Chapter 2
The Bills
Introduction
2.1 These bills are part of the Government's reforms initiated in response
to the Wallis inquiry into the financial system. The first stage of these
reforms were incorporated in legislation introduced during 1998 and included
the creation of a single prudential regulator, the Australian Prudential
Regulation Authority (APRA), the strengthening of Australia's payments
system with the creation of a Payments System Board within the Reserve
Bank, and a refocusing of disclosure and consumer protection through the
Australian Securities and Investments Commission (ASIC).
Financial Sector (Transfers of Business) Bill 1999
2.2 The Financial Sector (Transfers of Business) Bill 1999 introduces
new powers to allow the Australian Prudential Regulation Authority to:
- approve an application for the transfer of part or all of the business
of one prudentially regulated entity to another (a voluntary transfer);
or
- to require, in limited circumstances, a prudentially regulated entity
to transfer part or all of its business to another entity (a compulsory
transfer).
1.9 These provisions provide an effective prudential regulation tool
to facilitate a quick and efficient transfer of business in the case of
financial distress, with the aim of preventing further losses, and maintaining
investor confidence in the financial services industry. [1]
Financial Sector Reform (Amendments and Transitional Provisions) Bill
1998
2.3 In his second reading speech, the Minister for Financial Services
and Regulations, the Hon Joe Hockey MP, explained that the purpose of
this bill is to provide for the transfer of regulatory responsibility
from the states and territories of Australia to the Commonwealth of building
societies, credit unions and friendly societies. The Government's view
is that this bill will allow building societies and credit unions to better
compete with banks and to operate outside their existing state and territory
boundaries.
2.4 The bill will also provide a single regulatory framework for life
insurance companies and friendly societies, while recognising the special
features of friendly societies. The amendments also strengthen regulation
for life insurance and increase the flexibility of its application.
2.5 About 20 building societies, 237 credit unions and 85 friendly societies
will be involved in the regulatory transfer. These organisations represent
1,326 branches nationally, with $38 billion in assets and 12,420 employees.
2.6 The bill also proposes to make sundry minor amendments to correct
errors that have been detected in the relevant acts and to improve consistency.
Income Tax Rates Amendment (RSAs provided by Registered Organisations)
Bill 1999
2.7 As part of the Financial Sector Reform, it is proposed to allow friendly
societies to operate retirement savings accounts (RSAs). The Financial
Sector Reform (Amendments and Transitional Provisions) Bill 1999 proposes
to amend the Income Tax Assessment Act 1936 (the Tax Act) to recognise
the RSA business of friendly societies and other registered organizations.
This Bill amends the Income Tax Rates Act 1986 (the Rates Act)
to specify the rates of tax that apply to the RSA business of registered
organizations. [2]
Further information about the bills
2.8 The above material represents only a broad summary of the Government's
intentions in the bills. More comprehensive explanations of the bills
may be found in the:
- Explanatory Memoranda;
- Second reading speech; and
- Bills Digest published by the Parliamentary Library.
Footnotes
[1] Extracted from Explanatory Memorandum
[2] Extract from Explanatory Memorandum.
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