South Australian Government Financing Authority

In reply to Mr MARSHALL (Dunstan—Leader of the Opposition) (17 July 2014). (Estimates Committee B)

The Hon. A. KOUTSANTONIS (West Torrens—Treasurer, Minister for Finance, Minister for State Development, Minister for Mineral Resources and Energy, Minister for Small Business):

Pursuant to the Public Finance and Audit Act 1987 the Treasurer accepts deposits from government departments (section 8) and other persons (section 21).

The Treasurer places these funds on deposit with SAFA.

The Treasurer has borrowings from SAFA. These gross borrowings include liquidity borrowing that funds the cash held on deposit by departments. The Treasurer has a legal setoff arrangement with SAFA which allows the netting off of these offsetting borrowings and deposits.

This is analogous to the home loan offset arrangements commonly available to the public from financial institutions.

At 30 June 2014 the amount of deposits held by SAFA relating to departmental liquidity needs was expected to be $2.720 billion. This amount rises over the forward estimates to around $3.5 billion.

Consistent with the set off arrangement the general government sector balance sheet in table A.4 reflects an offsetting reduction in both borrowings and deposits of $2.720 billion for the 2014-15 budget.

There is no impact on net debt from this approach.

The 2014-15 budget includes a net off of the interest revenue and expense relating to this arrangement. The reduction in each year of the forward estimates is detailed in the table below.

The set off arrangement only relates to funds held on deposit relating to the liquidity requirements of government departments. On this basis there are deposits that are not set off, these deposits appear in the projected balance sheet, and the interest revenue accruing to the Treasurer from these funds is reflected in the operating statement. For example, industry funds deposited with the Treasurer pursuant to S21 of the Public and Finance Audit Act 1987.