‘Net Debt’ started out in the late 1960s as the measure of Gross Debt (mostly C’wealth Govt & C’w/State/Local Semi-govt Securities on Issue) less the balances of these securities held in Govt Trust Funds — thus the debt owed to the private sector. It was part of a first stab (by me) at putting the public sector balance sheet into the ‘national economic accounting’ framework.

This idea was later extended to cover all (income-entitled) financial claims on the public sector net of the public sector’s counterpart financial claims on the private sector — thus the net (income-entitled) debt to the private sector. A useful idea — but it certainly has been put to deceptive use by our politicos.

Where the Future Fund turns up depends on the way it is set up — is it a public financial corporation or managed as a non-corporate general government entity? At present, it’s the latter — so its non-equity financial assets are already in general government net debt. Its holding of Telstra shares is already included in general government equity. To the extent that the Future Fund invests further in shares by reducing its non-equity financial assets, general government net debt will increase.

‘Investments in financial assets for policy purposes’ is not a ‘strange device’. It is simply there to pick up repayable (usually interest-bearing) capital transfers to other sectors that must be applied by the recipient to specified purposes. As I recall, this item has been recorded in the Budget Papers as ‘advances paid’ since the GFS presentation was adopted in 1971-72. It used largely to cover Sec 96 repayable advances to the States. These days, I think a main component is HECS (which does include a ‘subsidy’ element by not charging market interest). They are in net debt because they are an income-entitled claim on another sector.

Finance leases for public buildings are ‘disguised’ debt, as you say. For State Governments, a neat way to get Canberra to pay the capital cost via company tax deductions for depreciation. For Canberra’s own offices — still can’t see any worthwhile financial advantage there.

Governments can create a ‘property right’ by fiat. For example, a permit to exploit a natural resource (minerals, forests); an intellectual property right; a business monopoly licence (taxi plate; pub; casino). In national economic accounting terms, the market value of such a right then appears in the balance sheet of its owner as an (intangible) asset — the counterpart entry being an increase in net worth (from ‘other economic flows’). If the government charges an ‘entitlement’ fee (up front or periodic) for the ‘right’ (ie permit/patent/licence), this is a ‘royalty’ (ie property income). If the government (in addition) levies a (periodic) charge on the permitted activities, that is ‘taxation’ (eg taxi vehicle registration; poker machines levy).

Thx for the note on the taxi market. First rational reason for rationing access to the taxi market I’ve seen.

The only example I’m not quite sure about is the taxi market one. You’re right that governments undersupply, but I can see a good reason for that, which is tax compliance: the taxi market is one of those markets where tax evasion in an unregulated market would be very simple. That’s why you cant have free entry in the taxi market. By giving out a restricted number of licenses you give the bidders for those licenses an incentive to rat on illegal taxi service providers, as well as an incentive to declare their own incomes in order to avoid losing their licenses. If you give out as many licenses as you could, its not just the case that you’d lower revenue on the licenses but you’d furthermore reduce the incentives to rat on illegal providers and to be tax compliant. Hence I see your argument and you may be right that hiding taxation from a gullible public is the dominant motive, but an old-fashioned principal-agent problem may also be at play here.