Page 3462 - Week 08 - Thursday, 23 August 2012
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rates—in other words, people are living longer—and increases in benefits due to increased—
Mr Smyth: Surely it is a decrease in pensioner mortality.
MR BARR: Improvements in pensioner mortality rates, yes. So people are living longer—increases in benefits due to increased incomes and a reduction in retirement rates by PSS members.
Further, the territory has seen something of a challenge with these liabilities through the particular accounting treatment, with the projected liabilities being calculated as a net present value calculation and so subject to variations in the discount rate—in this case, the commonwealth 10-year bond rate as at 30 June of each year. So there can be significant volatility in the calculation of what is essentially a very long term liability.
As members would know, the current bond rate is at historically low levels, reflecting the strength of the Australian economy in the face of global weakness, the pressures of European sovereign debt issues and a current international perception of this country as a safe haven for capital investment.
We can expect to see continued volatility in our superannuation liabilities for some time to come. Although this bears watching, it is not cause for undue concern. The government will continue to make proper provision to meet what are very long term liabilities and we will continue to monitor our superannuation.
Proposed expenditure agreed to.
Proposed expenditure—Part 1.10—Territory Banking Account—$214,000 (capital injection) and $33,261,000 (payments on behalf of the territory), totalling $33,475,000.
MR SMYTH (Brindabella) (8.45): When we talk about the territory banking account, it is normally a bit of an esoteric subject, but I think this year is a little different. The reason for this is that the balance in the territory banking account falls to virtually zero as at the end of this financial year. For those that have not looked at it, on page 223 of budget paper 3, at 30 June 2012 there was some $288 million in the account. At the end of this financial year, it will be $2.1 million. At the end of the following year, $2.1 million, and at the end of the following year, that is, 30 June 2015, it will be $1.7 million, recovering slightly in 2016 to $12 million.
While acknowledging that there are cash management issues relating to the flow of funds in and out of the TBA, nevertheless, I raise this aspect as a concern because it seems that by running the TBA to such a low level, particularly when the balance in the account was nearly $300 million at the end of the previous financial year, it could raise some interesting issues.
As was acknowledged in the estimates hearing, there is a possibility in exceptional circumstances, according to the Director-General of Treasury, that some short-term borrowings may be required if the balance in the TBA is too low when funds are required for particular purposes.
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