treasurer's annual financial report 2009-10 · deteriorated compared with the 200809 results,...
TRANSCRIPT
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2009-10 Treasurer’s Annual Financial Report i
Treasurer’s Annual Financial Report 2009-10
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2009-10 Treasurer’s Annual Financial Report i
CONTENTS
1 Introduction 1
2 Executive Summary 3
General Government Outcomes 4
Interim Fiscal Strategy Overview 8
3 Treasurer’s Annual Financial Statements 17
Certification of Treasurer’s Annual Financial Report 18
Opinion of the Auditor-General 19
Statement of Comprehensive Income for the year ended 30 June 2010 21
Statement of Financial Position as at 30 June 2010 23
Statement of Cash Flows for the year ended 30 June 2010 25
Statement of Changes in Equity for the year ended 30 June 2010 27
Notes to the Treasurer’s Annual Financial Statements 29
4 Public Account Statements 117
Certification of Public Account Statements 2009-10 118
Opinion of the Auditor-General 119
5 Loan Council Outcome 2009-10 135
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ii 2009-10 Treasurer’s Annual Financial Report
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2009-10 Treasurer’s Annual Financial Report 1
1 INTRODUCTION The 2009-10 Treasurer’s Annual Financial Report is prepared in accordance with section 26 of the Financial Management and Audit Act 1990, which requires the tabling of the Report by 31 October in each year.
The Report contains the following information:
• Section 2 provides an Executive Summary highlighting progress against the Key Fiscal Strategy Measures contained within the 2009-10 Budget Papers and commentary on significant variations to the Budget outcomes.
• Section 3 presents the General Government and Total State Sector financial statements for 2009-10 in accordance with AASB 1049 Whole-of-Government and General Government Sector Financial Reporting. The statements also align with the requirements of the Uniform Presentation Framework.
• Section 4 summarises details for the transactions and balances within the Public Account.
• Section 5 presents the Loan Council Outcome for 2009-10 in accordance with the requirements of the Uniform Presentation Framework.
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2 2009-10 Treasurer’s Annual Financial Report
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2009-10 Treasurer’s Annual Financial Report 3
2 EXECUTIVE SUMMARY Features
• The 2009-10 outcome for the State indicates a strong recovery from the prior year and the impact of the global slowdown. The 2009-10 outcomes are an improvement on the original Budget outlook and consistent with the Key Interim Fiscal Strategy targets.
• Key fiscal outcomes for the General Government Sector are:
- Net Operating Surplus of $18 million, an increase of $96 million from 2008-09;
- Fiscal Deficit of $291 million, a deterioration of $196 million from 2008-09; and
- Net Debt is negative $748 million, a decline of $234 million from 30 June 2009.
• Key fiscal outcomes for the Total State Sector are:
- Net Operating Surplus of $192 million, an increase of $172 million from 2008-09;
- Fiscal Deficit of $483 million, a deterioration of $33 million from 2008-09; and
- Net Debt of $962 million, a decline of $555 million from 30 June 2009.
• Net Worth for the Total State and General Government Sectors as at 30 June 2010 is $13 065 million. This has increased from $11 650 million at 30 June 2009.
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4 2009-10 Treasurer’s Annual Financial Report
GENERAL GOVERNMENT OUTCOMES The performance of the General Government Sector during 2009-10 is better than forecast in the 2009-10 Budget. The improvement has been impacted by one-off Australian Government Funding. While Net Debt deteriorated compared with the 2008-09 results, the outcome is a significant improvement on the 2009-10 Budget estimate primarily due to higher than forecast cash holdings.
Tables 1 and 2 summarise the General Government Sector key fiscal aggregates for 2009-10. The tables present the 2009-10 outcomes and the forecasts that were presented in the 2009-10 Budget Papers, Mid-Year Financial Report, 2010-11 Budget Papers and the Preliminary Outcomes Report.
Statement of Comprehensive Income
Table 1: Summary Statement of Comprehensive Income
2008-09
Actual
2009-10 Original Budget
2009-10 Mid-Year Revision
2009-10 Estimated Outcome
2009-10 Preliminary
Outcome
2009-10
Actual
$m $m $m $m $m $m
Revenue from transactions 4 286 4 216 4 517 4 610 4 642 4 602
Expenses from transactions 4 365 4 333 4 580 4 586 4 573 4 584
Net Operating Balance (78) (117) (63) 24 70 18
Less Net acquisition of non-financial assets 17 452 247 277 311 309
Equals Fiscal Balance – Surplus/(Deficit) (95) (569) (310) (254) (242) (291)
The 2009-10 Net Operating Balance of a $18 million surplus is an improvement of $135 million from the original Budget estimate of a $117 million deficit. The result is also an improvement of $96 million from the 2008-09 deficit of $78 million.
The 2009-10 Fiscal Balance of a $291 million deficit is an improvement of $278 million from the original Budget estimate of a $569 million deficit. The result is a decline of $196 million from the 2008-09 deficit of $95 million. This is due to the significant increase in infrastructure spending that occurred in 2009-10.
General Government Sector Revenue from transactions of $4 602 million increased by $316 million from the 2008-09 amount of $4 286 million. Additional revenue is primarily due to increases in:
• Grants revenue of $405 million to $3 110 million. This is a result of additional funding provided by the Australian Government as part of the Nation Building - Economic Stimulus Plan; and
• Taxation revenue of $68 million to $872 million. The increase is due to additional Payroll tax of $12 million, Land tax of $9 million, Guarantee fees of $9 million, Other motor vehicle fees and taxes of $9 million, Lottery tax of $4 million and introduction of the Totalizator wagering levy of $6 million.
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2009-10 Treasurer’s Annual Financial Report 5
These increases are partially offset by decreases in:
• Sales of goods and services of $14 million to $289 million, which is due to a revision in classification of revenue items;
• Interest income of $23 million to $45 million due to a reduction in the Cash held in the Public Account; and
• Dividend, tax and rate equivalent income of $131 million to $79 million primarily due to a reduction in Income tax equivalents of $116 million and a reduction in Dividends of $15 million.
Chart 1 shows the percentage breakdown of Revenue categories received during 2009-10 for the General Government Sector. The chart shows that Grants revenue of $3 110 million or 68 per cent of General Government revenue is the primary revenue centre, followed by Taxation revenue of $872 million or 19 per cent.
Chart 1: General Government Revenue Categories
Grants 68%
Sales of goods and services 6%
Taxation 19%
Fines and regulatory fees 2%
Other revenue 2%
Dividend, tax and rate equivalent income 2%
Interest income 1%
General Government Sector Expenses from transactions of $4 584 million increased by $219 million from the 2008-09 amount of $4 365 million. The main contributors to this increase are:
• An increase in Employee expenses of $94 million to $1 957 million. This is primarily due to additional costs for the Department of Health and Human Services ($61 million), the Department of Education and the Post Year Ten Statutory Authorities ($30 million) and the Department of Justice ($2 million);
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6 2009-10 Treasurer’s Annual Financial Report
• An increase in Grant and subsidy expenses of $128 million to $935 million. The increase is primarily due to:
− an increase of $78 million in grants provided to Non-Government Schools; and
− an increase of $22 million in grants provided by the Department of Health and Human Services; and
• A decrease in Superannuation expenses of $24 million to $233 million, partly offset by an increase in the Nominal superannuation interest expense of $15 million. These variations reflect the latest actuarial assessment of the Government’s Superannuation liability.
Chart 2 illustrates the breakdown of General Government Sector Expenses by Transaction for 2009-10. Employee expenses are the main category representing 43 per cent of total expenses. Grants and subsidies represent 20 per cent of total expenses and was impacted by the Stimulus Package provided by the Australian Government in 2009-10.
Chart 2: General Government Expense Categories
Supplies and consumables
21%
Employee expenses43%
Grants and subsidies expenses
20%
Nominal superannuation interest expense
5%Depreciation
5%
Superannuation5%
Other expenses1%
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2009-10 Treasurer’s Annual Financial Report 7
Statement of Financial Position
Table 2: Summary Statement of Financial Position
2008-09
Actual
2009-10 Original Budget
2009-10 Mid-Year Revision
2009-10 Estimated Outcome
2009-10 Preliminary
Outcome
2009-10
Actual
$m $m $m $m $m $m
Financial assets 6 578 5 843 8 245 8 478 8 377 8 102
Non-financial assets 10 203 10 821 10 642 10 701 10 962 10 930
less Liabilities 5 131 5 552 5 315 5 305 5 930 5 966
Equity 11 650 11 112 13 572 13 874 13 410 13 065
Net Worth 11 650 11 112 13 572 13 874 13 410 13 065
Net Financial Worth 1 447 292 2 930 3 173 2 448 2 135
Net Financial Liabilities 2 658 3 674 3 057 2 848 3 710 3 814
Net Debt (982) (487) (693) (765) (755) (748)
General Government Sector Net Worth is $13 065 million at 30 June 2010, an increase of $1 415 million from the 30 June 2009 balance of $11 650 million. Significant movements are:
• Financial assets increased by $1 524 million to a balance of $8 102 million at 30 June 2010. The increase is largely due to an increase in the Equity investment in PNFC and PFC sectors of $1 845 million primarily due to the inclusion of the net assets for water and sewerage entities as a result of the Australian Bureau of Statistics decision to classify these three local government owned entities as part of the PNFC Sector, together with the establishment of Tasmanian Railway Pty Ltd; and
• Non-Financial Assets increased by $727 million to a balance of $10 930 million at 30 June 2010 as a result of:
- an increase in the value of Land and buildings of $412 million due to an increase in capital investment by the Department of Education ($191 million); revaluation of land and buildings by the Department of Primary Industries, Parks, Water and Environment ($75 million) and the Department of Education ($72 million); and the recognition of Rail Corridor Land by the Department of Infrastructure, Energy and Resources ($51 million); and
- an increase in Infrastructure assets of $196 million due to the revaluation of roads and bridges by the Department of Infrastructure, Energy and Resources and additional capital expenditure on road infrastructure projects, including the Brighton Bypass and the Brighton Transport Hub; and
• Liabilities increased by $835 million to $5 966 million as at 30 June 2010. The movement is driven by an increase in the Superannuation liability of $826 million as a result of an actuarial reassessment of the liability, taking into consideration changes in assumptions used to value the defined benefit obligation.
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8 2009-10 Treasurer’s Annual Financial Report
INTERIM FISCAL STRATEGY OVERVIEW Table 3 presents progress against a number of key Interim Fiscal Strategy measures that were in place for the 2009-10 Budget. The actual outcome for 2009-10 is compared to the original Budget estimates for 2009-10 and to the actual 2008-09 outcome.
The State performed well against its Interim Fiscal Strategy targets in 2009-10, and is recovering from the impacts of the global slowdown. The results indicate that the State is on target to meet its targets by 2014-15. Whilst the comparison shows that there has been some decline from 2008-09, the outcome is an improvement against the original Budget outlook.
For details of the Government’s Interim Fiscal Strategy, refer to 2009-10 Budget Paper No 1 The Budget, Chapter 3.
Table 3: Key Interim Fiscal Strategy Targets
Interim Targets
2008-09
Actual
2009-10 Original Budget
2009-10 Actual
Outcome
Progress
$m $m $m Net Operating Surplus achieved on average over four-year rolling period
by 2014-15 14 (38) (12)
Underlying Net Operating Surplus achieved on average over four-year
rolling period by 2014-15 1 7 (124) (114)
Fiscal Surplus achieved by 2014-15 (95) (569) (291)
General Government Sector to remain Net Debt free (982) (487) (748)
Net Unfunded Superannuation Liability to be extinguished by 2035 2 710 3 107 3 496
Capital Expenditure in excess of depreciation on average, over
four-year rolling period 2 47 159 120
Ratio of Net Financial Liabilities to Revenue for the Non-Financial Public
Sector to not exceed 110 per cent in 2014-15 3 93% 116% 101%
Consolidated Fund Surplus by 2014-15 (11) (350) (266)
Key: On target, issues to be addressed, n.a. data not available Notes: 1. Achievement of an Underlying Net Operating Surplus on average over a four-year rolling period by 2014-15 is
measured on an underlying basis that removes the impact of one-off Australian Government funding for specific major capital programs.
2. In the 2009-10 Budget Papers and the 2009-10 Mid-Year Financial Report, the Capital Expenditure in excess of depreciation measure was presented as the differences between the four-year aggregates of capital expenditure and depreciation. The 2009-10 Actual Outcome has been presented on an “average over four years” basis as required by the Interim Fiscal Strategy.
3. For the purposes of the Interim Fiscal Strategy, Net Financial Liabilities represents Net Debt less Advances Paid plus the Superannuation Liability. Net Financial Liabilities is divided by Revenue from transactions to derive the Net Financial Liabilities to Revenue ratio. This is in accordance with the methodology used by Standard & Poor's ratings agency.
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2009-10 Treasurer’s Annual Financial Report 9
Net Operating Balance The Interim Fiscal Strategy target is to achieve a General Government Sector Net Operating Surplus, on average over a four-year rolling period by 2014-15.
The General Government Sector recorded an $18 million Net Operating Surplus in 2009-10, an improvement of $96 million on the $78 million Net Operating Deficit for 2008-09. On a four-year rolling average basis, the 2009-10 Net Operating Balance was a deficit of $12 million, a decrease of $26 million from 2008-09. However, the outcome is an improvement from the original Budget estimate of a $38 million deficit and the Government is on track to achieve a surplus by 2014-15.
Chart 3: General Government Net Operating Balance
296
240
120
53
18
(78)
(39)
(150)
(100)
(50)
....
50
100
150
200
250
300
350
2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10
$ m
illio
n
GGS Net Operating Balance Four-year rolling average
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10 2009-10 Treasurer’s Annual Financial Report
Underlying Net Operating Balance The Underlying Net Operating Balance is the Net Operating Balance adjusted to remove the effects of one-off Australian Government funding for specific major capital programs (most of which was associated with the Nation Building - Economic Stimulus Plan program). The 2009-10 Underlying Net Operating Balance is estimated to be a deficit of $363 million, an improvement of $72 million from the original Budget Deficit of $435 million.
Table 4: Underlying Net Operating Balance
2008-09
Actual
2009-10 Original Budget
2009-10
Actual
$m $m $m
Net Operating Balance (78) (117) 18
Less Impact of one-off Australian Government funding for specific major
capital programs1 28 318 381
Underlying Net Operating Balance (106) (435) (363)
Underlying Net Operating Surplus on average over four-year rolling period
by 2014-15 7 (124) (114)
Notes: 1. The impact of one-off Australian Government funding for specific major capital programs reflects the net impact of
the Nation Building – Economic Stimulus Plan, and additional funding for Nation Building (formerly Auslink) and Water for the Future.
2. To calculate the four-year rolling average of the Underlying Net Operating Balance as at 30 June 2010, the prior year outcomes for 2006-07, 2007-08 and 2008-09 were used, being a $39 million deficit, a $53 million surplus, and a $78 million deficit respectively. The Average Net Operating Surplus measures disclosed are as per the original 2009-10 Budget Papers, based on the 2009-10 outcome and as reported in the 2008-09 Treasurer’s Annual Financial Report.
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2009-10 Treasurer’s Annual Financial Report 11
Fiscal Surplus The Interim Fiscal Strategy target is to achieve a Fiscal Surplus by 2014-15.
Chart 4 shows the 2009-10 General Government Fiscal Balance was a deficit of $291 million, a deterioration of $196 million from 2008-09. The deficit outcome for 2009-10 was affected by the significant infrastructure investment that has occurred and the Government remains on track to achieve a surplus by 2014-15.
Chart 4: General Government Fiscal Balance
369
(291)
83 102
(6)
(95)
211
(400)
(300)
(200)
(100)
....
100
200
300
400
2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10
$ m
illio
n
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12 2009-10 Treasurer’s Annual Financial Report
General Government Net Debt The Interim Fiscal Strategy target to maintain the General Government Sector’s Net Debt free status was met in 2009-10.
Chart 5 shows General Government Sector Net Debt was negative $748 million as at 30 June 2010, a deterioration of $234 million from 30 June 2009. The movement in Net Debt is primarily a result of a fall in Cash and deposits due to infrastructure spending and equity transfers to the PNFC Sector.
Chart 5: General Government Net Debt as at 30 June
1 143 949
751
486
114
(748)
(409)(259)
(28)
(982)(1 031)
(1 500)
(1 000)
( 500)
....
500
1 000
1 500
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
$ m
illion
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2009-10 Treasurer’s Annual Financial Report 13
Superannuation The Net Unfunded Superannuation Liability is an estimate of the obligations of the State with respect to past service liabilities arising from current and former members of unfunded or partially funded Public Sector superannuation schemes. It is calculated by subtracting the balance of the Superannuation Provision Account from the Superannuation liability disclosed in the Statement of Financial Position.
Chart 6 shows that the Net Unfunded Superannuation liability for the General Government Sector increased by $786 million or 29 per cent between 30 June 2009 and 30 June 2010.
The Net Unfunded Superannuation liability will continue to increase in the medium-term. As indicated in the Interim Fiscal Strategy, the Government is making sufficient provisions to achieve the target in 2035.
Further details on the General Government and Total State Superannuation liability are provided in Note 7.5 of the Financial Statements.
Chart 6: General Government Net Unfunded Superannuation
1 531 1 447
2 147
2 532 2 460
2 710
3 496
....
500
1 000
1 500
2 000
2 500
3 000
3 500
4 000
2004 2005 2006 2007 2008 2009 2010
$ m
illion
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14 2009-10 Treasurer’s Annual Financial Report
Capital Expenditure In response to the global slowdown, the Government announced an increased Infrastructure four year spending program in the 2009-10 Budget. This capital investment was funded by the Australian Government’s Nation Building - Economic Stimulus Plan, refer to 2009-10 Budget Paper No 1 The Budget, Chapter 7. Purchase of non-financial assets increased by $321 million, to be $607 million for 2009-10.
The Interim Fiscal Strategy target of at least matching capital expenditure to equal depreciation costs, on average, over rolling four-year periods, was met in 2009-10. Investment in core infrastructure exceeded depreciation by $378 million. This is $321 million above the 2008-09 result of $57 million. The majority of this capital investment was undertaken by the Departments of Education, Infrastructure, Energy and Resources and Health and Human Services. For further detail on capital expenditure refer to individual Agency financial statements.
Chart 7: General Government Capital Expenditure
71 57
378
87
4
26 19
....
80
160
240
320
400
2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10
$ m
illio
n
Capital expenditure in excess of depreciation Four-year rolling average
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2009-10 Treasurer’s Annual Financial Report 15
Net Financial Liabilities to Revenue for the Total Non-Financial Public Sector The Net Financial Liabilities to Revenue ratio is a key measure of the sustainability of the Total Non-Financial Public Sector to meet its financial obligations from operating revenues.
The ratio for 2009-10 is 101 per cent, an increase of 8 per cent from 2008-09. The outcome is below the threshold target of 110 per cent.
Chart 8: Ratio of Net Financial Liabilities1 to Revenue for the Non-Financial Public Sector
101%
93%
88%
102%102%99%107%
60%
70%
80%
90%
100%
110%
120%
2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10
Net Financial Liabilities to Revenue Target of 110%
Note 1. For the purposes of the Interim Fiscal Strategy, Net Financial Liabilities represents Net Debt less Advances Paid
plus the Superannuation Liability. Net Financial Liabilities is divided by Revenue from transactions to derive the Net Financial Liabilities to Revenue ratio. This is in accordance with the methodology used by Standard & Poor's ratings agency.
Consolidated Fund The Interim Fiscal Strategy target to achieve a Consolidated Fund surplus by 2014-15 is on target for 2009-10.
The 2009-10 Consolidated Fund balance was a $266 million deficit, an improvement of $84 million from the $350 million Budget estimate.
The Government is committed to ensuring the Consolidated Fund returns to a surplus. The Government intends to achieve this interim strategy by making progressive improvements throughout the duration of the Interim Fiscal Strategy.
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16 2009-10 Treasurer’s Annual Financial Report
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2009-10 Treasurer’s Annual Financial Report 17
3 TREASURER’S ANNUAL FINANCIAL STATEMENTS
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18 2009-10 Treasurer’s Annual Financial Report
CERTIFICATION OF TREASURER’S ANNUAL FINANCIAL REPORT General Government Sector The General Government Sector financial statements for the year ended 30 June 2010 have been prepared in accordance with AASB 1049 Whole of Government and General Government Sector Financial Reporting. The Statements incorporate the reporting requirements of the Australian Accounting Standards Board and the Uniform Presentation Framework (which is based on the reporting standards of the Australian Bureau of Statistics Government Finance Statistics framework) and are compiled from information provided by agencies within the General Government Sector.
The Statements present fairly the transactions of the General Government Sector for the year ended 30 June 2010 and the financial position as at 30 June 2010.
At the date of signing we are not aware of any circumstances which would render the particulars included in the General Government Financial Statements misleading or inaccurate.
Total State Sector The Total State Sector general purpose financial report for the year ended 30 June 2010 has been prepared in accordance with AASB 1049 Whole-of-Government and General Government Sector Financial Reporting. The Statements incorporate the reporting requirements of the Australian Accounting Standards Board and the Uniform Presentation Framework (which is based on the reporting standards of the Australian Bureau of Statistics Government Finance Statistics framework) and are compiled from information provided by entities within the Tasmanian State Sector.
The Statements present fairly the transactions of the Total State Sector for the year ended 30 June 2010 and the financial position as at 30 June 2010.
At the date of signing we are not aware of any circumstances which would render the particulars included in the Whole-of-Government Financial Statements misleading or inaccurate.
Michael Aird D W Challen TREASURER SECRETARY DEPARTMENT OF TREASURY AND FINANCE
12 October 2010
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2009-10 Treasurer’s Annual Financial Report 19
OPINION OF THE AUDITOR-GENERAL
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20 2009-10 Treasurer’s Annual Financial Report
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2009-10 Treasurer’s Annual Financial Report 21
Statement of Comprehensive Income for the year ended 30 June 2010 General Government Total State
Notes
2009-10 Original Budget
2009-10
Actual
2008-09
Actual
2009-10
Actual
2008-09
Actual
$m $m $m $m $m Revenue from transactions
Grants 1.7(a), 3.1 2 759 3 110 2 705 3 129 2 704
Taxation 1.7(b), 3.2 810 872 804 829 775
Sales of goods and services 1.7(c), 3.3 375 289 303 3 021 2 545
Fines and regulatory fees 1.7(d), 3.4 64 97 92 97 92
Interest income 1.7(e) 34 45 68 147 245 Dividend, tax and rate equivalent
income 1.7(f), 3.5 100 79 210 31 62
Other revenue 3.6 74 109 104 153 167
4 216 4 602 4 286 7 408 6 591
Expenses from transactions
Employee expenses 1.8(a), 4.1 1 875 1 957 1 863 2 358 2 172
Superannuation 1.8(b), 7.5 213 233 257 269 291
Depreciation 1.8(c), 4.2 228 229 229 540 470
Supplies and consumables 4.4 938 973 958 2 731 2 347 Nominal superannuation interest
expense 1.8(d), 7.5 203 208 193 233 225
Borrowing costs 1.8(e) 18 18 16 212 310
Grant and subsidy expenses 1.8(f), 4.3 814 935 807 826 713 Dividend, tax and rate equivalent
expense 4.5 …. …. …. 14 ….
Other expenses 4.6 44 31 42 34 43
4 333 4 584 4 365 7 216 6 570
Equals NET OPERATING BALANCE (117) 18 (78) 192 20
Plus Other economic flows – Included in
Operating Result
Gain/(loss) on sale of non-financial assets 1.9(a), 5.1 (6) (24) 3 (26) 3
Change in equity investment in PNFC and PFC Sectors 1.9(b), 6.2 110 1 893 387 …. ….
Movements in superannuation liability 1.9(c), 7.5 …. (692) (148) (755) (168)
Other gains/(losses) 1.9(d), 5.2 2 (41) (28) (107) 217
107 1 136 214 (888) 53
Equals Operating Result (11) 1 153 136 (697) 73
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22 2009-10 Treasurer’s Annual Financial Report
Statement of Comprehensive Income for the year ended 30 June 2010 (continued) General Government Total State
Notes
2009-10 Original Budget
2009-10
Actual
2008-09
Actual
2009-10
Actual
2008-09
Actual
$m $m $m $m $m Plus Other economic flows – Other movements in
equity
Revaluations of non-financial assets 223 387 277 116 235
Other non-owner movements in equity (1) (14) (22) 1 997 (40)
221 373 255 2 112 195
Equals Comprehensive Result 211 1 527 391 1 416 268
KEY FISCAL AGGREGATES 1.18 NET OPERATING BALANCE (117) 18 (78) 192 20 Less Net acquisition of non-financial
assets
Purchase of non-financial assets 758 607 286 1 324 1 016
Less Sale of non-financial assets 78 69 41 109 76
Less Depreciation 228 229 229 540 470
452 309 17 675 470
Equals FISCAL BALANCE – SURPLUS/(DEFICIT) (569) (291) (95) (483) (450)
This Statement of Comprehensive Income should be read in conjunction with the accompanying notes. Budget information refers to original estimates and has not been subject to audit.
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2009-10 Treasurer’s Annual Financial Report 23
Statement of Financial Position as at 30 June 2010 General Government Total State
Notes
2010 Original Budget
2010
Actual
2009
Actual
2010
Actual
2009
Actual
$m $m $m $m $m Assets
Financial assets
Cash and deposits 1.10(a), 10.2 728 966 1 227 147 325
Investments 1.10(b), 6.1 70 56 48 3 303 4 595
Equity investments in PNFC and
PFC sectors 1.10(c), 6.2 3 966 5 950 4 105 …. ….
Other equity investments 1.10(c), 6.2 3 3 6 243 243
Receivables 1.10(d), 6.3 154 185 183 516 590
Other financial assets 1.10(e), 6.4 922 942 1 009 826 840
5 843 8 102 6 578 5 036 6 594 Non-financial assets
Land and buildings 1.10(g), 6.5 5 235 5 219 4 807 5 501 5 302
Infrastructure 1.10(g), 6.6 4 906 4 837 4 641 14 168 11 849
Plant and equipment 1.10(g), 6.7 157 216 213 430 381
Heritage and cultural assets 1.10(g), 6.8 454 553 447 553 447
Biological assets 1.10(g), 6.9 …. .... …. 319 385
Investment property 1.10(h), 6.11 11 13 13 29 29
Goodwill 1.10(k) …. …. …. 55 55
Intangible assets 1.10(i), 6.12 24 34 29 106 90
Assets held for sale 1.10(f), 6.13 7 21 15 32 20
Other non-financial assets 6.14 26 37 38 149 128
10 821 10 930 10 203 21 341 18 686
Total Assets 16 664 19 031 16 781 26 377 25 280
Liabilities
Borrowings 1.11(a), 7.1 312 274 293 4 411 5 327
Superannuation 1.11(b), 7.5 4 494 4 860 4 034 5 497 4 585
Employee entitlements 1.11(c), 7.2 416 461 459 567 544
Payables 1.11(d), 7.3 76 104 91 282 425
Other liabilities 1.11(e), 7.4 254 267 254 2 555 2 749
Total Liabilities 5 552 5 966 5 131 13 312 13 630
Net Assets 11 112 13 065 11 650 13 065 11 650
Equity
Accumulated surplus 6 280 7 627 6 921 8 012 6 382 Asset revaluation reserve 11.1 4 701 4 508 4 448 5 078 5 290 Equity transfers …. 930 280 …. .... Other reserves 131 …. .... (25) (22)
Total Equity 11 112 13 065 11 650 13 065 11 650
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24 2009-10 Treasurer’s Annual Financial Report
Statement of Financial Position as at 30 June 2010 (continued)
General Government Total State
Notes
2010 Original Budget
2010
Actual
2009
Actual
2010
Actual
2009
Actual
$m $m $m $m $m KEY FISCAL AGGREGATES 1.18 NET WORTH 11 112 13 065 11 650 13 065 11 650 NET FINANCIAL WORTH 292 2 135 1 447 (8 276) (7 037) NET FINANCIAL LIABILITIES 3 674 3 814 2 658 8 276 7 037 NET DEBT (487) (748) (982) 962 407 This Statement of Financial Position should be read in conjunction with the accompanying notes. Budget information refers to original estimates and has not been subject to audit.
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2009-10 Treasurer’s Annual Financial Report 25
Statement of Cash Flows for the year ended 30 June 2010 General Government Total State
Notes
2009-10 Original Budget
2009-10
Actual
2008-09
Actual
2009-10
Actual
2008-09
Actual
$m $m $m $m $m Cash flows from operating activities
Cash inflows Grants received 2 759 3 130 2 681 3 151 2 679
Taxation 810 867 792 825 765
Sales of goods and services 370 291 307 3 305 2 497
Fines and regulatory fees 58 86 63 86 63
Interest received 33 44 71 140 218
Dividend, tax and rate equivalents 100 106 152 31 ….
Other receipts 207 291 279 456 511
4 337 4 817 4 346 7 995 6 733 Cash outflows
Employee entitlements (1 874) (1 958) (1 805) (2 321) (2 109)
Superannuation (268) (304) (269) (355) (303)
Supplies and consumables (937) (933) (951) (3 034) (2 304)
Borrowing costs (17) (17) (16) (301) (319)
Grants and subsidies paid (814) (929) (797) (812) (703)
Other payments (172) (256) (206) (394) (383)
(4 081) (4 397) (4 046) (7 217) (6 122)
Net cash flows from operating activities 10.1 255 420 300 778 611
Cash flows from investing activities
Net cash flows from non-financial assets
Purchases of non-financial assets (758) (607) (286) (1 324) (1 016)
Sale of non-financial assets 73 69 41 109 76
(685) (538) (246) (1 215) (940) Net cash flows from financial assets
(policy purposes)
Equity injections (31) (111) (117) …. ….
Net advances paid (25) (11) (12) (12) (12)
(57) (122) (129) (12) (12) Net cash flows from financial assets
(liquidity purposes)
Net purchase of investments …. 1 5 151 199
…. 1 5 151 199
Net Cash flows from investing activities (741) (659) (370) (1 077) (753)
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26 2009-10 Treasurer’s Annual Financial Report
Statement of Cash Flows for the year ended 30 June 2010 (continued)
General Government Total State
Notes
2009-10 Original Budget
2009-10
Actual
2008-09
Actual
2009-10
Actual
2008-09
Actual
$m $m $m $m $m Cash flows from financing activities
Net borrowing 13 (22) (22) (833) 29 Dividend, tax and rate equivalent
payments …. …. …. (16) ….
Other financing …. …. 12 32 12
13 (22) (10) (817) 41
Net increase in cash held (473) (261) (80) (1 115) (100)
Cash at the beginning of the year 1 201 1 227 1 306 2 689 2 789 Cash at the end of the year 728 966 1 227 1 574 2 689
KEY FISCAL AGGREGATES
Net cash from operating activities 255 420 300 778 611 Plus distributions paid as Dividends and
income tax equivalents …. …. …. (16) …. Plus Net cash from investments in
non-financial assets (685) (538) (246) (1 215) (940)
Equals CASH SURPLUS/(DEFICIT) 1.18 (429) (118) 54 (453) (329)
This Statement of Cash Flows should be read in conjunction with the accompanying notes. Budget information refers to original estimates and has not been subject to audit.
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2009-10 Treasurer’s Annual Financial Report 27
Statement of Changes in Equity for the year ended 30 June 2010 General Government
Equity
Transfers
Asset Revaluation
Reserve Accumulated
Funds Total
$m $m $m $m Balance as at 1 July 2008 156 4 272 6 953 11 382
Comprehensive Result 2008-09 .... 278 112 391
Transactions as owners:
Administrative Restructures Equity Transfer for Tas Skills Institute, Tas
Polytechnic and Tas Academy 124 (102) (28) (6) Equity Transfers:
from TOTE Tasmania Pty Ltd ... ... 46 46
to Tasmanian Racing Board ... ... (46) (46)
to Aurora Energy Pty Ltd (103) (103)
to Rivers and Water Supply Commission ... ... (14) (14)
Total transactions as owners 124 (102) (145) (123)
Balance as at 30 June 2009 280 4 448 6 921 11 650
Comprehensive Result 2009-10 .... 387 1 140 1 527 Transactions as owners:
Administrative Restructures Transfer of Net Assets Relating to Elizabeth College
from Education to Tasmanian Polytechnic 13 .... (13) .... Transfer from DEPHA which ceased to exist from
1 July 2009 636 (327) (309) .... Equity Transfers: .... .... ....
to Tasmanian Railway Pty Ltd .... .... (82) (82)
to Rivers and Water Supply Commission .... .... (21) (21)
to Hydro Tasmania .... .... (1) (1)
to Aurora Energy Pty Ltd .... .... (5) (5)
to Tasracing Pty Ltd .... .... (1) (1)
Total transactions as owners 650 (327) (432) (110)
Balance as at 30 June 2010 930 4 508 7 627 13 065
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28 2009-10 Treasurer’s Annual Financial Report
Statement of Changes in Equity for the year ended 30 June 2010 Total State
Asset Revaluation
Reserve Accumulated
Funds Other
Reserves Total
$m $m $m $m Balance as at 1 July 2008 5 155 6 193 34 11 382
Comprehensive Result 2008-09 134 189 (56) 268
Balance as at 30 June 2009 5 290 6 382 (22) 11 650
Comprehensive Result 2009-10 116 1 304 (4) 1 416 Transactions as owners:
Transfer from Revaluation Reserve to Retained Earnings (327) 327 …. ….
Total transactions as owners (327) 327 …. ….
Balance as at 30 June 2010 5 078 8 012 (25) 13 065
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2009-10 Treasurer’s Annual Financial Report 29
NOTES TO THE TREASURER’S ANNUAL FINANCIAL STATEMENTS Note 1 Significant Accounting Policies 31 1.1 Compliance framework 31 1.2 Basis of consolidation 32 1.3 Changes in accounting policies 32 1.4 Disaggregated information 34 1.5 Reporting period 34 1.6 Transactions and other economic flows 34 1.7 Revenue from transactions 34 1.8 Expenses from transactions 35 1.9 Other economic flows 37 1.10 Assets 38 1.11 Liabilities 43 1.12 Leases 44 1.13 Foreign currency balances/transactions 44 1.14 Comparative figures 44 1.15 Budget information 44 1.16 Rounding 44 1.17 Accounting judgments, estimates and assumptions 44 1.18 Key Fiscal Aggregates 46 Note 2 Disaggregated information 48 Note 3 Revenue from transactions 57 3.1 Grants 57 3.2 Taxation revenue 58 3.3 Sales of goods and services 58 3.4 Fines and regulatory fees 59 3.5 Dividend, tax and rate equivalent revenue 59 3.6 Other revenue 60 Note 4 Expenses from transactions 61 4.1 Employee expenses 61 4.2 Depreciation 61 4.3 Grant and subsidy expenses 62 4.4 Supplies and consumables 63 4.5 Dividend, tax and rate equivalent expenses 63 4.6 Other expenses 64 Note 5 Other economic flows 65 5.1 Gain/(loss) on sale of non-financial assets 65 5.2 Other gains/(losses) included in Operating Result 65 Note 6 Assets 66 6.1 Investments 66 6.2 Equity investments 66 6.3 Receivables 68 6.4 Other financial assets 68 6.5 Land and buildings 69
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30 2009-10 Treasurer’s Annual Financial Report
6.6 Infrastructure 69 6.7 Plant and equipment 69 6.8 Heritage and cultural assets 70 6.9 Biological assets 70 6.10 Reconciliation of non-current assets 71 6.11 Investment property 72 6.12 Intangible Assets 73 6.13 Assets held for sale 73 6.14 Other non-financial assets 74 Note 7 Liabilities 75 7.1 Borrowings 75 7.2 Employee entitlements 75 7.3 Payables 76 7.4 Other liabilities 76 7.5 Superannuation 77 Note 8 Commitments and Contingencies 85 8.1 Schedule of commitments 85 8.2 Contingent assets and liabilities 87 Note 9 Financial instruments 91 9.1 Risk exposures 91 Note 10 Cash Flow Reconciliation 101 10.1 Reconciliation of Net cash flows from operating activities to Operating Result 101 10.2 Cash and cash equivalents 102 Note 11 Reserves 103 11.1 Asset revaluation reserve 103 Note 12 Explanations of major variances between General Government Budget & actual outcome 104 12.1 Statement of Comprehensive Income – General Government Sector 104 12.2 Statement of Financial Position – General Government Sector 106 12.3 Statement of Cash Flows – General Government Sector 107 Note 13 Reconciliation to ABS GFS Measures 108 Note 14 Details of Controlled Entities 109 Note 15 Events Occurring after Balance Date 111 Note 16 Functional Information 113 16.1 Expenses from transactions 113 16.2 Assets by Function 115
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2009-10 Treasurer’s Annual Financial Report 31
Note 1 Significant accounting policies The following summary sets out the significant accounting policies adopted in the Treasurer’s Annual Financial Report.
1.1 Compliance framework The Treasurer’s Annual Financial Report is a general purpose financial report and has been prepared in accordance with Australian Accounting Standards, including AASB 1049 Whole-of-Government and General Government Sector Financial Reporting, which requires compliance with all Australian Accounting Standards except those identified below.
The purpose of this financial report is to provide users with information about the Government’s stewardship of, and accountability for, resources in both the General Government and Total State Sectors, and information about its financial position, performance and cash flows. The Total State reporting entity includes GGS, Public Non-Financial Corporation and Public Financial Corporation entities. Disaggregated information is presented in Note 2. Specific details of the entities consolidated by the State are shown in Note 14.
The GGS is determined in accordance with the principles and rules contained in the Australian Bureau of Statistics Australian System of Government Finance Statistics: Concepts, Sources and Methods 2005. The GGS consists of all government departments and non-profit state entities controlled and mainly financed by government. Government departments are legal entities established by executive government processes that have legislative, judicial, or executive authority over other units and which provide goods and services to the community or to individuals on a non-market basis; and make transfer payments to redistribute income and wealth. Non-profit state entities are created for the purpose of producing or distributing goods and services but are not a source of income, profit or other financial gain for the Government.
The PNFC Sector comprises those entities that aim to cover the majority of their expenses by revenue from the sales of goods and services and which are commercially focused and non-financial in nature. Generally, this Sector covers the State-owned Companies and Government Business Enterprises. These entities have a variety of functions and responsibilities (and are not regulatory authorities in nature), are established in varying ways and also have different relationships with the Budget.
The PFC Sector comprises those entities that perform central bank functions or have the authority to incur financial liabilities and acquire financial assets in the market on their own account. In Tasmania, there are two organisations in this Sector, the Tasmanian Public Finance Corporation and the Motor Accidents Insurance Board.
AASB 1049 does not require full application of AASB 127 Consolidated and Separate Financial Statements and AASB 139 Financial Instruments: Recognition and Measurement. Assets, liabilities, income, expenses and cash flows of government controlled entities that are in the PNFC Sector and the PFC Sector are not separately recognised in the GGS financial report. Instead, the GGS financial report recognises an asset, being the controlling equity investment in those entities, and recognises a gain or loss relating to changes in the carrying amount of that asset, measured in accordance with AASB 1049.
The ABS GFS Manual also provides the basis upon which Government Finance Statistics information that is contained in the financial report is prepared. In particular, notes disclosing Key Fiscal Aggregates of Net Worth, Net Operating Balance, Total Change in Net Worth, Fiscal Surplus/(Deficit) and Cash Surplus/(Deficit) determined using the principles and rules in the ABS GFS Manual are included in the
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32 2009-10 Treasurer’s Annual Financial Report
financial report, together with a reconciliation of those ABS Key Fiscal Aggregates to the corresponding Key Fiscal Aggregates recognised in the financial report.
Compliance with the Australian Accounting Standards may not result in compliance with International Financial Reporting Standards, as the AAS include requirements and options available to not-for-profit organisations that are inconsistent with IFRS. The General Government Sector is considered to be not-for-profit and has adopted some accounting policies that do not comply with IFRS.
The financial reports have been prepared on an accrual basis and, except where stated, are in accordance with the historical cost convention.
Compliance with AASB 1049 will mean that these statements are also consistent with the reporting requirements of the Uniform Presentation Framework.
1.2 Basis of consolidation Reporting entities controlled by the State are consolidated within this financial report. As part of the process of reporting the State as a single economic entity, all material transactions and balances between government controlled entities are eliminated.
1.3 Changes in accounting policies Impact of new and revised Accounting Standards
In the current year, all of the new and revised Standards and Interpretations issued by the AASB that are relevant to the State’s financial reporting and effective for the current annual reporting period have been adopted. This has not brought about the need for any change in current accounting policy. The new and revised standards include:
• AASB 101 Presentation of Financial Statements – This Standard has been revised and introduces a number of terminology changes as well as changes to the structure of the Statement of Changes in Equity and the Statement of Comprehensive Income. It is now a requirement that changes in owner equity be presented separately from non-owner changes in equity. There is no financial impact resulting from the application of this revised Standard.
• AASB 123 Borrowing Costs – This Standard has been revised to mandate the capitalisation of all borrowing costs attributable to the acquisition, construction or production of qualifying assets. AASB 2009-1 Amendments to Australian Accounting Standards – Borrowing Costs of Not-for-Profit Public Sector Entities [AASB 1, AASB 111 & AASB 123] issued in April 2009 allows not-for-profit public sector entities to continue to choose whether to expense or capitalise borrowing costs relating to qualifying assets. There is no financial impact resulting from the application of this revised Standard.
• AASB 2007-10 Further Amendments to Australian Accounting Standards arising from AASB 101 – Revised Standard to be applied from reporting periods beginning on or after 1 January 2010. This Standard changes the term “general purpose financial report” to “general purpose Financial Statements” and the term “financial report” to “Financial Statements”, where appropriate, in Australian Accounting Standards (including Interpretations) and the Framework to better align with IFRS terminology. This Standard will not have a financial impact on the Financial Statements.
• AASB 2009-2 Amendments to Australian Accounting Standards: Improving Disclosures about Financial Instruments - Introduces new disclosure requirements for fair value measurement and refines existing disclosures on liquidity risk for financial instruments. There is no financial impact from the application of this Standard.
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2009-10 Treasurer’s Annual Financial Report 33
• AASB 2009-10 Amendments to Australian Accounting Standards: Reclassification of Financial Instruments - Permits the reclassification of certain non-derivative financial assets. It is not intended to reclassify financial assets in this current period; accordingly there will be no financial impact.
• AASB 8 Operating Segments - The new Standard replaced AASB 114 Segment Reporting. The operating segment disclosure requirements of AASB 8 do not generally apply, however, the new Standard can be used when defining the maximum size of a cash generating unit for impairment testing.
• AASB 3 Business Combinations - The revised Standard introduces significant changes in the accounting for business combinations occurring after this date. Changes affect the valuation of non-controlling interests (previously minority interests), the accounting for transaction costs, the initial recognition and subsequent measurement of contingent consideration and business combinations achieved in stages. These changes will impact the amount of goodwill recognised, the reported results in the period when an acquisition occurs and future results are reported. The amended Standard has no effect on the values recognised for previous business combinations as it is applied prospectively from 1 July 2009.
Impact of new and revised Accounting Standards yet to be applied
The following Accounting Standards and amendments have been issued but are not yet effective and have not been adopted:
• AASB 9 Financial Instruments – Standard to be applied to annual reporting periods beginning on or after 1 January 2013, includes requirements for the classification and measurement of financial assets resulting from the first part of Phase 1 of the replacement of AASB 139 Financial Instrument: Recognition and Measurement. These requirements improve and simplify the approach for classification and measurement of financial assets compared with the requirements of AASB 139.
• AASB 2009-5 Amendments to Australian Accounting Standards arising from the Annual Improvements Project – Revised Standard to be applied from reporting periods beginning on or after 1 January 2010. The amendments to some Standards result in accounting changes for presentation, recognition or measurement purposes, while some amendments that relate to terminology and editorial changes are expected to have no or minimal effect on accounting. It is not expected that the Standard will have a material financial impact on the Financial Statements.
• AASB 2009-11 Amendments to Australian Accounting Standards arising from the AASB 9 [AASB 1, 3, 4, 5, 7, 101, 102, 108, 112, 118, 121, 127, 128, 131, 132, 136, 139, 1023 & 1038 and Interpretations 10 and 12] - To be applied for reporting periods beginning on or after 1 January 2013. The amendment to AASB 9 requires modification to the disclosure of categories of financial assets. It is not expected that the Standard will have a material financial impact on the Financial Statements.
• AASB 2009-13 Amendments to Australian Accounting Standards arising from AASB Interpretation 17 – Distributions of Non-cash Assets to Owners - Revised Standard to be applied from annual reporting periods beginning on or after 1 July 2010. The amendments are in respect of the classification, presentation and measurement of non-current assets held for distribution to owners in their capacity as owners and the disclosure requirements for dividends that are declared after the reporting period but before the Financial Statements are authorised for issue, respectively. It is not expected that the Standard will have a material financial impact on the Financial Statements.
• AASB Interpretation 14 AASB 119 The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction – The interpretation clarifies when refunds or reductions in future contributions in relation to defined benefit assets should be regarded as available and provides
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34 2009-10 Treasurer’s Annual Financial Report
guidance on the impact of minimum funding requirements on such assets. It also gives guidance on when a MFR might give rise to a liability. It is not expected that the Interpretation will have a material financial impact on the Financial Statements.
• AASB 2010-2 Amendments to Australian Accounting Standards arising from Reduced Disclosure Requirements – Applies to annual reporting periods beginning on or after 1 July 2013. The Standard makes amendments to many Australian Accounting Standards, including Interpretations, to introduce reduced disclosure requirements to the pronouncements for application by certain types of entities in preparing general purpose financial statements. This Standard will not have a financial impact on the Financial Statements.
1.4 Disaggregated information The State’s consolidated financial information has been disaggregated between the following Sectors:
• General Government;
• Public Non-Financial Corporations; and
• Public Financial Corporations.
This information is provided as there is dissimilarity between General Government activities and those of entities in the PNFC and the PFC Sectors. Disclosure of this information will assist users of this financial report in determining the effects of differing activities on the financial position of the State. It will also assist users in identifying the resources used in the provision of a range of goods and services and the extent to which the State has recovered the costs of those resources from revenues attributable to those activities.
For the purposes of presenting disaggregated financial information, the expected future income tax equivalents receivable from the PNFC and PFC Sectors has been recognised in the statements for the GGS.
1.5 Reporting period The reporting period for all consolidated entities is the year or period ended 30 June.
1.6 Transactions and other economic flows The Statement of Comprehensive Income distinguishes between “transactions” and “other economic flows” in a manner that is consistent with the principles in the ABS GFS Manual. Transaction flows result directly from a mutually agreed interaction between two parties, for example, the sale of a good or service. The definition of a “transaction flow” also includes depreciation. This recognises that, in the case of depreciation, one party is acting in two roles, as owner of the asset and consumer of the services provided by the asset.
An “other economic flow” is a change in the volume or value of an asset, or a liability that does not result from a transaction. This includes a wide variety of events such as the revaluation of assets (holding gains or losses) arising from a change in market prices and changes in the volume of assets that result from discoveries, depletion and destruction of assets.
1.7 Revenue from transactions Revenue is recognised in the Statement of Comprehensive Income when an increase in future economic benefits related to an increase in an asset or a decrease in a liability has arisen from a mutually agreed interaction between two parties and can be measured reliably.
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2009-10 Treasurer’s Annual Financial Report 35
(a) Grants
Grants payable by the Australian Government are recognised as revenue when control of the underlying assets is gained. Where grants are reciprocal, revenue is recognised as performance occurs under the grant. Non-reciprocal grants are recognised as revenue when the grant is received or receivable. Conditional grants may be reciprocal or non-reciprocal depending on the terms of the grant.
(b) Taxation
Revenue from State taxation is recognised upon the first occurrence of either:
• receipt by the State of a taxpayer’s self-assessed taxes and fees; or
• the time the obligation to pay arises, pursuant to the issue of an assessment.
(c) Sales of goods and services
Amounts earned in exchange for the provision of goods are recognised when the significant risks and rewards of ownership have been transferred to the buyer. Revenue from the provision of services is recognised in proportion to the stage of completion of the transaction at the reporting date. The stage of completion is assessed by reference to surveys of work performed.
(d) Fines and regulatory fees
Revenue from fines and regulatory fees is recognised in the period to which it relates. Where a licence year intersects two financial years (for example 1 October to 30 September) the licence fee is not recognised as revenue on a pro-rata basis unless this is material, rather it is recognised in the financial year in which it is received and the licence issued.
(e) Interest income
Interest on funds invested is recognised as it accrues using the effective interest rate method.
(f) Dividend, tax and rate equivalent income
The GGS receives a return from the State’s PNFCs and PFCs in the form of dividends, tax equivalent payments and rate equivalent payments. Income tax and rate equivalent payments are received in accordance with the National Taxation Equivalence Regime. Revenue is recognised in the period it is earned. This revenue is eliminated at the Total State Sector level.
1.8 Expenses from transactions Expenses are recognised in the Statement of Comprehensive Income when a decrease in future economic benefits related to a decrease in an asset or an increase in a liability has arisen from a mutually agreed interaction between two parties and can be measured reliably.
(a) Employee Entitlements
Employee entitlements include entitlements to wages and salaries, annual leave, sick leave, long service leave and other post-employment benefits.
(b) Superannuation
This includes all superannuation expenses from transactions except the nominal superannuation interest cost. It generally includes current service cost, which is the increase in entitlements associated with the employment services provided by employees in the current period. Superannuation actuarial gains/losses are excluded as they are considered to be Other economic flows.
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36 2009-10 Treasurer’s Annual Financial Report
(c) Depreciation
All non-current assets having a limited useful life are systematically depreciated over their useful lives in a manner which reflects the consumption of their service potential. Land and biological assets, being assets with an unlimited useful life, are not depreciated. Depreciation is not recognised in respect of heritage assets and collections as their service potential has not, in any material sense, been consumed during the reporting period.
Depreciation of buildings, plant and equipment is generally calculated on a straight line basis. Leasehold improvements are depreciated over the estimated useful lives of the improvements or the unexpired period of the lease, whichever is the shorter. Road infrastructure is depreciated on a straight line basis over its estimated useful life.
The following are typical estimated useful lives for the different asset classes in 2009-10:
Asset Class Useful Life (years) Buildings 30 - 120
Computer equipment 3 - 7
Motor vehicles 2 - 33
Office equipment 2 - 15
Plant and equipment 2 - 20
Infrastructure assets 20 - 50
Generation assets 3 - 150
Wharves 1 - 80
Harbour improvements 5 - 99
Roads 15 - 100
(d) Nominal superannuation interest expense
Nominal interest on the unfunded superannuation liability is based on the interest cost on the gross superannuation liability, less expected return on plan assets.
(e) Borrowing costs
Interest on outstanding borrowings and other finance costs directly related to borrowings are recognised when incurred. Borrowing costs include:
• interest on bank overdrafts and short-term and long-term borrowings;
• unwinding of discounting of provisions;
• amortisation of discounts or premiums related to borrowings;
• amortisation of ancillary costs incurred in connection with the arrangement of borrowings; and
• finance lease charges.
(f) Grant and subsidy expenses
Grant and subsidy expenses are recognised to the extent that:
• the services required to be performed by the grantee have been performed; or
• the grant eligibility criteria have been satisfied.
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A liability is recorded when the State has a binding agreement to make the grant but services have not been performed or criteria satisfied. Where grant monies are paid in advance of performance or eligibility, a prepayment is recognised.
1.9 Other economic flows Other economic flows are changes in the volume or value of an asset or liability that do not result from transactions. Other economic flows are classified according to those flows that are included in the Operating Result or Other Movements in Equity.
(a) Gain/(loss) on sale of non-financial assets
Gains or losses from the sale of non-financial assets are recognised when control of the asset has passed to the buyer.
(b) Change in equity investment in PNFC and PFC Sectors
Equity investments are initially recorded at fair value based on the net assets of State-owned Companies and Government Business Enterprises. Changes in the value of equity investments are accounted for as Other economic flows - Included in the Operating Result.
(c) Movements in superannuation liability
All gains or losses arising from the actuarial revaluation of superannuation are classified as Other economic flows - Included in the Operating Result.
(d) Other gains/losses
Other gains/(Iosses) will include the impairment and write-down of assets.
(i) Impairment – financial assets
Financial assets are assessed at each reporting date to determine whether there is any objective evidence that any financial assets are impaired. A financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative affect on the estimated future cash flows of that asset.
An impairment loss, in respect of a financial asset measured at amortised cost, is calculated as the difference between its carrying amount, and the present value of the estimated future cash flows discounted at the original effective interest rate.
All impairment losses are recognised in the Operating Result.
An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognised. For financial assets measured at amortised cost and available-for-sale financial assets that are debt securities, the reversal is recognised in the Operating Result. For available-for-sale financial assets that are equity securities, the reversal is recognised as Other economic flows – Other movements in equity.
(ii) Impairment – non-financial assets
All non-financial assets are assessed to determine whether any impairment exists. Impairment exists when the recoverable amount of an asset is less than its carrying amount. The recoverable amount is the higher of fair value less costs to sell and its value in use. GGS assets are not used for the purpose of generating cash flows; therefore an asset’s value in use is based on depreciated replacement cost where the asset would be replaced if deprived of it.
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All impairment losses are recognised in the Operating Result.
An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.
(iii) Write down of assets
A revaluation is recognised as an expense in the Operating Result to the extent that it reverses a revaluation increment previously credited to, and still included in the balance of, an Asset revaluation reserve in respect of the same class of asset. In this case, it is debited direct to that Revaluation reserve and recognised within Other economic flows – Other movements in equity.
Where an increment reverses a revaluation decrement previously recognised in the Operating Result, in respect of that same class of non-current assets, the revaluation increment is recognised in the Operating Result.
1.10 Assets Assets are recognised in the Statement of Financial Position when it is probable that the future economic benefits will flow to the State and the asset has a cost or other value that can be measured reliably.
(a) Cash and deposits
For the purpose of the Statement of Cash Flows, cash and cash equivalents includes “at call” deposits with banks net of bank overdrafts, highly liquid investments with short periods to maturity, advances at call which are subject to insignificant risk of changes in value and borrowings and deposits held by the Tasmanian Public Finance Corporation from external clients at call.
(b) Investments
Financial assets in the scope of AASB 139 are classified as financial assets initially recorded at fair value through the Statement of Comprehensive Income, loans and receivables, held-to-maturity investments; or as available-for-sale investments, as appropriate. When financial assets are initially recognised they are measured at fair value plus, in the case of investments not at fair value through profit or loss, directly attributable transactions costs. All routine purchases and sales of financial assets are recognised on the trade date, ie the date that the State commits to purchase the asset.
(i) Financial assets held for trading
Financial assets classified as held for trading are stated at fair value through the Statement of Comprehensive Income. Financial assets are classified as held for trading if they are acquired for the purpose of selling in the near term. Derivatives are also classified as held for trading unless they are designated as effective hedging instruments. Gains or losses on investments held for trading are recognised in the Statement of Comprehensive Income within Other economic flows.
(ii) Held-to-maturity investments
Non-derivative financial assets with fixed or determinable payments and fixed maturity are classified as held-to-maturity when the State has the intention and ability to hold them to maturity. Investments intended to be held for an undefined period are not included in this classification. Investments that are intended to be held to maturity are subsequently measured at amortised cost. For investments carried at amortised cost,
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gains and losses are recognised in the Statement of Comprehensive Income, within Other economic flows, when the investments are derecognised or impaired, as well as through the amortisation process.
(iii) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are carried at amortised cost using the effective interest method. Gains and losses are recognised in the Statement of Comprehensive Income, within Other economic flows, when the loans and receivables cease to be recognised, or are impaired, as well as through the amortisation process.
(iv) Available-for-sale investments
Available-for-sale investments are those non-derivative financial assets that are designated as available-for-sale, or are not classified as any of the preceding categories. After initial recognition, available-for-sale investments are measured at fair value with gains or losses being recognised as a separate component of equity until the investment is derecognised or until the investment is determined to be impaired, at which time the cumulative gain or loss previously reported in equity is recognised in the Statement of Comprehensive Income within Other economic flows.
The fair value of investments that are actively traded in organised financial markets is determined by reference to quoted market bid prices at the close of business on balance date. For investments with no active market, fair value is determined using valuation techniques. Such techniques include using recent arm’s length market transactions; reference to the current market value of another instrument that is substantially the same; discounted cash flow analysis and option pricing models.
Entities required to report under Australian Accounting Standard AASB 1023 General Insurance Contracts have valued their investments at net market value. Any movements in the value of investments between reporting dates are recognised as gains or losses in the Statement of Comprehensive Income within Other economic flows.
(v) Other investments
The investments in respect of cash held in the Public Account are primarily undertaken through Tascorp. Short term investments with Tascorp (deposits for more than five days but less than one year) are carried at their face value and are not adjusted for fluctuations in market interest rates. Interest is brought to account on an accrual basis.
(c) Equity investments
(i) Equity investments in PNFC and PFC Sectors
Full application of AASB 127 Consolidated and Separate Financial Statements and AASB 139 Financial Instruments: Recognition and Measurement is not required for GGS financial reporting in accordance with AASB 1049. Accordingly, the assets, liabilities, income, expenses and cash flows of government controlled entities that are in the Public Non-Financial Corporations Sector and the Public Financial Corporations Sector are not separately recognised in the GGS financial statements. Instead, the GGS financial statements recognise an asset, being the controlling equity investment in those entities.
Equity investments are initially recorded at a fair value based on the net assets of State-owned Companies and Government Business Enterprises. Changes in the value of equity investments are accounted for as revenue, or as expenses in the GGS Statement of Comprehensive Income.
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40 2009-10 Treasurer’s Annual Financial Report
(ii) Other equity investments
Other equity investments are primarily held by the Motor Accidents Insurance Board, are initially recorded at cost in the Statement of Financial Position. Subsequent measurement is at fair value with any resultant fair value gains or losses recognised as Other economic flows – Included in the Operating Result.
(d) Receivables
Receivables are recognised at the amounts receivable as they are due for settlement. Impairment of receivables is reviewed on an annual basis. Impairment losses are recognised when there is an indication that there is a measurable decrease in the collectability of receivables.
(e) Other financial assets
Other financial assets are initially recorded at fair value. Other financial assets consist primarily of derivative transactions that were entered into as designated hedges of underlying physical positions or as designated hedges of portfolio interest rate risk. Derivative financial instruments are recorded in the Statement of Financial Positions as payables where the gross amount payable is in excess of the gross amount receivable and there is an intention by both parties to settle the transaction on a net basis. Derivative financial instrument receivables are the opposite of this.
(f) Assets held for sale
Assets held for sale (or disposal groups comprising assets and liabilities) that are expected to be recovered primarily through sale rather than continuing use are classified as held for sale. Immediately before classification as held for sale, the assets (or components of a disposal group) are remeasured in accordance with accounting policies. Thereafter, the assets (or disposal group) are measured at the lower of carrying amount and fair value less costs to sell.
(g) Property, plant, equipment and infrastructure
(i) Valuation basis
Land, buildings, infrastructure, long-lived plant and equipment and heritage and cultural assets are, unless specified, recorded at fair value less accumulated depreciation. All other non-current physical assets, including work in progress, are recorded at historic cost less accumulated depreciation and accumulated impairment losses.
Cost includes expenditure that is directly attributable to the acquisition of the asset. The costs of self-constructed assets includes the cost of materials and direct labour, any other costs directly attributable to bringing the asset to a working condition for its intended use, and the costs of dismantling and removing the items and restoring the site on which they are located. Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment.
When parts of an item of property, plant, equipment and infrastructure have different useful lives, they are accounted for as separate items (major components) of property, plant, equipment and infrastructure.
Infrastructure assets include such items as road, bridge, rail and water and sewerage infrastructure assets. Road infrastructure valuation is based on replacement value, being the cost to provide a new road of the existing standard. Road condition surveys are conducted each financial year. Land under roads, within road reserves and land under rail are valued at the Valuer-General’s latest valuation. Bridge infrastructure valuations are based on replacement values calculated for different bridge types. Water and sewerage infrastructure are carried at fair value.
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Electricity generation assets recorded at fair value are based on a Tasmanian energy price curve derived by Hydro Tasmania from the published three-year Victorian energy price curve. For further information regarding valuation of these assets refer to the Annual Report of Hydro Tasmania.
The valuation methodology for electricity distribution assets reflects the Tasmanian Electricity Market Code rules (as per the Tasmanian Electricity Code) which regulate the revenue from these assets. Aurora Energy Pty Ltd values the grid assets using the income approach, based on the revenue generation capacity of the assets, as determined by the Energy Regulator. Valuations are conducted annually.
Electricity network assets are measured at fair value based on the depreciated optimised replacement cost methodology. For further information on the valuation of these assets refer to the Annual Report for Transend Networks Pty Ltd.
Port infrastructure assets held by the Tasmanian Ports Corporation Pty Ltd are carried at cost less any accumulated depreciation and impairment losses.
Heritage assets and collections are defined as those non-current physical assets that the State intends to preserve because of their unique historical, cultural or environmental attributes. This category primarily consists of the Tasmanian Museum and Art Gallery collections and the State Library’s Tasmanian collection. The Tasmanian Museum and Art Gallery collections are recognised at fair value. The collection was last valued as at 30 June 2006 and, for subsequent years, the valuers have provided an index to increase the 2006 valuation to fair value. The State Library’s Tasmanian collection is recognised at fair value. In view of the fact that these items have an infinite life, no depreciation has been applied.
Biological assets comprise the forest crop of Forestry Tasmania. During 2010, Forestry Tasmania engaged James W Sewall Company to establish a valuation for its entire forest estate, inclusive of land and roads. The methodology applied to arrive at the valuation for these component parts differed from that applied in prior years. The new methodology utilised by Sewall has resulted in a change in accounting estimate under AASB 108 Accounting Policies, Changes in Accounting Estimates and Errors. The change in accounting estimate has been adjusted in the current year Statement of Comprehensive Income. This change has resulted in a decrease in the biological asset and forest estate assets of $140 million. It is not practical to estimate the impact of this change on future periods.
The methodology used to estimate the value for biological assets involves an income capitalisation approach. The forest under management is divided into three areas:
• general forest zone;
• special timbers zone; and
• formal forest reserves.
Due to the different uses and restrictions on these areas, separate valuations, utilising the income capitalisation approach are derived. Further, given that the valuations for the special timbers zone and formal forest reserves result in negative valuations, these have been recognised separately as a liability in the Statement of Financial Position, refer to Note 7.4.
Forestry Tasmania does not hold freehold title over State forest land, under the Forestry Act 1920 it has exclusive management rights over State forest and is deemed to control the land asset. A change in accounting estimate has arisen as, on the basis of a valuation by Sewall, the carrying value of the forest land asset has been written down to zero. This change in estimate will impact on future periods; however the future impact is impractical to estimate.
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42 2009-10 Treasurer’s Annual Financial Report
For further information regarding valuation of forest assets, refer to the Annual Report of Forestry Tasmania.
(ii) Subsequent costs
The cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits will arise and its costs can be measured reliably. The carrying amount of the replaced part is derecognised. The costs of day-to-day servicing of property, plant and equipment are recognised in profit or loss as incurred.
(iii) Asset recognition threshold
The asset capitalisation threshold adopted by the General Government and State Sectors is between $5 000 and $10 000. Assets valued at less than $5 000 are charged to the Statement of Comprehensive Income in the year of purchase (other than where they form part of a group of similar items which are material in total).
(iv) Revaluations
The asset revaluation threshold is in the order of $50 000, above which assets are revalued with sufficient regularity to ensure they reflect fair value at balance date. In accordance with AASB 116 Property Plant and Equipment, in years between valuations, indices are supplied by qualified valuers to index valuations to fair value.
Assets are grouped on the basis of having a similar nature or function.
(h) Investment property
Investment property is property held to earn rental income, for capital appreciation, or for both.
Investment property is recorded at fair value. Property interests held under operating leases are not classified and accounted for as investment property. Changes in the fair value of investment property are recorded as Other economic flows within the Statement of Comprehensive Income.
Investment property is not depreciated.
(i) Intangible assets
An intangible asset is recognised where:
• it is probable that an expected future benefit attributable to the asset will flow to the entity; and
• the cost of the asset can be reliably measured.
Intangible assets are valued at fair value where an active market exists and are amortised on a straight line basis over their estimated useful life. Where no active market exists, intangibles are recorded at cost less amortisation and impairment losses.
(j) Inventories
Inventories held for distribution are valued at cost adjusted, when applicable, for any loss of service potential. Inventories acquired for no cost or nominal consideration are valued at current replacement cost.
(k) Goodwill
Goodwill represents the excess of the cost of the acquisition over the net fair value of the identifiable assets, liabilities and contingent liabilities of the subsidiary. Goodwill is measured at cost less accumulated impairment losses. Goodwill is held by Hydro Tasmania and the Tasmanian Ports Corporation Pty Ltd.
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1.11 Liabilities Liabilities are recognised in the Statement of Financial Position when it is probable that an outflow of resources embodying economic benefits will result from the settlement of a present obligation and the amount at which the settlement will take place can be measured reliably.
(a) Borrowings
Bank loans and other loans are initially measured at fair value, net of transaction costs. Bank loans and other loans are subsequently measured at amortised cost using the effective interest rate method, with interest expense recognised on an effective yield basis.
The effective interest rate method is a method of calculating the amortised cost of a financial liability and allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or where appropriate, a shorter period.
(b) Superannuation
(i) Defined contribution plans
A defined contribution plan is a post employment benefit plan under which an entity pays fixed contributions into a separate entity and where there is no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution plans are recognised as an expense when they fall due.
(ii) Defined benefit plans
A defined benefit plan is a post employment benefit plan other than a defined contribution plan.
Superannuation obligations, in respect of the contributory service of current and past government employees, are recognised at the latest actuarial assessment of the members’ entitlements, net of scheme assets. The valuation is determined by discounting to present value, the gross benefit payments at a current, market-determined, risk-adjusted discount rate appropriate to the respective plan.
All gains or losses arising from the actuarial revaluation of superannuation liabilities are recognised as Other economic flows – Included in the Operating Result.
(c) Employee entitlements
Liabilities for wages and salaries and annual leave are recognised when an employee becomes entitled to receive a benefit. Those liabilities expected to be realised within 12 months are measured as the amount expected to be paid. Other employee entitlements are measured as the present value of the benefit at 30 June 2010, where the impact of discounting is material, and at the amount expected to be paid if discounting is not material.
A liability for long service leave is recognised, and is measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date.
(d) Payables
Payables, including goods received and services incurred but not yet invoiced, are recognised at amortised cost, which due to the short settlement period, equates to face value, when there is an obligation to make future payments as a result of a purchase of assets or services.
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44 2009-10 Treasurer’s Annual Financial Report
(e) Other liabilities
Other liabilities are recognised in the Statement of Financial Positions when it is probable that an outflow of resources embodying economic benefits will result from the settlement of a present obligation and the amount at which the settlement will take place can be measured reliably.
(f) Financial guarantee liabilities
Financial guarantee contract liabilities are measured initially at their fair values and subsequently at the higher of the amount determined in accordance with AASB 137 Provisions, Contingent Liabilities and Contingent Assets.
1.12 Leases Operating lease agreements exist for property, plant and equipment, where the lessors effectively retain all the risks and benefits incidental to ownership of the items leased. Equal instalments of lease payments are charged to the Statement of Comprehensive Income over the lease term, as this is representative of the pattern of benefits to be derived from the leased property.
1.13 Foreign currency balances/transactions Transactions denominated in a foreign currency are converted at the exchange rate at the date of the transaction. Foreign currency receivables and payables are translated at the exchange rates current at balance date.
1.14 Comparative figures Comparative figures have been adjusted to reflect any changes in accounting policy or the adoption of new standards.
1.15 Budget Information Budget information refers to original estimates as disclosed in the 2009-10 Budget Papers and is not subject to audit. Explanation of major variances between budget and actual outcomes is provided in Note 12.
1.16 Rounding Amounts in the Financial Statements and Notes to the Financial Statements are rounded to the nearest million dollars, unless otherwise stated. As a consequence, rounded figures may not add to totals. Amounts less than $500 000 are rounded to zero and are indicated by the symbol “….”.
1.17 Accounting judgments, estimates and assumptions In the preparation of the General Government and Total State Sector Financial Statements, entities are required to make judgements, estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities at the date of the Statements and the reported revenue and costs during the reported period.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised, if the revision affects only that period; or in the period of the revision and future periods if the revision affects both current and future periods.
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Judgements that have significant effects on the financial statements are discussed below:
(i) Assessment of impairment of non-regulated electricity assets
Tests are undertaken on an annual basis to determine whether assets have suffered any impairment, in accordance with the accounting policy. The recoverable amounts of cash-generating units have been determined based on value-in-use calculations. These calculations require the use of the following key assumptions:
• forecast electricity pool and contract prices and regulated pricing for non-contestable customers;
• forecast fuel prices;
• forecast maintenance and capital expenditure; and
• discount rates.
(ii) Fair value of financial instruments
The fair value of financial instruments that are not traded in an active market (for example, certain types of electricity derivatives) is determined by using valuation techniques. Judgement has been applied to select a variety of methods and makes assumptions that are mainly based on market conditions existing at each statement of financial position date.
(iii) RBF liability
The Retirement Benefits Fund defined benefits provision has been assessed by the State Actuary and various actuarial assumptions have been applied to arrive at the carrying value reported.
No assumptions have been made concerning the future that may cause a material adjustment to the carrying amounts of assets and liabilities within the next reporting period.
(iv) Provision for outstanding and unreported claims in MAIB
This provision is made at the Statement of Financial Position date for the estimated cost of claims incurred but not settled, including the cost of claims incurred but not yet reported.
The expected future payments are calculated based on the ultimate cost of settling claims, which includes the anticipated effects of inflation, the goods and services tax and other factors. The expected future payments are then discounted to a present value at the balance date using market determined risk free discount rates. Claims handling expenses include the cost of managing claims such as administration expenses and professional fees that are not otherwise directly allocated to individual claims.
In determining the provision for outstanding claims, a risk margin is added to the total of the net central estimate of the discounted future claim payments plus the estimated claims handling expenses. The addition of a risk margin recognises the inherent uncertainties contained within the actuarial valuation and provides a probability not less than 75 per cent (2009: not less than 75 per cent) that the provision is sufficient to meet the cost of the claims incurred. The allowances for claims handling expenses and the risk margin have been determined for the scheme as a whole. For reporting purposes they have been applied uniformly to each benefit type. For further detail, refer to the Annual Report of MAIB.
(v) Forest estate valuation methodology
The valuation of the forest estate assets involves a number of assumptions which are summarised below. For further detail, refer to the Annual Report of Forestry Tasmania.
• Existing practices with regard to forest management and silviculture are assumed to continue;
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• A pre-tax discount rate of 8.1 per cent (9.0 per cent as at 30 June 2009) is used to value the three forest zones;
• Forest yields/volumes – Native forest volume assessments were reviewed in 2007 as part of the Regional Forest Agreement review process and have been updated to take into account the volume losses associated with the change in silviculture alternatives. Hardwood and softwood plantation volumes are based on inventory data collected from 1998 to 2007;
• Future rotations – Only the current standing timber crop is valued according to AASB 141 Agriculture. No recognition is made of the costs and returns related to future tree crops, or of the harvest and delivery of logs;
• Costs – Costs directly attributable to the management of the forest estate are included in the discounted cash flow model; and
Prices – Stumpage rates are used to determine the revenues. The prices are based on current and historical prices and pricing trends over the full range of products.
1.18 Key Fiscal Aggregates The financial report presents a number of Key Fiscal Aggregates that are presented on the face of the statements, as a requirement of the UPF and AASB 1049. A description of the Key Fiscal Aggregates is provided below:
Net Operating Balance
The Net Operating Balance is a measure of the on-going sustainability of the operations of government. It indicates whether a government is generating enough revenue to cover the cost of its operations. A Net Operating Surplus indicates that a government has sufficient revenue to fund its operations and contribute to an increase in its asset base.
Operating Result
The Operating Result is similar to the Net Operating Balance in that it is a measure of the sustainability of the operations of government. However, this measure includes movements in asset and liability balances that result from movements in market values rather than as a result of government operations. These gains or losses on assets or liabilities are “unrealised” and are not available to fund government operations.
Comprehensive Result
The Comprehensive Result represents the total change in value of the Net Worth during a year arising from revenues, expenses and movements in the valuation of assets and liabilities. As such, the Comprehensive Result is equivalent to the total increase or decrease in Net Assets during the year. The Comprehensive Result is similar to the Operating Result in that it includes unrealised movements in the value of assets and liabilities that impact on net assets. These movements are not available to fund operations and do not arise as a result of government decisions.
Fiscal Balance
The Fiscal Balance indicates whether a sufficient surplus is being generated by the operations of government to fund its capital expenditure needs. It is determined as the difference between revenue from transactions over expenses from transactions, after allowing for the net addition to non-financial assets such as buildings and infrastructure.
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2009-10 Treasurer’s Annual Financial Report 47
Net Debt
Net Debt is a measure used to help assess the overall strength of a Government’s fiscal position. Net Debt comprises borrowings less the sum of cash and deposits and investments.
Net Financial Liabilities
Net Financial Liabilities comprises total liabilities less financial assets, excluding equity investments in Government Businesses. This is a broader measure than Net Debt, as it incorporates other liabilities such as superannuation.
Net Financial Worth
Net Financial Worth is calculated as financial assets less liabilities. This measure is broader than Net Debt, as it incorporates provisions made (such as superannuation, but not depreciation and bad debts) as well as ownership of equity.
Net Worth
Net Worth is calculated as total assets (both financial and non-financial) minus total liabilities. Net Worth incorporates non-financial assets such as land and other infrastructure assets, which may be sold and used to repay debt. It also incorporates certain financial assets and liabilities not captured by the Net Debt measure, most notably, accrued employee superannuation liabilities, ownership of equities, debtors and creditors.
GFS includes shares and contributed capital in the calculation of Net Worth, which for the PNFC and PFC Sectors is equivalent to the carrying amount of net assets. As a result, GFS Net Worth for the PNFC and PFC sectors will always be nil. This difference has no impact on GGS or Total State Sector Net Worth.
Net Increase in Cash Held
Net Increase in Cash Held is the sum of net cash flows from all operating, investing and financing activities. This measure is consistent with the movement in cash and deposits reported in the Statement of Financial Position, providing a mechanism for managing the cash position to ensure that sufficient cash is available to fund Government policy decisions.
Cash Surplus/(Deficit)
The Cash Surplus/(Deficit) comprises cash received from operating activities, and from sales and purchases of non-financial assets less finance leases and similar arrangements.
The Cash Surplus/(Deficit) is important for cash management purposes. It is important to note that a Cash Surplus does not necessarily imply that there is cash available for spending. This is because the Cash Surplus/(Deficit) includes funds allocated to provisions such as the Superannuation Provision Account.
It should be noted that the Australian Bureau of Statistics does not include equity injections/withdrawals and the repayment of advances in the calculation of the surplus/(deficit). However, these items can have a major impact in any given year.
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48 2009-10 Treasurer’s Annual Financial Report
Note 2 Disaggregated Information The following tables present the Statement of Comprehensive Income, Statement of Financial Position and Statement of Cash Flows for the GGS, PNFC and PFC Sectors.
The Total Non-Financial Public Sector represents the consolidated total of the GGS and PNFC Sectors. The Total State Sector represents the consolidation of GGS, PNFC and PFC Sectors. Total State Inter-Sector Eliminations are presented to allow reconciliation between the individual Sectors and the Total State Sector financial statements.
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2009-10 Treasurer’s Annual Financial Report 49
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2009-10 Treasurer’s Annual Financial Report 50
Note 2 Disaggregated Information – Statement of Comprehensive Income by Sector General Government
Sector Public Non-Financial Corporations Sector
Public Financial Corporations Sector
Inter-sector Eliminations
Total Non-Financial Public Sector
Total State Sector
2009-10 2008-09 2009-10 2008-09 2009-10 2008-09 2009-10 2008-09 2009-10 2008-09 2009-10 2008-09 $m $m $m $m $m $m $m $m $m $m $m $m Revenue from transactions
Grants 3 110 2 705 144 118 .... .... 125 119 3 131 2 706 3 129 2 704 Taxation 872 804 .... .... .... .... 43 29 829 775 829 775 Sales of goods and services 289 303 2 643 2 155 131 127 42 40 2 893 2 422 3 021 2 545 Fines and regulatory fees 97 92 .... .... .... .... .... .... 97 92 97 92 Interest income 45 68 11 14 286 376 195 213 56 82 147 245 Dividend, tax and rate equivalent income 79 210 .... .... 31 62 79 210 60 37 31 62 Other revenue 109 104 45 54 .... 12 2 3 153 156 153 167
4 602 4 286 2 843 2 342 449 576 486 614 7 218 6 269 7 408 6 591 Expenses from transactions
Employee expenses 1 957 1 863 396 304 5 5 .... .... 2 353 2 167 2 358 2 172 Superannuation 233 257 35 34 1 .... .... .... 268 291 269 291 Depreciation 229 229 311 241 .... .... .... .... 539 470 540 470 Supplies and consumables 973 958 1 679 1 337 114 94 34 42 2 620 2 258 2 731 2 347 Nominal superannuation interest expense 208 193 25 31 .... .... .... .... 232 224 233 225 Borrowing costs 18 16 172 170 236 345 214 221 172 178 212 310 Grant and subsidy expenses 935 807 23 23 1 2 134 119 826 712 826 713 Dividend, tax and rate equivalent expense .... .... 33 173 59 37 79 210 14 .... 14 .... Other expenses 31 42 29 23 .... .... 25 23 34 43 34 43
4 584 4 365 2 702 2 336 416 483 486 614 7 059 6 342 7 216 6 570 equals NET OPERATING BALANCE 18 (78) 141 6 33 93 .... …. 158 (73) 192 20 plus Other economic flows – Included in Operating Result
Gain/(loss) on sale of non-financial assets (24) 3 (2) .... .... .... .... .... (26) 3 (26) 3 Change in equity investment in PNFC/PFC sectors 1 893 387 .... .... .... .... 1 893 387 59 (40) .... .... Movements in superannuation liability (692) (148) (63) (20) .... .... .... .... (755) (168) (755) (168) Other gains/(losses) (41) (28) (91) 381 26 (136) .... .... (133) 353 (107) 217
1 136 214 (157) 361 26 (136) 1 893 387 (855) 148 (888) 53 equals Operating Result 1 153 136 (16) 367 59 (43) 1 893 387 (697) 76 (697) 73 plus Other economic flows – Other movements in equity
Revaluations of non-financial assets 387 277 (272) (42) .... .... .... .... 116 235 116 235 Other non-owner movements in equity (14) (22) 1 963 .... .... 3 (48) (18) 1 997 (43) 1 997 (40)
373 255 1 691 (42) .... 3 (48) (18) 2 112 192 2 112 195 equals Comprehensive Result 1 527 391 1 675 324 59 (40) 1 845 369 1 416 268 1 416 268
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2009-10 Treasurer’s Annual Financial Report 51
Note 2 Disaggregated Information (continued) – Statement of Comprehensive Income by Sector General Government
Sector Public Non-Financial Corporations Sector
Public Financial Corporations Sector
Inter-sector Eliminations
Total Non-Financial Public Sector
Total State Sector
2009-10 2008-09 2009-10 2008-09 2009-10 2008-09 2009-10 2008-09 2009-10 2008-09 2009-10 2008-09 $m $m $m $m $m $m $m $m $m $m $m $m KEY FISCAL AGGREGATES NET OPERATING BALANCE 18 (78) 141 6 33 93 .... .... 158 (73) 192 20 less Net acquisition of non-financial assets
Purchase of non-financial assets 607 286 716 729 1 .... .... .... 1 323 1 015 1 324 1 016 less Sale of non-financial assets 69 41 40 35 .... .... .... .... 109 76 109 76 less Depreciation 229 229 311 241 .... .... .... .... 539 470 540 470
309 17 365 453 1 .... .... .... 675 470 675 470 Equals FISCAL BALANCE – SURPLUS/(DEFICIT) (291) (95) (224) (447) 32 93 .... .... (517) (543) (483) (450)
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2009-10 Treasurer’s Annual Financial Report 52
Note 2 Disaggregated Information (continued) – Statement of Financial Position as at 30 June by Sector General Government
Sector Public Non-Financial Corporations Sector
Public Financial Corporations Sector
Inter-sector Eliminations
Total Non-Financial Public Sector
Total State Sector
2009-10 2008-09 2009-10 2008-09 2009-10 2008-09 2009-10 2008-09 2009-10 2008-09 2009-10 2008-09 $m $m $m $m $m $m $m $m $m $m $m $m Assets Financial Assets
Cash and deposits 966 1 227 200 208 2 2 1 020 1 112 1 166 1 435 147 325 Investments 56 48 43 124 6 070 7 102 2 866 2 679 97 172 3 303 4 595 Equity investments in PNFC and PFC sectors 5 950 4 105 .... .... .... .... 5 950 4 105 310 251 .... …. Other equity investments 3 6 138 125 102 112 .... .... 141 131 243 243 Receivables 185 183 320 403 13 15 2 11 503 575 516 590 Other financial assets 942 1 009 984 938 170 202 1 270 1 309 661 651 826 840
8 102 6 578 1 685 1 799 6 357 7 433 11 108 9 216 2 879 3 216 5 036 6 594 Non-financial assets
Land and buildings 5 219 4 807 282 495 .... .... .... .... 5 501 5 302 5 501 5 302 Infrastructure 4 837 4 641 9 331 7 208 .... .... .... .... 14 168 11 849 14 168 11 849 Plant and equipment 216 213 213 167 1 1 .... .... 429 380 430 381 Heritage and cultural assets 553 447 .... .... .... .... .... .... 553 447 553 447 Biological assets .... .... 319 385 .... .... .... .... 319 385 319 385 Investment property 13 13 .... 1 16 15 .... .... 13 14 29 29 Goodwill .... .... 55 55 .... .... .... .... 55 55 55 55 Intangible assets 34 29 72 61 .... .... .... .... 106 90 106 90 Assets held for sale 21 15 11 5 .... .... .... .... 32 20 32 20 Other non-financial assets 37 38 112 90 .... .... .... .... 149 128 149 128
10 930 10 203 10 394 8 467 17 16 .... .... 21 324 18 670 21 341 18 686 Total Assets 19 031 16 781 12 079 10 266 6 374 7 449 11 108 9 216 24 203 21 887 26 377 25 280 Liabilities
Borrowings 274 293 2 764 2 512 5 218 6 314 3 844 3 792 3 037 2 804 4 411 5 327 Superannuation 4 860 4 034 633 548 3 3 .... .... 5 493 4 582 5 497 4 585 Employee entitlements 461 459 104 84 1 1 .... .... 566 543 567 544 Payables 104 91 177 341 3 3 2 10 279 422 282 425 Other liabilities 267 254 2 760 2 928 840 877 1 313 1 310 1 762 1 885 2 555 2 749
Total Liabilities 5 966 5 131 6 439 6 413 6 065 7 198 5 158 5 112 11 137 10 237 13 312 13 630 Net Assets 13 065 11 650 5 640 3 853 310 251 5 950 4 105 13 065 11 650 13 065 11 650
Equity
Accumulated surplus 7 627 6 921 1 837 1 612 300 241 1 752 2 392 7 082 6 392 8 012 6 382 Asset revaluation reserve 4 508 4 448 570 841 .... .... .... .... 5 078 5 290 5 078 5 290 Equity transfers 930 280 3 258 1 432 .... .... 4 187 1 713 930 .... .... .... Other reserves .... .... (25) (32) 10 10 10 .... (25) (32) (25) (22)
Total Equity 13 065 11 650 5 640 3 853 310 251 5 950 4 105 13 065 11 650 13 065 11 650
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2009-10 Treasurer’s Annual Financial Report 53
Note 2 Disaggregated Information (continued) – Statement of Financial Position as at 30 June by Sector General Government
Sector Public Non-Financial Corporations Sector
Public Financial Corporations Sector
Inter-sector Eliminations
Total Non-Financial Public Sector
Total State Sector
2009-10 2008-09 2009-10 2008-09 2009-10 2008-09 2009-10 2008-09 2009-10 2008-09 2009-10 2008-09 $m $m $m $m $m $m $m $m $m $m $m $m KEY FISCAL AGGREGATES
NET WORTH 13 065 11 650 5 640 3 853 310 251 5 950 4 105 13 065 11 650 13 065 11 650
NET FINANCIAL WORTH 2 135 1 447 (4 754) (4 614) 293 235 5 950 4 105 (8 259) (7 021) (8 276) (7 037) NET FINANCIAL LIABILITIES 3 814 2 658 4 754 4 614 (293) (235) .... .... 8 569 7 273 8 276 7 037 NET DEBT (748) (982) 2 522 2 180 (854) (790) (43) .... 1 774 1 197 962 407
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2009-10 Treasurer’s Annual Financial Report 54
Note 2 Disaggregated Information (continued) – Statement of Cash Flows by Sector General Government
Sector Public Non-Financial Corporations Sector
Public Financial Corporations Sector
Inter-sector Eliminations
Total Non-Financial Public Sector
Total State Sector
2009-10 2008-09 2009-10 2008-09 2009-10 2008-09 2009-10 2008-09 2009-10 2008-09 2009-10 2008-09 $m $m $m $m $m $m $m $m $m $m $m $m Cash flows from operating activities Cash infow
Taxation 867 792 .... .... .... .... 42 27 825 765 825 765 Sales of goods and services 291 307 2 913 2 085 147 140 47 35 3 160 2 359 3 305 2 497 Grants received 3 130 2 681 150 117 .... .... 129 119 3 152 2 681 3 151 2 679 Dividend, tax and rate equivalent income 106 152 .... .... 31 .... 106 152 55 87 31 .... Fines and regulatory fees 86 63 .... .... .... .... .... .... 86 63 86 63 Interest received 44 71 10 13 280 355 194 221 54 83 140 218 Other receipts 291 279 162 157 3 78 .... 3 453 433 456 511
4 817 4 346 3 236 2 371 460 573 518 557 7 786 6 472 7 995 6 733 Cash outflow
Employee entitlements (1 958) (1 805) (360) (303) (3) (2) .... .... (2 318) (2 106) (2 321) (2 109) Superannuation (304) (269) (51) (33) .... .... .... .... (355) (303) (355) (303) Supplies and consumables (933) (951) (2 033) (1 296) (100) (90) (31) (36) (2 937) (2 214) (3 034) (2 304) Grant and subsidy paid (929) (797) (23) (23) (1) (2) (141) (119) (812) (703) (812) (703) Borrowing costs (17) (16) (160) (147) (335) (384) (212) (228) (159) (155) (301) (319) Other payments (256) (206) (158) (189) (7) (10) (28) (22) (387) (375) (394) (383)
(4 397) (4 046) (2 786) (1 991) (446) (489) (412) (405) (6 968) (5 856) (7 217) (6 122) Net cash flows from operating activities 420 300 450 380 15 83 106 152 818 616 778 611 Cash flows from investing activities Non-financial assets
Purchases of non-financial assets (607) (286) (716) (729) (1) (1) .... .... (1 323) (1 015) (1 324) (1 016) Sales of non-financial assets 69 41 40 35 .... .... .... .... 109 76 109 76
(538) (246) (676) (694) (1) .... .... .... (1 214) (939) (1 215) (940) Financial assets (policy purposes)
Equity injections (111) (117) 111 117 .... .... .... .... .... .... .... .... Net advances paid (11) (12) .... .... .... .... 1 .... (12) (12) (12) (12)
(122) (129) 111 117 .... .... 1 .... (12) (12) (12) (12) Financial assets (liquidity management purposes)
Net purchase/(sale) of investments 1 5 (20) (68) 104 (225) (66) (487) (19) (63) 151 199 1 5 (20) (68) 104 (225) (66) (487) (19) (63) 151 199 Net cash flows from investing activities (659) (370) (586) (645) 103 (225) (65) (487) (1 246) (1 015) (1 077) (753) Cash flows from financing activities
Net borrowing (22) (22) 81 409 (826) 129 66 487 60 387 (833) 29 Dividend, tax and rate equivalent payments .... .... (68) (65) (54) (87) (106) (152) (16) .... (16) .... Other financing .... 12 32 .... .... .... (1) .... 32 12 32 12
(22) (10) 45 344 (880) 42 (42) 335 76 399 (817) 41
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2009-10 Treasurer’s Annual Financial Report 55
Note 2 Disaggregated Information (continued) – Statement of Cash Flows by Sector General Government
Sector Public Non-Financial Corporations Sector
Public Financial Corporations Sector
Inter-sector Eliminations
Total Non-Financial Public Sector
Total State Sector
2009-10 2008-09 2009-10 2008-09 2009-10 2008-09 2009-10 2008-09 2009-10 2008-09 2009-10 2008-09 $m $m $m $m $m $m $m $m $m $m $m $m Net Increase/(decrease) in cash held (261) (80) (92) 80 (763) (100) .... .... (352) .... (1 115) (100) Cash and cash equivalents at beginning of the year 1 227 1 306 326 247 1 136 1 236 .... .... 1 553 1 553 2 689 2 789 Cash and cash equivalents at end of the year 966 1 227 234 326 373 1 136 .... .... 1 201 1 553 1 574 2 689 KEY FISCAL AGGREGATES Net cash from operating activities 420 300 450 380 15 83 106 152 818 616 778 611 plus Dividend, income tax and rate equivalent payments .... .... (68) (65) (54) (87) (106) (152) (16) .... (16) .... plus Net cash flows from non-financial assets (538) (246) (676) (694) (1) .... .... .... (1 214) (939) (1 215) (940) Equals CASH SURPLUS/(DEFICIT) (118) 54 (294) (380) (41) (4) .... .... (412) (324) (453) (329)
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56 2009-10 Treasurer’s Annual Financial Report
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2009-10 Treasurer’s Annual Financial Report 57
Note 3 Revenue from transactions
3.1 Grants
General Government Total State
2009-10 2009-10 2008-09 2009-10 2008-09
Original Budget
Actual
Actual
Actual
Actual
$m $m $m $m $m Australian Government grants paid into the
Consolidated Fund
General purpose payments 1 527 1 639 1 627 1 639 1 627
Specific purpose payments 562 580 522 580 522
National partnership payments 643 769 130 769 130
Capital grants …. …. 89 …. 89
Other grants and subsidies 15 70 .... 70 ….
Grants and subsidies not paid into the
Consolidated Fund 12 52 337 71 336
2 759 3 110 2 705 3 129 2 704
Significant reforms to Commonwealth-State relations were implemented on 1 January 2009, as a result of the Council of Australian Governments Intergovernmental Agreement on Federal Financial Relations. This has resulted in changes to the classification of many Australian Government grants between the categories of Specific purpose payments, National partnership payments and Other grants and subsidies.
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58 2009-10 Treasurer’s Annual Financial Report
3.2 Taxation revenue
General Government Total State
2009-10 2009-10 2008-09 2009-10 2008-09
Original Budget
Actual
Actual
Actual
Actual
$m $m $m $m $m Payroll tax 257 271 259 247 239
Taxes on property
Land tax 90 91 80 91 80
Taxes on financial and capital transactions 134 163 151 163 151
Fire service levies 51 53 50 53 50
Guarantee fees 20 18 9 …. ….
Taxes on the provision of goods and services
Casino tax and license fees 58 59 62 59 62
Betting exchange taxes and levies 7 7 8 7 8
Lottery tax 24 27 23 27 23
Totalizator wagering levy 6 6 …. 6 ….
Other taxes on insurance 44 47 43 47 43
Taxes on the use of goods and services
Vehicle registration fees 29 31 29 31 29
Other motor vehicle fees and taxes 90 98 89 98 89
810 872 804 829 775
3.3 Sales of goods and services
General Government Total State
2009-10 2009-10 2008-09 2009-10 2008-09
Original Budget
Actual
Actual
Actual
Actual
$m $m $m $m $m Sales of goods 113 38 31 431 425
Sales of services 189 178 200 2 508 2 046
Rental income 73 73 72 83 74
375 289 303 3 021 2 545
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2009-10 Treasurer’s Annual Financial Report 59
3.4 Fines and regulatory fees
General Government Total State
2009-10 2009-10 2008-09 2009-10 2008-09
Original Budget
Actual
Actual
Actual
Actual
$m $m $m $m $m Fines 26 36 31 36 31
Fees
Abalone licences 7 7 7 7 7
Environment fees 2 4 5 4 5
Drivers’ licences 8 9 6 9 6
Photo licence fees 2 …. 1 …. 1
Road safety levy 2 10 9 10 9
Other fees 18 32 33 32 33
64 97 92 97 92
3.5 Dividend, tax and rate equivalent revenue
General Government Total State
2009-10 2009-10 2008-09 2009-10 2008-09
Original Budget
Actual
Actual
Actual
Actual
$m $m $m $m $m Returns from the PNFC and PFC sectors as:
Dividend revenue 45 53 68 …. ….
Income tax equivalents 52 23 139 …. ….
Rates equivalents 3 3 3 …. ….
Other dividend revenue …. …. .... 31 62
100 79 210 31 62
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60 2009-10 Treasurer’s Annual Financial Report
3.6 Other revenue
General Government Total State
2009-10 2009-10 2008-09 2009-10 2008-09
Original Budget
Actual
Actual
Actual
Actual
$m $m $m $m $m Royalty income 22 39 30 39 30
Health Industry research funds and donations …. 3 4 3 4
Workers’ compensation recoveries …. 5 5 5 5
Salaries and wages recoveries …. 7 7 7 7
Customer contributions applied to capital works …. …. .... 9 10
Administration of justice …. 7 3 7 3
Trunk mobile radio network upgrade …. 6 .... 6 ….
Other recoveries …. 18 20 17 31
Workplace standards …. 5 4 5 4
Other revenue 52 18 31 54 73
74 109 104 153 167
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2009-10 Treasurer’s Annual Financial Report 61
Note 4 Expenses from transactions
4.1 Employee expenses
General Government Total State
2009-10 2009-10 2008-09 2009-10 2008-09
Original Budget
Actual
Actual
Actual
Actual
$m $m $m $m $m Salaries and wages 1 837 1 784 1 709 2 155 1 998
Annual leave …. 99 89 117 100
Long service leave 21 39 39 46 45
Fringe benefits tax 4 5 6 8 8
Other 14 30 20 31 20
1 875 1 957 1 863 2 358 2 172
4.2 Depreciation
General Government Total State
2009-10 2009-10 2008-09 2009-10 2008-09
Original Budget
Actual
Actual
Actual
Actual
$m $m $m $m $m Depreciation in respect of:
Buildings 80 87 89 91 95
Plant and equipment 55 45 48 82 81
Infrastructure 93 93 90 349 289
Other 1 4 2 18 4
228 229 229 540 470
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62 2009-10 Treasurer’s Annual Financial Report
4.3 Grant and subsidy expenses
General Government Total State
2009-10 2009-10 2008-09 2009-10 2008-09
Original Budget
Actual
Actual
Actual
Actual
$m $m $m $m $m Grants
Department of Health and Human Services:
Disability services n/a 92 79 92 79
Home and community care n/a 33 29 33 29
Supported accommodation assistance n/a 16 15 16 15
Other DHHS Services grants n/a 51 46 51 46
211 191 169 191 169 Grants to non-government schools:
Australian Government funded 131 154 141 154 141
State Government funded 46 49 49 49 49
Capital assistance 57 74 9 74 9
Local government grants 78 80 99 80 99
Other recurrent grants expenses 194 279 199 234 205
Capital grants 4 3 42 3 …. Subsidies
Aurora Energy Pty Ltd pensioner concessions 22 22 23 …. …. Community service obligation payment to
Metro Tasmania Pty Ltd 30 32 28 …. ….
Other community service obligation payments 9 10 8 …. ….
Payments to school bus operators:
Contract services 19 17 27 17 27
Route services 14 24 14 24 14
814 935 807 826 713
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2009-10 Treasurer’s Annual Financial Report 63
4.4 Supplies and consumables
General Government Total State
2009-10 2009-10 2008-09 2009-10 2008-09
Original Budget
Actual
Actual
Actual
Actual
$m $m $m $m $m Consultants 15 39 42 81 109
Property services 130 148 162 138 136
Maintenance 130 92 60 150 86
Communications 48 40 36 53 54
Information technology 67 62 52 80 66
Travel and transport 36 27 29 49 83
Medical, surgical and pharmacy supplies 153 174 159 174 159
Advertising and promotion 16 19 15 36 30
Operating lease costs 11 31 33 41 36
Other supplies and consumables 281 303 336 700 644
Cost of sales …. …. .... 1 192 911
Tasmanian Risk Management Fund 51 38 33 38 32
938 973 958 2 731 2 347
4.5 Dividend, tax and rate equivalent expenses
General Government Total State
2009-10 2009-10 2008-09 2009-10 2008-09
Original Budget
Actual
Actual
Actual
Actual
$m $m $m $m $m Water and Sewerage Corporations dividend
payment to Local Councils …. …. …. 14 ….
…. …. …. 14 ….
In accordance with section 32 of the Water and Sewerage Corporations Act 2008, dividends are to be determined by the Board of each water and sewerage entity during the financial year and payments are made following the Treasurer’s allocation order to the stakeholders.
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64 2009-10 Treasurer’s Annual Financial Report
4.6 Other expenses
General Government Total State
2009-10 2009-10 2008-09 2009-10 2008-09
Original Budget
Actual
Actual
Actual
Actual
$m $m $m $m $m Workers’ compensation …. …. 2 4 5
Other expenses 44 31 40 30 38
44 31 42 34 43
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2009-10 Treasurer’s Annual Financial Report 65
Note 5 Other economic flows
5.1 Gain/(loss) on sale of non-financial assets
General Government Total State
2009-10 2009-10 2008-09 2009-10 2008-09
Original Budget
Actual
Actual
Actual
Actual
$m $m $m $m $m Gain/(loss) on sale of non-financial assets
Proceeds on disposal of fixed assets 78 69 41 109 76
Written down value of fixed assets sold (83) (93) (38) (135) (73)
TOTAL (6) (24) 3 (26) 3
5.2 Other gains/(losses) included in Operating Result
General Government Total State
2009-10 2009-10 2008-09 2009-10 2008-09
Original Budget
Actual
Actual
Actual
Actual
$m $m $m $m $m Assets acquired below fair value …. 21 22 31 23
Asset revaluation movements 4 (23) (46) (50) 214
Amortisation (3) (3) (4) (19) (19)
Bad debt written off …. (1) …. (2) ….
TT Line prior year tax loss …. (36) …. …. ….
Forestry Tasmania establishment of obligations for
non-commercial zones …. …. …. (66) ….
Aurora unwinding discount of decommissioning
costs …. …. …. (1) ….
2 (41) (28) (107) 217
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66 2009-10 Treasurer’s Annual Financial Report
Note 6 Assets
6.1 Investments
General Government Total State
2009-10 2009-10 2008-09 2009-10 2008-09
Original Budget
Actual
Actual
Actual
Actual
$m $m $m $m $m Current investments
Loan advances 30 10 13 50 159
Government and institutional securities 6 6 8 2 106 3 117
37 16 20 2 156 3 276 Non-current investments
Loan advances 34 39 28 91 149
Government and institutional securities …. …. …. 1 055 1 169
34 39 28 1 147 1 319
70 56 48 3 303 4 595
6.2 Equity investments
General Government Total State
2009-10 2009-10 2008-09 2009-10 2008-09
Original Budget
Actual
Actual
Actual
Actual
$m $m $m $m $m Equity investment in PNFC and PFC sectors 3 966 5 950 4 105 …. ….
MAIB equity investments …. …. .... 102 112
Hydro investment in joint venture …. …. .... 122 123
Other equity investments 3 3 6 19 8
3 969 5 953 4 111 243 243
The increase in Equity investments in 2009-10 is primarily due to the inclusion of the local government owned water and sewerage corporations as a result of the Australian Bureau of Statistics decision to classify these entities within the Public Non-Financial Corporations Sector. This is a classification issue only and has no impact on the ownership and control of water and sewerage assets, which rests with local government under the Water and Sewerage Corporations Act 2008.
Following the Government’s decision to acquire the operating rail network, Tasmanian Railway Pty Ltd (TasRail) was established under the Rail Company Act 2009. TasRail was created by combining the below rail assets (track and associated infrastructure), for which the Government had assumed responsibility in 2007, with the above rail (rolling stock) and business assets purchased from Pacific National in late 2009.
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2009-10 Treasurer’s Annual Financial Report 67
During 2009-10, the Government provided the following equity contribution to Government businesses:
• Tasmanian Railway Pty Ltd $82 million;
• Rivers and Water Supply Commission $21 million;
• Aurora Energy Pty Ltd $5 million;
• Hydro Tasmania $1 million; and
• Tasracing Pty Ltd $1 million.
The equity investment in the PNFC and PFC Sectors is comprised of the following values at 30 June 2009 and 30 June 2010. Note original Budget information is not presented:
General Government
2010 Actual
2009 Actual
$m $m Public Non-Financial Corporations Sector
1
Aurora Energy Pty Ltd 496 518
Hydro Tasmania 1 882 1 665
Forestry Tasmania 327 629
Private Forests Tasmania 1 1
Metro Tasmania Pty Ltd 33 32
Transend Networks Pty Ltd 564 525
TOTE Tasmania Pty Ltd 9 5
Tasmanian Ports Corporation Pty Ltd 123 126
Tasracing Pty Ltd 53 53
Rivers and Water Supply Commission 63 42
Port Arthur Historic Site Management Authority 14 15
TT-Line Company Pty Ltd 249 237
Public Trustee 4 5
Tasmanian Railway Pty Ltd 72 ….
Tasmanian Water and Sewerage Corporation (Northern-Region) Pty Ltd 489 ….
Tasmanian Water and Sewerage Corporation (North-Western-Region) Pty Ltd 327 ….
Tasmanian Water and Sewerage Corporation (Southern-Region) Pty Ltd 933 ….
Public Financial Corporations Sector
Motor Accidents Insurance Board 271 220
Tasmanian Public Finance Corporation 38 31
5 950 4 105
Note: 1. The three regional water and sewerage entities hold an equity investment in the Tasmanian Water and Sewerage
Corporation (Common Services) Pty Ltd. As a result of the consolidation process, this entity is not included in the above table.
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68 2009-10 Treasurer’s Annual Financial Report
6.3 Receivables
General Government Total State
2009-10 2009-10 2008-09 2009-10 2008-09
Original Budget
Actual
Actual
Actual
Actual
$m $m $m $m $m Current receivables
Trade receivables 141 174 219 425 513
Other 13 1 1 75 102
Less Provision for impairment (5) (16) (38) (23) (40)
149 158 182 478 575 Non-current receivables
Trade receivables 5 35 1 35 ….
Other …. …. .... 12 15
Less Provision for impairment …. (8) .... (8) ….
5 27 1 39 15
154 185 183 516 590
6.4 Other financial assets
General Government Total State
2009-10 2009-10 2008-09 2009-10 2008-09
Original Budget
Actual
Actual
Actual
Actual
$m $m $m $m $m Current other financial assets
Prepayments 15 14 12 60 31
Accrued revenue 15 12 14 37 28
GST Receivable 9 17 11 22 14
Basslink financial asset …. …. .... 43 57
Derivative financial instruments receivable …. …. .... 152 206
Other 9 1 1 13 8
48 44 38 327 344 Non-current other financial assets
Deferred tax assets to mirror PNFC/PFC sectors 874 898 971 33 ….
Basslink financial asset …. …. .... 383 399
Basslink security deposit …. …. .... 50 50
Derivative financial instruments receivable …. …. .... 18 30
Gas supply contracts …. …. .... 15 17
874 898 971 499 496
922 942 1 009 826 840
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2009-10 Treasurer’s Annual Financial Report 69
6.5 Land and buildings
General Government Total State
2009-10 2009-10 2008-09 2009-10 2008-09
Original Budget
Actual
Actual
Actual
Actual
$m $m $m $m $m Land
Land at fair value 1 720 1 889 1 761 1 964 1 790
Land at cost …. …. .... 16 296
1 720 1 889 1 761 1 980 2 086
Buildings
Buildings at fair value 3 599 3 144 3 051 3 236 3 136
Buildings at cost …. 268 79 402 208
Less Accumulated depreciation (84) (80) (85) (116) (127)
3 515 3 331 3 045 3 522 3 217
5 235 5 219 4 807 5 501 5 302
6.6 Infrastructure
General Government Total State
2009-10 2009-10 2008-09 2009-10 2008-09
Original Budget
Actual
Actual
Actual
Actual
$m $m $m $m $m Infrastructure at fair value 4 906 4 737 4 645 15 898 13 542
Infrastructure at cost …. 186 44 1 159 823
Less Accumulated depreciation …. (86) (49) (2 889) (2 515)
4 906 4 837 4 641 14 168 11 849
6.7 Plant and equipment
General Government Total State
2009-10 2009-10 2008-09 2009-10 2008-09
Original Budget
Actual
Actual
Actual
Actual
$m $m $m $m $m Plant and equipment at fair value …. …. 6 36 50
Plant and equipment at cost 225 434 412 749 738
Less Accumulated depreciation (68) (218) (206) (355) (407)
157 216 213 430 381
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70 2009-10 Treasurer’s Annual Financial Report
6.8 Heritage and cultural assets
General Government Total State
2009-10 2009-10 2008-09 2009-10 2008-09
Original Budget
Actual
Actual
Actual
Actual
$m $m $m $m $m Tasmanian Museum and Art Gallery collection at
fair value 453 487 395 487 395
Other heritage and cultural assets at fair value 1 66 52 66 52
454 553 447 553 447
6.9 Biological assets
General Government Total State
2009-10 2009-10 2008-09 2009-10 2008-09
Original Budget
Actual
Actual
Actual
Actual
$m $m $m $m $m Current
Standing timber at market value .... .... .... 6 24
.... .... .... 6 24 Non-current
Standing timber at valuation .... .... .... 242 271
Joint venture timber resource at valuation .... .... .... 71 91
.... .... .... 313 362
.... .... .... 319 385
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2009-10 Treasurer’s Annual Financial Report 71
6.10 Reconciliation of non-current assets General Government Sector
Land and buildings
Infra- structure
Plant and
equipment
Heritage and
cultural Total
$m $m $m $m $m 2010
Carrying amount at 1 July 2009 4 807 4 641 213 447 10 108 Additions 399 223 78 1 701 Disposals (80) (30) (23) …. (133) Revaluation increments/(decrements) 169 96 …. 106 370 Transfers in/(out) (18) …. …. …. (19) Depreciation (88) (93) (44) …. (225) Impairment losses (8) …. …. …. (8) Other 39 …. (6) …. 33
Carrying amount at 30 June 2010 5 219 4 837 216 553 10 826
2009
Carrying amount at 1 July 2008 4 636 4 538 241 417 9 831 Additions 105 116 86 17 325 Disposals (24) (1) (26) .... (51) Revaluation increments/(decrements) 176 211 .... 10 397 Transfers in/(out) (13) .... .... .... (13) Depreciation (89) (90) (47) .... (226) Impairment losses (24) (31) .... .... (55) Other 39 (103) (41) 3 (101)
Carrying amount at 30 June 2009 4 807 4 641 213 447 10 108
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72 2009-10 Treasurer’s Annual Financial Report
6.10 Reconciliation of non-current assets (continued) Total State Sector
Land and buildings
Infra- structure
Plant and equipment
Heritage and
cultural Biological
assets Total
$m $m $m $m $m $m
2010 Carrying amount at 1 July 2009 5 302 11 849 381 447 385 18 363
Transfers to water and sewerage
entities
52 1 853 12 .... .... 1 917
Additions 425 869 171 .... 8 1 474 Disposals (83) (37) (34) .... .... (154) Revaluation
increments/(decrements)
111 61 2 106 (74) 206
Transfers in/(out) (97) (363) (79) .... .... (538) Depreciation (225) 22 (2) .... .... (205) Impairment losses (24) (2) (4) .... .... (29) Other 39 (85) (16) .... .... (62)
Carrying amount at 30 June 2010 5 501 14 168 430 553 319 20 971
2009
Carrying amount at 1 July 2008 5 121 11 288 394 417 330 17 550 Additions 122 737 137 17 12 1 025 Disposals (26) (1) (31) …. …. (59) Revaluation
increments/(decrements)
183 228 .… 10 43 465
Transfers in/(out) (15) …. …. …. …. (15) Depreciation (97) (290) (80) …. …. (467) Impairment losses (24) (31) 2 …. …. (54) Other 39 (81) (42) 3 …. (80)
Carrying amount at 30 June 2009 5 302 11 849 381 447 385 18 363
6.11 Investment property
General Government Total State
2009-10 2009-10 2008-09 2009-10 2008-09
Original Budget
Actual
Actual
Actual
Actual
$m $m $m $m $m Land 11 7 5 7 5
Buildings …. 6 7 22 24
11 13 13 29 29
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2009-10 Treasurer’s Annual Financial Report 73
6.12 Intangible assets
General Government Total State
2009-10 2009-10 2008-09 2009-10 2008-09
Original Budget
Actual
Actual
Actual
Actual
$m $m $m $m $m Carrying amount
Intangible assets 27 39 33 125 109
Less Accumulated amortisation (3) (5) (4) (19) (19)
24 34 29 106 90
Reconciliation of movements Carrying amount 1 July 27 29 25 90 67
Additions 1 9 8 36 42
Disposals …. …. .... (1) ….
Amortisation expense (3) (5) (4) (19) (19)
Carrying amount 30 June 24 34 29 106 90
6.13 Assets held for sale
General Government Total State
2009-10 2009-10 2008-09 2009-10 2008-09
Original Budget
Actual
Actual
Actual
Actual
$m $m $m $m $m Land …. 15 9 16 9
Buildings …. 5 6 9 9
Plant and equipment 7 1 1 2 1
Infrastructure .... .... .... 3 ....
Tasports assets1 .... .... .... 2 ....
7 21 15 32 20
Note: 1. Subsequent to 30 June 2010, Tasmanian Ports Corporation Pty Ltd sold its 50 per cent equity holding in Cargo and
Port Operation Logistics Pty Ltd to P&O Automotive and General Stevedoring Pty Ltd.
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74 2009-10 Treasurer’s Annual Financial Report
6.14 Other non-financial assets
General Government Total State
2009-10 2009-10 2008-09 2009-10 2008-09
Original Budget
Actual
Actual
Actual
Actual
$m $m $m $m $m Current
Inventory 14 16 16 129 107
14 16 16 129 107 Non-current
Library book stock …. 20 20 20 20
Other 12 …. 2 .... 2
12 20 21 20 22
26 37 38 149 128
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2009-10 Treasurer’s Annual Financial Report 75
Note 7 Liabilities
7.1 Borrowings
General Government Total State
2009-10 2009-10 2008-09 2009-10 2008-09
Original Budget
Actual
Actual
Actual
Actual
$m $m $m $m $m Current borrowings
Domestic and foreign borrowings 45 9 14 1 192 2 759 Australian Government non-financial agreement
debt 16 7 7 7 7
61 16 21 1 199 2 766 Non-current borrowings
Domestic and foreign borrowings 46 41 49 2 996 2 339 Australian Government non-financial agreement
debt 205 217 223 217 223
251 258 272 3 213 2 562
312 274 293 4 411 5 327
7.2 Employee entitlements
General Government Total State
2009-10 2009-10 2008-09 2009-10 2008-09
Original Budget
Actual
Actual
Actual
Actual
$m $m $m $m $m Current employee entitlements
Accrued salaries and wages 37 34 57 39 62
Annual leave 111 118 118 158 151
Long service leave 32 59 42 90 65
Other employee entitlements 18 7 4 8 7
198 218 221 295 285 Non-current employee entitlements
Annual leave 3 3 2 3 2
Long service leave 214 235 230 257 248
Other employee entitlements 2 6 6 11 7
219 244 238 271 257
416 461 459 567 544
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76 2009-10 Treasurer’s Annual Financial Report
7.3 Payables
General Government Total State
2009-10 2009-10 2008-09 2009-10 2008-09
Original Budget
Actual
Actual
Actual
Actual
$m $m $m $m $m Trade creditors 66 94 79 263 367
Other 9 11 13 19 58
76 104 91 282 425
7.4 Other liabilities
General Government Total State
2009-10 2009-10 2008-09 2009-10 2008-09
Original Budget
Actual
Actual
Actual
Actual
$m $m $m $m $m Current other liabilities
Revenue received in advance 12 13 6 140 96 Provision for outstanding and unreported claims
in MAIB …. …. .... 77 81
Basslink services agreement …. …. .... 112 88
Basslink facility swap fee …. …. .... (9) 11
Energy trading derivatives …. …. .... 107 55
Risk management …. 46 38 45 38 Forestry Tasmania’s obligation for non-
commercial zones …. …. .... 5 ....
Other 64 82 63 190 308
76 141 107 667 677 Non-current other liabilities
Provision for outstanding and unreported claims in MAIB …. …. .... 630 599
Basslink services agreement …. …. .... 729 783
Basslink facility swap fee …. …. .... 224 184
Deferred tax liabilities …. …. .... 62 ....
Energy trading derivatives …. …. .... 17 294
Risk management …. 116 121 116 121 Forestry Tasmania’s obligation for non-
commercial zones …. …. .... 60 ....
Other 178 10 26 49 92
178 126 147 1 888 2 072
254 267 254 2 555 2 749
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2009-10 Treasurer’s Annual Financial Report 77
7.5 Superannuation (a) Type of Plan
The major schemes currently operating in the Tasmanian public sector that have an unfunded liability, are those established under the Retirement Benefits Act 1993, the former Parliamentary Superannuation Act 1973; the former Parliamentary Retiring Benefits Act 1985; and the Judges’ Contributory Pensions Act 1968.
In November 2002, Parliament approved legislation that repealed the Parliamentary Superannuation Act 1973 and the Parliamentary Retiring Benefits Act 1985, with effect from 31 December 2002. The scheme details have been reproduced as regulations made under the Retirement Benefits Act 1993, namely the Retirement Benefits (Parliamentary Superannuation) Regulations 2002. This legislation made the Parliamentary Superannuation Fund and the Parliamentary Retiring Benefits Fund sub-funds of the Retirement Benefits Fund. As a consequence, the RBF Board became the trustee of these funds and the Parliamentary Superannuation and Retiring Benefits Trust ceased to exist. This decision, which followed a recommendation from the PSRBT, has not altered the benefits payable to PSF or PRBF members, but provides administrative efficiencies and reduces costs.
These schemes, which are now all closed to new entrants, provide superannuation arrangements for public sector employees generally, Members of Parliament, the judiciary and statutory legal officers.
Retirement Benefits Fund Scheme
The RBF Scheme was established under the Retirement Benefits Act 1970, but was continued under the Retirement Benefits Act 1982 and the Retirement Benefits Act 1993. Scheme details are contained in the Retirement Benefits Regulations 2005.
The RBF contributory scheme is an unfunded defined benefits scheme. Members contribute between five per cent and 15 per cent of salary, and voluntary contributions and salary sacrifice may be made. This scheme was closed to new entrants from 15 May 1999, with new employees appointed on or after that date initially becoming members of the RBF non-contributory scheme.
The RBF non-contributory scheme was an unfunded accumulation (or defined contribution) scheme for those employees not eligible to join the contributory scheme. The employer contributions in respect of non-contributory employees were at the rate required by the Australian Government’s Superannuation Guarantee (Administration) Act 1992. The scheme was closed on 25 April 2000 with the establishment of the fully funded Tasmanian Accumulation Scheme to replace it.
Simultaneous with the introduction of the Retirement Benefits Regulations in 1994, the Superannuation Provision Account was established in the Special Deposits and Trust Fund. Contributions by agencies and certain statutory authorities in respect of the accruing liability in relation to current employees (11 per cent of salary for contributory members and, until 25 April 2000, the appropriate Superannuation Guarantee rate for non-contributory scheme members) have been credited to the Account, as have interest and supplementary contributions from the Consolidated Fund to assist in meeting the unfunded liability. Agencies have also been required to make a “gap” payment for all permanent employees appointed on or after 15 May 1999. Employer contributions in respect of TAS members or members of other complying superannuation schemes are paid directly to the RBF Board or the complying superannuation scheme.
Payments to the RBF to cover the employer liability component for pensioners and lump sum benefits with respect to retiring employees are met from the SPA.
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78 2009-10 Treasurer’s Annual Financial Report
An independent actuarial assessment is undertaken into the RBF Scheme as at 30 June each financial year. In the valuation, the actuary includes liabilities of Government Business Enterprises, State-owned Companies and other statutory authorities, as part of the overall RBF Scheme valuation.
The net liability as at 30 June 2010 is based upon the latest available actuarial assessment, which was undertaken as at that date. The net liability takes into account funds under management with the RBF but does not take into account the SPA balance.
The division between the current and non-current liability as at 30 June each year is based upon anticipated superannuation expenditure during the ensuing financial year.
As a consequence of the Public Sector Superannuation Reform Act 1999, the RBF defined benefit scheme was closed to new entrants with effect from 15 May 1999. New public sector employees appointed after that date are now members of the fully funded TAS or an alternative complying superannuation scheme of their choice. Thus, there are no liabilities pertaining to employees covered by these arrangements.
Properties at 39 Sandy Bay Road and 104 Hampton Road, Hobart are controlled by the RBF and are included within the fair value of plan assets.
The RBF Board also administers three separate funds, Housing Tasmania’s Superannuation Scheme, the Tasmanian Ambulance Service Superannuation Scheme and the State Fire Commission Superannuation Scheme.
Parliamentary Superannuation Fund
The PSF is a defined benefit pension scheme established under the provisions of the former Parliamentary Superannuation Act 1973, and continued under the Retirement Benefits (Parliamentary Superannuation) Regulations 2002, and is the older of the two Parliamentary schemes in operation. The scheme was closed to new members in 1985, but was maintained for parliamentarians who, having been first elected before that date, were subsequently re-elected to Parliament after a period out of office. The 1999 reforms closed this scheme to parliamentarians re-elected as described above and therefore no parliamentarians can re-enter the scheme.
The PSF is a partially funded scheme, with the employer share of the benefits being met by the Government on an emerging cost basis.
An actuarial valuation of the scheme was undertaken as at 30 June 2010.
Parliamentary Retiring Benefits Fund
The PRBF is a closed defined benefit lump sum scheme established under the provisions of the former Parliamentary Retiring Benefits Act 1985 and continued under the Retirement Benefits (Parliamentary Superannuation) Regulations 2002. The scheme covers those members of Parliament first elected after 12 November 1985 and before 1 July 1999. New parliamentarians elected after 1 July 1999 automatically become members of TAS unless they elect to join a private complying superannuation scheme of their choice.
The Government currently funds this scheme at the rate of 23.4 per cent of salary for each member of the scheme, together with administration expenses. This is above the scheme design level of 22.5 per cent of salary, and arises from the recommendation of the actuary that the Government’s contribution be equal to 2.6 times member contributions.
An actuarial valuation of the scheme was undertaken as at 30 June 2010.
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2009-10 Treasurer’s Annual Financial Report 79
Judges’ Scheme
Superannuation arrangements for judges are specified in the Judges' Contributory Pensions Act 1968. There is no Judges’ Superannuation Fund as such, with the contributions made by judges (at the rate of five per cent of salary) being deposited into, and all benefits being met from, the Consolidated Fund.
The Judges’ Scheme is a defined benefit scheme that was closed to new entrants with effect from 1 July 1999. Prior to that date, the Solicitor-General, the Director of Public Prosecutions and the Master of the Supreme Court were also members of this scheme. Judges and statutory legal officers appointed after that date become members of TAS unless they elect to join a private complying superannuation scheme.
The Judges’ Scheme is an unfunded scheme in respect of employer contributions, with all the benefits being met by the Government as liabilities on an emerging cost basis.
Housing Tasmania and Tasmanian Ambulance Service Superannuation Schemes
These two liabilities are recognised by the Department of Health and Human Services. Housing Tasmania is required to meet the emerging cost of pension payments paid in respect of retired employees, where those employees had a superannuation entitlement that accrued before 1 July 1994. The TASSS balances reported are provided in respect of those employees who are defined benefit members.
State Fire Commission Superannuation Scheme
The State Fire Commission Superannuation Scheme is a defined benefit scheme held by the State Fire Commission. It was established for permanent uniformed employees of the Tasmanian Fire Service. The scheme was closed to new members on 30 June 2005 and amounts transferred to the RBF Board on 1 May 2006. Under the new arrangement, the trustee, fund administration and investment functions were transferred. In the following tables, details regarding this scheme are presented as part of the total RBF Scheme.
(b) Superannuation liability
General Government Total State
2010 2009 2010 2009
Actual
Actual
Actual
Actual
$m $m $m $m Current 181 165 210 192
Non-current 4 679 3 869 5 287 4 393
4 860 4 034 5 497 4 585
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80 2009-10 Treasurer’s Annual Financial Report
General Government
2010 Actual 2009 Actual
Present value of liability
Fair value of plan assets Total
Present value of liability
Fair value of plan assets Total
$m $m $m $m $m $m Retirement Benefits Fund
Scheme 6 122 (1 330) 4 792 5 218 (1 250) 3 968
Tasmanian Ambulance Scheme 35 (33) 1 33 (30) 4
Housing Tasmania Scheme 14 …. 14 14 .... 14
Judges’ Contributory Scheme 34 …. 34 31 .... 31
Parliamentary Schemes 27 (7) 20 28 (9) 19
6 231 (1 371) 4 860 5 323 (1 289) 4 034
Total State
2010 Actual 2009 Actual
Present value of liability
Fair value of plan assets Total
Present value of liability
Fair value of plan assets Total
$m $m $m $m $m $m Retirement Benefits Fund
Scheme 6 915 (1 489) 5 426 5 922 (1 403) 4 519
Tasmanian Ambulance Scheme 35 (33) 1 33 (30) 4
Housing Tasmania Scheme 14 …. 14 14 …. 14 Judges’ Contributory Scheme 34 …. 34 31 …. 31
Parliamentary Schemes 27 (7) 20 28 (9) 19
Other Schemes 12 (10) 2 …. …. ….
7 036 (1 539) 5 497 6 028 (1 442) 4 585
(c) Key actuarial assumptions
2010 Actual 2009 Actual
Discount rate
Expected return on
plan assets
Expected rate of salary
increases Discount
rate
Expected return on
plan assets
Expected rate of salary
increases
% % % % % % Retirement Benefits Fund
Scheme 5.4 7.0 4.5 5.7 7.0 4.5
Tasmanian Ambulance
Scheme 4.9 7.0 4.5 5.2 7.0 5.0
Housing Tasmania Scheme 5.4 7.0 4.5 5.7 7.0 4.5
Judges’ Contributory Scheme 5.5 .... 4.0 5.8 .... 4.0
Parliamentary Schemes 5.4 7.0 4.0 5.7 7.0 4.0
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2009-10 Treasurer’s Annual Financial Report 81
(d) Reconciliation of movements in present value of superannuation liability
2009-10
General Government Total State
RBF
Parliament
Schemes Judges
Tas
Ambulance
Housing
Tas Total
PNFC/PFC
Sectors Total
$m $m $m $m $m $m $m $m
Balance as at 1 July 5 218 28 31 33 14 5 323 706 6 028
Current service cost 114 .... .... 2 .... 116 14 130
Interest cost 289 2 2 2 1 295 40 335
Contributions by plan
participants 45 .... .... 1 .... 46 5 51
Actuarial losses/(gains) 752 2 3 (2) .... 755 50 805
Benefits paid (250) (5) (2) (1) (1) (258) (29) (287)
Other (46) .... .... .... .... (47) 24 (26)
Balance as at 30 June 6 122 27 34 35 14 6 231 810 7 036
2008-09
General Government Total State
RBF
Parliament
Schemes Judges
Tas
Ambulance
Housing
Tas Total
PNFC/PFC
Sectors Total
$m $m $m $m $m $m $m $m
Balance as at 1 July 5 032 29 28 32 16 5 137 687 5 824
Current service cost 145 .... .... 2 .... 148 13 161
Interest cost 285 2 2 2 1 291 38 329
Contributions by plan
participants 38 .... .... 1 .... 39 5 44
Actuarial losses/(gains) (46) .... 2 (1) (2) (48) 7 (40)
Benefits paid (223) (3) (2) (2) (1) (231) (45) (276)
Other (13) .... .... .... .... (13) (1) (14)
Balance as at 30 June 5 218 28 31 33 14 5 323 706 6 028
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82 2009-10 Treasurer’s Annual Financial Report
(e) Reconciliation of movements in plan assets
2009-10
General Government Total State
RBF
Parliament
Schemes Judges
Tas
Ambulance
Housing
Tas Total
PNFC/PFC
Sectors Total
$m $m $m $m $m $m $m $m
Balance as at 1 July 1 250 9 .... 30 .... 1 289 153 1 442
Expected return on plan
assets 83 1 .... 2 .... 86 11 97
Actuarial (losses)/gains 60 1 .... 1 .... 62 1 63
Employer contributions 185 1 .... 1 1 188 30 218
Contributions by plan
participants 45 .... .... 1 .... 46 5 51
Benefits paid (250) (5) .... (1) (1) (257) (40) (297)
Other (43) .... .... .... .... (44) 8 (36)
Balance as at 30 June 1 330 7 .... 33 .... 1 371 169 1 539
2008-09
General Government Total State
RBF
Parliament
Schemes Judges
Tas
Ambulance
Housing
Tas Total
PNFC/PFC
Sectors Total
$m $m $m $m $m $m $m $m
Balance as at 1 July 1 381 14 .... 34 .... 1 429 164 1 595
Expected return on plan
assets 96 1 .... 3 .... 99 11 111
Actuarial (losses)/gains (191) (3) .... (7) .... (201) (17) (218)
Employer contributions 162 1 .... 1 1 165 35 201
Contributions by plan
participants 38 .... .... 1 .... 39 5 44
Benefits paid (223) (3) .... (2) (1) (230) (45) (274)
Other (13) .... .... .... .... (13) (2) (15)
Balance as at 30 June 1 250 9 .... 30 .... 1 289 153 1 442
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2009-10 Treasurer’s Annual Financial Report 83
(f) Return on plan assets
The estimated actual return on plan assets was $86 million for the General Government Sector and $97 million for the Total State Sector. The difference between the expected return on plan assets and the actual return on plan assets is recognised as an actuarial gain or loss. Fair value of plan assets cannot be reconciled using the estimated figures shown in the tables above, as a number of items such as net assets, operating costs and investment returns can only be estimated using the proportion of funded liabilities compared to that of the RBF Contributory Scheme as a whole.
The expected return on plan assets (net of tax) has been based on the expected long-term returns for each of the major asset classes in which the plan invests. The allocation of assets in the portfolio is shown below. This allocation is the same for both General Government and Total State Sectors.
2009-10 Actual
2008-09 Actual
% % Australian equities 26 20
Overseas equities 22 13
Fixed interest securities 12 11
Property, infrastructure and alternative assets 20 31
Other 20 25
100 100
(g) Funding arrangements
Employer contributions to the RBF in respect of defined benefit schemes are made on an emerging cost basis.
The deficit, measured as the difference between accrued benefits and the net market value of plan assets under AAS 25 Financial Reporting by Superannuation Plans, is disclosed in the Annual Report of RBF. Figures for 2009-10 are based on unaudited accounts as at 30 April 2010 rolled forward to 30 June 2010, and audited accounts as at 30 June 2009. The measurement basis used by the RBF under AAS 25 differs from the measurement basis used in this financial statement, which is required by AASB 119 Employee Benefits.
The State has a legal liability to make up a deficit in the plan.
Retirement Benefits Fund
The current employer contribution recommendation for the RBF is 70 per cent of all paid benefits. This contribution is based on meeting the cost of the benefit that would have been payable had the member always contributed at the “basic” rate, being five per cent of salary. When the benefit becomes payable, the employer-funded share of the benefit is reimbursed to the RBF Board from the SPA.
Housing Tasmania’s Scheme
The valuation of the superannuation liability relates to the entitlements that accrued before 1 July 1994 for current employees of Housing Tasmania who are members of the RBF contributory fund and former employees who were either contributors or non-contributors and who have retained benefits or are current pensioners.
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84 2009-10 Treasurer’s Annual Financial Report
Parliamentary Superannuation Fund
The current contribution rate for the PSF is 73 per cent of all paid benefits, including pensions. The State is responsible for meeting its proportion of the cost of the benefits as and when they arise.
Parliamentary Retiring Benefits Fund
The State is responsible for meeting the cost of benefits in excess of the accumulated member contributions. The State currently contributes an amount equal to 2.6 times the member’s contributions plus an amount equal to the annual administration (and insurance) expensed for the PRBF. If the State and member contributions are insufficient to fund the liabilities, the State is responsible for meeting the costs of any unfunded liabilities as they emerge.
Judges’ Contributory Pensions
The employer is responsible for meeting the total cost of all superannuation liabilities covered under the Judges’ Contributory Pensions Act 1968 as they emerge. A portion of these liabilities have already been funded from member contributions.
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2009-10 Treasurer’s Annual Financial Report 85
Note 8 Commitments and contingencies
8.1 Schedule of commitments By type
General Government Total State
2010 2009 2010 2009 Actual Actual Actual Actual
$m $m $m $m Capital
Property, plant and equipment 225 59 421 189
Infrastructure 281 122 346 153
Other …. 19 43 60
505 200 810 403 Operating lease 433 426 799 543
Other commitments 605 95 999 358
1 543 722 2 608 1 303
Details of operating leases are provided in entity financial statements. A number of State Sector entities lease property under operating leases. Lease rentals are generally based on negotiated agreements that reflect the current market rent rates paid for comparable buildings. Entities also lease office equipment, information technology and medical equipment.
Other commitments for the General Government Sector primarily relates to the miscellaneous grant commitments for the Department of Health and Human Services of $465 million as at 30 June 2010. This commitment has been recognised for the first time, reflecting the move to triennium funding agreements.
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86 2009-10 Treasurer’s Annual Financial Report
By maturity
General Government Total State
2010 2009 2010 2009 Actual Actual Actual Actual
$m $m $m $m Capital
Not later than 1 year 434 162 629 301
Later than 1 year and no later than 5 years 71 38 175 95
Later than 5 years …. .... 5 6
505 200 810 403
Operating lease
Not later than 1 year 99 106 160 121
Later than 1 year and no later than 5 years 248 206 423 253
Later than 5 years 85 115 216 169
433 426 799 543
Other commitments
Not later than 1 year 253 33 356 100
Later than 1 year and no later than 5 years 336 39 510 184
Later than 5 years 15 23 133 74
605 95 999 358
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2009-10 Treasurer’s Annual Financial Report 87
8.2 Contingent assets and liabilities Contingent assets and liabilities are not recognised in the Statement of Financial Position due to uncertainty regarding the amount or timing of the underlying claim or obligation.
Quantifiable contingencies
A quantifiable contingent asset is a possible asset that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity.
A quantifiable contingent liability is a possible obligation that arises from past events and the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity; or a present obligation that arises from past events but is not recognised because it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation. Contingent liabilities represent items that, at 30 June 2010, are not recognised in the Statement of Financial Position because there is significant uncertainty at that date as to the necessity for the State to receive or make payments in respect of them. Following are details of the more significant of these contingent liabilities. Reference should be made to individual entity financial statements for additional information.
2010 2009
GGS PNFC PFC Total GGS PNFC PFC Total
$m $m $m $m $m $m $m $m Assets
Community Housing 23 .... .... 23 23 .... .... 23 Contribution from Insurance
industries 2 .... .... 2 3 .... .... 3
25 .... .... 25 26 .... .... 26
Liabilities Guarantees …. .... 434 434 .... 1 603 603 Agency litigation 35 .... .... 35 3 .... .... 3
35 .... 434 469 3 1 603 606
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88 2009-10 Treasurer’s Annual Financial Report
Unquantifiable Contingencies
A number of contingent liabilities exist that are not quantifiable, including legal actions that have been brought against the State and its agencies. Notification has also been received of a number of other cases that are not yet subject to Court action but which may result in subsequent litigation.
Other than where the likelihood of an outflow of resources is regarded as remote, at the General Government Sector level, contingent liabilities that are not quantifiable include:
• Claims against the Department of Health and Human Services relating to public liability claims by former patients. The liabilities are managed through the Tasmanian Risk Management Fund. The Department also has 339 open workers’ compensation claims (2009 – 572 open claims).
• Claims against the Department of Economic Development, Tourism and the Arts in relation to a landowner dispute regarding the ownership of a strip of foreshore land at Tinderbox currently valued at $100 000. The matter has been adjourned to a date to be fixed by the Court.
• Claims against the Department of Education relating to:
− personal injuries arising from accidents on Departmental premises. Eventual payments cannot be estimated;
− a number of leases by the Department on property it occupies. Some leases contain a make-good provision, which cannot be reliably measured and subsequently are not recognised in the Statement of Financial Position; and
− claims for retrospective payment of an availability allowance. A hearing has been scheduled with the Tasmanian Industrial Commission and the Department is not able to quantify if a liability will be incurred.
• Claims against Finance-General relating to:
− superannuation obligations of Government Business Enterprises and Statutory authorities; and
− a number of warranties under various sale agreements relating to the divestment of Government businesses. Treasury is of the opinion that these warranties are unlikely to arise and the amounts are not quantifiable.
• Claims against the Department of Infrastructure, Energy and Resources relating to:
− limited access compensation;
− a number of acquisitions for current road projects which are at various stages of settlement;
− contractual disputes which are not sufficiently clear or advanced to quantify;
− personal injury or damage caused to property (including vehicles) allegedly due to road works or road condition; and
− asbestos removal from up to 1 000 traffic signal sites in Tasmania.
• Claims against the Department of Primary Industries, Parks, Water and the Environment relating to;
− management of Crown Land sites. Some sites may be contaminated and required restoration;
− maintaining Tasmania’s relative disease, pest and weed free status. The threat of outbreak represents a future liability to manage and contain these risks;
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2009-10 Treasurer’s Annual Financial Report 89
− a total of 24 legal proceedings in which the Department was exposed to an estimated liability of $168 000. The claims will be met by the Tasmanian Risk Management Fund;
− as part of the Meander Dam Project, the Tasmanian Government prepared a Management Plan for the Spotted-tailed Quoll on State Forest and rehabilitated land adjoining the proposed dam. Under the Plan there is a provision that Forestry Tasmania be compensated for the value of the commercial timber and land assets affected by both the inundated area and the enlarged wildlife habitat strip. During 2010-11, the amount of compensation payable and the mechanism for payment will need to be agreed with Forestry Tasmania; and
− there are possible future payments through compensation claims from land owners under the affected owner’s provisions of the Nature Conservation Act 2002. Compensation claims will be assessed on a case-by-case basis.
• Claims against the Tasmanian Polytechnic relating to:
− possible Employee termination payments for some fixed-term contracted staff, extending from the proposed amendments to the Education and Training (Tasmanian Polytechnic) Act 2008; and
− as part of the Australian Government’s Nation Building infrastructure package the Polytechnic received $5.8 million to construct a new training centre in Launceston. The project has an expected completion date of 30 November 2010. If this date is not met or an extension to the contract is not accepted the Polytechnic may be required to internally fund the outstanding portion of the capital project.
• Claims against the Skills Institute relating to the Australian Government’s Nation Building funding of $6.4 million to construct the “Greens Skills Centre of Excellence”. The expected completion was initially 30 June 2010 and was extended until 30 November 2010. Five per cent of the funding is contingent on the completion of the project within the agreed timeframe. If the funding has not been spent by the 30 November 2010 the Skills Institute may be required to return that portion of funding. However Skills Tasmania may also agree to extend the completion date of the agreement.
Other than where the likelihood of an outflow of resources is regarded as remote, at the Total State level, the unquantifiable contingent assets and liabilities include those relating to government businesses and state-owned companies:
• Claims against the Port Arthur Historic Site Management Authority relating to Supreme Court writs issued against the Authority in relation to the April 1996 tragedy. The actions are currently being processed and any future liability will be covered by insurance.
• Claims made by the Port Arthur Historic Site Management Authority relating to instigation of legal action against contractors used in the construction of the visitor centre. The action is for remedies for the repairs to the roof and floor tiles due to perceived poor construction techniques.
• A claim against the Tasmanian Ports Corporation by a customer alleging a breach of contract. The action was brought in 2009 and the Corporation has defended the action and lodged a counter claim. This action has not been finalised and the Corporation does not believe there is any basis for recognising an amount as a liability.
• Tote Tasmania Pty Ltd is currently reviewing the basis upon which Goods and Services Tax applies to its wagering margin and is seeking a determination in this regard. The Directors consider that it may be possible to recover some GST already paid, but are unable to quantify the effect of this issue.
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90 2009-10 Treasurer’s Annual Financial Report
• Claims against Hydro Tasmania relating to an agreement for the sale of assets of subsidiaries, Bell Bay Power Pty Ltd and Bell Bay Three Pty Ltd, during 2007. Included in the sale agreement is a regime for the indemnification of the purchaser in respect of contamination of the Bell Bay Power Station site, particularly in respect of personal injury and latent contamination on the site. Hydro Tasmania has capped certain indemnities and continues to seek to mitigate any potential contingent liability by committing to sound environmental and safety practices on the site.
• Claims made by Hydro Tasmania relating to a disagreement with Basslink Pty Ltd, relating to charges associated with the Basslink Services Agreement. Hydro Tasmania is continuing to negotiate a resolution to this disagreement and may benefit from a reduction in charges under dispute.
• Tasmanian Railway Pty Ltd is in negotiation with the Tasmanian State Government to determine its responsibility for any environment liabilities that may arise from the activities of previous owners operations.
• A number of Government businesses have provided indemnities to directors and senior management in respect of liabilities to third parties arising from their positions, except where the liability arises out of conduct involving a lack of good faith. No monetary limit applies to these agreements and there are no known obligations outstanding at 30 June 2010.
• The Tasmanian Water and Sewerage Corporation (Northern Region) Pty Ltd has agreed to an arbitration conference with a contractor that was dismissed by an owner Council prior to 30 June 2009. The contractor was engaged to design and construct a waste water treatment plant and took action against the Council seeking redress. This action was not successful and the contractor agreed to arbitration on a date yet to be set. Based on legal advice, the Directors are of the opinion that no provision is required at 30 June 2010.
• During 2009-10, a significant fraud was discovered by the Tasmanian Water and Sewerage Corporation (North-Western Region) Pty Ltd in relation to the illegal transfer of funds by an employee. This fraud was committed over a number of years with the total amount stolen being approximately $1.2 million. Approximately $127 000 has been repaid and further funds are expected upon settlement of property owned by the former employee and through insurance recoveries during 2010-11. Provision for future recoveries has not been made as they are not virtually certain.
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2009-10 Treasurer’s Annual Financial Report 91
Note 9 Financial instruments
9.1 Risk exposures Risk management objectives and policies
Exposure to credit risk, liquidity risk, market risk and other financial risks arise in the normal course of government activity. State Sector entities implement various risk management policies to identify, analyse and manage these various types of risk, including the use of derivative financial instruments. The two main sources of market risk are fluctuations in interest and foreign exchange rates. Derivatives in use include interest rate swaps, interest rate futures, cross-currency swaps and forward foreign exchange contracts. Whenever derivative positions are created, cash or an underlying physical security is held to cover any potential liability.
Credit risk
Credit risk is the risk of financial loss to the State if a customer or counterparty to a financial instrument fails to meet its contractual obligations. Details of specific credit risks and the risk management policies are set out in the financial statements of each State Sector entity.
Receivables are recognised at the nominal amounts due, less any provision for bad and doubtful debts. Collectability of debts is reviewed on a monthly basis. Provisions are made when collection of the debt is judged to be less, rather than more likely. Credit terms are generally 30 days.
Financial guarantee contract liabilities are measured initially at fair value and subsequently at the higher of fair value or the amount determined in accordance with AASB 137 Provisions, Contingent Liabilities and Contingent Assets. Guarantees primarily relate to financing obligations of Government businesses and Statutory authorities.
Cash and deposits are recognised at face value. Currently only highly liquid, low risk cash based investment products, transacted with or via Tascorp, are included in the General Government and Total State Statements of Financial Position. Cash means notes, coins and any deposits held at call with a bank or financial institution.
The State is exposed to credit-related losses in the event of non-performance by counterparties to financial instruments. Any such exposure is governed by an International Swap Dealers Association Agreement between Tasmanian Public Finance Corporation and the counterparty concerned including, where possible, netting agreements. Derivative financial instruments include currency swaps, interest rate swaps and forward foreign exchange contracts. The carrying amount of financial assets recorded in the Financial Statements, net of any allowances for losses, represents the maximum exposure of the State to credit risk, with the exception of guarantees, which consist of the following as at 30 June 2010:
• $28 million held by Finance-General ($108 million as at 30 June 2009) relating to financing obligations of government businesses and statutory authorities; and
• $1 million held by the Department of Economic Development, Tourism and the Arts (Nil as at 30 June 2009).
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The following table analyses financial assets that are past due but not impaired:
General Government Total State
2010 Actual
2009 Actual
2010 Actual
2009 Actual
$m $m $m $m Receivables
Past due:
30 days 9 7 25 18
60 days 5 4 9 10
90 days 10 10 19 15
1 year 17 7 17 7
5 years 9 4 9 4
Total Past Due 50 33 80 54
Liquidity risk
Liquidity risk is the risk that an individual entity will not be able to meet its financial obligations as they fall due. The State’s approach to managing liquidity is to ensure that entities will always have sufficient liquidity to meet their liabilities when they fall due. Details of specific liquidity risks and risk management policies are set out in the financial statements of each State Sector entity.
Payables, including goods received and services incurred but not yet invoiced, are recognised at amortised cost which, due to the short settlement period, equates to face value, when the State becomes obliged to make future payments as a result of a purchase of assets or services. GGS and State entities regularly review budgeted cash outflows to ensure that there is sufficient cash to meet all obligations. Settlement is usually made within 30 days.
Bank loans, and other loans are initially measured at fair value, net of transaction costs. Bank loans and other loans are subsequently measured at amortised cost, using the effective interest rate method, with interest expense recognised on an effective yield basis. GGS and State entities regularly review their contractual outflows to ensure that there is sufficient cash available to meet contracted payments. Contractual payments are made on a regular basis.
The following tables detail the undiscounted cash flows payable by the GGS and Total State Sector by remaining contractual maturity for its financial liabilities. It should be noted that, as the maturity analysis is calculated using undiscounted cash flows, the total may not reconcile to the carrying amounts.
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2009-10 Treasurer’s Annual Financial Report 93
General Government Sector Maturity Analysis for financial liabilities
1 Year
2 Years
3 Years
4 Years
5 Years
More than 5 Years
Undiscounted Total
Carrying Amount
$m $m $m $m $m $m $m $m 2010 Financial liabilities
Payables 104 .... .... .... .... .... 104 104 Borrowings 33 16 19 8 8 189 274 274
Total 137 16 19 8 8 189 378 378
2009 Financial liabilities
Payables 91 .... .... .... .... .... 91 91 Borrowings 21 7 15 18 7 224 293 293
Total 112 7 15 18 7 224 384 384
Total State Sector Maturity Analysis for financial liabilities
1 Year 2 Years 3 Years 4 Years 5 Years More than
5 Years Undiscounted
Total Carrying Amount
$m $m $m $m $m $m $m $m
2010 Financial liabilities
Payables 282 …. …. …. …. …. 282 282
Borrowings 1 918 456 480 472 480 605 4 411 4 411
Other 207 112 112 112 112 1 803 2 460 948
Total 2 407 568 592 584 592 2 408 7 153 5 641
2009 Financial liabilities
Payables 425 …. …. …. …. …. 425 425
Borrowings 2 735 844 308 311 300 829 5 327 5 327
Other 191 182 182 182 182 2 294 3 211 1 540
Total 3 350 1 026 490 493 482 3 123 8 962 7 291
Market risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. The primary market risk that State entities are exposed to is pricing risk and interest rate risk.
Pricing Risk
The State is exposed to fluctuations in market prices, particularly in relation to electricity prices in Tasmania. In addition, the State is exposed to fluctuations in the Victorian market price for electricity to the extent of electricity flows over Basslink and through the variable portion of the Basslink facility fee. Exposure to these fluctuations in market price is managed through the use of derivative contracts executed
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94 2009-10 Treasurer’s Annual Financial Report
in the Tasmanian and Victorian regions of the National Electricity Market. Contract volumes for many of the current Tasmanian forward contracts are determined by the actual load consumed in the contract period.
The management of electricity trading risk is in line with an asset backed trading model.
The following table illustrates the effect of the State’s exposure to electricity price fluctuations on the Statement of Comprehensive Income as a result of changes in the fair value of energy price derivatives held by the State. For further details please refer to the Annual Reports of Hydro Tasmania and Aurora Energy Pty Ltd.
Sensitivity Analysis to 10 Per Cent Movement in Electricity Forward Prices
Total State
Profit or Loss
2010 Actual
2009 Actual
+10 per cent -10 per cent +10 per cent - 10 per cent
$m $m $m $m Net Energy derivative asset (51) 49 (23) 20
Net Basslink liability (25) 13 (31) 32
Net sensitivity (76) 62 (54) 52
Interest rate risk
The State is exposed to interest rate risk as it borrows funds at both fixed and floating interest rates. The risk is managed by maintaining an appropriate mix between fixed and floating rate borrowings, by entering into forward start borrowing agreements and by the use of interest rate swap contracts.
At the reporting date, the interest rate profile of the interest bearing financial instruments held by the State was as follows:
General Government Total State
2010
Actual 2009
Actual 2010
Actual 2009
Actual
$m $m $m $m Fixed rate instruments
Financial assets 4 6 2 628 3 320
Financial liabilities (242) (254) (3 073) (3 194)
(238) (248) (445) 127
Variable rate instruments Financial assets 1 020 1 275 824 1 024
Financial liabilities (31) (39) (1 338) (2 134)
989 1 236 (514) (1 109)
The Tasmanian Public Finance Corporation measures interest rate risk using a Value at Risk measure. This VaR estimates the potential loss in profit due to a change in benchmark interest rates and liability risk margins over a given holding period for a specified confidence level. Risk can be measured consistently
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2009-10 Treasurer’s Annual Financial Report 95
across Tascorp’s portfolio to arrive at a single risk number. The one day VaR number reflects the 99 per cent probability that the daily interest rate and liability margin risk loss will not exceed the reported VaR. Tascorp recorded an average of $400 000 exposure risk ($445 000 for 2009). Further details are available from Tascorp’s financial statements.
For all other entities, risk is calculated with reference to the impact of 100 basis point movement in interest rates at reporting date. This analysis assumes all other variables remain constant. The analysis was performed on the same basis for 2009. The State generally does not hold any financial instruments available for sale which would directly affect profit or loss as a result of changes in interest rates.
Sensitivity Analysis to 100 Basis Point Movement in Interest Rates
General Government Total State
Profit or Loss Profit or Loss
2010 Actual
2009 Actual
2010 Actual
2009 Actual
+ve -ve +ve -ve +ve -ve +ve -ve
$m $m $m $m $m $m $m $m
Financial assets 12 (12) 14 (14) 22 (22) 21 (21)
Financial liabilities …. …. …. …. (1) 1 .... ....
Net sensitivity 12 (12) 14 (14) 21 (21) 21 (21)
Comparison between carrying amount and net fair value of financial assets and liabilities
There are no material differences between net fair values for financial assets and financial liabilities and their carrying amounts for the General Government Sector.
The net fair values of cash and deposits are recognised at amortised cost, being their face value.
The value of equity investments have been measured at the Government’s share (100 per cent) of the carrying amount of net assets because fair value is not reliably measurable. A description of these investments can be found in the notes to the accounts under Equity investments. There is no market for these instruments consistent with the principles of AASB 1049.
Other equity investments are revalued from time to time, as considered appropriate, and are not stated at values in excess of their recoverable amounts.
The net fair values of interest bearing liabilities are measured at fair value in accordance with the quoted liability as provided by Tascorp. Other borrowings consist primarily of Australian Government borrowings incurred under various Commonwealth-State Housing Agreements. These borrowings are measured in accordance with a valuation technique based upon interest rate and repayment schedule confirmation provided by the Australian Government.
The fair value of the Basslink financial instruments has been calculated using a valuation model based on the present value of expected contractual cash flows. The fair value of expected receipts of inter-regional revenues under the Basslink Service Agreement has been separately calculated based on experience to date and projected operating conditions and reported as a financial asset. Expected contractual payments have been reported as financial liabilities. The fair value of the Basslink Service Agreement has been calculated using the pre-tax weighted average cost of capital as the nominal discount rate. The fair values
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96 2009-10 Treasurer’s Annual Financial Report
of the other instruments have been calculated using a 22 year forward market interest rate. These are not readily tradeable financial instruments.
Energy trading derivatives are to manage exposure to market price risks. While many of these contracts have been transacted since Tasmania entered the National Electricity Market, a number were in place prior to that date and reflect the vesting of contracts with retail and major industrial clients in place at the time of entry to the NEM. Modelling is used to value the Tasmanian energy contracts. In recognition of the term, load and other features of each contract, the contract price agreed at commencement represented a discount from the spot price at that time. Fair value at balance date has been calculated as the present value of the difference between the projected market price for each contract and the undiscounted contract price. Projected market price is based on an estimated long term Tasmanian energy price curve.
Financial instruments measured at fair value
The tables below analyses financial instruments carried at fair value using a hierarchy of levels:
Level 1 – the fair value is calculated using quoted prices in active markets;
Level 2 – the fair value is estimated using the inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices); and
Level 3 – the fair value is estimated using inputs for the asset or liability that are not based on observable market data.
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2009-10 Treasurer’s Annual Financial Report 97
Financial instruments measured at fair value (continued)
General Government 2010 Net Fair Value
Level 1 Net Fair Value
Level 2 Net Fair Value
Level 3 Net Fair Value
Total Carrying
Amount Total
$m $m $m $m $m Financial assets
Cash and Deposits …. …. 966 966 966
Loans and receivables:
Loan advances 32 …. …. 32 32
Receivables …. …. 185 185 185 Financial assets at fair value through profit and
loss
Held-to-maturity investments 26 …. …. 26 26
Equity investments …. …. 5 950 5 950 5 929
Total 58 …. 7 100 7 160 7 160 Financial liabilities
Financial liabilities at fair value through profit and loss 28 …. …. 28 28
Financial liabilities measured at amortised cost 104 …. 247 351 351
Total 132 …. 247 378 379
General Government 2009 Net Fair Value
Level 1 Net Fair Value
Level 2 Net Fair Value
Level 3 Net Fair Value
Total Carrying
Amount Total
$m $m $m $m $m Financial assets
Cash and Deposits …. …. 1 227 1 227 1 227
Loan advances 23 …. …. 23 23
Receivables …. …. 183 183 183 Financial assets at fair value through profit and
loss
Held-to-maturity investments 31 …. …. 31 31
Equity investments …. …. 4 105 4 105 4 105
Total 54 …. 5 515 5 569 5 569 Financial liabilities
Financial liabilities at fair value through profit and loss 22 …. …. 22 22
Financial liabilities measured at amortised cost 91 …. 281 372 372
Total 113 …. 281 394 394
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98 2009-10 Treasurer’s Annual Financial Report
Financial instruments measured at fair value (continued)
Total State 2010 Net Fair Value
Level 1 Net Fair Value
Level 2 Net Fair Value
Level 3 Net Fair Value
Total Carrying
Amount Total
$m $m $m $m $m Financial assets
Cash and Deposits …. …. 147 147 147
Loans and receivables:
Loan advances 32 …. …. 32 32
Receivables …. …. 516 516 516 Financial assets at fair value through profit and
loss - designated on initial recognition
Held-to-maturity investments …. 3 270 …. 3 270 3 270
Equity investments …. …. 243 243 243
Basslink financial assets …. …. 476 476 476 Derivative financial
instrument receivable 64 106 …. 170 170
Gas supply contract …. …. 15 15 15
Total 96 3 376 1 398 4 870 4 870 Financial liabilities Financial liabilities at fair value through profit and
loss
Borrowings …. …. 4 411 4 411 4 411
Basslink services agreement …. …. 841 841 841
Basslink facility swap fee …. …. 215 215 215
Energy trading derivatives 41 83 …. 124 124 Financial liabilities measured at amortised costs
Borrowings …. …. 251 251 251
Payables 282 …. …. 282 282
Total financial liabilities 323 83 5 719 6 125 6 125
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2009-10 Treasurer’s Annual Financial Report 99
Financial instruments measured at fair value (continued)
Total State 2009 Net Fair Value
Level 1 Net Fair Value
Level 2 Net Fair Value
Level 3 Net Fair Value
Total Carrying
Amount Total
$m $m $m $m $m Financial assets
Cash and Deposits …. …. 325 325 325
Loans and receivables:
Loan advances 23 …. …. 23 23
Receivables …. …. 590 590 590 Financial assets at fair value through profit and
loss - designated on initial recognition
Held-to-maturity investments …. 4 572 …. 4 572 4 572
Equity investments …. …. 243 243 243
Basslink financial assets …. …. 506 506 506 Derivative financial
instrument receivable 17 219 …. 236 236
Gas supply contract …. …. 17 17 17
Total 40 4 791 1 681 6 512 6 512 Financial liabilities Financial liabilities at fair value through profit and
loss
Borrowings …. …. 5 046 5 046 5 046
Basslink services agreement …. …. 870 870 870
Basslink facility swap fee …. …. 195 195 195
Energy trading derivatives 51 298 …. 349 349 Financial liabilities measured at amortised costs
Borrowings …. …. 281 281 281
Payables 425 …. …. 425 425
Total financial liabilities 476 298 6 392 7 167 7 167
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100 2009-10 Treasurer’s Annual Financial Report
Foreign Exchange Risk
The State has some borrowings and assets denominated in foreign currencies. Currency exposures are generally offset immediately on undertaking such transactions by entering into cross currency swaps and forward foreign exchange contracts. The objective of these contracts is to neutralise the impact of any foreign exchange rate fluctuation on future obligations to make interest and principal repayments in accordance with established contractual obligations. There were no cross currency swaps at balance date in 2009-10 or 2008-09.
The remaining terms and notional principal amounts of the State’s outstanding foreign exchange rate contracts at balance date are:
Total State
Canadian Dollars
Swiss Francs
Great British
Pounds Euros Singapore
Dollars US
Dollars
$m $m $m $m $m $m 2010 Liabilities less than 12 months (5) …. (61) (52) (25) (267)
Forward Forex contracts 5 …. 61 52 25 267
Total net position …. …. …. …. …. …. 2009
Liabilities less than 12 months (18) (6) …. (384) (13) (252)
Forward Forex contracts 18 6 …. 384 13 252
Total net position …. …. …. …. …. ….
Reclassifications of financial assets
The GGS and the Total State Sector have not reclassified any financial assets.
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2009-10 Treasurer’s Annual Financial Report 101
Note 10 Cash flow reconciliation
10.1 Reconciliation of Net cash flows from operating activities to Operating Result
General Government Total State
2009-10 Actual
2008-09 Actual
2009-10 Actual
2008-09 Actual
$m $m $m $m Operating Result 1 153 136 (697) 73 Add Economic Flows - Included in Statement of
Comprehensive Income (Gain)/loss on sale of non-financial assets 24 (3) 26 (3)
Assets acquired free of charge (21) (22) (31) (23)
Change in equity investment in PNFC and PFC Sectors (1 893) (387) …. ….
Movement in Superannuation liability 692 148 755 168
Impairment losses 59 47 269 36
Impairment losses – financial assets …. …. 1 (363)
Other (Gains)/losses 4 3 (131) 133
(1 135) (214) 888 (53)
Equals NET OPERATING BALANCE 18 (78) 192 20
Add Other Non-cash movements
Depreciation 229 229 540 470
Borrowing and payroll costs capitalised …. …. (10) (9)
Non-cash income tax equivalence revenue 27 (57) …. ….
Other non-cash movement in superannuation 136 176 146 186
Increase/(decrease) in employee entitlements 2 70 23 78
Increase/(decrease) in payables 13 8 (142) 117
Increase/(decrease) in accrued expenses …. 7 (3) 24
Increase/(decrease) in other liabilities 13 11 25 (13)
Decrease/(increase) in receivables (2) (38) 74 (164)
Decrease/(increase) in inventory …. (6) (22) (44)
Decrease/(increase) in other financial assets (19) (13) (51) (36)
Increase/(decrease) in tax liabilities …. …. 31 ….
Adjustment for other non-cash items 3 (9) (25) (18)
402 378 586 591
Net cash from operating activities 420 300 778 611
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102 2009-10 Treasurer’s Annual Financial Report
10.2 Cash and cash equivalents For the purpose of the Statement of Cash Flows, cash includes cash on hand, cash at bank and investments in highly liquid money market instruments. The definition of cash for the purposes of the Statement of Cash Flows is defined differently to cash reported in the Statement of Financial Position.
General Government Total State
2009-10 Actual
2008-09 Actual
2009-10 Actual
2008-09 Actual
$m $m $m $m Cash as per Statement of Financial Position 966 1 227 147 325
Cash equivalents as per the Statement of Cash Flows …. .... 1 427 2 364
Cash as per the Statement of Cash Flows 966 1 227 1 574 2 689
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2009-10 Treasurer’s Annual Financial Report 103
Note 11 Reserves
11.1 Asset revaluation reserve
General Government Total State
2010
Actual 2009
Actual 2010
Actual 2009
Actual
$m $m $m $m Property, plant and equipment
Balance at 1 July 2 428 2 334 2 899 2 873
Transfers from DEPHA which ceased to exist from
1 July 2009 (297) .... (297) ....
Revaluation increments/(decrements) 202 163 164 65
Other movements (15) (70) (15) (40)
Balance at 30 June 2 317 2 428 2 751 2 899 Infrastructure
Balance at 1 July 1 992 1 902 2 121 2 005
Transfers from DEPHA which ceased to exist from
1 July 2009 (7) .... (7) ....
Revaluation increments/(decrements) 85 211 90 237
Other movements 10 (121) 10 (121)
Balance at 30 June 2 081 1 992 2 215 2 121 Intangibles
Balance at 1 July …. 5 …. 5
Other movements …. (5) …. (5)
Balance at 30 June …. …. …. …. Other assets
Balance at 1 July 29 31 270 273
Transfers from DEPHA which ceased to exist from
1 July 2009 (23) .... (23) ....
Revaluation increments/(decrements) 106 (2) (132) (2)
Balance at 30 June 111 29 115 270
4 508 4 448 5 078 5 290
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104 2009-10 Treasurer’s Annual Financial Report
Note 12 Explanations of major variances between General Government Budget and actual outcomes
The following are brief explanations of major variances between General Government Budget estimates and actual outcomes. Details of material variances between Budget estimates and actual outcomes can also be found in the financial statements for each departmental entity.
Variances are considered major where the variance exceeds 15 per cent of the Budget estimate and is also greater than $20 million.
12.1 Statement of Comprehensive Income – General Government Sector
Note
2009-10 Original Budget
2009-10
Actual Variance Variance
$m $m $m %
Sales of goods and services (a) 375 289 (86) (23)
Fines and regulatory fees (b) 64 97 33 52
Dividend, tax and rate equivalent income (c) 100 79 (21) (21)
Other revenue (d) 74 109 35 48
Grant expenses (e) 814 935 121 15
Movement in investments in PNFC and
PFC Sectors
(f) 110 1 893 1 783 1 621
Revaluations of non-financial assets (g) 223 387 164 74
(a) A sale of goods and services was $86 million below the original Budget estimate of $375 million. The decrease was
primarily due to the reclassification of revenue that was included in Sales of goods and services for the original
Budget estimate. The Department of Health and Human Services reclassified $55 million of Mersey Community
Hospital Australian Government revenue to Grants, the Department of Treasury and Finance reclassified
$10 million to Fines and regulatory fees and the Department of Justice reclassified $9 million to Fines and
regulatory fees.
(b) Fines and regulatory fees was $33 million above the original Budget estimate of $64 million. This increase is
primarily due to a reclassification of revenue by the Departments of Treasury and Finance and Justice as well as
additional revenue for the Department of Justice due to the impact of sanctions being applied by the Monetary
Penalties Enforcement Service.
(c) Dividend, tax and rate equivalent income was $21 million below the original Budget estimate of $100 million. The
main variations are lower than anticipated income tax equivalent revenue of $28 million, partially offset by
additional dividend income of $8 million.
(d) Other revenue is $35 million above the original Budget estimate of $74 million. The increase is primarily due to
additional mineral royalties of $17 million and $9 million of additional revenue for the Department of Health and
Human Services relating to an increase in cost recoveries.
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2009-10 Treasurer’s Annual Financial Report 105
(e) Grant expenses are $121 million above the original Budget estimate of $814 million. This increase is primarily due
to additional grant funding provided to non-government schools of $43 million, rebates totalling $14 million
associated with the Government’s Land Tax Reforms; additional expenditure of $10 million from the Water
Infrastructure Fund for water infrastructure development; the Water and Sewerage Community Service Obligation
payment of $6 million which was classified as an Other expense in the 2009-10 Budget; and additional grants of
$7 million for school bus operators and $3 million for Metro Services.
(f) The Movement in investment in PNFC and PFC Sectors was $1 783 million above the original Budget. This is
primarily due to the inclusion of water and sewerage entities within the PNFC Sector. In addition, Tasmanian
Railway Pty Ltd was established in 2009-10 and net assets for the corporation have been recognised. This was
partly offset by a write-down in the order of $300 million in forest estate assets.
(g) Revaluations of non-financial assets was $164 million above the original Budget estimate. This primarily reflects
unanticipated revaluations of Heritage and cultural assets undertaken by the Department of Economic
Development, Tourism and the Arts ($82 million) and the recognition of Rail Corridor Land by the Department of
Infrastructure, Energy and Resources ($51 million).
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106 2009-10 Treasurer’s Annual Financial Report
12.2 Statement of Financial Position – General Government Sector Budget estimates for the 2009-10 Statement of Financial Position were compiled in June 2009 prior to completion of the actual outcomes for 30 June 2009. As a result, the outcome variance from the original Budget estimate will be impacted by the difference between the estimated and actual opening balances for 2009-10. The following commentary and table is therefore based on major movements between the 30 June 2009 actual outcome and the 30 June 2010 outcome.
Note
2010 Original Budget
2010
Actual
2009
Actual
Actual
Actual $m $m $m $m %
Cash and Deposits (a) 728 966 1 227 (261) (21)
Equity investment in PNFC and
PFC Sectors (b) 3 966 5 950 4 105 1 845 45
Other financial assets (c) 922 942 1 009 (67) (7)
Land and buildings (d) 5 235 5 219 4 807 412 9
Infrastructure (e) 4 906 4 837 4 641 196 4
Heritage and cultural assets (f) 454 553 447 106 24
Superannuation (g) 4 494 4 860 4 034 826 20
(a) Cash and deposits is $261 million below the 2009 actual, reflecting equity injections of $111 million to the PNFC
Sector and a reduction in the balance of cash as a result of the Consolidated Fund outcome of a $266 million
deficit.
(b) The increase of $1 845 million in the value of the Equity investment in PNFC primarily reflects the Australian
Bureau of Statistics decision to classify newly created local government water and sewerage entities within the
PNFC Sector and the establishment of Tasmanian Railway Pty Ltd.
(c) Other Financial Assets is $67 million below the 2009 actual due to a decrease in the deferred tax assets attributed
to the PNFC and PFC Sectors.
(d) The increase in the value of Land and buildings of $412 million is due to an increase in capital investment by the
Department of Education ($191 million), revaluation of Land and buildings by the Department of Primary Industries,
Parks, Water and Environment ($75 million) and the Department of Education ($72 million) and the recognition of
Rail Corridor Land by the Department of Infrastructure, Energy and Resources ($51 million).
(e) Infrastructure assets increased by $196 million. This is due to a revaluation of roads and bridges undertaken by the
Department of Infrastructure, Energy and Resource and additional capital expenditure on road infrastructure
projects, including the Brighton Bypass and the Brighton Transport Hub.
(f) An increase in the value of Heritage and cultural assets is primarily due to revaluations undertaken on the
Tasmanian Museum and Art Gallery collection held by the Department of Economic Development, Tourism and the
Arts and revaluations by the Department of Education.
(g) The $826 million increase in the Superannuation liability is a result of an actuarial assessment of the liability, taking
into consideration changes in assumptions used to value the defined benefit obligation.
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2009-10 Treasurer’s Annual Financial Report 107
12.3 Statement of Cash Flows– General Government Sector
Note
2009-10 Original Budget
2010
Actual Variance Variance
$m $m $m %
Cash flows from operating activities
Fines and regulatory fees (a) 58 86 28 48
Interest received (a) 33 44 11 33
Other receipts (a) 207 291 84 41
Other payments (a) (172) (256) (84) (49)
Purchases of non-financial assets (b) (758) (607) 151 20
Equity injections/contributions (c) (31) (111) (80) (258)
Net borrowing (d) 13 (22) (35) (269)
(a) The major variances in the Cash flows from operating activities reflect those that have occurred in the Statement of
Comprehensive Income. Refer to Note 12.1 for further information regarding these variances.
(b) The 2009-10 Actual outcome for Purchases of non-financial assets is $607 million which is $151 million less than
the original Budget estimate of $758 million. The main variations to the Purchase of non-financial assets relate to: − the Department of Health and Human Services which is $88 million below the original Budget
estimate. This reflects the revision of cash flows for projects in relation to housing construction and hospital capital improvements.
− the Department of Education which is $24 million below the original Budget estimate as a result of the deferral to 2010-11 of committed school amalgamations.
− the Department of Infrastructure, Energy and Resources which is $25 million below the original Budget estimate. This is primarily due to rail infrastructure expenditure that was included in the original Budget estimates which is now being undertaken by Tasmanian Railway Pty Ltd.
(c) This reflects additional Equity injections of $82 million to Tasmanian Railway Pty Ltd that were not included in the
original Budget estimate.
(d) Net cash flows from financing activities are estimated to be an outflow of $22 million, $35 million greater than the
original Budget estimate of a $13 million inflow. This variation primarily reflects the early redemption by
Finance-General of a Capital Indexed Bond of $30 million that was not included in the original Budget estimate.
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108 2009-10 Treasurer’s Annual Financial Report
Note 13 Reconciliations to ABS GFS measures Where the Key Fiscal Aggregates presented on the face of the financial statements are materially different to that measured in accordance with the ABS GFS Manual, a reconciliation between the two measures is required to be provided. The impact of convergence differences on the GGS and Total State Sector Key Fiscal Aggregates have been reviewed and there are no material differences.
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2009-10 Treasurer’s Annual Financial Report 109
Note 14 Details of controlled entities The following entities are classified within the Total State Sector:
General Government entities
Department of Economic Development, Tourism and the Arts
Department of Education
Department of Health and Human Services
Department of Infrastructure, Energy and Resources
Department of Justice
Department of Police and Emergency Management
Department of Premier and Cabinet
Department of Primary Industries, Parks, Water and Environment
Department of Treasury and Finance (including Finance-General)
House of Assembly
Inland Fisheries Service
Legislative Council
Legislature-General
Marine and Safety Tasmania
Office of the Governor
Office of the Ombudsman
Royal Tasmanian Botanical Gardens
State Fire Commission
Tasmanian Academy
Tasmanian Audit Office
Tasmanian Polytechnic
Tasmanian Skills Institute
The Nominal Insurer
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110 2009-10 Treasurer’s Annual Financial Report
Public Non-Financial Corporations
Aurora Energy Pty Ltd
Forestry Tasmania
Hydro Tasmania
Metro Tasmania Pty Ltd
Port Arthur Historic Site Management Authority
Private Forests Tasmania
Public Trustee
Rivers and Water Supply Commission
Tasmanian Ports Corporation Pty Ltd
TOTE Tasmania Pty Ltd
Tasracing Pty Ltd (formerly Tasmanian Racing Board)
Transend Networks Pty Ltd
TT-Line Company Pty Ltd
Tasmanian Railway Pty Ltd
Tasmanian Water and Sewerage Corporation (Common Services) Pty Ltd
Tasmanian Water and Sewerage Corporation (Northern Region) Pty Ltd
Tasmanian Water and Sewerage Corporation (North-Western Region) Pty Ltd
Tasmanian Water and Sewerage Corporation (Southern Region) Pty Ltd
Public Financial Corporations
Motor Accidents Insurance Board
Tasmanian Public Finance Corporation
Entities not consolidated
The Retirement Benefits Fund Board has not been included in this financial report because the assets are not available for the benefit of the State. Also, the University of Tasmania, certain professional, occupational and marketing boards and local government authorities are not included in this financial report because they are not controlled by the State.
Other Government bodies that are controlled but are not considered material, for whole-of-government purposes, are also excluded from this financial report.
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2009-10 Treasurer’s Annual Financial Report 111
Note 15 Events Occurring After Balance Date The Department of Health and Human Services entered into an agreement to purchase the North West Regional Hospital for an amount of $29 million prior to 30 June 2010. The Department of Health and Human Services completed the purchase during September 2010, after the reporting date of 30 June 2010. The financial effect of this event has not been recognised. The Department of Health and Human Services received appropriation and recognised the asset in its Statement of Financial Position following the purchase and this will be recognised in the Financial Statements for the year ended 30 June 2011.
Under the State Government’s Tasmania Tomorrow initiative, the Tasmanian Polytechnic, Tasmanian Skills Institute and the Tasmanian Academy were created as Statutory Authorities under:
• the Education and Training (Tasmanian Polytechnic) Act 2008;
• the Education and Training (Tasmanian Skills Institute) Act 2008; and
• the Education and Training (Tasmanian Academy) Act 2008.
The Tasmania Tomorrow initiative was intended to see, over a three year transition period, certain areas of the eight state senior secondary colleges which offer Post Year Ten learning within Tasmania, become part of the Academy and Polytechnic. These colleges were all formerly administered by the Department of Education.
Four of the eight colleges (Don, Hobart, Hellyer and Newstead) made the transition as at 1st January 2009, with Elizabeth College making the transition effective from 1 January 2010.
The Minister for Education announced in June 2010 that the Tasmania Tomorrow initiative was to be refined, and that it was proposed to transfer the management of the Polytechnic and Academy to the Department of Education effective from 1 January 2011. This refinement will see the abolition of the current Polytechnic and Academy Board of Management.
Details relating to this announcement and transition are currently being managed by a Project Management Group formed by the Minister for Education.
It is proposed to amend the Education and Training (Tasmanian Polytechnic) Act 2008 and the Education and Training (Tasmanian Academy) Act 2008, with the assets, liabilities and staff to be managed by the Department of Education effective from 1 January 2011. The amending legislation is currently being drafted, with the intention of being presented to the Tasmanian Parliament in late 2010.
The Department of Economic Development, Tourism and the Arts has loans of $3.85 million that have been advanced to Tascot Templeton Carpets Pty Ltd. On 23 September 2010, Tascot was placed in voluntary administration due to Director concern over future product orders slowing to the point where potential insolvent trading may occur. Mortgages and other charges are held as security over the loans. Given the early stage of the voluntary administration it is not possible to reliably measure a value for any potential impairment.
The Port Arthur Historic Site Management Authority is expected to transfer water and waste treatment infrastructure assets by 31 December 2010, to the Tasmanian Water and Sewerage Corporation (Southern Region) Pty Ltd under the Water and Sewerage Corporations Act 2008. The assets concerned were last valued in June 2008 on a replacement cost basis at $660 000. The impact upon future Statements of Comprehensive Income and Statements of Financial Position is currently unknown.
Hydro Tasmania and Aurora Energy Pty Ltd reached a commercial agreement in July 2010 on the terms and conditions of a contract under which Hydro Tasmania will sell electricity to Aurora for supply of a
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112 2009-10 Treasurer’s Annual Financial Report
portion of the non-contestable load. The term of the contract will coincide with the new regulated retail price period from 1 July 2010 to 30 June 2013.
Tasmanian Water and Sewerage Corporation (Common Services) Pty Ltd announced in August 2010 the selection of Gentrack Velocity to provide the core software for a new customer information system to be implemented during 2010-11.
The following Government businesses have declared dividends since 30 June 2010 that were not brought to account in the 2009-10 financial statements. These have no impact on the Total State Sector but will affect the PNFC and PFC Sectors.
• Transend Networks Pty Ltd ( $13.2 million);
• TOTE Tasmania Pty Ltd ($3.5 million);
• Aurora Energy Pty Ltd ($3.9 million);
• Hydro Tasmania ($10.2 million);
• Motor Accidents Insurance Board ($24.7 million);
• Tasmanian Public Finance Corporation ($4 million); and
• Public Trustee ($345 000).
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2009-10 Treasurer’s Annual Financial Report 113
Note 16 Functional Information The following tables presents Expenses from transactions and Asset balances classified according to the Government Purpose Classification which is based on the Australian Bureau of Statistics classifications used as part of the Government Finance Statistics reporting framework. The GPC provides a standard framework to allocate Government expenditure according to functions. Disclosure of this information can assist users in identifying the resources committed to particular functions and the costs of service delivery that are reliably attributable to those functions.
16.1 Expenses from transactions
General Government Total State
2009-10 2008-09 2009-10 2008-09
$m $m $m $m General public services
Other public services 179 285 629 637
179 285 629 637 Public order and safety
Police services 208 187 208 186
Fire protection services 66 57 65 57
Law courts and legal services 79 78 79 77
Prisons and corrective services 62 60 61 59
414 382 412 379 Education
Primary education 559 461 559 449
Secondary education 420 390 420 416
Technical and further education 203 164 203 154
Preschool education 45 41 45 38
Transport of non-urban students 42 41 42 41
1 271 1 098 1 271 1 098 Health
Acute care institutions
Admitted patients 867 819 860 810
Non-admitted patients 18 11 18 11
Mental health institutions 32 28 32 27
Community health services 143 134 141 133
Community mental health 39 38 39 38
Patient transport 46 44 46 43
Public health services 67 33 67 33
Health research not elsewhere classified …. .... .... 4
1 212 1 106 1 203 1 100 Social security and welfare
Family and children welfare services 116 109 94 89
Welfare services for the aged 42 37 42 37
Welfare services for people with a disability 115 118 114 118
Welfare services not elsewhere classified 40 35 34 35
Social security and welfare not elsewhere classified 13 8 13 ….
326 307 297 279
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114 2009-10 Treasurer’s Annual Financial Report
16.1 Expenses from transactions (continued)
General Government Total State
2009-10 2008-09 2009-10 2008-09
$m $m $m $m Housing and community amenities
Housing 140 157 141 157
Community development 14 7 14 7
Water Supply .... .... 183 ....
Sanitation and protection of the environment 50 41 50 41
204 205 388 205 Recreation and culture
National parks and wildlife 55 50 54 50
Cultural facilities and services 64 60 63 59
Recreation and culture not elsewhere classified 62 40 47 158
180 150 164 267 Fuel and energy
Electricity and gas 3 3 1 688 1 379
3 3 1 688 1 379 Agriculture, forestry, fishing and hunting
Agriculture 75 63 74 64
Forestry, fishing and hunting 32 60 192 195
107 124 266 259 Mining and mineral resources
Mining and mineral resources 7 8 7 8
7 8 7 8 Transport and communication
Road transport 221 205 231 216
Other water transport services 2 1 163 236
Non-urban rail transport freight services 27 38 56 38
251 245 450 490 Other economic affairs
Tourism and area promotion 42 37 40 35
Other labour and employment 27 25 27 23
Other economic affairs 70 60 64 59
139 122 131 117
Nominal interest on superannuation 208 193 233 225 Other purposes
Public debt transactions 4 4 .... ….
Inter government transactions 68 86 68 86
Other purposes not elsewhere classified 12 45 9 40
83 136 77 127
Total Expenses from transactions 4 584 4 365 7 216 6 570
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2009-10 Treasurer’s Annual Financial Report 115
16.2 Assets by Function
General Government Total State
2009-10 2008-09 2009-10 2008-09
$m $m $m $m
General public service 148 152 3 622 4 843
Public order and safety 594 536 588 530
Education 1 539 1 239 1 479 1 206
Health 696 669 696 669
Social security and welfare 30 27 30 27
Housing and community amenities 1 901 1 826 3 970 1 826
Recreation and culture 1 299 1 260 1 410 1 360
Fuel and energy …. .... 8 273 8 262
Agriculture, forestry, fishing and hunting 323 337 982 1 325
Transport and communication 4 868 4 739 5 259 5 154
Other economic affairs 68 77 68 77
Other purposes 7 566 5 918 .... ....
19 031 16 781 26 377 25 280
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116 2009-10 Treasurer’s Annual Financial Report
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2009-10 Treasurer’s Annual Financial Report 117
4 PUBLIC ACCOUNT STATEMENTS
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118 2009-10 Treasurer’s Annual Financial Report
CERTIFICATION OF PUBLIC ACCOUNT STATEMENTS 2009-10 The accompanying special purpose financial report of the Public Account for the year ended 30 June 2010 has been prepared in accordance with the provisions of the Financial Management and Audit Act 1990 and is in agreement with the relevant accounts and records so as to present fairly the transactions for the year ended 30 June 2010.
At the date of signing we are not aware of any circumstances which would render the particulars included in the financial statements misleading or inaccurate.
Michael Aird D W Challen TREASURER SECRETARY DEPARTMENT OF TREASURY AND FINANCE
27 September 2010
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2009-10 Treasurer’s Annual Financial Report 119
OPINION OF THE AUDITOR-GENERAL
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120 2009-10 Treasurer’s Annual Financial Report
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2009-10 Treasurer’s Annual Financial Report 121
Accounting Policies Cash Basis of Accounting The Public Account is maintained on a cash basis. That is, revenue is recorded when it is received, and expenditure recorded when the payment is made, during the financial year. The Public Account, therefore, does not include revenue due but not collected, and invoices received but not paid for goods and services supplied during the financial year. The value of assets and liabilities is not included in the Public Account Statements and no provision is made for depreciation, employee entitlements or creditors.
While cash accounting is adopted for reporting on the Public Account, certain activities undertaken within the Public Account involve accrual accounting concepts. Such activities mainly relate to the establishment of “provisions” in accounts in the Special Deposits and Trust Fund to fund the cost of certain transactions over more than one year. Funds accumulate in those accounts and are used to meet expenditure in future years. The main provision accounts relate to superannuation, debt management, risk management, special capital investment funds and the 27th pay.
Unaudited Information Original Budget information was prepared and presented as part of the 2009-10 State Budget in June 2009. Budget information is, by its nature, an estimate and as a result, this information has not been subject to an audit process.
Inter-Fund Transactions No attempt has been made to adjust for inter-fund or inter-agency transactions within the Public Account. Certain activities result in funds being transferred between accounts in the Special Deposits and Trust Fund or between the Consolidated Fund and the Special Deposits and Trust Fund. Consequently, expenditure and receipts in the Public Account are overstated to the extent of any inter-fund and inter-agency transfers.
Cash in Transit Consistent with a cash basis of accounting, only cash receipted in the Public Account as at 30 June 2010 is brought to account and reported as revenue of the Public Account for the year.
Rounding All amounts in the financial statements have been rounded to the nearest million, unless otherwise stated. As a consequence, rounded figures may not add to totals. Amounts less than $500 000 are rounded to zero and are indicated by the symbol “….”.
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122 2009-10 Treasurer’s Annual Financial Report
Statement 1 - Public Account Balance 2009-10
Actual
2008-09
Actual
$m $m Consolidated Fund .... ....
Special Deposits and Trust Fund 2 376 2 346
Balance 30 June (before Temporary debt repayment account) 2 376 2 346 Less Temporary debt repayment account balance 1 438 1 156
Balance 30 June (after Temporary debt repayment account) 938 1 189
REPRESENTED BY:
Westpac Banking Corporation (22) (19)
Tascorp Investments 960 1 209
Balance 30 June 938 1 189
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2009-10 Treasurer’s Annual Financial Report 123
Statement 2 - Consolidated Fund Outcome 2009-10 2009-10 2009-10 2008-09 Original Budget Actual Actual
$m $m $m Receipts
Australian Government sources
General purpose payments 1 527 1 639 1 627
Specific purpose payments 562 580 522
National partnership payments 643 769 130
Other grants and subsidies 15 70 ….
2 747 3 058 2 279
State sources
Taxation 823 892 822
Receipts from government businesses 120 124 162
Departmental fees and recoveries 82 82 93
Sale and rent of government property 42 42 18
Resource rents and royalties 23 38 32
Other recurrent receipts 108 92 225
1 198 1 271 1 352
Capital Receipts
Australian Government specific purpose payments 1 …. 89
1 …. 89
Total Receipts 3 946 4 329 3 720 less Expenditure
Recurrent services
Appropriation Act 3 527 3 867 3 342
Reserved by Law 147 137 133
3 674 4 004 3 475
Works and services
Appropriation Act 605 572 237
Economic and Social Infrastructure Fund 9 9 13
Hospitals Capital Fund …. …. 5
Infrastructure Tasmania Fund 7 10 ....
621 591 256
Total Expenditure 4 296 4 595 3 731
CONSOLIDATED FUND SURPLUS/(DEFICIT) (350) (266) (11)
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124 2009-10 Treasurer’s Annual Financial Report
Statement 3 - Consolidated Fund Receipts 2009-10 2009-10 2008-09
Original Budget Actual Actual
$m $m $m Recurrent Receipts
Australian Government sources General purpose payments
GST revenue 1 527 1 639 1 627 Specific purpose payments 1
Schools 223 240 44
Health services 246 246 224
Skills and workforce development 31 31 15
Disability services 28 28 27
Affordable housing 34 34 17
Assistance for concessions …. …. 3
Australian Government-State Housing Agreement …. …. 11
Primary and secondary education …. …. 36
Technical and further education …. …. 15
Home and community care program …. …. 16
Supported accommodation assistance program …. …. 4
Public health outcomes funding agreement …. …. 6
Disability services grant …. …. 13
High cost drugs …. …. 15
Grants to the State for local government …. …. 77
562 580 522 National partnership payments 1
Health services 47 50 52
Schools 237 309 56
Community services 35 42 1
Housing 109 110 11
Environmental services 22 32 1
Other services 15 14 9
Grant to the State for local government 46 63 ….
World heritage area …. 3 ….
First home owners boost 14 …. ….
National child care strategy …. …. ….
Infrastructure services 110 137 ….
Skills and workforce development 7 10 ….
643 769 130
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2009-10 Treasurer’s Annual Financial Report 125
Statement 3 - Consolidated Fund Receipts (continued) 2009-10 2009-10 2008-09
Original Budget Actual Actual $m $m $m
Other grants and subsidies 1
Primary and secondary education .... 4 ....
Training Infrastructure Investment for Tomorrow .... 12 ....
High cost drugs 15 …. ....
Health .... 9 ....
Other grants paid to:
Department of Health and Human Services .... 33 ....
Department of Primary Industries, Parks, Water
and Environment .... 12 ....
15 70 .... Total Australian Government sources 2 747 3 058 2 279 State sources
Taxation
Stamp duties 213 249 217
Lottery tax 24 27 23
Land tax 90 87 77
Motor taxation 54 58 54
Casino tax and licence fees 58 59 62
Payroll tax 370 398 379
Sundry licences 7 7 8
Totalisator Wagering Levy 6 6 ….
823 892 822 Receipts from Government Business Enterprises
Tasmanian Ports Corporation Pty Ltd 16 4 8
The Public Trustee …. 1 1
TOTE Tasmania Pty Ltd …. 7 2
Aurora Energy Pty Ltd 36 24 27
Hydro Tasmania 13 13 7
Tasmanian Public Finance Corporation 5 9 4
Transend Networks Pty Ltd 24 20 29
TT-Line Company Pty Ltd …. …. 1
Motor Accidents Insurance Board 25 45 84
Forestry Tasmania …. 1 ....
120 124 162
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126 2009-10 Treasurer’s Annual Financial Report
Statement 3 - Consolidated Fund Receipts (continued) 2009-10 2009-10 2008-09
Original Budget Actual Actual $m $m $m
Departmental fees and recoveries
Treasury and Finance 1 1 1
Justice 7 7 8
Environment, Parks, Heritage and the Arts …. …. 5
Primary Industries, Parks, Water and Environment 28 30 37
Infrastructure, Energy and Resources 43 43 41
Police and Emergency Management 2 1 1
82 82 93 Sale and rent of government property
Crown Lands Administration Fund 42 42 18 Resource rents and royalties
Rent and fees from mineral lands 1 2 2
Mineral royalties 19 35 28
Regional water authority licence fees 2 2 2
23 38 32
Other recurrent receipts
Fines and fees 6 8 8
Fines - infringement notices 12 12 10
Interest on investments - Finance-General 23 40 67
Recoveries from departmental business units 2 3 7
Miscellaneous 38 2 134
Funding for the 27th Pay 28 28 ….
108 92 225
Total State Sources 1 198 1 271 1 352
Total Recurrent Receipts 3 945 4 329 3 631
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2009-10 Treasurer’s Annual Financial Report 127
Statement 3 - Consolidated Fund Receipts (continued) 2009-10 2009-10 2008-09
Original Budget Actual Actual $m $m $m
Capital Receipts Australian Government sources
Specific purpose payments
Primary and secondary education …. …. 5
Technical and further education …. …. 2
Housing …. …. 2
Health …. …. 6
National highway system 1 …. 42
Rail …. …. 31
Total Australian Government sources 1 …. 89
Total Capital Receipts 1 .… 89
Total Receipts 3 946 4 329 3 720
Borrowings .... 266 11
Total Consolidated Fund Receipts 3 946 4 594 3 731
Note: 1. Significant reforms to Commonwealth-State relations were implemented on 1 January 2009, as a result of the
Council of Australian Governments Intergovernmental Agreement on Federal Financial Relations. This has resulted in changes to the classification of many Australian Government grants between the categories of Specific purpose payments, National partnership payments and Other grants and subsidies.
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128 2009-10 Treasurer’s Annual Financial Report
Statement 4 - Consolidated Fund Expenditure 2009-10 2009-10 2008-09 Original Budget Actual Actual $m $m $m
Economic Development, Tourism and the Arts Recurrent services 87 101 78
87 101 78 Education
Recurrent services 1 077 1 159 854 Works and services 223 233 39
1 300 1 391 893 Environment, Parks, Heritage and the Arts 1
Recurrent services .... …. 69 Works and services .... …. 5
.... …. 74 Finance-General
Recurrent services 272 316 457 Reserved by Law 124 116 116 Works and services 16 18 18
412 451 590 Health and Human Services
Recurrent services 1 366 1 434 1 231 Works and services 142 75 23
1 508 1 509 1 254 House of Assembly
Recurrent services 2 2 2 Reserved by Law 5 5 5
7 7 7 Infrastructure, Energy and Resources
Recurrent services 145 238 125 Works and services 232 256 152
377 494 277 Justice
Recurrent services 112 121 111 Reserved by Law 14 11 8 Works and services …. …. 12 126 132 132
Legislative Council Recurrent services 3 3 3 Reserved by Law 3 3 3
6 6 6
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2009-10 Treasurer’s Annual Financial Report 129
Statement 4 - Consolidated Fund Expenditure (continued) 2009-10 2009-10 2008-09 Original Budget Actual Actual $m $m $m
Legislature-General Recurrent services 5 5 6 Works and services …. …. 4 5 5 10
Ministerial and Parliamentary Support Recurrent services 17 19 19 Reserved by Law 1 1 1 18 20 20
Office of the Governor Recurrent services 3 3 3 3 3 3
Office of the Ombudsman Recurrent services 1 2 1 1 2 1
Police and Emergency Management Recurrent services 180 181 181 Works and services 3 3 1 183 184 182
Premier and Cabinet Recurrent services 64 67 62 Works and Services .... 1 .... 64 67 63
Primary Industries, Parks, Water and Environment Recurrent services 149 174 98 Works and services 5 5 1 154 179 99
Tasmanian Audit Office Recurrent services 2 2 2 2 2 2
Treasury and Finance Recurrent services 41 41 40 41 41 40
TOTAL CONSOLIDATED FUND EXPENDITURE 4 296 4 595 3 731
Note: 1. The Department of Environment, Parks, Heritage and the Arts ceased to exist on 30 June 2009. The operational
Divisions of the Department were transferred to the Department of Primary Industries, Parks, Water and Environment and the Department of Economic Development, Tourism and the Arts effective from 1 July 2009.
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130 2009-10 Treasurer’s Annual Financial Report
Statement 5 - Excess Consolidated Fund Recurrent Services Expenditure Authorised by Section 11 of the Public Account Act 1986.
Existing Items 2009-10 Authorised Expenditure
$m $m
Economic Development, Tourism and the Arts 14 14
Education 81 81
Finance-General 67 44
Health and Human Services 68 68
Infrastructure, Energy and Resources 93 93
Justice 8 8
Ministerial and Parliamentary Support 2 2
Police and Emergency Management 1 1
Premier and Cabinet 3 3
Primary Industries, Parks, Water and Environment 25 25
364 340
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2009-10 Treasurer’s Annual Financial Report 131
Statement 6 - Excess Consolidated Fund Works and Services Expenditure Authorised by Section 12 of the Public Account Act 1986.
Existing Items 2009-10
Authorised Expenditure
$m $m
Education 10 10
Finance-General 3 3
Infrastructure, Energy and Resources 24 24
37 37
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132 2009-10 Treasurer’s Annual Financial Report
Statement 7 - Special Deposits and Trust Fund Balance Balance 30 June 30 June 2009 Receipts Expenditure 2010
$m $m $m $m Economic Development, Tourism and the Arts
Department Operating Account 15 131 125 20 Tourism Tasmania – Product Distribution and Sales
Trading Account 3 …. 2 ….
Sports Development Account 1 1 2 ….
Intelligent Island Project Account 13 …. 7 7
32 132 136 28 Education
Department Operating Account 17 1 480 1 480 17
State Library Service Account 1 …. 1 ….
17 1 481 1 481 17 Environment, Parks, Heritage and the Arts 1
Operating Account 31 …. 31 …. Finance-General
Commonwealth/State Housing Agreement Account …. 10 10 ….
State Works and Housing Assistance Acts Account …. 7 7 ….
Tasmanian Community Fund Account 8 6 7 8 Assurance Fund – Land Titles Act 1980 Account 5 …. …. 5
Finance-General Operating Account …. 18 12 6
Unclaimed Moneys Account 11 1 …. 12
Housing Fund 56 …. 9 47
Infrastructure Tasmania Fund 95 14 23 85
Helsham Agreement Grants Account 2 …. 1 1
Urban Renewal and Heritage Fund 22 …. 10 11
Hospital Capital Fund 80 …. 10 70
Economic and Social Infrastructure Fund 23 20 15 29
Royal Hobart Hospital Redevelopment Fund 2 …. 1 1
Better Roads Fund 2 …. 2 ….
Australian Government Funding Management Account 113 59 …. 172
The Mount Lyell Closure Trust Fund 1 …. …. 1
Superannuation Provision Account 1 324 223 184 1 364
Agency Accommodation Charges Account …. 14 14 ….
Payroll Provision Account 33 7 28 12
State Debt Management Account 25 …. 12 13
Tasmanian State Service Risk Management Account 163 48 42 169
Temporary Debt Repayment Account (1 156) …. 282 (1 438)
Government Car Fleet Account (3) 50 42 5
808 477 711 574
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2009-10 Treasurer’s Annual Financial Report 133
Statement 7 - Special Deposits and Trust Fund (continued) Balance Balance 30 June 30 June 2009 Receipts Expenditure 2010
$m $m $m $m Heath and Human Services
Patient Trust and Hospital Bequest Account 13 20 17 16
Department Operating Account 31 1 735 1 722 43
Housing Services Operating Account 3 203 192 15 Home Ownership Assistance Program Operating
Account 11 2 1 11
58 1 960 1 932 85 House of Assembly
House of Assembly Operating Account …. 7 7 ….
Infrastructure, Energy and Resources Mines Deposit Account 3 2 …. 5 Department Operating Account 1 893 889 5 East Tamar Highway Redevelopment Account 46 1 17 30 Abt Railway Account 1 …. …. 1 50 897 908 40
Justice Crown Law Trust Account under Section 101 of the
Legal Profession Act 1993 5 75 72 8 Prisoners Earnings Deposit Account …. 2 2 …. Workers’ Compensation Act 1988 Fund Account 2 6 6 2 Supreme Court Suitors Fund Deposit Account 3 1 …. 3 Department Operating Account 13 186 184 16 Local Government and Other Elections Account …. 1 2 …. Criminal Injuries Compensation Act 1976 Victims Fund 1 …. …. 1 Crime (Confiscation of Profits) Account 1 …. …. 1 Criminal Injuries Compensation Fund …. …. …. 1 Rental Deposit Authority Account …. 22 3 18 25 294 269 50
Legislative Council Legislative Council Operating Account …. 6 6 ….
Legislature-General Legislature-General Operating Account …. 6 6 ….
Office of the Governor Office of the Governor Operating Account …. 3 3 ….
Office of the Ombudsman Office of the Ombudsman Operating Account …. 2 2 ….
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134 2009-10 Treasurer’s Annual Financial Report
Statement 7 - Special Deposits and Trust Fund (continued) Balance Balance 30 June 30 June 2009 Receipts Expenditure 2010
$m $m $m $m
Police and Emergency Management
Department Operating Account 10 213 216 7 Premier and Cabinet
Tasmanian Community Forest Agreement Fund 2 18 20 ….
Tasmanian Early Years Foundation Account 2 1 1 2
Department Operating Account 4 97 96 5 Telecommunications Management Division Operating
Account .... 33 32 ….
Service Tasmania Operating Account 1 11 11 1
9 159 160 8 Primary Industries, Parks, Water and Environment
Regional Forest Agreement Account 5 …. 1 4
Department Operating Account 36 329 308 57
Crown Lands Administration Fund 39 19 47 11
Valuation Services Operating Account .... 2 2 ….
Water Infrastructure Fund 62 18 32 48
Parks Development and Maintenance Account …. 4 3 1 Apple and Pear Industry Research and Development
Account 1 …. …. 1 Department of Primary Industries and Water
Recreational Fishing Licences Trust Account 1 1 1 1 Department of Primary Industries and Water Service
Tasmania Account .... 236 236 ….
145 610 629 124 Tasmanian Audit Office
Tasmanian Audit Office Operating Account 1 7 8 ….
Treasury and Finance
Department Operating Account 2 48 47 2
Contract Management Account 1 1 2 1
Community Support Levy Account .... 5 3 2
Tasmanian Economic Regulator Account 1 1 1 ….
4 55 53 5
TOTAL SPECIAL DEPOSITS AND TRUST FUND 1 189 6 308 6 559 938
Note: 1. The Department of Environment, Parks, Heritage and the Arts ceased to exist on 30 June 2009. The operational
Divisions of the Department were transferred to the Department of Primary Industries, Parks, Water and Environment and the Department of Economic Development, Tourism and the Arts effective from 1 July 2009.
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2009-10 Treasurer’s Annual Financial Report 135
5 LOAN COUNCIL OUTCOME 2009-10
Under Loan Council arrangements, every year the Australian Government and each State and Territory nominate a Loan Council Allocation. A jurisdiction's LCA incorporates:
• the estimated Cash Deficit/(Surplus) of the General Government and Public Non-Financial Corporations sectors;
• Net cash flows from investments in financial assets for policy purposes; and
• Memorandum items, which are other financing transactions that are treated as borrowing equivalents for Loan Council purposes.
The Loan Council evaluates LCA nominations by referring to each jurisdiction's fiscal position and the macro-economic implications of the aggregate figure.
Table 1 compares Tasmania's 2009-10 LCA as published in the 2009-10 Budget with the 2009-10 outcome.
Table 1: Loan Council Outcome 2009-10 2009-10 Original Budget Actual
$m $m General Government Cash Deficit/(Surplus) 429 118
Public Non-Financial Corporations Cash Deficit/(Surplus) 158 294
Total Non-Financial Public Sector underlying Deficit/(Surplus) 587 412
Less Non-Financial Public Sector Net cash flows from investments in financial assets
for policy purposes
(25) (12)
Plus Memorandum items1 110 15
Loan Council Allocation Deficit/(Surplus) 722 439
Notes: 1. Memorandum items include borrowings by local government and the University of Tasmania.
A tolerance band calculated as two per cent of Total Non-Financial Public Sector Cash received from operating activities (estimated to be $129 million for 2009–10) applies between the budget LCA and the LCA outcome. Applying this band to Tasmania’s original Budget LCA for 2009–10 gives a tolerance band of $852 million to $593 million.
If a jurisdiction is likely to exceed its Tolerance Limit, it must provide an explanation to Loan Council and make that explanation public. The $283 million change in Tasmania’s 2009-10 LCA outcome, to a deficit of $439 million, exceeds the Tolerance Limit of $129 million estimated at Budget time.
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136 2009-10 Treasurer’s Annual Financial Report
The change of $283 million in the LCA between the 2009-10 Budget and 2009-10 outcome is mainly due to:
• a decrease in the General Government Cash Deficit of $311 million. The improvement reflects the impact of the global slowdown being less than anticipated at Budget time. Explanation of major variances between the General Government Budget and actual outcomes are provided in Note 12.3 of the Treasurer’s Annual Financial Statements included in this Report;
• an increase in the Public Non-Financial Corporation Sector Cash Deficit of $136 million primarily due to increased capital expenditure of $178 million; and
• a decrease in new cash borrowings for the Local Government Sector of $95 million. This is due to the reclassification of water and sewerage entities that were previously included in the Local Government Sector for the original Budget LCA.
Consistent with the LCA arrangements, Tasmania advises Loan Council of these circumstances through this publication.