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CONTENTS
Passage History
Purpose
Background
Main Provisions
Endnotes
Contact Officer and Copyright Details
Authorised Deposit-Taking
Institutions Supervisory Levy Imposition Bill 1998
Authorised Non-Operating
Holding Companies Supervisory Levy Imposition Bill 1998
Superannuation Supervisory Levy
Imposition Bill 1998
Retirement Savings Account
Providers Supervisory Levy Imposition Bill 1998
Life Insurance Supervisory Levy
Imposition Bill 1998
General Insurance Supervisory
Levy Imposition Bill 1998
Date Introduced: 26 March 1998
House: House of
Representatives
Portfolio: Treasury
Commencement: Each of the Bills with the exception of the
Authorised Deposit-taking Institutions Supervisory Levy Bill 1998,
commence on the day that the Australian Prudential Regulation
Authority Act 1998 commences.
The Authorised
Deposit-taking Institutions Supervisory Levy Bill 1998 commences on
the earlier of a date to be fixed by proclamation and two years
after the Act receives the Royal Assent.
If the day of
commencement of any of the Acts is other than 1 July of any year,
the Acts have effect subject to modification provided in the
regulations.
To impose levies on those
industries that will be prudentially regulated by the Australian
Prudential Regulation Authority (APRA).
The Financial System Inquiry Final Report (FSI Report -
sometimes referred to as the 'Wallis Inquiry report') recommended
that a single Commonwealth prudential regulator should be
established for the deposit taking (including banks, building
societies and credit unions), insurance (general and life) and
superannuation industries (including retirement savings
accounts).(1) The Government has resolved to implement that
recommendation by the creation of APRA. The creation of APRA will
result in the abolition of the Insurance and Superannuation
Commission and eventually the state-based structure for regulation
of building societies and credit unions.
At present, the various industries are regulated by different
authorities which have separate funding mechanisms. This has
created significant disparities between the nature and level of
funding of each regulator.
Recommendation 104 of the FSI Report is headed 'Regulatory
agencies' charges should reflect their costs' and states:
The regulatory agencies should collect from the financial
entities which they regulate enough revenue to fund themselves, but
not more. As far as practicable, the regulatory agencies should
charge each financial entity for direct services provided, and levy
sectors of industry to meet the general costs of their
regulation.(2)
The government has stated its aim to be:
To establish an administratively simple and uniform scheme based
on the principle of full cost recover from the institutional
categories that are regulated.(3)
In broad terms, the proposed charges are similar to those
currently imposed on building societies, credit unions and
insurance and superannuation entities. The regulatory functions of
the Reserve Bank are presently funded by the interest forgone on
non-callable deposits held by the Reserve Bank (a requirement which
will be abolished by the Financial Sector Reform (Amendments
and Transitional Provisions) Act 1998).
The funds received as a result of the imposition of these six
levies are to be applied in two ways:
- The Treasurer must determine, for each financial year, the
amount of levy money received during the financial year that is to
be available to cover the costs to the Commonwealth of providing
market integrity and consumer protection functions for prudentially
regulated institutions. That amount is retained in the Consolidated
Revenue Fund;
- The balance of the levy money (after 'taking out' the amount
referred to above) is to be paid to APRA (clause 50 of the
Australian Prudential Regulation Authority Bill 1998).
It is necessary to understand the meaning of the following two
terms so as to understand the levy regime:
- An 'authorised deposit taking institution' is a body corporate
which is authorised, to carry on banking business in Australia
under the Banking Act 1959. It will cover banks, building
societies, credit unions etc.
- An 'authorised non-operating holding company' is a new type of
financial entity designed to allow the formation of financial
conglomerates which are to be allowed to hold more than one
deposit-taking licence.
Further information about the Financial Sector Inquiry Final
Report can be obtained from Parliamentary Library Research Paper
No. 16 of 1996-97, entitled The Wallis Report on the Australian
Financial System: Summary and Critique, by Phil Hanratty.
(Clauses and clause numbering in each of the Bills are
consistent unless otherwise stated.)
Each of these Bills sets up the mechanism for determining the
amount of the levy that each type of institution is liable to pay.
Liability for the levy will then be created by the Financial
Institutions Supervisory Levies Collection Bill 1998
(clause 6 of each Bill; clause 7
of the General Insurance Supervisory Levy Imposition Bill
1998).
Amount of the levy -
deposit-taking institutions, insurance companies, superannuation
entities and retirement savings account providers
The amount of the levy is determined under clause
7 of each Bill (except the General Insurance Supervisory
Levy Imposition Bill 1998 under which clause 8 is
the relevant provision).
The levy payable by each type of institution, except authorised
non-operating holding companies (see below), is a percentage (levy
percentage) of the particular entity's asset value. The levy
percentage is determined by the Treasurer for each financial year.
If the amount calculated is more than the maximum levy amount or
less than the minimum levy amount, the levy imposed is limited to
the maximum levy amount or increased to the minimum levy amount, as
the case may be. The maximum and minimum levy amounts are
determined by the Treasurer each financial year.
The Bills provide that the Treasurer cannot set the maximum levy
amount at more than $500 000 for superannuation entities,
retirement savings account providers and life and general insurance
companies and $1 000 000 for authorised deposit-taking
institutions. Those amount are indexed in accordance with the
consumer price index.
The Treasurer must also determine how an entity's asset value is
to be calculated.
Amount of the levy -
non-operating holding companies
The levy payable by authorised non-operating holding companies
(authorised NOHCs) is determined each financial year by the
Treasurer. There is no requirement that the levy bear any
relationship to the entity's asset value. However, the levy cannot
exceed $500 000 (clause 7 of the Authorised
Non-operating Holding Companies supervisory Levy Imposition Bill
1998).
The Explanatory Memorandum to the Bills provides that the amount
levied on authorised NOHCs will be a flat amount because the
entities are not expected to hold significant assets but may
require intensive supervision.
-
- Financial System Inquiry, Financial System Inquiry Final
Report, (Mr Stan Wallis, Inquiry Chairman), Canberra, March
1997.
- Ibid., 532.
-
- Australia, House of Representatives, Treasurer, Second Reading
speech in respect of the Company Law Review Bill 1997,
Parliamentary Debates, 26 March 1998, 1160.
Lee Jones
14 May 1998
Bills Digest Service
Information and Research Services
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is taken to ensure that the paper is accurate and balanced, the
paper is written using information publicly available at the time
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(IRS). Advice on legislation or legal policy issues contained in
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and their staff but not with members of the public.
ISSN 1328-8091
Commonwealth of Australia 1998
Except to the extent of the uses permitted under the
Copyright Act 1968, no part of this publication may be
reproduced or transmitted in any form or by any means, including
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Published by the Department of the Parliamentary Library,
1998.
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