The federal budget has earmarked $11.7 million in 2014-15 for scoping studies into ownership options for a variety of government assets, including the registry function of ASIC.
The immense database provides information about Australia’s 1.9 million companies, business names, and financial service licensees.
In February, ASIC chairman Greg Medcraft foreshadowed the budget announcement, telling the economics references committee the corporate register was “frankly, a technology business”.
Speaking at a post-budget webinar yesterday, Dante De Gori, general manager of policy and conduct at the Financial Planning Association (FPA), answered some of Wealth Professional’s
questions about the budget’s treatment of ASIC.
He said selling off the registry could attract as much as a $1 billion price tag.
“If the ASIC register is privatised it won’t mean too much for ASIC,” he said. “It’s built up to a point where it’s quite a big asset, and it will move some of the resourcing involved.”
The registry generates about $535 million in reporting fees, earns more than $90 million a year from business names and searches for corporate details, and carries annual costs of about $140 million, reported The Australian
The article said a sale could lead to a restructure of fees that could produce savings for small businesses, which mostly register their details with ASIC, paying an annual fee.
On the other hand large financial services and credit providers may be charged on a user-pays basis for the services.
FPA’s De Gori said he is more concerned about the effect that some of the measures to cut ASIC’s budget - which includes the loss of over 200 staff members - could have on things like licensing costs.
“Unsurprisingly there’s been a request by government for a variety of agencies to be more efficient, and the government announced that ASIC will effectively reduce funding of $120 million, and it will be asked to adjust its priorities,” he said. “There’s proposals by ASIC already that they may change licensing fees and provide a user-pays system. We’re keeping a watch out.”
One of the government agencies hit hardest by the budget is the Australian Taxation Office, which will lose more than 2,300 staff by 2014-15.
In another cost-cutting measure five merit review tribunals will be merged into one single organisation. The merger excludes the superannuation disputes tribunal, said De Gori.
And in another big change, the Australian Transaction Reports and Analysis Centre (AUSTRAC) will have a fiscal intention to recover 100% of its funding through industry contributions by 2017-18.
The government will also remove the $300 base component fee for AUSTRAC’s smallest regulated entities.
“It will be targeted at the upper end of town, and effectively for many of those who run their own license, you’ll be paying $300 to AUSTRAC [at the moment],” said De Gori. “That will be removed and be paid for by larger industry.”