1. Treasury Corporation of Victoria Investor Presentation May 2015

2. Treasury Corporation of Victoria Treasury Corporation of Victoria (TCV) established 1 January 1993, as the centralised financing authority and financial advisor for the State of Victoria - single interface with financial markets - independent Board reports directly to Treasurer of Victoria mandated provider of treasury risk management services to the State, government agencies and departments – our clients obligations are guaranteed by the State of Victoria guarantee - TCV’s borrowings & securities are guaranteed by the Government of Victoria under section 32(1) of the Treasury Corporation of Victoria Act 1992 - the guarantee is a direct and unconditional obligation of the Government of Victoria, payable out of the Consolidated Fund AAA/Aaa rated (stable) Interest Withholding Tax (IWT) free. 2

3. May 2015Treasury Corporation of Victoria Agenda 3 Three areas for discussion: 1.Victorian economic overview 2. Victorian Government finances and budget 3.TCV funding requirement 2015-16

4. May 2015Treasury Corporation of Victoria State of Victoria 4 Economic Significance 331.184 338.035 Capital:Melbourne Nominal GSP, 2014 (A$b): 350.3 Unemployment rate May 15, %:6.1 Share of national economy, %: 22 Unemployment rate, 5y ave %:5.7 Real GSP growth, Jun 14, (% yoy): 1.7 Population (Sep 2014):5.9 million Average GSP growth, 5y ave %: 2.0 Victoria's trade, 2013-14 331.184 338.035 GoodsServices Total% share of national trade Exports (A$b)24.013.4 37.411.3 Imports (A$b)66.016.3 82.324.3 Trade by major commodity (2013-14) Exports$bn% Total Imports$bn% Total Education related travel services4.712.6 Crude petroluem6.78.1 Personal travel (excl. education)2.97.8 Personal travel (excl. education)6.27.5 Milk, cream, whey & yoghurt1.43.7 Passenger motor vehicles5.76.9 Passenger motor vehicles1.33.6 Freight transport2.63.2 Wool & other animal hair1.33.5 Refined petroluem2.53.1 Meat (excluding beef)1.23.1 Goods vehicles1.62.0 Wheat1.02.7 Passenger transport1.51.9 Beef1.02.7 Vehicle parts & accessories1.41.8 Aluminium1.02.7 Telecom equipment & parts1.21.4 Professional consulting services0.92.5 Furniture1.11.3 Trade by Major trading partners (2013-14) Exports$bn% Total Imports$bn% Total China4.518.6 China14.421.9 United States2.18.7 United States7.411.2 Japan1.97.8 Japan4.26.4 New Zealand1.87.7 Germany4.06.0 Republic of Korea1.14.6 Malaysia3.75.6

5. May 2015Treasury Corporation of Victoria The national economy is transitioning *Dotted lines indicate expected capital spending adjusted for average realisation ratios Sources: Australian Bureau of Statistics; Department of Treasury and Finance 5

6. May 2015Treasury Corporation of Victoria Drivers of growth are varied 6 Contribution to GSP growth, 2013-14 Sources: Australian Bureau of Statistics; Department of Treasury and Finance

7. May 2015Treasury Corporation of Victoria Components of the Victorian economy 7 Sources: Australian Bureau of Statistics; Department of Treasury and Finance

8. May 2015Treasury Corporation of Victoria Population growth remains high Sources: Australian Bureau of Statistics, Department of Treasury and Finance 8

9. May 2015Treasury Corporation of Victoria Dwelling investment share of GSP 9 Sources: Australian Bureau of Statistics, Department of Treasury and Finance

10. May 2015Treasury Corporation of Victoria Full-time employment has remained flat Sources: Australian Bureau of Statistics, Department of Treasury and Finance 10

11. Victorian government finances and budget

12. May 2015Treasury Corporation of Victoria Medium-term fiscal strategy The Government fiscal parameters: the parameters reflect Government’s commitment to deliver high-quality services and infrastructure in a fiscally responsible manner they also provide for a sustainable level of net debt the strategy will require continued disciplined financial management. 12 Financial measuresParameters Operating surplusA net operating surplus consistent with maintaining general government net debt at a sustainable level over the medium term Infrastructure investmentPublic infrastructure will grow steadily over time to meet the needs of a growing population Net debtGeneral government net debt as a percentage of GSP to be maintained at a sustainable level over the medium term

13. May 2015Treasury Corporation of Victoria State government revenue budget 13

14. May 2015Treasury Corporation of Victoria State taxation revenue in detail 14 Source: Victorian Department of Treasury and Finance

15. May 2015Treasury Corporation of Victoria Where the government spends 15 Source: Victorian Budget

16. May 2015Treasury Corporation of Victoria Victorian Government – operating surplus 16

17. May 2015Treasury Corporation of Victoria Net debt to fall in 2015-16 17 Source: Department of Treasury and Finance S&P downgrades Victoria to AA

18. May 2015Treasury Corporation of Victoria Victorian Government – AAA rated Standard & Poor’s Ratings Services “We expect that the government will remain fiscally disciplined to ensure the general government accrual operating position remains in surplus over the forecast period. In our view, the Victorian government's budgetary performance is likely to remain broadly consistent with its recent history…“ “…we expect the state's total tax-supported debt to reduce toward 80% of operating revenues, from 88% in 2013, as the government increases the proportion of infrastructure funded through cash operating surpluses and the sale of the Port of Melbourne. Standard & Poor's considers this level of debt to be consistent with the 'AAA' rating on the state.” 5 th May 2015 Both Standard and Poor’s Ratings Services and Moody’s Investor Services will conduct an in-depth analysis of the budget and its medium-term impact on the State’s financial and debt profile as part of their normal monitoring process which is scheduled for June 2015. 18

19. May 2015Treasury Corporation of Victoria Budget at a glance 2015-16 Budget aggregates (general government sector) 19 2015-16 Budget 2016-17 Estimate 2017-18 Estimate 2018-19 Estimate Net result from transactions ($bn)1.21.4 1.8 Net debt ($bn)16.919.319.519.8 Net debt to GSP (%)4.44.84.64.4 Net infrastructure investment ($bn)5.26.54.55.1 growing economy focused on health, education, jobs and transport refocused infrastructure program new government is committed to maintaining AAA rating operating surplus of $1.2 billion in 2015-16 expect to finalise the medium term lease of the Port of Melbourne operations, settlement Q1 2016 Gross State Product to grow by 2.50 per cent in 2015 ‑ 16 net debt of 4.4 per cent of GSP in 2015-16

20. Funding strategy 2015-16

21. May 2015Treasury Corporation of Victoria TCV – funding sources 21 12 dealer panel members 7 benchmark maturities between 2016 – 2026 minimum outstanding target of A$4-5 billion per maturity total benchmark issue outstandings $A31billion 5 non-benchmark maturities totalling $A2.4 billion maturities dates 2015, 2030, 2032 and 2040 Australian Dollar Note Program $US3 billion multi Currency program outstandings A$95 million Euro Medium Term Note Programme $A5 billion program 1-365 day maturities outstandings A$2.6 billion Australian Dollar Promissory Note Program US$5 billion multi currency 1-365 day maturities outstandings (A$ equivalent) $24 million Euro Commercial Paper Program

22. May 2015Treasury Corporation of Victoria TCV funding requirement 2015-16 22 2015-16 Budget $ millions 2016-17 Forecast $ millions 2017-18 Forecast $ millions 2018-19 Forecast $ millions New Money Requirement - General Government Sector-5,5252,5461951,068 - Participating Authorities784360406508 Client Loan Refinancing1,1031,1372,4383,159 TCV Funding Requirement-3,6384,0433,0394,735

23. May 2015Treasury Corporation of Victoria TCV funding strategy 2015-16 Key points: the privatisation program significantly influences the funding strategy for 2015-16 the General Government sector will undertake a debt repayment of approximately $5.5 billion, resulting in a net funding requirement of negative $3.6 billion approximately $1.9 billion of the 2015-16 funding requirement will be raised through the Domestic Benchmark Bond program privatisation proceeds will reduce the level of short term debt outstandings and any excess funds will be invested against future maturing TCV liabilities, specifically the 15 November 2016 bond the short-term ECP and Australian P-note programs will increase outstandings in the lead up to the receipt of the privatisation receipts there are no plans to issue non-AUD securities or inflation linked debt at this time it is unlikely a new benchmark bond will be issued in 2015-16. 23

24. May 2015Treasury Corporation of Victoria TCV Domestic Bond outstandings as at 30 April 2015 24

25. May 2015Treasury Corporation of Victoria TCV bond distribution and turnover 25

26. May 2015Treasury Corporation of Victoria TCV Commonwealth bond spread as at 30 April 2015 26

27. May 2015Treasury Corporation of Victoria Semi government spread to TCV as at 30 April 2015 27

28. May 2015Treasury Corporation of Victoria Summary Strong Credit Rating Victoria is rated AAA/Aaa stable outlook by credit rating agencies Standard & Poor’s and Moody’s Investor Services the State has a strong financial profile, and has an economic strategy that supports its triple-A rating. Sound Budget Position focused on economic growth, jobs, education, hospitals and transport ongoing budget surplus forecast proven ability to constrain expenditure. Funding Strategy the updated funding requirement for 2015-16 is negative $3.6 billion the General Government Sector will be undertaking a debt repayment of $5.5 billion $1.9 billion of long term will be raised through the domestic benchmark bond program. 28

29. May 2015Treasury Corporation of Victoria Contact Details Justin Lofting General Manager, Treasury Tel: +61 3 9651 4828 Email: j.lofting@tcv.vic.gov.au 29 Bill Whitford Managing Director Tel: +61 3 9651 4800 Email: w.whitford@tcv.vic.gov.au

30. May 2015Treasury Corporation of Victoria Thank you Disclaimer This publication is: provided for the benefit of TCV clients for general information purposes only, based on facts and data available to TCV at the time of its preparation. Opinion and forecasts do not guarantee future outcomes or rates. Outcomes and rates will be subject to variations due to fluctuations and changed financial market or economic conditions. TCV is not under any obligation to update the information in this publication if it becomes aware of a change or inaccuracy in the information. Accordingly, TCV does not warrant or represent that the information contained in this publication is complete, accurate or suitable for use. To the fullest extent permitted by law, TCV accepts no liability to any person for any direct or indirect loss, damage, cost or expense whatsoever arising from use of information contained in this publication (whether arising from negligence or otherwise). Any reference to credit ratings has been provided solely for the information of “wholesale clients” and must not be directly or indirectly disclosed to “retail clients” within the meaning of section 761G of the Corporations Act 2001 (Cth). 30

31. For more information on TCV, our products and services, please visit: www.tcv.vic.gov.au