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Other reporting requirements

Accountable Authority during the current reporting period (2019/20)

Period as the accountable authority or member

Name

Position title/position held

Date of commencement

Date of cessation

Wayne Byres

Chair

1 July 2014

30 June 2024

Advertising and market research

Under the Commonwealth Electoral Act 1918, APRA is required to report annually on amounts paid to advertising agencies, market research and media advertising organisations relating to electoral expenditure.

In 2019/20 APRA has not incurred any advertising or market research expenditure in relation to an election.

Separately, during 2019/20 APRA incurred employment advertising expenditure relating to the following executive recruitment organisations:

Supplier

Amount (Excl. GST)

Mediabrands Australia Pty Ltd T/As Universal McCann

$94,425

Russell Reynolds Associates Australia Pty Ltd

$36,106

Outside of the above, APRA did not conduct any specific advertising campaigns during 2019/20.

Auditor-general activities

The Australian National Audit Office (ANAO) undertook the required statutory financial audit of APRA for 2019/20.

Capability reviews

In March 2019, the Australian Government initiated a capability review of APRA. The review was tasked with providing a forward-looking assessment of APRA’s ability to respond to an environment of growing complexity and emerging risks for APRA’s regulated sectors.

The report of the review was published by the Government on 17 July 2019. The report recognised APRA as a high-quality prudential supervisor that has successfully delivered on its core mandate – the financial safety of regulated entities and a sound and resilient financial system – over a long period of time.

However, it also concluded that APRA needed to expand its capabilities in a number of areas. These included strengthening its leadership capabilities, culture and organisational structure; increasing resourcing and supervisory focus on GCRA; giving greater prominence to member outcomes in superannuation; and better communicating what it does and how it does it. APRA supported all 19 recommendations that were directed at it; a further five recommendations were directed to the Government.

The Capability Review followed additional external reviews by the International Monetary Fund and the Productivity Commission, as well as APRA’s own internal Enforcement Review (published in March 2019) that identified opportunities to improve regulation and supervision practices. Collectively, along with the recommendations from the Royal Commission, these reviews provided approximately 150 recommendations and suggestions for APRA to consider. A summary of progress against these recommendations is included in the Statement of performance(Chapter 3).

The recommendations were important foundations for the formulation of APRA’s Corporate Plan and underlying operational plans.

Collective agreements and common law contracts

All employees are appointed under the APRA Act.

As at 30 June 2020, there were 669 employees covered by the terms of the APRA Employment Agreement 2018. The APRA Employment Agreement 2018 commenced on 9 December 2018 for a three-year term, with a nominal expiry date of 8 December 2021.

APRA’s 139 senior employees were covered by common-law agreements.

APRA applies a total remuneration package (TRP) approach whereby all salary, superannuation and ‘salary-sacrifice’ benefits are included in an employee’s TRP.

Table 1 − TRP ranges for non-executive employees as at 30 June 2020

Level 1

Level 2

Level 3

Level 4

Maximum

$71,464

$107,639

$156,022

$221,826

Minimum

$49,148

$64,582

$93,658

$133,050

Commonwealth Ombudsman

The Commonwealth Ombudsman did not undertake any investigation into APRA’s conduct in 2019/20.

Commonwealth procurement rules

The APRA Chair’s Finance Instructions and Finance Policies (CFIs) and associated operational procedures, ensure that APRA’s procurement process complies with the Commonwealth Procurement Rules (CPRs). In particular, they ensure that the core procurement principle of value-for-money is observed.

APRA conducts its procurement processes within the CPRs, including but not limited to:

  • engaging indigenous suppliers for procurements between $80,000 and $200,000 as required under the Indigenous Procurement Policy;
  • conducting open tenders for procurement activities of more than $200,000 (unless otherwise exempted under the CPRs);
  • reporting all procurements over $10,000 on AusTender; and
  • providing a link on APRA’s website to the AusTender report on all purchases over $100,000.

In 2019/20, APRA had no AusTender-exempt contracts. As required under the CPRs, all APRA competitively tendered contracts over $100,000 provide for the Auditor-General to have access to the contractor’s premises.

Procurement initiatives to support small business

APRA supports small business participation in the Commonwealth Government procurement market. Small and medium enterprises (SME) and small enterprise participation statistics are available on the Department of Finance’s website:

www.finance.gov.au/procurement/statisticson-commonwealth-purchasing-contracts/

APRA’s procurement activities that support small business are consistent with paragraph 5.5, 5.6 and 5.7 of the CPRs and include:

  • using the Commonwealth Contracting Suite for low-risk procurements valued under $200,000;
  • prequalified panels with SME providers;
  • payments via electronic systems; and
  • meeting the objective of paragraph 5.6 of the CPRs on sourcing over 10 per cent of procurements through SME providers.

Consultancies

APRA’s CFIs and associated operational procedures, include specific provisions on consultants.

APRA engages consultants where it lacks specialist expertise or when independent research, review or assessment is required. Consultants are typically engaged to investigate or diagnose a defined issue or problem; carry out defined reviews or evaluations; or provide independent advice, information or solutions to assist in APRA’s decision-making. Prior to engaging consultants, APRA considers the skills and resources required for the task, the skills available in-house, and the cost-effectiveness of engaging external expertise. The decision to engage a consultant is made in accordance with legislation, CPRs and internal policies.

During 2019/20, APRA entered into a total of seven new consultancy contracts involving a total expenditure of $670,716. Information on the value of contracts and consultancies is available on the AusTender website: www.tenders.gov.au.

Table 2 – Number of consultants and expenditure - 2019/20

Total

Number of new contracts entered into during the period

7

Total actual expenditure during the period on new contracts (excl. GST)

$670,716

Number of ongoing contracts engaging consultants that were entered into during a previous period

0

Total actual expenditure during the period on ongoing contracts (excl. GST)

0

Consultative arrangements

APRA consults extensively with regulated entities, industry bodies and other interested parties prior to finalising prudential policies, including new or amended prudential standards and reporting standards, as well as formal prudential guidance.

APRA complies with the Government’s policy on best practice regulation. During 2019/20, APRA finalised three Regulation Impact Statements. In addition, APRA completed eight preliminary assessments; of these, the Office of Best Practice Regulation (OBPR) advised that further regulatory impact analysis was required for three.

Courts and tribunals

Over 2019/20, there were no judicial decisions that had, or may have, a significant effect on APRA’s operations. There was one court decision relating to enforcement action taken by APRA during the year.

Executive remuneration

APRA’s Board members’ remuneration is determined by Remuneration Tribunal determinations. The Senior Executives are remunerated through a common law contract and APRA’s remuneration policies. All employees have a fixed salary component as their primary income with a discretionary bonus (‘at risk’ component) which is based on performance and in line with APRA’s performance policy. All decisions relating to Executive remuneration are governed by the APRA Board. The Executive Committee approves remuneration review adjustments for all other employees.

Remuneration for key management personnel earned in 2019/20

Name

Position / title

Short-term benefits

Post employment benefits

Other long-term benefits

Termination Benefits

Total remuneration

Base Salary

Bonuses

Other benefits and allowances

1

Contributed Superannuation

Long service leave

2

Other long-term benefits

Wayne Byres

Chair

720,425

-

82,251

113,593

81,811

-

-

998,081

Helen Rowell

Deputy Chair

719,629

-

100

25,000

45,074

-

-

789,803

John Lonsdale

Deputy Chair

643,445

-

6,405

89,082

31,142

-

-

770,074

Geoff Summerhayes

Member

654,883

-

19,875

25,000

24,276

-

-

724,033

Total

2,738,382

-

108,631

252,675

182,303

-

-

3,281,991

1 Other benefits and allowances include non-reportable fringe benefit amounts.

2 Long service leave balances include the annual accrual and any revaluation impacts.

Note: Differences in the key management personnel figures and those provided by the Remuneration Tribunal are related to leave earned during the year.

Remuneration for executives earned in 2019/20

Short-term benefits

Post employment benefits

Other long-term benefits

Termination Benefits

Total remuneration

Total remuneration band

Number of senior executives

Average base salary

Average bonuses

1

Average other benefits and allowances

Average contributed superannuation

Average long service leave

2

Average other long-term benefits

Average termination benefits

Average Total remuneration

220,000

and less

14

106,322

4,704

190

10,482

(8,863)

-

-

112,836

220,001

to

245,000

1

186,147

-

100

19,350

20,934

-

-

226,530

270,001

to

295,000

1

193,092

32,824

-

34,848

19,243

-

-

280,007

320,001

to

345,000

9

294,537

390

100

25,022

13,497

-

-

333,546

345,001

to

370,000

9

313,415

659

100

27,881

14,565

-

-

356,621

395,001

to

420,000

1

357,812

-

100

25,000

21,456

-

-

404,368

420,001

to

445,000

1

397,136

6,650

100

25,000

9,783

-

-

438,668

470,001

to

495,000

3

449,128

-

100

25,000

15,027

-

-

489,255

495,001

to

520,000

1

464,810

-

100

25,000

29,205

-

-

519,115

Total number of executives

40

1 Average bonus figures represent awards to senior staff who performed executive roles in an acting capacity throughout the year, and accrued but not paid bonuses held over from the 2018/19 financial year. No bonuses were accrued for substantive executives for 2019/20.

2 Long service leave balances include the annual accrual, write-backs from staff leaving with less than ten years service and any revaluation impacts.

Remuneration for other highly paid staff earned in 2019/20

Short-term benefits

Post employment benefits

Other long-term benefits

Termination Benefits

Total remuneration

Total remuneration bands

Number of other highly paid staff

Average base salary

Average bonuses

Average other benefits and allowances 1

Average contributed superannuation

Average long service leave 2

Average other long-term benefits

Average termination benefits

Average Total remuneration

225,001

to

245,000

38

190,791

14,877

225

19,036

9,216

-

-

234,144

245,001

to

270,000

33

202,392

18,811

97

21,609

9,022

-

4,868

256,798

270,001

to

295,000

24

218,017

21,452

100

26,388

14,086

-

-

280,043

295,001

to

320,000

5

238,261

23,000

100

27,735

13,192

-

-

302,288

320,001

to

345,000

1

161,916

18,000

123,004

15,870

7,813

-

-

326,602

Total number of highly paid staff

101

1 Average other benefits and allowances include the fringe benefit costs of offshore relocation expenses provided to employees on secondment.

2 Long service leave balances include the annual accrual, write-backs from staff leaving with less than ten years service and any revaluation impacts.

Indemnities and insurance premiums

APRA Members and officers are covered by the professional indemnity insurance cover of the Commonwealth-managed insurance scheme, Comcover. The generic terms and conditions of the insurance cover provided by Comcover to Commonwealth agencies are available on the Comcover website: www.finance.gov.au/comcover. Under the conditions of the cover, APRA has an obligation not to disclose the nature and limits of liability and the amount of the premium.

Grant programs

The Commonwealth Grants Rules and Guidelines require agencies to publish details of grants on their websites within 14 working days after the funding agreement for the grant takes place. Details must remain on websites for at least two financial years. Grant programs, including discretionary grant programs, that APRA either jointly administered or participated in during 2019/20, including previous recipients of the Brian Gray Scholarship and the University of New South Wales Cooperative Actuarial Scholarship, are available on APRA’s website: https://www.apra.gov.au/brian-gray-scholarship-program.

Information on grants awarded by APRA during 2019/20 is available at: https://www.apra.gov.au/grants-and-scholarships.

Legal services

The Legal Services Directions 2017 require Commonwealth agencies to make publicly available information on records of their legal services expenditure for the previous financial year. During 2019/20, APRA’s total expenditure on external legal advice and litigation services was $3,363,067 (excluding GST).

Parliamentary committees

Avenues through which APRA is accountable to the Parliament include Parliament’s ad hoc and standing committees, and specific references on legislation or issues of particular interest to parliamentary committees.

During 2019/20, APRA Members and executives appeared at public hearings before the:

  • Senate Standing Committee on Economics Legislation:
    • Australian Business Growth Fund Bill 2019 on 13 February 2020
  • Estimates hearing on 23 October 2019 and 5 March 2020
  • House of Representatives Standing Committee on Economics:
    • Inquiry into APRA’s Annual Report on 9 August 2019 and 2 December 2019
    • Australia's four major banks and other financial institutions: superannuation sector on 6 June 2020
  • Parliamentary Joint Committee on Corporations and Financial for their inquiry into the regulation of auditing in Australia on 7 February 2020
  • Select Committee on Financial Technology and Regulatory Technology on 28 February 2020
  • Senate Select Committee on COVID-19 on 28 May 2020

During 2019/20, APRA provided a submission to the Select Committee on Financial Technology and Regulatory Technology.

Copies of opening statements delivered as part of APRA’s appearances may be downloaded from APRA’s website www.apra.gov.au. Transcripts of APRA’s Parliamentary appearances and copies of its submissions to parliamentary committees are available from the Parliamentary website www.aph.gov.au.

Performance pay

APRA has a fully discretionary performance bonus system with aligned policy and guidelines around performance expectations.

In May 2020, in response to COVID-19, the Government instructed that within the APS:

  • remuneration increases for the general workforce should be deferred for six months; and
  • there should be a stay on remuneration increases and bonus payments for employees in the Senior Executive Service (SES).

Although not an APS agency, the APRA Members agreed that APRA should follow the Government’s guidance around the deferral of remuneration increases for employees, while also observing the relevant clauses in APRA’s Enterprise Agreement and Employment Contracts.

The effect of this decision was that remuneration increases for employees covered by the Employment Agreement (Levels 1-4) and Senior Managers, which would normally have taken effect in July 2020, will not take effect until January 2021. Employees (other than those aligned with the SES) remained eligible to participate in career advancement processes (where relevant) and to receive performance-related bonus payments according to APRA’s standard arrangements and timetable. However, for 2019/20 the aggregate bonus pool ($8.3 million) was set at a slightly more conservative level as a percentage of total remuneration than in previous years. Bonuses are only paid to eligible employees still in APRA’s employ at the payment date.

For its Senior Leadership Team, APRA placed a stay on all remuneration increases and performance-related bonus payments until further notice.

Privacy Commission

The Office of the Australian Information Commissioner (OAIC) conducted preliminary enquiries into a privacy complaint under section 42 of the Privacy Act 1988. However, the OAIC declined to investigate as they determined that APRA did not interfere with the individual’s privacy.

The Privacy Commissioner made no determinations under section 52, nor did APRA seek any under section 73.

There were no adverse or favourable comments made by the Privacy Commissioner in respect of APRA’s operations. Privacy enquiries relating to APRA sent by post should be addressed to:

Freedom of Information Coordinator

Australian Prudential Regulation Authority

GPO Box 9836

Sydney NSW 2001

Or by phone: 02 9210 3000; fax: 02 9210 3424 or email: foi [at] apra.gov.au

Responsible Ministers

During the 2019/20 financial year, the Hon. Josh Frydenberg MP had portfolio responsibility for APRA as Treasurer of the Commonwealth of Australia.

Senator the Hon. Jane Hume was the Assistant Minister for Superannuation, Financial Services and Financial Technology during the year.

Significant non-compliance with relevant financial laws

During 2019/20 there were no incidents of material non-compliance with relevant financial
laws.