Appendix B5: Budget Outcome and Summary of Variations

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1 Appendix B5: Budget Outcome and Summary of Variations Budget outcome for The Budget result for is estimated to be a surplus of $2.1 billion compared with a budgeted deficit of $283 million. Total revenue is estimated to be $69.1 billion which is $2 billion or 3.0 per cent higher than the original budget estimate of $67.1 billion. Total expenses are estimated to be $67.1 billion which is $311 million or 0.5 per cent lower than the original budget estimate of $67.4 billion. A detailed explanation of revenue and expense variances by line item is set out in the attached table. Budget Statement B5-1

2 Summary of Variations Category/Agency Budget Revised Variation Comment on Major Variations Revenue from Transactions Taxation Transfer Duty 6,095 7,290 1,195 Increases in the volume of transactions and strong price growth has driven a significant increase in Transfer Duty. Payroll Tax 7,745 7,454 (291) Weaker employment conditions than originally forecast has led to a downwards revision in Payroll Tax. Gambling and Betting 2,090 2,059 (30) A Casino levy payment has been reprofiled to This has been offset in part by stronger revenue from club and hotel gaming devices. Other Duties and Taxes 9,559 9,242 (317) Aggregated net minor variances. Total Taxation 25,489 26, Commonwealth Grants General Purpose GST Revenue Grants 16,758 17, An upward revision to the GST pool and an adjustment for the underestimation of the pool in has meant that GST revenue has exceeded amounts forecast in the Budget. Other General Purpose Grants (7) Minor variance to the Snowy Hydro Limited tax compensation. Total General Purpose Grants 16,810 17, National Agreements Ministry of Health 4,789 4, National Health Reform Agreement (NHRA) revenue from the Australian Government has been updated to reflect the most recent activity levels. Department of Education 1,552 1, National Education Reform Agreement (NERA) revenue from the Australian government has been adjusted to reflect revised enrolment information. Other National Agreements 1,488 1, Aggregated net minor variances. Total National Agreements 7,829 8, B5-2 Budget Statement

3 National Partnership Payments Transport for NSW 1,417 1, Adjustments to the Tintenbar to Ewingsdale and Woolgoolga to Ballina (Pacific Highway) projects has increased the amount of revenue received from the Australian Government in This has been offset in part by the reprofiling of the M1 Productivity package and the Bridges Renewal Program. Ministry of Health Funding for the Health and Hospital Infrastructure National Partnership Payment has been provided early from the Australian Government in instead of in future years. Department of Education The funding profiles of a number of Education NPPs were adjusted in the Australian Government Mid-Year Economic and Fiscal Outlook and Budget. This primarily affects the Skills Reform, National Schools Chaplaincy, Increased Local Decision Making and Trade Training Centres in Schools Agreements by bringing forward revenue from future years. Department of Industry, Skills and Regional Development Natural Disaster Relief and Recovery Arrangements Other National Partnership Payments Total National Partnership Payments 2,632 2, Other Grants and Subsidies (47) A number of negotiations with stakeholders and the Australian Government has resulted in funding for the Water for the Future NPP being moved from to (94) Funding from the Commonwealth has been delayed from to to allow the Commonwealth to perform an audit of natural disaster expenditure across the country Aggregated net minor variances. Other Grants and Subsidies 1,029 1, Aggregated net minor variances. Total Other Grants and Subsidies 1,029 1, Total Grants and Subsidies 28,301 29, Sales of Goods and Services Transport for NSW The new employment arrangements arising from the Government Services Employment Act 2013 have resulted in the collection of additional personnel services revenue from the State Transit Authority and Rail Corp. TAFE Commission (56) Lower revenue has been received for commercial activity and delivery of training to schools, migrant education and industry programs than originally forecast. Roads and Maritime Services Higher project development costs have been recouped for Westconnex. NSW Self Insurance Corporation Higher than expected reinsurance recoveries and movement in reinsurance recoveries receivable in line with actuarial valuations has driven this increase over the original forecast. Other 4,406 4, Aggregated net minor variances. Total Sales of Goods and Services 6,094 6, Budget Statement B5-3

4 Interest Income Crown Finance Entity Interest revenue has increased in line with higher general government cash balances, mainly resulting from divestment of Government assets and better-than anticipated budget outcomes. Workers Compensation (Dust Diseases) Board This increase is due to better than expected performance in investment markets. Other Aggregated net minor variances. Total Interest Income Dividend and Income Tax Equivalent Income from Other Sectors 2,336 2, Other Dividends and Distributions Long Service Corporation Higher distributions are a result of the strong performance of investments. NSW Self Insurance Corporation These distributions are a result of the strong performance of the Treasury Managed Fund investment facility. Other Aggregated net minor variances. Total Other Dividends and Distributions Fines, Regulatory Fees and Other Revenue Roads and Maritime Services Reimbursement from the Australian Government related to the National Heavy Vehicle Regulator has been updated to reflect revised expenditure forecasts. Builders Insurers Guarantee Corporation Additional distributions have been received from the HIH liquidators. Local Land Services Additional Australian Government funding for the Landcare program as part of a fee for service arrangement. Office of State Revenue The amount of unclaimed moneys has been revised since the Budget. Mining Royalties 1,592 1,273 (319) Forecast coal royalties have fallen due to changes to price and volume. Other 1,508 1, Aggregated net minor variances. Total Fines, Regulatory Fees and Other Revenue 3,981 3,892 (89) TOTAL REVENUES 67,113 69,143 2,029 B5-4 Budget Statement

5 Expenses from Transactions Employee Transport for NSW 1,296 1, The new employment arrangements arising from the Government Services Employment Act 2013 has resulted in the Department incurring additional personnel services expense on behalf of the State Transit Authority and Rail Corporation. Department of Finance, Services and Innovation (31) Delays in recruitment and vacant positions across the Office of State Revenue, Safety Return to Work and other divisions have led to lower employee related expenses. Roads and Maritime Services 20 (244) (263) Labour costs associated with construction and other capital projects are reallocated to capital expenditure, not anticipated in the Budget. NSW Self Insurance Corporation (42) A lower average cost of workers compensation claims have allowed a reduction in the claims expense. Other 25,788 25, Aggregated net minor variances. Total Employee 28,351 28,287 (64) Superannuation Transport for NSW The new employment arrangements arising from the Government Services Employment Act 2013 has resulted in the Department incurring additional superannuation liabilities on behalf of the State Transit Authority and Rail Corp. Crown Finance Entity 1,414 1, This has been driven by a gross-up of defined benefit superannuation liabilities for 15% contributions tax in-line with revised accounting standards (AASB 119) and a reduction in the 10 year Commonwealth bond rate used to discount the value of defined benefit superannuation liabilities. Other (62) Aggregated net minor variances. Total Superannuation Interest Cost 1,487 1, Budget Statement B5-5

6 Other Superannuation Transport for NSW The new employment arrangements arising from the Government Services Employment Act 2013 has resulted in the Department incurring additional superannuation liabilities on behalf of the State Transit Authority and Rail Corp. Crown Finance Entity Other superannuation expenses (service cost on defined benefit superannuation liabilities) have increased to $688 million mainly due to gross-up of defined benefit superannuation liabilities for 15% contributions tax in-line with revised accounting standards (AASB 119). A reduction in the expected Commonwealth bond rate used to value defined benefit superannuation liabilities has also contributed to the increase. Other 2,079 2,054 (25) Aggregated net minor variances. Total Other Superannuation 2,698 2, Depreciation and Amortisation Transport for NSW (24) Revised estimates for the amortisation of intangibles reflect the agency's reprofiled ICT investment program. Ministry of Health (29) Revised estimates for the amortisation of intangibles reflect the agency's reprofiled ICT investment program. NSW Police Force (22) The reduction in depreciation has been driven by the reprofiling of police capital expenditure. Other 3,192 3,190 (2) Aggregated net minor variances. Total Depreciation and Amortisation 4,242 4,165 (77) Interest Crown Finance Entity 1,446 1, An increase in costs following assumption of legacy debt has resulted in higher interest expenses. NSW Self Insurance Corporation (43) Unwinding of the associated interest discount on provisions. Workers Compensation (Dust Diseases) Board (47) Unwinding of the associated interest discount on provisions. Other (23) Aggregated net minor variances. Total Interest 2,298 2,268 (30) B5-6 Budget Statement

7 Other Operating New South Wales Electoral Commission Reimbursement fees for political parties arising from the 2015 State Election were originally budgeted to occur in Instead, a number of parties have submitted requests for reimbursement in Transport for NSW 1,542 1, Higher than expected costs for projects managed by TfNSW on behalf of other entities. These costs are fully recouped. Ministry of Health 4,985 4,965 (20) New South Wales provides a reimbursement when residents are treated by a hospital in another state. This underspend is associated with a lower level of cross-border patient expenses. Department of Education 2,012 1,863 (149) This underspend is primarily associated with lower Australian Government funded expenses due to timing adjustments to several National Partnerships. TAFE Commission TAFE figures have been adjusted post the to finalise the separation of TAFE from the Department of Education. Department of Family and Community Services (43) Underspends have been reallocated into Out of Home Care expenses, as well as into future years for the Metro residences transition. Roads and Maritime Services Higher WestConnex project development costs, costs associated with for the National Heavy Vehicle Regulator, and funds from hypothecated weight tax and commercial revenue being allocated to maintenance and a Land and Environment Court decision resulting in higher costs related to the Manly Wharf acquisition. Department of Industry, Skills and Regional Development Office of Environment and Heritage (60) Reduced and reprofiled Australian Government funding in for the Metering State Priority Project and a delay in the Basin Pipes and Healthy Floodplains project has resulted in a reduction in operating expenses Increased expenditure for bush fire related activities. This increase is offset by a corresponding increase in insurance recovery revenue. Other 3,630 3,545 (85) Aggregated net minor variances. Total Other Operating 14,620 14, Budget Statement B5-7

8 Grants and Transfers Current Grants and Transfers Transport for NSW 2,054 2, Redundancy payments and one-off salary maintenance costs of rail entities has resulted in an increase in grant payments to Transport for NSW. Ministry of Health 1,101 1, Grants to Third Schedule Hospitals and Albury Wodonga Health to provide healthcare services has increased, as agreed in-year based on executive negotiations. Crown Finance Entity (202) The rephasing of Restart NSW grants to local government and external entities and technical adjustments to natural disaster and redundancy funding to the PTE sector has reduced current grants and transfers. Department of Education 1,767 1,481 (286) Timing adjustments to Commonwealth National Partnerships has resulted in lower expenses in Office of the NSW Rural Fire Service Department of Family and Community Services Higher levels of fire activity in led to an increase in natural disaster expenditure. 3,241 3,213 (28) Funding for the Remote Indigenous Housing National Partnership has been adjusted by the Australian Government, and is subsequently reflected in the Department's grant expenses. Roads and Maritime Services Recognition of NSW contributions to the National Heavy Vehicle Regulator agreed with the Commonwealth, and funding for grants to off-network road projects and local roads for the Western Sydney Infrastructure Plan. Department of Industry, Skills and Regional Development Hunter Development Corporation (43) Expenses under the State Investment Attraction Scheme and the Regional Industries Investment Fund have been reallocated to future years. 37 (37) Aboriginal land claims, artefact analysis, planning and legal issues have resulted in an delay in the Hunter Infrastructure Investment Fund grants to local councils and the University of Newcastle. NSW Self Insurance Corporation Higher commission costs in relation to Home Building Compensation Fund (HBCF) in line with the increase in gross written premiums for business as a result of building activity upturn in NSW. Other 976 1, Aggregated net minor variances. Total Current Grants and Transfers 10,426 10,179 (247) B5-8 Budget Statement

9 Capital Grants and Transfers Transport for NSW 2,505 2,233 (271) Changes to the profile of a number of rail capital projects. Office of the NSW Rural Fire Service (24) Capital grants for firefighting equipment have been reprofiled into future years. Other (10) Aggregated net minor variances. Total Capital Grants and Transfers 3,274 2,969 (306) Total Expenses From Transactions 67,396 67,085 (311) BUDGET RESULT - SURPLUS/(DEFICIT) (283) 2,058 2,340 Capital Expenditure Department of Premier and Cabinet Additional funding was provided for the fit out for the new 52 Martin Place premises, including a provision for end of lease restoration costs. Service NSW (20) Reprofiling of the Service NSW capital works program to better reflect the requirements for new Service Centres. Transport for NSW 2,963 2,846 (118) A number of various transport related programs have reprofiled expenditure into future years. Ministry of Health 1,170 1, Favourable construction conditions have led to an acceleration of various health projects. Department of Justice (54) Significant underspends in the Alcohol Related Violence program, and a number of delays due to bad weather and poor soil conditions have resulted in reduced capital expenditure in This has been offset in part by the acceleration of some fire and life-saving upgrades for regional and rural courts. Department of Finance, Services and Innovation (56) A delay on the Office of State Revenue accommodation strategy, a reduction in State Fleet purchases, and ICT project timing adjustments has resulted in a reduced capital expenditure in NSW Police Force (33) Capital expenditure on various projects has been reallocated in to future years. Department of Education (46) Delayed project approvals from the Australian Government has resulted in capital expenditure under the Trade Training Centres National Partnership moving into future years. Department of Family and Community Services (43) Costs associated with the unified ERP system and other frontline systems replacement have been reprofiled into future years. Roads and Maritime Services 3,650 3,454 (196) Re-profiling of capital expenditure on various transport related programs, driven in part by adjustments to Australian Government programs. Other (125) Aggregated net minor variances. Total Capital Expenditure 10,203 9,610 (593) Budget Statement B5-9

10 OTHER KEY FISCAL AGGREGATES Sales of Non-Financial Assets Transport for NSW 38 8 (30) Assets previously included in the disposal program will now be retained for future projects. Other Aggregated net minor variances. Total Sales of Non-Financial Assets (13) Depreciation Other 4,242 4,165 (77) Reprofiled capital investment in Transport for NSW, the Ministry of Health and the NSW Police Force. Total Depreciation 4,242 4,165 (77) Change in Inventories 4 (4) (8) Assets Acquired Using Finance Leases Other Movements in Non- Financial Assets Transport for NSW (2,135) (1,876) 259 Reprofiling of non-cash capital grants to Rail Corp. Minister Administering the Environmental Planning and Assessment Act (63) (18) 45 Reprofile of non-cash land grants to local government. Other Aggregated net minor variances. Total Other Movements in Non-Financial Assets (2,049) (1,719) 330 NET LENDING (3,717) (1,196) 2,520 B5-10 Budget Statement