Queensland Treasury 18-K Annual report (foreign governments)

EXHIBIT (c)(iv)

Report entitled

“Queensland Budget 2019-20 Mid-Year Fiscal and Economic Review”.

FORWARD-LOOKING STATEMENTS

This exhibit contains forward-looking statements. Statements that are not historical facts, including statements about the State of Queensland’s (the “State” or “Queensland”) beliefs and expectations, are forward-looking statements. These statements are based on current plans, budgets, estimates and projections and therefore you should not place undue reliance on them. The words “believe”, “may”, “will”, “should”, “estimate”, “continue”, “anticipate”, “intend”, “expect”, “forecast” and similar words are intended to identify forward-looking statements. Forward-looking statements speak only as of the date they are made, and neither the Queensland Treasury Corporation nor the State undertake any obligation to update publicly any of them in light of new information or future events.

Forward-looking statements are based on current plans, estimates and projections and, therefore, undue reliance should not be placed on them. Although the Queensland Treasury Corporation and the State believe that the beliefs and expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such beliefs and expectations will prove to have been correct. Forward-looking statements involve inherent risks and uncertainties. We caution you that actual results may differ materially from those contained in any forward-looking statements.

A number of important factors could cause actual results to differ materially from those expressed in any forward-looking statement. Factors that could cause the actual outcomes to differ materially from those expressed or implied in forward-looking statements include:

• the international and Australian economies, and in particular the rates of growth (or contraction) of the State’s major trading partners;

• the effects, both internationally and in Australia, of any subsequent economic downturn, as well as the effect of ongoing economic, banking and sovereign debt risk;

• increases or decreases in international and Australian domestic interest rates;

• changes in the State’s domestic consumption;

• changes in the State’s labor force participation and productivity;

• downgrades in the credit ratings of the State and Australia;

• changes in the rate of inflation in the State;

• changes in environmental and other regulation; and

• changes in the distribution of revenue from the Commonwealth of Australia Government to the State.

QUEENSLAND BUDGET 2019-20

2019-20 Mid-Year Fiscal and Economic Review

© The State of Queensland (Queensland Treasury) 2019

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© The State of Queensland (Queensland Treasury) Mid-Year Fiscal and Economic Review 2019-20.

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CONTENTS    

Foreword	2
Overview	3
Our Economic Plan - More Jobs in More Industries	4
Economic Overview	6
External conditions	7
Queensland conditions	9
Labour market	12
Fiscal Overview	14
Net operating balance	15
Revenue	16
Expenses	17
Balance Sheet	19
Intergovernmental Financial Relations	21
Government Fiscal Principles	22
Uniform Presentation Framework	24
Taxation and Royalty Revenue Assumptions	33
Key Fiscal Aggregates	34

1

FOREWORD

FOREWORD

I am pleased to present the 2019-20 Mid-Year Fiscal and Economic Review (MYFER).   MYFER proves that even in challenging economic conditions, the Palaszczuk Government’s economic plan is working.   We are backing more jobs in more industries, building essential infrastructure and delivering high-quality frontline services that all Queenslanders have come to expect, regardless of where they live.   Since the Palaszczuk Government was elected, more than 223,000 Queensland jobs have been created, including 118,000 full time jobs.

Over the past year alone, more than half of all new Queensland jobs have been created in regions outside Greater Brisbane.

Our Government is backing Queensland jobs with measures like our $885 million payroll tax package. This includes a payroll tax discount for regional businesses and an increase in the payroll tax threshold, reducing the cost of doing business for more than 13,000 Queensland employers.

Our $51.8 billion infrastructure program is the largest four-year capital spend in nearly a decade, supporting 41,500 jobs in 2019-20 alone. Our infrastructure program includes record investments in health and education.

The Palaszczuk Government’s responsible economic management has delivered five consecutive operating surpluses. MYFER forecasts that the Government will deliver $2.1 billion in surpluses over the forward estimates.

We are keeping expenses under control. In the first six months, the Service Priority Review Office has realised savings of $715 million this financial year and $1.4 billion over the forward estimates, all without imposing redundancies.

Global economic turbulence and a slowdown in domestic economic growth have resulted in falls in commodity prices and a reduction in the size of the GST pool.

Despite the resulting revisions to royalties and GST revenue relative to Budget, revenue growth will continue to outpace expenses growth over the forward estimates, bolstering our state’s bottom line.

Growth in the national economy has slowed to rates not seen since the Global Financial Crisis, but Queensland’s economy continues to grow faster than the nation. Annual household consumption growth in Queensland is the fastest in the country, while the annual value of our merchandise exports has reached record highs since the 2019-20 Budget and now sit at $86.6 billion.

MYFER confirms our commitment to responsible economic management and to building an economy that benefits all Queenslanders.

The Honourable Jackie Trad MP

Deputy Premier

Treasurer

Minister for Aboriginal and Torres Strait Islander Partnerships

2  Mid-Year Fiscal and Economic Review 2019-20

OVERVIEW

OVERVIEW

The 2019-20 Mid-Year Fiscal and Economic Review (MYFER) provides an update on the state’s economic and fiscal position since the 2019-20 Queensland Budget.

The MYFER shows the fundamentals of the Budget and economy remain strong with highlights including:

• A forecast net operating surplus of $151 million in 2019-20 and surpluses totalling $2.122 billion over the forward estimates, despite significant reductions in forecast GST revenue and coal royalties.

• An increased capital program of $51.8 billion over the forward estimates, supporting 41,500 jobs in 2019-20.

• Employment growth in 2019-20 to improve from the Budget forecast of 1¹⁄₄% to 1¹⁄₂%.

• Forecast economic growth of 2¹⁄₂% in 2019-20, strengthening to 2³⁄₄% in 2020-21.

• A reduction in GST revenue from the Commonwealth of $2.5 billion since the 2018-19 Budget, over the three years to 2021-22.

• Savings from the Service Priority Review Office of $715 million in this financial year and $1.365 billion over the forward estimates, delivered by reducing operating expenses and recovering overpayments, without imposing redundancies.

The MYFER is underpinned by strong fiscal principles that not only target ongoing reductions in Queensland’s relative debt, they also allow for responsible management of the state’s finances including establishment of the Service Priority Review Office (SPRO) to target savings across government.

The Queensland Government is staying the course and delivering on our commitment to create more jobs in more industries, against the backdrop of challenging events both global and nationally which are impacting on the Queensland economy. These include the US-China trade war, Brexit, a slowdown of the Chinese economy and Australia’s softening economy.

Both the Reserve Bank of Australia (RBA) and the Organisation for Economic Co-operation and Development have acknowledged these economic headwinds. So too Moody’s - in their recent Australia 2020 Outlook publication - who highlight that all states and territories are exposed to the global economic slowdown.

The Palaszczuk Government’s Economic Plan will continue to deliver more jobs in more industries across the state. The effectiveness of the Economic Plan is demonstrated through Queensland’s strong jobs growth: more than 223,000 jobs, including 118,000 full time jobs, have been created since January 2015.

The Palaszczuk Government is committed to delivering more jobs in more industries, in addition to building the infrastructure and providing the services Queenslanders need today and in the future. To support our current economic plan and, importantly, guarantee Queensland’s future economic success, the government will establish the Queensland Future Fund.

The Queensland Future Fund will be seeded with an initial $5 billion investment, $2 billion redirected from the Government’s existing debt retirement plan and a further $3 billion invested from the surplus in the Defined Benefit fund. The Defined Benefit fund will continue to remain in surplus.

The Government’s plan to make Queensland the place to do business is delivering considerable benefits for Queenslanders. For business, we are delivering the $885 million payroll tax relief package announced in the 2019-20 Budget, including a regional payroll tax discount, an increase in the payroll tax threshold, and rebates for employers who take on additional full-time employees.

The Palaszczuk Government continues to deliver better schools and hospitals, new and improved transport networks and build infrastructure which grows the economy. Queensland has led the nation for new industries and new frontiers and that is why we are investing in the North-West Minerals Province, the hydrogen industry and developing new export hubs.

Our Economic Plan is working to create more jobs in more industries. This strong record of economic management allows us to deliver the infrastructure, skills and services that will help us to manage growth and ensure we can all share in the future prosperity of Queensland.

The 2020-21 State Budget, brought forward to 28 April 2020, will outline further measures to support regions and businesses across the state, get more Queenslanders into work and grow the economy.

3

OUR ECONOMIC PLAN - MORE JOBS IN MORE INDUSTRIES

OUR ECONOMIC PLAN - MORE JOBS IN MORE INDUSTRIES

The Queensland Government’s Economic Plan is continuing to deliver growth, jobs and prosperity for Queenslanders.

Since 2015, the Palaszczuk Government’s Economic Plan has been integral in driving economic prosperity, jobs and enhancing living standards across the state, through its focus on:

• increasing the economic opportunities available to Queenslanders

• enhancing the capacity of Queenslanders to access and capitalise on these opportunities

• ensuring all Queenslanders share in the prosperity and improved quality of life these opportunities deliver.

The effectiveness of the Economic Plan is demonstrated by Queensland’s strong jobs growth (up 2.1% or 1,000 jobs per week) over the year to October 2019, with more than 223,000 jobs, including 118,000 full time jobs, delivered since January 2015.

Strong participation in the workforce

New entrants into the workforce are driving higher participation rates, with women playing a bigger part in the labour market.

Under the Palaszczuk Government, female participation in the workforce has grown from 60.1% of the female working-age population in January 2015 to 61.8% in October 2019.

The Palaszczuk Government is working hard to ensure more Queenslanders can enter the workforce, including through our $885 million payroll tax package to encourage employment and through our investment in skills and training in traditional industries and new growth industries alike.

Chart 1: Participation rate, female and male, Queensland

(%, trend)

4  Mid-Year Fiscal and Economic Review 2019-20

OUR ECONOMIC PLAN - MORE JOBS IN MORE INDUSTRIES

Creating more jobs in more industries for Queenslanders, no matter where they live, is a priority of the Palaszczuk Government. We have invested in programs which have seen new business growth in manufacturing and defence, and also in innovation and technology. Our jobs programs, including Back to Work, Skilling Queenslanders for Work and Works for Queensland, are making a real difference across the state.

Our traditional sectors are still driving jobs growth, with our tourism industry supporting 151,000 jobs in Queensland and generating $12.3 billion in economic benefits in 2017-18.

Despite the strength of the state’s economy and labour market, it is critical that we maintain a strong, resilient and adaptable economy and workforce so that we can continue to respond to global factors and technological change.

The Government’s focus on driving economic growth is the right plan for the future of Queensland. We will continue to support more jobs in more industries in partnership with the private sector. That’s why we are working with the private sector to deliver two new export hubs to support new industry growth and increase exports.

Our plan to create more jobs in more industries is delivering for Queensland, with the latest ABS data showing that Queensland has over 5,000 people employed in the renewable energy industry, the highest among all states and territories. A recent report from the Climate Council highlight that projects currently under construction or about to begin will take total job creation in renewables to almost 10,000. This increase in jobs is driven by the Palaszczuk Government’s target of 50% renewable energy by 2030.

We have continued our commitment to renewable energy with the establishment of CleanCo, Queensland’s third publicly-owned power generator which is providing affordable, reliable and renewable electricity for households, business and industry. CleanCo will build, own, operate and maintain a portfolio of clean energy assets for the benefit of all Queenslanders.

In line with the Economic Plan, the Government will continue to maintain a strong focus on driving job creation across the entire state, particularly in the regions. The Plan is working, with substantial falls in the unemployment rate in several key regions over the past year, including Cairns, Townsville, Darling Downs - Maranoa and the Outback. Further, the gap between the regional and SEQ unemployment rates has narrowed considerably, from a recent peak of 2.5 percentage points in mid-2016 to 0.5 percentage points in October 2019.

5

ECONOMIC OVERVIEW

ECONOMIC OVERVIEW

International and national economic conditions have weakened substantially since the 2019-20 State Budget, with Australian gross domestic product (GDP) growth slowing to its lowest rate since the Global Financial Crisis.

Reflecting this more challenging external economic environment, the near-term outlook for the state’s economy has also softened since the Budget, reflecting weaker private demand and export growth.

Queensland’s economic growth is expected to be 2¹⁄₂% in 2019-20, down from the 3% growth forecast at Budget but still stronger than the 2¹⁄₄% national growth forecast by the RBA. Looking further ahead, economic forecasts for 2020-21 are largely unchanged since the Budget.

Key developments since the 2019-20 Budget

Since delivery of the 2019-20 Budget global and national economic conditions have continued to deteriorate, with several risks identified at Budget intensifying throughout the second half of 2019. Key developments include:    

• The intensification of the US-China trade war has continued to adversely affect the Chinese economy and the outlook for its key Asian trading partners, along with Australia.    

• A weaker outlook for industrial production growth has continued to impact the outlook for Queensland export growth.

• Trade flows of Queensland’s major trading partners have declined, reflecting the deterioration in external conditions since the Budget was handed down.

• Reflecting the weaker national economy, the Reserve Bank of Australia (RBA) has reduced the cash rate three times since June 2019 to an all-time low of 0.75%.

• Continuing drought conditions are having a negative impact on agricultural exports and the conditions are seeing crop production forecasts remain lower than annual averages over the last decade.    

• The International Monetary Fund (IMF) has downgraded international and national growth forecasts, and is forecasting annual economic growth of around 1.7% in 2019 for Australia, only slightly above annual population growth.    

• Construction activity in Queensland continues to be supported by ongoing growth in domestic dwelling renovation activity.

• Global prices for coal and minerals have declined even though demand for Queensland’s commodities has remained relatively stable since the delivery of the 2019-20 Budget.

• The Australian dollar has weakened against the US dollar.

6  Mid-Year Fiscal and Economic Review 2019-20

ECONOMIC OVERVIEW

Table 1: Queensland economic forecasts¹

	2018-19		2019-20				2020-21
	Outcome		Budget		MYFER		Budget		MYFER
Gross state product2		2.5		3		21⁄2		23⁄4		23⁄4
Employment3		1.5		11⁄4		11⁄2		11⁄2		11⁄2
Unemployment rate4		6.1		6		61⁄4		6		6
Inflation3		1.6		2		2		21⁄4		2
Wage Price Index3		2.3		21⁄4		21⁄4		21⁄2		21⁄2
Population5		1.8		13⁄4		13⁄4		13⁄4		13⁄4

Notes:

1. Unless otherwise stated, all figures are annual percentage changes.

2. Chain volume measure, 2016-17 reference year

3. Annual percentage change, year-average.

4. Per cent, year-average

5. Population growth for 2018-19 is the annual growth rate in the three quarters to March quarter 2019.

Sources: ABS 3101.0, 6202.0, 6345.0, 6401.0 and Queensland Treasury.

External conditions

International

Protracted trade tensions have prompted a slowdown in the global economy, and Queensland and Australia are not immune from these global trends. Governments across the world have adopted more accommodative macroeconomic policies to buffer their economies against global headwinds and ongoing uncertainty.

In October 2019, the International Monetary Fund (IMF) World Economic Outlook noted that the pace of global economic activity remains subdued, after slowing sharply in the last three quarters of 2018. The IMF also acknowledged that a notable shift towards expansionary monetary policy has cushioned the impact of these tensions on financial market sentiment and activity, while a generally resilient service sector has supported employment growth. Nevertheless, the outlook remains precarious with global growth forecast to slow to 3.0% in 2019.

The subdued global outlook owes to a deterioration in international manufacturing activity and industrial production. The slowdown in industrial production growth over the year is expected to be the sharpest in several of Queensland’s major trading partners, with industrial production forecast to contract in Japan, South Korea and Taiwan. Weaker industrial production has impacted on demand for and prices of Queensland’s resource exports.

7

ECONOMIC OVERVIEW

Chart 2: Industrial production forecast for 2019, by iteration

Source: Consensus Economics.

Increased tariffs and the slowdown in manufacturing activity have been reflected in weaker global trade. Trade flows have decreased in China, Japan and South Korea. Meanwhile, in the EU area, ongoing Brexit uncertainty and trade disputes with the US have further impacted sentiment, reflected in weaker growth and a softer outlook for investment and trade in the region.    

Central banks around the globe have responded to these developments. China’s central bank introduced measures to reduce the bank reserve requirement and directed banks to relax lending requirements. Despite these measures, China’s industrial production growth has continued to moderate and China’s stock market has continued a downward trend. China’s growth has moderated to 6.0% over the year to September quarter 2019, after growing 6.6% in 2018 and 6.8% in 2017.    

The US economic conditions remain mixed. While the unemployment rate of 3.5% is the equal lowest since 1969, jobs growth has slowed and wages growth has declined to 3.1% in November. The Federal Reserve has cut rates three times since July 2019 with the current target range for the federal funds rate at 1.50% to 1.75%. The US economy is facing the combined challenge of low rates, low growth and low inflation.    

Importantly, the global slowdown has impacted on industrial commodity prices, with the prices of most industrial metals having declined over the year, except for some affected by specific supply issues. In particular, prices for both thermal and metallurgical coal have fallen substantially, while oil prices have been volatile due to a combination of supply factors and geopolitical uncertainties.

The global economy continues to remain soft and headwinds are forecast to continue presenting ongoing challenges for the national and local economies.    

National economy

Since the Budget, Australian GDP growth has slowed to its lowest rate since the Global Financial Crisis.

The domestic economic slowdown has impacted on the budgets of all states and territories. The Australian dollar remains at around decade lows against the US dollar, providing some support to goods and services exports in otherwise challenging global trading conditions.    

8  Mid-Year Fiscal and Economic Review 2019-20

ECONOMIC OVERVIEW

Interest rates are at record lows. The RBA has reduced the cash rate by 75 basis points since June 2019 to its current level of 0.75%. Over the past year, the RBA has also revised down its forecast for 2019-20 GDP growth by one percentage point, to 2¹⁄₄%. The RBA has also noted that further reductions in interest rates may not be sufficient to stimulate economic growth, with RBA Governor Philip Lowe recently noting that, in a world of below-average economic growth, employment and inflation, that he “would hope other policy options were also on the country’s agenda.”

Ongoing weakness in retail trade outcomes suggest tax and interest rate cuts since Budget are yet to have a meaningful impact on consumer spending. Further, private investment has also been weaker than anticipated at Budget.    

Residential property prices have stabilised, following falls over the year to June 2019, underpinned by robust population growth and lower interest rates. Nationally, new housing approvals are around 40% lower than their late-2017 highs. Consequently, housing construction across the country is forecast to remain subdued for the next 18 to 24 months.

A sustained lower Australian dollar and rising incomes in the Asian middle class are providing some support for Australia’s services exports, particularly through ongoing strength in tourism activity and overseas student enrolments. However, the benefits of the low Australian dollar have not fully offset the challenges created by the weakness in global trade and economic activity.

Queensland conditions

Economic growth in Queensland is now expected to be 2¹⁄₂% in 2019-20, slightly softer than the 3% growth forecast at the time of the 2019-20 Budget. Revisions to the economic growth rate in Queensland are in line with the size of downward revisions to Australia’s economic growth rate over the course of 2019.

Looking ahead, GSP growth is forecast to pick up to 2³⁄₄% in 2020-21 as domestic components of the economy gather some momentum, particularly with dwelling investment expected to recover after declining for three consecutive years.    

Household consumption

Household consumption growth is expected to be slightly lower than anticipated at the time of the Budget, although the most recent national accounts data show that household consumption in Queensland over the past year grew faster than in any other state or territory.

Nevertheless, the level of household spending remains subdued as a result of lower household income growth and softer consumer sentiment. There is little evidence to suggest that record-low interest rates and federal income tax cuts have increased household consumption.    

Dwelling investment

Continued caution by households has also resulted in the outlook for dwelling investment in 2019-20 being softer than at Budget. However, with apartment approvals appearing to have bottomed out, dwelling investment is expected to return to growth in 2020-21. Renovation activity is expected to continue to grow solidly, with households preferring to invest in their current homes in an uncertain environment.

Softer dwelling investment is also expected to weigh on related consumer spending on household goods and furnishings, contributing to the subdued outlook for consumption growth.

9

ECONOMIC OVERVIEW

Business investment

The outlook for business investment remains broadly in line with the modest growth anticipated at Budget, notwithstanding global trade tensions, uncertainty and ongoing drought.

Leading indicators of investment point to a strengthening of commercial construction. Machinery and equipment investment is also expected to continue its recent growth, supported by lower interest rates and capacity utilisation remaining at around its long-term average.

Chart 3: Queensland Business Investment¹

Note:

1. Chain volume measure, 2016-17 reference year, 2019-20 and 2020-21 are forecasts.

Source: Queensland Treasury.

Public final demand

Public final demand increased by 4.4% in 2018-19 and is forecast to continue to grow solidly in 2019-20 and 2020-21. The ongoing roll-out of the Queensland Government’s capital works program, including a record spend on education facilities and investments in ports and export infrastructure, is expected to underpin ongoing solid growth in public final demand.

Overseas exports

As expected at the time of the Budget, the contribution of the trade sector remains broadly flat across 2019-20 and 2020-2021. Continued trade tensions and the adverse impacts of the current drought are providing ongoing challenges to the outlook for exports, and these are only partially offset by weaker growth in overseas imports. Conversely, a substantially lower Australian dollar is providing some support to exporters.

10  Mid-Year Fiscal and Economic Review 2019-20

ECONOMIC OVERVIEW

Coal

Demand for metallurgical coal has remained buoyant. However, spot prices have declined by around $75 USD per tonne from $221 USD per tonne at the end of 2018 to around $140 USD per tonne in November 2019.

Queensland coal exports are forecast to grow modestly over the forward estimates period, but it is unlikely that prices will return to recent highs in the near term.

Trade pressures and subdued global growth have impacted global demand with spot thermal coal prices down by around 10% since Budget. Over the year to November 2019 spot thermal coal prices have fallen from over $100 USD to around $65 USD per tonne.

LNG

LNG export volumes have grown modestly, with higher export values driven primarily by higher prices combined with the lower Australian dollar.    

Queensland LNG exports outstripped thermal coal exports in value over the last year, a trend that is set to continue as LNG continues to be the fastest-growing gas supply source globally.

Metals

The expected volume of base metal exports is largely unchanged from Budget. Queensland metal exports rose 11.8% in 2018-19, driven by zinc and lead exports as new mines commenced and Glencore operations restarted. Looking ahead, exports are forecast to grow further in 2019-20, mainly reflecting a strong increase in aluminium production due to the ramp up at Rio Tinto’s Amrun mine.

Agricultural

The outlook for agriculture exports has weakened since the Budget. With below-average rainfall likely to persist in the short term, crop exports are expected to decline until 2020-21. Meanwhile, the recent reduction in the cattle herd as a result of the drought and the north Queensland floods will likely see graziers undertaking restocking when conditions improve, which may constrain beef production and exports for some time.

Services

Queensland exports of services remain strong, underpinned by overseas tourism and education exports. Total overseas services exports exceeded $19 billion in 2018-19. Queensland tourism and education export revenue will continue to be supported by rising incomes in Asia as well as a competitive Australian dollar. However, there is volatility in many Asian markets which may impact demand in the short and medium term. The outlook for this sector remains largely unchanged since the time of the Budget, however it is not immune from a downturn should the weakness in the global economy intensify.

Offsetting some of the challenges faced by key export sectors, forecast growth in overseas imports is lower than at Budget, primarily reflecting more subdued consumption growth. As a result, this has helped mitigate the detraction of the trade sector from overall GSP growth.    

11

ECONOMIC OVERVIEW

Labour market

Despite softer economic growth in 2019-20, employment has grown strongly in the first four months of the financial year, with jobs growth now forecast to reach 1¹⁄₂% in 2019-20, stronger than the 1¹⁄₄% forecast at the time of the Budget.

An increase in labour force participation to 66.1% of the working age population has accompanied the increase in employment growth, as more Queenslanders have been encouraged to enter or re-enter the labour force. As a result, the state’s unemployment rate is forecast to average 6¹⁄₄% in 2019-20 before easing to 6% in 2020-21, in line with the Budget forecast.

Labour market conditions in regional Queensland have continued to converge with those in South East Queensland, with the gap between the regional and South East Queensland unemployment rates narrowing considerably, from 2.5 percentage points in mid-2016 to just 0.5 percentage points in October 2019.

Over the year to October 2019, key areas of regional Queensland have continued to record unemployment rates lower than in the south east corner, including Darling Downs-Maranoa (4.4%), Cairns (4.8%) and Mackay-Isaac-Whitsunday (5.6%). Further, strong domestic tourism conditions have continued to support positive labour market conditions in Queensland’s key tourism regions of Cairns, Gold Coast, Sunshine Coast and Brisbane.

Any upward pressure on wages is expected to be limited over the medium term, as outlined in the 2019-20 Budget. However, the ongoing modest consumer price inflation outlook means that wages are still expected to continue to grow in real terms over the forecast period.

Chart 4: Employment growth and unemployment rate, Queensland¹

Note:

1. Year-average. 2019-20 and 2020-21 are forecasts.    

Sources: ABS 6202.0 and Queensland Treasury.

12  Mid-Year Fiscal and Economic Review 2019-20

ECONOMIC OVERVIEW

Risks to the outlook

Several external risks identified in the 2019-20 Budget remain current and global trade friction continues to negatively impact Queensland’s major trading partners. This heightened uncertainty, including ongoing volatility in global and domestic share markets, may continue to dent business and consumer confidence.

Since the Budget, the US-China trade war has continued, with slowing growth in China increasing the risk that demand for key industrial commodities will be impaired.

The drought continues to impact the agriculture sector and the path to recovery in this sector remains uncertain despite global demand for Queensland’s quality agricultural produce. Record low rainfall and above-average temperatures in some parts of the state continue to impact output across the agriculture sector.    

On the upside, solid population growth, record low interest rates and the sustained low Australian dollar should help mitigate some of the impacts of key risks to the state’s economy. Further, despite the global challenges, Queensland businesses continue to invest across the state, including in both mining related and renewable energy projects. The Government will continue to provide an environment that encourages and facilitates investment in all sectors of the economy.

13

FISCAL OVERVIEW

FISCAL OVERVIEW

The key fiscal aggregates of the General Government Sector are outlined in Table 3.

Table 3: General Government Sector – key fiscal aggregates¹

	2018-19			2019-20			2019-20			2020-21			2021-22			2022-23
	Actual2			Budget			MYFER			Projection			Projection			Projection
	$ million			$ million			$ million			$ million			$ million			$ million
Revenue		59,834			60,387			59,914			61,715			63,366			65,194
Expenses		58,842			60,198			59,763			61,482			62,771			64,051
Net operating balance		992			189			151			234			595			1,142
PNFA3		5,764			6,727			7,223			7,476			8,383			6,612
Fiscal balance		(2,191	)		(3,527	)		(4,068	)		(4,633	)		(4,597	)		(1,815	)
Borrowing with QTC4		29,468			32,781			31,774			34,772			40,092			43,111
Leases and similar arrangements5		2,612			5,824			6,071			7,845			7,715			7,738
Securities and derivatives		121			122			121			121			121			121
Non-financial Public Sector
Borrowing with QTC4		67,576			71,954			70,832			75,055			80,688			83,294
Leases and similar arrangements5		2,612			6,217			6,481			8,220			8,054			8,040
Securities and derivatives		720			544			544			478			458			460

Notes:

1. Numbers may not add due to rounding. Bracketed numbers represent negative amounts.

2. Reflects published actuals.

3. PNFA: Purchases of non-financial assets.

4. Queensland Treasury Corporation.

5. This includes adoption of new accounting standard AASB 16 Leases.

14  Mid-Year Fiscal and Economic Review 2019-20

FISCAL OVERVIEW

Net Operating Balance

The General Government sector net operating surplus is $151 million in 2019-20. As shown in Table 3, this is a reduction of $38 million on the 2019-20 Budget estimated forecast surplus of $189 million.

This position has prevailed in the face of a decline of $677 million reduction in royalties and additional declines in the GST pool of $202 million.

The Better Budget and Better Services program being implemented by the Service Priority Review Office has delivered reductions in expenses of $1.365 billion over the forward estimates, which has buffered the State Budget against the shocks being felt in the national and local economy.

The reduction in forecast GST revenue and transfer duties identified in the 2019-20 Budget is expected to continue to negatively impact the net operating balance across the forward estimate period. The GST reduction reflects an ongoing downward revision to Queensland’s share of the national GST revenue pool by the Commonwealth Grants Commission.

Chart 5: Net operating balance 2019-20 to 2022-23

15

FISCAL OVERVIEW

Table 4 provides a breakdown of the movements in the net operating balance since the 2019-20 Budget.

Table 4: Reconciliation of net operating balance, 2019-20 Budget to 2019-20 MYFER¹

	2019-20			2020-21			2021-22			2022-23
	MYFER			Projection			Projection			Projection
	$ million			$ million			$ million			$ million
2019-20 Budget Net operating balance		189			313			483			787
Royalty revisions		(677	)		(222	)		(108	)		(128	)
Taxation revisions		(18	)		(43	)		(46	)		(50	)
Change to net flows from PNFC and PFC entities		(49	)		(197	)		(172	)		(155	)
GST revisions		(202	)		(212	)		(190	)		(220	)
Other adjustments2		908			595			628			908
2019-20 MYFER Net operating balance		151			234			595			1,142

Notes:

1. Numbers may not add due to rounding.

2. Includes changes in interest expenses, SPRO savings, depreciation, growth funding, swaps, deferrals and administered revenue, NDRRA net impacts, Australian Government funding revisions, additional policy measures.

Revenue

General Government revenue in 2019-20 is estimated to be $59.914 billion, $473 million (0.8%) less than the 2019-20 Budget estimate. Revenue forecasts over the forward estimates have been revised downwards by $14 million in 2020-21, $217 million in 2021-22 and $347 million in 2022-23. This is due to a sharper than anticipated decline in coal prices in this financial year to the forecast price over the forward estimate period, along with downward revisions to GST revenue, tax collections and dividends.    

Over the period 2019-20 to 2022-23, royalties have been revised down by $1.135 billion, with revisions from 2020-21 onwards driven by lower coal prices and downward revisions to other mineral and petroleum royalties.    

Land tax revenue has been revised down by $291 million over the period 2019-20 to 2022-23, following consultation with industry regarding implementation of the Foreign Surcharge. The Queensland Government is committed to maintaining competitive taxation settings, and will establish guidelines, in consultation with stakeholders, that provide relief for commercial activities that make a significant contribution to the state economy. This will ensure Queensland continues to be an attractive destination for investment.

Compared to the 2019-20 Budget outlook, GST revenue is expected to be the lower by $824 million across the period 2019-20 to 2022-23. Compared to the 2018-19 Budget, GST revenue is expected to be $2.5 billion less than projected over the period to 2022-23. The GST revision reflects reductions in the expected size of the GST pool and changes in state circumstances, such as the downward revisions to Victoria and NSW transfer duty estimates.    

Total revenues are expected to grow at an average of 2.2% over the four years to 2022-23, consistent with the 2019-20 Budget.

16  Mid-Year Fiscal and Economic Review 2019-20

FISCAL OVERVIEW

Expenses

General Government expenses in 2019-20 are estimated to be $59.763 billion, lower than in the 2019-20 Budget. The reduction is a result of the savings identified by the Service Priority Review Office better budget and better services savings, reduced interest expenses on borrowing with QTC as a result of lower interest rates and lower borrowings, partly offset by updated estimates of payments to the National Disability Insurance Agency reflecting the terms of the agreement recently reached with the Australian Government regarding transition to the National Disability Insurance Scheme.    

Expenses over the next four years are expected to be lower than at the 2019-20 Budget and to decline in real per capita terms.    

General Government expenses are estimated to grow at an average annual rate of 2.1% over the four years to 2022-23, compared with the 2.3% forecast in the 2019-20 Budget. Decreases in expenses over the four years reflect the Government’s commitment to delivering services to the public in the most efficient and effective manner to ensure all Queenslanders are getting value for money.    

The Government’s ongoing commitment to putting downward pressure on electricity prices will continue to contribute to the net flows from Government Owned Corporations, including a $49 million reduction in 2019-20.

Better budgets and better services

At the 2019-20 Budget, the government established a Service Priority Review Office (SPRO) in Queensland Treasury. Treasury is working in partnership with the Department of the Premier and Cabinet to drive the better budget outcomes to ensure Queenslanders continue to receive the best possible services and infrastructure.

The savings have offset revenue declines by reducing operating expenses resulting in savings of $715 million in 2019-20 by:

• Improving practices around the administration of Commonwealth taxes paid by state government entities

• Improving efficiency of cash management, leading to reduced borrowing costs

• Improving value for money across procurement by spending less on consultancies.

To date we have realised savings of $1.365 billion over the forward estimate period. These savings have been achieved without compromising frontline service delivery.

The program of work will continue to be implemented and savings will be used to offset any future deterioration in revenues or be returned to the budget to reduce borrowing requirements.

Better budgeting has also led to a reduction in interest expenses delivering $140 million in savings to the budget.

17

FISCAL OVERVIEW

Emerging Fiscal Pressures

At any given time, issues with potentially significant fiscal impacts will exist. However, until they have been considered by Government and have formal agreements in place, uncertainty remains as to when these issues will impact the net operating balance. As a result, the below emerging fiscal pressures have not been included in the current fiscal estimates.

Health Funding - National Health Reform Agreement

Currently, the Australian Government is negotiating with State and Territory Governments on an Addendum to the National Health Reform Agreement, to take effect from 1 July 2020 to 30 June 2025. A number of issues remain unresolved, which risks undermining the integrity of the national funding model and the ability of jurisdictions to plan and manage health services. The Queensland Government is committed to working with all jurisdictions and the Australian Government to secure an agreement that restores confidence and predictability to national health funding and ensures the effectiveness and sustainability of the public hospital system.

Native Title Compensation Settlement

The Government has a potentially significant liability with respect to compensation arising from acts that have extinguished or impaired native title since 1975. The High Court decision in relation to Griffiths v Northern Territory of Australia (known as the Timber Creek case) that was handed down on 13 March 2019 provide some guidance for calculating native title compensation. At 31 October 2019, there were 141 native title determinations over approximately 30% of Queensland’s total land area and a further 55 active claims for native title determination over a further 30% of the state. Any of the determinations may give rise to a native title compensation claim.

January 2011 flood events

In 2014, certain property owners commenced a class action making claims against the state, Seqwater and SunWater in respect of the January 2011 flood. On 29 November 2019, the Court found one plaintiff’s claim in negligence established against all parties and addressed a series of questions that apply to members of the class but are not determinative of the outcome of their claims. The state is considering its legal options. Whilst the state and its entities do have their own insurance arrangements, at this stage, the state is not in a position to reliably estimate the financial implications of the judgement for the state and its entities.

18  Mid-Year Fiscal and Economic Review 2019-20

BALANCE SHEET

BALANCE SHEET

The Palaszczuk Government remains focused on delivering the services and infrastructure to meet the needs of a modern Queensland and its diverse communities. To achieve this, the Government continues to deliver on its revised $51.8 billion capital program over four years to 2022-23.

The Government maintains its commitment to strong fiscal management while keeping income-generating assets in public hands and managing borrowings at sustainable levels. The cost of borrowings is at decade lows which has meant that borrowings from QTC in this financial year are $1.007 billion lower than forecast.

The Queensland Future Fund – Planning for our future

The Palaszczuk Government is committed to delivering more jobs in more industries, in addition to building the infrastructure and providing the services Queenslanders need today and in the future. To support our current economic plan and, importantly, guarantee Queensland’s future economic success, the government will establish the Queensland Future Fund.

The Queensland Future Fund will be seeded with an initial $5 billion investment, $2 billion redirected from the Government’s existing debt retirement plan and a further $3 billion invested from the surplus in the Defined Benefit fund. The Defined Benefit fund will continue to remain in surplus.

The interest and investment returns from the Future Fund will be quarantined and returned to the fund meaning it will grow over time to offset any borrowings. Withdrawals from the fund will only be used for paying down debt.

The Queensland Future Fund will be managed by our internationally renowned investment arm, Queensland Investment Corporation (QIC), who have been returning significant earnings back to the Queensland taxpayer for decades through the sound investment management of our fully funded Defined Benefits scheme.

The Fund, similar to the NSW Generations Fund, will be established under an Act of the Queensland Parliament, and will require that funds can only be used to pay down debt. These laws will also provide a new 100% guarantee of the state’s future Defined Benefit liabilities, to provide strengthened protection in addition to other legislation already in place.

The Palaszczuk Government is delivering the jobs, infrastructure and services we need today but also ensuring we manage today’s budget with an eye to the future and the generations of Queenslanders who will follow.

The establishment of the Queensland Future Fund will ensure our generation have put in place a long-term sustainable plan – guaranteed by law – to alleviate the debt burden on future generations of Queenslanders.

19

BALANCE SHEET

General Government sector

General Government Sector borrowings remain in line with forecasts made in the 2019-20 Budget. The Defined Benefit scheme remains in a sustainable surplus funding position as advised by the State Actuary.

The delivery of savings from activities within the Service Priority Review Office has assisted with providing a buffer from some of the impacts from the volatile external economic environment.

Queensland’s growing population continues to increase the demand for public services and infrastructure. The Government’s commitment to fiscally responsible capital investment will ensure that high-quality infrastructure continues to be delivered to Queenslanders, regardless of where they live. Forecast operating surpluses mean that the Government is not borrowing to fund ongoing operations, including the operating expenditure of health and education.

Non-Financial Public Sector

The Non-Financial Public Sector (NFPS) is the consolidation of the General Government and the Public Non-Financial Corporations Sectors, with transactions between these sectors eliminated.

NFPS borrowings are primarily held by Government Owned Corporations and are supported by income-generating assets including key pieces of economic infrastructure maintained in public ownership.

NFPS borrowings in 2019-20 are expected to be $1.122 billion lower than anticipated in the 2019-20 Budget, notwithstanding the additional commitment to the capital program.

A new accounting standard, AASB 16 Leases, applies to public and private sectors in Australia from 1 July 2019. The new standard has impacted the accounting presentation of corporate and government accounts across Australia from July 2019. Previously, only finance leases were accounted for on balance sheet. Under the new standard, operating leases are also classified as borrowings for GFS purposes.

Capital Program

The total capital program over the four years to 2022-23 is estimated to be $51.844 billion. This is the largest capital spend since the 2010-11 Budget. Large projects include Cross River Rail, upgrades to the Bruce Highway, commitment to the Gold Coast Light Rail Stage 3, regional roads such as the Smithfield Bypass and regional capacity in ports, the delivery of the Townsville Stadium, new high schools in Brisbane and additional investment in education facilities across the state.

General Government sector

The General Government capital program in 2019-20 is estimated to be $10.211 billion, $756 million higher than estimated in the 2019-20 Budget. This is largely due to cash flows in 2019-20 for work completed in the prior year and an increase in capital grants. Over the four years to 2022-23, the capital program comprises $29.695 billion in purchases of non-financial assets, $5.252 billion in capital grants and $4.662 billion in finance leases representing a total capital program of $39.608 billion, $2.55 billion higher that estimated in the 2019-20 Budget.

Non-Financial Public Sector

Purchases of non-financial assets in the Non-Financial Public Sector are estimated to be $10.727 billion in 2019-20, $504 million higher than projected at the time of the 2019-20 Budget. Over the four years to 2022-23, purchases of non-financial assets are expected to be $41.959 billion, with capital grants and finance leases expected to be $5.212 billion and $4.674 billion respectively, bring the total capital program to $51.844 billion.

20  Mid-Year Fiscal and Economic Review 2019-20

INTERGOVERNMENTAL FINANCIAL RELATIONS

INTERGOVERNMENTAL FINANCIAL RELATIONS

Payments for specific purposes

Payments from the Australian Government contribute to Queensland’s ability to meet its current and future service delivery and infrastructure responsibilities. Unfortunately, the Australian Government continues to create uncertainty around these payments by seeking to impose unwarranted conditions, delaying advice on funding extensions or unilaterally changing the basis of payments, all which impacts Queensland’s ability to plan and deliver critical services and infrastructure.

In recent years, funding agreements from the Australian Government have become increasingly prescriptive, with additional conditions—sometimes enshrined in Commonwealth legislation—attached to the receipt of funding. These arrangements reduce states’ flexibility in the delivery of services and create inefficiencies and complexities in the way funding arrangements are being given effect.

The Australian Government recently agreed to fast-track spending on a host of road and rail projects across Queensland as most of the road and rail infrastructure spending announced in the federal budget was funded beyond the forward estimates. Queensland would welcome the Australian Government increasing its commitment to jointly funding the maintenance of existing assets, given the role they can continue to play in supporting Queenslanders for many decades to come.

General revenue assistance

The Commonwealth Grants Commission, responsible for recommending GST distribution to the Australian Government, is finalising a major review of its method, including all state revenue capacity and expenditure needs. The review report is due in early 2020. Any recommendations will impact Queensland’s GST share from 2020-21 and will be implemented concurrently with the Australian Government’s legislated changes to GST, introduced in November 2018. The Queensland Government supports a transparent and independent review process and is an active participant in the process.

21

GOVERNMENT FISCAL PRINCIPLES

GOVERNMENT FISCAL PRINCIPLES

The Government remains committed to its fiscal principles, which underpin the development of the state’s fiscal strategy and financial decision-making.

Table 5: The fiscal principles of the Queensland Government

Principle	Indicator
	General Government debt to revenue ratio
		2019-20 Budget				2019-20 MYFER
		%				%
		Excludes AASB16 Impacts		Includes AASB16 Impacts
Target ongoing reductions in Queensland’s relative debt burden, as measured by the General Government debt to revenue ratio Note: The debt to revenue ratio includes borrowings from QTC; leases and similar arrangements and securities and derivatives. Budget Paper 2 2019-20 was reported including and excluding the impact of AASB16 Leases. Going forward, the debt to revenue ratio will include AASB16 impacts.	2018–19		54		54		54
	2019–20		61		64		63
	2020–21		65		69		69
	2021–22		71		74		76
	2022–23		73		76		78
	General Government net operating cashflows as a proportion of purchases of net investments in non-financial assets
		2019-20 Budget				2019-20 MYFER
		%				%
Target net operating surpluses that ensure any new capital investment in the General Government sector is funded primarily through recurrent revenues rather than borrowing	2018–19		79				106
	2019–20		60				56
	2020–21		64				56
	2021–22		55				49
	2022–23		70				64
	Non-financial Public Sector purchases of non-financial assets
		2019-20 Budget				2019-20 MYFER
		($ million)				($ million)
The capital program will be managed to ensure a consistent flow of works to support jobs and the economy and reduce the risk of backlogs emerging	2018–19		8,856				8,460
	2019–20		10,223				10,727
	2020–21		10,447				10,834
	2021–22		11,210				11,401
	2022–23		8,640				8,997
	General Government own-source revenue to GSP
Maintain competitive taxation by ensuring that General Government sector own-source revenue remains at or below 8.5% as a proportion of nominal gross state product, on average, across the forward estimates	2019-20 Budget:						8.5	%
	2019-20 MYFER:						8.5	%
	Average across the forward estimates:						8.2	%
Target full funding of long-term liabilities such as superannuation and WorkCover in accordance with actuarial advice	As at the last actuarial review (as at 30 June 2018), accruing superannuation liabilities were fully funded. The WorkCover scheme was also fully funded as at 30 June 2019.
Maintain a sustainable public service by ensuring that overall growth in full-time equivalent (FTE) employees, on average over the forward estimates, does not exceed population growth	FTE growth
	Average across the forward estimates:						1.7	%
	Population growth
	Average across the forward estimates:						13⁄4	%

22  Mid-Year Fiscal and Economic Review 2019-20

GOVERNMENT FISCAL PRINCIPLES

Principle 1 – Target ongoing reductions in Queensland’s relative debt burden, as measured by the General Government debt to revenue ratio

A primary fiscal focus for the Government is managing the debt of the General Government sector and servicing this debt from within the General Government sector through tax revenue, charges and royalties. Targeting ongoing reductions in the debt to revenue ratio enables the Government to improve the state’s fiscal sustainability.

The General Government sector’s debt to revenue ratio has fallen substantially from a peak of 91% in 2012-13 to 63% in the 2019-20 MYFER, which is slightly lower than forecast at the 2019-20 Budget.

As outlined in the 2019-20 Budget Paper 2, AASB 16 Leases, applies to all government and private sector reporting entities. This means operating leases that previously were not recognised on the balance sheet are included as lease liabilities and lease assets. There is no material change to the state’s underlying financial sustainability.

Principle 2 – Target net operating surpluses that ensure any new capital investment in the General Government sector is funded primarily through recurrent revenues rather than borrowing

The actual outcome in 2018-19 demonstrates that new capital investment was funded from recurrent revenues in that year. Across the forward estimates, more than half of the General Government sector’s capital investment is expected to be funded from net operating cashflows.

Principle 3 – The capital program will be managed to ensure a consistent flow of works to support jobs and the economy and reduce the risk of backlogs emerging

The 2019-20 MYFER sees Non-Financial Public Sector purchases of non-financial assets (capital purchases) increase from $8.46 billion in 2018-19 to $10.727 billion in 2019-20. Capital purchases over the next three years (2020-21 to 2022-23) average $10.5 billion per annum.

Principle 4 – Maintain competitive taxation by ensuring that General Government sector own–source revenue remains at or below 8.5% as a proportion of nominal gross state product, on average, across the forward estimates

General Government own-source revenue is forecast to be 8.5% of nominal gross state product (GSP) in 2019-20 and an average of 8.2% across the forward estimates. This ensures the Government’s revenue efforts do not constrain economic activity or place undue burden on households. Tax revenue will remain below the ten-year peak of 4.3% of GSP observed in 2014-15.

Principle 5 – Target full funding of long-term liabilities such as superannuation and WorkCover in accordance with actuarial advice

Consistent with the long-standing practice of successive governments, the Palaszczuk Government is committed to ensuring the state sets aside assets, on an actuarially determined basis, to meet long term liabilities such as superannuation and WorkCover.

The latest full actuarial review of the QSuper scheme, as at 30 June 2018 found the scheme to be fully funded. WorkCover is also fully funded as at 30 June 2019.

Principle 6 – Maintain a sustainable public service by ensuring that overall growth in full-time equivalent (FTE) employees, on average over the forward estimates, does not exceed population growth

Across the forward estimates, average growth in full-time equivalent employees is 1.7%, in line with expected population growth.

23

UNIFORM PRESENTATION FRAMEWORK

UNIFORM PRESENTATION FRAMEWORK

Table 6: General Government Sector Operating Statement¹

	2018-19			2019-20			2019-20			2020-21			2021-22			2022-23
	Actual			Budget			MYFER			Projection			Projection			Projection
	$ million			$ million			$ million			$ million			$ million			$ million
Revenue from Transactions
Taxation revenue		14,165			15,164			15,145			15,735			16,555			17,474
Grants revenue		28,307			28,003			28,261			30,241			30,797			31,413
Sales of goods and services		5,789			6,004			6,107			6,290			6,355			6,427
Interest income		2,191			2,141			2,047			1,986			1,929			1,933
Dividend and income tax equivalent income		2,786			2,237			2,187			1,446			1,483			1,673
Other revenue		6,596			6,837			6,167			6,018			6,247			6,274
Total Revenue from Transactions		59,834			60,387			59,914			61,715			63,366			65,194
Less     Expenses from Transactions
Employee expenses		24,019			25,396			25,511			25,788			26,774			27,804
Superannuation expenses
Superannuation interest cost		642			516			346			273			329			375
Other superannuation expenses		3,012			3,093			3,097			3,167			3,217			3,254
Other operating expenses		16,490			15,790			15,176			15,816			16,255			16,453
Depreciation and amortisation		3,451			3,961			3,951			4,088			4,223			4,325
Other interest expenses		1,581			1,688			1,544			1,637			1,687			1,705
Grants expenses		9,647			9,754			10,139			10,712			10,287			10,134
Total Expenses from Transactions		58,842			60,198			59,763			61,482			62,771			64,051
Equals Net Operating Balance		992			189			151			234			595			1,142
Plus     Other economic flows - included in operating result		(819	)		16			(275	)		31			160			260
Equals Operating Result		173			204			(124	)		265			755			1,402
Plus     Other economic flows - other movements in equity		5,624			2,495			424			3,084			3,078			3,406
Equals Comprehensive Result - Total Change In Net Worth		5,796			2,699			300			3,349			3,833			4,808
KEY FISCAL AGGREGATES
Net Operating Balance		992			189			151			234			595			1,142
Less     Net Acquisition of Non-financial Assets
Purchases of non-financial assets		5,764			6,727			7,223			7,476			8,383			6,612
Less     Sales of non-financial assets		312			305			306			254			259			253
Less     Depreciation		3,451			3,961			3,951			4,088			4,223			4,325
Plus     Change in inventories		61			17			19			32			(3	)		(11	)
Plus     Other movements in non-financial assets		1,121			1,238			1,234			1,701			1,293			935
Equals Total Net Acquisition of Non-financial Assets		3,182			3,716			4,219			4,867			5,192			2,958
Equals Fiscal Balance		(2,191	)		(3,527	)		(4,068	)		(4,633	)		(4,597	)		(1,815	)

Note:

1. Numbers may not add due to rounding and bracketed numbers represent negative amounts.

24  Mid-Year Fiscal and Economic Review 2019–20

UNIFORM PRESENTATION FRAMEWORK

Table 7: Public Non-financial Corporations Sector Operating Statement¹

	2018-19			2019-20			2019-20			2020-21			2021-22			2022-23
	Actual			Budget			MYFER			Projection			Projection			Projection
	$ million			$ million			$ million			$ million			$ million			$ million
Revenue from Transactions
Grants revenue		605			588			589			500			503			487
Sales of goods and services		13,060			11,981			11,940			11,570			11,898			12,489
Interest income		80			55			82			81			85			91
Dividend and income tax equivalent income		13			13			13			13			13			13
Other revenue		497			474			428			345			340			358
Total Revenue from Transactions		14,256			13,111			13,051			12,510			12,838			13,438
Less     Expenses from Transactions
Employee expenses		1,877			2,152			2,146			2,163			2,190			2,231
Superannuation expenses
Superannuation interest cost		(12	)		—			—			—			—			—
Other superannuation expenses		223			216			216			222			226			231
Other operating expenses		5,080			3,998			3,914			3,973			3,959			4,183
Depreciation and amortisation		2,585			2,857			2,830			2,877			2,954			2,960
Other interest expenses		1,860			1,847			1,846			1,828			1,817			1,794
Grants expenses		26			17			17			18			18			19
Other property expenses		948			724			722			504			499			547
Total Expenses from Transactions		12,587			11,811			11,690			11,584			11,663			11,965
Equals Net Operating Balance		1,669			1,300			1,361			926			1,175			1,473
Plus      Other economic flows - included in operating result		179			7			(26	)		(63	)		(123	)		(330	)
Equals Operating Result		1,848			1,307			1,335			863			1,052			1,143
Plus      Other economic flows - other movements in equity		(1,116	)		(823	)		(642	)		(109	)		(439	)		(564	)
Equals Comprehensive Result - Total Change In Net Worth		732			484			693			753			613			579
KEY FISCAL AGGREGATES
Net Operating Balance		1,669			1,300			1,361			926			1,175			1,473
Less      Net Acquisition of Non-financial Assets
Purchases of non-financial assets		2,687			3,496			3,504			3,358			3,018			2,384
Less     Sales of non-financial assets		33			21			22			5			1			5
Less     Depreciation		2,585			2,857			2,830			2,877			2,954			2,960
Plus     Change in inventories		29			(2	)		(2	)		(5	)		0			5
Plus     Other movements in non-financial assets		100			71			75			87			90			96
Equals Total Net Acquisition of Non-financial Assets		198			687			724			558			153			(479	)
Equals Fiscal Balance		1,471			613			637			368			1,022			1,952

Note:

1. Numbers may not add due to rounding and bracketed numbers represent negative amounts.

25

UNIFORM PRESENTATION FRAMEWORK

Table 8: Non-financial Public Sector Operating Statement¹

	2018-19			2019-20			2019-20			2020-21			2021-22			2022-23
	Actual			Budget			MYFER			Projection			Projection			Projection
	$ million			$ million			$ million			$ million			$ million			$ million
Revenue from Transactions
Taxation revenue		13,876			14,867			14,849			15,414			16,209			17,111
Grants revenue		28,338			28,028			28,288			30,271			30,826			31,443
Sales of goods and services		16,684			15,845			15,945			15,593			15,878			16,558
Interest income		2,219			2,160			2,089			2,028			1,970			1,974
Dividend and income tax equivalent income		160			164			164			171			192			211
Other revenue		7,057			7,207			6,489			6,043			6,215			6,369
Total Revenue from Transactions		68,334			68,272			67,823			69,520			71,290			73,665
Less     Expenses from Transactions
Employee expenses		25,786			27,430			27,537			27,829			28,839			29,909
Superannuation expenses
Superannuation interest cost		630			516			346			273			329			375
Other superannuation expenses		3,235			3,309			3,313			3,389			3,443			3,485
Other operating expenses		19,349			17,539			16,877			17,199			17,463			18,012
Depreciation and amortisation		6,036			6,818			6,781			6,965			7,177			7,286
Other interest expenses		3,233			3,330			3,182			3,238			3,248			3,222
Grants expenses		9,098			9,208			9,594			10,257			9,830			9,693
Total Expenses from Transactions		67,367			68,148			67,629			69,149			70,329			71,982
Equals Net Operating Balance		967			124			194			372			962			1,683
Plus     Other economic flows - included in operating result		(742	)		(183	)		(397	)		(162	)		(188	)		(346	)
Equals Operating Result		225			(60	)		(203	)		210			773			1,336
Plus     Other economic flows - other movements in equity		5,570			2,759			503			3,139			3,059			3,472
Equals Comprehensive Result - Total Change In Net Worth		5,795			2,699			300			3,349			3,833			4,808
KEY FISCAL AGGREGATES
Net Operating Balance		967			124			194			372			962			1,683
Less     Net Acquisition of Non-financial Assets
Purchases of non-financial assets		8,460			10,223			10,727			10,834			11,401			8,997
Less     Sales of non-financial assets		345			326			329			259			260			257
Less     Depreciation		6,036			6,818			6,781			6,965			7,177			7,286
Plus     Change in inventories		90			15			16			27			(3	)		(6	)
Plus     Other movements in non-financial assets		1,221			1,309			1,309			1,788			1,383			1,031
Equals Total Net Acquisition of Non-financial Assets		3,390			4,403			4,943			5,425			5,345			2,479
Equals Fiscal Balance		(2,422	)		(4,279	)		(4,749	)		(5,053	)		(4,383	)		(796	)

Note:

1. Numbers may not add due to rounding and bracketed numbers represent negative amounts.

26  Mid-Year Fiscal and Economic Review 2019-20

UNIFORM PRESENTATION FRAMEWORK

Table 9: General Government Sector Balance Sheet¹

	2018-19			2019-20			2019-20			2020-21			2021-22			2022-23
	Actual			Budget			MYFER			Projection			Projection			Projection
	$ million			$ million			$ million			$ million			$ million			$ million
Assets
Financial Assets
Cash and deposits		1,868			407			532			438			445			454
Advances paid		667			620			611			620			644			666
Investments, loans and placements		32,557			31,318			31,504			30,523			30,373			30,180
Receivables		4,503			4,019			3,887			3,390			3,695			4,533
Equity
Investments in other public sector entities		23,049			24,435			23,741			24,495			25,108			25,687
Investments - other		150			147			146			146			146			146
Total Financial Assets		62,793			60,945			60,421			59,612			60,411			61,666
Non-financial Assets
Land and other fixed assets		211,257			212,382			219,005			225,565			231,992			236,368
Other non-financial assets		6,700			6,874			6,916			7,133			7,156			7,236
Total Non-financial Assets		217,957			219,256			225,921			232,698			239,149			243,605
Total Assets		280,750			280,202			286,342			292,311			299,559			305,271
Liabilities
Payables		5,142			4,148			4,938			5,009			5,069			5,122
Superannuation liability		26,986			25,567			27,686			25,820			23,982			21,710
Other employee benefits		7,428			7,177			7,670			7,753			7,899			7,994
Deposits held		—			2			—			—			—			—
Advances received		2,692			1,616			1,710			1,455			1,485			1,584
Borrowing with QTC		29,468			32,781			31,774			34,772			40,092			43,111
Leases and other similar arrangements		2,612			5,824			6,071			7,845			7,715			7,738
Securities and derivatives		121			122			121			121			121			121
Other liabilities		4,796			4,068			4,566			4,382			4,211			4,096
Total Liabilities		79,246			81,306			84,537			87,157			90,573			91,476
Net Worth		201,505			198,896			201,805			205,154			208,986			213,795
Net Financial Worth		(16,452	)		(20,361	)		(24,116	)		(27,545	)		(30,162	)		(29,810	)
Net Financial Liabilities		39,501			44,796			47,858			52,039			55,270			55,497
Net Debt		(198	)		8,001			7,030			12,611			17,951			21,254

Notes:

1. Numbers may not add due to rounding and bracketed numbers represent negative amounts.

27

UNIFORM PRESENTATION FRAMEWORK

Table 10: Public Non-financial Corporations Sector Balance Sheet¹

	2018-19 Actual $ million			2019-20 Budget $ million			2019-20 MYFER $ million			2020-21 Projection $ million			2021-22 Projection $ million			2022-23 Projection $ million
Assets
Financial Assets
Cash and deposits		704			697			873			1,065			1,165			1,398
Advances paid		2,268			1,327			1,398			1,210			1,288			1,436
Investments, loans and placements		642			469			547			521			525			537
Receivables		1,874			1,601			1,799			1,792			1,824			1,871
Equity
Investments - other		297			250			297			297			297			297
Total Financial Assets		5,784			4,345			4,913			4,885			5,098			5,538
Non-financial Assets
Land and other fixed assets		63,530			65,791			65,412			66,767			67,758			67,976
Other non-financial assets		893			1,220			921			920			872			875
Total Non-financial Assets		64,423			67,011			66,333			67,687			68,629			68,851
Total Assets		70,207			71,356			71,246			72,571			73,728			74,389
Liabilities
Payables		3,395			2,695			2,590			1,970			2,188			2,567
Superannuation liability		(263	)		(368	)		(263	)		(263	)		(263	)		(263	)
Other employee benefits		830			742			826			838			852			867
Deposits held		14			17			15			15			15			15
Advances received		6			5			6			5			4			3
Borrowing with QTC		38,108			39,173			39,057			40,283			40,597			40,184
Leases and other similar arrangements		—			392			410			375			338			302
Securities and derivatives		599			422			423			357			337			339
Other liabilities		7,880			7,922			7,852			7,909			7,962			8,100
Total Liabilities		50,570			51,000			50,916			51,488			52,030			52,113
Net Worth		19,637			20,356			20,331			21,084			21,697			22,276
Net Financial Worth		(44,786	)		(46,655	)		(46,003	)		(46,603	)		(46,932	)		(46,575	)
Net Debt		35,114			37,516			37,093			38,239			38,314			37,473

Notes:

1. Numbers may not add due to rounding and bracketed numbers represent negative amounts.

28  Mid-Year Fiscal and Economic Review 2019-20

UNIFORM PRESENTATION FRAMEWORK

Table 11: Non-financial Public Sector Balance Sheet¹

	2018-19 Actual $ million			2019-20 Budget $ million			2019-20 MYFER $ million			2020-21 Projection $ million			2021-22 Projection $ million			2022-23 Projection $ million
Assets
Financial Assets
Cash and deposits		2,571			1,104			1,405			1,504			1,610			1,852
Advances paid		661			615			606			615			640			662
Investments, loans and placements		33,199			31,787			32,051			31,044			30,898			30,718
Receivables		4,247			4,008			4,145			4,225			4,386			4,964
Equity
Investments in other public sector entities		3,412			4,080			3,412			3,412			3,412			3,412
Investments - other		446			397			442			442			442			442
Total Financial Assets		44,536			41,991			42,060			41,242			41,388			42,049
Non-financial Assets
Land and other fixed assets		274,787			278,173			284,416			292,331			299,749			304,344
Other non-financial assets		992			1,300			1,146			1,250			1,089			931
Total Non-financial Assets		275,779			279,473			285,562			293,581			300,839			305,276
Total Assets		320,315			321,463			327,622			334,823			342,227			347,325
Liabilities
Payables		6,438			5,259			6,018			6,053			6,156			6,281
Superannuation liability		26,723			25,199			27,423			25,557			23,718			21,447
Other employee benefits		8,259			7,920			8,497			8,591			8,752			8,860
Deposits held		14			19			15			15			15			15
Advances received		424			289			313			245			197			148
Borrowing with QTC		67,576			71,954			70,832			75,055			80,688			83,294
Leases and other similar arrangements		2,612			6,217			6,481			8,220			8,054			8,040
Securities and derivatives		720			544			544			478			458			460
Other liabilities		6,045			5,168			5,696			5,456			5,203			4,983
Total Liabilities		118,810			122,568			125,817			129,670			133,241			133,530
Net Worth		201,504			198,896			201,805			205,154			208,986			213,795
Net Financial Worth		(74,274	)		(80,577	)		(83,757	)		(88,428	)		(91,852	)		(91,481	)
Net Financial Liabilities		77,686			84,657			87,169			91,839			95,264			94,892
Net Debt		34,916			45,517			44,123			50,851			56,264			58,726

Notes:

1. Numbers may not add due to rounding and bracketed numbers represent negative amounts.

29

UNIFORM PRESENTATION FRAMEWORK

Table 12: General Government Sector Cash Flow Statement¹

	2018-19			2019-20			2019-20			2020-21			2021-22			2022-23
	Actual			Budget			MYFER			Projection			Projection			Projection
	$ million			$ million			$ million			$ million			$ million			$ million
Cash Receipts from Operating Activities
Taxes received		14,127			15,162			15,144			15,733			16,553			17,473
Grants and subsidies received		28,572			28,000			28,259			30,242			30,783			30,997
Sales of goods and services		6,027			6,294			6,410			6,534			6,599			6,675
Interest receipts		2,173			2,139			2,044			1,983			1,927			1,931
Dividends and income tax equivalents		3,027			2,565			2,781			2,023			1,359			1,446
Other receipts		8,034			8,226			7,635			7,368			7,646			7,629
Total Operating Receipts		61,959			62,386			62,273			63,884			64,868			66,150
Cash Payments for Operating Activities
Payments for employees		(27,348	)		(29,080	)		(29,309	)		(29,574	)		(30,683	)		(31,861	)
Payments for goods and services		(17,898	)		(18,153	)		(17,599	)		(18,038	)		(18,402	)		(18,567	)
Grants and subsidies		(9,391	)		(9,649	)		(9,992	)		(10,625	)		(10,242	)		(10,014	)
Interest paid		(1,568	)		(1,669	)		(1,526	)		(1,581	)		(1,593	)		(1,608	)
Total Operating Payments		(56,206	)		(58,550	)		(58,425	)		(59,819	)		(60,920	)		(62,050	)
Net Cash Inflows from Operating Activities		5,754			3,836			3,848			4,065			3,948			4,100
Cash Flows from Investments in Non-Financial Assets
Purchases of non-financial assets		(5,764	)		(6,727	)		(7,223	)		(7,476	)		(8,383	)		(6,612	)
Sales of non-financial assets		312			305			306			254			259			253
Net Cash Flows from Investments in Non-financial Assets		(5,452	)		(6,422	)		(6,917	)		(7,222	)		(8,124	)		(6,360	)
Net Cash Flows from Investments in Financial Assets for Policy Purposes		(158	)		28			(101	)		(125	)		126			116
Net Cash Flows from Investments in Financial Assets for Liquidity Purposes		918			3,611			3,331			3,232			148			190
Receipts from Financing Activities
Advances received (net)		(56	)		(651	)		(980	)		(252	)		32			102
Borrowing (net)		(440	)		(486	)		(517	)		208			3,877			1,861
Net Cash Flows from Financing Activities		(497	)		(1,137	)		(1,497	)		(44	)		3,909			1,963
Net Increase/(Decrease) in Cash held		566			(85	)		(1,336	)		(93	)		7			9
Net cash from operating activities		5,754			3,836			3,848			4,065			3,948			4,100
Net cash flows from investments in non-financial assets		(5,452	)		(6,422	)		(6,917	)		(7,222	)		(8,124	)		(6,360	)
Surplus/(Deficit)		302			(2,586	)		(3,069	)		(3,157	)		(4,176	)		(2,260	)
Derivation of ABS GFS Cash Surplus/Deficit
Cash surplus/(deficit)		302			(2,586	)		(3,069	)		(3,157	)		(4,176	)		(2,260	)
Acquisitions under finance leases and similar arrangements		(955	)		(1,119	)		(1,162	)		(1,551	)		(1,117	)		(832	)
ABS GFS Cash Surplus/(Deficit) Including Finance Leases and Similar Arrangements		(653	)		(3,705	)		(4,231	)		(4,708	)		(5,293	)		(3,091	)

Note:

1. Numbers may not add due to rounding and bracketed numbers represent negative amounts.

30  Mid-Year Fiscal and Economic Review 2019–20

UNIFORM PRESENTATION FRAMEWORK

Table 13: Public Non-financial Corporations Sector Cash Flow Statement¹

	2018-19			2019-20			2019-20			2020-21			2021-22			2022-23
	Actual			Budget			MYFER			Projection			Projection			Projection
	$ million			$ million			$ million			$ million			$ million			$ million
Cash Receipts from Operating Activities
Grants and subsidies received		610			572			527			479			488			472
Sales of goods and services		15,010			13,130			13,665			13,207			13,514			14,138
Interest receipts		80			56			83			81			84			91
Dividends and income tax equivalents		13			13			13			13			13			13
Other receipts		395			486			360			261			251			265
Total Operating Receipts		16,110			14,257			14,647			14,041			14,351			14,979
Cash Payments for Operating Activities
Payments for employees		(2,032	)		(2,344	)		(2,366	)		(2,371	)		(2,400	)		(2,448	)
Payments for goods and services		(6,393	)		(4,801	)		(5,301	)		(5,356	)		(5,323	)		(5,531	)
Grants and subsidies		(266	)		(233	)		(233	)		(46	)		(18	)		(19	)
Interest paid		(1,856	)		(1,833	)		(1,833	)		(1,825	)		(1,814	)		(1,792	)
Other payments		(1,487	)		(1,313	)		(1,402	)		(1,041	)		(909	)		(1,002	)
Total Operating Payments		(12,035	)		(10,525	)		(11,135	)		(10,638	)		(10,464	)		(10,792	)
Net Cash Inflows from Operating Activities		4,074			3,732			3,512			3,403			3,886			4,187
Cash Flows from Investments in Non-Financial Assets
Purchases of non-financial assets		(2,687	)		(3,496	)		(3,504	)		(3,358	)		(3,018	)		(2,384	)
Sales of non-financial assets		33			21			22			5			1			5
Net Cash Flows from Investments in Non-financial Assets		(2,654	)		(3,475	)		(3,481	)		(3,353	)		(3,017	)		(2,380	)
Net Cash Flows from Investments in Financial Assets for Policy Purposes		22			436			775			58			(253	)		(344	)
Net Cash Flows from Investments in Financial Assets for Liquidity Purposes		77			(12	)		(19	)		(12	)		(13	)		(14	)
Receipts from Financing Activities
Advances received (net)		(1	)		(1	)		(1	)		(1	)		(1	)		(1	)
Borrowing (net)		411			925			907			1,177			264			(462	)
Dividends paid		(1,849	)		(1,633	)		(1,772	)		(1,319	)		(788	)		(808	)
Deposits received (net)		(1	)		—			1			—			—			—
Other financing (net)		44			125			247			240			20			55
Net Cash Flows from Financing Activities		(1,397	)		(583	)		(617	)		97			(504	)		(1,216	)
Net Increase/(Decrease) in Cash held		123			97			169			192			100			233
Net cash from operating activities		4,074			3,732			3,512			3,403			3,886			4,187
Net cash flows from investments in non-financial assets		(2,654	)		(3,475	)		(3,481	)		(3,353	)		(3,017	)		(2,380	)
Dividends paid		(1,849	)		(1,633	)		(1,772	)		(1,319	)		(788	)		(808	)
Surplus/(Deficit)		(429	)		(1,376	)		(1,741	)		(1,270	)		82			999
Derivation of ABS GFS Cash Surplus/Deficit
Cash surplus/(deficit)		(429	)		(1,376	)		(1,741	)		(1,270	)		82			999
Acquisitions under finance leases and similar arrangements		—			—			(5	)		(2	)		(2	)		(4	)
ABS GFS Cash Surplus/(Deficit) Including Finance Leases and Similar Arrangements		(429	)		(1,376	)		(1,745	)		(1,272	)		80			995

Note:

1. Numbers may not add due to rounding and bracketed numbers represent negative amounts.

31

UNIFORM PRESENTATION FRAMEWORK

Table 14: Non-financial Public Sector Cash Flow Statement¹

	2018-19			2019-20			2019-20			2020-21			2021-22			2022-23
	Actual			Budget			MYFER			Projection			Projection			Projection
	$ million			$ million			$ million			$ million			$ million			$ million
Cash Receipts from Operating Activities
Taxes received		13,842			14,866			14,848			15,413			16,208			17,110
Grants and subsidies received		28,602			28,008			28,224			30,250			30,798			31,012
Sales of goods and services		18,882			16,728			17,603			17,102			17,360			18,071
Interest receipts		2,202			2,157			2,086			2,026			1,968			1,971
Dividends and income tax equivalents		326			154			156			166			180			198
Other receipts		8,418			8,602			7,884			7,310			7,525			7,632
Total Operating Receipts		72,272			70,517			70,801			72,267			74,038			75,994
Cash Payments for Operating Activities
Payments for employees		(29,270	)		(31,304	)		(31,555	)		(31,823	)		(32,959	)		(34,183	)
Payments for goods and services		(22,084	)		(20,143	)		(20,309	)		(20,434	)		(20,597	)		(21,092	)
Grants and subsidies		(9,078	)		(9,318	)		(9,663	)		(10,198	)		(9,785	)		(9,573	)
Interest paid		(3,220	)		(3,297	)		(3,150	)		(3,179	)		(3,152	)		(3,125	)
Other payments		(627	)		(518	)		(535	)		(485	)		(499	)		(543	)
Total Operating Payments		(64,278	)		(64,582	)		(65,213	)		(66,119	)		(66,991	)		(68,515	)
Net Cash Inflows from Operating Activities		7,994			5,935			5,589			6,149			7,046			7,479
Cash Flows from Investments in Non-Financial Assets
Purchases of non-financial assets		(8,460	)		(10,223	)		(10,727	)		(10,834	)		(11,401	)		(8,997	)
Sales of non-financial assets		345			326			329			259			260			257
Net Cash Flows from Investments in Non-financial Assets		(8,115	)		(9,897	)		(10,398	)		(10,575	)		(11,141	)		(8,739	)
Net Cash Flows from Investments in Financial Assets for Policy Purposes		(51	)		46			50			(16	)		(30	)		(26	)
Net Cash Flows from Investments in Financial Assets for Liquidity Purposes		996			3,599			3,311			3,220			135			176
Receipts from Financing Activities
Advances received (net)		(40	)		(109	)		(109	)		(65	)		(46	)		(46	)
Borrowing (net)		(30	)		439			390			1,385			4,141			1,399
Deposits received (net)		(1	)		—			1			—			—			—
Other financing (net)		(64	)		—			—			—			—			—
Net Cash Flows from Financing Activities		(135	)		330			282			1,321			4,095			1,353
Net Increase/(Decrease) in Cash held		688			13			(1,167	)		99			106			242
Net cash from operating activities		7,994			5,935			5,589			6,149			7,046			7,479
Net cash flows from investments in non-financial assets		(8,115	)		(9,897	)		(10,398	)		(10,575	)		(11,141	)		(8,739	)
Surplus/(Deficit)		(121	)		(3,962	)		(4,810	)		(4,426	)		(4,095	)		(1,261	)
Derivation of ABS GFS Cash Surplus/Deficit
Cash surplus/(deficit)		(121	)		(3,962	)		(4,810	)		(4,426	)		(4,095	)		(1,261	)
Acquisitions under finance leases and similar arrangements		(955	)		(1,119	)		(1,167	)		(1,553	)		(1,118	)		(835	)
ABS GFS Cash Surplus/(Deficit) Including Finance Leases and Similar Arrangements		(1,076	)		(5,081	)		(5,976	)		(5,980	)		(5,213	)		(2,096	)

Note:

1. Numbers may not add due to rounding and bracketed numbers represent negative amounts.

32  Mid-Year Fiscal and Economic Review 2019–20

TAXATION AND ROYALTY REVENUE ASSUMPTIONS

TAXATION AND ROYALTY REVENUE ASSUMPTIONS

Table 15: Taxation and royalty revenue¹

	2018-19		2019-20		2019-20		2020-21		2021-22		2022-23
	Actual		Budget		MYFER		Projection		Projection		Projection
	$ million		$ million		$ million		$ million		$ million		$ million
Payroll tax		4,160		4,284		4,321		4,475		4,770		5,150
Transfer duty		3,195		3,038		3,053		3,205		3,383		3,578
Other duties		1,549		1,624		1,617		1,696		1,779		1,866
Gambling taxes and levies		1,333		1,410		1,414		1,467		1,523		1,582
Land tax		1,334		1,589		1,519		1,598		1,670		1,732
Motor vehicle registration		1,850		1,908		1,910		1,973		2,044		2,116
Other taxes		744		1,310		1,312		1,321		1,386		1,450
Total taxation revenue		14,163		15,164		15,145		15,735		16,555		17,474
Royalties
Coal		4,372		4,339		3,696		3,304		3,439		3,511
Petroleum2		454		577		549		591		596		610
Other royalties3		393		538		531		483		484		495
Land rents		159		168		168		169		172		174
Total royalties and land rents		5,378		5,621		4,944		4,548		4,691		4,789

Notes:

1. Numbers may not add due to rounding.

2. Includes impact of liquefied natural gas (LNG).

3. Includes base and precious metal and other mineral royalties.

Table 16: Royalty assumptions

	2019-20		2020-21		2021-22		2022-23
	MYFER		Projection		Projection		Projection
Tonnages – crown export1 coal (Mt)		216		224		228		236
Exchange rate $US per $A2		0.67		0.68		0.70		0.71
Year average coal prices ($US per tonne)3
Hard coking		156		143		145		145
Semi-soft		110		106		109		109
Thermal		90		78		83		83
Year average oil price
Brent ($US per barrel)		65		64		66		66

Notes:

1. Excludes coal produced for domestic consumption and coal where royalties are not paid to the Government, i.e. private royalties. 2019-20 estimate for domestic coal volume is approximately 25.7 Mt and private coal is 9.4 Mt.

2. Year average.

3. Price for highest quality coking and thermal coal. Lower quality coal can be sold below this price with the indicative average prices for 2019-20 as follows: Hard coking US$136 per tonne and thermal US$72 per tonne.

4. Published Brent oil prices are lagged by one quarter to better align with royalty revenue.

33

KEY FISCAL AGGREGATES

KEY FISCAL AGGREGATES

Table 17: Key Fiscal Aggregates¹

	2011-12			2012-13			2013-14			2014-15			2015-16			2016-17			2017-18			2018-19			2019-20			2020-21			2021-22			2022-23
	Actual2			Actual2			Actual2			Actual2			Actual2			Actual2			Actual2			Actual2			MYFER			Projection			Projection			Projection
	$ million			$ million			$ million			$ million			$ million			$ million			$ million			$ million			$ million			$ million			$ million			$ million
General Government
Total revenue		45,801			41,755			46,705			49,970			50,780			56,194			58,087			59,834			59,914			61,715			63,366			65,194
Tax revenue		10,608			10,937			11,840			12,598			12,547			12,919			13,244			14,165			15,145			15,735			16,555			17,474
Total expenses		46,028			46,313			46,217			49,551			50,112			53,369			56,337			58,842			59,763			61,482			62,771			64,051
Employee expenses		18,250			18,130			17,816			18,592			20,045			21,258			22,681			24,019			25,511			25,788			26,774			27,804
Net operating balance		(226	)		(4,558	)		488			420			668			2,825			1,750			992			151			234			595			1,142
Capital purchases		7,971			7,001			6,323			4,635			4,044			4,620			5,126			5,764			7,223			7,476			8,383			6,612
Net capital purchases		5,241			3,387			3,085			996			1,163			2,265			2,337			3,182			4,219			4,867			5,192			2,958
Fiscal balance		(5,467	)		(7,944	)		(2,597	)		(576	)		(495	)		560			(587	)		(2,191	)		(4,068	)		(4,633	)		(4,597	)		(1,815	)
Borrowings with QTC		28,391			36,508			39,864			41,343			34,200			31,358			29,256			29,468			31,774			34,772			40,092			43,111
Leases and similar arrangements		1,126			1,370			1,503			1,761			1,286			1,882			2,142			2,612			6,071			7,845			7,715			7,738
Securities and Derivatives		1			1			1			(0	)		(0	)		(0	)		122			121			121			121			121			121
Net debt		(5,720	)		2,466			5,208			5,749			654			(355	)		(509	)		(198	)		7,030			12,611			17,951			21,254
Non-Financial Public Sector
Total revenue		52,307			49,181			53,502			56,178			57,393			64,855			66,164			68,334			67,823			69,520			71,290			73,665
Capital purchases		11,980			10,774			9,313			7,811			6,852			7,291			7,643			8,460			10,727			10,834			11,401			8,997
Borrowings with QTC		60,205			67,116			70,668			73,256			71,160			69,107			66,964			67,576			70,832			75,055			80,688			83,294
Leases and similar arrangements		1,127			1,559			1,752			1,802			1,316			1,882			2,142			2,612			6,481			8,220			8,054			8,040
Securities and Derivatives		210			411			216			175			446			895			405			720			544			478			458			460

Notes:

1. Bracketed numbers represent negative amounts.

2. With the implementation of the latest GFS Manual (AGFS15), some categories have been restated above to ensure comparability.

34  Mid-Year Fiscal and Economic Review 2019–20

KEY FISCAL AGGREGATES

Table 18: Key Fiscal Indicators¹

	2011-12			2012-13			2013-14			2014-15			2015-16			2016-17		2017-18			2018-19			2019-20			2020-21			2021-22			2022-23
	Actual2			Actual2			Actual2			Actual2			Actual2			Actual2		Actual2			Actual2			MYFER			Projection			Projection			Projection
	%			%			%			%			%			%		%			%			%			%			%			%
General Government
Revenue/GSP		16.3			14.7			16.0			16.9			16.7			17.1		16.7			16.2			16.1			16.0			15.7			15.4
Tax/GSP		3.8			3.9			4.1			4.3			4.1			3.9		3.8			3.8			4.1			4.1			4.1			4.1
Own source revenue/GSP		8.2			8.3			8.6			8.9			8.9			8.7		8.6			8.5			8.5			8.1			8.1			8.0
Expenses/GSP		16.4			16.3			15.9			16.7			16.5			16.2		16.2			15.9			16.1			15.9			15.5			15.1
Employee expenses/GSP		6.5			6.4			6.1			6.3			6.6			6.5		6.5			6.5			6.9			6.7			6.6			6.6
Net operating balance/GSP		(0.1	)		(1.6	)		0.2			0.1			0.2			0.9		0.5			0.3			0.0			0.1			0.1			0.3
Capital purchases/GSP		2.8			2.5			2.2			1.6			1.3			1.4		1.5			1.6			1.9			1.9			2.1			1.6
Net cash inflows from operating activities/Net cash flows from investments in non-financial assets		36.3			(40.7	)		45.9			97.5			122.9			134.2		107.0			105.5			55.6			56.3			48.6			64.5
Fiscal balance/GSP		(1.9	)		(2.8	)		(0.9	)		(0.2	)		(0.2	)		0.2		(0.2	)		(0.6	)		(1.1	)		(1.2	)		(1.1	)		(0.4	)
Total borrowings/GSP		10.5			13.4			14.2			14.5			11.7			10.1		9.0			8.7			10.2			11.1			11.9			12.0
Total Borrowings/Revenue		64.4			90.7			88.6			86.3			69.9			59.2		54.3			53.8			63.4			69.3			75.6			78.2
Revenue growth		9.0			(8.8	)		11.9			7.0			1.6			10.7		3.4			3.0			0.1			3.0			2.7			2.9
Tax growth		6.3			3.1			8.3			6.4			(0.4	)		3.0		2.5			7.0			6.9			3.9			5.2			5.6
Expenses growth		5.9			0.6			(0.2	)		7.2			1.1			6.5		5.6			4.4			1.6			2.9			2.1			2.0
Employee expenses growth		8.5			(0.7	)		(1.7	)		4.4			7.8			6.1		6.7			5.9			6.2			1.1			3.8			3.8
Non-Financial Public Sector
Capital purchases/GSP		4.3			3.8			3.2			2.6			2.3			2.2		2.2			2.3			2.9			2.8			2.8			2.1
Total borrowings/GSP		21.9			24.4			24.9			25.4			23.9			21.8		19.9			19.2			20.9			21.7			22.1			21.7
Total Borrowings/Revenue		117.7			140.5			135.8			133.9			127.1			110.8		105.1			103.8			114.8			120.5			125.1			124.6
Net financial liabilities3/revenue		115.6			133.4			129.8			125.2			127.4			111.2		111.5			113.7			128.5			132.1			133.6			128.8

Notes:

1. Bracketed numbers represent negative amounts.

2. With the implementation of the latest GFS Manual (AGFS15), some categories have been restated above to ensure comparability.

3. UPF definition, which is equal to total financial assets less investments in other public sector entities less total liabilities.

35