Standing Committee on Economics, Finance and Public
Reviews of the 1995-96 annual reports of the Reserve Bank of Australia,
Australian Securities Commission and the Insurance and Superannuation
(Tabled on 22 June 1999)
This document has been scanned from the original government response.
It may contain some errors.
GOVERNMENT RESPONSE TO THE HOUSE OF REPRESENTATIVES STANDING COMMITTEE
ON FINANCIAL INSTITUTIONS AND PUBLIC ADMINISTRATION ON ITS REVIEWS OF
THE 1995-96 ANNUAL REPORTS OF THE RESERVE BANK OF AUSTRALIA, AUSTRALIAN
SECURITIES COMMISSION AND THE INSURANCE AND SUPERANNUATION COMMISSION
Recommendation 1 of the Report recommended:
"That the Australian Prudential Regulatory Authority be required
to appear before the House of Representatives Standing Committee on Financial
Institutions and Public Administration at a public hearing once a year
to report on prudential supervision of the financial services industry"
The Treasurer stated in his second reading speech when introducing the
Financial System Reform legislation into Parliament that APRA will report
to Parliament annually, and that it will be available to appear before
the relevant parliamentary committees. This is consistent with the present
practices of the ISC, RBA and ASC, and it is appropriate that the new
prudential regulator continue this reporting requirement.
Recommendation 2 of the report stated that:
"In order to encourage private investment in small business enterprises,
the Treasurer review the rules governing the issue of prospectuses with
a view to reducing the costs and complexity of preparing a prospectus
for small and medium companies."
In October 1997, as part of the Government's Corporate Law Economic Reform
Program, the Treasurer announced reform of the rules governing fundraising
by business. The reforms include a specially designed package aimed at
facilitating capital raising by small to medium enterprises. Reforms are
also proposed to facilitate the use of shorter prospectuses and, where
appropriate, profile statements providing basic information.
The Report also raised several issues in respect of which there have
since been relevant recent developments, which the Government would like
to draw to the Committee's attention.
The Report notes the concern of the Governor of the RBA regarding the
Wallis Inquiry proposals to transfer responsibility for the prudential
regulation of banks to APRA while leaving the RBA with responsibility
for financial system stability. The Treasurer addressed these concerns
in his statement of 2 September 1997 (Press Release No. 102), noting that
both organisations will operate closely, and that there will be provision
the RBA to have two ex-officio members on the APRA Board;
full information exchange between the two organisations;
a bilateral committee, chaired by a deputy governor of the RBA,
to coordinate information exchange, reporting arrangements and ongoing
cooperation between the two agencies; and
RBA participation in APRA inspection teams.
The Report raises issues arising from Crown immunity in relation to the
privatisation of Commonwealth and State government enterprises. The removal
of governmental immunity from the fundraising provisions of the Corporations
Law was announced by the Treasurer as part of the Corporate Law Economic
The Report indicates that additional legislation arising from the Corporate
Law Simplification Task Force has not been brought forward following the
change of government. Since that time, Parliament has enacted the Company
Law Review Act which adopted a number of reforms originally arising from
the former Simplification Task Force. The Act makes a number of important
reforms to the Corporations Law provisions dealing with share capital,
company incorporation and registration, financial statements and annual
The Report also discusses issues arising from the demutualisation of
the Australian Stock Exchange (ASX). The Corporations Law Amendment
(ASX) Act 1997,which has been passed by Parliament since the Committee's
Report was finalised, provides the legislative framework to support the
demutualisation of the ASX, which took place on 13 October 1998.
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