Budget Overview
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2007-08 budget Budget Overview Contents Budget at a Glance 2 Fiscal Outlook 4 Economic Outlook 6 Reducing Taxes 7 Acknowledgements Jobs, Skills and Education 8 The photographs in this publication are reproduced with the Regional Highlights 10 kind permission of: Byron Wauchope Housing 12 Department of Defence Department of Employment, Education and Training Developing Our Communities 13 Department of Health and Community Services Territory Lifestyle 14 Department of Local Government, Housing and Sport Department of Natural Resources, Environment and the Arts Health and Families 16 Northern Territory Police, Fire and Emergency Services Ray Laurence Constructions Pty Ltd Supporting Business 18 Sitzler Laing O’Rourke Joint Venture Tourism NT Police and Safety 20 2007-08 budget Budget at a Glance Budget 2007 continues to deliver on the Government’s priorities of: Investing in Roads • supporting and growing business; The 2007‑08 Budget delivers a $180M infrastructure program • enhancing our great lifestyle; for Territory roads and national • improving education and training outcomes; highways including capital works and repairs and maintenance. • building a healthier Territory; and Specific projects include: • providing a safer community for all Territorians. » $45.9M ongoing for the Victoria Highway Business and the Economy » $12.3M for roads around The Budget builds on a confident economic outlook for 2007‑08: Wadeye • economic growth and business investment to continue at historically high » $10.5M ongoing for the levels, with: Red Centre Way – a forecast increase of 3.7 per cent in gross state product; » $10M for Tiger Brennan Drive – abolition of stamp duty on hiring, saving $5.3 million a year; – lowest annual small business taxes in Australia; – increased stamp duty concession for first home buyers up to $350 000, worth up to $15 312; and – refocused HomeNorth Scheme for families and land releases to stimulate residential construction; • forecast population growth of 1.4 per cent and employment growth of 2.3 per cent; • bulk commodity exports to grow as peak production is reached; • continued capital investment in Defence projects, Darwin Waterfront and Blacktip pipeline; and • a record Territory Government infrastructure program, building roads, housing, health and education facilities across the Territory. Investing in Jobs and Skills Building a skilled workforce that meets industry needs and maximising employment opportunities for Territorians are key priorities of Government. The 2007‑08 Budget Key Growth Forecasts includes an additional $8.5 million over four years for training and Year on Year estimate forecast Percentage Change 2002‑03 2003‑04 2004‑05 2005‑06 2006‑07 2007‑08 employment initiatives through Real GSP 0.2 0.2 6.0 7.5 7.2 3.7 Jobs Plan 3, commencing Resident employment ‑ 0.1 ‑ 2.2 ‑ 2.0 4.0 4.4 2.3 2007‑08. This brings the total Population1 0.1 0.3 1.2 2 1.6 1.4 commitment to Jobs Plan Darwin CPI2 2.2 2.1 1.6 2.6 4.4 3.0 initiatives to $21.3 million 1 As at December, annual percentage change over four years. 2 As at December 2 Budget at a Glance Budget at a Glance Jobs Plan 3 builds on the success of Jobs Plan 1 and 2 by reinforcing strategies and initiatives that target gaps existing in the training and employment markets, enhance industry partnerships and improve pathways to jobs in regional and remote areas. Record Budgets: Health, Education, Police Record budgets in 2007‑08 for health, education and police 2007‑08 Infrastructure delivers on Government’s ongoing commitment to these key Program priorities: Total infrastructure spending will be $645M: » capital works cash of $232M • $838 million for health and community services; » capital grants of $70M • $658 million for employment, education and training; and » Power and Water Corporation capital expenditure • $226 million for police, fire and emergency services. of $143M » repairs and maintenance totalling $193M Budget Aggregates (including Power and Water Corporation) The Budget aggregates have improved in all years. » infrastructure‑related expenses of $7M Year ended 30 June 2007 2008 2009 2010 2011 New Works by Category $M General Government $M $M $M $M $M Roads 66.9 Operating revenue 3 198 3 339 3 445 3 509 3 632 Housing and Community Amenities 33.9 Operating expenses 3 167 3 310 3 437 3 494 3 594 Education 16.7 Cash outcome ‑ 11 ‑ 40 0 17 34 Health Services and Hospitals 16.5 Operating result 31 29 8 15 38 Recreation and Culture 15.5 Fiscal balance ‑ 71 ‑ 96 ‑ 41 ‑ 32 ‑ 10 Public Order and Safety 6.3 Non Financial Public Sector Other 4.8 Net debt to revenue (%) 44 45 45 44 42 Minor Works 33.0 Net debt + employee 116 116 115 114 110 Power and Water Corporation 143.0 liabilities to revenue (%) Recurrent Taxes for a Business with 80 Staff Recurrent Taxes for a Business with 100 Staff $000 $000 400 500 320 400 240 300 160 200 80 100 0 0 NSW Vic Qld WA SA Tas ACT NT NSW Vic Qld WA SA Tas ACT NT Budget at a Glance 3 2007-08 budget Fiscal Outlook Fiscal Highlights Fiscal highlights in the 2007‑08 Budget include: • an improved cash position for 2006‑07, with all other cash targets remaining unchanged; • operating surpluses projected for all years from 2006‑07 to 2010‑11; • fiscal balance continuing on a trend towards surplus, in line with the fiscal strategy target of a balance by 2012‑13; • infrastructure investment in 2007‑08 of $645 million, an increase of $109 million since 2006‑07; • contribution of $60 million in 2006‑07 towards the Territory’s superannuation liabilities; • net debt to revenue ratio falling to 42 per cent by 2010‑11, a significant improvement on the 67 per cent recorded in 2001‑02; and • net debt plus employee liabilities to revenue ratio falling to 110 per cent by 2010‑11, a significant improvement on the 134 per cent recorded in 2001‑02. The improved budget position is due to additional revenue, consistent with growth in the Territory and national economies, General Government Targets and continued spending restraint by the Territory Government. 2006‑07 2007‑08 2008‑09 2009‑10 2010‑11 Estimate Budget Forward Estimate The improved outcome for 2006‑07 has provided capacity for the Government to make Cash ($M) ‑ 11 ‑ 40 0 17 34 a $60 million contribution towards reducing Operating Result ($M) 31 29 8 15 38 the Territory’s unfunded superannuation Fiscal Balance ($M) ‑ 71 ‑ 96 ‑ 41 ‑ 32 ‑ 10 liability, benefiting future budgets. Note: surplus (+), deficit (‑) Consistent with other targets, the ratios of net debt and net debt plus employee liabilities to revenue are expected to improve over the forward estimates. Net Debt and Net Debt plus Employee Liabilities to Revenue Ratios Year Ended 30 June 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Net Debt (%) 67 64 57 54 48 44 45 45 44 42 Net Debt + Employee Liabilities (%) 134 131 118 1241 112 116 116 115 114 110 1 Increase represents transition to International Financial Reporting Standards 4 Fiscal Outlook Government’s Fiscal Strategy Sustainable Service Provision Target: General government net operating balance by 2012‑13. Budget Highlights » Assessment: Operating surplus predicted for Infrastructure all years. Total infrastructure payments in 2007‑08 are $645 million Infrastructure for Economic and and include $135 million for repairs and maintenance. Community Development This is an increase of 20 per cent from the estimated Target: Total infrastructure investment at appropriate expenditure in 2006‑07. The 2007‑08 capital works levels. program totals $368 million, $19 million higher than » Assessment: Record infrastructure spending in 2007‑08. 2006‑07. Target: Achieve general government net lending Expenses balance by 2012‑13. Expenses are expected to be $3.31 billion in 2007‑08, » Assessment: Fiscal balance trending towards surplus. $147 million higher than 2006‑07. The key functions of Competitive Tax Environment health, education and public order and safety comprise Target: Territory taxes and charges competitive with the 59.3 per cent of total expenses, an almost 3 per cent average of the states. greater share than last year. Increases in expenses » Assessment: Tax revenue per capita second lowest in are the result of usual prices growth and new and Australia. expanded initiatives. Prudent Management of Liabilities Revenue Target: Net debt plus employee liabilities to total revenue Territory revenue is expected to be $3.34 billion in to fall. 2007‑08, $141 million higher than 2006‑07. Territory » Assessment: Ratio reducing over the forward estimates period. revenue consists of 65 per cent from GST revenue, 15 per cent from Australian Government grants and 20 per cent from own‑source revenue. The largest component of own‑source revenue is payroll tax, which contributes 20 per cent, followed by taxes on property at 14 per cent. Mining royalties are also contributing a greater proportion to own‑source revenue at 10 per cent, with estimated revenue of $72.2 million in 2007‑08. Own-Source Revenue Territory Expenses Taxes on property Taxes on insurance Other industry services General public services $97M $23M $664M $120M Public order and Other economic safety $387M affairs $107M Motor vehicle Taxes on employers taxes $41M $137M Recreation, culture Education and housing $458M $684M Taxes on gambling $68M Mining royalties $72M Health and welfare $894M Fiscal Outlook 5 2007-08 budget Economic Outlook A Strengthening Economy Business Confidence net balance The strengthening Territory economy is expected to 80 Northern Territory consolidate in 2007‑08 with continuing steady population 70 increases and jobs growth. Positive prospects for the 60 Territory are reflected in high levels of consumer and 50 40 Australia business confidence, above the national average. 30 Construction activity, employment and population growth 20 are expected to remain strong with forecast expenditure 02 03 04 05 06 07 Year ended June of $1.7 billion in 2007‑08.