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Budget Paper No.2 Fiscal and Economic Outlook 2008-2009



Budget Paper No.2 Fiscal and Economic Outlook 2008-2009

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Tabled paper 1293


Tabled papers for 10th Assembly 2005 - 2008; Tabled Papers for 10th Assembly 2005 - 2008; Tabled papers; ParliamentNT; Tabled Papers




Tabled By Delia Lawrie


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23 Expenses The forward estimates for expenses are based on known policy decisions, with adjustments for parameters. The parameters for wages growth in all forward years is 3 per cent with CPI of 2.5 per cent. The efficiency dividend is 2 per cent in 2009-10 and 1 per cent in 2010-11 and 2011-12. The most significant risk to these estimates on the expense side is increasing budget pressure due to increased cost and demand influences. A further risk is in relation to any future enterprise bargaining agreements. The outcome of future enterprise bargaining agreements over and above amounts currently factored into the forward estimates increases budgetary pressures. The Darwin Waterfront project presents a risk to the expense estimates in as far as interest rate fluctuations affect the payments over the life of the public private partnership agreement. This risk is not expected to be significant and will be reassessed each year. The Territory Governments Closing the Gap initiatives could present a risk to expense and capital spending estimates in future years due to the potential for significant additional investment and the potential flow-on effect to service delivery areas. Any additional amounts approved over and above the funding already committed over the next five years could affect future budget outcomes. A contingent liability is a liability that the Government may be called on to meet at some future date if a specified event should occur. Contingent liabilities of the Territory may arise out of a range of circumstances, the most common of which are indemnities and guarantees contained in agreements executed by the Territory. Contingent liabilities may also arise as a result of undertakings made by the Territory or as a result of legislation containing a guarantee or indemnity. Contingent liabilities have the potential to materially affect the Budget due to the likelihood of an actual liability arising. As such, where possible, the potential outcome of an actual liability should be quantified. Details of estimated amounts of material contingent liabilities as at 30 June 2007 resulting from guarantees or indemnities granted by the Territory are presented in Table 2.8. Estimated Quantifiable Contingent Liability as at 30 June 2007 $M NPV1 Amadeus Basin to Darwin Gas Pipeline 43 Pine Creek/McArthur River Electricity Purchase Agreements 80 Public Trustee Common Funds 35 1 Future values discounted at a nominal 7.5 per cent discount rate. Source: Northern Territory Treasury Material contingent liabilities of the Territory are defined as guarantees and indemnities with potential exposure greater than $5 million and are disclosed in annual financial statements of the Territory in accordance with Australian Accounting Standards requirements. Quantifiable and unquantifiable material contingent liabilities of the Territory are outlined below. Contingent Liabilities Table 2.8: Material Quantifiable Contingent Liabilities