

Outcome)

2013-14)

Budget)

2014-15)

Forward)

Estimate)

2015-16)

Forward)

Estimate)

2016-17)

Forward)

Estimate)

$m) $m) $m) $m) $m)

Total Parameter Adjustments (25.3) (124.6) (228.2) (73.3) ....)

TOTAL REVENUE VARIATIONS (C) (24.8) (132.8) (239.0) (84.7) ....)

EXPENSES

Policy Decisions16

Agency Expenditure

Economic Development, Tourism and the

Arts

Asian Century Initiatives ....) 0.6) 0.3) 0.3) 0.3)

Aurora Stadium Lighting Upgrade 1.0) ....) ....) ....) ....)

Blundstone Arena Redevelopment ....) ....) 15.0) ....) ....)

Dairy Tas - Filling the Factories Conversion 0.4) ....) ....) ....) ....)

Hollybank Mountain Bike Park 0.8) ....) ....) ....) ....)

Lion Assistance Package ....) ....) 1.5) ....) ....)

Netball Tasmania Grant ....) 0.2) ....) ....) ....)

Seaport Boardwalk Expansion 1.0) ....) ....) ....) ....)

Tasmanian Government Innovation and

Investment Fund 2.5) 2.5) ....) ....) ....)

Tasmanian Museum and Art Gallery ....) 0.8) 0.8) 0.8) 0.8)

Theatre Royal Performing Arts and Education

Centre ....) ....) 10.8) 2.2) ....)

Tourism Marketing 1.0) 1.0) ....) ....) ....)

Trails and Bikeways Initiative ....) 0.5) 0.5) ....) ....)

Vodafone Call Centre Assistance ....) 1.2) 0.3) 2.7) 3.4)

6.7) 6.7) 29.2) 5.9) 4.5)

Education

Tasmanian Education Funding Reform ....) 7.0) 19.0) 26.0) 31.0)

VET Reform Management Costs 1.4) ....) ....) ....) ....)

Year 11/12 Regional Education Initiative ....) 0.6) 0.1) 0.1) 0.1)

1.4) 7.6) 19.1) 26.1) 31.1)

Finance-General

Boost for First Home Builders 2.5) 5.8) 5.7) ....) ....)

Electricity Reform Costs ....) 4.4) 4.0) 4.0) 4.0)

First Home Owner Grant on Established

Homes Abolition ....) ....) (11.0) (11.0) (11.0)

ICT Project Fund ....) 4.0) 6.0) 8.0) 10.0)

Payroll Tax Rebate ....) 0.5) 2.1) 1.4) ....)

Payroll Tax Rebate - Vodafone Call Centre ....) 1.5) 2.7) 0.3) ....)



2012-13)

Estimated)

Outcome)

2013-14)

Budget)

2014-15)

Forward)

Estimate)

2015-16)

Forward)

Estimate)

2016-17)

Forward)

Estimate)

$m) $m) $m) $m) $m)

Finance-General (continued)

Ports Infrastructure Essential Maintenance ....) 0.5) 1.0) 8.5) 7.5)

Tasmanian Bushfire Recovery 22.0) 8.3) ....) ....) ....)

Tasmanian Forests Agreement ....) 17.4) 8.3) 7.3) 1.8)

Tasmanian Irrigation Pty Ltd - Enterprise

Suitability Mapping ....) 0.8) 0.3) 0.3) 0.3)

24.5) 43.1) 19.1) 18.8) 12.6)


Apology for Forced Adoptions 0.1) 0.1) ....) ....) ....)

Checks for People Working with Children and

Vulnerable People ....) 0.7) 0.2) ....) ....)

Community Infrastructure 3.0) ....) ....) ....) ....)

Continuation of Reviews and Reforms Funding ....) 20.0) 20.0) 20.0) 20.0)

Equal Remuneration Order (ERO) Costs ....) 0.3) 2.5) 4.3) 9.2)

National Disability Insurance Scheme ....) 1.2) 2.0) 2.0) 11.6)

Preventative Health Initiatives ....) 0.5) 0.5) ....) ....)

Rural Breast Screening Clinics ....) 0.1) 0.1) 0.1) 0.1)

State-wide Cancer Services ....) 0.8) ....) ....) ....)

3.1) 23.6) 25.3) 26.4) 41.0)

Infrastructure, Energy and Resources

Abt Railway17 3.0) ....) ....) 1.5) 1.5)

Infrastructure Maintenance Additional Funding ....) 1.5) 1.5) 1.5) 1.5)

3.0) 1.5) 1.5) 3.0) 3.0)

Justice

Anti-Discrimination Commissioner ....) 0.3) 0.3) 0.3) 0.3)

Criminal Justice Information Management

System Operational Funding ....) ....) ....) 0.6) 0.6)

Mental Health Bill 2012 ....) 0.5) 0.5) 0.5) 0.5)

Planning Reform Specialist Gap 0.3) 0.5) ....) ....) ....)

Prison Infrastructure Redevelopment Program

Stage D Operating Costs ....) 0.2) 2.2) 4.4) 4.4)

0.3) 1.5) 3.0) 5.7) 5.7)

Police and Emergency Management

Additional Funding for Frontline Services ....) 4.5) 6.5) 10.6) 10.3)

....) 4.5) 6.5) 10.6) 10.3)



2012-13)

Estimated)

Outcome)

2013-14)

Budget)

2014-15)

Forward)

Estimate)

2015-16)

Forward)

Estimate)

2016-17)

Forward)

Estimate)

$m) $m) $m) $m) $m)

Premier and Cabinet

Asia Institute ....) 0.2) 0.2) 0.2) 0.2)

Coastal, Regional and Sector-based Climate

Change Adaptation Activities ....) 0.2) 0.2) ....) ....)

Community Engagement Strategy for the

Government's Agenda ....) 0.1) ....) ....) ....)

Community Resilience and Recovery - No

Interest Loans Scheme (NILS) ....) 0.3) 0.3) 0.3) 0.3)

Darrel Baldock Memorial ....) 0.1) ....) ....) ....)

Integrated Tasmanian Government Contact

Centre Project Operational Costs ....) 1.2) 1.1) 1.1) 1.0)

Jobs Website Redevelopment ....) 0.3) ....) ....) ....)

King Island Council Partnership Agreement 0.3) 0.1) 0.1) ....) ....)

Lesbian, Gay, Bisexual, Transgender and

Intersex Grant ....) 0.1) 0.1) 0.1) 0.1)

Tasmanian Carers Council ....) 0.1) 0.1) 0.1) 0.1)

0.3) 2.5) 2.0) 1.8) 1.6)


Environment

Intensive Animal Farming Industry

Development ....) 1.0) ....) ....) ....)

Mine Remediation and Innovation Centre of

Excellence Study ....) 0.1) ....) ....) ....)

Port Arthur - Penitentiary Conservation Works ....) 3.0) ....) ....) ....)

State Container Deposit Study ....) 0.1) ....) ....) ....)

....) 4.2) ....) ....) ....)

Royal Tasmanian Botanical Gardens

Ongoing Sustainability and Tasmanian Seed

Conservation Centre ....) 0.2) 0.2) 0.2) 0.2)

....) 0.2) 0.2) 0.2) 0.2)

Total Policy Decisions 39.2) 95.5) 105.8) 98.4) 110.0)


Depreciation 5.6) 23.2) 24.1) 26.4) ....)

Nominal Superannuation Interest Expense (25.0) (1.9) (3.5) (5.0) ....)

Borrowing Costs (0.8) (0.5) (0.3) (0.2) ....)



2012-13)

Estimated)

Outcome)

2013-14)

Budget)

2014-15)

Forward)

Estimate)

2015-16)

Forward)

Estimate)

2016-17)

Forward)

Estimate)

$m) $m) $m) $m) $m)

Agency Expenditure

Economic Development, Tourism and the Arts 1.6) 0.2) .... ) 1.1) ....)

Education14 1.3) (40.5) (59.3) (47.0) ....)

Finance-General (31.5) (23.2) (12.7) (1.8) ....)

Health and Human Services18 13.0) (114.8) (119.4) (113.5) ....)

Infrastructure, Energy and Resources 20.2) 3.1) (0.7) (5.7) ....)

Inland Fisheries Service ....) 0.2) 0.2) 0.2) ....)

Integrity Commission 0.1) ....) ....) ....) ....)

Justice 9.0) 5.4) 3.4) 4.5) ....)

Legislative Council 0.1) 0.1) 0.1) 0.1) ....)

Legislature-General 0.1) ....) .... ) .... ) ....)

Marine and Safety Tasmania 1.3) (0.4) (1.0) (0.5) ....)

Ministerial and Parliamentary Support (0.1) ....) 0.1) 0.1) ....)

Office of the Ombudsman ....) 0.2) 0.2) 0.2) ....)

Police and Emergency Management (1.0) (1.2) (1.2) (1.3) ....)

Premier and Cabinet 3.6) 2.4) 0.8) 0.5) ....)

Primary Industries, Parks, Water and Environment 9.9) 4.3) (0.7) (1.0) ....)

Royal Tasmanian Botanical Gardens .... ) (0.3) (0.3) (0.3) ....)


Tasmanian Health Organisations ) ) ....)

North-West18 11.6) 28.1) 28.8) 33.5) ....)

South18 38.8) 125.4) 121.0) 133.4) ....)

North18 19.4) 37.7) 37.7) 47.9) ....)

TasTAFE14 .... ) 86.6) 87.2) 87.4) ....)

Tasmanian Audit Office 0.1) 0.1) 0.1) 0.2) ....)

Tasmanian Skills Institute14 .... ) (36.7) (37.3) (38.3) ....)

Treasury and Finance 2.9) 0.3) 1.3) 1.5) ....)

Other (2.2) (8.5) (10.6) (14.6) ....)

Total Agency Expenditure 98.9) 70.6) 40.1) 89.0) ....)

Total Parameter Adjustments 78.7) 91.4) 60.4) 110.2) ....)

TOTAL EXPENSES FROM TRANSACTIONS

VARIANCE (D) 117.9) 186.9) 166.2) 208.6) ....)

NET OPERATING BALANCE19 (425.7) (266.9) (164.5) (33.9) 9.9)



2012-13)

Estimated)

Outcome)

2013-14)

Budget)

2014-15)

Forward)

Estimate)

2015-16)

Forward)

Estimate)

2016-17)

Forward)

Estimate)

$m) $m) $m) $m) $m)

less NET ACQUISITION OF NON-FINANCIAL

ASSETS FROM TRANSACTIONS

Purchases of Non-Financial Assets from

Transactions

Policy Decisions20


Silverdome Capital Upgrade ....) 0.3) 0.3) ....) ....)

....) 0.3) 0.3) ....) ....)

Education

Brooks High School ....) 1.2) 8.1) ....) ....)

Devonport High School ....) ....) 0.2) 0.7) ....)

George Town Child and Family Centre ....) 3.3) ....) ....) ....)

Glenorchy Primary ....) ....) ....) 0.5) 3.5)

Kings Meadows High School ....) ....) 0.1) 2.1) ....)

Lauderdale Primary School ....) ....) 0.1) 1.5) ....)

Montrose Bay High School ....) ....) ....) 1.2) 4.6)

New Town High School ....) 0.8) 2.0) ....) ....)

North West Special School ....) ....) ....) 0.3) 0.6)

Parklands High School ....) ....) ....) 0.5) 3.6)

Renewing our Education System ....) 1.2) ....) ....) ....)

Smithton High School ....) 0.9) 2.6) ....) ....)

South Hobart Primary School ....) ....) ....) 0.5) 3.1)

....) 7.4) 13.2) 7.2) 15.4)


Church Street Youth Accommodation and

Training Facility ....) 3.4) 7.0) ....) ....)

Latrobe Dental Clinic ....) 0.4) ....) ....) ....)

Neighbourhood House Program ....) 2.0) 2.0) ....) ....)

Ravenswood Community Health Centre ....) 0.4) 1.5) 0.5) ....)

Rural Breast Screening Clinics ....) 0.8) 0.5) ....) ....)

State-wide Cancer Services ....) 4.2) ....) ....) ....)

....) 11.2) 11.0) 0.5) ....)

Justice

Launceston Reception Prison ....) 1.0) ....) ....) ....)

Medium Security Accommodation ....) 0.5) ....) ....) ....)

....) 1.5) ....) ....) ....)

Total Policy Decisions ....) 20.4) 24.4) 7.7) 15.4)



2012-13)

Estimated)

Outcome)

2013-14)

Budget)

2014-15)

Forward)

Estimate)

2015-16)

Forward)

Estimate)

2016-17)

Forward)

Estimate)

$m) $m) $m) $m) $m)


Economic Development, Tourism and the Arts 5.8) ....) ....) ....) ....)

Education (6.1) 7.4) 1.8) 1.8) ....)

Finance-General (13.6) (2.1) 10.4) (1.1) ....)

Health and Human Services21 (82.4) (59.0) 11.5) 26.5) ....)

Infrastructure, Energy and Resources (20.3) 8.7) 11.2) ....) ....)

Inland Fisheries Service (0.5) ....) 0.1) 0.1) ....)

Justice (11.0) 11.7) ....) ....) ....)

Marine and Safety Tasmania 1.2) ....) ....) ....) ....)

Police and Emergency Management 0.5) ....) ....) ....) ....)

Premier and Cabinet 0.2) (0.2) ....) ....) ....)

Primary Industries, Parks, Water and Environment (10.1) (2.2) 12.8) 2.7) ....)


Tasmanian Health Organisations ....)

North-West (2.4) 2.1) (0.4) (0.5) ....)

South 3.6) 4.3) (0.3) (0.3) ....)

North (0.2) (0.4) (0.4) (0.4) ....)

TasTAFE ....) 0.4) 0.4) 1.9) ....)

Treasury and Finance 0.2) ....) ....) ....) ....)

Provision for Future Infrastructure Investment22 ....) (19.2) (25.5) (115.5) ....)

Total Parameter Adjustments (131.7) (44.9) 21.7) (84.2) ....)

Total Purchases of Non-Financial Assets from

Transactions (E) (131.7) (24.5) 46.1) (76.5) ....)

Less Sales of Non-Financial Assets from

transactions (F) (7.0) (1.9) 9.3) 1.3) ....)

Less Depreciation - Total Parameter

Adjustments (G) 5.6) 23.2) 24.1) 26.4) ....)

TOTAL NET ACQUISITION OF NON-FINANCIAL

ASSETS FROM TRANSACTIONS

VARIANCE (H)23 (130.3) (45.8) 12.7) (104.2) ....)

FISCAL BALANCE24 (441.0) (309.1) (215.2) (26.9) (18.7)


Notes: 1. The 2016-17 parameter adjustments are not reflected in the Table as the 2016-17 Forward Estimate was not

published in the 2012-13 Budget. However, policy adjustments are reflected to show their full impact on the Budget and Forward Estimates.

2. For further information on Taxation Policy decisions refer to Chapter 4 General Government Revenue of this Budget Paper.

3. The decrease in Duties primarily reflects a reduction in duty from conveyances due to lower than anticipated activity in the property market.

4. The decrease in Payroll Tax reflects lower employment levels and aggregate hours worked since the 2012-13 Budget was developed.

5. The decrease in Dividends and Income Tax Equivalents from Aurora Energy Pty Ltd and Transend Networks from 2014-15 onwards reflects the cessation of these businesses under the State’s Electricity Reform.

6. The decrease in Dividends and Income Tax Equivalents from Hydro reflects a softening of demand and wholesale market prices across the national electricity market and a reduction in forecast carbon prices.

7. Dividends and Income Tax Equivalents from the New Network Business commence from 2014-15, reflecting the creation of the new business under the State’s Electricity Reform.

8. Forestry Tasmania anticipated paying tax equivalents of $10.0 million in 2012-13, in relation to the sale of its share in the softwood joint venture. However, due to operating losses in 2011-12, Forestry Tasmania was not liable to make any tax equivalent payments in respect to that period.

9. The increase in Income Tax Equivalents from the Motor Accidents Insurance Board reflects the extinguishing of carried forward overpaid tax instalments that are expected to be absorbed during 2013-14, with a return to more normal tax equivalent payments in 2014-15.

10. The movement in GST receipts reflects estimates and assumptions regarding the size of the GST pool and Tasmania's GST relativity. For more information on GST receipts refer to Chapter 4 General Government Revenue of this Budget Paper.

11. Community Services primarily reflects the reclassification of Home and Community Care funding as Commonwealth Own Purpose Expenditure (COPE) and is reported as part of the Tasmanian Health Organisation Agency Revenue.

12. The movement in Environment reflects revised cash flows for the Water for the Future Program. 13. The decreases in Other primarily reflects the reclassification of COPE funding from Grants to Other Revenue.

COPEs revenue is now reflected as Agency Revenue in this statement. 14. The movement in Education, TasTAFE and the Tasmanian Skills Institute primarily reflects the commencement of

the new TasTAFE entity on 1 July 2013. This entity will incorporate the operation of the Tasmanian Skills Institute and some activities currently undertaken by the Department of Education.

15. The increase in Health and Human Services and the THOs primarily reflects the reclassification of COPE revenue from Grants to Other Revenue. COPEs revenue is now reflected as Agency Revenue in this statement.

16. For further information on Policy Decisions refer to Chapter 5 General Government Expenses of this Budget Paper. 17. In addition to this funding, the Australian Government is providing funding of $6.0 million in 2013-14 for the

immediate maintenance needs of the Railway. 18. The movement in Health and Human Services and the Tasmanian Health Organisations primarily reflects the

transfer of Statewide and Mental Health Services from the Department of Health and Human Services to the THOs. 19. Net Operating Balance is equal to A + C - D. 20. For further information on Policy Decisions refer to Chapter 7 Infrastructure Investment of this Budget Paper. 21. The decrease in Health and Human Services primarily reflects revised cash flows for the Royal Hobart Hospital

Redevelopment project. 22. The decrease in the Provision for Future Infrastructure Investment reflects the allocation of capital funding to new

infrastructure investment projects. 23. Total Net Acquisition of Non-Financial Assets is equal to E - F - G. 24. Fiscal Balance is equal to B + C - D - H.

Consolidated Fund Estimates A3.1

APPENDIX 3 CONSOLIDATED FUND ESTIMATES

Features

• In 2013-14, it is estimated that the Consolidated Fund Outcome will be a $57.5 million deficit.

• Total Consolidated Fund receipts are estimated to be $3 726.2 million in 2013-14, a decrease of $5.2 million on 2012-13 budgeted receipts of $3 731.4 million. Over the Forward Estimates period, Consolidated Fund receipts will be $3 998.9 million in 2014-15, $4 243.6 million in 2015-16 and $4 277.9 million in 2016-17.

• Consolidated Fund expenditure is estimated to be $3 783.7 million in 2013-14, a decrease of $111.2 million or 2.9 per cent on 2012-13 budgeted expenditure of $3 894.9 million. Over the Forward Estimates period, Consolidated Fund expenditure will be $3 858.7 million in 2014-15, $4 065.2 million in 2015-16, and $4 088.6 million in 2016-17.

• Consolidated Fund Outcome projections for 2014-15 to 2016-17 on a same policy basis are:

− 2014-15: $140.2 million surplus;

− 2015-16: $178.4 million surplus; and

− 2016-17: $189.3 million surplus.

A3.2 Consolidated Fund Estimates

INTRODUCTION This Appendix provides information on the 2013-14 Consolidated Fund Budget Estimates and the Consolidated Fund Forward Estimates for the years 2014-15 to 2016-17. The information in this Appendix has been prepared on a cash basis, representing receipts into, and payments from, the Consolidated Fund.

Information on the Consolidated Fund Estimated Outcome is now provided in the Chapter 8 Estimated Outcome including March Quarterly Report, of this Budget Paper.


CONSOLIDATED FUND 2013-14 BUDGET AND FORWARD ESTIMATES Table A3.1 provides a summary of the Consolidated Fund Budget for 2013-14 and the Forward Estimates period.

Table A3.1: Consolidated Fund Forward Estimates

2012-13)

2013-14)

2014-15)

Forward) 2015-16)

Forward) 2016-17)

Forward) Budget) Budget) Estimate) Estimate) Estimate) $m) $m) $m) $m) $m)

Receipts1,2 Recurrent Receipts

Australian Government Sources General Purpose Payments 1 700.8) 1 800.5) 1 949.4) 2 184.4) 2 318.8)

Specific Purpose Payments 400.2) 358.9) 373.2) 391.5) 399.1)

National Partnership Payments 124.5) 82.3) 85.4) 88.0) 89.2)

Other Grants and Subsidies 3.6) 0.1) 0.1) 0.1) 0.1)

2 229.1) 2 241.8) 2 408.1) 2 664.0) 2 807.2)

State Sources Taxation3 942.3) 817.9) 845.2) 873.6) 904.4)

Receipts from Government Businesses 267.5) 383.6) 453.1) 369.4) 255.7)

Departmental Fees and Recoveries 87.8) 87.4) 91.6) 93.1) 95.0)

Recoveries of State Debt Charges 3.8) 0.1) 0.1) 0.1) 0.1)

Sale and Rent of Government Property 5.4) 6.5) 5.0) 5.0) 5.0)

Resource Rents and Royalties 59.3) 52.9) 57.8) 57.8) 57.8)

Other Recurrent Receipts 135.9) 135.4) 137.4) 179.8) 152.1)

1 502.0) 1 483.8) 1 590.3) 1 578.9) 1 470.2)

Total Recurrent Receipts 3 731.1) 3 725.5) 3 998.2) 4 242.9) 4 277.2)

Capital Receipts State Sources 0.2) 0.7) 0.7) 0.7) 0.7)

0.2) 0.7) 0.7) 0.7) 0.7)

Total Receipts 3 731.4) 3 726.2) 3 998.9) 4 243.6) 4 277.9)


Table A3.1: Consolidated Fund Forward Estimates (continued)

2012-13)

2013-14)

2014-15)

Forward) 2015-16)

Forward) 2016-17)

Forward) Budget) Budget) Estimate) Estimate) Estimate) $m) $m) $m) $m) $m)

Less Expenditure Recurrent Services

Appropriation Act 3 452.6) 3 323.7) 3 413.4) 3 516.5) 3 580.8)

Reserved by Law 255.8) 290.6) 300.7) 320.6) 329.3)

3 708.4) 3 614.2) 3 714.1) 3 837.1) 3 910.1)

Works and Services Capital Investment Program 171.4) 169.5) 144.6) 228.1) 178.5)

Hospitals Capital Fund 15.0) ....) ....) ....) ....)

186.4) 169.5) 144.6) 228.1) 178.5)

Total Expenditure 3 894.9) 3 783.7) 3 858.7) 4 065.2) 4 088.6)

Consolidated Fund Surplus (163.5) (57.5) 140.2) 178.4) 189.3) Notes: 1. Refer to Chapter 4 General Government Revenue of this Budget Paper for more information on estimated Receipts. 2. Classification of Revenue for the purposes of the Consolidated Fund is not consistent with classifications shown in

the Statement of Comprehensive Income prepared in accordance with the Uniform Presentation Framework. 3. The decrease in Taxation reflects the impact of the cessation of the payment of payroll tax by agencies. Further

information on this policy change and its impact is included in the Introduction to Budget Paper No 2, Government Services.


EXPENDITURE Table A3.2 details Consolidated Fund Expenditure by Agency for the 2012-13 Budget. Table A3.5 details Consolidated Fund Expenditure by Agency over the Forward Estimates period.

Table A3.2: Consolidated Fund Expenditure by Agency, 2013-141 2013-14 Budget

Agency

2012-13] Budget)

Recurrent) Services)

Reserved) by Law)

Works and) Services)

Total)

$m) $m) $m) $m) $m) )

Economic Development, Tourism and the Arts 106.4) 90.9) ....) 0.3) 91.2)

Education 1 142.0) 1 113.1) ....) 10.5) 1 123.7)

Finance-General 463.5) 233.4) 258.8) 4.0) 496.2)

Health and Human Services 1 232.8) 1 135.0) ....) 12.0) 1 147.0)

House of Assembly 7.6) 2.3) 5.4) ....) 7.6)

Infrastructure, Energy and Resources 316.5) 193.5) 0.1) 124.9) 318.5)

Integrity Commission 3.0) 2.9) ....) ....) 2.9)

Justice 141.0) 114.2) 14.9) 16.4) 145.5)

Legislative Council 6.4) 3.3) 3.0) ....) 6.4)

Legislature-General 5.8) 5.8) ....) ....) 5.8)

Ministerial and Parliamentary Support 19.7) 18.3) 0.8) ....) 19.1)

Office of the Director of Public Prosecutions 7.5) 6.8) 0.6) ....) 7.4)

Office of the Governor 3.4) 2.8) 0.6) ....) 3.4)

Office of the Ombudsman 2.1) 2.1) ....) ....) 2.1)

Police and Emergency Management 196.9) 182.2) ....) ....) 182.2)

Premier and Cabinet 54.7) 45.0) 6.0) 0.3) 51.2)


Environment 142.6) 132.1) ....) 1.2) 133.2)

Tasmanian Audit Office 2.6) 1.8) 0.5) ....) 2.3)

Treasury and Finance 40.7) 38.0) ....) ....) 38.0)

TOTAL EXPENDITURE 3 894.9) 3 323.7) 290.6) 169.5) 3 783.7)

Note: 1. For more information relating to agency expenditure, refer to the relevant agency chapter in Budget Paper No 2

Government Services.


Table A3.3: Consolidated Fund Expenditure by Agency – Forward Estimates1

2012-13) )

Budget)

2013-14) )

Budget)




$m) $m) $m) $m) $m) Recurrent Services

Economic Development, Tourism and the Arts 106.4) 90.9) 113.5) 93.3) 86.1)

Education 1 129.9) 1 113.1) 1 157.0) 1 224.0) 1 227.7)

Finance-General 448.4) 492.1) 505.8) 516.9) 510.2)

Health and Human Services 1 224.8) 1 135.0) 1 160.9) 1 195.7) 1 278.3)

House of Assembly 7.6) 7.6) 7.7) 7.9) 7.9)


Integrity Commission 3.0) 2.9) 3.0) 3.1) 3.1)

Justice 125.6) 129.2) 128.6) 136.6) 136.9)

Legislative Council 6.4) 6.4) 6.4) 6.6) 6.6)

Legislature-General 5.8) 5.8) 5.8) 6.0) 6.0)

Ministerial and Parliamentary Support 19.7) 19.1) 19.3) 20.0) 20.0)

Office of the Director of Public Prosecutions 7.5) 7.4) 7.5) 7.9) 7.8)

Office of the Governor 3.4) 3.4) 3.5) 3.6) 3.6)

Office of the Ombudsman 2.1) 2.1) 2.1) 2.2) 2.1)

Police and Emergency Management 188.4) 182.2) 187.6) 199.0) 197.3)


Primary Industries, Parks, Water and Environment 138.9) 132.1) 124.4) 129.0) 128.1)

Tasmanian Audit Office 2.6) 2.3) 2.3) 2.4) 2.4)

Treasury and Finance 40.7) 38.0) 40.5) 42.2) 42.5)

3 708.4) 3 614.2) 3 714.1) 3 837.1) 3 910.1) Works and Services

Economic Development, Tourism and the Arts ....) 0.3) 0.3) ....) ....)

Education 12.1) 10.5) 14.0) 8.0) 16.2)

Finance-General 15.0) 4.0) 6.0) 8.0) 10.0)

Health and Human Services 7.9) 12.0) 11.0) 100.5) 25.0)


Justice 15.4) 16.4) ....) ....) ....)

Police and Emergency Management 8.6) ....) ....) ....) ....)


Primary Industries, Parks, Water and Environment 3.6) 1.2) 10.0) 1.7) 0.6)

Provision for Future Infrastructure Investment ....) ....) ....) 35.0) 50.0)

186.4) 169.5) 144.6) 228.1) 178.5)

3 894.9) 3 783.7) 3 858.7) 4 065.2) 4 088.6)


Note: 1. For more information relating to agency expenditure, refer to the relevant agency chapter in

Budget Paper No 2 Government Services.

RESERVED BY LAW ITEMS Reserved by Law items are not included in the annual Appropriation Acts. The authority to spend from these items is provided by the legislation under which the particular items are established.

Table A3.4 details Expenditure on Reserved by Law items by agency.

Table A3.4: Expenditure on Reserved by Law Items

2012-13)

2013-14)

2014-15)

Forward) 2015-16)

Forward) 2016-17)

Forward) Budget) Budget) Estimate) Estimate) Estimate)

$m) $m) $m) $m) $m)

Finance-General Superannuation Benefits Payable under the

Solicitor-General Act 1983 0.2) 0.3) 0.3) 0.3) 0.3) Payments under the Retirement Benefits

(Parliamentary Superannuation)

Regulations 2012 1.8) 1.9) 1.6) 1.4) 1.3)

Superannuation Benefits Payable under the Judges' Contributory Pensions Act 1968 1.9) 2.3) 2.3) 2.3) 2.4)

Payments to Municipalities under the Local

Government (Rates and Charges Remissions)

Act 1991 15.2) 15.7) 16.5) 17.2) 18.0) Appropriation to the Treasurer's Reserve (Public

Account Act 1986) 10.0) 10.0) 10.0) 10.0) 10.0)

Superannuation Benefits Payable under the Retirements Benefits Act 1993 197.9) 228.5) 239.5) 257.5) 265.3)

Superannuation Benefits Payable under the Governor of Tasmania Act 1982 0.1) 0.1) 0.1) 0.1) 0.1)

227.2) 258.8) 270.2) 288.9) 297.4)


Table A3.4: Expenditure on Reserved by Law Items (continued)

2012-13)

2013-14)

2014-15)

Forward) 2015-16)

Forward) 2016-17)


$m) $m) $m) $m) $m)

House of Assembly1 Parliamentary Salaries and Allowances

(Parliamentary Salaries, Superannuation and

Allowances Act 2012) 4.6) 4.6) 4.7) 4.8) 4.9) Travelling Allowances (Parliamentary Salaries,

Superannuation and Allowances Act 2012) 0.7) 0.7) 0.7) 0.7) 0.7)

5.3) 5.3) 5.4) 5.5) 5.6) Infrastructure, Energy and Resources Contribution towards Construction of Streets in

Towns by Municipal Councils (Local

Government Act 1993) 0.1) 0.1) 0.1) 0.1) 0.1) Justice2 Salary and Travel Allowances, Solicitor-General

(Solicitor-General Act 1983) 0.5) 0.6) 0.6) 0.7) 0.6) Salaries of Magistrates (Magistrates Court

Act 1987) 5.3) 5.6) 6.0) 6.5) 6.4) Salaries of Judges (Supreme Court Act 1887) 3.1) 3.3) 3.5) 3.8) 3.8)

Salary and Travelling Allowance, Associate Judge of the Supreme Court (Supreme Court

Act 1959) 0.4) 0.5) 0.5) 0.5) 0.5)

Expenses of Parliamentary Elections and Referendums (Electoral Act 2004 and

Referendum Procedures Act 2004) 1.0) 3.4) 1.2) 1.2) 1.2) Victims of Crime Assistance Act 1976 1.5) 1.5) 1.5) 1.5) 1.5) Expenses under the Legislative Council Electoral

Boundaries Act 1995 0.0) 0.0) 0.0) 0.0) 0.2)

11.9) 14.9) 13.3) 14.2) 14.3) Legislative Council3 Parliamentary Salaries and Allowances

(Parliamentary Salaries, Superannuation and

Allowances Act 2012) 2.7) 2.7) 2.8) 2.8) 2.8) Travelling Allowances (Parliamentary Salaries,

Superannuation and Allowances Act 2012) 0.3) 0.3) 0.3) 0.3) 0.3)

3.0) 3.0) 3.0) 3.1) 3.1)


Table A3.4: Expenditure on Reserved by Law Items (continued)

2012-13)

2013-14)

2014-15)

Forward) 2015-16)

Forward) 2016-17)


$m) $m) $m) $m) $m)

Ministerial and Parliamentary Support Allowances of Ministers (Parliamentary Salaries,

Superannuation and Allowances Act 2012) 0.8) 0.8) 0.8) 0.8) 0.8) Office of the Director of Public Prosecutions Salary, Travel and Other Allowances, Director of

Public Prosecutions (Director of Public

Prosecutions Act 1973) 0.5) 0.6) 0.6) 0.6) 0.6) Office of the Governor4 Salary, His Excellency the Governor (Governor of

Tasmania Act 1982) 0.5) 0.5) 0.6) 0.6) 0.6) Premier and Cabinet Tasmanian Community Fund (Tasmanian

Community Fund Act 2005) 6.0) 6.0) 6.0) 6.1) 6.2) Tasmanian Audit Office Salary and Travelling Allowance, Auditor General

(Audit Act 2008) 0.5) 0.5) 0.5) 0.6) 0.6) Treasury and Finance5 0.0) 0.0) 0.0) 0.0) 0.0) TOTAL 255.8) 290.6) 300.7) 320.6) 329.3)

Notes: 1. An amount of $31 000 per annum is provided to the House of Assembly under Members' Committee Fees and

Allowances (Parliamentary Salaries, Superannuation and Allowances Act 2012). This does not appear in the Table due to rounding.

2. The Department of Justice is provided with amounts of $5 000 per annum under the Legislative Council Electoral Boundaries Act 1995 with a one-off increase to $184 000 in 2016-17 reflecting the timing of the next major review. The Department of Justice is also provided with $5 000 in 2013-14, increasing to $26 000 in 2014-15 and then returning to $5 000 per annum in 2015-16 and 2016-17 under the Expenses of Aboriginal Land Council of Tasmania Elections (Aboriginal Lands Act 1995, section 17). These amounts do not appear in the Table due to rounding.

3. An amount of $40 000 per annum is provided to the Legislative Council under Members' Committee Fees and Allowances (Parliamentary Salaries, Superannuation and Allowances Act 2012). This does not appear in the Table due to rounding.

4. Under the Salary, The Administrator (Governor of Tasmania Act 1982, section 5(1)) an amount of $9 000 per annum is provided to the Office of the Governor in 2012-13, increasing to $10 000 from 2014-15 and increasing again to $15 000 in 2016-17. This does not appear in the Table due to rounding.

5. An amount of $27 000 per annum in 2012-13 and $28 000 per annum from 2013-14 onwards, is provided to the Department of Treasury and Finance under the Contribution to the Community Support Levy Account from Betting Exchange Revenues (Gaming Control Act 1993, section 151). These amounts do not appear in the Table due to rounding.

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