Australian Prudential Regulation Authority

Section 1: Overview, appropriations and budget measures summary

Agency overview

The role of the Australian Prudential Regulation Authority (APRA) is developing and enforcing regulation that promotes prudent behaviour by authorised deposit-taking institutions, insurance companies, superannuation funds and other financial institutions with the key aim of protecting the interests of their depositors, policy holders and members.

Prudential regulation focuses on the quality of an institution’s systems for identifying, measuring and managing the various risks in its business.

In carrying out this role, APRA will enhance public confidence in Australia’s financial institutions through a framework of prudential regulation, which balances financial safety and efficiency, competition, contestability and competitive neutrality. This is achieved by:

• the formulation and promulgation of prudential policy and practice to be observed by regulated institutions;
• effective surveillance and compliance programmes and, where relevant, remediation or enforcement measures, to give effect to the laws administered by APRA and to standards issued under those laws; and
• advice to government on the development of regulation and legislation affecting regulated institutions and the financial markets in which they operate.

APRA was established by the Australian Prudential Regulation Authority Act 1998. The Commonwealth Authorities and Companies Act 1997 applies to APRA.

Appropriations and resourcing

The total appropriation for APRA in the 2004-05 Budget is $80.5 million. Table 1.1 on the following page provides this detail.

Table 1.2 details funding provided for new budget measures in 2004-05.

Australian Prudential Regulation Authority — appropriations 2004-05

Table 1.1: Appropriations and other revenue

1. C1 and E1 refer to information provided in Table 2.1, Total resources for Outcome 1. K1 refers to information provided in Table 3.1, Budgeted Agency Statement of Financial Performance. K3 refers to information provided in Table 3.4, Agency Capital Budget Statement.
2. Refer to Table 3.1, Budgeted Agency Statement of Financial Performance for application of agency revenue.
3. Revenue from other sources includes other revenues from government (for example, resources free of charge) and revenue from other sources (for example, goods and services). Non-appropriated agency revenues are detailed in Table 1.3.
4. Estimated expenses from special appropriations are shown in Table 1.5.

Note: Percentage figures indicate the percentage contribution of revenues from government (agency appropriations) to the total price of outputs, by outcome.

Measures — Australian Prudential Regulation Authority summary

Table 1.2: Summary of measures disclosed in the 2004-05 Budget

Agency revenues

Table 1.3: Agency revenues

Goods and services include cost recoveries under sections 9 and 51 of the Australian Prudential Regulation Authority Act 1998 for elective services. Revenue from other sources includes recovery of the cost of statistical services and work undertaken in the context of the New Basel Capital Accord, which is subject to cost recovery impact statement guidelines (see section 4).

Special accounts

Table 1.6: Estimates of special account flows and balances

1. The opening balance for 2004-05 (reference A) is the same as the closing balance for 2003-04 (reference B).
2. This special account is administered in nature and is governed by section 20 of the Financial Management and Accountability Act 1997.

Agency equity injections and loans

APRA will receive a cash injection of $3.0 million in the 2004-05 Budget to fund activities associated with licensing of superannuation entities. Upon collection of license fees, the majority of which will not occur until 2005-06, a dividend will be returned to government.

Superannuation Protection Account

Under the Superannuation Industry (Supervision) Act 1993 a special account was established to facilitate the recovery of financial assistance provided to superannuation fund members suffering adverse outcomes resulting from fraud and misappropriation by fund trustees. The account has not been used prior to 2003-04. The first of the Financial Assistance Levies was gazetted on 30 June 2003 and collection commenced in August of that year. Further levies are planned in 2004-05 and outer years.

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