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Australian Government Coat of Arms

Budget | 2014-15

Budget 2014-15
Australian Government Coat of Arms, Budget 2014-15
  1. budget.gov.au
  2. 2014‑15
  3. Budget Paper No. 1
  4. Statement 9
  5. Appendix B

Statement 9 (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 2014‑15 LCA is a $37.4 billion deficit. This compares with its LCA nomination of a $44.5 billion deficit endorsed by the Loan Council on 28 March 2014. The LCA Budget estimate falls within the tolerance limit set at nomination.

Table B1: Commonwealth's Loan Council Allocation budget update for 2014‑15
    2014‑15
Nomination
$m		 2014‑15
Budget estimate
$m
  GGS cash surplus(-)/deficit(+) 30,953 26,705
  PNFC sector cash surplus(-)/deficit(+) 3,251 5,162
  NFPS cash surplus(-)/deficit(+)(a) 34,204 31,867
  Acquisitions under finance leases and similar arrangements 0 0
equals ABS GFS cash surplus(-)/deficit(+) 34,204 31,867
minus Net cash flows from investments in financial assets for policy purposes(b) -11,484 -6,819
plus Memorandum items(c) -1,171 -1,239
  Loan Council Allocation 44,517 37,447
  2014‑15 tolerance limit(d) 7,806 7,862

(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.