Statement of Receipts and Payments of the Consolidated Fund and ...

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gj^YPTANATORY NOTES ON SPECIFIC CONTINGENT LIABILITIES (a) State Bank Victoria The State Bank Merger Agreement between the Treasurer of Victoria and the Commonwealth Bank of Australia (CBA) contains a number of warranties and indemnities which could lead to the CBA making future claims on the State. These claims are limited to the extent that the CBA may not claim against the State if it can claim under an insurance policy, if the matter has been provided for in the final accounts, or if the amount is less than $1 million. Notice of any claims must be made within five years, or in the case of a claim relative to tax, in seven years. CBA must also give notice of potential claims within three months of becoming aware of the claim. The Merger Agreement provides that CBA must give notice to the Treasurer of the nature or anticipated nature of any claim, and where possible, the amount of the claim within three months of CBA first becoming aware of the claim. CBA is also required to give notice to the Treasurer of any litigation which may lead to a claim. The Treasurer has the option of taking over the conduct of the litigation. The Treasurer has received a number of notices under the Merger Agreement. The majority of these notices are either ambit in their nature or relate to litigation or potential litigation where the amount in dispute is considered to be too small to give rise to an actual claim under the Merger Agreement. Where appropriate, however, the Treasurer has taken over conduct of litigation instituted against CBA. To date, CBA has only lodged one claim for payment against the State. The claim is still under consideration by the State. No amount has yet been paid to CBA under the Merger Agreement. Also, a number of the underlying actions for which a notice has been lodged have subsequently been resolved with no claim made upon the State. At this stage, it is not considered appropriate to record a contingent liability for the notices on the claims. (b) Building Societies Uquidity Support Scheme Following the collapse of the Farrow Group, the Government, in conjunction with the then Victorian Building Societies Council (VBSC), established a liquidity support scheme for building societies. The scheme involved the establishment of a line of credit to the VBSC from VicFin. The line of credit was secured by an indemnity from the Director of Housing. The VBSC in turn secured its loans to building societies borrowing under the scheme by taking charges over the assets of those societies. 195
The scheme was originally established for a period of 12 months from July 1990 to enable societies to stabilise their depositor base, merge and/or seek banking licences. The Director of Housing's indemnity was retired in May 1992. The Building Societies Reserve Board, the successor to the VBSC, in conjunction with the building societies industry, established an industry funded liquidity support scheme. The scheme is not supported by the Government. This scheme will remain in operation until a national liquidity support scheme for building societies is established by the Australian Financial Institutions Commission (AFIC) later this year. (c) Director of Housing The Director of Housing, with the approval of the Treasurer, has entered into arrangements to provide support to the Home Opportunity Loans Scheme (HOLS) managed by the National Mortgage Market Corporation. The HOLS Trust is a self supporting trust through which home finance is provided to low and middle income earners who normally do not have access to bank finance. The scheme is secured against first mortgages over residential real estate and receives mortgage payments to meet funding costs. Any net shortfall on security or payments is met by the Director of Housing. The scheme is similar to a schemes in New South Wales, Western Australia and Queensland. A review of these schemes by Moody's Investor Services recognised the low loss rafio of these schemes. In total, the scheme has approved 15 019 home loans for Victorians to purchase their own homes individually or jointly with the Director of Housing. In total, 14 588 individual mortgages had been settled at 30 June 1992, with a value of $922.5 million. In view of the current recession and high unemployment levels in Victoria, and to ensure that the scheme is prudenUy operated, provisions for bad and doubtful debts of around 1 to 1.5 per cent have been made. However, to date the actual total losses of the scheme have been only $1.9 million. The Consolidated Fund has not made any payments in respect of the scheme and is unlikely to be called upon to make any payments. (d) Non-Government Schools In 1990-91, the Government facilitated and guaranteed a funding arrangement on behalf of all Non-Government Schools. These borrowings by the schools were repaid following receipt of their State Government grants. In 1991-92, the government helped facilitate an arrangement on behalf of the Catholic Schools, which was not guaranteed. Other Non-Government schools made private arrangements with their bankers with regard to their own requirements, with the exception of one school, which required a guarantee. The facility for the Catholic Schools and the guaranteed loan were discharged in early July 1992. 196
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•^ .,^^^ ^ Victoria Finance State
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The Honourable the Speaker Legislat
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VICTORIA HNANCE STATEMENT 1991-92 P
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1. INTRODUCTION EXPLANATORY NOTES T
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meet urgent claims may also be prov
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TABLE A,2 BALANCING THE CONSOLIDATE
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Pay-roll Tax Receipts from Pay-roll
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Offsetting these shortfalls were ad
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An amount of $24.2 million, reflecf
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Other significant payments related
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VICTORIA nNANCE STATEMENT 1991-92 S
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FINANCE STATEMENT 1991-92 SUMMARY O
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TEMENT 1991-92 IDATED FUND THE YEAR
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VICTORIA HNANCE STATEMENT 1991-92 A
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1990-91 Actual $ 17 449 641 440 043
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1990-91 Actual $ 87 840 142 87 840
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1990-91 Actual $ 758 331 212 2 700
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VICTORIA nNANCE STATEMENT 1991-92 A
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1990-91 Aaual nNANCE STATEMENT 1991
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nNANCE STATEMENT 1991-92 PAYMENTS F
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Page 153 and 154: nNANCE STATEMENT 1991-92 STATEMENT
Page 155 and 156: ETHNIC, MUNICIPAL AND COMMUNITY AFF
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Page 183 and 184: Department and Programs POLICE AND
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Page 189 and 190: Government of Victoria Capital Work
Page 191 and 192: 4. EXPLANATORY NOTES ON SPECIFIC MA
Page 193 and 194: Financial Year Ending 30 June 1991
Page 195 and 196: 5. LEASING COMMITMENTS The followin
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Page 201 and 202: Table B.6 provides details of conti
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Page 209 and 210: (c) World Congress Centre The World
Page 211 and 212: 10. EQUITY CAPITAL OF THE STATE Tab
Page 213 and 214: 12. SUMMARY OF CREDITORS A Summary
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Page 219 and 220: Contract Auditing Coode Island Revi
Page 221 and 222: Metropolitan Fire Brigades Superann
Page 223: Tobacco Franchise Licences 11 Total
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