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2010-11 Treasurer’s Annual Financial Report i
Treasurer’s Annual
Financial Report
2010-11
2010-11 Treasurer’s Annual Financial Report i
CONTENTS
1 Introduction 1
2 Executive Summary 3
General Government Outcome 4
Total State Sector Outcome 8
3 Interim Fiscal Strategy Overview 11
4 Treasurer’s Annual Financial Statements 21
Certification of Treasurer’s Annual Financial Statements 22
Opinion of the Auditor-General 23
Statement of Comprehensive Income 25
Statement of Financial Position 27
Statement of Cash Flows 29
Statement of Changes in Equity 31
Notes to the Treasurer’s Annual Financial Statements 33
5 Public Account Statements 117
Certification of Public Account Statements 2010-11 118
Opinion of the Auditor-General 119
Statement 1 - Public Account Balance 122
Statement 2 - Consolidated Fund Outcome 123
Statement 3 - Consolidated Fund Receipts 124
Statement 4 - Consolidated Fund Expenditure 127
Statement 5 - Excess Consolidated Fund Recurrent Services Expenditure 129
Statement 6 - Excess Consolidated Fund Works and Services Expenditure 129
Statement 7 - Excess Consolidated Fund Reserved by Law Expenditure 129
Statement 8 - Special Deposits and Trust Fund 130
6 Loan Council Outcome 2010-11 135
ii 2010-11 Treasurer’s Annual Financial Report
2010-11 Treasurer’s Annual Financial Report 1
1 INTRODUCTION
The 2010-11 Treasurer’s Annual Financial Report is prepared in accordance with section 26 of the
Financial Management and Audit Act 1990, which requires the tabling of the Report by 31 October in each
year.
The Report contains the following information:
Section 2 provides an Executive Summary that highlights key variations to the Budget outcomes.
Section 3 provides a summary of progress against the Key Interim Fiscal Strategy Measures contained
within the 2010-11 Budget Papers and commentary on significant variations to the Budget outcomes.
Section 4 presents the General Government and Total State Sector financial statements for 2010-11 in
accordance with AASB 1049 Whole-of-Government and General Government Sector Financial
Reporting. The statements also align with the requirements of the Uniform Presentation Framework.
Section 5 summarises details for the transactions and balances within the Public Account.
Section 6 presents the Loan Council Outcome for 2010-11 in accordance with the requirements of the
Uniform Presentation Framework.
2 2010-11 Treasurer’s Annual Financial Report
2010-11 Treasurer’s Annual Financial Report 3
2 EXECUTIVE SUMMARY
The 2010-11 outcomes reflect the impact of additional Australian Government infrastructure funding and do
not necessarily represent an improvement in the underlying Budget position.
Table 2.1: Key Financial Indicators
2010-11)
Original
Budget
2010-11
Actual
2009-10
Actual
$m) $m $m)
General Government Sector
Net Operating Surplus/(Deficit) (65) (23) 18
Fiscal Surplus/(Deficit) (530) (446) (291)
Net Debt (309) (416) (748)
Net Worth 14 211 12 492 13 065)
Net Financial Liabilities 3 487 4 146 3 814)
Total State Sector
Net Operating Surplus/(Deficit) 69) 132 192
Fiscal Surplus/(Deficit) (861) (538) (483)
Net Debt 1 669 1 309 962
Net Worth 14 211 12 492 13 065
Net Financial Liabilities 8 609 8 866 8 276
Consolidated Fund Surplus/(Deficit) (235) (540) (266)
4 2010-11 Treasurer’s Annual Financial Report
GENERAL GOVERNMENT OUTCOME The 2010-11 General Government Statements are prepared in accordance with AASB 1049 Whole of
Government and General Government Sector Financial Reporting.
Table 2.2 provides a summary of the key operating line items and budget variances. The full Statement of
Comprehensive Income is located at page 25 of the Report.
Table 2.2: General Government Sector Summary of Operating Result
2010-11
Original
Budget
2010-11
Actual
Variation Variation
$m $m $m %
Revenue from transactions 4 563 4 767 204 4
Expenses from transactions 4 627 4 790 163 4
Net Operating Balance – Surplus/(Deficit) (65) (23) 42 65
Less Net acquisition of non-financial assets 465 423 (42) (9)
Equals Fiscal Balance – Surplus/(Deficit) (530) (446) 84 16
Revenue Variations
Revenue from transactions was $4 767 million in 2010-11, $204 million higher than the 2010-11 original
Budget estimate of $4 563 million. The main changes are:
Grants revenue $280 million higher. This primarily reflects an increase in Australian Government funding
of $270 million towards the redevelopment of the Royal Hobart Hospital. There was also an advance
payment of 2011-12 funding in relation to Grants for Local Government amounting to $18 million.
Sales of goods and services $66 million lower. The decrease is primarily due to the Department of
Health and Human Services reclassifying $60 million of Mersey Community Hospital Australian
Government revenue to grants.
Taxation $16 million lower. The decrease primarily reflects a reduction in Financial transaction taxes of
$25 million due to reduced volume and value of property transactions. This is partially offset by
increases in Payroll tax ($5 million) and Vehicle registration fees ($3 million).
2010-11 Treasurer’s Annual Financial Report 5
Expense Variations
Expenses from transactions was $4 790 million in 2010-11, which is $163 million higher than the 2010-11
original Budget estimate of $4 627 million. The major expense variations by agency are:
Health and Human Services $129 million higher. The increase primarily reflects cost pressures in
response to higher demand for Acute Health and Children and Family Services. This has resulted in an
increase in Employee expenses of $64 million and $28 million in Supplies and consumables.
Department of Education $51 million higher. This primarily reflects the Department incurring an
additional $37 million in Employee entitlements explained by the Post Year 10 reforms and a revision to
the long service leave liability calculations. There was also an increase in grants to non-government
schools of $15 million as a result of increased funding from the Australian Government.
Finance-General $38 million lower. This largely reflects savings of $20 million from the Treasurer’s
Reserve provision and lower than anticipated claims costs through the Tasmanian Risk Management
Fund of $11 million.
Net Acquisition of Non-Financial Assets Variations
Net Acquisition of Non-Financial Assets was $423 million in 2010-11, which is $42 million lower than the
2010-11 original Budget estimate of $465 million. The main changes are:
Department of Education $34 million lower. Purchases of non-financial assets were $49 million below
the original Budget estimate, primarily reflecting a revision of cash flows for project delays in relation to
Child and Family Centres and Building the Education Revolution. This decrease is partially offset by a
$13 million decrease in depreciation and sales of non-financial assets being $2 million above the original
Budget estimate.
Department of Health and Human Services $18 million lower. Purchases of non-financial assets is
$4 million below the original Budget estimate, reflecting a revision of cash flows for project delays in
relation to the National Health and Hospitals Network Reforms, partially offset by the bringing forward of
construction for the Launceston Acute Medical and Surgical Project. Depreciation is also $8 million
above the original Budget estimate and Sales of non-financial assets, relating to new housing projects,
is $6 million above the original Budget estimate.
Department of Infrastructure, Energy and Resources $18 million higher. Purchases of non-financial
assets is $11 million higher than the original Budget estimate, primarily as a result of bringing forward
expenditure for the Kingston Bypass and Brighton Transport Hub, partially offset by a decrease in
infrastructure maintenance. Depreciation is also $7 million below the original Budget estimate due to
revised asset valuations and a change in the Department’s depreciation policy.
6 2010-11 Treasurer’s Annual Financial Report
Table 2.3: General Government Sector Summary Statement of Financial Position
2011
Actual
2010
Actual
Variation Variation
$m $m $m %
Financial Assets 8 113 8 102 11 ....
Non-Financial Assets 10 459 10 930 (471) (4)
Total Liabilities 6 081 5 966 115 2
Net Worth 12 492 13 065 (573) (4)
Budget estimates for the 2010-11 Statement of Financial Position were compiled in June 2010 prior to
completion of the actual outcomes for 30 June 2010. As a result, the outcome variance from the original
Budget estimate will be impacted by the difference between the estimated and actual opening balances for
2010-11. The commentary and table is therefore based on major movements between the 30 June 2010
actual outcome and the 30 June 2011 outcome.
General Government Assets are estimated to be $18 573 million at 30 June 2011, a decrease of
$458 million from the 30 June 2010 balance of $19 031 million.
Financial Asset Variations
Cash and Deposits $338 million lower. This reflects a reduction in cash holding primarily due to the
Consolidated Fund deficit of $540 million, partially offset by unspent Australian Government funding that
is to be carried forward to 2011-12. Details of the Consolidated Fund outcome are provided in Section 5
of this Report.
Equity investment in PNFC and PFC sectors $228 million higher. The increase reflects the increase in
net assets held by the electricity companies, Tasmanian Ports Corporation Pty Ltd, Tasmanian Railway
Pty Ltd, Motor Accidents Insurance Board and the water and sewerage corporations. This was offset by
a decrease in Forestry Tasmania’s net assets.
2010-11 Treasurer’s Annual Financial Report 7
Non-Financial Asset Variations
Land and buildings $678 million higher. The increase is due to:
revaluations undertaken by the Department of Health and Human Services ($227 million) and the
Department of Education ($57 million) and transferred assets held by the Tasmanian Skills Institute
($96 million);
increased work-in-progress expenditure incurred by the Department of Health and Human Services
in relation to new housing construction and the Royal Hobart Hospital ($96 million). The Department
also had a $21 million increase in Land and Building additions from the previous year, mainly due to
the purchase of the North-West Regional Hospital; and
increased work-in-progress expenditure incurred by the Department of Education ($54 million).
Infrastructure assets $1 050 million lower. The decrease primarily reflects the change by the Department
of Infrastructure, Energy and Resources in its valuation methodology for Land under roads, and its
revised methodology for calculating depreciation on State sealed roads.
Heritage and cultural assets $111 million lower. The decrease is due to the write-down of assets held by
the Tasmanian Museum and Art Gallery.
Liability Variations
Superannuation $106 million higher. The increase is a result of an actuarial reassessment of the liability,
taking into consideration changes in assumptions used to value the defined benefit obligation.
Employee entitlements $27 million higher. The increase primarily reflects a $12 million increase in long
service leave and annual leave entitlements.
8 2010-11 Treasurer’s Annual Financial Report
TOTAL STATE SECTOR OUTCOME
Table 2.4: Total State Sector Summary of Operating Result
2009 -10
Original
Budget
2010-11
Actual
Variation Variation
$m $m $m %
Revenue from transactions 7 445 7 856 411 6
Expenses from transactions 7 376 7 724 348 5
Net Operating Balance – Surplus/(Deficit) 69 132 63 91
Less Net acquisition of non-financial assets 930 670 (260) (28)
Equals Fiscal Balance – Surplus/(Deficit) (861) (538) 323 38
Financial results recorded by the Total State Sector were stronger than anticipated, with increases in the
Net Operating and Fiscal Balances. These movements reflect the trend in the General Government Sector
as well as other trends which are outlined below.
Revenue Variations
The Total State Revenue from transactions is $7 856 million in 2010-11, which is $411 million higher than
the 2010-11 Budget estimate of $7 445 million. The major revenue variations are due to:
increased General Government Sector revenue of $204 million;
Sales of goods and services up $193 million, primarily due to increased electricity entity revenue. This
revenue is largely offset by increases in operating expenses and energy and transmission purchases;
additional Dividend, tax and rate equivalent revenue in the Public Financial Corporations Sector
($64 million); and
decreased interest income of $60 million, primarily relating to the Public Financial Corporations Sector.
Expense Variations
The Total State Expenses from transactions is $7 724 million in 2010-11, which is $348 million higher than
the 2010-11 Budget estimate of $7 376 million. The major expense variations are due to:
increased General Government Sector expenditure of $163 million; and
Supplies and consumables up $159 million, largely due to increased operating expenses for electricity
entities.
2010-11 Treasurer’s Annual Financial Report 9
Table 2.5: Total State Sector Summary Statement of Financial Position
2011
Actual
2010
Actual
Variation Variation
$m $m $m %
Financial Assets 6 858 5 036 1 822 36
Non-Financial Assets 21 358 21 341 17 ….
Total Liabilities 15 724 13 312 2 412 18
Net Worth 12 492 13 065 (573) (4)
Total State Sector Assets are estimated to be $28 216 million at 30 June 2011, an increase of
$1 839 million from the 30 June 2010 balance of $26 377 million.
Financial Asset Variations
Investments $1 793 million higher which represents a change in the structure of the portfolio held by the
Tasmanian Public Finance Corporation. There was a corresponding increase in borrowings by the
Corporation of $2 108 million.
Other equity investments $107 million lower. This primarily represents Roaring 40s Renewable Energy
Pty Ltd becoming a wholly owned subsidiary of Hydro Tasmania as at 30 June 2011.
Non-Financial Asset Variations
Land and buildings $747 million higher due to:
movements in the General Government Sector ($678 million higher);
Buildings acquired by Hydro Tasmania in the acquisition of HT Wind Operations Pty Ltd (formerly
Roaring 40s Renewable Energy Pty Ltd) of $26 million;
an increase in buildings held by Transend Networks Pty Ltd of $17 million, primarily due to the
completed construction of the southern accommodation building; and
land and building revaluations undertaken by the Tasmanian Ports Corporation Pty Ltd ($14 million).
Infrastructure $595 million lower due to movements in the GGS ($1 050 million lower), partially offset by
infrastructure acquired as part of Hydro Tasmania’s acquisition of HT Wind Operations Pty Ltd (formerly
Roaring 40s Renewable Energy Pty Ltd) valued at $272 million.
Heritage and cultural assets $111 million lower. The decrease is due to the write-down of assets held by
the Tasmanian Museum and Art Gallery.
Biological assets $87 million lower. The decrease relates to a write-down in forest estate assets held by
Forestry Tasmania.
10 2010-11 Treasurer’s Annual Financial Report
Liability Variations
Superannuation $103 million higher. The increase in the superannuation liability reflects an actuarial
reassessment of the liability, taking into consideration changes in assumptions used to value the defined
benefit obligation.
Other liabilities $112 million higher. The increase is primarily the result of an increase in derivative
financial instruments held by the Tasmanian Public Finance Corporation ($54 million) and an increase in
the Motor Accidents Insurance Board’s unreported claims provision ($59 million).
2010-11 Treasurer’s Annual Financial Report 11
3 INTERIM FISCAL STRATEGY
OVERVIEW
A fiscal strategy is an effective planning tool for the Government, providing clear signals to financial
markets, the business sector and the community as to the Government’s intentions in financial
management. The purpose of a fiscal strategy is to establish a benchmark for the evaluation of the
Government’s year-to-year and medium term fiscal performance and to increase public awareness of its
fiscal policies.
As a result of the global slowdown, the Government announced an Interim Fiscal Strategy in the 2009-10
Budget to address issues arising from the Global Financial Crisis and return the Budget to a sustainable
position over the medium-term. At the time of the 2010-11 Budget, the Government was on track to meet all
but one of its established targets.
There has been a significant deterioration in the State’s financial position since the 2010-11 Budget. This
change primarily reflects the ongoing impact of the GFC on Tasmania’s GST receipts and, to a lesser
extent, on State own-source revenues. A new Fiscal Strategy was established in the 2011-12 Budget which
reflects the State’s current financial position and the Government’s policy response.
While a new Fiscal Strategy has been developed and implemented, the targets apply to 2011-12 and
beyond. As a consequence, Table 3.1 presents progress against a number of key Interim Fiscal Strategy
measures that were in place for the 2010-11 Budget. The actual outcome for 2010-11 is compared to the
original Budget estimates for 2010-11 and to the actual 2009-10 outcome.
12 2010-11 Treasurer’s Annual Financial Report
Table 3.1: Key Interim Fiscal Strategy Targets
Interim Targets
2009-10
Actual
Outcome
2010-11
Original
Budget
2010-11
Actual
Outcome
$m $m $m
Net Operating Surplus achieved on average over four-year rolling period by
2014-15 (12) (17) (8)
Underlying Net Operating Surplus achieved on average over four-year rolling
period by 2014-15 1 (114) (182) (243)
Fiscal Surplus achieved by 2014-15 (291) (530) (446)
General Government Sector to remain Net Debt free (748) (309) (416)
Net Unfunded Superannuation Liability to be extinguished by 2035 3 496 2 896 3 519
Capital Expenditure in excess of depreciation on average, over
four-year rolling period 120 235 235
Ratio of Net Financial Liabilities to Revenue for the Non-Financial Public Sector
to not exceed 110 per cent in 2014-15 2 101% 106% 105%
Consolidated Fund Surplus by 2014-15 (266) (235) (540)
Notes: 1. Achievement of an Underlying Net Operating Surplus on average over a four-year rolling period by 2014-15 is
measured on an underlying basis that removes the impact of one-off Australian Government funding for specific major capital programs.
2. For the purposes of the Interim Fiscal Strategy, Net Financial Liabilities represents Net Debt less Advances Paid plus the Superannuation Liability. Net Financial Liabilities is divided by Revenue from transactions to derive the Net Financial Liabilities to Revenue ratio. This is in accordance with the methodology used by Standard & Poor's ratings agency.
2010-11 Treasurer’s Annual Financial Report 13
Net Operating Balance
The Interim Fiscal Strategy target is to achieve a General Government Sector Net Operating Surplus, on
average over a four-year rolling period by 2014-15.
The General Government Sector recorded a $23 million Net Operating Deficit in 2010-11, a deterioration of
$41 million on the $18 million Net Operating Surplus for 2009-10. On a four-year rolling average basis, the
2010-11 Net Operating Balance was a deficit of $8 million, an improvement of $4 million from 2009-10.
Chart 3.1: General Government Net Operating Balance
240
120
(39)
53
(78)
18
(23)
(150)
(100)
(50)
....
50
100
150
200
250
300
2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11
$ m
illio
n
GGS Net Operating Balance Four-year rolling average
14 2010-11 Treasurer’s Annual Financial Report
Underlying Net Operating Balance
The Underlying Net Operating Balance is the Net Operating Balance adjusted to remove the effects of
one-off Australian Government funding for specific major capital projects linked to the Nation Building -
Economic Stimulus Plan, Nation Building, Water for the Future and the Royal Hobart Hospital
Redevelopment. The 2010-11 Underlying Net Operating Balance is estimated to be a deficit of $557 million,
a decrease of $225 million from the original Budget Deficit of $332 million.
Table 3.2: Underlying Net Operating Balance
2009-10
Actual
2010-11
Original
Budget
2010-11
Actual
$m $m $m
Net Operating Balance 18 (65) (23)
Less Impact of one-off Australian Government funding for specific major
capital programs 381 267 535
Underlying Net Operating Balance (363) (332) (557)
Underlying Net Operating Surplus on average over four-year rolling period
by 2014-151 (114) (182) (243)
Notes: 1. To calculate the four-year rolling average of the Underlying Net Operating Balance as at 30 June 2011, the prior
year outcomes for 2007-08, 2008-09 and 2009-10 were used, being a $53 million surplus, a $106 million deficit and a $363 million deficit respectively.
2010-11 Treasurer’s Annual Financial Report 15
Fiscal Surplus
The Interim Fiscal Strategy target is to achieve a Fiscal Surplus by 2014-15.
Chart 3.2 shows the 2010-11 General Government Fiscal Balance was a deficit of $446 million, a
deterioration of $155 million from 2009-10. The deficit outcome for 2010-11 was affected by the significant
infrastructure investment that has occurred.
Chart 3.2: General Government Fiscal Balance
211
83
(6)
102
(95)
(291)
(446)(500)
(400)
(300)
(200)
(100)
....
100
200
300
400
500
2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11
$ m
illio
n
16 2010-11 Treasurer’s Annual Financial Report
General Government Net Debt
The Interim Fiscal Strategy target to maintain the General Government Sector’s Net Debt free status was
met in 2010-11.
Chart 3.3 shows General Government Sector Net Debt was negative $416 million as at 30 June 2011, a
deterioration of $332 million from 30 June 2010.
Chart 3.3: General Government Net Debt as at 30 June
949
751
486
114
( 28)
(259)
(409)
(1 031) (982)
(748)
(416)
(1 500)
(1 000)
( 500)
....
500
1 000
1 500
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
$ m
illio
n
2010-11 Treasurer’s Annual Financial Report 17
Superannuation
The Net Unfunded Superannuation Liability is an estimate of the obligations of the State with respect to
past service liabilities arising from current and former members of unfunded or partially funded Public
Sector superannuation schemes. It is calculated by subtracting the balance of the Superannuation
Provision Account from the Superannuation liability disclosed in the Statement of Financial Position.
Chart 3.4 shows that the Net Unfunded Superannuation liability for the General Government Sector
increased by $23 million between 30 June 2010 and 30 June 2011.
Further details on the General Government and Total State Superannuation liability are provided in
Note 7.5 of the Financial Statements.
Chart 3.4: General Government Net Unfunded Superannuation
1 447
2 147
2 5322 460
2 710
3 496 3 519
....
500
1 000
1 500
2 000
2 500
3 000
3 500
4 000
2005 2006 2007 2008 2009 2010 2011
$ m
illio
n
18 2010-11 Treasurer’s Annual Financial Report
Capital Expenditure
Investment in infrastructure is necessary to ensure delivery of Government services to the community and
to foster economic and industry development. Maintaining capital expenditure to be at least equal to
depreciation levels ensures that the real value of General Government infrastructure assets is maintained.
The Interim Fiscal Strategy target of at least matching capital expenditure to equal depreciation costs, on
average, over rolling four-year periods, was met in 2010-11. Investment in core infrastructure exceeded
depreciation by $485 million. This is $107 million above the 2009-10 result of $378 million. The majority of
this capital investment was undertaken by the Departments of Infrastructure, Energy and Resources;
Health and Human Services; and Education. For further detail on capital expenditure refer to individual
Agency financial statements.
Chart 3.5: General Government Capital Expenditure
71 8726 19
57
378
485
....
80
160
240
320
400
480
560
2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11
$ m
illio
n
Capital expenditure in excess of depreciation Four-year rolling average
2010-11 Treasurer’s Annual Financial Report 19
Net Financial Liabilities to Revenue for the Total Non-Financial Public Sector
The Net Financial Liabilities to Revenue ratio is a key measure of the sustainability of the Total
Non-Financial Public Sector to meet its financial obligations from operating revenues.
The ratio for 2010-11 is 105 per cent, an increase of four per cent from 2009-10. The outcome is below the
threshold target of 110 per cent.
Chart 3.6: Ratio of Net Financial Liabilities1 to Revenue for the Non-Financial Public Sector
99%
102% 102%
88%
93%
101%
105%
60%
70%
80%
90%
100%
110%
120%
2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11
Net Financial Liabilities to Revenue Target of 110%
Note 1. For the purposes of the Interim Fiscal Strategy, Net Financial Liabilities represents Net Debt less Advances Paid
plus the Superannuation Liability. Net Financial Liabilities is divided by Revenue from transactions to derive the Net Financial Liabilities to Revenue ratio. This is in accordance with the methodology used by Standard & Poor's ratings agency.
Consolidated Fund
The Interim Fiscal Strategy target is to achieve a Consolidated Fund surplus by 2014-15.
The 2010-11 Consolidated Fund balance was a $540 million deficit, a deterioration of $305 million from the
Budget estimate of a $235 million deficit.
20 2010-11 Treasurer’s Annual Financial Report
2010-11 Treasurer’s Annual Financial Report 21
4 TREASURER’S ANNUAL
FINANCIAL STATEMENTS
22 2010-11 Treasurer’s Annual Financial Report
CERTIFICATION OF TREASURER’S ANNUAL
FINANCIAL STATEMENTS
General Government Sector
The General Government Sector financial statements for the year ended 30 June 2011 have been prepared
in accordance with AASB 1049 Whole of Government and General Government Sector Financial
Reporting. The Statements incorporate the reporting requirements of the Australian Accounting Standards
Board and the Uniform Presentation Framework (which is based on the reporting standards of the
Australian Bureau of Statistics Government Finance Statistics framework) and are compiled from
information provided by agencies within the General Government Sector.
The Statements present fairly the transactions of the General Government Sector for the year ended
30 June 2011 and the financial position as at 30 June 2011.
At the date of signing we are not aware of any circumstances which would render the particulars included in
the General Government Sector Financial Statements misleading or inaccurate.
Total State Sector
The Total State Sector general purpose financial statements for the year ended 30 June 2011 has been
prepared in accordance with AASB 1049 Whole-of-Government and General Government Sector Financial
Reporting. The Statements incorporate the reporting requirements of the Australian Accounting Standards
Board and the Uniform Presentation Framework (which is based on the reporting standards of the
Australian Bureau of Statistics Government Finance Statistics framework) and are compiled from
information provided by entities within the Tasmanian State Sector.
The Statements present fairly the transactions of the Total State Sector for the year ended 30 June 2011
and the financial position as at 30 June 2011.
At the date of signing we are not aware of any circumstances which would render the particulars included in
the Total State Sector Financial Statements misleading or inaccurate.
15 October 2011
2010-11 Treasurer’s Annual Financial Report 23
OPINION OF THE AUDITOR-GENERAL
24 2010-11 Treasurer’s Annual Financial Report
2010-11 Treasurer’s Annual Financial Report 25
Statement of Comprehensive Income for the year ended 30 June 2011
General Government Total State
Notes
2010-11
Original
Budget
2010-11
Actual
2009-10
Actual
2010-11
Actual
2009-10
Actual
$m $m $m $m $m
Revenue from transactions
Grants 1.7(a), 3.1 2 911 3 191 3 110 3 190 3 129
Taxation 1.7(b), 3.2 876 860 872 808 829
Sales of goods and services 1.7(c), 3.3 370 303 289 3 345 3 021
Fines and regulatory fees 1.7(d), 3.4 89 84 97 84 97
Interest income 1.7(e) 48 40 45 201 147
Dividend, tax and rate equivalent income 1.7(f), 3.5 149 159 79 64 31
Other revenue 3.6 121 129 109 163 153
4 563 4 767 4 602 7 856 7 408
Expenses from transactions
Employee expenses 1.8(a), 4.1 2 007 2 070 1 957 2 513 2 358
Superannuation 1.8(b), 7.5 229 271 233 313 269
Depreciation 1.8(c), 4.2 249 236 229 572 540
Supplies and consumables 4.4 992 991 973 2 893 2 731
Nominal superannuation interest expense 1.8(d), 7.5 222 232 208 264 233
Borrowing costs 1.8(e) 17 14 18 291 212
Grant and subsidy expenses 1.8(f), 4.3 880 952 935 841 826
Dividend, tax and rate equivalent expense 4.5 …. …. …. 14 14
Other expenses 32 23 31 23 34
4 627 4 790 4 584 7 724 7 216
Equals NET OPERATING BALANCE (65) (23) 18 132 192
Plus Other economic flows – Included in Operating
Result
Gain/(loss) on sale of non-financial assets 1.9(a), 5.1 17 6 (24) 8 (26)
Change in equity investment in PNFC and
PFC Sectors 1.9(b), 6.2 239 228 1 893 …. ….
Movements in superannuation liability 1.9(c), 7.5 …. 85 (692) 101 (755)
Other gains/(losses) 1.9(d), 5.2 7 (124) (41) (279) (107)
262 195 1 136 (170) (888)
Equals Operating Result 197 172 1 153 (38) (697)
26 2010-11 Treasurer’s Annual Financial Report
Statement of Comprehensive Income for the year ended 30 June 2011 (continued)
General Government Total State
Notes
2010-11
Original
Budget
2010-11
Actual
2009-10
Actual
2010-11
Actual
2009-10
Actual
$m $m $m $m $m
Plus Other economic flows – Other movements in
equity
Revaluations of non-financial assets 242 (807) 387 (678) 116
Other non-owner movements in equity (102) 120 (14) 142 1 997
140 (688) 373 (536) 2 112
Equals Comprehensive Result 338 (515) 1 527 (574) 1 416
KEY FISCAL AGGREGATES 1.19
NET OPERATING BALANCE (65) (23) 18 132 192
Less Net acquisition of non-financial
assets
Purchase of non-financial assets 772 721 607 1 319 1 324
Less Sale of non-financial assets 59 62 69 77 109
Less Depreciation 249 236 229 572 540
465 423 309 670 675
Equals FISCAL BALANCE – SURPLUS/(DEFICIT) (530) (446) (291) (538) (483)
This Statement of Comprehensive Income should be read in conjunction with the accompanying notes. Budget information refers to original estimates and has not been subject to audit.
2010-11 Treasurer’s Annual Financial Report 27
Statement of Financial Position as at 30 June 2011
General Government Total State
Notes
2011
Original
Budget
2011
Actual
2010
Actual
2011
Actual
2010
Actual
$m $m $m $m $m
Assets
Financial assets
Cash and deposits 1.10(a), 10.2 551 628 966 139 147
Investments 1.10(b), 6.1 80 56 56 5 096 3 303
Equity investments:
PNFC and PFC sectors 1.10(c), 6.2 6 265 6 178 5 950 …. ….
Other equity investments 1.10(c), 6.2 6 4 3 136 243
Receivables 1.10(d), 6.3 204 216 214 691 576
Other financial assets 1.10(e), 6.4 1 167 1 031 913 795 767
8 273 8 113 8 102 6 858 5 036
Non-financial assets
Land and buildings 1.10(g), 6.5 5 616 5 897 5 219 6 248 5 501
Infrastructure 1.10(g), 6.6 5 041 3 787 4 837 13 573 14 168
Plant and equipment 1.10(g), 6.7 220 224 216 453 430
Heritage and cultural assets 1.10(g), 6.8 468 442 553 442 553
Biological assets 1.10(g), 6.9 .... .... .... 232 319
Investment property 1.10(h), 6.11 11 12 13 28 29
Goodwill 1.10(k) .... .... .... 55 55
Intangible assets 1.10(i), 6.12 27 34 34 128 106
Assets held for sale 1.10(f), 6.13 12 28 21 33 32
Other non-financial assets 6.14 39 35 37 168 149
11 434 10 459 10 930 21 358 21 341
Total Assets 19 707 18 573 19 031 28 216 26 377
Liabilities
Borrowings 1.11(a), 7.1 323 269 274 6 544 4 411
Superannuation 1.11(b), 7.5 4 356 4 966 4 860 5 600 5 497
Employee entitlements 1.11(c), 7.2 491 488 461 593 567
Payables 1.11(d), 7.3 118 97 122 404 365
Other liabilities 1.11(e), 7.4 208 261 248 2 583 2 471
Total Liabilities 5 496 6 081 5 966 15 724 13 312
Net Assets 14 211 12 492 13 065 12 492 13 065
Equity
Accumulated funds 9 271 8 791 8 557 8 103 8 002
Asset revaluation reserve 11.1 4 940 3 701 4 508 4 400 5 078
Other reserves .... .... …. (11) (15)
Total Equity 14 211 12 492 13 065 12 492 13 065
28 2010-11 Treasurer’s Annual Financial Report
Statement of Financial Position as at 30 June 2011 (continued)
General Government Total State
Notes
2011
Original
Budget
2011
Actual
2010
Actual
2011
Actual
2010
Actual
$m $m $m $m $m
KEY FISCAL AGGREGATES 1.19
NET WORTH 14 211 12 492 13 065 12 492 13 065
NET FINANCIAL WORTH 2 777 2 032 2 135 (8 866) (8 276)
NET FINANCIAL LIABILITIES 3 487 4 146 3 814 8 866 8 276
NET DEBT (309) (416) (748) 1 309 962
This Statement of Financial Position should be read in conjunction with the accompanying notes. Budget information refers to original estimates and has not been subject to audit.
2010-11 Treasurer’s Annual Financial Report 29
Statement of Cash Flows for the year ended 30 June 2011
General Government Total State
Notes
2010-11
Original
Budget
2010-11
Actual
2009-10
Actual
2010-11
Actual
2009-10
Actual
$m $m $m $m $m
Cash flows from operating activities
Cash inflows
Grants received 2 911 3 184 3 130 3 183 3 151
Taxation 876 847 867 805 825
Sales of goods and services 368 311 291 3 671 3 305
Fines and regulatory fees 83 86 86 85 86
Interest received 47 41 44 270 140
Dividend, tax and rate equivalents 149 126 106 64 31
Other receipts 288 383 291 594 456
4 721 4 977 4 817 8 672 7 995
Cash outflows
Employee entitlements (1 977) (2 046) (1 958) (2 352) (2 321)
Superannuation (290) (305) (304) (367) (355)
Supplies and consumables (995) (1 016) (933) (3 383) (3 034)
Borrowing costs (16) (15) (17) (289) (301)
Grants and subsidies paid (880) (931) (929) (819) (812)
Other payments (200) (269) (256) (420) (394)
(4 357) (4 581) (4 397) (7 629) (7 217)
Net cash flows from operating activities 10.1 364 395 420 1 043 778
Cash flows from investing activities
Net cash flows from non-financial assets
Purchases of non-financial assets (772) (720) (607) (1 318) (1 324)
Sale of non-financial assets 59 62 69 77 109
(713) (658) (538) (1 241) (1 215)
Net cash flows from financial assets
(policy purposes)
Equity injections (106) (58) (111) .... ....
Net advances paid (15) (9) (11) (9) (12)
(120) (67) (122) (9) (12)
Net cash flows from financial assets
(liquidity purposes)
Net purchase of investments .... (1) 1 (1 183) 151
.... (1) 1 (1 183) 151
Net Cash flows from investing activities (834) (726) (659) (2 433) (1 077)
30 2010-11 Treasurer’s Annual Financial Report
Statement of Cash Flows for the year ended 30 June 2011 (continued)
General Government Total State
Notes
2010-11
Original
Budget
2010-11
Actual
2009-10
Actual
2010-11
Actual
2009-10
Actual
$m $m $m $m $m
Cash flows from financing activities
Net borrowing 11 (4) (22) 2 079 (833)
Dividends, tax and rate equivalents paid .... .... .... (21) (16)
Other financing .... (1) .... (1) 32
11 (5) (22) 2 057 (817)
Net increase in cash held (459) (338) (261) 667 (1 115)
Cash at the beginning of the year 1 010 966 1 227 1 574 2 689
Cash at the end of the year 552 628 966 2 241 1 574
KEY FISCAL AGGREGATES
Net cash from operating activities 364 395 420 1 043 778
Plus Dividends, tax and rate equivalents paid …. …. …. (21) (16)
Plus Net cash flows from non-financial assets (713) (658) (538) (1 241) (1 215)
Equals CASH SURPLUS/(DEFICIT) 1.19 (349) (263) (118) (219) (453)
This Statement of Cash Flows should be read in conjunction with the accompanying notes. Budget information refers to original estimates and has not been subject to audit.
2010-11 Treasurer’s Annual Financial Report 31
Statement of Changes in Equity for the year ended 30 June 2011
General Government
Notes
Asset Revaluation
Reserve
Accumulated
Funds Total
$m $m $m
Balance as at 1 July 2009 4 448 7 201 11 650
Comprehensive Result 2009-10 387 1 140 1 527
Transactions as owners:
Administrative Restructures (327) 327 ....
Equity Transfers:
to Aurora Energy Pty Ltd .... (5) (5)
to Hydro Tasmania .... (1) (1)
to Rivers and Water Supply Commission .... (21) (21)
to Tasmanian Railway Pty Ltd .... (82) (82)
to Tasracing Pty Ltd .... (1) (1)
(327) 217 (110)
Balance as at 30 June 2010 4 508 8 557 13 065
Comprehensive Result 2010-11 (807) 292 (515)
Transactions as owners:
Equity Transfers:
to Aurora Energy Pty Ltd .... (5) (5)
to Rivers and Water Supply Commission .... (15) (15)
to Tasmanian Ports Corporation Pty Ltd .... (1) (1)
to Tasmanian Railway Pty Ltd .... (38) (38)
.... (58) (58)
Balance as at 30 June 2011 3 701 8 791 12 492
32 2010-11 Treasurer’s Annual Financial Report
Statement of Changes in Equity for the year ended 30 June 2011
Total State
Asset
Revaluation
Reserve
Accumulated
Funds
Other
Reserves Total
$m $m $m $m
Balance as at 1 July 2009 5 290 6 382 (22) 11 650
Comprehensive Result 2009-10 116 1 294 7 1 416
Transfer from Revaluation Reserve to Accumulated
Funds (327) 327 …. ….
Balance as at 30 June 2010 5 078 8 002 (15) 13 065
Comprehensive Result 2010-11 (678) 101 4 (574)
Balance as at 30 June 2011 4 400 8 103 (11) 12 492
2010-11 Treasurer’s Annual Financial Report 33
NOTES TO THE TREASURER’S ANNUAL
FINANCIAL STATEMENTS Note 1 Significant Accounting Policies 35
1.1 Compliance framework 35
1.2 Basis of consolidation 36
1.3 Changes in accounting policies 36
1.4 Disaggregated information 37
1.5 Reporting period 37
1.6 Transactions and other economic flows 38
1.7 Revenue from transactions 38
1.8 Expenses from transactions 39
1.9 Other economic flows 40
1.10 Assets 42
1.11 Liabilities 47
1.12 Leases 48
1.13 Foreign currency balances/transactions 48
1.14 Comparative figures 48
1.15 Budget information 48
1.16 Rounding 48
1.17 Accounting judgments, estimates and assumptions 49
1.18 Goods and Services Tax 50
1.19 Key Fiscal Aggregates 50
Note 2 Disaggregated information 53
Note 3 Revenue from transactions 61
3.1 Grants 61
3.2 Taxation revenue 62
3.3 Sales of goods and services 62
3.4 Fines and regulatory fees 63
3.5 Dividend, tax and rate equivalent revenue 63
3.6 Other revenue 64
Note 4 Expenses from transactions 65
4.1 Employee expenses 65
4.2 Depreciation 65
4.3 Grant and subsidy expenses 66
4.4 Supplies and consumables 67
4.5 Dividend, tax and rate equivalent expenses 67
Note 5 Other economic flows 68
5.1 Gain/(loss) on sale of non-financial assets 68
5.2 Other gains/(losses) included in Operating Result 68
Note 6 Assets 69
6.1 Investments 69
6.2 Equity investments 69
6.3 Receivables 71
6.4 Other financial assets 71
6.5 Land and buildings 72
34 2010-11 Treasurer’s Annual Financial Report
6.6 Infrastructure 72
6.7 Plant and equipment 72
6.8 Heritage and cultural assets 73
6.9 Biological assets 73
6.10 Reconciliation of non-current assets 74
6.11 Investment property 75
6.12 Intangible Assets 76
6.13 Assets held for sale 76
6.14 Other non-financial assets 77
Note 7 Liabilities 78
7.1 Borrowings 78
7.2 Employee entitlements 78
7.3 Payables 79
7.4 Other liabilities 79
7.5 Superannuation 80
Note 8 Commitments and Contingencies 87
8.1 Schedule of commitments 87
8.2 Contingent assets and liabilities 89
Note 9 Financial instruments 92
Note 10 Cash Flow Reconciliation 102
10.1 Reconciliation of Net cash flows from operating activities to Operating Result 102
10.2 Cash and cash equivalents 103
Note 11 Reserves 104
11.1 Asset revaluation reserve 104
Note 12 Explanations of major variances between General Government Budget & actual outcome 105
12.1 Statement of Comprehensive Income – General Government Sector 105
12.2 Statement of Financial Position – General Government Sector 106
12.3 Statement of Cash Flows – General Government Sector 107
Note 13 Reconciliation to ABS GFS Measures 108
Note 14 Details of Controlled Entities 109
Note 15 Events Occurring after Balance Date 111
Note 16 Functional Information 113
16.1 Expenses from transactions 113
16.2 Assets by Function 115
2010-11 Treasurer’s Annual Financial Report 35
Note 1 Significant accounting policies
The following summary sets out the significant accounting policies adopted in the Treasurer’s Annual
Financial Report.
1.1 Compliance framework
The Treasurer’s Annual Financial Report is a general purpose financial report and has been prepared in
accordance with Australian Accounting Standards, including AASB 1049 Whole-of-Government and
General Government Sector Financial Reporting, which requires compliance with all Australian Accounting
Standards except those identified below.
The purpose of this financial report is to provide users with information about the Government’s
stewardship of, and accountability for, resources in both the General Government and Total State Sectors,
and information about its financial position, performance and cash flows. The Total State reporting entity
includes GGS, Public Non-Financial Corporation and Public Financial Corporation entities. Disaggregated
information is presented in Note 2. Specific details of the entities consolidated by the State are shown in
Note 14.
The GGS is determined in accordance with the principles and rules contained in the Australian Bureau of
Statistics Australian System of Government Finance Statistics: Concepts, Sources and Methods 2005.
The GGS consists of all government departments and non-profit state entities controlled and mainly
financed by government. Government departments are legal entities established by executive government
processes that have legislative, judicial, or executive authority over other units and which provide goods
and services to the community or to individuals on a non-market basis; and make transfer payments to
redistribute income and wealth. Non-profit state entities are created for the purpose of producing or
distributing goods and services but are not a source of income, profit or other financial gain for the
Government.
The PNFC Sector comprises those entities that aim to cover the majority of their expenses by revenue from
the sales of goods and services and which are commercially focused and non-financial in nature. Generally,
this Sector covers the State-owned Companies and Government Business Enterprises. These entities have
a variety of functions and responsibilities (and are not regulatory authorities in nature), are established in
varying ways and also have different relationships with the Budget.
The PFC Sector comprises those entities that perform central bank functions or have the authority to incur
financial liabilities and acquire financial assets in the market on their own account. In Tasmania, there are
two organisations in this Sector, the Tasmanian Public Finance Corporation and the Motor Accidents
Insurance Board.
AASB 1049 does not require full application of AASB 127 Consolidated and Separate Financial Statements
and AASB 139 Financial Instruments: Recognition and Measurement. Assets, liabilities, income, expenses
and cash flows of government controlled entities that are in the PNFC Sector and the PFC Sector are not
separately recognised in the GGS financial report. Instead, the GGS financial report recognises an asset,
being the controlling equity investment in those entities, and recognises a gain or loss relating to changes in
the carrying amount of that asset, measured in accordance with AASB 1049.
The ABS GFS Manual also provides the basis upon which Government Finance Statistics information that
is contained in the financial report is prepared. In particular, notes disclosing Key Fiscal Aggregates of
Net Worth, Net Operating Balance, Total Change in Net Worth, Fiscal Surplus/(Deficit) and
Cash Surplus/(Deficit) determined using the principles and rules in the ABS GFS Manual are included in the
36 2010-11 Treasurer’s Annual Financial Report
financial report, together with a reconciliation of those ABS Key Fiscal Aggregates to the corresponding Key
Fiscal Aggregates recognised in the financial report.
Compliance with the Australian Accounting Standards may not result in compliance with International
Financial Reporting Standards, as the AAS include requirements and options available to not-for-profit
organisations that are inconsistent with IFRS. The General Government Sector is considered to be
not-for-profit and has adopted some accounting policies that do not comply with IFRS.
The financial reports have been prepared on an accrual basis and, except where stated, are in accordance
with the historical cost convention.
Compliance with AASB 1049 will mean that these statements are also consistent with the reporting
requirements of the Uniform Presentation Framework.
1.2 Basis of consolidation
Reporting entities controlled by the State are consolidated within this financial report. As part of the process
of reporting the State as a single economic entity, all material transactions and balances between
government controlled entities are eliminated.
1.3 Changes in accounting policies
(a) Impact of new and revised Accounting Standards
In the current year, all of the new and revised Standards and Interpretations issued by the AASB that are
relevant to the State’s financial reporting and effective for the current annual reporting period have been
adopted. This has not brought about the need for any change in current accounting policy. The new and
revised standards include:
AASB 2008-3 Amendments to Australian Accounting Standards arising from AASB 3 and AASB 127 –
This Standard introduces some minor terminology changes. There is no expected financial impact of
applying these changes.
AASB 2009-5 Further Amendments to Australian Accounting Standards arising from the Annual
Improvements Project – This Standard introduces small disclosure and classification changes. There is
no expected financial impact of applying these changes.
(b) Impact of new and revised Accounting Standards yet to be applied
The following applicable Standards have been issued by the AASB and are yet to be applied:
AASB 2009-11 Amendments to Australian Accounting Standards arising from AASB 9 – The
amendments require modification to the disclosure of categories of financial assets. It is not anticipated
that there will be any financial impact.
AASB 1053 Application of Tiers of Australian Accounting Standards – This Standard establishes a
differential financial reporting framework consisting of two tiers of reporting requirements for preparing
general purpose financial statements. The Standard does not have any financial impact. However, it
may affect disclosures if reduced disclosure requirements apply.
AASB 1054 Australian Additional Disclosures – This Standard sets out the specific disclosures for
entities that have adopted Australian Accounting Standards that are additional to the requirements under
International Financial Reporting Standards, including disclosures relating to the nature of the financial
2010-11 Treasurer’s Annual Financial Report 37
report, audit fees and the reconciliation of net operating cash flows to net result. It is not expected to
have a financial impact.
AASB 2010-2 Amendments to Australian Accounting Standards arising from Reduced Disclosure
Requirements – This Standard makes amendments to introduce reduced disclosure requirements for
certain types of entities. There is no expected financial impact of applying these changes, as the State
will be considered a Tier 1 entity.
AASB 2010-6 Amendments to Australian Accounting Standards – Disclosures on Transfers of Financial
Assets – This Standard includes additional presentation and disclosure requirements for financial
assets. It is not expected to have a financial impact.
AASB 2010-7 Amendments to Australian Accounting Standards arising from AASB 9 – This Standard
makes minor revisions, however it is not expected to have a financial impact.
AASB 2009-12 Amendments to Australian Accounting Standards – This Standard introduces a number
of terminology changes. There is no expected financial impact.
AASB 2010-5 Amendments to Australian Accounting Standards – This Standard introduces terminology
changes as well as presentation changes, however, there is no financial impact from these revisions.
(c) Voluntary changes in accounting policy
During 2010-11, the accounting policy with respect to the measurement of port infrastructure assets
changed from the cost model to the fair value model. It is believed that the fair value model provides more
relevant information about the financial performance of these assets and assists users to better understand
the risks associated with these assets and is consistent with industry practice in relation to these types of
assets. As required by AASB 108 Accounting Policies, Changes in Accounting Estimates and Errors, this
initial change in accounting policy has been implemented as a revaluation in accordance with AASB 116
Property, Plant and Equipment on the basis that it represents the initial application of a policy to revalue
assets in accordance with AASB 116. The impact is recognised in the current period and comparative
information has not been adjusted.
1.4 Disaggregated information
The State’s consolidated financial information has been disaggregated between the following Sectors:
General Government;
Public Non-Financial Corporations; and
Public Financial Corporations.
This information is provided as there is dissimilarity between General Government activities and those of
entities in the PNFC and the PFC Sectors. Disclosure of this information will assist users of this financial
report in determining the effects of differing activities on the financial position of the State. It will also assist
users in identifying the resources used in the provision of a range of goods and services and the extent to
which the State has recovered the costs of those resources from revenues attributable to those activities.
For the purposes of presenting disaggregated financial information, the expected future income tax
equivalents receivable from the PNFC and PFC Sectors has been recognised in the statements for the
GGS.
1.5 Reporting period
The reporting period for all consolidated entities is the year or period ended 30 June.
38 2010-11 Treasurer’s Annual Financial Report
1.6 Transactions and other economic flows
The Statement of Comprehensive Income distinguishes between “transactions” and “other economic flows”
in a manner that is consistent with the principles in the ABS GFS Manual. Transaction flows result directly
from a mutually agreed interaction between two parties, for example, the sale of a good or service. The
definition of a “transaction flow” also includes depreciation. This recognises that, in the case of
depreciation, one party is acting in two roles, as owner of the asset and consumer of the services provided
by the asset.
An “other economic flow” is a change in the volume or value of an asset, or a liability that does not result
from a transaction. This includes a wide variety of events such as the revaluation of assets (holding gains
or losses) arising from a change in market prices and changes in the volume of assets that result from
discoveries, depletion and destruction of assets.
1.7 Revenue from transactions
Revenue is recognised in the Statement of Comprehensive Income when an increase in future economic
benefits related to an increase in an asset or a decrease in a liability has arisen from a mutually agreed
interaction between two parties and can be measured reliably.
(a) Grants
Grants payable by the Australian Government are recognised as revenue when control of the underlying
assets is gained. Where grants are reciprocal, revenue is recognised as performance occurs under the
grant. Non-reciprocal grants are recognised as revenue when the grant is received or receivable.
Conditional grants may be reciprocal or non-reciprocal depending on the terms of the grant.
(b) Taxation
Revenue from State taxation is recognised upon the first occurrence of either:
receipt by the State of a taxpayer’s self-assessed taxes and fees; or
the time the obligation to pay arises, pursuant to the issue of an assessment.
(c) Sales of goods and services
Amounts earned in exchange for the provision of goods are recognised when the significant risks and
rewards of ownership have been transferred to the buyer. Revenue from the provision of services is
recognised in proportion to the stage of completion of the transaction at the reporting date. The stage of
completion is assessed by reference to surveys of work performed.
(d) Fines and regulatory fees
Revenue from fines and regulatory fees is recognised in the period to which it relates. Where a licence year
intersects two financial years (for example 1 October to 30 September) the licence fee is not recognised as
revenue on a pro-rata basis unless this is material, rather it is recognised in the financial year in which it is
received and the licence issued.
(e) Interest income
Interest on funds invested is recognised as it accrues using the effective interest rate method.
2010-11 Treasurer’s Annual Financial Report 39
(f) Dividend, tax and rate equivalent income
The GGS receives a return from the State’s PNFCs and PFCs in the form of dividends, tax equivalent
payments and rate equivalent payments. Income tax and rate equivalent payments are received in
accordance with the National Taxation Equivalence Regime. Revenue is recognised in the period it is
earned. This revenue is eliminated at the Total State Sector level.
1.8 Expenses from transactions
Expenses are recognised in the Statement of Comprehensive Income when a decrease in future economic
benefits related to a decrease in an asset or an increase in a liability has arisen from a mutually agreed
interaction between two parties and can be measured reliably.
(a) Employee Entitlements
Employee entitlements include entitlements to wages and salaries, annual leave, sick leave, long service
leave and other post-employment benefits.
(b) Superannuation
This includes all superannuation expenses from transactions except the nominal superannuation interest
cost. It generally includes current service cost, which is the increase in entitlements associated with the
employment services provided by employees in the current period. Superannuation actuarial gains/losses
are excluded as they are considered to be Other economic flows.
(c) Depreciation
All non-current assets having a limited useful life are systematically depreciated over their useful lives in a
manner which reflects the consumption of their service potential. Land and biological assets, being assets
with an unlimited useful life, are not depreciated. Depreciation is not recognised in respect of heritage
assets and collections as their service potential has not, in any material sense, been consumed during the
reporting period.
Depreciation of buildings, plant and equipment is generally calculated on a straight line basis. Leasehold
improvements are depreciated over the estimated useful lives of the improvements or the unexpired period
of the lease, whichever is the shorter. Road infrastructure is depreciated on a straight line basis over its
estimated useful life.
The following are typical estimated useful lives for the different asset classes in 2010-11:
Asset Class Useful Life (years)
Buildings 30 - 120
Computer equipment 3 - 7
Motor vehicles 2 - 33
Office equipment 2 - 15
Plant and equipment 2 - 20
Infrastructure assets 20 - 50
Generation assets 3 - 150
Wharves 1 - 80
Harbour improvements 5 - 99
Roads 15 - 100
40 2010-11 Treasurer’s Annual Financial Report
(d) Nominal superannuation interest expense
Nominal interest on the unfunded superannuation liability is based on the interest cost on the gross
superannuation liability, less expected return on plan assets.
(e) Borrowing costs
Interest on outstanding borrowings and other finance costs directly related to borrowings are recognised
when incurred. Borrowing costs include:
interest on bank overdrafts and short-term and long-term borrowings;
unwinding of discounting of provisions;
amortisation of discounts or premiums related to borrowings;
amortisation of ancillary costs incurred in connection with the arrangement of borrowings; and
finance lease charges.
(f) Grant and subsidy expenses
Grant and subsidy expenses are recognised to the extent that:
the services required to be performed by the grantee have been performed; or
the grant eligibility criteria have been satisfied.
A liability is recorded when the State has a binding agreement to make the grant but services have not
been performed or criteria satisfied. Where grant monies are paid in advance of performance or eligibility, a
prepayment is recognised.
1.9 Other economic flows
Other economic flows are changes in the volume or value of an asset or liability that do not result from
transactions. Other economic flows are classified according to those flows that are included in the
Operating Result or Other Movements in Equity.
(a) Gain/(loss) on non-financial assets
Gains or losses from the sale of non-financial assets are recognised when control of the asset has passed
to the buyer.
(b) Change in equity investment in PNFC and PFC Sectors
Equity investments are initially recorded at fair value based on the net assets of State-owned Companies
and Government Business Enterprises. Changes in the value of equity investments are accounted for as
Other economic flows - Included in the Operating Result.
(c) Movements in superannuation liability
All gains or losses arising from the actuarial revaluation of superannuation are classified as Other economic
flows - Included in the Operating Result.
2010-11 Treasurer’s Annual Financial Report 41
(d) Other gains/losses
Other gains/(Iosses) will include the impairment and write-down of assets.
(i) Impairment – financial assets
Financial assets are assessed at each reporting date to determine whether there is any objective evidence
that any financial assets are impaired. A financial asset is considered to be impaired if objective evidence
indicates that one or more events have had a negative effect on the estimated future cash flows of that
asset.
An impairment loss, in respect of a financial asset measured at amortised cost, is calculated as the
difference between its carrying amount, and the present value of the estimated future cash flows
discounted at the original effective interest rate.
All impairment losses are recognised in the Operating Result.
An impairment loss is reversed if the reversal can be related objectively to an event occurring after the
impairment loss was recognised. For financial assets measured at amortised cost and available-for-sale
financial assets that are debt securities, the reversal is recognised in the Operating Result. For
available-for-sale financial assets that are equity securities, the reversal is recognised as Other economic
flows – Other movements in equity.
(ii) Impairment – non-financial assets
All non-financial assets are assessed to determine whether any impairment exists. Impairment exists when
the recoverable amount of an asset is less than its carrying amount. The recoverable amount is the higher
of fair value less costs to sell and its value in use. GGS assets are not used for the purpose of generating
cash flows; therefore an asset’s value in use is based on depreciated replacement cost where the asset
would be replaced if deprived of it.
All impairment losses are recognised in the Operating Result.
An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses
recognised in prior periods are assessed at each reporting date for any indications that the loss has
decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates
used to determine the recoverable amount. An impairment loss is reversed only to the extent that the
asset’s carrying amount does not exceed the carrying amount that would have been determined, net of
depreciation or amortisation, if no impairment loss had been recognised.
(iii) Write down of assets
A revaluation is recognised as an expense in the Operating Result to the extent that it reverses a
revaluation increment previously credited to, and still included in the balance of, an Asset revaluation
reserve in respect of the same class of asset. In this case, it is debited direct to that Revaluation reserve
and recognised within Other economic flows – Other movements in equity.
Where an increment reverses a revaluation decrement previously recognised in the Operating Result, in
respect of that same class of non-current assets, the revaluation increment is recognised in the Operating
Result.
42 2010-11 Treasurer’s Annual Financial Report
1.10 Assets
Assets are recognised in the Statement of Financial Position when it is probable that the future economic
benefits will flow to the State and the asset has a cost or other value that can be measured reliably.
(a) Cash and deposits
For the purpose of the Statement of Cash Flows, cash and cash equivalents includes “at call” deposits with
banks net of bank overdrafts, highly liquid investments with short periods to maturity, advances at call
which are subject to insignificant risk of changes in value and borrowings and deposits held by the
Tasmanian Public Finance Corporation from external clients at call.
(b) Investments
Financial assets in the scope of AASB 139 are classified as financial assets initially recorded at fair value
through the Statement of Comprehensive Income, loans and receivables, held-to-maturity investments; or
as available-for-sale investments, as appropriate. When financial assets are initially recognised they are
measured at fair value plus, in the case of investments not at fair value through profit or loss, directly
attributable transactions costs. All routine purchases and sales of financial assets are recognised on the
trade date, i.e. the date that the State commits to purchase the asset.
(i) Financial assets held for trading
Financial assets classified as held for trading are stated at fair value through the Statement of
Comprehensive Income. Financial assets are classified as held for trading if they are acquired for the
purpose of selling in the near term. Derivatives are also classified as held for trading unless they are
designated as effective hedging instruments. Gains or losses on investments held for trading are
recognised in the Statement of Comprehensive Income within Other economic flows.
(ii) Held-to-maturity investments
Non-derivative financial assets with fixed or determinable payments and fixed maturity are classified as
held-to-maturity when the State has the intention and ability to hold them to maturity. Investments intended
to be held for an undefined period are not included in this classification. Investments that are intended to be
held to maturity are subsequently measured at amortised cost. For investments carried at amortised cost,
gains and losses are recognised in the Statement of Comprehensive Income, within Other economic flows,
when the investments are derecognised or impaired, as well as through the amortisation process.
(iii) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not
quoted in an active market. Such assets are carried at amortised cost using the effective interest method.
Gains and losses are recognised in the Statement of Comprehensive Income, within Other economic flows,
when the loans and receivables cease to be recognised, or are impaired, as well as through the
amortisation process.
(iv) Available-for-sale investments
Available-for-sale investments are those non-derivative financial assets that are designated as
available-for-sale, or are not classified as any of the preceding categories. After initial recognition,
available-for-sale investments are measured at fair value with gains or losses being recognised as a
separate component of equity until the investment is derecognised or until the investment is determined to
be impaired, at which time the cumulative gain or loss previously reported in equity is recognised in the
Statement of Comprehensive Income within Other economic flows.
2010-11 Treasurer’s Annual Financial Report 43
The fair value of investments that are actively traded in organised financial markets is determined by
reference to quoted market bid prices at the close of business on balance date. For investments with no
active market, fair value is determined using valuation techniques. Such techniques include using recent
arm’s length market transactions; reference to the current market value of another instrument that is
substantially the same; discounted cash flow analysis and option pricing models.
Entities required to report under Australian Accounting Standard AASB 1023 General Insurance Contracts
have valued their investments at net market value. Any movements in the value of investments between
reporting dates are recognised as gains or losses in the Statement of Comprehensive Income within Other
economic flows.
(v) Other investments
The investments in respect of cash held in the Public Account are primarily undertaken through Tascorp.
Short term investments with Tascorp (deposits for more than five days but less than one year) are carried
at their face value and are not adjusted for fluctuations in market interest rates. Interest is brought to
account on an accrual basis.
(c) Equity investments
(i) Equity investments in PNFC and PFC Sectors
Full application of AASB 127 Consolidated and Separate Financial Statements and AASB 139 Financial
Instruments: Recognition and Measurement is not required for GGS financial reporting in accordance with
AASB 1049. Accordingly, the assets, liabilities, income, expenses and cash flows of government controlled
entities that are in the Public Non-Financial Corporations Sector and the Public Financial Corporations
Sector are not separately recognised in the GGS financial statements. Instead, the GGS financial
statements recognise an asset, being the controlling equity investment in those entities.
Equity investments are initially recorded at a fair value based on the net assets of State-owned Companies
and Government Business Enterprises. Changes in the value of equity investments are accounted for as
revenue, or as expenses in the GGS Statement of Comprehensive Income.
(ii) Other equity investments
Other equity investments which are primarily held by the Motor Accidents Insurance Board, are initially
recorded at cost in the Statement of Financial Position. Subsequent measurement is at fair value with any
resultant fair value gains or losses recognised as Other economic flows – Included in the Operating Result.
(d) Receivables
Receivables are recognised at the amounts receivable as they are due for settlement. Impairment of
receivables is reviewed on an annual basis. Impairment losses are recognised when there is an indication
that there is a measurable decrease in the collectability of receivables.
During 2010-11, the receivables classification was amended to include accrued revenue and GST
receivable. These items were previously classified as an Other financial asset. Comparative information
has been amended accordingly.
(e) Other financial assets
Other financial assets are initially recorded at fair value. Other financial assets consist primarily of derivative
transactions that were entered into as designated hedges of underlying physical positions or as designated
hedges of portfolio interest rate risk. Derivative financial instruments are recorded in the Statement of
Financial Positions as payables where the gross amount payable is in excess of the gross amount
44 2010-11 Treasurer’s Annual Financial Report
receivable and there is an intention by both parties to settle the transaction on a net basis. Derivative
financial instrument receivables are the opposite of this.
(f) Assets held for sale
Assets held for sale (or disposal groups comprising assets and liabilities) that are expected to be recovered
primarily through sale rather than continuing use are classified as held for sale. Immediately before
classification as held for sale, the assets (or components of a disposal group) are remeasured in
accordance with accounting policies. Thereafter, the assets (or disposal group) are measured at the lower
of carrying amount and fair value less costs to sell.
(g) Property, plant, equipment and infrastructure
(i) Valuation basis
Land, buildings, infrastructure, long-lived plant and equipment and heritage and cultural assets are, unless
specified, recorded at fair value less accumulated depreciation. All other non-current physical assets,
including work in progress, are recorded at historic cost less accumulated depreciation and accumulated
impairment losses.
Cost includes expenditure that is directly attributable to the acquisition of the asset. The costs of
self-constructed assets includes the cost of materials and direct labour, any other costs directly attributable
to bringing the asset to a working condition for its intended use, and the costs of dismantling and removing
the items and restoring the site on which they are located. Purchased software that is integral to the
functionality of the related equipment is capitalised as part of that equipment.
When parts of an item of property, plant, equipment and infrastructure have different useful lives, they are
accounted for as separate items (major components) of property, plant, equipment and infrastructure.
Infrastructure assets include such items as road, bridge, rail and water and sewerage infrastructure assets:
Road infrastructure valuation is based on depreciated replacement cost, calculated on a base unit
construction cost rate per square metre of given road carriageway area. The rate is then adjusted to
reflect the additional factors that contribute significantly to the replacement cost. Full valuation occurs
every five years, with the last valuation conducted in 2008. Values are indexed annually using the ABS
Current Road and Bridge Construction Index Number (ABS 6427.0 Table 16).
During 2010-11, an external consultant was engaged to review the road valuation methodology,
including the stratification of the components that form a road (earthworks, pavement and surface) and
the useful lives of each component based on experience and data gathered in Tasmania and interstate.
The methodology recommended by the consultants has resulted in an increase in the depreciated
proportion of the asset, thereby decreasing the overall valuation of the asset based on its age. The
methodology adopted is considered more accurate in terms of the estimation of the useful lives of the
asset components and reflects best practice. The adoption of this changed methodology in 2010-11 has
resulted in a one-off increase to accumulated depreciation by $570 million, which is in effect a write-
down of the net value of the road network by the same amount, applied to asset revaluation reserve.
The road replacement valuation is not affected by the changed methodology
Land under roads and within road reserves value is determined by the Valuer-General from the most
recent valuations of land titles adjoining and within a 200 metre corridor of the State road network. The
methodology utilised by the Valuer-General in providing the average rateable values per hectare or
square metre according to land use in each Municipality has been reviewed by the Valuer-General
resulting in the adoption of a more accurate methodology, employing GIS data, that has become
2010-11 Treasurer’s Annual Financial Report 45
available in recent years. The new methodology determines average values from the most recent
valuations of land titles adjoining and within a 200 metre corridor of the State road network.
Bridge infrastructure valuation is based on depreciated replacement cost, calculated from base unit
rates for construction of different bridge types. Full valuation occurs every five years, with the last
valuation completed in 2007. Values are indexed annually using the ABS Current Road and Bridge
Construction Index Number (ABS 6427.0 Table 16).
Water and sewerage infrastructure assets are carried at fair value.
Electricity generation assets recorded at fair value are based on a Tasmanian energy price curve
derived by Hydro Tasmania from the published three-year Victorian energy price curve. For further
information regarding valuation of these assets refer to the Annual Report of Hydro Tasmania.
The valuation methodology for electricity distribution assets reflects the Tasmanian Electricity Market
Code rules (as per the Tasmanian Electricity Code) which regulate the revenue from these assets.
Aurora Energy Pty Ltd values the grid assets using the income approach, based on the revenue
generation capacity of the assets, as determined by the Economic Regulator. Valuations are conducted
annually.
Electricity network assets are measured at fair value based on the depreciated optimised replacement
cost methodology. For further information on the valuation of these assets refer to the Annual Report for
Transend Networks Pty Ltd.
Port infrastructure assets held by the Tasmanian Ports Corporation Pty Ltd were revalued at
30 June 2011 and in future years will be reported at fair value less accumulated depreciation and
impairment.
Heritage assets and collections are defined as those non-current physical assets that the State intends to
preserve because of their unique historical, cultural or environmental attributes. This category primarily
consists of the Tasmanian Museum and Art Gallery collections and the State Library’s Tasmanian
collection. The Tasmanian Museum and Art Gallery collections are recognised at fair value. The collection
was last valued as at 30 June 2011. The State Library’s Tasmanian collection is recognised at fair value.
These items are not depreciated as they do not have a limited useful life as appropriate curatorial practices
are in place.
Biological assets comprise the forest crop of Forestry Tasmania. During 2011, Forestry Tasmania engaged
James W Sewall Company to establish a valuation for its entire forest estate, inclusive of land and roads.
The methodology used to estimate the value for biological assets involves an income capitalisation
approach. Due to the continued uncertainty surrounding the Tasmanian Forests Intergovernmental
Agreement and Statement of Principles process in Tasmania, whereby it is uncertain as to what area may
remain available from which Forestry Tasmania can source forest products, the valuation approach
included a number of scenarios, to which probabilities were attached in arriving at a valuation. The resulting
downward revaluation was half due to adverse market conditions, and half due to factoring in the likely
impact of the Tasmanian Forests Intergovernmental Agreement and Statement of Principles.
The forest under management is divided into three areas:
general forest zone;
special timbers zone; and
formal forest reserves.
46 2010-11 Treasurer’s Annual Financial Report
Due to the different uses and restrictions on these areas, separate valuations, utilising the income
capitalisation approach are derived. Further, given that the valuations for the special timbers zone and
formal forest reserves result in negative valuations, these have been recognised separately as a liability in
the Statement of Financial Position, refer to Note 7.4.
For further information regarding valuation of forest assets, refer to the Annual Report of Forestry
Tasmania.
National Parks, Reserves and Conservation Areas which are held by the Department of Primary Industries,
Parks, Water and the Environment have all been valued at fair (market) value for their existing use with no
consideration of a higher, better or more economic use of the land than the current use. The amount of
discounting or adjustment made to market sales evidence for valuation purposes depends on a variety of
factors including type of land, access, area and reservation status.
(ii) Subsequent costs
The cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount
of the item if it is probable that the future economic benefits will arise and its costs can be measured
reliably. The carrying amount of the replaced part is derecognised. The costs of day-to-day servicing of
property, plant and equipment are recognised in profit or loss as incurred.
(iii) Asset recognition threshold
The asset capitalisation threshold adopted by the General Government and State Sectors is between
$5 000 and $10 000. Assets valued at less than $5 000 are charged to the Statement of Comprehensive
Income in the year of purchase (other than where they form part of a group of similar items which are
material in total).
(iv) Revaluations
The asset revaluation threshold is in the order of $50 000, above which assets are revalued with sufficient
regularity to ensure they reflect fair value at balance date. In accordance with AASB 116 Property Plant and
Equipment, in years between valuations, indices are supplied by qualified valuers to index valuations to fair
value.
Assets are grouped on the basis of having a similar nature or function.
(h) Investment property
Investment property is property held to earn rental income, for capital appreciation, or for both. Investment
property is recorded at fair value. Property interests held under operating leases are not classified and
accounted for as investment property. Changes in the fair value of investment property are recorded as
Other economic flows within the Statement of Comprehensive Income. Investment property is not
depreciated.
(i) Intangible assets
An intangible asset is recognised where:
it is probable that an expected future benefit attributable to the asset will flow to the entity; and
the cost of the asset can be reliably measured.
Intangible assets are valued at fair value where an active market exists and are amortised on a straight line
basis over their estimated useful life. Where no active market exists, intangibles are recorded at cost less
amortisation and impairment losses.
2010-11 Treasurer’s Annual Financial Report 47
(j) Inventories
Inventories held for distribution are valued at cost adjusted, when applicable, for any loss of service
potential. Inventories acquired for no cost or nominal consideration are valued at current replacement cost.
(k) Goodwill
Goodwill represents the excess of the cost of the acquisition over the net fair value of the identifiable
assets, liabilities and contingent liabilities of the subsidiary. Goodwill is measured at cost less accumulated
impairment losses. Goodwill is held by Hydro Tasmania, TOTE Tasmania Pty Ltd and the Tasmanian Ports
Corporation Pty Ltd.
1.11 Liabilities
Liabilities are recognised in the Statement of Financial Position when it is probable that an outflow of
resources embodying economic benefits will result from the settlement of a present obligation and the
amount at which the settlement will take place can be measured reliably.
(a) Borrowings
Bank loans and other loans are initially measured at fair value, net of transaction costs. Bank loans and
other loans are subsequently measured at amortised cost using the effective interest rate method, with
interest expense recognised on an effective yield basis.
The effective interest rate method is a method of calculating the amortised cost of a financial liability and
allocating interest expense over the relevant period. The effective interest rate is the rate that exactly
discounts estimated future cash payments through the expected life of the financial liability, or where
appropriate, a shorter period.
(b) Superannuation
(i) Defined contribution plans
A defined contribution plan is a post employment benefit plan under which an entity pays fixed contributions
into a separate entity and where there is no legal or constructive obligation to pay further amounts.
Obligations for contributions to defined contribution plans are recognised as an expense when they fall due.
(ii) Defined benefit plans
A defined benefit plan is a post employment benefit plan other than a defined contribution plan.
Superannuation obligations, in respect of the contributory service of current and past government
employees, are recognised at the latest actuarial assessment of the members’ entitlements, net of scheme
assets. The valuation is determined by discounting to present value, the gross benefit payments at a
current, market-determined, risk-adjusted discount rate appropriate to the respective plan.
All gains or losses arising from the actuarial revaluation of superannuation liabilities are recognised as
Other economic flows – Included in the Operating Result.
(c) Employee entitlements
Liabilities for wages and salaries and annual leave are recognised when an employee becomes entitled to
receive a benefit. Those liabilities expected to be realised within 12 months are measured as the amount
expected to be paid. Other employee entitlements are measured as the present value of the benefit at
30 June 2011, where the impact of discounting is material, and at the amount expected to be paid if
discounting is not material.
48 2010-11 Treasurer’s Annual Financial Report
A liability for long service leave is recognised, and is measured as the present value of expected future
payments to be made in respect of services provided by employees up to the reporting date.
(d) Payables
Payables, including goods received and services incurred but not yet invoiced, are recognised at amortised
cost, which due to the short settlement period, equates to face value, when there is an obligation to make
future payments as a result of a purchase of assets or services.
During 2010-11, the payables classification was amended to include accrued expenses. These items were
previously classified as Other liabilities. Comparative information has been amended accordingly.
(e) Other liabilities
Other liabilities are recognised in the Statement of Financial Position when it is probable that an outflow of
resources embodying economic benefits will result from the settlement of a present obligation and the
amount at which the settlement will take place can be measured reliably.
(f) Financial guarantee liabilities
Financial guarantee contract liabilities are measured initially at their fair values and subsequently at the
higher of the amount determined in accordance with AASB 137 Provisions, Contingent Liabilities and
Contingent Assets.
1.12 Leases
Operating lease agreements exist for property, plant and equipment, where the lessors effectively retain all
the risks and benefits incidental to ownership of the items leased. Equal instalments of lease payments are
charged to the Statement of Comprehensive Income over the lease term, as this is representative of the
pattern of benefits to be derived from the leased property.
1.13 Foreign currency balances/transactions
Transactions denominated in a foreign currency are converted at the exchange rate at the date of the
transaction. Foreign currency receivables and payables are translated at the exchange rates current at
balance date.
1.14 Comparative figures
Comparative figures have been adjusted to reflect any changes in accounting policy or the adoption of new
standards.
1.15 Budget Information
Budget information refers to original estimates as disclosed in the 2010-11 Budget Papers and is not
subject to audit. Explanation of major variances between budget and actual outcomes is provided in
Note 12.
1.16 Rounding
Amounts in the Financial Statements and Notes to the Financial Statements are rounded to the nearest
million dollars, unless otherwise stated. As a consequence, rounded figures may not add to totals. Amounts
less than $500 000 are rounded to zero and are indicated by the symbol “….”.
2010-11 Treasurer’s Annual Financial Report 49
1.17 Accounting judgments, estimates and assumptions
In the preparation of the General Government and Total State Sector Financial Statements, entities are
required to make judgements, estimates and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent liabilities at the date of the Statements and the reported revenue
and costs during the reported period.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting
estimates are recognised in the period in which the estimate is revised, if the revision affects only that
period; or in the period of the revision and future periods if the revision affects both current and future
periods.
Judgements that have significant effects on the financial statements are discussed below:
(i) Assessment of impairment of non-regulated electricity assets
Tests are undertaken on an annual basis to determine whether assets have suffered any impairment, in
accordance with the accounting policy. The recoverable amounts of cash-generating units have been
determined based on value-in-use calculations. These calculations require the use of the following key
assumptions:
forecast electricity pool and contract prices and regulated pricing for non-contestable customers;
forecast fuel prices;
forecast maintenance and capital expenditure; and
discount rates.
(ii) Fair value of financial instruments
The fair value of financial instruments that are not traded in an active market (for example, certain types of
electricity derivatives) is determined by using valuation techniques. Judgement has been applied to select a
variety of methods and makes assumptions that are mainly based on market conditions existing at each
statement of financial position date.
(iii) RBF liability
The Retirement Benefits Fund defined benefits provision has been assessed by the State Actuary and
various actuarial assumptions have been applied to arrive at the carrying value reported.
No assumptions have been made concerning the future that may cause a material adjustment to the
carrying amounts of assets and liabilities within the next reporting period.
(iv) Provision for outstanding and unreported claims in MAIB
This provision is made at the Statement of Financial Position date for the estimated cost of claims incurred
but not settled, including the cost of claims incurred but not yet reported.
The expected future payments are calculated based on the ultimate cost of settling claims, which includes
the anticipated effects of inflation, the goods and services tax and other factors. The expected future
payments are then discounted to a present value at the balance date using market determined risk free
discount rates. Claims handling expenses include the cost of managing claims such as administration
expenses and professional fees that are not otherwise directly allocated to individual claims.
In determining the provision for outstanding claims, a risk margin is added to the total of the net central
estimate of the discounted future claim payments plus the estimated claims handling expenses. The
50 2010-11 Treasurer’s Annual Financial Report
addition of a risk margin recognises the inherent uncertainties contained within the actuarial valuation and
provides a probability not less than 75 per cent (2010: not less than 75 per cent) that the provision is
sufficient to meet the cost of the claims incurred. The allowances for claims handling expenses and the risk
margin have been determined for the scheme as a whole. For reporting purposes they have been applied
uniformly to each benefit type. For further detail, refer to the Annual Report of MAIB.
(v) Forest estate valuation methodology
The valuation of the forest estate assets involves a number of assumptions which are summarised below.
For further detail, refer to the Annual Report of Forestry Tasmania.
Existing practices with regard to forest management and silviculture are assumed to continue;
A pre-tax discount rate of 9.0 per cent (8.1 per cent as at 30 June 2010) is used to value the three forest
zones;
Forest yields/volumes – Native forest volume assessments were reviewed in 2007 as part of the
Regional Forest Agreement review process and have been updated to take into account the volume
losses associated with the change in silviculture alternatives. Hardwood and softwood plantation
volumes are based on inventory data collected from 1998 to 2007;
Future rotations – Only the current standing timber crop is valued according to AASB 141 Agriculture.
No recognition is made of the costs and returns related to future tree crops, or of the harvest and
delivery of logs;
Costs – Costs directly attributable to the management of the forest estate are included in the discounted
cash flow model; and
Prices – Stumpage rates are used to determine the revenues. The prices are based on current and
historical prices and pricing trends over the full range of products.
1.18 Goods and Services Tax
Revenue, expenses and assets are recognised net of the amount of Goods and Services Tax, except
where the GST incurred is not recoverable from the Australian Taxation Office. Receivables and payables
are stated inclusive of GST. The net amount recoverable, or payable, to the ATO is recognised as an asset
or liability within the Statement of Financial Position.
In the Statement of Cash Flows, the GST component of cash flows arising from operating, investing or
financing activities which is recoverable from, or payable to, the Australian Taxation Office is, in accordance
with the Australian Accounting Standards, classified as operating cash flows
1.19 Key Fiscal Aggregates
The financial report presents a number of Key Fiscal Aggregates that are presented on the face of the
statements, as a requirement of the UPF and AASB 1049. A description of the Key Fiscal Aggregates is
provided below:
Net Operating Balance
The Net Operating Balance is a measure of the on-going sustainability of the operations of government. It
indicates whether a government is generating enough revenue to cover the cost of its operations. A Net
Operating Surplus indicates that a government has sufficient revenue to fund its operations and contribute
to an increase in its asset base.
2010-11 Treasurer’s Annual Financial Report 51
Operating Result
The Operating Result is similar to the Net Operating Balance in that it is a measure of the sustainability of
the operations of government. However, this measure includes movements in asset and liability balances
that result from movements in market values rather than as a result of government operations. These gains
or losses on assets or liabilities are “unrealised” and are not available to fund government operations.
Comprehensive Result
The Comprehensive Result represents the total change in value of the Net Worth during a year arising from
revenues, expenses and movements in the valuation of assets and liabilities. As such, the Comprehensive
Result is equivalent to the total increase or decrease in Net Assets during the year. The Comprehensive
Result is similar to the Operating Result in that it includes unrealised movements in the value of assets and
liabilities that impact on net assets. These movements are not available to fund operations and do not arise
as a result of government decisions.
Fiscal Balance
The Fiscal Balance indicates whether a sufficient surplus is being generated by the operations of
government to fund its capital expenditure needs. It is determined as the difference between revenue from
transactions over expenses from transactions, after allowing for the net addition to non-financial assets
such as buildings and infrastructure.
Net Debt
Net Debt is a measure used to help assess the overall strength of a Government’s fiscal position. Net Debt
comprises borrowings less the sum of cash and deposits and investments.
Net Financial Liabilities
Net Financial Liabilities comprises total liabilities less financial assets, excluding equity investments in
Government Businesses. This is a broader measure than Net Debt, as it incorporates other liabilities such
as superannuation.
Net Financial Worth
Net Financial Worth is calculated as financial assets less liabilities. This measure is broader than Net Debt,
as it incorporates provisions made (such as superannuation, but not depreciation and bad debts) as well as
ownership of equity.
Net Worth
Net Worth is calculated as total assets (both financial and non-financial) minus total liabilities. Net Worth
incorporates non-financial assets such as land and other infrastructure assets, which may be sold and used
to repay debt. It also incorporates certain financial assets and liabilities not captured by the Net Debt
measure, most notably, accrued employee superannuation liabilities, ownership of equities, debtors and
creditors.
GFS includes shares and contributed capital in the calculation of Net Worth, which for the PNFC and PFC
Sectors is equivalent to the carrying amount of net assets. As a result, GFS Net Worth for the PNFC and
PFC sectors will always be nil. This difference has no impact on GGS or Total State Sector Net Worth.
52 2010-11 Treasurer’s Annual Financial Report
Net Increase in Cash Held
Net Increase in Cash Held is the sum of net cash flows from all operating, investing and financing activities.
This measure is consistent with the movement in cash and deposits reported in the Statement of Financial
Position, providing a mechanism for managing the cash position to ensure that sufficient cash is available
to fund Government policy decisions.
Cash Surplus/(Deficit)
The Cash Surplus/(Deficit) comprises cash received from operating activities, and from sales and
purchases of non-financial assets less finance leases and similar arrangements.
The Cash Surplus/(Deficit) is important for cash management purposes. It is important to note that a Cash
Surplus does not necessarily imply that there is cash available for spending. This is because the Cash
Surplus/(Deficit) includes funds allocated to provisions such as the Superannuation Provision Account.
It should be noted that the Australian Bureau of Statistics does not include equity injections/withdrawals and
the repayment of advances in the calculation of the surplus/(deficit). However, these items can have a
major impact in any given year.
2010-11 Treasurer’s Annual Financial Report 53
Note 2 Disaggregated Information
The following tables present the Statement of Comprehensive Income, Statement of Financial Position and
Statement of Cash Flows for the GGS, PNFC and PFC Sectors.
The Total Non-Financial Public Sector represents the consolidated total of the GGS and PNFC Sectors.
The Total State Sector represents the consolidation of GGS, PNFC and PFC Sectors. Total State
Inter-Sector Eliminations are presented to allow reconciliation between the individual Sectors and the Total
State Sector financial statements.
2010-11 Treasurer’s Annual Financial Report 54
Note 2 Disaggregated Information – Statement of Comprehensive Income by Sector General Government
Sector Public Non-Financial Corporations Sector
Public Financial Corporations Sector
Inter-sector Eliminations
Total Non-Financial Public Sector
Total State Sector
2010-11 2009-10 2010-11 2009-10 2010-11 2009-10 2010-11 2009-10 2010-11 2009-10 2010-11 2009-10 $m $m $m $m $m $m $m $m $m $m $m $m
Revenue from transactions Grants 3 191 3 110 152 144 .... .... 154 125 3 192 3 131 3 190 3 129 Taxation 860 872 .... .... .... .... 52 43 809 829 808 829 Sales of goods and services 303 289 2 941 2 643 137 131 36 42 3 212 2 893 3 345 3 021 Fines and regulatory fees 84 97 .... .... .... .... 1 .... 84 97 84 97 Interest income 40 45 13 11 349 286 201 195 53 56 201 147 Dividend, tax and rate equivalent income 159 79 .... .... 64 31 159 79 59 60 64 31 Other revenue 129 109 33 45 2 .... 1 2 160 153 163 153
4 767 4 602 3 140 2 843 552 449 603 486 7 569 7 218 7 856 7 408 Expenses from transactions
Employee expenses 2 070 1 957 437 396 6 5 .... .... 2 507 2 353 2 513 2 358 Superannuation 271 233 42 35 1 1 .... .... 312 268 313 269 Depreciation 236 229 335 311 1 .... .... .... 571 539 572 540 Supplies and consumables 991 973 1 800 1 679 141 114 40 34 2 754 2 620 2 893 2 731 Nominal superannuation interest expense 232 208 32 25 .... .... .... .... 264 232 264 233 Borrowing costs 14 18 182 172 320 236 225 214 173 172 291 212 Grant and subsidy expenses 952 935 35 23 2 1 149 134 841 826 841 826 Dividend, tax and rate equivalent expense .... .... 114 33 59 59 159 79 14 14 14 14 Other expenses 23 31 31 29 .... .... 31 25 23 34 23 34
4 790 4 584 3 008 2 702 529 416 604 486 7 460 7 059 7 724 7 216
equals NET OPERATING BALANCE (23) 18 132 141 23 33 .... .... 109 158 132 192
plus Other economic flows – Included in Operating Result Gain/(loss) on sale of non-financial assets 6 (24) 2 (2) .... .... .... .... 8 (26) 8 (26) Change in equity investment in PNFC/PFC sectors 228 1 893 .... .... .... .... 228 1 893 20 59 .... .... Movements in superannuation liability 85 (692) 16 (63) .... .... .... .... 101 (755) 101 (755) Other gains/(losses) (124) (41) (152) (91) (3) 26 .... .... (276) (133) (279) (107)
195 1 136 (134) (157) (3) 26 228 1 893 (147) (855) (170) (888)
equals Operating Result 172 1 153 (2) (16) 20 59 228 1 893 (38) (697) (38) (697)
plus Other economic flows – Other movements in equity Revaluations of non-financial assets (807) 387 129 (272) .... .... .... .... (678) 116 (678) 116 Other non-owner movements in equity 120 (14) 22 1 963 .... .... .... (48) 142 1 997 142 1 997
(688) 373 152 1 691 .... .... .... (48) (536) 2 112 (536) 2 112
equals Comprehensive Result (515) 1 527 149 1 675 20 59 228 1 845 (574) 1 416 (574) 1 416
2010-11 Treasurer’s Annual Financial Report 55
Note 2 Disaggregated Information (continued) – Statement of Comprehensive Income by Sector General Government
Sector Public Non-Financial Corporations Sector
Public Financial Corporations Sector
Inter-sector Eliminations
Total Non-Financial Public Sector
Total State Sector
2010-11 2009-10 2010-11 2009-10 2010-11 2009-10 2010-11 2009-10 2010-11 2009-10 2010-11 2009-10 $m $m $m $m $m $m $m $m $m $m $m $m
KEY FISCAL AGGREGATES NET OPERATING BALANCE (23) 18 132 141 23 33 .... .... 109 158 132 192 less Net acquisition of non-financial assets
Purchase of non-financial assets 721 607 598 716 .... 1 .... .... 1 319 1 323 1 319 1 324 less Sale of non-financial assets 62 69 15 40 .... .... .... .... 77 109 77 109 less Depreciation 236 229 335 311 1 .... .... .... 571 539 572 540
423 309 247 365 .... 1 .... .... 670 675 670 675
Equals FISCAL BALANCE – SURPLUS/(DEFICIT) (446) (291) (115) (224) 24 32 .... .... (561) (517) (538) (483)
2010-11 Treasurer’s Annual Financial Report 56
Note 2 Disaggregated Information (continued) – Statement of Financial Position as at 30 June by Sector General Government
Sector Public Non-Financial Corporations Sector
Public Financial Corporations Sector
Inter-sector Eliminations
Total Non-Financial Public Sector
Total State Sector
2010-11 2009-10 2010-11 2009-10 2010-11 2009-10 2010-11 2009-10 2010-11 2009-10 2010-11 2009-10 $m $m $m $m $m $m $m $m $m $m $m $m
Assets Financial Assets
Cash and deposits 628 966 203 200 1 2 693 1 020 831 1 166 139 147 Investments 56 56 18 43 7 862 6 070 2 840 2 866 74 97 5 096 3 303 Equity investments: PNFC and PFC sectors 6 178 5 950 .... .... .... .... 6 178 5 950 330 310 .... .... Other equity investments 4 3 18 138 114 102 .... .... 21 141 136 243 Receivables 216 214 454 351 27 13 6 2 665 563 691 576 Other financial assets 1 031 913 975 953 87 170 1 298 1 270 708 602 795 767
8 113 8 102 1 668 1 685 8 092 6 357 11 015 11 108 2 629 2 879 6 858 5 036
Non-financial assets Land and buildings 5 897 5 219 351 282 .... .... .... .... 6 248 5 501 6 248 5 501 Infrastructure 3 787 4 837 9 786 9 331 .... .... .... .... 13 573 14 168 13 573 14 168 Plant and equipment 224 216 228 213 1 1 .... .... 452 429 453 430 Heritage and cultural assets 442 553 .... .... .... .... .... .... 442 553 442 553 Biological assets .... .... 232 319 .... .... .... .... 232 319 232 319 Investment property 12 13 .... .... 15 16 .... .... 12 13 28 29 Goodwill .... .... 55 55 .... .... .... .... 55 55 55 55 Intangible assets 34 34 93 72 1 .... .... .... 127 106 128 106 Assets held for sale 28 21 5 11 .... .... .... .... 33 32 33 32 Other non-financial assets 35 37 133 112 .... .... .... .... 168 149 168 149
10 459 10 930 10 882 10 394 17 17 .... .... 21 341 21 324 21 358 21 341
Total Assets 18 573 19 031 12 550 12 079 8 109 6 374 11 015 11 108 23 970 24 203 28 216 26 377 Liabilities
Borrowings 269 274 2 946 2 764 6 819 5 218 3 490 3 844 3 214 3 037 6 544 4 411 Superannuation 4 966 4 860 631 633 3 3 .... .... 5 597 5 493 5 600 5 497 Employee entitlements 488 461 104 104 1 1 1 .... 592 566 593 567 Payables 97 122 310 241 2 3 6 2 401 362 404 365 Other liabilities 261 248 2 710 2 696 952 840 1 341 1 313 1 674 1 680 2 583 2 471
Total Liabilities 6 081 5 966 6 702 6 439 7 778 6 065 4 837 5 158 11 478 11 137 15 724 13 312
Net Assets 12 492 13 065 5 848 5 640 330 310 6 178 5 950 12 492 13 065 12 492 13 065
Equity
Accumulated funds 8 791 8 557 1 949 1 837 320 300 2 957 2 692 8 113 8 012 8 103 8 002 Asset revaluation reserve 3 701 4 508 699 570 .... .... .... .... 4 400 5 078 4 400 5 078 Equity transfers .... .... 3 221 3 258 .... .... 3 221 3 258 …. …. .... .... Other reserves .... .... (21) (25) 10 10 .... .... (21) (25) (11) (15)
Total Equity 12 492 13 065 5 848 5 640 330 310 6 178 5 950 12 492 13 065 12 492 13 065
2010-11 Treasurer’s Annual Financial Report 57
Note 2 Disaggregated Information (continued) – Statement of Financial Position as at 30 June by Sector General Government
Sector Public Non-Financial Corporations Sector
Public Financial Corporations Sector
Inter-sector Eliminations
Total Non-Financial Public Sector
Total State Sector
2010-11 2009-10 2010-11 2009-10 2010-11 2009-10 2010-11 2009-10 2010-11 2009-10 2010-11 2009-10 $m $m $m $m $m $m $m $m $m $m $m $m
KEY FISCAL AGGREGATES
NET WORTH 12 492 13 065 5 848 5 640 330 310 6 178 5 950 12 492 13 065 12 492 13 065
NET FINANCIAL WORTH 2 032 2 135 (5 034) (4 754) 313 293 6 178 5 950 (8 849) (8 259) (8 866) (8 276) NET FINANCIAL LIABILITIES 4 146 3 814 5 034 4 754 (313) (293) .... .... 9 180 8 569 8 866 8 276 NET DEBT (416) (748) 2 725 2 522 (1 044) (854) (44) (43) 2 310 1 774 1 309 962
2010-11 Treasurer’s Annual Financial Report 58
Note 2 Disaggregated Information (continued) – Statement of Cash Flows by Sector General Government
Sector Public Non-Financial Corporations Sector
Public Financial Corporations Sector
Inter-sector Eliminations
Total Non-Financial Public Sector
Total State Sector
2010-11 2009-10 2010-11 2009-10 2010-11 2009-10 2010-11 2009-10 2010-11 2009-10 2010-11 2009-10 $m $m $m $m $m $m $m $m $m $m $m $m
Cash flows from operating activities Cash infow
Taxation 847 867 .... .... .... .... 42 42 805 825 805 825 Sales of goods and services 311 291 3 241 2 913 152 147 33 47 3 521 3 160 3 671 3 305 Grants received 3 184 3 130 150 150 .... .... 150 129 3 185 3 152 3 183 3 151 Dividend, tax and rate equivalent income 126 106 .... .... 64 31 126 106 43 55 64 31 Fines and regulatory fees 86 86 .... .... .... .... 1 .... 85 86 85 86 Interest received 41 44 13 10 415 280 199 194 55 54 270 140 Other receipts 383 291 205 162 8 3 1 .... 586 453 594 456
4 977 4 817 3 609 3 236 639 460 552 518 8 281 7 786 8 672 7 995 Cash outflow
Employee entitlements (2 046) (1 958) (304) (360) (3) (3) .... .... (2 349) (2 318) (2 352) (2 321) Superannuation (305) (304) (62) (51) .... .... .... .... (366) (355) (367) (355) Supplies and consumables (1 016) (933) (2 298) (2 033) (101) (100) (31) (31) (3 284) (2 937) (3 383) (3 034) Grant and subsidy paid (931) (929) (35) (23) (2) (1) (679) (141) (819) (812) (819) (812) Borrowing costs (15) (17) (187) (160) (310) (335) 308 (212) (179) (159) (289) (301) Other payments (269) (256) (166) (158) (8) (7) (23) (28) (412) (387) (420) (394)
(4 581) (4 397) (3 050) (2 786) (423) (446) (426) (412) (7 409) (6 968) (7 629) (7 217)
Net cash flows from operating activities 395 420 558 450 216 15 126 106 871 818 1 043 778
Cash flows from investing activities Non-financial assets
Purchases of non-financial assets (720) (607) (598) (716) .... (1) .... .... (1 318) (1 323) (1 318) (1 324) Sales of non-financial assets 62 69 15 40 .... .... .... .... 77 109 77 109
(658) (538) (582) (676) .... (1) .... .... (1 241) (1 214) (1 241) (1 215) Financial assets (policy purposes)
Equity injections (58) (111) 59 111 .... .... .... .... .... .... .... .... Net advances paid (9) (11) .... .... .... .... .... 1 (9) (12) (9) (12)
(67) (122) 59 111 .... .... .... 1 (9) (12) (9) (12) Financial assets (liquidity management purposes)
Net purchase/(sale) of investments (1) 1 11 (20) (1 232) 104 (39) (66) 10 (19) (1 183) 151
(1) 1 11 (20) (1 232) 104 (39) (66) 10 (19) (1 183) 151
Net cash flows from investing activities (726) (659) (513) (586) (1 233) 103 (39) (65) (1 239) (1 246) (2 433) (1 077) Cash flows from financing activities
Net borrowing (4) (22) 40 81 2 081 (826) 37 66 36 60 2 079 (833) Dividend, tax and rate equivalent payments .... .... (103) (68) (43) (54) (126) (106) (21) (16) (21) (16) Other financing (1) .... .... 32 .... .... .... (1) (1) 32 (1) 32
(5) (22) (63) 45 2 037 (880) (88) (42) 14 76 2 057 (817)
2010-11 Treasurer’s Annual Financial Report 59
Note 2 Disaggregated Information (continued) – Statement of Cash Flows by Sector General Government
Sector Public Non-Financial Corporations Sector
Public Financial Corporations Sector
Inter-sector Eliminations
Total Non-Financial Public Sector
Total State Sector
2010-11 2009-10 2010-11 2009-10 2010-11 2009-10 2010-11 2009-10 2010-11 2009-10 2010-11 2009-10 $m $m $m $m $m $m $m $m $m $m $m $m
Net Increase/(decrease) in cash held (338) (261) (18) (92) 1 020 (763) (1) .... (354) (352) 667 (1 115) Cash and cash equivalents at beginning of the year 966 1 227 234 326 373 1 136 .... .... 1 201 1 553 1 574 2 689 Cash and cash equivalents at end of the year 628 966 216 234 1 393 373 .... .... 847 1 201 2 241 1 574 KEY FISCAL AGGREGATES Net cash from operating activities 395 420 558 450 216 15 126 106 871 818 1 043 778 plus Dividend, income tax and rate equivalent payments .... .... (103) (68) (43) (54) (126) (106) (21) (16) (21) (16) plus Net cash flows from non-financial assets (658) (538) (582) (676) .... (1) .... .... (1 241) (1 214) (1 241) (1 215)
Equals CASH SURPLUS/(DEFICIT) (263) (118) (127) (294) 172 (41) 1 .... (390) (412) (219) (453)
60 2010-11 Treasurer’s Annual Financial Report
2010-11 Treasurer’s Annual Financial Report 61
Note 3 Revenue from transactions
3.1 Grants
General Government Total State
2010-11 2010-11 2009-10 2010-11 2009-10
Original
Budget
Actual
Actual
Actual
Actual
$m $m $m $m $m
Australian Government sources:
General purpose payments 1 761 1 653 1 639 1 653 1 639
Specific purpose payments 609 618 580 618 580
National partnership payments 501 791 769 791 769
Other grants and subsidies 40 129 122 128 141
2 911 3 191 3 110 3 190 3 129
62 2010-11 Treasurer’s Annual Financial Report
3.2 Taxation revenue
General Government Total State
2010-11 2010-11 2009-10 2010-11 2009-10
Original
Budget
Actual
Actual
Actual
Actual
$m $m $m $m $m
Payroll tax 281 286 271 258 247
Taxes on property
Land tax 77 75 91 75 91
Fire service levies
Fire service contribution 31 31 30 31 30
Insurance levy 16 16 17 16 17
Government guarantee fees 24 24 18 …. ….
Taxes on financial and capital transactions 170 145 163 145 163
Taxes on the provision of goods and services
Gambling taxes
Casino tax and licence fees 59 59 59 59 59
Betting exchange taxes and levies 2 4 7 4 7
Lottery tax 25 25 27 25 27
Totalizator wagering levy 6 6 6 6 6
Insurance duty 49 49 47 49 47
Taxes on the use of goods and services
Vehicle registration fees 30 33 31 33 31
Motor vehicle fees and taxes
Motor vehicle duty 39 38 39 38 39
Motor tax 60 62 59 62 59
Motor vehicle fire levy 6 6 6 6 6
876 860 872 808 829
3.3 Sales of goods and services
General Government Total State
2010-11 2010-11 2009-10 2010-11 2009-10
Original
Budget
Actual
Actual
Actual
Actual
$m $m $m $m $m
Sales of goods 37 39 38 468 431
Sales of services 259 186 178 2 784 2 508
Rental income 74 78 73 94 83
370 303 289 3 345 3 021
2010-11 Treasurer’s Annual Financial Report 63
3.4 Fines and regulatory fees
General Government Total State
2010-11 2010-11 2009-10 2010-11 2009-10
Original
Budget
Actual
Actual
Actual
Actual
$m $m $m $m $m
Fines 33 26 36 26 36
Fees
Abalone licences 7 7 7 7 7
Environment fees 3 4 4 4 4
Drivers’ licences 8 6 9 6 9
Photo licence fees 2 1 …. 1 ….
Road safety levy 9 10 10 10 10
Quarantine fees 2 2 2 2 2
Other fees 25 29 30 28 30
89 84 97 84 97
3.5 Dividend, tax and rate equivalent revenue
General Government Total State
2010-11 2010-11 2009-10 2010-11 2009-10
Original
Budget
Actual
Actual
Actual
Actual
$m $m $m $m $m
Returns from the PNFC and PFC sectors
Dividend revenue 68 82 53 …. ….
Income tax equivalents 78 74 23 …. ….
Rates equivalents 3 3 3 …. ….
Other dividend revenue …. …. …. 64 31
149 159 79 64 31
64 2010-11 Treasurer’s Annual Financial Report
3.6 Other revenue
General Government Total State
2010-11 2010-11 2009-101 2010-11 2009-101
Original
Budget
Actual
Actual
Actual
Actual
$m $m $m $m $m
Royalty income 39 49 39 49 39
Other revenue by entity 2
Health and Human Services 31 29 33 29 33
Police 6 13 14 13 14
Justice 8 11 11 11 11
Finance-General 1 10 3 10 3
Primary Industries, Parks, Water and Environment 8 6 3 6 3
Infrastructure, Energy and Resources 1 5 4 5 4
Water and sewerage corporations .... .... .... 11 2
Aurora Energy Pty Ltd .... .... .... 9 9
Other 26 5 3 19 36
121 129 109 163 153
Notes: 1. The 2009-10 comparatives have been reclassified. This amendment has had no impact on the financial results. 2. Information in this section may differ from Other Revenue disclosed in individual entity financial statements due to
elimination and classification differences.
2010-11 Treasurer’s Annual Financial Report 65
Note 4 Expenses from transactions
4.1 Employee expenses
General Government Total State
2010-11 2010-11 2009-10 2010-11 2009-10
Original
Budget
Actual
Actual
Actual
Actual
$m $m $m $m $m
Salaries and wages 1 976 1 896 1 784 2 304 2 155
Annual leave n/a 106 99 128 117
Long service leave 14 41 39 48 46
Fringe benefits tax 4 6 5 10 8
Other 13 22 30 22 31
2 007 2 070 1 957 2 513 2 358
4.2 Depreciation
General Government Total State
2010-11 2010-11 2009-10 2010-11 2009-10
Original
Budget
Actual
Actual
Actual
Actual
$m $m $m $m $m
Depreciation in respect of:
Buildings 91 93 87 98 91
Plant and equipment 60 47 45 85 82
Infrastructure 97 93 93 370 349
Other .... 3 4 19 18
249 236 229 572 540
66 2010-11 Treasurer’s Annual Financial Report
4.3 Grant and subsidy expenses
General Government Total State
2010-11 2010-11 2009-101 2010-11 2009-101
Original
Budget
Actual
Actual
Actual
Actual
$m $m $m $m $m
Grants to local government sector 87 88 91 88 91
Payments to School bus operators 44 40 41 40 41
Grants to non-government schools
Australian Government funded 191 203 226 203 226
State Government funded 49 52 49 52 49
Capital assistance 1 1 1 1 1
241 256 277 256 277
Grants to PNFC Sector entities
Tasracing Pty Ltd 26 27 27 …. ….
Tasmanian Railway Pty Ltd 19 15 …. …. ….
Aurora Energy Pty Ltd 33 33 23 …. ….
Metro Tasmania Pty Ltd 35 33 32 …. ….
Forestry Tasmania 2 …. 20 …. ….
Water and sewerage corporations 26 19 16 …. ….
Other payments 21 19 13 …. ….
160 146 131 …. ….
Department of Health and Human Services grants
Disability services n/a 103 92 103 92
Home and community care n/a 36 33 36 33
Community support n/a 24 10 24 10
Supported accommodation assistance n/a 17 16 17 16
Other grants n/a 59 41 59 41
237 239 192 239 192
Other grants by agency
Economic Development 58 54 50 54 50
Finance-General 24 25 53 25 53
Infrastructure 22 22 20 22 20
Aurora Energy Pty Ltd …. …. …. 33 23
Other agencies 7 83 81 83 81
112 184 204 217 227
880 952 935 841 826
Note: 1. The 2009-10 comparatives have been reclassified. This amendment has had no impact on the financial results.
2010-11 Treasurer’s Annual Financial Report 67
4.4 Supplies and consumables
General Government Total State
2010-11 2010-11 2009-101 2010-11 2009-101
Original
Budget
Actual
Actual
Actual
Actual
$m $m $m $m $m
Consultants 21 37 39 76 81
Property services 145 153 148 144 138
Maintenance 126 142 140 243 198
Communications 53 38 40 54 53
Information technology 69 52 62 69 80
Travel and transport 40 34 27 51 49
Medical, surgical and pharmacy supplies 164 182 174 182 174
Advertising and promotion 21 18 19 38 36
Operating lease costs 12 34 31 54 41
Other supplies and consumables 277 265 254 647 652
Cost of sales …. 2 …. 1 301 1 192
Tasmanian Risk Management Fund 64 35 38 35 38
992 991 973 2 893 2 731
Note: 1. The 2009-10 comparatives have been reclassified. This amendment has had no impact on the financial results.
4.5 Dividend, tax and rate equivalent expenses1
General Government Total State
2010-11 2010-11 2009-10 2010-11 2009-10
Original
Budget
Actual
Actual
Actual
Actual
$m $m $m $m $m
Water and Sewerage Corporations
dividend payment to Local Councils …. …. …. 14 14
…. …. …. 14 14
Note: 1. In accordance with section 32 of the Water and Sewerage Corporations Act 2008, dividends are to be determined
by the Board of each water and sewerage entity during the financial year and payments are made, following the Treasurer’s allocation order, to the stakeholders.
68 2010-11 Treasurer’s Annual Financial Report
Note 5 Other economic flows
5.1 Gain/(loss) on sale of non-financial assets
General Government Total State
2010-11 2010-11 2009-10 2010-11 2009-10
Original
Budget
Actual
Actual
Actual
Actual
$m $m $m $m $m
Proceeds on disposal 59 62 69 77 109
Written down value of assets sold (42) (56) (93) (69) (135)
17 6 (24) 8 (26)
5.2 Other gains/(losses) included in Operating Result
General Government Total State
2010-11 2010-11 2009-10 2010-11 2009-10
Original
Budget
Actual
Actual
Actual
Actual
$m $m $m $m $m
Assets acquired below fair value …. 10 21 8 31
Non-financial asset revaluation movements 12 (118) (23) (199) (153)
Other revaluation movements …. (79) …. (79) 103
Amortisation (5) (5) (3) (23) (19)
Bad debt written off …. (1) (1) (2) (2)
Movement in deferred tax assets …. 69 (36) …. ….
Forestry Tasmania establishment of obligations for
non-commercial zones …. …. …. 9 (66)
Other gains/(losses) …. …. …. 7 (1)
7 (124) (41) (279) (107)
2010-11 Treasurer’s Annual Financial Report 69
Note 6 Assets
6.1 Investments
General Government Total State
2010-11 2010-11 2009-10 2010-11 2009-10
Original
Budget
Actual
Actual
Actual
Actual
$m $m $m $m $m
Loan advances 73 54 50 199 141
Government and institutional securities 7 3 6 4 897 3 162
80 56 56 5 096 3 303
Settled within 12 months 30 17 16 3 982 2 156
Settled in more than 12 months 50 39 39 1 115 1 147
80 56 56 5 096 3 303
6.2 Equity investments
General Government Total State
2010-11 2010-11 2009-10 2010-11 2009-10
Original
Budget
Actual
Actual
Actual
Actual
$m $m $m $m $m
Equity investment in PNFC and PFC sectors 6 265 6 178 5 950 …. ….
MAIB equity investments …. …. …. 114 102
Hydro investment in joint venture …. …. …. …. 122
Other equity investments 6 4 3 21 19
6 270 6 182 5 953 136 243
During 2010-11, the Government provided equity contributions to the following Government businesses:
Tasmanian Railway Pty Ltd $38 million;
Rivers and Water Supply Commission $15 million;
Aurora Energy Pty Ltd $5 million; and
Tasmanian Ports Corporation Pty Ltd $1 million.
70 2010-11 Treasurer’s Annual Financial Report
The equity investment in the PNFC and PFC Sectors is comprised of the following values at 30 June 2010
and 30 June 2011. Note original Budget information is not presented:
General Government
2011
Actual
2010
Actual
$m $m
Public Non-Financial Corporations Sector
State-owned Companies
Aurora Energy Pty Ltd 561 496
Metro Tasmania Pty Ltd 33 33
Tasmanian Ports Corporation Pty Ltd 181 123
Tasmanian Railway Pty Ltd 82 72
Tasracing Pty Ltd 50 53
TOTE Tasmania Pty Ltd 9 9
Transend Networks Pty Ltd 623 564
TT-Line Company Pty Ltd 256 249
Government Business Enterprises
Forestry Tasmania 1 187 327
Hydro Tasmania 2 013 1 882
Port Arthur Historic Site Management Authority 15 14
Private Forests Tasmania 1 1
Public Trustee 5 4
Rivers and Water Supply Commission 65 63
Water and Sewerage Corporations 2
Tasmanian Water and Sewerage Corporation (Northern-Region) Pty Ltd 1 495 489
Tasmanian Water and Sewerage Corporation (North-Western-Region) Pty Ltd 1 328 327
Tasmanian Water and Sewerage Corporation (Southern-Region) Pty Ltd 1 944 933
Public Financial Corporations Sector
Government Business Enterprises
Motor Accidents Insurance Board 289 271
Tasmanian Public Finance Corporation 41 38
6 178 5 950
Notes: 1. As part of the consolidation process, Government grants received in advance liabilities have been removed. As a
result, the value of net assets will be different to that disclosed in the individual entity financial statements. 2. The three regional water and sewerage corporations hold an equity investment in the Tasmanian Water and
Sewerage Corporation (Common Services) Pty Ltd. As a result of the consolidation process, this entity is not included in the above table.
2010-11 Treasurer’s Annual Financial Report 71
6.3 Receivables
General Government Total State
2010-11 2010-11 2009-101 2010-11 2009-101
Original
Budget
Actual
Actual
Actual
Actual
$m $m $m $m $m
Trade receivables 213 214 209 515 460
Less Provision for impairment (38) (14) (24) (58) (31)
Less Provision for fine remissions …. (8) …. (8) ….
175 192 185 449 429
Accrued revenue 16 11 12 223 124
GST receivable 13 12 17 20 22
29 24 29 242 146
204 216 214 691 576
Settled within 12 months 203 189 187 666 537
Settled in more than 12 months 1 27 27 26 39
204 216 214 691 576
Note: 1. The 2009-10 comparatives have been reclassified. This amendment has had no impact on the financial results.
6.4 Other financial assets
General Government Total State
2010-11 2010-11 2009-101 2010-11 2009-101
Original
Budget
Actual
Actual
Actual
Actual
$m $m $m $m $m
Basslink financial asset …. …. …. 483 426
Basslink security deposit …. …. …. 50 50
Deferred tax assets to mirror PNFC/PFC sectors 1 154 1 013 898 37 33
Derivative financial instruments receivable …. …. …. 154 170
Gas supply contracts …. …. …. 31 33
Prepayments 12 17 14 26 41
Other 1 1 1 14 13
1 167 1 031 913 795 767
Settled within 12 months 13 18 15 240 268
Settled in more than 12 months 1 154 1 013 899 555 499
1 167 1 031 913 795 767
Note: 1. The 2009-10 comparatives have been reclassified. This amendment has had no impact on the financial results.
72 2010-11 Treasurer’s Annual Financial Report
6.5 Land and buildings
General Government Total State
2010-11 2010-11 2009-10 2010-11 2009-10
Original
Budget
Actual
Actual
Actual
Actual
$m $m $m $m $m
Land
Land at fair value 1 804 2 060 1 889 2 164 1 964
Land at cost …. …. …. 2 16
1 804 2 060 1 889 2 166 1 980
Buildings
Buildings at fair value 3 812 3 402 3 144 3 541 3 236
Buildings at cost …. 489 268 626 402
Less Accumulated depreciation …. (53) (80) (83) (116)
3 812 3 837 3 331 4 078 3 522
5 616 5 897 5 219 6 248 5 501
6.6 Infrastructure
General Government Total State
2010-11 2010-11 2009-10 2010-11 2009-10
Original
Budget
Actual
Actual
Actual
Actual
$m $m $m $m $m
Infrastructure at fair value 5 041 5 515 4 737 17 187 15 898
Infrastructure at cost …. 205 186 1 372 1 159
Less Accumulated depreciation …. (1 932) (86) (4 986) (2 889)
5 041 3 787 4 837 13 573 14 168
6.7 Plant and equipment
General Government Total State
2010-11 2010-11 2009-10 2010-11 2009-10
Original
Budget
Actual
Actual
Actual
Actual
$m $m $m $m $m
Plant and equipment at fair value …. 13 …. 45 36
Plant and equipment at cost 220 441 434 805 749
Less Accumulated depreciation …. (231) (218) (398) (355)
220 224 216 453 430
2010-11 Treasurer’s Annual Financial Report 73
6.8 Heritage and cultural assets
General Government Total State
2010-11 2010-11 2009-10 2010-11 2009-10
Original
Budget
Actual
Actual
Actual
Actual
$m $m $m $m $m
Tasmanian Museum and Art Gallery collection at
fair value 413 371 487 371 487
Other heritage and cultural assets at fair value 56 70 66 70 66
468 442 553 442 553
6.9 Biological assets
General Government Total State
2010-11 2010-11 2009-10 2010-11 2009-10
Original
Budget
Actual
Actual
Actual
Actual
$m $m $m $m $m
Standing timber at valuation .... .... .... 146 248
Joint venture timber resource at valuation .... .... .... 86 71
.... .... .... 232 319
74 2010-11 Treasurer’s Annual Financial Report
6.10 Reconciliation of non-current assets
General Government Sector
Land and
buildings
Infra-
structure
Plant and
equipment
Heritage
and
cultural Total
$m $m $m $m $m
2011
Carrying amount at 1 July 2010 5 219 4 837 216 553 10 826
Additions 528 192 86 1 806
Disposals (35) (61) (26) …. (123)
Revaluation increments/(decrements) 294 (1 090) …. (112) (908)
Transfers in/(out) 7 …. (1) …. 6
Depreciation (96) (93) (45) …. (234)
Impairment losses (3) (30) …. …. (33)
Other (16) 30 (6) …. 8
Carrying amount at 30 June 2011 5 897 3 787 224 442 10 350
2010
Carrying amount at 1 July 2009 4 807 4 641 213 447 10 108
Additions 399 223 78 1 701
Disposals (80) (30) (23) …. (133)
Revaluation increments/(decrements) 169 96 …. 106 370
Transfers in/(out) (18) …. …. …. (19)
Depreciation (88) (93) (44) …. (225)
Impairment losses (8) …. …. …. (8)
Other 39 …. (6) …. 33
Carrying amount at 30 June 2010 5 219 4 837 216 553 10 826
2010-11 Treasurer’s Annual Financial Report 75
6.10 Reconciliation of non-current assets (continued)
Total State Sector
Land and
buildings
Infra-
structure
Plant and
equipment
Heritage
and
cultural
Biological
assets Total
$m $m $m $m $m $m
2011
Carrying amount at 1 July 2010 5 501 14 168 430 553 319 20 971
Additions 590 894 136 1 8 1 629
Disposals (36) (67) (30) …. …. (134)
Revaluation
increments/(decrements) 313 (968) …. (112) (95) (862)
Transfers in/(out) 10 (4) (1) …. …. 6
Depreciation (105) (381) (85) …. …. (571)
Impairment losses (2) (100) …. …. …. (101)
Other (23) 30 2 …. …. 10
Carrying amount at 30 June 2011 6 248 13 573 453 442 232 20 947
2010
Carrying amount at 1 July 2009 5 302 11 849 381 447 385 18 363
Transfers to water and sewerage
corporations
52 1 853 12 …. …. 1 917
Additions 425 869 171 .... 8 1 474
Disposals (83) (37) (34) .... .... (154)
Revaluation
increments/(decrements) 111 61 2 106 (74) 206
Transfers in/(out) (97) (363) (79) .... .... (539)
Depreciation (225) 22 (2) .... .... (205)
Impairment losses (24) (2) (4) .... .... (29)
Other 39 (85) (16) .... .... (62)
Carrying amount at 30 June 2010 5 501 14 168 430 553 319 20 971
6.11 Investment property
General Government Total State
2010-11 2010-11 2009-10 2010-11 2009-10
Original
Budget
Actual
Actual
Actual
Actual
$m $m $m $m $m
Land 11 5 7 5 7
Buildings …. 8 6 23 22
11 12 13 28 29
76 2010-11 Treasurer’s Annual Financial Report
6.12 Intangible assets
General Government Total State
2010-11 2010-11 2009-101 2010-11 2009-101
Original
Budget
Actual
Actual
Actual
Actual
$m $m $m $m $m
Carrying amount
Intangible assets 32 51 46 235 192
Less Accumulated amortisation (5) (17) (12) (108) (86)
27 34 34 128 106
Reconciliation of movements
Carrying amount 1 July 29 34 29 106 90
Additions 3 5 9 45 36
Disposals …. …. …. (1) (1)
Amortisation expense (5) (5) (5) (23) (19)
Carrying amount 30 June 27 34 34 128 106
Note: 1. The 2009-10 comparatives have been reclassified. This amendment has had no impact on the financial results.
6.13 Assets held for sale
General Government Total State
2010-11 2010-11 2009-10 2010-11 2009-10
Original
Budget
Actual
Actual
Actual
Actual
$m $m $m $m $m
Land 5 21 15 21 16
Buildings 6 6 5 9 9
Plant and equipment 1 1 1 3 2
Infrastructure .... …. .... .... 5
12 28 21 33 32
Settled within 12 months 12 28 21 33 32
12 28 21 33 32
2010-11 Treasurer’s Annual Financial Report 77
6.14 Other non-financial assets
General Government Total State
2010-11 2010-11 2009-10 2010-11 2009-10
Original
Budget
Actual
Actual
Actual
Actual
$m $m $m $m $m
Inventory 17 16 16 148 129
Library book stock …. 19 20 19 20
Other 21 …. …. …. ....
39 35 37 168 149
Settled within 12 months 17 16 16 148 129
Settled in more than 12 months 21 19 20 19 20
39 35 37 168 149
78 2010-11 Treasurer’s Annual Financial Report
Note 7 Liabilities
7.1 Borrowings
General Government Total State
2010-11 2010-11 2009-10 2010-11 2009-10
Original
Budget
Actual
Actual
Actual
Actual
$m $m $m $m $m
Domestic and foreign borrowings 105 52 50 6 321 4 188
Australian Government debt 217 218 223 218 223
Finance leases …. …. …. 6 1
323 269 274 6 545 4 411
Settled within 12 months 54 27 16 3 812 1 200
Settled in more than 12 months 269 242 258 2 733 3 213
323 269 274 6 545 4 411
7.2 Employee entitlements
General Government Total State
2010-11 2010-11 2009-10 2010-11 2009-10
Original
Budget
Actual
Actual
Actual
Actual
$m $m $m $m $m
Accrued salaries and wages 43 40 34 44 39
Annual leave 136 129 120 172 161
Long service leave 300 306 294 360 347
Other employee entitlements 12 13 13 17 19
491 488 461 593 567
Settled within 12 months 228 203 218 285 295
Settled in more than 12 months 264 285 244 308 270
491 488 461 593 567
2010-11 Treasurer’s Annual Financial Report 79
7.3 Payables
General Government Total State
2010-11 2010-11 2009-101 2010-11 2009-101
Original
Budget
Actual
Actual
Actual
Actual
$m $m $m $m $m
Trade creditors 78 46 75 265 263
Accrued expenses 27 43 37 124 83
Other 13 9 11 15 19
118 97 122 404 365
Settled within 12 months 118 97 122 404 365
118 97 122 404 365
Note: 1. The 2009-10 comparatives have been reclassified. This amendment has had no impact on the financial results.
7.4 Other liabilities
General Government Total State
2010-11 2010-11 2009-101 2010-11 2009-101
Original
Budget
Actual
Actual
Actual
Actual
$m $m $m $m $m
Basslink facility swap fee …. …. …. 187 215
Basslink services agreement …. …. …. 851 841
Deferred tax liabilities …. …. …. 66 62
Derivatives …. …. …. 168 124
Obligation for non-commercial forest zones …. …. …. 57 66
Provision for outstanding and unreported claims in MAIB …. …. …. 766 707
Revenue received in advance 6 7 13 112 140
Risk management 145 166 162 166 161
Other 57 88 73 210 157
208 261 248 2 583 2 472
Settled within 12 months 78 123 123 631 584
Settled in more than 12 months 130 137 125 1 952 1 888
208 261 248 2 583 2 472
Note: 1. The 2009-10 comparatives have been reclassified. This amendment has had no impact on the financial results.
80 2010-11 Treasurer’s Annual Financial Report
7.5 Superannuation
(a) Type of Plan
The major schemes currently operating in the Tasmanian public sector that have an unfunded liability, are
those established under the Retirement Benefits Act 1993, the former Parliamentary
Superannuation Act 1973; the former Parliamentary Retiring Benefits Act 1985; and the Judges’
Contributory Pensions Act 1968.
In November 2002, Parliament approved legislation that repealed the Parliamentary Superannuation
Act 1973 and the Parliamentary Retiring Benefits Act 1985, with effect from 31 December 2002. The
scheme details have been reproduced as regulations made under the Retirement Benefits Act 1993,
namely the Retirement Benefits (Parliamentary Superannuation) Regulations 2002. This legislation made
the Parliamentary Superannuation Fund and the Parliamentary Retiring Benefits Fund sub-funds of the
Retirement Benefits Fund. As a consequence, the RBF Board became the trustee of these funds and the
Parliamentary Superannuation and Retiring Benefits Trust ceased to exist. This decision, which followed a
recommendation from the PSRBT, has not altered the benefits payable to PSF or PRBF members, but
provides administrative efficiencies and reduces costs.
These schemes, which are now all closed to new entrants, provide superannuation arrangements for public
sector employees generally, Members of Parliament, the judiciary and statutory legal officers.
Retirement Benefits Fund Scheme
The RBF Scheme was established under the Retirement Benefits Act 1970, but was continued under the
Retirement Benefits Act 1982 and the Retirement Benefits Act 1993. Scheme details are contained in the
Retirement Benefits Regulations 2005.
The RBF contributory scheme is an unfunded defined benefits scheme. Members contribute between
five per cent and 15 per cent of salary, and voluntary contributions and salary sacrifice may be made. This
scheme was closed to new entrants from 15 May 1999, with new employees appointed on or after that date
initially becoming members of the RBF non-contributory scheme.
The RBF non-contributory scheme was an unfunded accumulation (or defined contribution) scheme for
those employees not eligible to join the contributory scheme. The employer contributions in respect of
non-contributory employees were at the rate required by the Australian Government’s Superannuation
Guarantee (Administration) Act 1992. The scheme was closed on 25 April 2000 with the establishment of
the fully funded Tasmanian Accumulation Scheme to replace it.
Simultaneous with the introduction of the Retirement Benefits Regulations in 1994, the Superannuation
Provision Account was established in the Special Deposits and Trust Fund. Contributions by agencies and
certain statutory authorities in respect of the accruing liability in relation to current employees (12.3 per cent
of salary for contributory members and, until 25 April 2000, the appropriate Superannuation Guarantee rate
for non-contributory scheme members) have been credited to the Account, as have interest and
supplementary contributions from the Consolidated Fund to assist in meeting the unfunded liability.
Agencies have also been required to make a “gap” payment for all permanent employees appointed on or
after 15 May 1999. Employer contributions in respect of TAS members or members of other complying
superannuation schemes are paid directly to the RBF Board or the complying superannuation scheme.
Payments to the RBF to cover the employer liability component for pensioners and lump sum benefits with
respect to retiring employees are met from the SPA.
2010-11 Treasurer’s Annual Financial Report 81
An independent actuarial assessment is undertaken into the RBF Scheme as at 30 June each financial
year. In the valuation, the actuary includes liabilities of Government Business Enterprises, State-owned
Companies and other statutory authorities, as part of the overall RBF Scheme valuation.
The net liability as at 30 June 2011 is based upon the latest available actuarial assessment, which was
undertaken as at that date. The net liability takes into account funds under management with the RBF but
does not take into account the SPA balance.
The division between the current and non-current liability as at 30 June each year is based upon
anticipated superannuation expenditure during the ensuing financial year.
As a consequence of the Public Sector Superannuation Reform Act 1999, the RBF defined benefit scheme
was closed to new entrants with effect from 15 May 1999. New public sector employees appointed after
that date are now members of the fully funded TAS or an alternative complying superannuation scheme of
their choice. Thus, there are no liabilities pertaining to employees covered by these arrangements.
The following properties, controlled by the RBF, are included within the fair value of plan assets:
39 Sandy Bay Road, Hobart;
104 Hampton Road, Hobart;
21 Kirksway Place, Hobart; and
Stoney Rise, Devonport.
The RBF Board also administers three separate funds, Housing Tasmania’s Superannuation Scheme, the
Tasmanian Ambulance Service Superannuation Scheme and the State Fire Commission Superannuation
Scheme.
Parliamentary Superannuation Fund
The PSF is a defined benefit pension scheme established under the provisions of the former Parliamentary
Superannuation Act 1973, and continued under the Retirement Benefits (Parliamentary Superannuation)
Regulations 2002, and is the older of the two Parliamentary schemes in operation. The scheme was closed
to new members in 1985, but was maintained for parliamentarians who, having been first elected before
that date, were subsequently re-elected to Parliament after a period out of office. The 1999 reforms closed
this scheme to parliamentarians re-elected as described above and therefore no parliamentarians can
re-enter the scheme.
The PSF is a partially funded scheme, with the employer share of the benefits being met by the
Government on an emerging cost basis.
An actuarial valuation of the scheme was undertaken as at 30 June 2011.
Parliamentary Retiring Benefits Fund
The PRBF is a closed defined benefit lump sum scheme established under the provisions of the former
Parliamentary Retiring Benefits Act 1985 and continued under the Retirement Benefits (Parliamentary
Superannuation) Regulations 2002. The scheme covers those members of Parliament first elected after
12 November 1985 and before 1 July 1999. New parliamentarians elected after 1 July 1999 automatically
become members of TAS unless they elect to join a private complying superannuation scheme of their
choice.
The Government currently funds this scheme at the rate of 23.4 per cent of salary for each member of the
scheme, together with administration expenses. This is above the scheme design level of 22.5 per cent of
82 2010-11 Treasurer’s Annual Financial Report
salary, and arises from the recommendation of the actuary that the Government’s contribution be equal to
2.6 times member contributions.
An actuarial valuation of the scheme was undertaken as at 30 June 2011.
Judges’ Scheme
Superannuation arrangements for judges are specified in the Judges' Contributory Pensions Act 1968.
There is no Judges’ Superannuation Fund as such, with the contributions made by judges (at the rate of
five per cent of salary) being deposited into, and all benefits being met from, the Consolidated Fund.
The Judges’ Scheme is a defined benefit scheme that was closed to new entrants with effect from
1 July 1999. Prior to that date, the Solicitor-General, the Director of Public Prosecutions and the Master of
the Supreme Court were also members of this scheme. Judges and statutory legal officers appointed after
that date become members of TAS unless they elect to join a private complying superannuation scheme.
The Judges’ Scheme is an unfunded scheme in respect of employer contributions, with all the benefits
being met by the Government as liabilities on an emerging cost basis.
Housing Tasmania and Tasmanian Ambulance Service Superannuation Schemes
These two liabilities are recognised by the Department of Health and Human Services. Housing Tasmania
is required to meet the emerging cost of pension payments paid in respect of retired employees, where
those employees had a superannuation entitlement that accrued before 1 July 1994. The TASSS balances
reported are provided in respect of those employees who are defined benefit members.
State Fire Commission Superannuation Scheme
The State Fire Commission Superannuation Scheme is a defined benefit scheme held by the State Fire
Commission. It was established for permanent uniformed employees of the Tasmanian Fire Service. The
scheme was closed to new members on 30 June 2005 and amounts transferred to the RBF Board on
1 May 2006. Under the new arrangement, the trustee, fund administration and investment functions were
transferred. In the following tables, details regarding this scheme are presented as part of the total RBF
Scheme.
(b) Superannuation liability
General Government Total State
2011 2010 2011 2010
Actual
Actual
Actual
Actual
$m $m $m $m
Settled within 12 months 192 181 222 210
Settled in more than 12 months 4 774 4 679 5 378 5 287
4 966 4 860 5 600 5 497
2010-11 Treasurer’s Annual Financial Report 83
General Government
2011 Actual 2010 Actual
Present value
of liability
Fair value of
plan assets Total
Present value
of liability
Fair value of
plan assets Total
$m $m $m $m $m $m
Retirement Benefits Fund
Scheme 6 265 (1 370) 4 895 6 122 (1 330) 4 792
Tasmanian Ambulance Scheme 41 (37) 3 35 (33) 1
Housing Tasmania Scheme 12 .... 12 14 .... 14
Judges’ Contributory Scheme 35 .... 35 34 .... 34
Parliamentary Schemes 27 (8) 19 27 (7) 20
6 381 (1 415) 4 966 6 231 (1 371) 4 860
Total State
2011 Actual 2010 Actual
Present value
of liability
Fair value of
plan assets Total
Present value
of liability
Fair value of
plan assets Total
$m $m $m $m $m $m
Retirement Benefits Fund
Scheme 7 048 (1 520) 5 528 6 915 (1 489) 5 426
Tasmanian Ambulance Scheme 41 (37) 3 35 (33) 1
Housing Tasmania Scheme 12 .... 12 14 .... 14
Judges’ Contributory Scheme 35 .... 35 34 .... 34
Parliamentary Schemes 27 (8) 19 27 (7) 20
Other Schemes 13 (11) 1 12 (10) 2
7 177 (1 576) 5 600 7 036 (1 539) 5 497
(c) Key actuarial assumptions
2011 Actual 2010 Actual
Discount
rate
Expected
return on
plan assets
Expected
rate of salary
increases
Discount
rate
Expected
return on
plan assets
Expected
rate of salary
increases
% % % % % %
Retirement Benefits Fund
Scheme 5.5 7.5 4.5 5.4 7.0 4.5
Tasmanian Ambulance
Scheme 4.8 7.5 4.5 4.9 7.0 4.5
Housing Tasmania Scheme 5.3 7.0 4.5 5.4 7.0 4.5
Judges’ Contributory Scheme 5.6 .... 4.0 5.5 .... 4.0
Parliamentary Schemes 5.5 7.5 4.0 5.4 7.0 4.0
84 2010-11 Treasurer’s Annual Financial Report
(d) Reconciliation of movements in present value of superannuation liability
2010-11
General Government Total State
RBF
Parliament
Schemes Judges
Tas
Ambulance
Housing
Tas Total
PNFC/PFC
Sectors Total
$m $m $m $m $m $m $m $m
Balance as at 1 July 6 122 27 34 35 14 6 231 810 7 036
Current service cost 144 .... .... 2 .... 146 15 161
Interest cost 321 1 2 2 1 326 42 368
Contributions by plan
participants 50 .... .... 1 .... 52 5 57
Actuarial losses/(gains) (86) .... 2 3 (1) (83) (14) (97)
Benefits paid (272) (1) (2) (1) (1) (277) (40) (317)
Other (13) .... .... (1) .... (13) (21) (35)
Balance as at 30 June 6 265 27 35 41 12 6 381 796 7 176
2009-10
General Government Total State
RBF
Parliament
Schemes Judges
Tas
Ambulance
Housing
Tas Total
PNFC/PFC
Sectors Total
$m $m $m $m $m $m $m $m
Balance as at 1 July 5 218 28 31 33 14 5 323 706 6 028
Current service cost 114 .... .... 2 .... 116 14 130
Interest cost 289 2 2 2 1 295 40 335
Contributions by plan
participants 45 .... .... 1 .... 46 5 51
Actuarial losses/(gains) 752 2 3 (2) .... 755 50 805
Benefits paid (250) (5) (2) (1) (1) (258) (29) (287)
Other (46) .... .... .... .... (47) 24 (26)
Balance as at 30 June 6 122 27 34 35 14 6 231 810 7 036
2010-11 Treasurer’s Annual Financial Report 85
(e) Reconciliation of movements in plan assets
2010-11
General Government Total State
RBF
Parliament
Schemes Judges
Tas
Ambulance
Housing
Tas Total
PNFC/PFC
Sectors Total
$m $m $m $m $m $m $m $m
Balance as at 1 July 1 330 7 .... 33 .... 1 371 169 1 539
Expected return on plan
assets 92 .... .... 2 .... 94 11 106
Actuarial (losses)/gains 1 .... .... 1 .... 2 (4) (2)
Employer contributions 182 1 2 1 1 187 32 219
Contributions by plan
participants 50 .... (2) 1 .... 50 5 55
Benefits paid (272) (1) .... (1) (1) (275) (50) (325)
Other (13) .... .... (1) .... (13) (2) (15)
Balance as at 30 June 1 370 8 .... 37 .... 1 415 162 1 577
2009-10
General Government Total State
RBF
Parliament
Schemes Judges
Tas
Ambulance
Housing
Tas Total
PNFC/PFC
Sectors Total
$m $m $m $m $m $m $m $m
Balance as at 1 July 1 250 9 .... 30 .... 1 289 153 1 442
Expected return on plan
assets 83 1 .... 2 .... 86 11 97
Actuarial (losses)/gains 60 1 .... 1 .... 62 1 63
Employer contributions 185 1 .... 1 1 188 30 218
Contributions by plan
participants 45 .... .... 1 .... 46 5 51
Benefits paid (250) (5) .... (1) (1) (257) (40) (297)
Other (43) .... .... .... .... (44) 8 (36)
Balance as at 30 June 1 330 7 .... 33 .... 1 371 169 1 539
86 2010-11 Treasurer’s Annual Financial Report
(f) Return on plan assets
The estimated actual return on plan assets was $94 million for the General Government Sector and
$106 million for the Total State Sector. The difference between the expected return on plan assets and the
actual return on plan assets is recognised as an actuarial gain or loss.
The expected rate of return on plan assets is determined by weighting the expected long-term return for
each asset class by the target allocation of assets to each asset’s class and allowing for correlations of the
investment returns between asset classes. The returns used for each asset class are net of estimated
investment tax and investment fees. The allocation of assets is the same for both General Government and
Total State Sectors and is shown below
2010-11
Actual
2009-10
Actual
% %
Australian equities 25 26
Overseas equities 22 22
Fixed interest securities 13 12
Property, infrastructure and alternative assets 19 20
Other 21 20
100 100
(g) Funding arrangements
Employer contributions to the RBF in respect of defined benefit schemes are made on an emerging cost
basis. The General Government Sector expects to make a contribution to the defined benefit plans for the
next financial year of $188 million ($179 million for 2010). The Total State Sector expects to make a
contribution to the defined benefit plans for the next financial year of $218 million ($209 million for 2010).
(h) Amounts recognised in profit or loss
General Government Total State
2011 2010 2011 2010
Actual
Actual
Actual
Actual
$m $m $m $m
Expenses from transactions
Employer service cost 146 116 162 130
Nominal superannuation interest expense
Interest cost 326 295 368 335
Expected return on plan assets (94) (85) (106) (97)
232 208 262 238
Other Economic flows- Included in Operating Result
Actuarial (gains)/losses (85) 692 (95) 742
293 1 015 329 1 110
2010-11 Treasurer’s Annual Financial Report 87
Note 8 Commitments and contingencies
8.1 Schedule of commitments
By type
General Government Total State
2011 2010 2011 2010
Actual Actual Actual Actual
$m $m $m $m
Capital
Property, plant and equipment 172 225 337 421
Infrastructure 177 281 228 346
Other …. …. 35 43
349 505 600 810
Operating lease 365 433 786 799
Other commitments 515 605 907 999
1 229 1 543 2 293 2 608
Details of operating leases are provided in entity financial statements. A number of State Sector entities
lease property under operating leases. Lease rentals are generally based on negotiated agreements that
reflect the current market rent rates paid for comparable buildings. Entities also lease office equipment,
information technology and medical equipment.
Other commitments for the General Government Sector primarily relate to the miscellaneous grant
commitments for the Department of Health and Human Services of $383 million as at 30 June 2011.
Other Commitments for the Total State Sector also include $222 million for Aurora Energy Pty Ltd for
information technology services, water supply and maintenance agreements and purchases of renewable
energy certificates, and $120 million for Hydro Tasmania relating to pass through costs, energy
transmission charges and supply of goods and services.
88 2010-11 Treasurer’s Annual Financial Report
By maturity
General Government Total State
2011 2010 2011 2010
Actual Actual Actual Actual
$m $m $m $m
Capital
Not later than 1 year 291 434 478 629
Later than 1 year and no later than 5 years 58 71 122 175
Later than 5 years …. …. …. 5
349 505 600 810
Operating lease
Not later than 1 year 105 99 164 160
Later than 1 year and no later than 5 years 183 248 375 423
Later than 5 years 77 85 247 216
365 433 786 799
Other commitments
Not later than 1 year 290 253 406 356
Later than 1 year and no later than 5 years 215 336 392 510
Later than 5 years 11 15 108 133
515 605 907 999
2010-11 Treasurer’s Annual Financial Report 89
8.2 Contingent assets and liabilities
Contingent assets and liabilities are not recognised in the Statement of Financial Position due to uncertainty
regarding the amount or timing of the underlying claim or obligation.
Quantifiable contingencies
A quantifiable contingent asset is a possible asset that arises from past events and whose existence will be
confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly
within the control of the entity.
A quantifiable contingent liability is a possible obligation that arises from past events and the existence of
which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events
not wholly within the control of the entity; or a present obligation that arises from past events but is not
recognised because it is not probable that an outflow of resources embodying economic benefits will be
required to settle the obligation. Contingent liabilities represent items that, at 30 June 2011, are not
recognised in the Statement of Financial Position because there is significant uncertainty at that date as to
the necessity for the State to receive or make payments in respect of them. Following are details of the
more significant of these contingent liabilities. Reference should be made to individual entity financial
statements for additional information.
2011 2010
GGS PNFC PFC Total1 GGS PNFC PFC Total1
$m $m $m $m $m $m $m $m
Assets
Community Housing 53 .... .... 53 23 .... .... 23
Contribution from Insurance
industries .... .... .... .... 2 .... .... 2
53 .... .... 53 25 .... .... 25
Liabilities
Agency litigation 28 1 .... 29 35 .... .... 35
28 1 .... 29 35 .... .... 35
Note: 1. The 2009-10 comparatives have been reclassified. This amendment has had no impact on the financial results.
90 2010-11 Treasurer’s Annual Financial Report
Unquantifiable Contingencies
A number of contingent liabilities exist that are not quantifiable, including legal actions that have been
brought against the State and its agencies. Notification has also been received of a number of other cases
that are not yet subject to Court action but which may result in subsequent litigation.
Other than where the likelihood of an outflow of resources is regarded as remote, at the General
Government Sector level, contingent liabilities that are not quantifiable include:
Claims against the Department of Health and Human Services relating to public liability claims by former
patients. The liabilities are managed through the Tasmanian Risk Management Fund. The Department
also has 842 open workers’ compensation claims (2010 – 504 open claims).
Claims against the Department of Economic Development, Tourism and the Arts relating to a number of
legal claims. It is not possible at reporting date to accurately estimate the amount of eventual payments
or receipts, if any, that may be required in relation to the claims below:
a landowner dispute regarding the ownership of a strip of foreshore land at Tinderbox currently
valued at $100 000. The matter has been adjourned to a date to be fixed by the Court;
an indemnity was provided to the Crown in order to secure a loan. The Crown is seeking repayment
of the loan amount of $2 million plus an interest component; and
the Department is disputing a workers’ compensation claim lodged by an employee. A hearing date
is yet to be set by the Tribunal.
Claims against the Department of Education relating to:
personal injuries arising from accidents on departmental premises. Eventual payments cannot be
estimated; and
a number of leases on property it occupies. Some of these leases contain a “make good provision”.
The majority of leases cover a five to 10 year period and are generally renewed, hence deferring any
make good liability.
Claims against Finance-General relating to:
superannuation obligations of Government Business Enterprises and Statutory authorities; and
a number of warranties under various sale agreements relating to the divestment of Government
businesses. Treasury is of the opinion that these warranties are unlikely to arise and the amounts are
not quantifiable.
Claims against the Department of Infrastructure, Energy and Resources relating to:
limited access compensation;
a number of acquisitions for current road projects which are at various stages of settlement;
contractual disputes which are not sufficiently clear or advanced to quantify;
a number of claims relating to personal injury or damage caused to property (including vehicles)
allegedly due to road works or road condition; and
asbestos removal from up to 1 000 traffic signal sites in Tasmania.
2010-11 Treasurer’s Annual Financial Report 91
Claims against the Department of Primary Industries, Parks, Water and the Environment as follows:
there are possible future payments through compensation claims from land owners under the
affected owner’s provisions of the Nature Conservation Act 2002. Compensation claims will be
assessed on a case-by-case basis;
as part of the Meander Dam Project, the Tasmanian Government prepared a Management Plan for
the Spotted-tailed Quoll on State Forest and rehabilitated land adjoining the proposed Dam. Under
the Plan, there is a provision that Forestry Tasmania be compensated for the value of the
commercial timber and land assets affected by both the inundated area and the enlarged wildlife
habitat strip. During 2010-11, it is necessary to finalise the amendment to the Public Authorities
Management Agreement with Forestry Tasmania to satisfy requirements of the Environment
Protection and Biodiversity Conservation Acts;
the Department is responsible for the management of Crown land. A number of these sites may be
contaminated and require restoration;
maintaining Tasmania’s relative freedom from disease, pests and weeds. Threats of possible
outbreaks represents a future liability to manage and contain these risks; and
a total of 56 legal proceedings in which the Department was exposed to an estimated liability of
$1.3 million. The claims will be met by the Tasmanian Risk Management Fund.
Claims against the Skills Institute relating to a dispute with a number of employees with respect to
aspects of the Tasmanian State Service Award. One possible outcome of these disputes is that some
additional payments may be made to some employees.
Other than where the likelihood of an outflow of resources is regarded as remote, at the Total State level,
the unquantifiable contingent assets and liabilities include those relating to government businesses and
state-owned companies:
A number of Government businesses have provided indemnities to directors and senior management in
respect of liabilities to third parties arising from their positions, except where the liability arises out of
conduct involving a lack of good faith. No monetary limit applies to these agreements and there are no
known obligations outstanding at 30 June 2011.
Claims against Hydro Tasmania relating to an agreement for the sale of the assets of subsidiaries Bell
Bay Power Pty Ltd and Bell Bay Three Pty Ltd during 2007. Included in the sale agreement is a regime
for the indemnification of the purchaser in respect of contamination of the Bell Bay Power Station site,
particularly in respect of personal injury and latent contamination on the site. Hydro Tasmania has
capped certain indemnities and continues to seek to mitigate any potential contingent liability by
committing to sound environmental and safety practices on the site.
The Tasmanian Water and Sewerage Corporation (Northern Region) Pty Ltd has agreed to an
arbitration conference with a contractor that was dismissed by an owner Council prior to 30 June 2009.
The contractor was engaged to design and construct a waste water treatment plant and took action
against the Council seeking redress. This action was not successful so the contractor agreed to
arbitration on a date yet to be set. Based on legal advice, the Directors are of the opinion that no
provision is required for 30 June 2011.
Claim against the Port Arthur Historic Site Management Authority relating to Supreme Court writs issued
against the Authority in relation to the April 1996 tragedy. The actions are currently being processed and
any future liability will be covered by insurance.
92 2010-11 Treasurer’s Annual Financial Report
Note 9 Financial instruments
9.1 Risk exposures
Risk management objectives and policies
Exposure to credit risk, liquidity risk, market risk and other financial risks arise in the normal course of
government activity. State Sector entities implement various risk management policies to identify, analyse
and manage these various types of risk, including the use of derivative financial instruments. The two main
sources of market risk are fluctuations in interest and foreign exchange rates. Derivatives in use include
interest rate swaps, interest rate futures, cross-currency swaps and forward foreign exchange contracts.
Whenever derivative positions are created, cash or an underlying physical security is held to cover any
potential liability.
Credit risk
Credit risk is the risk of financial loss to the State if a customer or counterparty to a financial instrument fails
to meet its contractual obligations. Details of specific credit risks and the risk management policies are set
out in the financial statements of each State Sector entity.
Receivables are recognised at the nominal amounts due, less any provision for bad and doubtful debts.
Collectability of debts is reviewed on a monthly basis. Provisions are made when collection of the debt is
judged to be less, rather than more likely. Credit terms are generally 30 days.
Financial guarantee contract liabilities are measured initially at fair value and subsequently at the higher of
fair value or the amount determined in accordance with AASB 137 Provisions, Contingent Liabilities and
Contingent Assets. Guarantees primarily relate to financing obligations of Government businesses and
Statutory authorities.
Cash and deposits are recognised at face value. Cash means notes, coins and any deposits held at call
with a bank or financial institution.
The State is exposed to credit-related losses in the event of non-performance by counterparties to financial
instruments. Any such exposure is governed by an International Swap Dealers Association Agreement
between Tasmanian Public Finance Corporation and the counterparty concerned including, where possible,
netting agreements. Derivative financial instruments include currency swaps, interest rate swaps and
forward foreign exchange contracts. The carrying amount of financial assets recorded in the Financial
Statements, net of any allowances for losses, represents the maximum exposure of the State to credit risk,
with the exception of guarantees, which consist of the following as at 30 June 2011:
$28 million held by Finance-General ($28 million as at 30 June 2010) relating to financing obligations of
government businesses and statutory authorities; and
$1 million held by the Department of Economic Development, Tourism and the Arts ($1 million as at
30 June 2010).
2010-11 Treasurer’s Annual Financial Report 93
The following table analyses financial assets that are past due but not impaired:
General Government Total State
2011
Actual
2010
Actual
2011
Actual
2010
Actual
$m $m $m $m
Receivables
Past due:
30 days 11 9 24 25
60 days 6 5 15 9
90 days 11 10 38 19
1 year 17 17 17 17
5 years 10 9 10 9
Total Past Due 55 50 104 80
Liquidity risk
Liquidity risk is the risk that an individual entity will not be able to meet its financial obligations as they fall
due. The State’s approach to managing liquidity is to ensure that entities will always have sufficient liquidity
to meet their liabilities when they fall due. Details of specific liquidity risks and risk management policies are
set out in the financial statements of each State Sector entity.
Payables, including goods received and services incurred but not yet invoiced, are recognised at amortised
cost. Settlement is usually made within 30 days.
Loans are initially measured at fair value, net of transaction costs and are measured at amortised cost,
using the effective interest rate method. Interest expense is recognised on an effective yield basis.
Contractual payments are made on a regular basis.
GGS and State entities regularly review budgeted cash movements to ensure that there is sufficient cash to
meet obligations.
The following tables detail the undiscounted cash flows payable by the GGS and Total State Sector by
remaining contractual maturity for its financial liabilities. It should be noted that, as the maturity analysis is
calculated using undiscounted cash flows, the total may not reconcile to the carrying amounts.
94 2010-11 Treasurer’s Annual Financial Report
General Government Sector Maturity Analysis for financial liabilities
1 Year
2 Years
3 Years
4 Years
5 Years
More than
5 Years
Undiscounted
Total
Carrying
Amount
$m $m $m $m $m $m $m $m
2011 Financial liabilities
Payables 97 .... .... .... .... .... 97 97
Borrowings 46 19 7 8 8 181 269 269
Total 143 19 7 8 8 181 366 366
2010 Financial liabilities
Payables 122 .... .... .... .... .... 122 122
Borrowings 33 16 19 8 8 189 274 274
Total 155 16 19 8 8 189 396 396
Total State Sector Maturity Analysis for financial liabilities
1 Year 2 Years 3 Years 4 Years 5 Years
More than
5 Years
Undiscounted
Total
Carrying
Amount
$m $m $m $m $m $m $m $m
2011 Financial liabilities
Payables 404 …. …. …. …. …. 404 404
Borrowings 2 959 1 407 507 507 497 666 6 544 6 544
Other 278 231 231 231 231 3 044 4 246 1 339
Total 3 641 1 638 738 738 728 3 711 11 193 8 287
2010 Financial liabilities
Payables 365 …. …. …. …. …. 365 365
Borrowings 1 918 456 480 472 480 605 4 411 4 411
Other 207 112 112 112 112 1 803 2 460 948
Total 2 490 568 592 584 592 2 408 7 236 5 724
Market risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because
of changes in market prices. The primary market risk that State entities are exposed to is pricing risk and
interest rate risk.
Pricing Risk
The State is exposed to fluctuations in market prices, particularly in relation to electricity prices in
Tasmania. In addition, the State is exposed to fluctuations in the Victorian market price for electricity to the
extent of electricity flows over Basslink and through the variable portion of the Basslink facility fee.
2010-11 Treasurer’s Annual Financial Report 95
Exposure to these fluctuations in market price is managed through the use of derivative contracts executed
in the Tasmanian and Victorian regions of the National Electricity Market. Contract volumes for many of the
current Tasmanian forward contracts are determined by the actual load consumed in the contract period.
The management of electricity trading risk is in line with an asset backed trading model.
The following table illustrates the effect of the State’s exposure to electricity price fluctuations on the
Statement of Comprehensive Income as a result of changes in the fair value of energy price derivatives
held by the State. For further details please refer to the Annual Reports of Hydro Tasmania and
Aurora Energy Pty Ltd.
Sensitivity Analysis to 10 Per Cent Movement in Electricity Forward Prices
Total State
Profit or Loss
2011
Actual
2010
Actual
+10 per cent -10 per cent +10 per cent - 10 per cent
$m $m $m $m
Net Energy derivative asset (138) 169 (51) 49
Net Basslink liability (25) 15 (25) 13
Net sensitivity (163) 184 (76) 62
Interest rate risk
The State is exposed to interest rate risk as it borrows funds at both fixed and floating interest rates. The
risk is managed by maintaining an appropriate mix between fixed and floating rate borrowings, by entering
into forward start borrowing agreements and by the use of interest rate swap contracts.
At the reporting date, the interest rate profile of the interest bearing financial instruments held by the State
was as follows:
General Government Total State
2011
Actual
2010
Actual
2011
Actual
2010
Actual
$m $m $m $m
Fixed rate instruments
Financial assets 6 4 4 210 2 628
Financial liabilities (237) (242) (5 405) (3 073)
(231) (238) (1 195) (445)
Variable rate instruments
Financial assets 678 1 020 1 025 824
Financial liabilities (34) (31) (1 139) (1 338)
644 989 (114) (514)
96 2010-11 Treasurer’s Annual Financial Report
The Tasmanian Public Finance Corporation measures interest rate risk using a Value at Risk measure.
This VaR estimates the potential loss in profit due to a change in benchmark interest rates and liability risk
margins over a given holding period for a specified confidence level. Risk can be measured consistently
across Tascorp’s portfolio to arrive at a single risk number. The one day VaR number reflects the
99 per cent probability that the daily interest rate and liability margin risk loss will not exceed the reported
VaR. Tascorp recorded an average of $633 000 exposure risk ($400 000 for 2010). Further details are
available from Tascorp’s financial statements.
For all other entities, risk is calculated with reference to the impact of 100 basis point movement in interest
rates at reporting date. This analysis assumes all other variables remain constant. The analysis was
performed on the same basis for 2010. The State generally does not hold any financial instruments
available for sale which would directly affect profit or loss as a result of changes in interest rates.
Sensitivity Analysis to 100 Basis Point Movement in Interest Rates
General Government Total State
Profit or Loss Profit or Loss
2011
Actual
2010
Actual
2011
Actual
2010
Actual
+ve -ve +ve -ve +ve -ve +ve -ve
$m $m $m $m $m $m $m $m
Financial assets 7 (7) 12 (12) 12 (12) 22 (22)
Financial liabilities .... .... …. …. (1) 1 (1) 1
Net sensitivity 7 (7) 12 (12) 11 (11) 21 (21)
Comparison between carrying amount and net fair value of financial assets and liabilities
There are no material differences between net fair values for financial assets and financial liabilities and
their carrying amounts for the General Government Sector.
The net fair values of cash and deposits are recognised at amortised cost, being their face value.
The value of equity investments have been measured at the Government’s share (100 per cent) of the
carrying amount of net assets because fair value is not reliably measurable. A description of these
investments can be found in the notes to the accounts under Equity investments. There is no market for
these instruments consistent with the principles of AASB 1049.
Other equity investments are revalued from time to time, as considered appropriate, and are not stated at
values in excess of their recoverable amounts.
The net fair values of interest bearing liabilities are measured at fair value in accordance with the quoted
liability as provided by Tascorp. Other borrowings consist primarily of Australian Government borrowings
incurred under various Commonwealth-State Housing Agreements. These borrowings are measured in
accordance with a valuation technique based upon interest rate and repayment schedule confirmation
provided by the Australian Government.
The fair value of the Basslink financial instruments has been calculated using a valuation model based on
the present value of expected contractual cash flows. The fair value of expected receipts of inter-regional
2010-11 Treasurer’s Annual Financial Report 97
revenues under the Basslink Service Agreement has been separately calculated based on experience to
date and projected operating conditions and reported as a financial asset. Expected contractual payments
have been reported as financial liabilities. The fair value of the Basslink Service Agreement has been
calculated using the pre-tax weighted average cost of capital as the nominal discount rate. The fair values
of the other instruments have been calculated using a 20 year forward market interest rate. These are not
readily tradeable financial instruments.
Energy trading derivatives are to manage exposure to market price risks. Many of these contracts have
been transacted since Tasmania entered the National Electricity Market, a number were in place prior to
that date and reflect the vesting of contracts with retail and major industrial clients in place at the time of
entry to the NEM. Modelling is used to value the Tasmanian energy contracts. In recognition of the term,
load and other features of each contract, the contract price agreed at commencement represented a
discount from the spot price at that time. Fair value at balance date has been calculated as the present
value of the difference between the projected market price for each contract and the undiscounted contract
price. Projected market price is based on an estimated long term Tasmanian energy price curve.
Financial instruments measured at fair value
The tables below analyses financial instruments carried at fair value using a hierarchy of levels:
Level 1 – the fair value is calculated using quoted prices in active markets;
Level 2 – the fair value is estimated using the inputs other than quoted prices included in Level 1 that are
observable for the asset or liability, either directly (as prices) or indirectly (derived from prices); and
Level 3 – the fair value is estimated using inputs for the asset or liability that are not based on observable
market data.
98 2010-11 Treasurer’s Annual Financial Report
Financial instruments measured at fair value (continued)
General Government
2011 Net Fair Value
Level 1
Net Fair Value
Level 2
Net Fair Value
Level 3
Net Fair Value
Total
Carrying
Amount Total
$m $m $m $m $m
Financial assets
Cash and Deposits …. …. 628 628 628
Loans and receivables:
Loan advances 32 …. …. 32 32
Receivables .... …. 216 216 216
Financial assets at fair value through profit and
loss
Held-to-maturity investments 24 …. …. 24 24
Equity investments …. …. 6 178 6 178 6 178
Total 56 …. 7 022 7 078 7 078
Financial liabilities
Financial liabilities at fair
value through profit and
loss 26 …. …. 26 26
Financial liabilities measured
at amortised cost 97 …. 242 340 340
Total 124 …. 242 366 366
General Government
2010 Net Fair Value
Level 1
Net Fair Value
Level 2
Net Fair Value
Level 3
Net Fair Value
Total
Carrying
Amount Total
$m $m $m $m $m
Financial assets
Cash and Deposits …. …. 966 966 966
Loans and receivables:
Loan advances 32 …. …. 32 32
Receivables .... …. 185 185 185
Financial assets at fair value through profit and
loss
Held-to-maturity investments 26 …. …. 26 26
Equity investments …. …. 5 950 5 950 5 950
Total 58 …. 7 100 7 160 7 160
Financial liabilities
Financial liabilities at fair
value through profit and
loss 28 …. …. 28 28
Financial liabilities measured
at amortised cost 122 …. 247 369 369
Total 150 …. 247 397 397
2010-11 Treasurer’s Annual Financial Report 99
Financial instruments measured at fair value (continued)
Total State
2011 Net Fair Value
Level 1
Net Fair Value
Level 2
Net Fair Value
Level 3
Net Fair Value
Total
Carrying
Amount Total
$m $m $m $m $m
Financial assets
Cash and Deposits …. …. 139 139 139
Loans and receivables:
Loan advances 32 …. …. 32 32
Receivables …. …. 691 691 691
Financial assets at fair value through profit and
loss - designated on initial recognition
Held-to-maturity investments …. 5 064 …. 5 064 5 064
Equity investments …. …. 136 136 136
Basslink financial assets …. …. 533 533 533
Derivative financial
instrument receivable 102 52 …. 154 154
Gas supply contract …. …. 31 31 31
Total 134 5 117 1 531 6 781 6 781
Financial liabilities
Financial liabilities at fair value through profit and
loss
Borrowings …. …. 6 544 6 544 6 544
Basslink services agreement …. …. 851 851 851
Basslink facility swap fee …. …. 187 187 187
Energy trading derivatives 55 113 …. 168 168
Financial liabilities measured at amortised costs
Borrowings …. …. 249 249 249
Payables 404 …. …. 404 404
Total financial liabilities 459 113 7 831 8 402 8 402
100 2010-11 Treasurer’s Annual Financial Report
Financial instruments measured at fair value (continued)
Total State
2010 Net Fair Value
Level 1
Net Fair Value
Level 2
Net Fair Value
Level 3
Net Fair Value
Total
Carrying
Amount Total
$m $m $m $m $m
Financial assets
Cash and Deposits …. …. 147 147 147
Loans and receivables:
Loan advances 32 …. …. 32 32
Receivables …. …. 516 516 516
Financial assets at fair value through profit and
loss - designated on initial recognition
Held-to-maturity investments …. 3 270 …. 3 270 3 270
Equity investments …. …. 243 243 243
Basslink financial assets …. …. 476 476 476
Derivative financial
instrument receivable 64 106 …. 170 170
Gas supply contract …. …. 15 15 15
Total 96 3 376 1 398 4 870 4 870
Financial liabilities
Financial liabilities at fair value through profit and
loss
Borrowings …. …. 4 411 4 411 4 411
Basslink services agreement …. …. 841 841 841
Basslink facility swap fee …. …. 215 215 215
Energy trading derivatives 41 83 …. 124 124
Financial liabilities measured at amortised costs
Borrowings …. …. 251 251 251
Payables 282 …. …. 282 282
Total financial liabilities 323 83 5 719 6 125 6 125
2010-11 Treasurer’s Annual Financial Report 101
Foreign Exchange Risk
The State has some borrowings and assets denominated in foreign currencies. Currency exposures are
generally offset immediately on undertaking such transactions by entering into cross currency swaps and
forward foreign exchange contracts. The objective of these contracts is to neutralise the impact of any
foreign exchange rate fluctuation on future obligations to make interest and principal repayments in
accordance with established contractual obligations. There were no cross currency swaps at balance date
in 2010-11 or 2009-10.
The remaining terms and notional principal amounts of the State’s outstanding foreign exchange rate
contracts at balance date are:
Total State
Swiss
Franc
Canadian
Dollars
New
Zealand
Dollars
Great
British
Pounds Euros
Singapore
Dollars
US
Dollars
$m $m $m $m $m $m
2011
Liabilities less than 12 months (131) (17) (141) (244) (138) (15) (834)
Forward Forex contracts 131 17 141 244 138 15 834
Total net position .... .... .... .... .... .... ....
2010
Liabilities less than 12 months .... (5) .... (61) (52) (25) (267)
Forward Forex contracts .... 5 .... 61 52 25 267
Total net position .... .... .... .... .... .... ....
Reclassifications of financial assets
The GGS and the Total State Sector have not reclassified any financial assets.
102 2010-11 Treasurer’s Annual Financial Report
Note 10 Cash flow reconciliation
10.1 Reconciliation of Net cash flows from operating activities to Operating Result
General Government Total State
2010-11
Actual
2009-10
Actual
2010-11
Actual
2009-10
Actual
$m $m $m $m
Operating Result 172 1 153 (38) (697)
Add Economic Flows - Included in Statement of
Comprehensive Income
(Gain)/loss on sale of non-financial assets (6) 24 (8) 26
Change in equity investment in PNFC and PFC Sectors (228) (1 893) …. ….
Movement in Superannuation liability (85) 692 (101) 755
Other (Gains)/losses 124 41 279 107
(195) (1 135) 170 888
Equals NET OPERATING BALANCE (23) 18 132 192
Add Other Non-cash movements
Depreciation 236 229 572 540
Borrowing and payroll costs capitalised .... …. .... (10)
Non-cash income tax equivalence revenue (34) 27 .... ….
Decrease/(increase) in receivables (2) (2) (116) 74
Decrease/(increase) in inventory …. …. (20) (22)
Decrease/(increase) in other financial assets (3) (19) (28) (51)
Increase/(decrease) in employee entitlements 27 2 25 23
Increase/(decrease) in payables (26) 13 39 (142)
Increase/(decrease) in accrued expenses .... …. .... (3)
Increase/(decrease) in other liabilities (12) 13 110 25
Increase/(decrease) in tax liabilities .... …. 1 31
Non-cash movement in superannuation 198 136 211 146
Adjustment for other non-cash items 34 3 116 (25)
419 402 910 586
Net cash from operating activities 395 420 1 043 778
2010-11 Treasurer’s Annual Financial Report 103
10.2 Cash and cash equivalents
For the purpose of the Statement of Cash Flows, cash includes cash on hand, cash at bank and
investments in highly liquid money market instruments. The definition of cash for the purposes of the
Statement of Cash Flows is defined differently to cash reported in the Statement of Financial Position.
General Government Total State
2010-11
Actual
2009-10
Actual
2010-11
Actual
2009-10
Actual
$m $m $m $m
Cash as per Statement of Financial Position 628 966 139 147
Cash equivalents as per the Statement of Cash Flows …. …. 2 102 1 427
Cash as per the Statement of Cash Flows 628 966 2 241 1 574
104 2010-11 Treasurer’s Annual Financial Report
Note 11 Reserves
11.1 Asset revaluation reserve
General Government Total State
2011
Actual
2010
Actual
2011
Actual
2010
Actual
$m $m $m $m
Property, plant and equipment
Balance at 1 July 2 317 2 428 2 751 2 899
Transfers from DEPHA which ceased to exist from
1 July 2010 .... (297) …. (297)
Revaluation increments/(decrements) 302 202 327 (73)
Other movements (17) (15) (18) 222
Balance at 30 June 2 602 2 317 3 060 2 751
Infrastructure
Balance at 1 July 2 081 1 992 2 215 2 121
Transfers from DEPHA which ceased to exist from
1 July 2010 .... (7) …. (7)
Revaluation increments/(decrements) (1 001) 85 (899) 90
Other movements .... 10 …. 10
Balance at 30 June 1 080 2 081 1 316 2 215
Other assets
Balance at 1 July 111 29 115 270
Transfers from DEPHA which ceased to exist from
1 July 2010 .... (23) …. (23)
Revaluation increments/(decrements) (91) 106 (91) (132)
Balance at 30 June 20 111 24 115
3 701 4 508 4 400 5 078
2010-11 Treasurer’s Annual Financial Report 105
Note 12 Explanations of major variances between General Government Budget and actual outcomes
The following are brief explanations of major variances between General Government Budget estimates
and actual outcomes. Details of material variances between Budget estimates and actual outcomes can
also be found in the financial statements for each departmental entity.
Variances are considered major where the variance exceeds 15 per cent of the Budget estimate and is also
greater than $20 million.
12.1 Statement of Comprehensive Income – General Government Sector
Notes
2010-11
Original
Budget
2010-11
Actual Variance Variance
$m $m $m %
Sales of goods and services (a) 370 303 (66) (18)
Superannuation (b) 229 271 42 18
Change in equity investment in PNFC
and PFC Sectors
(c) 239 228 (11) (5)
Movements in Superannuation Liability (d) …. 85 85 100
Other gains/(losses) (e) 7 (124) (131) (1 871)
(a) The decrease was primarily due to the Department of Health and Human Services reclassifying $60 million of
Mersey Community Hospital Australian Government revenue to Grants.
(b) The increase of $42 million relates to the increase in service cost (notional cost of employer-financed benefits
accruing each year) provided by the actuary as at 30 June 2011.
(c) The movement relates to the overall increase in net asset values of Equity investments held as at 30 June 2011.
(d) The movement in the superannuation liability of $85 million reflects the most recent actuarial projections.
(e) Other gains/losses was $131 million below Budget due to the revaluation loss recorded by the Department of
Infrastructure, Energy and Resources for land under roads of $89 million, a revaluation loss of $29 million for
Tasmanian Museum and Art Gallery assets held by the Department of Economic Development, Tourism and the
Arts and an unanticipated net loss of $19 million relating to the Tasmanian Risk Management Fund, due to
changes in actuarial assumptions used to value the liability.
106 2010-11 Treasurer’s Annual Financial Report
12.2 Statement of Financial Position – General Government Sector
Budget estimates for the 2010-11 Statement of Financial Position were compiled in June 2010 prior to
completion of the actual outcomes for 30 June 2010. As a result, the outcome variance from the original
Budget estimate will be impacted by the difference between the estimated and actual opening balances for
2010-11. The following commentary and table is therefore based on major movements between the
30 June 2010 actual outcome and the 30 June 2011 outcome.
Notes
2011
Original
Budget
2011
Actual
2010
Actual
Variance
Variance
Variance
Variance $m $m $m $m %
Cash and Deposits (a) 551 628 966 (338) (35)
Equity investment in PNFC and
PFC Sectors (b) 6 265 6 178 5 950 228 4
Other financial assets (c) 1 167 1 031 913 118 13
Land and buildings (d) 5 616 5 897 5 219 678 13
Infrastructure (e) 5 041 3 787 4 837 (1 050) (22)
Heritage and cultural assets (f) 468 442 553 (111) (20)
Superannuation (g) 4 356 4 966 4 860 106 2
Employee entitlements (h) 491 488 461 27 6
(a) Cash and deposits is $338 million below the 2010 actual. This reflects a reduction in cash holdings primarily due to
the Consolidated Fund deficit of $540 million. Refer to Statement 2 in Section 5 of this report.
(b) The increase of $228 million in the value of Equity investments reflects an increase in net assets held by the
electricity companies, Tasmanian Ports Corporation Pty Ltd, Tasmanian Railway Pty Ltd, Motor Accidents
Insurance Board and the water and sewerage corporations. This was offset by a decrease in Forestry Tasmania’s
net assets.
(c) Other financial assets are $118 million above the 2010 actual due to an increase in the deferred tax assets
attributed to the PNFC and PFC Sectors.
(d) The increase in the value of Land and buildings of $678 million is primarily due to capital investment by the
Department of Health and Human Services ($218 million) and the Department of Education ($188 million). In
addition, Land and buildings were revalued upwards by the Department of Health and Human Services
($227 million). Land and associated buildings were revalued upwards by the Department of Primary Industries,
Parks, Water and Environment ($11 million).
(e) Infrastructure is $1 050 million below the 2010 actual. This is due to a revaluation of road infrastructure by the
Department of Infrastructure, Energy and Resources.
(f) The decrease of $111 million in Heritage and cultural assets is due the write-down of assets held by the
Tasmanian Museum and Art Gallery.
(g) The increase of $106 million in the Superannuation liability is a result of actuarial reassessment of the liability,
taking into consideration changes in assumptions used to value the defined benefit obligation.
(h) Employee entitlements are $27 million above the 2010 actual primarily due to an increase in long service leave and
annual leave entitlements.
2010-11 Treasurer’s Annual Financial Report 107
12.3 Statement of Cash Flows– General Government Sector
Notes
2010-11
Original
Budget
2010-11
Actual Variance Variance
$m $m $m %
Sales of goods and services (a) 368 311 (57) (15)
Dividend, tax and rate equivalents (a) 149 126 (23) (15)
Other receipts (a) 288 383 95 33
Other payments (a) (200) (269) (69) 35
Equity injections (b) (106) (58) 48 (45)
(a) The major variances in the Cash flows from operating activities reflect those that have occurred in the Statement of
Comprehensive Income. Refer to Note 12.1 for further information regarding these variances.
(b) The change in Equity injections reflects a decrease of $30 million in payments to Tasmanian Railway Pty Ltd as a
result of State and Australian Government adjustments to funding allocations and a decrease of $18 million for the
Rivers and Water Supply Commission due to delays in projects resulting in lower than expected expenditures.
108 2010-11 Treasurer’s Annual Financial Report
Note 13 Reconciliations to ABS GFS measures
Where the Key Fiscal Aggregates presented on the face of the financial statements are materially different
to that measured in accordance with the ABS GFS Manual, a reconciliation between the two measures is
required to be provided. The impact of convergence differences on the GGS and Total State Sector Key
Fiscal Aggregates have been reviewed and there are no material differences.
2010-11 Treasurer’s Annual Financial Report 109
Note 14 Details of controlled entities
As a result of a restructuring of administrative arrangements during 2010-11, the following changes were
made to entities within the General Government Sector:
the Department of Justice relinquished its responsibility for the Office of the Director of Public
Prosecutions and the Integrity Commission, which became separate entities on 1 July 2010; and
the Department of Education assumed responsibility for the assets and liabilities of the Tasmanian
Polytechnic and Tasmanian Academy effective 1 January 2011.
As at 30 June 2011, the following entities are classified within the Total State Sector:
General Government entities
Department of Economic Development, Tourism and the Arts
Department of Education
Department of Health and Human Services
Department of Infrastructure, Energy and Resources
Department of Justice
Department of Police and Emergency Management
Department of Premier and Cabinet
Department of Primary Industries, Parks, Water and Environment
Department of Treasury and Finance (including Finance-General)
House of Assembly
Inland Fisheries Service
Integrity Commission
Legislative Council
Legislature-General
Marine and Safety Tasmania
Office of the Director of Public Prosecutions
Office of the Governor
Office of the Ombudsman
Royal Tasmanian Botanical Gardens
State Fire Commission
Tasmanian Audit Office
Tasmanian Skills Institute
110 2010-11 Treasurer’s Annual Financial Report
Public Non-Financial Corporations
Aurora Energy Pty Ltd
Forestry Tasmania
Hydro Tasmania
Metro Tasmania Pty Ltd
Port Arthur Historic Site Management Authority
Private Forests Tasmania
Public Trustee
Rivers and Water Supply Commission
Tasmanian Ports Corporation Pty Ltd
TOTE Tasmania Pty Ltd
Tasracing Pty Ltd
Transend Networks Pty Ltd
TT-Line Company Pty Ltd
Tasmanian Railway Pty Ltd
Tasmanian Water and Sewerage Corporation (Common Services) Pty Ltd
Tasmanian Water and Sewerage Corporation (Northern Region) Pty Ltd
Tasmanian Water and Sewerage Corporation (North-Western Region) Pty Ltd
Tasmanian Water and Sewerage Corporation (Southern Region) Pty Ltd
Public Financial Corporations
Motor Accidents Insurance Board
Tasmanian Public Finance Corporation
Entities not consolidated
The Retirement Benefits Fund Board has not been included in this financial report because its assets are
not available for the benefit of the State. Also, the University of Tasmania, certain professional,
occupational and marketing boards and local government authorities are not included in this financial report
because they are not controlled by the State.
Other Government bodies that are controlled but are not considered material, for whole-of-government
purposes, are also excluded from this financial report.
2010-11 Treasurer’s Annual Financial Report 111
Note 15 Events Occurring After Balance Date
Forestry Tasmania’s operating result together with the ongoing uncertainty around the Tasmanian Forests
Intergovernmental Agreement and the Statement of Principles and their possible impact on the business
have caused the Directors to review the appropriateness of continuing to prepare the accounts on a going
concern basis. The current trading outlook presents significant challenges in terms of sales volume and
pricing and, in these circumstances, there are material uncertainties over future trading results and cash
flows. In addition, the effect on the business of the Agreement and principles is yet to be finalised but it is
possible that they will lead to a significant reduction in the resources available for harvest and sale. Also
relevant is that the State Government has commenced a Strategic Review of Forestry Tasmania. The
outcome of this review may or may not increase the uncertainties surrounding Forestry Tasmania’s
operations.
The Port Arthur Historic Site Management Authority is expected to transfer water and waste treatment
infrastructure assets to the Tasmanian Water and Sewerage Corporation (Southern Region) Pty Ltd under
the Water and Sewerage Corporations Act 2008. Negotiations for the Port Arthur Historic Site Management
Authority are underway, however, the transfer is not expected to happen in the near future. The assets
concerned were valued in June 2011 on a replacement cost basis at $770 000. The impact upon future
financial statements is currently unknown.
The Port Arthur Historic Site Management Authority assumed responsibility for the Cascades Female
Factory Historic Site in December 2010. This will mean that the Authority has full control of the Site and it is
expected that the conservation costs of the Site will be funded by the State Government. It is expected the
proclamation under The Nature Conservation Act 2002 that affects the transfer will occur in 2011-12.
The Government has established an independent Expert Panel under the provisions of the Electricity
Supply Industry Expert Panel Act 2010 to conduct an investigation into, and provide guidance to Parliament
on, the current position and future development of Tasmania’s electricity industry. The Panel is due to
prepare and publish a final report by December 2011. The outcome and possible impacts of the report are
unknown.
The Australian Government’s carbon tax legislation was tabled in Parliament in July 2011. Based on the
legislation, Hydro Tasmania has not changed the fair value of its generation assets and, at the current time,
Aurora expects that the costs of carbon will be passed through to the end consumer, and as such will not
impact on the carrying value of Aurora’s assets.
Aurora has submitted its proposal for electricity distribution revenue for the period 1 July 2012 to
30 June 2017 to the Australian Energy Regulator. The outcome of this submission will not be known until
mid-2012.
As a result of the Irrigation Company Act 2011, on 1 July 2011, the Rivers and Water Supply Commission
and Tasmanian Irrigation Schemes Pty Ltd merged with Tasmanian Irrigation Pty Ltd to become one entity
named Tasmanian Irrigation Pty Ltd. Tasmanian Irrigation Pty Ltd has taken over all assets, contracts,
rights and liabilities of the Rivers and Waters Supply Commission and Tasmanian Irrigation Schemes Pty
Ltd.
112 2010-11 Treasurer’s Annual Financial Report
A significant portion of the State Government’s investment portfolio is exposed to Australian and
international listed investment markets and consequently it is subject to the associated market risk. From
the balance date up to the date the financial statements were certified and authorised for issue, the
Australian and international markets have experienced a period of significant volatility. Given the ongoing
volatility of the market, it is unknown whether this will have a significant impact on the performance of the
investment fund for the full year to 30 June 2012.
The following Government businesses have declared dividends since 30 June 2011 that were not brought
to account in the 2010-11 financial statements. These have no impact on the Total State Sector but will
affect the PNFC and PFC Sectors.
Transend Networks Pty Ltd ($28.6 million);
Aurora Energy Pty Ltd ($11.9 million);
Hydro Tasmania ($49.0 million); and
Motor Accidents Insurance Board ($20.2 million).
Commencing in 2011-12, the amended dividend payout ratios will apply to the following Government
businesses:
Aurora Energy Pty Ltd has increased from 50 per cent to 60 per cent of underlying profit;
Hydro Tasmania has increased from 50 per cent to 70 per cent of underlying profit;
Transend Networks Pty Ltd will be maintained at 60 per cent of underlying profit plus $20 million in
return of equity, subject to the company’s operating and capital expenditure requirements and borrowing
capacity until 30 June 2014; and.
the Motor Accidents Insurance Board will reduce from 70 per cent to 50 per cent of underlying profit
smoothed over five years.
2010-11 Treasurer’s Annual Financial Report 113
Note 16 Functional Information
The following tables present Expenses from transactions and Asset balances classified according to the
Government Purpose Classification which is based on the Australian Bureau of Statistics classifications
used as part of the Government Finance Statistics reporting framework. The GPC provides a standard
framework to allocate Government expenditure according to functions. Disclosure of this information can
assist users in identifying the resources committed to particular functions and the costs of service delivery
that are reliably attributable to those functions.
16.1 Expenses from transactions
General Government Total State
2010-11 2009-10 2010-11 2009-10
$m $m $m $m
General public services
Other public services 205 179 789 629
205 179 789 629
Public order and safety
Police services 216 208 216 208
Fire protection services 63 66 63 65
Law courts and legal services 87 79 86 79
Prisons and corrective services 70 62 69 61
436 414 435 412
Education
Primary education 552 559 552 559
Secondary education 487 463 487 420
Technical and further education 153 160 153 203
Preschool education 53 45 53 45
Transport of non-urban students 40 42 40 42
1 285 1 271 1 285 1 271
Health
Acute care institutions
Admitted patients 918 867 915 860
Non-admitted patients 22 18 22 18
Mental health institutions 36 32 36 32
Community health services 140 143 140 141
Community mental health 48 39 48 39
Patient transport 59 46 59 46
Public health services 72 67 72 67
1 295 1 212 1 291 1 203
Social security and welfare
Family and children welfare services 143 116 109 94
Welfare services for the aged 49 42 48 42
Welfare services for people with a disability 137 115 137 114
Welfare services not elsewhere classified 44 40 38 34
Social security and welfare not elsewhere classified 5 13 5 13
378 326 338 297
114 2010-11 Treasurer’s Annual Financial Report
16.1 Expenses from transactions (continued)
General Government Total State
2010-11 2009-10 2010-11 2009-10
$m $m $m $m
Housing and community amenities
Housing 157 140 156 141
Community development 15 14 15 14
Water Supply .... .... 213 183
Sanitation and protection of the environment 36 50 36 50
208 204 421 388
Recreation and culture
National parks and wildlife 64 55 63 54
Cultural facilities and services 67 64 67 63
Recreation and culture not elsewhere classified 55 62 68 47
185 180 198 164
Fuel and energy
Electricity and gas 2 3 1 789 1 688
2 3 1 789 1 688
Agriculture, forestry, fishing and hunting
Agriculture 53 75 53 74
Forestry, fishing and hunting 10 32 186 192
63 107 239 266
Mining and mineral resources
Mining and mineral resources 9 7 9 7
9 7 9 7
Transport and communication
Road transport 235 221 244 231
Other water transport services 1 2 160 163
Non-urban rail transport freight services 14 27 52 56
250 251 455 450
Other economic affairs
Tourism and area promotion 41 42 38 40
Other labour and employment 25 27 22 27
Other economic affairs 62 70 60 64
128 139 120 131
Nominal interest on superannuation 232 208 264 233
Other purposes
Public debt transactions 2 4 …. ....
Inter government transactions 78 68 78 68
Other purposes not elsewhere classified 34 12 13 9
115 83 92 77
Total Expenses from transactions 4 790 4 584 7 724 7 216
2010-11 Treasurer’s Annual Financial Report 115
16.2 Assets by Function
General Government Total State
2010-11 2009-101 2010-11 2009-101
$m $m $m $m
General public service 151 148 5 542 3 622
Public order and safety 600 594 596 588
Education 1 802 1 539 1 763 1 479
Health 829 696 829 696
Social security and welfare 38 30 38 30
Housing and community amenities 2 142 1 901 4 257 3 970
Recreation and culture 1 216 1 299 1 339 1 410
Fuel and energy …. …. 8 848 8 273
Agriculture, forestry, fishing and hunting 270 323 814 982
Transport and communication 3 768 4 868 4 135 5 259
Other economic affairs 51 68 51 68
Other purposes 7 704 7 566 3 ....
18 573 19 031 28 216 26 377
Note: 1. The 2009-10 comparatives have been reclassified. This amendment has had no impact on the financial results.
116 2010-11 Treasurer’s Annual Financial Report
2010-11 Treasurer’s Annual Financial Report 117
5 PUBLIC ACCOUNT
STATEMENTS
118 2010-11 Treasurer’s Annual Financial Report
CERTIFICATION OF PUBLIC ACCOUNT
STATEMENTS 2010-11 The accompanying special purpose financial report of the Public Account for the year ended 30 June 2011
has been prepared in accordance with the provisions of the Financial Management and Audit Act 1990 and
is in agreement with the relevant accounts and records so as to present fairly the transactions for the year
ended 30 June 2011.
At the date of signing we are not aware of any circumstances which would render the particulars included in
the financial statements misleading or inaccurate.
29 September 2011
2010-11 Treasurer’s Annual Financial Report 119
OPINION OF THE AUDITOR-GENERAL
120 2010-11 Treasurer’s Annual Financial Report
2010-11 Treasurer’s Annual Financial Report 121
Accounting Policies
Cash Basis of Accounting
The Public Account is maintained on a cash basis. That is, revenue is recorded when it is received, and
expenditure recorded when the payment is made, during the financial year. The Public Account, therefore,
does not include revenue due but not collected, and invoices received but not paid for goods and services
supplied during the financial year. The value of assets and liabilities is not included in the Public Account
Statements and no provision is made for depreciation, employee entitlements or creditors.
While cash accounting is adopted for reporting on the Public Account, certain activities undertaken within
the Public Account involve accrual accounting concepts. Such activities mainly relate to the establishment
of “provisions” in accounts in the Special Deposits and Trust Fund to fund the cost of certain transactions
over more than one year. Funds accumulate in those accounts and are used to meet expenditure in future
years. The main provision accounts relate to superannuation, debt management, risk management, special
capital investment funds and the 27th pay.
Unaudited Information
Original Budget information was prepared and presented as part of the 2010-11 State Budget in June 2010.
Budget information is, by its nature, an estimate and as a result, this information has not been subject to an
audit process.
Inter-Fund Transactions
No attempt has been made to adjust for inter-fund or inter-agency transactions within the Public Account.
Certain activities result in funds being transferred between accounts in the Special Deposits and Trust Fund
or between the Consolidated Fund and the Special Deposits and Trust Fund. Consequently, expenditure
and receipts in the Public Account are overstated to the extent of any inter-fund and inter-agency transfers.
Cash in Transit
Consistent with a cash basis of accounting, only cash receipted in the Public Account as at 30 June 2011 is
brought to account and reported as revenue of the Public Account for the year.
Rounding
All amounts in the financial statements have been rounded to the nearest million, unless otherwise stated.
As a consequence, rounded figures may not add to totals. Amounts less than $500 000 are rounded to zero
and are indicated by the symbol “….”.
122 2010-11 Treasurer’s Annual Financial Report
Statement 1 - Public Account Balance
2010-11
Actual
2009-10
Actual
$m $m
Consolidated Fund .... ....
Special Deposits and Trust Fund 2 598 2 376
Balance 30 June (before Temporary debt repayment account) 2 598 2 376
Less Temporary debt repayment account balance 1 978 1 438
Balance 30 June (after Temporary debt repayment account) 620 938
REPRESENTED BY:
Westpac Banking Corporation (8) (22)
Tascorp Investments 628 960
Balance 30 June 620 938
2010-11 Treasurer’s Annual Financial Report 123
Statement 2 - Consolidated Fund Outcome
2010-11 2010-11 2009-10
Original
Budget Actual Actual
$m $m $m
Receipts
Australian Government sources
General purpose payments 1 761 1 653 1 639
Specific purpose payments 609 618 580
National partnership payments 501 792 769
Other grants and subsidies 35 50 70
2 906 3 113 3 058
State sources
Taxation 892 874 892
Receipts from government businesses 173 148 124
Departmental fees and recoveries 84 87 82
Sale and rent of government property 29 5 42
Resource rents and royalties 40 49 38
Recoveries of state debt charges …. 1 ….
Other recurrent receipts 150 73 92
1 368 1 237 1 271
Total Receipts 4 274 4 350 4 329
less Expenditure
Recurrent services
Appropriation Act 3 815 4 203 3 867
Reserved by Law 149 137 137
3 964 4 340 4 004
Works and services
Appropriation Act 544 549 572
Economic and Social Infrastructure Fund 1 1 9
Infrastructure Tasmania Fund …. …. 10
545 550 591
Total Expenditure 4 509 4 890 4 595
CONSOLIDATED FUND SURPLUS/(DEFICIT) (235) (540) (266)
124 2010-11 Treasurer’s Annual Financial Report
Statement 3 - Consolidated Fund Receipts
2010-11 2010-11 2009-10
Original
Budget Actual Actual
$m $m $m
Australian Government sources
General purpose payments
GST revenue 1 761 1 653 1 639
Specific purpose payments
Schools 249 259 240
Health services 264 264 246
Skills and workforce development 31 31 31
Disability services 31 31 28
Affordable housing 34 34 34
609 618 580
National partnership payments
Health services 53 307 50
Schools 167 177 309
Community services 48 45 42
Housing 45 36 110
Environmental services 6 8 32
Other services 9 16 14
Grant to the State for local government 50 68 63
World heritage area …. …. 3
Infrastructure services 123 123 137
Skills and workforce development …. 12 10
501 792 769
Other grants and subsidies
Primary and secondary education 1 2 4
Training Infrastructure Investment for Tomorrow .... …. 12
High cost drugs 17 22 ….
Health .... 3 9
Other grants paid to:
Department of Health and Human Services 8 19 33
Department of Primary Industries, Parks, Water
and Environment 8 4 12
35 50 70
Total Australian Government sources 2 905 3 113 3 058
2010-11 Treasurer’s Annual Financial Report 125
Statement 3 - Consolidated Fund Receipts (continued)
2010-11 2010-11 2009-10
Original
Budget Actual Actual
$m $m $m
State sources
Taxation
Stamp duties 258 234 249
Lottery tax 25 25 27
Land tax 77 77 87
Motor taxation 60 62 58
Casino tax and licence fees 59 60 59
Payroll tax 404 405 398
Sundry licences 2 4 7
Totalisator wagering levy 6 6 6
892 874 892
Receipts from Government Business Enterprises
Tasmanian Ports Corporation Pty Ltd 1 2 4
Public Trustee 1 …. 1
TOTE Tasmania Pty Ltd 16 7 7
Aurora Energy Pty Ltd 9 11 24
Hydro Tasmania 67 52 13
Tasmanian Public Finance Corporation 7 9 9
Transend Networks Pty Ltd 32 33 20
Rivers and Water Supply Commission 7 …. ….
Motor Accidents Insurance Board 34 35 45
Forestry Tasmania 1 1 1
173 148 124
Departmental fees and recoveries
Treasury and Finance 1 1 1
Justice 7 7 7
Primary Industries, Parks, Water and Environment 32 34 30
Infrastructure, Energy and Resources 43 44 43
Police and Emergency Management …. 1 1
84 87 82
126 2010-11 Treasurer’s Annual Financial Report
Statement 3 - Consolidated Fund Receipts (continued)
2010-11 2010-11 2009-10
Original
Budget Actual Actual
$m $m $m
Sale and rent of government property
Crown Lands Administration Fund 29 5 42
Resource rents and royalties
Rent and fees from mineral lands 1 2 2
Mineral royalties 36 45 35
Regional water authority licence fees 2 2 2
40 49 38
Recoveries of state debt charges
Interest …. 1 ….
Other recurrent receipts
Fines and fees 25 21 20
Interest on investments - Finance-General 42 35 40
Recoveries from departmental business units 3 3 3
RBF TGIO reserve account surplus transfer …. 10 ….
Miscellaneous 71 4 2
Funding for the 27th Pay 9 …. 28
150 73 92
Total State Sources 1 369 1 237 1 271
TOTAL 4 274 4 350 4 329
2010-11 Treasurer’s Annual Financial Report 127
Statement 4 - Consolidated Fund Expenditure
2010-11 2010-11 2009-10
Original
Budget Actual Actual
$m $m $m
Economic Development, Tourism and the Arts
Recurrent services 116 115 101
116 115 101
Education
Recurrent services 1 128 1 168 1 159
Works and services 213 195 233
1 340 1 363 1 391
Finance-General
Recurrent services 281 531 316
Reserved by Law 127 113 116
Works and services 1 1 18
409 645 451
Health and Human Services
Recurrent services 1 435 1 558 1 434
Works and services 137 129 75
1 572 1 686 1 509
House of Assembly
Recurrent services 2 2 2
Reserved by Law 5 5 5
7 7 7
Infrastructure, Energy and Resources
Recurrent services 259 222 238
Works and services 189 219 256
449 441 494
Integrity Commission
Recurrent services 3 3 ….
3 3 ….
Justice
Recurrent services 115 120 121
Reserved by Law 12 9 11
127 130 132
Legislative Council
Recurrent services 3 3 3
Reserved by Law 3 3 3
6 6 6
128 2010-11 Treasurer’s Annual Financial Report
Statement 4 - Consolidated Fund Expenditure (continued)
2010-11 2010-11 2009-10
Original
Budget Actual Actual
$m $m $m
Legislature-General
Recurrent services 5 6 5
5 6 5
Ministerial and Parliamentary Support
Recurrent services 19 21 19
Reserved by Law 1 1 1
20 21 20
Office of the Director of Public Prosecutions
Recurrent services 6 6 ….
6 6 ….
Office of the Governor
Recurrent services 3 3 3
3 3 3
Office of the Ombudsman
Recurrent services 2 2 2
2 2 2
Police and Emergency Management
Recurrent services 190 193 181
Works and services 4 4 3
195 198 184
Premier and Cabinet
Recurrent services 51 56 67
Reserved by Law …. 6 ….
Works and Services .... …. 1
51 62 67
Primary Industries, Parks, Water and Environment
Recurrent services 153 153 174
Works and services 1 1 5
154 154 179
Tasmanian Audit Office
Recurrent services 2 2 2
2 2 2
Treasury and Finance
Recurrent services 41 41 41
41 41 41
TOTAL 4 509 4 890 4 595
2010-11 Treasurer’s Annual Financial Report 129
Statement 5 - Excess Consolidated Fund Recurrent Services Expenditure
Authorised by Section 11 of the Public Account Act 1986 and the Consolidated Fund Appropriation (Supplementary Appropriation for 2010-2011) Act 2011
Existing Items 2010-11
Authorised Expenditure
$m $m
Education 41 40
Finance-General 303 250
Health and Human Services 124 122
Justice 5 5
Ministerial and Parliamentary Support 1 1
Police and Emergency Management 3 3
Premier and Cabinet 6 6
484 429
Statement 6 - Excess Consolidated Fund Works and Services Expenditure
Authorised by Section 12 of the Public Account Act 1986 and the Consolidated Fund Appropriation
(Supplementary Appropriation for 2010-2011) Act 2011.
Existing Items 2010-11
Authorised Expenditure
$m $m
Infrastructure, Energy and Resources 30 30
30 30
Statement 7 - Excess Consolidated Fund Reserved by Law Expenditure
Authorised by Acts of Parliament.
2010-11
Expenditure
Over
Estimate
$m
Payments made by Finance-General under the:
Local Government (Rates and Charges Remissions) Act 1991 1
Governor of Tasmania Act 1982 1
2
130 2010-11 Treasurer’s Annual Financial Report
Statement 8 - Special Deposits and Trust Fund
Balance Balance
30 June 30 June
2010 Receipts Payments 2011
$m $m $m $m
Economic Development, Tourism and the Arts
Department Operating Account 20 146 150 16
Intelligent Island Project Account 7 …. 4 3
Sports Development Account …. 1 1 ….
28 147 154 20
Education
Department Operating Account 17 1 488 1 496 9
17 1 488 1 496 9
Finance-General
Agency Accommodation Charges Account …. 14 14 ….
Assurance Fund – Land Titles Act 1980 Account 5 …. …. 5
Australian Government Funding Management Account 172 344 92 424
Commonwealth/State Housing Agreement Account …. 9 9 ….
Economic and Social Infrastructure Fund 29 18 22 24
Finance-General Operating Account 6 20 9 17
Government Car Fleet Account 5 52 52 5
Helsham Agreement Grants Account 1 …. 1 1
Hospital Capital Fund 70 …. 21 49
Housing Fund 47 …. 14 33
Infrastructure Tasmania Fund 85 …. 25 61
Payroll Provision Account 12 7 …. 18
Royal Hobart Hospital Redevelopment Fund 1 …. …. 1
State Debt Management Account 13 2 …. 14
State Works and Housing Assistance Acts Account …. 7 7 ….
Superannuation Provision Account 1 364 265 182 1 447
Tasmanian Community Fund Account 1 8 …. 8 ….
Tasmanian State Service Risk Management Account 169 57 50 177
Temporary Debt Repayment Account (1 438) …. 540 (1 978)
The Mount Lyell Closure Trust Fund 1 …. …. 1
Treasurer’s Suspense Account …. 8 8 ….
Unclaimed Moneys Account 12 3 …. 15
Urban Renewal and Heritage Fund 11 12 17 6
574 818 1 072 320
2010-11 Treasurer’s Annual Financial Report 131
Statement 8 - Special Deposits and Trust Fund (continued)
Balance Balance
30 June 30 June
2010 Receipts Payments 2011
$m $m $m $m
Health and Human Services
Department Operating Account 43 1 929 1 943 29
Home Ownership Assistance Program Operating Account 11 2 1 12
Housing Services Operating Account 15 229 238 5
Patient Trust and Hospital Bequest Account 16 18 18 16
85 2 178 2 201 62
House of Assembly
House of Assembly Operating Account .... 8 8 ....
Infrastructure, Energy and Resources
Abt Railway Account 1 …. …. 1
Department Operating Account 5 893 885 13
East Tamar Highway Redevelopment Account 30 .... 28 1
Mines Deposit Account 5 1 1 5
40 894 914 20
Integrity Commission
Integrity Commission Operating Account .... 3 3 ....
Justice
Crime (Confiscation of Profits) Account 2 1 …. 1 ….
Criminal Injuries Compensation Act 1976 Victims Fund 1 …. …. 1
Criminal Injuries Compensation Fund 1 1 …. 2
Crown Law Trust Account under Section 101 of the Legal
Profession Act 1993 8 85 89 4
Department Operating Account 16 186 188 14
Prisoners Earnings Deposit Account …. 2 2 ….
Rental Deposit Authority Account 18 19 12 25
Supreme Court Suitors Fund Deposit Account 3 1 1 3
Workers’ Compensation Act 1988 Fund Account 2 8 8 2
50 303 301 52
Legislative Council
Legislative Council Operating Account …. 6 6 ….
Legislature-General
Legislature-General Operating Account …. 7 7 ….
132 2010-11 Treasurer’s Annual Financial Report
Statement 8 - Special Deposits and Trust Fund (continued)
Balance Balance
30 June 30 June
2010 Receipts Payments 2011
$m $m $m $m
Office of the Director of Public Prosecutions
Crime (Confiscation of Profits) Account 2 …. 1 1 ….
Director of Public Prosecutions Trust Account …. 2 1 1
Office of the Director of Public Prosecutions Operating Account …. 8 7 1
…. 11 9 2
Office of the Governor
Office of the Governor Operating Account …. 3 3 ….
Office of the Ombudsman
Office of the Ombudsman Operating Account …. 3 3 ….
Police and Emergency Management
Department Operating Account 7 228 228 7
Premier and Cabinet
Department Operating Account 5 92 92 5
Service Tasmania Operating Account 1 12 11 1
Tasmanian Community Fund Account 1 …. 14 6 7
Tasmanian Early Years Foundation Account 2 1 1 1
Telecommunications Management Division Operating Account …. 35 31 5
8 153 142 19
Primary Industries, Parks, Water and Environment
Apple and Pear Industry Research and Development Account 1 …. …. ….
Crown Lands Administration Fund 11 16 12 16
Department of Primary Industries and Water Recreational
Fishing Licences Trust Account 1 1 1 1
Department of Primary Industries and Water Service Tasmania
Account …. 225 226 ….
Department Operating Account 57 247 253 50
Parks Development and Maintenance Account 1 4 4 ….
Regional Forest Agreement Account 4 …. …. 4
Valuation Services Operating Account …. 2 1 1
Water Infrastructure Fund 48 1 21 28
124 496 518 101
2010-11 Treasurer’s Annual Financial Report 133
Statement 8 - Special Deposits and Trust Fund (continued)
Balance Balance
30 June 30 June
2010 Receipts Payments 2011
$m $m $m $m
Tasmanian Audit Office
Tasmanian Audit Office Operating Account …. 8 7 1
Treasury and Finance
Community Support Levy Account 2 5 6 ….
Contract Management Account 1 2 2 1
Department Operating Account 2 44 44 3
Tasmanian Economic Regulator Account …. 2 2 ….
5 52 53 4
TOTAL 938 6 808 7 125 620
Notes: 1. During 2010-11, responsibility for the Tasmanian Community Fund Account transferred from Finance-General to the
Department of Premier and Cabinet. 2. During 2010-11, responsibility for the Crime (Confiscation of Profits) Account transferred from the Department of
Justice to the Office of the Director of Public Prosecutions.
134 2010-11 Treasurer’s Annual Financial Report
2010-11 Treasurer’s Annual Financial Report 135
6 LOAN COUNCIL OUTCOME
2010-11
Under Loan Council arrangements, every year the Australian Government and each State and Territory
nominate a Loan Council Allocation. A jurisdiction's LCA incorporates:
the estimated Cash Deficit/(Surplus) of the General Government and Public Non-Financial Corporations
sectors;
Net cash flows from investments in financial assets for policy purposes; and
Memorandum items, which are other financing transactions that are treated as borrowing equivalents
for Loan Council purposes.
The Loan Council evaluates LCA nominations by referring to each jurisdiction's fiscal position and the
macro-economic implications of the aggregate figure.
Table 6.1 compares Tasmania's 2010-11 LCA as published in the 2010-11 Budget with the 2010-11
outcome.
Table 6.1: Loan Council Outcome
2010-11 2010-11
Original
Budget Actual
$m $m
General Government Cash Deficit/(Surplus) 349 263
Public Non-Financial Corporations Cash Deficit/(Surplus) 370 127
Total Non-Financial Public Sector underlying Deficit/(Surplus) 719 390
Less Non-Financial Public Sector Net cash flows from investments in financial assets
for policy purposes
(14) (9)
Plus Memorandum items1 23 14
Loan Council Allocation Deficit/(Surplus) 756 413
Notes: 1. Memorandum items include borrowings by local government and the University of Tasmania.
A tolerance band calculated as two per cent of Total Non-Financial Public Sector Cash received from
operating activities (estimated to be $151 million for 2010–11) applies between the budget LCA and the
LCA outcome. Applying this band to Tasmania’s original Budget LCA for 2010–11 gives a tolerance band of
$907 million to $605 million.
If a jurisdiction is likely to exceed its Tolerance Limit, it must provide an explanation to Loan Council and
make that explanation public. The $343 million change in Tasmania’s 2010-11 LCA outcome, to a deficit of
$413 million, exceeds the Tolerance Limit of $151 million estimated at Budget time.
136 2010-11 Treasurer’s Annual Financial Report
The change of $343 million in the LCA between the 2010-11 Budget and 2010-11 outcome is mainly due to:
a decrease in the General Government Cash Deficit of $86 million. The improvement reflects an
increase in Net cash flows from operating activities of $31 million and a decrease in Net cash flows
from non-financial assets of $55 million. Explanation of major variances between the General
Government Budget and actual outcomes is provided in Note 12 of the Treasurer’s Annual Financial
Statements included in this Report;
a decrease in the Public Non-Financial Corporation Sector Cash Deficit of $243 million primarily due to
a decrease in Purchases of non-financial assets of $235 million; and
a decrease in new cash borrowings for the Local Government Sector of $9 million. This is due to a
number of Local Councils delaying the start of planned projects.
Consistent with the LCA arrangements, Tasmania advises Loan Council of these circumstances through
this publication.