An unqualified audit opinion was issued on the Total State Sector Accounts for the year ended 30 June 2014.
Quality and Timeliness of Financial Reporting
The quality and timing of financial reporting has continued to improve across the NSW public sector. Timeframes have reduced and the number of errors has fallen since 2011-12.
Opportunities for improved quality and timeliness of financial reporting still exist. Moving to more regular and frequent preparation of financial reports during the year will improve financial management of the sector.
Financial Analysis - General Government Sector
The Budget Result for the year ended 30 June 2014 was a surplus of $1,247 million (deficit of $1,731 million for the year ended 30 June 2013), $3.1 billion better than originally budgeted in June 2013. Revenues were 5.5 per cent above original budget, while expenses were less than one per cent above original budget.
The Budget Result was $259 million better than forecast in the 2014-15 Budget Papers, published in June 2014.
Financial Analysis – Total State Sector
The State received $2.8 billion from the lease of port operations in Newcastle, the sale of Eraring Energy and Delta West’s Mt Piper and Wallerawang power stations. The State recorded a gain of $611 million on these transactions. In 2012-13, the State received $5.0 billion from other asset sale transactions and recorded a gain of $2.0 billion.
Revenues and Expenses
Total revenues and expenses for the whole-of-government were $76.1 billion ($70.0 billion in 2012-13) and $73.3 billion ($70.4 billion), respectively. After the results from discontinued operations are included ($10.0 million), the State’s Net Operating Balance was a $2.8 billion ($49.0 million) surplus. While the State’s total revenues 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 $1.5 billion ($4.3 billion) surplus.
Taxation revenues increased by 10.7 per cent overall, as a result of all sources of tax revenue increasing. Stamp duties of $7.8 billion increased by $1.6 billion or 25.5 per cent from 2012-13. Treasury advises this was largely from growth in residential property sales, due to low interest rates, and an increase in large commercial transactions.
Commonwealth grants totalled $27.3 billion, $2.7 billion more than in 2012-13. This was mainly due to a $1.3 billion increase in National Partnership Payments relating to transport funding and a $1.1 billion increase in general purpose payments from the Australian Government, which mainly comprise New South Wales’ share of the Goods and Services Tax.
Employee costs of $35.1 billion were 48 per cent of total expenditure, which is relatively consistent with previous year’s $34.1 billion (49 per cent). Employee costs grew by 2.8 per cent from the 2012-13.
Assets and Liabilities
The value of the State’s assets was around $340 billion at 30 June 2014 ($323 billion at 30 June 2013). The assets mostly comprise property, plant and equipment to provide or support service delivery. Capital expenditure was $14.5 billion in 2013-14 ($14.6 billion in 2012-13). In addition to the infrastructure assets reflected in the Total State Sector Accounts, the State has engaged in over forty public private partnerships to deliver infrastructure and services.
The State’s total liabilities increased to around $172 billion at 30 June 2014 ($163 billion at 30 June 2013). Borrowings increased by $5.7 billion or 7.4 per cent to $82.3 billion.
The State’s net liability for the defined benefit superannuation scheme increased by around $6.9 billion from $44.2 billion to $51.0 billion due to a change in accounting standards that remeasured the defined benefit obligation to include superannuation contributions tax on employer contributions.
The State has maintained its AAA credit rating.
In June 2014, Moody’s affirmed its Aaa rating and stable outlook, noting New South Wales is well placed compared to most Australian states and territories. Most recently in October 2014, Standard & Poor’s affirmed its AAA rating and elevated its outlook to ‘stable’ (up from ‘negative’).