Document Index Portfolio Budget Statements Department of the Treasury

Section 2: Outcomes and Outputs Information

• Outcomes and Output Groups
• Outcome 1 -- Sound Macroeconomic Environment
• Measures in the 1999-2000 Budget
  • Establishment of the Australian Office of Financial Management -- Expense
    • Budget Measure Purpose
  • Establishment of the Australian Office of Financial Management -- Capital
    • Budget Measure Purpose
• Resources for Outcome 1 -- Sound Macroeconomic Environment
• Contribution of Outputs to Outcome 1 -- Sound Macroeconomic Environment
• Performance Information for Outcome 1 -- Sound Macroeconomic Environment
  • Evaluations
• Outcome 2 -- Effective Government Spending and Taxation Arrangements
• Measures in the 1999-2000 Budget
  • Additional Funding for Taxation Reform -- Expense
    • Budget Measure Purpose
  • A New Tax System -- Grants to Balance State and Territory Budgets -- Expense
    • Budget Measure Purpose
  • A New Tax System -- Advances to Balance State and Territory Budgets -- Capital
    • Budget Measure Purpose
• Resources for Outcome 2 -- Effective Government Spending and Taxation Arrangements
• Contribution of Outputs to Outcome 2 -- Effective Government Spending and Taxation Arrangements
  • Evaluations
• Outcome 3 -- Well Functioning Markets
• Measures in the 1999-2000 Budget
  • Australia as a Centre for Global Financial Services (CGFS) -- Expense
    • Budget Measure Purpose
  • Enhancement of the Corporations and Securities Panel -- Expense
    • Budget Measure Purpose
  • Savings to Offset National Competition Council Measure `Additional Legal Funding for Matters Relating to Part IIIA of the Trade Practices Act 1974' -- Expense
    • Budget Measure Purpose
• Resources for Outcome 3 -- Well Functioning Markets
• Contribution of Outputs to Outcome 3 -- Well Functioning Markets
• Performance Information for Planned Outcome 3 -- Well Functioning Markets
  • Evaluations

OUTCOMES AND OUTPUT GROUPS

The map on the following page shows the relationship between Government outcomes and the contributing outputs for the Department of the Treasury. Financial detail for Outcomes 1, 2 and 3 by output appears in Tables 2.2.1, 2.2.2 and 2.2.3, while non-financial information for the three outcomes appears in Tables 2.3.1, 2.3.2 and 2.3.3.

OUTCOME 1 -- SOUND MACROECONOMIC ENVIRONMENT

A sound macroeconomic environment is an essential foundation for strong sustainable economic growth and the improved wellbeing of Australians. Treasury provides ongoing policy advice to Treasury portfolio Ministers to assist them in developing and implementing policies to achieve this outcome.

A sound macroeconomic environment is characterised by stable prices, low interest rates, healthy economic and employment growth and a sustainable external position. As there are many influences on macroeconomic outcomes beyond the control of the Government, policy is aimed at improving the prospects for the Australian economy, rather than targeting specific outcomes for major economic indicators. Success is judged more by medium- to long-term performance relative to Australia's past and to other countries, rather than by particular results in any year.

Table 2.1.1 shows the relationship between the programme structure for 1998-99 and the new outcome structure for the 1999-2000 Budget for Outcome 1.

Table 2.1.1: Relationship between Programme and Outcome Structure for Outcome 1 -- Sound Macroeconomic Environment

Programme Management Budgeting	Accrual Budgeting
Programme 1 -- Treasury To improve living standards of the Australian community through high, sustainable economic and employment growth with low inflation and efficient and sustainable use of resources	Outcome 1 Sound macroeconomic environment
Sub-programmes Sub-programme 1.1 -- Domestic Economy Sub-programme 1.2 -- International Economy Sub-programme 1.6 -- Debt Management Sub-programme 1.11 -- Corporate Direction and Support	Output Groups Output Group 1.1 -- Economic
Appropriations for Programme 1	Appropriations for Outcome 1
Sub-programme 1.1 Appropriation Bill 1 Running costs, including Section 31 receipts (670-1)	Output Group 1.1
Sub-programme 1.2 Special Appropriations Asian Development Bank (Additional Subscription) Act 1995 International Monetary Agreements Act 1947 Multilateral Investment Guarantee Agency Act 1997 Appropriation Bill 1 Running costs, including Section 31 receipts (670-1) International Finance Corporation -- Capital subscription (670-2-06) International Bank for Reconstruction and Development -- Capital subscription (670-2-07) Contributions to the International Monetary Fund -- Enhanced Structural Adjustment Facility (670-2-08)	Special Appropriations Asian Development Bank (Additional Subscription) Act 1995 International Monetary Agreements Act 1947 Multilateral Investment Guarantee Agency Act 1997
Sub-programme 1.6 Special Appropriations Airports (Transitional) Act 1996 -- Former debts of the Federal Airports Corporation -- Interest Commonwealth Inscribed Stock Act 1911, Loans Securities Act 1919, Loans Redemption and Conversion Act 1921 -- Commonwealth Government Securities interest Commonwealth Inscribed Stock Act 1911, Treasury Bills Act 1914 -- Payment of Special Bond premiums on redemption Financial Agreement Act 1994 -- Assistance for debt redemption Financial Agreement Act 1994 -- Commonwealth Contribution to Debt Retirement Reserve Trust Account on State and Northern Territory Debt Financial Agreement Act 1994 -- Interest on Debt Retirement Reserve Trust Account Balances Loans Redemption and Conversion Act 1921 -- Interest on overdue stocks Loans Securities Amendment Act 1988 (Swaps) -- Interest Loans Securities Amendment Act 1988 (Swaps) -- Principal Moomba -- Sydney Pipeline System Sale Act 1994 -- Costs on former debt of the Pipeline Authority Qantas Sale Act 1992 -- Costs on former debt of Qantas. Qantas debt servicing	Special Appropriations Airports (Transitional) Act 1996 -- Former debts of the Federal Airports Corporation -- Interest Commonwealth Inscribed Stock Act 1911, Loans Securities Act 1919, Loans Redemption and Conversion Act 1921 -- Commonwealth Government Securities interest Commonwealth Inscribed Stock Act 1911, Treasury Bills Act 1914 -- Payment of Special Bond premiums on redemption Financial Agreement Act 1994 -- Assistance for debt redemption Financial Agreement Act 1994 -- Commonwealth Contribution to Debt Retirement Reserve Trust Account on State and Northern Territory Debt Financial Agreement Act 1994 -- Interest on Debt Retirement Reserve Trust Account Balances Loans Redemption and Conversion Act 1921 -- Interest on overdue stocks Loans Securities Amendment Act 1988 (Swaps) -- Interest Loans Securities Amendment Act 1988 (Swaps) -- Principal Moomba -- Sydney Pipeline System Sale Act 1994 -- Costs on former debt of the Pipeline Authority Qantas Sale Act 1992 -- Costs on former debt of Qantas. Qantas debt servicing
Appropriation Bill 1 Running costs, including Section 31 receipts (670-1) Loan management expenses (670-2-02) Overseas bond issues -- Payments in respect of lapsed coupons (670-2-03) Australian National Railways Commission -- Debt acquisition (670-2-04)
Sub-programme 1.11 Appropriation Bill 1 Running costs, including Section 31 receipts (670-1) Compensation and legal expenses (670-2-01)	Outcome 1 Appropriation Bill 1 Departmental outputs Administered expenses

MEASURES IN THE 1999-2000 BUDGET

Establishment of the Australian Office of Financial Management -- Expense

Budget Measure Purpose

A new specialist agency, the Australian Office of Financial Management (AOFM), is to be established within the Treasury portfolio. The new agency will significantly enhance the Commonwealth's capacity to manage its net debt portfolio, offering the prospect of savings in debt service costs and an improvement in balance sheet net worth over time. The AOFM will commence operations from 1 July 1999. The Office will assume responsibility for the Commonwealth's existing debt management activities, currently undertaken within Treasury.

The AOFM will be established as a 'prescribed' agency under the Financial Management and Accountability Act 1997.

Establishment of the Australian Office of Financial Management -- Capital

Budget Measure Purpose

A new specialist agency, the Australian Office of Financial Management (AOFM), is to be established within the Treasury portfolio. The Government will make a capital injection to fund the acquisition of computer equipment for the AOFM. Investment in specialist financial management computer software and hardware is necessary to support the operations of the new agency.

RESOURCES FOR OUTCOME 1 -- SOUND MACROECONOMIC ENVIRONMENT

Table 2.2.1 shows how the 1998-99 appropriation and programming structure relates to total resourcing for Outcome 1.

Table 2.2.1: Total Resources for Outcome 1 -- Sound Macroeconomic Environment

	Estimated Actual	Estimated Actual	Budget
	1998-99 CASH $'000	1998-99 ACCRUAL $'000	1999-00 $'000
Administered Expenses (including Third Party Outputs)
Appropriation Structure 1998-99 Loan management expenses (670-2-02)	3,153	3,153
Overseas bond issues -- Payments in respect of lapsed coupons (670-2-03)	10	10
Australian National Railways Commission -- Debt acquisition (670-2-04)	366,600	315,600
International Finance Corporation -- Capital subscription (670-2-06)	8,421	-
International Bank for Reconstruction and Development -- Capital subscription (670-2-07)	5,251	-
Contributions to the International Monetary Fund -- Enhanced Structural Adjustment Facility (670-2-08)	2,500	-
Special Appropriations Asian Development Bank (Additional Subscription) Act 1995	2,750	-
International Monetary Agreements Act 1947	2,082,558	-18,249
Multilateral Investment Guarantee Agency Act 1997	3,000	-
Airports (Transitional) Act 1996 -- Former debts of the Federal Airports Corporation -- Interest	53,000	53,000
Commonwealth Inscribed Stock Act 1911, Loans Securities Act 1919, Loans Redemption and Conversion Act 1921	7,816,501	7,524,056
Commonwealth Inscribed Stock Act 1911, Treasury Bills Act 1914 -- Payment of Special Bond premiums on redemption	5	5
Financial Agreement Act 1994 -- Assistance for debt redemption	81,700	81,700
Financial Agreement Act 1994 -- Commonwealth Contribution to Debt Retirement Reserve Trust Account on State and Northern Territory Debt	5,189	5,189
Financial Agreement Act 1994 -- Interest on Debt Retirement Reserve Trust Account Balances	829	829
Loans Redemption and Conversion Act 1921	5	5
Loans Securities Amendment Act 1988 (Swaps) -- Interest	1,282,925	1,314,412
Loans Securities Amendment Act 1988 (Swaps) -- Principal	4,147,169	-441,821
Moomba -- Sydney Pipeline System Sale Act 1994	19,070	2,070
Qantas Sale Act 1992 -- Qantas debt servicing	356,284	33,284
Other
Early debt repayment adjustment	-	180,411
Loans Redemption and Conversion Act 1921 -- Loan Fund	10,236,818	-29,400
Loan Flotation Expenses	161	161
Loan Consolidation and Investment Reserved Money Fund	-186,460	-186,460
Loans Redemption and Conversion Act 1921 -- Net repurchase premia	330,000	330,000
Total Administered Expenses	26,617,439	9,167,955	9,090,183
Price of Departmental Outputs Output Group 1.1 -- Economic Output 1.1.1 -- Domestic economic policy advice and forecasting	6,482	5,349	5,827
Output 1.1.2 -- International economic policy advice and assessment	9,120	10,005	10,409
Output 1.1.3 -- Debt management	3,029	2,984	6,564
Appropriation Structure 1998-99(a) Sub-programme 1.1 -- Domestic Economy Sub-programme 1.2 -- International Economy Sub-programme 1.6 -- Debt Management Sub-programme 1.11 -- Corporate Direction and Support
Subtotal Output Group 1.1	18,631	18,338	22,800
Revenue from Government (Appropriation) for Departmental Outputs	18,384	18,157	22,589
Revenue from Other Sources	247	181	211
Total Price of Outputs	18,631	18,338	22,800
Total for Outcome 1	26,636,070	9,186,293	9,112,983

 

	1998-99	1999-00
Staff Years (Number)	158	144

1. See Table 2.1.1 for details.

CONTRIBUTION OF OUTPUTS TO OUTCOME 1 -- SOUND MACROECONOMIC ENVIRONMENT

Treasury aims to contribute to a sound macroeconomic environment by monitoring and assessing economic conditions and prospects, both in Australia and overseas, and by providing advice on the formulation and implementation of effective macroeconomic policy, including monetary and fiscal policy, and labour market issues.

Effective macroeconomic policies operate in a clear, transparent framework and are set with the objective of achieving strong sustainable economic growth and the improved wellbeing of Australians.

The Government's medium-term fiscal consolidation strategy has made an important contribution to a more stable macroeconomic environment in the face of recent adverse international influences. This strategy aims to ensure that the operations of the government make no net call on private saving on average over time. A legislated Charter of Budget Honesty holds governments to a high level of fiscal transparency and accountability.

The Government has also sought to lock in Australia's low inflation by setting monetary policy in a clear, forward-looking framework which was introduced by agreement between the Government and the Reserve Bank. The framework sets out an inflation objective and enhances the independence of the Bank.

Treasury provides advice on advancing Australia's interests at international fora such as the World Bank, the IMF, the Asian Development Bank and APEC. At present, a significant contribution is being made to international efforts to sustain international economic stability and growth through these fora.

Treasury also aims to ensure that Government debt is managed at the lowest possible cost, consistent with an acceptable degree of risk.

The effectiveness of Treasury's contribution to a sound macroeconomic environment is judged primarily by feedback from Treasury portfolio Ministers on the quality and relevance of Treasury's advice.

PERFORMANCE INFORMATION FOR OUTCOME 1 -- SOUND MACROECONOMIC ENVIRONMENT

Table 2.3.1: Performance Information 1999-2000
Performance Information for Administered Items (Including Third Party Outputs)
Subscriptions to international financial institutions	Facilitation of achievement of Government objectives in international fora, including strengthening the international financial system, multilateral debt relief and institutional reform in the multilateral development banks.
Debt issued by the Commonwealth (including CGS allocated to States and Territories) and debt assumed from Commonwealth agencies.	Achievement of the Commonwealth's financing task in a cost-effective manner.
Performance Information for Departmental Outputs
Output Group 1.1 -- Economic
Output 1.1.1 -- Domestic Economic Policy Advice and Forecasting	Advice on economic policy and the economic outlook meets Treasury portfolio Ministers' needs in administering their responsibilities and implementing Government decisions that contribute to a sound domestic economy. Effective presentation of budget documents and other publications to adequately inform public debate.
Output 1.1.2 -- International Economic Policy Advice and Assessments	Advice meets Treasury portfolio Ministers' needs in administering their responsibilities and implementing Government decisions relating to international economic and financial issues.
Output 1.1.3 -- Debt Management	Achievement of the Commonwealth's financing task in a cost-effective manner. Timely production of reports on debt management activities. Efficient execution of the Commonwealth's borrowing activities. Partial indicators include the range of accepted bids and the basis point spread between tender and secondary market yields. Efficient management of the Commonwealth's cash balances. Indicators include achievement of the Ministerially-endorsed cumulative average cash balance target as at end-year.

Evaluations

Feedback will be sought from key clients on a regular basis on the effectiveness of policy advice.

Performance in producing the Debt Management output is evaluated using benchmark analysis and regular review of the broader risk management framework to ensure that it remains appropriate in the light of Commonwealth operations and market conditions.

Results of evaluations will be presented, as appropriate, in Treasury's Annual Report.

OUTCOME 2 -- EFFECTIVE GOVERNMENT SPENDING AND TAXATION ARRANGEMENTS

Effective government spending and taxation arrangements provide an overall fiscal outcome which best contributes to the goal of strong sustainable economic growth and the improved wellbeing of Australians. The Government has established a medium-term fiscal strategy of maintaining fiscal balance on average over the course of the economic cycle to achieve this objective.

At the same time individual spending measures should be effective in meeting their stated objectives, minimise other behavioural distortions and deliver significant benefits in relation to cost. Taxation measures should meet revenue objectives (or other objectives if taken for public policy reasons) and be consistent with the principles of economic efficiency, horizontal and vertical equity, certainty and transparency whilst minimising compliance and administrative costs. By meeting their objectives, these measures contribute to the wellbeing of Australians, either directly or by providing the revenue base to finance government services.

Policy advice to Treasury portfolio Ministers promotes Government decisions which further these objectives and thereby contribute to this outcome.

Table 2.1.2 shows the relationship between the programme structure for 1998-99 and the new outcome structure for the 1999-2000 Budget for Outcome 2.

Table 2.1.2: Relationship between Programme and Outcome Structure for Outcome 2 -- Effective Government Spending and Taxation Arrangements

Programme Management Budgeting	Accrual Budgeting
Programme 1 -- Treasury To improve living standards of the Australian community through high, sustainable economic and employment growth with low inflation and efficient and sustainable use of resources	Outcome 2 Effective government spending and taxation arrangements
Sub-programmes Sub-programme 1.4 -- Taxation Sub-programme 1.5 -- Fiscal Sub-programme 1.8 -- Financial and Currency Sub-programme 1.11 -- Corporate Direction and Support	Output Groups Output Group 2.1 -- Budget
Appropriations for Programme 1	Appropriations for Outcome 2
Sub-programme 1.4 Appropriation Bill 1 Running costs, including Section 31 receipts (670-1) Ex-Gratia payment to approved charitable organisations or trust funds in memory of the Princess of Wales (670-2-09)	Output Groups Output Group 2.1
Sub-programme 1.5 Special Appropriations States Grants (General Purposes) Act 1994	Special Appropriations States Grants (General Purposes) Act 1994
Appropriation Bill 1 Running costs, including Section 31 receipts (670-1)
Appropriation Bill 2 Australian Capital Territory -- Special revenue assistance (977-01)
Sub-programme 1.8 Appropriation Bill 1 Running costs, including Section 31 receipts (670-1)
Sub-programme 1.11 Appropriation Bill 1 Running costs, including Section 31 receipts (670-1) Compensation and legal expenses (670-2-01)	Outcome 2 Appropriation Bill 1 Departmental outputs
	Appropriation Bill 2 Administered expenses

MEASURES IN THE 1999-2000 BUDGET

Additional Funding for Taxation Reform -- Expense

Budget Measure Purpose

The Government is providing additional funding to the Treasury for the development and implementation of business tax reform, the Goods and Services Tax (GST) and other elements of the Government's tax reform package, including developing a response to the Review of Business Taxation, chaired by John Ralph, AO.

A New Tax System -- Grants to Balance State and Territory Budgets -- Expense

Budget Measure Purpose

At the 1999 Premiers' Conference, the Commonwealth, States and Territories signed the Intergovernmental Agreement on the Reform of Commonwealth-State Financial Arrangements. The Agreement will facilitate the implementation of the reforms proposed in the Commonwealth's A New Tax System. The new arrangements will provide the States and Territories with all of the revenue from the GST, which will replace the existing financial assistance grants and allow them to remove a range of inefficient taxes.

As foreshadowed previously by the Commonwealth, the Agreement provides for transitional financial assistance to be paid to the States and Territories, in the form of a loan in the first year of reform and grants thereafter, to meet the Commonwealth's guarantee that the budgetary position of each State and Territory will be no worse off in the initial years following the introduction of the GST.

At the Premiers' Conference on 9 April 1999, the Commonwealth agreed to allocate additional funding for its guarantee to the States and Territories in relation to:

• the impact on State and Territory budgets over the first three years of reform of the abolition of Wholesale Sales Tax (WST) equivalent payments by Government business enterprises; and

• ensuring that the States will not be disadvantaged over the first three years of reform by the Commonwealth's undertaking that local government will benefit from the impact of changes to indirect taxes through lower prices on their purchases.

The Commonwealth also agreed to more generous arrangements for guarantee grants in the third year of reform, so that States and Territories with gains to their budgets in that year may retain all of those gains and the Commonwealth will fund those States and Territories with budget shortfalls.

Further to the additional assistance to be provided by way of the grants to balance State and Territory budgets, the Commonwealth agreed at the Premiers' Conference to separately provide extra funding to the States and Territories to meet higher State and Territory public housing costs resulting from tax reform (subject to the resolution of the new Commonwealth-State Housing Agreement).

A New Tax System -- Advances to Balance State and Territory Budgets -- Capital

Budget Measure Purpose

The purpose of this measure is to meet the Commonwealth's commitment made at the April 1999 Premiers' Conference to provide additional transitional assistance to the States and Territories as part of the Intergovernmental Agreement on Commonwealth-State Financial Relations.

At the April 1999 Premiers' Conference, the Commonwealth, States and Territories signed the Intergovernmental Agreement on the Reform of Commonwealth-State Financial Arrangements. As foreshadowed previously by the Commonwealth, the Agreement provides for transitional financial assistance to be paid to the States and Territories to meet the Commonwealth's guarantee that the budgetary position of each State and Territory will be no worse off in the initial years following the introduction of the GST.

The Commonwealth agreed at the Premiers' Conference to allocate additional funding to its guarantee to the States and Territories. The additional amounts relate to:

• the impact on State and Territory budgets over the first three years of reform of the abolition of WST tax equivalent payments by Government business enterprises;
  
• ensuring that the States will not be disadvantaged over the first three years of reform by the Commonwealth's undertaking that local government will benefit from the impact of changes to indirect taxes through lower prices on their purchases; and
  
• the provision of more generous arrangements for the States and Territories for guarantee grants in the third year of reform.

As a consequence of these changes, the estimate of Commonwealth advances to balance State and Territory budgets has increased by $182.7 million in 2000-01, with a commensurate increase in the repayments of advances by the States and Territories to the Commonwealth in 2001-02.

RESOURCES FOR OUTCOME 2 -- EFFECTIVE GOVERNMENT SPENDING AND TAXATION ARRANGEMENTS

Table 2.2.2 shows how the 1998-99 appropriation and programming structure relates to total resourcing for Outcome 2.

Table 2.2.2: Total Resources for Outcome 2 -- Effective Government Spending and Taxation Arrangements

1. See Table 2.1.2 for details.

CONTRIBUTION OF OUTPUTS TO OUTCOME 2 -- EFFECTIVE GOVERNMENT SPENDING AND TAXATION ARRANGEMENTS

Effective government spending and taxation arrangements are crucial to achieving the Government's objectives for the economy and the wellbeing of Australians. Ongoing advice to the portfolio Ministers from the Treasury assists in formulating, implementing and explaining government spending and taxation decisions which meet this objective.

More specifically, in the coming year Treasury will provide advice on:

• budget policies, including arrangements for the distribution of resources between the Commonwealth and other levels of government, which are consistent with sustainable public finances and macroeconomic objectives;
  
• government expenditure programmes, with a focus on those programmes with significant economic or budgetary implications;
  
• advice on policies to promote the efficient and sustainable use of resources and to improve the competitiveness and productivity of Australian industries, thereby promoting higher levels of sustainable economic growth;
  
• the development and implementation of policies relating to retirement incomes, including superannuation and the age pension, and other income support arrangements intended to promote the wellbeing of Australians; and
  
• taxation policies which contribute to the reform of the Australian taxation system in terms of efficiency, equity and administrative simplicity.

At present, Treasury is devoting significant resources to the development and implementation of the Government's taxation reform agenda, which encompasses significant reforms to income tax, indirect tax, family payments and Commonwealth/State financial relations. The Review of Business Taxation is also being supported by a Secretariat which includes officers from Treasury.

The outcome of the taxation reform process will be a taxation system which provides a stable and equitable revenue source to fund government services essential to the wellbeing of Australians. Taxation reform is an important element of an integrated economic policy framework necessary to ensure stronger economic and employment growth and thereby improve living standards.

The effectiveness of the contribution of these outputs to the outcome will be gauged primarily in terms of feedback from Treasury portfolio Ministers as to whether Treasury advice meets their needs in formulating, implementing and explaining government spending and taxation decisions.

Evaluations

Feedback will be sought from key clients on a regular basis on the effectiveness of policy advice. In relation to payments to State and Territory Governments, there will be an evaluation of the accuracy of calculation and the timeliness of payments. Results of evaluations will be presented, as appropriate, in Treasury's Annual Report.

OUTCOME 3 -- WELL FUNCTIONING MARKETS

Well functioning markets contribute to the achievement of high sustainable economic and employment growth and the wellbeing of Australians, by enabling resources to flow to those parts of the economy where they can be used most productively. Well functioning markets operate when investors and consumers have confidence and certainty about the regulatory framework and are able to make decisions that are well informed and free of market distortions and impediments.

Treasury provides advice on policy processes and reforms that promote a secure financial system and sound corporate practices, remove impediments to competition in product and services markets and safeguard the public interest in matters such as consumer protection and foreign investment.

Table 2.1.3 shows the relationship between the programme structure for 1998-99 and the new outcome structure for the 1999-2000 Budget for Outcome 3.

Table 2.1.3: Relationship between Programme and Outcome Structure for Outcome 3 -- Well Functioning Markets

MEASURES IN THE 1999-2000 BUDGET

Australia as a Centre for Global Financial Services (CGFS) -- Expense

Budget Measure Purpose

Australia has the capacity to develop as a Centre for Global Financial Services (CGFS) and gain a greater share of world financial services business.

The Government's role in promoting Australia as a CGFS will require best international practice in the overall economic and regulatory policy framework, taxation reform and sound economic management. Complementing this focus will be a more effective and coordinated promotion of Australia as a CGFS.

This measure provides $3.5 million in each of 1999-2000 and 2000-01 for initiatives developed jointly with the financial services industry that will promote Australia as a CGFS.

Enhancement of the Corporations and Securities Panel -- Expense

Budget Measure Purpose

The Government has decided to allocate additional resources to the Corporations and Securities Panel to fund its enhanced role and to provide a full-time independent secretariat to service the Panel.

The Corporations and Securities Panel provides a mechanism for peer review of takeover activity, with the aim of being more efficient and less formal than a court. Under proposals currently before the Parliament, the Panel's role is to be greatly expanded, so that it will take the place of the courts as the principal forum for the resolution of takeover disputes under the Corporations Law, during the bid period. Reduced litigation will allow takeovers to be based on commercial rather than legal considerations.

The operation of the Panel will be effectively cost neutral within the context of the national corporations scheme. The ongoing costs of the Panel are to be recovered in the same manner as the costs of the regulator (the Australian Securities and Investments Commission), that is through the imposition on parties bringing matters before the Panel of fees and charges based on expenditure in the previous financial year. The fees and charges will be set as part of a review of companies' fees to be completed in December 1999.

Savings to Offset National Competition Council Measure `Additional Legal Funding for Matters Relating to Part IIIA of the Trade Practices Act 1974' -- Expense

Budget Measure Purpose

This measure will provide for the offsetting savings to enable the National Competition Council to meet the costs of additional legal obligations associated with Part IIIA of the Trade Practices Act 1974.

See also the related expense measure under the National Competition Council Agency Statement.

RESOURCES FOR OUTCOME 3 -- WELL FUNCTIONING MARKETS

Table 2.2.3 shows how the 1998-99 appropriation and programming structure relates to total resourcing for Outcome 3.

Table 2.2.3: Total Resources for Outcome 3 -- Well Functioning Markets

1. Accrual data for 1998-1999 and 1999-2000 include the Royal Australian Mint (RAM). The cash figure for 1998-99 relates only to those activities relating to central Treasury, as cash figures for the RAM are not available.
2. See Table 2.1.3 for details.

CONTRIBUTION OF OUTPUTS TO OUTCOME 3 -- WELL FUNCTIONING MARKETS

Treasury provides advice to portfolio Ministers to assist them in carrying out their responsibilities in formulating, implementing and explaining the policies needed to achieve well functioning markets -- markets that are competitive, efficient, informed, fair and transparent.

Foreign investment policy advice is provided to the Government on foreign investment proposals and on general foreign investment policy matters, including Australia's participation in multilateral and bilateral agreements on investment. In addition, awareness and understanding of the Government's foreign investment policy is fostered in the community and in the business sector, both in Australia and overseas, and compliance with policy is monitored.

In relation to the financial system, significant steps have recently been taken to enhance the framework for financial supervision following the Financial System Inquiry (FSI), including the establishment of the Australian Prudential Regulation Authority (APRA) and the Australian Securities and Investments Commission (ASIC). In the coming year Treasury will provide advice on the implementation of other Government decisions in relation to the FSI. In addition a review of the effectiveness of the legislation administered by APRA to prudentially regulate deposit-taking, insurance and superannuation entities will be continued. Advice will be provided on enhancing Australia as a Centre for Global Financial Services.

Treasury participates with other government departments and agencies in formulating policy for the progress of structural reform in key sectors of the economy, including energy, transport and communications. National competition policy initiatives are coordinated and implemented and the effectiveness of competition and pricing provisions in the Trade Practices Act 1974 and the Prices Surveillance Act 1983 is monitored and legislation amended as required.

In the coming year, legislation will be developed to reform the regulation of financial products, markets and services; amend the Corporations Law to reform the system of registration and regulation of auditors; and amend the Commonwealth Inscribed Stock Act 1911 to enable Commonwealth securities to be settled electronically.

Assistance is also being given to the Government in relation to the passage of the Corporate Law Economic Reform Program Bill 1998, which involves reform to accounting standards, fundraising, takeovers, and directors' duties and corporate governance.

The Corporations and Securities Panel will be reconstituted and expanded to promote a more efficient market for corporate control.

A Financial Reporting Council will be established to provide broad oversight of the process for accounting standard-setting and to give the relevant portfolio Minister reports and advice on that process. Treasury will provide secretariat services to the Council.

The portfolio will also develop and implement proposals to reduce the paper compliance burden of Australian companies and enable ASIC to make greater use of communications technology. Fees set under the Corporations Law will also be reviewed with the objective of reducing fees to be paid by small business.

Consumer affairs policy advice will provide for the implementation of Government commitments on consumer affairs, the coordination of national policy on consumer protection and electronic commerce, industry self-regulation (particularly codes of conduct) and alternative dispute resolution schemes. A review of product safety regulation will be undertaken. Consumer information advice and materials targeting older Australians, rural/regional consumers and low income earners, and an Internet One Stop Shop will be provided.

The Royal Australian Mint is a semi-autonomous body responsible for the production of coinage. Treasury will continue to chair the Royal Australian Mint Advisory Board and also provide advice relating to the currency system.

PERFORMANCE INFORMATION FOR PLANNED OUTCOME 3 -- WELL FUNCTIONING MARKETS

Evaluations

Feedback will be sought from key clients on a regular basis on the effectiveness of policy advice.

In relation to companies regulation compensation payments to the six States and Northern Territory, there will be an evaluation of the accuracy of calculation and the timeliness of payments.

There is ongoing evaluation of foreign investment policy administration in the context of statutory deadlines and target response rates.

Results of evaluations will be presented, as appropriate, in Treasury's Annual Report.