Attachment B:
Australian Loan Council Allocation
Under Loan Council arrangements, every year the Australian Government and each State and Territory government nominate a Loan Council Allocation (LCA). A jurisdiction's Loan Council Allocation incorporates:
- the estimated non‑financial public sector GFS cash surplus/deficit (made up from the balances of the general government and public non‑financial corporations sectors);
- 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.
LCA nominations are considered by the Loan Council, having regard to each jurisdiction's fiscal position and infrastructure requirements, as well as the macroeconomic implications of the aggregate figure.
As set out in Table 23, the Australian Government's 2007‑08 LCA final budget outcome is a $27,123 million surplus. This compares with the Australian Government's 2007‑08 LCA Budget estimate of a $17,905 million surplus.
A tolerance limit of 2 per cent of non‑financial public sector receipts applies between the LCA Budget estimate and the outcome. Tolerance limits recognise that LCAs are nominated at an early stage of the Budget process and may change as a result of policy and parameter changes. The Australian Government's 2007‑08 LCA outcome exceeds the 2 per cent tolerance limit. This change is due to higher than expected surpluses in the General Government sector, influenced by higher than expected revenues and lower than expected expenses.
Table 23: Australian Government Loan Council Allocation
- May not directly equate to the sum of the GG sector and the PNFC sector cash surplus/deficit due to intersectoral transfers which are netted out.
- Net cash flows from investments in financial assets for policy purposes are displayed with the same sign as which they are reported in cash flow statements. 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.
- For the Commonwealth's Loan Council Allocation outcome, memorandum items include the change in net present value (NPV) of operating leases (with NPV greater than $5 million) and the over‑funding of superannuation.