Under Loan Council arrangements, every year the Commonwealth and each State and Territory nominate a Loan Council Allocation. A jurisdiction's Loan Council Allocation incorporates:
- the estimated non-financial public sector underlying cash balance (made up from the general government and public non-financial corporations sector balances);
- net cash flows from investments in financial assets for policy purposes; and
- memorandum items, which involve transactions, that are not formally borrowings, but nevertheless have many of the characteristics of borrowing.
Loan Council Allocation nominations are considered by the Loan Council, having regard to each jurisdiction's fiscal position and reasonable infrastructure requirements, as well as the macroeconomic implications of the aggregate figure.
As set out in Table 13, the Commonwealth's 2003-04 Loan Council Allocation Budget Update is a $2,159 million surplus. This compares with the Commonwealth's nomination, and Loan Council endorsed, Loan Council Allocation surplus of $5,715 million.
The Commonwealth has no plans in 2003-04 for any public infrastructure projects with private sector involvement that require disclosure under present arrangements.
Table 13: Commonwealth Loan Council Allocation Budget update for 2003-04
- Such transactions involve the transfer or exchange of a financial asset and are not included within the cash deficit. However, the cash inflow from investments in financial assets for policy purposes has implications for a government's call on financial markets.
- For the Commonwealth, memorandum items comprise the change in net present value of operating leases (with net present value greater then $5 million), university borrowings, overfunding of superannuation and an adjustment to exclude the net financing requirements of statutory marketing authorities and Telstra from the Loan Council Allocation.