House of Representatives

Second Reading Speech

Mr SLIPPER (Parliamentary Secretary to the Minister for Finance and Administration)

I move:

That this bill be now read a second time.

I introduce the that continues the legislation amendments to improve the efficiency and operation of a range of financial sector legislation.

Most of the amendments are minor and technical in nature.

The bill contains amendments to nine acts. Amendments to the Life Insurance Act 1995 and amendments to section 50 of the Australian Prudential Regulation Authority Act 1998, the APRA Act, need to be made by 30 June of this year.

The Life Insurance Act 1995 amendments will remove sunset clauses on the right to appeal prudential decisions to the Administrative Appeals Tribunal. By removing the right to appeal to the tribunal, APRA will be able to act more quickly in the event of a financial crisis to prevent contagion across the financial system. This amendment is consistent with the Insurance Act 1979, which has also removed the right to appeal prudential financial decisions. As the sunset clauses expire on 30 June this year, it is necessary for the amendments to occur by that date.

The amendments to section 50 of the APRA Act 1998 will ensure that levy revenue is treated on an accrual basis, consistent with government policy. This amendment will also address concerns raised by the Australian National Audit Office in relation to APRA's financial accounts. To enable APRA to make the necessary changes and for its financial statements to reflect changes for the 2001-02 financial year, the amendments need to apply from 1 July 2001.

The second part of this amendment will modify the wording of section 50 of the act so that the Treasurer can specify an amount for each of the levies collected by APRA to be hypothecated to the Commonwealth costs of customer protection and market integrity. This amendment will enable APRA to better manage its cash flow.

Amendments to the Financial Sector (Transfers of Business) Act 1999 will ensure that the Australian Tax Office has a formal role in assessing applications to transfer a financial sector business between regulated bodies. Currently, only the Australian Securities and Investments Commission and the Australian Competition and Consumer Commission need to be consulted for business transfers. This amendment will ensure that the tax implications from a transfer of a business are considered on application decisions.

Amendments to the Reserve Bank Act 1959 will simplify and clarify the process for the appointment and termination of appointments of Reserve Bank Board members, Payments System Board members and senior Reserve Bank officials. Other amendments to the Reserve Bank Act 1959 will remove administrative complexity from the Reserve Bank's superannuation arrangements and remove an unnecessary restriction on the location of the Reserve Bank head office.

The proposed changes to the Insurance Acquisitions and Takeovers Act 1991 will remove the current requirement to approve the application for a merger or acquisition within 30 days. The current 30 day limit does not give enough time for a comprehensive investigation to take place, resulting in the need to place a temporary restraining order on the merger or acquisition. Removing the 30-day time limit will give more time to undertake the necessary investigations prior to making a fully informed decision on the merger application.

The first proposed amendment to the Superannuation Supervision Levy Imposition Act 1998 will remove uncertainty about the amount of levy payable by a superannuation entity that becomes a superannuation entity during a fiscal year.

One of the proposed amendments to the Superannuation Industry Supervision Act 1993 will remove the unintended penalties imposed on superannuation funds that have fewer than five members and are in the process of winding up. The second amendment will allow the Australian Tax Office to provide currently protected information to APRA in relation to breaches of the act. This amendment will align the Superannuation Industry Supervision Act 1993 with section 56 of the APRA Act and is consistent with the current application of the Privacy Act.

A number of amendments will be made to the Financial Institutions Supervisory Levies Collection Act 1998, some of which will rectify drafting errors. Other amendments will have the effect of changing due dates for the payments of levies, to address some of the administrative problems APRA faces with the current levy payment structure. Another amendment to the act will give APRA the right to act on behalf of the Commonwealth to recover financial sector levy debts to overcome the current possible legal ambiguity of APRA recovering debts.

There are a number of proposed amendments to the Insurance Act 1973. Some amendments simply delete redundant sections of the act with other amendments ensuring harmonisation and consistency in the wording of the act.

Amendments also refine the 'fit and proper' requirements for directors or senior managers of general insurers or authorised non-operating holding companies. The amendments will maintain consistency with other APRA administered legislation.

Lastly, amendments were included to prevent a person who is linked to a general insurer or related group from sitting as a member of the Administrative Appeals Tribunal when hearing appeals about general insurance.

These bills build on the financial sector reforms already undertaken and they emphasise the commitment to ongoing improvements which will ensure that Australia is at the forefront of world's best practice in financial regulation.

The financial sector is a key driver in the economy. The benefits that these amendments will provide include increased efficiency of the financial industry and will improve the operation of the acts.

I am very pleased to commend this bill to the House and I present the explanatory memorandum