Part 1: AOFM Overview
The 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 objectives of the AOFM are to:
- meet the budget financing task in a cost‑effective manner subject to acceptable risk.
- facilitate the Government’s cash outlay requirements as and when they fall due; and
- be a credible custodian of the AGS market and where relevant other portfolio responsibilities.
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 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.
The AOFM’s investment management activities include managing investments in Australian RMBS under a 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 listed entity under the Public Governance, Performance and Accountability Act 2013 (PGPA Act) and maintains its own accounts and is responsible for compliance with the Act separately to 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 outcome on behalf of the Australian Government: — the advancement of macroeconomic growth and stability. This is pursued through the effective operation of financial markets by issuing debt and investing in financial assets; and managing debt, investments and cash. The AOFM aims to manage net debt for which it is responsible at least cost, subject to an acceptable level of risk. It also issues bonds taking into account the Government’s policy objectives of supporting the AGS market.
During 2015‑16, the AOFM used a six group operational structure, supported by a human resources manager. The allocation of roles and responsibilities within the Office ensures an appropriate segregation of duties and reporting lines. The six groups were:
- Treasury Services;
- Financial Risk;
- Investor Relations;
- Finance, Settlements and Corporate; and
- Enterprise Risk and Assurance.
In addition, the AOFM supports the Australian Government’s aims to transfer knowledge and skill to developing countries through related foreign aid programs. In 2015‑16, AOFM staff members worked on programs organised by the Department of Foreign Affairs and Trade under the Strongim Gavman Program in Papua New Guinea and the Solomon Islands Economic and Public Sector Governance Program in the Solomon Islands. Both programs offer the host governments support for their debt and cash management activities.
Last updated: 27 October 2016