You’ve gotta love the Turnbull Government’s response to Labor’s call for a Royal Commission on the banks as noted by Houses and Holes this morning with Treasurer Scott Morrison scrambling to boost ASIC’s powers and resources in a bid to head-off a Royal Commission. And yet according to ASIC chief Greg Medcraft, it is precisely the Coalition’s cuts to ASIC in the 2014 Federal Budget that rendered the regulator impotent. From The Guardian:
The head of the Australian Securities and Investments Commission has admitted budget cuts enacted by the Coalition have compromised the corporate watchdog’s ability to engage in proactive investigations.
Asic suffered a cut of $120m over four years in the 2014 federal budget.
The chairman of the commission, Greg Medcraft, said the cuts had “absolutely” resulted in less surveillance.
“Seventy per cent of our resources are devoted to surveillance and enforcement and when you have cuts in the budget what happens is actually you reduce the level of proactive surveillance because proactive surveillance is discretionary,” he told ABC Radio. “What it means is that we see people less than we may have in a proactive setting”…
“That is a matter for government and it’s a matter of determining what level of resilience you want in the financial system,” he said. “If we look at the area where there have been problems – the area of responsible lending, financial advice, of life insurance – there’s three for a start where clearly we could do more surveillance.”
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. Maybe, just maybe, it shouldn’t have cut the regulator’s resources in the first place?