- The Albanese Government’s first budget, handed down on 25 October by Treasurer Jim Chalmers, provides for substantial boosts in funding for ASIC, APRA and AUSTRAC:
Estimated 2021/2022 funding $m
Budgeted 2022/2023 funding $m
- The budget also foreshadows previously unannounced future changes to the regulatory landscape, including to the regulation of managed investment schemes and climate reporting standards for large businesses and financial institutions.
- The Government has committed funds to deal with the fallout from recent data breaches, including for the establishment of a National Anti-Scam Centre.
ASIC, APRA and AUSTRAC to see big increases in resourcing
Resources for financial services regulation are substantially increasing. In FY 22-23, ASIC’s budgeted expenses will reach $695 million in total, up from an estimated actual expenditure of $611 million in FY 21-22. Nearly $18 million of this increase will be aimed at ASIC’s core strategic projects, which include sustainable finance practices, crypto-assets, the Design and Distribution Obligation, breach reporting, and the new Financial Accountability Regime (FAR).
The increase to ASIC’s funding will also aid with the shift from Banking Executive Accountability Regime to the FAR which, when introduced, will be administered jointly by ASIC and APRA.
APRA’s funding will also rise substantially. APRA’s budgeted expenses will increase to $683 million in FY 22-23, up from an estimated actual expenditure of $614 million in FY 21-22. This increase will go straight towards APRA’s strategic objectives, with no material changes arising out of the budget measures.
AUSTRAC will see an increase out of this budget, moving from its estimated actual expenditure of $103 million in FY 21-22 to budgeted expenses of $108 million in FY 22-23. These funds will go towards AUSTRAC’s existing regulatory and intelligence programs, with the budget outlining a range of target metrics for the regulator to meet.
Budget measures give a glance at future priorities
A number of budget measures indicate that financial services regulatory reform is on the table for the future.
- Review of the regulatory framework for managed investment schemes and the ongoing review of the Reserve Bank ($2.7 million funding): The terms of reference for the review of the Reserve Bank excludes the Bank’s payments, financial infrastructure and banking functions, but any review into the regulation of managed investment schemes should be carefully followed by responsible entities and other financial services licensees.
- Independent review of the Australian carbon credit unit market ($0.8 million): Licensees and investors in carbon units should take note, with funding from the new ‘Powering the Regions Fund’ allocated to this.
- Treasury and the Australian Accounting Standards Board development and introduction of climate reporting standards for large businesses and financial institutions ($6.2 million over 4 years): The budget papers indicate that the standards are to be in line with international reporting requirements, which may refer to the recent release of draft sustainability reporting standards by the International Sustainability Standards Board.
Government responds to recent data breaches
It shouldn’t be a surprise that combatting scams, fraud and identity theft receive additional support in the wake of recent data breaches across a number of Australian corporates. These measures, most of which are drawn from existing funds, include:
- additional identity support services such as counselling and identity recovery assistance through the Department of Home Affair’s arrangement with IDCARE, the national identity and cyber support service at a cost of $2 million in once-off funding in FY 22-23;
- the Australian Competition and Consumer Commission is to establish a National Anti-Scam Centre, at a cost of $9.9 million over 4 years; and
- the Treasury is to conduct public scam awareness campaigns.
Increases to the Commonwealth Penalty Unit
It’s said that death and taxes are the only certainties in life. Another item for inclusion in that list might be the indexation of the Commonwealth Penalty Unit, which is now set to rise from $222 to $275 from 1 January 2023. This sting of an additional $53 per penalty unit is expected to generate an additional $31.6 million in revenue over the 4 years from FY 22-23.
The Government is putting its money where its mouth is, with the details in this first budget indicating that financial sector regulation will continue to be a priority. In addition to the expected introduction of the FAR, the budget indicates that additional regulatory reform will be on the horizon.
The financial services sector should be on the lookout for additional details about key announcements, including the review into the regulation of managed investment schemes, and the introduction of new accounting standards for climate reporting measures.
This publication is introductory in nature. Its content is current at the date of publication. It does not constitute legal advice and should not be relied upon as such. You should always obtain legal advice based on your specific circumstances before taking any action relating to matters covered by this publication. Some information may have been obtained from external sources, and we cannot guarantee the accuracy or currency of any such information.