2012-13 Government Mid-year Financial Projections Statement

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expected demand for mental health inpatient services ($9 million);$8 million for refunds to mining companies that have withdrawn their miningtenement application requests;$5 million per annum to reflect the integration of the Teacher Registration Board intothe Department of Education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