It’s been several years in the making, but the Australian Securities and Investments Commission has finally secured a user-pay funding model for its services that will see businesses hit with an annual levy based on their size.
On Thursday the senate passed the ASIC Supervisory Cost Recovery legislation without amendment, which is set to raise around two-thirds of the corporate regulator’s more than $300 million budget each year, with companies to pay an annual fee based on their size and their status as public or private companies.
The “user pays” model has been on the table since it was recommended as part of the 2014 Murray Inquiry into the nation’s financial systems, and in August 2015, then Assistant Treasurer Josh Frydenberg released a consultation paper on the policy.
The legislation means from July 1, 2017, Australian companies regulated by ASIC will be required to pay an annual fee, which will be calculated at the end of the financial year for payment in the following year.
The amount payable will be calculated based on a legislative instrument that uses a public company’s market capitalisation. The Australian reports this could mean companies valued at more than $20 billion on the Australian Securities Exchange could be paying a fee of $664,000.
Public companies with a market capitalisation of $5 million or less are set for a flat $4000 fee, while smaller private businesses will pay a fee that will be calculated by dividing the regulation costs for their sector by the number of businesses in Australia that operate in that space.
Minister for Revenue and Financial Services Kelly O’Dwyer said in a statement yesterday the legislation is intended to level the playing field in terms of who pays for ASIC services, by placing more burden on big business and less on the taxpayer.
“Only those entities that are regulated by ASIC and create need for regulation will bear its costs, rather than ordinary Australian taxpayers,” she said.
ASIC chairman Greg Medcraft welcomed the passing of the legislation, noting all sides of politics have supported the idea of companies chipping in more for the watchdog’s services.
“This is an important milestone not just for ASIC, but also for the companies and wider corporate sector that we regulate,’ he said in a statement yesterday.
When the government unveiled its consultation paper on the legislation in 2015, it was suggested some SMEs holding financial services licenses would be required to chip in on an annual $91 million each year under the scheme, but it was predicted investment banks and super providers would bear the brunt of payments.
While those in the small business community welcome the change, the Financial Planner’s Association did raise reservations about the bill, saying in submissions it would hit small financial planning firms with hundreds of dollars in fees, reports Independent Financial Adviser.
However, Council of Small Business Australia chief executive Peter Strong says his organisation’s members have been lobbying for the big end of town to pay their share of the regulator’s budget for upwards of seven years.
“I think the first time I heard about this from one of our members, who put it to [then Labor Minister for Competition Policy] Craig Emerson in 2010,” Strong says.
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“This is really good news, and I don’t think big business will complain — they’ll just say ‘fair enough’. This adds sense and logic to the process.”
Further details of the funding model will be made available shortly, according to a statement from Minister O’Dwyer.