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Legislative Assembly for the ACT: 1997 Week 13 Hansard (4 December) . . Page.. 4593 ..

MRS CARNELL (continuing):

The ACT Government's consolidated operating loss for 1996-97 before abnormal and extraordinary items was $100m, or 60 per cent better than the previous year, and $131m better than originally budgeted. This operating loss for the Territory for the year is equivalent to $324, on average, for every resident of the ACT, compared to more than $828 each in the previous year. That is a dramatic improvement. The loss for 1996-97 deteriorates to $153m, following a number of abnormal and extraordinary items which are largely technical adjustments to existing asset and liability values. This is still $191m better than the previous year's $344m loss.

The $191m improvement over the consolidated operating result for the previous year stems from a $124m increase in revenues and a $29m decrease in ordinary expenses, as well as a $38m improvement in net abnormal expenses. After budgeting for a modest improvement in operating results for 1995-96, the Territory revenues were $129m better than originally expected for 1996-97, and ordinary expenses decreased by $2m. The main contributors to the improvements were an increase in Territory taxation by $58m from last year, due largely to increased dutiable transactions. Fees recovered for the delivery of goods and services were also up by $36m. Prudent financial management has also resulted in a $26m improvement in interest and other investment income.

With the continuing transition to State-like Commonwealth funding arrangements and the accompanying real reduction in general purpose Commonwealth grants, the Territory funded 67 per cent of its 1996-97 ordinary expenses from its own source revenue, compared to 60 per cent in the previous year. The Territory held net assets of $7.1 billion at the end of 1996-97. This includes $8 billion of fixed assets and $500m in cash and financial investments. Borrowings of $705m remained stable over the year, and the Territory's credit risk rating remains at AAA, the highest available in the country.

The Territory had a cash surplus from operating activities of $186m in 1996-97. This $85m improvement on budget, an increase of $59m from 1995-96, underpins the improved operating result. A sum of $158m was used to purchase new physical and financial assets. Cash holdings increased by $37m, not representing surplus cash but funds used to manage the day-to-day cash needs of the Territory - a little problem Mr Berry had with understanding results. The Territory is dependent on local economic activity for much of its revenue. The ACT Government's management of its activities and the economy has resulted in a significantly improved operating result for 1996-97.

While it is essential to address the ACT's prevailing operating loss so that today's liabilities are not deferred to later generations, the Government must continue its measured response to dramatic Commonwealth employment and spending cuts in the region. The Office of Financial Management is presently updating its 1997-98 financial projections according to audited results for the previous year and any new challenges or opportunities which may have arisen early in this financial year. While it is too early to provide a detailed forecast outcome for this financial year, I am advised by OFM that the operating loss is currently predicted to be either in line with or an improvement upon the final outcome for 1996-97. So there, Mr Whitecross! While the Government will provide more detailed information in coming weeks, this preliminary indication is extremely positive news and shows that improvements made under our reforms over the past three financial years are real and sustainable.

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