Economic results for 1992-93

23/7/93

Premier and Treasurer Richard Court said today that on a consolidated fund basis the end-of-year results for 1992-93 left the State with a $288.2 million deficit largely funded by borrowings.

The Premier said the outcome was an improvement of $104.2 million on the Budget estimate.

"This is partly due to the efforts of Ministers and their departments to contain lower-priority recurrent expenditure and a reduction of $90 million in financing transactions as a result of lower capital spending of $40 million (which will be largely carried over into 1993-94) and a capital repayment of $50 million by the Water Authority of Western Australia," Mr Court said.

The Premier said he was pleased with the recurrent expenditure restraint exercised by Ministers and departments in a difficult economic and budgetary environment.

"Higher than expected revenue collections during the latter half of June also contributed to the better than expected outcome," he said.

The Premier said that despite the improvement, there was some concern about the level of borrowings that were needed in 1992-93 and the extremely difficult budgetary problem the State is facing in 1993-94.

On the recurrent side, the Consolidated Revenue Fund Budget which was presented to Parliament last September was in balance, with both revenue and expenditure set at $5,061.5 million. 

Expenditure during the year amounted to $5,068.2 million against revenue of $5,051.9 million.

The Consolidated Revenue Fund was balanced by drawing upon $16.3 million from the Revenue Equalisation Account.  This was $14.2 million less than the sum proposed to be drawn from this source when the Budget was presented to Parliament.

The Revenue Equalisation Account was established by the Parliament to hold interest earnings and accumulated Consolidated Revenue Fund surpluses and these funds were available to help balance the Consolidated Revenue Fund budget.  As available interest earnings amounted to only $7.0 million in 1992-93 it was necessary to draw on $9.3 million of accumulated funds in the account.

RECURRENT REVENUE

Total Consolidated Revenue Fund receipts amounted to $5,068.2 million, $6.7 million above the revenue estimate of $5,061.5 million.  However, revenue was boosted by a one-off injection of $50.8 million as a result of the winding-up of the Western Australian Development Corporation.

Total receipts and variations from the estimates under main heads of revenue were as follows:

TAXATION - Actual $1,489 million (up $18.0 million on estimate).

The net improvement in taxation receipts of $18 million reflects mainly higher tobacco licences of $15.6 million, increased gambling taxes of $8.8 million and increased stamp duty receipts of $8.1 million, partly offset by downturns in payroll tax (-$8.0 million), Land Tax (-$4.0 million), Financial Institutions Duty (-$1.8 million) and liquor licences (-$2.2 million).

TERRITORIAL - Actual $479.2 million (up $21.6 million on estimate)

The net improvement in territorial receipts reflects in the main increased revenues of $20.3 million from mining royalties as a result of mainly higher diamond sales (up $11.8 million) and higher petroleum production (up $8.7 million).

DEPARTMENTAL AND LAW COURTS - Actual $863.0 million (down $19.9 million on estimate).

Though there are a number of variations from the estimates of individual departments a notable variation was the $20 million decrease in revenue budgeted from the State Government Insurance Commission in relation to an estimated reserve held in the Government Workers' Compensation Insurance Fund.

COMMONWEALTH PAYMENTS - Actual $2,220.7 million (up $1.2 million on estimate).

There was a decrease of $12.3 million in the Financial Assistance Grant when compared with the estimate of $1,599.3 million attributed to a downward revision in the CPI for the four quarters to March 1993, which was offset by increased specific purpose grants of $12.1 million and special revenue assistance of $1.5 million.

RECURRENT EXPENDITURE

Total expenditure from the Consolidated Revenue Fund amounted to $5,068.2 million which was $6.7 million higher than the Budget estimate of $5,061.5 million.  However, expenditures were inflated by higher Commonwealth/industry contributions of around $21.5 million and after adjusting for this factor the out-turn was $14.8 million down on Budget.

Variations between the Budget estimate and actual expenditure are attributed to a number of factors and the main variations are as follows:

SPECIAL ACTS - Actual $695.6 million (down $10.4 million on estimate).

The $10.4 million expenditure reduction is attributable to the following major factors:

·         net reduction in mainly interest payments on borrowings ($7.2 million);

·         payments under the Government Employees' Superannuation Act 1987 were $5.8 million less than estimate due to Westrail meeting superannuation costs from its budget, savings as a result of a $1.1 million provision for actuarial deficiency not being called upon and a $1.7 million adjustment by the Government Employees' Superannuation Board in respect of 1991-92 payments;

·         payments under the Parliament Superannuation Act 1970 being $2.2 million less than expected; and -

·         reduced expenditure of $1.7 million on the Superannuation and Family Benefits Act 1938 mainly due to there being no indexation adjustments to pensions ($0.7 million) and the provision for actuarial adjustments not being drawn down ($0.7 million).

These expenditure savings were offset by:

·         a $6 million increase in payments to the Commonwealth in respect of the Petroleum (Submerged Lands) Act royalty collections as a consequence of higher production levels of the Saladin oil field and movement in exchange rates; and -

·         a $1.6 million increase in payments to the Western Australian Health Promotion Fund reflecting increased revenue from tobacco licences.

PREMIER AND CABINET - Actual $31.9 million (up $3.0 million on estimate).

The $3.0 million over-expenditure mainly reflects post February 1993 machinery of Government changes including the transfer of responsibility for the European and North Asia offices from the Department of Commerce and Trade and funding for the Independent Commission to Review Public Sector Finances.

ROYAL COMMISSION INTO COMMERCIAL ACTIVITIES OF GOVERNMENT AND OTHER MATTERS - Actual $3.9 million (up $1.1 million on estimate).

The over-expenditure of $1.1 million is due to the extension of time given to the Royal Commission to finalise its investigations including additional costs for legal counsel and accommodation.

INFRASTRUCTURE AND GOVERNMENT ASSETS - Actual $2.9 million (down $2.3 million on estimate).

The reduction in expenditure by the Department is due to a subdued property market resulting in savings of $2.1 million on the amount provided for leased office accommodation rent increases.

MISCELLANEOUS SERVICES - Actual $213.6 million (up $2.5 million on estimate).

The additional $2.5 million expenditure above Budget was due to a variety of factors, the major variations being:

·         an unbudgeted payment of $5.2 million for fringe benefits tax for legal expenses of former Ministers, members of Parliament and public servants in respect of the Royal Commission into Commercial Activities of Government and Other Matters;

·         over-spending of $3.36 million for Act of Grace payments including $1.6 million as the State's contribution to investor compensation for financial losses as a result of the collapse of the Western Women's Group and additional legal expenses associated with the Royal Commission.

These excesses were partly offset by the following underspendings:

·         contribution to the Community Sporting and Recreation Facilities Fund ($1.9 million);

·         the Energy Board of Review ($1.6 million);

·         reimbursement to local authorities of Pensioner Rates Concessions as a consequence of a lower than forecast level of claims ($1.3 million); and -

·         Remote Commercial Television Service ($1.2 million).

EDUCATION - $1,037.2 million (down $8.6 million on estimate).

The savings of $8.6 million by the Ministry of Education is attributed to the unused salary and wage Award Provision (-$6.2 million) and lower than expected activity on Commonwealth and other externally funded programs (-$2.4 million).

EMPLOYMENT, VOCATIONAL EDUCATION AND TRAINING - Actual $184.7 million (up $18.5 million on estimate).

The over-expenditure of $18.5 million by the Department of Employment, Vocational Education and Training is mainly attributable to the additional funds required to meet the commitment to provide 10,423 full-time commencing student places in the 1st Semester 1993 (+$10.1 million), the acquisition of additional vocational training equipment (+$1.3 million), additional grants to private vocational education providers (+$0.6 million) and increased activity on Commonwealth-funded programs (+$5.9 million) and work undertaken on behalf of the College of Customised Training (+$0.5 million).

The over-spending is partially offset by increased Commonwealth and College of Customised Training revenue of $13.9 million.

HEALTH - Actual $1,219.8 million (down $5.1 million on estimate).

The under-spending by the Department of Health is mainly attributed to delays in finalising an agreement with the Commonwealth for the administration of the Christmas Island Health Services (-$3.1 million) offset by a reduction in revenue, lower than budgeted debt servicing costs (-$1.6 million), over provision for the impact of a 27th pay period (-$2.3 million) partly offset by additional visiting medical officers' fees ($2 million).

TRANSPERTH - Actual $56.3 million (down $7.9 million on estimate).

The reduced contribution to Transperth reflects savings on debt servicing costs as a result of reduced interest rates and changes to the financing arrangements for the Northern Suburbs railway.

WESTRAIL - Actual $14.0 million (up $8.0 million on estimate).

The over-expenditure of $8 million was largely due to lower freight revenue than forecast and an unbudgeted past service superannuation liability of $5.1 million which was partially offset by the net impact of reduced operating costs of $4.6 million on the suburban passenger network.

AGRICULTURE - Actual $91.8 million (up $3.8 million on estimate).

The over-spending by the Department of Agriculture reflects in the main additional industry funded projects undertaken by the Department.

MINERALS AND ENERGY - Actual $46.1 million (down $2.6 million on estimate).

The under-spending of $2.6 million by the Department of Minerals and Energy reflects in the main lower than estimated royalty refunds.

POLICE - Actual $246.1 million (up $5.1 million on estimate).

The over-spending of $5.1 million by the Police Department is attributable to increased manning costs ($3.4 million), the part-year impact of the Police Reform Package ($1 million) and other higher Police operational costs ($0.7 million).

BUILDING MANAGEMENT AUTHORITY - Actual $123.4 million (up $3.6 million on estimate).

The over-spending of $3.6 million largely reflects an over-run of $3 million in the Construction Operations Work Program mainly as a result of an injection of an additional $2.6 million capital funding for school works in 1992-93.  The over-run of $3 million is fully offset by an equivalent recoup from the Capital Works Budget and other funding sources and therefore has no overall impact on the Consolidated Revenue Fund.

The balance of the over-spending of $0.6 million was required to meet uninsured losses of equipment and a shortfall in the Public Building Insurance Fund.

STATE SERVICES - Actual $46.2 million (down $2.6 million on estimate).

The under-spending by the Department of State Services is a result of reduced salary and wage costs (-$0.8 million), reduced purchases of paper and printing costs (-$0.7 million) and lower costs of the Human Resource Management Systems (-$0.9 million).

More detailed explanations of both revenues and expenditures will be provided with the tabling in Parliament later this year of the 1993-94 Budget papers and the Treasurer's Annual Statement.