Financial System Legislation Amendment (Financial Claims Scheme and Other Measures) Act 2008 (105 of 2008)

Schedule 3   Other measures: general insurance

Part 1   Main amendments

Insurance Act 1973

26   After section 131

Insert:

131A Authorising contracts etc. for protecting policyholders’ interests and financial system stability

Authorising the making of contracts and arrangements

(1) With the Finance Minister’s written approval, the Minister may authorise the making of contracts and arrangements by the Commonwealth for the purposes of:

(a) protecting the interests of policyholders and prospective policyholders under insurance policies (issued by general insurers and Lloyd’s underwriters) in ways that are consistent with the continued development of a viable, competitive and innovative insurance industry; or

(b) protecting financial system stability in Australia.

Specifying amounts to be credited to Special Account

(2) The authorisation must specify the amount (if any) to be credited to the Financial System Stability Special Account, so that the total described in subsection (3) does not exceed by more than $10,000,000,000 the total described in subsection (4).

Note: This ensures that the balance of the Special Account directly attributable to authorisations under this section cannot exceed $10,000,000,000 at any time.

(3) The total described in this subsection is the total of all the amounts specified under subsection (2) in authorisations made under this section (taking account of any amendments of those authorisations).

(4) The total described in this subsection is the total of all the amounts taken under subsection 21(2) of the Financial Management and Accountability Act 1997 to be debited from the Financial System Stability Special Account for expenditure for the purpose described in paragraph 70G(b) of the Banking Act 1959.

Note: That purpose is making a payment under a contract or arrangement whose making was authorised under this section.

Amending specification of amount to be credited

(5) The Minister may amend an authorisation made under this section, but only to change the specification of an amount under subsection (2), within the limit set out in that subsection.

Authorisation cannot be revoked

(6) The Minister cannot revoke an authorisation made under this section.

Authorisation or amendment not disallowable or subject to expiry

(7) An authorisation or amendment made under this section is a legislative instrument, but neither section 42 (disallowance) nor Part 6 (sunsetting) of the Legislative Instruments Act 2003 applies to the authorisation or amendment.

When authorisation or amendment takes effect

(8) The authorisation or amendment takes effect from the time it is made, despite subsections 12(1) and (2) of the Legislative Instruments Act 2003.

131B Borrowing funds for payments under authorised contracts etc.

(1) Subsection (2) applies if the Minister has determined under section 131A an amount to be credited to the Financial System Stability Special Account.

(2) On behalf of the Commonwealth, the Minister may, with the Finance Minister’s written approval, borrow money for not more than 24 months on terms and conditions specified in, or consistent with, the approval, so that the total unrepaid borrowing under this section is not more than $10,000,000,000 at any time.

(3) The Finance Minister may delegate, in writing, to an SES employee or acting SES employee in the Department that is administered by the Finance Minister, the Finance Minister’s power of approval for the purposes of subsection (2).

(4) In this section:

borrow includes raise money or obtain credit, whether by dealing in securities or otherwise, but does not include obtain credit in a transaction forming part of the day-to-day operations of the Commonwealth.