TABLE OF CONTENTS Chapter 1: Fiscal Strategy and Budget Priorities Overview ....................................................................................................................................... 1.1 Fiscal Strategy ............................................................................................................................... 1.3 Fiscal Outlook ............................................................................................................................... 1.8 Budget Priorities ........................................................................................................................... 1.11 Attachment — Variations to Operating Balance and Net Lending Estimates since the 2004-05 Budget and the 2004-05 Mid Year Budget Review................... 1.18 Chapter 2: Expenditure Overview ....................................................................................................................................... 2.1 Key Components of Expenses .................................................................................................... 2.11 Budget Initiatives by Portfolio and Agency.............................................................................. 2.19 Chapter 3: Revenue Overview ....................................................................................................................................... 3.1 Taxation Measures........................................................................................................................ 3.1 Emergency Services Levy............................................................................................................ 3.7 Agency Revenue Measures ......................................................................................................... 3.8 Fees and Charges.......................................................................................................................... 3.9 General Government Sector Revenue........................................................................................ 3.10 Taxation.......................................................................................................................................... 3.11 South Australia’s Relative Tax Effort......................................................................................... 3.17 Current Grants .............................................................................................................................. 3.19 Capital Grants ............................................................................................................................... 3.22 Schools Revenues and Expenses ................................................................................................ 3.22 Sales of Goods and Services ........................................................................................................ 3.23 Interest Income.............................................................................................................................. 3.24 Other Revenue .............................................................................................................................. 3.25 Chapter 4: Intergovernmental Finances Overview ....................................................................................................................................... 4.1 Recent Developments................................................................................................................... 4.1 Local Government Finances........................................................................................................ 4.14 Chapter 5: Managing the State’s Assets and Liabilities Overview ....................................................................................................................................... 5.1 General Government Financial Position ................................................................................... 5.1 Non-Financial Public Sector Financial Position ....................................................................... 5.8 Management of Assets and Liabilities....................................................................................... 5.10 Table of contents — continued Chapter 6: Government Businesses Overview ....................................................................................................................................... 6.1 Public Non-Financial Corporations: Operating Performance................................................ 6.3 Governance Arrangements ......................................................................................................... 6.7 Balance Sheet Structure................................................................................................................ 6.7 Competitive Neutrality Policies and Principles ....................................................................... 6.8 Chapter 7: Risk Statement Overview ....................................................................................................................................... 7.1 Revenue Risks ............................................................................................................................... 7.1 Expenditure Risks......................................................................................................................... 7.6 Contingent Liabilities................................................................................................................... 7.11 Chapter 8: South Australian Economy Overview ....................................................................................................................................... 8.1 Recent Economic Performance and Outlook............................................................................ 8.1 South Australian Export Performance....................................................................................... 8.3 Population...................................................................................................................................... 8.4 Labour Market Trends ................................................................................................................. 8.6 Business Investment..................................................................................................................... 8.8 Housing Sector.............................................................................................................................. 8.10 Costs and Prices ............................................................................................................................ 8.11 Appendices Appendix A: Uniform Presentation Framework Appendix B: General Government and Non Financial Public Sector Financial Statistics Time Series Appendix C: Consolidated Account Appendix D: South Australian State Public Sector Organisations Appendix E: Tax Expenditure Statement Glossary of Terms used in the Budget Papers Abbreviations used in the Budget Papers CHAPTER 1: FISCAL STRATEGY AND BUDGET PRIORITIES Overview The Government’s sound financial management was rewarded in 2004 with both Standard & Poor’s and Moody’s Investor Services credit rating agencies upgrading South Australia’s credit rating to triple-A. This is in recognition of South Australia’s robust fiscal performance, low net debt and other liabilities and the Government’s strong commitment to sound financial management. The overriding imperative of the 2005-06 Budget process is to maintain sound budget outcomes and the strength of the Government’s balance sheet. The restoration of South Australia’s triple-A credit rating has provided greater flexibility within the budget strategy, supporting forecast net lending deficits in the short term where circumstances warrant increased expenditure on high priority infrastructure projects. The net lending deficits forecast in the 2005-06 Budget reflect the impact of funding the infrastructure needs of South Australia as outlined in the Strategic Infrastructure Plan for South Australia. Resource allocation decisions in the 2005-06 Budget have been guided by South Australia’s Strategic Plan objectives. New funding has been provided for multilateral initiatives: • Road Safety — across South Australia Police, the Courts Administration Authority, and the Department for Transport, Energy and Infrastructure; • Social Inclusion — across the Attorney-General’s Department, the Departments of Transport, Energy and Infrastructure, Families and Communities, Further Education, Employment, Science and Technology and Education and Children’s Services; • Public Order and Safety — across South Australia Police, the Courts Administration Authority, the Attorney-General’s Department and the Department for Administrative and Information Services; • Skills and Business Support — across the Departments of the Premier and Cabinet, Trade and Economic Development and Further Education, Employment, Science and Technology, the South Australian Tourism Commission and a range of cuts to business taxes including land tax, debits tax, mortgage duty and rental duty; • Science and Innovation — across the Departments of Primary Industries and Resources and Further Education, Employment, Science and Technology; and • Environment — across the Departments of Trade and Economic Development, Primary Industries and Resources, Transport, Energy and Infrastructure, Environment and Heritage and Water, Land and Biodiversity