Key Issues ·        Total General Government Sector revenue is expected to be $7 848.2 million in 2022‑23, an increase of $590.7 million compared to the 2021‑22 Budget. ·        There have also been material increases in General Government Sector revenue in the 2021‑22 Estimated Outcome compared to the 2021‑22 Budget, largely driven by continued strength in State Taxation revenue and upwards revisions in Tasmania’s GST revenue. ·        The revenue outlook for 2022‑23 and across the Forward Estimates is positive, reflecting forecast growth in GST revenue and the continued strength in State Taxation receipts, particularly payroll tax, conveyance duty and land tax. ·        From 2022‑23 to 2025‑26, revenue is forecast to grow by $633.5 million (or by a compound annual growth rate of 2.6 per cent). ·        Key components of General Government Sector revenue in 2022‑23 include: -       GST revenue, which is estimated to be $3 125.6 million, an increase of $125.9 million from the 2021‑22 Budget of $2 999.7 million; -       Taxation revenue, which is estimated to be $1 613.3 million, an increase of $165.0 million from the 2021‑22 Budget of $1 448.3 million; and -       Australian Government Payments for Specific Purposes, which are estimated to be $1 915.1 million, an increase of $321.4 million from the 2021‑22 Budget of $1 593.7 million. ·       Tasmania’s share of revenue from Grants, including GST revenue and Australian Government Payments for Specific Purposes, equates to 65 per cent of Total General Government Sector revenue.

Total Revenue

This chapter provides an overview of Revenue for the 2022-23 Budget and Forward Estimates including the 2021-22 Estimated Outcome. Table 5.1 lists the major General Government Sector revenue sources.

Table 5.1:         General Government Sector Revenue

	2021‑22	2021‑22	2022‑23	2023‑24	2024‑25	2025‑26
		Estimated		Forward	Forward	Forward
	Budget	Outcome	Budget	Estimate	Estimate	Estimate
	$m	$m	$m	$m	$m	$m
Revenue from transactions
Grants	4 653.2	5 128.9	5 099.5	5 398.6	5 468.7	5 455.7
Taxation	1 448.3	1 549.9	1 613.3	1 715.2	1 792.2	1 870.7
Sales of goods and services	441.7	442.4	451.1	464.8	476.8	481.4
Fines and regulatory fees	107.2	110.9	111.2	116.3	117.7	119.2
Interest income	7.9	8.1	29.2	36.3	35.5	36.9
Dividend, tax and rate equivalent income	383.8	377.7	336.2	294.9	311.2	331.0
Other revenue	215.3	257.3	207.8	199.5	196.9	186.8
	7 257.5	7 875.2	7 848.2	8 225.5	8 398.9	8 481.7

Tasmania’s most significant source of funding is Grants revenue (including GST revenue and Australian Government Payments for Specific Purposes), which comprises 65 per cent of total revenue in 2022‑23. State Own-Source revenue accounts for 35 per cent of total revenue.

Chart 5.1 shows the composition of Total General Government Sector revenue over the period 2016-17 to 2025-26 (Estimated).

Major revenue risks and sensitivities are discussed in chapter 4 of this Budget Paper. The variances in revenue items are outlined in the Policy and Parameter Statement in chapter 4 of this Budget Paper.

Chart 5.1:         Composition of Total Revenue, 2016‑17 to 2025‑261

Notes:

1.    Data reflects actual outcomes for 2016‑17 to 2020-21 and the Estimated Outcome for 2021‑22.

2.    Other Australian Government Grants includes Specific Purpose Payments and National Partnership Payments.

3.    Other includes: Sales of goods and services; Fines and regulatory fees; Interest income; Dividend, tax and rate equivalent income; and Other revenue.

Grants

Grants primarily reflect transfers of funding from the Australian Government and are estimated to be $5 099.5 million in 2022‑23.

Table 5.2:         Grants

	2021‑22	2021‑22	2022‑23	2023‑24	2024‑25	2025‑26
		Estimated		Forward	Forward	Forward
	Budget	Outcome	Budget	Estimate	Estimate	Estimate
	$m	$m	$m	$m	$m	$m
General Purpose Payments (Untied Funding)
GST Revenue	2 999.7	3 159.2	3 125.6	3 340.1	3 412.5	3 515.7
Payments for Specific Purposes (Tied Funding)1
Specific Purpose Payments2	1 172.4	1 183.6	1 221.4	1 281.2	1 340.7	1 388.8
National Partnership Payments3	421.3	725.2	693.8	732.6	675.0	519.2
Total Payments for Specific Purposes	1 593.7	1 908.8	1 915.1	2 013.8	2 015.7	1 908.0
Other Grant and Subsidies4	59.8	60.9	58.7	44.7	40.5	32.0
Total Grants	4 653.2	5 128.9	5 099.5	5 398.6	5 468.7	5 455.7

Notes:

1.    Estimates of Specific Purpose Payments may differ from those published in the Australian Government 2022‑23 Budget due to different assumptions around timing and activity levels.

2.    Specific Purpose Payments include National Health Reform; Quality Schools, Quality Outcomes; National Housing and Homelessness; and National Skills and Workforce Development.

3.    Estimates of National Partnership Payments may differ from those published in the Australian Government 2022‑23 Budget due to the application of Australian Accounting Standard AASB 15 Revenue from Contracts with Customers.

4.    Other Grant and Subsidies primarily relates to payments to the State for Commonwealth Own Purpose Expenditure.

 

In accordance with the Intergovernmental Agreement on Federal Financial Relations, transfers from the Australian Government fall into two categories:

·       General Purpose Payments, which are ‘untied’ payments that can be used at the State’s discretion. The GST distribution is the only GPP received by Tasmania in 2022‑23; and

·       Conditional (tied) funding in the form of Payments for Specific Purposes, including Specific Purpose Payments and National Partnership Payments. These payments can only be spent for purposes as agreed with the Australian Government.

The Australian Government also provides payments directly to State agencies through Commonwealth Own Purpose Expenditure. Most of these payments will be made to the Department of Health and the Department of Communities Tasmania.

GST Revenue

GST revenue is the largest single source of revenue for Tasmania representing 39.8 per cent of Total General Government Sector revenue in 2022-23.

In accordance with the Intergovernmental Agreement on Federal Financial Relations, all GST revenue collected by the Australian Government is distributed amongst the states and territories. Each jurisdiction’s GST entitlement is dependent on three factors: national GST collections; the state’s per capita relativity; and the state’s share of the national population.

For the 2022-23 Budget, Treasury has continued to use its own financial model to forecast GST revenues. The model incorporates the latest Commonwealth Grants Commission assessments and recommended relativities, Australian Government forecasts of the GST pool and state and territory populations and states’ and territories’ own source revenue estimates.

Table 5.3 shows estimates for the national GST pool collections and Tasmania’s GST revenue estimates.

Table 5.3:         Tasmanian GST Revenue Estimates

	2021‑22	2022‑23	2023‑24	2024‑25	2025‑26
	Estimated		Forward	Forward	Forward
	Outcome	Budget	Estimate	Estimate	Estimate
National GST Collections ($m)	73 310	80 005	83 534	87 504	91 306
Tasmania’s GST Share (%)1	4.1	3.9	3.9	3.8	3.8
Tasmania’s GST Revenue ($m)2,3,4,5	3 159.2	3 125.6	3 340.1	3 412.5	3 515.7

Notes:

1.    GST shares have been calculated excluding the residual adjustment and the guarantee payments.

2.    The 2021-22 Estimated Outcome includes the positive $133.8 million residual adjustment for underpaid GST revenue to Tasmania in 2020‑21.

3.    The 2021-22 Estimated Outcome and the 2022-23 Budget are based on the actual relativities recommended by the CGC.

4.    A residual adjustment for 2021-22 will be recognised in 2022-23 once the Australian Government has finalised its 2021-22 actual GST collections.

5.    Tasmania’s GST revenue includes forecast no-worse-off guarantee payments of $74.9 million in 2023-24, $97.7 million in 2024‑25 and $74.6 million in 2025-26.

 

GST payments to Tasmania are expected to be $3 125.6 million in 2022-23.

Since the 2021-22 Budget, GST revenue to Tasmania has increased by $212.3 million over the four years from 2021-22 to 2024-25. Chart 5.2 compares the 2022-23 Budget forecasts to the 2021-22 Budget forecasts.

Chart 5.2:         GST Revenue to Tasmania, 2016‑17 to 2025‑26

 

Notes:

1.    GST revenue to Tasmania includes a positive $133.8 million residual adjustment in 2021-22 for underpaid GST revenue to the State in 2020‑21.

2.    The 2022-23 Budget includes the 2021-22 Estimated Outcome for GST revenue.

3.    The 2022-23 Budget includes forecast no-worse-off guarantee payments of $74.9 million in 2023-24, $97.7 million in 2024‑25 and $74.6 million in 2025-26.

4.    A residual adjustment for 2021-22 will be recognised in 2022-23 once the Australian Government has finalised its 2021-22 actual GST collections.

This change in GST revenue largely reflects the Australian Government increasing its forecasts of the GST pool in the 2022-23 Australian Government Budget by $13.4 billion, compared to the 2021-22 Australian Government Budget.  The Australian Government increased its forecasts of the GST pool to reflect stronger than expected household consumption and private dwelling investment, including the impact of increases in prices in the construction sector.

The positive impact of the increase in the GST pool has been partially offset by Tasmania’s share of the GST pool decreasing from 2022-23 following the Commonwealth Grants Commission’s 2022 Update. While Tasmania’s 2022-23 relativity has reduced as a result of the Commonwealth Grants Commission’s 2022 Update, it is still high compared to historical actuals.

Chart 5.3 illustrates Tasmania’s relativities since the introduction of the GST. The chart shows Tasmania’s GST relativity is currently forecast to decline over the Forward Estimates, primarily driven by Tasmania’s strong conveyance duty receipts.

Chart 5.3:           Tasmanian GST Relativities, 2000-01 to 2025‑261,2

Notes:

1.    CGC calculation of relativities is prepared on a consistent basis, with healthcare grants (pre 2009-10) treated by inclusion.

2.    Relativities from 2021-22 reflect the transition to the new GST distribution arrangements.

New GST Arrangements

The Australian Government’s new GST distribution arrangements came into effect from 1 July 2021 following the passage of the Treasury Laws Amendment (Making Sure Every State and Territory Gets Their Fair Share of GST) Act 2018 through the Federal Parliament.

Prior to the new arrangements, GST revenue was distributed on the basis of full Horizontal Fiscal Equalisation. HFE ensures that all states and territories have a similar fiscal capacity to deliver services and infrastructure to their residents to the same standard as any other state or territory, provided they make a similar revenue raising effort.

From 2021-22, the distribution of GST transitioned to a lesser standard of HFE.

The changes will be progressively implemented over six years and will move from the principle of equalising a state’s fiscal capacities to the level of the strongest state, currently Western Australia, to equalising to the fiscal capacity of the second strongest state (effectively the higher of New South Wales or Victoria).

For Tasmania, the new distribution methodology is expected to reduce GST revenue over the Forward Estimates. However, the Australian Government’s temporary no-worse-off guarantee ensures that no state will be worse off in total under the new distribution arrangements during the transition period up to 2026‑27.

Guarantee payments are paid in the year after a state is recognised as being worse off under the new distribution arrangements and are reduced by any benefit a state has received under the new arrangements in previous periods.

Under the new GST distribution arrangements, Tasmania is expected to receive no-worse-off guarantee payments of $247.2 million in total over the Forward Estimates.

 

Commonwealth Payments for Specific Purposes

Specific Purpose Payments and Reform Funding

SPPs are an ongoing funding arrangement between the Australian Government and the states and territories for service delivery in a particular sector. These include the National Health Reform Agreement, the National School Reform Agreement (Quality Schools, Quality Outcomes), the National Skills and Workforce Development SPP and the National Housing and Homelessness Agreement.

In 2022‑23, Tasmania will receive an estimated $1 221.4 million in SPPs and Reform Funding. The estimates throughout the 2022‑23 Budget and Forward Estimates are generally consistent with those published in the 2021‑22 Budget.

It is noted that estimates of SPPs may differ from those published in the Australian Government 2022‑23 Budget due to different assumptions around timing and activity levels.

National Partnership Payments

NPPs are provided to each state and territory through National Partnership Agreements and Project Agreements. The agreements are usually time‑limited and aim to support the delivery of projects, facilitate reforms within the State or reward the State for delivering on national reforms.

In 2022-23, NPPs for Tasmania will be an estimated $693.8 million.

Since the 2021‑22 Budget, additional funding has been provided to Tasmania for Project Marinus, Battery of the Nation, National Water Grid Fund projects and legal services. The 2022‑23 Budget also recognises significant additional funding for Land Transport Infrastructure Projects, including: both Road and Rail components; Roads of Strategic Importance; and major projects such as the New Bridgewater Bridge, Bell Bay and Melba Line Rail projects.

Table 5.4 details the Payments for Specific Purposes for Tasmania in 2022-23 and over the Forward Estimates.

 

Table 5.4:         Commonwealth Payments for Specific Purposes

	2021‑22	2021‑22	2022‑23	2023‑24	2024‑25	2025‑26
	)	Estimated		Forward	Forward	Forward
	Budget	Outcome	Budget	Estimate	Estimate	Estimate
	$m	$m	$m	$m	$m	$m
Specific Purpose Payments1				)
Health
National Health Reform	522.2	520.5	527.3	561.6	598.1	625.0
Education
Quality Schools, Quality Outcomes ‑ Government Schools	228.2	227.9	237.3	245.8	253.3	260.3
Quality Schools, Quality Outcomes ‑ Non‑Government Schools	353.8	367.0	387.8	406.1	420.8	435.7
Total Education Specific Purpose Payments	581.9	594.9	625.1	651.9	674.2	696.0
National Skills and Workforce Development	33.1	33.1	33.4	33.8	34.2	33.6
)
National Housing and Homelessness	35.1	35.1	35.6	34.0	34.3	34.3
Total Specific Purpose Payments	1 172.4	1 183.6	1 221.4	1 281.2	1 340.7	1 388.8
National Partnership Payments2
Health
Community Health and Hospitals Program	35.1	25.0	23.4	17.4	....	....
COVID-19 Public Health Response	....	123.2	....	....	....	....
Essential vaccines	1.1	1.5	2.0	1.9	1.2	....
Public dental services for adults	3.4	3.4	....	....	....	....
Redevelopment of the Royal Hobart Hospital	5.0	22.0	....	....	....	....
Other3	4.3	9.5	2.1	0.8	0.5	....
Total Health National Partnerships	48.9	184.5	27.5	20.1	1.6	....
Education
National School Chaplaincy Program	2.2	2.6	2.2	2.2	2.2	2.2
Preschool Reform Agreement4	6.7	10.0	10.5	9.8	9.8	9.8
Other5	0.2	0.5	0.6	....	....	....
Total Education National Partnerships	9.2	13.1	13.4	12.0	12.0	12.0
Housing
HomeBuilder	47.3	47.5	8.7	....	....	....
Total Housing National Partnerships	47.3	47.5	8.7	....	....	....

Table 5.4:         Commonwealth Payments for Specific Purposes (continued)

	2021‑22	2021‑22	2022‑23	2023‑24	2024‑25	2025‑26
	)	Estimated		Forward	Forward	Forward
	Budget	Outcome	Budget	Estimate	Estimate	Estimate
	$m	$m	$m	$m	$m	$m
Community Services (including Disability)
DisabilityCare Australia Fund	24.1	24.1	25.0	25.9	....	....
Family, Domestic and Sexual Violence Responses	2.0	4.8	2.8	....	....	....
Other6	2.5	2.8	2.0	....	....	....
Total Community Services (including Disability) National Partnerships	28.6	31.7	29.8	25.9	....	....
Skills and Workforce Development
Energising Tasmania	2.7	2.7	2.7	2.0	2.0	....
Job Ready Generation Package - North-West Tasmania	1.3	1.0	0.7	....	....	....
JobTrainer Fund	1.0	....	....	5.0	5.0	....
National Partnership for Skilling Australians Fund	5.0	2.2	5.0	5.0	5.0	....
Revitalising TAFE Campuses Across Australia	5.0	5.0	....	....	....	....
Other7	1.8	4.7	....	....	....	....
Total Skills and Workforce Development National Partnerships	16.8	15.6	8.4	12.0	12.0	....
Infrastructure
Land Transport Infrastructure Projects
Bell Bay Line	....	....	....	....	6.4	8.0
Black Spot Projects	1.4	2.8	2.8	....	....	....
Bridges Renewal program	9.8	2.7	0.6	3.9	....	....
COVID‑19 Infrastructure Stimulus Funding	9.9	11.1	1.8	....	....	....
Heavy Vehicle Safety & Productivity Program	0.2	0.2	3.6	....	....	....
Melba Line Bulk Minerals Rail Hub	....	....	....	3.2	6.4	4.8
New Bridgewater Bridge	18.0	30.8	208.4	224.4	91.6	67.6
Rail Component	41.0	37.0	42.0	18.0	24.0	24.0
Road Component	38.0	42.5	100.0	72.0	165.4	148.5
Roads of Strategic Importance	33.4	70.7	61.7	114.2	143.0	85.4
Tasman Bridge Upgrade	....	....	4.7	25.0	19.0	16.0
Urban Congestion Fund	3.7	1.3	13.3	12.0	17.2	17.0
Launceston City Deal - Tamar River	12.4	1.0	32.6	7.1	0.5	....

 

Table 5.4:         Commonwealth Payments for Specific Purposes (continued)  

	2021‑22	2021‑22	2022‑23	2023‑24	2024‑25	2025‑26
	)	Estimated		Forward	Forward	Forward
	Budget	Outcome	Budget	Estimate	Estimate	Estimate
	$m	$m	$m	$m	$m	$m
Infrastructure (continued)
National Water Grid Fund	....	4.9	5.0	1.3	....	....
Other8	0.5	0.0	0.5	....	....	....
Total Infrastructure National Partnerships	168.0	204.9	476.6	481.1	473.5	371.3
Environment
Battery of the Nation - Tarraleah	....	9.8	13.0	19.2	23.0	....
COVID-19 National and World Heritage Projects	3.4	3.8	1.5	....	....	....
Cradle Mountain Experience	....	....	....	5.7	5.3	19.0
Disaster Risk Reduction	1.0	1.0	1.0	1.0	1.6	....
Management of the World Heritage Values of the Tasmanian Wilderness	5.1	5.8	5.1	5.1	5.1	5.1
National Forestry Plan	....	0.5	....	....	....	....
National Water Infrastructure Development Fund	20.0	3.4	30.3	20.0	20.0	20.0
Pest and Disease Preparedness and Response	1.2	1.6	1.1	0.8	....	....
Project Marinus	2.0	21.2	36.2	26.1	15.0	....
Other9	0.2	1.6	1.4	0.2	....	....
Total Environment National Partnerships	32.9	48.7	89.6	78.1	70.0	44.1
Other Services
Financial assistance to Local Governments - Financial Assistance Grant program10	42.4	107.6	18.6	86.0	88.8	91.8
National Legal Assistance Partnership	12.1	15.8	16.5	16.8	17.1	....
Natural Disaster Relief and Recovery Arrangements	4.8	6.7	1.1	0.1	0.1	....
Supercharged Business Support Package	....	40.0	....	....	....	....
Small Business Regulatory Reform	4.7	4.7	....	....	....	....
Tourism Icon Package - Freycinet	3.0	3.0	3.0	....	....	....
Other11	2.7	1.5	0.4	0.4	....	....
Total Other Services	69.7	179.3	39.7	103.3	105.9	91.8
Total National Partnership Payments	421.3	725.2	693.8	732.6	675.0	519.2
TOTAL PAYMENTS FOR SPECIFIC PURPOSES	1 593.7	1 908.8	1 915.1	2 013.8	2 015.7	1 908.0

 

Notes:

1.    Estimates of Specific Purpose Payments may differ from those published in the Australian Government 2022‑23 Budget due to different assumptions around timing and activity levels. 

2.    Estimates of National Partnership Payments may differ from those published in the Australian Government 2022‑23 Budget due to the application of Australian Accounting Standard AASB 15 Revenue from Contracts with Customers. 

3.    Includes funding for National Bowel Cancer Screening Program, Expansion of BreastScreen Australia Program, Comprehensive Palliative Care, Lymphedema Compression Garments, Suicide Prevention and Improving Health Services in Tasmania. 

4.    The Preschool Reform Agreement replaced the Universal Access to Early Childhood Education Agreement which expired on 31 December 2021.

5.    Includes funding for National Quality Agenda for Early Childhood Education and Care, Supporting Students with Disabilities and Independent Public Schools. 

6.    Includes funding for Home and Community Care for Veterans and the Municipal and Essential Services Transition Fund.

7.    Includes funding for Infection Control Training, Building Australia's Future Workforce through Vocational Education and the Tasmanian Jobs and Investment Fund.

8.    Includes funding for Temporary Assistance for Tasmanian Exporters and the Regional Tourism Infrastructure and Innovation Fund. 

9.    Includes funding for Future Drought Fund projects, Assistance for pest and weed management, Prepared Communities, Bushfire Wildlife and Habitat Recovery and On‑Farm Emergency Water Infrastructure. 

10.  The profile reflects the timing of Financial Assistance Grant funding receipted from the Australian Government.

11.  Includes funding for Provision of Fire Services, Women’s Safety Package ‑ Technology Trials, National Bushfire Mitigation Program, Disaster Resilience and Family Law Information Sharing.    

State Taxation

State Taxation remains strong, reflecting increased receipts since the 2021‑22 Budget, particularly across conveyance duty, payroll tax and land tax.

In 2022-23, State Taxation is estimated to be $1 613.3 million, which represents an increase of $165.0 million compared to the 2021-22 Budget of $1 448.3 million.

In 2020-21, the Government provided land tax relief commencing from 1 July 2021 by increasing the tax‑free threshold for land tax from $24 999 to $49 999, increasing the start of the middle tax band threshold to $50 000 and increasing the top tax band threshold from $350 000 to $400 000.

The Government also announced during the 2021 State Election that it would task the Department of Treasury and Finance to provide options for capping future land tax increases. In response to this analysis, the Government determined that further changes to land tax rates and thresholds would be the most equitable, simple and effective way to provide land tax relief to Tasmanian landowners.

In its 2022 State of the State Address, the Government therefore announced further changes to land tax rates and thresholds to apply from 1 July 2022. The tax-free threshold has been doubled to $100 000 and the upper tax threshold has been increased to $500 000. The tax rate applying to land valued between $100 000 and $500 000 has been reduced from 0.55 per cent to 0.45 per cent.

During 2021‑22, the Government also announced a number of measures to support sustainable housing outcomes across the State and to encourage businesses to employ young Tasmanians, including:

·       extending the eligible period for the first home buyer and pensioner duty concessions for a further 12 months to 30 June 2023 and increasing the dutiable value cap from $500 000 to $600 000, with the new cap to apply retrospectively from 1 January 2022; and

·       extending the payroll tax rebate scheme for youth employees and for apprentices and trainees for two years to 30 June 2024.

The impacts of these measures are included in the 2022-23 Budget and Forward Estimates.

 

The Government has also announced a two per cent foreign investor land tax surcharge to ensure foreign investors in Tasmania contribute their fair share to the Tasmanian economy. The surcharge will apply to residential land that is not used as a principal place of residence and is acquired by a foreign person on or after 1 July 2022.

As announced in the 2021-22 Budget, the Government remains committed to introducing a road user charge for zero and low emission vehicles from 1 July 2027 or when zero and low emissions vehicles make up 30 per cent of all new vehicle sales. This measure is similar to that adopted in other Australian jurisdictions and will ensure that drivers of zero and low emission vehicles contribute their fair share towards the funding of Tasmanian roads. Work is continuing on the key design features of a road user charge for zero and low emissions vehicles in Tasmania as a basis for consultation with stakeholders, with legislation likely to be introduced in 2023. 

Chart 5.4 compares the 2022-23 Budget forecasts to the 2021-22 Budget forecasts.

Chart 5.4:         State Taxation Revenue, 2016‑17 to 2025‑26

Note:

1.    The 2022‑23 Budget includes the 2021‑22 Estimated Outcome for State Taxation revenue. The increase in the 2021‑22 Estimated Outcome compared to the 2021‑22 Budget is mainly due to increases in payroll tax and conveyance duty.

 

State Taxation is forecast to grow by $257.4 million from 2022-23 to 2025-26 (or by a compound annual growth rate of 5.1 per cent), due mainly to growth in the taxation bases for payroll tax, conveyance duty, insurance duty and land tax.  

Conveyance duty forecasts reflect the continued strength in the Tasmanian property market and the growth in residential property prices. The forecasts also reflect the extension to the duty concessions for first home buyers and pensioners downsizing.

Land tax forecasts reflect strong growth in land values and the impact of the Government’s amended land tax rates and thresholds. 

Payroll tax forecasts reflect historical growth rates, supported by continued growth in employment and hours worked.

Insurance duty forecasts reflect higher receipts in 2021-22, largely as a result of increases in insurance premiums. 

While the State Taxation outlook across the Forward Estimates is positive, as detailed in chapter 2 of this Budget Paper, there is considerable uncertainty around the path interest rates will take over the next few years and the impact that tightening monetary policy settings will have on households and businesses, including potential impacts on property values and the demand for goods and services. While the impacts may take some time to emerge, there is a risk that tighter monetary policy settings may constrain State Taxation over the Forward Estimates.

Further information on the revenue impact of the policy changes included in the 2022-23 Budget is detailed in the Policy and Parameter Statement of chapter 4 of this Budget Paper.

Chapter 4 of this Budget Paper provides further information around the risks to State Taxation revenue over the Budget and Forward Estimates.

Table 5.5 provides details of the components of the State Taxation estimates.

Table 5.5:         State Taxation

	2021‑22	2021‑22	2022‑23	2023‑24	2024‑25	2025‑26
		Estimated		Forward	Forward	Forward
	Budget	Outcome	Budget	Estimate	Estimate	Estimate
	$m	$m	$m	$m	$m	$m
Payroll tax	403.9	435.0	451.0	467.6	484.7	502.5
Taxes on property
Land tax	141.7	142.4	161.2	173.3	182.0	191.1
Fire service levies1	75.8	80.9	82.6	86.5	90.6	94.9
Government guarantee fees	13.4	12.7	14.9	20.6	26.1	27.6
Conveyance duty	378.0	427.9	435.3	477.3	505.6	535.6
	608.8	663.9	694.0	757.7	804.3	849.2
Taxes on provision of goods and services
Gambling taxes
Annual Wagering Levy	1.5	1.5	1.6	1.6	1.7	1.7
Casino tax and licence fees	50.8	53.4	52.9	57.9	57.4	56.9
Lottery tax	45.3	45.3	47.8	50.4	53.2	56.1
Point of Consumption Wagering Tax	14.1	14.5	14.6	14.7	14.8	15.0
Insurance duty	106.0	118.5	124.8	127.9	130.1	134.2
	217.8	233.2	241.7	252.7	257.2	263.9
Taxes on the use of goods and services
Vehicle registration fees	48.3	48.3	51.4	53.5	55.6	57.8
Motor vehicle fees and taxes
Motor vehicle duty	59.5	59.5	60.6	64.2	66.2	68.3
Motor tax	100.5	100.5	104.5	109.3	113.7	118.2
Motor vehicle fire levy	9.6	9.6	10.1	10.3	10.5	10.7
	217.9	217.9	226.6	237.3	246.0	255.1
TOTAL STATE TAXATION	1 448.3	1 549.9	1 613.3	1 715.2	1 792.2	1 870.7

Note:

1.    Fire service levies are reported as a tax for the purposes of the Uniform Presentation Framework. However, all revenues go directly to the State Fire Commission.

Tax Expenditure Statement

This statement provides an estimate of the revenue the Government has foregone, or the financial benefit obtained by taxpayers, through concessions, benefits and incentives that the Government provides through the tax system. Tax expenditures have been estimated for the main revenue lines of payroll tax, land tax and conveyance duty.

Methodology

Tax exemptions, rebates and concessions are measured based on the revenue foregone approach, where the value of the revenue that would have been received if the standard rate of tax had been applied is estimated.

The methodology does not allow for any behavioural changes that may result if an exemption, rebate or concession was removed. The approach also does not allow for potential tax rate changes that may result if a tax exemption, rebate or concession were removed.

Where thresholds are removed, the resulting measure of expenditure is labelled a tax‑free threshold in the table below. The tax expenditure, or revenue foregone, associated with providing tax‑free thresholds has been calculated for payroll tax and land tax.

All other expenditure measures included in Table 5.6 are measured as deviations from the current tax settings.

Table 5.6:         Estimated Major Tax Expenditures

 

Table 5.6:         Estimated Major Tax Expenditures (continued)

Notes:

1.    The payroll tax base consists of all wages paid in Tasmania in 2020-21 based on annual adjustment returns lodged by taxpayers and WorkCover data for employers who are not required to register for payroll tax. Actual payroll tax data for 2020-21 has been used as the basis for the 2022-23 estimate as it represents the most complete data source at the time of preparing the 2022-23 Budget.

2.    The reduction in the payroll tax educational institutions exemption in the 2022-23 Budget reflects methodology changes to the impact of the Tax-free threshold on payroll tax exemptions.

3.    The land tax base is all freehold land in Tasmania in 2022-23. Land classified as principal place of residence and primary production land is charged a nil rate of land tax. Property used for religious, charitable or educational purposes is exempt from land tax.

4.    The land tax expenditure estimates for 2022-23 use the new land tax thresholds which commence on 1 July 2022.

5.    The land tax tax-free threshold item has been introduced to estimate the tax‑free threshold revenue foregone as a result of the Government’s changes to land tax rates and thresholds, commencing on 1 July 2022. 

6.    Comprises land owned by the Australian Government, aged care providers and the land tax exemptions for both short-stay accommodation properties and newly built housing that are made available for long-term rental.

7.    The conveyance duty tax base is comprised mainly of concessional or exempt properties transferred in 2021-22 to date. Estimates are based on the expected growth in conveyance duty revenue. Not all exempt transactions are recorded and not all valuation data is available, therefore the estimates are likely to be understated.

8.    The corporate reconstructions expenditure estimate is forecast based on actual exemptions provided in the prior financial year. As there were no eligible corporate reconstructions in 2020-21, no estimate was included in the 2021-22 Budget.

9.    The first home buyer duty concession estimate for 2022-23 reflects the extension of the eligibility period from 30 June 2022 to 30 June 2023 and the increase to the dutiable value of property threshold from $500 000 to $600 000.

10.  The pensioner downsizing duty concession estimate for 2022‑23 reflects the extension of the eligibility period from 30 June 2022 to 30 June 2023 and the increase to the dutiable value of property threshold from $500 000 to $600 000.

11.  Comprises transfers to a special trustee under section 37 of the Duties Act 2001 and instances where there is no change in beneficial ownership.

Other Revenue Sources

Sales of Goods and Services

Revenue from the Sales of Goods and Services is estimated to be $451.1 million in 2022‑23.

Table 5.7 details the major components of revenue from the Sales of Goods and Services.

Table 5.7:         Sales of Goods and Services1

	2021-22	2021-22	2022-23	2023-24	2024-25	2025-26
		Estimated		Forward	Forward	Forward
	Budget	Outcome	Budget	Estimate	Estimate	Estimate
	$m	$m	$m	$m	$m	$m
Departmental Fees and Recoveries
Communities Tasmania	45.3	47.5	45.8	45.8	45.8	45.8
Education	43.3	43.3	46.3	46.9	47.7	48.4
Environment Protection Authority	....	0.1	0.1	....	....	....
Finance-General	1.1	0.4	0.6	0.5	0.2	0.1
Health2	233.9	237.0	242.0	249.4	258.2	260.8
Justice	4.6	4.6	4.7	4.7	4.7	4.7
Marine and Safety Tasmania	4.9	4.9	3.6	6.0	5.1	4.0
Natural Resources and Environment Tasmania	47.8	48.6	51.1	51.9	52.8	53.8
Office of the Governor	0.1	0.2	0.2	0.2	0.2	0.3
Police, Fire and Emergency Management	3.9	3.9	4.0	4.0	4.1	4.1
Premier and Cabinet3	8.4	2.5	2.5	2.5	2.5	2.5
State Fire Commission	6.4	6.4	6.5	6.6	6.8	6.9
State Growth	9.9	9.9	10.0	10.1	10.2	10.3
Tasmanian Audit Office	5.6	5.6	5.8	5.9	5.9	5.9
TasTAFE	24.8	25.7	26.2	28.4	30.6	31.8
	439.8	440.5	449.3	462.9	474.8	479.4
Other Sales of Goods and Services	1.9	1.9	1.9	1.9	2.0	2.0
TOTAL SALES OF GOODS AND       SERVICES	441.7	442.4	451.1	464.8	476.8	481.4

Notes:

1.    The information provided in this table may differ from the Sales of Goods and Services for each agency in Government Services Budget Paper No 2 due to the elimination of inter‑agency transactions during the consolidation process.

2.    The increase in Health in the Budget and across the Forward Estimates primarily reflects an increase in Pharmaceutical Benefits Scheme Medicare revenues resulting from the inclusion of chemotherapy pharmaceuticals.

3.    The decrease in Premier and Cabinet in 2022-23 primarily reflects a revision to the proportion of internally generated revenues, which is eliminated at the General Government Sector level. 

 

Fines and Regulatory Fees

Revenue from Fines and Regulatory Fees is estimated to be $111.2 million in 2022‑23.

Table 5.8 details the major components of Fines and Regulatory Fees.

Table 5.8:         Fines and Regulatory Fees1

	2021‑22	2021‑22	2022‑23	2023‑24	2024‑25	2025‑26
		Estimated		Forward	Forward	Forward
	Budget	Outcome	Budget	Estimate	Estimate	Estimate
	$m	$m	$m	$m	$m	$m
Fines2	23.4	23.3	23.3	23.4	23.5	23.5
Fees
Abalone Licences	6.4	6.4	6.6	6.8	6.9	7.1
Water Licence Fees	2.2	2.2	2.2	2.3	2.3	2.4
Environment Fees	4.2	4.2	4.3	4.4	4.5	4.6
Drivers Licences	7.5	7.5	7.7	7.9	8.1	8.3
Photo Licence Fees	1.8	1.8	1.9	1.9	2.0	2.0
Vehicle Inspection Services Fees	0.1	0.1	0.1	0.1	0.1	0.1
Quarantine Fees	4.1	3.9	4.0	3.9	4.0	4.0
Consumer Affairs Office Regulatory Fees	0.6	0.6	0.6	0.6	0.6	0.6
Magisterial Courts Regulatory Fees	0.7	0.7	0.7	0.7	0.7	0.7
Registrar-General Regulatory Fees	2.0	2.0	2.0	2.0	2.0	2.0
Supreme Court Regulatory Fees	1.2	1.2	1.2	1.2	1.2	1.2
Other Regulatory Fees	53.0	57.0	56.6	61.1	61.9	62.6
	83.8	87.7	87.8	92.9	94.2	95.7
TOTAL FINES AND REGULATORY FEES	107.2	110.9	111.2	116.3	117.7	119.2

Notes:

1.    The information provided in this section may differ from the Fines and Regulatory Fees for each agency in Government Services Budget Paper No 2 due to the elimination of inter-agency transactions during the consolidation process.

2.    Includes fines collected by the Department of Justice, Inland Fisheries Service and the Department of Police, Fire and Emergency Management.

 

Interest Income

Interest income is estimated to be $29.2 million in 2022‑23. The increase in interest income in 2022-23 and over the Forward Estimates primarily reflects higher forecast interest rates and variations in the balances of Cash and deposits and Investments.

Dividend, Tax and Rate Equivalent Income

Dividend, tax and rate equivalent income is estimated to be $336.2 million in 2022‑23. This reflects a decrease of $41.5 million from the 2021-22 Estimated Outcome estimate of $377.7 million. This decrease primarily reflects lower profitability for Hydro Tasmania, as a result of a forecast deterioration in trading conditions in the National Electricity Market.

Dividend, tax and rate equivalent income is expected to decrease further in 2023‑24 and then start to increase over the remainder of the Forward Estimates. This decrease is primarily due to profit forecasts for Hydro Tasmania, reflecting forecast trading conditions in the National Electricity Market, partially offset by increasing returns from Tasmanian Networks Pty Ltd. The increased returns from TasNetworks Pty Ltd are a result of expected improvements in profitability relating to the draft 2024-29 combined transmission and distribution revenue reset and strategic initiatives.

Chart 5.5 shows the total dividend, tax and rate equivalent income over time.

Chart 5.5:         Dividend, Tax and Rate Equivalent Income, 2016‑17 to 2025‑261

Note:

1.    Data is presented on an accruals basis and reflects actual outcomes for 2016‑17 to 2020‑21 and the Estimated Outcome for 2021‑22.

 

Table 5.9 details the dividend, tax and rate equivalent income in 2022-23 and over the Forward Estimates.

Table 5.9:         Dividend, Tax and Rate Equivalent Income1

	2021‑22	2021‑22	2022‑23	2023‑24	2024‑25	2025‑26
		Estimated		Forward	Forward	Forward
	Budget	Outcome	Budget	Estimate	Estimate	Estimate
	$m	$m	$m	$m	$m	$m
Dividends
Aurora Energy Pty Ltd2	10.8	13.1	3.5	14.1	12.7	12.7
Hydro Tasmania3	112.3	112.3	87.0	47.7	31.2	25.3
Motor Accidents Insurance Board4	52.6	48.3	39.9	36.2	37.9	41.9
Sustainable Timber Tasmania	....	1.1	....	....	....	....
Tasmanian Networks Pty Ltd5	15.5	5.1	12.0	10.6	28.4	28.4
Tasmanian Ports Corporation Pty Ltd6	....	....	5.1	7.9	5.5	12.3
Tasmanian Public Finance Corporation	8.5	8.7	7.4	4.9	6.5	7.3
	199.8	188.7	154.9	121.4	122.2	127.9
Mersey Community Hospital Dividend
Dividend for Mersey Community Hospital	89.7	89.7	92.8	96.1	99.4	102.9
	89.7	89.7	92.8	96.1	99.4	102.9
Taxation Equivalents
Aurora Energy Pty Ltd	5.5	4.4	7.6	7.3	6.9	6.9
Hydro Tasmania3	28.8	40.9	23.7	15.2	10.0	12.1
Motor Accidents Insurance Board	12.9	9.2	10.7	8.4	8.2	9.0
Public Trustee	0.1	....	....	....	....	....
Sustainable Timber Tasmania	0.7	0.7	....	....	....	....
Tasmanian Networks Pty Ltd5	26.6	32.1	29.5	35.0	47.5	45.9
Tasmanian Ports Corporation Pty Ltd	3.9	3.9	4.6	3.5	6.8	7.0
Tasmanian Public Finance Corporation	2.2	3.2	2.1	2.8	3.1	3.3
TT-Line Company Pty Ltd7	8.9	....	5.2	....	1.7	10.7
	89.6	94.4	83.5	72.2	84.2	94.7
Rates Equivalents
Hydro Tasmania	4.8	4.9	5.1	5.2	5.3	5.5
	4.8	4.9	5.1	5.2	5.3	5.5
TOTAL DIVIDEND TAX AND RATE EQUIVALENT INCOME	383.8	377.7	336.2	294.9	311.2	331.0

Notes:

1.    Dividend, Tax and Rate Equivalent Income is reported on an accrual basis.

2.    The decrease in Aurora Energy’s dividend in 2022-23 compared to 2021-22, reflects the impact of increased Renewable Energy Certificate prices and volume requirements on its 2021‑22 profit outcome.

3.    The decrease in Hydro Tasmania’s dividend and taxation equivalent returns largely reflects a forecast deterioration in trading conditions in the National Electricity Market.

 

4.    The decrease in the Motor Accidents Insurance Board's dividend in 2022-23 compared to 2021-22, reflects the impact of changes in underlying economic assumptions that have resulted in both a reduction in projected investment income and increased the claims expense. As a result of the established dividend smoothing methodology, dividend returns are expected to be maintained at the 2022-23 level over the Forward Estimates.

5.    The increase in Tasmanian Networks' dividend and taxation equivalent returns over the Forward Estimates reflects the expected improvement in profitability relating to the impact of the draft 2024-29 combined transmission and distribution revenue reset and strategic initiatives.

6.    The increase in Tasmanian Ports Corporation’s dividend in 2025-26 reflects an expected recovery in cruise ship activity and the completion of dredging works.

7.    The increase in TT-Line’s taxation equivalents in 2025-26 reflects the expected return to a pre-COVID-19 pandemic operating environment and the operation of the new vessels.

8.     

Other Revenue

Other Revenue is estimated to be $207.8 million in 2022‑23.

Table 5.10 lists the sources of Other Revenue.

Table 5.10:       Other Revenue1

	2021-22	2021-22	2022-23	2023-24	2024-25	2025-26
		Estimated		Forward	Forward	Forward
	Budget	Outcome	Budget	Estimate	Estimate	Estimate
	$m	$m	$m	$m	$m	$m
Mineral Royalties2	56.6	79.9	56.8	49.4	44.1	34.5
Regional Water Authority Licence Fees	2.3	2.3	2.3	2.3	2.3	2.3
Other Revenue by Agency
Communities Tasmania3	40.8	45.0	30.8	30.8	30.8	30.8
Education	18.7	18.7	19.0	20.6	21.5	21.9
Finance-General	3.9	5.3	4.7	3.8	3.8	3.8
Health	41.6	50.0	39.1	38.9	40.2	39.5
Justice	26.6	29.8	30.1	28.0	28.6	29.1
Natural Resources and Environment Tasmania	2.6	4.5	4.3	4.3	4.3	4.3
Police, Fire and Emergency Management	10.3	10.3	10.3	11.0	10.9	10.3
Premier and Cabinet	3.1	0.1	0.1	0.1	0.1	0.1
State Fire Commission	1.6	1.8	2.1	2.2	2.2	2.3
State Growth	3.2	3.7	3.2	3.2	3.2	3.2
Treasury and Finance	1.3	2.5	1.4	1.4	1.4	1.5
Other	2.8	3.4	3.6	3.6	3.6	3.5
TOTAL OTHER REVENUE	215.3	257.3	207.8	199.5	196.9	186.8

Notes:

1.    The information provided in this table may differ from the Other revenue for each agency in Government Services Budget Paper No 2 due to the elimination of inter‑agency transactions during the consolidation process.

2.    The decline in Mineral Royalties over the Budget and Forward Estimates reflects a number of factors including an easing of commodity prices from recent highs, ore grades and levels of production.

3.    The higher level in 2021-22 primarily reflects the reimbursement by the Victorian Government of Victorian Seasonal Worker hotel quarantine costs that were initially incurred by the State Government.