President WA Institute of Public Administration EVENT SPONSOR - PowerPoint PPT Presentation

President WA Institute of Public Administration

EVENT SPONSOR

PREMIER Corporate Member

Deputy Under Treasurer Department of Treasury and Finance

20 May 2011

2011-12 Budget Process Formulation of EERC Budget submissions Initial identification recommendations + in respect of Formal bilateral of Government communication w identified priorities meetings w EERC policy priorities Cabinet, Ministers and agencies November - February - February - 21 January 2011 December 2010 March 2011 mid-April 2011 2011/12 Budget Cabinet submission: Budget Paper Cabinet Statements 2011/12 Budget production decisions 21 April - 19 May 2011 20 April 2011 15 – 20 April 2011 mid-May 2011 Supporting Our Community Building the State

2011-12 Budget Economic and Revenue Conditions • Economic conditions mixed – Strong resource sector and business investment – Subdued housing market and retail spending – Reflected in revenue performance – Moderating but still solid population growth • Declining GST grants – Major structural challenge – Around 70% of WA’s royalty revenue redistributed to other States Supporting Our Community Building the State

Economic Growth Per cent 8 Western Australian Forecast Western Australia Australia long-run average 7 6 5 4 3 2 1 0 -1 1990-91 1994-95 1998-99 2002-03 2006-07 2010-11 2014-15 Supporting Our Community Building the State

Population Growth Per cent 3.5 3.0 Forecast 2.0% Long-run Average 2.5 2.0 1.5 1.0 2000-01 2002-03 2004-05 2006-07 2008-09 2010-11 2012-13 2014-15 Supporting Our Community Building the State

Commodity Prices Index (2008-09 = 100) 160 $A $US 140 120 100 80 60 40 20 0 1985 1990 1995 2000 2005 2010 Supporting Our Community Building the State

USD/AUD Exchange Rate USD/AUD 1.10 1.00 Long run average = US74 cents 0.90 0.80 0.70 0.60 0.50 0.40 1986 1990 1994 1998 2002 2006 2010 Supporting Our Community Building the State

Real Business Investment $ Billion (2008-09) Per cent of GSP 70 35 Forecast Business Investment (LHS) 60 30 Business Investment as Share of GSP (RHS) 50 25 40 20 30 15 20 10 10 5 0 0 1989-90 1992-93 1995-96 1998-99 2001-02 2004-05 2007-08 2010-11 2013-14 Supporting Our Community Building the State

Royalty Income Per Cent of Total Revenue $ Billion 6 25 Forecast Iron Ore Royalties (LHS) 5 Other Royalty Income (LHS) 20 Royalty Income Share of Total Revenue (RHS) 4 15 3 10 2 5 1 0 0 1993-94 1996-97 1999-00 2002-03 2005-06 2008-09 2011-12 2014-15 Supporting Our Community Building the State

Housing Finance Commitments Thousands 20 Forecast 18 16 Trend 14 12 10 8 6 4 2 0 Sep-91 Sep-94 Sep-97 Sep-00 Sep-03 Sep-06 Sep-09 Sep-12 Supporting Our Community Building the State

Total Duty on Transfers $ Million 2,500 Actual 2010-11 Budget forecasts 2011-12 Budget forecasts Forecasts 2,000 1,500 1,000 500 0 2000-01 2002-03 2004-05 2006-07 2008-09 2010-11 2012-13 2014-15 Supporting Our Community Building the State

GST – National Pool and Grants to WA $ Billion $ Billion 70 7 Forecast National Pool (LHS) 60 6 WA grants (RHS) 75% floor (RHS) 50 5 40 4 30 3 20 2 10 1 0 0 2001-02 2003-04 2005-06 2007-08 2009-10 2011-12 2013-14 Supporting Our Community Building the State

General Government Operating Balance $ million 3,000 Forecast 2,500 2,000 1,500 1,000 500 0 2000-01 2002-03 2004-05 2006-07 2008-09 2010-11 2012-13 2014-15 Supporting Our Community Building the State

Asset Investment Program $ billion 10 Forecast General government 9 Public corporations 8 7 6 5 4 3 2 1 0 2001-02 2004-05 2007-08 2010-11 2013-14 Supporting Our Community Building the State

Asset Investment Program 2011-12 Water Corporation Housing Authority PTA $861m $346m $654m 11% 5% 9% Ports Finance $134m $309m 2% 4% Health Electricity utilities TOTAL $1,558m $1,337m $7,638m 20% 18% Corrective Services $154m Other agencies 2% Main Roads $420m $646m Education 5% LandCorp 8% $850m $369m 11% 5% Supporting Our Community Building the State

Net Debt at 30 June Total Public Sector $ billion Per cent 25 100 Forecast Net debt at 30 June (LHS) NFL as a share of revenue (RHS) 20 80 15 60 10 40 5 20 0 0 2001 2003 2005 2007 2009 2011 2013 2015 Supporting Our Community Building the State

Financial Management • $3.5b package of new measures to ensure that net debt remains affordable – Phased increase in the iron ore ‘fines’ royalty rate (5.625%) to 7.5% ($1.9b) – 5% efficiency dividend on GTEs ($515m) – Targeted review of low priority programs ($300m) – Deferred infrastructure spending ($541m) – Reduction in Feed-in Tariff ($19m) Supporting Our Community Building the State

Financial Management • Expenses up $1.8 billion (or 7.9%) in 2011-12 • Expense growth moderating – down from average of 10.9% over previous three years • Government has restricted growth in number of full-time equivalent public servants to 1.7% in 2011-12 • Funding a further 400 voluntary separations – bringing total number of separations to over 1,200, for savings of $57m per year Supporting Our Community Building the State

Financial Management • Wages Policy – More flexible rostering – Greater use of multi-skilling – Greater capacity to move staff across facilities • Alternative methods of service delivery – Partnering with the private (for profit) and not-for-profit sectors – Examine ways to deliver services other than the employment of permanent staff Supporting Our Community Building the State

Financial Management • Value for Money Reviews – Greater utilisation of existing resources, reduced duplication, making use of economies of scale – Already harvesting real savings – One round complete, second underway Supporting Our Community Building the State

Financial Management • Tariffs, fees and charges – Electricity 5% (residential and small business) – Total water charges 8.5% – $1.1b subsidy over next four years for below cost-reflective electricity tariffs – Increasing cost of supplying water – desalinated water 2.5 times more expensive • Overall 4.6% increase for representative household Supporting Our Community Building the State

Budget Initiatives Sustainable Funding and Contracting with the Not-for-Profit Sector • $604m over five years, comprising – average funding increase of 25% for human services contracts by 2014-15 ($491m) – additional indexation funding ($96m) – funding for implementation of contracting reforms ($18m) Supporting Our Community Building the State

Budget Initiatives • Social Housing – $151m over three years for additional 284 homes for people impaired by disability, mental illness, or alcohol and drug-related difficulties – $45m accommodation support services • Disability Services – Additional $41m over four years to meet expected growth in demand Supporting Our Community Building the State

Budget Initiatives • Seniors – Increase in Cost of Living Rebate from $104.80 to $150 for singles, and from $157.22 to $225 for couples ($40m over four years) – Allow seniors working up to 25 hours per week to access a Seniors Card ($10.5m) • Families – Additional $51m over four years for child protection services – $20m Sport for All program Supporting Our Community Building the State

Budget Initiatives • Health Services – $565m Southern Inland Health Initiative – Additional $363m over five years to meet expected increase in demand for hospital services – $75m over five years to employ all graduating domestic junior doctors • Health Infrastructure – $1.6b in 2011-12 alone Supporting Our Community Building the State

Budget Initiatives • Education Services – Additional $362m over five years for teachers’ EBA, IPS, and realignment of budget – Additional $78m for growth in student numbers • Education Infrastructure – $850m in 2011-12 – Expansion of School Air Conditioning program ($52m over four years) Supporting Our Community Building the State

Budget Initiatives • Additional Training Places – $33m in 2011-12 to fund 12,000 new training places to address critical skills shortages and increase participation • Skilled Migration Strategy – $4m to speed up applications for State-sponsored skilled migrants Supporting Our Community Building the State

Budget Initiatives • Redevelopment of the Perth foreshore (net cost of $270m over 10 years) • Accelerating the City Square development in Perth City Link ($57m over four years) • Planning money for a new Major Stadium ($13m) • Planning money for a new Museum in Perth Cultural Centre precinct ($5m) Supporting Our Community Building the State

Budget Initiatives • Transport – Additional 15 three-car train sets ($164m over five years) – 8,400 additional passengers – Additional bus services ($134m) – 78 new buses over four years ($40m) • Roads – $1.2b spent on the State’s road system in 2011 -12 – $30m to widen the northbound lanes of the Mitchell Freeway (between Hepburn Avenue/Hodges Drive) Supporting Our Community Building the State