TOURISM COMMISSION

In reply to the Hon. D.W. RIDGWAY (Leader of the Opposition) (15 March 2012).

The Hon. G.E. GAGO (Minister for Agriculture, Food and Fisheries, Minister for Forests, Minister for Regional Development, Minister for Tourism, Minister for the Status of Women): I am advised:

1. The South Australian Tourism Commission (SATC) conducts more than $5 million of business using foreign currency every year. This includes funds required to undertake overseas marketing activities, pay costs for international representatives and funds for the payment of various contracts.

A foreign exchange hedging transaction aims to eliminate or reduce the impact of currency price fluctuations by using appropriate forward cover rather than the 'spot' exchange rate on delayed settlement.

The Treasurer of South Australia has issued instructions with regard to agencies managing their foreign exchange exposures. All public authorities as defined by the Public Finance and Audit Act 1987 are required to comply with the instruction, unless an exemption is obtained from the Treasurer.

In 2009-10 and 2010-11, SATC's book loss on foreign exchange arose when the value of the Australian dollar increased in respect of the forward hedged rates obtained through the South Australian Government Financing Authority. One of the other characteristics of the foreign exchange is that the fluctuations in the exchange rate will cause one currency to lose its monetary value, while others to gain, so there is a continuous motion in prices overtime.