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Legislative Assembly for the ACT: 2002 Week 12 Hansard (12 November) . . Page.. 3421 ..

MR HUMPHRIES (continuing):

That, of course, was your press release, not Standard and Poors'.

I understand that Standard and Poors is threatening to reduce the territory's credit rating as a result of the prospect of the socialisation of land development in the ACT. As it is, under the present plans you are projecting a deficit of $20.6 million for 2003-04, due largely to the costs of establishing socialised land development in the ACT.

Can you confirm, Treasurer, whether Standard and Poors has advised you that it will be reassessing the ACT's credit rating in light of the proposed introduction of socialised land development? Has Treasury thoroughly reviewed the business model of socialised land development in light of the scepticism Standard and Poors has expressed?

MR QUINLAN: We have certainly had information from Standard and Poors-they review everybody's credit rating every year-and they have expressed some concern. My intention is to meet with them because they tend to use those ABS statistics. As far as I am concerned, it is their choice and they can continue to do so, but they are just concerned about the cash bottom line, in spite of the fact that virtually all governments have now switched to accrual accounting and the fact that the previous Liberal government had espoused the virtues of accrual accounting. They will focus strictly on the cash bottom line, I think.

It may be a difficult task, but it behoves us to meet them and try to find some common ground. The view they are taking is a somewhat distorted view-that is, if you believe in accrual accounting. If you do not think accrual accounting is a true reflection of the bottom line, then maybe you will agree with what Standard and Poors are doing. But they tend to just say, "Let's look at it now; let's look at the cash position."The government is concerned about that, and we will have to take that into account.

I have said before in this place that a AAA rating is to be desired. Of course, it is not much good if you have a AAA rating and you do not borrow anything-it doesn't serve you much. But it is a common measurement of relative economies. Some states are AAA minus, I think, like South Australia and Western Australia.

But it is a measure of concern. It is a matter that the government will have to talk through with Standard and Poors. It is a crazy situation that some mob called Standard and Poors can have that much influence, particularly given the process that they use. But they have got their standards, and we do face a problem there.

You used the term "socialisation of land development". Our intention here is to make sure that the people of Canberra benefit from land development. You and I both know individuals in this town who have, in a very short space of time, become very wealthy people. Ostentatious residences are rising up, as I speak. With better management, a lot of that money might have gone to benefit all the citizens of Canberra.

I do not think that the amounts of money that have been made out of land development over the last seven or eight years in Canberra are all attributable to the lean, mean, hungry approach the private sector uses, versus the so-called sloppy and wasteful approach of the public sector.

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