❓ Mr. Wyatt questions the Treasurer's decision to abandon the net debt to revenue ratio target, inquiring about the components of 'net financial liabilities' and requesting the ratio for specific years. The Treasurer responds by defining net financial liabilities, providing the requested ratios, and justifying the adoption of a new financial target focused on net debt affordability.
AnsweredQoN 748Legislative Assembly
QuestionView source ↗
I refer to the Treasurer’s decision to abandon the previous government’s policy of keeping the net debt to revenue ratio at or below 47% and ask:
(a) what components of the State’s liabilities are included in the term ‘net financial liabilities’; and
(b) based on the figures contained in the Mid Year Review, what is the current net financial liabilities to operating revenue ratio for:
(i) 2008–2009;
(ii) 2009–2010;
(iii) 2010–2011; and
(iv) 2011–2012?
(a) what components of the State’s liabilities are included in the term ‘net financial liabilities’; and
(b) based on the figures contained in the Mid Year Review, what is the current net financial liabilities to operating revenue ratio for:
(i) 2008–2009;
(ii) 2009–2010;
(iii) 2010–2011; and
(iv) 2011–2012?
AnswerView source ↗
Answered
9 June 2009
Response time
35 days
(a) Net financial liabilities are a wider measure of balance sheet liabilities than net debt. As measured and reported by Standard and Poor's credit rating agency, this measure takes account of net debt as well as unfunded superannuation liabilities.
(b) Total non?financial public sector net financial liabilities as a share of revenue in the 2008?09 mid?year review are as follows:
(i) 2008-09: 51.4%
(ii) 2009-10: 63.9%
(iii) 2010-11: 70.8%
(iv) 2011-12: 80.2%
The net financial liabilities measure is not a formal financial target of the Government.
As outlined in the 2009?10 Budget Paper No. 3:
Economic and Fiscal Outlook
, the Government has adopted a new financial target centred around net debt affordability, specifically 'maintain the ratio of total non?financial public sector net interest costs as a share of revenue at or below 5%'.
This new target is considered to be a better measure of the affordability of the State's debt burden than the previous net debt to revenue ratio. Rather than relating net debt management on the magnitude of net debt to revenue, it targets the overall affordability of projected net debt levels on the State's day?to?day finances through the share of income that is required to pay interest on the State's debt. Accordingly, it indicates the degree to which revenue must be diverted from service delivery to support movements in net debt.
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(b) Total non?financial public sector net financial liabilities as a share of revenue in the 2008?09 mid?year review are as follows:
(i) 2008-09: 51.4%
(ii) 2009-10: 63.9%
(iii) 2010-11: 70.8%
(iv) 2011-12: 80.2%
The net financial liabilities measure is not a formal financial target of the Government.
As outlined in the 2009?10 Budget Paper No. 3:
Economic and Fiscal Outlook
, the Government has adopted a new financial target centred around net debt affordability, specifically 'maintain the ratio of total non?financial public sector net interest costs as a share of revenue at or below 5%'.
This new target is considered to be a better measure of the affordability of the State's debt burden than the previous net debt to revenue ratio. Rather than relating net debt management on the magnitude of net debt to revenue, it targets the overall affordability of projected net debt levels on the State's day?to?day finances through the share of income that is required to pay interest on the State's debt. Accordingly, it indicates the degree to which revenue must be diverted from service delivery to support movements in net debt.
Notice: This document is created or edited using unregistered or evaluation copy of rtLib valid for testing or development purposes only. To use it for productive or any other purposes please register it. You may purchase the license on
http://www.rtlib.com
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