Review Of the Commonwealth Government Securities Market

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Review Of the Commonwealth Government Securities Market



The Treasurer today released a discussion paper as part of a review of the

future of the Commonwealth Government Securities (CGS) market.

The discussion paper outlines the key issues that need to be considered in

assessing the costs and benefits of maintaining the market. The paper also seeks

to make the issues accessible for an audience without a financial market background.

The discussion paper is available at

In recent years, the Government has adopted a strategy aimed at managing the

reduction in Commonwealth net debt while maintaining the liquidity and efficiency

of the CGS market. The 2002-03 Budget projections indicate that, on current

policy, the holding of CGS could be eliminated by 2005-06. Alternatively, if

a liquid CGS market were maintained, the Commonwealth could accumulate substantial

financial assets.

Holding a substantial financial asset portfolio raises significant governance

and other public policy issues. The discussion paper therefore invites interested

parties to address the question of why it is necessary to maintain a CGS market

even if the Commonwealth is in a net asset position, and why private financial

markets need a CGS market to operate efficiently.

The Government is inviting written submissions in response to the discussion

paper. The deadline for written submissions is Friday 6 December 2002.

A Review Team within the Commonwealth Treasury will consult with stakeholders

on issues raised in the discussion paper. A group of representatives from key

stakeholder associations will also be formed as a reference committee to provide

assistance on matters of detail arising from the consultation process. The reference

committee will comprise representatives from:

  • the Australian Bankers’ Association;
  • the Australian Financial Markets Association;
  • the Australian Shareholders’ Association;
  • the International Banks and Securities Association of Australia; and
  • the Investment and Financial Services Association.

The Assistant Director and Dean of Faculty at the Melbourne Business School,

Professor Ian Harper, will also be included in the reference committee.

The Review Team will also consult with the Australian Office of Financial Management.

The Government noted in the 2002-03 Budget papers that it would be carefully

considering these issues, taking the views of key stakeholders into account.

This consultation process will ensure that all interested stakeholders have

the opportunity to provide input into the Government’s consideration of this

important issue.

A decision on the future of the CGS market will be taken by the Government

prior to the 2003-04 Budget.

30 October 2002


Contact: David Alexander

02 6277 7340