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Output performance 2008–09
Budget Output 1.2: Financial management and accounting services Continued progress on GAAP-GFS harmonisation During 2008–09, we continued our contribution to the Australian Accounting Standards Board‘s Generally Accepted Accounting Principles - Government Finance Statistics harmonisation project and supported the Heads of Treasuries Accounting and Reporting Advisory Committee in its contributions to the project. Heads of Treasuries consider that extending GAAP-GFS harmonisation to the financial reporting of government departments and other General Government Sector entities will complete the project. They consider it to be an urgent priority, since having reporting requirements for the GGS and whole-of-government that differ from the requirements for GGS entities is a source of confusion for both preparers and users of those reports. The Australian Accounting Standards Board released Exposure Draft 174 in January 2009, to facilitate GAAP-GFS harmonisation for GGS entities. HoTARAC has been actively involved in considering ED 174, and made a significant contribution to the development of an Illustrative Example by AASB staff. HoTARAC prepared a submission to the AASB on ED 174, and HoTARAC representatives attended Roundtables held by the AASB in May 2009 to discuss the proposals in ED 174. A Standard is expected to be released in the first quarter of 2010. We will continue to provide support to the AASB in concluding this final phase of the GAAP-GFS harmonisation project. Review of Tasmania’s financial management framework In the 2006 State of the State Address, the former Premier announced a number of initiatives relating to the reform of the Tasmanian financial management framework. Included in these announcements was that the Government would replace the current combined Financial Management and Audit Act 1990 with the introduction of a separate Audit Act and separate Financial Management Act. The Audit Bill 2008 passed through both Houses of Parliament during December 2008. The Governor proclaimed the Audit Act 2008 on 16 February 2009, with a commencement date of 1 March 2009. Significantly, the Audit Act:
Administration of unclaimed moneys A key part of our daily work involves the acceptance and administration of unclaimed moneys on behalf of the Treasurer and the community, in accordance with the Unclaimed Moneys Act 1918. Unclaimed moneys include share dividends, salaries and wages, rents and bonds, debentures and interest, unpresented cheques, trust moneys, unclaimed Tattersall’s winnings, Betting Exchange moneys and superannuation benefits. The total amount of unclaimed moneys held in trust by us at 30 June 2009 was $10.8 million. Unclaimed moneys received during 2008–09 were $1.6 million, which included unclaimed Tattersall’s winnings of $984 000 and unclaimed Betting Exchange moneys of $492 000. During 2008–09, we finalised 565 claims, amounting to around $138 000, and the relevant amounts were paid to their legal owners. The average value of each claim was $245, while the maximum value of a single claim was $34 665.
Review of Treasury’s Mandatory Data Requirements The Mandatory Data Requirements Project is intended to improve the quality and timeliness of financial data supplied by agencies to Treasury, and to ensure that the data collected is appropriate for the current and future financial and statistical reporting environment. It was anticipated that a draft set of MDR would be available for stakeholder consultation by June 2009. However, preliminary work on the MDR Project identified the need for an additional sub-project, which involves the review of the Budget Management and Financial Reporting System Chart. The Project Scope has been expanded to include the preparation of an Options Paper for changes to the BMFRS Chart. This work could not be undertaken in the first half of 2009 due to the competing priorities of the Budget development process. Any changes to the MDR and revised BMFRS Chart values and definitions will follow extensive consultation with internal and external stakeholders. However, it is envisaged that changes will have minimal impact on the functionality of BMFRS and external client (agency) financial management systems. What next?
Budget Output 1.3: Shareholder advice on Government businesses Financial returns from Government businesses A total of $161 million in Government business sector dividends, tax equivalent payments, rate equivalent payments and guarantee fees was collected from Government businesses in 2008–09. We provided advice to the Treasurer on these financial returns, which have been applied to fund essential Government services for the Tasmanian community. Government business reporting Under the Government Business Enterprises Act 1995, all Government businesses are required to submit annually a corporate plan for approval by the Treasurer and the Portfolio Minister. We reviewed and provided advice to the Treasurer regarding the 2008 Corporate Plans for all Government businesses. We are currently in the process of revising the quarterly reporting process to ensure more timely access to information, which is particularly important in the current economic climate. Divestment of TOTE Tasmania Following the announcement by the Treasurer on 8 January 2009 to sell TOTE Tasmania, we prepared legislation, the TOTE Tasmania (Sale) Act 2009, which was passed by both Houses of Parliament to approve the sale. The Branch engaged consultants to assist with the sale process and the formal competitive bid process for the divestment of TOTE Tasmania concluded on 11 September 2009. While there were no complying bids for TOTE, the divestment process will continue. Governance Review We issued new Guidelines for Tasmanian Government Businesses covering the governance framework for Government businesses . We implemented new director appointment arrangements to enhance the process for identifying candidates for upcoming board positions. Executive search firm Cordiner King was engaged to assist in identifying high quality candidates, and to provide a website and database where expressions of interest for Government business board positions can be registered. These initiatives will increase transparency and accountability and contribute to enhancing the performance of the State’s portfolio of businesses. Revised guarantee fee methodology We implemented a revised methodology for the calculation of guarantee fees, which are levied on all Government businesses to ensure that they do not receive any interest-cost advantage, relative to the private sector, by borrowing through Tascorp. The need for the new methodology arose following the deterioration of global credit market conditions, which resulted in significantly higher differentials between Tascorp and private sector interest rates. We prepared the necessary amending legislation, the Government Business Enterprises and State-owned Companies Legislation Amendment Act 2009, to effect the changes. While transitional arrangements have been in operation during 2008–09, the new policy commenced on 1 July 2009. Australian Government guarantee of State borrowings In October 2008, the Australian Government’s wholesale funding guarantee for banks was introduced to allow banks to issue large volumes of AAA-rated debt, which absorbed the weak demand for debt issues in the credit market resulting from the global financial crisis. This crowding out effect made it very difficult for the State borrowing authorities such as Tascorp, to raise sufficient money in the credit market. We worked closely with counterparts in other jurisdictions to address this issue, which led to the Australian Government’s offer to guarantee borrowings by the States in February 2009. Acquisition of Aurora Energy Tamar Valley and Bell Bay Power Station The purchase of the Aurora Energy Tamar Valley Power Station was negotiated with Babcock & Brown Power to mitigate a serious risk to Tasmania’s energy security that arose from the financial situation of Babcock & Brown Power. We also prepared the necessary legislation, the Tamar Valley Power Station Act 2008, to give effect to the State’s acquisition. We were also involved in securing the necessary regulatory approvals, particularly from the Australian Competition and Consumer Commission. After a detailed process and submission, the Commission concluded that the acquisition was unlikely to substantially lessen competition in the relevant markets. We continue to provide advice to the Government on the structural and commercial arrangements underpinning the Tamar Valley Power Station. In conjunction with this acquisition, a project was undertaken to transfer the existing Bell Bay Power Station assets from Hydro Tasmania to AETV Power, which is Aurora Energy’s subsidiary that owns the Tamar Valley Power Station. However, as the energy security situation had improved by early 2009, the transfer was deferred. Tasracing Board Pty Ltd The Branch was an active member of a working group chaired by the Department of Infrastructure, Energy and Resources tasked with moving the Tasmanian Racing Board from a statutory authority to a State-owned Company. We provided advice and assistance to DIER on ownership, governance and commercial issues, and also assisted in the drafting of the enabling legislation, the Racing (Tasracing Pty Ltd) Act 2009, and setting up the ownership and governance framework required for Tasracing to operate as a State-owned Company from 1 July 2009. Credit Ratings Each year Treasury hosts a visit from the credit rating agencies, Standard & Poor’s and Moody’s Investors Service. The Branch is responsible for managing the relationship with the rating agencies, arranging the visits and coordinating the Government’s annual presentation to each agency. This year we coordinated a formal presentation to each agency, as well as a number of less formal briefings throughout the year to ensure that the rating agencies were aware of the State’s changing budgetary circumstances. Despite a weaker budget position, both agencies have maintained the State’s credit rating (AA+ from S&P and Aaa from Moody’s). Continuing to maintain an open relationship will be essential as the Government adjusts to its changed financial circumstances. What next?
Budget Output 1.4: Government property and accommodation services Property management During 2008–09, we sold four surplus Crown properties through the Major Sales Program, for a return to the Government of $760 000. Also in 2008–09, significant office works projects were completed on the Government-owned office portfolio, as well as all statutory maintenance programs associated with the portfolio. The parliament square project In 2008–09, a three stage divestment process of the parliament square site was completed with a recommendation to be made to Government in early 2009–10 on the preferred developer with whom the eventual sale of the site would be negotiated. What next?
Budget Output 1.5: Government procurement services Contract management In 2008–09, we undertook tender processes for the supply of Information, Communication and Technology Hardware and for the provision of the Government’s Cartage and Interstate Air Freight requirements. In June 2009, public tenders were invited for the Petroleum Products contract. We also manage the Government vehicle fleet. In 2009, we commenced benchmarking our fleet management activities with other jurisdictions to ensure we are achieving best practice fleet management and continued to monitor the emissions of our fleet to gauge the effectiveness of the new range of vehicles on contract in contributing to the Government’s climate change objectives. In June 2009, we reviewed the executive vehicle fleet policy and listing to reduce the range and availability of prestige vehicles. Administration of the Tasmanian Risk Management Fund During 2008–09, we undertook tender processes for the provision of auditing services of the Fund Administration Agent and actuarial services for the Fund. The appointment of the Fund’s actuary is expected to be finalised early in 2009–10. Procurement policy During 2008–09, we developed introductory procurement and contract management training courses for Government procurement staff across all agencies and issued A Guide for Government Buyers. We also liaised with the Tasmanian Climate Change Office to assist agencies in incorporating climate change measures into procurement decisions. In addition to a general review of the Treasurer’s Instructions for procurement, we issued a new Treasurer’s Instruction in relation to a guarantee of on time payment of invoices. In response to the tight time frames associated with projects under the Nation Building – Economic Stimulus Plan, we developed and implemented a streamlined process for building and construction procurement to assist agencies in meeting the Australian Government’s requirements. A planned redevelopment of the purchasing website was deferred until 2009–10. What next?
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