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Legislative Assembly for the ACT: 2002 Week 12 Hansard (12 November) . . Page.. 3422 ..

MR QUINLAN (continuing):

A lot of money out of land development in the ACT should have accrued to benefit the people of the ACT-who I believe were the owners of that land-and has not. That is also of major concern to the government.

MR HUMPHRIES: I have a supplementary question. Minister, given the possibility of borrowing on the part of the ACT government, either in general or for the land development project itself, what contingencies do you believe will need to be built into the higher cost of borrowing that may result from a downgrading of the territory's credit rating?

MR QUINLAN: The budget that we brought down, even though it incorporated those numbers at the base of your question, did not involve borrowing to support those. If you look at the total unencumbered cash in that budget, you will find that there is still a positive line. Don't hold me to this; I do not wish to mislead the house. But I think I recall something in excess of $130-140 million unencumbered cash in the outyears at the end of the forward estimates for the budget.

The closest we may come to borrowing-let's be frank; there is some debate about definitions these days as the world gets more sophisticated-is the public-private partnerships that governments might involve themselves in. I think the same mob, Standard and Poors, have made some comment that this is an area that bears further discussion and that a public-private partnership for the construction of some assets may be nothing more than borrowing.

If you build a tollway, Standard and Poors will say that that is okay and is not borrowing. If you build a form of public asset that isn't revenue generating, Standard and Poors might, on the other hand, say, "We think that should be classified as borrowing."

The grey area will be something like a jail. If, using a public-private partnership, we constructed a jail for, say, $50 million, as an extension of the remand centre that is intended, that partnership would not be revenue generating but would certainly be cost saving. It would immediately start to reduce the cash that flows out of the territory to pay New South Wales for harbouring our prisoners-and, I might add, harbouring New South Wales criminals who come down here, are caught down here and are sent back to be incarcerated in New South Wales.

There is evolution in the thinking, and the last writings of Standard and Poors that I read, which was fairly recently, reflect that they were still mulling over trying to find some black-and-white definitions for that. Again, that is a point of concern for all of us.

If at least the economics are right, both sides of the house want a correctional facility in the ACT. At the same time, that may also have far more impact upon our rating than the mere suspension for one year of cash flow from land.

What the budget reflects in terms of the land development-because there is a lead lag between when the developments commence and when the money flows from developed block sales, rather than bulk sale-is that there will be one trough in the revenue that otherwise flows from land.

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