Government Releases 2006-07 Financial Sector Levy Rates

The Minister for Revenue and Assistant Treasurer, Peter Dutton MP, today announced the financial sector levy rates for 2006-07. The 2006-07 rates have been made under the new framework for determining financial sector levies implemented by the Government in response to the recommendations of the 2003 Review of Financial Sector Levies.

The levy rates are used to calculate annual levies from the financial services sector to fund the operational costs of the Australian Prudential Regulation Authority, and certain market integrity and consumer protection functions undertaken by the Australian Securities and Investments Commission (including the Superannuation Complaints Tribunal) and the Australian Taxation Office.

This year a new levy has been introduced to recover the costs of the National Claims and Policy Database from general insurers who contribute to and make use of the database.

The new levies framework ensures the burden of funding regulation is shared in a fair and efficient way, and allows for greater flexibility in the way that levies are collected. The overall financial sector levy funding requirement for 2006-07 is expected to be $103.9 million, compared with $100.7 million for 2005-06.

“The Government implemented the full framework for authorised deposit-taking institutions [ADIs], life insurers and general insurers from 2005-06 and this means these sectors have similar levy parameters for 2006-07,” Mr Dutton said.

However, in recognition of the significant structural changes currently being experienced by the superannuation sector, the Government has decided to extend the transitional levy arrangements that applied to superannuation entities in 2005-06 for one more year in 2006-07.

“The superannuation industry is currently going through a period of substantial change,” Mr Dutton said. “We have just completed the transition to superannuation trustee licensing and the sector is concentrating on bedding down these arrangements and responding to the reforms announced by the Government in the Budget. An extension of the transitional arrangements is appropriate in these circumstances.”

Mr Dutton also noted that improvements in operational risk management in the superannuation sector resulting from the licensing reforms, industry consolidation and the emergence of larger, more complex entities has longer term implications for how superannuation might be regulated into the future.

“The Government is taking a forward-looking approach and is committed to working with both the regulator and the superannuation industry on these issues. APRA and the Treasury will soon be releasing a discussion paper canvassing the issues and seeking industry views,” Mr Dutton said.

An overview of the 2006-07 levy rates for ADIs, general insurance, life insurance and superannuation is provided at Attachment A.

Media Contact: Brad Emery 02 6277 7360 – 0414 225 638

Attachment A