SUBPRIME MORTGAGE MARKET

In reply to Mr HAMILTON-SMITH (Waite—Leader of the Opposition) (25 June 2008).

The Hon. K.O. FOLEY (Port Adelaide—Deputy Premier, Treasurer, Minister for Industry and Trade, Minister for Federal/State Relations): I have been provided the following information:

The South Australian Government Financing Authority (SAFA) has no direct exposure to the US subprime mortgage market.

SAFA has a range of very highly rated financial assets, including in its cash management products. These include AAA Australian residential mortgage backed securities, longer dated highly rated senior bank floating rate notes and insurance related investments. While these financial assets have suffered adverse market value movements as credit spreads have widened, it has not impacted on the state's liquidity position.

SAFA's insurance related investments are managed by Funds SA.

Funds SA does have holdings of mortgage backed securities which include some indirect subprime exposure. The exposure represents approximately 0.006 per cent of total funds under management.