Commonwealth Banks Amendment Act 1978

Overview

The Commonwealth Banks Amendment Act 1978, enacted by the Parliament of Australia, serves to modify the Commonwealth Banks Act 1959. The primary objective of this legislation is to enhance the functions of the Development Bank by expanding its scope to include the establishment or development of business undertakings, particularly small ones, and to streamline its borrowing processes. The Act introduces specific amendments to the original Act, such as altering the borrowing limits for officers and placing restrictions on the Development Bank's ability to borrow funds without the Treasurer's approval. This Act aims to address gaps in the regulatory framework that may have hindered the effective functioning and support of small business undertakings. The Act also includes a repeal of certain provisions and introduces new sections to reinforce the oversight and management of financial operations within the Commonwealth Banks framework. By enacting these changes, the Commonwealth Banks Amendment Act 1978 seeks to better align the legislative provisions with the evolving economic needs and to provide clearer guidelines for financial activities and borrowings within the Commonwealth banking system.

Scope and Application

The Commonwealth Banks Amendment Act 1978 amends the Commonwealth Banks Act 1959 and applies to entities such as the Development Bank, which is central to the operations regulated by the Act. This amendment primarily focuses on enhancing the functions of the Development Bank, particularly its capacity to support small business undertakings, including those related to primary production. The Act is applicable on a national level within Australia, as it pertains to Commonwealth legislation. Notably, it introduces restrictions on the borrowing capacity of the Development Bank, requiring approval from the Treasurer for any borrowings outside those directly lent to or deposited with it under section 85. The Act also modifies the borrowing limit for officers of the Commonwealth Bank, raising it from $1,500 to $5,000, or another prescribed amount. The Act does not explicitly state exclusions or exemptions, but its provisions imply that certain borrowings by the Development Bank must meet specific regulatory requirements.

Key Provisions

The Commonwealth Banks Amendment Act 1978 (Act) primarily amends the Commonwealth Banks Act 1959, focusing on the functions of the Development Bank and borrowing limitations. Firstly, section 72 of the Commonwealth Banks Act 1959 is amended to expand the scope of the Development Bank's functions. The bank is now empowered to support the establishment or development of business undertakings, particularly small ones, including those related to primary production (section 72(a)(ii)). This expansion ensures that the bank can provide financial support to a broader range of businesses, thereby fostering economic growth and development (section 72(b)). The Act imposes specific obligations on the Development Bank regarding its borrowing activities. According to section 85a, the Development Bank is prohibited from borrowing money except with the approval of the Treasurer. This restriction applies to borrowings other than those made under section 85 of the Commonwealth Banks Act 1959. The Treasurer's approval can be granted either for a particular borrowing or for a class of borrowings, providing flexibility in managing the bank's financial activities (section 85a(1) and (2)). Additionally, section 111 of the Commonwealth Banks Act 1959 is amended to increase the maximum borrowing limit for officers from $1,500 to $5,000, or another prescribed amount. This change reflects an adjustment to accommodate the evolving financial needs of officers within the bank (section 111). The Act does not explicitly state the consequences for non-compliance with these borrowing limitations or the specific penalties for breaches. However, the overarching legislative framework implies that failure to adhere to these provisions could result in administrative or legal repercussions, as typically enforced under the general provisions of the Commonwealth Banks Act 1959.