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Legislative Assembly for the ACT: 2001 Week 8 Hansard (9 August) . . Page.. 2632 ..

MR HUMPHRIES (continuing):

In undertaking investments for Territory authorities, the Finance and Investment Group pays interest to Territory authorities on their investment. Section 56 of the Financial Management Act provides that interest received from the investment of Territory authorities' funds by the Finance and Investment Group remains the funds of the Territory authorities. Amendments will clarify that the payment of interest to Territory authorities may be made without warrant, and that the Finance and Investment Group may retain management fees for the provision of the investment service.

Mr Speaker, the Financial Management Act currently requires that where a Territory authority undertakes a borrowing that is not facilitated by the Finance and Investment Group, the loan must first be paid into the Territory Banking Account and from there, paid to the Territory authority.

Now remember Mr Speaker, as I have previously said, the Financial Management Act requires that the Treasurer must first approve "All" loans and borrowing of a Territory authority. The process of funnelling a Territory authority loan, which has not been facilitated by the Finance and Investment Group, through the Territory Banking Account is therefore cumbersome and unnecessary. It does nothing to increase accountability or add to the scrutiny process for such a loan.

This Bill therefore proposes amendments that will deiete the requirement for the proceeds of loans raised by Territory authorities, which are not facilitated by the Finance and Investment Group for Territory authorities, to be paid into the Territory Banking Account. Loans facilitated by the Finance and Investment Group will of course continue to be made from the Territory Banking Account and as such will require appropriation and warrant.

Mr Speaker, the Financial Management Act 1996 requires the Territory, departments and Territory authorities to prepare budgets and financial statements consistent with the Australian Accounting Standards that were in place at the time the Financial Management Act was enacted.

Changes to the Australian Accounting Standards have subsequently renamed the operating statement and the statement of assets and liabilities to be the Statement of Financial Performance and the Statement of Financial Position respectively. This means that the Financial Management Act requires the Territory, departments and Territory authorities to prepare a set of financial statements that are no longer consistent with the Australian Accounting Standards. To avoid any such future conflict between the Act and the Australian Accounting Standards, this Bill proposes amendments which will replace specific references in the Financial Management Act that require the Territory, departments and Territory authorities to prepare an operating statement, a statement of assets and a cash flow statement with generic financial reporting requirements.

The more detailed financial reporting requirements will be specified in the financial management guidelines issued by the Treasurer under section 66A of the Financial Management Act. These guidelines will require the Territory, departments and Territory authorities to prepare a Statement of Financial Performance, a Statement of Financial Position and a cash flow statement. This will ensure that the level of financial information available to the Assembly and the community will not be less than that that was previously available.

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