Transcript www.vic.ipaa.org.au

State Budget Briefing
& Analysis
Grant Hehir
Secretary, Department of Treasury and Finance
Vince FitzGerald
Chairman, the Allen Consulting Group
2010-11 Victorian Budget IPAA presentation
Grant Hehir
Secretary, Department of Treasury & Finance
Victorian Budget 2010-11
• Victorian economy
• 2010-11 Budget financial results
• 2010-11 Budget initiatives
Victorian economy
Most severe global recession since 1930s
Industrial production in the G7 during recessions
105
100
95
90
85
80
75
0
2
4
Index, peak = 100
Source: OECD
6
8
10 12 14 16 18 20 22 24 26 28 30 32 34 36
Months after peak
Early 1970s
Early 1990s
GFC 2008
GFC impact more severe overseas
Unemployment rate
per cent
25
20
15
10
5
0
Spain
India
USA
China
Sources: Sources: ABS; US BLS; Eurostat, ONS, Economist
Germany
UK
Australia
Annual employment growth
per cent
5.0
4.0
3.0
2.0
1.0
0.0
-1.0
2004
2005
2006
2007
Australia
Source: ABS
2008
Victoria
2009
2010
Victoria created 99 400 jobs in last 12 months
'000s
120
100
80
60
40
20
0
NSW
Vic
Qld
Total
Source: Australian Bureau of Statistics
Full-time
WA
SA
Victorian and Euro Zone business confidence
Points of std dev
Net balance
4
40
3
30
optimistic
2
20
1
10
0
0
-1
-10
pessimistic
-2
-20
-3
-30
-4
-40
Apr-06
Apr-07
Apr-08
Euro Zone (LHS)
Apr-09
Victoria (RHS)
Sources: National Australia Bank; European Commission
Apr-10
Victorian dwelling approvals increasing
000’s
6
5
4
3
2
1
0
1990
1993
1996
1999
2002
Seasonally Adjusted
Source: Australian Bureau of Statistics
2005
Trend
2008
Annual population growth
per cent
2.5
2.0
1.5
1.0
0.5
0.0
1982
1985
Source: ABS
1988
1991
1994
Australia
1997
2000
Victoria
2003
2006
2009
Victorian economic projections
2010-11 Budget projections
(projections in parentheses are from 2009-10 Budget Update where different)
Real GSP
Employment
Unemployment rate
2008-09
2009-10
2010-11
2011-12
2012-13
2013-14
Actual
Forecast
Forecast
Forecast
Forecast
Forecast
0.8
2.25
3.25
3.00
3.00
3.00
(1.50)
(2.50)
2.25
2.00
1.75
1.75
1.75
(0.25)
(1.25)
5.50
5.50
5.25
5.25
5.25
(6.50)
(6.75)
(6.75)
(6.75)
0.2
5.1
Wage price index
4.0
3.00
3.25
3.50
3.50
3.50
Consumer price index
2.8
1.75
2.25
2.50
2.50
2.50
2.10
1.90
1.80
1.70
1.70
(1.90)
(1.80)
(1.70)
(1.60)
(2.00)
Population
2.2
Risks
Sustained pressure on AUD
1.0
Consensus forecasts
0.9
0.8
Post-float average
0.7
0.6
Apr-05
Apr-06
Apr-07
Apr-08
USD per AUD
Source: Reserve Bank of Australia
Apr-09
Apr-10
Concensus Forecast
Apr-11
Apr-12
Annual inflation rates
per cent
6.0
5.0
4.0
3.0
2.0
1.0
0.0
2004
2005
2006
2007
Australia
Source: ABS
2008
Melbourne
2009
2010
Economic reform strategy
• In light of these risks there is an economic reform agenda
in place:
– prudent financial management
– reducing business costs
– improving competitiveness and productivity
• education and skills
• health
• market design
2010-11 Budget financial
results
2010-11 financial objectives and strategies
Objective
Short term target
Long term target
Net result from transactions
(operating surplus)
At least $100 million in each year.
Maintain a substantial net result from transactions
(operating surplus) that allows for the delivery of the
Government’s infrastructure objectives.
Net financial liabilities
Maintain a AAA credit rating.
Maintain government net financial liabilities at
prudent levels.
Infrastructure
Implement strategic infrastructure
projects.
Deliver world class infrastructure to maximise
economic, social and environmental benefits.
Taxation
Implement reforms.
Provide a fair and efficient tax system that is
competitive with other states.
Service delivery
Implement the 2006 election
commitments.
Provide improved service delivery to all Victorians.
Source: Department of Treasury and Finance
Maintaining a substantial operating surplus
Net result from transactions
$ million
2500
2000
Short term
$100 m target
1387.6
1500
1000
1493.2
871.9
650.4
500
394.9
0
2009-10
2010-11
Source: Department of Treasury and Finance
2011-12
2012-13
2013-14
Maintaining a substantial operating surplus
per cent
14
Revenue and expense growth relative to nominal GSP
13
12
2000-01
2002-03
2004-05
2006-07
Revenue
Source: Department of Treasury and Finance
2008-09
Expenses
2010-11
2012-13
Maintaining a substantial operating surplus
- Discretionary revenue not fully recovered
$ billions
Discretionary Revenue (GST + State Taxation)
28
26
24
22
20
2008-09
2009-10
2010/11 Budget
Source: Department of Treasury and Finance
2010-11
Gap
2011-12
Maintaining prudent financial liabilities
- Net debt reduced since 2009
General government net debt/gross state product
per cent
6
5
4
3
2
1
0
2007
2008
2009
2009-10 Budget
Source: Department of Treasury and Finance
2010
2011
2012
2013
2010-11 Budget
2014
Maintaining prudent financial liabilities
General government sector net financial liabilities
per cent
14
12
10
8
6
4
2
1999
2001
2003
Net financial liabilities to GSP
Source: Department of Treasury and Finance
2005
2007
2009
2011
2013
Net debt plus superannuation liability to GSP
Deliver world class infrastructure
Infrastructure spending
$ billion
15
12
9
6
3
0
1999-00
2001-02
2003-04
NFPS Sector
Source: Department of Treasury and Finance
2005-06
2007-08
2009-10
2011-12
Cwlth stimulus passed on
2013-14
Deliver world class infrastructure
Sources of funding for net investment
$ billion
7
6
5
4
3
2
1
0
2010-11
2011-12
Net cash flow from operating activities
Source: Department of Treasury and Finance
2012-13
2013-14
Net debt
Improving business competitiveness
• Payroll tax cut
– Saving to business of $193 million
– Seven cuts in 10 years
• Workcover premiums cut
– Saving to business of $240 million
– Six cuts in last 7 years
• Land tax cuts
– Exemption of up to two years for construction of residential aged
care facilities and retirement villages
• Red tape reductions
– Government has doubled target and now plans to cut regulatory
burden by $500 million per annum by 2012
Payroll tax rate cut to 4.90 per cent
per cent
Payroll tax rate
6.00
5.75
5.50
5.25
5.00
4.75
4.50
1999-00
2001-02
Source: Department of Treasury and Finance
2003-04
2005-06
2007-08
2009-10
WorkCover premiums cut by 3.5 per cent
‘000
per cent
2.4
35
2.2
30
2.0
25
1.8
20
1.6
15
1.4
10
1.2
5
1.0
0
2000-01
2002-03
2004-05
Average premium (LHS)
Source: WorkCover Authorities
2006-07
2008-09
2010-11
Number of claims (RHS)
Tax competitiveness
per cent
Taxation as a share of nominal GSP
7.0
New South Wales
6.5
6.0
Victoria
5.5
5.0
4.5
Queensland
4.0
3.5
1998-99
2000-01
2002-03
2004-05
2006-07
2008-09
Source: Australian Bureau of Statistics, Department of Treasury and Finance and various state publications
2010-11
2010-11 Budget initiatives provide improved service
delivery to all Victorians
2010-11 Budget output initiatives
Net impact of 2010-11 Budget new output initiatives
Education and Early Childhood Development
Health
Human Services
Innovation, Industry and Regional Development
Justice
Planning and Community Development
Premier and Cabinet
Primary Industries
Sustainability and Environment
Transport
Treasury and Finance
Parliament
Government-wide
Subtotal
Less funding from demand and other efficiencies
Net impact of 2010-11 Budget new output initiatives
Add: net impact of 2009-10 Budget Update output initiatives (c)
Net budget impact of output initiatives since 2009-10 Budget
Source: Department of Treasury and Finance
($ million)
2010-11 2011-12 2012-13 2013-14
Budget Estimate Estimate Estimate
60.2
45.8
26.0
25.6
283.0
196.6
205.4
170.6
44.1
39.7
30.1
30.8
67.2
52.3
40.6
25.8
114.3
166.8
197.6
246.6
48.3
30.7
22.9
18.2
7.7
6.2
3.7
3.7
3.4
3.6
4.1
5.0
10.9
12.8
9.8
9.5
26.8
6.2
10.7
14.5
96.5
51.4
4.7
..
1.5
1.4
1.4
1.4
157.8
162.7
166.5
172.3
921.7
776.1
723.4
724.1
-503.2
-395.8
-281.5
-304.2
418.5
380.3
441.9
419.8
214.6
218.7
172.4
na
633.1
599.0
614.3
419.8
2010-11 Budget asset initiatives
2010-11 Budget new asset funding
Education and Early Childhood Development
Health
Human Services
Innovation, Industry and Regional Development
Justice
Planning and Community Development
Premier and Cabinet
Primary Industries
Sustainability and Environment
Transport
Treasury and Finance
Parliament
Government wide
Total 2010-11 Budget asset funding
Add: 2009-10 Budget Update asset funding
Asset funding since the 2009-10 Budget
Source: Department of Treasury and Finance
2010-11
Budget
82.5
142.5
3.1
43.1
22.6
80.2
13.7
2.8
10.8
221.5
..
..
50.9
673.7
863.7
1 537.4
TEI (a)
236.4
1 285.0
11.1
80.1
153.2
414.5
13.7
9.6
21.9
1 521.0
..
..
65.9
3 812.4
6 230.4
10 042.8
Investing in education
•
Victorian Schools Plan – First tranche exceeded
– 553 school upgrades/refurbishments funded this term
– Exceeded promise to fund 500 this term
•
Blueprint for education and early childhood development
– 42 actions towards system improvement, partnerships with parents and
communities and workforce reform
•
$287 million to support non-government schools
– Support for disadvantaged students and students with disabilities
•
Building the Education Revolution
– Delivering $2.6 billion of capital works in partnership with
Commonwealth Government
Investing in lifelong learning
• Early childhood development
– 3,590 extra kindergarten places and 126 kindergarten teachers
– Partnership with the Commonwealth Government to deliver National
Quality Agenda for Early Childhood Education and Care
– Establishing the Victorian Deaf Education Institute
– Major upgrades to Glenroy Specialist School, Northern School for
Autism and Eastern Autistic School
• Support for TAFE sector
– New infrastructure including new Teaching & Learning Centre for NMIT
– Apprenticeship completion bonus and accommodation allowance
Putting patients first
• $4 billion injection for Victoria’s health system in partnership with the
Commonwealth, including;
• 1,000 new health workers
• $2.3 billion for Victorian health care facilities since 2009-10 Budget
– $618 million for regional hospitals in Bendigo, Coleraine, Leongatha, Ballarat,
Geelong, Wonthaggi and Healesville
– $408 million for Box Hill Hospital
– $91 million to expand Sunshine Hospital
• $760 million for immediate service funding
– 22,000 additional inpatient services in 2010-11
– 9,000 elective surgery treatments over two years
– 32,000 additional outpatient appointments in 2010-11
• Expanding support for people experiencing mental illness
– New Mental Health Bill
– Boosting early intervention programs for young people including youth suicide
prevention and youth and mental health outreach teams
Putting patients first
• $935 million from COAG Agreement on health and hospitals
reform
– 150,000 more emergency departmental patients each year being treated
– 34,000 more patients receiving elective surgery faster
– additional 332 sub-acute beds enabling treatment of 5,000 patients annually
• Making Victoria a leader in Cancer research and treatment
– Parkville Comprehensive Cancer Centre
– Olivia Newton-John Cancer and Wellness Centre - Stage 2a
– Ballarat Regional Integrated Cancer Centre
A Fairer Victoria – strengthening the safety net
• Helping households with rising living costs
– Increasing the water concession for 669,000 households
– Continuation of the Waterwise program for water audits & retrofitting
• Looking after vulnerable children
– Addressing out of home care service growth and enhancing quality
services for traumatised children ($35 million)
– Family services to better assist children at risk ($24 million)
• Ongoing support for people with a disability
– Increase in funding for Community Service Organisations
– Better resourcing 24-hour shared support accommodation
($35 million plus $11 million in asset funding)
– Supporting people with autism and their families ($7.5 million)
Retargeting the First Home Bonus
• 69% of Victorians own their home
• First Home Bonus created 19 000 jobs last year (HIA)
• FHB takes pressure off the rental market
•
•
•
•
First Home Bonus refocused to newly constructed homes
Boost for housing and employment in CADs ($10 million)
Support for community infrastructure ($22 million)
NRAS - $237 million for up to 7 500 affordable dwellings
Delivering the Victorian Transport Plan
• 50 new low floor trams and supporting infrastructure to move
an extra 10,000 passengers at a time
• 20 premium station upgrades including 100 additional station
staff
• Four new train stations in growth corridors
– Cardinia Road, Williams Landing, Lynbrook and Caroline
Springs
• Transport connections program to assist regional and rural
communities
Working with the community to tackle the causes of crime
• Delivering the Respect agenda
– Funding A Right to Respect tackling sexual and domestic violence
against women ($14 million)
– Fifty five additional youth workers to support young people ($22
million)
– Launched the Knives Scar Lives campaign
• Swifter access to justice
– Managing court demand and legal services master plan ($64
million)
– Boost to Victoria Legal Aid ($50 million)
Promoting community safety
• Delivering 1,966 frontline police back on the streets
– Biggest one-off boost in Victoria’s recent history
• Building an effective corrections system
– Increased capacity for women’s prison accommodation ($81 million)
– Additional men’s prison accommodation ($46 million)
– Continuation of Better Pathways strategy to reduce women’s
imprisonment and re-offending
Bushfire reconstruction and preparedness
• 2009-10 Budget: Immediate Response ($986 million)
– 33 Community Recovery Centres
– Over 200 case managers appointed
– Clearing over 3,000 damaged properties
• Interim Report response announced in 2009-10 ($61 million)
– Improvements to bushfire information services
• New funding in 2010-11 Budget ($254 million)
– Preparedness and community education ($92 million)
– Emergency response initiatives ($79 million)
– Extra support for Victorian Bushfire Reconstruction and Recovery
Authority
Our environment – continuing Victoria’s Leadership
• Leadership in tackling climate change
– Support for ETS
– Climate Change White Paper to be delivered this year
– Climate Change Bill
– Land & Biodiversity package released in December 2009
• Jobs for the Future Economy statement ($175 million)
– Improve the energy and water efficiency of the State’s hospitals,
schools and government buildings
– New research and industry partnerships in sustainable industries
• Free entry to national parks
– Estimated to boost visitation by 25-50% a year
2010-11 Victorian Budget IPAA presentation
Grant Hehir
Secretary, Department of Treasury & Finance
State Budget Briefing
& Analysis
Grant Hehir
Secretary, Department of Treasury and Finance
Vince FitzGerald
Chairman, the Allen Consulting Group