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2010-2011-2012-2013
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
INTERNATIONAL MONETARY AGREEMENTS AMENDMENT BILL 2013
EXPLANATORY MEMORANDUM
(Circulated by the authority of the
Deputy Prime Minister and Treasurer, the Hon Wayne Swan MP)
Table of contents
General outline and financial impact ....................................................... 3
Chapter 1 Amendments to the IMA Act .......................................... 5
Chapter 2 Statement of Compatibility with Human Rights .............. 9
Index ..................................................................................................... 11
Glossary
The following abbreviations and acronyms are used throughout this
explanatory memorandum.
Abbreviation Definition
IMA Act International Monetary Agreements Act 1947
IMF International Monetary Fund
SDR Special Drawing Rights
1
General outline and financial impact
Outline
This Bill amends the International Monetary Agreements Act 1947
(IMA Act) to provide a standing appropriation and authority to borrow for
payments to meet drawings made by the International Monetary Fund
(IMF) under a bilateral loan agreement entered into by Australia and the
IMF on 13 October 2012. The loan agreement will come into force
following Royal Assent of the Bill.
The Loan Agreement will provide for Australia to lend to the IMF up to
the equivalent of Special Drawing Rights (SDR) 4.61 billion (around
A$6.8 billion). The bilateral loan shall have a term of two years,
extendable by the IMF for up to two additional one-year periods, for a
maximum total term of four years.
The IMF may make drawings under the Agreement only if its existing
quota and New Arrangements to Borrow resources are insufficient to
support its lending to borrowing member countries. The Agreement is not
expected to be drawn upon over the forward estimates period as the IMF's
currently available resources are sufficient to cover its projected lending
activities.
1.1 Date of effect: The amendments in this Bill will apply from the
day after it receives Royal Assent.
Proposal announced: In April 2012 the Deputy Prime Minister and
Treasurer announced Australia's commitment to provide a US$7 billion
contingent bilateral loan to the IMF as part of a broad global effort to
increase the resources available to the IMF for crisis prevention and
resolution.
On 13 October 2012, the Deputy Prime Minister and Treasurer and the
Managing Director of the IMF signed the bilateral loan agreement at the
IMF/World Bank Annual Meetings.
Financial impact: The Bill will have no direct impact on either the
underlying cash balance or the fiscal balance. Loans to the IMF represent
monetary assets and associated transactions would be classified as
financing transactions. Therefore, they would have no impact on the
Australian Government's net debt but would add to its borrowing
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International Monetary Agreements Amendment (Loans) Bill 2013
requirement. In the event of the IMF drawing on this credit line, the loan
would be repaid to Australia in full, with interest.
The maximum amount available to be drawn under the Agreement is the
equivalent of SDR 4.61 billion (around A$6.8 billion).
Human rights implications: This Bill does not raise any human rights
issues. See Statement of Compatibility with Human Rights -- Chapter 2.
Compliance cost impact: Nil.
4
Chapter 1 - Amendments to the IMA Act
Chapter 1
Amendments to the IMA Act
Context of the Amendments
1.1 In April 2012 the Deputy Prime Minister and Treasurer
announced Australia's commitment to provide a US$7 billion contingent
bilateral loan to the IMF as part of a broad global effort to increase the
resources available to the IMF for crisis prevention and resolutions.
1.2 On 13 October 2012, the Deputy Prime Minister and Treasurer
and the Managing Director of the IMF signed the bilateral loan agreement
at the IMF/World Bank Annual Meetings.
Summary of new law
1.3 A standing appropriation is established for payments to the IMF
to meet drawings under the bilateral loan agreement between Australia
and the IMF that was signed on 13 October 2012. The appropriation
covers the agreement, and any subsequent amended agreement except in
the case that the maximum value that may be lent or the term of the
agreement is amended.
1.4 A standing appropriation is established for payments made by
Australia under section 3 of Article III of the IMF's Articles of Agreement
which deals with payments when quotas are changed.
Comparison of key features of new law and current law
New law Current law
The Consolidated Revenue Fund is No equivalent.
appropriated for payments made for
drawings by the IMF under a bilateral
loan agreement between Australia
and the IMD.
Amendments to the bilateral loan No equivalent.
agreement must be notified by
legislative instrument with the
exception of amendments to the
maximum amount that may be
borrowed under the agreement or the
term of the agreement.
The Consolidated Revenue Fund is The Consolidated Revenue Fund is
appropriated for payment for changes appropriated for payment for changes
in Australia's quota. in Australia's quota made by way of
SDRs and/or securities.
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International Monetary Agreements Amendment (Loans) Bill 2013
Detailed explanation of new law
1.5 This Bill establishes a standing appropriation for payments to
meet drawings made under a bilateral loan agreement between Australia
and the IMF that was done on 13 October 2012. The bilateral loan
agreement provides that the IMF may make drawings up to the equivalent
of SDR 4.61 billion (around $A6.8 billion). The IMF may only make
drawings under the loan agreement if its existing quota and New
Arrangements to Borrow resources are insufficient to support its lending
to borrowing member countries. [Schedule 1, item 1, section 3 and Schedule 1,
item 7, section 8CAA]
1.6 The loan agreement will come into force following Royal Assent
of the Bill commencing its term of two years. However, the agreement
may be extended for an additional one year by the IMF notifying Australia
of an extension and a further additional one year with the consent of
Australia.
1.7 The Treasurer must be satisfied that a payment must be made to
meet Australia's obligations under the loan agreement before directing
that the payment is made. Therefore, a standing appropriation ensures
that payments can be made in a timely manner when the loan agreement is
called upon, however, the appropriation is limited to drawings made by
the IMF that are covered by the terms of the loan agreement and hence,
the maximum amount specified by the agreement. This is identical to the
process for making payments under the New Arrangements to Borrow.
[Schedule 1, item 7, subsection 8CAA(1)]
1.8 The appropriation remains in place if the loan agreement is
amended if the Treasurer gives notice of the amendment by tabling a
legislative instrument, except in the case of amendments to either, or both,
of the maximum amount that Australia may lend to the IMF or to the term
of the agreement. [Schedule 1, item 7, subsection 8CAA(3)]
1.9 This approach ensures that any minor amendments to the loan
agreement are subject to parliamentary scrutiny as they must be tabled in a
legislative instrument and can be disallowed. This avoids the need for
legislative change of the IMA Act for minor amendments of the loan
agreement. However, the IMA Act would have to be amended before
payments could be made pursuant to an amended agreement with changes
to the maximum amount that Australia may lend or the term of the
agreement.
6
Chapter 1 - Amendments to the IMA Act
1.10 A legislative instrument notifying an amendment to the loan
agreement will come into force on the later of:
· the day that is specified in the instrument or the day after
the instrument is registered (whichever applies); or
· the day after the last day on which Parliament may pass a
resolution disallowing the instrument under the Legislative
Instruments Act 2003. [Schedule 1, item 7, section 8CAA(4)]
1.11 A legislative instrument will only come into effect until the
period of time within which Parliament may disallow has elapsed. This is
necessary as any amendments of the loan agreement will only become
effective following Australia's parliamentary requirements being
completed including that the legislative instrument has not been
disallowed. [Schedule 1, item 7, section 8CAA(4)]
1.12 Any legislative instrument made notifying an amendment will
be repealed the day after the loan agreement expires. [Schedule 1, item 7,
subsection 8CAA(5)]
1.13 For the avoidance of any doubt, section 6 of the IMA Act will
also be amended to clarify that the Treasurer will have authority to borrow
in order to make payments that meet Australia's obligations under the
loan agreement. This is consistent with the existing provision that
authorises the Treasurer to borrow in relation to Australia's membership
of the IMF and to meet obligations under the New Arrangements to
Borrow. [Schedule 1, item 3, paragraph 6(1)(c)]
Consequential amendments
1.14 The reference to the Commonwealth Inscribed Stock Act 1911 is
being updated to reflect the convention of referring to Acts by the year of
their commencement. [Schedule 1, item 2, subsection 6(1)]
1.15 The National Debt Sinking Fund Act 1923 was repealed in 1994
which means that subsection 6(3) of the IMA Act is now redundant.
Therefore, this subsection will be repealed. [Schedule 1, item 4,
subsection 6(3)]
1.16 Currently, the appropriation for payments to the IMF for
changes to Australia's quota in the IMF relies on section 5 of the IMA Act
to the extent a payment is made in SDRs and section 7 to the extent the
quota change is satisfied by issuing securities. However, this prevents the
Commonwealth from making payments for changes in Australia's quota
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International Monetary Agreements Amendment (Loans) Bill 2013
using a foreign currency or, if accepted by the IMF, in Australian
currency.
1.17 Therefore, a standing appropriation for the payment of quota
changes under section 3 of Article 3 of the IMF's Articles of Agreement
provides flexibility in the way the Commonwealth may pay for a change
in Australia's quota and will ensure that the appropriation covers
payments that are made using a foreign currency or Australian currency.
[Schedule 1, items 5 and 6, section 8]
Application
1.18 The amendments in this Bill commence on the day after Royal
Assent.
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Chapter 2
Statement of Compatibility with Human
Rights
Prepared in accordance with Part 3 of the Human Rights
(Parliamentary Scrutiny) Act 2011
International Monetary Agreements Amendment Bill 2013
This Bill is compatible with the human rights and freedoms recognised or
declared in the international instruments listed in section 3 of the Human
Rights (Parliamentary Scrutiny) Act 2011.
Overview
The general purpose of the Bill is to bring into force a bilateral loan
agreement between Australia and the International Monetary Fund (IMF),
and provide borrowing and appropriation authority for any drawings
under the agreement.
Human rights implications
This Bill does not engage any of the applicable rights or freedoms.
Conclusion
This Bill is compatible with human rights as it does not raise any human
rights issues.
The Hon. Wayne Swan MP, Deputy Prime Minister and Treasurer
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Index
Schedule 1: IMF loan agreement 2012
Bill reference Paragraph number
Item 1, section 3 and item 7, section 8CAA 1.5
Item 2, subsection 6(1) 1.14
Item 3, paragraph 6(1)(c) 1.13
Item 4, subsection 6(3) 1.15
Items 5 and 6, section 8 1.17
Item 7, subsection 8CAA(1) 1.7
Item 7, subsection 8CAA(3) 1.8
Item 7, section 8CAA(4) 1.10, 1.11
Item 7, subsection 8CAA(5) 1.12
11