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TREASURY CORPORATION OF VICTORIA BILL
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9 April 1992
Second Reading
SHEEHAN
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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.