Tomorrow, the Government will release the Revised Estimates Report, sometimes referred to as the ‘Mid-Year Report’.
The RER will confirm that under the Hodgman Liberal Government’s strong leadership and spending discipline, the budget is back on track and will be in surplus next year, three years ahead of schedule.
In regards to the Hydro, as I have already indicated, its financial performance will be impacted as a result of the challenging circumstances it currently faces and returns will be reduced across the forward estimates period.
As dividends and tax equivalents are paid yearly in arrears, due to a better than expected financial result for the previous financial year total returns already received in 2015-16 paid from the previous year’s profits are $8.5m higher than forecast.
However in the RER, we have taken a prudent approach to forecasting future returns from the business due to the difficult circumstances it is managing. Therefore total reductions of around $33m in dividends and $21m in tax equivalent payments from Hydro Tasmania have been factored into the budget across the three year forward estimates period.
This will be closely monitored as we prepare the upcoming Budget.
Furthermore the reduction in returns should be viewed in the context that total Hydro returns in any year across the forward estimates only equate to around 0.5% of total yearly revenue and the impact of this reduction will not materially affect the budget nor its return to surplus next year.
As we have said all along, bringing the budget back into surplus means that we can respond to these sort of unexpected challenges, as well as invest more in frontline services.