Federal Register of Legislation - Australian Government

Primary content

A Bill for an Act to amend the Superannuation Supervisory Levy Imposition Act 1998, and for related purposes
Administered by: Treasury
For authoritative information on the progress of bills and on amendments proposed to them, please see the House of Representatives Votes and Proceedings, and the Journals of the Senate as available on the Parliament House website.
Registered 14 May 2020
Introduced HR 13 May 2020
Table of contents.

2019-2020

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

HOUSE OF REPRESENTATIVES

 

 

AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY AMENDMENT (APRA INDUSTRY FUNDING) BILL 2020
AUTHORISED DEPOSIT-TAKING INSTITUTIONS SUPERVISORY LEVY IMPOSITION AMENDMENT BILL 2020
AUTHORISED NON-OPERATING HOLDING COMPANIES SUPERVISORY LEVY IMPOSITION AMENDMENT BILL 2020
GENERAL INSURANCE SUPERVISORY LEVY IMPOSITION AMENDMENT BILL 2020
LIFE INSURANCE SUPERVISORY LEVY IMPOSITION AMENDMENT BILL 2020
RETIREMENT SAVINGS ACCOUNT PROVIDERS SUPERVISORY LEVY IMPOSITION AMENDMENT BILL 2020
SUPERANNUATION SUPERVISORY LEVY IMPOSITION AMENDMENT BILL 2020

 

 

EXPLANATORY MEMORANDUM

 

 

(Circulated by authority of the

Treasurer, the Hon Josh Frydenberg MP)


Table of contents

Glossary............................................................................................................. 1

General outline and financial impact........................................................... 2

Chapter 1........... Financial Institution Supervisory Levy amendments... 3

Chapter 2........... Statement of Compatibility with Human Rights.......... 11

 

 


The following abbreviations and acronyms are used throughout this explanatory memorandum.

Abbreviation

Definition

APRA

Australian Prudential Regulation Authority

APRA Industry Funding Bill

the Australian Prudential Regulation Authority Amendment (APRA Industry Funding) Bill 2020

CPI

Consumer Price Index

Levy Imposition Acts

       the Authorised Deposit-taking Institutions Supervisory Levy Imposition Act 1998;

       the Authorised Non-operating Holding Companies Supervisory Levy Imposition Act 1998;

       the General Insurance Supervisory Levy Imposition Act 1998;

       the Life Insurance Supervisory Levy Imposition Act 1998;

       the Retirement Savings Account Providers Supervisory Levy Imposition Act 1998; and

       the Superannuation Supervisory Levy Imposition Act 1998.

Levy Imposition Amendment Bills

       the Authorised Deposit-taking Institutions Supervisory Levy Imposition Amendment Bill 2020;

       the Authorised Non‑operating Holding Companies Supervisory Levy Imposition Amendment Bill 2020;

       the General Insurance Supervisory Levy Imposition Amendment Bill 2020;

       the Life Insurance Supervisory Levy Imposition Amendment Bill 2020;

       the Retirement Savings Account Providers Supervisory Levy Imposition Amendment Bill 2020; and

       the Superannuation Supervisory Levy Imposition Amendment Bill 2020.


 


Financial Institution Supervisory Levy amendments

This Explanatory Memorandum accompanies the Levy Imposition Amendment Bills, which make amendments to their respective Levy Imposition Acts to increase the statutory upper limit on the amount of levies APRA can collect from the entities it prudentially regulates, ensuring that APRA remains industry funded. The Levy Imposition Amendment Bills also make amendments to how the indexation factor used to index the statutory upper limit is calculated.

This Explanatory Memorandum also accompanies the APRA Industry Funding Bill, which makes amendments to the Australian Prudential Regulation Authority Act 1998 to ensure that the Commonwealth can recover the costs of a wider range of activities that are funded by the Commonwealth and recoverable through the financial institution supervisory levy framework.

Date of effect:  The APRA Industry Funding Bill and the Levy Imposition Amendment Bills commence on the day after the Bills receive Royal Assent.

Proposal announced:  The proposals have not been previously announced.

Financial impactNil.

Human rights implications:  The APRA Industry Funding Bill and Levy Imposition Amendment Bills do not raise any human rights issue. See Statement of Compatibility with Human Rights — Chapter 2.

Compliance cost impactThis measure is estimated to have no more than minor regulatory impacts.

 

 

 


Outline of chapter

1.1                   This Explanatory Memorandum accompanies the following Bills:

       the Authorised Deposit-taking Institutions Supervisory Levy Imposition Amendment Bill 2020;

       the Authorised Non-operating Holding Companies Supervisory Levy Imposition Amendment Bill 2020;

       the General Insurance Supervisory Levy Imposition Amendment Bill 2020;

       the Life Insurance Supervisory Levy Imposition Amendment Bill 2020;

       the Retirement Savings Account Providers Supervisory Levy Imposition Amendment Bill 2020; and

       the Superannuation Supervisory Levy Imposition Amendment Bill 2020.

1.2                   Those Bills make amendments to the following Acts, respectively:

       the Authorised Deposit-taking Institutions Supervisory Levy Imposition Act 1998;

       the Authorised Non-operating Holding Companies Supervisory Levy Imposition Act 1998;

       the General Insurance Supervisory Levy Imposition
Act 1998
;

       the Life Insurance Supervisory Levy Imposition Act 1998;

       the Retirement Savings Account Providers Supervisory Levy Imposition Act 1998; and

       the Superannuation Supervisory Levy Imposition
Act 1998
.

1.3                   The Levy Imposition Amendment Bills make amendments to increase the statutory upper limit on the amount of levies APRA can collect from the entities it prudentially regulates, ensuring that APRA remains industry funded. The Levy Imposition Amendment Bills also make amendments to how the indexation factor used to index the statutory upper limit is calculated.

1.4                   This Explanatory Memorandum also accompanies the APRA Industry Funding Bill. The APRA Industry Funding Bill makes amendments to the Australian Prudential Regulation Authority Act 1998 to ensure that in the dynamic regulatory environment, the Commonwealth can recover the costs of a wider range of activities that are funded by the Commonwealth and recoverable through the financial institution supervisory levy framework.

Context of amendments

1.5                   In 1998, the Government introduced an industry funding model to recover the operational costs of APRA, and other specific costs incurred by certain Commonwealth agencies and departments.

1.6                   The legislative framework is made up of the Financial Institutions Supervisory Levies Collection Act 1998, which prescribes the timing of payment and the collection of the levies.

1.7                   The Levy Imposition Acts impose the levies in prudentially regulated sectors. The Levy Imposition Acts allow the Treasurer to determine levy amounts and set a limit that is indexed to CPI on the amount of certain levies that can be determined.

1.8                   Since the introduction of the industry funding model, the scope of the activities being industry funded has expanded. With this expansion, the yearly levy on one sector has already hit the statutory upper limit while yearly levies on other sectors continue to increase.

1.9                   On 16 August 2019, the Treasury released a
consultation paper seeking feedback from stakeholders on
changes to the statutory limit. The consultation period ended on
13 September 2019. Taking into consideration feedback from stakeholders, the Government has decided to make changes to the financial institution supervisory levy framework to ensure it can continue to operate as intended and remain fit for purpose.

Summary of new law

1.10               The Levy Imposition Amendment Bills make amendments to raise the statutory upper limit on certain levy amounts that can be determined under their respective Levy Imposition Acts to an amount of $10 million for the financial year commencing 1 July 2020.

1.11               The Levy Imposition Amendment Bills also make amendments to allow the indexation factor used in calculating the statutory upper limit to use the most recently published CPI figures available.

1.12               The APRA Industry Funding Bill makes amendments to subsection 50(1) of the Australian Prudential Regulation Authority Act 1998 to ensure that the Commonwealth can recover the costs of a wider range of activities that are funded by the Commonwealth and recoverable through the financial institution supervisory levy framework.

Comparison of key features of new law and current law

New law

Current law

The statutory upper limit is an amount of $10 million for the financial year commencing 1 July 2020 and increased by an indexation factor for later financial years.

 

The statutory upper limit is an amount of $1.5 million for the financial year commencing 1 July 2005 and increased by an indexation factor for later financial years.

 

The indexation factor for a given financial year is calculated by dividing the published CPI figure for the most recent quarter by the published CPI figure from the quarter 12 months before, and adding 0.03 to it.

 

The indexation factor for a given financial year is calculated by dividing the CPI figure from the most recently published March quarter immediately preceding the financial year by the CPI figure from the previous March quarter, and adding 0.03 to it.

The Minister is required to make a legislative instrument to determine the amount of levy money payable to the Commonwealth in respect of levy or each class of levy to cover the following costs to the Commonwealth:

       costs incurred in connection with supporting the integrity and efficiency of markets in which leviable bodies operate;

       costs incurred in connection with promoting the interests of consumers in markets in which leviable bodies operate;

       the cost of administering the function of making determinations about the release on compassionate grounds of benefits that are in a superannuation entity or retirement savings account;

       the cost of governing and maintaining the superannuation transactions network; and

       costs relating directly or indirectly to the regulation of leviable bodies.

The Minister is required to make a legislative instrument to determine the amount of levy money payable to the Commonwealth in respect of levy or each class of levy to cover the costs to the Commonwealth of:

       providing market integrity and consumer protection functions for prudentially regulated institutions;

       administering the function of making determinations about the release on compassionate grounds of benefits that are in a superannuation entity or retirement savings account; and

       governing and maintaining the superannuation transactions network.

Detailed explanation of new law

Statutory upper limit

1.13               The Levy Imposition Amendment Bills increase the statutory upper limit for the financial year commencing on
1 July 2020 to $10 million.
[Schedule 1 of the Authorised Deposit-taking Institutions Supervisory Levy Imposition Amendment Bill 2020, item 1, the definition of “statutory upper limit” in section 5 of the Authorised Deposit-taking Institutions Supervisory Levy Imposition Act 1998; Schedule 1 of the Authorised Non-operating Holding Companies Supervisory Levy Imposition Amendment Bill 2020, item 1, the definition of “statutory upper limit” in section 5 of the Authorised Non-operating Holding Companies Supervisory Levy Imposition Act 1998; Schedule 1 of the General Insurance Supervisory Levy Imposition Amendment Bill 2020, item 2, the definition of “statutory upper limit” in section 6 of the General Insurance Supervisory Levy Imposition
Act 1998; Schedule 1 of the
Life Insurance Supervisory Levy Imposition Amendment Bill 2020, item 1, the definition of “statutory upper limit” in section 5 of the Life Insurance Supervisory Levy Imposition Act 1998;Schedule 1 of the Retirement Savings Account Providers Supervisory Levy Imposition Amendment Bill 2020, item 1, the definition of “statutory upper limit” in section 5 of the Retirement Savings Account Providers Supervisory Levy Imposition Act 1998; Schedule 1 of the Superannuation Supervisory Levy Imposition Amendment Bill 2020, item 1, the definition of “statutory upper limit” in section 5 of the Superannuation Supervisory Levy Imposition Act 1998]

1.14               Minor amendments have also been made to the definitions of statutory upper limit and the provisions that provide that certain determined levy amounts cannot exceed the statutory limit, to clarify the operation of the provisions. [Schedule 1 of the Authorised Deposit-taking Institutions Supervisory Levy Imposition Amendment Bill 2020, items 2 and 3, the definition of “statutory upper limit” in section 5, and section 7 of the Authorised Deposit-taking Institutions Supervisory Levy Imposition
Act 1998; Schedule 1 of the
Authorised Non-operating Holding Companies Supervisory Levy Imposition Amendment Bill 2020, items 2 and 3, the definition of “statutory upper limit” in section 5, and section 7 of the Authorised Non-operating Holding Companies Supervisory Levy Imposition Act 1998; Schedule 1 of the General Insurance Supervisory Levy Imposition Amendment Bill 2020, items 1, 3, 4 and 5, the definition of “statutory upper limit” in section 6, and section 8 of the General Insurance Supervisory Levy Imposition Act 1998; Schedule 1 of the Life Insurance Supervisory Levy Imposition Amendment Bill 2020, items 2 and 3, the definition of “statutory upper limit” in section 5, and section 7 of the Life Insurance Supervisory Levy Imposition
Act 1998; Schedule 1 of the Retirement Savings Account Providers Supervisory Levy Imposition Amendment Bill 2020, items 2 and 3 , the definition of “statutory upper limit” in section 5, and section 7 of the Retirement Savings Account Providers Supervisory Levy Imposition Act 1998; Schedule 1 of the Superannuation Supervisory Levy Imposition Amendment Bill 2020, items 2 and 3, the definition of “statutory upper limit” in section 5, and section 7 of the Superannuation Supervisory Levy Imposition Act 1998]

1.15               The statutory upper limit operates to provide a limit on certain levy amounts that the Treasurer determines each financial year, and that are payable by leviable bodies and collected by APRA. 

1.16               The amendments will allow APRA to continue to collect a sufficient amount of levies from all leviable bodies to cover its costs, ensuring it remains fully industry funded and that all sectors continue to pay their fair share of the levies.

1.17               The statutory upper limit continues to be indexed, which ensures that its value does not diminish through inflation.

Indexation factor

1.18               The Levy Imposition Amendment Bills make changes to the calculation of the indexation factor used to establish the statutory upper limits applying in later years to allow the indexation factor to be calculated using the latest published CPI figures. The Levy Imposition Amendment Bills also make consequential amendments to the Levy Imposition Acts to ensure that only the index numbers that are published by the Australian Statistician are used in the calculation of the indexation factor. [Schedule 1 of the Authorised Deposit-taking Institutions Supervisory Levy Imposition Amendment Bill 2020, items 4 and 5, section 8 of the Authorised Deposit-taking Institutions Supervisory Levy Imposition Act 1998; Schedule 1 of the Authorised Non-operating Holding Companies Supervisory Levy Imposition Amendment Bill 2020, items 4 and 5, in section 8 of the Authorised Non-operating Holding Companies Supervisory Levy Imposition Act 1998; Schedule 1 of the General Insurance Supervisory Levy Imposition Amendment Bill 2020, items 6 and 7, in section 9 of the General Insurance Supervisory Levy Imposition Act 1998; Schedule 1 of the Life Insurance Supervisory Levy Imposition Amendment Bill 2020, items 4 and 5, in section 8 of the Life Insurance Supervisory Levy Imposition Act 1998; Schedule 1 of the Retirement Savings Account Providers Supervisory Levy Imposition Amendment Bill 2020, items 4 and 5, in section 8 of the Retirement Savings Account Providers Supervisory Levy Imposition Act 1998; Schedule 1 of the Superannuation Supervisory Levy Imposition Amendment Bill 2020, items 4 and 5, in section 8 of the Superannuation Supervisory Levy Imposition Act 1998]

1.19               Currently, the indexation factor calculation requires the use of the published index numbers for the March quarter immediately preceding the relevant financial year and the previous March quarter.

1.20               The amendments allow the indexation factor to be the number worked out by:

       using the index number for the most recent quarter at the start of the day on which the first determination is made; and

       dividing that index number by the index number from the same quarter in the previous year; and

       adding 0.030 to the number worked out from the previous steps.

1.21               The changes allow the calculation of the indexation factor used to index the statutory upper limit to use the latest published CPI figure available. This removes the limitation of having to use the March quarter published figures and provides flexibility around the process of calculating the statutory upper limit for the relevant financial year.

Commonwealth costs

1.22               The APRA Industry Funding Bill makes changes to the sorts of activities in relation to leviable bodies that the Commonwealth can recover costs for.

1.23               A new definition of leviable body has been inserted, which has the same meaning as in the Financial Institutions Supervisory Levies Collection Act 1998. [Schedule 1 of the APRA Industry Funding Bill, item 2, the definition of “leviable body” subsection 50(6) of the Australian Prudential Regulation Authority Act 1998]

1.24               The Commonwealth’s costs of the following remain recoverable:

       administering the function of making determinations about the release on compassionate grounds of benefits that are in a superannuation entity or retirement savings account; and

       governing and maintaining the superannuation transactions network.

1.25               The amendments allow a determination to be made by the Minister to recover the following additional costs:

       costs incurred in connection with supporting the integrity and efficiency of markets in which leviable bodies operate;

       costs incurred in connection with promoting the interests of consumers in markets in which leviable bodies operate; and

       costs relating directly or indirectly to the regulation of leviable bodies.

[Schedule 1 of the APRA Industry Funding Bill, item 1, subsection 50(1) of the Australian Prudential Regulation Authority Act 1998]

1.26               Costs incurred in connection with supporting the integrity and efficiency of markets can include activities such as inquiries or market studies into competition issues in financial markets.

1.27               Costs incurred in connection with promoting the interests of consumers can include the costs of consumer advocacy activities to improve consumer outcomes.

1.28               It is intended that costs relating directly or indirectly to the regulation of leviable bodies would capture the costs of a wide range of regulatory activities, and provide flexibility to support the financial institution supervisory levy framework in the future.

1.29               These amendments ensure that the Commonwealth can recover its costs for a wider range activities that are to be industry funded in the future.

Commencement provisions

1.30               The Levy Imposition Amendment Bills commence on the day after Royal Assent. [Clause 2 of the Levy Imposition Amendment Bills]

1.31               The APRA Industry Funding Bill commences on the day after Royal Assent. [Clause 2 of the APRA Industry Funding Bill]

Application provisions

1.32               The amendments made by the Levy Imposition Bills apply in relation to determinations that are made under the respective Levy Imposition Acts on or after the commencement of the Levy Imposition Amendment Bills. [Schedule 1 of the Authorised Deposit-taking Institutions Supervisory Levy Imposition Amendment Bill 2020, item 6; Schedule 1 of the Authorised Non-operating Holding Companies Supervisory Levy Imposition Amendment Bill 2020, item 6; Schedule 1 of the General Insurance Supervisory Levy Imposition Amendment Bill 2020, item 8; Schedule 1 of the Life Insurance Supervisory Levy Imposition Amendment Bill 2020, item 6; Schedule 1 of the Retirement Savings Account Providers Supervisory Levy Imposition Amendment Bill 2020, item 6; Schedule 1 of the Superannuation Supervisory Levy Imposition Amendment Bill 2020, item 6]

1.33               The amendments made by the APRA Industry Funding Bill apply in relation to a determination under subsection 50(1) of the Australian Prudential Regulation Authority Act 1998 that is made on or after the commencement of the APRA Industry Funding Bill. [Schedule 1 of the APRA Industry Funding Bill, item 3]


Chapter 2         
Statement of Compatibility with Human Rights

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

Australian Prudential Regulation Authority Amendment (APRA Industry Funding) Bill 2020

Authorised Deposit-taking Institutions Supervisory Levy Imposition Amendment Bill 2020

Authorised Non-operating Holding Companies Supervisory Levy Imposition Amendment Bill 2020

General Insurance Supervisory Levy Imposition Amendment Bill 2020

Life Insurance Supervisory Levy Imposition Amendment Bill 2020

Retirement Savings Account Providers Supervisory Levy Imposition Amendment Bill 2020

Superannuation Supervisory Levy Imposition Amendment Bill 2020

2.1                  These Bills are compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

Overview

2.2                  The APRA Industry Funding Bill makes amendments to the Australian Prudential Regulation Authority Act 1998 to ensure that the Commonwealth can recover the costs of a wider range of activities that are funded by the Commonwealth and recoverable through the financial institution supervisory levy framework.

2.3                  The Levy Imposition Amendment Bills make amendments to raise the statutory upper limit on certain levy amounts that can be determined under their respective Levy Imposition Acts to an amount of $10 million for the financial year commencing 1 July 2020.

2.4                  The Levy Imposition Amendment Bills also make amendments to allow the indexation factor used in calculating the statutory upper limit to use the most recently published CPI figures available.

Human rights implications

2.5                  The Bills do not engage any of the applicable rights or freedoms.

Conclusion

2.6                  The Bills are compatible with human rights as they do not raise any human rights issues.