Section 4: Purchaser/provider and cost recovery arrangements
Purchaser/provider arrangements
The Australian and Securities and Investments Commission (ASIC) is not party to any cross agency purchaser/provider arrangements.
Cost recovery arrangements
Cost Recovery Impact Statement: Sustaining ASIC’s Operations
Reason for preparing a Cost Recovery Impact Statement (CRIS)
It is proposed to offset the increase in expenses associated with sustaining ASIC’s operations by an increase to the annual review fee. Corporations fees form part of an existing arrangement whereby fees are collected from companies and other corporations and paid into consolidated revenue. These monies assist the Australian Government to fund the various costs of the national corporate regulation scheme, including the operations of ASIC.
The policy for setting corporations fees, including the annual review fee, will be subject to a comprehensive review under the Commonwealth Cost Recovery Guidelines in 2007-08.
Description of proposed cost recovery arrangement
The annual review fee increase will offset funding for ASIC to deal with pressing financial issues that threaten its continued ability to meet its mandate. These include several unavoidable cost increases in litigation, and an increase in demand for ASIC’s services (notably complaints received from the public requiring investigation).
There will also be resourcing to fund consumer protection initiatives to provide targeted consumer education and to deal with an expanding range of scams including wealth creation seminars, property schemes, mortgage brokers, and unsolicited offers to shareholders at below market prices. Most of the funding for this initiative will be available from 2005-06.
Details of compliance with cost recovery policy
The longstanding policy of successive governments has been that, over time, the total corporation fees paid will cover the total costs of the corporate regulatory scheme. These scheme costs include: ASIC’s costs of collecting the fees, ASIC’s annual appropriation, the cost in running the Corporations and Markets Advisory Committee, the Australian Accounting Standards Board, Commonwealth compensation payments to the States and the Northern Territory, and contribution towards the costs incurred by Australian Government agencies such as the Director of Public Prosecutions, the Federal Court and the Administrative Appeals Tribunal.
The proposed annual review fee increase is consistent with the existing funding arrangements so that the increase in ASIC’s costs will be funded from corporations fee revenues. The estimated revenue recouped by the increase equates to the costs in each year, and is shown below:
- Allowance has been made for bad debts and for the effect of the introduction of credit card and EFTPOS facilities.
Review
The Australian Government has announced that ASIC’s funding arrangements, which form part of the broader funding arrangements for corporate regulation, will be reviewed for consistency with the Commonwealth Cost Recovery Guidelines in 2007-08.