SUBJECTS: Announcement on commencement of ASIC's market supervision, Cooper Panel review into superannuation, Lindsay Tanner.
TICKY FULLERTON:
Australia's financial regulator formally opened its new offices in Sydney today, as it prepares to take on the role of supervising the securities exchange. Financial Services Minister Chris Bowen announced, also today, that the formal transfer of responsibilities from ASX to ASIC would take place on the first of August.
The Minister joined me a short while ago.
Chris Bowen, welcome to Lateline Business.
CHRIS BOWEN:
Thank you Ticky, good to be with you.
FULLERTON:
Big changes; not just the transfer of regulation from the ASX, we'll have new exchanges in competition with the ASX, perhaps new circuit breakers to get around market disruptions. We're all ready, are we?
BOWEN:
Yes, I have announced tonight that that transfer will occur on the 1st of August. Certainly ASIC has been doing a lot of preparatory work and they are very confident that they are ready for the transfer; and also, in the consultations that I've had with market participants and the peak representative bodies of market participants; they also feel that the consultation that's occurred by ASIC has been very good and that the market is ready for that transfer on the 1st of August.
FULLERTON:
Will you be offering any compensation to the ASX? I know the New York Stock Exchange was compensated when its supervisor responsibilities were transferred.
BOWEN:
Well look ASX has been in discussions with ASIC and Treasury about the whole range of issues that go to the transfer of supervision. We continue to be in those discussions and I've announced that the regulatory fee-structure – and that is, what applies to the new arrangements – and other matters are matters for discussion between the ASX and the government authorities.
FULLERTON:
Because obviously that could have quite an impact on its value.
BOWEN:
That's a matter for the ASX and it's a matter for discussion between the ASX and the various government authorities.
FULLERTON:
On the Cooper Review, the new proposed trustee rules look pretty complex. Is there a talent pool big enough to fill the board seats in corporate Australia?
BOWEN:
Well, that's one of the issues – and all the issues, I'm working through with the superannuation industry. I understand where the Panel's coming from with those recommendations.
In recent days I've been in discussions with the superannuation industry about that, and there are various views around: there are some people who think the recommendations are perfectly appropriate, there are other people who don't; who make that point that you make about the availability – if you like, the gene pool of available directors. Other people say that these reforms might actually help in that. These are complex issues and I'll be working that through in as methodical way as I can.
FULLERTON:
Jeremy Cooper has angered the unions and even some business groups about the idea of abolishing mandatory equal representation on boards. The ACTU says, 'the system ain't broke'. What do you say?
BOWEN:
Well of course, as you say, he's recommended – his Panel has recommended – that it no longer be mandatory. He's certainly not recommending that it not be an option to have 50-50 representation. He's saying that they should no longer be mandatory.
My answer is the same; I'll be working that recommendation through. I've been discussing it with various peak superannuation groups and funds over recent days. I'll continue to do that and our response will be a carefully considered and measured one.
FULLERTON:
When do you think your response will come out?
BOWEN:
Look, I want to give the industry some certainty. There are a lot of changes here, and there has been a lot of consultation as part of the Cooper Review process. And of course, with the panel issuing iterative reports over the last 12 months, that's enabled me to enter into quite a bit of consultation as we go. But I do want to provide the industry with some certainty, particularly on some of the big questions like My Super and Superstream; and I'd hope to do that in coming weeks and certainly over the next two months.
FULLERTON:
Just one on your new mining tax deal; on Tuesday the Treasury Secretary Ken Henry admitted the Government had assumed a big rise in commodity prices, so it could claim that the new mining tax deal would only reduce budget revenues by $1.5 billion dollars. Now that might be politically inspired, but you can't mark your budget to market like this surely?
BOWEN:
Well Ticky the Treasury does its estimates, its costings and its forecasts on the best information and the latest information it has available. Minister Ferguson made that very clear last weekend, and you wouldn't expect the Treasury – when doing its estimates and its forecasts – to say, 'well we're using old information by the way, for this forecast; we have new information but we're not going to use it'. I don't think anybody would think that's sustainable.
We take the advice of the Treasury and if they advise that these are the appropriate costings and forecasts, then that's we work off.
FULLERTON:
So if commodity prices come off, will Treasury be doing another calculation for you?
BOWEN:
Well, of course we always respond to changing market circumstances but I'd say this Ticky, the forecasts and projections of the Treasury are conservative – they don't take the best case scenario, they don't go out and say ‘well what's the highest that commodity prices might reach and let's base our assumptions on that'. They take a middle-ground approach, they take a conservative approach and that's appropriate.
FULLERTON:
And finally, can I ask you what sort of loss will the departure of Finance Minister Lindsay Tanner be for the Government?
BOWEN:
He's been a very good Finance Minister; it's been a pleasure to work with him – as I've done on the Expenditure Review Committee. He's been a very good, well respected Finance Minister and that, of course in that sense, is a loss.
I understand his reasons for going and I respect those, as a father as well; and we all wish him well. He's been a very good Finance Minister; no question about that, I agree with that, and to that extent, we'll miss him.
FULLERTON:
Minister Bowen, thank you very much for joining Lateline Business.
BOWEN:
Nice to talk to you Ticky.