2019-20 Budget Paper 1 - Chapter 1 - The 2019-20 Budget
1The 2019-20 BudgetKey IssuesThe 2019-20 State Budget will maintain the momentum and support growth across the State by delivering record investments in health, education and infrastructure.As our economy continues to grow, the Budget supports and encourages growth that will benefit all Tasmanians by delivering unprecedented investment in infrastructure and the State’s largest ever budget for health and education.Health expenditure will be a record $8.1?billion over the 2019-20 Budget and Forward Estimates period, an increase of $544?million on the level of funding included in the 2018-19 Budget Papers for that Budget and Forward Estimates period, while Education expenditure will (using the same comparison) increase by $349?million to a record $7.1?billion.The Government’s support for infrastructure investment continues at record levels. Over the 201920?Budget and Forward Estimates period, funding totalling $3.6?billion will be provided to develop social and economic infrastructure for the Tasmanian community, including a record $2.8?billion in agency infrastructure projects. The Government is investing in the essential services and the infrastructure that our growing state needs, both in the immediate term and also to strategically prepare Tasmania for future decades. The Government will achieve these outcomes and deliver a balanced Budget, with modest Net Operating Balance surpluses each year across the Forward Estimates.In the 2019-20 Budget the Government focusses on the delivery of the following key outcomes:the ongoing implementation of all of the Government’s 2018 election commitments;the provision of additional funding to address demand pressures in vital service delivery areas;the implementation of new initiatives to support the Government’s Building Your Future Plan;improving the long-term sustainability of the Budget position through the implementation of Budget savings measures to improve the efficiency and effectiveness of the Public Sector; andcontinuing to drive economic growth and job creation, including through investment in major social and economic infrastructure.In delivering these outcomes, the Government will continue to achieve all of its Fiscal Strategy Strategic Actions.Key Issues (cont)Over the 2019-20 Budget and Forward Estimates period, the Government will build on the achievement of Net Operating Balance surpluses over the past three years with surpluses forecast in every year (including the current 2018-19 Budget year). This outcome includes the impact of the significant reduction in some revenue estimates and the savings measures that are required to be implemented to support the future sustainability of the Budget.The strength of the Tasmanian economy continues to be reflected in the growth in Gross State Product. In 2018-19, Gross State Product is estimated to grow at 2??per?cent and it is estimated to remain at this level in 2019-20. This is above the longterm trend of two?per?cent. The Tasmanian tourism sector remains buoyant; over the past year population growth has been double the long-term trend; building approvals continue to be strong; business investment is robust; and there is a strong pipeline of investment projects for the State, including those funded by the Government.The 2019-20 Budget is the first Budget to be prepared under the new financial management framework established by the Financial Management Act 2016. It is also the first Budget to be prepared under new Australian Accounting Standards AASB?15?Revenue from Contracts with Customers and AASB?16 Leases. The presentation of information in these Budget Papers reflects the new Standards and their impact on the major Fiscal Measures.The 2019-20 BudgetThe 2019-20 Budget is an important Budget for both the Government and for Tasmania. The Budget has been developed in the context of a strong economy, the provision of significant funding over a number of years to support improved service delivery and record government infrastructure investment. It has also, however, been developed in an environment that is seeing a challenging reduction in some key revenues, continuing demand pressures in vital service delivery areas and significant costs associated with fighting and recovering from this year’s devastating bushfires. Finalisation of the 2019-20 Budget has, therefore, required careful consideration and balancing of the Government’s priorities.The 2019-20 Budget focusses on the delivery of the following key outcomes:the ongoing implementation of all of the Government’s 2018 election commitments;the provision of additional funding to address demand pressures in vital service delivery areas;the implementation of a number of new initiatives to support the Government’s Building Your Future Plan;improving the long-term sustainability of the Budget position through the implementation of Budget savings measures to improve the efficiency and effectiveness of the Public Sector; andcontinuing to drive economic growth and job creation, including through investment in major social and economic infrastructure.In delivering these outcomes, the Government will continue to achieve all of its Fiscal Strategy Strategic Actions. In addition, Net Operating Balance surpluses will be achieved across the Budget and Forward?Estimates period. This outcome is supported by Australian Government capital receipts, returns from government businesses and the implementation of Budget savings. Achievement of these savings and constraint in expenditure will be essential to meeting forecast Budget outcomes. Budget savings have initially been allocated to Finance-General and will subsequently be allocated to agencies early in the 201920 Budget year. As foreshadowed in the 201819 Revised Estimates Report, the Government is projected to return to a Net Debt position over the Forward Estimates period. This level of Net Debt is manageable. It reflects the Government’s strong commitment to the development of the State’s infrastructure to support service delivery, jobs and economic growth. The strength of the Tasmanian economy continues to be reflected in the growth in Gross State Product. In 2018-19, Gross State Product is estimated to grow at 2??per?cent, which is above the longterm trend of two?per?cent. This result is supported by continuing household consumption growth, strong dwelling investment activity, business investment and exports. For 2019-20, Gross State Product is forecast to remain at 2??per?cent with positive contributions primarily expected from government expenditure, business and dwelling investment, and international exports of goods and services, accompanied by positive but lower household consumption growth. As a result of the strength of the Tasmanian economy, labour market conditions continue to be favourable. This has seen positive net interstate migration into Tasmania due to higher retention of Tasmanian workers and a greater number of people moving to Tasmania from other Australian states and territories. This has, in turn, resulted in strong population growth that has supported demand and economic activity in the State.The 2019-20 Budget is the first Budget to be prepared on the basis of the new financial management framework established by the Financial Management Act 2016. This new legislation modernises the financial management of General Government Sector entities and improves transparency. The 2019-20 Budget has also been prepared on the basis of new Australian Accounting Standards that apply from 1 July 2019. The application of these standards materially impacts the reported General Government Net Operating Balance and Net Debt. Information on the impact of these new Australian Accounting Standards is provided in appendix 1.2 to this chapter.2019-20 Budget HighlightsImplementing Election CommitmentsThe 2018-19 Budget included funding to implement all of the Government’s 2018 election commitments. This included significant commitments across all of the priorities identified in the Government’s Building Your Future Plan. These priorities are:building infrastructure for the 21st Century;delivering a strong economy and more jobs;investing in health, education and Tasmanians in need;keeping Tasmanians safe;protecting the Tasmanian way of life; andtaking action on the cost of living.Funding to implement all election commitments is fully reflected in the 2019-20 Budget. In a number of instances (for example, in relation to acute hospital services) the level of funding committed increases across the Budget and Forward Estimates period. Detailed information on the status of the implementation of 2018?election commitments and other initiatives is included in agency key deliverables information provided in Government Services Budget Paper No?2.Supporting Vital ServicesAcross Australia, all governments are faced with increasing pressure on key service delivery areas. The Government is committed to ensuring that funding is prioritised to supporting services in these areas. To this end, the 2019-20 Budget allocates $240?million in additional funding to the Tasmanian Health Service and Ambulance Tasmania to address increasing health demand. This is in addition to the increased funding already being provided through the implementation of the Government’s election commitments. In the 201920?Budget the Government is also allocating:$27.6?million to support the National Disability Insurance Scheme and disability services;$20.1?million to support an increase in police officers;$16.8?million for the Tasmanian Prison Service;$16.9?million for Out of Home Care; and$14.3?million to support our courts and related legal services (including legal aid, legal assistance services and the Office of the Director of Public Prosecutions).Important New InitiativesThe Government continues to identify new initiatives to support the implementation of its Building for Your Future Plan. In the 2019-20 Budget these include:$6?million for the Government’s Strategic Growth initiative;$4.4?million for the Tasmanian Trade Strategy;$4.4?million to support Tourism and Hospitality Supply;$4?million to establish Brand Tasmania; and$2.8?million for the Defence Strategy.In addition, the Government will implement a number of other initiatives in the 201920?Budget that emphasise its continued action to address housing affordability, support Tasmania’s rental market and home ownership, and ensure that Tasmania receives its fair share of tax from wagering operators. These initiatives include:extending the $20?000 First Home Owner Grant for a further 12 months to 30?June?2020;extending the land tax exemption for short-stay accommodation properties that are made available for long-term rental, to 30?June?2023; extending the land tax exemption for all newly built housing that is made available for long-term rental, to 30?June?2023; extending the eligible period for the duty concession for first home buyers of established homes, to 30?June?2020;extending the eligible period for the duty concession for eligible pensioners that downsize their home, to 30?June?2020;increasing the Foreign Investor Duty Surcharge for acquisitions by foreign persons of residential land (after a review of the definition of a foreign person), from three?per?cent to seven?per?cent, and of primary production land, from half?a?per?cent to 1.5?per?cent from 1?January?2020; developing a land tax surcharge to apply to foreign ownership of residential and primary production land, from 1?July?2020; andintroducing a point of consumption tax on wagering at a rate of up to 15?per?cent on the net wagering revenue of betting companies offering services to Tasmania from 1?January?2020.Building Tasmania’s InfrastructureThe 201819 Budget included funding for a record Government agency infrastructure investment program of $2.6?billion. This included significant funding to develop vital Government infrastructure across the full range of Government service delivery areas including hospitals, schools, roads, housing, information and communications technology, and recreation. Funding allocated to Government agencies in the 201920?Budget results in a new record agency infrastructure investment program of $2.8?billion. This includes new funding of $63?million allocated for the commencement of the Royal Hobart Hospital Stage?2 Redevelopment and $20?million to address Kingborough congestion as part of the Hobart City Deal. In addition to investing in infrastructure through agencies, the Government also provides significant funding to government businesses, together with TasWater, to undertake important infrastructure projects. This funding can be provided through equity contributions or through grants. Over the 201920 Budget and Forward Estimate period, the Government will provide $792?million to government businesses and TasWater to support major long-term infrastructure projects including the Tasmanian Irrigation Scheme, the Tasmanian Rail Revitalisation Project, the replacement of TT-Line vessels, the decommissioning and relocation of the Macquarie Point wastewater treatment plant, as well as other significant water and sewerage projects such as Launceston’s combined sewerage and stormwater system improvements and the Freycinet Peninsula wastewater system. In total, over the 201920?Budget and Forward Estimates period, the Government has allocated $3.6?billion to develop Tasmania’s infrastructure. The Government’s infrastructure program represents a strategic pipeline of investment that enables Tasmanian businesses and industry to plan for the long-term. It will also continue to stimulate economic activity and jobs growth across the State.Managing the State’s Finances Since being first elected in 2014 the Government has made the responsible management of the State Budget a key priority. Whilst savings were initially required to assist in returning the Budget to a sustainable position; record additional funding has been allocated to improve Government services, develop infrastructure, support jobs and drive economic growth; challenges relating to changing revenue levels have been addressed and Net Operating Balance Surpluses have been delivered for three years in a row. In the 2019-20 Budget, challenges relating to significant falls in some revenue areas and funding pressures have again arisen. When compared to 2018-19 Budget estimates, revenue from GST and conveyance duty has fallen by $535.1?million. Of this total, GST receipts have fallen by $280.3?million. Early forecasts indicated that conveyance duty may decrease by as much as $280?million. However, the impact of more up-to-date data, together with the inclusion of proposed increases to FIDS rates, has resulted in a forecast reduction in conveyance duty of $254.8?million. The Government will, once again, act in a considered and responsible manner to meet these challenges. The 2019-20 Budget, therefore, includes the implementation of savings across the 201920 Budget and Forward Estimates period which are necessary to ensure the sustainability of the Budget position and the future provision of services to the Tasmanian community. The level of savings required in 2019-20 is approximately 0.75?per?cent of total expenditure with a further 0.75?per cent in 202021 and 202122. Budget savings over the 201920?Budget and Forward Estimates period total $450?million. Achievement of these savings, together with expenditure constraint, will be essential to the delivery of forecast Budget outcomes.These savings have initially been presented within Finance-General and the Government will work with agencies to identify the most appropriate approach to the implementation of these savings measures within individual agencies early in the new Budget year. The Government’s commitment to protect the frontline and minimise the impact on service delivery remains. The focus will be on expenditure such as consultants, travel and advertising, together with vacancy control and natural employee attrition, as well as reviewing returns from all government businesses. A review of the State Service will also be undertaken to identify structural, legislative and cultural improvements that will transform current structures, services and practices to deliver a more efficient and effective public service. An update on savings measures agreed with individual agencies will be released after the first quarter of the 2019-20 financial year and in the 2019-20 Revised Estimates Report. 2019-20 Budget Estimates SummaryThe following sections provide summary information on the key 2019-20 Budget estimates. Further detailed information on these estimates is provided in this Budget Paper and, on an agency basis, within Government?Services Budget Paper No?2. Table 1.1:Key Budget and Forward Estimate Aggregates, 2018-19 to 2022-232018-19?2018-19?2019-20?2020-21?2021-22?2022-23?Estimated?Forward?Forward?Forward?Budget?Outcome?Budget?Estimate?Estimate?Estimate?$m?$m?$m?$m?$m?$m?General Government SectorRevenue6 217.3?6 381.0?6 406.7?6 397.6?6 570.0?6 799.7?Expenses6 055.4?6 339.7?6 349.3?6 312.5?6 395.5?6 549.2?Net Operating Surplus/(Deficit)161.9?41.3?57.4?85.1?174.5?250.6?Fiscal Surplus/(Deficit)(284.6)(356.9)(248.4)(225.7)(19.8)3.0?Net Debt at 30 June1(329.6)(535.2)284.5?643.1?820.0?1 114.1?GFS Net Debt at 30 June2(329.6)(535.2)(50.4)321.0?520.2?839.8?Infrastructure Investment752.4?719.6?723.3?715.9?630.1?695.0?Notes:Net Debt represents Borrowings plus Lease liabilities, less the sum of Cash and deposits and Investments. This measure incorporates the impact of recognising Lease liabilities on the Balance Sheet as a result of the changes under AASB 16 which is effective from 2019-20. Further information on this change is provided in appendix 1.2 to this chapter.GFS Net Debt represents Borrowings less the sum of Cash and deposits and Investments. This is equivalent to Net Debt based on the Australian Bureau of Statistics Government Finance Statistics reporting framework, and excludes the impact of lease liabilities. This measure is consistent with the methodology for the calculation of General Government Net Debt in recent years. Further information on this change is provided in appendix 1.2 to this Operating BalanceThe Net Operating Balance is estimated to be a surplus of $57.4 million in 2019-20. Net Operating Balance surpluses are expected to be achieved across the Forward Estimates period.Chart?1.1 highlights the change in the Net Operating Balance that has occurred since 2008-09 and the current projections for the 2019-20 Budget and Forward Estimates period.Chart 1.1:Net Operating Balance, 2008-09 to 2022-231Note:The Net Operating Balance Actual for 2016-17 is presented net of the one-off Australian Government payment of $730 million related to the Mersey Community Hospital. The Net Operating Balance including this payment was $804 million. It should be noted that the receipt of Australian Government funding for capital programs, particularly oneoff major projects, has the effect of improving the Net Operating Balance outcome. Given the nature of the Net Operating Balance measure, it reflects the receipt of revenue from the Australian Government for infrastructure purposes but does not factor in the expenditure of these funds on infrastructure projects. The Underlying Net Operating Balance, whilst not part of the recognised standard accounting measures, has been used for a number of years as a measure that removes the impact of one-off Australian Government funding for specific capital projects. The Underlying Net Operating Balance is generally derived by excluding significant one-off capital related funding received from the Australian Government from the Net Operating Balance.Table 1.2 below provides information on the Underlying Net Operating Balance for the 2018-19 Estimated Outcome and 2019-20 Budget and Forward Estimates period. It should be noted that over the 201920?Budget and Forward Estimates period, when compared with the 2018-19 Budget information, the Net Operating Balance has also been impacted by Australian Accounting Standard changes. The impact of these Standards is detailed in appendix 1.2 to this chapter.Table 1.2:Underlying Net Operating Balance, 2018-19 to 2022-23??2018-19?2019-20?2020-21?2021-22?2022-23?Estimated?Forward?Forward?Forward??? Outcome?Budget?Estimate?Estimate?Estimate?$m?$m?$m?$m?$m?Net Operating Balance41.3?57.4?85.1?174.5?250.6?Less One-off Australian Government FundingBridgewater Bridge....?(6.0)(30.0)(50.0)(150.0)Cradle Mountain Experience....?(5.0)(17.0)(8.0)....?Roads and Rail Funding (Nation Building)(94.4)(83.9)(56.9)(54.1)(93.0)Roads of Strategic Importance(5.0)(13.0)(52.0)(70.0)(70.0)Royal Hobart Hospital Redevelopment(17.5)(54.7)....?....?....? Sustainable Rural Water Use and Infrastructure Program(35.8)(15.7)(40.0)(55.0)....? Urban Congestion Fund(1.0)(16.2)(23.5)(12.9)(6.1)(153.6)(194.4)(219.4)(250.0)(319.1)Underlying Net Operating Balance(112.3)(137.1)(134.3)(75.5) (68.5)???????Fiscal BalanceA Fiscal Balance deficit of $248.4?million is estimated for 2019-20 with the outcome improving over the Forward Estimates period to an estimated surplus of $3?million in 2022-23. The improvement in the Fiscal Balance reflects both the expected Net Operating Balance outcome and the impact of capital expenditure over the Budget and Forward Estimates period. Chart?1.2 illustrates the Fiscal Balance since 2008-09.Chart 1.2:Fiscal Balance, 2008-09 to 2022-231Note:The Fiscal Balance for 2016-17 is presented net of the one-off Australian Government payment of $730 million for the Mersey Community Hospital for presentation purposes. The Fiscal Balance including this payment was $677 DebtNet Debt represents Borrowings less the sum of Cash and deposits and Investments. A reference to ‘negative’ Net Debt means that Cash and deposits and Investments exceeds Borrowings. This can also be referred to as Net Cash and Investments.It is estimated that General Government Net Debt will be $284.5?million as at 30?June?2020 noting that, without the introduction of the new Australian Accounting Standard AASB?16 Leases, Net Cash and Investments of $50.4?million, would be reported. General Government Net Debt is estimated to be $1?114.1?million as at 30?June?2023 ($839.8?million without the new standard being applied). A significant factor in the increase in General Government Net Debt over the Budget and Forward Estimate period is the Government’s commitment to significant intergenerational infrastructure development through both agencies and government businesses. The record investment in the State’s infrastructure represents a strategic longterm commitment to develop Tasmania’s future.As noted above and detailed in appendix 1.2, the reported level of General Government Net Debt has been materially impacted by the introduction of the new Australian Accounting Standard AASB?16 Leases. The impact of the Standard on reported General Government Net Debt is highlighted in Chart 1.3. Chart 1.3:Net Debt, 2009 to 2023Sources of RevenueIn 2019-20, General Government Sector total revenue is estimated to be $6?406.7?million. This represents an increase of $189.4?million on the 2018-19 Budget Estimate of $6?217.3?million.Chart?1.4 provides information on the major sources of General Government Sector Revenue in 201920. Chapter 5 of this Budget Paper provides a detailed explanation of the major revenue items included in the 2019-20 Budget and over the Forward Estimates period.Chart 1.4:Sources of General Government Revenue, 2019-20Purposes of ExpenditureIn 2019-20, General Government Sector total expenditure is estimated to be $6?349.3?million. This represents an increase of $293.9?million on the 2018-19 Budget Estimate of $6?055.4?million.Chart?1.5 provides information on the major purposes of General Government Sector Expenditure in 201920. This Chart reflects the detailed information provided in Table A1.16 in appendix?1 of this Budget?Paper. Chapter?4 of this Budget Paper provides a detailed explanation of the major expense variations included in the 2019-20 Budget and over the Forward Estimates period.Chart 1.5:General Government Expenses by Purpose, 2019-20Agency Infrastructure InvestmentOver the 2019-20 Budget and Forward Estimates period, through Government agencies, the Government will invest a record $2.8?billion in vital community infrastructure projects, including in:roads and bridges ($1.6?billion);hospitals and health ($352.6?million);human services and housing ($212.5?million);schools and education ($194?million); andlaw and order ($170.6?million).This level of investment in infrastructure is above longterm historical infrastructure investment levels (see?Chart?6.1 in chapter?6). The program reflects the Government’s strong commitment to the development of intergenerational infrastructure that supports the delivery of services to the Tasmanian community, facilitates and supports jobs and economic growth and enhances the Tasmanian way of life. The agency infrastructure investment program has been formulated having regard to the Government’s Fiscal Principles contained in its Fiscal Strategy and will deliver on Strategic Action 5, namely, infrastructure investment will maintain existing assets, respond to economic and population growth and reflect the changing needs of the community. It is essential that a strong Budget position is maintained in order to facilitate the funding of essential infrastructure investment on a sustainable basis.Chart?1.6 provides details of infrastructure investment expenditure for 2019-20 by classification. Chapter?6?of this Budget Paper provides a detailed explanation of the Government’s investment in agency infrastructure over the 2019-20 Budget and Forward Estimates period. As noted above, this investment in agency infrastructure is supported by the allocation of a further $792?million to support infrastructure projects being undertaken by government businesses. Chart 1.6:Infrastructure Investment by Classification, 2019-20 Current Budget Risks and SensitivitiesGoods and Services Tax RevenueThe Australian Government has legislated revised GST revenue sharing arrangements that will see the GST distribution methodology transition from the current principle of equalising states’ fiscal capacities to the level of the state with the highest fiscal capacity, to equalising to the fiscal capacity of the higher of New?South?Wales or Victoria from 2021-22. The states have negotiated the inclusion of a no-worse-off guarantee in legislation until 2026-27. However, due to the finite nature of this guarantee, there is a risk to Tasmania’s share of GST revenue from 2027-28.The Commonwealth Grants Commission is also currently undertaking a five-yearly review of the methodology it uses to distribute GST to the states and territories. Changes to the CGC’s methodology may result in a lower GST revenue for the State from 2020-21. More immediately, the risks to Tasmania’s GST revenue estimate in the 201920 Budget are linked directly to the State’s share of the national population; the size of the GST revenue pool; and Tasmania’s relativity factor, which is forecast to fall over the Forward Estimates. The CGC’s 2020 Methodology Review also increases the risk of relativity volatility in 2020-21. Whilst we are seeing stronger population growth than the long-term trend in relative terms, Tasmania’s share of the national population is expected to fall over the Forward Estimates. GST revenue collections are also highly sensitive to changes in national consumer spending patterns, as evidenced by the recent significant reductions in the national pool forecasts in the Australian Government’s 2019-20 Budget. There is a one-to-one relationship between variations in the size of the national pool of GST available for distribution to the states and variations in GST revenue to Tasmania. For example, a one per cent variation in the GST pool would result in a $24.8 million variation in Tasmania’s GST revenue in 201920, assuming that the State’s population share and assessed relativity remained constant.Other Australian Government Funding and AgreementsAustralian Government-State funding arrangements are linked directly to arrangements under the Intergovernmental Agreement on Federal Financial Relations (IGAFFR) agreed by the Council of Australian Governments in November 2008.Contrary to the principles of the IGAFFR, there has been an increasing trend towards more prescriptive agreements that include requirements for matched funding, maintenance of effort, transfer of risks to the states and more onerous reporting and input controls. There have also been recent examples of the Australian Government legislating funding arrangements. These trends impose budgetary risks on Tasmania and reduce the State’s flexibility to fund its own expenditure priorities or respond to changing fiscal circumstances as they arise.Australian Government funding presents a further risk in that the CGC assesses the level of total funding available to each state in determining its relative financial need and GST requirement. Where Tasmania receives a level of Australian Government funding above the national average, or where it is the only recipient, the result is an almost equal reduction in the State’s GST revenue share over time. Effectively, this substitutes untied GST revenue for tied Australian Government funding, further limiting the State’s ability to direct funding according to its priorities and emerging fiscal challenges. The 2019 Australian Government election may increase financial risk due to the potential requirement for matched funding related to Australian Government election commitments, a number of which contain requirements for State funding. Any future major reforms may present potential fiscal implications for Tasmania.National Partnership PaymentsNational Partnership Payments are provided to each State through time-limited National Partnership Agreements and Project Agreements, with the specifics of each payment generally written into the agreement itself. The level of risk associated with these agreements is generally related to the nature of the payments provided and the difficulties agencies face adjusting expenditure levels when they cease.Future funding arrangements in relation to expiring NPPs are an ongoing risk exposure for all states and territories, particularly where these NPPs are funding critical core service delivery functions.Specific AgreementsNational Disability Insurance SchemeIn December 2018, Tasmania signed the National Disability Insurance Scheme Agreement in readiness for the commencement of the full scheme from 1 July 2019. Tasmania has agreed to pay a fixed annual contribution to the NDIS, set at $233 million in 2019-20, then escalated at 4.0 per cent per annum.From 1 July 2019, the National Disability Insurance Agency will be responsible for delivering specialist disability services to NDIS participants in Tasmania. From this time, Tasmania will bear the full cost of providing any duplication of services and, as such, this is a potential risk to the Budget and Forward Estimates.There is also a risk associated with Tasmania paying a fixed contribution while the full scheme NDIS matures, due to a number of outstanding issues that will be resolved in the early years of full scheme. This includes the risk that a lower than anticipated number of participants enter the scheme. Beyond the Forward Estimates, there is a Budget risk due to the potential for the Productivity Commission reviews of scheme costs to impact the State's financial contribution to the NDIS.National Health ReformThe National Health Reform Agreement (NHRA) is due to expire on 30 June 2020. The current Agreement is expected to deliver around $447.3?million in 2019-20. Tasmania continues to negotiate with the Australian?Government for the period 1 July 2020 to 30 June 2025 based on the Heads of Agreement that Tasmania signed in May 2018.The Heads of Agreement provides for a continuation of the existing public hospital funding arrangements as outlined in the current NHRA, with the Australian Government contributing 45 per cent of the efficient growth in public hospital funding until 2024-25. However, Australian Government funding is capped nationally at 6.5 per cent growth per annum and any activity above the cap must be wholly funded by the States.Funding and expenditure is largely based on actual levels of public hospital activity, which cannot be accurately predicted. Therefore, there is an underlying risk to the Budget and Forward Estimates should demand for health services in the State grow at a faster rate than the Australian Government’s capped funding monwealth Redress SchemeTasmania commenced its participation in the Commonwealth Redress Scheme on 1?November?2018. It is difficult to accurately forecast the costs to the State of this commitment due to the unknown nature of some of the variables, with the average level of compensation and the number of claimants having the largest impact on the quantum of total costs.Funding of $36 million has been included in the Budget and Forward Estimates, consistent with estimates of the cost to the State over the initial years of the Scheme. However, as noted in the 2018-19 Revised Estimates Report, depending on the level of redress provided, costs in excess of $120 million may eventuate over the ten years of the Scheme.The Joint Select Committee on Oversight of the Implementation of Redress related recommendations of the Royal Commission into Institutional Responses to Child Sexual Abuse released its final report on 2?April?2019. Additional costs may eventuate depending on any Australian Government response to the recommendations in the report.The Tasmanian Government’s broader response to the Royal Commission’s 409 recommendations may also have Budget implications.State TaxationState Taxation revenue estimates are sensitive to changes in a range of economic parameters, such as employment, wages growth and inflation, as well as prevailing economic conditions in Tasmania more generally. These parameters can result in either more or less State Taxation revenue being collected.Forecasting conveyance duty is particularly challenging as it is subject to additional factors, which can result in significant volatility from year to year. This includes population growth, housing supply, the lending policies of financial institutions, interest rates and both local and national sentiment with regard to property.Conveyance duty revenue in 201920 is forecast to decline by $69.9?million or 22.8?per?cent compared to the estimate for 2019-20 included in the 2018-19 Budget, with further downward revisions over the Forward Estimates period.? These revisions are primarily due to a reduction this financial year in residential property transactions which make up a significant proportion of conveyance duty receipts. To date, the reduction has been largely driven by reductions in transaction volumes in the South of the State, with transaction volumes in the North remaining relatively stable. Hobart has so far not experienced property price declines but residential price growth has begun to flatten in the past six months. Over the past year, property price growth in the North and North West has been stronger than the South, albeit off a lower base. Should reductions in property prices eventuate, this will exacerbate the effects of the slowdown in revenue growth. Non-residential conveyance duty revenue is generally volatile and can be significantly impacted by a small number of large transactions, also making forecasting difficult.Given the current position in the property market cycle and the variable performance in the residential property market across the State, it is difficult to determine the direction of conveyance duty revenue in the Forward Estimates years. Therefore a neutral position over the Forward Estimates has been adopted until further evidence emerges. There continues to be a risk that there will be further downwards revisions in the upcoming 201920 Revised Estimates Report, in the event that transaction volumes and property prices decline from current levels.The revision to conveyance duty is consistent with experiences in a number of other jurisdictions which have reported significant downward revisions in their forecasts for conveyance duty revenue and have raised the potential for further write-downs.Other RisksGeneral Agency Cost PressuresWhile all agencies are expected to deliver services within their allocated Budget and Forward Estimates, there continues to be a range of Budget pressures which agencies need to manage, including staffing levels, general increases in the cost of inputs and increasing demand for services. In the current Budget environment, expenditure constraint in all areas will be required.Implementation of Budget SavingsThe 2019-20 Budget and Forward Estimates assume the achievement of $450?million in Budget savings. Achievement of the budgeted level of savings will require committed action to identify and implement the savings measures. In the absence of improvements in revenues, achievement of savings levels below those detailed in the Budget Papers will result in a deterioration in the Budget position.Funding requirements beyond the current Forward EstimatesExpenditure estimates presented in this Budget Paper are based on the standard Budget and Forward?Estimates period of four years. As such, expenditure levels beyond this period are not identified. As is established practice, such impacts are taken into account in the ongoing development and management of the Budget.Public Sector WagesEmployee costs (including superannuation) represent approximately 47?per?cent of the Government’s total operating expenditure. A one per cent increase in employee costs across all employee areas, over and above that provided for, will (assuming no other changes) have a negative impact on the Budget position in excess of $28?million per annum including superannuation and an accumulative impact of $285 million over the Budget and Forward Estimates period. The 2019-20 Budget and Forward Estimates provide for wage indexation of two?per?cent per annum. This reflects the Government’s current wages policy. The Tasmanian Government is committed to ensuring our State Service employees receive fair and reasonable pay increases and improvements to employment terms and conditions. To this end, the Government made an offer to employee groups of seven per cent over three years, with the increase above the wages policy offset by savings measures, together with improvements in other important conditions. This exceeds the current rate of inflation. Whilst the Australian Education Union has put the Government’s offer to its members, at the time of writing, the outcome of the members’ vote is still to be determined. The Government will continue to negotiate with other employee groups in good faith to achieve an appropriate outcome.Health Improving health services in Tasmania is a high priority for the Government and this is reflected in the significant level of additional funding that the Government continues to provide for health services throughout Tasmania. Notwithstanding the provision of this significant additional funding, the delivery of these services to the Tasmanian community continues to present a significant budget challenge (as it is across all Australian jurisdictions). The Government will continue to review health funding requirements in the context of the priorities that are identified and the Budget position.Out of Home CareThe Government has provided significant additional funding to support vulnerable children with complex needs in Out of Home Care, including that provided in this Budget. Future funding requirements will continue to be reviewed taking into account a range of factors including the number of children in care, the level of care required and the ongoing implementation of reforms.Tasmanian Prison ServiceThe Government has provided significant additional funding to address increased operating costs associated with the prison service (including in the current Budget). It is expected, however, that demand issues and requirements for changing program delivery will continue to place significant pressure on future operating costs.Natural Disaster Costs and Recovery ArrangementsThe 2019-20 Budget includes significant additional funding to meet costs associated with the major bushfires that occurred across Tasmania over the recent bushfire season. While significant work has been undertaken to identify costs incurred, cost estimates are yet to be finalised. As such, there is the potential for additional funding to be required.Under Natural Disaster Relief and Recovery Arrangements and the new Disaster Recovery Funding Arrangements that replaced the NDRRA from 1 November 2018, the State is able to seek reimbursement from the Australian Government for a portion of the costs incurred by the State and local government in the event of natural disasters. Assumptions have been required to be made in relation to the level of future funds to be received from the Australian Government and the timing of the receipt of those funds. Any variation from these assumptions will result in an impact on the current Budget estimates. Infrastructure FundingThe Government has placed a high priority on the development of infrastructure to support the provision of services to the community, support jobs and drive economic growth. As a result, the size of the Government’s agency infrastructure investment program over the 2019-20 Budget and Forward Estimates period is at record levels. Outcomes in relation to the level of expenditure on infrastructure in any given year can materially impact Budget estimates and results. Issues that could impact the level of infrastructure expenditure include:the timing and amounts of Australian Government funding for infrastructure, including projects which are still progressing through investment planning stages;finalisation of State funding requirements to match Australian Government commitments;changes to the timing of project expenditure;the high level of activity in the Tasmanian construction industry; andGovernment commitments to major infrastructure projects such as further stages of the Royal Hobart Hospital Redevelopment Project.Support for International FlightsThe Government strongly supports the Tasmanian tourism industry. As part of this support, the Government has stated that it is actively pursuing opportunities for an international carrier to Hobart to enable international visitation to continue to grow. The level of any support to be provided to achieve this outcome is currently uncertain.Support to Grow the Tasmanian EconomyStrong economic growth is a major target of the Government. The Government works closely with the private sector and local government to support investment and jobs across Tasmania. This may result in the allocation of additional funding, providing financial guarantees or the forgoing of revenue over the Budget and Forward Estimates period. In some instances, there have been offers of support made by the Government that may be taken up if certain conditions are satisfied at a later date.Disability Royal CommissionThere will be significant costs for jurisdictions from participation in the Royal Commission. Costs will be associated with hearings that relate to Tasmania and legal and administrative support including the cost of providing information and evidence to the Royal Commission by government agencies. As well as these indirect costs, there may be costs associated with any Tasmanian Government response to the Royal Commission's findings and recommendations. Superannuation FundingThe Government recognises that superannuation is a significant liability and will continue to ensure that it manages this critical ongoing funding task in the most prudent way and in accordance with the funding recommendations of the State Actuary. The major superannuation schemes currently operating in the General Government Sector that have an unfunded liability are those established under the Public Sector Superannuation Reform Act 2016, the former Parliamentary?Superannuation?Act?1973, the former Parliamentary?Retiring?Benefits?Act?1985 and the Judges’?Contributory?Pensions?Act?1968. While these schemes have been closed to new members for some time, because of the longterm nature of superannuation benefits, the superannuation liability continues to increase as existing members accrue additional years of service as they approach retirement age. The liability is projected to increase until 202324 and then gradually decline over the following five or six decades. Currently, the emerging cash cost of defined benefit superannuation payments is met from the Public?Account, funded partly by agency contributions and by a Reserved by Law contribution, which comprises the balance of the Government’s share of pension and lump sum benefit costs.A key budget risk is that the cost to the Budget will increase significantly in coming years, increasing by 48.9?per?cent over the next 14 years and peaking in 203334. The estimated cost to the Budget is based on the most recent actuarial estimates. The change from the projections in the 2018-19 Budget reflects a 3.1?per?cent increase in the expected peak cost to $451.4?million ($437.8?million in the 2018-19 Budget).In 2019-20, defined benefit superannuation costs are estimated to be 4.7?per?cent of Cash receipts from operating activities in the General Government Sector. Defined benefit superannuation costs, as a percentage of General Government cash receipts, is estimated to peak at 5?per?cent in eight years (202728), followed by a decrease to 4.3?per cent in 15 years (2034-35) and 3.4?per?cent in 20 years (2039-40).Further information on the superannuation liability is provided in chapter 7 of this Budget ernment Businesses Government business are subject to a wide range of influences that can significantly impact the level of returns to the Government, both positively and negatively. These include market conditions, infrastructure investment requirements and the implementation of major reform programs. Such influences may impact the Budget through increased costs or reduced returns from Government businesses, and may also necessitate changes to businesses’ capital structure requirements.The Government continues to progress its review of the Tasmanian wholesale electricity market regulatory pricing framework. Future returns from the Government’s electricity business portfolio could be impacted depending upon the outcome of the review. Feasibility assessments into the Battery of the Nation and Project Marinus are also continuing, with the Australian Government recently committing $56 million towards the delivery of the definition and approvals phase of Project Marinus. Both of these projects will require significant investment if they proceed and, depending on the project finance model(s) chosen, may result in billions of dollars in new assets and liabilities being recognised on the Total State Sector balance sheet. Financial outcomes are dependent on a range of matters that are currently uncertain, including the national regulatory framework. The projects will impact on future returns to the Government from Hydro Tasmania and TasNetworks throughout the development, construction and operational phases. ?However, potential Budget impacts cannot be quantified at this preliminary stage.TasNetworksOn 30?April?2019, the Australian Energy Regulator (AER) released its final distribution and transmission revenue determination for Tasmanian Networks Pty Ltd for the period 20192024. The AER’s final determination has resulted in a lower total revenue allowance compared to the AER’s draft determination.? Given Tasmanian Networks’ returns to the Government in the 2019-20 Budget are based on the AER’s draft determination, there are downside risks to the estimates. TasWaterFunding totalling $300?million will be provided to TasWater over 10 years from 2018-19. This funding will allow TasWater to implement its accelerated infrastructure program and will provide support towards major infrastructure projects including the decommissioning and relocation of the Macquarie Point wastewater treatment plant, the Launceston combined sewerage and stormwater system improvements and the Freycinet Peninsula wastewater system. An initial contribution of $20?million was made to TasWater in January 2019 and a further $180?million is provided for over the 2019-20 Budget and Forward Estimates. To the extent that further funding will be required, it will be considered in future Budgets.Appendix 1.1State and Territory Credit RatingsThe current credit ratings and outlook for longterm domestic debt of the states and the territories by the rating agencies, Moody’s Investors Service (Moody’s) and Standard?&?Poor’s (S&P), are detailed in Table?1.3.Table 1.3:Government Ratings?Moody'sStandard & Poor's???New South WalesAaa (Stable)AAA (Stable)VictoriaAaa (Stable)AAA (Stable)QueenslandAa1 (Stable)AA+ (Stable)Western AustraliaAa2 (Positive)AA+ (Stable)South AustraliaAa1 (Stable)AA+ (Stable)TasmaniaAa2 (Stable)AA+ (Stable)Northern TerritoryAa2 (Negative)naAustralian Capital TerritorynaAAA (Stable)???Appendix 1.2 Impact of New Accounting StandardsThe Australian Accounting Standards Board has made a number of changes to the Australian?Accounting?Standards, with effect from 2019-20. Two of these standards have materially impacted the 2019-20 Budget and Forward Estimates when compared to the 201819?Budget?Papers: AASB 15 Revenue from Contracts with Customers; and AASB 16 Leases.The 201920 Budget is the first General Government Sector publication to recognise the impact of the two new Australian Accounting Standards. This appendix outlines the impact of both standards on the 2019-20 Budget and Forward Estimates.Impact of AASB 15 Revenue from Contracts with CustomersPrior to 2019-20, revenue was recognised when the funding was received in accordance with AASB?1004?Contributions. Two?new revenue-related Australian Accounting Standards, AASB?15 Revenue from Contracts with Customers and AASB?1058 Income of Not-for-Profit Entities, are effective from 2019-20 and these new standards change the accounting treatment for certain revenue items. The introduction of AASB?15 has implications for the accounting treatment of revenue received from the Australian Government, in particular, revenue received relating to National Partnership Payments. Under AASB 15, revenue is recognised at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer. This has impacted on the timing of revenue which has performance obligations on behalf of the State Government, primarily National?Partnership?Payments from the Australian Government. The treatment of Specific?Purpose?Payments remains unchanged, with all SPP funding continuing to be recognised as revenue when the funding is received. Prior to the introduction of AASB?I5, NPP revenue was recognised when the funding was received in accordance with AASB?1004. From 2019-20, all NPP revenue will be recognised over time, in accordance with AASB?15, as the performance obligations are met. The impact of this change is presented below in Table 1.4.Table 1.4:Impact of Changes to National Partnership Payments Revenue2018-19Budget2019-20?Budget?2020-21?Forward?Estimate?2021-22? Forward?Estimate?2022-23?Forward?Estimate?$m$m?$m?$m?$m? National Partnership Payments - based on 201819 Accounting Standards (as per 2018-19 Budget) 359.3307.0?270.4?300.4?....?Accrual Adjustment for changes to AASB?15 effective from 1 July 2019Building Australia’s Future Workforcena 5.9?0.6?....?....?Public dental services for adultsna....?2.4?....?....?Universal access to early educationna3.9?4.4?....?....?Subacute capability buildingna 2.7?....?....?....?Project Marinusna33.0?23.0?....?....?Land Transport Infrastructure Projects (Road Component)na 27.4? 2.4?(4.8)....?Redevelopment of the Royal Hobart Hospitalna 44.7?....?....?....?National Partnership for Skilling Australians Fundna....?....?....?7.7?Small Business Regulatory Reformna2.0?....?....?....?Other NPPsna 15.0?6.5?5.4?4.1?na134.6?39.3?0.6?11.8?Parameter Changes1 na(5.7)139.7?114.6?na?2019-20 Budget NPPs359.3?435.9?449.4?415.6?482.6?Note:Parameter Changes represents the impact of other changes in National Partnership Payments, between the 201819 Budget and the 201920 Budget, that do not relate to the impact of AASB 15. Impact on the General Government Sector A major change that AASB?15 introduces is the recognition of a Revenue in advance liability on the Balance?Sheet of the entity receiving consideration for the transfer of goods or services. In the case of Australian Government NPPs, the Government is receiving consideration from the Australian Government and the General Government Sector must recognise a Revenue in advance liability which represents the total contract revenue for NPPs expected over the life of the relevant agreements. Revenue that is received from NPPs is required to be recognised as performance obligations are met. Where performance obligations are met over time, which is the case for NPPs, in that the State is providing a service to the Australian Government with the Tasmanian community being the end beneficiary, AASB?15 provides for performance obligations to be recognised over time. The General Government Sector will, therefore, recognise NPP revenue over time, as expenditure is incurred by the relevant agency. The change in timing for the recognition of NPP grant revenue creates an accrual timing difference representing the different timing between when NPP revenue is received and when the funding is expended by the relevant agency. The impact of AASB?15 on the GGS Income Statement is presented in Table 1.5 below. The change in timing for the recognition of NPP grant revenue impacts on the total Revenue from transactions and has an equivalent flow on impact on the GGS Net Operating Balance and GGS Fiscal Balance. Table 1.5: Impact of Changes to Accounting Standards on Income Statement12018-19Budget201819EstimatedOutcome2019-20Budget2020-21ForwardEstimate2021-22ForwardEstimate2022-23ForwardEstimate$m$m$m$m$m$mRevenue from transactions6 217.3?6 381.0?6?406.7?6 397.6?6?570.0?6?799.7?Accrual of NPP Grants2na?na?(134.6)?(39.3)?(0.6)?(11.8)?Revenue from transactions excluding impact of AASB 156 217.3?6 381.0?6 272.1?6 358.3?6 569.4?6 787.9?Net Operating Balance161.9?41.3?57.4?85.1?174.5?250.6?Accrual of NPP Grants2na?na?(134.6)?(39.3)?(0.6)?(11.8)?Net Operating Balance excluding impact ofAASB 15161.9?41.3?(77.2)?45.8?173.9?238.8?Fiscal Balance(284.6)?(356.9)?(248.4)?(225.7)?(19.8)?3.0?Accrual of NPP Grants2na?na?(134.6)?(39.3)?(0.6)?(11.8)?Fiscal Balance excluding impact of AASB 15(284.6)?(356.9)?(383.0)?(265.0)?(20.4)?(8.8)?Notes:AASB?16 is not expected to have a material impact on the GGS Net?Operating Balance or GGS Fiscal Balance, as operating lease costs are currently recognised in the GGS Income Statement. Based on the requirements of AASB?15 which is effective from 1 July 2019.Impact of AASB 16 Leases AASB?16 Leases comes into effect from 1?July?2019. The new Standard ceases to distinguish between operating and finance leases and will result in the recording of total lease assets and total lease liabilities that include obligations for what are currently known as both operating and finance leases. Current lease accounting, in accordance with Australian Accounting Standard AASB?117 Leases, applied to the 2018-19 Budget and Forward Estimates. Under this approach, if an asset is subject to a lease arrangement which results in essentially no risk, reward or ownership rights for an entity (the lessee) but allows for the asset's use, then the arrangement is typically referred to as an operating lease and reflected in the accounts as a rental expense for the lessee, with no associated asset or liability on the Balance Sheet. An example of such an arrangement is the leasing of Government accommodation, where rental costs are currently recognised in the GGS Income Statement, which impacts on the GGS Net Operating Balance and the operating activities detailed in the GGS Cash Flow Statement. Under AASB?16, reporting entities in both the public and private sectors will be required to disclose commitments on the Balance Sheet for most leases. For lessees, the distinction between operating and finance leases will disappear and be replaced by a framework that is based on the more comprehensive reporting, currently associated with finance leases. In particular, lease reporting will include the recognition of a right-of-use asset together with a corresponding lease liability on the GGS Balance Sheet. On the asset side, the lessee will recognise a right-of-use asset which results in a Non-financial asset being recorded on the Balance Sheet. The Lease liability, representing the present value of the stream of future lease payments, will be recognised as a form of borrowing on the Balance Sheet, and will be included in the calculation of Net Debt. The associated costs for such leases will include an interest expense and the depreciation of the right-of-use asset over the life of the lease, however AASB?16 will not have a material impact on the GGS Net Operating Balance or GGS Fiscal Balance, as operating lease costs are currently recognised in the GGS Income Statement. Leases in the General Government Sector In accordance with the Treasurer's Instructions, General Government Sector entities are prohibited from entering into finance lease arrangements. This means that, prior to the enactment of AASB?16, no lease liability was recognised by the GGS. As a result of AASB 16, right-of-use assets and lease liabilities will be recognised, as outlined below in Table 1.6, which relate to existing operating lease arrangements that are now required to be disclosed on the GGS Balance Sheet. While this has resulted in an increase in GGS liabilities, this is a presentational change only and there has been no material change in the economic position or the financial commitments of the General Government Sector. A corresponding right-of-use asset is recognised which means there is minimal change in GGS Net Worth.Table 1.6:Leases by Category as at 30 June1?2019?2019?2020?2021?2022?2023?EstimatedForward?Forward?Forward??Budget?OutcomeBudget?Estimate?Estimate?Estimate?$m?$m?$m?$m?$m?$m?Lease - rightofuse assetsLand and buildings....?....? 280.4? 266.8? 245.1? 221.2?Plant and equipment....?....? 53.0? 54.7? 56.5? 58.2?....?....? 333.4? 321.6? 301.5? 279.4?Lease liabilitiesLand and buildings....?....? 279.2? 266.0? 243.7? 218.6?Plant and equipment....?....? 55.7? 56.1? 56.1? 55.7?....?....? 334.9? 322.1? 299.8? 274.3?Note:While the value of the right-of-use assets will equal lease liabilities on initial recognition, differences arise over the term of the lease, as lease liabilities decrease based on the principal component of the cash-based lease repayment, while right-of-use assets are generally depreciated on a straight line basis over the term of the lease.Impact of AASB 15 and AASB 16 on the General Government Sector Balance Sheet The impact of the new Australian Accounting Standards on the GGS Balance Sheet is presented in Table?1.7. The?GGS?Balance Sheet will be impacted by both the leasing standard AASB?16 and the new revenue standard AASB?I5. In relation to AASB?15, as noted above, NPPs are subject to performance obligations and must be recognised initially by the GGS as a Revenue in advance liability. The revenue is then recognised as the performance obligations are satisfied, which is based on the timing of expenditure of NPP funds. As a result, there will be a liability for Revenue in advance which reflects the level of unspent NPPs. From 201920, the new standards have resulted in: an increase in Liabilities and Non-financial assets (related to accrued NPP revenue and leases); a decrease in Net Worth (related to accrued NPP revenue); an increase in Net Debt (related to leases); a decrease in Net Financial Worth (related to accrued NPP revenue); an increase in Net Financial Liabilities (related to accrued NPP revenue); and no change in GFS Net Debt. Table 1.7:Impact of Changes to Accounting Standards on the Balance Sheet2018-19?Budget?201819?Estimated?Outcome?2019-20?Budget?2020-21?Forward?Estimate?2021-22?Forward?Estimate?2022-23?Forward?Estimate?$m?$m?$m?$m?$m?$m?Non-Financial Assets 12?748.4? 13 299.1?14?263.7?14?899.6?15?418.8?15?991.4?Lease - rightofuse assets1na?na?(333.4)(321.6)(301.5)(279.4)Non-Financial Assets excluding impact of AASB 1612 748.4?13?299.1? 13?930.3?14?578.0?15?117.3?15?712.0?Liabilities8 799.6?8 839.2?9 671.9?10?075.8?10?373.7?10 597.0?Lease liabilities1na?na??(334.9)(322.1)(299.8)(274.3)NPP Revenue in advance liability2na?na?(76.2)(36.8)(36.2)(24.4)Liabilities excluding impact ofAccounting Standards8 799.6?8 839.2?9 260.8?9 716.9?10?037.7?10 298.3?Net Worth11 593.3?12 414.4? 12?330.8?12 687.6?13 097.6?13 623.1?Lease liabilities1na?na?334.9?322.1?299.8?274.3?Lease - rightofuse assets1na?na?(333.4)(321.6)(301.5)(279.4)NPP Revenue in advance liability2na?na?76.2?36.8?36.2?24.4?Net Worth excluding impact ofAccounting Standards11 593.3?12?414.4?12?408.5?12?724.9?13?132.1?13?642.4?Net Financial Worth(1 155.1)(884.7)(1 932.9)(2 212.0)(2 321.3)(2 368.2)Lease liabilities1na?na?334.9?322.1?299.8?274.3?NPP Revenue in advance liability2na?na??76.2??36.8?36.2?24.4?Net Financial Worth excluding impact ofAccounting Standards(1 155.1)(884.7)(1 521.8)(1 853.1)(1 985.3)(2 069.5)Net Financial Liabilities6 553.4?6?472.5?7 384.4?7 715.0?7 924.0?8?218.9?Lease liabilities1na?na??(334.9)(322.1)(299.8)(274.3)NPP Revenue in advance liability2na?na?(76.2)(36.8)(36.2)(24.4)Net Financial Liabilities excluding impact ofAccounting Standards6 553.4?6?472.5?6 973.3?7 356.1?7 588.0?7 920.2?Net Debt(329.6)(535.2)284.5?643.1?820.0?1 114.1?Lease liabilities1na?na??(334.9)(322.1)(299.8)(274.3)Net Debt excluding impact of AASB 16 (GFSNet Debt)(329.6)(535.2)(50.4)321.0?520.3?839.8?GFS Net Debt(329.6)(535.2)(50.4)321.0?520.3?839.8?Lease liabilities....?....?....?....?....?....?GFS Net Debt excluding impact of AASB 16(329.6)(535.2)(50.4)321.0?520.3?839.8?Notes:Based on the requirements of AASB?16 which is effective from 2019-20.Based on the requirements of AASB?15 which is effective from 2019-20.GFS Net Debt GFS Net Debt represents Borrowings less the sum of Cash and deposits and Investments. The Australian Bureau of Statistics Government Finance Statistics reporting framework will not be adopting the changes under AASB 16. As a result, the ABS will be able to present a consistent time series for GFSbased Net Debt. The Net Debt measure will therefore be different when measured on an accounting or GFS basis, as set out in Table?1.7. As a result, GFS Net Debt provides a more consistent and comparable time-series. It is estimated that GFS Net Debt will be negative $535.2 million as at 30?June?2019, and will deteriorate to positive $839.8?million as at 30?June?2023. Chart 1.7:Net Debt, 2009 to 2023 ................
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