Funding Boosted for Regulators

Funding for the Australian Prudential Regulation Authority (APRA), and for related regulatory activity by the Australian Securities and Investments Commission (ASIC) and the Australian Taxation Office (ATO) will be boosted in 2004-05, Minister for Revenue and Assistant Treasurer, Senator Helen Coonan, announced today.

Senator Coonan said it was vital that Australia’s prudential regulator remained adequately resourced, with sufficient skills and expertise to perform its functions and protect the financial system.

“Increased funding will enable APRA to build up staff levels in front-line supervision and in specialist risk areas, such as insurance, credit, balance sheet, market and operational risk,” Senator Coonan said.

“The funding for these measures will be recovered from regulated institutions through the Financial Sector Levies.”

Senator Coonan today announced the revised levy rates for 2004-05, which lift total levy funding from about $85 million in 2003-04 to approximately $96 million in 2004 05.

“The largest component of this year’s increase in funding was the Government’s measures, announced in the Budget, to strengthen APRA’s supervisory capacity, particularly its ability to supervise large, complex financial institutions,” Senator Coonan said.

“As in previous years, industry was consulted on the levies for 2004-05.

“The smallest institutions, including small APRA superannuation funds, will pay the same as last year, with no changes to minimum levy amounts in any sector.”

For authorised deposit-taking institutions (ADIs), other than foreign bank branches and specialist credit card institutions, the maximum amount payable increases to $1,182,000 and the rate payable on assets remains unchanged at 0.011 per cent.

Within the ADI sector, foreign bank branches and specialist credit card institutions will continue to be levied at a rate of 0.0055 per cent up to an increased maximum levy amount of $591,000. This levy rate reflects that their supervision in Australia is less intensive than for other ADIs. In the case of foreign bank branches, it also reflects their ineligibility to accept retail deposits and the additional supervision provided by home country supervisors.

For the superannuation sector, the maximum levy amount and the levy rate increase to $99,000 and 0.042 per cent respectively, but the minimum levy amount remains unchanged at $600. These increases reflect the higher intensity of supervision anticipated over the coming period in conjunction with continuing significant restructuring in the superannuation sector.

For life insurers and friendly societies, the levy rate increases to 0.022 per cent and the maximum levy amount to $460,000 from $414,000.

The levy rate for general insurers increases to 0.034 per cent up to a new maximum levy amount of $470,000.

Retirement savings account providers and non-operating holding companies have had no change to their levy obligations.

The Government intends that the financial sector levies for the 2005 06 financial year will be determined on the basis of new arrangements outlined in the recent Review of Financial Sector Levies.