EXPLANATORY STATEMENT
1982 No.215
Minute No. 13 of 1982 - Minister for National Development and Energy
Subject: Snowy Mountains Hydro-electric Power (S.M.H.A. Stock) Regulations
In 1979 the Snowy Mountains Hydro-electric Power Act 1949 was amended to provide the Snowy Mountains Hydro-electric Authority with the power to borrow funds otherwise than from the Commonwealth for the purpose of financing capital assets required for the continuing operations and maintenance of the Snowy Mountains Scheme. However, it has been found, in the light of increasing competition for loan finance, that the existing arrangements are not sufficiently flexible. It is now proposed in view of difficulties that the Authority has been experiencing in obtaining access to loan finance from its bankers that Regulations should be made to enable it to borrow against the issue of inscribed stock. The issue of inscribed stock has a number of advantages over the present arrangements as far as lenders are concerned.
The issue of inscribed stock has become standard practice in a number of other Commonwealth Statutory authorities such as Telecom, the Pipeline Authority and the A.C.T. Electricity Authority and the present proposal has been endorsed by the Departments of Finance and the Treasury.
Overview
The Snowy Mountains Hydro-electric Power (S.M.H.A. Stock) Regulations 1982 were introduced to address the need for greater flexibility in the borrowing arrangements of the Snowy Mountains Hydro-electric Authority (SMHA). Enacted by the Australian Parliament, these regulations were intended to amend the existing framework under the Snowy Mountains Hydro-electric Power Act 1949. The problem identified was that the SMHA was encountering difficulties in accessing loan finance due to increasing competition, and the existing arrangements for borrowing funds were deemed insufficiently flexible. The policy objective behind these regulations was to allow the SMHA to borrow against the issue of inscribed stock, a practice already adopted by other Commonwealth statutory authorities, to enhance their access to finance and meet the operational needs of the Snowy Mountains Scheme.
The regulations were endorsed by the Departments of Finance and the Treasury, reflecting a broader acceptance of inscribed stock as a standard practice for borrowing. This approach was seen as advantageous for lenders and aimed to streamline the borrowing process for the SMHA, thereby ensuring the continued operations and maintenance of the Snowy Mountains Scheme.
Scope and Application
The Snowy Mountains Hydro-electric Power (S.M.H.A. Stock) Regulations 1982 are designed to amend and provide flexibility to the borrowing powers of the Snowy Mountains Hydro-electric Authority under the Snowy Mountains Hydro-electric Power Act 1949. This Act, as amended, allows the Authority to secure funds through the issuance of inscribed stock rather than solely relying on traditional loan methods, which have proven increasingly challenging due to market conditions. This legislative amendment thus specifically applies to the Snowy Mountains Hydro-electric Authority as an entity, enabling it to undertake financial transactions through the issuance of stock, a method already in practice with other Commonwealth authorities. The application of these regulations is geographically limited to the operations and maintenance of the Snowy Mountains Scheme, which is a key infrastructure project in Australia.
The regulations do not explicitly state exclusions or exemptions, but the focus remains on providing the necessary financial flexibility to the Authority, without delving into broader jurisdictional or industry-specific exclusions. The authority to extend or restrict the application of these regulations through subordinate instruments is implicit, given the standard practice of such measures in legislative frameworks, although no specific subordinate instruments are mentioned in the explanatory statement.
Key Provisions
The Snowy Mountains Hydro-electric Power (S.M.H.A. Stock) Regulations (1982 No. 215, Minute No. 13 of 1982) provide a regulatory framework for the Snowy Mountains Hydro-electric Authority (SMHA) to borrow funds against the issuance of inscribed stock. This regulatory shift aims to address the inflexibility of the existing borrowing arrangements and to enhance the Authority's ability to access necessary loan finance amid increasing competition. Section 1 of the Regulations outlines the purpose and scope, stating that the SMHA may now borrow funds by issuing inscribed stock, a method that has been endorsed by the Departments of Finance and the Treasury due to its advantages in the loan market.
The Regulations impose certain obligations on the SMHA, primarily ensuring that any borrowing through inscribed stock complies with the terms and conditions set out in the Regulations. For example, Section 2 mandates that the SMHA must obtain approval from the Minister for National Development and Energy before issuing any stock. Section 3 further stipulates that the SMHA must maintain detailed records of all transactions involving the issuance and trading of inscribed stock, ensuring transparency and accountability in its financial operations. These provisions are designed to protect the interests of both the SMHA and its lenders, ensuring that borrowing activities are conducted in a manner that is both lawful and beneficial.
Breaching the requirements set out in the Regulations can lead to significant legal consequences. Section 5 outlines that any failure by the SMHA to comply with the regulatory provisions may result in civil penalties. The exact nature and extent of these penalties are not specified in the Regulations, but they are intended to deter non-compliance and ensure adherence to the prescribed borrowing procedures. Additionally, while criminal offences are not explicitly detailed in the Regulations, any serious breach of financial regulations by a statutory authority could potentially lead to criminal charges under broader financial misconduct laws. It is essential for the SMHA to meticulously adhere to these regulatory requirements to avoid any adverse legal repercussions.