2012-13 Government Mid-year Financial Projections Statement

Financial ProjectionsThe surplus outcomes forecast for the outyears are in part due to the Government’scumulative efficiency dividend imposed on the discretionary operating expenditure ofGTEs as part of the 2012-13 Budget. The efficiency dividend commences at 2.5% in2012-13, increasing to 6.0% by 2015-16 (with port authorities subject to a 1.5% dividendin 2012-13, increasing to 6.0% by 2015-16). This measure aims to strengthen theprofitability of the GTEs and increase the return to the community through higherdividends and tax equivalent revenue to the general government sector, particularly in theoutyears.The 2012-13 Budget estimated that the GTE efficiency dividend across the forwardestimates period would total around $384 million in net debt terms. Of this amount:the Western Australian Land Information Authority is still determining themechanism for its efficiency dividend of $23 million to deliver a benefit to the State’sfinances, given that under its regulatory framework the benefits flow tocustomers; andthe $56 million efficiency dividend from Western Power has been delivered through areduction in operating expenditure. However, the resulting financial benefits largelyflow to customers rather than State finances due to the regulatory framework thatWestern Power operates within.These agencies will continue to look for alternative measures in the lead up to the2013-14 Budget.The mid-year review incorporates an overall net $170 million payment in 2012-13 fromthe general government sector to support electricity entities. In round terms, thiscomprises $494 million of operating subsidies, partly offset by $324 million of taxequivalent and dividend revenue.This includes electricity tariff subsidies (which are made to offset the shortfall inelectricity prices paid by customers relative to the cost of providing electricity), alongwith various other initiatives such as pensioner and senior concessions, and the Feed-inTariff scheme.The net payment from the State’s water entities has been revised down since budget to$95 million, reflecting lower customer demand in response to water efficiency measures.Overall, the net payment from the general government sector to GTEs in 2012-13 is nowexpected to be $550 million, up $77 million on the budget-time forecast of $473 million.This higher net payment to the GTEs reflects the impact of lower profitability on taxequivalent and dividend payments to the general government sector (discussed earlier inthis chapter).23