Government Security in Australia: 2025 Policy Updates & Investment Insights

With the Reserve Bank of Australia (RBA) signaling a cautious approach to monetary policy and the federal government issuing new debt to fund infrastructure and social programs, government securities are back in the spotlight for local investors. But what exactly are government securities, and how do recent policy moves impact their role in a modern Australian portfolio?

Understanding Government Securities: The Backbone of Low-Risk Investing

Government securities—often called ‘govvies’—are debt instruments issued by the Commonwealth or state governments to raise funds for public spending. The best-known examples are Commonwealth Government Bonds (CGBs), Treasury Notes, and semi-government bonds issued by states like New South Wales and Victoria.

• Commonwealth Government Bonds (CGBs): Fixed interest payments, typically with maturities from 1 to 30 years.

• Treasury Notes: Short-term instruments (less than a year), ideal for managing cash flow or parking funds safely.

• Semi-Government Bonds: Issued by state and territory governments, often with slightly higher yields due to perceived extra risk.

The appeal? These are among the safest assets on the market, backed by the full faith and credit of the government. For risk-averse Aussies or those approaching retirement, they offer stability and predictable income—qualities in demand amid 2025’s market volatility.

2025 Policy Shifts: What’s New for Government Securities?

This year, several policy developments have altered the landscape for government securities:

• Increased Issuance: The Australian Office of Financial Management (AOFM) announced record levels of new bond issuance to fund expanded infrastructure projects and green initiatives, pushing the total volume of CGBs on the market to new highs.

• Yield Curve Movements: As of Q2 2025, yields on 10-year CGBs sit around 4.1%, up from 3.6% in early 2024, reflecting both global rate pressures and Australia’s inflation management strategy.

• Green and Social Bonds: The federal government launched its first tranche of certified green bonds in March 2025, attracting strong demand from ESG-focused funds and superannuation schemes.

These changes mean investors now have more options—and more to consider—when allocating to government-backed debt.

Practical Uses: How Australian Investors Are Leveraging Government Securities

Government securities aren’t just for institutions or the ultra-conservative. They’re increasingly a core tool for everyday Australians, thanks to their accessibility and new product offerings:

• Portfolio Diversification: Financial advisers are recommending a higher allocation to CGBs and semis as a hedge against equity market swings and geopolitical shocks.

• Direct Investment: The RBA’s Treasury Bonds and Notes platform allows individuals to buy and hold government securities directly, not just via managed funds or ETFs.

• Superannuation Funds: APRA’s 2025 guidance encourages super funds to increase transparency around their holdings of government securities, highlighting their role in retirement income strategies.

Consider a Sydney-based retiree who, concerned about market turbulence and rising living costs, shifts a portion of her super into a ladder of 3-, 5-, and 10-year CGBs. She locks in predictable returns, benefits from tax concessions, and gains peace of mind—demonstrating how government securities can anchor a resilient income plan.

The Bottom Line: Are Government Securities Right for You in 2025?

With inflation uncertainties lingering and equity markets prone to bouts of volatility, government securities offer a rare combination of safety and steady returns. Policy updates in 2025 have broadened the range of options, from green bonds to state-backed debt, making these instruments more relevant than ever for Australian investors of all stripes.