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

The Budget Budget Paper No 1

Presented by

Hon Peter Gutwein MP, Treasurer, for the information of

Honourable Members, on the occasion of the Budget, 2017-18

Useful 2017-18 Budget and Government Websites

www.premier.tas.gov.au/budget_2017 Contains the 2017-18 Budget Paper documents and related

information including Budget Fact Sheets and Government

Media Releases.

www.treasury.tas.gov.au Contains the 2017-18 Budget Papers and Budget Paper

archives.

www.tas.gov.au Provides links to the websites of Tasmanian public sector

entities.

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

services in Tasmania.

i

CONTENTS

1 The 2017-18 Budget

2 Tasmanian Economy

3 The Fiscal Strategy

4 2017-18 Budget and Forward Estimates

5 General Government Revenue

6 Infrastructure Investment

7 Assets and Liabilities

Appendix 1 Uniform Government Reporting

Appendix 2 Consolidated Fund Estimates

Appendix 3 2016-17 Estimated Outcome Including March Quarterly Report

iii

INDEX

1 The 2017-18 Budget 1

The 2017-18 Budget 2

2017-18 Budget Priorities 3

2017-18 Budget Estimates Summary 6

Net Operating Balance 7

Fiscal Balance 9

Net Debt 10

Sources of Revenue 11

Purposes of Expenditure 12

Infrastructure Investment 13

Current Budget Risks and Sensitivities 14

Grants 14

State Taxation 17

Other Risks 18

Appendix 1.1 Credit Status of the State Public Sector 23

2 Tasmanian Economy 25

Current Environment - Overview 26

Global Conditions 26

Australian Conditions 27

Economic Outlook 28

Tasmania's Economic Outlook 29

Risks to the Outlook 33

3 The Fiscal Strategy 35

Fiscal Principles 36

Strategic Actions 36

Fiscal Strategy Progress 37

Fiscal Strategy Data 42

iv

4 2017-18 Budget and Forward Estimates 45

Overview 46

Government Financial Estimates 47

Policy and Parameter Statement 53

Introduction 53

Major Revenue Variations 73

Policy Decisions 73

Parameter Adjustments 73

Major Expense Variations 76

Policy Decisions 76


Major Purchases of Non-Financial Assets Variations 78

Policy Decisions 78


5 General Government Revenue 79

Total Revenue 80

Grants 82

GST Revenue 83

Commonwealth Payments for Specific Purposes 85

State Taxation 90

Tax Expenditure Statement 93

Other Revenue Sources 95

Sales of Goods and Services 95

Fines and Regulatory Fees 96

Interest Income 97

Dividend, Tax and Rate Equivalent Income 97

Other Revenue 100

6 Infrastructure Investment 101

Overview 102

Infrastructure Investment Projects by Agency 104

v

Major Areas of Infrastructure Investment in 2017-18 113

Schools and Education 113

Human Services and Housing 114

Hospitals and Health 115

Law and Order 117

Roads and Rail 117

Information and Communication Technology 118

Tourism, Recreation and Culture 119

Other Infrastructure 120

Roads Program 122

Reconciliation between Infrastructure Investment and Purchases of Non-Financial

Assets 125

Infrastructure Investment Outside of the General Government Sector 126

7 Assets and Liabilities 127

Balance Sheet 128

Assets 130

Equity Investment in PNFC and PFC Sectors 131

Other Financial Assets 131

Non-Financial Assets 132

Liabilities 132

General Government Superannuation Liability 133

Total State Superannuation Liability 138

Tasmanian Risk Management Fund 140

Appendix 1 Uniform Government Reporting 143

Introduction 144

Loan Council Allocation 144

Government Financial Estimates 147

Appendix 2 Consolidated Fund Estimates 179

Introduction 180

Consolidated Fund 2017-18 Budget and Forward Estimates 181

Expenditure 183

Reserved By Law Items 185

vi

Appendix 3 2016-17 Estimated Outcome Including March Quarterly Report 189

Introduction 190

General Government Income Statement 191

Revenue Variations 193

Expense Variations 197

Other Economic Flows - Included in Operating Result 202

Net Acquisition of Non-Financial Assets 203

General Government Balance Sheet 205

General Government Cash Flow Statement 207

Consolidated Fund 209


1 THE 2017-18 BUDGET

Key Issues

The 2017-18 Budget focuses on the implementation of the Government's key priorities of jobs and

economic growth; health and education; and supporting Tasmanians in need. It provides significant

additional funding to implement new initiatives to support these priorities while continuing to successfully

implement the Government's established Fiscal Strategy. This Budget lays the foundations for building

Tasmania’s future; investing $2 billion into important infrastructure and including record spending on

health and education as well as measures to grow the economy and create jobs, whilst keeping

downward pressure on cost of living increases.

It is only through the significant improvement in the Budget position that has been achieved by the

Government, together with the positive change in the Tasmanian economy that has also occurred, that

a strong foundation has been able to be provided to enable a sustainable improvement in the vital

services provided to the Tasmanian community.

Over the 2017-18 Budget and Forward Estimates period the Government again meets all of its

established Fiscal Strategy actions. Net Operating Balance surpluses are expected in each year for the

first time in almost a decade; Fiscal Balance surpluses are achieved in the third and fourth years of the

Forward Estimates; and General Government Net Debt improves compared to last year's Budget

expectations.

The fundamentals of the Tasmanian economy are positive. Business confidence in the economy is

strong; labour market conditions and forward indicators are positive with the State's unemployment rate

currently estimated to be below the national average in trend terms; the tourism industry continues to

be a strong contributor to the economy and is directly stimulating spending and investment; and the

Tasmanian economy is expected to expand by 2.5 per cent in 2017-18, which is stronger than the

long-term average rate of growth.

Investment in infrastructure by the Government continues to be at historically high levels. In the 2017-18

Budget, the Government has committed $245 million in new infrastructure funding over the Budget and

Forward Estimates period with total infrastructure expenditure now totalling over $2.0 billion. This

includes significant investment in schools and education ($117 million); hospitals, health facilities and

technology (over $500 million); human services and housing ($120 million); roads and rail (over

$800 million); tourism, recreation and culture ($39 million) and information and communication

technology ($50 million).

To maintain the improvement in the Budget position that has been achieved, it is essential that strong

regard continues to be paid to the prudent management of Budget risks, including highly variable

revenue levels and to the constraining of future expenditure growth within the levels represented by the

Budget and Forward Estimates.


THE 2017-18 BUDGET The 2017-18 Budget represents another important step in the improvement in Tasmania's Budget position.

Not only has the Net Operating Balance returned to a surplus position well before the Government's original

2019-20 estimate but, for the first time in almost a decade, Net Operating Balance surpluses are being forecast

for each year of the Budget and Forward Estimates period. Importantly, in addition to this improvement in the

Net Operating Balance, it is now also expected that a Fiscal Balance surplus will be achieved in 2019-20 and

2020-21 and there will be a substantial improvement in the General Government Net Debt position at the end

of the Forward Estimates period compared to the end of the Forward Estimates period at the time of last year's

Budget.

This improvement in Tasmania's Budget position has been achieved at the same time as the Government has

taken action over consecutive Budgets since the 2014 Election to significantly improve the services being

provided to the Tasmanian community. With the establishment of a strong Budget position and a positive

economic environment, the Government can deliver new and improved services in a sustainable manner.

In recent years Tasmania's economic fundamentals have continued to improve. Business confidence in the

economy is strong and labour market conditions and forward indicators are positive with the State's

unemployment rate currently estimated to be below the national average in trend terms. The tourism industry

continues to be a strong contributor to the economy and is directly stimulating spending and investment.

Overall, the Tasmanian economy is expected to expand by 2.5 per cent in 2017-18, which is stronger than

the long-term average rate of growth.

In the 2017-18 Budget the Government has a strong focus on the implementation of its major priorities of jobs

and economic growth; health and education; and supporting Tasmanians in need. This is achieved through:

increasing the level and quality of services available to the Tasmanian community;

the implementation of important Government reforms across portfolio areas;

responding to the needs of the Tasmanian community;

developing infrastructure to support service delivery and vital economic growth;

supporting business to support Tasmanian jobs;

assisting key industry sectors to reach their full potential; and

providing leadership and confidence in Tasmania as a place to live, work and invest.


2017-18 BUDGET PRIORITIES The 2017-18 State Budget is strongly focused on the delivery of the Government's priorities outlined in its

Plan for a Brighter Future: Deliverables 2017 document. These priorities are: health and education; jobs and

economic growth; and supporting Tasmanians in need. Together with the effective implementation of the

Government's Fiscal Strategy, the 2017-18 Budget delivers a comprehensive package of initiatives that will

deliver better services to the Tasmanian community and continue to drive jobs and economic growth.

Key priorities being implemented as part of the 2017-18 Budget are detailed below. Further information on

key deliverables for all Government agencies is provided in individual agency chapters of Government

Services Budget Paper No 2.

Health and Education

The Government is committed to continuing its substantial investment in health and education. The 2017-18

Budget forecasts record health spending over four years of over $7 billion, an increase of more than

$650 million compared with estimates in the 2016-17 Budget. Education spending is also at record levels over

four years and will increase by more than $250 million to total $6.4 billion over the Budget and Forward

Estimates period, compared with estimates in the 2016-17 Budget. The 2017-18 Budget includes significant

additional funding that will improve the delivery of services to the Tasmanian community and support the

development of service infrastructure that builds on the far-reaching investment that has already been made

by the Government in these critical areas. This investment supports major Government reforms such as One

State, One Health System, Better Outcomes and changes to the Education Act. Additional funding in the

2017-18 Budget includes the following new major initiatives:

Health

$100 million for key hospital initiatives;

$67.3 million to support Patients First - Stage 2 - New Hospital Beds and Staff;

$16 million for mental health service delivery priorities;

$14.4 million to supplement frontline staffing costs;

$9 million to secure a second medical and police search and rescue helicopter;

$9.5 million to support the cost of Ambulance Officers and $3 million for a new Campbell Town Ambulance

Station; and

$62.7 million for hospital and rural health facility infrastructure including $35 million for Mersey Community

Hospital capital upgrades.

Education

$28.8 million for schools infrastructure and $6 million to support Non-Government schools infrastructure

development;

$18.6 million to support the implementation of Education Act reforms; and

$17.8 million to support student learning through investing in district school nurses, school support workers,

student engagement and flexible learning and child and student wellbeing.


Jobs and Economic Growth

Investing to support jobs and economic growth is a high priority for the Government. Notwithstanding the

Government's achievements to date and the increasing strength of the Tasmanian economy, the Government

is committed to driving further economic growth and job creation. Major initiatives in the 2017-18 Budget

include:

$21.8 million to support the Cradle Mountain Visitor Experience;

$20 million to support business by reducing electricity costs;

$17.1 million for a payroll tax rebate to support the employment of new apprentices, trainees and youth;

$12.5 million to support the Government's Agri-Food Plan;

$11 million in additional support for Tourism marketing;

$10.4 million to support a continuation of First Home Builder Assistance;

$9.5 million to support Copper Mines of Tasmania and the West Coast community;

$8 million for tourism infrastructure in parks;

$7.3 million for an extension of the successful Accelerated Local Government Capital Program;

$6.9 million to support the City Deal Launceston;

$4.1 million for the Employment Partnership: Jobs Action Plan;

$3 million to implement the Global Education Growth Strategy;

$3.2 million to support the Drysdale Centre of Excellence;

$2 million to support the implementation of the Government's Strategic Growth Plan for Tasmania's Forest

Industries; and

$2 million in grants to small business to support the employment of new apprentices and trainees.

Supporting Tasmanians in Need

Not only is the Government supporting Tasmanians in need by driving jobs and economic growth and

providing improved education and health services, but also through implementing a wide range of other

initiatives and reforms. These include the provision of significant additional funding for vital government

services; the implementation of reforms such as the Government's Corrective Services package; the allocation

of targeted funding that will make a real difference to disadvantaged Tasmanians, including disadvantaged

youth, and the provision of support to non-government organisations that play an important role in directly

supporting our communities. Major new initiatives funded in the 2017-18 Budget include:

$27.5 million to meet the costs associated with additional Out of Home Care services and the

Commissioner for Children and Young People;

$12.5 million to implement the Government's Corrective Services package including sentencing reforms

and a prisoner through-care and reintegration initiative;

$6 million to implement a health and wellbeing program for ambulance, police, fire and emergency services

officers;


$5.6 million for programs supporting youth at risk;

$3.8 million for a Medical Cannabis Controlled Access Scheme to assist with paediatric epilepsy;

$2.5 million to support legal assistance services;

$2.5 million for the final allocation required to meet the full cost of the Equal Remuneration Order transition;

$2 million for the Housing Tasmania Property Modification Program;

$1 million to support a state service-wide approach to the employment of aboriginal and young people;

and

$420 000 to support an Eligible Persons Register.

Other Major 2017-18 Budget Initiatives

In addition to the 2017-18 Budget initiatives detailed above, the 2017-18 Budget also includes a number of

other important new initiatives that reflect key government policy priorities. These initiatives include:

$60 million to meet payments to Local Government under the Government's water and sewerage reforms;

$50 million to meet costs associated with major digital transformation projects that will improve service

delivery;

$29.9 million for Tranche 2 rail revitalisation infrastructure funding;

$27 million for the Fuel Reduction Program and $2 million for Bushfire Planning, Mitigation and Response

in our parks;

$20 million for the additional costs of Tranche 2 irrigation projects;

$19.1 million for Freight Access Bridge Upgrades to help boost transport productivity;

$16 million to meet cost and demand pressures in the Tasmanian Prison Service;

$13.1 million to undertake the Department of Police, Fire and Emergency Management's much needed

Project Unify to improve its information systems;

$12.5 million for community infrastructure including $3.5 million for the Circular Head Health and Wellbeing

Centre, $3.5 million for the Dial Regional Sports Centre Upgrade, $2 million for the Oatlands Swimming

Pool and $3.5 million for the Devonport Golf Club;

$7.8 million to support the new Emergency Services Computer Aided Dispatch System; and

$7 million for the Mowbray Connector.


Implementing our Fiscal Strategy

The Government is committed to the ongoing successful implementation of its Fiscal Strategy. It is only

through the achievement of an improvement in the Government's Budget position that the Government has

been able to responsibly provide the funding required to improve services to the Tasmanian community. As

noted in chapter 3 of this Budget Paper, the Government continues to meet all of the actions established in

its Fiscal Strategy. Furthermore, it is now expected that the Net Operating Balance will be in surplus over the

Budget and Forward Estimates period. It is, however, important that attention continues to be paid to the

potential for significant variations to occur in revenue levels, particularly relating to GST receipts. Continued

discipline in respect of expenditure levels will also be important to ensure that the Budget is managed on a

long-term sustainable basis.

2017-18 BUDGET ESTIMATES SUMMARY The following sections provide a summary of the key Budget estimates included in the 2017-18 Budget.

Further detailed information on these estimates is provided in this Budget Paper and, on an agency by agency

basis, within Government Services Budget Paper No 2.

Table 1.1: Key Budget and Forward Estimate Aggregates 2016-17) 2017-18) 2018-19) 2019-20) 2020-21)

Forward) Forward) Forward)

Budget) Budget) Estimate) Estimate) Estimate)

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

GENERAL GOVERNMENT

Revenue 5 573.7) 5 874.0 5 863.0 5 984.8 6 048.7

Expenses 5 496.3) 5 819.8 5 812.3 5 933.6 6 003.4

Net Operating Surplus/(Deficit) 77.3) 54.3 50.7 51.3 45.3

Fiscal Surplus/(Deficit) (160.6) (253.9) (229.2) 2.8 71.1

Net Debt at 30 June (301.3) (451.8) (200.0) (212.9) (339.6)

Infrastructure Investment 534.9) 657.0 604.8 420.6 359.5


Net Operating Balance

The Net Operating Balance is estimated to be a surplus of $54.3 million in 2017-18. Net Operating Balance

surpluses are also expected to be achieved across the Forward Estimates period.

Chart 1.1 highlights the change in the Net Operating Balance that has occurred since 2006-07 and the current

projections for the 2017-18 Budget and Forward Estimates period.

Chart 1.1: Net Operating Balance, 2006-07 to 2020-21

It should be noted that the receipt of Australian Government funding for capital programs, particularly one-off

major projects, has the effect of improving the Net Operating Balance outcome. Given the nature of the Net

Operating Balance measure, it reflects the receipt of revenue from the Australian Government but does not

factor in the expenditure of these funds on infrastructure projects. Given this situation, the Underlying Net

Operating Balance has been used for a number of years as a measure that removes the distorting impact of

one-off Australian Government funding for specific capital projects. The Underlying Net Operating Balance is

therefore generally derived by excluding non-operational capital related funding received from the Australian

Government from the Net Operating Balance.

In 2016-17, the Estimated Outcome will also be significantly affected by the financial impact of the expected

transfer of the Mersey Community Hospital from the Australian Government to the State. This includes the

significant one-off Australian Government payment of $730.4 million and additional Other Revenue of

$10 million that reflects the accounting treatment of the transfer of ownership of the Mersey Community

Hospital asset value. Given the material and one-off nature of these transactions, their impact has also been

reflected in the presentation of the Underlying Net Operating Balance.

(350)

(300)

(250)

(200)

(150)

(100)

(50)

....

50

100

2006

-07

2007

-08

2008

-09

2009

-10

2010

-11

2011

-12

2012

-13

2013

-14

2014

-15

2015

-16

2016

-17

2017

-18

2018

-19

2019

-20

2020

-21

$ m

illio

n

Actual 2016-17 Budget Budget and Forward Estimates


Table 1.2 below provides information on the Underlying Net Operating Balance for the 2016-17 Estimated

Outcome and 2017-18 Budget and Forward Estimates period.

Table 1.2: Underlying Net Operating Balance, 2016-17 to 2020-21 2016-17 2017-18 2018-19 2019-20 2020-21

Estimated

Outcome Budget

Forward

Estimate

Forward

Estimate

Forward

Estimate

$m $m $m $m $m

Net Operating Balance 812.0 54.3 50.7 51.3 45.3

Less

One-off Australian Government Capital Funding

Roads and Rail Funding1 119.8 116.1 49.2 60.0 60.0

Royal Hobart Hospital Redevelopment 25.0 15.0 10.0 .... ....

Sustainable Rural Water Use and Infrastructure

Program2 22.0 19.0 14.0 .... ....

Mersey Community Hospital Transfer

Australian Government Payment 730.4 .... .... .... ....

Asset Value Transfer 10.0 .... .... .... ....

907.2 150.1 73.1 60.0 60.0

Underlying Net Operating Balance (95.2) (95.8) (22.4) (8.7) (14.7)

Notes: 1. The existing five-year roads funding agreement with the Australian Government expires at the end of 2018-19. Based

on Australian Government roads funding over recent years, an estimated Future Australian Government Roads Funding allocation of $60 million has been included in 2019-20 and 2020-21 to provide a more accurate estimate of the likely level of infrastructure expenditure that will occur over the Forward Estimates period.

2. This has previously been referred to as Water for the Future Funding in previous Budget Papers.


Fiscal Balance

A Fiscal Balance deficit of $253.9 million is estimated for 2017-18 with the outcome improving over the

Forward Estimates period to a surplus of $71.1 million in 2020-21. The improvement in the Fiscal Balance

reflects both the expected Net Operating Balance outcome and the impact of capital expenditure over the

Budget and Forward Estimates period.

Chart 1.2 illustrates the Fiscal Balance since 2006-07.

Chart 1.2: Fiscal Balance, 2006-07 to 2020-21

(500)

(400)

(300)

(200)

(100)

....

100

200

2006

-07

2007

-08

2008

-09

2009

-10

2010

-11

2011

-12

2012

-13

2013

-14

2014

-15

2015

-16

2016

-17

2017

-18

2018

-19

2019

-20

2020

-21

$ m

illio

n

Actual 2016-17 Budget Budget and Forward Estimate


Net Debt

Net Debt represents Borrowings less the sum of Cash and Deposits and Investments. The reference to

'negative' Net Debt means that Cash and Deposits and Investments exceeds Borrowings. This can also be

referred to as Net Cash and Investments.

It is estimated that General Government Net Cash and Investments will be $451.8 million as at 30 June 2018.

This Net Cash and Investments position represents an improvement of $277.7 million on the estimated

30 June 2018 figure of $174.1 million detailed in the 2016-17 Budget Papers.

General Government Net Cash and Investments is estimated to remain positive over the Forward Estimates

period and be $339.6 million as at 30 June 2021. This reflects the impact of estimated Net Operating Balance

outcomes and infrastructure investment levels.

Chart 1.3 illustrates Net Debt since 2007.

Chart 1.3: Net Debt, 2007 to 2021

(1200)

(1000)

(800)

(600)

(400)

(200)

....

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

$ m

illio

n

Actual 2016-17 Budget Budget and Forward Estimate


Sources of Revenue

In 2017-18, General Government Sector total revenue is estimated to be $5 874 million. This represents an

increase of $300.3 million on the 2016-17 Budget Estimate of $5 573.7 million.

Chart 1.4 provides information on the major sources of General Government Sector Revenue in 2017-18.

Chapter 5 of this Budget Paper provides a detailed explanation of the major revenue items included in the

2017-18 Budget and over the Forward Estimates period.

Chart 1.4: Sources of General Government Revenue, 2017-18

Grants$3 682.9m

(62.7%)

Taxation$1 128.5m

(19.2%)

Sales of Goods and Services$408.0m(6.9%)

Fines and Regulatory

Fees$98.9m(1.7%)

Interest Income$19.6m (0.3%)

Dividend, Taxand

Rate Equivalent Income

$358.4m(6.1%)

Other Revenue$177.7m(3.0%)


Purposes of Expenditure

In 2017-18, General Government Sector total expenditure is estimated to be $5 819.8 million. This represents

an increase of $323.5 million on the 2016-17 Budget Estimate of $5 496.3 million.

Chart 1.5 provides information on the major purposes of General Government Sector Expenditure in 2017-18.

This Chart reflects the detailed information provided in Table A1.17 in appendix 1 of this Budget Paper.

Chapter 4 of this Budget Paper provides a detailed explanation of the major expense variations included in

the 2017-18 Budget and over the Forward Estimates period.

Chart 1.5: General Government Expenses by Purpose, 2017-18

Education$1 543.2m

(26.5%)

Other$805.8m(13.8%)

Public Order and Safety

$541.8m(9.3%)

Social Security and Welfare$453.5m(7.8%)

Nominal Interest on Superannuation$285.6m(4.9%)

Transport and Communications$279.2m(4.8%)

Housing and Community Amenities$187.8m(3.2%)

Health$1 722.8m

(29.6%)


Infrastructure Investment

Infrastructure investment is essential to the delivery of vital services to the Tasmanian community and is a

key element of the Government's fiscal, jobs and economic growth strategies. Infrastructure investment in

2017-18 is estimated to be $657 million. Over the 2017-18 Budget and Forward Estimates period, the

Government has allocated over $2 billion to infrastructure investment. Major infrastructure expenditure over

the 2017-18 Budget and Forward Estimates period includes:

hospitals and health ($493.7 million);

schools and education ($117.0 million);

human services and housing ($120.3 million);

law and order ($23.5 million);

roads and rail ($707.2 million);

information and communication technology ($67.5 million);

tourism, recreation and culture ($39.0 million);

other infrastructure ($18.7 million); and

a general provision of $335 million that has been set aside by the Government to be allocated to future

infrastructure investment projects or used to provide capacity to meet cost variation and the impact of the

re-scheduling of projects and a separate provision of $120 million has been included for future Australian

Government roads funding.

Chart 1.6 provides details of infrastructure investment expenditure for 2017-18 by classification. Chapter 6 in

this Budget Paper provides a detailed explanation of the Government's investment in infrastructure over the

2017-18 Budget and Forward Estimates period.

Chart 1.6: Infrastructure Investment by Classification, 2017-18

Schools and Education$51.1m(7.9%) Tourism, Recreation and Culture

$19.2m(2.9%)

Human Services and Housing$40.0m(6.1%)

Other Infrastructure$10.4m(1.6%)

Roads and Rail$294.6m(44.8%)

Information and Communication Technology

$21.3m(3.2%)

Law and Order$10.1m(1.5%)

Hospitals and Health$210.4m(32.0%)


CURRENT BUDGET RISKS AND SENSITIVITIES The achievement of a Net Operating Balance Surplus in 2015-16 was an important step in the implementation

of the Government's Fiscal Strategy. In the 2017-18 Budget, a further important step is taken with the

forecasting of a Net Operating Balance surplus in 2016-17 (estimated outcome) and in each year of the current

Budget and Forward Estimates period. Importantly there is also an estimated return to a Fiscal Surplus in

2019-20, which increases in 2020-21, and General Government Net Debt will improve by approximately

$177.6 million by the end of the current Forward Estimates period compared to the end of the 2016-17 Budget

Forward Estimates period.

Notwithstanding these positive outcomes it is important to note that, in the context of annual General

Government revenues of $6 billion, the estimated Net Operating Balance surpluses (of between $45 million

and $54 million) over the Budget and Forward Estimate period represent a surplus of less than one per cent

of total revenues. These positive outcomes are sensitive to relatively small movements in total revenues and

expenditures and the impact of a number of risks and sensitivities that are unable to be effectively quantified

at the present time. The effective management of these risks, as and when they arise, together with managing

associated expenditure levels, will be essential to the achievement of the estimates and further improvement

in the sustainability of the Budget position.

A number of current significant Budget risks and sensitivities are summarised below. Due to the changing

nature of the budgetary and economic environment, other risks and sensitivities may arise or existing risks

and sensitivities may assume greater importance during the course of the coming financial year.

Grants

Goods and Services Tax Revenue

On 30 April 2017, the Australian Treasurer, the Hon Scott Morrison MP, announced a review by the

Productivity Commission of the economic impact of horizontal fiscal equalisation. The Productivity

Commission is to provide a report to the Australian Government by 31 January 2018. This puts at risk the

distribution of the GST in accordance with the principle of horizontal fiscal equalisation.

In 2017-18, the GST distribution will deliver $1.1 billion more revenue to Tasmania than its population share.

The Commonwealth Grants Commission, in recommending Tasmania's GST share, recognises the above

average cost of providing services to Tasmania's smaller, more regional and more disadvantaged population,

and Tasmania's limited own-source revenue base.

This additional $1.1 billion in GST revenue represents approximately 18 per cent of Tasmania's total revenue

in 2017-18 and the Productivity Commission Review presents a significant risk to Tasmania's Budget over the

forward estimates period and beyond.

More immediately, the risks to Tasmania's GST revenue estimate in the 2017-18 Budget are linked directly to

the State's share of the national population; the size of the GST revenue pool; and Tasmania's relativity factor

which is currently forecast to fall over the Forward Estimates. GST revenue collections are highly sensitive to

changes in national consumer spending patterns, as has been evidenced by recent reductions in the national

pool in the Australian Government's 2016-17 Mid-Year Economic and Fiscal Outlook and in its 2017-18

Budget.


Tasmania's relativity factor (as recommended by the Commonwealth Grants Commission (CGC)) has been

finalised for 2017-18. Chapter 5 provides detailed information about the 2017 CGC Update Report. As shown

in Chart 5.2 in chapter 5, this relativity can be subject to a significant amount of volatility.

There is a one-to-one relationship between variations in the size of the national pool of GST available for

distribution to the states and variations in GST revenue to Tasmania. For example, a one per cent variation

in the GST pool would result in a $23.9 million variation in Tasmania's GST revenue in 2017-18, assuming

that the State's population share and assessed relativity remained constant.

Other Australian Government Funding

Australian Government-State funding arrangements are linked directly to arrangements under the

Intergovernmental Agreement on Federal Financial Relations (IGAFFR) agreed by the Council of Australian

Governments in November 2008. The ongoing uncertainty around the direction and/or durability of recent

Australian Government funding reforms, together with the trend towards cessation or short-term renewal of

critical core national partnership agreements, highlight the volatility and uncertainty faced by Tasmania.

There has been an increasing trend towards more prescriptive agreements that include requirements for

matched funding, greater risk sharing arrangements, and more onerous reporting and input controls. This

trend is contrary to agreed principles for national funding agreements under the IGAFFR and imposes

additional funding risks to the State.

Australian Government funding presents a further risk in that the CGC assesses the level of total funding

available to each state in determining its relative financial needs and GST requirements. Where Tasmania

receives a level of Australian Government funding above the national average, or where it is the only recipient,

the State's GST revenue share decreases. This is explained further in the Guide to the Budget document that

is available on the Department of Treasury and Finance website.

These payments fall into a number of different categories.

National Health Reform funding under the National Health Reform Agreement (NHRA)

At the COAG meeting of 1 April 2016, all jurisdictions agreed to extend the current NHRA subject to certain

amendments, the detail of which was to be negotiated and then formalised in an addendum to the NHRA. The

addendum is to apply for the period from 1 July 2017 to 30 June 2020, pending the negotiation of a longer

term health reform agreement to commence from 1 July 2020. The finalised addendum will commence once

all parties have signed. There continues to be uncertainty around the timing of this.

While this agreement broadly preserves the existing NHR funding arrangements, with the Australian

Government contributing 45 per cent of the efficient growth in activity and block grants, uncertainty also

remains over the actual levels of activity over the period and the subsequent impact on the Tasmanian Budget.


Students First funding under the National Education Reform Agreement (NERA)

The Australian Government provides Students First funding for Government and non-Government schools to

States on a needs basis in line with principles agreed in the NERA.

In its 2014-15 Budget, the Australian Government committed to honour the Students First funding

arrangements until the end of 2017. The Australian Government announced new school funding arrangements

in its 2017-18 Budget. These arrangements will see the replacement of state-specific funding agreements

with a nationally consistent funding distribution based on student need under the schooling resource standard.

The Commonwealth's total funding pool will be capped at 20 per cent of assessed Government school funding

under the schooling resource standard, and 80 per cent of the assessed non-Government school funding

under the schooling resource standard. Australian Government funding will transition to these caps over the

ten years from 2018 to 2027. Indexation of the schooling resource standard base amount will reduce from

3.6 per cent in 2017 to 3.56 per cent per annum from 2018 to 2020. From 2021, indexation will be dependent

on growth in the wage price index and the consumer price index.

Estimates of Students First payments differ from those published in the Australian Government's

2017-18 Budget. Although the Australian Government had announced the new arrangements, they will still

need approval from the Australian Parliament for amendments to the Australian Education Act 2013 (Cth), as

well as approval of state and territory governments.

Any reductions in funding as a result of these reforms could adversely impact the Forward Estimates.

Specific Purpose Payments

There are currently three Specific Purpose Payments (SPP) in operation: the National Affordable Housing

SPP, the National Skills and Workforce Development SPP and the National Disability Services SPP.

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

costs of providing services. This provides 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. SPP

estimates for the 2017-18 Budget and Forward Estimates period will change marginally once the actual

parameters are known. Indexation accounts for only a small proportion of total SPP funding and as such, this

funding is generally low risk. While funding risks from changes in indexation are considered low, a more

significant risk is a unilateral change to SPP funding arrangements by the Australian Government as occurred

in the 2014-15 Budget.

National Affordable Housing SPP

The National Affordable Housing Agreement (NAHA) sets out the conditions under which the Australian

Government provides the National Affordable Housing SPP and the related Homelessness NP payments to

the States. This includes the framework under which the Australian and State Governments work together to

improve housing affordability and homelessness outcomes.

The resultant uncertainty surrounding the details of the National Housing and Homelessness Agreement

(which will replace the National Affordable Housing SPP and the Homelessness NP from 2018-19) poses a

risk to the Forward Estimates.


National Disability Insurance Scheme Funding

The Bilateral Agreement between the Australian Government 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 Australian Government over this transition period.

From 1 July 2019 the full scheme will commence in Tasmania and the National Disability SPP will cease.

Under a Heads of Agreement between the Australian and Tasmanian Governments signed in May 2013, when

full scheme arrangements commence, Tasmania will pay a capped annual contribution to the NDIS, set at

$232 million in 2019-20, then escalated at 3.5 per cent per annum.

However, these arrangements may change following COAG's consideration of a Productivity Commission's

2017 review of scheme costs, which includes consideration of the currently agreed risk sharing arrangements

and annual escalation rate.

Variations to anticipated client inflows in transition or the risk sharing arrangements or escalation rate in full

scheme will impact the timing and size of the State's financial contribution and, as such, represent a potential

risk to the Forward Estimates.

DisabilityCare Australia Fund (DCAF)

The DisabilityCare Australia Fund was established by the Australian Government to provide funding for the

NDIS through a half percentage point increase in the Medicare Levy which commenced on 1 July 2014.

Under DCAF legislation a portion of the fund is allocated to the states and territories over a period of ten years

until 2023-24 to assist with meeting the costs of implementing the NDIS. However, as no agreement has been

reached with the Australian Government around the terms and conditions under which these funds are to be

dispersed no funding has yet been distributed. This presents a significant risk to the Budget.

The DCAF estimates included in the 2017-18 Budget and Forward Estimates reflect the Australian

Government's initial offer as set out in the bilateral transition agreement Tasmania signed in December 2015.

National Partnership Payments

National Partnership Payments (NPP) are provided to each State through time-limited National Partnership

Agreements and Project Agreements, with the specifics of each payment generally written into the agreement

itself. The level of risk associated with these agreements is generally related to the nature of the payments

provided and the difficulties agencies face adjusting expenditure levels when they cease.

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.

State Taxation State Taxation revenue estimates are sensitive to changes in a range of economic parameters, such as

employment, wages growth and inflation, as well as prevailing economic conditions in Tasmania more

generally. These parameters can result in either more or less State Taxation revenue being collected.


For example, it is estimated that a one per cent variation in the number of people employed within the

Tasmanian economy would result in a variation of 0.8 per cent change in Tasmania's Payroll Tax revenue in

2017-18 and a one per cent variation in average weekly earnings in Tasmania would result in an estimated

variation of 0.2 per cent change in Payroll Tax receipts in 2017-18.

Furthermore, it is estimated that a one per cent variation in the number of property sales would lead to a

1.0 per cent variation in Conveyance Duty revenue in 2017-18. A one per cent variation in property prices

would lead to a 1.1 per cent variation in Conveyance Duty revenue in 2017-18.

Other factors that influence state taxes include business and consumer confidence, access to capital and the

availability of labour, housing supply, interest rates and the lending policies of financial institutions.

Other Risks

General Agency Cost Pressures

While all Agencies are expected to deliver services within their allocated Budget and Forward Estimates, there

continues to be a range of Budget pressures which agencies need to manage, including:

Full Time Equivalent (FTE) staffing levels - taking into account the allocation of additional funding to

agencies to reflect such factors as Government initiatives and changes to Australian Government funding,

it will be important that agencies continue to closely manage FTE levels;

general increases in the cost of inputs; and

increasing demand for a range of services.

Expiring Election Commitments

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

expire in 2017-18 or over the Forward Estimates period. Whilst a number of these commitments were initially

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

in future Budgets.

Future Election Commitments

The 2017-18 Budget and Forward Estimates have been prepared assuming the continuation of the

Government's current policies i.e. on a same policy basis. During the forthcoming State Election process, all

political parties are expected to make commitments which have the potential to impact the levels of future

revenues and expenditures. These impacts are highly uncertain and no provision has therefore been able to

be made for either positive or negative budget impacts.

Forestry Tasmania/Sustainable Timber Tasmania

The Board of Forestry Tasmania is 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 with the proceeds to be used to support its restructure and transition. Given the uncertainty

regarding the timing and quantum of sale proceeds, the Budget does not include the impact of the plantation

sale. No additional transition support has been included in the Budget, therefore there is a risk that proceeds

will not be sufficient to support the transition.


As reported in the 2016-17 Revised Estimates Report, the General Government sector assumed responsibility

for a significant component of Forestry Tasmania's legacy superannuation liability on 31 December 2016.

Once the transition to Sustainable Timber Tasmania is complete, a further amount, which is yet to be

quantified or recognised in the Budget, will be assumed following the restructure.

While the Government will not provide funding to support Forestry Tasmania's commercial operations, there

is a cost to ensure that the Permanent Timber Production Zone land, not utilised for commercial harvest,

continues to be managed, accessible and available for multiple uses. This cost will arise regardless of the

profitability of commercial wood production or which entity undertakes management of this land. Within the

current constraints, scale and market environment the revenue from commercial wood production activities

cannot fully support these costs. The Budget includes a provision for funding estimated land management

and roading costs which do not support commercial activity. However, work is still ongoing on defining this

community service obligation (CSO) and the final cost.

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 that is provided for health services, including in this Budget.

Notwithstanding the provision of this additional funding, the delivery of services to the Tasmanian community

within this allocated funding continues to be a significant challenge, as it is across all Australian jurisdictions.

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 Services and Reforms

There are a number of funding risks currently associated with Justice portfolio services, reforms and related

issues. These include:

Tasmanian Prison Service - Important work has been undertaken in corrective services to improve its

operation and 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 and also changing requirements for program delivery are difficult to forecast. The

management of costs within this environment is an ongoing challenge;

Corrective Services Package (Suspended Sentences) - The 2017-18 Budget and Forward Estimates

include significant new funding to meet the cost of the implementation of Tranche 1 of the Government's

sentencing reforms. Budget estimates are based on modelling undertaken by the Department of Justice

and, as such, actual costs may vary when changes are implemented in practice; and

Corrective Services Reforms - The Department of Justice is also undertaking or investigating other

significant Government policy reforms. These include 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. It is not possible to estimate the likely costs associated with these reforms at

the present time, however, the reforms being considered have the potential to increase the cost of

corrective services and State legal services or have other significant financial implications.


Natural Disaster Relief and Recovery Arrangement Receipts

During 2016 the State met significant additional costs as a result of major bushfire and flood events. Under

Natural Disaster Relief and Recovery Arrangements the State is able to seek reimbursement from the

Australian Government for a significant portion of the costs that have been incurred. For the purpose of Budget

estimates, assumptions have had to be made in relation to the level of future funds to be received and the

timing of the receipt of those funds. Any variation from these assumptions will result in an impact on the current

estimates.

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 2017-18 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.

Returns from Government Businesses

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

returns to the Government, both positively and negatively. These include market conditions, infrastructure

investment requirements, changes in capital structures of businesses and the implementation of major reform

programs.

Roads 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 is required from the State remains uncertain.

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 costs to occur

as a consequence of 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. There is also the potential for the costs incurred in a particular

Budget year to vary depending on project progress. This may impact Fiscal Balance outcomes in a particular

Budget year.


Superannuation Funding

The Government recognises that superannuation is a significant liability and will continue to ensure that it

manages this critical ongoing funding task in the most prudent way and in accordance with the funding

recommendations of the State Actuary. The State Actuary's 2016 triennial review has re-confirmed that the

existing approved schedule of employer contributions remains at the level previously recommended by the

Actuary. The most recent actuarial estimates show that the superannuation liability is expected to be

extinguished by 30 June 2078.

The major superannuation schemes currently operating in the General Government Sector that have an

unfunded liability are those established under the Retirement Benefits Act 1993, the former

Parliamentary Superannuation Act 1973, the former Parliamentary Retiring Benefits Act 1985 and the

Judges' Contributory Pensions Act 1968. While these schemes have been closed to new members for some

time, because of the long-term nature of superannuation benefits, the superannuation liability continues to

increase as existing members accrue additional years of service as they approach retirement age. The liability

is projected to increase until 2023-24 and then gradually decline over the following five or six decades.

Currently, 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

54.8 per cent over the next 14 years and peaking in 2031-32. The estimated cost to the Budget is based on

the most recent actuarial estimates. The change from the projections in the 2016-17 Budget reflects a

2 per cent decrease in the expected peak cost to $442.6 million ($451.6 million in the 2016-17 Budget).

In 2017-18, 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 peak at 5.4 per cent in nine years (2026-27),

followed by a decrease to 4.7 per cent in fifteen years (2032-33) and 3.8 per cent in 20 years (2037-38).

Further information on the superannuation liability is provided in chapter 7 of this Budget Paper.

Support to Grow the Tasmanian Economy

Growing the economy continues to be a major focus of the Government. The Government has been working

closely with the private sector to support investment and jobs in Tasmania. This may result in the allocation

of additional funding or the foregoing of revenue over the Budget and Forward Estimates period. In some

instances there are offers available that may be taken up if certain conditions are satisfied, such as the

$25 million assistance package available to Copper Mines of Tasmania if mining is resumed at the Mt Lyell

copper mine. The State Government has also committed to provide guarantees to a small number of

businesses which could potentially be called upon at some stage.

Water and Sewerage Industry Reform

Despite significant reforms to the Tasmanian water and sewerage industry since 2008, there continues to be

systemic environmental non-compliance caused by inadequate and ageing water and sewerage infrastructure

across the State. Many communities lack access to clean and safe drinking water. Unsafe drinking water and

non-compliant waste water treatment plants are a consequence of long term underinvestment in Tasmania's

water and sewerage infrastructure by the State's councils.


The Government plans to address systemic non-compliance and underinvestment in infrastructure by

transferring responsibility for TasWater from local government to the State Government. Under the

Government's plan, all assets, liabilities, rights, obligations and employees of TasWater will be transferred to

a new Government Business Enterprise to deliver water and sewerage services in Tasmania. It is expected

that the new entity will begin operations on or before 1 July 2018.

A range of measures will be put in place to support the new entity and provide payments to councils. The

2017-18 Budget provides for payments to councils of $20 million per year for seven years from the

Consolidated Fund for the period between 1 July 2018 and 30 June 2025. The State Government has also

committed to providing additional financial support to the new entity in the future, if it is required, to enable the

necessary infrastructure investment to be undertaken.


APPENDIX 1.1 CREDIT STATUS OF THE STATE

PUBLIC SECTOR The current credit ratings and outlook for long-term domestic debt of the states and the territories by the rating

agencies, Moody's Investors Service (Moody's) and Standard & Poor's (S&P), are detailed in Table 1.3.

Table 1.3: Government Ratings Moody's Standard & Poor's

New South Wales Aaa (Stable) AAA (Negative)

Victoria Aaa (Stable) AAA (Negative)

Queensland Aa1 (Stable) AA+ (Stable)

Western Australia Aa2 (Stable) AA+ (Negative)

South Australia Aa1 (Stable) AA (Positive)

Tasmania Aa2 (Stable) AA+ (Stable)

Northern Territory Aa2 (stable) na

Australian Capital Territory na AAA (Negative)

Tasmanian Economy 25

2 TASMANIAN ECONOMY Key Issues

The outlook is for Tasmania's economic growth and employment growth over 2017-18 to be significantly

stronger than in recent years.

The tourism sector continues to be a very significant contributor to the Tasmanian economy, with record

levels of visitor numbers and spending. This is stimulating investment in tourism accommodation and

supporting employment across the State.

Other industries enjoying strong growth include agriculture, supported by high prices and favourable

weather conditions, and aquaculture, which continues to expand. The State's forestry industry has

shown some recovery and the prospects for Tasmania's mining industry have improved.

Tasmanian businesses continue to report a positive view of the Tasmanian economy, with Tasmanian

business confidence significantly increasing over the past two years. Significant public investment in

roads, rail and irrigation projects has been ongoing, further supporting the construction sector, and

Tasmania's housing market has been buoyant.

Demand within the State, as measured by state final demand, is expected to have grown above

trend in 2016-17. However, a reduction in international exports following extremely strong growth over

2015-16 is expected to constrain growth in gross state product to one per cent in 2016-17.

The Tasmanian economy is forecast to expand by 2½ per cent in 2017-18, stronger than the long-term

average rate of growth. Private activity is expected to increasingly drive growth in 2017-18, with

continued strong household spending, a return to growth in exports and some recovery in private

investment.

Above trend employment growth is forecast over 2017-18, building on the increased employment in

recent months. The unemployment rate is expected to average 6¼ per cent in 2016-17 and remain at

that rate in 2017-18, with labour market participation responding to improved labour market conditions.

Tasmania's population growth rate has been increasing to around the long-term trend rate, with a return

to net positive interstate migration inflow. These trends are expected to continue over the medium-term.

Monetary conditions are expected to remain supportive, though there are indications that inflation and

interest rates are trending upwards. Continued modest wages growth is expected for Tasmania,

consistent with national trends. Hobart's CPI is forecast to increase by 2¼ per cent in

2017-18.

26 Tasmanian Economy

CURRENT ENVIRONMENT - OVERVIEW

Global Conditions

Global economic conditions have been improving, with forecasters reporting a more favourable outlook and

presenting higher global economic growth estimates than in recent years. The International Monetary Fund

estimates that the global economy expanded by 3.1 per cent in 2016 and forecasts growth of 3.5 per cent in

2017, followed by 3.6 per cent growth in 2018. Despite this general improvement in the economic outlook,

significant risks to the global economy persist, with increased pressure towards protectionism, a tightening of

global financial conditions, consistently slow productivity growth in some advanced economies and increased

energy commodity prices.

The change in the administration in the United States has not dampened domestic US economic activity, with

a strengthening US labour market and increased private sector activity. Near-term expectations of an

expansionary fiscal policy are helping to promote a positive short-term outlook, while a mild tightening of

monetary policy suggests the US Federal Reserve has a positive outlook for the US economy.

The Chinese economy continues its transition away from industrialisation and mainly manufacturing-led

growth. The Premier of the State Council of the People's Republic of China, Li Keqiang, has reinforced a

minimum 6.5 per cent growth target in 2017. Given the importance of China as a trading partner for the

national and Tasmanian economies, the continued commitment of Chinese policy makers to robust economic

growth remains important for Australia and Tasmania's exporting industries.

Global international trade continues to be subdued, especially for manufactured goods, with very modest

growth in recent years. This has particularly affected emerging and developing economies, including many

that are significant export markets for Tasmania. In the near-term, a pickup in emerging Asian markets is

expected, assisted by a partial recovery in commodity prices.

There has been a modest recovery in the euro zone, though overall growth rates remain low and debt issues

persist for some southern European nations. There is continued uncertainty over the conditions of the

United Kingdom's exit from the European Union and how strong the pressure will be on other nations to

withdraw from the European Union.

An appreciation in oil prices and other commodity prices has contributed to a modest increase in

global inflation, following very low global inflation rates in recent years. The improved global outlook is

expected to lead to some further increases in inflation. Despite this, accommodative monetary policy positions

are expected to remain for some time in most developed economies. This is particularly the case in the euro

zone, where interest rates are close to zero and the European Central Bank has stated that it expects rates

to remain at this level or zero for an extended period.


Australian Conditions

The national economy continues to grow quite strongly compared to many advanced economies, supported

by strong growth in exports and sustained high levels of household spending. Vigorous growth in dwelling

investment, especially in New South Wales and Victoria where the housing market has been buoyant, has

helped to offset reduced business investment levels over the past few years. Following the peak of the mining

construction boom in 2012, when investment was at exceptionally high levels, mining investment has been

decreasing sharply. Non-mining business investment also continues to slowly expand.

These trends are contributing to diverging economic conditions across Australia. The Western Australian and

Queensland economies are now experiencing negative employment growth as mining investment winds

down. By contrast, Victoria and New South Wales have been enjoying above trend employment growth and

forecasts are for much stronger economic growth and higher population growth.

Export conditions remain favourable, with a relatively low Australian dollar against most major currencies and

improved commodity prices for iron ore and other key commodities. The newly completed mining investment

projects are now in the production phase, contributing to higher export volumes. The recent improvement in

the terms of trade and the increase in export volumes have supported national real income growth.

National household consumption growth has been a little below trend, supported by continued growth in

household wealth. Much of the growth in household spending has been on services that are less discretionary

in nature, such as rent and other dwelling services, health and insurance. Part of the growth in household

spending has been due to lower national savings rates, as household income growth has been modest, in line

with the low wage increases in recent years.

Consumer confidence levels appear subdued, despite increased household wealth, which may reflect

concerns that, with relatively high levels of indebtedness, many households are vulnerable to higher mortgage

costs if interest rates increase.

Government expenditure growth continues to increase, with public consumption growth returning to close to

trend rates and public investment picking up strongly. Much of the recent growth in public spending nationally

has been in Australian Government consumption and in infrastructure investment at the state, territory and

local government level.

Commonwealth Treasury is forecasting a gradual increase in national economic growth from around 1¾ per

cent in 2016-17 to three per cent by 2018-19. A return to positive business investment growth is looking

increasingly likely as the decline in mining investment comes to a close.

National labour market conditions remain quite strong though the unemployment rate has been increasing

marginally in recent months. The expected pick-up in economic growth is likely to be associated with

employment growth that would put downward pressure on the unemployment rate over the year ahead.

Inflationary conditions have firmed over recent quarters. The Reserve Bank of Australia estimates that

underlying inflation is currently at around 1¾ per cent, a little higher than a year earlier. Further modest

increases are expected as economic conditions continue to improve. While there are no indications from the

Reserve Bank that the cash rate is likely to move significantly upwards from its current very low level of

1.5 per cent, mortgage rates have started to increase, especially for investors and those on interest-only

loans.


ECONOMIC OUTLOOK Table 2.1 presents Treasury's estimates for key Tasmanian economic indicators for 2016-17, forecasts for

2017-18 and projections from 2018-19 to 2020-21. Changes in gross state product are derived from

component-based estimates of household consumption, private investment, government spending and

net exports.

The estimates and forecasts rely very heavily on the official data produced by the Australian Bureau of

Statistics. Concerns remain over the reliability and volatility of some of the key data for Tasmania, including

data relating to the labour force and gross state product and its components, especially international trade.

These concerns are compounded when major revisions are made to the data, which can require a major

reassessment of past economic trends and potentially significant changes to the economic forecasts prepared

by Treasury.

Treasury's capacity to prepare economic forecasts is also constrained by the lack of data on interstate trade

in goods and services. Treasury continues to work closely with the ABS on these issues, many of which also

arise for other small jurisdictions.

Table 2.1: Tasmanian Economic Estimates, Forecasts and Projections

Budget 2017-18

2015-16 2016-17 2017-18 2018-19 2019-20 2020-21

Actual Estimate Forecast Projections

Gross State Product1,2 1.3 1 2½ 2 2 2

State Final Demand1,2 2.2 2¾ 2½ 2¼ 2¼ 2¼

Employment2 -0.3 0 1¼ 1 1 1

Labour Force Participation Rate3 60.4 59¾ 60 60 60 60

Unemployment Rate3 6.5 6¼ 6¼ 6 6 6

Consumer Price Index (Hobart)2 1.4 2 2¼ 2¼ 2¼ 2¼

Population2 0.4 0.6 0.6 0.6 0.6 0.6

Source: Data - ABS; Estimates, Forecasts and Projections - Treasury. Notes: 1. Real, percentage change. 2. Year-average, percentage change. 3. Year-average, percentage level.

The projections over the period 2018-19 to 2020-21 contained in Table 2.1 are not forecasts. They are based

on the long-term averages 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.


Tasmania's Economic Outlook

The Tasmanian economy continues to grow and is forecast to expand by 2½ per cent in 2017-18, stronger

than the long-term average rate of growth. Private activity is expected to increasingly drive growth in 2017-18,

with continued strong household spending, a return to growth in exports and some recovery in private

investment. Tasmania experienced little upside from the mining investment boom but also had less downside

exposure following the shift to the boom's production phase. In particular, Tasmania's exporting and tourism

industries have benefited from the depreciation of the Australian dollar over the past five years.

According to the ABS, Tasmanian gross state product increased by 1.3 per cent in 2015-16, with some

Tasmania-specific events, including the Basslink outage, very low rainfall which was followed by floods

detracting from growth. Household consumption and government expenditure have contributed to sustained

growth in state final demand, despite private investment easing in recent quarters. International exports have

been easing from their high levels in 2015-16 and are likely to detract from the State's economic growth in

2016-17.

Tasmanian business sentiment continues to be very positive across the State, although this has not yet been

reflected in business investment, which remains subdued according to the ABS.

The export value of some agricultural commodities is expected to ease slightly in 2016-17 following very strong

results in 2015-16. Confidence is particularly strong in the agricultural sector, with generally high commodity

prices and favourable seasonal conditions contributing to a strong near-term outlook for the sector.

The tourism industry continues to be a significant and growing contributor to the Tasmanian economy. Growth

in visitor expenditure in the State has been over eight per cent, on average, for the five years to 2016. While

the full effects of tourism on the economy are difficult to measure, the tourism industry is relatively labour

intensive, providing employment opportunities across the State. It has also led to very significant investment

in tourism accommodation and other tourism facilities across the State.

After a period of decline, Tasmania's manufacturing industry is now more stable. At the sub-industry level, the

trends have been mixed. For example, Incat reported in April 2017 that it has record orders as a result of the

strong demand for fast ferries and is planning to expand employment from 500 to almost 750 workers. By

contrast, Murray Goulburn more recently announced the closure of its milk processing factory in Edith Creek

in northern Tasmania, which employs 120 workers.

Tasmania's economy is expected to grow by one per cent in 2016-17, below Tasmania's long-term trend of

around two per cent growth. The stronger growth in state final demand, expected at 2¾ per cent, is expected

to be partly offset by a reduction in international exports.

Hobart inflation growth has been modest over the past few years, as has been the case nationally. More

recently, Hobart inflation has been increasing, due partly to higher automotive fuel costs and domestic travel

and accommodation costs. Inflation growth of two per cent is estimated in 2016-17, followed by a forecast

2¼ per cent growth in 2017-18.

Tasmania's population growth has been increasing since 2010-11, supported by increased net overseas

in-migration to Tasmania and, more recently, positive net interstate in-migration. While individual migration

decisions occur for a variety of reasons, in aggregate, Tasmanian net interstate migration flows are influenced

by housing affordability and labour market conditions in Tasmania, which currently are relatively more

attractive compared to mainland Australia than in recent years.


This suggests the near-term outlook for Tasmania's population growth is positive, supported by the reported

high level of property purchases in Tasmania in recent months by interstate households. Tasmania's

population is expected to increase by 0.6 per cent over 2016-17.

Further details are provided in the remainder of this chapter.

Consumption

Household consumption has been expanding at around the national growth rate, despite Tasmania's much

lower population growth. Retail sales, in particular, have been strong, increasing by more than the national

growth rate, and supported by tourism-related expenditure on household goods, and in cafés, restaurants and

takeaways, department stores and other retailing categories.

With improved economic conditions and employment prospects for the year ahead, household consumption

is expected to remain a major contributor to economic growth. This is being partially offset by recent increases

in petrol prices and interest rates for some home loans, which reduce household disposable income. However,

households in Tasmania are less exposed to interest rate increases than households nationally as a higher

proportion of households own their home outright and average mortgages are significantly below national

levels.

Private Investment

Tasmanian private investment levels remain below the record high levels recorded prior to the global

economic downturn. Dwelling investment contributed to growth in 2015-16, supported by the

Tasmanian Government's First Home Owner Grant and very low interest rates. More recently, despite the

strong housing market, there has been reduced activity in construction of new dwellings, which has led to a

fall in dwelling investment. Key forward indicators of dwelling investment - residential building work yet to be

done and building approvals - suggest that activity may continue to be subdued in the near term without further

stimulation.

A number of major projects continue to be progressed in the Hobart CBD, such as the Myer redevelopment,

the new hotel as part of the $150 million parliament square project, the $35 million hotel at the former

Macquarie Wharf Shed No. 1 and hotel developments in Macquarie Street. Some major projects are underway

in other parts of the State, including the Silo Hotel project and the CH Smith building in Launceston and several

manufacturing-related investments in the north and the north-west of the State.

However, the ABS estimates indicate that business investment has also been easing for the State as a whole.

It is unclear whether the changing composition of Tasmania's industries, with an increase in labour-intensive

private services and a reduction in the relative importance of manufacturing, is leading to lower longer-term

investment levels.

Recent ABS estimates of investment in non-residential building and construction activity have been volatile,

which may reflect the timing of projects included in the ABS estimates. Continued strength in relevant forward

indicators of activity, such as non-residential private work yet to be done, suggests a modest pick-up in activity

is likely over coming quarters.

Tasmanian private investment is expected to contribute to growth in 2017-18, due to the solid pipeline of new

and recently commenced projects, including the ramping up of the CH Smith redevelopment in Launceston,

and the continuation of existing projects.


Government Expenditure

Government expenditure, which comprises public consumption and public investment, has been increasing

in Tasmania. This followed a period of moderate decrease between early 2014 and early 2015 which, in part,

reflected fiscal pressures faced by all levels of government at that time. Government expenditure is more than

five per cent above the level of one year earlier, due largely to increased public investment.

Public investment in 2016-17 to date has been supported by State Government infrastructure expenditure,

including increased expenditure on the ongoing Royal Hobart Hospital Redevelopment project, roads projects

and repairs to infrastructure in response to the June 2016 floods. There has also been significant spending

by the University of Tasmania on accommodation projects in Hobart and Launceston and the commencement

of the Creative Industries and Performing Arts Development by Hobart's Theatre Royal.

Government expenditure is expected to make a significant contribution to Tasmania's state final demand and

economic growth in 2016-17, with public consumption growth close to trend and a very strong increase in

public investment expected.

Over 2017-18, government expenditure is expected to further contribute to Tasmania's economic growth,

although not to the same extent as in 2016-17. Some further increase in public infrastructure spending is

forecast, together with continued high levels of public consumption.

Exports

International export sales were particularly strong in 2015-16. The increase was boosted by favourable factors

relating to some food exports (salmon, cherries and beef) and exports of non-ferrous metals, principally zinc

and aluminium. According the ABS, the volume of Tasmanian international exports of goods and services

increased by 20.2 per cent in 2015-16, the strongest percentage increase since 1997-98. This was achieved

despite a small reduction in production by major industrials in the last quarter of the financial year due to the

electricity supply shortage resulting from the extended Basslink outage and very low rainfall.

Since then, sales of these products have returned to more normal levels with the effect that international

export volumes over 2016-17 are expected to be substantially reduced in year-average terms.

The near-term outlook for Tasmanian exports is positive, given the improved international and national

outlooks and strengthened international commodity prices for major Tasmanian mineral and agricultural

exports, such as iron ore, zinc, beef and milk powder. To date, these impacts have not been significantly offset

by any significant appreciation in the Australian dollar, resulting in favourable local prices for these exports.

Forecasts for economic growth for Tasmania's major trading partners are generally high, which also suggests

the prospects are positive for Tasmania's exports, including the export of services such as education and

tourism-related services.

Tasmania's exports will also be boosted by the return to production at the Henty Gold mine in January 2017.

A resumption of production at the Mt Lyell copper mine would further enhance longer-term growth prospects.

Labour Market

Tasmanian labour market conditions have improved over the past year. The ABS estimates that employment

has increased by 3 300 persons from June 2016 to March 2017, or around 1.4 per cent, in trend terms

(Chart 2.1 below). Over this period, an increase in part-time employment has more than offset a decline in full

time employment. The labour market appears to be stronger in the south and the north-west than in the north,

where the unemployment rate remains relatively high.


The monthly estimates (seasonally adjusted) have been highly volatile, as the chart shows. This volatility

affects the trend estimates, such that it can be difficult to draw inferences about the underlying trends in

Tasmania's labour market.

ABS data suggest that the services sector (public and private), which represents more than 75 per cent of all

persons employed, continues to be the primary driver of employment growth. In contrast, labour demand is

weaker for some industries in the non-service sector (agriculture, mining and manufacturing). The construction

sector, along with growth in education and training, and administrative and support services, recorded the

largest increases in employment levels over the past year.

Chart 2.1: Employment level, Tasmania

Source: Labour Force, Australia, ABS Cat No 6202.

This recent increase in employment has been accompanied by the labour market participation rate declining

to a relatively low level, estimated to be 59¾ per cent over 2016-17. Along with employment growth, this has

contributed to a sharp decline in Tasmania's unemployment rate which, at March 2017, was 5.8 per cent,

lower than the national unemployment rate of 5.9 per cent.

In year-average terms, employment levels are expected to be unchanged in 2016-17, compared to 2015-16.

The unemployment rate is expected to be 6¼ per cent, on average, in 2016-17, which is above the current

rate due to higher unemployment rates earlier in the year, lifting the year-average unemployment rate

estimate.

Job vacancy estimates have recently improved, suggesting that this strong recent growth will be consolidated

over the short-term. For 2017-18, employment growth of 1¼ per cent is forecast, which is above the long-term

trend.

The forecast unemployment rate for 2017-18, in year-average terms is 6¼ per cent, unchanged from the

2016-17 estimate. Two factors that prevent the unemployment rate forecast from being lower are an expected

increase in the participation rate in response to the improved labour market conditions and increased growth

in the working age population.

235.0

237.0

239.0

241.0

243.0

Jun 2014 Jun 2015 Jun 2016 Jun 2017

000'

s o

f p

erso

ns

Seasonally adjusted Trend Year-average level (actuals) Year-average level (estimate)


Labour market projections over the Forward Estimates period are based on the long-term growth rates for

employment and population in Tasmania and on the assumption that the participation rate remains around

the level forecast for 2017-18.

Risks to the Outlook

The outlook is for Tasmania's economic growth and employment growth over 2017-18 to be significantly

stronger than in recent years and above the long-term trend. It appears that the balance of risks to the outlook

for the Tasmanian economy is even, with no evident upside or downside bias.

Factors which may improve the outlook include a greater than expected recovery in private investment. To

date, private investment levels have been subdued and have not fully reflected the improved economic

conditions or the high business confidence levels. Business investment is typically volatile for small

jurisdictions such as Tasmania and the timing of private sector projects could result in higher investment levels

than forecast.

Current levels of dwelling investment may partly reflect the overhang effect of the First Home Owner Grant,

as these schemes typically bring forward investment which then results in a lull in activity. Given the increased

population growth and the growth in property prices in recent years, there is potential for a return to higher

levels of dwelling investment in the medium term.

External economic conditions may also be more favourable than expected, which could lead to a greater

recovery in exports, and an increase in export-related investment. The prospects for Tasmania's major export

partners have been improving, which could lead to significantly increased exports from Tasmania, especially

if this is accompanied by favourable weather conditions.

Against this, however, increased tension in the Korean peninsula, and potentially the South China Sea, could

increase uncertainly and disrupt international trade, adversely affecting Tasmania's exporters. There are also

downside risks from any trends to increased protectionism globally, which would result in reduced income for

Tasmania's major trading partners and unfavourable flow-on effects for Tasmanian exports.

Housing market trends are becoming very important, following the very large increases in property prices, and

household indebtedness, in recent years. Tasmanian households are generally less exposed to a reduction

in domestic property prices than households in several other states and territories. However, if there were a

significant reduction in property prices, especially in the mainland states where the increases have been most

pronounced, this could have far reaching impacts on consumer spending. This, in turn, could have a strong

contractionary impact on Australia's economy, which would flow through to Tasmania's economy.

The tourism sector is becoming a major contributor to Tasmania's economy. The recent strong growth is

expected to continue, as Tasmania improves its tourism offerings, especially new tourism accommodation,

and as national and international economic conditions continue to improve. Given the size of the potential

market, there is scope for further growth in this sector, representing an upside risk to Tasmania's outlook.

The Fiscal Strategy 35

3 THE FISCAL STRATEGY

Key Issues

The 2017-18 Budget and Forward Estimates reflect the ongoing successful implementation of the

Government's Fiscal Strategy. Net Operating Balance surpluses are estimated over the 2017-18 Budget

and Forward Estimates, and importantly there is a return to Fiscal Balance Surplus estimated for both

2019-20 and 2020-21.

The Fiscal Strategy reflects the Government's commitment to: delivering improved services to the

Tasmanian community; maintaining the Government's infrastructure investment; improving public sector

efficiency; constraining government expenditure to within long-term average growth in revenue and

maintaining tax competitiveness.

Successful implementation of the Government’s Fiscal Strategy is a key factor in providing the Budget

flexibility to achieve the Government’s policy priorities of jobs and economic growth; health and

education and supporting Tasmanians most in need.

It is essential that action continues to be taken to ensure the achievement of the Fiscal Strategy over

the medium to long-term. This particularly requires an ongoing commitment to the management of

expenditure within available revenue levels and ensuring that recurrent expenditure is not committed

against one-off uncertain revenues.


FISCAL PRINCIPLES The Government's Fiscal Strategy provides a strong and effective framework for the ongoing management of

the State's budget position. It is focused on the achievement of long-term fiscal principles that reflect

responsible financial management and aim to deliver long-term budget sustainability. These long-term fiscal

principles are enduring in nature and apply across financial and economic cycles. The use of a principles

based approach recognises that a government can, in the short-term, legitimately depart from fiscal objectives

in response to changing circumstances, as long as that departure is necessary, transparent and justifiable.

While the Fiscal Strategy has a core focus on the long-term, shorter-term objectives and relevant financial

measures and economic statistics are also important in enabling the measurement of the Government's

progress against the principles.

The following long-term principles are embedded in the Charter of Budget Responsibility Act 2007:

1. manage the State's finances responsibly for the wellbeing of all Tasmanians;

2. provide for the future for the next generation of Tasmanians;

3. prepare for unexpected events by building a robust financial position;

4. improve services to Tasmanians by building a strong economy and efficiently allocating resources to gain

the maximum community benefit;

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

predictability; and

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

STRATEGIC ACTIONS The Government's Fiscal Strategy includes a number of important strategic actions that are aimed at achieving

the long-term fiscal principles. Those strategic actions being implemented by the Government to support the

fiscal principles are detailed below.

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.


FISCAL STRATEGY PROGRESS Table 3.1 summarises the current progress that has been made by the Government in implementing the

strategic actions.

Table 3.1: 2017-18 Budget - Fiscal Strategy Progress

Strategic Action 2017-18 Budget Progress

1. Annual growth in General

Government operating

expenses will be lower than

the long-term average growth

in revenue.

The 2017-18 Budget and Forward Estimates are consistent with

this strategic action. The compound annual growth in expenditure

over the Budget and Forward Estimates period is 1.4 per cent, well

below the long-run revenue growth rate of 4.7 per cent (calculated

from 1999-00 to 2015-16 actual). Net Operating Balance surpluses

are also expected over the Budget and Forward Estimates period.

Chart 3.1 highlights General Government revenue and expenditure

growth over the period from 1999-00 to 2020-21.

Chart 3.2 compares the compound annual growth rates of revenue

and expenditure in the periods 1999-00 to 2003-04; 2003-04 to

2008-09; 2008-09 to 2013-14; and 2014-15 to 2020-21. The Chart

shows that, over the current period from 2014-15 to 2020-21,

estimated revenue growth is 2.7 per cent compared to estimated

expenditure growth of 2.4 per cent.

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.

Table 3.2 shows that, over the 2017-18 Budget and

Forward Estimates period, borrowing and defined benefit

superannuation costs as a percentage of General Government

cash receipts remain below the established maximum of

six per cent.

The Government recognises that superannuation is a significant

liability and will continue to ensure that it manages this critical

ongoing funding task in the most prudent way and in accordance

with the recommendations of the State Actuary.

Net Debt remains in a strong position over the Budget and

Forward Estimates period. Net Debt is estimated to be negative

$451.8 million at 30 June 2018 (negative $475.6 million in the

2016-17 Revised Estimates Report), reducing to negative

$200 million in 2019, then improving to negative $339.6 million by

30 June 2021.


Table 3.1: 2017-18 Budget - Fiscal Strategy Progress (continued)


3. A competitive tax environment

will be maintained with an

objective for state taxes to be

efficient, fair, simple, stable

and sustainable.

Tasmania needs a competitive tax environment to support business

investment and drive economic growth.

Chart 3.3 shows that, 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 third lowest of all jurisdictions and is

well below the national average.

During 2016-17, the Government undertook amendments to the

Duties Act 2001 and the Land Tax Act 2000 that have now come

into effect. These amendments include a duty exemption for an

internal reconstruction or consolidation of a corporate group, and

introduction of the simpler and fairer landholder duty model,

bringing Tasmania in line with other jurisdictions. In addition,

amendments to the Duties Act have been made to enable the

introduction of a national electronic conveyancing solution,

reflecting the shift in contemporary business practice. To further

improve the fairness and simplicity of handling deceased estates,

amendments have been made to require less onerous evidence to

access the duty exemption when registering a change of ownership

of a motor vehicle from a deceased estate to the intended

beneficiary under a will; and to enable continuation of a principal

residence land classification for the financial year following death of

a sole owner provided the usage of the property does not change.

In the 2017-18 Budget, the Government has taken further action to

improve the tax environment for businesses that pay payroll tax by

providing payroll tax rebates for new apprentices, trainees and

youth employees aged 15 to 24 recruited from 1 July 2017 to

30 June 2019.




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 significant capital invested in its portfolio of

government businesses. As at 30 June 2016, the Government's

estimated total equity invested was $4.4 billion.

During 2016-17, the Government has implemented a number of

measures to improve the governance and efficiency of government

businesses, including:

ensuring that funds are set aside for the future replacement of the

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

Fund Act 2017 being passed by the Parliament;

facilitating the replacement of Metro Tasmania’s bus fleet, with the

first of four equity injections of $4.5 million being paid to the

Company in February 2017;

continuing to progress the transition of Forestry Tasmania by:

o securing commercially sustainable access to residue

markets in the south of the State;

o seeking expressions of interest for the sale of approximately

29 000 ha of largely unpruned and unthinned hardwood

plantations; and

o the separation of Forestry Tasmania into a commercial wood

production division and a non-commercial division, to be

effective from 1 July 2017; and

completing the RBF reforms, including the successor fund

transfer of RBF’s accumulation scheme accounts to Tasplan and

the transition of the administration of the defined benefits

schemes into Treasury.

Consistent with the Government’s energy strategy vision of

delivering affordable energy at competitive and predictable prices

that are amongst the lowest in Australia, the Government has

progressed legislative changes to enable the setting of a lower

wholesale electricity price for regulated electricity tariffs paid by

residential and small business customers for 2017-18. In addition,

Hydro Tasmania has reduced wholesale prices for unregulated

customers in 2017-18 and the 2017-18 Budget also allocates

funding to support those customers that entered into contracts

earlier in 2017 who were impacted by volatility in the national

electricity market.




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 (continued).

Over the coming period, the Government will:

review and update various governance documents including:

o Community Service Obligation guidelines;

o the ministerial charters for Forestry Tasmania and for Hydro

Tasmania; and

o Government business board governance with the aim of

ensuring; the composition of boards is appropriate to provide

sound leadership for the respective businesses; that board

membership meets the Government's commitment to a

target of 50 per cent representation of women by July 2020;

and that boards are more accountable to the Shareholding

Ministers;

review the wholesale electricity market arrangements; and

establish TasWater as a Government Business Enterprise to

accelerate infrastructure projects, improve services and restrain

price rises.

5. Tasmanian Government

infrastructure investment will

maintain existing assets,

respond to economic and

population growth and reflect

the changing needs of the

community.

The 2017-18 Budget continues the Government's significant

investment in infrastructure. The Government has committed

$245.2 million in new infrastructure funding over the Budget and

Forward Estimates period with total infrastructure expenditure over

this period now totalling over $2 billion. This is a material increase

on the over $1.8 billion allocated over last year’s Budget and

Forward Estimates period.

The Government’s investment in infrastructure is strongly focused

on its high priority policy areas of improving health and education

services; jobs and economic growth and supporting Tasmanians in

need. Over the Budget and Forward Estimates period $117 million

is provided to improve school and education infrastructure, total

funding for hospitals, health and ICT-related infrastructure exceeds

$500 million (including $389 million for the Royal Hobart Hospital

Redevelopment and $35 million for Mersey Community Hospital

Redevelopment), $35 million is provided under the Government’s

Affordable Housing Strategy and $827 million has been provided

for roads and rail infrastructure (including a provision of $120 million

for future Australian Government Roads Funding).




5. Tasmanian Government

infrastructure investment will

maintain existing assets,

respond to economic and

population growth and reflect

the changing needs of the

community (continued).

Significant new and existing funding is also being provided by the

Government to support other entities to undertake major

infrastructure projects including $90.6 million for rail infrastructure,

$68 million for irrigation infrastructure, $65 million for the Northern

Cities initiative and $6 million for non-government school

infrastructure.

Chart 3.4 shows that, over the 2017-18 Budget and Forward

Estimates period, investment by the Government in Non-Financial

Assets continues to exceed the value of depreciation. Table 3.3

summarises 2017-18 Budget and Forward Estimates Depreciation

and Purchases of Non-Financial Assets estimates.

6. Public sector efficiency,

productivity and financial

transparency will be improved.

The Government has implemented a number of important financial

management reforms that will strengthen the State financial

framework and help improve transparency. These include:

amendments to the Charter of Budget Responsibility Act;

the new Financial Management Act 2016 (due to be implemented

on 1 July 2018); and

the publication of the First Tasmanian Government Fiscal

Sustainability Report in April 2016.

Funding of $50 million has been allocated over the 2017-18 Budget

and Forward Estimates period to undertake a number of significant

digital transformation projects. Not only will these projects improve

the provision of services to the community but they are also

expected to deliver public sector efficiency and productivity

benefits.

The Government is committed to ensuring negotiated wage

outcomes are sustainable and affordable. The wages policy limits

wage outcomes to two per cent per annum.

Integration and automation of the employee system Empower is

progressing through the business planning stages to the

development of a reporting framework within the Department of

Justice. When completed it will provide substantial efficiency gains

across government through reduced manual payment processes

and overheads. Importantly the system will significantly increase

access to meaningful workforce data and reporting, to inform

workforce management and planning.


Fiscal Strategy Data

Chart 3.1: General Government Revenues and Expenses, 1999-00 to 2020-211

Note: 1. This Chart is based on actual data for the period 1999-00 to 2015-16, the Estimated Outcome for 2016-17 (excluding

the impact of the significant one-off payment for the Mersey Hospital of $730.4 million) and the Budget and Forward Estimates for 2017-18 to 2020-21.

Chart 3.2: Comparative Compound Annual Growth Rates of General Government Revenue and Expenditure, 1999-00 to 2020-21

2 000

2 500

3 000

3 500

4 000

4 500

5 000

5 500

6 000

6 500

1999

-00

2001

-02

2003

-04

2005

-06

2007

-08

2009

-10

2011

-12

2013

-14

2015

-16

2017

-18

2019

-20

Total Revenue Total Expenses

$m

illi

on

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

1999-00 to 2003-04 2003-04 to 2008-09 2008-09 to 2013-14 2014-15 to 2020-21Expenses Revenues


Table 3.2: General Government Borrowing and Defined Benefit Superannuation Costs, 2017-18 to 2020-21

2017-18 2018-19 2019-20 2020-21

Forward Forward Forward

Budget Estimate Estimate Estimate

$m $m $m $m

Superannuation - defined benefit schemes 285.8 296.6 307.9 319.9

Borrowing costs 9.8 9.5 9.1 8.3

Total borrowing and defined benefit scheme costs 295.7 306.2 317.0 328.1

Borrowing and defined benefit costs as a percentage of

General Government cash receipts 4.9% 5.1% 5.2% 5.3%

Chart 3.3: Ratio of Actual to Assessed Revenue, 2015-161

Source: Commonwealth Grants Commission 2017 Update Report on GST Revenue Sharing Relativities Note: 1. The ratio of actual to assessed revenue compares the revenue a 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.

80

90

100

110

120

NSW Vic Qld WA SA Tas ACT NT

Rat

io o

f A

ctu

al t

o A

sses

sed

Rev

enu

e (%

)


Table 3.3: Purchases of Non-Financial Assets in Excess of Depreciation, 2017-18 to 2020-21

2017-18 2018-19 2019-20 2020-21

Forward Forward Forward

Budget Estimate Estimate Estimate

$m $m $m $m

Purchases of Non-Financial Assets 609.9 574.0 402.1 342.7

Depreciation 268.6 263.7 322.8 337.6

Surplus 341.3 310.3 79.3 5.1

Chart 3.4: Purchases of Non-Financial Assets and Depreciation, 2006-07 to 2020-21

....

100

200

300

400

500

600

700

800

2006

-07

2007

-08

2008

-09

2009

-10

2010

-11

2011

-12

2012

-13

2013

-14

2014

-15

2015

-16

2016

-17

2017

-18

2018

-19

2019

-20

2020

-21

$ m

illio

n

Purchases of Non-Financial Assets Depreciation Expense

2017-18 Budget and Forward Estimates 45

4 2017-18 BUDGET AND

FORWARD ESTIMATES

Key Issues

The Net Operating Balance is expected to be in surplus throughout the 2017-18 Budget and Forward

Estimates period, with an estimated surplus of $54.3 million for 2017-18.

The Fiscal Balance is estimated to be a deficit of $253.9 million for 2017-18, with a projected

improvement over the Forward Estimates period to achieve surpluses of $2.8 million in 2019-20 and

$71.1 million in 2020-21.

In relation to Net Debt, whilst reducing in 2018-19, Net Cash and Investments remains positive reaching

a level of $339.6 million as at 30 June 2021. This reflects the impact of estimated Net Operating Balance

outcomes and infrastructure expenditure levels.

This chapter includes the Policy and Parameter Statement which provides a reconciliation of the major

movements in the Net Operating Balance and the Fiscal Balance between the Budget and Forward

Estimates presented in the 2016-17 Budget Papers and those in these Budget Papers.


OVERVIEW This chapter includes the General Government Sector Financial Statements for the 2017-18 Budget and

Forward Estimates period and the Policy and Parameter Statement which reflects changes between the

Budget and Forward Estimates reported in the 2016-17 Budget Papers and the 2017-18 Budget Papers.

The financial statements in this chapter have been prepared in accordance with the Uniform Presentation

Framework (UPF). The statements present information for the 2016-17 Budget and for the 2017-18 Budget

and Forward Estimates. Taxation information, required under the UPF, is provided in chapter 5 of this Budget

Paper.

In accordance with the UPF, the final end of year results for the General Government Sector will be available in the Treasurer's Annual Financial Report 2016-17, which will be publicly released by no later than

31 October 2017.


GOVERNMENT FINANCIAL ESTIMATES Tables 4.1 to 4.3 detail the Income Statement, Balance Sheet and Cash Flow Statement for the

General Government Sector.

Table 4.1: General Government Income Statement

2016-17)

)

Budget)

2017-18)

)

Budget)

2018-19)

Forward)

Estimate)

2019-20)

Forward)

Estimate)

2020-21)

Forward)

Estimate)

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

Revenue from Transactions1

Grants 3 634.6) 3 682.9) 3 673.5) 3 735.4) 3 748.3)

Taxation 1 055.6) 1 128.5) 1 147.4) 1 173.0) 1 198.9)

Sales of Goods and Services 352.9) 408.0) 417.0) 424.8) 428.7)

Fines and Regulatory Fees 96.5) 98.9) 99.3) 100.3) 101.6)

Interest Income 16.5) 19.6) 17.6) 16.0) 17.2)

Dividend, Tax and Rate Equivalent Income 263.8) 358.4) 338.2) 370.1) 390.4)

Other Revenue 153.8) 177.7) 170.1) 165.2) 163.5)

5 573.7) 5 874.0) 5 863.0) 5 984.8) 6 048.7)

Less Expenses from Transactions

Employee Expenses2 2 311.0) 2 400.4) 2 430.4) 2 461.6) 2 533.0)

Superannuation3 284.6) 273.5) 269.7) 270.0) 271.0)

Depreciation 264.6) 268.6) 263.7) 322.8) 337.6)

Supplies and Consumables4 1 105.9) 1 227.8) 1 186.1) 1 187.2) 1 206.8)

Nominal Superannuation Interest Expense5 288.2) 285.6) 289.7) 293.3) 296.2)

Borrowing Costs 10.3) 9.8) 9.5) 9.0) 8.2)

Grant Expenses6 1 206.2) 1 314.3) 1 333.4) 1 362.4) 1 322.8)

Other Expenses 25.4) 39.7) 29.8) 27.3) 27.8)

5 496.3) 5 819.8) 5 812.3) 5 933.6) 6 003.4)

Equals NET OPERATING BALANCE 77.3) 54.3) 50.7) 51.3) 45.3)

Plus Other Economic Flows - Included in Operating

Result

Gain/(Loss) on Disposal of Non-Financial Assets 10.5) 15.3) 12.2) 12.7) 12.8)

Movement in Investments in GBEs and SOCs7 19.5) (104.2) 11.2) 37.4) 50.2)

Other Gains/(Losses) (21.2) 9.8) (11.4) (7.0) (8.2)

8.8) (79.0) 12.1) 43.0) 54.8)

Equals Operating Result 86.1) (24.8) 62.8) 94.3) 100.0)


Table 4.1: General Government Income Statement (continued)

2016-17)

)

Budget)

2017-18)

)

Budget)

2018-19)

Forward)

Estimate)

2019-20)

Forward)

Estimate)

2020-21)

Forward)

Estimate)

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

Plus Other Economic Flows - Other Movements in

Equity

Revaluations of Non-Financial Assets 252.3) 250.8) 268.4) 288.5) 294.9)

Other Non-Owner Movements in Equity 3.3) 3.8) 3.8) 3.8) 3.8)

255.5) 254.6) 272.2) 292.3) 298.7)

Equals Comprehensive Result 341.6) 229.8) 335.0) 386.6) 398.7)

KEY FISCAL AGGREGATES

NET OPERATING BALANCE 77.3) 54.3) 50.7) 51.3) 45.3)

Less Net Acquisition of Non-Financial Assets

Purchases of Non-Financial Assets8 530.8) 609.9) 574.0) 402.1) 342.7)

Less Sale of Non-Financial Assets 28.3) 33.2) 30.4) 30.8) 30.9)

Less Depreciation 264.6) 268.6) 263.7) 322.8) 337.6)

237.9) 308.2) 279.9) 48.5) (25.8)

Equals FISCAL BALANCE (160.6) (253.9) (229.2) 2.8) 71.1)

Notes: 1. Detailed information on revenue estimates is provided in chapter 5 of this Budget Paper. 2. The increase in Employee Expenses in 2017-18 primarily relates to the Department of Education; the Tasmanian

Health Service and the Department of Justice for increases associated with the delivery of 2017-18 Budget initiatives. Further information in relation to agency initiatives is contained in the relevant agency chapter in Government Services, Budget Paper No 2. The increase in 2020-21 primarily reflects the impact of the proposed voluntary earlier school starting age resulting from the new Education Act (which is contingent on a Ministerial Order being approved by Parliament by no later than 1 September 2017) and the Tasmanian Health Service for updates to Block and Activity Based Funding.

3. The movement in Superannuation reflects an actuarial assessment of the defined benefit schemes and agency expenditure estimates for accumulation scheme members.

4. The increase in Supplies and Consumables in 2017-18 and over the Forward Estimates primarily reflects the listing of Hepatitis C medications on the Pharmaceutical Benefits Scheme and revised Activity Based Funding (ABF) and Block funding estimates. In addition, the increase in expenditure in 2017-18 also reflects increased costs for the Tasmanian Risk Management Fund due to higher medical and property claims expenditure.

5. The decrease in Nominal Superannuation Interest Expense in 2017-18 reflects a revised actuarial assessment of the defined benefit schemes.

6. The increase in Grant Expenses from 2017-18 primarily reflects increased funding to non-government schools under the Students First education reforms; an updated funding profile for the Northern Cities Major Development Initiative and the implementation of the Bilateral Agreement for the Transition to the NDIS with the Australian Government.

7. The decrease in Movement in Investments in GBEs and SOCs in 2017-18 of $123.7 million reflects changes in the net assets of the Public Non-Financial Corporations and Public Financial Corporations Sectors.

8. Additional information on agency 2017-18 Budget Infrastructure Investment is provided in chapter 6 of this Budget Paper.


Table 4.2: General Government Balance Sheet as at 30 June

2017)

Budget)

2018)

Budget)

2019)

Forward)

Estimate)

2020)

Forward)

Estimate)

2021)

Forward)

Estimate)

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

Assets

Financial Assets

Cash and Deposits1 880.8) 1 117.2) 1 056.7) 1 075.5) 1 092.3)

Investments 54.2) 46.4) 48.6) 50.8) 53.0)

Equity Investment in PNFC & PFC Sectors2 4 482.8) 5 654.0) 5 715.6) 5 757.5) 5 807.6)

Other Equity Investments 27.4) 27.2) 31.3) 35.4) 38.1)

Receivables 316.6) 315.4) 312.2) 307.0) 303.0)

Other Financial Assets 847.0) 815.4) 868.0) 904.5) 918.7)

6 608.9) 7 975.7) 8 032.4) 8 130.7) 8 212.7)

Non-Financial Assets

Land and Buildings 6 098.6) 6 265.3) 6 535.8) 6 644.9) 6 705.4)

Infrastructure 4 779.3) 4 816.5) 5 108.1) 5 343.5) 5 553.0)

Plant and Equipment 224.6) 229.0) 218.3) 213.9) 217.6)

Heritage and Cultural Assets 502.4) 484.0) 496.1) 508.3) 520.5)

Investment Property 3.0) 3.5) 3.8) 4.0) 4.4)

Intangibles 51.8) 47.7) 45.8) 42.0) 37.8)

Assets Held for Sale 4.7) 4.8) 4.1) 3.9) 2.9)

Other Non-Financial Assets 31.5) 37.4) 37.5) 37.5) 33.9)

11 696.0) 11 888.1) 12 449.5) 12 798.0) 13 075.5)

Total Assets 18 304.9) 19 863.8) 20 481.9) 20 928.8) 21 288.2)

Liabilities

Borrowings3 633.7) 711.8) 905.2) 913.4) 805.7)

Superannuation4 6 345.5) 6 266.3) 6 345.7) 6 412.6) 6 465.3)

Employee Entitlements 583.0) 618.8) 627.8) 610.5) 623.6)

Payables 134.9) 133.7) 133.3) 135.2) 137.1)

Other Liabilities 358.7) 409.7) 411.3) 412.0) 412.7)

Total Liabilities 8 055.7) 8 140.3) 8 423.4) 8 483.7) 8 444.4)

NET ASSETS 10 249.2) 11 723.5) 12 058.5) 12 445.0) 12 843.8)


Table 4.2: General Government Balance Sheet as at 30 June (continued)

2017)

Budget)

2018)

Budget)

2019)

Forward)

Estimate)

2020)

Forward)

Estimate)

2021)

Forward)

Estimate)

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

Equity

Accumulated Funds 5 293.3) 6 761.4) 6 828.0) 6 926.0) 7 029.9)

Asset Revaluation Reserve 4 955.9) 4 962.1) 5 230.5) 5 519.0) 5 813.9)

Total Equity 10 249.2) 11 723.5) 12 058.5) 12 445.0) 12 843.8)

NET WORTH5 10 249.2) 11 723.5) 12 058.5) 12 445.0) 12 843.8)

NET FINANCIAL WORTH6 (1 446.7) (164.6) (391.0) (353.0) (231.7)

NET FINANCIAL LIABILITIES7 5 929.6) 5 818.6) 6 106.6) 6 110.5) 6 039.4)

NET DEBT8 (301.3) (451.8) (200.0) (212.9) (339.6)

Notes: 1. The increase in Cash and Deposits in 2018 primarily reflects a change in timing of Australian Government Funding

together with higher estimated cash balances at the end of 2017. 2. The increase in Equity Investment in PNFC and PFC Sectors in 2018 primarily reflects an increase in Net Assets for

the Tasmanian Public Finance Corporation (following the transfer of the Australian Government Mersey Community Hospital payment to the Tasmanian Public Finance Corporation as a one-off equity contribution to be invested by the Tasmanian Public Finance Corporation with any returns to be retained in the Mersey Community Hospital Fund (payment expected to occur by 30 June 2017)), Hydro Tasmania, and Motor Accidents Insurance Board.

3. Borrowings of $711.8 million as at 30 June 2018 includes an estimated end of year borrowing of $499.1 million to be undertaken on 30 June 2018. The end of year borrowing has no impact on the Government’s Net Debt as the same amount will be borrowed and invested overnight on 30 June 2018 with the Tasmanian Public Finance Corporation, grossing-up the amount of cash held and borrowings. The change in Borrowings since the 2016-17 Budget is primarily due to changes in the estimated Consolidated Fund position.

4. The decrease in Superannuation in 2018 reflects the latest actuarial assessment of the liability related to the defined benefit schemes.

5. Net Worth represents Total Assets less Total Liabilities. 6. Net Financial Worth represents Financial Assets less Total Liabilities. 7. Net Financial Liabilities represents Total Liabilities less Financial Assets, excluding Equity Investment in PNFC & PFC

Sectors. 8. Net Debt represents Borrowings less the sum of Cash and Deposits and Investments.


Table 4.3: General Government Cash Flow Statement

2016-17)

)

Budget)

2017-18)

)

Budget)

2018-19)

Forward)

Estimate)

2019-20)

Forward)

Estimate)

2020-21)

Forward)

Estimate)

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

Cash Flows from Operating Activities

Cash Receipts from Operating Activities

Grants Received 3 634.6) 3 682.9) 3 673.5) 3 735.4) 3 748.3)

Taxation 1 045.9) 1 127.3) 1 144.5) 1 171.3) 1 196.4)

Sales of Goods and Services 353.7) 408.0) 415.3) 423.1) 427.2)

Fines and Regulatory Fees 96.5) 98.9) 99.3) 100.3) 101.6)

Interest Received 16.6) 19.6) 17.5) 16.1) 17.2)

Dividend, Tax and Rate Equivalents 234.2) 372.4) 288.6) 338.7) 380.7)

Other Receipts 331.9) 365.3) 360.9) 338.7) 332.5)

5 713.5) 6 074.3) 5 999.5) 6 123.6) 6 203.9)

Cash Payments from Operating Activities

Employee Entitlements (2 298.5) (2 393.0) (2 420.2) (2 474.9) (2 518.1)

Superannuation (442.6) (468.1) (478.7) (498.0) (513.9)

Supplies and Consumables (1 117.6) (1 239.9) (1 200.0) (1 199.1) (1 215.5)

Borrowing Costs (10.4) (9.8) (9.5) (9.1) (8.3)

Grants and Subsidies Paid (1 206.1) (1 314.2) (1 333.3) (1 362.3) (1 322.8)

Other Payments (205.9) (229.1) (221.4) (199.7) (196.9)

(5 281.2) (5 654.1) (5 663.2) (5 743.1) (5 775.4)

Net Cash Flows from Operating Activities 432.3) 420.3) 336.3) 380.5) 428.6)

Cash Flows from Investing Activities

Net Cash Flows from Non-Financial Assets

Purchases of Non-Financial Assets (524.8) (603.1) (564.8) (390.5) (330.8)

Sales of Non-Financial Assets 28.3) 33.0) 30.4) 30.8) 30.9)

(496.5) (570.1) (534.4) (359.8) (299.9)

Net Cash Flows from Financial Assets (Policy

Purposes)

Equity Injections (63.2) (58.8) (54.4) (8.6) (2.7)

Net Advances Paid ....) (2.1) (2.2) (2.2) (2.2)

Equity Disposals 0.7) 0.7) 0.7) 0.7) 0.7)

(62.5) (60.3) (55.9) (10.0) (4.2)


Table 4.3: General Government Cash Flow Statement (continued)

2016-17)

)

Budget)

2017-18)

)

Budget)

2018-19)

Forward)

Estimate)

2019-20)

Forward)

Estimate)

2020-21)

Forward)

Estimate)

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

Net Cash Flows from Investing Activities (559.0) (630.3) (590.3) (369.8) (304.1)

Net Cash Flows from Financing Activities

Net Borrowing (35.7) 147.8) 193.4) 8.2) (107.8)

(35.7) 147.8) 193.4) 8.2) (107.8)

Net Increase/(Decrease) in Cash Held (162.5) (62.3) (60.6) 18.9) 16.8)

Cash at Beginning of the Year 1 043.3) 1 179.6) 1 117.2) 1 056.7) 1 075.5)

Cash at End of the Year 880.8) 1 117.2) 1 056.7) 1 075.5) 1 092.3)


Net Cash Flows from Operating Activities 432.3) 420.3) 336.3) 380.5) 428.6)

Plus Net Cash Flows from Non-Financial Assets (496.5) (570.1) (534.4) (359.8) (299.9)

Equals CASH SURPLUS/(DEFICIT) (64.2) (149.8) (198.1) 20.7) 128.7)


POLICY AND PARAMETER STATEMENT

Introduction

The Policy and Parameter Statement (PPS) is a reconciliation of the major movements in the Net Operating

Balance and the Fiscal Balance between two points in time. The movements reflect changes between the

Budget and Forward Estimates reported in the 2016-17 Budget Papers and the 2017-18 Budget Papers.

The movements in the PPS are classified as revenue, expenses or net acquisition of non-financial assets and

then further categorised as a policy or parameter change. The classification of a variation as a policy or

parameter change is a matter of judgement and it is recognised that there may be some instances where part

of a Government initiative may have both policy and parameter components. In exercising judgement,

Treasury aims to ensure that Government decisions are made transparent.

Policy Variation

For the purpose of the PPS, a policy variation reflects a specific decision by the Government that has an

impact on the Budget and Forward Estimates and is related to a new policy or represents a change in the

Government's existing policy position since the previous Budget. A decision to change a Budget or Forward

Estimate aggregate, which is consistent with an existing policy, is not a policy decision.

Parameter Variation

A parameter variation reflects changes to the Budget and Forward Estimates due to the economic

environment, the agency operating environment or the timing of a transaction.

Parameter variations will reflect the impact of changes in taxes, grants or other income that do not arise

because of a Government decision and demand and cost variations in agency service delivery, including the

provision of indexation. Variations resulting from the rollover of a new Forward Estimate year and changes in

accounting policies, such as a change in an agency depreciation policy or the impact on estimates of a change

in an Australian Accounting Standard are classified as parameter variations.

Table 4.4 provides a summary of the policy and parameter changes detailed in Table 4.5 that have impacted

on the formulation of the 2017-18 Budget since the 2016-17 Budget.

Further Information

Additional information on revenue estimates is provided in chapter 5 of this Budget Paper. Additional

information on agency expenditure estimates is included in the relevant agency chapters in

Government Services Budget Paper No 2.

It should be noted that the estimates presented in the Policy and Parameter Statement were finalised prior to

the release of the Australian Government's 2017-18 Budget. Therefore, the movements included for Specific

Purpose Payments and some National Partnership payments may differ from those calculated using published

Australian Government 2017-18 Budget estimates.


Table 4.4: Summary Policy and Parameter Statement, 2016-17 to 2020-21

2016-17)

Estimated)

Outcome)

2017-18)

)

Budget)

2018-19)

Forward)

Estimate)

2019-20)

Forward)

Estimate)

2020-21

Forward

Estimate1

$m) $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 …. …. 40.0 40.0 ….

Parameter Adjustments 926.0 376.7 337.8 359.8 ….

TOTAL REVENUE VARIATIONS (C) 926.0 376.7 377.8 399.8 ….

EXPENSES

Policy Decisions 41.2 202.3 188.0 186.4 204.2


TOTAL EXPENSE VARIATIONS (D) 191.3 330.3 266.1 367.0 ….

NET OPERATING BALANCE (A+C-D) 812.0 54.3 50.7 51.3 45.3

Less NET ACQUISITION OF NON-FINANCIAL

ASSETS

Purchases of Non-Financial Assets

Policy Decisions 21.1 74.6 69.7 58.5 57.4

Parameter Adjustments (56.6) 32.1 109.1 42.0 ….

(35.5) 106.7 178.8 100.6 ….

Less Sale of Non-Financial Assets

Policy Decisions …. 2.5 …. …. ….


1.0 4.7 1.6 2.0 ….

Less Depreciation - Total Parameter Adjustments 2.5 (1.4) 1.3 51.1 ….

NET ACQUISITION OF NON-FINANCIAL ASSETS

VARIATIONS (E) (39.0) 103.4 175.8 47.4 ….

FISCAL BALANCE (B+C-D-E) 613.1 (253.9) (229.2) 2.8 71.1

Note: 1. Parameter adjustments for 2020-21 are not reflected in the Table as the 2020-21 Forward Estimate was not published

in the 2016-17 Budget. However, policy adjustments are reflected to show their full impact on the Budget and Forward Estimates.


Table 4.5: Policy and Parameter Statement, 2016-17 to 2020-21

2016-17)

Estimated)

Outcome)

2017-18)

)

Budget)

2018-19)

Forward)

Estimate)

2019-20)

Forward)

Estimate)

2020-21

Forward

Estimate1

$m) $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

Policy Decisions

Special Dividend .... .... 40.0 40.0 ....

Total Policy Decisions .... .... 40.0 40.0 ....

Parameter Adjustments

Taxation

Betting Exchange Taxes and Levies2 (3.0) (3.5) (3.6) (3.7) ....

Casino Tax and Licence Fees (2.0) (1.7) (1.7) (1.9) ....

Duties3 37.0 59.4 49.6 47.4 ....

Guarantee Fees (0.9) (3.1) (2.7) (4.6) ....

Land Tax4 8.3 8.7 8.6 9.2 ....

Lottery Tax (0.7) (0.8) (0.9) (0.9) ....

Motor Taxation 0.7 0.3 0.3 0.4 ....

Payroll Tax5 .... (5.1) (7.8) (10.3) ....

State Fire Commission Operating Account (1.4) (1.8) (1.8) (1.8) ....

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

Vehicle Registration Fees 0.5 0.5 0.5 0.5 ....

Total Taxation 38.4 52.6 40.6 34.3 ....


Table 4.5: Policy and Parameter Statement, 2016-17 to 2020-21 (continued)

2016-17)

Estimated)

Outcome)

2017-18)

)

Budget)

2018-19)

Forward)

Estimate)

2019-20)

Forward)

Estimate)

2020-21

Forward

Estimate1

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

Dividend, Tax and Rate Equivalent Income

Dividend income

Aurora Energy Pty Ltd 6.1 1.7 5.5 5.4 ....

Hydro Tasmania .... .... 12.0 16.5 ....

Motor Accidents Insurance Board 5.9 14.2 15.0 15.6 ....

Tasmanian Networks Pty Ltd 13.1 (10.0) (20.0) (7.1) ....

Tasmanian Ports Corporation Pty Ltd 1.4 0.3 (5.3) (1.1) ....

Tasmanian Public Finance Corporation (0.3) 77.5 79.2 82.0 ....

26.2 83.8 86.4 111.3 ....

Income Tax Equivalents

Aurora Energy Pty Ltd 0.7 2.6 2.5 3.4 ....

Hydro Tasmania 4.6 14.7 11.9 24.7 ....

Metro Tasmania Pty Ltd .... .... .... .... ....

Motor Accidents Insurance Board 23.4 11.0 10.4 11.8 ....

Tasmanian Networks Pty Ltd (3.7) (10.0) (5.6) (2.7) ....

Tasmanian Ports Corporation Pty Ltd 0.1 (2.8) (1.8) (1.7) ....

Tasmanian Public Finance Corporation 1.5 1.7 1.7 0.9 ....

TT-Line Company Pty Ltd (0.4) (4.2) 1.5 0.1 ....

26.1 13.1 20.7 36.5 ....

Total Dividend, Tax and Rate Equivalent Income 52.3 96.9 107.1 147.8 ....

Interest Income 5.6 3.5 4.8 3.1 ....

Australian Government Grants

General Purpose Payments

GST Revenue (44.2) 55.9 131.0 114.5 ....

(44.2) 55.9 131.0 114.5 ....



2016-17)

Estimated)

Outcome)

2017-18)

)

Budget)

2018-19)

Forward)

Estimate)

2019-20)

Forward)

Estimate)

2020-21

Forward

Estimate1

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


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

Education 0.7 0.4 .... .... ....

Environment 3.5 0.5 (4.6) .... ....

Healthcare 11.8 2.7 0.2 4.9 ....

Infrastructure (18.1) 108.2 10.5 2.1 ....

Mersey Community Hospital 730.4 .... .... .... ....

Natural Disaster Relief and Recovery

Arrangements 21.1 21.7 5.4 …. ….

Other Services (0.5) (0.1) (1.7) (2.0) ....

Skills and Workforce Development 1.1 .... .... .... ....

750.1 133.4 9.8 4.9 ....


Students First 2.4 13.4 25.7 33.0 ....

National Affordable Housing 0.2 0.2 0.2 0.3 ....

National Health Reform 17.9 11.4 11.7 12.0 ....

20.4 25.0 37.6 45.3 ....

Other Australian Government Grants 10.9 (69.1) (68.4) (68.3) ....

Total Australian Government Grants 737.2 145.2 110.0 96.4 ....

Agency Revenue

Education 0.5 0.7 0.9 1.3 ....

Finance-General 1.5 6.6 .... .... ....

Health and Human Services (2.8) (2.5) (3.9) (2.9) ....

Inland Fisheries Service (0.3) (0.5) (0.2) (0.2) ....

Justice 1.2 0.6 0.6 0.6 ....

Marine and Safety Tasmania 0.7 0.5 (0.2) (0.3) ....

Ministerial and Parliamentary Support 0.8 0.8 0.8 0.8 ....

Police, Fire and Emergency Management (0.5) 1.0 0.8 0.2 ....

Premier and Cabinet 3.0 0.6 (1.3) (1.4) ....

Primary Industries, Parks, Water and Environment 0.5 5.0 5.1 5.2 ....

Royal Tasmanian Botanical Gardens 0.3 0.4 0.2 0.2 ....

State Growth 20.7 25.3 27.5 25.3 ....



2016-17)

Estimated)

Outcome)

2017-18)

)

Budget)

2018-19)

Forward)

Estimate)

2019-20)

Forward)

Estimate)

2020-21

Forward

Estimate1

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

Agency Revenue (continued)

TasTAFE .... 0.7 0.9 1.2 ....

Tasmanian Audit Office .... (0.1) (0.1) (0.1) ....

Tasmanian Health Service 66.1 38.9 44.0 48.1 ....

Treasury and Finance 0.7 0.4 0.3 0.2 ....

Total Agency Revenue 92.4 78.5 75.4 78.2 ....

Total Parameter Adjustments 926.0 376.7 337.8 359.8 ....

TOTAL REVENUE VARIATIONS (C) 926.0 376.7 377.8 399.8 ....

Expenses from Transactions

Policy Decisions6

Agency Expenditure

Director of Public Prosecutions

Corrective Services Package .... 0.4 0.4 0.4 0.4

Family Violence and Sexual Assault Unit .... 0.4 0.4 0.4 0.4

Reduction of Backlog of Criminal Cases .... 0.3 0.3 .... ....

.... 1.0 1.1 0.8 0.8

Education

Capital Assistance - Non-government Schools .... 1.5 1.5 1.5 1.5

Education Act - Implementation .... .... .... .... 12.6

Education Act - Refocusing Teaching and

Learning in the Early Years .... 0.5 1.0 1.0 0.5

Education Act - Support for the Education and

Care Sector .... 1.5 1.5 .... ....

Education Infrastructure Planning Framework

and Feasibility Study .... 0.3 .... .... ....

Non-government Schools State Students First

Contribution .... 1.2 1.4 1.6 3.5

Office of Tasmanian Assessment, Standards

and Certification .... 0.6 0.4 0.2 0.2



2016-17)

Estimated)

Outcome)

2017-18)

)

Budget)

2018-19)

Forward)

Estimate)

2019-20)

Forward)

Estimate)

2020-21

Forward

Estimate1

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

Education (continued)

Primary Schools to Primary Industries .... 0.2 0.2 .... ....

Review of the School Improvement

Framework and Improved Assessment

and Reporting .... 0.4 .... .... ....

Supporting Student Learning - Stay ChatTY

Grant …. 0.3 …. …. ….

Supporting Student Learning - Child and

Student Wellbeing .... 0.4 0.4 0.4 0.4

Supporting Student Learning - Additional

School Health Nurses .... 1.0 1.0 1.0 1.0

Supporting Student Learning - School Support

Workers .... 1.7 1.7 1.7 1.7

Supporting Student Learning - Student

Engagement and Flexible Learning .... 0.7 1.4 1.4 1.4

Tasmanian Youth Orchestra .... 0.1 0.1 0.1 ....

.... 10.3 10.6 8.9 22.9

Finance-General

Accelerated Local Government Capital

Program 0.1 3.0 3.5 3.4 3.4

City Deal Launceston7,8 .... 1.3 2.0 1.8 1.8

Copper Mines of Tasmania Support9 .... 6.0 3.5 .... ....

Digital Transformation - CYS Client

Information System10 .... 0.3 .... .... ....

Digital Transformation - Justice Connect11 .... 0.2 .... .... ....

Digital Transformation Program Review

Strategy .... 0.3 .... .... ....

Digital Transformation Program Review

Strategy - Program Management .... .... 0.1 0.1 0.1

Digital Transformation - Project Unify12 .... .... 0.4 0.4 0.4

Energy Rebates for Business9 .... 20.0 …. .... ....

Fire Fighting Costs 0.8 .... .... .... ....

First Home Builder Assistance8 .... 6.8 3.6 .... ....

Health Funding Provision10 .... 20.0 20.0 30.0 30.0

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

Local Government Flood Costs 10.0 12.2 .... .... ....



2016-17)

Estimated)

Outcome)

2017-18)

)

Budget)

2018-19)

Forward)

Estimate)

2019-20)

Forward)

Estimate)

2020-21

Forward

Estimate1

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

Finance-General (continued)

Payroll Tax Rebate (Trainees, Apprentices

and Youth)8 .... 2.8 6.8 5.7 1.8

State Fire Commission Debt Retirement 5.0 .... .... .... ....

Structural Reviews .... 1.0 1.0 .... ....

Tasmanian Cycling Tourism Strategy …. 3.0 3.0 …. ….

TasWater - Payment to Councils8 .... .... 20.0 20.0 20.0

15.8 77.9 63.9 61.4 57.5

Health and Human Services and Tasmanian

Health Service

Building a Joined Up Human Services Support

System .... 0.6 0.4 .... ....

Commissioner for Children and Young People .... 0.5 0.5 0.5 0.5

Elder Abuse .... 0.2 .... .... ....

Equal Remuneration Order (ERO) Costs .... .... .... .... 2.5

Frontline Staffing Costs - Supplementation .... 3.6 3.6 3.6 3.6

Housing Tasmania Property Modification

Program .... 2.0 .... .... ....

Investing in Ambulance Tasmania .... 2.1 2.5 2.5 2.5

Medical Cannabis Controlled Access Scheme

- Paediatric Epilepsy .... 0.9 0.9 0.9 0.9

Mental Health Service Delivery Priorities -

2017-18 Budget .... 3.4 4.2 4.2 4.2

Moonah Youth Facility .... 0.8 0.8 0.8 0.8

Out of Home Care - Additional Support .... 6.1 6.3 6.6 6.6

Patients First - Stage 2 - New Hospital Beds

and Staff 4.0 18.1 16.4 16.4 16.4

Securing a Second Medical and Police Search

and Rescue Helicopter .... 1.8 2.4 2.4 2.4

Streets Ahead and Homeshare - Additional

Investment13 .... (0.5) (0.5) (0.5) (0.5)

Youth Justice - Save the Children Bail

Program and Post-Detention Transition

Program .... 0.6 0.6 0.6 0.6

4.0 40.1 38.0 38.0 40.5

House of Assembly

House of Assembly Education Office .... 0.2 0.2 0.2 0.2

…. 0.2 0.2 0.2 0.2



2016-17)

Estimated)

Outcome)

2017-18)

)

Budget)

2018-19)

Forward)

Estimate)

2019-20)

Forward)

Estimate)

2020-21

Forward

Estimate1

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

Integrity Commission

Remuneration of the Integrity Commission

Board and the Chief Commissioner .... 0.1 0.1 0.1 0.1

…. 0.1 0.1 0.1 0.1

Justice

Community Education - Shared Economy .... 0.1 .... .... ....

Corrective Services Package - Suspended

Sentences .... 2.4 2.4 2.4 2.4

Corrective Services Package - Recurrent

Demand Analysis Specialist Resources .... 0.3 0.3 0.3 0.3

Corrective Services Package - Throughcare

and Reintegration .... 0.4 0.4 0.4 0.4

Eligible Persons Register .... 0.2 0.2 .... ....

Extension of Prison Infrastructure .... 0.3 1.1 1.1 1.2

Legal Assistance Services .... 1.3 1.3 .... ....

Local Provision Schedules .... 0.3 .... .... ....

Supreme Court Acting Judges 0.2 1.0 1.0 .... ….

Tasmanian Civil and Administrative Tribunal

(TASCAT) .... 0.1 .... .... ....

Tasmanian Prison Service - Current Cost and

Demand Pressure .... 4.0 4.0 4.0 4.0

0.2 10.4 10.7 8.2 8.3

Legislature-General

Heat, Light and Power .... 0.1 0.1 0.1 0.1

Joint Select Committee Enquiry - Future

Gaming Markets in Tasmania 0.1 0.1 .... .... ....

Public Accounts Committee Enquiry -

Government Owned Energy Entities 0.1 .... .... .... ....

Rent for Parliamentary Offices .... 0.1 0.1 0.1 0.1

Security Services 0.1 0.1 0.1 0.1 0.1

0.2 0.3 0.3 0.3 0.3

Office of the Governor

Security Arrangements .... 0.1 0.1 0.1 0.1

Upgrade Security Equipment .... 0.1 .... .... ....

…. 0.2 0.1 0.1 0.1



2016-17)

Estimated)

Outcome)

2017-18)

)

Budget)

2018-19)

Forward)

Estimate)

2019-20)

Forward)

Estimate)

2020-21

Forward

Estimate1

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

Police, Fire and Emergency Management

2016 Tasmanian Flood Review 0.4 .... .... .... ....

Aerial Fire Appliances .... 3.8 .... .... ....

Body Worn Video .... 0.8 0.7 0.7 0.7

Emergency Services Computer Aided

Dispatch System .... 1.8 2.0 2.0 2.0

Flood Taskforce 1.0 .... .... .... ....

Fuel Reduction Program .... .... 9.0 9.0 9.0

Health and Wellbeing Program .... 1.5 1.5 1.5 1.5

Shoplifting Prevention Awareness Campaign .... 0.1 .... .... ....

1.4 7.9 13.2 13.2 13.2

Premier and Cabinet

20th Anniversary of the Port Arthur Massacre

Event14 .... .... .... .... ....

Aboriginal Land Council of Tasmania -

wukalina Cultural Walk 0.3 0.3 .... .... ....

Aboriginal People and Young Tasmanians

(State Service Employment) .... 0.3 0.3 0.3 0.3

Basketball Tasmania .... 0.3 .... .... ....

Beaconsfield Hart Shaft Rectification Works 1.1 .... .... .... ....

Circular Head Community Wellbeing Centre .... .... .... .... 3.5

City Mission: E-Waste Recycling Facility .... 0.1 .... .... ....

Climate Action 21: Tasmania's Climate

Change Action Plan 2017-2021 .... 0.8 0.8 0.8 0.8

Community Participation and Appeals Fund .... 0.1 0.1 .... ....

Cyber Security Program .... 0.3 0.3 0.3 0.3

Devonport Golf Club .... 1.4 1.4 0.7 ....

Dial Regional Sports Complex Upgrade .... .... .... .... 3.5

Elphin Sports Centre .... 0.2 .... .... ....

Enhancing the Tasmanian Brand .... 0.5 .... .... ....

Federation of Ethnic Communities' Councils of

Australia Congress .... .... 0.1 .... ....

Food Vans - Additional Support .... 0.1 .... .... ....

Foodbank .... 0.1 0.1 0.1 0.1

Football Federation of Tasmania .... 0.3 0.3 0.3 0.3

Local Government Boards of Inquiry 0.3 .... .... .... ....

Local Government Governance .... 0.2 0.1 .... ....



2016-17)

Estimated)

Outcome)

2017-18)

)

Budget)

2018-19)

Forward)

Estimate)

2019-20)

Forward)

Estimate)

2020-21

Forward

Estimate1

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

Premier and Cabinet (continued)

Northern Stadium Strategy .... 0.1 .... .... ....

Oatlands Swimming Pool .... 0.8 0.8 0.4 ....

Physical Disability Sport .... 0.1 .... .... ....

Premier's Scholarship Fund15 .... 0.3 .... 0.1 0.1

Returned and Services League .... 0.1 .... .... ....

Risdon Vale Bike Collective16 .... 0.1 .... .... ....

Rugby Park .... 0.3 .... .... ....

Seniors and Active Ageing .... 0.3 .... .... ....

Tasmania Brand Skilled Migration Campaign .... 0.5 .... .... ....

Tasmanian Men's Shed Association Inc. .... 0.1 .... .... ....

Volunteering Tasmania - EV CREW 0.1 0.1 0.1 0.1 0.1

Welcome Home to Olympians and

Paralympians in 201617 .... .... .... .... ....

1.8 7.4 4.2 3.0 8.9

Primary Industries, Parks, Water and

Environment

Agri-Food Plan: Agricultural Landscapes

Rehabilitation Scheme 1.9 2.1 .... .... ....

Agri-Food Plan: Animal Welfare .... 0.4 0.4 0.4 0.4

Agri-Food Plan: Aquatic Animal Health .... 0.2 0.2 0.2 0.2

Agri-Food Plan: Bee Industry Futures18 .... .... .... .... ....

Agri-Food Plan: Biosecurity - Frontline

Services .... 0.2 0.2 0.2 0.2

Agri-Food Plan: Biosecurity - Invasive Species .... 0.5 0.5 0.5 0.5

Agri-Food Plan: Invasive Species - Cat

Management .... 0.4 0.4 0.4 0.4

Agri-Food Plan: POMS Industry Support .... 0.3 0.3 0.3 ....

Agri-Food Plan: Safe Farming Tasmania .... 0.2 0.2 0.2 0.2

Agri-Food Plan: Stock Underpass Pilot

Program .... 0.3 0.5 .... ....

Agri-Food Plan: Strategic Industry

Partnerships Program .... 0.3 0.3 0.3 0.3

Agri-Food Plan: TARFish .... 0.1 .... .... ....

Agri-Food Plan: Tasmanian Shellfish Quality

Assurance Program .... 0.2 0.2 0.2 0.2



2016-17)

Estimated)

Outcome)

2017-18)

)

Budget)

2018-19)

Forward)

Estimate)

2019-20)

Forward)

Estimate)

2020-21

Forward

Estimate1

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


Environment (continued)

Ben Lomond Ski Patrol19 .... .... .... .... ....

Bushfire Planning, Mitigation and Response .... 0.5 0.5 0.5 0.5

Container Deposit Scheme - Model

Development .... 0.1 .... .... ....

June Floods - Acute Riparian Recovery 0.5 1.7 .... .... ....

June Floods - Assistance Grants 2.8 .... .... .... ....

Lewisham Foreshore Soft Erosion Trial .... 0.1 .... .... ....

Maria Island Rediscovered .... 0.2 .... .... ....

Orange-bellied Parrot .... 0.2 0.2 0.2 0.2

Pacific Oyster Mortality Syndrome Response 1.0 .... .... .... ....

Tamar Estuary and Esk Rivers Program .... 0.1 0.1 0.1 ....

6.2 7.7 3.7 3.2 2.9

State Growth

A Tasmanian Youth Arts Strategy .... 0.4 0.4 0.4 0.4

A Workforce for Now and the Future .... 0.3 0.2 0.2 0.2

Additional Screen Production Grant Funding .... 0.3 .... .... ....

Constellation Netball Cup Launceston 0.2 .... .... .... ....

Continuation of Launceston 10 and Stan

Siejka Cycling Classic20 .... .... .... .... ....

Dark MOFO 1.9 1.9 1.9 1.9 1.9

Digital Ready for Business .... 0.2 0.3 0.3 0.3

Drysdale Centre of Excellence .... 1.1 2.1 .... ....

Employment Partnership: Jobs Action

Package .... 1.8 1.3 0.5 0.5

Enduro World Series 0.1 .... .... .... ....

Enterprize Hubs .... 0.3 0.3 0.3 0.3

Extension of Beacon Foundation Funding .... 0.2 .... .... ....

Forestry CSO (Non-commercial and Roads)21 .... 3.2 8.0 8.0 8.0

Forward Planning for Roads (including

Launceston Traffic Planning) .... 0.5 .... 0.5 0.5



2016-17)

Estimated)

Outcome)

2017-18)

)

Budget)

2018-19)

Forward)

Estimate)

2019-20)

Forward)

Estimate)

2020-21

Forward

Estimate1

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

State Growth (continued)

Global Education Strategy .... 0.9 0.7 0.7 0.7

India Engagement .... 0.2 0.2 .... ....

International Engagement .... 0.2 0.2 0.2 0.2

Kangaroo Bay International Hospitality

Training College .... 0.2 .... .... ....

Kentish Bus Service .... 0.2 0.2 .... ....

King Island Shipping 1.1 .... .... .... ....

Launceston Chamber of Commerce .... 0.2 .... .... ....

MAST Infrastructure - Woodbridge and Brid

River Jetties .... 0.6 0.6 .... ....

Mersey Forest Road - 2016 Floods 3.3 .... .... .... ....

Mining Sector Innovation .... 0.3 0.3 0.3 0.3

National Netball League Partnership 0.6 0.6 0.6 .... ....

Northern Cities Major Development Initiative -

Project Facilitation .... 0.2 0.2 .... ....

Northern Tasmania Development Corporation

(NTDC) .... 0.1 .... .... ....

Office of the Coordinator-General - Investment

Attraction and Major Projects Facilitation .... 0.6 .... .... ....

Population Growth Strategy .... 0.5 0.6 0.2 0.2

Rail Revitalisation Funding - Tranche Two .... .... .... 15.0 15.0

Small Business Grants to Support Apprentices

and Trainees .... 1.0 1.0 .... ....

Start-up Accelerator .... 0.5 0.5 .... ....

Strategic Growth Plan for Tasmania's Forest

Industries .... 0.5 0.5 0.5 0.5

Tasmanian Hospitality Association .... 0.1 0.1 0.1 ....

Tasmanian Museum and Art Gallery -

Organisational Reform .... 0.3 0.1 0.1 0.1

Tasmanian Small Business Council Support .... 0.1 .... .... ....



2016-17)

Estimated)

Outcome)

2017-18)

)

Budget)

2018-19)

Forward)

Estimate)

2019-20)

Forward)

Estimate)

2020-21

Forward

Estimate1

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


Ten Days on the Island .... 0.5 0.5 0.5 0.5

Tourism and Hospitality Supply .... 0.4 1.4 .... ....

UXC Additional Support 0.4 0.4 0.3 0.3 0.3

West Coast - Tourism Infrastructure .... 0.4 .... .... ....

Whitelion Jobs Initiative .... 0.2 0.2 0.2 ....

7.4 19.3 22.3 29.9 29.7

Tourism Tasmania

Tourism Marketing - Additional Funding .... 2.0 3.0 3.0 3.0

…. 2.0 3.0 3.0 3.0

Treasury and Finance

Commonwealth Grants Commission 2020

Methodology Review .... 0.2 0.5 0.2 ....

Office of the Superannuation Commission 4.2 16.7 15.9 15.9 15.9

Payroll Tax Rebate (Trainees, Apprentices

and Youth) .... 0.1 0.1 0.1 0.1

Water and Sewerage Industry Reform Support .... 0.6 0.3 .... ....

4.2 17.6 16.8 16.2 16.0

Total Policy Decisions 41.2 202.3 188.0 186.4 204.2



2016-17)

Estimated)

Outcome)

2017-18)

)

Budget)

2018-19)

Forward)

Estimate)

2019-20)

Forward)

Estimate)

2020-21

Forward

Estimate1

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


Depreciation 2.5 (1.4) 1.3 51.1 ....

Nominal Superannuation Interest Expense (51.9) (8.4) (9.6) (10.7) ....

Borrowing Costs .... (0.3) (0.3) (0.3) ....

Agency Expenditure

Director of Public Prosecutions 0.3 .... .... .... ....

Education 9.4 14.0 27.7 26.5 ....

Finance-General 28.0 (18.2) (31.8) (25.3) ....

Health and Human Services 17.9 (5.9) (14.5) (12.3) ....

Inland Fisheries Service (0.3) (0.2) 0.2 (0.1) ....

Integrity Commission 0.1 0.1 0.1 0.1 ....

Justice 5.3 2.1 2.0 1.4 ....

Legislative Council 0.2 0.2 0.2 0.2 ....

Marine and Safety Tasmania 2.4 (0.2) 0.1 (0.2) ....

Ministerial and Parliamentary Support 0.8 0.8 0.8 0.9 ....

Office of the Ombudsman (0.1) 0.2 0.1 0.1 ....

Police, Fire and Emergency Management (0.2) 1.0 0.8 0.2 ....

Premier and Cabinet 1.1 4.2 (2.0) (0.4) ....


Environment 3.8 7.1 7.0 4.9 ....

Royal Tasmanian Botanical Gardens 0.5 0.6 0.2 0.2 ....

State Fire Commission 0.9 0.7 9.7 9.6 ....

State Growth 21.5 58.2 13.0 63.0 ....

TasTAFE (0.1) …. 1.1 1.7 ....

Tasmanian Health Service 106.7 75.2 75.5 71.5 ....

Treasury and Finance 1.3 (0.4) (0.4) (0.5) ....

Other22 .... (1.3) (3.1) (1.0) ....

Total Agency Expenditure 199.5 138.2 86.7 140.5 ....

Total Parameter Adjustments 150.1 128.0 78.1 180.6 ....



2016-17)

Estimated)

Outcome)

2017-18)

)

Budget)

2018-19)

Forward)

Estimate)

2019-20)

Forward)

Estimate)

2020-21

Forward

Estimate1

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

TOTAL EXPENSES FROM TRANSACTIONS

VARIANCE (D) 191.3 330.3 266.1 367.0 ....

NET OPERATING BALANCE (A+C-D) 812.0 54.3 50.7 51.3 45.3

less NET ACQUISITION OF NON-FINANCIAL

ASSETS FROM TRANSACTIONS

Purchases of Non-Financial Assets from

Transactions

Policy Decisions23

Education

Boat Harbour Primary School .... 0.5 1.4 .... ....

Education Act Implementation - Capital .... .... 6.0 12.0 ....

Illawarra Primary School .... 0.5 2.4 .... ....

Lansdowne Crescent Primary School .... .... .... 1.1 3.6

Molesworth Primary School .... .... .... 0.3 1.6

Northern Economic Stimulus Package 1.0 11.3 (4.2) (8.1) ....

Queechy High School .... 2.0 .... .... ....

Southern Support School .... 0.4 3.9 .... ....

Spreyton Primary School .... .... .... 0.3 1.4

Taroona High School .... 1.1 3.9 .... ....

Year 7-12 Implementation Plan - Capital .... .... 1.5 1.5 1.5

1.0 15.7 14.9 7.1 8.1

Finance-General

Digital Transformation Priority Expenditure

Program8 .... 10.0 10.0 15.0 15.0

Digital Transformation - Project Unify12 .... 7.2 4.7 .... ....

Repatriation Hospital Capital10 …. 7.0 …. …. ….

.... 24.2 14.7 15.0 15.0


Health Service

Campbell Town Ambulance Station .... .... 0.1 1.2 1.6

Medical Cannabis Controlled Access Scheme -

Paediatric Epilepsy …. 0.1 …. …. ….

Mersey Community Hospital Capital Upgrades .... .... .... 15.0 20.0

Northern Economic Stimulus Package 5.0 (5.0) .... .... ....

Patients First - Stage 2 - New Hospital Beds and

Staff 1.7 …. …. …. ….



2016-17)

Estimated)

Outcome)

2017-18)

)

Budget)

2018-19)

Forward)

Estimate)

2019-20)

Forward)

Estimate)

2020-21

Forward

Estimate1

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


Health Service (continued)

St Helens Hospital Redevelopment 0.4 .... 3.6 .... ....

Statewide Hospital Critical Facility Upgrades .... 0.7 3.2 6.6 ....

Statewide Rural Health Facility Infrastructure

Upgrades .... .... .... 2.5 2.2

THS Infrastructure Upgrades .... .... .... 0.7 1.2

7.1 (4.2) 6.9 26.0 25.0

Justice

O’Hara Pre-Release Facility - Additional Units .... …. 0.8 0.7 ....

Mary Hutchinson Women's Prison - Mother and

Baby Unit …. …. …. 0.5 ….

Ron Barwick Minimum Security Prison - Cell

Recommissioning …. 1.0 2.0 …. ….

.... 1.0 2.8 1.2 ....

Legislative Council

Legislative Council Chamber OH&S Issues and

Disability Access .... 0.7 .... .... ....

.... 0.7 .... .... ....


Body Worn Video .... .... 0.1 .... 0.7

Large Vessel Replacement Program .... .... .... 1.2 3.5

.... .... 0.1 1.2 4.2


Environment

Biotoxin Testing Laboratory .... 1.2 .... .... ....

Cradle Mountain Visitor Experience .... 8.8 10.0 3.0 ....

June 2016 Floods - Parks Infrastructure 9.0 2.9 .... .... ....

Maria Island Rediscovered .... 0.9 0.8 .... ....

Orange-bellied Parrot Facility24 .... 2.5 .... .... ....

Tourism Infrastructure in Parks .... 4.0 4.0 .... ....

9.0 20.3 14.8 3.0 ....

State Growth

A Workforce for Now and the Future .... 0.1 0.1 0.1 0.1

Bonnet Hill Road .... 1.4 (1.4) .... ....

Flood Recovery - Roads Funding .... 4.7 .... .... ....



2016-17)

Estimated)

Outcome)

2017-18)

)

Budget)

2018-19)

Forward)

Estimate)

2019-20)

Forward)

Estimate)

2020-21

Forward

Estimate1

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


Freight Access Bridge Upgrades .... 4.8 5.4 4.4 4.5

Mowbray Connector .... 1.5 5.5 .... ....

Real-Time Traffic Congestion Management in

Hobart .... 1.8 .... .... ....

Roads and Bridges - 2016 Floods 4.0 .... .... .... ....

State funding for Australian Government Election

Commitments for Roads .... 2.1 5.5 .... ....

4.0 16.3 15.0 4.4 4.5


Office of the Superannuation Commission .... 0.6 0.6 0.6 0.6

.... 0.6 0.6 0.6 0.6

Total Policy Decisions 21.1 74.6 69.7 58.5 57.4


Education (7.9) 11.4 .... .... ....

Finance-General 6.2 6.7 6.1 1.9 ....

Health and Human Services (35.6) (41.3) 65.1 31.9 ....

Inland Fisheries Service (0.2) (0.1) (0.2) (0.2) ....

Justice (0.3) 0.4 .... .... ....

Marine and Safety Tasmania 0.8 0.6 0.6 .... ....

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

Premier and Cabinet 0.5 0.5 0.5 .... ....

Primary Industries, Parks, Water and Environment 1.8 1.6 0.9 0.8 ....

Royal Tasmanian Botanical Gardens 0.2 0.3 .... .... ....

State Fire Commission (1.7) (3.8) (2.2) 0.3 ....

State Growth (41.5) 74.5 19.0 (25.9) ....

TasTAFE 2.6 0.3 3.9 4.3 ....

Tasmanian Health Service 15.7 5.2 0.3 (1.1) ....

Treasury and Finance 0.3 0.9 .... .... ....

Provision for Future Infrastructure Investment .... (25.0) 15.0 30.0 ....

Total Parameter Adjustments (56.6) 32.1 109.1 42.0 ....



2016-17)

Estimated)

Outcome)

2017-18)

)

Budget)

2018-19)

Forward)

Estimate)

2019-20)

Forward)

Estimate)

2020-21

Forward

Estimate1

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

Total Purchases of Non-Financial Assets from

Transactions (E) (35.5) 106.7 178.8 100.6 ....

Gain/ (Loss) on Sale of Non-Financial Assets

Policy Decisions


Environment

Sale of Orange-bellied Parrot Facility24 .... 2.5 .... .... ....

Total Policy Decisions .... 2.5 .... .... ....


Less Total Sale of Non-Financial Assets from

Transactions (F) 1.0 4.7 1.6 2.0 ….

Depreciation - Total Parameter Adjustments (G) 2.5 (1.4) 1.3 51.1 ….

TOTAL NET ACQUISITION OF NON-FINANCIAL

ASSETS FROM TRANSACTIONS VARIANCE (H)

(E - F - G)

(39.0) 103.4 175.8 47.4 ….

FISCAL BALANCE (B + C - D - H) 613.1 (253.9) (229.2) 2.8 71.1

Notes: 1. Parameter adjustments for 2020-21 are not reflected in the Table as the 2020-21 Forward Estimate was not published

in the 2016-17 Budget. However, policy adjustments are reflected to show the full impact on the Budget and Forward Estimates.

2. The reduction in Betting Exchange Taxes and Levies in 2016-17 and over the Forward Estimates reflects the surrender by Betfair of its Tasmanian Gaming License.

3. The decrease in Duties in 2018-19 primarily reflects that Conveyance Duty on large commercial property transactions is forecast to reduce towards trend levels, which have been higher than usual in 2016-17 and are forecast to remain at elevated levels in 2017-18.

4. The increase in Land Tax primarily reflects a net increase in land values across the State, system enhancements leading to improvements in debt management and targeted compliance efforts.

5. The decrease in Payroll Tax over the Forward Estimates reflects lower forecasts for growth in average weekly earnings (AWE).

6. For further information on expense related policy decisions, refer to the relevant agency chapter in Government Services Budget Paper No 2.

7. The State contribution for the City Deal Launceston initiative includes funding for the City Heart, Tamar Estuary Management Taskforce and a Jobs Co-ordinator.

8. For further information on the policy, refer to the Department of Treasury and Finance chapter in Government Services Budget Paper No 2.

9. For further information on the policy, refer to the Department of State Growth chapter in Government Services Budget Paper No 2.

10. For further information on the policy, refer to the Department of Health and Human Services chapter in Government Services Budget Paper No 2.


11. For further information on the policy, refer to the Department of Justice chapter in Government Services Budget Paper No 2.

12. For further information on the policy, refer to the Department of Police, Fire and Emergency Management chapter in Government Services Budget Paper No 2.

13. While the movement recorded in the Policy and Parameter Statement for the Streets Ahead and Homeshare - Additional Investment is a negative amount in each year, this reflects the financial treatment of the redirection of the expenditure from the former Tasmanian Affordable Housing Limited Funding (TAHL) and represents an additional allocation to the Homeshare program.

14. An amount of $25 000 is included in 2016-17 for the 20th Anniversary of the Port Arthur Massacre Event. 15. An amount of $30 000 is included in 2018-19 for the Premier's Scholarship Fund. 16. An amount of $25 000 is included in 2016-17 for the Risdon Vale Bike Collective. 17. An amount of $15 000 is included in 2016-17 for the Welcome Home to Olympians and Paralympians from the Rio

Olympics and Paralympic Games event. 18. An amount of $30 000 is included in 2017-18 for the Agri-Food Plan: Bee Industry Futures. 19. An amount of $30 000 per annum is included over the Budget and Forward Estimates for the Ben Lomond Ski Patrol. 20. An amount of $35 000 per annum is included over the Budget and Forward Estimates for the Continuation of

Launceston 10 ($10 000 per annum) and Stan Siejka Cycling Classic ($25 000 per annum). 21. This reflects new funding provided in the 2017-18 Budget. Existing funding transferred from Finance-General is

reflected as a parameter variation. For further information see chapter 10 of Government Services Budget Paper No 2. 22. The movement in Other primarily reflects adjustments to eliminations and indexation as well as cost estimates

associated with the State's superannuation expense and liability. 23. For further information on Purchases of Non-Financial Assets from Transactions policy decisions refer to chapter 6 of

this Budget Paper. 24. The expenditure for the Orange-bellied Parrot Facility will be offset by proceeds from the sale of the existing property.


MAJOR REVENUE VARIATIONS

Policy Decisions

Special Dividend

The TT-Line Vessel Replacement Fund Act 2017 provides for the establishment of an account within the

Public Account to accrue funds to assist in meeting costs for the replacement of Spirit of Tasmania I and II.

The 2016-17 Budget provided for two $40 million special dividends from TT-Line Company Pty Ltd as initial

contributions to the TT-Line Vessel Replacement Fund. A further two $40 million Special Dividends from

TT-Line Company Pty Ltd in 2018-19 and 2019-20 and two $10 million contributions from the Consolidated

Fund in 2019-20 and 2020-21 are included in this Budget as further contributions to the Fund. At the end of

the Forward Estimates period (30 June 2021) the Fund will total $180 million plus accumulated interest.


Duties

Duties reflects changes in estimates for Conveyance Duty, Motor Vehicle Duty and Insurance Duty. The

increase in 2016-17 reflects a higher level of large commercial property transactions. In addition, there has

been a general increase to the base forecasts for Conveyance Duty, which is the main driver for the movement

in the Budget and Forward Estimates.


The major movements in Dividends relate to increases from the Motor Accidents Insurance Board, due to

favourable claims experience, and Hydro Tasmania in 2018-19 and 2019-20, due to an expected increase in

profitability. The 2016-17 Budget estimates reflected the uncertainty at the time as to how long it would take

for Hydro Tasmania to rebuild its water storages. These increases are offset by lower dividends from

Tasmanian Networks Pty Ltd due to a decrease in profitability as regulated revenues are expected to be lower.

The major increases in Income Tax Equivalents relate to the Motor Accidents Insurance Board and Hydro

Tasmania due to increased profitability, as noted above, and therefore also taxable income.

Further information relating to Dividend, Tax and Rate Equivalent Income is provided in chapter 5 of this

Budget Paper.

Tasmanian Public Finance Corporation Dividend

The one-off National Partnership Payment received from the Australian Government for the transfer of

ownership of the Mersey Community Hospital to the State (expected to occur by 30 June 2017), will be

transferred to the Tasmanian Public Finance Corporation (Tascorp) as a one-off equity contribution and will

be invested by Tascorp with any returns to be retained in the Mersey Community Hospital Fund.

Further information relating to the dividend is provided in chapter 5 of this Budget Paper.


GST Revenue

The movement in GST reflects changes to estimates and assumptions regarding the size of the GST pool,

Tasmania's population and its GST relativity.

Estimates of the size of the GST pool for distribution have been reduced, reflecting lower than expected GST

receipts, but this is partially offset by a small increase in Tasmania’s share of the national population.

The per capita relativity used for 2017-18 is the relativity recommended by the Commonwealth Grants

Commission and determined by the Australian Treasurer. The per capita relativities from 2018-19 onwards

are based on modelling by the Department of Treasury and Finance. For more information on GST receipts,

refer to chapter 5 of this Budget Paper.


Movements in National Partnership payments occur frequently and may reflect either changes to underlying

program agreements or the reallocation of funding to different years as advised by the Australian Government.

Information on major movements is provided below.

The increase in Environment in 2016-17 primarily reflects a change in timing of the receipt of funding from the

Australian Government for the second tranche of irrigation projects being undertaken by Tasmanian Irrigation

Pty Ltd under the Sustainable Rural Water Use and Infrastructure Program.

The increase in Healthcare in 2016-17 primarily reflects the reallocation of cash flows for programs, including

the Commonwealth Dental Health Program and Reducing Elective Surgery Waiting Lists in Tasmania.

The decrease in Infrastructure in 2016-17 and significant increase in 2017-18 reflects the reallocation of Roads

funding from 2016-17 to 2017-18 together with the Australian Government’s contribution to new road projects

announced during the 2016 Federal Election.

The increase in Natural Disaster Relief and Recovery Arrangements funding in 2016-17 and 2017-18 reflects

estimated receipts (at the time of finalisation of Budget data) from the Australian Government for costs

associated with the 2016 bushfire and flood events.


National Health Reform funding increases observed each year from the 2016-17 Estimated Outcome to

2019-20 primarily reflect an increase in Australian Government Activity Based Funding due to a revision of

Tasmanian Health Services activity profiles. Increases also reflect the impact of other adjustments made by

the Administrator of the National Health Funding Pool, such as movements in the National Efficient Price

(NEP).

The movement in Students First funding reflects increased Australian Government funding for both the

Government and Non-government education sectors. Students First allocations are provisional and subject

to change and to the finalisation of enrolments and loadings in each school year.


Agency Revenue

State Growth

The increase in revenue for the Department of State Growth primarily reflects a rise in mineral royalties due

to higher mineral prices and includes the continuation of the Road Safety Levy from 2017-18.

Tasmanian Health Service

The increase in revenue for the Tasmanian Health Service in 2016-17 and across the Forward Estimates is

primary driven by increased revenues in relation to the listing of Hepatitis C medications on the

Pharmaceutical Benefits Scheme. In addition, the increase in 2016-17 includes a one-off amount of $10 million

reflecting the expected transfer of ownership of the Mersey Community Hospital Facility from the Australian

Government to the State prior to 30 June 2017. This reflects the appropriate accounting treatment of the

transfer under which the asset value is recognised as Contributed Revenue within Other Revenue in the

General Government Income Statement. An equivalent value is then reflected in Purchases of Non-Financial

Assets within Net Acquisition of Non-Financial Assets. This results in the transfer of the value of the asset to

the General Government Balance Sheet.


MAJOR EXPENSE VARIATIONS

Policy Decisions

For detailed information on policy decisions, refer to agency chapters in Government Services

Budget Paper No 2.


Agency Expenditure

Education

The increase in expenditure for 2016-17 and over the Forward Estimates includes the impact of increased

Students First Specific Purpose Payment funding and increased funding associated with the 2014 election

commitment to extend high schools to Year 11 and 12.

Finance-General

The increase in 2016-17 includes changes in expenditure for the Tasmanian Risk Management Fund related

to the June 2016 flood event and Peacock Centre fire claim and duty related ex gratia payments where there

are corporate reconstruction transactions that do not result in a change of ownership. The decrease in

expenditure for 2017-18 and over the Forward Estimates reflects a transfer of the Forestry CSO expenditure

to the Department of State Growth and a reduction in service administration costs, following the transfer of

administration of defined benefit schemes to the Office of the Superannuation Commission within the

Department of Treasury and Finance.

Health and Human Services

The increase in expenditure for the Department of Health and Human Services in 2016-17 reflects revised

expenditure for a range of Commonwealth Own Purpose Expenditure Agreements and National Partnership

payments. The decrease over the Forward Estimates reflects revised estimates for Housing activities and the

transfer of the Child Health and Parenting Service to the Tasmanian Health Service.

Justice

The increase in expenditure for the Department of Justice in 2016-17 is associated with Working with

Vulnerable Persons registration; the rollout of the new Building Act and Continuing Professional Development

for contractors; and additional costs relating to Corrective Services.

Primary Industries, Parks, Water and Environment

The increase in expenditure for the Department of Primary Industries, Parks, Water and Environment reflects

the change in classification of Water and Sewerage Licence Fee expenditure of $600 000 per annum from

2016-17; revised Australian Government funding for the Tasmanian Wilderness World Heritage Area

Extension funding of $1.7 million in 2017-18 and 2018-19; and revised expenditure associated with the Three

Capes Track due to higher than anticipated visitor numbers.


State Growth

The increase in expenditure in 2016-17 and over the Forward Estimates reflects an updated funding profile

for the Northern Cities Major Development Initiative; a reclassification of $16.9 million in Australian

Government funding for roads infrastructure from Non-Financial Asset Purchases to Supplies and

Consumables Expense; the transfer of Forestry CSO expenditure from Finance-General and includes

expenditure associated with the continuation of the Road Safety Levy from 2017-18.


The major expense variations for the Tasmanian Health Service in 2016-17 and over the Forward estimates

period reflect additional expenditure in relation to the listing of Hepatitis C medication on the Pharmaceutical

Benefits Scheme and the expenditure of revised Activity Based Funding (ABF) and Block Funding.


MAJOR PURCHASES OF NON-FINANCIAL ASSETS

VARIATIONS

Policy Decisions

For detailed information on 2017-18 Budget Infrastructure Policy Decisions, refer to chapter 6 of this

Budget Paper.


Education

The movement for the Department of Education primarily reflects the reallocation of funding from 2016-17 to

2017-18 for Capital Investment Program projects to meet changed cashflow requirements including the

Parklands High School, East Launceston Primary School, Austins Ferry Primary School, and Windermere

Primary School.


The movement in Health and Human Services primarily reflects reallocation of cash flow estimates for the

Royal Hobart Hospital Redevelopment together with expenditure of funds carried forward from 2015-16 to

support initiatives under the Affordable Housing Action Plan.

State Growth

Movements primarily reflect the reallocation of funding from Non-financial Asset Purchases to Grant Expense

associated with the Northern Cities Major Development Initiative and the reallocation of cash flow estimates

for Australian Government Funded projects.


The increase in Purchases of Non-Financial Assets in 2016-17 primarily reflects the transfer of ownership of

the Mersey Community Hospital Facility from the Australian Government to the State, and expenditure carried

forward from 2015-16.

General Government Revenue 79

5 GENERAL GOVERNMENT

REVENUE

Key Issues

Total General Government Sector revenue is estimated to be $5 874.0 million in 2017-18, an

increase of $300.3 million above the 2016-17 Budget estimate of $5 573.7 million.

Key components of General Government Sector revenue in 2017-18 include:

– GST Revenue is estimated to be $2 387.4 million, an increase of $88.2 million above the 2016-17

Budget of $2 299.2 million;

– Australian Government Payments for Specific Purposes are estimated to be $1 251.6 million, an

increase of $30 million above the 2016-17 Budget of $1 221.6 million; and

– Taxation Revenue is estimated to be $1 128.5 million, an increase of $72.9 million above the

2016-17 Budget of $1 055.6 million.

Tasmania's share of revenue from Grants, including GST and Australian Government Grants for

Specific Purposes, equates to 62.7 per cent of total General Government sector revenue.


TOTAL REVENUE This chapter provides an overview of Revenue for the 2017-18 Budget and Forward Estimates. Table 5.1 lists

the major General Government Sector revenue sources.

Table 5.1: General Government Sector Revenue

2016-17)

)

Budget)

2017-18

)

Budget)

2018-19)

Forward)

Estimate)

2019-20)

Forward)

Estimate)

2020-21)

Forward)

Estimate)

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

Grants 3 634.6) 3 682.9 3 673.5 3 735.4 3 748.3

Taxation 1 055.6) 1 128.5 1 147.4 1 173.0 1 198.9

Sales of Goods and Services 352.9) 408.0 417.0 424.8 428.7

Fines and Regulatory Fees 96.5) 98.9 99.3 100.3 101.6

Interest Income 16.5) 19.6 17.6 16.0 17.2

Dividend, Tax and Rate Equivalent Income 263.8) 358.4 338.2 370.1 390.4

Other Revenue 153.8) 177.7 170.1 165.2 163.5

5 573.7) 5 874.0 5 863.0 5 984.8 6 048.7

In 2017-18, Total General Government Sector revenue is forecast to be $300.3 million higher than the 2016-17

Budget.

Tasmania's most significant source of funding is Grants revenue (including GST and Australian Government

Grants), which comprises 62.7 per cent of total revenue in 2017-18. State Own-Source Revenue accounts for

37.3 per cent of total revenue.

Chart 5.1 shows the composition of Total General Government Sector revenue over time.

Major revenue risks and sensitivities are discussed in chapter 1 of this Budget Paper. The major variances in

revenue compared to the 2016-17 Budget are discussed in the Policy and Parameter Statement in chapter 4

of this Budget Paper.


Chart 5.1: Composition of Total Revenue, 2007-08 to 2020-211

Notes: 1. Data reflects actual outcomes for 2007-08 to 2015-16 and the original Budget estimates for 2016-17. 2. Other Australian Government Grants includes Specific Purpose Payments and National Partnership Payments. 3. Other includes: Sales of Goods and Services; Fines and Regulatory Fees; Interest Income; Dividend, Tax and Rate

Equivalent Income; Other Revenue; and Other Grants and Subsidies.

.... 500

1 0001 5002 0002 5003 0003 5004 0004 5005 0005 5006 0006 500

2007

-08

2008

-09

2009

-10

2010

-11

2011

-12

2012

-13

2013

-14

2014

-15

2015

-16

2016

-17

2017

-18

2018

-19

2019

-20

2020

-21

$ m

illio

n

GST Grants Other Australian Government Grants Taxation Other

Forecasts

2 3


GRANTS Grants primarily reflect transfers of funding from the Australian Government and are estimated to be

$3 682.9 million in 2017-18. This is an increase of $48.3 million above the 2016-17 Budget of $3 634.6 million.

Table 5.2: Grants

2016-17

Budget

2017-18

Budget

2018-19

Forward

Estimate

2019-20

Forward

Estimate

2020-21

Forward

Estimate

$m $m $m $m $m

General Purpose Payments (Untied Funding) ) ) ) )

GST Revenue 2 299.2 2 387.4 2 467.0 2 508.8 2 577.5

Payments for Specific Purposes (Tied Funding)1

Specific Purpose Payments2

To the State 629.4 658.1 676.9 656.1 672.4

Through the State 237.7 253.9 263.3 272.7 282.4

867.1 912.0 940.3 928.9 954.9


To the State 283.2 266.6 140.9 174.6 91.1

Through the State 71.3 73.0 74.7 77.2 79.7

354.5 339.6 215.6 251.8 170.8

Total Payments for Specific Purposes 1 221.6 1 251.6 1 155.9 1 180.7 1 125.7

Other Grants and Subsidies3 113.8 43.9 50.7 46.0 45.2

Total 3 634.6 3 682.9 3 673.5 3 735.4 3 748.3

Notes: 1. Estimates of Specific Purpose Payments and some National Partnership Payments may differ from those published

in the Australian Government's 2017-18 Budget due to the need to finalise State estimates before the release of the Australian Government Budget.

2. Specific Purpose Payments include National Health Reform and Students First education reforms funding. 3. Other Grants and Subsidies primarily relate to payments to the State for Commonwealth Own Purpose Expenditure.

In accordance with the Intergovernmental Agreement on Federal Financial Relations (IGA), transfers from the

Australian Government fall into two categories:

General Purpose Payments (GPPs), which are 'untied' payments that can be used at the State's discretion.

The GST distribution is the only GPP received by Tasmania in 2017-18; and

conditional (tied) funding in the form of Payments for Specific Purposes, including Specific Purpose

Payments (SPPs), Reform Funding and National Partnership Payments (NPPs). These payments must

only be spent for purposes as agreed with the Australian Government.

The Australian Government also provides payments directly to State agencies through Commonwealth Own

Purpose Expenditure (COPEs). Most of these payments are made to the Department of Health and Human

Services and the Tasmanian Health Service.


These payments reduce by $69.9 million in 2017-18, largely due to the agreement by the Tasmanian

Government to resume ownership of the Mersey Community Hospital in exchange for a significant one-off

Australian Government payment of $730.4 million which is expected to occur by 30 June 2017. This payment

is included in the 2016-17 Estimated Outcome (see Appendix 3 of this Budget Paper).

The Australian Government Mersey Community Hospital payment will be transferred to the Tasmanian Public

Finance Corporation (Tascorp) as a one-off equity contribution and will be invested by Tascorp with any

returns to be retained in the Mersey Community Hospital Fund. The Government will introduce legislation to

require Tascorp to pay each year a dividend equal to the operating costs of the Mersey Community Hospital,

escalating at 3.5 per cent each year until cessation of the Fund. This dividend is shown in Table 5.9.

GST Revenue

GST Revenue is the largest single source of revenue for Tasmania representing 40.6 per cent of Total

General Government Sector revenue in 2017-18.

In accordance with the Intergovernmental Agreement on Federal Financial Relations, all GST Revenue

collected by the Australian Government is distributed amongst the states and territories. Each state's GST

entitlement is dependent on three factors: national GST collections, the state's per capita relativity and the

state's share of the national population.

The Commonwealth Grants Commission (CGC) makes annual recommendations to the Australian

Government Treasurer regarding each jurisdiction's relativity.

Tasmania has been assessed as having a higher per capita GST need than all other jurisdictions, except the

Northern Territory, and is a major beneficiary of the equalisation process, receiving $1.1 billion, or

approximately 81 per cent, more GST revenue in 2017-18 than its per capita share. This reflects the relatively

higher cost of service provision in the State and the below average capacity to raise revenue. Tasmania has

the second lowest assessed fiscal capacity and Western Australia has the strongest assessed fiscal capacity.

Further detail on the CGC's methodology is provided in the Guide to the Budget (available on the Treasury

website), and the Report on GST Revenue Sharing Relativities - 2017 Update (2017 Update Report), which

can be found on the CGC website at www.cgc.gov.au.

For the 2017-18 Budget, Treasury has used its own financial model to forecast GST revenues, as was the

case for the 2016-17 Budget. The model incorporates the latest CGC assessments and recommended

relativities, Australian Government forecasts of the GST pool and state populations, and state and territory

own-source revenue estimates.

Chart 5.2 below illustrates Tasmania's relativities since the introduction of the GST. The chart shows

Tasmania's forecast relativities returning to trend after rising rapidly until 2015-16, primarily as a result of the

additional royalty revenue generated in Western Australia and the other mining states during the mining boom.


Chart 5.2: Tasmanian GST Revenue Sharing Relativities, 2000-01 to 2020-211

Note: 1. CGC calculation of relativities prepared on a consistent basis, with healthcare grants (pre 2009-10) treated by inclusion

and five year averaging of single year relativities (prior to 2010-11) replaced with the current three year averaging method.

Table 5.3 shows GST Revenue estimates for the national pool and Tasmania.

Table 5.3: Tasmanian GST Revenue Estimates

2017-18

)

Budget

2018-19

Forward

Estimate

2019-20

Forward

Estimate

2020-21

Forward

Estimate

) ) ) )

National GST Collections ($m)1 62 340 65 590 67 670 71 540

Tasmania's GST Share (%)2 3.83 3.76 3.71 3.61

Tasmania's GST Revenue ($m)2 2 387 2 467 2 509 2 577

Notes: 1. The National GST Collections are preliminary 2017-18 Australian Budget estimates provided by the Australian

Government, due to the need to finalise State estimates before the release of the Australian Government Budget. 2. 2017-18 Budget is based on the actual relativity that will apply in 2017-18 as recommended by the CGC.

GST payments to Tasmania are expected to be $2 387.4 million in 2017-18. The growth in GST revenue over

the Forward Estimates to Tasmania reflects GST pool growth, offset by a gradual reduction in Tasmania’s

GST relativity and lower than average population growth.

After rising during the mining boom, Tasmania's GST relativity is forecast to return towards the long-term trend

over the Forward Estimates as a result of:

comparatively weaker own-source revenue growth forecast in Western Australia and other resource-rich

states;

1.45

1.50

1.55

1.60

1.65

1.70

1.75

1.80

1.8520

00-0

1

2001

-02

2002

-03

2003

-04

2004

-05

2005

-06

2006

-07

2007

-08

2008

-09

2009

-10

2010

-11

2011

-12

2012

-13

2013

-14

2014

-15

2015

-16

2016

-17

2017

-18

2018

-19

2019

-20

2020

-21

Rel

ativ

ity

Actual Forecasts Trend


slow population growth compared to the national average, which reduces the CGC’s assessment of

Tasmania’s need to invest in infrastructure; and

a slightly higher share of Commonwealth payments.

Chart 5.3 below illustrates the difference between the 2016-17 and 2017-18 State Budget estimates of GST

revenue to Tasmania over the Forward Estimates. The compound annual growth rate of GST revenue from

2017-18 to 2020-21 is 2.6 per cent.

Tasmania's share of the GST pool has increased slightly from approximately 3.79 per cent in 2016-17 to

3.83 per cent in 2017-18.

Chart 5.3: GST Revenue to Tasmania, 2007-08 to 2020-21

Note: 1. The 2017-18 Budget includes the 2016-17 Estimated Outcome for GST Revenue.

Commonwealth Payments for Specific Purposes

Specific Purpose Payments and Reform Funding

SPPs are an ongoing funding arrangement between the Australian Government and the States for service

delivery in a particular sector. There are currently three SPPs in operation: the National Skills and Workforce

Development SPP; the National Disability Services SPP; and the National Affordable Housing SPP.

Reform funding arrangements, namely the National Health Reform Agreement and the Students First

education reforms, replaced the former Health and Education SPPs as of July 2012 and January 2014

respectively.

1 500

1 600

1 700

1 800

1 900

2 000

2 100

2 200

2 300

2 400

2 500

2 600

2007

-08

2008

-09

2009

-10

2010

-11

2011

-12

2012

-13

2013

-14

2014

-15

2015

-16

2016

-17

2017

-18

2018

-19

2019

-20

2020

-21

$ m

illio

n

2016-17 Budget Actual 2017-18 Budget1


In 2017-18, Tasmania will receive an estimated $912.0 million in SPPs and national health and education

reform agreement funding. This is an increase of $44.9 million above the 2016-17 Budget estimate

of $867.1 million. The growth in SPPs and reform funding primarily reflects an increase in National Health

Reform and Students First education reform funding. The National Disability Services SPP ceases on

30 June 2019 with the commencement of the National Disability Insurance Full Scheme on 1 July 2019.

It is noted that estimates of SPPs and some National Partnership Payments may differ from those published

in the Australian Government's 2017-18 Budget due to the need to finalise State estimates before the release

of the Australian Government Budget.


National Partnership Payments (NPPs) are provided to each State through National Partnership Agreements

and Project Agreements. The agreements are usually time-limited and aim to support the delivery of projects,

facilitate reforms within the State or reward the State for delivering on national reforms.

In 2017-18, Tasmania will receive an estimated $339.6 million of funding in NPPs, a decrease of $14.9 million

from the 2016-17 Budget of $354.5 million. This primarily reflects the scheduled expiry of the Improving Health

Services in Tasmania and Building Australia’s Future Workforce - National Partnership on skills reform NPPs

at the end of 2016-17, and a smaller 2017-18 Redevelopment of the Royal Hobart Hospital payment. These

decreases are partially offset by increases in funding under the Land Transport Infrastructure Projects and

the Natural Disaster Relief and Recovery Arrangements NPP in response to the 2016 fire and flood events.

Table 5.4 details the Payments for Specific Purposes that Tasmania will receive from the

Australian Government in 2017-18 and over the Forward Estimates period.

Table 5.4: Commonwealth Payments for Specific Purposes1

2016-17

)

Budget

2017-18

)

Budget

2018-19

Forward

Estimate

2019-20

Forward

Estimate

2020-21

Forward

Estimate

$m $m $m $m $m

Specific Purpose Payments )

Health

National Health Reform2 359.1 379.7 389.5 399.2 409.0

Education )

Students First - Government Schools 178.8 185.8 191.1 196.5 203.0

Students First - Non-Government Schools 237.7 253.9 263.3 272.7 282.4

Total Education Specific Purpose Payments 416.5 439.7 454.4 469.2 485.4

National Skills and Workforce Development 31.3 31.4 34.4 31.5 31.5

)

National Disability Services 31.7 32.4 33.1 .... ....

National Affordable Housing 28.5 28.8 28.8 28.9 29.0

Total Specific Purpose Payments 867.1 912.0 940.3 928.9 954.9


Table 5.4: Commonwealth Payments for Specific Purposes1 (continued)

2016-17

)

Budget

2017-18

)

Budget

2018-19

Forward

Estimate

2019-20

Forward

Estimate

2020-21

Forward

Estimate

$m $m $m $m $m


Health

Health and Hospitals Fund

Redevelopment of the Royal Hobart Hospital 25.0 15.0 10.0 .... ....

Improving Health Services in Tasmania

Reducing elective surgery waiting lists in Tasmania 7.5 .... .... .... ....

John L Grove - LGH 5.0 .... .... .... ....

Essential vaccines 2.9 2.8 2.8 2.8 0.2

Expansion of the BreastScreen Australia Program 0.4 .... .... .... ....

Public dental services for adults .... 2.4 .... .... ....

Other3 …. 0.4 0.2 0.2 ....

Total Health National Partnerships 40.9 20.6 13.0 3.0 0.2

Education

Universal access to early childhood education 8.6 6.1 .... .... ....

National School Chaplaincy Program 2.2 2.2 .... .... ....

Independent Public Schools Initiative 0.6 .... .... .... ....

National quality agenda for early childhood education

and care

.... 0.3 .... .... ....

Online Safety program in schools .... 0.1 .... .... ....

Total Education National Partnerships 11.4 8.7 .... .... ....

Skills and Workforce Development

Building Australia's Future Workforce - National

Partnership on skills reform 11.6 .... .... .... ....

Total Skills and Workforce Development National

Partnerships 11.6 .... .... .... ....

Community Services (including Disability) )

DisabilityCare Australia Fund4 4.1 4.2 12.0 102.1 23.3

Transitioning Responsibilities for Aged Care and

Disability Services 10.1 10.5 10.8 .... ....

Pay Equity for the Social and Community Services

Sector 4.3 5.4 6.6 .... ....

Total Community Services (including Disability)

National Partnerships 18.5 20.1 29.4 102.1 23.3



2016-17

)

Budget

2017-18

)

Budget

2018-19

Forward

Estimate

2019-20

Forward

Estimate

2020-21

Forward

Estimate

$m $m $m $m $m

Affordable Housing

Homelessness 2.8 .... .... .... ....

Total Affordable Housing National Partnerships 2.8 .... .... .... ....

Infrastructure

Land Transport Infrastructure Projects

Road Component5 107.5 102.3 34.8 60.0 60.0

Rail Component 20.4 13.8 14.4 .... ....

Off-Network Projects - Road 15.5 39.6 18.8 2.1 ....

Black Spot Projects 8.3 4.9 1.6 .... ....

Bridges Renewal program 0.7 1.9 1.2 .... ....

Heavy Vehicle Safety & Productivity Program 1.1 1.0 0.8 .... ....

Asset Recycling Fund - New Investments 2.0 2.4 .... .... ....

Interstate Road Transport 0.4 0.4 0.4 0.4 0.4

Developing demand driver infrastructure for the

tourism industry 0.8 1.6 .... .... ....

Total Infrastructure National Partnerships 156.6 167.7 72.0 62.5 60.4

Environment

Sustainable Rural Water Use and Infrastructure

Program 18.7 19.0 14.0 .... ....

Management of the World Heritage Values of the

Tasmanian Wilderness 1.8 1.7 .... .... ....

Other6 .... 0.1 0.1 .... ....

Total Environment National Partnerships 20.5 20.8 14.1 .… .…

Other Services

Financial assistance to local governments - Financial

Assistance Grant program 71.3 73.0 74.7 77.2 79.7

Legal Assistance Services 5.7 5.9 5.9 5.9 6.0

Natural Disaster Relief and Recovery

Arrangements7 13.0 21.7 5.4 .... ....

Community Legal Centres 1.5 1.1 1.1 1.2 1.2

Bushfire Mitigation 0.4 .… .... .... ....

Provision of Fire Services 0.3 …. …. .... ....

Total Other Services 92.2 101.6 87.1 84.3 86.9

Total National Partnership Payments 354.5 339.6 215.6 251.8 170.8



2016-17

)

Budget

2017-18

)

Budget

2018-19

Forward

Estimate

2019-20

Forward

Estimate

2020-21

Forward

Estimate

$m $m $m $m $m

TOTAL PAYMENTS FOR SPECIFIC PURPOSES 1 221.6 1 251.6 1 155.9 1 180.7 1 125.7

Total to the State 912.6 924.7 817.8 830.8 763.5

Total through the State 309.0 326.9 338.0 349.9 362.1

1 221.6 1 251.6 1 155.9 1 180.7 1 125.7

Notes: 1. Estimates of Specific Purpose Payments and some National Partnership Payments may differ from those published

in the Australian Government's 2017-18 Budget due to the need to finalise State estimates before the release of the Australian Government Budget.

2. From 2017-18 to 2019-20, the Australian Government has agreed to continue funding for Public Hospital services using activity based funding, capped at 6.5 per cent per annum nationally. However, given there is uncertainty with the quantum of funding under the new arrangements, funding based on previous growth trends has been assumed.

3. Includes funding for OzFoodNet and National Bowel Cancer Screening - participant follow-up function. 4. Estimates of DisabilityCare Australia Fund payments included in the 2017-18 Budget and Forward Estimates reflect

the Australian Government’s initial offer as set out in the bilateral transition agreement Tasmania signed in December 2015.

5. Provision included in 2019-20 and 2020-21 for future road funding on the expiry of the current agreement. 6. Includes funding for the National Whale Stranding Action Plan and Managing established pest animals and weeds. 7. Includes $36 000 funding for 2017-18 under the Natural Disaster Relief - Fire agreement.


STATE TAXATION State Taxation revenue is the main source of own-source revenue and comprises 19.2 per cent of total

revenue in 2017-18.

In 2017-18, State Taxation revenue is forecast to be $72.9 million higher than the 2016-17 Budget, primarily

due to increases in Conveyance Duty and Land Tax. The increase in Conveyance Duty is driven by growth in

residential property prices and transaction volumes while the increase in Land Tax reflects a net increase in

land values across the State, system enhancements leading to improvements in debt management and

targeted compliance efforts.

State Taxation revenue is forecast to grow by $70.4 million (or by a compound annual growth rate of

2.0 per cent) from 2017-18 to 2020-21, due mainly to growth in tax bases for Payroll Tax and Land Tax (there

is no change in the rate structure of either tax).

Table 5.5 provides details of the components of the State Taxation estimates. Definitions of the State taxes,

including relevant legislation, can be found in the Glossary section of the Guide to the Budget.

Table 5.5: State Taxation 2016-17 2017-18 2018-19 2019-20 2020-21

Budget Budget

Forward

Estimate

Forward

Estimate

Forward

Estimate

$m $m $m $m $m

Payroll tax 331.1 338.7 349.2 360.3 371.0

Taxes on property

Land tax 93.8 105.2 107.9 111.4 114.8

Fire service levies1 59.4 60.3 62.6 65.1 67.6

Government guarantee fees 21.5 16.9 18.2 16.8 16.7

Conveyance duty2 191.2 246.8 241.6 244.0 246.3

365.9 429.2 430.3 437.3 445.4

Taxes on the provision of goods and services

Gambling taxes

Casino tax and licence fees 56.4 54.9 55.0 55.2 55.6

Betting exchange taxes and levies3 3.4 .... .... .... ....

Lottery tax 30.6 30.4 30.9 31.4 32.0

Totalizator wagering levy 7.3 7.3 7.5 7.7 7.8

Insurance duty 84.7 87.3 89.6 92.0 94.5

182.5 179.9 183.0 186.3 189.9


Table 5.5: State Taxation (continued)

2016-17 2017-18 2018-19 2019-20 2020-21

Budget Budget

Forward

Estimate

Forward

Estimate

Forward

Estimate

$m $m $m $m $m

Taxes on the use of goods and services

Vehicle registration fees 40.4 42.1 43.4 44.7 46.0

Motor vehicle fees and taxes

Motor vehicle duty 42.9 42.9 42.9 42.9 42.9

Motor tax 85.0 87.7 90.0 92.4 94.8

Motor vehicle fire levy 7.8 8.0 8.5 9.0 9.0

176.1 180.7 184.8 189.0 192.7

TOTAL STATE TAXATION 1 055.6 1 128.5 1 147.4 1 173.0 1 198.9

Notes: 1. Fire service levies are reported as a tax for the purposes of the Uniform Presentation Framework. However, all

revenues go directly to the State Fire Commission. 2. Conveyance duty is forecast to reduce slightly in 2018-19 due to an expected return towards trend levels of large

commercial property transactions, which have been higher than usual in 2016-17 and are forecast to remain at elevated levels in 2017-18.

3. The reduction in Betting exchange taxes and levies from 2017-18 reflects the surrender by Betfair of its Tasmanian Gaming Licence.


Chart 5.4 shows that the 2017-18 Budget and Forward Estimates have increased compared to the levels

forecast in the 2016-17 Budget. This increase has been largely driven by Conveyance Duty due to growth in

residential property prices and transaction volumes.

Chart 5.4: State Taxation Revenue, 2009-10 to 2020-21

Note: 1. This includes the 2016-17 Estimated Outcome for State Taxation Revenue. The increase in the 2016-17 Estimated

Outcome compared to the 2016-17 Budget is due mainly to higher than expected revenue from Conveyance Duty and Land Tax.

750

800

850

900

950

1 000

1 050

1 100

1 150

1 200

2009

-10

2010

-11

2011

-12

2012

-13

2013

-14

2014

-15

2015

-16

2016

-17

2017

-18

2018

-19

2019

-20

2020

-21

$ m

illio

n

Actual 2016-17 Budget 2017-18 Budget1


Tax Expenditure Statement

This statement provides an estimate of the revenue the Government has forgone, or the financial benefit

obtained by taxpayers, through concessions, benefits and incentives the Government provides through the

tax system. Tax expenditures have been estimated for the main revenue lines of payroll tax, land tax and

conveyance duty.

Methodology

Tax exemptions, rebates and concessions are measured based on the revenue foregone approach, where

the value of the revenue that would have been received if the standard rate of tax had been applied is

estimated.

The methodology does not allow for any behavioural changes that may result if an exemption, rebate or

concession was removed. The approach also does not allow for potential tax rate changes that may result if

a tax exemption, rebate or concession were removed.

Where thresholds are removed, the resulting measure of expenditure is labelled a tax free threshold in the

table below. The tax expenditure, or revenue foregone, associated with providing tax free thresholds has been

calculated for payroll tax.

All other expenditure measures included in Table 5.6 are measured as deviations from the current tax settings.

Table 5.6: Estimated Major Tax Expenditures 2016-17 2017-18

$m $m

Payroll Tax1

Tax-free threshold 215.0 191.9

Educational institutions exemption 1.2 15.3

Health care service provider exemptions 1.1 4.7

Employer payroll tax rebate for additional positions created 1.7 4.2

219.0 216.1

Land Tax2

Principal place of residence exemption 111.2 116.9

Primary production land exemption 79.8 95.4

Religious bodies, charitable institutions, or educational institutions exemption 6.7 6.6

Other3 3.7 3.8

201.4 222.7


Table 5.6: Estimated Major Tax Expenditures (continued) 2016-17 2017-18

$m $m

Conveyance Duty4

Ex gratia relief provided for corporate reconstructions 2.0 0.7

Family farm transfers 2.0 2.3

Transfer of public road or park/garden to council 1.8 2.4

Relationship breakdown or spouse and significant relationship transfers5 11.2 13.2

Other6 3.4 3.4

20.4 22.0

TOTAL 440.8 460.8

Notes: 1. While the 2016-17 estimates reflect the approach used for the 2016-17 Budget, the 2017-18 estimate for Payroll Tax

expenditure reflects the use of all wages paid in Tasmania based on 2015-16 Work Cover data. Estimates are based on the expected growth in Payroll Tax revenue.

2. The Land Tax base is all freehold land in Tasmania in 2016-17. Estimates are based on the expected growth in Land Tax revenue. Land classified as principal place of residence (PPR) and primary production land (PPL) is charged a nil rate of Land Tax. Property used for religious, charitable or educational purposes is exempt from Land Tax.

3. Comprises land owned by the Commonwealth, aged care providers and charitable organisations. 4. The Conveyance Duty tax base is comprised of concessional or exempt properties transferred in 2015-16. Estimates

are based on the expected growth in Conveyance Duty revenue. Not all exempt transactions are recorded and not all valuation data is available, therefore the estimates are likely to be understated.

5. The estimate for 2017-18 includes transfers under the Relationship Act 2003 between carers and relatives which was previously included in ‘Other’.

6. Comprises transfers to a special trustee under section 37 of the Duties Act 2001 and instances where there is no change in beneficial ownership.


OTHER REVENUE SOURCES

Sales of Goods and Services

Revenue from the Sales of Goods and Services is estimated to be $408.0 million in 2017-18, an increase of $55.1 million above the 2016-17 Budget of $352.9 million.

Table 5.7 details the major components of revenue from the Sales of Goods and Services.

Table 5.7: Sales of Goods and Services1

2016-17) 2017-18) 2018-19) 2019-20) 2020-21)

Budget) Budget)

Forward)

Estimate)

Forward)

Estimate)

Forward)

Estimate)

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

Departmental Fees and Recoveries

Education 36.8) 37.3) 37.6) 38.3) 38.8)

Finance-General 0.1) 0.1) 0.1) 0.1) 0.1)

Health and Human Services 69.0) 68.2) 68.5) 69.3) 70.3)

Justice 3.8) 3.9) 4.0) 4.1) 4.2)

Marine and Safety Tasmania 3.9) 5.5) 3.9) 3.0) 5.2)

Police, Fire and Emergency

Management 2.1) 2.3) 2.3) 2.3) 2.3)

Premier and Cabinet 8.8) 9.4) 9.4) 9.5) 9.5)


Environment2 40.8) 45.3) 45.9) 46.4) 47.1)

State Fire Commission 6.0) 6.1) 6.2) 6.4) 6.5)

State Growth 9.4) 9.5) 9.6) 9.7) 9.8)

Tasmanian Audit Office 5.6) 5.7) 5.7) 5.7) 5.7)

Tasmanian Health Service3 140.3) 187.6) 195.8) 201.4) 199.7)

TasTAFE 24.5) 25.7) 26.4) 27.2) 28.0)

351.1) 406.5) 415.4) 423.3) 427.0)

Other Sales of Goods and Services 1.8) 1.5) 1.5) 1.6) 1.6)

TOTAL SALES OF GOODS AND

SERVICES 352.9) 408.0) 417.0) 424.8) 428.7)

Notes: 1. The information provided in this section may differ from the Sales of Goods and Services for each agency in

Government Services Budget Paper No 2 due to the elimination of inter-agency transactions during the consolidation process.

2. The increase in 2017-18 and the Forward Estimates primarily reflects the recognition of revenue associated with the Three Capes Track.

3. The increase in 2017-18 and over the Forward Estimates primarily reflects new funding associated with the listing of Hepatitis C medications on the Pharmaceutical Benefits Scheme.


Fines and Regulatory Fees

Revenue from Fines and Regulatory Fees is estimated to be $98.9 million in 2017-18, an increase of

$2.4 million above the 2016-17 Budget of $96.5 million. Table 5.8 details the major components of Fines and

Regulatory Fees.

Table 5.8: Fines and Regulatory Fees1

2016-17) 2017-18) 2018-19) 2019-20) 2020-21)

Budget) Budget)

Forward)

Estimate)

Forward)

Estimate)

Forward)

Estimate)

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

Fines

Commitment to Increase Fines Revenue 3.0 3.0 3.0 3.0 3.0

Other Fines2 21.1) 21.1 20.7 20.7 20.8

24.10 24.1) 23.7) 23.7) 23.8)

Fees

Abalone Licences 5.4) 5.9) 5.9) 6.0) 6.1)

Water Licence Fees 1.9) 2.0) 2.0) 2.1) 2.1)

Environment Fees 4.7) 4.7) 4.8) 4.8) 4.9)

Drivers Licences 7.2) 7.0) 7.1) 7.2) 7.3)

Photo Licence Fees 1.7) 1.7) 1.8) 1.8) 1.8)

Vehicle Inspection Services Fees3 ....) ....) ....) ....) 0.1)

Quarantine Fees 1.2) 1.2) 1.3) 1.3) 1.4)

Consumer Affairs Office Regulatory

Fees 0.6) 0.6) 0.6) 0.6) 0.6)

Magisterial Courts Regulatory Fees 1.2) 0.7) 0.7) 0.7) 0.7)

Registrar-General Regulatory Fees 1.9) 1.9) 1.9) 2.0) 2.0)

Supreme Court Regulatory Fees 0.8) 1.3) 1.3) 1.4) 1.4)

Other Regulatory Fees4 45.7) 47.7) 48.1) 48.7) 49.5)

72.3) 74.8) 75.6) 76.5) 77.9)

TOTAL FINES AND REGULATORY

FEES 96.5) 98.9) 99.3) 100.3) 101.6)

Notes: 1. The information provided in this section may differ from the Fines and Regulatory Fees for each agency in Government

Services Budget Paper No 2 due to the elimination of inter-agency transactions during the consolidation process. 2. Other Fines is primarily comprised of fines collected by the Department of Justice, Inland Fisheries Service and the

Department of Police, Fire and Emergency Management. 3. Vehicle Inspection Services Fees are estimated to be $47 000 in 2017-18, increasing to $48 000 in 2018-19, $49 000

in 2019-20 and $50 000 in 2020-21. This amount does not appear in the Table until 2020-21 due to rounding. 4. Other Regulatory Fees includes: the Tasmanian Economic Regulator; the Community Support Levy; and various other

fees collected by agencies, such as recreational fishing licence fees.


Interest Income

Interest Income is estimated to be $19.6 million in 2017-18, an increase of $3.1 million compared to the

2016-17 Budget estimate of $16.5 million. The increase reflects higher interest rates.


Dividend, Tax and Rate Equivalent Income is estimated to be $358.4 million in 2017-18, an increase of

$94.6 million compared to the 2016-17 Budget estimate of $263.8 million. This increase is largely due to the

forecast dividend payable by Tascorp of $78.1 million in 2017-18 equal to the operating costs of the Mersey

Community Hospital (as detailed in the Grants section of this Chapter).

Chart 5.5: Dividend, Tax and Rate Equivalent Income, 2009-10 to 2020-211

Note: 1. Data reflects actual outcomes for 2009-10 to 2015-16 and the original Budget estimates for 2016-17.

....

50

100

150

200

250

300

350

400

450

2009

-10

2010

-11

2011

-12

2012

-13

2013

-14

2014

-15

2015

-16

2016

-17

2017

-18

2018

-19

2019

-20

2020

-21

$ m

illio

n

Forecasts


Table 5.9: Dividend, Tax and Rates Equivalent Income1 2016-17) 2017-18) 2018-19) 2019-20) 2020-21)

Budget) Budget)

Forward)

Estimate)

Forward)

Estimate)

Forward)

Estimate)

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

Dividends

Aurora Energy Pty Ltd2 20.9) 16.9 19.3 17.5 16.8

Hydro Tasmania3 ….) ….) 12.0 30.1 73.6

Motor Accidents Insurance Board4 43.8) 56.9 46.4 38.1 32.5

Tasmanian Networks Pty Ltd5 59.5) 73.5 30.1 38.9 43.3

Tasmanian Ports Corporation6 ....) 3.7 5.1 9.3 9.6

Tasmanian Public Finance Corporation7 5.1) 4.0 4.0 0.2 1.4

129.4) 155.0 116.9 134.1 177.2

Special Dividends

TT-Line Company Pty Ltd8 40.0 40.0 40.0 40.0 ….

40.0 40.0 40.0 40.0 ….

Mersey Community Hospital Dividend

Tasmanian Public Finance Corporation9 …. 78.1 80.9 83.7 86.6

…. 78.1 80.9 83.7 86.6

Taxation Equivalents

Aurora Energy Pty Ltd 7.2 9.2 8.3 8.0 7.9

Hydro Tasmania10 7.2 11.4 18.4 35.0 43.1

Motor Accidents Insurance Board 6.2 17.7 17.1 18.4 19.6

Public Trustee …. 0.1 …. …. ….

Tasmanian Networks Pty Ltd11 56.2 31.8 35.8 37.9 41.7

Tasmanian Ports Corporation Pty Ltd12 1.9 2.4 4.7 4.8 5.9

Tasmanian Public Finance Corporation7 4.4 5.0 4.8 3.6 3.8

TT-Line Company Pty Ltd13 7.0 3.4 6.8 0.1 ….

90.2 81.0 96.0 107.8 122.0

Rates Equivalents

Hydro Tasmania 4.2) 4.3 4.4 4.5 4.6

4.2) 4.3 4.4 4.5 4.6

TOTAL DIVIDEND TAX AND RATE

EQUIVALENT INCOME 263.8) 358.4 338.2 370.1 390.4

Notes: 1. All Dividend, Tax and Rate Equivalent Income is reported on an accrual basis for all years. 2. The reduction in Dividends payable by Aurora Energy Pty Ltd in 2017-18 is due to lower profit estimates due to the

Tasmanian Economic Regulator's Final 2016 Retail Price Determination.


3. The increased dividends from Hydro Tasmania are due to improved operating conditions subsequent to the Basslink outage and low inflow period during 2015-16. The business will make a gradual return to its normal dividend policy over the Budget period. A zero dividend is still expected in 2017-18 but the business will return to a full dividend payment by 2020-21. The recent significant increase in wholesale electricity prices was not factored into Hydro Tasmania's returns to government in the 2017-18 Budget.

4. The increase in Dividends from the Motor Accidents Insurance Board in 2017-18 reflects the expectation of increased profitability in 2016-17, predominately due to lower claims expenses. The gradual reduction in Dividends from 2018-19 reflects the impact of returning to a 50 per cent dividend payout ratio on the MAIB’s five year rolling average dividend policy.

5. The decline in Dividends from Tasmanian Networks Pty Ltd in 2018-19 reflects the forecast decrease in regulated distribution and transmission revenues over the period.

6. The increase in Dividends and Income Tax Equivalents from Tasmanian Ports Corporation Pty Ltd across the Budget and Forward Estimates period reflects the progressive return to profitability as the community asset maintenance program concludes and forecast freight volumes increase.

7. Tascorp is subject to a fixed cash lump sum dividend and income tax equivalent regime. In addition, discretionary dividends can be paid if circumstances warrant. The reduction in 2019-20 reflects that no additional discretionary dividends are expected to be paid.

8. The Special Dividends from TT-Line Company Pty Ltd are contributions from the company to be deposited into the TT-Line Vessel Replacement Fund for the purpose of accruing funds for the future replacement of the TT-Line passenger ferries.

9. The one-off payment received by the Tasmanian Government for resuming ownership of the Mersey Community Hospital is to be transferred to Tascorp as a one-off equity contribution and will be invested by Tascorp, with an annual dividend to be paid equal to the indexed operating costs of the Mersey Community Hospital from 2017-18 until cessation of the Mersey Community Hospital Fund.

10. The increase in Income Tax Equivalents from Hydro Tasmania across the Budget and Forward Estimates period reflect improved operating conditions and an increase in profitability following the Basslink outage and low inflow period during 2015-16. The recent significant increase in wholesale electricity prices was not factored into Hydro Tasmania's returns to government in the 2017-18 Budget.

11. The decrease in Income Tax Equivalents from Tasmanian Networks Pty Ltd in 2017-18 is the result of reduced profitability due to lower forecast regulated revenues.

12. The increase in Income Tax Equivalents from Tasmanian Ports Corporation Pty Ltd across the Budget and Forward Estimates period reflects the progressive return to profitability as the community asset maintenance program concludes and forecast freight volumes increase.

13. Income Tax Equivalents for TT-Line Company Pty Ltd across the Budget and Forward Estimates period are driven by expected movements in the exchange rate which affect the valuation of the vessels and no Income Tax Equivalents are expected from 2020-21 due to the application of a shipping income tax exemption.


Other Revenue

Other Revenue is anticipated to be $177.7 million in 2017-18, an increase of $23.9 million above the

2016-17 Budget of $153.8 million.

Table 5.10 lists the sources of Other Revenue.

Table 5.10: Other Revenue1

2016-17)

Budget)

2017-18)

Budget)

2018-19)

Forward)

Estimate)

2019-20)

Forward)

Estimate)

2020-21)

Forward)

Estimate)

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

Mineral Royalties2 20.3) 41.1) 38.8) 36.3) 34.5)

Regional Water Authority Licence Fees 2.3) 2.3) 2.3) 2.3) 2.3)

Other Revenue by Agency

Education 25.9) 27.2) 27.5) 27.8) 27.0)

Finance-General3 3.6) 10.2) 3.6) 3.6) 3.6)


Justice 22.7) 23.7) 26.4) 24.5) 24.9)

Police, Fire and Emergency Management 11.2) 10.8) 10.6) 10.0) 10.0)


Primary Industries, Parks, Water and Environment 1.5) 2.3) 2.3) 2.3) 2.3)

State Fire Commission 1.4) 1.4) 1.5) 1.5) 1.5)

State Growth 2.0) 3.2) 2.0) 2.0) 2.0)

Treasury and Finance 1.3) 1.4) 1.3) 1.0) 1.0)

Tasmanian Health Service4 30.6) 22.4) 22.4) 21.7) 21.7)

Other5 1.7) 2.7) 2.5) 2.5 2.6)

TOTAL OTHER REVENUE 153.8) 177.7) 170.1) 165.2) 163.5)

Notes: 1. The information provided in this section may differ from Other Revenue estimates for each agency in Government

Services Budget Paper No 2 due to the elimination of inter-agency transactions during the consolidation process. 2. The increase in Mineral Royalties across the Budget and Forward Estimates reflects a rise in mineral prices, particularly

iron ore, based on advice from Mineral Resources Tasmania. 3. The increase to revenue to Finance-General in 2017-18 primarily reflects the State's current estimate pursuant to

property catastrophe insurance for covered items damaged during the June 2016 flood event. 4. The decrease in Tasmanian Health Service in 2017-18 is primarily due to the completion of the Training More Specialist

Doctors initiative, which was funded by the Australian Government through the medical professional colleges. 5. Other includes: The Office of the Director of Public Prosecutions, Inland Fisheries Service, Ministerial and

Parliamentary Support, Office of the Ombudsman, Royal Tasmanian Botanical Gardens, Tasmanian Audit Office and Tourism Tasmania.


6 INFRASTRUCTURE

INVESTMENT

Key Issues

The 2017-18 Budget commits over $2 billion in funding over the Budget and Forward Estimates period

to support infrastructure development across Tasmania, with a further $245.2 million in new infrastructure

funding included in the Budget.

The Government maintains a strong focus on ensuring that infrastructure investment within Tasmania is

directed towards projects that:

harness the existing strengths of the Tasmanian economy;

stimulate economic activity and jobs growth across all areas of the State; and

lead to a more efficient service delivery across both the private and public sectors.

Over $500 million in funding for hospitals, health and ICT-related infrastructure has been provided in this

Budget. The Government continues to progress Tasmania's largest ever health infrastructure project with

the Royal Hobart Hospital Redevelopment being allocated funding of $389 million over the 2017-18

Budget and Forward Estimates period.

The Government has allocated $117 million to fund schools and education infrastructure over the Budget

and Forward Estimates period. This includes new funding of $28.8 million for primary and high school

upgrades and continued support for the Government's Year 7 - 12 Implementation Plan.

Over $800 million in funding has been provided for roads and rail infrastructure over the Budget and

Forward Estimates (including a provision of $120 million for future Australian Government Roads

Funding). The Roads Program includes new funding of $19.1 million for Freight Access Bridges,

$7 million for the Mowbray Connector and $1.8 million for Real-Time Traffic Congestion Management in

Hobart. The Roads Program also reflects the Government's ongoing commitment to the $500 million,

10 year, Midland Highway upgrade project and includes more than $250 million in ongoing road

maintenance projects over the Budget and Forward Estimates period.


OVERVIEW Over the 2017-18 Budget and Forward Estimates period, the Government will invest over $2 billion in vital

community infrastructure projects, of which $1.6 billion has been allocated to key infrastructure projects,

including:

schools and education ($117.0 million);

hospitals and health ($493.7 million);

human services and housing ($120.3 million);

law and order ($23.5 million);

roads and rail ($707.2 million);

ICT to support frontline services ($67.5 million);

tourism, recreation and culture ($39.0 million); and

other infrastructure ($18.7 million).

The $2 billion General Government Sector infrastructure investment program includes state funding for

co-funded (Australian and State Government) roads projects, the Government's Roads for Our Future

Program. In accordance with established Budget management practice it also includes an unallocated

provision for future infrastructure investment. A general provision of $335 million has been set aside over the

2017-18 Budget and Forward Estimates period to be allocated to future infrastructure investment projects or

used to provide capacity to meet cost variation and the impact of the re-scheduling of projects. A separate

provision of $120 million has also been included for additional Australian Government roads funding (pending

finalisation of the next five year agreement). This is based on Australian Government roads funding over

recent years and provides a more accurate estimate of the likely level of infrastructure expenditure that will

occur over the Forward Estimates period.

The investment of $2 billion in infrastructure over a four year period is significant and is above long-term

historical infrastructure investment levels. It is essential that a strong Budget position is achieved in order to

facilitate the funding of infrastructure investment on a sustainable basis. The infrastructure program has been

formulated having regard to the Government's Fiscal Principles contained in its Fiscal Strategy and will deliver

on Strategic Action 5, namely, infrastructure investment will maintain existing assets, respond to economic

and population growth and reflect the changing needs of the community.


Chart 6.1 outlines the infrastructure investment from 2006-07 to 2016-17 and the 2017-18 Budget and

Forward Estimates. The chart illustrates the provision for future infrastructure investment and future Australian

Government roads funding.

Chart 6.1: Infrastructure Investment, 2006-07 to 2020-21

....

100

200

300

400

500

600

700

800

2006

-07

2007

-08

2008

-09

2009

-10

2010

-11

2011

-12

2012

-13

2013

-14

2014

-15

2015

-16

2016

-17

2017

-18

2018

-19

2019

-20

2020

-21

$ m

illio

n

Actual Infrastructure Investment Allocated Infrastructure Investment

Potential Future Infrastructure Investment Provision for Future Aust Govt Roads Funding


INFRASTRUCTURE INVESTMENT PROJECTS BY

AGENCY Table 6.1 details infrastructure investment expenditure by agency, the provision for future infrastructure

investment and estimated future Australian Government Roads Funding.

Table 6.1: Infrastructure Expenditure by Agency1

2016-17

Budget

2017-18

Budget

2018-19

Forward

Estimate

2019-20

Forward

Estimate

2020-21

Forward

Estimate

$m $m $m $m $m

Education 56.2 48.9 32.9 24.4 8.1

Finance-General …. 27.7 18.2 15.0 15.0

Health and Human Services 181.4 243.3 234.0 84.5 45.2

Justice 1.9 2.1 3.7 1.7 ….

Legislative Council …. 0.7 …. …. ….

Legislature-General 0.9 …. …. …. ….

Marine and Safety Tasmania …. 0.6 0.6 …. ….

Police, Fire and Emergency Management 17.0 8.0 1.3 2.5 4.2

Premier and Cabinet 1.1 2.1 0.3 0.3 0.3

Primary Industries, Parks, Water and Environment 10.5 23.5 16.0 3.6 0.6

State Growth 262.7 294.6 217.9 98.7 96.1

TasTAFE …. 2.2 3.4 …. ….

Treasury and Finance 3.2 3.1 1.5 …. ….

ALLOCATED INFRASTRUCTURE EXPENDITURE 534.9 657.0 529.8 230.6 169.5

Provision for Future Infrastructure Investment2 …. …. 75.0 130.0 130.0

Estimated Future Australian Government Roads

Funding3 …. …. …. 60.0 60.0

TOTAL INFRASTRUCTURE EXPENDITURE 534.9 657.0 604.8 420.6 359.5

Notes: 1. This Table includes expenditure (both Purchases of Non-Financial Assets and associated expenses) for all

infrastructure projects, but does not include minor asset purchases for non-infrastructure projects. For these reasons, the Table is not equivalent to the Purchases of Non-Financial Assets presented in chapter 4 of this Budget Paper. Table 6.4 provides a reconciliation of Purchases of Non-Financial Assets to Total Infrastructure Expenditure.

2. In addition to the allocated infrastructure investment expenditure, the Government has set aside $335 million of capital provisions over the 2017-18 Budget and Forward Estimates period, which will be allocated to future infrastructure investment projects or used to provide capacity to meet cost variation and the impact of the re-scheduling of projects.

3. The existing five-year roads funding agreement with the Australian Government expires at the end of 2018-19. Based on Australian Government roads funding over recent years, an Estimated Future Australian Government Roads Funding allocation of $60 million has been included in both 2019-20 and 2020-21 to provide a more accurate estimate of the likely level of infrastructure expenditure that will occur over the Forward Estimates period.


Table 6.2 provides infrastructure investment project details by agency, including projects which are continuing

from a previous Budget year and new priority infrastructure projects that have been funded by the Government

in the 2017-18 Budget.

Table 6.2: Infrastructure Investment Project Details by Agency1

New/

Existing Start Complete

Estimated

Total

Cost

2017-18

Budget

2018-19

Forward

Estimate

2019-20

Forward

Estimate

2020-21

Forward

Estimate

$m $m $m $m $m

DEPARTMENT OF

EDUCATION

Austins Ferry Primary

School Existing 2016 2018 5.5 5.2 …. …. ….

Boat Harbour Primary

School New 2017 2018 1.8 0.5 1.4 …. ….

East Devonport Primary

School Existing 2017 2018 1.8 1.7 …. …. ….

East Launceston Primary

School Existing 2016 2018 4.5 4.3 …. …. ….

Education Act

Implementation -

Capital Existing 2018 2020 18.0 …. 6.0 12.0 …..

Hobart College Existing 2018 2019 2.5 …. 0.8 1.7 …..

Illawarra Primary School New 2017 2019 2.9 0.5 2.4 …. ….

Lansdowne Crescent

Primary School New 2019 2021 4.7 …. …. 1.1 3.6

Latrobe High School Existing 2015 2017 10.0 0.8 …. …. ….

Lenah Valley Primary

School Existing 2016 2018 3.0 2.6 …. …. ….

Molesworth Primary

School New 2019 2020 1.9 …. …. 0.3 1.6

Montagu Bay Primary

School Existing 2018 2019 1.8 …. 0.8 1.0 ….

Parklands High School Existing 2015 2018 9.1 5.5 .... .... ….

Queechy High School

New/

Existing 2017 2018 5.0 4.9 …. …. ….

Riverside High School Existing 2017 2019 12.0 2.4 7.2 2.4 ….

Riverside Primary School Existing 2017 2018 2.5 2.4 …. …. ….

Smithton High School Existing 2015 2017 7.0 0.5 …. …. ….

Snug Primary School Existing 2018 2020 2.5 …. 1.3 1.3 ….

Somerset Primary School Existing 2016 2018 1.8 1.3 …. …. ….

Sorell School Existing 2018 2020 3.8 …. 1.9 1.9 ….

Southern Support School New 2017 2019 4.3 0.4 3.9 …. ….

Spreyton Primary School New 2019 2020 1.7 …. …. 0.3 1.4


Table 6.2: Infrastructure Investment Project Details by Agency (continued)1

New/


Estimated

Total

Cost

2017-18

Budget

2018-19

Forward

Estimate

2019-20

Forward

Estimate

2020-21

Forward

Estimate

$m $m $m $m $m

St Marys District School Existing 2016 2018 5.0 4.6 …. …. ….

Taroona High School New 2017 2019 5.0 1.1 3.9 …. ….

Tasman District School Existing 2016 2018 4.0 3.7 …. …. ….

Tasmanian Archives and

Heritage Office Existing 2018 2019 3.0 …. 2.0 1.0 ….

Windermere Primary

School Existing 2016 2018 5.5 5.2 …. …. ….

Year 7-12

Implementation Plan -

Capital2

New/

Existing 2014 2021 10.5 1.5 1.5 1.5 1.5

TOTAL 48.9 32.9 24.4 8.1

DEPARTMENT OF

HEALTH AND HUMAN

SERVICES

Human Services and

Housing Infrastructure3

Affordable Housing

Strategy4 Existing 2015 2019 60.0 15.0 20.0 …. ….

Housing Fund Existing 2008 2021 60.0 1.2 1.3 1.0 0.9

Housing Program5 Existing Ongoing na 18.2 17.4 20.5 19.3

North West Youth

Accommodation and

Training Facility Existing 2016 2017 6.0 4.5 …. …. ….

Northern Suburbs

Community Centre Existing 2016 2018 1.7 1.0 …. …. ….

40.0 38.6 21.5 20.2

Health Infrastructure6,7

Campbell Town

Ambulance Station New 2019 2021 3.0 …. 0.1 1.2 1.6

Glenorchy Health Centre Existing 2010 2017 21.0 6.7 …. …. ….



New/


Estimated

Total

Cost

2017-18

Budget

2018-19

Forward

Estimate

2019-20

Forward

Estimate

2020-21

Forward

Estimate

$m $m $m $m $m

Health Infrastructure

(continued)

Health Transport and

Coordination

Infrastructure Existing 2017 2018 10.0 5.3 …. …. ….

Hospital and Health

Centre Maintenance Existing 2015 2017 8.3 0.8 …. …. ….

Kingston Health Centre Existing 2013 2019 6.5 4.1 1.7 …. ….

Launceston General

Hospital Ward

Upgrades - Ward 4K

Upgrades Existing 2016 2020 7.9 1.4 4.4 1.9 ….

Mersey Community

Hospital Capital

Upgrades New 2019 2021 35.0 …. …. 15.0 20.0

Mersey Hospital Upgrade Existing 2013 2017 1.9 1.4 …. …. ….

National Health and

Hospitals Network

Reforms: Emergency

Department Existing 2010 2017 9.3) 0.2 ....) ....) ....)

Royal Hobart Hospital

Pharmacy

Redevelopment Existing 2017 2020 3.8 0.2 1.0 2.6 ….

St Helens Hospital

Redevelopment

New/

Existing 2016 2020 12.1 2.8 4.9 3.8 ….

Statewide Hospital

Critical Facility

Upgrades New 2018 2020 10.5 0.7 3.2 6.6 ….

Statewide Rural Health

Facility Infrastructure

Upgrades New 2019 2021 4.7 …. …. 2.5 2.2

THS Infrastructure

Upgrades New 2019 2021 1.9 …. …. 0.7 1.2

23.4 15.3 34.3 25.0



New/


Estimated

Total

Cost

2017-18

Budget

2018-19

Forward

Estimate

2019-20

Forward

Estimate

2020-21

Forward

Estimate

$m $m $m $m $m


Redevelopment

Funding


Redevelopment8 Existing 2011 2019 469.2 180.0 180.0 28.7 ….

180.0 180.0 28.7 ….

TOTAL 243.3 234.0 84.5 45.2

DEPARTMENT OF

JUSTICE9

iplan Stage Two:

Integrated Planning

and Building Portal Existing 2017 2020 1.9 0.5 0.9 0.5 ….

Mary Hutchinson

Women's Prison Existing 2016 2018 0.9 0.7 …. …. ….

Mary Hutchinson

Women's Prison -

Mother and Baby Unit New 2019 2020 0.5 …. …. 0.5 ….

O'Hara Pre-Release

Facility - Additional

Units New 2018 2020 1.5 …. 0.8 0.7 ….

Ron Barwick Minimum

Security Prison - Cell

Recommissioning New 2017 2019 3.0 1.0 2.0 …. ….

TOTAL 2.1 3.7 1.7 ….

DEPARTMENT OF

POLICE, FIRE AND

EMERGENCY

MANAGEMENT10

Aerial Fire Appliances New 2017 2018 3.8 3.8 …. …. ….

Body Worn Video New 2019 2021 0.7 …. 0.1 …. 0.7

District Headquarters and

Major Support Service

Building Refurbishment Existing 2016 2018 2.0 1.0 …. …. ….



New/


Estimated

Total

Cost

2017-18

Budget

2018-19

Forward

Estimate

2019-20

Forward

Estimate

2020-21

Forward

Estimate

$m $m $m $m $m

Emergency Services

Computer Aided

Dispatch System Existing 2015 2018 17.3 2.0 …. …. ….

Large Vessel

Replacement Program

New/

Existing 2014 2021 13.3 …. …. 1.2 3.5

Upgrade Police Housing Existing 2015 2020 5.0 1.3 1.3 1.3 ….

TOTAL 8.0 1.3 2.5 4.2

DEPARTMENT OF

PREMIER AND

CABINET

Service Tasmania Shops

Capital Investment Existing Ongoing na 0.3 0.3 0.3 0.3

Silverdome -

Maintenance and

Building Compliance Existing 2017 2018 2.7 1.9 …. …. ….

TOTAL 2.1 0.3 0.3 0.3

DEPARTMENT OF

PRIMARY INDUSTRIES,

PARKS, WATER AND

ENVIRONMENT

Biotoxin Testing

Laboratory New 2017 2018 1.2 1.2 .... …. ….

Cradle Mountain Visitor

Experience New 2017 2020 21.8 8.8 10.0 3.0 ….

Crown Land

Services - Structural

Asset Upgrades Existing Ongoing na 0.6 0.6 0.6 0.6

Fisheries Integrated

Licensing and

Management System Existing 2016 2018 1.2 1.0 …. …. ….

June 2016 Floods - Parks

Infrastructure Existing 2016 2018 11.9 2.9 …. …. ….

Maria Island

Rediscovered New 2017 2019 1.7 0.9 0.8 …. ….



New/


Estimated

Total

Cost

2017-18

Budget

2018-19

Forward

Estimate

2019-20

Forward

Estimate

2020-21

Forward

Estimate

$m $m $m $m $m

Orange-bellied Parrot

Facility11 New 2017 2018 2.5 2.5 …. …. ….

South Coast Track Existing 2014 2018 2.0 0.3 …. …. ….

Three Capes Track -

Stage 3 Existing 2015 2018 4.0 1.5 0.7 …. ….

Tourism Infrastructure in

Parks New 2017 2019 8.0 4.0 4.0 …. ….

TOTAL 23.5 16.0 3.6 0.6

DEPARTMENT OF STATE

GROWTH

A Workforce for Now and

the Future New 2017 2021 0.2 0.1 0.1 0.1 0.1

Roads Program

Expenditure12

New/

Existing 294.6 217.9 98.7 96.1

TOTAL 294.6 217.9 98.7 96.2

DEPARTMENT OF

TREASURY AND

FINANCE13

Budget Information

Management System

Project Existing 2014 2018 7.5 2.9 1.5 …. ….

State Revenue System

Replacement - Payroll

Tax and Duties Existing 2014 2017 2.8 0.2 …. …. ….

TOTAL 3.1 1.5 …. ….

FINANCE-GENERAL

Digital Transformation

Priority Expenditure

Program3,6,9 New 2017 2021 50.0 10.0 10.0 15.0 15.0

Digital Transformation -

Project Unify New 2017 2019 11.9 7.2 4.7 …. ….



New/


Estimated

Total

Cost

2017-18

Budget

2018-19

Forward

Estimate

2019-20

Forward

Estimate

2020-21

Forward

Estimate

$m $m $m $m $m

Launceston Government

Office Accommodation New 2017 2019 7.0 3.5 3.5 …. ….

Repatriation Hospital

Capital New 2017 2018 7.0 7.0 …. …. ….

TOTAL 27.7 18.2 15.0 15.0

LEGISLATIVE COUNCIL

Legislative Council

Chamber OH&S Issues

and Disability Access New 2017 2018 0.7 0.7 …. …. ….

TOTAL 0.7 …. …. ….

MARINE AND SAFETY

TASMANIA

Woodbridge and Brid

River Jetties New 2018 2019 1.2 0.6 0.6 …. ….

TOTAL 0.6 0.6 …. ….

TasTAFE

Drysdale Centre of

Excellence New 2017 2019 2.7 0.7 1.9 …. ….

TAFE Training

Infrastructure Existing 2017 2019 3.0 1.5 1.5 …. ….

TOTAL 2.2 3.4 …. ….

TOTAL ALLOCATED

INFRASTRUCTURE

PROJECTS 657.0 529.8 230.6 169.5

Notes: 1. This Table does not include irrigation or rail related expenditure, as this type of expenditure is in the form of grants or

equity injections to entities outside of the General Government Sector and the resulting infrastructure is not held within the General Government Sector.

2. New funding of $1.5 million per annum commencing in 2018-19 has been provided in this Budget.


3. The Department of Health and Human Services will receive funding from the Digital Transformation Priority Expenditure Program in Finance-General to support the Department to investigate and identify options for the replacement of the legacy Child Protection Information System. Future project costs (estimated to be $6 million) will be met from the Digital Transformation Priority Expenditure Program.

4. Implementation of the Affordable Housing Strategy commenced in 2015-16 with the allocation of $13.5 million in capital and recurrent funding. It will also be supported through the redirection of a proportion of Housing Tasmania revenue towards the priorities set by the Action Plan.

5. More details on the Housing Program are provided in the Department of Health and Human Services chapter in Government Services Budget Paper No 2.

6. The Department of Health and Human Services will receive $18 million in funding for the Health ICT Priority Infrastructure Program from the Digital Transformation Priority Expenditure Program in Finance-General.

7. Capital funding of $7 million has been allocated in Finance-General for the Repatriation Hospital Capital project. 8. The Royal Hobart Hospital Redevelopment is funded by both the State and Australian Government. In respect of the

RHH, practical completion of K Block is anticipated in mid-2019. Final payments occur in 2019-20 following commissioning. More details are provided in the Department of Health and Human Services chapter in Government Services Budget Paper No 2.

9. The Department of Justice will receive funding to progress detailed requirements for the Justice Connect project from the Digital Transformation Priority Expenditure Program in Finance-General. Future project costs (estimated to be $16.6 million) will be met from the Digital Transformation Priority Expenditure Program.

10. Recurrent funding of $1.2 million and capital funding of $11.9 million has been allocated in Finance-General for the implementation of the Department of Police, Fire and Emergency Management's important Project Unify.

11. This project will be offset by asset sale proceeds from the current property at Taroona. 12. The Roads Program includes new funding of $19.1 million for Freight Access Bridge Upgrades, $7 million for the

Mowbray Connector and $1.8 million for Real-Time Traffic Congestion Management in Hobart. Further details on these, and other Roads Program items, are included at Table 6.3.

13. The Department of Treasury and Finance will progress detailed design work for the replacement of its Public Account Reporting and Cash Management Systems in 2017-18. Future project costs (estimated to be $5 million) will be met from the Digital Transformation Priority Expenditure Program.


MAJOR AREAS OF INFRASTRUCTURE

INVESTMENT IN 2017-18 This section provides details of the key projects being undertaken in 2017-18 within each of the major areas

of infrastructure expenditure. Details of other infrastructure projects not included in this section are available

in individual agency chapters in Government Services Budget Paper No 2.

Chart 6.2 provides a breakdown of 2017-18 infrastructure expenditure by classification.

Chart 6.2: 2017-18 Infrastructure Investment by Classification

Schools and Education

In 2017-18, total Schools and Education infrastructure expenditure is $51.1 million. The major infrastructure

projects include:

Austins Ferry Primary School

Funding of $5.2 million has been allocated to the Department of Education in 2017-18 for the second year of

a two year, $5.5 million project to address capacity issues being experienced due to enrolment growth at

Austins Ferry Primary School. The project will provide additional general learning and support areas at the

school. This project commenced in 2016-17.

Parklands High School

Funding of $5.5 million has been allocated to the Department of Education in 2017-18 for the final year of a

$9.1 million project to construct a performing arts centre, canteen, refurbish teaching areas and provide

modern contemporary flexible learning environments. This project commenced in 2015-16.

Schools and Education$51.1m(7.9%) Tourism, Recreation and Culture

$19.2m(2.9%)

Human Services and Housing$40.0m(6.1%)

Other Infrastructure$10.4m(1.6%)

Roads and Rail$294.6m(44.8%)


$21.3m(3.2%)

Law and Order$10.1m(1.5%)

Hospitals and Health$210.4m(32.0%)


Queechy High School

Funding of $4.9 million has been allocated to the Department of Education in 2017-18 for the construction of

contemporary learning areas at Queechy High School. Additional funding of $2.0 million has been provided

to this project in the 2017-18 Budget, increasing the total cost to $5.0 million. The commencement of this

project was brought forward to 2016-17 as part of the Government's Northern Economic Stimulus Package.

St Marys District School


a two year, $5.0 million project to provide contemporary general learning areas, including music and

performing arts facilities at St Marys District School. The commencement of this project was brought forward

to 2016-17 as part of the Government's Northern Economic Stimulus Package.

Windermere Primary School


a $5.5 million project to construct additional general learning and support areas to address capacity issues

experienced due to enrolment growth at Windermere Primary School. This project commenced in 2016-17.

Human Services and Housing

In 2017-18, total Human Services and Housing infrastructure funding is budgeted to be $40.0 million. The

major infrastructure projects include:

Affordable Housing Strategy

Tasmania's Affordable Housing Strategy 2015-2025 sets the key outcomes to measure the success of the

Government's strategies over the next decade to improve housing affordability in Tasmania, including a

decrease in the proportion of low income Tasmanians experiencing housing stress and a decrease in the

proportion of Tasmanians experiencing homelessness.

Additional funding of $60 million over three years was provided in the 2016-17 Budget to implement the

Government's priorities under Tasmania's Affordable Housing Action Plan 2015-2019. The Government's

target is to provide 1 600 vulnerable Tasmanian households with support over the four year term of the Action

Plan, including construction of 941 new homes and support to access affordable homes in the private market.

Expenditure of $20 million was originally allocated to 2016-17, however, $5 million in funding was brought

forward from the 2017-18 allocation as part of the Government's Northern Economic Stimulus Package. As a

result, $15 million is now allocated for expenditure in 2017-18 with the remaining $20 million in 2018-19.

New projects also support projects and actions in the Affordable Housing Action Plan, including investment in

crisis housing, youth homelessness and supported accommodation.

Housing Fund

The Housing Fund was established in 2007-08 with an allocation of $60 million for the purpose of increasing

the supply of affordable housing. In 2017-18, it is anticipated that $1.2 million will be spent from the Housing

Fund towards the continuation of support for the National Rental Affordability Scheme (NRAS), with funding

towards the development of up to 1 500 properties under NRAS Stage 4.


Housing Program

Funding of $18.2 million has been allocated in 2017-18 from the Housing Program for Major Housing Program

projects including:

funding under the Family Violence Action Plan towards establishing the Women's Crisis Accommodation

($1.5 million);

Government equity purchases under the HomeShare program ($762 000); and

new stock purchases, including land and existing dwellings ($8.2 million).

North West Youth Accommodation and Training Facility

Funding of $6 million over two years was allocated in the 2016-17 Budget to build a supported accommodation

facility in Devonport with specialist support services for youth. The Youth Accommodation and Training Facility

will deliver around 25 units of accommodation for low income young people in the Devonport area, who are

homeless, or at risk of homelessness. The facility will also include safe and secure accommodation options

and support services suitable for young people living with a disability.

Hospitals and Health

In 2017-18, total Hospitals and Health infrastructure expenditure is budgeted to be $210.4 million. The major

infrastructure projects include:

Glenorchy Health Centre

Funding of $6.7 million has been allocated to the Department of Health and Human Services in 2017-18 for

the Glenorchy Health Centre. This project will replace the existing Glenorchy Community Health Centre at a

new site. The Centre will be a standalone facility adjacent to the Glenorchy City Central Business District.

Health Transport and Coordination Infrastructure


health transport infrastructure projects. These funds will be used for investment in improved infrastructure

associated with changes to patient coordination, transport and accommodation arising from the One Health

System reforms.

Investment will target capital upgrades to support patients that need to travel for services, staff that may need

to travel to provide outreach services to patients, or strategies that limit the need for patients or staff to travel

in order to provide or receive services under a single state wide Tasmanian health system.

Kingston Health Centre


the Kingston Health Centre. This project will replace the existing Kingston Community Health Centre at a new

site.


Repatriation Hospital Capital

Additional capital funding of $7 million is provided for the refurbishment and opening of ward space at the

Repatriation Hospital, following progression of a proposal through the Government's Structured Infrastructure

Investment Review Process.

St Helens Hospital Redevelopment

The construction of a new St Helens Hospital will achieve a modern and accessible environment for patients,

clients, staff and community members in the Break O'Day region into the future. A new allocation of

$3.6 million is provided in the 2017-18 Budget in addition to the existing allocation of $8.1 million (additional

funding of $414 000 has also been reflected in 2016-17). It is anticipated that the total cost of the

redevelopment will be $12.1 million.

Practical completion for the construction program of the St Helens Hospital Redevelopment project is

anticipated in December 2018. Payments will extend beyond that period to reflect equipment purchases and

final payments made following the completion of the defects period.

Royal Hobart Hospital Redevelopment

The $689 million Royal Hobart Hospital Redevelopment is Tasmania's largest ever health infrastructure

project and will deliver a modern health facility for future generations. This project is jointly funded by the

Australian and Tasmanian Governments, including $469.2 million from the Capital Investment Program

project, with the remaining funds from the Special Capital Investment Fund, Women's and Children's Precinct,

and Cancer Centre phases of the project.

Funding for this project has been sourced from the following:

Royal Hobart Hospital (Hospitals Capital Fund) - total funding of $100 million was provided from this

source, which has now been fully expended;

Royal Hobart Hospital Women's and Children's Precinct - funding of $100 million was provided by the

Australian Government to fund the construction of a Women's and Children's Precinct within the broader

redevelopment program of the Royal Hobart Hospital. This funding has now been fully expended;

Royal Hobart Hospital Redevelopment - funding for a major redevelopment of the Royal Hobart Hospital

was secured following an application in late 2010 to the Board of the Health and Hospitals Fund (HHF).

The $469.2 million commitment to redevelop the Royal Hobart Hospital is a combined Australian and State

Government project with $240 million being provided by the Australian Government and $229.2 million

provided by the State Government; and

RHH Cancer Centre - the project total of $689 million includes $20.1 million for the RHH Cancer Centre,

which was delivered under the now completed Statewide Cancer Centres Capital output.


Law and Order

In 2017-18, total Law and Order Infrastructure funding is $10.1 million. The major infrastructure projects

include:

Aerial Fire Appliances

Funding of $3.8 million has been allocated to the Department of Police, Fire and Emergency Management in

2017-18 to replace and refurbish a number of aerial fire appliances required by the Tasmanian Fire Service.

District Headquarters and Major Support Service Building Refurbishment

Funding of $1 million has been allocated to the Department of Police, Fire and Emergency Management in

2017-18 for the second year of a two year project to improve major police facilities across the state, such as

the Tasmanian Police Academy, district headquarters and support services buildings. All buildings are due

for major works to ensure they continue to meet the needs of the Tasmanian community, are safe, functional

and can meet the Government's policy objectives.

Emergency Services Computer Aided Dispatch System

Funding of $2 million is allocated to the Department of Police, Fire and Emergency Management in 2017-18

for the final year of the Emergency Services Computer Aided Dispatch (ESCAD) System project. The ESCAD

project involves the replacement of the three computer aided dispatch systems currently in operation within

Tasmania Police, Tasmania Fire Service and Ambulance Tasmania.

Ron Barwick Minimum Security Prison - Cell Recommissioning

Funding of $3.0 million over two years from 2017-18 has been allocated to the Department of Justice for the

refurbishment of Division 7 within the Ron Barwick Minimum Security Prison. This refurbishment will provide

an additional 40 minimum security cells within the facility. This funding will also help to address ageing

infrastructure including electrical and plumbing issues throughout the facility.

Upgrade Police Housing

Funding of $1.3 million has been allocated to the Department of Police, Fire and Emergency Management in

2017-18 as part of a five year program to refurbish residential housing for police officers and their families

stationed in remote and regional areas of Tasmania. The majority of the housing stock is in excess of 35 years

old. This funding will ensure that the housing is of good condition and fit for purpose and will help to encourage

officers and their families to take up residence in remote locations.

Roads and Rail

Funding of $294.6 million has been allocated in 2017-18 for roads infrastructure projects, with total roads

funding over the Budget and Forward Estimates period estimated at $827.4 million, including $243.0 million

in Australian Government funding plus a provision of $120.0 million in Australian Government funding over

2019-20 and 2020-21 for the next Australian Government roads funding agreement.


In addition, the Government has committed funding of $29.9 million for rail infrastructure in the 2017-18

Budget for Tasmanian Railway Pty Ltd with total rail funding over the Budget and Forward Estimates period

of $90.6 million, including $28.2 million in Australian Government rail funding. Australian Government Rail

funding is provided as equity to Tasmanian Railway Pty Ltd and is therefore not reflected in general

government sector infrastructure investment budgets.

Significant roads and rail funding in 2017-18 includes:

continuation of significant works on the Midland Highway, including commencement of the Perth Link

Roads project, bringing forward $60 million in Australian Government funding from the future 2019-20 to

2023-24 Australian Government agreement;

commencement of a number of new projects jointly funded by the State and Australian Governments,

including the Hobart Airport Roundabout replacement and Bass Highway intersection upgrades at

Wynyard;

a significant Freight Access Bridge Upgrades program over four years to facilitate the operation of High

Productivity Freight Vehicles on key freight routes connecting Tasmanian ports, transport hubs and major

industries;

commencement of an upgrade of the junction of the East Tamar Highway and Mowbray Connector to

improve safety;

implementation of a real-time traffic congestion management solution for Hobart;

continuation of construction works on Esk Main Road, Highland Lakes Road, Huon Highway/Summerleas

Road intersections, and Murchison Highway;

ongoing road and bridge maintenance;

continuation of the rail revitalisation program; and

continued implementation of the Positive Cycling Policy to improve cycling access and safety, including

bringing forward safety works on Bonnet Hill.

Further details of the Roads Program are provided in a separate section of this chapter.


In 2017-18, Information and Communication Technology funding is $21.3 million. The major infrastructure

projects include:

Budget Information Management System Project

Funding of $2.9 million has been allocated to the Department of Treasury and Finance in 2017-18 to progress

the replacement of the Budget Management System.


Digital Transformation Priority Expenditure Program

In the 2017-18 Budget the Government has allocated over $60 million to Digital Transformation Priority

Expenditure. Over $13.5 million has been allocated to fund the replacement of the core legacy operating

system utilised by the Tasmania Police (Project Unify, total project funding of $13.1 million - see below) with

remaining funding allocated to commence detailed design work for Justice Connect (to replace legacy criminal

information management systems) and the Child and Youth Services (CYS) Client Information System. A

provision of $50 million has been made over the Budget and Forward Estimates to fund implementation of the

following projects once initial design work and costings are confirmed through the Treasury Structured

Infrastructure Investment Review Process (SIIRP):

Justice Connect ($16.6 million over five years, commencing in 2018-19);

CYS Client Information System ($6 million);

Health ICT Priority Infrastructure Program ($18 million); and the

Public Account Reporting and Cash Management System ($5 million).

These allocations represent current estimates. The estimated cost of projects and the timing of project

expenditure will be finalised during the detailed planning stage of each project.

Fisheries Integrated Licensing and Management System

Funding of $1.0 million has been allocated in 2017-18 to the Department of Primary Industries, Parks, Water

and Environment for the development of a Catch and Effort Module within Tasmania's fisheries management

and compliance system. The new module will support the sustainable management of Tasmania's fisheries

resources through improved systems for research, compliance and fisheries management.

Digital Transformation - Project Unify

Funding of $11.9 million over two years from 2017-18 has been allocated in Finance-General to Project Unify

to be administered by the Department of Police, Fire and Emergency Management (total project funding

including recurrent costs is $13.1 million). The project will develop an integrated and sophisticated operational

information system that will support operational decision making, safe communities, information sharing and

enhance regulatory and compliance activities. The Agency currently maintains a significant number of core

operational systems that are not integrated. The new system is expected to provide significant operational

benefits for the Agency as the replacement for a legacy system.

Tourism, Recreation and Culture

In 2017-18, $19.2 million has been allocated Tourism, Recreation and Culture infrastructure expenditure. The

major infrastructure projects include:

Cradle Mountain Visitor Experience

The Government announced, in the 2016-17 State Budget, a commitment of $15 million towards a visitor

centre and associated public infrastructure at Cradle Mountain and viewing facilities at Dove Lake. In response

to detailed concept planning and design, total funding of $21.8 million over three years from 2017-18 has now

been allocated to the Department of Primary Industries, Parks, Water and Environment to deliver the Cradle

Mountain Visitor Experience, consistent with the Cradle Mountain Experience Master Plan, 2016.


The project will revitalise visitor facilities at the existing "gateway" to Cradle Mountain outside of the national

park, including a new visitor centre and associated commercial/retail precinct; car parking; shuttle bus and

transit facilities; and significantly improved visitor services. At the iconic Dove Lake, within the World Heritage

Area, this project will enhance the visitor experience through a new shuttle arrival point and visitor shelter.

June 2016 Floods - Parks Infrastructure

Funding of $2.9 million has been allocated to the Department of Primary Industries, Parks, Water and

Environment in 2017-18 to enable repairs to Tasmania's important roads and tourism infrastructure damaged

in the June 2016 floods (predominantly in the State's north and north west). This is in addition to significant

funding allocated for this purpose in 2016-17.

Maria Island Rediscovered

Funding of $1.7 million over two years from 2017-18 has been allocated to the Department of Primary

Industries, Parks, Water and Environment to support restoration of the World Heritage listed Darlington site

on Maria Island and provide substantial improvements to visitor services. This will enable locals and tourists

to re-discover Maria Island as a world class experience and iconic destination. The project will protect the

values that locals treasure and provide long-term economic stimulus to the East Coast Region.

Three Capes Track - Stage 3


Environment in 2017-18 for ongoing investment in the experience and construction of Stage Three of the

track. This stage of the development will provide improved access to Cape Raoul and Shipstern Bluff. Track

head facilities will also be developed in the 2017-18 financial year.

Tourism Infrastructure in Parks

Funding of $8 million has been allocated over two years from 2017-18 to the Department of Primary Industries,

Parks, Water and Environment to continue the delivery of the renewal of visitor facilities in national parks and

other reserves across the State. Tourism Infrastructure in Parks will focus on the use and enjoyment of the

parks estate by the public; commercial enterprises; and tourism. In partnership with the tourism sectors, the

Program will ensure well planned, sustainable, visitor infrastructure and longer term jobs in construction and

park maintenance.

Other Infrastructure

In 2017-18, total Other Infrastructure expenditure is $10.4 million. The major projects include:

Biotoxin Testing Laboratory


Environment in 2017-18 to enable the establishment of a biotoxin testing laboratory capacity within Analytical

Services Tasmania. The Tasmanian laboratory will provide testing services to shellfish growers and the

broader seafood industry and will minimise turnaround time compared with the current requirement to send

samples interstate for testing, thereby improving industry profitability.


Launceston Government Office Accommodation

As part of the Government's centralised property management strategy, funding of $7 million has been

allocated over two years, from 2017-18, to Finance-General for the implementation of the second stage of the

Government's strategy to improve the management and efficiency of government leased accommodation.

This strategy will include the establishment of new contemporary government office space to be leased at the

CH Smith site in Launceston. This infrastructure investment will assist with the revitalisation of the CH Smith

site, together with priority works as required in the Launceston leased office portfolio, providing an important

economic stimulus to the northern economy.

Legislative Council - Chamber OH&S Issues and Disability Access

Funding of $700 000 has been allocated to the Legislative Council in 2017-18 to address occupational health

and safety and disability access issues in the Council chamber.

Orange-bellied Parrot Facility


Environment, in 2017-18, to enable the construction of a new fit-for-purpose facility including improved

infrastructure for captive breeding. Construction of a new facility will support the preservation of the critically

endangered Orange-bellied Parrot including the capacity to increase the captive-bred population and ensure

a greater number of birds are available for release in the parrot's breeding areas at Melaleuca in the

Tasmanian Wilderness World Heritage Area. This capital cost will be offset by the proceeds of the sale of the

existing facility at Taroona in the State's south.

Silverdome - Maintenance and Building Compliance

Funding of $1.9 million has been allocated to the Department of Premier and Cabinet in 2017-18 as part of

an ongoing project to undertake important maintenance at the Silverdome.


ROADS PROGRAM The Roads Program comprises new works projects and the upgrade and maintenance of established roads.

In 2017-18, total roads expenditure is $294.6 million. This includes a State Government allocation of

$142.5 million and an Australian Government allocation of $152.1 million.

Table 6.3: Roads Program Expenditure

Start Complete

Estimated

Total

Cost

2017-18

Budget

2018-19

Forward

Estimate

2019-20

Forward

Estimate

2020-21

Forward

Estimate

$m $m $m $m $m

STATE FUNDED

Co-contribution Projects

Bass Highway - Wynyard1 2017 2018 0.6 0.6 .... .... ....

Bridport Western Access Road1 2017 2018 1.0 1.0 .... .... ....

Brooker Highway - Elwick,

Goodwood, Howards Roads1,2 2015 2017 6.4 1.0 .... .... ....

Domain Highway Planning1,2 2017 2017 1.0 0.4 .... .... ....

Hobart Airport Roundabout1 2018 2019 6.0 0.5 5.5 .... ....

Huon Highway/Summerleas Road

Intersection1,2 2016 2018 4.4 1.0 .... .... ....

Midland Highway - Road Safety

Program4 2015 2018 20.0 9.0 .... .... ....

Midland Highway1,2,3 2014 2019 30.0 9.6 13.0 .... ....

23.1 18.5 .... ....

Roads for Our Future Program4

Bridge Strengthening on Esk and

Tasman Highways2 2016 2019 10.0 4.1 4.9 .... ....

Bruny Island Main Road2 2015 2019 3.7 2.4 0.8 .... ....

Colebrook Main Road2 2016 2019 6.5 4.3 1.3 .... ....

Esk Main Road2 2015 2019 13.0 4.2 4.0 .... ....

Highland Lakes Road2 2015 2018 4.0 1.9 .... .... ....

Huon Highway

Upgrade - Glendevie Passing

Lane2 2015 2018 8.0 4.0 .... .... ....

Murchison Highway2 2015 2018 8.0 2.8 0.3 .... ....

23.7 11.3 .... ....

Other Roads Infrastructure

Asset Management Ongoing na 5.5 5.7 5.8 5.9

Environmental Management Ongoing na 0.6 0.6 0.6 0.6

Freight Access Bridge Upgrades 2017 2021 19.1 4.8 5.4 4.4 4.5


Table 6.3: Roads Program Expenditure (continued)

Start Complete

Estimated

Total

Cost

2017-18

Budget

2018-19

Forward

Estimate

2019-20

Forward

Estimate

2020-21

Forward

Estimate

$m $m $m $m $m

Great Eastern Drive 2018 2020 6.3 0.3 3.0 3.0 ....

Infrastructure Development Ongoing na 0.9 1.0 1.0 1.0

Infrastructure Maintenance Ongoing na 64.7 62.7 64.4 66.2

Launceston Northbank 2015 2018 1.4 0.7 .... .... ....

Mowbray Connector 2018 2019 7.0 1.5 5.5 …. ….

Program Management Ongoing na 1.2 1.2 1.2 1.3

Real-Time Traffic Congestion

Management in Hobart 2017 2018 1.8 1.8 .... .... ....

Road Safety and Traffic

Management Ongoing na 7.2 4.5 6.1 6.3

Road Safety

Strategy - Infrastructure5 Ongoing na 3.6 6.8 7.0 7.2

Strategic Planning and Policy Ongoing na 2.9 3.0 3.0 3.1

95.7 99.4 96.6 96.2

TOTAL STATE FUNDED ROADS 142.5 129.1 96.6 96.2

AUSTRALIAN GOVERNMENT

FUNDED

Investment Program

Bass Highway - Wynyard1 2017 2018 2.3 2.1 .... .... ....

Grants to Local Government6 2017 2019 9.0 8.2 0.8 .... ....

Midland Highway1,3 2014 2019 260.0 94.7 59.0 .... ....

Tasman Ramps 2013 2017 15.0 0.3 .... .... ....

105.3 59.8 .... ....

Off-Network

Bridport Western Access Road1 2017 2018 1.9 1.9 .... .... ....

Domain Highway Planning1 2015 2018 4.0 3.9 .... .... ....

Highland Lakes Road1 2018 2020 5.0 2.4 2.5 0.1 ....

Hobart Airport Roundabout1 2017 2019 24.0 6.0 15.5 2.0 ....

Huon Highway/Summerleas Road

Intersection2 2015 2017 17.5 14.9 .... .... ....

North East Freight Roads1 2009 2017 34.0 0.2 .... .... ....

29.3 18.0 2.1 ....


Table 6.3: Roads Program Expenditure (continued)

Start Complete

Estimated

Total

Cost

2017-18

Budget

2018-19

Forward

Estimate

2019-20

Forward

Estimate

2020-21

Forward

Estimate

$m $m $m $m $m

Other Roads Infrastructure

Bass Highway - Birralee to Exton7 2015 2017 7.7 2.4 .... .... ....

Bridge Renewal Program Ongoing na 1.9 1.2 .... ....

Heavy Vehicle Safety and

Productivity Ongoing na 1.0 0.8 .... ....

Road Safety and Traffic

Management Ongoing na 4.9 1.6 .... ....

Road Specific Maintenance Ongoing na 7.3 7.3 .... ....

17.5 10.9 .... ....

TOTAL AUSTRALIAN

GOVERNMENT FUNDED ROADS 152.1 88.8 2.1 ....

TOTAL ALLOCATED ROADS

PROGRAM EXPENDITURE 294.6 217.9 98.7 96.1

Estimated Future Australian

Government Roads Funding8 .... .... 60.0 60.0

TOTAL ROADS PROGRAM

EXPENDITURE 294.6 217.9 158.7 156.2

Notes: 1. These projects include both State and Australian Government funding. 2. Funding for these projects is provided as part of the State Government's 2014 election commitment of $110 million for

the roads funding package which includes the co-contribution and Roads for Our Future Projects. 3. The Australian Government commitment for the Midland Highway is $400 million over 10 years. The Australian

Government will now contribute $260 million over the first five-year period from 2014-15 to 2018-19 and $140 million from 2019-20 to 2023-24. The Tasmanian Government will contribute $100 million across the 10 years from 2014-15 to 2023-24.

4. Planning for the Roads for Our Future Program Stage 2 is underway. Funding allocations for individual projects will be determined as part of this process and included in future Budgets. A general provision of $335 million has been set aside, in the period 2018-19 to 2020-21, to be allocated to future infrastructure investment projects, including Roads for Our Future Stage 2, and to provide capacity to meet cost variation and the impact of the re-scheduling of projects.

5. The State's co-contribution to Australian Government roads infrastructure projects includes $20 million sourced from Road Safety Levy receipts for safety upgrades to the Midland Highway.

6. The Australian Government has committed funding for a number of its 2016 Election commitments that relate specifically to Local Government roads. This funding will be provided to the relevant Council via the State Government.

7. The allocation includes Bass Highway road safety improvements. 8. The existing five-year roads funding agreement with the Australian Government expires at the end of 2018-19. Based

on Australian Government roads funding over recent years, an Estimated Future Australian Government Roads Funding allocation of $60 million has been included in both 2019-20 and 2020-21 to provide a more accurate estimate of the likely level of infrastructure expenditure that will occur over the Forward Estimates period.


RECONCILIATION BETWEEN INFRASTRUCTURE

INVESTMENT AND PURCHASES OF

NON-FINANCIAL ASSETS Purchases of Non-Financial Assets is an accounting classification under the Australian Accounting Standards.

It appears on the Income Statement and Cash Flow Statement and reflects purchases of non-financial assets

such as land, buildings, plant and equipment, infrastructure, and intangible assets. While the majority of the

Purchases of Non-Financial Assets is comprised of Infrastructure Investment projects, there is a portion of

Purchases of Non-Financial Assets expenditure that is not included in this chapter. Such items include Budget

allocations for:

the Government's fleet management services;

ambulance, surgical and medical equipment;

computer software; and

other smaller capital items.

Conversely, Infrastructure Investment projects can include allocations of expenditure which are not classified

as Purchases of Non-Financial Assets under the Australian Accounting Standards, but are directly related to

infrastructure projects. This expenditure can include items such as employee entitlements, infrastructure

maintenance, Australian Government Loan Repayments and other supplies and consumables.

Table 6.4 provides a reconciliation between the two measures.

Table 6.4: Reconciliation between Purchases of Non-Financial Assets and Infrastructure Investment

2016-17

Budget

2017-18

Budget

2018-19

Forward

Estimate

2019-20

Forward

Estimate

2020-21

Forward

Estimate

$m $m $m $m $m

Purchases of Non-Financial Assets1 524.8 603.1 564.8 390.5 330.8

Less Purchases of Non-Financial Assets excluded from

Infrastructure Investment 75.8 59.3 53.6 48.2 49.6

Plus Infrastructure Investment not included in

Purchases of Non-Financial Assets 85.9 113.3 93.6 78.3 78.3

Equals TOTAL INFRASTRUCTURE EXPENDITURE 534.9 657.0 604.8 420.6 359.5

Note: 1. Reflects Purchases of Non-Financial Assets as detailed in the General Government Cash Flow Statement.


INFRASTRUCTURE INVESTMENT OUTSIDE OF THE

GENERAL GOVERNMENT SECTOR This chapter provides information on infrastructure investment in the General Government Sector.

Infrastructure investment undertaken by Government Business Enterprises or State-owned Companies is

outside of the General Government Sector and is therefore not included in the definition of infrastructure

investment for the purpose of this chapter. Information on infrastructure investment undertaken by these

entities can be found in entity annual reports and on entity websites.

The 2017-18 Budget does, however, include equity and other contributions provided through the General

Government Sector to Tasmanian Irrigation Pty Ltd, Tasmanian Railway Pty Ltd and Metro Tasmania Pty Ltd

to undertake major infrastructure works.

Metro Tasmania Pty Ltd

As announced in the 2016-17 Budget, funding of $4.5 million per annum over four years will be provided as

an equity contribution to Metro Tasmania Pty Ltd to implement a Metro Bus Infrastructure capital initiative that

will give the advanced manufacturing sector in Tasmania an opportunity to bid for customisation and fit-out

work to deliver an accelerated replacement Metro Tasmania bus fleet. This equity payment will be made by

Finance-General.

Tasmanian Irrigation Pty Ltd

The 2017-18 Budget provides additional equity funding of $10 million per annum to Tasmanian

Irrigation Pty Ltd in 2017-18 and 2018-19 to meet the State's share of increased costs associated with

undertaking Tranche 2 irrigation projects.

Tasmanian Railway Pty Ltd

The Tasmanian Rail Revitalisation Program is a program to continue to remediate Tasmania's Freight Rail

Network. As part of their respective 2015-16 Budgets, the Tasmanian and Australian Governments each

committed $59.8 million to complete Tranche One of the Program over four years.

As part of this Budget, the Tasmanian Government is committing additional funding of $59.8 million over four

years, commencing in 2019-20, in order to facilitate the second Tranche of the Program. This funding is

dependent on a matching contribution from the Australian Government.

Assets and Liabilities 127

7 ASSETS AND LIABILITIES

Key Issues

General Government Net Worth is estimated to be $11 723.5 million as at 30 June 2018. Net Worth is

estimated to increase over the Forward Estimates period to $12 843.8 million by 30 June 2021.

General Government Net Debt is estimated to be negative $451.8 million as at 30 June 2018, an

improvement of $150.5 million on the 2016-17 Budget estimate of negative $301.3 million as at

30 June 2017. General Government Net Debt is expected to remain negative over the

Forward Estimates period (as relevant assets continue to exceed liabilities) to 30 June 2021.

The most significant liability on the General Government Balance Sheet is the General Government

Superannuation Liability, which is estimated to be $6 266.3 million as at 30 June 2018. The liability is

expected to be extinguished by 30 June 2078.

The Government continues to meet the cash cost of the defined benefit superannuation schemes on

an emerging basis ($285.8 million in 2017-18). While forecast to be manageable, a key ongoing Budget

risk is that the cash cost to the Budget will increase significantly in the coming years, with cash

payments anticipated to increase over the next 14 years, peaking in 2031-32 ($442.6 million).

The present value of superannuation liabilities is particularly sensitive to discount rate movements,

although these movements do not impact on the cash costs that require funding.

As part of the reform of public sector superannuation, the Government has implemented a more

efficient model for defined benefit scheme operating expenses, providing estimated savings of

$2.5 million per annum across the Budget and Forward Estimates period.


BALANCE SHEET The Balance Sheet presented in this chapter provides assets and liabilities estimated as at

30 June 2017 to 2021 and reports key indicators for the same period. By providing information on the nature

of assets and liabilities held by the Government, this Statement gives an indication of the State's financial

strength.

The key measures presented in the Balance Sheet are Net Worth, Net Financial Worth,

Net Financial Liabilities and Net Debt.

Table 7.1 details the estimated General Government Sector Balance Sheet as at 30 June from 2017 to 2021.


Table 7.1: General Government Balance Sheet as at 30 June

2017

Budget

2018

Budget

2019

Forward

Estimate

2020

Forward

Estimate

2021

Forward

Estimate

$m $m $m $m $m

Assets

Financial Assets

Cash and Deposits1 880.8 1 117.2 1 056.7 1 075.5 1 092.3

Investments 54.2 46.4 48.6 50.8 53.0

Equity Investment in PNFC and PFC Sectors 4 482.8 5 654.0 5 715.6 5 757.5 5 807.6

Other Equity Investments 27.4 27.2 31.3 35.4 38.1

Receivables 316.6 315.4 312.2 307.0 303.0

Other Financial Assets 847.0 815.4 868.0 904.5 918.7

6 608.9 7 975.7 8 032.4 8 130.7 8 212.7


Land and Buildings 6 098.6 6 265.3 6 535.8 6 644.9 6 705.4

Infrastructure 4 779.3 4 816.5 5 108.1 5 343.5 5 553.0

Plant and Equipment 224.6 229.0 218.3 213.9 217.6

Heritage and Cultural Assets 502.4 484.0 496.1 508.3 520.5

Investment Property 3.0 3.5 3.8 4.0 4.4

Intangibles 51.8 47.7 45.8 42.0 37.8

Assets Held for Sale 4.7 4.8 4.1 3.9 2.9

Other Non-Financial Assets 31.5 37.4 37.5 37.5 33.9

11 696.0 11 888.1 12 449.5 12 798.0 13 075.5

Total Assets 18 304.9 19 863.8 20 481.9 20 928.8 21 288.2

Liabilities

Borrowings 633.7 711.8 905.2 913.4 805.7

Superannuation2 6 345.5 6 266.3 6 345.7 6 412.6 6 465.3

Employee Entitlements 583.0 618.8 627.8 610.5 623.6

Payables 134.9 133.7 133.3 135.2 137.1

Other Liabilities 358.7 409.7 411.3 412.0 412.7

Total Liabilities 8 055.7 8 140.3 8 423.4 8 483.7 8 444.4

NET ASSETS 10 249.2 11 723.5 12 058.5 12 445.0 12 843.8


Table 7.1: General Government Balance Sheet as at 30 June (continued)

2017)

Budget)

2018)

Budget)

2019)

Forward)

Estimate)

2020)

Forward)

Estimate)

2021)

Forward)

Estimate)

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

Equity

Accumulated Funds 5 293.3 6 761.4 6 828.0 6 926.0 7 029.9

Asset Revaluation Reserve 4 955.9 4 962.1 5 230.5 5 519.0 5 813.9

Total Equity 10 249.2 11 723.5 12 058.5 12 445.0 12 843.8

NET WORTH3 10 249.2 11 723.5 12 058.5 12 445.0 12 843.8

NET FINANCIAL WORTH4 (1 446.7) (164.6) (391.0) (353.0) (231.7)

NET FINANCIAL LIABILITIES5 5 929.6 5 818.6 6 106.6 6 110.5 6 039.4

NET DEBT6 (301.3) (451.8) (200.0) (212.9) (339.6)

Notes: 1. The increase in Cash and Deposits in 2017-18 primarily reflects a change in timing of Australian Government Funding

together with higher estimated cash balances at the end of 2016-17. 2. The decrease in Superannuation in 2017-18 reflects the latest actuarial assessment of the defined benefits schemes. 3. Net Worth represents Total Assets less Total Liabilities. 4. Net Financial Worth represents Financial Assets less Total Liabilities. 5. Net Financial Liabilities represents Total Liabilities less Financial Assets, excluding Equity Investment in the PFC and

PNFC sectors. 6. Net Debt represents Borrowings less the sum of Cash and Deposits and Investments.

ASSETS Total Assets are estimated to be $19 863.8 million as at 30 June 2018, an increase of $1 558.9 million from

the 2016-17 Budget estimate of $18 304.9 million as at 30 June 2017. The increase primarily reflects an

increase in the Equity Investment in PNFC and PFC Sectors of $1 171.2 million, which is primarily due to the

equity contribution of $730.4 million to the Tasmanian Public Finance Corporation relating to the one-off

payment received for the transfer of ownership of the Mersey Community Hospital from the Australian

Government (expected to occur by 30 June 2017). Total Assets are estimated to increase across the Forward

Estimates period from $19 863.8 million as at 30 June 2018 to $21 288.2 million as at 30 June 2021.


Equity Investment in PNFC and PFC Sectors

This item consists of the Government's investment in the net assets of the Public Non‑Financial Corporations

and Public Financial Corporations sectors.

The Government's equity investment is estimated to be $5 654 million as at 30 June 2018, an increase of

$1 171.2 million from the 2016-17 Budget estimate of $4 482.8 million as at 30 June 2017. This primarily

reflects an increase in the PFC Sector as a result of the $730.4 million equity contribution the State

Government will make to the Tasmanian Public Finance Corporation related to the transfer of the Mersey

Community Hospital (expected to occur by 30 June 2017). In addition, there is a forecast increase in net

assets for Hydro Tasmania of $195.7 million and the Motor Accidents Insurance Board of $114.2 million.

Chart 7.1 illustrates the components of the Government's Equity Investment holdings.

Chart 7.1: Equity Investment in PNFC and PFC Sectors as at 30 June 2018

Other Financial Assets

Other Financial Assets primarily includes Income Tax Equivalents Receivable and Prepayments.

Other Financial Assets is estimated to be $815.4 million as at 30 June 2018, a decrease of $31.6 million on

the 2016-17 Budget estimate of $847 million as at 30 June 2017. The decrease primarily reflects a

$23.1 million decrease in the Income Tax Equivalents estimate and a decrease of $8.6 million in Prepayments.

Table 7.2 provides a summary of Other Financial Assets.

Electricity$3 521.8m

(62.3%)

Ports$203.6m(3.6%)

Resource Management

$138.2m(2.5%)

Financial$1 273.6m

(22.5%)

Transport$396m(7%)

Other$120.9m (2.1%)


Table 7.2: Other Financial Assets as at 30 June

2017

Budget

2018)

Budget)

2019)

Forward)

Estimate)

2020)

Forward)

Estimate)

2021)

Forward)

Estimate)

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

Income Tax Equivalents Receivable1 820.1 797.0 849.5 885.7 899.6

Prepayments 27.0 18.4 18.5 18.8 19.1

847.0 815.4 868.0 904.5 918.7

Note: 1. Income Tax Equivalents Receivable is an asset held by the General Government Sector that mirrors the

Income Tax Liabilities held by Government Business Enterprises and State-owned Companies within the PNFC and PFC sectors. The receivable reflects timing differences in the payment of income tax equivalents in accordance with Australian Accounting Standards.


Non-Financial Assets include the value of Crown Land and other land holdings, including national parks and

conservation areas, schools, hospitals and other buildings held by the Government for the provision of goods

and services. Non-Financial Assets also includes Plant and Equipment, Intangibles, Assets Held for Sale and

Other Non-Financial Assets.

Land and Buildings is estimated to be $6 265.3 million as at 30 June 2018, an increase of $166.7 million on

the 2016-17 Budget estimate of $6 098.6 million as at 30 June 2017. Land and Buildings is estimated to

increase by $440.1 million to $6 705.4 million as at 30 June 2021.

Infrastructure is estimated to be $4 816.5 million as at 30 June 2018, an increase of $37.2 million on the

2016-17 Budget estimate of $4 779.3 million as at 30 June 2017. Infrastructure is estimated to increase by

$736.5 million to $5 553 million as at 30 June 2021.

The increase in Land and Buildings and Infrastructure over the 2017-18 Budget and Forward Estimates period

reflects the implementation of the Government's infrastructure investment program. Further information

regarding infrastructure investment is provided in chapter 6 of this Budget Paper.

LIABILITIES Total Liabilities is estimated to be $8 140.3 million as at 30 June 2018, increasing over the Forward Estimates

period, with estimated Total Liabilities of $8 444.4 million as at 30 June 2021.

The estimated Borrowings of $711.8 million as at 30 June 2018 include an estimated end of year borrowing

of $499.1 million to be undertaken on 30 June 2018. The end of year borrowing has no impact on the

Government’s Net Debt as the same amount will be borrowed and invested overnight on 30 June with the

Tasmanian Public Finance Corporation, grossing up the amount of cash held and borrowings.


Other Liabilities (which includes Tasmanian Risk Management Fund liabilities) is estimated to be

$409.7 million as at 30 June 2018, an increase of $51 million compared to the 2016-17 Budget of

$358.7 million as at 30 June 2017. The increase primarily reflects the impact of 2016 actual balances that

were not known at the time of preparing the 2016-17 Budget.

General Government Superannuation Liability

The Government's superannuation liability is an estimate of the obligations of the State with respect to

liabilities arising from the current and former members of unfunded or partially funded Public Sector

defined benefit superannuation schemes, which were closed to new members with effect from May 1999.

The superannuation liability is an estimate of the Net Present Value of the Government's share of meeting

current and future benefit payments for scheme members. The superannuation liability differs from many other

financial liabilities, such as Borrowings, which can be called on for repayment in full at any point in time.

The superannuation liability has arisen over many decades because benefits are funded on an emerging basis

when scheme members become entitled to a pension or lump sum benefit. That is, the Government's portion

of the final benefit is paid when it falls due, with the remaining part of the benefit being funded from the

scheme's assets. The major schemes currently operating in the General Government Sector that have an

unfunded liability are those established under the Retirement Benefits Act 1993, the former

Parliamentary Superannuation Act 1973, the former Parliamentary Retiring Benefits Act 1985 and the

Judges' Contributory Pensions Act 1968.

While these schemes have been closed to new members, because of the long-term nature of superannuation

benefits, the superannuation liability continues to increase as existing members accrue additional years of

service as they approach retirement age. The liability is projected to increase until 2023-24 and then gradually

decline over the following five or six decades.

As part of the reform of public sector superannuation, the Government has established the

Superannuation Commission, from 1 April 2017, to replace the RBF Board and be responsible for the

management of the defined benefit schemes. In conjunction with that important reform, the Government has

implemented a more efficient and transparent model for defined benefit scheme operating expenses, whereby

these costs are now directly funded by the Government, through the Department of Treasury and Finance, as

part of the annual Budget development process, rather than being incurred at the RBF Board’s discretion and

charged directly against the Plan Assets. The average annual operating expenses incurred by the RBF Board

over the past six years (being the two most recent triennial review periods) was $19.4 million, while the

average annual cost for the new funding arrangement is $16.9 million across the Budget and Forward

Estimates period, resulting in an estimated saving of $2.5 million per annum, without impact on the level of

service offered to members. This saving has a direct impact on the General Government Net Operating

Balance across the Budget and Forward Estimates period through a reduction in the superannuation expense.

The Government recognises that superannuation is a significant liability and will continue to ensure that it

manages this critical ongoing funding task in the most prudent way and in accordance with the

recommendations of the State Actuary.

The estimated General Government Superannuation Liability as at 30 June 2018 is $6 266.3 million, which is

comprised of the estimated present value of the liability of $8 057.2 million less the estimated fair value of

plan assets of $1 790.8 million.


Table 7.3: General Government Superannuation Liability as at 30 June

2018)

) Budget)

2019)

Forward)

Estimate)

2020)

Forward)

Estimate)

2021)

Forward)

Estimate)

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

Present Value of Superannuation Liability 8 057.2 8 130.4 8 187.4 8 221.2

Fair Value of Plan Assets (1 790.8) (1 784.7) (1 774.8) (1 755.8)

Total 6 266.3 6 345.7 6 412.6 6 465.3

Chart 7.2 projects the General Government Superannuation Liability (net of plan assets) over the total life of

the defined benefit schemes. The Chart shows the liability is expected to be extinguished by 30 June 2078.

Chart 7.2: General Government Superannuation Liability Projection, 30 June 2018 to 30 June 2078

....

1 000

2 000

3 000

4 000

5 000

6 000

7 000

Jun

-20

18

Jun

-20

23

Jun

-20

28

Jun

-20

33

Jun

-20

38

Jun

-20

43

Jun

-20

48

Jun

-20

53

Jun

-20

58

Jun

-20

63

Jun

-20

68

Jun

-20

73

Jun

-20

78

$ m

illio

n

Superannuation Liability


Independent actuarial assessments are prepared by the State Actuary to provide reporting and disclosure

information, relating to the General Government Superannuation Liability, in respect of current and former

employees who have defined benefits arising from membership of the closed defined benefit

superannuation schemes.

The actuarial assumptions are used for the variables that will determine the ultimate cost of providing

long-term superannuation benefits. Actuarial assumptions must be unbiased (i.e. neither imprudent nor

excessively conservative) and should reflect the economic relationships between factors such as inflation,

rates of salary increase, the return on scheme assets and discount rates.

Key assumptions used by the State Actuary in preparing the most recent actuarial estimate of the

General Government Superannuation Liability are:

Discount Rate - 4.75 per cent;

Salary Increase Rate - 3.0 per cent;

Pension Increase Rate - 2.5 per cent; and

Investment Earnings - 4.75 per cent.

It is important to recognise that the actuarial estimate is a snapshot of a scheme's estimated financial position

at a particular point in time, and that the actuarial results do not predict a scheme's future financial position or

its ability to pay benefits in the future. Over time, a scheme's total cost will depend on a number of factors,

including the amount of benefits the scheme pays, the number of people paid benefits (for example mortality

and marital status are estimated), scheme expenses and the amount earned on any assets invested to pay

the benefits. These variables will change over the life of the liability. The variables are uncertain at the

valuation date and are estimated by the State Actuary.

The superannuation liability is particularly sensitive to discount rate movements. Since 2009-10, due to the

volatility of the bond market and the long-term nature of the liability, the Budget projections of the

Superannuation Liability do not use the current Australian Government long-term bond rate. The

2017-18 Budget projections are based on a discount rate of 4.75 per cent.

There is a strong inverse relationship between the discount rate and the valuation of the liability. Chart 7.3

shows the impact of an increase or decrease of one per cent in the average discount rate used to value the

General Government Superannuation Liability. The base rate column represents the estimated Present Value

of the superannuation liability (gross) as at 30 June in each year valued by the State Actuary using a discount

rate of 4.75 per cent.


Chart 7.3: Sensitivity Analysis of the General Government Superannuation Liability as at 30 June

Currently, 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.

Chart 7.4 shows the estimated employer contribution payments, made up of both pension and lump sum

benefit costs, over the period 2017-18 to 2077-78.

Chart 7.4: Defined Benefit Superannuation Costs, 2017-18 to 2077-78

5 500

6 000

6 500

7 000

7 500

8 000

8 500

9 000

9 500

2018 2019 2020 2021

$ m

illio

n

Base Rate plus 1% Base Rate 4.75% Base Rate minus 1%

....

50

100

150

200

250

300

350

400

450

2017

-18

2022

-23

2027

-28

2032

-33

2037

-38

2042

-43

2047

-48

2052

-53

2057

-58

2062

-63

2067

-68

2072

-73

2077

-78

$ m

illio

n

Lump Sum and Pension Payments


A key budget risk is that the cost to the Budget will increase significantly in coming years, increasing by

54.8 per cent over the next 14 years and peaking in 2031-32. The estimated cost to the Budget is based on

the most recent actuarial estimates. The change from the projections in the 2016-17 Budget reflects a

2 per cent decrease in the expected peak cost to $442.6 million ($451.6 million in the 2016-17 Budget).

In 2017-18, 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 peak at 5.4 per cent in nine years (2026-27),

followed by a decrease to 4.7 per cent in fifteen years (2032-33) and 3.8 per cent in 20 years (2037-38).

While movements in discount rates have a significant impact on the valuation of the superannuation liability

at any point of time, those discount rate movements do not impact on the nominal cash flows required to meet

the emerging cost of benefits paid to members.

Table 7.4 shows the estimated nominal cash flows required to meet the emerging cost of superannuation

benefits payable to members. This represents the estimated total cost of benefits payable and includes the

General Government share, together with the share of benefits that are funded from Plan Assets.

Table 7.4: Undiscounted Defined Benefit Obligations Payable to Employees of the General Government Sector

2017

Estimate

$m

Estimated total benefit payments to be made in the period

No later than 1 year 392

Later than 1 year and no later than 2 years 410

Later than 2 years and no later than 5 years 1 310








Later than 40 years and no later than 45 years 898


Undiscounted defined benefit obligation 19 804

After 50 years there is expected to be a reducing level of cash for a further 25 years totalling

approximately: 233


Total State Superannuation Liability

The estimated Total State Superannuation Liability as at 30 June 2018 is $6 776 million, which is comprised

of the estimated present value of the liability of $8 706.5 million less the estimated fair value of plan assets of

$1 930.5 million. Total State includes Government Business Enterprises and State-owned Companies.

Table 7.5: Total State Superannuation Liability as at 30 June

2018)

) Budget)

2019)

Forward)

Estimate)

2020)

Forward)

Estimate)

2021)

Forward)

Estimate)

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

Present Value of Superannuation Liability 8 706.5 8 786.0 8 847.8 8 884.6

Fair Value of Plan Assets (1 930.5) (1 924.0) (1 913.3) (1 892.8)

Total 6 776.0 6 862.0 6 934.5 6 991.8

Chart 7.5 shows the impact of an increase or decrease of one per cent in the discount rate used to value the

Total State Superannuation Liability. The base rate column represents the estimated present value of the

superannuation liability (gross) as at 30 June in each year valued by the State Actuary using a discount rate

of 4.75 per cent.

Chart 7.5: Sensitivity Analysis of the Total State Superannuation Liability as at 30 June

5 500

6 000

6 500

7 000

7 500

8 000

8 500

9 000

9 500

10 000

10 500

2018 2019 2020 2021

$ m

illio

n

Base Rate plus 1% Base Rate 4.75% Base Rate minus 1%


Table 7.6 shows the estimated nominal cash flows required to meet the emerging cost of superannuation

benefits payable to members. This represents the estimated total cost of benefits payable and includes the

Total State share, together with the share of benefits that are funded from Plan Assets.

Table 7.6: Undiscounted Defined Benefit Obligations Payable to Employees of the Total State Sector

2017

Estimate

$m

Estimated total benefit payments to be made in the period

No later than 1 year 423

Later than 1 year and no later than 2 years 443











Undiscounted defined benefit obligation 21 403

After 50 years there is expected to be a reducing level of cash for a further 25 years

totalling approximately: 252


TASMANIAN RISK MANAGEMENT FUND Purpose of the Fund

The Tasmanian Risk Management Fund was established on 1 January 1999 to provide a

whole-of-government approach to funding and managing the insurable risks of inner-Budget agencies.

Agencies are covered for the majority of insurable risks to which they are exposed or for which they choose

to accept responsibility and the Fund agrees to cover, including:

personal injury (including workers' compensation and personal accident);

property (including buildings and contents, business interruption, motor vehicles, machinery, marine hull,

transit and fraud);

liability (including public and products, professional, and directors' and officers' liability);

medical liability; and

travel.

All classes are self-insured by the Fund apart from marine hull, travel, and some property claims, which remain

insured through the private sector, as this is more cost-effective than self-insurance for these categories of

risk. From 1 July 2015, an Industrial Special Risks Insurance Policy has been purchased in the external

market to cover catastrophic risk for property claims above $5 million.

Performance of the Fund

The Fund operates on a cost recovery basis with all inner Budget agencies making contributions each year in

order to build up reserves to meet current and emerging costs. Contributions are based on advice from an

independent Actuary and are adjusted over time according to the claims experience of agencies. Overall, total

agency contributions are expected to increase from $56.7 million in 2016-17 to $60.2 million in 2017-18.

The expected overall increase in contributions for 2017-18 is mainly due to an anticipated increase in both

workers' compensation and property contributions. The increase in workers' compensation contributions and

expenses is primarily as a result of anticipated higher claim costs in recent years and a deterioration in the

funding level of this risk. The contribution of property has increased significantly, reflecting poor claims

experience in 2016-17 and projected higher claims costs for both large and small claims in 2017-18. These

increases will be marginally offset by a decrease in both general and medical liability contributions, which is

mainly due to the improved funding position of these risk categories. Contributions for motor vehicles will also

increase moderately to take account of the higher number of claims expected in 2017-18 over 2016-17.

In terms of the financial position of the Fund, the Fund's Actuary takes into account the level of assets and

liabilities in each risk category when determining annual contributions. The net assets of the Fund are

expected to increase over time mainly reflecting improvement in the funding position of workers' compensation

risks, a rebuilding of the large claim funding reserve of $5 million for property risks and a significant pre-2001

medical liability risk provision. This provision is being maintained in medical liability risks as claims can take

many years to be reported and many more years to reach a settlement. These reporting and settlement delays

mean that the outstanding claims liability in this risk is subject to considerable uncertainty.


Table 7.7: Financial Position of the Tasmanian Risk Management Fund as at 30 June

2017 2018 2019 2020 2021

Estimated

Outcome Budget

Forward

Estimate

Forward

Estimate

Forward

Estimate

$m $m $m $m $m

Current Assets

Cash and Cash Equivalents 235.9 238.4 252.3 265.1 276.0

Receivables 0.8 0.8 0.8 0.8 0.8

236.7 239.2 253.1 265.9 276.8

Liabilities1

Personal Injury 99.5 102.2 105.3 108.9 112.2

Property 7.9 0.8 2.9 3.0 3.1

Motor Vehicle 0.4 0.4 0.4 0.4 0.5

Liability 6.6 6.9 7.1 7.3 7.6

Medical 115.4 118.5 122.6 127.0 131.7

Payables 0.8 0.8 0.8 0.8 0.8

230.6 229.6 239.1 247.4 255.9

Net Assets 6.1 9.6 14.0 18.5 20.9

Note: 1. Liabilities are calculated by the Fund's actuary as at 31 December 2016.

Uniform Government Reporting 143

APPENDIX 1 UNIFORM

GOVERNMENT REPORTING

Key Issues

The estimated Net Operating Balance for 2017-18 is a surplus of $54.3 million for the

General Government Sector (GGS), a deficit of $55.5 million for the PNFC Sector, a deficit of

$1.2 million for the TNFP Sector, a deficit of $56.6 million for the PFC Sector and a deficit of $57.9 million

for the Total State Sector.

The estimated Fiscal Balance for 2017-18 is a deficit of $253.9 million for the GGS, a deficit of

$222.8 million for the PNFC Sector, a deficit of $476.7 million for the TNFP Sector, a deficit of

$56.9 million for the PFC Sector and a deficit of $533.6 million for the Total State Sector.

As at 30 June 2018, GGS Net Debt is forecast to be negative $451.8 million, PNFC Sector Net Debt is

forecast to be $2 559.8 million, TNFP Sector Net Debt is forecast to be $2 108 million, PFC Sector

Net Debt is forecast to be negative $2 072.2 million and Total State Sector Net Debt is forecast to be

$35.8 million.

Further information about the GGS Budget and Forward Estimates is included in chapter 4 of this

Budget Paper. Details of the GGS 2016-17 Estimated Outcome are included in appendix 3 of this Budget

Paper.

144 Uniform Government Reporting

INTRODUCTION The financial information in this appendix has been prepared in accordance with the Uniform Presentation

Framework (UPF). This appendix provides Income Statement, Balance Sheet and Cash Flow Statement

estimates for the:

General Government Sector (GGS);

Public Non-Financial Corporations (PNFC) Sector;

Total Non-Financial Public (TNFP) Sector;

Public Financial Corporations (PFC) Sector; and

Total State Sector.

The statements present the 2016-17 Estimated Outcome, 2017-18 Budget Estimates and Forward Estimates

for the period 2018-19 to 2020-21. For taxation information required under the UPF, refer to chapter 5 of this

Budget Paper.

In accordance with the UPF, the final end of year results for 2016-17 will be released in the

Treasurer's Annual Financial Report 2016-17. The Report will be publicly released by no later than

31 October 2017.

Loan Council Allocation

Under Loan Council arrangements, every year the Australian Government and each state and territory

nominate a Loan Council Allocation (LCA). A jurisdiction's LCA incorporates:

the estimated Cash Deficit/(Surplus) of the General Government and PNFC Sectors;

Net Cash Flows from Investments in Financial Assets for Policy Purposes; and

Memorandum Items, which are other financing transactions that are treated as borrowing equivalents for

Loan Council purposes.


Table A1.1 compares Tasmania's 2017-18 LCA approved by the Loan Council in March 2017, with the revised

LCA based on 2017-18 Budget estimates.

Table A1.1: Loan Council Allocation 2017-18 2017-18 2017-18

) Budget

Nomination Estimate

$m $m

General Government Cash Deficit/(Surplus) 7.9 149.8

Public Non-Financial Corporations Sector Cash Deficit/(Surplus) 158.5 215.1

Non-Financial Public Sector Cash Deficit/(Surplus) 166.4 364.9

Less Non-Financial Public Sector Net Cash Flows from Investments in Financial Assets for

Policy Purposes (4.1) (4.5)

Plus Memorandum Items1 63.1 119.7

Loan Council Allocation Deficit/(Surplus) 233.6 489.1

2017-18 Tolerance Limit2 174.8 176.8

Notes: 1. Memorandum Items include borrowings by local government (including TasWater) and the University of Tasmania. 2. The Tolerance Limit is equal to two per cent of Total Non-Financial Public Sector Cash Receipts from Operating

Activities and applies from the time that the LCA is approved by the Loan Council until the budgeted LCA is released. The Tolerance Limit will change with each revision to the Budget. The Tolerance Limit recognises that LCAs are nominated at early stages of the Budget process and that estimates are likely to change as a result.

The 2017-18 Budget estimate is a deficit of $489.1 million, an increase of $255.5 million, which is outside the

Tolerance Limit of $174.8 million estimated for Tasmania in March 2017. If a jurisdiction is likely to exceed its

Tolerance Limit, it must provide an explanation to the Loan Council and make that explanation public.

The change of $255.5 million in the LCA between the 2017-18 LCA Nomination and 2017-18 Budget estimate

is mainly due to:

an increase in the General Government Cash Deficit of $141.9 million;

an increase in the Public Non-Financial Corporations Cash Deficit/(Surplus) of $56.6 million, which is

primarily due to:

an increase in Purchases of Non-Financial Assets of $47 million primarily relating to:

Tasmanian Irrigation Pty Ltd of $16.9 million, due to a change in the construction schedule for

various irrigation schemes;

Aurora Energy Pty Ltd of $11.4 million, due to additional investment in plant and equipment;

Hydro Tasmania of $10 million, due to a change in forecast capital expenditure;

Tasracing Pty Ltd of $9.9 million, due to a revision of the timing of capital works with the

commencement of a major track upgrade bought forward from 2020 to 2018; and


an increase in Memorandum items of $56.6 million, which is primarily due to additional new cash

borrowings for the Local Government Sector. This is partly due to the State Government’s Accelerated

Local Government Capital Program, which enables councils to apply for Government interest free loans

and bring forward planned infrastructure projects by up to five years.

Consistent with the LCA arrangements, Tasmania advises Loan Council of these circumstances through this

appendix. The LCA Outcome for 2016-17 will be presented in the Treasurer's Annual Financial

Report 2016-17.


GOVERNMENT FINANCIAL ESTIMATES Tables A1.2 to A1.16 provide details of the Income Statements, Balance Sheets and Cash Flow Statements

for the GGS, PNFC Sector, TNFP Sector, PFC Sector and Total State Sector respectively.

Table A1.2: General Government Income Statement 2016-17 2017-18 2018-19 2019-20 2020-21

Estimated Forward Forward Forward

Outcome Budget Estimate Estimate Estimate

$m $m $m $m $m


Grants 4 371.9 3 682.9 3 673.5 3 735.4 3 748.3

Taxation 1 094.1 1 128.5 1 147.4 1 173.0 1 198.9

Sales of Goods and Services 411.2 408.0 417.0 424.8 428.7

Fines and Regulatory Fees 95.9 98.9 99.3 100.3 101.6

Interest Income 22.1 19.6 17.6 16.0 17.2

Dividend, Tax and Rate Equivalent Income 316.0 358.4 338.2 370.1 390.4

Other Revenue 188.4 177.7 170.1 165.2 163.5

6 499.6 5 874.0 5 863.0 5 984.8 6 048.7


Employee Expenses 2 371.5 2 400.4 2 430.4 2 461.6 2 533.0

Superannuation 339.9 273.5 269.7 270.0 271.0

Depreciation 267.1 268.6 263.7 322.8 337.6

Supplies and Consumables 1 187.9 1 227.8 1 186.1 1 187.2 1 206.8

Nominal Superannuation Interest Expense 236.3 285.6 289.7 293.3 296.2

Borrowing Costs 10.4 9.8 9.5 9.0 8.2

Grant Expenses 1 243.0 1 314.3 1 333.4 1 362.4 1 322.8

Other Expenses 31.6 39.7 29.8 27.3 27.8

5 687.6 5 819.8 5 812.3 5 933.6 6 003.4

Equals NET OPERATING BALANCE 812.0 54.3 50.7 51.3 45.3


Result

Gain/(Loss) on Disposal of Non-Financial Assets 11.3 15.3 12.2 12.7 12.8

Movement in Investment in PNFC and PFC Sectors 392.2 (104.2) 11.2 37.4 50.2

Movements in Superannuation Liability 2 914.6 .... .... .... ....

Other Gains/(Losses) (24.7) 9.8 (11.4) (7.0) (8.2)

3 293.5 (79.0) 12.1 43.0 54.8

Equals Operating Result 4 105.5 (24.8) 62.8 94.3 100.0


Table A1.2: General Government Income Statement (continued) 2016-17 2017-18 2018-19 2019-20 2020-21



$m $m $m $m $m

Plus Other Economic Flows - Other Movements in Equity

Revaluations of Non-Financial Assets 224.9 250.8 268.4 288.5 294.9

Other Non-Owner Movements in Equity 8.6 3.8 3.8 3.8 3.8

233.5 254.6 272.2 292.3 298.7

Equals Comprehensive Result 4 339.0 229.8 335.0 386.6 398.7


NET OPERATING BALANCE 812.0 54.3 50.7 51.3 45.3



Less Sale of Non-Financial Assets 29.4 33.2 30.4 30.8 30.9

Less Depreciation 267.1 268.6 263.7 322.8 337.6

198.9 308.2 279.9 48.5 (25.8)

Equals FISCAL BALANCE 613.1 (253.9) (229.2) 2.8 71.1


Table A1.3: General Government Balance Sheet as at 30 June 2017 2018 2019 2020 2021

Estimated Revised Forward Forward Forward


$m $m $m $m $m

Assets

Financial Assets

Cash and Deposits 1 179.6 1 117.2 1 056.7 1 075.5 1 092.3

Investments 44.3 46.4 48.6 50.8 53.0

Equity Investment in PNFC and PFC Sectors 5 703.4 5 654.0 5 715.6 5 757.5 5 807.6


Receivables 319.5 315.4 312.2 307.0 303.0


8 077.0 7 975.7 8 032.4 8 130.7 8 212.7



Infrastructure 4 521.4 4 816.5 5 108.1 5 343.5 5 553.0




Intangibles 45.5 47.7 45.8 42.0 37.8



11 311.0 11 888.1 12 449.5 12 798.0 13 075.5

Total Assets 19 388.0 19 863.8 20 481.9 20 928.8 21 288.2

Liabilities

Borrowings 564.1 711.8 905.2 913.4 805.7

Superannuation 6 176.4 6 266.3 6 345.7 6 412.6 6 465.3


Payables 132.8 133.7 133.3 135.2 137.1

Other Liabilities 408.3 409.7 411.3 412.0 412.7


NET ASSETS 11 493.7 11 723.5 12 058.5 12 445.0 12 843.8

Equity



Total Equity 11 493.7 11 723.5 12 058.5 12 445.0 12 843.8


Table A1.3: General Government Balance Sheet as at 30 June (continued)

2017 2018 2019 2020 2021

Estimated Revised Forward Forward Forward


$m $m $m $m $m


NET WORTH1 11 493.7 11 723.5 12 058.5 12 445.0 12 843.8

NET FINANCIAL WORTH2 182.6 (164.6) (391.0) (353.0) (231.7)


NET DEBT4 (659.8) (451.8) (200.0) (212.9) (339.6)

Notes: 1. Net Worth represents Total Assets (both Financial and Non-Financial) less Total Liabilities. 2. Net Financial Worth represents Total Financial Assets less Total Liabilities. 3. Net Financial Liabilities represents Total Liabilities less Financial Assets, excluding Equity investment in the PNFC

and PFC Sectors. 4. Net Debt represents Borrowings less the sum of Cash and Deposits and Investments.


Table A1.4: General Government Cash Flow Statement 2016-17 2017-18 2018-19 2019-20 2020-21



$m $m $m $m $m


Cash Received from Operating Activities

Grants Received 4 371.9 3 682.9 3 673.5 3 735.4 3 748.3

Taxation 1 084.5 1 127.3 1 144.5 1 171.3 1 196.4



Interest Received 22.1 19.6 17.5 16.1 17.2

Dividend, Tax and Rate Equivalents 301.2 372.4 288.6 338.7 380.7

Other Receipts 361.8 365.3 360.9 338.7 332.5

6 641.3 6 074.3 5 999.5 6 123.6 6 203.9

Cash Payments for Operating Activities


Superannuation (448.9) (468.1) (478.7) (498.0) (513.9)


Borrowing Costs (10.5) (9.8) (9.5) (9.1) (8.3)


Other Payments (215.5) (229.1) (221.4) (199.7) (196.9)

(5 485.2) (5 654.1) (5 663.2) (5 743.1) (5 775.4)

Net Cash Flows from Operating Activities 1 156.1 420.3 336.3 380.5 428.6




Sales of Non-Financial Assets 29.4 33.0 30.4 30.8 30.9

(447.0) (570.1) (534.4) (359.8) (299.9)

Net Cash Flows from Financial Assets

(Policy Purposes)


Net Advances Paid .... (2.1) (2.2) (2.2) (2.2)

Equity/Disposals 0.7 0.7 0.7 0.7 0.7

(795.2) (60.3) (55.9) (10.0) (4.2)

Net Cash Flows from Investing Activities (1 242.1) (630.3) (590.3) (369.8) (304.1)


Table A1.4: General Government Cash Flow Statement (continued) 2016-17 2017-18 2018-19 2019-20 2020-21



$m $m $m $m $m


Net Borrowing (61.4) 147.8 193.4 8.2 (107.8)

(61.4) 147.8 193.4 8.2 (107.8)

Net Increase/(Decrease) in Cash Held (147.4) (62.3) (60.6) 18.9 16.8

Cash at Beginning of the Year 1 326.9 1 179.6 1 117.2 1 056.7 1 075.5

Cash at End of the Year 1 179.6 1 117.2 1 056.7 1 075.5 1 092.3




Equals CASH SURPLUS/(DEFICIT) 709.1 (149.8) (198.1) 20.7 128.7


Table A1.5: Public Non-Financial Corporations Sector Income Statement

2016-17 2017-18 2018-19 2019-20 2020-21



$m $m $m $m $m


Grants 180.3 148.4 152.4 170.3 173.4

Sales of Goods and Services 2 904.2 2 901.5 2 986.2 3 143.7 3 267.3

Interest Income 7.2 6.3 6.5 6.6 6.8

Other Revenue 33.7 33.4 41.3 35.8 36.7

3 125.4 3 089.6 3 186.3 3 356.4 3 484.1


Employee Expenses 392.5 404.8 413.1 421.6 428.7

Superannuation 42.7 40.4 41.1 41.9 42.5

Depreciation 322.6 332.8 346.9 354.6 361.2



Borrowing Costs 127.2 124.2 126.4 121.7 122.4

Dividend and Income Tax Equivalent Expenses 226.0 196.7 185.0 226.2 246.5

Grant Expenses 39.2 40.8 41.7 42.6 43.6

Other Expenses 27.4 26.8 27.3 27.1 27.4

3 127.4 3 145.1 3 187.6 3 342.0 3 469.2

Equals NET OPERATING BALANCE (2.0) (55.5) (1.3) 14.4 14.9

Plus Other Economic Flows - Included in Operating Result

Movement in Superannuation Liability 228.7 .... .... .... ....

Other Gains/(Losses) (29.6) (68.3) (19.1) 8.6 16.9

199.1 (68.3) (19.1) 8.6 16.9

Equals Operating Result 197.0 (123.8) (20.4) 23.0 31.8


Table A1.5: Public Non-Financial Corporations Sector Income Statement (continued)

2016-17 2017-18 2018-19 2019-20 2020-21



$m $m $m $m $m


Equity


Other Non-Owner Movements in Equity 7.1 11.1 20.3 (3.6) (4.0)

117.7 62.2 70.8 48.0 49.7

Equals Comprehensive Result 314.8 (61.7) 50.4 71.0 81.4


NET OPERATING BALANCE (2.0) (55.5) (1.3) 14.4 14.9





175.7 167.2 87.8 19.7 7.6

Equals FISCAL BALANCE (177.7) (222.8) (89.1) (5.3) 7.3


Table A1.6: Public Non-Financial Corporations Sector Balance Sheet as at 30 June

2017 2018 2019 2020 2021



$m $m $m $m $m

Assets

Financial Assets

Cash and Deposits 279.2 222.4 173.6 163.1 171.4

Investments 84.9 1.3 0.6 0.3 0.3


Receivables 556.9 521.9 522.3 523.5 523.7


1 849.5 1 695.4 1 638.4 1 630.8 1 643.2


Land and Buildings 229.1 238.3 242.9 243.8 243.9

Infrastructure 7 877.6 7 981.4 8 060.7 8 118.3 8 164.9


Biological Assets 200.6 201.1 201.5 202.0 202.4

Intangibles 123.3 129.0 134.8 129.6 133.8


8 906.2 9 007.7 9 119.5 9 172.9 9 228.5

Total Assets 10 755.8 10 703.1 10 757.9 10 803.7 10 871.7

Liabilities

Borrowings 2 771.9 2 783.6 2 728.4 2 674.9 2 660.9

Superannuation 495.2 502.3 508.5 513.7 517.8


Payables 418.7 383.3 380.3 379.5 379.8

Other Liabilities 2 583.8 2 550.6 2 553.6 2 570.2 2 563.5


NET ASSETS 4 386.3 4 380.4 4 482.1 4 558.7 4 641.2

Equity

Accumulated Funds 804.2 720.8 747.4 795.6 820.4


Other Equity 2 308.3 2 334.6 2 359.4 2 336.1 2 340.2

Total Equity 4 386.3 4 380.4 4 482.1 4 558.7 4 641.2


Table A1.6: Public Non-Financial Corporations Sector Balance Sheet as at 30 June (continued)

2017 2018 2019 2020 2021



$m $m $m $m $m


NET WORTH1 4 386.3 4 380.4 4 482.1 4 558.7 4 641.2

NET FINANCIAL WORTH2 (4 519.9) (4 627.3) (4 637.4) (4 614.3) (4 587.3)


NET DEBT4 2 407.8 2 559.8 2 554.1 2 511.5 2 489.2

Notes: 1. Net Worth represents Total Assets (both Financial and Non-Financial) less Total Liabilities. 2. Net Financial Worth represents Total Financial Assets less Total Liabilities. 3. Net Financial Liabilities represents Total Liabilities less Financial Assets. For the PNFC Sector this is equivalent to

negative Net Financial Worth. 4. Net Debt represents Borrowings less the sum of Cash and Deposits and Investments.


Table A1.7: Public Non-Financial Corporations Sector Cash Flow Statement

2016-17 2017-18 2018-19 2019-20 2020-21



$m $m $m $m $m



Grants Received 178.1 146.2 150.2 168.1 171.1



Other Receipts 110.2 109.4 117.0 112.0 114.0

3 244.7 3 183.8 3 225.1 3 326.2 3 492.9


Employee Entitlements (417.3) (425.3) (434.0) (444.1) (447.5)

Superannuation (42.5) (40.1) (41.0) (41.7) (42.3)


Borrowing Costs (121.7) (131.8) (132.9) (129.1) (129.4)

Grants and Subsidies Paid (39.2) (40.8) (41.7) (42.6) (43.6)

Other Payments (128.4) (119.6) (122.3) (124.0) (127.4)

(2 710.8) (2 701.3) (2 693.3) (2 711.8) (2 856.3)

Net Cash Flows from Operating Activities 533.9 482.4 531.8 614.3 636.6





(498.3) (500.1) (434.7) (374.3) (368.8)


Purposes)

Equity Injections 61.9 55.7 51.4 5.5 1.1

61.9 55.7 51.4 5.5 1.1

Net Cash Flows from Financial Assets (Liquidity

Purposes)

Net Purchase of Investments (17.5) 90.6 7.5 6.3 6.3

(17.5) 90.6 7.5 6.3 6.3

Net Cash Flows from Investing Activities (454.0) (353.7) (375.8) (362.5) (361.5)


Table A1.7: Public Non-Financial Corporations Sector Cash Flow Statement (continued)

2016-17 2017-18 2018-19 2019-20 2020-21



$m $m $m $m $m

Cash Flows from Financing Activities

Net Borrowing 33.3 11.9 (55.0) (53.2) (13.8)

Dividends and Tax Equivalents Paid (202.7) (197.5) (149.9) (209.2) (253.1)

Net Cash Flows from Financing Activities (169.4) (185.5) (204.8) (262.4) (266.9)

Net Increase/(Decrease) in Cash Held (89.5) (56.8) (48.8) (10.5) 8.3

Cash at Beginning of the Year 368.7 279.2 222.4 173.6 163.1

Cash at End of the Year 279.2 222.4 173.6 163.1 171.4




Plus Dividends and Tax Equivalents Paid (202.7) (197.5) (149.9) (209.2) (253.1)

Equals CASH SURPLUS/(DEFICIT) (167.1) (215.1) (52.7) 30.9 14.7


Table A1.8: Total Non-Financial Public Sector Income Statement 2016-17 2017-18 2018-19 2019-20 2020-21



$m $m $m $m $m


Grants 4 371.9 3 682.9 3 673.5 3 735.4 3 748.3

Taxation 1 050.8 1 087.9 1 105.0 1 131.5 1 157.0



Interest Income 29.3 25.9 24.1 22.7 23.9


Other Revenue 222.1 211.0 211.4 200.9 200.3

9 145.5 8 548.4 8 640.0 8 873.6 9 041.4



Superannuation 382.5 314.0 310.8 311.9 313.5

Depreciation 589.7 601.4 610.6 677.4 698.8



Borrowing Costs 117.1 117.0 117.6 113.9 113.9

Grant Expenses 1 101.9 1 206.8 1 222.7 1 234.7 1 193.1

Other Expenses 36.2 42.9 33.0 29.8 30.0

8 335.6 8 549.7 8 590.6 8 807.9 8 981.2

Equals NET OPERATING BALANCE 810.0 (1.2) 49.4 65.7 60.2


Result

Gain/(Loss) on Sale of Non-Financial Assets 11.3 15.3 12.2 12.7 12.8

Movement in Investments in GBEs and SOCs 77.4 (42.5) (39.1) (33.6) (31.3)

Movement in Superannuation Liability 3 143.3 .... .... .... ....

Other Gains/(Losses) (45.7) (58.5) (30.5) 1.6 8.7

3 186.4 (85.7) (57.4) (19.4) (9.8)

Equals Operating Result 3 996.3 (86.9) (8.0) 46.3 50.4


Table A1.8: Total Non-Financial Public Sector Income Statement (continued)

2016-17 2017-18 2018-19 2019-20 2020-21



$m $m $m $m $m


Equity


Other Flows 7.1 14.9 24.1 0.2 (0.2)

342.6 316.7 343.0 340.3 348.3



NET OPERATING BALANCE 810.0 (1.2) 49.4 65.7 60.2


Purchases of Non-Financial Assets 994.8 1 110.7 1 009.4 776.8 711.9



374.6 475.4 367.7 68.2 (18.2)

Equals FISCAL BALANCE 435.3 (476.7) (318.3) (2.5) 78.4


Table A1.9: Total Non-Financial Public Sector Balance Sheet as at 30 June

2017 2018 2019 2020 2021



$m $m $m $m $m

Assets

Financial Assets

Cash and Deposits 1 458.8 1 339.6 1 230.3 1 238.7 1 263.7

Investments 128.6 47.2 48.6 50.5 52.7

Equity Investment in PFC Sector 1 317.1 1 273.6 1 233.5 1 198.8 1 166.5


Receivables 876.3 837.3 834.5 830.5 826.7


4 677.5 4 435.9 4 301.3 4 289.0 4 298.3



Infrastructure 12 399.0 12 797.9 13 168.9 13 461.7 13 717.8





Intangibles 168.8 176.7 180.6 171.6 171.6



20 217.3 20 895.8 21 569.0 21 971.0 22 304.0

Total Assets 24 894.8 25 331.6 25 870.3 26 260.0 26 602.2

Liabilities

Borrowings 3 335.4 3 494.8 3 633.0 3 587.7 3 465.9

Superannuation 6 671.6 6 768.6 6 854.2 6 926.3 6 983.1


Payables 551.6 517.0 513.6 514.7 516.9



NET ASSETS 11 493.7 11 723.5 12 058.5 12 445.0 12 843.8


Table A1.9: Total Non-Financial Public Sector Balance Sheet as at 30 June (continued)

2017 2018 2019 2020 2021



$m $m $m $m $m

Equity



Total Equity 11 493.7 11 723.5 12 058.5 12 445.0 12 843.8


NET WORTH1 11 493.7 11 723.5 12 058.5 12 445.0 12 843.8



NET DEBT4 1 748.0 2 108.0 2 354.1 2 298.6 2 149.6

Notes: 1. Net Worth represents Total Assets (both Financial and Non-Financial) less Total Liabilities. 2. Net Financial Worth represents Total Financial Assets less Total Liabilities. 3. Net Financial Liabilities represents Total Liabilities less Financial Assets, excluding Equity Investment in the

PFC Sector. 4. Net Debt represents Borrowings less the sum of Cash and Deposits and Investments.


Table A1.10: Total Non-Financial Public Sector Cash Flow Statement 2016-17 2017-18 2018-19 2019-20 2020-21



$m $m $m $m $m



Grants Received 4 369.7 3 680.8 3 671.4 3 733.2 3 746.1

Taxation 1 041.2 1 086.7 1 102.1 1 129.8 1 154.5





Other Receipts 472.0 474.7 478.0 450.7 446.5

9 429.8 8 842.1 8 850.4 8 999.1 9 198.8



Superannuation (491.3) (508.2) (519.8) (539.7) (556.2)


Borrowing Costs (111.7) (124.7) (124.2) (121.4) (120.9)


Other Payments (321.1) (325.0) (319.6) (299.1) (299.1)

(7 942.5) (8 136.9) (8 132.2) (8 213.4) (8 386.7)


Cash flows from Investing Activities


Purchases of Non-Financial Assets (975.8) (1 103.8) (1 000.2) (765.2) (700.0)


(945.3) (1 070.1) (969.0) (734.0) (668.7)


Purposes)



Equity Disposals 0.7 0.7 0.7 0.7 0.7

(733.3) (4.5) (4.5) (4.5) (3.1)


Purposes)

Net Purchase of Investments (17.5) 90.6 7.5 6.3 6.3

(17.5) 90.6 7.5 6.3 6.3



Table A1.10: Total Non-Financial Public Sector Cash Flow Statement (continued)

2016-17 2017-18 2018-19 2019-20 2020-21



$m $m $m $m $m


Net Borrowings (28.1) 159.7 138.4 (45.0) (121.6)

Net Cash Flows from Financing Activities (28.1) 159.7 138.4 (45.0) (121.6)


Cash at Beginning of the Year 1 695.6 1 458.8 1 339.6 1 230.3 1 238.7

Cash at End of the Year 1 458.8 1 339.6 1 230.3 1 238.7 1 263.7



Plus Net Cash Flows from Non-Financial Assets (945.3) (1 070.1) (969.0) (734.0) (668.7)



Table A1.11: Public Financial Corporations Sector Income Statement 2016-17 2017-18 2018-19 2019-20 2020-21



$m $m $m $m $m



Interest Income 224.9 242.5 233.5 234.8 229.0


Other Revenue 5.2 4.3 4.4 4.4 4.4

442.4 444.0 440.1 451.2 456.3


Employee Expenses 5.9 6.1 6.3 6.4 6.5

Superannuation 1.0 1.0 1.0 1.1 1.1

Depreciation 0.2 0.2 0.2 0.2 0.2

Supplies and Consumables 149.8 156.5 164.5 171.2 178.8

Borrowing Costs 183.5 169.6 162.9 170.0 165.4

Dividend and Income Tax Equivalent Expenses 90.0 161.7 153.2 143.9 143.9

Grant Expenses 5.0 5.1 5.3 5.4 5.6

Other Expenses 0.3 0.3 0.3 0.3 0.3

435.6 500.6 493.7 498.4 501.9

Equals NET OPERATING BALANCE 6.8 (56.6) (53.5) (47.2) (45.6)


Result

Other Gains/(Losses) 92.5 21.8 22.6 23.5 24.5

92.5 21.8 22.6 23.5 24.5

Equals Operating Result 99.3 (34.8) (31.0) (23.7) (21.1)


Equity

Other Flows (34.6) (8.7) (9.2) (11.0) (11.3)

(34.6) (8.7) (9.2) (11.0) (11.3)

Equals Comprehensive Result 64.8 (43.5) (40.1) (34.7) (32.3)


Table A1.11: Public Financial Corporations Sector Income Statement (continued)

2016-17 2017-18 2018-19 2019-20 2020-21



$m $m $m $m $m


NET OPERATING BALANCE 6.8 (56.6) (53.5) (47.2) (45.6)



Less Sale of Non-Financial Assets .... 0.1 .... .... 0.1


0.7 0.3 0.5 0.5 0.3

Equals FISCAL BALANCE 6.1 (56.9) (54.0) (47.7) (45.9)


Table A1.12: Public Financial Corporations Sector Balance Sheet as at 30 June

2017 2018 2019 2020 2021



$m $m $m $m $m

Assets

Financial Assets


Investments 9 175.7 8 595.5 8 247.0 8 302.8 8 261.4

Receivables 45.8 43.7 37.2 32.9 26.7


9 516.5 8 944.9 8 587.5 8 636.5 8 586.5




Intangibles 1.0 1.0 1.0 1.1 1.0

17.1 17.5 17.9 18.5 18.8

Total Assets 9 533.7 8 962.4 8 605.5 8 655.0 8 605.3

Liabilities

Borrowings 7 111.2 6 531.5 6 151.1 6 171.0 6 086.1

Superannuation 7.0 7.4 7.8 8.2 8.7


Payables 2.9 2.9 2.9 2.9 2.9



NET ASSETS 1 317.1 1 273.6 1 233.5 1 198.8 1 166.5

Equity

Accumulated Funds 576.7 571.2 573.8 587.1 608.4

Other Equity 740.4 702.4 659.6 611.6 558.1

Total Equity 1 317.1 1 273.6 1 233.5 1 198.8 1 166.5


Table A1.12: Public Financial Corporations Sector Balance Sheet as at 30 June (continued)

2017 2018 2019 2020 2021



$m $m $m $m $m


NET WORTH1 1 317.1 1 273.6 1 233.5 1 198.8 1 166.5

NET FINANCIAL WORTH2 1 300.0 1 256.1 1 215.5 1 180.3 1 147.7

NET FINANCIAL LIABILITIES3 (1 300.0) (1 256.1) (1 215.5) (1 180.3) (1 147.7)

NET DEBT4 (2 072.6) (2 072.2) (2 104.6) (2 140.9) (2 184.9)

Notes: 1. Net Worth represents Total Assets (both Financial and Non-Financial) less Total Liabilities. 2. Net Financial Worth represents Total Financial Assets less Total Liabilities. 3. Net Financial Liabilities represents Total Liabilities less Financial Assets. For the PFC Sector this is equivalent to

negative Net Financial Worth. 4. Net Debt represents Borrowings less the sum of Cash and Deposits and Investments.


Table A1.13: Public Financial Corporations Sector Cash Flow Statement

2016-17 2017-18 2018-19 2019-20 2020-21



$m $m $m $m $m






Other Receipts 1.9 2.0 2.0 2.0 2.0

454.6 460.1 463.3 473.4 481.2


Employee Entitlements (5.8) (6.1) (6.2) (6.4) (6.5)

Superannuation (0.8) (0.8) (0.8) (0.8) (0.8)

Supplies and Consumables (90.2) (113.1) (125.3) (134.1) (140.7)

Borrowing Costs (183.1) (167.6) (162.4) (167.6) (164.5)

Grants and Subsidies Paid (5.5) (5.6) (5.8) (5.9) (6.1)

Other Payments (6.9) (5.9) (5.8) (5.9) (6.3)

(292.2) (299.1) (306.3) (320.8) (324.9)





Sales of Non-Financial Assets .... 0.1 .... .... 0.1

(0.9) (0.5) (0.7) (0.6) (0.5)


Purposes)

Equity injections 730.4 .... .... .... ....

730.4 .... .... .... ....


Purposes)

Net Purchase of Investments (241.0) 594.2 363.1 (41.9) 57.2

(241.0) 594.2 363.1 (41.9) 57.2

Net Cash Flows from Investing Activities 488.5 593.8 362.4 (42.5) 56.8


Table A1.13: Public Financial Corporations Sector Cash Flow Statement (continued)

2016-17 2017-18 2018-19 2019-20 2020-21



$m $m $m $m $m


Net Borrowing (563.0) (579.6) (380.4) 19.9 (84.9)

Dividends and Tax Equivalents Paid (98.5) (175.0) (138.7) (129.5) (127.7)

Net Cash Flows from Financing Activities (661.5) (754.6) (519.1) (109.6) (212.6)

Net Increase/(Decrease) in Cash Held (10.6) 0.2 0.4 0.4 0.5






Plus Dividends and Tax Equivalents Paid (98.5) (175.0) (138.7) (129.5) (127.7)

Equals CASH SURPLUS/(DEFICIT) 63.1 (14.4) 17.7 22.5 28.2


Table A1.14: Total State Sector Income Statement 2016-17 2017-18 2018-19 2019-20 2020-21



$m $m $m $m $m


Grants 4 371.9 3 682.9 3 673.5 3 735.4 3 748.3

Taxation 1 050.5 1 087.6 1 104.7 1 131.2 1 156.7



Interest Income 132.8 150.5 140.8 145.9 140.2


Other Revenue 227.4 215.3 215.8 205.3 204.6

9 376.3 8 712.4 8 809.9 9 069.0 9 240.6



Superannuation 383.5 315.0 311.9 313.0 314.6

Depreciation 589.8 601.6 610.8 677.6 699.0



Borrowing Costs 179.2 168.7 163.8 172.4 166.5

Grant Expenses 1 106.9 1 211.9 1 228.0 1 240.1 1 198.6

Other Expenses 36.2 42.9 33.0 29.8 30.0

8 559.5 8 770.2 8 814.0 9 050.5 9 226.0

Equals NET OPERATING BALANCE 816.8 (57.9) (4.1) 18.5 14.6


Result

Gain/(Loss) on Sale of Non-Financial Assets 11.3 15.3 12.2 12.7 12.8

Movement in Superannuation Liability 3 143.3 .... .... .... ....

Other Gains/(Losses) 84.9 (36.0) (7.2) 26.0 34.4

3 239.5 (20.6) 5.1 38.7 47.2

Equals Operating Result 4 056.3 (78.5) 0.9 57.1 61.7


Equity


Other Flows (52.9) 6.5 15.2 (10.6) (11.6)

282.7 308.3 334.0 329.4 337.0



Table A1.14: Total State Sector Income Statement (continued) 2016-17 2017-18 2018-19 2019-20 2020-21



$m $m $m $m $m


NET OPERATING BALANCE 816.8 (57.9) (4.1) 18.5 14.6


Purchases of Non-Financial Assets 995.7 1 111.2 1 010.1 777.4 712.4



375.3 475.7 368.2 68.7 (17.9)

Equals FISCAL BALANCE 441.4 (533.6) (372.3) (50.2) 32.5


Table A1.15: Total State Sector Balance Sheet as at 30 June 2017 2018 2019 2020 2021



$m $m $m $m $m

Assets

Financial Assets


Investments 6 092.7 5 436.1 4 957.4 5 033.2 5 107.5


Receivables 922.1 881.1 871.8 863.4 853.4

Other Financial Assets 1 047.7 1 094.9 1 093.4 1 089.6 1 088.4

8 446.7 7 743.0 7 249.1 7 348.0 7 424.3



Infrastructure 12 399.0 12 797.9 13 168.9 13 461.7 13 717.8





Intangibles 169.7 177.7 181.6 172.7 172.6



20 234.4 20 913.2 21 586.9 21 989.5 22 322.7

Total Assets 28 681.1 28 656.2 28 836.1 29 337.5 29 747.0

Liabilities

Borrowings 6 055.0 5 702.1 5 428.7 5 442.5 5 332.5

Superannuation 6 678.6 6 776.0 6 862.0 6 934.5 6 991.8


Payables 554.5 519.9 516.6 517.6 519.8



NET ASSETS 11 493.7 11 723.5 12 058.5 12 445.0 12 843.8


Table A1.15: Total State Sector Balance Sheet as at 30 June (continued)

2017 2018 2019 2020 2021



$m $m $m $m $m

Equity



Other Equity 10.0 10.0 10.0 10.0 10.0

Total Equity 11 493.7 11 723.5 12 058.5 12 445.0 12 843.8


NET WORTH1 11 493.7 11 723.5 12 058.5 12 445.0 12 843.8



NET DEBT4 (324.6) 35.8 249.6 157.7 (35.3)

Notes: 1. Net Worth represents Total Assets (both Financial and Non-Financial) less Total Liabilities. 2. Net Financial Worth represents Total Financial Assets less Total Liabilities. 3. Net Financial Liabilities represents Total Liabilities less Financial Assets. For the Total State Sector this is equivalent

to negative Net Financial Worth. 4. Net Debt represents Borrowings less the sum of Cash and Deposits and Investments.


Table A1.16: Total State Sector Cash Flow Statement 2016-17 2017-18 2018-19 2019-20 2020-21



$m $m $m $m $m



Grants Received 4 369.7 3 680.8 3 671.4 3 733.2 3 746.1

Taxation 1 040.9 1 086.4 1 101.8 1 129.4 1 154.2





Other Receipts 473.9 476.6 480.0 452.7 448.5

9 661.1 9 005.7 9 054.6 9 227.6 9 435.7



Superannuation (492.1) (509.0) (520.6) (540.5) (557.0)


Borrowing Costs (173.4) (174.3) (169.9) (177.4) (172.6)


Other Payments (327.7) (330.6) (325.1) (304.7) (305.1)

(8 109.8) (8 314.4) (8 318.1) (8 418.8) (8 594.9)




Purchases of Non-Financial Assets (976.7) (1 104.4) (1 000.9) (765.9) (700.5)


(946.2) (1 070.6) (969.7) (734.7) (669.2)


Purposes)



Equity Disposals 0.7 0.7 0.7 0.7 0.7

(2.9) (4.5) (4.5) (4.5) (3.1)


Purposes)

Net Purchase of Investments (1 251.9) 679.8 502.3 (53.7) (50.0)

(1 251.9) 679.8 502.3 (53.7) (50.0)



Table A1.16: Total State Sector Cash Flow Statement (continued) 2016-17 2017-18 2018-19 2019-20 2020-21



$m $m $m $m $m


Net Borrowings 537.7 (352.6) (273.1) 14.0 (109.7)

Net Cash Flows from Financing Activities 537.7 (352.6) (273.1) 14.0 (109.7)






Plus Net Cash Flows from Non-Financial Assets (946.2) (1 070.6) (969.7) (734.7) (669.2)



Table A1.17: General Government Expenses from Transactions by Purpose

2016-17 2017-18 2018-19 2019-20 2020-21



$m $m $m $m $m

General Public Services 245.6 210.5 183.3 184.4 186.4

Public Order and Safety 522.0 541.8 547.5 546.4 559.2

Education 1 497.3 1 543.2 1 573.2 1 602.7 1 646.6

Health 1 712.4 1 722.8 1 730.2 1 795.6 1 837.6

Social Security and Welfare 449.7 453.5 507.3 461.3 454.4

Housing and Community Amenities 186.4 187.8 176.9 178.9 181.5

Recreation and Culture 180.8 192.6 186.8 189.4 199.2

Fuel and Energy 5.4 5.4 3.5 1.9 2.0

Agriculture, Forestry, Fishing and Hunting 93.4 92.0 85.8 85.2 85.8

Mining and Mineral Resources 6.3 9.5 6.9 7.1 6.9

Transport and Communications 297.4 279.2 270.3 306.3 318.1

Other Economic Affairs 151.1 193.6 138.8 166.6 112.4

Nominal Interest on Superannuation 236.3 285.6 289.7 293.3 296.2

Other Purposes 103.7 102.1 112.2 114.4 117.1

5 687.6 5 819.8 5 812.3 5 933.6 6 003.4

Table A1.17 presents General Government Expenses from Transactions classified by purpose. This is

presented in accordance with the Government Purpose Classification, which is based on the ABS

classifications used as part of the Government Finance Statistics reporting framework. The GPC provides a

standard framework to allocate Government expenditure according to functions. Disclosure of this information

can assist users in identifying the resources committed to particular functions and the costs of service delivery

that are attributable to those functions.

Consolidated Fund Estimates 179

APPENDIX 2 CONSOLIDATED

FUND ESTIMATES

Key Issues

The annual Budget Estimates are presented on a total resources basis for the General Government

Sector. This includes, but is much broader than, the Consolidated Fund estimates presented in this

appendix. For further information on the Tasmanian Government financial management framework

see the Guide to the Budget that is available on the Department of Treasury and Finance website at

www.treasury.tas.gov.au.

In 2017-18, it is estimated that the Consolidated Fund Outcome will be a $161.5 million deficit.

Consolidated Fund Outcome projections for 2018-19 to 2020-21 are:

2018-19: $201.3 million deficit;

2019-20: $24.4 million deficit; and

2020-21: $96.8 million surplus.

180 Consolidated Fund Estimates

INTRODUCTION This appendix provides information on the 2017-18 Consolidated Fund Budget Estimates and the

Consolidated Fund Forward Estimates for the years 2018-19 to 2020-21. The information in this appendix has

been prepared on a cash basis, representing receipts into, and payments from, the Consolidated Fund.


CONSOLIDATED FUND 2017-18 BUDGET AND

FORWARD ESTIMATES Table A2.1 provides a summary of the Consolidated Fund Budget for 2017-18 and the Forward Estimates

period.

Table A2.1: Consolidated Fund Budget and Forward Estimates

2016-17)

)

Budget)

2017-18)

)

Budget)

2018-19)

Forward)

Estimate)

2019-20)

Forward)

Estimate)

2020-21)

Forward)

Estimate)

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

Receipts1,2

Recurrent Receipts

Australian Government Sources

General Purpose Payments 2 299.2) 2 387.4) 2 467.0) 2 508.8) 2 577.5)

Specific Purpose Payments 508.1) 532.3) 550.8) 529.6) 545.9)

National Partnership Payments 71.3) 73.0) 74.7) 77.2) 79.7)

Other Grants and Subsidies 0.1) 0.1) 0.1) 0.1) 0.1)

2 878.6) 2 992.7) 3 092.5) 3 115.6) 3 203.2)

State Sources

Taxation3 929.6) 1 004.3) 1 017.8) 1 040.6) 1 062.8)

Receipts from Government Businesses4 247.9) 350.4) 266.4) 316.4) 397.7)

Departmental Fees and Recoveries 95.9) 99.9) 100.3) 102.5) 105.0)

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 Royalties5 25.0) 45.8) 43.5) 41.0) 39.1)

Other Recurrent Receipts6 147.8) 159.8) 155.1) 237.5) 160.6)

1 451.2) 1 665.2) 1 588.1) 1 742.9) 1 770.3)

Total Recurrent Receipts 4 329.9) 4 657.9) 4 680.7) 4 858.5) 4 973.5)

Capital Receipts

State Sources 3.5) 3.5) 3.5) 3.5) 3.5)

3.5) 3.5) 3.5) 3.5) 3.5)

Total Receipts 4 333.4) 4 661.4) 4 684.2) 4 862.0) 4 976.9)


Table A2.1: Consolidated Fund Budget and Forward Estimates (continued)

2016-17)

)

Budget)

2017-18)

)

Budget)

2018-19)

Forward)

Estimate)

2019-20)

Forward)

Estimate)

2020-21)

Forward)

Estimate)

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

Less Expenditure

Recurrent Services

Appropriation Act 3 751.3) 4 083.4) 4 120.1) 4 220.7) 4 230.5)

Reserved by Law 324.2) 344.1) 352.3) 364.5) 377.7)

4 075.5) 4 427.4) 4 472.4) 4 585.2) 4 608.2)

Works and Services

Capital Investment Program 238.3) 395.5) 413.1) 301.2) 272.0)

238.3) 395.5) 413.1) 301.2) 272.0)

Total Expenditure 4 313.8) 4 822.9) 4 885.5) 4 886.3) 4 880.1)

Consolidated Fund Surplus/(Deficit) 19.6) (161.5) (201.3) (24.4) 96.8)

Notes: 1. Refer to chapter 5 of this Budget Paper for more information on General Government Revenue. 2. Classification of Receipts for the purposes of the Consolidated Fund is not consistent with classifications shown in the

Statement of Comprehensive Income prepared in accordance with the Uniform Presentation Framework. 3. The increase in Taxation in 2017-18 primarily reflects an increase in Conveyance Duty of $55.6 million and Land Tax

of $11.4 million. 4. The increase in Receipts from Government Businesses in 2017-18 primarily reflects additional Dividends from the

Tasmanian Public Finance Corporation of $78.1 million relating to the investment of additional grant monies received in 2016-17 from the Australian Government following the transfer of ownership of the Mersey Community Hospital to the State Government (expected to occur by 30 June 2017) together with additional Dividend and Income Tax Equivalent returns from the Motor Accidents Insurance Board of $35.4 million.

5. The increase in Resource Rents and Royalties in 2017-18 primarily reflects an increase in Mineral Royalties estimates of $20.8 million.

6. The increase in Other Recurrent Receipts in 2017-18 compared to 2016-17 primarily reflects $21.7 million of Natural Disaster Relief and Recovery Arrangement funding relating to the June 2016 Flood event. The significant increase in 2019-20 reflects the projected receipt of $102.1 million from the Australian Government for the National Disability Insurance Scheme.


EXPENDITURE Table A2.2 details Consolidated Fund Expenditure by Agency for the 2017-18 Budget. Table A2.3 details

Consolidated Fund Expenditure by Agency over the Forward Estimates period.

Table A2.2: Consolidated Fund Expenditure by Agency, 2017-181

2017-18 Budget

Agency

2016-17]

Budget)

Recurrent)

Services)

Reserved)

by Law)

Works and)

Services) Total)

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

Education 1 264.3) 1 261.9) ....) 47.8) 1 309.7)

Finance-General 539.7) 289.0) 310.4) 27.7) 627.1)

Health and Human Services 1 278.5) 1 401.0) ....) 152.5) 1 553.5)

House of Assembly 8.0) 3.3) 5.0) ....) 8.3)

Integrity Commission 2.3) 2.5) ....) ....) 2.5)

Justice 144.5) 142.7) 16.5) 2.1) 161.3)

Legislative Council 6.5) 3.9) 3.0) 0.7) 7.6)

Legislature-General 7.0) 6.6) ....) ….) 6.6)

Ministerial and Parliamentary Support 19.6) 19.1) 1.1) ....) 20.2)

Office of the Director of Public Prosecutions 6.4) 7.1) 0.5) ....) 7.6)

Office of the Governor 4.0) 3.5) 0.6) ....) 4.1)

Office of the Ombudsman 2.1) 2.3) ....) ....) 2.3)

Police, Fire and Emergency Management 226.5) 221.0) ....) 8.0) 229.0)



Environment 173.7) 174.4) ....) 23.5) 197.9)

State Growth 485.0) 384.8) 0.1) 128.0) 512.9)

Tasmanian Audit Office 2.3) 2.0) 0.5) ....) 2.5)

Tourism Tasmania 26.8) 29.3) ....) ....) 29.3)

Treasury and Finance 42.9) 58.7) ....) 2.9) 61.6)

TOTAL EXPENDITURE 4 313.8) 4 083.4) 344.1) 395.5) 4 822.9)

Note: 1. For more information relating to agency expenditure, refer to the relevant agency chapter in Government Services

Budget Paper No 2.


Table A2.3: Consolidated Fund Expenditure by Agency - Forward Estimates1

2016-17)

)

Budget)

2017-18)

)

Budget)

2018-19)

Forward)

Estimate)

2019-20)

Forward)

Estimate)

2020-21)

Forward)

Estimate)

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

Recurrent Services

Education 1 208.1) 1 261.9) 1 296.3) 1 321.3) 1 370.3)

Finance-General 539.7) 599.4) 599.3) 612.2) 621.9)

Health and Human Services 1 244.6) 1 401.0) 1 458.5) 1 485.0) 1 475.2)

House of Assembly 8.0) 8.3) 8.4) 8.5) 8.7)

Integrity Commission 2.3) 2.5) 2.5) 2.6) 2.6)

Justice 142.6) 159.2) 158.8) 158.8) 162.6)

Legislative Council 6.5) 6.9) 7.0) 7.1) 7.2)

Legislature-General 6.1) 6.6) 6.7) 6.8) 6.9)

Ministerial and Parliamentary Support 19.6) 20.2) 20.7) 21.0) 21.5)

Office of the Director of Public Prosecutions 6.4) 7.6) 7.8) 7.6) 7.8)

Office of the Governor 4.0) 4.1) 4.1) 4.1) 4.2)

Office of the Ombudsman 2.1) 2.3) 2.3) 2.4) 2.4)




State Growth 371.6) 384.8) 344.6) 394.4) 349.0)

Tasmanian Audit Office 2.3) 2.5) 2.5) 2.6) 2.6)

Tourism Tasmania 26.8) 29.3) 29.2) 29.6) 30.1)

Treasury and Finance 39.6) 58.7) 58.9) 59.1) 59.9)

4 075.5) 4 427.4) 4 472.4) 4 585.2) 4 608.2)

Works and Services

Education 56.2) 47.8) 32.9) 24.4) 8.1)

Finance-General .… 27.7 18.2 15.0 15.0


Justice 1.9) 2.1) 3.7) 1.7) ….

Legislative Council …. 0.7 …. …. ….

Legislature-General 0.9) …. …. …. ….




State Growth 113.5) 128.0) 122.3) 89.5) 88.9)

Treasury and Finance 3.2) 2.9) 1.5) …. ….

Provision for Future Infrastructure Investment …. …. 75.0) 130.0) 130.0)

238.3) 395.5) 413.1) 301.2) 272.0)

TOTAL EXPENDITURE 4 313.8) 4 822.9) 4 885.5) 4 886.3) 4 880.1)

Note: 1. For more information relating to agency expenditure, refer to the relevant agency chapter in Government Services

Budget Paper No 2.


RESERVED BY LAW ITEMS Reserved by Law items are not included in the annual Appropriation Acts. The authority to spend from these

items is provided by the legislation under which the particular items are established.

Table A2.4 details Expenditure on Reserved by Law items by agency.

Table A2.4: Expenditure on Reserved by Law Items

2016-17)

)

Budget)

2017-18)

)

Budget)

2018-19)

Forward)

Estimate)

2019-20)

Forward)

Estimate)

2020-21)

Forward)

Estimate)

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

Finance-General

Appropriation to the Treasurer's Reserve (Public

Account Act 1986) 10.0) 10.0) 10.0) 10.0) 10.0)

Payments to Municipalities under the Local

Government (Rates and Charges Remissions)

Act 1991 16.7) 17.4) 18.0) 18.6) 19.2)

Payments under the Retirement Benefits

(Parliamentary Superannuation) Regulations 2012 1.1) 1.0) 1.0) 1.0) 1.0)

Superannuation Benefits Payable under the

Governor of Tasmania Act 1982 0.1) 0.1) 0.1) 0.1) 0.1)

Superannuation Benefits Payable under the Judges'

Contributory Pensions Act 1968 2.1) 2.1) 2.1) 2.1) 2.1)


Retirements Benefits Act 1993 264.7) 279.6) 290.3) 301.7) 313.7)


Solicitor-General Act 1983 0.3) 0.3) 0.3) 0.3) 0.3)

295.0) 310.4) 321.8) 333.8) 346.5)

House of Assembly

Members' Committee Fees and Allowances

(Parliamentary Salaries, Superannuation and

Allowances Act 2012)1 ....) ....) ....) ....) ....)

Parliamentary Salaries and Allowances


Allowances Act 2012) 4.7) 4.8) 4.9) 5.0) 5.1)

Travelling Allowances (Parliamentary Salaries,

Superannuation and Allowances Act 2012) 0.1) 0.1) 0.1) 0.1) 0.1)

4.9) 5.0) 5.1) 5.1) 5.3)


Table A2.4: Expenditure on Reserved by Law Items (continued)

2016-17)

)

Budget)

2017-18)

)

Budget)

2018-19)

Forward)

Estimate)

2019-20)

Forward)

Estimate)

2020-21)

Forward)

Estimate)

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

Justice

Expenses of Aboriginal Land Council of Tasmania

Elections (Aboriginal Lands Act 1995,

Section 17)2 ....) ....) ....) ....) ....)

Expenses of Parliamentary Elections and

Referendums (Electoral Act 2004 and

Referendum Procedures Act 2004)3 1.8) 5.4) 1.9) 2.1) 2.2)

Expenses under the Legislative Council Electoral

Boundaries Act 19954 0.1) 0.1) ....) ....) ....)

Salaries of Judges (Supreme Court Act 1887)5 3.1) 3.6) 3.6) 3.3) 3.3)

Salaries of Magistrates (Magistrates Court Act 1987) 4.8) 4.9) 5.0) 5.1) 5.2)

Salary and Travel Allowances, Solicitor-General

(Solicitor-General Act 1983) 0.5) 0.5) 0.5) 0.5) 0.5)

Salary and Travelling Allowance, Associate Judge of

the Supreme Court (Supreme Court Act 1959) 0.4) 0.4) 0.4) 0.5) 0.5)

Victims of Crime Assistance Act 1976 1.5) 1.5) 1.5) 1.5) 1.5)

12.3) 16.5) 13.1) 13.0) 13.2)

Legislative Council

Members' Committee Fees and Allowances


Allowances Act 2012)6 ....) ....) ....) ....) ....)

Parliamentary Salaries and Allowances


Allowances Act 2012) 2.7) 2.8) 2.9) 2.9) 3.0)

Travelling Allowances (Parliamentary Salaries,


2.8) 3.0) 3.1) 3.1) 3.2)

Ministerial and Parliamentary Support

Allowances of Ministers (Parliamentary Salaries,


Office of the Director of Public Prosecutions

Salary, Travel and Other Allowances, Director of

Public Prosecutions (Director of Public

Prosecutions Act 1973) 0.5) 0.5) 0.5) 0.5) 0.5)


Table A2.4: Expenditure on Reserved by Law Items (continued)

2016-17)

)

Budget)

2017-18)

)

Budget)

2018-19)

Forward)

Estimate)

2019-20)

Forward)

Estimate)

2020-21)

Forward)

Estimate)

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


Salary, Her Excellency the Governor (Governor of

Tasmania Act 1982) 0.5) 0.6) 0.6) 0.6) 0.6)

Salary, The Administrator (Governor of Tasmania

Act 1982, Section 5(1))7 ....) ....) ....) ....) ....)

0.6) 0.6) 0.6) 0.6) 0.6)

Premier and Cabinet

Tasmanian Community Fund (Tasmanian

Community Fund Act 2005) 6.4) 6.4) 6.5) 6.6) 6.7)

State Growth

Contribution towards Construction of Streets in

Towns by Municipal Councils (Local Government

Act 1993) 0.1) 0.1) 0.1) 0.1) 0.1)

Tasmanian Audit Office

Salary and Travelling Allowance, Auditor-General

(Audit Act 2008) 0.5) 0.5) 0.5) 0.5) 0.5)


Contribution to the Community Support Levy

Account from Betting Exchange Revenues

(Gaming Control Act 1993, Section 151)8 ....) ....) ....) ....) ....)

TOTAL 324.2) 344.1) 352.3) 364.5) 377.7)

Notes: 1. An amount of $31 000 per annum is provided to the House of Assembly under Members' Committee Fees and

Allowances (Parliamentary Salaries, Superannuation and Allowances Act 2012). 2. The Department of Justice is provided with $5 000 per annum under the Expenses of Aboriginal Land Council of

Tasmania Elections (Aboriginal Lands Act 1995, section 17). 3. The increase in Expenses of Parliamentary Elections and Referendums (Electoral Act 2004 and Referendum

Procedures Act 2004) in 2017-18 reflects funding for the next State Election. 4. The Department of Justice is provided with $5 000 per annum under the Legislative Council Electoral Boundaries

Act 1995 with a one-off increase to $144 000 in 2016-17 and $65 000 in 2017-18 reflecting the timing of the next major review.

5. The increase in Salaries of Judges (Supreme Court Act 1887) in 2017-18 and 2018-19 primarily reflects additional temporary funding for the salaries of acting judges for two years.

6. An amount of $40 000 is provided in 2017-18 and $36 000 per annum in the Forward Estimates, to the Legislative Council, under Members' Committee Fees and Allowances (Parliamentary Salaries, Superannuation and Allowances Act 2012).

7. Under the Salary, The Administrator (Governor of Tasmania Act 1982, section 5(1)) an amount of $15 000 per annum is provided to the Office of the Governor.

8. An amount of $26 000 in 2016-17 was provided to the Department of Treasury and Finance under the Contribution to the Community Support Levy Account from Betting Exchange Revenues (Gaming Control Act 1993, section 151). From 2017-18, the amount will no longer be appropriated due to the relocation of the Betfair Group from Tasmania.

2016-17 Estimated Outcome Including March Quarterly Report 189

APPENDIX 3 2016-17

ESTIMATED OUTCOME

INCLUDING MARCH QUARTERLY

REPORT

Key Issues

The Estimated Outcome information presented in this appendix reflects financial estimates available to

Treasury at the time of the finalisation of the Budget Papers and includes agency assessments of

funding requirements, current estimates of State taxation and information available from the Australian

Government and Government Businesses.

This appendix also meets the information requirements for a March Quarterly Report as specified in

Section 26C of the Financial Management and Audit Act 1990. It presents financial results for the

nine months ending 31 March 2017 for the General Government Sector and the Consolidated Fund.

The estimated General Government Net Operating Balance for 2016-17 is a $812 million surplus, a

$734.7 million improvement from the 2016-17 Budget estimate of a $77.3 million surplus. This result

primarily reflects the expected receipt of a significant one-off Australian Government payment of

$730.4 million for the transfer of the Mersey Community Hospital to the State which is expected to occur

by 30 June 2017.

The actual General Government Net Operating Balance for the nine months to 31 March 2017 is a

$166.9 million surplus.

190 2016-17 Estimated Outcome Including March Quarterly Report

INTRODUCTION This appendix presents the 2016-17 Estimated Outcome based on the latest available agency assessments

of indicative additional funding requirements or potential savings and revised whole-of-government revenue

estimates. Significant changes to revenue and expenditure estimates can occur between the preparation of

these estimates and those reported in future reports on the 2016-17 Budget outcome.

Detailed information on the final Outcome for 2016-17 will be published in:

the Preliminary Outcomes Report, required to be published by 15 August 2017 in the event that the

preliminary outcomes result differs materially from the Estimated Outcome published in this appendix;

the Treasurer's Annual Financial Report, which will be tabled in Parliament by 31 October 2017; and

agency Annual Reports, which will be tabled in Parliament by 31 October 2017.

This appendix also meets the information requirements for a March Quarterly Report as specified in

Section 26C of the Financial Management and Audit Act 1990. It presents financial results for the nine months

ending 31 March 2017 for the General Government Sector and the Consolidated Fund. These financial

statements have been prepared in accordance with applicable Australian Accounting Standards including

AASB 1049 Whole of Government and General Government Sector Financial Reporting. Preparation of the

Report requires the application of estimation methods in accordance with the principles of AASB 134 Interim

Financial Reporting.


GENERAL GOVERNMENT INCOME STATEMENT Table A3.1 provides details of the Estimated Outcome for 2016-17, compared to the 2016-17 Budget

estimates.

Table A3.1: General Government Income Statement, 2016-17 2016-17)

)

Budget)

2016-17)

Estimated)

Outcome)

2016-17)

March YTD)

Actual)

$m) $m) $m)


Grants 3 634.6) 4 371.9) 2 721.5

Taxation 1 055.6) 1 094.1) 840.0

Sales of Goods and Services 352.9) 411.2) 297.3

Fines and Regulatory Fees 96.5) 95.9) 75.7

Interest Income 16.5) 22.1) 13.0

Dividend, Tax and Rate Equivalent Income 263.8) 316.0) 239.2

Other Revenue 153.8) 188.4) 145.3

5 573.7) 6 499.6) 4 332.0


Employee Expenses 2 311.0) 2 371.5) 1 757.0

Superannuation 284.6) 339.9) 248.8

Depreciation 264.6) 267.1) 195.0

Supplies and Consumables 1 105.9) 1 187.9) 796.4

Nominal Superannuation Interest Expense 288.2) 236.3) 178.6

Borrowing Costs 10.3) 10.4) 7.6

Grant Expenses 1 206.2) 1 243.0) 956.6

Other Expenses 25.4) 31.6) 25.2

5 496.3) 5 687.6) 4 165.1

Equals NET OPERATING BALANCE 77.3 812.0) 166.9

Plus Other Economic Flows - Included in Operating Result

Gain/(Loss) on Disposal of Non-Financial Assets 10.5) 11.3) 1.0

Movement in Investments in GBEs and SOCs 19.5) 392.2 ....

Movements in Superannuation Liability ....) 2 914.6) ....

Other Gains/(Losses) ( 21.2) ( 24.7) (9.3)

8.8) 3 293.5) (8.2)

Equals Operating Result 86.1) 4 105.5) 158.6


Table A3.1: General Government Income Statement, 2016-17 (continued)

2016-17) 2016-17) 2016-17)

Estimated) March YTD)

Budget) Outcome) Actual)

$m) $m) $m)

Plus Other Economic Flows - Other Movements in Equity

Revaluations of Non-Financial Assets 252.3) 224.9) 168.7

Other Non-Owner Movements in Equity 3.3) 8.6) 8.0

255.5) 233.5) 176.7

Equals Comprehensive Result 341.6) 4 339.0) 335.3


NET OPERATING BALANCE 77.3) 812.0) 166.9


Purchases of Non-Financial Assets 530.8) 495.3) 261.3

Less Sale of Non-Financial Assets 28.3) 29.4) 26.9

Less Depreciation 264.6) 267.1) 195.0

237.9) 198.9) 39.4

Equals FISCAL BALANCE ( 160.6) 613.1) 127.5


REVENUE VARIATIONS Total revenue for 2016-17 is estimated to be $6 499.6 million, $926.0 million above the Budget estimate of

$5 573.7 million. The major revenue variations are described in Table A3.2.

Table A3.2: Major Revenue Variations Revenue Item Variance from Budget Reasons

Grants: $737.3 million higher

General Purpose

Payments

$44.2 million lower The decrease in General Purpose Payments funding is a

result of estimated GST receipts being revised down.

This change reflects an increase in Tasmania’s share of

the national population, offset by a $1.5 billion reduction

in the estimated GST pool available for distribution to the

states and a $4.2 million residual adjustment for overpaid

GST revenue to Tasmania in 2015-16.

Specific Purpose

Payments

$20.4 million higher The increase in Payments for Specific Purposes primarily

reflects:

an increase in Australian Government National

Health Reform Activity Based funding of $15.7 million

and National Health Reform Block funding of

$2.2 million. These changes are primarily due to a

revision of Tasmanian Health Service activity profiles;

and

an increase in Australian Government Students First

funding of $2.4 million reflecting updates in the

2016-17 Australian Government Budget.


Table A3.2: Major Revenue Variations (continued) Revenue Item Variance from Budget Reasons

National Partnership

Payments

$750.1 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:

the receipt of a significant one-off Australian Government

payment of $730.4 million for the transfer of the Mersey

Community Hospital to the State which is expected to

occur by 30 June 2017 (the National Partnership on

Transfer of the Mersey Community Hospital);

Natural Disaster Relief and Recovery Arrangements

receipts of $21.1 million relating to the January 2016

Bushfires and June Flood Event. This reflects the

expected timing of receipts as at the finalisation of Budget

data;

Reducing elective surgery waiting lists in Tasmania

funding of $5.0 million;

Sustainable Rural Water Use and Infrastructure Program

funding of $3.4 million;

Public dental services for adults funding of $3.1 million;

DisabilityCare Australia Fund payments of $2.0 million;

Improving Health Services in Tasmania Schedule D

funding of $1.3 million relating to Walk-in Centres in

Hobart and Launceston; and

Tourism Growth Package Feasibility Studies funding of

$1.1 million relating to the Cradle Mountain Master Plan

($1 million); the ‘Geeves Effect’ ($70,000) and

FermenTasmania ($50,000).

This increase is partially offset by a reallocation of

$19.2 million in Road related grants funding from 2016-17 to

2017-18 reflecting the timing of projects.

Other Grants and

Subsidies

$10.9 million higher The increase in Other Grants and Subsidies primarily reflects

an increase in Australian Government funding of $7.9 million

relating to Commonwealth Own Purpose Expenditure funding

for the Department of Health and Human Services and the

Tasmanian Health Service.



Taxation $38.4 million higher The increase in Taxation primarily reflects:

An upwards revision in Conveyance duty receipts of

$34.3 million, due mainly to growth in residential property

prices and transaction volumes; and

an upwards revision in Land Tax of $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 movements are partially offset by reductions in

Betting Exchange Taxes and Levies of $3.0 million reflecting

the surrender by Betfair of its Tasmanian Gaming Licence;

and Casino Tax and Licence Fees of $2.0 million reflecting

lower than expected year-to-date revenue.

Sales of Goods and

Services

$58.3 million higher The increase in Sales of Goods and Services primarily

reflects revised estimates for the Tasmanian Health Service

comprising:

new funding of $50 million in 2016-17 associated with the

listing of Hepatitis C medications on the Pharmaceutical

Benefits Scheme; and

revised projections of Australian Government revenues

of $7.4 million primarily relating to the Child Dental

Benefit Schedule and Training More Specialists in

Tasmania Program.

Interest Income $5.6 million higher The increase in Interest Income primarily reflects projected

increases in estimated Cash and Deposits.

Dividend, Tax and Rate

Equivalent Income

$52.3 million higher The increase in Dividend, Tax and Rate Equivalent Income

reflects an increase in Dividends of $26.2 million and Income

Tax Equivalents (ITEs) of $26.1million.

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



Dividend, Tax and Rate

Equivalent Income

(continued)

a $5.9 million increase for the Motor Accident 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 ITEs primarily reflects:

a $23.4 million increase for the Motor Accidents

Insurance Board as a result of higher taxable distributions

from fund managers and a lower than expected claims

expense; and

a $4.6 million increase for Hydro Tasmania as a result of

improving profit levels during the year.

The increase in ITEs was partly offset by a decrease in ITEs

of $3.7 million from Tasmanian Networks due to a lower than

expected profit outcome for 2016-17.

Other Revenue $34.6 million higher The increase in Other Revenue primarily reflects:

an increase in Department of State Growth of

$20.6 million reflecting a revised mineral royalties

estimate;

an increase in the Tasmanian Health Service of

$10 million which reflects the estimated one-off impact of

the transfer of ownership of the Mersey Community

Hospital asset value from the Australian Government to

the State Government; and

an increase in the Department of Justice of $1.7 million

associated with Working with Vulnerable People

registration.


EXPENSE VARIATIONS Total expenses for 2016-17 are estimated to be $5 687.6 million, $191.3 million above the Budget estimate

of $5 496.3 million. The major expense variations are described in Table A3.3.

Table A3.3: Major Expense Variations Expense Item Variance from Budget Reasons

Employee Expenses $60.5 million higher The increase in Employee Expenses primarily reflects:

an increase in the Department of Education of

$9.3 million primarily relating to a reclassification of

expenditure of $9.1 million from Supplies and

consumables to better align with actual expenditure;

an increase in the Tasmanian Health Service of

$42.2 million primarily reflecting increased National

Health Reform funding as a result of revised activity

levels and higher than budgeted employee expenditure;

and

an increase in the Department of Justice of $4 million

including:

additional costs relating to Corrective Services of

$1.8 million; and

additional expenditure relating to an increase in

revenues primarily associated with Working with

Vulnerable Persons registration.


Table A3.3: Major Expense Variations (continued) Expense Item Variance from Budget Reasons

Superannuation $55.3 million higher The increase in Superannuation 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 $82 million higher The increase in Supplies and Consumables primarily

reflects:

an increase in the Department of Health and Human

Services of $12.3 million primarily relating to higher than

budgeted expenditure for Out of Home Care of

$7.9 million, together with revised expenditure

projections of Australian Government funding of

$4.8 million;

an increase of $61 million in the Tasmanian Health

Service primarily reflecting additional expenditure

associated with listing of Hepatitis C medications on the

Pharmaceutical Benefits Scheme;

an increase in the Department of State Growth of

$10.1 million primarily reflecting:

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.

This is offset by the reallocation of $2.4 million in

expenditure from 2016-17 to 2017-18 reflecting the

revised timing of Advancing the Case for a Second

Interconnector (Energy Strategy) of $1.1 million and the

move of Mineral Resources Tasmania to Burnie of

$1.3 million;



Supplies and Consumables

(continued)

an increase in Marine and Safety Tasmania of

$2.4 million which primarily reflects the reallocation of

expenditure from 2015-16 to 2016-17 for a number of

Recreational Boating Fund projects; and

an increase in the Department of Premier and Cabinet

of $2.7 million primarily relating to increased

expenditure associated with additional

Telecommunications Management Division revenue

and its rollout of new technologies to clients.

These increases are partially offset by a decrease in the

Department of Education of $12.3 million which primarily

reflects:

the reclassification of expenditure to Employee

Expenses ($9.1 million) to better align with actual

expenditure; and

the reclassification of $3.8 million to Grant Expenses to

better align with actual expenditure.

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 trend 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 Expenses $36.8 million higher The increase in Grant Expenses primarily reflects:

an increase in the Department of Education of

$12.3 million including:

a reclassification of $3.8 million from Supplies and

Consumables to better align with actual expenditure;

an increase in projected expenditure of Australian

Government National Partnership funding of

$3.7 million; and

an increase in Students First - Non-Government

Schools funding of $4.8 million (State and Australian

Government funded);

an increase in the Department of Primary Industries,

Parks, Water and Environment of $6.5 million including:

expenditure associated with the June 2016 flood event

of $5.2 million; and

expenditure to support the clean-up costs incurred by

businesses as a result of the outbreak of the Pacific

Oyster Mortality Syndrome of $1 million; and

an increase in the Department of State Growth of

$19.1 million including:

$10 million in funding for the Northern Cities Major

Development Initiative. This reflects the timing of a

payment for the initial stages of the Launceston

University of Tasmania relocation;

the reallocation of $4 million in expenditure from

2017-18 to 2016-17 for the Tasmanian Jobs and

Investment Fund;



Grant Expenses (continued) revised expenditure projections of Australian

Government funding of $5.1 million;

$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; and

$1.1 million in funding for an interim King Island

shipping service to the end of March 2017.

These increases are offset by the reallocation of

$3.6 million from 2016-17 to 2017-18 and $0.5 million from

2016-17 to 2018-19 for the Academy of Creative Industries

and Performing Arts.

Other Expenses $6.2 million higher The increase in Other Expenses primarily reflects an

increase in the Tasmanian Health Service of $5.1 million

which includes the impact of an increase in National Health

Reform Activity Based and Block Funding.


OTHER ECONOMIC FLOWS - INCLUDED IN

OPERATING RESULT Other economic flows - Included in the Operating Result is estimated to be an inflow of $3 293.5 million in

2016-17, which is $3 284.7 million higher than the 2016-17 Budget of an $8.8 million inflow. The major

changes are detailed in Table A3.4.

Table A3.4: Other Economic Flows - Included in Operating Result Variations

Item Variance from Budget Reasons

Movement in Investments in

GBEs and SOCs

$372.7 million higher This is primarily due to an increase in forecast Net Assets

held by electricity entities of $350.8 million which primarily

reflects the impact of a revaluation of infrastructure assets.

Movements in

Superannuation Liability

$2 914.6 million higher The increase in the Superannuation liability reflects the latest

actuarial assessment. 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 which is 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 $198.9 million, $39 million below the

Budget estimate of $237.9 million. The major variations in the net acquisition of non-financial assets are

described in Table A3.5.

Table A3.5: Major Net Acquisition of Non-Financial Assets Variations Item Variance from Budget Reasons

Purchases of Non-Financial

Assets

$35.5 million lower The decrease in Purchases of Non-Financial Assets

primarily reflects:

a decrease in the Department of Health and Human

Services of $42.7 million due to revised cashflows

for the Royal Hobart Hospital Redevelopment

Project to update the timing of likely expenditure of

the program.

This decrease is partially offset by increases of:

$5 million in Affordable Housing Strategy

expenditure brought forward from 2017-18 as part

of the Northern Economic Stimulus Package; and

$5.8 million for initiatives under Tasmania's

Affordable Housing Action Plan 2015-19; and

a decrease in the Department of State Growth of

$37.5 million due to;

the reallocation of $33.6 million of Australian

Government Roads Program funding from

2016-17 to 2017-18 and 2018-19 to better align

with revised program expenditure projections; and

a reclassification of $8.7 million to Supplies and

Consumables based on revised program

expenditure projections.

This decrease is partially offset by additional

expenditure of $4 million for roads and bridge

infrastructure repair costs associated with the

June 2016 Floods.


Table A3.5: Major Net Acquisition of Non-Financial Assets Variations (continued) Item Variance from Budget Reasons

Purchases of Non-Financial

Assets (continued)

The above decreases in Purchases of Non-Financial Assets

expenditure have been partly offset by the following

increases in expenditure:

Tasmanian Health Service of $17.4 million primarily

reflecting:

a $10 million increase following the decision by the

Australian Government to transfer ownership of the

Mersey Community Hospital to the State which is

expected to occur by 30 June 2017;

$3.4 million of own source revenue funded asset

purchases relating to asbestos removal, ICT

stabilisation and equipment purchases;

$2.0 million of works undertaken at the Mersey

Community Hospital following the reconfiguration of

maternity services in the North-West; and

$1.7 million for minor capital reconfiguration in

statewide hospitals funded as a part of the Patients

First - Stage 2 initiative; and

Department of Primary Industries, Parks Water and

Environment of $10.8 million primarily reflecting

additional Parks infrastructure costs of $9 million

following the June 2016 Floods.


GENERAL GOVERNMENT BALANCE SHEET

Table A3.6: General Government Balance Sheet 2017) 2017) 2017)

) Estimated) March YTD

Budget) Outcome) Actual

$m) $m) $m)

Assets

Financial Assets

Cash and Deposits 880.8) 1 179.6) 1 436.4

Investments 54.2) 44.3) 47.2

Equity Investment in PNFC and PFC Sectors1 4 482.8) 5 703.4) 4 427.2

Other Equity Investments 27.4) 23.1) 20.5

Receivables 316.6) 319.5) 329.4

Other Financial Assets 847.0) 807.1) 796.1

6 608.9) 8 077.0) 7 056.7


Land and Buildings 6 098.6) 5 984.6) 5 876.5

Infrastructure 4 779.3) 4 521.4) 4 365.7

Plant and Equipment 224.6) 240.5) 250.1

Heritage and Cultural Assets 502.4) 471.9) 461.5

Investment Property 3.0) 3.2) 2.8

Intangibles 51.8) 45.5) 49.1

Assets Held for Sale 4.7) 5.7) 9.2

Other Non-Financial Assets 31.5) 38.3) 38.5

11 696.0) 11 311.0) 11 053.3

Total Assets 18 304.9) 19 388.0) 18 110.0

Liabilities

Borrowings 633.7) 564.1) 624.1

Superannuation2 6 345.5) 6 176.4) 8 947.8

Employee Entitlements 583.0) 612.7) 602.2

Payables 134.9) 132.8) 74.3

Other Liabilities 358.7) 408.3) 404.4

Total Liabilities 8 055.7) 7 894.3) 10 652.8

NET ASSETS 10 249.2) 11 493.7) 7 457.2


Table A3.6: General Government Balance Sheet (continued)

2017) 2017) 2017)



$m) $m) $m)

Equity

Accumulated Funds 5 293.3) 6 782.4) 2 812.1

Asset Revaluation Reserve 4 955.9) 4 711.3) 4 645.1

Total equity 10 249.2) 11 493.7) 7 457.2


NET WORTH3 10 249.2) 11 493.7) 7 457.2

NET FINANCIAL WORTH4 (1 446.7) 182.6 (3 596.1)

NET FINANCIAL LIABILITIES5 5 929.6) 5 520.8 8 023.2

NET DEBT6 (301.3) (659.8) (859.5)

Notes: 1. The increase primarily reflects the investment of the one-off Australian Government payment of $730.4 million, following

the decision by the Australian Government to transfer ownership of the Mersey Community Hospital to the State, which is expected to occur by 30 June 2017. In addition, there are forecast increases in net assets for Hydro Tasmania and the Motor Accidents Insurance Board.

2. The Superannuation liability as at 31 March 2017 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 nine months ending 31 March 2017. There is a difference of $2 771.4 million between the Estimated Outcome and the March 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 per cent) and the estimated long-term bond rate which is used for Budget purposes (4.75 per cent at 30 June 2016).

3. Net Worth represents Total Assets (both Financial and Non-Financial) less Total Liabilities. 4. Net Financial Worth represents Total Financial Assets less Total Liabilities. 5. Net Financial Liabilities represents Total Liabilities less Financial Assets, excluding Equity Investment in the PNFC and

PFC Sectors. 6. Net Debt represents Borrowings less the sum of Cash and Deposits and Investments.


GENERAL GOVERNMENT CASH FLOW

STATEMENT

Table A3.7: General Government Cash Flow Statement 2016-17) 2016-17) 2016-17)



$m) $m) $m)



Grants Received1 3 634.6) 4 371.9) 2 716.3

Taxation 1 045.9) 1 084.5) 815.6

Sales of Goods and Services 353.7) 404.1) 295.8

Fines and Regulatory Fees 96.5) 95.8) 72.6

Interest Received 16.6) 22.1) 13.2

Dividend, Tax and Rate Equivalents 234.2) 301.2) 241.5

Other Receipts 331.9) 361.8) 310.4

5 713.5) 6 641.3) 4 465.5


Employee Entitlements (2 298.5) (2 350.1) (1 757.3)

Superannuation (442.6) (448.9) (320.9)

Supplies and Consumables (1 117.6) (1 217.4) (870.3)

Borrowing Costs (10.4) (10.5) (2.1)

Grants and Subsidies Paid (1 206.1) (1 242.9) (958.6)

Other Payments (205.9) (215.5) (176.1)

(5 281.2) (5 485.2) (4 085.3)

Net Cash Flows from Operating Activities 432.3 1 156.1) 380.2



Purchases of Non-Financial Assets (524.8) (476.3) (261.3)

Sales of Non-Financial Assets 28.3 29.4) 26.9

(496.5) (447.0) (234.4)

Net Cash Flows from Financial Assets

(Policy Purposes)

Equity Injections2 (63.2) (795.9) (32.9)

Net Advances Paid .... …. (4.0)

Equity/Disposals 0.7 0.7 1.7

(62.5) (795.2) (35.2)


Table A3.7: General Government Cash Flow Statement (continued) 2016-17) 2016-17) 2016-17)



$m) $m) $m)

Net Cash Flows from Investing Activities (559.0) (1 242.1) (269.5)


Net Borrowing (35.7) (61.4) (1.2)

(35.7) (61.4) (1.2)

Net Increase/(Decrease) in Cash Held (162.5) (147.4) 109.5

Cash at Beginning of the Year 1 043.3 1 326.9 1 326.9

Cash at End of the Year 880.8 1 179.6 1 436.4


Net Cash Flows from Operating Activities 432.3 1 156.1) 380.2

Plus Net Cash from Investments in Non-Financial Assets (496.5) (447.0) (234.4)

Equals CASH SURPLUS/(DEFICIT) (64.2) 709.1 145.8

Notes: 1. The increase in Grants Received primarily reflects the estimated receipt of a significant one-off Australian Government

payment of $730.4 million for the transfer of the Mersey Community Hospital to the State by 30 June 2017 (the National Partnership on Transfer of the Mersey Community Hospital).

2. The increase in Equity Injections primarily reflects the investment in the Tasmanian Public Finance Corporation of the one-off Australian Government payment of $730.4 million, following the decision by the Australian Government to transfer ownership of the Mersey Community Hospital to the State, which is expected to occur by 30 June 2017.


CONSOLIDATED FUND

Table A3.8: Consolidated Fund Outcome 2016-17 2016-17 2016-17

Estimated March YTD

Budget Outcome Actual

$m $m $m

Recurrent receipts

Australian Government sources

General purpose payments 2 299.2 2 254.9 1 711.3

Specific purpose payments 508.1 510.6 442.6

National Partnership Payments 71.3 71.5 53.7

Other Grants and Subsidies 0.1 0.1 ....

2 878.6 2 837.1 2 207.6

State sources

Taxation 929.6 969.8 737.9

Receipts from government businesses 247.9 274.4 254.2

Departmental fees and recoveries 95.9 96.5 74.7

Recoveries of State debt charges 0.1 0.1 ....

Sale and rent of government property 5.0 5.0 ....

Resource rents and royalties 25.0 45.6 32.8

Other recurrent receipts 147.8 176.6 100.9

1 451.2 1 568.1 1 200.6

Capital receipts

State sources

Other capital receipts 3.5 3.5 2.2

3.5 3.5 2.2

Total Receipts 4 333.4 4 408.7 3 410.4

Less Expenditure

Recurrent services

Appropriation Act 3 751.3 3 801.4 2 780.3

Reserved by Law 324.2 317.7 229.1

4 075.5 4 119.1 3 009.4

Works and services

Capital Investment Program 238.3 242.2 147.0

238.3 242.2 147.0

Total Expenditure 4 313.8 4 361.3 3 156.4

CONSOLIDATED FUND SURPLUS 19.6 47.4 254.0


Table A3.8: Consolidated Fund Expenditure by Agency 2016-17 2016-17 2016-17

Estimated March YTD


$m $m $m

Education

Recurrent services 1 208.1 1 212.2 936.2

Works and services 56.2 47.9 33.4

1 264.3 1 260.1 969.6

Finance-General

Recurrent services 539.7 552.3 362.1

539.7 552.3 362.1


Recurrent services 1 244.6 1 250.3 925.8


1 278.5 1 291.9 943.1

House of Assembly


8.0 8.0 5.6

Integrity Commission


2.3 2.3 1.6

Justice



144.5 148.0 110.5

Legislative Council


6.5 6.8 4.9

Legislature-General


Works and services 0.9 0.9 ....

7.0 7.2 5.2

Ministerial and Parliamentary Support


19.6 19.5 15.0

Office of the Director of Public Prosecutions


6.4 6.5 4.8


Table A3.8: Consolidated Fund Expenditure by Agency (continued) 2016-17 2016-17 2016-17

Estimated March YTD


$m $m $m



4.0 4.0 2.7

Office of the Ombudsman


2.1 2.1 1.4




226.5 226.9 154.3

Premier and Cabinet



73.5 72.3 46.2

Primary Industries, Parks, Water and Environment



173.7 190.6 139.0

State Growth



485.0 487.3 345.2

Tasmanian Audit Office


2.3 2.3 1.8

Tourism Tasmania


26.8 26.8 13.6




42.9 46.4 29.7

TOTAL 4 313.8 4 361.3 3 156.4

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