Australian Office of Financial Management
Section 1:  Overview, Appropriations and Budget Measures Summary
Overview
The Australian Office of Financial Management (AOFM) was established on 1 July 1999 as a ‘prescribed agency’ under the Financial Management and Accountability Act 1997. At that time it assumed responsibility for the Commonwealth’s debt management activities previously undertaken by the Department of the Treasury.
The objective of the AOFM is to raise, manage and retire Commonwealth debt at the lowest possible long‑term cost, consistent with an acceptable degree of risk exposure.
Appropriations
The total appropriations for the AOFM in the 2000‑01 Budget are $60,917.3 million. Table 1.1 on the following page shows the total appropriations for the AOFM’s outcome.
Price of output appropriation of $5.7 million is based on budgeted expenses (of $5.9 million) after deducting estimated revenues from external sources (of $0.2 million).
The total administered outcome appropriation of $60,907.5 million is based on budgeted expenses of $8,680.0 million and budgeted debt raising and financial investment activity of $52,227.5 million.

Australian Office of Financial Management — Appropriations 2000-01
Table 1.1:  Appropriations ($’000)
Outcomes	Agency (Price of Outputs)		Administered		
	Revenue from Government (Appropriations)	Revenue from Other Sources(a)	Price of Outputs		Annual Appropriations	Special Approps(b)	Total Administered Appropriations	Total Appropriations	
	Bill No. 1

	Special
Approps
	Total	

		Bill No. 1(b) 
	Bill No. 2
(SPPs & NAOs)	

		
	(A)	(B)	(C=A+B)	(D)	(E= C+D)		(F)	(G)	(H)	(I=F+G+H)	(J=C+I)	
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 	

5,706	

-	

5,706	

162	

5,868		

4,429	

-	

60,903,047	

60,907,476	

60,913,182	
Total	5,706	-	5,706	162	5,868		4,429	-	60,903,047	60,907,476	60,913,182	
Agency Capital (Equity Injections and Loans)		749	
Administered Capital		3,400	
Total Appropriations		60,917,331	
(a)	Revenue from Other Sources includes other revenue from Government (for example, resources free of charge) and revenue from sources other than Government (for example, sales of goods and services).
(b)	Estimated expenses from individual Appropriation Bill No. 1 items and Special Appropriations are shown in Appendix 2.

Administered Capital and Agency Capital (Equity Injections and Loans)
The AOFM will receive an agency loan of $0.7 million. These funds will be used for office relocation and acquisition of leasehold improvements.
In addition to the agency loan, the AOFM will receive administered capital of $3.4 million for new specialist debt management hardware and software.
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.
	Australian Office of Financial Management
Chief Executive Officer:  Michael Allen		
							
	Overall Government Outcome
Strong, sustainable economic growth and the improved wellbeing of Australians.		
							
	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.
Total Price of Outputs:  $5.9 million
Total Administered Expenses:  $8,680.0 million		
							
	Output 1.1
Debt Management
Total Price of Output 1:  $5.9 million
Total Administered Expenses:  $8,680.0 million		

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 ($’000)
	Estimated Actual 	Budget
Estimate	
	1999-00
($’000)	2000-01
($’000)	
Administered appropriations			
Annual appropriations	2,043	4,429	
Special appropriations	55,045,368	60,903,047	
Total administered appropriations	55,047,411	60,907,476	
Agency appropriations
Output 1.1 — Debt Management 	
5,535	
5,706	
Subtotal output 1.1	5,535	5,706	
Total revenue from Government (appropriations)
contributing to price of agency outputs	5,535
99.2%	5,706
97.2%	
Revenue from other sources
Output 1.1 — Debt Management	
42	
162	
Total revenue from other sources	42	162	
Total price of agency outputs	5,577	5,868	
Total estimated resourcing for outcome 1	55,052,988	60,913,344	

	1999-00	2000-01	
Average staffing levels (number)	20	42	

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.
Section 3:  Budgeted Financial Statements
Budgeted agency and administered financial statements for the AOFM, and related notes, are presented in this section. The financial statements are produced for 1999‑00 (estimated actual results), 2000‑01 (Budget estimate) and three forward years and comprise the following statements. The financial statements should be read in conjunction with the accompanying notes.
Budget Statement of Revenues and Expenses (Budget Operating Statement)
This statement provides a picture of the expected financial results for the AOFM by identifying full accrual expenses and revenues.
Budget Statement of Assets and Liabilities (Budget Balance Sheet)
This statement shows the financial position of the AOFM. It enables decision-makers to track the management of the agency’s assets and liabilities.
Budget Cash Flow Statement
This statement provides information on the extent and nature of budgeted cash flows, categorised into expected cash flows from operating activities, investing activities and financing activities.
Capital Budget Statement
This statement shows all proposed capital expenditure on non‑financial assets, whether funded either through capital appropriations (equity or borrowings) or from internally sourced funds.
Non-financial Assets — Summary of Movement
This statement shows the movement in the AOFM’s non‑financial assets during the Budget year 2000-01.
Notes to the Financial Statements
These form an integral part of the Budget Financial Statements and provide a summary of the basis on which Statements were prepared.

Table 3.1:  Agency Budget Statement of Revenues and Expenses
(for the period ended 30 June)
	Estimated Actual
1999-00
$’000	Budget Estimate
2000-01
$’000	Forward Estimate
2001-02
$’000	Forward Estimate
2002-03
$’000	Forward Estimate
2003-04
$’000	
Operating revenue						
Revenues from Government	5,535	5,706	5,806	5,896	5,846	
Interest	42	162	176	191	207	
Total operating revenues (before abnormal items)	5,577	5,868	5,982	6,087	6,053	
Operating expenses						
Employees	1,698	3,300	3,376	3,446	3,417	
Suppliers	830	2,043	2,088	2,130	2,136	
Depreciation and amortisation	127	154	154	154	150	
Interest	-	45	38	31	24	
Total operating expenses	2,655	5,542	5,656	5,761	5,727	
Operating surplus or deficit before abnormal and extraordinary items	2,922	326	326	326	326	
Abnormal and extraordinary items	-	-	-	-	-	
Operating surplus or deficit after abnormal and extraordinary items	2,922	326	326	326	326	
Capital use charge paid	-	326	326	326	326	
Operating surplus or deficit after abnormal and extraordinary items and CUC	2,922	-	-	-	-	

Table 3.2:  Agency Budget Statement of Assets and Liabilities
(as at 30 June)
	Estimated Actual
1999-00
$’000	Budget Estimate
2000-01
$’000	Forward Estimate
2001-02
$’000	Forward Estimate
2002-03
$’000	Forward Estimate
2003-04
$’000	
Assets						
Financial assets						
Cash	3,246	3,524	3,822	4,131	4,399	
Total financial assets	3,246	3,524	3,822	4,131	4,399	
Non-financial assets						
Infrastructure, plant and equipment	
13	
608	
454	
300	
150	
Total non-financial assets	13	608	454	300	150	
Total assets	3,259	4,132	4,276	4,431	4,549	
Liabilities						
Debt						
Loans	-	674	599	524	449	
Total debt	-	674	599	524	449	
Provisions and payables						
Employees	511	709	927	1,157	1,351	
Suppliers	28	29	30	30	29	
Total provisions and payables	
539	
738	
957	
1,187	
1,380	
Total liabilities	539	1,412	1,556	1,711	1,829	
Equity						
Accumulated surplus or deficit	
2,720	
2,720	
2,720	
2,720	
2,720	
Total equity	2,720	2,720	2,720	2,720	2,720	
Current liabilities	246	400	489	578	653	
Non-current liabilities	293	1,012	1,067	1,133	1,176	
Current assets	3,246	3,524	3,822	4,131	4,399	
Non-current assets	13	608	454	300	150	

Table 3.3:  Agency Budget Cash Flow Statement
(for the period ended 30 June)
	Estimated Actual
1999-00
$’000	Budget Estimate
2000-01
$’000	Forward Estimate
2001-02
$’000	Forward Estimate
2002-03
$’000	Forward Estimate
2003-04
$’000	
Operating activities						
Cash received						
Appropriations for outputs	5,535	5,706	5,806	5,896	5,846	
Interest	42	162	176	191	207	
Total cash received	5,577	5,868	5,982	6,087	6,053	
Cash used						
Employees	1,529	3,102	3,158	3,216	3,223	
Supplies	802	2,042	2,087	2,130	2,137	
Interest	-	45	38	31	24	
Total cash used	2,331	5,189	5,283	5,377	5,384	
Net cash from operating activities	
3,246	
679	
699	
710	
669	
Cash used						
Purchase of property, plant and equipment	
-	
749	
-	
-	
-	
Total cash used	-	749	-	-	-	
Net cash from investing activities	
-	
-749	
-	
-	
-	
Financing activities						
Cash received						
Proceeds from debt	-	749	-	-	-	
Total cash received	-	749	-	-	-	
Cash used						
Repayments of debt	-	75	75	75	75	
Capital use and dividends paid	
-	
326	
326	
326	
326	
Total cash used	-	401	401	401	401	
Net cash from financing activities	-	348	-401	-401	-401	
Net increase in cash held	3,246	278	298	309	268	
Cash at the beginning of the reporting period	-	3,246	3,524	3,822	4,131	
Cash at the end of the reporting period	3,246	3,524	3,822	4,131	4,399	

Table 3.4:  Agency Capital Budget Statement
(for the period ended 30 June)
	Estimated Actual
1999-00
$’000	Budget Estimate
2000-01
$’000	Forward Estimate
2001-02
$’000	Forward Estimate
2002-03
$’000	Forward Estimate
2003-04
$’000	
Capital appropriations						
Total loans	-	749	-	-	-	
Represented by						
Purchase of non-current assets	-	749	-	-	-	
Other	-	-	-	-	-	
Total	-	749	-	-	-	
Purchase of non-current assets						
Funded by capital appropriations	-	749	-	-	-	
Funded internally by departmental resources	-	-	-	-	-	
Total amount funded	-	749	-	-	-	

Table 3.5:  Agency Non-financial Assets Statement — Summary of Movement
	Land

$’000	Buildings

$’000	Total Land and Buildings

$’000	Other Infrastructure, Plant and Equipment
$’000	Total Infrastructure, Plant and Equipment
$’000	Intangibles

$’000	Total

$’000	
Gross value								
As at 1 July 2000 (opening)	-	-	-	17	17	585	602	
Additions	-	-	-	749	749	-	749	
Disposals	-	-	-	-	-	-	-	
Other movements	-	-	-	-	-	-	-	
As at 30 June 2001 (closing)	-	-	-	766	766	585	1,351	
Accumulated depreciation								
As at 1 July 2000 (opening)	-	-	-	4	4	585	589	
Disposals	-	-	-	-	-	-	-	
Charge for the reporting period	-	-	-	154	154	-	154	
Other movements	-	-	-	-	-	-	-	
As at 30 June 2001 (closing)	-	-	-	158	158	585	743	
Net book value as at 30 June 2001 (Closing book value)	-	-	-	608	608	-	608	
Net book value as at 1 July 2000 (Opening book value)	-	-	-	13	13	-	13	

Total additions
Self funded	-	-	-	-	-	-	-	
Appropriations	-	-	-	749	749	-	749	
Total	-	-	-	749	749	-	749	

Table 3.6:  Statement of Administered Revenues and Expenses
(for the period ended 30 June)
	Estimated Actual
1999-00
$’000	Budget Estimate
2000-01
$’000	Forward Estimate
2001-02
$’000	Forward Estimate
2002-03
$’000	Forward Estimate
2003-04
$’000	
Operating revenues						
Non-taxation						
Revenues from Government	55,047,411	60,907,476	68,770,085	98,369,441	95,090,677	
Interest	2,559,690	2,973,265	3,723,019	5,099,424	6,526,719	
Other sources of non taxation revenues	866	856	851	847	849	
Total non-taxation	57,607,967	63,881,597	72,493,955	103,469,712	101,618,245	
Total operating revenues	57,607,967	63,881,597	72,493,955	103,469,712	101,618,245	
Operating expenses						
Grants	64,636	56,644	45,556	29,916	35,337	
Net foreign exchange losses	
800,237	
-	
-	
-	
-	
Interest and other financing costs	
8,290,466	
8,622,481	
7,944,539	
8,115,868	
7,911,237	
Other	828	829	829	829	829	
Total operating expenses	9,156,167	8,679,954	7,990,924	8,146,613	7,947,403	
Abnormal/extraordinary revenue	
2,610,988	
-	
-	
-	
-	
Net contribution or cost to the budget outcome	
51,062,788	
55,201,643	
64,503,031	
95,323,099	
93,670,842	
Transfers to the official public account						
Amount remitted from administered revenues	32,469,979	48,100,615	50,369,082	70,950,321	73,342,782	
Net surplus or deficit	18,592,809	7,101,028	14,133,949	24,372,778	20,328,060	

Table 3.7:  Statement of Administered Assets and Liabilities
(as at 30 June)
	Estimated Actual
1999-00
$’000	Budget Estimate
2000-01
$’000	Forward Estimate
2001-02
$’000	Forward Estimate
2002-03
$’000	Forward Estimate
2003-04
$’000	
Assets						
Financial assets						
Receivables	7,865,606	7,377,192	7,152,122	7,061,331	6,690,300	
Investments	9,600,000	-	-	-	-	
Accrued revenues	179,505	88,302	152,999	232,027	316,420	
Total financial assets	17,645,111	7,465,494	7,305,121	7,293,358	7,006,720	
Non-financial assets						
Infrastructure, plant and equipment	-	3,400	3,400	3,400	3,400	
Total non-financial assets	-	3,400	3,400	3,400	3,400	
Total assets	17,645,111	7,468,894	7,308,521	7,296,758	7,010,120	
Liabilities						
Debt						
Loans	78,946,903	61,902,159	48,151,608	24,042,347	3,777,980	
Other	1,922,614	1,755,346	1,232,127	957,264	549,279	
Total debt	80,869,517	63,657,505	49,383,735	24,999,611	4,327,259	
Provisions and payables						
Other	2,280,137	2,211,504	2,190,952	2,190,535	2,248,189	
Total provisions and payables	2,280,137	2,211,504	2,190,952	2,190,535	2,248,189	
Total liabilities	83,149,654	65,869,009	51,574,687	27,190,146	6,575,448	
Equity						
Capital	-	3,400	3,400	3,400	3,400	
Accumulated surplus or deficit	-65,504,543	-58,403,515	-44,269,566	-19,896,788	431,272	
Total equity	-65,504,543	-58,400,115	-44,266,166	-19,893,388	434,672	

Table 3.8:  Administered Cash Flow Statement
(for the period ended 30 June)
	Estimated Actual
1999-00
$’000	Budget Estimate
2000-01
$’000	Forward Estimate
2001-02
$’000	Forward Estimate
2002-03
$’000	Forward Estimate
2003-04
$’000	
Operating activities						
Cash received						
Appropriations	8,675,973	8,383,273	7,992,823	8,128,623	7,917,603	
Interest	2,408,252	2,920,154	3,639,669	5,001,989	6,470,180	
Other	38	25	20	20	20	
Total cash received	11,084,263	11,303,452	11,632,512	13,130,632	14,387,803	
Cash used						
Grants	64,636	56,644	45,556	29,916	35,337	
Interest and other financing costs	8,610,508	8,325,800	7,946,438	8,097,878	7,881,437	
Cash to official public account	2,408,290	2,920,179	3,639,689	5,002,009	6,470,200	
Other	829	829	829	829	829	
Total cash used	11,084,263	11,303,452	11,632,512	13,130,632	14,387,803	
Net cash from operating activities	-	-	-	-	-	
Investing activities						
Cash received						
Cash from official public account	11,261,015	795,668	2,265,937	1,684,863	2,715,733	
Other	1,486,738	696,771	1,817,393	1,487,312	2,411,582	
Total cash received	12,747,753	1,492,439	4,083,330	3,172,175	5,127,315	
Cash used						
Purchase of property, plant and equipment	-	3,400	-	-	-	
Cash to official public account	1,486,738	696,771	1,817,393	1,487,312	2,411,582	
Other	11,261,015	792,268	2,265,937	1,684,863	2,715,733	
Total cash used	12,747,753	1,492,439	4,083,330	3,172,175	5,127,315	
Net cash from investing activities	-	-	-	-	-	

Table 3.8:  Administered Cash Flow Statement
(for the period ended 30 June) (continued)
	Estimated Actual
1999-00
$’000	Budget Estimate
2000-01
$’000	Forward Estimate
2001-02
$’000	Forward Estimate
2002-03
$’000	Forward Estimate
2003-04
$’000	
Financing activities						
Cash received						
Proceeds from borrowings	28,561,000	44,471,000	44,912,000	64,461,000	64,461,000	
Cash from official public account	35,494,474	51,663,014	58,511,222	88,534,961	84,427,541	
Other	640,087	486,395	151,329	35,300	297,826	
Total cash received	64,695,561	96,620,409	103,574,551	153,031,261	149,186,367	
Cash used						
Repayments of debt	36,120,610	52,136,744	58,662,551	88,570,261	84,725,367	
Cash to official public account	
28,574,951	
44,483,665	
44,912,000	
64,461,000	
64,461,000	
Total cash used	64,695,561	96,620,409	103,574,551	153,031,261	149,186,367	
Net cash from financing activities	-	-	-	-	-	
Net increase in cash held						
Cash at beginning of reporting period	-	-	-	-	-	
Cash at end of reporting period	-	-	-	-	-	

Table 3.9:  Administered Capital Budget Statement
	Estimated Actual
1999-00
$’000	Budget Estimate
2000-01
$’000	Forward Estimate
2001-02
$’000	Forward Estimate
2002-03
$’000	Forward Estimate
2003-04
$’000	
Capital appropriations						
Administered capital	-	3,400	-	-	-	
Represented by						
Purchase of non-current assets	-	3,400	-	-	-	
Other	-	-	-	-	-	
Total	-	3,400	-	-	-	

Table 3.10:  Administered Non-financial Assets — Summary of Movement
	Land

$’000	Buildings

$’000	Total Land and Buildings

$’000	Other Infrastructure, Plant and Equipment
$’000	Total Infrastructure, Plant and Equipment
$’000	Intangibles

$’000	Total

$’000	
Gross value								
As at 1 July 2000 (opening)	-	-	-	-	-	-	-	
Additions	-	-	-	-	-	3,400	3,400	
Disposals	-	-	-	-	-	-	-	
Other movements	-	-	-	-	-	-	-	
As at 30 June 2001 (closing)	-	-	-	-	-	3,400	3,400	
Accumulated depreciation								
As at 1 July 2000 (opening)	-	-	-	-	-	-	-	
Disposals	-	-	-	-	-	-	-	
Charge for the reporting period	-	-	-	-	-	-	-	
Other movements	-	-	-	-	-	-	-	
As at 30 June 2001 (closing)	-	-	-	-	-	-	-	
Net book value as at 30 June 2001 (Closing Book value)	-	-	-	-	-	3,400	3,400	
Net book value as at 1 July 2000 (Opening book value)	-	-	-	-	-	-	-	

Total additions
Self funded	-	-	-	-	-	-	-	
Appropriations	-	-	-	-	-	3,400	3,400	
Total	-	-	-	-	-	3,400	3,400	

Notes to the Financial Statements
Goods and Services Tax
The budgeted financial statements have been prepared in accordance with the GST accounting guidelines of the Urgent Issues Group (UIG) of the Australian Accounting Research Foundation. The UIG consensus requires that expenses and assets be accounted for net of recoverable GST, revenues be accounted for net of GST payable and that cash flows and accounts payable and receivable be reported gross. Appropriations are thus net of recoverable GST amounts.
Agency and Administered Financial Statements
Under the Commonwealth’s accrual budgeting framework, and consistent with Australian Accounting Standards, 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, revenues and expenses in relation to an agency or authority 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.
•	Administered items are revenues, expenses, assets and liabilities which are managed by an agency or authority on behalf of the Government according to set Government directions. Administered expenses include interest incurred on Commonwealth debt and administered revenues include interest earned on housing agreement loans and interest from swaps.
Appropriations in the Accrual Budgeting Framework
Under the Commonwealth’s accrual budgeting framework, separate annual appropriations are provided to the AOFM for:
•	Agency price of outputs appropriations: representing the Government’s purchase of outputs.
•	Agency capital appropriations: representing a loan for investment in establishment assets.
•	Administered expense appropriations: for the estimated administered expenses relating to debt management outcome.
•	Administered capital appropriations: representing a loan for investment in specialist debt management hardware and software.
Special appropriations continue under the accrual appropriation framework, and fund the majority of payments from the consolidated revenue fund. 
Cash Transfers to Official Public Account (OPA)
Administered receipts of the AOFM such as proceeds from debt raising, swap interest receipts, swap principal receipts and interest on housing agreements are passed to the Commonwealth’s Official Public Account (OPA). These transfers are shown in the Administered Operating Statement as ‘Cash transfers to OPA’, which is a ‘below Operating Result line’ expense.
Budget Statement of Revenues and Expenses
Agency
Appropriations
Price of outputs appropriation estimates are not based on market price indicators. Currently, the agreed price of outputs appropriation estimates are based on budgeted expenses.
The AOFM has prepared its estimates for the 2000-01 budget and forward years to achieve a break-even operating result. Consequently the appropriation revenue from Government represents the funding required to meet all expenses after deduction of revenue from other sources.
Revenues from Other Sources — Other Revenue from Other Sources
As part of the agency banking incentive scheme, the AOFM has estimated that it will earn 5 per cent interest on credit balances in its agency account and from term deposit investments.
Expenses
The total expenses of the AOFM have been estimated by aggregating the direct divisional funding of the former Debt Management Office (within the Department of the Treasury) with the budget measure for the establishment of the AOFM in the 1999‑2000 Treasury Portfolio Budget Statements. An approximate doubling of the staffing of the present debt management operation is envisaged.

Administered
Non‑Taxation Operating Revenues — Interest
	Revised Budget	Estimated	
	1999-00
$’000	2000-01
$’000	2001-02
$’000	2002-03
$’000	2003-04
$’000	
Interest on housing agreements	175,153	172,262	169,249	166,110	162,852	
Interest on state and territory debt	153,045	74,943	38,225	31,799	26,209	
Interest from other sources	2,231,492	2,726,060	3,515,545	4,901,515	6,337,658	
Total interest	2,559,690	2,973,265	3,723,019	5,099,424	6,526,719	
Interest from other sources includes interest from swaps and investments. 
Abnormal/Extraordinary Revenue
During the 1999‑2000 financial year, as part of privatisation initiatives, the Commonwealth assumed debt of the Australian National Railways Commission of $119.0 million. This debt is administered by the AOFM.
As from 1 July 1999, with the introduction of the accrual financial framework and the abolition of funds accounting, the Loans Consolidation and Investment Reserve (a trust account within the Reserved Money Fund) and the Loan Fund were abolished. This has resulted in the assumption, by DoFA of a liability of $2,730 million from the AOFM for Internal Treasury Bills issued by the Loan Fund to Commonwealth Agencies on 30 June 1999.
Operating Expenses — Grants
	Revised Budget	Estimated	
	1999-00
$’000	2000-01
$’000	2001-02
$’000	2002-03
$’000	2003-04
$’000	
Grants to State and Territory Governments	64,636	56,644	45,556	29,916	35,337	
Total grants	64,636	56,644	45,556	29,916	35,337	

Operating Expenses — Interest and Other Financing Costs
	Revised Budget	Estimated	
	1999-00
$’000	2000-01
$’000	2001-02
$’000	2002-03
$’000	2003-04
$’000	
Interest on Government securities	6,389,455	6,027,955	5,479,990	5,528,000	5,338,000	
Interest on swaps	1,815,749	2,357,339	2,454,526	2,583,955	2,569,324	
Interest on other debt	18,545	11,045	6,010	-	-	
Net repurchase premia	64,000	221,000	-	-	-	
Other financing costs	2,717	5,142	4,013	3,913	3,913	
Total interest and other costs	8,290,466	8,622,481	7,944,539	8,115,868	7,911,237	

Budget Statement of Assets and Liabilities
Agency
The employee liabilities of the AOFM are expected to increase from the levels at 30 June 2000. The increased liability recognises that staff numbers are expected to grow significantly during the 2000-01 budget year and that a proportion of staff will be transferring liabilities from other Commonwealth agencies.
The estimated cash holding of $3.2 million as at 30 June 2000 results from delays in the appointment of the Chief Executive of the AOFM and consequently, the full establishment of the new specialist debt management agency. The increase in estimated cash holdings from 30 June 2000 recognises that the AOFM will need to hold certain revenue in reserve in order to:
•	settle employee liabilities as they fall due;
•	make asset replacements; and
•	repay loans.
A loan of $0.7 million is expected to be drawn on during the 2000-01 budget year to fund the acquisition of fit-out. The loan is expected to be repaid over a 10 year period.
Administered
Debt Liabilities — Loans
Loans represent the book value of Government securities liability net of investments, with exception to 1999-2000, where they are reported separately.

Debt Liabilities — Other Debt
	Revised Budget	Estimated	
	1999-00
$’000	2000-01
$’000	2001-02
$’000	2002-03
$’000	2003-04
$’000	
Swaps principal	1,922,614	1,755,346	1,232,127	957,264	549,279	
Total other debt	1,922,614	1,755,346	1,232,127	957,264	549,279	
Provisions and Payables — Other
	Revised Budget	Estimated	
	1999-00
$’000	2000-01
$’000	2001-02
$’000	2002-03
$’000	2003-04
$’000	
Interest payable	2,280,137	2,211,504	2,190,952	2,190,535	2,248,189	
Total other provisions and payables	2,280,137	2,211,504	2,190,952	2,190,535	2,248,189	
Financial Assets — Receivables
	Revised Budget	Estimated	
	1999-00
$’000	2000-01
$’000	2001-02
$’000	2002-03
$’000	2003-04
$’000	
Loans to State and Territory Governments	5,075,313	4,517,978	4,292,805	4,181,020	3,804,201	
Appropriations receivable	2,766,281	2,835,202	2,835,305	2,856,299	2,886,099	
Swap principal	24,012	24,012	24,012	24,012	-	
Total receivables	7,865,606	7,377,192	7,152,122	7,061,331	6,690,300	

Appendix 1
Non-appropriation Agency and Administered Revenue
	Estimated
1999-00
$’000 	Estimated
2000-01
$’000	
Agency revenue			
Agency Section 31 receipts	42	162	
Total non-appropriation agency revenue	42	162	
Appropriation revenue	5,535	5,706	
Total agency revenue	5,577	5,868	
			
Administered revenue			
Advances to the Australian Capital Territory — interest	2,484	823	
Advances to the States under the Housing Agreements —   interest	101,814	99,615	
Advances to the Northern Territory for housing — interest	1,574	1,555	
Advances to the States under the Housing Assistance Act 1973 — interest	151	148	
Advances to the States under the States (Works and Housing Assistance) Acts — interest	71,185	70,545	
Advances to the States under the War Service Lands Settlements Acts — interest	429	399	
Interest paid by States and the Northern Territory on other loans	150,561	74,120	
Interest on financial assets	288,000	378,000	
Loan management expenses — recoveries from the States and the Northern Territory	38	25	
Loans Securities Amendment Act 1998 (swaps) — interest	1,943,492	2,348,060	
Other	828	831	
Total non-appropriation administered revenue	2,560,556	2,974,121	
Appropriation revenue	55,047,411	60,907,476	
Total administered revenue	57,607,967	63,881,597	

Appendix 2
Estimates of Administered Expenses from Appropriation Bills No. 1 and No. 2
	Revised Budget
1999-00
$’000	Budget
2000-01
$’000	
Appropriation Bill No. 1			
Loan management expenses	2,033	4,419	
Overseas bond issues — lapsed coupons	10	10	
Australian National Railways Commission — (a) interest	-	-	
Total Appropriation Bill No. 1	2,043	4,429	
			
Appropriation Bill No. 2			
Australian National Railways Commission — principal (a)	-	-	
Establishment of the Australian Office of Financial Management — capital	
-	
-	
Total Appropriation Bill No. 2	-	-	
Total Appropriation Bill No. 1 and No. 2	2,043	4,429	
Estimates of Administered Expenses from Special Appropriations
	Revised Budget
1999-00
$’000	Budget
2000-01
$’000	
Airports (Transitional) Act 1996 — former debts of the Federal Airports Corporation — interest	45,420	37,550	
Commonwealth Inscribed Stock Act 1911, Loans Securities Act 1919, Loans Redemption and Conversion Act 1921	6,272,564	6,068,125	
Loans Securities Amendment Act 1988 (Swaps) — interest	1,815,749	2,357,339	
Financial Agreement Act 1994 — assistance for debt redemption	59,626	53,400	
Loans Redemption and Conversion Act 1921	5	5	
Loans Securities Amendment Act 1988 (Swaps) — principal	800,237	-	
Moomba — Sydney Pipeline System Sale Act 1994	1	-	
Financial Agreement Act 1994 — Commonwealth contribution to Debt Retirement Reserve Trust Account on State and Northern Territory debt	5,010	3,244	
Financial Agreement Act 1994 — interest on Debt Retirement Reserve Trust Account Balances	829	829	
Commonwealth Inscribed Stock Act 1911, Treasury Bills Act 1914 — payment of special bond premiums on redemption	5	5	
Qantas Sale Act 1992 — Qantas debt servicing	2,120	920	
Australian National Railways Commission Act 1983 — debt servicing	16,545	10,426	
Other			
Loans Redemption and Conversion Act 1921	71,450	-77,740	
Loan flotation expenses	563	422	
Loans Redemption and Conversion Act 1921 — net repurchase premia	64,000	221,000	
Total estimated expenses – special appropriation	9,154,124	8,675,525	

Appendix 3
Assumption of Assets and Liabilities on Establishment of the AOFM
On establishment of the AOFM on 1 July 1999 the following assets and liabilities were assumed from the Department of the Treasury.
Assumption of assets and liabilities on 1 July 1999
	Agency	Administered	

	1 July 1999
$’000	1 July 1999
$’000	
Debt			
Government securities	-	89,053,502	
Other debt — swaps	-	1,396,333	
Total debt	-	90,449,835	
Provisions and payables			
Employees	342	-	
Other — interest	-	2,798,893	
Total provisions and payables	342	2,798,893	
Total liabilities	342	93,248,728	
Equity			
Accumulated results	-202	-84,097,352	
Total equity	-202	-84,097,352	
Total liabilities and equity	140	9,151,376	
Financial assets			
Receivables	-	8,988,595	
Accrued revenue	-	162,781	
Total financial assets	-	9,151,376	
Non-financial assets			
Infrastructure, plant and equipment	140	-	
Total non-financial assets	140	-	
Total assets	140	9,151,376