Australian Office of Financial Management
Annual Report 2007-08
© Commonwealth of Australia 2008
ISBN 978-0-642-74475-3
This work is copyright. Apart from any use as permitted under the Copyright Act 1968, no part may be reproduced by any process without prior written permission from the Commonwealth. Requests and inquiries concerning reproduction and rights should be addressed to:
Commonwealth Copyright Administration
Attorney-General's Department
Robert Garran Offices
National Circuit
BARTON ACT 2600
Or posted at:
A copy of this document appears on the Australian Office of Financial Management web site (www.aofm.gov.au). The 2007-08 statistical information is also available on the website.
Printed by CanPrint Communications Pty Ltd.
7 October 2008
The Hon Wayne Swan 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 2008 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.
Yours sincerely
SIGNED
Neil Hyden
Chief Executive Officer
AOFM Role
The AOFM's role is to support the efficient operation of Australia's financial system by sustaining the market for Australian Government debt and to advance the Government's net worth through the management of debt, financial investments and cash balances.
Contents
Review by the Chief Executive Officer
Treasury Bond market
Management of the portfolio
Portfolio outcomes
Communications Fund
Operational risk
Cooperation with other debt managers
Staff
Role, function, outcome and output structure
Organisational structure
Part 2: Operations and performance
Introduction
Treasury Bond issuance
Cash management
Minimising debt servicing costs subject to acceptable risk
Communications Fund
Operational risk
Cooperation with other debt managers
Agency financial performance
Role of the Commonwealth Government Securities market
Introduction
Changes in bond market structure and turnover
Pricing and referencing other financial products
Managing interest rate risk
Vunerability of the financial system
Some other arguments advanced for continued issuance
Conclusion
Part 3: Management and accountability
Corporate governance
Audit
Judicial decisions
Management of human resources
Assets management
Purchasing
ANAO access clauses and exempt contracts
Consultants
Structure of the AOFM's portfolio
Funding
Appropriations and other sources of funding
Advertising and market research
Discretionary grants
Freedom of information
Ecologically sustainable development
Index of compliance with requirements
List of tables
Part 2: Operations and performance
Table 1: Treasury Bond tender results — 2007-08
Table 2: Spreads from mid-market on interest rate swaps
Table 3: Australian Government debt portfolio cost of funds analysis
Table 5: Derivative counterparties by credit rating as at 30 June 2007 and 30 June 2008
Part 3: Management and accountability
Table 1: Operative and paid inoperative staff as at 30 June 2007 and 2008
Table 3: Consultancy contracts
Table 4: Consultancy contracts of $10,000 or more let during 2007-08
Table 1: General Government Sector funding requirements and funding sources
Table 2: AOFM gross appropriations and other funding
List of figures
Figure 1: AOFM organisational structure
List of charts
Part 2: Operations and performance
Chart 1: Treasury Bond issuance for 2007-08 and Treasury Bonds outstanding as at 30 June 2008
Chart 2: Australian Government financial asset holdings at the Reserve Bank of Australia 2007-08
Chart 3: 91-day moving average cash balance
Chart 4: Australian swap yield curves 2007-08
Chart 5: Modified duration — nominal component of Australian dollar Long-Term Debt Portfolio 2007-08
Chart 7: Savings arising from domestic interest rate swaps
Role of the Commonwealth Government Securities market
Chart 1: Bonds on issue in Australia
Chart 2: Annual turnover of fixed coupon Treasury Bonds
Chart 3: Annual value of Treasury Bond futures turnover
Chart 4: Non-resident holdings of Treasury Bonds
Next: AOFM Overview
Previous: Review by the Chief Executive
Officer
Return to: Contents