Australian Office of Financial Management
Annual Report 2003-04
© Commonwealth of Australia 2004
ISBN 0 642 74258 8
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11 October 2004
Treasurer
Parliament House
CANBERRA ACT 2600
I have pleasure in presenting the Annual Report of the Australia Office of Financial Management for the year ending 30 June 2004 for presentation to the Parliament.
The Report has been prepared in accordance with guidelines approved on behalf of the Parliament by the Joint Committee of Public Accounts and Audit. These guidelines provide that a copy of the Annual Report is to be laid before each House of the Parliament on or before 31 October.
Yours sincerely
SIGNED
Paul Power
Acting Chief Executive Officer
AOFM OBJECTIVE
The AOFM aims to manage the Commonwealth net debt portfolio at least cost over the medium-term, subject to the government’s policies and risk preferences.
Contents
AOFM objective
Review by the Chief Executive Officer
Supporting financial markets
Establishing a new debt management framework
Performance in 2003-04
Cash management
Foreign exchange exposure
Communications and external relations
Changes in senior staff
Part 1: AOFM overview
AOFM role, functions, outcome and output structure
Part 2: Operations and performance
Introduction
Treasury bond issuance
Cash management
Minimising debt servicing costs subject to acceptable risk
Unwind of the foreign currency exposure
Operational risk
Agency financial performance
Review: Foreign currency debt
Foreign currency loans
Foreign currency swaps
Economic outcome of the foreign currency swaps
Conclusion
Part 3: Management and accountability
Corporate governance
External scrutiny
Management of human resources
Commonwealth disability strategy
Purchasing
Competitive tendering and contracting
Assets management
Consultants
Advertising and market research
Discretionary grants
Ecologically sustainable development and environmental performance
Freedom of information
Part 4: Financial statements
Glossary
Acronyms
Index of compliance with requirements
Contact details
Index
List of tables
Part 1: AOFM overview
Table 1: General government sector funding requirement and funding sources
Table 2: AOFM gross appropriations and other funding
Part 2: Operations and performance
Table 1: Treasury bond tender results
Table 2: Derivative counterparties by credit rating as at 30 June 2003 and 30 June 2004
Part 3: Management and accountability
Table 1: Operative and paid inoperative staff by classification and gender as at 30 June 2004
Table 2: AOFM Australian Workplace Agreement salary ranges
List of figures
Part 1: AOFM overview
Figure 1: AOFM organisation structure
Part 2: Operations and performance
Figure 1: Portfolio structure
Figure 2: The two parts of the net debt portfolio
List of charts
Part 2: Operations and performance
Chart 1: Australian Government general government sector net debt and Treasury bonds on issue
Chart 2: Treasury bond issuance for 2003-04 and Treasury bonds outstanding as at 30 June 2004
Chart 3: Australian 3- and 10-year bond yields 2003-04
Chart 4: Commonwealth yield curves 2003-04
Chart 5: Australian/US 10-year bond interest rate differential 2003-04
Chart 6: Commonwealth financial asset holdings at the Reserve Bank of Australia and Treasury notes on issue 2003-04
Chart 7: Term profile before and after swaps
Chart 8: Modified duration — nominal component of Australian dollar Long-Term Debt Portfolio: 1 July 2003-30 June 2004
Chart 9: Short-dated exposure – nominal component of Australian dollar Long-Term Debt Portfolio: 1 July 2003-30 June 2004
Chart 10: Bond yields and issuance
Chart 11: Volume of US dollar derivative exposure: 1 July 2003-30 June 2004
Review: Foreign currency debt
Chart 1: Foreign currency share of CGS debt
Chart 2: Foreign currency revaluations in the CGS debt portfolio
Return to Contents
Next - Part 1: AOFM Overview
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Officer