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 2011-12 year, the AOFM continued to invest in residential mortgage-backed securities under a Government program to support competition in lending for housing.

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 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.

Organisational structure

During 2011-12, 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. These groups were supported by a human resources unit. The six groups were:

  • Treasury services;
  • Financial risk management;
  • Investor relations;
  • Reporting and IT;
  • Finance, settlements and corporate; and
  • Enterprise risk management, legal and compliance.

In 2011-12, the arrangements in relation to enterprise risk management were enhanced to better support the Executive Group’s oversight of key business risks. The functions of risk management, legal and compliance were brought together in the Enterprise Risk Management, Legal and Compliance (ERMLC) Group. A Chief Risk and Compliance Officer was appointed in May 2012 to oversee the operations and work programs of this Group, and recruitment activities have commenced to resource its activities into 2012-13.

At 30 June 2012, the ERMLC Group has developed its business and work plans, and is in the process of developing the project plans to support delivery of a major review of the AOFM’s Enterprise Risk Management Framework. The revised framework will bring together the various aspects of the AOFM’s risk activities into an integrated monitoring and assessment format that supports the Executive Group in its management of agency specific risks.

In addition, the AOFM supports knowledge and skill transfer aims of the Australian Government through several foreign aid related avenues. For the whole financial year two staff members were placed on secondment programs organised by AusAID. One 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.

Part 1: AOFM organisational structure

The AOFM operated using six groups structured to ensure an appropriate segregation of duties and reporting lines. These groups were supported by a human resources unit and reported directly to the Chief Executive Office, Rob Nicholl. The six groups were: Treasury services, head of this group was Gerald Dodgson. This group was responsible for funding and liquidity management, deal execution and financial market and monitoring liaison; Financial risk management, director of this group was Michael Bath. This group was responsible for debt strategy, portfolio management, performance analytics, credit management and risk policy, residential mortgage-backed securities investments and secondments to Papua New Guinea and Solomon Islands; Investor relations, head of this group was Ian Clunies-Ross. This group was responsible for client relationship management, market research and analysis, marketing and promotion and corporate communications; Reporting and IT, head of this unit was Andrew Johnson; Finance, settlements and corporate, head of this group was Pat Raccosta; and Enterprise risk management, legal and compliance, head of this group was Samantha Montenegro.

Last updated: 5 February 2014