Operational Notice: Regular Transfer under the Portfolio Management Framework

2 July 2004

Op Notice No. 11/2004

The AOFM’s portfolio management framework allocates the net debt managed by AOFM between a Long Term Debt Portfolio and a Cash Management Portfolio. AOFM Operational Notice No 13/2003 set out the rules
governing the allocation and transfer of assets and liabilities between these two portfolios. The rules are designed to ensure that the volume of debt within the Long Term Debt Portfolio tracks the trend level of net Commonwealth Government Securities (CGS) debt while short term fluctuations are contained in the Cash Management Portfolio.

The rules provide for a transfer to be made between the two portfolios on 1 July each year to remove any persistent balance that may have accumulated in the Cash Management Portfolio over the course of the previous financial year, so that it is included in the Long Term Debt Portfolio for the coming year. This is achieved by transferring to the Long Term Debt Portfolio the average daily asset or liability balance in the Cash Management Portfolio over the previous financial year.

The transfer of assets made on 1 July 2004 was reduced to take account of the retirement from the Commonwealth’s balance sheet of two long-term liabilities covering Commonwealth obligations relating to the Telstra and Australia Post employees’ retirement benefit schemes. These obligations were paid out on 17 June 2004 and 1 July 2004 respectively. The adjustment was made because of the nature of the transactions and because their timing resulted in their having little impact on the average balance in the Cash Management Portfolio in 2003-04, whereas they will have an ongoing impact on the level of net CGS debt and its trend level in 2004-05.

Last updated: 5 March 2014