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House of Assembly - Fifty-First Parliament, Third Session (51-3)
2009-04-07 Daily Xml
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SOUTH AUSTRALIAN GOVERNMENT FINANCING AUTHORITY

399 Mr HAMILTON-SMITH (Waite—Leader of the Opposition) (17 November 2008). With respect to the report of the Auditor-General 2007-08—part B, volume 4, page 1027:

1. What was the value of mortgage-backed securities secured by US residential mortgages at 30 June 2008, given that SAFA's investments included $162.6 million of mortgage-backed securities secured by Australian residential mortgages?

2. What was the nature of the $35 million in impaired investments in 2007-08?

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:

SAFA had no mortgage-backed securities secured by US residential mortgages at 30 June 2008. SAFA's investment of $162.6 million of mortgage-backed securities at 30 June 2008 comprised of Australian residential mortgages all of which were rated AAA by Standard & Poor's rating agency.

The impaired investment of $35 million in SAFA's accounts for 2007-08 relates to SAFA's holding of securities issued for the Adelaide to Darwin railway project. As there is reasonable doubt that not all the principal and interest will be collected in accordance with the terms of the securities, a provision was made in SAFA's financial statements.

The provision represents SAFA's estimate as at 30 June 2008 of the amount at risk. Under the arrangements put in place at the time of the State's interest in the project in April 2001, the Premier at the time provided a guarantee and indemnity to SAFA against any loss SAFA might suffer on the investment. Accordingly, the impairment provision expense in SAFA's accounts is matched by a receivable from the Premier. The amount payable by the Premier is recognised in the financial report for the Department of the Premier and Cabinet.

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