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This is a Bill, not an Act. For current law, see the Acts databases.
2019
The Parliament of the
Commonwealth of Australia
HOUSE OF REPRESENTATIVES
Presented and read a first time
Australian Banks (Government Audit)
Bill 2019
No. , 2019
(Mr Katter)
A Bill for an Act to provide for the auditing of
Australian banks by the Commonwealth
Auditor-General, to reinforce the Constitutional
obligation of the Commonwealth to regulate
Australia's banking system and resultant currency
and credit within the Australian economy and to
better protect deposits within Australia's banking
system, and for related purposes
No. , 2019
Australian Banks (Government Audit) Bill 2019
i
Contents
Part 1--Preliminary
2
1
Short title ........................................................................................... 2
2
Commencement ................................................................................. 2
3
Purposes of this Act ........................................................................... 2
4
Definitions ......................................................................................... 3
5
Act binds the Crown .......................................................................... 4
Part 2--Bank audits
5
6
Audits to be undertaken by the Auditor-General ............................... 5
7
Reports on audits ............................................................................... 5
8
Powers of Auditor-General when conducting audits ......................... 6
9
Audit requirements ............................................................................ 7
10
Attorney-General ............................................................................... 8
11
Additional staff and resources ........................................................... 8
12
Auditor-General staff and resources .................................................. 8
13
Rules .................................................................................................. 9
Schedule 1--List of D-SIBs
10
1
List of D-SIBs ................................................................................. 10
No. , 2019
Australian Banks (Government Audit) Bill 2019
1
A Bill for an Act to provide for the auditing of
1
Australian banks by the Commonwealth
2
Auditor-General, to reinforce the Constitutional
3
obligation of the Commonwealth to regulate
4
Australia's banking system and resultant currency
5
and credit within the Australian economy and to
6
better protect deposits within Australia's banking
7
system, and for related purposes
8
The Parliament of Australia enacts:
9
Part 1
Preliminary
Section 1
2
Australian Banks (Government Audit) Bill 2019
No. , 2019
Part 1--Preliminary
1
2
1 Short title
3
This Act is the
Australian Banks (Government Audit) Act 2019
.
4
2 Commencement
5
(1) Each provision of this Act specified in column 1 of the table
6
commences, or is taken to have commenced, in accordance with
7
column 2 of the table. Any other statement in column 2 has effect
8
according to its terms.
9
10
Commencement information
Column 1
Column 2
Column 3
Provisions
Commencement
Date/Details
1. The whole of
this Act
The day after the day on which the
Consolidated Revenue Fund is appropriated
under an Act to the Department in which this
Act is administered for payment for the
purposes of this Act..
Note:
This table relates only to the provisions of this Act as originally
11
enacted. It will not be amended to deal with any later amendments of
12
this Act.
13
(2) Any information in column 3 of the table is not part of this Act.
14
Information may be inserted in this column, or information in it
15
may be edited, in any published version of this Act.
16
3 Purposes of this Act
17
The purposes of this Act are:
18
(a) to provide for an independent audit of the banks as listed in
19
Schedule 1 hereto by the Commonwealth Auditor-General;
20
(b) to provide for an audit of the banks as listed in Schedule 1
21
hereto by an entity independent of private interests;
22
Preliminary
Part 1
Section 4
No. , 2019
Australian Banks (Government Audit) Bill 2019
3
(c) to re-enforce the Constitutional obligation of the
1
Commonwealth to regulate Australia's banking system;
2
(d) to re-enforce the Constitutional obligation of the
3
Commonwealth to regulate currency and credit within the
4
Australian economy;
5
(e) to better protect deposits within Australia's banking system.
6
4 Definitions
7
In this Act:
8
Auditor-General
means the Auditor-General appointed under the
9
Auditor-General Act 1997
.
10
ADI
means an authorised deposit-taking institution within the
11
meaning of the
Banking Act 1959
.
12
APRA
means the Australian Prudential Regulation Authority.
13
ASIC
means Australian Securities and Investments Commission.
14
Bank
means an ADI that is a D-SIB.
15
derivative
includes the following:
16
(a) any arrangement or financial product having a value deriving
17
from and dependent upon an underlying variable asset;
18
(b) any investment in a structured or synthetic product;
19
(c) any financial instrument in which a return is calculated based
20
on the value of, or by reference to the performance of, a
21
security, commodity, swap, other asset, or an entity;
22
(d) any index or basket composed of securities, commodities,
23
swaps, other assets, or entities, other than customarily
24
determined interest rates.
25
D-SIB
means a Domestic Systemically Important Bank as
26
determined by APRA and includes:
27
(a) the Banks listed in Schedule 1; and
28
(b) any Banks prescribed by the rules.
29
Part 1
Preliminary
Section 5
4
Australian Banks (Government Audit) Bill 2019
No. , 2019
Joint Committee of Public Accounts and Audit
means the Joint
1
Committee of Public Accounts and Audit established by the
Public
2
Accounts and Audit Committee Act 1951
.
3
mortgage
means any deed, memorandum of mortgage, instrument,
4
or agreement whereby security for payment of moneys or for the
5
performance of any contract is granted over real property in
6
Australia or any interest therein, and includes an equitable
7
mortgage by deposit of title deeds, and any document by which the
8
duration of a mortgage is extended or by which any provision of
9
the mortgage is varied.
10
rules
means rules made under section 13.
11
5 Act binds the Crown
12
This Act binds the Crown in right of each of the States, of the
13
Australian Capital Territory, and of the Northern Territory.
14
Bank audits
Part 2
Section 6
No. , 2019
Australian Banks (Government Audit) Bill 2019
5
Part 2--Bank audits
1
6 Audits to be undertaken by the Auditor-General
2
(1) The Auditor-General's functions include carrying out audits of the
3
books, accounts and transactions of the Banks.
4
(2) The Auditor-General must inspect and audit the books, accounts
5
and transactions of the Banks, and must draw the Treasurer's
6
attention to any irregularity revealed by the inspection and audit
7
that, in the opinion of the Auditor-General, is of sufficient
8
importance to justify doing so.
9
(3) The Auditor-General must undertake an inspection and audit as
10
referred to in subsection (2) in respect of each of the Banks and
11
must commence the first of such audits within 90 days after the day
12
this Act commences and must complete each such audit as soon as
13
practicable thereafter.
14
(4) The Auditor-General must carry out further inspections and audits
15
in respect of each Bank at such time or times as the
16
Auditor-General determines but such that there must be a period of
17
not more than 12 months between the time of completion of an
18
inspection and audit and the time of commencement of the next
19
audit and inspection of each Bank.
20
(5) For the purposes of subsection (4), the time of completion of an
21
inspection and audit is taken to be when the Auditor-General
22
reports to the Treasurer the results of the inspection and audit
23
under subsection 7(1).
24
7 Reports on audits
25
(1) The Auditor-General must report to the Treasurer the results of
26
each inspection and audit carried out under section 6.
27
(2) The Treasurer must give a copy of each report to the Joint
28
Committee of Public Accounts and Audit.
29
Part 2
Bank audits
Section 8
6
Australian Banks (Government Audit) Bill 2019
No. , 2019
(3) The Treasurer must cause a copy of each report to be laid before
1
each House of the Parliament within 15 sittings days of that House
2
after the day the report is given to the Treasurer.
3
8 Powers of Auditor-General when conducting audits
4
(1) The Auditor-General or an authorised official:
5
(a) may at all reasonable times enter and remain on any premises
6
occupied by a Bank; and
7
(b) is entitled to full and free access to all accounts, records,
8
documents and papers of the Bank relating directly or
9
indirectly to the receipt or payment of moneys by the Bank or
10
contracts or obligations entered into by each Bank or to the
11
acquisition, receipt, custody or disposal of property of the
12
Bank.
13
(2) An authorised official is not entitled to enter or remain on Bank
14
premises if he or she fails to produce a written authority on being
15
asked by the Bank to produce proof of his or her authority. For this
16
purpose,
written authority
means an authority signed by the
17
Auditor-General that states that the official is authorised to
18
exercise powers under this section.
19
(3) If an authorised official enters, or proposes to enter, premises under
20
this section, the Bank must provide the official with all reasonable
21
facilities for the effective exercise of powers under this section.
22
(4) For the purpose of exercising powers under this section, a Bank
23
must give the Auditor-General access to its books, accounts,
24
records, documents or papers and must give to the Auditor-General
25
such information and facilities as the Auditor-General requires to
26
conduct the audit investigation.
27
(5) The Auditor-General or an authorised official may make copies of,
28
or take extracts from, any such books, accounts, records,
29
documents or papers.
30
(6) The Auditor-General or an authorised official may require a
31
Director, officer, employee, agent or contractor of a Bank to give
32
the Auditor-General such information in the possession of such
33
person or to which such person has access as the Auditor-General
34
Bank audits
Part 2
Section 9
No. , 2019
Australian Banks (Government Audit) Bill 2019
7
or authorised official considers necessary for the purposes of an
1
inspection or audit under this Act, and such person must comply
2
with the requirement.
3
(7) To avoid doubt:
4
(a) nothing in this section authorises the Auditor-General to
5
furnish a report with respect to the affairs of any individual
6
customer of a Bank; and
7
(b) this section does not limit the operation of Part 5 of the
8
Auditor-General Act 1997
in relation to an audit under
9
section 6 of this Act.
10
(8) In this section,
authorised official
means an official of a
11
non-corporate Commonwealth entity (within the meaning of the
12
Public Governance, Performance and Accountability Act 2013
)
13
who is authorised by the Auditor-General, in writing, to exercise
14
powers or perform functions under this section.
15
9 Audit requirements
16
The Auditor-General must include in an inspection and audit of a
17
Bank under section 6, an investigation, consideration and
18
evaluation of the following matters and must include the
19
Auditor-General's observations, findings and conclusions as to
20
such matters in the Auditor-General's report on the inspection and
21
audit referred to in subsection 7(1):
22
(a) the derivatives exposures of the Bank (both gross contracts
23
and net exposures by type) and whether off or on
24
balance-sheet including an assessment of the assumptions
25
made by the Bank and which underlie the derivatives
26
contracts and an assessment of the true risk such derivative
27
contracts present to the Bank;
28
(b) the home loan portfolios of the Bank and a marking to market
29
of housing loans against mortgage security held by the Bank
30
(the market value of the security properties and not limited to
31
original book value);
32
(c) the adequacy of provisions for defaults and delinquencies in
33
the Bank's housing loans including loans made by the Bank
34
to any non-bank mortgage lender or financial institution
35
Part 2
Bank audits
Section 10
8
Australian Banks (Government Audit) Bill 2019
No. , 2019
conducting a business of lending money on mortgage and the
1
assumptions underlying the Bank's provisions for such
2
defaults;
3
(d) off balance sheet liability exposures of the Bank;
4
(e) any Internal Ratings Based (IRB) model by which the Bank
5
has assessed the Bank's risk and set risk-weighted capital
6
levels and whether such model has caused or contributed to a
7
housing bubble in Australia and may be too weak and
8
unreliable (based on questionable assumptions) to guide the
9
Australian economy.
10
10 Attorney-General
11
In undertaking investigation, consideration and evaluation of the
12
matters referred to in section 9 the Auditor-General may call upon
13
the services of the Attorney General who must provide such
14
service and assistance as may be requested.
15
11 Additional staff and resources
16
The Auditor-General may increase the staff, resources and
17
facilities available to the Attorney-General to undertake the
18
inspections and audits under section 6 and must advise the
19
Treasurer of the additional cost and funding required.
20
12 Auditor-General staff and resources
21
(1) In undertaking audits under section 6, the Auditor-General must
22
not engage either as an officer, employee, agent, consultant or
23
contractor, a person who is or has been a director, partner, officer,
24
employee, agent, consultant or contractor of an auditor which has
25
undertaken or been responsible for the audit of any one or more of
26
the Banks.
27
(2) In undertaking audits under section 6, the Auditor-General must
28
not engage either as an officer, employee, agent, consultant or
29
contractor, a person who is or has been an officer, employee, agent,
30
consultant or contractor of APRA or ASIC.
31
Bank audits
Part 2
Section 13
No. , 2019
Australian Banks (Government Audit) Bill 2019
9
(3) Despite subsections (1) and (2), the Auditor-General may engage a
1
person in undertaking audits under section 6 if:
2
(a) for a period of at least three years before the proposed date of
3
appointment the person has not worked in any of the
4
capacities referred to in those subsections; and
5
(b) the Auditor-General is satisfied that the person has
6
experience, skills and abilities which would be of substantial
7
benefit and assistance in undertaking the audits.
8
13 Rules
9
(1) The Treasurer may, by legislative instrument, make rules
10
prescribing matters:
11
(a) required or permitted by this Act to be prescribed by the
12
rules; or
13
(b) necessary or convenient to be prescribed for carrying out or
14
giving effect to this Act.
15
(2) Without limiting subsection (1), the rules may prescribe
16
requirements about the conduct of inspections and audits under this
17
Act.
18
(3) To avoid doubt, the rules may not do the following:
19
(a) create an offence or civil penalty;
20
(b) provide powers of:
21
(i) arrest or detention; or
22
(ii) entry, search or seizure;
23
(c) impose a tax;
24
(d) set an amount to be appropriated from the Consolidated
25
Revenue Fund under an appropriation in this Act;
26
(e) directly amend the text of this Act.
27
Schedule 1
List of D-SIBs
Clause 1
10
Australian Banks (Government Audit) Bill 2019
No. , 2019
Schedule 1--List of D-SIBs
1
Note:
See the definition of
D-SIB
in section 4.
2
3
1 List of D-SIBs
4
The following are D-SIBs for the purposes of this Act:
5
(a) Australia and New Zealand Banking Group Limited (ANZ);
6
(b) Commonwealth Bank of Australia and its subsidiary Bank of
7
Western Australia Limited trading as BankWest;
8
(c) National Australia Bank and its subsidiary UBank
9
(d) Westpac Banking Corporation and its subsidiaries Bank of
10
Melbourne and St. George Bank Limited.
11
12