Statement 9:
Budget Financial Statements
(Continued)
Appendix B: Australian Loan Council Allocation
Under Loan Council arrangements, every year the Commonwealth and each State and Territory government nominate a Loan Council Allocation (LCA). A jurisdiction's LCA incorporates:
- the estimated non‑financial public sector ABS GFS cash surplus/deficit (made up from the balances of the general government and public non‑financial corporations sectors and total non‑financial public sector acquisitions under finance leases and similar arrangements);
- 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 B1, the Commonwealth's 2010‑11 Loan Council Allocation budget update is a $50.0 billion deficit. This compares with its Loan Council Allocation nomination of a $51.0 billion deficit endorsed by Loan Council on 26 March 2010.
Table B1: Commonwealth's Loan Council Allocation budget update for
2010‑11
- 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 flow from investments in financial assets for policy purposes are displayed with the same sign as 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 surplus/deficit. 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, memorandum items include the change in net present value (NPV) of operating leases (with NPV greater than $5 million), the over‑funding of superannuation and the net financing requirement of the Australian National University.
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