The Australian Office of Financial Management is on the hunt for a new chief executive.
On Friday, Treasury announced that Rob Nicholl, the AOFM CEO since 2011, will leave around mid-September.
Nicholl is being nominated by the Australian government as executive director at the International Monetary Fund. He will replace Nigel Ray in this role.
If Treasury Secretary Steven Kennedy has a person with deep experience working in debt capital markets on his radar, he will need to raid another part of his (or another agency’s) budget.
The 2021 annual report discloses salary and remuneration for the AOFM CEO of A$464,000. There are few perks and no performance bonus. This is pretty poor coin by the standards of the sharpest minds in the debt market that ensure they and their employer profit from their co-dependency with the AOFM, tasked to manage the ballooning portfolio of debt and financial assets on behalf of government.
This package is more than $200,000 less than the total remuneration of the assistant governor, financial markets at the Reserve Bank of Australia, to cite one comparator.
Among the AOFM’s present top talent, Michael Bath, head of global markets and business strategy, would have to be well-placed to step up.
In his most recent speech, with the rapidly overtaken headline “Beyond the crisis”, outgoing chief Rob Nicholls reflected on the challenges and disciplines facing the AOFM as a communicator.
“Having watched central banks with their communication challenges, it is clear the market communication task requires increasingly careful thought and crafting,” Nicholl told an Australian Business Economists function in Sydney a month ago.
“The risk of underperforming with messaging feels elevated and potentially unforgiving.”
Equally unforgiving, but surely more manageable, are the idiosyncrasies and tantrums of markets in interest rate products.
A little noticed disclosure (in February) under Freedom of Information lists all the counterparties named as Registered Bidders under the AOFM Tender System.
Perhaps surprisingly, there are as few as 22, or there were in May 2021.
On Thursday, Nicholl, Bath and rest of the debt capital market will all know a bit more about the scale and potential complexities of the funding task ahead when treasurer Jim Chalmers updates parliament on preparations for the Albanese government’s first budget (scheduled for October), along with fresh forecasts of key economic variables.
The headline numbers around the financial products under the purview of the AOFM are, colloquially put, ‘all over the shop’. Over the course of the financial year just ended, total assets more than valued over a few months, and more recently more than doubled.
Banking Day’s never thought to look up the pay deal for the AOFM boss before, but it doesn’t sit right.
Even if it means making the next chief executive one of the highest paid public servants in the country, there will be plenty of reasons to lay before the people and an avalanche of testing work for this person as Australia (and many other places) sprints for a sharp but hopefully short shock.
And they will have to handle deficit and debt metrics that even the stress heads at AOFM