Achievements towards Outcome 1

Budget Output 1.1 – Budget development and management
Budget Output 1.2 – Financial management and accounting services
Budget Output 1.3 – Shareholder advice on government businesses
Budget Output 1.4 – Government property and accommodation services
Budget Output 1.5 – Government procurement services
Budget Output 4 – Community Assistance

That the Treasurer and other key clients receive efficient and effective financial and asset management services

Budget Output 1.1 – Budget development and management

Delivery of the 2007–08 State Budget

On 7 June 2007 the Treasurer, the Hon Michael Aird MLC, delivered the 2007–08 State Budget. The Budget introduced a range of important initiatives, as well as continuing to honour the commitments the State Government made to the Tasmanian people during the 2006 election. We have assisted the Government in ensuring that the General Government Sector will continue to remain net debt free, while the State Government provides record funding to Tasmanians for the delivery of essential services including health, education and public safety.

Separate Appropriation Bills

In the 2006 State of the State Address the Premier announced that separate Budget appropriations would be established for the independent Government agencies, specifically the Office of the Ombudsman, the Office of the Governor and the Parliamentary agencies.

As part of the 2007–08 Budget, Treasury prepared a separate Consolidated Fund Appropriation Bill for the independent agencies and will continue to do so in all future Budgets.

Providing a separate appropriation to independent agencies recognises their unique role in Tasmania’s parliamentary and democratic systems and provides further accountability and transparency to the Tasmanian community.

Next year’s aims

We will:

• Review State Government Concessions – during the 2006 election, the Government provided a commitment that it would undertake a review of the range of concessions available to Tasmanians. We will lead the review in consultation with the Department of Premier and Cabinet and the community sector, to ensure that the concessions are accessible, well targeted and provide appropriate support to Tasmanians in need.
• Review Budget Papers – we will continue to improve the information contained in the State Budget Papers to provide the best possible information to the Tasmanian community on budgetary issues, the monitoring of Tasmania’s financial performance, and Tasmania’s fiscal strategy.
• Implement Generally Accepted Accounting Principles (GAAP) and Government Finance Statistics (GFS) Harmonisation – the State Budget and outcomes reporting is currently based on GFS. Tasmania, with other Australian jurisdictions, will move to adopt a harmonised GAAP-GFS reporting format from 2008–09 for budgeting and financial reporting. The format will comply with Australian Accounting Standards Board 1049 Financial Reporting of General Government Sectors by Governments, released by the AASB.

Adopting the harmonised reporting format will:

• require changes to the current presentation of financial statements in Budget Paper No 1, the Mid Year Financial Report, the Preliminary Outcomes Report and the Treasurer’s Annual Financial Report;
• provide additional information in the Budget and financial statement presentation, such as additional financial measures in the Operating Statement, and require reconciliations in the notes to the financial statements; and
• increase consistency of budget and financial statements, and will provide greater information to stakeholders.

These changes will improve financial reporting for the General Government Sector, which will increase the level of transparency and accountability to the Tasmanian community.

Budget Output 1.2 – Financial management and accounting services

Major progress on GAAP-GFS harmonisation

For many years Australia’s Heads of Treasuries have been pursuing an industry specific standard for public sector reporting, which provides for the harmonisation of Generally Accepted Accounting Principles (GAAP) and Government Finance Statistics (GFS).

The finalisation of this work is the highest priority for Australian public sector reporting as the current dual reporting regime, whereby all of Australia’s jurisdictions report outcomes based on both the GFS and GAAP frameworks, causes considerable confusion for financial report users.

We have made a significant contribution to the (AASB) GAAP-GFS harmonisation project. We have actively supported Heads of Treasuries in their contributions to the harmonisation project.

A standard for General Government Sector financial reporting, AASB 1049 Financial Reporting of General Government Sectors by Governments, was issued by the AASB in September 2006 as the first part of its GAAP–GFS harmonisation project. The new harmonised standard is mandatory for reporting periods beginning on or after 1 July 2008 and Tasmania will implement AASB 1049 in 2008–09 for both Budget and outcomes reporting purposes.

Accountability to the community

On 26 September 2006 the Premier announced the development of an extensive package of budgeting and financial management reforms to ensure that Tasmanians have the highest levels of government accountability, transparency, responsibility and governance. This included the introduction of separate Financial Management and Audit Acts to replace the current combined Financial Management and Audit Act 1990.

The new legislation will provide the Tasmanian community with improved financial transparency, greater fiscal integrity, improved financial equity, government responsibility and accountability. It will be introduced to Parliament in two stages.

The proposed Audit Act gives the Auditor-General additional powers to oversee all government entities, whether government departments, government businesses or statutory bodies. The Act will also provide the sole authority for audit functions across state and local government sectors and make it explicit that the Auditor-General has the same powers in relation to local government as for the state sector. We have worked closely with the Auditor-General on the early development of the content of the draft Audit Bill.

New government banking arrangements

We conducted a tender process for Government Banking Services during 2006–07. Following the evaluation of tenders by an interdepartmental committee, the Treasurer approved the following preferred tenderers for each category of service covered by the Request for Tender:

• Transactional banking: Westpac Banking Corporation
• Revenue collection: Australia Post and Westpac Banking Corporation
• School banking: Commonwealth Bank of Australia
• Corporate purchasing card: Westpac Banking Corporation.

The new banking arrangements will be effective from 2007–08, and are expected to result in ongoing improvements to the efficiency of government banking and revenue collection services. This will result in improvements to the Government’s financial interactions with the community.

Financial Management Education and Training Program

In today’s progressive and changing environment, individual learning and development is vital in the community’s personal and work life. The Government recognises the importance of professional development for all its employees and is committed to assisting them to fulfil their work and individual goals and ambitions.

The Financial Management Education and Training Program aims to develop and improve the knowledge, skills and confidence of those State employees who are involved in the management of Tasmania’s financial resources. It also aims to improve the overall management of the State’s financial resources. Effective participation in this program will help to continue the improvement in the State’s financial position and assist in the delivery of vital services to all Tasmanians.

Seven modules are currently available through the program. In 2006–07 we delivered 15 whole-of-government training sessions to around 200 participants. As well, an estimated ten in-house or tailored courses were delivered state-wide to around 160 participants. The feedback from all training sessions continues to be very positive.

Next year’s aims

We will:

• Implement the harmonised GAAP–GFS reporting requirements for whole-of-government (General Government Sector, Public Non-Financial Corporations Sector and Public Financial Corporations Sector) financial reporting.
• AASB 1049 requires the General Government Sector financial report to be made available at the same time as the whole-of-government financial report. Heads of Treasuries consider it essential that a whole-of-government harmonised standard is finalised by no later than the fourth quarter of 2007 to allow jurisdictions to comply with the date of effect of AASB 1049. We will contribute to the development of the Heads of Treasuries submission to the AASB on this important issue. We expect that a standard will be finalised by October 2007.
• Once a whole-of-government harmonised standard is finalised, we understand that the AASB will give priority to issuing an Exposure Draft that addresses the financial reporting of government departments and other general government sector entities. We will continue to provide support to the AASB in finalising the GAAP-GFS harmonisation project.
• Once we have finalised drafting the Bill in conjunction with the Auditor-General and the Office of Parliamentary Counsel, we will commence extended consultation with all stakeholders. We expect to introduce the Audit Bill to Parliament in late 2007.
• Introduce the Financial Management Bill to Parliament during 2008.The new Financial Management Act will take a more streamlined, principles-based and less prescriptive approach to public sector financial management. The new Act will clarify and strengthen the responsibilities of Heads of Agencies under the financial management framework, provide an appropriate reporting framework for statutory authorities, and provide increased accountability to the community. This will enable efficient management of resources, preserving the long-term financial stability of the State.
• Finalise the development of a new education module, Managing Grants, which will be available for delivery from October 2007. This module is designed to provide participants with information and guidance for best practice grants management.
• Continue to provide executive support to the Heads of Treasuries Accounting and Reporting Advisory Committee (HoTARAC).
• Develop and transmit accounting policy guidance in relation to the introduction of new legislative requirements and revised accounting standards.
• Continue to improve the performance of critical internal financial management systems.
• Publish all whole-of-government financial and statistical reports before the required date.

Budget Output 1.3 – Shareholder advice on government businesses

Credit rating

We are responsible for coordinating Tasmania’s annual submissions to the international credit ratings agencies, Moody’s Investor Service (Moody’s) and Standard and Poor’s (S&P).

In December 2006 Moody’s raised Tasmania’s credit rating to Aaa, the highest rating issued by Moody’s. The State has been awarded four credit rating upgrades since October 2001, as recognition of the ongoing prudent economic and financial management of the State.

Any upgrade to Tasmania’s credit ratings benefits the Tasmanian community by reducing the State’s borrowing costs and therefore the burden on the State’s Budget. In addition, high credit ratings help maintain strong business confidence in the State.

Bell Bay Power Station

In 2006–07 Alinta Ltd agreed to purchase the Bell Bay Power Station site, including the Gas Peaking Plant, from Hydro Tasmania, and will build a new gas-fired electricity generation capacity on the site. Hydro Tasmania will retain access to the thermal generation units until the larger of Alinta’s developments is completed. We assisted the Government to achieve appropriate policy outcomes and undertakings regarding the ownership of Bell Bay, when Tasmania’s entry to the National Electricity Market was approved.

Governance review

We reviewed the current arrangements for the selection and appointment of directors, and key governance and reporting arrangements for subsidiaries and joint ventures of government businesses. In undertaking the review, we examined arrangements and best practice in other jurisdictions and the private sector.

We prepared a draft report for the Treasurer that included recommendations and draft guidelines for government businesses.

Transfer of Silverdome

We played a key role in winding up the Tasmanian International Velodrome Management Authority, which operates the Silverdome in Launceston, and its transfer to the Department of Economic Development.

The transfer has provided greater certainty regarding the long-term use and maintenance of the Silverdome and should result in more cost-effective management and better utilisation of the facility.

Divestment

The Government continually reviews its portfolio of businesses to ensure that its assets are being used in a manner that best meets the interests of the Tasmanian community. The Treasurer announced in the 2007–08 State Budget that the Government had decided to divest the Hobart International Airport, the Printing Authority of Tasmania and the Southern Regional Cemetery Trust. These sales are intended to remove restrictions on these businesses and enable reinvestment into new infrastructure. We undertook preparatory work and research associated with this decision.

Corporate planning

In 2006–07 the Department developed a revised format for analysis of corporate and business plans of government businesses.

Next year’s aims

We will:

• Continue to liaise with the two ratings agencies, which will include formal presentations. We will also coordinate input from the larger government-owned businesses.
• Consult and seek the input of government businesses on the draft Governance Review Report. This will enable completion of the report and, subject to the Treasurer’s approval, we will implement the report’s final recommendations and guidelines.
• Continue to review the Government Business Enterprises Act 1995 to ensure that the legislation promotes the key principles of corporate governance and maintains a strong commercial focus for government business enterprises.
• In 2007–08 we propose to consult with government businesses on the draft report and, subject to the Treasurer’s approval, implement the final recommendations and guidelines.
• Introduce improvements to the corporate planning processes for government businesses that will ensure greater shareholder input in the early development of this key accountability document. This will assist government businesses to determine strategies that consider shareholder expectations.
• Progress the sale of the Hobart International Airport, the Printing Authority of Tasmania and the Southern Regional Cemetery Trust to completion by 30 June 2008.

Budget Output 1.4 – Government property and accommodation services

Sale of Crown properties

During 2006–07 we sold 16 surplus Crown properties through the Major Sales Program. These included two high valued office buildings and two parcels of Crown land for a return to the Government of $17.8 million. Property sold through the Major Sales Program consists of surplus Crown land from inner-Budget agencies. The sales enable unwanted and under-utilised assets to generate additional revenue for the Government.

Next year’s aims

We will:

• Progress the sale of surplus Crown properties, including three high-value former Hobart Ports properties on the Hobart waterfront.
• Progress the divestment and redevelopment of Heritage Square which consists of eight buildings behind Parliament House in Hobart.

Budget Output 1.5 – Government procurement services

Major whole-of-government contracts

Whole-of-government contracts are designed to provide all government agencies and, in relation to specific contracts, approved charitable and not-for-profit organisations, with the best possible pricing for commonly used goods and services.

In 2006–07 we awarded one strategic whole-of-government contract – the Advertising Print Media Services contract. The contract, valued at approximately $19.2 million, was awarded to Gray Matters Advertising and provides print media services for the placement of consolidated vacancy notices, tenders and public notices in Tasmanian and overseas newspapers.

In addition we exercised options to extend the Information and Communication Technology Hardware Services and the Petroleum Products contracts by a further two years and the Fleet Management Agreement by another three years. The Corporate Card Facility was renewed as part of the Banking Services Tender managed by the Government Finance and Accounting Branch.

Administration of the Tasmanian Risk Management Fund (the Fund)

We developed and issued a Policy and Disclosure document. This document provides a comprehensive summary of the Fund’s purpose and the risks and entities it covers.

We initiated a new communication strategy with agencies, aimed at regular effective discussion of arising issues and building stronger relationships to help agencies with claims administration and government policy compliance.

Because the current Fund Administration Agent contract expires on 30 June 2008, we began planning and preparing tender documents for the appointment of a new provider.

We developed a policy for the provision of cover for agency-related entities. The policy reaffirms that generally cover is only extended to inner-Budget agencies.

Administration of procurement policy

We released a new policy that changes the presumption of confidentiality clauses in contracts entered into by the Crown. The Crown Contracts Confidentiality Policy provides that in any contract between the Crown and any other party, confidentiality requirements in the provisions of the contract are not to be included unless a Standing Committee approves an exemption to be in the public interest. The purpose of the policy is to ensure that government contracting is conducted in a transparent manner and that unnecessary confidentiality provisions do not hamper the scrutiny of government contracts.

We reviewed key procurement policies and processes and identified opportunities for improved efficiency. In particular, we completed the first stage of a review of the policies and procedures for building and construction (including roads and bridges) procurement which led to the removal of the Public Works Tender Board. We also released a revised set of the Treasurer’s Instructions for procurement.

As part of our objective of improving procurement competency across government, we coordinated two information sessions, conducted by Crown Law, on Understanding Contracts and Effective Contract Management. Almost 100 attendees were at each session.

Next year’s aims

We will:

• Continue to review and improve the effectiveness of procurement policies and processes in order to meet the Government’s procurement principles and objectives.
• Continue to work with agencies and the Fund’s actuary to ensure adequate financial provision is made for the cost of risk. We will also evaluate tender submissions and award a new contract for the provision of fund administration services to the Fund.
• Renew the major whole-of-government contract for motor vehicles and begin the renewal process for the interstate cartage, information, communication and technology hardware contracts.

Budget Output 4 – Community Assistance

Community Assistance provides targeted community support and subsidised assistance to various segments of the community. The focus is on government Community Service Obligations (CSOs).

Bass Strait Islands CSO

We managed the Community Service Obligation payment that provides for the subsidised supply of electricity to Bass Strait Islands customers and for concessions to pensioner customers on King and Flinders Islands.

The Public Trustee CSO

We administered this Community Service Obligation payment, which provides for assistance in the administration of:

• Absolute Estates with a gross asset value of less than $60 000;
• Continuing Trust and Life Tenancy Estates with a gross asset value of less than $100 000;
• Minor Trusts with a gross asset value of less than $20 000; and
• Assets for Represented Persons with a gross asset value of less than $100 000.

Community Support Levy

The Revenue, Gaming and Licensing Division collected Community Support Levy funds. The funds were distributed for the prevention of compulsive gambling, treatment or rehabilitation of compulsive gamblers, community education and other health services, and for the benefit of charitable and sport and recreation organisations.

The Department of Health and Human Services and the Department of Economic Development provided administrative support.

Anzac Day Trust and Royal Society of Tasmania

An annual contribution was paid to the Anzac Day Trust in accordance with the provisions of the Anzac Day Observance Act 1929. The Trust distributes the funds to returned services organisations to help provide welfare benefits for their members and families.

A payment was made to the Royal Society of Tasmania to assist with the printing of papers.