Kai Swoboda
On 20 April 2016, the Government announced additional
resources for the Australian Securities and Investments Commission (ASIC),
comprising:
- $61 million to ‘enhance ASIC’s data analytics and
surveillance capabilities as well as modernise ASIC’s data management systems’
- $9 million to ASIC and the Treasury to ‘ensure they can
implement appropriate law and regulatory reform’ and
- $57 million to ‘enable increased surveillance and enforcement on
an ongoing basis in the areas of financial advice, responsible lending, life
insurance and breach reporting’.[1]
The budget papers confirm the allocation of this funding and
provide some additional information about how this increased funding will be
applied. In broad terms, the $127 million included in the April 2016
announcement is divided into funding to ASIC of $121 million (comprising capital
funding of $39 million and operational funding of $82 million) and
$6 million to the Treasury.[2]
ASIC resourcing over time
There are a number of ways to examine how resources are allocated
to a government agency over time. For ASIC, the most relevant information on
resourcing includes changes in ASIC’s programme expenses, changes in staffing
levels and the impact of budget measures over time.
Programme expenses
ASIC is responsible for delivering two programmes under the
outcome budgeting framework: one related to detecting, understanding and
responding to misconduct; and one related to the administration of unclaimed
money from banking and deposit taking institutions and life insurance
institutions.[3] For the purposes of
examining the resources allocated to market surveillance activities, only the
first programme needs to be considered, as the unclaimed money function is
broadly an administrative function that receives monies from financial
institutions which are then paid out to individuals as required.
The four year allocation to ASIC for market surveillance functions
reached a high point in the 2013–14 Budget (Figure 1).While the allocation
included in the 2016–17 Budget, in both real and nominal terms, represents an
increase on the previous Budget, the quantum of funds available is broadly
comparable to that provided to ASIC in the 2014–15 Budget.
Budget measures from previous years
related to ASIC
Some of the key changes in ASIC resourcing in previous
years which partly explain the overall changes in resourcing have included:
- 2015–16 Budget—an increase of $19 million over four years
for monitoring of market misconduct and implement and monitor a regulatory
framework for crowd-source equity funding.[4]
- 2014–15 Budget—a reduction of $120.1 million over five years
to be ‘redirected by the Government to repair the Budget and fund policy
priorities. A further $46.2 million in funding cuts over four years were
applied through a temporary increase in the efficiency dividend rate.[5]
- 2012–13 Budget—an increase of funding of $129.3 million over
four years for ‘enhanced market supervision’ and ‘operational’ funding.[6]
Figure 1: Nominal four-year ASIC programme expenses
(excluding unclaimed money programme), $ million
Source: Parliamentary
Library estimates based on Australian Government, Portfolio budget statements 2016–17: budget related
paper no. 1.16: Treasury Portfolio,
p. 137 (and previous issues) and Australian Bureau of Statistics, Consumer Price Index, Australia, cat. no. 6401.0, Tables 1 and 2, CPI: All Groups,
Index Numbers and Percentage Changes.
ASIC staffing levels
An analysis of average staffing levels included in the
portfolio budget statements since 2008–09 shows that average staff levels for
ASIC reached a peak of 2,040 staff in 2010–11, and then declined each year
to reach 1,573 staff in 2015–16. Expected staffing levels for ASIC will
now increase to 1,687 in 2017–18.[7]
ASIC capability review
The ASIC capability review, commissioned by the Government following
a recommendation of the Financial System Inquiry, analysed annual revenues and
expenditures and staffing for ASIC over the period 2004–05 to 2014–15.[8] This analysis shows resourcing at its peak (both financial as well as staffing)
in 2009–10, with a fall each year since 2012–13.[9]
Changes to ASIC’s funding model
The Government’s 20 April 2016 announcement included a
proposal to change ASIC’s future funding mix, with the introduction of an
industry-funded ‘user pays’ model for some of ASIC’s functions, to commence
from 2017–18.[10] This approach will
implement a recommendation of the Financial System Inquiry.[11] While the ASIC activities to be funded by industry has been informed by an August
2015 Treasury consultation paper, there may be some activities, such as
financial literacy education, that remain funded by government.[12] The budget papers confirm that the additional funding for ASIC totalling
$121.4 million will be recovered by an increase in levies collected by the
Australian Prudential Regulation Authority.[13] However, the amount
which industry will fund for ASIC’s activities from 2017–18 is not able to be clearly
identified in the budget papers.
All online articles accessed May 2016.
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