Hansard debates

                     TREASURY CORPORATION OF VICTORIA BILL
                                 Second reading

  Mr A. J. SHEEHAN (Treasurer) -- I move:
  That this Bill be now read a second time.
The  Bill  establishes the  Treasury  Corporation  of  Victoria,  an  initiative
announced  by  the   Premier  in  her  economic  statement  in  June  1991.  The
establishment of the corporation is a key  component of the government's 1991-92
debt management strategy; it needs to be seen in the context of the government's
overall debt  management strategy. That  strategy has been  evolving  since 1986
when the  government  published  an  information paper entitled Victorian Public
Sector Debt.

That  paper comprehensively addressed  all  aspects of debt  and, in particular,
discussed  the need  to centralise the debt of the Budget  sector to  ensure the
optimum management of that debt.
In January  1987  the  process  of centralising debt with VicFin and the Capital
Works  Authority  commenced  with  the  centralisation  of  the transport  debt.
Progressively since 1987 the financial agreement debt, the  Commonwealth Housing
Agreement  debt,  the  State  Works  and  Housing  Assistance  debt,  and  other
Commonwealth specific  loans have been or  will shortly be centralised  with the
corporation and  the  Capital Works Authority.  The final centralisation  of the
State's debt will occur with the creation of  the  corporation,  which  will  be
formally responsible  for the management  of the Victorian Development  Fund. To
maximise  efficiencies  and  to ensure the coordinated  implementation  of  debt
management strategies,  the  corporation is  to  be  responsible  also  for  the
administration of the Victorian Debt Retirement Fund.

The  Bill establishes the corporation as successor in  law to VicFin. Consistent
with its  broader  role, the  objectives  and functions of  the  corporation are
widely stated. The objectives of the corporation are:
                to  act  as  a  financial  institution  for  the  benefit     of
                participating authorities and the State;
                to enhance the financial  position  of  the  corporation  and of
                participating authorities and the State; and
                to  provide  its  services  in  an  effective,  efficient    and
                competitive manner.

The Bill is designed  to  be flexible in its operation so that  the  role of the
corporation can be tailored  to meet the  requirements of the government,  which
will vary  over  time.  It  is the government's intention at this time, however,
that the  corporation operate as the  principal borrowing agency for  the Budget
sector  and participating authorities. It is intended also  that the corporation
act as the principal debt manager for the Budget sector. The  corporation's debt
management strategy  will  be determined through  the setting of  the  strategic
plan, which will be agreed between the corporation and the Treasurer.
There are several further aspects of the Bill which I direct to the attention of
the  House.  As  successor  in  law  to  VicFin,  the  corporation  will  assume
responsibility for the rights and obligations of VicFin. As a number of VicFin's
borrowings were  raised  in foreign jurisdictions,  the Bill is expressed  to be
extra-territorial in its operation.

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As  indicated  above,  the  Bill  makes  the  corporation  responsible  for  the
management of  the Victorian Development Fund and the Victorian  Debt Retirement
Fund. Although the corporation will be responsible for managing these funds, the
assets  and  liabilities  of  the  funds will be  separate  from  those  of  the
corporation and will not be consolidated in the accounts of the corporation.
The  Bill  broadens the  definition  of public  authorities.  The  term   public
authority  was not defined in the  Victorian Public Authorities Finance  Act and
this led to  uncertainty  as to whether  certain bodies were public  authorities
and, therefore, eligible to  be participating authorities. The Bill, as drafted,
removes  such  uncertainties  and enables  a  range of public  sector  bodies to
participate in the future benefits of borrowing  through and using the financial
expertise of the corporation.

The  Bill  exempts the  corporation  from  the requirements  of  the Freedom  of
Information Act. This  exemption  is in line  with  exemptions which  have  been
granted to Treasury corporations in other States.
The Bill  contains a clause that enables the Treasurer to pay to the corporation
an amount not exceeding $30 million in the  1992-93  financial  year.  This will
provide the corporation with an initial capital base. It is envisaged that, over
time,  the  capital  base  will be increased to ensure that the corporation  has
sufficient capital to support its operations.
To  ensure  adequate  accountability,  to  ensure  that  the objectives  of  the
corporation  are  pursued  in  a  commercial  manner, and  to  ensure  that  the
government's overall objectives are met, the corporation  will be subject to the
overall direction of the Treasurer and a formal strategic planning process.

The strategic plan will  set out the corporation's  objectives for the following
three-year period and will be reported upon quarterly and progressively updated.
Finally,  to ensure that the corporation's board has the necessary expertise and
breadth of experience to fulfil  its  charter, the Bill provides for an expanded
board consisting of six to eight directors.
In conclusion,  the establishment of the  corporation is an important element of
the government's debt management strategy.
I commend the Bill to the House.
Debate adjourned on motion of Mr GUDE (Hawthorn).
Debate adjourned until Thursday, 23 April.