QON – Hydro Tasmania Dividend

Legislative Council, Tuesday 11 August 2026

Ms FORREST question to the LEADER for the GOVERNMENT in the LEGISLATIVE COUNCIL, Ms RATTRAY

Question:

1. In calculating the Hydro dividend estimates included in Table 6.9, what assumptions were made in relation to the size of the Hydro dividend payout ratio applied to projected Hydro profits (for each Budget and Forward Estimate year)?
2. When were the Hydro projected profit estimates, on which the Hydro dividend estimates in Table 6.9 were based, received by Treasury and when were the Hydro dividend estimates finalised as part of the Budget development process?
3. On Page 80 of Budget Paper 2 Vol 1 it is stated that “The decrease in the Renewable Energy Dividend from 2026-27 reflects forecast Hydro Tasmania dividends being insufficient to trigger the threshold”. In this regard, it is noted that Hydro dividend estimates exceed the base criteria level of $90 million in two Forward Estimate years. In the Treasurer’s Estimates Hearings on 1 June 2026, it was suggested by Treasury representatives that this reflected a review of the Renewable Energy Dividend policy to be undertaken by 30 June 2028. Is the statement made on Page 80 of Budget Paper 2 Vol 1, therefore, incorrect?
4. Based on the Hydro dividend estimate for 2029-30 of $173.8 million and applying the currently established criteria for the calculation of the Renewable Energy Dividend to that Hydro dividend amount, what would be the estimated Renewable Energy Dividend payment amount?
5. Given the payment of a Renewable Energy Dividend is current Government Policy, why was the change in this policy to assume no payment over the 2026-27 Budget and Forward Estimates not reflected in the Policy and Parameter Statement detailed in Table 5.5 of Budget Paper No 1?
6. Given the 2026-27 Budget decision to reflect the cessation of the Renewable Energy Dividend prior to the flagged review being undertaken, why was the potential for the payment of a RED to continue post the review not included as a specific expenditure risk in Chapter 4 Risk, Sensitivities and Presentation of Budget Paper 1?
7. Was the 2026-27 Budget decision to reflect the cessation of the Renewable Energy Dividend across the 2026-27 Budget Forward Estimates endorsed by Cabinet?
8. Does the Treasurer agree with the Secretary of Treasury’s comment made during his Estimates Hearing on 1 June 2026 that the policy context for the payment of the Renewable Energy Dividend has changed since it was established by the Government?
9. Noting that the Renewable Energy Dividend was first announced by the Government in August 2023 (which included a reference to a review after four years of operation) and the first payment was made in the 2023-24 Budget year, will the flagged review be finalised in time for any resulting decision to be reflected in the 2028-29 Budget?
10. What are the Terms of Reference for the review of the Renewable Energy Dividend, and will the review include consultation with the community?

Answer:

1. Hydro Tasmania’s dividend estimates are based on the application of the Government’s general dividend policy for Government businesses of 90 per cent of after tax profits.
2. Hydro Tasmania’s projected profit estimates, including associated dividend estimates, were provided to Treasury on 20 February 2026 through the Budget process for returns to Government and were subsequently considered and endorsed by Treasury’s State Forecasting Committee on 26 February 2026 for inclusion in the 2026-27 Budget.
3. The statement on page 80 of Budget Paper 2, Volume 1 is not incorrect.
   Under the Government’s Renewable Energy Dividend policy, the dividend threshold is indexed annually in line with Hobart CPI from a base of $90 million in 2023-24. As a result, while Hydro Tasmania’s forecast dividend exceeds the original base threshold in 2027-28, it does not exceed the estimated indexed threshold for that period.
   In addition, the RED Framework was established with a requirement for review prior to 30 June 2028. Consistent with this design, continuation of the program beyond that date is not automatic and remains subject to Government consideration following the review.
4. A notional RED can be calculated based on the 2029-30 Hydro Tasmania dividend estimate. However, this is subject to a range of assumptions, including the Government continuing the program under the same settings, Treasury’s CPI forecasts (which determine the indexed threshold) and the number of eligible customer connections.
   On this basis, and assuming no growth in eligible customer connections of around 256 000, the notional Renewable Energy Dividend for 2029‑30 is estimated to be approximately $131 per household.
5. The treatment of the RED in the 2026‑27 Budget and Forward Estimates does not represent a change in Government policy and, accordingly, is not reflected as a policy decision in the Policy and Parameter Statement (PPS).
   This approach was also applied in the previous Budget. While Hydro Tasmania’s forecast dividends exceeded the estimated indexed threshold in the final Forward Estimate year at that time, no corresponding RED payment was included due to the proximity of the review date and the absence of a government decision regarding continuation of the program.
   As you are aware, the PPS captures only changes in policy relative to the previous Budget, the continued application of this established budgeting treatment does not constitute a new policy decision or a change in existing policy settings.
   Accordingly, there is no impact to report in Table 5.5 of Budget Paper No. 1.
6. There has been no decision to cease the RED and as indicated the Budget does not pre empt the outcome of the scheduled review.
   The RED remains current Government policy and is subject to a review prior to 30 June 2028, at which point the Government will consider whether and how the program should continue.
   Chapter 4 of Budget Paper No. 1 captures risks at an aggregate level. Importantly, I would refer you to the “Returns from Government Businesses” risk (BP1 page 82) which explicitly recognises that both the level of dividends and the allocation of dividend revenues are subject to a range of influences, including market conditions, major capital investment requirements, and Government policy decisions. This includes mechanisms such as the RED.
   Accordingly, the potential for RED payments to continue beyond the review date is inherently encompassed within this broader risk disclosure, rather than being identified as a separate, specific expenditure risk.
7. There has been no decision to cease the RED and as indicated the Budget does not pre empt the outcome of the scheduled review.
8. The question incorrectly characterises the Secretary’s evidence provided at the Estimates Hearings on 1 June 2026.
   During the hearing, evidence was provided that the RED has been treated as zero in the Forward Estimates in the absence of certainty as to whether the policy will continue and in what form ahead of the scheduled review. The Secretary’s comments regarding the policy context referred to broader market and economic conditions, including changes in wholesale electricity prices, rather than any change to the policy itself.
9. It is my expectation that the outcome of the review arrangements for the RED will be able to be considered in the development of the 2028-29 Budget.
10. Detailed Terms of Reference for the review of the RED framework have not yet been finalised.
    The Terms of Reference will be developed closer to the review period to ensure they are appropriately informed by the policy’s operation to date, as well as prevailing energy market, fiscal and economic conditions alongside the Tasmanian community’s needs.
    It would be my expectation that as part of a review of this nature, strong consideration be given to appropriate stakeholder engagement as part of the process.