Part 1: AOFM Overview
Role, function, outcome and output structure
The Australian Office of Financial Management (AOFM) is responsible for the management of Australian Government debt. The AOFM also manages the Government’s cash balances and invests in financial assets.
The AOFM’s debt management activities include the issuance of Treasury Bonds and Treasury Indexed Bonds. To support the efficient operation of the markets for these debt instruments, it maintains a securities lending facility that allows financial market participants to borrow the bonds from the Reserve Bank of Australia (RBA).
The AOFM’s cash management activities include the issuance of Treasury Notes for short-term funding, and investments in term deposits with the RBA and in short-term money market instruments, such as bank accepted bills and negotiable certificates of deposit.
During the 2010-11 year, the AOFM continued to invest in residential mortgage-backed securities under a Government program to support competition in lending for housing. It also invested in short-dated securities issued by State and Territory governments (following similar investments the previous year).
The AOFM is part of the Treasury portfolio. It is accountable to the Secretary to the Treasury and to the Treasurer, and through the Treasurer to the Parliament and the public. However, it is a prescribed agency under the Financial Management and Accountability Act 1997 and maintains its own accounts separately from those of the Treasury. AOFM staff are employed under the Public Service Act 1999.
For budgetary purposes, the AOFM’s activities comprise of one program. This program is directed to achieve the following on behalf of the Australian Government: the advancement of macroeconomic growth and stability; the effective operation of financial markets through issuing debt and investing in financial assets; and managing debt, investments and cash. The AOFM aims to manage its net debt portfolio at least cost, subject to an acceptable level of risk, and to improve the net worth of the Australian Government over time. It also issues bonds taking into account the Government’s policy objectives to support the CGS market.
During 2010-11, the AOFM operated using six groups with roles and responsibilities within the Office being structured to ensure an appropriate segregation of duties and reporting lines. The six groups were:
- Treasury services;
- Financial risk management;
- Investor relations;
- Reporting and IT;
- Finance, settlements and corporate; and
They were supported by a human resources unit. In addition, a staff member was seconded under the Strongim Gavman Program to Papua New Guinea. Another staff member was seconded under the Regional Assistance Mission component of the Financial and Economic Management Strengthening Program to the Solomon Islands. Both programs offer these governments support for their debt management activities. The secondments were organised through AusAID.
Last updated: 5 February 2014