Library: Departments of Premier & Cabinet v Treasury & Finance Level 5, 1 Macarthur Street East Melbourne Victoria 3002 DX 210759 Ph: 03 9651 5660 Fax: 03 9651 5659 Email: library@dtf vic.gov.au luiC^i'T1^- IM Department of Treasury and Finance Annual Report 1997/98 Published by The Department of Treasury and Finance - ' - • © State of Victoria 1998 This book is copynght No part may be reproduced by any process except m accordance with the provisions of the Copynght Act Address enquiries to ' . Ms Antoinette Cameron ~ ( 3rd Floor . * 1 Treasury Place ' „ Melbourne 3002 ' , Telephone (03) 96512213 • > ' , . T •"J" ISSN 13251775 ' ' Published October 1998 ' Department of Treasury and Finance 1 Treasury Place Melbourne Victoria 3002 Telephone: (03) 9651 5111 Facsimile: (03) 6954 7215 DTS 753 DX21 Victoria The Honourable Alan Stockdale MLA The Honourable Roger M Hallam MLC Treasurer Minister for Finance Minister for Information Technology and Multimedia Minister for Gaming 1 Treasury Place MELBOURNE VIC 3002 Dear Ministers I am pleased to provide you with the annual report of the Department of Treasury and Finance for the year ending 30 June 1998, prepared in accordance with Section 45 of the Financial Management Act 1994. 1997-98 was a year of very significant achievement for the Department of Treasury and Finance, with a number of long-term strategic objectives being met. A cash budget surplus was achieved for the fourth successive year and the strengthened State finances provided scope in the April 1998 Budget not only for the Government to increase spending in priority areas but also to further ease the tax burden. Public sector net debt was reduced by a further $3.2 billion through the year. This was assisted by the successful sales of Victoria's electricity transmission entity, PowerNet Victoria, and the electricity generator, Southern Hydro Limited. Competition reforms delivered tangible benefits to the community in the form of lower water and electricity charges. 1998 also saw the introduction of the first output-based accrual Budget for the State and the first fully audited set of whole-of-government accounts. These achievements and the overall financial performance of the Government received independent recognition in April 1998 with the upgrading of Victoria's credit rating to triple-A. Worldwide, only three other sovereign or sub-national jurisdictions have ever regained a lost triple-A rating. These achievements would not have been possible without your leadership through the year, and the day-in day-out commitment of the Department's staff. In particular, I would like to acknowledge the contribution made by Dr Mike Vertigan, who retired as Secretary of the Department in March 1998. Yours sincerely LàbRAKïï » i>ir 2 o DEC 2005 Ian Little Secretary Level 5, 1 Macarthur Street East Melbourne Vic 3002 Victoria ON THE MOVE Highlights of 1997-98 2 About the Department of Treasury and Finance Corporate objectives and results Tax reform Financial management reform Gas industry reform Sale of electricity assets Reform of the provision of public sector infrastructure and services Transport reform Achieving excellence in our core central/specialist agency activities Internal priorities Financial statements Statement of financial position Operating statement Statement of cash flows Notes to and forming part of the Financial Statements Directory Acts administered Regulatory and legislative changes Information available on request & compliance index Freedom of Information Workforce data Consultants engaged Building Act compliance Boards and Committees Overseas visits Publications Promotional activities and presentations made by the Department Functions and services of the Department Progress in implementing National Competition Policy Performance against 1997-98 output targets specified in the State Budget 'Prudent financial management has delivered sound finances, and these sound finances can now deliver í realand substantial improvements in the services Government provides to people.' The Honourable Alan Stockdale MLA, Treasurer, Minister for Information Technology and Multimedia. 1997-98 was a watershed year with the achievement of most of the Government's headline long-term targets that were established to address the State's financial crisis in the early 1990s. The significant turnaround in Victoria's economic and financial position and the benefits of the Government's reform program were highlighted by the upgrade of the State's credit rating to triple-A during the year. The Department has been a major contributor to the Victorian Net interstate migration loss from Victoria (persons) Government's achievements in these areas. The highlights of the year were: • Economic activity. Real economic growth was estimated at 3.5 per cent in 1997-98. Victorian trend employment grew by 60 000. Resources are being llllllllllllllln. attracted back to the State, with private business investment 6 per cent higher than in the previous year and net migration losses to other States ceasing. DEC DEC DEC DEC DEC DEC MARCH • Fiscal position. A budget surplus of $583.6 million (adjusted for privatisation 1992 1993 1994 1995 1996 1997 1998 proceeds) was recorded in 1997-98, the fourth consecutive year in which a Net interstate migration losses have now ceased. cash surplus has been achieved. • Contemporary financial management framework. The first fully audited Annual Financial Statement, delivered in October 1997, and the shift from a cash to an accrual budget in April 1998, achieved the major outstanding recommendations of the 1992 Commission of Audit. 'The move to full accrual appropriations in the 1998-99 Budget puts Victoria at the forefront of financial management reform in Australia. ' Development of State and national taxation reform options. As well as developing options for taxation reforms designed to promote the competitiveness of the Victorian economy, the Department has taken a leading role amongst the States' Treasuries in advocating national taxation reform. The Honourable Roger M Hallam MLC, Minister for Finance, Minister for Gaming. Resource Management. Further rationalisation of Government office accommodation known as the City Precinct Strategic Plan was undertaken, involving upfront Reductions in State taxes. Tax rates were reduced by a capital expenditure of $18 million during 1997-98. The further $132 million in the 1998-99 Budget bringing the program is now on schedule to realise ongoing rental savings State's overall tax burden into closer alignment with the of $22 million per annum. Whole-of-government contracts average of the Australian States. for the leasing and/or purchasing of vehicles, electricity, Reductions in utility charges. The Winter Power Bonus, fuel and software were negotiated by the Department. announced in February 1998, will give electricity customers who do not yet have a choice of supplier (i.e. households Victorian Public Sector Net Debt and Credit Rating* and small business) a $60 reduction in their winter 'Standard Et Poors electricity bills for the three years to 2000. In addition, from January 1998, water charges are being reduced by an average of 18 per cent for residential properties. Victoria's return to a triple-A rating. On 22 April 1998, Standard and Poor's announced an upgrade in Victoria's long-term, local currency credit rating to triple-A. Worldwide, only three sovereign or sub-national 1990 1991 1992 1993 1994 1995 1996 1997 1998 jurisdictions have ever regained a lost triple-A rating. As at 30 June Victoria's upgrade to a triple-A credit rating in April 1998 provided Further sale of electricity assets. The Department independent recognition of the strength of the State's finances managed the sale of Victoria's electricity transmission and its economy. entity, PowerNet Victoria, for a sale price of $2,555 billion and the sale of the electricity generator. Southern Hydro Business investment (% of spending) Limited, for $391 million. 1 Reductions in public debt. Victoria's public sector net debt has fallen by two-thirds from $32 billion as at 30 June 1992 to $11 billion by 30 June 1998. 1 Transport reform. In August 1997, the Government announced details of its plans to build on the recent reforms and privatise the Public Transport Corporation's train and tram services, with March 1999 the target date for completion DEC DEC DEC DEC DEC DEC of sales. The V/Line Freight sales process is under way. 1992 1993 1994 1995 1996 1997 Business investment has been above its long-term average for • Water reform. The Department coordinated the the last three years. metropolitan water reform debt and equity restructuring package that took effect in January 1998. h\ mi II • ri'tl if A íEi i u i vA 11 In I CO) : - L.J ^—J U A better future for all Victorians. The Department aims to make Victoria a better place in which to live, to invest and to do business. It is working towards this by delivering a more efficient and effective public sector which provides value for the taxpayer's dollar, and by improving the systems and machinery of Government. The Senior Executive Group I ir^ )' i U J l\ 1 L to R (back) LAJ Mission s V— V LJ \ fiori Paice, Deputy Secretary. Financial Management John Perham, Deputy Secretary, Privatisation and To provide leadership in economic, financial and resource management. Industry Reform, Neil Taylor, Executive Director, Strategic Management and Frank King, Deputy Secretary, Budget and Resource Management. The Department is the key provider of economic, financial and resource L to R (sitting) management policy advice to Government and provides whole-of-govemment Chloe Munro, Deputy Secretary, Energy Projects management services in these areas. In addition, it is directly responsible for Ian Utile, Secretary and Glenn Appleyard, Deputy implementation of significant microeconomic reform initiatives across the Secretary, Economic and Financial Policy public sector. 07 Achieve excellence in our core central/specialist agency activities; Create an environment where the momentum of public sector reform is locked-in and self-sustaining; Generate new major reform recommendations to Government; and Implement major Government policy decisions relevant to the portfolio.