Governance

This page details the framework which governs the way AOFM operates. It outlines the key roles and mechanisms by which we are held to account.

The AOFM is a non-corporate Commonwealth entity within the Treasury portfolio. We are accountable to the Treasurer and the Secretary to the Treasury.

Legislative framework

The AOFM undertakes investments, debt and cash management activities in accordance with relevant legislation, including:

Commonwealth Inscribed Stock Act 1911 (CIS Act)
- This Act provides authority to the Treasurer to borrow money on behalf of the Australian Government. This is done through the issuance of AGS denominated in Australian currency.
Loan (Temporary Revenue Deficits) Act 1953
- This Act provides authority for short-term borrowing to meet temporary revenue shortfalls.
Public Governance, Performance and Accountability Act 2013 (PGPA Act)
- This Act provides for the proper use and management of public money. It also authorises investments by the Treasurer.
Loans Redemption and Conversion Act 1921
- Under this Act, the Treasurer may borrow to pay off, repurchase or redeem AGS.
Payment Systems and Netting Act 1998
- This Act provides legal enforceability for the AOFM to net transactions with its counterparties.
Financial Agreement Act 1994
- This Act establishes revised debt consolidation and redemption arrangements between the Commonwealth and the States.
- The only debt remaining under these arrangements is perpetual stock issued by the States prior to 1924.
Loan Securities Act 1919 (Loan Securities Act)
- This Act establishes provisions (under sections 5B and 5BA) for entry into swaps and other financial arrangements (including repurchase agreements) and securities lending.
Australian Business Securitisation Fund Act 2019
- Provides for the establishment of the Australian Business Securitisation Fund.
Structured Finance Support (Coronavirus Economic Response Package) Act 2020
- Provides for the establishment of the Structured Finance Support Fund.

Roles and responsibilities

The Treasurer

The Treasurer is accountable to the Parliament for administering legislation associated with debt and cash management. The Treasurer maintains broad oversight of strategic issues relating to debt and cash management.

The AOFM provides an annual Debt Issuance Ministerial Submission to the Treasurer for review which sets out AOFM’s planned issuance following the Budget.

Many of the Treasurer’s powers under the Acts listed above have been delegated to the CEO of the AOFM and other specified AOFM positions.

Secretary to the Treasury

Borrowing money on the public credit of the Australian Government is executed by the AOFM under its mandate. This is overseen by the Secretary to the Treasury. The Secretary also advises the Treasurer on debt and cash management policy.

The Secretary approves the AOFM’s Annual Remit and the Financial Risk Management Policy.

CEO of the AOFM

The AOFM is a listed entity under the rules of the PGPA Act. As the Accountable Authority under the PGPA Act, the day-to-day management of the AOFM is the responsibility of the CEO. The AOFM’s CEO is appointed by the Secretary and accountable to the Treasurer and the Secretary.

The Secretary has provided delegations to the CEO in relation to powers under various employment-related Acts (including the Public Service Act 1999) and associated Directions to facilitate the daily administration of the AOFM.

The CEO is also responsible for operational debt management and cash management. This includes meeting all legislative, administrative and accountability requirements for debt issuance, repurchase and redemption. The CEO reports to the Secretary on cost and interest rate risk management, as well as progress against the Annual Remit.

The Treasury

The interaction of debt management operations and policy requires close cooperation between the AOFM and the Treasury on all matters relating to implementation of the debt and cash management mandate. A central consideration in debt management is the interaction between operations and the reported budget position, notably the underlying and headline cash balances and gross debt.

Treasury advises the Treasurer in matters related to debt management policy and risks. For example, Treasury advise the Treasurer on matters where debt management issues could affect government policy, the smooth functioning of markets or the real economy.

The Treasury provides secretariat services for the Secretary’s AOFM Advisory Board. This includes the appointment of external members.

AOFM Advisory Board

The role of the AOFM Advisory Board is to assist the Secretary (Chair) in assessing the AOFM’s proposed strategies and plans. The Board also advises the Secretary on issues relating to debt and investment markets.

The AOFM Advisory Board does not have executive powers or decision-making authority. It does not advise on AOFM's governance matters.

AOFM Audit and Risk Committee

The AOFM’s CEO has established an Audit and Risk Committee in accordance with section 45 of the PGPA Act and section 17 of the Public Governance, Performance and Accountability Rule 2014 (PGPA Rule). The Audit and Risk Committee provides independent advice to the CEO on the AOFM’s: