The agency at the centre of this scrutiny manages around $993 billion in government securities, raising money from global investors to plug ongoing budget deficits and refinance maturing bonds. It sits within the Treasury portfolio and is responsible for issuing Commonwealth bonds, now paying close to 5% on new 10-year debt, and running the government’s cash and debt portfolios. Over the past year, however, the organisation has been through a major internal restructure, which coincided with an unusually high rate of staff departures and growing internal dissatisfaction that has now drawn formal attention.
In a sign of how seriously Treasury treats the situation, it has commissioned an external review focused on the agency’s structure, governance, risk management and technical capability. The review is expected to run for a couple of months and will examine whether the debt office is achieving value for money for taxpayers while managing financial risks in increasingly complex global markets. It follows a period in which at least 22 of the agency’s roughly 48 employees left, including around 10 redundancies during a management-led overhaul, and after internal public service survey data showed more than a quarter of staff wanted to leave within a year, with many pointing to dissatisfaction with senior leadership.
Beyond staffing and governance, the bigger flashpoint is how the agency now funds government spending. The organisation has shifted towards a highly precautionary funding model, issuing more long-term bonds at higher interest rates while holding a much larger cash buffer on deposit at the central bank. In 2024–25 the average cash balance was around $65 billion, well above pre-pandemic norms, even though part of that cash is funded by cheaper short-term Treasury notes. With a term premium of roughly 0.8 percentage points between long-term bond yields and what the government earns on deposits over time, this approach appears to add more than $200 million a year in expected net interest costs, even as the agency argues that a minimum liquidity buffer of about $30 billion is essential to ride out potential market disruptions.
The review arrives on top of existing oversight. An audit by the national audit office in early 2024 found the debt manager largely effective at controlling costs and risks, but encouraged stronger analysis of whether the overall portfolio is structured at the lowest cost for an acceptable level of risk. At the same time, staff survey responses flagged a rise in perceived “corrupt” conduct, with around 18% reporting that they had seen behaviour they would label that way over the previous year, well above the public service average, even though the label appears to reflect a broad interpretation and there are no formal allegations of wrongdoing. While the upcoming review will not investigate those culture concerns directly, it seems likely that it could influence how the agency justifies its funding strategy, manages its workforce and rebuilds confidence after being drawn into a major bank bond-trading enforcement case that ended with a financial penalty for the bank but no proven extra cost to taxpayers.
