Providing Value to Clients
WATC provides Western Australian government authorities a comprehensive range of high-quality, cost-effective financial products and services.
Debt Products and Services
WATC provides debt finance to public sector clients in Western Australia to meet their financing requirements. This includes funding for new works, refinancing existing debt and financing for liquidity purposes. A range of flexible debt products are available, covering a wide maturity spectrum and range of structures. We work in collaboration with our clients to ensure each debt product is applied appropriately to achieve each client’s individual debt and debt management needs.
With the State’s borrowing program announced at the start of the 2020–21 financial year, we anticipated and planned for a $2.3 billion annual increase in client borrowings. However, with the evolving nature of government initiatives and priorities – coupled with the strength of the Western Australian economy – client borrowings only increased by $264.3 million over the course of the year. Total client debt outstanding at 30 June 2021 was $50.0 billion.
As at 30 June 2021, the total debt outstanding with WATC by Western Australian local governments was $581.9 million, a decrease of $38.3 million during the year. Seventy-two new loans totalling $62.3 million were approved for our local government clients.
WATC Client Debt 1986 to 2021
Supporting Clients During COVID-19
Determining how we can best support our clients during the COVID-19 crisis has been a priority for WATC.
On 7 May 2020, the State Government announced the establishment of a new $100 million lending facility through WATC to support local governments and universities in Western Australia that were impacted by reduced revenue due to the pandemic.
Our new Short-Term Lending Facility provided clients with access to low interest short-term loans to support operational liquidity during the financial year. Six local governments established such a facility, altogether totalling $23.5 million. These facilities offered clients the assurance of a financial safety net of available funds, should it be needed. In the end, no funds were required under the facility.
Alongside this short-term facility, we developed a cash flow forecasting model to help local governments identify any potential cash flow shortfalls resulting from the pandemic.
Financial Advisory Services
WATC provides the Western Australian public sector with a range of corporate and financial risk management advisory services to facilitate informed financial decision-making. Our goal is to work collaboratively with clients to enhance the corporate and financial risk management analyses undertaken on public sector projects. Through integrating our expertise and experience with the unique business knowledge of our clients – and our understanding of the State’s public sector – we endeavour to deliver superior outcomes for clients and Western Australia as a whole.
Examples of client advisory engagements to drive better outcomes for our clients and the State include:
- Working with the Public Transport Authority and Main Roads Western Australia, to develop and enhance business cases to support requests for Commonwealth funding for high priority infrastructure projects. These projects exceed $3.5 billion in value. Through accessing Federal co-funding, we can reduce the impact on State borrowings.
- Assisting various clients with the tendering and retendering process for contracted services. This involved reviewing pricing mechanisms, evaluating financial responses to tenders and pricing proposals, and providing financial models to calculate contract payments, delivering substantial cost savings to the State.
- Supporting Energy Policy WA to review and validate financial modelling underpinning the determination of an opening regulatory asset base for Horizon Power’s North West Interconnected System (NWIS) electricity network in the Pilbara.
At WATC, we seek client feedback on our financial advisory services after completing each engagement. Feedback received for the 2020–21 financial year was extremely positive across all areas. Clients were asked to rate the quality of advice provided, the value added and our team’s overall capability and level of service, with 100 per cent of clients surveyed saying they were highly satisfied with our services, 75 per cent of those being extremely satisfied.
Financial Advisor for Western Australia’s Future Container Port
WATC is the State’s financial advisor to Westport, a complex infrastructure project that is planning for a new port in Kwinana with supporting logistics and associated integrated road and rail transport corridors. In August 2020, the State Government endorsed the independent Westport Taskforce’s recommended location for a future container port at Kwinana to meet Western Australia’s long-term freight needs.
WATC has advised Westport on numerous matters over the previous two years. The Westport Taskforce’s final recommendations are underpinned by the following key pieces of financial analysis provided by WATC:
- Economic and commercial assessments of each option considered in the two detailed multi-criteria analyses, which were used to shortlist the project’s options.
- A rapid cost–benefit analysis model to calculate the benefit–cost ratios of the shortlisted options.
- Container growth rate review and recommendations.
The Department of Transport has retained WATC as the financial advisor to Westport to support the next stage of the program, which involves developing a business case and other considerations to inform a future investment decision by the State Government.
Foreign Exchange Services
WATC provides a broad range of foreign exchange solutions for our Western Australian public sector clients. This includes assisting clients with managing foreign exchange risk in accordance with Treasurer’s Instruction 826 and providing education seminars on foreign exchange products and foreign exchange risk management. We also assist clients with identifying and quantifying foreign currency exposures, and work in partnership with them to design and execute foreign exchange risk management strategies.
During the financial year, WATC executed in excess of $221 million in foreign exchange transactions in 10 currencies on behalf of 20 clients.
WATC assisted the Public Transport Authority with managing the foreign exchange risk on the purchase of new coaches for Transwa, which service Western Australia’s regional communities.
Success Stories in Managing Foreign Exchange
Examples of projects where we assisted clients to successfully identify and manage foreign exchange risk and/or delivered value in cost-effective foreign exchange transactions, include:
- Western Australia Police Force: helicopter procurement, Emergency Services Radio Network and forward-looking infrared thermal imaging cameras
- Department of Fire and Emergency Services: Emergency Rescue Helicopter Service
- Public Transport Authority: Project Alliance arrangements, road coaches and train equipment
- Synergy: turbine maintenance.
Improving Client Processes, Practices and Awareness
In light of the risks associated with foreign exchange in procurement, we also assisted the Department of Finance with redrafting the State’s procurement processes, practices and templates to better identify and manage these risks.
We adapted our education seminars on foreign exchange this year to an online presentation format due to social distancing requirements. Feedback received from seminar participants continues to be very positive.
Asset and Investment Management Services
WATC plays an important role in managing public sector finances by providing the State and government authorities with a range of investment products and treasury management services. These products and services help clients to achieve sound financial risk management, including managing credit risk. Through these services, clients have access to our considerable experience and expertise, together with the systems, pricing and oversight that come with our scale of operations.
We manage the investment of funds on behalf of the Public Bank Account and the Future Health Research and Innovation Fund, as well as for Landgate and Lotterywest. Total client funds under management at 30 June 2021 was $2.9 billion – across five investment portfolios.
At 30 June 2021, we held $69.7 million from clients utilising our overnight cash deposit and term deposit facilities.
During the year, WATC commenced providing back-office trade capture and reporting treasury management services for Synergy.
Delivering on Client Requirements
Continuous development and improvement are important to us at WATC. We regularly seek feedback through various channels to ensure our products and services are fully aligned to our clients’ requirements.
This year, we engaged with Peter Lee Associates, a research and consulting firm that specialises in the financial services sector. Peter Lee Associates undertook a comprehensive and independent survey across WATC’s state government clients. The survey results were very positive, with clients rating very high levels of satisfaction across all products and services offered by WATC on a range of measures, including:
- alignment of products and services to client needs
- overall quality of service
- transaction efficiency
- adding value
- understanding client needs.
Feedback received from clients provides positive reinforcement that we continue to successfully deliver high-quality, cost-effective financial solutions that meet the needs of the Western Australian public sector.
In 2021, Bright Energy Investments, of which Synergy is an investment partner, opened Warradarge Wind Farm that has the capacity to meet the average annual electricity needs of 148,500 households in Western Australia. WATC supports Synergy with debt funding and treasury management services.
WATC Hosts National Forum on PPP Investments
In December 2020, WATC hosted an online forum to promote learning and sharing of experiences relating to Public Private Partnerships (PPPs). The 2020 National PPP Contract Managers Forum, which brought together contract managers from government departments across Australia and New Zealand, took the form of a virtual event due to travel restrictions imposed by COVID-19.
The forum focused on managing PPPs during unprecedented times as a result of the pandemic. Consisting of 8 presentations by 13 different presenters across Australia and New Zealand, 190 people from over 100 different government agencies attended the online forum.
The presentations were very relevant to current times and included case studies (based on first-hand experience), research, panel discussions and insight sessions.
Feedback from attendees was very positive. We are assisting our counterparts in New Zealand who will be hosting the 2021 forum.
Increasing Knowledge on Financing Large-Scale Investments
In November 2020 – and in partnership with Macquarie University – we facilitated a training program on financing large-scale investments, for WATC staff and our clients.
The process of financing large-scale investments is quite different to standard corporate finance. The program covered the techniques and principles to structure, value and finance large-scale infrastructure and industrial projects. It also examined the different ways in which project finance allocates the risks and responsibilities typically found in complex projects and renders them financeable.
Originally planned as a two-day in-person program, due to COVID-19 the program was delivered online over four half days. Feedback from all participants was very positive.
- Reviewing opportunities to enhance client debt products to improve administrative efficiency and optimise client debt portfolios.