EXPLANATORY STATEMENT
Commonwealth Authorities and Companies Act 1997, paragraph 18(3)(d) – approval of manners of investment
The Investment Approval to which this explanatory statement relates
This explanatory statement relates to an Investment Approval (the Investment Approval) made under paragraph 18(3)(d) of the Commonwealth Authorities and Companies Act 1997 (CAC Act) which is entitled, Commonwealth Authorities and Companies Act 1997 – Approval of Manners of Investment 2008/01. The Investment Approval commenced when it was signed.
The legislative authority under which the Investment Approval is made
Commonwealth authorities subject to subsection 18(3) of the CAC Act are allowed to invest surplus money in a range of investments under paragraphs 18(3)(a) – (c) of the CAC Act. The scope of permitted investments for Commonwealth authorities under paragraphs 18(3)(a) – (c) is conservative. Surplus money may only be placed on deposit with a bank, or invested directly in securities issued or guaranteed by the Commonwealth, a State or a Territory.
An authority can, however, seek approval from the Minister for Finance and Deregulation to invest in a category of investment outside paragraphs 18(3)(a) – (c) of the CAC Act.
The directors of a Commonwealth authority are responsible for ensuring that the authority meets its obligations under the CAC Act. Accordingly, directors need to satisfy themselves that the authority complies with section 18.
Purpose and operation of the Investment Approval
A total of 19 Commonwealth authorities currently hold investment approvals. The Investment Approval revokes all previous investment approvals made under paragraph 18(3)(d) of the CAC Act and issues new investment approvals for nine Commonwealth authorities. Therefore, ten Commonwealth authorities will have their investment approvals revoked under the Investment Approval.
Individual approvals (Schedules 2 to 10 of the Investment Approval) will be issued to nine Commonwealth authorities to suit their individual business needs. Conditions, as set out in Part 6 of each Schedule, are also imposed on approved manners of investment.
The nine Commonwealth authorities are:
- Australian Broadcasting Corporation;
- Export Finance and Insurance Corporation;
- Grains Research and Development Corporation;
- Rural Industries Research and Development Corporation;
- Commonwealth Scientific and Industrial Research Organisation;
- Civil Aviation Safety Authority;
- Australian Hearing Services;
- Australian Nuclear Science and Technology Organisation; and
- Airservices Australia.
Schedule 1 of the Investment Approval will allow Commonwealth authorities to invest in securities listed in paragraphs 18(3)(b) and (c) of the CAC Act that exist solely in electronic form (dematerialised securities). Dematerialised securities are securities that exist (i.e. are created, registered and traded) only in electronic form. Austraclear, Australia’s major central debt registry and settlement facility, introduced dematerialised securities in 1999 and, since 2002, the Commonwealth has dematerialised all new Treasury Bonds and Treasury Notes.
Consultation
The Australian Government Solicitor was consulted on the issue of dematerialised securities.
All affected Commonwealth authorities were consulted, including those that are having their investment approvals revoked and not reissued. The nine Commonwealth authorities to be issued with new investment approvals were provided with drafts of their investment approvals and their agreement sought.
As the Investment Approval is for internal machinery of government purposes only, no consultation was considered necessary with other persons (see sections 17 and 18 of the Legislative Instruments Act 2003).
Additional Information
The Investment Approval is subject to parliamentary disallowance (section 42 of the Legislative Instruments Act 2003) and sunsetting (Part 6 of the Legislative Instruments Act 2003).