Turnbull delivers more policy on the run

By Leith van Onselen

After gutting its funding by $120m over four years in the 2014 federal budget, and severely reducing its enforcement capabilities, the Coalition Government is now looking to restore the Australian Securities and Investments Commission’s (ASIC) funding in a bid to stymie Labor’s call for a banking Royal Commission. From The Guardian:

Federal cabinet met on Monday and considered a suite of policies to boost the resources of the Australian Securities and Investments Commission (Asic), with its proposals to be taken to a party room meeting on Tuesday…

The proposals considered by the Turnbull cabinet could involve restoring all of the $120m funding that Asic lost in the Abbott government’s 2014 budget.

It also considered introducing a tougher regime of civil penalties, and giving Asic product intervention powers…

Labor says a review of speeches and public comments from Asic executives from the past two years shows the regulator has warned the government on 41 occasions that it is unable to do its job properly without greater powers and resourcing.

“In October 2014, Asic chairman Greg Medcraft declared that Australia was a ‘paradise’ for white-collar criminals because of its soft punishments of corporate offences, calling on the government to give the regulator the power to impose harsher jail terms and bigger penalties for white-collar crime,” Bowen said.

“Asic has been calling on this government to take action repeatedly in public and parliamentary forums.”

So the Coalition cut ASIC’s funding, thereby reducing its capabilities, and is now scrambling to bolster it back up to counter Labor’s call for a banking Royal Commission. We can only see this as another politically driven policy switch which again sells the Australian people short.

Refunding ASIC before we even understand where it went wrong is absurd. That’s the point of the Royal Commission, to discover where and how Australia’s financial architecture needs improvement, from Chanticleer:

Shadow treasurer Chris Bowen’s office is receptive to calls from Labor’s anti-banking zealots and others outside the party to ensure the royal commission explores the idea of creating a specialist government organisation for investigating corporate fraud.

The model for this can be found in the United Kingdom and New Zealand which both have serious fraud offices. In each case, the SFO is a specialist prosecuting authority that tackles complex, fraud, bribery and corruption.

In the UK, the SFO is investigating Tesco, LIBOR, Rolls-Royce, GlaxoSmithKline and Barclays Bank. In New Zealand, the SFO is investigating a range of themes including large scale mortgage fraud.

Anti-banking campaigner and Labor senator, Sam Dastyari, is on the record as supporting the idea of a SFO in Australia. During the inquiry into ASIC in 2013-2014, Dastyari and other members of the Senate Economic References Committee visited New Zealand to examine the operations of that country’s SFO.

We also know a large majority favour the Royal Commission.

Yet again we have Labor setting the policy agenda and the Turnbull Government reacting with poor second hand policy on the run that can only do it political harm.

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Unconventional Economist

Leith van Onselen is Chief Economist at the MB Fund and MB Super. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.

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Comments

  1. Re-brand ASIC ( how many Australian voters really know what that stands for, never mind about what it does or doesn’t do!) as The Serious Fraud Office. Even without knowing who or what they are, most voters will understand what it’s purpose is, and are likely to embrace any ‘additional’ funding that is required….

  2. They must be licking their lips at ASIC over this. Just think of what they could do with all that extra funding: New bathrooms and kitchens…..some nice art on the walls….a little bit extra for the ‘performers’ come Xmas time…..the list goes on!

  3. “That’s the point of the Royal Commission, to discover where and how Australia’s financial architecture needs improvement,”

    Isn’t that what the Murray Inquiry was for?

    As for an SFO – is there much evidence of actual illegal (as opposed to immoral) activity from banks?

    And I would have thought that restoring ASIC Funding now was a good start.

    • The polls are at 50-50.

      Hopefully the LNP will only go south from here as the ALP put out ads about Cayman Islands.

  4. proofreadersMEMBER

    A totally band-aid solution from a totally flakey PM and team. ASIC are relative lightweights. We need the Royal Commission to get to the bottom of the problems and come up with the findings and recommendations and then perhaps, ASIC could have part of a role in monitoring the outcomes etc, albeit a for-real Serious Fraud Office is more relevant as part of the solution.

    While we are it, why don’t we a have Royal Commission in to property purchases if the ATO’s investigations have been sidelined.

    • “Royal Commission in to property purchases”
      Absolutely. Many familiar government names need to be stripped of all wealth and jailed for their complicit decisions around this, as do many FIRB/ATO employees. Shooting scum in a barrel this would be.

  5. he was elected by the ruling elite only to do some damage control, and he is doing even that extremely poorly

  6. Of course the Coalition is running scared on the idea of a Royal Commission, because if you give it broad enough terms of reference, then it is going to put the squeeze on the preferred business model of the Coalition’s FIRE sector benefactors. But if that inquiry was genuinely being established to get to the heart of the problem, by necessity broad enough to examine the role not only of banks but of the FIRB, ATO, ASIC, APRA, the links between banks, politicians and their fundraising networks, lobby groups, industry peak bodies, unions, think tanks, etc, then Labor would also has much to lose politically.

    • Jumping jack flash

      Agreed 100%, and what would the people have them do?

      Tear out the foundations of the new FIRE economy?

      Which unlucky sod is going to take responsibility for the fiscal tightening that forces the next “recession we need to have”?

      It’d be Keating all over again. How many people screamed blue murder when interest rates were jacked up to slow the economy? A lot of people were enjoying life quite nicely up until that point. Keating was quickly crucified, and “give ’em what they want, and sell everything to do it” Howard arrived.

      How much worse would that strategy be these days with the amount of debt orders of magnitude higher, an entire economy feeding from it, and few alternatives left since the great hollowing out was enacted by easy credit and that “everlasting mining boom” we had?

  7. Jumping jack flash

    Seriously? I’ll believe it when I see some heads rolling, some fines laid and some legislation changed. Until then it is just pandering to the outraged.

    I predict some insipid and impotent 1000 page report is produced that can be summarised as:
    “Maybe the banks did something wrong, maybe not, but whatever they did probably wasn’t as good as it could have been depending on how you look at it.”

    and then it will be promptly forgotten.

    The facts are that nobody wants to do anything because anyone that can do anything is too busy profiting from the current system, so why change it?