Part 1: AOFM Overview
Role, function, outcome and program 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. When considered appropriate, it may also invest in short-term money market instruments, such as bank accepted bills and negotiable certificates of deposit.1
Under the direction of the Treasurer, from April 2013 the AOFM made no new investments in residential mortgage-backed securities under the Government program that supported 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. It also issues bonds taking into account the Government’s policy objectives to support the CGS market.
During 2012-13, 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;
- Investor relations;
- Reporting and IT;
- Finance, settlements and corporate; and
- Enterprise risk management, legal and compliance.
In addition, the AOFM supports the Australian Government’s aims to transfer knowledge and skill to developing countries through several foreign aid related avenues. Throughout 2012-13 two staff members were 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 and the further development of their policies and frameworks.
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.
- Following a review of unsecured lending to financial institutions (via negotiable certificates
of deposit) no such investments have been made since 2011. ↩
Last updated: 20 January 2014