State net debt

In aggregate, state general government sector net debt² is expected to remain at around -1.8 per cent of GDP in 2005-06. Net debt for the aggregate state public non-financial corporations sector is estimated to be 4.5 per cent of GDP in 2004-05,³ up from 4.2 per cent in 2003-04. The public non-financial corporations sector owns nearly all of the stock of state non-financial public net debt.

The higher the net debt of a government, the greater the call that will be imposed on the government’s future revenue flows to service that debt.

Most states continue to reduce their levels of general government sector net debt (Chart 7). For example, between 1997-98 and 2007-08, South Australia and Tasmania are expected to reduce general government net debt by more than 13 per cent of GSP. This primarily reflects the sale of assets, such as the electricity privatisation process in South Australia,⁴ and the application of budget surpluses to repay debt.⁵

Aggregate state general government net debt is estimated to fall to -2.0 per cent of GDP by 2007-08. From 2003-04, New South Wales joins Queensland and the Australian Capital Territory in forecasting an ongoing net financial asset position, with South Australia and Tasmania forecasting to be in a similar position from 2005-06.

Chart 7: Individual state net debt by sector (as at end of financial year)(a)(b)
General government
Public non-financial corporations
Non-financial public sector

1. The ABS is currently reviewing accrual time series data, in consultation with all Treasuries, as accrual reporting is now established in all jurisdictions. Improvements in the quality of the time series data have resulted in some changes to these series. Further revisions are expected over the next year.
2. States’ net debt is expressed as a percentage of GSP (left hand axis) and the states’ aggregate net debt is expressed as a percentage of GDP (right hand axis).

Sources: ABS Cat. No. 5512.0, state 2004-05 mid-year reports, Victoria, Australian Capital Territory and Northern Territory 2005-06 Budgets and Treasury estimates.

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² Net debt is the sum of selected financial liabilities (deposits held, advances received, government securities, loans and other borrowing) less the sum of selected financial assets (cash and deposits, advances paid, and investments, loans and placements). Net debt does not include superannuation or superannuation related liabilities.

³ Estimates for the public non-financial corporations sector and the non-financial public sector are unavailable after 2004-05 in some states. The public non-financial corporations sector comprises bodies that provide goods and services (such as electricity, gas and water) that are mainly market, non-regulatory and non-financial in nature, and are financed predominantly through sales to the consumers of these goods and services.

⁴ SA Budget Paper No. 3, Budget Statement 2002-03, p. 6.3.

⁵ SA Budget Paper No. 3, Budget Statement 2004-05, p. 5.1 and Tasmanian Budget Paper No. 1, Budget Overview 2002-03, p. 18.