2012-13 Government Mid-year Financial Projections Statement

APPENDIX 6Implementation of the GeneralGovernment Efficiency DividendThe 2012-13 Budget included an efficiency dividend on the general government sector,in order to provide better value for money services and achieve sound financialmanagement outcomes. The efficiency dividend commenced in 2012-13 at 2% ofagencies’ cash appropriations (1% for the Department of Education) and increases by 1%per annum thereafter. Funding for services purchased from the not-for-profit sector(component 1 eligible contracts) and the seniors cost of living rebate has been quarantinedfrom the efficiency dividend. Agencies achieving savings of less than $300,000 in anyyear have also been exempted for that year.The efficiency dividend is estimated to deliver savings of $1.9 billion over the period2012-13 to 2015-16. General government agencies (and the Public Transport Authority)have reflected these savings in their operating budgets, following an evaluation of theirprojected spending activities. Since the announcement in the 2012-13 Budget,the Government has made the following adjustments to individual agencies’ efficiencydividend savings:the Parliamentary Services Department has been fully exempted from the efficiencydividend, as its spending is mostly non-discretionary;the Drug and Alcohol Office component of the efficiency dividend has beentransferred from the Department of Health to the Mental Health Commission;the 2012-13 savings of the Department for Child Protection have been reduced,by excluding funding provided to purchase homelessness services from thenot-for-profit sector; andthe Department of the Attorney General has been exempted for the part of itsefficiency dividend associated with funding for the Legal Aid Commission.Examples of how agencies will achieve their efficiency dividend at the operational levelare shown below.139