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Banking (Queensland Industry Development Corporation) Amendment Bill 1995
House: House of Representatives
Commencement: Royal Assent
To bring the Queensland Industry Development Corporation (QIDC) within the prudential control of the Reserve Bank of Australia.
The QIDC commenced operation on 1 July 1986 and replaced the Agricultural Bank, the Industries Assistance Board and the Rural Reconstruction Board. The main functions of the QIDC are the provision of financial services to Queensland industry and the administration, in Queensland, of certain Commonwealth and State business and rural assistance schemes, including the Rural Adjustment Scheme, the Natural Disaster Assistance Scheme, the Small Business Debt Assistance Scheme and the Rural Housing Scheme. In relation to its financial services, QIDC provides a broad range of products, including development capital, interest rate swaps, bridging loans, mortgages, commercial bills and investment services.
QIDC is a relatively large and profitable operation, with net assets of $151.335 million as at 30 June 1994 and total operating revenue of $248.444 million in 1993-4. After tax operating profits for that year were $25.925 million. 1 While not subject to Commonwealth income tax, as QIDC is a State body (section 114 of the Constitution prevents the Commonwealth from imposing a tax on property of any kind belonging to a State), QIDC is required to pay an amount equal to the tax that would be payable to the Commonwealth to the Queensland government and is also required to pay a dividend to the government.
The public sector in Queensland is currently undergoing a process known as 'Corporatisation' as part of micro-economic reform in that State. In relation to government business enterprises, the major part of the corporatisation process involves placing the businesses in, as far as practicable, the same position as private enterprises while allowing government supervision of the general direction of the enterprise and their public service obligations. Regarding QIDC, a working party was established in 1993 to consider the implementation of corporatisation and the working party reported in February 1994. The working party's recommendations were accepted by the Queensland government and legislation to implement the recommendations was passed in September 1994. The major changes to be implemented are:
* the functions relating to government assistance programs be given to a separate body, with QIDC's strategic direction to be the provision of financial services only;
* QIDC's performance be assessed by reference to the rate of return on its funds;
* the Queensland government provide a guarantee for QIDC's borrowings;
* the Queensland Venture Capital Fund to be wound-up with itbs assets being transferred to QIDC at market value and QIDC taking over the provision of venture capital previously provided by the Fund; and
* a prudential supervisory regime be established that is external to QIDC and the government. 2
This Bill is concerned with the later matter.
The Reserve Bank of Australia (RBA) has power under the Banking Act 1959 (the Principal Act) to supervise the prudential standards applicable to banks authorised under that Act to conduct banking services. Standards relate to the capital adequacy of the banks and to the prudent risk management of their business. This Bill will include the QIDC in the entities subject to the RBA's prudential control.
Item 1 of the Schedule will amend the definition of 'bank' in the Principal Act to include the QIDC in the definition.
Item 4 of the Schedule will apply the provisions of the Principal Act dealing with prudential supervision and certain miscellaneous provisions of the Principal Act to QIDC. The main miscellaneous provisions that will apply to QIDC relate to the ability of the RBA to conduct investigations into QIDC; the supply of information to the RBA; and the ability of the RBA to direct QIDC to comply with the Principal Act.
1. QIDC Annual Report, 1993-4, Financial Statements.
2. Ibid., p. 14.
Chris Field (Ph. 06 2772439)
Bills Digest Service 8 March 1995
Parliamentary Research Service
This Digest does not have any legal status. Other sources should be consulted to determine whether the Bill has been enacted and, if so, whether the subsequent Act reflects further amendments.
Commonwealth of Australia 1995.
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Published by the Department of the Parliamentary Library, 1995.