The Australian Government maintains a group of bank accounts at the Reserve Bank of Australia (RBA), known as the Official Public Account (OPA), the aggregate balance of which represents the Government’s daily cash position. The AOFM is responsible for management of the aggregate OPA balance.
The AOFM’s primary objective in managing the OPA balance is to ensure that the Government is able to meet its financial obligations as and when they fall due. Other objectives are to minimise the cost of funding the balance and to invest excess balances efficiently.
Meeting the primary objective requires close attention to the within-year variability and uneven pattern of the Australian Government’s receipts and expenditures. There is considerable cash flow volatility as a result of mismatches in the timing of receipts and expenditures.
Cash proceeds not required for immediate purposes are invested in term deposits with the RBA or in money market investments such as bank-accepted bills and negotiable certificates of deposit. Short-term funding needs can be met by increasing the volume of Treasury Notes on issue and/or redeeming term deposits and money market investments.
As part of the Australian Government’s banking arrangements with the RBA, the RBA provides an overdraft facility to the Government. Using this facility is more costly than equivalent short-term borrowing (for example, issuance of Treasury Notes). The terms of this facility provide that it is to cover only temporary shortfalls of cash and is to be used infrequently and, in general, only to cover unexpected events.