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Legislative Assembly for the ACT: 2002 Week 11 Hansard (26 September) . . Page.. 3389 ..

Borrowing costs comprise both the interest paid on borrowings to external financial institutions and investment interest paid to internal ACT Government entities earned on the balance of funds invested through the Central Financing Unit (CFU).

The following table summarises the borrowing cost estimates for 2001-02.

Note

2001-02

Budget

$'000

2001-02

Est Outcome

Published 25 June 02

$'000

Variation

%

Borrowing Cost

Payments to Financial Institutions

a

39,173

34,915

-11%

Payments to other ACT Government Entities

Agencies

b(i)

11,848

18,340

55%

Territory Banking Account

b(ii)

0

8,559

100%

11,848

26,899

127%

Total Borrowing Cost

51,021

61,814

21%

Notes to table

a) Payments to Financial Institutions For Borrowings Administered On Behalf Of the territory

CFU administers various combinations of fixed and floating interest rate borrowings on behalf of the Territory. The decrease between the original 2001-2002 budget and the estimated 2001-2002 outcome as published in the 2002-2003 Budget papers is attributed to the lower than anticipated interest rates on the Territory borrowings that are financed on a floating interest rate basis. These include the $250m Indexed Annuity Bonds and the $140m of Commercial Paper on issue.

b) Investment Interest Payments To ACT Government Agencies

ACT Government Agencies invest temporary surplus funds through the CFU. Investment interest earned on these funds is received as revenue by the CFU and is then onpassed back to Agencies as an interest payment. The increase of 127% between the original 2001-2002 budget and the estimated 2001-2002 outcome as published in the 2001-02 Budget papers is due to the combination of:

i. a higher than anticipated level of average funds held on investment. The original 2001-2002 budget assumed an average investment balance of $242m returning an estimated 4.9% back to the agencies. The estimated 2001-2002 outcome was revised to an average investment balance of $399m returning an estimated 4.6% back to the agencies.

ii. the increase in investment interest paid out to the Territory Banking Account is as a result of reclassifying these payments as interest payments as opposed to including the interest payment as part of the annual dividend payment to the Territory Banking Account as was the case in the original 2001-2002 budget. The amount of Territory Banking Account related investment interest estimated to be earned and included as part

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