Debates Day 2 - Wednesday 1 May 1991
Parliamentary Record 3
Debates for 6th Assembly 1990 - 1994; ParliamentNT; Parliamentary Record; 6th Assembly 1990 - 1994
Made available by the Legislative Assembly of the Northern Territory
Legislative Assembly of the Northern Territory
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Legislative Assembly of the Northern Territory
DEBATES - Wednesday 1 May 1991 Let us examine too his parrot-like line on the need for accrual accounting in the Territory. His argument is that accrual accounting would serve the Territory better than cash accounting and, in some cases, he is right. In fact, all statutory authorities in the Territory use accrual accounting as required by the Territory's financial legislation. Mr Speaker, you would know that cash accounting records transactions when payment is made or revenue is received. Accrual accounting attempts to bring to account the monetary value of a transaction in the accounting period in which outgoings are incurred or benefits are derived. On the plus side, accrual accounting provides an accounting framework which integrates operation and capital transactions in a logical manner. It enables a closer matching of revenues with expenses, even though cash may not actually have changed hands. On the minus side, a system of accrual accounting adds significant administration costs, and not all the information that becomes available is relevant to decision-making. For example, the value of the Stuart Highway is of no real consequence to government decision-making because the road will never be sold. In contrast, cash accounting is simple to use and understand. However, cash accounting cannot be used in isolation because it does not automatically produce all the information needed properly to manage the budget. In the Territory, we combine cash accounting with some of the elements available in accrual accounting to provide a balanced picture. The extent and nature of the type of information that is reported is under regular review. For example, recently, the Public Accounts Committee addressed a number of comments made by the Auditor-General, and no doubt it will issue a report in due course. Also, a working party has been set up by all state and territory Treasury Chief Executive Officers to examine a recent Commonwealth paper on this issue. However, as things stand, the Territory is satisfied that the mix of cash and accrual accounting methods being employed currently is giving us good results. I will conclude with some comments about the refinancing of Commonwealth debt and its relationship with the Northern Territory. Over the next decade or so, the Territory will be assuming responsibility for all the debt previously issued by the Commonwealth on behalf of the Northern Territory. A similar arrangement is in place for each of the states. The mechanism for doing this will be the redemption of maturing Commonwealth debt from the proceeds of newly-issued Northern Territory semi-government stock. For example, this year about $23m of Commonwealth bonds is maturing, bonds which were issued on behalf of the Territory in previous years. The Territory has been given an additional $23m in borrowing allocation this year, on top of our global limit, to fund those redemptions. For each of the next 2 years, the amount involved will be about $88m, and our semi-government borrowing allocation will be enlarged to that extent. This amount will decline in later years as the amount of outstanding Commonwealth stock diminishes progressively. What it all means is that, because the Commonwealth has changed the rules, both Territory receipts and expenditure will rise by the same amount. It is not a matter of increasing Territory debt, but simply a change in its composition. Mr Deputy Speaker, in tabling the 1991 Report on Northern Territory Debt compiled by the Treasury, I wish to point out to honourable members 2 typographical errors. On page 19, at line 10, the figure of 8.3% should read 8.1% and, on page 26, at line 12, the year 1986-87 should read 1987-88. The member for Karama will be supporting me today on this ministerial statement on debt and I hope that, once and for all, we can get the opposition to start using accurate figures, and especially to avoid 842
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