2012-13 Government Mid-year Financial Projections Statement

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2012-13 Government Mid-year Financial Projections StatementGENERAL GOVERNMENT EXPENSE GROWTH IN 2012-13Figure 226,000$ million4.2% growth25,00024,000Up$306m(1.3%)on EOT2.5% growthDown$103m(0.4%)onBudget23,00022,00021,00020,0002011-12Estimated Outturn2011-12 Actual 2012-13 Budget 2012-13 MYRKey changes in general government expenses since the time of the 2012-13 Budgetinclude:an additional $86 million for the Western Australian Natural Disaster Relief andRecovery Arrangement that will be spent on restoring roads affected by flooding inthe Carnarvon, Pilbara and Mid-West Regions, and for the construction of housingunits following the March 2011 Kimberley floods;an additional $85 million to meet higher than anticipated demand for hospitalservices;an additional $38 million will be spent on education programs as a result of therevised recurrent funding for Western Australia reflected in the CommonwealthGovernment’s 2012-13 Mid-year Economic and Fiscal Outlook, as well as a further$55 million to resource schools for growth in student enrolments;an additional $23 million to ensure that training delivery continues to meet the needsof the Western Australian economy and to maintain the current level of trainingplaces for the 2013 calendar year;a higher operating subsidy to the Water Corporation ($17 million) reflecting lowercustomer revenue as a consequence of decreased water consumption;$14 million to address unavoidable rental increases for Government Regional OfficerHousing;12
Financial Projectionsan additional $11 million per annum, commencing in 2012-13, to address higher costsdriven by an increase in the daily average prisoner population;increased spending to deliver agreed objectives under the National PartnershipAgreement Supporting National Mental Health Reform ($7 million) and to meethigher than expected demand for mental health inpatient services ($9 million);$8 million for refunds to mining companies that have withdrawn their miningtenement application requests;$5 million per annum to reflect the integration of the Teacher Registration Board intothe Department of Education Services on 7 December 2012;spending on additional fire management officers ($5 million) to increase firepreparedness of the Department of Environment and Conservation;a reduction in superannuation interest costs (down $61 million) reflecting the effect offinancial market activity on the discount rate used to determine these costs 2 ;a reduction in debt servicing costs (down $24 million) reflecting the effect of lowerinterest rates following the reductions in the official cash rate announced by theReserve Bank of Australia since the May 2012 budget; andthe implementation of a range of savings measures totalling $364 million announcedsince the 2012-13 Budget, in response to the weaker revenue outlook detailed above.Corrective MeasuresIn response to the deterioration in the revenue outlook since the 2012-13 Budget,the Government has approved a further round of corrective measures. As announcedin September 2012, these savings initiatives, which impact the majority of generalgovernment agencies, include:lowering the full-time equivalent (FTE) ceiling by around 1,200 FTEs to reflectactual (occupied) FTE levels across the general government sector. Agencies havebeen directed to actively manage their workforce within an approved ceiling.FTE ceilings (and salary budgets) have been reduced to account for the number ofvacant positions across the sector as at 13 September 2012. The associated salarysavings total around $108 million in 2012-13;2Long-term government bond rates are used by the actuary in year-end valuations of unfunded superannuation liabilities.Bond rates have remained at low levels during the first half of 2012-13, compared with a budget assumption that the bond ratewould gradually trend back toward the long-term average (around 6%). A decrease in the bond rate means that unfundedliabilities increase in value (and vice versa). The mid-year review impact of these changes is estimated by Treasury.13
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2012-13 Government Mid-year Financial Projections Statement

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