Page 1320 - Week 05 - Thursday, 31 May 2007
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budget and find the correct figures, the correct accounting treatment that would allow you to make this assessment. It is for this very reason that governments have now adopted the government finance statistics, also known as GFS, accounting method which replaces the former Australian accounting standard, or AAS, method.
So what is the difference here? The AAS method includes land sales, amongst other things, in the budget bottom line and therefore does not reflect sustainable revenue to the government. On the contrary, the GFS method excludes land sales. In a March 2004 report, the ACT Treasurer stated:
GFS financial reporting requirements have been developed specifically to accommodate differences in the activities of governments compared to activities in the private sector.
In addition, the government’s own 2006-07 budget states:
It should be emphasised that this adjustment is not simply required to ensure consistency with the GFS results reported by state jurisdictions. It is also required to provide an accurate assessment of the longer-term sustainability of the budget position.
I urge Ms Porter to review this very point. Moreover, even under the GFS, we must still be careful to read the correct figures to get to the sustainable income position. The GFS figures in the budget provide the net operating balance, excluding gains in superannuation assets and also the net operating balance after adding gains in superannuation assets. As I have said, it makes no sense to include in your calculations gains in superannuation assets which belong to those employed in the public sector. This is clearly the case where, as is currently the case, these superannuation assets do not even cover the liabilities that they intended to cover.
So how do we find out our sustainable income? Well, it is pretty simple. You go to the GFS calculations in the budget and you look at the figure for the GFS net operating balance, excluding gains in superannuation assets. What does the ACT position look like? Adopting this method we can turn to the ACT budget position to see if the government is delivering services in a sustainable manner.
The 2006-07 budget provides for a deficit, under the proper GFS accounting system, of $147.5 million, excluding gains in superannuation assets. In 2005-06, this deficit was $196 million. Indeed, we even had deficit after deficit under this government. Even if we were to include the superannuation gains, we would still have deficits. After adding expected gains in superannuation assets, the budget still provides for a deficit of $80.3 million in 2006-07 and a deficit of $162.3 million in 2005-06.
In some cases, where we are looking at a different question, it may be proper to use a different accounting method or to include superannuation assets. It really depends on the question we are asking, but if we want to get a clear picture of the sustainable income to the territory—which is what this MPI is about—which will allow for sustainable service delivery, then this is what we need to look at.
We can see that the government is not able to deliver sustainable high quality services. We know that there are serious problems in ACT services. But even excluding an
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