Wednesday, 4 February 2026

 Richard WELCH (North-Eastern Metropolitan) (12:21): My question is to the Treasurer. In light of the Reserve Bank’s interest rate rise yesterday, will the Treasurer confirm whether the government operates an explicit risk limit or target framework governing total short-term funding, outstanding P-notes and Euro commercial paper and if there is any control over the aggregate floating rate exposure?

 Jaclyn SYMES (Northern Victoria – Treasurer, Minister for Industrial Relations, Minister for Regional Development) (12:22): I thank Mr Welch for his question. At the outset obviously the impact of a rate increase yesterday will be felt right across households in Victoria. We know that one of the main drivers of cost-of-living impacts is interest rate rises. In relation to the impact on the state budget, Mr Welch, I can assure you that these are taken into consideration. You will see from the budget update, and I reckon I have got a page reference for you somewhere – page 36 – that interest expense estimates assume that the average interest rate on new and refinanced borrowings will increase over time. Of course DTF model these things, and that is taken into account.

 Richard WELCH (North-Eastern Metropolitan) (12:23): No, you are referencing a different kind of debt. This is short-term floating rate debt, so when an interest rate flows through directly and immediately to that debt. The TCV has historically maintained offshore short-term funding as part of its liquidity toolkit. Will the Treasurer explain the rationale for the ECP being unused for at least 10 months in 2025 with expanding domestic P-note exposure over the same period, given that we had clear SIP market signals in changes to interest rate outlooks? Treasurer, can you explain how exposure to higher domestic rates was assessed and mitigated and whether the decision not to utilise Euro commercial paper formed part of that assessment?

The PRESIDENT: I believe there was more than one question from Mr Welch, so the Treasurer can pick one.

 Jaclyn SYMES (Northern Victoria – Treasurer, Minister for Industrial Relations, Minister for Regional Development) (12:24): The overarching answer, Mr Welch, is that TCV manage all of our debt, and as you indicated in relation to the interest rate changes, they are forecast and accounted for in relation to our aggregates. As I said, the budget update certainly identified that we are entering a period of anticipated increased rate rises, and that was indeed factored in. TCV manage all risks arising from exchange rate movements resulting from changes in both short-term interest rates and other factors that impact our bond issuing or indeed our debt management.