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❓ Question on Notice regarding WA's long-term financial projections, specifically concerning public sector net debt, salary expenses, royalties, and overall revenue and expense predictions under 'Base Case' and 'Excluding the Fiscal Action Plan' scenarios. The response provides key assumptions and figures.

AnsweredQoN 1571Legislative Assembly

Asked

20 November 2013

Member

Mr B.S. Wyatt

Portfolio

Treasurer

QuestionView source ↗

I refer to the table on page 74 of the 2013–2014 Economic and Fiscal Outlook entitled Long-term Financial Projections, Fiscal Action Plan Comparison and I ask: (a) what are the underlying assumptions that result in total public sector net debt reaching $47,337 million by 2022–2023 in the ‘Base Case’ scenario; (b) what is the assumed percentage increase, in each year, of the salaries expense in the General Government operating statement in the ‘Base Case’ scenario; (c) what are the underlying assumptions that result in total public sector net debt reaching $86,351 million by 2022–2023 in the ‘Excluding the Fiscal Action Plan’ scenario; (d) what is the assumed percentage increase, in each year, of the salaries expense in the General Government operating statement in the ‘Excluding the Fiscal Action Plan’ scenario; (e) what is the assumed revenue from royalties, in each year, in the ‘Base Case’ scenario; (f) what is the assumed revenue from royalties, in each year, in the ‘Excluding the Fiscal Action Plan’ scenario; (g) in respect of the revenue predictions in the ‘Base Case’ scenario: (i) what was the basis for the assumption of the annual revenue increase for each year out to 2022–2023; and (ii) was the projected revenue increase based on revenue received over previous years, and if so, what years and how was this calculated; (h) in respect of the revenue predictions in the ‘Excluding the Fiscal Action Plan’ scenario: (i) what was the basis for the assumption of the annual revenue increase for each year out to 2022–2023; and (ii) was the projected revenue increase based on revenue received over previous years, and if so, what years and how was this calculated; (i) in respect of the expense predictions in the ‘Base Case’ scenario: (i) what was the basis for the assumption of the annual expense increase for each year out to 2022–23; and (ii) was the projected expense increase based on expenses over previous years? If so, what years and how was this calculated; and (j) in respect of the expense predictions in the ‘Excluding the Fiscal Action Plan’ scenario: (i) what was the basis for the assumption of the annual expense increase for each year out to 2022–23; and (ii) was the projected revenue increase based on expenses over previous years? If so, what years and how was this calculated?

AnswerView source ↗

Answered

25 February 2014

Response time

97 days

The Department of Treasury advises:
a) The assumptions are:
- Population is projected to grow at an average of 2.1 per cent per annum.
- Labour productivity is projected to grow at 1.8 per cent per annum.
- Labour force participation is projected to fall from 69.0 per cent in 2012-13 to 66.6 per cent in 2022-23.
- Unemployment is assumed to trend towards 5 per cent by 2022-23.
- An annual Asset Investment Program (AIP) of 2.5 per cent of Gross State Product (GSP) per annum after the forward estimates period.
- No policy changes beyond what are already contained in the 2013-14 Budget Papers.
- The consumer price index is projected to grow at 2.5 per cent per annum.
(b) In the 'Base Case' scenario:
2013 - 5.3 per cent
2014 - 6.8 per cent
2015 - 2.5 per cent
2016 - 4.2 per cent
2017 - 4.6 per cent
2018 - 5.1 per cent
2019 - 4.3 per cent
2020 - 4.9 per cent
2021 - 4.9 per cent
2022 - 4.9 per cent
2023 - 4.8 per cent
(c) Please refer to part (a).
(d) In the 'Excluding the Fiscal Action Plan' scenario:
2013 - 5.7 per cent
2014 - 6.6 per cent
2015 - 4.9 per cent
2016 - 5.8 per cent
2017 - 6.2 per cent
2018 - 6.8 per cent
2019 - 6.2 per cent
2020 - 6.8 per cent
2021 - 6.8 per cent
2022 - 6.8 per cent
2023 - 6.8 per cent
(e) In the 'Base Case' scenario:
2013 - $4 460m
2014 - $5,824m
2015 - $6 122m
2016 - $6 765m
2017 - $6 911m
2018 - $7 064m
2019 - $7 091m
2020 - $7 114m
2021 - $7 103m
2022 - $7 077m
2023 - $7 050m
(f) The two scenarios produce identical mining revenue projections.
(g)(i) For the period 2013-14 to 2016-17, the Member is referred to revenue estimates as detailed in Chapter 4 of the 2013-14 Budget Paper No. 3.
For the period 2017-18 to 2022-23:
- WA's tax revenue is projected based on economic and demographic drivers.
- Mining royalties are projected according to price and volume assumptions for key commodities.
- GST grants are projected based on WA's share of national GST revenue.
(g)(ii) Not directly linked.
(h)(i) For the period 2013-14 to 2016-17, the revenue projections are equal to the base case adjusted by removing the impact of revenue measures documented in Chapter 4 and on pages 3-6 of 201314 Budget Paper No. 3.
For the period 201718 to 2022-23 please refer to part (g)(i).
(ii) Please refer to part (g)(ii).
(i)(i) The forward estimates from 2013-14 to 2016-17 are consistent with the expense estimates included in the 201314 Budget Papers.
For the period 2017-18 to 2022-23, projected expense growth takes into account population growth and age structure, inflation and real wages, and for each functional area draws upon data on the utilisation of government services by age group.
(i)(ii) Projected expense growth is not directly linked to spending in previous years.
(j) In the 'Excluding the Fiscal Action Plan' scenario:
(j)(i) The forward estimates from 2013-14 to 2016-17 are consistent with the base case adjusted by removing the impact of expense and net debt savings measures documented on pages 3-6 and Chapter 6 of Budget Paper No. 3.
For the period 2017-18 to 2022-23 projected expense growth is consistent with the base case except for the impact of measures from the Fiscal Action Plan. For example, the impact of the CPI wages policy.
(j)(ii) Not directly linked.

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