2005
2005
2012-08-28
act
government
publicgeneral
act.reprint
act-2006-058
allinforce
2005-05-24
2005-05-24
0
2012-08-28
act-2012-058
2005
none
act-2005-041
49e6f160-154b-4fe2-a9eb-a10b030f47a8
8f361a0d-9146-4ac2-885b-74386aa79530
Repeal:
The Act was repealed by sec 12 of the Fiscal Responsibility Act 2012 No 58
with effect from 28.8.2012.
An Act with respect to fiscal targets and fiscal
principles and to repeal the General
Government Debt Elimination Act 1995; and for other
purposes.
Part 1Preliminary
1Name of
Act
This Act is the Fiscal
Responsibility Act 2005.
2Commencement
(1)
This Act commences, or is taken to have
commenced, on 1 July 2005, except as provided by subsection
(2).
(2)
Schedule 1 [3] commences:
(a)
on the commencement of this Act,
or
(b)
on the commencement of Schedule 3.2 to the
Workers Compensation Amendment (Insurance Reform) Act
2003,
whichever is the later.
3Purpose, objects and
application of Act
(1)
The purpose of this Act is to provide the
framework for the conduct of New South Wales fiscal policy, with a view to
maintaining financial results that are fiscally sustainable in the medium and
long term.
Note—
Fiscal sustainability requires that the
Government be able to manage financial risks and financial shocks in future
periods without having to introduce significant and economically or socially
destabilising expenditure or revenue adjustments in those future periods. What
is considered consistent with fiscal sustainability will vary depending on the
strength and outlook for the economy, the structure of expenditure and revenue
of the budget, the outlook for the State’s credit rating, demographic
and social trends that will affect the budget, and the nature of financial
risks faced by the Government at any given time.
(2)
The following principles are to be employed in
meeting the purpose of this Act:
(a)
to set out fiscal targets and fiscal principles
for the State,
(b)
to make it a goal for the Government to pursue
its policy objectives in accordance with those fiscal targets and fiscal
principles,
(c)
to provide for progress reports on those fiscal
targets and fiscal principles in the annual budget papers,
(d)
to provide for reports on departures from those
fiscal targets and fiscal principles to be prepared by the
Treasurer.
(3)
This Act applies to and in respect of the State
budget.
4Definitions and other general
provisions
(1)
In this Act:
budget
papers means the budget papers of the Government tabled in
Parliament in connection with annual Appropriation Bills.
financial
asset means a financial asset as described in accordance
with GFS.
general
government net financial liabilities includes all
liabilities of the general government sector (such as unfunded superannuation
and insurance liabilities) less all financial assets held by the general
government sector (such as cash, advances and investments except for the
Government’s equity in the public financial enterprise sector and the
public trading enterprise sector).
general
government sector means New South Wales agencies or
activities listed or described as part of the general government sector by the
Australian Bureau of Statistics (which are listed or described in accordance
with international statistics conventions).
government finance statistics or
GFS means Australian Bureau of
Statistics principles for the presentation of government finances (which are
based on international statistics conventions).
net cost
of services means the total cost of services less any
revenue retained by agencies involved in the provision of the
services.
net
operating result means the excess of total revenue over
total expenses as described for GFS.
Note—
Net operating result excludes expenditure on the
acquisition of capital assets, but includes the consumption of capital
(depreciation).
net
worth means total assets less total liabilities as described
for GFS.
public
financial enterprise sector means New South Wales agencies
or activities listed or described as part of the public financial corporation
sector by the Australian Bureau of Statistics (which are listed or described
in accordance with international statistics conventions).
Note—
The Australian Bureau of Statistics refers to the
public financial enterprise sector as public financial
corporations.
public
trading enterprise sector means New South Wales agencies or
activities listed or described as part of the public non-financial corporation
sector by the Australian Bureau of Statistics (which are listed or described
in accordance with international statistics conventions).
total
state sector means the general government sector, the public
financial enterprise sector and the public trading enterprise
sector.
underlying general government net
debt means the sum of the deposits held by, advances
received by and borrowings made by the general government sector less the sum
of cash and deposits held by, advances paid and investments, loans and
placements made by the general government sector (as described for GFS). It
excludes financial assets that are allocated to fund other liabilities through
legislation or contract (for example, the net financial assets of the
Liability Management Ministerial Corporation).
(2)
A reference in the definitions of general
government sector, public
financial enterprise sector and public
trading enterprise sector in subsection (1) to agencies or
activities listed or described by the Australian Bureau of Statistics is a
reference to agencies or activities listed or described by the Bureau for the
purposes of the preparation of GFS.
(3)
Notes included in this Act do not form part of
this Act.
Part 2Fiscal
targets
5Fiscal
targets
(1)
For the purposes of this Act, the fiscal targets
are as set out in this Part.
(2)
The fiscal targets comprise:
(a)
the medium term fiscal targets,
and
(b)
the long term fiscal
targets.
(3)
The fiscal targets are to be achieved in the
context of maintaining prudent, commercially sound debt levels for the
agencies or activities comprising the public trading enterprise
sector.
6Medium term fiscal
targets
The medium term fiscal targets are:
(a)
to reduce the level of general government net
financial liabilities as a proportion of gross state product to 7.5 per cent
or less by 30 June 2010, and
(b)
to maintain underlying general government net
debt as a proportion of gross state product at or below its level as at 30
June 2005, unless an increase is required in net debt to reduce one or more
components of general government net financial
liabilities.
7Long term fiscal
targets
The long term fiscal targets are:
(a)
to reduce the level of general government net
financial liabilities as a proportion of gross state product to 6 per cent or
less by 30 June 2015, and
(b)
to maintain underlying general government net
debt as a proportion of gross state product at or below its level as at 30
June 2005, unless an increase is required in net debt to reduce one or more
components of general government net financial liabilities,
and
(c)
to eliminate total state sector unfunded
superannuation liabilities by 30 June 2030.
Part 3Fiscal
principles
8Fiscal
principles
For the purposes of this Act, the fiscal
principles are as set out in this Part.
9Application of fiscal
principles
(1)
The fiscal principles relate to sound financial
management, and accordingly the Government should aim to pursue its policy
objectives in accordance with those principles.
(2)
Those principles may be departed from in the
presentation and implementation of the budget, but any departure should be
temporary.
(3)
The Treasurer is to include in the budget papers
a statement containing the following:
(a)
the reasons for the
departure,
(b)
the approach to be taken to enable a return to
the principles,
(c)
the time frame within which a return to the
principles should occur.
10Impact of decisions of
Commonwealth Grants Commission etc
The application of the fiscal principles and
targets in determining the tax and other fiscal policies of the Government is
subject to Commonwealth/State financial arrangements and the impact of
decisions of the Commonwealth Grants Commission.
11Fiscal principle No
1—keeping the budget and forward estimates in
surplus
Fiscal principle No 1 is that the budget should
be framed so as to achieve a net operating result for the general government
sector that is a surplus consistent with the fiscal
targets.
12Fiscal principle No
2—constrained growth in net cost of services and
expenses
(1)
Fiscal principle No 2 is that growth in net cost
of services and expenses of the general government sector is to be managed in
accordance with the objective of prudently managing State
finances.
(2)
For the purposes of this section, the average
annual growth in net cost of services and expenses of the general government
sector on a GFS basis is to be calculated for:
(a)
the 4-year period ending with, and inclusive of,
the financial year prior to the budget year, and
(b)
the 4-year budget and forward estimates period
commencing with the budget year.
(3)
For each of the 4-year periods referred to in
subsection (2), the average annual growth in net cost of services and expenses
is to be kept at or below long-term average revenue growth. An assessment of
past and prospective long-term average revenue growth is to be reported each
year in the budget.
(4)
The calculations required by subsection (2) (a)
and (b) are to be reported in the annual budget papers.
13Fiscal principle No
3—managing public sector employee costs
(1)
Fiscal principle No 3 is that government policy
with respect to negotiating rates of pay and related conditions of employment
of general government sector employees is to be consistent with the fiscal
targets.
(2)
In negotiating rates of pay for employees, public
trading enterprises are to take into account conditions in their industry and
the government’s policy for negotiating rates of pay and related
conditions of employment of general government sector
employees.
14Fiscal principle No
4—evaluation of capital expenditure proposals
Fiscal principle No 4 is that capital expenditure
proposals are to be evaluated in accordance with government procurement policy
requirements.
15Fiscal principle No
5—managing State finances with a view to long-term fiscal
pressures
(1)
Fiscal principle No 5 is that the budget should
be framed taking into account the anticipated future fiscal gap likely to
develop as a result of increased spending pressures associated with the ageing
of the population and other long-term trends.
(2)
An assessment of long-term fiscal gaps is to be
presented in the 2006–2007 budget papers and is to be updated in the
budget papers in conjunction with the 5-yearly review of this
Act.
(3)
An assessment of the impact of budget measures in
respect of expenses and revenue on long-term fiscal gaps is to be presented in
the annual budget papers.
16Fiscal principle No
6—maintaining or increasing general government sector net
worth
(1)
Fiscal principle No 6 is that general government
sector net worth should at least be maintained in real terms from year to
year.
(2)
Measures taken to implement this fiscal principle
are to be identified and subject to progress reports in the annual budget
papers.
17Fiscal principle No
7—funding employer superannuation liabilities
(1)
Fiscal principle No 7 is that employer
superannuation liabilities are to be managed and funded so as to eliminate
total state sector unfunded superannuation liabilities by 30 June 2030 and
that the manner of management and funding of these liabilities is to be
subject to periodic review.
(2)
Measures taken to implement this fiscal principle
are to be identified and subject to progress reports in the annual budget
papers.
18Fiscal principle No
8—total asset management
(1)
Fiscal principle No 8 is that government agencies
must align their physical asset management practices (on a whole-of-life
basis) with their service delivery priorities and
strategies.
(2)
Measures taken to implement this fiscal principle
are to be identified and subject to progress reports in the annual budget
papers.
19Fiscal principle No
9—prudent risk management
(1)
Fiscal principle No 9 is that financial risk is
to be managed prudently on the basis of sound risk management
principles.
(2)
For the purposes of this section, the management
of financial risk comprises the following:
(a)
maintaining total state sector net financial
liabilities at prudent levels,
(b)
managing risks associated with contingent
liabilities,
(c)
managing risks associated with the total state
sector’s debt and financial assets, including commercial risks arising
from the ownership of public trading enterprises.
(3)
Measures taken to implement this fiscal principle
are to be identified and subject to progress reports in the annual budget
papers.
20Fiscal principle No
10—tax restraint
(1)
Fiscal principle No 10 is that any adjustments to
legislated tax rates, thresholds and bases are to be made with the maximum
possible restraint having regard to the effect of these adjustments on the
overall level of tax revenue, and policies should be pursued that are
consistent with a reasonable degree of predictability and stability of tax
rates, thresholds and bases for future years.
(2)
The estimated impact of proposed tax policy
changes in the year of implementation and, where different, in a full year, is
to be reported in the budget papers.
Part 4Miscellaneous
21Effect of
Act
(1)
Nothing in this Act places on any person any
obligation enforceable in a court of law or administrative review
body.
(2)
Without limiting subsection (1), a failure to
comply with a provision of this Act:
(a)
does not prevent the introduction of any Bill in,
or the passage of a Bill through, a House of Parliament or prevent assent
being given to any Bill, and
(b)
does not affect the validity of any legislation,
and
(c)
does not affect the validity of any action taken
by any public official or agency, and
(d)
does not expose any person to civil or criminal
liability.
(3)
Accordingly, no court or administrative review
body has jurisdiction or power to consider any question involving compliance
or non-compliance with this Act.
(4)
This section does not apply to the other
provisions of this Part or to Schedule 1.
22Acts not affected by this
Act
This Act does not affect the provisions of any of
the following Acts:
Annual Reports
(Departments) Act 1985
Annual Reports
(Statutory Bodies) Act 1984
Public
Authorities (Financial Arrangements) Act
1987
Public Finance
and Audit Act 1983
State Owned
Corporations Act 1989
Note—
Within-year reporting requirements are contained
in sections 6 and 8 of the Public Finance
and Audit Act 1983.
23Repeal of General Government Debt Elimination Act 1995 No
83
The General
Government Debt Elimination Act 1995 is
repealed.
24
s 24: Rep 2006 No 58,
Sch 4.
25Review of
Act
(1)
The Treasurer is to review this Act to determine
whether the policy objectives of the Act remain valid and whether the terms of
the Act remain appropriate for securing those
objectives.
(2)
The review is to be undertaken as soon as
possible after the period of 5 years from the date of assent to this
Act.
(3)
A report of the outcome of the review is to be
tabled in each House of Parliament within 12 months after the end of the
period of 5 years.
26Further review of
Act
(1)
As soon as possible after the period of 10 years
from the date of assent to this Act, the Treasurer is to review this Act to
determine whether the policy objectives of the Act remain valid and whether
the terms of the Act remain appropriate for securing those
objectives.
(2)
A report of the outcome of the review is to be
tabled in each House of Parliament within 12 months after the end of that
period of 10 years.
(3)
If a House of Parliament is not sitting when the
Treasurer seeks to present the report in accordance with subsection (2), the
Treasurer is to present the report to the Clerk of the House concerned to be
dealt with in accordance with section 63C of the Public
Finance and Audit Act 1983.
Schedule 1
sch 1: Rep 2006 No
58, Sch 4.
Historical
notes
Table of amending
instruments
Fiscal
Responsibility Act 2005 No 41. Second reading speech made:
Legislative Assembly, 24.5.2005; Legislative Council, 9.6.2005. Assented to
16.6.2005. Date of commencement, Sch 1 [3] excepted, 1.7.2005, sec 2 (1); date
of commencement of Sch 1 [3], 1.7.2005, sec 2 (2). This Act has been amended
as follows:
2006
No
58
Statute Law
(Miscellaneous Provisions) Act 2006. Assented to
20.6.2006.
Date of commencement of Sch 4, assent, sec 2
(1).
Table of
amendments
Sec
24
Rep 2006 No
58, Sch 4.
Sch
1
Rep 2006 No
58, Sch 4.