MID - YEAR REVIEW Budget Mid Year... · 2012. 9. 28. · 2008‐09 Budget Mid Year Review 2008‐09...

MID - YEARREVIEW

Australian Capital Territory

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2008 – 2009888 888 888 888 888 888 888 888 888

Location:

ACT Department of Treasury Canberra Nara Centre Constitution Ave CANBERRA ACT 2601 Postal Address:

GPO Box 158 CANBERRA ACT 2601

Internet Address:

www.treasury.act.gov.au

Treasury Switchboard:

Tel: (02) 6207 0310

Fax: (02) 6207 0298

2008‐09 Budget Mid Year Review

2008‐09 Budget Mid Year Review Page 1

TABLE OF CONTENTS

INTRODUCTION....................................................................................................3

CHAPTER 1: UPDATE TO THE 2008-09 BUDGET ESTIMATES......................4

Overview...................................................................................................................4

Net Operating Balance – General Government Sector .........................................................6

Reconciliation to the Budget Position – GGS Operating Statement..........................................7

Financial Position – General Government Sector ..............................................................11

Net Operating Cash – General Government Sector ...........................................................13

Total Territory Revised Estimates..................................................................................14

Public Trading Enterprises (PTE) Revised Estimates .........................................................15

Risks......................................................................................................................16

CHAPTER 2: PERFORMANCE AGAINST FINANCIAL POLICY OBJECTIVES AND STRATEGIES.............................................19

CHAPTER 3: ECONOMIC CONDITIONS.........................................................29

APPENDIX 1: DETAILED FINANCIAL PROJECTIONS ..................................32



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INTRODUCTION Section 20A of the Financial Management Act 1996 (FMA) requires the preparation of a budget review for each financial year.

The purpose of the budget review is to provide updated information to allow for the assessment of the Government’s financial performance against its financial policy objectives and strategies, as set out in the Territory Budget for the financial year (i.e., the 2008‐09 Budget Papers).

The 2008‐09 Budget Mid Year Review:

• provides an update to the forecast results;

• updates financial and economic parameters, and incorporates the consequent changes to the estimated outcome and the forward years’ forecasts;

• identifies the impact of any policy initiatives introduced since the passage of the 2008‐09 Budget (or latest review), including the Appropriation Act 2008‐2009 (No.2);

• identifies events that have emerged since the passage of the Budget, and incorporates their impact where they are certain and quantifiable; and

• presents a view of the Territory’s financial position and risks to that position.

The Review provides an update to the 2008‐09 Pre‐Election Budget Update (PEBU) published on 18 September 2008, which can be found on the Treasury Website at:

http://www.treasury.act.gov.au/about/publications.shtml

Known and advised changes in the Commonwealth Government Budget and the impact of agreed and signed inter‐governmental agreements are included in the Mid Year Review forecasts.

However, the financial impacts of decisions taken at the 29 November 2008 meeting of the Council of Australian Governments (COAG) in Canberra which focused on major reforms to federal specific purpose payments arrangements and new national partnership programs driving reform are not reflected in this review, and instead, will be reflected in the 2009‐10 ACT Budget.

The ACT Government and the Commonwealth Government remain engaged in discussions, and the Intergovernmental Agreement on Federal Financial Relations and other documents giving effect to these new arrangements had not been signed in time to be reflected in this review.

Looking forward, the Mid Year Review represents a ‘no policy change’ position, since the presentation of the Supplementary Appropriation. Where significant issues have been identified, but are not certain, or unable to be quantified with reasonable certainty, they have been identified as potential risks to the budget and forward estimates. These risks may be on the upside or downside of budgetary performance.

http://www.treasury.act.gov.au/about/publications.shtml�



CHAPTER 1: UPDATE TO THE 2008-09 BUDGET ESTIMATES

Overview The 2008‐09 Budget was set in the context of a moderating local economy. The Pre Election Budget Update (PEBU), released in September 2008, was also in a similar context with the moderation in the housing market occurring faster than previously forecast.

Since the PEBU, the deterioration in the financial markets has lead to an outlook of a global economic slowdown, and prospects of recession in some of the leading economies. The Australian economy can not be immune from such developments, although it is much better placed to deal with their impacts.

Likewise, the ACT economy is relatively better placed than the other jurisdictions. Unemployment is close to record low levels, and is likely to remain below the national rate. A larger proportion of the workforce is in the public sector, which is likely to have relatively higher stability.

With relatively higher discretionary spending, some caution on the part of consumers has translated in to lower rate of growth in demand for goods and services. The Federal Government’s fiscal stimulus initiatives, however, along with the interest rate cuts totalling 3 percentage points since September are expected to stimulate demand from early 2009.

The outlook for investment in the dwelling construction sector also remains positive. The latest information from the Australian Bureau of Statistics indicates the ACT recording substantial growth in some of the lead indicators such as commencements and finance commitments. Further growth is expected to flow on from interest rate cuts and the First Home Owners Boost program.

The non‐dwelling construction sector had been coming off a very high base in 2007. With constraints on the availability of credit, there is evidence of some private sector projects being deferred. However, projects totalling around $3 billion are expected to proceed over the next three to four years, a number of which relate to office accommodation for the Commonwealth public sector tenants.

In summary, while there have been some changes to economic parameters, the outlook for the local economy has not significantly changed since the PEBU.

The budget, however, has been considerably impacted from the unfolding of events in the financial markets, a deterioration in consumer sentiment at the national level, and the changes in the monetary policy since the PEBU.

The 2008‐09 Budget provided for surpluses of around $61 million a year on average, or around 1.7 per cent of the annual budget over the forward estimates. The PEBU revised the forecast surpluses down to around $57 million a year on average, or 1.6 per cent of the annual budget.



Such a buffer would have been sufficient to absorb the revenue impacts from changes in the local economic conditions, such as the earlier softening in the housing market. The impacts of the deterioration in financial markets and the interest rate cuts have, however, been much more substantial.

The Mid Year Review forecasts a small surplus of $15 million in 2008‐09, and an outlook of deficits, driven by external parameter changes affecting revenue. The projected deficits amount to around $72 million a year on average over the budget and forward years.

The changes in operating balances mainly relate to revenue, and largely reflect:

• a reduction in the ACT’s share of GST revenue from a decrease in the size of the pool, due to reduced national consumer spending;

• declines in financial markets impacting on investment returns, including superannuation and other investments;

• lower interest rates from the Reserve Bank of Australia intervention, which has impacted earnings on cash and investment balances; and

• a reduction in forecast taxation revenue due to the decline in economic activity, particularly market impacts on conveyance revenue.

One of the 7 financial policy objectives–to maintain a net operating surplus–is not projected to be met in the forward years. With this exception, all the other financial policy objectives continue to be met. The overall financial position of the Territory remains sound.

The 2008‐09 Budget provided for capital investments totalling around $1.4 billion over the forward estimates period, largely funded from past surpluses and cash holdings. The Budget, therefore, is largely unaffected by the tightening of the credit markets. Indeed it retains vital capacity to advance projects targeted at some specific sub sectors of the industry to provide stability in the economic activity and stable employment in those areas.

The Update incorporates the impact of the Supplementary Appropriation passed in early December 2008 to provide for a number of election commitments, and financial support for some vulnerable groups in the community during a time of financial stress.

It is important to note that this update is on the basis of ‘no policy change’, and as such does not incorporate any policy response to the parameter driven impact on the operating balance. A policy response to the projected net operating deficits would be considered through the 2009‐10 Budget.

The Government remains committed to its election policy platform, and its delivery will also be part of the 2009‐10 Budget considerations.



Net Operating Balance – General Government Sector The GGS Net Operating balance is now forecast to be in surplus by $15.2 million in 2008‐09, a fall of $58.6 million from the $73.8 million surplus estimated at the time of the 2008‐09 PEBU.

Table 1: General Government Sector Net Operating Balance 2008‐09 2008‐09 2008‐09 2009‐10 2010‐11 2011‐12

Original Budget

RevisedPEBU

RevisedMYR

Revised Estimate

Revised Estimate

Revised Estimate

$m $m $m $m $m $m Total Revenue 3,318.1 3,305.0 3,307.0 3,329.4 3,464.4 3,644.6 Total Expenses 3,323.7 3,317.4 3,341.3 3,515.9 3,672.6 3,850.8 UPF Net Operating Balance ‐5.6 ‐12.9 ‐34.3 ‐186.5 ‐208.2 ‐206.2 Plus Expected long term capital gains on superannuation investments

90.5 86.7 49.6 87.6 101.7 110.2

Net Operating Balance 84.9 73.8 15.2 ‐98.9 ‐106.5 ‐96.0

Note: Table may not add up due to rounding

Table 2, shows a summary of the variations in the GGS Net Operating Balance from the 2008‐09 Original Budget, and the 2008‐09 PEBU to the 2008‐09 Budget Mid Year Review (MYR).

Table 2: Summary of the Net Operating Balance to Mid Year Review 2008‐09 2009‐10 2010‐11 2011‐12 $ʹ000 $ʹ000 $ʹ000 $ʹ000 2008‐09 Budget Net Operating Balance 84.9 71.2 53.7 33.7

2008‐09 PEBU Net Operating Balance 73.8 48.0 51.5 54.4 Change in Total Revenue ‐34.6 ‐139.2 ‐156.1 ‐148.2 Change in Total Expenses ‐23.9 ‐7.8 ‐2.0 ‐2.2 2008‐09 MYR Net Operating Balance 15.2 ‐98.9 ‐106.5 ‐96.0

Note: Tables may not add due to rounding



Reconciliation to the Budget Position – GGS Operating Statement Table 3 below shows variations between the GGS Net Operating Balance published in the 2008‐09 Budget, as well as the revised estimates presented in the 2008‐09 PEBU. Details of these variations have been split between policy and parameter changes.

Table 3: Summary of Movements in the Net Operating Balance 2008‐09 2009‐10 2010‐11 2011‐12 $m $m $m $m GGS Net Operating Balance ‐ 2008‐09 Budget 84.9 71.2 53.7 33.7 GGS Net Operating Balance ‐ 2008‐09 PEBU 73.8 48.0 51.5 54.4 Parameter Impact Commonwealth Revenue

GST Revenues ‐26.2 ‐38.6 ‐41.8 ‐49.3 Other Commonwealth Revenue 1.0 1.2 1.4 1.6 Commonwealth Revenue – Territory and Municipal

Services 2.0 3.7 0.0 0.0

Financial Market Impacts Superannuation Investment Earnings 0.0 ‐19.1 ‐20.5 ‐22.1 TBA1 Investments Interest (net) ‐7.4 ‐43.0 ‐41.6 ‐50.2 Agency Interest (net) ‐1.1 ‐1.0 ‐1.0 ‐1.1

Moderating Economic Activity Revised Taxation Revenue Estimates ‐20.8 ‐30.3 ‐27.2 ‐14.9 LDA ‐ Duty, Tax Equivalent and Dividend Payments ‐2.7 ‐7.8 ‐14.4 ‐4.4

Other ACTTAB and ACTEW ‐ Tax Equivalent and Dividend

Payments ‐0.5 ‐0.4 ‐0.3 ‐0.2

Appropriation Rollovers (2007‐08 to 2008‐09) ‐12.1 ‐1.0 ‐0.9 ‐1.0 Write‐back of Totalcare superannuation liabilities 5.4 0.0 0.0 0.0 Indexation Adjustments (net) 0.0 ‐7.3 ‐7.5 ‐7.7 Other 20.1 0.9 0.5 3.5

Sub‐Total ‐42.3 ‐142.7 ‐153.5 ‐145.8 Policy Impact

2008‐09 Second Appropriation ‐16.2 ‐4.3 ‐4.5 ‐4.6 Sub‐Total ‐16.2 ‐4.3 ‐4.5 ‐4.6 Revised GGS Net Operating Balance Mid Year Review

15.2 ‐98.9 ‐106.5 ‐96.0


1. TBA: Territory Banking Account



Details of Parameter Variations and Cost Pressures

Commonwealth Revenue

GST Revenue

GST Revenue Grants have been revised to reflect downward revisions to the GST revenue pool estimate, as announced in the Commonwealth Government’s 2008‐09 Mid Year Economic and Fiscal Outlook (MYEFO) released 5 November 2008. These downward revisions were premised on lower forecast national growth in 2008‐09. Growth in consumption subject to GST is expected to slow further in 2009‐10, but be partly offset by stronger growth in dwelling investment in response to the Commonwealth Government’s housing stimulus package (First Home Owners Boost).

Other Commonwealth Revenue

Other revenues have been updated following the release of the Commonwealth Government’s MYEFO reflecting changes in the Commonwealth’s population and CPI parameters.

Commonwealth Revenue – Territory and Municipal Services

Increased revenue in 2008‐09 reflects the $2 million announced as part of the Regional and Local Community Infrastructure Program on 18 November 2008.

Additional revenue in 2009‐10 relates to the Canberra Integrated Urban Waterways Project.

Financial Market Impacts

Superannuation Investment Earnings

The decrease in superannuation investment earnings for 2009‐10 and the forward years is the result of the reduction to the Superannuation Provision Account (SPA) investment asset base due to poor performance of the equity market.

TBA Investment Interest

The decrease in Territory Banking Account (TBA) investment earnings for 2008‐09 and the forward years is due mainly to the combination of:

• the reduction of assumed average interest rate from 7.25 per cent to 4.25 per cent; and

• a reduced investment base, as a result of other parameter changes.

Agency Interest

The decrease in agency earnings for 2008‐09 and the forward years is due mainly to the reduction of assumed average interest rate from 7.25 per cent to 4.25 per cent.



Moderating Economic Activity

Revised Taxation Revenue Estimates

The residential property market has largely been slowing throughout 2008 in response to the Reserve Bank’s contractionary stance in monetary policy during the early part of the year. This, in combination more recently with falling share markets, has led to consumer caution, with a projection of moderated residential conveyancing in 2008‐09 relative to 2007‐08.

The fall in 2008‐09 is somewhat moderated by the recent significant cuts in interest rates and introduction of the First Home Owners Boost (FHOB). The housing market is expected to gradually pick up, in response to the changed monetary policy and FHOB. These forecasts are based on the assumption that the ACT land release program remains unchanged and therefore supply constraints do not drive future growth in prices.

The forecast for commercial conveyance duty revenue in 2008‐09 has been reduced since the PEBU. The lower forecast reflects the recent downward trend in the number of commercial property transactions—coincident with the global financial crisis and associated business uncertainty. The recent pattern could continue for the remainder of 2008‐09. Looking forward, the number of commercial property transactions is expected to return to longer‐run average levels.

Recent high interest rates, and increased consumer caution and falling wealth, coupled with high petrol prices during 2008, have resulted in a fall in motor vehicle sales over the past year. As a result, the forecast for motor vehicle duty revenue has been revised down in 2008‐09 and 2009‐10. The 2009‐10 forecast still represents an expected increase on the estimated revenue in 2008‐09 due to the positive impacts of reduced interest rates.

Gaming revenue has been revised downwards for 2008‐09, reflecting a reduction in gambling activity.

LDA Duty, Tax Equivalent and Dividend Payments

There is a downward revision of conveyance duty, tax equivalents and dividends from the Land Development Agency (LDA), resulting from a forecast reduction in land sales revenue. The reduction is mainly due to the deferral of sales of Molonglo 2 and North Weston into 2009‐10. The land supply targets as published in the 2008‐09 Budget, however, remain unchanged and the deferral of these estates has been mainly offset by bringing on additional releases in the Gungahlin area and specific sites elsewhere in Canberra.



Other

ACTEW and ACTTAB Dividends and Income Tax

ACTTAB’s dividend and tax equivalent payments have been revised downward reflecting the imposition by the NSW Government of a 1.5 per cent turnover tax on all gambling associated with NSW races, and racing products fee of 10 per cent of Gross profits on all Victorian races. This was offset by minor increases in ACTEW’s tax equivalent payments due to minor revisions to Joint Venture revenue.

Appropriation Rollovers (2007‐08 to 2008‐09)

Section 16B of the Financial Management Act 1996 authorises (under specific circumstances) a rollover of appropriation from the year of appropriation to the following year, if at the end of the financial year, in which the appropriation is made, the amount is not dispersed to the entity to which it is appropriated.

The total Section 16B appropriation rollover impacting on the 2008‐09 Mid Year Review GGS Net Operating Balance comprises of recurrent appropriations, depreciation on capital works, and payments on behalf of the Territory, made to a number of ACT Government departments and agencies after the publication of the 2008‐09 PEBU.

Write‐back of Totalcare Superannuation Liabilities

The upward revision in 2008‐09 reflects a further refinement of the Totalcare superannuation liability.

Indexation Adjustments

Additional net expenditure is due to an increase in the estimate for the Consumer Price Index (CPI) in 2008‐09.

Other

This adjustment reflects a reduction in the estimate of cost of capital associated with capital investments and a revision of the estimated superannuation fund of choice expenses in 2008‐09.

Details of Policy Changes

2008‐2009 Appropriation Act (No.2)

The Appropriation Act 2008‐2009 (No. 2) was passed on 11 December 2008. The initiatives funded through this appropriation are explained within the Supplementary Budget Papers located at www.treasury.act.gov.au/budget/index.shtml.



Financial Position – General Government Sector The financial position of the General Government Sector, as assessed through a number of balance sheet measures remains strong, although that strength has reduced marginally since the PEBU. The changes in balance sheet measures largely relate to a decrease in investment assets.

Net Debt

Net Debt is a key balance sheet measure which takes into account gross debt liabilities, as well as assets such as cash reserves and investments. Net Debt is calculated as the sum of deposits held, advances received and borrowing, less the sum of cash and deposits, advances paid and investments loans and placements. Superannuation Provision Account (SPA) assets have been excluded in determining Net Debt.

The GGS Net Debt, excluding Superannuation related investments, is forecast to be minus $780.6 million, a decline from the original Budget largely due to reduced investment balances.

Negative Net Debt indicates that GGS cash reserves and investments are greater than debt liabilities.

Table 4: Net Debt 2008‐09 2008‐09 2008‐09 2009‐10 2010‐11 2011‐12

OriginalBudget

RevisedPEBU

RevisedMYR

RevisedEstimate

Revised Estimate

Revised Estimate

General Government Sector

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

Cash and Deposits 126.3 152.2 184.1 197.7 207.4 225.3 Advances Paid 934.7 933.3 972.6 1,049.2 1,047.3 1,042.1 Investments, Loans and Placements 3,351.3 3,484.9 2,994.2 3,098.4 3,322.6 3,585.7 Less: Superannuation Investments 2,344.6 2,242.6 1,981.3 2,188.1 2,400.1 2,596.7

Deposits Held 7.5 109.7 109.7 107.5 105.7 104.8 Advances Received 99.3 99.3 99.3 96.4 93.3 90.1 Borrowing* 1,071.0 1,142.5 1,179.9 1,210.8 1,195.1 1,176.5

Net Debt ‐889.9 ‐976.2 ‐780.6 ‐742.5 ‐783.1 ‐885.1


* Borrowings includes financial leases



Net Financial Liabilities

Net Financial Liabilities takes into account unfunded superannuation liabilities and provides a broader measure of debt than Net Debt. Net Financial Liabilities is calculated as total liabilities less financial assets (such as cash reserves and investments). It takes into account all non‐equity financial assets but excludes equity held by the GGS in public corporations (for example, ACTEW).

The revised forecast for Net Financial Liabilities for 2008‐09 is $1,392 million, an increase in net liabilities of $575.5 million compared to the 2008‐09 PEBU forecast of $816.5 million.

The increase in Net Financial Liabilities largely reflects lower investment balances resulting from the poor performance of financial markets which has impacted investment returns, including superannuation investments and Territory investments.

Table 5: Net Financial Liabilities 2008‐09 2008‐09 2008‐09 2009‐10 2010‐11 2011‐12 Original Budget

RevisedPEBU

RevisedMYR

RevisedEstimate

Revised Estimate

Revised Estimate


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

Financial Assets 10,118.5 10,515.6 10,097.8 10,557.0 11,070.4 11,648.8

Less: Equity Investments in PTEs

5,402.3 5,643.4 5,619.5 5,905.6 6,185.5 6,470.2

Total Liabilities 5,579.6 5,688.7 5,870.2 6,191.5 6,481.4 6,776.0

Net Financial Liabilities 863.5 816.5 1,392.0 1,540.2 1,596.5 1,597.4


Net Worth

Net Worth provides a broad measure of the Territory’s balance sheet, and is calculated as total assets less total liabilities including superannuation.

The forecast GGS Net Worth for 2008‐09 has been revised to $13,282.3 million, a decrease of $528.1 million compared to the 2008‐09 PEBU forecast of $13,810.4 million. The decrease in Net Worth is largely attributed to the decreasing value of investments and interest rates.

Table 6: Net Worth 2008‐09 2008‐09 2008‐09 2009‐10 2010‐11 2011‐12 Original Budget

RevisedPEBU

RevisedMYR

RevisedEstimate

Revised Estimate

Revised Estimate


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

Total Assets 19,093.7 19,499.1 19,152.5 19,954.5 20,679.3 21,375.2

Total Liabilities 5,579.6 5,688.7 5,870.2 6,191.5 6,481.4 6,776.0

Net Worth 13,514.0 13,810.4 13,282.3 13,763.0 14,197.9 14,599.3




Net Operating Cash – General Government Sector The Net Operating Cash is the cash counterpart to the accrual Net Operating Balance. It measures all operating cash receipts for a financial year (for example, taxes, fees and fines, and operating grants from the Commonwealth Government) less all operating cash payments (including wages and salaries, cash superannuation payments and payments for goods and services).

The revised forecast for the GGS Net Operating Cash at the end of 2008‐09 is a surplus of $441.1 million, a decrease of $52 million compared to the forecast of $493.1 million as published in the 2008‐09 PEBU. This is mainly a result of the reduced GST, interest and taxation revenues.

Table 7: Net Operating Cash 2008‐09 2009‐10 2010‐11 2011‐12 RevisedBudget

RevisedEstimate

Revised Estimate

Revised Estimate


$m $m $m $m

2008‐09 Budget Net Operating Cash 488.1 469.6 456.8 435.6

2008‐09 Pre‐Election Budget Update Net Operating Cash 493.1 495.3 484.8 463.0

2008‐09 Mid‐Year Review Net Operating Cash

441.1 333.5 323.3 319.5



Total Territory Revised Estimates The 2008‐09 Budget Papers forecast a Total Territory Net Operating Surplus of $57.8 million in 2008‐09 and a Total Territory operating surplus of $45.1 million in PEBU for the same year. A Total Territory operating deficit of $22.8 million is now anticipated, indicating a decline of $67.9 million from PEBU, largely reflecting the movements in the General Government Sector Net Operating Balance.

The decrease is due to the reduction in GGS revenue estimates for the reasons outlined earlier in this report.

Table 8: Total Territory Revised Budget and Forward Estimates 2008‐09 2008‐09 2008‐09 2009‐10 2010‐11 2011‐12

Original Budget

RevisedPEBU

RevisedMYR

RevisedEstimate

Revised Estimate

Revised Estimate

Total Territory

$m $m $m $m $m $m Total Revenue 3,544.0 3,523.3 3,530.4 3,552.8 3,717.2 3,943.4

Total Expenses 3,576.6 3,564.8 3,602.8 3,791.2 3,967.9 4,194.0

UPF Net Operating Balance ‐32.7 ‐41.6 ‐72.4 ‐238.3 ‐250.7 ‐250.6

Plus

Expected Long‐Term Capital Gains on Superannuation Investments 90.5 86.7 49.6 87.6 101.7 110.2 Net Operating Balance 57.8 45.1 ‐22.8 ‐150.7 ‐149.0 ‐140.3

Net Worth 13,505.8 13,789.6 13,257.8 13,717.2 14,130.3 14,509.0

Net Debt (excluding superannuation related investments) ‐304.7 ‐376.5 ‐156.9 25.8 ‐8.1 ‐203.2

Net Financial Worth ‐983.5 ‐1,063.0 ‐1,604.2 ‐1,934.0 ‐2,024.4 ‐1,984.7



Public Trading Enterprises (PTE) Revised Estimates A PTE Net Operating Balance of $85.3 million is now forecast in 2008‐09, indicating a marginal decline from the 2008‐09 PEBU forecast.

Table 9: Public Trading Enterprise Revised Budget and Forward Estimates 2008‐09 2008‐09 2008‐09 2009‐10 2010‐11 2011‐12 Original Budget

RevisedPEBU

RevisedMYR

RevisedEstimate

Revised Estimate

Revised Estimate

Public Trading Enterprises

$m $m $m $m $m $m Total Revenue 733.1 716.6 722.5 726.9 758.3 830.2 Total Expenses 625.8 622.0 637.2 656.4 690.7 751.6 UPF Net Operating Balance 107.3 94.6 85.3 70.5 67.6 78.6

Net Worth 5,402.3 5,643.4 5,639.9 5,926.0 6,205.9 6,490.6 Net Financial Worth ‐182.2 ‐287.2 ‐214.5 ‐374.9 ‐387.0 ‐323.8 Net Debt 585.2 599.7 623.7 768.3 775.1 681.9



Risks The 2008‐09 Budget Paper No. 3, as well as the 2008‐09 Pre‐Election Budget Update (PEBU), provided comprehensive statements of significant new or ongoing fiscal risks. An update to these statements is as follows.

Economic Risks

Although growth is forecast to remain below trend in 2008‐09 and 2009‐10, the outlook contains substantial uncertainty and potential volatility, which have significantly increased the risks to the economic outlook.

Further deterioration in the global and domestic economies brought about by the global financial crisis present downside risks to the economic forecasts. If conditions globally remained at current levels for an extended period of time, this could lead to Australia entering an elongated period of slow growth, which in turn may lead to lower activity in the ACT. Additionally, consumer and business confidence are already at quite low levels and if these conditions were to continue for an extended period, future growth in the ACT economy may be limited. This would translate to lower SFD, GSP and employment growth.

The upside risks to the economic forecasts come mainly from an earlier rebound in consumer spending and a significant increase in spending by the Commonwealth Government. A recovery in consumer sentiment in response to lower interest rates would boost household consumption and lead to upward growth in SFD and GSP.

Should the Commonwealth Government significantly increase expenditure then there is likely to be a boost to national government consumption spending in the ACT, in the form of additional Commonwealth Public Sector employment. This would have an indirect, but positive, impact on ACT household consumption, and therefore SFD and GSP.

Interest Revenue

Further reductions of interest rates will result in lower interest revenue from investment across the Budget and forward years.

Commonwealth Funding

As the GST is a broad based consumption tax, GST revenue collections are subject to consumer confidence and the state of the economy at the national level. Any adverse changes in these can lead to a smaller pool of funding for the States. The Commonwealth’s next revision to the pool will be released as part of the Commonwealth’s 2009‐10 Budget in May 2009.



GST revenue grants to the ACT also remain subject to revisions by the Commonwealth Grants Commission (CGC) to States’ GST relativities. The 2009‐10 relativities will be released in February 2009 but are as yet unquantifiable; changes are expected to the States’ 2010‐11 relativities following the outcome of the CGC’s 2010 methodology review in February 2010.

The ACT’s share of the GST revenue pool is determined on a weighted population share basis, therefore, any revision by the Australian Bureau of Statistics to the States’ estimated populations will have a flow on effect to GST revenue grants.

The newly agreed federal financing arrangements between the States and Commonwealth under the auspices of the Council of Australian Governments (COAG), while reflecting an overall increase in the amount of Commonwealth funding, will result in a move towards equal per capita funding for Specific Purpose Payments (SPPs) over the next five years. Thus the ACT’s share of SPPs will also vary according to the Territory’s relative share of the Australian population. This realignment of Commonwealth funding will also impact on the ACT’s GST relativity.

The financial impacts of decisions taken at the 29 November 2008 meeting of the Council of Australian Governments (COAG) in Canberra which focused on major reforms to federal specific purpose payments arrangements and new national partnership programs driving reform are not reflected in this review, and instead, will be reflected in the 2009‐10 ACT Budget.

Commonwealth Tax Review

The Commonwealth Government has announced a wide ranging review of Australia’s tax and transfer system. The review will cover State/Territory taxes. The review panel is expected to release its final report in December 2009. At this stage, the extent to which any possible recommendations of the review are accepted and implemented, and their potential impact on taxation revenue is difficult to gauge.

Superannuation Provision Account Investments

Investments managed by the Superannuation Provision Account are subject to market risk.

Superannuation (defined benefit) Liabilities

Changes in superannuation expenses reflect the movement between the superannuation liabilities from one year to the next. If the superannuation liability increases then the expense increases and vice versa.

The budget estimates for the superannuation liabilities reflect a long‐term expected average discount rate of 6 per cent. A fall in the discount rate increases the liability/expense and vice versa. A 1 percentage point fall in the discount rate equates to approximately a $700 million increase in the liability and an approximate increase of $40 million to superannuation expense.



The level of employer liability associated with defined benefit superannuation schemes is actuarially determined. The Territory’s net superannuation liabilities are sensitive to:

• the current level of ACT public sector wages;

• demographic assumptions (including, but not limited to, years of service, salary increases from promotions, invalidity, mortality, resignation, benefit stream election by PSS members, member contribution levels by PSS members, and spouse assumptions);

• the discount rate used by the actuary in valuing the liabilities according to relevant accounting standards, which utilises a discount rate equivalent to the annualised 10 year Commonwealth Government bond rate; and

• other financial assumptions including inflation and wage inflation.

The actuarial assessment of the superannuation liabilities involves setting a range of demographic and financial assumptions that are fully reviewed every three years (triennial review). This assessment process can result in considerable fluctuations in the valuation of the liability and a corresponding direct impact on the Net Operating Balance of the General Government Sector.



CHAPTER 2: PERFORMANCE AGAINST FINANCIAL POLICY OBJECTIVES AND STRATEGIES

The Government’s financial policy objectives, as detailed in the 2008‐09 Budget presented to the Assembly on 6 May 2008, is centred on placing the Territory’s finances on a sustainable platform, whilst providing targeted investment to respond to emerging need and maintaining quality services in high priority areas.

The Government’s strategy is based on prudent financial management to protect against unforeseeable shifts in economic conditions. This approach provides the Territory with capacity to respond to any unforseen fiscal shocks and emerging risks in the future.

Preservation of high quality services, while maintaining fiscal restraint, remain key parts of the Government’s Fiscal Strategy.

The Government’s 2008‐09 Financial Policy Objectives and Fiscal Strategy remain unchanged from that published in 2008-09 Budget Paper No. 3:

• to achieve a General Government Sector Net Operating Surplus;

• to maintain operating cash surpluses;

• to maintain a AAA credit rating;

• to manage debt prudently and maintain Net Financial Liabilities within the range of all AAA rated jurisdictions;

• to fully fund the Territory’s unfunded superannuation liability by 2030;

• to maintain quality services and infrastructure; and

• to maintain taxation revenue at sustainable levels.

The financial policy objective of maintaining a net operating surplus was met before schedule in the past years, but is now not projected to be met in the forward years. With this exception, all the other financial policy objectives continue to be met.

The PEBU forecast surpluses of around $57 million a year on average or around 1.6 per cent of the annual budget over the forward estimates. Such a buffer would have been sufficient to absorb the revenue impact from the changes in local economic conditions, such as the softening in the housing market. The impacts of the deterioration in the global financial markets and significant cuts in interest rates, however, have been much more substantial. Such factors were unforeseen and unprecedented.



The overall financial position of the Territory remains sound, as demonstrated in a number of key indicators which signify the continued strength of the Budget:

• a surplus GGS Net Operating Balance in 2008‐09;

• a strong Balance Sheet;

• low Net Financial Liabilities;

• strong Net Worth; and

• a continued AAA credit rating.



General Government Sector Net Operating Surplus

This measure relates to the achievement of Net Operating Surpluses, without the reliance on land revenue to finance the operating budget, as observed under the Australian Accounting Standards (AAS) regime.

The Government’s objective to achieve a General Government Sector Net Operating Surplus has been maintained in 2008‐09. As shown in Table 10, below, negative Net Operating Balances are forecast across the forward estimates, based on a ‘no policy change’ position. Policy responses will be considered as part of the 2009‐10 Budget process.

Table 10: Comparison of 2008‐09 Budget, Pre‐Election Budget, and 2008‐09 Mid Year Review Net Operating Balances

2008‐09 2009‐10 2010‐11 2011‐12

Budget Estimate Estimate Estimate

$m $m $m $m

2008‐09 Budget Net Operating Balance 84.9 71.2 53.7 33.7

2008‐09 Pre‐Election Budget Update Net Operating Balance 73.8 48.0 51.5 54.4

2008‐09 Mid‐Year Review Net Operating Balance 15.2 ‐98.9 ‐106.5 ‐96.0



Maintaining Operating Cash Surpluses

The Government’s objective is to maintain strong operating cash surpluses in the general government sector at all times. The operating cash balance is the cash counterpart to the accrual Net Operating Balance. It measures all operating cash receipts each year (for example, taxes, fees and fines, and operating grants from the Commonwealth Government) less all operating cash payments (including wages and salaries, cash superannuation payments and payments for goods and services).

Figure 1 below shows that the GGS operating cash surplus for 2008‐09 is expected to decrease by $52 million to $441 million from $493 million, as published in the 2008‐09 PEBU. Although a decrease compared to the PEBU is forecast, the Territory continues to maintain strong operating cash surpluses. Strong operating cash surpluses ensure that there is sufficient cash generated from operations to cover the net outlays for capital investment, to repay debt, and to address unfunded superannuation liabilities.

Figure 1: Net Cash Flows from Operating Activities – General Government Sector

488470

457436

493 495 485463

441

334 323 320

0

50

100

150

200

250

300

350

400

450

500

550

2008-09 2008-09 2009-10 2010-11

($ m

illion

s)

2008-09 Annual Budget 2008-09 Pre-Election Budget Update 2008-09 Mid Year Review



Maintaining a AAA Credit Rating

On 10 September 2008, the credit rating agency Standard & Poor’s affirmed the ACT’s “AAA” (triple A) long term credit rating and “A‐1+” short term credit rating, in both local and foreign currencies.

The “AAA” and “A‐1+” ratings are the highest ratings assigned by Standard & Poor’s. Standard & Poor’s assessed the outlook for the ACT’s finances as continuing to be “Stable”.

The Standard & Poor’s press release (10 September 2008) stated:

• the ratings affirmation reflects the ACT’s strong operating performance and balance sheet, comparing well against its domestic and international peers; and

• the ACT’s liability burden remains moderate, even after considering the broader measure of net financial liabilities (net debt and unfunded superannuation).

Domestic Long Term

Domestic Short Term

Foreign Currency Long Term

Standard & Poor’s AAA A1+ AAA



Manage Debt Prudently and Maintain Net Financial Liabilities within the Range of all AAA rated Jurisdictions

The ACT continues to have one of the strongest balance sheets of any government in Australia. The Territory’s balance sheet remains strong and the ACT continues to maintain the capacity to support high priority investments in the future.

Net Debt

A key balance sheet measure in the GFS framework is net debt, which takes into account gross debt liabilities as well as assets (such as cash reserves and investments). The Commonwealth Government, for example, highlights net debt as the key measure of government debt.

Figure 2 below shows that the ACT is estimated to have negative General Government Sector Net Debt in 2008‐09. This indicates that the Territory’s General Government Sector cash reserves and investments are greater than its gross debt liabilities.

As shown in the figure below, Net Debt for some states, including the ACT, Queensland, Western Australia and Tasmania, is negative—signifying a strong position. The ACT position has, however, had a minor reduction reflecting the impact of investments held to fund superannuation liabilities, largely resulting from interest rate falls and the size of the investment pool. However, even if these superannuation liabilities are excluded, the ACT has negative Net Debt, equivalent to around 24 per cent in the revised outcomes.

Figure 2: Net Debt to Revenue Ratio – General Government Sector

25%

-52%

-23%-28% -27%

-14%

5%13%

-24%

11%

-110%

-90%

-70%

-50%

-30%

-10%

10%

30%

NSWAAA

VicAAA

Qld AAA

WA AAA

SAAAA

ACTAAA

ACTAAA

ACTAAA

TasAA+

NTAa2

% R

even

ue

Excluding superannuation assets

Including superannuation assets

2008-09 Revised Estimate

2008-09 OriginalBudget

2007-08 Actual

Outcome

-88% -98% -84%

Note: The inter‐jurisdictional data used reflects information presented in each jurisdiction’s 2008‐09 Mid Year Review, except for New South Wales, Western Australia and South Australia, where 2008‐09 Budget data has been used.



Net Financial Liabilities

Although net debt is a widely used measure in the GFS framework, it does not take into account all financial liabilities. Most particularly, it does not take into account unfunded superannuation liabilities. These unfunded superannuation liabilities are also a form of debt. As a consequence, a number of jurisdictions focus on a broader measure of debt, net financial liabilities, as a key balance sheet indicator.

Net Financial Liabilities is calculated as total liabilities less financial assets (such as cash reserves and investments). It takes into account all non‐equity financial assets, but excludes the value of equity held by the general government sector in public corporations (for example, ACTEW Corporation).

Figure 3 below compares the ACT’s net financial liabilities as a proportion of revenue with other jurisdictions. It shows that the ACT has a lower level of net financial liabilities than most jurisdictions (and below the weighted average level for all AAA rated jurisdictions).

Figure 3: Net Financial Liabilities to Revenue Ratio – General Government Sector

69%72%

75%

101%

72%

20%

42%

26%27%

17%

0%

20%

40%

60%

80%

100%

120%

NSWAAA

VicAAA

Qld AAA

WA AAA

SAAAA

ACTAAA

ACTAAA

ACTAAA

TasAA+

NTAa2

% R

even

ue

AAA Weighted average: 53%

2007-08 Actual

Outcome

2008-09 Original Budget





Net Worth

The broadest measure of a jurisdiction’s balance sheet is net worth, which measures the total value of all assets less all liabilities. The ACT has strong positive net worth, and as a proportion of revenue, remains one of the strongest of all Australian jurisdictions.

Figure 4: Net Worth to Revenue Ratio – General Government Sector

433%

402%

231%

272%

74%

296%

169%

396%

424%

407%

0%

50%

100%

150%

200%

250%

300%

350%

400%

450%

500%

NSWAAA

VicAAA

Qld AAA

WA AAA

SAAAA

ACTAAA

ACTAAA

ACTAAA

TasAA+

NTAa2

% R

even

ue

Weighted average AAA: 320%

2007-08 Actual

Outcome

2008-09 Annual Budget





Fully Fund the Territory’s Unfunded Superannuation Liability by 2030

The coverage of the superannuation liabilities with investment assets was 65 per cent as at 30 June 2008 and this is currently projected to decrease to approximately 53 per cent as at 30 June 2009 (original budget estimate was 63 percent).

Investments managed by the Superannuation Provision Account are subject to market risk. These investments have experienced, and will continue to experience, significant fluctuations in value according to the conditions in domestic and international investment markets. These market fluctuations have resulted in significant investment gains and losses in recent years and cannot be predicted with certainty, particularly over the shorter term.

The SPA investment portfolio has a long‐term investment strategy that is based on a strategic asset allocation that is expected to deliver a long‐term average return of 5 per cent real (net of CPI and fees). The modelling also assumes that there is an expectation of a negative return one in every 4 to 5 years.

Over the last 12 financial years to 30 June 2008, the SPA investment portfolio has generated a net return of 8.5 per cent per annum or a real return (net of CPI and fees) of 5.7 per cent per annum, which is ahead of the real return objective of 5 per cent per annum.

The Government remains committed to fully funding the Territory’s unfunded superannuation liability by 2030.

Table 11: Superannuation Provision Account

2007‐08 2008‐09 2009‐10 2010‐11 2011‐12 $m $m $m $m $m

Superannuation Assets 2,023.4 1,981.4 2,188.2 2,400.2 2,596.8

Superannuation Liabilities 3,120.7 3,718.5 3,991.7 4,272.1 4,556.2

Percentage of funded Superannuation (%) 65 53 55 56 57 Note: Superannuation liabilities reflect a long‐term expected average discount rate of 6 percent.



Maintain Quality Services and Infrastructure

The Government continues to invest prudently in quality services and infrastructure across the Territory. This is evidenced by the Government’s further commitment to the community and infrastructure investment across the city, through the Appropriation Act 2008‐2009 (No.2).

The Government indicated during the 2008 Election campaign that it would deliver a Supplementary Appropriation to address a number of immediate needs of the Community, largely consisting of one‐off targeted spending aimed at those most in need.

The Appropriation Act 2008‐2009 (No.2) provides urgent assistant to the vulnerable in the community who have been severely affected by deteriorating national and international economy, and who are most in need of help; as well as providing, in a responsible and responsive manner, initiatives to promote economic activity against the flow on impacts of the global financial crisis.

The investment further consolidates and builds upon the Government’s commitment to deliver to the community in areas of high priority, as outlined in the 2008‐09 Budget Papers.

Maintain Taxation Revenue at Sustainable Levels

The ACT Government continues to maintain taxation rates at sustainable levels. Taxation revenues are a necessary component of the income required to continue funding key services for the community, of the high quality expected by Canberrans.

The ACT is not a high taxing jurisdiction. Based on Australian Bureau of Statistics (ABS), the ACT’s total taxation per capita is well below the national average.

Furthermore, the Commonwealth Grants Commission continues to assess the ACT’s taxation effort to be broadly in‐line with the national average.



CHAPTER 3: ECONOMIC CONDITIONS

Key Points

• Since the presentation of the 2008‐09 Pre‐Election Budget Update (PEBU), significant reductions in interest rates, along with higher Commonwealth Government outlays, as announced in the Commonwealth MYEFO, are expected to support increased economic activity in the ACT. However, economic growth is expected to be below trend in 2008‐09 and 2009‐10. The prospects for both dwelling and non‐dwelling construction sectors are positive.

• The below trend growth is reflective of the national and global economic conditions. Economic activity in the Territory remains at a high level. Unemployment remains close to record lows, and is expected to remain below the national rate.

Economic Forecasts

The economic forecasts have been updated for this Review. Table 12 details the latest forecasts and compares them with those published in the 2008‐09 Budget and the PEBU.

Table 12: Economic Forecasts – 2008‐09 Budget and Pre‐Election Budget Update

2007‐08 2008‐09 2009‐10 2010‐11 2011‐12

Actual

2008‐09 Budget (a)

2008‐09 PEBU (a)

2008‐09 MYR (a)

Estimate (a) Projections (b)

ACT

Gross State Product 2.5 2½ 1¼ 1½ 1½ 3 3

Employment 1 ¾ 0 ½ ¼ 1½ 1 ½

State Final Demand 2.2 3¾ 1½ ¾ 3 4¾ 4 ¾

Consumer Price Index 3.6 3 3 ½ 4½ 2¾ 2½ 2½

Wage Price Index 4.1 4¼ 4¼ 4 4 4 4

Population 1.3 1 1 1¼ 1 1 1

Notes (a) Forecasts and projections are rounded to a ¼ of a percentage point to reflect the relative level of accuracy used in

forecasting economic parameters. This is standard forecasting practice used by governments throughout Australia. (b) Projections are based largely on long‐run averages and are provided for planning purposes only. They do not reflect

an expectation (forecast) of actual outcomes.



Economic Outlook for 2008‐09

ACT economic growth has been moderating in response to a range of external factors that are beyond Government’s control. The stance of monetary policy in the early part of 2008 has had a moderating effect on both the Australian and ACT economies. More recently, the impacts of reduced consumer confidence, arising from the global financial crisis, have placed further downward pressures on the national and ACT economies.

The OECD has recently stated that 21 out of its 30 member nations are either currently in, or will soon be in, recession. In light of recent global developments, the Australian Government revised its growth forecasts from 2 ¾ per cent to 2 per cent in the MYEFO.

Sharemarkets across the world have fallen dramatically. Across Australia, the higher interest rate environment, during the earlier part of the year, slowed the housing market considerably, with prices even showing some falls. These factors have impacted on consumer and business confidence, reducing the willingness of consumers and businesses to make large investment decisions.

Responding to these events, the Reserve Bank of Australia (RBA) switched from a restrictive monetary policy stance to an expansionary stance in an effort to stimulate the economy and avoid a significant economic downturn. Official interest rates have now fallen 3 percentage points since September 2008 from 7.25 per cent to 4.25 per cent in December 2008. The impacts of the lower interest rates are expected to take sometime to flow through the economy, with consumer sentiment expected to return towards the middle of 2009.

The Commonwealth Government supported these measures through a $10.4 billion fiscal stimulus package. However, working against these stimulatory influences are reductions in household wealth and consumer confidence, as well as tighter credit conditions being experienced by businesses. Therefore, the current national slow‐down in economic activity is likely to take longer to return to the long term trend, than initially expected.

These factors are all impacting on the ACT economy. As a result, growth in economic activity is expected to remain below trend as was the case in PEBU. In 2008‐09, production in the ACT, as measured by Gross State Product (GSP) is forecast to grow by 1½ per cent. This represents an upward revision from the PEBU due to the increased estimates of government expenditure, as contained in the Commonwealth MYEFO, which should lead to an increase in production in the ACT.

Employment growth has been revised up since the PEBU, although it remains below the long term trend. Growth has been revised up to ½ per cent, from zero per cent at the PEBU. Increased Commonwealth Government expenditure in the ACT should keep public employment growth positive, although the ongoing global financial crisis is likely to impact on business confidence and possibly private sector employment.



In 2008‐09, expenditure in the ACT, as measured by State Final Demand (SFD) is forecast to grow by ¾ per cent, down from 1½ per cent at the PEBU. The revision reflects reduced private consumption as a result of higher interest rates earlier in the year, and reduced consumer confidence stemming from the global financial crisis.

Investment growth is expected to be positive, with both private and public investment expected to increase in 2008‐09. While tighter credit conditions will make it more difficult to undertake investment, Commonwealth Government extension to the First Home Owners Grant supported by land supply is expected to stimulate dwelling investment, while non dwelling investment is still expected to add to economic growth.

The Consumer Price Index (CPI) forecast has been revised up from 3½ per cent to 4½ per cent. The upward revision reflects the impact of the depreciating Australian dollar outweighing the impact of reduced consumer demand.

Annual growth in the Wage Price Index (WPI) has been revised down to 4 per cent, from 4 ¼ per cent in the PEBU. This downward revision reflects the moderation in the labour market, both nationally and in the ACT.

The population forecast has been revised up to 1¼ per cent. International migration is expected to increase significantly, as the 2008‐09 national migrant intake is expanded. Natural increase (births minus deaths) should continue at around current high levels, while net interstate migration is expected to grow at around the long term trend.

Revisions to the Forward Estimates

It is expected that there will be an increase in economic activity in 2009‐10 relative to 2008‐09. The effects of the considerable easing in monetary policy in late 2008, ongoing private sector non‐dwelling investment and ACT Government investment should continue to contribute positively to growth.

GSP growth is forecast to remain at 1½ per cent, while SFD growth is forecast to increase to 3 per cent, up from ¾ per cent in 2008‐09. The increase in SFD growth is due to an increase in private consumption in response to the lower interest rate environment, which is expected to stimulate consumer confidence in 2009‐10. Both SFD and GSP growth are forecast to be below trend in 2009‐10.

Employment growth is forecast to decrease to ¼ per cent in 2009‐10. Employment is a lagging indicator, hence the reduction in employment growth in 2009‐10 is a reflection of the lower economic growth in 2008‐09. Population is forecast to return to its long run average growth rate, as overseas migration returns to more normal levels and net interstate migration to the ACT turns positive—as has been the case in most previous national economic slowdowns.

The CPI is forecast to return to 2 ¾ per cent in 2009‐10, within the RBA’s target band. The forecast moderation in growth, both nationally and in the ACT, should exert downward pressure on prices.



APPENDIX 1: DETAILED FINANCIAL PROJECTIONS


• Taxation Revenue

• Operating Statement

• Balance Sheet

• Cashflow Statement

Public Trading Sector


• Balance Sheet


Total Territory


• Balance Sheet




Australian Capital Territory General Government Sector

Taxation Revenue 2007-08 2008-09 2008-09 2009-10 2010-11 2011-12

Actual

Outcome Original

Budget Revised

Estimate Revised

Estimate Revised

Estimate Revised

Estimate

$'000 $'000 $'000 $'000 $'000 $'000

General Tax

Payroll Tax 243,074 251,364 251,305 267,358 284,603 302,837 Tax Waivers 5,249 5,034 5,034 5,051 5,069 5,087 General Rates 166,880 176,239 176,239 185,889 196,089 206,672 Land Tax 73,012 83,414 83,414 86,409 89,480 92,627

Total General Tax 488,215 516,051 515,992 544,707 575,241 607,223

Duties Conveyances 264,241 270,171 230,165 227,438 250,827 282,442 General Insurance 32,109 36,356 33,805 34,996 36,409 37,880 Leases 7,009 4,760 7,829 0 0 0 Life Insurance 1,302 1,064 1,371 1,419 1,477 1,537 Motor Vehicle Registrations

and Transfers 28,052 27,492 26,650 27,796 28,991 30,237

Shares and Marketable Securities

22,511 4,000 10,000 4,000 0 0

Other Duties 100 0 0 0 0 0 Total Duties 355,324 343,843 309,820 295,649 317,704 352,096

Gambling Taxes

ACTTAB Licence Fee 1,174 1,041 1,041 1,041 1,041 1,041 Gaming Tax 34,999 36,700 35,000 36,400 37,856 39,370 Casino Tax 1,960 2,017 1,917 1,994 2,073 2,156 Interstate Lotteries 13,835 13,700 13,700 14,044 14,396 14,755

Total Gambling Taxes 51,968 53,458 51,658 53,479 55,366 57,322

Other Taxes Motor Vehicle Registration 73,784 74,915 74,915 76,928 80,054 83,134 Ambulance Levy 11,894 11,450 11,894 12,327 12,773 13,238 Change of Use Charge 9,037 4,697 4,697 4,871 5,056 5,056 Utilities (Network Facilities)

Tax 16,735 17,227 17,227 17,916 18,633 19,378

Fire and Emergency Service Levy

22,308 23,214 23,214 24,230 25,229 26,256

City Centre Marketing and Improvements Levy

1,533 1,803 1,840 2,076 2,318 2,590

Energy Industry Levy 205 2,094 2,094 2,118 2,168 2,120 Total Other Taxes 135,496 135,400 135,881 140,466 146,231 151,772

Total Taxation 1,031,003 1,048,752 1,013,351 1,034,301 1,094,542 1,168,413




Operating Statement 2007-08 2008-09 2008-09 2009-10 2010-11 2011-12

Actual

Outcome Original

Budget Revised

Estimate Revised

Estimate Revised

Estimate Revised

Estimate $'000 $'000 $'000 $'000 $'000 $'000 Revenue

Taxation Revenue 1,031,003 1,048,752 1,013,351 1,034,301 1,094,542 1,168,413 Grants Revenue 1,385,994 1,440,502 1,434,163 1,491,514 1,560,472 1,625,976 Sales of Goods and Services

Revenue 373,175 359,693 374,405 387,915 399,525 413,415 Interest Income 114,437 164,671 175,336 129,066 123,494 126,197 Dividend and Income Tax

Equivalent Income 315,749 161,124 215,427 190,531 188,506 210,505 Other Revenue 139,260 143,402 94,277 96,027 97,813 100,044

Total Revenue 3,359,618 3,318,144 3,306,959 3,329,354 3,464,352 3,644,550 Expenses

Employee Expenses 1,072,166 1,145,062 1,161,559 1,203,876 1,248,939 1,294,659 Superannuation Expenses

Superannuation Interest Cost 194,954 194,910 204,451 223,163 239,566 256,402 Other Superannuation

Expenses 178,819 227,281 178,280 213,258 218,248 246,773 Depreciation and Amortisation

Expenses 186,697 216,185 219,870 244,780 263,103 266,170 Interest Expenses 58,804 62,918 68,557 68,634 68,794 67,324 Other Operating Expenses

Supplies and Services 643,856 726,464 731,595 775,666 825,584 884,652 Other 186,903 135,356 141,770 150,013 157,880 165,252

Grants Expenses 585,909 615,543 635,204 636,509 650,463 669,583 Total Expenses 3,108,107 3,323,719 3,341,286 3,515,899 3,672,577 3,850,815 UPF Net Operating Balance 251,511 -5,575 -34,327 -186,545 -208,225 -206,265 Other Economic Flows - included in the Operating Result

Dividends - Market Gains on Land Sales 91,900 24,286 20,486 16,905 14,775 14,947

Net Land Revenue (Accrual Revenue) 112,892 302,256 248,538 302,340 271,295 218,959

Net Gain on Sale of Non-Financial Assets 434 100 234 460 464 468

Net Gain on Financial Assets or Liabilities at Fair Value -276,050 90,464 -209,064 87,599 101,730 110,248

Bad Debts Written Off -1,706 -1,458 -1,458 -1,504 -1,551 -1,601 Operating Result 178,982 410,073 24,409 219,255 178,488 136,756




Operating Statement 2007-08 2008-09 2008-09 2009-10 2010-11 2011-12

Actual

Outcome Original

Budget Revised

Estimate Revised

Estimate Revised

Estimate Revised

Estimate $'000 $'000 $'000 $'000 $'000 $'000 Other Economic Flows - Other Movements in Equity

Net Effect of a Correction for an Error -2,744 -1,875 -1,875 0 0 0

Post-Audit Adjustment -19 0 15,013 0 0 0 Superannuation Prior Year

Actuarial Movement 121,824 -207,507 -362,438 0 0 0 Increase/(Decrease) in Asset

Revaluation Reserve 1,346,895 0 0 0 0 0 Increase/(Decrease) in Other

Reserves 2,689 2 3 3 -1 -3 Transfer to/from Reserves 216 0 0 0 0 0 Capital Injections -17,922 -32,780 -33,387 -24,625 -23,405 -20,084 Increase/(Decrease) in Net

Assets of PTE Entities 525,204 331,056 335,328 286,100 279,828 284,695

Comprehensive Result - Total Change in Net Worth 2,155,125 498,969 -22,947 480,733 434,910 401,364 UPF Net Operating Balance 251,511 -5,575 -34,327 -186,545 -208,225 -206,265

less Net Acquisition of Non-Financial Assets

Purchases of Non-Financial Assets

347,649 569,594 647,952 538,452 414,184 327,479 Sales of Non-Financial Assets -2,409 -100 -2,571 -2,260 -2,260 -2,260 Land Revenue (Cash Receipts) -124,825 -299,707 -253,874 -315,127 -272,684 -221,458 Depreciation -186,697 -216,185 -219,870 -244,780 -263,103 -266,170 Other Movements in

Non-Financial Assets 73,150 45,553 45,553 46,832 50,996 50,996 Total Net Acquisition of Non-Financial Assets 106,868 99,155 217,190 23,117 -72,867 -111,413 Net Lending / Borrowing (Fiscal Balance) 144,643 -104,730 -251,517 -209,662 -135,358 -94,852 AUSTRALIAN CAPITAL TERRITORY NET OPERATING BALANCE UPF Net Operating Balance 251,511 -5,575 -34,327 -186,545 -208,225 -206,265

Expected Long Term Capital Gains on Superannuation Investments 46,625 90,464 49,568 87,599 101,730 110,248 HEADLINE NET OPERATING BALANCE 298,136 84,889 15,241 -98,946 -106,495 -96,017




Balance Sheet 2007-08 2008-09 2008-09 2009-10 2010-11 2011-12

Actual

Outcome Original

Budget Revised

Estimate Revised

Estimate Revised

Estimate Revised

Estimate $'000 $'000 $'000 $'000 $'000 $'000 Assets Financial Assets

Cash and Deposits 178,505 126,303 184,098 197,704 207,414 225,316 Advances Paid 614,933 934,665 972,610 1,049,200 1,047,287 1,042,097 Investments, Loans and

Placements 3,257,690 3,351,348 2,994,201 3,098,352 3,322,581 3,585,739

Receivables 334,361 303,837 327,345 306,080 307,586 325,410 Equity

Investments in Other Public Sector Entities

5,284,217 5,402,344 5,619,545 5,905,645 6,185,473 6,470,168

Investments - Other 20 20 20 20 20 20 Total Financial Assets 9,669,725 10,118,517 10,097,819 10,557,001 11,070,361 11,648,750 Non-Financial Assets

Land and Other Fixed Assets Property, Plant and Equipment 8,076,307 8,585,235 8,595,189 8,859,991 9,077,434 9,359,573 Investment Properties 70,761 70,761 70,761 70,761 70,761 70,761 Intangibles 13,567 25,518 20,811 26,306 28,902 26,369 Inventories 11,386 10,444 18,925 19,063 19,199 19,350 Assets Held for Sale 10,784 0 1,750 1,750 1,750 1,750 Capital works-in-progress 321,976 251,292 268,865 341,084 332,359 170,134

Other Non-Financial Assets 84,729 31,915 78,372 78,560 78,559 78,558 Total Non-Financial Assets 8,589,509 8,975,165 9,054,673 9,397,515 9,608,964 9,726,495 Total Assets 18,259,234 19,093,682 19,152,492 19,954,516 20,679,325 21,375,245 Liabilities

Deposits Held 109,565 7,485 109,687 107,476 105,697 104,818 Advances Received 101,883 99,346 99,346 96,368 93,280 90,078 Borrowings

Finance Leases 75,226 4,623 58,060 56,075 58,867 57,585 Other Borrowings 807,535 1,066,346 1,121,886 1,154,745 1,136,187 1,118,874

Superannuation 3,121,393 3,722,957 3,719,384 3,992,773 4,273,369 4,557,663 Other Employee Benefits 342,481 337,676 362,822 381,402 402,981 424,519 Payables 389,107 334,757 389,804 393,696 401,843 413,028 Other Liabilities 6,837 6,445 9,243 8,988 9,198 9,413

Total Liabilities 4,954,027 5,579,635 5,870,232 6,191,523 6,481,422 6,775,978 Net Assets 13,305,207 13,514,047 13,282,260 13,762,993 14,197,903 14,599,267

Equity in Public Trading Entities 5,284,217 5,402,344 5,619,545 5,905,645 6,185,473 6,470,168 Accumulated Funds 5,288,630 5,367,982 4,930,352 5,124,982 5,280,065 5,396,737 Asset Revaluation Reserve 2,722,014 2,734,770 2,722,014 2,722,014 2,722,014 2,722,014 Other Reserve 10,346 8,951 10,349 10,352 10,351 10,348

Net Worth 13,305,207 13,514,047 13,282,260 13,762,993 14,197,903 14,599,267




Balance Sheet 2007-08 2008-09 2008-09 2009-10 2010-11 2011-12

Actual

Outcome Original

Budget Revised

Estimate Revised

Estimate Revised

Estimate Revised

Estimate $'000 $'000 $'000 $'000 $'000 $'000 Net Financial Worth 4,715,698 4,538,882 4,227,587 4,365,478 4,588,939 4,872,772 Net Financial Liabilities 568,519 863,462 1,391,958 1,540,167 1,596,534 1,597,396 Net Debt (including Superannuation related Investments)

-2,956,918 -3,234,516 -2,761,930 -2,930,592 -3,183,251 -3,481,797

Net Debt (excluding Superannuation related Investments)

-933,329 -889,887 -780,610 -742,498 -783,105 -885,094




Cash Flow Statement 2007-08 2008-09 2008-09 2009-10 2010-11 2011-12

Actual

Outcome Original

Budget Revised

Estimate Revised

Estimate Revised

Estimate Revised

Estimate $'000 $'000 $'000 $'000 $'000 $'000 Cash Receipts from Operating Activities

Taxes Received 1,074,060 1,021,378 975,363 1,005,964 1,065,845 1,144,659 Receipts from Sales of Goods

and Services 542,457 395,912 414,068 428,014 434,277 447,684

Grants/Subsidies Received 1,337,315 1,406,322 1,399,983 1,458,084 1,523,887 1,589,759 Interest receipts 115,729 163,956 175,617 129,434 124,030 126,694 Dividends and Income Tax

Equivalents 134,281 198,444 186,833 149,008 135,550 141,108

Other Receipts 442,804 355,753 367,087 341,752 356,076 367,928 Total Operating Receipts 3,646,646 3,541,765 3,518,951 3,512,256 3,639,665 3,817,832 Cash Payments for Operating Activities

Payments for Employees -1,181,322 -1,275,882 -1,274,796 -1,345,106 -1,408,437 -1,495,418 Payments for Goods and Services -717,744 -818,858 -677,031 -710,171 -753,915 -813,319 Grants and Subsidies Paid -559,854 -638,511 -644,283 -647,370 -662,331 -681,792 Interest Paid -56,936 -51,499 -62,543 -52,415 -58,422 -60,759 Other Payments -349,560 -268,909 -419,202 -423,688 -433,304 -447,026

Total Operating Payments -2,865,416 -3,053,659 -3,077,855 -3,178,750 -3,316,409 -3,498,314 Net Cash Flows from Operating Activities

781,229 488,106 441,096 333,506 323,256 319,518

Cash Flows from Investments Activities Cash Flows from Investments in Non-Financial Assets

Sales of Non-Financial Assets 2,409 299,807 256,445 317,387 274,944 223,718 Purchases of Non-Financial

Assets -347,649 -569,594 -647,952 -538,452 -414,184 -327,479

Net Cash Flows from Investments in Non-Financial Assets

-345,240 -269,787 -391,507 -221,065 -139,240 -103,761

Cash Flows from Investments in Financial Assets for Policy Purposes

Cash Receipts Repayment of Loans 2,519 996 1,030 866 728 614 Dividends - Market Gains on

Land Sales 91,900 24,286 20,486 16,905 14,775 14,947

Total Cash Received from Investment in Financial Assets for Policy Purposes

94,419 25,282 21,516 17,771 15,503 15,561

Cash Payments Issue of Loan -12,000 -13,000 -13,000 -8,000 -10,000 -7,000 Capital Payments to

Government Agencies -17,922 -32,780 -33,387 -24,625 -23,405 -20,084

Total Cash Paid from Investment in Financial Assets for Policy Purposes

-29,922 -45,780 -46,387 -32,625 -33,405 -27,084

Net Cash Flows from Investments in Financial Assets for Policy Purposes

64,497 -20,498 -24,871 -14,854 -17,902 -11,523




Cash Flow Statement 2007-08 2008-09 2008-09 2009-10 2010-11 2011-12

Actual

Outcome Original

Budget Revised

Estimate Revised

Estimate Revised

Estimate Revised

Estimate $'000 $'000 $'000 $'000 $'000 $'000 Cash Flows from Investments in Financial Assets for Liquidity Purposes

Sales of Investments 105,698 226,068 454,021 105,550 4,050 434 Purchase of Investments -552,552 -398,414 -481,777 -127,530 -131,796 -163,845

Cash Flows from Investments in Financial Assets for Liquidity Purposes

-446,854 -172,346 -27,756 -21,980 -127,746 -163,411

Net Cash Flows from Investing Activities

-727,597 -462,631 -444,134 -257,899 -284,888 -278,695

Cash Flows from Financing Activities

Cash Receipts Borrowings 295,857 266,652 291,630 38,704 6,288 8,781

Total Cash Received from Financing Activities

295,857 266,652 291,630 38,704 6,288 8,781

Cash Payments Borrowings -312,731 -304,215 -336,497 -100,205 -34,452 -31,214

Total Cash Paid from Financing Activities

-312,731 -304,215 -336,497 -100,205 -34,452 -31,214

Net Cash Flows from Financing Activities

-16,874 -37,563 -44,867 -61,501 -28,164 -22,433

Net Increase/(Decrease) in Cash held

36,757 -12,088 -47,905 14,106 10,204 18,390

Cash and Cash Equivalents at the Beginning of Reporting Period

141,150 137,054 177,908 130,002 144,108 154,312

Cash and Cash Equivalents at the End of Reporting Period

177,908 124,966 130,002 144,108 154,312 172,702

Key Fiscal Aggregates Net Cash Flows from

Operating Activities 781,229 488,106 441,096 333,506 323,256 319,518

Net Cash Flows from Investments in Non-Financial Assets

-345,240 -269,787 -391,507 -221,065 -139,240 -103,761

Cash Surplus (+) / Deficit (-) 435,989 218,319 49,589 112,441 184,016 215,757 A positive number denotes a cash inflow, a negative sign denotes a cash outflow Derivation of ABS GFS Cash Surplus/Deficit

Cash Surplus (+) / Deficit (-) 435,989 218,319 49,589 112,441 184,016 215,757 Acquisitions Under Finance Leases

and Similar Arrangements (a) 0 0 0 0 0 0

ABS GFS Cash Surplus (+) / Deficit (-) Including Finance and Similar Arrangements

435,989 218,319 49,589 112,441 184,016 215,757

MID - YEAR REVIEW Budget Mid Year... · 2012. 9. 28. · 2008‐09 Budget Mid Year Review 2008‐09...

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