John Alexander (Bennelong, Liberal Party) Share this | Hansard source

On behalf of the Standing Committee on Economics, I present the committee's report, entitled Review of the Australian Prudential Regulation Authority annual report 2014 (second report), together with the minutes of proceedings. This report follows a hearing with the chairman and other officials of the Australian Prudential Regulation Authority, APRA, on 20 March 2015 in Canberra.

The House of Representatives Standing Committee on Economics is pleased to continue its oversight of Australia's prudential standards for the banking, insurance and superannuation sectors through this review of APRA.

It was pleasing to learn at our recent hearing with APRA that the Australian financial sector has continued to demonstrate stability overall. However, there are clearly some emerging risks in the housing market which need to be carefully monitored.

The committee notes that APRA has recently written to authorised deposit-taking institutions to outline its plans around sound lending practices. An increased scrutiny of mortgage portfolios is an appropriate response to this issue and we will be requesting updates on APRA's activities and processes in this regard at future hearings.

The progress in implementing the new prudential standards through the Stronger Super reforms is of continuing interest to the committee. APRA stated at the public hearing in March that the superannuation industry's approach to managing conflicts of interest needed to be improved.

We also note from our discussions with APRA on its oversight of the super industry that new disclosure requirements are yet to be fully implemented and enforced. We welcome APRA's undertaking that it is continuing to monitor the efforts of this sector to strengthen governance and risk management frameworks and practices.

The prudential responsibilities of the Private Health Insurance Administration Council will be transferring to APRA in July of this year. APRA has outlined the resourcing of this transfer and its proposal to implement only the minimum changes required to achieve it. The committee will be monitoring this transition with interest over the coming months.

The outcomes of the Financial System Inquiry, FSI, and the work of the Basel Committee may well influence the future capital requirements of the Australian banking sector and we look forward to discussing this with APRA more broadly at the next public hearing.

On behalf of the committee I would like to thank the chairman of APRA, Mr Wayne Byres, and his colleagues for appearing at the public hearing on 20 March 2015. The committee looks forward to further discussions on upcoming prudential issues at the next hearing with APRA on Friday 23 October 2015 in Canberra.

I also thank the committee secretariat for their tireless work, and my parliamentary colleagues, in particular the Member for Chifley in his capacity as deputy chair, for the collegial manner in which this committee operates. I commend the report to the House.

Report made a parliamentary paper in accordance with standing order 39(e).

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