Alternative financing of government policies – Understanding the fiscal costs and risks of loans, equity injections and guarantees
Parliamentary Budget Office Report no. 01/2020
This report examines trends in the use of alternative financing arrangements, explains how these arrangements relate to the Commonwealth budget and identifies possible enhancements to budget reporting to support public understanding. It was authored by Kate Wagner, with contributions and the benefit of comments by Kathryn Morrison, Lok Potticary, Nicholas Ramirez and Linda Ward.
Key points:
- The use of alternative financing arrangements to deliver policy outcomes has been increasing, but the full cost of which is not captured in the underlying cash balance.
- Revaluation-related costs from alternative financing arrangements can be substantial and such costs are not clear from current budget reporting, which could be enhanced.
- The underlying cash balance should not be relied upon as the sole indicator of the fiscal position.
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