EXPLANATORY STATEMENT

Financial Sector (Collection of Data) Act 2001

INSTRUMENT EXEMPTING REGISTERED ENTITYCERTAIN REGISTERED ENTITIES FROM REPORTING TO APRA

Instrument to which this explanatory statement relates

1. This explanatory statement relates to an instrument dated 6 July 2005 made under paragraph 16(1)(a) of the Financial Sector (Collection of Data) Act 2001 (the “Act”) exempting a registered entity four financial sector entities from reporting to the Australian Prudential Regulation Authority (“APRA”) under certain reporting standards determined by APRA under section 13 of the Act.

2. The registered entity is George Street Finance Pty Limited ABN 46 110 398 911 (“George Street”).The four entities are Wesfarmers Ltd ABN 28 008 984 049 and its three wholly owned subsidiaries Wesfarmers Landmark Ltd ABN 73 008 743 217, Westralian Farmers Co-Operative Ltd ABN 42 007 507 833 and Wesfarmers Landmark (Qld) Ltd ABN 31 008 996 218 (the “Wesfarmers Group”). 

APRA’s power to collect relevant information and exempt from reporting

3.   APRA is the prudential regulator of the banking, general insurance, life insurance and superannuation industries.  One of APRA’s functions is to collect information under the Act that will assist with the prudential regulation of bodies within the financial sector.  APRA’s power to collect information extends to non-regulated entities which are involved in financial intermediation (called registered entities).  

4.   APRA has determined a number of reporting standards in relation to registered entities under section 13 of the Act.  They include the following reporting standards (the “Exempted Reporting Standards”) which are applicable to financial sector entities which, together with related entities, have total assets exceeding $500 million:

RRS 320.0 Statement of Financial Position (Domestic Books)

RRS320.1 Debt Securities Held

RRS 320.2 Equity Securities Held

RRS320.3 Debt Securities on Issue

RRS 320.4 Accepted and Endorsed Bills

RRS 320.5 Securities Subject to Repurchase & Resale & Stock Lending & Borrowing

RRS331.0 Selected Revenues and Expenses

RRS 332.0 Statement of Economic Activity

RRS 391.0 Commercial Finance

RRS 392.0 Housing Finance

RRS 393.0 Lease Finance

RRS 394.0 Personal Finance

RRS 231.1a International Exposures – Locational (Assets) Part 1

RRS 231.1b International Exposures – Locational (Liabilities) Part 1

RRS 231.2 International Exposures – Locational Data Part 2

RRS 231.3a International Exposures – Consolidated Data (Domestic Entity)

RRS 231.3b International Exposures – Consolidated Data (Foreign Entity)

The reporting standards relate to the financial position, revenues and expenses, debt securities, equity securities, bill acceptances and other securities held by registered entities.

5.   Subsection 16(1) of the Act provides that APRA may, by written instrument, exempt a financial sector entity (or class of financial sector entity) from some or all of the applicable reporting standards.  An exemption under subsection 16(1) of the Act is a disallowable instrument.

6. “Financial sector entity” is defined in subsection 5(2) of the Act as including registered entities.  George Street is aThe Wesfarmers Group of companies are registered entityies., which is a class of financial sector entity.  Accordingly George Streetthe Group can be exempted from reporting requirements under subsection 16(1) of the Act.

Scope of the exemption

7. The relevant reporting standards are:The instrument of exemption exempts George Streetthe four companies in the Wesfarmers Group from the Exemptedfollowing Rreporting sStandards, as they are in force from time to time.:

         RRFS 320.0 Statement of Financial Position

         RRSF 331.0 Selected Revenues and expenses

         RRSF 320.1 Debt Securities Held

         RRSF 320.2 Equity Securities Held

         RRSF 320.3 Debt Securities on Issue

         RRSF 320.4 Bill Acceptances

         RRSF 320.5 Securities Subject to Repurchase & Resale & Stock Lending & Borrowing

RRS 332.0 Statement of Economic Activity

Reasons for the exemption

8.   APRA provides the information collected in the Exempted Reporting Standards to the Australian Bureau of Statistics (ABS) (in accordance with subsection 56(5A) of the Australian Prudential Regulation Act 1998).

9. George Street is a special purpose vehicle in a securitisation arrangement established by the Royal Bank of Scotland.  The information which would be reportable by George Street under the Exempted Reporting Standards is already reported by George Street to the ABS through its securitisation survey.  Wesfarmers Ltd, as the parent company, has been submitting reports to APRA for the Group in compliance with the reporting standards. However, on 19 March 2003, Wesfarmers Ltd submitted to APRA that the Wesfarmers Group should be exempted asked APRA to exempt the Wesfarmers Group from the reporting requirements of the Act for the following reasons:

All funds raised by the parent company are only used for intra-group lending for working capital purposes.

Funds raised by the parent entity only represent a small portion of total liabilities.

Other loan arrangements to which Wesfarmers Ltd is a party do not impact its balance sheet exposures. Wesfarmers Ltd collects fees for arranging credit for 2 two non-related primary industry financial institutions.

The provision of finance does not involve third partiesNo company in the Wesfarmers Group provides finance to third parties.

10. APRA is satisfied that these assertions are correct, and agrees that George Streetthe Wesfarmers Group should be granted an exemption from the Exempted Reporting Standards under paragraph 16(1)(a) of the Act in order to avoid George Street duplicating its reporting obligations. 

Consultation

11. The exemption is not a class instrument and does not have a direct, or substantial indirect, effect on business not does it restrict competition.  APRA has consulted with the ABS and has informed George Street of APRA’s intentions.  The instrument is relatively minor or mechanical in nature and does not substantially alter existing arrangements.  Hence, industry consultation is not considered necessary or appropriate. 

9.                   APRA is conscious of the objectives of the Act which, in these circumstances, is to provide for the collection of data in order to formulate monetary policy. It is generally accepted that data collected on transactions between related corporations does not assist in this purpose.

Effect Duration of exemption

121. The instrument of exemption, made by a delegate of APRA, has the effect of exempting the four registered entities in the Wesfarmers Group from the requirement to comply with all of the requirements contained in the registered entity reporting standards.The exemption remains in force indefinitely or until it is revoked.