Australian Office of Financial Management
Annual Report 2005-06
© Commonwealth of Australia 2006
ISBN 0 642 74311 8
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A copy of this document appears on the Australian Office of Financial Management web site (www.aofm.gov.au). The 2005-06 statistical information is also available on the website.
Printed by CanPrint Communications Pty Ltd.
20 October 2006
The Hon Peter Costello MP
Treasurer
Parliament House
CANBERRA ACT 2600
Dear Treasurer
I have pleasure in presenting the Annual Report of the Australian Office of Financial Management for the year ending 30 June 2006 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
Neil Hyden
Chief Executive Officer
AOFM OBJECTIVE
The AOFM aims to manage its net debt portfolio at least cost over the medium-term, subject to an acceptable level of risk.
It also contributes to the operation of financial markets by supporting efficient Treasury Bond and Treasury Bond futures markets.
Contents
Review by the Chief Executive Officer
Treasury Bond issuance
Cash management
Management of the portfolio
Performance of the portfolio
Credit management
Communications Fund investment facility
Net debt and the Australian Government balance sheet
International activities
Operations
Staff
Part 1: AOFM Overview
AOFM role, function, outcome and output structure
Structure of the portfolio
Funding
Organisational structure
Appropriations and other funding
Part 2: Operations and performance
Introduction
Treasury Bond issuance
Cash management
Minimising debt servicing costs subject to acceptable risk
Operational risk
Agency financial performance
Net debt and the Australian Government balance sheet
Background
The Australian Government balance sheet
Net debt through time
Management of term deposit assets
Impact of the Future Fund
Conclusion
Part 3: Management and accountability
Corporate governance
Audit
Judicial decisions
Management of human resources
Assets management
Purchasing
Consultants
Advertising and market research
Discretionary grants
Ecologically sustainable development and environmental performance
Freedom of information
Part 4: Financial statements
Glossary
AOFM Annual Report 2004-05 correction
In the AOFM’s Annual Report for 2004-05 the data in Note 25C on page 129 was duplicated on page 130.
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: Spreads from mid-market on interest rate swaps (basis points)
Table 3: Long-Term Debt Portfolio cost of funds analysis
Table 4: AOFM’s Net Debt Portfolio cost of funds analysis
Table 5: Commonwealth debt portfolio comprehensive income presentation of funding costs
Table 6: Relative performance analysis: Long-Term Debt Portfolio vs benchmark
Table 7: Derivative counterparties by credit rating as at 30 June 2005 and 30 June 2006
Net debt and the Australian Government balance sheet
Table 1: Australian Government General Government Sector balance sheet
Part 3: Management and accountability
Table 1: Operative and paid inoperative staff as at 30 June 2005 and 2006
Table 2: AOFM Australian Workplace Agreement salary ranges
Table 3: Consultancy services let during 2005-06 of $10,000 or more
List of figures
Part 1: AOFM Overview
Figure 1: Portfolio structure
Figure 2: AOFM organisational structure
List of charts
Part 2: Operations and performance
Chart 1: Treasury Bond issuance for 2005-06 and Treasury Bonds outstanding as at 30 June 2006
Chart 2: Australian Government financial asset holdings at the Reserve Bank of Australia 2005-06
Chart 3: 91-day moving average cash balance ($m)
Chart 4: Australian swap yield curves 2005-06
Chart 5: Australian 3- and 10-year swap rates 2005-06
Chart 6: Modified duration — nominal component of Australian dollar Long-Term Debt Portfolio: 1 July 2005-30 June 2006
Chart 7: Short-dated exposure — nominal component of Australian dollar Long-Term Debt Portfolio: 1 July 2005-30 June 2006
Chart 8: Interest expense by year of issue
Chart 9: Changes in debt servicing cost between 2004-05 and 2005-06
Net debt and the Australian Government balance sheet
Chart 1: GGS net debt, Treasury Bonds and short-term assets
Return to Contents
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