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Australian Office of Financial Management

Date

Section 1: Agency overview and resources

1.1 Strategic direction statement

The Australian Office of Financial Management (AOFM) is responsible for the management of Australian Government debt and certain financial assets. It issues Treasury Bonds, Treasury Indexed Bonds and Treasury Notes, manages the Government's cash balances and invests from time to time in high quality financial assets including term deposits and investment grade fixed interest investments.

The AOFM aims to meet the Government's financing needs in a cost‑effective manner subject to acceptable risk and to meet the Government's policy objectives of maintaining liquid and efficient Bond and Bond futures markets. Treasury Bonds are the main issuance instrument used by the AOFM. The use of Treasury Indexed Bonds facilitates the diversification of the investor base by tapping into additional sources of investor demand.

In managing the Government's cash balances, the AOFM aims to minimise the net cost of funding while ensuring that the Government is able to meet its financial obligations when they fall due. Treasury Notes and financial assets are used to manage the Government's within‑year financing task.

The AOFM manages the Government's holdings of highly rated residential mortgage‑backed securities acquired between 2008‑09 and 2012‑13 in accordance with the Treasurer's directions.

1.2 Agency resource statement

Table 1.1 shows the total resources for AOFM.

Table 1.1: Australian Office of Financial Management resource statement — Budget estimates for 2013‑14 as at Budget May 2013
Estimate
of prior
year amounts
available in
2013‑14
$'000
+ Proposed
at Budget
2013‑14
$'000
= Total
estimate
2013‑14
$'000
Actual
available
appropriation
2012‑13
$'000
Ordinary annual services              
Departmental              
Prior year departmental appropriation   27,056 4 -   27,056  
Departmental appropriation3   -   11,893 1 11,893 11,815
Receipts from other sources (s31)   -   828 2 828 828
Total departmental   27,056   12,721   39,777 12,643
Administered expenses              
Outcome 1       10 1 10 10
Total ordinary annual services A 27,056   12,731   39,787 12,653
Other services              
Departmental non-operating              
Equity injections   662   -   662 -
Total other services B 662   -   662 -
Total available annual appropriations (A+B)   27,718   12,731   40,449 12,653
Special appropriations expenses              
Commonwealth Inscribed Stock Act 1911   -   12,456,587   12,456,587 12,209,424
Financial Agreement Act 1994   -   22   22 22
Loans Securities Act 1919   -   668   668 806
Subtotal   -   12,457,277   12,457,277 12,210,252
Special appropriations capital              
Commonwealth Inscribed Stock Act 1911   -   54,511,013   54,511,013 87,322,348
Financial Management and Accountability Act 1997   -   229,369,814   229,369,814 766,131,180
Subtotal   -   283,880,827   283,880,827 853,453,528
Total special appropriations C -   296,338,104   296,338,104 865,663,780
Total appropriations excluding special accounts   27,718   296,350,835   296,378,553 865,676,433
Special accounts              
Opening balance5   657   -   657 -
Total special account D 657   -   657 -
Total net resourcing for the AOFM (A+B+C+D)   28,375   296,350,835   296,379,210 865,676,433

1. Appropriation Bill (No. 1) 2013‑14.

2. Receipts received under section 31 (s31) of the Financial Management and Accountability Act 1997.

3. Includes $0.4 million in 2013‑14 for the Departmental Capital Budget (also refer to Table 3.2.5).

4. Estimated adjusted balance carried forward from previous year for annual appropriations.

5. Estimated opening balance for special accounts. For further detail on special accounts see Table 3.1.2.

1.3 Budget measures

Budget measures relating to the AOFM are summarised below.

Table 1.2: Australian Office of Financial Management 2013‑14 Budget measures
Program 2012‑13
$'000
2013‑14
$'000
2014‑15
$'000
2015‑16
$'000
2016‑17
$'000
Expense measures            
Commonwealth debt management — savings            
Departmental expenses 1.1 - (2,183) (2,210) (2,240) (2,219)
Targeted savings — public service efficiencies1            
Departmental expenses 1.1 (52) (55) (54) (54) (51)
Total expense measures   (52) (2,238) (2,264) (2,294) (2,270)

1 This measure was included as a cross portfolio measure in the Mid‑Year Economic and Fiscal Outlook 2012‑13.

Prepared on a Government Finance Statistics (fiscal) basis.

Section 2: Outcomes and planned performance

2.1 Outcomes and performance information

Government outcomes are the intended results, impacts or consequences of actions by the Government on the Australian community. Commonwealth programs are the primary vehicle by which government agencies achieve the intended results of their outcome statements. Agencies are required to identify the programs which contribute to government outcomes over the budget and forward years.

The AOFM's outcome is described below, specifying the strategy, program objective, program deliverables and program key performance indicators used to assess and monitor the performance of the AOFM.

Outcome 1: The advancement of macroeconomic growth and stability, and the effective operation of financial markets, through issuing debt, investing in financial assets and managing debt, investments and cash for the Australian Government

Outcome 1 strategy

The AOFM's activities include debt issuance, cash management, investment, portfolio management, compliance monitoring, financial reporting, transaction settlement, debt administration, regular communication with investors, monitoring of market conditions and liaison with market participants.

Debt issuance is directed to meeting the Government's Budget funding needs. Both Treasury Bonds and Treasury Indexed Bonds will be issued to meet this objective. The composition and maturity of debt issuance will remain flexible to achieve an appropriate balance between market efficiency, managing investor demand, refinancing risk and the costs of the debt portfolio.

The within‑year cash management task results from differences in the timing of receipts and payments in the Official Public Account. In managing the Government's cash balances, the AOFM will continue to issue Treasury Notes and make short‑term term deposits with the Reserve Bank of Australia. The AOFM may also from time to time invest in fixed interest investments and may raise funds by entering into repurchase agreements using its fixed interest investments as collateral.

The AOFM's financial assets and financial liabilities are managed in accordance with legislative requirements; delegations and directions from the Treasurer; and instructions from the Secretary to the Treasury and the AOFM Chief Executive.

Outcome Expense Statement

Table 2.1 provides an overview of the total expenses for Outcome 1.

Table 2.1: Budgeted Expenses for Outcome 1
Outcome 1: The advancement of macroeconomic growth and stability, and the effective operation of financial markets, through issuing debt, investing in financial assets and managing debt, investments and cash for the Australian Government 2012‑13
Estimated
actual
expenses
$'000
2013 ‑14
Estimated
expenses
$'000
Program 1.1: Australian Office of Financial Management    
Depar
tmental expenses
   
Departmental appropriation 10,237 12,313
Expenses not requiring appropriation in budget year 803 803
Administered expenses    
Ordinary annual services (Appropriation Bill No. 1) 10 10
Special appropriations    
Commonwealth Inscribed Stock Act 1911 12,209,424 12,456,587
Financial Agreement Act 1994 22 22
Loans Securities Act 1919 806 668
Total expenses for Outcome 1 12,221,302 12,470,403
     
  2012‑13 2013‑14
Average staffing level (number) 41 45

Contributions to Outcome 1

Program 1.1: Australian Office of Financial Management
Program objective

Achievement of the Government's financing task in a cost‑effective manner, subject to acceptable risk and maintain liquidity in the Treasury Bond and Treasury Bond futures markets.

Program expenses

With the increased level of debt on the AOFM's administered balance sheet, total debt servicing costs arising from the issuance will also rise.

Table 2.2: Program expenses
2012‑13
Revised
budget
$'000
2013‑14
Budget
$'000
2014‑15
Forward
year 1
$'000
2015‑16
Forward
year 2
$'000
2016‑17
Forward
year 3
$'000
Annual departmental expenses:          
Departmental items 11,040 13,116 13,199 13,302 13,463
Annual administered expenses:          
Administered item 10 10 10 10 10
Special Appropriations:          
Commonwealth Inscribed Stock Act 1911 12,209,424 12,456,587 12,733,477 12,902,372 12,890,129
Financial Agreement Act 1994 22 22 22 22 22
Loans Securities Act 1919 806 668 670 672 550
Total program expenses 12,221,302 12,470,403 12,747,378 12,916,378 12,904,174
Program deliverables

The AOFM has the following key deliverables:

  • issue Treasury Bonds, Treasury Indexed Bonds and Treasury Notes; and
  • manage the Official Public Account balance.
Program key performance indicators

The AOFM has the following key performance indicators:

  • debt issuance;
    • volume and efficiency of issuance; and
    • meeting the planned debt issuance program.
  • efficient management of the Government's cash balances;
    • maintaining the 91 day moving average of the Government's cash balances within operational limits and within the Ministerial limit throughout the year; and
    • only using the overdraft facility with the Reserve Bank of Australia to cover unexpected events.
  • encourage investors' take up of Commonwealth Government Securities by intermediaries and investors;
    • liaise with the CGS investor community to improve investor understanding of the CGS market through face‑to‑face meetings and conference presentations.
  • operating within legal and policy limits;
    • compliance with legislative and policy limits.

Section 3: Explanatory tables and budgeted financial statements

Section 3 presents explanatory tables and budgeted financial statements which provide a comprehensive snapshot of agency finances for the budget year 2013‑14. It explains how budget plans are incorporated into the financial statements and provides further details of the reconciliation between appropriations, program expenses, movements in administered funds and special accounts.

3.1 Explanatory tables

3.1.1 Movement of administered funds between years

The AOFM has not moved any administered funds between years.

3.1.2 Special accounts

Special accounts provide a means to set aside and record amounts used for specified purposes. Special accounts can be created by a Finance Minister's Determination under the Financial Management and Accountability Act 1997 or under separate enabling legislation. Table 3.1.2 shows the expected additions (receipts) and reductions (payments) for each account used by the AOFM.

Table 3.1.2: Estimates of special account cash flows and balances
Outcome Opening
balance
2013‑14
2012‑13
$'000
Receipts
non-
appropriated
2013‑14
2012‑13
$'000
Receipts
appropriated
2013‑14
2012‑13
$'000
Payments
2013‑14
2012‑13
$'000
Closing
balance
2013‑14
2012‑13
$'000
Debt Retirement Reserve Trust Account 1 657 - - - 657
  657 - - - 657
Total special accounts 2012‑13 Budget estimate   657 - - - 657
Total special accounts 2011‑12 estimated actual   657 - - - 657

Until July 1990, the Australian Government borrowed on behalf of the State and Northern Territory Governments and allocated a portion of its Treasury Bond raisings to those governments to fund the redemption of previous allocations of bonds. Until 1986, the Australian Government also borrowed on behalf of State and Northern Territory Governments to raise new borrowings. In addition, there are outstanding balances of various loans raised by the State Governments.

The annual funding to meet the redemption of debt allocated to the States and the Northern Territory is governed by the Financial Agreement Act 1994, which requires the Australian Government to establish and maintain the Debt Retirement Reserve Trust Account for the States and the Northern Territory. Monies standing to the credit of a State or the Northern Territory are applied by the Australian Government in connection with the repurchase and repayment of the debt of that State or the Northern Territory.

Only perpetual debt with no fixed maturity date remains outstanding under these arrangements for New South Wales and Victoria. Redemption of the perpetual debt is at the discretion of the relevant State.

3.1.3 Australian Government Indigenous Expenditure

The AOFM does not have any Australian Government Indigenous Expenditure.

3.2 Budgeted financial statements

3.2.1 Differences in agency resourcing and financial statements

Departmental

Sales of goods and services revenue as recorded in the comprehensive income statement (Table 3.2.1) includes resources received free of charge from the Australian National Audit Office for audit services. Departmental agency receipts as recorded in the agency resource statement (Table 1.1) exclude the estimated value of these services.

Administered

The AOFM receives administered appropriations for expenses and for capital expenditure arising from managing a portfolio of debt and assets. This is reflected in the agency resource statement. The administered financial statements identify expenses in the schedule of budgeted income and expenses (Table 3.2.7), and capital expenditures in the capital budget schedule (Table 3.2.10).

3.2.2 Analysis of budgeted financial statements

Departmental

The AOFM forecasts that during the forward estimates period it will need to make renewed capital investment in agency infrastructure. Capital expenditure on the AOFM's specialist debt management systems, both for development and replacement, represents the majority of this expenditure. Expected capital expenditure on specialist debt management systems is forecast to occur in 2013‑14.

Administered

The budget and forward estimates reflect expected increases in debt issuance and debt levels to meet the Government's funding needs. With the increased level of debt, total debt servicing costs will also rise.

Assets administered on behalf of the Government include investments in residential mortgage‑backed securities which were made in accordance with the Government's policy to support competition in lending for housing and small business. They also include investments in short term assets held as part of the AOFM's management of the Government's cash balances.

3.2.3 Budgeted financial statements tables

Table 3.2.1: Comprehensive income statement (Showing Net Cost of Services)
(for the period ended 30 June)
Estimated
actual
2012‑13
$'000
Budget
estimate
2013‑14
$'000
Forward
estimate
2014‑15
$'000
Forward
estimate
2015‑16
$'000
Forward
estimate
2016‑17
$'000
EXPENSES          
Employee benefits 6,755 7,625 7,854 8,090 8,332
Supplier 3,785 4,991 4,845 4,712 4,631
Depreciation and amortisation 500 500 500 500 500
Total expenses 11,040 13,116 13,199 13,302 13,463
LESS:          
OWN-SOURCE INCOME          
Sale of goods and rendering of services 1,131 1,131 1,131 1,131 1,131
Total own-source income 1,131 1,131 1,131 1,131 1,131
Net cost of (contribution by) services 9,909 11,985 12,068 12,171 12,332
Appropriation revenue 11,409 11,485 11,568 11,671 11,832
Surplus (deficit) attributable to the Australian Government 1,500 (500) (500) (500) (500)
Note: Impact of Net Cash Appropriation Arrangements          
  2012-13
$'000
2013-14
$'000
2014-15
$'000
2015-16
$'000
20116-17
$'000
Total Comprehensive Income (loss) less depreciation/amortisation expenses previously funded through revenue appropriations 2,000 - - - -
plus depreciation/amortisation expenses previously funded through revenue appropriations (500) (500) (500) (500) (500)
Total Comprehensive Income (loss) - as per the Statement of Comprehensive Income 1,500 (500) (500) (500) (500)

Prepared on Australian Accounting Standards basis.

Table 3.2.2: Budgeted departmental balance sheet
(as at 30 June)
Estimated
actual
2012‑13
$'000
Budget
estimate
2013‑14
$'000
Forward
estimate
2014‑15
$'000
Forward
estimate
2015‑16
$'000
Forward
estimate
2016‑17
$'000
ASSETS          
Financial assets          
Cash and equivalents 100 100 100 100 100
Trade and other receivables1 27,746 24,892 24,939 24,987 25,037
Total financial assets 27,846 24,992 25,039 25,087 25,137
Non-financial assets          
Infrastructure, plant and equipment 586 614 1,154 1,466 1,793
Intangibles 159 2,939 2,639 2,573 2,507
Other 57 57 57 57 57
Total non-financial assets 802 3,610 3,850 4,096 4,357
Total assets 28,648 28,602 28,889 29,183 29,494
LIABILITIES          
Provisions          
Employees 2,028 2,074 2,121 2,169 2,219
Other 136 136 136 136 136
Total provisions 2,164 2,210 2,257 2,305 2,355
Payables          
Suppliers 332 332 332 332 332
Total payables 332 332 332 332 332
Total liabilities 2,496 2,542 2,589 2,637 2,687
Net assets 26,152 26,060 26,300 26,546 26,807
EQUITY          
Contributed equity 4,931 5,339 6,079 6,825 7,586
Retained surpluses 21,221 20,721 20,221 19,721 19,221
Total equity 26,152 26,060 26,300 26,546 26,807
Current assets 3,185 285 285 285 285
Non-current assets 25,463 28,317 28,604 28,898 29,209
Current liabilities 940 954 968 983 998
Non-current liabilities 1,556 1,588 1,621 1,654 1,689

1. Includes undrawn appropriations.

Prepared on Australian Accounting Standards basis.

Table 3.2.3: Budgeted departmental statement of cash flows
(for the period ended 30 June)
Estimated
actual
2012‑13
$'000
Budget
estimate
2013‑14
$'000
Forward
estimate
2014‑15
$'000
Forward
estimate
2015‑16
$'000
Forward
estimate
2016‑17
$'000
OPERATING ACTIVITIES          
Cash received          
Goods and services 828 828 828 828 828
Appropriations 9,389 14,339 11,521 11,623 11,782
Total cash received 10,217 15,167 12,349 12,451 12,610
Cash used          
Employees 6,589 7,579 7,807 8,042 8,282
Suppliers 3,628 4,688 4,542 4,409 4,328
Total cash used 10,217 12,267 12,349 12,451 12,610
Net cash from or (used by) operating activities - 2,900 - - -
INVESTING ACTIVITIES          
Cash used          
Purchase of property, plant and equipment and intangibles 406 3,308 740 746 761
Total cash used 406 3,308 740 746 761
Net cash from or (used by) investing activities (406) (3,308) (740) (746) (761)
FINANCING ACTIVITIES          
Cash received          
Contributed equity 406 408 740 746 761
Total cash received 406 408 740 746 761
Net cash from or (used by) financing activities 406 408 740 746 761
Net increase or (decrease) in cash held - - - - -
Cash at the beginning of the reporting period 100 100 100 100 100
Cash at the end of the reporting period 100 100 100 100 100

Prepared on Australian Accounting Standards basis.

Table 3.2.4: Departmental statement of changes in equity — summary of movement (Budget year 2013‑14)
Retained
surpluses
$'000
Asset
revaluation
reserve
$'000
Other
reserves
$'000
Contributed
equity/
capital
$'000
Total
equity
$'000
Opening balance as at 1 July 2013          
Balance carried forward from previous period 21,221 - - 4,931 26,152
Adjusted opening balance 21,221 - - 4,931 26,152
Comprehensive income          
Surplus (deficit) for the period (500) - - - (500)
Total comprehensive income recognised directly in equity (500) - - - (500)
Transactions with owners          
Contributions by owners          
Appropriation (departmental capital budget) - - - 408 408
Total transactions with owners - - - 408 408
Estimated closing balance as at 30 June 2014 20,721 - - 5,339 26,060

Prepared on Australian Accounting Standards basis.

Table 3.2.5: Departmental capital budget (DCB) statement
Estimated
actual
2012‑13
$'000
Budget
estimate
2013‑14
$'000
Forward
estimate
2014‑15
$'000
Forward
estimate
2015‑16
$'000
Forward
estimate
2016‑17
$'000
NEW CAPITAL APPROPRIATIONS          
Capital budget - Bill 1 DCB 406 408 740 746 761
Total new capital appropriations 406 408 740 746 761
Provided for:          
Purchase of non-financial assets 406 408 740 746 761
Total Items 406 408 740 746 761
PURCHASE OF NON-FINANCIAL ASSETS          
Funded by capital appropriation - DCB 406 3,308 740 746 761
Funded by prior year equity injections - - - - -
TOTAL 406 3,308 740 746 761
RECONCILIATION OF CASH USED TO ACQUIRE ASSETS TO ASSET MOVEMENT TABLE          
Total purchases 406 3,308 740 746 761
Total cash used to acquire assets 406 3,308 740 746 761

Prepared on Australian Accounting Standards basis.

Table 3.2.6: Statement of asset movements — departmental
Buildings
$'000
Other
infrastructure,
plant and
equipment
$'000
Intangibles
$'000
Total
$'000
As at 1 July 2013        
Gross book value - 1,579 3,505 5,084
Accumulated depreciation/amortisation and impairment - 993 3,346 4,339
Opening net book balance - 586 159 745
Capital Asset Additions/Disposals        
By purchase - appropriation ordinary annual services - 228 3,080 3,308
Disposals - gross value - - - -
Total asset additions/disposals - 228 3,080 3,308
Other movements        
Depreciation/amortisation expense - 200 300 500
Disposals - accumulated depreciation/amortisation - - - -
Total other movements - 200 300 500
As at 30 June 2014        
Gross book value - 1,807 6,585 8,392
Accumulated depreciation/amortisation and impairment - 1,193 3,646 4,839
Closing net book balance - 614 2,939 3,553

Prepared on Australian Accounting Standards basis.

Table 3.2.7: Schedule of budgeted income and expenses administered on behalf of government (for the period ended 30 June)
Estimated
actual
2012‑13
$'000
Budget
estimate
2013‑14
$'000
Forward
estimate
2014‑15
$'000
Forward
estimate
2015‑16
$'000
Forward
estimate
2016‑17
$'000
EXPENSES ADMINISTERED ON BEHALF OF GOVERNMENT          
Grants 22 22 22 22 22
Interest costs 12,199,740 12,452,765 12,733,157 12,902,054 12,889,689
Other 10,500 4,500 1,000 1,000 1,000
Total expenses before re-measurements 12,210,262 12,457,287 12,734,179 12,903,076 12,890,711
LESS:          
OWN-SOURCE INCOME          
Own-source revenue          
Revenue before re-measurements          
Non-taxation revenue          
Interest 1,115,907 1,020,516 847,260 830,182 803,281
Total revenues before re-measurements 1,115,907 1,020,516 847,260 830,182 803,281
Operating result before re-measurements (11,094,355) (11,436,771) (11,886,919) (12,072,894) (12,087,430)
Re-measurements          
Net market valuation gains (losses) 3,616,413 2,924,859 2,369,676 1,867,726 1,549,704
Total re-measurements 3,616,413 2,924,859 2,369,676 1,867,726 1,549,704
Net income (7,477,942) (8,511,912) (9,517,243) (10,205,168) (10,537,726)

Prepared on Australian Accounting Standards basis.

Table 3.2.8: Schedule of budgeted assets and liabilities administered on behalf of
government (as at 30 June)
Estimated
actual
2012‑13
$'000
Budget
estimate
2013‑14
$'000
Forward
estimate
2014‑15
$'000
Forward
estimate
2015‑16
$'000
Forward
estimate
2016‑17
$'000
ASSETS ADMINISTERED ON BEHALF OF GOVERNMENT          
Financial assets          
Cash and cash equivalents 622 622 622 622 622
Receivables 2,461,618 2,379,586 2,294,650 2,207,191 2,116,970
Investments (s39 FMA Act) 27,185,559 27,472,960 25,919,698 24,560,483 29,284,517
Total assets administered on behalf of government 29,647,799 29,853,168 28,214,970 26,768,296 31,402,109
LIABILITIES ADMINISTERED ON BEHALF OF GOVERNMENT          
Interest bearing liabilities          
Commonwealth Government Securities 292,852,238 321,255,823 345,423,919 356,675,222 370,336,327
Total liabilities administered on behalf of government 292,852,238 321,255,823 345,423,919 356,675,222 370,336,327
Net assets/(liabilities) (263,204,439) (291,402,655) (317,208,949) (329,906,926) (338,934,218)

Prepared on Australian Accounting Standards basis.

Table 3.2.9: Schedule of budgeted administered cash flows
(for the period ended 30 June)
Estimated
actual
2012‑13
$'000
Budget
estimate
2013‑14
$'000
Forward
estimate
2014‑15
$'000
Forward
estimate
2015‑16
$'000
Forward
estimate
2016‑17
$'000
OPERATING ACTIVITIES          
Cash received          
Interest 1,085,687 1,000,855 828,359 812,989 779,286
Total cash received 1,085,687 1,000,855 828,359 812,989 779,286
Cash used          
Interest paid 12,674,067 13,173,754 14,064,999 16,118,259 15,062,118
Grants 22 22 22 22 22
Total cash used 12,674,089 13,173,776 14,065,021 16,118,281 15,062,140
Net cash from or (used by) operating activities (11,588,402) (12,172,921) (13,236,662) (15,305,292) (14,282,854)
INVESTING ACTIVITIES          
Cash received          
Repayments of advances 100,249 102,565 105,164 107,330 109,692
Total cash received 100,249 102,565 105,164 107,330 109,692
Net cash from or (used by) investing activities 100,249 102,565 105,164 107,330 109,692
FINANCING ACTIVITIES          
Cash received          
Proceeds from borrowing 114,298,798 86,576,302 53,967,308 52,081,165 76,498,114
Investment redemptions 764,681,144 229,082,249 188,073,084 212,950,790 224,821,683
Total cash received 878,979,942 315,658,551 242,040,392 265,031,955 301,319,797
Cash used          
Repayments of borrowings 87,322,348 54,511,013 26,098,000 35,746,649 59,105,915
Investments made 766,131,180 229,369,814 186,521,842 211,594,535 229,540,887
Total cash used 853,453,528 283,880,827 212,619,842 247,341,184 288,646,802
Net cash from or (used by) financing activities 25,526,414 31,777,724 29,420,550 17,690,771 12,672,995
Net increase or (decrease) in cash held 14,038,261 19,707,368 16,289,052 2,492,809 (1,500,167)
Cash at beginning of reporting period 622 622 622 622 622
Cash from Official Public Account for: appropriations 866,624,022 297,622,026 227,163,301 263,922,150 303,981,286
Cash to Official Public Account for: receipts (880,662,283) (317,329,394) (243,452,353) (266,414,959) (302,481,119)
Cash at end of reporting period 622 622 622 622 622

Prepared on Australian Accounting Standards basis.

Table 3.2.10: Schedule of administered capital budget
Estimated
actual
2012‑13
$'000
Budget
estimate
2013‑14
$'000
Forward
estimate
2014‑15
$'000
Forward
estimate
2015‑16
$'000
Forward
estimate
2016‑17
$'000
NEW CAPITAL APPROPRIATIONS          
Special appropriations 853,453,528 283,880,827 212,619,842 247,341,184 288,646,802
Total new capital appropriations 853,453,528 283,880,827 212,619,842 247,341,184 288,646,802
Provided for:          
Repayments of borrowings and purchase of investments 853,453,528 283,880,827 212,619,842 247,341,184 288,646,802
Total Items 853,453,528 283,880,827 212,619,842 247,341,184 288,646,802

Prepared on Australian Accounting Standards basis.

3.2.4 Notes to the financial statements

The financial statements contain estimates prepared in accordance with the requirements of the Australian Government's financial budgeting and reporting framework, including Australian Accounting Standards and Statements of Accounting Concepts, as well as specific guidelines issued by the Department of Finance and Deregulation.

The departmental financial statements have been prepared on an accrual basis and are in accordance with the historical cost convention, except for infrastructure, plant and equipment assets and employee entitlements.

With the exception of loans to the States and the Northern Territory, the administered financial statements have been prepared on a fair value basis in accordance with Australian Accounting Standards. Loans to the States and the Northern Territory are measured on an amortised cost basis, after initial recognition at fair value.

Fair value is synonymous with market value and represents the estimated exchange equivalent price using relevant inputs from reference markets and valuation techniques. Fair value is determined on the presumption of normal market conditions and that the reporting entity is not undertaking transactions on adverse terms.

Budgeted departmental and administered financial statements

Under the Australian Government's accrual budgeting framework, transactions that agencies control (agency transactions) are separately budgeted for and reported from transactions agencies do not have control over (administered transactions). This ensures that agencies are only held fully accountable for the transactions over which they have control.

Agency assets, liabilities, revenue and expenses are those which are controlled by the agency. Agency expenses include employee and supplier expenses and other administrative costs, which are incurred by the agency in providing its goods and services to government.

Administered assets, liabilities, revenue and expenses are those which are managed on behalf of the Australian Government according to set government directions. Administered expenses include interest incurred on Commonwealth Government Securities. Administered revenues include interest earned on housing agreement loans, and interest on investments.

Administered internal transactions

Administered transactions between the AOFM and other agencies within the general government sector (administered internal transactions) are not reported in the schedule of budgeted administered income and expenses or the schedule of budgeted administered assets and liabilities.

However, for the purposes of disclosing all cash flows through the AOFM's administered bank accounts, cash flows in the schedule of budgeted administered cash flows are reported inclusive of administered internal transactions.

Goods and services tax

Supplies provided by the AOFM are predominantly input taxed under A New Tax System (Goods and Services Tax) Act 1999.

Budgeted departmental comprehensive income statement
Appropriations

Under the net cash appropriation framework the AOFM receives an output appropriation to meet budgeted expenses (except depreciation). The output appropriation is recognised in revenue.

The AOFM also receives a capital appropriation for the replacement of infrastructure, plant and equipment and intangibles. The capital appropriation is not recognised in revenue. It is recognised as contributed equity in the departmental balance sheet in the year the appropriation takes effect.

Budgeted departmental balance sheet
Cash and undrawn appropriations

The estimated cash reserves and undrawn appropriations will be maintained to ensure that the AOFM is well placed to:

  • settle employee liabilities as they fall due;
  • fund future asset replacements; and
  • repay liabilities.
Administered schedule of budgeted income and expenses
Non‑taxation revenue — interest
Estimated
actual
2012‑13
$'000
Budget
estimate
2013‑14
$'000
Forward
estimate
2014‑15
$'000
Forward
estimate
2015‑16
$'000
Forward
estimate
2016‑17
$'000
Interest revenue          
Interest on housing agreements 149,123 144,450 139,631 134,633 129,494
Interest from investments 966,784 876,066 707,629 695,549 673,787
Total interest revenue 1,115,907 1,020,516 847,260 830,182 803,281
Net market valuation gains (losses)

Net market valuation gains (losses) represent the estimated unrealised fair value gains or losses on the financial asset and financial liability portfolio. The revaluation effect represents the change in financial exposures due to changes in market conditions and the passage of time.

In a passive 'issue and hold to maturity' strategy, such as that relating to the AOFM's debt issuance and management activities, the revaluation effect will net to zero over the life of a financial instrument.

Administered schedule of budgeted assets and liabilities
Financial assets — investments

The AOFM manages the cash balances in the Official Public Account and invests surplus funds in deposits and fixed interest securities. Investments also include holdings of residential mortgage‑backed securities. Estimates of the fair value of these asset holdings are disclosed as administered investments. The asset holdings of the Future Fund and other government agencies are not included in these estimates.

Interest bearing liabilities — Commonwealth Government Securities

Interest bearing liabilities represent the fair value of Commonwealth Government Securities on issue.

Estimated
actual
2012‑13
$'000
Budget
estimate
2013‑14
$'000
Forward
estimate
2014‑15
$'000
Forward
estimate
2015‑16
$'000
Forward
estimate
2016‑17
$'000
Commonwealth Government Securities (at fair value)          
Treasury Bonds 258,864,942 286,913,181 305,405,101 316,657,959 319,515,563
Treasury Indexed Bonds 28,976,168 34,322,245 39,998,827 39,997,676 43,815,610
Treasury Notes 4,990,362 - - - 6,991,110
Other 20,766 20,397 19,991 19,587 14,044
Total Commonwealth Government Securities (at fair value) 292,852,238 321,255,823 345,423,919 356,675,222 370,336,327