Page 4088 - Week 13 - Wednesday, 24 November 1993
Next page . . . . Previous page . . . . Contents . . . . Debates(HTML) . . . . PDF . . . .
Clearly, it is difficult to develop specific legislation to suit every investment strategy. It is for this reason that the Government proposed that the individual contracts applying to external fund managers should contain authorisation controls and specific directions on the manner in which derivatives may be used to control risk. These controls and directions would be determined in the context of the particular investment portfolio. The key is not to prescribe an arbitrary limit for derivatives but to ensure that derivatives are applied strategically to control risk and are not used speculatively under any circumstances. This approach is consistent with the findings of the Commonwealth inquiry into collective investment schemes which considered that financial derivatives should be used only for genuine risk management purposes.
Mr Deputy Speaker, the Public Accounts Committee's report further proposed that all investments be undertaken through the ACT Borrowing and Investment Trust Account and that a management advisory board be established which would report directly to the Assembly. It was suggested that the proposed board comprise a broad base of expertise able to advise the Treasury on investment matters. Evidence was presented to the committee that independent expert investment advice is already being provided to Treasury. Currently the actuarial firm of Towers Perrin and the Commonwealth Bank advisory services are contracted to perform these roles. There is no evidence to indicate that a management board would provide better advice than that available under the existing arrangements.
It was also suggested that the proposed management board would achieve accountability to the Assembly and the Executive. There are extensive accountability arrangements already in place. Details of the ACT Borrowing and Investment Trust Account activities are included in the Treasurer's quarterly financial statement, the ACT Treasury annual report and audited financial statements. Furthermore, all accounts and records are subject to examination by the Auditor-General, whose report is published as a public document. Finally, borrowing and investment activities are, of course, subject to scrutiny by the Estimates Committee and the Public Accounts Committee. In this regard I am reassured by the Public Accounts Committee's acknowledgment that it is satisfied with the investment processes and the management strategies which have been developed. Under the Audit Act 1989 the Treasurer is accountable to the Assembly for the activities of the ACT Borrowing and Investment Trust Account and in my view this accountability cannot be delegated to or shared with another body such as the management board recommended by the committee. The Government therefore does not support the recommendations of the majority report of the committee.
Debate (on motion by Mr Kaine) adjourned.
Next page . . . . Previous page . . . . Contents . . . . Debates(HTML) . . . . PDF . . . .