Chris Bowen (Prospect, Australian Labor Party, Shadow Assistant Treasurer) Share this | Hansard source

In November 2002, the Prime Minister commissioned the Review of the Corporate Governance of Statutory Authorities and Office Holders, led by Mr John Uhrig. On 12 August 2004, the Uhrig report was publicly released. The report made a number of recommendations to improve the governance of statutory authorities and office holders and their accountability frameworks. The Governance Review Implementation (Treasury Portfolio Agencies) Bill 2007 is part of the government’s response to the Uhrig report. The bill seeks to implement recommendations in relation to three statutory authorities: the Australian Securities and Investments Commission, or ASIC; the Corporations and Markets Advisory Committee, or CAMAC; and the Australian Prudential Regulation Authority, or APRA. The Uhrig review recommended that two templates be applied to ensure good governance of statutory authorities—that is, that agencies should be managed either by a chief executive officer or by a board structure.

We support this bill. However, we certainly do not support the implementation of the Uhrig principles across the board, and we have outlined in the past our disappointment that, for example, Austrade has had its board abolished. We see that as a short-sighted and counterproductive move. It has deprived Austrade of a vital link with private industry. But we certainly support the application of the Uhrig principles to the Treasury bodies. Labor supports measures which will improve the governance of statutory authorities. The implementation of the Uhrig report recommendations, through this bill, should increase the efficiency and transparency of the operations of the statutory authorities I have mentioned. Labor will also support this bill as part of its commitment to consistency in the governance of statutory authorities.

At a federal level, statutory authorities are established by a specific act of parliament which also stipulates their responsibilities and how they should operate. In addition to enabling legislation, statutory authorities are now also subject to either the Financial Management and Accountability Act 1997, the FMA Act, or the Commonwealth Authorities and Companies Act 1997, the CAC Act. The CAC framework generally applies to statutory authorities which are corporate entities, largely funded by their own commercial activities and managed by a board. The chief executive officers of CAC agencies are required to report to the responsible minister. CEOs must also ensure that the activities of the authority comply with any relevant government policies. The FMA framework generally applies to agencies that are budget funded and managed by a chief executive. The act establishes particular responsibilities for the chief executive and allows the minister to give the chief executive guidelines.

There has arguably been a lack of consistency in the application of the CAC and FMA frameworks to statutory authorities. One of the six recommendations of the Uhrig report was that the legislative basis for agencies should be simplified so that the FMA framework applies to budget funded statutory authorities and the CAC framework applies to authorities which are legally and financially separate from the Commonwealth. Currently, all three statutory authorities that are subject to this bill—that is, ASIC, CAMAC and APRA—operate under the CAC framework, even though their operations are predominantly budget funded.

This bill seeks to transfer ASIC, CAMAC and APRA from the CAC framework to the FMA framework. This change would commence from the 2007-08 financial year. In implementing this transfer, a number of changes to the structure and operation of these statutory authorities will occur. The main changes are that ASIC, CAMAC and APRA will be subject to the FMA Act and not the CAC Act. However, each agency will retain its status as a body corporate but will hold public money and public property on behalf of the Commonwealth, as defined in section 5 of the FMA Act. References to ASIC’s money and CAMAC’s money will be removed from the Australian Securities and Investments Commission Act, and the reference to APRA money will be removed from the Australian Prudential Regulation Authority Act. ASIC will now have all powers and duties of a trustee on behalf of the Commonwealth in relation to property held on trust. Part 5.7 of the Corporations Act, in relation to winding up bodies other than companies, will be amended so that trust property vests with the Commonwealth.

Under the FMA Act, the agencies’ chief executives will be personally responsible and accountable for managing their agency in a way which promotes efficient, ethical and effective use of Commonwealth resources. For both ASIC and APRA, the chief executive will be the chair, and for CAMAC the chief executive will be its convenor.

There are also consequential amendments, due to the implementation from the CAC framework to the FMA framework for each agency’s financial and reporting requirements. The convenor of CAMAC will now be personally responsible for providing the responsible minister with an annual report on CAMAC’s operations during the financial year. A new section 163 will be inserted in the ASIC Act to set out CAMAC’s reporting requirements under the FMA Act. APRA’s reporting requirements are set out in section 59 of the APRA Act.

The Commonwealth will now also be responsible for ASIC’s financial liabilities. The collection of unclaimed money by ASIC, under part 9.7 of the Corporations Act, will now be put into an account, titled the Companies and Unclaimed Moneys Special Account, under section 133 of the act. The minister will retain the discretion to apply the proceeds of investment moneys. A special account will also be set up for APRA. All of APRA’s sources of funding will now be received for and on behalf of the Commonwealth. These amounts will be credited to the account, with the balance of the account providing APRA with the appropriation authority to spend these amounts, and updating taxation arrangements. Each agency will also retain its common seal and may sue and be sued on behalf of its corporate name.

In the case of APRA, employment powers will be transferred from the agency to the chair as, under the FMA framework, the chair, as the chief executive, has the responsibility of managing the affairs of the agency in a way which promotes the efficient use of Commonwealth resources. Labor is committed to ongoing improvements to the corporate governance of statutory authorities—that is why we support this bill. The implementation of the Uhrig report recommendation in regard to the application of the FMA and CAC frameworks will increase the consistency in the corporate governance of statutory authorities and is welcomed by the opposition. This is an appropriate use of the Uhrig principles. It is appropriate that the three bodies affected by this bill are brought within the framework of the Uhrig principles. As I said at the outset, we do not support the operation of the Uhrig principles across the board; they should be adopted on a case by case basis. We have no problem in supporting the legislation in these three cases.

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