Source: https://www.treasury.tas.gov.au/BudgetPapersHTML/Budget2018/BP1/2018-19-BP1-5-General-Government-Revenue.htm
Timestamp: 2020-01-17 14:06:50
Document Index: 770853420

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2018-19 Budget Paper 1 - Chapter 5 - General Government Revenue
· Total General Government Sector revenue is estimated to be $6 217.3 million in 2018‑19, an increase of $343.3 million above the 2017‑18 Budget estimate of $5 874 million.
· Key components of General Government Sector revenue in 2018‑19 include:
– GST Revenue, which is estimated to be $2 487.7 million, an increase of $100.3 million above the 2017-18 Budget of $2 387.4 million;
– Australian Government Payments for Specific Purposes, which are estimated to be $1 356.5 million, an increase of $104.9 million above the 2017-18 Budget of $1 251.6 million; and
– Taxation Revenue, which is estimated to be $1 215.2 million, an increase of $86.7 million above the 2017-18 Budget of $1 128.5 million.
· Tasmania’s share of revenue from Grants, including GST and Australian Government Grants for Specific Purposes, equates to 62.6 per cent of total General Government Sector revenue.
This chapter provides an overview of Revenue for the 2018‑19 Budget and Forward Estimates including the 2017‑18 Estimated Outcome. Table 5.1 lists the major General Government Sector revenue sources.
In 2018‑19, Total General Government Sector revenue is forecast to be $343.3 million higher than the 2017‑18 Budget.
Tasmania’s most significant source of funding is Grants revenue (including GST and Australian Government Grants), which comprises 62.6 per cent of total revenue in 2018‑19. State Own‑Source Revenue accounts for 37.4 per cent of total revenue.
Major revenue risks and sensitivities are discussed in chapter 1 of this Budget Paper. The major variances in revenue compared to the 2017‑18 Budget are discussed in the Policy and Parameter Statement in chapter 4 of this Budget Paper.
Chart 5.1: Composition of Total Revenue, 2008‑09 to 2021‑221
1. Data reflects actual outcomes for 2008‑09 to 2016‑17 and the original Budget estimates for 2017‑18.
Grants primarily reflect transfers of funding from the Australian Government and are estimated to be $3 893.9 million in 2018‑19. This is an increase of $211 million above the 2017-18 Budget of $3 682.9 million.
Payments for Specific Purpose (Tied Funding)1
1 310.7
1. Estimates of Specific Purpose Payments and some National Partnership Payments may differ from those published in the Australian Government 2018-19 Budget due to different assumptions around timing and activity levels.
2. Specific Purpose Payments include National Health Reform; Quality Schools, Quality Outcomes; and National Housing and Homelessness funding arrangements.
· General Purpose Payments, which are ‘untied’ payments that can be used at the State’s discretion. The GST distribution is the only GPP received by Tasmania in 2018-19; and
GST Revenue is the largest single source of revenue for Tasmania representing 40 per cent of Total General Government Sector revenue in 2018‑19.
In accordance with the Intergovernmental Agreement on Federal Financial Relations, all GST Revenue collected by the Australian Government is distributed amongst the states and territories. Each state’s GST entitlement is dependent on three factors: national GST collections; the state’s per capita relativity, and the state’s share of the national population.
Tasmania has been assessed as having a higher per capita GST need than all other jurisdictions, except the Northern Territory, and is a major beneficiary of the equalisation process, receiving $1.1 billion, or approximately 77 per cent, more GST revenue in 2018‑19 than its per capita share. This reflects the relatively higher cost of service provision in the State and the below average capacity to raise revenue. Tasmania has the second lowest assessed fiscal capacity and Western Australia has the strongest assessed fiscal capacity.
Further detail on the CGC’s methodology is provided in the Guide to the Budget (available on the Treasury website), HFE - An Equitable Approach to GST Distribution (available on the Treasury website) and the Report on GST Revenue Sharing Relativities - 2018 Update (2018 Update Report), which can be found on the CGC website at www.cgc.gov.au.
For the 2018-19 Budget, Treasury has used its own financial model to forecast GST revenues, as was the case for the 2017‑18 Budget. The model incorporates the latest CGC assessments and recommended relativities, Australian Government forecasts of the GST pool and state populations, and state and territory own‑source revenue estimates.
Chart 5.2 below illustrates Tasmania’s relativities since the introduction of the GST. The chart shows Tasmania’s forecast relativities returning to trend after rising rapidly until 2015-16, primarily as a result of the additional royalty revenue generated in Western Australia and the other mining states during the mining boom.
Chart 5.2: Tasmanian GST Revenue Sharing Relativities, 2000-01 to 2021‑221
Tasmania’s GST Share (%)1
Tasmania’s GST Revenue ($m)1
1. The 2018-19 Budget is based on the actual relativity that will apply in 2018‑19 as recommended by the CGC.
GST payments to Tasmania are expected to be $2 487.7 million in 2018‑19. The growth in GST revenue over the Forward Estimates to Tasmania reflects GST pool growth, partially offset by a gradual reduction in Tasmania’s GST relativity and lower than national average population growth.
After rising during the mining boom, Tasmania’s GST relativity is forecast to continue to return towards the long-term trend over the Forward Estimates as a result of:
· Western Australia’s rising GST share, as the impact on the GST distribution of its high mining royalties during the mining boom declines;
· Victoria’s need to invest in infrastructure arising from strong population growth, which has significantly increased its GST share; and
· Tasmania’s slow population growth, compared to the national average, which reduces the CGC’s assessment of Tasmania’s need to invest in infrastructure.
Chart 5.3 below illustrates the difference between the 2017‑18 and 2018‑19 State Budget estimates of GST revenue to Tasmania over the Forward Estimates. The compound annual growth rate of GST revenue from 2018‑19 to 2021‑22 is 3.5 per cent.
Tasmania’s share of the GST pool has decreased slightly from approximately 3.83 per cent in 2017‑18 to 3.70 per cent in 2018‑19.
Chart 5.3: GST Revenue to Tasmania, 2008‑09 to 2021‑22
1. The 2018-19 Budget includes the 2017-18 Estimated Outcome for GST revenue.
SPPs are an ongoing funding arrangement between the Australian Government and the states for service delivery in a particular sector. There are currently two SPPs in operation: the National Skills and Workforce Development SPP; and the National Disability Services SPP. From 2018‑19, the previous National Affordable Housing SPP will be combined with the new funding for homelessness under the National Housing and Homelessness Agreement.
In 2018-19, Tasmania will receive an estimated $997.2 million in SPPs and reform funding. This is an increase of $85.2 million above the 2017-18 Budget estimate of $912 million. The growth in SPPs and reform funding primarily reflects an increase in National Health Reform and Quality Schools, Quality Outcomes funding. The National Disability Services SPP ceases on 30 June 2019 with the commencement of the National Disability Insurance Full Scheme on 1 July 2019.
It is noted that estimates of SPPs and some National Partnership Payments may differ from those published in the Australian Government 2018-19 Budget due to different assumptions around timing and activity levels.
In 2018-19, Tasmania will receive an estimated $359.3 million of funding in NPPs, an increase of $19.7 million from the 2017-18 Budget of $339.6 million. This primarily reflects the reallocation of funds for the DisabilityCare Australia Fund from 2019‑20 to 2018‑19 and increased funding for the Sustainable Rural Water Use and Infrastructure Program. This increase is partially offset by a reduction in funding for roads infrastructure, funding under the Natural Disaster Relief and Recovery Arrangements NPP in response to the 2016 fire and flood events, and the 50 per cent advance payment to local governments receipted in 2017‑18.
Table 5.4 details the Payments for Specific Purposes that Tasmania will receive from the Australian Government in 2018-19 and over the Forward Estimates period.
Quality Schools, Quality Outcomes ‑ Non‑Government Schools
National Housing and Homelessness2
John L Grove - LGH
2. From 1 July 2018, funding under National Housing and Homelessness Agreement will replace funding received under the National Affordable Housing Agreement and National Partnership Agreement on Homelessness.
3. Includes funding for OzFoodNet, Improving Health Services in Tasmania - Delivering connected care for complex patients with multiple chronic needs and Vaccine Preventable Diseases Surveillance Program.
4. Estimates of DisabilityCare Australia Fund payments included in the 2018‑19 Budget and Forward Estimates reflect the most recent offer from the Australian Government.
5. Provision included in 2019‑20 to 2021-22 for future road funding on the expiry of the current agreement.
6. In 2018‑19, the reduction in financial assistance to local governments reflects a 50 per cent advance payment receipted in 2017‑18. The 2017‑18 estimated financial assistance to local governments was $73 million and approximately 50 per cent of this funding was paid as an advance payment to councils in June 2017 and therefore not included in the 2017-18 Estimated Outcome.
7. Includes $302 000 funding for 2018-19 under the Natural Disaster Relief - Fire agreement.
State Taxation revenue is the main source of own-source revenue and comprises 19.5 per cent of total revenue in 2018-19.
In 2018‑19, State Taxation revenue is forecast to be $86.7 million higher than the 2017‑18 Budget, primarily due to increases in Conveyance Duty and Payroll Tax. The increase in Conveyance Duty is driven by growth in residential property prices and transaction volumes while the increase in Payroll Tax reflects stronger employment growth.
State Taxation revenue is forecast to grow by $86 million (or by a compound annual growth rate of 2.3 per cent) from 2018‑19 to 2021‑22, due mainly to growth in the tax bases for Conveyance Duty and Payroll Tax. The forecasts incorporate a number of the Government’s taxation initiatives including the imposition of a Foreign Investor Duty Surcharge and reduced rate of payroll tax for payrolls between $1.25 million and $2 million.
Fire service levies3
Totalizer wagering levy
1. Payroll tax includes the Government’s commitment to introduce a reduced rate of payroll tax (from 6.1 to 4 per cent) for payrolls between $1.25 million and $2 million.
2. Land tax includes the Government’s commitment to: provide a three year land tax exemption for all newly built housing that is made available for long‑term rental; and a one year land tax exemption for short-stay accommodation properties that are made available for long-term rental accommodation within the Greater Hobart Area.
3. Fire service levies are reported as a tax for the purposes of the Uniform Presentation Framework. However, all revenues go directly to the State Fire Commission.
4. Conveyance duty includes the Government’s commitment to: implement a Foreign Investor Duty Surcharge of an additional three per cent of the dutiable value for all purchases of residential property by foreign persons and an additional half per cent of the dutiable value for all purchases of primary production land by foreign persons; provide a 50 per cent duty concession to first home buyers of established homes with a dutiable value not exceeding $400 000, for a twelve month period; and provide a 50 per cent duty concession to eligible pensioners that sell their existing home and downsize to a new home or unit at a lower cost, for a twelve month period.
Chart 5.4 shows that the 2018-19 Budget and Forward Estimates have increased compared to the levels forecast in the 2017‑18 Budget. This increase has been largely driven by Conveyance Duty due to growth in residential property prices and transaction volumes.
Chart 5.4: State Taxation Revenue, 2010‑11 to 2021‑22
1. This includes the 2017-18 Estimated Outcome for State Taxation Revenue. The increase in the 2017-18 Estimated Outcome compared to the 2017-18 Budget is mainly due to higher than expected revenue from Payroll Tax and Conveyance Duty.
Duty concession for pensioners7
Ex gratia relief provided for corporate reconstructions5
1. The Payroll Tax base consists of all wages paid in Tasmania based on 2016-17 Work Cover data. The reduction in the estimate from 2017-18 to 2018-19 is due to the Government’s commitment to introduce a reduced rate of payroll tax (from 6.1 to 4 per cent) for payrolls between $1.25 million and $2 million.
2. The Land Tax base is all freehold land in Tasmania in 2017-18. Estimates are based on the expected growth in Land Tax revenue. Land classified as principal place of residence and primary production land is charged a nil rate of Land Tax. Property used for religious, charitable or educational purposes is exempt from Land Tax.
3. Comprises land owned by the Australian Government, aged care providers and charitable organisations. In addition, the Government has committed to provide a three year land tax exemption for all newly built housing that is made available for long‑term rental and a one year land tax exemption for short-stay accommodation properties that are made available for long-term rental accommodation within the Greater Hobart Area.
4. The Conveyance Duty tax base is comprised of concessional or exempt properties transferred in 2016-17. Estimates are based on the expected growth in Conveyance Duty revenue. Not all exempt transactions are recorded and not all valuation data is available, therefore the estimates are likely to be understated.
6. The Government has committed to provide a 50 per cent duty discount to first home buyers of established homes with a value of up to $400 000, for a twelve month period.
7. The Government has committed to provide a 50 per cent discount on duty for eligible pensioners that sell their existing home and downsize to a new home or unit at a lower cost, for a twelve month period.
Revenue from the Sales of Goods and Services is estimated to be $417.6 million in 2018-19, an increase of $9.6 million above the 2017-18 Budget of $408 million.
Revenue from Fines and Regulatory Fees is estimated to be $98.6 million in 2018-19, a decrease of $300 000 below the 2017-18 Budget of $98.9 million. Table 5.8 details the major components of Fines and Regulatory Fees.
TOTAL FINES AND REGULATORY
3. Vehicle Inspection Services Fees are estimated to be $48 000 in 2018-19, increasing to $49 000 in 2019-20, $50 000 in 2020-21 and $51 000 in 2021-22. This amount does not appear in the table until 2020-21 due to rounding.
Interest Income is estimated to be $17.8 million in 2018-19, a decrease of $1.8 million compared to the 2017‑18 Budget estimate of $19.6 million. This reduction in interest income reflects a decrease in the anticipated level of cash held in the Public Account.
Dividend, Tax and Rate Equivalent Income is estimated to be $409.7 million in 2018‑19, an increase of $51.3 million compared to the 2017‑18 Budget estimate of $358.4 million.
This increase is largely driven by improved performance by Hydro Tasmania and other businesses leading to increased dividend and income tax equivalent income.
Chart 5.5: Dividend, Tax and Rate Equivalent Income, 2010‑11 to 2021‑221
1. Data reflects actual outcome for 2010-11 to 2016-17 and the original Budget estimates for 2017-18.
Sustainable Timber Tasmania7
TT-Line Vessel Replacement Fund8
Motor Accidents Insurance Board9
TOTAL DIVIDEND TAX AND RATE
2. Aurora Energy dividends and taxation equivalents decreased due to increased depreciation as a result of revisions to the useful life of certain assets and the implementation of the Special Energy Bonus.
3. The increase in returns for Hydro Tasmania reflects the improvement in the financial position of the business following the recovery from the Energy Supply event of 2015-16, which continued to impact returns in 2017-18. Dividends from Hydro Tasmania are expected to return to a 90 per cent dividend pay-out ratio from 2018‑19.
4. Dividends from the Motor Accidents Insurance Board are based on the average of the past five years earnings, with investment income returns expected to moderate over the Forward Estimates.
5. The decline in the Tasmanian Networks dividend in 2018-19 is the result of lower forecast regulated revenues due to a lower regulated rate of return. A combined transmission and distribution revenue reset will occur in 2019-20 which will impact returns from that date.
6. Tasmanian Ports Corporation dividends and income tax equivalents improve over the Forward Estimates period as freight volumes increase but are impacted in 2017‑18 and 2018‑19 by the costs of its subsidiary, Bass Island Line.
7. The special dividend of $15 million from Sustainable Timber Tasmania in 2018‑19 represents the return of part of the proceeds from the plantation sale.
8. The Special Dividends from TT-Line Company Pty Ltd are contributions from the company to be deposited into the TT‑Line Vessel Replacement Fund for the purpose of funding the replacement vessels.
9. The decrease in taxation equivalents from the Motor Accidents Insurance Board is due to an increase in forecast claims expense and a reassessment of the components of investment revenue.
10. Due to the application of a shipping tax exemption, TT‑Line Company Pty Ltd is not expecting to pay taxation equivalents over the Budget and Forward Estimates period.
Other Revenue is anticipated to be $164.6 million in 2018-19, a decrease of $13.1 million below the 2017‑18 Budget of $177.7 million.
2. The decrease in Mineral Royalties in 2018-19 reflects volatility in the iron ore price.
3. The decrease in 2018-19 primarily reflects revised cash flows associated with property insurance claims related to the June 2016 flood event. At the time of publication, the total costs and expected recoveries relating to the May 2018 Hobart extreme weather event are still being assessed.