Treasurer Jim Chalmers gives ASIC and APRA fresh marching orders
Updated ,first published
The country’s two top financial regulators will be told to place greater emphasis on economic growth when overseeing banks and publicly traded companies.
Finance Minister Jim Chalmers this morning issued new, so-called statements of expectations for both the Australian Prudential Regulation Authority and the Australian Securities and Investments Commission, which set out how the government wants the agencies to use their powers.
Businesses and banks have complained for more than a decade that both institutions have increased red tape as governments of both political persuasions seek to protect consumers from bad practices.
While the Global Financial Crisis and the banking royal commission have led to massive increases in rules and regulations aimed at stopping the worst excesses of corporate leaders, concerns remain about environmental regulations governing businesses.
Chalmers said statements of expectations for both institutions will now include a greater emphasis on promoting economic growth.
“This is all about ensuring our financial regulators unlock more productivity and more growth in our economy,” he said.
“These clarifications will ensure that our financial regulators can support productivity, unlock investment and grow our economy, while maintaining financial stability and market integrity and protecting consumers from harm.
“We strike the right balance between supporting productivity and investment, reducing the regulatory burden on businesses, promoting stability and protecting our financial system and markets.”
Chalmers oversaw the latest APRA statement of expectations, updated in 2023.
This required the authority to promote financial security, efficiency and competition in the sector, as well as ensuring “funding flows to support strong, sustainable growth”.
The 2023 statement also sought to balance regulation of the pensions sector with a target of a “low failure rate” but “did not go far enough to guarantee a zero failure rate”.
ASIC’s statement of expectations extends to 2021 and then-treasurer Josh Frydenberg.
He focused mainly on supporting the country’s economic recovery from the COVID-19 pandemic, but also noted that the company must “minimize the costs and burdens of regulatory requirements” on affected businesses and consumers.
Chalmers said the changed aspects stem from the budget’s $10 billion efficiency package and build on issues raised at last year’s economic reform roundtable.
In May, Chalmers announced a series of measures that he said would reduce regulatory costs and increase productivity. These included overhauling requirements for climate-related financial disclosures, changes to electronic record-keeping rules and increasing the ceiling on banks’ issuance of covered bonds.
The government estimates that changes to regulations will save the financial sector $780 million a year.
But shadow treasurer Tim Wilson derided the government’s changes.
“The economic model of the Albanian government raises inflation, taxes inflation and spends inflation,” he said.
“Now, after undermining confidence in their budgets about the future of the Australian economy, they are handing over responsibility for growth to regulators.
“Living standards will continue to fall until there is a change of government where economic leadership focuses on growing the pie.”
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Shane Wright is senior economic correspondent for The Sydney Morning Herald and The Age.Connect with: X or email.
