More efficient management of working capital will:
- Reduce net interest expense as surplus working capital held by agencies can be applied to reduce long term borrowing costs;
- Reduce the level of financial assets held on the balance sheet and enable these borrowings to be reallocated to financing infrastructure investment;
- Reduce the level of gross debt which will positively impact the State’s AAA credit rating;
- Create savings from a reduction in the number of bank accounts and bank fees; and
- Improve the State’s cash forecasting.
The Standing Directions 2018 under the Financial Management Act 1994 (2018 Directions) have been amended to require General Government agencies to hold all working capital in the CBS, subject to limited exceptions set out in the 2018 Directions. Funds deposited by agencies within the CBS are held in separate Westpac accounts and will be accessible in the same way as currently allowed.
The 2018 Directions allow individual agencies to maintain transactional accounts with their existing transactional banker, however balances should be minimised.
It is not mandatory for Public Non-Financial Corporations (PNFCs) to hold working capital in the CBS. However, the Treasurer has formally requested PNFCs to consider depositing surplus balances in the CBS.
Key points to note
- The 2018 Directions require general government agencies to transfer Eligible Financial Assets to the CBS by 14 February 2019.
- Funds held in a CBS account are accessible at any time (“at call”).
- Transactional bank accounts may remain outside of the CBS, however daily balances must be minimised to not exceed an amount that the agency considers necessary to meet its daily cash flow requirements over the very short term (taking into consideration that money held in the CBS is at call).
- CBS accounts are subject to the same terms and conditions as bank accounts under the Banking and Financial Services State Purchase Contract. If your agency does not currently hold an account with Westpac as a part of the State Purchase Contract (SPC), a new CBS account(s) is required to be opened. For more details on the Banking and Financial Services State Purchase Contract please visit the Buying for Victoria website. If you have any general queries on the SPC, please contact Marco Martini from Strategic Sourcing: email@example.com.
How do I join the Central Banking System?
If you are Westpac customer, please contact your existing Westpac relationship manager.
If you are not an existing Westpac customer: Please contact the Department of Treasury and Finance Working Capital Team by emailing firstname.lastname@example.org and the team will respond to your query.