Lending to the Territory Government
NTTC lends funds to the Territory Government, government business divisions, government owned corporations, local authorities and other government organisations. Loans are issued in accordance with commercially based guidelines and practices.
All loans are approved by the Treasurer of the Northern Territory in accordance with section 13(2)(b) of the Northern Territory Treasury Corporation Act and section 31(1) of the Financial Management Act.
General Government Agencies
General government agencies are funded through the Central Holding Authority (CHA) via appropriations, some of which are funded by loans provided by NTTC. The CHA is the 'parent body' that represents the Territory Government's ownership interest in government-controlled entities. The funds are used to finance general government activities and the Territory's major infrastructure projects.
As at 30 June 2017, loans to the general government sector totalled approximately $2.41 billion.
Government Business Divisions
Loans to government business divisions represent borrowings by Territory Government-owned entities that operate on a commercial basis. The funds are used to finance capital and operating expenditure requirements.
As at 30 June 2017, loans to this sector totalled approximately $222 million.
Government Owned Corporations
Loans to government owned corporations represent borrowings by Territory Government-owned entities that operate on a commercial basis but whose operations are not guaranteed by the Crown and do not make the Territory liable for debts, liabilities or obligations. The funds are used to finance capital and operating expenditure requirements.
On 1 July 2014, the legislation came into effect to separate Power and Water Corporation into three separate government owned corporations namely Power and Water Corporation (PWC), Jacana Energy and Territory Generation.
PWC continues to manage the electricity network and remains the water sewerage services provider. Jacana Energy looks after electricity accounts and customer needs, issues bills and collects payments while Territory Generation supplies electricity to Jacana Energy. Territory Generation may also supply to any other electricity retailer that may enter the market in the future.
As at 30 June 2017, loans to this sector totalled approximately $1.35 billion.
Loans to local authorities represent borrowings by town and community government councils situated throughout the Northern Territory. The funds are used to finance specific council infrastructure projects, working capital requirements, or to purchase or replace existing plant and equipment.
Loans to local authorities are first assessed by the Department of Housing and Community Development and must carry the support and recommendation of the Minister for Housing and Community Development prior to being submitted for approval to the Treasurer of the Northern Territory.
As at 30 June 2017, there were no loans to local authorities.
Other Government Organisations
Loans to other government organisations represent borrowings by non-financial public sector organisations with which the Territory Government has an association.
As at 30 June 2017, there were no loans to other government organisations.
Central Holding Authority
CHA records on behalf of the Territory Government:
- assets and liabilities controlled by the Government and managed by agencies on behalf of the Government;
- revenue collected by CHA and regarded as Territory revenue. The main types are taxation, untied grants (GST revenue) and fines; and
- expenses where the main expense is the payment of appropriation to agencies. Other significant expenses are interest on Territory borrowings, interest on cash balances of government business divisions and government owned corporations, and the centrally managed employee costs of superannuation and long service leave.
The Territory Government's investment portfolio is formed by pooling the surplus cash balances of the Government's bank accounts and investing in a variety of secure short, medium and long-term debt securities issued in the Australian financial markets.
The broad objectives of NTTC in managing the Territory's investment portfolio are:
- To ensure sufficient liquidity is maintained in the Government's cash balances to meet all financial obligations as they fall due; and
- To obtain a return on the Government's cash balances in line with the benchmark while adhering to the investment guidelines approved by the Treasurer.
The investment portfolio is composed of a range of secure investments of which a significant proportion are in short-term instruments including term deposits, bank accepted bills, promissory notes and negotiable certificates of deposit. A core amount of the investment portfolio is available for investment in longer term instruments such as floating rate notes and fixed interest securities.
As at 30 June 2017, the investment portfolio totalled approximately $494 million.
Medium Term Investment Fund
The Medium Term Investment Fund (MTIF) is a segregated pool of investments held with CHA and commenced on 27 November 2007 with an initial investment of $50 million. The MTIF primarily represents surplus funds that have accumulated and not yet been expended by Territory Government agencies. In November 2014, the fund was increased by $100 million following a review of the CHA investment portfolio guidelines. In May 2016, $100 million was redeemed from the fund to the Infrastructure Development Fund.
The fund is a tailored solution provided by JANA Investment Advisors Pty Ltd and has a relatively conservative investment style with approximately 15% allocated to growth assets in order to achieve its stated objective of producing a superior return over the medium term of two to three years.
NTTC is responsible for monitoring and reporting on the performance of the fund and managing the relationship with the investment manager.
The investment performance of the fund is benchmarked against the Bloomberg AusBond Bank Bill Index.
As at 30 June 2017, the market valuation of the MTIF totalled $85 million.
Infrastructure Development Fund
The Infrastructure Development Fund (IDF) is a transitional segregated pool of investments held within the Central Holding Authority. It primarily represents funds received from the sale of Territory Insurance Office which have been accumulated and temporarily invested into financial markets.
The IDF is managed by JANA Investment Advisers via multi-manager sector trusts and has a highly conservative investment approach, with a very small (approximately 5 per cent) allocation to growth assets. The IDF commenced on 26 June 2015 with an initial investment of $210 million and a further $100 million added into the fund in May 2016. The investment performance of the fund is benchmarked against the Bloomberg AusBond Bank Bill Index.
As at 30 June 2017, the IDF had a market value of about $205 million.
Conditions of Service Reserve
The Conditions of Service Reserve (COSR) is a segregated pool of investments held within CHA.
The funds are held at the discretion of the Treasurer and are intended for purposes such as meeting the Territory Government's unfunded superannuation liabilities. The funds are managed by three fund managers – AMP Capital Investors, Colonial First State Global Asset Management and JANA Investment Advisors.
NTTC is responsible for monitoring and reporting on the performance of the fund and managing the relationship with the fund managers.
The investment performance of the fund is benchmarked against performance results for the 'growth' product category as published in the monthly Morningstar Market Index Performance. This is consistent with the asset allocation mix applied to COSR.
As at 30 June 2017, the market valuations of the COSR fund totalled $720 million.
Last updated: 27 March 2018