On the face of it, the financial services regulators appeared to be some of the winners emerging from the budget announced on Tuesday. The Federal Government had confirmed that they would be receiving an additional $10.6 million and $2.7 million respectively for their assistance in the Banking Royal Commission which, it was claimed, was well overdue (see our previous blogs on Misconduct and Corporate Culture).
However, if you look closely at the Treasury Department’s accounts for ASIC and APRA, you will see that this publicly made declaration of additional funding is thwarted by a cut in funding over the next three years which sees them stripped of $26 million and a reduction in staff numbers of around 30 employees in 2018/19.
The additional funding announced pre-budget would be offset by an increase in the APRA Financial Institutions Supervisory Levies and the levies paid under the ASIC industry funding model over a two year period from 2018/19. On this basis, it is hard to see the justification for such a substantial cut post-budget. Only two years ago, the Federal Government injected ASIC with $121 million to boost its resources in an attempt to avoid a Royal Commission being called into the financial services industry.
The corporate regulators are not the only victims of a funding cut with the Office of the Director of Public Prosecutions sustaining a hit of around $1 million. Given the misconduct highlighted in the Banking Royal Commission to date, and society’s expectations for the Government and regulators to act on the findings, it is inevitable that both ASIC and the Prosecutor’s Office will see a sharp rise in their workloads.
How the wider community and the industry itself will view the Federal Government’s budget announcement is yet to be seen. After all, how can ASIC meet its objectives to take ‘whatever action it can take, and is necessary, to enforce and give effect to the laws of the Commonwealth…’ without full and proper support?