Government Bad Debts

In reply to the Hon. M.C. PARNELL (30 June 2020).

The Hon. R.I. LUCAS (Treasurer): I have been provided the following advice:

1.. The Department of Treasury and Finance is not aware of any government agencies changing their bad or doubtful debt write-off policies during the COVID-19 pandemic.

Whilst debt recovery arrangements were temporarily relaxed during the peak period of the pandemic, this did not include waiving any debts. Rather, the terms of recovery were extended.

It is likely that there will be some increase in bad or doubtful debt expenses as a result of COVID-19, however figures are unable to be provided at this time. Further information will become available as part of the finalisation of audited financial statements for 2019-20, which include updates to bad or doubtful debt provisions and expected credit losses. This information will be presented to parliament in October as per standard practice.

2. As at 30 June 2020, the total balance of ticket credits held by the state government for cancelled flights is approximately $775,000. This includes those flights cancelled due to COVID-19 and other cancellations that have occurred as part of the normal course of business.

At this time, the government has not received notification from any airline that the credits held will not be honoured. On this basis, no money has been lost.

In respect of Virgin Australia, the value of the credits is approximately $75,000. It is understood that these credits are still being honoured under the current voluntary administration arrangements, however it remains unknown whether this will continue to be the case following any subsequent business restructure.

Typically, ticket credits are valid for a period of 12 months, however due to COVID-19 airline policies are changing regularly and, in most cases, favourably for customers. For example, the state government's ticket credits with Qantas, which represent over half of the total amount, are currently valid to December 2022.