House of Representatives

Explanatory Memorandum

(Circulated by authority of the Treasurer,the Hon Peter Costello, MP)

4 - Schedule 1 Amendment of the Australian Prudential Regulation Authority Act 1998

Item 1

4.1 This amendment modifies section 50 of the Australian Prudential Regulation Authority Act 1998 (the APRA Act) so that, consistent with Commonwealth policy, outstanding levies are recognised by APRA on an accrual basis. Presently, section 50 requires APRA to recognise the cash collected during a financial year as revenue. This amendment changes revenue recognition to the accrual concept to comply with the Commonwealth Governments accrual accounting reporting policy.

4.2 This amendment also clarifies that the Treasurers determination of Commonwealth costs is specific to the levy for each industry sector rather than treated as a single amount. The present wording of section 50 appears to direct the Treasurer to specify a single amount for all of the financial industry that must be retained for market integrity and consumer protection functions.

4.3 Currently, a large proportion of the amount specified in the Treasurers levy determination relates to APRA regulated superannuation funds, although the annual levy on superannuation funds is not due until after 30 September each financial year. This means that the amount specified by the Treasurers determination is raised from the levies in other sections of the industry, the annual levies which are due on 1 July of the financial year. This causes a cash flow problem for APRA. This amendment requires the Treasurers determination to specify a separate amount for each levy for each financial year and will resolve the cash flow problems.

Item 2

4.4 This amendment clarifies that Item 1 applies for the financial year that began on 1 July 2001 and for all later financial years.

Item 3

4.5 This amendment is a technical amendment to assist in clarifying of the operation of APRAs secrecy provisions in relation to the disclosure of personal information (within the meaning of the Privacy Act 1998 ).

Item 4

4.6 This amendment clarifies the operation of APRAs secrecy provisions in relation to the disclosure of personal information (within the meaning of the Privacy Act 1998 ).

Commencement

4.7 Item 1 will commence on 30 June 2002 in order for APRA to avoid an audit qualification from the Australian National Audit Office (ANAO). Items 2 and 3 will commence the day after the day on which this Act receives the Royal Assent.