Australian Government, 2008‑09 Budget

Section 2: Outcomes and planned performance

2.1 Outcomes and performance information

The Australian Government requires agencies to measure their intended and actual performance in terms of outcomes. Government outcomes are the results, impacts or consequences of actions by the Government on the Australian community.

2.1.1 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

Outcome 1 strategy

The AOFM contributes to its outcome through its output — debt management. It issues Treasury Bonds, executes interest rate swaps and invests in term deposits with the RBA. It also undertakes risk management activities, compliance activities, financial reporting, debt administration and the monitoring of conditions in Treasury Bond and Treasury Bond Futures markets.

The AOFM will issue long‑term fixed interest debt in accordance with government policy to maintain the efficiency of the Treasury Bond and Treasury Bond Futures markets. It will issue bonds with tenors chosen to support the 3 year and 10 year Treasury Bond Futures markets.

The AOFM executes domestic interest rate swaps to achieve lower public debt servicing costs arising from issuing bonds for market efficiency purposes. In response to market conditions, the AOFM currently has no plans to execute interest rate swaps in 2008‑09.

Outcome 1 resource statement

Table 2.1 provides additional detail of Budget appropriations and the total resourcing for outcome 1.

Table 2.1: Total resources for outcome 1

Table 2.1: Total resources for outcome 1

Contributions to outcome 1

Output group 1.1 — Australian Office of Financial Management

Components of output group 1.1 are:

Output 1.1.1 — Debt management

An efficient Treasury Bond market that supports an efficient Treasury Bond Futures market. Achievement of the Australian Government's financing task in a cost-effective manner, subject to acceptable risk.

Output 1.1.1 — Debt management
Key performance indicators 2008‑09 target

Efficient Treasury Bond and Treasury Bond Futures markets.

Maintaining an active dialogue with price makers, the RBA, the Australian Stock Exchange and the Australian Financial Markets Association's Debt Securities Committee.

Continual monitoring of key market efficiency indicators (such as bid/ask spreads and repurchase market indicators).

Treasury Bond issuance is undertaken efficiently.

The average spread of the weighted issue yield above the secondary market yield is consistent with the 10 year average.

The range of accepted bids is consistent with the 10 year average.

The times covered ratio is consistent with the 10 year average.

Minimise debt servicing costs subject to acceptable risk.

Maintaining the debt portfolio within benchmark portfolio modified duration and short-dated exposure limits.

Efficient management of the Australian Government's cash balances.

The 91 day moving average of the Australian Government's cash balances is within operational limits and within the Ministerial limit throughout the year.

Use of overdraft facility only to cover unexpected events.

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