Net debt and net worth
The Australian Government eliminated net debt in 2006. Over 2005-06, the level of Australian Government net debt continued to fall from a peak of 18.5 per cent of GDP in 1995-96 to -0.6 per cent of GDP as at 30 June 2006. Since 1996-97, net debt has fallen by around $102 billion. The fall in net debt was $1.3 billion greater than estimated in the 2006-07 Budget, largely reflecting the higher than anticipated underlying cash surplus outcome.
Net interest payments in 2005-06 were $270 million lower than anticipated at the 2006-07 Budget. Having peaked at $8.4 billion in 1996-97, net interest payments declined to $2.3 billion in 2005-06, representing annual savings in interest payments of $6.2 billion.
Australian Government general government sector net worth improved from -$30.3 billion in 2004-05 to -$23.1 billion at the end of 2005-06. The $7.2 billion improvement largely reflects a strong net operating surplus of $15.8 billion and a fall in the market valuation of debt due to movements in interest rates ($1.0 billion). These improvements are partially offset by:
- a decrease in the value of the Government’s shareholding in Telstra due to a fall in the share price over the year to 30 June 2006;
- actuarial revaluations of $3.6 billion relating mainly to the unfunded superannuation liability; and
- a net write-down of assets of $2.2 billion, largely due to provisioning for bad and doubtful debts by the Australian Taxation Office.
Table 7: Australian Government general government sector net worth, net debt and net interest payments
- Net debt equals the sum of deposits held, advances received, government securities, loans and other borrowing, minus the sum of cash and deposits, advances paid and investments, loans and placements.
- Australian Government cash interest payments less cash interest receipts.