Centralised treasury and investment policy

This policy centralises the borrowing and investment powers of state entities with the State's central finance agencies, Treasury Corporation of Victoria and Victoria Financial Management Corporation.

The policy is supported by Direction 3.7.2 issued under the Financial Management Act 1994 . Subject to several exceptions, the Direction gives legal force to the policy.

The Standing Directions are outlined in three documents, the Directions and two supporting documents, namely an instructions document and a guidance document. For further information see Standing Directions 2018 under the Financial Management Act 1994.

The key points of the policy are summarised below:

  • the Direction requires State Government agencies to undertake all borrowings, investments and financial arrangements with a financial institution that is either a State-owned entity or has a credit rating, that is the same as or better than the State of Victoria (subject to specific exceptions);

  • for investments, an automatic exemption applies for transactional deposits and investment deposits up to $2 million;

  • while the direction is mandatory, entities can apply for a specific exemption. Exemption requests should contain the support of the relevant portfolio Minister, and will need to be sent to the Treasurer for approval.

  • Section 1.5 of the Guidance Document outlines the information to be included in any application for an exemption. It states that ‘exemptions will only be granted in exceptional circumstances’ and that an agency must demonstrate ‘a compelling case for exemption’. It also states that an ‘exemption may be subject to conditions.’

  • where an ongoing exemption from is sought, the Treasurer and DTF have determined that a condition of such exemption is that agencies should write to the Director, Financial Assets and Liabilities, DTF, prior to the end of May each year:

    • requesting an annual refreshing of the exemption; and
    • outlining why this exemption is still required;
  • the Instructions Document notes that: (a) a Treasury Policy is required for agencies with borrowings and/or cash and interest-earning investments such as term deposits, and (b) an  investment policy is required for agencies investing with VFMC or in long term or other high risk assets such as equities and managed funds.
Reviewed 20/12/2018
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