Section 4: Other reporting requirements

4.1 Purchaser-provider arrangements

The Australian Prudential Regulation Authority (APRA) is not party to any material cross agency purchaser-provider arrangements. Minor amounts are recovered from Australian Bureau of Statistics (ABS) and Reserve Bank of Australia (RBA) for provision of statistical data as recorded in the following section dealing with cost recovery arrangements.

4.2 Cost recovery arrangements

Cost recovery arrangements have been negotiated with the large banks to accelerate their preparations for opportunities available to them under the new Basel Capital Accord on capital adequacy. Cost recovery arrangements are also in place to fund the Registrable Superannuation Entity (RSE) licence for Superannuation Trustees based on a two year programme which commenced in 2004-05. Fees are imposed on General Insurers for use of a National Claims and Policies Database which will assist the general insurance industry and collect data on public liability and professional indemnity policies and claims. Licence fees are also charged to new authorised deposit-taking institutions and insurers in a tiered licensing arrangement for those institutions applying to operate in the financial system. Similarly, a small fee is charged to grant consent to foreign authorised deposit-taking institutions wishing to establish and maintain a representative office in Australia. Costs of providing statistical services to the RBA and the ABS, and prudential services to various State Governments are also recovered.

Outside the fee for service regime, APRA recovers costs on behalf of the Australian Taxation Office (ATO) and the Australian Securities and Investments Commission (ASIC) for various consumer protection, enforcement and Superannuation Complaints Tribunal activities and lost member and unclaimed superannuation arrangements as part of annual levies on financial institutions. These latter recoveries are not retained by APRA and are passed directly to the Consolidated Revenue Fund.

Summary of cost recovery impact statement

In accordance with the Government’s cost recovery policy, APRA prepared a cost recovery impact statement dated February 2006 entitled Periodic review of cost recovery arrangements of the Australian Prudential Regulation Authority. The purpose of the cost recovery impact statement was to conduct a review consistent with the Government’s five year review schedule of existing cost recovery arrangements and provide a comprehensive report to Government.

In 2006-07 APRA proposes to recover the following costs by way of fees for service:

• Licensing of superannuation trustees under the Superannuation Industry (Supervision) Act 1993 as amended by the Superannuation Safety Amendment Act 2004 which prescribes that an application fee may be charged for processing licence applications. The licensing arrangement was recommended by the Superannuation Working Group in October 2002 and subsequently adopted as Government policy and enables APRA to ensure that only suitable and adequately resourced entities remain in the superannuation industry. The licensing process is detailed and resource intensive requiring APRA to establish in the first instance a specialist team to process the 325 applications received. Licence fees have been set on a three tiered sliding scale according to the complexity of the assessment of the applicants, with the highest fee being paid by trustees of public offer entities and lesser fees for non-public offer entities;
• Licensing of authorised deposit-taking institutions, life and general insurance companies under the Banking Act 1959, Life Insurance Act 1995 and Insurance Act 1973 respectively. The legislation requires that entities wishing to conduct banking and insurances activities in Australia be licensed and enables APRA to set a fee for assessing applicants for a licence. The fees charged are a series of fixed fees for categories of applicants who are a bank or special service provider, a building society, a credit union, a specialist credit card institution, a general insurer, a life company other than a friendly society and a life company that is a friendly society and are payable on application;
• Granting consent for a representative office of a foreign bank to be established and maintained in Australia under s67 of the Banking Act 1959. The charge for granting initial consent is a once only fixed charge. A further annual fee is charged for maintaining the foreign representative office in Australia, of which there are currently about twenty four;
• A charge made under s51 of the Australian Prudential Regulation Authority Act 1998 to the four major banks and other significant banks to enable the institutions to accelerate the models-based approach to capital adequacy provided for in the Basel II capital accord. This is a fixed charge to the four major banks and a lesser charge to other significant banks and has been imposed in the last two financial years;
• Fees on a class of general insurers to recover costs for use of National Claims and Policies Database which for 2004-05 and 2005-06 was on a voluntary basis and thereafter will be added as a levy on indemnity and liability insurers. The charge is made on about 60 general insurers under s51 of the Australian Prudential Regulation Authority Act 1998;
• Recovery of costs associated with prudential regulation services provided to non-regulated federal and state run institutions and statistical services provided to RBA and ABS. These recoveries are on an agreed fee basis made under s9 of the Australian Prudential Regulation Authority Act 1998 and are not required to be covered by a cost recovery impact statement; and
• Other miscellaneous cost recoveries such as recovery of rent from sub-letting of surplus leased space in the Canberra office to a third party and costs associated with overseas secondments and other services provided through the International Monetary Fund and AusAID. All are through the provisions of the Australian Prudential Regulation Authority Act 1998.

The fees outlined have been set in accordance with the Australian Government’s cost recovery policy and guidelines, in consultation with Treasury and those that are required to be, are covered by cost recovery impact statements.

In total the above cost recoveries are budgeted to realise revenues of $4.3 million in 2006-07.

In all instances, the cost recovery proposals have been discussed with the major stakeholders during annual industry consultations involving industry representative associations and/or the main affected institutions. In some instances, such as the Basel II accreditation work, the fees were set by direct negotiation and agreement with the institutions concerned. Other minor fees were also set by negotiation and mutual agreement with the institutions or organisations directly involved.

APRA’s cost recovery arrangements are due to be reviewed again in 2011.

4.3 Australian Government Indigenous Expenditure

Table 4.1: Australian Government Indigenous Expenditure

APRA does not have any specific indigenous expenditure.