❓ A WA parliamentary question regarding the increase in the loan guarantee fee charged by the Western Australian Treasury Corporation, inquiring about the basis for the increase, actuarial advice, affected agencies, and revenue impact. The Treasurer's response details the rationale, lists affected agencies, and explains the revenue calculation.
AnsweredQoN 303Legislative Council
QuestionView source ↗
TREASURY
CORPORATION — LOAN GUARANTEE FEE
303. Hon MATT BENSON-LIDHOLM to the minister representing
the Treasurer:
I refer to the increase from 0.2 per cent to 0.7 per cent in
the loan guarantee fee charged by the Western Australian Treasury Corporation for
government guaranteed lending to selected agencies.
(1) Did the
government receive any actuarial advice prior to increasing this charge?
(2) If yes to (1), will the minister table the advice or a
summary of the advice; and, if not, why not?
(3) If no to (1), on what basis was the new figure of 0.7 per
cent determined?
(4) Which agencies will pay the increased fee?
(5) Why does
the fee generate $36 million in additional revenue in the 2012–13 year
but only $l6 million in the 2013–14 year?
CORPORATION — LOAN GUARANTEE FEE
303. Hon MATT BENSON-LIDHOLM to the minister representing
the Treasurer:
I refer to the increase from 0.2 per cent to 0.7 per cent in
the loan guarantee fee charged by the Western Australian Treasury Corporation for
government guaranteed lending to selected agencies.
(1) Did the
government receive any actuarial advice prior to increasing this charge?
(2) If yes to (1), will the minister table the advice or a
summary of the advice; and, if not, why not?
(3) If no to (1), on what basis was the new figure of 0.7 per
cent determined?
(4) Which agencies will pay the increased fee?
(5) Why does
the fee generate $36 million in additional revenue in the 2012–13 year
but only $l6 million in the 2013–14 year?
AnswerView source ↗
I thank the honourable member for notice of this question.
(1) The loan guarantee fee is not a pricing issue that is
actuarially based.
(2) Not applicable.
(3) The basis of
the decision was to expose the entities to some of the risk-related cost of
debt they would face if they were required to borrow at the market interest
rate, and ensure competitive neutrality between the entities and the private
sector. Otherwise, the entities would have a competitive advantage relative to
private competitors; for example, electricity generators. A comparison with
other jurisdictions indicates that the rate set is lower than that which
applies to similar entities in other major states.
(4) Albany Port
Authority; Broome Port Authority; Bunbury Port Authority; Busselton Water
Board; Country Housing Authority; Dampier Port Authority; Esperance Port
Authority; Forest Products Commission; Fremantle Port Authority; Geraldton Port
Authority; Gold Corporation; Government Employees Superannuation Board; Horizon
Power; Housing Authority, including Government Regional Officers'
Housing; Independent Market Operator; Metropolitan Redevelopment Authority;
Perth Market Authority; Port Hedland Port Authority; Public Transport
Authority; Synergy; Verve Energy; Western Australian Land Authority; Water
Corporation; Western Australian Treasury Corporation; and Western Power.
(5) The
calculation of the impact referred to is the additional revenue received,
offset by lower taxes and dividends payable by the entities. The dividend paid
by most of the entities in 2012–13 will be based on their profits in
2011–12, which is not affected by the loan guarantee fee increase;
therefore, the benefit to the net operating balance in 2012–13 is
greater than the later years.
(1) The loan guarantee fee is not a pricing issue that is
actuarially based.
(2) Not applicable.
(3) The basis of
the decision was to expose the entities to some of the risk-related cost of
debt they would face if they were required to borrow at the market interest
rate, and ensure competitive neutrality between the entities and the private
sector. Otherwise, the entities would have a competitive advantage relative to
private competitors; for example, electricity generators. A comparison with
other jurisdictions indicates that the rate set is lower than that which
applies to similar entities in other major states.
(4) Albany Port
Authority; Broome Port Authority; Bunbury Port Authority; Busselton Water
Board; Country Housing Authority; Dampier Port Authority; Esperance Port
Authority; Forest Products Commission; Fremantle Port Authority; Geraldton Port
Authority; Gold Corporation; Government Employees Superannuation Board; Horizon
Power; Housing Authority, including Government Regional Officers'
Housing; Independent Market Operator; Metropolitan Redevelopment Authority;
Perth Market Authority; Port Hedland Port Authority; Public Transport
Authority; Synergy; Verve Energy; Western Australian Land Authority; Water
Corporation; Western Australian Treasury Corporation; and Western Power.
(5) The
calculation of the impact referred to is the additional revenue received,
offset by lower taxes and dividends payable by the entities. The dividend paid
by most of the entities in 2012–13 will be based on their profits in
2011–12, which is not affected by the loan guarantee fee increase;
therefore, the benefit to the net operating balance in 2012–13 is
greater than the later years.
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