House of Representatives

Explanatory Memorandum

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

2 - Outline

2.1 The Governance Review Implementation (Treasury Portfolio Agencies) Bill 2007 (the Bill) seeks to improve the corporate governance of three statutory authorities in the Treasury portfolio - the Australian Securities and Investments Commission (ASIC), the Corporations and Markets Advisory Committee (CAMAC) and the Australian Prudential Regulation Authority (APRA). The Bill is one part of a broader exercise within the Australian Government to improve transparency and consistency in relation to governance arrangements for statutory authorities and office holders.

2.2 In August 2004, the Australian Government announced its response to the June 2003 Review of the Corporate Governance of Statutory Authorities and Office Holders (the Uhrig Review). As part of the response, the Australian Government agreed that the Financial Management and Accountability Act 1997 (the FMA Act), should be applied to statutory authorities where it is appropriate they be legally and financially part of the Commonwealth and they do not need to own assets.

2.3 The Bill implements this decision in relation to ASIC, CAMAC and APRA, transferring them from the Commonwealth Authorities and Companies Act 1997 (the CAC Act) to the FMA Act.

2.4 Under the new regime, the three agencies will hold money and property on behalf of the Commonwealth, rather than in their own right. This reflects their status as agencies that are largely budget-funded, in contrast to agencies that raise funds from commercial activities.

2.5 Similarly, the agencies will have the power to enter into contracts on behalf of the Commonwealth. ASIC and APRA will retain the power to enter into contracts on their own behalf, however the intention is that this power will only be used for regulatory purposes (for example, regulatory agreements).

2.6 As a consequence of the above changes, a number of technical amendments are required.

2.7 First, a number of provisions in the Corporations Act 2001 (Corporations Act) and the Australian Securities and Investments Commission Act 2001 (ASIC Act) will be amended to reflect that ASIC will now be acting as a trustee on behalf of the Commonwealth in relation to moneys and properties held on trust.

2.8 Second, the statutory regime for unclaimed moneys under Part 9.7 of the Corporations Act will be managed through a statutory special account, the Companies and Unclaimed Moneys Special Account, to be established in the ASIC Act.

2.9 Third, the Australian Prudential Regulation Authority Special Account will be established in the Australian Prudential Regulation Authority Act 1998 (APRA Act) for funding the operations of APRA. APRA's current funding sources will be received on behalf of the Commonwealth and credited to the Account.

2.10 The Bill will also define the reporting requirements of ASIC, CAMAC and APRA under the FMA Act and the responsibilities of the Chief Executives of the agencies.

2.11 It is important to note that the above changes will not adversely affect the operational capabilities or independence of the statutory bodies. As noted in the Uhrig Review, it is the authority's legislative framework (and not its financial framework) that establishes the level of operational independence required to exercise its statutory responsibilities effectively.

Financial Impact Statement

2.12 There is no financial impact.