EXPLANATORY STATEMENT
Statutory Rule 1988 No 249 Issued by the Authority of the Minister for Transport and Communications
Section 116 of the Postal Services Act 1975 (the Act) provides that the Governor-General may make regulations, not inconsistent with the Act, prescribing all matters required or permitted to be prescribed by the regulations, or which are necessary or convenient to be prescribed by the regulations, for carrying out or giving effect to the Act.
Section 82 of the Act provides that the Australian Postal Services Commission (the Commission) must obtain the Minister’s approval before entering into a contract exceeding the amount of $500,000, or if a higher amount is prescribed by regulations, that higher amount.
Regulation 56A of the Postal Services Regulations previously provided that, for the purposes of section 82 of the Act the prescribed higher amount was $6,000,000.
Section 75A of the Act empowers the Commission to borrow money from sources other than the Commonwealth. The approval of the Treasurer is required, which approval may relate to a particular transaction or to transactions included in a specified class of transactions (subsection 75A(4)).
Subsection 78(2) provides that moneys of the Commission not immediately required for the purposes of the Commission may be invested in a manner approved by the Treasurer (paragraph 78(2)(c)).
In the course of its normal operations, the Commission makes a large number of transactions relating to money management in accordance with approvals given by the Treasurer under section 75A and subsection 78(2). An average of sixty of these transactions each month exceed the $6,000,000 threshold set for the purposes of section 82. The Commission had not previously sought additional approval under section 82 for such transactions, relying instead on the Treasurer’s approval under section 75A or subsection 78(2).
Department of Finance Circular No 1988/12 entitled “Investment and Borrowing Powers of Statutory Authorities - Need for Ministerial Approval”, states that:
“Statutory authorities that are governed by a requirement to seek Ministerial approval for contracts above a specified limit should now ensure that investment or borrowing transactions above that limit receive Ministerial approval”.
This Circular was based on legal advice from the Attorney-General’s Department. For the Commission this had the effect that where a transaction relating to money management exceeded $6,000,000, approval had to be obtained under section 82 of the Act in addition to any approval required under section 75A or subsection 78(2).
It was impracticable for the Commission to obtain approval from the Minister for each individual money market transaction. Further, it was considered that the requirement for the Treasurer’s approval under section 75A or subsection 78(2) provided adequate supervision for these sorts of transaction.
The Government has decided that the requirement that the Commission obtain Ministerial approval to enter into contracts be removed (see Ministerial statement of 25 May 1988 by the Minister for Transport and Communications “Reshaping the Transport and Communications Government Business Enterprises” - page 34). This will require an amendment of section 82 of the Act. To allow the Commission to engage in investment and borrowing transactions in the period until the Act is amended, the Minister for Transport and Communications in consultation with the Prime Minister decided that where the Commission proposes to enter into a transaction in accordance with the approval from the Treasurer under section 75A or subsection 78(2), additional approval under section 82 will be required only where the amount involved exceeds $50,000,000.
The statutory rule repeals regulation 56A and substitutes a new regulation which provides a dual threshold for contract approvals under section 82 of:
• $50,000,000 where the transaction is entered into for the purposes of section 75A or subsection 78(2); and
• $6,000,000 in any other case.
Overview
The Statutory Rule 1988 No 249, issued under the authority of the Minister for Transport and Communications, amends the Postal Services Regulations 1975 to address a specific oversight identified in the management of financial transactions by the Australian Postal Services Commission. The original regulation, section 82, stipulated that the Commission must obtain ministerial approval for contracts exceeding $500,000, with a higher amount prescribed at $6,000,000. However, a departmental circular and legal advice necessitated that transactions exceeding $6,000,000 also required ministerial approval, creating a cumbersome process for the Commission. The Government decided to streamline the approval process by removing the need for ministerial approval for contracts under certain conditions, as outlined in the Ministerial statement of 25 May 1988. Consequently, the new regulation sets a dual threshold for contract approvals: $50,000,000 for transactions approved under section 75A or subsection 78(2), and $6,000,000 for all other transactions, ensuring that the Commission can continue its financial operations efficiently while maintaining adequate oversight.
Scope and Application
The Postal Services Act 1975 applies to the Australian Postal Services Commission, governing its operations and financial dealings, including the entering into contracts and the borrowing and investment of funds. This Act allows the Governor-General to issue regulations that facilitate the execution of the Act, provided they are consistent with it. The Act stipulates that the Commission must secure ministerial approval before entering into a contract exceeding a specified amount, which is currently $500,000, or a higher amount if prescribed by regulations. The application of the Act extends across the Commonwealth of Australia and governs the financial transactions of the Commission. The new statutory rule modifies the threshold for contract approvals under section 82 of the Act, establishing a dual threshold for such approvals: a higher threshold of $50,000,000 for transactions approved by the Treasurer under section 75A or subsection 78(2), and a lower threshold of $6,000,000 for other transactions. This rule is issued under the authority of the Minister for Transport and Communications and is designed to streamline the approval process for the Commission's financial transactions while ensuring adequate oversight.
Key Provisions
The primary provisions of the Statutory Rule 1988 No 249, which amends the Postal Services Regulations, revolve around the thresholds for the approval of contracts by the Australian Postal Services Commission (section 82 of the Act). The rule introduces a dual threshold system (regulation 56A) for contract approvals: a higher threshold of $50,000,000 applies when the transaction is entered into pursuant to section 75A or subsection 78(2) of the Act, and a lower threshold of $6,000,000 for any other transaction. This dual threshold is designed to align with the Government's decision to remove the requirement for Ministerial approval for contracts below a certain amount, except for those involving significant financial transactions.
Under this legislation, the Australian Postal Services Commission is mandated to obtain Ministerial approval for contracts exceeding the specified thresholds. For transactions involving borrowing or investment, which are typically approved by the Treasurer under section 75A or subsection 78(2), approval under section 82 is required only if the transaction amount exceeds $50,000,000. This is a significant change from the previous requirement of obtaining approval for any transaction exceeding $6,000,000, reflecting a more streamlined approach to financial transactions while maintaining oversight for larger financial dealings.
The rule also clarifies the obligations of the Commission by specifying that Ministerial approval is only necessary for contracts that exceed the prescribed thresholds. This legislative amendment aims to balance the need for financial oversight with the practicalities of managing numerous smaller transactions. The Commission is expected to adhere to the new thresholds and ensure that appropriate approvals are sought in accordance with the regulations.
Breach of the requirements set out in this statutory rule could potentially lead to civil or criminal consequences, although the specific penalties are not detailed in the explanatory statement. The penalties for non-compliance would typically depend on the severity and intent behind the breach, and could range from fines to more severe criminal charges if the breach is deemed to be of a serious nature. The exact penalties would be determined in accordance with the broader legal framework governing administrative and financial compliance in Australia.