OZschwitz: State loses billions on markets

Subject: OZschwitz: State loses billions on markets Thu Oct 30, 2008 6:45 pm

KEY Victorian Government agencies have revealed investment losses totalling billions of dollars due to their exposure to collapsing global markets.

Among the losers is the Department of Treasury and Finance, which has reported a blowout of almost $3 billion in the state's unfunded public service superannuation liabilities, largely due to the markets turmoil.

The Transport Accident Commission, which is responsible for paying compensation to road accident victims, also took a hit of more than $1 billion.

The losses, revealed in reports tabled in Parliament, meant the agencies ended the financial year technically in the red — the TAC by $517 million and the department by $2.8 billion.

But the figures do not mean that the overall state budget will go into the red. And when global markets recover, the agencies can also expect an improvement in their financial position.

According to the report of Treasury and Finance, the super annuation bill owed to past and present public sector employees blew out from about $10 billion to $12.6 billion in the financial year. Unlike private sector employees, most current and retired Victorian public sector employees are still in "defined benefit" super schemes, which means the Government is obliged to pay them a fixed income in retirement regardless of which way markets move.

If it had not taken such a hit from investment losses, the department would have been $563 million in the black last year, according to its annual report.

LNK

OZschwitz: State loses billions on markets

OZschwitz: State loses billions on markets

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