Bonds are investment securities where an investor lends money to a borrower (typically a company or a government) for an agreed period of time, generally in exchange for regular interest payments and the repayment of the amount lent (principal). Bonds are a form of debt - an entitlement to receive or an obligation to pay fixed or varied interest payments over a set period of time. Bonds are a means for companies or government to raise funds to finance ongoing operations, new projects or acquisitions. Bonds have maturity dates at which point the principal amount must be paid back in full or risk defaulting.
The maturity date is set when the bond is issued. Since the calculator is estimating future debt, we make assumptions on the type of bond that will be used. The PDI Calculator assumes all debt is financed by 10‑year Treasury bonds.
For more information about the bonds and maturities issued by the Commonwealth Government, see the ‘Debt statement, assets and liabilities’ in the Budget Paper No. 1 of each budget and the Mid‑Year Economic and Fiscal Outlook. Budgets are available at https://budget.gov.au/index.htm.
The Government finances its activities either through receipts or borrowing. When receipts fall short of payments, the Government borrows by issuing government bonds (known as Australian Government Securities (AGS) to fund its operations and spending. The amount of money that the government owes its lenders at a particular point in time is known as Government debt. In broad terms, it measures how much successive governments have spent over the receipts they have collected.
The Australian Office of Financial Management (AOFM) is responsible for issuing AGS and managing the Government's financing activities.