Page 131 - Week 01 - Wednesday, 15 February 2006

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MR QUINLAN: What do you want me to do—give you exact numbers down to the cent?

Mr Mulcahy: We will settle for that down to the odd million.


MR QUINLAN: About time. If you know so much, go and get the back of an envelope. Work out the surpluses, work out the capital expenditure, have a look at the cash and you will see where it is going. It is a process of cash, operating expenditure and capital expenditure. Very difficult for you! Just go do that.

MR MULCAHY: I ask a supplementary question. With a forecast GFS operating deficit of $332.6 million in 2008-09, where will the funds come from to increase unencumbered cash from $8.2 million to $79.4 million?

MR QUINLAN: Let us start with land sales. Underlying this question is Mr Mulcahy’s desire to use absolute GFS to say, “This is the real position. If I say it often enough, somebody might believe me.” I refer you to page 23 of the Mid year review, which actually gets closer to reconciling GFS with reality. The absolute application of GFS, if you understand it, is that you are not allowed to include land sales because that is sale of assets. You have not earned that income. That is just sale of assets. But you are required to include the operation of, say, the Land Development Authority. So you have to charge yourself $34 million but do not include $170 million worth of land sales—doom and disaster! Let us get on the radio: “The territory is going to hell in a handcart because you are not allowed to count land sales.”

The fact is that the ACT is different from most states and territories. The land is out there. It is not on our books as an asset. It is brought in by that process on an annual cyclic basis and it is turned off and sold. That has happened in the past and that will happen in the future.

Standard & Poor’s and Moody’s are prepared to accept that. We have had those discussions with them. They understand that, because in most states in Australia the land is freehold and somebody has it and there is a little bit of Crown land. It is even the case that, where Crown land is developed in other states, they have a different accounting process. They set up their land development agencies as completely separate businesses that pay dividends to government, and those dividends are counted.

Our dividend happens to be the value of the land minus the cost of the LDA. They both go into our accounts. I know you want to spread the worst news you can.

Mr Mulcahy: I am just telling people the facts.

MR QUINLAN: You would be better off saying, “We have a $100 million deficit and that is a problem.” You would be better off saying that because you would have some credibility. But if you are saying, “You are not allowed to count all your land revenue because we do not want to count it—”

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