Coronavirus (COVID-19) updates from the Australian Government

Part 2: Report on performance (continued)


Program 1.1: Department of the Treasury (continued)

Markets Group


A focus for the Treasury in 2012-13 was on ensuring the financial system remains robust and dynamic and that regulatory frameworks promoted macroeconomic stability and market confidence.

The Treasury implemented measures designed to empower and protect financial consumers through the development of MySuper, and enhanced the availability and quality of financial advice. The Treasury continued to monitor and provide advice on the prudential framework applying to financial markets, including the banking sector, insurers, superannuation funds and capital markets.

During 2012-13, the Treasury continued to pursue sound regulatory and structural reforms to foster well-functioning markets in infrastructure, energy and housing markets. Treasury’s work in supporting the COAG competition and regulatory reform agenda contributed to this goal, particularly ongoing work to support and maintain the national law for consumer protection; contributing to the development of energy market reforms for COAG; and hosting a symposium on Standard Business Reporting (SBR) to help foster greater awareness of the SBR’s potential to drive productivity.

The Treasury participated actively in international forums, such as the G20 and Financial Stability Board (FSB), to enhance the regional and global financial system. In addition, the Treasury provided advice on foreign investment and trade policy, and continued to participate in free trade agreement negotiations. Treasury also played an active role in promoting regional financial engagement by organising the Asia-Pacific Financial Market Development Symposium and progressing work to establish an Asia Region Funds Passport.

During 2012-13, the Treasury continued to promote the stable and efficient provision of financial market infrastructure, particularly through emphasising the role of competition. Treasury also provided policy advice regarding the improved operation of Australia’s financial reporting, corporate governance and corporate insolvency regimes, and progressed specific reforms in relation to director liability, the reporting of executive remuneration, audit, and reform of the regulation of corporate insolvency.

Group deliverables

Markets Group’s key deliverables are to provide advice on:

  • measures to promote competition, market confidence, macroeconomic stability, and the efficient flow of funds between entities — including providing advice on the prudential frameworks applying to banking, insurance superannuation and capital markets;
  • financial services reform addressing emerging issues in investor protection, including systemic reforms to financial advice and consumer credit;
  • reform of corporate regulation, including addressing issues in executive remuneration, corporate governance, financial reporting, auditing, and corporate insolvency;
  • COAG’s competition and regulatory reform agenda, including the maintenance of a national law for consumer protection, national consumer credit law, cross-jurisdictional reform of personal criminal liability for corporate fault, and the reduction of red tape;
  • the administration and management of the forward work program of the Productivity Commission;
  • managing incoming foreign investment to ensure that the national interest is protected, and the free flow of investment is encouraged;
  • promoting well-functioning infrastructure markets with appropriate regulatory intervention for road, rail and port, communications, energy and housing, and developing possible approaches to funding and financing major infrastructure projects;
  • the oversight and administration of Treasury portfolio regulators, including the Australian Competition and Consumer Commission (ACCC), the Australian Securities and Investments Commission (ASIC), and the Australian Prudential Regulatory Authority (APRA);
  • initiatives to position Australia as a leading financial services centre in the Asia-Pacific region arising from the Government’s response to the Australian Financial Centre Forum’s report, Australia as a Financial Centre: building on our strengths;
  • how to best influence and implement international financial system regulation, such as that formulated by the G20, FSB and other international standard setting bodies, including in areas like banking, corporate governance, financial reporting, auditing and corporate insolvency;
  • representation of Australia’s interest on investment, financial services, competition and consumer issues in negotiating free trade agreements and, in relation to investment and competition, in multilateral forums like the OECD and APEC; and
  • actuarial matters through the Australian Government Actuary, which provides actuarial services to the Government, the Treasury and other agencies.

Group outcomes

Markets Group’s key outcomes for 2012-13 were:

  • implementing the MySuper and governance aspects of the Government’s Stronger Super initiatives to improve retirement benefits, including by requiring improved disclosure of superannuation fund costs and fees;
  • implementing regulations supporting the Future of Financial Advice initiatives that became mandatory on 1 July 2013 and which are intended to improve the quality of financial advice provided to Australians;
  • implementing and monitoring reforms to foster competition and stability in the banking sector including the new ‘tick and flick’ deposit account switching service that came into effect on 1 July 2012 and the provision of free transaction facilities at ATMs in selected very remote indigenous communities;
  • implementing the National Insurance Affordability Initiative and Council to reduce flood risk and reduce insurance premiums;
  • implementing the Insurance Contracts Amendment Act 2012 including establishing a standard definition of ‘flood’ and developing a fact sheet for home building and home and contents insurance policies, securing passage of the Insurance Contracts Amendment Act 2013 and introducing reforms into Parliament governing unfair terms in insurance contracts;
  • progressing the Government’s initiative to position Australia as a leading financial services centre in the Asia-Pacific region, including work to develop an Asia Region Funds Passport;
  • hosting a symposium on Asia-Pacific Financial Market Development in April 2013 which brought together regulators, officials and private sector leaders from across the region;
  • providing advice to Government on financial regulation reforms and representing Australia at key international forums, including sub-committees of the Financial Stability Board;
  • working closely with the IMF on its financial stability assessment of Australia in 2012 and providing advice to Government on the IMF’s recommendations;
  • continuing to work on refining Australia’s arrangements for crisis management and resolution of financial institutions, including in conjunction with the Australian Council of Financial Regulators and New Zealand’s financial regulators;
  • achieving closer economic integration with New Zealand through the adoption of the Protocol on Investment to the Australia-New Zealand Closer Economic Relations Trade Agreement which came into force on 1 March 2013;
  • facilitating the implementation for banks, superannuation, and companies of COAG Housing Supply and Affordability Reform recommendations, which were developed to improve housing supply in Australia;
  • leading reforms of the COAG Business Regulation and Competition Working Group to progress reforms in some of the 27 areas where duplicate and/or inconsistent regulation across jurisdictions imposes an unnecessary burden on business;
  • providing advice on competition policy,
    as well as supporting links with economies in the region to encourage the development of sound competition regulatory regimes;
  • maintaining and enhancing a national consumer law through engagement with the ACCC, and States and Territories to support consistency in consumer protection, product safety regulation, and cooperative enforcement;
  • delivering the Energy Security Council program, including liaising with potential applicants for assistance and between energy market institutions;
  • developing legislation to amend the National Consumer Credit Protection Act 2009 to give consumers better and more efficient outcomes when they use small amount credit contracts, consumer leases, and reverse mortgages;
  • providing advice on the Parliamentary Joint Committee (PJC) on Corporations and Financial Services report Inquiry into the Collapse of Trio Capital, and developing the Government’s response to the recommendations in Mr Richard St. John’s report, Compensation Arrangements for Consumers of Financial Services;
  • progressing reforms to remove unnecessary regulatory burdens on directors and corporate officers, and minimise inconsistency between Australian jurisdictions in the application of personal criminal liability for corporate fault. The Personal Liability for Corporate Fault Reform Act 2012 was enacted in December 2012 to implement Commonwealth reforms to this effect;
  • progressing reforms to the framework for corporate and personal insolvency regulation to promote practitioner professionalism and competency, as well as increased efficiency in insolvency administration. A draft Bill, the Insolvency Law Reform Bill 2012, was released for public consultation on 19 December 2012;
  • providing advice, in consultation with the Foreign Investment Review Board, on significant foreign investment cases;
  • contributing to free trade agreement negotiations with Australia’s key trading partners;
  • leading the inter-agency working group established by the Government on 15 June 2012 to canvass the issues and consult with the community on developing a national foreign ownership register for agricultural land;
  • implementing G20 commitments related to over-the-counter (OTC) derivatives by passing legislative framework that allows for flexible implementation of obligations (in coordination with other jurisdictions) and enabling the introduction of a new trade reporting regime for OTC derivatives;
  • enabling the introduction of retail trading in Commonwealth Government Securities, with the passage of the Commonwealth Government Securities Legislation Amendment (Retail Trading) Act 2012;
  • working with other Council of Financial Regulators agencies to complete the review of competition in clearing cash equities, leading to the establishment by ASX of its Code of Practice for Clearing and Settlement of Cash Equities in Australia;
  • completion, in conjunction with ASIC, of its review of cost recovery arrangements related to the supervision of financial markets;
  • facilitating the transition of business names registration from State and Territory-based registers to a single national register operated by ASIC. Additional funding, offset by a small increase in business name registration fees, was provided to ASIC in the 2013-14 Budget to alleviate congestion in ASIC’s Client Contact Centre caused by larger-than-expected volumes of inquiries relating to the national register;
  • reviewing the current stock of legislation and regulatory instruments overseen by Markets Group for the purposes of the sun-setting regime that applies under the Legislative Instruments Act 2003, including considering the need to continue, remake or exempt instruments;
  • leading the ongoing governance of SBR through to April 2013, at which point the SBR Program Office moved from the Treasury to the Australian Business Registrar, which is housed in the Australian Taxation Office; and
  • continuing to provide advice relating to the currency system and maintaining successful operations of the Australian Government Actuary.

Analysis of performance


Following extensive consultation with stakeholders, on 21 September 2011, the Government announced the details of its Stronger Super reforms, which were in response to the review into the governance, efficiency, structure and operation of Australia’s superannuation system (Super System Review). The Stronger Super reforms include:

  • creating a new simple, low-cost default superannuation product called MySuper;
  • introducing new duties for trustees and trustee directors managing the superannuation system, particularly for those managing default superannuation funds in which the majority of Australians invest;
  • providing APRA, ASIC and the ATO with the tools they need to improve their oversight of superannuation; and
  • making the process of everyday transactions easier, cheaper and faster through the Government’s SuperStream reforms.

The Treasury provided advice to the Government in developing legislation to implement the reforms. During 2012-13, four tranches of legislation implementing the Government’s MySuper and governance reforms received Royal Assent.

  • The Superannuation Legislation Amendment (MySuper Core Provisions) Act 2012 received Royal Assent on 8 September 2012. The Superannuation Legislation Amendment (Trustee Obligations and Prudential Standards) Act 2012 received Royal Assent on 3 December 2012. The Superannuation Legislation Amendment (Further MySuper and Transparency Measures) Act 2012 received Royal Assent on 3 December 2012. The Superannuation Legislation Amendment (Service Providers and Other Governance Measures) Act 2013 received Royal Assent on 26 June 2013.

Two tranches of regulations to support the MySuper and governance reforms were made in 2012-13:

  • the Superannuation Legislation Amendment Regulation 2013 (No. 1) was made on 1 March 2013; and
  • the Superannuation Legislation Amendment (MySuper Measures) Regulation 2013 was made on 28 June 2013.

In consultation with the Department of Education, Employment and Workplace Relations, the Treasury provided advice on the development of a new system for assessing and selecting default superannuation funds in modern awards. The relevant amendments to the Fair Work Act 2009 were included in the Superannuation Laws Amendment (MySuper Capital Gains Tax Relief and Other Measures) Act 2013, which received Royal Assent on 28 June 2013.

On 16 May 2012, the Parliamentary Joint Committee (PJC) on Corporations and Financial Services released its report, Inquiry into the Collapse of Trio Capital. The Treasury, in conjunction with the regulators (APRA, ASIC and the ATO), provided advice on the Government’s response to the PJC report, which was released on 26 April 2013. The Treasury continues to work with the regulators to further strengthen the regulatory framework.

The Treasury provided advice on two applications for compensation to members of APRA regulated superannuation funds under Part 23 of the Superannuation Industry (Supervision) Act 1993 and formulated regulations for collecting the industry levy to fund the compensation.

The Superannuation (Financial Assistance Funding) Levy and Collection Amendment Regulation 2013 (No. 1) was registered on 18 March 2013.

Infrastructure policy

The Treasury provided advice on the Government’s investment in infrastructure projects announced in the 2012-13 Budget, including a number of nationally significant projects identified by Infrastructure Australia as priorities for Australia.

The Secretary to the Treasury is a member of the Infrastructure Australia Council, the Government’s key advisory body on nationally si
gnificant infrastructure. The Treasury is also engaged in the activities of the COAG Infrastructure Working Group, including the Private-Public Partnership Subgroup.

During the year, the Treasury continued its work on ways to encourage greater private sector investment in infrastructure. The Treasury was provided funding in the 2013-14 Budget to establish an advisory function that will provide advice to the Government on the financial risks and implications of funding agreements for certain infrastructure projects, utilising specialist financial, legal and probity expertise from the private and public sectors.

The Treasury continued to work with the Department of Infrastructure and Transport and State governments to progress COAG’s Heavy Vehicle Charging and Investment reforms.

The Treasury provided advice on the interaction of the Government’s climate change policies and the Australian energy market, including the implementation of the Energy Security Council and secretariat support to the Council. The Treasury was actively engaged in the work of the Senior Committee of Officials of the Standing Council on Energy and Resources, which provides advice on ongoing energy market reforms.

The Treasury continued to work with the Department of Broadband, Communications and the Digital Economy, the Australian Competition and Consumer Commission and other central agencies on implementing the Government’s National Broadband Network policy, and providing advice on reform in the national telecommunications market.

The Treasury also continued to work with the Department of Broadband, Communications and the Digital Economy on ensuring that the radio frequency spectrum is efficiently allocated.

The Treasury led key activities of the COAG Housing Supply and Affordability Reform (HSAR) Working Party, which is responsible for reporting to COAG through the Ministerial Council for Federal Financial Relations on issues like planning and zoning, infrastructure charges and an audit of under-utilised land. COAG endorsed the HSAR report during 2012-13 and it was released on the COAG website in August 2012.

The Treasury advised the Government on housing supply policy and provided strategic analysis of broader housing matters.

Competition policy

The Treasury provides advice on competition policy issues as they arise, including on competition laws in Part IV of the Competition and Consumer Act 2010. In 2012-13, this included considering competition issues and small business concerns in concentrated markets.

The Treasury contributed to COAG’s competition and regulatory reform agenda, including by participating in the inter-jurisdictional Taskforce, which was set up to advise COAG following the Prime Minister’s Business Advisory Forum (BAF) meeting in April 2012. Following the BAF, COAG committed to pursuing a range of reforms to lower costs for business and improve productivity, such as energy market reform and reforms to lift regulatory performance and reduce red tape.

These reforms build on the National Partnership Agreement to Deliver a Seamless National Economy, which ended on 31 December 2012. The Treasury provided advice on progressing reforms in some of the 27 areas where duplicate and inconsistent regulation across jurisdictions unnecessarily burdens business. 

The Treasury coordinates the Productivity Commission’s work program and advises departments and the Government on preparing terms of reference for reviews. In 2012-13, the Productivity Commission commenced five public inquiries and three commissioned studies. In 2012-13, the PC also completed four public inquiries and two commissioned research studies.

The Treasury also represents Australia at international forums on competition policy, and is a member of the OECD Competition Committee. The Treasury is also a member of the APEC Economic Committee and coordinates the competition policy work stream.

Consumer policy

In 2012-13, the Treasury provided advice to the Government on Australia’s consumer policy framework, including ongoing work to support and maintain the Australian Consumer Law (ACL). The ACL includes provisions about unfair practices and fair trading, unfair contract terms, consumer guarantees and product safety. Specific amendments in 2012-13 included exempting restaurant and café menu surcharges from the component pricing laws; clarifying lay-by sales rules; and enhancing the tobacco information standard.

The Treasury worked with both national and State and Territory consumer agencies during 2012-13 to maintain the policy and enforcement framework for the ACL. The Treasury played an active role in considering the role of the consumer policy framework in regulating food labelling claims, examining the provision of price information to consumers on fuel price boards and preparing guidelines to assist jurisdictions to ensure laws remain consistent with the ACL.

The Treasury provided secretariat support to the COAG Legislative and Governance Forum on Consumer Affairs, as well as Consumer Affairs Australia and New Zealand (including its advisory committees). The Treasury also provided secretariat support to the Commonwealth Consumer Affairs Advisory Council, which, in 2012-13, gave independent advice to the Assistant Treasurer on a range of consumer-related issues, such as app purchases on mobile and hand-held devices, as well as sharing repair information in the automotive industry.

In 2012-13, the Treasury continued to represent Australia in international forums on consumer policy, including as a member of the OECD Committee on Consumer Policy.

National regulation of credit

The Consumer Credit Legislation Amendment (Enhancements) Act 2012 passed the Senate in August 2012. It introduced specific protections for seniors in relation to reverse mortgages, a national cap on costs (to replace inconsistent State and Territory caps), changes to make it more straightforward for consumers to obtain a variation of their repayments when they experience financial hardship, and reforms to address the current regulatory arbitrage between consumer leases and credit contracts.

The reforms were developed through consultations with stakeholders, principally through a Working Group with representation from major industry bodies, the Law Council, external dispute resolution schemes, consumer groups and the Law Council of Australia.

These reforms supplement previous legislation introduced as part of the National Credit Reforms, following the 2008 COAG decision to transfer responsibility for consumer credit regulation to the Australian Government. The first phase of these reforms was implemented by the National Consumer Credit Protection Act 2009 (Credit Act). This statute replaced the State and Territory-administered Uniform Consumer Credit Code with a nationally consistent consumer credit framework; introduced a national credit licensing system with both entry standards and ongoing conduct requirements for all persons engaging in credit activities; and required lenders, as well as those intermediaries who provide credit assistance, to meet responsible lending obligations, which include assessing the capacity of borrowers to make the proposed repayments.

Phase two of the National Credit Reforms requires consideration of the need to regulate investment lending and fringe financial products, and to also address avoidance of the Credit Act. The Commonwealth is continuing to negotiate with the states in relation to a possible referral of legislative power to comprehensively support any reforms.

Financial system reform

A specific focus during 2012-13 was the provision of policy analysis and advice to deepen the supply potential of the economy after the global financial crisis and the global recession. These policies focused on ensuring the financial system remained robust and dynamic, and the regulatory framework promo
ted macroeconomic stability and market confidence.

Treasury officials continued to participate in the work of the G20, contributing to the development of global reforms to financial regulation. Treasury provided advice on implementation of strengthened standards for capital and liquidity and is implementing the Australian Government’s G20 over-the-counter derivatives market commitments.

The Treasury contributed to the work of other international bodies to foster international cooperation in financial system regulation, corporate governance, financial reporting, auditing and corporate insolvency.

Regulation of particular market sectors addressed in those forums included hedge funds, credit rating agencies and over-the-counter derivatives.

Domestically, the Treasury progressed further initiatives to address regulatory concerns emerging from the crisis.

Financial sector crisis management

The Treasury released the Strengthening APRA’s Crisis Management Powers consultation paper in September 2012 for a three-month consultation period. The proposals outlined in the paper will more closely align APRA’s powers with the Financial Stability Board’s Key Attributes of Effective Crisis Resolution Regimes.

Treasury worked with Australia’s financial regulators to ensure the adequacy of our arrangements for crisis management and resolution, including assessing their consistency with new and emerging international standards. The Treasury continued to work with the Council of Financial Regulators and liaise with other government agencies to monitor developments in the global and domestic financial markets and to provide policy advice. As part of this work, Australian authorities engaged with their New Zealand counterparts under the framework of the Trans-Tasman Council on Banking Supervision.

The department continued to monitor developments in overseas and domestic financial markets to inform policy considerations across the financial system.

IMF Financial Stability Assessment Program Report

The IMF conducted its Financial Stability Assessment Program (FSAP) review of Australia in 2012. The FSAP provides a comprehensive and in-depth analysis of a country’s financial sector. It is a key instrument of the IMF’s surveillance and provides a valuable opportunity to obtain an independent analysis of the health of a country’s financial sector and the robustness of its regulatory framework and supervisory approach. The IMF’s FSAP Report, delivered in October 2012, found Australia’s financial system is sound, resilient and well-managed, and that the Australian financial regulatory and supervisory framework exhibits a high degree of compliance with international standards.

The Treasury and the other CFR agencies worked closely with the IMF review team that developed the FSAP report. The Treasury also provided advice on the IMF’s recommendations to enhance Australia’s financial regulatory framework.

Unclaimed moneys

Treasury advised the Government on the implementation of changes, announced in October 2012, to the treatment of unclaimed money in relation to unclaimed bank accounts. This included developing legislation and regulations in consultation with industry on special rules for certain types of accounts, such as term deposits, children’s accounts, security and escrow accounts, and reactivated accounts. New regulations were also introduced that make it possible for account holders to inform their banks that they do not want their accounts to become unclaimed, without having to make a transaction.

Banking competition reforms

The Treasury continued to work on implementing reforms to foster competition and stability in the banking sector. In 2012-13, the following measures were implemented:

  • the commencement of an initiative by the banking industry and two major independent automatic teller machine (ATM) companies to voluntarily provide free transactions at ATMs in selected very remote Indigenous communities. The initiative has provided fee-free ATMs at up to 85 sites since 1 December 2012, alongside a Government information and education campaign; and
  • the Government’s new ‘tick and flick’ deposit account switching service came into effect on 1 July 2012, making it easier for consumers to move their deposit accounts between financial institutions.
National Insurance Affordability Initiative and Insurance Contract Reforms

Treasury has advised on the implementation of the National Insurance Affordability Initiative, which will invest $100 million in targeted flood and other natural disaster mitigation measures and create a National Insurance Affordability Council (NIAC). The Initiative complements existing flood risk management strategies by ensuring that Government action is informed by the needs of the insurance industry, and has the effect of reducing insurance premiums.

Securitisation market

Treasury provided advice on developments in the domestic securitisation market. In 2008, the Government agreed to provide temporary support to the securitisation market during a period of severe dislocation. The Government provided assistance by investing in the highly rated securitisation issuances of smaller lenders. This supported competition in the banking sector while also preserving securitisation market infrastructure. The market recovered substantially in 2012-13 and on 9 April 2013 the Government ceased new investment in the securitisation market. The Government continues to manage the existing portfolio of securitisation investments and is adjusting its holdings consistent with supporting the market’s ongoing sustainability.

Financial industry supervisory levies

During 2012-13, the Treasury, in conjunction with APRA, consulted with industry and provided advice to the Government on the determination of financial industry supervisory levies that support the operations of APRA and other agencies.

In addition, the Treasury, in conjunction with APRA, commenced a four-yearly review in 2013 of the parameters and methodology underpinning financial industry supervisory levies. To support consultation on the methodology, Treasury released a discussion paper in April 2013 and received feedback from key industry groups and entities. It intends to consult further with key stakeholders and APRA before releasing a response paper in late 2013. The findings of the methodology review will inform the Treasury’s advice in the 2014-15 levies process.

Financial market infrastructure

In April 2011, the Deputy Prime Minister and Treasurer made an order under the Foreign Acquisitions and Takeovers Act 1975 prohibiting the acquisition of ASX by Singapore Exchange Limited (SGX). In the context of this decision, the Deputy Prime Minister and Treasurer sought advice from the CFR on how to ensure that appropriate resolution and recovery arrangements were in place for financial market infrastructure and that regulatory influence and control were preserved in an increasingly internationalised environment.

The CFR responded to that request by advising the Government on potential measures to ensure Australia’s regulatory system for financial market infrastructure continues to protect the interests of Australian issuers, investors and market participants, including under a scenario where the ASX is part of a foreign-domiciled group. The working group is also progressing reforms that ensure appropriate crisis management arrangements are in place to systemically import financial market infrastructure.

G20 commitments on over-the-counter derivatives

Treasury developed policy advice during 2012-13 in conjunction with APRA, ASIC and the RBA, and consulted on mandatory reporting of OTC derivatives trades to trade repositories. May 2013, the Minister made a determination that ena
bled ASIC to make rules, and subsequently approved initial rules in June.

Treasury also engaged in international efforts to address conflicting and inconsistent implementation of these commitments across jurisdictions.  This work is designed to minimise duplicative regulatory burdens by ensuring that Australian businesses can continue to participate in international markets while remaining primarily regulated in Australia; and that Australia does its part to maintain a consistent global framework and remove opportunities for regulatory arbitrage.

Market supervision and competition cost-recovery

New market supervision and competition cost-recovery arrangements commenced on 1 July 2013. The arrangements provide a mechanism for the Australian Government to recover the funding it has provided to ASIC to meet its additional costs for undertaking its new regulatory functions following the transfer of market supervision (on 1 August 2010), the introduction of market competition (in equity securities, in October 2011), and enhancements to market supervision announced in the 2012-13 Budget.

The new cost-recovery regime was developed by Treasury and ASIC in consultation with industry, and complies with the Australian Government cost-recovery guidelines.

Competition in the clearing of Australian Cash Equity Market

In the course of the review of financial market infrastructure regulation, a question arose about competition in clearing and settlement. Treasury, together with other Council agencies, subsequently invited the ACCC to form a working group to further develop analysis of the competition aspects of clearing and settlement.

In December 2012, the working group finalised a conclusions paper that made recommendations to Government on how to approach competition in clearing and settling the Australian cash equity market.

In February 2013, the Government accepted the CFR recommendations, which included a deferral of consideration of competition for two years; adoption of a Code of Practice to address stakeholder concerns in relation to the status quo; and a review of the Code’s effectiveness following the deferment period.

Following the ASX’s commitment to implement the recommendations, the Treasury — together with the other CFR agencies (the RBA, APRA and ASIC) — provided guidance to ASX in developing its Code of Practice for Clearing and Settlement of Cash Equities in Australia to ensure that the code was consistent with the principles and developed in consultation with industry. The ASX released the final code on 18 July, with a start date of 9 August 2013.

Australian Government Bonds and Retail Corporate Bonds

Facilitating trading of Australian Government Bonds (AGB) on retail financial markets forms part of the banking package announced by the Government in December 2010. One of the objectives of that package is to secure the long-term safety and sustainability of the Australian financial system by reducing reliance on off-shore wholesale funding markets. To that end, the Government has committed to fostering a deep and liquid corporate bond market. Introducing trading of AGB on retail financial markets will provide retail investors with a visible pricing benchmark for investments in corporate bonds.

The Treasury coordinated the implementation of the arrangements required to facilitate the trading of AGB on retail financial markets. The Commonwealth Government Securities Legislation Amendment (Retail Trading) Act 2012 was passed in November 2012 and trading in retail AGB commenced on 21 May 2013.

In 2012-13, the Treasury continued retail corporate bond reforms, which will cut red tape for businesses issuing simple corporate bonds, thereby making it easier to buy and sell such products. The reforms focus on streamlining disclosure, refining director liabilities and establishing a framework for parallel trading.

The Corporations Amendment (Simple Corporate Bonds and Other Measures) Bill 2013 was introduced into Parliament on 20 March 2013. The Treasury has commenced work on developing supporting regulation.

Financial services reforms
Financial advice reform

In June 2012, Parliament passed the Future of Financial Advice (FoFA) reforms, which focused on improving the quality of advice and enhancing retail investor protection. In particular, the FoFA initiatives introduced an obligation for financial advisers to act in the best interests of their clients; banned financial advisers from receiving conflicted remuneration; and established an adviser charging regime for ongoing fees.

In 2012-13, the Treasury developed regulations to support the measures passed by Parliament. Among other things, these regulations:

  • introduced grandfathering arrangements for the ban on conflicted remuneration;
  • made it easier for professionals wanting to provide financial advice to clients without a specific product recommendation to obtain a licence;
  • clarified the operation of the simplified best interests duty for basic banking and general insurance products;
  • exempted limited forms of superannuation advice fees from the adviser charging regime and clarified the operation of the product fee exemption; and
  • provided exemptions from the ban on conflicted remuneration for additional stockbroker-related activities.

The FoFA package became mandatory on 1 July 2013; parts of the ban on conflicted remuneration will, however, apply only to new clients after 1 July 2014. The Treasury will continue to monitor the impact of the initiative in 2013-14 to assess if any further changes are needed.

Statutory Compensation Scheme Review

As part of the FoFA package, Mr Richard St. John was commissioned to undertake a review of the cost and benefits of a statutory compensation scheme for financial services. In May 2012, Mr St. John provided his report, Compensation Arrangements for Consumers of Financial Services, to Government. During 2012-13, the Treasury worked on developing a Government response to the recommendations in this report. On 26 April 2013, the Government released its response, accepting the vast majority of the report’s recommendations, including:

  • legislative changes to strengthen the professional indemnity insurance requirements of providers of financial services that deal with retail consumers;
  • changes to improve the communication of risks to investors and to ensure the adequacy of regulatory processes; and
  • consultation papers by the Treasury on powers to support ASIC in its enforcement role and to improve the governance arrangements of managed investment schemes.

During 2013-14, the Treasury will work on implementing these recommendations.

Insurance contract reforms

On 28 June 2013, the Insurance Contracts Amendment Act 2013 (the Act) received Royal Assent. The Act gives effect to a number of recommendations made by Mr Alan Cameron AM and Ms Nancy Milne in their 2004 review of the operation of the Insurance Contracts Act 1984 (ICA).

The Act facilitates beneficial outcomes for insurers and those insured by modernising and streamlining the operation of the ICA. In particular, the Act enables insurers to communicate with consumers via electronic means. The ability to communicate with consumers through electronic means allows insurers to provide consumers with key documents in a way that is more in keeping with the way consumers currently access information.

Australia as a Financial Centre

In September 2008, the Government commissioned a panel of experts — the Australian Financial Centre Forum — to identify the key priority areas that would position Australia as a leading financial centre in the Asia-Pacific region.The Forum’s report, Australia as a Financial Centre: building on our strengths, was released in January 2010. The Gover
nment has supported all 19 recommendations. These included recommendations on the taxation of financial services, commissioning a Board of Taxation review of Islamic financial products and collective investment vehicles, and the development of an Asia Region Funds Passport.

The Asia Region Funds Passport is being led by the Treasury and progressed under the auspices of APEC. Considerable progress was made in the first half of 2013 to develop the proposed arrangements, including at a policy and technical workshop held in Taipei in June 2013 attended by officials from 12 APEC economies.

Financial sector trends and structures

The Treasury continues to advise the Government on emerging market trends and structures by assessing market developments and new products, monitoring trends affecting competition and efficiency in the financial sector, and considering potential developments that may affect the effectiveness of existing policy settings. In addition, the Treasury has advised the Government on developments in banking; the affordability and availability of insurance; and the operation, structure and cost of the superannuation system.

Corporations regulation reforms
Executive remuneration

Treasury developed legislative reforms to implement the Government’s decision to further strengthen Australia’s executive remuneration framework. Several of the proposed reforms address recommendations made by the Corporations and Markets Advisory Committee in its 2011 report on executive remuneration, and include proposals to relieve certain unlisted entities from the obligation to prepare a remuneration report and relieve public companies from the obligation to appoint auditors if audits are not required. Draft legislation was released in December 2012 for public comment. Regulations were also developed to ensure continued reporting of related party transactions following changes to relevant accounting standards.

Director liability

Reforms have been developed to remove unjustified or excessive regulatory burdens on directors and corporate officers, and to enhance consistency between Australian jurisdictions in applying personal criminal liability for corporate fault. These reforms aim to reduce the risk that directors will be prosecuted for misconduct in situations where they could not reasonably be expected to prevent the misconduct. The reforms form part of the Commonwealth’s obligations under the COAG Seamless National Economy National Partnership to implement a coordinated national approach to director liability. The Personal Liability for Corporate Fault Reform Act 2012 was enacted in December 2012 to implement Commonwealth reforms to this effect. The majority of the States and Territories have also enacted similar legislation.

Insolvency regulation

On 19 December 2012, the Parliamentary Secretary to the Treasurer and the former Attorney-General jointly released the draft Insolvency Law Reform Bill 2012 for public comment. The draft Bill set out a framework for corporate and personal insolvency regulation that promotes a high level of practitioner professionalism and competence, enhances transparency and communication between insolvency practitioners and stakeholders, and promotes increased efficiency in insolvency administration.

Dividends test

The Parliamentary Secretary to the Treasurer released draft legislation in December 2012 outlining amendments to the test for payment of dividends (dividends test). The Government is currently considering issues raised in the submissions received in response to the draft legislation.

Individual foreign investment proposals: advice and processing

Foreign investment proposals that fall within the scope of Australia’s foreign investment policy or the Foreign Acquisitions and Takeovers Act 1975 (the Act) are examined to determine whether they are contrary to Australia’s national interest.

Foreign persons are required to notify the Treasurer when entering into an agreement to acquire an interest in certain types of Australian real estate or a substantial interest1 in an Australian business or corporation valued above $248 million.2 All foreign government investors must notify and get prior approval before making a direct investment in Australia, starting a new business or acquiring any interest in land, regardless of the value of the investment.

During 2012-13, the Foreign Investment Review Board (a non-statutory body that advises the Treasurer on foreign investment matters) provided advice to the Treasurer on major proposals. The General Manager of the Foreign Investment and Trade Policy Division is the Executive Member of the Foreign Investment Review Board.

Additional information on Australia’s foreign investment screening arrangements, including statistics on foreign investment, is provided on the Foreign Investment Review Board’s website at

Advice on investment and trade policy

The Treasury provides advice to the Government on general foreign investment and trade policy matters. The Treasury also provides advice on Australia’s participation in multilateral, regional and bilateral investment and trade agreements.

Representation in international forums and trade negotiations

The Treasury provides policy input on international investment issues in multilateral forums such as the World Trade Organization and the OECD, in regional forums such as APEC, and bilaterally through free trade agreements, Investment Promotion and Protection Agreements, and other bilateral partnerships. The Treasury is involved in negotiating investment, financial services and competition-related provisions in free trade agreements.

On 1 March 2013, the Protocol on Investment to the Australia-New Zealand Closer Economic Relations Trade Agreement came into force. The Treasury was responsible for implementing the Protocol.

OECD Investment Committee

Australia is represented at OECD Investment Committee meetings by a senior Treasury official. The committee enhances the contribution of international investment to growth and sustainable development worldwide, by advancing investment policy reform and international cooperation.

The committee also oversees the operation of the OECD Guidelines for Multinational Enterprises, a voluntary code providing recommendations for responsible business conduct. As a member of the OECD, the Australian Government promotes and implements the guidelines. This responsibility rests with the Treasury and is performed by the Australian National Contact Point (ANCP), a role filled by the General Manager of the Foreign Investment and Trade Policy Division.

In 2012-13, the Australian National Contact Point received one specific instance complaint under the guidelines. This complaint concerned the operation of an Australian mining company in the Eastern Cape region of South Africa. The ANCP was not able to accept the matter as a specific instance complaint under the guidelines. Additional information is provided on the ANCP website at


The Treasury is a member of the Investment Experts Group and the APEC Economic Committee and coordinates the competition policy work stream.

International liaison
Asia Region Funds Passport

The sixth and seventh Asia Region Funds Passport Policy and Technical Workshops were held in Hanoi in December 2012 and Taipei in June 2013, respectively. The workshops were co-organised by Treasury and the Department of Foreign Affairs and Trade, and were attended by representatives of 12 APEC economies. The sixth workshop was also attended
by representatives of the Shanghai Financial Services Office. The workshops developed further the framework for, and governance of, an Asia Region Funds Passport.

Asia-Pacific Financial Market Development Symposium

Australia hosted a symposium on Asia-Pacific Financial Market Development in April 2013, which was co-organised by Treasury and the APEC Business Advisory Council (ABAC). Regulators, government officials and industry representatives from over 15 countries met in Sydney to explore ABAC’s proposal to establish an Asia Pacific Financial Forum (APFF) to promote regional financial market integration. ABAC will draw on these discussions to present a refined proposal to APEC finance ministers in September 2013.

G20/Financial Stability Board

The Treasury has provided the Australian representatives to various Financial Stability Board (FSB) committees, including the Standing Committee on Standards Implementation (SCSI) and the Standing Committee for Supervisory and Regulatory Cooperation (SRC). The SCSI monitors the implementation of international financial regulations standards agreed by the G20 and FSB and undertakes peer reviews of individual FSB countries and on key priorities issues. The SRC aims to address key financial stability issues relating to the development of supervisory and regulatory policy and assist in enhancing cross-border cooperation between national supervisors.

OECD Insurance and Private Pensions Committee

The Treasury provided an Australian representative to the OECD Insurance and Private Pensions Committee, which also includes the Working Party on Private Pensions and the Working Party of Governmental Experts on Insurance. In 2012-13, the committee focused on emerging issues of relevance to insurance sectors and private pension funds across member countries. These included issues around long-term investment by institutional investors’ retirement savings adequacy, disaster risk and insurance financing, and annuities markets.

International Financial Reporting Standards regional policy forum

The seventh International Financial Reporting Standards regional policy forum, which was held in Hong Kong in June 2013, was attended by many jurisdictions from the Asia-Oceania region. Australia participated in the forum through representatives from the Treasury, the Financial Reporting Council, the accounting standard setters, professional accounting bodies and business representatives. The theme of the forum was ‘A Journey to Better Financial Reporting’.

Trans-Tasman coordination to develop a Single Economic Market

In August 2009, the Australian and New Zealand Prime Ministers agreed to principles and a range of shared short and medium-term practical outcomes in business law for developing the Single Economic Market. The range of shared outcomes include insolvency law, financial reporting policy, financial services policy, competition policy, business reporting, corporations law, personal property securities law, intellectual property law and consumer policy.

A Trans-Tasman Outcomes Implementation Group comprising senior officials from the Australian and New Zealand Governments has been tasked with overseeing and, wherever possible, accelerating the progress of the reform agenda. The Treasury and the New Zealand Ministry of Economic Development co-chair the group.

Australia New Zealand Therapeutic Products Agency (ANZTPA)

In 2003, the Australian and New Zealand Governments signed an agreement to establish a joint regulatory scheme for therapeutic products, which will regulate medicines (including complementary medicines) and medical devices. The objective is to safeguard public health and safety while encouraging economic integration and benefitting industry in both countries.

In 2012-13 Parliamentary Secretary to the Treasurer was a member of the ANZTPA Implementation Ministerial Council and the Treasury is a member of a Trans-Tasman Senior Officials Group (TTSOG), which supports the Ministerial Council.

Trans-Tasman Accounting and Auditing Standards Advisory Group

The Trans-Tasman Accounting and Auditing Standards Advisory Group (TTAASAG) comprises representatives from accounting and auditing standard setters, professional accounting bodies, and policymakers from Australia and New Zealand. TTAASAG’s focus is to ensure that the financial reporting and auditing frameworks of both countries do not unnecessarily impede Trans-Tasman business activity. During 2012-13, the Group helped to progress a range of crossborder economic initiatives designed to ensure greater commonality and alignment between the two frameworks. All outcomes agreed between the Australian and New Zealand Governments related to accounting and auditing have been achieved or otherwise dealt with, and the Group continues to monitor their operation.

Trans-Tasman Council on Banking Supervision

The Trans-Tasman Council on Banking Supervision reports to the Treasurer and the New Zealand Minister of Finance on promoting a joint approach that delivers a seamless regulatory environment for banking services. The Secretaries to the Treasuries of Australia and New Zealand jointly chair the Council, and its membership includes senior officials from the financial system regulators.

The Treasury has pursued the Council’s work program, focusing on improved cooperation on crisis management.

Financial Reporting Council

The Financial Reporting Council (FRC) comprises 19 members responsible for overseeing the effectiveness of the financial reporting framework in Australia. Its key functions include overseeing the accounting and auditing standards-setting processes for the public and private sectors, providing strategic advice in relation to the quality of audits conducted by Australian auditors, and advising the Minister on these and related matters to the extent that they affect the financial reporting framework.

The Treasury provides secretariat support to the FRC, including its meetings, and is also responsible for advising the Minister on the appointment of members to the FRC to ensure that it is broadly representative of stakeholders (including the Treasury) with an interest in financial reporting. The Treasury maintains a close relationship with the FRC and engages in high-level discussions with the FRC, which benefits both the Treasury in developing policy advice and the FRC in guiding their strategic direction.

The FRC has four committees — nominations, audit quality, public sector and strategic plan. The FRC currently has two task forces — Integrated Reporting and Financial Report. The Managing Complexity and Board Education Task Forces reported to the FRC and completed their work in 2012-13. The Treasury has engaged with the activities of the various task forces and committees by providing secretarial support, fostering dialogue with stakeholders on the issues being explored, liaising with the chairs of the committees and taskforces to form their strategic direction and providing assistance to key outputs.

Takeovers Panel

The Takeovers Panel contributed to well-functioning securities markets in Australia by dealing with 20 applications, which are essentially disputes relating to takeovers made under the Takeovers Chapter of the Corporations Act 2001 and other control transactions. The Panel, a peer review body with regulatory functions, has 48 members who are specialists in mergers and acquisitions as investment bankers, lawyers, company directors or other professionals. In resolving disputes, the panel helps to ensure that acquisition of control over voting shares in listed and widely-held companies occurs in an efficient, competitive and informed market; security holders and directors are given enough information; and security holders have a reasonable and equal opportunity to participate in any benefits of a proposal. The Panel also publishes guidance notes to help foster market confidence and

In 2012-13, the Panel:

  • considered a number of applications alleging association;
  • considered some significant and complex applications including on the policies in relation to truth in takeovers and rights issues; and
  • issued an index of its decisions from 2005-2012 (inclusive).
Standard Business Reporting

SBR is co-designed by Commonwealth, State and Territory government agencies and the private sector to reduce the business-to-government reporting burden by providing standardised electronic reporting. SBR simplifies financial reporting to government and makes it a byproduct of natural business systems.

Since the SBR Program became operational in 2010, the whole-of-government functions were split between a small team within the Treasury and a larger team under the Australian Business Registrar, which is housed in the Australian Taxation Office.

To enhance these activities and improve information-sharing and stakeholder engagement, these two teams were co-located in April 2013 under the Australian Business Registrar.

The direction and governance of the SBR Program will not change and the Secretary of the Treasury will continue to chair the SBR Board.


The Treasury provided advice to Treasury portfolio ministers on a range of currency-related matters. It chaired the Royal Australian Mint Advisory Board to assist the Mint in developing its policy and administering its initiatives. The Treasury also assisted the Perth Mint in relation to its currency determinations (legislative instruments), which are tabled in Parliament before the release of numismatic (collector) coins.

Secretariat services

The Treasury provided secretariat services to the Legislative and Governance Forum for Corporations (formerly constituted as the Ministerial Council for Corporations (MINCO)). The Treasury also assisted ministers in fulfilling the Government’s obligations under the Corporations Agreement 2002, the Intergovernmental Agreement (IGA) for Business Names Agreement, and the IGA on National Credit Law.

The Treasury provided secretariat support to the Financial Sector Advisory Council, which brings together a range of senior financial market participants to provide advice to the Government on policies to facilitate the growth of a strong and competitive financial sector. FSAC has discussed and provided advice on a range of topics including financial sector regulation; exchange rate intervention; the G20 agenda; and the future of the Australian financial sector.

The Treasury provided secretariat support to the Insurance Reform Advisory Group, which provides a forum in which consumers, insurers and other stakeholders can be heard by government and can contribute to the fair, efficient and effective regulation of the general and life insurance industries.

During 2012, the Treasury a provided secretariat support for the former COAG Business Regulation and Competition Working Group (BRCWG) Competition Sub-Committee, which was chaired by the Assistant Treasurer. The Sub-Committee oversaw the eight competition reform areas under the National Partnership to Deliver a Seamless National Economy (SNE NP), which ended on 31 December 2012. Since 2013, oversight of implementation of the SNE NP reforms, previously undertaken by the BRCWG, has been coordinated through the BAF Taskforce.

The Treasury provided secretariat support to the Energy Security Council, which was established as part of the Government’s Clean Energy Future package. The Council’s purpose is to provide advice to the Treasurer on risks on energy security that could emerge from financial impairment arising from any source. The Council is responsible for assessing two categories of applications for assistance, including loans for generator-owners who need to refinance their debt if finance on reasonable commercial terms is not otherwise available; and loans or other assistance to seek to address systemic risk to energy security in light of an energy market participant’s financial distress.

The Treasury provided secretariat support to the National Housing Supply Council (NHSC). On 1 March 2013, the NHSC released the Housing Supply and Affordability Issues 2012-13 report.  The report contains detailed information on housing trends including Census analysis, summaries of studies on housing and ageing, migration and recent housing policy developments around Australia.

Australian Government Actuary

Australian Government Actuary operates in a competitive and contestable market for actuarial services. Income from consultancy services relative to total costs is, therefore, a primary indicator of performance. Australian Government Actuary maintains a special account to ensure its financial operations are managed properly and transparently. At 30 June 2013, the account was in a sound financial position.

Demand for service was again high during 2012-13.

Consultancy services

Australian Government Actuary consultancy services typically involve analysing uncertain future financial flows using financial modelling techniques, documenting the analysis and presenting the results to clients.

Departments that sought advice included Defence; Attorney-General’s; Industry, Innovation, Science, Research and Tertiary Education; Families, Housing, Community Services and Indigenous Affairs; Health and Ageing; Finance and Deregulation, and Veterans’ Affairs. Human Services and Immigration and Citizenship also sought advice.

Feedback from these agencies indicates general satisfaction with the advice received and its value as an input in achieving agencies’ objectives.

Services to the Treasury

Australian Government Actuary contributed its technical expertise on policy issues, including the superannuation system and insurance matters. The Australian Government Actuary reported on an investigation into strata title insurance price rises in North Queensland and provided advice on the National Disability Insurance Scheme.

1A substantial interest is defined as an interest of 15 per cent or more for an individual foreign person, or an interest of 40 per cent or more for two or more foreign persons, and their associates.

2Under the Australia-United States Free Trade Agreement and the Protocol to the Australia and New Zealand Closer Economic Relations Trade Agreement, a higher threshold of $1,078 million applies for United States and New Zealand investors. The higher threshold does not apply to government investors or investments in prescribed sensitive sectors.