Page 225 - Week 01 - Thursday, 16 February 2006

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MR QUINLAN: There is a case that, from time to time—and we have seen it and discussed it earlier—there is an actuarial assessment of superannuation liability. Variously over time standards have changed. Superannuation can be brought in through the operating statement. It would be below the line. It would be something like the $95 million that was in the 1995-96 $344 million deficit that the Carnell government delivered to us. That had a $95 million below the line adjustment for the same thing—superannuation.

The standard that exists today, which only changed on 1 July last year, is that those adjustments that relate to the past should be adjustments to the balance sheet but should not distort the operating statement because they are abnormal items and relate to previous periods. The standard that prevails now requires us to charge that money against the balance sheet. We do not say, “Oops, we lost that money in the last 12 months.” That would be the communication from the operating statement. You would not want that. Mrs Dunne, I am sure you would not want the operating statements of the ACT to give people the wrong impression of what is actually occurring. Harmonisation is one of the standards that have been changed to ensure that we do not distort our operating standards. In applying that standard last year, this government was ahead of its time.

MRS DUNNE: I ask a supplementary question. I am glad you mentioned harmonisation. Do you expect that the harmonisation of the financial reporting systems, which you foreshadowed, will overcome completely the flaw in the government’s financial reports to enable us to end up with a more accurate picture for the electors of the ACT?

MR QUINLAN: Understand that harmonisation is about generally accepted accounting. Therefore, it is the system that your Treasury spokesman is saying ain’t relevant. I do not know all the ins and outs of harmonisation, but I do know that the treatment of adjustments to liabilities like these as balance sheet items conveys a far more accurate assessment of the operating year by not being included in an operating statement like they were in 1995-96. It exaggerated the figure. It was a figure that the Carnell government brought to us.

According to the books that were done, the Carnell government had a deficit of 250 something million dollars in 1995-96, I think. But it was reported as $344 million because there was a below the line item. If you happened to be saying to people that the territory had an operating loss of $344 in that year under the Carnell government, you would probably be exaggerating the deficit that the Carnell government brought to us because, in fact, the real deficit was about $250 million.

Mr Mulcahy: Even on those figures it is still pretty bad, Ted.

MR QUINLAN: You do not understand it either, do you? I think the standard of today would say that the Carnell government delivered an operating deficit of $250 million-odd—I cannot remember the exact figure—in that year, but there was a below the line figure that boosted it. If the standards that apply today had been applied back then, we would not have had that distortion. We would not want distortion of reporting. We would not really want to berate the Carnell government for delivering a $344 million deficit if, in fact, they only delivered a $250 million deficit.

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