1     Introduction

Key Issues

·       The 2019-20 Budget focusses on the delivery, by entities, of the following key outcomes:

-   the ongoing implementation of the Government’s 2018 election commitments;

-   the provision of additional funding to address demand pressures in vital service delivery areas;

-   the implementation of new initiatives to support the Government’s Building Your Future Plan;

-   improving the long-term sustainability of the Budget position through the implementation of Budget savings measures to improve the efficiency and effectiveness of the Public Sector; and

-   continuing to drive economic growth and job creation, including through investment in major social and economic infrastructure.

·       This Budget Paper provides information on an entity basis that supports the whole‑of‑government information provided in The Budget Budget Paper No 1. Most importantly, this Budget Paper provides detailed information on the services provided by entities (Outputs) and the key deliverables that are being undertaken by the entities over the Budget and Forward Estimates period.

·       Other information provided in this Budget Paper includes:

-   performance information that enables an assessment of the efficiency and effectiveness of entities;

-   details of infrastructure projects being undertaken by entities; and

-   detailed financial statements for the 2019-20 Budget and Forward Estimates period for each entity.

·       The 2019-20 Budget is the first Budget to be prepared under the new financial management framework established by the Financial Management Act 2016. It is also the first Budget to be prepared under new Australian Accounting Standards AASB 15 Revenue from contracts with customers and AASB 16 Leases. These changes impact the presentation of information in these Budget Papers and impact the key Fiscal Measures.

·       Information on the Tasmanian Government financial management framework, the annual Budget process and the presentation of Budget Paper information is provided in the Overview - Tasmania’s Financial Management Framework available at www.treasury.tas.gov.au.


 

Budget Paper No 2 Information

This Budget Paper provides information, on an entity basis, about the Outputs (goods and services) the Government will deliver to the Tasmanian community through General Government Sector entities in 2019‑20 and over the Forward Estimates period (2020‑21 to 2022‑23). This Budget Paper is a major source of financial and non‑financial information on the operations of Government departments, entities and General Government Sector statutory authorities. The other major source of detailed information on these entities is the annual report required to be prepared by each entity (2018‑19 Annual Reports will be available by 31 October 2019).

Budget Paper No 2 comprises two volumes and three separate parts that reflect the differing nature of entities within the General Government Sector:

·       Part 1 includes Government departments, such as the Department of Communities Tasmania and the Department of Education;

·       Part 2 includes Parliamentary agencies, such as the House of Assembly and the Legislative Council, and other independent entities, such as the Tasmanian Audit Office and the Office of the Ombudsman; and

·       Part 3 includes other statutory authorities within the General Government Sector, such as the State Fire Commission and TasTAFE.

This Budget Paper does not provide information on government businesses. Information on these entities is available in each entity’s annual financial report.

Some of the information presented in this Budget Paper is provided on a Ministerial Portfolio basis. Appendix 1.1 to this chapter includes a summary of current Ministerial Portfolio responsibilities.

2019-20 Budget Presentation and Other Issues

Information is provided in this chapter on matters that should be taken into account when reviewing the information provided in this Budget Paper. These matters primarily relate to changes that have occurred in the presentation of entity information since the 2018-19 Budget. Information on the Government’s financial management framework and the annual Budget process is provided in the Overview ‑ Tasmania’s Financial Management Framework available at www.treasury.tas.gov.au.

Presentational and other matters highlighted in this chapter are:

·       implementation of the Financial Management Act 2016;

·       changes to the structure of entities made since the 2018-19 Budget;

·       the implementation of new Australian Accounting Standards;

·       presentation of key deliverables information;

·       presentation of performance information; and

·       implementation of Budget savings.

Financial Management Act Implementation

The Financial Management Act 2016 will commence operation on 1 July 2019 and replaces the existing Financial Management and Audit Act 1990 and the Public Account Act 1986. The FMA represents a further major step in an ongoing reform to Tasmania’s financial management framework.

The Act simplifies and reforms Tasmania’s financial management legislation to support a modern financial management framework for the General Government Sector. The FMA introduces a new structure for the Public Account and a new series of Treasurer’s Instructions; and clarifies responsibilities for managing the State’s finances. These changes will provide for management of the public finances of the State in an economical, efficient and effective manner. The FMA will also improve financial and budget management processes, and strengthen the quality of information provided to Parliament and other stakeholders.

The 2019-20 Budget is presented in accordance with the provisions of the FMA. The new legislation results in minimal change to the presentation of the entity financial information presented in this Budget Paper. Changes include:

·       the replacement of reference to recurrent and works and services appropriation and expenditure to operating and capital appropriation and expenditure; and

·       removal of references to the Consolidated Fund and their replacement with the Public Account.

2019-20 Budget Entity Restructures

Establishment of Brand Tasmania

In November 2018, the Premier announced the establishment of the new statutory authority, Brand Tasmania, as the State’s place branding organisation.

Brand Tasmania is established by the Brand Tasmania Act 2018. The Act, which commenced on 29 March 2019, sets out Brand Tasmania’s objectives and functions. The Authority will continue the work of the Brand Tasmania Council to lead the State’s brand promotion, collaboration and coordination. The work of Brand Tasmania will be overseen by a Board and the Authority will be led by the Chief Executive Officer.

Further information in regard to Brand Tasmania can be found in chapter 13.

Department of Justice

A new Output 1.12 ‑ Child Abuse Royal Commission Response Unit has been created within the Department of Justice. This Output is responsible for coordinating the Tasmanian Government’s response to, and implementation of, the recommendations of the Royal Commission into Institutional Responses to Child Sexual Abuse; and Tasmania’s role as a participating institution under the National Redress Scheme for Institutional Child Sexual Abuse.

Administrative Arrangements Order 2019

The allocation of Agency Outputs to Ministerial Portfolios included in this Budget Paper reflects the structure of the Tasmanian Government under the Administrative Arrangements Order 2019.

Changes to Australian Accounting Standards

The new Australian Accounting Standard AASB 16 Leases comes into effect from 1 July 2019. The new Standard requires lessees, including government agencies, to recognise most operating and finance leases in the Statement of Financial Position. During the 2019‑20 Budget development process, agencies considered and accounted for all relevant leases, resulting in the presentation of property and equipment leases as both assets and liabilities on the Statement of Financial Position. This means that for many agencies there will be material changes to both expenditure, and Statement of Financial Position items in 2019-20. In particular, it will impact:

·       depreciation expense (increase);

·       interest bearing liabilities (increase);

·       (net) borrowings expense (increase);

·       assets (increase); and

·       supplies and consumables expense (decrease).

Whilst there may be a material impact on individual line items, there is no impact on final net cash flows. However there may be some very minor changes on the Net Operating Balance and Net Assets (liabilities).

The transition of reporting of lease transactions under the new Standard has had an impact on indexation calculated for agencies. Due to new system requirements, indexation on some lease transactions has been unable to be included in entity estimates. As a result, a provision for indexation on lease payments relating to Statement of Financial Position transactions has been included in Finance-General. This will be allocated to specific agencies early in the 2019‑20 year. The amount is approximately $600 000 for 2019‑20, increasing to $2.6 million in 2022‑23.

There is no impact on entity financial statements from the implementation of Standard AASB 15 Revenue from Contracts with customers as all of the changes relating to this Standard are reflected in Finance-General.

Key Deliverables Information

The information provided in this Budget Paper on key deliverables reflects important information on the initiatives announced by the Government in this Budget together with other high priority initiatives being undertaken by entities over the Budget and Forward Estimates period. These other high priority initiatives have either been funded by the Government in recent previous Budgets or are being funded by entities from within existing resources. The Key Deliverables table can include a combination of operating and capital initiatives; totals are therefore not provided. The Policy and Parameter Statement in chapter 4 of The Budget Budget Paper No 1 (Table 4.5) provides information on the specific new policy initiatives in this Budget.

The foundation of the 2018‑19 Budget was the implementation of the Government’s 2018 election commitments. The 2019‑20 Budget continues the provision of funding for these commitments. Further information on election commitments can be found in entity chapters.

Performance Information

The public presentation of entity performance information is important in assisting an open and transparent assessment of the expenditure of funding provided through the Budget process. Entities continually review performance measures based on a number of factors including national approaches to performance measurement, the availability of information and the changing nature of services. This leads to changes in the performance information for some entities between Budgets.

It should also be noted that the timing of the annual Budget process does not lend itself to the presentation of the most recent performance information. Due to the presentation of the 2019‑20 Budget in May 2019, actual results are not available for 2018-19 and it is some time since the data for the previous financial year was published in annual reports or in national reporting documents. The 2019‑20 Budget Papers, therefore, present two years of actual information (2016-17 and 2017-18) and two years of targets (2018-19 and 2019‑20). The presentation of performance information in the Budget Papers is subject to ongoing review.

Entities will next report on performance information in 2018‑19 Annual Reports, due to be available by 31 October 2019.

Budget Savings

In the 2019-20 Budget, challenges relating to significant falls in some revenue areas and funding pressures have again arisen. When compared to 2018-19 Budget estimates, revenue from GST and conveyance duty has fallen by $535 million. Of this total, GST receipts have fallen by $280.3 million. Early forecasts indicated that conveyance duty may decrease by as much as $280 million. However, the impact of more up-to-date data, together with the inclusion of proposed increases to FIDS rates, has resulted in a forecast reduction in conveyance duty of $254.8 million. The Government will, once again, act in a considered and responsible manner to meet these challenges. The 2019-20 Budget, therefore, includes the implementation of savings across the 2019‑20 Budget and Forward Estimates period which are necessary to ensure the sustainability of the Budget position and the future provision of services to the Tasmanian community.

The level of savings required in 2019-20 is approximately 0.75 per cent of total expenditure with a further 0.75 per cent in 2020‑21 and 2021‑22. Budget savings over the 2019‑20 Budget and Forward Estimates period total $450 million. Achievement of these savings, together with expenditure constraint, will be essential to the delivery of forecast Budget outcomes.

These savings have initially been presented within Finance-General and the Government will work with agencies to identify the most appropriate approach to the implementation of these savings measures within individual agencies early in the new Budget year. The Government’s commitment to protect the frontline and minimise the impact on service delivery remains. The focus will be on expenditure such as consultants, travel and advertising, together with vacancy control and natural employee attrition as well as reviewing returns from all government businesses. A review of the State Service will also be undertaken to identify structural, legislative and cultural improvements that will transform current structures, services and practices to deliver a more efficient and effective public service.

An update on savings measures agreed with individual agencies will be released after the first quarter of the 2019-20 financial year and in the 2019-20 Revised Estimates Report.

Conventions

The information presented in the Budget Papers has been prepared taking into account the following conventions.

·       Figures in tables and in the text have been rounded. Discrepancies in tables between totals and sums of component items reflect rounding. Percentage changes in all tables are based on the underlying unrounded amounts.

·       The notation used in the Budget Papers is as follows:

na

not available, or not applicable

….

zero, or rounded to zero

$'000

$ thousand

$m

$ million


 

Appendix 1.1:    Ministerial Portfolio and Departmental Structure

Table A1.1:         General Government Departments

Minister

Portfolio

Department

 

 

 

Hon Will Hodgman MP

Premier

Premier and Cabinet / Communities Tasmania

 

Minister for Heritage

Primary Industries, Parks, Water and Environment

 

Minister for Parks

Primary Industries, Parks, Water and Environment

 

Minister for Tourism, Hospitality and Events

Tourism Tasmania / State Growth / Brand Tasmania

 

Minister for Trade

State Growth

 

 

 

Hon Jeremy Rockliff MP

Deputy Premier

 

 

Minister for Education and Training

Education / State Growth / TasTAFE

 

Minister for Infrastructure

State Growth

 

Minister for Advanced Manufacturing and Defence Industries

State Growth

 

 

 

Hon Elise Archer MP

Attorney-General

Justice

 

Minister for the Arts

State Growth

 

Minister for Corrections

Justice

 

Minister for Environment

Primary Industries, Parks, Water and Environment / Premier and Cabinet

 

Minister for Justice

Justice

 

Minister for Racing

Primary Industries, Parks, Water and Environment / Premier and Cabinet

 

 

 

Hon Guy Barnett MP

Minister for Energy

State Growth / Treasury and Finance

 

Minister for Primary Industries and Water

Primary Industries, Parks, Water and Environment

 

Minister for Veterans’ Affairs

Communities Tasmania

 

 

 

Hon Sarah Courtney MP

Minister for Building and Construction

Justice

 

Minister for Resources

State Growth / Justice

 

 

 

Hon Michael Ferguson MP

Minister for Health

Health

 

Minister for Police, Fire and Emergency Management

Police, Fire and Emergency Management

 

Minister for Science and Technology

State Growth / Premier and Cabinet

 

 

 

Table A1.1:         General Government Departments (continued)

Minister

Portfolio

Department

 

 

 

Hon Peter Gutwein MP

Treasurer

Treasury and Finance / Justice

 

Minister for Local Government

Premier and Cabinet / Primary Industries, Parks, Water and Environment

 

Minister for State Growth

State Growth

 

 

 

Hon Roger Jaensch MP

Minister for Housing

Communities Tasmania

 

Minister for Human Services

Communities Tasmania

 

Minister for Planning

Justice / Treasury and Finance

 

 

 

Hon Jacquie Petrusma MP

Minister for Aboriginal Affairs

Communities Tasmania / Primary Industries, Parks, Water and Environment

 

Minister for Disability Services and Community Development

Communities Tasmania

 

Minster for Sport and Recreation

Communities Tasmania

 

Minister for Women

Communities Tasmania

General Government Sector Authorities

These Statutory Authorities are established under specific legislation, which defines the purpose of the authority and the general functions for which it is responsible.

Table A1.2 identifies the current Ministerial portfolio allocations for the General Government Sector Authorities.

Table A1.2:       General Government Sector Authorities

Statutory Authority

Portfolio Minister

Portfolio Department

 

 

 

Inland Fisheries Service

Hon Guy Barnett MP

Primary Industries, Parks, Water and Environment

Marine and Safety Tasmania

Hon Jeremy Rockliff MP

State Growth

Royal Tasmanian Botanical Gardens

Hon Will Hodgman MP

Primary Industries, Parks, Water and Environment

State Fire Commission

Hon Michael Ferguson MP

Police, Fire and Emergency Management

TasTAFE

Hon Jeremy Rockliff MP

State Growth