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Part I: Overview
The budget financial statements included in this statement have been prepared on an accrual basis in accordance with applicable Australian Accounting Standards, including Australian Accounting Standard No. 31 Financial Reporting by Governments (AAS31) except as identified in Note 1 to Budget Statement 4.
The Commonwealth's operating result before extraordinary items is expected to remain in surplus in 2000-01. The estimated operating result for 2000-01 is a surplus of $5.0 billion.
Table 1: Commonwealth General Government Operating Result
(a) Consistent with Australian Accounting Standard AAS 1 Statement of Financial Performance. Only disclosure of operating results after extraordinary items is provided. The notion of `abnormals' no longer exists.
The change in operating result from 1999-2000 to 2000-01 is mainly driven by changes resulting from the implementation of The New Tax System, dividends, interest and asset sales. Total revenue will decrease in 2000-01 by around $9.3 billion. Overall, expenses will decrease in 2000-01 by $4.7 billion.
Further details on revenues and expenses are provided in Statement 5 and Statement 6 respectively.
Chart 1: Commonwealth General Government Operating Result
The Operating Surplus and Sustainable Commonwealth Finances
The expected operating surplus of the general government sector in each of the forward years improves the net assets position in the balance sheet.
The operating result excludes extraordinary items. The major extraordinary items over the forward estimates period relate to the Government's asset sales programme, particularly the planned sell-down of its investment in Telstra. This contributes significantly to the operating result after extraordinary items and further improves the net assets position of the general government sector.
The consolidated financial position of the General Government Sector is expected to improve markedly over the Budget and forward years.
Table 2: Summary of Commonwealth General Government Balance Sheet
In 2000-01, the Government is budgeting for an increase in net assets of $4.9 billion or 8.8 per cent relative to the expected outcome for 1999-2000. This improvement will reduce the excess of liabilities over assets to $50.7 billion by 30 June 2001.
The Commonwealth is budgeting for a further significant improvement in its net assets position over the forward years. By 30 June 2004, it is expected that net assets will significantly improve, moving by $58.3 billion to a positive net asset position of $2.8 billion.
The main drivers of the expected improvement in the net asset position are continued strong operating surpluses and the asset sales programme.
The Commonwealth's total asset position is expected to decrease in 2000-011. A forecast modest growth in non-financial assets (0.4 per cent) will be more than offset by a 7.2 per cent reduction in receivables. This fall in receivables predominately reflects the collection of Telstra sale proceeds in early 1999-2000, which is partially offset by an increase in taxation receivables associated with the introduction of the new Pay As You Go (PAYG) tax system.
Chart 2: Summary of Commonwealth General Government
Balance Sheet Aggregates
Panel A: Assets and Liabilities
Panel B: Net Assets
The main components of the Commonwealth's liabilities are government securities and employee provisions, predominantly superannuation.
The Summary of Commonwealth General Government Cash Flows in Table 3 shows that net cash from operating activities generates positive cash flows in the Budget and the forward years. After applying cash toward investing activities (including acquisition of property, plant and equipment), there will be an overall positive cash inflow of $20.7 billion in 2003-04. This is predominantly applied to debt reduction.
Table 3: Summary of Commonwealth General Government Cash Flows
Note: Net increase/decrease in cash held represents movements in cash and bank overdraft.
1 For 2000-01 and the forward years, transactions relating to government securities and financial assets acquired for debt management purposes have been netted in the government securities category in the balance sheet. This netting treatment has not been applied in 1999-2000. This causes an apparent fall in Commonwealth financial assets between 1999-2000 and 2000-01.