Office of Finance and Services
Category
NSW Treasury and Finance Circular
Identifier
OFS-2014-04
Status
Active

OFS-2014-04-Circular to advise the introduction of Competitive Neutrality Principles to StateFleet Leases

Description:

Inform Departments and Agencies of impending changes in lease rates due to introduction of Competitive Neutrality.

In September 2014, the Expenditure Review Committee (ERC) approved competitive neutrality as the guiding principle in setting pricing and return target for StateFleet and its services as a means of managing risk, clarifying measured returns and ensuring appropriate price signalling and consumption behaviour. 

The change comes into effect from 1 January 2015.  The interest rates to be used in the lease formula and Competitive Neutrality fee will be determined by NSW Treasury in December 2014.

It is anticipated that the changes will result in a small increase (approximately 0.5%) in lease payments for the remainder of 2014-15, and will result in a total increase in lease payments of approximately 3% per annum once fully implemented to all leases.

The ERC noted that departments and agencies are expected to absorb the small increases in StateFleet leasing fees due to the implementation of competitively neutral pricing within their existing budgets by fleet reductions and/or efficiencies.