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Deeper ever deeper into debt

By johnboy - 14 May 2013 15

Every year the ACT Government promises us that while this year is a deficit, next year they’ll balance the books.

Maybe if all the good little boys and girls were to clap their hands in unison all will be well.

Meanwhile the Liberals’ Brendan Smyth is pointing out just how much money will have to repaid in that golden future:

The March Quarter 2013 Consolidated Financial Reports tabled in the Assembly today shows that the ACT Budget is still on track for a $362 million deficit this financial year.

The combined efforts of the Gillard-Swan Federal Labor Government and the ACT’s Gallagher-Barr Labor Government have contributed to keeping the ACT Budget on track for a near record deficit, according to Shadow Treasurer, Brendan Smyth.

“What the report shows is that the actions of the Federal Government, through their reduction in public service numbers and the early calling of the Federal election, has had an real negative impact on the ACT, with the ACT Labor Government on track for a near record deficit,” Mr Smyth said.

“At the same time our superannuation liability, our largest single liability, has increased to a record $7.765 billion, making up 67% of our total liabilities.

“Net Debt has also deteriorated by $593 million since June 2012, due to additional borrowings undertaken by the Government.

What’s Your opinion?


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15 Responses to
Deeper ever deeper into debt
dungfungus 11:26 am 15 May 13

HiddenDragon said :

dungfungus said :

milkman said :

dungfungus said :

Is that $7.765 billion superannuation liability unfunded? If it is, that is unsustainable. Who the hell runs the Government’s superannuation anyhow?

Why is it unsustainable? It’s not like it will ever need to be paid out in a single year.

Not having a go, genuinely curious as to your opinion.

Well, as I understand it, this is only the amount due to to public servants who had defined benefit (unfunded) pensions and the liability declared applies only to those who are now in retirement. This means the amount could triple in the next 10 years and it will continue until they (and their spouses) die.
I would be happy to be corrected on this if anyone knows otherwise.
It is noted that the new self contribution super scheme should be fully funded but from time to time the Government has to “top it up”. Who runs this scheme as I believe it is not “in house” as it should be?

Whatever the answers to those pertinent questions, I expect that the ACT will have a bigger problem with this issue than most other jurisdictions (particularly NSW) and so, in time, there will be more and more rates and taxes “exiles” (including retired ACT public servants) who will move across the border.

Some people may eventually come to appreciate that one of the most useful things ever done by the Stanhope Government was to close off access to the defined benefit scheme for new employees in the ACT PS. That could only have occurred under a Labor government – had a Liberal government tried it, there would have been the mother of all battles.

Good comment.
I would expect of the 25,000 ACT Government public servants many would be reading this post so it amazes me that there is next to no interest in this massive liability and the future potential for it to blow out. I guess you are all saying “well, it is not my problem, so as long as I get my entitlement then everyone else can get stuffed”.
I urge you to think again, make some enquiries, look what is happening to government “guaranteed” pension funds in other countries.
Our rates will be quadrupling, not tripling.

FioBla 11:18 am 15 May 13

Debt’s nice.

HiddenDragon 11:06 am 15 May 13

dungfungus said :

milkman said :

dungfungus said :

Is that $7.765 billion superannuation liability unfunded? If it is, that is unsustainable. Who the hell runs the Government’s superannuation anyhow?

Why is it unsustainable? It’s not like it will ever need to be paid out in a single year.

Not having a go, genuinely curious as to your opinion.

Well, as I understand it, this is only the amount due to to public servants who had defined benefit (unfunded) pensions and the liability declared applies only to those who are now in retirement. This means the amount could triple in the next 10 years and it will continue until they (and their spouses) die.
I would be happy to be corrected on this if anyone knows otherwise.
It is noted that the new self contribution super scheme should be fully funded but from time to time the Government has to “top it up”. Who runs this scheme as I believe it is not “in house” as it should be?

Whatever the answers to those pertinent questions, I expect that the ACT will have a bigger problem with this issue than most other jurisdictions (particularly NSW) and so, in time, there will be more and more rates and taxes “exiles” (including retired ACT public servants) who will move across the border.

Some people may eventually come to appreciate that one of the most useful things ever done by the Stanhope Government was to close off access to the defined benefit scheme for new employees in the ACT PS. That could only have occurred under a Labor government – had a Liberal government tried it, there would have been the mother of all battles.

thebrownstreak69 9:03 am 15 May 13

bundah said :

Ah if only we could go back to the open cheque book days pre self gummint.

Indeed. Having our beautiful city supported by the efforts of other Australians was really great.

dungfungus 8:58 am 15 May 13

milkman said :

dungfungus said :

Is that $7.765 billion superannuation liability unfunded? If it is, that is unsustainable. Who the hell runs the Government’s superannuation anyhow?

Why is it unsustainable? It’s not like it will ever need to be paid out in a single year.

Not having a go, genuinely curious as to your opinion.

Well, as I understand it, this is only the amount due to to public servants who had defined benefit (unfunded) pensions and the liability declared applies only to those who are now in retirement. This means the amount could triple in the next 10 years and it will continue until they (and their spouses) die.
I would be happy to be corrected on this if anyone knows otherwise.
It is noted that the new self contribution super scheme should be fully funded but from time to time the Government has to “top it up”. Who runs this scheme as I believe it is not “in house” as it should be?

bundah 8:42 am 15 May 13

Ah if only we could go back to the open cheque book days pre self gummint.

milkman 6:31 am 15 May 13

dungfungus said :

Is that $7.765 billion superannuation liability unfunded? If it is, that is unsustainable. Who the hell runs the Government’s superannuation anyhow?

Why is it unsustainable? It’s not like it will ever need to be paid out in a single year.

Not having a go, genuinely curious as to your opinion.

dpm 10:31 pm 14 May 13

I’m by no means defending the current Govt, but as I don’t know much about this stuff, how is the situation so dire on one hand, but also:
a) the third best jurisdictional economy (Keeping in mind that potentially comparing a bunch of bad things doesn’t make the ‘relatively better’ ones automatically ‘good’)
http://www.investing.commsec.com.au/stateofstates ,

b) with a top credit rating?
http://www.afr.com/rw/2009-2014/AFR/2013/03/21/Photos/0a69343a-91c6-11e2-9e2c-9d27ef4e6daa_AustralianStates_Mar2013.pdf

Is there a measure somewhere that tells the real story then? And if so, why do people always banging on about the above ones, if they are meaningless? (serious question)!

dungfungus 9:12 pm 14 May 13

Is that $7.765 billion superannuation liability unfunded? If it is, that is unsustainable. Who the hell runs the Government’s superannuation anyhow?

HiddenDragon 8:27 pm 14 May 13

Nothwithstanding the indignant (and carefully worded) denials, property rates will keep going up, and at a quite a clip, too if the gap is to be narrowed, and all those accumulating superannuation pensions paid for.

Deref 7:03 pm 14 May 13

Zed and Tony’ll fix it, no worries.

rosscoact 6:31 pm 14 May 13

This isn’t like the debt you get from buying the Maloo and the 80″ flatscreen on the Amex gold card.

Highschool economics tells us that debt for infrastructure projects is a way to get future generations to pay for the benefit they receive.

Some spending and debt is less desirable but I’ve never known an opposition Treasury spokesperson to either know the difference or admit it.

Facile statements by Smyth.

Tetranitrate 6:03 pm 14 May 13

Err right.
This deficit figures to be less than 3% of state final demand or thereabouts. (http://www.treasury.act.gov.au/snapshot/SFD.pdf)
Long run nominal GDP growth generally does better than that – year on year, the Nominal Growth in state final demand in the ACT (and it’s nominal that matters because the debt is nominal) was like 5.1% as of September quarter last year as far as I’m reading. That to me implies that the ACT governments debt was shrinking relative to the size of the ACT economy.

No doubt things will blow out over the next couple of years what with the change of government federally, but it doesn’t strike me as a particularly perilous course to be on.

Keijidosha 4:45 pm 14 May 13

Less whinging, more skywhale!

dpm 2:37 pm 14 May 13

It’s our centenary! Who cares about this other stuff! 🙂

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