2012-13 Government Mid-year Financial Projections Statement

Appendix 1NOTE 7: LOAN COUNCIL ALLOCATIONThe Australian Loan Council oversees State, Territory and Commonwealth governments’public sector borrowings using a system of Loan Council Allocations (LCAs). LCAs arebased on net borrowings as indicated by a government’s cash deficit position 1 .An LCA deficit of $4,932 million is forecast for 2012-13, $1,351 million higher than thebudget-time projection of $3,581 million. This revision is largely driven by the impact ofa substantial increase in Keystart home lending activities ($1.1 billion), reflecting a lowerthan expected outturn in 2011-12, and anticipated strengthening of demand for Keystart’smortgage products in 2012-13, primarily due to changes in lending criteria.An LCA deficit of $3,690 million is forecast for 2013-14. The lower outcome comparedto the 2012-13 forecast primarily reflects:a higher cash deficit for the general government sector (up $290 million) and for thepublic non-financial corporations sector (down $544 million), mainly due to changesto the outlook discussed in Chapter 1 of this mid-year review; andlower memorandum items (down $1.7 billion), mainly due to:the impact of moderating growth in Keystart home lending projections in2013-14, following the amended 2012-13 projection noted above; anda $681 million increase in acquisitions under finance leases and similararrangements, mainly for the Mundaring Water Treatment Plant andcommencement of the facilities management contract for the Fiona StanleyHospital.1For the purposes of LCAs, deficits are positive and surpluses are negative.95