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Section 2: Outcomes and Outputs Information
Outcomes and Output Groups
The map below shows the relationship between Government outcomes and the contributing outputs for the AOFM. Financial details for Outcome 1 by output appear in Table 2.1 while non-financial information for Outcome 1 appears in Table 2.2.
Changes to Outcomes and Outputs
There are no proposed changes in outcomes or outputs since the previous year.
Outcome 1
To enhance the Commonwealth's capacity to manage its net debt portfolio, offering the prospect of savings in debt servicing costs and an improvement in the net worth of the Commonwealth over time
Measures in the 2000-01 Budget
There are no Budget measures for the AOFM.
Outcome 1 - Resourcing
Table 2.1 shows how the 2000-01 appropriations translate to total resourcing for Outcome 1, including administered expenses, revenue from Government (appropriation), revenue from other sources, and the total price of outputs.
Table 2.1: Total Resources for Outcome 1 ($'000)
Outcome 1 - Contribution of Outputs
The AOFM has only one output - debt management. The AOFM's debt management operations include the issue of various borrowing instruments, the strategic formulation and undertaking of portfolio management, including through swap transactions, and the administration of the Commonwealth debt portfolio.
Despite surplus funding positions in recent years, the AOFM has undertaken modest issuance programs directed at maintaining net debt within agreed portfolio limits as well as seeking to maintain the liquidity and efficiency of Commonwealth Government securities markets. Integral to the continuing efficient management of its funding risk, the AOFM's specific objective for its major debt instrument, Treasury Fixed Coupon Bonds, remains building and maintaining liquidity in key benchmark lines over a yield curve extending to around 12-13 years.
The AOFM's portfolio management objective is to minimise the cost of debt over the long-term, subject to acceptable market risk. This objective forms the basis for a defined portfolio benchmark that serves as a target for the composition and nature of market risks within the Commonwealth debt portfolio. The analytical framework behind the benchmark assesses the trade-off between the long-term expected cost and risk of different portfolio structures thus allowing informed decisions about the nature of Commonwealth market exposures.
Debt administration is undertaken by the AOFM in conformity with legislative requirements and in compliance with approved accounting standards.
Performance Information for Outcome 1
Table 2.2: Performance Information 2000-01
Effectiveness - Overall achievement of the outcome Debt issued by the Commonwealth (including CGS allocated to States and Territories) and debt assumed from Commonwealth agencies.
Achievement of the Commonwealth's financing task in a cost-effective manner.
Performance information for agency outputs Output Group 1.1 Output 1.1 - Debt Management
Achievement of the Commonwealth's financing task in a cost-effective manner.
Timely production of reports on debt management activities.
Efficient execution of the Commonwealth's borrowing activities. Partial indicators include the range of accepted bids and the basis point spread between tender and secondary market yields.
Efficient management of the Commonwealth's cash balances. Indicators include achievement of the Ministerially endorsed cumulative average cash balance target as at end-year.
Evaluations
Performance with regard to producing the debt management output is currently evaluated using benchmark analysis and regular review of the broader risk management framework to ensure that it remains appropriate in the light of Commonwealth operations and market conditions.
Competitive Tendering and Contracting
The AOFM is in the process of developing a Competitive Tendering and Contracting strategy which will bring together management's position on:
- core and non-core activities of the AOFM;
- future objectives for non-core activities;
- market capacity and willingness; and
- the market testing program.
Given that the Department of the Treasury provides corporate services functions to the AOFM, aspects of the strategy will need to be agreed with the Treasury.
