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Act No. 49
PUBLIC AUTHORITIES (FINANCIAL ARRANGEMENTS)
AMENDMENT BILL 1991
NEW SOUTH WALES
EXPLANATORY NOTE
(This Explanatory Note relates to this Bill as introduced into Parliament)
The Treasury Corporation (Amendment) Bill 1991 is cognate with this Bill.
The object of this Bill is to amend the Public Authorities (Financial Arrangements)
Act 1987 so as:
(a) to extend the credit rating requirements for investments by public sector bodies;
and
(b) to clarify the existing provisions in the Principal Act on financial
accommodation, financial adjustment and guarantees; and
(c) to provide clear statutory authority for public sector bodies to enter joint
financing arrangements with other bodies, in both the public sector and the
private sector.
Clause 1 specifies the short title of the proposed Act.
Clause 2 provides for the commencement of the proposed Act.
Clause 3 is a formal provision that gives effect to the Schedule of amendments.
Schedule 1 makes the amendments to the Public Authorities (Financial
Arrangements) Act 1987 described more comprehensively below.
SCHEDULE 1--AMENDMENTS
Definitions
Items 1, 2 and 3 expand the definitions in the Principal Act. Item 1 provides
cross-references in the main definition section (section 3) to definitions appearing in
separate sections for "financial accommodation", "financial adjustment" and "joint
financing arrangement". Item 1 also inserts a definition of an authority's "affiliate", to
apply throughout the Principal Act. Items 7 (b) and 11 consequentially omit the
definition from sections 11 and 28A.
2 Act No. 49
Public Authorities (Financial Arrangements) Amendment 1991
Item 2 extends the definition of financial accommodation in section 4 of the
Principal Act to include the raising of money by an authority when it is paid that money
in return for its undertaking to meet the obligations of another party (for example, by a
type of liability assumption agreement). This matter is treated at greater length in the
cognate Treasury Corporation (Amendment) Bill 1991.
Item 3 inserts as section 5A in the Principal Act a definition of joint financing
arrangement (dealt with in greater detail below).
Treasurer's approval
Item 5 amends section 8 to make it clear, among other things, that the Treasurer's
approval to financial accommodation may cover a number of authorities at once, or just
one at a time.
Financial adjustments
Item 10 inserts 3 new Parts in the Principal Act. The first--proposed Part 2A
(FINANCIAL ADJUSTMENTS)--gives a clearer statutory framework for financial
adjustments. In particular, Part 2A clarifies:
* the need for, and force of, the Treasurer's approval for financial adjustments
* that one approval may cover oneor more adjustments and one or mort
authorities
Items 4, 6, 7 (a) and 8 make consequential amendments, omitting from the Principal
Act material referring to financial adjustments and now covered by proposed Part 2A.
Joint financing arrangements
The second proposed Part inserted by item 10--Part 2B (JOINT FINANCING
ARRANGEMENTS)--allows public authorities a flexible approach to arrangements
with other bodies (inside or outside the public sector) for structured financings which
involve the carrying out of functions on behalf of the public authorities or the provision
of assets or services to the public authorities.
proposed section19 defines "authority" for the purposes of proposed Part 2B.
Proposed section 20 provides for a public authority (on the recommendation of the
appropriate Minister and with the specific approval of the Treasurer) to enter a joint
financing arrangement. It also sets out a range of functions to be exercised m such an
arrangement.
Proposed section 21 refers to the Treasurer's specific approval of those arrangements
and states its evidentiary value.
Guarantees
The third proposed Part inserted by item 10--Part 2C (GUARANTEES)--creates a
sepatate Part to deal with both statuatory and discretionary guarantees. This amendment
is aimed at clarification, rearranging the existing guarantee provisions in the Principal
Act rather than changing them.
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Public Authorities (Financial Arrangements) Amendment 1991
However, proposed section 22A (Statutory guarantee) departs from present section 15
by widening the categories of financial accommodation covered and in containing a
cross-reference to the State Owned Corporations Act 1989 to make clear that the
discretion concerning guarantees under section 16 of that Act continues to operate.
Proposed section 22B (Discretionary guarantees) departs from present section 16 to
make clear that discretionary guarantees may be specific or general.
Proposed section 22C (Statutory charge) departs from present section 16A to ensure
that payments in respect of financial adjustments (not just financial accommodation) are
a charge on the revenue of an authority.
Proposed sections 22D (Guarantee fee), 22E (Other payments by Government) and
22G (Priorities) mirror the corresponding existing provisions of the Principal Act,
except that the sections will refer also to joint financing arrangements and all will refer
to financial adjustments.
Proposed sections 22F (Treasurer may enter into and execute guarantee etc. on behalf
of Government), 22H (Recovery of money paid under guarantee or agreement) and 22I
(Appropriation) follow the corresponding existing provisions of the Principal Act.
Item 9 consequentially omits Part 2, Division 4 (Guarantees) of the Principal Act.
Credit rating criteria
Item 12 amends Schedule 4 of the principal Act to give a more general application
of prescribed ratings to investments authorised for authorities. This means that in future
an authority cannot invest, for example, in a bank, except in the Reserve Bank or a bank
carrying a credit rating prescribed in the regulations and given by a rating agency also
prescribed m the regulations.
Savings and transitional provisions
Item 13 substitutes Schedule 6 of the Principal Act to enlarge the savings and
transitional provisions to cover the enactment of the proposed Act.