The management of Australia's government balance sheet and the liabilities of the Reserve Bank of Australia need a rethink, to see if one problem in banking is being solved in a way that robs the country of the best use of resources.Plans for a Committed Liquidity Facility from the RBA to overcome a lack of bonds for banks to invest in is a woeful solution to a problem.What banks need are bonds.The Australian government could sell them, very easily, to banks and a bevy of foreign investors, the latter doing their bit lately to lower the cost of borrowing.The government, if it chose, could match the borrowing with spending on whatever it likes.Otherwise it could issue the debt as a financial stability measure, shifting reserves into treasury accounts (the bond sale).The Australian Prudential Regulation Authority in January estimated Australia's largest 35 banks would need to tap A$344 billion in "committed liquidity" from the Reserve Bank of Australia to meet new standards coming into force next year.The Australian Office of Financial Management has said Treasury bond issuance in 2014/15 is expected to be around A$63 billion. This is down from the approximately $80 billion issued in 2013/14.At June 2014, the AOFM managed $290 billion in bonds and another $30 billion in liabilities.The RBA left any comment on the scale and significance of this facility out of its Financial System Inquiry submission.The Committed Liquidity Facility or CLF is needed to bridge a lack of eligible bonds to allow banks to meet the Liquidity Coverage Ratio from January 2015.The LCR requires that banks hold a sufficient liquid assets to withstand a hypothetical 30-day period of funding stress - more than four times as long as the previous standard.Banks clearly need a massive volume of new treasury bonds to meet Basel III. They can only get them from one placeSo borrow it. Spend it. Build it.Many problems solved.