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Tuesday, 2 February 2016
Page: 20

Mr LAUNDY (Reid) (12:59): On behalf of the Standing Committee on Economics I present the committee's report entitled Review of the Australian Prudential Regulation Authority annual report 2014 (third report)together with minutes of the proceedings.

Report made a parliamentary paper in accordance with standing order 39(e).

Mr LAUNDY: by leave—At our most recent public hearing with APRA, in October 2015, the committee learned of a number of actions the regulator had taken to reinforce potential practices across APRA regulated institutions in the financial sector.

The committee notes that APRA released a study on the relative capital strength of the major Australian banks against their overseas peers and also announced that effective 1 July 2016 it will increase the risk weight for residential mortgage exposures for banks that are accredited to use internal models to determine their capital ratios.

We also note from our discussions with APRA that the recommendations of the Financial System Inquiry (FSI) report and the work of the Basel Committee are likely to influence the capital requirements of Australian banks further and look forward to following the progress that is anticipated in this area.

Additionally, the committee notes APRA's continued supervision of the residential mortgage lending practices of ADIs in the current environment of heightened risk. However, the committee notes reports by the RBA that data problems regarding lenders' housing loans have emerged following increased supervisory scrutiny and will be investigating the matter further with APRA at future hearings.

In relation to superannuation, the committee will continue to scrutinise APRA on its oversight of the industry's implementation of prudential standards, particularly in light of the recent Stronger Super reforms.

The transition of responsibilities for the prudential supervision of private health insurance funds from the Private Health Insurance Administration Council (PHIAC) to APRA occurred from 1 July 2015 and the committee looks forward to observing the development of the prudential regime for private health insurers in the long term.

Finally, on behalf of the committee, I would like to thank the chairman of the APRA, Mr Wayne Byers, and other representatives of APRA for appearing at the hearing on 23 October 2015. I also thank my fellow economics committee members for their continued support and input as well as the most capable secretariat staff who, as always, help us put these reports together. The next hearing with APRA is scheduled for 18 March 2016. I commend this report to the House and move:

That the House take note of the report.

The DEPUTY SPEAKER ( Mr Craig Kelly ): In accordance with standing order 39(c), the debate is adjourned. The resumption of the debate will be made an order of the day for the next sitting.