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Legislative Assembly for the ACT: 1999 Week 5 Hansard (6 May) . . Page.. 1537 ..

MR QUINLAN (continuing):

I return to the report of the select committee. It did include very reasonable concerns regarding the high level of paper investments that the Government would have had it flogged off ACTEW. These investments carry the very real risk of stock market correction that could wipe out hundreds of millions of dollars overnight. Remember, we are investing over the very long term. We are looking at financing and funding superannuation 40 or 50 years out. Do you think the stock market is going to remain as buoyant as it is right now over that period of time?

I am concerned that this budget implies a plan to hold $1.5 billion in paper assets while maintaining a debt level up near the billion dollar level. I would like to hear the Government explain this strategy. With markets riding high at present, I feel considerable disquiet about the timing of the next bubble burst. That is serious stuff.

I accept that it is fun to mix it with the big boys and girls in the financial market, and it must be nice to strut it with the financial moguls, but who are the real winners in our investment operations? Are our Government and our administration being played for dupes - dupes with the Territory's wealth in their hands, being led along by merchant bankers who, I would suggest, are a bit smarter than those here present?

I want now to address another matter that I find disturbing. Our Chief Minister has written and has stated that we need to move towards surpluses that are at least equal to funds required for the capital program. Intuitively, it sounds okay, but this demonstrates the most basic misunderstanding of accrual accounting, in which she claims so much expertise. She makes a crack about doing accounting 101. Is there a summer school in preparation for that?

Simply because we have adopted accrual accounting, this does not mean that we throw out accounting for the cash. There are non-cash charges made above the line that reduce our operating result but do not reduce our cash holdings. Some need to be matched by setting aside cash, as for superannuation and other employee entitlements, because you are going to have to pay them later. Others do not need to be funded.

The operating data for the general government sector shows a depreciation expense of more than $120m. This represents liquidation of assets, turning our assets back into money. For a continuing enterprise, it is designed to permit asset replacement. That is what depreciation is about. If it exceeds the regular capital works program, as it does by almost 100 per cent this year, it provides necessary funding. Accrual surpluses are not needed for that purpose. You have to do a fund statement. As well as your cash statement, you still have to do a source and application of funds. Look it up in accounting 101. So we see here the most fundamental misunderstanding of very basic accounting on the part of this self-proclaimed expert. Either that or the Treasurer wishes to convey a picture of our economy that is worse than actually exists. You make up your mind.

On a positive note, Mr Speaker - I could not find many - I would like to focus a little on sport and recreation, which is one of my shadow portfolios. It appears from the budget papers that in the focus of this Government's sport funding is a small but identifiable shift from overwhelming and exorbitant support of elite sport to greater emphasis on sport at the mass participation level. For instance, I had pleasure in strongly supporting

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