CHAPTER 3
Land Fund Report
Statutory Reporting Requirements
3.1 The statutory requirements in relation to the Land Fund's annual
report are set out in section 193I of the ATSIC Act. They include the
requirement for the Minister to cause to be prepared as soon as practicable
after the end of 30 June each year a report about the administration and
operation of the Land Fund and its supporting legislation (s.193I(1)).
These requirements were set out in Chapter 3 of this Committee's fifth
report.
3.2 The following specific matters are required by s.193I(2) of the ATSIC
Act to be included in each Land Fund report:
(a) particulars of amounts credited to the Land Fund during the financial
year;
(b) particulars of amounts paid out of the Land Fund during the financial
year;
(c) particulars of investments of the Land Fund;
(d) the realised real return on investments of the Land Fund in respect
of the financial year;
(e) such other information (if any) as is specified in the regulations.
3.3 Further, copies of annual reports are to be laid before each House
of Parliament within fifteen sitting days after the completion of the
report (s.193I(3)).
Compliance
Tabling
3.4 The 1996-97 annual report of ATSIC, with the Land Fund report appended
(Appendix 11), was presented to the Minister on 21 October 1997 and was
tabled in both Houses of Parliament on 29 October 1997. The Land Fund
report satisfied the tabling requirements.
3.5 Importantly, the Land Fund Report is reproduced as Appendix 1 to
the ILC annual report for 1996-97.
Specific Matters
- Amounts credited to the Land Fund
3.6 $200 million was committed to the Land Fund in the 1994-95 Budget.
On 4 July 1995 $123,178,000 was appropriated to the Land Fund. This amount
represented the first of nine indexed annual allocations of $121 million
from 1995-96 through to 2003-2004. Each year the amount is to be indexed
to maintain value in 1994-95 dollar terms. The second special appropriation
of $126,750,000 occurred on 1 July 1996 (ATSIC annual report 1996-97,
p.244; ILC annual report 1996-97, p.75).
3.7 At page 76 of the ILC report, the Land Fund report records that:
The real return on investments was well in excess of the return required
to ensure the capital base of the Land Fund reaches its target in 2004
of $1106 million indexed. This result was achieved mainly by the selection
of mid term (12 month) fixed interest investments providing a good return
above inflation which also allowed the effect of falling rates in early
1997 to be avoided in this financial year. The sustained low inflation
rate is also assisting to keep the return in excess of the required margin,
however, the effects of the general fall in cash interest rates will become
evident in 1997/98 upon the maturity of current investments.
3.8 The figure of $1106 million (indexed) for the 2004 Land Fund target
is specified at s.193AA(2) of the ATSIC Act. The Committee observes that
reference in the ILC's annual report for 1994-95 (p.3) to a total amount
of $1.46 billion for the Land Fund has not been repeated in the ILC's
1996-97 annual report; the 'notional' target given is $1.289 billion (p.11).
3.9 Importantly, the ILC has not explained, or attempted to reconcile,
the `notional' and `target' Land Fund figures. Further, the Notional Allocations
table in the 1996-97 annual report (Figure 1, p.11) repeats the errors
noted in the Committee's report (para 2.5) on the ILC's 1995-96 annual
report.
- Amounts paid out of the Land Fund
3.10 An amount of $25,140,500 was provided to the ILC and $21,997,800
was provided to ATSIC for its Land Acquisition and Maintenance Program.
This was the last such payment to ATSIC.
- Investments and realised real returns
3.11 The Land Fund report (ILC annual report 1996-97 p.75) states that,
of the $126,750,000 appropriation for 1996-97, $79,611,700 was invested
in securities in accordance with s.62B of the Audit Act 1901. The Land
Fund report (p.76) confirms that:
Investments during the year were made in securities prescribed by the
Audit Act.
These included Negotiable Certificates of Deposit, Promissory Notes,
Commercial Bills, Term Deposits, Customised Securities and Floating Rate
Notes. The Cash balance of these investments at 30 June 1997 was $379,481,658.
With accrued interest on investments totaling $17,033,831 the value of
the fund was $396,515,489.
Summary
3.12 The Financial Statements of the Land Fund annual report for 1996-97
received an unqualified audit. Further, reporting about the Land Fund
for 1996-97 complies with the legislative requirements.
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