State Of Queensland Australia 18-K/A Annual report (foreign governments) (amended)

EXHIBIT (c)(viii)

Queensland Government State Budget Papers for 2006-07

Exhibit (c)(viii)

APPROPRIATION BILL 2006

(Second Reading Speech, 6 June 2006)

TREASURER

The Honourable Anna Bligh MP

Deputy Premier, Treasurer and Minister for State Development, Trade and Innovation

APPROPRIATION BILL 2006

(Second Reading Speech, 6 June 2006)

TREASURER

The Honourable Anna Bligh MP

Deputy Premier, Treasurer and Minister for State Development, Trade and Innovation

Mr Speaker, I move that the Bill now be read a second time.

Today’s Budget builds Queensland in every sense of the word.

It continues our tradition of fiscal responsibility and it grasps the opportunity to build the Queensland of tomorrow.

This Budget centres on our overriding priority as a Government: a better standard of living for all Queenslanders. The core commitments of our budget strategy are:

• Managing for strong finances;

• Delivering quality services; and

• Securing growth and prosperity through productivity.

Firstly, strong finances. We are responsible economic managers with a focus on maintaining a healthy balance sheet, delivering an economic climate where industry continues to grow, jobs continue to flourish and prosperity is secured.

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Secondly, delivering quality services ensures that all Queenslanders can share in our prosperous economy. We recognise that families are the key building block of a strong and healthy society. Our economic policy must deliver the services that support families as they bring up children and create the communities of tomorrow.

Thirdly, securing growth and prosperity through productivity. Constant improvement in productivity is key to improving standards of living in Queensland and we are determined to drive productivity growth.

To these ends, today’s Budget:

• builds investment through tax cuts;

• builds services and infrastructure with record spending; and

• builds opportunities for our children with a massive boost to our schools.

Let me start by outlining Queensland’s strong financial position.

1. Managing for Strong Finances

Queensland today is in an enviable position. Our economy is one of the strongest in the world, our resource sector is booming, our unemployment rate is close to a 30-year low, infrastructure and business investment are at record highs and our balance sheet is one of the strongest in the nation.

Solid and responsible financial management fundamentally underwrites everything we do as a Government. The Beattie Government has an unparalleled record for prudently managing its finances.

Net debt is the most common measure used to judge the overall strength of a jurisdiction’s fiscal position. High net debt imposes a call on future revenues and reduces financial flexibility.

I am pleased to report that Queensland has net financial assets of $5,155 per capita, while other states have average net financial liabilities of $111 per capita.

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This year, the Queensland economy has grown by 3 ¹/2%, compared with 2 ¹/2% nationally – the tenth consecutive year in which Queensland has outperformed the rest of Australia. More importantly, growth in the Queensland economy is forecast to strengthen to 4 ¹/4% next year to again exceed the national average.

Despite higher interest rates and oil prices, household spending is forecast to continue to grow at 4 ¹/2% for the second year in a row, as Queenslanders continue to benefit from exceptional labour market conditions and strong growth in household incomes and wealth.

Last year we predicted an operating surplus of $934 million in 2005-06. I am pleased to report the surplus is now estimated at $2.85 billion – with an underlying surplus of $1.72 billion.

The forecast surplus for 2006-07 is $245 million. In addition, healthy operating surpluses are budgeted for each of the outyears.

Higher world commodity prices have boosted Queensland’s export earnings and related business investment. In the three months to April 2006, the nominal value of Queensland’s overseas merchandise exports rose 39.4% compared with the same period a year earlier, to total $8.8 billion.

Business investment is estimated to surge by 16 ¹/2% in 2005-06. Business investment is forecast to increase further next year, to surpass $25 billion for the first time. This represents a level of business investment twice that of only five years ago.

In 2005-06, working Queenslanders exceeded 2 million for the first time. Employment is set to grow at double the national rate next year. As a result, the unemployment rate in Queensland is expected to remain around the 30-year low of 5%, and below the national rate.

For the past eight years we have consistently managed for a strong, stable financial position.

Let me turn now to the new and expanded services made possible by our strong financial management.

2. Delivering Quality Services

Strong communities and strong families rely on quality services.

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Health Care

Paramount among these is quality health care.

In October last year the Government announced the most wide ranging program of reform to health care in the history of this State.

Our Health Action Plan committed more than $6.4 billion in additional funding over the next five years for more medical staff; more services; and better facilities.

Today, the Government further strengthens this commitment. I am pleased to announce our investment in the Health Action Plan will be increased to $9.7 billion in just over five years.

In this year alone, we will spend $6.65 billion on health, an increase of 24% on last year.

The Beattie Government has doubled funding to Health from 1998-99 to 2006-07.

This additional funding will provide more doctors, nurses and allied health professionals, more services, more capacity in our hospitals, more equipment and technology, shorter waiting times and better facilities for the people who need them.

Today we make the single largest injection of funds into Queensland’s Health system in the history of this State. Our commitment to the people of this State is to build the best possible Health system and with the increased funding of $9.7 billion, we deliver on that commitment.

Children and Families

Our government values families as the fundamental building block of our society.

We also recognise society is changing, in work patterns and in parenting roles and responsibilities. Family life is busier and more demanding than ever. We understand these changes need new initiatives, new ideas and flexibility.

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This Budget is the first that provides a doubling in the maternity leave entitlement of Queensland public sector workers from six weeks to twelve weeks. A new entitlement of up to two years unpaid leave can now be taken by either parent to help families in these important early years.

As part of our maternity action plan, new parents and young families will benefit as the first three of our new family support hubs are established this year. These new services, to be established by Queensland Health, will provide care and assistance to mothers during their pregnancy and after the birth of their baby.

For some families, raising children presents many challenges. $35 million over the next four years will establish four new Early Years Service Centres in high needs areas to provide professional parenting and child development services for these families. These centres will provide early intervention before a challenge becomes a crisis.

Disability Services

This government continues to recognise the needs of those families and individuals living with a disability.

Today’s Budget builds on our government’s strong record in the delivery of these essential services.

An additional $128 million in recurrent funding and $6 million in capital funding over four years will be made available in this Budget, increasing total spending to $633 million.

This represents a 22% increase on the previous year but a massive 186% increase on the disability services budget we inherited in 1998. The new funds improve community services and accommodation support and deliver better respite care services for children and adults with a disability.

This government is committed to people with disabilities playing an active role in our community. To this end a further $47.7 million will be made available in 2006-07 for modifications to the Citytrain network to further improve access for people with disabilities.

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Child Safety

Regrettably, even in the midst of Queensland’s strong economy, many are still doing it tough.

Unfortunately, the number of children entering the care of the State is continuing to grow. To meet this increasing demand and to provide a child protection system worthy of the expectations of all Queenslanders, the Government will commit more than $500 million in 2006-07 to the Department of Child Safety – almost a tripling of funds in the last three years.

In 2006-07, an extra $109 million will be provided to continue the reforms of recent years and to implement new programs and projects. New services include $4 million in capital to establish two new residential therapeutic facilities and $11.6 million over four years for new services to Indigenous children.

The Government has now implemented 94 of the 110 recommendations for reform of Child Safety set down by the Crime and Misconduct Commission and we expect to implement all 110 by the end of this year.

Housing

This government does not forget those most in need, and in housing services this is particularly true.

Additional funds will see new programs to support some of our State’s most vulnerable people, including nearly $40 million over four years for 70 units of accommodation to enable people with spinal cord injuries to leave hospital and $20 million to improve housing in Indigenous communities.

Non-Government organisations

Many government services are delivered in partnership with non-government organisations. In recognition of their vital role, the level of indexation applied to grants to these groups will rise from 2.5% to 3.4% in 2006-07.

Public Safety

Strong and healthy communities must be safe communities. This Budget continues the Government’s firm commitment to public safety and law and order.

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This year, the operating budget of the Queensland Police Service will grow by $122 million to support new initiatives, including 350 extra sworn police officers and better police computer systems to cut response times and solve crimes faster.

The total number of sworn officers will increase by almost 3,000 since the first Beattie Government was elected, to a record 9,728 officers by September 2007.

This will maintain Queensland’s police to population ratio above the national average.

New recurrent funding of $103.9 million and $50.6 million in capital will be made available over four years for a Public Safety Network which will provide a single upgraded data system for our Police, Emergency Services, Corrective Services and the Department of Justice and Attorney-General.

The Government will also recruit an additional 144 ambulance officers over three years and employ another 35 communications officers next year to improve ambulance call response times.

New funding of $35 million over four years will further strengthen community safety with the introduction of tougher supervision and surveillance measures into our probation and parole system.

Rural and Regional Queensland

While many Queenslanders are benefiting from our strong economy, some rural communities in particular are facing challenging times.

As I speak today, more than 60% of the State is declared drought affected while other areas are recovering from cyclone and flood damage.

On the morning of the 20^th of March this year, one of the most powerful and destructive cyclones seen in our State hit the North Queensland coast.

The recovery response in those communities affected by this storm is a testament to the spirit of the Queensland people.

This Budget includes funding for the ongoing rebuilding effort under joint Federal-State disaster assistance measures to get North Queensland back on its feet. While it may be some time before the final costs of the devastation are clear, over $100 million has been set aside by the Government.

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Queenslanders living in rural and regional areas face a range of challenges. In conjunction with AgForce and the Local Government Association, we have released a 10-year Blueprint for the Bush to build the sustainability, liveability, and prosperity of rural Queensland. The Blueprint commits more than $150 million over the next four years to a range of initiatives that will assist rural communities.

Environment

Our government believes that we have a duty of care to protect, manage and revitalise Queensland’s unique environment.

To this end, today’s Budget provides $20 million to acquire high environmental value properties in South East Queensland and $3 million for similar programs in Cape York.

It also provides $2.1 million over four years for conservation and management of koala habitats.

The degraded East Trinity site near Cairns will receive almost $2.5 million over three years for soil remediation and management of the site.

The service improvements and expansions outlined in this Budget are an investment in the health, well being and security of Queensland’s people, their families and their communities.

We can only continue to build and expand our services if we continue to achieve economic growth. Let me now detail our efforts to secure the future growth and prosperity of Queensland through a relentless pursuit of productivity gains.

3. Securing Growth and Prosperity through Productivity

Our government seeks to keep Queensland the best place in Australia to invest, the best place to do business – with an economy equipped with the infrastructure and the highly skilled workforce it needs to thrive.

Since the Beattie Government came to power, Queensland has bettered the national average for productivity growth. We aim to go further ahead.

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We understand that competitive taxation arrangements attract investment and create jobs.

Today’s Budget enhances Queensland’s position as a State with one of the most competitive tax arrangements in the country, with per capita State tax collections on average 15% lower than in other States.

This Government has announced a timetable for the abolition of nine taxes and duties. The savings to Queenslanders from the abolitions will rise from $290 million in 2005-06 to over $1 billion per year by 2011-12. The cost to revenue from the abolition of these taxes will be $4.5 billion over this seven year period.

From 1 January 2007, we will abolish hire duty and unquoted marketable securities duty at a cost of $16.5 million, growing to $33 million in a full financial year.

However, our commitment to a strong investment environment does not end there.

I am pleased to announce a further reform to payroll tax. From 1 July this year, the tax free threshold for payroll tax will increase from $850,000 to $1 million.

Some 600 employers who would have been liable to pay this tax in 2006-07 will now not be required to pay and a further 4,000 employers will receive payroll tax reductions.

This reform makes Queensland’s payroll tax threshold one of the highest in the country and means that approximately 90% of Queensland businesses will not pay any payroll tax.

This is good news for jobs and good news for business. Importantly it will make the biggest difference to small businesses, the job generators of Queensland.

This Government gave a commitment in the last budget to review land tax each year. I am pleased to announce that from 1 July 2006, the tax free threshold for resident individual land tax payers will be increased from $450,000 to $500,000. This will mean more than 5,000 individuals who would have paid land tax next year will no longer do so and 15,000 others will benefit.

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This measure ensures that the benefits of our land tax reforms of last year can be maintained.

I am also pleased to announce a new first home owner transfer duty concession for the purchase of vacant land, encouraging Queenslanders to invest in their own home. This benefit is worth over $1 million in this Budget, growing to $2.2 million thereafter.

These reforms combine to make our State the most attractive investment destination in the nation.

Investment attraction, strong fiscal management and balanced economic settings are our foundations. But this government recognises long term productivity can only be assured by investing in the knowledge and skills of our people and the delivery of the key physical infrastructure that underpins economic progress.

Education and Skills

Investing in knowledge, research, education and skills drives modern, thriving, productive economies.

As part of the Smart State Strategy, this Government approved $128 million over four years for the Innovation Building Fund. In this year, $46 million will fund seven new research facilities in Brisbane, Mackay, Townsville and the Gold Coast.

In Queensland’s booming economy, skilled workers are becoming a scarce resource.

This Budget commits a billion dollar investment for training and skills initiatives outlined in the Queensland Skills Plan to improve the skills base of the Queensland workforce and significantly lift the opportunities available to individuals seeking to upgrade their own qualifications.

Over the next four years, around $800 million will be invested in developing the skills of Queenslanders.

Major initiatives include an additional 17,000 trades training places and an additional 14,000 Certificate IV and above training places to be available each year by 2010.

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In addition, a $300 million major capital works investment program will commence to modernise the State’s network of TAFE Institutes. Of this, around $46 million is allocated in 2006-07.

At its heart, this Budget recognises the fundamental importance of investing in our schools and in our school children.

Funding for education is at record levels. This Budget increases recurrent spending on Queensland schools to a record $5.17 billion, some 8.6% higher than last year. Capital spending also increases by 9.2% to a total of $497 million.

In February next year, every State, Catholic and Independent primary school in Queensland will offer an additional year of school – our new Prep Year.

This Budget commits $106 million to deliver new and refurbished Prep Year classrooms, and a further $11 million in grants for curriculum resources, books and materials. We are also committing up to 100 extra teachers and an additional 10,000 hours of teacher-aide time per week to support Prep Year.

Additional funds will support other significant reforms, new teachers to reduce class sizes, the further roll out of technology to create smart classrooms, the support needed to ensure that children with disabilities can reach their potential and new programs to ensure the success of our “learning or earning” reforms.

Today’s Budget goes beyond our reforms to date. Today we rise to the challenge of delivering to our children the best possible learning environments. We do this because Queensland children are competing against the world.

Our children need world class schools and classrooms. That is why the centrepiece of this Budget is the most significant new injection of capital works spending ever seen on Queensland’s schools.

We are making a $1 billion investment in school renewal and school upgrades over the next five years. The new program – Tomorrow’s Schools – Providing for a Smarter Future – will involve parents and school communities in an unprecedented way in planning for the future of Government schools in local areas.

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The program recognises that many of our schools are in need of extra assistance for minor projects that make all the difference. To meet this need, Tomorrow’s Schools will begin with a School Community Development program of $50 million in the 2006-07 year, to fund small priority capital works projects for government schools, with projects selected on the advice of parents.

The program will then see $850 million invested in modernising and refurbishing Queensland government schools, again in consultation with parents.

Queensland’s Catholic and Independent schools will also benefit with a one-off allocation of $100 million this financial year to assist these schools meet the demands of the future.

Let me make it clear that the billion-dollar Tomorrow’s Schools program represents a new investment in our children’s classrooms and learning environments and the funds are in addition to existing school capital programs.

Our children deserve the best that we can give them. Our job is to create opportunity and give our children every chance of success.

Today’s investment of $1 billion in the schools of Queensland centres on giving every Queensland child the best opportunity to reach their full potential and the best opportunity to make it in a competitive world environment.

Infrastructure

Our Government has invested unprecedented, record amounts in infrastructure to build this State.

This year a record $8 billion in capital works was undertaken. The Government will now further increase the investment in capital works projects for 2006-07.

For the first time ever, Queensland’s capital works budget is forecast to exceed $10 billion.

Our capital program is the largest per capita program in the country.

In 2006-07 alone, it includes $2.86 billion for energy projects, $2 billion for roads, and $856 million for ports and $838 million for rail. These projects fundamentally underpin economic growth for the State.

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In 2006-07, capital spending represents 5.5% of our Gross State Product and compares with the Federal Government’s investment in infrastructure of only 1.1% of Gross Domestic Product.

It is critical that the Government plans for infrastructure across the whole State. The South East Queensland Infrastructure Plan and Program and the recently announced Blueprint for the Bush provide all Queenslanders with a clear map for infrastructure provision wherever they live.

Importantly, almost 60% of the State’s capital program will occur outside the Brisbane region.

Let me briefly outline some of the projects to be commenced or delivered next year through this $10.1 billion investment:

• Main roads including: duplication of the Gateway Bridge; additional lanes on the Sunshine Motorway; the Tugun Bypass; and, rehabilitating and widening the Dawson Highway between Gladstone and Biloela.

• Transport priorities include: the Roma Street/King George Square section of the Inner Northern Busway and the Eastern Busway; $274 million for coal rolling stock in Central Queensland; and almost $400 million on ports in Gladstone and Rockhampton.

• Education and Skills programs will be supported by new schools in Burpengary West, Edmonton West, Redlynch and Springfield Lakes and new major TAFE facilities on the Gold Coast and in Mackay, Townsville, Acacia Ridge and Eagle Farm.

• Energy projects include a record $1.7 billion in expenditure by Energex and Ergon Energy and almost $360 million to continue development of the Kogan Creek power station and coal mine.

The State’s most significant new cultural infrastructure in 20 years – the Millennium Arts complex at the Southbank Cultural Precinct – will open this year.

We will also strengthen our regional tourism infrastructure with an allocation of an additional $4 million over four years to our Regional Tourism organisations.

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Water

This Budget also meets the challenge of securing future water supplies for Queensland. We have announced, and funded, comprehensive strategies for addressing both sides of the issue – ensuring water supply and managing water demand.

The Government has announced plans for two mega dams in South East Queensland and two weir projects in Central Queensland. We will allocate $200-300 million from the Queensland Future Growth Fund to accelerate these projects.

A separate amount of $69 million has already been set aside for water-related land purchases in 2006-07.

We will spend $8 million to bring forward construction of pipelines connecting dams in South East Queensland so water is better shared across our region.

In addition, $270 million will be invested to construct a water pipeline from Gorge Weir to Moranbah to provide and enhance water supplies to coal mines and towns in the Bowen Basin.

The Government is also working with local governments and communities to manage demand and make sure we are smarter in our use of water.

Recycling will play a critical role and $100 million has been committed for a recycled water pipeline in the western corridor of South East Queensland for industrial users.

In South East Queensland, $32 million is available over three years to help address leaking water mains. We will also promote water efficiency with $20 million for water efficient devices and advice to home owners and industry in South East Queensland. Rural areas will also receive $12.8 million to promote efficient water use.

CONCLUSION

The Beattie Labor Government’s record of strong budgets, year in and year out, is delivering dividends for the people of Queensland.

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Queensland is emerging as the Smart State of Australia and we are building on that platform every year:

• building investment with a program of new tax cuts;

• building infrastructure with capital works spending that tops $10 billion for the first time ever;

• building new and expanded services with record spending in health, child safety, education, police and disability services; and

• building opportunities for our children with Australia’s largest school renewal program.

Mr Speaker, this is a Budget that builds Queensland in every sense of the word and I commend it to the House.

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By authority: R. J. Hunt, Government Printer, Queensland-2006

STATE BUDGET
2006-07

BUDGET STRATEGY AND OUTLOOK

Budget Paper No. 2

TABLE OF CONTENTS

1. Budget Strategy, Performance and Outlook	1
Summary of Key Financial Aggregates	1
Budget Outcomes 2005-06	2
Budget 2006-07 and Outyear Projections	5
Reconciliation of Operating Result	7
Fiscal Strategy	8
Indicators of Fiscal Condition	12
2. Economic Performance and Outlook	13
Introduction	13
External Environment	14
The Queensland Economy	19
3. Economic Strategy	37
Introduction	37
Productivity Growth	38
Fostering Productivity Growth	40
Energy Reform	48
Water Reform	51
Forestry Reform	54
4. Budget Priorities and Initiatives	57
Introduction	57
Improving Health Care and Strengthening Services to the Community	60
Growing a Diverse Economy and Creating Jobs	67
Realising the Smart State Through Education, Skills and Innovation	69
Managing Urban Growth and Building Queensland’s Regions	74
Protecting Our Children and Enhancing Community Safety	80
Protecting the Environment for a Sustainable Future	85
Delivering Responsive Government	87
5. Revenue	89
Introduction	89
Revenue by Operating Statement Category	90
Taxation Revenue	92
Queensland’s Competitive Tax Status	102
Grants and Subsidies	104
Sales of Goods and Services	108
Interest Income	110
Other Revenue	111

6. Expenses	115
Introduction	115
Expenses by Operating Statement Category	116
Details of Expenses	118
Operating Expenses by Purpose	121
Departmental Expenses	124
7. Balance Sheet and Cash Flows	129
Introduction	129
Balance Sheet	129
Cash Flows	137
Reconciliation of Operating Cash Flows to the Operating Statement	144
8. Intergovernmental Financial Relations	145
Commonwealth-State Financial Relations	146
Institutional and Governance Arrangements	147
Australian Government Funding to States	150
Queensland’s Share of Commonwealth Funding	154
Current Specific Purpose Payment Negotiations	160
State-Local Government Relations	163
9. Government Finance Statistics	167
Introduction	167
General Government Sector	167
Public Non-Financial Corporations Sector	167
Uniform Presentation Framework Financial Information	169
Reconciliation of GFS Net Operating Balance to Accounting Surplus	179
General Government Time Series	180
Other General Government GFS Data	181
Background and Interpretation of Government Finance Statistics	185
Sector Classification	186
Reporting Entities	187
Appendix A — Tax Expenditure Statement	191
Appendix B — Concessions Statement	199
Appendix C — Statement of Risks and Sensitivity Analysis	205

1. BUDGET STRATEGY, PERFORMANCE AND OUTLOOK

KEY POINTS

• In 2005-06, the General Government sector is forecast to have a net operating surplus of $2.853 billion and a cash surplus of $3.381 billion.

• For 2006-07, there is a budgeted General Government net operating surplus of $245 million and a cash deficit of $796 million.

• The State’s capital program in 2006-07 is budgeted to be $10.136 billion, a 23% increase on estimated 2005-06 outlays.

• The State’s net worth is forecast to increase across the forward estimates to $107.361 billion by 2009-10.

This chapter discusses:

• the summary financial aggregates of the 2006-07 Budget

• the Government’s fiscal strategy as outlined in the Charter of Social and Fiscal Responsibility.

SUMMARY OF KEY FINANCIAL AGGREGATES

Table 1.1 provides aggregate actual outcome information for 2004-05, estimated actual outcome information for 2005-06, forecasts for 2006-07 and projections for the outyears.

Table 1.1
General Government sector — key financial aggregates¹

	2004-05		2005-062			2006-07			2007-08			2008-09			2009-10
	Actual		Est. Act.			Budget			Projected			Projected			Projected
	$ million		$ million			$ million			$ million			$ million			$ million
Revenue		27,609		29,586			29,070			30,271			31,242			32,456
Expenses		23,683		26,733			28,825			30,024			31,019			32,354
Net operating balance		3,926		2,853			245			247			224			102
Cash surplus/(deficit)		4,640		3,381			(796	)		(786	)		(809	)		(1,169	)
Capital purchases		2,843		2,914			3,958			4,016			3,961			4,152
Borrowings		6		(842	)		1,800			2,686			2,762			3,334
Net worth		96,433		96,388			99,032			101,720			104,516			107,361

Notes:
1.	Numbers may not add due to rounding.
2.	Australian Equivalents to International Financial Reporting Standards were adopted from 1 July 2005. A decline in net worth of $3.792 billion was recorded on adoption of these new standards.

Budget Strategy and Outlook 2006-07 1

BUDGET OUTCOMES 2005-06

Key financial aggregates

Table 1.2
General Government sector — key financial aggregates¹

	2005-06		2005-06			2005-06
	Budget		SFES			Est. Act.
	$ million		$ million			$ million
Revenue		26,604		26,931			29,586
Expenses		25,670		26,214			26,733
Net operating balance		934		718			2,853
Cash surplus/(deficit)		98		(39	)		3,381
Capital purchases		3,616		3,800			2,914
Borrowings		827		440			(842	)
Net worth		85,344		94,836			96,388

Notes:
1.	Numbers may not add due to rounding.

Operating balance

The operating balance expected for 2005-06 is a surplus of $2.853 billion. The estimated 2005-06 surplus reflects the continuing strength of the economy flowing through to taxation and related revenues and investment returns above the long-term assumed rate of return.

At the time of the 2005-06 Budget, a reduction in taxation revenues was expected, primarily due to an anticipated moderation in activity in the property market together with a number of tax reduction initiatives including the abolition of debits tax, the implementation of a land tax relief package and the first tranche of stamp duty abolitions. The expected decline in transfer duties did not eventuate with other taxation revenues also performing more strongly than expected. This has led to upward revisions to revenues at both the time of the Special Fiscal and Economic Statement (SFES) and in the context of the 2006-07 Budget.

Estimates of royalty revenue have also increased reflecting higher commodity prices and growth in export volumes.

2 Budget Strategy and Outlook 2006-07

With over $22 billion in funds invested in a portfolio of equities, property, cash and fixed interest, the performance of international financial markets has a major influence on the Budget result. While Budget and Special Fiscal and Economic Statement estimates for investment returns were based on the expected long-term average return for the portfolio of 7.5%, the 2005-06 estimated actual is now based on a forecast rate of return of 16%.

The underlying operating balance

Investment market volatility impacts on the Queensland Budget in 2005-06 more in Government Finance Statistics (GFS) terms than it does for other states. This is in part due to differences in the way Queensland’s public sector superannuation arrangements are structured. Queensland’s financial assets set aside to meet future employer superannuation liabilities are held as General Government sector assets and associated superannuation liabilities are similarly recorded as General Government sector financial liabilities. In contrast, other jurisdictions generally have structures whereby all investments are held in superannuation funds and only the net superannuation liability is recorded in the General Government balance sheet.

With the introduction of internationally harmonised accounting standards in 2005-06, the GFS methodology for calculating the Government’s defined benefits obligations and associated costs has been revised. With this change in accounting standards the Government is seen to bear the interest risk associated with defined benefit obligations regardless of whether or not superannuation assets and liabilities are included in the General Government sector. As a result, the General Government sector will include interest on Superannuation Fund surpluses/deficits.

This has eliminated the significant differences that previously existed between the states in accounting for superannuation. There is now a consistent approach across the states with the impact of investment market volatility in Queensland being contained to the current year and representing the difference between the actuary’s assumptions on investment returns and actual returns achieved during the year.

If Queensland’s superannuation arrangements were structured on the same basis as generally applies in other states, the General Government sector underlying operating balance for 2005-06 would be a surplus of approximately $1.721 billion. The Budget and outyear results are also outlined in Table 1.3 and are calculated on a consistent basis with that used in the other states. This table illustrates that Queensland expects to report underlying operating surpluses in the Budget year and each of the outyears that are virtually the same as the reported operating balance.

Budget Strategy and Outlook 2006-07 3

Table 1.3
Calculation of underlying operating balance

	2005-06		2006-07		2007-08		2008-09		2009-10
	Est. Act.		Budget		Projection		Projection		Projection
	$ million		$ million		$ million		$ million		$ million
Operating Balance		2,853		245		247		224		102
Less Investment Earnings1		2,240		1,231		1,304		1,376		1,447
Plus Superannuation Interest Expense2		502		563		593		623		651
Plus Net Return on Fund Surplus3		606		660		703		752		796
Underlying Balance		1,721		237		240		224		102

Notes:
1.	Represents investment earnings (net of fees and charges) on financial assets held to meet future defined benefit and defined contribution superannuation liabilities.
2.	Represents current superannuation interest expense calculated on the basis of gross liability less the current level of member fund assets.
3.	Represents interest on the defined benefit fund surplus (i.e. the extent to which the assets exceed the liabilities for defined benefit superannuation assuming all defined benefit investments are transferred to the superannuation trust). The inclusion of this item is the result of a revision to the Australian Bureau of Statistics’ methodology for calculating the Government’s defined benefit obligations and associated costs.

Cash surplus

The General Government sector is estimated to achieve a cash surplus in 2005-06 of $3.381 billion.

At the time of the Special Fiscal and Economic Statement, a cash deficit of $39 million was expected in 2005-06 for the General Government sector. Factors contributing to the improvement in the estimated surplus include the cash impact of the upward revision to investment returns from 7.5% to 16% and higher than expected levels of receipts from taxation revenues.

The underlying strength of the General Government cash flow for 2005-06 is demonstrated by the absence of borrowings and the repayment of debt during the course of the year.

Capital purchases

General Government investment in capital (purchases of non-financial assets) in 2005-06 is estimated to be $2.914 billion. The estimated capital spend in 2005-06 is below the estimates in the Special Fiscal and Economic Statement, reflecting capacity constraints in the construction and civil engineering sector resulting in a modest level of capital deferrals. However, spending by Government-owned corporations has been higher than expected at the time of the 2005-06 Budget and the Special Fiscal and Economic Statement. This has resulted in a total capital program for 2005-06, including capital grants, of $8.222 billion, $241 million higher than expected at the time of the 2005-06 Budget. For further details see Budget Paper No. 3 — Capital Statement.

4 Budget Strategy and Outlook 2006-07

Borrowing

Despite estimated capital acquisitions of $2.914 billion in 2005-06, the strong cash position has meant the General Government sector has not needed to borrow. During the course of 2005-06 the Government was able to repay debt in the General Government sector, including the debt owed by Queensland Health.

Net worth

The net worth, or equity, of the State is the amount by which the State’s assets exceed its liabilities. This is the value of the investment held on behalf of the people of Queensland by public sector instrumentalities. The net worth of the General Government sector at 30 June 2006 is estimated at $96.388 billion. This is $1.552 billion higher than net worth forecast at the time of the Special Fiscal and Economic Statement, reflecting an improved operating position and an increase in the value of the State’s equity holding in Government-owned corporations.

BUDGET 2006-07 AND OUTYEAR PROJECTIONS

Key financial aggregates

Table 1.4
General Government sector — key financial aggregates¹

	2006-07			2007-08			2008-09			2009-10
	Budget			Projected			Projected			Projected
	$ million			$ million			$ million			$ million
Revenue		29,070			30,271			31,242			32,456
Expenses		28,825			30,024			31,019			32,354
Net operating balance		245			247			224			102
Cash surplus/(deficit)		(796	)		(786	)		(809	)		(1,169	)
Capital purchases		3,958			4,016			3,961			4,152
Borrowings		1,800			2,686			2,762			3,334
Net worth		99,032			101,720			104,516			107,361

Note:
1.	Numbers may not add due to rounding.

Budget Strategy and Outlook 2006-07 5

Operating balance

The budgeted position for the General Government sector is for an operating surplus of $245 million in 2006-07.

The forecast budget surpluses are expected to remain at around this level for 2007-08 and 2008-09 and moderate in 2009-10. Key factors leading to the expected reduction in the Budget surplus in 2009-10 are:

• financing and other recurrent costs associated with the significant increase in General Government capital investment

• implementation of the Health Action Plan and increased expenditure commitments in key service delivery areas including child safety and disability services

• lower taxation revenue growth, reflecting the implementation of the Government’s schedule of tax abolitions.

Further details on revenue and expenditure projections are contained in Chapters 5 and 6 respectively.

Cash surplus and capital purchases

A cash deficit of $796 million is expected in 2006-07 for the General Government sector. The cash result is forecast to remain around this level in 2007-08 and 2008-09 with a cash deficit of $1.169 billion projected in 2009-10.

Apart from the cash impact of smaller recurrent operating surpluses relative to 2005-06, as outlined above, the major factor contributing to lower cash results is the significant planned capital expansion.

Total General Government capital purchases of $3.958 billion are budgeted for 2006-07, reflecting a range of infrastructure initiatives including those announced in the South East Queensland Infrastructure Plan and Program. Budget Paper No. 3 — Capital Statement provides details, by portfolio, of budgeted 2006-07 capital outlays.

Over the period 2006-07 to 2009-10, net additions (i.e. after deducting depreciation and asset sales) to the General Government capital stock of approximately $7 billion are planned. This substantial investment in additional capital will impact on the GFS cash result.

Borrowing

Borrowing for capital purposes is consistent with the Government’s fiscal principles. Net borrowings of $1.8 billion are budgeted for 2006-07 in support of $3.958 billion in purchases of non-financial assets.

The remainder of the General Government capital program will continue to be financed through the operating cash flow.

6 Budget Strategy and Outlook 2006-07

Over the Budget and forward estimates period, total General Government borrowings of $10.582 billion are planned. Of this amount, some $1.918 billion (including $318 million in 2006-07) is to fund equity injections to Queensland’s Government-owned corporations to support expansion of the State’s electricity, rail and ports infrastructure.

Net worth

State net worth is projected to increase from the 2005-06 estimated actual by $2.644 billion to $99.032 billion at 30 June 2007. Net worth is also expected to increase in all outyears. More information on the State’s net worth, assets and liabilities is provided in Chapter 7.

RECONCILIATION OF OPERATING BALANCE

Table 1.5 provides a reconciliation of the General Government sector operating balance for 2005-06 and 2006-07 published in the Special Fiscal and Economic Statement and current Budget estimates.

Table 1.5
Reconciliation of 2005-06 and 2006-07 operating balance to SFES estimates¹

	2005-06			2006-07
	Est. Act.			Budget
	$ million			$ million
SFES Operating Balance		718			175
Expenditure Policy Decisions2		(140	)		(754	)
Revenue Policy Decisions3		—			(31	)
Other Significant Variations Impacting on Operating Balance
- Investment Returns and Interest Earnings4		1,538			127
- General Revenue Grants from the Australian Government5		22			77
- Taxation and Royalty Revisions6		697			716
- Other Parameter Adjustments7		18			(65	)
2006-07 Budget		2,853			245

Notes:
1.	Denotes impact on Operating Balance. Numbers may not add due to rounding.
2.	Reflects expenditure policy decisions taken during 2005-06 and in the Budget context. Major initiatives in 2005-06 relate to increased funding for non-government schools as part of the Tomorrow’s Schools program, funding for Cyclone Larry restoration costs and funding for water initiatives to combat drought in South East Queensland. For details relating to key decisions made in the context of the 2006-07 Budget, see Chapter 4.
3.	Reflects reductions in payroll tax, land tax and other tax initiatives — see Chapter 5.
4.	Reflects revisions of estimated rate of return on investments from 7.5% to 16% in 2005-06 and earnings on cash balances. Includes earnings on all investments, not only those held for employee liabilities.
5.	Includes outcomes of Commonwealth Grants Commission 2006 Update, population changes and most recent estimates of GST revenue included in the 2006-07 Australian Government Budget as well as final payments under National Competition Policy and changes to Specific Purpose Payments.
6.	Includes adjustments to Government-owned corporations net flows.
7.	Refers to adjustments of a non-policy nature such as movements in expenditure and revenue relating to economic and technical parameters and expenditure lapses in 2005-06.

Budget Strategy and Outlook 2006-07 7

FISCAL STRATEGY

The Charter of Social and Fiscal Responsibility outlines the Government’s fiscal principles and is an integral part of the Government’s commitment to the community. The fiscal principles, detailed in Box 1.1, have been framed to meet a number of objectives, with the overriding requirement to maintain the integrity of the State’s finances.

The fiscal principles establish the basis for sustainability of the Government’s policies. They require the services provided by Government be funded from tax and other revenue sources over the long term. The principles are supported by an accrual budgeting framework, which recognises future liabilities of the State and highlights the full cost of sustaining the Government’s operations on an ongoing basis.

The fiscal principles recognise the importance of a strong financial position for the State. A state government, because of its more limited tax base, does not have the same capacity as a national government to cushion economic and financial shocks. At the same time, state governments have a responsibility to provide continuity of services, such as health, police and education. A strong financial position, as indicated by a AAA credit rating, enables lower borrowing costs and is an indication of the soundness of the financial position and policies of the Government, rather than a goal in itself.

The success of Queensland’s financial and economic management has been consistently affirmed by international ratings agencies. These agencies have cited Queensland’s strong balance sheet, sound financial operations, modest debt levels and dynamic economic base as reasons underpinning the State’s AAA credit rating.

8 Budget Strategy and Outlook 2006-07

Box 1.1
The Fiscal Principles of the Queensland Government

	Achievement
	Budgeted for
Principle	2006-07		Indicator
Competitive tax environment The Government will ensure that State taxes and charges remain competitive with the other states and territories in order to maintain a competitive tax environment for business development and jobs growth.		ü	Taxation revenue per capita: Queensland: $1,927 Average of other states and territories: $2,272
Affordable service provision The Government will ensure that its level of service provision is sustainable by maintaining an overall General Government operating surplus, as measured in Government Finance Statistics terms.		ü	GFS operating surplus of $245 million
Sustainable borrowings for capital investment Borrowings or other financial arrangements will only be undertaken for capital investments and only where these can be serviced within the operating surplus, consistent with maintaining a AAA credit rating.		ü	General Government borrowings: $1.8 billion General Government total purchases of non-financial assets: $3.958 billion AAA credit rating confirmed by Moody’s and Standard and Poor’s (highest rating available)
Prudent management of financial risk The Government will ensure that the State’s financial assets cover all accruing and expected future liabilities of the General Government sector.		ü	General government net financial worth: $18.489 billion
Building the State’s net worth The Government will maintain and seek to increase total State net worth.		ü	Net worth to increase to $99.032 billion

Competitive tax environment

One of the Queensland Government’s key social and fiscal objectives is to maintain a competitive tax environment which raises sufficient revenue to meet the infrastructure and government service delivery needs of the people of Queensland, while at the same time providing a low cost environment for business to promote economic development and jobs growth.

The competitiveness of a state’s tax system is usually assessed by using one of the following measures:

• taxation revenue on a per capita basis

• taxation relativities based on the Commonwealth Grants Commission methodology

• taxation revenue expressed as a percentage of gross state product (GSP).

Budget Strategy and Outlook 2006-07 9

Queensland’s competitive tax position is confirmed by all three measures.

• Per capita tax collections in Queensland in 2006-07 are estimated at $1,927, compared with an estimated $2,272 for the average of the other states.

• Commonwealth Grants Commission data indicates that Queensland’s taxation effort ratio is 85.8% compared with the standard (100%).

• Latest Australian Bureau of Statistics data shows Queensland’s tax collections are 4.4% of GSP compared to 4.7% for the average of the other states.

The 2006-07 Budget includes an increase in the payroll tax threshold and the land tax tax-free threshold for resident individuals. Details of these changes and other revenue items are provided in Chapter 5.

Affordable service provision

The objective of maintaining affordable service provision requires the maintenance of a budget operating surplus, to ensure recurrent services can be funded from recurrent sources.

The 2006-07 Budget and forward estimates continues the implementation of the Health Action Plan with funding to Queensland Health more than doubling Queensland Health’s Budget in the 10 years to 2008-09.

The Budget also provides for significant increases in expenditure in the areas of child safety, education and disability services.

More information on these initiatives is provided in Chapter 4.

Queensland is already one of the more efficient providers of government services among the states. Nevertheless, further improving the efficiency and effectiveness of government services is an essential element of delivering on these key policy priorities in a way that is both affordable and sustainable.

As announced in the Special Fiscal and Economic Statement, the Queensland Government established an independent Service Delivery and Performance Commission to ensure government services are effectively meeting the needs of the community. One aspect of the Commission will involve improving the provision of services in Queensland to ensure duplication and inefficiencies are minimised.

Sustainable borrowings for capital investment

The provision of adequate levels of infrastructure is an ongoing challenge for a state such as Queensland which continues to experience high levels of economic and population growth. In meeting this challenge, the Government provides capital expenditure per capita well above the average of the other states and territories.

10 Budget Strategy and Outlook 2006-07

Investment in core infrastructure is a key feature of the 2006-07 Budget with a record capital program of $10.136 billion. This represents an increase of 23% over the estimated 2005-06 outlays.

In recognition of Queensland’s capital requirements, the Charter of Social and Fiscal Responsibility allows borrowing for capital where the costs of the borrowing can be serviced within the context of an overall operating surplus.

Queensland’s 2006-07 capital program will be funded from a mix of recurrent sources, cash balances and borrowings. Details of the State capital program for 2006-07 and sources of funds are provided in Budget Paper No. 3 — Capital Statement.

Prudent management of financial risk

Queensland has a long-standing policy of setting aside funds to accumulate financial assets sufficient to meet future liabilities, the largest being for future employee entitlements, most notably superannuation.

In this respect, Queensland is far better placed than any of the other state or territory governments to fund future accruing liabilities as most other jurisdictions have substantial unfunded superannuation liabilities.

In 2005-06 investment returns are estimated at 16%.

The State’s policy of setting aside funds to meet future liabilities and reinvesting all earnings provides the capacity to manage cycles in investment markets without impacting on the Government’s ability to fund ongoing services to the community.

Building the State’s net worth

The Charter of Social and Fiscal Responsibility policy of building the State’s net worth is intended to ensure that infrastructure and other assets are not run-down to the detriment of future citizens and taxpayers. It is an important element in ensuring intergenerational equity.

Queensland’s net worth is forecast to grow over the forward estimates. Queensland’s per capita net worth is expected to be 46% greater in 2006-07 than the average per capita net worth of the other states.

Further information on State net worth and other balance sheet aggregates can be found in Chapter 7.

Budget Strategy and Outlook 2006-07 11

INDICATORS OF FISCAL CONDITION

Table 1.6 provides information on the Government’s service delivery capacity, financial sustainability and financial capacity.

Service delivery capacity

This financial data provides an indication of the non-financial capital resources of the General Government sector. These resources generally relate to capital infrastructure and therefore indicate the capacity of the Government to provide services to the community. The data, showing increasing levels and additions of non-financial assets, reflect the State’s heightened commitment to infrastructure provision in recent years.

Financial sustainability

These ratios provide an indication of the sustainability of current policy settings — including the size of the operating surplus (relative to expenses) and the level of debt servicing costs (relative to revenue). A large operating balance and stable low debt servicing costs indicate that current policies are sustainable.

Financial capacity

These ratios provide an indication of the State’s capacity to respond to unexpected events or opportunities. Low levels of borrowing and taxation and large negative net debt provide the State with the capacity for additional resources to be called upon if required.

Table 1.6
Indicators of fiscal condition — General Government sector

										Other
	2004-05			2005-06			2006-07			States 1
	Actual			Est. Act.			Budget			2006-07
Service Delivery Capacity
Non-financial assets/population ($)		18,851			19,102			19,722			13,308
Purchases of non-financial assets/ non-financial assets (%)		3.8			3.8			4.9			4.4
Financial Sustainability
Operating balance/total expenses (%)		16.6			10.7			0.8			0.6
Debt servicing cost/total revenue (%)		0.7			0.6			0.8			1.6
Financial Capacity
Total borrowings/total assets (%)		2.3			1.6			3.0			6.1
Total liabilities/total assets (%)		18.9			22.5			23.8			27.5
Net debt/GSP (%)		(12.1	)		(12.9	)		(11.5	)		0.8
Taxation/GSP (%)		4.4			4.4			4.4			4.6

Note:
1.	Weighted average of all states and territories, excluding Queensland.
Source:	State Budget Papers for VIC, WA and NT. Mid-Year Reviews/Budget Updates for other states and territories.

12 Budget Strategy and Outlook 2006-07

2. ECONOMIC PERFORMANCE AND OUTLOOK

KEY POINTS

• The Queensland economy is estimated to grow by 3¹/2% in 2005-06, well above growth of 2¹/2% nationally. This represents the tenth consecutive year that the State has outperformed economic growth in the rest of Australia.

• The composition of domestic economic growth is estimated to change in 2005-06, as investments in additional productive capacity see the business and public sectors replace households as the main driver of economic growth.

• Relatively strong growth in domestic demand is expected to see growth in imports continue to exceed exports growth, resulting in a detraction in growth by the trade sector for the fifth year in a row.

• Economic growth in Queensland is forecast to strengthen to 4¹/4% in 2006-07. This is largely due to an anticipated strengthening of exports growth to a six-year high of 4³/4%, as strong global economic growth benefits coal and other mineral exports.

• Positive labour market conditions and growth in real incomes are forecast to support growth in consumer spending in 2006-07, while further increases in private and public sector investment are forecast to continue to expand the State’s infrastructure base.

• Job gains are expected to be broad-based in the current and next financial year, as ongoing strength in the domestic economy is complemented by an improvement in trade sector performance. Employment growth is forecast to remain relatively strong at 3% in 2005-06 and 2¹/2% in 2006-07, representing rates of growth well above forecasts of national jobs growth.

• With employment growth forecast to match growth in the State’s labour force in 2005-06 and 2006-07, the year-average unemployment rate is forecast to remain near a three-decade low of around 5% in both years, representing a rate slightly below the national unemployment rate (5¹/4%).

INTRODUCTION

This chapter presents the economic framework within which the 2006-07 Budget has been produced. It examines recent developments in Queensland’s external economic environment, reviews the performance and outlook for the Queensland economy and highlights any risks and opportunities to economic growth during the forecast horizon. The chapter details estimated actuals and forecasts for the major components of State economic activity for 2005-06 and 2006-07 respectively (see Table 2.2) and presents projections for key economic variables over the medium-term to 2009-10 (see Table 2.3).

Budget Strategy and Outlook 2006-07 13

EXTERNAL ENVIRONMENT

Current conditions and outlook

International

After easing in 2004-05, Queensland’s major trading partner growth is estimated to strengthen to 4¹/2% in 2005-06, to match the recent peak in growth in 2003-04 (see Chart 2.1). Stronger growth in 2005-06 reflects a continued economic recovery in Japan (the State’s major trading partner), as well as ongoing strength in non-Japan Asia, in particular China and India. However, stronger global growth has also coincided with less accommodative monetary policy stances across major central banks, resulting in higher long-term interest rates. As a result, Queensland’s major trading partner growth is forecast to ease slightly to 4% in 2006-07.

Despite growth in the United States (US) moderating in December quarter 2005, the initial estimate for growth in gross domestic product in March quarter 2006 showed a considerable improvement. The strength of the economy has been evident from a continuing increase in the rate of capacity utilisation and a recovery in corporate profits. Labour market conditions in the US have also improved substantially, with the unemployment rate falling below 5% since late 2005. The measured tightening in monetary policy in the US, which has seen the federal funds rate increase by 400 basis points to 5.0% in two years, has kept core inflation low. Subtracting growth in food and energy prices, consumer price inflation has remained only slightly above 2% per annum since mid-2005. Despite core inflation in the US appearing to accelerate somewhat in April 2006, its impact on inflation expectations has so far been benign. As a result, most analysts expect that the monetary tightening cycle in the US may end later this year.

Chart 2.1
Economic growth in Queensland’s major trading partners

(E)	2005-06 is an estimate, (f) 2006-07 is a forecast.
Source:	Queensland Treasury and Consensus Economics.

14 Budget Strategy and Outlook 2006-07

Looking further forward, there may be potential for the US economic outlook to be restrained by the ongoing deterioration in its current account deficit (CAD). Following a brief period of improvement in 2003, the CAD in the US surpassed 5% of gross domestic product in March quarter 2004 and reached 7% in December quarter 2005. With the CAD in the US absorbing 75% of the world’s current account surpluses, any adjustment in the US$ or interest rates would have implications for the global economy. Not only has the US$ depreciated somewhat against the Yen and Euro since late 2005, 10-year US Treasury bond yields have also risen by 50 basis points over the same period, surpassing 5% since April 2006. Higher long-term US interest rates may see world economic growth return toward long-run average rates beyond 2006-07, particularly if accompanied by any further depreciation of the US$, which would erode the profitability of export sectors in the newly industrialised and emerging economies in Asia.

Following the recession in the early 1990s, the Japanese economy has undergone several cyclical upswings and downturns. However, the current expansion has proved more sustainable than previous ones, with corporate profits continuing to improve and the lending attitude of private banks becoming less conservative. The improved business environment has been conducive to a higher level of employment, which in turn has led to a recovery in consumer spending. Another positive development since late 2005 has been the end of consumer price deflation. Core consumer prices (the consumer price index excluding fresh food) in Japan have now recorded an annual rise since November 2005, after falling consistently over the previous six years.

In response to a stronger domestic economy and consumer price inflation, the Bank of Japan (BoJ) announced in March 2006 that it would revert back to the overnight call rate (an official interest rate) for its monetary target and reduce its excess reserves held by the financial sector. This announcement officially ended the BoJ’s ‘quantitative easing’ era. During this period, the BoJ provided ample supply of liquidity to the financial sector and enabled banks to restructure their balance sheets and reduce the size of non-performing debts. However, this policy led to a large increase in Japanese investment in the US Treasury bond market. Therefore, the reduction of excess liquidity by the BoJ will place upward pressure not only on long-term interest rates in Japan, but also those in the US, which is anticipated to see global economic growth ease in the medium term.

Defying widespread speculation that the Chinese economy would undergo a cyclical downturn, economic growth in China accelerated in March quarter 2006, rising at an annual rate of 10.2%. Driven by a rising trade surplus, foreign exchange reserves in China have increased rapidly in recent years, which in turn has put upward pressure on the value of the Chinese Yuan. However, given that the profit margin of the export sector in China is likely to be squeezed further if the Yuan rises substantially, most analysts suggest the Chinese government will be reluctant to submit to pressure to any significant revaluation of the Yuan. As a result, the performance of China and its export sector should continue to be positive through 2006-07.

Budget Strategy and Outlook 2006-07 15

Economic growth in the Euro-zone continued to be subdued in 2005. After rising 2.0% in 2004, the combined gross domestic product of the EU-12 countries rose only 1.3% in 2005, constrained by sluggish economic performance in Germany and Italy. However, recent business and consumer surveys indicate a marked improvement in economic sentiment in the Euro-zone. This turnaround has been led by a surge in business confidence in Germany, with the IFO Business Climate Index rising at an annual rate of 13.9% in April 2006 and reaching its highest level in 15 years. A more positive outlook for the Euro-zone in 2006 and 2007, along with concerns over inflationary pressures and excessive credit growth, has resulted in the European Central Bank raising interest rates twice since December 2005.

National

The Australian economy continued to benefit from the global commodity price boom in 2005. With the terms of trade rising a further 11.6% in 2005, gross domestic income (gross domestic product adjusted for the terms of trade) in Australia increased by 4.7% over the year, following 5.1% growth in 2004. However, with growing signs that the domestic economy is reaching full capacity, the rise in domestic demand induced by higher incomes has increasingly been fulfilled by imports. As a result, strong growth in incomes has translated into lower growth in national domestic production. Gross domestic product in Australia is estimated to increase by only 2¹/2% in 2005-06, with net exports detracting one percentage point from overall economic growth over the year.

Higher domestic incomes, as well as increasing demand for mineral products, saw business investment in Australia increase by an estimated 14% in 2005-06, the fourth consecutive year of double-digit growth. Investment in other buildings and structures as well as machinery and equipment increased by an estimated 14% and 15% respectively over the year. In contrast, growth in private consumption moderated in 2005-06, with evidence that consumers began to consolidate household budgets due to a significant increase in household debt following the housing boom.

A strong domestic economy also translated into solid jobs growth during the year, albeit at a more moderate rate than in 2004-05. The number of persons employed in Australia rose by an estimated 2% in 2005-06, compared with 3.0% growth in 2004-05. However, with employment growth matching labour force growth, the year-average unemployment rate is estimated to remain largely unchanged at 5¹/4% in 2005-06.

16 Budget Strategy and Outlook 2006-07

Growth in domestic economic activity is forecast to ease in 2006-07, largely due to a moderation in business investment and public final demand growth. Despite higher oil prices, household debt and interest rates, growth in consumer spending is forecast to strengthen slightly, largely reflecting the expansionary impact of income tax cuts and changes to family tax benefit arrangements announced by the Australian Government. As a result, the overall easing in growth in domestic activity is expected to be modest in 2006-07. Further, the moderation in domestic activity is forecast to be more than offset by a significant improvement in exports growth, driven by strong global demand and expansions to transport infrastructure and trade-related production capacity. As a result, overall national economic growth is forecast to strengthen to 3¹/4% in 2006-07.

Ongoing growth in the labour-intensive domestic sector is forecast to increase employment by a further 1% in 2006-07. However, with the economy operating at near full capacity, the unemployment rate is forecast to remain at around 5¹/4% in 2006-07.

Chart 2.2
Gross domestic product and gross domestic income, Australia

Source: ABS 5206.0.

Budget Strategy and Outlook 2006-07 17

Chart 2.3
Employment growth and unemployment rate, Australia

Source: ABS 6202.0.

External assumptions

As a small open economy, Queensland’s economic performance is related to the outlook for both the national and international economies. Therefore, forecasts for economic growth in Queensland are based on assumptions about the external environment, including the national economy, trading partners and financial markets (see Table 2.1).

• Economic growth in Queensland’s major trading partners is expected to moderate in 2006-07, albeit from very high growth in 2005-06. This easing is due to an anticipated slowing in growth in countries such as the US, Japan and China.

• Inflation in Queensland’s major trading partners is forecast to be 2¹/4% in 2006-07, slightly lower than that in 2005-06.

• As outlined in the Australian Budget delivered on 9 May 2006, the Australian Government’s economic forecasts, projections and changes to personal income taxation and family benefit arrangements have been adopted as the basis for national economic performance over the forecast period.

• With underlying consumer price inflation remaining within the Reserve Bank of Australia’s 2-3% target band, the official cash rate is assumed to remain largely unchanged over the forecast horizon.

• After depreciating to below US71c in late March 2006, the A$ traded at a higher level towards the end of 2005-06. The A$ is assumed to be largely unchanged from its current rate over the forecast period, in both US$ and trade-weighted terms.

18 Budget Strategy and Outlook 2006-07

• Forecasts of rural production and exports are based on an assumption of a return towards average seasonal conditions in Queensland in 2006-07 and beyond, taking into account the damage caused by Cyclone Larry in March 2006.

A discussion of the risks to these assumptions is contained later in this chapter.

Table 2.1
External assumptions

	Outcomes				Est. Act.		Forecast
	2003-04		2004-05		2005-06		2006-07
	%		%		%		%
International assumptions
Major trading partner economic growth		4.4		3.7		41/2		4
Major trading partner inflation		1.6		2.1		21/2		21/4
National assumptions
Economic growth		4.0		2.5		21/2		31/4
Inflation		2.4		2.4		3		23/4

Source: Queensland Treasury, ABS 5206.0, ABS 6401.0, Australian Treasury and Consensus Forecasts.

THE QUEENSLAND ECONOMY

Overall economic growth

Ongoing strength in the domestic sector is expected to drive overall economic activity in 2005-06. The Queensland economy is estimated to grow by 3¹/2%, well above national growth of 2¹/2% and representing the tenth consecutive year that the State has outperformed economic growth in the rest of Australia. However, the composition of domestic growth is estimated to change, with business and public sector investment expected to replace households as the main driver of economic growth in 2005-06.

Driven by strong growth in employment and wages, consumer spending is expected to grow at a solid rate of 4¹/2% in 2005-06, but represents a growth rate below that experienced during the peak of the housing cycle. In contrast, business investment is forecast to surge by 16¹/2%, as strong global and domestic demand encourage expansions to productive capacity in the service and trade sectors. Public investment is also expected to rise significantly, supporting population growth and expansions to transport, energy and other infrastructure. However, strong domestic activity is expected to see growth in imports (7¹/2%) exceed exports growth (1%), resulting in a detraction from growth from the trade sector for the fifth year in a row in 2005-06.

Budget Strategy and Outlook 2006-07 19

Chart 2.4
Queensland economic growth ¹

Note:
1.	CVM, 2003-04 reference year. 2005-06 is an estimated actual, 2006-07 is a forecast.
Source: Queensland Treasury.

Economic growth is forecast to strengthen to 4¹/4% in 2006-07, with a slight easing in growth in domestic activity to be more than offset by an improvement in the trade sector. Further growth in wages as well as income tax cuts are anticipated to partially counter the effects of slightly higher interest rates and petrol prices on disposable incomes in 2006-07. As a result, consumer spending is forecast to continue to grow at a solid rate. In comparison, growth in business investment, while forecast to remain strong at 8% in 2006-07, is anticipated to moderate from the very high growth rates achieved in previous years. Exports growth is expected to strengthen to a six-year high of 4³/4% in 2006-07, as greater export capacity and global economic growth benefit coal and base metal exports.

20 Budget Strategy and Outlook 2006-07

Chart 2.5
Contribution to growth in Queensland’s gross state product¹

Note:
1.	CVM, 2003-04 reference year. 2005-06 is an estimated actual, 2006-07 is a forecast.
Source: Queensland Treasury.

Chart 2.6
Contribution to growth in Australia’s gross domestic product ¹

Note:
1.	CVM, 2003-04 reference year. 2005-06 is an estimated actual, 2006-07 is a forecast.
Source: Queensland Treasury and Australian Treasury.

Budget Strategy and Outlook 2006-07 21

Table 2.2
State and National Economic Forecasts ¹

	Outcomes				Est. Actual			Forecast
	2003-04		2004-05		2005-06			2006-07
	%		%		%			%
Queensland forecasts2
Domestic production
Household consumption		9.8		5.0		4	1/2		4	1/2
Private investment3,4		9.5		8.6		9	1/2		4	1/2
Dwellings		5.8		4.7		2	1/2		0
Business investment4, 5		8.8		17.9		16	1/2		8
Other buildings and structures4		1.2		9.6		18			8	3/4
Machinery and equipment4		14.0		23.0		15	3/4		7	1/2
Private final demand4		9.7		6.0		6			4	1/2
Public final demand4		5.9		7.3		6	1/2		7	1/2
Gross state expenditure6		9.5		6.2		5	1/2		5
Exports of goods and services		0.9		3.4		1			4	3/4
Imports of goods and services		15.5		9.6		7	1/2		6	3/4
Net exports7		-5.0		-2.6		-2	1/2		-1	1/2
Gross state product		4.9		4.1		3	1/2		4	1/4
Other state economic measures
Population		2.3		2.0		2			2
Inflation		2.9		2.6		3			2	3/4
Wage Price Index		3.6		3.8		4	1/2		4	1/4
Employment (labour force survey)		3.3		5.6		3			2	1/2
Unemployment rate (%, year-average)		6.2		4.9		5			5
Labour force		2.3		4.1		3			2	1/2
Participation rate		64.8		65.8		66	1/4		66	1/4
National forecasts2
Domestic production
Household consumption		5.5		4.2		2	3/4		3
Private investment	na		na		na			na
Dwellings		4.0		-1.5		-3			-1
Business investment4, 5	na			11.7		14			8
Other buildings and structures4	na			7.7		14			6
Machinery and equipment4	na			15.4		15			9
Private final demand4	na			4.5		4	1/4		3	3/4
Public final demand4	na			4.3		3	1/4		3	1/4
Gross national expenditure6		6.3		4.1		4			3	1/2
Exports of goods and services		1.4		2.5		2			7
Imports of goods and services		12.7		12.0		6			7
Net exports7		-2.1		-2.0		-1			- 1	1/2
Gross domestic product		4.0		2.5		2	1/2		3	1/4
Other national economic measures
Population		1.1		1.1		1	1/4		1	1/4
Inflation		2.4		2.4		3			2	3/4
Wage Price Index		3.6		3.8		4			4
Employment (labour force survey)		1.8		3.0		2			1
Unemployment rate (%, year-average)		5.8		5.3		5	1/4		5	1/4
Labour force		1.3		2.4		2			1
Participation rate		63.5		64.0		64	1/2		64	1/4

Notes:
1.	Unless otherwise stated, all figures are annual % changes. Decimal point figures indicate an actual outcome. na — Indicates not available.
2.	CVM, 2003-04 reference year.
3.	Private investment includes livestock, intangible fixed assets and ownership transfer costs.
4.	Excluding private sector net purchases of second-hand public sector assets.
5.	National calculations of business investment include investment in livestock and intangible fixed assets, which are not included in the Queensland calculations.
6.	Includes statistical discrepancy and change in inventories.
7.	Percentage point contribution to growth in gross state or domestic product.
Source: Queensland Treasury, Australian Treasury and ABS 5206.0.

22 Budget Strategy and Outlook 2006-07

Household consumption

Consumer spending continued to be one of the main contributors to economic growth over the first half of 2005-06, supported by growth in employment and very strong growth in employee earnings. However, growth in consumption is expected to remain at more sustainable rates for the remainder of 2005-06 and 2006-07, compared with the very high growth achieved during the housing boom (see Chart 2.7).

Household consumption growth is estimated to ease slightly to 4¹/2% in 2005-06, following 5.0% growth recorded in 2004-05. Part of the moderation in growth can be explained by the peaking in the housing cycle, which has seen growth in spending on furnishings, household equipment and related household services moderate so far in 2005-06. Similarly, the rise in petrol prices, particularly in September quarter 2005, coincided with a fall in spending related to motor vehicles and transport services in the first half of the current financial year.

Offsetting these factors, the rapid increase in the terms of trade (export prices relative to import prices) has benefited incomes and spending in 2005-06. Higher commodity prices directly benefited employee wages in related industries, but also improved stock market gains and in turn consumer sentiment and wealth more generally. This coincided with strong growth in discretionary areas of spending, such as hospitality, recreation and other services during the first half of the year. With global competition lowering the price of imported retail products, growth in retail spending also remained strong in the first three quarters of 2005-06.

Chart 2.7
Household consumption ¹ and housing finance commitments, Queensland

Note:
1.	CVM, 2003-04 reference year. 2005-06 is an estimated actual, 2006-07 is a forecast.
Source: Queensland Treasury and ABS 5609.0.

Budget Strategy and Outlook 2006-07 23

Slightly higher interest rates, combined with higher household debt and petrol prices, are expected to have some adverse affect on discretionary incomes next financial year. However, these factors are expected to be offset by the positive effects on overall incomes from ongoing growth in real wages and employment, as well as income tax cuts, in 2006-07. As a result, consumer spending is forecast to remain around its long-run average growth rate of 4¹/2% next financial year.

Dwelling investment

Following a surge in dwelling investment since early 2000, Queensland has defied a downward trend nationally and continued to record an increase in total housing investment over the past year and a half. As a result, dwelling investment is anticipated to rise a further 2¹/2% over 2005-06 as a whole.

While housing investment is anticipated to continue to rise in 2005-06, the composition of growth is expected to change. After driving growth in total dwelling investment over the past four years, new home construction began to decline over the first half of 2005-06. However, the rate of decline in new construction has been modest, reflecting the fact that the volume of approved construction work still to be completed has reached historical highs (see Chart 2.8). In addition to a large amount of residential work in the pipeline, monthly private house approvals have largely stabilised around their long-run level in the first ten months of 2005-06.

Chart 2.8
Dwelling investment¹ , dwelling approvals and work yet to be done² ,Queensland 

Note:
1.	CVM, 2003-04 reference year. 2005-06 is an estimated actual, 2006-07 is a forecast.
2.	Work yet to be done is deflated using ABS 6416.0 House Price Index: Project Homes: Brisbane.
Source: Queensland Treasury, ABS 8371.0, 8752.0 and 6416.0.

24 Budget Strategy and Outlook 2006-07

In comparison, renovation activity rose by almost 10% in annual terms in the first half of 2005-06, with homeowners continuing to utilise increased home equity to improve their properties. Ongoing growth in alterations and addition activity is expected to more than offset subdued new construction for the remainder of the year, seeing overall housing investment increase in 2005-06.

After rising by an estimated 80% in the five years to 2005-06, the overall volume of dwelling investment in Queensland is forecast to remain largely unchanged in 2006-07. This levelling out in dwelling investment does not reflect any anticipated deterioration in the economic fundamentals underpinning demand and supply in the housing sector, but rather reflects the historically high level of housing investment reached following the previous housing boom.

Despite an increase in official interest rates in early May 2006, a backlog of work yet to be done as well as several major apartment projects committed for next year should see any decline in new construction from historical highs remain modest in 2006-07. Further, renovation activity, strong population growth and robust labour market conditions should also support a high level of housing investment in 2006-07.

Business investment

Business investment in Queensland entered its fifth consecutive year of expansion in 2005-06 and is estimated to surge 16¹/2% over the year. The current business investment cycle has been supported by generally strong domestic and global economic conditions, low borrowing costs and rising rates of capacity utilisation.

Non-dwelling construction is estimated to increase by 18% in 2005-06. Strong global demand for Queensland’s resource exports and high world commodity prices have encouraged strong growth in engineering construction related to mining and other trade-related industries. Further, solid growth in the domestic economy, rising household incomes and population growth have encouraged high levels of non-residential construction in sectors such as education, offices, shops and transport. Machinery and equipment investment, which comprises the largest part of business investment, is estimated to record a rise of 15³/4% in 2005-06, with solid domestic demand and a relatively high A$ exchange rate encouraging business spending on imported capital items.

Business investment is forecast to rise a further 8% in 2006-07, to surpass $25 billion next financial year. Reflecting continued efforts to expand capacity in the domestic and export sectors, non-dwelling construction is forecast to increase a further 8³/4% in 2006-07, while machinery and equipment investment is forecast to grow by 7¹/2% next financial year.

Budget Strategy and Outlook 2006-07 25

Chart 2.9
Business investment, Queensland¹

Note:
1.	CVM, 2003-04 reference year. 2005-06 is an estimated actual, 2006-07 is a forecast. Excluding private sector net purchases of second-hand public sector assets.
Source: Queensland Treasury.

Public final demand

Following solid increases in the previous two years, growth in total public final demand in Queensland is forecast to grow by 6¹/2% in 2005-06 and 7¹/2% in 2006-07, representing rates of growth well above the long-run average.

Strong growth in public final demand in the current and upcoming financial year partly reflects infrastructure spending initiatives associated with the State Government’s South East Queensland Infrastructure Plan and Program (SEQIPP), which aims to provide the necessary infrastructure to manage an expected increase in South East Queensland’s population of more than one million persons over the next 20 years. Under SEQIPP, investment of more than $2 billion is planned for water, transport, energy, education and health infrastructure in 2006-07. In addition to SEQIPP, the Queensland Government’s Blueprint for the Bush aims to ensure appropriate infrastructure and service provision for regional and rural Queensland.

Queensland’s Government-owned corporations are also set to continue to increase their capital programs, in response to growing demands on the State’s infrastructure base. In particular, a record $1.7 billion in expenditure is planned by ENERGEX and Ergon Energy, as well as major investments in rail and ports infrastructure to meet world demand for the State’s commodity exports.

26 Budget Strategy and Outlook 2006-07

Chart 2.10
Public final demand, Queensland¹

Note:
1.	CVM, 2003-04 reference year. 2005-06 is an estimated actual, 2006-07 is a forecast. Excluding private sector net purchases of second-hand public sector assets.
Source: Queensland Treasury.

Net exports

With growth in imports continuing to exceed exports growth, the trade sector is expected to detract from overall economic growth for the fifth consecutive year in 2005-06. Net exports are expected to detract 2¹/2 percentage points from economic growth, similar to the 2.6 percentage point detraction recorded in 2004-05.

Exports are estimated to record modest growth of 1% in 2005-06, after rising by 3.4% in 2004-05. Base metals (such as aluminium, copper and zinc) are expected to record the strongest growth among mineral commodities in 2005-06, benefiting from expansions in mining and refining operations in the state and strong growth in global industrial production and resource demand. In comparison, growth in coal exports is estimated to be subdued in 2005-06. This partly reflects the fact that coal exports had already surged to a record high in 2004-05, as well as transitory factors affecting the supply and demand for coal in 2005-06. These included a disruption to capacity at one of the State’s major ports and evidence that overseas customers were relying on stocks in anticipation of lower negotiated prices late in the financial year.

Declines in other commodity exports are also expected to partly offset the growth in mineral exports. Beef exports are estimated to fall marginally in 2005-06, as some improvement in growing conditions allow herds to begin to be rebuilt. The adverse affect of rainfall during harvesting season is estimated to lower sugar exports in 2005-06.

Budget Strategy and Outlook 2006-07 27

Chart 2.11
Export and Imports, Queensland¹

Note:
1.	CVM, 2003-04 reference year. 2005-06 is an estimated actual, 2006-07 is a forecast.
Source: Queensland Treasury.

Finally, interstate tourism exports are estimated to decline in 2005-06. The number of interstate visitors to Queensland fell over the first half of the financial year, with the Commonwealth Games in Victoria also expected to moderate interstate tourism in March quarter 2006. This trend in interstate tourism also follows the greater impact of higher petrol prices on car travel relative to air travel. This, combined with a relatively higher A$ exchange rate and strong growth in household incomes, has seen residents in the rest of Australia substitute interstate holidays with overseas travel.

In contrast to subdued growth in exports, imports grew an estimated 7¹/2% in 2005-06. A strong domestic economy and a relatively high A$ encouraged household and business spending on imported consumer durables and capital items. Furthermore, the high exchange rate, combined with strong growth in employee earnings, encouraged Queenslanders to travel overseas, increasing imports of overseas tourism services.

The net performance of the State’s trade sector is forecast to improve in 2006-07, with the detraction from overall economic growth of net exports anticipated to narrow to 1¹/2 percentage points. Exports growth is forecast to strengthen to a six-year high of 4³/4% in 2006-07. Stronger growth in coal exports is anticipated to help drive overall growth in exports, reflecting an improvement in the economic outlook for Queensland’s major coal export destinations (such as Japan, Korea and China), as well as new coal mining facilities and expansions of coal transportation networks. Further, interstate tourism exports are also anticipated to rebound from the previous year. However, the impact of Cyclone Larry on sugar cane plantations in the Innisfail area is forecast to result in a further reduction in sugar export volumes in 2006-07.

28 Budget Strategy and Outlook 2006-07

In comparison, imports growth is forecast to moderate only slightly, to 6³/4% in 2006-07, reflecting ongoing solid rates of growth in consumer and business spending.

Employment

After reaching a 10-year high of 5.6% in 2004-05, employment growth is estimated to ease to a more sustainable rate of 3% in 2005-06, reflecting some easing in growth in the labour-intensive sectors of the domestic economy this year. However, this rate of jobs growth remains slightly above the average rate of growth over the past ten years and represents the creation of around 55,000 jobs during the year.

Chart 2.12
Employment growth, labour force growth and unemployment rate, Queensland¹

Note:
1.	Year-average, 2005-06 is an estimated actual, 2006-07 is a forecast.
Sources: Queensland Treasury and ABS 6202.0.

Employment growth was broad-based in 2005-06. High levels of consumer spending and housing activity have seen the construction sector, retail trade and property and business services generate significant annual job gains over the first three quarters of 2005-06. Employment in these industries collectively rose by more than 40,000 persons. Similarly, strong global demand for the State’s resource exports has seen mining employment rise by more than 50%, or nearly 13,000 persons, in annual terms for the same period. Offsetting these factors, drier than normal conditions in recent years has seen employment in agriculture and related food manufacturing continue to decline, falling by around 18,000 persons in annual terms in the first three quarters of 2005-06.

Budget Strategy and Outlook 2006-07 29

The labour force participation rate is expected to edge higher to reach an historical peak of 66¹/4% in 2005-06, as ongoing strength in the domestic economy and signs of higher living costs (such as petrol prices and rent) induce persons to enter the labour force. The rise in the participation rate, along with population growth, is estimated to result in a 3% increase in the size of the State’s labour force in 2005-06. With jobs growth forecast to ease to a pace in line with labour force growth, the unemployment rate is estimated to remain largely unchanged at a year-average rate of 5% in 2005-06.

Employment growth is forecast to ease to 2¹/2% in 2006-07, with growth in economic activity shifting further away from the labour-intensive domestic sector toward the more capital-intensive trade sector. Despite an anticipated levelling out in the labour force participation rate at its current historic high in 2006-07, strong population growth is forecast to underpin a 2¹/2% rise in the labour force in the next financial year. With labour force growth matching anticipated jobs growth, the year-average unemployment rate is forecast to remain at around a three-decade low of 5% in 2006-07.

Population

Queensland’s population growth is anticipated to largely stabilise at around 2% in the current and next financial year, after easing from 2.4% in 2002-03 to 2.0% in 2004-05. As a consequence of this steady growth, the State’s population is anticipated to increase by approximately 150,000 persons over the next two years, reaching a total of above 4.1 million persons by the end of 2006-07, to represent around one fifth of the national population.

The easing in population growth in recent years largely reflects a decline in net inflow of interstate migrants following the passing of the peak of the housing boom, which initially encouraged migrants from southern States to migrate north due to lower house prices. The net inflow of interstate migrants peaked at more than 39,000 persons in 2002-03, before easing to below 32,000 persons in 2004-05 (see Chart 2.13).

However, net inflows of interstate and overseas migration are expected to stabilise at current levels and remain high relative to other States, reflecting long-established factors such as the State’s stronger economic growth, a competitive tax environment, preferable climate and quality lifestyle. As a result, population growth in Queensland is forecast to remain around double that in the rest of Australia in 2005-06 and 2006-07.

30 Budget Strategy and Outlook 2006-07

Chart 2.13
Domestic economic growth differential and migration, Queensland

Source: ABS 3101.0 and 5206.0.

Wages

Queensland is expected to record strong wages growth in 2005-06, with the Wage Price Index (WPI) expected to increase by 4¹/2%. This strong growth reflects tight labour market conditions, characterised by low unemployment, as well as strong growth in the terms of trade and private investment, which has allowed solid wage increases for employees in resource, construction and export-related sectors. Wages are estimated to have risen at a faster rate than the overall level of prices in 2005-06, implying a rise in real earnings during the year. This improvement in real incomes in Queensland is estimated to in turn support growth in consumer spending over the year.

Growth in the WPI is forecast to remain strong in 2006-07, rising a further 4¹/4%. With forecast wages growth remaining above anticipated inflation for the next year, Queensland employees are anticipated to continue to benefit from rising real wages in 2006-07.

Inflation

Consumer price index (CPI) inflation is forecast to strengthen slightly to 3% in 2005-06, following an inflation rate of 2.6% in 2004-05, but remain in line with estimated national price inflation of 3%. Both domestic and international factors are estimated to contribute to higher prices in Queensland in 2005-06.

Budget Strategy and Outlook 2006-07 31

In terms of domestic factors, food and housing costs contributed more than half of the increase in the Brisbane CPI over the first three quarters of 2005-06 (see Chart 2.14). Increases in housing-related costs largely reflected increases in rents over the year. Fruit and vegetable prices also rose over the first three quarters of 2005-06 and are estimated to have risen further in the last quarter of the financial year, due to the destruction of fruit supplies caused by Cyclone Larry in North Queensland.

The main external influence placing upward pressure on consumer prices in 2005-06 continued to be fuel prices, which rose sharply in the first and last quarter of the financial year. In contrast, strong global competition continued to see price declines on many retail items during the year, such as clothing and footwear.

Consumer price inflation in Queensland is forecast to ease slightly to 2³/4% in 2006-07, in line with the Australian Government’s forecast of inflation nationally. Slightly higher interest rates should place downward pressure on consumer price inflation in 2006-07. Further, ongoing global competition is expected to maintain stable prices on many imported retail and consumer items next year. However, these dampening influences are anticipated to be partly offset by several upstream prices influences next year. In particular, the increase in petrol prices in the last quarter of 2005-06 is anticipated to flow on to prices in other sectors of the economy. In addition, increasing business costs, as evidenced by strong growth in the producer price index in early 2006, are also likely to be partly passed on to higher consumer prices next year.

Chart 2.14
Components of consumer price inflation, Queensland
(% of total change in CPI, three quarters to March quarter 2006)

Source: ABS 6401.0.

32 Budget Strategy and Outlook 2006-07

Risks and opportunities

As a small open economy, national and global developments have a key influence on sectors of the Queensland economy. As a result, the expected rate of economic growth in major trading partners, future movements in world commodity and oil prices, as well as the exchange rate, represent key external risks and opportunities to Queensland economic growth. Domestic factors, such as the housing cycle, inflation and seasonal conditions may also influence forecast economic growth in Queensland.

Major trading partner growth

Growth in major Asian trading partners represents a key opportunity for the Queensland economy and exports in particular in 2006-07. Japan, South Korea, China and India represent Queensland’s four largest export destinations, together accounting for more than half of the State’s overseas commodity exports. Growth in these economies has outperformed market expectations in the first three months of 2006. If growth in these economies proves higher than expected over the remainder of 2006 and into 2007, this may result in stronger economic growth in Queensland than currently anticipated.

In particular, stronger than expected global growth may encourage the commencement of a greater number of projects in the mineral and energy sector, such as gas pipelines and coal mining facilities, than currently anticipated. This would in turn result in higher than forecast growth in business investment and exports.

However, solid global economic growth has also resulted in major central banks joining the US Federal Reserve Board in raising official interest rates. The European Central Bank raised interest rates in March 2006 for the second time in three months, while the Bank of Japan ended its ‘quantitative easing policy’ in March. If official interest rates globally rise at a faster rate than expected in 2006, business and consumer spending both domestically and in Queensland’s trading partners would be affected.

Commodity prices

Higher world commodity prices have boosted Queensland’s export earnings and related business investment. Higher prices for resource exports have also allowed strong wage increases in the trade sector and provided a source of wealth to households more generally through stockmarket gains. While concerns regarding the potential impact of higher US interest rates on global economic growth caused some correction in the world price of base metals in mid-May 2006, world commodity prices still remain well above levels of previous years. However, if world economic growth eases at a faster than expected pace in 2006-07, or global resource supply significantly increases, commodity prices may continue to ease in the next financial year. Any significant easing in world resource prices may in turn cause business investment and consumer spending, as well as employment related to these sectors, to be lower than currently anticipated.

Budget Strategy and Outlook 2006-07 33

Exchange rate

The A$ has fluctuated over the past year, in response to changes in global economic conditions, commodity prices and monetary policy settings. The A$ depreciated from around US77c in early September 2005 to US74c in early March 2006, following a narrowing in interest rate differentials between the US and Australia. After the Bank of Japan ended its ‘quantitative easing’ policy in mid March 2006, the A$ depreciated a further 5% against the US$ and Yen, to around US70c and 82Yen by late March 2006. The A$ again appreciated to around US78c in early-May, reflecting the financial market’s response to a surge in world prices for base metals, before falling back toward US75c in response to some correction in metal prices in late-May.

Given Queensland forecasts are based on the A$ exchange rate remaining largely unchanged, future movements in the A$ may influence the performance of the trade sector and the economy more generally. Any significant appreciation in the A$ may adversely impact on economic growth in 2006-07, by making imported goods more attractive while reducing A$ returns to exporters, while any depreciation of the A$ may potentially improve trade sector performance next year.

Oil prices

An ongoing external risk to the economy is the possibility of higher oil prices. After peaking at nearly $1.30 per litre in September quarter 2005, higher petrol prices had a clear impact on certain components of consumer spending (motor vehicles and transport services) during the first half of 2005-06. While petrol prices eased to below $1.00 in December quarter 2005, they again rose to above $1.30 per litre in the final quarter of 2005-06. If the global oil supply is disrupted by natural disasters or political unrest in major oil producing countries in 2006-07, oil prices are likely to rise further. This would in turn adversely affect global economic growth and consumer spending in Queensland.

Inflation

A key domestic risk to the Queensland and national economies relates to the possibility of further increases in official interest rates. The Reserve Bank of Australia raised the cash rate to 5.75% in May 2006, sighting several sources of inflationary pressure. These included strong growth in incomes due to rising terms of trade, capacity constraints, higher oil prices and signs of stronger growth in consumer credit. If any of these sources of inflationary pressure, in addition to the expansionary impact of the income tax cuts announced in the Australian Budget, cause further increases in the official interest rate, overall growth in economic activity and employment is likely to be lower than that currently forecast for 2006-07. In addition, if capacity constraints manifest themselves in terms of skill shortages or higher labour costs, this would also have direct implications for employment growth in Queensland in the next financial year.

34 Budget Strategy and Outlook 2006-07

Housing cycle

Another domestic risk concerns the rate of moderation in housing activity in Queensland. Underpinned by stronger population growth and rising levels of renovation activity, the State’s overall housing activity has continued to grow, in contrast to the downward trend nationally. House prices in Queensland have also proved more resilient than expected, with the ABS measuring established house prices in Brisbane to have increased by 2.8% over the year to March quarter 2006. However, any further rise in interest rates, or a fall in house prices, may adversely affect home construction and consumer spending.

Seasonal conditions

Agricultural production and exports in Queensland in 2006-07 are forecast to be supported by a gradual improvement in seasonal conditions toward more normal patterns. However, there remains the risk of drier weather conditions or natural disasters, such as the recent cyclone in the Innisfail region, which may delay and prolong any sustainable recovery in rural production and related exports.

Medium-term outlook

Queensland Treasury provides projections for key economic parameters for the three years following the immediate forecast period in the annual Budget and in the Mid Year Fiscal and Economic Review. The projections for the years 2007-08 to 2009-10, shown in Table 2.3, provide a broad indication of the likely path of economic conditions in the State and nationally over the medium term, rather than point estimates of actual growth for this period.

The projections assume a continuation of the longer-term Australian Government fiscal policy and the monetary policy stance of the Reserve Bank of Australia. These policies aim to maintain a stable budget position and a low inflation environment to foster sustainable economic growth. The projections incorporate the anticipated effects of the 2006-07 Australian Budget released on 9 May 2006. Following exceptional growth in 2005-06, economic activity in Queensland’s major trading partners is forecast to return toward its long-run average growth rate over the projection period, as major overseas economies continue to raise interest rates toward more neutral levels.

Economic growth in Queensland is anticipated to return towards its average growth rate over the past decade, around 4¹/2% per annum, projected for the period to 2009-10. Jobs growth of 2¹/2% per annum over this period is projected to outpace population growth of 1³/4% per annum. This implies a moderate increase in labour force participation and the maintenance of a relatively low unemployment rate over the medium term.

Budget Strategy and Outlook 2006-07 35

Table 2.3
Economic parameters/projections¹
(annual % change)

									Projections2
	Outcome		Est.Act.			Forecast			2007-08 to
	2004-05		2005-06			2006-07			2009-10
	%		%			%			%
Queensland
Gross state product3		4.1		3	1/2		4	1/4		4	1/2
Employment		5.6		3			2	1/2		2	1/2
Inflation		2.6		3			2	3/4		2	1/2
Wage Price Index		3.8		4	1/2		4	1/4		4
Population		2.0		2			2			1	3/4
Australia
Gross domestic product3, 4		2.5		2	1/2		3	1/4		3	1/4
Employment4		3.0		2			1			1	1/4
Inflation		2.4		3			2	3/4		2	1/2
Wage Price Index4		3.8		4			4			4
Population		1.1		1	1/4		1	1/4		1	1/4

Notes:
1.	Decimal point figures indicate an actual outcome.
2.	Average annual percentage change over the period.
3.	CVM, 2003-04 reference year.
4.	The Australian Government forecasts 31/2% growth in gross domestic product in 2007-08, easing to 31/4% in 2008-09 and 2009-10 respectively. The Australian Government forecasts 11/2% employment growth in 2007-08, easing to 11/4% in 2008-09 and 2009-10 respectively. The Australian Government forecasts 33/4% wage growth in 2007-08, rising to 4% in 2008-09 and 2009-10 respectively.
Source: Queensland Treasury and Australian Treasury.

36 Budget Strategy and Outlook 2006-07

3. ECONOMIC STRATEGY

KEY POINTS

• Queensland’s economic strategy continues to target the key driver of economic growth – productivity growth – through investing in infrastructure, human capital and innovation.

• Economic growth is determined by population, participation and productivity. All three factors have grown strongly over the last decade.

• The key policies forming the Government’s economic strategy are the maintenance of a sound fiscal and economic environment as a foundation for growth, investments in skills and innovation to help drive productivity and infrastructure provision and sectoral reforms.

• Energy reform continues with the introduction of full retail competition from 1 July 2007 and the restructuring of the electricity sector in response to the Energy Review.

• The Queensland Future Growth Fund will operate by investing the proceeds of the sale of ENERGEX Retail, the contestable elements of Ergon Retail and the Allgas Network. The proceeds from the sale, anticipated at more than $1 billion, will be invested in new initiatives including new technologies to mitigate climate change, particularly clean coal technology, new water infrastructure to help Queensland deal with the effects of climate change and new infrastructure to promote Queensland’s continued strong economic development.

• The Government is continuing to reform the State’s water sector with the creation of the Queensland Water Commission being a key initiative.

INTRODUCTION

The aim of the Queensland Government’s economic strategy is to ensure strong economic and productivity growth. This underpins one of the Government’s key economic and social policy priorities outlined in its Charter of Social and Fiscal Responsibility, which is to enhance the quality of life for all Queenslanders.

Queensland’s economic strategy targets the key driver of economic growth – productivity growth – by investing in infrastructure, human capital and fostering innovation through the Smart State Strategy.

Budget Strategy and Outlook 2006-07 37

Economic growth is determined by population growth, economic participation and productivity growth. Queensland has experienced strong population and participation growth in recent years. These trends are discussed in more detail in Chapter 2. The economic impact of Queensland’s population growth was discussed in detail in Chapter 3 of Budget Paper No. 2 of the 2004-05 Budget.

Productivity growth will generate high rates of sustainable economic growth and provide employment and improved living standards for Queenslanders.

This chapter discusses the Queensland Government’s economic policies that foster productivity growth, with a special focus on infrastructure policies and sectoral reforms.

PRODUCTIVITY GROWTH

Productivity growth is the most important determinant of sustainable long-term economic growth and living standards. Productivity growth means that more goods and services can be produced from a given level of inputs.

Productivity growth generally results from increases in capital inputs (physical capital and human capital), efficiency improvements (making better use of existing capital and labour inputs and resources given current technology) and technological progress (driven by innovation).

Productivity growth can be passed onto employees in the form of higher real wages, to consumers in the form of lower prices, or to employers and businesses in the form of lower inputs costs and increased profitability. In each case, productivity growth ultimately results in higher real incomes and improved standards of living.

Productivity growth and particularly higher real incomes play an important role in maintaining and improving the Government’s long-term revenue base, providing capacity to enhance the delivery of a wide range of goods and services throughout Queensland such as health and aged care, education, transport, crime prevention, cultural activities, regional development and environmental protection.

Chart 3.1 shows the relationship between productivity growth and sustainable long-term economic growth. Over the past 10 years, Queensland has generated an average annual growth rate of about 4.6%, with labour productivity growth accounting for about two-fifths of this growth and employment growth the remainder.

38 Budget Strategy and Outlook 2006-07

Chart 3.1
Employed labour, labour productivity and real output, 1994-95 to 2004-05

Source: Queensland State Accounts, ABS 6202.0 unpublished data.

The growth in employment has occurred despite increases in labour force participation rates to record levels (Chart 3.2).

Chart 3.2
Labour force participation rate¹ and employment rate²

Source: ABS 6202.0. Queensland Treasury, Australian Treasury.
(e) estimate

1.	Labour force as a percentage of civilian population aged 15 and over.
2.	Employment as a percentage of civilian population aged 15 and over.

Budget Strategy and Outlook 2006-07 39

FOSTERING PRODUCTIVITY GROWTH

The maintenance of a sound fiscal and economic environment provides an essential foundation for growth.

This strategy reflects the findings of the Government’s Drivers of Economic Growth research study released in 2003. The economic evidence assembled through the study indicates that the main areas in which the State Government could support productivity growth include:

• maintaining the strong fundamentals of the Queensland economy, especially through responsible fiscal policy, competitive taxation policies, a supportive environment for business investment and periodic review of the regulation – these fundamentals provide certainty to industry and boost business confidence, which in turn promotes physical capital investment and productivity growth

• fostering innovation, supporting research and development and encouraging the adoption and adaptation of new technology by new and existing industries – this leads to technological progress and productivity growth

• improving the quality of the State’s human capital, through appropriately directed education and training programs – this investment in human capital improves labour productivity

• maintaining adequate and appropriate levels of infrastructure and undertaking reforms to the State’s key infrastructure sectors to increase their economic efficiency – infrastructure is both an important industry in its own right and a strong influence on private physical capital investment.

A sound fiscal position supports a competitive tax environment, enhances business competitiveness and provides a stable economic environment allowing businesses to make investment decisions with a reasonable degree of certainty and confidence. These key settings, coupled with targeted government policies in the areas of innovation, human capital and infrastructure provision, form the framework for the Government’s economic strategy as shown in Figure 3.1 below.

40 Budget Strategy and Outlook 2006-07

Figure 3.1
Queensland’s Economic Strategy

Sound fiscal and economic environment

Charter of Social and Fiscal Responsibility

The Government’s economic and social priorities are outlined in its Charter of Social and Fiscal Responsibility. The Government is committed to delivering high quality services to improve the quality of life for Queenslanders. A central element is to further develop the State’s already strong economy. Government strategies that aim to maintain a strong diversified economy include:

• expanding market access, export and trade opportunities

• creating additional job opportunities

• maintaining a competitive tax environment for business development and jobs growth

• diversifying and strengthening the economy through value adding, productivity growth and the development of future growth industries.

Budget Strategy and Outlook 2006-07 41

To best support the diversification of the economy and sustainable service delivery, the Government remains committed to responsible management of the State’s financial resources. A sound fiscal and economic environment allows the Government to develop and implement policies and enables industry to make decisions that increase capital investment, while encouraging the development of technology and innovation to improve the skills of human capital. These key elements of productivity growth support the continued growth of the Queensland economy.

More detail about the Government’s fiscal objectives and performance is in Chapter 1. The State’s economic performance is detailed in Chapter 2.

Regulatory reform

The Queensland Government is developing a new reform agenda to further enhance the Queensland business environment. The Government is undertaking a Review of Hot Spots for Regulatory Reform to identify regulatory issues adversely affecting business in Queensland and to develop a program of review for regulation where the burden is considered to be excessive.

The Review is being conducted in parallel with other Government activities including the sector reviews under the Small Business Policy, which are investigating the impact of regulations in the manufacturing, retail and tourism industries.

The consultation period for the Review closed in March 2006 and a final report detailing regulatory ‘hot spots’ is currently being prepared.

Innovation and Smart State

Innovation involves the development and introduction of new or improved products, services or production processes that boost the efficiency and productive capacity of labour or capital or both. Innovation in the private sector generates greater income from given resources and is a primary source of productivity growth, improved living standards and enhanced job opportunities. Public sector innovation generally focuses on areas with important social benefits, such as environmental protection and health care, which are also crucial contributors to productivity and improved living standards.

The Government plays an important role in facilitating innovation by providing incentives for potential innovators, enhancing the capacity of the innovation system through infrastructure and skill development and generating a culture of innovation in the community. In addition, the Organisation for Economic Cooperation and Development estimates that innovation accounts for 50% of long-term economic growth in advanced economies. For these reasons, innovation and fostering innovation is at the heart of the Smart State Strategy.

42 Budget Strategy and Outlook 2006-07

Research and development (R&D) is widely considered as an important input into innovation activities and processes. Recognising the importance of R&D to innovation, the Queensland Government has taken an active role in this area by providing R&D infrastructure and facilities to foster and influence innovation in the State’s economy. Since 1998 the Queensland Government has invested more than $2.4 billion in research, science and innovation and related infrastructure and facilities. Some recent investments by the Queensland Government in world-leading infrastructure and facilities include the:

• University of Queensland’s Institute for Molecular Bioscience

• Queensland University of Technology’s Institute for Health and Biomedical Innovation

• Queensland Brain Institute at the University of Queensland

• Griffith University’s Eskitis Institute for Cellular and Molecular Therapies

• University of Queensland’s Australian Institute for Bioengineering and Nanotechnology

• Griffith University’s Institute for Glycomics

• Centre of Excellence in Engineered Fibre Composites at the University of Southern Queensland

• Queensland University of Technology’s Creative Industries Precinct.

Another example of the Queensland Government investing in R&D infrastructure is the establishment of the Ecosciences Precinct by redeveloping the former Boggo Road Gaol site into an integrated knowledge precinct focusing on ecosystems science. The site will be transformed into a mixed-use urban village comprising research, commercial, retail and residential facilities, bringing together a vital mix of people including researchers, commercialisation experts and entrepreneurs for several research organisations. The main participating Queensland Government agencies will be the Department of Natural Resources, Mines and Water, the Department of Primary Industries and Fisheries and the Environmental Protection Agency.

The Smart State Strategy has been an integral part of the Queensland Government’s broader economic development strategy. The recently released Smart Queensland: Smart State Strategy 2005-2015 is the second stage of the Smart State Strategy, which began in 1998. Smart Queensland will continue creating jobs, improving education and the economy and fostering innovation, new technologies and industries that will improve our health and way of life. The Government will commit at least $473 million over the next few years to implement the Smart Queensland Strategy and this will provide an immediate stimulus to boost industry innovation and commercial capacity for greater global export and trade gains.

Budget Strategy and Outlook 2006-07 43

Key initiatives of Smart Queensland include:

• $200 million over four years for three new funds to build research centres and support innovation across a broad range of fields, including health and medicine, the environment, agriculture and mining

• $56 million over four years to establish two new state schools of excellence for senior school students in creative arts and science, maths and technology.

Skilling human capital

Human capital refers to the stock of knowledge, skills and attributes available in the workforce. Human capital can be enhanced by formal education and training, informal training, including work and life experiences, increased participation in the labour force and skilled immigration. The enhancement of human capital has a positive effect on productivity and economic growth through innovation, the adoption of new technology and the formation of new production processes.

Two important policies that aim to enhance the human capital of Queensland are the Queensland Skills Plan and the Government’s Education and Training Reforms for the Future.

Queensland Skills Plan

Technological changes, globalisation, an ageing population and low unemployment rates have contributed to significant changes in Queensland’s labour market. Skills shortages have been identified across a number of key industry areas, including traditional trades and para-professional occupations.

Following state-wide consultation regarding proposed reforms to the Queensland vocational education and training system, the State Government launched the Queensland Skills Plan in March 2006. The Queensland Skills Plan establishes a policy framework that will better match the supply of skilled labour to industry needs and the demands of the economy. In addition, the Queensland Skills Plan outlines a range of actions that the Queensland Government will implement to transform and modernise the State’s vocational education and training system.

Major initiatives include:

• an additional 17,000 trades training places and an additional 14,000 Certificate IV and above training places available each year by 2010

• improvements to Queensland’s apprenticeship system (including fully implementing competency-based training arrangements)

• a major capital works program to upgrade and enhance Technical and Further Education (TAFE) institutes State-wide

44 Budget Strategy and Outlook 2006-07

• a new State-wide Trade and Technician Skills Institute to lead product development and delivery in key trades areas

• three new Centres of Excellence to promote skills development in the energy, manufacturing and engineering and building and construction industries

• 10 new sites for Skilling Solutions Queensland established in 2006-07, to provide face to face career and training information services. This enhancement follows the success of pilot sites which opened in early 2005

• a Skilling Queenslanders for Work initiative to provide sustainable employment outcomes for Queenslanders who are disadvantaged in the labour market. While this initiative will replace the highly successful Breaking the Unemployment Cycle program, it will combine some features of the existing program, as well as providing new measures that will allow assistance to be better matched to an individual’s needs.

Over the next four years, around $800 million in recurrent expenditure will be invested to implement vocational education and training reforms (including an estimated $542 million in new recurrent funding). Around $46 million is budgeted in 2006-07 by the Department of Employment and Training to implement capital initiatives outlined within the Queensland Skills Plan, including modernisation of the State’s network of TAFE institutes (part of a total capital commitment exceeding $300 million over six years).

Education and Training Reforms for the Future

Improvements in education outcomes are an important way of increasing human capital. The 2006-07 Budget provides $186.7 million for the continuation of the Government’s Education and Training Reforms for the Future across the early (Preparatory Year to year 3), middle (years 4 to 9) and senior (years 10 to 12) phases of education. From 2007, this will include the commencement of a full-time Preparatory Year available at state and non-state primary schools. It is expected that approximately 25,000 students born between January and June 2002 will enrol in the Preparatory Year in 2007. This is expected to rise to around 50,000 in 2008 when a full year group is eligible to enrol.

In addition, the Government’s comprehensive ‘learning or earning’ reforms for senior schooling are making learning more flexible, exciting and relevant to students. Young Queenslanders will have access to better support services and programs to help them stay in education, training or work until they turn 17 years of age.

Budget Strategy and Outlook 2006-07 45

Students commencing Year 11 in 2007 will be eligible for the new Queensland Certificate of Education (QCE) in 2008. Achievement of a QCE will require a significant amount of learning at a set standard and is subject to specific literacy and numeracy requirements. The new qualification will recognise a broad range of achievement including TAFE courses, school-based apprenticeships, university subjects, job readiness programs and structured work experience.

National Reform Agenda — Human Capital Intergovernmental Action Plans

The Council of Australian Governments (COAG) agreed on 10 February 2006 to work on a stream of reforms aimed at improving workforce participation and productivity by focussing on health, education and training and work incentives. Work is progressing for further COAG consideration of outcomes and associated progress measures in these areas together with actions and milestones. Subject to the resolution of associated funding arrangements, Intergovernmental Action Plans will be developed for COAG consideration.

Infrastructure provision and sectoral reforms

Increasing the State’s infrastructure base

The Queensland Government recognises the central role that infrastructure investment has in increasing the State’s productive capacity. The Government’s commitment to increasing the State’s capital infrastructure base is reflected in the scale of the State’s capital infrastructure program. For the General Government sector, purchases of non-financial assets are estimated to be $3.958 billion in 2006-07. On a per capita basis, this is the largest capital program of any State (see Chart 3.3).

Effective and responsive planning of infrastructure networks can improve the efficiency of both current and future infrastructure. For example, coordinated planning can assist in ensuring that infrastructure assets function effectively as part of an integrated network. The South East Queensland Infrastructure Plan and Program is an example of an infrastructure planning framework which will give direction and momentum to both Government and private infrastructure investment in the south east of the State over the next 20 years.

46 Budget Strategy and Outlook 2006-07

Chart 3.3
General Government Purchases of Non-financial Assets $  per capita

Sources : Unpublished ABS 5512.0 and 3101.0; various State Budget papers and State Budget Mid Year Reviews/Budget Updates; population estimates from Australian Government Budget Paper No.3, 2006-07 (e) estimate

Competition and infrastructure regulation

COAG has agreed that governments will establish a simpler and consistent national approach to the economic regulation of significant infrastructure. Subsequently, Queensland, along with other states and territories, agreed that national consistency in relation to infrastructure regulation could be strengthened by working towards common principles to govern the operation of access regimes and minimise costs for infrastructure users operating across jurisdictions. These elements will include common objects clauses and pricing principles and the adoption of six months binding time limits on decisions by regulators. In addition, the application of competitive neutrality principles to government business enterprises engaged in significant business activities in competition with the private sector will be enhanced.

Further, price monitoring for services provided by means of significant infrastructure facilities will also be introduced in Queensland in line with the COAG agenda. Price monitoring requires businesses to report their prices, costs and profitability on a regular basis and puts businesses on notice that additional price regulation may be applied if they take unfair advantage of their market power. Thus, price monitoring offers a light-handed and cost effective approach to regulation where an infrastructure service provider has significant market power.

Budget Strategy and Outlook 2006-07 47

The COAG infrastructure reforms also involve the development of a simpler and consistent national system of regulation for ports and export-related infrastructure and rail freight infrastructure. The Queensland Government is committed to a review of port authority and handling facility operations to ensure the competition and regulatory frameworks operating in significant ports are appropriate. It will also consider the application of the Australian Rail Track Corporation access undertaking to nationally significant railways.

Queensland is also participating in COAG reviews of transport and energy regulation. The transport reviews are examining urban transport congestion and the efficient pricing of road and rail freight infrastructure. On energy, an expert Energy Reform Implementation Group is being established to report back to COAG by the end of 2006 with proposals for achieving a national transmission grid and other structural issues affecting the national electricity sector.

Sectoral reforms

The Government is implementing sectoral reforms across the State’s infrastructure sectors to increase the efficiency and productivity of these sectors.

Increasing the efficiency of the State’s infrastructure sectors enables higher levels of outputs to be provided with the same level of inputs. Increasing the efficiency of existing infrastructure can be achieved through policy or regulatory mechanisms. Using existing infrastructure more efficiently may confer greater economic benefits to society than new infrastructure investment, as it minimises the need to draw upon the Government’s resources.

Discussion of economic reforms of the State’s energy and water follows. Reform of an important resources sector, Queensland’s forestry sector, is also outlined.

ENERGY REFORM

The Government is implementing substantial reform of Queensland’s energy sector. The reforms aim to improve the efficiency of the sector and modernise its industry structure in response to changes in the national and Queensland energy markets.

Energy Market Developments Driving Change

The energy market developments underlying the reforms are the continued growth of Queensland’s energy market, structural change in the National Electricity Market (NEM) and the introduction of full retail competition (FRC) to Queensland’s energy sector.

48 Budget Strategy and Outlook 2006-07

• Queensland is the second largest and fastest growing market in the NEM, which includes NSW, Victoria, South Australia, Tasmania and the ACT. This growth is driven by strong demand from Queensland’s industries because of Queensland’s rapid economic growth, Queensland’s population growth and increased use of air-conditioning. Continued economic and population growth means that electricity demand is expected to continue to grow strongly.

• The NEM was established in 1998 and has led to substantially increased competition in the energy market. As the NEM has evolved, a number of changes have occurred, in particular the trend towards the vertical integration or re-aggregation of generation and retail assets. This has occurred prominently in other jurisdictions, most notably Victoria.

• FRC is being introduced into the Queensland energy market from 1 July 2007. From that date, all consumers will be able to choose the retailer from whom they wish to purchase their energy. The introduction of FRC is the culmination of a series of electricity and gas reforms from 1998 in which competition has been progressively extended from the largest industrial customers through medium sized industrial and commercial customers to all customers from 1 July 2007.

These developments have provided customers with greater choice, more flexibility and more efficient energy prices, while Government retains responsibility for ensuring reliable and adequate energy supply to cater for the expected growth in the market. The Government’s response to this growth in demand, which includes tariff reform and investment projects, was outlined in the Special Fiscal and Economic Statement. However, the Government considered that the supply side of the industry needed further review and in October 2005 it established the Energy Government-Owned Corporations Structural Review.

Energy Government-Owned Corporations Structural Review

The Review reported in March 2006 and in April 2006 the Government announced the following key decisions:

• the State’s transmission and distribution networks are to remain in public ownership

• generation assets will remain under current arrangements

• ENERGEX’s retail business, Ergon Energy’s contestable retail activities and the Allgas gas distribution business are to be sold

• Enertrade is to retain its North Queensland gas assets

• the power purchase arrangements managed by Enertrade are to be reviewed with a view to Government exit.

Budget Strategy and Outlook 2006-07 49

The reasons underlying the Government’s decisions were:

• the Government will retain ownership of generation, transmission and distribution assets in order to protect the reliability of adequate energy supply to Queensland businesses and consumers

• FRC, which is likely to result in strong retail competition, will increase the risk associated with owning retail assets to unacceptable levels and expose the Government to the risk of significant losses. Exiting the retail businesses would eliminate this financial risk and allow ENERGEX and Ergon Energy to focus on core electricity distribution roles.

Specific decisions in respect of ENERGEX were:

• ENERGEX’s retail activities will be brought under the name of Sun Retail and be divested through a trade sale that is structured to support competition in the retail market

• other ENERGEX activities to be exited are gas retail and contracts, ENERGEX’s LPG business and Allgas distribution

• there will be no forced redundancies for all employees directly affected who are covered by awards or enterprise bargaining agreements (EBAs), with a large proportion of employees to be offered reversion rights to employment within the ENERGEX distribution business.

Specific decisions in respect of Ergon Energy were:

• Ergon Energy is to exit its existing contestable retail business

• Ergon Energy is not to compete in the contestable domestic and small business markets (100 Megawatt hours and below)

• there will be provisions similar to those in ENERGEX regarding redundancies and rights of reversion for those award or EBA employees directly affected.

An implementation team has been established within Queensland Treasury to manage the sales process. The implementation team is aiming to achieve financial close for the divestment process by the end of the 2006 calendar year.

Queensland Future Growth Fund

The Government has decided to establish the Queensland Future Growth Fund. The Fund will operate by investing the proceeds of the sale of ENERGEX Retail, the contestable elements of Ergon Retail and the Allgas Network. The proceeds of the sale, anticipated at more than $1 billion, will be invested in initiatives including:

• new technologies to mitigate climate change effects, particularly clean coal technology

50 Budget Strategy and Outlook 2006-07

• new water infrastructure to help Queensland deal with the effects of climate change

• new infrastructure to promote Queensland’s continued strong economic development.

The Future Growth Fund will operate separately from the State Budget.

As a priority under the Fund, the Government intends to accelerate the building of two new dams and two new weir projects. Subject to Australian Government cooperation, these projects are now likely to be completed by the end of 2011. Together they are expected to deliver up to an extra 235,000 megalitres per year.

The dams comprise a major new dam on the Mary River in the Gympie region and the bringing forward of the construction of a new dam proposed for the upper reaches of the Logan River. As part of the process for the Logan River Dam, the Government will re-examine the existing proposal for the Wyaralong Dam site as compared to a new site which has been identified at Tilley’s Bridge near Rathdowney.

On the Fitzroy River in Central Queensland, the Eden Bann Weir will be raised and a new weir built at Rookwood.

A further priority for the Fund will be to support the development of clean coal technology. The allocation will be used for projects which aim to both support the coal industry’s future and protect the environment through reductions in emissions from power generation.

Further details of the Fund will be released following the sale of the retail assets.

WATER REFORM

The Queensland Government remains committed to developing and maintaining an economically viable and environmentally sustainable water industry. Water reform has been actively underway since the mid to late 1990s. This has been by national agreement under COAG’s Water Resource Policy from 1994, the implementation of National Competition Policy in the late 1990s and now the National Water Initiative.

The rate of progress on water reform in Queensland increased with the introduction of the Water Act 2000. This represents the most fundamental rewrite of water industry legislation in Queensland since the early 1900s and provides a clear separation between water industry regulators and water service providers. The implementation of the Water Act 2000 establishes, among other things, a system which enables effective water resource planning on a catchment-by-catchment basis and facilitates water trading through a framework to progressively create tradeable water allocations on completion of water resource planning in each catchment. Once water resource planning in each catchment has been finalised, water entitlements will be separated from property with the creation of tradeable water allocations.

Budget Strategy and Outlook 2006-07 51

The ability to trade water, including more cost reflective water pricing, promotes the most efficient and effective use of water over time, with water progressively being drawn towards its highest value and best use.

Continuing this reform trend, in August 2005 the Queensland Government released the Water Plan for 2005 to 2010. This sets out the seven strategies for improving sustainable water management:

• securing water for the environment and users through water resource planning

• planning for future water needs through regional water supply strategies

• smarter use of existing supplies through greater rural and urban water efficiency

• pricing water for sustainability, including new price paths for rural water users

• protecting water quality, including implementation of the Reef Water Quality Protection Plan

• compliance to protect users and the environment

• investing in science and technology to better inform water management decisions.

Several notable individual activities within this overall framework for water reform are detailed below.

Queensland Water Commission

The Queensland Water Commission has been established to improve the water planning processes for regions across Queensland. It will initially focus on the South East Queensland region, where water supply issues have been brought sharply into focus for the State and local governments by the current drought, which is the worst on record.

The Water Commission’s task will be to immediately assume control over water restriction regimes to ensure that a regional approach is taken to the use of this scarce resource. It will complete the Water Supply Strategy for the region, which has been underway for several years and will identify the current and future demand for water and the current and potential supply sources available to meet that demand.

Importantly, given the cost of new water sources is expected to be significantly greater than existing dams, it will focus on achieving water supply security for the region on a cost effective basis and ensure the costs and benefits of water supply security are equitably shared within the region.

52 Budget Strategy and Outlook 2006-07

Water pricing

The Queensland Government, as a signatory to the National Water Initiative (NWI), has committed to ensuring that the price of water, both rural and urban, reflects the costs of supply and encourages people to invest in efficient water supply and use. Urban water prices generally reflect the full cost of the infrastructure required to deliver water to industry and households. However, for rural water, this policy has required the implementation of price paths to transition prices towards full cost recovery over time and where practicable.

SunWater, the State Government-owned corporation that supplies the vast bulk of irrigation water, is completing negotiations for the second set of rural water price paths, covering the period 2006 to 2011. This will continue to move rural water prices towards a greater degree of cost recovery and will be supported by community service obligation payments from the State, where appropriate, to ease the transition for rural water users.

The NWI also seeks for water resource management costs to be identified and attributed to water users. The Government is currently investigating options for recovering water resource management costs from urban, industrial and rural water users, with independent analysis of this issue to be concluded by late 2006. The Government will continue to work with key stakeholders on implementation of water charges and the application of the NWI water charge principles.

Water infrastructure development

Queensland’s approach to infrastructure development is to undertake a considered needs-based assessment of new infrastructure proposals to ensure that the infrastructure is economically and environmentally sustainable. This is consistent with the Government’s Guidelines for Financial and Economic Evaluation of New Water Infrastructure in Queensland and is a key element of the Regional Water Supply Strategies, including:

• the South East Queensland Regional Water Supply Strategy. Significant infrastructure proposals are under consideration for South East Queensland to secure regional water supplies, both in response to the current drought and also in the medium to long term to underpin the significant population growth forecast for the region

• the Central Queensland Regional Water Supply Strategy. Released in draft for comment in late 2005, this strategy outlines a range of future infrastructure options available to meet increased demand associated with continued urban, industrial and rural development in that region.

Budget Strategy and Outlook 2006-07 53

FORESTRY REFORM

The State Government is implementing the commercial reform of the State-owned plantation forests in Queensland. These reforms will underpin the long-term sustainability and competitiveness of the plantation timber industry, provide appropriate market signals for both the state’s commercial plantation manager and private plantation growers to invest in the Queensland market and secure the future of the some 6,000-plus jobs that are dependent on the plantation sector in the State.

Forestry Plantations Queensland is being established as the new commercial manager of the State-owned plantation assets. It is established as a corporation sole with two responsible ministers, the Treasurer and the Minister for Primary Industries and Fisheries. It will be given property rights, assets, an appropriate accountability framework and clearly defined objectives required to operate in a commercial manner, including:

• the requirement for it to agree and adhere to an annual operational plan, which outlines key strategies, activities, targets, performance criteria and operational and policy guidelines

• the provision of responsible ministers with the power to issue directions

• the consent for it to enter into the financial arrangements and transactions needed to undertake commercial activities detailed in its operational plan, particularly its investments

• the provision of certain assets previously controlled by DPI Forestry

• access to state plantation forests and the rights to deal with natural resource products

• compliance with the Financial Administration and Audit Act 1977

• quarterly reports to responsible ministers on the targets and performance criteria and the publication of an annual report.

The commercial governance structure for Forestry Plantations Queensland will include:

• the ability to appoint a commercial advisory board

• delegated responsibility of the board’s strategic planning, development and negotiation of the operational plan, performance monitoring and review

• the responsibility of ministers to provide the board with other duties and responsibilities as required.

54 Budget Strategy and Outlook 2006-07

These reforms have been designed for the Queensland environment and provide the State-owned plantation grower with the commercial reforms that were applied to competitors in southern states and New Zealand. Specifically, these reforms will enable Forestry Plantations Queensland to benchmark itself against southern and New Zealand growers, address the low productivities experienced in a number of the State’s plantations, develop commercial governance and risk management structures, establish commercial partnerships, maximise value, add opportunities and better respond to the demands of major clients which are facing challenges in maintaining market shares.

Budget Strategy and Outlook 2006-07 55

4. BUDGET PRIORITIES AND INITIATIVES

KEY POINTS

• The key areas for service enhancements in the 2006-07 Budget include health, disability services, child safety, education, employment and training, police and water infrastructure.

• The Blueprint for the Bush commits more than $150 million over the next four years for additional initiatives across rural and regional Queensland.

• Queensland Health’s Budget in 2006-07 is estimated at $6.6 billion, a 24% increase on the 2005-06 Budget of $5.4 billion. The Health Budget is estimated to grow to $7.8 billion in 2009-10, an increase of 45% on the 2005-06 Budget.

• An additional $128 million in recurrent funding and $6 million in capital funding over four years will improve the delivery of disability services.

• An investment of $1 billion over five years is provided for Queensland state schools, including $850 million over five years for modernisation and refurbishment.

• Over the next four years, around $800 million will be invested to implement reforms outlined in the Queensland Skills Plan, including additional trades and Certificate IV and above training places and a major capital works investment program to modernise the State’s network of Technical and Further Education (TAFE) institutes.

• The Budget provides an additional $172.5 million recurrent and $76.4 million capital funding over the next four years for the further enhancement of the Queensland Police Service’s information and communications systems.

• The Budget also provides significant funding for the development of new water infrastructure to meet urban, industrial and agricultural demand.

• The capital program for 2006-07 is $10.136 billion, $1.914 billion more than last year’s estimated actuals and includes $2.856 billion for energy projects, over $2 billion for roads, $856 million for ports and $838 million for rail projects.

INTRODUCTION

This chapter details:

• the Government’s identified outcomes and priorities which underpin the 2006-07 Budget

• service delivery initiatives and developments for each of the Government’s key priorities.

56 Budget Strategy and Outlook 2006-07

As part of its commitment to ensuring a better quality of life for all Queenslanders, the Government has identified eight outcomes that it is working to achieve for the people of Queensland. These outcomes are outlined in the Charter of Social and Fiscal Responsibility and include economic development, community wellbeing and environmental sustainability. All government services contribute to one or more of these outcomes for the community.

To support the achievement of these outcomes, the Government has a clear policy agenda, currently targeting seven priority areas in which the Government will concentrate efforts to improve performance and respond to changing community needs and expectations.

These priorities are:

• improving health care and strengthening services to the community

• growing a diverse economy and creating jobs

• realising the Smart State through education, skills and innovation

• managing urban growth and building Queensland’s regions

• protecting our children and enhancing community safety

• protecting the environment for a sustainable future

• delivering responsive government.

The 2006-07 Budget provides for a range of specific initiatives and service developments that will assist in achieving these key policy priorities. The major revenue initiatives to achieve the Government’s priorities in the 2006-07 Budget relate to State taxation, including payroll tax and land tax. A full discussion of the revenue initiatives and issues is provided in Chapter 5.

Spending to achieve these priorities falls into two categories, recurrent and capital. Recurrent expenses are the costs incurred in providing services and running and maintaining assets and are addressed in detail in Chapter 6. Capital expenditure relates almost exclusively to the purchase and construction of assets that are used to support service delivery, such as hospitals, schools, courthouses, police stations, fire and ambulance stations and roads. Capital expenditure is discussed in Budget Paper No. 3 – Capital Statement.

Details of some of the service delivery initiatives in the 2006-07 Budget that support the achievement of the Government’s priorities are described below. While highlights of the Budget are described in terms of their primary impact on the community, many assist the Government in pursuing more than one key priority.

Budget Strategy and Outlook 2006-07 57

A number of the initiatives in the 2006-07 Budget are related to four policy documents released by the Government:

• Health Action Plan (see Box 4.1)

• Queensland Skills Plan (see Box 4.2)

• South East Queensland Infrastructure Plan and Program (see Box 4.3)

• Blueprint for the Bush (see Box 4.4).

Details of the Government’s response to Cyclone Larry are provided in Box 4.5.

As well, details on the State’s investment in information and communication technology are provided in Box 4.6.

More detailed information on service delivery initiatives can be found in individual Ministerial Portfolio Statements.

58 Budget Strategy and Outlook 2006-07

IMPROVING HEALTH CARE AND STRENGTHENING SERVICES TO THE COMMUNITY

Improving hospital and health services as well as other services to the community is a continuing priority for the Government. Major service developments and initiatives relating to this priority are detailed below.

To support this priority, the Government released the Health Action Plan in October 2005. An update on the Plan is provided in Box 4.1.

Health initiatives

Health staff remuneration

Additional funding of $1.3 billion over four years ($241.6 million in 2006-07) is provided for the finalisation of Queensland Health’s staff enterprise bargaining agreements. Agreements have been reached with medical staff and negotiations are near completion for nurses and at various stages of negotiation for allied health professionals and other staff. The enterprise bargaining agreements provide for competitive remuneration and will assist to meet the Government’s plan to recruit and retain health staff, including doctors, nurses and allied health professionals.

Mater Hospital redevelopment operating costs

A significant boost to public health services will be provided from an injection of $157.1 million over four years ($24.9 million in 2006-07 increasing to $50.7 million in 2008-09 and ongoing) for the enhanced services being provided through the public component of the redevelopment of the Mater Adult and Mothers Hospitals.

The redevelopment of the Mater Hospital complex was a 2004 election commitment which provided for 50 extra adult inpatient/day beds, eight extra emergency department short stay beds, seven extra intensive care/coronary care beds, 47 extra public obstetric beds, 11 extra neonatal cots and improved parking access. Since the announcement in 2004, the Government has provided a significant funding boost for the redevelopment. As a result of some scope changes and increases in construction costs, the Government’s original contribution of $88 million towards the public component of the redevelopment has increased to $123.6 million.

Forensic services reform

Capital funding of $18 million over three years is provided to implement key infrastructure priorities at Queensland Health Scientific Services and, together with recurrent funding of $9 million over three years and $3 million ongoing, to deal with the backlog of forensic cases. This is in addition to ongoing funding of $2.4 million announced in the Special Fiscal and Economic Statement to address issues with regard to DNA profiling and crime scene samples.

Budget Strategy and Outlook 2006-07 59

Services for people with disabilities

The 2006-07 Budget provides $128 million in recurrent funding and $6 million in capital funding over four years, including $26.7 million in new recurrent funding and $1.5 million in new capital funding for 2006-07, to enhance disability services in Queensland. This brings Disability Services Queensland’s operating budget to $634 million in 2006-07, an increase of 22% over the 2005-06 Budget and builds on the $180 million over four years provided in the 2005-06 Budget.

Key elements of this additional funding are:

• $4 million over four years to expand early intervention strategies for families caring for children with autism under five years of age, who have complex and challenging behaviours

• $16 million over four years to establish new and/or enhanced respite services for families living with a family member with a disability

• $6 million over four years for the Post Schools Services – Adult Lifestyle Support Program, which assists young people with high and complex disability support needs who do not have work or further education options when leaving school

• $17.4 million over five years in recurrent funding and $6 million over four years in capital funding, to reduce the number of young people living in nursing homes

• $15.7 million over four years to implement the Disability Services Act 2006, introducing fundamental safeguards for people receiving disability services

• $6 million over four years for the Carers Action Plan Initiative which will ensure better recognition of the role of carers in the community and support the Queensland Government Carer Recognition Policy

• $40 million over four years to strengthen the capacity of non-government organisations to provide high-quality disability services.

Spinal injury

Additional funding of $15.9 million in recurrent funding ($3.9 million in 2006-07) and $38.5 million in capital funding ($6 million in 2006-07) over four years is provided across a number of agencies to improve the lives of people with an acquired spinal cord injury. This funding will enable people with spinal cord injuries to receive further care and support upon discharge from the Spinal Injuries Unit in Brisbane and to resume their lives upon their return to the community.

Citytrain network

The Budget provides $47.7 million in 2006-07 to make modifications to the Citytrain network to further improve access to trains and train stations for people with a disability.

60 Budget Strategy and Outlook 2006-07

Box 4.1
Health Action Plan

With the release of the Health Action Plan in October 2005, the Government commenced a major transformation and renewal of Queensland’s public health system.

The Health Action Plan announced a record injection of funding totalling $6.4 billion in just over five years to 2010-11, of which $4.4 billion was new money. Through the 2006-07 Budget, State funding for Queensland Health will grow by $9.7 billion over the five years.

Chart 1
Growth in Queensland Health State Funding

As a result of the significant injection of new State funding, Queensland Health’s Budget in 2006-07 is estimated at $6.6 billion, which is a 24% increase on the 2005-06 Budget of $5.4 billion. Queensland Health’s Budget is estimated to grow to $7.8 billion in 2009-10. This represents an increase of 45% on the 2005-06 Budget.

In the first six months, the Government has made significant progress on a number of key aspects of the Health Action Plan.

A critical achievement of the Government has been progress in addressing workforce issues, such as attracting and retaining clinical staff. A fundamental element in attracting and retaining staff is to provide and maintain competitive and attractive remuneration.

• To address the problem of a chronic shortage of health professionals, the Health Action Plan contained a commitment to recruit an additional 1,200 clinicians over an 18 month period. This involved recruiting 300 extra doctors, 400 extra allied health professionals and 500 extra nurses (actual staff numbers rather than full-time equivalents).

• Queensland Health is well on its way to meeting the recruitment targets with a total of 272 extra doctors, 413 allied health professionals and 1,082 nurses recruited by the end of April 2006.

• Agreements have been secured with medical staff, providing for a competitive remuneration package aimed at retaining and attracting medical professionals.

• Agreements are also being progressed for nurses and other Queensland Health staff.

The total cost of renewing Queensland Health’s enterprise bargaining agreements will top $3.5 billion (over the period 2006-07 to 2009-10) and will cost some $1 billion ongoing in 2009-10. This represents a significant investment in delivering on the Government’s priority of addressing recruitment, retention and training strategies for the health workforce.

Budget Strategy and Outlook 2006-07 61

Another key element to the reform of the health system is to ensure adequate and targeted investment in health services infrastructure.

Queensland Health is budgeting to spend $585.4 million in 2006-07 on a range of capital projects such as hospital refurbishments, community heath centres, improved renal services, staff accommodation and information and communication technologies. More detail is provided in Budget Paper No. 3 — Capital Statement.

Accountability and transparency will be enhanced through the establishment of the new Health Quality and Complaints Commission to commence 1 July 2006. A budget of $7.7 million is provided for the Commission in 2006-07. A new Consumer Health Council will be established to provide patients and their families a greater say in how the health system operates.

The Government’s health reform agenda is long-term and while the Government has made significant progress in the first six months, more work is required. A key element of the longer term reform agenda is the development of a better capacity to plan for future service delivery. The Government is committed to better planning through the development of a State-wide health services plan, to be completed by December 2006.

Major service delivery priorities to be targeted include:

• Cancer Services – $87.9 million in 2006-07 for new and existing cancer services across the State

• Chronic Disease – $14.6 million in increased funding in 2006-07 for initiatives for prevention and management of chronic disease

• Home and Community Care – more than $10 million in additional funding in 2006-07 will be allocated to provide a range of services to the community

• Healthier Ageing – $78 million over four years across two initiatives, the Transition Care Program (jointly funded by the Australian Government) and the Government’s Direction for Aged Care 2004-2011 policy.

The Queensland Government has committed new funding of $78.3 million in 2006-07
($349.4 million over five years) across a number of service delivery agencies, including Queensland Health, to improve the quality of and access to mental health services throughout the State. This funding will support the National Action Plan on Mental Health 2006-2011 being prepared for consideration by the Council of Australian Governments in July 2006. It will also complement the Queensland Mental Health Strategy being developed by Queensland Health in 2006.

In addition to the significant injection of new funds for health reform announced in the Health Action Plan, the 2006-07 Budget provides an additional $1.5 billion over the four years to 2009-10 to enhance the reform program.

The additional funding comprises the following initiatives:

• additional funding of $1.3 billion over four years ($241.6 million in 2006-07) for Queensland Health staff enterprise bargaining agreements

• an investment of $157 million over four years ($24.9 million in 2006-07) to provide additional services arising from the redevelopment of the Mater Adult and Mothers Hospital

• a further injection of funds to support the Mater Adult and Mothers Hospital redevelopment, increasing the contribution to $123.6 million

• additional funding of $12 million over four years ($4.2 million in 2006-07) and $18 million in capital funding over three years to boost forensic services.

62 Budget Strategy and Outlook 2006-07

Initiatives to address homelessness and housing

Responding to homelessness

The Responding to Homelessness initiative continues in 2006-07 with $34 million in capital funding and $3.9 million in recurrent funding for the Department of Housing to deliver a range of accommodation initiatives. This includes the continued development of the Lady Bowen Complex to further expand the housing options for homeless people in inner Brisbane as well as further allocations to the Crisis Accommodation and Boarding House Programs.

Other housing initiatives

The Government will allocate:

• $285.4 million for the Public Housing and Aboriginal and Torres Strait Islander Housing rental programs and the Long Term Community Housing Program to acquire 584 dwellings, complete construction of 333 dwellings, upgrade existing dwellings and purchase land for future construction

• $46.3 million for the Boarding House Program, to commence construction or purchase up to 278 new units of accommodation, complete construction of 95 dwellings and purchase and develop land for future construction of approximately 100 units of accommodation

• $35.5 million for the Crisis Accommodation Program, to provide four shelters and 47 units of accommodation, complete four shelters and seven units of accommodation commenced in previous years and purchase and develop land to facilitate future construction of approximately 96 units of accommodation and provide current grants to assist in responding to homelessness.

Services to support Indigenous communities

Indigenous communities initiatives

The Budget provides additional funding of approximately $0.3 million in 2006-07 for communication activities to raise awareness of the alcohol management programs in Queensland’s Indigenous communities.

Indigenous Queenslanders will also benefit from an additional allocation of $20 million to provide a total of $98.2 million for maintenance, upgrades and new construction in the 34 Indigenous communities. This includes the provision of $5.1 million for factory built homes to increase social housing assets on smaller communities.

Budget Strategy and Outlook 2006-07 63

Indigenous justice initiatives

Recurrent funding of $12.9 million over four years ($3.4 million in 2006-07) is allocated for Indigenous initiatives, as part of the Government’s ongoing commitment to reducing Indigenous incarceration consistent with the Queensland Indigenous and Torres Strait Islander Justice Agreement. Funding will enable expanded Family Counselling Services, the Indigenous Drivers Licensing project and a three year pilot of Murri Courts.

Queensland Indigenous Alcohol Diversion Program

The 2006-07 Budget commits $36.4 million over the forward estimate period towards the Queensland Indigenous Alcohol Diversion Program. The program aims to improve Indigenous health, reduce the number of Indigenous people in the criminal justice system and reduce alcohol-related harm to individuals and their communities. The program will divert defendants charged with alcohol-related offences to treatment and case management while on bail. The program, proposed to be trialled in three regional locations would represent best practice in Australia for coordinated interventions for Indigenous offenders.

Other community services

Indexation for non-government organisations

As part of the 2006-07 Budget, new indexation arrangements are being introduced for State grants provided by Queensland Health, Disability Services Queensland and the Departments of Child Safety and Communities to non-government organisations. The new arrangements will more appropriately reflect movements in wage and non-wage costs in Queensland. At 3.4% in 2006-07, this will be higher than the historical approach of indexing grants by changes in the Consumer Price Index.

Licensing and monitoring of child care services

Additional funding of $7.7 million over four years ($1.9 million in 2006-07) is provided for increased licensing and monitoring of child care services. Monitoring functions will be enhanced and a specialist licensing and compliance team will be established to assist staff with complex legislative issues, manage and decide applications for alternative solutions to meeting building standards and streamline licensing processes.

Prevention and early intervention

Additional funding of $35 million over four years ($5 million in 2006-07) is provided for increased prevention and early intervention services. This investment will establish four early years service centres to provide professional services, programs and information for families with young children and access to education, health and children’s services in the local community. Funds will also be allocated towards family support services, such as parenting programs and counselling services, and early childhood services, such as toy libraries or play groups.

64 Budget Strategy and Outlook 2006-07

Strengthening rural communities

As part of the Blueprint for the Bush, $30 million over three years ($8.3 million in 2006-07) will be provided to implement the Blueprint and establish two grant programs - Strengthening Rural Communities Grants and Strengthening Rural Non-Government Organisation (NGO) Grants. The rural communities program will assist communities to attract new businesses and services, fund practical projects to allow better use of existing community facilities, host trainee teachers from urban communities and promote careers in the rural sector. The NGO program will enable NGOs to share buildings and other resources, allow workers and volunteers to participate in training programs and implement specific measures to strengthen rural Indigenous NGOs.

The fight against obesity

Obesity and excessive weight gain is a global epidemic that affects over half of all adults and almost one in four children in Australia. The Queensland Government is committed to a concerted partnership with the community, industry, local governments and the Australian Government to address this serious health issue.

In recognition of its commitment, the Government will provide more than $21 million over the next three years to help fight obesity. As part of the Queensland Obesity Summit held at Parliament House on 3 and 4 May 2006, the Government announced a range of initiatives to address obesity, including:

• a household self-help package of educational and other information resources, a dedicated website and a marketing campaign to promote healthy eating and exercise

• partnership with the Australian Medical Association (Queensland) to extend its Kids GP campaign to strengthen obesity education in the classroom

• a new community partnership grants scheme for community organisations and local government aimed at increasing physical activity participation and encouraging healthy food choices

• investment in a world class cycle transit centre under King George Square in collaboration with the Brisbane City Council

• a new School’s Out – Open Playground Program to provide easier community access to school facilities outside of school hours

• a Better Choice Strategy to provide healthier food and drink to staff and visitors to all Queensland Health facilities

• a new business awards program to encourage employers to promote healthy eating and lifestyles to workers.

Budget Strategy and Outlook 2006-07 65

GROWING A DIVERSE ECONOMY AND CREATING JOBS

Building on Queensland’s strong economic base benefits all Queenslanders through job creation and an enhanced quality of life. Major service developments and initiatives to stimulate economic development throughout Queensland are detailed below.

Chapter 3 also provides more details on the Queensland Government’s strategies to achieve this priority.

Industry initiatives

Implementation of full retail competition

Additional funding of $3.2 million over two years has been allocated to continue the development and implementation of Full Retail Competition (FRC) in the Queensland electricity and gas markets. FRC will be introduced from 1 July 2007. The Energy Competition Committee will continue to consult with industry and community stakeholders to ensure that the rules, procedures and systems that underpin FRC minimise barriers for new industry participants.

Centre for Advanced Animal Science

Additional funding totalling $11.8 million over three years from 2005-06 ($6 million in 2006-07) is provided for a joint Queensland Government and University of Queensland animal research facility being developed at the University’s Gatton campus. This funding is in addition to $9.5 million previously provided from the Smart State Research Facility Fund. The world class facility will be a model of multi-institutional collaboration and builds critical mass in strategic areas to maintain capacity to respond to disease incursions in large animals and maintain market access for Queensland’s animal industries.

Tourism initiatives

An additional $1 million per year for four years is provided to Queensland’s 14 regional tourist organisations for destination marketing and development, increasing the current grant to these organisations to $4.1 million per year.

The Budget also provides $1.5 million in 2006-07 to fund the Australian Tourism Exchange, to be hosted by Tourism Queensland in 2007. The Exchange is the largest travel trade fair in the Southern Hemisphere and is staged annually by Tourism Australia.

Coral reef management plan and fishery resource assessments

An additional $5 million is provided over two years to ensure the continued management of Queensland marine fisheries in accordance with the principles of ecologically sustainable development, as required under the provisions of the Commonwealth Environmental Protection and Biodiversity Conservation Act 1999. Fisheries research and monitoring, quota management and compliance activities support the program.

66 Budget Strategy and Outlook 2006-07

Hardwood plantation research and development funding

An additional $2 million is provided over two years for hardwood research and development activities including breeding, pest and disease control and new wood products to support investment in hardwood plantations in Queensland.

Indigenous Business Development Program

Funding of $2.5 million per year for the next four years allows for the continuation of the Indigenous Business Development Program that commenced in 2003. This program specifically targets the attraction of support from the Australian Government and the private sector in establishing viable Indigenous business, assisting with building Indigenous business capacity and skills and assisting with the creation of Indigenous employment opportunities throughout Queensland. The program has already delivered a number of substantial Indigenous employment and business outcomes with strong Australian Government and private sector support and partnerships.

Queensland Indigenous Arts Marketing and Export Agency

An additional $2 million over four years is provided for the Queensland Indigenous Arts Marketing and Export Agency Arts Partnership Program, which collaborates with prominent galleries, dealers, festival and event organisers across all art forms (Visual Arts and Crafts, Performing Arts and Literature) to market and export Queensland Indigenous arts internationally and domestically.

Centre for Native Floriculture

Additional funding of $1.7 million over three years has been provided to enable the Centre to capitalise on Queensland’s vast, diverse and unique native flora resources by developing new floriculture products to facilitate growth in the value of Queensland’s native floriculture industries in generating employment opportunities. The Centre will continue to support the phasing out of harvesting timber in State forests in accordance with the South East Queensland Forest Agreement and the development of new industry opportunities in those areas impacted by the Western Hardwoods Agreement.

Drought relief

Additional funding will be provided in 2006-07 on a needs basis, based on actual expenses, to continue the existing State Drought Relief Assistance Scheme and for the Queensland contribution to the joint Commonwealth/State Exceptional Circumstance (Drought) Business Support scheme.

Queensland cruise shipping infrastructure projects

Additional funding of $2.5 million is provided over the three year period from 2006-07 to 2008-09 for the continued development of the Brisbane Cruise Terminal including headworks and dredging. Additional funding of $1.4 million is provided in 2006-07 for continued planning of the proposed Gold Coast Marine Development Project.

Budget Strategy and Outlook 2006-07 67

REALISING THE SMART STATE THROUGH EDUCATION, SKILLS AND INNOVATION

In recent years, the Government has laid the foundation for establishing Queensland as the Smart State. Initiatives have focused on education and training reforms and facilities and improving workforce skills for current and future needs by focusing on lifelong learning. In March 2006, the Queensland Government released the Queensland Skills Plan for the vocational and training system. Details on this plan are provided in Box 4.2.

Other major initiatives to support the Smart State priority are detailed below.

Education initiatives

The 2006-07 Budget will provide up to 224 additional teachers to meet enrolment growth and 150 extra teachers to continue to reduce class size targets in Years 4 to 10 from 30 to 28 students.

Tomorrow’s Schools

An investment of $1 billion over five years will ensure Queensland students have the best possible facilities to meet the needs of the future. This will include:

• $ 50 million in 2006-07 to fund priority minor capital works projects for state schools, with projects selected on the advice of parents

• a further $850 million over five years to modernise and refurbish Queensland state schools

• an additional $100 million to non-state schools, provided in 2005-06, as capital assistance.

Improving outcomes for Indigenous students

In 2006-07 an additional $6.2 million in capital funding and $3.5 million in recurrent funding will be invested in projects to improve education, training and career opportunities for Aboriginal and Torres Strait Islanders. This funding is part of a new four year commitment by the State Government comprising $19.4 million in recurrent funding and $9.2 million in capital funding to students in Cape York and the Torres Strait through its Bound For Success initiative.

Increased funding for students with disabilities

An additional $37.9 million four year commitment will provide additional teachers, teacher aides and therapists to continue specialist support for students with disabilities.

68 Budget Strategy and Outlook 2006-07

Preparatory Year introduced State-wide

2007 sees the historic introduction of Queensland’s new Preparatory Year of schooling. In 2006-07, the State Government will provide:

• $ 106 million for the further construction and refurbishment of classrooms to ensure a total of 1,600 Preparatory Year classrooms are available for the full implementation of the Preparatory Year in state schools

• funding for 100 new teachers, who will join the existing early years teachers to staff the new year of school

• up to an additional 10,000 teacher aide hours per week to support the full implementation of the Preparatory Year

• $1.4 million for professional development for state school Preparatory Year teachers

• $11 million in grants to schools for Preparatory Year curriculum resources such as books, art and craft materials and indoor play equipment.

Building new schools and better facilities

The total education capital works program of $497.1 million is comprised of $427.1 million for building new schools and classrooms to meet student growth and $70 million from the Tomorrow’s Schools program.

Funding of $169.8 million is provided for the construction of new classrooms and facilities to accommodate Queensland’s growing student population. A further $98.5 million is provided for building improvement programs to modernise state school libraries and administration areas, upgrade toilets and special education facilities and increase schools’ power capacity to operate new technologies.

The investment in school maintenance will include $35.4 million for the replacement of roofs in state schools as part of the Accelerated Asbestos Roof Replacement Program and $4.5 million from a new $9 million two year program to install electrical safety switches in approximately 100 state schools.

Equipping students with the essentials

The four year literacy framework, Literacy – the Key to Learning: Literacy Framework for Action 2006-2008 will employ and train regional literacy experts to work with state schools to improve student literacy outcomes and provide professional development for teachers of literacy and teacher aides across Queensland.

Budget Strategy and Outlook 2006-07 69

Box 4.2
Queensland Skills Plan

Following State-wide consultation regarding proposed reforms to the Queensland vocational education and training system, the Government launched the Queensland Skills Plan in March 2006. This plan establishes a policy framework that will better match the supply of skilled labour to industry needs and the demands of the economy and outlines a range of actions that the Queensland Government will implement to transform and modernise the State’s vocational education and training system.

The Queensland Skills Plan provides for initiatives including:

• an additional 17,000 trades training places and an additional 14,000 Certificate IV and above training places to be available each year by 2010

• 10 new sites for Skilling Solutions Queensland to be established in 2006-07 to provide a face-to-face career and training information service

• three additional centres of excellence to be created to promote skills development in the important industries of energy, manufacturing and engineering, and building and construction

• a major capital works investment program to be implemented to modernise the State’s network of Technical and Further Education (TAFE) institutes.

Over the next four years, around $800 million in recurrent expenditure will be invested to implement reforms outlined within the Queensland Skills Plan (including an estimated $542 million in new recurrent funding). Around $46 million is budgeted in 2006-07 to implement capital initiatives of the Queensland Skills Plan, including modernisation of the State’s network of TAFE institutes (part of a total capital commitment exceeding $300 million over six years).

Queensland Academies

The 2006-07 Budget provides capital funding of $12.5 million for first stage works on two new Queensland Academies for the State’s best and brightest. The maths, science and technology academy at Toowong will have links with the University of Queensland, while the creative industries academy will have links with the Queensland University of Technology at Kelvin Grove.

Vocational education and training and employment initiatives

Skilling Queenslanders for Work

The Government will maintain its focus on labour market initiatives, in recognition of the high levels of support required by clients who are still struggling to gain employment in the current economy. During 2006-07, the Government will transition from the highly successful Breaking the Unemployment Cycle program to a new labour market response Skilling Queenslanders for Work, as part of the Queensland Skills Plan. This initiative combines some features of the existing program, as well as providing new measures that will allow assistance to be better matched to an individual’s needs.

70 Budget Strategy and Outlook 2006-07

Other vocational education, training and employment initiatives

In 2006-07 the Government will allocate:

• $ 27.1 million for the Community Jobs Plan program to support 6,020 long term unemployed, mature age and other disadvantaged jobseekers with targeted job placements, job search assistance and training

• funding to continue the implementation of the Cyclone Larry Employment Assistance Package to provide support to workers in the affected area (a total commitment of up to $18.6 million over 2005-06 and 2006-07)

• $22.8 million to fund up to 1,100 traineeships through the First Start program. The First Start program provides subsidies to public sector agencies to employ disadvantaged jobseekers as trainees

• $9.8 million to provide employment preparation assistance for young people aged 15 to 17 years who have left school before completing Year 12, or who are at risk of leaving without engaging in further education, training or employment (part of the Education and Training Reforms Pathways Program — Get Set for Work program)

• $7.1 million for employer incentives to increase school-based apprenticeship and traineeship opportunities (part of the Education and Training Reforms Pathways Program — Youth Training Incentive).

Major capital initiatives for 2006-07 include:

• $19.1 million capital funding to commence site works and construction of the new Coomera Campus of the Gold Coast Institute of TAFE (part of a total capital investment of $31.7 million). The new campus will deliver programs with a focus on creative industries including film and television, graphic design, interior design, architecture, building technology and information technology

• $19.3 million capital funding to establish major Trade and Technician Skills Institute campuses at Acacia Ridge and Eagle Farm in Brisbane (part of a total capital investment of $120.5 million)

• $11.8 million capital funding to acquire land and commence detailed planning for the establishment of major trade training centres at Barrier Reef (Townsville) and Central Queensland (Mackay) Institutes of TAFE (part of a total capital investment of $58.2 million)

• $15.9 million capital funding for Information and Communication Technology capital initiatives (with a further $2.8 million to be invested in infrastructure equipment).

Budget Strategy and Outlook 2006-07 71

Other initiatives

Institute of Molecular Bioscience

Funding of $50 million over five years from 2009-10 to 2013-14 will be provided for this world class institute. This will enable the Institute for Molecular Bioscience to attract and retain internationally recognised scientists, capitalise on its achievements to date and plan for the longer term. This new funding is in addition to the $92.5 million provided by the Queensland Government since 2000.

Boggo Road Precinct redevelopment

Capital funding of $335.5 million is provided for the Boggo Road Precinct Redevelopment for infrastructure works, planning, construction and fit-out of facilities planned for completion in 2009-10. The redevelopment includes the Boggo Road Ecosciences Precinct, the Coopers Plains Health and Food Sciences Precinct and other ancillary offsite facilities. These centres will bring together the research activities of a number of State agencies. The State is currently discussing the possibility of collocating with the Australian Commonwealth Scientific and Research Organisation.

Queensland Education and Training International initiative

Additional funding of $2 million per year for five years has been provided for the second stage of the Queensland Education and Training International initiative. Stage Two seeks to build on the success of Stage One, to develop a sustainable international education industry in Queensland. To meet the demands of an increasingly competitive market, broader focused strategies will be developed.

72 Budget Strategy and Outlook 2006-07

MANAGING URBAN GROWTH AND BUILDING QUEENSLAND’S REGIONS

Queensland’s strong population growth presents challenges for transport systems and other infrastructure, services and the environment. Major service developments and initiatives to support this priority are detailed below.

To plan for urban growth in the South East Queensland region, the Government released the South East Queensland Infrastructure Plan and Program (SEQIPP) in April 2005, which outlines key infrastructure priorities. An update on the SEQIPP is provided in Box 4.3. In June 2006, the Queensland Government announced its Blueprint for the Bush, focusing on building the sustainability, liveability and prosperity of rural Queensland. Details on the Blueprint are provided in Box 4.4.

Water Infrastructure initiatives

Water infrastructure

The development of new water infrastructure to meet urban, industrial and rural demand on an environmentally sustainable and economically responsible basis is a key priority for the Government, particularly in South East Queensland. The acquisition of land for future water infrastructure projects will continue, with $69 million set aside in 2006-07 for strategic land purchases, including an additional $50 million to accelerate land acquisitions for two new dams located on the Logan and Mary rivers.

Water efficiency

Funding of $32 million has been provided to address the major issue of water wastage and loss, to assist South East Queensland councils to repair water main breaks and leaks over 2005-06, 2006-07 and 2007-08.

The Budget also provides $20 million to South East Queensland councils and SEQWater to help cut water use through a new water efficiency program to be implemented during 2006-07. Residents will receive special water audits and water saving devices will be installed where needed, alongside a water efficiency audit program for commercial and industrial water users.

Investigations for Connors River Dam

New funding of $1.5 million is provided in the Budget for environmental baseline studies, geotechnical investigations and preliminary engineering design for the proposed Connors River Dam, which will supply water to coal mines and mining communities in the Northern Bowen Basin.

Western Corridor recycled water scheme

To facilitate implementation of a recycled water pipeline in South East Queensland’s Western Corridor additional funding of $100 million has been provided in 2006-07.

Budget Strategy and Outlook 2006-07 73

Box 4.3
South East Queensland Infrastructure Plan and Program

To support the South East Queensland Regional Plan and guide the preferred pattern of development, the Office of Urban Management has prepared the new South East Queensland Infrastructure plan and Program 2006-2026. This is the first in a series of annual updates to this long-term investment program.

The 2006 Plan covers investment in transport and freight, water, energy, information and communication technology and social and other community infrastructure (including health, education, vocational education and training and sport and recreation).

Progress on projects and investigations over the previous 12 months is provided below.

• Planning for the $216 million Eastern Busway (Buranda to Boggo Road) is well advanced, with construction to commence in mid-2006.

• Construction of the inner city section of the Inner Northern Busway has commenced and scheduled for completion by 2008.

• Pre-construction work on the $543 million Tugun Bypass has commenced with all works to be finalised by late 2008.

• Assessment of tenders for the Gateway Upgrade Project including duplication of the Gateway Bridge and upgrades to 20km of existing motorway is underway and expected to be finalised by September 2006.

• Construction is underway on the upgrade of the Prince Charles Hospital with completion of Stage 1 scheduled for December 2006.

• Planning of health services for Health Hubs at Robina, Northlakes, Browns Plains and the Sunshine Coast is underway, with sites acquired at both Northlakes and Browns Plains.

• New State Colleges at Stretton and Meridian Plains have opened to students from the Preparatory Year to Year Six.

• In partnership with local governments in the region, a program to reduce water pressure, manage leakages and install water saving devices is being implemented.

• Design and land acquisition for the Western Corridor Recycled Water Scheme is underway.

• Significant investments in new electricity distribution infrastructure have been made by Ergon Energy and ENERGEX.

The 2006 Plan also outlines the impacts of key initiatives such as the Regional Drought Strategy, the Health Action Plan and the Queensland Skills Plan.

In total, the 2006 Plan envisions approximately $66 billion of infrastructure over the coming 20 years, including almost $28 billion in road and public transport projects, $90 million to investigate another possible $14 billion worth of road and public transport projects, $5 billion in social and community infrastructure, $5 billion in expected water infrastructure projects (excluding the two new South East Queensland dams and connecting infrastructure), $4 billion spending on energy networks (over the next five years) and $10 billion in expected outlays on energy networks (beyond the first five years).

74 Budget Strategy and Outlook 2006-07

Transport initiatives

Integrated Ticketing System

The 2006-07 Budget provides $20 million towards the new Integrated Ticketing System. The new Integrated Ticketing System includes the use of smart card technology as part of a wider program by TransLink to introduce a new fare collection system. The system will make it easier and quicker for customers to pay fares and travel across South East Queensland.

Regional Airport Development Scheme

The Regional Airport Development Scheme 2006-07 investment of $3.2 million includes the commencement of the enhanced program under the Blueprint for the Bush initiative. This initiative will provide an additional $5 million over three years.

South East Queensland Infrastructure Plan and Program

In the 2006-07 Budget, the Government continues to progress the implementation of the SEQIPP. Some major projects included in SEQIPP are:

• $118 million towards the construction of the Inner Northern Busway. This project has a total estimated cost of $333 million and will link the Queen Street Bus Station to the already completed stages of the Inner Northern Busway near Roma Street

• $10.3 million towards the construction of cycle links to enhance the cycle network in South East Queensland. This is made up of $4.3 million towards the construction of State owned cycle links and $6 million in grants to be provided to local authorities

• $33.5 million towards construction of a two-lane Eastern Busway corridor connection from Buranda to Boggo Road to the Green Bridge

• $5 million for ongoing land acquisitions as part of a $2.6 billion commitment to construct the Caboolture to Maroochydore Corridor Study rail link between the North Coast line (at Beerwah) and the high growth area of the Sunshine Coast.

Road network

Significant increases in funding have been approved by the Government for investment in the road network, including:

• $1.4 billion over five years for road projects under SEQIPP. Additional roads funding to meet the $27.7 billion commitment to major transport infrastructure identified in SEQIPP over the 20 years from 2005-06 totals some $8.7 billion

• $359 million over four years under the Rural and Regional Roads Funding special initiative for acceleration of regionally significant projects outside the south east corner

Budget Strategy and Outlook 2006-07 75

• $ 170 million over five years for the $350 million Regional Bridge Renewal Program to replace more than 100 timber bridges and older concrete and steel structures across the State

• $ 88 million over three years for the Accelerated Road Rehabilitation Program to rehabilitate and widen 71 kilometres of the Dawson Highway between Gladstone and Banana and replace five timber bridges in Central Queensland and 31 timber bridges in Southern Queensland.

Road projects for 2006-07

Key roadworks that are being progressed in 2006-07 include:

• continuation of the construction of the $543 million ($423 million of which is State funded, $120 million of which is Australian Government funded) four lane bypass on the Pacific Motorway between Tugun and Tweed Heads, scheduled to be completed by the end of 2008

• $ 71 million in 2006-07 for works on duplicating the Sunshine Motorway between Sippy Downs and Pacific Paradise, including the second Maroochy River bridge and major interchanges at Mooloolaba and Maroochydore Roads and Pacific Paradise, at a total estimated cost of $223 million

• $ 11.8 million towards construction of the South West Arterial (Springfield to Ripley to Yamanto extension) at a total estimated cost of $270 million            

• commencement of major works for a second Gateway Bridge river crossing and increased capacity on the Gateway Motorway between Mt Gravatt-Capalaba Road and Nudgee Road. This will be Queensland’s largest single road project with a total estimated cost of $1.6 billion

• $ 4.1 million in 2006-07 towards construction of the Bundaberg Ring Road to provide an alternative route from the Isis Highway to the industrial areas and the port to the east of Bundaberg City, at a total estimated cost of $42 million

• widening and upgrading of Roma-Taroom Road to support oil and gas development and improve regional community access, at a total estimated cost of $30 million

• the completion of detailed planning for the duplication of the Forgan Bridge in Mackay to allow construction to start in the second quarter of 2007 (at a total estimated cost of $50 million) and to allow a start on the replacement of the Hospital Bridge in Mackay in late 2006 (at a total estimated cost of $24 million)

76 Budget Strategy and Outlook 2006-07

• duplication of North Ward Road in Townsville between William Street and Ingham Road and between Walker Street and Heatleys Parade, at a total estimated cost of $33.8 million

• widening of Mulgrave Road in Cairns from four to six lanes, at a total estimated cost of $16 million.

Road safety

The Budget allocates $42 million in 2006-07, with $183 million to be allocated over four years from 2006-07, for road safety capital programs as part of the State’s Safer Roads Sooner initiative. This initiative aims to reduce road trauma and its social consequences by targeting road safety improvements.

Box 4.4
Blueprint for the Bush

In February 2005, Premier Peter Beattie made a commitment at a Community Cabinet meeting in Charleville, to work in partnership with AgForce Queensland to develop a Blueprint for the Bush.

Based on an extensive consultation process with rural and regional Queenslanders, the Government released the Blueprint for the Bush through its partnership with AgForce and the Local Government Association of Queensland on 1 June 2006. The Blueprint is a 10 year plan that advances strategic directions and initiatives that focus on building the sustainability, liveability and prosperity of rural Queensland.

The Blueprint is accompanied by the Rural Economic Development and Infrastructure Plan which is a five year plan focusing on the economic outlook for the Bush and outlining a range of Government and private sector investment initiatives for rural and regional Queensland.

The Blueprint commits more than $150 million in additional State-wide initiatives across rural and regional Queensland over the next four years.

The key focus areas of the Blueprint for the Bush include:

• driving economic development and innovation

• facilitating infrastructure planning and provision

• implementing a more cohesive regional planning model to help drive future investment and service delivery

• improving service delivery and developing new service models tailored to rural communities in relation to health, education, transport and community services

• reducing ‘red tape’ and streamlining support to rural communities

• improving local input to planning, decision-making and actions

• strengthening relationships and extending the Blueprint partnership approach.

The Blueprint is a dynamic plan that will continue to develop through the partnership agreement and in consultation with rural Queenslanders. It will identify and respond to emerging issues and help inform future rural policy directions and investments.

Budget Strategy and Outlook 2006-07 77

Other initiatives

Queensland’s 150th celebrations

The Government has provided additional funding of $10 million over four years for a program of events to celebrate Queensland’s sesquicentenary. The program will celebrate and reflect on past achievements, current opportunities and future directions. Main elements of the program will include:

• funding for local communities to promote community engagement in locally organised and delivered celebration

• funding for an educational and awareness program

• funding for a State-wide touring program

• additional funding for an expanded Queensland Week celebration program.

Queensland Events Regional Development Program

The Government has maintained its annual recurrent $2.4 million commitment to the Queensland Events Regional Development Program. Events in regional centres play a key role in fostering regional tourism and economic development, are valuable for local community involvement and are effective for promoting a particular region.

Rural Infrastructure Access Initiative

$1 million will be provided under the Blueprint for the Bush Rural Infrastructure Access Initiative for feasibility and financing studies of high priority regional infrastructure. This funding complements the $25 million provided over five years through the Regional Collaboration and Capacity Building Program.

Additional funding of $4.5 million will be provided under the Blueprint for the Bush to expand the Government’s current regional planning program by establishing three additional Regional Planning Advisory Committees, for North Western, Central Western and South Western Queensland.

78 Budget Strategy and Outlook 2006-07

PROTECTING OUR CHILDREN AND ENHANCING COMMUNITY SAFETY

The Government has attached a high priority to implementing strategies which protect our children and contribute to safe communities. Major service developments and initiatives to support this priority are detailed below.

Box 4.5 provides details of a range of measures to assist the recovery of communities affected by Cyclone Larry, which caused severe damage to homes and essential infrastructure across Far North Queensland in March 2006.

Child protection initiatives

The 2006-07 Budget provides new recurrent and capital funding of $133.2 million and $4.9 million respectively over four years for child safety initiatives. Of this, $28.1 million in recurrent funding and $4.8 million in capital funding is provided in 2006-07. This brings the Department of Child Safety’s operating budget to $503.1 million in 2006-07, a 28% increase over the 2005-06 Budget and builds on the significant funding for the Child Protection Blueprint projects initiated in the 2004-05 Budget. Key elements of the new funding provided in the 2006-07 Budget are outlined below.

Additional front-line child protection officers

Funding of $32.1 million over four years ($7.6 million in 2006-07) has been provided to support the recruitment of an additional 50 child safety officers to address ongoing demand pressures in Queensland’s child protection system. These funds will also provide incentives to attract and retain staff particularly in regional, rural and remote areas of Queensland.

Out-of-home care placements

Recurrent funding of $50.2 million over four years ($10 million in 2006-07) has been provided for non-government partners to deliver further alternative care placements for children in care with complex and extreme needs as well as general foster care placements. Capital funding of $4 million has also been provided in 2006-07 for the establishment of two therapeutic residential facilities in South East Queensland.

A further $24 million over four years ($6 million in 2006-07) has been provided to address the increased number of children entering into general foster care as well as for the growth in kinship foster carers and planned respite for Queensland’s foster carers.

Budget Strategy and Outlook 2006-07 79

Service delivery hubs in remote Indigenous communities

An additional $11.6 million over four years ($2.6 million in 2006-07) has been provided to enhance localised child protection responses in a number of remote Indigenous communities in the Gulf and Cape/Torres regions and Palm Island. This will provide a permanent presence of child safety support staff in local communities to enhance social and cultural networks and assist with community capacity building. A further $0.9 million over two years ($0.8 million in 2006-07) in capital funding has been provided to support the establishment of the service delivery hubs.

Youth justice services and interventions

Additional funding of $12.7 million over four years ($3.1 million in 2006-07) is provided to expand youth justice services, including increased capacity of the youth justice conferencing program, additional services for people on community-based youth justice orders, the establishment of a Far North Queensland campus of Boonah Outlook, additional treatment services for juvenile sex offenders and the establishment of a State-wide youth justice quality assurance team to introduce a new assessment tool.

Additional funding for Employment Screening Services and Community Visitor programs

The Government’s ongoing commitment to safeguarding children and young people, particularly those most vulnerable, sees additional funding of $22.1 million over the next four years for Employment Screening Services. This funding will be used to promote safe service environments for children and young people by screening people who work or volunteer with children, as well as through the criminal history screening of foster carers, kinship carers, adult members of these households and relevant persons associated with licensed care services.

The Government has also committed additional funding of $9.6 million over the next four years to ensure that the Community Visitor program is maintained at its current level of monitoring and reporting on children in out-of-home care.

Policing Initiatives

Support for police

For 2006-07, the Police Service’s operating budget increases by 10.3% over the 2005-06 published Budget. The Budget provides for additional recurrent funding of $233.6 million and additional capital funding of $173.8 million over the next four years.

Additional police officers

The Queensland Police Service’s funded sworn strength will be increased to 9,728 by September 2007 through the creation of an additional 350 new police positions. This strong growth in police numbers will more than meet the Government’s commitment to maintain police numbers at or above the national average police to population ratio.

80 Budget Strategy and Outlook 2006-07

Capital works

An additional $97.3 million in capital and $15.6 million in recurrent funding is provided over four years for new and upgraded police stations, watchhouses, police beats and police housing across the State.

Enhancement of Queensland Police Service information and communication technology

Over the next four years, the Budget provides an additional $172.5 million recurrent and $76.4 million in capital funding for the continued enhancement of the Queensland Police Service’s information and communications technology (ICT).

The State-wide implementation of QPRIME, an integrated policing solution, will be supported through recurrent funding of $68.6 million and capital funding of $25.8 million over the next four years. QPRIME will provide the tools to effectively manage the ever increasing volume of information used by operational police, ranging from location data, to traffic management and crime management data.

Implementation of the Public Safety Network will provide a common ICT network for the Departments of Police, Emergency Services, Corrective Services and Justice and Attorney-General. The Government will invest $103.9 million in recurrent funding and $50.6 million in capital funding over the next four years in the Public Safety Network.

Emergency services initiatives

Aeromedical and air rescue helicopter services

An additional $13.2 million is provided over four years from 2006-07 to increase grants to Community Helicopter Providers for upgrading the aeromedical and air rescue helicopters to twin engine helicopters and for introducing a stronger safety auditing system.

Increased capital funding of $7.5 million will be provided in 2007-08 for the replacement of the Emergency Management Queensland Helicopter Rescue Bell 412 helicopter fleet which will involve a total capital cost of $48.3 million.

Queensland Ambulance Service

The Budget provides an additional $35.3 million over three years to the Queensland Ambulance Service (QAS) for the recruitment of 144 additional ambulance officers for service delivery purposes. An additional $12.4 million funding over four years is provided to QAS for the recruitment of 35 additional communication officers to improve ambulance call response times at communication centres.

Budget Strategy and Outlook 2006-07 81

Improving information and communication network support

An additional $1.1 million capital funding is provided in 2006-07 to upgrade emergency services current electronic information and communication connections to operational locations.

Box 4.5
Cyclone Larry Response

On 20 March 2006, Tropical Cyclone Larry crossed the Queensland coast near Innisfail as a Category Five storm – the highest on the intensity scale – with winds of up to 290 kilometres per hour. In addition to the severe damage caused to homes and essential infrastructure across Far North Queensland communities, the impact of the cyclone on local residents, primary producers and businesses has been immense.

Following the immediate disaster management response, the Government appointed General Peter Cosgrove to lead a taskforce to oversee the rebuilding of communities. The State and Australian Governments have initiated a range of measures to assist the recovery of affected communities, including:

• an enhanced loan/grant assistance scheme providing concessional loan assistance packages of up to $500,000 to primary producers and small businesses, with 25% of the package being in the form of a grant (capped at $50,000)

• emergency assistance of up to $150 per person (to a maximum of $700 per family)

• essential household contents grants of up to $1,500 per individual and $4,500 per couple/family

• grants for structural repairs to dwellings of up to $17,000 for individuals and $20,000 per family (less amounts paid for essential household content grants)

• up to $5 million for Operation Farm Clear to assist primary producers through the high priority clearing of debris necessary to maintain human safety and animal welfare

• freight subsidies of up to $5,000 for primary producers and assistance for the cost of generator hire

• support for workers and farmers under the $18.6 million Cyclone Larry Employment Assistance Package, including $14 million for the employment of up to 1,000 local displaced residents under the Community Jobs Plan.

The Australian Government will contribute to the cost of some of the above measures that fall within the scope the Natural Disaster Relief Arrangements.

Criminal justice initiatives

Integrated Justice Information System

The Budget contains capital funding of $20.9 million over two years ($11.3 million in 2006-07) for further components of the Integrated Justice Information System to allow consistent and quality data transfers between criminal justice agencies. Additional recurrent funding of $18.2 million over four years is provided to support this initiative.

82 Budget Strategy and Outlook 2006-07

Videoconferencing

Capital funding of $4.2 million ($3.7 million in 2006-07) is allocated to expand the use of videoconferencing in the criminal justice sector. This will enable video links between correctional centres and courthouses and is supported by recurrent funding of $6.1 million over four years.

Courthouses

The Budget provides funding for the construction of new courthouse facilities State-wide. Additional capital funding of $73.3 million over three years is provided for construction of a new Ipswich courthouse, as part of a combined facility including a watchhouse and police station. Construction of a new Mareeba courthouse is facilitated through capital funding of $5.3 million over two years. Additional capital funding of $3 million over two years is allocated for the completion of the new Pine Rivers courthouse.

Correctional centres

The Budget provides $139.3 million in capital funding over three years from 2006-07 for the expansion and redevelopment of the Townsville Correctional Centre. Recurrent funding of $44.8 million over three years from 2007-08 supports the expanded operations. The Budget also includes increased capital funding of $68.4 million over two years to complete the expansion of Sir David Longland and Arthur Gorrie Correctional Centres and the construction of the new women’s facility in Townsville. An additional $21.8 million over four years will also be provided to operate the remaining 202 unused prison cells in Maryborough, Woodford and Brisbane Women’s Correctional Centres, due to anticipated prisoner population growth in South East Queensland.

Probation and parole services

The Budget provides additional recurrent funding of $35 million over four years to overhaul the community corrections system by establishing a new probation and parole service. By building a service with a strong surveillance and compliance capacity, combined with a focus on rehabilitation, a viable diversionary alternative for low risk, non-violent offenders is provided. A further $3.9 million in capital funding is allocated for this initiative. The initiative is in addition to funding of $10 million over four years already allocated to facilitate the management of an expected increased number of offenders on parole orders issued by the courts. Together, these initiatives will ensure that offenders serve their entire sentence, either in jail or in community supervision.

Budget Strategy and Outlook 2006-07 83

PROTECTING THE ENVIRONMENT FOR A SUSTAINABLE FUTURE

The sustainable use of natural resources and the maintenance of biodiversity are key priorities of the Government. The Government will continue to promote sustainable development through responsible use of the State’s natural resources.

Major service developments and initiatives to support this priority are detailed below.

Blueprint for the Bush initiatives

Reclaim the Bush, a Pest Offensive

Additional funding of $11 million over three years ($3 million in 2006-07) is provided for the improved management of high risk weeds and pest animals across Queensland. This initiative will include an increased emphasis on improved delivery of preventative programs throughout rural areas of Queensland.

Environmental Partnership Scheme

Additional funding of $5.5 million over three years ($1.5 million in 2006-07) is provided to combine and enhance a package of strategies designed to recognise and reward effective land management practices. The scheme will provide a coordinated, whole-of-Government approach to assist landholders.

State Rural Leasehold Land Strategy

Additional funding of $4 million in 2006-07, as part of a package of $19 million over four years, is provided for development of tools and information products to support land condition assessment and monitoring, the acquisition of skills in condition assessment and negotiation and support for the increased compliance requirements under the proposed State Rural Leasehold Land Strategy.

High-Priority Artesian Bore Capping initiative

Additional funding of $0.5 million over three years ($0.2 million in 2006-07) is provided to subsidise the capping of nine high risk bores as part of the Great Artesian Basin Sustainability Initiative. This scheme limits the landholder contributions for initial access works to $20,000 per bore.

OnePlan initiative

Additional funding of $3 million over four years ($0.6 million in 2006-07) is provided to implement the OnePlan initiative that will provide rural landholders with a coordinated and consistent approach to the preparation of a wide range of mainly regulatory property planning documents.

84 Budget Strategy and Outlook 2006-07

Rural Water Use Efficiency Stage 3

Additional funding of $4 million over three years ($1.3 million in 2006-07) is provided to extend Rural Water Use Efficiency Stage Three (RWUE3) across Queensland. This funding is in addition to the $2.5 million over two years provided for RWUE3 in 2005-06 and the $15 million over 10 years as announced in 2005-06 as part of the South East Queensland Infrastructure Plan and Program for rural water use efficiency initiatives in South East Queensland. This additional funding will enable partner industries in rural Queensland to provide complete programs addressing water use efficiencies, on-farm water management and natural resource impacts.

Other environmental initiatives

East Trinity property management and acid sulphate soil remediation

Additional funding of $1.2 million of recurrent funding and $1.3 million of capital funding is provided over three years for the continued remediation, management and monitoring of the degraded East Trinity site. This is in addition to $4.5 million in recurrent funding and $0.7 million in capital funding provided in 2005-06 over four years for the East Trinity Property Management strategy. A planned program of continued acid sulphate soil remediation and maintenance, including the upgrade of the existing bund wall, floodgates and roads, will build on the success of earlier works and deliver remediation of the site allowing alternate land uses in the future.

Haulage assistance rebates

Additional funding of $1.8 million over three years ($0.8 million in 2006-07) is provided to continue hardwood timber haulage assistance rebates in South East Queensland and extend rebates to the Western Hardwoods Region.

Koala Conservation Plan implementation package

Additional funding of $2.1 million over four years ($0.5 million in 2006-07) is provided to support a package of initiatives to assist in halting the decline of the koala population in Queensland, especially South East Queensland. Key components of the package include the survey and mapping of koala habitat, planning and assessment activities to ensure development is compatible with conserving koalas and koala habitat and community engagement activities to raise awareness of issues and responsibilities for koala conservation.

Cape York Peninsula land acquisition program

Additional funding of $3 million is provided in 2006-07 to continue the implementation of the Cape York Peninsula Land Acquisition Program, through the acquisition of land containing representative samples of Cape York ecosystems for inclusion within the Protected Area Estate. This funding is in addition to $7.5 million provided in 2004-05.

Budget Strategy and Outlook 2006-07 85

Delivery of natural resource management in Cape York region

Additional funding of $2.1 million over two years ($1 million in 2006-07) is provided for the continued delivery of regional natural resource management in Cape York under the Natural Heritage Trust program.

South East Queensland Conservation initiative

Additional funding of $20 million is provided in 2006-07 to acquire properties within South East Queensland to increase green space. The land will be added to the protected estate.

Funding day-to-day management of the Great Barrier Reef Marine Park

In recognising the importance of the Great Barrier Reef the Government is working with the Great Barrier Reef Marine Park Authority in determining the priorities and directions for the Great Barrier Reef Marine Park. Additional funding of $12.2 million over four years is allocated to ensure that the Great Barrier Reef Marine Park and its island National Parks are managed in accordance with community expectations, which provides certainty to the world class tourism industry and supports the fishing industry through improved compliance and management.

DELIVERING RESPONSIVE GOVERNMENT

The Financial Administration and Audit Act 1977 and the associated Financial Management Standard 1997 put in place a comprehensive framework of governance and accountability for the Government and its agencies. The Government also places priority on delivering responsive Government through a range of actions and strategies including engaging communities in government decisions and processes through the continuation of regional community forums and regional Cabinet meetings.

Fuel Subsidy Scheme – change in definition of fuel

The Budget provides for a planned change in the definition of fuel under the Fuel Subsidy Act 1997. Presently, fuel must be of a type ordinarily sold by a retailer to qualify for subsidy. This definition will be expanded to cater for certain emerging forms of motor spirit and diesel fuels. The change will apply from the date of Royal Assent to the amending legislation.

86 Budget Strategy and Outlook 2006-07

Box 4.6
The State’s investment in information and communication technology

The Queensland Government recognises that opportunities exist to achieve better business and information and communication technology (ICT) value from a consolidated and coordinated approach to ICT service provision to the community. These opportunities also exist through the implementation of an overarching e-Government approach to connect Government internally to communities and to other jurisdictions.

The Office of Government ICT assists agencies to achieve this by:

• developing and implementing a whole-of-Government ICT strategic planning methodology

• using this information to assist in more strategic decision-making and to identify opportunities that cross agency boundaries

• designing the Government Enterprise Architecture, incorporating the design elements and standards for business, information, applications and technologies, and the standardisation of the infrastructure to enable cross-agency interactions to occur

• increasing the ICT skills, capabilities and professional development of both individuals and agencies.

Some of the key Government initiatives in ICT in 2006-07 include:

• Enhancement of Queensland Police Service ICT, including the State-wide implementation of QPRIME, an integrated policing solution to effectively manage the ever increasing volume of information used by operational police and the implementation of the Public Safety Network to provide a common ICT network across a number of agencies

• Integrated Client Management System, a key project under the Shared Information Solutions ICT initiative, will support information management and decision making in the child protection and youth justice systems. The first component of this system, the Directory of Carers, was delivered in 2005. Remaining functions will be completed by 2007

• Integrated Justice Information System, with $20.9 million over two years and $18.2 million over four years in capital and recurrent funding respectively, to enhance consistent and quality data transfers between criminal justice agencies

• Health ICT, an investment of $87.2 million supports improved access to information and systems for clinicians in hospital and community care settings and the continued development, integration and replacement of technical infrastructure underpinning enterprise systems and networks

• Smart Classrooms, with $79 million in recurrent and $5 million in capital funding invested in school technology projects in 2006-07, which will enable the establishment of a central state schools computer help desk, parents to log on to their local school computer network and grants for targeted technology programs and projects

• Smart Service Queensland, with $16.3 million recurrent funding and $1.8 million in capital to expand services available to the public. This funding will enable agencies to transition their high priority services to Smart Service Queensland, providing the public with easier access to Queensland Government services and information

• Shared Service Initiative, which is now in the third year of a five year implementation phase and moves from the piloting of new finance and human resource business solutions to a comprehensive roll-out across most agencies in the next two years.

Budget Strategy and Outlook 2006-07 87

5. REVENUE

KEY POINTS

• Total General Government sector revenue is estimated to be $29.070 billion in 2006-07. The decrease of $516 million (or 1.7%) on 2005-06 estimated actual revenue primarily reflects the return of investment returns to the assumed long-term average earnings rate of 7.5%.

• Payroll tax relief will be provided to small and medium sized businesses from 1 July 2006, with the payroll tax threshold to be increased from $850,000 to $1 million.

• The tax-free threshold for resident individual land tax payers will be increased from $450,000 to $500,000 from 1 July 2006.

• A new first home transfer duty concession will be available for certain acquisitions of vacant land from 1 January 2007.

• Hire duty and marketable securities duty will be abolished on 1 January 2007.

• As previously announced, transfer duty rates will increase from 1 July 2006 for transfers of dutiable property over $500,000. This will be partially offset by an increase in the concession for home purchases.

• Queensland will retain its competitive tax status, with per capita tax estimated at $1,927 in 2006-07 compared to an average of $2,272 for the other states.

INTRODUCTION

This chapter provides an overview of General Government sector revenue for the estimated actual outcome for 2005-06, forecasts for the 2006-07 Budget year and projections for 2007-08 to 2009-10.

Table 5.1
General Government revenue¹

	2005-06		2005-06		2006-07		2007-08		2008-09		2009-10
	Budget		Est. Act.		Budget		Projected		Projected		Projected
	$ million		$ million		$ million		$ million		$ million		$ million
Revenue
Taxation revenue		6,843		7,356		7,871		8,331		8,736		9,198
Current grants and subsidies		12,682		12,809		13,143		13,460		13,785		14,243
Capital grants		528		591		683		951		870		676
Sales of goods and services		2,401		2,500		2,693		2,773		2,836		2,910
Interest income		1,421		3,200		1,802		1,891		1,991		2,096
Other		2,729		3,129		2,879		2,865		3,025		3,333
Total Revenue		26,604		29,586		29,070		30,271		31,242		32,456

Note:

1. Numbers may not add due to rounding.

88 Budget Strategy and Outlook 2006-07

The forward estimates are based on the economic projections outlined in Chapter 2 and are formulated on a no policy change basis.

General Government revenue in 2005-06 is estimated to be $29.586 billion or 11.2% more than the 2005-06 Budget estimate.

Significant variations include higher:

• interest income, reflecting the strong performance of investment markets which has significantly improved the returns from the State’s financial assets held to meet future employee entitlements. Excluding the higher revenue from interest income reduces estimated actual revenue to 4.5% higher than budgeted

• taxation revenue, primarily due to higher revenue from duty on property transfer transactions resulting from stronger than expected market activity, as well as higher payroll tax from high employment and wage growth

• payments from the Australian Government

• tax equivalent payments and royalty revenue.

General Government revenue in 2006-07 is estimated to be $29.070 billion, a decrease of $516 million or 1.7% on the 2005-06 estimated actual revenue of $29.586 billion. This is largely due to:

• reduced interest income, reflecting the return of investment returns to the assumed long-term average earnings rate of 7.5%

• reduced revenue from tax equivalent payments.

These revenue reductions are partly offset by forecast increases in GST revenue grants and tax revenue.

REVENUE BY OPERATING STATEMENT CATEGORY

Major sources of General Government revenue in 2006-07 are current grants and subsidies (45.2% of revenue) and taxation revenue (27.1%). Chart 5.1 illustrates the composition of General Government revenue.

Budget Strategy and Outlook 2006-07 89

Chart 5.1
Revenue by operating statement category 2006-07

Note:

1. The major components of ‘other revenue’ are dividends (2.2%), royalties and land rents (5.2%) and tax equivalent payments from public corporations (1.3%).

Chart 5.2 compares the composition of General Government revenue, based on 2005-06 estimated actuals and 2006-07 estimates.

The overall result primarily reflects anticipated decreases in interest income and other revenue being partly offset by increases in current grants and subsidies and taxation revenue.

Chart 5.2
Revenue by operating statement category for 2005-06 and 2006-07

90 Budget Strategy and Outlook 2006-07

TAXATION REVENUE

One of the Queensland Government’s key social and fiscal objectives is to maintain a competitive tax environment while raising sufficient revenue to meet the infrastructure and Government service delivery needs of the people of Queensland.

Total revenue from taxation is expected to increase by 7.0% in 2006-07. This reflects the continued robustness of the property market on duty revenue as well as employment and wage growth on payroll tax revenue.

Table 5.2
Taxation revenue¹

	2004-05	2005-06	2006-07
	Actual	Est. Act.	Budget
	$ million	$ million	$ million
Payroll tax	1,674	1,916	2,054
Duties
Transfer2	1,744	1,906	2,116
Vehicle registration	267	272	279
Insurance3	316	331	346
Mortgage	256	290	310
Other duties4	60	68	26
Total Duties	2,642	2,867	3,078
Gambling taxes and levies5
Gaming machine tax and levies6	520	563	582
Lotteries taxes	181	181	186
Wagering taxes	33	33	35
Casino taxes and levies	59	60	63
Keno tax	13	13	14
Total Gambling taxes and levies	806	851	881
Other taxes
Land tax	419	424	500
Debits tax	189	1	0
Motor vehicle registration	767	813	846
Fire levy	225	235	247
Community Ambulance Cover	112	116	121
Guarantee fees	64	75	83
Other taxes	55	58	61
Total Taxation	6,952	7,356	7,871

Notes:
1.	Numbers may not add due to rounding.
2.	Includes marketable securities duty.
3.	Includes accident insurance premiums.
4.	Includes duty on leases, rental arrangements, credit business and life insurance premiums.
5.	Includes community benefit levies.
6.	Includes the Major Facilities Levy and Health Services Levy.

Budget Strategy and Outlook 2006-07 91

Budget tax initiatives

Payroll tax relief

Queensland has experienced strong growth in its labour market for a number of years and this is expected to continue into the future. A consequence of this performance has been an increase in the number of employers liable for payroll tax. In recent years, the impact has been moderated by the application of a high threshold and a tapered deduction system and by incremental reductions in the payroll tax rate from 5.0% in 1999-2000 to the current 4.75%.

Even so, in the absence of further payroll tax relief, many employers would be entering the payroll tax system for the first time. This Budget delivers payroll tax relief from 1 July 2006 which provides for an increase in:

• the exemption threshold from $850,000 to $1 million of employers’ annual Australian payrolls

• the maximum payroll at which taxpayers receive a deduction, from $3.4 million to $4 million.

Compared to the current payroll tax threshold, the revised threshold will:

• reduce by approximately 600 the number of employers in the payroll tax base in 2006-07. As a result, approximately 90% of Queensland employers will not be liable for payroll tax

• provide significant tax reductions for current payroll tax payers with payrolls below $4 million, as shown in Table 5.3 below

• save taxpayers $34.3 million in 2006-07.

Table 5.3
Payroll tax payable

Payroll		Current		New
$		$		$
	850,000		—		—
	900,000		3,167		—
	1,000,000		9,500		—
	1,250,000		25,333		15,833
	1,500,000		41,167		31,667
	2,000,000		72,833		63,333
	2,500,000		104,500		95,000
	3,000,000		136,167		126,667
	3,500,000		166,250		158,333
	4,000,000		190,000		190,000

92 Budget Strategy and Outlook 2006-07

Table 5.4 shows that a combination of a high threshold and a low flat rate will make Queensland payroll tax amongst the most competitive in Australia.

Table 5.4
Payroll tax schedules for 2006-07

	QLD
	Current			New			NSW			VIC			WA			SA			TAS
Threshold     $000s		850			1,000			600			550			750			504			1,010
Rate %		4.75	%		4.75	%		6	%		5.15	%		5.50	%		5.50	%		6.10	%

Land tax

Queensland has experienced strong growth in land values since 2001. Although moderated by the application of three year averaging of land valuations for assessments, a consequence has been a potential increase in the numbers of landowners liable for land tax and growth in land tax liabilities for landowners already in the system. The Government responded last year by overhauling the land tax system, increasing the tax free thresholds and reducing tax rates.

This Budget delivers further land tax relief by increasing the tax free threshold for resident individuals from the current $450,000 to $500,000. This means resident individuals will not be subject to land tax until the unimproved value of their landholdings, excluding their principal place of residence, amounts to $500,000. Compared to the current schedule, the increased threshold will reduce by over 5,000 the number of resident individuals in the land tax system in 2006-07 and provide a benefit for a further 15,000 individuals. No taxpayer will be worse off. The new land tax schedule for resident individuals is presented in Table 5.5 and the savings are presented in Table 5.6.

Table 5.5
Land tax schedules for 2006-07 – resident individuals¹

Unimproved Land Value	Current	Unimproved Land Value	New
$450,000 - $749,999	$400 + rate 0.70%	$500,000 - $749,999	$500 + rate of 0.70%
$750,000 - $1,249,999	$2,500 + rate 1.45%	$750,000 - $1,249,999	$2,250 + rate 1.45%
$1,250,000 - $1,999,999	$9,750 + rate 1.50%	$1,250,000 - $1,999,999	$9,500 + rate of 1.50%
$2,000,000 - $2,999,999	$21,000 + rate 1.65%	$2,000,000 - $2,999,999	$20,750 + rate 1.675%
$3,000,000 and above	Rate 1.25% on full value	$3,000,000 and above	Rate 1.25% on full value

Note:
1.	Rates are marginal rates unless otherwise specified.

Budget Strategy and Outlook 2006-07 93

Table 5.6
Land tax payable

Taxable Value	Current	New	Savings
$	$	$	$
450,000	400	0	400
500,000	750	500	250
600,000	1,450	1,200	250
800,000	3,225	2,975	250
1,000,000	6,125	5,875	250
1,500,000	13,500	13,250	250
2,000,000	21,000	20,750	250
2,500,000	29,250	29,125	125
3,000,000	37,500	37,500	0

The changes to the land tax threshold for individual resident taxpayers will take effect for the 2006-07 financial year. The cost to the Budget is estimated to be $6.7 million in 2006-07.

Table 5.7 shows that a combination of high tax-free thresholds and low rates will make the Queensland land tax system one of the most competitive amongst the states.

Table 5.7
Land tax schedules for 2006-07 – resident individuals

	QLD		NSW		VIC		WA		SA		TAS
Tax-free threshold ($’000)		500		352		200		150		110		25
Maximum tax rate1 (%)		1.25		1.7		3.0		2.5		3.7		2.5

Note:
1.	The maximum tax rate is the rate applying to the highest value landholding band.

Transfer duty

From 1 January 2007 a new first home owner transfer duty concession will be available for the purchase of vacant land. Providing the other eligibility criteria are satisfied, first home owners who purchase a vacant block of land to build their first home:

• will not be liable for duty where the value of the land is up to $100,000

• will be better off where the value of the land is up to $250,000.

This measure is estimated to cost $1.1 million in 2006-07 and $2.2 million in a full year and will apply to transactions entered into on or after 1 January 2007.

94 Budget Strategy and Outlook 2006-07

As previously announced, from 1 July 2006, rates of duty payable on property transfers will increase for transfers with dutiable values above $500,000. The rate for transfers valued between $500,000 and $700,000 will increase from 3.75% to 4%, with the rate above $700,000 increasing from 3.75% to 4.5%.

At the same time, the threshold for the home concession will increase from $300,000 to $320,000, ensuring that buyers of homes valued below $700,000 will not pay more duty.

Land rich duty and transfer duty relating to land holding entities

The duty provisions relating to acquisitions of majority interests in land rich corporations and certain land holding trusts will be strengthened. The land component threshold of a land rich corporation’s total assets will be reduced from the current 80% to 60%. In addition, the acquisition trigger will be adjusted from an interest of ‘more than 50 percent’ to ‘50 percent or more’ for both land rich corporations and certain land holding trusts.

These changes are consistent with the position adopted by most other jurisdictions in relation to these tests. These changes will apply to acquisitions made or agreed to be made on or after the date that the legislation giving effect to these changes receives Royal Assent.

Although primarily a measure for the purposes of revenue protection, the measure will raise additional revenue of approximately $10 million a year.

Abolition of state taxes

The Intergovernmental Agreement on the Reform of Commonwealth-State Financial Relations (IGA), agreed to by the Australian Government and all state and territory governments in 1999, required the abolition and review of a number of state taxes.

In accordance with the requirements of the IGA, transfer duty on quoted marketable securities and debits tax were abolished in 2001 and 2005 respectively.

Last year, Queensland participated in a multijurisdictional review into the need to retain a number of state duties, as required by the IGA. A timetable for the abolition of the majority of these duties was announced in the 2005-06 Budget and agreed to by the Australian Government in the Ministerial Council Meeting of March 2006.

Table 5.8 presents the full schedule of tax abolitions under the IGA.

Budget Strategy and Outlook 2006-07 95

Table 5.8
Abolition of state taxes under the IGA

			Full year
			cost1
Tax	Description	Abolition	$ million
Marketable securities duty (quoted)	Payable on the transfer of marketable securities listed on the Australian Stock Exchange or another recognised stock exchange.	ü July 2001		35
Credit card duty2	Payable on credit card transactions.	ü August 2004		20
Debits tax	Payable on debits to accounts with cheque drawing facility.	ü July 2005		190
Lease duty	Payable on the lease of land or premises in Queensland. Residential leases exempted.	ü January 2006		27
Credit business duty	Payable on the amount of credit provided under a loan, a discount transaction or a credit arrangement.	ü January 2006		19
Hire duty	Payable on the hiring charges of the hire of goods.	1 January 2007		19
Marketable securities duty (unquoted)	Payable on the transfer of marketable securities not listed on the Australian Stock Exchange or another recognised stock exchange.	1 January 2007		14
Mortgage duty	Payable on entering into a mortgage over property in Queensland.	50% 1 Jan 2008 100% 1 Jan 2009		380
Duty on transfer of core business assets	Payable on the transfer of non-realty business assets.	50% 1 Jan 2010 100% 1 Jan 2011		200

Notes:
1.	Estimated revenue foregone in financial year following full abolition.
2.	Credit card duty was abolished prior to its review under the IGA.

The timing of the duty abolitions balances a range of community priorities, including the maintenance of the State’s tax competitiveness while funding the delivery of essential community services and the provision of critical new infrastructure.

The Government has completed the first tranche of duty abolitions announced in last year’s Budget, with the removal of credit business and lease duties from 1 January 2006.

A further four taxes are scheduled to be abolished. Hire duty and transfer duty on unquoted marketable securities will be abolished from 1 January 2007, with mortgage duty and duty on the transfer of core business assets to be abolished by 2011.

The savings to Queenslanders from the abolition of these nine taxes will rise from $290 million in 2005-06 to over $1 billion per year by 2011-12. The cost to revenue from the abolition of these taxes will be $4.5 billion over this seven year period.

96 Budget Strategy and Outlook 2006-07

Estimates of state revenue

Chart 5.3 indicates the composition of estimated state tax revenue for the 2006-07 year.

Chart 5.3
Taxation by tax category

Note:
1.	‘Other taxes’ includes the fire levy, community ambulance cover, guarantee fees and other minor taxes.
2.	‘Other duties’ includes vehicle registration duty, insurance duty, mortgage duty and other minor duties.

The largest sources of taxation revenue are payroll tax and transfer duty, which together represent over half of the State’s total taxation revenue in 2006-07.

Payroll tax (26.1% of total tax revenue in 2006-07) has a solid base with relatively stable growth driven by the underlying strength in the State economy. In contrast, revenue growth from transfer duty (representing 26.9% of tax revenue) can vary significantly from year to year with its base being subject to the volatile movements of the property market.

Other duties, including vehicle registration duty, insurance duty, mortgage duty and other smaller duties, represent 12.2% of total tax revenue. This proportion is likely to decline as duties are abolished in accordance with the Government’s schedule of tax abolitions.

Land tax represents 6.4% of total revenue in 2006-07. While also subject to the volatility of price movements in the property market, this impact is moderated by a relatively stable base and the effect of three year averaging of land values for assessments.

Gambling taxes and levies represent 11.2% of tax revenues in 2006-07. Motor vehicle registration, which is classified as a tax for budget purposes, represents 10.7% of total tax revenue.

Budget Strategy and Outlook 2006-07 97

Payroll tax

Payroll tax is chargeable at a rate of 4.75% when the total yearly Australian taxable wages of an employer, or those of a group of related employers, exceed the exemption threshold of $850,000.

Payroll tax collections are estimated to increase by 7.2% in 2006-07, reflecting growth in employment and wages in key industries.

The payroll tax rate has been reduced in recent years from 5% to its current level of 4.75%, making Queensland’s payroll tax rate overall the lowest of any state. Further, an employer paying annual taxable wages of less than $1 million from 2006-07 will not be liable for payroll tax – amongst the highest thresholds in Australia.

Duties

Duties are levied on a range of financial and property transactions. Overall, revenue from duties is forecast to increase by 7.4% in 2006-07. This is largely driven by increased revenues from transfer and mortgage duty arising from the continued strength in housing and non-residential property transactions and the revenue initiatives announced in the Special Fiscal and Economic Statement. This growth will be partially offset by the abolition of hire duty and transfer duty on unquoted marketable securities in 2007.

The major duties include transfer, mortgage, vehicle registration and insurance duties.

•	Transfer duty is charged at various rates on the transfer of real and business property. The Queensland Government offers extensive concessions to the transfer of land where the property is purchased as a first or subsequent home.
	Revenue from transfer duty is expected to grow in 2006-07 by 11% as a result of the continued strength of the Queensland property market coupled with the revenue measure announced in the Special Fiscal and Economic Statement. Recent years have seen a shift in the composition of the base from residential investments to commercial property purchases.
•	Mortgage duty is levied at a rate of 0.4% of the total amount secured by the mortgage.
	Revenue from mortgage duty is estimated to grow by 6.9% in 2006-07, driven by continued strength in the property market. Mortgage duty is to be halved from 1 January 2008 and fully abolished from 1 January 2009.
•	Vehicle registration duty is charged at the rate of 2% of the dutiable value of a motor vehicle on the transfer or initial registration of the motor vehicle.
	Revenue from vehicle registration duties is expected to grow slightly in 2006-07 in line with projections for activity within the sector. Motor vehicle duty has shown sluggish growth in recent times due mainly to a subdued motor vehicle market and weak price growth.

98 Budget Strategy and Outlook 2006-07

•	Insurance duty is charged on contracts of general, life insurance and accident insurance. The base rate for most general insurance products is 7.5%, with certain general insurance products, life insurance and accident insurance charged at the rate of 5%.
	Revenue from insurance duty is expected to grow by 4.5% in 2006-07, reflecting growth in the number of insurance policies moderated by the relative stability of premiums.

Gambling taxes and levies

A range of gambling activities is subject to state taxes and levies. Total gambling tax and levy collections are estimated to increase by 3.5% in 2006-07. Gaming machine taxes and levies are estimated to increase by 3.4%, lotteries taxes by 3%, wagering taxes by 6% and other gambling taxes by 5%. Growth in gaming machine taxes and levies is expected to be impacted by the complete ban on smoking in venues from 1 July 2006.

Land tax

Land tax is levied on the unimproved value of the landowner’s aggregated holdings of freehold land owned in Queensland as at midnight on 30 June each year. The principal place of residence is deducted from this value.

Resident individuals are generally liable for land tax if the total unimproved value of the freehold land owned by that person as at 30 June is equal to or greater than $450,000, which is to be increased to $500,000 from 1 July 2006. Companies, trustees and absentees are generally liable for land tax if the total unimproved value of the freehold land owned as at 30 June is equal to or greater than $300,000.

Land tax is estimated to grow by 17.9% in 2006-07.

The application of three year averaging for assessments, whereby the land value is determined by averaging the unimproved property values for the current and preceding two years rather than simply using the current year valuation, moderates and delays the impact of valuation increases. It is estimated that the revenue foregone as a result of three year averaging will be approximately $171.5 million in 2005-06. Queensland is the only state to apply three year averaging to land tax.

Motor vehicle registration fees

Motor vehicle registration is influenced primarily by the growth of the vehicle fleet and fee adjustments related to the consumer price index (CPI).

Fire levy

Fire levy revenue, which is used to fund the Queensland Fire and Rescue Authority, is expected to increase in line with the growth of the number of contributors and CPI.

Budget Strategy and Outlook 2006-07 99

Community Ambulance Cover

The Community Ambulance Cover Scheme was introduced in 2003-04 to replace the Ambulance Subscription Scheme and to provide a sustainable funding base for the Queensland Ambulance Service. It is collected through a payment on non-exempt electricity accounts.

To minimise the impact of the levy, a range of exemptions are provided, including for pensioners, certain farm sheds and water pumps, religious bodies and other institutions and government. Additional exemptions were provided in November 2003 for certain common and multiple accounts for commercial and residential buildings, security lighting and public parks, hot water systems and electricity accounts relating to a medical condition.

An extension to the exemption for farm sheds and water pumps has been made to include certain amenity horticulture activities. In particular, the exemption will apply to farm sheds and water pumps used solely in the commercial production of any horticultural products, whether food or non-food, but will not apply to retail activities and other associated services.

Growth in 2006-07 reflects CPI adjustment and growth in the number of non-exempt electricity accounts.

Guarantee fees

Guarantee fees are revenues collected by Queensland Treasury Corporation (QTC) on behalf of the State and comprise performance dividends, competitive neutrality fees and credit margin fees. These fees promote competitive neutrality between public sector agencies and those in the private sector and ensure that the benefits accruing from the financial backing and superior borrowing performance of the State (through QTC) are shared between the borrower and the State.

Other taxes

Revenue from other taxes includes the Statutory Insurance Scheme Levy, the Nominal Defendant Levy and other sundry taxes.

Tax expenditures

Taxation expenditures are reductions in tax revenue that result from the use of the taxation system as a policy tool to deliver Government policy objectives. Taxation expenditures are provided through a range of concessions, including tax exemptions, reduced tax rates, tax rebates, tax deductions and provisions which defer payment of a tax liability to a future period. Appendix A provides details of tax expenditure arrangements set in place by the Queensland Government.

100 Budget Strategy and Outlook 2006-07

QUEENSLAND’S COMPETITIVE TAX STATUS

Taxation can impact on business decisions regarding investment and employment. Maintaining the competitiveness of Queensland’s tax system provides a competitive advantage to business and moderates the tax burden for its citizens and is therefore fundamental to the Government’s commitment to job creation and economic development.

Recent tax changes have sought to improve the efficiency and equity of the State’s tax system, strengthen the funding base of essential services and reduce or eliminate taxes to the benefit of taxpayers.

In pursuit of these objectives over recent years, the Government has:
•	rationalised the payroll tax system by reducing the rate from 5% to 4.75%, offset by a broadening of the tax base
•	raised land tax thresholds, reduced tax rates and simplified the land tax system. It has also provided exemptions to moveable dwelling parks and expanded the principal place of residence exemption
•	introduced the Community Ambulance Cover to secure the funding base for the Queensland Ambulance Service, while minimising the impact through a range of exemptions
•	extended the transfer duty concession for purchases of first homes from $80,000 (with the concession phasing out at $160,000) to $250,000 (with the concession phasing out at $500,000)
•	extended the mortgage duty exemption threshold for first home buyers from $100,000 to $250,000
•	extended the transfer duty home concession from $250,000 to $300,000 (and to $320,000 from 1 July 2006)
•	reduced the base insurance duty rate from 8.5% to 7.5%
•	increased some transfer duty rates to assist the funding of the Health Action Plan
•	abolished transfer duty on quoted marketable securities, credit card duty, debits tax, lease duty and credit business duty.

Budget Strategy and Outlook 2006-07 101

Consistent with this commitment to ongoing tax reform, the Government has announced in this Budget:

• payroll tax relief

• land tax relief

• a new first home buyer transfer duty concession for certain purchases of vacant land

• changes to land rich duty and transfer duty relating to certain land holding trusts as a revenue protection measure

• the continued progressive abolition of a number of duties.

Since 2004, the Government has introduced initiatives that will deliver total net tax reductions of $3 billion over the next four years.

The Charter of Social and Fiscal Responsibility commits the Government to maintaining competitive tax levels in relation to other states. Table 5.9 demonstrates that this commitment is being met, with various measures of tax competitiveness all indicating the Queensland state tax system remains amongst the most competitive in Australia.

Table 5.9
Queensland’s tax competitiveness

	QLD		NSW		VIC		WA		SA		TAS4		ACT		NT4		Avg5
Taxation per capita1 ($)
		1,927		2,451		2,147		2,464		1,953		1,484		2,388		1,562		2,272
Taxation effort2 (%)		85.8		102.3		102.4		103.4		116.4		99.1		100.3		102.4	na
Taxation % of GSP3 (%)		4.4		5.0		4.7		4.3		4.9		4.3		3.9		2.9		4.7

Notes:
1.	2006-07 data. Sources: QLD, VIC, WA, NT State Budgets, NSW, SA, TAS, ACT Mid Year Reviews/Budget Updates
2.	2004-05 data. Source: Commonwealth Grants Commission: 2006 Update. Revenue raising effort ratios, assessed by the Commonwealth Grants Commission, isolate policy impacts from revenue capacity impacts and are an indicator of the extent to which the governments burden their revenue bases. Queensland’s tax revenue raising effort is well below the Australian policy standard (equal to 100%).
3.	2004-05 data. Sources: ABS 5506.0 and ABS 5220.0.
4.	Low taxation per capita reflects the lower revenue raising capacity of those jurisdictions.
5.	Weighted average of states and territories, excluding Queensland.

102 Budget Strategy and Outlook 2006-07

GRANTS AND SUBSIDIES

Current grants and subsidies comprise revenues from the Australian Government, grants from the community and industry and other miscellaneous grants. The moderate growth of 3.2% in 2006-07 largely reflects the expected growth in Australian Government grants.

Table 5.10
Grants and subsidies¹

	2004-05		2005-06		2006-07
	Actual		Est. Act.		Budget
	$ million		$ million		$ million
Current grants and subsidies
Australian Government grants		11,739		12,278		12,570
Other grants and contributions		515		532		573
Total current grants and subsidies		12,255		12,809		13,143
Capital grants and subsidies
Australian Government grants		489		568		683
Other grants and contributions		2		23		0
Total capital grants and subsidies		491		591		683
Total grants and subsidies		12,745		13,401		13,826

Note:
1.	Numbers may not add due to rounding.

Australian Government payments

Australian Government payments to Queensland comprise:

• general purpose payments, including GST revenue grants and National Competition Policy payments. General purpose payments are ‘untied’ and are used for both recurrent and capital purposes

• specific purpose payments (SPPs), including grants for health, education and transport, which are used to meet Australian Government and shared policy objectives.

Australian Government payments to Queensland in 2006-07 are expected to total $13.3 billion, an increase of $407 million or 3.2% over payments in 2005-06.

Differences between SPPs in this chapter and Australian Government Budget estimates can arise and generally reflect the outcome of agency-to-agency discussions or the absence of state level information. Chapter 8 provides more detailed background on Commonwealth-state financial arrangements.

Budget Strategy and Outlook 2006-07 103

Table 5.11

Australian Government payments¹

	2004-05		2005-06		2006-07
	Actual		Est. Act.		Budget
	$ million		$ million		$ million
General Purpose Payments
GST Revenue Grants and other payments		7,354		7,639		7,972
National Competition Policy Payments		143		179		0
Total General Purpose Payments		7,498		7,818		7,972
Specific Purpose Payments2
Health		1,911		2,015		2,126
Education and the Arts		1,439		1,540		1,641
Local Government, Planning, Sport & Recreation		298		315		312
Employment and Training		201		218		220
Housing		186		188		191
Treasury		90		98		103
Disability Services Queensland		109		117		119
Main Roads		260		264		400
Other		236		275		169
Total Specific Purpose Payments		4,730		5,028		5,280
Total Australian Government Payments		12,228		12,846		13,253

Notes:
1.	Numbers may not add due to rounding.
2.	Specific Purpose Payments are shown below by relevant Queensland Government department.

General purpose payments

GST revenue grants

GST revenue grants to Queensland in 2006-07 are expected to be $7.969 billion which represents an increase of $356 million on 2005-06.

GST revenue projections are based on consumption estimates, which incorporate assumed growth in the outyears. The distribution of these revenues is based on the recommendations of the Commonwealth Grants Commission in accordance with the application of horizontal fiscal equalisation principles. The moderate increase in GST revenue grants primarily reflects underlying growth of the tax base.

The Australian Government provides compensation to the states for the deferred GST revenue resulting from its decision to allow businesses who are below the GST registration threshold and voluntarily registered for GST to report and pay GST annually instead of quarterly.

104 Budget Strategy and Outlook 2006-07

Queensland also accrued a residual adjustment amount of $38.8 million in 2004-05. Residual adjustment amounts are provided to offset any unintended consequences of the transitional arrangements applied when states no longer require budget balancing assistance.

National Competition Policy payments

The distribution of National Competition Policy (NCP) payments is population based, with payments dependent on the states making satisfactory progress with the implementation of the specified reforms. NCP payments to Queensland will cease in 2005-06.

Specific purpose payments

SPPs for Queensland in 2006-07 are estimated at $5.3 billion, an increase of 5% from 2005-06. Table 5.11 provides the distribution of SPPs by Queensland Government department.

Queensland Health

Queensland receives funding for public hospitals and other health services from the Australian Government under the Australian Health Care Agreement (AHCA). The AHCA provides the majority of Queensland Health’s revenue from the Australian Government and is adjusted annually for population growth, increases in cost and utilisation. The 2003-2008 AHCA commenced on 1 July 2003. Under the current agreement, Queensland will receive $1.7 billion in 2006-07 in Health Care Grants.

Queensland Health will also receive additional tied funding in 2006-07 for a range of programs including Home and Community Care, Highly Specialised Drugs, Essential Vaccines, National Public Health and nursing home benefits.

Department of Education and the Arts

SPPs for education purposes comprise recurrent and capital grants for distribution to state and non-state schools and other organisations. A 6.5% increase in Australian Government grants in 2006-07 reflects cost indexation, enrolment growth, commencement of new programs and funding for capital projects.

Department of Local Government, Planning, Sport and Recreation

Australian Government SPPs to the Department of Local Government, Planning, Sport and Recreation relate to Financial Assistance Grants provided to local government in Queensland.

Budget Strategy and Outlook 2006-07 105

Department of Employment and Training

The 2005-2008 Commonwealth-State Agreement for Skilling Australia’s Workforce provides the Department of Employment and Training with funding for a range of specific vocational education and training programs. In 2006-07, the Department expects to receive around $208 million in funding under the Agreement, an increase of 4% over 2005-06 ($200 million). Additional funding is provided by the Australian Government for a range of other programs.

Further discussion of the Agreement is provided in Chapter 8.

Department of Housing

In 2006-07, the Department of Housing will receive $191 million in SPPs under the current Commonwealth-State Housing Agreement covering the period 2003-2008. The Budget estimate for 2006-07 represents a 2% increase against estimated payments in 2005-06 reflecting growth funding built into the 2003-2008 Agreement.

This funding will be used for the continued development of a core social housing sector to assist people unable to access alternative suitable housing options through the delivery of affordable, appropriate, flexible and diverse housing assistance responses that provide people with choice and are tailored to their needs, local conditions and opportunities.

Queensland Treasury

Treasury receives payments from the Australian Government for joint Commonwealth-state natural disaster relief measures, concessions for Pensioner Concession Card Holders and compensation for foregone revenue on the establishment of the Australian Securities Commission.

Disability Services Queensland

The Commonwealth-State Disability Agreement for the period 2002-2007 was signed by the Queensland Government in June 2003. Australian Government funding for Disability Services Queensland is estimated to increase by 2% in 2006-07.

Department of Main Roads

Funding is received from the Australian Government for infrastructure and maintenance works on the National Network and for Black Spot Road Safety projects. The 2006-07 allocation reflects road works programmed under the Australian Government’s AusLink program.

Other

Other SPPs are expected to decline in 2006-07, with a number of agencies expected to receive reduced payments from the Australian Government.

106 Budget Strategy and Outlook 2006-07

Other grants and contributions

Grants and contributions are funds received from other state and local government agencies, other bodies and individuals where there is no direct benefit to the provider. Contributions exclude Australian Government grants and user charges. The main sources of contributions are:

• those received from private enterprise and community groups to fund research projects and community services, including the contributions of parents and citizens associations to state schools

• contributed assets and goods and services received for a nominal amount.

Table 5.12
Other grants and contributions

	2004-05		2005-06		2006-07
	Actual		Est. Act.		Budget
	$ million		$ million		$ million
Other grants and contributions		518		555		573

Revenues will vary from year to year based on the number and size of research projects, assets transferred between the Government and the private sector and contributed assets and services.

SALES OF GOODS AND SERVICES

Sales of goods and services revenue comprises cost recoveries from the provision of goods or services. Revenue from this source is expected to increase by 7.7% in 2006-07.

Table 5.13
Sales of goods and services¹

	2004-05		2005-06		2006-07
	Actual		Est. Act.		Budget
	$ million		$ million		$ million
Fee for service activities		983		1,000		1,086
TransLink		184		196		218
Rent revenue		274		295		319
Sale of land inventory		38		56		97
Hospital fees		191		215		207
Transport and traffic fees		183		194		179
Other sales of goods and services		528		543		588
Total sales of goods and services		2,381		2,500		2,693

Note:
1.	Numbers may not add due to rounding.

Budget Strategy and Outlook 2006-07 107

Fee for service activities

Major items of fee for service activities across the General Government sector include:

• recoverable works carried out by both the Department of Main Roads and the commercialised arm of the department

• fees charged by Technical and Further Education (TAFE) colleges

• fees charged by CITEC for information and telecommunications services to the private sector.

The Government provides concessions in the form of discounts, rebates and subsidies to improve access to and the affordability of a range of services for individuals or families based on eligibility criteria relating to factors such as age, income and special needs or disadvantage. Appendix B provides details of the concession arrangements set in place by the Queensland Government.

TransLink

Revenues arise from the arrangements associated with TransLink integrated ticketing and public transport arrangements, which commenced in July 2004. Instead of subsidising public transport operators for the gap between operating costs and revenues, the TransLink entity collects revenues from the operation of public transport services in South East Queensland to fund public transport services in the region. These revenues are estimated at $218 million in 2006-07.

Rent revenue

Rent revenue is earned on the rent or lease of Government buildings, housing, plant and equipment, motor vehicles and car parks. Major items under this category include public housing rentals and rents charged for Government buildings.

Sale of land inventory

Sale of land inventory comprises land sales undertaken by agencies, where the buying and selling of land is a core business activity of the agency, such as the Property Services Group under the Coordinator-General. As such, it is distinct from property disposals undertaken by most Government agencies.

Hospital fees

Hospital fees are collected by public hospitals for a range of hospital services. Fees include those received from private patients and other third party payers, as well as payments received from the Australian Government Department of Veterans’ Affairs for the treatment of veterans.

108 Budget Strategy and Outlook 2006-07

Transport and traffic fees

This category comprises state transport fees, the Traffic Improvement Fee, drivers’ licence fees and various marine licence and registration fees.

Other sales of goods and services

Revenue from other sales of goods and services is estimated to increase by 8.3% in 2006-07.

INTEREST INCOME

Interest income primarily comprises interest earned on the Treasurer’s Cash Balances and investments held to finance future employee entitlements, for example superannuation and long service leave.

Table 5.14
Interest income

	2004-05		2005-06		2006-07
	Actual		Est. Act.		Budget
	$ million		$ million		$ million
Interest income		2,972		3,200		1,802

Queensland Treasury Corporation manages the State’s short term investments, such as the Treasurer’s Cash Balances, while Queensland Investment Corporation manages the State’s long-term investments, primarily employee entitlement provisions (including assets held to meet employer superannuation liabilities). The State’s investment portfolio includes a diversified holding of equities, property and fixed interest.

With respect to investments held to meet employer superannuation liabilities, the State has, during the course of 2005-06, effected a significant reduction in its equity holdings and further diversified its portfolio.

While the previous asset allocation was appropriate in the context of managing very long term liabilities, the introduction of the Accumulation Scheme option for State employees and the actuarial surplus in the superannuation fund resulting from the strong performance of equity markets has presented an opportunity to alter the asset allocation.

The strong performance of domestic and international equity markets positively impacted interest income in 2005-06, with an estimated return of 16%. This estimate is based on actual year-to-date investment returns at the time of the finalisation of the Budget.

Interest income in 2006-07 is based on investment returns achieving the assumed long term average earnings rate of 7.5%. Chart 5.4 shows investment return rates achieved over time.

Budget Strategy and Outlook 2006-07 109

Chart 5.4
Investment returns (% per annum)^1,2

Note:
1.	Line represents actuarial assumed long term average.
2.	2005-06 is an estimate.

Source: 1989-90 to 2004-05: Queensland Investment Corporation

OTHER REVENUE

Other revenue comprises dividends, tax equivalent payments, royalties, fines and forfeitures and other sundry revenues. Other revenue is expected to decrease in 2006-07, largely due to an expected reduction in tax equivalent payments.

Table 5.15
Other revenue¹

	2004-05		2005-06		2006-07
	Actual		Est. Act.		Budget
	$ million		$ million		$ million
Dividends		683		625		635
Tax equivalents		390		627		374
Royalties and land rents		1,028		1,479		1,517
Fines and forfeitures		188		177		200
Revenue nec		269		222		153
Total Other Revenue		2,558		3,129		2,879

Note:
1.	Numbers may not add due to rounding.

110 Budget Strategy and Outlook 2006-07

Dividends

Dividends are received from the State’s equity in Public Non-financial Corporations and Public Financial Corporations. These include, for example, the Queensland electricity supply industry, Queensland Investment Corporation, port authorities, QR and Golden Casket.

Table 5.16
Dividends¹

	2004-05		2005-06		2006-07
	Actual		Est. Act.		Budget
	$ million		$ million		$ million
Energy sector		395		431		411
Transport sector (rail and ports)		248		164		186
Other2		40		30		37
Total Dividends		683		625		635

Notes:
1.	Numbers may not add due to rounding.
2.	Includes dividends from Forestry Plantations Queensland, Golden Casket Corporation, Queensland Investment Corporation and SunWater.

Dividends are expected to increase by 1.6% in 2006-07.

Dividend revenue from public enterprises is a function of both net operating profits and dividend payout ratios.

The dividend pay-out ratio recommended by the Boards of Government-owned corporations does not impact on the capacity and requirement of these entities to carry out necessary maintenance and repairs and asset replacement (via provision for depreciation). Dividends are paid after providing for such costs. The dividend payout ratio for 2005-06 and the assumption on which the 2006-07 Budget and forward estimates are based is 80% of net operating profit after tax (except SunWater). Shareholding Ministers also consider the circumstances of individual Government-owned corporations and the advice of their boards before arriving at a final determination.

In total, dividends account for 2.2% of total General Government revenue in 2006-07.

Tax equivalent payments

Tax equivalent payments comprise payments by Government-owned corporations in lieu of state and Australian Government taxes and levies from which they are exempt. These payments arise from an agreement reached between the Australian Government and state governments in 1994 to establish a process for achieving tax uniformity and competitive neutrality between public sector and private sector trading activities.

Budget Strategy and Outlook 2006-07 111

Tax equivalent payments are expected to decline by 40% in 2006-07. This is primarily due to higher tax equivalent payments in 2005-06 from WorkCover Queensland as a result of a significant increase in its taxable income arising from a reduction in its provision for outstanding claims.

Table 5.17
Tax equivalent payments¹

	2004-05		2005-06		2006-07
	Actual		Est. Act.		Budget
	$ million		$ million		$ million
Energy sector		227		234		216
Transport sector (rail and ports)		100		92		106
Other2		62		301		52
Total Tax Equivalent Payments		390		627		374

Notes:
1.	Numbers may not add due to rounding.
2.	Increase in 2005-06 due to higher WorkCover payments.

Royalties and land rents

The State earns royalties from the extraction of coal, base and precious metals, bauxite, petroleum, mineral sands and other minerals and land rents from pastoral holdings, mining and other leases. Royalties return some of the proceeds for the extraction of non-renewable resources to the community.

Estimates of mining royalties are based predominantly on forecasts of production compiled by the Department of Natural Resources, Mines and Water, using information provided by mining companies. Price estimates are broadly consistent with those published by the Australian Bureau of Agricultural and Resource Economics.

Royalty revenue is expected to remain at high levels in 2006-07 due to continued growth in coal exports to meet strong overseas demand. Outyear projections incorporate a moderation in royalty revenues.

Fines and forfeitures

The major fines included in this category are traffic and court fines. There is an expected increase of 13% in collections of fines and forfeitures in 2006-07.

Revenue nec

Revenue nec includes other revenues not elsewhere classified. The decrease in 2006-07 reflects a number of one-off receipts across agencies in 2005-06.

112 Budget Strategy and Outlook 2006-07

6. EXPENSES

KEY POINTS

• Total General Government sector expenses are expected to increase by $2.092 billion (or 7.8%) over the estimated actual for 2005-06, to $28.825 billion in 2006-07.

• Growth in expenses includes a range of service developments and initiatives with a particular focus on the areas of health, education, water management and infrastructure enhancements.

• The major areas of expenditure are education and health, which together constitute approximately 48% of General Government sector expenses.

INTRODUCTION

This chapter provides an overview of General Government sector expenses for the estimated actual outcome for 2005-06, forecasts for the 2006-07 Budget year and projections for 2007-08 to 2009-10. The forward estimates are based on the economic projections outlined in Chapter 2 and are formulated on a no policy change basis.

The Ministerial Portfolio Statements provide details of expenditure for individual departments.

Table 6.1
General Government sector expenses¹

	2005-06		2005-06		2006-07		2007-08		2008-09		2009-10
	Budget		Est. Act.		Budget		Projected		Projected		Projected
	$ million		$ million		$ million		$ million		$ million		$ million
Expenses
Gross operating expenses
Employee expenses		11,719		12,051		13,324		14,047		14,718		15,616
Other operating expenses		5,161		5,641		5,844		5,855		5,930		6,079
Depreciation		1,617		1,632		1,754		1,876		1,951		2,017
Superannuation interest		604		502		563		593		623		651
Other interest		232		186		222		366		543		744
Current transfers		5,494		5,754		6,094		6,404		6,555		6,602
Capital transfers		844		966		1,024		882		698		645
Total Expenses		25,670		26,733		28,825		30,024		31,019		32,354

Note:
1.	Numbers may not add due to rounding.

Budget Strategy and Outlook 2006-07 113

General Government expenses in 2005-06 are estimated to be $26.733 billion, an increase of $1.063 billion over the 2005-06 Budget forecast of $25.670 billion. This increase is primarily due to:

• additional funding for the Health Action Plan

• provision for costs arising from damage sustained in Far North Queensland as a result of Cyclone Larry in March 2006

• funding for new initiatives approved by the Government during the year including increased capital grant funding to non-government schools as part of the Tomorrow’s Schools program, acceleration of the Asbestos Roof Replacement Program in State Schools, various initiatives aimed at improving Queensland’s water supply including better water management, water recycling projects and contributions to upgrade the Wivenhoe Dam spillway

• additional expenditure to match increases in specific purpose grants and other own source revenues.

The General Government operating statement provides for aggregate expenses of $28.825 billion in 2006-07, representing an increase of $2.092 billion (or 7.8%) over the 2005-06 estimated actual. Factors influencing the growth in expenses include the implementation of service enhancements and initiatives outlined in Chapter 4 and other cost increases such as wage increases as part of enterprise bargaining agreements.

EXPENSES BY OPERATING STATEMENT CATEGORY

This section provides a breakdown of General Government expenses in 2006-07 by category and discusses the significant variances between 2005-06 estimated actual and 2006-07 Budget by expense category.

Chart 6.1 indicates that the single largest expense category in the General Government sector is employee expenses, reflecting the direct service provision nature of Government activities, followed by current transfers that include community service obligation payments to Government-owned corporations (GOCs) and the fuel subsidy scheme.

114 Budget Strategy and Outlook 2006-07

Chart 6.1
Expenses by operating statement category, 2006-07

Note:
1.	Includes superannuation interest expense.

Chart 6.2 compares the 2005-06 estimated actual expenses for each operating statement category with the 2006-07 Budget.

Chart 6.2
Expenses by operating statement category¹
2005-06 and 2006-07

Note:
1.	Includes superannuation interest expense.

Budget Strategy and Outlook 2006-07 115

DETAILS OF EXPENSES

Employee expenses

Employee expenses include salaries and wages, annual leave, long service leave and superannuation expense. Superannuation expense represents the current service cost or the increase in the present value of the State’s defined benefit obligation resulting from employee service in the current period.

Employee expenses are forecast to increase by $1.273 billion or 10.6% to $13.324 billion in 2006-07. The increase reflects a combination of wage increases related to established enterprise bargaining agreements, provision for future agreements and significant additional staffing resulting from the implementation of the Health Action Plan and other services growth and enhancements.

The additional staffing provided in the 2006-07 Budget is predominantly in key service delivery areas, including recruiting 300 extra doctors, 400 extra allied health professionals and 500 nurses over an 18 month period, 224 additional teachers to meet enrolment growth, 150 extra teachers to reduce class sizes and 350 additional sworn police officers by September 2007.

Other operating expenses

Other operating expenses comprise the non-labour costs of providing goods and services, repairs and maintenance, consultancies, contractors, electricity, communications and marketing.

Other operating expenses are expected to increase by 3.6% to $5.844 billion in 2006-07, reflecting projected increases in these input costs and also growth in service provision.

Depreciation

Depreciation expense is an estimate of the progressive consumption of the State’s assets through normal usage, wear and tear and obsolescence. Growth in this expense category primarily reflects asset revaluations and additions to the asset base.

Queensland’s depreciation expense as a percentage of fixed assets is generally higher than that of other states, reflecting a more conservative provision for asset replacement. Although this results in lower operating surpluses, over time it will lead to a younger asset base. It is also more sustainable by making available larger amounts of funding from recurrent sources to finance capital expenditure.

116 Budget Strategy and Outlook 2006-07

Current and capital transfers

Current transfers include grants and subsidies to the community (such as to schools, hospitals, benevolent institutions and local governments) and personal benefit payments. Current transfers to non-government recipients represent grants to non-government organisations and householders. Funding includes support to non-government health care providers, organisations servicing the community in partnership with government in the family support, disability, youth and childcare sectors. Community service obligations (CSOs) are provided where GOCs are required to provide non-commercial services or services at non-commercial prices for the benefit of the community.

Capital transfers represent grants by the Government for capital purposes to local governments, non-profit institutions and other non-government entities, such as households and businesses.

Increases in CSO payments to GOCs and grants to local governments are factors contributing to an estimated increase of $398 million or 6% in 2006-07 (see Table 6.2).

The increase in State fuel subsidy payments in 2006-07 reflects expected increased fuel consumption. It also incorporates the impact of the recently announced extension of the fuel subsidy scheme to on-road use of diesel fuel by equipment type vehicles such as concrete pumping trucks, mobile cranes and elevated work platforms (but excludes conditionally registered vehicles, or those of a kind eligible for conditional registration in Queensland such as backhoes, harvesters, graders, golf buggies and road pavers/finishers).

In addition, the increase in fuel subsidy payments takes account of a planned change in the definition of fuel under the Fuel Subsidy Act 1997. Presently, fuel must be of a type ordinarily sold by a retailer to qualify for subsidy. This definition will be expanded to cater for certain emerging forms of motor spirit and diesel fuels. The change will apply from the date of Royal Assent to the amending legislation.

Higher CSO payments reflect funding to QR for additional track and rollingstock throughout Queensland as part of the South East Queensland Infrastructure Plan and Program (SEQIPP). The increase in capital grants to local governments in 2006-07 primarily reflects grants to support SEQIPP. Commitments from year to year in capital transfers are also influenced by the timing of capital projects and the progressive completion of approved projects.

Budget Strategy and Outlook 2006-07 117

Table 6.2 indicates the composition of transfer payments by recipient.

Table 6.2
Current and capital transfers¹

	2005-06		2006-07
	Est. Act.		Budget
	$ million		$ million
Current
Fuel Subsidy Scheme		524		553
Grants to local government		438		409
Grants to non-government schools		1,239		1,264
Grants to non-profit organisations		814		983
Grants to other non-government recipients		1,460		1,427
Payments to GOCs		1,279		1,458
Total current transfers		5,754		6,094
Capital
First Home Owner Grant Scheme		172		198
Grants to local government		311		493
Grants to non-profit organisations		109		115
Grants to other non-government recipients		374		218
Total capital transfers		966		1,024
Total current and capital transfers		6,720		7,118

Note:
1.	Numbers may not add due to rounding.

Interest

The superannuation interest expense represents the imputed interest on the Government’s accruing defined benefit superannuation liability. In determining the State’s defined benefit superannuation liabilities, AASB 119 requires the discounting of future benefit obligations using yield rates on government bonds net of investment tax, estimated at 4.9%.

The other interest expense includes interest paid on borrowings to acquire capital assets and infrastructure such as roads and government buildings. The growth in this expense over the forward estimates reflects growth in borrowings for capital asset acquisitions, including new infrastructure investment as part of SEQIPP. However, interest expense will only rise to 2% of total operating expenses by the end of the forward estimates period.

118 Budget Strategy and Outlook 2006-07

OPERATING EXPENSES BY PURPOSE

Chart 6.3 indicates the proportion of expenditure by major purpose classification for the 2006-07 Budget. Education and health account for the largest shares of expenses (around 24% each).

Chart 6.3
General Government expenses by purpose, 2006-07

Chart 6.4
General Government expenses by purpose 2005-06 and 2006-07

Budget Strategy and Outlook 2006-07 119

The Government’s Charter of Social and Fiscal Responsibility sets out the Government’s priorities for delivering high quality services and improving the quality of life for Queenslanders. The Government has consistently had a clear focus on improving key service areas such as education, health, public order and safety and community services. The Queensland Government’s focus on these areas since 1998-99 can be seen in the following chart.

Chart 6.5
General Government expenses by purpose
Growth from 1998-99 to 2006-07

Source: Queensland Treasury’s data supplied to ABS.

Education

The education function includes primary and secondary education, tertiary education (including technical and further education) and the transportation of school students. The 2006-07 Budget for this functional area is $6.947 billion, representing an increase of 70% ($2.864 billion) between 1998-99 and 2006-07.

The consistently strong annual growth in education and training expenditure has ensured that, in addition to services having kept pace with cost increases, services have also been enhanced and expanded. The implementation of education and training reforms and initiatives over this period has included a large increase in the number of school based apprenticeships and traineeships, enhanced services in special education, significant investments in literacy and numeracy initiatives and computers in schools.

120 Budget Strategy and Outlook 2006-07

The Government continues to further its education and training strategy in the 2006-07 Budget with the introduction statewide of the Preparatory Year of schooling, investment in school maintenance with the Accelerated Asbestos Roof Replacement Program and continued support for vocational education and training reforms with the launch of the Queensland Skills Plan, providing funding for additional trades and other training places and improvements to Queensland’s apprenticeship system.

Health

The health function includes expenses relating to hospital and health services, acute care institutions, mental health institutions, nursing homes for the aged and community health services including patient transport. By 2006-07, expenses for providing health services are estimated to have increased by 96% ($3.354 billion) since 1998-99 reflecting a range of service developments including growth in service capacity (including elective surgery initiatives), implementation of new medical technology, expansion of Home and Community Care services and the operational costs of new facilities.

In 2005, the Government committed to reforming the Queensland public health system through the Health Action Plan. The Health Action Plan announced a record injection of funding totalling $6.4 billion in just over five years to 2010-11, of which $4.4 billion was new money. Through the 2006-07 Budget, State funding for Queensland Health will grow by $9.7 billion over the five years.

Public order and safety

The public order and safety function includes police and fire protection services, law courts and legal services and prisons and corrective services. Expenditure on the public order and safety function are estimated to total $2.728 billion in 2006-07, an increase of 73% since 1998-99.

The strong growth in the public order and safety function is the result of the Government’s commitment to maintain police numbers above the national average police to population ratio. By September 2007, the Queensland Police Service’s sworn strength will be increased to 9,728 through the creation of an additional 350 new police positions.

Social welfare, housing and other community services

Services provided under the category of social welfare, housing and other community services include family and disability services, child protection, housing and community amenities including Aboriginal and Torres Strait Islander communities, environmental services, arts and cultural outlays. The 2006-07 Budget provides for total expenditure of over $3.439 billion, representing an estimated increase of $1.836 billion or 115% between 1998-99 and 2006-07.

Budget Strategy and Outlook 2006-07 121

Growth in expenses in this category reflects a range of initiatives over this period spanning a number of functional areas. Particular areas experiencing major service enhancements have been disability services, child protection and family support services.

Transport and communications

The transport and communications function includes the State’s road network and transport systems including bus, rail and port systems. Expenditure on the transport and communications function is estimated to total $3.070 billion in 2006-07, an increase of 48% since 1998-99. Growth under the function relates to major road and transport projects undertaken as a result of the implementation of the SEQIPP.

Details of 2006-07 initiatives and service developments are provided in Chapter 4.

DEPARTMENTAL EXPENSES

Data presented in Tables 6.3 and 6.4 provide a summary drawn from financial statements contained in the Ministerial Portfolio Statements reports. Further information on the composition of expenses, outputs delivered and factors influencing the movement in expenses can be obtained from individual Ministerial Portfolio Statements.

122 Budget Strategy and Outlook 2006-07

Table 6.3

Departmental Controlled Expense^1,2

	2005-06		2006-07
	Est. Actual		Estimate
	$’000		$’000
Aboriginal and Torres Strait Islander Policy		61,916		61,002
Child Safety		407,094		503,064
Communities		407,945		472,093
Coordinator-General		66,886		44,915
Corrective Services		422,137		416,199
Disability Services Queensland		526,312		633,971
Education and the Arts		4,464,401		4,724,744
Electoral Commission of Queensland		9,174		23,983
Emergency Services		690,798		744,113
Employment and Training		938,724		978,700
Energy		19,599		19,642
Environmental Protection Agency		287,189		294,488
Forestry Plantations Queensland Office		5,776		36,217
Health		5,832,492		6,649,890
Housing		569,528		649,691
Industrial Relations		94,570		99,184
Justice and Attorney-General		257,804		267,197
Legislative Assembly		62,128		63,123
Local Government, Planning, Sport and Recreation		519,431		573,503
Main Roads		1,305,427		1,318,996
Natural Resources, Mines and Water		603,189		650,501
Office of the Governor		4,006		4,232
Office of the Ombudsman		5,157		5,461
Office of the Public Service Commissioner		7,338		6,956
Police		1,189,776		1,300,143
Premier and Cabinet		106,426		88,508
Primary Industries and Fisheries		336,021		307,977
Public Works		340,937		344,433
Queensland Audit Office		26,636		27,640
State Development, Trade and Innovation		453,425		238,550
The Public Trustee of Queensland		50,352		57,152
Tourism, Fair Trading and Wine Industry Development		57,447		56,855
Transport		1,817,524		2,083,981
Treasury		187,464		190,789
Total Expenses		22,135,029		23,937,893

Note:
1.	Total expenses by department does not equate to total General Government expenses in GFS terms reported elsewhere in the Budget Papers as GFS General Government expenses include a wider range of entities such as State Government statutory authorities. Transactions between entities within the General Government sector (for example, payroll tax payments) are also excluded in the preparation of whole-of-Government GFS financial statements.
2.	Explanations of variations in departmental controlled expenses can be found in individual agency Ministerial Portfolio Statement documents.

Budget Strategy and Outlook 2006-07 123

Table 6.4

Departmental Administered Expense^1,2

	2005-06		2006-07
	Est. Actual		Estimate
	$’000		$’000
Communities		156,270		152,384
Coordinator-General		218		—
Education and the Arts		1,687,067		1,710,862
Employment and Training		1,443		—
Energy		398,077		387,700
Health		446		3,227
Justice and Attorney-General		150,007		151,033
Local Government, Planning, Sport and Recreation		327,219		332,318
Natural Resources, Mines and Water		12,865		8,503
Police		376		391
Premier and Cabinet		91,421		90,616
Primary Industries and Fisheries		13,182		8,356
Public Works		21,495		19,352
State Development, Trade and Innovation		1,915		1,915
The Public Trustee of Queensland		2,049		2,036
Tourism, Fair Trading and Wine Industry Development		44,929		47,109
Transport		230		375
Treasury3		1,424,438		2,399,204
Total Expenses		4,333,647		5,315,381

Note:
1.	Total expenses by department does not equate to total General Government expenses in GFS terms reported elsewhere in the Budget Papers as GFS General Government expenses include a wider range of entities such as State Government statutory authorities. Transactions between entities within the General Government sector (for example, payroll tax payments) are also excluded in the preparation of whole-of-Government GFS financial statements.
2.	Explanations of variations in departmental administered expenses can be found in individual agency Ministerial Portfolio Statement documents.
3.	In its capacity as manager of the State’s finances, Treasury borrows on behalf of the Government. The increase in the 2006-07 estimate represents interest on additional funds borrowed during 2006-07 to support the expansion of the State’s capital program.

124 Budget Strategy and Outlook 2006-07

Table 6.5

Reconciliation of Departmental to GFS Expenses ¹

	2005-06			2006-07
	Est. Actual			Estimate
	$ million			$ million
Departmental expenditure per MPS — Controlled (Table 6.3)		22,135			23,938
— Administered (Table 6.4)		4,334			5,315
Non-GFS departmental expenses2		(19	)		(577	)
Other General Government entities (e.g. CBUs, SSPs, Statutory Bodies)		2,856			2,877
		29,306			31,553
Superannuation Interest expense		502			563
Eliminations and Other whole-of-Government adjustments
Elimination of payments to CBUs and SSPs		(2,480	)		(2,534	)
Payroll Tax elimination		(384	)		(391	)
Other eliminations and adjustments		(212	)		(366	)
Total General Government GFS Expenses		26,733			28,825

Note:
1.	Numbers may not add due to rounding.
2.	Certain expenses such as asset valuation changes are excluded from GFS reporting. In addition, this item removes the effect of cash payments for whole-of-Government schemes such as the State’s share of defined superannuation beneficiary payments reported in Treasury Administered’s expenses. Costs associated with these schemes are accrued annually.

Budget Strategy and Outlook 2006-07 125

7. BALANCE SHEET AND CASH FLOWS

KEY POINTS

• The Queensland Government’s strong financial position is expected to strengthen further in 2006-07. State net worth is projected to rise by $2.644 billion through the year to $99.032 billion.

• Net worth is also forecast to increase each year over the forward estimates period, meeting the Government’s commitment in its Charter of Social and Fiscal Responsibility to maintain and seek to increase total State net worth.

• The General Government sector is well placed to meet all its present and future liabilities. Financial assets are projected to exceed liabilities by $18.489 billion in the General Government sector at 30 June 2007, consistent with the Government’s Charter principles.

• The General Government sector is estimated to record a cash deficit of $796 million in 2006-07, after allowing for $3.656 billion in net asset purchases.

INTRODUCTION

The 2006-07 balance sheet shows the projected assets, liabilities and net worth of the General Government sector as at 30 June 2007. It is important for the Government to maintain a strong balance sheet to provide it with the stability, flexibility and capacity to deal with any emerging financial and economic pressures.

The assets and liabilities in the balance sheet are defined according to the Australian Bureau of Statistics Government Finance Statistics (GFS) standard.

Detailed balance sheet and cashflow information for the General Government sector and the rest of the public sector is contained in Chapter 9.

BALANCE SHEET

Table 7.1 provides a summary of the key balance sheet measures for the General Government sector.

126 Budget Strategy and Outlook 2006-07

Table 7.1

General Government sector: Summary of budgeted balance sheet¹

	2005-06			2005-06			2006-07			2007-08			2008-09			2009-10
	Budget			Est. Act.			Budget			Projected			Projected			Projected
	$ million			$ million			$ million			$ million			$ million			$ million
Financial assets		44,209			47,899			49,489			52,120			54,929			58,227
Non-financial assets		67,632			76,450			80,543			84,573			88,570			92,779
Total Assets2		111,842			124,349			130,032			136,693			143,499			151,006
Borrowings and advances		4,155			2,486			4,419			7,184			9,960			13,375
Superannuation liability		16,192			17,959			19,005			20,065			21,103			22,087
Other provisions and liabilities		6,151			7,515			7,576			7,724			7,921			8,184
Total Liabilities		26,497			27,961			31,000			34,972			38,983			43,645
Net Worth		85,344			96,388			99,032			101,720			104,516			107,361
Net Financial Assets		17,712			19,938			18,489			17,147			15,946			14,582
Net Debt		(17,654	)		(22,130	)		(21,054	)		(19,779	)		(18,422	)		(16,745	)

Notes:
1.	Numbers may not add due to rounding.
2.	For GFS purposes, the State’s assets are classed as either financial or non-financial assets.

Financial assets

The General Government sector holds the full equity of the State’s public enterprises, principally its shareholding in Government-owned corporations, in much the same manner as the parent or holding company in a group of companies. The estimated net investment in public enterprises ($17.117 billion at 30 June 2007) is included in the General Government sector’s financial assets¹.

In the year to 30 June 2007, financial assets are projected to increase by $1.590 billion, attributable principally to increased investment in assets set aside to meet future employee liabilities and higher investment in the State’s public enterprises. This is partially offset by the decline in cash balances to fund the State’s capital program.

¹ Some credit rating agencies and analysts set aside the equity investment in public enterprises in assessing net financial assets. Their view is that as these investments are held for policy purposes and are not readily realisable they cannot, in practice, be used to offset liabilities.

Budget Strategy and Outlook 2006-07 127

Financial assets of $47.899 billion are forecast for 2005-06, or $3.690 billion higher than originally budgeted, reflecting the impact of stronger earnings on investments during the year. At the time of the 2005-06 Budget, investment earnings were based on the long term rate of return of 7.5%. Strong performance in the equities investments in 2005-06 has resulted in an upward revision of investment returns to 16%. Investment earnings in 2006-07 and the outyears are based on long term rate of return assumptions.

Chart 7.1 shows projected General Government sector financial assets by category at 30 June 2007. Investments held to meet future liabilities for superannuation and long service leave comprise the major part of the State’s financial assets.

Chart 7.1
General Government financial assets by category as at 30 June 2007

Non-financial assets

General Government non-financial assets are projected to total $80.543 billion at 30 June 2007. The majority of these non-financial assets are roads, schools, hospitals and other infrastructure used to provide services to Queenslanders. Other non-financial assets held by the State include intangibles (mainly computer software and licences), inventories and land.

Changes in non-financial assets occur for a number of reasons including:

• construction and purchase of assets, either to replace existing assets or provide additional capacity for the State to deliver services

• revaluations of infrastructure assets required under accounting standards

• depreciation and disposals of assets.

128 Budget Strategy and Outlook 2006-07

Non-financial assets in the year ending 30 June 2007 are expected to grow by $4.093 billion. Of this increase, $1.992 billion represents the net acquisition of non-financial assets as part of the Government’s capital program.

The Government has traditionally funded new infrastructure at levels well beyond that of the other states. General Government purchases of non-financial assets per capita have far exceeded the average of the other states and territories for well over a decade (see Chart 3.3 of Chapter 3).

Liabilities

The largest accruing liability in the General Government sector is employee entitlements (principally superannuation and long service leave) which are projected to total $23.671 billion at 30 June 2007. Other liabilities include borrowings and advances received.

Liabilities are budgeted to increase by $3.039 billion in 2006-07, largely on account of growth in the General Government superannuation liability and increased borrowing to support the State’s capital program.

State public sector superannuation liabilities include defined benefit liabilities for current employees and the balance of former scheme members (retirement, resignation etc) who choose to retain their funds within QSuper.

The proportion of the State’s total superannuation liability relating to former scheme members is expected to increase over the forward estimates period as these investment balances grow and new public sector employees join the accumulation fund, as opposed to defined benefit fund.

Over the Budget and forward estimates period, total additional General Government borrowings of $10.523 billion are planned. Of this amount, some $1.9 billion (including $318 million in 2006-07) is to fund equity injections to Queensland’s Government-owned corporations to support expansion of the State’s energy, rail and ports infrastructure, with the remainder required to fund infrastructure projects in the General Government sector.

Other non-equity liabilities include payables, unearned revenue and other liabilities excluding borrowings and provisions.

Budget Strategy and Outlook 2006-07 129

The composition of the General Government sector’s liabilities is illustrated in Chart 7.2.

Chart 7.2
General Government liabilities by category as at 30 June 2007

Net financial assets

The net financial assets (net financial worth) measure is an indicator of financial strength. Net financial assets are defined as financial assets less all existing and accruing liabilities. Financial assets include cash and deposits, advances, financial investments, loans, receivables and equity in public enterprises.

The net financial assets measure is broader than the alternative measure, net debt, which measures only cash, advances and investments on the assets side and borrowings and advances on the liabilities side. Because of its comprehensive nature, the net financial assets measure is more appropriate in an accrual accounting framework.

The net financial assets of the General Government sector for 2006-07 are forecast at $18.489 billion, indicating that the State is well able to meet all its current and recognised future obligations, without recourse to material adjustments in fiscal policy settings.

This position is consistent with the principle in the Government’s Charter of Social and Fiscal Responsibility that the State’s financial assets cover all accruing and expected future liabilities of the General Government sector.

130 Budget Strategy and Outlook 2006-07

Based on current projections, the General Government sector will continue to meet the commitment in the Government’s Charter to ensure that financial assets cover all accruing and expected future liabilities in all years through to 30 June 2010. The level of net financial assets reduces in future years reflecting the State’s increased borrowings to fund the purchase of infrastructure assets (which are not included in the calculation of net financial assets).

Queensland has consistently pursued sound long term fiscal policies such as the full funding of employee superannuation entitlements. The strong balance sheet and high levels of liquidity in the General Government sector clearly demonstrate the success of these policies.

Queensland’s level of liquidity is well in excess of other states as illustrated in Chart 7.3.

Chart 7.3
Ratio of financial assets to liabilities
(excluding investments in public enterprises) as at 30 June 2007
General Government sector

Source: State Budget Papers for QLD, VIC and WA. Mid Year Reviews/Budget Updates for NSW, SA and TAS.

Budget Strategy and Outlook 2006-07 131

Net worth

The Charter of Social and Fiscal Responsibility specifically requires the Government to maintain and seek to increase total State net worth.

The net worth, or equity, of the State is the amount by which the State’s assets exceed its liabilities (which is equivalent to General Government net worth). This is the value of the investment held on behalf of the people of Queensland by public sector instrumentalities.

Changes in the State’s net worth occur for a number of reasons including:

• operating surpluses (deficits) that increase (decrease) the Government’s equity

• revaluation of assets and liabilities as required by accounting standards. Some financial liabilities are revalued on a regular basis. For example, the Government’s accruing liabilities for employee superannuation and long service leave are determined by actuarial assessments

• movements in the net worth of the State’s investments in the Public Non-financial Corporations and Public Financial Corporations sectors

• gains or losses on disposal of assets. Government agencies routinely buy and sell assets. Where the selling price of an asset is greater (less) than its value in an agency’s accounts, the resultant profit (loss) affects net worth.

Net worth of the General Government sector in 2005-06 of $96.388 billion is forecast. This exceeds growth forecasts in the 2005-06 Budget by $11.044 billion primarily as a result of the flow through of significantly higher net worth in the 2004-05 outcome ($11.428 billion).

Net worth is forecast to grow by $2.644 billion to $99.032 billion in 2006-07. This is due to the General Government’s operating surplus and increases in assets as a result of revaluations of major assets as part of the State’s asset revaluation cycle. During the year the Departments of Main Roads, Natural Resources, Mines and Water and Education and the Arts will carry out major revaluations.

Chart 7.4 shows the State’s strong net worth compared with the other states. Queensland’s per capita net worth is 46% greater than the average per capita net worth of the other states.

Budget Strategy and Outlook 2006-07 133

Chart 7.4
Interstate comparison of per capita net worth as at 30 June 2007

Note:
1.	Western Australia values land under roads as part of its overall asset base. This has been adjusted to allow comparison with other jurisdictions which do not value land under roads.

Source: State Budget Papers for QLD, VIC and WA. Mid Year Reviews/Budget Updates for NSW, SA and TAS. Population data from Australian Government Budget Paper No.3, 2006-07.

Net debt

Net debt is the difference between gross debt and financial assets (less equity in public enterprises and non-equity assets). The extent of accumulated net debt is currently the most common measure used to judge the overall strength of a jurisdiction’s fiscal position. High levels of net debt impose a call on future revenue flows to service that debt and meeting these payments can limit Government flexibility to adjust outlays. Excessive net debt can call into question the ability of Government to service that debt.

As shown in Table 7.2, the Queensland General Government sector has negative net debt, that is, a surplus of financial assets over financial liabilities, in comparison to other states, thus indicating the strength of Queensland’s financial position relative to the other states.

Queensland’s negative net debt of $5,155 per capita (net financial assets), compares to the average net debt of $111 per capita (net financial liabilities) in the other states.

134 Budget Strategy and Outlook 2006-07

Table 7.2
Net debt per capita as at 30 June 2007

	QLD			NSW		VIC		WA			SA		TAS
Net debt per capita ($)		(5,155	)		740		549		(493	)		205		(448	)

Source: State Budget Papers for QLD, VIC and WA. Mid Year Reviews/Budget Updates for NSW, SA and TAS. Population data from Australian Government Budget Paper No.3, 2006-07.

In April 2006, the Australian Government eliminated its General Government sector net debt with negative net debt forecast at 30 June 2007. This compares with Queensland, which has had negative net debt in the General Government sector for many years.

CASH FLOWS

The cash flow statement provides information on the Government’s estimated cash flows from its operating, financing and investing activities.

The cash flow statement records estimated cash payments and cash receipts and hence differs from accrued revenue and expenditure recorded in the operating statement. In particular, the operating statement often records revenues and expenses that do not have an associated cash flow (for example, depreciation expense). The timing of recognition of accrued revenue or expense in the operating statement may differ from the actual cash disbursement or receipt (for example, tax equivalents). A detailed reconciliation between the cash flows from operations and the operating statement is provided later in this chapter.

The cash flow statement also records cash flows associated with investing and financing activities that are otherwise reflected in the balance sheet. For example, purchases of capital equipment are recorded in the cash flow statement and impact on the balance sheet through an increase in physical assets.

The cash flow statement provides the cash surplus (deficit) measure which is comprised of the net cash flow from operating activities plus the net cash flow from investment in non-financial assets (or physical capital). This measure is also used to derive the Loan Council Allocation nomination, provided in Chapter 9.

A cash surplus of $3.381 billion is forecast in 2005-06 for the General Government sector, a revision of $3.283 billion from the 2005-06 Budget. The upward revision is primarily the result of improved net flows from operating activities and lower expenditure on the capital program.

The cash result is forecast to move into deficit in 2006-07 and the outyears. The cash deficit for 2006-07 is $796 million.

Budget Strategy and Outlook 2006-07 135

Apart from the cash impact of smaller recurrent operating surpluses relative to 2005-06, the major factor contributing to lower cash results is the planned capital expansion. Total General Government capital purchases of $3.958 billion are budgeted for 2006-07.

Over the period 2006-07 to 2009-10, net additions (i.e. after deducting depreciation and asset sales) to the General Government capital stock of close to $7.4 billion are planned. This substantial investment in additional capital will impact on the GFS cash result.

Table 7.3 provides summary cash flow information for the General Government sector for 2005-06, 2006-07 and the outyears. Detailed cash flow tables are included in Chapter 9.

Table 7.3
General Government sector: Summary of budgeted cash flows¹

	2005-06			2005-06			2006-07			2007-08			2008-09			2009-10
	Budget			Est. Actual			Budget			Projected			Projected			Projected
	$ million			$ million			$ million			$ million			$ million			$ million
Cash receipts from operating activities		27,148			30,318			29,890			30,787			31,669			32,851
Cash payments for operating activities		(23,731	)		(24,378	)		(27,030	)		(27,947	)		(28,832	)		(30,152	)
Net cash flow from operating activities		3,417			5,940			2,860			2,840			2,837			2,699
Net cash flows from investing activities		(4,846	)		(6,882	)		(5,246	)		(5,496	)		(5,590	)		(5,931	)
Net cash flows from financing activities		813			(860	)		1,785			2,671			2,747			3,320
Net increase/(decrease) in cash held		(617	)		(1,801	)		(602	)		15			(6	)		88
Derivation of GFS cash surplus (deficit)
Net cash flow from operating activities		3,417			5,940			2,860			2,840			2,837			2,699
Less net cash flow from investments in non-financial assets		3,319			2,559			3,656			3,626			3,647			3,869
Equals GFS cash surplus (deficit)		98			3,381			(796	)		(786	)		(809	)		(1,169	)

Note:
1.	Numbers may not add due to rounding.

136 Budget Strategy and Outlook 2006-07

Cash flows from operating activities

Table 7.4 provides a disaggregation of operating cash flows.

Table 7.4
General Government sector: Cash flows from operating activities¹

	2005-06			2005-06			2006-07
	Budget			Est. Act.			Budget
	$ million			$ million			$ million
Receipts from operating activities
Taxes received		6,842			7,348			7,870
Grants and subsidies received		13,216			13,761			13,768
Sales of goods and services		2,669			2,892			2,993
Other receipts		4,420			6,317			5,259
Total receipts from operating activities		27,148			30,318			29,890
Payments for operating activities
Payments for goods and services		(16,631	)		(16,783	)		(19,161	)
Grants and subsidies		(6,201	)		(6,705	)		(7,036	)
Interest		(233	)		(187	)		(223	)
Other payments		(666	)		(703	)		(609	)
Total payments for operating activities		(23,731	)		(24,378	)		(27,030	)
Net cash inflows from operating activities		3,417			5,940			2,860

Note:
1.	Numbers may not add due to rounding.

Cash inflows from operating activities include receipts from taxes, grants from the Australian Government, fees and charges levied on the provision of goods and services, interest receipts from investments and dividend and tax receipts from Public Non-financial and Financial Corporations.

Taxes received by the General Government sector are forecast at $7.870 billion in 2006-07, an increase of 7% or $522 million on the 2005-06 estimated actual of $7.348 billion. This reflects the impacts of taxation initiatives announced prior to and in this Budget, the continued strength of property market activity on duty revenue and employment and wage growth on payroll tax revenue.

Grants and subsidies receipts of $13.768 billion in 2006-07 remain at similar levels to 2005-06.

Budget Strategy and Outlook 2006-07 137

Other receipts include investment earnings, dividends and tax equivalents received from Government-owned corporations (GOCs) and royalties. Other receipts are expected to decrease in 2006-07 by $1.058 billion to $5.259 billion. This largely reflects a return to the long term average earnings rate of 7.5% on investments. Strong performance in the equities investments resulted in an upward revision to investment return to 16% in 2005-06. Investment earnings in 2006-07 and the outyears are based on long term rate of return assumptions. Partially offsetting this decline is an increase in dividends and tax equivalent receipts from GOCs.

Cash outflows represent payment for goods and services, wages and salaries, finance costs and grants and subsidies paid to households, businesses and other Government agencies. In 2006-07 the largest cash disbursement is employee expenses at $13.030 billion or 48.2% of total cash payments from operating activities.

In 2006-07, payments for goods and services, including wages and salaries, are expected to increase 14.2% to $19.161 billion. This increase reflects payments pertaining to employer superannuation (accumulation scheme) contributions and State share of superannuation beneficiary payments, increased employee entitlements in line with enterprise bargaining agreements and growth related to new and enhanced services.

Cash payments for grants and subsidies are expected to increase by $331 million or 4.9% in 2006-07 to $7.036 billion. This item includes recurrent grants paid by the Australian Government through the State to non-state schools, grants paid to industry and grants to non-profit institutions. This item also includes community service obligation payments to the energy sector and QR and capital grants which are largely paid to local government authorities to fund capital works.

Other payments mainly comprise personal benefit payments and other transfer payments. This item is estimated to decline by 13.4% in 2006-07 to $609 million. This is primarily attributable to a decline in personal benefit payments in 2006-07 across a range of departments and the expensing of research and development costs by Queensland Health in 2005-06.

138 Budget Strategy and Outlook 2006-07

Cash flows from investments

Cash flows from investments include both financial and non-financial assets. Table 7.5 provides a disaggregation of investment cash flows into the different types.

Table 7.5
General Government sector: Cash Flows from investing activities

	2005-06			2005-06			2006-07
	Budget			Est. Act.			Budget
	$ million			$ million			$ million
Net payments for investments in non-financial assets		(3,319	)		(2,559	)		(3,656	)
Net cash flows from investing activities in financial assets for policy purposes		(271	)		(694	)		(318	)
Net cash flows from investing activities in financial assets for liquidity purposes		(1,256	)		(3,629	)		(1,272	)
Net increase/(decrease) in cash held from investing activities		(4,846	)		(6,882	)		(5,246	)

The largest cash disbursement for the Government, outside of recurrent operations, is for investments in non-financial assets. This represents the Government’s capital works program which provides for infrastructure such as schools, hospitals and roads.

Cash outflows from investing in non-financial assets are expected to increase to $3.656 billion in 2006-07 from $2.559 billion in 2005-06, an increase of 42.9%.

The cash expenditure on investment in non-financial assets differs from the estimates of capital works expenditure in Budget Paper No. 3 – Capital Statement. The estimates contained in that paper are on a gross basis and incorporate both departmental agencies and Government-owned corporations. In addition, Budget Paper No. 3 only includes capital expenditure, including capital grants, within Queensland and does not offset proceeds from asset sales.

Apart from investing in new capital expenditure, governments also manage financial assets in order to finance overall expenditures. In addition, Queensland manages financial assets set aside to provide for future employee benefits (for example, superannuation and long service leave). The Government manages its financial assets through a combination of borrowing or investing funds and reducing or increasing equity in government or private sector entities. Investments in financial assets include activities relating to both policy and liquidity.

Budget Strategy and Outlook 2006-07 139

Investments for policy purposes include net equity injections into Government and other business enterprises and the net cash flow from disposal or return of equity in Government business enterprises.

Cash outflows from investments for policy purposes for 2005-06 of $694 million reflect equity transactions by the General Government sector with Public Non-financial and Financial Corporations. In 2005-06, this includes the injection of $300 million to Central Queensland Port Authority for the RG Tanna Coal Terminal, $250 million to Enertrade to meet commitments associated with State Power Purchase Agreements, $86 million to QR for the Citytrain MetTrip initiative and $53 million to SunWater for the Burdekin Moranbah Pipeline project.

Cash outflows from investments for policy purposes for 2006-07 of $318 million also reflect equity transactions with public enterprises, in particular additional equity injections of $298 million into QR for the Citytrain MetTrip and South East Queensland Infrastructure Plan and Program initiatives and $20 million into Queensland Motorways.

Cash flows from investments for liquidity purposes represent net investment in financial assets such as to cover superannuation and other employee entitlements.

The 2005-06 estimated cash outflows from investments in financial assets for liquidity purposes of $3.629 billion is substantially higher than forecast in the 2005-06 Budget and primarily reflects the increase in interest earnings on investments from 7.5% to 16%.

The reinvestment of interest earnings, investment of contributions set aside for the Government’s defined benefit superannuation scheme and employee entitlements and investing of the Treasurer’s cash balances in short term deposits with Queensland Treasury Corporation have resulted in higher cash outflows for 2005-06. These outflows are partially offset by payments for employee entitlements during the year.

Cash outflows from investments in financial assets for liquidity purposes are estimated to be $1.272 billion in 2006-07. The decline from 2005-06 reflects reinvestment of interest earnings based on the long term rate of return of 7.5% and a higher State share of superannuation beneficiary payments. In 2005-06, the State’s share of superannuation beneficiary payments were reduced in line with the funding recommendation outlined in the most recent actuarial investigation.

140 Budget Strategy and Outlook 2006-07

Cash flows from financing activities

Cash flows generated from financing activities are outlined in Table 7.6 below.

Table 7.6
General Government sector: Cash flows from financing activities

	2005-06			2005-06			2006-07
	Budget			Est. Act.			Budget
	$ million			$ million			$ million
Net cash flows from advances		(14	)		(18	)		(15	)
Net cash flows from borrowing (net)		827			(842	)		1,800
Net increase/(decrease) in cash held from financing activities		813			(860	)		1,785

Cash flows from financing activities include cash flows from net borrowing (increase in borrowing less redemption), net advances (gross investment in new loans less redemption of loans issued) and other financing (net movement in government securities on issue).

In 2005-06 net cash outflows from financing activities are estimated at $860 million. This represents the extinguishment of debt by the General Government as a result of strong cash surpluses in 2004-05 and 2005-06.

During 2005-06, $493 million of Queensland Health’s debt was extinguished as part of the Health Action Plan. The completion of the Burnett Water Dam and its subsequent sale to SunWater also resulted in the retirement of $188 million of associated debt by the Department of State Development, Trade and Innovation.

Cash inflows from financing activities for 2006-07 are estimated at $1.785 billion, reflecting borrowings to partially fund the General Government’s capital program of $3.958 billion.

Budget Strategy and Outlook 2006-07 141

RECONCILIATION OF OPERATING CASH FLOWS TO THE OPERATING STATEMENT

Table 7.7 provides a reconciliation of the cash flows from operating activities to the operating result for the General Government sector for the Budget year.

Table 7.7
General Government sector: Reconciliation of cash flows
from operating activities to accrual operating activities

	2005-06			2005-06			2006-07
	Budget			Est. Act.			Budget
	$ million			$ million			$ million
GFS accrual revenue		26,604			29,586			29,070
Plus/(less) movement in tax equivalent and dividend receivables		(228	)		(449	)		99
Plus GST receipts		845			904			907
Plus/(less) movement in other receivables		(73	)		277			(186	)
Equals GFS cash receipts		27,148			30,318			29,890
GFS accrual expense		25,670			26,733			28,825
(Less) non-cash items
Depreciation and amortisation expense		(1,617	)		(1,632	)		(1,754	)
Accrued superannuation expense		(1,534	)		(1,468	)		(1,586	)
Accrued employee entitlements		(574	)		(311	)		(328	)
Other accrued costs		(230	)		(404	)		(241	)
Plus Superannuation benefits paid — defined benefit		420			55			430
Plus/(less) movement in employee entitlement provisions		426			193			203
Plus/(less) GST paid		866			941			936
Plus/(less) movement in other provisions and payables		304			271			545
Equals GFS cash expenditure		23,731			24,378			27,030

The main difference between the accrual operating statement and the cash flow relates to the timing of cash payments and receipts and their recognition in accrual terms and the inclusion of non-cash expenses and revenues. The largest difference is on the expenses (expenditure) side, with large non-cash expenses associated with depreciation and superannuation. Differences due to the timing of receipt or payment of amounts are recorded as either a receivable or payable in the balance sheet.

142 Budget Strategy and Outlook 2006-07

8. INTERGOVERNMENTAL FINANCIAL RELATIONS

KEY POINTS

• Following the introduction of the GST in 2000 and the abolition of a number of state taxes, the states have become increasingly reliant on Australian Government funding. Approximately 46% of Queensland’s revenue will be sourced from Australian Government funding in 2006-07.

• The Commonwealth Grants Commission’s 2006 Update Report recommended a $174.1 million reduction in Queensland’s underlying share of GST. This reduction is largely due to relatively strong growth in Queensland’s capacity to raise stamp duty on property conveyances. The Commonwealth Grants Commission’s latest relativity assessments imply a reduction in Queensland’s share of GST over the next few years.

• The Australian Government will cease National Competition Policy (NCP) payments to the states from 30 June 2006. This will mean a reduction in funding for Queensland of $178.7 million in 2006-07.

• Revenue reductions for Queensland associated with the abolition of business taxes covered by the Intergovernmental Agreement of 1999 will be $340 million in 2006-07, increasing to $828 million in 2009-10.

• Queensland’s reduced GST funding share combined with the cessation of NCP payments and the revenue lost through abolishing business taxes will limit the Government’s ability to fund further tax reductions.

• Queensland has not benefited as much from the introduction of the GST as is often claimed. On a per capita basis, Queensland taxpayers are expected to be $309 better off in 2006-07 as a result of lower taxes and other reforms associated with the introduction of the GST. This is less than the average benefit of $329 per capita across all states and less than the $330 per capita benefit taxpayers in New South Wales are expected to receive.

• The Queensland Government provides strong support to the Local Government sector. In 2006-07, the Queensland Government will provide $730.9 million in grants to Queensland local government authorities, comprising 63.1% of grant funding for local government in Queensland.

Budget Strategy and Outlook 2006-07 143

COMMONWEALTH-STATE FINANCIAL RELATIONS

Commonwealth-state¹ financial relations are characterised by a mismatch between the revenue-raising capacity and the expenditure responsibilities of the Australian and state governments. This mismatch is known as vertical fiscal imbalance. The Australian Government collects the major share of taxation revenues and, increasingly, states must rely on grants from the Australian Government to meet expenditure requirements.

Chart 8.1 shows all states’ funding sources for 1999-2000 and 2006-07 and highlights the states’ increased reliance on Australian Government funding since the introduction of the Australian Government’s national tax reforms in 2000. In 1999-2000 the states received 35% of their revenues from the Australian Government. This is estimated to increase to 47% in 2006-07. In contrast, the proportion of the states’ revenues from state taxes has reduced from 40% in 1999-2000 to an estimated 32% in 2006-07.

Chart 8.1
Revenue sources, all states, 1999-2000 and 2006-07¹

Notes:
1.	2006-07 data are estimates.
2.	Includes user charges, interest earnings, contributions from trading enterprises and mining revenue.
Source: ABS Government Finance Statistics Cat No. 5512.0 and state and Australian Government Budget Papers.
1	In this chapter, the term ‘state’ refers to Australian states and territories.

144 Budget Strategy and Outlook 2006-07

Queensland’s reliance on Australian Government funding, as shown in Chart 8.2, follows the national trend, with the share of total funding sourced from the Australian Government rising from 35% in 1999-2000 to an estimated 46% in 2006-07. Meanwhile state taxation revenue has decreased from 29% of total revenue in 1999-2000 to an estimated 27% in 2006-07.

Chart 8.2
Revenue sources, Queensland, 1999-2000 and 2006-07¹

Notes:
1.	2006-07 data are estimates.
2.	Includes user charges, interest earnings, contributions from trading enterprises and mining revenue.
Source: ABS Government Finance Statistics Cat No. 5512.0 and Queensland Budget estimates.

Queensland’s reliance on Australian Government funding is expected to further increase in the future, as planned stamp duty reforms are implemented.

INSTITUTIONAL AND GOVERNANCE ARRANGEMENTS

The framework for Commonwealth-state financial arrangements includes:

• the Ministerial Council for the Reform of Commonwealth-State Financial Relations

• the Australian Loan Council

• the Commonwealth Grants Commission.

Budget Strategy and Outlook 2006-07 145

Ministerial Council

The Ministerial Council for the Reform of Commonwealth-State Financial Relations (Ministerial Council) comprises the Australian Government and state government treasurers and was established in June 1999 to oversee the operation of the Intergovernmental Agreement on the Reform of Commonwealth-State Financial Relations (IGA).

The Ministerial Council generally meets towards the end of the first quarter of every calendar year and considers matters such as:

• GST policy and administration issues

• recommendations of the Commonwealth Grants Commission and Heads of Treasuries and the Australian Treasurer’s advice regarding estimated payments to states

• taxation issues relevant to Commonwealth-state financial relations

• Specific Purpose Payments to the states

• competition and economic reform matters.

Australian Loan Council

The Australian Loan Council comprises the Australian Government Treasurer and state treasurers. It meets immediately following the annual Ministerial Council meeting. Nominations for Loan Council Allocations (LCAs) for 2006-07 put forward by the Australian and state governments reflect current best estimates of non-financial public sector deficits or surpluses. For 2006-07, the Loan Council endorsed total LCAs of $27.4 billion (a projected public sector surplus). This amount reflects a surplus of $36.0 billion for the Australian Government and a net deficit of $8.6 billion collectively for the states.

Queensland’s LCA deficit for 2006-07 is estimated at $4.219 billion. This figure incorporates a funding requirement for the State’s $10.136 billion capital program in 2006-07. Borrowings in the General Government sector will be consistent with the Government’s commitments in the Charter of Social and Fiscal Responsibility. In recognition of Queensland’s capital requirements, the Charter allows borrowing for capital purposes where the costs of borrowing can be serviced within the context of an overall operating surplus.

146 Budget Strategy and Outlook 2006-07

Commonwealth Grants Commission

The role of the Commonwealth Grants Commission (CGC) is to advise the Australian Government on the distribution of GST revenue among the states. Under its terms of reference the CGC is required to determine its recommendations on the basis of horizontal fiscal equalisation (HFE), as detailed in Box 8.1. Each year the CGC updates the financial, economic and demographic data that underpin its recommendations.

Box 8.1
Horizontal Fiscal Equalisation

The Australian Government distributes GST revenue to states based on the principle of horizontal fiscal equalisation (HFE), using per capita relativities recommended by the Commonwealth Grants Commission (CGC). Queensland supports the principle of HFE and the role of the independent CGC in determining each state’s share of GST revenue.

The principle of HFE is that state governments should receive funding from the Australian Government such that, if each made the same effort to raise revenue from its own sources and operated at the same level of efficiency of service delivery, each would have the capacity to provide services to the same standard.

HFE provides the capacity for all communities to have access to a similar level of state government services regardless of where they are located. A distribution based on HFE principles recognises the different financial capacities of the states, particularly that some states have inherently greater capacity to raise revenue and that some states have inherently greater costs to meet in providing services to an Australian standard.

If the distribution of the GST to the states were on any basis other than HFE, some taxpayers would be forced to accept either a lower standard of state services or a higher level of state taxation than other taxpayers in similar circumstances.

More information on HFE can be accessed through the Queensland Government Treasury website: www.treasury.qld.gov.au/gst-factsheets or the Commonwealth Grants Commission website: www.cgc.gov.au.

2010 Review of State Revenue Sharing Relativities — Progress Report

The CGC undertakes a substantive review of its methodology every five years, with the next review due to be completed in 2010. The terms of reference for the 2010 review direct the CGC to simplify its processes and introduce a more streamlined approach to HFE, based on a simplified methodology and better quality data. The 2010 review is more far reaching than previous reviews and includes proposals for a substantial change in the way the CGC structures its assessments.

Under the terms of reference for the review, the CGC is required to make progress reports to Ministerial Council in 2006 and 2007. The CGC presented its first progress report at the 2006 Ministerial Council meeting and has subsequently made the report publicly available.

Budget Strategy and Outlook 2006-07 147

During 2006 the CGC will seek views from the states on the nature and scope of HFE, progress its work on devising more aggregated assessment categories and continue the examination of the quality and reliability of major data sets. The CGC’s 2007 report to the Ministerial Council will outline the findings and proposals from its work program in 2006.

AUSTRALIAN GOVERNMENT FUNDING TO STATES

Australian Government payments to the states in 2006-07 are expected to total $66.975 billion, an increase of $2.829 billion or 4.4% compared with 2005-06.

Table 8.1 compares estimated Australian Government payments to the states in 2006-07 with those for 2005-06.

Table 8.1
Estimated Australian Government payments to the states, 2005-06 and 2006-07¹

					Change			Change			Change
	2005-06		2006-07		Nominal			Real2			Real2 Per
	$ million		$ million		Terms %			Terms %			Capita %
General Purpose Payments
GST Revenue		36,813		39,130		6.3			3.2			1.9
Budget Balancing Assistance		44		—		n.a.			n.a.			n.a.
Compensation for GST deferral		127		17		(86.5	)		(86.9	)		(87.0	)
Residual Adjustment Amounts		51		—		n.a.			n.a.			n.a.
National Competition Policy Payments		820		—		n.a.			n.a.			n.a.
Total General Purpose Payments		37,855		39,147		3.4			0.4			(0.8	)
Specific Purpose Payments
SPPs ‘to’ the States		19,399		20,464		5.5			2.4			1.2
SPPs ‘through’ the States		6,891		7,363		6.8			3.7			2.5
Total Specific Purpose Payments		26,290		27,827		5.8			2.8			1.5
Total Payments		64,146		66,975		4.4			1.4			0.1

Notes:
1.	Numbers may not add due to rounding.
2.	Deflated by the 2006-07 year average national inflation forecast of 3.0% and Australian population growth of 1.25%.
Source: Australian Government Budget Paper No.3, 2006-07.

General Purpose Payments

General purpose payments comprise GST revenue, Budget Balancing Assistance, compensation for the deferral of GST revenue, residual adjustment amounts and (until 2005-06) National Competition Policy payments. General purpose payments from the Australian Government are expected to increase from $37.855 billion in 2005-06 to $39.147 billion in 2006-07, an increase of 3.4% in nominal terms. In real per capita terms, general purpose payments are expected to decrease by 0.8%. The distribution of GST revenue is discussed in Box 8.2.

148 Budget Strategy and Outlook 2006-07

National Competition Policy payments

National Competition Policy payments to the states, which reflected the economic benefits of the National Competition agenda, will cease on 30 June 2006. This will mean a reduction in funding for Queensland of $178.7 million in 2006-07.

National Reform Agenda

Australia has benefited from various structural reforms implemented by the Australian and state governments over the past decade.

Current efforts are focussed on sustaining Australia’s strong economic performance through productivity growth and increasingly competitive, well-functioning markets. In February this year, the Council of Australian Governments (COAG) supported a new National Reform Agenda and the creation of a COAG Reform Council (CRC) to replace the National Competition Council.

The National Reform Agenda (NRA) will be developed around three streams:

• human capital – aimed at improving workforce participation and productivity by focussing on health, education and training and work incentives

• competition – focussed on further reforms in energy, transport, infrastructure regulation and planning

• reducing the regulatory burden.

The NRA will be supported by Intergovernmental Action Plans (IAPs) to be developed by Senior Officials in 2006. The IAPs to be agreed by COAG will set out agreed outcomes and commitments, progress measures, actions and milestones. The CRC will report annually to COAG on the progress in implementing the NRA.

The Australian Government has indicated it will provide funding to the states on a case-by-case basis once specific implementation plans have been developed. Payments to the states and, where appropriate, to local government, will be linked to agreed actions or progress measures and achieving demonstrable economic benefits.

Detailed funding arrangements that ensure a fair sharing of the costs and benefits of reform will need to be developed as part of the further work being done to progress implementation of the NRA.

Budget Strategy and Outlook 2006-07 149

Box 8.2
Distribution of the GST in Australia

The Intergovernmental Agreement on the Reform of Commonwealth-State Financial Relations, signed by all states and territories (states) in 1999, specified that GST revenue will be distributed among the states on an untied basis in accordance with the principle of horizontal fiscal equalisation (HFE). Prior to the introduction of the GST, HFE underpinned the distribution of federal financial assistance grants to the states.

HFE is intended to ensure that each state government has the same financial capacity to provide the same standard of services to their populations. The Commonwealth Grants Commission (CGC) provides independent and objective advice to the Australian Government on how GST revenue should be distributed to the states, in accordance with the principles of HFE.

The distribution of GST revenue that occurs under HFE works to counteract the differences between states that arise for reasons that are beyond their control. The CGC takes into account the entire range of state revenues and the costs involved in delivering state services.

For example, smaller states suffer diseconomies of scale because of their population size. States like Queensland and Western Australia suffer disadvantages associated with population dispersion which affect their ability to provide services in regional and remote areas. Wage differentials between states affect the cost of providing services. Some states have a greater abundance of natural resources than others, while some states have stable, developed economies compared with others that have growing economies. These are some of the key issues that are taken into consideration by the CGC to ensure all states get a fair share of GST revenue.

In aggregate, the CGC currently considers Queensland requires more than a population share of GST revenue, while New South Wales and Victoria require less than a population share of GST revenue. However, the latest CGC assessment implies that Queensland’s share of GST revenue is expected to decline over the next few years.

The collection of GST is not related to the distribution of the GST revenue

There has been consistent criticism by New South Wales that it does not receive a fair share of GST. New South Wales has argued that it should receive most if not all of the GST revenue it claims is paid by New South Wales taxpayers. The GST is a nationally based tax and to suggest that it should be distributed back to the states on the basis of where it is derived is analogous to saying that the Australian Government income tax should be allocated across the states on the basis of where it was generated. No-one expects this to happen as it would be inequitable and unfair if wealthy states retained all the national taxes that they contribute. In any case, it is impossible to say how much of the GST is attributable to one state or another. The tax data required to make such an assessment simply does not exist, as GST revenue can be generated in one state but reported in another.

Even if it were able to be measured, distributing tax revenue based on where it is generated would mean that Australians would not enjoy fair access to services because each state government would not have the capacity to provide services to their populations to the same standard.

150 Budget Strategy and Outlook 2006-07

The distribution of GST revenue does not act as a disincentive for good performance

Some states have asserted that the current allocation method compensates for poor policy performance or provides a disincentive for states to pursue efficiency improvements because the gains they make are lost through the GST revenue distribution process. However, as noted above, the distribution of GST revenue is based on the inherent differences between states rather than economic performance.

The CGC developed a case study which demonstrates that any state improving its service delivery is not disadvantaged by the distribution of GST revenue and in fact may receive more GST revenue:

Suppose Victoria was able to improve the efficiency of its hospitals to such an extent that it reduced its actual expenses by 10 per cent. Its cost of providing Inpatient Services in 2004-05 was $4.558 billion, so its improved efficiency would have generated budget savings of $456 million...

...A reduction in Inpatient Services average expenses of $456 million in 2004-05 would produce a (very small) redistribution of $1.9 million to the benefit of States assessed to have cost advantages in Inpatient Services in 2004-05. They were: Victoria (its share of GST revenue would increase by $0.9 million); Western Australia ($0.2 million); and the ACT ($0.2 million).

Source: CGC, 2006, Relative Fiscal Capacities of the States 2006.

In other words, Victoria would benefit from its efficiency savings of $456 million and improve its GST revenue share by $0.9 million.

States which experience higher than average economic growth should expect, other things being equal, to see their share of GST revenue fall. This is an intended consequence of the current GST distribution process (see below) and is a key aspect of maintaining equity between the states.

The process for distribution of the GST is dynamic and independent

The CGC uses the latest available data in its assessments, which reflect the relative economic circumstances of the states. For example, in the 2006 Update Report, the CGC found that Queensland had a relatively greater capacity to raise revenue from stamp duty on conveyances and mining revenue. This greater revenue raising capacity, amongst other things, is reducing Queensland’s share of GST funding.

This declining share of GST revenue may impact the State’s capacity to provide additional services, or enhance existing services. However, Queensland recognises that it is fair for a state that has an increased capacity to raise revenue from its own sources to have that capacity recognised when GST revenue is distributed to the states.

The CGC is currently conducting a review, due in 2010, of the processes used to determine the distribution of the GST revenue. In this review the CGC, working with states, is seeking to make the process simpler and more transparent and ensure that the data used in the assessments is more accurate, consistent and comparable across states. A progress report on the 2010 review process was provided to the Ministerial Council for Commonwealth-State Financial Relations in March 2006 and is available on the CGC’s web site: www.cgc.gov.au.

Budget Strategy and Outlook 2006-07 151

Specific Purpose Payments

Specific Purpose Payments (SPPs) are provided by the Australian Government to states for particular purposes under conditions negotiated between Governments. Separate agreements are negotiated for each SPP, with the agreements covering both funding and policy issues.

SPP funding to states is provided either ‘to’ or ‘through’ the state. An SPP ‘to’ a state assists in funding areas of state responsibility – for example, health and disability services. Payments ‘through’ the state are passed to other service providers such as non-government schools and local governments.

Total SPPs in 2006-07 are expected to be $27.827 billion. This represents an increase of $1.537 billion, or 5.8% in nominal terms, over 2005-06. Payments to the states increased by 5.5%, which represents an increase of 1.2% in real per capita terms. SPPs through the states are growing at a slightly faster rate and are expected to increase by 6.8% in nominal terms, a real per capita increase of 2.5%.

QUEENSLAND’S SHARE OF COMMONWEALTH FUNDING

Table 8.2 shows the expected shares of total Australian Government payments to each state for 2006-07 compared with each state’s population share. Queensland’s expected share of total Australian Government funding of 19.8% is marginally greater than its population share of 19.7%.

Table 8.2
Relative shares of payments to the states, 2006-07¹

	Share of		Share of		Relative
	payments		population		share2
	%		%		%
New South Wales		29.7		33.2		89.7
Victoria		22.2		24.7		90.1
Queensland		19.8		19.7		100.6
Western Australia		11.0		10.0		110.1
South Australia		8.5		7.5		113.5
Tasmania		3.3		2.4		141.1
Australian Capital Territory		1.8		1.6		112.2
Northern Territory		3.6		1.0		354.6

Notes:
1.	Numbers may not add due to rounding.
2.	A state’s relative share is measured as its funding share expressed as a percentage of its population share.
Source:		Australian Government Budget Paper No. 3, 2006-07.

Table 8.3 details Queensland’s share of estimated Australian Government payments in 2006-07 and the difference from its population share.

152 Budget Strategy and Outlook 2006-07

Queensland expects to receive $250.2 million more than a per capita share of GST revenue, including compensation for GST revenue deferral, in 2006-07. This is partly offset by the $169.7 million less than a per capita share of SPP funding Queensland is expected to receive. In terms of total Australian Government funding, Queensland expects to receive $80.6 million more than a per capita share in 2006-07.

Table 8.3
Queensland’s share of estimated Australian Government payments 2006-07¹

			Difference from
	Queensland’s		Population
	Share		Share
	%		$ million
General Purpose Payments
GST Revenues		20.4		250.2
Compensation for GST deferral		20.3		0.1
Total General Purpose Payments		20.4		250.3
Specific Purpose Payments
SPPs ‘to’ the State		19.0		(138.9	)
SPPs ‘through’ the State		19.3		(30.7	)
Total Specific Purpose Payments		19.1		(169.7	)
Total Australian Government Payments		19.8		80.6

Note:
1.	Numbers may not add due to rounding.
Source: Australian Government Budget Paper No. 3, 2006-07.

2006 Relativities update

The Australian Government accepted the Commonwealth Grants Commission’s (CGC) 2006 Update Report on State Revenue Sharing Relativities (2006 Update Report) as the basis for the distribution of the GST revenue to the states in 2006-07. The March 2006 meeting of the Ministerial Council endorsed the CGC’s recommendations for payments relating to 2006-07.

In the 2006 Update Report, the CGC recommended an underlying decrease in Queensland’s share of GST revenue of $174.1 million in 2006-07 (Table 8.4). The recommended decrease in Queensland’s share of grants is largely due to relatively strong growth in Queensland’s capacity to raise stamp duty on property conveyances.

The 2006 Update Report outcome demonstrates the responsiveness of the CGC’s methodology to changes in the relative circumstances of states. The CGC’s latest relativity assessments imply a reduction in Queensland’s GST share over the next few years.

Budget Strategy and Outlook 2006-07 153

Table 8.4
Components of underlying change in states’ share of GST revenue
2005-06 to 2006-07^1,2

	NSW		VIC		QLD		WA		SA		TAS		ACT		NT
	$ million		$ million		$ million		$ million		$ million		$ million		$ million		$ million
Revenue		-9.2		199.2		-144.7		-32.9		-33.3		7.0		-8.2		22.1
Expenditure		101.4		17.5		-38.8		-49.0		-22.2		-15.0		9.5		-3.4
SPPs		-19.7		4.4		9.4		-7.2		0.2		4.0		0.7		8.2
Total		72.7		221.4		-174.1		-89.3		-55.4		-4.0		1.9		26.8

Note:
1.	Numbers may not add due to interactions between Expenditure and SPP assessments.
2.	Following the release of the CGC 2006 Update Report, minor changes were made to use the corrected data on the value of property transfers provided by South Australia. These are not included in this table.
Source: Commonwealth Grants Commission 2006 Update Report on State Revenue Sharing Relativities.

Review of state taxes

All Australian states signed the Intergovernmental Agreement on the Reform of Commonwealth-State Financial Relations (IGA) in June 1999. The stated objectives of the IGA are:

• the achievement of a new national tax system, including the elimination of a number of existing inefficient taxes which are impeding economic activity

• the provision to state and territory governments of revenue from a more robust tax base that can be expected to grow over time

• an improvement in the financial position of all state and territory governments, once the transitional changes have been completed, relative to that which would have existed had the current arrangements continued.

The IGA also contains a number of reform requirements of both the states and the Australian Government. For the states, these requirements include:

• abolishing bed taxes, from 1 July 2000

• abolishing financial institutions duty, from 1 July 2001

• abolishing stamp duty on quoted marketable securities, from 1 July 2001

• abolishing debits tax by 1 July 2005, subject to review by Ministerial Council

• reviewing the need for retention of stamp duty on non-residential conveyances, leases, mortgages, debentures, bonds and other loan securities, credit arrangements, instalment purchase arrangements and rental arrangements, cheques, bills of exchange and promissory notes and unquoted marketable securities, by 2005.

154 Budget Strategy and Outlook 2006-07

Queensland has met all of the IGA requirements. Queensland abolished stamp duty on quoted marketable securities on 1 July 2001 and had never imposed bed taxes or financial institutions duty. Debits tax was abolished on 1 July 2005.

In 2005, Queensland participated in a comprehensive review of the need to retain the stamp duties identified in the IGA. At the conclusion of this review, Queensland decided some of the additional revenue provided by the GST could be used to abolish these stamp duties. Queensland also found the strong demand for infrastructure and a higher standard of services in the State was at least as important as abolishing these stamp duties. Therefore, Queensland committed to a program for abolishing a majority of duties listed in the IGA over a timeframe which will allow the State to also provide additional infrastructure and enhanced services to Queenslanders.

Impact of IGA reforms

Revenue reductions for Queensland associated with the abolition of business taxes covered by the Intergovernmental Agreement of 1999 will be $340 million in 2006-07, increasing to $828 million in 2009-10. Details of Queensland’s schedule for the abolition of these state taxes can be found in Chapter 5.

It has been claimed that Queensland receives the greatest benefit from GST revenue on the basis that it receives the largest amount of GST revenue in excess of the Guaranteed Minimum Amount (GMA). The GMA is a measure of the amount of revenue which the states would have received if the GST had not been introduced. Comparing GST revenue in excess of the GMA is an oversimplified way of looking at the impact of IGA reforms, as it does not account for the differences in tax regimes prior to the abolition of state taxes.

The revenue foregone due to abolishing these taxes, along with the cost of providing First Home Owner Grant (FHOG) Scheme payments, is included in the calculation of the GMA. While Queensland receives a relatively higher amount of GST revenue in excess of the GMA, states such as New South Wales have larger amounts of tax reductions included in their GMA.

Table 8.5 shows the Australian Government’s estimated impact of IGA reforms on a per capita basis for each state in 2006-07. This table shows that Queensland taxpayers have benefited less than the average from the IGA reforms. This is because Queensland did not impose financial institutions duty or bed taxes, which other states were required to abolish, prior to the IGA reforms.

When the complete picture is considered, it becomes apparent Queenslanders have received the second lowest amount of benefit, on a per capita basis, from the national tax reforms. In contrast, as shown in Table 8.5 below, residents in states such as New South Wales have gained significantly more benefit, largely as a result of the tax abolitions required under the IGA.

Budget Strategy and Outlook 2006-07 155

Table 8.5
Impact of IGA reforms in each State, per capita, 2006-07^{1, 2}

			First Home		GST in
	Taxes		Owner Grant		Excess of
	Abolished2		Scheme		GMA		Total
	$		$		$		$
New South Wales		264.4		42.5		23.3		330.2
Victoria		195.9		58.2		58.4		312.5
Queensland		101.6		44.9		162.8		309.3
Western Australia		161.5		62.9		131.0		355.5
South Australia		126.4		43.5		124.4		294.3
Tasmania		104.3		38.0		209.3		351.6
Australian Capital Territory		206.3		49.2		184.1		439.7
Northern Territory		213.7		49.8		588.5		852.0
Average		189.6		49.0		90.4		329.1

Notes:
1.	Numbers may not add due to rounding.
2.	Includes the abolition of certain stamp duties listed in the Australian Government Budget.
Source: Australian Government Budget Paper No. 3, 2006-07 and unpublished data provided by states.

Queensland’s available GST revenue

The amount of GST revenue reported in the Budget is not the full amount available to be spent in Queensland as can be seen in Chart 8.3. This is because the Queensland Government has to meet a number of costs associated with its commitments under the IGA.

It is anticipated that total GST collections per capita will continue to grow at an annual average rate of 4% from 2006-07 to 2009-10. However, the State’s declining relativity means that Queensland’s GST revenue per capita is estimated to grow at an annual average rate of only 1³/4% over the same period.

Queensland faces the following costs associated with its commitments under the IGA: First Home Owners Grant Scheme; GST administration costs payable to the Australian Tax Office; and the cost of taxes abolished as part of the IGA. When these costs are taken into consideration, Queensland’s net GST revenue per capita declines marginally over the period. This means that Queensland’s net GST revenue per capita over the period falls in real terms.

156 Budget Strategy and Outlook 2006-07

Chart 8.3
Queensland GST revenue per capita, 2006-07 to 2009-10

Note:
1.	Net GST revenue per capita represents net available revenue after meeting First Home Owner Grant Scheme costs, GST administration costs and the cost of taxes abolished under the IGA.
Source: Australian Government Budget Paper No. 3, 2006-07 and Queensland Treasury.

The impact of the costs associated with Queensland’s commitments under the IGA coupled with the declining share of GST revenue implied by the Commonwealth Grants Commission’s latest relativity assessment indicate limited capacity to further reduce State taxes while continuing to meet the service needs of a growing population.

Queensland’s allocation of its GST revenue

The IGA provides for GST revenue to be freely available for use by the states for any purpose. Since 2002-03, when Queensland first received additional funding as a result of the GST, increases in GST revenue have been allocated to delivering additional services, including the implementation of a preparatory year of school.

Chart 8.4 below provides a notional allocation of 2006-07 GST revenues to government services.

Budget Strategy and Outlook 2006-07 157

Chart 8.4
Allocation of GST revenue, 2006-07

Source: Queensland Treasury

CURRENT SPECIFIC PURPOSE PAYMENT NEGOTIATIONS

The Australian Government has taken a clear position in recent SPP negotiations with the states to use individual SPP negotiations to actively pursue its own policy objectives. This and other factors have led to several SPP negotiations becoming protracted during 2005-06. Some SPP negotiations were not finalised until after existing SPP agreements expired, which placed additional pressure on state budgetary positions.

Queensland works cooperatively with other states through an SPP Working Group which gives the states a forum to progress SPP issues. All states have expressed concerns with the current SPP arrangements, including:

• requirements for the states to provide a public commitment to future state funding in a number of SPP portfolio areas, which tends to constrain states’ future budgetary flexibility

• input and accountability controls for SPPs which can inhibit reform and efficiency improvements in service delivery at the state level. Queensland supports the use of outcome-based objectives to facilitate innovation and provide opportunities to introduce efficiencies. There are opportunities for the Australian Government to work co-operatively with the states to explore options for improving efficiency and encouraging innovation

158 Budget Strategy and Outlook 2006-07

• the implementation of federally focused policies through SPP agreements. The Australian Government can require states to deliver on national SPP terms and conditions by withholding a percentage of total funding if states do not comply with Australian Government requirements. The funding risk resulting from non-compliance with the terms and conditions has potential budget impacts for Queensland. For example, the Australian Government is making the adoption of its industrial relations practices, under the National Building Code of Practice and Commonwealth Implementation Guidelines, a condition of receiving federal capital grants.

In 2005-06, the SPP Working Group has focussed on examining budget flexibility issues in individual SPP agreements that are approaching renewal. It is currently reviewing the Commonwealth-State and Territory Disability Agreement which expires on 30 June 2007.

The Australian Government is expected to retain a preference for input controls, rather than an outcome/output framework for SPP management. The SPP Working Group will continue to focus on examining budget flexibility issues, reviewing developments in SPP negotiations and undertaking research projects that may be agreed to from time to time.

Commonwealth-State Agreement for Skilling Australia’s Workforce

Late in 2005, all state training Ministers agreed to sign the Australian Government’s new 2005-2008 Commonwealth-State Agreement for Skilling Australia’s Workforce (the Agreement), replacing the Australian National Training Authority Agreement 2001-2005 which expired on 30 June 2005.

Under the Agreement, the Australian Government will provide $4.970 billion to the states over the four calendar years 2005 to 2008. This includes additional funding of $215 million. States are required to match this amount.

States have agreed to a number of activities and targets under the Agreement, including national targets of 10,000 additional places for new apprenticeship commencements in skills shortages areas for trades and 10,000 additional training places in other (non-trade apprenticeship) skill shortage areas.

The new Agreement requires states to implement workplace reforms in Technical and Further Education (TAFE) institutions, including offering staff Australian Workplace Agreements or other individual agreements where the lack of corporate status of the TAFE institution means that it is not covered by the Australian Government’s Workplace Relations Act 1996. The latter is the case in Queensland.

Budget Strategy and Outlook 2006-07 159

Home and Community Care

The Home and Community Care (HACC) SPP provides for basic community care services to frail aged and younger people with disabilities and their carers. HACC was due for renewal on 1 July 2005. However, as there is no sunset clause, funding is ongoing until such time as a new agreement is finalised.

The Australian Government has proposed that the HACC Agreement continue and that the current matching arrangements and program responsibilities be maintained (i.e. states maintain day-to-day responsibility for management of the program). The HACC SPP is currently increased by around 8% per annum by the Australian Government.

The new HACC Agreement is expected to be finalised towards the end of 2006.

AusLink

The Australian Government released its AusLink White Paper on 7 June 2004, detailing proposed reform of land transport planning and funding. AusLink became operational from 1 July 2004. The Australian Government introduced new legislation to provide for the administration of the program, including transitional arrangements, for example for national highway projects already approved under the Australian Land Transport Development Act 1988.

The AusLink arrangements provide for shared state/federal funding of the declared AusLink Network. The Queensland Government will be responsible for funding some projects on the declared AusLink Network (e.g. the Flinders Highway) and may be required to contribute to projects relating to the former National Highway System, which was fully funded by the Australian Government prior to the implementation of AusLink.

The AusLink Agreement between Queensland and the Australian Government was finalised in December 2005. Following the Australian Government’s 2006-07 Budget, funding of $2.166 billion is to be provided to the Queensland Government for roads over the five year period from 2004-05 to 2008-09.

160 Budget Strategy and Outlook 2006-07

STATE-LOCAL GOVERNMENT RELATIONS

Local government has a responsibility to deliver a variety of facilities and services to their individual communities. Queensland’s major cities and coastal towns continue to experience significant population growth. These demographic changes pose challenges in terms of environmental impacts, the balance between urban and productive land, water resources, air quality and maintenance of public infrastructure.

In regional, rural and remote Queensland, many inland towns and communities are facing different challenges associated with declining populations and economic well-being. Despite divergent issues, all communities across the State have high expectations in relation to amenity and well-being and look to Government for services and associated support.

The Queensland Government has an interest in assisting local governments across the state to achieve and improve delivery standards and enhance equitable access to services and facilities, particularly in smaller communities. To facilitate this, the Queensland Government provides considerable financial assistance to local government by way of grant and program funding. The Australian Government also provides funding to local government through financial assistance grants and SPPs.

Fiscal capacity

There is a large disparity in local governments’ ability to raise revenue due to large differences in the tax base (rating ability) and differential ability to levy user charges among urban, regional, rural and remote councils. Variables that influence an individual council’s rating ability include unimproved capital values of rateable land (residential, commercial and rural), the number of rateable properties within a jurisdiction and each community’s economic well-being.

Councils in Aboriginal communities have less opportunity to raise revenue than local governments elsewhere. This is largely due to differences in land tenure. Aboriginal councils are the trustees of Deed of Grant in Trust land held on behalf of the entire community. The absence of private property means Aboriginal councils do not raise rates, a key source of revenue for other local governments.

Queensland provides more funding to local government than any other state. This reflects the significant proportion of regional and rural and remote councils within Queensland. Table 8.6 provides the most recent data on total and per capita grants from states to local government.

Budget Strategy and Outlook 2006-07 161

Table 8.6
Grants from states to local governments, 2003-04

	State grants		State grants
	$ million		$ per capita
New South Wales		230		34.30
Victoria		322		65.20
Queensland		341		88.50
Western Australia		165		83.90
South Australia		47		31.00
Tasmania		12		25.30
Northern Territory		42		209.90
Total		1,159		58.90

Source: Australian Bureau of Statistics unpublished data, Australian Government Department of Transport and Regional Services unpublished data.

Queensland provided a total of $341 million in grants to local governments in 2003-04, which was almost 30% of the total grants paid by Australian state governments to local governments. In per capita terms, Queensland’s payment of $88.50 per person was 50% higher than the Australian average of $58.90 per person.

Grant assistance to local government

In 2004-05, a total of $843.9 million in grants was provided to Queensland’s local governments, with 58.5% of this amount provided by the Queensland Government and the balance provided by the Australian Government.

Current estimates indicate that the proportion of funding provided by the Queensland Government will increase to 59.1% in 2005-06 with a further increase in 2006-07 to 63.1%. Table 8.7 details Queensland Government and Australian Government grants to local governments in Queensland.

In 2006-07 it is expected that the Queensland Government will provide a total of $730.9 million in grant funding to Queensland local governments. Of this, $534.8 million will be grants for capital purposes.

162 Budget Strategy and Outlook 2006-07

Table 8.7
Grants to Local Government in Queensland^1,2

	2004-05		2005-06		2006-07
	Actual		Est. Act.		Budget
	$ million		$ million		$ million
Queensland Government Grants
Communities		51.7		58.3		59.3
- includes Pensioner Rates Rebate		42.3		48.9		51.1
Education and the Arts		18.0		18.1		18.1
Emergency Services		2.2		8.7		9.5
Employment and Training3		21.4		23.2		10.5
Environmental Protection Agency		2.2		0.8		0.8
Health		11.5		12.1		10.8
Housing		36.0		44.2		110.6
Local Government, Planning, Sport and Recreation		268.0		288.3		402.2
Main Roads		71.9		106.4		86.8
Public Works		2.4		0.2		6.0
State Development, Trade and Innovation		0.9		0.9		3.1
Transport		3.5		7.6		8.9
Other		4.3		4.4		4.3
Total Queensland Grants		493.9		573.0		730.9
Australian Government Grants
Australian Government “through”		295.7		310.8		323.7
Australian Government “direct”		54.2		85.6		103.5
Total Australian Government Grants		350.0		396.4		427.2
Total Grants to Local Government Authorities and Aboriginal and Islander Councils4		843.9		969.4		1,158.1

Notes:
1.	For current and capital purposes to local government authorities and Aboriginal and Islander councils.
2.	Numbers may not add due to rounding.
3.	This estimate may be revised upward depending on demand for services during the financial year.
4.	Totals may differ to those provided in Chapter 6 due to differences in the scope of payments.
Source:	Queensland Treasury, Australian Government Final Budget Outcome 2004-05, Australian Government Budget Paper No. 3, 2006-07.

The overall increase in Queensland Government grants to local government in 2006-07 reflects the expansion of some existing programs and the introduction of new initiatives in some Queensland Government agencies, including:

• Indigenous Planned Maintenance Program (Department of Housing)

• Local Government Infrastructure Grants & Subsidy Programs: first year of funding for the $700 million, five year program (Department of Local Government, Planning, Sport and Recreation)

• Indigenous Environmental Health Infrastructure Program (Department of Local Government, Planning, Sport and Recreation)

• Mackay Convention Precinct (Department of Public Works).

Budget Strategy and Outlook 2006-07 163

Grant purposes

The composition of Queensland’s grants to local government can vary from year to year. The major areas of funding in 2005-06 were:

• general public services including contribution to the costs of providing local government services where councils are unable to levy land rates

• employment and training programs to support and mentor trainees and apprentices and enhance community employment

• the provision of rate subsidies to eligible pensioners

• capital works subsidies provided towards the costs of local public infrastructure

• road subsidies for local roads, networks and drainage.

Grants for capital purposes comprised 71.6% of grants provided to local government by the Queensland Government in 2005-06. This proportion is expected to rise to 73.2% in 2006-07.

Chart 8.5 highlights the broad range of purposes for which local government grants were provided by the Queensland Government in 2005-06.

Chart 8.5
State Grants to Local Government in Queensland by Purpose 2005-06

Source: Queensland Treasury

164 Budget Strategy and Outlook 2006-07

9. GOVERNMENT FINANCE STATISTICS

INTRODUCTION

Government Finance Statistics (GFS) data is used extensively in the presentation of financial statement information in the Budget Papers.

This chapter contains detailed financial statements for the Queensland Public Sector based on Australian Bureau of Statistics (ABS) GFS standards. These tables provide financial information prepared under the Uniform Presentation Framework of reporting as required under the Australian Loan Council arrangements. In line with these requirements, budgeted financial information for the Public Financial Corporations sector is not included.

In addition, the chapter provides:

• reconciliation of the General Government sector GFS net operating balance to the accounting surplus

• a GFS time series for the General Government sector

• data on General Government expenses and purchases of non-financial assets by function

• details of taxation revenue collected by the General Government sector

• the State’s revised Loan Council Budget allocation

• background information on GFS, including the conceptual basis, sector definitions and a list of reporting entities.

GENERAL GOVERNMENT SECTOR

For a detailed analysis of the General Government sector, readers should refer to Chapter 5 – Revenue, Chapter 6 – Expenses and Chapter 7 – Balance Sheet and Cash Flows.

PUBLIC NON-FINANCIAL CORPORATIONS SECTOR

The Public Non-financial Corporations (PNFC) sector comprises entities operating in a range of industries. These entities are mainly engaged in the production and sale of goods and services to the market.

In Queensland a significant part of the PNFC sector is comprised of the State’s Government-owned corporations (GOCs) operating in a number of key industries including energy, rail, ports and water delivery services. GOCs operate as commercially focussed entities and their activities are targeted at meeting needs identified within the market sectors they service.

Budget Strategy and Outlook 2006-07 165

PNFC operating statement

The majority of revenue generated by GOCs is driven by the sale of goods and services to customer markets. GOC revenues are heavily linked to the performance of the Queensland economy and the ability of these entities to compete in increasingly competitive markets. Major components of GOC revenues include rail freight charges, electricity sales, port charges and agricultural and industrial water delivery.

Across the PNFC sector, it is anticipated that sales of goods and services will generate revenues of $8.064 billion in 2006-07, an increase of 11.6% when compared to the 2005-06 estimated actual. Growth in sales revenue is expected to continue, increasing by 19% from 2006-07 to 2009-10.

Another source of revenue for GOCs is community service obligation payments (CSOs). These are included in current grants and subsidies revenue. CSOs are provided by the State where GOCs are required to provide non-commercial services or services at non-commercial prices for the benefit of the community. The main CSOs are the uniform electricity tariff and QR passenger rail services.

GOCs distribute dividends to the State as shareholder. Dividends from the GOC sector are a function of net profits and the dividend payout ratio. The dividend payout ratio does not affect a GOC’s capacity to carry out necessary maintenance and repairs. Dividends are paid after providing for these costs.

In general, the dividend payout ratio for the 2006-07 Budget is based on 80% of net profit after tax. In some cases, forecast net profit after tax will be adjusted to exclude any unrealised (i.e. non-cash) forecast gains from upward revaluation of non-current assets. Shareholding Ministers consider circumstances of individual GOCs and advice from their boards before arriving at a final determination.

The sector reflects positive performance with the forecast GFS net operating balance of $78 million in 2006-07 after dividends of $629 million.

PNFC balance sheet and cash flow statement

The ability of GOCs to efficiently and effectively service their customers is reliant upon the investment in and maintenance of underlying infrastructure.

In 2006-07, the PNFC sector is expected to invest approximately $5.603 billion in capital projects. Significant levels of investment are expected to continue across the forward estimates period.

GOCs undertake infrastructure investment on a commercial basis and in response to the needs of the market sectors they service. Key areas of attention for GOCs continue to be electricity generation and network reliability and building capacity in Queensland ports and rail infrastructure.

166 Budget Strategy and Outlook 2006-07

There are a number of ways in which GOCs fund these investments including utilising cash flow from their business, borrowing and equity injections from Shareholding Ministers.

Financing of capital projects will differ according to the individual circumstances of the relevant GOC and the specific nature of the project. The Queensland Government is committed to GOCs being at all times able to fund viable projects whilst at the same time retaining a sound financial position, by ensuring that all GOCs remain sufficiently well capitalised to ensure an investment grade credit rating as determined by independent credit ratings agencies.

Over the period 2006-07 to 2009-10, the sector is budgeting to receive a total of $1.918 billion in equity support from the State.

UNIFORM PRESENTATION FRAMEWORK FINANCIAL INFORMATION

The tables on the following pages present operating statements, balance sheets and cash flow statements prepared on an accrual GFS basis for the General Government, Public Non-financial Corporations and Non-financial Public sectors.

Budget Strategy and Outlook 2006-07 167

Table 9.1
General Government Sector Operating Statement ¹

			2005-06			2005-06			2006-07			2007-08			2008-09			2009-10
			Budget			Est. Actual			Budget			Projection			Projection			Projection
			$ million			$ million			$ million			$ million			$ million			$ million
	GFS Revenue
	Taxation revenue			6,843			7,356			7,871			8,331			8,736			9,198
	Current grants and subsidies			12,682			12,809			13,143			13,460			13,785			14,243
	Capital grants			528			591			683			951			870			676
	Sales of goods and services			2,401			2,500			2,693			2,773			2,836			2,910
	Interest income			1,421			3,200			1,802			1,891			1,991			2,096
	Other			2,729			3,129			2,879			2,865			3,025			3,333
	Total Revenue			26,604			29,586			29,070			30,271			31,242			32,456
Less	GFS Expenses
	Gross operating expenses
	Employee expenses			11,719			12,051			13,324			14,047			14,718			15,616
	Other operating expenses			5,161			5,641			5,844			5,855			5,930			6,079
	Depreciation			1,617			1,632			1,754			1,876			1,951			2,017
	Superannuation interest expense			604			502			563			593			623			651
	Other interest expense			232			186			222			366			543			744
	Current transfers			5,494			5,754			6,094			6,404			6,555			6,602
	Capital transfers			844			966			1,024			882			698			645
	Total Expenses			25,670			26,733			28,825			30,024			31,019			32,354
Equals	GFS net operating balance			934			2,853			245			247			224			102
Less	Net acquisition of non-financial assets
	Purchases of non-financial assets			3,616			2,914			3,958			4,016			3,961			4,152
	Sales of non-financial assets			(297	)		(355	)		(302	)		(391	)		(314	)		(283	)
	Less	Depreciation		1,617			1,632			1,754			1,876			1,951			2,017
	Plus	Change in inventories		27			18			75			28			(3	)		12
	Plus	Other movements in non-financial assets		14			40			15			15			15			15
	Equals	Total net acquisition of non-financial assets		1,742			984			1,992			1,792			1,708			1,879
Equals	GFS Net lending / (borrowing) (Fiscal Balance)			(808	)		1,869			(1,747	)		(1,546	)		(1,484	)		(1,777	)

Note:
1.	Numbers may not add due to rounding.

168 Budget Strategy and Outlook 2006-07

Table 9.2
Public Non-financial Corporations Sector Operating Statement ¹

			2005-06			2005-06			2006-07			2007-08			2008-09			2009-10
			Budget			Est. Actual			Budget			Projection			Projection			Projection
			$ million			$ million			$ million			$ million			$ million			$ million
	GFS Revenue
	Current grants and subsidies			1,349			1,260			1,443			1,551			1,586			1,621
	Capital grants			17			22			18			18			18			18
	Sales of goods and services			7,175			7,225			8,064			8,577			9,192			9,611
	Interest income			77			85			80			75			75			78
	Other			464			538			591			532			513			493
	Total Revenue			9,082			9,130			10,195			10,753			11,383			11,821
Less	GFS Expenses
	Gross operating expenses
	Employee expenses			1,802			1,846			2,002			2,098			2,167			2,266
	Other operating expenses			3,734			3,913			4,472			4,538			4,667			4,509
	Depreciation			1,413			1,363			1,532			1,707			1,855			1,989
	Other interest expense			874			795			951			1,129			1,249			1,300
	Other property expenses			964			973			967			1,025			1,177			1,428
	Current transfers			84			108			181			219			151			131
	Capital transfers			—			30			12			—			—			—
	Total Expenses			8,871			9,028			10,118			10,716			11,266			11,623
Equals	GFS net operating balance			210			102			78			37			117			197
Less	Net acquisition of non-financial assets
	Purchases of non-financial assets			3,952			4,561			5,603			4,515			4,132			3,929
	Sales of non-financial assets			(26	)		(60	)		(49	)		(83	)		(54	)		(56	)
	Less	Depreciation		1,413			1,363			1,532			1,707			1,855			1,989
	Plus	Change in inventories		65			94			—			(13	)		(16	)		(13	)
	Plus	Other movements in non-financial assets		30			(30	)		(12	)		—			—			—
	Equals	Total net acquisition of non-financial assets		2,609			3,202			4,010			2,712			2,208			1,872
Equals	GFS Net lending / (borrowing) (Fiscal Balance)			(2,399	)		(3,101	)		(3,932	)		(2,675	)		(2,091	)		(1,674	)

Note:
1.	Numbers may not add due to rounding.

Budget Strategy and Outlook 2006-07 169

Table 9.3
Non-financial Public Sector Operating Statement ¹

			2005-06			2005-06			2006-07			2007-08			2008-09			2009-10
			Budget			Est. Actual			Budget			Projection			Projection			Projection
			$ million			$ million			$ million			$ million			$ million			$ million
	GFS Revenue
	Taxation revenue			6,508			7,021			7,518			7,965			8,360			8,819
	Current grants and subsidies			12,605			12,732			13,002			13,287			13,646			14,111
	Capital grants			528			591			683			951			870			676
	Sales of goods and services			9,424			9,571			10,601			11,191			11,868			12,362
	Interest income			1,499			3,285			1,881			1,966			2,066			2,174
	Other			2,224			2,689			2,497			2,367			2,356			2,393
	Total Revenue			32,788			35,890			36,183			37,728			39,166			40,536
Less	GFS Expenses
	Gross operating expenses
	Employee expenses			13,521			13,897			15,326			16,146			16,886			17,883
	Other operating expenses			8,391			9,061			9,804			9,864			10,057			10,045
	Depreciation			3,030			2,995			3,286			3,583			3,806			4,006
	Superannuation interest expense			604			502			563			593			623			651
	Other interest expense			1,106			981			1,173			1,495			1,792			2,044
	Current transfers			4,165			4,525			4,689			4,896			4,979			4,978
	Capital transfers			826			974			1,021			867			683			630
	Total Expenses			31,643			32,934			35,861			37,444			38,826			40,235
Equals	GFS net operating balance			1,145			2,956			322			283			341			300
Less	Net acquisition of non-financial assets
	Purchases of non-financial assets			7,568			7,409			9,561			8,532			8,094			8,082
	Sales of non-financial assets			(323	)		(349	)		(351	)		(474	)		(368	)		(339	)
	Less	Depreciation		3,030			2,995			3,286			3,583			3,806			4,006
	Plus	Change in inventories		92			111			75			15			(19	)		(1	)
	Plus	Other movements in non-financial assets		44			10			3			15			15			15
	Equals	Total net acquisition of non-financial assets		4,352			4,187			6,003			4,504			3,916			3,751
Equals	GFS Net lending / (borrowing) (Fiscal Balance)			(3,207	)		(1,231	)		(5,680	)		(4,221	)		(3,575	)		(3,451	)

Note:
1.	Numbers may not add due to rounding.

170 Budget Strategy and Outlook 2006-07

Table 9.4
General Government Sector Balance Sheet ¹

	2005-06			2005-06			2006-07			2007-08			2008-09			2009-10
	Budget			Est. Actual			Budget			Projection			Projection			Projection
	$ million			$ million			$ million			$ million			$ million			$ million
Assets
Financial Assets
Cash and deposits		1,344			783			181			197			191			279
Advances paid		197			202			204			206			208			209
Investments, loans and placements		20,268			23,632			25,088			26,559			27,984			29,631
Other non-equity assets		5,467			6,894			6,898			7,160			7,552			8,043
Equity		16,933			16,388			17,117			17,997			18,995			20,064
Total Financial Assets		44,209			47,899			49,489			52,120			54,929			58,227
Non-Financial Assets		67,632			76,450			80,543			84,573			88,570			92,779
Total Assets		111,842			124,349			130,032			136,693			143,499			151,006
Liabilities
Advances received		471			469			455			441			426			413
Borrowing		3,684			2,017			3,964			6,743			9,534			12,962
Superannuation liability		16,192			17,959			19,005			20,065			21,103			22,087
Other employee entitlements and provisions		3,722			4,512			4,666			4,917			5,203			5,496
Other non-equity liabilities		2,429			3,003			2,910			2,807			2,718			2,688
Total Liabilities		26,497			27,961			31,000			34,972			38,983			43,645
Net Worth		85,344			96,388			99,032			101,720			104,516			107,361
Net Financial Worth		17,712			19,938			18,489			17,147			15,946			14,582
Net Debt		(17,654	)		(22,130	)		(21,054	)		(19,779	)		(18,422	)		(16,745	)

Note:
1.	Numbers may not add due to rounding.

Budget Strategy and Outlook 2006-07 171

Table 9.5
Public Non-financial Corporations Sector Balance Sheet ¹

	2005-06			2005-06			2006-07			2007-08			2008-09			2009-10
	Budget			Est. Actual			Budget			Projection			Projection			Projection
	$ million			$ million			$ million			$ million			$ million			$ million
Assets
Financial Assets
Cash and deposits		847			1,079			837			721			809			870
Investments, loans and placements		1,032			918			904			911			923			944
Other non-equity assets		1,942			2,213			2,364			2,477			2,641			2,739
Equity		47			39			47			54			60			66
Total Financial Assets		3,869			4,250			4,151			4,163			4,433			4,619
Non-Financial Assets		33,337			34,219			38,563			41,638			44,207			46,507
Total Assets		37,206			38,469			42,714			45,802			48,639			51,126
Liabilities
Deposits held		65			73			74			72			71			71
Borrowing		14,269			15,001			17,822			19,682			21,083			21,970
Superannuation liability		—			11			12			12			12			12
Other employee entitlements and provisions		5,096			6,322			6,598			6,838			7,241			7,748
Other non-equity liabilities		1,752			1,717			2,134			2,244			2,281			2,304
Total Liabilities		21,182			23,124			26,640			28,848			30,688			32,105
Net Worth		16,024			15,345			16,073			16,954			17,951			19,021
Net Financial Worth		(17,313	)		(18,874	)		(22,489	)		(24,685	)		(26,256	)		(27,486	)
Net Debt		12,455			13,076			16,156			18,121			19,422			20,226

Note:
1.	Numbers may not add due to rounding.

172 Budget Strategy and Outlook 2006-07

Table 9.6
Non-financial Public Sector Balance Sheet ¹

	2005-06			2005-06			2006-07			2007-08			2008-09			2009-10
	Budget			Est. Actual			Budget			Projection			Projection			Projection
	$ million			$ million			$ million			$ million			$ million			$ million
Assets
Financial Assets
Cash and deposits		2,191			1,862			1,018			918			1,000			1,150
Advances paid		181			190			188			190			192			193
Investments, loans and placements		21,278			24,531			25,970			27,443			28,872			30,535
Other non-equity assets		2,671			3,028			2,808			2,807			2,851			2,840
Equity		990			1,115			1,124			1,131			1,136			1,141
Total Financial Assets		27,311			30,726			31,108			32,488			34,051			35,858
Non-Financial Assets		100,936			110,635			119,072			126,178			132,742			139,252
Total Assets		128,246			141,361			150,180			158,666			166,793			175,110
Liabilities
Deposits held		65			73			75			72			72			71
Advances received		471			469			455			440			425			412
Borrowing		17,914			16,987			21,748			26,380			30,566			34,875
Superannuation liability		16,192			17,970			19,017			20,077			21,114			22,099
Other employee entitlements and provisions		4,463			5,112			5,302			5,553			5,863			6,196
Other non-equity liabilities		3,797			4,362			4,551			4,424			4,236			4,095
Total Liabilities		42,902			44,973			51,148			56,946			62,277			67,749
Net Worth		85,344			96,388			99,032			101,720			104,516			107,361
Net Financial Worth		(15,591	)		(14,247	)		(20,040	)		(24,458	)		(28,227	)		(31,890	)
Net Debt		(5,199	)		(9,054	)		(4,898	)		(1,657	)		1,000			3,481

Note:
1.	Numbers may not add due to rounding.

Budget Strategy and Outlook 2006-07 173

Table 9.7
General Government Sector Cash Flow Statement ¹

	2005-06			2005-06			2006-07			2007-08			2008-09			2009-10
	Budget			Est. Actual			Budget			Projection			Projection			Projection
	$ million			$ million			$ million			$ million			$ million			$ million
Receipts from operating activities
Taxes received		6,842			7,348			7,870			8,330			8,735			9,197
Grants and subsidies received		13,216			13,761			13,768			14,291			14,572			14,890
Sales of goods and services		2,669			2,892			2,993			3,070			3,132			3,203
Other receipts		4,420			6,317			5,259			5,095			5,230			5,562
Total		27,148			30,318			29,890			30,787			31,669			32,851
Payments for operating activities
Payments for goods and services		(16,631	)		(16,783	)		(19,161	)		(19,832	)		(20,593	)		(21,722	)
Grants and subsidies		(6,201	)		(6,705	)		(7,036	)		(7,167	)		(7,131	)		(7,120	)
Interest		(233	)		(187	)		(223	)		(368	)		(544	)		(746	)
Other payments		(666	)		(703	)		(609	)		(580	)		(565	)		(564	)
Total		(23,731	)		(24,378	)		(27,030	)		(27,947	)		(28,832	)		(30,152	)
Net cash inflows from operating activities		3,417			5,940			2,860			2,840			2,837			2,699
Payments for investments in non-financial assets
Purchases of non-financial assets		(3,616	)		(2,914	)		(3,958	)		(4,016	)		(3,961	)		(4,152	)
Sales of non-financial assets		297			355			302			391			314			283
Total		(3,319	)		(2,559	)		(3,656	)		(3,626	)		(3,647	)		(3,869	)
Payments for investments in financial assets for policy purposes		(271	)		(694	)		(318	)		(512	)		(559	)		(529	)
Payments for investments in financial assets for liquidity purposes		(1,256	)		(3,629	)		(1,272	)		(1,358	)		(1,384	)		(1,533	)
Receipts from financing activities
Advances received (net)		(14	)		(18	)		(15	)		(15	)		(15	)		(14	)
Borrowing (net)		827			(842	)		1,800			2,686			2,762			3,334
Total		813			(860	)		1,785			2,671			2,747			3,320
Net increase/(decrease) in cash held		(617	)		(1,801	)		(602	)		15			(6	)		88
Net cash from operating activities and investments in non-financial assets		98			3,381			(796	)		(786	)		(809	)		(1,169	)
GFS Surplus/(deficit)		98			3,381			(796	)		(786	)		(809	)		(1,169	)

Note:
1.	Numbers may not add due to rounding.

174 Budget Strategy and Outlook 2006-07

Table 9.8
Public Non-financial Corporations Sector Cash Flow Statement¹

	2005-06			2005-06			2006-07			2007-08			2008-09			2009-10
	Budget			Est. Actual			Budget			Projection			Projection			Projection
	$ million			$ million			$ million			$ million			$ million			$ million
Receipts from operating activities
Grants and subsidies received		1,377			1,440			1,577			1,650			1,694			1,734
Sales of goods and services		8,115			8,031			9,143			9,366			9,988			10,491
Other receipts		917			975			1,116			1,020			1,005			988
Total		10,409			10,446			11,837			12,036			12,687			13,214
Payments for operating activities
Payments for goods and services		(5,613	)		(5,997	)		(6,568	)		(6,683	)		(6,918	)		(6,951	)
Grants and subsidies		(83	)		(107	)		(180	)		(218	)		(151	)		(131	)
Interest		(929	)		(734	)		(879	)		(1,027	)		(1,121	)		(1,157	)
Other payments		(1,039	)		(1,134	)		(1,144	)		(1,197	)		(1,269	)		(1,282	)
Total		(7,664	)		(7,973	)		(8,771	)		(9,124	)		(9,459	)		(9,520	)
Net cash inflows from operating activities		2,746			2,474			3,065			2,912			3,228			3,693
Payments for investments in non-financial assets
Purchases of non-financial assets		(3,952	)		(4,561	)		(5,603	)		(4,515	)		(4,132	)		(3,929	)
Sales of non-financial assets		26			60			49			83			54			56
Total		(3,927	)		(4,502	)		(5,554	)		(4,432	)		(4,079	)		(3,873	)
Payments for investments in financial assets for policy purposes		—			(6	)		—			—			—			—
Payments for investments in financial assets for liquidity purposes		(20	)		363			(43	)		(44	)		(44	)		(44	)
Receipts from financing activities
Borrowing (net)		1,684			1,879			2,786			1,790			1,302			770
Deposits received (net)		—			(3	)		—			(3	)		(1	)		(1	)
Distributions paid		(716	)		(758	)		(816	)		(851	)		(877	)		(1,013	)
Other financing (net)		271			699			318			512			559			529
Total		1,239			1,817			2,289			1,448			983			285
Net increase/(decrease) in cash held		38			147			(243	)		(116	)		88			61
Net cash from operating activities and investments in non-financial assets		(1,181	)		(2,028	)		(2,489	)		(1,520	)		(851	)		(180	)
Distributions paid		(716	)		(758	)		(816	)		(851	)		(877	)		(1,013	)
GFS Surplus/(deficit)		(1,897	)		(2,786	)		(3,305	)		(2,371	)		(1,729	)		(1,193	)

Note:
1.	Numbers may not add due to rounding.

Budget Strategy and Outlook 2006-07 175

Table 9.9
Non-financial Public Sector Cash Flow Statement¹

	2005-06			2005-06			2006-07			2007-08			2008-09			2009-10
	Budget			Est. Actual			Budget			Projection			Projection			Projection
	$ million			$ million			$ million			$ million			$ million			$ million
Receipts from operating activities
Taxes received		6,508			7,013			7,517			7,964			8,359			8,818
Grants and subsidies received		13,150			13,842			13,743			14,199			14,524			14,854
Sales of goods and services		10,632			10,769			11,980			12,278			12,961			13,535
Other receipts		4,617			6,532			5,560			5,262			5,356			5,518
Total		34,908			38,156			38,801			39,703			41,200			42,725
Payments for operating activities
Payments for goods and services		(22,090	)		(22,629	)		(25,573	)		(26,362	)		(27,362	)		(28,508	)
Grants and subsidies		(4,841	)		(5,452	)		(5,615	)		(5,643	)		(5,539	)		(5,481	)
Interest		(1,095	)		(921	)		(1,102	)		(1,395	)		(1,665	)		(1,902	)
Other payments		(1,436	)		(1,497	)		(1,400	)		(1,403	)		(1,445	)		(1,455	)
Total		(29,462	)		(30,500	)		(33,691	)		(34,802	)		(36,012	)		(37,346	)
Net cash inflows from operating activities		5,445			7,656			5,110			4,900			5,188			5,379
Payments for investments in non-financial assets
Purchases of non-financial assets		(7,568	)		(7,409	)		(9,561	)		(8,532	)		(8,094	)		(8,082	)
Sales of non-financial assets		323			349			351			474			368			339
Total		(7,245	)		(7,060	)		(9,211	)		(8,058	)		(7,726	)		(7,742	)
Payments for investments in financial assets for policy purposes		—			—			—			—			—			—
Payments for investments in financial assets for liquidity purposes		(1,276	)		(3,266	)		(1,315	)		(1,402	)		(1,428	)		(1,577	)
Receipts from financing activities
Advances received (net)		(14	)		(19	)		(15	)		(15	)		(15	)		(14	)
Borrowing (net)		2,511			1,038			4,586			4,476			4,064			4,104
Deposits received (net)		—			(3	)		—			(3	)		(1	)		(1	)
Total		2,497			1,016			4,572			4,459			4,049			4,090
Net increase/(decrease) in cash held		(579	)		(1,654	)		(844	)		(100	)		83			149
Net cash from operating activities and investments in non-financial assets		(1,800	)		596			(4,101	)		(3,157	)		(2,538	)		(2,363	)
GFS Surplus/(deficit)		(1,800	)		596			(4,101	)		(3,157	)		(2,538	)		(2,363	)

Note:
1.	Numbers may not add due to rounding.

176 Budget Strategy and Outlook 2006-07

RECONCILIATION OF GFS NET OPERATING BALANCE TO ACCOUNTING SURPLUS

The primary difference between GFS net operating balance and the accounting surplus calculated under Australian Accounting Standards (AAS) is that valuation adjustments are excluded from the GFS net operating balance.

Data presented in Table 9.10 provides a reconciliation of the General Government sector GFS net operating balance to the accounting surplus.

Table 9.10
Reconciliation of GFS net operating balance to Accounting surplus¹

	2005-06			2005-06			2006-07
	Budget			Est. Act.			Budget
	$ million			$ million			$ million
GFS net operating balance General Government sector		934			2,853			245
Remeasurement/valuation adjustments
Bad debts and amortisation		(50	)		(48	)		(43	)
Market value adjustments QTC loans2		—			48			—
Market value adjustments investments		6			25			9
Revaluation of superannuation provision3		—			(679	)		(89	)
Revaluation of other provisions		1			(70	)		(36	)
Decommissioned Main Roads assets and land under roads written off		(173	)		(106	)		(145	)
Loss on sale of Burnett Water Pty Ltd to SunWater		—			(199	)		—
Other gains/(losses) on assets sold/written off		9			(24	)		—
AAS net surplus General Government sector		727			1,801			(60	)

Notes:
1.	Numbers may not add due to rounding.
2.	The adjustment from book value to market value on QTC loans for 2005-06 has been based on market values as at 31 March 2006, being the best available estimate. No market value estimate has been made for the Budget as the calculation is dependent on future interest rates.
3.	The superannuation provision is calculated based on a number of actuarial assumptions such as long term bond rates and expected returns on assets, price and salary inflation and demographic assumptions. Variations from these assumptions will result in revaluations of the superannuation provision.

Budget Strategy and Outlook 2006-07 177

GENERAL GOVERNMENT TIME SERIES

Data presented in Table 9.11 provides a time series from 1999-2000 for the General Government sector on the key GFS indicators used by the Government to measure financial performance.

Table 9.11
General Government Sector¹

		1999-00			2000-01			2001-02			2002-03			2003-04			2004-05
		Actual			Actual			Actual			Actual			Actual			Actual
		$ million			$ million			$ million			$ million			$ million			$ million
OPERATING STATEMENT
	GFS Revenue
	Taxation revenue		5,051			4,255			4,815			5,598			6,676			6,952
	Current grants and subsidies		6,203			8,539			9,520			10,175			10,992			12,255
	Capital grants		448			483			696			510			553			491
	Sales of goods and services		1,695			1,747			1,837			1,964			2,105			2,381
	Interest income		1,773			852			(464	)		(128	)		2,723			2,972
	Other		2,222			2,382			2,453			2,138			2,165			2,558
	Total Revenue		17,392			18,258			18,857			20,256			25,214			27,609
Less	GFS Expenses
	Gross operating expenses		11,060			12,844			13,733			14,562			15,709			17,018
	Superannuation interest expense		710			467			626			630			750			752
	Other interest expense		283			339			223			220			211			207
	Current transfers		3,511			4,413			4,713			4,271			4,500			4,915
	Capital transfers		766			1,052			456			558			704			791
	Total Expenses		16,330			19,116			19,751			20,241			21,874			23,683
Equals	GFS net operating balance		1,062			(858	)		(894	)		15			3,340			3,926
OTHER KEY AGGREGATES
Purchases of non-financial assets			2,992			2,520			2,416			2,232			2,415			2,843
Net acquisition of non-financial assets			1,166			813			708			155			503			1,053
GFS Net lending / (borrowing) (Fiscal Balance)			(104	)		(1,671	)		(1,602	)		(140	)		2,838			2,873
Net Worth			57,293			57,623			58,093			64,894			77,723			96,433
Net Debt			(10,122	)		(10,082	)		(11,032	)		(11,260	)		(14,851	)		(19,446	)
Cash Surplus/Deficit			(1,281	)		534			188			645			3,490			4,640

Note:
1.	Numbers may not add due to rounding.
Source: Budget Papers and Outcomes Reports for Queensland 1999-2000 to 2004-05.

178 Budget Strategy and Outlook 2006-07

OTHER GENERAL GOVERNMENT GFS DATA

Data presented in the following tables are presented in accordance with GFS and Uniform Presentation Framework guidelines which present data on a consolidated basis.

Expenses by function

Data presented in Table 9.12 provides details of General Government sector expenses by function.

Table 9.12
General Government Sector Expenses by Function¹

	2005-06		2005-06		2006-07		2007-08		2008-09		2009-10
	Budget		Est. Act.		Budget		Projection		Projection		Projection
	$ million		$ million		$ million		$ million		$ million		$ million
General public services		1,550		1,500		1,593		1,632		1,647		1,691
Public order and safety		2,455		2,527		2,728		2,874		3,007		3,170
Education		6,346		6,564		6,947		7,277		7,593		7,843
Health		5,593		6,059		6,851		7,319		7,693		8,274
Social security and welfare		1,333		1,356		1,591		1,664		1,727		1,772
Housing and community amenities		1,016		1,009		1,166		1,026		1,051		1,053
Recreation and culture		678		638		683		698		731		733
Fuel and energy		998		938		958		1,014		1,048		1,079
Agriculture, forestry, fishing and hunting		772		841		824		716		602		597
Mining, manufacturing and construction		115		115		124		116		120		120
Transport and communications		2,577		2,770		3,070		3,223		3,267		3,340
Other economic affairs		802		778		765		785		743		732
Other purposes		1,435		1,636		1,526		1,679		1,789		1,951
Total Expenses		25,670		26,733		28,825		30,024		31,019		32,354

Note:
1.	Numbers may not add due to rounding.

Budget Strategy and Outlook 2006-07 179

Purchases of non-financial assets by function

Data presented in Table 9.13 provides details of General Government sector purchases of non-financial assets by function.

Table 9.13
General Government Sector Purchases of Non-financial Assets by Function¹

	2005-06		2005-06		2006-07
	Budget		Est. Act.		Budget
	$ million		$ million		$ million
General public services		324		409		313
Public order and safety		331		178		507
Education		437		377		373
Health		520		315		515
Social security and welfare		78		66		79
Housing and community amenities		320		291		332
Recreation and culture		198		135		124
Agriculture, forestry, fishing and hunting		63		37		103
Mining, manufacturing and construction		1		6		4
Transport and communications		1,262		1,043		1,564
Other economic affairs		33		58		43
Other purposes		49		0		1
Total Purchases		3,616		2,914		3,958

Note:
1.	Numbers may not add due to rounding.

180 Budget Strategy and Outlook 2006-07

Taxes

Data presented in Table 9.14 provides details of taxation revenue collected by the General Government sector.

Table 9.14
General Government Sector Taxes ¹

	2005-06		2006-07
	Est. Actual		Budget
	$ million		$ million
Taxes on employers’ payroll and labour force		1,916		2,054
Taxes on property
Land taxes		424		500
Stamp duties on financial and capital transactions		2,227		2,426
Financial Institutions’ Transactions Taxes		1		—
Other		347		356
Taxes on the provision of goods and services
Taxes on gambling		851		881
Taxes on insurance		389		408
Taxes on use of goods and performance of activities
Motor vehicle taxes		1,085		1,125
Other		116		121
Total Taxation Revenue		7,356		7,871

Note:
1.	Numbers may not add due to rounding.

Budget Strategy and Outlook 2006-07 181

Loan Council Allocation

The Australian Loan Council requires all jurisdictions to prepare Loan Council Allocations (LCA) to provide an indication of each government’s probable call on financial markets over the forthcoming financial year.

Table 9.15 presents the State’s revised LCA Budget allocation and the Loan Council endorsed LCA for 2006-07.

Table 9.15

Loan Council Allocation ¹

		2006-07		2006-07
		Nomination		Budget
		$ million		$ million
	General Government sector cash deficit/(surplus) 2		833		796
	PNFC sector cash deficit/(surplus) 2		2,047		3,305
	Non Financial Public Sector cash deficit/(surplus) 2		2,882		4,101
Less	Net cash flows from investments in financial assets for policy purposes		—		—
Plus	Memorandum items 3		118		118
	Loan Council Allocation		3,000		4,219

Note:
1.	Numbers may not add due to rounding.
2.	Figures in brackets represent surpluses.
3.	Memorandum items include operating leases and local government borrowings.

The State’s Budget LCA allocation is a deficit of $4.219 billion. This compares to the LCA nomination in March 2006 of $3 billion.

A tolerance limit of two per cent of Non-financial Public sector receipts applies between the LCA nomination and the Budget allocation. For 2006-07, the LCA Budget allocation exceeds the LCA nomination by more than the two per cent tolerance limit.

The increased deficit is largely due to higher net borrowing requirements as a result of increased spending on capital infrastructure in the PNFC sector.

182 Budget Strategy and Outlook 2006-07

BACKGROUND AND INTERPRETATION OF GOVERNMENT FINANCE STATISTICS

Accrual GFS framework

The GFS reporting framework, developed by the Australian Bureau of Statistics (ABS), is based on international statistical standards (the International Monetary Fund Manual on Government Finance Statistics and the United Nations System of National Accounts). This allows comprehensive assessments to be made of the economic impact of government.

Nature of the GFS framework

The accrual GFS framework is based on an integrated recording of stocks and flows. Stocks refer to a unit’s holdings of assets, liabilities and net worth at a point in time, whilst flows represent the movement in the stock of assets and liabilities between two points in time. Flows comprise two separate types, transactions and other economic flows. Transactions come about as a result of mutually agreed interactions between units or within a single unit. Other economic flows would include revaluations and destruction or discovery of assets that do not result from a transaction. In GFS operating statements, other economic flows, being outside of the control of government, are excluded and do not affect the net operating result.

The GFS statements reported in the Budget are the operating statement, balance sheet and cash flow statement.

Operating statement

This statement is designed to capture the details of transaction flows of GFS revenue and GFS expense items as well as net acquisitions of non-financial assets for an accounting period. Unlike operating statements prepared on Australian Accounting Standard principles, a GFS operating statement reports two major fiscal measures – the GFS net operating balance and GFS net lending/borrowing.

Net operating balance is represented by GFS revenues less GFS expenses and excludes any other economic flows such as revaluations, gains or losses on asset disposals and allowances for doubtful debts.

Net lending is the net operating balance less net acquisition of non-financial assets. It is also referred to as the fiscal balance. It measures, in accrual terms, the gap between Government savings plus net capital transfers and investment in non-financial assets. A surplus indicates that the State Government is placing financial resources at the disposal of other sectors of the economy, whilst a deficit reflects the State utilising the financial resources of other sectors.

Budget Strategy and Outlook 2006-07 183

Balance sheet

The balance sheet shows stocks of financial and non-financial assets and liabilities. Key indicators in the balance sheet are net debt and net worth.

Net debt is represented by the sum of selected financial liabilities (such as deposits held, advances received and borrowings) minus the sum of selected financial assets (cash and deposits, loans and placements). It provides an indication of the strength of a government’s financial position.

Net worth, also known as net assets, is defined as total assets less total liabilities. It provides a more comprehensive picture of a government’s position as all assets and liabilities are taken into account.

Net financial worth, on the other hand, is calculated as financial assets minus total liabilities. It measures a government’s net holdings of financial assets.

Cash flow statement

Cash means cash on hand (notes and coins held and deposits held at call with a bank or financial institution) and cash equivalents (highly liquid investments readily convertible to cash and overdrafts considered integral to the cash management functions). The cash flow statement demonstrates how cash is generated and applied in a single accounting period.

The GFS surplus/deficit is the cash counterpart of the fiscal balance as disclosed in the GFS operating statement. A surplus reflects the availability of cash to increase the State’s financial assets or decrease its liabilities, whilst a deficit reflects the requirement for cash either by running down the State’s financial assets or by drawing on the cash reserves of other sectors of the economy. It comprises net cash received/paid from operating activities, from sales and purchases of non-financial assets and from financing activities.

SECTOR CLASSIFICATION

GFS data is presented by institutional sector, distinguishing between the General Government sector and the Public Non-financial Corporations (PNFC) sector.

Budget reporting focuses on the General Government sector, which provides regulatory services and goods and services of a non-market nature that are provided at less than cost or at no cost. These services are largely financed by general revenue (Australian Government grants and state taxation). This sector comprises government departments, their commercialised business units/shared service providers and certain statutory bodies.

184 Budget Strategy and Outlook 2006-07

The PNFC sector comprises bodies that provide mainly market goods and services that are of a non-regulatory and non-financial nature. PNFCs are financed through sales to consumers of their goods and services and may be supplemented by explicit government subsidy to satisfy community service obligations. In general, PNFCs are legally distinguishable from the governments that own them. Examples of PNFCs include QR and the energy entities.

Together, the General Government sector and the PNFC sector comprise the Non-financial Public sector.

Further discussion of the GFS framework of reporting, including definitions of GFS terms, can be obtained from the webpage of the Australian Bureau of Statistics at www.abs.gov.au.

REPORTING ENTITIES

The reporting entities included in the General Government and PNFC sectors are provided below.

General Government

Departments

Aboriginal and Torres Strait Islander Policy

Child Safety

Communities

Corrective Services

Disability Services Queensland

Education and the Arts

Electoral Commission of Queensland

Emergency Services

Employment and Training

Energy

Environmental Protection Agency

Forestry Plantations Queensland Office

Health

Housing

Industrial Relations

Justice and Attorney-General

Legislative Assembly

Local Government, Planning, Sport and Recreation

Main Roads

Natural Resources, Mines and Water

Office of the Governor

Office of the Ombudsman

Office of the Public Service Commissioner

Police

Premier and Cabinet

Primary Industries and Fisheries

Public Works

Queensland Audit Office

State Development, Trade and Innovation

The Coordinator-General

The Public Trustee of Queensland

Tourism, Fair Trading and Wine Industry Development

Transport

Treasury

Budget Strategy and Outlook 2006-07 185

Statutory Authorities

Anti-Discrimination Commission Queensland

Australian Agricultural College Corporation

Board of the Queensland Museum

Commission for Children and Young People and Child Guardian

Crime and Misconduct Commission

Legal Aid Queensland

Library Board of Queensland

Motor Accident Insurance Commission

Nominal Defendant

Prostitution Licensing Authority

Queensland Art Gallery Board of Trustees

Queensland Building Services Authority

Queensland Events Corporation Pty Ltd

Queensland Institute of Medical Research

Queensland Performing Arts Trust

Queensland Studies Authority

Queensland Treasury Holdings Pty Ltd

QRAA

Residential Tenancies Authority

Service Delivery and Performance Commission

SGH Ltd

South Bank Corporation

The Office of the Information Commissioner

Tourism Queensland

Workers Compensation Regulatory Authority (Q-Comp)

Commercialised Business Units

CITEC

GoPrint

Main Roads — RoadTek

Project Services

Property Services Group

Q-Build

Q-Fleet

Sales and Distribution Services

Shared Service Providers

Corporate Administration Agency

Corporate and Professional Services

CorpTech

Queensland Health Shared Service Provider

Shared Service Agency

186 Budget Strategy and Outlook 2006-07

Public Non-financial Corporations

Betty Rees Group Pty Ltd (CRT)

Bundaberg Port Authority

Burnett Water Pty Ltd

Cairns Port Authority

Central Queensland Port Authority

CS Energy Ltd

DBCT Holdings Pty Ltd

ENERGEX Ltd

Ergon Energy Corporation Ltd

Eungella Water Pipeline Pty Ltd

Forestry Plantations Queensland

Gladstone Area Water Board

Gold Coast Events Co Pty Ltd

Golden Casket Lottery Corporation Ltd

Heritage Train Company Pty Ltd

Mackay Port Authority

Major Sports Facilities Authority

Mount Isa Water Board

National Logistics Alliance Pty Ltd

North West Queensland Water Pipeline Pty Ltd

On Track Insurance Pty Ltd

Port of Brisbane Corporation

Ports Corporation of Queensland

Powerlink Queensland

Queensland Motorways Ltd

Queensland Power Trading Corporation (Enertrade)

QR

Interail Australia Pty Ltd

Stanwell Corporation Ltd

SunWater

Tarong Energy Corporation Ltd

The Trustees of Parklands Gold Coast

Townsville Port Authority

Budget Strategy and Outlook 2006-07 187

APPENDIX A — TAX EXPENDITURE STATEMENT

OVERVIEW

Governments employ a range of policy tools to achieve social and economic objectives. These include the use of direct budgetary outlays, regulatory mechanisms and taxation. As required by the Charter of Social and Fiscal Responsibility, this Tax Expenditure Statement (TES) details revenue foregone as a result of Government decisions relating to the provision of tax concessions. The TES is designed to improve transparency in the use of tax expenditures and increase public understanding of the fiscal process.

Tax expenditures are reductions in tax revenue that result from the use of the taxation system as a policy tool to deliver Government policy objectives. Tax expenditures are provided through a range of concessions, including:

• tax exemptions

• the application of reduced tax rates to certain groups or sectors of the community

• tax rebates

• tax deductions

• provisions which defer payment of a tax liability to a future period.

Labelling an exemption or concession as a tax expenditure does not necessarily imply any judgement as to its appropriateness. It merely makes the amount of the exemption or concession explicit and thereby facilitates its scrutiny as part of the annual Budget process.

Methodology

Revenue foregone approach

The method used almost exclusively by governments to quantify the value of their tax expenditures is the revenue foregone approach. This method estimates the revenue foregone through use of the concession by applying the benchmark rate of taxation to the volume of activities or assets affected by the concession. One of the deficiencies of the revenue foregone approach is that the effect on taxpayer behaviour resulting from the removal of the particular tax expenditure is not factored into the estimate. Consequently, the aggregation of costings for individual tax expenditure items presented in the TES will not necessarily provide an accurate estimate of the total level of assistance provided through tax expenditures.

188 Budget Strategy and Outlook 2006-07

Measuring tax expenditures requires the identification of:

• a benchmark tax base

• concessionally taxed components of the benchmark tax base such as a specific activity or class of taxpayer

• a benchmark tax rate to apply to the concessionally taxed components of the tax base.

Defining the tax benchmark

The most important step in the preparation of a TES is the establishment of a benchmark for each tax included in the statement. The benchmark provides a basis against which each tax concession can be evaluated. The aim of the benchmark is to determine which concessions are tax expenditures as opposed to structural elements of the tax. The key features of a tax benchmark are:

• the tax rate structure

• any specific accounting conventions applicable to the tax

• the deductibility of compulsory payments

• any provisions to facilitate administration

• provisions relating to any fiscal obligations.

By definition, tax expenditures are those tax concessions not included as part of the tax benchmark.

Identification of benchmark revenue bases and rates requires a degree of judgement and is not definitive. Furthermore, data limitations mean that the tax expenditures are approximations and are not exhaustive. This statement does not include estimates of revenue foregone from exemptions or concessions provided to Government agencies. Very small exemptions or concessions are also excluded.

THE TAX EXPENDITURE STATEMENT

This year’s statement includes 2004-05 and 2005-06 estimates of tax expenditures for payroll tax, land tax, duties, the community ambulance cover and gambling taxes. A summary of the major tax expenditures valued on the basis of revenue foregone is presented in Table A.1. Not all expenditures can be quantified at this time. Accordingly, the total value of tax expenditures should be considered as indicative only.

Budget Strategy and Outlook 2006-07 189

Table A.1
Tax expenditure summary¹

	2004-052		2005-06
	$ million		$ million
Payroll Tax
Exemption threshold3		676		755
Deduction scheme4		106		118
Section 14 exemptions
Local Government3		74		83
Education3		81		91
Hospitals3		145		166
Total Payroll Tax		1,082		1,213	��
Land Tax
Liability thresholds5		191		282
Graduated land tax scale		130		124
Primary production deduction		48		51
Section 13 exemptions not included elsewhere6		40		41
General land tax rebate7		11		—
Additional land tax rebate7		3		—
Land developers’ concession		8		19
Total Land Tax		431		517
Duties
Transfer duty on residential property
Home concession		442		421
First home concession		161		186
Insurance duty on general insurance
Non-life insurance3		97		102
Workcover3		21		22
Health insurance3		124		135
Total Duties		845		866
Community Ambulance Cover
Concession to pensioners and seniors8		39		41
Taxes on Gambling
Gaming machine taxes		113		119
Casino taxes		7		10
Total Gambling Tax		120		129

Notes:
1.	Numbers may not add due to rounding.
2.	2004-05 estimates may have been revised since last year’s Budget.
3.	Methodology changes employed in this Budget account for significant variations from estimates of previous Budgets.
4.	Deduction of $850,000, which reduces by $1 for every $3 above $850,000, is applicable to employers with an annual payroll between $850,000 and $3.4 million.
5.	Land tax is payable only on the value of taxable land above a threshold which depends on the ownership structure.
6.	Applicable, but not limited, to religious bodies, public benevolent institutions and other exempt charitable institutions.
7.	The revision of land tax schedules in 2005-06 effectively incorporated the general and additional land tax rebates into the schedules.
8.	Estimates are based on the revenue foregone through the use of the levy exemption by pensioners and senior citizens. The estimated cost of providing the service to pensioners and senior citizens exempted from the levy is significantly higher, estimated at $150 million in 2004-05 and $174 million in 2005-06.

190 Budget Strategy and Outlook 2006-07

DISCUSSION OF INDIVIDUAL TAXES

Payroll tax

The benchmark tax base for payroll tax is assumed to be all wages, salaries and supplements (including employer superannuation contributions) paid in Queensland, as defined in the Pay-roll Tax Act 1971. The benchmark tax rate for payroll tax is assumed to be the statutory rate applying in each financial year.

Payroll tax exemption threshold

Employers who employ in Queensland with an annual Australian payroll of $850,000 or less are exempt from payroll tax. On the basis of average weekly earnings, this threshold corresponds to approximately 20 full-time equivalent employees. This concession is designed to assist small and medium sized businesses. (The threshold is to be increased to $1 million from 1 July 2006.)

Deduction scheme

Employers who employ in Queensland with Australian payrolls between $850,000 and $3.4 million benefit from a deduction of $850,000, which reduces by $1 for every $3 by which the annual payroll exceeds $850,000. There is no deduction for employers or groups with an annual payroll in excess of $3.4 million. (The increase in the payroll tax exemption threshold to $1 million from 1 July 2006 will result in a deduction for employers or groups with payrolls up to $4 million.)

Section 14 exemptions

A number of organisations are provided with exemptions from payroll tax under Section 14 of the Pay-roll Tax Act 1971. The activities for which estimates have been calculated are wages paid by public hospitals, non-tertiary private educational institutions and local governments (excluding commercial activities).

Land tax

The benchmark tax base is assumed to be all freehold land within Queensland, excluding residential land used as a principal place of residence and land owned by individuals with a value for that year below the threshold. The benchmark tax rate for land tax is assumed to be the top rate of land tax applicable in Queensland in each financial year.

Budget Strategy and Outlook 2006-07 191

Liability thresholds

Land tax is payable on the value of taxable land above a threshold which depends on the land’s ownership. In 2004-05, the thresholds were $170,000 for companies, absentees and trusts and $220,000 for resident individuals. In 2005-06 the thresholds were $300,000 for companies, absentees and trusts and $450,000 for resident individuals (to be increased to $500,000 for the 2006-07 year).

Residential land owned by resident individuals as their principal place of residence is excluded from the estimate. The exemption from paying below a minimum amount ($350 in 2004-05 and $400 in 2005-06) is not included as a tax expenditure as it is regarded as the application of an administration threshold.

Graduated land tax scale

A graduated (concessional) scale of land tax rates is applicable to land with a taxable value of less than $1.5 million for 2004-05 and $3 million for resident individuals and $2 million for companies, absentees and trustees for 2005-06.

Primary production deduction

The taxable value of land owned by a resident individual, trustee or some absentees and companies does not include all or part of their land that is used for the business of agriculture, pasturage or dairy farming.

Section 13 exemptions (not elsewhere included)

A number of land tax exemptions are granted under Section 13 of the Land Tax Act 1915 to eligible organisations. These include, but are not limited to, public benevolent institutions, religious institutions and other exempt charitable institutions, retirement villages, trade unions and showgrounds.

General land tax rebate

A general rebate on land tax of 15% was provided to resident individual land tax payers in 2004-05. The substantial revision of land tax rate schedules in 2005-06 effectively incorporated the general land tax rebate into the schedules.

Additional land tax rebate

Trustees, companies and absentees received a phasing in rebate of a maximum of 36%, reducing by 0.5 percentage point for every $1,000 of taxable value over $170,000 in 2004-05. The substantial revision of land tax rate schedules in 2005-06 effectively incorporated the additional land tax rebate into the schedules.

192 Budget Strategy and Outlook 2006-07

Land developers’ concession

From 1 July 1998, land developers have been charged land tax on 60% of the unimproved value of (undeveloped) land subdivided in the previous financial year and which remains unsold at 30 June of that year. This concession is outlined in Section 3CA of the Land Tax Act 1915.

Transfer duty concession on residential property

The benchmark tax base is assumed to be all sales of residential property within Queensland. The benchmark tax scale is assumed to be the scale that actually applied in each financial year.

Home concession

A concessional rate of duty applies to purchases of a principal place of residence. Until 31 July 2004, a concessional rate of 1% applied on dutiable values up to $250,000 compared to the normal schedule of rates between 1.5% and 3.25%. For properties valued over $250,000, the scheduled rates of transfer duty applied on the excess.

From 1 August 2004, the concessional rate of 1% has applied to the purchase of a principal place of residence valued up to $300,000 (to be increased to $320,000 from 1 July 2006).

First home concession

Where a purchaser has not previously owned a residence in Queensland or elsewhere, the purchaser of a home receives a more generous concession on duty. This concession comprises a rebate in addition to the home concession on properties (this concession may not be applicable if the purchase price is less than the full market value of the property). The size of the rebate depends on the value of the property. Duty relief is provided to purchases of a first principal place of residence valued up to $500,000. (From 1 January 2007, a new first home concession will be provided for the purchase of certain vacant land up to the value of $250,000).

Insurance duty

The benchmark tax base is assumed to be all premiums for general insurance policies (except for life insurance). The benchmark tax scale is assumed to be the scale that actually applied in each financial year.

The rate of duty applicable to most types of general insurance has been 8.5% until August 2004 and 7.5% thereafter. Concessional rates apply to some other general insurance types (5% for motor vehicle insurance other than compulsory third party (CTP), workers’ compensation and professional indemnity insurance and 10c on a premium for CTP insurance). Data limitations mean that these insurance types are categorised into non-life insurance cover and WorkCover. An exemption from duty is also provided for private health insurance.

Budget Strategy and Outlook 2006-07 193

Duty on mortgages — home concessions and first home concessions

The benchmark tax base is assumed to be all mortgages and loans taken out in Queensland. The benchmark tax scale is assumed to be the scale that actually applied in each financial year.

A concession from duty is allowed where a home mortgage secures an advance attributable to the purchase or construction of the borrower’s home.

The data required to estimate the revenue foregone is not available.

Community Ambulance Cover

Concession to pensioners and seniors

Pensioners and senior card holders are exempt from paying the Community Ambulance Cover charge levied quarterly on electricity accounts.

Gambling taxes

Gaming machine tax concessions for licensed clubs

The benchmark tax base is assumed to be all gaming machines operated by licensed clubs and hotels in Queensland. The benchmark tax scale is assumed to be the rate of taxation that applies to gaming machines in hotels in each financial year (which is 35.91% of the monthly metered win).

A concessional graduated tax rate scale applies to gaming machines operated by licensed clubs. The tax rate is calculated on the gaming machine monthly metered win and the full tax rate (as applies to hotel gaming machines) is only applied to gaming machine revenue where the monthly metered win exceeds $1.4 million for any licensed club.

Casino tax concessions

The benchmark tax base is assumed to be all casinos operating in Queensland. The benchmark tax scale is assumed to be the flat rate of 20% of casino gross revenue that applies for standard transactions in the Brisbane and Gold Coast casinos.

A concessional tax rate of 10% applies for normal gross revenue for the Cairns and Townsville casinos. In addition, concessional rates apply for revenue from high rollers in all casinos. High roller revenue is taxed at 10% for the Brisbane and Gold Coast casinos and 8% for the Cairns and Townsville casinos.

194 Budget Strategy and Outlook 2006-07

APPENDIX B — CONCESSIONS STATEMENT

INTRODUCTION

The Government provides concessions in the form of discounts, rebates and subsidies to improve access to and the affordability of a range of services for individuals or families based on eligibility criteria relating to factors such as age, income and special needs or disadvantage.

This statement serves to highlight the cost and nature of concessions covering both concessions which are reflected as outlays in the Budget (for example, direct subsidy payments) and revenue foregone through fees and charges which are set at a rate lower than that applying to the wider community.

Varying methods have been used to estimate the cost of concessions depending on the nature of the concession, including:

• direct Budget outlay cost (for example, direct subsidy or rebate payments)

• revenue foregone (for example, concessional fees and charges)

• cost of goods and services provided.

Table B.1 sets out the cost of concessions by agency. The total value of concessions is estimated at $767.1 million in 2006-07.

Budget Strategy and Outlook 2006-07 195

\

Table B.1
Concessions by agency¹

	2005-06		2006-07
	Est. Act.		Estimate
Agency	$ million		$ million
Department of Communities
Electricity Rebate Scheme		59.4		62.5
Electricity Life Support Scheme		0.5		0.5
Pensioner Rate Subsidy Scheme		48.9		51.1
Rail Concession Scheme		32.2		33.2
Department of Education and the Arts
Arts Concessional Entry Fees		0.4		0.4
Living Away from Home Allowances Scheme		5.6		5.5
School Transport Assistance for Students with Disabilities		27.0		27.0
Non-State School Transport Assistance Scheme		3.9		4.0
Department of Emergency Services
Urban Fire Levy Concession		5.3		5.5
Department of Employment and Training
TAFE Concessions		11.7		12.1
Environmental Protection Agency
Environmental Licence Fee Waiver		0.2		0.3
Concessions Entry and Tour Fees		0.1		0.1
Queensland Health
Spectacles Supply Scheme		4.9		5.9
Medical Aids Subsidy Scheme2		16.7		16.3
Patient Travel Subsidy Scheme		5.0		5.1
Oral Health Scheme		90.5		94.1
Department of Housing
Aboriginal and Torres Strait Islander Housing Rental Rebate		9.2		9.6
Public Rental Housing Rebate		186.9		190.0
Department of Justice and Attorney-General
Public Trustee of Queensland — Rebates of Fees		11.6		12.3
Department of the Premier and Cabinet
South Bank Corporation — Venue Hire Discounts		0.2		0.2
Department of Transport
Transport Concessions incl. Taxi Subsidies3		54.5		58.5
Motor Vehicle Registration Concession		50.3		51.5
Recreational Ship Registration Concession		0.8		0.8
School Transport Assistance Scheme		119.8		120.6
Total		745.5		767.1

Notes:
1.	Numbers may not add due to rounding.
2.	The Estimated Actual for 2005-06 is higher than the Budget for 2006-07 due to an internal reallocation of funding to the program in 2005-06 on a one-off basis to meet additional demand in that financial year.
3.	The 2005-06 Estimated Actual expenditure reflects an increase in concessions provided under the Taxi Subsidy Scheme, which has resulted from a sustained increase in usage by eligible scheme participants.

196 Budget Strategy and Outlook 2006-07

Department of Communities

The Department of Communities has responsibility for the Queensland Government Electricity Rebate Scheme and reimburses the electricity retail corporations for electricity rebates provided. The scheme provides a rebate on the cost of domestic electricity supply to eligible holders of a Pensioner Concession Card, Queensland Seniors Card or a Repatriation Health Card for All Conditions (Gold Card) who receive a War Widow or Special Rate Totally and Permanently Incapacitated pension.

The Electricity Life Support Concession Scheme is aimed at assisting seriously ill people who use home-based life support systems such as oxygen concentrators and kidney dialysis machines.

The Pensioner Rate Subsidy Scheme alleviates the impact of local government rates and charges on pensioners, thereby assisting them to continue to live in their own homes.

The Queensland Rail Concessions Scheme assists pensioners, veterans and seniors to reduce the cost of public transport and to maintain an active and healthy lifestyle.

Department of Education and the Arts

Concessional ticket entry fees apply to a variety of concession card holders, students, children and families for special exhibitions at the Queensland Art Gallery and the Queensland Museum.

The Department of Education and the Arts provides a living away from home allowance to students in Years 1 to 12 in state and non-state schools whose homes are geographically isolated from local schools. The allowances offset the costs associated with boarding away from home to attend school on a daily basis and include tuition and travel costs.

The department also offers assistance to students with disabilities to access school programs to meet their educational needs. Assistance is in the form of the provision of taxis or specialised contracted minibuses, payment of fares on regular buses or trains, or an allowance for parents who drive their children to school.

The Non-State School Transport Assistance Scheme assists families of students attending non-state schools outside Brisbane whose bus fare is over a weekly threshold amount. The program also assists families of students with disabilities who attend a non-state school.

Department of Emergency Services

Pensioners are eligible for a 20% discount on the Urban Fire Levy payable on prescribed properties of which they are the owner or part owner.

Budget Strategy and Outlook 2006-07 197

Department of Employment and Training

Concessions on TAFE tuition fees for Government-funded training are offered to a range of concession card holders, students of Aboriginal and Torres Strait Islander descent and students who can demonstrate extreme financial hardship.

Environmental Protection Agency

A fee waiver may be granted on environmental licences on the grounds of financial hardship or if there is a small or insignificant environmental risk. The department also offers concessional entry fees for specified protected areas including St Helena Island, David Fleay Wildlife Park and Mon Repos Conservation Park.

Queensland Health

The Spectacles Supply Scheme assists eligible Queensland residents by providing a comprehensive range of free basic prescription spectacles. Queensland Health administers the Scheme through its network of public hospitals and community health services.

The Medical Aids Subsidy Scheme provides eligible Queensland residents with permanent and stabilised conditions or disabilities with access to subsidy funding assistance for the provision of a range of aids and equipment. Aids and equipment are provided primarily to assist people to live at home thus avoiding premature or inappropriate residential care or hospitalisation.

Queensland Health’s Patient Travel Subsidy Scheme provides financial assistance to patients who need to access specialist medical services which are not available within their local area. The Scheme provides a subsidy towards the cost of travel and accommodation for patients and, in some cases, an escort.

The Oral Health Scheme provides free dental care to eligible clients and their dependents who possess a current Health Care Card, Pensioner Concession Card, Queensland Seniors Card or Commonwealth Seniors Card. In rural and remote areas where no private dental practitioner exists, access to dental care for the general public is provided at a concessional rate.

198 Budget Strategy and Outlook 2006-07

Department of Housing

The Aboriginal and Torres Strait Islander Housing Rental Rebate targets low income Indigenous families and individuals and represents the difference between the rents that would be payable in the private market and the rent that is charged based on the household’s income.

The Public Rental Housing Rebate targets low income families and individuals and represents the difference between the rent that would be payable in the private market and the rent that is charged based on the household’s income.

Department of Justice and Attorney-General

The Public Trustee offers fee rebates (full or partial) for clients who, because of financial circumstances, cannot pay the full amount of fees that have been levied.

Department of the Premier and Cabinet

Community groups and charities are given discounted charges for the hire of venues within the South Bank parklands, such as the Suncorp Piazza.

Department of Transport

Transport concessions are provided by the Government in a variety of forms and across a range of activities to ensure access and mobility for Queenslanders who are transport disadvantaged. Eligible categories to receive a concession include Pensioner Concession Card holders, Seniors Card holders, children and secondary and tertiary students. Members of the Taxi Subsidy Scheme also receive concessions on taxi travel.

Motor vehicle and boat registration concessions are provided to people with a Pensioner Concession Card, Queensland Seniors Card or a Totally or Permanently Incapacitated Ex-serviceperson Pension as a means of improving pensioners and seniors access to travel.

The School Transport Assistance Scheme is a program for students whose access to school is disadvantaged by distance or are from defined low income groups. Assistance is provided towards the cost of travel on bus, rail and/or ferry with allowances for private vehicle transport.

Budget Strategy and Outlook 2006-07 199

APPENDIX C –
STATEMENT OF RISKS AND SENSITIVITY ANALYSIS

INTRODUCTION

The Queensland State Budget, like those of other states, is based in part on assumptions made about future elements of uncertainty both internal and external to the State which can impact directly on economic and fiscal forecasts. Operating results achieved in recent years reflect the fact that the actual fiscal result achieved depends on the direction of such variables.

Consistent with the Charter of Social and Fiscal Responsibility, this section analyses the sensitivity of the estimates to changes in the economic and other assumptions used in developing the Budget and forward estimates. This analysis is provided, as required under the Charter, to enhance the level of transparency and accountability of the Government.

Notwithstanding the risks associated with the Budget, Queensland is well placed to manage adverse impacts. Queensland’s strong balance sheet and low tax status means it has greater capacity than any other jurisdiction in Australia to withstand the risks normally associated with any state or territory budget.

The forward estimates in the Budget are framed on a no policy change basis. That is, the expenditure and revenue policies in place at the time of the Budget (including those announced in the Budget) are applied consistently throughout the forward estimates period.

The following discussion provides details of some of the key assumptions and risks associated with revenue and expenditure forecasts and, where a direct link can be established, the indicative impact on forecasts resulting from a movement in those variables.

SENSITIVITY OF EXPENDITURE ESTIMATES AND EXPENDITURE RISKS

Public sector wage costs

Salaries and wages form a large proportion of General Government operating expenses. Increases in salaries and wages are negotiated through enterprise bargaining agreements.

200 Budget Strategy and Outlook 2006-07

Most of the major enterprise bargaining agreements across the General Government sector, including the agreement for the core public sector, have now been finalised or are currently under negotiation. The 2006-07 Budget and forward estimates for these agencies incorporates a provision for wage increases consistent with an outcome of approximately 4% per annum or, where an agreement has been reached, the expected cost of implementing that agreed outcome. A central provision is held for agreements expiring post 2006-07.

Interest rates

The General Government sector has a very moderate level of debt with a total debt servicing cost forecast at $222 million in 2006-07.

The current average duration of General Government debt is approximately 5.97 years. Accordingly, a one percentage point variation in interest rates would lead to a very modest change in debt servicing costs in 2006-07.

Actuarial estimates of superannuation and long service leave

Liabilities for superannuation and long service leave are estimated by the State Actuary with reference to, among other things, assumed rates of investment returns, salary growth and inflation. These liabilities are therefore subject to changes in these parameters. Similarly, the long service leave liabilities are subject to the risk that the actual rates of employee retention will vary from those assumed in the liability calculation.

While these impacts have been estimated and allowances made in the Budget and forward estimates to accommodate them, the actual outcome may differ from the estimates calculated for the Budget.

Demographic and demand based risks

Unforeseen changes in the size, location and composition of Queensland’s population can impact on the demand for goods and services and therefore on the cost of maintaining existing policies. This is particularly evident in the health, education, community services and criminal justice sectors.

State Government expenditure is often more closely associated with socio-demographic factors, such as the number of school age children or the number of elderly residents, than with economic activity. However, such changes are unlikely to impact significantly in the short term.

For this reason, the composition, size and location of the State’s population are more significant in projecting the State’s expenditure needs across the forward estimates period than for the current or budget year.

Budget Strategy and Outlook 2006-07 201

Unforeseen events

It is almost inevitable that some events will occur during the financial year which will require additional expenditure but could not be foreseen or quantified at the time of the Budget.

Contingency funding for such events is provided in the Budget through the Treasurer’s Advance. The Treasurer’s Advance is an amount of appropriation within Treasury’s Administered Budget as a whole-of-Government provision for potentially emergent costs.

In 2006-07, the Treasurer’s Advance allocation is $100 million.

SENSITIVITY OF REVENUE ESTIMATES AND REVENUE RISKS

The rate of growth in tax revenues is dependent on a range of factors that are linked to the rate of growth in economic activity in the State. Some taxes are closely related to activity in specific sectors of the economy, whilst others are broadly related to the general rate of economic growth, employment, inflation and wages. A change in the level of economic activity, resulting from economic growth differing from forecast levels, would impact upon a broad range of taxation receipts.

Other revenue items are influenced by external variables such as the exchange rate or the performance of financial markets.

Performance of financial markets — investment returns

Investment earnings are based on the assumption of long-term average market returns for an acceptable level of risk. These investments principally cover the superannuation investment funds. The Government’s financial investments are held in a portfolio comprising property, domestic and offshore equities and fixed interest.

The assumed long-term rate of return used in Budget estimates is 7.5%. Actual returns will depend on the performance of sectors which comprise the portfolio.

Given Queensland’s large holding of financial assets, actual revenues are highly sensitive to small variations from the assumed long run rate of return.

In 2006-07, a one percentage point variation in investment earnings on assets held to meet future employee entitlements would lead to a change in net investment revenue of approximately $180 million.

Exchange rate and coal prices and volumes — royalties estimates

Estimates of mining royalties are sensitive to movements in the A$/US$ exchange rate and commodity prices and volumes.

202 Budget Strategy and Outlook 2006-07

Contracts for the supply of commodities are generally written in US$. Accordingly, a change in the exchange rate impacts on the A$ price of commodities and therefore expected royalties collections.

A one cent variation in the A$/US$ would lead to a change in royalties revenue of approximately $20 million in 2006-07.

Also impacting on royalty estimates are volume effects. A large component of Queensland’s royalty collections is derived from coal. A 1% variation in export coking and thermal coal volumes would lead to a change in royalty revenue of approximately $12 million.

The 2006-07 Budget assumptions for export coal prices are derived by taking into account various price forecasts made by coal companies. A US$1 variation in the price of export coal would lead to a change in royalty revenue of approximately $16 million.

Property prices and volumes — transfer duty estimates

Over recent years, strong growth in State taxation receipts has been a result of high levels of activity in the residential property market through its impact on transfer duty receipts. The increase in stamp duty receipts flowing from residential property market activity has two elements – the price of properties changing hands and the volume of properties changing hands.

For 2006-07, an easing in the property market is forecast. The assumption underpinning the expected reduction in stamp duties is for property prices to remain at current levels, but for a reduction in transaction volumes.

A one percentage point variation in the average value of property transactions would change transfer duty collections by approximately $22 million in 2006-07.

A one percentage point variation in the volume of transactions would change transfer duty revenues by approximately $20 million in 2006-07.

Wages and employment growth — payroll tax collections

Wages and employment growth have a direct impact on payroll tax collections. The Budget assumptions are for an increase in the Wage Price Index of 4¹/4% and employment growth of 2¹/2% in 2006-07.

A one percentage point variation in wages growth would change payroll tax collections by approximately $21 million. Similarly, a one percentage point variation in employment growth would change payroll tax collections by $21 million.

Budget Strategy and Outlook 2006-07 203

Parameters influencing Australian Government GST payments to Queensland

Estimates of Australian Government GST revenue grants to states and territories are dependent on total GST revenue collected, which tends to be closely correlated with the general level of economic activity. The Australian Government has provided estimates of total GST collections in its Budget Papers. In 2006-07, Queensland’s Budget will bear the risks of fluctuations in GST revenues and the other components of the package, such as the First Home Owner Grant Scheme, administrative costs associated with the GST and gambling tax foregone.

The Australian Government’s estimate of GST revenue in 2006-07 is based on its forecast of national GDP growth of 3¹/4% and household consumption growth of 3%. As with all other tax estimates, there is a risk of lower collections than estimated by the Australian Government if economic growth and consumption is weaker than expected.

Relative to other states, Queensland has been assessed as having an increasing capacity to raise revenue from stamp duty on conveyances and mining revenue in recent years. As a result, Queensland’s share of GST funding (relativity) has declined. If Queensland continues to raise relatively more revenue because of strong resource and housing sectors, there is a prospect that its relativity and therefore share of GST funding could decline further and be lower than its population share.

There is insufficient information provided in the Australian Government Budget Papers to prepare indicative forecasts of the sensitivity of GST estimates to key variables.

Australian Government grants (Specific Purpose Payments)

Specific Purpose Payments (SPPs) are payments made by the Australian Government to promote its policy objectives. The majority of SPPs are remitted directly to state governments, with a proportion of these passed through to other bodies, while some SPPs are remitted directly to local government authorities.

Indexation arrangements and distributions between the states vary for each SPP. The Australian Government reviews the payments each year and has guaranteed that it will not reduce the overall, aggregate level of SPPs to states. However, in recent years growth in payments ‘through’ the states has exceeded that for payments directly ‘to’ states (refer Table 8.1 in Chapter 8).

204 Budget Strategy and Outlook 2006-07

CONTINGENT LIABILITIES

Contingent liabilities represent items that are not included in the Budget as significant uncertainty exists as to whether the Government would sacrifice future economic benefits in respect of these items. Nevertheless, such contingencies need to be recognised and managed wherever possible in terms of their potential impact on the Government’s financial position in the future.

The State’s quantifiable and non-quantifiable contingent liabilities are detailed in the 2004-05 Report on State Finances – Consolidated Financial Statements (Note 33).

A summary of the State’s quantifiable contingent liabilities as at 30 June 2005 is provided below.

Table C.1
Contingent liabilities

	2005
	$ million
Nature of contingent liability
Guarantees and indemnities		5,849
QTC – stock loans		597
Other		23
Total		6,469

Budget Strategy and Outlook 2006-07 205

This page has been left blank intentionally.

By authority: R. J. Hunt, Government Printer, Queensland-2006

STATE BUDGET
2006-07

CAPITAL STATEMENT

Budget Paper No. 3

TABLE OF CONTENTS

1.	Overview
	Introduction		1
	Employment Generation		5
	Funding the State Capital Program		5
2.	State Capital Program — Planning and Priorities
	Introduction		9
	General Government Sector Capital Planning and Priorities		9
	Capital Grants to Local Government Authorities		11
	2006-07 Highlights		12
	Public Non-Financial Corporations Sector Capital Planning and Priorities		17
	Smart State Building Fund Appendix 2.1		21
3.	Private Sector Contribution to the Delivery of Public Infrastructure
	Queensland’s Public Private Partnership Policy and Value for Money Framework		22
	Potential Public Private Partnership Projects		22
	Existing Public Private Partnership Projects		23
	Other Projects Involving the Private Sector		24
4.	Key Concepts, Scope and Coverage
	Key Concepts, Scope and Coverage		28
5.	Capital Outlays by Entity
	Aboriginal and Torres Strait Islander Policy	��	30

	Child Safety	32
	Communities	34
	Corrective Services	37
	Disability Services Queensland	39
	Education and the Arts	42
	Electoral Commission of Queensland	54
	Emergency Services	55
	Employment and Training	61
	Energy	64
	Environmental Protection Agency	75
	Health	78
	Housing	86
	Industrial Relations	92
	Justice and Attorney-General	93
	Legislative Assembly of Queensland	97
	Local Government, Planning, Sport and Recreation	98
	Main Roads	101
	Natural Resources, Mines and Water	115
	Office of the Governor	120
	Office of the Ombudsman	121
	Office of the Public Service Commissioner	122
	Police	123
	Premier and Cabinet	127
	Primary Industries and Fisheries	130
	Public Works	133
	Queensland Audit Office	137
	State Development, Trade and Innovation	138
	The Coordinator-General	139
	Tourism, Fair Trading and Wine Industry Development	142
	Transport	144
	Treasury	159
Appendix A – Entities included in Capital Outlays		162

1. OVERVIEW

KEY POINTS

• Capital outlays in 2006-07 are estimated to be $10.136 billion, an increase of 23% or $1.914 billion on estimated actual 2005-06 capital outlays.

• Capital outlays will support some 73,700 full-time jobs in Queensland.

• Implementation of the Queensland Government’s South East Queensland Infrastructure Plan and Program has commenced, with investment of over $2 billion in 2006-07 for water, transport (including rail), energy, education and training, and health.

• Capital outlays in 2006-07 reflect the Queensland Government’s ongoing commitment to regional and rural Queensland, with almost 60% of capital expenditure occurring outside the Brisbane Statistical Division. Investment includes $359 million over four years under the Rural and Regional Roads Funding initiative, commencement of construction of the $543 million four-lane Tugun bypass and the $42 million Bundaberg Ring Road.

• In 2006-07 there will be capital outlays of $4.044 billion for transport and main roads, $2.856 billion for energy, $641.2 million for education and training and $594 million for health.

• The Government will invest $606.4 million in water infrastructure, including $325 million in new funding over five years for water and sewerage infrastructure, effluent re-use and demand management and water loss reduction in local governments, $129.4 million for the completion of the Burdekin-Moranbah pipeline, and $100 million to continue the Western Corridor Recycled Water Scheme.

• The capital outlays of Government-owned corporations constitute approximately 43% of total outlays in 2006-07, including a record $1.71 billion in expenditure by ENERGEX and Ergon Energy. Major investment in rail and ports infrastructure is also planned to meet demand for Queensland’s exports.

INTRODUCTION

This Capital Statement presents an overview of proposed capital outlays by the Queensland Government in 2006-07, as well as a summary of the State Government’s approach to infrastructure provision. Capital outlays in 2006-07 are estimated to be $10.136 billion, net of a capital contingency reserve of $800 million.

Capital Statement 2006-07 1

This represents an increase of 23% on estimated actual outlays in 2005-06, and provides for the continuation of the South East Queensland Infrastructure Plan and Program (SEQIPP), the $1.4 billion Smart State Building Fund, as well as a number of new capital investments.

The increased capital outlays in 2006-07 demonstrates the Government’s commitment to broaden Queensland’s infrastructure base to meet the social and economic needs of the State.

The capital outlays of Queensland’s Government-owned corporations (GOCs) will constitute 43% of total outlays in 2006-07, reflecting major investments in electricity, rail and ports infrastructure.

Expenditure in 2006-07 is highest in the Brisbane Statistical Division – the most populated and one of the fastest growing areas of the State – planned at $4.376 billion. However, consistent with the Government’s commitment to building Queensland’s regions, almost 60% of capital expenditure is expected to occur outside the Brisbane Statistical Division.

Capital outlays by purpose in 2006-07 are shown in Chart 1.1. Capital outlays by State Government entity are listed in Table 1.1. Table 1.2 outlines major sources of funding for the State capital program, while Table 1.3 details estimated capital outlays by entity in each of the State’s statistical divisions.

Chart 1.1
Capital Outlays by Purpose, 2006-07

2 Capital Statement 2006-07

Table 1.1
Capital Outlays by Entity^1,2

	2005-06		2006-07
	Est. Act.		Budget
Entity	$’000		$’000
Aboriginal and Torres Strait Islander Policy		4,618		6,485
Child Safety		25,670		39,723
Communities		31,866		30,119
Corrective Services		46,253		236,908
Disability Services Queensland		6,834		50,019
Education and the Arts Portfolio
Education		479,281		537,063
Arts		138,607		70,574
Emergency Services		96,645		110,118
Employment and Training		79,673		104,098
Energy GOCs		2,651,327		2,856,009
Environmental Protection Agency		23,634		55,265
Health		370,710		594,006
Housing		434,455		481,172
Justice and Attorney-General		34,390		79,657
Legislative Assembly of Queensland		3,078		2,598
Local Government, Planning, Sport and Recreation Portfolio
Local Government, Planning, Sport and Recreation		313,988		374,650
Major Sports Facility		63,384		103,611
Main Roads Portfolio
Main Roads		1,192,603		1,528,035
Roadtek/Queensland Motorways Limited		178,084		451,320
Natural Resources, Mines and Water Portfolio
Natural Resources, Mines and Water		86,275		152,002
Water Boards		26,452		25,071
Sunwater3		172,450		151,203
Police		138,890		197,790
Premier and Cabinet		15,468		11,230
Primary Industries and Fisheries Portfolio
Primary Industries and Fisheries		15,953		24,588
Forestry Plantation Queensland		—		12,224
Public Works Portfolio
Public Works		68,126		157,538
CITEC		6,010		4,000
QFleet		173,812		151,628
Other Commercialised Business Units		5,239		10,696
State Development and Innovation		61,168		24,126

Capital Statement 2006-07 3

Table 1.1
Capital Outlays by Entity^1,2 (Continued)

	2005-06			2006-07
	Est. Act.			Budget
Entity	$’000			$’000
The Coordinator General Portfolio
Coordinator General		28,233			119,633
Property Services Group		35,252			115,129
Tourism, Fair Trading and Wine Industry Development		2,304			1,682
Transport Portfolio
Queensland Transport		163,899			301,373
Port Authorities		653,272			855,900
Queensland Rail		713,251			837,750
Treasury Portfolio
Treasury4		19,533			14,757
CorpTech		49,717			39,113
Golden Casket Lottery Corporation		9,009			15,758
Other 5		2,527			1,206
Anticipated Capital Contingency Reserve6		(400,000	)		(800,000	)
Total Capital Outlays7,8		8,221,940			10,135,827

Notes:
1.	Includes associated statutory bodies.
2.	Capital works projects are shown on a GST exclusive basis – that is, net of any recoverable GST input tax credits. The exception to this is where an agency, because of its GST status, is unable to recover some GST input tax credits, for example the Department of Housing.
3.	Sunwater includes subsidiaries Eungella Water Pipeline and Burnett Water.
3.	Treasury includes the Motor Accident Insurance Commission and the Shared Service Agency.
4.	Includes the Departments of Energy and Industrial Relations, Electoral Commission of Queensland, Office of the Governor, Office of the Public Service Commissioner, Office of the Ombudsman, Queensland Audit Office, and QRAA.
5.	Contingency recognises that individual agencies may budget to fully expend their capital works allocations, however on a whole-of-Government basis, there is likely to be under spending, resulting in a carryover of capital allocations. The amount for 2006-07 has been revised upwards to reflect large increases in the capital program and in anticipation of industry capacity constraints in some areas.
6.	Capital works outside of Queensland are not included in the capital program.
8.	Numbers may not add due to rounding.

4 Capital Statement 2006-07

EMPLOYMENT GENERATION

The 2006-07 capital program will have a significant effect on employment, supporting some 73,700 full time jobs, either directly or indirectly. Estimated employment generation from budgeted capital expenditure in 2006-07 exceeds the forecast in the 2005-06 Capital Statement. This increased employment will be spread across a number of areas including education, energy, correctional facilities, ports and transport infrastructure. Employment generating capital does not include expenditure on land purchases, and plant and equipment.

FUNDING THE STATE CAPITAL PROGRAM

Table 1.2 outlines the major sources of funding for the State capital program.

The Government’s Charter of Social and Fiscal Responsibility also recognises the legitimate role of borrowings in funding capital investment.

After allowing for the reinvestment of earnings on the State’s superannuation investments, free cash flow in excess of $3.6 billion is expected to be available for investment in capital in 2006-07.

In 2006-07, a net borrowing requirement of $4.586 billion is estimated in support of the capital program, of which $2.786 billion is the expected borrowing requirement of the State’s Government-owned corporations. Net borrowings of $1.8 billion are budgeted in 2006-07 for the General Government sector. In total, borrowings are projected to fund 49% of new infrastructure in 2006-07. Borrowing for capital purposes is entirely consistent with the Government’s fiscal principles and is necessary to support expansion of the State’s capital base.

Capital Statement 2006-07 5

Table 1.2
Sources of Funding for Capital¹

	2005-06		2006-07
	Est. Act.		Budget
	$ million		$ million
Total Capital Expenditure		8,222		10,136
Less Capital Grants (Funded from Operating Revenue)		762		826
Net State Capital Funding Task		7,460		9,310
Funding Sources
Cash Flows from Operating Activities		7,656		5,110
Less Reinvestments2		3,116		1,465
Equals Net Cash Flow for Capital Acquisitions		4,540		3,645
Asset Sales		349		351
Borrowings		1,038		4,586
Cash Balances and Other Financing Sources		1,533		728
Total Funding Sources		7,460		9,310

Note:
1.	Numbers may not add due to rounding.
2.	Primarily reflects reinvestment of General Government investment earnings relating to accruing entitlements.

The remaining chapters of this Budget Paper provide further details of State Government capital outlays. Chapter 2 outlines the Government’s approach to the planning and delivery of infrastructure. Chapter 3 provides an update on the role of the private sector in providing public infrastructure in Queensland. Chapter 4 lists capital outlays on a project basis by entity.

6 Capital Statement 2006-07

Table 1.3
Total Capital Outlays by Entity within Statistical Division for 2006-07^2,4

	05		10		15		20		25		30		35		40		45		50		55		Totals
	Brisbane		Moreton		W/Bay		D/Downs		S/West		Fitzroy		C/West		Mackay		Northern		F/North		N/West
Entity1	$’000		$’000		$’000		$’000		$’000		$’000		$’000		$’000		$’000		$’000		$’000		$’000
Aboriginal and Torres Strait Islander Policy		289		132		41		35		4		30		2		24		433		5,099		396		6,485
Child Safety		22,653		6,559		2,044		1,749		204		1,479		91		1,180		1,626		1,874		264		39,723
Communities		19,299		1,622		753		1,282		27		1,265		12		1,063		1,476		3,236		85		30,119
Corrective Services		111,910		1,842		859		284		55		1,072		49		106		119,029		1,507		194		236,908
Disability Services Queensland		33,130		4,934		4,687		2,551		84		1,433		38		483		1,684		888		108		50,019
Education and the Arts Portfolio
Education		251,168		105,729		25,611		24,187		2,000		17,196		2,459		16,841		22,606		65,667		3,601		537,063
Arts		68,418		275		16		210		2		12		1		9		814		815		2		70,574
Emergency Services		54,543		16,466		4,691		7,833		322		3,591		960		2,582		9,855		5,927		3,350		110,118
Employment and Training		47,023		26,024		5,645		5,695		214		2,382		96		7,111		7,663		1,967		277		104,098
Energy		832,438		269,282		416,834		476,085		68,592		169,209		64,374		201,958		134,031		134,876		88,329		2,856,009
Environmental Protection Agency		5,621		23,139		3,291		555		913		2,136		173		305		885		18,159		88		55,265
Health		245,279		122,545		40,019		29,726		5,056		33,607		1,576		19,994		16,805		77,384		2,015		594,006
Housing		206,511		60,740		26,036		16,924		2,130		28,133		1,505		19,301		29,870		78,961		11,061		481,172
Justice and Attorney-General		67,617		2,968		1,425		1,091		92		669		41		2,534		751		2,348		119		79,657
Legislative Assembly of Queensland		2,598																						2,598
Local Government, Planning, Sport and Recreation		158,250		138,301		16,564		22,293		6,453		25,740		5,554		31,176		24,531		44,756		4,642		478,261
Main Roads		930,534		452,631		61,678		50,765		29,476		85,080		16,916		51,172		80,831		127,763		92,508		1,979,355
Natural Resources, Mines and Water		22,121		24,799		56,770		2,496		547		12,897		109		72,105		114,651		2,925		18,857		328,276
Police		99,232		36,929		11,790		8,115		923		7,178		1,612		6,330		9,445		12,547		3,690		197,790
Premier and Cabinet		10,430										40				520		120		120				11,230
Primary Industries and Fisheries		20,739		6,360		1,889		1,616		189		1,366		84		1,091		1,503		1,732		244		36,812
Public Works		202501		33966		11312		9213		2047		12642		467		12333		14911		19958		4512		323,862
State Development, Trade And Innovation		18331		157		3709		42		169		35		2		600		228		846		6		24,126
The Coordinator-General		120871		68091		100		8100				11150				13500		7850		5100				234,762
Tourism, Fair Trading and Wine Industry Development		1682																						1,682
Transport Portfolio
Transport		243611		37304		2263		1168		583		2949		715		2467		4200		4873		1241		301,373
Qld Rail		314850		93911		143242		5249		617		33728		277		102949		118280		5625		19021		837,750
Port Authorities		193991				490						396342				108342		10607		146115		13		855,900
Treasury		69628																						69,628
Other3		1206																						1206
Anticipated Capital Contingency Reserve																								(800,000	)
Funds Allocated		4,376,474		1,534,707		841,759		677,262		120,700		851,362		97,113		676,076		734,684		771,066		254,624		10,135,827

Notes
1.	Includes associated statutory bodies. Capital works outside of Queensland are not included in the 2006-07 capital program.
2.	Capital works are shown on a GST exclusive basis, except where an agency is unable to recover some GST input tax credits, for example the Department of Housing (Australian Accounting Research Foundation ).
3.	Includes the Departments of Energy and Industrial Relations, Electoral Commission of Queensland, Office of the Governor, Office of the Public Service Commissioner, Office of the Ombudsman, Queensland Audit Office, and QRAA.
4.	Numbers may not add due to rounding. Where an entity does not have capital expenditure in a particular statistical division, no dollar figures are shown in the table.

Capital Statement 2006-07 7

8 Capital Statement 2006-07

2. STATE CAPITAL PROGRAM — PLANNING AND PRIORITIES

INTRODUCTION

The Queensland Government is committed to creating the infrastructure necessary to support the economic and social development of the State. It does so:

• by providing infrastructure in support of core service delivery priorities – General Government sector investment

• through investments made by Government-owned corporations – Public Non-Financial Corporations sector investment

• where appropriate, by fostering private sector investment.

This chapter outlines key capital planning and expenditure priorities for the General Government sector and Public Non-Financial Corporations sector, with reference to the Queensland Government’s priorities in the SEQIPP.

Further details on the current status of projects with private sector involvement are provided in Chapter 3 of this Budget Paper.

GENERAL GOVERNMENT SECTOR CAPITAL PLANNING AND PRIORITIES

General Government sector capital investment decisions are driven by the policy priorities of Government and factors such as demographic changes and planning requirements which affect service delivery needs.

The Charter of Social and Fiscal Responsibility outlines the Government’s key policy priorities, as follows:

• Growing a diverse economy and creating jobs

• Realising the Smart State through education, skills and innovation

• Managing urban growth and building Queensland’s regions

• Improving health care and strengthening services to the community

• Protecting our children and enhancing community safety

• Protecting the environment for a sustainable future

• Delivering responsive government.

Capital Statement 2006-07 9

The Government has several mechanisms available to deliver the capital needed to support these priorities. These include funding and constructing its own infrastructure and providing capital grants to local government, the private sector and profit and not-for-profit organisations to build capital and provide services on behalf of the Government. The Government also examines private sector involvement in public sector infrastructure delivery either through joint ventures or stand-alone projects.

Determining which of these mechanisms represents the best value-for-money outcome for taxpayers forms part of the planning phase of infrastructure investment and is closely scrutinised by the Government. The Queensland Government’s overall approach to infrastructure planning is represented in the State Infrastructure Plan, supplemented by regional initiatives such as SEQIPP.

South East Queensland Infrastructure Plan and Program

The 2006-2026 SEQIPP reaffirms the Queensland Government’s commitment to delivering the necessary infrastructure to support the fastest-growing metropolitan region in Australia.

The SEQIPP gives direction and momentum to Queensland Government infrastructure and services investment over the next 20 years. The 2006 edition envisages investment of approximately $66 billion of infrastructure including $1.1 billion for additional projects and two new infrastructure categories: vocational employment and training and regional sport and recreation.

The 2006-2026 SEQIPP takes into account the increases in project costs that are resulting from a booming civil construction market in the public and private, particularly mining, sectors.

The SEQIPP is aimed at ensuring greater coordination of the infrastructure and services provided by State agencies and Government-owned corporations. The SEQIPP is now supported by a dedicated Program Management Office within The Coordinator-General which includes a mix of specialist private sector and public sector staff. This group has a key role in planning and delivering the large scale infrastructure program being undertaken by the Queensland Government.

Highlights of the $66 billion 2006-2026 SEQIPP include:

• $28 billion over the next 20 years in road and public transport projects, and $90 million to investigate possible road and public transport projects worth another $14 billion

• $5 billion in social and community infrastructure

10 Capital Statement 2006-07

• $5 billion in water infrastructure projects

• $4 billion on energy networks over the next five years with another $10 billion in expected outlays on energy networks (beyond the first five years).

CAPITAL GRANTS TO LOCAL GOVERNMENT AUTHORITIES

As highlighted in Budget Paper 2 – Budget Strategy and Outlook, the Queensland Government provides capital grants to local government authorities, ranging from capital works subsidies towards the costs of local public infrastructure to road subsidies for local roads, networks and drainage.

In 2005-06, approximately 71% ($368.9 million) of total Queensland Government grants made to local government authorities were for capital purposes. Capital grants to local governments are expected to account for $470.8 million, or 73% of total Queensland Government grants in 2006-07. The capital grant funding can be utilised for a range of purposes including roads and drainage, water and environment, and housing.

Chart 2.1
Queensland Government Capital Grants to Local Government Authorities,
by Purpose, 2006-07

Capital Statement 2006-07 11

2006-07 HIGHLIGHTS

The Queensland Government is committed to broadening Queensland’s infrastructure base. Highlights of capital spending in 2006-07 in the General Government sector are outlined in this section.

A list of Smart State Building Fund allocations by portfolio is outlined in Appendix 2.1 to this chapter, providing updated details on the $1.4 billion Smart State Building Fund, which was announced in late 2003 and detailed in the 2004-05 Budget.

Education and Training

This budget delivers a $1 billion injection over five years into the state and non-state education sector. Tomorrow’s Schools – Providing for a Smarter Future will ensure that Queensland students have the best possible facilities to meet the needs of the future and is in addition to the annual capital expenditure on school infrastructure.

The 2006-07 Budget provides a substantial investment in educational facilities with a schools capital works program of $427.1 million (including $68.6 million in capitalised expenses). This includes $169.8 million for new schools, classrooms and land acquisition in growth areas throughout the State and a further $104.7 million for building renewal programs to ensure state school premises are comfortable, safe and suitable to deliver modern curriculum initiatives.

In 2006-07, the Government has allocated $106 million to continue delivering facilities for the new preparatory year of schooling as part of the lead-up to the full introduction of the preparatory year in 2007. An investment of $12.5 million is provided for stage one of construction of two new Queensland Academies (one focused on maths, science and technology and one on the creative arts). An amount of $9 million is also provided to complete works in the current round of the Cooler Schools program.

In March 2006, the Queensland Government launched the Queensland Skills Plan, which contains a range of actions to transform and modernise the State’s vocational education and training system. Around $46 million is budgeted in 2006-07 by the Department of Employment and Training to commence the implementation of capital initiatives contained within the Queensland Skills Plan. The plan represents a total capital commitment exceeding $300 million over six years.

During 2006-07, the Department of Employment and Training is budgeting total capital expenditure of $104.1 million for employment and training initiatives. This commitment includes $19.1 million to commence site works and construction of the new Gold Coast Institute of TAFE campus at Coomera. A further $19.3 million is allocated to establish major Trade and Technician Skills Institute campuses at Acacia

12 Capital Statement 2006-07

Ridge and Eagle Farm in Brisbane. Around $11.8 million is budgeted to acquire land and commence detailed planning for the establishment of major trade training centres at Barrier Reef (Townsville), and Central Queensland (Mackay) Institutes of TAFE.

Health

The Queensland Government has continued its significant investment in Queensland Health infrastructure with a portfolio capital program of $594 million in 2006-07, including $3.1 million for the Queensland Institute of Medical Research. The focus of the capital program for 2006-07 includes hospital redevelopments, the development of community and mental health infrastructure, health technology replacement, completion of the residential aged care upgrade, further investment in staff accommodation and development of new information technology infrastructure. The capital program includes SEQIPP projects such as the Prince Charles Hospital upgrade.

The 2006-07 capital works program also includes $12.6 million for critical infrastructure upgrades and the purchase of additional equipment for the Queensland Health Scientific Services to enable enhanced capacity in dealing with DNA profiling and crime scene samples.

Water

The development of new water infrastructure to meet urban, industrial and rural demand on an environmentally sustainable and economically responsible basis is a key priority for the Government. Drought conditions across much of Queensland, not least the record drought in the South East, is highlighting the need for efficiency in the use of this most valuable resource, along with diversification of water sources to address climate variability and any other supply risks.

The Government has announced the development of two new dams in South East Queensland, at Traveston on the Mary River and either Tilleys Bridge on the Logan River or Wyaralong on Teviot Brook (also part of the Logan catchment) subject to the finalisation of technical investigations into individual sites. In SEQIPP the State has allocated $490 million to the cost of these dams, which includes $66 million for initial land acquisition in 2006-07, with between $200 million and $300 million to be contributed from the Queensland Future Growth Fund. These dams, together with the weir commenced at Cedar Grove, will underpin the medium to long term water supply security for growth in the region.

In addition to these dam projects, the State is also working with local governments in South East Queensland to progress drought contingency projects. Investigations under the SEQ Regional Water Supply Strategy are currently underway and depending on the length and severity of the drought, could involve bringing forward significant alternative water supply sources to support the current diminishing supplies. Sources could include groundwater developments, desalination and recycling.

Capital Statement 2006-07 13

Water recycling and re-use makes sound environmental and economic sense in a water scarce environment. The Government has allocated $100 million for an initial order of pipes for the first stage of the Western Corridor Recycled Water Scheme, providing recycled water to power stations and industry, in turn freeing up valuable potable water from the Wivenhoe system. Further environmentally prudent measures include additional funding of $32 million to help SEQ councils fix water main breaks and leaks, and implement water pressure reduction measures, saving between 60 million and 90 million litres per day across the region. The State Government will also be working with local governments in South East Queensland to achieve further efficiency improvements in domestic, commercial and industrial water usage in the region. The budget of $20 million will provide assistance for rebates to retrofit domestic premises with more water efficient devices as well as assisting individual industries to better understand their water usage and find more water efficient solutions.

The Government, in partnership with Central Queensland communities, has also prepared a draft Regional Water Supply for that region. This highlights a number of potential future water infrastructure projects for development, pending environmental sustainability and economic viability. The State Government has announced it is commencing project development to raise the Eden Bann Weir and develop the Rookwood Weir, with funding to be also provided from the Future Fund.

Investment in this water infrastructure will be financed from a number of sources including contributions from the State Government, revenue from water charges, developer contributions and borrowings. The underlying principle is that water infrastructure be developed where economically viable and the cost can be met by those who benefit from its development.

To maintain and improve the supply of water to Queensland, SunWater will spend more than $129.4 million in 2006-07 on the Burdekin to Moranbah Pipeline project and a further $19.6 million on refurbishing and enhancing existing schemes and other minor works. SunWater is also continuing investigations into a range of other commercial water projects throughout Queensland. SunWater’s subsidiary, Eungella Water Pipeline Pty Ltd, is spending more than $2 million in 2006-07 to complete the construction of the Eastern Spur extension to the existing Eungella Pipeline.

Expenditure on the pipeline projects is in response to increasing water demands of the coal industry in the Bowen Basin. The new Burdekin to Moranbah Pipeline involves construction of a 215 kilometre water pipeline from Gorge Weir near Burdekin Falls Dam to Moranbah to provide and enhance water supplies to coal mines in the Bowen Basin. The Eastern Spur extension involves construction of a 46 kilometre water pipeline from Moranbah to Coppabella. Both pipeline projects will ensure continuation of coal extraction and processing in the region for valuable export markets.

14 Capital Statement 2006-07

Highlights of the 2006-07 capital program include:

• Burdekin to Moranbah Pipeline — SunWater will spend around $270 million over two years to construct a 215 kilometre water pipeline from Gorge Weir near Burdekin Falls Dam to Moranbah to provide and enhance water supplies to coal mines and towns in the Bowen Basin.

• Eastern Spur Extension to Eungella Pipeline — SunWater will spend $19.6 million over two years to construct a 46 kilometre extension to the Eungella Water Pipeline from Moranbah to Coppabella, supplying water for coal mines in the region.

Transport Infrastructure

Capital funding of $2 billion is provided through the transport portfolio which includes Queensland Transport, Queensland Rail and port authorities.

The Government will continue to build the infrastructure outlined last year in the SEQIPP.

The Government will spend $333 million over four years to continue its investment in the Inner Northern Busway (INB). In 2006-07, expenditure on the INB will be $79.8 million and $38.2 million on Sections 1 and 2 respectively.

The Budget provides for expenditure of $36.8 million in 2006-07 towards planning and construction for the Eastern and Northern Busways, including $33.5 million for the Boggo Road section of the Eastern Busway.

Expenditure by Queensland Rail on passenger services is forecast to be $163 million in 2006-07, including $80 million alone for additional Citytrain rollingstock. Queensland Rail expenditure on Network Access will be $344.7 million in 2006-07, including $57.6 million for a third loop at Dalrymple Bay Coal Terminal.

Funding is also provided for major investments in ports infrastructure to meet expected demand for Queensland’s exports. The 2006-07 capital program sets out $855.9 million in ports capital expenditure, including $193.8 million at Port of Brisbane and $396.2 million at Port of Gladstone.

In 2006-07, capital funding of $1.979 billion is provided through the Main Roads portfolio.

Program highlights include commencement of major works for a second Gateway Bridge river crossing and increased capacity on the Gateway Motorway between Mt Gravatt-Capalaba Road and Nudgee Road with $347 million to be spent in 2006-07. This will be Queensland’s largest single road project with a total estimated cost of $1.6 billion.

Capital Statement 2006-07 15

The Government will also continue construction of the $543 million ($423 million – State; $120 million – Australian Government) four-lane bypass on the Pacific Motorway between Tugun and Tweed Heads, with $190 million to be spent in 2006-07. Completion is scheduled by the end of 2008.

The Government will allocate $230 million over five years from 2006-07, for road safety capital programs as part of the State’s Safer Roads Sooner initiative, aiming to reduce road trauma and its social consequences by targeting road safety improvements.

Housing

The Department of Housing is responsible for constructing, maintaining and upgrading one of the State’s largest assets – the housing portfolio, valued at approximately $9.3 billion. In 2006-07 the department will spend $700 million which includes a $472.7 million capital works program to expand the supply and enhance the standard of social housing dwellings. Through departmentally-owned and funded dwellings the department provides long-term, crisis and transitional social housing more than 77,000 households.

A number of factors are influencing a gradual realignment of the portfolio. These include a general contraction in household size, an ageing population, and a loss of affordable private housing, especially for low-income households.

Through redevelopment and acquisition opportunities, the department is focusing on realigning the housing portfolio in targeted Brisbane suburbs to maximise the mix and the value of the significant residential assets.

The department will continue its commitment to the Government’s Responding to Homelessness initiative through further development of the Lady Bowen Complex, to expand the housing options for homelessness people in inner-Brisbane, together with funding allocations to the Crisis Accommodation and Boarding House Programs.

The department will also expand the supply of accommodation for low-income Queenslanders though the provision of capital grants to not-for-profit organisations in inner-Brisbane through the Brisbane Housing Company, and in regional centres such as the Gold Coast and Sunshine Coast.

16 Capital Statement 2006-07

PUBLIC NON-FINANCIAL CORPORATIONS SECTOR CAPITAL PLANNING AND PRIORITIES

The Public Non-Financial Corporations sector is vital to the future development of Queensland. Importantly, a major part of the Queensland Government’s capital program is undertaken through Government-owned corporations (GOCs).

While the capital program undertaken across the GOC sector contributes significantly towards meeting the Government’s priorities for Queensland, the process in which this capital program is developed and funded is different from the General Government sector.

GOCs operate as commercial business entities, generally within competitive markets, and as such progress their capital programs on the basis of needs identified within the market sectors they service. Each GOC develops its capital program through its own board. Major projects are directly authorised by a GOC’s shareholding Ministers.

There are a number of ways in which the GOC capital expenditure program can be funded. These options include using cash flow from their business, borrowings, and, in certain situations, requesting a dividend reinvestment or equity injection from shareholding Ministers. The method of financing will differ according to the individual circumstances of the relevant GOC, and the specific nature of the project in question. The Queensland Government is committed to ensuring that GOCs are at all times able to fund viable projects while at the same time retaining a sound financial position.

GOCs operate across a very broad section of Queensland industry and the actions and undertakings of GOCs have significant impact on Queensland.

Energy

The rapid growth in electricity demand that Queensland has experienced over recent years is expected to continue over the coming years. Over the next three years, electricity demand is forecast to grow on average at 4.4%, 4.1% and 3.1% per annum respectively for total energy delivered under a medium growth scenario.

While this growth in electricity demand is particularly evident in the south-east corner, the resources boom is also driving demand to unprecedented levels in the rest of the State. Growth in average demand in the south east over the next 10 years is likely to be exceed 3.1% per annum while the rest of Queensland is expected to experience growth in excess of 1.5% over the same period.

While Queensland’s population growth continues to drive the increase in peak demand, lifestyle changes such as the increasing use of air conditioners, computers and swimming pool filters are also causing an increase in energy use per householder.

Capital Statement 2006-07 17

The growth in demand, particularly during peak periods, drives the need for capital expenditures. These growth forecasts will see the need for increased expenditure in generation assets as well as the augmentation of the State’s transmission and distribution networks over the coming years. The GOC network businesses, Powerlink, ENERGEX and Ergon Energy, will spend approximately $2.1 billion in 2006-07 to strengthen the networks around Queensland.

The energy sector is facing some unique challenges. The increasing growth in energy demand has required additional investment in electricity infrastructure in an environment characterised by resource constraints, both human and physical. However, capital investment undertaken in recent years ensures that current generation capacity in Queensland remains adequate and with new plant currently under construction, Queensland will have sufficient generation capacity to meet the increased demand through to 2009-10. Recent and planned investment in the networks will also ensure reliability and quality of supply.

Highlights of the 2006-07 electricity capital program include:

•

Electricity Distribution Network — In February 2004, the Government initiated the independent, Electricity Distribution and Service Delivery (EDSD) review for the 21st century, into the performance of Queensland’s electricity distribution networks. Among the key considerations of the EDSD Review were network security issues and the capital expenditure required to implement the associated recommendations. Since the release of the findings of the EDSD review, Ergon Energy and ENERGEX have prepared capital programs designed to meet their ongoing commitments to deliver on all the recommendations of the EDSD Review.

In the 2006-07 year, the combined capital network expenditure of Ergon Energy and ENERGEX total a record $1.7 billion. The increased expenditure continues to focus on improving the quality and reliability of Queensland’s electricity distribution network assets to meet the increasing demands associated with the State’s strong economic and population growth. The Queensland Competition Authority has also recognised these capital requirements in its current regulatory determination, providing the revenue support the distributors need to implement these plans.

• Kogan Creek Power Project — The new Kogan Creek Power Station currently under construction is due to be commissioned in October 2007.

18 Capital Statement 2006-07

CS Energy is forecasting capital expenditure of $359.8 million (including capitalised interest) to continue to develop the power station and coal mine in 2006-07. Construction of the power station commenced in July 2004 and is on schedule for completion to meet forecast energy demand in the summer of 2007-08. When commissioned, the Kogan Creek power station will be one of the most efficient, low-cost, coal-fired power stations in the National Electricity Market and will contribute to maintaining the supply of reliable, low-cost electricity to Queensland.

Rail and Ports

Continued competitive reform of the transport industry over the last 10 years has led to the emergence of a nationally integrated transport market. This has had the effect of combining all transport modes (road, rail and ports) with the aim of moving goods in a coordinated and timely manner. An efficient, integrated transport process maximises the efficiency of the flow of goods, increases returns to the State of Queensland and makes our importers and exporters more competitive in the global market.

Exports are a key driver for the Queensland economy and coal is the single most important mineral commodity exported. Coal exports to our largest trade partners Japan, South Korea and India have been increasing, fueled by growth in demand for steel and electricity overseas, particularly in Asia.

Over the next five years, demand for Queensland’s coal is forecast to remain strong with markets in China, South-East Asia (including India), Japan and Brazil growing strongly. GOCs will play a significant role in facilitating the necessary expansion of the coal supply chain, including water, transport and energy, to enable the Queensland coal industry to respond to this demand.

Queensland Rail, Ports Corporation of Queensland and Central Queensland Ports Authority have all initiated coal-related infrastructure projects with development either well underway or planned to commence in 2006-07.

GOCs are dynamic commercial entities and operate across broad sections of Queensland industry. In addition to bulk commodity and containerised trade facilitated by rail and seaports, GOCs are also responsible for the operation and future development of many of Queensland’s larger airports. Growth in domestic tourism and the introduction into the Australian market of low cost carriers has generated sustained passenger growth through Queensland’s airports and an increase in capital investment.

Capital Statement 2006-07 19

Highlights of the 2006-07 rail and ports capital program include:

• Coal Network Upgrades — $85 million will be spent by Queensland Rail to maintain and upgrade track infrastructure on the coal network.

• Coal Rollingstock — $274 million will be spent by Queensland Rail for additional coal rollingstock to support increased coal haulage requirements in Central Queensland.

• Mt Isa Network Upgrade — $18 million will be spent by Queensland Rail to maintain the Mt Isa rail system, which transports bulk minerals, livestock, and general freight.

• Expansion of the RG Tanna Coal Terminal — $360 million will be spent by Central Queensland Ports Authority as part of its project to expand the RG Tanna Coal Terminal. Once completed, this expansion will increase the terminal’s coal throughput to 68 million tonnes per annum.

• Port of Hay Point Departure Path — $32 million will be spent by Ports Corporation of Queensland as part of its capital dredging project to deepen the channel at the Port of Hay Point to allow larger ships to be loaded to their maximum capacity.

• Expansion of the Abbot Point Coal Terminal — $63 million will be spent by Ports Corporation of Queensland as part of its project to expand the Abbot Point Coal Terminal. Once completed, this expansion will increase the terminal’s coal capacity to 25 million tonnes per annum.

• Cairns Airport Domestic Terminal — $39.4 million will be spent by Cairns Port Authority as part of it redevelopment of the domestic terminal located at the Cairns Airport.

• Cairns Airport International Terminal — $11.1 million will be spent by Cairns Port Authority to further expand the baggage reclaim hall and to provide new baggage carousels within the International Terminal.

• Port of Brisbane Corporation — $28.8 million will be spent by Port of Brisbane Corporation to construct a tenth berth and wharf at Fisherman Islands to facilitate increased containerised trade and $15.4 million will be spent on a general cargo berth.

20 Capital Statement 2006-07

APPENDIX 2.1

SMART STATE BUILDING FUND ALLOCATIONS BY PORTFOLIO

Smart State Building Fund^1,3

	2004-05		2005-06		2006-07		Post
	Actual		Est. Act		Budget		2006-07
Department	$’000		$’000		$’000		$’000
Aboriginal and Torres Strait Islander Policy2		271		1,179		250		—
Disability Services Queensland		592		2,834		10,357		—
Department of Education and the Arts		42,582		147,700		160,718		—
Emergency Services		2,210		7,790		—		—
Employment and Training		947		—		19,140		4,913
Environmental Protection Agency		3,448		3,472		7,520		—
Health		9,710		46,033		124,019		20,238
Housing2		7,712		11,100		12,700		—
Justice and Attorney-General		315		2,625		8,060		—
Main Roads4		41,315		65,743		53,873		25,319
Natural Resources, Mines and Water		1,992		6,263		2,304		261
Police		6,300		10,700		13,000		—
Primary Industries and Fisheries		—		100		3,300		1,600
Public Works5		2,050		2,246		1,934		6,270
State Development and Innovation		20,000
Transport		10,435		26,747		20,564		6,000
Sub-Total Departments		149,879		334,532		437,739		64,601
Queensland Rail6		9,506		82,265		166,585		141,644
Total		159,385		416,797		604,324		206,245

Notes

1.	Numbers may not add due to rounding.
2.	Responsibility for Aitkenvale project transferred to the Department of Housing.
3.	Some forecast expenditure has been treated as an expense, due to the adoption of Australian Equivalents to International Financial Reporting Standards. As a result the SSBF does not add to the original $1.4 billion program.
4.	Some road projects announced in the SSBF package had been significantly extended in scope, resulting in longer implementation periods than originally announced.
5.	$0.8 million of the funding for Anzac Square was subsequently reallocated as recurrent funding.
6.	Project timetables revised for construction of Mains Road bridge to coincide with operational closures on the rail corridor, some delays to start of corridor works Salisbury to Altandi, and contractor behind schedule with civil construction works on Ormeau to Coomera.

Capital Statement 2006-07 21

3. PRIVATE SECTOR CONTRIBUTION TO THE DELIVERY OF PUBLIC INFRASTRUCTURE

QUEENSLAND’S PUBLIC PRIVATE PARTNERSHIP POLICY AND VALUE FOR MONEY FRAMEWORK

The Queensland Government believes private sector participation in the provision of public infrastructure can assist the timely delivery of efficient and effective infrastructure to the Queensland community. However, the Queensland Government recognises Public Private Partnerships (PPPs) are complex arrangements, and need to be thoroughly evaluated to ensure the Queensland Government is receiving a value for money outcome.

Queensland’s PPP evaluation approach is through the Value for Money Framework, which measures traditional delivery against PPP delivery to determine the optimal delivery method. This evaluation process is designed with the aim of ensuring the Government optimises value for money, on a whole-of-project-life basis, in the provision of public infrastructure and related non-core services.

POTENTIAL PPP PROJECTS

Currently, the Queensland Government is considering several infrastructure projects to be explored as potential PPPs. Out of the planned $66 billion over 20 years for the South East Queensland Infrastructure Plan and Program (SEQIPP), a number of major projects are to be investigated under the Value for Money Framework.

Airport Link

Airport Link is a proposed tunnel to connect the northern arterials of Gympie Road, Sandgate Road and Airport Drive (via the East-West Arterial) to the Inner City Bypass and the North-South Bypass Tunnel at Bowen Hills.

A joint State Government and Brisbane City Council project team is expected to finalise a feasibility study and business case for Airport Link by mid-2006.

As part of the business case, the joint project team is also examining opportunities for synergies with the proposed Northern Busway, which is designed to enhance public transport services from the City to Brisbane’s northern suburbs.

Toowoomba Bypass

The Queensland Government is currently undertaking a PPP business case for the Toowoomba Bypass project, with the assistance of the Commonwealth Government. The proposed bypass will provide a safer and faster range crossing, removing the majority of heavy vehicles from city streets and the existing range road. The business case is expected to be completed in 2007.

22 Capital Statement 2006-07

Springfield to Darra Road and Rail Corridor

A preliminary assessment examining the duplication of the Centenary Highway from the Ipswich Motorway to Springfield and the construction of the rail line from Darra to Springfield has been completed. Subject to Government consideration of the results of the preliminary assessment, a business case is expected to commence shortly.

Gold Coast Public Transport Project

A quality public transport system from Helensvale or Parkwood to Broadbeach and through to Coolangatta was identified in SEQIPP. Depending on the mode of transport chosen, it may be possible to achieve better value for money through a PPP arrangement by optimising the allocation of construction, operation, maintenance and financing risks.

Eastern Busway: Buranda to Capalaba

SEQIPP identified the need for an Eastern Busway from Buranda to Capalaba. Consultation is continuing with the local community in relation to construction of the busway. The Department of Transport intends to announce a preferred alignment for the busway in August 2006.

Sunshine Coast & Western Corridor Schools

The Queensland Government has identified the need for a number of new schools to meet growing population needs. Schools will be planned using population projections and new school sites will be prioritised based on reviews of demographic trends. Under SEQIPP, the Government has estimated the need for 23 new schools in the Sunshine Coast region and 13 new schools in the Western Corridor area. Business cases on these packages of schools will commence in 2006.

Gold Coast Hospital

A master planning exercise for the Gold Coast Hospital project is currently underway, which will incorporate results of consultation with key stakeholders. The business case for the project will be completed after health service requirements have been confirmed.

EXISTING PPP PROJECTS

Southbank Education and Training Precinct Project

The Queensland Government’s first PPP under the Value for Money Framework is the Southbank Education and Training Precinct, involving construction of new facilities and refurbishment of a number of existing buildings at the Southbank Institute of TAFE at South Bank Parklands.

Capital Statement 2006-07 23

Construction work is well underway and is expected to be completed in late 2008. At the end of the construction period, the private sector consortium (Axiom Education Queensland) is required to maintain the facilities for a further 30 years under a performance-based contract with the Government. Core service delivery, such as teaching and curriculum, will remain the responsibility of the State.

The net present value of the overall project is estimated at $550 million. Included in this amount are construction costs of approximately $230 million.

North-South Bypass Tunnel

Brisbane City Council has announced RiverCity Motorway as the preferred bidder to build, own and operate the North-South Bypass Tunnel. Financial close is expected later this year. The tunnel will connect Woolloongabba, Kangaroo Point and Bowen Hills, allowing motorists to bypass the central business district.

OTHER PROJECTS INVOLVING THE PRIVATE SECTOR

In addition to those infrastructure projects being assessed within the PPP Framework, several other major infrastructure projects with private sector involvement are being progressed through partnering with the private sector as well as via more traditional delivery methods.

Gateway Upgrade Project

The Queensland Government is currently assessing tenders for the delivery of the Gateway Upgrade Project. The Government’s business case estimated capital cost for the project to be $1.6 billion.

This project is to be delivered by Queensland Motorways Limited under a design, construct and maintain contract with the private sector. The contract includes a duplicate bridge, refurbishment of the existing bridge and upgrading of 20km of the approach roads.

The contract is expected to be awarded in late 2006, with construction commencing by year end. Sections of the upgrade will be opened progressively to traffic, with the new bridge scheduled to be open by late 2010 and refurbishment of the existing bridge to be completed in 2011.

Townsville Ocean Terminal

Contractual arrangements between the State and a consortium comprising TABCORP Holdings and Consolidated Properties Group for delivery of the Townsville Ocean Terminal project have been finalised. This project will provide Townsville with:

• a dedicated cruise terminal and wharf to dock cruise ships and naval vessels, located on the Western Breakwater, adjacent to the Port of Townsville;

24 Capital Statement 2006-07

• an integrated residential and tourism development for the land surrounding the casino; and

• a landscaped residential development, providing public access to the Breakwater and future green areas.

It is anticipated construction of the terminal will commence in mid-2007 and be completed by mid-2009.

This project is a key component in the implementation of the Government’s cruise shipping plan, and acknowledges the potential economic benefits to the State and the Townsville region associated with increased visits from both cruise vessels, and Australian and foreign military vessels on rest and recreation visits.

Brisbane Cruise Terminal

The Brisbane Cruise Terminal is currently being developed by Multiplex Limited as part of a $350 million integrated residential and retail development, known as ‘Portside Wharf’, located at Hamilton.

The Brisbane Cruise Terminal will be capable of operating as a base port or transit stop for cruise ships and navy vessels.

The Brisbane Cruise Terminal is key to the promotion of cruise shipping in Queensland and is expected to generate up to $100 million per annum for the State and create an estimated 750 jobs in construction and an additional 450 jobs in the operation of the terminal and in the broader Queensland tourism industry.

Construction of the Brisbane Cruise Terminal commenced in 2004 and is anticipated to be completed by July/August 2006.

Gold Coast Marine Development Project

In September 2005, the Government announced the first stage in the anticipated Gold Coast Cruise Ship Terminal as part of a broader marine development proposal for The Spit.

The Queensland Government’s vision for The Spit is for an integrated development that is compatible with the existing natural and built environment, consolidates and complements the existing marine infrastructure, and creates new and exciting recreational and tourism experiences while enhancing the public recreational experience on The Spit.

Elements of the Gold Coast Marine Development Project include:

• a cruise ship terminal on the northern end of The Spit;

• construction of a marina facility for super yachts, recreational and commercial vessels at either the Marine Stadium or to the west of Sea World;

Capital Statement 2006-07 25

• the development of State land south of Sea World;

• a preservation program for Doug Jennings Park and the western arm of the Marine Stadium;

• the provision of recreational facilities for public use; and

• a protection and enhancement program for the 93ha Federation Walk and Nature Reserve areas east of Sea World Drive.

An Environmental Impact Study (EIS) is currently underway to examine the impact of the project. At the same time, a competitive bidding process is underway to identify a preferred proponent to deliver the project.

Subject to the outcome of the EIS and the competitive bidding process, construction of the cruise ship terminal is expected to commence in 2008 and be completed by 2010.

State Tennis Centre — Tennyson Riverside Development

Following a competitive bidding process, the Queensland Government selected Mirvac Queensland as the preferred developer for the delivery of an international-standard State Tennis Centre and residential development at Tennyson.

Situated in one of Brisbane’s most scenic locations, the development will include a state-of-the-art tennis and residential complex which integrates with the surrounding area.

Queensland’s State Tennis Centre is scheduled for completion at the end of 2008.

Aurukun Project

The Aurukun Bauxite Resource is situated in a parcel of land in western Cape York, south of Weipa. As part of an international competitive bidding process for the granting of development rights over the Aurukun Bauxite Resource, the Queensland Government has shortlisted the Aluminum Corporation of China Limited to lodge a Final Proposal. This proposal is to include a mine and wash plant at Aurukun and an alumina refinery on the east coast of Queensland, worth approximately $2.92 billion. In undertaking this competitive process, the Government is seeking to optimise the economic, social and financial outcomes for the State and the local region from the development of the bauxite resource and investment in downstream processing.

North Bank

The proposed North Bank development spanning the two kilometre stretch of Brisbane CBD waterfront from the Goodwill Bridge to the William Jolly Bridge will include a mixture of public use, commercial, retail and residential spaces. The aim of the North Bank project is to complement the existing Southbank development and further enhance Brisbane’s reputation as the ‘River City’.

26 Capital Statement 2006-07

A Preferred Strategic Plan has been developed for the area, with the project to be delivered in stages. A competitive process for the development of Stage One of the North Bank project (extending from Victoria Bridge east to Alice Street) is currently underway to select a preferred proponent.

Wacol Westgate

The Government is investigating options for developing the Westgate site west of Brisbane, bounded by the Ipswich Motorway, Centenary Highway, Wolston Creek, Brisbane River and Woogaroo Creek. The site contains about six kilometres of undeveloped riverfront and prime land for high quality residential and community use at the entrance to Brisbane’s Western Corridor.

A Strategic Plan is being prepared for the area, which will incorporate community and other stakeholder consultation to ensure the best long term use for the area, with sufficient transport infrastructure to meet the needs of a growing population in the area.

Open Access Broadband Network for Brisbane

A business case has been completed for the provision of an ultra high speed (100 mega bits per second), open access broadband network for the Brisbane City Local Government Area. The Queensland Government’s role in this telecommunications initiative would be facilitative, involving access to State and local government assets (such as electricity poles, pits, pipes, road and rail easements) to be used to carry infrastructure and services. Results of the business case are being considered by Government.

Capital Statement 2006-07 27

4. KEY CONCEPTS, SCOPE AND COVERAGE

KEY CONCEPTS, SCOPE AND COVERAGE

Capital Contingency

Consistent with the approach adopted in previous years, a capital contingency reserve has been included. This reserve recognises that while departments budget to fully use their capital works allocation, circumstances such as project lead-in times, project management constraints, unexpected weather conditions, and capacity constraints such as the supply of labour and materials may prevent full usage. On a whole-of-Government basis, there is likely to be underspending, resulting in a carryover of capital allocations.

Coverage

Under accrual output budgeting, capital is the stock of assets including property, plant and equipment, intangible assets and inventories that an agency owns and/or controls and uses in the delivery of services, as well as capital grants made to other entities. For the purpose of this Budget Paper, capital outlays refer to the gross acquisition of these assets. The following definitions are applicable throughout this document:

• total capital outlays — property, plant and equipment outlays, other capital expenditure and capital grants

• property, plant and equipment outlays — property, plant and equipment outlays as per the financial statements excluding asset sales, depreciation and revaluations

• other capital expenditure — intangibles, inventories, and self-generating and regenerating assets

• capital grants — capital grants to other entities (excluding grants to other Government departments, statutory bodies and individuals under the First Home Owners Grant scheme).

Capital outlays include information for all bodies defined as reporting entities for the purpose of whole-of-Government financial reporting requirements, excluding Public Financial Corporations. Projects without a recorded total estimated cost are ongoing. The entities included in scope for the Capital Statement are listed in Appendix A.

28 Capital Statement 2006-07

Capital Works and the GST

Abstract 31, issued by the Australian Accounting Research Foundation, deals with accounting for the Goods and Services Tax (GST). This Abstract states that in relation to acquisitions of assets, any recoverable GST (in the form of GST input tax credits) would not be included in the cost of acquiring an asset. On this basis, capital works projects are shown on a GST exclusive basis, that is, net of any recoverable GST input tax credits. The exception to this is where an agency is unable to recover some GST input tax credits because of their GST status — for example the Department of Housing.

Capital Statement 2006-07 29

5. CAPITAL OUTLAYS BY ENTITY

ABORIGINAL AND TORRES STRAIT ISLANDER POLICY

The department’s capital expenditure program for 2006-07 is $6.5 million and principally comprises the upgrading of a number of departmental facilities, along with capital grants associated with upgrading infrastructure within Queensland’s Indigenous communities.

Program Highlights

• $0.25 million will be spent to upgrade departmental houses at the Lockhart River Aboriginal community.

• $0.4 million will be spent to upgrade the Jimaylya Centre at Mount Isa to assist programs identified in the Regional Blueprint for Indigenous Homelessness.

• $1.2 million is provided to refurbish Retail Stores throughout the State.

• $1.06 million is provided for the provision of fuel facilities at Retail Stores at Kowanyama, Lockhart River and Doomadgee.

• $0.4 million in capital grants has been allocated to complete the construction of an Aquatic Centre at Yarrabah.

• $1.1 million in capital grants has been allocated for replacement Islanders Board of Industry and Service Stores on Mabuiag Island and Dauan Island in the Torres Strait.

• $1.4 million in capital grants has been allocated for Cape York Outstations.

30 Capital Statement 2006-07

Aboriginal and Torres Strait Islander Policy

	Statistical	Total		Expenditure		Budget		Post
	Division	Estimated		to		2006-07		2006-07
Project		Cost		30-06-06
		$’000		$’000		$’000		$’000
DEPARTMENT OF ABORIGINAL AND TORRES STRAIT ISLANDER POLICY
Property, Plant and Equipment
Refurbishment of the Jimaylya Centre	45		750		350		400
Refurbishment of Retail Stores	50		1,200				1,200
Fuel Facilities at Retail Stores	Various		1,061				1,061
Refurbishment of Departmental Houses*	Various		1,000		750		250
Plant & Equipment Replacement	Various						633	Ongoing
Total Property, Plant and Equipment							3,544
Capital Grants
Yarrabah Aquatic Centre	50		930		489		441
IBIS Stores Replacement	50		2,200		1,100		1,100
Cape York Outstations	50		1,500		100		1,400
Total Capital Grants							2,941
TOTAL DEPARTMENT OF ABORIGINAL AND TORRES STRAIT ISLANDER POLICY							6,485

* Funded fully or in part under the Smart State Building Fund

Capital Statement 2006-07 31

CHILD SAFETY

The 2006-07 budget provides $39.7 million in capital expenditure for the Department of Child Safety. The capital program includes ongoing major investments in the Integrated Client Management Information System (ICMS) and expansion of the network of Child Safety Services Centres. The program also includes the establishment of two additional therapeutic residential facilities and service delivery hubs in remote Indigenous communities.

Program Highlights

• $18.2 million will be invested to continue the initiative to accommodate and support departmental staff working in Child Safety Service Centres located across the State.

• Expenditure of $8.9 million is allocated to the ongoing investment in the Information Renewal Initiative (including the ICMS) and a range of other departmental information systems. The ICMS initiative is critical to improve the management of information to support increased effectiveness, responsiveness and accountability in child protection service delivery across Queensland.

• An additional $4 million is planned in 2006-07 to establish two therapeutic residential facilities in South-East Queensland. These facilities will extend the department’s capacity to respond to children in the care of the State with complex behaviours and mental health issues. This additional funding will augment the $2.4 million investment in facilities being developed in Cairns and Townsville.

• An additional $0.81 million will be invested to support service delivery hubs in Indigenous communities located in the Gulf of Carpentaria, Cape York and Torres Strait and Palm Island.

32 Capital Statement 2006-07

Child Safety

	Statistical	Total		Expenditure		Budget		Post
	Division	Estimated		to		2006-07		2006-07
Project		Cost		30-06-06
		$’000		$’000		$’000		$’000
DEPARTMENT OF CHILD SAFETY
Property, Plant and Equipment
Office Accommodation	Various		30,385		12,192		18,193
Therapeutic Residential Care Facilities	Various		6,400				6,400
Minor Works and Other Plant and Equipment	Various						6,241	Ongoing
Total Property, Plant and Equipment							30,834
Other Capital Expenditure
Information Renewal Initiative	05		25,908		16,530		8,327		1,051
Minor Information Systems	Various						562	Ongoing
Total Other Capital Expenditure							8,889
TOTAL DEPARTMENT OF CHILD SAFETY							39,723

Capital Statement 2006-07 33

COMMUNITIES

The department’s capital expenditure program for 2006-07 is $30.1 million. This investment will continue to support Queensland’s vibrant communities as places where people feel empowered, safe and valued, wherever they live, whatever their circumstances.

Program Highlights

• A further $7.1 million in 2006-07 has been allocated to the regional accommodation program. This funding, which was approved as part of the 2005-06 Budget, will enable the department to deliver new and expanded services from 10 Youth Justice Service Centres, eight Regional Service Centres and more than 20 Local Service Centres. Local Service Centres will comprise smaller satellite Youth Justice Service Centres, providing core business services and service delivery hubs in rural and remote sites. The accommodation program will support the implementation of the relevant recommendations from the Crime and Misconduct Commission Report “Protecting Children: An Inquiry Into Abuse Of Children In Foster Care”.

• $2.4 million is allocated to Smart Service Queensland initiatives to further develop key whole-of-Government systems across multiple agencies, to standardise and streamline Queensland Government services to further enhance access and service delivery for the community as a whole.

• $2 million in Child Care capital grants will be provided in 2006-07 to enable services to meet the requirements of Queensland’s child care legislation. Ongoing funding of $1 million will be provided to school aged care services to continue upgrading facilities and a further $1 million to community-based child care services in remote Indigenous communities to upgrade equipment and facilities.

Property, plant and equipment expenditure for 2006-07 of $15.9 million is allocated to complete the following capital projects:

• $2.6 million to meet OH&S requirements for air conditioning at Brisbane Youth Detention Centre;

• $0.44 million for a youth support facility in Mareeba;

• $0.58 million for a neighbourhood centre in Kuranda;

• $1.2 million for a community centre in Innisfail;

• $1.3 million for a district community centre in Bohlevale;

34 Capital Statement 2006-07

• $1.8 million for neighbourhood and community centre upgrades;

• $0.2 million for an expansion of the Childrens Court;

• $0.76 million on other minor capital works and

• $7 million on ICT equipment for Shared Information Solutions.

Communities

	Statistical	Total		Expenditure		Budget		Post
	Division	Estimated		to		2006-07		2006-07
Project		Cost		30-06-06
		$’000		$’000		$’000		$’000
DEPARTMENT OF COMMUNITIES
Property, Plant and Equipment
Smart Service Queensland	05		9,228		4,800		2,407		2,021
Brisbane Youth Detention Centre Air Conditioning	05		2,670		50		2,620
Kuranda Neighbourhood Centre	50		884		302		582
Wilsonton His Neighbourhood Centre	20		200		185		15
Childrens Court Expansion	05		2,200				200		2,000
Innisfail Community Centre	50		1,450		250		1,200
Bohlevale District Community Centre	45		1,500		240		1,260
Mareeba Transition Centre	50		1,000		560		440
Central Office Fitout	05		409				409
Information Renewal Initiative	05		6,918		4,038		2,004		876
Shared Information Solutions Capital Replacement	05		15,664		851		4,955		9,858
Regional Accommodation Program	Various		18,842		11,781		7,061
Minor Capital Works	Various		450				150		300
Property Plant & Equipment	Various		187				187
Neighbourhood Centre Upgrades	Various		1,200		130		670		400
Community Centres funded projects	Various		233				233
Departmental Facilities Service Rooms	Various		800				200		600
Neighbourhood Centre Security & Safety	Various		300				75		225
Neighbourhood Centre Disability Access	Various		2,500				625		1,875
Total Property, Plant and Equipment							25,293

Capital Statement 2006-07 35

Communities

	Statistical	Total		Expenditure		Budget		Post
	Division	Estimated		to		2006-07		2006-07
Project		Cost		30-06-06
		$’000		$’000		$’000		$’000
Other Capital Expenditure
Information Renewal Initiative — Software	05		6,337		3,159		2,796		382
Total Other Capital Expenditure							2,796
Capital Grants
Child Care Grants	Various						2,030	Ongoing
Total Capital Grants							2,030
TOTAL DEPARTMENT OF COMMUNITIES							30,119

36 Capital Statement 2006-07

CORRECTIVE SERVICES

The department’s capital expenditure program for 2006-07 is $236.9 million and principally comprises the expansion of prison infrastructure to meet the immediate and short-term accommodation needs of prisoners, and upgrades to existing prison infrastructure. These initiatives link to the Government’s outcome of safe and secure communities.

Program Highlights

• $58.4 million is provided in 2006-07 to allow construction to continue on a new 150 bed female prison at Townsville, $75.3 million to redevelop and expand the Sir David Longland Correctional Centre, and $23.7 million to expand the Arthur Gorrie Correctional Centre.

• $59 million is provided in 2006-07 to commence construction of a $142.5 million expansion of the men’s Townsville Correctional Centre, the planning for which commenced in 2005-06.

• Upgrades to existing prison infrastructure will continue, including $5.5 million to continue work on the five-year $30 million perimeter security systems upgrade, and $1.2 million for completion of the lightning protection project at secure correctional centres.

• In conjunction with the Department of Justice and Attorney-General, $2.7 million is provided for a videoconferencing installation at the Brisbane Women’s Correctional Centre, as well as planning, design and construction of a videoconferencing suite at the Arthur Gorrie Correctional Centre.

Capital Statement 2006-07 37

Corrective Services

	Statistical	Total		Expenditure		Budget		Post
	Division	Estimated		to		2006-07		2006-07
Project		Cost		30-06-06
		$’000		$’000		$’000		$’000
DEPARTMENT OF CORRECTIVE SERVICES
Property, Plant and Equipment
Women’s Correctional Centre (CC) at Townsville	45		130,000		5,073		58,427		66,500
Redevelopment of Sir David Longland CC	05		110,000		6,172		75,328		28,500
Expansion of Arthur Gorrie CC	05		55,000		4,217		23,683		27,100
Expansion of Townsville CC	45		142,500		3,200		59,000		80,300
Correctional Centre Lightning Protection	Various		3,600		2,437		1,163
Perimeter Security Systems	Various		30,000		12,510		5,490		12,000
Mobile Duress Alarms at Lotus Glen CC and Arthur Gorrie CC	Various		1,400		881		519
Capricornia CC	30		87,120		86,900		220
Additional Security to the Townsville CC	45		1,749		1,713		36
Scanning and Handling Equipment at Secure CC Laundries	Various		1,200		968		232
Establishment of New Probation and Parole Service	Various		3,920				1,500		2,420
Videoconferencing to External Locations	05		2,667				2,667
Other Acquisitions of Property, Plant and Equipment	Various						8,263	Ongoing
Total Property, Plant and Equipment							236,528
Other Capital Expenditure
Integrated Offender Management System Capital Upgrade	Various		380				380
Total Other Capital Expenditure							380
TOTAL DEPARTMENT OF CORRECTIVE SERVICES							236,908

38 Capital Statement 2006-07

DISABILITY SERVICES QUEENSLAND

Disability Services Queensland is responsible for providing leadership in services and programs for people with a disability. The department provides services across three outputs: Accommodation Support Services, Community Services and Respite Services. Investment in capital infrastructure forms a vital part of delivering these outputs.

As a human services provider and funding agency, capital investment in infrastructure occurs where it is required for government service provision.

Capital infrastructure is used to accommodate and support departmental staff and in targeted community sector infrastructure accommodation (usually in partnership with non-government service providers) for people with an intellectual disability and respite centres. The major portion of non-government service delivery uses existing community sector capital infrastructure.

Program Highlights

The 2006-07 Budget commits $50 million in capital funding to enhance disability services delivered within the government and non-government sectors. These funds are being applied towards a range of strategies including:

• $5.2 million to finalise the development of the Disability Information System, which will increase the capacity for the department to deliver on its strategic objectives by providing an information system to support, measure and report on service delivery

• capital equipment and upgrades of $19.8 million for services operated by Disability Services Queensland and community-based organisations to strengthen their ability to provide high quality services and programs for people with a disability

• additional respite and family support services at a cost of $5.2 million, including planning and locating sites for two additional respite facilities in Toowoomba and the Brisbane North corridor. These new respite centres will provide temporary support, allowing families of carers of people with a disability a rest period

• continued funding of $12.1 million to support a range of tailored accommodation support options and enhanced community services for people with high and complex support needs, including purpose design housing at Wacol and another site to be located in the Brisbane North corridor

• the development of appropriate longer term care options and models of accommodation for younger people with a disability residing in aged care

Capital Statement 2006-07 39

facilities at a cost of $1.5 million. These responses, to be developed in a joint five year program, will reduce the number of young people with disabilities living in residential aged care facilities.

The final three innovative houses previously announced for development in Maryborough, Loganlea and Ipswich are to be completed in 2006-07 at a projected cost of $4.9 million. These houses will provide purpose-built accommodation for people with a disability who have high and complex support needs.

Disability Services Queensland

	Statistical	Total		Expenditure		Budget		Post
	Division	Estimated		to		2006-07		2006-07
Project		Cost		30-06-06
		$’000		$’000		$’000		$’000
DISABILITY SERVICES QUEENSLAND
Property, Plant and Equipment
Respite Services
Hervey Bay	15		2,000		444		1,556
Ipswich	05		450		36		414
Nerang	10		947		919		28
Townsville	45		1,116		372		744
Yandina	10		1,033		511		522
Ashgrove	05		1,000				1,000
Various Statewide Projects	Various		4				4
Innovative Housing
Loganlea	05		1,334		74		1,260
Maryborough	15		2,436		479		1,957
Townsville	45		1,477		1,379		98
Morayfield	05		1,283		1,157		126
Ipswich — New Site	05		1,964		264		1,700
Wacol	05		1,682		1,531		151
Various Statewide Projects	Various		1,091				1,091
Smart State Building Fund
Respite — Townsville & Nerang*	Various		600		339		261
Respite — Yandina*	10		750		80		670
Wacol Area Office*	05		500				500
Ipswich Area Office*	05		998				998
Maryborough Area Office*	15		337				337
Rockhampton Area Office*	30		500				500
South Coast*	10		200				200
Mt Gravatt*	05		500				500
Toowoomba*	20		300		184		116
Other Land & Buildings*	Various		4,393		65		4,328
Systems	Various		2,108		1,108		1,000

40 Capital Statement 2006-07

Disability Services Queensland

		Total		Expenditure
		Estimated		to		Budget		Post
	Statistical	Cost		30-06-06		2006-07		2006-07
Project	Division	$’000		$’000		$’000		$’000
Tailored Accommodation
Cluster Housing	05		14,012				6,012		8,000
Purpose Design Housing	05		3,862				3,862
2 Respites	Various		2,184				2,184
Young People in Nursing Homes	Various		6,000				1,500		4,500
Other Property, Plant and Equipment
Redevelopment of Wacol Site	05		4,400		3,010		1,390
Maroochydore	10		500		10		490
Cairns	50		121				121
Pine Rivers	05		125				125
Mt Gravatt*	05		1,072				1,072
Sunshine Coast	10		374		35		339
Toowoomba	20		646		19		627
Loganlea	05		167		11		156
Townsville	45		151		137		14
Stanwell	30		585		283		302
South Brisbane	05		100				100
Rockhampton	30		100		75		25
Mika House — Ipswich	05		205				205
Endeavour Properties	05		460				460
Various Statewide Projects	Various						4,408	Ongoing
Total Property, Plant and Equipment							43,453
Other Capital Expenditure
Software	05		827		23		804
Disability Information System	05		12,853		7,616		5,237
Total Other Capital Expenditure							6,041
Capital Grants
Endeavour & Respite Services	Various		718		193		525
Total Capital Grants							525
TOTAL DISABILITY SERVICES QUEENSLAND							50,019

* Funded fully or in part under the Smart State Building Fund

Capital Statement 2006-07 41

EDUCATION AND THE ARTS

EDUCATION

The 2006-07 Budget provides a substantial investment in educational facilities with an education capital works program of $497.1 million (including expense component of $78.6 million).

Program Highlights

The new $1 billion Tomorrow’s Schools — Providing for a Smarter Future package will ensure that Queensland students have the best possible facilities to meet the needs of the future. The program will include consultation with school communities to modernise existing infrastructure and provide new facilities.

The five-year package includes:

• $50 million capital grants in 2006-07 to state school communities through a submission process by Government schools and their Parents and Citizens’ Associations to support minor capital works programs responsive to local needs

• $850 million over five years to modernise and refurbish Government schools

• $100 million to Catholic and Independent schools as a one-off payment in 2005-06 in recognition of the need for additional capital assistance.

In addition to this new program, other highlights include:

• $169.8 million to construct four new schools at Burpengary West, Edmonton West, Redlynch (Middle School), and Springfield Lakes, undertake further staged work at four schools, make land acquisitions and provide additional classrooms in growth areas of the State

• $98.5 million for a range of building improvement programs to modernise state school libraries and administration areas, upgrade toilets and special education facilities and increase schools’ power capacity

• $106 million to continue construction work for the introduction of the Preparatory Year in 2007

• $12.5 million for the first stage of works for the two new Queensland Academies — one for maths, science and technology, and one for the creative arts

• $9 million to air-condition facilities in Queensland state schools under the Cooler Schools program

• $7.1 million to acquire new employee housing and refurbish existing housing stock

42 Capital Statement 2006-07

• $5 million for capital-related technology expenditure.

Education’s planning for capital meets the Government’s priorities and needs under the South East Queensland Infrastructure Plan and Program by considering the following factors:

• population growth and shifts, and the consequent impacts on enrolments

• changes to educational standards and educational delivery methods

• meeting school renewal requirements

• fulfilling government commitments such as the introduction of the Preparatory Year

• addressing other high priority needs such as student and staff health and safety.

Capital Statement 2006-07 43

ARTS QUEENSLAND

Total 2006-07 capital expenditure for Arts Queensland, together with the Library Board of Queensland, Queensland Art Gallery, Queensland Museum and Queensland Performing Arts Trust is $70.6 million.

Arts Queensland’s capital expenditure program for 2006-07 is $64.3 million. The Millennium Arts Project at the Queensland Cultural Centre, including the Gallery of Modern Art, the redevelopment of the State Library of Queensland and site infrastructure works, will be completed in September 2006. Projects to enhance access points and provide furniture, fittings and equipment will be completed in November 2006. Construction is scheduled for completion on the second stage of the Cairns Centre of Contemporary Arts in 2006-07, funded as part of the Smart State Building Fund.

Library Board of Queensland

The $2.4 million capital outlays for 2006-07 include continued expansion of the State Library of Queensland’s heritage and general reference collections and plant and equipment replacement.

The Strategic Development Grants scheme is payable to public libraries and encourages the use of innovative strategies to increase community use of library services.

Queensland Art Gallery

The Gallery’s $1.3 million property, plant and equipment expenditure program for 2006-07 principally comprises purchases of works of art for the Gallery of Modern Art and operational plant and equipment for the existing Queensland Art Gallery.

Queensland Museum

The Museum’s capital expenditure program for 2006-07 is $1.8 million with a focus on exhibition development, and completion of the collection management database.

Exhibition development includes two sponsored projects at the Museum’s Townsville campus, and the first year of a four year state-wide program of replacement. The collections database will facilitate the recording, evaluation and display of Queensland’s prized heritage assets, and provide a central reference and research point.

Queensland Performing Arts Trust

The Trust’s capital expenditure program for 2006-07 is $0.75 million to meet property, plant and equipment requirements, such as theatrical and musical production equipment.

44 Capital Statement 2006-07

Education and the Arts^1,2,3,4

			Total		Expenditure
			Estimated		to		Budget		Post
	Statistical		Cost		30-06-06		2006-07		2006-07
Project	Division		$’000		$’000		$’000		$’000
EDUCATION
KEY TO ABBREVIATIONS
GLAB — General Learning Area Block
ICT — Information and Communication Technologies
SEU — Special Education Unit
CER — Cairns Educational Renewal
Property, Plant and Equipment
Aldridge State High School, Upgrade to Special Education Facilities		15		580		254		326
Algester State School, Major classroom upgrade to support multi-media initiatives*		05		598		230		368
Aspley East State School, Major resource centre upgrade to support ICT initiatives*		05		565		205		360
Ayr State High School, Major classroom upgrade to support ICT and arts initiatives*		45		814		214		600
Ayr State High School, Administration Upgrade*		45		792		429		363
Balaclava State School, Administration Upgrade*		50		668		227		441
Barcaldine State School, Covered Multi Purpose Courts		35		534		2		532
Belmont State School, Additional Amenities		05		592		44		548
Benowa State High School, Major classroom upgrade to support language immersion initiatives*		10		715		364		351
Blackbutt State School, Administration Upgrade*		15		520		256		264
Boondall State School, Administration Upgrade*		05		992		701		291
Bowen State School, Toilet Upgrade — Replacement		40		593		258		335
Brisbane State High School, Redevelopment Works		05		17,200		1,770		6,830		8,600
Brookfield State School, Administration Upgrade*		05		802		358		444

Capital Statement 2006-07 45

Education and the Arts^1,2,3,4

			Total		Expenditure
			Estimated		to		Budget		Post
	Statistical		Cost		30-06-06		2006-07		2006-07
Project	Division		$’000		$’000		$’000		$’000
Bulimba State School, Additional Accommodation		05		3,231		89		3,142
Burnside State High School, Major classroom upgrade to support middle schooling initiatives*		10		1,066		745		321
Burpengary West State School, New School for 2007*		05		12,058		2,280		9,778
Caboolture Special School, GLAB — 4 Spaces and Amenities		05		2,150				2,150
Chancellor State College, Stage 3A — Manual Arts Fitout		10		430		52		378
Chancellor State College, Stage 3B — Contribution to Sports Hall		10		1,720				1,720
Chancellor State College, Stage 3C — Performing Arts — Planning		10		473		43		430
Coolangatta Special School, Replacement School		10		15,148		14,305		843
Coombabah State School, Major resource centre upgrade to support ICT initiatives*		10		721		269		452
Dalby State School, Administration Upgrade*		20		745		421		324
Daradgee Environmental Education Centre, Additional Amenities		50		659		49		610
Drayton State School, Library Upgrade*		20		521		266		255
Edmonton West State School, New School for 2007*		50		12,719		2,752		9,967
Elanora State High School, 2 Space Relocatable (SEU)		10		361				361
Emu Park State School, Administration Upgrade*		30		745		361		384
Flagstone State Community College, Stage 6—Planning		05		1,057		369		688
Forest Lake State School, Oval Development		05		1,290		64		1,226
Freshwater State School, GLAB —2 Spaces and Music		50		1,548				1,548
Gatton State School, Toilet Upgrade — Replacement		10		910		379		531
Geebung State School, Additional Amenities		05		615		314		301

46 Capital Statement 2006-07

Education and the Arts^1,2,3,4

			Total		Expenditure
			Estimated		to		Budget		Post
	Statistical		Cost		30-06-06		2006-07		2006-07
Project	Division		$’000		$’000		$’000		$’000
Glenala State High School, Major classroom upgrade to support food technology initiatives*		05		640		62		578
Golden Beach State School, Major classroom upgrade to support arts and music initiatives*		10		580		204		376
Grand Avenue State School, 4 Spaces by Enclosure Under		05		473		209		264
Gumdale State School, Administration Upgrade*		05		702		78		624
Gumdale State School, GLAB — 2 Storey — 4 Spaces		05		1,620				1,620
Gympie South State School, Administration Upgrade*		15		728		333		395
Harris Fields State School, Major resource centre upgrade to support ICT initiatives*		05		579		206		373
Harristown State High School, Upgrade to Special Education Facilities		20		548		293		255
Humpybong State School, Major classroom upgrade to support practical learning initiatives*		05		629		254		375
Ingham State High School, Major classroom upgrade to support industrial technology initiatives*		45		681		376		305
Innisfail East State School, Stabilisation of River Bank		50		460		75		385
Jamboree Heights State School, Major resource centre upgrade to support ICT initiatives*		05		633		311		322
Jones Hill State School, Additional Amenities		15		494		227		267
Kallangur State School, Major classroom upgrade to support ICT initiatives*		05		720		199		521
Kinchant Dam Outdoor Education Centre, New Amenities & On Site Sewerage Plant		40		694		202		492
Kuranda State High School, CER — Amalgamation with Kuranda State School		50		3,562		1,304		2,258

Capital Statement 2006-07 47

Education and the Arts^1,2,3,4

			Total		Expenditure
			Estimated		to		Budget		Post
	Statistical		Cost		30-06-06		2006-07		2006-07
Project	Division		$’000		$’000		$’000		$’000
Laidley State High School, Hall		10		315				315
Mackay District Special School, Administration Upgrade*		40		668		367		301
Mackay North State High School, T2000 Relocatable Building (SEU)		40		361				361
Maleny State School, Major classroom upgrade to support practical learning initiatives*		10		524		266		258
Maroochydore State High School, Cafeteria & Resource Centre		10		391		2		389
Marsden State School, Major resource centre upgrade to support ICT initiatives*		05		826		416		410
Meridan State College, Stage 2 — Planning		10		4,304		4		4,300
Miami State School, Major resource centre upgrade to support ICT initiatives*		10		594		212		382
Mitchelton State School, Additional Amenities		05		417				417
Mooloolaba State School, Major classroom upgrade to support ICT initiatives*		10		508		148		360
Mount Cotton State School, Additional Amenities		05		576				576
Mudgeeraba Special School, GLAB — 4 Spaces & Amenities		10		2,408				2,408
Musgrave Hill State School, Major classroom upgrade to support practical learning initiatives*		10		466		206		260
Narangba Valley State School, Stage 3 — Planning		05		640		34		606
North Lakes State College, Stage 5B —Years 11 —12		05		8,772		2,829		5,943
North Lakes State College, Performing Arts		05		3,027		381		2,646
North Lakes State College, Stage 6 — Planning		05		645		26		619
Northern Peninsula Area State College, Additional Amenities		50		858		587		271

48 Capital Statement 2006-07

Education and the Arts^1,2,3,4

			Total		Expenditure
			Estimated		to		Budget		Post
	Statistical		Cost		30-06-06		2006-07		2006-07
Project	Division		$’000		$’000		$’000		$’000
Oonoonba State School, 2 Space Relocatable		45		258				258
Palm Beach State School, Major classroom upgrade to support arts initiatives*		10		502		180		322
Park Ridge State School, Major classroom upgrade to support practical learning initiatives*		05		674		339		335
Pine Rivers Special School, Administration Block		05		732		65		667
Proserpine State High School, Multi Purpose Hall		40		626		2		624
Queensland College Of Wine Tourism, Stages B, C, and D		20		3,443		1,965		1,478
Queensland Academy, Science, Mathematics and Technology		05		12,600		1,265		8,550		2,785
Queensland Academy, Creative Arts		05		23,400				2,700		20,700
Redbank Plains State School, Major classroom upgrade to support science and technology initiatives*		05		660		335		325
Redland District Special School, Administration Upgrade*		05		697		364		333
Redlynch Middle School, New School for 2007		50		14,061		5,069		8,992
Redlynch Middle School, Stage 2 — Planning		50		517		1		516
Rochedale State School, Major classroom upgrade to support practical learning initiatives*		05		286				286
Rochedale State School, Administration Upgrade*		05		697				697
Russell Island State School, Toilet Upgrade — Replacement		05		750		469		281
Shailer Park State High School, Major classroom upgrade to support middle schooling initiatives*		05		1,428		1,016		412
Spinifex State College — Mount Isa — Senior Campus, Major upgrade to support multi-media initiatives*		55		1,419		1,050		369
Springfield Lakes State School, New school for 2007*		05		12,293		2,395		9,898

Capital Statement 2006-07 49

Education and the Arts^1,2,3,4

			Total		Expenditure
			Estimated		to		Budget		Post
	Statistical		Cost		30-06-06		2006-07		2006-07
Project	Division		$’000		$’000		$’000		$’000
Stretton State College, Primary — Stage 2		05		1,720		87		1,633
Stretton State College, Secondary — Stage 1		05		15,056		3,657		11,399
Stretton State College, Primary — Stage 3 - Planning		05		612		1		611
Tallebudgera State School, Major classroom upgrade to support practical learning initiatives*		10		601		136		465
Tara Shire State College, CARE Project		20		328		2		326
Tinana State School, 2 Space Relocatable (SEU)		15		361				361
Trinity Bay State High School, Community Hall Augmentation		50		560				560
Tully State High School, Additional Amenities		50		496		46		450
Tully State High School, Administration Upgrade*		50		521		241		280
Tully State High School, Indoor Multi Purpose Centre		50		600				600
Upper Coomera State College, Stage 3 —Year 12		10		4,128		865		3,263
Upper Coomera State College, Stage 4 — Music and Amenities		10		1,548		172		1,376
Victoria Point State School, Additional Amenities		05		430				430
Wellers Hill State School, Additional Amenities		05		1,290		34		1,256
West Pacific Pines State School, New School for 2008 — Planning		10		2,580				2,580
Windsor State School, Upgrade to Special Education Facilities		05		430		3		427
Woree State High School, CER — Community Learning Centre		50		516		250		266
Additional accommodation	Various							17,796	Ongoing
General works	Various							142,903	Ongoing
Land acquisition	Various							35,292	Ongoing
Minor works	Various							21,509	Ongoing
Plant & Equipment	Various							32,246	Ongoing

50 Capital Statement 2006-07

Education and the Arts ^1,2,3,4

					Expenditure
			Total		to	Budget		Post
	Statistical		Estimated Cost		30-06-06	2006-07		2006-07
Project	Division		$’000		$’000	$’000		$’000
Tomorrow’s Schools	Various			60,000			60,000
Total Property, Plant and Equipment							450,766
Capital Grants
Capital Grants	Various			85,987			85,987
Total Capital Grants							85,987
TOTAL EDUCATION QUEENSLAND							536,753
QUEENSLAND STUDIES AUTHORITY
Property, Plant and Equipment
Other Plant & Equipment		05		105			105
Total Property, Plant and Equipment							105
TOTAL QUEENSLAND STUDIES AUTHORITY							105
CORPORATE AND PROFESSIONAL SERVICE
Property, Plant and Equipment
Property, Plant and Equipment		05		205			205
Total Property, Plant and Equipment							205
TOTAL CORPORATE AND PROFESSIONAL SERVICES							205
TOTAL EDUCATION							537,063

Capital Statement 2006-07 51

Education and the Arts^1,2,3,4

			Total		Expenditure
			Estimated		to		Budget		Post
	Statistical		Cost		30-06-06		2006-07		2006-07
Project	Division		$’000		$’000		$’000		$’000
ARTS QUEENSLAND
Property, Plant and Equipment
Millennium Arts — QCC		05		277,260		229,839		47,421
Millennium Arts — Furniture Fittings And Equipment		05		12,958				12,958
Queensland Cultural Centre Access Works		05		3,000				3,000
Cairns Centre of Contemporary Arts*		50		1,000		200		800
Property, Plant and Equipment		05						100	Ongoing
Total Property, Plant and Equipment								64,279
TOTAL ARTS QUEENSLAND								64,279
LIBRARY BOARD OF QUEENSLAND
Property, Plant and Equipment
Plant and Equipment		05						907	Ongoing
Library Collection Expenditure		05						1,247	Ongoing
Total Property, Plant and Equipment								2,154
Capital Grants
Strategic Development Grants	Various							250	Ongoing
Total Capital Grants								250
TOTAL LIBRARY BOARD OF QUEENSLAND								2,404
QUEENSLAND ART GALLERY
Property, Plant and Equipment
Property, Plant and Equipment		05						1,300	Ongoing
Total Property, Plant and Equipment								1,300
TOTAL QUEENSLAND ART GALLERY								1,300
QUEENSLAND MUSEUM
Property, Plant and Equipment
Collection Database		05		760		500		260
Enchanted Rainforest Exhibition — Museum of Tropical Queensland		45		459		15		444
Shipwreck Exhibition — Museum of Tropical Queensland		45		177		15		162

52 Capital Statement 2006-07

Education and the Arts ^1,2,3,4

		Total		Expenditure
		Estimated		to		Budget		Post
	Statistical	Cost		30-06-06		2006-07		2006-07
Project	Division	$’000		$’000		$’000		$’000
Exhibition Program	Various		3,000				750		2,250
Property, Plant and Equipment — Other	Various						125	Ongoing
Total Property, Plant and Equipment							1,741
Other Capital Expenditure
Collection Database — Software	05		240		140		100
Total Other Capital Expenditure							100
TOTAL QUEENSLAND MUSEUM							1,841
QUEENSLAND PERFORMING ARTS TRUST
Property, Plant and Equipment
Property, Plant and Equipment	05						750	Ongoing
Total Property, Plant and Equipment							750
TOTAL QUEENSLAND PERFORMING ARTS TRUST							750
TOTAL ARTS QUEENSLAND							70,574
TOTAL EDUCATION AND THE ARTS							607,637

Notes:
1.	Capital grants are distributed by non-state entities throughout Queensland’s statistical divisions.
2.	Project budgets listed in the table are in some cases indicative and are subject to refinement as projects are further developed.
3.	Projects contained in the table have been included on the basis of projected enrolments. If projected enrolments do not eventuate, then listed projects may be deferred or stopped, or new projects added during the course of the financial year.
4.	The amounts quoted in the above table reflect the estimated portion of project costs that will be capitalised. The amounts quoted in the program highlights (and in the Ministerial Portfolio Statements) are the full financial costs of the projects (i.e. they include some expensed capital items).

* Funded fully or in part under the Smart State Building Fund

Capital Statement 2006-07 53

ELECTORAL COMMISSION OF QUEENSLAND

An amount of $0.04 million is allocated towards the replacement of plant and equipment in 2006-07 to provide for the ongoing operational requirements associated with the efficient and effective provision of electoral services for the State of Queensland.

Electoral Commission of Queensland

			Total	Expenditure
			Estimated	to	Budget		Post
	Statistical		Cost	30-06-06	2006-07		2006
Project	Division		$’000	$’000	$’000		$’000-07
ELECTORAL COMMISSION OF QUEENSLAND
Property, Plant and Equipment
Plant and Equipment		05				40	Ongoing
Total Property, Plant and Equipment						40
TOTAL ELECTORAL COMMISSION OF QUEENSLAND						40

54 Capital Statement 2006-07

EMERGENCY SERVICES

The Department of Emergency Services’ capital program invests $110.1 million in capital acquisitions and grants.

The capital investment plan provides for essential infrastructure, equipment and information technology investment to support operations, and to achieve economic and operational effectiveness through contemporary asset management strategies. The capital investment program reflects the Government’s ongoing commitment to the provision of essential emergency services to ensure that Queenslanders live in safe and secure communities.

A major feature of this budget is the continued expansion of the Queensland Combined Emergency Services Academy at Whyte Island in Brisbane.

Emergency Management Queensland

Program Highlights

• Emergency Management Queensland (EMQ) will acquire three new helicopters to replace the EMQ Helicopter Rescue fleet over the course of four years, with delivery of the first helicopter expected in July 2007.

• Capital expenditure of $7.3 million in 2006-07 will progress the fleet replacement program.

Queensland Ambulance Service

Capital investments by the Queensland Ambulance Service in 2006-07 provide $40.3 million for ambulance facilities, information technology and communication infrastructure projects.

Program Highlights

• Five new ambulance stations, 18 replacement/redevelopment stations and one residence will be commenced or completed in 2006-07.

• $4.7 million will be invested in replacement ambulance vehicles as part of the vehicle replacement program. The reduced allocation compared to previous budgets is a result of $6.1 million funding being accelerated into the 2005-06 financial year because of an impending disruption to the supply of base vehicles while manufacturers retool for the production of new models.

• $2.7 million will be invested in continued improvement in operational and communications equipment across the state.

• A further $2 million will be invested in the continued implementation of the Strategic Information Management Initiative, which is aimed at reducing paperwork by paramedics, and improving service availability and response times.

Capital Statement 2006-07 55

Queensland Fire and Rescue Service

Capital investments by the Queensland Fire and Rescue Service in 2006-07 provide $36.9 million for fire facilities, information technology and communication infrastructure projects.

Program Highlights

• One new fire and rescue station, eight redevelopments/refurbishments and five station replacements/relocations will be commenced or completed in 2006-07, as well as the refurbishment of two district offices and the completion of a replacement regional office.

• A further $1.8 million is provided for strategic land purchases.

• $13.5 million will be invested in additional or replacement urban vehicles as part of the fleet replacement program and to meet enhanced service delivery requirements.

• A further $3.5 million will be invested in rural vehicles and $6.8 million on a program of continued improvement in information and communication technology and operational equipment.

Joint Facilities and Infrastructure

During 2006-07 the Queensland Ambulance Service and Queensland Fire and Rescue Service will also invest $6 million (as part of an allocation of $20 million over three years) to undertake a major expansion of the Queensland Combined Emergency Services Academy as an operational, multi-service and multi-agency training centre of excellence for emergency management and community safety. An additional investment of $1.7 million will be spent to upgrade existing facilities at the academy.

The department will invest $3.7 million to commence or complete joint facilities at Highfields and Palm Island. In addition, the redevelopment of the joint facility at Roma Street, Brisbane, which commenced in 2004-05, will be completed in 2006-07. $9.2 million will be outlaid for the Roma Street project in 2006-07 (total capital expenditure for the project is estimated to be $15 million).

The department will invest a further $2 million in the Emergency Services Computer Aided Dispatch (CAD) system which aims to improve support for ambulance and fire response services.

56 Capital Statement 2006-07

Emergency Services

		Total		Expenditure
		Estimated		to		Budget		Post
	Statistical	Cost		30-06-06		2006-07		2006-07
Project	Division	$’000		$’000		$’000		$’000
DEPARTMENT OF EMERGENCY SERVICES
Property, Plant and Equipment
QUEENSLAND AMBULANCE SERVICE
Building/General Works
Aramac replacement station	35		840		24		816
Atherton replacement station	50		1,545		995		550
Ayr replacement station	45		1,332		111		1,221
Babinda replacement station	50		950		70		880
Balmoral replacement station	05		3,312		100		2,712		500
Birkdale new station	05		815		40		775
Carindale land and new station	05		2,530		116		2,414
Carmila replacement station	40		750		30		720
Coolum land and replacement station	10		3,575		1,242		1,833		500
Emu Park replacement station	30		1,125		730		395
Gemfields/Sapphire replacement station and residence	30		900		36		864
Gympie replacement station	15		1,985		1,907		78
Ipswich replacement station	05		3,413		56		2,357		1,000
Julia Creek replacement station	55		865		43		822
Narangba new station	05		1,656		1,164		492
Nerang land and new station	10		2,045		924		1,121
Project development	Various		450				450
Roma replacement station	20		2,000		42		1,458		500
Samford Valley new station	05		1,254		164		1,090
Spring Hill replacement station	05		50				50
Townsville redevelopment projects	45		4,500		917		3,583
Warwick replacement station	20		2,100		167		1,933
Weipa replacement station	50		2,075		5		370		1,700
Yarrabah replacement station	50		900		64		836
Minor works	Various						1,250	Ongoing
Other Plant and Equipment
Ambulance vehicle purchases	Various						4,655	Ongoing
Operational and communications equipment	Various						2,715	Ongoing
Sub-total QUEENSLAND AMBULANCE SERVICE							36,440

Capital Statement 2006-07 57

Emergency Services

		Total		Expenditure
		Estimated		to		Budget		Post
	Statistical	Cost		30-06-06		2006-07		2006-07
Project	Division	$’000		$’000		$’000		$’000
QUEENSLAND FIRE AND RESCUE SERVICE
Building/General Works
Burpengary new station	05		3,250				450		2,800
Cherbourg replacement facility	15		450		2		248		200
Cloncurry district office	55		125		5		120
Eatons Hill station redevelopment	05		449		18		431
Forest Hill replacement station	10		492		443		49
Hollywell station redevelopment	10		556		24		532
Kenmore station redevelopment	05		630		3		627
Lowood station redevelopment	10		641		33		608
Maryborough regional office	15		1,616		1,284		332
Miriam Vale station redevelopment	15		110				110
Mount Gravatt station relocation	05		2,998		2,036		962
Oxley station relocation — Durack	05		2,663		223		2,440
Project development	Various						1,434	Ongoing
Roma district office	20		560		42		270		248
South Townsville station refurbishment	45		200		10		190
Southport station refurbishment	10		2,605		20		980		1,605
Woodridge station redevelopment	05		530		4		26		500
Yungaburra replacement station	50		375		40		335
Minor works	Various						500	Ongoing
Land
Rural Operations land purchases	Various						100	Ongoing
Agnes Water	15		700				700
Sunshine Coast hinterland	10		1,000				1,000
Other Plant and Equipment
Operational and communications equipment	Various						6,750	Ongoing
Rural Fire appliances	Various						3,480	Ongoing
Urban Fire appliances	Various
Sub-total QUEENSLAND FIRE AND RESCUE SERVICE							13,500	Ongoing
							36,174
EMERGENCY MANAGEMENT QUEENSLAND
Replacement of EMQ Helicopter Rescue fleet	Various		48,339		12,085		7,251		29,003

58 Capital Statement 2006-07

Emergency Services

		Total		Expenditure		��
		Estimated		to			Budget		Post
	Statistical	Cost		30-06-06			2006-07		2006-07
Project	Division	$’000		$’000			$’000		$’000
Minor works	05							61	Ongoing
Plant and Equipment	Various							118	Ongoing
Sub-total EMERGENCY MANAGEMENT QUEENSLAND								7,430
OTHER DEPARTMENTAL
Information technology infrastructure	Various							1,420	Ongoing
Minor works	05							200	Ongoing
Sub-total OTHER DEPARTMENTAL								1,620
JOINT EMERGENCY SERVICE FACILITIES
Highfields station — joint facility	20		1,689		275			1,414
Palm Island station — joint facility	45		2,304		8			2,296
Queensland Combined Emergency Services Academy — air emission control	05		2,439		1,239			1,200
Queensland Combined Emergency Services Academy — complex improvements	05							500	Ongoing
Queensland Combined Emergency Services Academy — Strategic Development Project	05		20,000		500			6,000		13,500
Roma Street replacement Fire & Ambulance station*	05		15,085		5,920			9,165
Sub-total JOINT EMERGENCY SERVICE FACILITIES
								20,575
Total Property, Plant and Equipment								102,239
Other Capital Expenditure
QUEENSLAND AMBULANCE SERVICE
Information systems development	Various							1,909	Ongoing
Strategic Information Management Initiative	Various		9,170		7,182			1,988
QUEENSLAND FIRE AND RESCUE SERVICE
Fire Information Management System	Various		3,964		3,524			440
Information Systems and Training Intellectual Property Development	Various							300	Ongoing
OTHER DEPARTMENTAL
Corporate information systems development	Various							768	Ongoing

Capital Statement 2006-07 59

Emergency Services

		Total		Expenditure
		Estimated		to		Budget		Post
	Statistical	Cost		30-06-06		2006-07		2006-07
Project	Division	$’000		$’000		$’000		$’000
Emergency Services CAD	55		6,538		4,546		1,992
Total Other Capital Expenditure							7,397
Capital Grants
Rural Fire Brigades	Various						150	Ongoing
State Emergency Service units	Various						332	Ongoing
Total Capital Grants							482
TOTAL DEPARTMENT OF EMERGENCY SERVICES							110,118

* Funded fully or in part under the Smart State Building Fund

60 Capital Statement 2006-07

EMPLOYMENT AND TRAINING

The Department’s capital expenditure program for 2006-07 is $104.1 million, of which $70.1 million is for the construction and refurbishment of TAFE training facilities. The Department is commencing the implementation of the Queensland Skills Plan which involves a six year major capital works program exceeding $300 million. This is supported by a five year Information and Communication Technology (ICT) modernisation program to leverage improvements in efficiency, productivity and increased training output.

Program Highlights

• $15.9 million will be invested directly in ICT capital, while a further $2.8 million will be invested in infrastructure equipment.

• $19.1 million is allocated to commence site works and construction of the new Coomera campus of the Gold Coast Institute of TAFE, a Smart State Building Fund initiative. The new campus will deliver programs with a focus on creative industries including film and television, graphic design, interior design, architecture, building technology and information technology.

• $19.3 million is allocated to establish major Trade and Technician Skills Institute campuses at Acacia Ridge and Eagle Farm in Brisbane.

• $11.8 million will be used to acquire land and commence detailed planning for the establishment of major trade training centres at Barrier Reef (Townsville), and Central Queensland (Mackay) Institutes of TAFE.

• $2.2 million will be invested to commence the relocation of automotive training services provided by Southern Queensland Institute of TAFE from the current Hume Street to the major TAFE campus at Bridge Street, Toowoomba.

• $9.9 million will be used to progress the redevelopment of Block B at the Mt Gravatt campus of the Moreton Institute of TAFE.

• A further $3.6 million will be invested to complete projects at Yeppoon and Biloela for the Central Queensland Institute of TAFE; and at the Hervey Bay and Bundaberg campuses of the Wide Bay Institute of TAFE.

Capital Statement 2006-07 61

Employment and Training

		Total		Expenditure
		Estimated		to		Budget		Post
	Statistical	Cost		30-06-06		2006-07		2006-07
Project	Division	$’000		$’000		$’000		$’000
DEPARTMENT OF EMPLOYMENT AND TRAINING
Property, Plant and Equipment
Major Capital Works — refurbishment
Moreton Institute of TAFE — Mt Gravatt Redevelopment	05		25,000		5,780		9,892		9,328
Wide Bay Institute of TAFE — Bundaberg Redevelopment	15		2,750		659		2,091
Trade and Technician Skills Institute — Acacia Ridge	05		24,008				9,603		14,405
Trade and Technician Skills Institute — Eagle Farm	05		47,987				2,399		45,588
Major Capital Works — construction
Gold Coast Institute of TAFE — Coomera Educational Precinct*	10		31,700		947		19,140		11,613
Sunshine Coast Institute of TAFE — Campus Upgrades	15		14,979				749		14,230
Wide Bay Institute of TAFE — Hervey Bay Campus	15		2,000		1,000		660		340
Southern Queensland Institute of TAFE — Toowoomba Consolidation	20		23,870		22,526		664		680
Barrier Reef Institute of TAFE — Townsville Trades	45		24,125				5,956		18,169
Central Queensland Institute of TAFE — Yeppoon Campus	30		2,300		2,050		195		55
Central Qld Institute of TAFE — Mackay Trades	40		34,074				5,872		28,202
Southern Qld Institute of TAFE — Toowoomba Automotive	20		3,390				2,195		1,195
Trade and Technician Skills Institute — Acacia Ridge Stage II	05		48,530				7,280		41,250
Central Queensland Institute of TAFE — Biloela Campus	30		1,350		610		635		105
Brisbane North Institute of TAFE — Ithaca Animal Science	05		925		200		725
Brisbane North Institute of TAFE — Caboolture Campus	05		4,350		2,263		2,087
Infrastructure Equipment	Various						2,787	Ongoing
Other Plant and Equipment	Various						2,317	Ongoing
Minor Equipment and Facility Upgrades	Various		2,645				1,000		1,645

62 Capital Statement 2006-07

Employment and Training

		Total		Expenditure
		Estimated		to	Budget		Post
	Statistical	Cost		30-06-06	2006-07		2006-07
Project	Division	$’000		$’000	$’000		$’000
Minor Capital Works	Various					3,535	Ongoing
Additional minor works	Various		4,161			2,412		1,749
ICT Modernisation — TAFE	Various		7,000			1,400		5,600
ICT Modernisation — non TAFE	Various		17,555			6,804		10,751
Information and Communication Technology	Various					7,700	Ongoing
Total Property, Plant and Equipment						98,098
Capital Grants
Agricultural College Infrastructure Grants	20					1,000	Ongoing
Skill Centre Program	Various					5,000	Ongoing
Total Capital Grants						6,000
TOTAL DEPARTMENT OF EMPLOYMENT AND TRAINING						104,098

* Funded fully or in part under the Smart State Building Fund

Capital Statement 2006-07 63

ENERGY

The 2006-07 capital acquisitions for the department relate to the purchase of office equipment, including information technology.

CS Energy Limited

A $422.5 million capital expenditure program is planned for 2006-07. This reflects the continued construction of the Kogan Creek power station, and ongoing capital requirements and major overhauls at Callide, Swanbank and Mica Creek power stations.

Program Highlights

• $359.8 million provided in line with the three year construction program of the Kogan Creek Power Station. The project consists of a 750 MW coal fired baseload power station, along with a dedicated coal source, located near Chinchilla in South East Queensland. This power station is being developed in response to the projected growth in electricity consumption in Queensland as well as forecast growth in the interconnected National Electricity Market.

• $59.6 million is provided for ongoing capital and overhaul requirements at Callide, Swanbank and Mica Creek power stations, including scoping of the Callide B mid-life refit planned within the next three years.

ENERGEX Limited

The ENERGEX Group has prepared a record capital program of $941.9 million as part of its commitment to providing a safe, secure, highly reliable, cost effective, and environmentally friendly energy delivery to its customers. The capital program will match the high growth in electricity usage being driven by the strong Queensland economy and the increased use of lifestyle improving appliances, such as air conditioners.

Included in the program is:

• The CityGrid project to reinforce supply to the Brisbane CBD

• The south west Brisbane project to upgrade the electricity network to the important economic corridor out to Ipswich

• Continuing the major works on the Sunshine Coast and Gold Coast

• Infrastructure upgrades to Lockyer Valley.

The regulated electricity network capital expenditure program for 2006-07 is $642 million. This includes $401.2 million on the sub transmission system.

64 Capital Statement 2006-07

Program Highlights

The capital works program for 2006-07 will contribute to an improved level of reliability of supply and includes the following projects:

• $240.9 million for distribution augmentation, including $114.5 million on customer requested works

• $26.9 million to improve and extend the gas network.

A total sub transmission program of $401.2 million. This includes:

• $51 million to continue work on the $139.1 million CityGrid project. CityGrid combines new and upgrade work on ENERGEX’s substations high voltage electricity network that supplies the CBD and surrounding suburbs

• $25.4 million to continue work on the $91.4 million Brisbane South West project to upgrade the energy infrastructure in Brisbane’s south west corridor to support Queensland’s economic and population growth into the future

• $14 million to install two new 33 kilovolt underground cables from Burleigh Heads substation to Kirra substation, via Currumbin and Palm Beach substations

• $7.8 million towards installing a second 30MW transformer and associated works at West Maroochydore substation

• Sub transmission works for Wide Bay — Burnett, Darling Downs, West Moreton and other areas.

Stanwell Corporation Limited

Stanwell Corporation Limited’s capital expenditure program for 2006-07 is $81.9 million. This relates to improving the efficiency of existing generation assets at Stanwell, Barron Gorge and Kareeya power stations and investment in new generation.

Program Highlights

• Major overhauls and efficiency upgrades at Stanwell power station.

• Ongoing capital works at the Kareeya and Barron gorge hydro power stations

Tarong Energy Corporation Limited

Tarong Energy’s capital expenditure program for 2006-07 of $241.7 million relates to securing a long term fuel supply for Tarong power station and Tarong North and maintaining operations at the Tarong power station, Tarong North and Wivenhoe power stations.

Capital Statement 2006-07 65

Program Highlights

• $28.2 million for overhaul expenditure, including one major and two minor overhauls at Tarong power station and one major at the Tarong North power station.

• $16.5 million for the replacement of the damaged Unit 2 generator at Tarong power station.

PowerLink Queensland

Powerlink Queensland is the high-voltage electricity transmission entity for Queensland. Powerlink’s core business includes the delivery of a secure, reliable transmission service to electricity market participants via open, non-discriminatory access to the Queensland transmission grid.

Powerlink Queensland’s capital expenditure for 2006-07 is $398.5 million (excluding financing costs during construction).

Program Highlights

• $55 million for the South East Queensland Augmentation — a 275/330kV double circuit transmission line between Middle Ridge substation (near Toowoomba) and the Greenbank substation (Logan area) and associated works to meet the transmission needs of the rapidly growing Logan and Gold Coast areas.

• $50.1 million for the North Queensland Transmission Reinforcement (Stage 1) — a 275kV transmission line between the Broadsound and Nebo (inland from Mackay) substations as part of a three-stage solution to reinforce supply to North Queensland.

• $8.7 million for the Gold Coast Transmission Reinforcement — a 275kV transmission line between the Greenbank substation and Maudsland (inland from Nerang) to augment the transmission network supplying the Gold Coast region.

• $13 million for the Bohle River to Townsville GT — a 132 kV transmission line to replace a section of the existing aged line to ensure transmission reliability in the (northern) Townsville area.

• $25.5 million for the Mackay Transmission Reinforcement — a 132kV transmission line from Nebo substation to Pioneer Valley (near Mackay) to meet load growth in the Mackay region.

• $24.1 million for the Tully to Innisfail — a 132kV/275kV transmission line and related substation works to replace the aged 132kV line between Kareeya and Innisfail.

66 Capital Statement 2006-07

• $8.1 million for the Molendinar 110kV Substation Replacement - replacement of aged assets at Molendinar substation at the northern end of the Gold Coast.

• $16.5 million for the Lilyvale to Blackwater - 132kV transmission line to meet the increasing mining load in inland Central Queensland.

• $2.7 million for the Belmont to Murrarrie Reinforcement - a 275kV line to strengthen the transmission supply to Australian TradeCoast and the Brisbane CBD.

• $2.8 million for the Goodna 110/33kV Substation Establishment - establishment of a new bulk supply for the South West Brisbane area.

• $13 million for the Townsville East Substation - establishment of a new 132/66kV substation and a new 132kv transmission line to Townsville South to meet load growth in the Townsville (Port and CBD) area.

• $16.3 million for the Tarong 275kV Substation - refurbishment and upgrade of the existing Tarong substation to ensure a safe and reliable transmission supply.

• $18 million for the Strathmore 275kV SVC - installation of a Static VAR Compensator and associated substation works at Strathmore Substation (near Collinsville) to increase transmission capacity to North Queensland.

Ergon Energy Corporation Limited

In becoming a world-class customer-driven energy business, Ergon Energy will deliver outcomes that meet customers’ growing expectations for security, quality, reliability and availability of energy supply in a safe, environmentally sensitive and cost effective way.

During the 2006-07 financial year, Ergon Energy has a budgeted capital expenditure of $768.1 million. Ergon Energy’s capital expenditure program will continue to focus on significant capital expansion, with reinforcement, maintenance and modernisation programs within a long term strategic plan which targets significant service quality and reliability improvements.

The budgeted capital expenditure for 2006-07 includes a significant number of major projects, which are primarily focussed on improving the quality of supply to domestic and commercial customers. The $768.1 million budgeted for networks includes $302.6 million on corporation initiated works, $214.3 million on customer requested works and $25.4 million on isolated systems.

Program Highlights

• $19.2 million for reinforcement of supply to Agnes Water.

Capital Statement 2006-07  67

• $ 15 million for supply for Sunwater (Burdekin-Moranbah Pipeline).

• $14.7 million for reinforcement of 132 kV supply to Maryborough and Hervey Bay.

• $12.3 million for upgrade of remote control and monitoring systems.

• $11.2 million for reinforcement of supply to Cairns North.

• $10.1 million for a power station at Bamaga.

• $9.5 million for reinforcement of supply to Dalby.

• $9.3 million for Kearneys Spring Substation to reinforce supply to Toowoomba.

• $8.8 million for Alfred Street Zone Substation to reinforce supply to Mackay.

• $7.2 million for supply to South Walker Mine.

• $6.7 million for redevelopment of Gayndah Substation.

Energy

		Total		Expenditure
		Estimated		to		Budget		Post
	Statistical	Cost		30-06-06		2006-07		2006-07
Project	Division	$’000		$’000		$’000		$’000
DEPARTMENT OF ENERGY
Property, Plant and Equipment
Plant and Equipment	05		78				78
Total Property, Plant and Equipment							78
TOTAL DEPARTMENT OF ENERGY							78
CS ENERGY LIMITED
Property, Plant and Equipment
Callide Power Station	30						26,111	Ongoing
Swanbank Power Station	05						11,527	Ongoing
Mica Creek Power Station	55						21,995	Ongoing
Kogan Creek Power Project	20		1,154,513		709,070		359,829		85,614
Business Development/Other	05						2,994	Ongoing
Total Property, Plant and Equipment							422,456
TOTAL CS ENERGY LIMITED							422,456

68 Capital Statement 2006-07

Energy

		Total		Expenditure
		Estimated		to		Budget		Post
	Statistical	Cost		30-06-06		2006-07		2006-07
Project	Division	$’000		$’000		$’000		$’000
ENERGEX LTD
Property, Plant and Equipment
Gas
Renewal	Various		12,656				12,656
Customer Requested	05		12,715				12,715
Gas Augmentation	05		1,500				1,500
Sub-total Gas							26,871
Distribution Augmentation
Distribution Augmentation	Various		53,313				53,313
Customer Works - Domestic rural	Various		61,145				61,145
Distribution Sub program	Various		126,405				126,405
Sub-total Distribution Augmentation							240,863
Sub Transmission Program
Reliability Subtransmission	Various		10,646		207		10,411		28
Customer Driven Subtransmission	Various		41,882		23,563		13,967		4,352
Demand Driven Subtransmission	Various		515,888		172,579		263,847		79,462
Refurbishment Subtransmission	Various		29,624		9,919		12,649		7,056
Sub Transmission Other	Various						100,342	Ongoing
Sub-total Sub Transmission Program							401,216
Non System Other
Other	05						134,574	Ongoing
Fleet	05		55,956				55,956
Information Systems	05		82,379				82,379
Sub-total Non System Other							272,909
Total Property, Plant and Equipment							941,859
TOTAL ENERGEX LTD							941,859
STANWELL CORPORATION LIMITED
Property, Plant and Equipment
Corporate
Minor Works	Various						4,903	Ongoing
Business Expansion - Project Development Costs	Various						16,000	Ongoing
Improvement Projects	Various		12,686		2,130		8,242		2,314
Kareeya
Capital Works and Modifications	50		5,596		99		2,827		2,670
Minor Works	50						1,005	Ongoing

Capital Statement 2006-07  69

Energy

		Total		Expenditure
		Estimated		to		Budget		Post
	Statistical	Cost		30-06-06		2006-07		2006-07
Project	Division	$’000		$’000		$’000		$’000
Barron Gorge
Capital Works and Modifications	50		4,407				940		3,467
Minor Works	50						497	Ongoing
Stanwell Power Station
Capital Works and Modifications	30		119,670		2,096		6,282		111,292
Minor Works and Overhauls	30						39,699	Ongoing
Rocky Point
Windy Hill	50						20	Ongoing
Koombooloomba	50						15	Ongoing
Wivenhoe	20						10	Ongoing
Mackay Gas Turbine	40		1,500				1,500
Total Property, Plant and Equipment							81,940
TOTAL STANWELL CORPORATION LIMITED							81,940
TARONG ENERGY CORPORATION LIMITED
Property, Plant and Equipment
Tarong Power Station
Direct Treated Cooling H2O to Condensers	15		2,183		1		1,600		582
Generator Midlife Refit (Stator Rewind)	15		18,949		15,848		3,101
Installation of Variable Speed Drive	15		2,500		297		250		1,953
Improve Stormwater Management System	15		1,015		155		860
Above Ground Ash Emplace on adj TPS Land	15		9,165		2,594		3,000		3,571
Records Management	15		3,042		994		1,473		575
Ellipse Upgrade & enhancements	15		5,048		2,204		750		2,094
Telecommunications Strategy	15		3,357		26		785		2,546
Minor Capital Works - Tarong Power Station	15						4,179	Ongoing
Overhaul - Tarong Power Station	15						24,972	Ongoing
Min Fire Risk Unit/Station Relay Room	15		514		11				503
Control System Refit	15		38,509		500		1,234		36,775
Improving efficiency of Cooling Water makeup for TN	15		1,527		45		705		777
Third Air Heater Primary Air	15		8,434		25				8,409

70 Capital Statement 2006-07

Energy

		Total		Expenditure
		Estimated		to		Budget		Post
	Statistical	Cost		30-06-06		2006-07		2006-07
Project	Division	$’000		$’000		$’000		$’000
Install Improved Flue Gas Spray Systems	15		1,727		2		1,301		424
Ash Dam Rehab Demonstration Trial	15		1,014				500		514
Low Nox Burners	15		22,434		150		1,060		21,224
Optimise Dense Phase Ash Prod & Storage	15		2,530		879		1,136		515
Implement Combust Support Improvements	15		3,394		11		400		2,983
Plant Adaptation for Alt Coal Supplies	15		3,700		3,000		700
Coal Plant Operational Improvements	15		1,162		1		651		510
Facilities Refurbishment	15		1,721		180		651		890
Tarong Field Device Upgrade	15		3,325		35		800		2,490
AVR Replacement	15		1,077		26				1,051
Replace 25 Tonne Mobile Crane	15		1,000				1,000
Replace Unit 2 Generator	15		20,280		1,740		16,500		2,040
Critical 6.6kV Motor Spares	15		916		1		915
Unit 4 Generator Stator Replacement	15		11,200				1,000		10,200
Pulverised Fuel Pipes Isolation Valves	15		1,344		7		324		1,013
Midlife Refit of TPS Lighting	15		5,483		273		1,522		3,688
Generator rotor mid-life inspections	15		3,229		1,136		1,650		443
Sub-total Tarong Power Station							73,019
Wivenhoe Power Station
New Wivenhoe Generator Transformer	20		9,706		3,794		6		5,906
Minor Capital Works - Wivenhoe Power Station	20						638	Ongoing
Control Systems Refit Wivenhoe	20		3,100				5		3,095
Wivenhoe Main Transformer Environment Risk Mitigation	20		1,026		10		200		816
Sub-total Wivenhoe Power Station							849
Tarong North Power Station
Ash pipe extension	15		1,015		515		500
Minor Capital Works - Tarong North	15						909	Ongoing

Capital Statement 2006-07  71

Energy

		Total		Expenditure
		Estimated		to		Budget		Post
	Statistical	Cost		30-06-06		2006-07		2006-07
Project	Division	$’000		$’000		$’000		$’000
Tarong North Overhaul	15						3,223	Ongoing
Sub-total Tarong North Power Station							4,632
Corporate
Technology and Software Updates	05						1,200	Ongoing
Minor Capital Works - TECO Head Office	05						1,790	Ongoing
Sub-total Corporate							2,990
Fuel Strategy
Coal Supply	15		408,790		44,088		147,595		217,107
Coal Transportation	Various		30,145		10,408		12,600		7,137
Sub-total Fuel Strategy							160,195
Total Property, Plant and Equipment							241,685
TOTAL TARONG ENERGY CORPORATION LIMITED							241,685
POWERLINK QUEENSLAND
Property, Plant and Equipment
Q Rail SVC 132kV Secondary System Refurbishment	Various						6,300	Ongoing
Gold Coast Transmission Reinforcement	Various						8,704	Ongoing
Ross - Townsville South 132kV Reinforcement	45						9,000	Ongoing
Algester 110kV Substation Establishment	05		14,100		11,551		2,549
Bohle River to Townsville GT 132kV Line	45						13,000	Ongoing
Belmont-Murarrie Transmission Reinforcement	05		46,900		44,239		2,661
Goodna 110/33kV Substation Establishment	05		17,100		14,345		2,755
Mackay Transmission Reinforcement	40						25,500	Ongoing
Tully - Innisfail 132kV Transmission Line	50						24,100	Ongoing
SEQ Transmission Augmentation	Various						55,000	Ongoing
Molendinar 110kV Substation Replacement	10		19,300		11,178		8,122
Townsville East Substation Establishment	45						13,000	Ongoing

72 Capital Statement 2006-07

Energy

		Total		Expenditure
		Estimated		to		Budget		Post
	Statistical	Cost		30-06-06		2006-07		2006-07
Project	Division	$’000		$’000		$’000		$’000
West Darra Switchyard Rebuild	05						5,700	Ongoing
North Qld Transmission Reinforcement Stage 1	40						50,100	Ongoing
Lilyvale - Blackwater 132kV Transmission Line	Various						16,500	Ongoing
Tarong 275kV Substation Refurbishment	15						16,300	Ongoing
Strathmore 275kV SVC	40						18,000	Ongoing
Other Projects	Various		121,209				121,209
Total Property, Plant and Equipment							398,500
TOTAL POWERLINK QUEENSLAND							398,500
ENERTRADE
Property, Plant and Equipment
Minor Works 06/07 - PPE	05		831				831
Total Property, Plant and Equipment							831
Other Capital Expenditure
Minor Works 06/07 - Software	05		645				645
Total Other Capital Expenditure							645
TOTAL ENERTRADE							1,476
ERGON ENERGY CORPORATION LIMITED
Property, Plant and Equipment
System Related
Corporation Initiated Works
Augment Substation Northern	45		4,500		1,000		2,300		1,200
Augment Substation Wide Bay	15		13,000		500		7,300		5,200
Redevelop Substation Wide Bay	15		29,500		2,400		13,000		14,100
Reinforce Lines Wide Bay	15		125,000		9,100		40,700		75,200
Reinforce Supply Darling Downs	20		120,000		5,500		32,400		82,100
Reinforce Supply Mackay	40		84,000		6,300		13,900		63,800
Reinforce Supply Fitzroy	30		15,000		2,300		1,900		10,800
Reinforce Supply Northern	45		36,500		7,600		3,200		25,700
Reinforce Supply Far North	50		39,500		700		12,100		26,700

Capital Statement 2006-07  73

Energy

		Total		Expenditure
		Estimated		to		Budget		Post
	Statistical	Cost		30-06-06		2006-07		2006-07
Project	Division	$’000		$’000		$’000		$’000
Other Corp Initiated Works	Various						175,839	Ongoing
Sub-total Corporation Initiated Works							302,639
Customer Initiated Works
Major Customer - Dalrymple Bay/Hay Point	40		12,000		100		1,100		10,800
Major Customer - Kogan (Arrow Energy Powerstation)	20		8,000		400		6,100		1,500
Major Customer - Sth Walker Mine	40		9,000		200		7,200		1,600
Major Customer - Sunwater (Burdekin - Moranbah Pipeline)	45		28,000		700		15,000		12,300
Major Customer - Vermont Coal Mine	40		6,500		100		5,000		1,400
Sundry Customer Requested Initiated Works	Various						179,894	Ongoing
Sub-total Customer Initiated Works							214,294
Isolated Systems
Isolated Systems Central West	35		8,000		300		2,100		5,600
Isolated Systems Far North	50		27,000		1,100		16,200		9,700
Other Isolated Systems	Various						7,066	Ongoing
Sub-total Isolated Systems							25,366
Sub-total System Related							542,299
Other Regulated Asset Additions
Sundry Other Regulated Asset Additions	Various						145,777	Ongoing
Sub-total Other Regulated Asset Additions							145,777
Non-Regulated Asset Additions
Sundry Other Non-Regulated Asset Additions	Various						80,017	Ongoing
Sub-total Non-Regulated Asset Additions							80,017
Total Property, Plant and Equipment							768,093
TOTAL ERGON ENERGY CORPORATION LIMITED							768,093
TOTAL ENERGY							2,856,087

74 Capital Statement 2006-07

ENVIRONMENTAL PROTECTION AGENCY

The environment is one of Queensland’s greatest strategic assets. The crucial challenge for Queensland is to maintain and improve the quality of this strategic asset. By investment in appropriate infrastructure, equipment and assets, the Government is providing a strong foundation for delivering on an environmental agenda that meets the community’s expectations of environmental integrity, economic viability and social equity.

The 2006-07 capital program for the Environmental Protection Agency of $55.3 million provides for the continuing protection of Queensland’s natural and cultural heritage through the acquisition of land and the ongoing construction of infrastructure and improvements in Queensland’s parks and forests.

Program Highlights

• An additional $3 million is provided to further supplement the existing 2006-07 allocation for Cape York land acquisitions. This is in addition to the existing land acquisition funding of $4.5 million, the final year of a $15 million three-year land acquisition program. Funding of $6.8 million has now been allocated for acquisitions in Cape York and the Daintree, with the remaining funds available for state-wide acquisitions of strategic importance.

• $12.4 million is provided for infrastructure requirements under the Land Management Package for Expanded QPWS Estate initiative. Significant recent and planned expansions in the protected estate will be supported by ongoing investment in additional infrastructure ranging from minor works such as firebreaks and signage to visitor and management facilities.

• $20 million is allocated to acquire land under the South East Queensland Recreation and Conservation Initiative.

Capital Statement 2006-07  75

Environmental Protection Agency

		Total		Expenditure
		Estimated		to		Budget		Post
	Statistical	Cost		30-06-06		2006-07		2006-07
Project	Division	$’000		$’000		$’000		$’000
ENVIRONMENTAL PROTECTION AGENCY
Property, Plant and Equipment
Plant and Equipment	Various						2,040	Ongoing
Capital Works - Administrative Building Works
Moreton Bay Marine Operations Base	05		450				450
Rockhampton Regional Office	30		816		342		474
Office Accommodation Cardwell	50		307				307
Minor Works	05						234	Ongoing
Sub-total Capital Works - Administrative Building Works							1,465
Land Management Package for Expanded QPWS Estate
Ranger Base - Old Laura - Lakefield National Park	50		800				741		59
Staff Housing - Coen	50		450				450
Taroom Management Base	25		480		30		450
Lakefield National Park - Boundary Fencing	50		509		5		304		200
Staff Housing - Heathlands	50		680				680
Remediation of Road - Presho State Forest	25		378		78		300
Staff Housing - Lakefield National Park	50		680				680
Mimosa Recreation Area Redevelopment	30		555		55		250		250
Heavy Plant & Equipment Acquisition	Various		1,322		182		1,140
Bitumen Steep Access Road to Blackdown Tableland	30		395				395
Minor Works - Land Management Package	Various						6,990	Ongoing
Sub-total Land Management Package for Expanded QPWS Estate							12,380
Land Acquisition
Strategic Lands*	Various		2,500		1,750		750
South East Queensland Recreation and Conservation	10		20,000				20,000
Strategic Lands, Cape York / Daintree*	50		14,750		8,000		6,750
Sub-total Land Acquisitions							27,500

76 Capital Statement 2006-07

Environmental Protection Agency

		Total		Expenditure
		Estimated		to		Budget		Post
	Statistical	Cost		30-06-06		2006-07		2006-07
Project	Division	$’000		$’000		$’000		$’000
Capital Works - Parks and Forests
Lake Eacham day use area - Crater Lakes National Park	50		1,052		335		355		362
Office - Dundubara Base - Great Sandy National Park	15		503		50		453
Great Sandy Marine Park	15		1,330		200		1,130
Waste Treatment System - Dundubara Base - Great Sandy National Park	15		728		62		666
Minor Works - Parks and Forests	Various						1,676	Ongoing
Sub-total Capital Works - Parks and Forests							4,280
Great Walks of Queensland Gold Coast Hinterland Great Walk	10		1,919		1,494		425
Sub-total Great Walks of Queensland							425
Better and Sustainable Parks
Sunshine Coast Hinterland Visitor Information Centre*	10		652		351		301
Settlement Visitor Facilities - Springbrook National Park*	10		437		162		275
Minor Works - Better and Sustainable Parks*	Various		3,045		1,901		1,144
Sub-total Better and Sustainable Parks							1,720
Palmerston MaMu Walk*	50		4,000		200		3,800
East Trinity Property Management	50		1,588		288		600		700
Total Property, Plant and Equipment							54,210
Other Capital Expenditure
Intergrated Searches and Licencing	05		2,006		1,352		654
Various System Enhancements	05		401				401
Total Other Capital Expenditure							1,055
TOTAL ENVIRONMENTAL PROTECTION AGENCY							55,265

* Funded fully or in part under the Smart State Building Fund

Capital Statement 2006-07  77

HEALTH

The total capital program for Queensland Health will invest $594 million in new capital acquisitions in 2006-07, which includes the Queensland Institute of Medical Research funding of $3.1 million.

The Queensland Health capital works program is a major input into the delivery of health services and outputs that supports the Government’s priorities of Managing urban growth and building Queensland’s regions and Improving health care and strengthening services to the community. The program focuses on capital infrastructure in the community, hospitals, health technology, pathology and scientific services, renal, mental health, residential care, ambulatory care, staff accommodation, and information and communication technologies. It reflects a greater emphasis on comprehensive health service planning and best practice design features.

Program Highlights

• Over the next four years, Queensland Health will continue to invest $254.6 million as part of the new initiatives under the SEQIPP including Health Precincts at Browns Plains/Jimboomba, Caboolture, North Lakes, Robina and Sunshine Coast, upgrade of The Prince Charles Hospital and the expansion of health services at Caloundra Hospital.

• An investment of $179.1 million in 2006-07 on major hospital projects including redevelopments at Ingham, Innisfail, The Prince Charles and Yeppoon Hospitals; and emergency department upgrades at Dalby, Gold Coast, Gympie, Logan, Redcliffe, Redland, Robina and Rockhampton Hospitals.

• In 2006-07, $69.7 million will be invested in continuing community based projects including SEQIPP initiatives of Health Precincts at Browns Plains/Jimboomba, Caboolture, North Lakes and Sunshine Coast, together with consolidation of community services in Cairns and Gladstone and redevelopments of Miles and Weipa Hospitals.

• $32.9 million to construct new primary health care centres at Erub (Darnley) Island, Warraber Island, Gin Gin, Hope Vale, Yarrabah and Wondai.

• $90.6 million will be invested in new and continuing health technology projects, including $70 million for the provision of new health technology and building engineering equipment.

• $48.4 million in 2006-07 is allocated towards the upgrade of staff accommodation including $37 million for the Regional Staff Accommodation program. Additional projects include accommodation at Babinda, Cape York (Kowanyama, Lockhart River, Pormpuraaw), Emerald, Gladstone, Injune, Rockhampton and Winton.

78 Capital Statement 2006-07

• Enhancement of Renal Services in Queensland will continue in 2006-07 with $11.4 million invested to continue projects at Cooktown, Redland and Robina.

A total of $87.2 million is provided for continued investment in information and communication technology projects in 2006-07. The total capital investment of $59.2 million is net of $28 million of non-capital expenditure. This investment includes:

• $21.2 million on clinical information projects focused on solutions supporting improved access to information and systems in hospital and community settings

• $8.8 million on other information and communication technology projects to enable improved secured system access, data capacity management and statewide service capability

• $29.2 million on continued development, integration and replacement of technical infrastructure to support enterprise systems and networks.

The Council of the Queensland Institute of Medical Research

The capital development program at QIMR, which includes the upgrading and extension of the small animal facility and the proteomics facility, has been progressed.

Of the $3.15 million QIMR 2006-07 capital program, $0.85 million will be expended on further proteomics equipment, and additional small animal cages.

The new facilities have been welcomed by scientists at QIMR who predict that the improvements to infrastructure will result in their continued ability to compete globally.

Program Highlights

Capital funding will support the following initiatives:

• state-of-the-art proteomics facility for the analysis of proteins involved in health and disease

• small animal facility which meets the needs of scientists and the regulations for compliance.

Capital Statement 2006-07 79

Health

		Total		Expenditure
		Estimated		to		Budget		Post
	Statistical	Cost		30-06-06		2006-07		2006-07
Project	Division	$’000		$’000		$’000		$’000
DEPARTMENT OF HEALTH
Property, Plant and Equipment
Community Health Centres (CHC)
Browns Plains Ambulatory and Community Centre *	05		17,012		4,228		4,370		8,414
Caboolture Ambulatory and Community Health Campus	05		20,000				1,578		18,422
Cairns Central CHC*	50		12,674		2,920		1,000		8,754
Gladstone Community, Mental and Oral Health Consolidation*	30		12,750		1,071		8,679		3,000
Mackay Community Based1 Rehab/Transition Service	40		2,200		10		2,190
Miles Hospital Redevelopment*	20		11,696		849		8,146		2,701
North Lakes Ambulatory and Community Centre *	05		26,160		5,539		6,600		14,021
Nundah CHC	05		15,780		1,680		5,500		8,600
Robina Ambulatory and Community Health Campus	10		26,000				1,326		24,674
Rockhampton Oral Health Upgrade*	30		7,150		551		5,533		1,066
Sunshine Coast Ambulatory and Community Centre*	10		14,742		100		5,400		9,242
Sunshine Coast Land Acquisitions	10		30,717				15,000		15,717
Weipa Hospital Redevelopment*	50		27,738		413		3,500		23,825
Blackall Private Practice Clinic	35		1,000		120		880
Sub-total Community Health Centres (CHC)							69,702
Multi-Purpose Health Service (MPHS)
Collinsville Health Service *	40		10,507		310		7,087		3,110
Sub-total Multi-Purpose Health Service (MPHS)							7,087
Primary Health Care Centres (PHCC)
Erub (Darnley) Island	50		5,400		150		5,000		250
Gin Gin Health Service*	15		8,572		536		7,036		1,000
Hope Vale PHCC *	50		13,369		760		8,500		4,109
Warraber Island	50		3,820		157		3,023		640
Wondai PHCC *	15		2,603		150		2,375		78
Yarrabah PHCC *	50		15,774		541		7,000		8,233
Sub-total Primary Health Care Centres (PHCC)							32,934

80 Capital Statement 2006-07

Health

		Total		Expenditure
		Estimated		to		Budget		Post
	Statistical	Cost		30-06-06		2006-07		2006-07
Project	Division	$’000		$’000		$’000		$’000
Hospitals
Bundaberg Hospital Electrical1 Upgrade	15		1,650		90		1,560
Caloundra-Expansion of Health Services	10		50,000		50		4,754		45,196
Dalby Hospital Outpatients, Emergency Department and Maternity*	20		9,700		681		7,300		1,719
Emergency Department Upgrades Gold Coast Hospital1 Emergency Department Upgrade	10		2,300		180		2,120
Gympie Hospital Emergency Department Upgrade*	15		6,404		1,284		5,000		120
Logan Hospital Emergency Department Upgrade*	05		7,460		1,966		5,494
Redcliffe Hospital Emergency Department Upgrade*	05		22,340		3,202		14,048		5,090
Redland Hospital Emergency Department Upgrade*	05		11,550		3,075		7,065		1,410
Robina Hospital Emergency1 Department and Intensive Care Unit*	10		40,110		3,388		33,803		2,919
Rockhampton Hospital (Stage 1)1 Emergency Department	30		20,500		200		5,000		15,300
Gold Coast Cardiac Patients1 Refurbishment	10		3,200				3,200
Gold Coast New Facility for Renal1	10		1,070				1,070
Hervey Bay Hospital Clinics Building	15		5,270		5,250		20
Ingham Hospital Redevelopment*	45		22,100		136		1,500		20,464
Innisfail Hospital Redevelopment	50		41,785		21,778		19,557		450
Logan Refurbish Oncology Ward1	05		300				300
Mareeba (Tableland) Hospital Refurbishment	50		800		285		515
Maryborough Hospital Hydrotherapy	15		1,392		555		837
The Royal Brisbane and Women’s Hospital Refurbishment Lady Lamington Building Nurses Quarters	05		1,000		895		105
Riverton Relocation *	05		9,900		1,773		8,127

Capital Statement 2006-07 81

Health

		Total		Expenditure
		Estimated		to		Budget		Post
	Statistical	Cost		30-06-06		2006-07		2006-07
Project	Division	$’000		$’000		$’000		$’000
The Prince Charles Hospital Upgrade	05		108,500		28,621		50,740		29,139
Thursday Island Chronic Disease Centre	50		7,934		278		3,250		4,406
Yeppoon Hospital Redevelopment	30		17,000		416		2,000		14,584
Master Planning Studies	Various						850	Ongoing
Building Capital Works Program Management	Various						850	Ongoing
Sub-total Hospitals							179,065
Health Technology Replacement
Health Technology Equipment	Various						70,000	Ongoing
Project Finalisation	Various						15,196	Ongoing
Program Management	05						1,045	Ongoing
Cardiac New Services Equipment
Chest Pain Assessment Units1	Various		140				140
Echocardiography Machine	Various		1,440				1,440
Exercise Equipment for1 Cardiac Rehab	Various		120				120
Interventional &1 Electrophysiology Equipment	05		1,050				1,050
The Royal Brisbane and Women’s1 Hospital Lab Equipment for Bone Marrow Transplant Services	05		210				210
Healthy Hearing*	Various		2,825		1,950		875
Sterilising Services Equipment	Various		500				500
Sub-total Health Technology Replacement							90,576
Renal Services
Cooktown Satellite Renal Service	50		3,336		304		2,811		221
Redland Hospital — Renal Dialysis Service	05		3,870				3,570		300
Robina Hospital — Renal Dialysis Service	10		4,685		420		3,000		1,265
Thursday Island Satellite Renal Service	50		3,336		120		1,250		1,966
Sunshine Coast Ambulatory & Community Centre — Renal Dialysis Service	Various		1,160		122		774		264
Sub-total Renal Services							11,405

82 Capital Statement 2006-07

Health

		Total		Expenditure
		Estimated		to		Budget		Post
	Statistical	Cost		30-06-06		2006-07		2006-07
Project	Division	$’000		$’000		$’000		$’000
Mental Health
Cairns Rehabilitation/Dual Diagnosis Unit*	50		5,380		401		4,979
Child Safety Mental Health Facilities	Various		765				765
Rockhampton Child and Youth MHS relocation	30		1,650		1,550		100
Sub-total Mental Health							5,844
Pathology and Scientific Services Queensland Health Scientific1 Services	05		20,616		363		12,583		7,670
Sub-total Pathology and Scientific Services							12,583
Residential Care
Maryborough Residential Aged Care Facility	15		18,374		18,314		60
Roma Residential Aged Care Facility	25		12,991		11,594		1,397
Warwick Residential Aged Care Facility	20		8,245		7,320		922		3
Wondai Residential Aged Care Facility	15		13,174		5,584		7,519		71
Fire Safety Upgrades- Residential Aged Care	Various		5,176		1,676		3,500
Program Management	Various		2,636		105		2,390		141
Sub-total Residential Care							15,788
Staff Accommodation Program
Ayr Hospital Residence	45		521		491		30
Townsville Staff Accommodation	45		2,515		2,500		15
Cape York Staff Accommodation	50		2,450		8		2,442
Rockhampton Staff Accommodation *	30		6,500		176		1,000		5,324
Housing Stock Upgrade	Various						1,000	Ongoing
Other Staff Accommodation (various locations) *	Various		12,353		5,423		6,905		25
Regional Accommodation Program	Various		91,000		25,000		37,000		29,000
Sub-total Staff Accommodation Program							48,392

Capital Statement 2006-07 83

Health

		Total		Expenditure
		Estimated		to		Budget		Post
	Statistical	Cost		30-06-06		2006-07		2006-07
Project	Division	$’000		$’000		$’000		$’000
Other Acquisitions of Property, Plant and Equipment
Minor Capital Projects and2 Acquisitions	Various						16,538	Ongoing
Health Contact Centre	Various		8,939		8,080		859
Queensland Bone Bank Redevelopment	05		11,400		9,900		1,500
Mackay Annex	40		1,700				1,700
Charters Towers — Residential Aged Care Upgrade	45		400				400
Emergent Works Program	Various						17,000	Ongoing
The Royal Brisbane and Women’s Hospital Staff Amenities	05		3,000				3,000
Princess Alexandra Hospital Staff Amenities	05		4,000				4,000
Toowoomba Medical Wards	10		2,000				2,000
Roma Nurses Quarters	25		2,500				2,100		400
Townsville Hospital — Additional Ward Beds	45		2,666				2,197		469
Sub-total Other Acquisitions of Property, Plant and Equipment							51,294
Information Technology Equipment
Information Technology3 Equipment Acquisition	Various						29,175	Ongoing
Sub-total Information Technology Equipment							29,175
Total Property, Plant and Equipment							553,845
Other Capital Expenditure
Inventory Movement	Various						1,521	Ongoing
Information and Communication Technology4
Hospital and Community Health Care Enablement*	Various		108,322		10,906		21,189		76,227
Resource Management Enablement	Various		973		584		389
Decision Support Enablement	Various		1,283		552		731
ICT Infrastructure3,5
Security	Various		8,439		3,727		2,627		2,085
Processing and Storage	Various		7,452		120		1,390		5,942
Other IT Projects	Various		18,778		12,731		2,918		3,129
IT Contingency and Emergent Needs	Various						750	Ongoing
Sub-total Information and Communication Technology							29,994

84 Capital Statement 2006-07

Health

		Total		Expenditure
		Estimated		to		Budget		Post
	Statistical	Cost		30-06-06		2006-07		2006-07
Project	Division	$’000		$’000		$’000		$’000
Total Other Capital Expenditure							31,515
Capital Grants
Home and Community Care	Various						5,500	Ongoing
Total Capital Grants							5,500
TOTAL DEPARTMENT OF HEALTH							590,860
THE COUNCIL OF THE QUEENSLAND INSTITUTE OF MEDICAL RESEARCH
Property, Plant and Equipment
Animal Cages	05		1,870		1,470		400
Animal House Extension	05		1,950		1,940				10
Level C CBCRC Fitout	05		3,190		3,180				10
Other Scientific Equipment	05						2,246	Ongoing
Proteomics Facility	05		4,000		3,550		450
Records Management System	05		50				50
Total Property, Plant and Equipment							3,146
TOTAL THE COUNCIL OF THE QUEENSLAND INSTITUTE OF MEDICAL RESEARCH							3,146
TOTAL HEALTH							594,006

Notes:

1.	Additional Funding provided through the Special Fiscal and Economic Statement in October 2005.
2.	Amount is net of $23.5 million non-capital component of project expenditure.
3.	Telecommunications & Connectivity projects are now reported under IT Equipment.
4.	Information and Communication Technology projects are net of $28 million in 2006-07 and $123.4 million in the total estimated cost representing changes in Classification of expenditure due to the application of the new Australian Equivalents to International Financial Reporting Standards.
5.	IT Infrastructure projects have been realigned under new Programs of work.
*	Funded fully or in part under the Smart State Building Fund

Capital Statement 2006-07 85

HOUSING

The department’s 2006-07 capital expenditure program of $481.2 million underpins the provision of a range of social housing solutions across the department’s outputs.

The department will deliver housing assistance in Queensland through the implementation of one social housing system, developing better integration between a range of housing programs funded or subsidised by the Government to make it easier for clients to navigate through the social housing system, to improve access to affordable housing for low-income Queenslanders and provide options to assist people to remain in private rental accommodation or home ownership.

In 2006-07, year two of the Queensland Government’s Responding to Homelessness initiative provides $34 million in capital funding to deliver a range of accommodation initiatives. These include continued development of the Lady Bowen Complex to further expand the housing options for homeless people in inner-Brisbane together with further allocations to the Crisis Accommodation and Boarding House Programs.

An allocation of $38.5 million over four years, including $6 million in 2006-07, for the Government’s Spinal Cord Injuries Initiative will fund the procurement of up to 70 units of accommodation, across Queensland. This cross-agency initiative will provide housing and support to assist spinal cord injuries patients to leave hospital when they no longer require hospital care.

Program Highlights

The department will expand the supply and improve the amenity of social housing dwellings through capital investment and grant funding including:

• $285.4 million for the Public Housing and Aboriginal and Torres Strait Islander Housing rental programs and the Long Term Community Housing Program to:

- acquire 584 dwellings, complete construction of 333 dwellings commenced in 2006-07 or previous years, and purchase and develop land to facilitate future construction of approximately 56 units of social housing accommodation; and

- enhance the condition of existing social housing dwellings through general upgrades, including the continuation of Urban Renewal projects.

• $67.3 million in capital grants allocated for upgrades to existing properties and replacement and new constructions on the 34 Aboriginal and Torres Strait Islander communities. This includes $5.1 million for factory built homes to increase social housing assets on smaller communities and an additional $5 million for upgrades and new construction.

• $46.3 million for the Boarding House Program to commence construction or purchase up to 278 new units of accommodation, complete construction of 95

86 Capital Statement 2006-07

	dwellings commenced in previous years, and purchase and develop land for the future construction of approximately 100 units of accommodation.
•	$32.4 million for the Crisis Accommodation Program to provide four shelters and 47 units of accommodation, complete four shelters and seven dwellings commenced in previous years, and purchase and develop land for the future construction of approximately 96 units of accommodation.
•	$9.7 million to commence stages two (further building refurbishment) and three (new boarding house construction of approximately 30 studio rooms) of the refurbishment of the Lady Bowen Complex to provide housing options for homeless people in inner-Brisbane.
•	$5 million in capital grants to the Brisbane Housing Company to provide approximately 29 units of accommodation to low-income households and up to $20 million in capital grants to commence construction of 97 units of accommodation for affordable housing on the Gold Coast and Sunshine Coast.

In addition, the department will assist Queenslanders to access and sustain housing in the private market through the state-wide allocation of $2 million in grants for the Residential Services Industry and Residential Budget Accommodation. The funding will assist residential service owners/operators and residential budget accommodation owners/operators to modify or upgrade their premises to comply with the prescribed building and fire safety requirements and standards under the Residential Services (Accreditation) Act 2002 and the Building and Other Legislation Amendment Act 2002.

The department will continue to create better opportunities and outcomes in renewal communities across Queensland through the allocation of $1.8 million towards improving community facilities and neighbourhood amenities in targeted areas across Queensland under the Community Renewal program.

An estimated 1,271 FTE jobs will be directly sustained in the residential construction sector and a further 1,289 FTE jobs in related supply sectors, based on construction related capital investment of $254 million and capital grants expenditure of $111.1 million.

Capital Statement 2006-07 87

Housing

		Total	Expenditure
		Estimated	to	Budget		Post
	Statistical	Cost	30-06-06	2006-07		2006-07
Project	Division	$’000	$’000	$’000		$’000
DEPARTMENT OF HOUSING
Property, Plant and Equipment
PUBLIC RENTAL HOUSING
New Construction
Brisbane
Detached Houses	05				1,650	Ongoing
Medium Density	05				43,750	Ongoing
Seniors’ Units	05				1,300	Ongoing
Moreton
Medium Density	10				11,800	Ongoing
Seniors’ Units	10				4,900	Ongoing
Wide Bay-Burnett
Detached Houses	15				500	Ongoing
Medium Density	15				700	Ongoing
Seniors’ Units	15				2,000	Ongoing
Darling Downs
Medium Density	20				2,100	Ongoing
Fitzroy
Seniors’ Units	30				3,200	Ongoing
Central West
Medium Density	35				200	Ongoing
Mackay
Medium Density	40				4,500	Ongoing
Seniors’ Units	40				400	Ongoing
Northern
Medium Density	45				300	Ongoing
Singles	45				2,100	Ongoing
Accommodation
Far North
Medium Density	50				3,800	Ongoing
Singles	50				1,500	Ongoing
Accommodation
Various	Various				13,300	Ongoing
Sub-total New Construction					98,000
Capital Works on Existing Dwellings
Brisbane	05				55,903	Ongoing
Moreton	10				6,425	Ongoing
Wide Bay-Burnett	15				1,905	Ongoing
Darling Downs	20				3,234	Ongoing
South West	25				10	Ongoing

88 Capital Statement 2006-07

Housing

		Total	Expenditure
		Estimated	to	Budget		Post
	Statistical	Cost	30-06-06	2006-07		2006-07
Project	Division	$’000	$’000	$’000		$’000
Fitzroy	30				4,403	Ongoing
Central West	35				290	Ongoing
Mackay	40				3,820	Ongoing
Northern	45				7,513	Ongoing
Far North	50				4,760	Ongoing
North West	55				837	Ongoing
Sub-total Capital Works on Existing Dwellings					89,100
Land purchases and improvement	Various				4,976	Ongoing
Spot purchases	Various				37,200	Ongoing
Sub-total PUBLIC RENTAL HOUSING					229,276
ABORIGINAL AND TORRES STRAIT ISLANDER HOUSING
New Construction
Brisbane	05				2,510	Ongoing
Wide Bay-Burnett	15				1,840	Ongoing
Darling Downs	20				70	Ongoing
Fitzroy	30				1,100	Ongoing
Central West	35				50	Ongoing
Mackay	40				600	Ongoing
Northern	45				540	Ongoing
South West	25				600	Ongoing
Various	Various				2,690	Ongoing
Sub-total New Construction					10,000
Capital Works on Existing Dwellings
Brisbane	05				1,797	Ongoing
Moreton	10				80	Ongoing
Wide Bay-Burnett	15				548	Ongoing
Darling Downs	20				975	Ongoing
Fitzroy	30				959	Ongoing
Central West	35				10	Ongoing
Mackay	40				957	Ongoing
Northern	45				1,821	Ongoing
Far North	50				2,321	Ongoing
North West	55				1,532	Ongoing
Sub-total Capital Works on Existing Dwellings					11,000
Land purchases and improvement	Various				1,500	Ongoing
Spot purchases	Various				13,075	Ongoing
Sub-total ABORIGINAL AND TORRES STRAIT ISLANDER HOUSING					35,575

Capital Statement 2006-07 89

Housing

		Total	Expenditure
		Estimated	to	Budget		Post
	Statistical	Cost	30-06-06	2006-07		2006-07
Project	Division	$’000	$’000	$’000		$’000
COMMUNITY HOUSING
New Construction
Brisbane	05				1,940	Ongoing
Moreton*	10				2,175	Ongoing
Wide Bay-Burnett*	15				4,820	Ongoing
Darling Downs	20				315	Ongoing
South West	25				30	Ongoing
Fitzroy*	30				7,115	Ongoing
Mackay	40				870	Ongoing
Northern	45				2,210	Ongoing
Far North*	50				1,465	Ongoing
Various*	Various				5,760	Ongoing
Sub-total New Construction					26,700
Capital Works on Existing Dwellings
Various	Various				6,000	Ongoing
Northern*	45				1,500	Ongoing
Brisbane	05				11,700	Ongoing
Sub-total Capital Works on Existing Dwellings					19,200
Land Purchase and Improvement	Various				15,800	Ongoing
Spot Purchases	Various				33,730	Ongoing
Sub-total COMMUNITY HOUSING					95,430
HOME PURCHASE ASSISTANCE
Investment	Various				200	Ongoing
Sub-total HOME PURCHASE ASSISTANCE					200
PRIVATE HOUSING
Land purchases and development	05				1,135	Ongoing
Sub-total PRIVATE HOUSING					1,135
PLANT & EQUIPMENT
Intangibles	Various				8,354	Ongoing
Property, plant & equipment	Various				146	Ongoing
Sub-total PLANT & EQUIPMENT					8,500
Total Property, Plant and Equipment					370,116

90 Capital Statement 2006-07

Housing

		Total	Expenditure
		Estimated	to	Budget		Post
	Statistical	Cost	30-06-06	2006-07		2006-07
Project	Division	$’000	$’000	$’000		$’000
Capital Grants
ABORIGINAL AND TORRES STRAIT ISLANDER HOUSING
Wide Bay-Burnett	15				2,118	Ongoing
Fitzroy	30				2,429	Ongoing
Northern	45				4,099	Ongoing
Far North	50				53,517	Ongoing
North West	55				5,093	Ongoing
Sub-total ABORIGINAL AND TORRES STRAIT ISLANDER HOUSING					67,256
COMMUNITY HOUSING
Brisbane	05				2,234	Ongoing
Wide Bay-Burnett	15				670	Ongoing
Darling Downs	20				885	Ongoing
South West	25				391	Ongoing
Fitzroy	30				1,014	Ongoing
Central West	35				462	Ongoing
Mackay	40				1,849	Ongoing
Northern	45				704	Ongoing
Far North	50				1,424	Ongoing
North West	55				2,193	Ongoing
Various	Various				3,150	Ongoing
Sub-total COMMUNITY HOUSING					14,976
COMMUNITY RENEWAL
Brisbane	05				996	Ongoing
Moreton	10				297	Ongoing
Northern	45				380	Ongoing
Far North	50				160	Ongoing
Sub-total COMMUNITY RENEWAL					1,833
PRIVATE HOUSING
Brisbane Housing Company	05				5,000	Ongoing
Residential Service Industry and Budget Accommodation Grant	Various				1,991	Ongoing
Other	Various				20,000	Ongoing
Sub-total PRIVATE HOUSING					26,991
Total Capital Grants					111,056
TOTAL DEPARTMENT OF HOUSING					481,172

* Funded fully or in part under the Smart State Building Fund

Capital Statement 2006-07 91

INDUSTRIAL RELATIONS

Expenditure on capital items will total $0.457 million in 2006-07. Key areas of expenditure are replacement of operational equipment and new accommodation fit outs.

The department will make substantial investment in knowledge management systems such as an electronic document and records management system, a web content management system and redevelopment of the intranet. Under accounting standards and Accounting Policy Guidelines, the majority of this expenditure will be classified as an operating expense for 2006-07.

Industrial Relations

		Total		Expenditure
		Estimated		to	Budget		Post
	Statistical	Cost		30-06-06	2006-07		2006-07
Project	Division	$’000		$’000	$’000		$’000
DEPARTMENT OF INDUSTRIAL RELATIONS
Property, Plant and Equipment
Leashold Improvements	Various					100	Ongoing
Plant and Equipment	Various					157	Ongoing
Total Property, Plant and Equipment						257
Other Capital Expenditure
IT Systems	05		200			200
Total Other Capital Expenditure						200
TOTAL DEPARTMENT OF INDUSTRIAL RELATIONS						457

92 Capital Statement 2006-07

JUSTICE AND ATTORNEY-GENERAL

The 2006-07 capital expenditure program for Justice and Attorney-General (Department of Justice and Attorney-General, Crime and Misconduct Commission, Legal Aid Queensland, and Public Trust Office) is $79.7 million.

The Department of Justice and Attorney-General’s capital expenditure program for 2006-07 is $74.1 million. The department’s capital program focuses on designing, constructing and managing facilities and assets to ensure the services in the justice system are effective, accessible and safe.

Program Highlights

• $6.3 million is provided to conduct a design competition and preparation of a schematic design for a new court building to meet the future needs of the Supreme and District Courts in Brisbane.

• $9.1 million is provided for the design and construction of a new Ipswich Courthouse as part of a combined facility including a watchhouse and police station.

• $8.6 million is provided to construct a new courthouse at Pine Rivers.

• $0.99 million is provided to expand the use of videoconferencing to significantly improve service delivery within the criminal justice sector.

• $17.2 million is provided to further develop the Integrated Justice Information System which will deliver improved information sharing and operational efficiencies across the criminal justice system.

• $1 million is provided to modify the functionality of the Queensland Wide Integrated Courts system (QWIC) so it aligns with revised court reporting protocols. The project represents a renewal of existing system capability in order to meet new business requirements.

The Public Trust Office will invest $2.4 million in capital projects in 2006-07, including $1.1 million on the refurbishment and replacement of Public Trust offices, to ensure efficient services to the Queensland community.

Legal Aid Queensland will invest $2 million in capital projects in 2006-07 aimed at improving service delivery in Queensland.

The Crime and Misconduct Commission will invest $1.2 million in capital projects in 2006-07 relating to computer and motor vehicle replacements and alterations to leased premises.

Capital Statement 2006-07 93

Justice and Attorney-General

		Total		Expenditure
		Estimated		to		Budget		Post
	Statistical	Cost		30-06-06		2006-07		2006-07
Project	Division	$’000		$’000		$’000		$’000
DEPARTMENT OF JUSTICE AND ATTORNEY-GENERAL
Property, Plant and Equipment
Bowen, courthouse upgrade*	40		4,000		2,000		2,000
Brisbane Supreme and District Courts redevelopment	05		6,250				6,250
Buildings, programmed renewal	Various						5,100	Ongoing
Ipswich, land purchase and new courthouse	05		75,000		900		9,100		65,000
Mareeba Courthouse	50		5,308				1,500		3,808
Maryborough Courthouse	15		2,000				500		1,500
Minor capital works — Property, Plant & Equipment	Various						1,630	Ongoing
Pine Rivers, land purchase and new courthouse*	05		11,000		940		8,560		1,500
Sandgate, new courthouse	05		4,700		300		4,400
Videoconferencing to External Locations	05		1,525				985		540
Wide Area Network	Various		4,019		3,508		511
Other acquisitions of property, plant and equipment	Various						4,387	Ongoing
Total Property, Plant and Equipment							44,923
Other Capital Expenditure
Corporate Performance Management System	05		1,062		220		614		228
Crown Law — CLO System	05		1,133				168		965
Crown Law — VISUALFILES System	05		1,590		525		540		525
Integrated Justice Information Strategy	05		34,055		7,282		17,182		9,591
Minor Capital Works — Software	05						400	Ongoing
Prosecutions Case Management Information System	05		4,040				4,040
QWIC Renewal	05		1,000				1,000
Sentencing Database and Decision Support System	05		696		375		321
State Penalties Enforcement Registry Project	05		10,680		9,185		1,495
State Reporting Bureau — state of the art evidence transcription and reporting system	05		4,239		2,819		1,420

94 Capital Statement 2006-07

Justice and Attorney-General

		Total		Expenditure
		Estimated		to	Budget		Post
	Statistical	Cost		30-06-06	2006-07		2006-07
Project	Division	$’000		$’000	$’000		$’000
Other capital	Various					1,988	Ongoing
Total Other Capital Expenditure						29,168
TOTAL DEPARTMENT OF JUSTICE AND ATTORNEY-GENERAL						74,091
PUBLIC TRUST OFFICE
Property, Plant and Equipment
Other Plant, Property and Equipment	05					1,015	Ongoing
Refurbishment and Replacement of PT Offices	05		1,072			1,072
Total Property, Plant and Equipment						2,087
Other Capital Expenditure
Computer Software	05					335	Ongoing
Total Other Capital Expenditure						335
TOTAL PUBLIC TRUST OFFICE						2,422
LEGAL AID QUEENSLAND
Property, Plant and Equipment
Leasehold Improvements	Various					315	Ongoing
Brisbane building — minor works	05					490	Ongoing
Office Equipment	Various					592	Ongoing
Vehicle Replacement	05					505	Ongoing
Total Property, Plant and Equipment						1,902
Other Capital Expenditure
Core Business System Technical Redevelopment	05					50	Ongoing
Total Other Capital Expenditure						50
TOTAL LEGAL AID QUEENSLAND						1,952

Capital Statement 2006-07 95

Justice and Attorney-General

		Total	Expenditure
		Estimated	to	Budget		Post
	Statistical	Cost	30-06-06	2006-07		2006-07
Project	Division	$’000	$’000	$’000		$’000
CRIME AND MISCONDUCT COMMISSION
Property, Plant and Equipment
Other plant and equipment	05				1,192	Ongoing
Total Property, Plant and Equipment					1,192
TOTAL CRIME AND MISCONDUCT COMMISSION					1,192
TOTAL JUSTICE AND ATTORNEY-GENERAL					79,657

* Funded fully or in part under the Smart State Building Fund

96 Capital Statement 2006-07

LEGISLATIVE ASSEMBLY OF QUEENSLAND

Capital outlays in property, plant and equipment are critical to the delivery of the Legislative Assembly and Parliamentary Service output. The 2006-07 capital program for the Legislative Assembly is $2.6 million and is principally allocated towards the introduction of the video broadcast of Parliamentary proceedings over the Internet, and the upgrade of computer network infrastructure within the Parliamentary Precinct. Funding is also directed to the ongoing Parliament House Stonework Restoration Program and a range of minor capital works projects designed to improve the functionality and performance of existing building infrastructure.

Legislative Assembly of Queensland

		Total		Expenditure
		Estimated		to		Budget		Post
	Statistical	Cost		30-06-06		2006-07		2006-07
Project	Division	$’000		$’000		$’000		$’000
LEGISLATIVE ASSEMBLY OF QUEENSLAND
Property, Plant and Equipment
Parliament House Stonework Restoration Program	05		12,384		3,804		100		8,480
Video Broadcast of Parliamentary Proceedings	05		500				500
Network Infrastructure Upgrade	05		375				375
Annexe Level 7 Safety Improvements	05		350				350
Minor Capital Works-Plant and Equipment	05		1,273				1,273
Total Property, Plant and Equipment							2,598
TOTAL LEGISLATIVE ASSEMBLY OF QUEENS LAND							2,598

Capital Statement 2006-07 97

LOCAL GOVERNMENT, PLANNING, SPORT AND RECREATION

The Department of Local Government, Planning, Sport and Recreation capital works subsidy programs will provide $384.1 million in 2006-07 (including a capital grant of $9.4 million to the Major Sports Facilities Authority). This will facilitate the creation of new or enhanced facilities to improve the delivery of services and products to communities and clients, and support the delivery of the Government’s policy priorities. This capital program provides for infrastructure to:

• help shape Queensland’s growth.

• increase participation in sport and active recreation.

• improve community access to services.

• promote economic and social development.

The majority of capital expenditure incurred by the department relates to capital grants and subsidies provided to local government bodies, sport and recreation organisations and Indigenous organisations to:

• assist with the creation or upgrading of a range of capital infrastructure such as water supply and sewerage works.

• assist with the building or upgrading of facilities which enhance the opportunities for communities to participate in sport and active recreation.

Other capital expenditure by the department is associated with improving the quality and accessibility of facilities at a number of the State’s Active Recreation Centres, to support the delivery of the State Tennis Centre and to ensure the ongoing maintenance and provision of an appropriate level of office equipment and information technology hardware for technical and administrative staff in Brisbane and regional offices.

Program Highlights

• Up to $34 million in 2006-07 is provided for environmental health infrastructure and its operation and maintenance in mainland and island Indigenous communities.

• $325 million in new funding is provided over five years ($65 million in 2006-07) for water and sewerage infrastructure, effluent re-use and demand management and water loss reduction in local governments throughout the State.

• Commencing from 1 July 2006, $25 million will be provided over five years ($5 million in 2006-07) for the Regional Collaboration and Capacity Building Program. With these funds, neighbouring councils can work together to explore the feasibility of providing joint facilities or services and some councils may wish to investigate the benefits that could stem from amalgamation.

98 Capital Statement 2006-07

• $6.7 million in 2006-07 will support early works (demolition and remediation) of the Tennyson Power Station site to facilitate the development of the new State Tennis Centre.

Major Sports Facilities Authority

The capital program for the Major Sports Facilities Authority reflects the investment required to develop and maintain the State’s major sports facilities to a standard appropriate for the conduct of national and international events. The capital program will provide $103.6 million in 2006-07 and will include the development of a hydrotherapy recovery and rehabilitation centre at the Queensland Sport and Athletics Centre as well as construction of the 25,000 seat stadium located at Robina on the Gold Coast. It is anticipated the stadium will be operational by 2008 and be the home ground of the new Gold Coast Titans National Rugby League team.

Capital Statement 2006-07 99

Local Government, Planning, sport and Recreation

		Total		Expenditure
		Estimated		to		Budget		Post
	Statistical	Cost		30-06-06		2006-07		2006-07
Project	Division	$’000		$’000		$’000		$’000
DEPARTMENT OF LOCAL GOVERNMENT, PLANNING, SPORT AND RECREATION
Property, Plant and Equipment
Tennyson Riverside Redevelopment Buildings	05		9,884		3,184		6,700
Active Recreation Centres	Various						4,877	Ongoing
Townsville Sports Reserve	45						395	Ongoing
Townsville Sports House	45		2,971		2,884		87
Plant & Equipment	05						554	Ongoing
Total Property, Plant and Equipment							12,613
Capital Grants
Sport Infrastructure
Major Facilities	Various						20,000	Ongoing
Minor Facilities	Various						7,500	Ongoing
Local Government Development Program	Various						3,500	Ongoing
Local Government Infrastructure
Roads	Various						69,996	Ongoing
Water and Sewerage	Various						178,121	Ongoing
Other Works	Various						82,920	Ongoing
Total Capital Grants							362,037
TOTAL DEPARTMENT OF LOCAL GOVERNMENT, PLANNING, SPORT AND RECREATION							374,650
MAJOR SPORTS FACILITIES AUTHORITY
Property, Plant and Equipment
Capital maintenance and equipment	Various						9,411	Ongoing
Gold Coast Stadium	10		160,000		18,800		72,200		69,000
Suncorp Stadium Infrastructure East Project	05		279,700		267,700		12,000
QSAC Rehabilitation Centre	05		10,000				10,000
Total Property, Plant and Equipment							103,611
TOTAL MAJOR SPORTS FACILITIES AUTHORITY							103,611
TOTAL LOCAL GOVERNMENT, PLANNING, SPORT AND RECREATION							478,261

100 Capital Statement 2006-07

MAIN ROADS

The 2006-07 capital expenditure program for Main Roads (which includes Queensland Motorways Limited and RoadTek) is $1.979 billion, a 58% increase on the 2005-06 Budget. Main Roads strategically manages, plans, develops, operates and maintains the State road network, while recognising and taking into account the wider transport task, community and industry needs and the environment.

Capital investment in the road network results in improvements to the road system, generating significant long-term benefits to the people of Queensland in terms of:

• safe and secure communities through safer roads

• a strong and diversified economy through efficient and effective transport

• a fair, socially cohesive and culturally vibrant community through fair access and amenity

• a clean, liveable and healthy environment.

In order to assist in achieving these outcomes, the State Government is providing additional allocations for the following major State-funded programs:

• $1.4 billion over five years for roads projects under the SEQIPP-noting also that extra State-sourced roads funding to meet the $27.7 billion commitment to major transport infrastructure identified in SEQIPP over the 20 years from 2005-06, totals some $8.7 billion.

• $359 million over four years under the Rural and Regional Roads Funding special initiative for acceleration of regionally-significant projects outside the south-east corner

• $170 million over five years for the $350 million Regional Bridge Renewal Program to replace more than 100 timber bridges and older concrete and steel structures across the State

• $88 million over three years for the Accelerated Road Rehabilitation Program to rehabilitate and widen 71 kilometres of the Dawson Highway between Gladstone and Banana, and replace five timber bridges in Central Queensland and 31 in Southern Queensland.

Program Highlights

• Continue construction of the $543 million ($423 million-State; $120 million - -Australian Government) four-lane bypass on the Pacific Motorway between Tugun and Tweed Heads, with scheduled completion by the end of 2008.

Capital Statement 2006-07 101

• $183 million for the Safer Roads Sooner program over four years from 2006-07, including revenue from speed and red light cameras to fix black spots on State-controlled roads. A further $17.8 million is provided by the Australian Government in national black spot funding over two years for targeted road safety improvements on State and local government roads.

• $71 million in 2006-07 for works on duplicating the Sunshine Motorway between Sippy Downs and Pacific Paradise, including the second Maroochy River bridge and major interchanges at Mooloolaba and Maroochydore Roads and Pacific Paradise, at a total estimated cost of $223 million.

• $11.8 million towards construction of the South West Arterial (Springfield to Ripley to Yamanto extension) at a total estimated cost of $270 million.

• Commencement of major works for a second Gateway Bridge river crossing and increased capacity on the Gateway Motorway between Mt Gravatt-Capalaba Road and Nudgee Road. This will be Queensland’s largest single road project with a total estimated cost of $1.6 billion.

• $4.1 million in 2006-07 towards construction of the Bundaberg Ring Road to provide an alternative route from the Isis Highway to the industrial areas and the port to the east of Bundaberg City, at a total estimated cost of $42 million.

• Provision of four lanes on the New England Highway through Highfields, north of Toowoomba, in conjunction with a program of widening, overtaking lanes and intersection improvements north to Crows Nest.

• Widening and upgrading of Roma-Taroom Road to support oil and gas development and improve regional community access, at a total estimated cost of $30 million.

• Duplication and rehabilitation of sections of Maryborough-Hervey Bay Road in Hervey Bay City to accommodate growth in traffic and the development occurring on the outskirts of the city and within the urban and commercial environs.

• Complete detailed planning for the duplication of the Forgan Bridge in Mackay to allow a construction start in the second quarter of 2007 (at a total estimated cost of $50 million), and to allow a start on the replacement of the Hospital Bridge in Mackay in late 2006 (at a total estimated cost of $24 million).

• Continuation of works to upgrade the federally-funded Ipswich/Logan Motorway interchange at a total estimated cost of $160 million; and $320 million ($2005) under AusLink towards the full upgrade of the Ipswich Motorway, between Wacol and Darra.

102 Capital Statement 2006-07

• $9.7 million to complete detailed planning, corridor acquisition and make a start on construction in 2007(straight after the wet season) on the upgrading of the federally-funded Bruce Highway between Corduroy Creek and Banyan Creek, south of Tully, to improve flood immunity-with $128 million ($2006) committed by the Australian Government to allow completion by 2009.

• Completion of the federally-funded Wooroona and Inca Creek bridges and approaches on the Barkly Highway (Mount Isa and Camooweal) at a total estimated cost of $58.3 million.

• Widening the single-lane bitumen to provide a minimum seal width of eight metres, widening or removing narrow grids and improving visibility through sections of poor alignment on sections of the Burke Developmental Road, over four years from 2005-06, at a total estimated cost of $28 million.

• Duplication of North Ward Road in Townsville between William Street and Ingham Road, and between Walker Street and Heatleys Parade at a total estimated cost of $33.8 million, together with $2.8 million for the installation of traffic signals at the intersection of Warburton and Landsborough Streets.

• Widening of Mulgrave Road in Cairns, from four to six lanes, at a total estimated cost of $16 million.

• $9 million towards the duplication of Moggill Road between Kilkivan Avenue and Pullenvale Road at an estimated cost of $27 million.

• Route lighting for traffic and pedestrian safety, signal upgrades, intersection improvements and four-laning of various short sections of Ruthven Street in Toowoomba (with extra funding of $17.5 million provided over four years from 2005-06), including $8 million over three years for intersection improvements south of Spring Street.

• $0.24 million in 2006-07 to continue planning for the replacement of the single lane Ward River Bridge and the adjacent two span, single lane bridge over Woolshed Gully, on the Diamantina Developmental Road west of Charleville at a total estimated cost of $8 million.

• Widening the existing narrow formation to provide a minimum eight metre wide sealed pavement on sections of the Kennedy Highway south of Mt Garnet at a total estimated cost of $9 million, including $2.1 million in 2006-07 to widen and seal between Middle Creek and Granite Rocks.

• $9 million for continuing construction of the duplication of the Mt Lindesay Highway from Green/Fedrick Streets to Rosia Road and planning for duplication of the section between Rosia Road to Jimboomba.

Capital Statement 2006-07 103

• Construction of bikeway sections along the Pacific Motorway from Logan Road to the Logan River in Logan City at a total cost of $6 million.

Main Roads

		Total		Expenditure
		Estimated		to		Budget		Post
	Statistical	Cost		30-06-06		2006-07		2006-07
Project	Division	$’000		$’000		$’000		$’000
DEPARTMENT OF MAIN ROADS
Property, Plant and Equipment
Corporate Buildings
Barcaldine District Office	35		500		100		400
Metropolitan District Office	05		800		100		400		300
North Coast Hinterland District, Mooloolaba Office	10		500				500
RoadTek Rockhampton Workshop Construction	30		1,200		200		1,000
Minor works	Various						4,367	Ongoing
Sub-total Corporate Buildings							6,667
AusLink National Road Network
Barkly Highway
Inca Creek and Wooroona Creek, Construct bridges and approaches	55		58,309		10,818		47,491
Bruce Highway
Black Mountain Road/Pioneer Road, At-grade intersection improvement	10		5,750		300		5,450
Boundary Road-Uhlmann Road, Widen 4 to 6 lanes	05		108,000		65,909		42,091
Corduroy Creek-Banyan Creek, Realign 2 lanes	50		172,829		3,955		9,739		159,135
Gympie urban section, Duplicate 2 to 4 lanes	15		35,000		4,249		20,751		10,000
Mandurana turnout-The Leap, Realignment of 2 lanes	40		10,825		2,998		7,827
Plain Creek-Saltwater Creek, Grade separation	45		23,051		3,943		18,608		500
Tooloombah Creek-Granite Creek, Widen shoulder(s) and sealing	30		4,070		822		3,248

104 Capital Statement 2006-07

Main Roads

		Total		Expenditure
		Estimated		to		Budget		Post
	Statistical	Cost		30-06-06		2006-07		2006-07
Project	Division	$’000		$’000		$’000		$’000
Townsville Ring Road (Stages 2 and 3), Upper Ross River Road — Shaw Road, Construct to new sealed 2 lane standard	45		40,000		13,551		23,449		3,000
Uhlmann Road — Caboolture, Widen 4 to 6 lanes	05		132,000		5,068		47,000		79,932
Cunningham Highway / Arterial (Ipswich Motorway)
Dinmore — Gailes (Goodna Bypass), Planning study	05		10,000				5,000		5,000
Marshall Road — Suscatand Street, Miscellaneous works	05		16,543		14,000		1,500		1,043
Logan Motorway interchange, Construct interchange	05		160,000		20,000		45,000		95,000
Wacol — Darra, Widen 4 to 6 lanes	05		320,000		1,000		72,000		247,000
Cunningham Highway
Eight Mile intersection, At-grade intersection improvement	20		4,932		713		4,219
Fisher Park to Maryvale (Fisher Park West section), Widen and overlay	20		6,900		342		6,558
Flinders Highway
Charters Towers — Hughenden, West of Bullock Creek (176.1 - - 192.8km), Widen and seal	55		3,590		61		3,129		400
Griffith Arterial
Beatty / Balham Roads intersections (Brisbane Urban Corridor), At-grade intersection improvement	05		10,000		1,000		4,500		4,500
Pacific Highway
Pacific Highway (Pacific Motorway), Gateway Motorway — Logan Motorway, Concept Planning	05		7,300		4,300		3,000
Pacific Highway (Pacific Motorway), Nerang — Stewart Road, Planning: widen 4 to 6 lanes	10		5,296		2,796		2,500
Tugun — Tweed Heads, Construct 4 lane bypass	10		543,000		126,000		190,000		227,000

Capital Statement 2006-07 105

Main Roads

		Total		Expenditure
		Estimated		to		Budget		Post
	Statistical	Cost		30-06-06		2006-07		2006-07
Project	Division	$’000		$’000		$’000		$’000
Warrego Highway
Toowoomba bypass, Planning and land acquisition	Various		43,250		33,250		6,500		3,500
Other Construction	Various						90,470	Ongoing
Sub-total AusLink National Road Network							660,030
Other State-controlled Roads
Brisbane — Beenleigh Road Fletcher Street — Boundary Street, Duplicate 2 to 4 lanes*	05		52,500		18,800		15,200		18,500
Bundaberg City Road Network
Eight sites, At-grade intersection improvements	15		12,800		687		3,513		8,600
Bundaberg Ring Road
Full length (0 -14.3km), Construct to new sealed 2 lane standard	15		42,000		2,282		4,118		35,600
Burke Developmental Road
Cloncurry — Normanton, Sections: 2.70 km - 183.0km, Widen existing pavement	55		28,000		4,800		10,200		13,000
Cloncurry — Normanton, Sections: 346.0 - 351.0km, Rehabilitate and widen	55		1,980		15		565		1,400
Normanton — Dimbulah, Deadman’s Gully, Upgrade floodway	55		2,400		885		1,215		300
Caloundra — Mooloolaba Road
Construct to new sealed 2 lane standard, Section: 0 - 5.0km*	10		60,000		22,698		13,167		24,135
Caloundra Road
Bruce Highway — Pierce Avenue, Duplicate 2 to 4 lanes	10		80,000		8,054		11,000		60,946
Capricorn Highway
Dingo — Walton Creek, Widen and seal	30		6,700		2,598		4,102
Carnarvon Highway
Balonne River bridge, Widen bridge	25		3,000		35		1,115		1,850

106 Capital Statement 2006-07

Main Roads

		Total		Expenditure
		Estimated		to		Budget		Post
	Statistical	Cost		30-06-06		2006-07		2006-07
Project	Division	$’000		$’000		$’000		$’000
Collinsville — Elphinstone Road
Bowen Developmental Road — Leichhardt Range Jump Up (Cerito Road — Stage 2), Construct deviation — unsealed standard	40		7,302		842		4,460		2,000
Leichhardt Range Jump Up — Newlands Mine Road (Cerito Road — Stage 1), Construct deviation — sealed standard	40		9,428		5,573		3,855
D’Aguilar Highway
Caboolture Northern Bypass (Mewett Street, Lagoon Creek / Old Gympie Road), Construct 2 lane bypass	05		40,000		14,715		25,285
Dawson Highway
Gladstone — Biloela, Rehabilitation and widening and replacement of timber bridges	30		50,524		2,000		20,000		28,524
Diamantina Developmental Road
Charleville — Quilpie, Ward River and Woolshed Gully, Replace bridges and improve approaches	25		8,000		259		241		7,500
Quilpie — Windorah, Sections:
193.48 - 224.15km, 10mm polymer modified bitumen reseal	35		1,150				1,150
Eyre Developmental Road
Bedourie — Birdsville, Sections:
84.5 - 90.5km, Pave and seal	35		1,000				1,000
Gregory Developmental Road
Belyando Crossing — Charters Towers, 2km north of Victoria Creek - 2km south of Victoria Downs (110.2 - 130.0km), Widen existing pavement	45		7,291		271		2,925		4,095
Isisford — Blackall Road
Replace bridge and approaches, Section: 121.25 - 121.99km	35		2,800		317		2,483

Capital Statement 2006-07 107

Main Roads

		Total		Expenditure
		Estimated		to		Budget		Post
	Statistical	Cost		30-06-06		2006-07		2006-07
Project	Division	$’000		$’000		$’000		$’000
Kennedy Highway
Mt Garnet — The Lynd, Middle Creek — Granite Rocks, Widen and seal	50		2,100		61		2,039
Leichhardt Highway
Miles — Goondiwindi, Widen and seal, Sections: 98.0 - 111.0km (section 1)	20		2,000		835		1,165
Westwood — Taroom, Dawson River — Twelve Mile Creek, Widen existing pavement	30		6,001		259		4,512		1,230
Mackay Bypass
Hospital Bridge, Construct bridge and approaches	40		24,000		1,050		1,500		21,450
Mackay — Bucasia Road
Phillip Street — Holts Road , Duplicate 2 to 4 lanes	40		6,500		260		4,100		2,140
Mackay — Eungella Road
David Burgess Bridge, Replace bridge	40		6,200		240		5,960
Mackay — Slade Point Road
Forgan Bridge, Construct bridge	40		50,000		435		1,000		48,565
Maroochydore Road
Bruce Highway — Pike Street / Hobbs Road, Construct to new sealed 4 lane standard	10		90,000		16,400		29,000		44,600
Maryborough — Hervey Bay Road
Sections: Torbanlea turnoff — McNally Street (26.3 - 40.1km), Duplicate 2 to 4 lanes	15		25,597		425		2,908		22,264
Millmerran — Inglewood Road
Millmerran — Inglewood 0.00 - 68.68, Widen and overlay	20		14,000		40		3,993		9,967
Moggill Sub-Arterial Road
Kilkivan Avenue — Pullenvale Road, Duplicate 2 to 4 lanes	05		27,350		16,254		9,096		2,000

108 Capital Statement 2006-07

Main Roads

		Total		Expenditure
		Estimated		to		Budget		Post
	Statistical	Cost		30-06-06		2006-07		2006-07
Project	Division	$’000		$’000		$’000		$’000
Mount Lindesay Highway
Brisbane — Beaudesert, Green Road / Fedrick Street — Talinga Drive — Rosia Road, Duplicate 2 to 4 lanes	05		90,385		13,240		8,145		69,000
Mulgrave Road
Ray Jones Drive — Captain Cook Highway, Construct additional lanes	50		16,000		200		2,500		13,300
Nerang — Broadbeach Road
Allambe Cemetery — Ross Street, Duplicate 2 to 4 lanes	10		20,000		7,400		10,600		2,000
Ross Street — Nielsens Road, Duplicate 2 to 4 lanes	10		18,000		7,030		10,970
New England Highway
Crows Nest — Highfields, Rehabilitate and widen	20		18,926		475		1,275		17,176
Highfields between Reis Road and Cawdor Road (excluding Borghardt — Highfields Road), Duplicate 2 to 4 lanes	20		6,530		214		2,716		3,600
Ruthven Street (south of Spring Street), At-grade intersection improvement	20		8,050		60		3,932		4,058
North Ward Road, Townsville
Warburton Street / Landsborough Street, Install traffic signals	45		2,812		288		2,124		400
Peak Downs Highway
Blackwaterhole Creek and approaches, Realign 2 lanes	40		5,400		577		4,823
Rockleigh — North Mackay Road
Sams Road — Barnes Creek Road, Widen to 4 lanes	40		11,000		484		1,500		9,016
Roma — Taroom Road
Sections: 0 - 149.21km, Pave and seal	25		30,000		500		4,500		25,000
South West Arterial Road
Springfield — Yamanto, Construct to new sealed 2 lane standard	05		270,000		105,550		11,750		152,700

Capital Statement 2006-07 109

Main Roads

		Total		Expenditure
		Estimated		to		Budget		Post
	Statistical	Cost		30-06-06		2006-07		2006-07
Project	Division	$’000		$’000		$’000		$’000
Sunshine Motorway
Sippy owns — Kawana Arterial (Military Road), Duplicate 2 to 4 lanes*	10		43,000		4,500		34,500		4,000
Thomson Developmental Road
Jundah — Longreach, Sections:
70.6 - 79.4km, Rehabilitate and widen	35		1,250				1,250
Wallumbilla South Road
Sandy Creek (0.6 - 2.5km), Widen and seal	25		1,038		133		905
Warrego Highway
Angellala Creek (20.3 - 20.4km), Widen bridge	25		1,600		48		1,352		200
Wills Developmental Road
Gregory — Doomadgee turnoff:
419.0 - 428.0km (stage 9), Pave and seal	55		500				500
Gregory — Doomadgee turnoff:
428.0 - 432.5km (stage 11), Pave and seal	55		1,500				1,000		500
Yeppoon — Byfield Road
Yeppoon Western Bypass, Construct bypass — sealed standard	30		16,000		6,614		9,386
Other Construction	Various						477,104	Ongoing
Sub-total Other State-controlled Roads							781,699
Plant and Equipment	Various						3,333	Ongoing
Total Property, Plant and Equipment							1,451,729
Other Capital Expenditure
Information Technology	Various						6,500	Ongoing
Total Other Capital Expenditure							6,500
Capital Grants
Transport Infrastructure Development Scheme — Capital Grants
Anderleigh Road,
Tiaro Shire, Upgrade (5.0 - 7.0km)	15		300				150		150

110 Capital Statement 2006-07

Main Roads

		Total		Expenditure
		Estimated		to		Budget		Post
	Statistical	Cost		30-06-06		2006-07		2006-07
Project	Division	$’000		$’000		$’000		$’000
Arcturus Road,
Bauhinia Shire, Pave and seal (31.88 - 34.65km)	30		125				125
Balham Road,
Brisbane, Extension to Beatty Road, Full road construction	05		4,211		1,604		2,607
Bayswater Road,
Dalrymple Road — Duckworth Street, Townsville, Upgrade	45		710				475		235
Beach Road,
Burdekin Shire, Widen and seal	45		546		20		274		252
Black Street,
Dalby, Reconstruct pavement (0.74 - 0.94km)	20		152				152
Bloomfield Road,
Cook Shire, Ayton towards the Bloomfield aerodrome, Bitumen seal and improve drainage	50		420		50		370
Boundary Road,
Kelliher Road — Garden Road, Brisbane, Construction of two-lane underpass	05		20,333		8,100		4,733		7,500
Burketown Road,
Carpentaria Shire, Construct to two lane sealed standard	55		993		60		240		693
Clermont — Rubyvale Road,
Peak Downs Shire, Pave and seal (64.2 - 69.65km)	30		159				159
Cramsie — Muttaburra Road,
Aramac Shire, Construct to two lane sealed standard (96.8 - 98.95km)	35		120				120
Dusty Rhodes Bridge,
Petrie Creek Road, Maroochy Shire, Diddillibah, Construct new bridge and approaches	10		675				675
Eenie Creek Road,
Noosa Shire, Langura Street - Heathland Drive (Stage 3), Construct new road	10		1,047		223		824

Capital Statement 2006-07 111

Main Roads

		Total		Expenditure
		Estimated		to		Budget		Post
	Statistical	Cost		30-06-06		2006-07		2006-07
Project	Division	$’000		$’000		$’000		$’000
Farrellys Lane / Connors Road,
Mackay City, Install traffic signals	40		350				350
Highams Bridge,
Mirani Shire, Reconstruct	40		970				970
Home Creek Road,
Barcaldine Shire, Construct to two lane sealed standard	35		120				120
lama Island Airstrip,
Construct to sealed standard	50		950		250		700
Iffley — Taldora Road,
McKinlay Shire, Seal gravelled sections	55		260				260
Innamincka Road,
Bulloo Shire, Pave and seal	25		136				136
Kyabra Road,
Quilpie Shire, Construct to single lane sealed standard (39.0 - 49.0km)	25		136				136
Langlo Road,
Tambo Shire, Construct to two lane sealed standard (23.00 - 30.00km)	35		120				120
Lienassie Road,
Waggamba Shire, Upgrade to bitumen seal (8.0 - 11.0km)	20		172				172
Moy Pocket Road,
Cooloola Shire, Widen and overlay	15		380				175		205
Noondoo — Thallon Road,
Balonne Shire, Construct to two lane sealed standard (32.4 - 37.4km)	25		207				132		75
Pacific Motorway,
Logan Road — Logan River, Bikeway construction (sections)	05		6,000		2,000		2,000		2,000
Pappas Way,
Gold Coast City, Extension to Cayuga Street, Full road construction	10		113				113

112 Capital Statement 2006-07

Main Roads

		Total		Expenditure
		Estimated		to		Budget		Post
	Statistical	Cost		30-06-06		2006-07		2006-07
Project	Division	$’000		$’000		$’000		$’000
Pormpuraaw Causeway,
Pormpuraaw Shire, Upgrade causeway on the access road	50		755				755
Sandy Creek Road,
Cooloola Shire, Downsfield, Pave and seal	15		365				365
Yaraka — Emmet
Isisford Shire, Construct to a bitumen sealed standard	35		2,050		1,025		1,025
Other Capital Grants	Various						42,450	Ongoing
Sub-total Transport Infrastructure Development Scheme — Capital Grants							60,883
Federal Black Spot	Various						8,923	Ongoing
Total Capital Grants							69,806
TOTAL DEPARTMENT OF MAIN ROADS							1,528,035
ROADTEK
Property, Plant and Equipment
Hire Plant	Various						23,296	Ongoing
Total Property, Plant and Equipment							23,296
Other Capital Expenditure
Information Technology	Various						61	Ongoing
Total Other Capital Expenditure							61
TOTAL ROADTEK							23,357
QUEENSLAND MOTORWAYS LIMITED
Property, Plant and Equipment
Gateway Motorway, Gateway Upgrade Project	05		1,643,000		128,774		346,721		1,167,505
Logan Motorway, Paradise Road Interchange	05		36,000		2,500		33,500
Other	05						12,714	Ongoing
Rehabilitation Projects	05						18,000	Ongoing
Sundry Roadworks	05						9,228	Ongoing

Capital Statement 2006-07 113

Main Roads

		Total	Expenditure
		Estimated	to	Budget		Post
	Statistical	Cost	30-06-06	2006-07		2006-07
Project	Division	$’000	$’000	$’000		$’000
Toll Equipment	05				7,800	Ongoing
Total Property, Plant and Equipment					427,963
TOTAL QUEENSLAND MOTORWAYS LIMITED					427,963
TOTAL MAIN ROADS					1,979,355

* Funded fully or in part under the Smart State Building Fund

114 Capital Statement 2006-07

NATURAL RESOURCES, MINES AND WATER

Capital acquisitions for the Natural Resources, Mines and Water portfolio (including the department, SunWater, and various water boards) in 2006-07 is $274.7 million. A further $53.5 million is budgeted for departmental capital grant payments for dam upgrades.

The department’s 2006-07 capital acquisition program of $98.5 million principally comprises expenditure to support the planning and management of the state’s land, water and native vegetation resources and the development of the state’s mining industry.

Program Highlights

• Water security, particularly in South East Queensland, is a critical issue. Acquisitions of land for future water infrastructure projects will continue with $69 million set aside in 2006-07 for strategic land purchases, including an additional $50 million to accelerate land acquisitions for two new dams located on the Logan and Mary rivers.

• The program of dam upgrades will continue in 2006-07 with $47.5 million provided to upgrade the Ross River dam and $6 million for other dam spillway upgrades.

• The protection of remnant native vegetation remains a high priority of the department. In 2006-07, $7.5 million is set aside for the acquisition of land for this purpose.

The Gladstone Area Water Board forecasts capital outlays in 2006-07 of $6.6 million. Projects include storage to improve security of water supply in the northern area and the Awoonga dam and pipeline upgrade.

In 2006-07, the Mount Isa Water Board estimates capital outlays of $18.5 million. Major projects include the Mount Isa terminal reservoir pump station upgrade and stage one of the Lake Moondarra pipeline upgrade.

SunWater’s capital budget of $148.9 million includes $129.4 million for the completion of the Burdekin-Moranbah pipeline. The project involves construction of a 215km water pipeline from Gorge Weir near Burdekin Falls Dam to Moranbah to provide and enhance water supplies to coal mines and towns in the Bowen Basin. SunWater’s capital expenditure is focused on development of water supply services to support regional coal production, associated industrial development and irrigation, as well as refurbishment and enhancement of existing assets.

The Eungella Water Pipeline Pty Ltd, a subsidiary of SunWater, has budgeted capital outlays in 2006-07 of $2 million to complete construction of the Eastern Spur extension to the Eungella pipeline.

Capital Statement 2006-07 115

Natural Resources, Mines and Water

		Total		Expenditure
		Estimated		to		Budget		Post
	Statistical	Cost		30-06-06		2006-07		2006-07
Project	Division	$’000		$’000		$’000		$’000
DEPARTMENT OF NATURAL RESOURCES, MINES AND WATER
Property, Plant and Equipment
Non-Commercial Water Assets	Various						1,294	Ongoing
Building and Accommodation upgrades
Helidon Explosives Magazine*	10		2,000		1,550		450
Minor Works	Various						2,973	Ongoing
Land Acquisitions
Vegetation Management	Various		20,000		7,500		7,500		5,000
Weir on Logan River	05		3,000				3,000
New Dams on Logan and Mary Rivers	Various						66,000	Ongoing
Land Development & GLMS	Various						2,100	Ongoing
Plant and Equipment
Information Queensland Access Portal*	05		465		365		100
Water Reform — continuity of supply	Various						1,000	Ongoing
Water monitoring network upgrades*	Various		4,408		3,208		1,200
Plant and Equipment — general	Various						8,574	Ongoing
Total Property, Plant and Equipment							94,191
Other Capital Expenditure
Information Queensland Access Portal*	05		2,097		1,282		554		261
Other Systems Development	05						3,000	Ongoing
Urban Water Accounting	05		1,750				750		1,000
Total Other Capital Expenditure							4,304
Capital Grants
Dam Safety Upgrade — grant program	Various		72,500		27,000		6,040		39,460
Ross River Dam Modernisation	45		80,204		17,645		47,467		15,092
Total Capital Grants							53,507
TOTAL DEPARTMENT OF NATURAL RESOURCES, MINES AND WATER							152,002

116 Capital Statement 2006-07

Natural Resources, Mines and Water

		Total		Expenditure
		Estimated		to		Budget		Post
	Statistical	Cost		30-06-06		2006-07		2006-07
Project	Division	$’000		$’000		$’000		$’000
GLADSTONE AREA WATER BOARD
Property, Plant and Equipment
Above Ground Asset Replacement	30						110	Ongoing
Removal of Asbestos	30		308				140		168
Flow Meter Installation	30						50	Ongoing
Monitoring Treated Water Quality	30		200		80		120
Telemetry Systems	30		755				55		700
Asset Rationalisation — Calliope Shire Council	30		3,100				1,550		1,550
Administration Equipment	30						410	Ongoing
Awoonga Dam and Pump Station	30		4,485		244		696		3,545
Awoonga Recreation Area	30		324		111		86		127
Awoonga Pipeline	30		440				300		140
Northern Storage	30		1,585		85		1,500
General Works	30						410	Ongoing
Gladstone Water Treatment Plant	30		8,779		1,271		453		7,055
Fish Hatchery	30		1,148		228		120		800
Yarwun Water Treatment Plant Upgrade	30		660		100		560
Total Property, Plant and Equipment							6,560
TOTAL GLADSTONE AREA WATER BOARD							6,560
MOUNT ISA WATER BOARD
Property, Plant and Equipment
Lake Moondarra to Mount Isa Terminal Reservoir Chlorination Upgrade	55		925		275		650
Mount Isa Terminal Reservoir Pump Station	55		13,000		1,837		7,820		3,343
Recreation Reserve R48 facilities upgrade	55		2,370		1,150		250		970
Lake Moondarra to Mount Isa Terminal Reservoir priming works (Stage 2)	55		3,300		50		250		3,000
Control system upgrade	55		1,770		125		650		995
Energy feed system upgrades	55		1,600		96		500		1,004
Lake Moondarra Pipeline (Stage 1)	55		2,300		300		1,500		500
MIM Asset purchase	55		4,500				4,500
MIM minor capital projects	55		3,000		957		400		1,643

Capital Statement 2006-07 117

Natural Resources, Mines and Water

		Total		Expenditure
		Estimated		to		Budget		Post
	Statistical	Cost		30-06-06		2006-07		2006-07
Project	Division	$’000		$’000		$’000		$’000
Other minor works	55		4,161		1,670		1,991		500
Total Property, Plant and Equipment							18,511
TOTAL MOUNT ISA WATER BOARD							18,511
SUNWATER
Property, Plant and Equipment
Refurbishment and Enhancement (water supply schemes)
Dawson Valley	30						863	Ongoing
Bundaberg	15						2,529	Ongoing
Burdekin Haughton	Various						1,089	Ongoing
Mareeba Dimbulah	50						672	Ongoing
Nogoa Mackenzie	30						2,292	Ongoing
Barker Barambah	15						1,071	Ongoing
St George	25						298	Ongoing
Other schemes < $250K	Various						1,474	Ongoing
Sub-total Refurbishment and Enhancement (water supply schemes)							10,288
Minor Works
Bowen Broken	40						3,270	Ongoing
Nogoa Mackenzie	30						1,071	Ongoing
Software development (water mgt)	05						515	Ongoing
Other schemes < $250K	Various						602	Ongoing
Non-scheme < $250K	Various						471	Ongoing
Operations and Maintenance	05						360	Ongoing
Hardware and software development	05						2,983	Ongoing
Sub-total Minor Works							9,272
Development Projects
Burdekin-Moranbah Pipeline	Various		270,000		140,647		129,353
Sub-total Development Projects							129,353
Total Property, Plant and Equipment							148,913
TOTAL SUNWATER							148,913

118 Capital Statement 2006-07

Natural Resources, Mines and Water

			Total		Expenditure
			Estimated		to		Budget		Post
	Statistical		Cost		30-06-06		2006-07		2006-07
Project	Division		$’000		$’000		$’000		$’000
EUNGELLA WATER PIPELINE
Property, Plant and Equipment
Eastern Spur		40		19,600		17,650		1,950
Total Property, Plant and Equipment								1,950
TOTAL EUNGELLA WATER PIPELINE								1,950
BURNETT WATER
Property, Plant and Equipment
Refurbishment and Enhancement		15						340	Ongoing
Total Property, Plant and Equipment								340
TOTAL BURNETT WATER								340
TOTAL NATURAL RESOURCES, MINES AND WATER								328,276

* Funded fully or in part under the Smart State Building Fund

Capital Statement 2006-07 119

OFFICE OF THE GOVERNOR

During 2006-07 the Office of the Governor will expend $0.035 million towards capital replacements including vehicles and office equipment.

Ongoing replacement of capital items enables the Governor to undertake the full range of duties expected of the Head of State, including those that promote and support whole-of-Government priorities.

Office of the Governor

			Total	Expenditure
			Estimated	to	Budget		Post
	Statistical		Cost	30-06-06	2006-07		2006-07
Project	Division		$’000	$’000	$’000		$’000
OFFICE OF THE GOVERNOR
Property, Plant and Equipment
Asset replacement		05				35	Ongoing
Total Property, Plant and Equipment						35
TOTAL OFFICE OF THE GOVERNOR						35

120 Capital Statement 2006-07

OFFICE OF THE OMBUDSMAN

Capital funding of $0.1 million is provided in 2006-07 for the provision of office and information technology tools to enable investigative staff to review complaints about government administration.

Office of the Ombudsman

			Total		Expenditure
			Estimated		to		Budget		Post
	Statistical		Cost		30-06-06		2006-07		2006-07
Project	Division		$’000		$’000		$’000		$’000
OFFICE OF THE OMBUDSMAN
Property, Plant and Equipment
Computer equipment		05						20	Ongoing
Office equipment		05						60	Ongoing
Total Property, Plant and Equipment								80
Other Capital Expenditure
Case and file management system		05		500		415		20		65
Total Other Capital Expenditure								20
TOTAL OFFICE OF THE OMBUDSMAN								100

Capital Statement 2006-07 121

OFFICE OF THE PUBLIC SERVICE COMMISSIONER

The Office of the Public Service Commissioner is committed to the development of a strong and sustainable public service, which achieves the best results for Queenslanders. The Office has a mandate to deliver legislative and regulatory functions as well as strategies that enable the Queensland Public Service to deliver on the Government’s priorities.

Accordingly, the Office’s capital acquisition plan amounting to $0.014 million in 2006-07 focuses on the replacement of computer and office equipment required to efficiently provide these services.

Office of the Public Service Commissioner

			Total	Expenditure
			Estimated	to	Budget		Post
	Statistical		Cost	30-06-06	2006-07		2006-07
Project	Division		$’000	$’000	$’000		$’000
OFFICE OF THE PUBLIC SERVICE COMMISSIONER
Property, Plant and Equipment
Asset Replacement Program		05				14	Ongoing
Total Property, Plant and Equipment						14
TOTAL OFFICE OF THE PUBLIC SERVICE COMMISSIONER						14

122 Capital Statement 2006-07

POLICE

The delivery of effective policing services to the community of Queensland requires the establishment and maintenance of appropriate infrastructure. The Service’s capital program encompasses a strategic approach that focuses on designing, constructing and maintaining facilities, information technology and other equipment needs. An allocation of $197.8 million in 2006-07 will enable the Service to progress the following key projects.

Program Highlights

• $70.7 million is provided to construct new and replacement facilities and to plan for future facilities identified in the Queensland Police Service Ten-Year Capital Investment Strategic Plan. Included in the $70.7 million is $13 million from the Smart State Building Fund.

• $61.8 million is provided for information management and relates to projects identified in the Service’s Information Strategic Plan 2001-10, including the Public Safety Network (PSN) and Queensland Police Records and Information Management Exchange (QPRIME).

• $8.2 million is provided for vessel purchases, upgrades, and outfitting. Included in the $8.2 million is the purchase of the J. F. Power (Redland Bay), and the replacement of the Russel Wilson (Cairns), Len Hooper (Yeppoon) and W Conroy (Thursday Island) vessels.

• $57.1 million is provided to support the purchase of other plant and equipment including motor vehicles, communications and resource support for growth in police numbers.

Capital Statement 2006-07 123

Police

		Total		Expenditure
		Estimated		to		Budget		Post
	Statistical	Cost		30-06-06		2006-07		2006-07
Project	Division	$’000		$’000		$’000		$’000
DEPARTMENT OF POLICE
Property, Plant and Equipment
Major Capital*
Ayr-Replacement Police Station and Watchhouse	45		7,500		220		600		6,680
Brisbane West-Replacement District Headquarters	05		1,650				1,650
Caboolture-District Headquarters	05		9,500				500		9,000
Caboolture-Police Station and Watchhouse Extensions (Stage 3)	05		800				550		250
Cloncurry-Replacement Police Station	55		5,700		286		1,500		3,914
Coomera-District Office	10		10,700				200		10,500
Dutton Park-Replacement Police Station and District HQ	05		17,940		90		5,600		12,250
Fortitude Valley-Replacement Police Station	05		13,000		500		8,000		4,500
Gympie-Replacement Police Station and Watchhouse	15		10,000		6,600		1,860		1,540
Ipswich-Replacement Police Station	05		15,840				3,900		11,940
Mareeba-Replacement Police Station and Watchhouse	50		10,437				200		10,237
Oakey-Replacement Police Station	20		720		494		219		7
Sippy Downs-New Police Station	10		4,500				3,100		1,400
Southport-Replacement Police Station	10		5,333		4,300		428		605
Strathpine-New Watchhouse	05		7,200		600		6,600
Stuart-Replacement Police Station	45		5,000				700		4,300
Surfers Paradise-New Police Station	10		2,730				2,730
Upper Mt Gravatt-Refurbishment	05		3,000				2,000		1,000
Whitsunday-Replacement Police Station and Watchhouse	40		11,500		100		1,000		10,400
Other Major Capital	Various						3,350	Ongoing
Sub-total Major Capital*							44,687

124 Capital Statement 2006-07

Police

		Total		Expenditure
		Estimated		to		Budget		Post
	Statistical	Cost		30-06-06		2006-07		2006-07
Project	Division	$’000		$’000		$’000		$’000
Sub-Programs
Police Beats*	Various						3,511	Ongoing
Security Upgrade Program	Various						700	Ongoing
Small Station Program	30		521		21		500
Miriam Vale-Replacement Police Station	15		700				700
Mt Morgan-Police Station Upgrade	30		521		21		500
Ravenshoe-Replacement Police Station and Holding Cell	50		800				800
Woodford-Replacement Police Station	05		800				800
Wujal Wujal-New Police Station and Watchhouse	50		1,294		100		1,194
Academies Upgrade Program	05						900	Ongoing
Alderley Upgrade Program	05						50	Ongoing
Brisbane PHQ Accommodation Changes	05						1,780	Ongoing
Dayroom Upgrade Program	Various						250	Ongoing
Land Acquisition Program	Various						4,760	Ongoing
Watchhouse Upgrade Program	Various						1,500	Ongoing
Sub-total Sub-Programs							17,445
Housing Program
Cloncurry-New Twin Dwelling Unit	55		500				500
Cooktown-New Twin Dwelling Unit	50		640		250		390
Longreach-Replacement Duplex 1 and 2 (Stage 2)	35		1,200				1,200
Mt Isa-Residential Complex	55		1,600		1,100		500
Wujal Wujal-New Residence and Duplex	50		1,600		100		1,500
State Housing Program	Various						1,500	Ongoing
Sub-total Housing Program							5,590
Minor Works	Various						3,018	Ongoing
Information Management Strategic
Plan	Various						35,615	Ongoing
Vessels	Various						8,191	Ongoing

Capital Statement 2006-07 125

Police

		Total	Expenditure
		Estimated	to	Budget		Post
	Statistical	Cost	30-06-06	2006-07		2006-07
Project	Division	$’000	$’000	$’000		$’000
Other Plant and Equipment (includes Motor Vehicles)	Various				57,106	Ongoing
Total Property, Plant and Equipment					171,652
Other Capital Expenditure
Intangibles-Information	Various				26,138	Ongoing
Management Strategic Plan
Total Other Capital Expenditure					26,138
TOTAL DEPARTMENT OF POLICE					197,790

* Funded fully or in part under the Smart State Building Fund

126 Capital Statement 2006-07

PREMIER AND CABINET

Capital expenditure for the Department of the Premier and Cabinet including all associated organisations (Commission for Children and Young People and Child Guardian, Queensland Events Corporation and South Bank Corporation) is $11.2 million.

Department of the Premier and Cabinet

Capital expenditure for the Department of the Premier and Cabinet in 2006-07 is $1.8 million and provides for the enhancement and replacement of office equipment and information systems required to efficiently deliver the department’s outputs.

Capital grants are provided to the Great Barrier Reef Marine Park Authority to maintain, replace and enhance infrastructure and marine transport on the Great Barrier Reef.

Commission for Children and Young People and Child Guardian

The 2006-07 capital program of $0.7 million for the Commission for Children and Young People and Child Guardian will continue to enhance and replace existing assets to efficiently deliver the Commission’s outputs.

Of this capital allocation, $0.5 million will be used to further develop the Complaints Management Database, the Child Death Register and the Corporate Records Management System to enable these assets to handle a significant increase in data input and analysis load.

Queensland Events Corporation

The capital expenditure program of $0.02 million for Queensland Events Corporation will maintain and upgrade the computer hardware and software necessary for efficient and productive operations and to cater for the continued focus on attracting major events to Queensland.

South Bank Corporation

The 2006-07 capital works program of $8.8 million for South Bank Corporation is directed at enhancements to complement the completed masterplan works and enhance the experience of visitors to the parklands and the precinct generally.

Expenditure of $3.6 million is allocated to the ongoing operational requirements of the South Bank parklands and the Brisbane Convention and Exhibition Centre. In addition, the Corporation will upgrade and expand playground facilities during 2006 with an exciting new water play park being the centrepiece.

Capital Statement 2006-07 127

Premier and Cabinet

		Total		Expenditure
		Estimated		to	Budget		Post
	Statistical	Cost		30-06-06	2006-07		2006-07
Project	Division	$’000		$’000	$’000		$’000
DEPARTMENT OF THE PREMIER AND CABINET
Property, Plant and Equipment
Asset Replacement Program	05					962	Ongoing
Total Property, Plant and Equipment						962
Capital Grants
Great Barrier Reef Marine Park
Whitsunday Package	40		1,200			400		800
Island Facilities	Various					250	Ongoing
General Plant & Equipment	Various					50	Ongoing
Vessel Replacement	Various					100	Ongoing
Sub-total Great Barrier Reef Marine Park						800
Total Capital Grants						800
TOTAL DEPARTMENT OF THE PREMIER AND CABINET						1,762
COMMISSION FOR CHILDREN AND YOUNG PEOPLE AND CHILD GUARDIAN
Property, Plant and Equipment
Asset Replacement Program	05					181	Ongoing
Complaints Management Database	05		125			125
Child Death Register	05		125			125
Corporate Records Management System	05		250			250
Total Property, Plant and Equipment						681
TOTAL COMMISSION FOR CHILDREN AND YOUNG PEOPLE AND CHILD GUARDIAN						681
QUEENSLAND EVENTS CORPORATION
Property, Plant and Equipment
Asset Replacement Program	05					21	Ongoing
Total Property, Plant and Equipment						21
TOTAL QUEENSLAND EVENTS CORPORATION						21

128 Capital Statement 2006-07

Premier and Cabinet

			Total		Expenditure
			Estimated		to		Budget		Post
	Statistical		Cost		30-06-06		2006-07		2006-07
Project	Division		$’000		$’000		$’000		$’000
SOUTH BANK CORPORATION
Property, Plant and Equipment
Riverside Moorings		05		650		50		600
Water Play Area		05		4,000		425		3,575
South Bank Parklands Enhancements		05						990	Ongoing
South Bank Precinct Enhancements		05						295	Ongoing
Brisbane Convention & Exhibition Centre Enhancements		05						2,606	Ongoing
Land Development		05						700	Ongoing
Total Property, Plant and Equipment								8,766
TOTAL SOUTH BANK CORPORATION								8,766
TOTAL PREMIER AND CABINET								11,230

Capital Statement 2006-07 129

PRIMARY INDUSTRIES AND FISHERIES

The Department of Primary Industries & Fisheries’ (DPI&F) capital expenditure program for 2006-07 is $24.6 million, which is primarily focused on developing world class research facilities to deliver excellent science outcomes for primary industries and fisheries. DPI&F has numerous facilities located throughout rural and regional Queensland. These require a significant level of minor works, mechanical items and other plant and equipment upgrades to keep them operating effectively.

Program Highlights

• The Queensland Crop Development Facility (QCDF) is a strategic collaboration between the DPI&F, Queensland University of Technology and the University of Queensland. At a cost of $7.8 million QCDF will provide world class high security glasshouses and in-vitro growth facilities for plant science research, which other research groups can lease. QCDF will be used to develop new varieties of tropical crops and molecular farming crops and will consolidate the Smart State’s biotechnology vision as articulated in the Bio-industries Strategy; the Gene Technology in Agriculture policy statement and the Queensland Research and Development Priorities. QCDF will foster a high level of collaboration between participating research groups resulting in innovative science and an internationally competitive cohort of university, government and industry scientists.

• Sustainable fisheries research staff will be relocated to Bribie Island Aquaculture Research Centre at a cost of $5 million, providing a world class facility for combined fisheries and aquaculture research with more efficient and integrated infrastructure. The project includes new seawater tank facilities.

• The Nambour Regional Office will be relocated to the Maroochy Research Station at a cost of $2 million. The co-location of staff will allow for better provision of DPI&F services locally and in the region.

Forestry Plantations Queensland

The capital expenditure budget for 2006-07 is $12.2 million. The budget includes $8 million for the purchase of freehold land for plantation establishment, $2.1 million for the replacement of heavy plant and motor vehicles and $0.5 million for the purchase of computer hardware. Provision has also been made to purchase other plant and equipment amounting to $1.6 million.

QRAA

Capital expenditure includes $0.1 million to upgrade or replace general office equipment and furniture in order to improve the delivery of financial assistance to Queensland’s rural producers.

130 Capital Statement 2006-07

Primary Industries and Fisheries

		Total		Expenditure
		Estimated		to		Budget		Post
	Statistical	Cost		30-06-06		2006-07		2006-07
Project	Division	$’000		$’000		$’000		$’000
DEPARTMENT OF PRIMARY INDUSTRIES AND FISHERIES
Property, Plant and Equipment
Bribie Island Aquaculture Research Centre-Extension*	05		5,000		100		750		4,150
Queensland Crop Development Facility-Redlands	05		7,800		600		4,800		2,400
Regional Office Complex-Nambour	10		2,500				300		2,200
Relocation and Refurbishment	Various						2,000	Ongoing
Research Facilities Development	Various						2,000	Ongoing
Vessel Replacement	Various						1,300	Ongoing
Heavy Plant and Equipment	Various						2,000	Ongoing
Minor Works	Various						2,000	Ongoing
Other Plant and Equipment	Various						7,037	Ongoing
Total Property, Plant and Equipment							22,187
Other Capital Expenditure
Intangible Assets	05						1,951	Ongoing
Other Projects	Various						450	Ongoing
Total Other Capital Expenditure							2,401
TOTAL DEPARTMENT OF PRIMARY INDUSTRIES AND FISHERIES							24,588
FORESTRY PLANTATIONS QUEENSLAND
Property, Plant and Equipment
Land	Various						8,000	Ongoing
Heavy Plant and Motor Vehicles	Various						2,070	Ongoing
Computer Hardware	Various						541	Ongoing
Other Plant and Equipment	Various						1,613	Ongoing
Total Property, Plant and Equipment							12,224
TOTAL FORESTRY PLANTATIONS QUEENSLAND							12,224

Capital Statement 2006-07 131

Primary Industries and Fisheries

			Total	Expenditure
			Estimated	to	Budget		Post
	Statistical		Cost	30-06-06	2006-07		2006-07
Project	Division		$’000	$’000	$’000		$’000
QRAA
Property, Plant and Equipment
Upgrade/replace office equipment		05				100	Ongoing
Total Property, Plant and Equipment						100
TOTAL QRAA						100
TOTAL PRIMARY INDUSTRIES AND FINISHERIES						36,912

* Funded fully or in part under the Smart State Building Fund

132 Capital Statement 2006-07

PUBLIC WORKS

The Department’s capital expenditure program for 2006-07, including commercialised business units (CBUs) is $323.9 million. Capital expenditure by the department, excluding CBUs is $157.5 million.

Program Highlights

• QFleet will purchase motor vehicles totalling $149.6 million. The vehicles will be leased to clients to facilitate the delivery of Government services across Queensland. The vehicle purchases and their maintenance provide support for local Queensland firms.

• $39 million is provided in 2006-07 for the Boggo Road precinct redevelopment. The redevelopment will contribute significantly to the Smart State initiatives with the first stage of the proposed knowledge based research and business component providing approximately 60,000 square metres of office and laboratory space for scientific research into eco-science. The total funding allocation of $45.5 million will provide for the completion of infrastructure works (including roads and underground services) necessary for future development of the 9.5 hectare site.

• $31 million is provided in 2006-07 to refurbish and integrate the disused former Health and Welfare Building at 63 George Street, Brisbane and integrate it with the adjoining David Longland Building. The total project cost of $45.3 million will deliver 10,600 square metres of refurbished office space. Compared with the existing floor areas of the two buildings, efficiencies associated with the integration will deliver an additional 1,077 square metres of office space.

• $21.3 million is provided in 2006-07 for a major expansion of the Queensland State Archives facilities at Runcorn, Brisbane. The expansion will provide an additional 45 lineal kilometres of storage which is expected to satisfy the known archival storage requirements of the Queensland Government for the next 10 to 15 years. The project will also provide support facilities such as sorting rooms. Funding is based on a total project cost of $52 million.

• $15.2 million is allocated in 2006-07 for the construction and upgrade of Government employee housing in rural and remote areas, including Weipa and Palm Island, to support the delivery of government services in these locations.

• $13.7 million is allocated in 2006-07 as part of the $63.3 million project to construct a new footbridge from Tank Street to the new Queensland Gallery of Modern Art at the Queensland Cultural Centre.

• $6.5 million is provided in 2006-07 to complete design and commence construction of a new government office building on Palm Island in order to meet Government agencies accommodation needs. The total project cost is $12.9 million.

Capital Statement 2006-07 133

• Funding of $6 million is provided in 2006-07 as part of the $36.1 million capital grant to the Mackay City Council for the construction of the Mackay Convention Precinct.

• $5 million is allocated in 2006-07 as part of a $9.5 million project to redevelop the Fitzroy River riverbank in Rockhampton. The redevelopment will include pedestrian and cycling paths, playgrounds and other facilities for the community.

• The progressive refurbishment of the heritage-listed Old Museum building at Bowen Hills, Brisbane will continue, with an allocation of $3.7 million provided in 2006-07 to refurbish the exterior of the Concert Hall wing and to restore the large stained glass window in the Exhibition Hall.

Public Works

			Total		Expenditure
			Estimated		to		Budget		Post
	Statistical		Cost		30-06-06		2006-07		2006-07
Project	Division		$’000		$’000		$’000		$’000
DEPARTMENT OF PUBLIC WORKS
Property, Plant and Equipment
Brisbane — Old Museum building		05		7,300		3,551		3,749
Brisbane — 63 George Street refurbishment		05		45,300		5,772		31,000		8,528
Brisbane — 80 George Street upgrade air-conditioning		05		1,970		1,549		421
Brisbane — Boggo Road Precinct redevelopment		05		45,476		6,500		38,976
Brisbane — Queensland State Archives stage 2		05		52,000		2,750		21,250		28,000
Brisbane — Tank Street — new pedestrian/cycle bridge		05		63,300		3,200		13,700		46,400
Brisbane — CITEC Data Centre upgrade		05		6,620		1,620		5,000
Roma — upgrade office building		25		1,000				1,000
Rockhampton — Riverbank project		30		9,500		4,512		4,988
Palm Island — office building*		45		12,870		100		6,500		6,270
Government Employee housing*	Various							15,246	Ongoing
Anti-discrimination program	Various							500	Ongoing
Workplace health and safety	Various							900	Ongoing
Carpet replacement program	Various							600	Ongoing
Other Plant and Equipment		05						4,124	Ongoing
Total Property, Plant and Equipment								147,954

134 Capital Statement 2006-07

Public Works

			Total		Expenditure
			Estimated		to		Budget		Post
	Statistical		Cost		30-06-06		2006-07		2006-07
Project	Division		$’000		$’000		$’000		$’000
Other Capital Expenditure
Travel Management System		05		2,670		1,048		1,622
Whole of Government ICT initiatives		05						1,962	Ongoing
Total Other Capital Expenditure								3,584
Capital Grants
Mackay Convention Precinct1		40		36,140		677		6,000		29,463
Total Capital Grants								6,000
TOTAL DEPARTMENT OF PUBLIC WORKS								157,538
QBUILD
Property, Plant and Equipment
Plant and equipment	Various							3,104	Ongoing
Total Property, Plant and Equipment								3,104
Other Capital Expenditure
Business systems	Various							6,000	Ongoing
Total Other Capital Expenditure								6,000
TOTAL QBUILD								9,104
QFLEET
Property, Plant and Equipment
Motor Vehicles	Various							149,641	Ongoing
Other plant and equipment		05						469	Ongoing
Total Property, Plant and Equipment								150,110
Other Capital Expenditure
Information systems		05						1,518	Ongoing
Total Other Capital Expenditure								1,518
TOTAL QFLEET								151,628
PROJECT SERVICES
Property, Plant and Equipment
Plant and equipment	Various							768	Ongoing
Total Property, Plant and Equipment								768

Capital Statement 2006-07 135

Public Works

			Total	Expenditure
			Estimated	to	Budget		Post
	Statistical		Cost	30-06-06	2006-07		2006-07
Project	Division		$’000	$’000	$’000		$’000
Other Capital Expenditure
Business systems software	Various					263	Ongoing
Total Other Capital Expenditure						263
TOTAL PROJECT SERVICES						1,031
SDS (SALES AND DISTRIBUTION SERVICES)
Property, Plant and Equipment
Warehouse equipment		05				337	Ongoing
Total Property, Plant and Equipment						337
Other Capital Expenditure
Internet development		05				224	Ongoing
Total Other Capital Expenditure						224
TOTAL SDS (SALES AND DISTRIBUTION SERVICES)						561
CITEC
Property, Plant and Equipment
Plant and equipment		05				2,760	Ongoing
Total Property, Plant and Equipment						2,760
Other Capital Expenditure
Internally developed software and systems		05				1,240	Ongoing
Total Other Capital Expenditure						1,240
TOTAL CITEC						4,000
TOTAL PUBLIC WORKS						323,862

Note:
1.	The total cost of this project is $38 million of which the Mackay City Council will receive a capital grant of $36.14 million and the remaining $1.86 million expenditure will be incurred by the Department.
*	Funded fully or in part under the Smart State Building Fund

136 Capital Statement 2006-07

QUEENSLAND AUDIT OFFICE

Capital expenditure of $0.382 million on plant and equipment during 2006-07 is to maintain systems that support the mandated audit program and the Queensland Audit Office output of Independent Public Sector Auditing Services and Reporting to Parliament.

In particular, the funds will be allocated to replace minor office equipment and computer hardware and software which forms part of the ongoing replacement program. Included in this amount is $0.2 million for the fit-out of new leased premises to accommodate the expanded Performance Management System (PMS) audit section.

Queensland Audit Office

			Total	Expenditure
			Estimated	to	Budget		Post
	Statistical		Cost	30-06-06	2006-07		2006-07
Project	Division		$’000	$’000	$’000		$’000
QUEENSLAND AUDIT OFFICE
Property, Plant and Equipment
Minor Works		05				232	Ongoing
Total Property, Plant and Equipment						232
Other Capital Expenditure
Upgrade Office Software		05				150	Ongoing
Total Other Capital Expenditure						150
TOTAL QUEENSLAND AUDIT OFFICE						382

Capital Statement 2006-07 137

STATE DEVELOPMENT, TRADE AND INNOVATION

Capital expenditure of the Department of State Development, Trade and Innovation in 2006-07 is $24.1 million.

The capital program is designed to provide innovation, direction and leadership in industry and small business.

Program Highlights

• New funding of $290 million has been allocated for the planning, construction and fit-out of all facilities approved within the Knowledge Based Research and Business project scope, including the Boggo Road Ecosciences Precinct, the Coopers Plains Health and Food Sciences Precinct and other ancillary offsite facilities. The construction of the Precincts is proposed for completion in 2009-2010.

• $3 million will be spent to complete the Turtle Interpretive Centre in Bundaberg.

• $2.6 million in capital grants will be provided to the Sugar Industry.

State Development, Trade And Innovation

			Total		Expenditure
			Estimated		to		Budget		Post
	Statistical		Cost		30-06-06		2006-07		2006-07
Project	Division		$’000		$’000		$’000		$’000
DEPARTMENT OF STATE DEVELOPMENT, TRADE AND INNOVATION
Property, Plant and Equipment
Computer Equipment	Various							527	Ongoing
Other acquisitions or property, plant and equipment	Various							223	Ongoing
Ecosciences Precinct at Boggo Road and the Health and Food Sciences		05		290,000				17,600		272,400
Precinct at Coopers Plains
Total Property, Plant and Equipment
Capital Grants								18,350
Turtle Interpretive Centre		15		2,987				2,987
Sugar Industry	Various			2,890		326		2,564
Other Capital Grants		50
Total Capital Grants				250		25		225
								5,776
TOTAL DEPARTMENT OF STATE DEVELOPMENT, TRADE AND INNOVATION								24,126

138 Capital Statement 2006-07

THE COORDINATOR-GENERAL

The Coordinator-General

Capital expenditure of The Coordinator-General, including the Property Services Group, is $234.8 million in 2006-07.

The Coordinator-General has a lead role in major project delivery and infrastructure planning and coordination across government. The 2006-07 capital program of $119.6 million will primarily focus on the Western Corridor Recycled Water Scheme which aims to facilitate the planning and implementation of a recycled water pipeline in South East Queensland’s western corridor.

Program Highlights

• $100 million to continue the Western Corridor Recycled Water Scheme.

• $7.5 million to undertake infrastructure and suitability planning for the Townsville State Development Area, and to acquire and develop land for the proposed Townsville Port Access.

• $6.5 million towards the hardship purchase of property required for the proposed hardrock haul roads at Narangba and Kholo Creek.

• $5.5 million to acquire properties as part of the development of the Targinie Precinct of the Gladstone State Development Area.

Property Services Group

The Property Services Group delivers the property services component of the Industry Location Scheme. Key functions of the group include the acquisition, planning and development of land for business and industry locating or expanding in Queensland. The group’s capital acquisition plan has a total budget of $115.1 million in 2006-07.

Program Highlights

Development approvals are in place and construction of the following projects is planned for 2006-07:

• $4.6 million to commence construction of the Arundel Industrial Park

• $27 million to continue construction of a larger scale development at Caloundra Regional Business and Industry Park

• $8 million for construction of the Charlton North Industrial Estate

• $5.5 million to continue construction of the Clinton Industrial Estate.

Capital Statement 2006-07 139

Construction of the following projects is expected to proceed in 2006-07 once development approvals are obtained:

• $20.2 million to commence construction of the Coolum Industrial Estate

• $7.4 million to commence construction of the South Mackay Industrial Estate.

The following land acquisitions are planned for 2006-07, subject to negotiations:

• $5 million to acquire land for the Edmonton Industrial Estate

• $6 million to acquire land for the future development of industrial estates in the Mackay region

• $15 million to acquire land within South East Queensland for the future development of industrial estates.

The Coordinator-General

			Total		Expenditure
			Estimated		to		Budget		Post
	Statistical		Cost		30-06-06		2006-07		2006-07
Project	Division		$’000		$’000		$’000		$’000
THE COORDINATOR-GENERAL
Property, Plant and Equipment
Asset Replacement Program		05						133	Ongoing
Hardrock Haulage Road		10		19,000		6,500		6,500		6,000
Townsville State Development Area		45		7,500				7,500
Western Corridor Recycled Water Scheme		05		100,000				100,000
Targinie Valley		30		42,000		36,500		5,500
Total Property, Plant and Equipment								119,633
TOTAL THE COORDINATOR-GENERAL								119,633
PROPERTY SERVICES GROUP
Property, Plant and Equipment
Asset Replacement Program		05						38	Ongoing
Total Property, Plant and Equipment								38
Other Capital Expenditure
Land Development
Amberley Aerospace Park		10		30,550		50		500		30,000
Arundel Industrial Park (GCTP)		10		5,471		846		4,625
Caloundra Regional Business and		10		52,002		13,002		27,000		12,000
Industry Park

140 Capital Statement 2006-07

The Coordinator-General

			Total		Expenditure
			Estimated		to		Budget		Post
	Statistical		Cost		30-06-06		2006-07		2006-07
Project	Division		$’000		$’000		$’000		$’000
Charlton North Industrial Estate		20		17,840		840		8,000			9,000
Clinton Industrial Estate — Bensted Street		30		9,469		3,969		5,500
Coolum Industrial Estate		10		30,297		3,097		20,200			7,000
Lytton Industrial Estate		05		25,382		21,882		3,500
South Mackay Industrial Estate		40		8,008		608		7,400
Yandina Industrial Estate		10		6,300		1,384		4,916
Bohle Industrial Estate Stage 4		45		7,250				250			7,000
Nandroya Industrial Estate		10		5,000		800		4,200
Minor Works	Various							500		Ongoing
Sub-total Land Development								86,591
Land Purchases
South East Queensland Strategic Land		05		31,575		4,075		15,000			12,500
Amberley Aerospace Park		05		5,428		3,428		2,000
Edmonton Industrial Estate		50		5,000				5,000
Mackay Region Industrial Land		40		6,000				6,000
Minor Land Acquisitions	Various							500		Ongoing
Sub-total Land Purchases								28,500
Total Other Capital Expenditure								115,091
TOTAL PROPERTY SERVICES GROUP								115,129
TOTAL THE COORDINATOR-GENERAL								234,762

Capital Statement 2006-07 141

TOURISM, FAIR TRADING AND WINE INDUSTRY DEVELOPMENT

In 2006-07, the portfolio of the Department of Tourism, Fair Trading and Wine Industry Development and Tourism Queensland has a total capital program of $1.7 million. This capital program will continue the work conducted in 2005-06 to improve information systems to provide more accessible and reliable information to improve services to the people of Queensland.

Program Highlights

• $0.49 million to continue systems and internet development to enable external clients and whole-of-Government service providers to access departmental services proposed for integration with Smart Service Queensland.

• $0.25 million to implement a Market Information System (MIS) that will enable Tourism Queensland to easily understand and make use of its research data to better analyse economic and marketing trends.

• $0.22 million to upgrade Tourism Queensland’s financial management system, Finance One, to maintain software support and deploy web functionality enabling use by international offices.

• $0.08 million to implement an Electronic Documents and Records Management System (eDRMS) to comply with information standards IS40 and IS41 for the management of documents and records.

• Ongoing provision of an appropriate level of office equipment and information technology hardware to support technical and administrative staff in Brisbane and regional offices.

142 Capital Statement 2006-07

Tourism, Fair Trading and Wine Industries

			Total		Expenditure
			Estimated		to		Budget		Post
	Statistical		Cost		30-06-06		2006-07		2006-07
Project	Division		$’000		$’000		$’000		$’000
DEPARTMENT OF TOURISM, FAIR TRADING AND WINE INDUSTRY DEVELOPMENT
Property, Plant and Equipment
Plant and Equipment		05						651	Ongoing
Total Property, Plant and Equipment								651
Other Capital Expenditure
SSQ Systems Integration project		05		960		475		485
Total Other Capital Expenditure								485
TOTAL DEPARTMENT OF TOURISM, FAIR TRADING AND WINE INDUSTRY DEVELOPMENT								1,136
TOURISM QUEENSLAND
Other Capital Expenditure
MIS — Market Information System		05		250				250
Financial System Upgrade (Finance One — Release 11 )		05		221				221
Electronic Documents and Records Management System		05		150				75		75
Total Other Capital Expenditure								546
TOTAL TOURISM QUEENSLAND								546
TOTAL TOURISM, FAIR TRADING AND WINE INDUSTRY DEVELOPMENT								1,682

Capital Statement 2006-07 143

TRANSPORT

Total capital outlays for the Transport portfolio in 2006-07 will be $2 billion representing a 27% increase in capital expenditure compared with the 2005-06 Budget. The portfolio consists of Queensland Transport, Queensland Rail and the port authorities.

Queensland Transport

Queensland Transport’s capital expenditure program for 2006-07 totals $301.4 million and predominantly comprises investment in public transport infrastructure and systems.

Program Highlights

• $20 million towards the new Integrated Ticketing System. The new Integrated Ticketing System includes the use of smart card technology as part of a wider program by TransLink to introduce a new fare collection system. The new system will make it easier and quicker for customers to pay fares and travel across south-east Queensland.

• $ 118 million towards the construction of the Inner Northern Busway sections 1 and 2. This project has a total estimated cost of $333 million and will link the Queen Street Bus Station to the already completed sections of the Inner Northern Busway near Roma Street.

• $10.3 million towards the construction of cycle links to enhance the cycle network in South East Queensland. This consists of $4.3 million towards the construction of State owned cycle links and $6 million in grants to be provided to local authorities.

• $33.5 million under the South East Queensland Infrastructure Plan and Program(SEQIPP) towards construction of a two-lane Eastern Busway corridor connection from Buranda to Boggo Road to the Green Bridge.

• $8 million to commence implementation of a new Queensland drivers’ licence. The new Queensland drivers’ licence is based on a modern licensing system using smartcard technology. The use of smartcard technology has benefits to both government and licence holders.

• $4.9 million, provided under the Smart State Building Fund, towards a quality bus corridor from Petrie to Kippa-Ring.

• $5 million, as part of a $2.6 billion commitment provided under SEQIPP, to construct the Caboolture to Maroochydore Corridor Study (CAMCOS) rail link between the North coast line (at Beerwah) and the high growth area of the Sunshine Coast.

144 Capital Statement 2006-07

Queensland Rail

QR is allocating $837.8 million for capital outlays in 2006-07.

Program Highlights

• $274.4 million in 2006-07 towards an additional 35 coal locomotives, 1,150 coal wagons and upgrade of 84 coal locomotives to support the increased haulage of coal in Central Queensland. Total program cost for the rollingstock is $972.4 million.

• $135.3 million to upgrade track infrastructure on the Citytrain network as part of the MetTRIP initiative, along with $80 million for additional Citytrain rollingstock to deliver substantial service enhancements to commuters between the Gold Coast, Brisbane and the Sunshine Coast.

• $57.6 million to construct a third loop at the Dalrymple Bay Coal Terminal. Total works amount to $83.4 million.

• $47.7 million to improve disabled access to Citytrain stations and rollingstock.

• $18.2 million to maintain and upgrade the track on the Mount Isa line.

• $13.1 million under SEQIPP to commence early construction works for the Springfield line and detailed design and planning for the third track from Corinda to Darra.

• $3.2 million for safety and security works at Citytrain stations.

• $3.1 million to complete station works to provide increased access to Traveltrain stations throughout Queensland.

Port of Brisbane Corporation

In 2006-07, the Port of Brisbane Corporation has allocated $193.8 million for the continuing development of the port, driven particularly by the ongoing relocation of port operations from Hamilton to Fisherman Islands and other port development requirements to accommodate the strong growth across a range of commodity areas.

Program Highlights

• $28.8 million for the construction of a tenth berth and wharf at Fisherman Islands to better enable the Port’s stevedores to handle the growing number and size of container ships visiting the port.

• $15.4 million for the construction of a general purpose berth at Fisherman Islands to provide port users with the capacity to load and unload a diverse range of cargo.

Capital Statement 2006-07 145

• $15 million for the development of Port Central, a service and retail precinct at Fisherman Islands to cater for the needs of the growing workforce at the port.

Bundaberg Port Authority

The Bundaberg Port Authority has allocated $0.49 million for continued upgrading of port infrastructure during the 2006-07 financial year.

Cairns Port Authority

In 2006-07, the Cairns Port Authority has allocated $130.4 million towards new and ongoing airport and seaport development.

Program Highlights

• $39.4 million for the redevelopment of the domestic terminal at Cairns Airport.

• $11.1 million for the expansion of the baggage reclaim hall and provision of new baggage carousels within the International Terminal Building.

• $9.7 million to construct the remaining apron bays linking the international and domestic aprons.

• $8.5 million for a new facility for the Australian Quarantine and Inspection Service operation in the Cairns area.

• $15.5 million for the redevelopment of the retail area in the international terminal.

• $8.8 million for other improvements at the airport.

• $10.3 million for the continued development of Cairns Cityport.

Central Queensland Ports Authority

In 2006-07, the Central Queensland Ports Authority has allocated $396.3 million towards the ongoing expansion of the ports at Gladstone and Rockhampton.

Program Highlights

• $360 million to further expand the RG Tanna Coal Terminal including construction of stockpile 19, 20 and 21, and a third outloading stream. This is part of a continuing expansion of works to take the terminal towards its ultimate capacity of 68 million tonnes per annum.

• $11.7 million for plant and equipment and various other miscellaneous infrastructure developments throughout the Port of Gladstone.

• $0.18 million for miscellaneous property, plant and equipment projects at the Port of Rockhampton (Port Alma).

146 Capital Statement 2006-07

Mackay Port Authority

In 2006-07, the Mackay Port Authority has allocated $10.9 million for the development and continued upgrading of port and airport infrastructure.

Program Highlights

• $2 million to develop vacant land in the commercial (marina) precinct.

• $2 million to develop vacant land in industrial precinct.

Ports Corporation of Queensland

In 2006-07, the Ports Corporation of Queensland has allocated $113.4 million for various port development projects.

Program Highlights

• $63 million for the Stage 2 expansions at Abbot Point Coal Terminal.

• $32 million for dredging at the Port of Hay Point.

• $10.6 million for dredging at the Port of Weipa.

• $7.8 million for a number of minor projects and the purchases of plant and equipment for various ports administered by the Ports Corporation of Queensland throughout the State.

Townsville Port Authority

The Townsville Port Authority has allocated $10.6 million towards the acquisition of infrastructure and improvements to the port during
2006-07.

Program Highlights

• $4.2 million to provide container handling at the QNI Terminal close to Berth 2.

• $3.6 million to develop a port industrial park to improve storage facilities for port customers.

• $1.8 million to upgrade the existing high voltage network.

Capital Statement 2006-07 147

Transport

		Total		Expenditure
		Estimated		to		Budget		Post
	Statistical	Cost		30-06-06		2006-07		2006-07
Project	Division	$’000		$’000		$’000		$’000
QUEENSLAND TRANSPORT
Property, Plant and Equipment
Public Transport Infrastructure Inner Northern Busway (Section1 1)	05		225,000		32,200		79,800		113,000
Inner Northern Busway (Section1 2)	05		108,000		3,800		38,200		66,000
Transport Corridor Acquisitions — SEQ*	Various						10,000	Ongoing
Normanby Cycleway Connection*	05		6,000		3,200		2,800
South East Queensland Cycle1 Network	Various						4,300	Ongoing
Bus Infrastructure Rolling Program in SEQ	Various		60,000		25,900		10,100		24,000
Bus Intermodal Facilities in SEQ*	05		6,000		4,100		1,900
Gold Coast Bus Priority/High2 Occupancy Vehicle Program	10		72,814				1,600		71,214
Sunshine Coast Bus Priority/High2 Occupancy Vehicle Program	10		47,421		200		1,830		45,391
TransLink Station Upgrade2 Program	10		208,579		200		3,180		205,199
Quality Public Transport Corridor2 (Helensvale/Parkwood to Broadbeach to Coolangatta)	10		914,217		400		1,700		912,117
Caloundra to Maroochydore quality2 bus corridor and public transport stations	10		247,078		200		550		246,328
Eastern Busway: Buranda to1 Boggo Road to Green Bridge	05		216,611		17,000		33,524		166,087
Eastern Busway: Buranda to2 Capalaba	05		953,466		1,500		2,200		949,766
Northern Busway: Enoggera Creek2 to Aspley	05		812,156				1,100		811,056
Petrie to Kippa-Ring Quality Bus Corridor (Stage 1 )*	05		7,000		2,100		4,900
Gympie Road Bus Corridor*	05		5,000		3,800		1,200
South East Busway extension to2 Springwood	05		31,812		500		3,300		28,012
Integrated Ticketing System	05		39,492		28,322		11,170
CAMCOS Rail (Beerwah to Maroochydore)	10		2,642,173				5,000		2,637,173

148 Capital Statement 2006-07

Transport

		Total		Expenditure
		Estimated		to		Budget		Post
	Statistical	Cost		30-06-06		2006-07		2006-07
Project	Division	$’000		$’000		$’000		$’000
Sub-total Public Transport Infrastructure							218,354
Maritime Infrastructure
Vessel Traffic System (VHF) Communication Upgrade*	45		1,000		750		250
Upgrade of Oil Spill Response Equipment*	Various		396		286		110
Vessel Traffic Management Information System (VTMIS)	05		600				600
Vessel Traffic System (VTS)	Various		738				738
REEFREP/MSQ AIS	Various		900		300		600
Marine Safety Minor Works	Various		1,080				1,080
Palm Island Dredging, Jetty and Barge Ramp	45		1,775		175		1,600
Port Douglas Boat Harbour New Dredged Material Disposal Area*	50		3,500		756		2,000		744
Gold Coast Sand Bypass Jetty Upgrade (Stages 2 & 3)*	10		2,991		200		2,791
Brampton Island — Jetty*	40		714		50		406		258
Recreational Marine Facilities Minor Works*	Various		5,103		501		2,207		2,395
Boating Infrastructure Minor Works	Various						2,673	Ongoing
Sub-total Maritime Infrastructure							15,055
Corporate Property — Building							0
Emerald MVIC (Stage 2)	30		500				500
Corporate Property Minor Works	Various						825	Ongoing
CBD Refurbishments	05						965	Ongoing
Sub-total Corporate Property — Building							2,290
Corporate Information Services
Infrastructure Replacement — Upgrades	05						2,963	Ongoing
Sub-total Corporate Information Services							2,963
Departmental Plant & Equipment
Plant & Equipment	05						1,426	Ongoing
Sub-total Departmental Plant & Equipment							1,426
Total Property, Plant and Equipment							240,088

Capital Statement 2006-07 149

Transport

		Total		Expenditure
		Estimated		to		Budget		Post
	Statistical	Cost		30-06-06		2006-07		2006-07
Project	Division	$’000		$’000		$’000		$’000
Other Capital Expenditure
Vessel Traffic Management Information System (VTMIS)	05		3,214		1,231		1,983
Gladstone VTS Radar Upgrade	30		550				400		150
REEFREP/MSQ AIS	Various		650		400		250
Integrated Ticketing System (Development & Software)	05		56,477		48,957		7,520
Integrated Ticketing System (School Transport Software Enhancement)	05		5,700		500		1,300		3,900
New Queensland Drivers’ Licence3 (Stage 1 Implementation)	05		20,021				8,021		12,000
Modelling Software and Database — Rail Safety	05		500				500
Total Other Capital Expenditure							19,974
Capital Grants
SchoolBUS Upgrade Scheme	Various						3,300	Ongoing
SchoolBUS — Steep Roads Program	Various		12,000		1,800		2,900		7,300
Rural & Remote Airstrips	Various						3,220	Ongoing
Public Transport Infrastructure	Various						2,853	Ongoing
Accessible Buses	Various						3,000	Ongoing
Security Cameras in Taxis	Various		8,000		5,507		2,493
Safe School Travel	Various						492	Ongoing
Safe Walking and Pedaling	Various						200	Ongoing
Network Plan — Public Transport Infrastructure	05						2,000	Ongoing
South East Queensland Cycle1 Network	Various						6,038	Ongoing
Rail Crossing Grade Separation	05						11,000	Ongoing
Public Transport Infrastructure — Compliance with Disability Standards	Various						3,815	Ongoing
Total Capital Grants							41,311
TOTAL QUEENSLAND TRANSPORT							301,373
QUEENSLAND RAIL
Property, Plant and Equipment
Network Access Kinrola Branch Relay	30		16,100		15,564		536

150 Capital Statement 2006-07

Transport

		Total		Expenditure
		Estimated		to		Budget		Post
	Statistical	Cost		30-06-06		2006-07		2006-07
Project	Division	$’000		$’000		$’000		$’000
RG Tanna Coal Terminal 3rd Loop	30		15,500		9,253		6,247
Windah — Grantleigh Duplication	30		23,000		22,500		500
Goonyella System: Rail Upgrade	40		11,450		5,336		2,798		3,316
Mindi Electrical Substation	40		13,500		1,975		10,040		1,485
Dalrymple Bay Coal Terminal: 3rd Loop	40		83,400		9,631		57,600		16,169
Northern Missing Link Study (Newlands — North Goonyella Link)	40		19,000		4,290		6,970		7,740
Mount Isa Line: Concrete Relay, Rerail & Associated Works	55		63,390		23,458		18,231		21,701
Timber Bridge Elimination — Brisbane Suburban Area	05		30,000		22,544		7,456
Roma Street, Normanby & Mayne Re-signalling	05		18,889		16,889		2,000
Citytrain Station Conduit Upgrade Various Projects	Various		18,473		12,473		6,000
Noise Amelioration — Metro	05		19,720		16,739		2,981
Level Crossing Protection	Various		18,500		14,360		4,140
Citytrain MetTRIP track infrastructure upgrades — Stages 1 and 2*	Various		608,754		45,770		135,283		427,701
Corinda to Darra: Third Track	05		90,000		461		5,000		84,539
Metropolitan Freight Capacity Enhancements	05		65,000		39		6,950		58,011
Springfield Line	05		300,000		525		8,094		291,381
Network Access — General	Various						63,831	Ongoing
Sub-total Network Access							344,657
QR National
Coal Electric Loco Fleet Upgrade — Stage 2	45		366,000		5,000		50,800		310,200
Upgrade 24 Locos to 2250 Class	05		56,790		34,140		22,650
Rolleston Project — Coal Wagons	05		67,575		65,495		2,080
Additional VCA Coal Wagons	Various		185,000		10,560		97,800		76,640
20 x 3800 Class Electric Locomotives	Various		188,000		1,000		44,000		143,000
15 x 4000 Class Locomotives	15		109,000		3,000		57,100		48,900
QR National — General	Various						6,634	Ongoing
Sub-total QR National							281,064

Capital Statement 2006-07 151

Transport

		Total		Expenditure
		Estimated		to		Budget		Post
	Statistical	Cost		30-06-06		2006-07		2006-07
Project	Division	$’000		$’000		$’000		$’000
Passenger Services
Citytrain EMU Re-engineering & Overhaul	05		68,800		50,267		7,906		10,627
Citytrain Safe Stations	Various		38,813		38,084		729
Citytrain Disabled Access Compliance	Various		50,777		42,756		8,021
Traveltrain Accessible Stations	Various		10,100		7,028		3,072
Citytrain Disability Standards 2007 Compliance: Infrastructure	Various		70,779		10,650		25,000		35,129
Citytrain Disability Standards 2007 Compliance: Rollingstock	05		48,364		1,291		7,000		40,073
General — Passenger Services	Various						5,224	Ongoing
MetTRIP — Citytrain Intermodal Works*	Various		26,794		8,779		11,048		6,967
MetTRIP — Citytrain Station Upgrades*	Various		9,538		3,086		3,942		2,510
Met TRIP — Citytrain Safety & Security Works*	Various		9,859		46		3,288		6,525
Met TRIP — Citytrain Disabled Access Improvements*	Various		7,727				7,727
Met TRIP — Additional Citytrain Rollingstock*	15		289,456		41,366		80,000		168,090
Sub-total Passenger Services							162,957
Across QR
Payroll System Upgrade	05		16,100		12,419		3,681
Motor Vehicle Acquisitions	05						34,000	Ongoing
Across QR — General	Various						11,391	Ongoing
Sub-total Across QR							49,072
Total Property, Plant and Equipment							837,750
TOTAL QUEENSLAND RAIL							837,750
PORT OF BRISBANE CORPORATION
Property, Plant and Equipment
Port Drive Subsidiary Area	05		9,150		3,000		6,150
Terminal 4, 5 and 6	05		34,300		300		6,000		28,000

152 Capital Statement 2006-07

Transport

		Total		Expenditure
		Estimated		to		Budget		Post
	Statistical	Cost		30-06-06		2006-07		2006-07
Project	Division	$’000		$’000		$’000		$’000
Wharf 10	05		59,978		18,734		28,824		12,420
Hamilton Site Redevelopment	05		81,982		25,340		17,848		38,794
Upgrade of Major Roads	05						1,500	Ongoing
Lessee Terminals or Wharves	05						1,000	Ongoing
General Purpose Berth	05		45,900		500		15,400		30,000
Grain Wharf Extension	05		6,100		600		5,500
Whimbrel Street South Car Facility	05		6,500				6,500
Electrical and Communications Upgrades	05						300	Ongoing
Reclamation and Earthworks	05						8,500	Ongoing
Surcharging Lot 83	05		9,000				9,000
Services — Including Headworks	05		2,400				2,400
Warehouses and Container Facilities — Fisherman Islands	05						5,000	Ongoing
Port Central	05						15,000	Ongoing
Whyte Island Site Preparation	05		4,000				4,000
Portgate East Filling	05		13,500				13,500
Roads and Services Networks — Whyte Island	05		3,000				3,000
Eagle Farm — Site Preparation and Warehousing	05						14,500	Ongoing
Colmslie — Site Preparation and Warehousing	05						9,800	Ongoing
Port West — Site Filling	05						3,000	Ongoing
Office — Manly Boat Harbour	05		2,000				2,000
General — Business Partnering	05						500	Ongoing
Dredging Equipment	05						6,930	Ongoing
Excavator 30 tonne	05		450				450
Minor Plant and Equipment	05						7,203	Ongoing
Total Property, Plant and Equipment							193,805
TOTAL PORT OF BRISBANE CORPORATION							193,805
BUNDABERG PORT AUTHORITY
Property, Plant and Equipment
Minor Plant and Equipment	15						490	Ongoing
Total Property, Plant and Equipment							490
TOTAL BUNDABERG PORT AUTHORITY							490

Capital Statement 2006-07 153

Transport

		Total		Expenditure
		Estimated		to		Budget		Post
	Statistical	Cost		30-06-06		2006-07		2006-07
Project	Division	$’000		$’000		$’000		$’000
CAIRNS PORT AUTHORITY
Property, Plant and Equipment
Cairns Airport
International Terminal Building Baggage Make-up and Checked Bag Screening	50		31,895		31 ,702		193
International Terminal Building Baggage Reclaim Hall Expansion	50		18,187		968		11,087		6,132
Bay 1 Concourse — Fixed Link and Aerobridge	50		8,390		8,386		4
Central Services Building	50		9,992		9,964		28
Interim Terminal Works — Project Management	50		1,168		978		156		34
Electrical Infrastructure	50		4,391		1,140		575		2,676
Drainage Improvements	50		5,234		2,084		600		2,550
Runway 15/33 Overlay	50		9,444		86		3,032		6,326
Bays 9 – 13	50		14,029		4,341		9,688
Australian Quarantine and Inspection Service Office Building	50		8,810		310		8,500
Business Park Development	50		11,564		6,291		3,835		1,438
International Terminal Building Departures Retail	50		22,500		929		15,501		6,070
South Major Aircraft Maintenance Facility	50		5,100		100		2,685		2,315
Airside Works	50		7,171		764		2,507		3,900
Landside Works	50		18,027		4,510		8,820		4,697
General Aviation Works	50		4,930		1,111		2,773		1,046
Domestic Terminal Redevelopment Project	50		135,570		2,522		39,391		93,657
Airport Minor Plant and Equipment	50						3,461	Ongoing
Sub-total Cairns Airport							112,836
Cairns Seaport
Tingira St Subdivision Development	50		5,280		45		1,975		3,260

154 Capital Statement 2006-07

Transport

			Total		Expenditure
			Estimated		to		Budget		Post
	Statistical		Cost		30-06-06		2006-07		2006-07
Project	Division		$’000		$’000		$’000		$’000
Surebeam Fruit Disinfestation Facility		50		4,001		201		3,800
Car Park (Tingira St) Design and Construction		50		407		207		200
Seaport Minor Plant and Equipment		50						300	Ongoing
Sub-total Cairns Seaport								6,275
Cairns Cityport
Precinct 12a Development		50		7,658		213		5,788		1,657
Marina Bilge and Sullage System		50		25				25
Foreshore Development		50		3,493		227		2,040		1,226
Demolition and Site Remediation		50		2,514		327		1,422		765
Cityport Commercial Allowance		50		9,154		5,480		1,074		2,600
Sub-total Cairns Cityport								10,349
Corporate Minor Plant and Equipment		50						915	Ongoing
Total Property, Plant and Equipment								130,375
TOTAL CAIRNS PORT AUTHORITY								130,375
CENTRAL QUEENSLAND PORTS AUTHORITY
Property, Plant and Equipment
Port of Gladstone
RG Tanna Coal Terminal Expansion
Stockpile 19, 20 and 21		30		107,985		4,747		80,238		23,000
3rd Outloading Stream		30		82,450		41,498		40,952
Redevelopment of Entrance and Facilities		30		12,620		6,035		6,585
3rd Shiploader		30		126,892		40,611		86,281
Site Construction Management and Facilities		30		82,791		26,608		52,393		3,790
3rd Dump Station (Rail Receival)		30		64,377		35,642		28,735
Electricity Supply Upgrade		30		31,895		14,497		17,398
Berth 4		30		73,604		26,149		47,455
Sub-total RG Tanna Coal Terminal Expansion								360,037
RG Tanna Coal Terminal Projects		30		37,512		4,552		16,000		16,960
Wiggins Island Feasibility Study and Preliminary Engineering		30		5,212		1,912		3,300

Capital Statement 2006-07 155

Transport

			Total		Expenditure
			Estimated		to		Budget		Post
	Statistical		Cost		30-06-06		2006-07		2006-07
Project	Division		$’000		$’000		$’000		$’000
Fisherman’s Landing Wharves 6-11		30		2,187				650		1,537
Fisherman’s Landing South Expansion		30		6,457		5,887		200		370
Port Central		30		12,881		3,478		4,103		5,300
Commercial Buildings		30		500		70		200		230
Minor Plant and Equipment		30						11,672	Ongoing
Sub-total Port of Gladstone								396,162
Port of Rockhampton
Minor Plant and Equipment		30						180	Ongoing
Sub-total Port of Rockhampton								180
Total Property, Plant and Equipment								396,342
TOTAL CENTRAL QUEENSLAND PORTS AUTHORITY								396,342
MACKAY PORT AUTHORITY
Property, Plant and Equipment
Mackay Seaport
Port Access Corridor		40		6,500		5,500		1,000
Accounting / Management System		40		250				250
Port Security		40		735		335		400
Loves Jetty Removal		40		750				750
Harbour Road — Bridge over Drain		40		1,505		305		1,200
Harbour View Central		40		2,000				2,000
Slade Point Road Subdivision		40		2,000				2,000
Minor Plant and Equipment		40						1,473	Ongoing
Sub-total Mackay Seaport								9,073
Mackay Airport
Security Lounge Expansion		40		1,960		1,260		700
Car Parking		40		3,006		2,306		700
Minor Plant and Equipment		40						452	Ongoing
Sub-total Mackay Airport								1,852
Total Property, Plant and Equipment								10,925
TOTAL MACKAY PORT AUTHORITY								10,925

156 Capital Statement 2006-07

Transport

			Total		Expenditure
			Estimated		to		Budget		Post
	Statistical		Cost		30-06-06		2006-07		2006-07
Project	Division		$’000		$’000		$’000		$’000
PORTS CORPORATION OF QUEENSLAND
Property, Plant and Equipment
Head Office Miscellaneous Plant and Equipment (including Cooktown and Cape Flattery)		05						186	Ongoing
Port Development
Hay Point Port Development		40						31	Ongoing
Abbot Point Port Development		40						1,886	Ongoing
Lucinda Port Development		45						5	Ongoing
Mourilyan Port Development		50						660	Ongoing
Weipa Port Development		50						4	Ongoing
Thursday Island Port Development		50						16	Ongoing
Karumba Port Development		55						13	Ongoing
Hay Point Departure Path		40		60,000		28,000		32,000
Louisa Creek Land Acquisitions		40		10,000		4,229		500		5,271
Abbot Point Expansion Stage 2		40		116,000		48,000		63,000		5,000
Mourilyan Stormwater Drainage		50		1,800		500		1,300
Weipa South Channel Widening		50		24,200		13,640		10,560
Thursday Island Fender Cargo Wharf		50		1,800		600		1,200
Horn Island Paving Cargo and Passenger Causeways		50		2,100		100		2,000
Total Property, Plant and Equipment								113,361
			��
TOTAL PORTS CORPORATION OF QUEENSLAND								113,361
TOWNSVILLE PORT AUTHORITY
Property, Plant and Equipment
Container Terminal		45		4,200		50		4,150
Development of Port Industrial Park		45		3,900		300		3,600
High Voltage Power Reticulation Upgrade		45		2,365		615		1,750
Minor Plant and Equipment		45
Total Property, Plant and Equipment								1,102	Ongoing
								10,602
TOTAL TOWNSVILLE PORT AUTHORITY								10,602
TOTAL TRANSPORT								1,995,023

Capital Statement 2006-07 157

Notes:

1.	Projects have now entered development / implementation stage.
2.	Total estimated cost reflects revised timing and SEQIPP funding requirements in out-turned dollars for projects
	in early planning.
3.	The total estimated cost only reflects 2006-07 CBRC outcomes. The total estimated cost along with the split between Property, Plant & Equipment and Other Capital Expenditure will be determined during the course of 2006-07.
*	Funded fully or in part under the Smart State Building Fund

158 Capital Statement 2006-07

TREASURY

Treasury portfolio (incorporating Treasury Department, its statutory authorities, Shared Service Agency and the Government-owned corporation, Golden Casket Lottery Corporation) has a combined 2006-07 capital works program of $69.6 million.

Treasury has a capital expenditure program of $13.5 million.

Program Highlights

• $9 million towards further implementation and development of the Revenue Management System within the Office of State Revenue. The system employs contemporary technology to provide revenue and information management and e-business capability to better service the Government and people of Queensland in collecting and administering State tax revenue streams.

• $0.7 million to incorporate new office functionality and business requirements into the online Corporate Office of Gaming Systems to assist in improving information and communication systems and practices in the Queensland Office of Gaming Regulation.

• $3.8 million towards the replacement of property, plant and equipment and information technology software to provide Treasury’s key infrastructure with software solution needs. Of the $3.8 million, $0.7 million has been allocated to Portfolio Services for the implementation of an electronic Documents and Records Management System. The solution will require significant process change and improved information management practices in order to achieve efficiency and effectiveness benefits.

CorpTech

CorpTech is the technology centre of skill established under the Shared Service Initiative. CorpTech has a capital expenditure program in 2006-07 amounting to $39.1 million. This program will provide innovative whole-of-Government corporate applications and infrastructure solutions for the five large shared service providers and to the agencies within Government.

Motor Accident Insurance Commission

Property, plant and equipment expenditure of $0.015 million will be allocated towards the ongoing operational requirements of the Motor Accident Insurance Commission and the Nominal Defendant.

Capital Statement 2006-07 159

Golden Casket Lottery Corporation Limited

Golden Casket’s capital expenditure program is $15.8 million and principally comprises expenditure on plant and equipment and software which will contribute to the delivery of enhanced operational functionality.

Shared Service Agency

Property, plant and equipment expenditure of $1.2 million will be allocated towards the ongoing operational requirements of the Shared Service Agency.

Treasury

		Total		Expenditure
		Estimated		to		Budget		Post
	Statistical	Cost		30-06-06		2006-07		2006-07
Project	Division	$’000		$’000		$’000		$’000
DEPARTMENT OF TREASURY
Property, Plant and Equipment
Asset Replacement	05						2,283	Ongoing
Documents & Records Management Improvement Project (eDRMS)	05		680		506		174
Total Property, Plant and Equipment							2,457
Other Capital Expenditure
Asset Replacement	05						712	Ongoing
eDRMS	05		1,173		569		552		52
OSR — Revenue Management System	05		32,866		23,270		9,001		595
Disaster Recovery — Business Continuity Planning	05		280		159		121
QOGR — Corporate Office of Gaming System (Enhancement)	05		700				700
Total Other Capital Expenditure							11,086
TOTAL DEPARTMENT OF TREASURY							13,543
CORPTECH
Property, Plant and Equipment
Asset Replacement	05						500	Ongoing
Other	05						150	Ongoing
Total Property, Plant and Equipment							650

160 Capital Statement 2006-07

Treasury

		Total		Expenditure
		Estimated		to		Budget		Post
	Statistical	Cost		30-06-06		2006-07		2006-07
Project	Division	$’000		$’000		$’000		$’000
Other Capital Expenditure
Shared Service Solutions (SSS) Program	05		115,848		59,872		38,463		17,513
Total Other Capital Expenditure							38,463
TOTAL CORPTECH							39,113
MOTOR ACCIDENT INSURANCE COMMISSION
Property, Plant and Equipment
Minor Capital Works — MAIC	05						4	Ongoing
Minor Capital Works — ND	05						11	Ongoing
Total Property, Plant and Equipment							15
TOTAL MOTOR ACCIDENT INSURANCE COMMISSION							15
GOLDEN CASKET LOTTERY CORPORATION LIMITED
Property, Plant and Equipment
Asset Replacement	05		18,878		1,806		14,100		2,972
Infrastructure Development	05		6,910		280		570		6,060
Total Property, Plant and Equipment							14,670
Other Capital Expenditure
System Development	05		2,050		570		760		720
Other	05		458				328		130
Total Other Capital Expenditure							1,088
TOTAL GOLDEN CASKET LOTTERY CORPORATION LIMITED							15,758
SHARED SERVICE AGENCY
Property, Plant and Equipment
Property Plant and Equipment	Various						1,199	Ongoing
Total Property, Plant and Equipment							1,199
TOTAL SHARED SERVICE AGENCY							1,199
TOTAL TREASURY							69,628

Capital Statement 2006-07 161

APPENDIX A

Entities included in Capital Outlays — 2006-07 Budget

Department of Aboriginal and Torres Strait Islander Policy

Department of Child Safety

Department of Communities

Department of Corrective Services

Disability Services Queensland

Education Queensland

     Queensland Studies Authority

     Corporate and Professional Services

     Arts Queensland

     Library Board of Queensland

     Queensland Art Gallery

     Queensland Museum

     Queensland Performing Arts Trust

Electoral Commission of Queensland

Department of Emergency Services

Department of Employment and Training

Department of Energy

     CS Energy Limited

     Energex Ltd

     Stanwell Corporation Limited

     Tarong Energy Corporation Limited

     PowerLink Queensland

     Enertrade

     Ergon Energy Corporation Limited

Environmental Protection Agency

Department of Health

     The Council of the Queensland Institute of Medical Research

Department of Housing

Department of Industrial Relations

Department of Justice and Attorney-General

     Public Trust Office

     Legal Aid Queensland

     Crime and Misconduct Commission

Legislative Assembly of Queensland

Department of Local Government, Planning, Sport and Recreation

     Major Sports Facilities Authority

Department of Main Roads

     RoadTek

     Queensland Motorways Limited

162 Capital Statement 2006-07

Entities included in Capital Outlays — 2006-07 Budget

Department of Natural Resources, Mines and Water

     Gladstone Area Water Board

     Mount Isa Water Board

     SunWater

     Eungella Water Pipeline

     Burnett Water

Office of the Governor

Office of the Ombudsman

Office of the Public Service Commissioner

Department of Police

Department of the Premier and Cabinet

     Commission for Children and Young People and Child Guardian

     Queensland Events Corporation

     South Bank Corporation

Department of Primary Industries and Fisheries

     Forestry Plantations Queensland

     QRAA

Department of Public Works

     QBuild

     QFleet

     Project Services

     SDS (Sales and Distribution Services)

     CITEC

Queensland Audit Office

Department of State Development, Trade and Innovation

The Coordinator-General

     Property Services Group

Department of Tourism, Fair Trading and Wine Industry Development

     Tourism Queensland

Queensland Transport

     Queensland Rail

     Port of Brisbane Corporation

     Bundaberg Port Authority

     Cairns Port Authority

     Central Queensland Ports Authority

     Mackay Port Authority

     Ports Corporation of Queensland

     Townsville Port Authority

Department of Treasury

     CorpTech

     Motor Accident Insurance Commission

     Golden Casket Lottery Corporation Limited

     Shared Service Agency

Capital Statement 2006-07 163

By authority: R. J. Hunt, Government Printer, Queensland-2006

STATE BUDGET
2006-07

APPROPRIATION BILLS

Queensland

Appropriation (Parliament)
Bill 2006

1
Appropriation (Parliament) Bill 2006

Appropriation (Parliament) Bill 2006

Explanatory Notes

General Outline

Policy Objectives of the Bill

Section 21(b) of the Financial Administration and Audit Act 1977 provides that for each financial year, the Treasurer must present to the Legislative Assembly a Bill for a parliamentary Annual Appropriation Act for the financial year.

This Bill provides for:

• Appropriation for 2006-07 to fund the cost of providing the outputs, equity adjustment and administered items of the Legislative Assembly and parliamentary service in that year and certain outputs, equity adjustment and administered items delivered in the previous year, not previously funded; and

• Supply for 2007-08 to allow the normal operations of the Legislative Assembly and parliamentary service to continue until the Appropriation (Parliament) Bill for 2007-08 receives assent.

Notes On Provisions

Clause 1 provides for the short title of the Act.

Clause 2 provides that the amount of $58 177 000 is appropriated for the 2006-07 financial year for the Legislative Assembly and parliamentary service for application to its departmental outputs, equity adjustment and administered items as set out in the Schedule.

It also provides that part of that amount may be applied for some payments necessary in respect of departmental outputs, equity adjustment and administered items delivered in 2005-06 which were not paid for by the end of that financial year.

Clause 2(3) provides that the amount of $58 177 000 includes the amount already authorised by the Appropriation (Parliament) Act 2005, section 3, to be paid for the financial year starting 1 July 2006.

2
Appropriation (Parliament) Bill 2006

Clause 3 provides that the amount of $29 000 000 is authorised to be paid for the 2007-08 financial year for the Legislative Assembly and parliamentary service for application to its departmental outputs, equity adjustment and administered items until the Appropriation (Parliament) Bill for 2007-08 receives assent.

Clause 4 repeals the Appropriation (Parliament) Act 2003 (2003 Act No. 42) and Appropriation (Parliament) Act (No. 2) 2003 (2003 Act No. 76).

The Schedule to the Bill details the total amount appropriated for the Legislative Assembly and parliamentary service and the amounts for application to its departmental outputs, equity adjustment and administered items in 2006-07.

Legislative Standards

Consultation

Consultation has been undertaken with the Speaker in determining the appropriation requirements of the Legislative Assembly and parliamentary service.

©The State of Queensland 2006
BY AUTHORITY
GOVERNMENT PRINTER, QUEENSLAND—2006
306045

Queensland

Appropriation (Parliament) Bill 2006

Contents

	Page
1 Short title		4
2 Appropriation for 2006–2007		4
3 Supply for 2007–2008		4
4 Repeals		5
Schedule Appropriation for 2006–2007		6

2006

A Bill

for

An Act authorising the Treasurer to pay amounts from the consolidated fund for the Legislative Assembly and parliamentary service for the financial years starting 1 July 2006 and 1 July 2007

4
Appropriation (Parliament) Bill 2006

The Parliament of Queensland enacts—

1 Short title

     This Act may be cited as the Appropriation (Parliament) Act 2006.

     Note—

Under the Financial Administration and Audit Act 1977, section 22, words used in this Act that are defined in the Financial Administration and Audit Act 1977 have the same meaning the words have in that Act, subject to a contrary intention in this Act.

2 Appropriation for 2006–2007

(1)	The Treasurer is authorised to pay $ 58 177 000 from the consolidated fund for the Legislative Assembly and parliamentary service for the financial year starting 1 July 2006.
(2)	The amount mentioned in subsection (1)—

(a)	is appropriated for the financial year for the Legislative Assembly and parliamentary service for application to its departmental outputs, equity adjustment and administered items as stated in the schedule; and
(b)	includes amounts for departmental outputs, equity adjustment and administered items delivered by the Legislative Assembly and parliamentary service in the financial year starting 1 July 2005 but for which it has not been paid in that financial year.

(3) The amount mentioned in subsection (1) includes the amount already authorised by the Appropriation (Parliament) Act 2005,
section 3, to be paid for the financial year starting 1 July 2006.

3 Supply for 2007–2008

The Treasurer is authorised to pay $29 000 000 from the consolidated fund for the Legislative Assembly and

5
Appropriation (Parliament) Bill 2006

parliamentary service for the financial year starting 1 July 2007.

4 Repeals

The following Acts are repealed—

• Appropriation (Parliament) Act 2003, No. 42

• Appropriation (Parliament) Act (No. 2) 2003, No. 76.

6
Appropriation (Parliament) Bill 2006

Schedule Appropriation for 2006–2007

section 2(2)

	Budget			Est. Actual			Budget
	2005–2006			2005–2006			2006–2007
	$			$			$
Controlled Items
Departmental Outputs		59 395 000			60 547 000			61 542 000
Equity Adjustments		(3 365 000	)		(2 885 000	)		(3 365 000	)
Administered Items		—			—			—
Vote		56 030 000			57 662 000			58 177 000

© State of Queensland 2006

Authorised by the Parliamentary Counsel
and printed by the Government Printer

Queensland

Appropriation Bill 2006

1
Appropriation Bill 2006

Appropriation Bill 2006

Explanatory Notes

General Outline

Policy Objectives of the Bill

Section 21(a) of the Financial Administration and Audit Act 1977 provides that for each financial year, the Treasurer is to present to the Legislative Assembly a Bill for an ordinary Annual Appropriation Act.

The policy objectives of the Bill, the reasons for those objectives and the ways in which the policy objectives will be achieved by the Bill are detailed in the Budget Speech and the accompanying Budget Papers.

The Bill provides for:

• Appropriation for 2006-07 to fund the cost of delivering departmental outputs, administered items and equity adjustment in that year and certain outputs, administered items and equity adjustment delivered in the previous year but not previously funded; and

• Supply for 2007-08 to allow the normal operations of government to continue until the Appropriation Bill for 2007-08 receives assent.

Notes On Provisions

Clause 1 provides for the short title of the Act.

Clause 2 provides that for each department, the vote amount mentioned for the department in Schedule 2 is appropriated for the 2006-07 financial year for the department for application to its departmental outputs, equity adjustment and administered items as stated in Schedule 2.

It also provides that part of the vote amount may be applied for some payments necessary in respect of departmental outputs, equity adjustment and administered items delivered in 2005-06 which departments were not paid for by the end of that financial year.

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Appropriation Bill 2006

Clause 2(3) provides that the total amount of $23 980 344 000 includes the amount already authorised by the Appropriation Act 2005, section 3, to be paid for the financial year starting 1 July 2006.

Clause 3 provides that the amount of $12 000 000 000 is authorised to be paid for the 2007-08 financial year for departments for application to their departmental outputs, equity adjustment and administered items until the Appropriation Bill for 2007-08 receives assent.

Clause 4 repeals the Appropriation Act 2003 (2003 Act No. 43) and Appropriation Act (No. 2) 2003 (2003 Act No. 75).

Schedule 1 sets out how the amount appropriated from the Consolidated Fund for the year starting on 1 July 2006 is to be distributed between departments, other than the Legislative Assembly and parliamentary service.

Schedule 2 details the total amount appropriated for each department for application to its outputs, equity adjustment and administered items for the financial year.

Accountable Officers may apply the total of funds received from the Treasurer for departmental outputs across the individual outputs of the department.

Under section 24 of the Financial Administration and Audit Act 1977, the Treasurer may pay a department’s appropriation in amounts different to those set out in the Annual Appropriation Act, provided that the total Vote amount is not exceeded. If the Treasurer considers there is a surplus in one or more of the headings of a department for a financial year and a deficiency in another heading or headings of a department, the Treasurer may allocate an amount to one or more of the headings that are deficient from the heading or headings in surplus.

Section 24A of the Act, provides for an amount called the Treasurer’s Advance which is included in the Vote for the Treasury Department but which may be used for purposes that may be delivered by any department. Amounts from the Treasurer’s Advance may be paid by the Treasurer to other departments for departmental outputs, equity adjustments or administered items, even though the amount appropriated to other departments under the relevant Annual Appropriation Act for the financial year will be exceeded.

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Appropriation Bill 2006

Legislative Standards

Consultation

Appropriate consultation has been undertaken with departments in establishing the appropriations payable to them pursuant to this Bill.

^©The State of Queensland 2006
BY AUTHORITY
GOVERNMENT PRINTER, QUEENSLAND—2006
306044

Queensland

Appropriation Bill 2006

Contents

		Page
1	Short title		4
2	Appropriation for 2006–2007		4
3	Supply for 2007–2008		4
4	Repeals		5
Schedule 1	Appropriation summary for 2006–2007		6
Schedule 2	Appropriation for 2006–2007		8

2006

A Bill

for
An Act authorising the Treasurer to pay amounts from the consolidated fund for departments for the financial years starting 1 July 2006 and 1 July 2007

4
Appropriation Bill 2006

The Parliament of Queensland enacts—

1 Short title    

This Act may be cited as the Appropriation Act 2006.
Note—
	Under the Financial Administration and Audit Act 1977, section 22, words used in this Act that are defined in the Financial Administration and Audit Act 1977 have the same meaning the words have in that Act, subject to a contrary intention in this Act.

2 Appropriation for 2006–2007

(1)	The Treasurer is authorised to pay $23 980 344 000 from the consolidated fund for departments as itemised in schedule 1 for the financial year starting 1 July 2006.
(2)	For each department, the vote amount mentioned for the department in schedule 2—
	(a)	is appropriated for the financial year for the department for application to its departmental outputs, equity adjustment and administered items as stated in schedule 2; and
	(b)	includes amounts for departmental outputs, equity adjustment and administered items delivered by the department in the financial year starting 1 July 2005 but for which the department has not been paid in that financial year.
(3)	The amount mentioned in subsection (1) includes the amount already authorised by the Appropriation Act 2005, section 3, to be paid for the financial year starting 1 July 2006.

3 Supply for 2007–2008

The Treasurer is authorised to pay $12 000 000 000 from the consolidated fund for departments for the financial year starting 1 July 2007.

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Appropriation Bill 2006

4 Repeals

The following Acts are repealed—
•	Appropriation Act 2003, No. 43
•	Appropriation Act (No. 2) 2003, No. 75.

6
Appropriation Bill 2006

Schedule 1 Appropriation summary for
2006–2007

section 2(1)     

	Budget		Est. Actual		Vote
	2005–2006		2005–2006		2006–2007
Department	$’000		$’000		$’000
Department of Aboriginal and Torres Strait Islander Policy		45  608		44  722		70  586
Department of Child Safety		443  842		431  208		532  670
Department of Communities		449  488		491  786		527  501
Department of Corrective Services		400  643		397  968		597  599
Department of Education and the Arts		5  671  371		5  750  005		6  007  794
Department of Emergency Services		379  373		392  077		414  383
Department of Employment and Training		611  348		630  453		686  208
Department of Energy		372  148		712  679		405  989
Department of Health		3  249  790		3  989  179		4  463  650
Department of Housing		170  829		271  893		205  609
Department of Industrial Relations		56  146		52  667		52  935
Department of Justice and Attorney-General		318  734		345  896		417  942
Department of Local Government, Planning, Sport and Recreation		822  306		843  531		876  802
Department of Main Roads		1  432  214		1  434  744		1  742  312
Department of Natural Resources, Mines and Water		482  067		501  435		591  588
Department of Police		1  243  070		1  208  938		1  385  052
Department of the Premier and Cabinet		217  702		193  550		170  705
Department of Primary Industries and Fisheries		235  816		264  774		255  990
Department of Public Works		198  436		165  412		247  426
Department of State Development, Trade and Innovation		346  154		473  773		279  340
Department of Tourism, Fair Trading and Wine Industry Development		87  868		90  947		92  120
Department of Transport		1  890  280		2  152  822		2  265  973
Disability Services Queensland		421  895		397  255		540  525
Environmental Protection Agency		221  206		219  069		265  062
Treasury Department		1  511  412		1  554  067		703  608

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Appropriation Bill 2006

Schedule 1 (continued)

	Budget		Est. Actual		Vote
	2005–2006		2005–2006		2006–2007
Department	$’000		$’000		$’000
The Coordinator-General		—		64  126		136  078
Electoral Commission of Queensland		8  858		9  199		23  818
Office of the Governor		3  562		4  000		4  226
Office of the Ombudsman		4  895		4  895		5  259
Office of the Public Service Commissioner		4  760		7  200		6  756
Queensland Audit Office		4  565		4  565		4  838
TOTAL		21  306  386		23  104  835		23  980  344

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Appropriation Bill 2006

Schedule 2 Appropriation for 2006–2007

section 2(2)     

	Budget			Est. Actual		Budget
	2005–2006			2005–2006		2006–2007
Minister/Organisational Unit	$’000			$’000		$’000
Estimates Committee A
PREMIER
Office of the Governor
Controlled Items
Departmental Outputs		3  676			4  000		4  226
Equity Adjustment		(114	)		—		—
Administered Items		—			—		—
Vote		3  562			4  000		4  226
Queensland Audit Office
Controlled Items
Departmental Outputs		4  315			4  315		4  930
Equity Adjustment		250			250		(92	)
Administered Items		—			—		—
Vote		4  565			4  565		4  838
Office of the Public Service Commissioner
Controlled Items
Departmental Outputs		4  760			7  200		6  756
Equity Adjustment		—			—		—
Administered Items		—			—		—
Vote		4  760			7  200		6  756

9
Appropriation Bill 2006

Schedule 2 (continued)

	Budget			Est. Actual		Budget
	2005–2006			2005–2006		2006–2007
Minister/Organisational Unit	$’000			$’000		$’000
Department of the Premier and Cabinet
Controlled Items
Departmental Outputs		108  205			98  369		80  076
Equity Adjustment		(407	)		3  760		13
Administered Items		109  904			91  421		90  616
Vote		217  702			193  550		170  705
The Coordinator-General
Controlled Items
Departmental Outputs		—			59  965		36  078
Equity Adjustment		—			4  100		100  000
Administered Items		—			61		—
Vote		—			64  126		136  078
DEPUTY PREMIER, TREASURER AND MINISTER FOR STATE DEVELOPMENT, TRADE AND INNOVATION
Treasury Department
Controlled Items
Departmental Outputs		116  066			116  586		103  290
Equity Adjustment		4  487			4  944		3  125
Administered Items		1  390  859			1  432  537		597  193
Vote		1  511  412			1  554  067		703  608

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Appropriation Bill 2006

Schedule 2 (continued)

	Budget		Est. Actual		Budget
	2005–2006		2005–2006		2006–2007
Minister/Organisational Unit	$’000		$’000		$’000
Department of State Development, Trade and Innovation
Controlled Items
Departmental Outputs		279  419		297  782		222  571
Equity Adjustment		7  221		89  335		22  454
Administered Items		59  514		86  656		34  315
Vote		346  154		473  773		279  340
MINISTER FOR PUBLIC WORKS, HOUSING AND RACING
Department of Public Works
Controlled Items
Departmental Outputs		72  697		74  238		59  501
Equity Adjustment		107  716		69  454		168  573
Administered Items		18  023		21  720		19  352
Vote		198  436		165  412		247  426
Department of Housing
Controlled Items
Departmental Outputs		113  879		114  943		127  804
Equity Adjustment		56  950		156  950		77  805
Administered Items		—		—		—
Vote		170  829		271  893		205  609

11
Appropriation Bill 2006

Schedule 2 (continued)

	Budget		Est. Actual		Budget
	2005–2006		2005–2006		2006–2007
Minister/Organisational Unit	$’000		$’000		$’000
Estimates Committee B
MINISTER FOR HEALTH
Department of Health
Controlled Items
Departmental Outputs		2  983  733		3  374  269		4  171  238
Equity Adjustment		266  057		614  471		289  192
Administered Items		—		439		3  220
Vote		3  249  790		3  989  179		4  463  650
MINISTER FOR CHILD SAFETY
Department of Child Safety
Controlled Items
Departmental Outputs		390  453		418  406		498  797
Equity Adjustment		53  389		12  802		33  873
Administered Items		—		—		—
Vote		443  842		431  208		532  670
MINISTER FOR POLICE AND CORRECTIVE SERVICES
Department of Police
Controlled Items
Departmental Outputs		1  153  314		1  144  564		1  263  166
Equity Adjustment		89  380		63  998		121  495
Administered Items		376		376		391
Vote		1  243  070		1  208  938		1  385  052

12
Appropriation Bill 2006

Schedule 2 (continued)

	Budget		Est. Actual		Budget
	2005–2006		2005–2006		2006–2007
Minister/Organisational Unit	$’000		$’000		$’000
Department of Corrective Services
Controlled Items
Departmental Outputs		389 233		393 038		402 226
Equity Adjustment		11 410		4 930		195 373
Administered Items		—		—		—
Vote		400 643		397 968		597 599
Estimates Committee C
MINISTER FOR TRANSPORT AND MAIN ROADS
Department of Transport
Controlled Items
Departmental Outputs		1 488 292		1 610 685		1 734 489
Equity Adjustment		239 078		154 383		233 074
Administered Items		162 910		387 754		298 410
Vote		1 890 280		2 152 822		2 265 973
Department of Main Roads
Controlled Items
Departmental Outputs		1 076 874		1 129 197		1 137 303
Equity Adjustment		355 340		305 547		605 009
Administered Items		—		—		—
Vote		1 432 214		1 434 744		1 742 312

13
Appropriation Bill 2006

Schedule 2 (continued)

	Budget		Est. Actual		Budget
	2005–2006		2005–2006		2006–2007
Minister/Organisational Unit	$’000		$’000		$’000
MINISTER FOR EMPLOYMENT, TRAINING AND INDUSTRIAL RELATIONS AND MINISTER FOR SPORT
Department of Employment and Training
Controlled Items
Departmental Outputs		597 035		613 661		640 291
Equity Adjustment		12 899		15 349		45 917
Administered Items		1 414		1 443		—
Vote		611 348		630 453		686 208
Department of Industrial Relations
Controlled Items
Departmental Outputs		55 669		52 290		54 086
Equity Adjustment		477		377		(1 151	)
Administered Items		—		—		—
Vote		56 146		52 667		52 935
MINISTER FOR TOURISM, FAIR TRADING AND WINE INDUSTRY DEVELOPMENT
Department of Tourism, Fair Trading and Wine Industry Development
Controlled Items
Departmental Outputs		42 569		45 832		45 114
Equity Adjustment		405		221		(68	)
Administered Items		44 894		44 894		47 074
Vote		87 868		90 947		92 120

14
Appropriation Bill 2006

Schedule 2 (continued)

	Budget		Est. Actual			Budget
	2005–2006		2005–2006			2006–2007
Minister/Organisational Unit	$’000		$’000			$’000
Estimates Committee D
MINISTER FOR ENERGY AND ABORIGINAL AND TORRES STRAIT ISLANDER POLICY
Department of Energy
Controlled Items
Departmental Outputs		13 817		18 189			18 289
Equity Adjustment		197		(1 665	)		—
Administered Items		358 134		696 155			387 700
Vote		372 148		712 679			405 989
Department of Aboriginal and Torres Strait Islander Policy
Controlled Items
Departmental Outputs		40 494		39 635			36 943
Equity Adjustment		4 740		4 575			33 178
Administered Items		374		512			465
Vote		45 608		44 722			70 586
MINISTER FOR EMERGENCY SERVICES
Department of Emergency Services
Controlled Items
Departmental Outputs		347 899		361 927			395 658
Equity Adjustment		31 474		30 150			18 725
Administered Items		—		—			—
Vote		379 373		392 077			414 383

15
Appropriation Bill 2006

Schedule 2 (continued)

	Budget			Est. Actual			Budget
	2005–2006			2005–2006			2006–2007
Minister/Organisational Unit	$’000			$’000			$’000
Estimates Committee E
MINISTER FOR EDUCATION AND MINISTER FOR THE ARTS
Department of Education and the Arts
Controlled Items
Departmental Outputs		3 694 018			3 750 526			3 998 527
Equity Adjustment		387 062			313 668			298 858
Administered Items		1 590 291			1 685 811			1 710 409
Vote		5 671 371			5 750 005			6 007 794
MINISTER FOR ENVIRONMENT, LOCAL GOVERNMENT, PLANNING AND WOMEN
Environmental Protection Agency
Controlled Items
Departmental Outputs		228 088			241 713			258 406
Equity Adjustment		(6 882	)		(22 644	)		6 656
Administered Items		—			—			—
Vote		221 206			219 069			265 062

16
Appropriation Bill 2006

Schedule 2 (continued)

	Budget		Est. Actual			Budget
	2005–2006		2005–2006			2006–2007
Minister/Organisational Unit	$’000		$’000			$’000
Department of Local Government, Planning, Sport and Recreation
Controlled Items
Departmental Outputs		498 686		514 857			536 974
Equity Adjustment		1 404		3 452			7 510
Administered Items		322 216		325 222			332 318
Vote		822 306		843 531			876 802
Estimates Committee F
MINISTER FOR JUSTICE AND ATTORNEY-GENERAL
Department of Justice and Attorney-General
Controlled Items
Departmental Outputs		209 827		222 825			232 653
Equity Adjustment		20 043		(3 794	)		56 808
Administered Items		88 864		126 865			128 481
Vote		318 734		345 896			417 942
Electoral Commission of Queensland
Controlled Items
Departmental Outputs		8 680		9 035			23 894
Equity Adjustment		178		164			(76	)
Administered Items		—		—			—
Vote		8 858		9 199			23 818

17
Appropriation Bill 2006

Schedule 2 (continued)

	Budget			Est. Actual			Budget
	2005–2006			2005–2006			2006–2007
Minister/Organisational Unit	$’000			$’000			$’000
Office of the Ombudsman
Controlled Items
Departmental Outputs		5 017			5 017			5 381
Equity Adjustment		(122	)		(122	)		(122	)
Administered Items		—			—			—
Vote		4 895			4 895			5 259
MINISTER FOR COMMUNITIES, DISABILITY SERVICES AND SENIORS
Department of Communities
Controlled Items
Departmental Outputs		300 159			318 611			359 671
Equity Adjustment		18 232			20 131			15 446
Administered Items		131 097			153 044			152 384
Vote		449 488			491 786			527 501
Disability Services Queensland
Controlled Items
Departmental Outputs		388 676			392 811			498 509
Equity Adjustment		33 219			4 444			42 016
Administered Items		—			—			—
Vote		421 895			397 255			540 525

18
Appropriation Bill 2006

Schedule 2 (continued)

	Budget		Est. Actual		Budget
	2005–2006		2005–2006		2006–2007
Minister/Organisational Unit	$’000		$’000		$’000
Estimates Committee G
MINISTER FOR NATURAL RESOURCES, MINES AND WATER
Department of Natural Resources, Mines and Water
Controlled Items
Departmental Outputs		448 614		421 370		509 836
Equity Adjustment		9 846		61 107		6 380
Administered Items		23 607		18 958		75 372
Vote		482 067		501 435		591 588
MINISTER FOR PRIMARY INDUSTRIES AND FISHERIES
Department of Primary Industries and Fisheries
Controlled Items
Departmental Outputs		216 791		232 187		227 813
Equity Adjustment		5 253		11 405		11 821
Administered Items		13 772		21 182		16 356
Vote		235 816		264 774		255 990
Total Appropriation:		21 306 386		23 104 835		23 980 344

^© State of Queensland 2006

Authorised by the Parliamentary Counsel
and printed by the Government Printer

By authority: R. J. Hunt, Government Printer, Queensland-2006