EXPLANATORY STATEMENT
STATUTORY RULES 1984 NO. 307
ISSUED BY AUTHORITY OF THE TREASURER
COMMONWEALTH BANKS ACT 1959
COMMONWEALTH BANKS REGULATIONS (AMENDMENT)
Section 129 of the Commonwealth Banks Act 1959 (the Act) empowers the Governor-General to make regulations, not inconsistent with the Act, prescribing all matters which by the Act are required or permitted to be prescribed, or which are necessary or convenient to be prescribed for carrying out or giving effect to the Act or for the conduct of business by the Commonwealth Banking Corporation, the Commonwealth Bank, the Commonwealth Savings Bank or the Commonwealth Development Bank.
Section 121 of the Act provides that the Board of the Commonwealth Banking Corporation (Corporation) shall, as soon as practicable after each thirtieth day of June, in respect of each of the abovementioned bodies prepare financial statements, in accordance with the prescribed forms, in respect of that year. The forms are prescribed by sub-regulation 36(1) of the Commonwealth Banks Regulations and are set out in the Schedule to those Regulations.
As a measure aimed at improving the reserves position of the Corporation and its three constituent banks, the Board of the Corporation decided that all four bodies would revalue their premises to reflect current market valuations and that, in future, the Group would follow a policy of regular revisions of property values. The Treasurer is aware of this decision and both he and the Auditor-General are in full agreement with it.
A consequence of the Board’s decision is the need for the Corporation to include a premises revaluation reserve in its accounts which is not currently provided for in its prescribed form, Form B in the Schedule to the Regulations. The three constituent banks have existing provisions for reserves in their accounts which can absorb the reserves created by the revaluation. There have also been a number of changes over time in the terminology used in the financial statements in the Corporation’s Annual Report which have not been reflected by appropriate amendments to the various forms prescribed for the Corporation and its constituent banks. To rectify that situation, the format of Form B of the Regulations (in respect of the Corporation) has been revised. The Regulations are also being amended to bring the form of financial statements of the three constituent banks of the Corporation into line with the form of financial statements for savings and trading banks prescribed in the Second Schedule to the Banking Act 1959.
The Regulations are also being amended to recognise the change of name of the Commonwealth Trading Bank of Australia to the Commonwealth Bank of Australia which was effected by the Commonwealth Banks Amendment Act 1984.
Sub-section 111(3) of the Commonwealth Banks Act provides that the Commonwealth Bank may, where the Managing Director is satisfied that special circumstances exist, lend to an officer upon such terms and conditions as the Managing Director thinks fit, money not exceeding at any one time $5,000 or such other amount as is prescribed. A further amendment to the Regulations is required to give effect to the Treasurer’s recent decision to increase, from $5,000 to $12,000, the limit on non-housing loans to staff that can be made under sub-section 111(3). Loans made in terms of sub-section 111(3) are largely used to assist officers, whose duties require them to make extensive use of their own cars on Corporation business, to purchase motor vehicles. The loans are made at concessional interest rates.
The amending Regulations repeal regulation 35 which prescribed an amount for the purpose of section 66 of the Act which has been repealed. Regulation 35 is substituted by a new regulation which prescribes $12,000 as the amount for the purposes of sub-section 111(3) of the Act.
As mentioned above, the opportunity is being taken to update the forms prescribed by sub-regulation 36(1) for the purposes of paragraph 121(1)(b) of the Act and to provide a premises revaluation reserve in the financial statements of the Corporation. Regulation 7 substitutes a revised Form B, which includes a premises revaluation reserve, in the Schedule to the Regulations. By virtue of regulation 6, which amends sub-regulation 36(1), Form B is the prescribed form for the Corporation.
Regulation 7 removes certain forms that have been provided in respect of the Commonwealth Bank, Commonwealth Savings Bank and Commonwealth Development Bank, and regulation 6 amends sub-regulation 36(1) to prescribe the relevant forms in the Second Schedule of the Banking Act 1959 for the purpose of paragraph 121(1)(b) of the Commonwealth Banks Act. This will ensure consistency in the format in which the Corporation is required to present financial information under both the Commonwealth Banks Act 1959 and the Banking Act 1959. The relevant forms in the Second Schedule to the Banking Act 1959 as prescribed by regulation 6 are Forms A and B in respect of the Commonwealth Bank and Commonwealth Development Bank and Forms B and G in respect of the Savings Bank.
Overview
The Commonwealth Banks Regulations (Amendment) Statutory Rules 1984 No. 307, issued by authority of the Treasurer, amend the Commonwealth Banks Regulations 1959 to address several issues concerning the financial reporting and operations of the Commonwealth Banking Corporation and its constituent banks. Enacted by the Parliament, the policy objective of these amendments is to enhance the financial transparency and operational efficiency of these entities. To achieve this, the regulations introduce a revaluation reserve for the Corporation's premises in its financial statements, reflecting current market values. Additionally, the regulations update the terminology used in financial statements and align the forms of financial statements with those prescribed under the Banking Act 1959, ensuring consistency. The amendments also recognise the name change of the Commonwealth Trading Bank of Australia to the Commonwealth Bank of Australia and increase the limit on non-housing loans to staff from $5,000 to $12,000, facilitating better support for employees who use their vehicles extensively for work purposes. These changes aim to improve the financial health and reporting practices of the Commonwealth banks, aligning them with contemporary standards and practices.
Scope and Application
The Commonwealth Banks Regulations (Amendment) Statutory Rules 1984 No. 307, issued by authority of the Treasurer, amends the Commonwealth Banks Regulations to implement certain decisions and policy changes made by the Board of the Commonwealth Banking Corporation. These regulations apply to the Commonwealth Banking Corporation, the Commonwealth Bank, the Commonwealth Savings Bank, and the Commonwealth Development Bank, ensuring their financial statements and related forms comply with updated requirements and current market valuations. The amendments reflect the Board's decision to revalue premises and establish a premises revaluation reserve, changes in financial statement terminology, and the renaming of the Commonwealth Trading Bank of Australia to the Commonwealth Bank of Australia. Additionally, the regulations adjust the limit on non-housing loans to staff from $5,000 to $12,000, aligning with the Treasurer’s recent decision to better support officers with extensive business travel needs. These changes aim to enhance the financial reporting standards and operational efficiency of these Commonwealth-owned banks.
Key Provisions
The Commonwealth Banks Regulations (Amendment) Statutory Rules 1984 No. 307, issued under the authority of the Treasurer, introduce several amendments to the Commonwealth Banks Regulations to reflect recent decisions by the Board of the Commonwealth Banking Corporation (Corporation). These amendments pertain primarily to the financial reporting requirements of the Corporation and its constituent banks. The principal changes involve the introduction of a premises revaluation reserve in the financial statements of the Corporation (Section 121(1)(b) of the Commonwealth Banks Act 1959), updates to the prescribed financial statement forms, and an adjustment to the limit on non-housing loans to staff.
The amendments require the Corporation to include a premises revaluation reserve in its accounts, which is necessary due to the Board’s decision to revalue the Corporation’s and its constituent banks' premises to reflect current market valuations (Regulation 7). The existing financial statement forms have also been revised to ensure consistency with the forms used by other savings and trading banks, as prescribed in the Banking Act 1959 (Regulations 6 and 7). These changes ensure that the Corporation’s financial statements are consistent and align with industry standards. Additionally, the Regulations recognise the name change of the Commonwealth Trading Bank of Australia to the Commonwealth Bank of Australia (Regulation 7).
The amendments impose specific obligations on the Corporation and its constituent banks. Firstly, the Corporation is required to revalue its premises and include a revaluation reserve in its accounts. Secondly, the Corporation and its constituent banks must adhere to the revised financial statement forms prescribed in the Regulations. These forms, which have been updated to reflect current standards and terminology, must be used when preparing financial statements for the Corporation and its constituent banks. The Corporation and its banks are also required to align their financial statements with those prescribed in the Banking Act 1959, ensuring consistency across different banking regulations.
The Regulations do not explicitly outline specific offences, penalties, or civil/criminal consequences for breaches. However, failure to comply with the prescribed financial reporting requirements and the mandated changes could potentially result in regulatory scrutiny, investigations, or other enforcement actions under the Commonwealth Banks Act 1959 and the Banking Act 1959. These consequences may include financial penalties, corrective actions, or other measures taken by the relevant regulatory authorities to ensure compliance with the financial reporting and valuation requirements stipulated in the Act and Regulations.