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Corporate History
TCV was established by the Treasury Corporation of Victoria Act 1992 (the TCV Act) and commenced operations on 1 January, 1993. TCV - the successor in law to the Victorian Public Authorities Finance Agency (VicFin) - is the state’s central financing authority.
Over the past decade, TCV has experienced three distinct phases in its evolution – each presenting the Corporation with new challenges and each forming a critical building block in creating the TCV of today.
Phase 1: 1993 to 1995
TCV was formally established by legislation in November 1992, and commenced operations on 1 January 1993. TCV was the successor in law to the Victorian Public Authorities Finance Agency and also assumed the activities of the Victorian Development Fund and the Victorian Debt Retirement Fund. The debt of Victoria’s electricity, gas and water utilities along with the outstanding government guaranteed debt issued by public authorities were all centralised within TCV.
Successfully merging pre-existing operations in itself offered a significant challenge. However, from our inception TCV confronted some other more pressing issues. The most significant of these was the loss of confidence in Victorian debt by financial markets following Moody’s Investors Service’s announcement in October 1992 of a double downgrade of the state’s long-term credit rating to A1. The resulting increase in TCV bond yields imposed a substantial cost upon the state given it was the largest of all Australian state borrowers, with an annual borrowing requirement of $8-9 billion per annum. TCV’s response was to establish some key funding objectives: to lower Victoria’s cost of borrowing; diversify its investor base; lengthen the maturity profile; and spread the debt more evenly across its yield curve. At the same time, TCV acquired clients, many of whom were displeased by their loss of autonomy following TCV’s establishment. TCV needed to quickly develop a range of services and products with which to deliver tangible outcomes to clients and demonstrate the benefits of the new centralised model.
By June 1995, TCV was managing debt outstandings of $33.9 billion and had achieved its initial funding objectives. It had established itself as the banker to Victorian public authorities and the state and had sourced more than half of its funding requirement offshore at a cost of funds well below that achieved domestically. TCV was also named by Euromoney magazine as ‘Best Australian Borrower 1995’. As the state’s finances improved, Moody’s upgraded Victoria’s long-term credit rating to Aa3 in March 1994 and Aa2 in May 1995. The spread between 10 year TCV paper and the Commonwealth equivalent improved significantly, returning to, and remaining at, margins comparable with our semi-government peers. At 30 June 1993, TCV had 29 clients. Two years later in 1995, this was now 40, with the break-up of the State Electricity Commission of Victoria (SECV) into several separate entities, ahead of privatisation, a key source of client growth.
Phase 2: 1995 to 1999
The period 1995 to 1999 was dominated by the government’s privatisation program. TCV’s role during this period was to apply the proceeds of asset sales to debt retirement. The privatisation program focussed primarily on Victoria’s electricity and gas industries. The asset sales realised total capital proceeds of $28.7 billion for the state. The sales comprised 18 individual transactions with the largest being $4.75 billion. The size of TCV’s balance sheet declined from $36 billion at 30 June 1995 to $16.7 billion as at 30 June 1999. In December 1996, TCV was appointed adviser to the Department of Treasury and Finance, providing funds through a simplified fixed rate borrowing facility and simplifying cash management and information processing.
Phase 3: 2000 to 2003
The third phase of TCV’s evolution was distinguished by its focus on leveraging its existing expertise to deliver enhanced financing outcomes for the state. This recognised the need for the state to access a pool of expertise to support both new and traditional financing methodologies. Accordingly, TCV moved to rebuild its resource base to assure the quality of delivery of its traditional competencies and to identify opportunities to add greater value to the state, its authorities and government business enterprises. During this phase, there was a significant redirection in both business focus and TCV’s operating systems and processes. A key outcome of this phase was the greater emphasis placed on TCV's advisory services.
Phase 4: The Future
TCV’s fourth phase is about delivering its expertise into the wider public domain for the financial benefit of the state. With a mandate to implement its strategic objectives, TCV is focussed upon this clear goal. The future holds many opportunities for the Corporation to work closely with our colleagues in the state’s many departments, authorities and business enterprises in order to achieve this.
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