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Annual Report 2007-08

• Letter of transmittal
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Financial and economic policy

Treasury Office delivers financial and economic policy and provides advice to the Queensland Government. This office develops and implements whole-of-Government fiscal and economic strategies to achieve the Government’s priorities and advance the performance of the Queensland economy to support growth and employment.

Our clients

Treasury Office works with the Treasurer and the Government to develop and implement whole-of-Government fiscal policy, to help the Government fulfil its commitments to Queenslanders. Treasury Office also helps other Queensland Government agencies and statutory bodies deliver services by providing financial management, accounting and project evaluation advice.

Structure

• Under Treasurer, Gerard Bradley
  • Deputy Under Treasurer, Tim Spencer
    • Assistant Under Treasurer, John O'Connell
      • Director, Fiscal and Taxation Policy, Leigh Pickering
      • Director, Financial Management, Sue Highland
    • Assistant Under Treasurer, Dr Gary Ward
      • Director, Education and Justice, Tina Davey
      • Director, Economic and Inter-Governmental Relations, (vacant)
      • Director, Queensland Office for Regulatory Efficiency, Peter McKenna
    • Assistant Under Treasurer, Walter Ivessa
      • Director, Health and Community Services, Janelle Thurlby
      • Director, Resources, Lynne Bulloch
    • Assistant Under Treasurer, Ian Munro
      • Director, Transport and Industry, Drew Ellem
      • Director, Strategic Asset Management, Richard Somerville
    • Assistant Under Treasurer, Ken Sedgwick
      • Structural Policy Directorate
      • Executive Director, SEQ Water Transaction Unit, John Frazer

Vision

For Queensland’s long-term fiscal and economic performance to lead Australia.

Mission

We strive to:

• provide leadership in financial and economic policy development
• advance the performance of the Queensland economy to support growth and employment
• maintain the integrity of the State’s finances in accordance with the Charter of Social and Fiscal Responsibility
• promote value-for-money service delivery which meets Queenslanders’ needs.

General Government purchases of non-financial assets ($ per capita)

Analysis: The Queensland Government’s capital spending in the General Government sector remains at approximately double the average of the other states, at $1,541 per person.

Key issues facing the output

• Queensland will continue to invest heavily in infrastructure and expand services to meet increased demand arising from Queensland’s continuing population growth. In light of expected weaker revenue growth from the abolition of some State taxes and a declining share of GST, Treasury Office will continue to play a vital role in managing the State’s finances to sustain investment in infrastructure and services while still achieving a sound fiscal position.
• Treasury will continue to engage in the Council of Australian Government’s (COAG) reform process, which is focussed on a number of key measures to improve economic efficiency, restructure Commonwealth–state financial relations, and close the gap between Indigenous and non-Indigenous Australians. A key COAG work stream led by Treasury is the business regulation and competition reform agenda, which seeks to achieve a ‘seamless national economy’ through harmonising, streamlining, and simplifying business regulation, as well as competition reform, to enhance labour mobility, productivity, innovation and investment. Another COAG initiative Treasury is heavily engaged in is a fundamental review of the Commonwealth–state payment system to reform the system which transfers $79 billion of Commonwealth funding to the states.
• Administer funding from the Queensland Future Growth Fund, which will continue to be directed towards infrastructure and Smart State projects.
• Proceeds from the long-term lease of Cairns and Mackay airports, and the sale of the Port of Brisbane’s remaining shareholding in Brisbane Airport will be used to redevelop the existing Cairns Base Hospital, purchase a site for future health service needs in Cairns, build a new Mackay Base Hospital and redevelop Mount Isa Hospital.
• A significant focus over the coming year will be to develop and encourage strategies to lift the State’s sustainable level of economic growth, address the challenges of water reform and infrastructure delivery and manage governance arrangements for the new water authorities.
• Treasury will continue to assist and support the Queensland Government’s Expenditure Review Committee in its role of monitoring and prioritising spending across departments and agencies and help deliver the Government’s productivity dividend.

Output performance highlights

Measure	Target		Actual
Quantity
Quarterly reports on financial position within six weeks of quarter end	4	4
Number of written pieces of portfolio resource allocation advice provided	1,450	1,400
Number of written pieces of economic and intergovernmental relations advice provided	600	550
Number of written pieces of fiscal, taxation policy and financial management advice provided	700	700
Number of written pieces of infrastructure policy advice provided	240	3361
Quality
Adherence to fiscal objectives as described in the Charter of Social and Fiscal Responsibility	100%	100%
Compliance with the Uniform Presentation Framework and relevant Australian Accounting Standards for whole-of-Government financial reporting	100%	100%
Timeliness
Achievement of key milestones in the budget process	100%	100%
Achievement of key milestones in the Report on State Finances process	100%	100%
Data provision to the Commonwealth Grants Commission and Australian Bureau of Statistics within agreed timeframes	100%	100%
Cost
Cost of portfolio resource allocation advice	$6.323M	$5.5M2
Cost of economic and intergovernmental relations advice	$1.758M	$1.5M2
Cost of fiscal, taxation policy and financial management advice	$5.067M	$4.6M2
Cost of infrastructure policy advice	$3.410M	$2.5M2

Variances

1. Reflects growth in the State’s infrastructure program.
2. Reflects unanticipated staff vacancies.

Our business priorities

• Keeping Queensland’s fundamentals strong

  Treasury’s economic and financial leadership continued to keep the State’s fundamentals strong and provide value-for-money service delivery across the Queensland Government.

  In 2007–08, Treasury coordinated the 2008–09 State Budget, which will deliver major injections of funding to our public hospitals and healthcare system, and fund the biggest capital works program in Queensland’s history.

  The expected 2007–08 underlying operating result of $272 million surplus after funding substantial increases in service delivery and growth in the infrastructure program reflects the strength of Queensland’s economy.

  To meet the Queensland Government’s commitment to transparency and accountability, we prepared the 2006–07 Report on State Finances, incorporating the Outcomes Report and the Consolidated Financial Statements. This report provides a comprehensive view of the financial operations and position of the Queensland Government. For 2006–07, the Report on State Finances confirmed the strength of Queensland’s balance sheet, with a net worth of $117.9 billion.

  We also prepared the 2007–08 Mid-Year Fiscal and Economic Review, which reported revised fiscal estimates for that Budget year and the three following years. For 2008–09, Queensland is budgeting for a General Government net operating surplus of $809 million. Forecast Budget surpluses are expected to gradually moderate from this level through 2008–09, 2009–10 and 2010–11.

  In 2007–08, Treasury conducted a comprehensive audit of the Queensland Ambulance Service (QAS). The audit recommended a package of measures to improve the efficiency and effectiveness of services delivered by QAS. It also identified savings of $12.2 million to be returned to front-line service delivery and assisted QAS in managing demand and ensuring value-for-money in the allocation of Government resources.

• Securing quality of life through adequate water supplies

  A growing population, impending climate change and the sustained drought again placed significant demand on Queensland’s water supplies during the year.

  In 2007–08 Treasury managed the acquisition by the State of the South East Queensland bulk water assets and water treatment plants from South Queensland Councils, SEQ Water Corporation Limited and other South East Queensland water entities. The assets were transferred from these water entities to the newly established State-owned authorities: Queensland Bulk Water Supply Authority and Queensland Bulk Water Transport Authority. Total compensation for these assets was in excess of $2 billion and was completed on
  30 June 2008 in time for the implementation of the urban water reforms. Treasury also developed new governance arrangements for four new water statutory authorities:

  • Queensland Bulk Water Supply Authority
  • Queensland Bulk Transport Authority
  • Queensland Manufactured Water Authority
  • Queensland Water Grid Manager.

  Although water restrictions are likely to ease in 2008–09, future supplies will depend on maintaining strong supply frameworks. We will continue to work with these authorities and relevant agencies to develop and maintain governance frameworks that will support their ability to deliver services. This will include developing real, measurable targets to allow for ongoing performance monitoring and reporting throughout the year.

• Solid frameworks for smart decision making

  Every day, the Queensland Government makes decisions and undertakes activities that directly impact on how people live their lives and conduct their business. The Government’s financial management framework forms the basis for these decisions – decisions on planning, resource allocation and management, monitoring and reporting to the people who use our services.

  In 2007–08, we continued to modernise the Financial Administration and Audit Act 1977, so it continues to support sound decision making. By consulting with stakeholders and conducting information sessions, we ensured that those charged with using the framework shared their expertise in improving it.

  In 2008–09, we will work with the Office of the Queensland Parliamentary Counsel to develop new legislation – the Financial Accountability Act – and supporting materials that will help our decision makers achieve quality and value-for-money for Queenslanders.

• Working with the Department of Infrastructure and Planning

  During the year, Treasury obtained Infrastructure Cabinet Committee endorsement of the Project Assurance Framework. We also provided support to the Department of Infrastructure and Planning which has now assumed responsibility for coordinating implementation of the Project Assurance Framework.

• Infrastructure for growing communities

  Delivering infrastructure to drive the growth, productivity and prosperity, and to meet the needs of a growing population and a strong business and investment sector, remains a cornerstone of the Queensland Government’s agenda.

  In 2007–08 Treasury provided commercial and financial advice to the Government on major projects including:

  • Aurukun Bauxite Development, in western Cape York
  • the Gold Coast Marine Development
  • the Yeerongpilly Landing Development
  • the Urangan Boat Harbour precinct redevelopment on the Fraser Coast.

  In the year ahead, our role in these projects will continue, along with commercial advice to the Queensland Government on additional major projects, including Brisbane’s Eastern Busway and the Gold Coast Hospital.

  Methods for delivering key infrastructure need to keep pace with the changing needs of communities, business and investors. The use of public/private partnerships (PPPs), in which Government and business collaborate to deliver major projects, continued to feature in our infrastructure programs. During the year, we advised Government agencies on a range of projects to determine their sustainability as PPPs, including:

  • Airport Link
  • the SEQ Schools project
  • Sunshine Coast University Hospital
  • Gold Coast Rapid Transit
  • the Brisbane City Council’s Transapex projects (including the Northern Link).

  In the year ahead, Treasury will continue to work with agencies on evaluating and implementing these and other infrastructure delivery projects.

• Resourcing to tackle climate change

  During the year, Treasury finalised the sale of four of the State’s wind farms (in Queensland, Victoria and South Australia) and a number of development projects to the Transfield Services Infrastructure Fund. Treasury also finalised the sale of Enertrade’s gas business to a 50/50 joint venture between Arrow Energy and AGL Energy. The proceeds from these sales will sustain an ongoing Queensland Climate Change Fund which will enable a fixed ongoing allocation of $30 million per annum for initiatives such as the ClimateSmart Home Service.

Last reviewed 5 November 2008

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