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Getting Things Done Victorian Budget 18/19 Budget Victorian 2018-19 Financial Report 2018-19 (incorporating Quarterly Financial Report No. 4) 4) No. Financial Report Quarterly (incorporating Victorian Budget 18/19 GETTING THINGS DONE 2018-19 Financial Report 2018-19 Financial Report (incorporating Quarterly Financial Report No. 4) dtf.vic.gov.au Presented by Tim Pallas MP Treasurer of the State of Victoria The Secretary © State of Victoria 2019 Copyright queries may be directed to Department of Treasury and Finance (Department of Treasury and Finance) [email protected]. 1 Treasury Place Melbourne, Victoria, 3002 You are free to re-use this work under a Australia Creative Commons Attribution 4.0 licence, provided you credit the State of Victoria Tel: +61 9651 5111 (Department of Treasury and Finance) Website: dtf.vic.gov.au as author, indicate if changes were made ISSN 1443-1289 (print) and comply with the other licence terms. ISSN 2204-7166 (online) If you would like to receive this publication Authorised by the Victorian Government The licence does not apply to any branding, in an accessible format please email 1 Treasury Place, Melbourne, 3002 including Government logos. Published October 2019 [email protected] or telephone 9651 5111 Printed by Waratah Digital, Port Melbourne This document is also available in PDF and Word format at dtf.vic.gov.au Financial Report (incorporating Quarterly Financial Report No. 4) 2018-19 Presented by Tim Pallas MP Treasurer of the State of Victoria for the information of Honourable Members _______________________ Ordered to be printed _______________________ October 2019 No. PP 76, Session 2018–19 TABLE OF CONTENTS Chapter 1 – Foreword ................................................................................................................................... 1 Chapter 2 – General government sector outcome ......................................................................................... 3 Chapter 3 – State of Victoria outcome......................................................................................................... 13 Chapter 4 – Annual Financial Report ........................................................................................................... 19 1. About this report .......................................................................................................................................... 33 2. How funds are raised ................................................................................................................................... 35 3. How funds are spent .................................................................................................................................... 40 4. Major assets and investments ..................................................................................................................... 48 5. Financing state operations ........................................................................................................................... 54 6. Other assets and liabilities ........................................................................................................................... 64 7. Risks, contingencies and valuation judgements ......................................................................................... 74 8. Comparison against budget and the public account ................................................................................ 105 9. Other disclosures........................................................................................................................................ 129 Chapter 5 – Supplementary uniform presentation framework tables ........................................................ 155 Appendix A – General government sector quarterly financial report ......................................................... 161 Appendix B – Financial Management Act 1994 – Compliance index .......................................................... 165 Style conventions ..................................................................................................................................... 169 CHAPTER 1 – FOREWORD PURPOSE Key drivers of the growth in demand were private business investment (which rose by 9.1 per cent), The 2018-19 Financial Report presents the dwelling investment (4.8 per cent) and public demand consolidated financial outcomes for the State of (4.1 per cent). Victoria, including the general government sector, the public non-financial corporations sector and the Strong population growth has continued to support public financial corporations sector. increased economic activity in Victoria. Victoria’s population grew by 2.2 per cent over the year to This chapter outlines the economic and fiscal December 2018, well above the rate of growth for context for the State’s financial performance and the rest of Australia (1.4 per cent). All components position, and summarises the 2018-19 results. contributed to this growth: natural increase, net Chapter 2 analyses the results for the general interstate migration and net overseas migration. government sector, comparing them with the actuals in 2017-18 and the revised estimates for the Ongoing strength in the economy also continued to year as presented in the 2019-20 Budget. Chapter 3 be reflected in improved labour market conditions. presents the 2018-19 results for the State of Employment in Victoria grew by 3.4 per cent in Victoria. 2018-19, with full-time employment rising by 4.1 per cent and part-time employment by 1.8 per cent. This Chapter 4 contains the audited financial statements took the unemployment rate down to an 11-year low as required under the Financial Management Act 1994. of 4.6 per cent in 2018-19, despite the participation These are presented in line with applicable Australian rate remaining at a record high of 65.9 per cent in accounting standards and pronouncements, in 2018-19. By the end of June 2019, 470 600 jobs had particular AASB 1049 Whole of Government and General been created in the Victorian economy since the Government Sector Financial Reporting. Government was elected in November 2014, Chapter 5 provides supplementary information including 60 100 in regional Victoria. required under the Uniform Presentation Inflation slowed in 2018-19, while wage growth Framework. Appendix A includes the Quarterly increased moderately. Aggregate inflation was Financial Report for the general government sector constrained by subdued housing price pressures and as required by Section 26 of the Financial Management downward pressure on some administered prices Act 1994. Appendix B presents a compliance index such as utilities and child care. providing a linkage between the relevant legislative provisions relating to the preparation of this report and the disclosure provided therein. FISCAL OUTCOMES The Government achieved a general government ECONOMIC CONTEXT sector operating surplus of $1.4 billion for 2018-19. Victoria’s economy continued to perform strongly The operating surplus was $267 million higher than in 2018-19, leading to growth in employment of the revised budget estimate in the 2019-20 Budget, 108 900 persons. This was supported by high largely due to the timing of activity across population growth and low interest rates. departments. Victoria’s state final demand grew by 3.4 per cent in Total revenue from transactions for the general 2018-19, double the national average increase government sector was $69.6 billion. This was (1.7 per cent). Gross state product (GSP) is forecast consistent with the revised budget estimate and to expand by 3.0 per cent in 2018-19. $5 billion higher than the previous year. 2018-19 Financial Report Chapter 1 1 State taxation revenue was $23.7 billion, $161 million Employee expenses of $25.4 billion were below the revised budget estimate, and $724 million $309 million above the revised budget estimate and higher than in 2017-18. The decrease compared with $2.1 billion higher than in 2017-18. Compared with the revised estimate was primarily driven by lower the previous year, this was mainly attributable to than expected land tax. The increase compared with increased resources in hospitals and healthcare to 2017-18 is largely attributable to higher land tax meet demand, additional teaching and support staff revenues as a result of higher property revaluations for schools to meet growing school enrolments and in 2018 and higher payroll tax reflecting the strong to achieve the Government’s Education State labour market. These were partially offset by lower commitment, and more police following the land transfer duty due to weakened property prices implementation of the Community Safety Statement. and lower transaction volumes. The increase in employee expenses also reflects increases in remuneration levels in enterprise Dividends, income tax and rate equivalent revenue bargaining agreements, including under teachers, was $1 billion, $78 million above the revised budget police and public health sector agreements. estimate and $249 million higher than in 2017-18. The increase in 2018-19 was mainly due to higher Other operating expenses in 2018-19 were dividends received from the public financial $21 billion, $222 million below the revised budget corporations sector, partially offset by lower estimate and $1.2 billion higher than the previous dividends from the water corporations. year. The increase since 2017-18 mainly reflects additional spending in the health, community safety Revenue from the sale of
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