Cash flows

In 2006-07, an underlying cash surplus of $10.8 billion is expected, compared with the MYEFO estimate of $9.7 billion. While the 2006-07 cash balance has increased by $1.1 billion since MYEFO, the fiscal balance has increased by only $0.6 billion. This difference between the change in the underlying cash balance and the fiscal balance is largely attributable to increased superannuation expenses which do not have a cash impact and increased road funding where the cash impact occurs in 2005-06 but is expensed in 2006‑07 to 2009‑10.

Table 3 provides a summary of Australian Government general government sector cash flows.

Table 3: Summary of Australian Government general government sector cash flows^(a)

1. Cash flows are derived from the accrual GFS framework excluding GST.
2. Equivalent to cash receipts from the sale of non-financial assets in the GFS cash flow statement.
3. Equivalent to cash payments for purchases of new and second-hand non-financial assets in the GFS cash flow statement.
4. The acquisition of assets under finance leases decreases the underlying cash balance. The disposal of assets previously held under finance leases increases the underlying cash balance.
5. Excludes expected Future Fund earnings from 2005-06 onwards.
6. Under the cash budgeting framework, these cash flows were referred to as net advances.
7. The earnings assume the gross proceeds from the sale of Telstra are transferred to the Future Fund. The Fund is assumed to earn a rate of return initially equal to the yield on other term deposits held by the Government then increasing to a rate consistent with the benchmark return specified in the Government’s investment mandate. The earnings exclude capital gains which are reflected in the statement of other economic flows (Table B4).

Table 4 provides a reconciliation of the variations in the underlying cash balance estimates.

Table 4: Reconciliation of Australian Government general government sector
underlying cash balance estimates

1. Excludes the public debt net interest effect of policy measures.
2. Excludes expected Future Fund earnings from 2005-06 onwards.

Headline cash balance

A headline cash surplus of $37.5 billion is now forecast for 2006-07 compared with a surplus of $36.2 billion at MYEFO. The increase in the headline cash surplus estimate since MYEFO largely reflects the increase in the underlying cash balance plus the inclusion of expected Future Fund earnings.