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Australian Government Coat of Arms

Budget | 2014-15

Budget 2014-15
Australian Government Coat of Arms, Budget 2014-15

Statement 7: Debt Statement, Assets and Liabilities

This statement includes the Debt Statement and information on the major assets and liabilities on the Government’s balance sheet.

Debt Statement

The Debt Statement provides information on current and projected debt on issue and details of climate spending and the extent to which this spending has contributed to debt.

Commonwealth Government Securities issuance

The Government finances its activities either through receipts or by borrowing. When receipts fall short of payments, the Government borrows by issuing Commonwealth Government Securities (CGS) to investors.

Even when CGS issuance is not required to finance the government's activities, successive governments have continued to issue CGS for policy purposes, such as to maintain a liquid CGS market. A well‑functioning CGS market supports the Treasury Bond futures markets (used by financial institutions to manage interest rate risk), supports the corporate bond market by providing a risk‑free benchmark, and provides a low‑risk investment vehicle.

The Australian Office of Financial Management (AOFM) is the agency responsible for issuing CGS and the management of the Government's financing activities. The AOFM currently issues three types of securities:

Treasury Bonds: medium‑ to long‑term securities with a fixed annual rate of interest payable every six months;

Treasury Indexed Bonds (TIBs): medium‑ to long‑term securities for which the capital value of the security is adjusted for movements in the consumer price index (CPI). Interest on TIBs is paid quarterly, at a fixed rate, on the adjusted capital value; and

Treasury Notes: short‑term securities generally maturing within six months of issuance. The volume of Treasury Notes on issue will vary over the course of the year, depending on the size and profile of the within‑year funding flows.

All new CGS issuance is undertaken in Australian dollars. There is a very small amount of foreign currency denominated debt securities on issue remaining from issuance undertaken before 1988. Most of these securities mature in March 2017.

Within these three broad categories of CGS, issuance is undertaken into a limited number of maturities (known as lines). Each of these lines has a fixed maturity date (the date on which the Government repays the principal it has borrowed) and, for Treasury Bonds and TIBs, a coupon rate (the annual fixed interest rate paid on the security).

Concentrating CGS issuance into a limited number of lines (rather than issuing securities with a specific time value, such as 10 years) ensures each line is sufficiently large that it can easily be traded in the secondary market. Maintaining a limited number of liquid lines promotes demand for CGS, and assists in lowering borrowing costs.

Estimates and projections of CGS on issue

Estimates and projections of CGS on issue are published in both face value and market value terms in this statement.

The face value of CGS on issue is the amount that the Government pays back to investors at maturity, independent of fluctuations in market prices.1 The total face value of CGS on issue changes when new securities are issued, or when securities are repurchased or reach maturity.

The market value of CGS represents the value of securities as traded on the secondary market, which changes continuously with movements in market prices. Consistent with external reporting standards the market value of CGS on issue is reported on the Australian Government general government sector balance sheet. Changes in the market price of CGS will have an impact on the value of net debt.

Table 1 contains projections of the face value (end‑of‑year and within‑year peak) and the market value (end‑of‑year) of CGS on issue.

As required by the Charter of Budget Honesty Act 1998, Table 1 reports projections of CGS on issue subject to the Treasurer's Direction. The Treasurer's Direction specifies the maximum face value of stock and securities that can be on issue.

When considering these projections, it is important to note that the AOFM publishes an issuance strategy for the budget year only. Projections beyond the budget year are based on a set of technical assumptions and will vary with changes to these assumptions and budget estimates and projections.

Table 1: Projections of Commonwealth Government Securities on issue subject to the Treasurer's Direction(a)
2013‑14
$b
2014‑15
$b
2015‑16
$b
2016‑17
$b
2017‑18
$b
Face value - within-year peak(b) 330 370 410 450 470
Per cent of GDP(b) 20.8 22.7 24.0 25.1 25.0
Month of peak(b) Jun-14 Apr-15 Jun-16 Feb-17 Jan-18
Face value - end of year 320 360 390 430 440
Per cent of GDP 20.2 22.1 22.8 24.0 23.4
Market value - end of year(c) 340 380 420 460 470
Per cent of GDP 21.5 23.3 24.6 25.6 25.0

(a) The face and market value of CGS published in this table are rounded to the nearest $10 billion.

(b) The precise within‑year timing of cash receipts and payments is not known. Projected peaks of CGS on issue are therefore subject to considerable uncertainty.

(c) The Treasurer's Direction applies only to the face value of CGS on issue. This table shows the equivalent market value of CGS that are subject to the Treasurer's Direction. These figures will differ from the estimates and projections published in Statement 9: Budget Financial Statements Table 2: Australian Government general government sector balance sheet that refer to total CGS on issue.

Source: Australian Office of Financial Management.

The amount of CGS on issue subject to the Treasurer's Direction is reported weekly on the AOFM website.

In 2014‑15, the face value of CGS on issue is expected to reach a within‑year peak of around $370 billion. Over the forward estimates, the face value of CGS on issue is projected to rise to a within‑year peak of around $470 billion in 2017‑18.

Changes in CGS on issue since the 2013‑14 MYEFO

Table 2 shows the change in the projected end‑of‑year face value of CGS on issue, between the 2013‑14 MYEFO and the 2014‑15 Budget.

Table 2: Projected CGS on issue subject to the Treasurer's Direction —reconciliation from the 2013‑14 MYEFO to the 2014‑15 Budget
2013‑14
$b
2014‑15
$b
2015‑16
$b
2016‑17
$b
Total face value of CGS on issue subject to the Treasurer's direction as at 2013‑14 MYEFO 310 360 400 430
Factors affecting the change in face value of CGS on issue from 2013‑14 MYEFO to 2014‑15 Budget        
Receipts decisions 0.0 -0.7 -1.9 -2.8
Receipts variations 1.4 -2.4 0.6 -1.2
Payment decisions 0.5 -1.0 -4.0 -7.6
Payment variations 1.1 -0.2 -1.8 4.4
Net investments in financial assets(a) 4.7 -0.3 3.6 8.5
Total face value of CGS on issue subject to the Treasurer's direction as at 2014‑15 Budget 320 360 390 430

(a) Change in net cash flows from investments in financial assets for policy and liquidity purposes.

Note: End of year data. Projections of the face value of CGS on issue are published to the nearest $10 billion. As such, numbers do not add due to rounding.

Chart 1 shows the projected end‑of‑year face value of CGS on issue, as at the 2013‑14 MYEFO and the 2014‑15 Budget, over the medium term.

The published 2013‑14 MYEFO face value of CGS on issue figure of $667 billion in 2023‑24 did not include a cap on tax receipts. The projection for MYEFO in Chart 1 includes a 23.9 per cent of GDP cap on tax receipts, increasing the face value of CGS on issue projected to $748 billion in 2023‑24.

In comparison, at 2014‑15 Budget CGS on issue is projected to be $389 billion in 2023‑24, an improvement of $359 billion. By 2024‑25, the projected end‑of‑year face value of CGS on issue is expected to reach $362 billion.

Chart 1: Total face value of CGS on issue 2013‑14 MYEFO vs 2014‑15 Budget

In the scenario with a tax cap, CGS on issue in 2023-24 is expected to be around $390 billion in 2023-24, compared to $750 billion at MYEFO. CGS is projected to peak at $457 billion in 2018-19, then falling every year to $362 in 2024-25.

Note: A tax‑to‑GDP cap of 23.9 per cent has been applied to these projections. This is the average tax‑to‑GDP ratio in the years post‑GST and pre‑GFC. MYEFO tax‑cap projection was not published at MYEFO.

Source: Australian Office of Financial Management and Treasury projections.

[View chart data]

Over the medium term, the majority of the decrease in the face value of CGS on issue since MYEFO can be attributed to an improvement in the underlying cash balance as a result of policy decisions.

Further details on the changes to the underlying cash balance since the 2013‑14 MYEFO can be found in Statement 3: Fiscal Strategy and Outlook.

Changes in net debt since the 2013‑14 MYEFO

Australian Government general government sector net debt is equal to the sum of deposits held, government securities (at market value), loans and other borrowing, minus the sum of cash and deposits, advances paid and investments, loans and placements.

Table 3: Liabilities and assets included in net debt from 2013‑14 to 2017‑18
  Estimates    Projections
  2013‑14
$m
2014‑15
$m
2015‑16
$m
  2016‑17
$m
2017‑18
$m
Liabilities included in net debt            
Deposits held 182 182 182   182 182
Government securities 346,648 387,772 421,424   460,519 475,214
Loans 9,608 13,436 12,707   12,717 12,640
Other borrowing 1,524 1,376 1,276   1,175 1,149
Total liabilities included in net debt 357,963 402,766 435,590   474,593 489,185
Assets included in net debt            
Cash and deposits 3,004 2,480 2,764   2,760 3,080
Advances paid 39,737 45,145 52,454   61,294 70,021
Investments, loans and placements 117,371 128,753 134,010   149,258 151,884
Total assets included in net debt 160,111 176,378 189,228   213,313 224,985
Net debt 197,851 226,388 246,362   261,280 264,200

Net debt in 2014‑15 is estimated to decrease by $4.7 billion since the 2013‑14 MYEFO to $226.4 billion. From 2014‑15 to 2016‑17, net debt is lower compared to the 2013‑14 MYEFO. This is primarily driven by the higher value of investments held by the Government in newly established funds and other deposits. Changes in the financing requirement have also resulted in a small reduction of net debt. These decreases are partially offset by the impact of lower average yields compared to those at the 2013‑14 MYEFO, which increases the market value of Commonwealth Government Securities on issue.

Table 4: Net debt — reconciliation from the 2013‑14 MYEFO to the 2014‑15 Budget
2013‑14
$b
2014‑15
$b
2015‑16
$b
2016‑17
$b
Net Debt as at 2013‑14 MYEFO ($b) 191.5 231.1 259.1 280.5
Changes in financing requirement 5.7 -0.8 -3.9 -3.7
Impact of lower yields on CGS 5.9 6.2 6.3 6.1
Asset and other liability movements -5.3 -10.2 -15.1 -21.6
Total movements in Net Debt from 2013‑14 MYEFO to 2014‑15 Budget ($b) 6.3 -4.7 -12.7 -19.2
Net Debt as at 2014‑15 Budget ($b) 197.9 226.4 246.4 261.3

Breakdown of CGS currently on issue

Table 5 provides a breakdown of the CGS on issue by type of security as at 8 May 2014.

Table 5: Breakdown of current Commonwealth Government Securities on issue
  On issue as at 8 May 2014
  Face value
$m
Market value(a)
$m
Treasury Bonds 295,136 313,738
Treasury Index Bonds 20,540 26,474
Treasury Notes 1,000 990
Total CSG subject to Treasurer's Direction(b) 316,676 341,202
Other stock and securities 2,548 4,773
Total CGS on issue 319,225 345,975

(a) The Treasurer's Direction applies only to the face value of CGS on issue. This table shows the equivalent market value of CGS that are subject to the Treasurer's Direction.

(b) The same stock and securities that were excluded from the previous legislative limit are excluded from the current limit set by the Treasurer's Direction. These exclusions, outlined in subsection 51JA(2A) of the Commonwealth Inscribed Stock Act 1911, are:

  • stock and securities issued in relation to money borrowed under the Loan (Temporary Revenue Deficits) Act 1953;
  • stock and securities loaned by the Treasurer under a securities lending arrangement under section 5BA of the Loans Securities Act 1919, or held by or on behalf of the Treasurer for the purpose of such an arrangement;
  • stock and securities invested under subsection 39(2) of the Financial Management and Accountability Act 1997; and
  • stock and securities on issue as at the start of 13 July 2008, other than Treasury Fixed Coupon Bonds.

Source: Australian Office of Financial Management.

Treasury Bonds

Table 6 lists Treasury Bonds currently on issue, as well as the annual interest rate (the coupon) and the timing of coupon payments. There are currently 20 Treasury Bond lines on issue, with a weighted average term to maturity of around 5.8 years and the longest maturity extending to April 2033.

Table 6: Treasury Bonds on issue
Coupon
Per cent
Maturity On issue as at 8 May 2014
$m
Timing of interest payments(a)
6.25 15-Jun-14 13,299 Twice yearly 15 Jun 15 Dec
4.50 21-Oct-14 12,000 Twice yearly 21 Oct 21 Apr
6.25 15-Apr-15 14,798 Twice yearly 15 Apr 15 Oct
4.75 21-Oct-15 13,900 Twice yearly 21 Oct 21 Apr
4.75 15-Jun-16 21,900 Twice yearly 15 Jun 15 Dec
6.00 15-Feb-17 21,096 Twice yearly 15 Feb 15 Aug
4.25 21-Jul-17 17,200 Twice yearly 21 Jul 21 Jan
5.50 21-Jan-18 19,900 Twice yearly 21 Jan 21 Jul
3.25 21-Oct-18 5,500 Twice yearly 21 Oct 21 Apr
5.25 15-Mar-19 19,647 Twice yearly 15 Mar 15 Sep
4.50 15-Apr-20 19,197 Twice yearly 15 Apr 15 Oct
5.75 15-May-21 20,999 Twice yearly 15 May 15 Nov
5.75 15-Jul-22 17,500 Twice yearly 15 Jul 15 Jan
5.50 21-Apr-23 20,600 Twice yearly 21 Apr 21 Oct
2.75 21-Apr-24 13,900 Twice yearly 21 Apr 21 Oct
3.25 21-Apr-25 11,200 Twice yearly 21 Apr 21 Oct
4.25 21-Apr-26 7,700 Twice yearly 21 Apr 21 Oct
4.75 21-Apr-27 11,700 Twice yearly 21 Apr 21 Oct
3.25 21-Apr-29 6,500 Twice yearly 21 Apr 21 Oct
4.50 21-Apr-33 6,600 Twice yearly 21 Apr 21 Oct

(a) Where the timing of an interest payment falls on a non‑business day, the payment will occur on the following business day.

Source: Australian Office of Financial Management.

Treasury Indexed Bonds

Table 7 lists Treasury Indexed Bonds currently on issue, as well as the annual interest rate (the coupon) and the timing of coupon payments. There are currently 7 TIB lines on issue, with a weighted average term to maturity of around 9.6 years and the longest maturity extending to August 2035.

Table 7: Treasury Indexed Bonds (TIBs) on issue
Coupon Per cent Maturity On issue as at 8 May 2014
$m
Timing of interest payments(a) 
4.00 20-Aug-15 1,157 Quarterly 20 Aug 20 Nov 20 Feb 20 May
1.00 21-Nov-18 2,539 Quarterly 21 Nov 21 Feb 21 May 21 Aug
4.00 20-Aug-20 4,973 Quarterly 20 Aug 20 Nov 20 Feb 20 May
1.25 21-Feb-22 3,400 Quarterly 21 Feb 21 May 21 Aug 21 Nov
3.00 20-Sep-25 5,450 Quarterly 20 Sep 20 Dec 20 Mar 20 June
2.50 20-Sep-30 3,150 Quarterly 20 Sep 20 Dec 20 Mar 20 June
2.00 21-Aug-35 2,400 Quarterly 21 Aug 21 Nov 21 Feb 21 May

(a) Where the timing of an interest payment falls on a non‑business day, the payment will occur on the following business day.

Source: Australian Office of Financial Management.

Treasury Notes

The face value of Treasury Notes on issue as at 8 May 2014 was $1 billion. Table 8 lists the Treasury Notes currently on issue. Treasury Notes do not pay a coupon, but they are issued at a discount — the face value received at maturity is higher than the price paid at issuance.

Table 8: Treasury Notes on issue
Maturity On issue as at 8 May 2014 ($m) Timing of interest payment
8‑Aug‑14 500 At maturity 8 Aug
24‑Oct‑14 500 At maturity 24 Oct

Source: Australian Office of Financial Management.

Non‑resident holdings of CGS on issue

The sale of CGS is not restricted to Australian residents. As at the December quarter 2013, 67.5 per cent of total CGS on issue were held by non‑residents of Australia (Chart 2).

The proportion of CGS held by non‑residents remains around historically high levels, having risen significantly since 2009. This is likely to have been driven by the build‑up of foreign currency reserves in some countries, and the increasing tendency for these reserves to be invested outside of the major currencies (such as the yen, the US dollar and the euro).

The historically high proportion of non‑resident holdings of CGS is also likely to have been driven by a rise in investor confidence in the Australian sovereign debt market, owing to the relative strength of Australia's public finances and the Australian economy more broadly. This is also contributing to demand for the Australian dollar.

The confidence in the Australian sovereign debt market and the overall subdued global growth outlook has likely contributed to the favourable yields for Australian sovereign debt.

Chart 2: Non‑resident holdings of Commonwealth Government Securities

This chart shows that the proportion of Commonwealth Government Securities (CGS) held by non-residents remains around historically high levels, having risen significantly since 2009.  As at the December quarter 2013, 67.5 per cent of total CGS on issue were held by non-residents of Australia.

Note: Data refer to the market value of holdings.

Source: ABS Catalogue Number 5302.0 and Australian Office of Financial Management.

[View chart data]

Interest on CGS

The interest costs related to CGS are presented in these statements in both cash and accrual accounting terms. The difference between the cash interest payments and accrual interest expense generally relates to the timing of when the interest cost is recognised;

  • Interest payments are recognised in the period when they are paid during the life of the security.
  • Interest expense is recognised in the period in which an expense is incurred during the life of the security, rather when they are actually paid.

Estimates of the interest payments and expense of CGS on issue include the cost of CGS already on issue and future CGS issuance. The cost of:

  • CGS already on issue uses the actual interest rates incurred at the time of issuance; and
  • the expected future issuance of CGS is based on the prevailing market rates across the yield curve at the time of a budget estimates update.

The assumed market yields at the 2014‑15 Budget result in a weighted average cost of borrowing of around 3.7 per cent for future issuance of Treasury Bonds in the forward estimates period, compared with around 3.9 per cent at the 2013‑14 MYEFO. Chart 3 shows the yield curve assumptions underpinning the 2013‑14 Budget, 2013‑14 MYEFO and 2014‑15 Budget.

Chart 3: Yield curve assumptions from 2013‑14 to 2017‑18

This chart shows the yield curve assumptions underpinning the 2013‑14 Budget, 2013‑14 MYEFO and 2014‑15 Budget. The assumed market yields at the 2014‑15 Budget result in a weighted average cost of borrowing of around 3.7 per cent for future issuance of Treasury Bonds in the forward estimates period, compared with around 3.9 per cent at the 2013‑14 MYEFO.

[View chart data]

The Government's interest payments and expense over the forward estimates mostly relate to the cost of servicing the stock of CGS on issue, and are expected to increase over the forward estimates as a result of the projected rise in CGS on issue.

The Government's total interest payments in 2014‑15 are estimated to be $14.2 billion, of which $13.5 billion relates to CGS on issue (Table 9).

Table 9: Interest payments
2013‑14
$m
2014‑15
$m
2015‑16
$m
2016‑17
$m
2017‑18
$m
Interest payments on CGS 13,235 13,515 14,786 15,535 16,352
Per cent of GDP 0.8 0.8 0.9 0.9 0.9
Total interest payments 13,935 14,174 15,442 16,188 17,011
Per cent of GDP 0.9 0.9 0.9 0.9 0.9

The Government's interest expenses in 2014‑15 are estimated to be $15.6 billion, of which $14.7 billion relates to CGS on issue. In the 2013‑14 MYEFO, interest expenses in 2014‑15 were estimated to be $16.4 billion, of which $15.0 billion related to CGS on issue. Table 10 shows the Government's estimated interest expense, interest expense on CGS, interest income and net interest expense over the forward estimates.

Table 10: Interest expense, interest income and net interest expense
2013‑14
$m
2014‑15
$m
2015‑16
$m
2016‑17
$m
2017‑18
$m
Interest expense 14,396 15,551 17,072 18,327 19,011
Per cent of GDP 0.9 1.0 1.0 1.0 1.0
Interest expense on CGS 13,429 14,707 16,133 17,156 17,875
Interest income 3,445 4,229 4,731 5,128 5,565
Per cent of GDP 0.2 0.3 0.3 0.3 0.3
Net interest expense 10,952 11,322 12,341 13,199 13,446
Per cent of GDP 0.7 0.7 0.7 0.7 0.7

Climate spending

The Government's climate spending is shown on an aggregated basis in Table 11.

Table 11: Climate spending from 2013‑14 to 2017‑18
2013‑14
$b
2014‑15
$b
2015‑16
$b
2016‑17
$b
2017‑18
$b
Climate spending(a) 5.75 1.25 0.75 0.60 0.50

(a) Spending in this table is on a headline cash balance basis; that is, payments and net cash flows from investments in financial assets for policy purposes, as well as estimated interest receipts associated with Clean Energy Finance Corporation investments.

Over the forward estimates, the key components of climate spending are:

  • the Emissions Reduction Fund, which will provide incentives to support abatement activities across the economy;
  • funding for the Department of Industry to support Australian Renewable Energy Agency legacy functions;
  • the free permit buyback facility provided as part of the Jobs and Competitiveness Programme and the Energy Security Fund, noting these programmes will be abolished from 2014‑15; and
  • previously committed expenditure from the Biodiversity Fund and the Clean Technology Programmes, noting these programmes will no longer be eligible for new applications beyond 2013‑14.

The slight increase in climate spending in 2013‑14 is primarily due to additional investment by the Clean Energy Finance Corporation since MYEFO.

Impact of climate spending on debt

Receipts and debt are not specifically allocated to particular spending programmes. In this context, there are multiple approaches that could be taken to consider the extent to which spending on climate change has contributed to debt.

One approach is to assume that the proportion of climate spending being financed through new debt (as opposed to receipts) is equivalent to climate spending as a proportion of total spending. Table 12 shows the impact of climate change spending on debt using this approach.

Table 12: Impact on debt — climate spending as a proportion of total spending
  2013‑14 2014‑15 2015‑16 2016‑17 2017‑18
Climate spending ($b) 5.75 1.25 0.75 0.60 0.50
Total spending ($b) 417.2 419.3 437.0 459.5 479.4
Climate spending (per cent of total spending) 1.4 0.3 0.2 0.1 0.1
Change in face value of CGS from previous year ($b) 63 40 30 40 20
Contribution to change in face value of CGSfrom climate spending ($b) 0.86 0.12 0.05 0.05 0.02

(a) The calculation of spending in this table is on a headline cash balance basis; that is, payments and net cash flows from investments in financial assets for policy purposes, as well as estimated interest receipts associated with the Clean Energy Finance Corporation investments.

(b) Calculations of the change in the face value of CGS on issue use data from 2013‑14 onwards rounded to the nearest $10 billion and are total CGS on issue.

Recurrent and capital spending

In the 2013‑14 MYEFO, the Government made a commitment to enhance disclosure in the 2014‑15 Budget on the proportion of the budget2 allocated to recurrent and capital spending.

The recurrent budget includes pension and income support payments, funding in the areas of health and education (except where funding is allocated to the building of facilities), interest payments on public debt, student loans, and operating costs of the Government including payments to employees.

The capital budget comprises loans and other funding made to fund infrastructure, including transport and communications infrastructure; and purchases of defence and other non‑financial assets.

Chart 4 below presents a detailed breakdown of recurrent and capital spending for the 2014‑15 year.

Chart 4: Recurrent and capital spending as a proportion of the Budget in 2014‑15

This chart provides a breakdown of the recurrent and capital budgets.

(a) Recurrent payments excluding payments to states and territories include pension and income support payments, government loans, payments to government employees, payments for goods and services, and grants and subsidies not made for capital purposes.

(b) Other capital purchases include the purchase of land and buildings, software and other facilities.

(c) Capital grants and subsidies include payments to recipients other than those within the general government, for example local governments.

(d) State and territory payments include payments for general revenue assistance (including Goods and Services Tax payments) and specific purpose payments.

[View chart data]

Chart 4 shows that 91 per cent of total budget spending estimates in 2014‑15 is recurrent, and the remaining 9 per cent of the budget is capital.

Of the total budget, 72 per cent comprises recurrent payments such as income support payments, grants and subsidies to recipients other than states and territories, interest payments on public debt, operating costs of the Government, and student loans. Payments to States and Territories to fund recurrent spending make up 20 per cent of the budget.3 This amount includes specific purpose payments to States and Territories, including in the areas of health and education, and recurrent spending by the States and Territories estimated to be funded through general revenue assistance.

Of the $36.2 billion of the capital budget, around $19.8 billion relates to specific purpose payments to the states and territories for capital purposes and the portion of General Revenue Assistance that is estimated to fund capital spending by the States and Territories. Equity payments to NBN Co comprise around 14 per cent of the capital budget and purchases of defence capital (for example, defence weapons and aircraft) comprises around 20 per cent. Other capital purchases such as software facilities upgrades make up around 10 per cent of the capital budget, with the remaining 1 per cent funding capital loans, grants and subsidies to recipients other than States and Territories.

Funding for the Infrastructure Growth Package is reflected in payments to States and Territories for capital spending (for amounts paid to States and Territories) and other capital loans, grants and subsidies (for amounts paid to local governments).

Additional Transparency — Medium term projections

To improve the transparency of the budget papers, the medium term projections in this budget have been enhanced to encourage discussion and debate beyond the short term about the benefits of funding important investments such as infrastructure.

Building on the presentation of the medium term in the 2013 Pre-Election Economic and Fiscal Outlook, Budget Statement 3: Fiscal Strategy and Outlook includes different scenarios of the medium term outlook, for the underlying cash balance, total payments, total receipts and CGS on issue.

Further, the Budget details the Government's commitment to funding productivity-enhancing infrastructure over the medium term.

The Government is investing $50 billion in infrastructure spending over the next 6 years, with this spending included in the forward estimates and medium term projections. The Government's infrastructure spending will also catalyse State and private sector infrastructure investment, bringing total infrastructure spending to over $125 billion.

The medium term fiscal projections in this budget include the expenditure on infrastructure by the Commonwealth, but do not take into account the economic benefits of this infrastructure.

When the over $125 billion of additional infrastructure projects catalysed by the Government are completed, they will add one percentage point to the level of GDP.


1 For TIBs, the final repayment amount paid to investors includes an additional amount owing to inflation accretion over the life of the security. This amount is not included in the calculation of face value.

2 Total budget is defined as all cash outflows within the underlying cash balance and headline cash balance (where identifiable). This is equal to total payments plus investments in financial assets for policy purposes (for example, loans and equity payments).

3 The proportions of general revenue assistance which fund recurrent and capital spending has been estimated based on past data. Specific purpose payments are split into recurrent and capital in accordance with Government Finance Statistics.