While federal Treasurer Scott Morrison was spruiking low and middle income families as the “winners” in the federal budget, with tax cuts that meant they could buy "a new washing machine" or "a new set of tyres", unnoticed among the biggest “losers” was the Australian Securities and Investment Commission (ASIC).
Along with the Australian Prudential Regulation Authority (APRA), ASIC is supposedly in charge of oversight and regulation of financial institutions in Australia. This is significant, as the cuts to ASIC’s budget come at a time when a widespread culture of corruption, misconduct, corporate greed and theft has been exposed by the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.
The budget cut $26 million from ASIC over three years and reduced its average staffing levels by 2%, or about 30 staff. According to the ABC, this "reduction in funding is largely related to specific programs winding up, including around data collection."
APRA, which had already been given a one-off payment to allow it to employ more staff as part of the banking royal commission, is also facing cuts. The Director of Public Prosecutions, which will prosecute criminal conduct exposed by the royal commission, has also had its funding cut by about $3.5 million.
As recently as April 2016, the Coalition government was using ASIC's existence as "the tough cop on the beat" as a reason that a banking royal commission was unwarranted. "ASIC can do the job" it insisted, until public outrage around the issue forced its hand.
But whether ASIC is actually "the tough cop" is highly questionable. One of the more farcical moments in the royal commission was when an AMP executive lost count of the number of times the company had lied to ASIC. On April 25, the ABC published an article reporting that ASIC has a “culture of subservience to the big banks”.
The article quoted a former employee of ASIC as saying: "I saw ASIC literally changing the law, amending the Corporations Act to benefit the banks and the lobby groups for the banks". The fact that much of the funding for ASIC will now be coming directly from the banking and finance industries seems likely to entrench this further.
On May 10, a spokesperson for Financial Services Minister Kelly O'Dwyer explained to the ABC these were not really cuts at all: "ASIC funding is project driven, so funding and personnel fluctuates from time to time. ASIC is well-funded and resourced to undertake its important regulatory work."
While the size of ASICs workforce can "fluctuate", claims that ASIC is "well-funded and resourced" do not hold up to scrutiny. A quick look at the summaries of key stakeholder data over the past decade shows trends that undermine that position.
For example, if we take the announcement of about 30 positions to be cut from the 2017 numbers, we find the same average number of staff in 2018–19 as more than a decade ago. But in the past decade the number of corporations being monitored by ASIC has grown by 58%, from 1.5 million in 2007 to more than 2.5 million last year. The nature of the finance industry has also changed and expanded dramatically in the past decade, with technology playing an ever greater role.
Speaking to Lawerly on May 10, Professor of Corporate Governance at the University of Technology Sydney Thomas Clarke explained: “At a time when the royal commission has unearthed how supine ASIC has been for the past 10 years, to cut ASIC’s budget doesn’t make much sense ... At best it is penny pinching, at worst it is undermining the possibility of regulating the banks and exposing the behaviour we’ve seen at the Royal Commission and prosecuting it.”
This should come as no real surprise. With an election on the horizon, Morrison was dangling the carrot of a very minor tax cut for families facing economic instability and stagnant wages, while taking the stick of budget cuts to government-funded organisations delivering uncomfortable truths, such as the ABC, the Fair Work Ombudsman, the Australian Bureau of Statistics and ASIC.
The fact these organisations, which are supposedly "well funded and resourced," have had their budgets cut, when funding for the discredited, anti-union Registered Organisations Commission received a funding increase, smacks of the budget being used as a blunt ideological tool.
It is almost as if the government does not want to see its mates in the banking and finances sector held to account for their misdeeds.