Focusing on New South Wales state finances

Business Australia New South Wales

This year was the first time in over a decade that the New South Wales' Total State Sector Accounts received an unqualified auditor’s opinion.

Executive Summary

Audit Result

The Total State Sector Accounts for the year ended 30 June 2013 received an unqualified independent auditor’s opinion. This is the first time in over a decade the Total State Sector Accounts have not been qualified.

Budget Result

The Budget Result was a surplus of $239 million for the year ended 30 June 2013, $1.1 billion better than originally budgeted in June 2012. Revenues were less than one per cent above original budget and expenses were one per cent below. The Budget Result was $613 million better than forecast in the 2013-14 Budget Papers published in June 2013.

Financial Analysis

Significant transactions

The State received $5.0 billion from the lease of port operations in Sydney and Port Kembla. It used $767 million to repay associated borrowings. The State recorded a gain of $2.0 billion on the transaction.

Revenues and expenses

Total revenues and expenses for the whole-of-government were $71.2 billion and $69.4 billion respectively. After the results from discontinued operations are included, the State’s Net Operating Balance (Budget Result) was a $2.1 billion surplus. While the State’s revenue and expenses exceed those reported by other states and territories, revenues and expenses per capita are lower than those in other jurisdictions.

After fair value adjustments to liabilities and other losses, the State recorded an Operating Result of $6.5 billion surplus.

Taxation revenues increased by 6.3 per cent overall, as a result of all sources of revenue increasing, with the exception of land tax. Commonwealth grants totalled $24.5 billion, $1.6 billion less than in 2011-12, and slightly less than expected.

Employee costs were 46 per cent of total expenditure, which is relatively consistent with previous years. The State employs approximately 11 per cent of all people employed in New South Wales.

Assets and liabilities

The value of the State’s assets was over $320 billion at 30 June 2013. The assets mostly comprise property, plant and equipment to provide or support service delivery. The value reflects $72.0 billion in capital expenditure over the past five years. Capital expenditure was $14.2 billion in 2012-13, which represents about 94 per cent of the budgeted amount. In addition to the infrastructure assets reflected in the Total State Sector Accounts, the State has over forty public private partnerships to deliver infrastructure and services.

The State’s total liabilities are relatively steady, falling slightly to around $156 billion at 30 June 2013. Borrowings increased by $4.3 billion.

Fiscal Responsibility

Credit rating

The State has maintained its AAA credit rating and outlooks from rating agencies have remained unchanged since October 2012.

Quality and Timeliness of Financial Reporting

The quality and timeliness of financial reporting across the NSW public sector have significantly improved.

The Treasurer has actively engaged with agency Chief Financial Officers and Audit and Risk Committee Chairs to communicate the importance of accurate and timely financial information at various forums.

Treasury Circular 13/01 ‘Mandatory early close procedures for 2013’ expanded the scope and the range of procedures agencies needed to perform before year end.

Public accounts committee recommendations

The three year timeframe for implementing the Committee’s recommendations to improve the quality and timing of financial reporting has ended. Reassessment of the recommendations is required and further actions, if any, determined.

Agency financial statements in 2012-13

The number of errors has fallen since 2011-12, but opportunities for improved quality and timeliness of financial reporting still exist.

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