Tassie's balance sheet Part 3

 

The State’s net debt?

What is it?

Apart from being a measure  thrown into Government media releases whenever convenient?

Premier Giddings was at it again the other day reassuring us that the $15 million to be spent at Blundstone Arena (nee Bellerive Oval) would be responsible adding it “is not until the 2014-15 year after we've come out of net debt”.

Let’s have a look again at the latest Treasurer’s Annual Report for 2011/12.

Tassie's balance sheet Part 2

 

We are often assured that the State Government itself is net debt free.

Is this of any comfort when Governments enterprises are loaded with debt?

Any discussion about net debt or the broader measure of net financial liabilities is pointless without looking at both the Government itself and all its subsidiaries.

Tassie's balance sheet Part 1

 

On matters of financial management of the State’s finances almost all attention focuses on the Budget circus now programmed for May each year.

The political and media cycle ignores the Treasurer’s Annual Financial Report (TAFR) tabled in October each year. Whereas the Budget contains Estimated Outcomes for the almost completed year, the TAFR contains the actuals for both the General Government (GG) and the Total State Sector (TSS) which includes the GG plus all wholly owned subsidiaries – the Government Business Enterprises (GBEs) and State Owned Corporations (SOCs).

The TAFR is the equivalent of a listed company’s Annual Report which at least is scrutinised by shareholders at an AGM. No such attention is given to the TAFR which is a pity because it a comprehensive outline of the State’s situation based on actuals, free of the hype and nonsense that accompanies Budget papers.

Whilst spasmodic attention is given to GBEs and SOCs, there is a noticeable lack of understanding of the financial role these entities play as part of the TSS and their life saving contribution to their parent company, the GG.

The aim of this and the next few posts is to have a closer look at the Balance Sheets for both GG and TSS....... the statement of assets and liabilities for both......  and try to explain the important bits........ cash, loans, net debt and net financial liabilities and the fiscal strategy measures that relate to the balance sheet.

After all accounting is just a series of plusses and minuses.

RBF: A hard road ahead

All super funds have made bad investments.

RBF is certainly no exception.

The Hobart Airport investment via Tasmanian Gateway Consortium (TGC) was a classic example, predicated on the assumption that the good times would last forever as per Macquarie Bank’s crystal ball.

Macquarie came to town as part of Operation Stealing Candy from a Baby HERE  and sweet talked RBF into parting with $100 million for a non controlling minority interest in an airport at nearly twice the going rate at 27 times earnings, which necessitated a high degree of leverage to achieve the required return, which in turn led to the fixing of interest rates, ostensibly to placate nervous financiers but realistically designed to lock in returns for lenders, which together with a management fee which approximated 15% of earnings for a bit of paper shuffling and a couple of long lunches with bankers, ended up removing all the investors’ gains.

RBF should have been extracting steady rents from the deal. It was in a good position as a cashed up fund with implicit State Government backing.

Instead it became the perfect partner for the financiers and deal makers as the latter locked in their returns ahead of RBF who ended up with an empty promise of blue sky.

Had RBF been unwilling, it would have been daylight robbery.

But there was worse.

Hobart Airport in trouble?

The Hobart airport owner/operator, the Tasmanian Gateway consortium (TGC) half owned by RBF, the Tasmanian government superannuation fund, is in serious trouble.

Going concern issues were raised in the latest financial statements lodged with ASIC in October 2012.

RBF’s Annual Report tabled in Parliament late in October gave no hint of trouble but the Auditor General let the cat out of bag with his report to Parliament tabled late in November.

MIS Barking up the wrong tree

It was the disappearance of almost the entire farming community of Preolenna, just a few kms away from home as the crow flies that first sounded the alarm.

In just a few short years at the turn of the century all the working dairy and potato farms were replaced with a carpet of hardwood plantations.

In earlier times planting the odd block to trees by landowners simply as another crop. was accepted as part of the fabric of farming in North West Tasmania.

Suddenly the landscape changed. Who were the invaders? Where did they get their money?

It would be brave to say no

Of small comfort in the crazy world of Tasmanian forest politics is that Lewis Carroll would have felt right at home.

“But I don’t want to go among mad people,” Alice remarked. “Oh, you can’t help that,” said the Cat, “we’re all mad here. I’m mad. You’re mad.” “How do you know I’m mad?” said Alice. “You must be,” said the Cat, “or you wouldn’t have come here.”

Finally we have a Tasmanian forest peace deal and a bill to go before state Parliament next week. The treaty of Versailles didn’t take 30 months, unlike this forests agreement. So what’s in it—and what will it mean for the flailing industry?