2018-19 Budget Paper 1 - Chapter 4 - 2018-19 Budget and ... … · Web viewOverview: This chapter ... During the course of the 2018 State Election the Government announced the introduction

4 2018-19 BUDGET AND FORWARD ESTIMATES

Key Issues

The Net Operating Balance is in surplus throughout the 2018-19 Budget and Forward Estimates period, with an estimated surplus of $161.9 million in 2018-19.

The Fiscal Balance is estimated to be a deficit of $284.6 million for 2018-19, with a projected improvement over the Forward Estimates period to achieve surpluses of $5.3 million in 2020-21 and $52.9 million in 2021-22.

Net Debt remains negative throughout the Forward Estimates period (i.e. Net Cash and Investments remains positive). As at 30 June 2019, Net Debt is estimated to be negative $329.6 million.

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 2017-18 Budget Papers and those presented in these Budget Papers. Detailed information on 2018-19 Budget initiatives, including the implementation of the Government’s 2018 election commitments can be found in Government Services Budget Paper No 2.

2018-19 Budget and Forward Estimates 47

OVERVIEWThis chapter includes the General Government Sector Financial Statements for the 2018-19 Budget and Forward Estimates period and an Estimated Outcome for 2017-18. It also incorporates the Policy and Parameter Statement which reflects changes between the Budget and Forward Estimates reported in the 2017-18 Budget Papers and the 2018-19 Budget Papers.The financial statements in this chapter have been prepared in accordance with the Uniform Presentation Framework. The statements present information for the 2017-18 Budget and for the 2018-19 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 2017-18, which will be publicly released by no later than 31 October 2018.

48 2018-19 Budget and Forward Estimates

GOVERNMENT FINANCIAL ESTIMATESTables 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 Statement2017-18 2017-18 2018-19 2019-20 2020-21 2021-22

Estimated Forward Forward Forward

Budget Outcome Budget Estimate Estimate Estimate $m $m $m $m $m $m

Revenue from transactions1

Grants 3 682.9 3 802.0 3 893.9 3 911.9 4 009.4 4 187.2 Taxation 1 128.5 1 161.1 1 215.2 1 247.8 1 274.0 1 301.2 Sales of goods and services 408.0 406.4 417.6 422.6 429.3 435.7 Fines and regulatory fees 98.9 99.0 98.6 99.7 101.1 101.7 Interest income 19.6 22.4 17.8 13.3 12.1 12.5 Dividend, tax and rate equivalent income 358.4 376.5 409.7 391.6 369.9 368.9 Other revenue 177.7 168.4 164.6 162.3 157.3 149.2

5 874.0 6 035.8 6 217.3 6 249.2 6 353.1 6 556.5

Less Expenses from transactionsEmployee expenses2 2 400.4 2 513.8 2 531.5 2 588.7 2 658.5 2 735.6 Superannuation3 273.5 318.4 294.1 297.4 299.0 302.6 Depreciation 268.6 267.7 264.1 322.7 337.8 348.2 Supplies and consumables4 1 227.8 1 211.4 1 232.7 1 231.5 1 264.4 1 324.2 Nominal superannuation interest expense 285.6 254.9 270.9 273.7 276.0 277.6 Borrowing costs 9.8 9.7 9.5 9.1 8.8 8.3 Grant and subsidy expenses5 1 314.3 1 351.3 1 393.1 1 376.8 1 322.5 1 323.0 Other expenses 39.7 33.3 59.5 35.5 38.0 40.6

5 819.8 5 960.5 6 055.4 6 135.5 6 204.8 6 360.0

Equals NET OPERATING BALANCE 54.3 75.3 161.9 113.7 148.3 196.4

Plus Other economic flows - included in

operating resultGain/(loss) on disposal of non-financial

assets 15.3 13.1 12.2 12.7 13.5 13.9 Movement in investments in GBEs & SOCs6 (104.2) 10.9 (93.7) (35.6) (6.5) 15.0 Movements in superannuation liability3 .... 1 186.5 .... .... .... ....


Other gains/(losses) 9.8 27.2 (4.2) (5.4) (5.1) 0.5 (79.0) 1 237.7 (85.7) (28.3) 1.8 29.4

Equals Operating Result (24.8) 1 312.9 76.2 85.4 150.1 225.9

Table 4.1: General Government Income Statement (continued)

2017-18 2017-18 2018-19 2019-20 2020-21 2021-22 Estimate

d Forward Forward Forward Budget Outcome Budget Estimate Estimate Estimate

$m $m $m $m $m $m

Plus Other economic flows - othermovements in equityRevaluations of non-financial assets 250.8 250.6 268.4 288.5 294.9 299.8 Other non-owner movements in equity 3.8 3.8 3.8 3.8 3.8 3.8

254.6 254.4 272.2 292.3 298.7 303.6

Equals Comprehensive Result 229.8 1 567.4 348.4 377.7 448.8 529.5

KEY FISCAL AGGREGATES

NET OPERATING BALANCE 54.3 75.3 161.9 113.7 148.3 196.4

Less Net acquisition of non-financial assets

Purchases of non-financial assets7 609.9 514.7 741.0 719.6 532.4 523.8 Less Sale of non-financial assets 33.2 30.9 30.4 30.8 51.6 32.0 Less Depreciation 268.6 267.7 264.1 322.7 337.8 348.2

308.2 216.0 446.5 366.1 143.0 143.6

Equals FISCAL BALANCE (253.9) (140.7) (284.6) (252.4) 5.3 52.9

Notes:1. Detailed information on revenue estimates is provided in chapter 5 of this Budget Paper.2. The increase in Employee expenses in 2018-19 primarily reflects the delivery of the Government’s

2018 election commitments and other 2018 Budget initiatives. Further information in relation to agency initiatives is contained in the relevant agency chapter in Government Services Budget Paper No 2.

3. The movement in Superannuation reflects an actuarial assessment of the defined benefit schemes and agency expenditure estimates for accumulation scheme members. Further information on the Superannuation liability is provided in chapter 7 and appendix 3 of this Budget Paper.

4. The increase in Supplies and consumables from 2018-19 onwards primarily reflects the delivery of the Government’s 2018 election commitments and other 2018 Budget initiatives. Further information in relation to agency initiatives is contained in the relevant agency chapter in Government Services Budget Paper No 2.

5. The increase in Grant and subsidy expenses in 2018-19 and 2019-20 reflects increased Australian Government funding to non-government schools under Quality Schools, Quality Outcomes; the expenditure profile for the Northern Cities Major Development Initiative; the implementation of the Bilateral Agreement for the Transition to the NDIS with the Australian Government; offset by revised timing of the receipt of Australian Government funding to local government councils.


6. The movement in investments in GBEs & SOCs reflects changes in the net assets of the Public Non-Financial Corporations and Public Financial Corporation sectors. Refer to appendix 1 for more information on the PNFC and PFC sectors.

7. Additional information on agency 2018-19 Budget Infrastructure Investment is provided in chapter 6 of this Budget Paper.


Table 4.2: General Government Balance Sheet as at 30 June2018 2018 2019 2020 2021 2022



AssetsFinancial assets

Cash and deposits1 1 117.2 1 130.0 938.7 823.3 844.8 876.6 Investments2 46.4 71.7 139.8 187.5 193.7 193.9 Equity investment in PNFC & PFC sectors3 5 654.0 5 417.4 5 398.3 5 423.5 5 464.7 5 535.4 Other equity investments 27.2 23.8 47.9 71.9 95.9 118.8 Receivables 315.4 320.9 316.9 311.4 306.4 303.2 Other financial assets 815.4 796.6 802.9 826.0 841.1 858.8

7 975.7 7 760.5 7 644.5 7 643.6 7 746.6 7 886.5

Non-financial assetsLand and buildings4 6 265.3 6 270.9 6 635.1 6 988.5 7 160.6 7 311.5 Infrastructure5 4 816.5 4 916.2 5 259.9 5 552.8 5 802.7 6 086.8 Plant and equipment 229.0 244.0 255.9 268.3 290.6 305.4 Heritage and cultural assets 484.0 473.9 486.0 498.2 510.4 522.7 Investment property 3.5 3.7 4.0 4.2 4.6 4.9 Intangibles 47.7 57.5 54.5 49.8 44.7 41.1 Assets held for sale 4.8 10.1 9.4 9.3 8.3 7.2 Other non-financial assets 37.4 43.9 43.6 43.7 40.1 39.9

11 888.1 12 020.2 12 748.4 13 414.7 13 861.9 14 319.4

Total assets 19 863.8 19 780.7 20 392.9 21 058.4 21 608.5 22 206.0

LiabilitiesBorrowings6 711.8 579.3 748.9 987.5 1 023.6 1 018.9 Superannuation7 6 266.3 6 786.2 6 868.1 6 933.0 6 981.9 7 015.0 Employee entitlements 618.8 638.8 648.3 631.1 643.8 663.0 Payables 133.7 135.2 135.8 136.2 138.7 140.1 Other liabilities 409.7 396.3 398.4 399.5 400.7 419.7

Total liabilities 8 140.3 8 535.8 8 799.6 9 087.3 9 188.6 9 256.6

Net assets 11 723.5 11 244.9 11 593.3 11 971.0 12 419.8 12 949.3


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

2018 2018 2019 2020 2021 2022 Estimate


$m $m $m $m $m $m

EquityAccumulated funds 6 761.4 6 018.7 6 098.7 6 187.9 6 341.8 6 571.5 Asset revaluation reserve 4 962.1 5 226.2 5 494.6 5 783.1 6 078.0 6 377.8

Total equity 11 723.5 11 244.9 11 593.3 11 971.0 12 419.8 12 949.3

NET WORTH8 11 723.5 11 244.9 11 593.3 11 971.0 12 419.8 12 949.3

NET FINANCIAL WORTH9 (164.6) (775.3) (1 155.1) (1 443.7) (1 442.0) (1 370.1)

NET FINANCIAL LIABILITIES10 5 818.6 6 192.7 6 553.4 6 867.2 6 906.8 6 905.5

NET DEBT11 (451.8) (622.4) (329.6) (23.3) (14.8) (51.6)

Notes:1. The decrease in Cash and deposits in 2019 primarily reflects the Government’s significant

infrastructure investment program and the anticipated expenditure of Australian Government Funding.

2. The increase in Investments primarily reflects the current estimate of loan advances provided by the Department of State Growth, together with funds invested with the Tasmanian Public Finance Corporation for the TT-Line Vessel Replacement Fund.

3. The decrease in Equity investments in PNFC & PFC sectors primarily reflects a decrease in the net assets of the PNFC sector, as a result of a decrease for electricity entities of $374 million due to the impact of final 2017 balances that were not known at the time of the 2017-18 Budget. This is partly offset by an increase for TT-Line Company Pty Ltd of $79.9 million, reflecting the return of funds held in the TT-Line Vessel Replacement Fund.

4. The increase in Land and buildings reflects the implementation of the Government’s significant infrastructure investment program with increased capital expenditure on schools, housing and hospital assets undertaken by the Department of Education, Department of Communities Tasmania and Department of Health.

5. The increase in Infrastructure reflects the implementation of the Government’s significant infrastructure investment program.

6. Borrowings of $748.9 million as at 30 June 2019 includes an estimated end of year borrowing of $507.5 million to be undertaken on 28 June 2019. The end of year borrowing has no impact on the Government’s Net Debt as the same amount will be borrowed and invested on 28 June 2019 until 1 July 2019 with the Tasmanian Public Finance Corporation, grossing-up the amount of cash held and borrowings.

7. The increase in Superannuation as at 30 June 2019 reflects the latest actuarial assessment of the liability related to the defined benefit schemes. Further information on the Superannuation liability is provided in chapter 7 and appendix 3 of this Budget Paper.

8. Net Worth represents Total assets less Total liabilities.9. Net Financial Worth represents Financial assets less Total liabilities.10. Net Financial Liabilities represents Total liabilities less Financial assets, excluding Equity

investments in PNFC & PFC sectors.11. Net Debt represents Borrowings less the sum of Cash and deposits and Investments.



Table 4.3: General Government Cash Flow Statement2017-18 2017-18 2018-19 2019-20 2020-21 2021-22



Cash Flows from Operating Activities

Cash receipts from operating activities

Grants received 3 682.9 3 802.0 3 893.9 3 912.0 4 009.4 4 187.2 Taxation 1 127.3 1 159.0 1 213.6 1 245.4 1 272.1 1 298.9 Sales of goods and services 408.0 406.1 417.0 421.3 428.9 433.6 Fines and regulatory fees 98.9 99.0 98.6 99.7 101.1 101.7 Interest received 19.6 22.3 17.8 13.3 12.1 12.5 Dividend, tax and rate equivalents 372.4 409.3 412.0 375.3 361.2 362.5 Other receipts 365.3 355.7 355.2 335.9 326.2 318.2

6 074.3 6 253.4 6 407.9 6 403.0 6 510.9 6 714.5

Cash payments from operatingactivitiesEmployee entitlements (2 393.0) (2 506.2) (2 521.3) (2 601.9) (2 643.9) (2 715.4)Superannuation (468.1) (472.7) (481.8) (507.9) (525.5) (545.5)Supplies and consumables (1 239.9) (1 225.9) (1 244.5) (1 243.5) (1 271.3) (1 317.4)Borrowing costs (9.8) (9.8) (9.5) (9.3) (8.8) (8.3)Grants and subsidies paid (1 314.2) (1 351.2) (1 393.1) (1 376.8) (1 322.4) (1 322.9)Other payments (229.1) (222.6) (252.1) (208.9) (208.1) (211.0)

(5 654.1) (5 788.5) (5 902.3) (5 948.3) (5 980.0) (6 120.5)

Net Cash Flows from OperatingActivities 420.3 464.9 505.6 454.7 531.0 594.0

Cash Flows from Investing Activities

Net cash flows from non-financial

assetsPurchases of non-financial assets (603.1) (514.1) (731.8) (708.1) (520.5) (511.9)Sales of non-financial assets 33.0 30.8 30.4 30.8 51.6 32.0

(570.1) (483.3) (701.4) (677.3) (468.9) (479.9)

Net cash flows from financial assets

(policy purposes)Equity injections (58.8) (151.4) (98.7) (84.8) (71.7) (78.5)Net advances paid (2.1) (24.4) (27.6) 4.1 6.6 3.0 Equity disposals 0.7 1.1 1.1 1.1 1.1 1.1


(60.3) (174.6) (125.1) (79.6) (63.9) (74.4)


Table 4.3: General Government Cash Flow Statement (continued)

2017-18 2017-18 2018-19 2019-20 2020-21 2021-22 Estimate


$m $m $m $m $m $m

Net cash flows from financial assets

(liquidity management purposes)Net purchase of investments .... 39.9 (40.5) (51.8) (12.9) (3.1)

.... 39.9 (40.5) (51.8) (12.9) (3.1)

Net cash flows from investing activities (630.3) (618.0) (866.9) (808.6) (545.7) (557.5)

Net cash flows from financing activities

Net borrowing 147.8 29.7 170.0 238.6 36.1 (4.8)147.8 29.7 170.0 238.6 36.1 (4.8)

Net Increase/(Decrease) in Cash Held (62.3) (123.4) (191.3) (115.3) 21.4 31.8

Cash at Beginning of the Year 1 179.6 1 253.4 1 130.0 938.7 823.3 844.8 Cash at End of the Year 1 117.2 1 130.0 938.7 823.3 844.8 876.6

KEY FISCAL AGGREGATES

Net Cash Flows from Operating Activities 420.3 464.9 505.6 454.7 531.0 594.0 Plus Net cash flows from non-financial

assets (570.1) (483.3) (701.4) (677.3) (468.9) (479.9)Equals CASH SURPLUS/(DEFICIT) (149.8) (18.4) (195.7) (222.6) 62.1 114.1


POLICY AND PARAMETER STATEMENTIntroduction

The Policy and Parameter Statement is a reconciliation of the major movements in the Net Operating Balance and the Fiscal Balance between two points in time. The movements reflect changes between the Budget and Forward Estimates reported in the 2017-18 Budget Papers and the 2018-19 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 VariationFor 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 item, which is consistent with an existing policy, is not a policy decision.

Parameter VariationA 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 2018-19 Budget since the 2017-18 Budget.

Further InformationAdditional information on revenue estimates is provided in chapter 5 of this Budget Paper. Additional information on agency expenditure estimates, including 2018


Budget initiatives, is provided in the relevant agency chapters in Government Services Budget Paper No 2.It should be noted that the estimates presented in the PPS were finalised prior to the release of the Australian Government’s 2018-19 Budget. Therefore, the movements included for Specific Purpose Payments and some National Partnership payments may differ from those published in the Australian Government 2018-19 Budget due to different assumptions around timing and activity levels.


Table 4.4: Summary Policy and Parameter Statement, 2017-18 to 2021-22

2017-18)Estimate

d)Outcom

e)

2018-19))

Budget)

2019-20)Forward)

Estimate)

2020-21)Forward)

Estimate)

2021-22 Forward Estimat

e1

$m) $m) $m) $m) $mForward Estimates (Net Operating Balance)

as per the 2017-18 Budget (A) 54.3 50.7 51.3 45.3 .... Forward Estimates (Fiscal Balance) as per

the 2017-18 Budget (B) (253.9) (229.2) 2.8 71.1 ....

REVENUEPolicy Decisions2 .... .... .... .... .... Parameter Adjustments 161.7 354.3 264.4 304.4 ....

TOTAL REVENUE VARIATIONS (C) 161.7 354.3 264.4 304.4 ....

EXPENSESPolicy Decisions 105.1 188.7 167.4 176.9 191.5 Parameter Adjustments 35.6 54.4 34.6 24.6 ....

TOTAL EXPENSE VARIATIONS (D) 140.8 243.1 202.0 201.5 ....

NET OPERATING BALANCE (A+C-D) 75.3 161.9 113.7 148.3 196.4

Less NET ACQUISITION OF NON-FINANCIAL ASSETSPurchases of non-financial assets

Policy Decisions 2.5 157.0 224.7 243.4 252.8 Parameter Adjustments (97.7) 10.0 92.9 (53.7) ....

(95.2) 167.0 317.5 189.7 .... Less Sale of non-financial assets

Policy Decisions .... .... .... .... .... Parameter Adjustments (2.2) .... .... 20.7 ....

(2.2) .... .... 20.7 .... Less Depreciation - Total Parameter

Adjustments (0.8) 0.4 (0.1) 0.2 .... NET ACQUISITION OF NON-FINANCIAL

ASSETS VARIATIONS (E) (92.2) 166.6 317.6 168.8 ....

FISCAL BALANCE (B+C-D-E) (140.7) (284.6) (252.4) 5.3 52.9

Notes:1. Parameter adjustments for 2021-22 are not reflected in the Table as the 2021-22 Forward Estimate

was not published in the 2017-18 Budget. However, policy adjustments are reflected to show their full impact on the Budget and Forward Estimates.


2. During the course of the 2018 State Election the Government announced the introduction of legislation to give effect to a suite of important tax reform initiatives that will support Tasmanian businesses and jobs. These include: a regional business relocation payroll tax holiday; a new lower payroll tax rate and threshold; and the foreign investor surcharge. Further information on the Government’s taxation reforms can be found in chapter 12 of Government Services Budget Paper No 2. The impact on estimated taxation receipts, as a result of the introduction of these new measures, is reflected in General Government Sector taxation estimates presented in this chapter and chapter 5 of this Budget Paper. General changes in the level of taxation estimates are considered to be parameter variations for the purposes of the Policy and Parameter Statement.

Table 4.5: Policy and Parameter Statement, 2017-18 to 2021-22

2017-18 2018-19 2019-20 2020-21 2021-22 Estimate

d Forward Forward Forward Outcome Budget Estimate Estimate Estimate1

$m $m $m $m $m Forward Estimates (Net Operating Balance) as per

the 2017-18 Budget (A) 54.3 50.7 51.3 45.3 .... Forward Estimates (Fiscal Balance) as per the

2017-18 Budget (B) (253.9) (229.2) 2.8 71.1 ....

Revenue from transactionsParameter Adjustments

TaxationCasino Tax and Licence Fees2 (3.7) (4.0) (4.3) (4.8) .... Duties3 20.7 66.3 73.7 75.6 .... Guarantee Fees 0.6 (2.7) (1.7) (3.2) .... Land Tax4 0.6 3.1 3.4 4.0 .... Lottery Tax .... (0.2) (0.4) (0.6) .... Motor Taxation .... (0.1) (0.2) (0.3) .... Payroll Tax5 14.5 5.0 3.4 3.2 .... Totalizator Wagering Levy .... (0.1) (0.1) (0.1) .... Vehicle Registration Fees .... 0.4 0.9 1.4 ....

Total Taxation 32.6 67.8 74.7 75.1 ....

Dividend, tax and rate equivalent incomeDividend Income

Aurora Energy Pty Ltd 0.7 (2.9) (1.0) (1.9) .... Hydro Tasmania .... 55.7 42.8 10.3 .... Motor Accidents Insurance Board (0.6) 3.7 4.0 4.2 .... Tasmanian Networks Pty Ltd 4.1 5.8 (14.6) (10.0) .... Tasmanian Ports Corporation Pty Ltd (0.9) 0.5 (0.4) 0.3 .... Tasmanian Public Finance Corporation (3.2) (1.0) 0.1 (0.5) .... Public Trustee 0.1 .... .... .... ....

0.2 61.8 31.0 2.4 .... Income Tax Equivalents

Aurora Energy Pty Ltd (1.4) (0.4) (0.9) (0.8) ....


Hydro Tasmania 19.1 15.6 4.1 (4.8) .... Motor Accidents Insurance Board (8.4) (9.8) (11.0) (10.9) .... Tasmanian Networks Pty Ltd 6.4 (4.2) (2.4) (6.7) .... Tasmanian Ports Corporation Pty Ltd 1.4 0.4 0.3 (0.3) .... Tasmanian Public Finance Corporation Pty Ltd 1.0 (0.1) 0.5 0.5 .... TT-Line Company Pty Ltd (0.3) (6.8) (0.1) .... ....

17.9 (5.3) (9.5) (23.0) ....

Table 4.5: Policy and Parameter Statement, 2017-18 to 2021-22 (continued)

2017-18 2018-19 2019-20 2020-21 2021-22 Estimate


$m $m $m $m $m Special Dividend Income

Sustainable Timber Tasmania .... 15.0 .... .... .... .... 15.0 .... .... ....

Total Dividend, tax and rate equivalent income 18.1 71.6 21.5 (20.6) ....

Interest income 2.8 0.2 (2.8) (5.0) ....

Australian Government GrantsGeneral Purpose Payments

GST Revenue6 37.4 20.7 48.3 73.0 .... 37.4 20.7 48.3 73.0 ....

National Partnership PaymentsCommunity Services (including Disability) 2.1 91.2 (79.1) (0.3) .... Education 2.8 6.5 .... .... .... Environment 18.9 24.3 23.3 10.0 .... Health 22.9 13.6 7.7 0.2 .... Housing 2.9 .... .... .... .... Infrastructure (44.1) 43.1 101.8 88.6 .... Natural Disaster Relief and Recovery Arrangements 35.0 (0.5) .... .... .... Other Services 3.8 (34.5) 1.6 1.0 ....

44.3 143.7 55.2 99.6 .... Specific Purpose Payments

Disability Services 0.2 0.4 .... .... .... National Affordable Housing .... 3.0 3.1 3.9 .... National Health Reform 24.0 39.0 46.8 55.2 .... Quality Schools, Quality Outcomes 12.1 17.2 24.5 31.7 .... Skills and Workforce Development 0.3 (2.6) 0.4 0.5 ....

36.6 56.9 74.8 91.2 ….


Other Australian Government Grants 0.7 (1.0) (1.8) (2.8) ....

Total Australian Government Grants 119.0 220.3 176.5 261.1 ....



2017-18 2018-19 2019-20 2020-21 2021-22 Estimate


$m $m $m $m $m Agency Revenue

Communities Tasmania7 (2.8) (3.3) (3.7) (4.0) .... Education (0.9) (0.9) (0.9) 0.4 .... Finance-General (4.2) 2.5 0.3 0.9 .... Health (0.9) (7.7) (8.5) (5.4) .... Justice (0.4) (0.1) (0.1) (0.1) .... Marine and Safety Tasmania 0.6 0.4 0.4 0.4 .... Police, Fire and Emergency Management 0.7 0.8 2.1 .... .... Premier and Cabinet 1.7 5.1 3.2 4.7 .... Primary Industries, Parks, Water and Environment 2.6 3.7 4.8 5.1 .... Royal Tasmanian Botanical Gardens 0.2 0.1 0.2 0.6 .... State Fire Commission .... (0.1) (0.1) (0.1) .... State Growth (8.0) (4.7) (1.5) (6.4) .... TasTAFE .... (2.3) (2.6) (2.9) .... Tourism Tasmania 0.2 0.2 0.2 0.2 .... Treasury and Finance 0.4 0.5 0.6 0.6 ....

Total Agency Revenue (10.8) (5.6) (5.6) (6.1) ....

Total Parameter Adjustments 161.7 354.3 264.4 304.4 ....

TOTAL REVENUE ADJUSTMENTS (C) 161.7 354.3 264.4 304.4 ....

Expenses from transactionsPolicy Decisions8

Agency ExpenditureCommunities Tasmania

Election Commitments .... 35.1 19.3 13.1 3.8 Out of Home Care - Additional Support .... 6.0 6.0 6.0 6.0 Safe Homes, Safe Families .... .... 6.0 6.0 6.0

.... 41.1 31.3 25.1 15.8 Education

Election Commitments .... 8.5 17.0 23.5 32.0 Year 7-12 Implementation Plan 3.0 .... .... .... ....

3.0 8.5 17.0 23.5 32.0



2017-18 2018-19 2019-20 2020-21 2021-22 Estimate


$m $m $m $m $m Finance-General

Election Commitments .... 8.5 2.6 2.0 2.5 City Deal Tamar River Catchment

Projects State Cost .... 0.5 1.0 1.0 1.0 Energy Security Taskforce Final Report 0.1 0.1 0.1 0.1 0.1

0.1 9.1 3.7 3.1 3.6 Health

Ambulance Tasmania Additional Funding 4.0 5.2 5.2 5.2 5.2 Community Rapid Response 0.4 .... .... .... .... Election Commitments9 .... 21.8 43.7 62.7 80.5 Elective Surgery Additional Activity 2017-18 14.3 .... .... .... .... Elective Surgery Activity .... 20.0 .... .... .... Secondary Triage Model - Ambulance Tasmania 0.3 .... .... .... .... Street Team Project 0.1 .... .... .... .... Rural Medical Practitioners (Tasmanian

State Service) Agreement 2017 0.4 .... .... .... .... THS increased demand 33.9 .... .... .... ....

53.4 47.0 48.9 67.9 85.7 Legislative Council

Member Allowances10 .... .... .... .... .... .... .... .... .... ....

JusticeAdditional Tasmanian Prison Service Funding 4.3 4.0 4.0 4.0 4.0 Court Security and Prisoner Transport 0.6 0.8 0.8 0.8 0.8 Commonwealth Redress Scheme .... 25.0 5.0 5.0 5.0 Election Commitments .... 0.2 .... .... .... Alternative Sentencing Options .... 4.3 4.3 4.3 4.3

4.9 34.2 14.1 14.1 14.1 Police, Fire and Emergency Management

Election Commitments .... 5.0 8.4 12.0 15.4 Middleton Fire Station 0.6 .... .... .... .... New Generation Emergency Alert Telephone

Warning System .... 0.5 .... .... .... Police Enterprise Agreement 2018 5.1 0.3 0.7 0.7 0.7

5.7 5.8 9.1 12.7 16.0




2017-18 2018-19 2019-20 2020-21 2021-22 Estimate


$m $m $m $m $m Premier and Cabinet

Cradle Coast Councils Feasibility Study 0.1 .... .... .... .... Coastal Pathways 4.8 .... .... .... .... Election Commitments 9.9 .... .... .... .... Office of Security and Emergency Management .... 0.5 0.5 0.5 0.5 Glenorchy City Council Board of Inquiry 0.2 .... .... .... .... Local Government Feasibility Study - George Town

and West Tamar Councils 0.1 .... .... .... .... Reconciliation Council of Australia 0.1 .... .... .... .... Secretariat for Sorell/Tasman Councils Share

Services Board 0.2 .... .... .... .... Silverdome Operations 0.6 .... .... .... ....

15.9 0.5 0.5 0.5 0.5 Primary Industries, Parks, Water and Environment

Biosecurity - Fruit Fly Response and Assistance Package11 8.0 .... .... .... ....

Drought Support Rural Relief 0.3 .... .... .... .... Election Commitments .... 6.9 10.3 11.1 10.9 Macquarie Heads Campground 0.2 .... .... .... .... Nyrstar Funding Agreement .... 1.4 .... 1.6 .... Royal Tasmanian Botanical Gardens -

New Visitor Centre .... 1.0 2.6 .... .... RTBG Bicentenary 0.1 .... .... .... .... Save the Tasmanian Devil 0.8 0.5 0.5 0.5 0.5 Welcome/Montagu Riverworks 0.4 .... .... .... ....

9.7 9.8 13.4 13.2 11.4 State Growth

Industry Assistance Grants:Additional support to DXC 0.4 .... .... .... .... Biomar Group 2.3 .... .... .... .... Carlton & United Breweries .... 1.0 .... .... .... Castings Tasmania Pty Ltd 0.4 .... .... .... .... Dundas Mining Pty Ltd .... 1.2 1.2 1.1 .... Hermal Group 2.0 2.5 .... 2.5 2.0 Houston’s Farm 0.7 .... .... .... .... Other Industry Assistance 0.7 0.2 0.9 0.6 1.4 Remarkable Lodge .... 0.4 0.3 0.3 ....



2017-18 2018-19 2019-20 2020-21 2021-22 Estimate


$m $m $m $m $m State Growth (continued)

AFLW in Tasmania .... 0.5 0.5 0.6 0.6 Australian Rally Championships 0.1 .... .... .... .... Bass Highway - Leith 0.3 .... .... .... .... Business Incentives .... .... .... 0.1 0.1 Cessation of Transport Assistance for southern

sawmills 0.6 .... .... .... .... Circular Head Working Group 1.5 .... .... .... .... Election Commitments .... 18.1 20.5 8.0 5.0 Energy Security Management 0.1 0.3 0.3 0.3 0.3 Festivale 0.1 0.1 0.1 .... .... Flinders Island Telecommunications Upgrades 0.4 .... .... .... .... Former Devonport Maternity Hospital 1.0 .... .... .... .... ICC World Twenty20 .... 0.5 2.3 0.3 .... Mona Foma Festival 1.0 .... .... .... .... Kangaroo Bay Redevelopment 0.1 1.6 .... .... .... Rosehaven - Season 3 0.3 0.2 .... .... .... Small Business Grants to Support Apprentices and

Trainees 0.2 2.8 .... .... .... TMAG Chiller Unit 0.1 .... .... .... ....

12.1 29.4 26.1 13.7 9.4 Tourism Tasmania

Election Commitments .... 3.2 3.2 3.2 3.0 .... 3.2 3.2 3.2 3.0

Total Policy Decisions 105.1 188.7 167.4 176.9 191.5

Parameter AdjustmentsDepreciation (0.8) 0.4 (0.1) 0.2 .... Nominal superannuation interest expense (30.7) (18.8) (19.5) (20.3) .... Borrowing costs .... .... 0.1 0.5 ....



2017-18 2018-19 2019-20 2020-21 2021-22 Estimate


$m $m $m $m $m Agency Expenditure

Communities Tasmania 19.9 16.4 11.6 10.9 .... Education 15.0 16.1 32.9 29.0 .... Finance-General (13.6) (51.2) (24.1) (28.1) .... Health 53.0 49.3 40.1 35.6 .... House of Assembly 0.9 0.9 1.0 1.0 .... Inland Fisheries Service .... 0.1 .... 0.3 .... Justice 3.5 0.7 1.0 1.3 .... Legislature-General 0.3 0.1 0.1 0.1 .... Marine and Safety Tasmania 2.0 0.1 0.1 0.1 .... Ministerial and Parliamentary Support 1.6 1.8 1.8 1.8 .... Office of the Governor .... 0.1 0.1 0.1 .... Police, Fire and Emergency Management 3.7 0.8 2.1 .... .... Premier and Cabinet 5.4 5.1 2.7 3.2 .... Primary Industries, Parks, Water and Environment (0.3) 10.5 5.0 6.9 .... Royal Tasmanian Botanical Gardens (0.1) 0.5 0.5 0.5 .... State Fire Commission .... (1.1) (0.9) (0.4) .... State Growth (25.5) 22.6 (14.9) (9.8) .... TasTAFE 0.7 .... (1.9) (3.2) .... Tourism Tasmania .... 0.9 0.2 0.3 .... Treasury and Finance 0.4 .... 0.5 0.9 .... Other12 0.2 (1.0) (3.9) (6.3) ....

Total Agency Expenditure 67.2 72.8 54.2 44.2 ....

Total Parameter Adjustments 35.6 54.4 34.6 24.6 ....

TOTAL EXPENSES FROM TRANSACTIONSVARIANCE (D) 140.8 243.1 202.0 201.5 ....

NET OPERATING BALANCE 75.3 161.9 113.7 148.3 196.4



2017-18 2018-19 2019-20 2020-21 2021-22 Estimate


$m $m $m $m $m less NET ACQUISITION OF NON-FINANCIAL

ASSETS FROM TRANSACTIONSPurchases of non-financial assets from

transactionsPolicy Decisions13

Communities TasmaniaElection Commitments .... 27.0 29.0 36.3 25.0

.... 27.0 29.0 36.3 25.0 Education


Finance-GeneralKirksway Place Purchase14 .... 20.0 .... .... ....

.... 20.0 .... .... .... Health

Election Commitments .... 36.3 37.3 27.3 20.1 Launceston General Hospital Cladding Upgrade 0.3 1.7 .... .... .... Secondary Triage Model - Ambulance Tasmania 0.1 .... .... .... ....

0.4 38.0 37.3 27.3 20.1 Justice

Court Security and Prisoner Transport 0.4 .... .... .... .... Election Commitments .... 10.0 41.0 38.0 43.3 Mary Hutchinson Women’s Prison 20 Bed

Accommodation 1.3 .... .... .... .... 1.7 10.0 41.0 38.0 43.3

Police, Fire and Emergency Management


Primary Industries, Parks, Water and Environment


State GrowthElection Commitments 0.5 37.5 66.5 85.3 106.4

0.5 37.5 66.5 85.3 106.4


Total Policy Decisions 2.5 157.0 224.7 243.4 252.8


2017-18 2018-19 2019-20 2020-21 2021-22 Estimate


$m $m $m $m $m Parameter Adjustments

Communities Tasmania 21.3 (5.7) 6.8 (3.1) .... Education (9.7) 17.2 (2.9) .... .... Finance-General (9.4) 6.1 (3.4) (4.7) .... Health (34.9) (11.0) 103.5 14.6 .... Justice 1.7 .... (0.5) .... .... Legislature-General 0.1 .... .... .... .... Marine and Safety Tasmania (0.1) 1.1 0.8 1.5 .... Police, Fire and Emergency Management 6.1 .... .... .... .... Primary Industries, Parks, Water and Environment (6.7) 15.7 7.9 9.9 .... Royal Tasmanian Botanical Gardens 0.5 1.0 2.6 .... .... State Fire Commission .... 0.8 1.1 0.7 .... State Growth (59.0) 58.2 94.1 58.9 .... TasTAFE (8.2) 2.0 13.3 (0.9) .... Treasury and Finance 0.5 (0.6) (0.6) (0.6) .... Provision for Future Infrastructure Investment .... (75.0) (130.0) (130.0) ....

Total Parameter Adjustments (97.7) 10.0 92.9 (53.7) ....

Total Purchases of non-financial assets from

transactions (E) (95.2) 167.0 317.5 189.7 ….

Less Total Sale of non-financialassets from transactions (F) (2.2) .... .... 20.7 ....

Depreciation - Total Parameter Adjustments (G) (0.8) 0.4 (0.1) 0.2 ....

TOTAL NET ACQUISITION OFNON-FINANCIAL ASSETS FROMTRANSACTIONS VARIANCE (H) (E - F - G) (92.2) 166.6 317.6 168.8 ....

FISCAL BALANCE (B + C - D - H) (140.7) (284.6) (252.4) 5.3 52.9

Notes:


1. Parameter adjustments for 2021-22 are not reflected in the Table as the 2021-22 Forward Estimate was not published in the 2017-18 Budget. However, policy adjustments are reflected to show their full impact on the Budget and Forward Estimates period.

2. The reduction in Casino Tax and Licence Fees reflects lower than expected year-to-date revenue in 2017-18 and a continuation of this trend over the Forward Estimates period.


3. The increase in Duties in 2017-18 primarily reflects an increase in Conveyance Duty due to growth in residential property prices and transaction volumes, which has contributed to a general increase to the base forecast over the Forward Estimates period. Duties revenue has also been impacted by the Government’s election commitments to apply a Foreign investor surcharge and reductions in duty due to the First home buyer concession and pensioner home downsizing concession. There has also been higher than expected increases in Motor Vehicle Duty and Insurance Duty due to stronger motor vehicle sales and premium revenue growth of general insurers.

4. The increase in Land Tax primarily reflects a net increase in land values across the State.5. The increase in Payroll Tax reflects stronger employment growth in 2017-18 and over the Forward

Estimates. This increase has been offset to some extent by a reduction in the rate of payroll tax (from 6.1 per cent to 4 per cent) for wages between $1.25 million and $2 million which will commence from 1 July 2018.

6. The increase in GST Revenue is primarily a result of increased estimates of the GST pool, partially offset by reduced estimates of Tasmania’s GST relativities.

7. For comparative purposes, this statement has been prepared on the basis of the agency structure that is to be in place from 1 July 2018.

8. Detailed information on 2018 election commitments and other 2018-19 Budget initiatives is provided in Government Services Budget Paper No 2.

9. The Government’s Financial Policy stated that health policy commitments were net of the unallocated $8.5 million One Health Provision and THS restructure savings. Increased Australian Government Activity Based Funding revenue arising from increased activity is also expected and was included in the Government’s Policy. The impact of these items is included as a parameter adjustment.

10. An amount of $40 000 per annum is included in 2018-19 and over the Forward Estimates for the reinstatement of funding for Member Allowances.

11. Following the recent announcement of $20 million for the Biosecurity Emergency Response and Research Fund from the Australian Government, Fruit Fly Response expenditure of $2.5 million in 2018-19 and $1 million per annum over the Forward Estimates period will be met from this funding. This expenditure has been recognised as a parameter adjustment, in accordance with the standard treatment for Australian Government funding.

12. The movement in Other primarily reflects adjustments to eliminations and cost estimates associated with the State’s superannuation expense and liability.

13. Further information on Purchases of non-financial assets from transactions policy decisions is provided in chapter 6 of this Budget Paper.

14. This represents the purchase of 21 Kirksway Place as part of the Government’s public sector superannuation reforms.


MAJOR REVENUE VARIATIONSParameter Adjustments

Dividend, tax and rate equivalent incomeThe major movements in Dividends relates to increases from Hydro Tasmania and Sustainable Timber Tasmania. The special dividend of $15 million from Sustainable Timber Tasmania was originally forecast to be received in 2017-18 however it will now be receipted in 2018-19 and represents the return of part proceeds from the plantation sale. In the 2017-18 Budget, dividend forecasts from Hydro Tasmania were based upon a staged return to the Government’s standard dividend policy of a 90 per cent dividend pay-out ratio. This staged return followed a challenging period associated with the extended Basslink outage from December 2015 to June 2016. However, the business had performed better than expected.Dividends from Hydro Tasmania are expected to return to a 90 per cent dividend pay-out ratio from 2018-19. This change in pay-out ratio, combined with materially higher forecast financial performance of the business since the 2017-18 Budget, has driven a significant increase in expected dividend payments from Hydro Tasmania.This increase is partially offset by lower dividends from Tasmanian Networks Pty Ltd in 2019-20 and 2020-21 due to a decrease in profitability as regulated revenues are expected to be lower. Tasmanian Networks Pty Ltd’s dividends are also being impacted by the forecast over recovery of regulated revenue in 2017-18, which impacts profitability in 2018-19.The increase in Income Tax Equivalents in 2017-18 relates to Hydro Tasmania due to increased profitability, as noted above, and therefore also taxable income. The decrease over the Budget and Forward Estimates period reflects lower Income Tax Equivalents from Tasmanian Networks Pty Ltd and the Motor Accidents Insurance Board.Further information relating to Dividend, tax and rate equivalent income is provided in chapter 5 of this Budget Paper.

GST Revenue The movement in GST Revenue 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 increased, reflecting higher than expected GST receipts, but this is partially offset by reduced estimates of Tasmania’s GST relativities over the Budget and Forward Estimates period. For the 2018-19 Budget, Treasury has used its own financial model to forecast GST revenues, as was the case for the 2017-18 Budget. The model incorporates the latest


Commonwealth Grants Commission assessments and recommended relativities, Australian Government forecasts of the GST pool and state populations, and state and territory own-source revenue estimates. For more information on GST receipts, refer to chapter 5 of this Budget Paper.

National Partnership Payments Movements in National Partnership Payments occur frequently and may reflect 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 Community Services in 2018-19 reflects the most recent offer from the Australian Government for the DisabilityCare Australia Fund. The increase in Environment in 2017-18 reflects new funding for the Biosecurity Emergency Response and Research Fund of $20 million. The increase in 2018-19 and 2019-20 primarily reflects the receipt of funding from the Australian Government under the Sustainable Rural Water Use and Infrastructure Program for the construction of Irrigation Tasmania’s Tranche 2 Schemes. In addition, the Australian Government has committed further funding for the construction of the Scottsdale Irrigation Scheme by providing $10 million in 2018-19 and $15.3 million in 2019-20.The increase in Health in 2017-18 and 2018-19 primarily reflects revised cash flows for programs, including the Royal Hobart Hospital Redevelopment Project and an increase in funding for Improving Health Services in Tasmania.The decrease in Infrastructure in 2017-18 and significant increases from 2018-19 reflects the reallocation of Roads funding from 2017-18 to 2018-19 and 2019-20. In addition, the movements in 2019-20 and 2020-21 includes funding for the Bridgwater Bridge, and Roads of Strategic Importance Projects. Further detail on Australian Government funding for infrastructure projects is provided in chapter 6 of this Budget Paper.The increase in Other Services for 2017-18 reflects the receipts from the Australian Government for the bringing forward of Financial Assistance Grants for local government councils from 2018-19.The increase in Natural Disaster Relief and Recovery Arrangements funding in 2017-18 reflects revised cash flows for the Australian Government funding from 2016-17 to 2017-18.

Specific Purpose Payments National Health Reform funding increases from the 2017-18 Estimated Outcome to 2020-21 reflect current activity estimates for 2017-18 indexed at approximately 4.1 per cent per year. This is consistent with the bilateral funding guarantee negotiated between the State and the Australian Government.The movement in Quality Schools, Quality Outcomes funding reflects increased Australian Government funding for both the Government and Non-government


education sectors. Quality Schools, Quality Outcomes allocations are provisional and subject to change and to the finalisation of enrolments and loadings in each school year.


MAJOR EXPENSE VARIATIONSPolicy Decisions

For detailed information on policy decisions, refer to agency chapters in Government Services Budget Paper No 2.

Parameter AdjustmentsAgency Expenditure

Communities Tasmania

The increase in expenditure in 2017-18 includes: expenditure carried forward from 2016-17 to 2017-18 for the Tasmanian contribution to the National Disability Insurance Scheme relating to 2016-17 costs. The increase in 2018-19 includes a reclassification of expenditure for the Affordable Housing Strategy from Purchases of non-financial assets to Grant and subsidy expenses.

Education

The increase in expenditure for 2017-18 and over the Forward Estimates period includes the impact of increased Quality Schools, Quality Outcomes Specific Purpose Payment funding and National Partnership funding.

Finance-General

The decrease in expenditure in 2017-18 and over the Forward Estimates period includes the transfer of the Health Funding Provision to the Department of Health together with the changed nature of Water and Sewerage Reform funding from 2018-19 following the signing of the memorandum of understanding with TasWater.

Health

The increase in expenditure for 2017-18 and over the Forward Estimates period includes the transfer of the Health Provision funding from Finance-General and increased National Health Reform funding from the Australian Government, reflecting increased activity.

Primary Industries, Parks, Water and Environment

The increase in expenditure includes revised expenditure estimates for the Parks and Wildlife Service following increased revenue estimates.

State Growth

The decrease for the Department of State Growth in 2017-18 of $25.5 million includes the reallocation of expenditure associated with the Northern Cities Major Development - Burnie to 2018-19 and savings in Transport concessions and subsidies. The decrease from 2019-20 reflects the transfer of $15 million per annum to Finance-


General for an equity contribution to Tasmanian Railway Pty Ltd under the Tasmanian Rail Revitalisation Program.


MAJOR PURCHASES OF NON-FINANCIAL ASSETS VARIATIONS

Policy DecisionsFor detailed information on 2018-19 Budget Infrastructure Policy Decisions, refer to chapter 6 of this Budget Paper.

Parameter AdjustmentsCommunities Tasmania

The increase for the Department of Communities Tasmania in 2017-18 includes expenditure carried forward from 2016-17 together with expenditure brought forward from 2018-19. In addition, movements in 2017-18 and 2018-19 reflect a revised expenditure profile under the Affordable Housing Strategy.

EducationThe movement for the Department of Education includes the reallocation of funding from 2017-18 to 2018-19 for some Capital Investment Program projects to meet changed cash flow requirements. These include the East Launceston Primary School, Queechy High School, Riverside High School, and St Marys District School.

HealthThe movement in the Department of Health includes the revision to cash flow estimates for the Royal Hobart Hospital Redevelopment, Mersey Community Hospital Capital Upgrades, Launceston General Hospital Redevelopment and the St Helens Hospital Redevelopment.

Primary Industries, Parks, Water and EnvironmentThe movement for the Department of Primary Industries, Parks, Water and Environment includes the reallocation of expenditure from 2017-18 to 2018-19 for the Cradle Mountain Visitor Experience, the Orange-bellied Parrot Facility and Parks Infrastructure funding. In addition, increases in expenditure from 2018-19 includes the Australian Government contribution to the Cradle Mountain Visitor Experience.

State GrowthThe movement in the Department of State Growth primarily includes revised cash flow estimates together with increases for Australian Government Funded infrastructure projects.



2018-19 Budget Paper 1 - Chapter 4 - 2018-19 Budget and ... … · Web viewOverview: This chapter ... During the course of the 2018 State Election the Government announced the introduction

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