EXPLANATORY STATEMENT
Issued by authority of the Treasurer
Commonwealth Inscribed Stock Act 1911
Commonwealth Inscribed Stock (Maximum Total Face Value of Stock and Securities) Amendment Direction 2020
Subsection 51JA(2) of the Commonwealth Inscribed Stock Act 1911 (the Act) provides that the Treasurer must give a direction as to the maximum total face value of stock and securities that may be on issue under the Act and the Loans Securities Act 1919 in relation to borrowings under section 3A of the Act and section 4 of the Loans Redemption and Conversion Act 1921.
Under subsection 33(3) of the Acts Interpretation Act 1901, where an Act confers a power to make, grant or issue any instrument of a legislative or administrative character (including rules, regulations or by-laws), the power shall be construed as including a power exercisable in the like manner and subject to the like conditions (if any) to repeal, rescind, revoke, amend, or vary any such instrument.
The purpose of the Commonwealth Inscribed Stock (Maximum Total Face Value of Stock and Securities) Amendment Direction 2020 (the Amending Direction) is to increase the maximum total face value of stock and securities from $850 billion to $1,200 billion.
The maximum total face value of stock and securities of $1,200 billion provides certainty to financial markets about the Government’s ability to issue additional debt in response to the COVID‑19 pandemic.
Subsection 51JA(3) of the Act provides that delegates of the Treasurer’s power in section 3A of the Act are required to comply with the Direction. All delegates under section 3A of the Act are officers of the Australian Office of Financial Management.
The Australian Office of Financial Management was consulted during the development of the Amending Direction.
Details of the Amending Direction are set out in Attachment A.
The Amending Direction is a legislative instrument for the purposes of the Legislation Act 2003. However, the Amendment Direction is not subject to disallowance (see item 2 of the table in section 9 of the Legislation (Exemptions and Other Matters) Regulation 2015) or sunsetting (see item 3 of the table in section 11 of that regulation).
The Amending Direction commenced on the day after it was registered on the Federal Register of Legislation.
ATTACHMENT A
Details of the Commonwealth Inscribed Stock (Maximum Total Face Value of Stock and Securities) Amendment Direction 2020
Section 1—Name of the instrument
Section 1 provides that the name of the instrument is the Commonwealth Inscribed Stock (Maximum Total Face Value of Stock and Securities) Amendment Direction 2020 (the Amending Direction).
Section 2—Commencement
Section 2 provides that the Amending Direction commenced on the day after the instrument was registered on the Federal Register of Legislation.
Section 3—Authority
Section 3 provides that the Amending Direction is made under the Commonwealth Inscribed Stock Act 1911 (the Act).
Section 4—Schedule
Section 4 provides that each instrument that is specified in a Schedule to this instrument will be amended or repealed as set out in the applicable items in the Schedule, and any other item in a Schedule to this instrument has effect according to its terms.
Schedule 1—Amendments
Item 1 of Schedule 1 increases the maximum total face value of stock and securities that may be on issue under the Act and the Loans Securities Act 1919 in relation to borrowings under section 3A of the Act and section 4 of the Loans Redemption and Conversion Act 1921 from $850 billion to $1,200 billion.
Overview
The Commonwealth Inscribed Stock (Maximum Total Face Value of Stock and Securities) Amendment Direction 2020 was introduced to address the financial challenges posed by the COVID-19 pandemic. This amendment was made under the authority of the Treasurer pursuant to the Commonwealth Inscribed Stock Act 1911. The primary objective of this legislative instrument was to increase the maximum total face value of stock and securities that could be issued under the Act from $850 billion to $1,200 billion, thereby providing the government with greater financial flexibility to respond to the economic impacts of the pandemic. This increased limit ensures that the government has the capacity to raise necessary funds in the financial markets, which is essential for maintaining economic stability and supporting public health efforts during the crisis. The Direction was developed in consultation with the Australian Office of Financial Management and is not subject to disallowance or sunsetting, ensuring its immediate and continued applicability.
Scope and Application
The Commonwealth Inscribed Stock (Maximum Total Face Value of Stock and Securities) Amendment Direction 2020 applies to the Commonwealth Inscribed Stock Act 1911, specifically targeting the maximum total face value of stock and securities that can be issued under this Act and the Loans Securities Act 1919. This applies to borrowings under section 3A of the Commonwealth Inscribed Stock Act 1911 and section 4 of the Loans Redemption and Conversion Act 1921. The purpose of the Amending Direction is to increase the maximum total face value of stock and securities from $850 billion to $1,200 billion to provide certainty to financial markets regarding the Government's ability to issue additional debt in response to the COVID-19 pandemic. This amendment is applicable nationally within the Commonwealth of Australia. The Amending Direction is a legislative instrument under the Legislation Act 2003 and is not subject to disallowance or sunsetting, as per the Legislation (Exemptions and Other Matters) Regulation 2015. The Amending Direction commenced on the day after it was registered on the Federal Register of Legislation.
Key Provisions
The Commonwealth Inscribed Stock (Maximum Total Face Value of Stock and Securities) Amendment Direction 2020 (the Amending Direction) provides for an increase in the maximum total face value of stock and securities from $850 billion to $1,200 billion under the Commonwealth Inscribed Stock Act 1911 (the Act). This is detailed in section 4 of Attachment A, which outlines the amendments made by the Direction. The key change specified in Item 1 of Schedule 1 pertains to the maximum total face value of stock and securities that can be issued in relation to borrowings under section 3A of the Act and section 4 of the Loans Redemption and Conversion Act 1921.
The Act imposes obligations on the Treasurer to provide a direction regarding the maximum total face value of stock and securities that may be on issue, as per subsection 51JA(2). Additionally, the Act requires that any delegates of the Treasurer’s power under section 3A of the Act comply with this direction, as outlined in subsection 51JA(3). The Australian Office of Financial Management, which is consulted during the development of such directions, consists of officers who must adhere to the stipulations set forth in the Direction. This ensures that the increased limit of $1,200 billion is effectively implemented and monitored.
Failure to comply with the provisions of the Amending Direction could result in legal consequences. Although the explanatory statement does not detail specific offences or penalties, breaches of the Act may attract civil or criminal penalties depending on the nature and severity of the violation. The Act, in general, provides for enforcement mechanisms to ensure compliance, which can include fines or other legal actions. The maximum penalties, however, are not explicitly stated in the explanatory statement but can be found in the relevant sections of the Act itself. The Direction, being a legislative instrument under the Legislation Act 2003, is not subject to disallowance or sunsetting, ensuring its continued applicability until further amendment or repeal.