This statement discusses debt management, including maintaining the Commonwealth Government Securities (CGS) market and the proposed investment of financial assets in the Future Fund.

As announced in the 2003-04 Budget, the Government has decided to continue to issue Treasury bonds, despite the Australian Government’s strong fiscal position, in order to support low cost interest rate risk management throughout the economy. Treasury bond issuance will be tightly targeted to support the Treasury bond futures market — a key interest rate risk management market.

The Government’s decision to establish the Future Fund for the purpose of offsetting unfunded Government superannuation liabilities will not affect the issuance strategy for CGS. Issuance in 2004‑05 and planned issuance for 2005-06 reflects the Government’s continuing policy stance of maintaining around $5 billion per bond line, which is consistent with continued liquidity. The issuance of Treasury Notes to meet within year financing requirements may increase as a result of transfers of assets to the Future Fund in 2005-06.