Page 1462 - Week 05 - Wednesday, 17 April 1991
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Government Borrowings
MR STEFANIAK: My question is to the Chief Minister. What will be the effect of the withdrawal of the Commonwealth Government's guarantee for borrowings made by the ACT after 1 July this year?
MR KAINE: The Commonwealth Government guarantee applies only until the end of this financial year, after which they consider that we can fly without their assistance. Borrowings before that date will still be under the Commonwealth umbrella, but after that date it will mean that we will be examined by the financial market in our own right as a borrower. The market will look at us on the basis that we no longer have the protection of the Commonwealth behind us. We are not just sitting waiting for that to happen, however. We have sought a credit rating within the Australian rating system so that lenders can have a measure of our ability to service our borrowings. That is what all the States do, just as major corporations do. We will have our own rating so that people can make their own judgment about whether or not to lend us money.
In developing a rating, the agency no doubt will be looking at our ability to cope with our budgetary situation. They will be making an analysis of that. They will be looking at what we did with this year's budget, and no doubt they will be looking very closely at what we are going to do with next year's to cover the financial gap that we are inheriting from the Commonwealth next year. I think the bottom line is that our judgment is that the removal of the Commonwealth Government guarantee is likely to see the rates at which we can borrow increase by about half to one per cent a year. We are going to be incurring a much larger interest bill in future because the Commonwealth has withdrawn its backing to our borrowing.
Institute of Technical and Further Education
MRS GRASSBY: My question is also to the Chief Minister, Mr Kaine. Are there any plans within the Government to corporatise TAFE?
MR KAINE: No. I thought the Government's position in connection with TAFE had been pretty well established. We have put them on a three-year funding arrangement and we are only two-thirds of the way through the first of those three years yet. Our intention for the next three years is pretty obvious and pretty clear. As part of the three-year funding arrangement that we have with them, they are required, increasingly, to seek support from industry and elsewhere by selling their services and the like, because the percentage of money that we will be putting into their coffers as a percentage of the whole reduces slightly from year to year; but there is no implication in that of corporatisation, as far as I am aware.
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