SERVICE PRIORITY REVIEW BACKGROUND PAPER

OVERVIEW OF THE BUDGET PROCESS

This background paper was authored by the Service Priority Review secretariat in consultation with, and to inform the work of, the Service Priority Review Panel. Every effort has been taken to ensure accuracy, currency and reliability of the content. The paper is not intended to be a comprehensive overview of the subject nor does it represent the position of the Western Australian Government. Changes in circumstances after the time of publication may impact the quality of the information.

The following background papers are published in full on the Department of the Premier and Cabinet website: www.dpc.wa.gov.au

1. Agency capability reviews

2. Best practice regulation

3. Overview of the budget process

4. Counterproductive rules and processes

5. Digital transformation

6. Engaging with the community

7. Functional leadership

8. Government boards and committees

9. Government trading enterprises

10. Leader performance management and accountability

11. One sector workforce

12. Privacy and information sharing

13. Procurement of goods and services

14. Public sector employment framework

15. Role of the centre

16. Service design and delivery

17. Successful implementation of reform

18. Whole-of-government targets

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SERVICE PRIORITY REVIEW - BACKGROUND PAPER

Overview of the Budget Process

Introduction

This paper provides an overview of the annual Western Australian State Government Budget process and covers the following areas:

1. Budget process timeline 2. Agency budget submissions 3. Cabinet and Expenditure Review Committee 4. Streamlined budget process 5. Government trading enterprises 6. Asset investment program 7. Royalties for Regions 8. Tariffs, fees and charges 9. Budget papers 10. Budget estimates.

This paper also notes some additional issues that relate to the annual budget:

1. Outcome Based Management (OBM) 2. Asset management.

The overview provided is high level. This paper does not seek to provide a comprehensive set of recommendations around the budget process.

Rather, in the discussion that is provided, the focus is on specific elements of the budget process, OBM and asset management that have been raised as part of the Service Priority Review engagement and consultation process, with the intention of providing options (outlined at the end of this paper) that will support implementation of the broader reforms. These areas include:

• cross-agency collaboration • outcomes-focused service delivery • evaluation and accountability

Western Australian Budget Process

The budget process is, broadly, a year-round exercise with a period of more intense focus in the six months immediately preceding the presentation of the budget to the Legislative Assembly (usually on the Thursday of the second week of May each year).

The budget process allows for submission of bids by agencies (with ministerial endorsement) to address policy priorities and/or financial issues. Analyses and recommended actions on bids are assessed by the Government through the Expenditure Review Committee (ERC) of Cabinet before final approval of the budget settings that

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permits preparation of the formal budget papers in support of Parliamentary scrutiny and approval of the budget.

All State agencies are covered by the budget process which brings together decision-making by government across all ministerial portfolios.

1. Budget Process Timeline

The following key dates and actions are shown for the presentation of an early May Budget. Fixed elections held in March every four years involve similar activities at different timing to support delivery of later post-election Budgets.

Month Process

November Budget circular sent to ministers and agencies – details the annual process and key dates

Mid-December Ministerially endorsed tariffs, fees and charges submissions to be submitted to the Department of Treasury

Mid-January Agencies submit ministerially-endorsed budget submissions to Treasury

February – Early April Budget deliberations by ERC

Early April Budget cut-off date, a statutory requirement of the Government Financial Responsibility Act 2000 – usually one month before budget day

April – Early May Budget paper production

Early May Treasurer presents the budget to the Legislative Assembly and introduces the Appropriation Bills

Late-May to June Legislative Assembly and Legislative Council estimates hearings

June / August Passage of the Appropriation Bills

2. Agency Budget Submissions

Agencies’ budget submissions comprise two main areas:

• Cost and demand pressures, and unavoidable parameter changes

These are agency submissions that relate to changes in the timing of existing programs or projects, accounting treatment changes and changes in underlying economic parameters (inflation or other indexation forecasts, population projections and movements in own-source revenue). These do not relate to any new recurrent or Asset Investment Programs.

• New Budget Bids

These are agency recurrent or infrastructure spending submissions that require new funding. New Budget bids outline options for policy changes.

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Budget submissions must include the following information for new Budget bids and material cost and demand/unavoidable changes:

• priority • financial implications • the inclusion of a sunset clause if the net operating balance impact is above $5 million

in any one year • link to Outcome Based Management (required if the agency’s total cost of service is

increased by $20 million or more across the forward estimates or by 2% in the budget year);

• risks • impact on any other agencies • regions affected • consultation.

3. Cabinet Process and the Expenditure Review Committee

The Cabinet handbook requires that all Cabinet submissions with financial implications should only be considered during the annual budget process1. The only exception to this rule, is when critical matters arise and the Treasurer is satisfied that these matters cannot be met from existing funding allocations. In practice, submissions with financial implications can (and do) emerge outside the budget process.

The Cabinet handbook also notes that Treasury must evaluate all financial impacts prior to a submission being submitted to either Cabinet or the ERC. The handbook states that “the Cabinet secretariat will not normally accept submissions unless the financial implications of the proposal have been evaluated by the Treasury”2.

Figure 1. Flow chart of the process for Cabinet submissions with financial implications3

Cabinet submissions have to clearly outline the consultation undertaken by the lead agency to ensure that all views and information have been gathered. The Cabinet submission summary sheet needs to reflect and record the relevant consultation.

1 Department of Premier and Cabinet. 2017. Cabinet Handbook. Government of Western Australia. Perth, Australia. p4. 2 Ibid. 3 Source: Cabinet Handbook June 2017

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Additionally, Cabinet submissions also need to outline if the proposal has any impact on the agency’s expenditure limit, general government net operating balance, Asset Investment Program, staffing and/or total public sector net debt. All financial costings need to be verified by the chief finance officer and Treasury.

The ERC considers all policy issues with financial implications and recommends a course of action to Cabinet on these issues. For Cabinet submissions with financial implications, Treasury will advise if it believes a submission should be referred to the ERC.

The voting members of the ERC can vary, but as at March 2017 comprises the Treasurer (Chair), Premier, Deputy Premier and four other senior ministers. Treasury and the Department of the Premier and Cabinet (DPC), along with the Offices of the Treasurer and Premier, provide the ERC with policy advice to assist with the decision-making process.

The principal function of the ERC is the formulation of the annual State Budget. Outside the budget process, the ERC monitors the delivery of strategic government commitments, the achievement of the Government’s desired outcomes and other matters with major financial and/or economic impacts.

The ERC determines the focus of the State Budget annually. Key considerations in this exercise are given to:

• government goals • financial targets and overall financial capacity • streamlined budget process (detailed below) • whole-of-government initiatives • tariffs, fees and charges.

Treasury’s advice to the Government on submissions focuses on evidence-based analysis and assessments of value for money and supports the strategic justification and service delivery objectives when considering and evaluating each agency proposal4. There is nothing precluding agencies or ministers from making joint submissions as part of this process.

The deliberations of the ERC are reported back to Cabinet by a submission from the Treasurer, requesting that Cabinet approve the minutes of the ERC meeting.

At the conclusion of the ERC bilateral process (meetings to consider ministers’ budget submissions), Treasury prepares the ‘Budget Cabinet Submission’ which seeks Cabinet’s approval for all decisions made during the bilateral process; agencies’ approved appropriations and expenses; changes to the major whole-of-government financial aggregates; key economic assumptions; expected compliance with the Government’s financial targets; and approval for the drafting, printing and introduction of the associated Appropriation Bills.

Cabinet approval of this submission is generally known as the budget cut-off date, which is the date after which no further decisions can be made or will be incorporated in the budget.

4 Department of Treasury. 2016. Strategic Asset Management Framework – Budget Submissions and Planning Documents. Government of Western Australia. Perth, Australia.

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The cut-off date is a requirement of the Government Financial Responsibility Act 2000 and is the date on which the Treasurer formally notifies the Under Treasurer that the budget process has been completed (as detailed in sections 4 and 12(4) of the Act).

4. Streamlined Budget Process

The streamlined budget process (SBP) was introduced as part of the 2015-16 budget and aims to reduce the number of budget submissions put forward by smaller and lower risk agencies5. The SBP incentivises such agencies to opt out of the normal budget process, which allows the ERC to focus on high-risk and high-value decisions.

SBP agencies receive an incentive of additional recurrent appropriation of 1% in the budget year and exemption from whole-of-government savings measures (unless otherwise determined by the Government). Agencies can decide how the funding can be allocated to recurrent expenses (provided it does not create the need for ongoing funding as it is only approved for one year). Participation in the SBP is voluntary and agencies can choose not to opt in and then follow the normal budget process.

Agencies that do opt in to this process must agree not to submit any proposals during the budget or throughout the budget year that increase net debt in any year. If agencies subsequently submit a budget bid during the financial year, then the 1% incentive will be recouped and all savings measures will be retrospectively applied6.

5. Government Trading Enterprises

Government trading enterprises (GTEs) are required to submit a ministerially endorsed pre-budget statement of corporate intent (SCI) and strategic development plan (SDP) based on budget bids and other prevailing operating settings. Following the budget, GTEs submit ministerially endorsed final SCI and SDPs to the Treasurer for concurrence and SCI’s are tabled in Parliament. GTEs are also required to submit ministerially approved strategic asset plans to Treasury. A strategic asset plan articulates an agency’s asset-related demand drivers and projections, and its service delivery objectives and model over the next 10 years as the foundation for all subsequent asset planning and management.

6. Asset Investment Program

The Asset Investment Program (AIP) outlines planned infrastructure spending of agencies. Spending is broken down into new projects, works in progress and completed works. It also outlines the funding source for the projects. The Strategic Asset Management Framework7

5 A general government agency is eligible for the SBP if its total recurrent operating expenditure is less than $100 million per annum and it passes Treasury financial risk assessment tests. Source: Department of Treasury. 2015. Streamlined Budget Process Policy Principle Agency Guide. Government of Western Australia. http://www.treasury.wa.gov.au/uploadedFiles/_Treasury/Publications/Streamlined_Budget_Process_Policy_Principles_Agency_Guide_November_2015.pdf [25 October 2017]. 6 Department of Treasury. 2017. Streamlined Budget Process Policy Principles – Agency Guide. Government of Western Australia. Perth, Australia. p5. 7 Department of Treasury. 2016. Strategic Asset Management Framework – Budget Submissions and Planning Documents. Government of Western Australia. pp2-6.

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provides guidance to agencies on the development of business cases related to infrastructure projects. As part of the business case, agencies are required to consider the strategic justification, investment decision and funding decision.

As part of the budget process, agencies are required to review project cash flows and the timing of each project to ensure spending projections are accurate. Additionally, savings from appropriation-funded projects are required to be returned to the Consolidated Account and not reallocated to other projects or scope increases without prior approval of the ERC. Approval also needs to be sought for the reallocation of cost savings funded from sources other than the Consolidated Account (e.g. from borrowings from the Western Australian Treasury Corporation).

The WA public sector invests about $5-6 billion into land and infrastructure assets, such as schools and hospitals, each year. The State’s investment supports the delivery of key services and economic growth. The value of the State’s current land and infrastructure portfolio is estimated to be over $40 billion8.

7. Royalties for Regions

The Royalties for Regions (RfR) program9 commenced in December 2008 to facilitate economic, social and business development in regional Western Australia. Each year, 25 per cent of the State’s mining and onshore petroleum royalties are paid into the Royalties for Regions Fund, subject to a $1 billion cap on balances held in the fund. The RfR program is administered by the Department of Primary Industries and Regional Development (DPIRD). It delivers benefits based on the following objectives10:

1. building capacity in regional communities 2. retaining benefits in regional communities 3. improving services to regional communities 4. attaining sustainability 5. expanding opportunity 6. growing prosperity

Agencies need to liaise directly with DPIRD for any new projects and program variations. The annual program (and associated forward estimates) is approved as part of the budget process by the ERC and Cabinet.

As part of the 2017-18 budget process, the Government undertook a comprehensive review of the RfR program. This resulted in $861 million of regional programs being moved from being centrally funded to being funded through the RfR fund. The 2017-18 budget included $4 billion of programs and projects funded by RfR over the forward estimates.

8 Department of Treasury. 2016. Budget Fact Sheet Asset Investment Program. Government of Western Australia. http://static.ourstatebudget.wa.gov.au/16-17/factsheets/asset-investment.pdf [25 October 2017]. 9 Department of Primary Industries and Regional Development. 2017. What is Royalties for Regions? Government of Western Australia. http://www.drd.wa.gov.au/rfr/whatisrfr/Pages/default.aspx [27 September 2017] 10 Ibid

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8. Tariffs, Fees and Charges

Treasurers Instruction 810 requires agencies to conduct reviews of their tariffs, fees and charges (TF&C) on an annual basis. Unless the Government approves otherwise, prices are generally set at levels that reflect the full costs of providing the services. Agencies are required to assess TF&C to determine if they are reflective of the full costs incurred in the provision of services. Agency reviews of TF&C should be supported by a robust costing system that allocates full costs to various activities on the basis of resources consumed.

Director general/chief executive and ministerial certification is required to confirm the agency’s review methodology is accurate and considers the level of cost recovery being achieved. Agencies are required to provide information on the results of their review for consideration by ERC as part of the budget process.

TF&C are comprised of household and non-household TF&C. The household TF&C cover annual State Government charges affecting a representative household including electricity charges, water, sewerage and drainage charges, public transport fees, emergency services levy, third party insurance, motor vehicle registration and driver licence fees. The non-household TF&C covers all other fees and charges.

9. Budget Papers

The current institutional framework governing budget processes is set out in the Government Financial Responsibility Act 2000. This legislation provides that, while ministers and Cabinet make the final decisions, it is the role of the Treasury to develop the information base upon which decisions are taken. Section 12(8) of that Act requires the Under Treasurer to certify that financial projections, economic forecasts and assumptions were prepared by the Under Treasurer – in light of all relevant information available to the Under Treasurer on the budget cut-off date – and that the budget statements set out the implications of all relevant decisions known and the economic assumptions on which the financial projections were based.

The Budget Papers consist of three distinct documents.

1. The Budget Speech (Budget Paper No. 1).

The Treasurer’s speech presenting the annual Budget to the Legislative Assembly and which introduces the Appropriation Bills.

2. The Budget Statements (Budget Paper No. 2).

Agencies financial information and details of OBM and service delivery. Budget Paper No. 2 (agency Budget statements) currently discloses: • overall appropriations, expenses and cash assets • significant issues impacting the agency • recurrent spending changes (funding decisions since the previous Budget or

publication)

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• outcomes, services and key performance information for each service – linked to the Resource Agreement signed by the Minister, Accountable Authority and Treasurer

• Asset Investment Program • financial statements.

This paper supports the Parliamentary debate of the Appropriation Bills through the estimates hearings process.

3. Economic and Fiscal Outlook (Budget Paper No. 3).

This paper analyses the whole-of-government fiscal position and forecast results for the WA public sector. Whole-of-government includes the general government sector, public financial corporations and public non-financial corporations11. Budget Paper No. 3 also evaluates the State’s economic conditions and assesses the budget aggregates against the Government’s financial targets.

10. Budget Estimates Hearings

Agencies are required to attend Legislative Assembly and/or Legislative Council budget hearings once the budget is handed down. These estimates hearings are the consideration in detail stage for the passage of the Appropriation Bills through Parliament. Agencies report back to Parliament on financial and service outcomes at the end of the financial year through the tabling of annual reports.

11. Outcome Based Management

OBM has been a feature of WA public sector governance for appropriation-funded agencies since 1998. Appropriation-funded agencies report on efficiency and effectiveness Key Performance Indicators (KPIs) that are developed through the OBM framework. Agencies identify desired outcomes and key services to deliver those outcomes that are linked to high-level Government goals (see figure 2 below).

The annual budget includes forecast OBM disclosures, outlining the expected cost of providing services approved by the Government.

KPIs are published in agency budget statements with targets for the budget year, and actual and expected results for the previous two years (for comparability purposes). Agencies are expected to account for all expenditure against the KPIs. The KPIs are subsequently audited and published in agencies’ audited annual reports.

Performance standards and accountabilities are set through resource agreements and CEO performance agreements, which outline the Government’s priorities for each ministerial portfolio and Department. Resource Agreements include information on the agency’s OBM, targets for its KPIs and financial targets such as the agency’s total cost of services (i.e. endorsed expense limit), salary expense limit and working cash limit. It is essentially an

11 The total non-financial public sector, comprising of the general government and the public non-financial corporation sectors, is a key focus for credit rating purposes.

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agreement that, within the constraints of targets (like expense limits), the agency and minister agree to providing the necessary resources and services to achieve its outcomes and therefore the Government’s goals.

Overarching policy themes (approved by Cabinet) are developed for the annual budget and can be used to inform the priorities for agencies’ budget submissions to be made through their ministers when the themes are finalised prior to submissions.

Figure 2. Outcome Based Management Framework

12. Asset Management

In WA, agencies are responsible for managing their own assets (often utilising the expertise of the Department of Finance’s Building Management and Works business), with an expectation they should be managed in an effective manner throughout their lifecycle.12 Treasury is responsible for the overarching Strategic Asset Management Framework, which is based on a set of policy principles that are required to be followed by agencies. The Department of Finance has provided information on the way that assets are currently handled which has been included as part of this paper.

Figure 3. Strategic Asset Management Framework Sequence13

12 Public Sector Commission. 2014. Public Sector Commissioner’s Circular 2014-03 Strategic Asset Management Framework. Government of Western Australia. Perth, Australia. 13 Source: Department of Treasury. Year unknown. Strategic Asset Management Framework: Overview. Government of Western Australia. Perth, Australia. p14.

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Inter-jurisdictional comparison

While budget processes in other jurisdictions are broadly similar to WA, the following highlights some differences in approach. It is important to note that some of these examples are national governments, therefore processes may differ based on the different government structures.

New Zealand

The New Zealand Government identifies distinct phases of the budget process14:

1. In the strategic phase, ministers determine their budget strategy for the coming three years. Cabinet considers the government outcomes that it wants to achieve and agrees on the key themes. Ministers then identify priorities for departmental chief executives to guide preparation of budget submissions.

2. In the baseline alignment phase agencies submit budget bids for three years for any parameter adjustments to existing programs.

3. Supplementary estimates are prepared for the current year to seek Parliamentary approval for changes to the approved baseline or new proposals.

4. The Parliamentary phase relates to the passage of relevant legislation through Parliament.

In addition, NZ agencies are increasingly working together to deliver results for the community. To support this focus, the Treasury, together with agencies, has developed the cross-agency funding framework to make funding cross-agency initiatives easier. The framework provides clarity on the range of funding models available, when they should be used and resets expectations about where it is reasonable to pursue particular funding arrangements.

The framework has three broad funding models:

• Cost recovery charges – where an agency buys a service from another agency that recovers costs through a service fee

• Pooled funding – a small group of agencies pool funds from their baselines to share the cost of an initiative to achieve a common goal

• Centrally determined funding – where ministers determine that an activity is to be performed and funded on a cross-agency basis, and determine the funding sources.

The framework includes funding principles, decision tools and key questions to guide agencies through the process of identifying the most appropriate funding models for cross-agency initiatives. Cabinet agreed the cross-agency funding framework in December 2014.15

With regard to financial management, NZ introduced a capital charge in 1991. The capital charge seeks to ensure that prices for goods and services produced by government 14 The Treasury. 2017. Budget Process. New Zealand Government. http://www.treasury.govt.nz/budget/process [6 September 2017]. 15 New Zealand Government. 2015. Cross Agency Funding. http://www.treasury.govt.nz/statesector/betterpublicservices/crossagencyfunding [13 September 2017].

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departments reflect full production costs, including the government's cost of capital. It is noted that Victoria (not covered in the inter-jurisdictional comparison) has also had a capital asset charge since 1998-99. The application of a capital charge is intended to allow comparison of the costs of output production with those of other producers (whether in the public or private sector), and to create an incentive for departments to make proper use of working capital and to dispose of surplus fixed assets16.

The capital charge is levied on the net worth (assets minus liabilities) of departments and some Crown entities. The assets are assessed on the basis that they are valued in financial statements and may include buildings and other fixed assets, cash appropriated for depreciation or held as working capital, inventory, or receivables. The assets represent the opportunity cost of money - what the Government can expect to earn in alternative investments entailing similar risk. It may be thought of as an internal rate of return on the Government's investment in its own entities.

The capital charge has a dual purpose. Firstly, it signals that capital is not costless and should be managed as would any other cost of production. Secondly, it spurs managers to include the cost of capital when comparing the cost of outputs produced by government entities with the cost of obtaining those outputs from outside suppliers. The charge puts internal contracting on the same footing as contracting out and encourages full cost recovery of outputs sold to governmental or private users17.

Like WA, budget forecasts in NZ are also covered by regulation. Section 26W of the Public Finance Act 1989 requires a statement of responsibility to be signed by the Secretary of the Treasury stating that Treasury has used its best professional judgement to supply the Minister of Finance with an economic and fiscal update. The update incorporates the fiscal and economic implications of both government decisions and other circumstances as at budget cut-off date. The Minister of Finance also signs the statement of responsibility accepting responsibility for the accuracy of the disclosures contained in the update.

United Kingdom

The Office for Budget Responsibility was established in 2010 to provide independent and authoritative analysis of the United Kingdom’s public finances. The five main roles of the office relate to18:

• Economic and fiscal forecasting • Evaluating performance against targets • Sustainability and balance sheet analysis • Evaluation of fiscal risks • Scrutinising tax and welfare policy costing

16 New Zealand Government. 2017. Capital Charge. http://www.treasury.govt.nz/publications/guidance/mgmt/capitalcharge [17 October 2017). 17 New Zealand Government. 2015. Charging for Capital. https://www.ssc.govt.nz/node/1332 [17 October 2017]. 18 Office for Budget Responsibility. 2017. What we do. United Kingdom Government. http://budgetresponsibility.org.uk/about-the-obr/what-we-do/ [6 September 2017].

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The Treasury manages public spending through departmental expenditure limits (DEL) and annually managed expenditure (AME)19.

• DEL relates to three-year departmental expenditure plans by instruction from the Finance Minister. Departments cannot exceed the limits they have been set. Departmental budgets are set on an accrual basis. Departments have separate DEL budgets for resources (current expenditure), near-cash (measure that impacts on current balance), administration (expenditure on running central government departments excluding frontline activities) and capital budgets (new investment lending)20.

• AME relates to major unpredictable demand-led expenditure that departments cannot control within existing budgetary limits. Treasury reviews the AME program twice a year with departments (budget and pre-budget report). Treasury ensures that all spending proposals meet the priorities of the Government of the day and criteria for the use of public funds.

The budgeting system allows flexibility, where departments can carry forward unspent DEL provisions into later financial years.

Commonwealth Government

The annual budget process commences in November or December when the Expenditure Review Committee of Cabinet (CERC) considers portfolio ministers’ new proposals and expected major pressures, and establishes the budget priorities.

The CERC develops the budget based on the Government’s political, social and economic priorities from February to April.

The Department of Finance is responsible for ensuring budget estimates, processes and documentation are prepared and delivered in an accurate and timely manner.

The enhanced Commonwealth performance framework was introduced as part of the Public Governance, Performance and Accountability Act 2013. The framework aims to increase the transparency between what was intended and what was delivered21.

Commonwealth entities and companies are required to prepare corporate plans at the beginning of the reporting cycle (by 31 August each financial year). At the end of the reporting cycle, entities are required to produce annual performance statements in their annual reports.

The above documents input into the portfolio budget statements and annual reports, and are the main areas of the enhanced performance framework.

19 Ibid 20 United Kingdom Government. 2017. Treasury Approvals Process for Programs and Projects. https://www.gov.uk/government/publications/treasury-approvals-process-for-programmes-and-projects [6 September 2017]. 21 Department of Finance. 2017. Resource Management. Australian Government. http://www.finance.gov.au/resource-management/ [6 September 2017].

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Queensland

The Queensland Government’s budget process is similar to WA’s.

The budget process comprises22:

• the Cabinet Budget Review Committee (CBRC) identifies key areas for resource allocation based on the Government priorities of the day

• Treasury, with advice from agencies, updates the forward estimates (current and next four years)

• agencies submit budget submissions for amendments to existing activities or new policy proposals

• CBRC meetings review and approve budget submissions • budget documents are prepared following CBRC deliberations • budget day – Treasurer introduces annual appropriation bills to the Queensland

Government.

New South Wales

The financial management transformation project23 was committed to by the Government in 2013. The transformation program is based on the following components:

• new legislation to establish a single framework for public sector financial management • new policies to support performance and resource management • a new financial management that enables end-to-end management of the budget

(planning, tracking expenditure to benchmarking of results).

The transformation program is intended to enable the New South Wales Government to move towards outcome-budgeting over the following years by focusing on the results and performance of government expenditure. This will ensure greater transparency, accountability and value for money.

As part of the outcomes approach, the NSW Treasury aims to24:

• ensure all resource decisions relate to achieving outcomes, greater collaboration among agencies and focus on whole-of-government priorities

• all budget spend will be linked to outcomes to be achieved for the NSW public • more systematic and integrated reviews will be incorporated into the budget process

to ensure continued value for money.

22 Queensland Government. 2017. Economy and Budget. https://www.treasury.qld.gov.au/economy-and-budget/ [6 September 2017]. 23 Department of Treasury. 2017. Financial Management Transformation. New South Wales Government. https://www.treasury.nsw.gov.au/budget-financial-management/financial-management-transformation [6 September 2017]. 24 Ibid.

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Effectiveness of current processes

Budget Forecasts

One of the components of the budget process is ensuring the independence of the assumptions underpinning the economic and financial forecasts provided to the Under Treasurer. In the WA context, where the economy and, in turn, the State’s finances are heavily linked to the cyclical resources sector, it is particularly important that transparency and independence is assured.

In comparison to other jurisdictions, it appears there is potential to strengthen WA’s legislation to ensure the transparency of the assumptions underpinning the economic and financial forecasts prepared by the Under Treasurer and to remove any uncertainty about the independence of this process.

Financial Management

In its current form, the WA budget process does not actively encourage long-term planning, collaboration or accountability, and provides agencies with few incentives to find savings. This has led to the imposition of generally ‘blunt’ sector-wide savings measures.

As noted above, savings from infrastructure projects need to be retained and not reinvested without the explicit approval of the Government. Likewise, switching funding from capital to recurrent requires approval due to the impact on the net operating balance. It can be argued that this encourages ministers and agencies to focus on their portfolios rather than whole-of-government financial outcomes.

Due to the deteriorating financial position of the State, the previous Government implemented a number of cost saving measures (see Appendix 1). While these measures have provided short-term financial savings, they have resulted in limited capacity for agencies to manage their budgets independently. They have also created a culture where agencies look inward at how to reduce the scope of their activities, rather than outward towards whole-of-sector solutions.

There is no simple solution to the structural imbalance in the State’s finances. The only sustainable course of action is to return the State’s finances to an operating surplus position. This can be achieved through raising revenue, reducing expenses, or a combination of both, which will require decisive government action – and difficult decisions – over several budgets.

Notwithstanding, it is acknowledged there is tension between the clear immediate need for control over government expenditure and the need for agency heads to deploy their resources sensibly, flexibly and innovatively to bring about better outcomes for the public. These competing goals are not necessarily irreconcilable, but must be acknowledged at central agency and Cabinet level to ensure that decisions about financial policy do not create unintended consequences, or limit the capacity of public sector entities – who have a better understanding of their own operating needs – to individually manage their budgets.

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There is also a significant opportunity to use budget tools, with appropriate strategic revision, to support positive change and drive the reform agenda proposed in this report.

Outcome Based Management

The Office of the Auditor General (OAG) has raised concerns about the application of the OBM framework by agencies. As mentioned previously, agencies are currently required to account for all expenditure in KPIs. This leads to high-level data being published, which makes it difficult to measure agency performance. Further, the information is often not relevant or useful for decision making.

While the intent of OBM is to provide a performance monitoring and reporting framework that supports and reflects operational management at the agency level, there is a limited link between OBM and program-level information. The information that is reported is high level and does not provide detail of how OBM is used operationally by agencies. Again, this limits its capacity as an evaluation tool and leads to minimal internal management of OBM throughout the year to assess how services are tracking and if targets will be achieved.

One of the key issues in reviewing and updating agency OBM frameworks is a lack of expertise in the identification of outcomes and services and, in particular, the development of meaningful KPIs to measure performance against those outcomes and services over time.

Another issue is the requirement for agency OBM frameworks to be audited by the OAG as prescribed by the Financial Management Act 2006. Agencies may have more detailed data and information, however, it may not be auditable. This may contribute to the OBM being viewed as a compliance process rather than encouraging progress towards achieving meaningful KPIs. WA is the only jurisdiction that requires the OAG (or equivalent) to audit agencies KPIs.

Asset Management

Gaps have been identified in the way land and infrastructure assets are currently managed across government, along with opportunities to deliver significant benefits to the community and the public sector. With regard to the management of assets, the Strategic Asset Management Framework (SAMF) evaluates asset investment proposals and focuses on gaining funds for asset creation.

Anecdotal evidence suggests there is mixed performance by agencies when it comes to implementation of the SAMF, mainly due to a lack of enforcement and oversight of the framework. WA has no prescribed standard or approach for asset management, such as the recognised international industry standard of ISO 55000. This is in contrast to the NZ model which has central leadership and guidance along with a much stronger focus on asset investment and performance.25

25 The Treasury, 2016. Investment Management. New Zealand Government. http://www.treasury.govt.nz/statesector/investmentmanagement [25 October 2017].

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There are a number of other specific issues that arise from the current model which suggest that asset management outcomes for the public sector may be less than optimal, including the following:

• Existing asset data is incomplete, inconsistent and has often been gathered for financial balance sheet purposes rather than for managing the asset performance in an effective manner.

• For the general government sector, the asset ownership role is generally secondary to the primary service delivery role of the agency, so agencies seldom focus on managing and monitoring the performance of assets: - as a consequence, the linkages between levels of service, the condition of the

infrastructure and its performance are not well developed - not knowing the current condition or desired performance of an asset increases the

risk of asset breakdowns, which impacts service delivery and often leaves the public sector with limited and expensive options

• Importantly, the Government as the key decision maker for resource allocation has little insight into how well agencies are undertaking the task of asset management.

The State would directly benefit from an improved approach to asset management. Improving the overall condition of assets and reducing the occurrence of breakdowns would improve the reliability and quality of services delivered to the community. In addition, better asset management is likely to increase citizen safety by avoiding sub-optimal outcomes26. Focusing on the maintenance of assets also creates opportunity to support the Government’s jobs and local content election commitments by creating employment opportunities across the State.

Options for reform

A number of other jurisdictions have implemented measures which attempt to overcome some of the problems outlined above. Establishing departmental expenditure limits, as has occurred in the UK, would ensure agencies are forced to review programs, reprioritise and find efficiencies to meet the expenditure limits approved, thereby increasing accountability.

Within this process, there also needs to be a strong process that ensures agencies make decisions that actively seek to maximise the return on their assets and support the Government’s fiscal objectives. Options include the use of the capital charge by NZ and Victoria.

While WA currently requires agencies to reflect the opportunity cost of capital within their established pricing structures of government services (providing information to government when making decisions on things such as resource allocation, price-setting when charging for services, and benchmarking), this does not create the same direct incentive for agencies to actively manage their own assets within the budget framework. It is noted that WA has previously implemented a capital user charge, however the process was cumbersome and, according to Treasury’s reports, it did not successfully influence agencies’ behaviour with

26 Hiatt, B. 2017. Classroom ceilings fall five times in two years. The West Australian. https://thewest.com.au/news/wa/classroom-ceilings-fall-five-times-in-two-years-ng-b88483345z [25 October 2017].

17

regard to holding and managing assets. Any changes to improve the management of assets by agencies would need to incorporate the lessons from this experience.

Options also exist to create incentives for agencies to better manage their assets within the current system and need to be explored further. For example, savings identified through Treasury’s Asset Investment Program currently need to be returned to Treasury rather than being allocated to other programs. While recognising the current necessity to achieve whole-of-government savings, allowing agencies to retain and reinvest a portion of the savings would create an ongoing inducement for agencies to think more strategically about maximising the value of their assets (noting the risk of creating perverse incentives).

The NSW budget process is currently implementing a cluster/cross-agency approach to managing services that seeks to facilitate greater agency collaboration and improve the links between expenditure and government priorities or targets. Tracking expenditure to outcomes also ensures greater accountability by the public on how government expenditure is being spent. This implementation is still in progress but in principle could improve the value of service delivery.

Enhanced accountability for expenditure and service delivery could be achieved through tighter agency annual reporting (on achievement of expense limits and other financial targets) and implementing a ‘close-out’ estimates hearings process (reviewing key agency outcomes and annual reports), and dealing with annual supplementary funding Bills.

Given the volume of change and reform currently being undertaken within the WA public sector, substantial reform to the budget process in the near term would carry a significant level of risk. The increased workload for agencies to adopt a significantly different budget process could undermine the potential to achieve the improvements being sought. It would also be prudent to allow the NSW transition to occur and be evaluated so that there is a stronger understanding of the elements that might be suitable for WA.

However, an interim measure could be to more actively include collaboration between agencies in the budget process. For example, as part of the current bilateral negotiations, ERC considers budget submissions during bilateral meetings with ministers, with Treasury providing independent advice on the submissions. Changes could be made to this process to consider the submissions from more than one minister by clustering related agencies together. Ministers and their agencies would have to work together prior to submitting to ERC and joint and individual submissions from agencies could be considered at this time. Through this multilateral process, there would be an increased focus on the whole-of-government or cross-agency responses to issues. For example, justice and police submissions could be considered together.

In this regard, there are already signs of increasing agency and/or ministerial collaboration through initiatives such as the justice pipeline model and recently announced machinery of government changes (with multiple ministers responsible for the activities of a single agency such as the Department of Communities).

A more collaborative approach to service delivery (as has been achieved in NZ) would better focus public sector service delivery against key government goals while enhancing value-for-money financial management outcomes.

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Asset Management Reform

Reform of the asset management program could be based on improving the availability of information available on the assets held by agencies and increasing the incentive for agencies to manage and maintain assets as efficiently as possible. Better visibility of the asset portfolio would provide the Government with better oversight and assist planning and evaluation from a whole-of-government perspective (including asset purchasing and disposal), while increasing the ability of agencies to manage maintenance priorities.

Current arrangements, however, provide little incentive for agencies to relinquish assets or to plan to maintain older assets with recurrent funding in lieu of applying for capital funding for new buildings. As such, there is a risk that, even with better information available, the changes sought would not be achieved.

It is noted that proposals for an Infrastructure WA, an election commitment of the Government, are designed to address a number of these asset management issues, including the establishment of a 20-year State infrastructure plan which would require a comprehensive review of the current asset base.

Reforming Outcome Based Management

The lack of transparency of agency activities would be improved through reform of the OBM framework and through measuring the performance of specific ‘programs’ of agency expenditure (i.e. expenditure aimed at achieving a single specific intent), rather than measuring the achievement of agency-level desired outcomes and efficiency of services.

A medium-term reform of the OBM could be implemented to create a framework that encourages and supports:

• collaborative behaviour between agencies • better evaluation and reporting of outcomes, including - the collection of more meaningful data that can accurately measure performance

and allow for the evaluation of services - more readable and usable reporting on OBM to ensure better accountability and

evaluation of performance.

Any change to OBM will need to incorporate whole-of-government targets, which are designed to be achieved through cross-agency collaboration, as well as allow for cross-agency collaboration more generally. In particular, agencies’ targets and KPIs under the OBM framework need to be more broadly reviewed to ensure that the targets are realistic, appropriate, informed by external benchmarks for similar activities in other jurisdictions, and by trends in performance from prior periods (where possible).

It is likely that legislative reforms would be required to allow for a revised focus away from delivery of services. Amending the Financial Management Act 2006 to remove the clause on the OAG auditing agencies’ KPIs would also be a key component of reform of the OBM. As noted earlier, WA is the only jurisdiction with this legislation, which has contributed to the compliance nature of KPIs in their current form. Agencies and the relevant minister should be accountable for agencies’ KPIs and the achievement of targets (similar to other

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jurisdictions). This would allow agencies to report in a way that enables more meaningful evaluation of performance against outcomes.

In the shorter-term, support for cross-agency collaboration could also be encouraged through higher profile disclosure in budget papers. This would act to highlight work undertaken to achieve whole-of-government targets, as well as draw out relevant examples of collaborative working across the sector (such as the justice pipeline model, which was outlined in the 2017-18 budget)27. This simple change is easily implemented and can significantly increase the profile, and undertaking, of cross-agency collaboration.

If a stronger signal for collaborative approaches to service delivery is needed, then, similar to the New Zealand Government’s approach, a cross-agency funding framework could be developed that explicitly describes the existing funding mechanisms available to support working across agencies.

Evaluation and accountability

The importance of evaluation and the need for agencies to have accountability around this has been addressed in other background papers.

To complement the Government’s goals, targets and priorities and to strengthen the culture of evaluation across the public sector, a schedule for evaluation reports to the Government is also an option. This could involve, for example, developing a list of key programs, particularly in social services, to be incorporated into a rolling evaluation schedule.

Such a schedule could be developed in partnership with Treasury and agencies and include agreed outcomes or milestones of programs. Implementation of this would determine how programs have performed; whether results have been achieved; if programs have delivered value for money; whether improvements need to be made; or if programs should cease if they are not delivering the intended outcomes. It is also important that community expectations around programs are managed appropriately.

It is noted that Treasury’s program evaluation unit has developed advice and an evaluation guide for agencies that should be considered in any development of a process for rolling evaluations. The evaluation guide is designed to help provide consistency across evaluations, improve cost effectiveness of programs, promote accountability and encourage a culture of evaluation and continuous improvement28.

A potential process for continued evaluations would require agencies to submit progress reports to Treasury for key programs to be evaluated. Once completed, the report would be approved by the agency chief executive and the Under Treasurer. Final reports would then be submitted to the Government, or through the previously mentioned close-out estimates hearings process, and should inform future funding decisions.

27 Government of Western Australia. 2017. Criminal justice sector modelling to reshape WA's justice system. https://www.mediastatements.wa.gov.au/Pages/McGowan/2017/09/Criminal-justice-sector-modelling-to-reshape-WAs-justice-system.aspx [25 October 2017]. 28 See Program Evaluation Western Australia website for more information: http://programevaluation.wa.gov.au/Home

20

References

Department of Finance. 2017. Resource Management. Australian Government. http://www.finance.gov.au/resource-management/ [6 September 2017].

Department of Premier and Cabinet. 2017. Cabinet Handbook. Government of Western Australia. Perth, Australia. p4.

Department of Primary Industries and Regional Development. 2017. What is Royalties for Regions? Government of Western Australia. http://www.drd.wa.gov.au/rfr/whatisrfr/Pages/default.aspx [27 September 2017].

Department of Treasury. 2015. Streamlined Budget Process Policy Principle Agency Guide. Government of Western Australia. http://www.treasury.wa.gov.au/uploadedFiles/_Treasury/Publications/Streamlined_Budget_Process_Policy_Principles_Agency_Guide_November_2015.pdf [25 October 2017].

Department of Treasury. 2016. Strategic Asset Management Framework – Budget Submissions and Planning Documents. Government of Western Australia. pp2-6.

Department of Treasury. 2016. Budget Fact Sheet Asset Investment Program. Government of Western Australia. http://static.ourstatebudget.wa.gov.au/16-17/factsheets/asset-investment.pdf [25 October 2017].

Department of Treasury. 2016. Strategic Asset Management Framework – Budget Submissions and Planning Documents. Government of Western Australia. Perth, Australia.

Department of Treasury. Year unknown. Strategic Asset Management Framework: Overview. Government of Western Australia. Perth, Australia.

Department of Treasury. 2017. Financial Management Transformation. New South Wales Government. https://www.treasury.nsw.gov.au/budget-financial-management/financial-management-transformation [6 September 2017].

Department of Treasury. 2017. Streamlined Budget Process Policy Principles – Agency Guide. Government of Western Australia. Perth, Australia. p5.

Government of Western Australia. 2017. Criminal justice sector modelling to reshape WA's justice system. https://www.mediastatements.wa.gov.au/Pages/McGowan/2017/09/Criminal-justice-sector-modelling-to-reshape-WAs-justice-system.aspx [25 October 2017].

Hiatt, B. 2017. Classroom ceilings fall five times in two years. The West Australian. https://thewest.com.au/news/wa/classroom-ceilings-fall-five-times-in-two-years-ng-b88483345z [25 October 2017].

New Zealand Government. 2015. Charging for Capital. https://www.ssc.govt.nz/node/1332 [17 October 2017].

New Zealand Government. 2015. Cross Agency Funding. http://www.treasury.govt.nz/statesector/betterpublicservices/crossagencyfunding [13 September 2017].

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New Zealand Government. 2017. Capital Charge. http://www.treasury.govt.nz/publications/guidance/mgmt/capitalcharge [17 October 2017).

Office for Budget Responsibility. 2017. What we do. United Kingdom Government. http://budgetresponsibility.org.uk/about-the-obr/what-we-do/ [6 September 2017].

Public Sector Commission. 2014. Public Sector Commissioner’s Circular 2014-03 Strategic Asset Management Framework. Government of Western Australia. Perth, Australia.

Queensland Government. 2017. Economy and Budget. https://www.treasury.qld.gov.au/economy-and-budget/ [6 September 2017].

The Treasury. 2016. Investment Management. New Zealand Government. http://www.treasury.govt.nz/statesector/investmentmanagement [25 October 2017].

The Treasury. 2017. Budget Process. New Zealand Government. http://www.treasury.govt.nz/budget/process [6 September 2017].

United Kingdom Government. 2017. Treasury Approvals Process for Programs and Projects. https://www.gov.uk/government/publications/treasury-approvals-process-for-programmes-and-projects [6 September 2017].

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Appendix 1 - Revenue and Savings Measures Since from 2008 to 2020-2129

GENERAL GOVERNMENT REVENUE $M 2009-10 BUDGET MEASURES

LOWER TAX RELIEF MEASURES 127

ECONOMIC AUDIT STAGE 1 424

2009-10 MID-YEAR REVIEW MEASURES -

TRANSFER DUTY ON NON-REAL PROPERTY 355

HARMONISATION OF PAYROLL TAX GROUPING PROVISIONS 156

2011-12 BUDGET MEASURES -

IRON ORE 'FINES' PHASED REMOVAL OF CONCESSIONAL RATE 2,019

GTE 5% EFFICIENCY DIVIDEND (REVENUE IMPACT) 277

2012-13 BUDGET CORRECTIVE MEASURES -

INCREASING THE LOAN GUARANTEE FEE TO 0.7% 125

GTE EFFICIENCY DIVIDEND 245

PROVISION FOR HIGHER RATE OF RETURN ON PORTS 85

2012-13 MID-YEAR REVIEW CORRECTIVE MEASURES -

REVISED DIVIDEND ARRANGEMENTS 149

REFUND OF OVERPAID GST 50

2013-14 BUDGET FISCAL ACTION PLAN MEASURES -

DEFERRED ABOLITION OF TRANSFER DUTY ON NON-REAL PROPERTY 527

LAND TAX (12.5% INCREASE IN RATES) 338

HALVE PRIVATE VEHICLE CONCESSION 155

SCHOOL FEES FOR CHILDREN OF 457 VISA HOLDERS 120

TAX ADMINISTRATION PACKAGE 454

PROGRAM-LEVEL SAVINGS MEASURES 44

2014-15 BUDGET REVENUE AND SAVINGS MEASURES -

PORT INTERIM DIVIDEND 116

ABOLITION OF MOTOR VEHICLE -

REGISTRATION FEE CONCESSION 189

INCREASE PERTH PARKING LEVY 73

CHANGES TO THE FIRST HOME BUYER -

29Information provided by the Department of Treasury, compiled from relevant WA Budget Papers. Total general government operating impact generally reflects the forecasts published for the forward estimates period at the time of the announced measures.

23

TRANSFER DUTY CONCESSION 222

CHANGES TO LAND TAX RATES 334

LANDFILL LEVY INCREASES 137

2014-15 MID-YEAR REVIEW REVENUE MEASURES -

ENERGY SECTOR INTERIM DIVIDENDS 139

AMENDMENTS TO PAYROLL TAX SCALE 418

2015-16 BUDGET MEASURES -

REVISED LAND TAX SCALE 826

LOAN GUARANTEE FEES (PUBLIC UNIVERSITIES, LOCAL GOVERNMENTS, KEYSTART CUSTOMERS)

149

AGENCY EXPENDITURE REVIEWS -33

2015-16 MID-YEAR REVIEW REVENUE MEASURES -

AGENCY EXPENDITURE REVIEWS -

- CULTURE AND THE ARTS PORTFOLIO -

- DEPARTMENT OF FINANCE 106

INSURANCE COMMISSION OF WESTERN AUSTRALIA - 2014-15 DIVIDEND VARIATION

93

WESTERN POWER INFRASTRUCTURE REDUCTION (DIVIDEND IMPACT) -16

2016-17 BUDGET MEASURES

REVISED WAGES POLICY (REVENUE IMPACT) -25

TOTAL REVENUE IMPACT 8,378

GENERAL GOVERNMENT EXPENSES $M 2009-10 BUDGET MEASURES

ELECTION COMMITMENTS -252

3% EFFICIENCY DIVIDEND -1,755

ECONOMIC AUDIT STAGE 1 -574

ELECTRICITY TARIFF CHANGES -742

CAPPING THE FIRST HOME OWNERS' GRANT -4

2009-10 MID-YEAR REVIEW MEASURES -

ROYALTIES FOR REGIONS (RFR) -

SENIORS COST OF LIVING REBATE -26

FRIEND IN NEED EMERGENCY -

2011-12 BUDGET MEASURES -

24

GTE 5% EFFICIENCY DIVIDEND (EXPENSE IMPACT) -80

VOLUNTARY SEPARATIONS OFFERS -18

DEFERRAL OF EASTERN GOLDFIELDS REGIONAL PRISON -35

DEFERRAL OF WEST PILBARA DESALINATION PLANT -129

$300 MILLION GLOBAL SAVINGS -300

2012-13 BUDGET MEASURES -

GENERAL GOVERNMENT EFFICIENCY DIVIDEND -1,899

DEFER RFR SPENDING -15

FTE CAP IN 2013-14 -230

ASSUMED OUTYEAR FTE GROWTH OF 1.5% -182

INCREASING THE LOAN GUARANTEE FEE TO 0.7% - GRANTS -

TO PUBLIC CORPORATIONS 37

LOWER DEBT SERVICING COSTS -216

2012-13 MID-YEAR REVIEW CORRECTIVE MEASURES -

FTE CEILING REDUCTION -108

CAPPING LEAVE LIABILITIES -307

REDUCED PROCUREMENT EXPENDITURE -63

DELAYED GRANTS EXPENDITURE -

NATURAL RESOURCE MANAGEMENT PROGRAM -

LOW EMISSIONS ENERGY DEVELOPMENT FUND -

LIGNOR FINANCIAL ASSISTANCE AGREEMENT -6

BROWSE LNG PRECINCT REGIONAL BENEFITS PACKAGE -

DEFERRAL OF ROYALTIES FOR REGIONS RECURRENT EXPENDITURE - 2012-13

-

REDUCED ROYALTIES FOR REGIONS RECURRENT EXPENDITURE - 2013-14 -53

2013-14 BUDGET FISCAL ACTION PLAN MEASURES -

PUBLIC SECTOR WORKFORCE REFORM -2,869

PROGRAM EVALUATION -150

PROGRAM-LEVEL SAVINGS MEASURES -422

PUBLIC TRANSPORT COST RECOVERY -84

TEMPORARY PROCUREMENT AND ADVERTISING FREEZE -84

INTEREST SAVINGS -286

2013-14 MID-YEAR REVIEW EXTENDED FISCAL ACTION PLAN -

REDUCED PROCUREMENT EXPENDITURE -92

25

BROWSE PROJECT FUNDING AMENDMENTS -88

RENEGOTIATED STATE ROAD FUNDS TO LOCAL GOVERNMENT AGREEMENT

-70

2014-15 BUDGET REVENUE AND SAVINGS MEASURES -

RECRUITMENT FREEZE -21

ADVERTISING FREEZE -7

15% PROCUREMENT REDUCTION -169

MANAGEMENT OF ROYALTIES FOR REGIONS -57

INTEREST SAVINGS FROM MEASURES -118

2014-15 MID-YEAR REVIEW MEASURES -

1% EFFICIENCY DIVIDEND -424

REVERSAL OF PROVISION FOR PROGRAM EVALUATION SAVINGS 165

15% BASE REDUCTION IN 'NON-ESSENTIAL' PROCUREMENT -412

15% REDUCTION IN MAIN ROADS' MAINTENANCE EXPENDITURE -153

TARGETED VOLUNTARY SEPARATION SCHEME -226

EFFICIENCY MEASURES FOR GOVERNMENT TRADING ENTERPRISES -346

WORKFORCE RENEWAL POLICY -1,272

ICT SAVINGS AND REFORM (NET SAVINGS) -85

INTEREST IMPLICATIONS -151

2015-16 BUDGET MEASURES -

AGENCY EXPENDITURE REVIEWS -170

ABOLISH FIRST HOME OWNER GRANT FOR ESTABLISHED HOMES -109

ABOLISH CELLAR DOOR SUBSIDY -11

REFORM OF SOCIAL CONCESSIONS -199

2015-16 BUDGET ADJUSTMENTS TO PAST MEASURES30

REVISED WORKFORCE RENEWAL POLICY

- REMOVE PREVIOUS GLOBAL 1,272

- ALLOCATION TO AGENCIES -1,329

2015-16 MID-YEAR REVIEW EXPENSE MEASURES -

AGENCY EXPENDITURE REVIEWS -

- FINANCE 2

- CULTURE AND THE ARTS -3

30 Includes the 3% efficiency dividend, provisioned in the 2008-09 PFPS, allocated to agencies in the 2008-09 Mid-Year Review, and allocated to services in the 2009-10 Budget.

26

- TRANCHE 2 -123

SALARIES UNDERSPENDING -496

NON-SALARY EXPENSE INDEXATION -185

GOVERNMENT REGIONAL OFFICER HOUSING REFORMS -28

2016-17 BUDGET MEASURES -

REVISED WAGES POLICY:

- SALARIES AND SUPERANNUATION -813

- PUBLIC CORPORATION SUBSIDIES -12

AGENCY EXPENDITURE REVIEWTRANCHE 3 -461

2016-17 MID-YEAR REVIEW - ADJUSTMENTS TO PAST MEASURES (B)

AGENCY EXPENDITURE REVIEW SAVING REDUCTIONS FOR:

- PUBLIC TRANSPORT AUTHORITY (DIRECTED TO STAGE 2 AER) 28

- REGIONAL DEVELOPMENT (EXCLUDE RFR GRANT PAYMENTS) 14

- DISABILITY SERVICES (UPDATED NFP INDEXATION FUNDING) 6

- GOLDFIELDS-ESPERANCE DEVELOPMENT COMMISSION (EXCLUDE RFR GRANT PAYMENTS)

0

TOTAL EXPENSE IMPACT -16,997

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