revised estimates report 2016-17 (including december ... · this report should be read in...

Revised Estimates

Report 2016-17

(including December

Quarterly Report)

Revised Estimates Report 2016-17 (including December Quarterly Report) © Government of Tasmania Excerpts from this publication may be reproduced, with appropriate acknowledgement, as permitted under the Copyright Act. For further information please contact: Department of Treasury and Finance GPO Box 147 Hobart Tasmania 7001 Telephone: +61 3 6166 4444 Website: http://www.treasury.tas.gov.au Published February 2017 Printed by Ricoh Business Centre ISSN 1837-6835 (Print) ISSN 1837-7793 (Online)

Revised Estimates Report 2016-17 (including December Quarterly Report) i

CONTENTS 1. Introduction 1

2. Fiscal Strategy Update 5

3. Tasmanian Economic Aggregates and Forecasts 11

4. General Government Sector Outcome 17

Income Statement 17

Underlying Net Operating Balance 20

Risks and Disclosures 36

Other Risks 38

Balance Sheet 44

Cash Flow Statement 46

Policy and Parameter Statement 48

5. Uniform Government Reporting 59

General Government Sector 60

Public Non-Financial Corporations Sector 66

Total Non-Financial Public Sector 72

Public Financial Corporations Sector 78

Total State Sector 84

Loan Council Allocation 90

6. Public Account 91

Consolidated Fund 91

Special Deposits and Trust Fund 95

ii Revised Estimates Report 2016-17 (including December Quarterly Report)

Revised Estimates Report 2016-17 (including December Quarterly Report) 1

1. INTRODUCTION

The Revised Estimates Report 2016-17 (including December Quarterly Report) has been prepared in

accordance with sections 26A and 26B of the Financial Management and Audit Act 1990. Accordingly, it

presents the information required for a Revised Estimates Report as well as a December Quarterly Report.

The Report contains the following information:

Section 2 provides an update of the Government’s Fiscal Strategy;

Section 3 updates the Tasmanian economic aggregates and forecasts published in the 2016-17 Budget

Papers;

Section 4 presents General Government financial results for the six months ending 31 December 2016

and revised Budget estimates presented in accordance with the applicable Australian Accounting Standard

AASB 1049 Whole of Government and General Government Sector Financial Reporting. Commentary is

provided on material changes between original and revised Budget estimates;

Section 5 presents revised fiscal estimates for the General Government, Public Non-Financial

Corporations, Public Financial Corporations, Total Non-Financial Public and Total State Sectors, in

accordance with the Uniform Presentation Framework reporting requirements for a Loan Council

Mid-Year Report; and

Section 6 summarises the receipts to and expenditure from the Consolidated Fund and balances within

the Special Deposits and Trust Fund.

This Report should be read in conjunction with the 2016-17 Budget Papers and the Guide to the Budget.

The financial information provided in this Report reflects the results of the mid-year review of the

2016-17 Budget. Further review of the Forward Estimates will be undertaken as part of the development of

the 2017-18 Budget. Information on significant risks and issues that may impact on the Budget position and

Forward Estimates in the future, but which are unable to be accurately quantified or remain uncertain at the

time of the finalisation of this Report, is also provided in Section 4 (Risks and Disclosures) of this Report.

Table 1.1 summarises the impact of budget variations on Key Fiscal Measures since the 2016-17 Budget.

2 Revised Estimates Report 2016-17 (including December Quarterly Report)

General Government Sector Key Fiscal Measures

2016-17 2017-18 2018-19 2019-20

Revised Forward Forward Forward

Budget Estimate Estimate Estimate

$m $m $m $m

Net Operating Balance

Budget 2016-17 77.3 7.9 (61.0) 18.4

Variations (29.6) 124.9 65.1 157.9

2016-17 Revised 47.7 132.8 4.1 176.3

Net Debt

Budget 2016-17 (301.3) (174.1) (56.6) (162.0)

Variations (232.9) (301.5) (260.7) (384.5)

2016-17 Revised (534.2) (475.6) (317.3) (546.5)

Infrastructure Expenditure

Budget 2016-17 534.9 535.2 425.2 323.1

Variations (23.4) 39.2 79.0 20.7

2016-17 Revised 511.5 574.4 504.2 343.8

There have been material year by year changes in key financial measures over the Budget and

Forward Estimates period since the tabling of the 2016-17 Budget. Over the Budget and Forward Estimates

period, the Net Operating Balance has improved by a total of $318.3 million. This change in the

Net Operating Balance over the Budget and Forward Estimates primarily reflects a range of parameter

adjustments since the 2016-17 Budget.

Parameter variations reflect changes due to the economic environment, the agency operating environment or

the timing of a transaction. Major parameter adjustments which have impacted on the Net Operating Balance

over the Budget and Forward Estimates include:

a net increase in GST revenue of $127.4 million;

a net increase in National Partnership Payments, Specific Purpose Payments and other

Australian Government Grant revenue of $157.8 million which is reflected in additional agency expenditure.

Additional agency expenditure also reflects Australian Government funding carried forward from 2015-16;

a net increase in Taxation revenue of $148.3 million which primarily reflects an increase in revenue from

Conveyance Duty and Land Tax; and

an increase in Dividend, Tax and Rate Equivalent Income from Government Businesses of $78.6 million

which primarily reflects increases for the Motor Accidents Insurance Board, Hydro Tasmania and

Aurora Energy Pty Ltd due to higher than forecast profit results, offset by a decrease for Tasmanian

Networks Pty Ltd reflecting revised forecasts.


Policy decisions that have impacted on the Net Operating Balance over the Budget and Forward Estimates

period primarily relate to the significant bushfire and flood events that occurred during 2016. In actively

responding to these events, the Government has incurred significant unbudgeted recurrent and capital

expenditures, some of which will be offset by national natural disaster funding arrangements and State

insurance arrangements. Other policy decisions reflect support for major events such as Dark MOFO

($1.9 million per annum) and action being taken under the Northern Tasmania Economic Stimulus Plan.

The improvement in the Government’s Net Debt position reflects both the improvement in the Government’s

operating position and a significant improvement in the actual Net Debt position as at 30 June 2016 compared

to previous estimates in the 2016-17 Budget.

Changes in infrastructure expenditure levels primarily reflect changes in the timing of expenditure on major

projects such as the Royal Hobart Hospital Redevelopment and Australian Government-funded roads

projects.

Information on all policy and parameter variations is provided in the Policy and Parameter Statement in

Section 4 of this Report.


2. FISCAL STRATEGY UPDATE

The Government’s Fiscal Strategy provides a strong and effective framework for the management of the

State’s financial position. It focuses on the achievement of long-term fiscal principles (as set out in the Charter

of Budget Responsibility Act 2007) which aim to achieve financial sustainability for Tasmania. These principles

are:

manage the State’s finances responsibly for the wellbeing of all Tasmanians;

provide for the future for the next generation of Tasmanians;

prepare for unexpected events by building a robust financial position;

improve services to Tasmanians by building a strong economy and efficiently allocating public resources

to gain the maximum community benefit;

formulate spending and taxation policies that ensure a reasonable degree of equity, stability and

predictability; and

ensure transparency and accountability in developing, implementing and reporting on fiscal objectives.

To achieve the established long-term principles, the Government has identified and reported against, since

the 2014-15 Budget, the following Strategic Actions:

1. Annual growth in General Government operating expenses will be lower than the long-term average growth

in revenue.

2. General Government debt and defined benefit superannuation liabilities will be managed to ensure the

combined annual servicing cost is less than six per cent of General Government cash receipts.

3. A competitive tax environment will be maintained with an objective for state taxes to be efficient, fair,

simple, stable and sustainable.

4. Government businesses will be required to deliver services to Tasmanians at the lowest sustainable cost,

while also providing an appropriate financial return to the Government.

5. Tasmanian Government infrastructure investment will maintain existing assets, respond to economic and

population growth and reflect the changing needs of the community.

6. Public sector efficiency, productivity and financial transparency will be improved.

Table 2.1 provides an update on progress in implementing the Fiscal Strategy Strategic Actions.


Fiscal Strategy Update

Strategic Action 2016-17 Revised Estimates Report Comment

1. Annual growth in General

Government operating

expenses will be lower than the

long-term average growth in

revenue.

The long-run growth in revenue is approximately

4.8 per cent per annum (2000-01 to 2015-16 actual).

The growth in revenue over the period from

2015-16 (actual) to the 2019-20 Revised Forward Estimate

is estimated to be 1.8 per cent (1.1 per cent in the 2016-17

Budget based on the 2015-16 estimated outcome)

compared to the growth in estimated expenditure of

1.3 per cent (0.6 per cent in the 2016-17 Budget).

The revised 2016-17 Budget and Forward Estimates

continue to reflect the achievement of this Strategic Action.

A Net Operating Balance surplus continues to be estimated

to be achieved in 2016-17, following the achievement of a

net operating surplus of $62 million and a fiscal surplus of

$4 million in 2015-16 which was four years ahead of the

target return to a net operating surplus date of 2019-20.

A net operating surplus is now estimated to be maintained

over the Forward Estimates period, with a fiscal surplus

estimated in 2019-20.

Notwithstanding this position, it is noted that Budget

revenues continue to be subject to high levels of variation,

much of which is outside the direct control of Government.

This variability has emphasised the importance of

expenditure constraint, in particular, ensuring that ongoing

expenditure is not allocated against uncertain or

time-limited revenues. Continued successful

implementation of the Fiscal Strategy will require careful

management of expenditure, including ongoing constraint

in public sector wage outcomes and careful management

of public sector employment levels.

2. General Government debt and

defined benefit superannuation

liabilities will be managed to

ensure the combined annual

servicing cost is less than

six per cent of General

Government cash receipts.

The Revised Estimates Report details an improvement in

the General Government Net Debt position as at

30 June 2017 and across the Forward Estimates when

compared to the 2016-17 Budget and Forward Estimates.

General Government Net Debt is now estimated to be

negative $534.2 million as at 30 June 2017, an

improvement of $232.9 million from the 2016-17 Budget

estimate. General Government Net Debt whilst remaining

negative (i.e. Cash and deposits and Investments exceed

Borrowings) is then estimated to deteriorate in the 2017-18

and 2018-19 Forward Estimates before improving again to

negative $546.5 million by 30 June 2020.


Table 2.1: Fiscal Strategy Update (continued)


2. General Government debt and

defined benefit superannuation

liabilities will be managed to

ensure the combined annual

servicing cost is less than

six per cent of General

Government cash receipts

(continued).

Borrowing and defined benefit costs as a percentage of

General Government cash receipts remain below the

established maximum of six per cent over the Budget and

Forward Estimates period.

As has previously been noted, the achievement of this

Strategic Action will become increasingly challenging as the

annual employer contribution payments increase.

3. A competitive tax environment

will be maintained with an

objective for state taxes to be

efficient, fair, simple, stable and

sustainable.

According to the most recent Commonwealth Grants

Commission data, Tasmania’s ratio of revenue the State

actually raised from its tax sources to the revenue it could

have raised (had it applied the Australian average level of

effort to its available revenue base), is the second lowest of

all jurisdictions and is well below the national average.

During 2016, the Government tabled three amendments to

the Duties Act 2001 that have recently come into effect. The

first grants a duty exemption for an internal reconstruction

or consolidation of a corporate group, bringing Tasmania in

line with other jurisdictions. The second amendment has

broadened the permitted use of the current duty exemption

for demonstrator vehicles to reflect more contemporary

business practice for new motor vehicle dealerships. The

third amendment introduced the landholder duty model,

simplifying the model and bringing it into line with other

jurisdictions.




4. Government businesses will be

required to deliver services to

Tasmanians at the lowest

sustainable cost, while also

providing an appropriate

financial return to the

Government.

The Government has issued revised capital investment

guidelines which require Government businesses to have

in place rigorous assessment and approval processes to

ensure major capital investment decisions are soundly

based and are consistent with the Government’s risk

appetite.

The Government has taken a number of steps to improve

the performance and ongoing sustainability of the

Government business portfolio by:

- continuing to progress a review of Government

business board governance with the aim of ensuring

the composition of boards is appropriate to provide

sound leadership for the respective businesses and

that boards are accountable to the Shareholding

Ministers;

- ensuring funds are set aside for the future replacement

of the Spirit of Tasmania vessels, with the TT-Line

Vessel Replacement Fund Bill 2016 being passed by

the House of Assembly and currently awaiting debate

in the Legislative Council;

- facilitating the replacement of Metro Tasmania’s bus

fleet, with the initial equity injection of $4.5 million to the

Company to be paid in early 2017;

- continuing to progress the transition of Forestry

Tasmania by: securing commercially sustainable

access to residue markets from the south of the State;

seeking expressions of interest for the sale of

approximately 29 000 ha of largely unpruned and

unthinned hardwood; and progressing the separation of

Forestry Tasmania into a commercial wood production

division and a non-commercial division, to be effective

from 1 July 2017; and

- implementing the Government’s Public Sector

Superannuation reforms through the passage of the

Public Sector Superannuation Reform Act 2016 and

creation of the Office of the Superannuation

Commission.




5. Tasmanian Government

infrastructure investment will

maintain existing assets,

respond to economic and

population growth and reflect

the changing needs of the

community.

Based on the estimates presented in this Report,

investment by the Government in Non-Financial Assets

continues to exceed the value of depreciation over the

Budget and Forward Estimates period.

Over the Budget and Forward Estimates period, the

Government will invest over $1.8 billion in infrastructure to

support the Tasmanian community.

Since the 2016-17 Budget, there have been changes in the

timing of some infrastructure expenditures such as the

reallocation of $30.2 million in the Royal Hobart Hospital

redevelopment expenditure from 2016-17 to 2017-18 and

$30.8 million of Roads projects expenditure from 2016-17

to 2017-18. There has been no change in the estimated

total value of the expenditure being undertaken on these

important projects.

The Government has also committed significant funding in

response to the June 2016 floods. This includes a

$12.4 million increase in expenditure to repair damaged

parks infrastructure and $8.7 million to repair road and

bridge infrastructure.

In addition, the Government announced the

Northern Economic Stimulus Package which aims to

accelerate job creating projects in the North and

North West. As part of this package, $11 million in funding

for the Affordable Housing Strategy has been reallocated to

2016-17. Funding has also been provided to assist with

local government infrastructure investment through the

Accelerated Local Government Capital Program. This

program provides access to $60 million in funding for

northern Councils through the provision of targeted loan

interest rebates.




6. Public sector efficiency,

productivity and financial

transparency will be improved.

The Budget Savings Strategies that were implemented as

part of the 2014-15 Budget have assisted in improving the

productivity and efficiency of the Tasmanian public sector

and are embedded in the improved Budget position that has

now been achieved.

The Government has implemented a number of important

financial management reforms that will strengthen the

State’s financial framework and help to improve

transparency. These include

- the passage of amendments to the

Charter of Budget Responsibility Act;

- the publication of the first Tasmanian Government

Fiscal Sustainability Report in April 2016; and

- the passage of the Financial Management Act 2016

(due to be implemented by 1 July 2018).

The first Fiscal Sustainability Report highlighted that future

governments will face increasing fiscal pressure in the

decades ahead. This is largely due to the growth in

expenditure on health services, based on past expenditure

growth, continuing into the future. The Report also found

that the State’s capacity to respond to fiscal pressure by

materially increasing its revenue was limited. In order to

ensure the State’s finances remain sustainable, future

Tasmanian governments need to continue to keep in check

the forces that can result in strong expenditure growth.


3. TASMANIAN ECONOMIC

AGGREGATES AND

FORECASTS

Economic Forecasts

Budget Revised Budget Forecasts

2015-16 2016-17 2016-17 2017-18 2018-19 2019-20

Actual Forecast Estimate Projections2

Gross State Product (real, % change) 1.3 2¼ 1 2 2 2

State Final Demand (real, % change) 2.2 2¼ 1¾ 2¼ 2¼ 2¼

Employment (year-average, % change)1 -0.3 ½ -¼ 1 1 1

Labour Force Participation Rate

(year-average, %)

60.4 60½ 59¾ 59¾ 59¾ 59¾

Unemployment Rate (year-average, %) 6.5 6¾ 6½ 6½ 6½ 6½

Consumer Price Index

(year-average, % change)

1.4 1¾ 1¾ 2¼ 2¼ 2¼

Population (year-average, % change) 0.4 0.6 0.6 0.6 0.6 0.6

Source: Actual - ABS; Estimates, Forecasts and Projections - Treasury. Notes: 1. A detailed discussion of Tasmania’s labour market is presented in the section below titled “Tasmania’s labour market”. 2. The projections over the period 2017-18 to 2019-20 contained in Table 3.1 are not forecasts. They are based on the

long-term average growth rates for each of the indicators and do not take into account the potential impact of any future economic events or policy changes by the State or Australian Governments.

Global and national economic environment

Global economic conditions continue to be weak, with global growth below expectations over the past year at

around three per cent. This was due to the modest performance of advanced countries and some easing in

the high growth rates for many emerging market economies arising from the very subdued growth in

international trade. The global outlook remains uncertain, however, near term forecasts are for a marginal

improvement in global growth rates, though still below the long term trend.


China continues to contribute to global economic growth, though its growth has been easing and this trend is

expected to continue. China faces a range of challenges as it continues to transition to a more

consumption-based economy while managing the risks from high levels of public debt. China is particularly

vulnerable to any major new restrictions on international trade, as it is already experiencing the adverse effects

of the global downturn in manufacturing.

Advanced economies continue to grow at below long term trend rates and many face historically high levels

of unemployment, including in the Euro area. For the United Kingdom and the United States, which had been

performing relatively well, there was a loss of momentum in the first half of 2016 but these economies appear

to have recovered more recently. The outlook for the US is generally positive, reflected in a buoyant US equity

market, although there is uncertainty regarding the implications of the international trade and fiscal policies of

the new US administration. Growth forecasts for the UK are also positive and have been revised upwards

following stronger quarterly growth in late 2016. However, uncertainty exists around the “Brexit” negotiations

and Britain’s withdrawal from the European Union.

Global commodity prices have generally increased over 2016, many from relatively low levels. Oil prices, in

particular, have almost doubled since early 2016. The prices of some commodities important to Tasmania,

including iron ore, zinc and milk powder, have recovered strongly. A rise in global inflation is now looking more

likely, with expectations that this will be supported by an expansionary fiscal policy under the new

US administration.

Domestic economic conditions in Australia held up relatively well over the past year. Business investment has

been in decline as a result of the winding down of the mining construction boom. There has been some modest

increase in non-mining business investment, together with increased dwelling investment, supported by

buoyant property prices. New South Wales and Victoria have become the high growth states, with the

strongest population growth.

The national economy has benefitted from increasing international merchandise exports, much of which is

from the newly completed mining investment projects entering the production phase. The Australian dollar

remains at relatively low levels against most major currencies and this, together with sustained strong

household consumption, has supported national economic growth.

National economic growth is now forecast by the Australian Treasury to be well below trend at only

two per cent in 2016-17, and then to move towards the longer term growth rate in 2017-18.

Monetary conditions remain very favourable, with low consumer price inflation and modest wages growth.

Interest rates remain very low, though some interest rates are increasing, such as for fixed rate home loans.

The national labour market remains quite strong, though employment growth has been easing over the past

year. The national unemployment rate has been declining since early 2015, supported by an easing in the

participation rate. The Australian Treasury’s most recent forecast is for modest employment growth and a

national unemployment rate of 5½ per cent in 2016-17 and over the near term.

Recent economic performance and outlook for the Tasmanian economy

The Tasmanian economy has continued to show signs of modest expansion over the past year. According to

the Australian Bureau of Statistics, gross state product growth over 2015-16 was below trend at 1.3 per cent,

supported by household consumption and a very strong increase in international exports of goods and

services. Tasmania-specific events such as the Basslink outage and the very low rainfall followed by floods

negatively impacted on economic growth over the period.


Household consumption continues to be a driving factor for growth in the Tasmanian economy with retail sales

and new motor vehicle sales recording strong growth in 2016. The outlook for consumption spending remains

strong for 2016-17.

Tasmania’s tourism sector continues to expand. In the year to September 2016, total visitor numbers to the

State were estimated to be up by four per cent from the previous year, including a 15 per cent increase in

international visitors. Visitor expenditure was estimated to be eight per cent higher over the same period

compared to the year to September 2015. A flourishing tourism sector has stimulated the economy state-wide

through increased consumer spending, increased employment opportunities and investment in tourism

developments. The outlook for the Tasmanian tourism sector remains positive, especially if the exchange rate

against major currencies remains around current levels.

Private investment for the State as a whole was subdued in 2015-16 according to the ABS, despite the strong

levels of construction activity in the greater Hobart area. Business investment levels have eased over the past

year from the high levels in mid-2015, mostly driven by lower investment in buildings and structures. The near

term outlook for business investment is a return to modest growth, supported by a number of hotel and retail

developments currently underway.

Dwelling investment contributed to growth over 2015-16, supported by the First Home Owner Grant and very

low interest rates. As expected, the Grant has brought forward some new construction to meet demand from

new property owners. Dwelling investment peaked in the September 2015 quarter, according to the ABS, and

as expected has been gradually easing. A small decline in dwelling investment is now forecast over 2016-17,

a downward revision from the forecast in the 2016-17 Budget as the peak occurred a little earlier than

anticipated.

Government spending on goods and services and on infrastructure has been affected by the timing of major

public capital projects, including those undertaken by State Government Businesses and TasWater, and the

timing of particular activities in major projects, such as the Royal Hobart Hospital Redevelopment project.

Government spending levels over 2015 have been revised upwards by the ABS since the 2016-17 Budget

was prepared, resulting in a higher year-average level for the 2015-16 financial year. As with 2015-16,

government spending is expected to continue to contribute to growth in 2016-17.

Final spending in Tasmania, as measured by state final demand, has held up well in recent quarters; until

recently it was expanding at a greater rate than national final demand. State final demand in 2016-17 is now

expected to grow by 1¾ per cent, down marginally from the forecast of 2¼ per cent in the 2016-17 Budget

due to the revised estimates for private investment and public spending.

The ABS has been reporting an extraordinary growth in Tasmania’s international exports in 2015-16 in real or

volume terms, with exports of goods and services estimated to have increased by just over 20 per cent from

2014-15 levels. The recent trend in monthly nominal merchandise export data suggests that export volumes

have been moderating more recently (real quarterly data are not available for Tasmania). However, the

prospects for Tasmania’s export sector for 2016-17 as a whole appear positive, due to favourable agricultural

conditions, a return to full production levels by those major industries that had wound back output earlier in

2016 and an expected recovery in meat exports following the floods in late 2015-16. Many Tasmanian

exporters are also benefiting from the increase in commodity prices. Given the high reported year-average

levels for 2015-16, real exports are now expected to be lower in 2016-17 than in 2015-16, a downward revision

from the 2016-17 Budget.

These emerging trends since the 2016-17 Budget have resulted in the estimate for economic growth in

Tasmania being revised downwards from 2¼ per cent to one per cent for 2016-17. The projections for

economic growth over the Forward Estimates period are unchanged, as they based on long term trends.


The principal risks to the economic growth estimates relate to consumption and investment. Households have

benefitted significantly from low interest rates. However, if there are concerns over increasing interest rates,

especially for mortgage holders, this may have a dampening effect on household spending. As consumption

is such a large component of gross state product, this could moderate Tasmania’s overall economic growth

rate. A further downside risk is a decline in dwelling investment below the current estimates.

On the upside, investment levels both public and private, may increase more quickly than expected due to the

timing of some major projects. As an example, the $90 million Creative Industries and Performing Arts

Development by the University of Tasmania has recently commenced and this, together with other major new

developments including the commencement of the $90 million Northern Cities Major Development Initiative,

would contribute to increased investment over the remainder of 2016-17. Equally, major private sector

projects, including hotel developments, may advance more quickly than anticipated, which would raise

investment levels.

Population growth continues to return towards the long term average of around 0.6 per cent. Over 2015-16,

Tasmania’s population increased by 0.4 per cent. Interstate migration has been contributing to population

growth, with a net inflow recorded in 2015-16, significantly this is the first net inflow, in annual terms, since

2009-10. Tasmania’s population growth is expected to be 0.6 per cent in year-average terms in 2016-17,

unchanged from the 2016-17 Budget forecast.

Inflationary conditions remain subdued. The Hobart Consumer Price Index was estimated to have increased

by 1.4 per cent in 2015-16, consistent with national consumer price inflation over the same period. Inflation at

1¾ per cent is expected over 2016-17, unchanged from the 2016-17 Budget forecast. This is expected to

result in continued moderate growth in wages in Tasmania.

Tasmania’s labour market

Tasmania’s labour market has seen modest growth in employment since the middle of 2016 (Chart 3.1) and

a decline in Tasmania’s unemployment rate, according to the ABS. The ABS reports that the labour market

participation rate continues to be relatively low in Tasmania over the 2016-17 financial year to date. The ABS

also reports that trend employment increased from 237 000 persons in June 2016 to 238 300 persons in

December 2016.

According to the ABS estimates, employment has not returned to the high levels it had been reporting for late

2014 and over 2015. However, as pointed out in the 2016-17 Budget, these earlier employment estimates

were remarkably high and were not consistent with other economic indicators for that period, including growth

in gross state product.

The ABS now estimates that employment declined by 0.3 per cent in the past financial year. This is an

unexpected result, and out of step with other ABS estimates such as an increase in Tasmania’s state final

demand of 2.2 per cent in that year, which represents a substantial increase in domestic activity, and the very

strong growth in Tasmania’s international exports of goods and services which account for around 16 per cent

of the State’s economy. The revised estimate for 2016-17 is for a decline, in year-average terms, of ¼ of

one per cent over 2016-17, despite expected growth over the second half of 2016-17. This revised estimate,

which is determined in large part by the reported ABS data to December 2016, is below the 2016-17 Budget

forecast for employment growth over 2016-17 of ½ of one per cent.


Chart 3.1 Employment level, Tasmania

Source: Labour Force, Australia ABS Cat No 6202.0.

The growth in Tasmania’s tourism sector, together with increasing demand in the health care and social

assistance industry, is providing employment opportunities across the State. Conditions have been improving

in the West and North West region, which had been adversely affected by the reduction in the manufacturing

sector over the past decade. This region has benefited from the expansion of the State’s aquaculture industry

and, more recently, the return to production at the Henty Gold Mine. By contrast, the Launceston and

North East region has benefited less from recent industry trends, with construction remaining subdued and

generally weaker economic conditions compared to the rest of the State. However it is expected that

significant construction projects such as the UTAS Launceston relocation and the CH Smith redevelopment

will contribute to stronger economic conditions.

The outlook for Tasmania’s labour market over the remainder of 2016-17 is positive, with growth anticipated

that is consistent with the State’s long term growth rate of just under one per cent (annualised). Further

employment growth is expected in the tourism sector, in particular, as high levels of tourism demand have

been extending beyond the traditional summer period. The expansion of the National Disability Insurance

Scheme is also providing increasing demand for care and other community workers across the State. In

year-average terms, Tasmania’s labour market performance in 2016-17 is expected to be broadly consistent

with 2015-16.

Over the Forward Estimates period, employment growth is also projected to be consistent with the State’s

long term growth rate of just under one per cent per year.

Tasmania’s unemployment rate is expected to remain around current levels, as reported by the ABS, which

would result in a year-average estimate of 6½ per cent for 2016-17, marginally below the 2016-17 Budget

forecast of 6¾ per cent and unchanged from the ABS estimate of 6.5 per cent for 2015-16. The unemployment

rate is projected to remain at 6½ per cent over the Forward Estimates period, again marginally below the

2016-17 Budget projections of 6¾ per cent.

225.0

227.0

229.0

231.0

233.0

235.0

237.0

239.0

241.0

243.0

245.0

Dec 2011 Dec 2012 Dec 2013 Dec 2014 Dec 2015 Dec 2016

Pers

ons

em

plo

yed, ‘0

00s

Seasonally Adjusted Trend Year-average original


The labour market participation rate is now estimated to be 59¾ per cent in 2016-17, below the

2016-17 Budget forecast of 60½ per cent and the reported outcome of 60.4 per cent for 2015-16. A

participation rate of 59¾ per cent is now projected over the Forward Estimates period, again below the

2016-17 Budget projections of 60½ per cent.

ABS labour force data

Treasury relies on data from the ABS to report and analyse recent trends in Tasmania’s labour market,

particularly for employment, unemployment and labour market participation. These ABS data are critical inputs

for Treasury’s forecasts, as they provide information on current levels, which provide the base from which

future trends are projected.

The Tasmanian Economy chapter in the 2016-17 Budget highlighted a number of concerns with ABS labour

force data. While there have always been issues relating to the volatility and accuracy of economic data for

small jurisdictions, these issues have become more acute as the focus has turned to very recent reported

changes in economic performance. Treasury has undertaken further work in this area, which raises additional

questions about the reliability of these data.

Treasury considers that while the ABS labour force data, over an extended period, provide reasonable

indicators of labour market conditions, the reported short-term movements may be unreliable and even trend

estimates and year-average levels, which are designed to be more reliable, may not necessarily be accurate.

As a result, care should be exercised in interpreting recent labour force estimates, as the ABS points out, and

also in interpreting Treasury’s near-term forecasts and estimates.


4. GENERAL GOVERNMENT

SECTOR OUTCOME

Income Statement

The General Government Income Statement for 2016-17 is detailed in Table 4.1.

The revised 2016-17 Budget forecasts:

a Net Operating Surplus of $47.7 million, a $29.6 million deterioration from the Budget estimate of a

$77.3 million surplus; and

a Fiscal Deficit of $168.8 million, an $8.2 million deterioration from the Budget estimate of a $160.6 million

deficit.


General Government Income Statement

2015-16 2016-17 2016-17 2016-17

Dec YTD Revised Dec YTD

Actual Budget Budget Actual

$m $m $m $m

Revenue from transactions

Grants 1 712.4 3 634.6 3 644.2 1 766.5

Taxation 573.0 1 055.6 1 098.6 584.4

Sales of goods and services 173.9 352.9 398.2 195.0

Fines and regulatory fees 47.2 96.5 95.4 46.8

Interest income 8.2 16.5 20.7 8.1

Dividend, tax and rate equivalent income 235.4 263.8 296.8 217.5

Other revenue 82.3 153.8 162.8 85.9

2 832.3 5 573.7 5 716.7 2 904.2

Less Expenses from transactions

Employee expenses 1 137.0 2 311.0 2 373.4 1 184.6

Superannuation 150.3 284.6 340.1 185.3

Depreciation 125.2 264.6 264.3 127.3

Supplies and consumables 491.6 1 105.9 1 174.2 504.8

Nominal superannuation interest expense 129.7 288.2 236.3 118.1

Borrowing costs 5.7 10.3 10.4 4.5

Grant and subsidy expenses 696.0 1 206.2 1 242.5 721.5

Other expenses 8.4 25.4 27.8 14.3

2 743.9 5 496.3 5 668.9 2 860.4

Equals NET OPERATING BALANCE 88.4 77.3 47.7 43.8

Plus Other economic flows – included in Operating

Result

Gain/(loss) on sale of non-financial assets 1.5 10.5 12.6 (1.0)

Movement in Equity investment in GBEs and SOCs .... 19.5 159.0 ....

Movement in Superannuation liability .... .... 2 764.6 ....

Other gains/(losses) (1.1) (21.2) (50.4) (0.8)

0.4 8.8 2 885.8 (1.8)

Equals Operating Result 88.8 86.1 2 933.5 42.1


Table 4.1: General Government Income Statement (continued)

2015-16 2016-17 2016-17 2016-17



$m $m $m $m

Plus Other economic flows – other movements in

Equity

Revaluations of non-financial assets 145.1 252.3 248.0 126.1

Other non-owner movements in equity 11.0 3.3 3.3 9.4

156.1 255.5 251.3 135.5

Equals Comprehensive Result 244.9 341.6 3 184.8 177.6

KEY FISCAL AGGREGATES

NET OPERATING BALANCE 88.4 77.3 47.7 43.8

Less Net acquisition/(disposal) of non-financial assets

Purchase of non-financial assets 108.7 530.8 511.3 184.2

Less Sale of non-financial assets 20.3 28.3 30.5 18.0

Less Depreciation 125.2 264.6 264.3 127.3

(36.8) 237.9 216.5 38.9

Equals FISCAL BALANCE - SURPLUS/(DEFICIT) 125.2 (160.6) (168.8) 5.0


Underlying Net Operating Balance

The Underlying Net Operating Balance is a measure which removes the distorting impact of one-off

Australian Government funding for specific capital projects linked to Roads and Rail funding, Sustainable

Rural Water Use and Infrastructure Program (formerly Water for the Future Program) and the Royal Hobart

Hospital Redevelopment.

Underlying Net Operating Balance

2016-17

Revised

Budget

2017-18

Forward

Estimate

2018-19

Forward

Estimate

2019-20

Forward

Estimate

$m $m $m $m

Net Operating Balance 47.7 132.8 4.1 176.3

) Less Impact of One-off Australian Government funding

Roads and Rail Funding 121.7 71.5 25.9 60.0

Royal Hobart Hospital Redevelopment 25.0 15.0 10.0 ….

Sustainable Rural Water Use and Infrastructure

Program

22.0 23.0 10.0 ….

168.7 109.5 45.9 60.0

Underlying Net Operating Balance (121.0) 23.3 (41.8) 116.3


Major Revenue Variations

Revenue from transactions is estimated to be $5 716.7 million in 2016-17, which is $143 million higher than

the 2016-17 Budget estimate of $5 573.7 million. The main changes in the 2016-17 estimates are summarised

below.

Description Variance from Budget Reasons

Grants $9.6 million higher

General Purpose

Payments

$25.8 million lower The reduction in General Purpose Payments is a

result of GST revenue being revised downwards by

$25.8 million to reflect the revisions made by the

Australian Government in its Mid-Year Economic

and Fiscal Outlook. This primarily reflects:

a residual adjustment of negative $4.2 million in

GST revenue paid to Tasmania in 2016-17, as

a result of lower than anticipated GST receipts

in 2015-16; and

the impact of a small increase in Tasmania’s

share of the revised national population, offset

by a $920 million reduction in the estimated size

of the GST pool available for distribution in

2016-17.

Specific Purpose

Payments

$20.3 million higher The increase in Specific Purpose Payments

primarily reflects:

an increase in Australian Government

Activity based funding of $15.7 million and

Australian Government Block funding of

$2.2 million. These changes are primarily due

to a revision of Tasmanian Health Service

activity profiles which relate to actual activity

achieved in 2015-16 which was higher than

anticipated; and

an increase in Students First Funding of

$2.4 million reflecting updates in the 2016-17

Australian Government Budget.



National Partnership

Payments

$10.7 million higher The increase in National Partnership Payments

primarily reflects additional revenue expected to be

received from the Australian Government in 2016-17

for a range of grants which include:

Natural Disaster Relief and

Recovery Arrangement receipts of $13 million

relating to the January 2016 Bushfires and

$4.3 million for the June 2016 Flood Event;

Reducing Elective Waiting Lists funding of

$5 million;

Australian Government election commitments

of $3.2 million for a number of infrastructure

projects across the State which include:

$1.2 million for the Carlton Bridge

Upgrade;

$800 000 for the Cove Hill Bridge

Upgrade;

$500 000 for the Hobart International

Airport Roundabout; and

$250 000 for the Bass Highway - Wynyard

Intersection Upgrades;

Tasmanian Irrigation funding of $3.4 million;

and

Improving Health Services in Tasmania Walk-in

Centres Hobart and Launceston of $1.2 million.

This increase is partially offset by the reallocation of

Roads funding of $20.9 million from 2016-17 to

2017-18 to reflect the timing of Project approvals and

associated processes.

Other grants and

subsidies

$4.4 million higher The increase in Other grants and subsidies primarily

reflects an increase in Australian Government

Funding relating to Commonwealth own Purpose

Expenditure for the Department of Health and

Human Services.



Taxation $43 million higher The increase in Taxation primarily reflects a

$39.5 million upwards revision in Conveyance duty

receipts, primarily driven by large commercial

transactions and an increase in residential property

transaction volumes. Land tax has also been revised

up by $8.3 million, reflecting a net increase in land

values across the State, system enhancements

leading to improvements in debt management and

targeted compliance efforts.

These increases are partially offset by a downward

revision to:

Casino tax and licence fees of $2 million,

reflecting lower than expected year-to-date

revenue; and

Betting exchange taxes and levies of $3 million,

reflecting the surrender by Betfair of its

Tasmanian Gaming Licence.

Sales of goods and

services

$45.3 million higher The increase in Sales of goods and services

primarily reflects revised estimates for the

Tasmanian Health Service comprised:

new funding of $50 million in 2016-17 for the

implementation of the National Hepatitis C

medication program; and

revised projections of Australian Government

revenues of $4.4 million primarily relating to the

Child Dental Benefit Schedule and Training

More Specialists in Tasmania Program.

These increases are partially offset by a downward

revision of $9 million, which predominantly relates to

a reduction in projected pharmaceutical recoveries

and other chargeable services by the Tasmanian

Health Service.



Dividend, tax and rate

equivalent income

$33 million higher The increase in Dividend, tax and rate equivalent

income reflects an increase in Dividends of

$26.2 million and Income Tax Equivalents of

$6.9 million.

The increase in Dividends primarily reflects:

a $13.1 million increase for Tasmanian Networks

Pty Ltd due to a higher profit result for 2015-16

as a result of transmission and distribution

revenues exceeding forecasts;

a $6.1 million increase for Aurora Energy Pty Ltd

as a result of a better profit outcome primarily due

to expenditure control; and

a $5.9 million increase for the Motor Accidents

Insurance Board (MAIB) due to a better profit

outcome for 2015-16 due to stronger investment

returns and a lower claims expense.

The increase in Income tax equivalents primarily

reflects a $13.1 million increase for MAIB due to

increased profitability, offset by a decrease of

$3.3 million for Tasmanian Networks Pty Ltd due to an

adjustment from 2015-16, and a decrease of

$2.6 million for Hydro Tasmania due to the impact of

the energy supply event.

Other revenue $9 million higher The increase in Other revenue primarily reflects:

an increase in Finance-General of $5.5 million

reflecting the first Property Catastrophe

Insurance progress claim for covered items

damaged during the June 2016 floods;

an increase in Justice of $1.7 million reflecting

revised revenue projections primarily for Fees

and Fines to better align with actual experience.

Tasmanian Health Service Australian

Government Revenue of $1.3 million primarily

relating to the Training More Specialist Doctors

Program which is mainly offset by an increase in

Supplies and consumables expenses.

Interest income $4.2 million higher The increase in interest income primarily reflects

projected increases in Cash and deposits.


General Government Grants

2015-16 2016-17 2016-17 2016-17



$m $m $m $m

General purpose payments 1 133.3 2 299.2 2 273.4 1 149.2

Specific purpose payments 412.1 867.1 887.4 434.9

National partnership payments 78.0 354.5 365.2 116 1

Other grants and subsidies 89.0 113.8 118.2 66.3

1 712.4 3 634.6 3 644.2 1 766.5

General Government Taxation

2015-16 2016-17 2016-17 2016-17



$m $m $m $m

Payroll tax 162.3 331.1 331.1 167.9

Taxes on property

Land tax 90.4 93.8 102.1 101.6

Fire service levies

Fire service contribution 19.4 40.2 40.2 20.5

Insurance levy 8.3 19.2 19.2 7.7

Government guarantee fees .... 21.5 19.8 0.7

Conveyance duty 112.1 191.2 230.6 105.1

Taxes on the provision of goods and services

Gambling taxes

Casino tax and licence fees 29.1 56.4 54.4 28.1

Betting exchange taxes and levies 1.4 3.4 0.4 0.4

Lottery tax 14.7 30.6 29.9 13.7

Totalizator wagering levy 7.1 7.3 7.2 7.2

Insurance duty 43.2 84.7 84.8 44.2

Taxes on the use of goods and services

Vehicle registration fees 19.5 40.4 40.4 19.7

Motor vehicle fees and taxes

Motor vehicle duty 22.2 42.9 44.9 22.6

Motor tax 39.6 85.0 85.7 41.3

Motor vehicle fire levy 3.7 7.8 7.8 3.7

573.0 1 055.6 1 098.6 584.4


Major Expense Variations

Total Expenses from transactions is estimated to be $5 668.9 million in 2016-17, which is $172.6 million above

the 2016-17 Budget estimate of $5 496.3 million. The main expense category changes in 2016-17 estimates

are summarised below and in the Policy and Parameter Statement (Section 4).


Employee expenses $62.4 million higher The increase in Employee expenses primarily reflects:

an increase in the Department of Education of

$7.6 million including:

a reallocation of expenditure of $9.1 million

from Supplies and consumables to better align

with actual expenditure; and

partially offset by a reduction in projected

Australian Government funding expenditure of

$1.8 million;

an increase of $44.6 million in the Tasmanian

Health Service primarily reflecting increased

National Health Reform funding, revised Australian

Government funding, and higher than budgeted

employee expenditure and activity levels; and

an increase in the Department of Justice of


additional expenditure of $1.5 million relating

to an increase in revenues primarily

associated with working with vulnerable

persons registration; and

additional costs relating to Corrective Services

of $1.8 million.

Superannuation $55.5 million higher The increase primarily reflects the latest actuarial

projection of the increase in the present value of the

defined benefit obligation resulting from employee

service in the current period.



Supplies and

consumables

$68.3 million higher The increase in Supplies and consumables primarily

reflects:

an increase in the Department of Health and

Human Services of $7.2 million primarily relating to

revised expenditure projections of Australian

Government funding;

an increase in the Tasmanian Health Service of

$47 million including additional expenditure of

$50 million reflecting new funding in 2016-17 for

the implementation of the National Hepatitis C

medication program. This is partially offset by a

reduction in projected other pharmaceutical

purchases and actual expenditure to date;

an increase in the Department of Justice of

$1.3 million which primarily reflects adjustments

based on the retention of asset sale proceeds and

cost pressures relating to Corrective Services; and

an increase in the Department of State Growth of


the reclassification of $8.7 million from

Purchase of non-financial assets to reflect the

revised nature of projected expenditure; and

additional expenditure of $3.3 million for

restoration costs associated with flood

damage to the Mersey Forest Road.

These changes are partially offset by a decrease in the

Department of Education of $3.4 million which primarily

reflects:

the reclassification of expenditure to

Employee expenses of $9.1 million to better align

with actual expenditure; and

the reclassification of $4 million to Grant and

subsidy expenses to better align with actual

expenditure.

These decreases are partially offset by a

$10 million increase in revised expenditure

projections of Australian Government funding.



Nominal superannuation

interest expense

$51.9 million lower The decrease reflects the most recent actuarial

assessment of the Government’s superannuation

liability, which includes the application of the

30 June 2016 ‘spot’ discount rate of 2.7 per cent

(a long-term discount rate of 4.75 per cent was used in

the 2016-17 Budget) to determine interest cost and

interest income with respect to the liability and plan

assets, respectively.

Grant and subsidy

expenses

$36.3 million higher The increase in Grant and subsidy expenditure

primarily reflects:

an increase in the Department of Education of

$4 million primarily reflecting a reallocation from

Supplies and consumables to better align with

actual expenditure;

an increase in the Department of Health and

Human Services of $5 million which primarily

reflects revised expenditure projections of

Australian Government funding of $2.8 million;

an increase of $7.1 million in the Department of

Primary Industries, Parks, Water and Environment

including:

expenditure associated with the June 2016

Flood of $5.8 million; and

expenditure to support clean-up costs incurred

by businesses as a result of the outbreak of the

Pacific Oyster Mortality Syndrome of

$1 million;



Grant and subsidy

expenses (continued)

an increase in the Department of State Growth of

$18 million including:

revised expenditure projections of Australian

Government funding of $3.5 million;

the reallocation of $4 million in expenditure

from 2017-18 to 2016-17 for the Tasmanian

Jobs and Investment Fund;

$1.9 million in funding for Dark Mofo reflecting

the Government’s commitment to provide

$1.9 million per annum over the next five

years;

carried forward expenditure from 2015-16 of

$6.6 million; and

$2 million for the Academy of Creative

Industries and Performing Arts reflecting below

budget expenditure in 2015-16;

an increase in Finance-General of $5 million

including:

revised expenditure projections of

Australian Government funding of $1 million;

an increase of $2.4 million for First Home

Owner Grant assistance reflecting an increase

in projected demand in the second half of

2016-17; and

an increase in projected Employment Incentive

Scheme Payroll Tax Rebate Grant payments

of $1.4 million reflecting increased demand.


Other Economic Flows – Included in Operating Result

Other economic flows – Included in the Operating Result is estimated to be an inflow of $2 885.8 million in

2016-17, which is $2 877 million higher than the 2016-17 Budget estimate of a $8.8 million inflow. The major

changes are detailed below.


Movement in Equity

investment in GBEs and

SOCs

$139.5 million higher The increase is primarily due to an increase in

forecast Net Assets held by electricity entities of

$131 million which reflects the revaluation of

infrastructure assets undertaken by Hydro Tasmania

in 2015-16.

Movement in

Superannuation liability

$2 764.6 million higher The increase in the Superannuation liability reflects

the latest actuarial valuation. The increase primarily

reflects the difference between the discount rate

applied by the State Actuary, in accordance with

Australian Accounting Standard AASB 119

Employee Benefits, for financial reporting purposes

(2.7 per cent) and the estimated long-term bond rate

used for Budget purposes (4.75 per cent).


Net Acquisition of Non-Financial Assets

Net Acquisition of Non-Financial Assets for 2016-17 is estimated to be $216.5 million, $21.4 million lower than

the Budget estimate of $237.9 million. The major changes are detailed below.

Description

Variance from

Budget Reasons

Department of Education:

Parklands High School

$4.5 million lower

This decrease reflects the reallocation of expenditure

from 2016-17 to 2017-18 due to project delays.

School Upgrades

$1.9 million higher

This increase reflects a bringing forward of

expenditure from 2018-19 and 2019-20 to 2016-17 as

part of the Northern Economic Stimulus Package as

well as funding carried forward from 2015-16 for minor

delays in several other projects.

Department of Health and

Human Services:

Royal Hobart Hospital

Redevelopment

$30.2 million lower This decrease reflects revised cash flows for the

project to update the timing of likely expenditure after

delays in the construction programme.

Affordable Housing

Strategy

$11 million higher This increase reflects:

a bringing forward of expenditure from 2017-18 to

2016-17 of $5 million as part of the Northern

Economic Stimulus Package; and

$6 million for initiatives under Tasmania’s

Affordable Housing Action Plan 2015-2019.

Launceston General

Hospital Allied Health

Clinics

$1 million higher This increase reflects the expenditure of additional

funding required for project completion.

Finance-General:

Parliament Square Fitout $9.3 million higher This increase in 2016-17 reflects expenditure of

$7.9 million of unexpended funding carried forward

from 2015-16 and $1.4 million in revised expenditure

costs reflecting the impact of timing and changes to

the overall construction program.

Department of Police,

Fire and Emergency

Management:

Emergency Services

Computer Aided Dispatch

(ESCAD) System

$2.3 million higher This increase reflects the expenditure of unexpended

funding carried forward from 2015-16.



Department of Primary

Industries, Parks, Water

and Environment:

Parks Infrastructure

June 2016 Floods

$12.4 million higher This increase reflects additional Parks

infrastructure costs following the June 2016

Floods.

High Priority Parks

Infrastructure

$1.5 million higher This increase reflects the expenditure of

unexpended funding carried forward from 2015-16.

Department of State

Growth:

Roads $30.8 million lower This decrease primarily reflects the reallocation of

$32.7 million of Australian Government funding to

2017-18 together with a reclassification of

$8.7 million to Supplies and consumables based

on revised Roads Program expenditure

projections.

This is partially offset by increases to reflect:

additional Australian Government funding of

$3.2 million for new roads projects announced

during the 2016 Federal Election;

additional funding of $4 million for road and

bridge infrastructure costs associated with the

June 2016 Floods; and

expenditure of unexpended funding of

$2.8 million carried forward from 2015-16.


December Year-to-Date Actual Variations

The statements include December 2016 year-to-date actuals which have been prepared based on interim

financial information provided by agencies. Seasonal and timing factors can influence these results and care

should be taken in trying to extrapolate the 2016-17 outcome.

Where relevant, the half-yearly results have been compared to a pro-rata percentage (50 per cent) of the

Original Budget estimates, however this comparison point has not been adjusted to reflect seasonal and timing

impacts for receipts and payments.

Description Variance from

Pro-Rata Original

Budget

Reasons

Grants revenue $50.8 million lower The decrease primarily reflects the timing of

National Partnership Payments for the:

Royal Hobart Hospital Redevelopment of

$12.5 million;

Road and Rail infrastructure programs of

$32.3 million; and

Natural disaster Relief funding of $6.5 million.

These payments are either expected to be received

in the second half of 2016-17 or have been

reallocated to following years.

Taxation $56.6 million higher The increase primarily reflects increases for:

Land Tax of $54.7 million, as a result of the

timing of collection of Land Tax, the majority of

which is recognised in the September Quarter;

and

Taxes on financial and capital transactions of

$9.5 million which is primarily due to large

commercial transactions and a higher than

anticipated volume of residential property

transactions. This is consistent with the

increase reflected in the 2016-17 Revised

Budget.

The increases are partly offset by Guarantee fees

which are $10 million below the pro-rata Original

Budget estimate as these are typically received in

the second half of the year.



Pro-Rata Original

Budget

Reasons

Sales of goods and services $18.6 million higher The increase reflects additional revenue for the

Tasmanian Health Service of $18.2 million which is

primarily due to the implementation of the National

Hepatitis C medication program. This change has

been included in the 2016-17 Revised Budget.

Dividend, tax and rate

equivalent income

$85.6 million higher The increase reflects the timing of dividend

payments from Government businesses, which are

typically declared and paid in the December

quarter.

Superannuation; and

Nominal superannuation

Interest expense

$43 million higher

$26 million lower

The superannuation related expense variations are

consistent with the updated assessment of the

superannuation costs undertaken by the

State Actuary and included in the 2016-17 Revised

Budget.

Supplies and consumables $48.2 million lower The decrease is primarily due to timing and cyclical

factors for:

the Department of Education of $26.1 million

primarily due to timing of expenses that relate

to the calendar-based school year. Expenses

are expected to increase once the 2017 school

year has commenced;

the Department of State Growth of

$13.9 million primarily due to infrastructure

development and maintenance costs which

are expected to be spent in the second half of

the year; and

Finance-General of $10.2 million which is

primarily due to timing of expenditure in

relation to Property Management Services,

and savings from the Treasurer’s Reserve.



Pro-Rata Original

Budget

Reasons

Grants and subsidy expenses $118.4 million higher The increase is primarily a result of the timing of

grant payments during the year for:

the Department of Health and Human

Services of $53.4 million primarily due to the

timing of grant payments for Housing,

Disability and Community Services;

the Department of Education of $29.6 million

which reflects the timing of payments for

Non-Government Schools Grants; and

the Department of Primary Industries, Parks,

Water and Environment of $23.5 million due to

the full year payment of a number of grants in

the September quarter.

Purchase of non-financial

assets

$81.2 million lower This variation primarily reflects the impact of timing

factors on projects relating to road, health and

housing infrastructure and the fit-out of Parliament

Square, with expenditure to increase in the second

half of 2016-17.


Risks and Disclosures

GST Receipts

This Report includes the most recent estimates for GST receipts based on data contained in the

Australian Government’s Mid-Year Economic and Fiscal Outlook published in December 2016, as well as a

revised forecast of states’ own source revenue.

GST revenue collections (also referred to as the GST pool) are sensitive to changes in national consumer

spending and the level of growth in the national economy. Tasmania’s share of these receipts is also

dependent upon the State’s share of the national population and the relativity factor determined by the

Commonwealth Grants Commission. Small changes in Tasmania’s relativity factor can have a large impact

on forecast GST revenue.

Payments for Specific Purposes

Payments for Specific Purposes include Specific Purpose Payments (SPPs), National Reform Funding and

National Partnership Payments (NPPs).

Payments for Specific Purposes are grants from the Australian Government to the states for specific activities.

These Australian Government-State funding arrangements were established under the Intergovernmental

Agreement on Federal Financial Relations (IGA) that was agreed by the Council of Australian Governments

in November 2008.

All states face some level of risk where they are reliant on Australian Government funding. The Australian

Government’s 2014-15 Budget contained unilateral cuts and changes to numerous agreements, highlighting

the volatility and financial uncertainty faced by Tasmania due to this reliance. In addition, Payments for

Specific Purposes can impact on Tasmania’s GST receipts, because the CGC assesses the level of total

funding received by each state in determining its relative financial needs and GST requirements. Where

Tasmania receives Payments for Specific Purposes that are above the per capita national average, or where

it is the only recipient, the State’s GST revenue share decreases albeit with a lagged effect as GST relativities

are averaged over three years. This is explained further in the Guide to the Budget (available on the

Department of Treasury and Finance website).

Specific Purpose Payments

SPPs provide ongoing annual funding to the states for service delivery in specific areas. There are currently

three SPPs in operation: the National Affordable Housing SPP, the National Skills and Workforce

Development SPP and the National Disability Services SPP.

Under the IGA, SPPs are indexed so that the level of funding moves broadly in line with changes in the costs

of providing services. This provides the states with some certainty as to 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 sensitive to assumptions underlying these parameters. Indexation

accounts for only a small proportion of total SPP funding and as such, this funding is low risk.


National Partnership Payments

NPPs are time limited and support the delivery of specific outcomes or projects. While the specifics of each

payment are generally written into the agreement itself, the level of risk associated with these agreements

generally relates to the requirement to meet specific performance milestones and to provide funding and/or

resources to implement the agreements. Agencies may also face challenges reducing service levels and

associated expenditure when a NPP expires.

Future funding arrangements in relation to expiring NPPs are an ongoing risk exposure for all states and

territories, particularly where these NPPs are funding critical core service delivery functions. In this context,

critical core NPPs of concern in terms of funding beyond 2017 include the Homelessness NPP which has

been rolled forward for one year until June 2018, the Universal Access to Early Childhood Education NPP for

which funding ceases on 31 December 2017, and the Building Australia’s Future Workforce - Skills Reform

NPP, funding for which ceases on 30 June 2017. The State is awaiting confirmation from the Australian

Government as to the future of these agreements.

National Reform Funding - National Health Reform Agreement

In its 2014-15 Budget, the then Australian Government announced the National Health Reform Agreement

(NHRA) would be replaced by a block funding model indexed by CPI and population growth from 1 July 2017.

However, at the Council of Australian Governments (COAG) meeting of 1 April 2016, all jurisdictions agreed

to extend the current NHRA activity based funding arrangements, subject to an annual 6.5 per cent aggregate

growth cap and certain other amendments, to cover the period 1 July 2017 to 30 June 2020, pending a longer

term funding agreement to commence from 1 July 2020.

While this NHRA extension preserves the activity based funding approach under which the Australian

Government will continue to contribute up to 45 per cent of the efficient growth in activity based funding, the

imposition of the national funding cap and other changes means that uncertainty remains around the realised

level of future funded activity and the subsequent impact on the Tasmanian Budget.

National Reform Funding - Students First

The 2014-15 Australian Government Budget revealed significant changes to the Students First funding

arrangements. The Australian Government has stated that it will honour the Students First funding

arrangements until the end of 2017, but not for the final two calendar years in 2018 and 2019. Funding in the

final two calendar years will be indexed by CPI with an allowance for enrolment numbers. Education funding

beyond 2017 is currently subject to discussions between the Australian Government and the states.

The State Government continues to deliver on its Students First funding and education reforms, providing the

full $134 million of additional funding over the scheduled six years ($98 million for the Government Sector and

$36 million for the Non-Government Sector).


National Disability Insurance Scheme Funding

The Bilateral Agreement between the Commonwealth and Tasmania on Transition to a National Disability

Insurance Scheme was signed in December 2015. It establishes the agreed transition profile of clients

anticipated to come into the Scheme between 2016 and 2019 and the respective cost-shares to be borne by

the State and the Australian Government over this transition period. In late 2017, the risk sharing

arrangements between the State and the Australian Government for the full scheme will be re-negotiated

following a review of scheme cost by the Productivity Commission due to be completed by September 2017.

Variations to anticipated client inflows, issues with the cessation of State Government services that are

expected to transfer to the NDIS, or the current risk sharing arrangements may have a material impact on the

timing and size of the State’s financial contribution and, as such, represent a potential risk to the current

Forward Estimates.

Mersey Hospital Funding

The current Heads of Agreement between the State and Australian Governments to operate and manage the

Mersey Community Hospital on behalf of the Australian Government expires on 30 June 2017. The current

Heads of Agreement provides for 3.5 per cent indexation of 2014-15 operating funding, resulting in 2016-17

funding in the last year of the current agreement of $75.5 million.

A new agreement is currently being negotiated with the Australian Government. However, as the outcome of

the negotiations is uncertain, and in the absence of an agreement in place for the future funding of the Mersey,

the 2016-17 Revised Estimates Report assumes a continuation of Australian Government funding over the

Forward Estimates based on the parameters in the current agreement. To the extent that outcomes differ from

Tasmania’s current expectations, the financial impact on the Budget will change.

Other Risks

Public Sector Wages

The Government’s established Wages Policy provides for the total cost of salary increases, allowances and

any other employment conditions for all industrial agreements to be no greater than two per cent per annum.

Consistent with this policy, the 2016-17 Revised Budget and Forward Estimates provide for wage indexation

of two per cent per annum. Given that employee costs (including superannuation) represent approximately

47 per cent of total operating expenditure, any wage outcomes over and above this level will have a significant

negative impact on the Budget outcome. For example, a one per cent increase in employee costs across all

employee areas, over and above that provided for, will (assuming no other changes) have a negative impact

on the Budget position of approximately $25 million per annum.


There are a number of wage-related agreements for the Tasmanian State Service which are due to expire, or

are being renegotiated, in 2016-17. The outcomes resulting from these new wage agreements have the

potential to negatively impact the Budget over the 2016-17 Budget and Forward Estimates period. Whilst

negotiations have been finalised with respect to a number of agreements, negotiations have either

commenced or are about to commence in respect of the following:

TasTAFE Teaching Staff Industrial Agreement 2014;

Legal Practitioners Agreement 2014;

Department of Infrastructure, Energy and Resources Engineers Industrial Agreement 2014;

Tas Fire Equipment Officer Employees;

Rural Medical Practitioners;

Salaried Medical Practitioners Interim Agreement;

Teaching Service (Tasmanian Public Service) Principals Agreement; and

Teaching Service Salaries and Conditions of Employment.

Agency Expenditure

Additional Expenditure

Additional expenditure that reflects known Government commitments has been included in the Revised

estimates. This includes expenditure initiatives and changes to the timing of previously expected cashflows.

Expenditure not currently included

While the current estimates reflect known expenditures and those with a reasonable degree of certainty, there

are a range of issues which may arise during the year which are traditionally considered by Government

towards the end of a financial year. These reflect the uncertain nature of the likelihood and level of some

expenditure.

As is usual practice, agency expenditure will continue to be closely monitored during the remainder of the

Budget year. It is generally expected that agencies will seek to absorb new and additional expenditure in the

first instance.

Timing and Treatment of Expenditure

The revised estimates have been prepared on the basis of estimated expenditure commitments which have

the potential to vary in either timing or accounting treatment, should circumstances on finalisation of

negotiations or agreements cause a change. Timing and accounting treatment of expenditure is examined on

an ongoing basis, with revisions disclosed in either Budget documents or Financial Reporting as they become

certain.

Expiring Election Commitments

There are a number of 2014 Election Commitments and annual Budget Initiatives with funding which will

expire in 2016-17 or over the Forward Estimates period. Whilst a number of these commitments were four

year programs it is likely that there will be a desire for some of these activities to continue.


Health Expenditure

Improving health services in Tasmania is a high priority for the Government and this continues to be reflected

in the level of additional budgeted funding and expenditure that has been provided for the Tasmanian Health

Service and its predecessor Tasmanian Health Organisations over successive Budgets. Notwithstanding the

provision of additional funding, the provision of services within this allocated funding remains a significant

challenge, as it is across all Australian jurisdictions, with the Tasmanian Health Service continuing to manage

projected above-budget expenditure in 2016-17, with current revenue and expenditure estimates included in

this report. The potential for future budget over-expenditure, therefore remains a significant risk, particularly

given that health expenditure comprises approximately 30 per cent of total Budget expenditure.

Justice Reforms

The Department of Justice is currently undertaking or investigating significant Government policy reforms.

These include key Government priority policy reforms such as phasing out suspended sentences,

strengthening legal responses to family violence, creating a single civil and administration appeals tribunal,

responding to the Royal Commission into the Institutional Responses to Child Sexual Abuse, and an increased

focus on breaking the cycle by improving ‘through care’ for offenders.

As the Department of Justice refines and implements these strategies, and identifies their linkages with

programs and policy of other agencies, further recurrent and capital costs may be identified, which are not

currently budgeted for. The definition and clarification of this reform program has the potential to increase the

cost of corrective services and State legal services.

Justice Services

Important work has been undertaken in corrective services to improve its operation and to improve its

efficiency. Notwithstanding the significant progress that has been made to date, there continues to be

increasing demand pressures placed on these services. The impact of some of these demand issues is difficult

to forecast. The management of costs within this environment is therefore an ongoing challenge and risk to

current Budget estimates.

Netball Agreement

The Government has very recently entered into a new partnership with the Collingwood Football Club and

Netball Australia to support Netball opportunities in Tasmania over three years. Commencing in 2016-17, the

cost of the agreement will be $550 000 per annum, with a total cost of $1.65 million. The agreement provides

for a number of important initiatives including bringing a Suncorp Super Netball game to the Silverdome in

Launceston each year, supporting Netball Tasmania to assist it with establishing a Tasmanian Magpies team

in the second-tier Australian Netball league and creating opportunities for Tasmanian players, coaches,

umpires and other officials. Funding for this purpose will be provided by way of a Request for Funds in 2016-17

and in the 2017-18 Budget for following years.

Natural Disaster Relief and Recovery Arrangements - January 2016 Bushfires

The 2016-17 Budget included an estimate of $13 million of Natural Disaster Relief and Recovery

Arrangements (NDRRA) funding for 2016-17. Based on the actual level of bushfire expenditure incurred by

the Government in 2016, an additional $13 million in NDRRA receipts has now been included for 2016-17.

The actual timing of the receipt of any funds payable under the NDRRA is subject to a number of factors

including the submission of a final claim by the State and the review of that claim by the Australian

Government. It is possible that funds may not be received in 2016-17 as currently expected.


Natural Disaster Relief and Recovery Arrangements - June 2016 Floods

Following advice from the Australian Government, receipts in respect of the State’s NDRRA claim for the

June 2016 Flood Event of $4.3 million have been included in 2016-17 in this Report. A number of matters

remain to be finalised in relation to the State’s claim in relation to the floods and the final level and timing of

receipts remains to be resolved.

June 2016 Flood Costs

Significant additional costs have been included in this report as a result of the significant flood event in

June 2016. The cost impact continues to be assessed and further costs are likely to be identified including

costs incurred by Local Government. These costs may be the subject of further NDRRA claims.

Following the June 2016 Floods, the Government announced an independent review of the event in

September 2016. The purpose of the review is to consider all aspects of the flood event. There may be

additional costs associated with the Government’s response to the review report.

Government Businesses

Government businesses are subject to a wide range of influences that can significantly impact the level of

returns to the Government. These include market conditions, infrastructure investment requirements, changes

in capital structures of businesses and the implementation of major reform programs.

Tasmanian Railway Pty Ltd and Tasmanian Irrigation Pty Ltd

Discussions with the Australian Government with regard to potential additional funding for rail and irrigation

projects are continuing. The amount and timing of State Government funding is uncertain as it is dependent

on the outcome of these discussions and the amount of increased funding provided by the Australian

Government.

Office of the Superannuation Commission

From 31 March 2017, the public sector Tasmanian Accumulation Scheme will be transferred to Tasplan and

no longer administered by Government through the Retirement Benefits Fund. Tasmanian public sector

defined benefit superannuation will be administered by the Superannuation Commission, supported by a

Treasury Branch, the Office of the Superannuation Commission, from this transfer date.

The administration cost of the defined benefit schemes is currently met from Finance-General. After the

transfer date, it will be met from Treasury’s budget. The General Government sector result will be unaffected

assuming costs are equivalent. Future outlay projections for the Commission and the Office will depend on

the outcome of the request for proposals for the administration of the defined benefits schemes and finalisation

of the Office structure.

Hydro Tasmania

Hydro Tasmania experienced a significant financial impact during 2015-16 due to actions required to mitigate

the combined Basslink outage and low inflow period. Basslink returned to service on 13 June 2016 and

storage levels have since recovered in the wake of an extremely wet winter. Total energy in storage is now

more than 20 percentage points higher than at the same time last year. This change in circumstances has

allowed Hydro Tasmania to return to normal operations.

Motor Accident Insurance Board

The MAIB’s operating results are largely driven by the performance of its investment portfolio and its claims

expenses each year. The outlook for financial and equity markets can be volatile, which suggests a wide

range of possible outcomes for the MAIB and hence its returns over the Forward Estimates period.


Forestry Tasmania

In September 2016 the Board of Forestry Tasmanian advised Shareholding Ministers that its current business

model would not provide a long term financially sustainable approach to managing and making commercially

available Tasmania’s production native timber resources. The Board advised that the business was not

operating sustainably and would be unable to do so for the foreseeable future.

In response the Government announced a range of changes to Forestry Tasmania which will impact on the

State Budget, including:

the General Government sector assuming responsibility for Forestry Tasmania’s legacy RBF annuity

payments for pensioners; and

reviews aimed to identify:

the management requirements and funding associated with managing large areas of non-production

forests within the Permanent Timber Production Zone; and

the costs and range of uses of the large forestry road network currently maintained by Forestry

Tasmania on behalf of the State.

The Board of Forestry Tasmania is also progressing the restructure of Forestry Tasmania into Sustainable

Timber Tasmania and has sought expressions of interest for a parcel of approximately 29,000 hectares of

hardwood plantations.

Whilst the Government will not provide funding to support Forestry Tasmania’s commercial operations, the

reviews will identify Forestry Tasmania’s costs in meeting responsibilities outside its core commercial

operations which support broader social and economic objectives.

The General Government sector has already assumed responsibility for Forestry Tasmania’s legacy RBF

annuity and this is reflected in the Revised Estimates Report. However, at the time of preparation of this

Report, the financial impacts on the General Government Sector of the above reviews are uncertain, as is the

timing and quantum of sale proceeds likely to be received from the hardwood plantation sale. These financial

impacts will be reflected in the 2017-18 Budget and Forward Estimates following completion of the above

reviews.

Superannuation Funding

The estimated General Government Superannuation Liability as at 30 June 2017 is $6 321.3 million. This is

an estimate of the Net Present Value of the Government’s share of current and future benefit payments for

defined benefit scheme members. While all of the defined benefit schemes are closed, because of the

long-term nature of superannuation benefits, the superannuation liability will continue to grow as members

accrue additional years of service as they approach retirement age. The superannuation liability is projected

to grow until 2022-23 and then gradually decline over the following five or six decades.

The emerging cash cost of defined benefit superannuation payments is met from the Consolidated Fund,

funded partly by agency contributions and by a Reserved by Law contribution, which comprises the balance

of the Government’s share of pension and lump sum benefit costs. A key Budget risk is that the cost to the

Budget will increase significantly in coming years (increasing by 65 per cent over the next 14 years and

peaking in 2030-31). In 2016-17, defined benefit superannuation costs are estimated to be 4.7 per cent of

Cash Receipts from Operating Activities in the General Government Sector.

Defined benefit superannuation costs as a percentage of General Government cash receipts is estimated to

increase to 5.3 per cent within five years (by 2021-22) and peak at 5.4 per cent in 2025-26, followed by a

decrease to 4.4 per cent in 15 years (2031-32) and to 3.4 per cent in 20 years (2036-37).


Royal Hobart Hospital Redevelopment

The Royal Hobart Hospital Redevelopment is one of the largest public infrastructure projects ever undertaken

in Tasmania. Whilst the project is being carefully managed, there is potential for unanticipated cost to occur

to changes in scope, latent site conditions or other variations. To the extent additional costs cannot be

managed within the project’s contingency budget, there is potential for there to be an adverse impact on the

General Government Sector.

Ten Days on the Island Guarantee

The Government has provided a guarantee against loss of $600 000 in relation to the 2017 Ten Days on the

Island Festival. Should this guarantee be called upon, funding will be reallocated from the existing 2017-18

funding allocation.

Roads and Rail Funding

The existing five-year roads funding agreement with the Australian Government expires at the end of 2018-19.

Negotiation of a new five-year agreement between the State and Australian Government has been ongoing.

Until an agreement is finalised, the level of funding to be provided by the Australian Government and what

subsequent level of matching funding required from the State remain uncertain.

Provision for Future Infrastructure Investment

As part of the 2016-17 Budget, the Government set aside $185 million ($25 million in 2017-18, $60 million in

2018-19 and $100 million in 2019-20) as a provision for Future Infrastructure Investment.

Since the 2016-17 Budget, $30.4 million has been allocated and approved against this provision over the

Forward Estimates, whilst a further $15 million will be allocated in the 2017-18 Budget for the Cradle Mountain

Visitor Experience Project:

$7.6 million of additional funding has been approved as the State’s contribution towards Australian

Government election commitments for road projects including: the Hobart International Airport

Roundabout ($500 000 in 2017-18 and $5.5 million in 2018-19), Bridport Western Access Road ($1 million

in 2017-18), and Bass Highway-Wynyard Intersection Upgrades ($575 000 in 2017-18);

$4.8 million of additional funding has been approved for State Road infrastructure due to the June 2016

Flood emergency; and

$18 million of additional funding has been approved for education infrastructure investment ($6 million in

2018-19 and $12 million in 2019-20) as part of the Education Act Review.


Balance Sheet

General Government Balance Sheet

30 Jun 2016 30 Jun 2017 30 Jun 2017 31 Dec 2016

Revised


$m $m $m $m

Assets

Financial assets

Cash and deposits 1 326.9 880.8 1 039.7 1 277.4

Investments 44.3 54.2 43.5 44.2

Equity investments in PNFC and PFC Sectors 4 395.1 4 482.8 4 736.0 4 412.3

Other equity investments 19.5 27.4 23.1 20.3

Receivables 314.5 316.6 310.8 368.0

Other financial assets 798.8 847.0 774.2 828.5

6 899.2 6 608.9 6 927.3 6 950.7

Non-financial assets

Land and buildings 5 785.7 6 098.6 6 006.1 5 879.6

Infrastructure 4 277.6 4 779.3 4 530.6 4 342.6

Plant and equipment 242.0 224.6 232.1 251.6

Heritage and culture assets 461.5 502.4 473.7 461.4

Investment property 2.4 3.0 2.7 2.5

Intangible assets 46.2 51.8 51.4 45.8

Assets held for sale 14.0 4.7 13.0 9.9

Other non-financial assets 33.5 31.5 33.6 39.6

10 862.9 11 696.0 11 343.2 11 032.9

Total Assets 17 762.1 18 304.9 18 270.6 17 983.6

Liabilities

Borrowings 625.3 633.7 549.0 623.8

Superannuation1 8 840.6 6 345.5 6 321.3 8 935.7

Employee entitlements 591.9 583.0 603.6 604.6

Payables 141.0 134.9 141.6 73.8

Other liabilities 408.6 358.7 315.6 432.2

Total Liabilities 10 607.4 8 055.7 7 931.1 10 670.1

NET ASSETS 7 154.7 10 249.2 10 339.5 7 313.5


Table 4.5: General Government Balance Sheet (continued)

30 Jun 2016 30 Jun 2017 30 Jun 2017 31 Dec 2016

Revised


$m $m $m $m

Equity

Accumulated funds 2 668.3 5 293.3 5 605.1 2 701.0

Asset revaluation reserve 4 486.4 4 955.9 4 734.4 4 612.5

Total Equity 7 154.7 10 249.2 10 339.5 7 313.5


NET WORTH 2 7 154.7 10 249.2 10 339.5 7 313.5

NET FINANCIAL WORTH 3 (3 708.2) (1 446.7) (1 003.7) (3 719.4)

NET FINANCIAL LIABILITIES 4 8 103.3 5 929.6 5 739.8 8 131.6

NET DEBT 5 (745.9) (301.3) (534.2) (697.8)

Notes: 1. The Superannuation liability as at 31 December 2016 is based on the latest actuarial valuation as at 30 June 2016

adjusted for the employer service cost and the nominal interest expense, based on actuarial advice, for the six months ending 31 December 2016. There is a difference of $2 614.4 million between the Revised Budget estimate and the December year-to-date valuation of the Superannuation liability. This reflects the difference between the discount rate applied by the State Actuary, in accordance with Australian Accounting Standard AASB 119 Employee Benefits, for financial reporting purposes (2.7%) and the estimated long-term bond rate which is used for Budget purposes (4.75% in the 2016-17 Budget) together with the impact of the Government’s decision to transfer the assets and liabilities of Retirement Benefits Fund Defined Benefit Scheme members of Forestry Tasmania to the General Government Sector.

2. Net Worth represents total assets minus total liabilities. 3. Net Financial Worth represents financial assets minus total liabilities. 4. Net Financial Liabilities represents total liabilities less financial assets, excluding equity investments in the PNFC and

PFC Sectors. 5. Net Debt represents borrowings less cash and deposits and investments.


Cash Flow Statement

General Government Cash Flow Statement

2015-16 2016-17 2016-17 2016-17



$m $m $m $m

Cash flows from operating activities

Cash received

Grants received 1 697.7 3 634.6 3 644.2 1 760.8

Taxation 523.6 1 045.9 1 089.6 526.2

Sales of goods and services 176.4 353.7 399.1 195.1

Fines and regulatory fees 43.9 96.5 95.2 44.0

Interest received 8.3 16.6 20.8 8.4

Dividend, tax and rate equivalents 235.4 234.2 288.2 219.8

Other receipts 187.2 331.9 341.0 200.9

2 872.4 5 713.5 5 878.1 2 955.3

Cash paid

Employee entitlements (1 153.4) (2 298.5) (2 360.4) (1 180.2)

Superannuation (199.2) (442.6) (450.2) (209.1)

Supplies and consumables (509.0) (1 117.6) (1 185.9) (577.5)

Borrowing costs (1.9) (10.4) (10.5) (1.0)

Grants and subsidies paid (685.3) (1 206.1) (1 242.5) (724.4)

Other payments (123.3) (205.9) (208.3) (126.6)

(2 672.0) (5 281.2) (5 457.7) (2 818.7)

Net cash flows from operating activities 200.4 432.3 420.4 136.6

Cash flows from investing activities


Purchase of non-financial assets (108.7) (524.8) (505.3) (184.2)

Sale of non-financial assets 20.3 28.3 30.5 18.0

(88.4) (496.5) (474.8) (166.1)

Financial assets (policy purposes)

Equity injections (15.1) (63.2) (65.5) (18.8)

Net advances paid 6.4 .... 0.8 (1.0)

Equity Disposals .... 0.7 0.7 1.1

(8.7) (62.5) (64.0) (18.6)

Financial assets (liquidity purposes)

Net purchase of investments 0.1 .... .... ....

0.1 .... …. ....

Net cash flows from investing activities (97.1) (559.0) (538.8) (184.7)


Table 4.6: General Government Cash Flow Statement (continued)

2015-16 2016-17 2016-17 2016-17



$m $m $m $m

Cash flows from financing activities

Net borrowing (5.0) (35.7) (168.9) (1.5)

Net cash flows from financing activities (5.0) (35.7) (168.9) (1.5)

Net increase/(decrease) in cash held 98.3 (162.5) (287.3) (49.6)

Cash at beginning of the year 1 282.4 1 043.3 1 326.9 1 326.9

Cash at end of the period 1 380.7 880.8 1 039.7 1 277.4


Net cash flows from operating activities 200.4 432.3 420.4 136.6

Plus Net cash from investments in non-financial assets (88.4) (496.5) (474.8) (166.1)

Equals CASH SURPLUS/(DEFICIT) 112.0 (64.2) (54.4) (29.5)


Policy and Parameter Statement

A Policy and Parameter Statement 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 2016-17 Budget Papers and the revised estimates included in this Report.

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 increased 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 where financial estimates are

affected by a change in an Australian Accounting Standard are classified as parameter variations.

Table 4.7 provides a summary of the detailed policy and parameters changes listed in Table 4.8 that have

impacted on the formulation of the revised 2016-17 Budget and Forward Estimates.


Summary Policy and Parameter Statement

2016-17)

Revised)

Budget)

2017-18)

Forward)

Estimate)

2018-19)

Forward)

Estimate

2019-20)

Forward)

Estimate

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

Forward Estimates (Net Operating Balance) as per the

2016-17 Budget (A) 77.3 7.9 (61.0) 18.4

Forward Estimates (Fiscal Balance) as per the 2016-17

Budget (B) (160.6) (196.9) (165.0) 17.4

REVENUE

Policy Decisions .... .... .... ....

Parameter Adjustments 143.0 222.0 167.9 257.2

TOTAL REVENUE VARIATIONS (C) 143.0 222.0 167.9 257.2

EXPENSES

Policy Decisions 16.5 5.3 3.4 3.3

Parameter Adjustments 156.1 91.8 99.4 96.0

TOTAL EXPENSE VARIATIONS (D) 172.6 97.1 102.8 99.3

NET OPERATING BALANCE (A+C-D) 47.7 132.8 4.1 176.3

Less NET ACQUISITION OF NON-FINANCIAL ASSETS

Purchases of Non-Financial Assets

Policy Decisions 22.4 13.1 7.3 3.9

Parameter Adjustments (41.9) 17.2 73.4 15.2

(19.5) 30.3 80.7 19.1

Less Sales of Non-Financial Assets 2.1 2.3 1.7 1.6

Less Depreciation - Total Parameter Adjustments (0.3) 1.3 1.3 1.3

NET ACQUISITION OF NON-FINANCIAL ASSETS

VARIATIONS (E) (21.4) 26.6 77.6 16.2

FISCAL BALANCE (B+C-D-E) (168.8) (98.6) (177.6) 159.0


Policy and Parameter Statement

2016-17)

Revised)

Budget)

2017-18)

Forward)

Estimate)

2018-19)

Forward)

Estimate)

2019-20)

Forward)

Estimate)

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

Forward Estimates (Net Operating Balance) as per the

2016-17 Budget (A) 77.3) 7.9) (61.0) 18.4)

Forward Estimates (Fiscal Balance) as per the 2016-17

Budget (B) (160.6) (196.9) (165.0) 17.4)

Revenue from Transactions

Parameter Adjustments

Taxation

Betting Exchange Taxes and Levies1 (3.0) (3.5) (3.6) (3.7)

Casino Tax and Licence Fees2 (2.0) (1.7) (1.7) (1.7)

Duties3 41.4 39.6 37.3 34.9

Guarantee Fees4 (1.7) (2.4) (3.0) (3.4)

Land Tax5 8.3 8.9 9.3 9.6

Lottery Tax (0.7) (0.8) (0.8) (0.8)

Motor Taxation 0.7 0.1 0.1 0.1

Payroll Tax .... (1.8) (2.9) (2.9)

Totalizator Wagering Levy (0.1) .... .... ....

Total Taxation 43.0) 38.3) 34.7) 32.3)

Notes: 1. The decrease in Betting Exchange Taxes and Levies in 2016-17 and across the Forward Estimates reflects the surrender of a

Tasmanian Gaming Licence (betting exchange endorsement). Consequently, the licence and taxation fees will no longer be collected in Tasmania from 1 November 2016.

2. The decrease in Casino Tax and Licence Fees in 2016-17 and across the Forward Estimates reflects revised projections based on current receipt trends.

3. The increase in Duties across the Budget and the Forward Estimates primarily reflects a significant increase in conveyance duties driven by an increase in residential transaction volumes and large commercial transactions.

4. The decrease in Guarantee Fees primarily reflects Hydro Tasmania’s revised borrowing profile following its return to more normal operating conditions after the low inflow period and Basslink outage in 2015-16.

5. The increase in Land tax of $8.3 million in 2016-17, together with increases over the Forward Estimates, reflect a net increase in land values across the State, system enhancements leading to improvements in debt management and improvements in targeted compliance efforts.


Table 4.8: Policy and Parameter Statement (continued)

2016-17)

Revised)

Budget)

2017-18)

Forward)

Estimate)

2018-19)

Forward)

Estimate)

2019-20)

Forward)

Estimate)

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

Dividend, Tax and Rate Equivalent Income

Dividend income

Aurora Energy Pty Ltd6 6.1) 3.6) 5.1) 5.2)

Hydro Tasmania7 ....) ....) ....) 19.7)

Motor Accidents Insurance Board8 5.9) 6.4) 6.5) 6.7)

Tasmanian Networks Pty Ltd9 13.1) (6.6) (28.5) (15.1)

Tasmanian Ports Corporation Pty Ltd 1.4) ....) (1.1) 3.3)

Tasmanian Public Finance Corporation (0.3) ....) (0.7) (0.3)

26.2) 3.4) (18.8) 19.4)

Income Tax Equivalents

Aurora Energy Pty Ltd6 0.5 2.4 2.5 2.6

Hydro Tasmania7 (2.6) 17.9 8.9 12.8

Motor Accidents Insurance Board8 13.1 8.0 8.5 10.2

Tasmanian Networks Pty Ltd9 (3.3) (14.4) (8.1) (11.2)

Tasmanian Ports Corporation Pty Ltd .... (0.5) 0.3 (0.4)

Tasmanian Public Finance Corporation .... 0.7 0.3 0.8

TT-Line Company Pty Ltd (1.0) (0.7) 1.0 ....

6.9) 13.4) 13.4) 14.8)

Total Dividend, Tax and Rate Equivalent Income 33.0) 16.8) (5.3) 34.1)

Interest Income 4.2) 3.1) 4.6) 8.5)

Australian Government Grants

General Purpose Payments

GST Revenue10 (25.8) 16.1 59.0 78.1

(25.8) 16.1 59.0 78.1

Notes: 6. The increase in Aurora Energy Pty Ltd Dividend and Income Tax Equivalents revenue reflects the adoption of the Final 2016 Retail

Price Determination in its estimated profitability projections. The 2016-17 Budget estimates were based on the Draft 2016 Retail Price Determination.

7. The increase in Dividend and Income Tax Equivalents revenue for Hydro Tasmania over the Forward Estimates period reflects an expected recovery in performance following the low inflow period and Basslink outage which impacted dividend estimates in the 2016-17 Budget.

8. The increase in Dividend and Income Tax Equivalents revenue for the Motor Accidents Insurance Board in 2016-17 and across the Forward Estimates reflects expected higher than forecast profits as a result of revised projections for investment returns and reduced claims expense.

9. The increase in Dividends for Tasmanian Networks Pty Ltd in 2016-17 reflects higher than forecast profit results for 2015-16 as a result of transmission and distribution revenues exceeding forecasts. The decrease in Dividends and Income Tax Equivalents over the forward estimates reflects the draft pricing decision by the Australian Energy Regulator which is lower than the original budget forecasts that were based on Tasmanian Networks Pty Ltd original revenue proposal.

10. Changes in GST revenue forecasts reflect reductions in the Australian Government’s forecasts of the GST pool, an increase in Tasmania’s forecast share of the national population, and the impact of revised forecasts of states’ own-source revenues. The $25.8 million reduction in GST revenue in 2016-17 includes a $4.2 million residual adjustment for overpaid GST revenue in 2015-16.



2016-17)

Revised)

Budget)

2017-18)

Forward)

Estimate)

2018-19)

Forward)

Estimate)

2019-20)

Forward)

Estimate)

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

National Partnership Payments

Community Services (including Disability) 0.1 .... .... ....

Education 0.7 0.4 .... ....

Environment11 3.5 4.5 (8.5) ....

Healthcare 6.7 0.3 0.2 3.0

Infrastructure12 (17.7) 56.2 (5.8) 2.5

Other Services13 17.5 (0.6) (1.2) (1.7)

10.7 60.7 (15.3) 3.7

Specific Purpose Payments

Students First14 2.4 6.4 11.7 19.0

National Health Reform15 17.9 11.4 11.7 12.0

20.3 17.8 23.4 31.0

Other Australian Government Grants 4.4 0.2 0.2 0.7

Total Australian Government Grants 9.6 94.8) 67.3) 113.5)

Agency Revenue

Education 0.5 0.7 1.0 1.4

Finance-General16 5.5 5.5 …. ….

Health and Human Services 0.4 (0.1) (0.1) (0.1)

Justice 1.2 0.1 0.1 0.1

Police, Fire and Emergency Management (0.8) 0.8 0.6 ....

Premier and Cabinet 0.1 (0.3) (0.4) (0.5)

Primary Industries, Parks, Water and Environment 0.6 4.4 4.4 3.9

Notes: 11. The movement in the Environment National Partnership Payment reflects a change in the timing of the receipt of funding from the

Australian Government for the second tranche of irrigation projects being undertaken by Tasmanian Irrigation Pty Ltd. 12. The movement in the Infrastructure National Partnership Payment reflects a reallocation of Australian Government funding for road

infrastructure projects from 2016-17 to 2017-18 and includes Australian Government election commitment roads funding in 2016-17 and over the Forward Estimates.

13. The increase in Other Services National Partnership Payments reflects expected additional receipts under the Natural Disaster Relief and Recovery Arrangements (NDRRA) totalling $17.3 million in 2016-17 in relation to the January 2016 Bushfire event ($13 million) and the June 2016 Flood event ($4.3 million). This is in addition to $13 million in NDRRA revenue estimated to be received in 2016-17 in the 2016-17 Budget Papers.

14. Students First revenue estimates have been revised to reflect updates in the 2016-17 Australian Government Budget. 15. The increase in National Health Reform Funding reflects advice from the Australian Government regarding the level of Activity Based

Funding and Block funding to the Tasmanian Health Services in 2016-17 and over the Forward Estimates period. 16. The increase in revenues for Finance-General of $5.5 million in 2016-17 and $5.5 million in 2017-18 reflects the State’s current estimates

pursuant to Property Catastrophe Insurance for covered items damaged during the June 2016 Flood event.



2016-17)

Revised)

Budget)

2017-18)

Forward)

Estimate)

2018-19)

Forward)

Estimate)

2019-20)

Forward)

Estimate)

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

Agency Revenue (continued)

State Growth (0.8) (1.0) (1.1) (1.4)

Tasmanian Health Service17 46.6 58.9 62.1 65.3

Total Agency Revenue 53.3 69.1) 66.7) 68.8)

Total Parameter Adjustments 143.0) 222.0) 167.9) 257.2)

Total Revenue Variations (C) 143.0) 222.0) 167.9) 257.2)

Expenses from Transactions

Policy Decisions

Agency Expenditure

Finance-General

Accelerated Local Government Capital Program18 0.1 1.7 1.5 1.4

Fire Fighting Costs19 0.8 .... .... ....

Launceston Flood Risk Management Project 1.0 .... .... ....

1.8 1.7 1.5 1.4

Legislature-General

Public Accounts Committee Enquiry20 0.1 .... .... ....

0.1 .... .... ....

Police, Fire and Emergency Management

Flood Taskforce21 1.0 .... .... ....

2016 Tasmanian Flood Review22 0.4 .... .... ....

1.4 .... .... ....

Notes: 17. Significantly increased revenue for Tasmanian Health Service in 2016-17 and across the Forward Estimates is primarily driven by

increased revenues in relation to the listing of Hepatitis C medications on the Pharmaceutical Benefits Scheme. 18. The Accelerated Local Government Capital Program reflects the Government’s announcement to provide loan interest rebates to

approved Local Government capital projects as part of the Northern Economic Stimulus Package. The purpose of the Program is to support expanded investment in infrastructure by Northern Tasmania’s local government authorities.

19. Fire Fighting Costs reflects the final amount to be allocated to the State Fire Commission for costs associated with the January 2016 bushfires.

20. The Public Accounts Committee Enquiry reflects the provision of an additional $50 000 to Legislature-General to support the Parliamentary Standing Committee of Public Accounts enquiry into the financial position and performance of Government owned energy entities.

21. The Flood Taskforce reflects the operational costs of the taskforce established to address the June 2016 Flood Event. This was funded through funding allocated by the Government to meet immediate flood costs which was carried forward from 2015-16 totalling $5 million.

22. The Government has committed $400 000 to support the undertaking of an Independent Review to consider all aspects of the June 2016 Flood event.



2016-17)

Revised)

Budget)

2017-18)

Forward)

Estimate)

2018-19)

Forward)

Estimate)

2019-20)

Forward)

Estimate)

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

Agency Expenditure (continued)

Premier and Cabinet

Beaconsfield Hart Shaft Rectification

Works - 2016 Floods23 0.9 .... .... ....

0.9 .... .... ....


Agricultural Rehabilitation Scheme - 2016 Floods23 1.9 0.1 .... ....

Acute Riparian Recovery - 2016 Floods23 0.5 1.6 .... ....

Primary Producer Grants - 2016 Floods23 3.4 .... .... ....

Pacific Oyster Mortality Syndrome Response24 1.0 .... .... ....

6.8 1.7 .... ....

State Growth

Constellation Netball Cup Launceston25 0.2) ....) ....) ....)

Dark MOFO26 1.9) 1.9) 1.9) 1.9)

Enduro World Series27 0.1) ....) ....) ....)

Mersey Forest Road - 2016 Floods23 3.3) ....) ....) ....)

5.5) 1.9) 1.9) 1.9)

Total Policy Decisions 16.5) 5.3) 3.4) 3.3)


Depreciation (0.3) 1.3) 1.3) 1.3)

Nominal Superannuation Interest Expense28 (51.9) (1.1) (1.6) (2.0)

Borrowing Costs ....) (0.1) (0.1) ....)

Agency Expenditure

Director of Public Prosecutions 0.2 .... .... ....

Education29 9.7 6.3 16.3 14.2

Finance-General (0.5) (0.6) (2.3) (5.2)

Notes: 23. This funding represents part of a substantial allocation of additional funding to meet the immediate and subsequent recovery costs

associated with the June 2016 Flood event. Funding reflects the current estimates of the cost of assistance provided by the Government, some of which will be offset by funding received from the Australian Government under the Natural Disaster Relief and Recovery Arrangements or alternatively is able to be claimed under the Government’s catastrophe insurance cover. Estimates of potential receipts have been separately included in this Statement. Final expenditure amounts and associated receipt levels will be included in future reports.

24. This reflects the Government’s announcement of $1 million towards a $2.1 million clean-up package for businesses impacted by the outbreak of Pacific Mortality Syndrome. The remaining funding has been provided by the Australian Government.

25. The Government announced a contribution of $200 000 towards the Constellation Netball Cup game hosted at Launceston’s Silverdome in October 2016 between the Australian Netball Diamonds and New Zealand’s Silver Ferns.

26. This reflects the Government’s decision to provide additional funding of $1.9 million per annum for five years from 2016-17 to Events Tasmania to support the Dark MOFO event.

27. Additional funding of $100 000 has been allocated to Events Tasmania to support the Shimano Enduro Tasmania mountain bike event as part of the 2017 Enduro World Series.

28. The decrease in Nominal Superannuation Interest Expense reflects the most recent actuarial assessment of the Government’s superannuation liability, which includes the application of the 30 June 2016 ‘spot’ discount rate of 2.7 per cent (a long-term discount rate of 4.75 per cent was used in the 2016-17 Budget) to determine interest cost and interest income with respect to the liability and plan assets, respectively.

29. The increase in expenditure for the Department of Education reflects the expenditure of Australian Government funding carried forward from 2015-16 together with additional Students First funding in 2016-17 and over the Forward Estimates.



2016-17)

Revised)

Budget)

2017-18)

Forward)

Estimate)

2018-19)

Forward)

Estimate)

2019-20)

Forward)

Estimate)

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

Agency Expenditure (continued)

Health and Human Services30 12.5 0.3 (1.7) 4.3

Integrity Commission 0.1 0.1 0.1 0.1

Justice31 5.1 1.6 1.5 0.9

Office of the Ombudsman .... 0.1 0.1 0.1

Police, Fire and Emergency Management (0.5) 0.8 0.6 ....

Premier and Cabinet 2.3 (0.4) (0.3) (0.3)

Primary Industries, Parks, Water and Environment32 3.1 5.4 4.8 2.4

State Fire Commission 0.3 .... .... ....

State Growth33 24.9 5.3 6.2 1.7

Tasmanian Health Service34 98.3 73.7 73.7 77.1

Treasury and Finance 1.1 .... .... ....

Other35 51.9 (0.8) 1.0 1.5

Total Agency Expenditure 208.3) 91.7) 99.7) 96.8)

Total Parameter Adjustments 156.1) 91.8) 99.4) 96.0)

TOTAL EXPENSES FROM TRANSACTIONS VARIANCE (D) 172.6) 97.1) 102.8) 99.3)

NET OPERATING BALANCE 47.7) 132.8) 4.1) 176.3)

Notes: 30. The increase in expenditure for the Department of Health and Human Services in 2016-17 primarily reflects a revision of projected

expenditure of Australian Government Funding of $11.3 million for a range of Commonwealth Own Purpose Expenses (COPE) Agreements and National Partnerships (NPs).

31. The increase in expenditure for the Department of Justice primarily reflects revisions to expenditure for Working with Vulnerable Persons; expenditure of additional Australian Government funding provided to support the delivery of Family Advocacy and Support Services by the Legal Aid Commission; and estimated increased prison service costs.

32. The increase in expenditure for the Department of Primary Industries, Parks, Water and the Environment primarily reflects revised expenditure projections associated with the Tasmanian Wilderness World Heritage Area Extension funding from the Australian Government and additional expenditure associated with the maintenance of the Three Capes Track.

33. The increase in expenditure for the Department of State Growth in 2016-17 primarily relates to expenditure of $8.5 million carried forward from 2015-16, the reallocation of $4 million of Tasmania Jobs and Investment Funds from 2017-18 to 2016-17, together with the reallocation of cash flows for the Academy of Creative Industries and Performing Arts project of $2 million which was unspent in 2015-16. The movement from 2016-17 and over the Forward Estimates includes the reclassification of $16.9 million in Australian Government funding for roads infrastructure from Non-Financial Asset Purchases to Supplies and Consumables expense (2016-17, $8.7 million; 2017-18, $5 million; 2018-19, $8.2 million).

34. The increase in expenditure for the Tasmanian Health Service primarily relates to the listing of Hepatitis C medications on the Pharmaceutical Benefits Scheme of $243 million over the Budget and Forward Estimates together with revised Activity Based and Block funding from the Australian Government of $12.1 million in 2016-17 and $35 million over the Forward Estimates.

35. The movement in Other primarily reflects adjustments to eliminations and indexation as well as costs associated with the State’s superannuation expense and liability.



2016-17)

Revised)

Budget)

2017-18)

Forward)

Estimate)

2018-19)

Forward)

Estimate)

2019-20)

Forward)

Estimate)

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

less NET ACQUISITION OF NON-FINANCIAL ASSETS

Purchases of Non-Financial Assets

Policy Decisions

Education

Education Act Reforms Infrastructure36 ....) ....) 6.0) 12.0)

Northern Economic Stimulus Package37 1.0) 11.3) (4.2) (8.1)

1.0) 11.3) 1.8 3.9

Health and Human Services

Northern Economic Stimulus Package38 5.0) (5.0) ....) ....)

5.0) (5.0) ....) ....)


Parks Infrastructure - 2016 Floods23 12.4) ....) ....) ....)

12.4) ....) ....) ….)

State Growth

Roads and Bridges - 2016 Floods39 4.0) ....) ....) ....)

Flood Recovery - Roads Funding40 ....) 4.7) ....) ....)

State funding for Australian Government Election

Commitments for Roads41 ....) 2.1) 5.5) ....)

4.0) 6.8) 5.5) ....)

Total Policy Decisions 22.4) 13.1) 7.3) 3.9)

Notes: 36. As a part of the Education Act Reforms the Minister of Education has announced a one-off funding amount of $18 million for infrastructure

investment. This funding will be utilised to ensure government and non-government schools have the capacity to accommodate an increased number of students as a result of changes to the school starting and leaving ages. The exact timing and accounting treatment of this expenditure will be subject to further review following the ongoing finalisation of this reform. Consultation will occur with relevant stakeholders on the details of the application and assessment process with a view to having an agreed process to commence in September 2017 if the order and report on the earlier starting age is approved by both Houses of Parliament.

37. $12.3 million of existing school infrastructure investment funding has been approved to be brought forward as part of the Northern Economic Stimulus Package. Infrastructure funding for four Northern Tasmanian school Projects has been brought forward to 2016-17 and 2017-18 from 2018-19 and 2019-20 for Riverside Primary School ($2.5 million), St Mary’s District School ($5 million), Queechy High School ($3 million), and East Devonport Primary School ($1.75 million).

38. $5 million in existing funding for the construction of 27 units as part of the Affordable Housing Strategy, has been approved to be brought forward from 2017-18 to 2016-17 as part of the Northern Economic Stimulus Package.

39. $4 million has been allocated to fund infrastructure repairs to roads and bridges following the June 2016 Flood Event. The total cost is $8.7 million with $4.7 million being transferred from Bridge Funding allocated in 2016-17. New funding to replace the Bridge Funding has been allocated in 2017-18 (See 40 below).

40. Additional funding has been approved for the Department of State Growth in 2017-18 for the Bridge Renewal Program and the Huon Highway: Glendevie Passing projects, due to existing funds being made available to fund required flood recovery activities in 2016-17 financial year.

41. Additional funding has been approved for the Department of State Growth from 2017-18 to match Australian Government funding for three roads projects: the Hobart International Airport Roundabout ($6 million); the Bridport Western Access Road ($1 million); and the Bass Highway-Wynyard Intersection Upgrades ($575 000).



2016-17)

Revised)

Budget)

2017-18)

Forward)

Estimate)

2018-19)

Forward)

Estimate)

2019-20)

Forward)

Estimate)

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


Education42 (4.8) 8.2) ....) ....)

Finance-General43 10.4) 3.4) 2.4) 2.0)

Health and Human Services44 (20.6) (44.2) 65.1) 21.9)

Justice 0.1) ....) ....) ....)

Police, Fire and Emergency Management 2.3) ....) ....) ....)

Premier and Cabinet 0.3) 0.3) 0.3) ....)

Primary Industries, Parks, Water and Environment 2.2) 1.2) 0.9) 0.8)

State Growth45 (35.2) 48.0) 21.0) 2.5)

Tasmanian Health Service 3.0) 1.7) ....) ....)

Treasury and Finance 0.3) 0.8) ....) ....)

Provision for Future Infrastructure Investment ....) (2.1) (16.3) (12.0)

Total Parameter Adjustments (41.9) 17.2) 73.4) 15.2)

Total Purchases of Non-Financial Assets (E) (19.5) 30.3) 80.7) 19.1)

Total Sale of Non-Financial Assets (F) 2.1) 2.3) 1.7) 1.6)

Depreciation - Total Parameter Adjustments (G) (0.3) 1.3) 1.3) 1.3)

TOTAL NET ACQUISITION OF NON-FINANCIAL ASSETS

VARIANCE (H)46 (21.4) 26.6) 77.6) 16.2)

FISCAL BALANCE47 (168.8) (98.6) (177.6) 159.0)

Notes: 42. The movement for Department of Education in 2016-17 primarily reflects the reallocation of funding from 2016-17 to 2017-18 for the

Parklands High School due to project delays. The movement in 2017-18 reflects a revised cash flow profile for the following capital projects: Parklands High school project ($4.5 million); Austin Ferry Primary School ($700 000); East Launceston Primary School ($700 000); Latrobe High School, ($750 000); Lenah Valley Primary School ($400 000); Tasman District School ($450 000); and Windermere Primary School ($700 000).

43. The increase in the Purchase of Non-Financial Assets for Finance-General in 2016-17 primarily reflects Parliament Square expenditure of $7.9 million of unexpended funding carried forward from 2015-16 and $1.4 million in revised expenditure costs reflecting the impact of timing and changes to the overall construction program.

44. The movement for the Department of Health and Human Services primarily reflects revised cash flows for the Royal Hobart Hospital Redevelopment to update the timing of likely expenditure after delays in the construction programme. This movement is offset by additional expenditure in the Housing Capital Program, with the majority supporting initiatives under the Affordable Housing Strategy.

45. The movement for the Department of State Growth in the Purchase of Non-Financial Assets primarily reflects a change in timing of expenditure of existing Australian Government funding for road infrastructure projects from 2016-17 to 2017-18 for the Huon Highway / Summerleas Road project ($14.9 million); and Midland Highway ($21 million). The increase in 2016-17 and over the Forward Estimates also reflects Australian Government election commitment roads funding. These projects include: Hobart International Airport Roundabout ($24 million); Highland Lakes Road ($5 million); Bass Highway-Wynyard Intersection Upgrades ($2.3 million); Bridport Western Access Road ($1.9 million); and Legana Road Upgrade ($2.8 million).

46. Net Acquisition/(Disposal) of Non-Financial Assets is equal to E-F-G. 47. Fiscal Balance is equal to B + C - D - H.


5. UNIFORM GOVERNMENT

REPORTING

In accordance with the Uniform Presentation Framework, agreed by the Australian Loan Council in

March 2000, this Report presents revised fiscal estimates that take into account fiscal developments since

the commencement of the Budget year.

Tables 5.1 to 5.15 present Income Statement, Balance Sheet and Cash Flow Statement estimates for the:

General Government Sector;

Public Non-Financial Corporations Sector;

Total Non-Financial Public Sector;

Public Financial Corporations Sector; and

Total State Sector.

The revised Loan Council Allocation is provided in Table 5.16.


General Government Sector

General Government Income Statement

2016-17 2016-17 2017-18 2018-19 2019-20


Budget Budget Estimate Estimate Estimate

$m $m $m $m $m

Revenue from Transactions

Grants 3 634.6 3 644.2 3 633.4 3 631.8 3 753.1

Taxation 1 055.6 1 098.6 1 114.2 1 141.5 1 171.0

Sales of goods and services 352.9 398.2 424.1 434.0 439.9

Fines and regulatory fees 96.5 95.4 89.5 84.2 84.5

Interest income 16.5 20.7 19.2 17.4 21.5

Dividend, tax and rate equivalent income 263.8 296.8 278.2 185.8 216.4

Other revenue 153.8 162.8 160.7 158.4 155.7

5 573.7 5 716.7 5 719.3 5 653.1 5 842.2


Employee expenses 2 311.0 2 373.4 2 350.3 2 382.8 2 420.3

Superannuation 284.6 340.1 280.7 275.6 274.3

Depreciation 264.6 264.3 271.3 263.7 273.1

Supplies and consumables 1 105.9 1 174.2 1 164.8 1 145.5 1 151.4

Nominal superannuation interest expense 288.2 236.3 293.0 297.8 301.9

Borrowing costs 10.3 10.4 10.0 9.7 9.3

Grant expenses 1 206.2 1 242.5 1 184.3 1 249.0 1 213.2

Other expenses 25.4 27.8 32.1 24.9 22.4

5 496.3 5 668.9 5 586.5 5 649.0 5 665.9

Equals NET OPERATING BALANCE 77.3 47.7 132.8 4.1 176.3

Plus Other economic flows - included in

Operating Result

Gain/(loss) on sale of non-financial assets 10.5 12.6 12.9 12.3 12.2

Movement in investment in GBEs and SOCs 19.5 159.0 (58.9) 34.5 95.1

Movement in Superannuation liability .... 2 764.6 .... .... ....

Other gains/(losses) (21.2) (50.4) (17.9) (13.6) (14.6)

8.8 2 885.8 (63.9) 33.3 92.6

Equals Operating Result 86.1 2 933.5 68.9 37.4 268.9


Table 5.1: General Government Income Statement (continued)

2016-17 2016-17 2017-18 2018-19 2019-20



$m $m $m $m $m

Plus Other economic flows - other movements in equity

Revaluations of non-financial assets 252.3 248.0 271.8 291.5 322.2

Other non-owner movements in equity 3.3 3.3 3.8 3.8 3.8

255.5 251.3 275.6 295.3 326.0

Equals Comprehensive Result 341.6 3 184.8 344.5 332.7 594.9


NET OPERATING BALANCE 77.3 47.7 132.8 4.1 176.3


Purchase of non-financial assets 530.8 511.3 533.5 475.9 320.7

Less Sale of non-financial assets 28.3 30.5 30.8 30.6 30.3

Less Depreciation 264.6 264.3 271.3 263.7 273.1

237.9 216.5 231.4 181.7 17.3

Equals FISCAL BALANCE (160.6) (168.8) (98.6) (177.6) 159.0


General Government Balance Sheet as at 30 June

2017 2017 2018 2019 2020



$m $m $m $m $m

Assets

Financial assets

Cash and deposits 880.8 1 039.7 951.8 834.6 795.1

Investments 54.2 43.5 44.8 46.2 48.3

Equity investment in PNFC and PFC sectors 4 482.8 4 736.0 4 725.0 4 791.6 4 891.2

Other equity investments 27.4 23.1 26.7 30.3 33.9

Receivables 316.6 310.8 309.5 305.4 300.5

Other financial assets 847.0 774.2 784.8 826.4 845.0

6 608.9 6 927.3 6 842.5 6 834.5 6 913.9


Land and buildings 6 098.6 6 006.1 6 286.9 6 546.6 6 655.5

Infrastructure 4 779.3 4 530.6 4 774.7 5 003.6 5 245.8

Plant and equipment 224.6 232.1 216.2 207.4 204.2

Heritage and cultural assets 502.4 473.7 485.9 498.2 510.5

Investment property 3.0 2.7 3.0 3.3 3.6

Intangibles 51.8 51.4 50.7 49.0 44.8

Assets held for sale 4.7 13.0 12.0 11.3 11.2

Other non-financial assets 31.5 33.6 32.8 32.4 29.3

11 696.0 11 343.2 11 862.2 12 351.8 12 705.0

Total Assets 18 304.9 18 270.6 18 704.7 19 186.3 19 618.9

Liabilities

Borrowings 633.7 549.0 521.0 563.5 296.8

Superannuation 6 345.5 6 321.3 6 429.3 6 523.2 6 601.8

Employee entitlements 583.0 603.6 609.9 619.5 642.5

Payables 134.9 141.6 143.0 144.2 146.3

Other liabilities 358.7 315.6 317.5 319.2 319.9

Total Liabilities 8 055.7 7 931.1 8 020.7 8 169.6 8 007.3

NET ASSETS 10 249.2 10 339.5 10 684.0 11 016.7 11 611.6

Equity

Accumulated funds 5 293.3 5 605.1 5 677.8 5 719.0 5 991.7

Asset revaluation reserve 4 955.9 4 734.4 5 006.2 5 297.7 5 619.9

Total Equity 10 249.2 10 339.5 10 684.0 11 016.7 11 611.6


Table 5.2: General Government Balance Sheet as at 30 June (continued)

2017 2017 2018 2019 2020



$m $m $m $m $m


NET WORTH1 10 249.2 10 339.5 10 684.0 11 016.7 11 611.6

NET FINANCIAL WORTH2 (1 446.7) (1 003.7) (1 178.2) (1 335.1) (1 093.4)

NET FINANCIAL LIABILITIES3 5 929.6 5 739.8 5 903.2 6 126.7 5 984.6

NET DEBT4 (301.3) (534.2) (475.6) (317.3) (546.5)

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, excluding Equity investment in the PNFC

and PFC Sectors. 4. Net Debt represents Borrowings less the sum of cash and deposits and Investments.


General Government Cash Flow Statement

2016-17 2016-17 2017-18 2018-19 2019-20)



$m $m $m $m $m


Cash received

Grants received 3 634.6 3 644.2 3 633.4 3 631.8 3 753.1

Taxation 1 045.9 1 089.6 1 112.4 1 139.6 1 168.7



Interest received 16.6 20.8 19.2 17.4 21.5

Dividend, tax and rate equivalents 234.2 288.2 263.9 143.7 196.0

Other receipts 331.9 341.0 350.3 342.3 327.6

5 713.5 5 878.1 5 890.4 5 791.2 5 990.1

Cash paid

Employee entitlements (2 298.5) (2 360.4) (2 342.7) (2 371.7) (2 396.6)

Superannuation (442.6) (450.2) (464.6) (478.4) (495.8)

Supplies and consumables (1 117.6) (1 185.9) (1 176.6) (1 157.8) (1 159.9)

Borrowing costs (10.4) (10.5) (10.0) (9.7) (9.5)

Grants and subsidies paid (1 206.1) (1 242.5) (1 184.2) (1 248.9) (1 213.2)

Other payments (205.9) (208.3) (224.6) (209.6) (194.7)

(5 281.2) (5 457.7) (5 402.7) (5 476.2) (5 469.6)

Net cash flows from operating activities 432.3 420.4 487.8 315.0 520.4



Purchase of non-financial assets (524.8) (505.3) (526.5) (468.9) (314.2)

Sale of non-financial assets 28.3 30.5 30.8 30.6 30.3

(496.5) (474.8) (495.7) (438.4) (283.8)


Equity injections (63.2) (65.5) (51.4) (35.7) (8.1)

Net advances paid …. 0.8 (1.3) (1.4) (2.1)

Equity disposals 0.7 0.7 0.7 0.7 0.7

(62.5) (64.0) (52.0) (36.4) (9.4)

Net cash flows from investing activities (559.0) (538.8) (547.7) (474.7) (293.3)


Table 5.3: General Government Cash Flow Statement (continued)

2016-17 2016-17 2017-18 2018-19 2019-20)



$m $m $m $m $m


Net borrowing (35.7) (168.9) (27.9) 42.5 (266.7)

(35.7) (168.9) (27.9) 42.5 (266.7)

Net increase/(decrease) in cash held (162.5) (287.3) (87.9) (117.2) (39.5)

Cash at beginning of the year 1 043.3 1 326.9 1 039.7 951.8 834.6

Cash at end of the year 880.8 1 039.7 951.8 834.6 795.1



Plus Net cash from investments in non-financial assets (496.5) (474.8) (495.7) (438.4) (283.8)

Equals CASH SURPLUS/(DEFICIT) (64.2) (54.4) (7.9) (123.3) 236.6


Public Non-Financial Corporations Sector

Public Non-Financial Corporations Sector Income Statement

2016-17 2016-17 2017-18 2018-19 2019-20



$m $m $m $m $m


Grants 179.3 179.3 145.9 143.4 145.9

Sales of goods and services 2 861.1 2 915.0 2 959.6 3 124.2 3 220.3

Interest income 7.5 7.6 7.9 7.9 8.2

Other revenue 62.9 32.4 30.4 31.9 30.9

3 110.8 3 134.3 3 143.9 3 307.4 3 405.4


Employee expenses 360.6 362.8 371.0 379.1 386.7

Superannuation 54.9 54.6 50.3 50.3 50.5

Depreciation 307.4 318.2 329.9 342.5 350.4



Borrowing costs 153.1 140.0 132.1 131.9 131.1

Dividend, tax and rate equivalent expenses 204.2 218.4 205.9 124.2 165.4

Grant and subsidy expenses 39.3 39.3 40.1 40.9 41.7

Other expenses 76.2 24.9 26.1 26.3 26.5

3 090.0 3 147.5 3 194.3 3 245.8 3 399.6

Equals NET OPERATING BALANCE 20.8 (13.2) (50.5) 61.6 5.7

Plus Other economic flows – included in

Operating Result

Movement in superannuation liability .... 219.0 .... .... ....

Other gains/(losses) (6.7) (17.8) (58.8) (93.3) 25.1

(6.7) 201.2 (58.8) (93.3) 25.1

Equals Operating Result 14.1 188.0 (109.3) (31.8) 30.8


Table 5.4: Public Non-Financial Corporations Sector Income Statement (continued)

2016-17 2016-17 2017-18 2018-19 2019-20



$m $m $m $m $m


equity


Other non-owner movements in equity (14.2) (75.1) 11.3 15.8 1.2

41.0 (2.8) 63.2 66.7 52.9

Equals Comprehensive Result 55.1 185.2 (46.1) 35.0 83.7


NET OPERATING BALANCE 20.8 (13.2) (50.5) 61.6 5.7



Less Sale of non-financial assets 86.7 1.8 .... 0.6 ....


135.4 210.4 123.9 52.6 4.3

Equals FISCAL BALANCE – SURPLUS/(DEFICIT) (114.6) (223.6) (174.3) 8.9 1.4


Public Non-Financial Corporations Sector Balance Sheet as at 30 June

2017 2017 2018 2019 2020



$m $m $m $m $m

Assets

Financial assets

Cash and deposits 281.4 232.7 211.2 206.9 221.1

Investments 13.8 74.8 13.1 12.8 12.5


Receivables 450.7 558.3 526.5 536.0 536.8


1 597.8 1 800.8 1 662.4 1 616.6 1 634.5


Land and buildings 209.8 229.4 229.6 228.3 234.0

Infrastructure 7 686.5 7 903.8 8 015.8 8 003.6 8 075.0


Biological assets 72.8 200.6 200.7 201.6 201.6

Intangible assets 55.2 123.4 129.1 134.9 129.5


8 531.4 8 943.2 9 027.4 9 027.5 9 096.0

Total Assets 10 129.2 10 744.1 10 689.8 10 644.1 10 730.5

Liabilities

Borrowings 2 825.3 2 713.1 2 739.8 2 613.3 2 609.4

Superannuation 641.5 562.8 576.5 589.1 598.0


Payables 319.9 414.4 394.2 395.2 391.5

Other liabilities 2 215.5 2 712.3 2 635.3 2 634.3 2 630.1

6 112.5 6 503.8 6 447.7 6 334.9 6 333.1

NET ASSETS 4 016.6 4 240.3 4 242.1 4 309.2 4 397.4

Equity

Accumulated funds 881.5 711.2 649.5 609.1 613.6

Asset revaluation reserve 862.8 1 235.5 1 287.5 1 338.4 1 390.1

Other equity 2 272.3 2 293.6 2 305.1 2 361.7 2 393.7

Total Equity 4 016.6 4 240.3 4 242.1 4 309.2 4 397.4


Table 5.5: Public Non-Financial Corporations Sector Balance Sheet as at 30 June (continued)

2017 2017 2018 2019 2020



$m $m $m $m $m


NET WORTH1 4 016.6 4 240.3 4 242.1 4 309.2 4 397.4



NET DEBT4 2 530.1 2 405.6 2 515.5 2 393.6 2 375.9

Notes: 1. Net Worth represents Total Assets minus Total Liabilities. 2. Net Financial Worth represents Financial Assets minus 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 Cash and deposits and Investments.


Public Non-Financial Corporations Sector Cash Flow Statement

2016-17 2016-17 2017-18 2018-19 2019-20



$m $m $m $m $m


Cash received

Grants received 179.3 179.3 145.9 143.4 145.9



Other receipts 143.1 110.7 117.7 109.7 109.9

3 181.6 3 224.3 3 269.7 3 412.8 3 486.6

Cash paid

Employee entitlements (378.3) (371.3) (380.5) (387.5) (394.7)

Superannuation (85.0) (87.0) (83.2) (83.8) (84.0)


Borrowing costs (145.1) (125.6) (132.0) (131.6) (130.5)

Grants and subsidies paid (39.3) (39.3) (40.1) (40.9) (41.7)

Other payments (148.7) (128.8) (125.2) (120.3) (130.8)

(2 612.8) (2 665.9) (2 772.4) (2 832.6) (2 957.4)





Sale of non-financial assets 86.7 1.8 .... 0.6 ....

(442.9) (528.6) (453.7) (395.1) (354.7)


Equity injections 58.6 61.9 47.9 32.1 4.5

58.6 61.9 47.9 32.1 4.5

Financial Assets (liquidity purposes)

Net purchase of investments 0.6 (7.5) 62.5 0.3 (1.0)

0.6 (7.5) 62.5 0.3 (1.0)

Net cash flows from investing activities (383.7) (474.2) (343.4) (362.7) (351.2)


Table 5.6: Public Non-Financial Corporations Sector Cash Flow Statement (continued)

2016-17 2016-17 2017-18 2018-19 2019-20



$m $m $m $m $m


Net Borrowing (15.0) (25.2) 26.7 (126.4) (3.9)

Dividends and tax equivalents paid (173.7) (195.0) (202.1) (95.2) (159.9)

Net cash flows from financing activities (188.7) (220.2) (175.4) (221.7) (163.9)

Net increase/(decrease) in cash held (3.7) (136.0) (21.5) (4.2) 14.2

Cash at beginning of the year 285.0 368.7 232.7 211.2 206.9

Cash at end of the year 281.4 232.7 211.2 206.9 221.1



Plus Net cash flows from non-financial assets (442.9) (528.6) (453.7) (395.1) (354.7)

Plus Dividends, tax and rate equivalents paid (173.7) (195.0) (202.1) (95.2) (159.9)

Equals CASH SURPLUS/(DEFICIT) (47.8) (165.2) (158.5) 89.8 14.6


Total Non-Financial Public Sector

Total Non-Financial Public Sector Income Statement

2016-17 2016-17 2017-18 2018-19 2019-20



$m $m $m $m $m


Grants 3 634.6 3 644.2 3 633.4 3 631.8 3 753.1

Taxation 1 012.4 1 057.9 1 074.8 1 101.5 1 130.2



Interest income 23.9 28.3 27.1 25.2 29.7


Other revenue 216.8 195.1 191.1 190.3 186.7

8 224.2 8 376.7 8 436.6 8 617.4 8 859.9



Superannuation 339.5 394.7 331.1 325.9 324.8

Depreciation 572.0 582.5 601.2 606.2 623.5



Borrowing costs 142.0 130.5 124.4 123.7 122.2

Grant and subsidy expenses 1 066.2 1 102.5 1 078.5 1 146.5 1 109.0

Other expenses 79.8 31.7 36.5 29.1 26.3

8 126.1 8 342.3 8 354.3 8 551.7 8 677.9


Plus Other economic flows – included in Operating

Result


Movement in equity investment in PFC sector (35.6) (28.7) (12.8) (0.5) 11.3

Movement in superannuation liability .... 2 983.6 .... .... ....


(53.1) 2 901.8 (76.6) (95.0) 34.0

Equals Operating Result 45.1 2 936.3 5.7 (29.4) 216.0


Table 5.7: Total Non-Financial Public Sector Income Statement (continued)

2016-17 2016-17 2017-18 2018-19 2019-20



$m $m $m $m $m


equity



296.5 248.5 338.8 362.0 378.9




Less Net acquisition/(disposal) of non-financial

assets

Purchase of non-financial assets 1 060.4 1 041.7 987.3 871.7 675.4



373.3 426.9 355.2 234.3 21.6

Equals FISCAL BALANCE – SURPLUS/(DEFICIT) (275.2) (392.5) (272.9) (168.7) 160.4


Total Non-Financial Public Sector Balance Sheet as at 30 June

2017 2017 2018 2019 2020



$m $m $m $m $m

Assets

Financial assets

Cash and deposits 1 162.2 1 272.4 1 163.0 1 041.5 1 016.2

Investments 67.4 117.7 57.3 58.4 60.1

Equity investment in PFC sector 466.2 495.7 482.9 482.5 493.8


Receivables 767.3 869.2 836.0 841.4 837.3


3 302.9 3 621.8 3 415.0 3 272.6 3 269.8



Infrastructure 12 465.7 12 434.4 12 790.4 13 007.2 13 320.8








20 227.3 20 286.4 20 889.6 21 379.2 21 801.0

Total Assets 23 530.2 23 908.2 24 304.6 24 651.8 25 070.8

Liabilities

Borrowings 3 458.4 3 261.5 3 260.2 3 176.2 2 905.7

Superannuation 6 986.9 6 884.2 7 005.7 7 112.3 7 199.8


Payables 454.8 555.9 537.2 539.4 537.8



NET ASSETS 10 249.2 10 339.5 10 684.0 11 016.7 11 611.6

Equity



Other equity .... 21.7 6.7 6.7 6.7

Total Equity 10 249.2 10 339.5 10 684.0 11 016.7 11 611.6


Table 5.8: Total Non-Financial Public Sector Balance Sheet as at 30 June (continued)

2017 2017 2018 2019 2020



$m $m $m $m $m


NET WORTH1 10 249.2 10 339.5 10 684.0 11 016.7 11 611.6



NET DEBT4 2 228.8 1 871.4 2 039.9 2 076.4 1 829.4

Notes: 1. Net Worth represents Total Assets minus Total Liabilities. 2. Net Financial Worth represents Financial Assets minus 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 Cash and deposits and Investments.


Total Non-Financial Public Sector Cash Flow Statement

2016-17 2016-17 2017-18 2018-19 2019-20



$m $m $m $m $m


Cash received

Grants received 3 634.6 3 644.2 3 633.4 3 631.8 3 753.1

Taxation 1 002.7 1 048.9 1 073.0 1 099.6 1 128.0





Other receipts 475.0 451.7 468.0 452.0 437.5

8 465.3 8 651.6 8 737.4 8 889.9 9 094.6

Cash paid


Superannuation (527.6) (537.2) (547.8) (562.2) (579.9)


Borrowing costs (134.1) (116.3) (124.3) (123.5) (121.9)


Other payments (332.9) (316.1) (328.1) (307.8) (302.8)

(7 638.0) (7 867.8) (7 954.4) (8 090.0) (8 204.8)




Purchase of non-financial assets (1 054.4) (1 035.7) (980.2) (864.6) (668.9)


(939.4) (1 003.4) (949.4) (833.5) (638.6)



Net advances paid …. 0.8 (1.3) (1.4) (2.1)

Equity disposals 0.7 0.7 0.7 0.7 0.7

(3.9) (2.1) (4.1) (4.3) (4.9)


Net purchase of investments 0.6 (7.5) 62.5 0.3 (1.0)

0.6 (7.5) 62.5 0.3 (1.0)

Net cash flows from investing activities (942.7) (1 013.0) (891.1) (837.4) (644.5)


Table 5.9: Total Non-Financial Public Sector Cash Flow Statement (continued)

2016-17 2016-17 2017-18 2018-19 2019-20



$m $m $m $m $m


Net borrowing (50.8) (194.1) (1.3) (84.0) (270.6)

Net cash flows from financing activities (50.8) (194.1) (1.3) (84.0) (270.6)

Net increase/(decrease) in cash held (166.2) (423.2) (109.4) (121.5) (25.4)

Cash at beginning of the year 1 328.3 1 695.6 1 272.4 1 163.0 1 041.5

Cash at end of the year 1 162.2 1 272.4 1 163.0 1 041.5 1 016.2



Plus Net cash flows from non-financial assets (939.4) (1 003.4) (949.4) (833.5) (638.6)

Equals CASH SURPLUS/(DEFICIT) (112.1) (219.6) (166.4) (33.6) 251.2


Public Financial Corporations Sector

Public Financial Corporations Sector Income Statement

2016-17 2016-17 2017-18 2018-19 2019-20



$m $m $m $m $m



Interest income 254.5 254.4 224.7 232.0 224.4


Other revenue 3.0 2.9 2.9 3.0 3.0

458.9 455.3 422.6 435.3 436.7


Employee expenses 5.4 5.5 5.5 5.6 5.8

Superannuation 0.8 0.9 0.9 0.9 1.0

Depreciation 0.2 0.2 0.2 0.2 0.2

Supplies and consumables 174.6 147.8 165.5 169.9 175.4

Borrowing costs 225.3 225.3 195.4 204.0 197.9

Dividend and income tax equivalent expenses 59.6 78.4 72.3 61.6 50.9

Grant expenses 5.2 5.0 5.1 5.3 5.5

Other expenses 0.3 0.3 0.3 0.3 0.3

471.4 463.3 445.2 448.0 436.9

Equals NET OPERATING BALANCE (12.6) (8.0) (22.6) (12.6) (0.2)

Plus Other economic flows – included in

Operating Result

Gain/(Loss) on Sale of non-financial assets 0.1 0.1 0.1 0.1 0.1

Other gains/(losses) (19.6) (16.0) 12.5 15.7 14.7

(19.5) (15.9) 12.6 15.8 14.8

Equals Operating Result (32.1) (23.9) (10.0) 3.2 14.6


equity

Other non-owner movements in equity (3.5) (2.3) (2.8) (3.6) (3.3)

(3.5) (2.3) (2.8) (3.6) (3.3)

Equals Comprehensive Result (35.6) (26.2) (12.8) (0.5) 11.3


Table 5.10: Public Financial Corporations Sector Income Statement (continued)

2016-17 2016-17 2017-18 2018-19 2019-20



$m $m $m $m $m


NET OPERATING BALANCE (12.6) (8.0) (22.6) (12.6) (0.2)


assets


Less sale of non-financial assets 0.1 0.1 0.1 0.1 0.1


0.3 0.1 0.3 0.3 0.1

Equals FISCAL BALANCE – SURPLUS/(DEFICIT) (12.9) (8.1) (22.9) (12.9) (0.3)


Public Financial Corporations Sector Balance Sheet as at 30 June

2017 2017 2018 2019 2020



$m $m $m $m $m

Assets

Financial assets


Investments 8 425.4 8 672.7 7 821.5 8 020.9 8 096.5

Receivables 39.6 40.6 34.9 29.3 28.2


8 760.7 8 935.8 8 078.6 8 270.7 8 343.1





16.4 16.9 17.3 17.6 17.9

Total Assets 8 777.2 8 952.8 8 095.9 8 288.3 8 361.0

Liabilities

Borrowings 7 150.3 7 319.8 6 409.1 6 536.6 6 532.9

Superannuation 5.3 7.0 7.4 7.8 8.2


Payables 2.5 2.6 2.6 2.6 2.6



NET ASSETS 466.2 495.8 482.9 482.5 493.8

Equity

Accumulated funds 456.2 485.8 472.9 472.5 483.8

Other equity 10.0 10.0 10.0 10.0 10.0

Total Equity 466.2 495.8 482.9 482.5 493.8


Table 5.11: Public Financial Corporations Sector Balance Sheet as at 30 June (continued)

2017 2017 2018 2019 2020



$m $m $m $m $m


NET WORTH1 466.2 495.8 482.9 482.5 493.8

NET FINANCIAL WORTH2 449.8 478.8 465.6 464.8 475.9

NET FINANCIAL LIABILITIES3 (449.8) (478.8) (465.6) (464.8) (475.9)

NET DEBT4 (1 351.7) (1 360.7) (1 420.5) (1 492.7) (1 572.4)

Notes: 1. Net Worth represents Total Assets minus Total Liabilities. 2. Net Financial Worth represents Financial Assets minus 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 Cash and deposits and Investments.


Public Financial Corporations Sector Cash Flow Statement

2016-17 2016-17 2017-18 2018-19 2019-20



$m $m $m $m $m


Cash received




Other receipts 0.6 0.5 0.6 0.6 0.6

475.9 466.3 442.3 457.4 455.2

Cash paid

Employee entitlements (5.5) (5.5) (5.6) (5.7) (5.8)

Superannuation (0.6) (0.6) (0.7) (0.7) (0.7)

Supplies and consumables (135.1) (108.6) (115.9) (121.6) (132.7)

Borrowing costs (221.1) (221.1) (193.9) (202.6) (195.5)

Grants and subsidies paid (5.7) (5.5) (5.6) (5.9) (6.0)

Other payments (6.6) (6.6) (5.8) (5.6) (5.7)

(374.7) (347.9) (327.4) (342.0) (346.4)





Sales of non-financial assets 0.1 0.1 0.1 0.1 0.1

(0.5) (0.3) (0.4) (0.5) (0.3)


Net purchase of investments (322.0) 318.5 858.3 (193.7) (68.4)

(322.0) 318.5 858.3 (193.7) (68.4)

Net cash flows from investing activities (322.4) 318.3 857.8 (194.1) (68.7)


Net borrowing 284.0 (354.4) (910.7) 127.5 (3.7)

Dividends and tax equivalents paid (60.5) (93.2) (61.8) (48.5) (36.1)

Net cash flows from financing activities 223.5 (447.6) (972.5) 79.1 (39.8)

Net increase/(decrease) in cash held 2.2 (10.9) 0.3 0.4 0.4




Table 5.12: Public Financial Corporations Sector Cash Flow Statement (continued)

2016-17 2016-17 2017-18 2018-19 2019-20



$m $m $m $m $m



Plus Net cash from non-financial assets (0.5) (0.3) (0.4) (0.5) (0.3)

Plus Dividends and tax equivalents paid (60.5) (93.2) (61.8) (48.5) (36.1)

Equals CASH SURPLUS/(DEFICIT) 40.2 25.0 52.7 66.5 72.5


Total State Sector

Total State Sector Income Statement

2016-17 2016-17 2017-18 2018-19 2019-20



$m $m $m $m $m


Grants 3 634.6 3 644.2 3 633.4 3 631.8 3 753.1

Taxation 1 012.1 1 057.6 1 074.5 1 101.2 1 129.9



Interest income 137.5 148.9 125.3 133.3 127.2


Other revenue 219.8 198.0 194.0 193.2 189.6

8 482.3 8 619.6 8 660.1 8 866.8 9 118.5



Superannuation 340.4 395.5 332.0 326.9 325.7

Depreciation 572.2 582.7 601.4 606.3 623.6



Borrowing costs 226.4 222.0 193.3 203.8 193.2

Grant and subsidy expenses 1 071.4 1 107.5 1 083.6 1 151.9 1 114.5

Other expenses 79.8 31.7 36.5 29.1 26.3

8 396.7 8 593.1 8 600.4 8 813.7 8 936.7


plus Other economic flows – included in Operating

Result


Movement in superannuation liability .... 2 983.6 .... .... ....


(32.9) 2 907.3 (55.2) (83.1) 32.4

Equals Operating Result 52.7 2 933.8 4.5 (30.0) 214.2

plus Other economic flows – other movements in

equity



288.9 251.0 340.1 362.7 380.7



Table 5.13: Total State Sector Income Statement (continued)

2016-17 2016-17 2017-18 2018-19 2019-20



$m $m $m $m $m




assets

Purchase of non-financial assets 1 061.0 1 042.0 987.7 872.2 675.8



373.6 427.0 355.5 234.6 21.7

Equals FISCAL BALANCE –SURPLUS/(DEFICIT) (288.0) (400.5) (295.8) (181.6) 160.1


Total State Sector Balance Sheet as at 30 June

2017 2017 2018 2019 2020



$m $m $m $m $m

Assets

Financial assets


Investments 5 210.4 5 422.0 4 587.8 4 869.6 4 969.7


Receivables 806.9 909.7 870.9 870.7 865.5


7 135.6 7 641.2 6 749.4 6 990.5 7 103.1



Infrastructure 12 465.7 12 434.4 12 790.4 13 007.2 13 320.8








20 243.8 20 303.4 20 907.0 21 396.9 21 818.9

Total Assets 27 379.3 27 944.6 27 656.3 28 387.4 28 922.0

Liabilities

Borrowings 6 164.1 6 173.1 5 426.5 5 668.6 5 456.6

Superannuation 6 992.2 6 891.1 7 013.1 7 120.1 7 208.0


Payables 457.2 558.5 539.8 542.0 540.3



NET ASSETS 10 249.2 10 339.5 10 684.0 11 016.7 11 611.6

Equity



Other Equity 33.4 31.7 16.7 16.7 16.7

Total Equity 10 249.2 10 339.5 10 684.0 11 016.7 11 611.6


Table 5.14: Total State Sector Balance Sheet as at 30 June (continued)

2017 2017 2018 2019 2020



$m $m $m $m $m


NET WORTH1 10 249.2 10 339.5 10 684.0 11 016.7 11 611.6



NET DEBT4 877.1 510.6 619.4 583.7 256.9

Notes: 1. Net Worth represents Total Assets minus Total Liabilities. 2. Net Financial Worth represents Financial Assets minus 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 Cash and deposits and Investments.


Total State Sector Cash Flow Statement

2016-17 2016-17 2017-18 2018-19 2019-20



$m $m $m $m $m


Cash received

Grants received 3 634.6 3 644.2 3 633.4 3 631.8 3 753.1

Taxation 1 002.4 1 048.6 1 072.8 1 099.3 1 127.7





Other receipts 475.6 452.3 468.5 452.6 438.1

8 736.2 8 887.4 8 987.9 9 171.1 9 383.0

Cash paid


Superannuation (528.2) (537.8) (548.4) (562.8) (580.5)


Borrowing costs (214.2) (203.5) (191.7) (202.1) (190.4)


Other payments (339.2) (322.5) (333.6) (313.0) (308.2)

(7 868.3) (8 078.4) (8 151.7) (8 304.2) (8 420.5)




Purchase of non-financial assets (1 054.9) (1 036.0) (980.7) (865.2) (669.3)


(939.9) (1 003.7) (949.9) (834.0) (638.8)



Equity disposals .... 0.7 0.7 0.7 0.7

Net advances paid 0.7 0.8 (1.3) (1.4) (2.1)

(3.9) (2.1) (4.1) (4.3) (4.9)


Net purchase of investments 310.5 449.7 843.2 (274.6) (92.2)

310.5 449.7 843.2 (274.6) (92.2)

Net cash flows from investing activities (1 254.3) (556.0) (110.8) (1 112.8) (735.9)


Table 5.15: Total State Sector Cash Flow Statement (continued)

2016-17 2016-17 2017-18 2018-19 2019-20



$m $m $m $m $m


Net borrowings 388.5 (411.3) (746.5) 242.1 (212.0)

Net cash flows from financing activities 388.5 (411.3) (746.5) 242.1 (212.0)

Net increase/(decrease) in cash held 2.2 (158.3) (21.2) (3.9) 14.6





Plus Net cash from investments in non-financial

assets (939.9) (1 003.7) (949.9) (834.0) (638.8)

Equals CASH SURPLUS/(DEFICIT) (71.9) (194.6) (113.7) 32.9 323.7


Loan Council Allocation

Loan Council arrangements provide for each State and Territory to nominate a LCA based on the estimated

combined General Government and PNFC Sector Cash Deficit, plus memorandum items. Memorandum items

are other financing transactions, which for Loan Council purposes, are treated the same as borrowings. This

measure of the level of financing, therefore, focuses on the call of the public sector on national savings.

A tolerance band calculated as two per cent of Total Non-Financial Public Sector Cash received from

operating activities ($169.3 million for 2016-17) applies between the budgeted LCA and the LCA outcome.

Table 5.16 shows the Budget estimate and Revised estimate for the 2016-17 LCA. The Revised LCA estimate

of a $408.4 million deficit is an increase of $166.8 million which is within the tolerance limit of $169.3 million.

The LCA outcome for 2016-17 will be presented in the Treasurer’s Annual Financial Report 2016-17.

Loan Council Allocation for 2016-17

2016-17 2016-17

Budget Revised

Estimate Estimate

$m $m

General Government Sector Cash Deficit/(Surplus) 64.2 54.4

Public Non-Financial Corporations Sector Cash Deficit/(Surplus) 47.8 165.2

Total Non-Financial Public Sector Cash Deficit/(Surplus) 112.1 219.6

less Total Non-Financial Public Sector Net Cash Flows from Investments

in Financial Assets for Policy Purposes (3.9) (2.1)

plus Memorandum items 125.6 186.7

Total LCA Deficit/(Surplus) 241.6 408.4


6. PUBLIC ACCOUNT

Consolidated Fund

Consolidated Fund Outcome

2015-16 2016-17 2016-17 2016-17



$m $m $m $m

Receipts

Australian Government sources

General purpose payments 1 133.3 2 299.2 2 273.4 1 149.2

Specific purpose payments 232.7 508.1 510.4 248.9

National partnership payments 18.1 71.3 71.5 35.8

Other grants and subsidies .... 0.1 0.1 ....

1 384.1 2 878.6 2 855.5 1 433.8

State sources

Taxation 479.9 929.6 974.2 485.6

Receipts from government businesses 237.8 247.9 300.9 221.5

Departmental fees and recoveries 45.1 95.9 95.1 46.1

Recoveries of State debt charges .... 0.1 0.1 ....

Sale and rent of government property .... 5.0 5.0 ....

Resource rents and royalties 13.0 25.0 25.0 18.7

Other recurrent receipts 66.5 147.8 169.3 66.6

842.4 1 451.2 1 569.6 838.5

Capital receipts

Proceeds on sale of assets 1.6 3.0 3.0 1.5

Other capital receipts .... 0.5 0.5 ....

1.6 3.5 3.5 1.5

Total Receipts 2 228.0 4 333.4 4 428.5 2 273.9

Less Expenditure

Recurrent services

Appropriation Act 1 906.7 3 751.3 3 786.1 1 966.9

Reserved by Law 147.4 324.2 324.2 151.6

2 054.1 4 075.5 4 110.3 2 118.6

Works and services

Capital Investment Program 49.4 238.3 250.7 94.9

49.4 238.3 250.7 94.9

Total Expenditure 2 103.5 4 313.8 4 361.0 2 213.4

CONSOLIDATED FUND SURPLUS/(DEFICIT) 124.5 19.6 67.5 60.4


Consolidated Fund Expenditure

2015-16 2016-17 2016-17 2016-17



$m $m $m $m

Education

Recurrent services 614.7 1 208.1 1 210.5 628.5

Works and services 4.3 56.2 49.0 22.8

619.0 1 264.3 1 259.5 651.2

Finance-General

Recurrent services 104.8 244.7 256.4 108.0

Reserved by law 132.8 295.0 295.1 138.4

237.6 539.7 551.6 246.4


Recurrent services 627.6 1 244.6 1 244.6 668.5


632.0 1 278.5 1 285.8 679.0

House of Assembly


Reserved by law 2.6 4.9 4.9 2.5

3.9 8.0 8.0 3.7

Integrity Commission


1.3 2.3 2.3 1.1

Justice


Reserved by law 6.1 12.3 12.3 4.8


78.1 144.5 147.9 79.7

Legislative Council



3.4 6.5 6.5 3.4

Legislature-General


Works and services .... 0.9 0.9 ....

3.5 7.0 7.0 3.5

Ministerial and Parliamentary Support



10.7 19.6 19.6 10.7

Office of the Director of Public Prosecutions



3.8 6.4 6.4 3.5


Table 6.2: Consolidated Fund Expenditure (continued)

2015-16 2016-17 2016-17 2016-17



$m $m $m $m

Office of the Governor



1.9 4.0 4.0 1.8

Office of the Ombudsman


1.1 2.1 2.1 1.1




104.0 226.5 226.9 106.3

Premier and Cabinet



Works and services .... 1.1 1.1 0.1

35.6 73.5 74.1 31.5




114.7 173.7 194.5 108.9

State Growth


Reserved by law .... 0.1 0.1 ....


218.3 485.0 493.4 250.5

Tasmanian Audit Office



1.2 2.3 2.3 1.3

Tourism Tasmania


12.0 26.8 26.8 10.0

Treasury and Finance



21.6 42.9 42.3 20.0

TOTAL 2 103.5 4 313.8 4 361.0 2 213.4


Consolidated Fund Forward Estimates

2016-17 2016-17 2017-18 2018-19 2019-20



$m $m $m $m $m

Receipts

Australian Government sources

General purpose payments 2 299.2 2 273.4 2 347.6 2 395.0 2 472.4

Specific purpose payments 508.1 510.4 525.1 536.6 515.3

National partnership payments 71.3 71.5 73.2 75.3 77.4

Other grants and subsidies 0.1 0.1 0.1 0.1 0.1

2 878.6 2 855.5 2 946.0 3 006.9 3 065.2

State sources

Taxation 929.6 974.2 987.7 1 011.1 1 036.0

Receipts from government businesses 247.9 300.9 281.9 161.8 214.1

Departmental fees and recoveries 95.9 95.1 97.0 98.5 100.4

Recoveries of State debt charges 0.1 0.1 0.1 0.1 0.1

Sale and rent of government property 5.0 5.0 5.0 5.0 5.0

Resource rents and royalties 25.0 25.0 29.2 29.2 29.2

Other recurrent receipts 147.8 169.3 138.7 152.5 240.6

1 451.2 1 569.6 1 539.5 1 458.0 1 625.3

Capital receipts

Proceeds on sale of assets 3.0 3.0 3.0 3.0 3.0

Other capital receipts 0.5 0.5 0.5 0.5 0.5

3.5 3.5 3.5 3.5 3.5

Total Receipts 4 333.4 4 428.5 4 489.0 4 468.4 4 694.1

Less Expenditure

Recurrent services

Appropriation Act 3 751.3 3 786.1 3 766.1 3 829.2 3 836.8

Reserved by Law 324.2 324.2 340.9 352.0 365.7

4 075.5 4 110.3 4 107.0 4 181.2 4 202.4

Works and services

Capital Investment Program 238.3 250.7 366.8 337.7 240.2

238.3 250.7 366.8 337.7 240.2

Total Expenditure 4 313.9 4 361.0 4 473.8 4 518.8 4 442.6

CONSOLIDATED FUND SURPLUS/(DEFICIT) 19.6 67.5 15.2 (50.4) 251.5


Special Deposits and Trust Fund

Special Deposits and Trust Fund Balances

Balance Balance

30 June 31 Dec

2016 2016

$m $m

Education

Department Operating Account 41.8 34.7

Schools Banking Account 60.6 52.4

State Library Service (Overdue Fines) 0.2 0.3

102.6 87.4

Finance-General

Agency Accommodation Charges Account 0.6 6.6

Agency Employment Separation Account (1.1) (1.1)

Assurance Fund – Land Titles Act 1980 Account 5.8 5.9

Australian Government Funding Management Account 302.9 280.0

Berriedale Landslip Account 0.1 0.1

Economic and Social Infrastructure Fund 0.5 0.1

Finance-General Operating Account 25.9 13.7

Government Car Fleet Account 16.1 17.4

Hospital Capital Fund 1.4 1.4

Housing Fund 7.9 6.9

Infrastructure Tasmania Fund 24.0 22.9

Payroll Provision Account 11.0 11.0

Rosetta Landslip Account 0.3 0.3

Royal Hobart Hospital Redevelopment Fund 0.6 0.6

State Debt Management Account 58.4 58.4

Tasmanian Forests Agreement Account 9.6 8.6

Tasmanian State Service Risk Management Account 232.7 260.1

The Mount Lyell Closure Trust Fund 1.3 1.3

Unclaimed Moneys Account 26.5 27.4

Agency Voluntary Targeted Employment Separation Account 9.9 9.9

734.5 731.3



Home Ownership Assistance Program Operating Account 4.5 5.6

Housing Services Operating Account 17.9 12.1

Patient Trust and Hospital Bequest Account 0.1 ....

114.4 91.5

House of Assembly

House of Assembly Operating Account .... ....

Integrity Commission

Integrity Commission Operating Account .... ....


Table 6.4: Special Deposits and Trust Fund Balances (continued)

Balance Balance

30 June 31 Dec

2016 2016

$m $m

Justice

Appeal Costs Fund Deposits Account 0.7 0.6

Asbestos Compensation Fund 12.1 15.6

Crown Law Trust Account under Section 241 of the Legal Profession Act 2007 1.4 2.1


Local Government and Other Elections Operating Account 0.5 0.5

Property Purchase Retention Amounts Held Account 0.1 ....

Prisoners Earnings Deposit Account 0.1 0.2

Rental Deposit Authority Account 41.3 42.3

Supreme Court Suitors Fund Deposit Account 1.9 2.0

Victims of Crime Assistance Act 1976 0.7 0.7

Workers’ Compensation Act 1988 Fund Account 2.8 5.4

85.8 95.9

Legislative Council

Legislative Council Operating Account .... ....

Legislature-General

Legislature-General Operating Account .... ....

Office of the Director of Public Prosecutions

Director of Public Prosecutions Trust Account 0.1 0.1

Office of the Director of Public Prosecutions Operating Account 1.3 1.3

Crime (Confiscation of Profits) Account 0.6 0.9

1.9 2.3

Office of the Governor

Office of the Governor Operating Account 0.1 0.1

Office of the Ombudsman

Office of the Ombudsman Operating Account 0.4 0.5


Department Operating Account 4.4 ....

Premier and Cabinet


Service Tasmania Operating Account 2.0 1.7

Sports Development Account 0.2 0.3

Tasmanian Community Fund Account 11.0 11.9

Tasmanian Early Years Foundation Account 0.6 ....

Telecommunications Management Division Operating Account 2.8 2.4

20.8 17.0


Table 6.4: Special Deposits and Trust Fund Balances (continued)

Balance Balance

30 June 31 Dec

2016 2016

$m $m


Crown Lands Administration Fund 56.2 59.8


Environmental Incidents Account 0.2 0.3

Parks Development and Maintenance Account 2.0 1.6

Recreational Fishing Licences Account 0.9 0.9

Regional Forest Agreement Account 2.0 1.7

Valuation Services Operating Account 2.0 2.1

118.7 114.2

State Growth

Abt Railway Account 0.8 0.7


Government Guarantees Reserve Account 1.0 1.0

Intelligent Island Project Account 0.1 ....

Mines Deposit Account 5.8 5.8

Taxi Industry General Administration Trust Fund 0.3 0.3

Princes Wharf No 1 Management Account 0.1 0.1

95.1 85.9

Tasmanian Audit Office

Tasmanian Audit Office Operating Account 2.8 3.4

Tasmanian Health Service

Patient Trust and Hospital Bequest Account 23.9 24.5

THS Operating Account 71.3 26.7

95.2 51.2

Tourism Tasmania

Tourism Tasmania Operating Account 0.1 0.1

Treasury and Finance

Community Support Levy Account 0.3 1.9

Contract Management Account 1.5 1.8


Tasmanian Economic Regulator Account 0.1 0.5

5.4 6.9

TOTAL 1 382.2 1 287.9

revised estimates report 2016-17 (including december ... · this report should be read in...

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