2012-13 Government Mid-year Financial Projections Statement

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2012-13 Government Mid-year Financial Projections StatementGlobal economic uncertainty, particularly from events in the euro area, has resulted in theprice of most commodities weakening since budget. With the exception of gold,commodity prices have generally softened so far in 2012-13. At the same time, the$US/$A exchange rate is expected to average US103.4 cents in 2012-13, over US4 centshigher than assumed at budget-time. Both of these factors are acting to reduce the State’sroyalty revenue.A softer revenue outlook for the electricity and water utilities, together with higheroperating costs, will drive lower profitability and hence lower payments to the generalgovernment sector (down $66 million in 2012-13 and $978 million over the four years to2015-16).Lower forecasts for royalties and public corporations are partially offset by a strongeroutlook for tax collections (particularly payroll tax) and agency goods and servicesrevenue.Further details on the variations in forecast revenue and expenses are outlined below(a detailed table of general government sector revenue is available inAppendix 2: General Government Operating Revenue).2012-13General government revenue is estimated to be $25.3 billion in 2012-13, $159 million(or 0.6%) lower than the 2012-13 Budget forecast.Royalty income has been revised down by $505 million in 2012-13, due to the netimpact of:lower iron ore prices, down from an average price of $US127.30 per tonne atbudget-time to the current estimate of $US118.40 per tonne. This has reducedestimated royalty income in 2012-13 by $286 million; anda higher than expected $US/$A exchange rate, which is estimated to averageUS103.4 cents over the remainder of 2012-13, US4.4 cents higher than the budgetassumption of US99.0 cents. Holding all other factors constant, this change isexpected to reduce royalty income in 2012-13 by $265 million.Taxation revenue has been revised up by $456 million in the current year.This mainly reflects the impact of:higher payroll tax collections (up $216 million), reflecting robust conditions inthe State’s labour market, with strong employment and wages growth;an upward revision to total duty on transfers (up $122 million), mainly reflectingseveral high value commercial transactions in the first part of 2012-13;an upward revision to forecast taxes on insurance (up $46 million), reflectinghigher than expected insurance premiums in the year to date;higher land tax collections (up $28 million), due to higher than expected increasesin valuations for some types of land; and8
Financial Projectionsan increase in vehicle license duty (up $27 million), reflecting higher thanexpected average monthly growth in collections and continuous trend growth innew vehicle sales. Commonwealth grants have been revised down by $184 million in 2012-13,mainly due to the net impact of:an upward revision to GST grants (up $170 million), due mainly to an increase inthe estimate of the State’s forecast share of the national population following the2011 Census (the State’s share of the national population in 2012-13 has beenrevised up from 10.6% to 10.8%);the inclusion of a $50 million provision in 2012-13 for refunds of overpaidagency GST liabilities (see Corrective Measures feature box later in this chapter);lower than anticipated North West Shelf grants (down $95 million), reflecting ahigher exchange rate and weaker oil prices, partly offset by an increase in LNGprices;lower National Partnership payments for Health (down $68 million), primarilyreflecting changes to the Commonwealth’s schedule of grants for the MidlandHealth Campus, preventive health and essential vaccines; andlower tied grants for capital purposes (down $241 million), mainly reflecting thepre-payment of grants at the end of 2011-12 (referred to in the 2011-12 AnnualReport on State Finances).Interest income has been revised up by $13 million, reflecting the net impact ofhigher cash balances at 30 June 2012 (as a result of 2011-12 outcomes detailed in the2011-12 Annual Report on State Finances, released in September 2012) and lowerinterest rate forecasts following the reductions in the official cash rate announced bythe Reserve Bank of Australia since the May Budget.Dividends from public corporations are $56 million higher than budget,mainly reflecting the net impact of:the implementation of savings measures, including a one-off $62 million dividendfrom the Western Australian Land Authority, and a $19 million increase ininterim dividend payments from the Water Corporation; andlower than expected dividend outcomes for Western Power (down $33 million),Verve Energy (down $25 million), and Horizon Power (down $15 million).Tax equivalent revenue is expected to be $122 million lower than budget, reflectinglower than anticipated revenue from Synergy (down $17 million), Verve Energy(down $20 million), Western Power (down $55 million) and Water Corporation(down $14 million), on the back of lower profitability in 2012-13.Projected revenue from sales of goods and services in 2012-13 has been revised up by$97 million. This largely reflects the flow-on impact of higher than expectedoutcomes in 2011-12.9
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2012-13 Government Mid-year Financial Projections Statement

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