Statement 9: Australian Government Budget Financial Statements (Continued)
Appendix B: Australian Loan Council Allocation
Under the Loan Council arrangements, every year the Commonwealth and each State and Territory government nominate an annual Loan Council Allocation (LCA). A jurisdiction's LCA incorporates:
- the estimated non‑financial public sector ABS GFS cash surplus/deficit (made up from the balance 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 Australian Government's revised estimate for the 2013‑14 LCA is a $29.0 billion deficit. This compares with its LCA nomination of a $10.3 billion deficit endorsed by the Loan Council on 3 April 2013.
The Loan Council Allocation Budget estimate falls outside the tolerance limit set at nomination. This change primarily reflects the weaker outlook for tax receipts.
| 2013‑14 Nomination $m |
2013‑14 Budget estimate $m | ||
|---|---|---|---|
| GGS cash surplus(-)/deficit(+) | -4,835 | 14,736 | |
| PNFC sector cash surplus(-)/deficit(+) | 2,884 | 4,862 | |
| NFPS cash surplus(-)/deficit(+)(a) | -1,951 | 19,599 | |
| plus | Acquisitions under finance leases and similar arrangements | 470 | 469 |
| equals | ABS GFS cash surplus(-)/deficit(+) | -1,481 | 20,067 |
| minus | Net cash flows from investments | ||
| in financial assets for policy purposes(b) | -12,732 | -10,073 | |
| plus | Memorandum items(c) | -985 | -1,121 |
| Loan Council Allocation | 10,265 | 29,019 | |
| 2013‑14 tolerance limit(d) | 7,982 | 7,691 |
(a) May not directly equate to the sum of the GGS and the PNFC sector due to intersectoral transfers which are netted out.
(b) Net cash flows 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.
(c) 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.
(d) A tolerance limit equal to two per cent of NFPS cash receipts from operating activities applies to the movement between the LCA nomination and budget estimate, and again between the budget estimate and outcome.
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