Section 2: Outcomes and outputs information

Outcomes and output groups

The map below shows the relationship between Government outcomes and the contributing outputs for the Australian Prudential Regulation Authority (APRA). Financial detail for Outcome 1 by output appears in Table 2.1 while non-financial information for Outcome 1 appears in Table 2.2.

Map 2: Outcomes and output groups

Output cost attribution

Outputs are priced by costing the time allocated to work carried out on prudential policy development, surveillance programmes and prudential advice. The costs attributed to outputs are collected in cost pools for direct cost with associated allocated overheads. Support costs are allocated through the apportionment of unallocated time in the same ratio as direct costs.

Changes to outcomes and outputs

There are no proposed changes to the outcome or outputs.

Outcome 1 — Description

To enhance public confidence in Australia’s financial institutions through a framework of prudential regulation which balances financial safety, efficiency, competition, contestability and competitive neutrality.

Measures affecting Outcome 1

Australian Prudential Regulation Authority — strengthened capabilities in prudential regulation

The Government will provide $47.4 million over four years to the Australian Prudential Regulation Authority (APRA) to strengthen its supervisory capacity, principally in supervising large, complex and systemically important financial institutions. It will enable APRA to build up staff levels in front-line supervision and in specialist risk areas and to strengthen its capabilities as Australia’s statistical collection agency for the financial sector. This supports the Government’s commitment to increase public confidence in the Australian financial system.

The funding will also support other regulatory activities to strengthen the safety of superannuation funds and to assess whether individuals are ‘fit and proper’ to remain in the general insurance industry in view of the HIH Royal Commission’s findings.

Apart from funding for ‘fit and proper’ assessments, the cost of this measure will be recovered via increases in financial sector levies.

The Government will also provide an equity injection of $3 million in 2004-05, which will be returned to the Budget in the subsequent year. This is to cover a timing difference between expenses and the collection of superannuation trustee licensing fees announced by the Government on 28 October 2002.

The provision of an equity injection is a financial transaction within the general government sector and consequently has no direct impact on the fiscal balance.

Outcome 1 — Resourcing

Table 2.1 shows how the 2004-05 appropriations translate to total resourcing for Outcome 1, including revenues from government (appropriations), revenue from other sources, and the total price of outputs.

Table 2.1: Total resources for Outcome 1

1. C1 and E1 show the links back to Table 1.1.
2. Further details on special accounts appear in Table 1.6.

Outcome 1 — Contribution of outputs

The outputs of APRA aim to 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.

The outputs involve 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.

Performance information for Outcome 1

Table 2.2: Performance information for Outcome 1

Table 2.2: Performance information for Outcome 1 (continued)

Evaluations

Performance will be measured on a quarterly basis through an integrated programme of business planning, measurement and reporting. The business plan is expressed through six key results areas (KRAs), three of which represent the outputs described in Table 2.2 plus three KRAs covering staff, infrastructure and accountability.

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

The performance of surveillance programmes is evaluated both internally through the measurement processes, by the Quality Assurance and Consistency Group and internal audit, and externally through industry consultation on a periodic basis.

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