Government Mid‑year Financial Projections Statement 2014-15

Government Mid‑year Financial Projections Statement 2014-15
2014-15
Government Mid‑year
Financial Projections
Statement
December 2014
OV
ER N ME
N
S
TE
LI
WE
A
OF
THE
T
G
RN
AUST
RA
2014‑15
G o ver n m e n t Mid - y e a r
F i n an ci al Pr o je c tio n s Sta te m e n t
DECEMBER 2 0 14
2014-15 Government Mid-year Financial Projections Statement
© Government of Western Australia 2014
Further information or enquiries related to this report may be obtained by emailing [email protected]
An electronic copy of this report may be obtained at http://www.treasury.wa.gov.au
ISSN 1444-9110 (print)
ISSN 1839-9002 (on-line)
2014–15
Government Mid-year Financial
Projections Statement
Table of Contents
UNDER TREASURER’S CERTIFICATION ..................................................
i
CHAPTER 1: FINANCIAL PROJECTIONS .................................................
1
Introduction ..............................................................................................................
2
Feature Box: Iron Ore Price .....................................................................................
4
Feature Box: Mid-year Review Revenue and Savings Measurers ..........................
7
General Government Sector ....................................................................................
12
Total Public Sector ...................................................................................................
27
Feature Box: Synergy ..............................................................................................
30
Net Debt and Gross Borrowings ...............................................................................
35
Statement of Risks ....................................................................................................
39
CHAPTER 2: FINANCIAL STRATEGY .......................................................
49
Introduction .............................................................................................................
49
Financial Targets .....................................................................................................
51
CHAPTER 3: THE WESTERN AUSTRALIAN ECONOMY .........................
59
Introduction .............................................................................................................
60
Commodity Prices .....................................................................................................
63
International Conditions ...........................................................................................
64
Domestic Economic Activity ......................................................................................
66
International Trade ....................................................................................................
71
Labour Market ...........................................................................................................
73
Inflation......................................................................................................................
76
Risks .........................................................................................................................
76
APPENDIX 1: DETAILED FINANCIAL PROJECTIONS .............................
79
APPENDIX 2: GENERAL GOVERNMENT OPERATING REVENUE ..........
107
APPENDIX 3: MAJOR SPENDING CHANGES ..........................................
111
APPENDIX 4: THE TREASURER’S ADVANCE .........................................
149
APPENDIX 5: SPECIAL PURPOSE ACCOUNTS .......................................
153
APPENDIX 6: ROYALTIES FOR REGIONS ...............................................
159
Under Treasurer’s Certification
The Government Financial Responsibility Act 2000 (GFRA) requires that the Treasurer
release a Government Financial Strategy Statement at least once every year (section 11),
and a Government Mid-year Financial Projections Statement updating the budget-time
forecasts by 31 December each year (section 13). The required content of these statements
is detailed in sections 11 and 13 of the Act.
For the purposes of these GFRA requirements:
•
the Government Financial Strategy Statement and associated financial targets
disclosures are detailed in Chapter 3: Financial Projections and Fiscal Strategy in
Budget Paper No. 3: Economic and Fiscal Outlook, presented to the Legislative
Assembly on 8 May 2014;
•
the content of this Mid-year Review meets the requirements of section 13 of the
GFRA. In particular:
•
−
Appendix 1 details the projections required by section 13(2)(a) of the GFRA;
−
Chapters 1 and 3 detail the economic and other assumptions underlying the
Mid-year Review projections (section 13(2)(b));
−
Chapter 2 details the compliance of the projections with the Government’s
financial targets (section 13(2)(c)); and
−
the Statement of Risks in Chapter 1 details the sensitivity of the projections to
various economic and financial assumptions and other risks (sections 13(2)(d)
and (e)); and
this certification gives effect to the requirements of sections 13(2)(f) and 13(6).
The Government Mid-year Financial Projections Statement presented in this Mid-year
Review is based upon Government decisions that I was aware of or that were made
available to me by the Treasurer, together with other relevant information known to
Treasury, on or before the Mid-year Review planning cut-off date of 3 December 2014
and which have a material effect on the State’s financial projections.
i
It has been prepared in accordance with applicable Australian Accounting Standards and
Government Finance Statistics principles, and is based on the economic forecasts and
assumptions outlined in Chapter 1: Financial Projections, Chapter 2: Financial Strategy
and Chapter 3: The Western Australian Economy. These assumptions were finalised by
Treasury, under my direction, on 3 December 2014.
Michael Barnes
ACTING UNDER TREASURER
16 December 2014
ii
CHAPTER 1
Financial Projections
HIGHLIGHTS
•
While strong growth in exports saw the Western Australian economy expand by a
robust 5.5% in 2013-14, the State’s budget is under significant pressure, with:
–
a fall of over 40% in the iron ore price since the 2014-15 Budget estimates were
finalised in April 2014;
–
a decline in Western Australia’s share of national GST revenue to just 37.6% of
the State’s population share in 2014-15 (down from 44.6% in 2013-14);
–
early termination by the Commonwealth Government of a number of National
Partnership and other funding arrangements; and
–
moderating domestic economic conditions (following a peak in business
investment in 2012-13) resulting in well below average growth in major tax
bases such as payroll tax.
•
In total, the revenue estimates have been revised down since budget by an
unprecedented $5 billion over the forward estimates period (2014-15 to 2017-18),
including a downward revision of $1.6 billion in the current financial year alone.
•
This revenue write-down has resulted in an estimated general government
operating deficit in 2014-15 of around $1.3 billion, compared to the slim operating
surplus of $175 million forecast at budget-time.
1
2014-15 Government Mid-year Financial Projections Statement
•
Since the 2014-15 Budget, the Government has approved new revenue and savings
measures totalling $3.8 billion (in net debt terms) over the forward estimates
period, comprising the $2 billion package of measures announced in October 2014
and a further $1.8 billion of new measures announced in this Mid-year Review.
The new measures comprise:
–
a new Public Sector Workforce Renewal policy, estimated to generate
salary-related savings of $1,272 million over the forward estimates;
–
changes to the payroll tax scale, estimated to generate additional revenue of
$418 million to 2017-18; and
–
targeted reductions in general government agencies’ information and
communications technology expenditure, estimated to generate net savings of
$85 million.
•
The Government will also be embarking on a series of agency expenditure reviews
over the first half of 2015 to ensure that those programs or activities being
delivered by agencies remain a priority and are being delivered as efficiently and
effectively as possible.
•
These revenue and savings measures have significantly (but not entirely) offset the
downward revision to the revenue estimates since the May 2014 Budget.
•
Nonetheless, urgent reform of the GST distribution system, and further corrective
action in the 2015-16 Budget, will be required to restore the State’s finances to a
surplus position as soon as possible.
Introduction
Notwithstanding strong growth in exports (with Western Australia accounting for around
50% of national merchandise exports in 2013-14), the immediate economic outlook in
Western Australia is weaker than forecast at the time of the 2014-15 Budget, reflecting
much weaker commodity prices and softer domestic economic conditions. Gross State
Product (GSP) is now expected to grow by 2.25% in both 2014-15 and 2015-16,
down from 2.75% and 3% respectively at budget-time. This reflects a larger forecast fall
in business investment and an expectation of continued subdued growth in household
consumption.
Following a 2.1% reduction in 2013-14, State Final Demand (a measure of the domestic
economy, excluding net exports) is expected to fall by a further 1% in 2014-15 and then
essentially remain flat in 2015-16 (with growth of just 0.25% forecast). However, with
continued strong growth in iron ore export volumes, and an expected ramp-up of LNG
exports in the last two years of the forward estimates period, overall growth (as measured
by GSP) is expected to pick-up strongly to 5% by 2017-18.
2
Financial Projections
Key assumptions underlying the Mid-year Review financial projections are shown in the
following table. A detailed discussion of the current economic outlook is available in
Chapter 3: The Western Australian Economy.
KEY ECO NO M IC FO R EC AST S , W E ST E RN AU ST R AL I A
(a)
Table 1
2013-14
Actual (b)
2014-15
Mid-year
Revision
2015-16
Forward
Estimate
2016-17
Forward
Estimate
2017-18
Forward
Estimate
Real Gross State Product growth (%)
5.5
(3.75)
2.25
(2.75)
2.25
(3.0)
3.75
(4.25)
5.0
Real State Final Demand growth (%)
-2.1
(0.25)
-1.0
(0.0)
0.25
(0.75)
1.25
(1.5)
2.0
Employment growth (%)
1.7
(1.5)
2.25
(1.5)
1.75
1.75
2.0
Unemployment rate (%) (c)
4.8
(5.0)
5.25
(5.5)
5.25
5.0
4.75
2.8
(3.25)
2.75
(3.25)
3.25
(3.5)
3.5
3.75
3.0
2.25
(2.75)
2.5
2.5
2.5
‘Headline’ iron ore price ($US/tonne CFR)
122.8
(125.2)
75.0
(122.7)
77.3
(120.1)
79.6
(117.6)
81.9
(115.0)
Effective iron ore price ($US/tonne FOB)
112.5
(114.4)
65.9
(113.3)
68.1
(109.6)
70.3
(107.1)
72.6
(104.7)
631
(597)
693
(634)
745
(694)
776
(741)
802
(777)
109.8
(108.9)
85.4
(104.1)
80.6
(99.7)
83.6
(96.6)
85.7
(94.5)
91.8
(91.5)
87.2
(90.6)
83.3
(88.3)
81.8
(86.4)
80.8
(84.9)
2.6
1.9
(2.1)
2.0
(2.1)
2.1
2.2
(2.1)
– Public Bank Account earnings(c)
2.8
2.9
3.1
(3.7)
3.6
(4.3)
4.1
(4.3)
– Consolidated Account borrowings(c)
4.0
4.0
(4.1)
3.9
(4.5)
4.1
(4.7)
4.3
(4.8)
Wage Price Index growth (%)
Perth Consumer Price Index growth (%)
Iron ore volumes (million dry tonnes)
Crude oil price ($US per barrel)
Exchange rate (US cents)
Population growth (%)(d)
Interest rate assumptions (%):
(a)
2014-15 Budget assumptions shown in parentheses where the forecasts have changed since then.
(b)
Gross State Product and State Final Demand growth data are based on 2013-14 State Accounts data, released on
21 November 2014, updated for the September quarter National Accounts data.
(c)
Average over the year.
(d)
Estimated actual for 2013-14, as at the 3 December 2014 cut-off date.
Note: All data are annual averages.
As indicated in the table above, the iron ore price assumptions have been revised down
sharply since the 2014-15 Budget, reflecting a fall in the spot price of more than 40% over
this period, and a much weaker market outlook. This has had a very material impact on
the State’s royalty income, notwithstanding higher than previously expected iron ore
volumes and a slightly lower exchange rate. At the same time, weaker than previously
expected domestic economic conditions are acting as a significant drag on growth in the
State’s major tax bases.
3
2014-15 Government Mid-year Financial Projections Statement
These factors have resulted in a substantial $5 billion reduction in the general government
revenue estimates (over the period 2014-15 to 2017-18) relative to the 2014-15 Budget,
necessitating additional revenue and savings measures in this Mid-year Review.
Revenue and savings measures approved by the Government since the 2014-15 Budget
total $3.8 billion (in net debt terms) over the forward estimates period, significantly
(but not entirely) offsetting the weaker revenue outlook. Despite these measures, general
government operating deficits are now in prospect for 2014-15 and 2015-16
(see following table). The Government will consider further corrective measures as part of
the 2015-16 Budget, and will continue to push for urgent reform of the GST distribution
system, to restore the State’s finances to a surplus position as soon as possible.
Table 2
KEY B UD G ET AG G RE G AT E S
W es ter n A us tr a l ia
2013-14
Actual
GENERAL GOVERNMENT SECTOR
Net Operating Balance ($m )
2014-15
Budget
Estimate
2014-15 2015-16 2016-17 2017-18
Mid-year Forw ard Forw ard Forw ard
Revision Estimate Estimate Estimate
719
175
-1,287
-907
304
1,344
Revenue ($m)
Revenue Grow th (%)
27,956
8.7
28,683
2.6
27,096
-3.1
28,047
3.5
30,084
7.3
31,726
5.5
Expenses ($m)
Expense Grow th (%)
27,236
6.9
28,508
2.6
28,383
4.2
28,954
2.0
29,780
2.9
30,382
2.0
20,754
6,814
-2,465
41,216
24,918
6,728
-2,668
43,473
25,375
6,615
-4,282
44,490
28,030
5,495
-2,189
45,915
29,407
5,397
-1,003
47,789
30,857
6,033
-790
50,503
7.5
55.2
5.3
61.2
2.1
67.4
3.7
70.4
6.2
69.6
7.5
69.2
TOTAL PUBLIC SECTOR
Net Debt at 30 June ($m)
Asset Investment Program ($m)
Cash Position ($m)
Gross Borrow ings at 30 June ($m)
KEY FINANCIAL RATIOS (a)
Cash Operating Surplus as a Share of Receipts (%)
Net Debt to Revenue (%)
(a)
These ratios relate to the total non-financial public sector.
Iron Ore Price
Since the 2014-15 Budget estimates were finalised, the iron ore price has fallen by
more than 40%, touching a five-and-a-half year low shortly before the Mid-year
Review cut-off date.
The sharp fall in price since budget has been primarily due to a substantial increase in
supply that has coincided with a moderation in demand from the world’s largest iron
ore consumer, China, largely due to a slowdown in its residential property construction
and over-capacity in its steel industry 1.
1
4
Residential property construction is China’s largest steel consuming sector, which impacts demand for iron ore, a key
steel-making ingredient.
Financial Projections
The three largest Western Australian producers (BHP Billiton, Rio Tinto and Fortescue
Metals Group) added over 120 million tonnes (Mt) in production, or around 10% of
global seaborne supply, in the year to September 2014. The larger than expected
increase in supply was due to a faster than anticipated ramp-up of production at new
mines and expansions, as well as more efficient use of infrastructure.
These factors have resulted in a much sharper than anticipated fall in the iron ore price.
As a result, the estimated average price for 2014-15 has been revised down to
$US75 per tonne, which is below the actual price of $US84.6 per tonne for the 2014-15
year-to-date (i.e. up to the Mid-year Review cut-off date of 3 December 2014),
but above the current benchmark spot price (at cut-off) of $US69.5 per tonne.
Figure 1
BE NC HM AR K CF R IR O N O R E P RI C E V S. B UDG ET AS S UM PT IO N S
$US/t
150
140
2013-14 Budget
assumption:
$US124.5/t
130
120
2014-15 Budget assumption: $US122.7/t
2013-14 actual price:
$US122.8/t
110
100
90
2014-15 year-to-date price (MYR cut-off):
$US84.6/t
80
70
2014-15 MYR
cut-off
2014-15 Budget
cut-off
60
Jul-13
Oct-13
Jan-14
Apr-14
Jul-14
Oct-14
2014-15 MYR assumption:
$US75/t
Jan-15
Apr-15
Prices are projected to increase modestly over the forecast period as higher cost
production is displaced from the market by lower cost supply. The displacement
process is expected to take time but there is evidence that it is already occurring, with
Chinese imports of production from countries other than Australia and Brazil falling by
almost 50% since the start of 2014. In addition, around 50 Mt per year of Chinese
private iron ore production capacity was idled between December 2013 and
August 2014 2. State-owned enterprises seeking to sustain employment and reports of
planned tax relief may result in Chinese domestic production remaining stronger for
longer. Eventually, however, the balancing of supply and demand will result in some
production being displaced, which will likely lead to a gradual recovery towards a
more sustainable long-run price.
2
BHP Billiton, October 2014.
5
2014-15 Government Mid-year Financial Projections Statement
Table 3
IRO N O R E AS S UM PT I O N S
Iron Ore Price CFR ($US/t)
2014-15 Budget
2014-15 Mid-year Review
Variance ($US/t)
Revenue impact ($m)
Volume (Mt)
2014-15 Budget
2014-15 Mid-year Review
Variance (Mt)
Revenue impact ($m)
Exchange rate ($US/$A) (a)
2014-15 Budget
2014-15 Mid-year Review
Variance (US cents)
Revenue impact ($m)
(a)
2014-15
2015-16
2016-17
2017-18
Total
122.7
75.0
-47.7
-2,554
120.1
77.3
-42.8
-2,535
117.6
79.6
-38.0
-2,392
115.0
81.9
-33.1
-2,191
-9,670
634
693
60
466
694
745
50
392
741
776
35
270
777
802
25
195
1,322
90.6
87.2
-3.4
202
88.3
83.3
-5.0
350
86.4
81.8
-4.6
343
84.9
80.8
-4.1
319
1,214
The revenue impact of the exchange rate applies to royalties from all commodities.
Note: Columns may not add due to rounding.
Revisions to price assumptions are based on Treasury’s methodology, which combines
actual spot prices for the year-to-date and forward contract rates for the remainder of
the budget year to set the average price assumption for 2014-15. Assumed prices across
the outyears (2015-16 to 2017-18) are calculated by gradually reverting from the
2014-15 starting price toward the long-run price derived from the latest Consensus
Economics survey of commodity forecasters.
Holding everything else (e.g. the exchange rate) constant, the change in price
assumptions has reduced forecast iron ore royalties by around $2.6 billion in 2014-15
and $9.7 billion across the forward estimates period. The decline in revenue due to the
fall in the iron ore price is only partially offset by an upward revision to production
volumes (worth an estimated $1.3 billion across the forward estimates period) and a
slightly lower exchange rate ($1.2 billion).
In light of prevailing fiscal constraints, there has been limited new expenditure approved
since the 2014-15 Budget. The major exception is approval of the $1,575 million Perth
Freight Link project, including $591 million in new State funding over the period 2014-15
to 2018-19 (of which $124 million is reflected in the current forward estimates period to
2017-18). Other spending changes include:
•
6
$67 million for recurrent costs associated with the relocation of the Supreme
Court (Civil), the State Administrative Tribunal, and the Departments of the Attorney
General and Treasury to the Old Treasury Building Tower and St Georges Cathedral
Heritage Precinct;
Financial Projections
•
$24 million in 2014-15 for cost pressures in the Department of Corrective Services
(related to an increase in the daily average prisoner population and growth in the
number and cost of workers’ compensation claims); and
•
$20 million for the Western Australia Natural Disaster Relief and Recovery
Arrangements that will primarily be spent on restoring roads affected by natural
disasters.
The overall net impact of all spending and savings decisions and parameter changes (such
as updated iron ore price assumptions) since the 2014-15 Budget is a $1.5 billion increase
in the projected level of net debt by 30 June 2018, from $29.4 billion at budget-time to
$30.9 billion in this Mid-year Review.
Mid-year Review Revenue and Savings Measures
On 9 October 2014, the Government announced a $2 billion package of revenue and
savings measures as an initial response to the significant decline in general government
revenue projections over the forward estimates period relative to the 2014-15 Budget.
Ongoing weakness in the revenue outlook has necessitated additional measures in this
Mid-year Review worth a further $1.8 billion over the period to 2017-18, bringing the
total value of revenue and savings measures announced since the 2014-15 Budget to
$3.8 billion.
These measures go a considerable way towards offsetting the $5 billion deterioration in
the revenue outlook since the 2014-15 Budget, and will further improve the efficiency
of the public sector business model. The Mid-year Review measures are summarised in
the following figure. The projected financial impact of these measures is shown in the
table at the end of this feature box.
Figure 2
M ID- Y E AR R E VI EW M E AS U R E S
PUBLIC SECTOR REFORMS
Workforce renewal
policy
REVENUE MEASURES
ICT savings and
reform
Amendments to
payroll tax scale
Interim dividends
for energy utilities
SAVINGS MEASURES
1,500 targeted
voluntary separation
scheme
1% efficiency
dividend
5% AIP efficiency
measure
15% procurement
reduction
10% operating
subsidy reduction
15% road
maintenance
reduction
Agency expenditure
reviews
7
2014-15 Government Mid-year Financial Projections Statement
9 October 2014 Measures
Measures announced by the Government on 9 October 2014 (worth $2 billion to
2017-18) comprise:
•
interim dividend arrangements to be implemented for Synergy, Western Power and
Horizon Power from 2014-15;
•
a 1% efficiency dividend on most general government agencies and the Public
Transport Authority to apply from 2014-15;
•
an ongoing 15% reduction in non-essential general government procurement
expenditure from 2015-16 onwards (a 15% procurement reduction was
implemented for 2014-15 in the recent Budget);
•
a 15% per annum reduction in road maintenance expenditure over the three years
from 2014-15 to 2016-17;
•
a voluntary separation scheme targeting 1,500 public sector employees across
agencies with identified surplus staff;
•
a 10% per annum (7.5% in 2014-15) reduction in operating subsidy payments to
Synergy, the Water Corporation and the Western Australian Land Authority,
matched by a requirement for these public corporations to identify offsetting
expenditure savings; and
•
building on favourable tender results achieved for most capital projects, a further
5% efficiency saving to agencies’ Asset Investment Programs from 2015-16.
Additional Measures
In addition to the October 2014 measures, this Mid-year Review includes changes to
the payroll tax scale, and implementation of further public sector reforms focussing on
workforce renewal and Information and Communications Technology (ICT)
expenditure.
Amendments to Payroll Tax Scale
From 1 July 2015, a gradual diminishing of the payroll tax exemption threshold will be
introduced for payrolls between the current exemption threshold of $800,000 up to
around $7.5 million. For payrolls of $7.5 million and above, payroll tax will be payable
(at the current rate of 5.5%) on an employer’s entire payroll, with no exemption
threshold (currently, all payroll tax paying employers are exempt from payroll tax on
the first $800,000 of payroll, regardless of their size). This is similar to the approach in
Queensland and the Northern Territory. The Government has also decided to defer a
scheduled increase in the payroll tax exemption threshold to $850,000, from
1 July 2016 to 1 July 2017. These changes are estimated to raise additional revenue of
$418 million over the three years to 2017-18.
8
Financial Projections
Workforce Renewal Policy
A new Public Sector Workforce Renewal policy is to apply from 1 January 2015.
Under this arrangement, public sector employees leaving through resignation or
retirement will be replaced with lower cost alternatives. Excluded from the measure are
agencies with less than 30 full-time equivalent staff, Government Trading Enterprises,
and Parliamentary Services. All other general government sector agencies and the
Public Transport Authority are in-scope.
This measure aims to address the impact of ‘classification creep’ and achieve
significant salary savings. In recent years, labour market conditions were particularly
tight in Western Australia and many agencies experienced difficulty attracting and
retaining staff. A way of counteracting this was through the reclassification of roles
and promotions to higher classification levels.
The chart below shows that since 2008-09 the proportion of the public sector classified
equivalent to Level 6 and above has increased significantly, from around one-fifth of
the workforce in 2008-09 to around one-third in 2013-14.
Figure 3
W E ST E RN AU ST R AL I AN P UB LI C S E RV IC E – L E V EL 6 AN D AB O V E
35
(a)
P er c e n ta g e of T ot a l W or k f or c e
%
30
25
20
15
10
5
0
2008-09
(a)
2009-10
2010-11
2011-12
2012-13
2013-14
Level 6 refers to the Public Service and Government Officers General Agreement equivalent salary bands.
Source: State of the Sector Reports 2013 and 2014.
The policy is expected to encourage the sector to adopt more innovative methods of
providing services as preparation for when the ageing of the population reduces the
available labour supply. In this regard, the public sector is already characterised by an
ageing workforce, with mature employees (those aged 45 years and over) comprising a
far greater proportion of the public sector workforce (51.9%) than the broader
Western Australian labour force (37.8%).
9
2014-15 Government Mid-year Financial Projections Statement
Under this measure, when a permanent employee leaves an agency through resignation
or retirement, the relevant agency will retain only 60% of the employee’s ongoing
salary, with the remaining 40% harvested as a saving. For specified front-line
employees (police officers, teachers, nurses, medical practitioners, fire fighters, train
drivers and child protection workers), the relevant agency will be able to retain 90% of
the employee’s ongoing salary, in recognition of relative demand pressures and other
limitations on these occupational groups.
Various options are available to agencies to operationalise these savings, including
employing replacement staff at lower classification levels, replacing full-time
employees with part-time employees, or not replacing an employee at all.
This measure does not apply to employees leaving the public sector under the targeted
voluntary separation scheme announced on 9 October 2014.
This Mid-year Review includes savings of $67 million in 2014-15, and a total of nearly
$1.3 billion over the forward estimates period, as a result of this measure. Agency-level
savings will be calculated and reflected in the 2015-16 Budget.
ICT Savings and Reform
Following very high rates of growth in expenditure on ICT-related services in recent
years, the Government has implemented a 15% annual reduction in such expenditure
(from 1 January 2015) for the largest ICT-spending agencies. Savings from this
measure total $110 million by 2017-18, with $25 million of these savings to be
directed to a new ICT Renewal and Reform Fund that will support agencies in
developing more efficient and innovative ICT solutions.
Agency Expenditure Reviews and Asset Sales
The Government has also announced a number of initiatives that are expected to
improve the State’s financial position but are not yet reflected in the financial
projections in this Mid-year Review.
10
•
Agency expenditure reviews are to be undertaken of the operations of the
Departments of the Attorney General, Training and Workforce Development,
Culture and the Arts, Fisheries, Parks and Wildlife, Agriculture and Food, Finance
and Commerce. These reviews are intended to ensure that those programs or
activities being delivered by the agencies remain a priority and are being delivered
as efficiently and effectively as possible. The first stage of these reviews will occur
over the first half of 2015, with identified savings to be reflected in the
2015-16 Budget.
•
On 28 August 2014, the Government announced the first tranche of its asset sales
program, comprising Market City (operated by the Perth Market Authority, which
undertakes the marketing and distribution of fresh fruits and vegetables in the
State), and port handling facilities in Port Hedland (Utah Point) and Kwinana
(Kwinana Bulk Terminal). The Government also announced on 25 September 2014
that 20 key parcels of land, including five hospital precincts, had been identified
for sale, with proceeds to be used to reduce the State’s debt.
Financial Projections
Estimates of proceeds from these processes are not reflected in this Mid-year Review
and will only be incorporated in the State’s financial projections once the expenditure
reviews and assets sales are finalised.
Table 4
FIN AN C I AL IM P ACT O F R E V E NU E AN D S AV I N G S M E AS U R E S
2014-15 2015-16 2016-17 2017-18
Total
$m
$m
$m
$m
$m
Revenue
Energy sector interim dividends (a)
159
-9
-19
8
139
Expenses
1% efficiency dividend
Reversal of provision for program evaluation savings (b)
15% base reduction in 'non-essential' procurement
15% reduction in Main Roads' maintenance expenditure
Targeted Voluntary Separation Scheme
Efficiency measures for Government Trading Enterprises
Total
-80
15
-38
134
-70
-38
-112
50
-138
-55
-120
-89
-464
-116
50
-137
-60
-120
-95
-478
-116
50
-137
-120
-92
-416
-424
165
-412
-153
-226
-346
-1,396
Operating impact of 9 October 2014 measures
9 October 2014 Measures
General government operating impact
197
455
459
423
1,535
Infrastructure review
-
-175
-176
-191
-542
New Measures in this Mid-year Review
Revenue
Amendments to payroll tax scale
-
118
155
145
418
-67
-15
-82
-229
-23
-252
-399
-23
-422
-577
-24
-601
-1,272
-85
-1,357
82
370
577
746
1,775
-
-9
-45
-96
-151
Total Operating Impact
279
834
1,081
1,265
3,460
Total impact on net debt at 30 June
-71
-1,018
-1,276
-1,449
-3,814
Expenses
Workforce renewal policy
ICT Savings and Reform (net savings)
Total
Operating impact of new Mid-year Review measures
Interest implications
(a)
Implementation of the interim dividends for the energy sector does not impact public sector net debt.
(b)
Included in the 2013-14 Budget as a global provision. These program evaluation savings have been partially achieved
in 2014-15 by the ICT savings and reform measure, and fully achieved from 2015-16 onwards by this measure and the
15% reduction in non-essential procurement expenditure.
11
2014-15 Government Mid-year Financial Projections Statement
General Government Sector
Operating Statement
A general government operating deficit of around $1.3 billion is estimated for 2014-15,
a substantial turnaround from the surplus projection of $175 million in the
May 2014 Budget. An operating deficit is also now in prospect for 2015-16, with a return
to a growing surplus outlook forecast from 2016-17. This outlook reflects the net impact
of a substantial downturn in the State’s own-source revenue (taxation and royalties),
the impact of new revenue and savings measures in response to this change, and the
lagged adjustment of Western Australia’s share of GST grants.
Relative to the 2014-15 Budget forecasts, revenue has declined by $1.6 billion (or 5.5%)
in 2014-15 and a total of $5 billion (or 4.1%) over the four years to 2017-18.
Mainly reflecting the Government’s response to the deteriorating revenue position,
expenses have been reduced since budget-time by $125 million in 2014-15 and a total of
$3.9 billion over the period to 2017-18.
The following table summarises the changes in general government revenue and expenses
since the 2014-15 Budget estimates were finalised on 14 April 2014.
12
Financial Projections
Table 5
SUM M ARY O F G E N ER AL G O V E RNM E NT R E V EN U E AN D E X P E NS E
V AR I AT IO N S SI NC E T HE 20 1 4- 1 5 B UDG ET
2014-15
$m
2015-16
$m
2016-17
$m
2017-18
$m
Total
$m
2014-15 BUDGET - NET OPERATING BALANCE
Revenue
Impact of revenue measures
Taxation
- Payroll tax (excluding policy changes)
- Total duty on transfers
- Insurance duty
- Land tax - primary production exemption
- State-w ide extension of MRIT
- Vehicle licence duty
- Casino tax
- Other taxes
Commonw ealth grants
- GST grants
- North West Shelf/condensate compensation
- Transport
- Pensioner Concessions Agreement
- Training
- National Health Reform
- Health - Multi Purpose Service Units
- Health - Aged Care Assessment Program
- Municipal and Essential Services – Transition Fund
- Other Commonw ealth grants
Royalty income
- Iron ore
- Other royalties
Interest income
Revenue from public corporations (excluding measures)
Agency goods and services revenue
Other
175
5
50
283
158.7
-279.5
-96.5
-64.2
-14.1
-3.0
-73.2
-22.8
-5.7
201.5
52.6
-152.6
191.1
-25.4
-1.7
15.2
-26.2
0.7
90.0
57.8
-1,808.5
-1,825.0
16.5
-22.8
89.9
53.2
20.1
109.5
-299.2
-101.1
-61.6
-15.2
-3.0
19.4
-80.6
-45.6
-11.4
146.1
225.8
-224.2
184.6
-26.3
0.2
-43.0
-26.2
1.5
53.6
-1,794.0
-1,812.5
18.5
-28.1
-22.5
55.6
-21.2
135.6
-315.1
-108.2
-62.0
-16.5
-3.0
21.3
-88.2
-47.0
-11.5
954.6
838.4
-151.6
419.6
-27.4
0.3
-83.6
-26.2
-10.0
-4.9
-1,789.2
-1,802.2
13.0
-25.1
15.7
-14.9
-36.8
152.5
-331.3
-115.4
-64.1
-17.9
-3.0
23.5
-96.6
-49.0
-8.7
1,393.9
1,600.2
-98.3
194.3
-28.5
-52.2
-174.0
-26.2
-10.0
-11.4
-1,686.3
-1,695.3
9.0
-17.7
36.8
-16.2
32.4
556.3
-1,225.0
-421.2
-251.9
-63.7
-12.0
64.1
-338.6
-164.4
-37.4
2,696.0
2,717.0
-626.7
989.6
-107.5
-53.4
-285.4
-104.8
-17.8
90.0
95.1
-7,078.0
-7,135.0
57.0
-93.7
120.0
77.7
-5.5
TOTAL REVENUE
-1,587.5
-1,853.8
-1,075.2
-435.7
-4,952.2
-120.3
-103.1
12.8
-1.7
-21.4
3.4
23.7
52.5
20.0
-8.7
-23.2
-19.6
-4.2
10.2
-26.2
0.7
-24.2
84.9
-715.9
-51.7
-95.1
10.4
0.2
25.4
44.2
18.0
-13.5
-55.6
-37.7
-14.9
1.9
-26.2
1.5
-48.0
8.1
5.3
-36.1
-900.0
-109.3
-99.9
11.9
0.3
21.7
10.0
-9.9
-147.1
-59.3
-24.7
1.6
-26.2
-10.0
-50.0
8.3
6.2
-12.0
-1,016.6
-168.9
-107.3
61.1
-52.2
16.7
-19.6
-163.0
-32.1
2.6
1.5
-26.2
-10.0
-52.0
8.5
7.1
21.0
-2,752.8
-329.9
-405.4
96.2
-53.4
-21.4
67.2
23.7
96.8
28.0
20.0
-51.7
-388.9
-148.7
-41.2
15.2
-104.8
-17.8
-174.2
25.0
18.6
57.7
TOTAL EXPENSES
-124.7
-941.8
-1,329.3
-1,497.3
-3,893.2
TOTAL VARIANCE
-1,462.7
-912.0
254.1
1,061.6
-1,059.1
-1,287
-907
304
1,344
Expenses
Impact of expense savings measures
Changes to Superannuation Guarantee rate
Nominal superannuation interest
Interest expense
Commonw ealth funded training spending
Seniors Cost of Living Rebate
Old Treasury Building relocation
Corrective Services cost pressures
Road w orks for third parties
Nicholson Road grade separation
Natural disaster spending
Public Transport Authority operating subsidies
Synergy operating subsidies (excluding measures)
Health
- Depreciation
- FSH facilities management (contract and interest)
- Multi-purpose Service Units
- Aged Care Assessment Program
Gambling tax rebates
ICT Renew al and Reform Fund spending
MRIT expansion - recurrent planning expenditure
All other
2014-15 MID-YEAR REVIEW - NET OPERATING BALANCE
Note: Columns/rows may not add due to rounding.
13
2014-15 Government Mid-year Financial Projections Statement
Revenue
General government revenue is expected to contract by 3.1% in 2014-15 relative to the
actual outturn for 2013-14, compared with a forecast 2.6% increase at budget-time.
The revised outlook reflects the sharp decline in commodity prices since the
2014-15 Budget estimates were finalised, and softer than expected conditions in the
domestic economy flowing through to taxation revenue.
Overall, revenue has been revised down by around $5 billion across the forward
estimates, equivalent to a 4.1% decrease compared to the 2014-15 Budget. Growth in
revenue over the forward estimates remains subdued, increasing by an average 3.2% per
annum, which is well below the average growth of 8.1% over the past decade.
Figure 4
G E N ER AL G O VE RNM ENT R E VE NU E G RO W T H
20
%
Forecast
16
Ten year average
growth = 8.1%
12
8
4
0
-4
2004-05
2006-07
2008-09
2010-11
2012-13
2014-15
2016-17
Further details on the revenue estimates are outlined below, and detailed disclosure of
general government sector revenue forecasts is available in Appendix 2: General
Government Operating Revenue.
2014-15
In 2014-15, general government revenue is dominated by taxation and royalties,
accounting for half of total revenue. Commonwealth grants (including from GST) account
for around one third of projected revenue in 2014-15.
14
Financial Projections
G E N ER AL G O VE RNM ENT R E VE NU E
20 1 4- 15
Other Revenue
$651m
2%
GST Revenue
$2,267m
8%
Other
Commonwealth
Grants
$6,617m
24%
Public Corporations
$1,717m
6%
Sales of Goods
and Services
$2,256m
8%
Figure 5
(a)
TOTAL
$27,096m
Taxation
$9,220m
34%
Royalty Income
$4,368m
16%
(a)
Totals may not add due to rounding.
Revenue is estimated to be $27.1 billion in 2014-15, a decrease of $1.6 billion relative to
the budget-time forecast. This mainly reflects the following movements.
•
3
Mining revenue 3 has been revised down by $2 billion (or 27%) in 2014-15, due to the
net impact of:
−
a sharply lower iron ore price assumption for 2014-15 of $US75 per tonne
(inclusive of cost and freight), down from an assumed price of
$US122.7 per tonne in the 2014-15 Budget. This reduces estimated royalty
income in the current financial year by $2.6 billion;
−
an upward revision to iron ore volumes (of 60 million tonnes) as a result of very
strong production from the large iron ore miners since the 2014-15 Budget
estimates were finalised. This is estimated to generate an additional $466 million
of royalty income in 2014-15;
−
a slightly lower than expected $US/$A exchange rate, which is forecast to
average US87.2 cents in 2014-15, down US3.4 cents from budget-time. This is
expected to increase royalty income this financial year by $202 million; and
Includes royalty income, North West Shelf grants and compensation for changed crude oil excise arrangements.
15
2014-15 Government Mid-year Financial Projections Statement
−
•
•
16
a downward revision to North West Shelf and condensate compensation grants
(down $153 million), primarily reflecting lower oil prices, which have fallen by
around 35% between the cut-off dates for the 2014-15 Budget (14 April 2014)
and this Mid-year Review (3 December 2014).
Taxation revenue has been revised down by $279 million (or 2.9%) in 2014-15.
This is mainly due to the net impact of:
−
a downward revision to total duty on property transfers (down $64 million),
reflecting lower than anticipated collections from large commercial property
transactions;
−
a downward revision to payroll tax collections (down $96 million), due to the
flow-on impact of lower than expected collections in 2013-14 and in the
year-to-date. Growth of 4.8% is estimated for 2014-15, below the forecast of
6.0% at budget-time. This reflects an expectation that an upward revision to
employment growth (which is partially offset by a downward revision to wage
growth) is unlikely to fully flow through to payroll tax collections, with
employment growth being driven by part-time workers and industries that make a
smaller contribution to payroll tax;
−
a downward revision to vehicle licence duty (down $73 million), resulting from
lower than expected average monthly collections in the first five months of
2014-15, and lacklustre sales of new motor vehicles;
−
a downward revision to gambling taxes (down $23 million), reflecting changes to
casino tax arrangements that replace the current GST reimbursement scheme with
casino tax rates that are net of GST, and effectively reduce the tax rate from 11%
to 8% (in exchange for a minimum payment of $9 million per annum) on the
highly competitive International Commission Business component of Crown
Casino’s operations;
−
a downward revision to insurance duty of $14 million, due to the flow-on impact
of weaker than expected collections in 2013-14; and
−
a downward revision to land tax of $5 million, largely reflecting a policy change
to the exemption on land used in primary production.
Forecasts of dividend and tax equivalent revenue from public corporations are higher
than anticipated at budget-time (up $249 million, or 16.9%), mainly reflecting the
impact of:
−
the implementation of interim dividend arrangements for Synergy,
Western Power and Horizon Power, announced by the Government in
October 2014 (up $159 million); and
−
higher dividend revenue from Western Power (up $47 million) and the
Water Corporation (up $45 million), due largely to higher than forecast profit
outcomes in 2013-14.
Financial Projections
•
•
•
4
Commonwealth grants (excluding North West Shelf and condensate compensation
grants) have been revised up $354 million (or 4.5%), mainly due to the net impact of:
−
higher grant payments for transport projects (up $191 million) largely reflecting
Commonwealth funding for the construction of the Perth Freight Link (approved
as part of this Mid-year Review and reflected in the general government sector
infrastructure spending forecasts discussed below), and timing changes for a
range of road spending including the Gateway WA and NorthLink WA projects,
and the Roe Highway/Berkshire Road grade separation project;
−
an additional $90 million following the Commonwealth’s decision to transfer
responsibility to the State for all essential and municipal services for remote
Aboriginal communities from this year;
−
higher than anticipated GST grants (up $53 million), reflecting an upward
revision to the estimated national GST pool since the 2014-15 Budget
(notwithstanding this increase, GST grants are still expected to decline from
$2.5 billion in 2013-14 to $2.3 billion in 2014-15);
−
the removal of Commonwealth funding for Multi-purpose Service Units
(which improve access to health and aged care services in rural communities),
reflecting that funding arrangements are still to be finalised between the State and
the Commonwealth (down $26 million); and
−
the removal of Commonwealth funding for pensioners and seniors concessions
(down $25 million) in line with the Commonwealth’s May 2014 Budget.
Revenue from the sale of goods and services has been revised up by $53 million
(or 2.4%) in 2014-15, mainly due to:
−
higher revenue for Main Roads (up $45 million), reflecting additional work
undertaken on behalf of third parties, including Perth Stadium precinct works for
the Public Transport Authority (a public non-financial corporation), and for
mining and other companies (for works associated with private projects);
−
revenue for home indemnity insurance arrangements (up $19 million), reflecting
extension of the public sector’s temporary insurance role in this area from
1 November 2014 4; and
−
lower revenue for the Chemistry Centre (down $9 million), reflecting a decline in
demand for services.
Interest income has been revised down by $23 million (or 10.9%) in 2014-15,
reflecting lower estimates for cash balances held by the Public Bank Account.
The State, through the Department of Commerce, wholly underwrites the provision of new Home Indemnity Insurance (HII)
policies issued by private insurers, providing cover on an emerging cost basis. This arrangement, which was initially a temporary
12 month arrangement expiring on 31 October 2014, was recently extended by two years to provide additional time to develop a
longer term market-based HII solution.
17
2014-15 Government Mid-year Financial Projections Statement
2015-16 to 2017-18
Across the outyears (2015-16 to 2017-18), general government revenue has been revised
down by an aggregate $3.4 billion since the 2014-15 Budget. This mainly reflects the
impact of:
•
lower royalty income (down $5.3 billion, or 23.9%) due to the net impact of sharply
lower commodity prices, particularly iron ore, higher iron ore volumes (up a total of
110 million tonnes or 5.0% over the three year period) and a marginally lower
$US/$A exchange rate, as discussed earlier;
•
higher GST revenue grants (up $2.7 billion, or 75.4%), primarily reflecting the lagged
Commonwealth Grants Commission (CGC) impact of the downward revision in
mineral royalty receipts 5. Under the current CGC process, the reduction in
Western Australia’s royalty revenue in 2014-15 does not start to be compensated
through higher GST grants until 2016-17, and will not be fully compensated until
2018-19;
Figure 6
G ST G R ANT S
$ Billion
Forecast
4
Mid-year Review
Revision
3
2
1
0
2003-04
•
5
18
2005-06
2007-08
2009-10
2011-12
2013-14
2015-16
2017-18
higher Commonwealth funding for transport projects (up $798 million), mainly for
the construction of the Perth Freight Link (as discussed earlier);
However, the State’s share of GST revenue is still expected to decline to just 32.3% of its population share in 2017-18, compared
to the 37.6% share Western Australia will receive in 2014-15.
Financial Projections
•
lower taxation revenue (down $528 million, or 1.6%) due to downward revisions to
vehicle licence duty (down $265 million), duty on transfers (down $188 million),
gambling tax (down $141 million), insurance duty (down $50 million), and land tax
(down $14 million), reflecting the flow-on impact of lower than expected collections
discussed above. These downward revisions are forecast to be partially offset by the
extension of the Metropolitan Region Improvement Tax to a State-wide arrangement
(adding $64 million) 6, and a net $93 million increase in payroll tax collections
(including the impact of the Government’s decision to adjust the payroll tax scale
worth $418 million – see new revenue measures feature box earlier in this chapter);
•
lower North West Shelf and condensate compensation grants (down $474 million,
or 14.9%), reflecting significantly lower oil prices partially offset by a lower
exchange rate, as discussed earlier;
•
a reduction in Commonwealth funding (down $301 million) for public hospital
services under the National Health Reform Agreement (NHRA) announced in the
Commonwealth’s 2014-15 Budget;
•
the outyear impact of the removal of Commonwealth funding for Multi-purpose
Service Units from the estimates (down $79 million), funding for pensioners and
seniors concessions (down $82 million), funding for the Aged Care Assessment
Program (down $19 million, mainly in 2016-17 and 2017-18), and lower funding for
training (down $52 million) mainly reflecting the scheduled expiry of the National
Partnership Agreement on Skills Reform in 2016-17 (removing $54 million in
2017-18); and
•
a reduction in forecast interest income (down $71 million), reflecting lower projected
interest rates and lower Public Bank Account cash balances.
Expenses
General government expenses have been revised down by $125 million (or 0.4%) in
2014-15 since budget-time, to a total of $28.4 billion. This equates to annual growth of
4.2% relative to 2013-14. Spending on health, education, and law and order accounts for
around 54% of general government recurrent outlays.
6
The Metropolitan Region Improvement Tax is to be extended State-wide from 1 July 2015, raising an additional $64 million over
the three years to 2017-18. This measure also includes an increase in the land acquisition program and spending on planning
activities (further detail is contained in Appendix 3: Major Spending Changes).
19
2014-15 Government Mid-year Financial Projections Statement
G E N ER AL G O VE RNM ENT E X P EN S E S
20 1 4- 15
Water Subsidies
$559m
2%
Transport, Rail and
Roads
$2,274m
8%
All Other
$7,560m
27%
Electricity
Subsidies
$550m
2%
Training
$662m
2%
Law and Order
$2,752m
10%
TOTAL
$28,383m
Education
$4,586m
16%
Disability Services
$869m
3%
(a)
Figure 7
(a)
Child Protection
$619m
2%
Health
$7,952m
28%
Totals may not add due to rounding.
Lower spending in 2014-15 relative to budget-time reflects new savings measures
included in this Mid-year Review, lower superannuation interest costs, lower spending on
Commonwealth-funded programs and lower electricity subsidy payments, partly offset by
additional spending in key areas such as roads, law and order, and education.
Across the outyears (2015-16 to 2017-18), expense growth is forecast to average 2.3% per
annum, down from 3.8% at the time of the 2014-15 Budget. This moderation is mainly
due to the growing impact of savings measures announced since budget (which grow from
an annual impact of $120 million in 2014-15 to $1.0 billion in 2017-18).
Salaries growth (including increases in wage rates and growth in staff numbers) is
forecast to be 6.2% in 2014-15, up from 2.8% at budget-time. This increase is mainly due
to the ‘base’ impact of a significantly lower than expected salaries outcome in 2013-14
(which ended the year $357 million lower than expected at the time of the
2014-15 Budget), and the cost of the Targeted Voluntary Separation Scheme (which will
increase salaries costs in 2014-15 by an estimated $134 million but generate ongoing
savings of around $120 million per year from 2015-16). Salaries growth is forecast to
average just 1.2% per annum across the three outyears, down from 3.3% in the
2014-15 Budget.
20
Financial Projections
2014-15
The major expense revisions in 2014-15 since the May Budget include:
7
•
the implementation of savings measures totalling $120 million, in response to the
weaker revenue outlook (see feature box earlier in this chapter);
•
a reduction in nominal superannuation interest costs (down $103 million), due to a
lower discount rate used to determine these costs 7;
•
an increase in spending on roadworks on behalf of third parties (up $53 million),
including works for the Public Transport Authority (a public non-financial
corporation) associated with the Perth Stadium precinct, and minor upgrades to Great
Northern Highway, Ripon Hills Road and Marble Bar Road in the Pilbara;
•
a reduction of $26 million in spending on access to health and aged care services in
rural communities, pending a finalised funding agreement with the Commonwealth;
•
lower gambling tax rebates (down $24 million), due to the cessation of GST rebates
and associated changes to casino tax arrangements under a recent agreement with
Crown Casino;
•
an additional $24 million for cost pressures faced by the Department of Corrective
Services, including additional prison officers and goods and services required to
accommodate increased prisoner numbers, and an increase in insurance contributions
driven by growth in the number and cost of workers’ compensation claims;
•
lower operating subsidy payments to Synergy (down $23 million) as a result of lower
energy and network costs and reduced corporate overhead costs following the merger
with former generator Verve Energy in 2013-14, and lower than anticipated uptake of
concessions and rebates;
•
a reduction in the Seniors Cost of Living Rebate (down $21 million), reflecting the
Government’s June 2014 announcement to halve the rebate following the
Commonwealth’s 2014-15 Budget decision to cut pensioners and seniors concessions
funding from 2014-15; and
•
an additional $20 million for the Western Australia Natural Disaster Relief and
Recovery Arrangements, mainly for road restoration following flooding in the
Kimberley, Pilbara, Gascoyne, North and South Interior, Goldfields, Eucla and North
West Cape regions, and for housing assistance after the Parkerville Bushfire in
January 2014.
Long-term government bond rates are used by the actuary in year-end valuations of unfunded superannuation liabilities. Bond
rates have remained at low levels during the first half of 2014-15 (a rate of 3.2% has been used for 2014-15 based on the long-term
bond rate at cut-off, compared with a budget assumption of 4.6%). A decrease in the bond rate means that unfunded liabilities
increase in value (and vice versa), but nominal superannuation interest costs are lower.
21
2014-15 Government Mid-year Financial Projections Statement
2015-16 to 2017-18
General government expenses have been revised down by $3.8 billion over the outyears
(2015-16 to 2017-18) since budget-time. This mainly reflects the net impact of:
8
22
•
additional savings measures implemented in this Mid-year Review, which reduce
expenses by a further $2.6 billion over the period 2015-16 to 2017-18 (see feature box
earlier in this chapter);
•
the impact of lower operating subsidy payments to Synergy due to reduced operating
costs, discussed above (down $366 million);
•
a reduction in concurrent superannuation costs ($330 million) due to Commonwealth
Government changes to the Superannuation Guarantee rate 8;
•
discount rate changes on nominal superannuation interest costs discussed earlier
(reducing expenses by $302 million);
•
lower gambling tax rebates, as discussed earlier ($150 million);
•
lower spending on access to health and aged care services in rural communities as a
result of agreements that are yet to be signed with the Commonwealth, discussed
earlier ($79 million);
•
an additional $64 million for the costs associated with the relocation of the State
Administrative Tribunal, the Supreme Court (Civil), and the Departments of the
Attorney General and Treasury to the Old Treasury Building Tower and St Georges
Cathedral Heritage Precinct;
•
a reduction in training expenditure of $52 million, mainly due to the scheduled expiry
of the Commonwealth-State National Partnership Agreement on Skills Reform
(down $54 million in 2017-18);
•
spending of $44 million in 2015-16 on roadworks on behalf of third parties, discussed
earlier;
•
lower operating subsidy payments to the Public Transport Authority
(down $43 million) resulting from a reduction in interest costs due to lower interest
rates and reduced borrowings due to changes in the Authority’s Asset Investment
Program;
•
lower health sector depreciation costs (down $37 million), recognising changes in
accounting policy effective from 2014-15, the impact of hospital closures as new
facilities come online, and the flow-on impact of updates to the spending profile of
the health sector’s Asset Investment Program;
•
an additional $28 million between 2015-16 and 2016-17 to construct a grade
separation at the Nicholson Road rail crossing;
The Superannuation Guarantee rate will remain constant at 9.5% until 1 July 2021. Prior to this change, the rate was scheduled to
increase from 9.5% in 2014-15 to 11% in 2017-18.
Financial Projections
•
an additional $25 million over the three outyears for the establishment and operation
of a new Information and Communications Technology (ICT) Renewal and Reform
Fund (as part of the ICT savings and reform measure noted in the feature box earlier
in this chapter); and
•
a reduction in spending on the Aged Care Assessment Program (down $19 million,
mainly in 2016-17 and 2017-18), reflecting the lack of a signed funding agreement
with the Commonwealth beyond 2015-16.
Figure 8
G E N ER AL G O VE RNM ENT E X P EN S E S
%
$ Billion
16
35
Expense growth (LHS)
Forecast
Total expenses (RHS)
14
12
30
Ten year average
growth = 8.5%
25
10
20
8
15
6
10
4
5
2
0
0
2004-05
2006-07
2008-09
2010-11
2012-13
2014-15
2016-17
Further detail on the material changes in spending by general government sector agencies
is available in Appendix 3: Major Spending Changes.
Capital Investment
General government sector infrastructure spending is projected to be $3.1 billion in
2014-15 and to total $10.2 billion over the four years to 2017-18.
Changes to the composition of the Asset Investment Program (AIP) since budget-time
mainly reflect:
•
spending on the Perth Freight Link, with an additional $990 million to be spent on
this $1,575 million project over the forward estimates period to 2017-18, funded
jointly by the State ($124 million) and Commonwealth ($866 million) Governments.
Together with the Gateway WA and NorthLink WA projects, the Perth Freight Link
will provide a strategic urban freight corridor between Fremantle, Perth Airport and
the Kewdale industrial precinct and then northwards to Muchea; and
23
2014-15 Government Mid-year Financial Projections Statement
•
the impact of a further 5% efficiency saving in agencies’ AIPs, in recognition of
savings being achieved across the range of projects tendered in recent months (with
an estimated saving of $123 million over the period 2015-16 to 2017-18).
This measure builds on a similar infrastructure efficiency saving implemented as part
of the 2014-15 Budget.
2014-15
Relative to the 2014-15 Budget, general government sector infrastructure spending has
been revised down by $87 million in 2014-15, to $3.1 billion. Spending changes since
budget-time include:
•
$90 million for the Commissioner of Main Roads for spending carried forward from
2013-14, including $13 million for the Ravensthorpe Heavy Vehicle Route on the
South Coast Highway (delayed due to additional community consultation undertaken)
and $12 million in underspends approved for re-allocation to the Roe
Highway/Berkshire Road interchange in 2014-15 9;
•
a reduction of $72 million for the Department of Sport and Recreation mainly due to
the acquisition of the new Perth Stadium as a Design, Build, Finance and Maintain
Public Private Partnership (this accounting change still impacts net debt – see net debt
discussion later in this chapter);
•
$24 million for WA Health for the stabilisation of information and communications
technology systems at Fiona Stanley Hospital, projects carried over from 2013-14 and
rescheduled spending due to delays in the planning or procurement phase,
construction timeframes and invoicing of completed works; and
•
$22 million for Education, primarily to commence the construction of five new Trade
Training Centres and the planned bring-forward of investment for Ellenbrook North
Senior High School.
This Mid-year Review also includes a $350 million provision for yet-to-be-identified
underspending expected to emerge over the remainder of 2014-15. The current provision
compares with a total $649 million in general government sector underspending that
emerged between the 2013-14 Mid-year Review and the final outturn for 2013-14.
2015-16 to 2017-18
General government sector infrastructure investment over the period 2015-16 to 2017-18
is estimated at $7.1 billion, up $335 million (or 5.0%) from the budget-time projection,
due mainly to the addition of the Perth Freight Link and the accounting change for the
new Perth Stadium. Annual spending by the general government sector is expected to
ease during this period as major health projects reach completion.
9
24
A further $20 million has been added to the Main Roads infrastructure program as a result of the capitalisation of the
Lloyd St/Midland Rail Underpass project previously forecast to be expensed. This accounting change has no overall change in
spending on this project.
Financial Projections
Other post-budget changes to the general government sector AIP include:
•
a reduction of $109 million reflecting project planning revisions for the Statewide
Regional Blueprint and Southern Investment Initiative (with spending now to be
incurred in 2018-19);
•
expansion of the delivery of renal dialysis and support services ($41 million, funded
by the Commonwealth); and
•
additional investment to increase student capacity at Churchlands Senior High School
($39 million) and outyear spending on new Trade Training Centres ($6 million).
Further details on material changes to agency infrastructure programs are outlined in
Appendix 3: Major Spending Changes.
Balance Sheet
General government sector net worth 10 is forecast to increase from $116.8 billion at
30 June 2014 to $129 billion at 30 June 2018. This projection is $440 million lower than
at the time of the 2014-15 Budget, with higher forecast asset holdings (up $2.8 billion)
more than offset by higher projected financial obligations (up $3.2 billion).
The revised outlook to 30 June 2018 includes:
•
a $0.7 billion higher net worth outcome for the year ending 30 June 2014 (detailed in
the 2013-14 Annual Report on State Finances);
•
a $0.4 billion increase in financial asset projections, mainly investments, loans and
placements (up $783 million over the forward estimates period, excluding the impact
of the 2013-14 outturn), forecast movements in receivables (down $517 million
excluding 2013-14 outcomes, mainly due to movements in the timing of cash receipts
relative to budget), and higher public corporation net worth (up $228 million over the
four years to 30 June 2018); and
•
a $3 billion increase in liabilities (excluding the impact of the 2013-14 outturn),
mainly due to higher borrowings (see net debt discussion later in this chapter),
partially offset by valuation changes to unfunded superannuation liabilities and
movements in payables and other liabilities.
As noted earlier in this chapter, proceeds from the Government’s proposed asset sales are
not incorporated in the financial projections in this Mid-year Review.
10
Net worth is the total value of assets owned by the general government sector (including the sector’s ownership interest in the net
value of State public corporations) less the total value of the sector’s obligations (including borrowings, unfunded superannuation
liabilities, accounts payable, etc.).
25
2014-15 Government Mid-year Financial Projections Statement
Table 6
G E N ER AL G O VE RNM ENT
B al a nc e S he et at 3 0 J un e
2014
$m
2015
$m
2016
$m
2017
$m
2018
$m
2014-15 MID-YEAR REVIEW
Assets
Liabilities
Net Worth
Net Debt
142,551
25,723
116,828
6,973
147,014
28,608
118,406
10,655
152,183
31,492
120,691
13,426
158,217
33,919
124,297
14,830
164,361
35,350
129,012
15,576
2014-15 BUDGET
Assets
Liabilities
Net Worth
Net Debt
141,598
25,474
116,124
7,426
147,109
27,815
119,294
9,953
151,681
29,086
122,596
11,350
156,859
30,959
125,899
12,553
161,599
32,147
129,452
13,297
952
249
704
-453
-95
793
-887
701
502
2,406
-1,905
2,076
1,358
2,960
-1,602
2,277
2,762
3,203
-440
2,279
VARIANCE
Assets
Liabilities
Net Worth
Net Debt
Note: Columns may not add due to rounding.
Cash Flow Statement
Cash deficits (which reflect the impact of both recurrent and capital spending) are forecast
for the general government sector for the period 2014-15 through to 2016-17, with a small
surplus expected in 2017-18. Over the four years to 2017-18, the aggregate general
government sector cash deficit is around $1.6 billion higher than at budget-time.
This reflects the net impact of the substantial revenue downturn noted earlier,
the corrective measures implemented since the 2014-15 Budget, and movements in
infrastructure spending (detailed above).
The general government sector will continue to use debt to support infrastructure
spending across the forward estimates as a result of the forecast cash deficits.
26
Financial Projections
Total Public Sector 11
Summary
Largely reflecting the general government sector outlook detailed earlier in this chapter,
operating deficits are also projected for the total public sector in 2014-15 and 2015-16
before a turnaround to surplus from 2016-17. Combined with significant investment in the
State’s infrastructure program, this is estimated to see total public sector net debt increase
from $20.8 billion at 30 June 2014 to $30.9 billion by 30 June 2018 (up $1.5 billion since
budget-time). As noted earlier, this outlook does not factor in expected proceeds from the
asset sales process announced by the Government in August 2014.
The following table summarises the key financial aggregates for the total public sector.
Table 7
T O T AL PU BL IC SE CT O R
S um m ar y Fi n a nc i a l S t at em ent
2013-14
Actual
$m
2014-15 2014-15 2015-16 2016-17 2017-18
Budget Mid-year Forw ard Forw ard Forw ard
Estimate Revision Estimate Estimate Estimate
$m
$m
$m
$m
$m
42,630
42,406
225
45,285
45,523
-238
42,260
44,275
-2,015
44,560
45,802
-1,242
47,359
47,313
46
50,061
49,018
1,042
180,857
64,029
116,828
185,640
66,346
119,294
185,517
67,110
118,406
189,608
68,916
120,691
195,567
71,270
124,297
203,386
74,374
129,012
STATEMENT OF CASHFLOWS
Net Cash Flow s from Operating Activities
Asset Investment Program
Cash Position
3,198
6,814
-2,465
2,708
6,728
-2,668
1,176
6,615
-4,282
1,951
5,495
-2,189
3,291
5,397
-1,003
4,149
6,033
-790
Memorandum Item: Net Debt at 30 June
20,754
24,918
25,375
28,030
29,407
30,857
OPERATING STATEMENT
Revenue
Expenses
Net Operating Balance
BALANCE SHEET AT 30 JUNE
Assets
Liabilities
Net Worth
Note: Columns may not add due to rounding.
11
Also known as the whole-of-government, the total public sector consolidates the general government sector (discussed earlier in
this chapter), the public non-financial corporations sector (which includes entities operating on a predominantly cost recovery
basis like the State’s ports, and the electricity and water utilities), and the public financial corporations sector (which includes
agencies such as the Western Australian Treasury Corporation and the Insurance Commission of Western Australia).
27
2014-15 Government Mid-year Financial Projections Statement
Operating Statement 12
Relative to budget-time, a larger total public sector operating deficit is in prospect for
2014-15. The larger deficit reflects the sharp turnaround in the general government
operating position discussed earlier. Operating outcomes are expected to strengthen over
the forward estimates period, with an operating surplus of $1 billion projected for
2017-18, mainly due to the growing impact of the new revenue and savings measures
announced since the 2014-15 Budget.
Table 8
T O T AL PU BL IC SE CT O R O P E R AT IN G B AL AN C E
B y S ec tor
2013-14
Actual
$m
Net Operating Balance
General government sector
Public non-financial corporations sector
Public financial corporations sector
2014-15
Budget
Estimate
$m
2014-15 2015-16 2016-17 2017-18
Mid-year Forw ard Forw ard Forw ard
Revision Estimate Estimate Estimate
$m
$m
$m
$m
719
571
-86
175
371
210
-1,287
372
194
-907
490
219
304
612
234
1,344
648
252
General government dividend revenue
Public non-financial corporations dividend
revenue (a)
901
938
1,226
976
1,036
1,133
78
56
68
68
68
69
Total public sector net operating balance
225
-238
-2,015
-1,242
46
1,042
less
(a)
Dividends received from Keystart (a PFC) by the Housing Authority (a PNFC).
Note: Columns may not add due to rounding.
Public Non-Financial Corporations
Consistent with budget forecasts, operating surpluses for the public non-financial
corporations (PNFC) sector are projected for 2014-15 and for the remainder of the
forward estimates period. An operating surplus of $372 million is forecast for 2014-15,
progressively increasing to a forecast $648 million in 2017-18.
PNFC sector revenue and expenses have both been substantially revised down in each
year of the forward estimates period. This is primarily due to:
12
28
•
the expected impact of movements in international precious metals markets on the
price and volume of metals purchased and sold by the Gold Corporation. The outlook
for the Corporation’s revenue and expenses has been revised down by around
$724 million in 2014-15 and by a total of $6 billion over the four years to 2017-18;
•
revisions to Synergy’s outlook, with downward revisions to both revenue and
expenses largely reflecting a number of post-merger changes and the completion of a
review into Synergy’s cost-reflective tariffs (see feature box later on); and
Consolidation of the sub-sectors of the public sector removes transactions between each part of government. In aggregate, the
operating balance of the total public sector is equal to the sum of the general government and public corporations sectors’
operating balances, less dividend revenue. Under Australian Accounting Standards, the dividend costs of the public corporations
sectors are not classified as expenses, although the associated dividend income is recognised as revenue.
Financial Projections
•
implementation of savings measures since the 2014-15 Budget, including a reduction
in general government sector operating subsidy payments to Synergy, the Water
Corporation and the Western Australian Land Authority ($70 million in 2014-15
growing to $92 million by 2017-18). Offsetting savings in recurrent spending are to
be implemented by these agencies in response to the subsidy reductions.
Other significant changes to the PNFC sector’s revenue outlook since the 2014-15 Budget
include:
•
lower revenue ($303 million) for the Housing Authority mainly due to:
−
lower forecast sales of affordable housing inventories and lower rental income
from Government Regional Officers’ Housing (GROH) as a result of softer
housing market activity; and
−
lower dividend revenue from Keystart, reflecting an adjustment of capital
holdings to realign with industry best practice for financial institutions;
•
an $81 million increase in revenue for Horizon Power, mainly for the (non-cash)
transfer of the Onslow Power Station from Chevron in 2016-17;
•
a reduction in operating revenue of $69 million for the Public Transport Authority
between 2014-15 and 2017-18, largely reflecting the impact on the Authority’s
operating subsidy of lower interest costs and the 1% efficiency dividend announced in
October 2014; and
•
higher revenue ($65 million) for the Pilbara Ports Authority relating to the transfer of
assets (including a support facility and access road) from an external party to the
Authority13.
Other significant expenditure movements impacting the PNFC sector since the
2014-15 Budget include:
•
•
13
a $194 million decrease in the Housing Authority’s expenses, primarily due to the net
effect of:
−
lower construction costs for housing inventories arising from current market
conditions;
−
lower GROH operating lease expenditure as a result of reduced property rental
leases, particularly in the Pilbara region; and
−
changes in the timing of planned transfers of housing stock to community
organisations;
$149 million in lower expenses for Western Power, mainly due to lower interest and
depreciation costs, reflecting both timing and other changes to infrastructure
spending, and a restructuring of the Corporation’s debt portfolio; and
The former Dampier and Port Hedland port authorities merged to form the Pilbara Ports Authority from 1 July 2014.
29
2014-15 Government Mid-year Financial Projections Statement
•
an aggregate decrease of $116 million in expenses between 2014-15 and 2017-18 for
the Public Transport Authority, primarily due to lower interest expenses on
borrowings, the impact of savings measures and lower depreciation costs.
Synergy
Since the 2014-15 Budget, Synergy’s revenue and expense forecasts have been reduced
over the forward estimates period.
This is largely due to a number of changes following the 1 January 2014 merger with
Verve Energy, which have reduced revenue (down $1.4 billion) and expenditure
(down $1.5 billion). These changes include:
•
improved arrangements for the transportation of gas to Synergy’s retail customers
and generation plants;
•
an increase in the cost of coal due to a change in contractual arrangements;
•
early retirement of the Kwinana Power Station, and reduced corporate overhead
costs associated with the merged business;
•
lower interest costs associated with a revised financing structure;
•
a net improvement in Synergy’s plant and supply portfolio due to the cessation of a
number of power purchase agreements between the former Verve Energy and the
previous standalone Synergy retail business;
•
decreasing margins in Synergy’s market-based and contestable sectors servicing
medium and large business customers, reflecting strong competition from other
retailers and excess supply placing downward pressure on prices;
•
lower energy purchases in line with reduced sales demand; and
•
cost increases associated with percentage changes under the Commonwealth’s
Small Scale Renewable Energy Scheme and Large Renewable Energy Target.
In addition, a review of Synergy’s cost-reflective tariffs (conducted by the Department
of Treasury, the Public Utilities Office and Synergy) has further reduced the outlook
for both revenue and expenditure (by approximately $500 million over the forward
estimates period). The key changes resulting from the review include:
30
•
a change in the method for recovering a number of costs, including ancillary
services and retail depreciation;
•
update of network cost assumptions to align Synergy and Western Power’s
forecasts; and
Financial Projections
•
lower generation network transmission prices in line with the Economic
Regulation Authority’s Access Arrangement determination in 2012, and approved
2014-15 price list.
The above changes include the flow-on impact to the Corporation’s operating expenses
of the Government’s October 2014 announcement to reduce Synergy’s operating
subsidy by 7.5% in 2014-15 and 10% each year thereafter (or $168 million over the
forward estimates period). Synergy’s operating subsidy (from the general government
sector) has reduced by a total of $557 million over the forward estimates period, from
$1.8 billion at budget-time to $1.3 billion.
The table below shows the total impact on the State’s finances resulting from
Synergy’s Mid-year Review update.
Table 9
SY N E RG Y – M ID- Y E AR RE V I EW U PD AT E
Impact on State Finances
General Government Net Operating Balance
of which:
- Operating Subsidy
- Tax Equivalent / Dividends
Total Public Sector Net Debt
2014-15
$m
2015-16
$m
2016-17
$m
2017-18
$m
4 Year Total
$m
97
48
144
251
541
-58
40
101
-99
-51
-109
-194
-50
-398
-206
46
-648
-557
-15
Note: Columns/rows may not add due to rounding.
Public Financial Corporations
The outlook for the public financial corporations (PFC) sector is largely unchanged since
the 2014-15 Budget, with expected surpluses in each year of the forward estimates period.
Relative to the 2014-15 Budget, both interest revenue and interest expenses have been
revised down reflecting the flow-on impacts from the 2013-14 results in the Annual
Report on State Finances.
Asset Investment Program
The State’s Asset Investment Program (AIP) is estimated at $6.6 billion in 2014-15 and a
total of $23.5 billion over the four years to 2017-18 (down marginally from $23.7 billion
at budget-time). This includes the general government sector asset spending discussed
earlier in this chapter, and infrastructure delivered by public corporations (such as
electricity and water utilities, ports, public housing and public transport).
The majority of infrastructure spending in 2014-15 (65%) is focused on the delivery of
health, electricity, water and roads projects (see following figure).
31
2014-15 Government Mid-year Financial Projections Statement
AS S E T IN V E ST M ENT PR O G R AM
20 1 4- 15
Metropolitan
Redevelopment
Authority
$248m
4%
Figure 9
(a)
Housing Authority
$482m
7%
Western Australian
Land Authority
$387m
6%
Main Roads
$1,063m
16%
Other Agencies
$602m
9%
TOTAL
$6,615m
Electricity Utilities
$1,330m
20%
Water Corporation
$842m
13%
Finance
$182m Health
3% $1,018m
16%
(a)
Education
$462m
7%
Totals may not add due to rounding.
The PNFC sector accounts for approximately 55% of the AIP in 2014-15 (see following
figure). This proportion is expected to increase to 59% by 2017-18 as a number of large
general government infrastructure projects are completed (including major health projects
such as the Perth Children’s Hospital), together with increases in investment in PNFC
projects, such as the Forrestfield Airport Link and the Pilbara Underground Power
Project.
32
Financial Projections
Figure 10
AS S E T IN V E ST M ENT PR O G R AM
8
$ Billion
General Government
Public Corporations
Forecast
6
4
2
0
2004-05
2006-07
2008-09
2010-11
2012-13
2014-15
2016-17
Changes to PNFC sector infrastructure spending in this Mid-year Review include:
•
increased capital spending by Horizon Power of $172 million over the period 2014-15
to 2017-18, primarily relating to the Pilbara Underground Power Project (funded from
Royalties for Regions and local government contributions), the Advanced Metering
Infrastructure project (which will replace all electricity meters in its service area with
advanced meters that are Customer Code and Metering Code compliant), and an
increase in demand-driven customer funded works;
•
a net increase of $145 million in the Housing Authority’s AIP, mainly due to:
•
−
works from 2013-14 carried over into 2014-15 ($98 million), reflecting delays to
the Social Housing Boost and the Land Development programs as a result of
delays in obtaining planning and development approvals;
−
a change in classification of Shared Equity spending from operating activities to
infrastructure investment following finalisation of the Authority’s 2013-14 annual
report; and
−
reduced spending across 2016-17 and 2017-18 ($138 million), reflecting an
expected decline in land development activities due to softening housing market
conditions, particularly in the Pilbara region;
a $63 million reduction in infrastructure investment by the Western Australian Land
Authority, due mainly to a downturn in current market conditions resulting in reduced
sales revenue and deferral of planned development expenditure;
33
2014-15 Government Mid-year Financial Projections Statement
•
$79 million for Western Power, due to rescheduled acquisition of transmission line
assets between Eneabba and the Three Springs Terminal from the Karara group of
companies (originally scheduled for 2013-14 and delayed due to Karara seeking a
bank guarantee for the project, which was granted in July 2014);
•
a reduction of $53 million for the Water Corporation’s AIP, largely due to favourable
outcomes from the competitive alliance process for the Groundwater Replenishment
Scheme ($24 million), and lower costs associated with the repeal of the
Commonwealth’s Clean Energy Act 2011 ($24 million); and
•
an additional $41 million for the Metropolitan Redevelopment Authority, mainly due
to delays to works originally scheduled for 2013-14 ($22 million), increased costs for
Yagan Square and other development works at Perth City Link, (up a total
$8 million), higher cost for remediation of contaminated sites in Midland ($8 million),
and increased expenditure from the acceleration of works at Elizabeth Quay to align
to the current project development timeframes (up $4 million).
Further details of the material changes in spending since budget are available in
Appendix 3: Major Spending Changes.
Balance Sheet
Net worth for the total public sector is equivalent to that of the general government sector
(discussed earlier in this chapter). This is because the net worth of public corporations is
reported as an asset in the general government sector balance sheet.
Further information on total public sector net debt is provided below.
Cash Flow Statement
A total public sector cash deficit of $4.3 billion is estimated for 2014-15, $1.6 billion
higher than forecast at budget-time. This largely reflects the impact on cash of the
substantial deterioration in the general government sector revenue outlook discussed
earlier in this chapter.
Across the four years to 2017-18, infrastructure spending is expected to be around
$140 million lower (see earlier discussion of asset investment).
The outlook for the cash position also includes a substantial reduction in forecast sales of
land, housing stock and other fixed assets, which have been revised down by an aggregate
$578 million between 2014-15 and 2017-18 since budget. This mainly reflects:
34
•
lower sales forecasts for the Western Australian Land Authority (down $430 million
due to weaker property market conditions as a result of the slowdown in
resource-related business investment across regional areas); and
•
lower sales by the Housing Authority (down $202 million across the forward
estimates period, reflecting softer market conditions, particularly in South Hedland).
Financial Projections
Net Debt and Gross Borrowings 14
Net debt for the total public sector is forecast to increase from $20.8 billion at
30 June 2014 to $30.9 billion by 30 June 2018, $1.5 billion higher than forecast in the
May Budget. This increase largely reflects the net impact across the forward estimates of:
•
the lower than expected net debt outturn at 30 June 2014 (down $1.3 billion),
as reported in the 2013-14 Annual Report on State Finances;
•
a net $1.4 billion deterioration in the operating cash position of the public sector,
including:
−
the significant fall in mining-related revenue (down $7.3 billion in cash terms),
including $6.7 billion in iron ore royalties and $602 million in petroleum royalties
and North West Shelf/condensate compensation grants;
−
reductions in vehicle licence duty (down $339 million) and total duty on transfers
(down $252 million) due to softer conditions in the economy (discussed earlier);
−
higher GST grants (up $2.7 billion), with the lagged Commonwealth Grants
Commission process expected to only partly compensate for the reductions to
mining revenue and taxes outlined above; and
−
the impact of the savings measures announced on 9 October 2014 and additional
measures included in this Mid-year Review;
•
$542 million in AIP savings due to further efficiencies (discussed earlier);
•
a total $1.2 billion increase for all other AIP spending changes since budget,
most notably approval of the Perth Freight Link project;
•
lower than projected proceeds from the sale of non-financial assets such as land and
housing stock (down $578 million), particularly for the Housing Authority and the
Western Australian Land Authority; and
•
a $52.5 million increase from the changed accounting treatment for the new Perth
Stadium (discussed further below).
The following table summarises changes in total public sector net debt projections since
the 2014-15 Budget.
14
Net debt is a balance sheet measure based on Government Finance Statistics concepts. It is calculated as the difference between
liquid financial assets (including loans made by governments) and financial liabilities that attract a debt servicing cost. Net debt is
an important indicator of the strength of the public sector’s financial position and the sustainability of the public sector’s future
call on cash. Gross borrowings are the main liability component in net debt and are a key focus for credit rating agencies.
35
2014-15 Government Mid-year Financial Projections Statement
Table 10
NET D EBT O F T HE T O T AL PU BLI C S E CT O R AT 3 0 JU N E
2014-15 BUDGET - TOTAL PUBLIC SECTOR NET DEBT
2016
$m
2017
$m
2018
$m
24,918
26,190
27,556
29,378
Plus improvement from 2013-14 outturn
-1,287.9
Less change in net cashflow s from operating activities and
dividends paid
- General government
- Public non-financial corporations
- Public financial corporations
Total public sector
-1,102.2
-427.1
-2.3
-1,531.7
-1,093.0
134.6
19.6
-938.8
78.8
209.6
24.7
313.1
798.5
-55.0
28.2
771.6
-
-174.6
-175.9
-191.2
Plus purchases of non-financial assets
Savings Measures
- 5% Asset Investment Program efficiencies
Other Changes (a)
- Underspend Provision
- Perth Freight Link
- New Perth Stadium - Sport and Recreation
- New Perth Stadium - Public Transport Authority
- Pilbara Underground Pow er Project
- Advanced Metering Infrastructure
- Electricity Generation and Retail
- Accommodation for Churchlands Senior High School
- New Cannington Greyhound Racing Complex
- Fiona Stanley Hospital ICT Commissioning
- All other (including carryover from 2013-14 and
other timing changes)
Total purchases of non-financial assets
-700.0
25.9
-91.1
23.1
11.4
23.4
0.3
11.0
11.7
124.0
-291.2
-9.6
26.9
14.4
0.5
2.6
2.0
-
391.0
-329.1
-10.0
24.0
8.2
-1.8
26.1
-
449.1
-76.1
-2.8
26.0
0.2
-46.4
9.8
-
571.9
-112.4
408.3
103.3
-14.1
-81.5
-217.9
-49.4
Less proceeds from sale of non-financial assets
Land Authority
Housing Authority
Metropolitan Redevelopment Authority
All other
Total sales of non-financial assets
-130.0
-50.1
-49.0
34.9
-194.2
-70.0
-16.5
-7.7
13.9
-80.2
-119.1
-127.7
-21.5
1.5
-266.8
-111.1
-8.2
82.2
0.7
-36.4
Plus all other financing
Financing prepayments for new Perth Stadium
Finance lease at completion of new Perth Stadium
Other acquisitions under finance leases and
similar arrangements
All other (b)
-
214.7
-
230.6
-
44.2
422.8
156.5
-24.3
-0.3
45.7
-91.9
0.6
-55.7
Cumulative impact on net debt at 30 June
457.7
1,840.1
1,851.1
1,478.4
25,375
28,030
29,407
30,857
2014-15 MID-YEAR REVIEW - TOTAL PUBLIC
SECTOR NET DEBT
(a)
Material changes in infrastructure spending are outlined earlier in this chapter and Appendix 3.
(b)
Includes other movements in net debt attributable to issues such as revaluations of investment assets and debt liabilities,
the restatement of agency net debt assets/liabilities for changes in annual reports completed after the 2013-14 Annual
Report on State Finances was finalised, net acquisitions of financial assets for liquidity purposes, etc. These transactions
have no associated operating or infrastructure cash flows reflected in other items in this table.
Note: Columns may not add due to rounding.
36
2015
$m
Financial Projections
The Mid-year Review projections also incorporate an increase in net debt related to the
change in accounting treatment for the new Perth Stadium which is now being developed
as a Public Private Partnership. The contract has a 25 year term anticipated to commence
in January 2018 and will deliver significant savings, in net present value terms, over the
life of the contract relative to traditional models of public sector procurement.
However, consistent with accounting standards, post-operational contract payments under
the project agreement with WESTADIUM (to design, build, partially finance, and
maintain the new Perth Stadium) are required to be recognised as a finance lease and as a
result, net debt will increase by $52.5 million by 30 June 2018. This increase reflects the
upfront recognition of construction costs under the lease (which also includes capitalised
interest during construction and other upfront costs incurred by WESTADIUM) as a
liability that will be paid by the State over the 25 year agreement with WESTADIUM.
A summary of the impact of stadium transactions on net debt at 30 June 2018 is shown in
the following table.
Table 11
CH AN G E S T O N EW P ERT H ST AD I UM AC C O UNT IN G
Im pac t o n N et D e bt a t 30 J un e 2 01 8
$m
Reverse previous forecasts:
- Sport and Recreation (AIP)
- Public Transport Authority (AIP)
- Consolidated Account interest costs
Sub Total
New forecasts:
- Financing Prepayments
- Finance lease at completion
Sub Total
TOTAL CHANGES
-787.5
-22.4
-50.0
-859.9
489.5
422.8
912.3
52.5
Note: Columns may not add due to rounding.
Gross Borrowings
The following figure shows that the State’s gross borrowing levels have increased
significantly in recent years – and are expected to increase further over the forward
estimates period – in support of the State’s substantial infrastructure program.
Gross borrowing levels at the end of the forward estimates period have been revised up by
$0.9 billion relative to the budget forecasts 15.
15
Forecast levels of gross borrowing at 30 June 2018 are $0.9 billion higher than budget-time, with the remaining $0.6 billion
increase in net debt attributable to lower liquid financial assets, mainly reflecting the impact of the deteriorating outlook on the
Public Bank Account.
37
2014-15 Government Mid-year Financial Projections Statement
Figure 11
G RO S S BO R RO W ING S
T ota l P u b lic S ec t or
$ Billion
2014-15 Mid-year Review
50
Forecast
2014-15 Budget
40
30
20
10
0
1994
1997
2000
2003
2006
2009
2012
2015
2018
The majority of general government sector borrowings are held by the Consolidated
Account which provides financing contributions for most of the sector’s infrastructure
investment. The vast majority of remaining gross borrowings are held by public
corporations that invest these funds in income-generating assets.
The Government will continue to work on ways to reduce growth in the State’s gross
borrowing levels, including consideration of further savings measures as part of the
2015-16 Budget. As noted earlier in this chapter, proceeds from planned asset sales,
which will reduce the need for future borrowings, will only be incorporated in the
estimates when sale proceeds are known with certainty (i.e. when sales transactions are
finalised).
38
Financial Projections
Statement of Risks
Forecasting Uncertainties
The inherent uncertainties associated with producing forecasts for an approximately
$256 billion economy and $27 billion general government sector recurrent budget means
that there will always be differences between the forecasts of key aggregates and the final
audited results. This Statement of Risks provides an overview of the known issues that
have the potential to materially affect the financial projections contained in this Mid-year
Review.
To illustrate the uncertainties associated with forecasting the State’s finances, general
government operating balances have been underestimated in Mid-year Reviews in nine of
the last 10 years, ranging from $109 million in 2012-13 to $963 million in 2005-06
(reflecting unexpectedly high revenue growth in that year). The final outcome for 2008-09
was an $868 million overestimation due to the impact of the Global Financial Crisis.
Revenue Estimates
The revenue estimates are highly sensitive to changes in key economic parameters,
including the $US/$A exchange rate, commodity prices (especially iron ore), employment
and wage growth, and house prices and transaction volumes. Approximate annual impacts
of changes in these variables are outlined in the following table.
Table 12
AP P R O XIM AT E P AR AM ET ER S EN S IT IV IT Y O F R E V E NU E EST IM AT ES
20 1 4- 15
Variability
($m)
Detail
Royalty income and
North West Shelf
grants
Iron ore royalties
±60
For each US1 cent decrease/increase in the $US/$A exchange rate
(royalty income is inversely related to the $US/$A exchange rate)
±56
For each $US1 per tonne increase/decrease in the price of iron ore
Petroleum royalties
and North West
Shelf grants
±10
For each $US1 increase/decrease in the price of a barrel of oil
Payroll tax
±37
For each one per cent increase/decrease in taxable wages or
employment growth (i.e. the total wages bill)
Underlying transfer
duty
- Prices
- Transactions
±15
±14
For each one per cent increase/decrease in average property prices
For each one per cent increase/decrease in transaction levels
GST grants
±90
For a $100 million increase/decrease in iron ore royalty revenue (due to
increased/decreased value of production), all else being equal, Western
Australia will lose/gain an estimated $90 million of GST grants in net
present value terms (the loss/gain will occur in later years due to the time
lags in the Grants Commission process)
Further to the revenue sensitivities above, specific risks to the revenue estimates are
discussed below. Risks to the economic outlook are discussed in Chapter 3: The Western
Australian Economy.
39
2014-15 Government Mid-year Financial Projections Statement
Implementation of Revenue and Savings Measures
This Mid-year Review includes $3.8 billion of revenue and savings measures introduced
by the Government in response to the significant decline in general government revenue
projections over the forward estimates period since the 2014-15 Budget (discussed in
detail earlier in this chapter). These measures build on previous initiatives implemented
by the Government, including $2 billion in revenue and savings measures in the
2014-15 Budget.
The projections contained in this Mid-year Review are based on the assumption that
agencies will deliver these measures in full, with the associated financial benefits.
If agencies do not fully achieve these savings, there will be a deterioration in the general
government sector operating balance and net debt estimates contained in this Mid-year
Review.
To date, considerable progress has been made in implementing announced measures.
However, key risks remain, particularly in relation to potential overlap in some of the
measures (for example, many agencies would seek to use natural attrition as a key
strategy in achieving efficiency dividend savings, but under the new workforce renewal
policy a portion of the savings from natural attrition will be harvested from agencies’
salaries budgets).
Asset Sales
In addition to the above measures, the Government announced a structured process of
public sector asset sales on 28 August 2014 as part of its strategy to reduce the State’s
debt levels. The proceeds from these asset sales will only be incorporated in the State’s
financial projections once the transactions are finalised. This represents an upside risk to
the debt projections contained in this Mid-year Review.
Royalty Income ($4,368 million in 2014-15)
Royalty income is forecast to account for 16.1% of the State’s total projected revenue in
2014-15. This has declined from 21.5% at budget-time, as a result of the sharp fall in the
iron ore price discussed earlier. Royalty income estimates are particularly sensitive to
movements in the $US/$A exchange rate and iron ore prices, with iron ore royalty income
alone projected to account for 13.9% of total general government revenue.
Exchange Rate
The $US/$A exchange rate represents one of the largest risks to the royalty revenue
forecasts. Since the 2014-15 Budget, the exchange rate has varied between a high of
US95 cents and a low of US84.1 cents, a range of US10.9 cents. For every one US cent
that the exchange rate is higher/lower than the assumed rate of US87.2 cents for 2014-15,
royalty revenue will deteriorate/improve by around $60 million.
40
Financial Projections
The $US/$A exchange rate often moves in the same direction as prices for
Western Australia’s key commodity exports, which at times has offered a natural hedge.
However, there have been relatively extended periods in recent years where commodity
prices have dropped while the value of the Australian dollar has remained elevated.
The Australian dollar continues to be supported by interest rates in Australia being
significantly higher than in other countries, such as the US and Japan. Higher interest
rates attract investors seeking the higher yield, which increases the value of the Australian
dollar relative to other currencies.
In this regard, since the 2014-15 Budget forecasts were finalised on 14 April 2014, iron
ore prices have fallen by 40.6%, while the exchange rate has fallen by only 10.8%.
Conversely, it is possible that investor confidence in the Australian dollar may rapidly
erode, causing it to depreciate at a faster rate than is projected. This scenario could occur
if perceptions of the Chinese economic outlook deteriorate significantly and/or the market
expects interest rates to decline in Australia relative to other countries.
Iron Ore Prices
Recent history has demonstrated that the iron ore price is highly volatile. For example,
since the 2014-15 Budget cut-off date of 14 April 2014, the iron ore price has varied
between a high of $US117 per tonne and a low of $US68 per tonne. For every
$US1 per tonne that the iron ore price is lower/higher than assumed, royalty revenue will
be around $56 million lower/higher than estimated in 2014-15.
The iron ore market is currently in a period of transition where the growth in new supply
entering the market is larger than the incremental increase in demand. Therefore, existing
supply must be displaced from the market in order to reach equilibrium. This is likely to
continue to create significant instability in the market as high cost producers are likely to
resist a decision to close for as long as they can. Mines in some countries may be
subsidised for a sustained period to prevent them from closing. Other producers may
continue to produce if they can absorb a short-term loss in anticipation of a potential price
recovery. Iron ore producers that are vertically integrated with steel manufacturing
operations may also feel less pressure to close. Ultimately, high cost producers are
unlikely to leave the market in an orderly fashion.
Participants in the iron ore market are currently anticipating relatively modest growth in
global steel demand and rapid growth in iron ore supply across the forward estimates
period. This is reflected in both spot and derivative markets for iron ore and is broadly
consistent with these Mid-year Review projections. However, given ongoing uncertainty
and volatility in the iron ore market, there remains considerable risk around the outlook
for iron ore prices.
41
2014-15 Government Mid-year Financial Projections Statement
Iron Ore Volumes
Despite the risks associated with lower prices, iron ore production volumes have been
revised up since budget. They are now projected to grow from 631 million tonnes (Mt) in
2013-14 (up from 597 Mt at budget-time) to 802 Mt in 2017-18 (up from 777 Mt) 16.
Ultimately, this represents an expectation that the majority of iron ore supply that may be
displaced at current prices will be from producers outside of Western Australia.
Moreover, easing labour and supply chain constraints are allowing iron ore miners to
deliver expansion projects ahead of schedule and a focus on productivity and efficiency is
allowing producers to increase production volumes from existing infrastructure.
In this regard, most of the iron ore produced in Western Australia comes from large
capital-intensive operations that have relatively low operating costs when compared to
producers from other countries. Production from large producers is not likely to be
affected by movements in price over the short-term. Previous episodes of sharp price
declines during 2012 and the Global Financial Crisis had little impact on the volume of
iron ore sales from Western Australia. Capital-intensive producers typically have high
fixed costs, which means they have to operate at capacity to minimise the unit costs.
Consequently, these producers have limited incentive to reduce output when demand falls.
Mineral Royalty Rate Review
The Government announced in the 2012-13 Budget that it would undertake a review of
the State’s existing mineral royalty rates in consultation with industry. Terms of reference
for the review were released in August 2013, with the review due to be provided to the
Government shortly.
The forward estimates include additional royalty income of $180 million in 2015-16,
$187 million in 2016-17 and $193 million in 2017-18 as a provision for the outcomes of
this review. However, at the cut-off date for this Mid-year Review, the Government had
yet to receive or consider the review’s findings/recommendations. This, combined with
the current weakness in commodity prices, means there is a significant risk associated
with these estimates. A decision on this matter will be made as part of the
2015-16 Budget.
North West Shelf Grants ($911 million in 2014-15)
North West Shelf grants are derived from sales of LNG, oil, condensate, liquefied
petroleum gas and domestic gas, with LNG generating the largest amount of revenue from
these commodities.
16
42
These volumes are expressed as dry tonnes.
Financial Projections
Most of the LNG from the North West Shelf is sold under contracts that are linked to the
price of oil 17. Therefore, a large unanticipated movement in the oil price represents the
most significant risk to North West Shelf grants over the budget forecast period. The oil
price is currently experiencing a period of volatility, after several years of relative
stability. This has been caused by robust growth in production, in particular from
North America, coming at a time of weak economic activity in Europe and Japan, and a
more subdued outlook for the economy in China.
Over the short-term, the oil price may rebound if the Organisation of the Petroleum
Exporting Countries responds to lower prices by cutting output, a course of action it has
resisted to date. Moreover, supply disruptions remain a risk for the oil market as a
significant proportion of oil is produced in politically unstable regions. However, a supply
disruption would likely have to be substantial to have a material impact on price, given
the relative abundance of supply currently available and the subdued outlook for demand.
Commonwealth Grants ($8,885 million in 2014-15)
The Commonwealth Government had not released its Mid-Year Economic and Fiscal
Outlook (MYEFO) at the time assumptions for this Mid-year Review were finalised on
3 December 2014. Accordingly, any updates to the outlook for grants in the
Commonwealth’s MYEFO are not reflected in these Mid-year Review projections. Any
such updates will be incorporated in the State’s 2015-16 Budget.
Commonwealth Grants Commission (CGC) Methodology Review
The State’s share of the national GST grant pool is recommended annually by the CGC.
Its recommendations take account of States’ costs of providing services and capacity to
raise their own revenue.
For 2014-15, the GST revenue estimates incorporate the CGC’s approved
recommendation of Western Australia’s GST relativity (i.e. 37.6% of an equal per capita
share).
The Western Australian Treasury’s projections of GST relativities for 2015-16 onwards
take account of projected changes in economic circumstances that are expected to be
reflected in the CGC’s calculations.
The projections have been prepared on an assumption that the CGC will continue to use
the same methods in its calculations. However, the CGC is currently undertaking a review
of these methods. The review is to be completed in February 2015 and will apply to the
GST distribution from 2015-16 onwards.
This review could substantially alter Western Australia’s GST grant share, in either
direction, from 2015-16. The CGC has released a draft report, but the final outcome is not
yet clear.
17
Contracts typically range in length between five and 25 years and many contracts allow for periodic renegotiation of pricing.
43
2014-15 Government Mid-year Financial Projections Statement
Expiring National Partnership Agreements
Western Australia is currently party to around 48 National Partnership (NP) agreements
with the Commonwealth Government relating to the delivery of specific projects,
improvements in service delivery or reform. A further 15 NPs are either currently under
negotiation or about to be negotiated. These agreements are generally for a limited period
and have specific conditions attached to funding.
The majority of NPs create increased service levels, which generates community
expectation that such levels will continue despite the time-limited nature of NPs. Other
NPs develop capital projects that will require ongoing maintenance. Unless another
source of Commonwealth funding is found at an NP’s expiry, the State must either fund
the increased service levels or allow service delivery to revert to pre-NP levels.
Some NP agreements have been rolled over for short terms (some more than once),
without longer-term commitment. This creates budget uncertainty for the State and
significant uncertainty for service providers.
Given the uncertainty about expiring NPs, in most cases this Mid-year Review assumes
no continued funding (either Commonwealth or State) past an NP’s expiry date and that
the additional or enhanced services generated by the NP will cease 18.
Students First Funding
Projections of Students First funding provided by the Commonwealth Government
contained in this Mid-year Review reflect the amounts advised in writing to the Minister
for Education by the Commonwealth Minister for Education in December 2013.
However, the Minister for Education is currently attempting to confirm with the
Commonwealth Minister possible reductions to Students First funds based on revised
student enrolment projections apparently being used by the Commonwealth.
These reductions have the potential to total $166 million over the forward estimates
period ($20 million in 2014-15, $27 million in 2015-16, $53 million in 2016-17 and
$66 million in 2017-18). However, as any changes to Students First funding are yet to be
confirmed, they have not been reflected in the forward estimates at this time.
18
44
However, funding is assumed to continue for the Legal Aid Services NP (Commonwealth) and the Natural Disaster Resilience
NP (Commonwealth and State) due to their ongoing nature. In addition, funding for the Home and Community Care Program is
assumed to continue, as services are expected to be preserved in the future.
Financial Projections
Spending Risks
Population Growth
Demand for services and infrastructure provided by the public sector is still strong in
Western Australia, despite the recent moderation in domestic economic activity.
This reflects that population growth remains robust at an estimated 2.6% in 2013-14.
Population growth has clearly slowed from a peak of 3.6% in 2012-13 and is projected to
ease further to 1.9% in 2014-15. However, should population growth be higher than
expected, there would be a corresponding increase in the demand for government services
and infrastructure.
Health Spending
Activity Based Funding
The key budget strategy for WA Health is to achieve convergence between the cost of
delivering public hospital services in the State’s health system and the national average
cost of hospital services by 2017-18.
There is currently a significant differential between the cost of delivering hospital services
in Western Australia and the national Projected Average Cost (PAC), as determined by
the Independent Hospital Pricing Authority, with Western Australia’s cost of delivering
services around 8% higher than the national average per weighted unit of activity.
Achieving convergence to the PAC will require substantial and sustained improvements
to the efficiency of public hospital service delivery over the forward estimates. Should
these efficiency improvements not be fully realised, there is a risk that public hospital cost
growth in Western Australia will outpace national price settings, requiring additional
State funding or adjustments to planned activity levels.
Reconfiguration of South Metropolitan Health Service
The commissioning of Fiona Stanley Hospital and associated reconfiguration of services
in the South Metropolitan Health Service (SMHS) represents a major change to clinical
service delivery within the SMHS. Upward pressure on activity-related costs could
eventuate over the forward estimates period from service capacity across reconfigured
sites that is in excess of approved service volumes. A further risk arises if the
reconfiguration of services does not deliver the intended efficiencies.
Operational service planning at each site is proceeding on the basis that activity and
workforce profiles at each SMHS hospital will be consistent with the strategy of
achieving convergence to the PAC by 2017-18.
45
2014-15 Government Mid-year Financial Projections Statement
Health Information and Communications Technology (ICT)
Current ICT investment in WA Health is focussed on establishing functionality across a
number of facilities including the Fiona Stanley and Perth Children’s Hospitals, replacing
the Pathwest laboratory information system and upgrading the operating system for
computers throughout the State’s health system.
Beyond the delivery of this investment, WA Health will be required to identify and
prioritise future ICT requirements, which are expected to be substantial. To inform future
investment decisions, including priorities and benefits realisation, WA Health is preparing
an overarching strategy for Health ICT.
Law and Order Spending
Daily Average Prisoner Population
Based on current daily average prisoner population projections, the number of prisoners
within correctional facilities in Western Australia is forecast to increase over the forward
estimates period. While additional funding of $15 million has been approved in this
Mid-year Review to address the increase in prisoner numbers for 2014-15, there is a risk
additional expenditure may be required from 2015-16 onwards.
The Department of Corrective Services is currently implementing its Population
Management Strategy to incorporate the recently completed Acacia Prison expansion as
well as continuing to progress its broader reform agenda. As both these strategies are still
being developed, the impact on prisoner numbers beyond 2014-15 will be considered as
part of the 2015-16 Budget.
Criminal Law Amendment (Home Burglary and Other Offences) Bill 2014
The Criminal Law Amendment (Home Burglary and Other Offences) Bill 2014 was
introduced to Parliament on 12 March 2014. There is a risk that enactment of the
proposed legislation will result in an increase to the State’s custodial population, due to
increased sentence lengths for applicable adult and juvenile offenders (although the
legislation may also provide an offsetting deterrent effect).
The proposed legislation may also increase workload demands on prosecutors, potentially
leading to increased costs for Western Australia Police and the Office of the Director of
Public Prosecutions, with flow-on effects to the court system. However, the potential
financial impact remains uncertain at this time and has therefore not been reflected in this
Mid-year Review.
46
Financial Projections
Public Transport Patronage
Based on preliminary modelling by Treasury, there is a risk that public transport
patronage forecasts may be revised down from those assumed in the 2014-15 Budget,
following a 1.4% decline in patronage on public transport in 2013-14. This in turn would
require an increase in the Public Transport Authority’s operating subsidy. Based on the
preliminary modelling results, this could be in the order of $30 million across the forward
estimates period, but this will be confirmed as part of the 2015-16 Budget.
Essential and Municipal Services to Remote Communities
The Commonwealth made a $90 million payment to the State in October 2014 as a final
funding contribution to essential and municipal services to remote Aboriginal
communities in Western Australia. This payment was made on condition that the State
Government accepts full responsibility for funding these services from 1 July 2015. The
State is continuing to discuss this matter with the Commonwealth Government. If the
State becomes solely responsible for funding these services in perpetuity, there is a
significant (as yet unquantifiable) long-term liability on the State.
Government Trading Enterprises
Corporatised public corporations, also known as Government Trading
Enterprises (GTEs), are a significant revenue source for the general government sector
through income tax equivalent and dividend payments (representing $1.7 billion, or 6.3%,
of general government revenue in 2014-15). In addition, some GTEs receive operating
subsidies from the Consolidated Account ($1.9 billion, or 6.6%, of general government
expenses in 2014-15). GTEs also undertake a significant proportion of the State’s
infrastructure investment (around 55% in 2014-15), with any required borrowings
contributing to the State’s debt levels.
Projections for GTEs are made complex by a number of issues, including that important
aspects of some entities are subject to independent regulatory processes (such as the
Economic Regulation Authority’s (ERA’s) regulation of Western Power’s network tariff
pricing), Government determinations (customer tariffs), and changing market conditions
(cost and demand fluctuations).
In addition to these issues, other material risks to the operating outlook and Asset
Investment Program for GTEs include:
•
capital expenditure for Western Power – in its Further Final Decision on
Western Power’s Third Access Arrangement, the ERA determined an efficient level
of asset investment that is around $1.1 billion above the currently budgeted levels
over 2012-13 to 2016-17. The Government is continuing to assess the implications of
this difference in expenditure and its associated outcomes (including the impact on
network safety) through the annual budget process, alongside competing priorities
and affordability constraints; and
47
2014-15 Government Mid-year Financial Projections Statement
•
Alinta Energy submitted an application to the Minister for Energy on
24 October 2014, seeking access to the North West Interconnected System (NWIS).
The NWIS is the transmission and distribution network in the Pilbara region that is
owned and operated by Horizon Power. The acceptance of this application may have
a financial impact which is yet to be quantified.
Bunbury to Albany Gas Pipeline
An allocation has been made for the planning of a gas pipeline between Bunbury and
Albany, which is intended to be built in collaboration with the private sector.
The planning for the procurement of the pipeline is not yet final and therefore uncertainty
remains around the total cost. In addition, there is a risk that future revenue from the users
of the pipeline may not be sufficient for a private investor to recover its investment,
potentially resulting in the need for an ongoing public sector subsidy. These issues are
subject to a business case to be submitted to the Government.
Contingent Assets and Liabilities
Contingent assets are possible future assets that may arise from past events. The existence
of these assets will only be confirmed by the occurrence or non-occurrence of one or more
future events not wholly in the control of the State. Contingent assets usually consist of
the potential settlement of lawsuits or contractual claims.
Typically, contingent liabilities consist of guarantees, indemnities and sureties, as well as
legal and contractual claims. They constitute a potential risk to the financial projections
should they eventuate.
Contingent assets and liabilities were reported in the 2013-14 Annual Report on State
Finances (ARSF). Since the release of the ARSF, the State, through the Department of
Commerce, has extended the temporary arrangement with private insurers to underwrite
Home Indemnity Insurance (HII). The State wholly underwrites the provision of new HII
policies to provide cover on an emerging cost basis for the financial loss resulting from
the death, insolvency or disappearance of a builder or building group. This arrangement
was recently extended until 31 October 2016 to provide additional time to develop a
longer term market-based HII solution. The potential exposure under this arrangement has
yet to be quantified.
There have been no other material updates to the September 2014 disclosures in
the ARSF.
48
CHAPTER 2
Financial Strategy
HIGHLIGHTS
• The unprecedented $5 billion downward revision to the general government revenue
estimates since the 2014-15 Budget has resulted in a deterioration in performance
against the Government’s financial targets.
• This is particularly the case in the current (2014-15) and next (2015-16) financial
years, as the steep decline in iron ore prices since the 2014-15 Budget will not start
to be offset through the GST distribution system until 2016-17.
• The $3.8 billion package of revenue and savings measures implemented in this
Mid-year Review, and the continuing impact of previous rounds of corrective
measures, is expected to significantly improve performance against most financial
targets towards the end of the forward estimates period.
• Despite a forecast peak in 2015-16, the total non-financial public sector net debt to
revenue ratio is expected to remain well above the target limit of 55%.
The Government’s asset sales program has an important role to play in bringing this
ratio back towards the target limit.
Introduction
This chapter provides an assessment of the Mid-year Review financial projections against
the Government’s financial targets, as required by the Government Financial
Responsibility Act 2000.
The Government’s financial targets are to:
•
ensure that general government sector expense growth does not exceed revenue
growth;
•
maintain a cash surplus from operating activities for the general government sector of
at least 50% of infrastructure spend per year;
49
2014-15 Government Mid-year Financial Projections Statement
•
maintain the total non-financial public sector (TNPS) 1 net debt to revenue ratio at or
below 55%;
•
maintain a cash operating surplus for the TNPS of at least 5% of operating cash
receipts; and
•
provide a fair and efficient taxation system that is competitive with other Australian
States.
The following table summarises compliance with these targets. Performance against the
Government’s targets has deteriorated since the 2014-15 Budget, reflecting the substantial
downward revisions to general government revenue across the forward estimates period.
Table 1
20 1 4- 15 M ID- Y E AR R E VI EW – F IN AN C I AL T ARG ET CO M PLI AN C E
2013-14
2014-15
2015-16
2016-17
2017-18
Actual
Forecast
Forecast
Forecast
Forecast
Ensure expense growth does not exceed revenue growth
- Current estimate (revenue growth minus expense growth)
- 2014-15 Mid-year Review compliance
- 2014-15 Budget compliance
1.8
Yes
No
-7.3
No
Yes
1.5
Yes
No
4.4
Yes
Yes
3.4
Yes
Yes
Maintain a cash surplus from operating activities for the general
government sector of at least 50% of infrastructure spend
- Current estimate
- 2014-15 Mid-year Review compliance
- 2014-15 Budget compliance
52.7
Yes
No
5.0
No
No
4.8
No
Yes
64.1
Yes
Yes
103.5
Yes
Yes
Maintain TNPS net debt at or below 55% of revenue
- Current estimate
- 2014-15 Mid-year Review compliance
- 2014-15 Budget compliance
55.2
No
No
67.4
No
No
70.4
No
No
69.6
No
No
69.2
No
No
Maintain a TNPS cash operating surplus of at least 5% of
receipts
- Current estimate
- 2014-15 Mid-year Review compliance
- 2014-15 Budget compliance
7.5
Yes
Yes
2.1
No
Yes
3.7
No
Yes
6.2
Yes
Yes
7.5
Yes
Yes
Maintain the State's tax competitiveness
- 2014-15 Mid-year Review compliance
- 2014-15 Budget compliance
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
The remainder of this chapter outlines projected performance against these targets based
on the Mid-year Review projections detailed in Chapter 1: Financial Projections.
1
50
The TNPS is the consolidation of the general government sector (which includes agencies such as Education and WA Health
which are largely funded from central revenue collections such as taxes and royalties) and the public non-financial corporations
sector (agencies which offer non-financial goods and services, for which a significant portion of costs are recovered through user
charges, such as the ports, the Public Transport Authority and electricity and water utilities). Public financial corporations (such as
the Insurance Commission of Western Australia and the Western Australian Treasury Corporation) are excluded from the TNPS
because their operations have a distortionary impact on many financial ratios used to measure public sector performance.
The credit rating agencies focus on TNPS financial ratios in assessing the State’s finances.
Financial Strategy
Financial Targets
Ensure that general government sector expense growth does not exceed
revenue growth
This target is not expected to be met in 2014-15. However, expected performance against
this target over the forward estimates has improved since the 2014-15 Budget due to the
significant savings measures approved as part of this Mid-year Review.
RE V E NU E G R O W T H L E S S E X P EN S E G R O W T H
AN D O P ER AT ING B AL AN C E
G e ner a l G o v er nm ent S ec t or
15
Figure 1
(a)
$ Million
Percentage points
3,000
Forecast
10
2,000
5
1,000
0
0
-5
-1,000
-10
-2,000
Revenue growth less expense
growth (LHS)
Operating balance (RHS)
-15
-3,000
2001-02
2004-05
2007-08
2010-11
2013-14
2016-17
(a) Outcomes greater than zero represent compliance with the target.
Non-compliance with this target in 2014-15 reflects the dramatic deterioration in revenue
since budget. General government revenue is now expected to decline by 3.1% in
2014-15, compared with a 2.6% increase forecast at budget-time. This reflects a
$1.8 billion decline in royalty revenue (driven by dramatic falls in iron ore and oil prices
in particular) and a softer tax outlook (reflecting subdued economic conditions,
particularly in the labour and property markets).
At the same time, expenses are estimated to increase by 4.2% in 2014-15, up from the
2.6% forecast in the 2014-15 Budget. This higher rate of growth mainly reflects the ‘base’
impact of a $550 million lower than expected expense outcome for 2013-14, detailed in
the 2013-14 Annual Report on State Finances released on 23 September 2014. Relative to
the May 2014 Budget, general government sector expenses for 2014-15 are now expected
to be $125 million lower than forecast.
51
2014-15 Government Mid-year Financial Projections Statement
The Government has approved a four year package of new revenue and savings measures
since the 2014-15 Budget, worth a substantial $3.8 billion in response to the revenue
downturn. The impact of these measures starts to build rapidly from 2015-16, reflecting
the lead time to implement corrective action. As a result of these new measures,
this financial target is expected to be met in each year from 2015-16 to 2017-18.
More detailed discussion of general government revenue and expenses is available in
Chapter 1.
52
Financial Strategy
Maintain a cash surplus from operating activities for the general
government sector of at least 50% of infrastructure spend per year
The outlook for this target has deteriorated since budget-time, with the target not expected
to be met in either 2014-15 or 2015-16.
Performance against this target has been affected by a significant decline in general
government sector operating cash surpluses, which are forecast to decrease by around
$1 billion in both 2014-15 and 2015-16 relative to budget (infrastructure spending is
broadly unchanged over this period). The weaker operating outlook reflects the
dramatically lower revenue forecasts noted earlier. With less internally generated funds
from day-to-day (or operating) activities, additional general government sector
borrowings will be required to fund the sector’s infrastructure spending in these two
years.
This target is expected to be met from 2016-17, reflecting the positive impact of revenue
and savings measures on the general government operating position, along with a
projected increase in GST revenue due to the lagged response of the State’s GST grant
share to the significant downward revision in royalty revenue in 2014-15.
Figure 2
C AS H O P ER AT ING S UR PL U S AS A S H AR E O F
INF R AST RU CT UR E S P EN DI NG
G e ner a l G o v er nm ent S ec t or
%
300
2014-15 Mid-year Review
Forecast
2014-15 Budget
250
200
150
100
50% target
50
0
2001-02
2004-05
2007-08
2010-11
2013-14
2016-17
53
2014-15 Government Mid-year Financial Projections Statement
Maintain TNPS net debt to revenue ratio at or below 55%
Consistent with budget-time expectations, this target is not expected to be met in any year
of the forward estimates period.
Compared to the 2014-15 Budget forecasts, the TNPS net debt to revenue ratio has been
revised up significantly in all years of the forward estimates (see following figure).
This mainly reflects the substantial $5 billion downward revision to the general
government revenue estimates discussed earlier, as well as substantial downward
revisions to revenue for the public non-financial corporations sector, primarily due to
lower precious metal prices reducing Gold Corporation revenue (by $720 million in
2014-15, growing to a forecast $1.9 billion by 2017-18).
Figure 3
NET D EBT AS A S H ARE O F R E V E NU E
T ota l N on- Fi n a nc i a l P ub l ic S ec tor
%
80
2014-15 Budget
70
55% target
Forecast
2014-15 Mid-year Review revisions
60
50
40
30
20
10
0
2001-02
2004-05
2007-08
2010-11
2013-14
2016-17
The Government has committed to further measures to help ensure the State’s debt levels
remain sustainable and affordable. This includes a structured and coordinated process of
asset sales (announced in August 2014) and targeted agency expenditure reviews as part
of the 2015-16 Budget. The proceeds from asset sales (which will not be reflected in the
financial projections until sales are finalised) will be used to retire debt 2.
2
54
Based on these Mid-year Review projections, TNPS net debt levels need to be reduced by around $7 billion by the end of the
forward estimates period (through a combination of asset sales and other corrective measures) to bring the TNPS net debt to
revenue ratio down to the 55% target limit.
Financial Strategy
Maintain a cash operating surplus for the TNPS of at least 5% of operating
cash receipts
This target is not expected to be met until 2016-17.
This financial target reflects the extent to which the TNPS can finance its operating costs
and service delivery from recurrent receipts. A high cash operating balance indicates that
the public sector has self-financing capacity to fund infrastructure investment.
The significant downward revision to the State’s revenue outlook (discussed in detail in
Chapter 1) is reflected in expected operating outcomes for the TNPS, and has resulted in
partial compliance with this target over the forward estimates period.
Figure 4
C AS H O P ER AT ING S UR PL U S AS A S H AR E O F O P E R AT I NG R EC EI PT S
T ota l N on- Fi n a nc i a l P ub l ic S ec tor
%
18
2014-15 Mid-year Review
2014-15 Budget
Forecast
16
14
12
10
5% target
8
6
4
2
0
2001-02
2004-05
2007-08
2010-11
2013-14
2016-17
55
2014-15 Government Mid-year Financial Projections Statement
Provide a fair and efficient tax system that is competitive with other States
This target is expected to be met in 2014-15 and each year of the forward estimates
period, even with the tax policy changes outlined in Chapter 1.
The competitiveness of Western Australia’s tax system can be assessed against a variety
of measures, including:
•
tax revenue as a share of Gross State Product (GSP);
•
tax revenue on a per capita basis; and
•
tax ‘effort’ calculated from Commonwealth Grants Commission (CGC) data.
Figure 5
T AX CO M PET IT I V EN E S S
V ar io us M e as ur es
TAX PER CAPITA
2014-15 (est)
TAX AS A SHARE OF GSP
2014-15 (est)
5
Per cent
4,000
$
TAX EFFORT
2012-13(a)
120
3,500
Index
100
4
3,000
80
2,500
3
60
2,000
2
1,500
40
1,000
1
20
500
0
0
WA
(a)
Other States
0
WA
Other States
WA
Other States
Source: CGC. Tax effort refers to the level of tax actually raised in a State, divided by a State’s ‘standardised’ tax revenue
(i.e. the level of tax revenue that the CGC estimates the State would have raised had it applied national average State tax
rates). 2012-13 is the latest year for which data is available.
Tax as a proportion of the economy (i.e. GSP) is an internationally recognised measure of
tax competitiveness, which, unlike tax per capita, accounts for differences in the size and
composition of the economic and revenue base in each jurisdiction. According to this
measure, the tax burden in Western Australia is expected to be lower than the average of
other States in 2014-15 (3.7% compared to an average of 4.6% estimated for other States).
In contrast, per capita tax revenue in Western Australia is expected to exceed the average
of other States in 2014-15. This mainly reflects the relative strength of the State’s
economic base (and hence its revenue raising capacity), rather than higher average tax
rates.
56
Financial Strategy
In this regard, and based on the latest available data compiled by the CGC,
Western Australia’s tax ‘effort’ (i.e. its average tax rate) was 4.6% lower than the national
average in 2012-13.
This Mid-year Review includes a $418 million increase in forecast payroll tax collections
over the period 2015-16 to 2017-18, as a result of the Government’s decision to adjust
payroll tax scales from 1 July 2015 (see Chapter 1). Additional revenue from this measure
is not expected to change the State’s performance against this target.
57
2014-15 Government Mid-year Financial Projections Statement
58
CHAPTER 3
The Western Australian
Economy
HIGHLIGHTS
•
The Western Australian economy, as measured by Gross State Product (GSP),
grew by 5.5% in 2013-14, more than double national growth of 2.5% and well
above historical growth of 4.6%. Growth was underpinned by a strong lift in
exports as iron ore projects ramped up production more rapidly than anticipated.
•
Exports are expected to increase strongly across the budget period driven by
increased production from major iron ore and liquefied natural gas (LNG) projects.
This is expected to drive a gradual lift in GSP growth from 2.25% in 2014-15
(revised down from 2.75% at budget-time) to 5% by 2017-18. Western Australia
now accounts for around 50% of national merchandise exports.
•
However, abstracting from exports, domestic economic activity has moderated
more sharply than expected at budget-time, with State Final Demand (SFD) falling
by 2.1% in 2013-14, the largest annual fall since 1990-91. This was primarily due
to a large decline of 11.5% in business investment coupled with weak growth in
household consumption.
•
Business investment is expected to decline by a further 9.5% in 2014-15,
and household consumption is expected to remain soft, leading to a further
contraction in the domestic economy as measured by SFD (-1%).
•
The weaker domestic economy is also evident in softer labour market conditions
and slower population growth. Wage Price Index growth of 2.8% in 2013-14 is the
weakest annual wage growth since 1999-2000.
•
Further weakness in commodity prices, particularly for iron ore, remains a
significant downside risk for the State’s economy (and finances).
59
2014-15 Government Mid-year Financial Projections Statement
Introduction
The Western Australian economy is continuing its transition from investment-driven to
export-led growth. While economic growth, as measured by GSP, remained robust in
2013-14, growth is expected to moderate in the near term.
The State’s economy grew by a stronger than expected 5.5% in 2013-14, due to a strong
lift in net exports more than offsetting a decline in domestic economic activity. However,
domestic activity, as measured by SFD, declined by 2.1% in 2013-14, compared to 0.25%
growth forecast at budget-time. This is the largest annual decline in SFD since 1990-91.
In the short-term, household consumption and business investment are expected to
continue to be weaker than projected at budget, leading to an expected 1% contraction in
the domestic economy in 2014-15 (compared to nil growth forecast in the
2014-15 Budget). Growth in SFD is then forecast to gradually lift to 2% by 2017-18 as
growth in household consumption increases and the rate of decline in business investment
moderates.
The outlook for business investment has weakened with only one new major resource
project announced since budget and limited new expenditure on existing projects as major
resource companies continue to focus on cost cutting and efficiency. Recent declines in
commodity prices (particularly for iron ore) and continued weakness in business
confidence have also weighed on the outlook for major project investment. The recent
decline in commodity prices and associated decline in the terms of trade is expected to
flow through to corporate incomes and household purchasing power. Both of these factors
are adversely impacting the State’s own source revenue (taxation and royalty income).
Household consumption has been weaker than anticipated with growth revised down in
2014-15 and 2015-16 in line with a weaker outlook for wages and slightly slower
population growth, which have both moderated from record rates in recent years.
The immediate outlook for dwelling investment is stronger than forecast at budget, with
growth revised up from 7% to 10% in 2014-15 and from 3.75% to 4% in 2015-16.
This reflects continued strength in leading indicators of housing activity such as building
approvals and housing finance commitments. However, dwelling investment comprises a
small share of the State’s economy (4%) compared to business investment (27%) and
household consumption (37%).
Reflecting the weaker domestic economy, GSP is now expected to increase by 2.25% in
both 2014-15 and 2015-16, down from 2.75% and 3% (respectively) forecast at budget.
Export growth in the last two forward estimate years is expected to drive a progressive lift
in GSP growth to 5% by 2017-18.
60
The Western Australian Economy
Figure 1
EC O NO M IC G RO W T H
G r os s S t at e Pr o duc t a nd G r os s Dom es t ic Pr od uc t
%
8
7
Western Australia
Long-run average
Western Australia
Australia
Forecast
6
5
4
3
2
1
0
1996-97
1999-00
2002-03
2005-06
2008-09
2011-12
2014-15
2017-18
Source: Australian Bureau of Statistics (ABS) Catalogue 5220.0, Department of Treasury and Commonwealth 2014-15 Budget.
Employment growth has been revised up to 2.25% (from 1.5%) and the unemployment
rate has been revised down to 5.25% (from 5.5%) in 2014-15. This improvement
primarily reflects a lift in part-time employment. Notwithstanding this, generally softer
labour market conditions have been reflected in very low wage growth, leading to a
downward revision from 3.25% to 2.75% in 2014-15. This follows growth of 2.8% in the
Wage Price Index in 2013-14, which reflects a decline in real wages and the weakest
growth in annual terms since 1999-2000.
The State’s population is estimated to have grown by 2.6% (or around 65,600 people) in
2013-14, with around 42,000 or 64% of these people moving to Western Australia from
overseas. While the State’s population growth remains strong compared to national rates,
it is well below the record rate of 3.6% in 2012-13, due to a significant fall in net overseas
migration. Population growth is expected to slow further to 1.9% in 2014-15 as migration
to Western Australia continues to moderate. Population growth is then expected to pick
up gradually across the forward estimates to reach 2.2% by 2017-18, broadly in line with
long-run trend growth.
61
2014-15 Government Mid-year Financial Projections Statement
Table 1
CO M PO N ENT S O F G R O S S ST AT E PRO DU C T
W es ter n A us tr a l ia
2013-14
Demand and Output (a)
Household consumption
Actual
%
2014-15
Budget
Estimate
%
2014-15
Mid-year
Revision
%
2015-16
Forward
Estimate
%
2016-17
Forward
Estimate
%
2017-18
Forward
Estimate
%
3.75
2.0
3.25
1.75
2.75
3.5
Dwelling investment
11.6
7.0
10.0
4.0
2.0
1.5
Business investment
-11.5
-8.5
-9.5
-7.0
-5.0
-2.5
Government consumption
3.2
4.0
3.5
3.5
3.75
3.75
Government investment
1.9
-0.75
-1.0
-0.5
1.0
2.5
State Final Demand (SFD)
-2.1
0.0
-1.0
0.25
1.25
2.0
Merchandise exports
6.7
4.5
5.0
4.0
6.5
8.5
Merchandise imports
3.4
-7.75
-8.0
-3.0
-0.75
0.75
Net exports (b)
9.6
8.25
10.5
6.5
9.0
10.5
Gross State Product (GSP) (c)
5.5
2.75
2.25
2.25
3.75
5.0
Population (d)
2.6
2.1
1.9
2.0
2.1
2.2
Employment
1.7
1.5
2.25
1.75
1.75
2.0
Unemployment rate (e)
4.8
5.5
5.25
5.25
5.0
4.75
68.2
68.2
68.8
68.7
68.3
68.1
Consumer Price Index (CPI)
3.0
2.75
2.25
2.5
2.5
2.5
Wage Price Index (WPI)
2.8
3.25
2.75
3.25
3.5
3.75
SFD deflator
3.1
2.7
3.7
2.9
2.4
2.4
GSP deflator
3.3
1.4
-6.7
2.9
2.9
2.9
Established house price index
6.9
2.5
2.5
1.4
0.8
1.5
91.8
90.6
87.2
83.3
81.8
80.8
122.8
122.7
75.0
77.3
79.6
81.9
109.8
104.1
85.4
80.6
83.6
85.7
Labour market
Participation rate (e)
Prices
Other key parameters
Exchange rate $US/$A (cents)
‘Headline’ iron ore price ($US/tonne)
cost and freight inclusive (CFR)
Crude oil price ($US/barrel)
62
(a)
Based on 2013-14 State Accounts data, released on 21 November 2014 (ABS Catalogue 5220.0) updated for the
September quarter National Accounts (ABS Catalogue 5206.0).
(b)
Net exports refer to international trade in both goods and services.
(c)
Forecasts for ownership transfer costs, international trade in services, balancing item components, and the statistical
discrepancy of the State Accounts are not separately reported.
(d)
Estimated actual for 2013-14.
(e)
Data expressed in terms of the annual average during the financial year.
The Western Australian Economy
Commodity Prices
Concurrent with the transition in the Western Australian economy from investment-driven
to export-led growth, commodity export prices have fallen significantly in the first half of
2014-15. In particular, the iron ore price is over 40% lower than at the time of finalising
the 2014-15 Budget estimates in April 2014. The oil price has also fallen by around 35%
over the same period. Declines for both commodities reflect the combined effect of
higher than anticipated supply coinciding with weaker than expected demand (see the Iron
Ore Price feature box in Chapter 1: Financial Projections for further information on iron
ore price trends).
As a result, the Western Australian commodity price index (see figure below) has fallen
sharply from record levels in the September quarter 2011. Lower commodity export
prices have a direct effect on incomes as they represent a decline in the terms of trade
(the ratio of export prices to import prices) and the purchasing power of households 1.
CO M M O DIT Y PR IC E I ND E X
W es ter n A us tr a l ia
Figure 2
(a)
2012-13 = 100
140
$US
$A
120
100
80
60
40
2014-15 Budget cut-off
20
0
Dec-96
(b)
Dec-98
Dec-00
Dec-02
Dec-04
Dec-06
Dec-08
Dec-10
(a)
A weighted index of prices for iron ore, gold, oil, LNG, copper, nickel, zinc and alumina.
(b)
The index values for the September and December quarters of 2014 are estimates.
Dec-12
Dec-14
Source: Department of Treasury.
Moreover, the decline in the prices of exports is weighing on the outlook for new
investment by resource firms, which is flowing through to softer labour market conditions
and weaker wages growth compared to recent years (see the Business Sector and Labour
Market sections for more information).
1
When export prices fall relative to import prices, a smaller volume of goods and services (e.g. motor vehicles) can be imported in
exchange for a given volume of exports (e.g. iron ore).
63
2014-15 Government Mid-year Financial Projections Statement
International Conditions
Global economic conditions have weakened since budget due to more uncertain prospects
for economic activity in Europe and Japan, and slowing growth in China.
Reflecting this, in its October 2014 World Economic Outlook (WEO), the International
Monetary Fund (IMF) revised down estimates for global growth from 3.4% to 3.3% in
2014. The IMF’s assessment is that global growth remains uneven and that downside
risks have increased. Nonetheless, the IMF expects global economic conditions to
improve in 2015, forecasting growth of 3.8%.
The IMF is projecting economic growth in China to continue to moderate, easing to 7.4%
in 2014 and 7.1% in 2015. This reflects both the transition towards a more sustainable
growth path as well as a slowdown in residential investment. Given the nature of
Western Australia’s exports to China, the outlook for the State’s resource-driven economy
relies heavily on the continued strength of the Chinese economy and its demand for our
raw materials.
China’s property sector has continued to show signs of weakness since budget, with
residential property construction declining and property prices continuing to fall across
China’s 70 largest cities. The property construction sector is the largest consumer of steel
in China. As such, slowing property construction will reduce demand for steel, and hence
iron ore, in the short to medium-term.
Notwithstanding this, it is expected that growth in the Chinese economy will continue to
support demand for iron ore, albeit at a slower rate than recent years. The Chinese
Government has set a goal of a 60% urbanisation rate by 2020, up from around 54% in
2013, which is likely to help maintain construction demand over the longer term. At the
same time, rising incomes are likely to increase demand for steel-intensive goods, with
real per capita Gross Domestic Product (GDP) in China projected to increase by almost
44% between 2013 and 2019 2.
The US economy rebounded strongly in the June and September quarters of 2014,
growing by an annualised 4.6% and 3.9% respectively. At the same time,
the unemployment rate continues to fall and the housing market is showing signs of
recovery. Reflecting increased optimism in the strength of the US economic recovery, the
US Federal Reserve announced an exit from its recent quantitative easing 3 program in
October 2014, effectively putting an end to its monthly purchasing of assets. According to
the latest WEO, the IMF anticipates that the Federal Reserve will begin raising short-term
interest rates by mid-2015.
The Federal Reserve has indicated that the timing of any increase in the policy rate is
dependent on inflation, which is currently running below the Federal Reserve’s target rate
of 2%, and unemployment trends.
2
3
64
Sourced from the IMF World Economic Outlook Database, October 2014.
Quantitative easing is an unconventional monetary policy tool used by central banks to stimulate the economy when short-term
interest rates have reached or are close to reaching zero. Quantitative easing involves the purchasing of assets of longer maturity
than short-term government bonds, thereby lowering longer-term interest rates while simultaneously increasing the money supply.
The Western Australian Economy
The economic recovery in the euro area has slowed recently with growth prospects
remaining uneven among member countries. The IMF is now forecasting the euro area to
grow by only 0.8% in 2014 (revised down from 1.1%) and by 1.3% in 2015 (revised
down from 1.5%). Economic growth appears to be picking up in a number of countries
where Europe’s sovereign debt crisis was most severe (including Spain, Portugal and
Ireland). However, growth in some of the larger euro area economies has been weaker
recently, in part due to a slowdown in a number of key trading partners (most notably
China).
Inflation continues to track well below the European Central Bank’s (ECB) target rate of
2% over the medium-term, while unemployment remains at historically high levels.
The ECB reaffirmed its commitment to use additional stimulus measures if and when it
becomes necessary in order to address the risk of deflation. Notwithstanding this, any
recovery in the euro area is likely to be gradual with economic growth over the remainder
of 2014 and into 2015 expected to be subdued and uneven across member countries.
The outlook for growth in Japan remains weak, with the impact from the April 2014
consumption tax increase continuing to be felt throughout the economy. As a result, the
IMF cut its growth forecast for Japan to just 0.9% in 2014 (down from 1.6%) and 0.8% in
2015 (down from 1.1%). The downward revision reflects Japan’s second consecutive
GDP contraction of 0.5% in the September quarter and 1.9% in the June quarter,
indicating that the economy has slipped back into recession.
Overall, average growth for Western Australia’s key export markets is expected to remain
reasonably robust, at 5.3% in 2014 and 5.2% in 2015 (see figure below), following
growth of 5.5% in 2013.
65
2014-15 Government Mid-year Financial Projections Statement
W E ST E RN AU ST R AL I A’ S M AJ O R E X PO RT M ARK ET S
A nn u a l G r o wt h
9
(a)
Figure 3
%
Trading Partners (Calendar Years)
8
Forecast
Western Australia (Financial Years)
7
6
5
4
3
2
1
0
-1
1997
(a)
1999
2001
2003
2005
2007
2009
2011
2013
2015
Includes China, Japan, South Korea, India and nine other countries. Together, these account for over 90% of the State’s
exports in the year to September 2014.
Source: IMF and Department of Treasury.
Domestic Economic Activity
Household Sector
Private Consumption
Growth in household consumption moderated to 2% in 2013-14, well below the 3%
growth forecast at budget. This was the lowest rate recorded since 2008-09 and brings
growth in Western Australia more in line with the national rate of 2.2% in 2013-14.
Weaker than expected household consumption has led to a downward revision to growth
in both 2014-15 (from 3.25% to 1.75%) and 2015-16 (from 3.5% to 2.75%). This is
consistent with a softer outlook for wage and population growth, which have both been
revised down since budget. In addition, discretionary spending 4 has continued to soften
and failed to contribute to household consumption growth in 2013-14, for the first time
since 2008-09.
4
66
Discretionary items include: cigarettes and tobacco; alcoholic beverages; clothing and footwear; furnishings and household
equipment; purchase of vehicles; communications; recreation and culture; and hotels, cafes and restaurants. Non-discretionary
items include: food; rent and other dwelling services; electricity, gas and other fuel; health; operation of vehicles; transport
services; and education services. ‘Other’ items include: insurance and other financial services; other goods and services; and net
expenditure interstate.
The Western Australian Economy
Subdued labour market conditions saw real wages decline in 2013-14, which has
contributed to weak consumer sentiment in Western Australia. The Curtin Business
School-CCIWA Consumer Confidence Index has been in negative territory 5 for three
consecutive quarters to September 2014. This is expected to constrain spending through
2014-15.
Recent movements in leading indicators are also consistent with a moderation in
household consumption, with annual average growth in real retail trade contracting by
0.4% in the September quarter of 2014. This compares to annual average growth of 4.3%
in the September quarter 2013.
The outlook for household consumption over the remainder of the forecast period is
broadly consistent with that at budget, with growth in spending projected to slowly
increase over the budget period as wage growth strengthens and the unemployment rate
falls.
Figure 4
HO U S E HO LD C O N S U M PT IO N AN D R E AL W AG E S
A nn u a l A v er a g e G r o wt h, W es ter n Aus tr al i a
%
%
10
Household Consumption (LHS)
9
4
Real Wages (RHS)
3
8
2
7
6
1
5
0
4
3
-1
2
-2
1
0
2000
-3
2002
2004
2006
2008
2010
2012
2014
Source: ABS Catalogue 5206.0, 6401.0 and 6345.0.
Established Housing Market
Conditions in the established housing market remained robust in 2013-14 with established
house prices increasing by 6.9% over the year (compared to the 6.6% budget estimate).
5
The index is considered to be in ‘negative territory’ when the value falls below the neutral value of 100 and means that the number
of pessimists outweighs the number of optimists.
67
2014-15 Government Mid-year Financial Projections Statement
House price growth is expected to be more subdued in 2014-15, reflecting the combined
impact of softer population growth on demand as well as high levels of building activity
lifting supply.
Recent trends are consistent with the price outlook. In particular, overseas arrivals and
departures data point to a moderation in net overseas migration while transaction volumes
(a measure of housing demand) have softened.
On the supply side, property listings have risen to their highest level since mid-2012.
The average number of selling days for residential properties has also trended up since
December 2013, but remains well below 2011-12 levels. The rental vacancy rate is well
above the generally accepted equilibrium rate of 3%, which together with a high level of
sales listings is indicative of a high stock level in the overall housing market. In addition,
the housing stock is expected to expand as growth in new dwelling construction continues
to be strong and the number of dwellings under construction remains high (see Dwelling
Investment section).
These trends in demand and supply are in line with an expected decline in transfer duty in
2014-15 relative to 2013-14 (see Chapter 1: Financial Projections).
Relatively subdued house price growth is forecast across the entire forward estimates
period (unchanged from budget-time). This reflects the continued moderation in demand
as population growth stabilises at a lower rate, balanced by ample supply following
significant additions to the housing stock.
Dwelling Investment
Dwelling investment 6 in Western Australia increased by a strong 11.6% in 2013-14, with
strong growth in the construction of new dwellings partially offset by a decline in
dwelling alterations and additions. This strength in dwelling investment follows two years
of contraction in 2011-12 and 2012-13.
Continued strength in leading indicators of dwelling activity suggest that growth in
dwelling investment will be stronger for a longer period than anticipated at budget.
In particular, the number of dwellings under construction reached 22,524 in the June
quarter of 2014, the second highest number recorded since 2006-07, and 23.3% higher
than a year earlier. These high levels reflect a record number of dwelling commencements
(29,034) in 2013-14.
Building activity is expected to be supported by a high number of homes that have been
contracted, but where construction has yet to commence. Building approvals have also
risen strongly to be 16.8% higher in annual average terms in October 2014, pointing to
high levels of activity in 2014-15.
6
68
Dwelling investment consists of the construction of new dwellings (usually around 60% of overall dwelling investment) and
residential alterations and additions (the remaining 40%).
The Western Australian Economy
On this basis, dwelling investment is forecast to lift by 10% in 2014-15 (up from 7% at
budget) and by 4% in 2015-16. More moderate growth, averaging around
1.75% per annum, is projected over 2016-17 and 2017-18, reflecting lower rates of
population growth and high levels of additions to the housing stock expected in 2014-15.
Over the forward estimates, it is expected that lower growth in dwelling investment will
be sufficient to meet more subdued housing demand.
Figure 5
DW E LLI NG CO N ST RU CT IO N
W es ter n A us tr a l ia
30,000
Under Construction
Completions (rolling annual average)
25,000
Commencements (rolling annual average)
20,000
15,000
10,000
5,000
0
Jun-94 Jun-96 Jun-98 Jun-00 Jun-02 Jun-04 Jun-06 Jun-08 Jun-10 Jun-12 Jun-14
Source: ABS Catalogue 8752.0.
Business Sector
Business investment fell by a larger-than-expected 11.5% in 2013-14. The decline follows
three years of very strong growth, including record growth of 46.3% in 2011-12.
Apart from a small decline in 2009-10, business investment has been steadily rising since
around the start of the century. Over this period, investment in Western Australia
increased by more than five-fold, from $13.3 billion in 2001-02 to a record peak of
$76.5 billion in 2012-13.
While recent growth was driven by the development of large iron ore and LNG projects,
the majority of these projects have now either been completed or are expected to finish
construction within the forward estimates period. As a result, business investment in
Western Australia is forecast to decline in each year across the budget period.
This profile is similar to that presented in the 2014-15 Budget. However, forecast growth
has been revised down in all years reflecting a weaker outlook for future investment in
both the resources and non-resources sectors of the economy.
69
2014-15 Government Mid-year Financial Projections Statement
With the exception of the Persephone gas project ($1.2 billion), no new major resource
projects have been announced since budget and companies have shifted their focus from
expanding to cutting costs and improving efficiency. Recent declines in commodity prices
(particularly for iron ore) and continued weakness in business confidence have also
weighed on the outlook for major project investment.
In addition, investment other than in major resource projects, which was previously
forecast to grow strongly across the budget period, is now expected to moderate at the
same time as major resources investment declines.
Overall, business investment is expected to fall by 9.5% in 2014-15 and by 7% in
2015-16. The declines in investment are expected to taper to -5% in 2016-17 and -2.5% in
2017-18 as investment gradually moderates from record levels.
Despite the larger forecast declines, business investment is still expected to remain at
historically high levels across the forward estimates and well above the $50 billion level
of investment recorded in 2010-11 (see following figure).
Figure 6
BU SI N E S S IN V E ST M ENT IN W E ST ER N AU S T R AL I A
A nn u a l Le v e ls , C h a in V ol um e T er m s
90
$ Billion
80
70
Forecast
Actuals
Mid-year Review
2014-15 Budget
60
50
40
30
20
10
0
1989-90
1993-94
1997-98
2001-02
2005-06
2009-10
Source: ABS Catalogue 5206.0 and Department of Treasury.
Note: Data are adjusted for the 1997-98 sale of the Dampier to Bunbury Natural Gas Pipeline.
70
2013-14
2017-18
The Western Australian Economy
Government Sector
Public consumption 7 in Western Australia increased by 3.2% in 2013-14, broadly in line
with the budget forecast of 3.5%. Growth in government consumption has been revised
down across the budget period consistent with the continued focus on cost cutting and
efficiency at all levels of government. Public consumption is expected to increase by
3.5% in 2014-15 and 2015-16 (down from 4% and 4.25% respectively at budget) before
lifting to 3.75% in 2016-17 and 2017-18 (both down from 4.25%). This brings forecast
growth in government consumption more in line with the decade average growth of
3.4% per annum and is consistent with State Government expense growth projections
from Chapter 1: Financial Projections.
Public investment increased by 1.9% in 2013-14, lower than the 3.75% forecast at budget.
Public investment is expected to fall in 2014-15 (-1%) and 2015-16 (-0.5%) before
gradually lifting to reach 2.5% by 2017-18, consistent with the Asset Investment Program
projections provided in Chapter 1: Financial Projections.
International Trade
Exports
Merchandise exports from Western Australia have been growing broadly in line with
budget expectations, with growth of 6.7% recorded for 2013-14 (compared to 7% forecast
at budget). This was driven by a significant increase in iron ore exports, which was higher
than expected at budget. However, the ramp up in iron ore production was offset by lower
than anticipated gold exports (due to lower than projected re-exports 8) and oil exports
(due to a faster than expected decline in mature oil fields).
Higher volumes of iron ore exports are expected to continue into 2014-15, as projected
expansions are completed, and efficiency gains are realised from existing infrastructure.
Similar to 2013-14, these gains are expected to be slightly offset by a downward revision
to both gold and oil exports. The net impact is an upward revision to merchandise export
growth in 2014-15 to 5% (from 4.5% at budget).
Forecast growth in merchandise exports has been revised down in 2015-16 (from 5.5% to
4%) and 2016-17 (from 7.25% to 6.5%) since budget, largely reflecting that some of this
growth was brought forward through the faster than expected commissioning of iron ore
projects in 2013-14 and 2014-15.
The forecast for growth in merchandise exports in 2017-18 remains unchanged at 8.5%
with the strong increase expected to be driven by production from the major LNG projects
(Gorgon, Wheatstone and Prelude), which are currently under construction. Iron ore
exports are expected to be 170 million tonnes (or 6%) higher over the period 2014-15 to
2017-18 than forecast at budget.
7
8
Public consumption and investment includes spending by the Commonwealth, State and local governments.
Gold re-exports refers to gold imported by the Gold Corporation which is processed and then re-exported.
71
2014-15 Government Mid-year Financial Projections Statement
Figure 7
M ERCH AN D I S E EX P O RT S
W es ter n A us tr a l ia , C h a in Vo l um e
200
$ Billion
Iron Ore
LNG
Other
Forecast
150
100
50
0
2003-04
2005-06
2007-08
2009-10
2011-12
2013-14
2015-16
2017-18
Source: ABS Catalogue 5368.0 and Department of Treasury.
Imports
Merchandise imports increased by 3.4% in 2013-14, which was significantly stronger than
the 5.5% decline forecast at budget. This variance is likely due to the way in which the
Australian Bureau of Statistics (ABS) treats imports of large capital items. Many of these
goods, particularly those related to the offshore oil and gas industry, are included in the
‘balancing item’ 9, rather than in merchandise imports due to their confidential nature 10.
The forecast growth in merchandise imports is based on the assumption that imports will
move in line with changes in business investment and household spending over the budget
period, consistent with historical trends. As a result, forecast growth in merchandise
imports has been revised in all years, due to a more subdued outlook for household
consumption and business investment since budget. This is expected to result in weaker
demand for consumer and capital goods, which will flow into fewer than anticipated
imports. Merchandise imports are expected to increase by the end of the budget period, as
the expected pick up in household consumption growth starts to offset the more moderate
declines in business investment.
9
10
72
The balancing item is the residual of GSP less SFD less international trade in exports of goods and services, plus international
trade in imports of goods and services. The balancing item comprises changes in inventories, total net interstate trade as well as
other miscellaneous items such as the balancing item discrepancy and adjustments for balance of payments trade.
In recent years, there has been a large amount of project investment in the State’s offshore oil and gas sector. As imports of capital
goods required for these projects are recorded by the ABS in the ‘balancing item’, total merchandise imports over this period have
been understated and have not closely tracked trends in business investment. The categorisation of these items as imports or as
part of the ‘balancing item’ does not impact on GSP outcomes, because in either case the items are recorded as detracting from
GSP.
The Western Australian Economy
Labour Market
Employment
Employment in Western Australia grew by a subdued 1.7% in 2013-14, in line with a
marked slowdown in domestic economic activity. However, annual average growth has
since strengthened to 2.3% in October 2014, underpinned by a strong increase of 5.5% in
part-time employment (see figure below). As a result, forecast employment growth has
been revised up from 1.5% to 2.25% in 2014-15.
By comparison, growth in full-time employment has remained weak, up only 1% over the
year to October 2014, indicating that underlying labour market conditions remain soft.
Figure 8
EM PLO Y M ENT G RO W T H
W es ter n A us tr a l ia , S e as o n a ll y A dj us te d
P er c e n ta g e P o in t Co n t r i bu t io n t o A nn u a l A v e r ag e G r o wth
%
7
Part-time
Full-time
Total
6
5
4
3
2
1
0
-1
-2
-3
Oct-04
Oct-05
Oct-06
Oct-07
Oct-08
Oct-09
Oct-10
Oct-11
Oct-12
Oct-13
Oct-14
Source: ABS Catalogue 6202.0.
Leading indicators of labour demand (such as internet job vacancies) have recently shown
tentative signs of recovery but improvement in these indicators are modest by recent
standards. Annual growth in hours worked has recovered after contracting over 2013, but
remains below its decade average rate.
Employment growth over the forward estimate years remains unchanged from budget,
with growth expected to moderate to 1.75% in 2015-16 and 2016-17 before lifting to 2%
by 2017-18. Despite the upward revision in 2014-15, employment growth is expected to
be modest relative to the previous decade, as domestic economic conditions remain
subdued and resource projects continue to transition to the less labour-intensive
production phase.
73
2014-15 Government Mid-year Financial Projections Statement
Unemployment
Western Australia’s unemployment rate averaged 4.8% over 2013-14 and has risen to an
average of 5% in the four months to October 2014. Despite this, Western Australia’s
unemployment rate remains the lowest of the Australian States and is well below the
national rate, which has averaged 6.2% in the four months to October.
The unemployment rate is expected to pick-up over the remainder of the year to average
5.25% over 2014-15, as labour supply continues to outweigh demand, reflecting weak
conditions in the domestic economy. This rate is lower than the 5.5% unemployment rate
projected at budget, mirroring the upward revision to employment growth in 2014-15.
The forecasts over the forward estimate years are in line with budget, with the
unemployment rate expected to fall to 4.75% by 2017-18 as domestic economic activity
gradually improves.
The participation rate forecasts have been revised up relative to budget, driven by higher
employment growth in 2014-15. The participation rate is now expected to average 68.8%
in 2014-15 before gradually moderating to 68.1% by 2017-18.
Population
Western Australia’s population increased by 3% in annual average terms in the
March quarter of 2014 (the most recent available data), down from record growth of 3.6%
in 2012-13. Growth remains above the average for the past decade of 2.5% per annum.
The slowing growth is in large part due to a decline in net overseas migration, and
particularly migration of skilled workers.
Western Australia’s population growth is estimated to have eased further to 2.6% in
2013-14 as forecast at budget. Forecast population growth has been revised down slightly
to 1.9% in 2014-15 and 2% in 2015-16 (both down from 2.1% at budget), with net
interstate migration anticipated to be softer than assumed in the 2014-15 Budget.
Population growth is forecast to strengthen to 2.1% in 2016-17 and 2.2% in 2017-18
(up from 2.1% at budget) in line with the expected improvement in the State’s domestic
economy.
Over the four years 2014-15 to 2017-18, Western Australia’s population is forecast to
increase by a total of around 222,000 persons, with 58.3% (or around 129,500 persons) of
this increase from net overseas migration (see following figure).
74
The Western Australian Economy
Figure 9
CO M PO N ENT S O F PO PU L AT IO N G RO W T H
A dd i ti o ns / S u btr ac t i o ns t o G r o wt h
People
100,000
90,000
Natural Increase
Forecast
Net Interstate Migration
80,000
Net Overseas Migration
70,000
60,000
50,000
40,000
30,000
20,000
10,000
0
2003-04
2005-06
2007-08
2009-10
2011-12
2013-14
2015-16
2017-18
Source: ABS Catalogue 3101.0 and Department of Treasury.
Wages
Western Australia’s Wage Price Index (WPI) increased by just 2.8% in 2013-14, the
weakest growth in annual terms since 1999-2000 and the first decline in real wages since
2006. This was underpinned by a sharp moderation in private sector wage growth as firms
sought to improve efficiency and reduce costs.
Wage growth is expected to remain subdued at 2.75% in 2014-15 as further capacity
builds in the labour market and as firms continue to focus on restraining costs.
This represents a downward revision from 3.25% growth at budget.
The State’s WPI is forecast to gradually increase to 3.75% by 2017-18 (as expected at
budget), in line with gradually improving economic and labour market conditions, but is
forecast to remain below average growth of 4.3% per annum over the past decade.
75
2014-15 Government Mid-year Financial Projections Statement
Inflation
Consumer Price Index
Perth’s Consumer Price Index (CPI) increased by 3% in 2013-14, with a quarterly
increase of 0.5% in the September quarter of 2014 sustaining the annual rate at 3%.
The September quarter increase was driven by a 19% rise in ‘other services in respect of
motor vehicles’ 11, which contributed 0.23 percentage points to growth. The latest CPI data
also showed that electricity prices fell by 4.5% in the September quarter (the largest
quarterly fall since the series began in 1980), coinciding with the removal of the carbon
tax from 1 July 2014.
Reflecting these changes, CPI growth has been revised down by 0.5 percentage points to
2.25% in 2014-15 12. This is a smaller revision than the 0.75 percentage points reduction in
CPI due to the carbon tax removal estimated by the Commonwealth Treasury, as stronger
than expected growth in ‘other services in respect of motor vehicles’ is expected to have
partially offset this impact.
Perth’s CPI is forecast to increase by 2.5% per annum across the forward estimate years,
consistent with budget expectations and broadly in line with national CPI forecasts.
Risks
Global Risks
While the global economic recovery is expected to continue, growth over 2014 and into
2015 is projected to be slower than previously anticipated and more uneven between
countries. Downside risks to the outlook have also increased since budget.
Any implications of these global risks for Western Australia will largely be determined by
the growth prospects in China, as our largest trading partner.
The IMF is projecting that China’s economy will grow by 7.4% in 2014 and 7.1% in
2015. This represents a significant easing from the average rate of growth of around 10%
over the past decade. The lower growth outlook reflects slowing residential property
investment, and China’s transition from investment-led growth to a more sustainable
consumption-led growth path.
Residential property construction has slowed substantially over the past year. As a key
driver of steel and iron ore demand, weaker conditions in China’s construction sector
represent a key short to medium-term risk to the Western Australian economy
(and finances).
11
12
76
Includes motor vehicle registration, roadworthiness test, drivers licence fees, parking fees, driving lessons and tollway charges.
The CPI forecasts at budget did not include any adjustments for the removal of the carbon tax, as the legislation to remove the tax
had not yet passed Federal Parliament.
The Western Australian Economy
Over the medium to longer term, the latest IMF growth forecasts for China suggest that an
additional RMB7.3 trillion is expected to be added to Chinese GDP from 2014 to 2019.
On this basis, the Chinese economy will be almost 50% larger in 2019 than in 2013.
Furthermore, the Chinese Government has stated that it remains committed to continued
urbanisation in order to drive sustainable economic growth. Consequently, it is expected
that continued growth in the Chinese economy and urbanisation will continue to support
demand for iron ore, although at a slower pace of growth than in recent years.
Despite continued falls in the US unemployment rate, the labour market does not appear
as healthy as the headline unemployment rate implies, which may mean the economic
recovery in the US is more fragile than headline GDP growth suggests. While down from
its peak of 10% at the height of the global financial crisis, the unemployment rate remains
above the levels experienced in the decade prior to the crisis. The pace of the economic
recovery in the US presents a direct exchange rate risk for Western Australian royalty
revenue as the Federal Reserve has linked the future policy rate to economic conditions
and the US-Australia interest rate differential is a key determinant of the $US/$A
exchange rate. The $US/$A exchange rate may continue to experience ongoing volatility
as global financial markets respond to changes in US monetary policy.
Economic growth within the euro area remains weak and uneven, indicating that any
recovery in the area will likely be gradual, as the economy struggles to emerge from a
period of very high unemployment and very low inflation. While Western Australia has
limited direct trade links with the euro area, a significant slowdown in the area could
negatively impact on the Chinese economy, with potential negative flow-on effects for
Western Australia.
In Japan, very high levels of public debt combined with a softer economic outlook are
expected to continue to remain key concerns for the economy in the near term. As our
second-largest trading partner behind China, any slowdown in Japanese output has the
potential to impact on Western Australia and the demand for Western Australia’s goods.
Geopolitical shocks related to tension between Russian and Ukraine and the turmoil in the
Middle East also remain a risk. While the effects of these have yet to cause much
disruption to output globally, any change in the future could have significant implications
for the global economic outlook via increased financial market volatility and commodity
price fluctuations.
Much of the growth in Western Australia’s GSP over coming years will be driven by the
external sector. If the State’s commodity export prices fall by more than forecast, export
income will (other things equal) be weaker than expected, representing a downside risk to
both royalty revenue and resource firms’ profitability. This in turn could flow through to
softer than expected employment and wage growth, acting as a drag on domestic
economic activity and the State’s tax revenue.
Domestic Risks
As investment in major iron ore and LNG projects declines, it is expected that these
declines will be partly offset by investment in non-resource sectors, and other projects
that are at present only prospective.
77
2014-15 Government Mid-year Financial Projections Statement
However, if the value of realised future projects is lower than anticipated there is some
downside risk to the outlook. Furthermore, if reduced spending on major resource projects
has a larger than expected flow-on impact on investment in other sectors of the economy,
business investment could be significantly lower than forecast.
Dwelling investment activity is currently strong. However, turning points are difficult to
predict, as sentiment in the market can change quickly. There is some risk over the
medium-term that growth in dwelling investment may be weaker than forecast. This risk
will be heightened if forecast declines in business investment have a bigger than
anticipated impact on other sectors of the economy. On the upside, the strong demand for
housing may continue if population growth remains robust and low interest rates persist.
This may result in higher house prices and stronger levels of dwelling construction
activity.
A stronger than anticipated moderation in labour market conditions represents a downside
risk to household consumption. If wages growth slows by more than forecast (and real
wages continue to fall), consumer spending may be weaker. However, there remains a
potential upside risk to household consumption growth (particularly in 2015-16) if
full-time employment growth picks-up by more than currently anticipated.
A significant risk to the outlook relates to major resource project expansions which may
encounter delays in the project delivery and commissioning phases. Project delivery has
been a particular issue for the Western Australian resource sector over the past ten years.
Complex operations, such as LNG projects, carry the greatest risks. Any delays
experienced in project delivery, or the subsequent ramp up of production, could reduce
exports below forecast levels, and result in lower than forecast export-led GSP growth.
The outlook for the State’s labour market is based on the expectation that domestic
economic conditions will remain subdued across the budget period and constrain labour
demand. However, employment growth may be higher than forecast if full-time
employment growth strengthens faster than anticipated, and if conditions in the
non-resource sector of the State’s economy gain momentum over the near term.
Moreover, this could translate into a lower unemployment rate and higher wage growth
than currently forecast.
Wage growth moderated steeply from 4% in 2012-13 to 2.8% in 2013-14, as businesses
cut costs amid slowing domestic demand. Wage growth is forecast to remain around this
rate in 2014-15, based on the expectation that the majority of wage cuts have already been
implemented, and that any pay increases are likely to be modest. However, further wage
cuts over the near term could result in lower wage growth than anticipated.
Population growth is forecast to slow from record high rates, as domestic economic
activity moderates and the State’s share of national net overseas migration falls. However,
if labour market conditions are stronger than expected, population growth may be higher
than forecast as more people are attracted to the State. This presents some upside risk to
growth in other sectors such as household consumption and housing demand.
78
APPENDIX 1
Detailed Financial Projections
This appendix contains detailed financial projections for the Western Australian public
sector and its sub-sectors. The tables in this section satisfy Uniform Presentation
Framework requirements, and are consistent with Australian Accounting Standards and
the presentation of whole-of-government financial projections contained in the
2014-15 Budget.
79
2014-15 Government Mid-year Financial Projections Statement
Contents
General Government
Table 1.1: Operating Statement ......................................................................................................................81
Table 1.2: Balance Sheet at 30 June ...............................................................................................................82
Table 1.3: Cash Flow Statement.....................................................................................................................83
Public Non-Financial Corporations
Table 1.4: Operating Statement ......................................................................................................................84
Table 1.5: Balance Sheet at 30 June ...............................................................................................................85
Table 1.6: Cash Flow Statement.....................................................................................................................86
Total Non-Financial Public Sector
Table 1.7: Operating Statement ......................................................................................................................87
Table 1.8: Balance Sheet at 30 June ...............................................................................................................88
Table 1.9: Cash Flow Statement.....................................................................................................................89
Public Financial Corporations
Table 1.10: Operating Statement ....................................................................................................................90
Table 1.11: Balance Sheet at 30 June .............................................................................................................91
Table 1.12: Cash Flow Statement...................................................................................................................92
Total Public Sector
Table 1.13: Operating Statement .................................................................................................................... 93
Table 1.14: Balance Sheet at 30 June ............................................................................................................. 94
Table 1.15: Cash Flow Statement................................................................................................................... 95
Notes to the Financial Projections
Note 1: Statement of Compliance ..................................................................................................................96
Note 2: Summary of Significant Accounting Policies ....................................................................................96
Note 3: General Government Operating Revenue ..........................................................................................97
Note 4: General Government Transfer Expenses ...........................................................................................97
Note 5: General Government Expenses and Spending on the Purchase of Non-Financial Assets by
Government Purpose Classification ..................................................................................................98
Note 6: Convergence Differences ..................................................................................................................98
Note 7: Loan Council Allocations ................................................................................................................104
80
Appendix 1
Table 1.1
G E N ER AL G O VE RNM ENT
O p er a t in g S t at em ent
Note
2013-14
Actual
$m
2014-15
Budget
Estimate
$m
2014-15
Mid-year
Revision
$m
2015-16
Mid-year
Revision
$m
2016-17
Mid-year
Revision
$m
2017-18
Mid-year
Revision
$m
8,849
8,199
547
2,078
194
9,500
8,006
677
2,203
210
9,220
7,884
1,001
2,256
187
9,875
7,712
697
2,383
212
10,536
8,224
994
2,423
243
11,260
8,765
756
2,549
255
901
602
6,025
561
27,956
938
530
6,176
444
28,683
1,226
491
4,368
464
27,096
976
543
5,184
464
28,047
1,036
617
5,604
405
30,084
1,133
602
5,978
428
31,726
10,682
11,345
11,340
11,370
11,724
11,748
1,118
354
472
1,289
2,337
5,036
538
5,454
565
28,508
1,116
251
448
1,307
2,373
5,084
551
5,352
562
28,383
1,116
274
469
1,405
2,257
5,354
662
5,413
634
28,954
1,149
281
476
1,444
2,189
5,595
813
5,662
447
29,780
1,149
285
481
1,476
2,349
5,760
958
5,735
440
30,382
Results from Transactions
REVENUE
Taxation
Current grants and subsidies
Capital grants
Sales of goods and services
Interest income
Revenue from public corporations
Dividends from other sector entities
Tax equivalent income
Royalty income
Other
Total
3
EXPENSES
Salaries
Superannuation
Concurrent costs
Superannuation interest cost
Other employee costs
Depreciation and amortisation
Services and contracts
Other gross operating expenses
Other interest
Current transfers
Capital transfers
Total
4
4
5
1,030
297
432
1,197
2,041
4,943
492
5,357
765
27,236
NET OPERATING BALANCE
6
719
175
-1,287
-907
304
1,344
-34
-114
-37
16
-169
12
5
-4
13
11
-438
-4
-431
38
-25
-4
8
7
-32
-4
-29
3
-47
-4
-48
Other economic flows - included in the operating result
Net gains on assets/liabilities
Net actuarial gains - superannuation
Provision for doubtful debts
Changes in accounting policy/correction of prior period errors
Total other economic flows
OPERATING RESULT
550
188
-1,719
-899
275
1,296
All other movements in equity
Items that will not be reclassified to operating result
Revaluations
Gains recognised directly in equity
Change in net w orth of the public corporations sectors
All other
Total all other movements in equity
1,934
-1
1,419
3,351
2,093
-1
890
2,982
2,153
-1
1,145
3,297
2,108
-1
1,076
3,184
2,030
-1
1,301
3,331
2,027
-1
1,392
3,418
TOTAL CHANGE IN NET WORTH
3,901
3,170
1,579
2,285
3,606
4,715
6
719
175
-1,287
-907
304
1,344
5
3,289
1
-22
3,169
216
3,082
-2
372
2,246
-104
2,363
-
2,478
423
224
1,197
1,847
291
1,289
1,804
293
1,307
1,851
310
1,405
427
234
1,444
685
123
1,476
1,301
-1,127
-1,629
-3,138
-1,335
-381
43
KEY FISCAL AGGREGATES
NET OPERATING BALANCE
Less Net acquisition of non-financial assets
Purchase of non-financial assets
Changes in inventories
Other movement in non-financial assets
Less:
Sales of non-financial assets
Depreciation
Total net acquisition of non-financial assets
NET LENDING/-BORROWING
6
Note: Columns may not add due to rounding.
81
2014-15 Government Mid-year Financial Projections Statement
Table 1.2
G E N ER AL G O VE RNM ENT
B al a nc e S he et at 3 0 J un e
Note
Actual
$m
2015
Budget
Estimate
$m
2015
Mid-year
Revision
$m
2016
Mid-year
Revision
$m
2017
Mid-year
Revision
$m
2018
Mid-year
Revision
$m
692
664
3,904
3,054
586
721
3,187
3,264
577
672
2,941
2,754
569
678
3,554
2,836
580
685
4,679
2,982
602
662
5,515
3,056
45,706
6,731
11
60,762
46,367
7,083
11
61,219
46,851
7,249
11
61,054
47,926
7,855
11
63,428
49,228
8,334
11
66,498
50,620
8,689
11
69,154
37,606
43,162
1
37,719
47,314
2
38,359
46,258
1
39,149
48,087
1
39,979
50,057
1
40,850
53,144
1
96
79
574
16
8
247
81,789
55
72
502
14
8
205
85,890
82
77
622
15
8
537
85,960
68
77
606
15
752
88,756
54
77
570
15
966
91,719
52
77
529
15
538
95,207
142,551
147,109
147,014
152,183
158,217
164,361
522
438
11,362
7,890
3,140
1,048
1,323
25,723
470
459
13,607
7,556
3,257
1,148
1,318
27,815
404
408
14,120
8,090
2,951
1,032
1,603
28,608
658
393
17,176
7,869
2,694
1,030
1,673
31,492
722
377
19,673
7,619
2,767
1,030
1,730
33,919
629
360
21,365
7,392
2,782
1,067
1,754
35,350
NET ASSETS
116,828
119,294
118,406
120,691
124,297
129,012
Of which:
Contributed equity
Accumulated surplus
Other reserves
NET WORTH
11,122
105,706
116,828
11,279
108,015
119,294
9,556
108,851
118,406
8,686
112,005
120,691
8,990
115,307
124,297
10,287
118,725
129,012
Net financial worth
Net financial liabilities
35,039
17,398
33,411
20,038
32,447
21,653
31,936
23,846
32,578
24,984
33,805
25,504
Net debt
Gross debt liabilities
Less : liquid financial assets
Less: convergence differences impacting net debt
Net debt
12,322
5,260
88
6,973
14,536
4,494
88
9,953
14,932
4,189
88
10,655
18,226
4,800
13,426
20,773
5,943
14,830
22,355
6,779
15,576
ASSETS
Financial assets
Cash and deposits
Advances paid
Investments, loans and placements
Receivables
Shares and other equity
Investments in other public sector entities - equity method
Investments in other public sector entities - direct injections
Investments in other entities
Other financial assets
Total financial assets
Non-financial assets
Land
Property, plant and equipment
Biological assets
Inventories
Land inventories
Other inventories
Intangibles
Non-current assets held for sale
Investment property
Other
Total non-financial assets
TOTAL ASSETS
LIABILITIES
Deposits held
Advances received
Borrow ings
Unfunded superannuation
Other employee benefits
Payables
Other liabilities
TOTAL LIABILITIES
6
2014
MEMORANDUM ITEMS
Note: Columns may not add due to rounding.
82
Appendix 1
Table 1.3
G E N ER AL G O VE RNM ENT
Cas h Fl o w S ta tem e nt
Note
2013-14
Actual
$m
2014-15
Budget
Estimate
$m
2014-15
Mid-year
Revision
$m
2015-16
Mid-year
Revision
$m
2016-17
Mid-year
Revision
$m
2017-18
Mid-year
Revision
$m
8,712
8,614
2,135
219
1,497
7,829
29,006
9,514
8,689
2,242
199
1,447
7,594
29,685
9,234
8,932
2,292
176
1,707
6,262
28,604
9,894
8,425
2,423
201
1,566
6,621
29,130
10,552
9,206
2,502
233
1,628
7,061
31,181
11,275
9,523
2,636
244
1,738
7,450
32,867
Cash Paid
Wages, salaries and supplements, and superannuation
Payments for goods and services
Interest paid
Grants and subsidies paid
Dividends and tax equivalents
Other payments
Total cash paid
-12,157
-7,526
-485
-5,567
-1,538
-27,273
-12,874
-7,814
-523
-5,841
-1,377
-28,429
-12,944
-7,870
-533
-5,706
-1,397
-28,450
-13,269
-7,952
-619
-5,750
-1,431
-29,022
-13,382
-8,206
-766
-5,906
-1,405
-29,666
-13,460
-8,556
-917
-5,970
-1,401
-30,304
NET CASH FLOWS FROM OPERATING ACTIVITIES
1,733
1,256
154
108
1,515
2,563
-3,289
224
-3,065
-3,169
291
-2,878
-3,082
293
-2,788
-2,246
310
-1,937
-2,363
234
-2,129
-2,478
123
-2,355
CASH FLOWS FROM OPERATING ACTIVITIES
Cash received
Taxes received
Grants and subsidies received
Receipts from sales of goods and services
Interest receipts
Dividends and tax equivalents
Other receipts
Total cash received
CASH FLOWS FROM INVESTING ACTIVITIES
Cash flows from investments in non-financial assets
Purchase of non-financial assets
Sales of non-financial assets
Total cash flows from investments in non-financial assets
Cash flows from investments in financial assets
Cash received
For policy purposes
For liquidity purposes
Cash paid
For policy purposes
For liquidity purposes
Total cash flows from investments in financial assets
22
1
-
-
8
-
-
-551
-1
-529
-597
-597
-616
-616
-543
-535
-497
-497
-423
-423
NET CASH FLOWS FROM INVESTING ACTIVITIES
-3,594
-3,475
-3,405
-2,471
-2,626
-2,778
30
545
36
611
40
2,271
39
2,351
15
2,478
35
2,528
16
3,229
36
3,280
16
2,661
58
2,735
16
1,479
64
1,559
-16
-368
-140
-524
-15
-127
-217
-360
-15
-80
-153
-249
-16
-92
-422
-529
-16
-89
-430
-535
-16
-119
-241
-376
CASH FLOWS FROM FINANCING ACTIVITIES
Cash received
Advances received
Borrow ings
Deposits received
Other financing receipts
Total cash receipts from financing activities
Cash paid
Advances paid
Borrow ings repaid
Deposits paid
Other financing payments
Total payments for financing activities
NET CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
86
1,991
2,280
2,752
2,199
1,183
-1,775
6,263
4,488
-228
3,843
3,615
-971
4,488
3,517
388
3,517
3,905
1,089
3,905
4,993
968
4,993
5,962
1,733
-3,065
1,256
-2,878
154
-2,788
108
-1,937
1,515
-2,129
2,563
-2,355
-1,333
-1,622
-2,635
-1,829
-614
208
KEY FISCAL AGGREGATES
Net cash flow s from operating activities
Net cash flow s from investing in non-financial assets
Cash surplus/-deficit
6
Note: Columns may not add due to rounding.
83
2014-15 Government Mid-year Financial Projections Statement
Table 1.4
PU BL IC NO N- F IN AN C I AL CO R PO R AT IO N S
O p er a t in g S t at em ent
Note
2013-14
Actual
$m
2014-15
Budget
Estimate
$m
2014-15
Mid-year
Revision
$m
2015-16
Mid-year
Revision
$m
2016-17
Mid-year
Revision
$m
2017-18
Mid-year
Revision
$m
2,368
231
15,536
175
659
18,969
2,416
199
17,429
204
487
20,734
2,306
202
16,263
176
527
19,473
2,274
153
17,273
201
579
20,481
2,235
115
17,962
218
673
21,203
2,172
114
19,166
242
549
22,243
1,209
1,206
1,219
1,217
1,251
1,280
115
60
2,005
972
11,392
955
595
1,011
83
18,398
119
42
2,077
833
13,475
1,046
498
1,032
35
20,363
120
44
2,096
806
12,242
994
459
1,032
90
19,102
119
44
2,093
844
12,998
1,036
504
1,090
45
19,991
123
45
2,139
773
13,364
1,132
574
1,145
46
20,591
125
45
2,169
723
14,318
1,200
555
1,181
21,596
571
371
372
490
612
648
90
-28
-13
-715
-666
96
-19
76
85
-17
68
146
-18
128
201
-18
183
223
-19
204
-95
448
439
619
794
851
1,839
462
2,301
1,283
-57
1,226
1,822
-65
1,757
1,340
-58
1,282
1,440
-63
1,377
1,555
-65
1,490
-825
575
-250
-893
653
-240
-1,182
518
-664
-929
606
-323
-985
480
-506
-1,080
355
-725
1,956
1,434
1,532
1,577
1,665
1,616
571
371
372
490
612
648
3,534
514
339
3,681
-93
35
3,624
-193
49
3,241
212
154
3,028
363
240
3,549
274
149
940
2,005
1,441
1,189
2,077
356
961
2,096
423
1,045
2,093
469
869
2,139
623
971
2,169
832
-870
16
-51
22
-11
-185
Results from Transactions
REVENUE
Current grants and subsidies
Capital grants
Sales of goods and services
Interest income
Other
Total
EXPENSES
Salaries
Superannuation
Concurrent costs
Superannuation interest cost
Other employee costs
Depreciation and amortisation
Services and contracts
Other gross operating expenses
Other interest
Tax equivalents
Current transfers
Capital transfers
Total
NET OPERATING BALANCE
6
Other economic flows - included in the operating result
Net gains on assets/liabilities
Net actuarial gains - superannuation
Provision for doubtful debts
Changes in accounting policy/correction of prior period errors
Total other economic flows
OPERATING RESULT
Other non-owner movements in equity
Items that will not be reclassified to operating result
Revaluations
Gains recognised directly in equity
All other
Total other non-owner movements in equity
Movements in owner equity
Dividends
Capital injections
Total movements in owner equity
TOTAL CHANGE IN NET WORTH
KEY FISCAL AGGREGATES
NET OPERATING BALANCE
6
Less Net acquisition of non-financial assets
Purchase of non-financial assets
Changes in inventories
Other movement in non-financial assets
Less:
Sales of non-financial assets
Depreciation
Total net acquisition of non-financial assets
NET LENDING/-BORROWING
Note: Columns may not add due to rounding.
84
6
Appendix 1
Table 1.5
PU BL IC NO N- F IN AN C I AL CO R PO R AT IO N S
B al a nc e S he et at 3 0 J un e
Note
ASSETS
Financial assets
Cash and deposits
Advances paid
Investments, loans and placements
Receivables
Shares and other equity
Investments in other public sector entities - equity method
Investments in other public sector entities - direct injections
Investments in other entities
Other financial assets
Total financial assets
2014
Actual
$m
2015
Budget
Estimate
$m
2015
Mid-year
Revision
$m
2016
Mid-year
Revision
$m
2017
Mid-year
Revision
$m
2018
Mid-year
Revision
$m
1,199
4,526
1,198
913
5,614
1,381
494
5,756
1,057
922
5,760
1,249
1,149
5,779
1,300
1,245
5,812
1,414
33
946
7,902
910
8,817
38
910
8,254
44
860
8,834
50
818
9,096
57
759
9,287
Non-financial assets
Land
Property, plant and equipment
Biological assets
Inventories
Land inventories
Other inventories
Intangibles
Non-current assets held for sale
Investment property
Other
Total non-financial assets
14,799
50,421
333
15,780
50,908
319
15,539
51,890
321
16,316
52,768
322
17,131
53,802
324
17,988
55,453
325
1,905
3,225
507
13
24
137
71,365
2,110
3,410
461
31
23
247
73,289
2,088
3,032
438
13
25
173
73,518
2,244
3,244
404
13
25
178
75,513
2,240
3,607
377
13
25
185
77,704
2,209
3,881
359
13
25
171
80,423
TOTAL ASSETS
79,267
82,107
81,772
84,348
86,800
89,710
LIABILITIES
Deposits held
Advances received
Borrow ings
Unfunded superannuation
Other employee benefits
Payables
Other liabilities
TOTAL LIABILITIES
424
21,467
127
425
4,810
1,364
28,616
409
23,299
71
450
4,606
1,759
30,593
408
23,053
96
467
4,049
1,516
29,589
393
23,542
56
464
4,491
1,642
30,588
377
23,950
14
452
4,814
1,768
31,375
360
24,993
464
5,002
1,850
32,669
NET ASSETS
50,651
51,513
52,183
53,760
55,425
57,041
Of which:
Contributed equity
Accumulated surplus
Other reserves
NET WORTH
6,731
18,232
25,688
50,651
7,083
18,109
26,322
51,513
7,249
17,228
27,706
52,183
7,855
16,773
29,132
53,760
8,334
16,428
30,663
55,425
8,689
16,048
32,305
57,041
-71,365
-73,266
-73,518
-75,513
-77,704
-80,423
21,890
5,725
16,166
23,708
6,527
17,181
23,462
6,250
17,212
23,935
6,682
17,253
24,326
6,928
17,399
25,353
7,057
18,296
6
MEMORANDUM ITEMS
Net financial worth
Net debt
Gross debt liabilities
Less : liquid financial assets
Less: convergence differences impacting net debt
Net debt
Note: Columns may not add due to rounding.
85
2014-15 Government Mid-year Financial Projections Statement
Table 1.6
PU BL IC NO N- F IN AN C I AL CO R PO R AT IO N S
Cas h Fl o w S ta tem e nt
Note
2013-14
Actual
$m
2014-15
Budget
Estimate
$m
2014-15
Mid-year
Revision
$m
2015-16
Mid-year
Revision
$m
2016-17
Mid-year
Revision
$m
2017-18
Mid-year
Revision
$m
2,597
15,932
166
78
1,706
20,479
2,620
17,289
204
56
1,229
21,399
2,513
16,423
176
68
1,225
20,406
2,431
17,258
201
68
1,142
21,102
2,352
18,406
218
68
1,188
22,233
2,294
19,413
242
69
1,257
23,275
Cash paid
Wages, salaries and supplements, and superannuation
Payments for goods and services
Interest paid
Grants and subsidies paid
Tax equivalents
Other payments
Total cash paid
-1,325
-10,653
-968
-738
-573
-3,817
-18,076
-1,375
-12,402
-965
-766
-495
-3,316
-19,319
-1,366
-11,720
-930
-782
-480
-3,185
-18,464
-1,448
-11,912
-975
-827
-562
-2,899
-18,623
-1,458
-12,422
-1,076
-871
-559
-3,404
-19,791
-1,481
-13,213
-1,145
-889
-558
-3,665
-20,950
NET CASH FLOWS FROM OPERATING ACTIVITIES
2,403
2,080
1,941
2,479
2,442
2,325
-3,534
940
-2,594
-3,681
1,189
-2,491
-3,624
961
-2,663
-3,241
1,045
-2,197
-3,028
869
-2,159
-3,549
971
-2,578
CASH FLOWS FROM OPERATING ACTIVITIES
Cash received
Grants and subsidies received
Receipts from sales of goods and services
Interest receipts
Dividends and tax equivalents
Other receipts
Total cash received
CASH FLOWS FROM INVESTING ACTIVITIES
Cash flows from investments in non-financial assets
Purchase of non-financial assets
Sales of non-financial assets
Total cash flows from investments in non-financial assets
Cash flows from investments in financial assets
Cash received
For policy purposes
For liquidity purposes
Cash paid
For policy purposes
For liquidity purposes
Total cash flows from investments in financial assets
422
70
119
14
54
10
-386
36
-4
-14
52
-32
87
-20
-5
-21
-20
13
-28
-21
-39
NET CASH FLOWS FROM INVESTING ACTIVITIES
-2,557
-2,440
-2,576
-2,202
-2,145
-2,617
23,781
590
24,372
14,459
634
15,092
15,475
653
16,128
14,392
592
14,984
20,095
540
20,635
22,215
482
22,697
-15
-23,071
-23
-825
-23,934
-15
-13,715
-59
-887
-14,677
-15
-15,083
-28
-1,176
-16,302
-16
-13,896
-35
-924
-14,871
-16
-19,679
-38
-979
-20,712
-16
-21,160
-32
-1,084
-22,291
NET CASH FLOWS FROM FINANCING ACTIVITIES
438
415
-174
113
-77
406
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
284
1,519
1,803
55
1,184
1,239
-809
1,803
994
390
994
1,383
220
1,383
1,603
113
1,603
1,717
2,403
-2,594
-825
-1,015
2,080
-2,491
-887
-1,299
1,941
-2,663
-1,176
-1,898
2,479
-2,197
-924
-642
2,442
-2,159
-979
-695
2,325
-2,578
-1,084
-1,337
CASH FLOWS FROM FINANCING ACTIVITIES
Cash received
Advances received
Borrow ings
Deposits received
Other financing receipts
Total cash received
Cash paid
Advances paid
Borrow ings repaid
Deposits paid
Other financing payments
Dividends paid
Total cash paid
KEY FISCAL AGGREGATES
Net cash flow s from operating activities
Net cash flow s from investing in non-financial assets
Dividends paid
Cash surplus/-deficit
Note: Columns may not add due to rounding.
86
6
Appendix 1
Table 1.7
T O T AL N O N- F IN AN C I AL P UBL IC S ECT O R
O p er a t in g S t at em ent
Note
2013-14
Actual
$m
2014-15
Budget
Estimate
$m
2014-15
Mid-year
Revision
$m
2015-16
Mid-year
Revision
$m
2016-17
Mid-year
Revision
$m
2017-18
Mid-year
Revision
$m
8,387
8,199
547
17,133
342
6,025
161
1,094
41,887
9,029
8,006
677
19,115
386
6,176
133
845
44,366
8,766
7,884
1,001
17,994
335
4,368
144
879
41,370
9,397
7,712
697
19,101
384
5,184
154
943
43,573
10,039
8,224
994
19,861
430
5,604
162
979
46,292
10,741
8,765
756
21,177
465
5,978
170
875
48,927
11,890
12,551
12,559
12,587
12,975
13,028
1,146
297
287
3,202
3,008
15,866
1,420
3,694
611
41,421
1,237
354
261
3,367
3,174
18,041
1,556
3,771
401
44,713
1,236
251
265
3,403
3,181
16,820
1,518
3,786
450
43,468
1,236
274
278
3,498
3,104
17,817
1,669
3,930
525
44,918
1,271
281
280
3,582
2,966
18,452
1,912
4,264
378
46,362
1,274
285
278
3,646
3,075
19,554
2,126
4,422
327
48,015
465
-347
-2,098
-1,346
-70
912
Other economic flows - included in the operating result
Net gains on assets/liabilities
Net actuarial gains - superannuation
Provision for doubtful debts
Changes in accounting policy/correction of prior period errors
Total other economic flows
56
-142
-50
-699
-835
107
5
-23
89
95
-438
-21
-363
183
-25
-22
136
208
-32
-23
153
226
-47
-23
155
OPERATING RESULT
-370
-258
-2,461
-1,209
84
1,068
All other movements in equity
Items that will not be reclassified to operating result
Revaluations
Gains recognised directly in equity
Change in net w orth of the PFC sector
All other
Total all other movements in equity
3,772
461
38
4,271
3,376
-57
109
3,427
3,974
-66
131
4,040
3,448
-59
104
3,494
3,470
-63
116
3,522
3,582
-66
131
3,647
TOTAL CHANGE IN NET WORTH
3,901
3,170
1,579
2,285
3,606
4,715
465
-347
-2,098
-1,346
-70
912
6,809
515
317
6,720
-93
251
6,608
-195
420
5,487
212
50
5,391
363
240
6,027
275
572
1,150
3,202
3,288
1,351
3,367
2,160
1,157
3,403
2,274
1,354
3,498
896
1,103
3,582
1,308
1,094
3,646
2,134
-2,823
-2,507
-4,371
-2,242
-1,377
-1,221
Results from Transactions
REVENUE
Taxation
Current grants and subsidies
Capital grants
Sales of goods and services
Interest income
Royalty income
Dividend and tax equivalents
Other
Total
EXPENSES
Salaries
Superannuation
Concurrent costs
Superannuation interest cost
Other employee costs
Depreciation and amortisation
Services and contracts
Other gross operating expenses
Other interest
Current transfers
Capital transfers
Total
NET OPERATING BALANCE
6
KEY FISCAL AGGREGATES
NET OPERATING BALANCE
6
Less Net acquisition of non-financial assets
Purchase of non-financial assets
Changes in inventories
Other movement in non-financial assets
Less:
Sales of non-financial assets
Depreciation
Total net acquisition of non-financial assets
NET LENDING/-BORROWING
6
Note: Columns may not add due to rounding.
87
2014-15 Government Mid-year Financial Projections Statement
Table 1.8
T O T AL N O N- F IN AN C I AL P UBL IC S ECT O R
B al a nc e S he et at 3 0 J un e
Note
ASSETS
Financial assets
Cash and deposits
Advances paid
Investments, loans and placements
Receivables
Shares and other equity
Investments in other public sector entities - equity method
Investments in other public sector entities - direct injections
Investments in other entities
Other financial assets
Total financial assets
2014
Actual
$m
2015
Budget
Estimate
$m
2015
Mid-year
Revision
$m
2016
Mid-year
Revision
$m
2017
Mid-year
Revision
$m
2018
Mid-year
Revision
$m
1,560
240
8,427
4,077
1,213
313
8,798
4,401
859
263
8,693
3,585
1,024
285
9,310
3,904
1,197
308
10,454
4,076
1,409
301
11,324
4,268
1,786
44
16,134
1,936
11
16,672
1,917
48
15,365
2,021
54
16,599
2,137
61
18,233
2,268
68
19,639
Non-financial assets
Land
Property, plant and equipment
Biological assets
Inventories
Land inventories
Other inventories
Intangibles
Non-current assets held for sale
Investment property
Other
Total non-financial assets
52,405
93,583
335
53,499
98,222
321
53,898
98,149
322
55,465
100,855
324
57,110
103,860
325
58,838
108,597
327
2,002
3,304
1,081
28
32
384
153,153
2,166
3,482
963
44
31
452
159,179
2,170
3,109
1,060
28
33
710
159,478
2,312
3,321
1,010
28
25
930
164,269
2,294
3,684
947
28
25
1,151
169,423
2,261
3,958
888
28
25
709
175,631
TOTAL ASSETS
169,287
175,851
174,843
180,868
187,656
195,269
187
438
32,829
8,017
3,564
5,715
1,709
52,459
181
459
36,906
7,624
3,707
5,517
2,165
56,558
188
408
37,174
8,185
3,418
4,857
2,207
56,437
188
393
40,718
7,925
3,158
5,344
2,452
60,177
188
377
43,623
7,633
3,219
5,640
2,678
63,359
188
360
46,358
7,392
3,246
5,871
2,842
66,257
NET ASSETS
116,828
119,294
118,406
120,691
124,297
129,012
Of which:
Contributed equity
Accumulated surplus
Other reserves
NET WORTH
29,360
87,467
116,828
29,395
89,899
119,294
26,791
91,616
118,406
25,466
95,225
120,691
25,425
98,872
124,297
26,342
102,670
129,012
-36,326
38,156
-39,855
41,803
-41,072
43,037
-43,578
45,654
-45,126
47,323
-46,619
48,955
33,454
10,227
88
23,139
37,546
10,323
88
27,134
37,770
9,815
88
27,867
41,298
10,620
30,678
44,188
11,959
32,228
46,906
13,034
33,872
LIABILITIES
Deposits held
Advances received
Borrow ings
Unfunded superannuation
Other employee benefits
Payables
Other liabilities
TOTAL LIABILITIES
6
MEMORANDUM ITEMS
Net financial worth
Net financial liabilities
Net debt
Gross debt liabilities
Less : liquid financial assets
Less: convergence differences impacting net debt
Net debt
Note: Columns may not add due to rounding.
88
Appendix 1
Table 1.9
T O T AL N O N- F IN AN C I AL P UBL IC S ECT O R
Cas h Fl o w S ta tem e nt
Note
2013-14
Actual
$m
2014-15
Budget
Estimate
$m
2014-15
Mid-year
Revision
$m
2015-16
Mid-year
Revision
$m
2016-17
Mid-year
Revision
$m
2017-18
Mid-year
Revision
$m
Cash received
Taxes received
Grants and subsidies received
Receipts from sales of goods and services
Interest receipts
Dividends and tax equivalents
Other receipts
Total cash received
8,244
8,614
17,587
357
177
9,073
44,051
9,040
8,689
19,020
375
121
8,527
45,772
8,780
8,932
18,197
325
119
7,176
43,528
9,419
8,425
19,133
373
148
7,517
45,015
10,054
9,206
20,390
419
158
7,978
48,204
10,755
9,523
21,516
454
166
8,435
50,849
Cash paid
Wages, salaries and supplements, and superannuation
Payments for goods and services
Interest paid
Grants and subsidies paid
Dividends and tax equivalents
Other payments
Total cash paid
-13,482
-17,276
-1,426
-3,674
-4,882
-40,740
-14,249
-19,433
-1,460
-3,964
-4,217
-43,324
-14,310
-18,797
-1,435
-3,942
-4,125
-42,609
-14,718
-19,097
-1,565
-4,120
-3,853
-43,353
-14,840
-19,866
-1,810
-4,401
-4,309
-45,225
-14,941
-20,992
-2,030
-4,540
-4,543
-47,045
NET CASH FLOWS FROM OPERATING ACTIVITIES
3,311
2,448
919
1,662
2,979
3,804
-6,809
1,150
-5,659
-6,720
1,351
-5,369
-6,608
1,157
-5,451
-5,487
1,354
-4,133
-5,391
1,103
-4,287
-6,027
1,094
-4,933
CASH FLOWS FROM OPERATING ACTIVITIES
CASH FLOWS FROM INVESTING ACTIVITIES
Cash flows from investments in non-financial assets
Purchase of non-financial assets
Sales of non-financial assets
Total cash flows from investments in non-financial assets
Cash flows from investments in financial assets
Cash received
For policy purposes
For liquidity purposes
Cash paid
For policy purposes
For liquidity purposes
Total cash flows from investments in financial assets
22
423
70
119
22
54
10
-23
-387
35
-14
56
-32
87
-20
3
-20
34
-21
-11
NET CASH FLOWS FROM INVESTING ACTIVITIES
-5,624
-5,313
-5,364
-4,130
-4,253
-4,944
15
24,326
41
24,383
25
16,730
35
16,790
17,953
35
17,988
17,621
36
17,656
22,755
37
22,793
23,694
36
23,730
-16
-23,440
-105
-23,561
-15
-13,842
-240
-14,098
-15
-15,163
-144
-15,323
-16
-13,988
-408
-14,411
-16
-19,768
-425
-20,209
-16
-21,279
-213
-21,508
821
2,692
2,665
3,245
2,583
2,221
-1,491
7,781
6,290
-173
5,026
4,853
-1,780
6,290
4,510
777
4,510
5,287
1,309
5,287
6,596
1,082
6,596
7,677
3,311
-5,659
2,448
-5,369
919
-5,451
1,662
-4,133
2,979
-4,287
3,804
-4,933
-2,348
-2,921
-4,532
-2,471
-1,309
-1,129
CASH FLOWS FROM FINANCING ACTIVITIES
Cash received
Advances received
Borrow ings
Deposits received
Other financing receipts
Total cash received
Cash paid
Advances paid
Borrow ings repaid
Deposits paid
Other financing payments
Total cash paid
NET CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
KEY FISCAL AGGREGATES
Net cash flow s from operating activities
Net cash flow s from investing in non-financial assets
Cash surplus/-deficit
6
Note: Columns may not add due to rounding.
89
2014-15 Government Mid-year Financial Projections Statement
Table 1.10
PU BL IC FI N AN C I AL C O R PO R AT IO N S
O p er a t in g S t at em ent
Note
2013-14
Actual
$m
2014-15
Budget
Estimate
$m
2014-15
Mid-year
Revision
$m
2015-16
Mid-year
Revision
$m
2016-17
Mid-year
Revision
$m
2017-18
Mid-year
Revision
$m
915
1,712
7
2,634
1,062
1,989
3,052
1,062
1,882
2,945
1,141
2,115
3,256
1,226
2,404
3,630
1,318
2,668
3,986
47
51
52
54
56
58
5
2
18
9
1,065
1,563
6
4
2
2,720
5
2
16
11
938
1,780
32
4
3
2,843
5
2
16
9
941
1,688
32
4
2
2,751
5
2
15
10
1,007
1,899
39
4
2
3,037
5
2
15
10
1,078
2,180
43
4
2
3,396
6
2
15
11
1,153
2,435
48
4
2
3,734
-86
210
194
219
234
252
311
2
-147
166
-
-2
-2
-
-
-
80
210
193
220
234
252
-23
135
112
-
50
50
-
-
-
-154
-154
-101
-101
-112
-112
-116
-116
-119
-119
-122
-122
38
109
131
104
116
131
-86
210
194
219
234
252
5
-
8
-
7
-
7
-
6
-
6
-
18
-13
16
-9
16
-9
15
-8
15
-9
15
-9
-73
218
203
227
243
261
Results from Transactions
REVENUE
Current grants and subsidies
Capital grants
Sales of goods and services
Interest income
Other
Total
EXPENSES
Salaries
Superannuation
Concurrent costs
Superannuation interest cost
Other employee costs
Depreciation and amortisation
Services and contracts
Other gross operating expenses
Other interest
Tax equivalents
Current transfers
Capital transfers
Total
NET OPERATING BALANCE
6
Other economic flows - included in the operating result
Net gains on assets/liabilities
Net actuarial gains - superannuation
Provision for doubtful debts
Changes in accounting policy/correction of prior period errors
Total other economic flows
OPERATING RESULT
Other non-owner movements in equity
Items that will not be reclassified to operating result
Revaluations
Gains recognised directly in equity
All other
Total other non-owner movements in equity
Movements in owner equity
Dividends
Capital injections
Total movements in owner equity
TOTAL CHANGE IN NET WORTH
KEY FISCAL AGGREGATES
NET OPERATING BALANCE
6
Less Net acquisition of non-financial assets
Purchase of non-financial assets
Changes in inventories
Other movement in non-financial assets
Less:
Sales of non-financial assets
Depreciation
Total net acquisition of non-financial assets
NET LENDING/-BORROWING
Note: Columns may not add due to rounding.
90
6
Appendix 1
Table 1.11
PU BL IC FI N AN C I AL C O R PO R AT IO N S
B al a nc e S he et at 3 0 J un e
Note
Actual
$m
2015
Budget
Estimate
$m
2015
Mid-year
Revision
$m
2016
Mid-year
Revision
$m
2017
Mid-year
Revision
$m
2018
Mid-year
Revision
$m
51
3,731
41,700
596
24
5,039
44,394
634
28
4,983
45,457
600
36
4,956
47,447
597
46
4,981
50,017
595
55
4,980
53,146
595
1,414
17
47,509
1,553
24
51,668
1,529
17
52,615
1,650
17
54,703
1,783
17
57,439
1,931
17
60,724
119
197
-
118
248
-
119
197
-
119
198
-
119
198
-
119
198
-
10
549
2
878
10
621
64
1,061
9
594
51
971
9
638
51
1,015
9
682
51
1,060
10
727
51
1,105
TOTAL ASSETS
48,387
52,729
53,586
55,719
58,498
61,829
LIABILITIES
Deposits held
Advances received
Borrow ings
Unfunded superannuation
Other employee benefits
Payables
Other liabilities
TOTAL LIABILITIES
3
43,095
10
10
97
3,387
46,601
2
47,239
12
9
81
3,451
50,793
2
47,976
10
10
123
3,548
51,669
2
49,789
11
10
148
3,738
53,697
2
52,220
12
10
167
3,951
56,361
2
55,164
12
10
187
4,186
59,561
NET ASSETS
1,786
1,936
1,917
2,021
2,137
2,268
Of which:
Contributed equity
Accumulated surplus
Other reserves
NET WORTH
1,571
215
1,786
1,681
255
1,936
1,695
222
1,917
1,791
230
2,021
1,898
239
2,137
2,019
248
2,268
-878
-440
-971
-1,015
-1,060
-1,105
43,098
45,483
-2,384
47,240
49,457
-2,217
47,977
50,469
-2,492
49,791
52,439
-2,649
52,222
55,044
-2,822
55,166
58,181
-3,015
ASSETS
Financial assets
Cash and deposits
Advances paid
Investments, loans and placements
Receivables
Shares and other equity
Investments in other public sector entities - equity method
Investments in other public sector entities - direct injections
Investments in other entities
Other financial assets
Total financial assets
Non-financial assets
Land
Property, plant and equipment
Biological assets
Inventories
Land inventories
Other inventories
Intangibles
Non-current assets held for sale
Investment property
Other
Total non-financial assets
6
2014
MEMORANDUM ITEMS
Net financial worth
Net debt
Gross debt liabilities
Less: liquid financial assets
Less: convergence differences impacting net debt
Net debt
Note: Columns may not add due to rounding.
91
2014-15 Government Mid-year Financial Projections Statement
Table 1.12
PU BL IC FI N AN C I AL C O R PO R AT IO N S
Cas h Fl o w S ta tem e nt
Note
2013-14
Actual
$m
2014-15
Budget
Estimate
$m
2014-15
Mid-year
Revision
$m
2015-16
Mid-year
Revision
$m
2016-17
Mid-year
Revision
$m
2017-18
Mid-year
Revision
$m
1,043
1,699
138
2,881
5
1,102
1,989
107
3,204
5
1,101
1,882
106
3,095
5
1,183
2,115
114
3,417
5
1,266
2,404
121
3,796
5
1,358
2,668
129
4,160
Cash paid
Wages, salaries and supplements, and superannuation
Payments for goods and services
Interest paid
Grants and subsidies paid
Tax equivalents
Other payments
Total cash paid
-50
-883
-1,689
-22
-194
-2,839
-56
-821
-1,780
-20
-165
-2,842
-56
-809
-1,688
-7
-165
-2,726
-58
-847
-1,899
-33
-176
-3,013
-61
-896
-2,180
-40
-188
-3,365
-63
-951
-2,435
-44
-201
-3,693
NET CASH FLOWS FROM OPERATING ACTIVITIES
42
361
369
404
431
467
-5
-4
-8
-7
-7
-7
-7
-7
-6
-6
-6
-6
CASH FLOWS FROM OPERATING ACTIVITIES
Cash received
Grants and subsidies received
Receipts from sales of goods and services
Interest receipts
Dividends and tax equivalents
Other receipts
Total cash received
CASH FLOWS FROM INVESTING ACTIVITIES
Cash flows from investments in non-financial assets
Purchase of non-financial assets
Sales of non-financial assets
Total cash flows from investments in non-financial assets
Cash flows from investments in financial assets
Cash received
For policy purposes
For liquidity purposes
Cash paid
For policy purposes
For liquidity purposes
Total cash flows from investments in financial assets
6,689
1,585
6,692
6,966
7,206
7,393
-7,019
-330
-2,409
-824
-8,172
-1,481
-7,167
-202
-7,478
-271
-7,663
-270
NET CASH FLOWS FROM INVESTING ACTIVITIES
-334
-831
-1,488
-209
-278
-276
48,837
48,837
45,116
45,116
48,801
48,801
47,762
47,762
47,327
47,327
44,215
44,215
-49,726
-154
-49,880
-44,512
-101
-44,613
-47,472
-112
-47,583
-47,760
-116
-47,876
-47,325
-119
-47,444
-44,213
-122
-44,335
NET CASH FLOWS FROM FINANCING ACTIVITIES
-1,043
503
1,217
-114
-117
-120
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
-1,336
3,430
2,094
33
3,477
3,510
99
2,094
2,193
82
2,193
2,275
36
2,275
2,311
70
2,311
2,381
42
-4
-154
-117
361
-7
-101
253
369
-7
-112
251
404
-7
-116
281
431
-6
-119
306
467
-6
-122
338
CASH FLOWS FROM FINANCING ACTIVITIES
Cash received
Advances received
Borrow ings
Deposits received
Other financing receipts
Total cash received
Cash paid
Advances paid
Borrow ings repaid
Deposits paid
Other financing payments
Dividends paid
Total cash paid
KEY FISCAL AGGREGATES
Net cash flow s from operating activities
Net cash flow s from investing in non-financial assets
Dividends paid
Cash surplus/-deficit
Note: Columns may not add due to rounding.
92
6
Appendix 1
Table 1.13
T O T AL PU BL IC SE CT O R
O p er a t in g S t at em ent
Note
2013-14
Actual
$m
2014-15
Budget
Estimate
$m
2014-15
Mid-year
Revision
$m
2015-16
Mid-year
Revision
$m
2016-17
Mid-year
Revision
$m
2017-18
Mid-year
Revision
$m
8,384
8,199
547
17,773
614
6,025
1,088
42,630
9,025
8,006
677
19,854
702
6,176
845
45,285
8,762
7,884
1,001
18,732
634
4,368
879
42,260
9,393
7,712
697
19,904
727
5,184
943
44,560
10,035
8,224
994
20,728
795
5,604
979
47,359
10,736
8,765
756
22,113
836
5,978
875
50,061
11,937
12,602
12,610
12,641
13,031
13,086
1,150
297
288
3,220
3,017
16,645
1,543
3,695
613
42,406
1,242
354
263
3,383
3,174
18,665
1,664
3,772
404
45,523
1,241
251
267
3,419
3,181
17,446
1,622
3,786
452
44,275
1,241
274
281
3,513
3,104
18,495
1,796
3,930
527
45,802
1,277
281
282
3,598
2,966
19,180
2,054
4,264
380
47,313
1,280
285
281
3,661
3,075
20,336
2,264
4,422
329
49,018
225
-238
-2,015
-1,242
46
1,042
Other economic flows - included in the operating result
Net gains on assets/liabilities
Net actuarial gains - superannuation
Provision for doubtful debts
Changes in accounting policy/correction of prior period errors
Total other economic flows
368
-140
-50
-846
-669
107
5
-23
89
95
-438
-23
-365
183
-25
-22
136
208
-32
-23
153
226
-47
-23
155
OPERATING RESULT
-444
-149
-2,380
-1,105
199
1,198
All other movements in equity
Items that will not be reclassified to operating result
Revaluations
Gains recognised directly in equity
All other
Total all other movements in equity
3,750
595
4,345
3,376
-57
3,319
4,025
-66
3,959
3,449
-59
3,390
3,471
-63
3,407
3,582
-66
3,517
TOTAL CHANGE IN NET WORTH
3,901
3,170
1,579
2,285
3,606
4,715
225
-238
-2,015
-1,242
46
1,042
6,814
515
317
6,728
-93
251
6,615
-195
420
5,495
212
50
5,397
363
240
6,033
275
572
1,151
3,220
3,275
1,351
3,383
2,151
1,157
3,419
2,265
1,354
3,513
888
1,103
3,598
1,299
1,094
3,661
2,125
-3,050
-2,390
-4,280
-2,130
-1,253
-1,082
Results from Transactions
REVENUE
Taxation
Current grants and subsidies
Capital grants
Sales of goods and services
Interest income
Royalty income
Other
Total
EXPENSES
Salaries
Superannuation
Concurrent costs
Superannuation interest cost
Other employee costs
Depreciation and amortisation
Services and contracts
Other gross operating expenses
Other interest
Current transfers
Capital transfers
Total
NET OPERATING BALANCE
6
KEY FISCAL AGGREGATES
NET OPERATING BALANCE
6
Less Net acquisition of non-financial assets
Purchase of non-financial assets
Changes in inventories
Other movement in non-financial assets
Less:
Sales of non-financial assets
Depreciation
Total net acquisition of non-financial assets
NET LENDING/-BORROWING
6
Note: Columns may not add due to rounding.
93
2014-15 Government Mid-year Financial Projections Statement
Table 1.14
T O T AL PU BL IC SE CT O R
B al a nc e S he et at 3 0 J un e
Note
ASSETS
Financial assets
Cash and deposits
Advances paid
Investments, loans and placements
Receivables
Equity - Investments in other entities
Other financial assets
Total financial assets
2014
Actual
$m
2015
Budget
Estimate
$m
2015
Mid-year
Revision
$m
2016
Mid-year
Revision
$m
2017
Mid-year
Revision
$m
2018
Mid-year
Revision
$m
1,610
3,968
15,419
4,355
1,457
17
26,826
1,236
5,350
12,520
4,704
1,564
24
25,400
886
5,245
13,491
3,851
1,578
17
25,068
1,060
5,240
12,164
4,137
1,705
17
24,323
1,242
5,287
12,417
4,278
1,844
17
25,085
1,463
5,280
13,451
4,440
1,999
17
26,650
Non-financial assets
Land
Property, plant and equipment
Biological assets
Inventories
Land inventories
Other inventories
Intangibles
Non-current assets held for sale
Investment property
Other
Total non-financial assets
52,524
93,780
335
53,617
98,470
321
54,017
98,346
322
55,584
101,053
324
57,229
104,058
325
58,957
108,795
327
2,002
3,304
1,091
28
581
386
154,031
2,166
3,482
973
44
652
515
160,240
2,170
3,109
1,069
28
627
762
160,449
2,312
3,321
1,020
28
662
982
165,284
2,294
3,684
956
28
707
1,203
170,482
2,261
3,958
898
28
752
761
176,736
TOTAL ASSETS
180,857
185,640
185,517
189,608
195,567
203,386
186
438
41,216
8,027
3,574
5,757
4,832
64,029
181
459
43,473
7,635
3,716
5,522
5,361
66,346
187
408
44,490
8,196
3,427
4,921
5,481
67,110
187
393
45,915
7,936
3,168
5,427
5,891
68,916
187
377
47,789
7,645
3,229
5,740
6,303
71,270
187
360
50,503
7,404
3,256
5,987
6,676
74,374
NET ASSETS
116,828
119,294
118,406
120,691
124,297
129,012
Of which:
Contributed equity
Accumulated surplus
Other reserves
NET WORTH
30,931
85,897
116,828
31,076
88,218
119,294
28,485
89,921
118,406
27,257
93,434
120,691
27,323
96,974
124,297
28,361
100,650
129,012
-37,204
38,661
-40,295
41,859
-42,043
43,621
-44,593
46,298
-46,185
48,029
-47,724
49,723
41,840
20,997
88
20,754
44,112
19,106
88
24,918
45,085
19,622
88
25,375
46,494
18,464
28,030
48,353
18,946
29,407
51,050
20,194
30,857
LIABILITIES
Deposits held
Advances received
Borrow ings
Unfunded superannuation
Other employee benefits
Payables
Other liabilities
TOTAL LIABILITIES
6
MEMORANDUM ITEMS
Net financial worth
Net financial liabilities
Net debt
Gross debt liabilities
Less : liquid financial assets
Less: convergence differences impacting net debt
Net debt
Note: Columns may not add due to rounding.
94
Appendix 1
Table 1.15
T O T AL PU BL IC SE CT O R
Cas h Fl o w S ta tem e nt
Note
2013-14
Actual
$m
2014-15
Budget
Estimate
$m
2014-15
Mid-year
Revision
$m
2015-16
Mid-year
Revision
$m
2016-17
Mid-year
Revision
$m
2017-18
Mid-year
Revision
$m
8,186
8,614
18,291
692
9,204
44,987
8,976
8,689
19,778
737
8,630
46,809
8,716
8,932
18,954
695
7,278
44,573
9,351
8,425
19,959
790
7,626
46,151
9,981
9,206
21,281
857
8,094
49,418
10,678
9,523
22,477
895
8,559
52,132
Cash paid
Wages, salaries and supplements, and superannuation
Payments for goods and services
Interest paid
Grants and subsidies paid
Dividends and tax equivalents
Other payments
Total cash paid
-13,533
-17,815
-1,751
-3,674
-5,016
-41,789
-14,304
-19,910
-1,614
-3,960
-4,314
-44,101
-14,367
-19,261
-1,610
-3,937
-4,222
-43,397
-14,776
-19,586
-1,765
-4,115
-3,957
-44,200
-14,901
-20,387
-2,023
-4,396
-4,420
-46,128
-15,004
-21,545
-2,237
-4,535
-4,663
-47,983
NET CASH FLOWS FROM OPERATING ACTIVITIES
3,198
2,708
1,176
1,951
3,291
4,149
-6,814
1,151
-5,663
-6,728
1,351
-5,376
-6,615
1,157
-5,458
-5,495
1,354
-4,140
-5,397
1,103
-4,294
-6,033
1,094
-4,939
CASH FLOWS FROM OPERATING ACTIVITIES
Cash received
Taxes received
Grants and subsidies received
Receipts from sales of goods and services
Interest receipts
Dividends and tax equivalents
Other
Total cash received
CASH FLOWS FROM INVESTING ACTIVITIES
Cash flows from investments in non-financial assets
Purchase of non-financial assets
Sales of non-financial assets
Total cash flows from investments in non-financial assets
Cash flows from investments in financial assets
Cash received
For policy purposes
For liquidity purposes
Cash paid
For policy purposes
For liquidity purposes
Total cash flows from investments in financial assets
22
7,112
1,655
6,811
6,988
7,260
7,403
-23
-7,406
-295
-2,423
-768
-8,204
-1,394
-7,187
-199
-7,498
-237
-7,685
-281
NET CASH FLOWS FROM INVESTING ACTIVITIES
-5,958
-6,144
-6,852
-4,339
-4,531
-5,220
15
26,192
41
26,249
25
31,214
35
31,275
33,185
35
33,220
33,510
36
33,545
27,124
37
27,161
22,411
36
22,447
-16
-26,194
-105
-26,316
-15
-27,723
-240
-27,979
-15
-29,066
-144
-29,225
-16
-29,875
-408
-30,298
-16
-24,134
-425
-24,576
-16
-19,994
-213
-20,224
-67
3,296
3,994
3,247
2,585
2,223
-2,827
11,210
8,383
-140
8,502
8,361
-1,681
8,383
6,702
859
6,702
7,560
1,345
7,560
8,905
1,152
8,905
10,057
3,198
-5,663
2,708
-5,376
1,176
-5,458
1,951
-4,140
3,291
-4,294
4,149
-4,939
-2,465
-2,668
-4,282
-2,189
-1,003
-790
CASH FLOWS FROM FINANCING ACTIVITIES
Cash received
Advances received
Borrow ings
Deposits received
Other financing receipts
Total cash received
Cash paid
Advances paid
Borrow ings repaid
Deposits paid
Other financing payments
Total cash paid
NET CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
KEY FISCAL AGGREGATES
Net cash flow s from operating activities
Net cash flow s from investing in non-financial assets
Cash surplus/-deficit
6
Note: Columns may not add due to rounding.
95
2014-15 Government Mid-year Financial Projections Statement
NO T E 1: ST AT EM E NT O F CO M PL I AN C E
The projected public sector financial statements presented in this appendix have been
prepared in accordance with Australian Accounting Standards and the Australian Bureau
of Statistics’ Government Finance Statistics Concepts, Sources and Methods 2005.
The presentation in this appendix is consistent with AASB 1049: Whole of Government
and General Government Sector Financial Reporting, applying to all reporting periods
from 1 July 2008.
NO T E 2: SUM M ARY O F SIG NI FI C ANT AC C O UNT IN G PO L IC I E S
The financial statements constitute general purpose financial reports for the total public
sector (also known as the whole-of-government), general government sector, and each of
the subsidiary public corporations sectors. Financial projections for the total non-financial
public sector (i.e. general government and the public non-financial corporations – such as
water and electricity utilities, and the ports) are also presented.
The financial projections are a requirement of the Government Financial Responsibility
Act 2000.
(a) The reporting entity
The reporting entity is the Government of Western Australia (the public sector) and
includes entities under its control.
(b) Basis of preparation
These financial projections do not include all the notes of the type normally included in an
annual financial report. The accounting policies adopted in this publication are consistent
with those outlined in the 2013-14 Annual Report on State Finances (ARSF), which are
described in detail in Note 3: Summary of Significant Accounting Policies in Appendix 1
of the 2013-14 ARSF.
The projections are presented in Australian dollars and all amounts are rounded to the
nearest million dollars ($m).
(c) Unaudited data
These financial projections are not subject to audit.
(d) Comparative figures
Comparative information for 2013-14 is based on the audited actual data presented in the
2013-14 ARSF.
96
Appendix 1
NO T E 3: G EN E R AL G O V E RNM ENT O P ER AT ING R E V E NU E
A detailed dissection of general government revenue is included in Appendix 2: General
Government Operating Revenue.
NO T E 4: G EN E R AL G O V E RNM ENT T R AN S FE R E X P EN S E S
Transfer expenses are defined as the provision of something of value for no specific
return or consideration and include grants, subsidies, donations, transfers of assets free of
charge, etc.
The following table provides detail of current and capital transfer expenses of the general
government sector, in line with Uniform Presentation Framework disclosure
requirements.
T R AN S F ER E X P EN S E S
G e ner a l G o v er nm ent
2013-14
Actual
$m
(a)
2014-15 2014-15 2015-16 2016-17 2017-18
Budget Mid-year Mid-year Mid-year Mid-year
Estimate Revision Revision Revision Revision
$m
$m
$m
$m
$m
CURRENT TRANSFERS
Local government
Local government on-passing
Private and not-for-profit sector
Private and not-for-profit sector on-passing
Other sectors of government
Total Current Transfers
316
168
1,537
951
2,384
5,357
383
179
1,446
1,018
2,427
5,454
414
173
1,404
1,040
2,321
5,352
332
176
1,479
1,136
2,290
5,413
312
179
1,686
1,235
2,251
5,662
226
189
1,814
1,318
2,188
5,735
CAPITAL TRANSFERS
Local government
Local government on-passing
Private and not-for-profit sector
Private and not-for-profit sector on-passing
Other sectors of government
Total Capital Transfers
274
107
130
22
232
765
94
111
130
30
200
565
89
107
131
32
202
562
194
107
143
35
154
634
71
107
114
38
115
447
67
112
106
41
115
440
(a)
Includes grants, subsidies and other transfer expenses.
97
2014-15 Government Mid-year Financial Projections Statement
NO T E 5: G EN E R AL G O V E RNM ENT E X P EN S E S AN D S P E ND ING O N T H E
PU RC H AS E O F NO N- FIN AN C I AL AS S ET S BY G O V E RNM ENT PU RP O SE
(a)
CL AS S I FI C AT IO N
2013-14
Actual
$m
Expenses
General public services
Public order and safety
Education
Health
Social security and w elfare
Housing and community amenities
Recreation and culture
Fuel and energy
Agriculture, forestry, fishing and hunting
Mining and mineral resources other than fuels; manufacturing;
and construction
Transport and communications
Other economic affairs
Other purposes
Total General Governm ent Expenses
2014-15 2014-15 2015-16 2016-17 2017-18
Budget Mid-year Mid-year Mid-year Mid-year
Estimate Revision Revision Revision Revision
$m
$m
$m
$m
$m
514
3,088
6,455
7,336
1,931
1,870
906
708
348
489
3,193
6,850
7,930
2,079
1,884
879
683
331
648
3,183
6,867
7,863
2,039
1,867
844
620
341
349
3,291
7,269
8,059
2,124
1,793
892
562
340
229
3,415
7,519
8,444
2,210
1,818
823
512
337
203
3,444
7,776
8,490
2,209
1,886
824
482
326
220
2,118
785
958
227
2,208
683
1,073
242
2,220
674
977
218
2,267
679
1,112
220
2,329
639
1,284
209
2,452
649
1,432
27,236
28,508
28,383
28,954
29,780
30,382
Purchases of new non-financial assets
General public services
Public order and safety
Education
Health
Social security and w elfare
Housing and community amenities
Recreation and culture
Fuel and energy
Agriculture, forestry, fishing and hunting
Mining and mineral resources other than fuels; manufacturing;
and construction
Transport and communications
Other economic affairs
Other purposes
105
218
570
873
59
89
199
4
29
176
247
466
956
59
53
200
5
25
190
272
491
980
63
68
160
5
26
208
122
290
508
29
58
113
3
17
148
90
289
314
19
137
134
1
21
126
51
224
138
9
247
203
1
17
1
1,025
117
-
3
924
55
-
3
1,113
61
-350
4
824
68
-
3
1,169
38
-
1
1,439
22
-
Total Purchases of Non-financial Assets
3,289
3,169
3,082
2,246
2,363
2,478
(a)
Data in this table are for consolidated general government aggregates and exclude internal transactions within the sector.
In relation to purchases of non-financial assets, the information in this table represents spending by function on fixed
assets by general government agencies, which is a component part of the total public sector Asset Investment Program.
NO T E 6: CO N V ERG E NC E DI FF ER E NC E S
Where possible, AASB 1049 harmonises Government Finance Statistics (GFS) and
accounting concepts into a single presentation. Where harmonisation cannot be achieved
(e.g. the recognition of a doubtful debts provision is excluded from GFS net worth), a
convergence difference arises.
The following tables detail all convergence differences in the forward estimates.
98
Appendix 1
AAS B 1 0 4 9 T O G F S C O N V ERG E NC E D IFF E RE NC E S
Ne t O p er a t in g Ba l anc e
2013-14
Actual
$m
2014-15 2014-15 2015-16 2016-17 2017-18
Budget Mid-year Mid-year Mid-year Mid-year
Estimate Revision Revision Revision Revision
$m
$m
$m
$m
$m
General government
AASB 1049 net operating balance
719
175
-1,287
-907
304
1,344
Plus GFS revenue adjustments
-
-
-
-
-
-
Less GFS expense adjustments
Dampier to Bunbury Natural Gas Pipeline - extinguish loan asset
Total GFS expense adjustments
-
-
-
88
88
-
-
Total GFS adjustments to AASB 1049 net operating balance
-
-
-
-88
-
-
719
175
-1,287
-995
304
1,344
AASB 1049 net operating balance
571
371
372
490
612
648
Less GFS expense adjustments
Capitalised interest
Dividends
Total GFS expense adjustments
42
825
867
25
893
918
30
1,182
1,212
33
929
962
33
985
1,018
31
1,080
1,111
Total GFS adjustments to AASB 1049 net operating balance
-867
-918
-1,212
-962
-1,018
-1,111
GFS net operating balance
-296
-547
-840
-472
-407
-463
465
-347
-2,098
-1,346
-70
912
-
-
-
-
-
-
42
42
25
25
30
30
33
88
121
33
33
31
31
GFS net operating balance
Public non-financial corporations
Total non-financial public sector
AASB 1049 net operating balance
Plus GFS revenue adjustments
Less GFS expense adjustments
Capitalised interest
Dampier to Bunbury Natural Gas Pipeline - extinguish loan asset
Total GFS expense adjustments
Total GFS adjustments to AASB 1049 net operating balance
-42
-25
-30
-121
-33
-31
GFS net operating balance
423
-372
-2,127
-1,467
-103
881
AASB 1049 net operating balance
-86
210
194
219
234
252
Less GFS expense adjustments
Dividends
Total GFS expense adjustments
154
154
101
101
112
112
116
116
119
119
122
122
Total GFS adjustments to AASB 1049 net operating balance
-154
-101
-112
-116
-119
-122
GFS net operating balance
-241
108
83
104
115
130
225
-238
-2,015
-1,242
46
1,042
-
-
-
-
-
-
42
42
25
25
30
30
33
88
121
33
33
31
31
Total GFS adjustments to AASB 1049 net operating balance
-42
-25
-30
-121
-33
-31
GFS net operating balance
183
-264
-2,045
-1,363
12
1,011
Public financial corporations
Total public sector
AASB 1049 net operating balance
Plus GFS revenue adjustments
Less GFS expense adjustments
Capitalised interest
Dampier to Bunbury Natural Gas Pipeline - extinguish loan asset
Total GFS expense adjustments
99
2014-15 Government Mid-year Financial Projections Statement
AAS B 1 0 4 9 T O G F S C O N V ERG E NC E D IFF E RE NC E S ( C O NT .)
Ne t L en d in g /- Bor r o wi n g
2013-14
Actual
$m
2014-15 2014-15 2015-16 2016-17 2017-18
Budget Mid-year Mid-year Mid-year Mid-year
Estimate Revision Revision Revision Revision
$m
$m
$m
$m
$m
General government
AASB 1049 net lending/-borrowing
Plus Net operating balance convergence difference (noted above)
GFS net lending/-borrow ing
-1,127
-1,629
-3,138
-1,335
-381
43
-
-
-
-88
-
-
-1,127
-1,629
-3,138
-1,423
-381
43
Public non-financial corporations
AASB 1049 net lending/-borrowing
-870
16
-51
22
-11
-185
Plus Net operating balance convergence difference (noted above)
-867
-918
-1,212
-962
-1,018
-1,111
-1,737
-903
-1,263
-941
-1,029
-1,295
-2,823
-2,507
-4,371
-2,242
-1,377
-1,221
GFS net lending/-borrow ing
Total non-financial public sector
AASB 1049 net lending/-borrowing
Plus Net operating balance convergence difference (noted above)
-42
-25
-30
-121
-33
-31
-2,865
-2,532
-4,401
-2,363
-1,410
-1,252
-73
218
203
227
243
261
Plus Net operating balance convergence difference (noted above)
-154
-101
-112
-116
-119
-122
GFS net lending/-borrow ing
-227
117
91
112
124
139
-3,050
-2,390
-4,280
-2,130
-1,253
-1,082
-42
-25
-30
-121
-33
-31
-3,092
-2,415
-4,309
-2,251
-1,286
-1,113
GFS net lending/-borrow ing
Public financial corporations
AASB 1049 net lending/-borrowing
Total public sector
AASB 1049 net lending/-borrowing
Plus Net operating balance convergence difference (noted above)
GFS net lending/-borrow ing
100
Appendix 1
AAS B 1 0 4 9 T O G F S C O N V ERG E NC E D IFF E RE NC E S ( C O NT .)
Ne t W or th a t 3 0 J un e
2014
Actual
$m
2015
2015
2016
2017
2018
Budget Mid-year Mid-year Mid-year Mid-year
Estimate Revision Revision Revision Revision
$m
$m
$m
$m
$m
General government
AASB1049 net worth
116,828
119,294
118,406
120,691
124,297
129,012
88
88
88
-
-
-
216
42
347
208
25
321
216
15
320
216
16
233
216
17
234
216
17
234
117,174
119,615
118,726
120,924
124,531
129,245
AASB1049 net worth
50,651
51,513
52,183
53,760
55,425
57,041
Plus
Impact of general government equity injections
Provision for doubtful debts
Total GFS net worth adjustments
-6,374
33
-6,340
-6,987
15
-6,972
-7,098
15
-7,083
-7,662
16
-7,645
-8,138
17
-8,121
-8,534
17
-8,517
GFS net w orth
44,310
44,541
45,100
46,114
47,304
48,525
116,828
119,294
118,406
120,691
124,297
129,012
88
88
88
-
-
-
250
9
347
222
11
321
232
320
233
233
233
234
233
234
117,174
119,615
118,726
120,924
124,531
129,245
1,786
1,936
1,917
2,021
2,137
2,268
9
9
11
11
-
-
-
-
1,795
1,947
1,917
2,021
2,137
2,268
116,828
119,294
118,406
120,691
124,297
129,012
88
259
347
88
233
321
88
232
320
233
233
234
234
234
234
117,174
119,615
118,726
120,924
124,531
129,245
Plus
Dampier to Bunbury Natural Gas Pipeline loan asset
Provision for doubtful debts
General government sector
Impact on public corporations net w orth
Total GFS net worth adjustments
GFS net w orth
Public non-financial corporations
Total non-financial public sector
AASB1049 net worth
Plus
Dampier to Bunbury Natural Gas Pipeline loan asset
Provision for doubtful debts
Total non-financial public sector
Impact on public corporations net w orth
Total GFS net worth adjustments
GFS net w orth
Public financial corporations
AASB1049 net worth
Plus
Provision for doubtful debts
Total GFS net worth adjustments
GFS net w orth
Total public sector
AASB1049 net worth
Plus
Dampier to Bunbury Natural Gas Pipeline loan asset
Provision for doubtful debts
Total GFS net worth adjustments
GFS net w orth
101
2014-15 Government Mid-year Financial Projections Statement
AAS B 1 0 4 9 T O G F S C O N V ERG E NC E D IFF E RE NC E S ( C O NT .)
Ch a ng e i n N et W or th
2014
Actual
$m
2015
2015
2016
2017
2018
Budget Mid-year Mid-year Mid-year Mid-year
Estimate Revision Revision Revision Revision
$m
$m
$m
$m
$m
General government
AASB1049 change in net worth
3,901
3,170
1,579
2,285
3,606
4,715
-
-
-
-88
-
-
8
-55
-46
1
1
-27
-27
1
-87
1
1
-
3,854
3,171
1,552
2,198
3,607
4,715
1,956
1,434
1,532
1,577
1,665
1,616
Plus change in:
Impact of general government equity injections
Provision for doubtful debts
Total GFS change in net worth adjustments
-528
4
-524
-593
1
-592
-724
-18
-742
-563
1
-563
-477
1
-476
-395
-395
GFS change in net w orth
1,433
841
790
1,014
1,189
1,221
3,901
3,170
1,579
2,285
3,606
4,715
-
-
-
-88
-
-
12
-59
-46
1
1
-18
-9
-27
1
-87
1
1
-
3,854
3,171
1,552
2,198
3,607
4,715
Plus change in:
Dampier to Bunbury Natural Gas Pipeline loan asset
Provision for doubtful debts
General government sector
Impact on public corporations net w orth
Total GFS change in net worth adjustments
GFS change in net w orth
Public non-financial corporations
AASB1049 change in net worth
Total non-financial public sector
AASB1049 change in net worth
Plus change in:
Dampier to Bunbury Natural Gas Pipeline loan asset
Provision for doubtful debts
Total non-financial public sector
Impact on public corporations net w orth
Total GFS change in net worth adjustments
GFS change in net w orth
Public financial corporations
AASB1049 change in net worth
38
109
131
104
116
131
Plus change in:
Provision for doubtful debts
Total GFS change in net worth adjustments
-59
-59
-
-9
-9
-
-
-
GFS change in net w orth
-21
109
122
104
116
131
3,901
3,170
1,579
2,285
3,606
4,715
-46
-46
1
1
-27
-27
-88
1
-87
1
1
-
3,854
3,171
1,552
2,198
3,607
4,715
Total public sector
AASB1049 change in net worth
Plus change in:
Dampier to Bunbury Natural Gas Pipeline loan asset
Provision for doubtful debts
Total GFS change in net worth adjustments
GFS change in net w orth
102
Appendix 1
AAS B 1 0 4 9 T O G F S C O N V ERG E NC E D IFF E RE NC E S ( C O NT .)
Cas h S ur p lus /- D ef ic i t
2013-14
Actual
$m
2014-15 2014-15 2015-16 2016-17 2017-18
Budget Mid-year Mid-year Mid-year Mid-year
Estimate Revision Revision Revision Revision
$m
$m
$m
$m
$m
General government
AASB 1049 cash surplus/-deficit
Less Acquisitions under finance leases and similar arrangements
GFS cash surplus/-deficit
-1,333
-1,622
-2,635
-1,829
-614
208
109
216
372
5
-
423
-1,441
-1,838
-3,006
-1,834
-614
-214
-1,015
-1,299
-1,898
-642
-695
-1,337
Public non-financial corporations
AASB 1049 cash surplus/-deficit
Less Acquisitions under finance leases and similar arrangements
GFS cash surplus/-deficit
264
1
1
-
-
1
-1,279
-1,299
-1,899
-642
-695
-1,338
-2,348
-2,921
-4,532
-2,471
-1,309
-1,129
372
216
373
5
-
423
-2,720
-3,137
-4,905
-2,476
-1,309
-1,552
-117
253
251
281
306
338
Total non-financial public sector
AASB 1049 cash surplus/-deficit
Less Acquisitions under finance leases and similar arrangements
GFS cash surplus/-deficit
Public financial corporations
AASB 1049 cash surplus/-deficit
Less Acquisitions under finance leases and similar arrangements
GFS cash surplus/-deficit
-
-
-
-
-
-
-117
253
251
281
306
338
-2,465
-2,668
-4,282
-2,189
-1,003
-790
372
216
373
5
-
423
-2,837
-2,884
-4,654
-2,195
-1,003
-1,214
Total public sector
AASB 1049 cash surplus/-deficit
Less Acquisitions under finance leases and similar arrangements
GFS cash surplus/-deficit
103
2014-15 Government Mid-year Financial Projections Statement
NO T E 7: LO AN CO UN CIL AL LO C AT IO N
The Australian Loan Council oversees State, Territory and Commonwealth governments’
public sector borrowings using a system of Loan Council Allocations (LCAs). LCAs are
based on net borrowings as indicated by a government’s cash deficit position 1.
An LCA deficit of $5.6 billion is forecast for 2014-15, $2.4 billion higher than the
budget-time projection of $3.2 billion. This revision is driven by larger than anticipated
cash deficits for the general government sector and public non-financial corporations
sectors, and by the impact of an increase in Keystart borrowing (impacting the LCA
memorandum item) following lower than expected home loan draw downs in 2013-14.
For 2014-15, the larger LCA deficit is mainly driven by:
•
the very significant downturn in the outlook for royalty revenue and tax collections
since the 2014-15 Budget (impacting the general government sector cash position);
•
the net impact of softer cash transactions for goods and services receipts and
associated costs and lower projected sales of surplus assets (particularly land and
housing inventories) in the public non-financial corporations sector; and
•
a $1.2 billion forecast for Keystart borrowings in 2014-15, reflecting the Board’s
upper range of current borrowing projections (with a review of these forecasts
expected to be reflected in 2015-16 Budget) 2.
Detailed financial projections are discussed in more detail in Chapter 1 of this report.
An LCA deficit of $1.8 billion is forecast for 2015-16 ($3.7 billion lower than the
expected outturn for 2014-15). The lower LCA nomination for 2015-16 primarily reflects:
1
2
•
a lower cash deficit for the total non-financial public sector, with lower deficits for
both the public non-financial corporations sector (down $806 million) and the general
government sector (down $1.3 billion), mainly due to changes to the outlook
discussed in Chapter 1; and
•
lower memorandum items (down $1.3 billion), due mainly to moderating home
lending activity relative to 2014-15.
For the purposes of LCAs, deficits are positive and surpluses are negative.
Borrowings for home lending purposes are broadly net debt neutral for the State’s balance sheet due to matching home lending
assets. Should the LCA memorandum item for home lending borrowings be substantially revised (up or down) in the coming
Budget, the overall impact on State balance sheet outcomes is broadly unchanged at a net aggregate level.
104
Appendix 1
LO AN C O U NC IL AL L O C AT IO N
W es ter n A us tr a l ia
2014-15
Budget
Mid-year
2015-16
Estimate
Revision Nomination
$m
$m
$m
General government cash surplus/deficit
1,622
2,635
Public non-financial corporations sector cash surplus/deficit
1,299
1,898
642
Total non-financial public sector cash surplus/deficit
2,921
4,532
2,471
Acquisitions under finance leases and simlar arrangements
GFS cash surplus/deficit
Less: Non-financial public sector net cash flow s from investments in
financial assets for policy purposes
Plus: Memorandum items
Loan Council Allocation
Tolerance Limit
(a)
(a)
1,829
216
373
5
3,137
4,905
2,476
-
-
-
36
681
-628
3,173
5,586
1,848
871
The tolerance limit is set at 2% of total non-financial public sector operating receipts and is specified at the time of the
nomination. The limit provides an upper and lower bound for LCA variation reporting purposes.
Note: Columns may not add due to rounding.
105
2014-15 Government Mid-year Financial Projections Statement
106
APPENDIX 2
General Government Operating
Revenue
This appendix contains estimates of general government operating revenue prepared on an
accrual basis consistent with Australian Accounting Standards and Government Finance
Statistics frameworks.
107
2014-15 Government Mid-year Financial Projections Statement
Table 2.1
O P E R AT ING R E V E NU E
G e ner a l G o v er nm ent
2013-14
TAXATION
Taxes on employers’ payroll and labour force
Payroll tax
Property taxes
Land tax
Transfer duty
Landholder duty
Total duty on transfers
Metropolitan Region Improvement Tax
Perth Parking Levy (a)
Emergency Services Levy
Loan guarantee fees
Total other property taxes
Taxes on provision of goods and services
Lotteries Commission
Video lottery terminals
Casino tax
Betting tax
Other
Total taxes on gambling
Insurance duty
Other
Total taxes on insurance
Taxes on use of goods and performance of activities
Vehicle licence duty
Permits - oversize vehicles and loads
Motor vehicle recording fee
Motor vehicle registrations
Total motor vehicle taxes
Mining Rehabilitation Levy
Landfill Levy (a)
(b)
Total Taxation
Note: Columns may not add due to rounding.
108
Actual
$m
2014-15
Budget
Estimate
$m
2014-15
Mid-year
Revision
$m
2015-16
Mid-year
Revision
$m
2016-17
Mid-year
Revision
$m
2017-18
Mid-year
Revision
$m
3,566
3,834
3,737
4,164
4,535
4,889
661
755
750
826
909
1,009
1,776
193
1,969
1,823
123
1,946
1,761
121
1,882
1,689
118
1,807
1,704
119
1,823
1,764
121
1,885
88
40
258
119
504
93
48
274
125
539
91
48
274
122
535
120
59
282
126
586
132
59
295
128
613
145
60
308
133
647
147
127
43
317
155
1
123
44
322
155
1
100
44
299
162
1
81
45
289
170
1
84
46
301
178
1
86
47
312
580
32
611
638
25
663
624
25
649
673
24
697
728
24
752
790
25
815
385
7
53
728
1,173
442
8
52
834
1,336
369
8
52
834
1,263
408
9
56
878
1,350
447
9
61
924
1,441
490
9
67
971
1,537
n.app.
47
45
60
45
60
51
104
58
105
58
108
8,849
9,500
9,220
9,875
10,536
11,260
Appendix 2
Table 2.1 (cont.)
O P E R AT ING R E V E NU E
G e ner a l G o v er nm ent
2013-14
Actual
$m
2014-15
Budget
Estimate
$m
2014-15
Mid-year
Revision
$m
2015-16
Mid-year
Revision
$m
2016-17
Mid-year
Revision
$m
2017-18
Mid-year
Revision
$m
2,507
1,103
2,215
1,055
2,267
911
1,842
813
1,957
879
2,399
867
65
58
50
45
48
48
951
168
107
1,018
179
111
1,040
173
107
1,136
176
107
1,235
179
107
1,318
189
112
469
528
528
598
665
665
151
146
139
159
155
145
160
155
145
165
164
150
170
173
155
176
183
160
1,518
1,730
1,745
1,919
2,134
2,189
484
15
52
323
363
15
70
203
325
15
65
196
323
78
197
304
82
135
303
61
96
8,199
8,006
7,884
7,712
8,224
8,765
22
30
32
35
38
41
Other Grants/National Partnerships
Housing
Transport
Other
191
242
92
166
416
66
260
611
97
124
500
38
97
832
27
99
614
3
Total Capital Grants
547
677
1,001
697
994
756
CURRENT GRANTS AND SUBSIDIES
General Purpose Grants
GST grants
North West Shelf grants
Commonw ealth compensation for changed crude oil
excise arrangements
Grants Through the State
Schools assistance – non-government schools
Local government financial assistance grants
Local government roads
National Specific Purpose Payment Agreement Grants
National Schools
National Agreement for Skills and Workforce
Development
National Disability Services
National Affordable Housing
National Health Reform
Other Grants/National Partnerships
Health
Housing
Transport
Other
Total Current Grants and Subsidies
CAPITAL GRANTS
Grants Through the State
Schools assistance – non-government schools
Note: Columns may not add due to rounding.
109
2014-15 Government Mid-year Financial Projections Statement
Table 2.1 (cont.)
O P E R AT ING R E V E NU E
G e ner a l G o v er nm ent
2013-14
Actual
$m
2014-15
Budget
Estimate
$m
2014-15
Mid-year
Revision
$m
2015-16
Mid-year
Revision
$m
2016-17
Mid-year
Revision
$m
2017-18
Mid-year
Revision
$m
525
167
149
138
42
139
36
109
93
50
630
546
168
152
163
58
132
44
107
82
56
694
547
172
154
157
56
132
39
114
104
56
723
575
169
156
176
59
144
40
113
104
70
777
574
173
157
185
59
159
41
114
88
64
810
574
176
157
186
59
154
40
116
80
63
943
2,078
2,203
2,256
2,383
2,423
2,549
INTEREST INCOME
194
210
187
212
243
255
REVENUE FROM PUBLIC CORPORATIONS
Dividends
Tax Equivalent Regime
901
602
938
530
1,226
491
976
543
1,036
617
1,133
602
Total Revenue from Public Corporations
1,503
1,468
1,717
1,520
1,653
1,736
ROYALTY INCOME
6,025
6,176
4,368
5,184
5,604
5,978
94
141
326
86
168
190
86
179
199
88
172
204
90
172
143
90
172
166
561
444
464
464
405
428
27,956
28,683
27,096
28,047
30,084
31,726
SALES OF GOODS AND SERVICES
WA Health
Department of Transport
Department of Education
State Training Providers
Department of Training and Workforce Development
Western Australian Land Information Authority
Department of Parks and Wildlife
Department of the Attorney General
Department of Commerce
Department of Mines and Petroleum
All Other
Total Sale of Goods and Services
(a) (b)
OTHER
Lease rentals
Fines
Revenue not elsew here counted
Total Other
(b)
TOTAL REVENUE
(a)
The 2014-15 Budget included this revenue as goods and services income. However, the Australian Bureau of
Statistics (ABS) advised that for Government Finance Statistics purposes, the levy should be classified as a tax.
This revised treatment was reflected in the 2013-14 Annual Report on State Finances released on 23 September 2014.
Comparative data from the 2014-15 Budget have been recast in this table for this classification change.
(b)
From 1 July 2014 the Mining Rehabilitation Fund Levy became a compulsory levy (the Levy was a previously voluntary
charge). The ABS has advised that this compulsory levy should be classified as a tax. The voluntary levy is classified as
‘other revenue’ in 2013-14 and has not been reclassified. This levy was included in the 2014-15 Budget as goods and
services income. Comparative data from the 2014-15 Budget has been recast for this classification change.
Note: Columns may not add due to rounding.
110
APPENDIX 3
Major Spending Changes
This appendix provides details of material changes in general government expenses and
total public sector infrastructure spending since the 2014-15 Budget. The portfolio
disclosures in this appendix are consistent with arrangements at the time of the Mid-year
Review cut-off date, and do not reflect the change in ministerial portfolio responsibilities
announced by the Premier on 8 December 2014.
Spending changes detailed in this appendix include:
•
all material decisions made between the 14 April 2014 cut-off date for the
2014-15 Budget and the 3 December 2014 cut-off date for this Mid-year Review; and
•
other changes of a material nature affecting agency spending over the forward
estimates period 1. These include the impact of issues such as variations in
Commonwealth-funded programs, higher cost and demand for government services,
and depreciation.
Changes relating purely to timing are not included in this appendix as they are broadly net
debt-neutral across the forward estimates period. Any material timing changes are
discussed in Chapter 1.
1
For general government expenses, materiality is determined in dollar terms. For example, adjustments to forecast recurrent costs
for the State’s largest department, WA Health, are only included if they exceed $10 million in any one year. For agencies with an
expense base of less than $100 million per annum, any change in excess of $1 million is included. For changes in infrastructure
spending, a change in annual spending in excess of 1% or $1 million in a year (whichever is larger) is considered material for the
purposes of disclosure in this appendix.
111
2014-15 Government Mid-year Financial Projections Statement
Savings Measures
The following sector-wide savings measures have been reflected in this Mid-year Review
and are discussed in Chapter 1. Specific agency financial impacts are shown in the agency
disclosures later in this appendix.
1% General Government Efficiency Dividend
As previously announced, the Government has endorsed the implementation of a 1%
general government efficiency dividend. The measure has been applied to general
government sector appropriation-funded agencies from 1 October 2014 (with the
exception of the Department of Education, which will have its efficiency dividend apply
to central and regional office spending only). The measure also includes the Public
Transport Authority and the Department of Regional Development (based on recurrent
Royalties for Regions funding, but with the $1 billion expenditure cap for the program to
remain unchanged). Savings from this measure total $424 million over the period 2014-15
to 2017-18, with specific agency impacts detailed in their respective tables.
Ongoing General Government Procurement Savings
As previously announced, the Government has endorsed the continuation of the 15%
reduction in non-essential general government procurement expenditure that was included
in the 2014-15 Budget. The measure includes expenditure on consultants, staff travel,
consumables and administration 2. Savings from this measure total $412 million over the
period 2015-16 to 2017-18, with specific agency impacts detailed in their respective
tables.
ICT Savings and Reform
The Government has endorsed a 15% annual reduction in certain agencies’ ICT
expenditure commencing from 1 January 2015. Sixteen agencies with historically high
expenditure on ICT-related services are included in this measure. The portfolio impact
tables in this appendix outline the individual savings of the affected agencies.
Total savings from this measure are $110 million from 2014-15 to 2017-18, with
$25 million of these savings being redirected to a new ICT Renewal and Reform Fund
that will support agencies in developing more efficient and innovative ICT solutions.
2
112
The procurement savings do not apply to contracts and services purchased from the not-for-profit sector, nor to direct purchases by
schools or patient support services in the health sector.
Appendix 3
Public Sector Workforce Renewal
A new workforce renewal policy is to apply from 1 January 2015. Under this
arrangement, public sector employees leaving through resignation or retirement are to be
replaced with lower cost alternatives. This measure aims to address the impact of
‘classification creep’ and achieve significant salary savings. When an employee leaves an
agency through resignation or retirement, the agency will only be able to retain 60% of
the employee’s ongoing salary. For defined front-line employees (police officers,
teachers, nurses, medical practitioners, fire fighters, train drivers and child protection
workers), the relevant agency will be able to retain 90% of the ongoing salary, in
recognition of relative demand pressures and other limitations with these key occupations.
This measure is expected to improve the general government sector operating position by
$67 million in 2014-15, and a total of nearly $1.3 billion over the four years to 2017-18.
These savings are reflected as a global provision in this Mid-year Review (see Provisions
at the end of this appendix), and will be reflected at an individual agency level in the
2015-16 Budget.
Targeted Voluntary Separation Scheme
On 9 October 2014, the Government announced a new voluntary separation scheme for
general government sector employees, with specific agencies to be targeted for the
scheme. The financial impact of the scheme on agency budgets will be dependent on
factors such as up-take by surplus staff, and the entitlements of separating employees.
The allocation of separations to specific agencies is provided in following table.
This Mid-year Review includes a provision of $134 million for separation costs in
2014-15, with a further $49 million in projected accrued leave payments expensed in
earlier years also expected to be paid in 2014-15 under the scheme. Consequential savings
from 2015-16 are also provisioned in this Mid-year Review.
T ARG ET ED V O LU NT ARY S E P AR AT IO N S
Agency
(a)
Separations
Target
Health
Education
State Training Providers
Corrective Services
Agriculture and Food
Parks and Wildlife
Child Protection and Family Support
Western Australia Police (excludes sworn Police Officers)
Disability Services Commission
Attorney General
Transport
Finance
Main Roads
Commerce
Culture and the Arts
Unallocated
Total
(a)
500
200
200
100
100
50
40
40
30
30
30
30
20
20
10
100
1,500
There will be some flexibility to adjust these estimates (up or down) in light of any unforeseen circumstances.
113
2014-15 Government Mid-year Financial Projections Statement
Asset Investment Program Savings
As announced on 9 October 2014, the Government has endorsed a further 5% reduction to
most agencies’ asset investment programs. This is in addition to the 5% reduction
announced in the 2014-15 Budget. The decision primarily reflects lower than expected
escalation in building costs, as well as final tender results typically coming in below
pre-tender estimates for a variety of projects across the public sector. Estimated savings
from the latest measure total $542 million from 2015-16 to 2017-18, with specific agency
impacts detailed in their respective tables.
114
Appendix 3
Major Spending Changes (by Portfolio)
PREMIER; MINISTER FOR STATE DEVELOPMENT; SCIENCE
M AJO R S P EN DI NG C H AN G E S
2014-15
$m
2015-16
$m
2016-17
$m
2017-18
$m
-1.2
1.4
-1.6
-0.8
0.5
-1.6
-0.8
-
-1.6
-0.8
-
-0.1
-0.2
-0.2
-0.2
1.7
1.0
0.4
0.4
-0.1
-0.3
-0.3
-0.2
-0.3
-0.3
-0.2
-0.3
-0.3
-0.2
-
-0.4
-0.4
-0.4
PREMIER AND CABINET
Expenses
Efficiency Dividend
Ongoing Procurement Savings
Strategic Assessment of the Perth and Peel Regions
PUBLIC SECTOR COMMISSION
Expenses
ICT Reform
LOTTERIES COMMISSION
Asset Investment
Software and Information Technology Infrastructure
STATE DEVELOPMENT
Expenses
Efficiency Dividend
Ongoing Procurement Savings
ICT Reform
CHEMISTRY CENTRE
Expenses
Ongoing Procurement Savings
Premier and Cabinet
Expenses
Strategic Assessment of the Perth and Peel Regions (SAPPR)
An additional $1.9 million will be spent over two years from 2014-15 by the Department
of the Premier and Cabinet on studies and planning activities related to the SAPPR
project. This project will assess the environmental impact of future land use development
proposals in the Perth and Peel region, including the impact of urban, industrial and
infrastructure projects.
Lotteries Commission
Asset Investment
Software and Information Technology Infrastructure
Additional capital expenditure totalling $3.4 million has been approved for software and
information technology infrastructure, mainly to upgrade and replace end-of-life
technology.
115
2014-15 Government Mid-year Financial Projections Statement
DEPUTY PREMIER; MINISTER FOR HEALTH; TRAINING AND
WORKFORCE DEVELOPMENT
M AJO R S P EN DI NG C H AN G E S
2014-15
$m
2015-16
$m
2016-17
$m
2017-18
$m
WA HEALTH
Expenses
Changes to National Health Reform Agreement
Depreciation
Fiona Stanley Hospital Facilities Management
– Interest Expense
– Contract Negotiations
Multi-purpose Service Units
Aged Care Assessment Program
Efficiency Dividend
Ongoing Procurement Savings
-4.2
-14.9
-24.7
2.6
-6.5
16.7
-26.2
0.7
-31.6
-
1.9
-26.2
1.5
-42.9
-39.2
1.6
-26.2
-10.0
-43.5
-37.9
1.5
-26.2
-10.0
-43.6
-39.1
Asset Investment
Fiona Stanley Hospital
– Facilities Management Lease Repayment
– Information and Communication Technology
Renal Dialysis and Support Services
Asset Investment Program Savings
-23.0
11.7
18.0
-
15.9
15.0
-12.4
3.5
8.0
-7.6
5.4
2.8
-5.1
-1.7
-3.1
-
0.2
-4.1
-2.4
0.3
-4.1
-2.3
-52.2
-4.1
-2.3
-
-0.9
-0.7
- (a)
- (a)
8.4
-6.7
-0.1
0.9
-6.9
-0.1
-6.5
-6.6
-0.1
-27.3
TRAINING AND WORKFORCE DEVELOPMENT
Expenses
Alignment to 2014-15 Commonwealth Budget
Efficiency Dividend
Ongoing Procurement Savings
Asset Investment
Asset Investment Program Savings
STATE TRAINING PROVIDERS
Expenses
Ongoing Procurement Savings
ICT Reform
Update of Financial Projections
(a)
Amount less than $50,000.
WA Health
Expenses
Changes to National Health Reform Agreement (NHRA)
In its 2014-15 Budget, the Commonwealth Government announced a reduction in funding
under the NHRA for public hospital services in Western Australia of approximately
$300 million over the period 2015-16 to 2017-18. The State has met this shortfall through
an increase in appropriation funding, with no change in overall expenditure.
Depreciation
Depreciation expense over the forward estimates has been updated to recognise a change
in depreciation policy for plant and equipment assets, refinements to the depreciation
expense associated with hospital closures, and the flow-on impact to depreciation from
updates to the timing of capital expenditure in the Asset Investment Program.
116
Appendix 3
Fiona Stanley Hospital Facilities Management Interest Expense
The interest expense associated with the Fiona Stanley Hospital (FSH) Facilities
Management contract will be reduced by $6.5 million in 2014-15 and increase by
$5 million over the forward estimates. The changes reflect the impact of the phased
opening of the FSH, the timing of the acquisition and commissioning of assets, the
estimated value of the assets to be acquired and revisions in the useful life of these assets
over the contract period.
Fiona Stanley Hospital Facilities Management Contract Negotiations
The Government has approved an additional $16.7 million in 2014-15 to finalise the
contract variation for the provision of pre-operational facilities management services by
Serco at the FSH. This additional amount is due to the phased opening of the hospital in
2014-15.
The 2013-14 Mid-year Review identified that the State and Serco had reached an
agreement for the provision of facilities management services at FSH between
January 2014 and March 2015. It was also noted that as certain elements of the facilities
management service were still subject to negotiation, there would be a risk of further costs
associated with the issue. The additional $16.7 million is within the risk expectations set
at that time.
Multi-purpose Service Units
Annual expenditure (and equivalent Commonwealth funding) of $26.2 million for
Multi-purpose Service Units has been removed from the budget estimates to reflect that
the Commonwealth – State funding agreement is yet to be finalised. The expenditure for
the Multi-purpose Service Units provides improved access to health and aged care
services in rural communities and will be reinstated when the agreement is finalised and
funding guaranteed.
Aged Care Assessment Program
Additional expenditure of $0.7 million in 2014-15 and $1.5 million in 2015-16 indicates a
marginal increase in the base allocation of $10 million for the Aged Care Assessment
Program (ACAP), which is a Commonwealth-funded program delivered by the State.
The signing of a new agreement with the Commonwealth has resulted in the ACAP
expenditure estimates being reduced by $10 million in 2016-17 and 2017-18 as the latest
agreement is for a two year period only.
117
2014-15 Government Mid-year Financial Projections Statement
Asset Investment
Fiona Stanley Hospital Facilities Management Lease Repayment
The FSH Facilities Management contract lease repayments will be reduced by $23 million
in 2014-15, increased by $15.9 million in 2015-16, $3.5 million in 2016-17 and
$5.4 million in 2017-18. The changes to the repayment schedule reflect the impact of the
phased opening of the FSH, and include updates to the timing and value of assets to be
acquired, revisions to the useful life of assets and interest rate changes over the contract
period.
Fiona Stanley Hospital Information and Communication Technology
An additional $11.7 million will be spent in 2014-15 to ensure the FSH information and
communication technology (ICT) platform and systems are stabilised prior to Phase 3
opening. This expenditure will support the staged commissioning of the new hospital,
support the reconfiguration and remediation of applications, and provide onsite help desk
support to ICT users at the hospital.
Renal Dialysis and Support Services
A total of $43.8 million will be invested over the four years from 2014-15 to 2017-18 to
expand the delivery of renal dialysis and support services. This includes 17 additional
renal dialysis chairs and more patient accommodation in regional Western Australia.
This investment is fully funded by the Commonwealth as part of the Health and Hospitals
Fund allocations.
Training and Workforce Development
Expenses
Alignment to 2014-15 Commonwealth Budget
Projected spending on training has been revised down by $53.4 million over the forward
estimates period. This primarily reflects the scheduled expiry of the National Partnership
Agreement on Skills Reform (NPASR) in 2016-17, which results in a reduction in
estimated Commonwealth grants of $52.2 million in 2017-18.
State Training Providers
Expenses
Update of Financial Projections
Total spending by the eleven State Training Providers will decrease by $24.5 million over
the forward estimates period. This is being driven by an update of expenditure forecasts in
line with expected training delivery and the expiry of the NPASR funding in 2016-17.
118
Appendix 3
MINISTER FOR REGIONAL DEVELOPMENT; LANDS;
MINISTER ASSISTING THE MINISTER FOR STATE
DEVELOPMENT
M AJO R S P EN DI NG C H AN G E S
2014-15
$m
2015-16
$m
2016-17
$m
2017-18
$m
-1.9
-0.5
-3.5
-0.4
-4.2
-0.3
-4.6
1.5
11.5
-
-
-
-1.9
-1.4
-1.4
-1.5
-53.4
7.8
-
92.5
3.7
-16.0
10.1
-19.1
-113.2
-20.6
Expenses
Strata Titles Act Reform
Ongoing Procurement Savings
1.3
-
0.9
-0.7
1.0
-0.8
1.0
-0.9
Asset Investment
Strata Titles Act Reform
3.7
1.2
-
-
REGIONAL DEVELOPMENT
Expenses
Ongoing Procurement Savings
Efficiency Dividend
LANDS
Expenses
Redevelopment of the Claremont North East Precinct –
Claremont Football Club
Compensation to the Thalanyji Native Title Holders
WESTERN AUSTRALIAN LAND AUTHORITY
Expenses
Operating Subsidy Savings
Asset Investment
Revised Financial Forecasts
Albany Middleton Beach Site Acquisition
Asset Investment Program Savings
WESTERN AUSTRALIAN LAND INFORMATION
AUTHORITY
Lands
Expenses
Redevelopment of the Claremont North East Precinct – Claremont Football
Club
An amount of $1.5 million will paid in 2014-15 to the Claremont Football Club for the
maintenance, repair and renewal of the new Club premises.
Compensation to the Thalanyji Native Title Holders
The Government has offered compensation of $11.5 million under section 217(3) of the
Land Administration Act 1997 to the Buurabalayji Thalanyji Aboriginal Corporation for
Onslow ‘Area 4’.
119
2014-15 Government Mid-year Financial Projections Statement
Western Australian Land Authority (LandCorp)
Expenses
Operating Subsidy Savings
On 9 October 2014, the Government announced that efficiency savings were to be
achieved by a number of public corporations. This includes a 7.5% reduction in the
general government operating subsidy to LandCorp in 2014-15, and a 10% reduction in
the base operating subsidy in subsequent years, which is to be matched by lower operating
costs in the Authority. LandCorp has implemented the full operating subsidy amount of
$6.2 million over the forward estimates period, applied with varying percentages over the
four years. Full allocation of these savings to LandCorp’s specific activities is still being
identified and will be considered as part of the 2015-16 Budget process.
Asset Investment
Revised Financial Forecasts
The revised financial estimates reflect LandCorp’s strategic direction in terms of land
sales, acquisitions and development expenditure. Softening property market conditions,
particularly in the regional and industry sectors, have led to the Authority implementing a
range of measures such as deferring development expenditure and acquisitions on a
number of projects in order to minimise impacts on the State’s finances.
Albany Middleton Beach Site Acquisition
A total of $11.5 million (including $4.8 million from Royalties for Regions) will be spent
across the forward estimates period to fund the acquisition of land and subsequent
development of the former Esplanade Hotel site. This includes development works to
Flinders Parade and associated infrastructure and landscaping improvements to the
beachfront.
Western Australian Land Information Authority (Landgate)
Expenses
Strata Titles Act Reform
An additional $4.2 million will be spent over four years from 2014-15 to provide the legal
and policy capacity to prioritise the delivery of reforms to the Strata Titles
Act 1985 (WA). The legislative changes to the Act will support flexible land tenure
arrangements, provide a model for the renewal or replacement of old housing stock, and
improve management provisions and dispute resolution processes associated with strata
developments.
120
Appendix 3
Asset Investment
Strata Titles Act Reform
An additional $4.9 million will be spent over two years from 2014-15 for upgrades to
Landgate’s ICT infrastructure and software requirements to support reforms to the Strata
Titles Act 1985 (WA).
MINISTER FOR EDUCATION; ABORIGINAL AFFAIRS; ELECTORAL
AFFAIRS
M AJO R S P EN DI NG C H AN G E S
2014-15
$m
2015-16
$m
2016-17
$m
2017-18
$m
12.9
3.8
-1.5
-5.2
31.2
7.6
-2.1
-8.4
-10.6
7.6
-2.2
-8.6
-10.9
7.6
-2.3
-8.8
-11.1
0.3
11.3
2.6
6.4
26.1
-
9.8
-
0.5
0.3
-
-9.0
-5.1
-4.4
-
13.9
-
-
SCHOOL CURRICULUM AND STANDARDS AUTHORITY
Efficiency Dividend
Ongoing Procurement Savings
-0.3
-
-0.3
-0.2
-0.3
-
-0.3
-
COUNTRY HIGH SCHOOL HOSTELS AUTHORITY
Ongoing Procurement Savings
-0.5
-0.5
-0.5
-0.5
-
-0.3
-0.2
-0.3
-0.2
-0.4
-0.2
EDUCATION
Expenses
Extension to the National Partnership Agreement on
Universal Access to Early Childhood Education
School Chaplaincy Program
Efficiency Dividend
Ongoing Procurement Savings
ICT Reform
Asset Investment
Accommodation for Churchlands Senior High School
Trade Training Centres
Extension to the National Partnership Agreement on
Universal Access to Early Childhood Education
Fremantle College
Asset Investment Program Savings
EDUCATION SERVICES
Expenses
Per Capita Grants to Non-Government Schools
ABORIGINAL AFFAIRS
Expenses
Efficiency Dividend
Ongoing Procurement Savings
121
2014-15 Government Mid-year Financial Projections Statement
Education
Expenses
Extension to the National Partnership Agreement on Universal Access to Early
Childhood Education
An additional $44.1 million will be spent on continuing the provision of 15 hours per
week of kindergarten to all age-eligible children in the 2015 school year. The State
Government currently funds 11 hours per week of kindergarten to Western Australian
children. The additional expenditure reflects a one year extension of Commonwealth
funding for four additional hours of kindergarten.
School Chaplaincy Program
A total of $26.7 million will be spent to continue the Commonwealth Government’s
National Chaplaincy Program, which provides funding to allow government and
non-government schools to have school chaplains. Under the arrangement, funds will be
distributed from the Commonwealth directly to the Department, which will then allocate
funding to service providers.
Asset Investment
Accommodation for Churchlands Senior High School
A total of $38.8 million will be invested from 2014-15 to 2017-18 to increase the
permanent capacity at Churchlands Senior High School by 500 students to cater for
increased student enrolment growth. This will increase the school’s capacity to 2,200
students in time for the 2018 school year.
Trade Training Centres
A total of $17.7 million will be invested over two years on five new Trade Training
Centres announced as part of round five of the Commonwealth’s Trade Training Centres
program. The new Trade Training Centres will be located at Katanning, Halls Creek,
Kullarri, Coodanup and Gilmore.
Extension to the National Partnership Agreement on Universal Access to Early
Childhood Education
The Government will invest a further $500,000 in 2014-15 to build early childhood
annexes at schools to assist in providing kindergarten to all age-eligible children.
122
Appendix 3
Fremantle College
An initial investment of $250,000 has been allocated to investigate the infrastructure
options for the proposed Fremantle College. It is envisaged that the current South
Fremantle Senior High School (SHS) site will be redeveloped to accommodate students
from both Hamilton SHS and South Fremantle SHS, with redevelopment costs to be met
from the sale proceeds of the Hamilton SHS site. A business case will be presented for
Government consideration as part of the 2015-16 Budget.
Education Services
Expenses
Per Capita Grants to Non-Government Schools
The Department will administer an additional $13.9 million in per capita grants to
non-government schools in 2015-16, which will address indexation and enrolment growth
in the non-government school sector.
MINISTER FOR PLANNING; CULTURE AND THE ARTS
M AJO R S P EN DI NG C H AN G E S
2014-15
$m
2015-16
$m
2016-17
$m
2017-18
$m
1.5
-0.4
-0.2
1.0
-0.4
-1.7
-0.5
-0.4
-1.2
-0.5
-0.4
-1.4
-0.5
5.0
-
9.7
-2.6
4.5
-1.4
-0.4
-0.5
Expenses
Extension of the Metropolitan Region Improvement Tax
Rockingham Housing Project
Ongoing Procurement Savings
1.2
-
5.3
-0.2
6.2
-0.2
7.1
-
Asset Investment
Extension of the Metropolitan Region Improvement Tax
Asset Investment Program Savings
-
5.3
-1.8
6.2
-1.8
7.2
-1.7
-0.6
0.5
-0.6
-
-1.0
-2.0
-0.4
1.2
-1.0
-2.0
-2.5
-0.2
-1.0
-1.7
-1.9
-0.6
PLANNING
Expenses
Strategic Assessment of the Perth and Peel Regions
Efficiency Dividend
Ongoing Procurement Savings
ICT Reform
METROPOLITAN REDEVELOPMENT AUTHORITY
Asset Investment
Revised Financial Forecasts
Asset Investment Program Savings
WESTERN AUSTRALIAN PLANNING COMMISSION
CULTURE AND THE ARTS
Expenses
Efficiency Dividend
Ongoing Procurement Savings
Perth International Arts Festival
Reduction in Own-source Revenue
Depreciation
123
2014-15 Government Mid-year Financial Projections Statement
Planning
Expenses
Strategic Assessment of the Perth and Peel Regions (SAPPR)
An additional $2.5 million will be spent over two years from 2014-15 by the Department
of Planning on studies and planning activities related to the SAPPR project. This project
will assess the environmental impact of future land use development proposals in the
Perth and Peel region, including the impact of urban, industrial and infrastructure projects.
Metropolitan Redevelopment Authority
Asset Investment
Revised Financial Forecasts
The Authority has revised the financial forecasts for all of its key projects, such as
Elizabeth Quay, Perth City Link, Riverside, Perth Cultural Centre, Subi Centro, Midland,
Scarborough, Armadale and Wungong. The revisions reflect more accurate timelines of
expenditure for development works, finalisation of contract negotiations and updated
revenue projections (based on current market conditions).
Western Australian Planning Commission
Expenses
Extension of the Metropolitan Region Improvement Tax
An additional $18.6 million will be spent on planning activities over three years from
2015-16 reflecting the proposed State-wide extension of the Metropolitan Region
Improvement Tax (MRIT) and associated Metropolitan Region Improvement Fund,
creating a single Metropolitan and Regional Improvement Tax and related Metropolitan
and Regional Improvement Fund. The implementation of the expanded MRIT from
1 July 2015 is subject to the passage of legislation.
Rockingham Housing Project
An additional $1.2 million will be spent in 2014-15 to recoup LandCorp for the
remediation of a contaminated site in Rockingham.
Asset Investment
Extension of the MRIT
The Commission’s land acquisition program has been increased by $18.7 million over the
period 2015-16 to 2017-18 to meet the State’s statutory and planning obligations as a
result of the proposed State-wide extension of the MRIT.
124
Appendix 3
Culture and the Arts
Expenses
Perth International Arts Festival
An amount of $500,000 will be spent in 2014-15 in relation to the Perth International Arts
Festival for ‘The Giants’ event by Royale Deluxe.
Reduction in Own-source Revenue
Expenditure has been revised downwards by $5.4 million over the forward estimates to
reflect a corresponding reduction in own-source revenue, primarily due to the closure of
the Perth Museum site in 2016-17 to allow for the construction of the new Museum, and
for the outsourcing of the food and beverage function at Perth Theatre Trust venues.
Depreciation
Depreciation expenses on the portfolio’s asset base have been revised upwards by
$452,000 over the forward estimates following a review of building valuations.
MINISTER FOR POLICE; TOURISM; ROAD SAFETY;
WOMEN’S INTERESTS
M AJO R S P EN DI NG C H AN G E S
2014-15
$m
2015-16
$m
2016-17
$m
2017-18
$m
-8.9
-3.5
-12.4
-11.6
-7.1
-13.0
-11.2
-7.3
-13.2
-10.7
-7.5
-
-2.8
-1.9
-0.9
-0.5
-
-0.6
-0.7
-0.5
-0.7
10.0
-0.5
-0.7
WESTERN AUSTRALIA POLICE
Expenses
Efficiency Dividend
Ongoing Procurement Savings
ICT Reform
Asset Investment
Asset Investment Program Savings
WESTERN AUSTRALIAN TOURISM COMMISSION
Expenses
Royalties for Regions – Continuation of Events Funding
Efficiency Dividend
Ongoing Procurement Savings
Western Australian Tourism Commission
Expenses
Royalties for Regions – Continuation of Events Funding
An amount of $10 million will be spent in 2017-18 to enable the Commission to continue
delivering a balanced and diverse calendar of events that increases the international
appeal of Western Australia.
125
2014-15 Government Mid-year Financial Projections Statement
MINISTER FOR MENTAL HEALTH; DISABILITY SERVICES;
CHILD PROTECTION
M AJO R S P EN DI NG C H AN G E S
2014-15
$m
2015-16
$m
2016-17
$m
2017-18
$m
-4.7
-
3.4
-6.4
-0.5
1.7
-6.7
-0.6
1.8
-7.0
-0.5
-5.1
-
2.5
-7.2
-1.5
2.6
-7.7
-1.4
2.6
-7.7
-1.4
-4.1
-0.8
-5.5
-2.7
-1.6
-5.7
-2.6
-1.6
-5.8
-2.6
-1.7
MENTAL HEALTH COMMISSION
Expenses
Office Accommodation Relocation
Efficiency Dividend
Ongoing Procurement Savings
DISABILITY SERVICES COMMISSION
Expenses
Disability Justice Centre: Reinstatement of Salary
Funding
Efficiency Dividend
Ongoing Procurement Savings
CHILD PROTECTION AND FAMILY SUPPORT
Expenses
Efficiency Dividend
Ongoing Procurement Savings
ICT Reform
Mental Health Commission
Expenses
Office Accommodation Relocation
An additional $6.9 million will be spent from 2015-16 to 2017-18 to co-locate the Drug
and Alcohol Office and the Mental Health Commission following the amalgamation of
the two entities. The co-location, to occur in new premises in East Perth, will result in
additional fit-out, relocation and ongoing lease costs.
Disability Services Commission
Expenses
Disability Justice Centre: Reinstatement of Salary Funding
Around $7.7 million will be spent from 2015-16 to 2017-18 for staffing costs at the
Disability Justice Centre (DJC) in Caversham. The DJC is expected to be operational by
July 2015.
126
Appendix 3
ATTORNEY GENERAL; COMMERCE
M AJO R S P EN DI NG C H AN G E S
2014-15
$m
2015-16
$m
2016-17
$m
2017-18
$m
ATTORNEY GENERAL
Expenses
Criminal Property Confiscations Grants
Old Treasury Building Relocation
Sale of the Integrated Courts Management System (ICMS)
Efficiency Dividend
Ongoing Procurement Savings
ICT Reform
Asset Investment
ICMS – Fines Enforcement Registry
Asset Investment Program Savings
1.9
3.4
2.3
-1.4
-1.2
25.4
2.8
-2.0
-4.8
-2.4
20.8
0.6
-2.0
-5.0
-2.5
15.8
0.7
-2.1
-5.3
-2.6
0.4
-
0.6
-0.4
-0.5
-0.4
-
-0.3
-0.3
-0.1
-0.3
-0.3
-0.1
-0.3
-0.3
-0.1
-
-0.3
-0.3
-0.3
-1.6
-0.3
-
-0.1
-0.4
-0.7
-0.1
-0.4
-0.7
0.2
-0.4
-0.7
-0.6
-0.2
0.9
0.5
-7.0
2.0
-0.7
-1.3
-0.4
0.7
0.8
0.5
2.1
-0.7
-1.3
-0.4
0.9
1.8
3.3
2.1
-0.8
-1.3
-0.4
2.0
2.2
4.8
2.2
- (a)
-0.1
-0.1
-0.1
-
-0.7
-0.8
-0.8
CORRUPTION AND CRIME COMMISSION
Expenses
Efficiency Dividend
Ongoing Procurement Savings
ICT Reform
-
(a)
OFFICE OF THE DIRECTOR OF PUBLIC
PROSECUTIONS
Expenses
Efficiency Dividend
LEGAL AID COMMISSION
Expenses
Commonwealth Grants
Efficiency Dividend
Ongoing Procurement Savings
COMMERCE
Expenses
Efficiency Dividend
Ongoing Procurement Savings
ICT Reform
Accommodation Funding
EnergySafety Division
Home Indemnity Insurance
WorkSafe Division
REGISTRAR, WESTERN AUSTRALIAN INDUSTRIAL
RELATIONS COMMISSION
Expenses
ICT Reform
WORKCOVER WESTERN AUSTRALIA AUTHORITY
Expenses
Ongoing Procurement Savings
(a)
Amount less than $50,000.
127
2014-15 Government Mid-year Financial Projections Statement
Attorney General
Expenses
Criminal Property Confiscations Grants
An additional $1.9 million will be spent in 2014-15 to reflect increased grants for a
number of purposes including law enforcement and the provision of services that address
the impact and damage done by illegal activities. These grants are approved by the
Attorney General and are paid to non-government and local government organisations
from funds generated in the Confiscations Proceeds Account.
Old Treasury Building Relocation
A provisional allocation of $65.4 million from 2014-15 to 2017-18 has been approved for
costs associated with the relocation of the State Administrative Tribunal, the Supreme
Court (Civil) and the Department of the Attorney General to the Old Treasury Building
Tower and St Georges Cathedral Heritage Precinct. The additional spending includes
lease expenses, security, ICT and electricity costs.
Sale of the Integrated Courts Management System (ICMS)
An additional $6.4 million from 2014-15 to 2017-18 will be spent to reflect the provision
of support and help desk services to the Australian Capital Territory (ACT) associated
with the sale of the ICMS. This will be fully funded from revenue received from the ACT
on a cost recovery basis.
Asset Investment
ICMS – Fines Enforcement Registry
A total of $1 million will be invested over 2014-15 and 2015-16 for the completion of the
Fines Enforcement Registry ICMS, funded by proceeds from the sale of the ICMS to the
ACT.
Legal Aid Commission
Expenses
Commonwealth Grants
Spending will be reduced by a total of $1.5 million from 2014-15 to 2017-18 to reflect
lower Commonwealth funding for programs associated with the provision of legal
assistance services.
128
Appendix 3
Commerce
Expenses
Accommodation Funding
An additional $4.5 million over the four years to 2017-18 has been approved to support
the Department’s office accommodation relocation and realignment to the Mason Bird
Building in Cannington, and existing government office accommodation at the
Westcentre (West Perth) and Gordon Stephenson House (Perth).
EnergySafety Division
Increased expenditure of $5.3 million over the four years to 2017-18 has been approved to
ensure the EnergySafety Division is able to continue to deliver its regulatory services to
Western Australia’s electrical and gas industries, in accordance with its 2014-15 and
2015-16 Business Plan.
Home Indemnity Insurance
An expenditure reduction of $7 million in 2014-15, and an increase of $8.6 million over
the three years to 2017-18, has been approved to reflect the Government’s decision to
extend the existing Home Indemnity Insurance scheme by a further two years, and revised
data in relation to claims expenditure.
WorkSafe Division
Increased expenditure of $8.4 million over the four years to 2017-18 has been approved to
ensure the WorkSafe Division is able to continue to deliver its regulatory functions in
relation to occupational health and safety, and to meet Government commitments under
the Inter-Governmental Agreement for Regulatory and Operational Reform in
Occupational Health and Safety.
MINISTER FOR MINES AND PETROLEUM; HOUSING
M AJO R S P EN DI NG C H AN G E S
2014-15
$m
2015-16
$m
2016-17
$m
2017-18
$m
MINES AND PETROLEUM
Expenses
Efficiency Dividend
Ongoing Procurement Savings
ICT Reform
-0.6
- (a)
-0.8
-2.5
-0.1
-0.9
-2.5
-0.1
-0.7
-2.5
-0.1
20.6
-11.3
72.4
-10.0
-5.6
-22.2
-48.7
HOUSING AUTHORITY
Asset Investment
Asset Investment Program Savings
Other Infrastructure Movements
(a)
Amount less than $50,000.
129
2014-15 Government Mid-year Financial Projections Statement
Housing Authority
Asset Investment
Other Infrastructure Movements
Higher spending in 2014-15 and 2015-16 largely reflects a change in classification of
Shared Equity spending from operating activities to infrastructure investment following
finalisation of the Authority’s 2013-14 annual report. This spending was classified to
operating activities, along with Affordable Housing transactions, as part of the audit of the
Authority’s 2012-13 annual report. However, Shared Equity transactions should have
been retained as infrastructure spending. This accounting change does not adjust the
Authority’s overall spending on these activities.
Lower spending in 2016-17 and 2017-18 reflects a decrease in land development
activities due to softening housing market conditions, particularly in the Pilbara region.
130
Appendix 3
MINISTER FOR SPORT AND RECREATION; RACING AND
GAMING
M AJO R S P EN DI NG C H AN G E S
2014-15
$m
2015-16
$m
2016-17
$m
2017-18
$m
-
-0.4
-0.4
-0.3
-0.4
-0.4
-91.1
-291.2
-329.1
-76.1
0.1
4.3
-2.5
-0.5
0.1
4.7
-4.2
-0.5
0.1
0.6
-4.2
-0.5
-4.2
-
-0.9
-0.9
-0.6
-24.2
-48.0
-50.0
-52.0
-
-0.4
-0.5
-0.4
-
-0.3
-0.3
-0.3
11.0
2.0
-
-
-
-0.8
-0.9
-0.6
SPORT AND RECREATION
Expenses
Efficiency Dividend
Ongoing Procurement Savings
Asset Investment
New Perth Stadium
WESTERN AUSTRALIAN SPORTS CENTRE TRUST
Expenses
Ongoing Procurement Savings
HBF Stadium – Naming Rights
nib Stadium – Operational Costs
Outsourcing of Catering Function
Asset Investment
Asset Investment Program Savings
RACING GAMING AND LIQUOR
Expenses
Gambling Tax Rebates – Casino
RACING AND WAGERING WESTERN AUSTRALIA
Asset Investment
Asset Investment Program Savings
WESTERN AUSTRALIAN GREYHOUND RACING
ASSOCIATION
Expenses
Ongoing Procurement Savings
Asset Investment
New Cannington Complex
BURSWOOD PARK BOARD
Expenses
Ongoing Procurement Savings
Sport and Recreation
Asset Investment
New Perth Stadium
The new Perth Stadium is being developed as a Public Private Partnership through a
Design, Build, Finance and Maintain contract, with a 25 year term anticipated to
commence in January 2018. Previous forecasts showed the acquisition of the stadium
asset as infrastructure spending by the Department. These cash flows have been replaced
by the cashflows reflecting a 60% capital contribution from the State and the private
sector financing transactions associated with the stadium construction as detailed in the
contract (see net debt discussion in Chapter 1).
131
2014-15 Government Mid-year Financial Projections Statement
Western Australian Sports Centre Trust
Expenses
HBF Stadium – Naming Rights
An amount of $267,000 over the three years to 2016-17 will be spent to meet costs
associated with the naming rights agreement with HBF for Arena Joondalup (HBF Arena)
and Challenge Stadium (HBF Stadium), including for the rebranding of existing venue
equipment, stationery and uniforms. These costs are offset by additional revenue received
as part of the naming rights agreement.
nib Stadium – Operational Costs
As a result of the Trust taking over the management of nib Stadium from
September 2014, additional expenditure of $9.6 million over the three years to 2016-17,
funded through an associated increase in external revenues, has been approved to
recognise the commercial operations of nib Stadium over this period.
Outsourcing of Catering Function
A $15.2 million reduction in expenses over the four years to 2017-18 will be delivered as
a result of the Trust outsourcing the catering function across several venues.
The reduction in expenses is offset by a reduction in projected revenue for this function.
Racing Gaming and Liquor (Administered)
Expenses
Gambling Tax Rebates - Casino
As recently announced, gambling tax rebates paid to Crown Casino will reduce by
$174.2 million over the forward estimates period as GST rebates ($228 million) will cease
from 24 December 2014 and be replaced temporarily by a new rebate on international
commission business (ICB, $54 million) until the associated State Agreement can be
amended to provide for a minimum ICB payment. The change in GST rebates will be
accompanied by lower casino tax rates (reducing revenue by an estimated $164 million,
discussed in Chapter 1). The new arrangement is expected to improve the general
government sector operating balance by a net $10 million over the four years to 2017-18.
Western Australian Greyhound Racing Association
Asset Investment
New Cannington Complex
An amount of $13 million over the two years to 2015-16 will be spent on the construction
of a new greyhounds training, trialling and racing facility at Cannington.
132
Appendix 3
MINISTER FOR AGRICULTURE AND FOOD; FISHERIES
M AJO R S P EN DI NG C H AN G E S
2014-15
$m
2015-16
$m
2016-17
$m
2017-18
$m
-0.8
-
-1.2
-3.0
-1.3
-3.0
-1.3
-2.9
-
-0.5
-0.2
-0.1
-1.9
1.2
1.2
-0.3
-
1.2
-0.5
-2.1
1.2
-0.5
-2.1
1.2
-0.5
-2.0
AGRICULTURE AND FOOD
Expenses
Efficiency Dividend
Ongoing Procurement Savings
Asset Investment
Asset Investment Program Savings
FISHERIES
Expenses
Aquatic Biosecurity
Commercial Revenue Revisions
Recreational Fishing Initiatives Fund
Efficiency Dividend
Ongoing Procurement Savings
Fisheries
Expenses
Aquatic Biosecurity
A reduction in expenditure of $1.9 million will be achieved in 2014-15 by streamlining
the aquatic biosecurity program and ceasing lower priority research and compliance
activities. This reflects a delay in cost recovery arrangements being finalised for this
function.
Commercial Revenue Revisions
An additional $1.2 million per annum from 2014-15 will be spent on the delivery of
commercial fishing compliance, research and policy functions, funded through higher
forecast commercial licence revenue.
Recreational Fishing Initiatives Fund
An additional $1.2 million will be spent in 2014-15 to deliver agreed projects between the
State and Recfishwest that will benefit the experience of recreational fishers in
Western Australia, including an artificial reef structure at Rottnest Island and the
enhancement of snapper stock.
133
2014-15 Government Mid-year Financial Projections Statement
TREASURER; MINISTER FOR ENERGY; CITIZENSHIP AND
MULTICULTURAL INTERESTS
M AJO R S P EN DI NG C H AN G E S
2014-15
$m
2015-16
$m
2016-17
$m
2017-18
$m
2.0
-
2.1
-0.4
0.1
2.1
-0.4
0.8
-0.4
0.9
-
-0.2
-0.2
-0.2
-
-0.4
-0.4
-0.4
Expenses
Operating Subsidy for Electricity Tariffs
Operating Subsidy for Aboriginal and Remote Communities
-3.1
-4.6
-3.2
-4.9
-2.5
-4.9
-4.9
-5.0
Asset Investment
Royalties for Regions – Pilbara Underground Power Project
Advanced Metering Infrastructure
Customer Funded Works
Midwest and Norseman Network Augmentation
Pilbara Power Project
Onslow Power Infrastructure Project
Asset Investment Program Savings
23.1
11.4
2.5
4.6
0.8
-
26.9
14.4
3.0
1.0
1.7
0.8
-2.1
24.0
8.2
3.1
-2.0
26.0
0.2
3.1
-2.0
-22.2
-1.0
-34.6
-54.5
-1.1
-43.4
-145.9
-1.2
-47.2
-155.4
-7.6
-43.4
4.7
18.7
-
0.5
-3.4
-2.1
0.3
-3.1
-46.7
0.3
-4.8
-
-25.0
-28.4
-30.7
-
-17.2
-16.5
-16.9
TREASURY
Expenses
Asset Sales Program
Efficiency Dividend
Office Accommodation – Old Treasury Building
OFFICE OF THE AUDITOR GENERAL
Expenses
Ongoing Procurement Savings
INDEPENDENT MARKET OPERATOR
Expenses
Ongoing Procurement Savings
HORIZON POWER
SYNERGY
Expenses
Operating Subsidy for Electricity Tariffs
Operating Subsidy for Electricity Concessions and Rebates
Operating Subsidy Savings
Asset Investment
Generation
Retail
Asset Investment Program Savings
WESTERN POWER NETWORKS
Asset Investment
Asset Investment Program Savings
WESTERN POWER PROVISIONS
Asset Investment
Asset Investment Program Savings
134
Appendix 3
Department of Treasury
Expenses
Asset Sales Program
Following the announcement of the Government’s asset sales program in August 2014, a
total of $6.2 million will be spent between 2014-15 and 2016-17 on the implementation of
the program, including the establishment of an Asset Sales Unit and the appointment of
external consultant support.
Office Accommodation – Old Treasury Building
Additional lease costs of $1.8 million will be incurred between 2015-16 and 2017-18
when the Department relocates from Gordon Stephenson House to the Old Treasury
Building Office Tower in 2016.
Horizon Power
Expenses
Operating Subsidy for Electricity Tariffs
The operating subsidy, which provides for the difference between the cost of providing
electricity and the prices that are paid by consumers, will decrease by $13.8 million over
the forward estimates period, reflecting changes to Horizon Power’s forecasts for energy
demand.
Operating Subsidy for Aboriginal and Remote Communities
The operating subsidy provided to Horizon Power for the provision of regulated services
to Aboriginal and remote community towns has been revised down by $19.4 million over
2014-15 to 2017-18. This is primarily due to a reduction in operating costs and a lower
demand for energy in these areas.
Asset Investment
Royalties for Regions – Pilbara Underground Power Project
An additional $100 million will be spent over the four years to 2017-18 to underground
the electricity distribution network to properties in Karratha, Roebourne and Onslow.
This is funded from the Royalties for Regions program (75%), local councils (24%) and
Horizon Power (1%).
135
2014-15 Government Mid-year Financial Projections Statement
Advanced Metering Infrastructure
Horizon Power will invest a total of $34.1 million across 2014-15 to 2017-18 to replace
all electricity meters in its service area with advanced meters that are Customer Code and
Metering Code compliant. The Advanced Metering Infrastructure project installs the
communication and information infrastructure to allow remote access, reading of meters
in real time, and validating readings directly from a desktop computer.
Customer Funded Works
Horizon Power receives funds from customers seeking connections to sub-divisions and
commercial use. This work is fully funded through upfront payments from customers.
Horizon Power has revised its customer driven works forecast, which results in additional
expenditure of $11.7 million across 2014-15 to 2017-18.
Midwest and Norseman Network Augmentation
Horizon Power will invest $5.7 million over 2014-15 and 2015-16 to undertake network
augmentation works in Norseman and six Midwest towns, purchase land in Norseman and
associated management costs.
Pilbara Power Project
An additional $1.7 million will be spent in 2014-15 for an upgrade to network
infrastructure related to the Pilbara Power Project (which involves the installation of new
generation capacity to service towns in the Pilbara).
Onslow Power Infrastructure Project
An additional $1.5 million will be spent over 2014-15 and 2015-16 for Horizon Power’s
management costs in relation to the provision of new power infrastructure in Onslow.
Synergy
Expenses
Operating Subsidy for Electricity Tariffs
The operating subsidy, which provides for the difference between the cost of providing
electricity and the prices that are paid by consumers, will decrease by $378 million over
2014-15 to 2017-18 despite higher than forecast demand for electricity. This reduction is
due to a change in the method for recovering a number of costs, including ancillary
services, network costs, and retail depreciation following the completion of a review into
Synergy’s cost-reflective tariffs (see feature box in Chapter 1).
Operating Subsidy for Electricity Concessions and Rebates
The forecast value of electricity concessions and rebates has been revised down by
$10.8 million over 2014-15 to 2017-18. This is due to lower than anticipated uptake of
concessions and rebates, including the Cost of Living Assistance payment.
136
Appendix 3
Operating Subsidy Savings
The Government announced on 9 October 2014 that efficiency savings were to be
achieved by a number of public corporations. This includes a 7.5% reduction in the
general government operating subsidy to Synergy in 2014-15, and a 10% reduction in the
base operating subsidy in subsequent years, which is to be matched by lower operating
costs in the Corporation. Synergy has fully allocated the savings ($168.6 million) over the
period to 2017-18, largely through a number of post-merger changes, such as reduced
corporate overheads and lower gas transportation costs.
Asset Investment
Generation
Expenditure on Synergy’s generation portfolio will reduce by $44.1 million over the
period to 2017-18. This reflects a lower sustainable capital expenditure level associated
with the early retirement of the Kwinana C Power Station and the use of less
capital-intensive high efficiency and combined cycle gas turbines.
Retail
An additional $19.8 million will be spent over 2014-15 to 2017-18 on Information
Technology projects necessary to manage and build Synergy’s relationship with its
customers. A key project includes Synergy’s Digital Strategy which will enable customers
to access products and services directly from digital devices.
MINISTER FOR LOCAL GOVERNMENT; COMMUNITY
SERVICES; SENIORS AND VOLUNTEERING; YOUTH
M AJO R S P EN DI NG C H AN G E S
2014-15
$m
2015-16
$m
2016-17
$m
2017-18
$m
-21.4
-0.9
-0.1
-0.5
-1.3
-0.1
-0.5
-1.3
-0.1
-0.5
-1.3
-0.1
-
-0.2
-0.3
-0.3
LOCAL GOVERNMENT AND COMMUNITIES
Expenses
Seniors Cost of Living Rebate
Ongoing Procurement Savings
Efficiency Dividend
ICT Reform
METROPOLITAN CEMETERIES BOARD
Asset Investment
Asset Investment Program Savings
137
2014-15 Government Mid-year Financial Projections Statement
Local Government and Communities
Expenses
Seniors Cost of Living Rebate
Expenditure on the Seniors Cost of Living Rebate was reduced by $21.4 million in
2014-15 as a result of the Government’s decision in June 2014 to halve the rebate.
This followed the cessation of payments to Western Australia from the Commonwealth
Government for pensioners and seniors concessions, totalling $25.4 million in 2014-15
and $107 million across the forward estimates period.
MINISTER FOR ENVIRONMENT; HERITAGE
M AJO R S P EN DI NG C H AN G E S
2014-15
$m
2015-16
$m
2016-17
$m
2017-18
$m
-1.3
-7.3
0.5
-1.9
-4.5
-7.3
-
-1.9
-4.4
-7.3
-
-1.9
-4.2
-7.3
-
-
-1.0
-1.1
-0.8
-
-0.5
-0.5
-0.5
-
-0.4
-0.4
-0.4
1.7
-
-
-
0.3
0.1
-
-
-
-0.6
-0.6
-0.6
PARKS AND WILDLIFE
Expenses
Efficiency Dividend
Ongoing Procurement Savings
Own-Source Revenue Reduction
Strategic Assessment of the Perth and Peel Regions
Asset Investment
Asset Investment Program Savings
ENVIRONMENT REGULATION
Expenses
Ongoing Procurement Savings
BOTANIC GARDENS AND PARKS AUTHORITY
Expenses
Ongoing Procurement Savings
Asset Investment
Minor Capital Works
OFFICE OF THE ENVIRONMENTAL PROTECTION
AUTHORITY
Expenses
Strategic Assessment of the Perth and Peel Regions
ZOOLOGICAL PARKS AUTHORITY
Expenses
Ongoing Procurement Savings
138
Appendix 3
Parks and Wildlife
Expenses
Own-Source Revenue Reduction
Projected expenditure has been revised down by $7.3 million per annum over the forward
estimates period to reflect lower than expected revenue from external sources (including
the impact of factors such as environmental offsets and lower externally-sourced research
grants).
Strategic Assessment of the Perth and Peel Regions (SAPPR)
An additional $500,000 will be spent in 2014-15 by the Department of Parks and Wildlife
on studies and planning activities related to the SAPPR project. This project will assess
the environmental impact of future land use development proposals in the Perth and Peel
region, including the impact of urban, industrial and infrastructure projects.
Botanic Gardens and Parks Authority
Asset Investment
Minor Capital Works
An additional $1.7 million will be spent in 2014-15 for the completion of a range of minor
capital works projects, including the completion of works on Saw Avenue, resurfacing of
paths and refurbishment of toilets and other visitor facilities.
Office of the Environmental Protection Authority
Expenses
Strategic Assessment of the Perth and Peel Regions (SAPPR)
An additional $436,000 will be spent over two years from 2014-15 by the Office of the
Environmental Protection Authority on studies and planning activities related to the
SAPPR project. This project will assess the environmental impact of future land use
development proposals in the Perth and Peel region, including the impact of urban,
industrial and infrastructure projects.
139
2014-15 Government Mid-year Financial Projections Statement
MINISTER FOR EMERGENCY SERVICES; CORRECTIVE
SERVICES; SM ALL BUSINESS; VETERANS
M AJO R S P EN DI NG C H AN G E S
2014-15
$m
2015-16
$m
2016-17
$m
2017-18
$m
2.3
-5.6
1.4
-0.3
-5.9
1.5
-0.3
-6.2
1.5
-
-1.1
-1.2
-0.5
14.8
9.0
-5.7
-
-7.8
-12.2
-8.4
-12.1
-8.5
-12.1
-
-0.6
-0.5
-0.6
FIRE AND EMERGENCY SERVICES
Expenses
Efficiency Dividend
Ongoing Procurement Savings
Equalisation of Volunteers Insurance
Asset Investment
Asset Investment Program Savings
CORRECTIVE SERVICES
Expenses
Demand Growth (Daily Average Prisoner Population)
RiskCover Contributions
Efficiency Dividend
Ongoing Procurement Savings
Asset Investment
Asset Investment Program Savings
Fire and Emergency Services
Expenses
Equalisation of Volunteers Insurance
An additional $6.7 million from 2014-15 to 2017-18 will be spent for a firefighter support
package to protect and assist current volunteer and former career and volunteer
firefighters. The package involves the introduction of presumptive legislation for
firefighters who are diagnosed with prescribed cancers in certain circumstances, as well as
the equalisation of insurance coverage for all volunteers operating under the emergency
services Acts.
Corrective Services
Expenses
Demand Growth (Daily Average Prisoner Population)
An additional $14.8 million will be spent in 2014-15 to fund growth in the daily average
prisoner population to 5,293 in 2014-15. The increased expenditure reflects the cost of
additional prison officers and goods and services required to accommodate the increased
prisoner numbers.
140
Appendix 3
RiskCover Contributions
An additional $9 million in 2014-15 has been provided to accommodate an increase in
RiskCover insurance contributions, driven primarily by growth in the number and cost of
workers’ compensation claims within the agency.
MINISTER FOR WATER; FORESTRY
M AJO R S P EN DI NG C H AN G E S
2014-15
$m
2015-16
$m
2016-17
$m
2017-18
$m
0.4
-0.5
-
0.2
-0.6
-1.3
-0.7
-1.5
-0.7
-1.4
-
-0.9
-0.6
-0.6
7.2
-33.2
-44.6
-46.6
-47.0
-5.0
-6.2
-
-4.5
-8.6
-37.0
3.6
-9.1
-45.9
-18.2
-47.3
WATER
Expenses
Strategic Assessment of the Perth and Peel Regions
Efficiency Dividend
Ongoing Procurement Savings
Asset Investment
Asset Investment Program Savings
WATER CORPORATION
Expenses
Operating Subsidies (Parameter)
Operating Subsidy Savings
Asset Investment
Ground Water Replenishment
Repeal of Clean Energy Act 2011
Asset Investment Program Savings
Water
Expenses
Strategic Assessment of the Perth and Peel Regions (SAPPR)
An additional $621,000 will be spent over two years from 2014-15 by the Department of
Water on studies and planning activities related to SAPPR project. This project will assess
the environmental impact of future land use development proposals in the Perth and Peel
region, including the impact of urban, industrial and infrastructure projects.
Water Corporation
Expenses
Operating Subsidies (Parameter)
An increase in the value of the country water, sewerage and drainage operating subsidy
reflects an increase in electricity costs (with Horizon Power moving to more
cost-reflective prices subsequent to the 2014-15 Budget – $5.4 million), additional
projects identified as eligible for an operating subsidy ($2.1 million), and revised inflation
forecasts (reducing spending by $0.3 million).
141
2014-15 Government Mid-year Financial Projections Statement
Operating Subsidy Savings
The Government announced on 9 October 2014 that efficiency savings were to be
achieved by a number of public corporations. This includes a 7.5% reduction in the
general government operating subsidy to the Water Corporation in 2014-15, and a 10%
reduction in the base operating subsidy in subsequent years, which is to be matched by
lower operating costs in the Corporation. Full allocation of these savings to the
Water Corporation’s specific activities is still being identified and will be considered by
the Government as part of the 2015-16 Budget process.
Asset Investment
Ground Water Replenishment
The Water Corporation identified savings totalling $24.1 million in the cost of the Ground
Water Replenishment project due to market conditions, design innovation and economies
of scale delivered by constructing stages 1 and 2 concurrently.
Repeal of Clean Energy Act 2011
As a result of the repeal of the Commonwealth Clean Energy Act 2011 in July 2014,
the Water Corporation has removed the impact of the cost of the carbon tax from its
forecasts and adjusted expenditure accordingly, including the impacts on the cost of goods
procured under its Asset Investment Program.
142
Appendix 3
MINISTER FOR TRANSPORT; FINANCE
M AJO R S P EN DI NG C H AN G E S
2014-15
$m
2015-16
$m
2016-17
$m
2017-18
$m
TRANSPORT
Expenses
Ongoing Procurement Savings
-
-4.7
-4.8
-4.8
Asset Investment
Asset Investment Program Savings
-
-1.3
-1.0
-0.9
-8.2
-1.0
-37.7
52.5
11.0
-8.2
-2.1
-6.5
-55.1
44.2
11.0
-8.2
-2.1
-6.6
-60.0
-
-8.7
-2.2
-6.7
-
4.8
-5.5
7.8
-10.2
-
-13.5
-
7.5
11.0
25.9
2.0
124.0
391.0
449.1
0.7
-4.9
-2.0
-8.7
2.2
-6.9
-4.1
18.0
-13.5
2.2
-7.3
-4.2
10.0
-9.9
2.2
-7.3
-4.3
-19.6
-
0.5
-
-6.6
-9.6
-5.3
-10.0
-7.0
-2.8
FREMANTLE PORT AUTHORITY
Asset Investment
Revised Financial Forecasts
Asset Investment Program Savings
-32.1
-
0.7
-2.9
32.3
-1.3
-4.5
-0.6
MID WEST PORTS AUTHORITY
Asset Investment
Ship Loading Infrastructure
Asset Investment Program Savings
7.0
-
-0.2
-0.2
-0.2
PILBARA PORTS AUTHORITY
Asset Investment
Port Improvement Rate Capital Works Provision
Asset Investment Program Savings
-
5.0
-2.0
-1.1
-0.6
SOUTHERN PORTS AUTHORITY
Asset Investment
Asset Investment Program Savings
-
-0.3
-0.3
-0.3
-0.9
-0.7
-
-1.2
-1.4
8.1
-2.8
-1.4
-1.4
8.3
-2.8
-1.4
-1.4
8.5
-2.8
2.1
-7.6
4.4
-6.8
0.1
-6.4
-
COMMISSIONER OF MAIN ROADS
Expenses
Commonwealth Black Spot Program
Commonwealth Maintenance Program
ICT Reform
Ongoing Procurement Savings
Temporary Road Maintenance Savings
Works on Behalf of Third Parties
Asset Investment
Asset Investment Program Savings
Bussell Highway – Vasse to Newtown
Kwinana Freeway – Roe Highway to Russell Road
Widening (Southbound)
Lloyd Street Midland Rail Underpass
Perth Freight Link
PUBLIC TRANSPORT AUTHORITY
Expenses
ANZAC Commemorative Events
Efficiency Dividend
ICT Reform
Nicholson Road Grade Separation Project
Revised Interest Expenses
Royalties for Regions – AvonLink Enhancement Project
Asset Investment
ANZAC Commemorative Events
Asset Investment Program Savings
New Perth Stadium Transport Project
FINANCE
Expenses
Efficiency Dividend
ICT Reform Savings
ICT Reform – ICT Renewal and Reform Fund
Ongoing Procurement Savings
Asset Investment
Asset Investment Program Savings
Office Accommodation – Old Treasury Building
143
2014-15 Government Mid-year Financial Projections Statement
Commissioner of Main Roads
Expenses
Commonwealth Black Spot Program
Expenditure on the Commonwealth’s Black Spot Program has increased by $22 million
over two years to reflect updated Commonwealth funding contributions. The program
targets road locations identified as having a poor safety record for crashes, by funding
measures such as traffic signals and roundabouts at dangerous locations.
Commonwealth Maintenance Program
Spending on maintaining the national land transport network has been revised down in
2014-15 and each year of the forward estimates to align with the Commonwealth’s
formula-based funding allocation to the program under the National Partnership
Agreement on Land Transport Infrastructure Projects. Allocations are reviewed annually
in light of updated information provided by Main Roads, including changes to the
network.
Temporary Road Maintenance Savings
As previously announced, a temporary 15% reduction has been applied to Main Roads’
recurrent road maintenance expenditure for the period 2014-15 to 2016-17, totalling
$152.8 million.
Works on Behalf of Third Parties
Additional spending totalling $96.7 million over two years is being undertaken to upgrade
the road network on behalf of third parties. Spending includes works associated with the
new Perth Stadium precinct ($85.7 million over two years) and minor upgrades to Great
Northern Highway and the Ripon Hills and Marble Bar Roads, enabling better road access
for a number of mining companies ($11 million in 2014-15).
Asset Investment
Bussell Highway – Vasse to Newtown
The private developers of the Vasse Newtown residential and commercial development
east of Busselton are contributing $12.6 million over two years to allow construction of a
Vasse bypass road to facilitate access to the development from Bussell Highway.
Kwinana Freeway – Roe Highway to Russell Road Widening (Southbound)
An additional $7.5 million will be spent on the current widening of Kwinana Freeway to
extend this project southbound from Armadale Road to Russell Road. Jointly funded by
the State and Commonwealth, this extension will better integrate with the extension works
proposed for Roe Highway as part of the Perth Freight Link project.
144
Appendix 3
Lloyd Street Midland Rail Underpass
Funding contributions have been secured from the Commonwealth ($10 million) and the
City of Swan ($3 million) towards the $80 million cost of constructing the Lloyd Street,
Midland rail underpass. The underpass will provide emergency vehicles with unimpeded
access to the new Midland Health campus when it opens in late 2015. Main Roads has
also reallocated an amount of $9 million that was to be expensed but is now to be
capitalised for the project.
Perth Freight Link
Additional spending totalling $990 million to 2017-18 (and a further $467 million in
2018-19) has been approved to construct the Perth Freight Link. The project comprises an
extension of Roe Highway from Kwinana Freeway to Stock Road (including a 1km pinch
point widening between Tonkin Highway and Welshpool Road), upgrades to Stock Road
and Leach Highway, extending Leach Highway along High Street between Carrington
Street and Stirling Highway (previously approved as part of the 2013-14 Mid-year
Review) and upgrades to Stirling Highway.
When completed, the Perth Freight Link will provide a strategic urban transport corridor
that facilitates the seamless movement of road freight between Fremantle, Perth Airport
and the Kewdale industrial precinct, and northwards to Muchea. The project incorporates
the introduction of a heavy vehicle (Austroads Vehicle Classes 3 and above) user charge
applying to the 85km road freight route from Fremantle to Muchea, including the
Gateway WA and NorthLink WA road infrastructure enhancement projects.
Together with expenditure of $118 million approved as part of the 2013-14 Mid-year
Review for the Leach Highway (High Street) extension, the Perth Freight Link has an
estimated total cost of $1,575 million, jointly funded by the Commonwealth
($925 million) and the State ($650 million). Construction is anticipated to be completed
by 2018-19.
Public Transport Authority
Expenses
ANZAC Commemorative Events
Additional operating subsidy of $652,000 will be paid to the Authority in 2014-15 to fund
activities to commemorate the 100th anniversary of the ANZAC campaign.
Nicholson Road Grade Separation Project
An amount of $36 million will be spent between 2014-15 and 2016-17 to construct a
grade separation at the Nicholson Road rail crossing. Additional expenditure of
$28 million will be funded by the Commonwealth Government ($18 million) and an
increase in the Authority’s operating subsidy ($10 million). The remaining costs of the
project ($8 million) will be met by reprioritising existing expenditure.
145
2014-15 Government Mid-year Financial Projections Statement
Revised Interest Expenses
The operating subsidy paid to the Authority will be reduced by $51.7 million between
2014-15 and 2017-18 to reflect lower revised interest expenses. The reduction in interest
costs reflects lower than expected interest rates, as well as lower borrowings for asset
investment due to efficiency savings in the Authority’s Asset Investment Program.
Royalties for Regions – AvonLink Enhancement Project
An additional $6.6 million has been allocated between 2014-15 and 2016-17 to continue
AvonLink train services. This includes trialling service improvements such as higher
frequencies on weekdays, and new services on weekends and for special events.
Asset Investment
ANZAC Commemorative Events
Additional capital expenditure of $500,000 was incurred to construct a depot to
accommodate buses used in the Albany Convoy Commemorative Event.
New Perth Stadium Transport Project
Elements of the new Perth Stadium Transport Project, including the bus hub, have been
included in the stadium Design, Build, Finance and Maintain contract to better align
design and construction schedules. Previous forecasts showed the acquisition of these
assets as infrastructure spending by the Authority. These cash flows have been updated to
reflect a 60% capital contribution from the State and the private sector financing
transactions associated with the stadium (see Department of Sport and Recreation in this
appendix, and the net debt discussion in Chapter 1).
Fremantle Port Authority
Asset Investment
Revised Financial Forecasts
The Fremantle Port Authority has revised its financial forecasts pertaining to current
business operations which results in a reduction of $3.6 million over four years to its
Asset Investment Program.
Mid West Ports Authority
Asset Investment
Ship Loading Infrastructure
An additional $7.0 million will be spent in 2014-15 for the replacement of ship loading
infrastructure at the Port of Geraldton.
146
Appendix 3
Pilbara Ports Authority
Asset Investment
Port Improvement Rate Capital Works Provision
The Government has approved a $5 million increase in the Authority’s capital works
provision in 2015-16 reflecting higher than budgeted Port Improvement Rate (PIR)
revenue collected in 2013-14. Expenditure on projects funded by PIR revenue is subject
to approval on a case-by-case basis.
Finance
Expenses
ICT Savings and Reform – ICT Renewal and Reform Fund
This Mid-year Review includes a provision for additional spending of $25 million over
three years, commencing in 2015-16, for the operation of the ICT Renewal and Reform
Fund (IRRF). The aim of the IRRF is to provide an incentive mechanism through a
discretionary funding source for agencies to work together and test innovative new ICT
approaches and assist with developing leadership capability to drive ICT reform across
the public sector.
Asset Investment
Office Accommodation – Old Treasury Building
An additional $6.6 million will be spent from 2014-15 to 2016-17 for the fit-out and
relocation of the Department of Treasury from Gordon Stephenson House (GSH) to the
Old Treasury Building Office Tower, and the relocation of a part of the Department of
Finance to GSH.
PROVISIONS
M AJO R S P EN DI NG C H AN G E S
Expenses
Public Sector Workforce Renewal
Targeted Voluntary Separation Scheme
Allocation of Program Evaluation Savings
Asset Investment
Provision for Underspending
2014-15
$m
2015-16
$m
2016-17
$m
2017-18
$m
-67.0
134.0
15.1
-228.9
-120.0
50.0
-398.8
-120.0
50.0
-577.1
-120.0
50.0
-700.0
-
-
-
147
2014-15 Government Mid-year Financial Projections Statement
Provisions
Expenses
Public Sector Workforce Renewal
A provision has been included in this Mid-year Review for the Public Sector Workforce
Renewal initiative announced in this Mid-year Review (details outlined earlier in this
appendix).
Targeted Voluntary Separation Scheme
A provision has been included in this Mid-year Review for the targeted voluntary
separation scheme for general government sector employees announced on
9 October 2014 (details outlined earlier in this appendix).
Allocation of Program Evaluation Savings
The 2013-14 Budget Fiscal Action Plan included a $50 million annual savings provision
from 2014-15 for yet-to-be identified program evaluation savings. The Government’s
decision to implement ICT savings and reform (detailed at the beginning of this appendix)
includes $15.1 million in 2014-15, growing to around $32 million by 2017-18.
This, together with extension of the 2014-15 Budget measure for a 15% reduction in
non-essential procurement spending from 2015-16 onwards, combine to exceed the
aggregate program evaluation savings provisions 3.
Asset Investment
Provision for Underspending
Consistent with previous years, this Mid-year Review includes a provision for yet-to-be
identified slippage in agency infrastructure spending that is expected to emerge over the
remainder of the year. A total $700 million underspending provision has been
incorporated in the forecasts in 2014-15, with $350 million allocated to the general
government sector and $350 million to the public non-financial corporations sector
(representing 9.6% of unadjusted agency spending forecasts for the year).
3
148
A residual $35 million provision for program evaluation savings written into the estimates at the time of the 2013-14 Budget
remains in these Mid-year Review projections.
APPENDIX 4
The Treasurer’s Advance
The Treasurer’s Advance is provided for under the Financial Management
Act 2006 (FMA). It authorises the Treasurer to make short-term recoverable advances to
agencies for the temporary financing of works and services (referred to as ‘net
recoverable advances’) and to provide new or supplementary funding during the year for
extraordinary or unforeseen matters (known as ‘excesses and new items’).
The total amount drawn against recoverable advances, excesses and new items for
2014-15 must remain within the $638.4 million limit authorised by the FMA, unless
adjusted by Parliament by enacting a Treasurer’s Advance Authorisation Act.
Table 4.1 shows the estimated position of the Treasurer’s Advance for 2014-15,
consistent with the agency data underlying the financial projections presented in this
Mid-year Review.
Based on the Mid-year Review estimates,
2014-15 Treasurer’s Advance is $271.1 million.
the
expected
outturn
for
the
Table 4.1
T RE AS U R E R’ S AD V ANC E
2013-14
Actual
$m
2014-15
Projection (a)
$m
AUTHORISED LIMIT
595.7
638.4
Total projected to be drawn against Treasurer’s Advance authorisation
Comprising:
Net recoverable advances as at 30 June
Approved Excesses and New Items
− recurrent
− capital
373.9
271.1
7.0
20.0
299.0
67.9
203.0
48.1
(a) Detailed disclosure of the final audited outcome for 2014-15 will be available in the 2014-15 Annual Report on State
Finances, to be released by 28 September 2015.
Note: Columns may not add due to rounding.
149
2014-15 Government Mid-year Financial Projections Statement
Transfers, Excesses and New Items
Table 4.2 details excesses and/or new items that are projected to occur during 2014-15
and the expected impact of these on the Treasurer’s Advance under the authority of
section 27 of the FMA.
The projections shown in Table 4.2 are subject to movements in agencies’ appropriations
through the remainder of 2014-15. Funding in excess of budget for appropriation items
shown in the table will only occur if management responses do not achieve compensating
shortfalls in other spending supported by these items prior to 30 June 2015.
Section 25 of the FMA allows appropriations originally allocated in the 2014-15 Budget
to be transferred to other agencies for the provision of an appropriation-funded service
that is now to be delivered by the other agency. These transfers have no impact on the
Treasurer’s Advance.
Appropriation transfers approved since the presentation of the 2014-15 Budget include:
150

$9 million of recurrent appropriation that was provisioned in Treasury has been
transferred to WA Health ($7.1 million) and to the Housing Authority ($1.9 million)
for Component II funding for the Sustainable Funding and Contracting with the
Not-for-Profit Sector Initiative;

$0.5 million of recurrent appropriation has been transferred from the Department of
Child Protection and Family Support to the Department of Local Government and
Communities for the provision of corporate services; and

$0.2 million of recurrent appropriation has been transferred from the Department of
Treasury to the Department of Finance for support of accommodation costs at Gordon
Stephenson House.
Appendix 4
Table 4.2
T R AN S F ER S , E X C E S S E S AN D N EW IT EM S
Treasurer's Advance
(a)
New Items
Excesses
Draw on
Treasurer's
Advance to
date (b)
$m
$m
$m
$m
-
-
0.3
-
-
-
20.0
-
WA Health
13
Delivery of services
7.1
-
-
-
Lands
25
Delivery of services
-
-
13.0
-
-
-
0.1
-
Planning
34
Delivery of services
-
-
1.4
-
Culture and the Arts
36
Delivery of services
-
-
0.3
-
-0.5
-
-
-
Attorney General
46
Delivery of services
-
-
2.3
-
Parliamentary Inspector of the Corruption and
Crime Commission
52
Delivery of services
-
-
- (c)
-
1.9
-
-
-
-
-
0.2
-
-0.2
-9.0
-
1.6
1.3
-
-
134.0
-
-
-
-
1.5
-
0.5
-
-
-
Parks and Wildlife
96
Delivery of services
-
-
0.3
-
Office of the Environmental Protection Authority
99
Delivery of services
-
-
0.3
-
Transfers
Item Appropriation
Recurrent Appropriations
Legislative Council
1
Delivery of services
Premier and Cabinet
6
Administered Grants, Subsidies and Other
Transfer Payments
Education Services
29
Administered Grants, Subsidies and Other
Transfer Payments
Child Protection and Family Support
45
Delivery of services
Housing Authority
58
Delivery of services
Western Australia Sports Centre Trust
62
Delivery of services
Treasury
69
Delivery of services
91
Administered Grants, Subsidies and Other
Transfer Payments
New Provision for Targeted Voluntary Separation Scheme
Economic Regulation Authority
92
Delivery of services
Local Government and Communities
94
Delivery of services
Note: Columns may not add due to rounding.
151
2014-15 Government Mid-year Financial Projections Statement
Table 4.2 (cont.)
T R AN S F ER S , E X C E S S E S AN D N EW IT EM S
Treasurer's Advance
(a)
New Items
Excesses
Draw on
Treasurer's
Advance to
date (b)
$m
$m
$m
$m
Heritage Council of Western Australia
102 Delivery of services
-
-
0.6
-
Fire and Emergency Services
104 Delivery of services
-
-
2.3
-
Corrective Services
106 Delivery of services
-
-
18.0
-
Small Business Development Corporation
108 Delivery of services
-
-
1.3
-
Commissioner of Main Roads
112 Delivery of services
-
-
4.3
-
0.2
-
-
-
-
134.0
69.0
-
Child Protection and Family Support
132 Capital Appropriation
-
-
0.4
-
Attorney General
133 Capital Appropriation
-
-
2.6
-
Treasury
145 Regional Pow er Corporation (Horizon Pow er)
147 WA Health
New Western Australia Land Authority
-
9.1
1.1
8.0
-
-
Transport
162 Capital Appropriation
-
-
2.5
-
Commissioner of Main Roads
163 Capital Appropriation
-
-
22.3
-
Finance
165 Capital Appropriation
-
-
2.1
-
Total Capital
-
9.1
39.0
-
TOTAL
-
143.1
108.0
-
Transfers
Item Appropriation
Finance
113 Delivery of services
Total Recurrent
Capital Appropriations
(a) Authorised under section 25 of the FMA.
(b) Mid-year Review cut-off date, 3 December 2014.
(c) Amount less than $50,000.
Note: Columns may not add due to rounding.
152
APPENDIX 5
Special Purpose Accounts
Special Purpose Accounts (SPAs) are established under various sections of the Financial
Management Act 2006 (FMA) or by specific legislation (e.g. the Fiona Stanley Hospital
Construction Account and the Royalties for Regions Fund). Accounts established by
legislation are governed by the relevant provisions of the statute while accounts that are
established administratively are governed by a special purpose statement (operating
accounts) or a trust statement (trust accounts) that outlines the purpose of the account.
This appendix contains information on key SPAs. It is not an exhaustive list of all SPAs,
but covers the major/material SPAs in existence in 2014-15 (or expected to be established
this year as a consequence of forecasts included in this Mid-year Review). The forecast
SPA balances (and transactions in and out of these accounts) form part of the overall
consolidated projections for 2014-15 outlined elsewhere in this Mid-year Review.
The SPA balances detailed in this appendix provide a funding source for particular
initiatives. However, it is important to note that each dollar that is spent from these SPA
balances will increase net debt (and reduce the net operating balance if the spending is for
recurrent purposes) by the same amount. In this way, these SPA balances are no different
from other funding sources, including new borrowings.
Changes to forecast receipts and payments in 2014-15 reflect movements in the financial
projections detailed in Chapter 1 of this Mid-year Review. Variations in account balances
for the 2013-14 outturn (relative to the expected outturn detailed in the 2014-15 Budget)
were disclosed in the 2013-14 Annual Report on State Finances released on
23 September 2014.
153
2014-15 Government Mid-year Financial Projections Statement
Fiona Stanley Hospital Construction Account
This SPA was established in October 2007 to set aside funds to be used for the
construction of the Fiona Stanley Hospital.
Funds from the account have almost been fully drawn down to pay for construction work,
with the new facility achieving practical completion in December 2013 and commencing
phased operation in October 2014. Projected receipts include appropriation for remaining
works ($10 million) and minimal interest earnings on the account balance. A small cash
balance is expected to remain at the end of 2014-15 to provide for project close-out
activities. Following final completion, any remaining funds will be returned to the
Consolidated Account.
Table 5.1
FIO N A S T AN L EY HO S PIT AL C O N ST RU CT IO N AC C O U NT
2013-14
$m
2014-15
$m
104
17
112
9
9
10
18
1
Balance at 1 July
Receipts
Payments
Closing Balance
Note: Columns may not add due to rounding.
Perth Children’s Hospital Account
This SPA was established in October 2010 to hold money for the construction and
start-up of the Perth Children’s Hospital. The hospital is expected to achieve practical
completion in the second half of 2015.
A total of $645 million (or 55%) of the construction costs was funded from one-off
royalty revenue and Consolidated Account surplus outcomes recorded over the period
from 2009-10 to 2011-12 (including $70 million from the 2011-12 year, paid into the
Account in 2013-14). The remaining 45% of the hospital’s funding, including receipts of
$350 million as part of the 2014-15 Budget, represent Consolidated Account capital
contributions to meet the scheduled construction work. Funds are drawn from the SPA
and paid to WA Health as payments for construction work fall due.
Table 5.2
P ERT H C HIL DR E N’ S HO S PIT AL AC CO UNT
Balance at 1 July
Receipts
Payments
Closing Balance
Note: Columns may not add due to rounding.
154
2013-14
$m
2014-15
$m
277
182
365
94
94
350
391
52
Appendix 5
Perth Parking Licensing Account
This SPA was established in July 1999 to set aside funds to be used to encourage a
balanced transport system for gaining access to the Perth city area.
Receipts consist of application fees, licence fees, penalties and money appropriated by
Parliament. Funds drawn from the account are spent on the Central Area Transit system,
improving public transport access, enhancing the pedestrian environment, supporting
bicycle access and for administration of the Perth Parking Management Act 1999.
Higher receipts are forecast for 2014-15 compared to 2013-14 mainly as a result of an
increase in licence fees for all fee-liable Perth Parking Management Area parking bays,
announced in the 2014-15 Budget. The additional revenue is to be used to assist in
funding construction of the $209 million Perth Busport.
Table 5.3
P ERT H P AR K ING LI C EN S IN G AC C O U NT
Balance at 1 July
Receipts
Payments
Closing Balance
2013-14
$m
2014-15
$m
70
40
54
55
55
48
88
15
Note: Columns may not add due to rounding.
Road Trauma Trust Account
This account was established to provide for road safety initiatives. Receipts reflect
prescribed penalties paid during the year, other funds collected under the Road Traffic
Act 1974, and interest revenue earned on the account balance.
Key initiatives funded from the account in 2014-15 include:
•
improvements to metropolitan intersections to reduce the incidence and severity of
vehicle crashes;
•
continuation of the electronic school zone sign project;
•
safety improvements to sections of the Wubin-Mullewa Road and the Coalfields and
Albany Regional Highways;
•
strategic traffic enforcement
Western Australia Police;
•
community and school education programs; and
•
continued support for ‘Roadwise’ (the Local Government and Community Road
Safety Program).
and
increased
breath
and
drug testing by
155
2014-15 Government Mid-year Financial Projections Statement
Table 5.4
RO AD T R AUM A T RU S T AC CO UNT
Balance at 1 July
Receipts
Payments
Closing Balance
2013-14
$m
2014-15
$m
65
89
81
72
72
104
101
75
Note: Columns may not add due to rounding.
Royalties for Regions Fund
The Royalties for Regions Fund was established in December 2008 to set aside a share of
the State’s annual royalty income to fund investment in regional Western Australia.
Payments from the fund also include transfers to the Western Australian Future Fund,
transfers to agencies that deliver some parts of the program, and transfers to the Southern
Inland Health Initiative SPA, disclosed separately below. Accordingly, aggregate
payments from the Royalties for Regions Fund can exceed the $1 billion spending cap
imposed as part of the 2014-15 Budget. However, portions of the transfers are retained in
the Future Fund, the Southern Inland Health Initiative SPA and agency accounts and
remain unspent, consistent with the $1 billion expenditure cap applying to the program.
Details of the Royalties for Regions program are available in Appendix 6 of this
Mid-year Review.
Table 5.5
RO Y ALT I E S FO R R EG IO N S FU ND
Balance at 1 July
Receipts
Payments
Closing Balance
2013-14
$m
2014-15
$m
881
1,489
1,430
940
940
1,148
1,088
1,000
Note: Columns may not add due to rounding.
Royalties for Regions Southern Inland Health
Initiative
This SPA was established in June 2012 to hold funds for expenditure on the Southern
Inland Health Initiative, pursuant to section 9(1) of the Royalties for Regions Act 2009.
Funds paid into this account are sourced from the Royalties for Regions Fund (see earlier
disclosure) and are drawn from the SPA to support improved access to core health
services through the provision of additional resources, improvements to local hospitals
and health facilities, and telehealth services in the Great Southern, Mid West, Goldfields,
South West and Wheatbelt regions.
156
Appendix 5
Table 5.6
RO Y ALT I E S FO R R EG IO N S S O UT H ER N IN L AN D HE ALT H I NIT I AT IV E
Balance at 1 July
Receipts
Payments
Closing Balance
2013-14
$m
2014-15
$m
211
106
44
273
273
5
97
182
Note: Columns may not add due to rounding.
The New Perth Stadium Account
This SPA was established in October 2011 to set aside funds to be used for the
construction of the new Perth Stadium and associated transport infrastructure.
The stadium is expected to be completed by 2018 and utilise all available funds in the
SPA as part of the funding to support construction.
The account was established with $100 million from the better than expected operating
surplus for the 2010-11 financial year (appropriated to the SPA in the 2012-13 Budget).
The Trust Statement underlying this SPA was amended in January 2013 to also include
funding of transport infrastructure that will improve access to the stadium.
Funds are drawn from the SPA as payments for the stadium and related transport
infrastructure construction work fall due.
Table 5.7
T HE N EW P ERT H ST ADI UM AC CO U NT
Balance at 1 July
Receipts
Payments
Closing Balance
2013-14
$m
2014-15
$m
95
15
63
47
47
145
91
102
Note: Columns may not add due to rounding.
Waste Avoidance and Resource Recovery Account
The Waste Avoidance and Resource Recovery (WARR) Account was established in 2008
under section 79 of the Waste Avoidance and Resource Recovery Act 2007 to hold
revenue allocated from the landfill levy. The purpose of the account is to fund programs
and other waste management initiatives approved by the Minister for Environment on the
advice of the Waste Authority of Western Australia. This includes implementing
initiatives related to the management, reduction, reuse, recycling, monitoring or
measurement of waste.
Forecast receipts in 2014-15 reflect an additional $4.2 million as a result of an increase in
landfill levy rates announced in the 2014-15 Budget, to take effect on 1 January 2015.
157
2014-15 Government Mid-year Financial Projections Statement
Table 5.8
W AST E AV O I D AN C E AN D RE S O U RC E R EC O V E RY AC C O U NT
Balance at 1 July
Receipts
Payments
Closing Balance
2013-14
$m
2014-15
$m
18
11
14
16
16
16
19
13
Note: Columns may not add due to rounding.
Western Australian Future Fund
The Western Australian Future Fund was established as a Treasurer’s SPA following the
passage of the Western Australian Future Fund Act 2012 in November 2012. The Act
provides for an accruing balance over 20 years to 2032, after which the annual interest
earnings can be drawn down to fund economic or social infrastructure across
Western Australia.
Announced as part of the 2012-13 Budget, the Future Fund will receive around
$1.0 billion in ‘seed capital’ to be transferred from the Royalties for Regions Fund over
the period 2012-13 to 2015-16. From 2016-17 onwards, a minimum of 1% of the State’s
annual royalty revenue will be paid into the Fund. Receipts for 2014-15 include the
Royalties for Regions ‘seed capital’ contribution ($247 million) and forecast interest
receipts ($30 million).
The Future Fund is projected to accumulate $1.3 billion in funds by 30 June 2018 and,
on current projections, a total of $4.6 billion by 30 June 2032.
Table 5.9
W E ST E RN AU ST R AL I AN FUT U RE F UN D
Balance at 1 July
Receipts
Payments
Closing Balance
Note: Columns may not add due to rounding.
158
2013-14
$m
2014-15
$m
306
290
596
596
277
873
APPENDIX 6
Royalties for Regions
Forecast spending by Royalties for Regions in 2014-15 is estimated to be $1 billion,
unchanged from the 2014-15 Budget estimate. This is a $75 million (or 7.0%) decrease on
the $1,075 million spent in 2013-14.
An update of the projections for individual initiatives that make up the Royalties for
Regions program is shown below. Notable changes to the program since the
2014-15 Budget include:
•
the carryover of expenditure from 2013-14 into 2014-15 and subsequent years, caused
by delays in the progress of projects. Expenditure in 2014-15 and the forward
estimate years has also been rescheduled to reflect updated timing of expenditure of
individual projects; and
•
the Government’s efficiency dividend and procurement savings measures have been
identified as a whole-of-program measure. Any impacts at program level will be
disclosed in the 2015-16 Budget.
The following table summarises projected balances in the Royalties for Regions Fund
over the forward estimates period. Payments from the fund also include transfers to the
Western Australian Future Fund, transfers to agencies that deliver some parts of the
program, and transfers to the Southern Inland Health Initiative Special Purpose
Account (SPA). Accordingly, aggregate payments from the Royalties for Regions Fund
can exceed the $1 billion spending cap imposed as part of the 2014-15 Budget. However,
portions of the transfers are retained in the Future Fund, the Southern Inland Health
Initiative SPA and agency accounts and remain unspent, consistent with the $1 billion
expenditure cap applying to the program.
159
2014-15 Government Mid-year Financial Projections Statement
Table 6.1
RO Y ALT I E S FO R R EG IO N S FU ND
Balance at 1 July
Receipts
Payments
Balance at 30 June
2013-14
$m
2014-15
$m
2015-16
$m
2016-17
$m
2017-18
$m
881
1,489
1,430
940
940
1,148
1,088
1,000
1,000
1,015
1,015
1,000
1,000
916
916
1,000
1,000
1,000
1,000
1,000
Note: Columns may not add due to rounding.
With the sharp decline in estimated royalty income since the 2014-15 Budget, receipts
into the Royalties for Regions Fund are now forecast to be 26.3% of royalty income in
2014-15 (up from 18.6% at budget-time), 19.6% in 2015-16 (up from 14.6%), 16.3% in
2016-17 (up from 12.4%) and 16.7% in 2017-18 (up from 13.1%).
While the percentage of mining royalties in 2014-15 (based on the 2014-15 Mid-year
Review) exceeds 25% of the forecast royalty income for the year, the appropriation for
the current budget year (authorised by section 6(1) of the Royalties for Region Act 2009)
is set at budget-time, and is not reduced if the percentage exceeds 25% during the
financial year.
160
Appendix 6
Table 6.2
RO Y ALT I E S FO R R EG IO N S E X P E ND IT UR E
INITIATIVE
COUNTRY LOCAL GOVERNMENT FUND (CLGF)
Administration of CLGF
Regional Centres Development Plan
Regional Groupings and Individuals
Local Government Facilitation
Support to Regional Groupings of Local Governments
Capacity Building - Regional Governance Services and
Asset Management Tools
TOTAL - COUNTRY LOCAL GOVERNMENT FUND
REGIONAL COMMUNITY SERVICES FUND
Regional Com m unity Program s and Schem es
Country Age Pension Fuel Card
Volunteer Fuel Card
Regional Workers Incentives
Regional Police Incentives
Fire Crew Protection
Boarding Aw ay From Home
Community Resource Centres
Wild Dogs Management Plan
Performing Arts Regional Tours Boost
Creative Regions Program
Community Pool Revitalisation
Regional Visitor Centres
Caravan and Camping
WA Regional Small Business Aw ards
Community Sporting and Recreation Facilities Fund
Supporting Community Sport
Foodbank
Better Beginnings - Early Literacy
Responsible Parenting Support Services
Rangelands Reform Program
Orange School Bus Initiatives
New Kimberley National Parks
Great Kimberley Marine Park
Royal Agricultural Society Show Concessions - Free
entry for Children
DFES Helicopter
Exploration Incentive Scheme
Public Sector Regional Leadership
Regional Buy Local Initiatives
Regional Events Program
Kimberley Science and Conservation Strategy
Marine Parks Management
Support for Racecourse Infrastructure Grants Program
Regional Com m unity Program s and Schem es Subtotal
Regional Health Program s
Fitzroy Kids Health
Regional (Kalgoorlie Esperance) Telehealth
Wheatbelt Renal Dialysis
Rural Palliative Care Program
Patient Assisted Travel Scheme
Royal Flying Doctor Service
Rural Generalist (Practice) Pathw ays
St John Ambulance Services in Country WA
Pilbara Cardiovascular Screen Program
Ear Health
Regional Patient Accommodation Facility
Regional Men's Health
Regional Health Program s Subtotal
2013-14
Actual
2014-15
Mid-Year
Revision
$m
2015-16
Mid-Year
Revision
$m
2016-17
Mid-Year
Revision
$m
2017-18
Mid-Year
Revision
$m
Total
Five Years
$m
2014-15
Budget
Estimate
$m
0.1
42.3
0.8
0.3
1.0
5.0
50.0
0.6
-
1.0
1.2
50.3
0.7
-
1.0
5.0
-
1.0
5.0
-
0.9
4.8
-
4.0
16.0
92.6
1.4
0.3
1.0
44.4
2.0
58.5
2.2
55.4
4.9
10.9
4.8
10.8
5.7
12.9
127.2
24.1
61.1
1.8
1.1
12.5
1.0
28.5
1.8
39.1
2.5
3.7
1.6
13.2
0.7
28.5
1.8
39.2
2.0
4.9
2.0
11.9
1.0
30.4
1.8
26.3
2.8
4.4
1.7
13.2
0.5
34.2
1.8
27.1
2.8
3.0
1.8
14.0
-
34.6
1.8
27.6
1.2
2.0
14.0
-
151.8
7.4
181.2
10.5
12.3
8.6
65.5
2.4
3.6
10.3
0.4
0.2
0.8
9.6
2.5
0.1
3.1
0.3
2.0
3.3
0.3
14.6
0.2
0.8
0.2
0.9
10.5
0.2
1.0
1.8
0.4
2.5
3.3
0.3
15.2
0.2
4.1
0.9
0.2
0.8
10.5
0.4
1.0
1.8
0.3
6.8
3.3
1.3
11.2
0.2
0.8
0.2
0.8
0.4
1.2
2.5
0.3
7.3
3.3
1.3
10.7
0.2
0.7
0.2
0.8
1.2
7.6
7.3
3.3
1.3
2.8
0.2
0.5
0.2
0.8
-
1.0
24.0
13.2
4.2
43.6
0.8
14.4
3.3
1.1
4.1
20.1
0.8
2.5
3.5
15.0
0.5
23.6
0.5
0.5
10.9
1.7
1.5
4.4
175.6
0.8
5.0
0.7
3.0
11.6
2.2
5.3
1.0
156.8
1.1
5.3
0.6
0.8
1.0
11.9
3.1
5.5
1.0
163.3
5.0
0.6
2.5
11.9
6.5
136.6
5.0
3.0
10.0
0.1
136.6
5.0
3.5
10.0
116.3
1.6
20.3
24.2
2.0
10.6
54.8
4.8
13.6
5.4
728.5
9.7
12.1
2.0
7.5
0.2
2.5
0.5
34.6
0.1
2.5
0.8
1.0
10.1
4.0
3.0
8.6
0.5
1.5
2.5
0.8
35.4
0.2
1.4
0.8
1.0
10.1
4.0
3.1
7.9
0.6
1.5
2.5
0.8
34.0
0.1
2.1
0.8
1.3
10.3
4.0
8.0
1.5
0.8
28.9
0.1
2.2
1.0
1.3
10.6
4.0
4.7
1.5
0.8
26.1
2.3
0.9
0.5
10.9
1.5
0.8
16.8
0.4
8.0
3.5
4.0
51.6
24.1
5.1
28.1
0.9
6.0
5.0
3.7
140.4
-
(a)
$m
Source: Department of Regional Development.
161
2014-15 Government Mid-year Financial Projections Statement
Table 6.2 (cont.)
RO Y ALT I E S FO R R EG IO N S E X P E ND IT UR E
INITIATIVE
2013-14
Actual
2014-15
Mid-Year
Revision
$m
2015-16
Mid-Year
Revision
$m
2016-17
Mid-Year
Revision
$m
2017-18
Mid-Year
Revision
$m
Total
Five Years
$m
2014-15
Budget
Estimate
$m
13.5
1.3
0.3
-
15.0
1.4
1.2
15.0
1.4
0.3
15.0
1.4
1.2
15.0
1.5
1.2
1.2
58.5
5.5
0.3
3.7
$m
Aboriginal Initiatives
Regional Youth Justice Strategy Kimberley and Pilbara Expansion
Clontarf Colleges
WA Indigenous Tourism Operators Committee
Aboriginal Tourism Development Program
Aboriginal Justice Program - Enhanced Driver Training and
for Regional and Remote Communities
Aboriginal Justice Program - Enhanced Services for Victims of
Within Regional and Remote Communities
Remote Area Essential Services Program
Aboriginal Community Critical Response Fund
NorthWest Drug and Alcohol Support Program
Improving Water Quality in Remote Aboriginal Communities
Governance and Leadership Development Program
Indigenous Visitor Hostels
Jigalong Essential Services Pilot
Remote Indigenous Health Clinics
Aboriginal Initiatives Subtotal
0.6
1.5
1.2
1.6
2.2
0.9
6.5
0.3
30.0
1.1
6.4
4.4
8.7
0.4
3.7
70.7
1.1
5.8
1.6
1.0
2.8
4.0
8.4
43.6
1.2
2.5
6.8
3.0
0.4
4.2
9.0
5.7
50.5
1.3
2.5
5.6
1.1
1.8
0.6
5.8
37.9
1.1
2.5
5.6
0.9
1.8
31.6
1.1
1.2
1.6
5.9
4.9
30.0
9.7
24.5
7.4
2.3
18.1
10.0
15.1
196.7
Regional Strategic Projects
Regional Strategic Projects
Regional Strategic Projects Subtotal
38.1
38.1
30.7
30.7
41.3
41.3
20.3
20.3
14.8
14.8
14.8
14.8
129.4
129.4
-
51.5
51.5
48.9
48.9
83.5
83.5
108.5
108.5
59.0
59.0
300.0
300.0
319.1
317.9
338.0
307.2
317.7
212.9
1,494.9
15.4
15.4
9.0
9.0
12.1
12.1
1.7
1.7
-
-
29.3
29.3
0.6
8.0
4.4
168.9
17.0
0.9
199.8
14.3
7.0
5.5
147.3
14.1
188.3
14.3
8.5
0.9
- (a)
12.0
138.7
16.6
2.3
0.5
193.8
70.0
1.8
141.5
8.0
5.3
226.6
80.0
101.6
24.9
0.3
206.7
39.9
141.3
12.0
193.2
204.9
18.3
0.9
- (a)
16.4
691.9
78.5
3.2
6.0
1,020.1
Regional Housing
Affordable Housing for Workers
Regional Housing Subtotal
54.1
54.1
41.2
41.2
41.2
41.2
55.2
55.2
30.0
30.0
51.0
51.0
231.5
231.5
East Kim berley Revitalisation
Ord-East Kimberley Expansion Project - Phase 2 (Asset
Investment)
Kununurra Courthouse
East Kim berley Revitalisation Subtotal
51.9
17.0
68.9
8.7
8.7
12.9
12.9
-
-
-
51.9
29.9
81.8
West Kim berley Revitalisation
China Tow n Redevelopment
West Kimberley Transitional Housing Program
West Kimberley Strategic Development Unit
0.1
-
2.0
13.5
0.4
2.0
13.5
0.2
8.0
13.5
0.4
5.9
0.2
-
10.0
33.0
0.9
Fitzroy Crossing Courthouse
Broome Boating Facility
Broome Wharf Extension of Life
Broome Road Industrial Area
West Kim berley Revitalisation Subtotal
1.1
1.0
2.3
4.7
8.0
28.6
2.0
2.0
6.1
25.9
2.9
8.8
33.6
6.1
-
4.9
1.1
3.0
14.9
67.9
Seizing the Opportunity Agriculture
Seizing the Opportunity Agriculture
Seizing the Opportunity Agriculture Subtotal
TOTAL - REGIONAL COMMUNITY SERVICES FUND
REGIONAL INFRASTRUCTURE AND HEADWORKS FUND
Regional Capital Works Initiative
Regional Capital Works Initiative
Regional Capital Works Initiative Subtotal
Pilbara Cities Initiative
Karratha Health Campus
Pilbara Health Partnership
Pilbara Underground Pow er
Pilbara Water Opportunities
Northern Tow ns Development Fund
Pilbara Cities Strategic Infrastructure
Pilbara Cities Community Projects
Pilbara Fabrication and Services Common Use Facility
The Quarter
Pilbara Cities Initiative Subtotal
Source: Department of Regional Development.
162
(a)
Appendix 6
Table 6.2 (cont.)
RO Y ALT I E S FO R R EG IO N S E X P E ND IT UR E
2014-15
Mid-Year
Revision
$m
2015-16
Mid-Year
Revision
$m
2016-17
Mid-Year
Revision
$m
2017-18
Mid-Year
Revision
$m
Total
Five Years
$m
2014-15
Budget
Estimate
$m
4.6
2.0
6.6
5.0
4.0
5.0
14.0
10.0
5.0
2.7
17.7
20.0
20.0
2.0
3.2
45.2
47.2
20.0
12.0
0.3
79.5
15.0
12.0
27.0
92.2
4.6
2.0
45.0
26.0
6.2
176.0
-
15.0
15.0
15.0
15.0
20.0
20.0
63.4
63.4
336.8
336.8
435.2
435.2
Gascoyne Development Plan
Exmouth Health Clinic
Carnarvon Health Campus
Coral Bay Seasonal Staff Accommodation
Exmouth Boat Harbour
Gascoyne Revitalisation Subtotal
16.6
0.9
1.6
0.1
19.2
26.1
4.5
16.8
0.6
5.4
53.4
26.9
5.2
15.4
0.6
5.4
53.5
12.2
1.7
3.2
0.2
14.6
31.8
0.1
0.1
-
55.6
7.8
20.1
1.1
20.0
104.7
Mid West Revitalisation
Midw est Investment Plan
Brand Highw ay - Greenough River Bridge
Midw est Unit
Mid West Revitalisation Subtotal
42.1
1.5
0.6
44.2
28.2
1.0
29.2
21.7
0.8
22.5
48.4
0.8
49.1
39.7
0.4
40.1
51.6
51.6
203.4
1.5
2.5
207.4
Regional Health Infrastructure
Esperance Health Campus
North West Health Initiative
Busselton Health Campus
Busselton ICT
Regional Health Infrastructure Subtotal
1.2
12.7
0.8
14.8
15.6
1.0
4.2
20.8
12.6
1.0
9.8
23.4
3.8
5.0
8.8
40.0
40.0
80.0
80.0
17.6
126.0
12.7
10.7
167.0
Southern Inland Health Initiative
District Medical Workforce Investment Program
District Hospital Investment Program (Operating)
Primary Health Centres Demonstration Program
Small Hospital and Nursing Post Refurbishment Program
Telehealth Investment Program (Operating)
Residential Aged and Dementia Care Investment Program
Renal Dialysis Service Expansion
Southern Inland Health Initiative Subtotal
20.9
7.9
0.9
2.4
1.9
0.1
0.2
34.3
54.9
24.1
2.5
43.5
9.9
10.0
1.2
146.1
43.9
13.5
2.4
21.0
6.4
4.0
1.2
92.5
67.0
46.0
15.3
47.0
11.9
10.0
2.4
199.6
22.7
94.8
24.4
32.0
11.6
5.9
3.2
194.6
-
154.5
162.3
43.0
102.4
31.8
20.0
7.0
521.0
Regional Skills and Training
Regional Skills and Training Initiative
Regional Skills and Training Subtotal
76.6
76.6
25.6
25.6
29.2
29.2
12.4
12.4
-
-
118.1
118.1
Regional Schools
Regional Schools Plan
Relocation of Year 7 Students
Regional Residential College Upgrades
Regional Schools Subtotal
42.5
23.5
3.5
69.5
14.9
11.4
26.3
6.3
15.5
12.3
34.1
17.3
17.3
-
-
48.8
39.0
33.1
120.8
1.3
1.3
2.7
2.7
1.4
1.4
1.2
1.2
-
-
3.9
3.9
10.6
0.1
-
21.2
3.2
21.5
1.5
13.0
6.4
3.2
6.4
2.8
6.4
-
45.1
19.2
0.1
7.4
10.7
24.4
23.0
22.6
9.2
6.4
71.8
INITIATIVE
Goldfields Esperance Revitalisation
Goldfields Esperance Revitalisation
Northern Goldfields Office and Administration Centre
Hopetoun Community Centre
Kalgoorlie-Boulder Community High School
Great Eastern Highw ay Passing Lanes
Goldfields Arts Centre
Goldfields Esperance Revitalisation Subtotal
Southern Investm ent Initiative
Southern Investment Initiative
Southern Investm ent Initiative Subtotal
2013-14
Actual
$m
Gascoyne Revitalisation
Portlink Inland Freight Corridor
Portlink Inland Freight Corridor Planning
Portlink Inland Freight Corridor Subtotal
Regional Developm ent - Water and NRM Initiatives
Regional Development Water and NRM Initiatives
Natural Resources Investment Program
Peel Recycled Water Scheme
Regional Natural Resource Management - State Barrier Fence
Regional Developm ent - Water and NRM Initiatives
Subtotal
-
(a)
Source: Department of Regional Development.
163
2014-15 Government Mid-year Financial Projections Statement
Table 6.2 (cont.)
RO Y ALT I E S FO R R EG IO N S E X P E ND IT UR E
INITIATIVE
2013-14
Actual
2014-15
Budget
Estimate
$m
2014-15
Mid-Year
Revision
$m
2015-16
Mid-Year
Revision
$m
2016-17
Mid-Year
Revision
$m
2017-18
Mid-Year
Revision
$m
Total
Five Years
-
-
-
(a)
-
-
-
- (a)
-
-
- (a)
-
-
-
- (a)
13.3
8.5
3.7
4.0
1.0
4.9
9.3
0.4
0.3
0.3
45.8
5.0
25.5
4.3
8.2
1.8
2.0
9.0
2.0
5.0
62.9
4.3
5.0
34.4
4.3
7.0
6.5
3.2
2.2
9.0
0.8
0.1
5.0
3.4
85.1
10.0
12.1
4.5
1.6
2.2
10.5
1.0
5.2
47.2
10.0
5.1
1.7
2.2
2.0
4.9
25.9
20.0
4.1
2.0
26.1
17.6
45.0
64.3
14.2
12.6
7.5
4.9
12.5
0.4
6.6
19.5
6.1
0.4
15.1
3.4
230.1
663.4
696.0
683.2
772.3
695.6
772.1
3,586.6
48.0
16.0
2.0
18.0
52.3
28.9
2.0
-1.9
-0.5
28.5
53.7
29.5
8.0
-3.5
-0.5
33.5
52.6
65.9
35.0
-4.2
-0.4
96.2
56.2
55.5
79.0
-4.6
-0.3
129.6
56.2
179.8
124.0
-14.2
-1.7
287.9
266.6
$m
Regional Centres Developm ent Plan (SuperTow ns)
SuperTow ns Development Planning Fund
Regional Centres Developm ent Plan (SuperTow ns)
Subtotal
Regional Infrastructure Projects
Regional Mobile Communications Project
Regional Telecommunications Project - Stage 2
Community Safety Netw ork (Operating)
Recreational Boating Facilities Scheme (Operating)
Regional Airports Development Scheme
Ravensthorpe Heavy Haulage Route
Regions Infill Sew erage
Conservation Parks Infrastructure and Roads
SuperTow ns - Avon Train
Avonlink Enhancement Project
Bunbury to Albany Gas Pipeline
Living Lakes
Collie Water Plan (Operating)
Road Coach Capital Replacement Program
Regional Bus Acquisition
Regional Infrastructure Projects Subtotal
TOTAL - REGIONAL INFRASTRUCTURE AND
HEADWORKS FUND
NEW REGIONAL AND STATEWIDE INITIATIVES
New Regional and Statew ide Initiatives (Operating)
Statew ide Regional Blueprint Initiatives
1% Efficiency Dividend (c)
15% Procurement Reduction (c)
TOTAL - NEW REGIONAL AND STATEWIDE INITIATIVES
Adm inistering the Royalties for Region Fund
Over Program ing Provision
TOTAL - ROYALTIES FOR REGIONS FUND
FUTURE FUND CONTRIBUTION (b)
-
-142.9
-158.8
-176.5
-176.5
-176.5
-688.2
1,074.9
1,000.0
1,000.0
1,000.0
1,000.0
1,000.0
5,074.9
262.5
246.8
246.8
197.1
-
-
706.4
(a)
Amount less than $50,000.
(b)
Total Royalties for Regions Future Fund contributions are forecast to be $1,004.1 million over the period 2012-13 to
2015-16.
(c)
Government savings measures in this Mid-year Review may impact on the composition of the RfR program. The detailed
impact of these savings is not known at this time, and will be disclosed in the 2015-16 Budget.
Note: Columns/rows may not add due to rounding
Source: Department of Regional Development.
164
$m
2 0 1 4 - 1 5 G O V E R N M E N T M I D - Y E A R F I N A N C I A L P R O J E C T I O N S S TAT E M E N T
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