Northern Territory Treasury Corporation
ANNUAL REPORT
2015-16
Published by the Department of Treasury and Finance
© Northern Territory Government 2016
Apart from any use permitted under the Copyright Act, no part of this document may be reproduced without prior written permission from the Northern Territory Government through the Department of Treasury and Finance.
ISSN 1324-9789 (print) ISSN 2204-5759 (online)
Northern Territory Treasury Corporation
Level 11, Charles Darwin Centre, 19 The Mall, Darwin NT 0800 GPO Box 2035 Darwin NT 0801
Telephone: +61 8 8999 7745 Email: nttc[email protected] Website: www.nttcorp.nt.gov.au Territory Bonds
Telephone: +61 8 8999 7745 Email: [email protected]
The Honourable Nicole Manison MLA Treasurer
GPO Box 3146 DARWIN NT 0801
Dear Treasurer
In accordance with section 31 of the Northern Territory Treasury Corporation Act, section 28 of the Public Sector Employment and Management Act and section 12 of the Financial Management Act, I am pleased to provide to you the 2015‑16 Annual Report of the Northern Territory Treasury Corporation (NTTC).
Pursuant to the Financial Managament Act (FMA), I advise that to the best of my knowledge and belief:
• proper records of all transactions affecting NTTC are kept and that employees under my control observe the requirements of the FMA, the Financial Management Regulations and the Treasurer’s Directions;
• procedures within NTTC are subject to proper internal control, which are recorded in the Accounting and Property Manual, prepared in accordance with the requirements of the FMA;
• there is no indication of fraud, malpractice, major breach of legislation or delegation, major error in, or omission from, the accounts and records;
• in accordance with the requirements of section 15 of the FMA, the internal audit capacity available to NTTC is adequate and the results have been reported to me;
• the financial statements included in the Annual Report have been prepared from proper accounts and records, and are in accordance with Treasurer’s Directions;
• all Employment Instructions issued by the Commissioner for Public Employment have been satisfied; and
• NTTC is working in compliance with the Information Act.
I can also advise you that the Auditor‑General has audited NTTC’s financial statements for the year ended 30 June 2016 and her report is included.
Yours sincerely
Craig Graham A/Under Treasurer 30 September 2016
Mission
To provide the Northern Territory Government with cost‑effective funding, efficient financial management and reliable service to assist the Territory in achieving long‑term viability for the benefit of Territorians.
Values
• Open communication and respect
• Trust and integrity in all our dealings and relationships
• Valuable contributions for our stakeholders
• Dedication and professionalism of our people
Enabling Act
The Northern Territory Treasury Corporation (NTTC) was established on 1 July 1994 under the Northern Territory Treasury Corporation Act (NTTC Act).
Statutory Guarantee
All obligations incurred or assumed by NTTC are guaranteed by the Treasurer on behalf of the Territory under section 20 of the NTTC Act.
Status
NTTC is a government business division and an administrative unit of the Department of Treasury and Finance (DTF) for the purposes of the Public Sector Employment and Management Act (PSEMA).
Credit Rating
As at June 2016, Moody’s Investors Service has assigned NTTC a long‑term issuer and debt rating of Aa1 with a negative outlook.
How to Use this Report
This report is designed to meet NTTC’s statutory annual reporting requirements, as specified for public sector agencies in PSEMA, the Financial Management Act (FMA), Information Act and NTTC Act. It reports NTTC’s performance to the Treasurer, the Legislative Assembly, government agencies, stakeholders, financial markets and ratings agencies.
Contents
Profile 3
Under Treasurer’s Address 4
Performance Summary 6
Financial Markets 8
Client Services 12
Administration 17
Treasury Corporation People 20
Corporate Governance 21
Territory Economy 28
Appendices 31
Financial Statements 39
Profile
Purpose
NTTC is the central financing authority (CFA) for the Territory Government, responsible for providing specialist financial advice and services to the Territory Government to support the delivery of infrastructure and service to Territorians by:
• undertaking sound borrowing and investing activities for the Territory Government;
• investing surplus short‑term cash balances of government accounts; and
• providing cost‑efficient loans to its public sector clients and government agencies, government owned corporations and local authorities.
Figure 1: NTTC Stakeholders, Functions and Programs
Financial Markets
• Borrow funds at progressively lower margins to benchmark
• Broaden the investor base
• Manage financial risks
Client Services
• Offer competitive loan facilities to Government, its agencies and local authorities
• Provide financial advice to
Government, its agencies and local authorities
• Obtain returns on cash balances above benchmark
• Manage the cash flow requirements of Government
• Invest funds appropriately on behalf of Government
Borrowing
Investing Lending External Stakeholders
• Government and Legislative Assembly
• Government agencies
• Auditor-General
• Advisory Board
• Industry groups
• Other governments
• Public and commentators
• Investors
Internal Stakeholders
• Treasurer
• Department of Treasury and Finance
• Northern Territory Treasury Corporation staff
Administration
• Manage operational risks
• Maintain awareness of and compliance with current financial market and accounting practices
• Constantly review internal procedures
• Provide administrative support to NTTC’s Advisory Board and Audit Committee
• Comply with all guidelines and reporting requirements
Under Treasurer’s Address
The financial year 2015‑16 has been another challenging year. Volatility in financial markets has continued across the world, mainly driven by events in Europe, United States and China. To date, the action taken to stimulate a sustainable global economic recovery has had mixed success. The US recovery is continuing, albeit at a slow pace, while growth in China is moderating. This, along with continued social unrest in the Middle East has created a volatile environment for financial markets across the world over the past year.
In Australia, the economic fundamentals remain relatively strong as the Australian economy enters its 25th year of economic growth. However, the Australian economy faces some headwinds as it transitions from strong resource investment‑led growth to broader‑based drivers of economic activity. However, the transition is supported by historically low interest rates, the fall in the Australian dollar and low oil prices.
Employment growth has strengthened as the economy moves to more labour‑intensive sectors such as services and supported by moderate wage growth. While business investment intentions currently remain subdued, conditions conducive to stronger business investment are in place.
Locally, the Territory economy has continued to perform well, building on the the record levels of business investment undertaken in recent years. However, the Territory economy faces a range of challenges following a sustained period of record growth across most industries. As the impact of large resource‑based projects move beyond their peak growth, gross state product (GSP), business investment, employment and population are expected in the short term to moderate from historical highs.
Despite these challenges, the Territory is well positioned to take advantage of a number of opportunities likely to re‑shape the structure of the Territory economy throughout the forecast period and into the next decade. The Territory’s position as a gateway to Asia, a key defence hub, world‑renowned tourist attractions and a rich diversity of mineral, gas, petroleum, agricultural resources and renewable energy all provide the strategic opportunities required to underpin future growth. This includes opportunities for growth in service industries such as health, education and research.
In terms of borrowing activity, it has been another relatively quiet year for NTTC. The Territory’s borrowing program for 2015‑16 was a modest $33 million, a significant reduction from the initial estimate of $654 million announced in the 2015‑16 Budget in April 2015. The retirement of loans from counterparties largely met the funding requirements of NTTC. Accordingly, the reduced borrowing program for 2015‑16 resulted in total outstanding issued debt as at 30 June 2016 being lower by approximately $532 million from the balance reported at 30 June 2015.
NTTC’s investment and cash management activities have adjusted to the current economic environment, with a higher level of liquidity maintained throughout the period. NTTC achieved a return of 2.55 per cent on the Government’s investment portfolio of surplus cash balances. This was ahead of the benchmark return of 2.24 per cent and is considered to be a good result given investment conditions.
The investment portfolio represents approximately 47 per cent of total funds under management.
Its weighting towards high‑quality short‑term investments has helped to provide consistency and protection from the volatility experienced in longer term investments, which are held to partially meet superannuation‑related liabilities.
In contrast, the long term investments held in the Conditions of Service Reserve (COSR) returned a modest 1.09 per cent. This represents an under‑performance of 1.11 per cent relative to benchmark.
While this short‑term, absolute performance is disappointing, the fund has managed to outperform its benchmark over a 3, 5, 7 and 10‑year timeframe, which more closely reflects the investment term for these funds.
Similarly, the Medium Term Investment Fund (MTIF) delivered weak performance results over the past financial year returning 2.15 per cent compared to the benchmark return of 2.24 per cent. Although the fund has a smaller allocation to growth assets compared to COSR, the fund’s exposure to international equities, combined with the subdued performance of cash and other fixed income securities, affected the overall performance of the fund.
The transitional Northern Territory Infrastructure Development Fund (NTIDF) also had a modest performance during the financial year. Nevertheless, the fund performed better than the MTIF and COSR portfolio returning 2.33 per cent over the financial year. The fund also marginally outperformed the benchmark index by about 0.09 per cent, returning 2.24 per cent over the same period. The fund’s exposure to more conservative asset classes and real return multi‑asset portfolio helped achieve a stronger return compared to the more aggressive COSR and MTIF portfolio.
Administratively, the risk management framework was completed during the year along with the finalisation of NTTC’s risk register. This major task, in addition to normal duties and sometimes difficult market conditions have tested NTTC but have been dealt with appropriately and successfully.
In conclusion, I wish to express my thanks to the Advisory Board and staff for their valuable advice, diligence and professionalism during this challenging year.
Craig Graham A/Under Treasurer 30 September 2016
Performance Summary
Review of 2015‑16
• Increased global financial market volatility
• Mixed domestic economic conditions with low inflation
• Reduced borrowing program of $33 million
• No term funding issuances into the wholesale market
• About $3.5 billion on issue in major bond series
• Modest investment returns
Outlook for 2016‑17
• Ongoing market volatility
• Continued low cost of borrowing in line with the low interest rate environment and global divergence
• Borrowing program of $621 million mainly to refinance maturing debt and fund new loans to counterparties
• New major bond series to be established under the Australian Domestic Note Programme
• Tap issues of existing long‑dated bond series
• Utilise short‑dated Promissory Note facility
Strategic Issues for 2016‑17
• Managing the Territory Government’s pool of investments efficiently within defined risk management frameworks
• Securing attractive term funding arrangements in the most cost‑effective manner in order to refinance maturing debt and provide flexible and efficient financing options to clients
• Continuous development of NTTC’s business continuity plan and corporate governance framework Table 1: Five‑Year Financial Overview
2015‑16 2014‑15 2013‑14 2012‑13 2011‑12
Statement of Income $000 $000 $000 $000 $000
Revenue 239 230 277 249 289 872 258 055 233 453
Expenses 215 098 241 120 256 898 224 250 203 527
Profit before tax 24 132 36 129 32 974 33 805 29 926
Tax expense 7 240 10 839 9 892 10 141 8 978
Net profit after tax 16 892 25 290 23 082 23 664 20 948
Statement of Financial Position
Total assets 4 085 056 4 648 108 5 283 013 4 848 368 4 098 068 Total liabilities 4 063 426 4 626 478 5 261 383 4 826 738 4 076 438
Total equity 21 630 21 630 21 630 21 630 21 630
Statement of Cash Flows
Cash flows from operating activities 1 314 9 926 24 194 29 793 30 416 Cash flows from investing activities 582 025 60 012 352 242 770 051 480 057
Table 2: Five‑Year Key Performance Indicators Summary
Performance Measures 2015‑16 2014‑15 2013‑14 2012‑13 2011‑12
Quantity
Weighted average cost of borrowing (WACoB)
2.22% 2.51% 4.23% 4.01% 4.86%
Quality
Borrowing rate margin compared to industry peers1
n/a n/a + 0.37% + 0.36% + 0.38%
Investment portfolio return above benchmark2
+ 0.31 + 0.27% + 0.28% + 0.36% + 0.32%
Stakeholder satisfaction3 5 5 5 5 n/a
n/a: not assessable
1 NTTC did not issue any term funding into the wholesale financial market during both the 2014‑15 and 2015‑16 financial years.
2 The benchmark is the weighted relevant Bloomberg AusBond indices. The composite benchmark return for 2015‑16 was 2.24% while NTTC achieved a return of 2.55%.
3 A stakeholder satisfaction rating is obtained from government business divisions, government owned corporations and local government authorities and the Treasurer. Ratings range from 1: extremely dissatisfied to 6: extremely satisfied.
Performance Measure Analysis
NTTC’s cost of borrowing target for 2015‑16 was lowered to 3.00 per cent in line with the low interest rate environment throughout the year. The actual outcome achieved for the year was 2.22 per cent.
However, when promissory note issuances are excluded, the weighted average cost of borrowing for 2015‑16 increases to 2.75 per cent. The weighted average cost of borrowing on outstanding issued debt at 30 June 2016 was 5.00 per cent.
As NTTC did not issue any term funding into the wholesale financial market during the 2015‑16
financial year, NTTC’s best estimate of current borrowing margins is determined by reference to secondary market activity as reflected on end‑of‑day rate sheets published by a number of financial institutions and intermediaries. As at 30 June 2016, NTTC’s 10‑year bond yields are priced at approximately 0.24 per cent over similar bond maturities offered by AAA‑rated semi‑government authorities.
The Central Holding Authority (CHA) investment portfolio was predominantly invested in short‑term securities within the existing credit limits approved by the Treasurer and delivered a 2.55 per cent return for the financial year.
Figure 2: NTTC WACoB versus Spread to AAA Semi‑Governments
Borrowing margin to AAA semis
Weighted average cost of borrowing (WACoB)
0.00.5 1.01.5 2.02.5 3.03.5 4.04.5 5.05.5 6.06.5 7.0
0 05 10 15 20 25 30 35 40 45 50
WACoB
Spread to AAA semis
Basis points %
2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16
10 11 13 24 22 38 36 37 29 24
6.14% 6.67% 5.96% 5.70% 5.29% 4.86% 4.01% 4.23% 2.51% 2.22%
Financial Markets
Table 3: Borrowing Composition
2015‑16 2014‑15 2013‑14 2012‑13 2011‑12
$M $M $M $M $M
Refinance maturing Territory debt 565 641 542 411 427
New borrowings ‑ ‑ ‑ 245 479
Debt reduction Pre‑funded
‑ 532
‑
‑ 219
‑ 393
‑
‑
‑
‑
‑
‑
Borrowing requirement 33 29 542 656 906
Pre‑funding ‑ ‑ 393 453 492
Total borrowing program 33 29 935 1 109 1 398
Borrowing Activity
The borrowing program for 2015‑16 was approximately $33 million raised throughout the financial year compared to $565 million of matured debt. The reduced borrowing program has resulted in total outstanding issued debt as at 30 June 2016 being lower by approximately $532 million from last year’s reported balance.
During 2015‑16 NTTC had not issued into the wholesale financial market. The repayment of loans from counterparties, including an early retirement of outstanding loans by CHA had largely met NTTC’s funding requirements for the financial year. A full listing of NTTC’s issued debt is provided in Appendix A on page 31.
Funding
NTTC manages the Territory Government’s exposure to funding risk by ensuring it is not subject to a significant refinancing risk in any financial year. NTTC’s approach to minimise funding risk involves the diversification of borrowing and investment activities across the maturity spectrum and utilising a variety of funding sources to meet its requirements.
NTTC’s funding sources are as follows:
»Wholesale Market
• fixed interest securities
• floating rate notes
• promissory notes
»Retail Market
• Territory Bonds
• Migration Linked Bonds
As at 30 June 2016, NTTC had six institutional benchmark bond issues as detailed in Table 4.
Table 4: Institutional Bond Issues as at 30 June 2016
Maturity Date Coupon
Amount on Issue
% $M
20 November 2016 5.75 500
17 November 2017 4.75 500
20 September 2018 4.75 500
20 September 2021 4.25 650
15 March 2024 6.00 650
15 March 2026 6.00 650
Table 5: Borrowing Performance as at 30 June
2016 2015 2014 2013 2012
% % % % %
Average borrowing margin
Short‑term – margin to bank bill swap (BBSW) rate ‑ 0.04 ‑ 0.04 ‑ 0.05 ‑ 0.04 ‑ 0.04 Long‑term (fixed rate) – margin to AAA‑rated
semi‑government security
n/a n/a 0.37 0.36 0.38
Cost of borrowing achieved during the year
Weighted average cost of borrowing 2.22 2.51 4.23 4.01 4.86
Total cost of funds
Weighted average cost of funds 5.00 5.19 5.21 5.32 5.67
Portfolio Duration and Term to Maturity
As at 30 June 2016, the weighted average duration of Territory debt on issue was 4.2 years, slightly lower than the 4.3 years reported in June 2015. Similarly, weighted average term to maturity shortened to 5 years compared to 5.3 years in June 2015.
Interest Rate Risk Management
NTTC’s interest rate risk arises from cash flow mismatches in the maturity profiles and repricing dates of its financial assets and liabilities. NTTC manages its exposure to interest rate risk to avoid creating abnormally high refinancing requirements during periods of high interest rates, or unusually low
refinancing requirements in periods of low interest rates (see Figure 3 on page 10). NTTC may use interest rate swaps and forward start interest rate swaps to manage interest rate risk as required.
The target level of interest rate exposure to maturing debt in any financial year is $600 million, with a lower limit of $400 million and an upper limit of $800 million. This strategy continues to support NTTC’s ability to respond to strong demand from institutional investors and create slightly larger and more liquid bonds series. The target will support the Territory’s borrowing requirements anticipated for the next two to three years to fund the capital and operating expenditure requirements of Territory Government agencies, business divisions and government owned corporations.
Figure 3: Interest Rate Exposure of Maturing Debt as at 30 June 2016
Trading Margin
An important influence on trading margins is the perception of liquidity. The relatively small size of the Territory’s borrowing program does not promote significant trading activity. As a result, the borrowing margin is more a reflection of the liquidity premium demanded by institutional investors for supporting NTTC’s bond issuances.
NTTC did not issue into the wholesale financial market during the financial year 2015‑16. Accordingly, NTTC’s best estimate of current borrowing margin is determined by reference to secondary market activity as reflected on end‑of‑day rate sheets published by a number of financial institutions and intermediaries.
Rate sheets as at 30 June 2016 show NTTC’s 10‑year bond yields are approximately 0.24 per cent over similar bond maturities offered by AAA‑rated CFAs such as New South Wales Treasury Corporation and Treasury Corporation of Victoria.
Figure 4 shows NTTC’s borrowing margin relative to the Commonwealth and AAA‑rated CFAs.
Figure 4: Trading Margin
$M
Financial year
Approved band for interest rate exposure to maturing debt
0 100 200 300 400 500 600 700 800
2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25 2025-26 2026-27 2027-28 2028-29 2029-30 2030-31 2031+
0 25 50 75 100 125 150Basis points
NTTC margin to Australian Commonwealth Government Bonds (ACGB) NTTC margin to AAA-rated semi-government security
AAA-rated semi-government security margin to ACGB
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Promissory Notes
NTTC’s short‑term funding requirement is met through its promissory note facility. These notes are issued by way of tender to our key institutional counterparties. While NTTC has no promissory notes outstanding at 30 June 2016, the promissory note facility was used throughout the year to meet short‑term funding requirements.
The weighted average yield achieved for the financial year was 2.18 per cent (2014‑15: 2.45 per cent), with an average margin to BBSW reference rate of ‑0.04 per cent. The issuing margins to BBSW in 2015‑16 ranged from ‑0.02 per cent to ‑0.05 per cent.
Migration Linked Bonds
The bonds offered by NTTC satisfy the criteria of a Designated Investment under the following programs administered by the Department of Immigration and Border Protection:
• Business Innovation and Investment Programme
• Investor Retirement Migration
As at 30 June 2016, total Designated Investments on issue remained steady at $0.5 million.
Territory Bonds
Territory Bonds is NTTC’s retail fixed interest borrowing product and is used to attract funds from the general public. Territory Bonds has been issued since 1979 and is offered to investors seeking a safe, secure, government‑guaranteed investment.
In 2015‑16, Issues 99 and 100 raised approximately $35.4 million from 933 applications, compared to last year’s result of $30.5 million from 1083 applications. The average conversion rate for 2015‑16 was approximately 65 per cent, an improvement from last year’s rate of 62 per cent indicating that existing investors continued to show reasonably strong support for the product by reinvesting their investments at maturity.
Over the course of 2015‑16, the number of registered investors declined by 957 to 3377. This reduction, combined with the decline in the outstanding face value of Territory Bonds results in an average
investment size of about $27 049 as at year end. While the average subscription size has increased, the total amount outstanding in Territory Bonds continues to decline. As at 30 June 2016, the total outstanding balance was approximately $91 million, which is about $5 million lower than the balance recorded at 30 June 2015.
Figure 5: Territory Bonds Outstanding and Average Holding Size
Investment size
Amount outstanding
Total outstanding balance Average investment size
$M $000
6 8 10 12 14 16 18 20 22 24 26 28
50 75 100 125 150 175 200 225
n-05 ec-05 n-06 ec-06 n-07 ec-07 n-08 ec-08 n-09 ec-09 Jun-10 ec-10 Jun-11 ec-11 Jun-12 ec-12 Jun-13 ec-13 Jun-14 ec-14 Jun-15 ec-15 Jun-16
Client Services
Loans
NTTC lends funds to the Territory Government, government business divisions, government owned corporations, local authorities and other government organisations. Loans are issued in accordance with commercially based guidelines and practices. All loans are approved by the Treasurer in accordance with section 13(2)(b) of the NTTC Act and section 31(1) of the FMA.
As at 30 June 2016, NTTC had a total outstanding loan portfolio of $4.04 billion, approximately
$582 million lower than the balance reported at 30 June 2015. Table 6 on page 13 shows the
comparative analysis of total outstanding loans provided by NTTC over the past five years. A full listing of NTTC’s loans is provided in Appendix B on Page 34.
General Government Agencies
General government agencies are funded through the CHA via appropriations, some of which are funded by loans provided by NTTC. CHA is the ‘parent body’ that represents the Territory Government’s ownership interest in government‑controlled entities. The funds are used to finance general government activities and the Territory’s major infrastructure projects.
As at 30 June 2016, loans to the general government sector totalled $2.52 billion, a decrease of about
$613 million from the previous financial year. The net movement largely represents the full repayment of a maturing $500 million loan and an early repayment of $120 million of loans by CHA, less a $12 million debt‑to‑equity swap agreement between CHA and Darwin Port Corporation.
Government Business Divisions
Loans to government business divisions represent borrowings by Territory Government owned entities that operate on a commercial basis. The funds are used to finance capital expenditure requirements.
As at 30 June 2016, loans to this sector totalled about $231 million, approximately $48 million lower than the previous financial year. This net movement resulted mainly from the decision by NT Home Ownership to apply some of their surplus cash balances to repay $28 million of their outstanding loans and the
$12 million debt‑to‑equity swap arrangement between Darwin Port Corporation and CHA. The remaining
$8 million was due to scheduled loan repayments throughout the year.
Government Owned Corporations
Loans to government owned corporations represent borrowings by Territory Government owned entities that operate on a commercial basis but whose operations are not guaranteed by the Crown and do not make the Territory liable for its debts, liabilities or obligations. The funds are used to finance capital expenditure requirements.
On 1 July 2014, legislation came into effect to separate the Power and Water Corporation (PWC) into three separate government owned corporations namely PWC, Jacana Energy and Territory Generation.
PWC continues to manage the electricity network and remains the water and sewerage services provider.
Jacana Energy as a retailer looks after electricity accounts and customer needs, issues bills and collects payments while Territory Generation supplies electricity to the market including Jacana Energy.
Loans to this sector totalled approximately $1.29 billion as at 30 June 2016, an increase of about
$79 million from last year’s balance of $1.22 billion. This is the net movement resulting from the
$161 million of new loans provided to PWC over the course of the financial year, less the $82 million scheduled loan repayments.
Local Authorities
Loans to local authorities represent borrowings by local governing bodies situated throughout the Territory. The funds are used to finance specific council infrastructure projects, working capital requirements or purchase or replace existing plant and equipment. Loans to local authorities are first assessed by the Department of Local Government and Community Services and must carry the support and recommendation of the Minister for Local Government and Community Services prior to being submitted for approval to the Treasurer. As at 30 June 2016, there are no loans outstanding for local authorities.
Other Government Organisations
Loans to other government organisations represent borrowings by non‑financial public sector
organisations with which the Territory Government has an association. As at 30 June 2016, NTTC has no outstanding loans to this sector.
Figure 6: Client Loans as at 30 June 2016
Table 6: Outstanding Loans as at 30 June
2016 2015 2014 2013 2012
$M $M $M $M $M
General government agencies 2 516.3 3 128.6 3 017.5 2 640.8 2 113.8 Government business divisions 230.8 279.0 327.0 361.2 246.7 Government owned corporations 1 292.8 1 214.3 1 336.7 1 320.9 1 197.9
Local authorities ‑ ‑ ‑ ‑ 0.4
Other government organisations ‑ ‑ ‑ 6.0 ‑
Total 4 039.9 4 621.9 4 681.2 4 328.9 3 558.8
Central Holding Authority 60.4%
Department of Housing 1.9%
Land Development Corporation 0.5%
NT Home Ownership 5.2%
Power and Water Corporation 27.5%
Territory Generation 4.5%
General government agencies 62.3%
Government business divisions 5.7%
Government owned corporations 32.0%
Central Holding Authority Investments
Investment Portfolio
The investment portfolio is composed of a range of secure investments, of which a significant proportion is in short‑term instruments such as term deposits, bank accepted bills, promissory notes and negotiable certificates of deposit. A core amount of the investment portfolio is available for investment in
longer‑term instruments, such as floating rate notes and fixed interest securities.
NTTC aims to achieve the maximum return on investments within defined risk parameters, while ensuring the Government has sufficient cash balances to meet cash flow requirements in anticipation of increased government expenditure and declining revenues. Accordingly, NTTC has maintained a high allocation in cash and short‑term securities.
In 2015‑16, the investment portfolio generated total investment income of about $31.5 million, slightly higher than the $31 million income recognised in 2014‑15. All interest revenue on the investment portfolio is paid directly to CHA. As at 30 June 2016, the total investment portfolio had a market value of about $935 million, approximately $298 million lower than last year’s reported balance of $1.23 billion (see Table 7). The weighted average return on the investment portfolio in 2015‑16 was 2.55 per cent compared to 2.87 per cent in 2014‑15 (see Table 8) outperforming the benchmark by 0.31 per cent.
Table 7: Investment Portfolio by Asset Allocation as at 30 June
2016 2015 2014 2013 2012
% $M % $M % $M % $M % $M
Cash and term deposits and discount securities
98.9 925 99.2 1 223 98.2 1 054 99.4 840 99.2 650
Floating rate notes 1.1 10 0.8 10 0.9 10 0.6 5 0.8 5
Fixed interest securities ‑ ‑ ‑ ‑ 0.9 10 ‑ ‑ ‑ ‑
Total 935 1 233 1 074 845 655
Table 8: Investment Performance against Objective/Comparison to Benchmark
2015‑16 2014‑15 2013‑14 2012‑13 2011‑12
% % % % %
Weighted average return 2.55 2.87 2.97 3.64 5.02
Weighted Bloomberg AusBond
»The Territory Government’s investment portfolio is formed by pooling the surplus cash balances held in the name of CHA and investing in a variety of secure short, medium and long‑term debt securities issued in the Australian financial markets.
»The broad objectives of NTTC in managing CHA’s investment portfolio are:
• to ensure sufficient liquidity is maintained in the Government’s cash balances to meet all financial obligations as they fall due; and
• to obtain a return on the Government’s cash balances in line with the benchmark, while adhering to the investment guidelines approved by the Treasurer.
Details of the investment guidelines approved by the Treasurer are outlined in Appendix C on page 35.
Medium‑Term Investment Fund
The Medium‑Term Investment Fund (MTIF) is a segregated pool of investments held within CHA. The MTIF is a tailored solution provided by JANA Investment Advisers. The MTIF has a relatively conservative investment strategy, with a small allocation (about 15 per cent) to growth assets in order to achieve its stated objective of producing a superior return over the medium term (two to three years).
NTTC is responsible for monitoring and reporting on the performance of the fund and managing the relationship with the investment manager.
The MTIF commenced on 27 November 2007 with an initial investment of $50 million. As at
30 June 2016, the market valuation of the MTIF totalled $81.4 million, a decrease of about $96 million from the $177.2 million reported at 30 June 2015. The decrease largely represents the withdrawal of
$100 million from the fund in May 2016 to the Northern Territory Infrustructure Development Fund (NTIDF).
Figure 7: MTIF Asset Allocation at 30 June 2016
Northern Territory Infrastructure Development Fund
The NTIDF is a transitional segregated pool of investments held within the CHA.
The NTIDF is managed by JANA via multi‑manager sector trusts and has a highly conservative investment approach with a very small (about 5 per cent) allocation to growth assets. The NTIDF commenced on 26 June 2015 with an initial investment of $210 million. A further $100 million was added into the fund in May 2016 from MTIF.
As at 30 June 2016, the NTIDF had a market value of about $315 million (30 June 2015: $210 million).
Figure 8: NTIDF Asset Allocation at 30 June 2016
Australian equities 4.0%
International equities 9.4%
Australian fixed interest 1.8%
Listed property trusts 1.9%
Cash and short-term debt securities 82.9%
Protective assets 84.6%
Growth assets 15.4%
Growth assets 5.5%
Protective assets 94.5%
Australian equities 2.2%
International equities 3.4%
Australian fixed interest 5.0%
Cash and short-term debt securities 89.4%
Conditions of Service Reserve
Conditions of Service Reserve (COSR) is a segregated pool of investments held within CHA. The funds are held at the discretion of the Treasurer and are intended for purposes such as meeting the Territory Government’s unfunded superannuation liabilities. The funds are managed by three investment managers with a long‑term investment strategy oriented towards growth assets such as domestic and international equities. NTTC is responsible for monitoring and reporting on the performance of the fund and managing the relationship with the investment managers.
The investment performance of the fund is benchmarked against performance results for the ‘Multisector Growth’ product category as published in the monthly Morningstar Australian Superannuation Survey.
This is consistent with the asset allocation mix applied to COSR.
As at 30 June 2016, the market valuation of the COSR fund totalled $654 million, a small increase of approximately $7 million from the $647 million recorded as at 30 June 2015. There were no additional contributions to or withdrawals from the fund during 2015‑16.
A snapshot of the COSR pool of investments and fund performance is shown in Table 9 below.
Table 9: Conditions of Service Reserve – Investment Allocation and Performance Summary Fund
Allocation Market Valuation 30 June Performance Returns
Fund Manager 2016 2016 2015 1 Year 3 Years 5 Years 10 Years
% $M $M % % % %
AMP Capital Investors Limited
34.1 222.7 219.5 1.48 9.32 9.36 5.80
Colonial First State Global Asset Management
33.0 216.1 212.6 1.63 7.85 7.57 5.65
JANA Investment Advisers Pty Ltd
32.9 214.9 214.8 0.08 8.26 8.68 5.41
Total 100.0 653.7 646.9
Weighted average fund return 1.09 8.46 8.44 5.67
Benchmark – Morningstar Multisector Growth Portfolio 2.20 8.20 8.00 4.80 Performance of COSR relative to benchmark ‑ 1.11 + 0.26 + 0.44 + 0.87
Figure 9: COSR Asset Allocation at 30 June 2016
Growth assets 72.8%
Protective assets 27.2%
Australian equities 28.2%
International equities 26.4%
Australian fixed interest 23.2%
International fixed interest 1.6%
Listed property trusts 7.2%
Infrastructure and other 11.0%
Cash 2.4%
Administration
The administration program aims to ensure NTTC operates in a professional, prudent and cost‑effective manner. This is achieved by implementing policies relating to current financial market and accounting practices, regularly reviewing internal procedures and providing relevant and timely training to employees.
Specific functions include:
• providing timely and accurate settlement of all financial market transactions;
• maintaining NTTC’s inscribed stock register by recording details of all inscribed stock and holders in accordance with the Registry Services Agreement and NTTC’s Inscribed Stock Regulations;
• ensuring NTTC’s finances are managed effectively, within stated limits and in accordance with Australian Accounting Standards and legislative frameworks;
• providing administrative support to NTTC’s Advisory Board and Audit Committee;
• satisfying NTTC’s personnel requirements by maintaining current human resource management practices, and encouraging open communication between management and staff; and
• producing NTTC’s annual report in accordance with legislative requirements.
Major Projects
Enterprise Risk Management Framework
NTTC finalised its Enterprise Risk Management Framework during the year, which captures and articulates all elements of risk management and compliance in its business environment. The framework comprises a comprehensive risk register, documents NTTC’s applicable internal controls and includes internal and external compliance requirements.
Tax Policy
In line with the Australian Tax Office (ATO) expectations, NTTC has compiled specific tax policies around its goods and services tax and fringe benefit tax requirements. The policy provides guidance on the tax treatment of specific NTTC transactions and how it meets its compliance obligations. This serves as an important tool in managing NTTC’s tax risk profile in the event of ATO audit activity.
Electronic Document Records Management
In conjunction with DTF, NTTC commenced a project transitioning to electronic document records management (EDRM). This project commenced in February 2016 and saw a large number of NTTC records moved to electronic formats, including the provision of audit information. The EDRM
implementation will result in a reduction of paper use, a decrease in the cost of off‑site storage, reinforce business continuity and disaster prevention/recovery arrangements, facilitate better information flow and collaboration, and enhanced searching capabilities.
Business Relationships
Registry Services
NTTC has a key relationship with Link Market Services (Link), which maintains its retail inscribed stock register, recording details of all inscribed stock and holders in accordance with the Registry Services Agreement and the NTTC’s Inscribed Stock Regulations. Link has offices in Melbourne, Sydney, Brisbane and Perth, providing convenient access for most bondholders.
NTTC utilises ASX Austraclear Services Limited (ASX) for the registration of its wholesale domestic borrowings. ASX provides NTTC with the full range of corporate actions relating to the life cycle of the security issued to the financial markets, from origination to maturity. Corporate actions include inscribing the securities in the ASX register, making payments, transferring ownership of the security between seller and buyer and effecting payments at maturity of securities.
Human Resource Management
Staffing
NTTC’s employees are employed under PSEMA. Section 10 of the NTTC Act permits the Under Treasurer to assign employees to NTTC from DTF, on either a full‑time or part‑time basis.
As at 30 June 2016, NTTC had eight full‑time employees, four females and four males. Employees are required to comply with the PSEMA, the Northern Territory Government Code of Conduct and the codes of ethics of all relevant professional associations.
Figure 10: NTTC’s Organisational Structure
Employee Performance Management
NTTC, in conjunction with DTF, operates an Employee Development Framework (EDF), which provides a two‑way feedback structure between managers and staff. The framework is designed to identify and develop the work performance of employees so NTTC’s and employees’ objectives and goals are achieved. Staff and management undertake an annual review. Development requirements are recorded and followed up using the DTF EDF system.
Flexible Work Arrangements
NTTC offers a range of initiatives for work life balance for staff, including flexible work arrangements, flextime, purchased leave options and recreation leave at half pay. The initiatives are all in line with the NTPS 2013‑17 Enterprise Bargaining Agreement. In 2016 two staff accessed flexible working arrangements.
Manager
Financial Assets and Liabilities NTTC’s borrowing and lending investment portfolioCHA
Senior Investment
Officer Senior Finance Officer
Finance Officer in Training General Manager
Finance Officer Manager Financial Administration
Senior Accounting
Officer Senior Budgets and Finance Officer Financial
reporting Budget development Personnel and office
management
Finance Officer in Training Graduate Program
Throughout the year, graduates employed through the DTF Finance Officer in Training graduate program (FOIT program) may be provided with placement opportunities in NTTC. The FOIT program consists of graduates engaged on a 12‑month contract who undertake work experience in several work areas in DTF over the year. This is coupled with regular training through a comprehensive series of workshops and seminars outlining DTF’s functions and government processes and structures.
Training and Professional Memberships
Employees undertake training and professional development aligned with organisational requirements generally identified through the EDF process. In addition to training, they are encouraged to undertake finance and accounting‑related study through various professional bodies and institutions at the postgraduate level. Formal study is supported by DTF’s Study Assistance program, which provides up to 2.5 hours paid study leave per week and reimbursement of course costs upon successful completion (capped at $1500 per unit).
Employees are reimbursed half the cost of their annual professional membership fees where membership is relevant to their work role. Management and staff hold memberships with the following professional bodies:
• Australian Financial Markets Association;
• Certified Practising Accountants Australia;
• Australian Institute of Company Directors;
• Finance and Treasury Association; and
• Chartered Accountants Australia and New Zealand.
Equal Opportunity and Workplace Harassment
NTTC is an equal opportunity employer and is committed to providing a workplace that is free from discrimination and harassment. All employees are required to take sessions on anti‑discrimination, cross‑cultural and harassment awareness to promote an understanding of such issues and inform staff of policies in place to address any incidents. In addition, DTF has formal and informal complaints processes as well as a grievance resolution procedure in place that staff can access.
Employee Wellness
NTTC employees have access to DTF’s Employee Assistance Program (EAP). This program provides an important service to the agency’s employees and forms part of our work health and safety commitments.
NTTC recognises that staff may be affected by personal, family or work‑related issues and EAP is one way that NTTC supports staff. The EAP offers up to five free confidential counselling sessions for employees and their family members with either of DTF’s EAP providers.
Also, flu vaccinations are available to NTTC employees on an annual basis.
Employment Opportunities
Information on employment opportunities within NTTC can be found on the Territory Government’s website at www.nt.gov.au/jobs, DTF’s website at www.treasurycareers.nt.gov.au, or by contacting:
Mr Alex Pollon General Manager +61 8 8999 6318
Ms Vicky Coleman Manager Financial Administration +61 8 8999 5599
Mr Archellus Lim
Manager Financial Assets and Liabilities
+61 8 8999 6767
Treasury Corporation People
Total Staff Numbers by Gender and Level
Table 10 provides a comparison by gender for each classification level.
Table 10: Staff Demographics (full‑time equivalent) as at 30 June 2016
Male Female Total
Designation 2014‑15 2015‑16 2014‑15 2015‑16 2014‑15 2015‑16
AO4 1 1 ‑ ‑ 1 1
AO5 1 1 3 3 4 4
SAO1 1 1 1 1 2 2
ECO1 1 1 ‑ ‑ 1 1
Total 4 4 4 4 8 8
As part of NTTC’s equal employment opportunities (EEO), staff take part in an annual census conducted by DTF to update contact, next of kin and EEO details. This data is used to assist in workforce planning, reporting and for business continuity purposes. Table 11 provides NTTC’s reported EEO profile.
Table 11: Reported EEO Profile as at 30 June 2016
Aboriginal and Torres Strait Islanders ‑
Non‑English speaking background 5
People with a disability ‑
Left to right: Niki Mastoros, Gloria Lui, Daniel Susantio, Alex Pollon, Vicky Coleman, John Kidd, Anna Mitchell, Archellus Lim
Corporate Governance
Figure 11: NTTC’s Corporate Governance Framework
Corporate Governance
NTTC’s objective is to provide the Territory Government with cost‑effective funding, efficient financial management and reliable service and advice. Its Advisory Board and management are committed to achieving this objective while upholding high standards of corporate governance, transparency and accountability through controls, policies and best practice frameworks.
NTTC was established as a corporation sole (a corporation that consists solely of a nominated office holder) in June 1994 and is constituted under the NTTC Act. The Under Treasurer of DTF is designated as the office holder, the corporation sole, under the NTTC Act and as such represents the Crown in right of the Territory. Under section 5 of the Act, NTTC is subject to the direction of the Treasurer.
Human resources Code of conduct
Equal employment opportunity policy Anti Discrimination Act Workplace harassment policy Work health and safety management system
Employee development framework Professional memberships Employee assistance program
Staff training Whistleblower protection
Recruitment policy
Legislative
Treasurer’s Directions Financial Management Act Northern Territory Treasury Corporation Act
Public Sector Employment and Management Act
Communications
Budget report Annual report Prospectus Presentations Conferences/expos
Oversight
Advisory Board Audit Committee DTF Senior Management
Group DTF Risk and Audit
Committee
Risk Management
Control self-assessment process
Business continuity plan AML/CTF program
Compliance
Policies and procedures Internal audit External audit
Strategic Direction
Mission statement Corporate objectives
Figure 12: NTTC’s Reporting Structure
Strategic Direction
Corporate Objectives
NTTC’s objectives are to:
• safeguard the Territory’s financial resources by establishing and regularly reviewing credit limits and maintaining adequate internal controls and staffing;
• reduce the Territory’s cost of borrowings through the effective control and management of its interest rate risk and maintain the exposure to interest rate risk at an acceptable level;
• ensure NTTC’s continued ability to meet the Territory’s financing obligations in an orderly manner, as and when they fall due, in both the short and long term, through liquidity management;
• minimise the Territory’s cost of foreign currency requirements through the effective control and management of its foreign exchange risk and remove the exposure to foreign exchange risk; and
• adopt improved risk management strategies through the ongoing evaluation and review of appropriate risk management frameworks by utilising specialist resources available to NTTC.
Department of Treasury and Finance’s Senior Management Group
NTTC reports to DTF’s Senior Management Group (SMG), which is responsible for strategic decision making and policy setting of DTF and its business units. This includes managing performance and improving management and business practices. A key priority of SMG is to develop DTF’s corporate capabilities including people, systems and work environment. Monthly management reports are provided to DTF senior executives and SMG.
Department of Treasury and Finance’s Risk and Audit Committee
Audit and compliance reports submitted to DTF’s senior executives are reviewed by DTF’s Risk and Audit Committee. The committee oversees the internal audit, risk management and compliance with legislative requirements.
Treasurer
Audit Committee
General Manager Internal Audit NTTC Staff
Advisory Board Under Treasurer
Senior Management GroupDTF
Advisory Board
Under section 8 of the NTTC Act, NTTC has established an Advisory Board to assist the Under Treasurer with issues relating to NTTC’s operations. The Advisory Board is constituted to be the Under Treasurer and no more than five other persons appointed by the Treasurer. The Advisory Board meets quarterly to review and monitor the performance of NTTC, its business risks and performance in relation to its objectives. The Advisory Board also provides guidance on policy, analysis of economic conditions and advice on aligning borrowing and investing intentions with interest rate expectations.
Matters Considered by the Advisory Board
The Advisory Board receives specific papers and management reports that cover:
• financial statements and budget position;
• performance and progress reports on the investment portfolio;
• NTTC’s borrowing and lending programs; and
• financial and operational risk exposure reports covering interest rates, counterparties and liquidity.
Conflict of Interest
Advisory Board members monitor and disclose any actual, potential or perceived conflicts of interest. Formal disclosure declarations are made on an annual basis and verbally on an ad hoc basis at board meetings where a conflict is identified. Where a member has a conflict of interest they will refrain from participating in any discussions and decision making on the matter.
Advisory Board Members
Ms Jodie RyanChairman
Department of Treasury and Finance
Ms Ryan was appointed Under Treasurer in July 2013. Ms Ryan has over 20 years’ experience in Treasury and Finance, having previously held the positions of Deputy Under Treasurer and Deputy Chief Executive of the Department of the Chief Minister. She sits on various inter‑agency committees and is on the Board of the Northern Territory Infrastructure Development Fund. Ms Ryan has a Bachelor of Business (Accounting) and is a Certified Practising Accountant.
Mr Anthony Cole AO
External Board Member and Member of the Audit Committee
Mr Cole was appointed to the Board in June 1995. He was a senior partner of Mercer for 15 years. Mr Cole and his team advised institutional investors, including superannuation funds and sovereign wealth funds on the development of their investment programs. Earlier, he spent nearly 30 years in senior Commonwealth Government economic posts. These included Principal Adviser to the then Treasurer, the Hon. Paul Keating MP, Deputy Secretary (Economic) to the Department of the Prime Minister and Cabinet, and Secretary to the Treasury. Mr Cole is also a director of the Commonwealth Superannuation Corporation and of Australian Ethical Investments Ltd. He is also a member of the Investment Committee of the New South Wales Treasury Corporation.
Mr Richard Ryan AO
External Board Member and Chair of the Audit Committee
Mr Ryan was appointed to the Board in June 1995 and is a Fellow of the Chartered Accountants Australia and New Zealand, a Companion of the Institution of Engineers Australia and a Companion of the Institute of Management (UK). He was previously Chancellor of Charles Darwin University, Chair of the Menzies School of Health Research and President of the National Heart Foundation. Mr Ryan is also a non‑executive director of several public companies.
Mr John Montague
External Board Member and Member of the Audit Committee
Mr Montague was appointed to the Board in November 2014 and is General Manager of Super SA, the superannuation provider for South Australian public sector employees. Mr Montague began his career with Westpac Banking Corporation in 1986, holding various trading and management positions in Sydney and Melbourne within the bank’s Treasury Fixed Interest division. He was seconded to NTTC in 1994 where he was General Manager for 14 years before being appointed as DTF’s Senior Director Funds Management in 2008, Assistant Under Treasurer (Funds Management) in 2011 and Commissioner of Superannuation in April 2012.
Mr David Braines‑Mead Deputy Under Treasurer
Department of Treasury and Finance
Mr Braines‑Mead is Deputy Under Treasurer in DTF and has held various positions at the director level and above within the Financial Management Group since joining DTF in 2004. He represents DTF on both intergovernmental and whole of government committees. Prior to this, he had over 15 years’ experience within the accounting profession both in Darwin as a Senior Audit Manager with Ernst & Young and in the UK with various chartered accountancy firms. Mr Braines‑Mead is a fellow of the UK‑based Association of Chartered Certified Accountants.
Left to right: Richard Ryan, John Montague, David Braines‑Mead, Jodie Ryan, Alex Pollon, Vicky Coleman and Anthony Cole
Northern Territory Treasury Corporation Audit Committee
The Audit Committee is a subcommittee of the Advisory Board. It provides advice to the Chairman on operational issues and in relation to internal and external audits and meets prior to all Advisory Board meetings or as necessary. As at 30 June 2016, the Audit Committee comprised the three external Advisory Board members and is chaired by Mr Ryan.
Merit Partners Darwin, in conjunction with Ernst & Young Adelaide, undertake the internal audit review of NTTC’s business while the Auditor‑General for the Northern Territory carries out the external audit of NTTC’s financial statements.
A partner from Merit Partners attends Audit Committee meetings at the request of the Audit Committee.
The Auditor‑General may also be invited to attend meetings during the year to provide direct comment to the committee members.
Treasury Corporation Management Team
Mr Alex Pollon General Manager
Mr Pollon was appointed General Manager of NTTC in May 2010 and is responsible for the overall management of NTTC’s staff and resources, ensuring the efficient, effective and appropriate control of the borrowing, lending and investing activities on behalf of government. Mr Pollon has over 20 years’
experience in the finance and treasury industry and is a member of various inter‑agency committees and boards including the Public Trustee Investment Board, Superannuation Trustee Board, Agents Licensing Fidelity Guarantee Fund and Legal Practitioners Fidelity fund. Prior to joining NTTC, Mr Pollon held various treasury management positions in the financial services sector. Mr Pollon is a member of the Australian Institute of Company Directors and holds Australian Financial Markets Association dealer accreditation.
Ms Vicky Coleman
Manager Financial Administration and Corporate Secretary
Ms Coleman joined DTF in April 2000 and was appointed Manager Financial Administration for NTTC in February 2002. Ms Coleman is responsible for NTTC’s financial reporting, budgeting, corporate governance and risk management functions. Prior to joining DTF, Ms Coleman held various management positions in private industry mainly in the finance sector. She holds a Bachelor of Business (Accounting) and is a Certified Practising Accountant. Ms Coleman is also a member of the Australian Institute of Company Directors, holds a Certificate in Governance and Risk Management from the Chartered Secretaries Australia, and has recently completed a Master of Business Administration at Deakin University.
Mr Archellus Lim
Manager Financial Assets and Liabilities
Mr Lim joined NTTC in September 2013 as Manager Financial Assets and Liabilities and is responsible for the day‑to‑day activities and operational effectiveness of the treasury functions undertaken by NTTC.
Prior to working with NTTC, Mr Lim worked as Chief Financial Officer at an Indigenous college and as an auditor at a chartered accounting firm in Darwin specialising in the financial services sector. He holds a Bachelor of Science in Accountancy and a Bachelor of Science in Business Administration, majoring in Finance and Management Accounting, from Holy Angel University in the Philippines. He is currently completing his Master of Business Administration at Charles Darwin University. He is a Certified Finance and Treasury Professional and a Member of the Finance and Treasury Association of Australia. He is also a Member (Provisional) of the Chartered Accountants Australia and New Zealand and a Member of the
Risk Management
Risk recognition and management is an essential function of NTTC, given the nature of its operations.
NTTC has various frameworks, policies and controls in place to ensure all key risks are identified and managed.
Enterprise Risk Management Framework
NTTC has developed a framework to capture and articulate all elements of risk management and compliance in the business environment. The framework comprises a comprehensive risk register, documents NTTC’s applicable internal controls and includes internal and external compliance requirements.
Anti‑Money Laundering and Counter‑Terrorism Financing (AML/CTF) Legislation
NTTC is subject to the suspicious matters reporting requirement of the AML/CTF Act. A staff member is appointed as Compliance Officer and oversees the program and monitors risk mitigation processes by maintaining the current AML/CTF program and supporting policies.
Business Continuity Management
NTTC has a business continuity plan to ensure it is able to meet its financial obligations during an event that disrupts normal processes and procedures. The plan is reviewed on a regular basis to ensure all critical functions are captured and contingency arrangements are documented.
Compliance Self‑Assessment Reviews
NTTC uses compliance self‑assessment reviews to identify and monitor risk areas in its environment.
Questionnaires are completed by management monthly, and associated reports are reviewed by the Advisory Board quarterly and audited by NTTC’s internal auditors on a semi‑annual basis.
Delegations
Clear lines of responsibility and authority to act are specified in Agency Corporate Delegations through DTF and internal policy manuals approved by the Under Treasurer. Both delegations and policy manuals are reviewed on an annual basis to ensure they meet current legislative frameworks and business resourcing requirements.
Insurance Arrangements
Insurable risks are risks generally related to workers compensation, assets and inventories, public liabilities and indemnities. They exclude financial risk and legal costs in action.
In line with Territory Government policy, NTTC self insures. As a government business division, NTTC can and has elected to pay a premium to DTF as its host agency for workers compensation insurance, in lieu of purchasing commercial insurance. In 2015‑16 there were no self‑insurance claims. This is consistent with 2014‑15.
Work Health and Safety
Work health and safety (WHS) services are provided to NTTC as part of DTF’s WHS program. DTF’s WHS Committee meets quarterly and regularly reports to DTF’s SMG. The committee reports and advises on workplace safety and systems of work, developing, implementing and monitoring WHS measures, advocating acceptable and responsible practices by employees and others, and promoting a health and safety ethos.
Compliance
NTTC has a high level of compliance and is subject to several audits and review processes during the year.
These are undertaken by both internal and external auditors and their focus reflects the importance of risk management and corporate governance. Findings of reviews and audits conducted during the year are reported in Table 12.
Policy and Procedures
Formal policy and procedure manuals were created and provided to all staff members. Policy and procedure manuals are updated annually or as required.
Corporate Planning and Reporting Process
As an agency of DTF, NTTC links into its strategic planning processes, which develop objectives to guide core business areas in the delivery of government outcomes.
Information Act Compliance
NTTC is subject to the requirements of the Information Act, which include records management, freedom of information (FOI) and privacy. DTF is responsible for the management of all information requests on behalf of NTTC. Details of information held by NTTC, including an outline of how to make an application under the Information Act, can be found on the website below. NTTC did not receive any requests under the Information Act during 2015‑16. FOI requests can be made to the following:
Information Policy Officer
Department of Treasury and Finance GPO Box 1974
Darwin NT 0801
Telephone: +61 8 8999 6982 Facsimile: +61 8 8999 6150 Email: [email protected]
Website: www.treasury.nt.gov.au/InformationAct
External Audit
Under section 30 of the NTTC Act, the Auditor‑General of the Northern Territory is required to review and audit NTTC’s accounts and operating environment. Under section 31, the Auditor‑General will issue an audit opinion on NTTC’s financial statements and report to the Treasurer and Territory Parliament. The Auditor‑General also attends NTTC’s Audit Committee meetings as requested.
Internal Audit
NTTC has an internal audit function reporting directly to its Advisory Board, Audit Committee and DTF’s senior executives. The internal auditor, Merit Partners Darwin, in conjunction with Ernst & Young Adelaide, audits NTTC’s financial statements and reviews its risk and operational controls environment.
Table 12: Audits Undertaken During the Year
Function Type Period Internal/External Outcomes
2014‑15 financial statements Audit 30/06/15 Internal External
Unqualified audit opinion Unqualified audit opinion Compliance self‑assessment Review 30/09/15
31/03/16
Internal No significant matters identified
Information technology controls Audit 30/06/16 Internal No significant matters identified Interim period review Audit 30/06/16 Internal/external No significant matters identified
