Part 1: AOFM Overview
Role, function, outcome and programme 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.
The AOFM’s investment management activities include managing investments in Australian residential mortgage‑backed securities (RMBS) under the Government programme that supported competition in lending for housing. Under the direction of the Treasurer, the AOFM has made no new investments in RMBS since April 2013.
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 programme directed to achieve the following outcome 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 Commonwealth Government Securities market.
During 2013‑14, the AOFM operated using six groups supported by a human resources manager. Roles and responsibilities within the Office were structured to ensure an appropriate segregation of duties and reporting lines. The six groups were:
- Treasury Services;
- Financial Risk;
- Investor Relations;
- Reporting and Information Technology (IT);
- 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 foreign aid related avenues. In 2013‑14, AOFM staff members worked on programmes organised by AusAID and 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 programmes offer these governments support for their debt and cash management activities.
Last updated: 31 October 2014