Appendix A: Loan Council Allocation

Under Loan Council arrangements, every year the Australian Government 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 borrowings.

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 Australian Government’s 2004-05 Loan Council Allocation Budget update is a $2,277 million surplus. This compares with the Australian Government’s nominated, and Loan Council endorsed, Loan Council Allocation surplus of $3,749 million.

The Australian Government has no plans in 2004-05 for any public infrastructure projects with private sector involvement that require disclosure under present arrangements.

Table 13: Australian Government Loan Council Allocation Budget update for 2004-05

1. Such transactions involve the transfer or exchange of a financial asset and are not included within the cash deficit/surplus. However, the cash flow from investments in financial assets for policy purposes has implications for a government’s call on financial markets.
2. For the Australian Government, memorandum items comprise the change in net present value (NPV) of operating leases (with NPV greater than $5 million), university borrowings, over-funding of superannuation and an adjustment to exclude the net financing requirements of statutory marketing authorities and Telstra from the Loan Council Allocation.