Home / Regulatory & Government / Treasury to review timing of documentation for levies
19 August 2019
The Australian Prudential Regulation Authority (APRA) may be open to changing the release date of the Cost Recovery Impact Statement (CRIS) that accompanies the annual supervisory funding levy consultations.
Treasury has released a paper seeking submissions on the methodology it uses to calculate the annual supervisory levy. It asks what changes industry would find useful to the levy consultation process, and whether the current levies system is transparent and appropriate for industry sub-sectors.
“Regarding the timing of the annual CRIS, industry has indicated concerns during annual consultations that APRA publishes its CRIS after the consultation process,” the paper says.
The CRIS holds expenditure information, including accounting for cost-recovered activities, the efficient allocation of resources and its licensing and authorisation charging activities. The next one is due after the outcome of the methodology review.
Last year the Insurance Council of Australia attacked the timing of the CRIS in consultation on the financial supervisory levies.
“It is poor process that the sector is being asked to respond to this consultation in the absence of the CRIS from APRA,” ICA said. “It is critical that an adequately transparent framework be in place to ensure regulators deliver value for money.
“The general insurance sector’s contribution to the levies is significant. It is therefore important that the sector knows how its contribution will be allocated and used.”
APRA’s levy requirement on the general insurance sector for 2019-20 was $30.5 million. Its total funding for that period is $186.1 million. The levy maximum for the general insurance industry was increased by about 44% to accommodate the increase to APRA’s increased future funding requirements, drawing criticism from industry that the rise outstripped the levy on the major banks – which got a 24% increase.
Treasury also wants feedback from industry over whether the current levy base is appropriate for each industry sector, and if the design and operation of the levy framework is still fit for purpose.
This year the levy will also recoup the costs Treasury incurred in conducting a capability review of APRA.
One of the challenges of the levy methodology is avoiding cross-subsidisation – when a disproportionately large levy is charged to part of the industry when compared to the actual cost of APRA supervision, the paper says.
The proposed life insurance industry funding levy for 2019-20 is $19.9 million, or 8.4% of total levies.