STATE MEMBER FOR MALVERN
SHADOW TREASURER

Portfolio Speeches

BORROWING AND INVESTMENT POWERS AMENDMENT BILL 2013

Statement of compatibility

Mr O'BRIEN (Treasurer) tabled following statement in accordance with Charter of Human Rights and Responsibilities Act 2006:

  • In accordance with section 28 of the Charter of Human Rights and Responsibilities Act 2006 (charter act), I make this statement of compatibility with respect to the Borrowing and Investment Powers Amendment Bill 2013.

In my opinion, the Borrowing and Investment Powers Amendment Bill 2013, as introduced to the Legislative Assembly, is compatible with the human rights protected by the charter act. I base my opinion on the reasons outlined in this statement.

Overview of bill

The bill will improve the governance of government business enterprises under the Borrowing and Investment Powers Act 1987 (the act) by repealing the limits on financial accommodation imposed on Melbourne Water Corporation and the State Electricity Commission of Victoria, consistent with the treatment of other government business enterprises under the act.

 Human rights issues

 1. Human rights protected by the charter act that are relevant to the bill

The bill does not raise any human rights issues. The bill only impacts the borrowing operations of Melbourne Water Corporation and the State Electricity Commission of Victoria. The bill may result in increased borrowings for the Melbourne Water Corporation to fund its operations. This will not impact its day-to-day activities.

2. Consideration of reasonable limitations -- section 7(2)

As the bill does not raise any human rights issues, it does not limit any human rights and therefore it is not necessary to consider section 7(2) of the charter act.

Conclusion

 I consider that the bill is compatible with the charter act.

 Hon. Michael O'Brien, MP

 Treasurer

 BORROWING AND INVESTMENT POWERS AMENDMENT BILL 2013

Second reading

Mr O'BRIEN (Treasurer) -- I move:

That this bill be now read a second time.

This bill will improve the governance of government business enterprises under the Borrowing and Investment Powers Act 1987 by repealing the statutory limits on financial accommodation imposed on Melbourne Water Corporation and the State Electricity Commission of Victoria (SECV), consistent with the treatment of other government business enterprises under the act.

The current statutory limits under the Borrowing and Investment Powers Act 1987 are a legacy of the late 1980s and early 1990s when Parliament retained control over the level of debt for significant government business enterprises. It was noted by the then Treasurer in the second-reading speech on an amendment to the limits on 3 November 1988 that the statutory limits were to be a temporary arrangement.

Currently, the Melbourne Water Corporation and the State Electricity Commission of Victoria are the only government business enterprises which have statutory limits in the act on the amount of financial accommodation that may be granted to them.

The Borrowing and Investment Powers Act 1987 does not impose limits on the amount of financial accommodation that may be obtained by any other government business enterprise. Control of financial accommodation is delegated to the Treasurer and is now governed through a number of frameworks including annual borrowing approvals for government business enterprises exercised by the Treasurer under the Borrowing and Investment Powers Act 1987; corporate planning and performance reporting requirements; and the high-value/high-risk assurance process, where high-value and/or high-risk projects are subject to more rigorous scrutiny and approval processes.

These broader governance arrangements applying to government business enterprises provide a more effective means for oversight than a simple legislative cap on borrowing. Victoria is the only Australian jurisdiction with any statutory limits still in legislation. Every other jurisdiction has separate legislation that empowers the Treasurer to determine appropriate borrowing limits on its government business enterprises.

If the statutory limits are not removed, the Melbourne Water Corporation's ability to effectively manage its financial obligations will be unnecessarily constrained. This includes the need to meet certain ongoing financial obligations, such as the next payment due in relation to the desalination plant lease which is approximately $53 million.

Therefore the remaining statutory limits in the act are inconsistent with the strong financial governance framework which now applies more generally to government business enterprises. It is timely that these limits be repealed.

I commend the bill to the house.

Debate adjourned on motion of Mr WYNNE (Richmond).

Debate adjourned until Wednesday, 12 June.

Contact Michael
Michael O'Brien MP

313 Waverley Road
MALVERN EAST VIC 3145

Phone: (03) 9576 1850
Fax: (03) 9576 1849


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