5.4	2005‑06 FINANCIAL POSITION
This chapter provides an overview of the financial position for the 2005‑06 Budget and the forward estimates for the General Government Sector. 
Financial Position of the General Government Sector
Table 5.4.1 below provides a summary of the financial position of the General Government Sector (GGS) for the 2005‑06 Budget and across the forward estimates.
Table 5.4.1
General Government Sector Financial Position
2005-06 Budget and Forward Estimates 
Budget	 	 	Est. Outcome	Planned	 	Planned	Planned	Planned	
30/6/05			30/6/05	30/6/06	Var	30/6/07	30/6/08	30/6/09	
$m	 	 	$m	$m	%	$m	$m	$m	
									
  9  107 		Total Assets	  9  139 	  9  304 	2 	  9  551 	  9  822 	  10  141 	
									
  3  452 		Total Liabilities	  3  848 	  4  118 	7 	  4  370 	  4  606 	  4  856 	
									
  5  655 		Total Funds Employed	  5  291 	  5  186 	-2 	  5  182 	  5  216 	  5  284 	
 	 	 	 	 	 	 	 	 	
NB: Tables may not add due to rounding

Short-Term Outlook - Liquidity
The current ratio is used to indicate the GGS’s liquidity and equates to current assets over current liabilities.  The ratio indicates the GGS’s ability to meet short-term debt from cash and cash equivalents.
Superannuation investments and liabilities have been excluded in calculating the current ratio, as by legislation, these investments are not available for the repayment of any debt other than superannuation liabilities.
A ratio less than 1:1 may indicate an inability to meet short-term liabilities.

Table 5.4.2
General Government Sector Liquidity
2005-06 Budget and Forward Estimates

 	 	Est. Outcome	Planned	Planned	Planned	Planned	
		30/6/05	30/6/06	30/6/07	30/6/08	30/6/09	
 	 	$m	$m	$m	$m	$m	
	Current Assets	  1  009 	    682 	    607 	    634 	    715 	
	Current Liabilities	    354 	    374 	    392 	    408 	    433 	
							
 	Current Ratio	2.85:1	1.82:1	1.55:1	1.56:1	1.65:1	
The current ratio equals current assets divided by current liabilities.  The current ratio has been calculated excluding superannuation investments and superannuation liabilities. 
NB: Tables may not add due to rounding

The GGS ratio of 2.85:1 as at 30 June 2005 indicates that the sector is more than able to meet its short‑term debt from short‑term cash and equivalents.
The current ratio in the Budget and forward estimates decrease significantly from the high ratio in the estimated outcome.  The reduction in the current ratio is attributed to the use of cash and investments to fund new and continuing capital works programs in the budget year and 2006‑07, and financing enterprise bargaining agreements, offset by increases in revenues.

Longer-Term Outlook – Financial Stability
The debt ratio (total liabilities over total assets) is used to indicate the GGS’s longer term stability, in particular its ability to meet debts from its asset base.  The lower the percentage, the better the ability to cover debt from assets.  This ratio also excludes equity investments, superannuation investments and total superannuation liability.
Table 5.4.3
General Government Sector Financial Stability
2005-06 Budget and Forward Estimates
 	 	Est. Outcome	Planned	Planned	Planned	Planned	
		30/6/05	30/6/06	30/6/07	30/6/08	30/6/09	
 	 	$m	$m	$m	$m	$m	
							
	Total Liabilities	  1  346 	  1  390 	  1  420 	  1  438 	  1  469 	
	Total Assets	  7  663 	  7  644 	  7  705 	  7  778 	  7  872 	
							
 	Debt Ratio	18%	18%	18%	18%	19%	
The debt ratio equals total liabilities divided by total assets. The debt ratio has been calculated excluding equity investments, superannuation investments (including cash) and superannuation liabilities.

The General Government Sector debt ratio of 18% indicates that the sector continues to maintain a manageable financial outlook with the ability to meet both short and longer-term debt and maintain its asset base.  This relatively low ratio demonstrates a prudent level of liabilities.

General Government Sector Assets
Composition of Assets
The following table outlines the composition of assets of the General Government Sector.
Table 5.4.4
General Government Sector Assets
 	 	Est. Outcome	Planned	Planned	Planned	Planned	 	
 		30/6/05	30/6/06	30/6/07	30/6/08	30/6/09	 	
 	 	$m	$m	$m	$m	$m	 	
 							 	
 	Cash	    77 	    72 	    72 	    71 	    72 	 	
 	Receivables	    575 	    562 	    559 	    556 	    553 	 	
 	Investments	  2  304 	  2  214 	  2  280 	  2  499 	  2  803 	 	
 	Inventories	    112 	    130 	    149 	    143 	    141 	 	
 	Land	    278 	    277 	    277 	    278 	    278 	 	
 	Property, Plant and Equipment	  5  685 	  5  955 	  6  108 	  6  165 	  6  180 	 	
 	Other	    108 	    96 	    106 	    111 	    114 	 	
 							 	
 	Total Assets	  9  139 	  9  304 	  9  551 	  9  822 	  10  141 	 	
NB: Tables may not add due to rounding

Cash and Investments
The following tables provide a summary of the total level of cash and investments, including non-current investments for the General Government Sector.
Table 5.4.5
Cash and Investments
 	Est. Outcome	Planned	Planned	Planned	Planned	
 	30/6/05	30/6/06	30/6/07	30/6/08	30/6/09	
 	$m	$m	$m	$m	$m	
 					 	
Cash	    77 	    72 	    72 	    71 	    72 	
Current Investments	    638 	    348 	    258 	    283 	    361 	
Non Current Investments	  1  666 	  1  865 	  2  022 	  2  215 	  2  442 	
 	  2  381 	  2  285 	  2  352 	  2  570 	  2  875 	
 					 	
$ movement	    254 	- 96	    67 	    218 	    305 	
% growth	12%	-4%	3%	9%	12%	
NB: Tables may not add due to rounding

Total cash and investments are currently forecast to show small decrease in the budget year, but improves across the forward estimates, reflecting increases in the value of superannuation investments.

The following table presents Table 5.4.5 above, without superannuation investments.

Table 5.4.6
Cash and Investments – excluding Superannuation investments
 	Est. Outcome	Planned	Planned	Planned	Planned	
 	30/6/05	30/6/06	30/6/07	30/6/08	30/6/09	
 	$m	$m	$m	$m	$m	
Cash	    75 	    70 	    70 	    70 	    71 	
Current Investments	    638 	    348 	    258 	    283 	    361 	
Non Current Investments	    219 	    238 	    192 	    173 	    175 	
 	    932 	    657 	    521 	    526 	    607 	
 					 	
$ movement	    165	- 276	- 136	    5	    81	
% growth	22%	- 30%	- 21%	1%	15%	
NB: Tables may not add due to rounding
The decrease in cash and investments movements between 2005-06 and 2006-07 is due to the size of planned capital works, which includes significant projects such as the replacement of the Quamby Youth Detention Centre and funding for the Alexander Maconochie Centre (Correctional Facility).  

General Government Sector Liabilities
Composition of Liabilities
Total general government sector liabilities are anticipated to be $4.118 billion, an increase of $270m from the estimated opening balance.
Table 5.4.7 below depicts the composition of the General Government Sector liabilities.
Table 5.4.7
General Government Sector Liabilities
 	 	Est. Outcome	Planned	Planned	Planned	Planned	 	
 		30/6/05	30/6/06	30/6/07	30/6/08	30/6/09	 	
 		$m	$m	$m	$m	$m	 	
 							 	
 	Interest Bearing Liabilities	    701 	    681 	    668 	    652 	    637 	 	
 	Finance Leases	    114 	    159 	    190 	    217 	    248 	 	
 	Employee Entitlements	  2  752 	  2  996 	  3  226 	  3  456 	  3  686 	 	
 	Other Provisions	    14 	    8 	    6 	    6 	    6 	 	
 	Other	    27 	    27 	    27 	    27 	    27 	 	
 	Payables	    239 	    246 	    253 	    249 	    252 	 	
 							 	
 	Total Liabilities	  3  848 	  4  118 	  4  370 	  4  606 	  4  856 	 	
NB: Tables may not add due to rounding

Borrowings
There are no new General Government Sector borrowings projected during the 2005‑06 financial year.  Figure 5.4.1 illustrates the level of borrowings since 1996‑97 and across the forward years.

Figure 5.4.1
General Government Sector Gross Borrowings