The Policy team worked closely with the Engagement team to issue timely coverage and analysis of Federal Budget 2021‒22 on 12 May.
Key Budget measures of interest to members were:
- A major funding boost of $17.7 billion over four years for the aged care sector to deliver on the recommendations of the royal commission.
- A funding boost for women’s economic security of $3.4 billion over five years.
- A commitment of $1.2 billion over six years for a new Digital Economy Strategy that aims to transform Australia into a modern and leading digital economy.
- Regulatory red tape cutting for business of $134.6 million including $800,000 to examine options to enable electronic document execution and $10 million to modernise business communication by amending legislation in the Treasury Portfolio to be technology neutral.
- A Financial Market Infrastructure Regulatory Reforms package to protect Australia’s financial markets.
- An additional $222.9 million over two years for the embattled arts sector, one of the not-for-profit sectors hardest hit by COVID-19.
Disappointingly, there was no indication of progress on the establishment of the Commonwealth Integrity Commission. The budget committed no funding and no staff for the anti-corruption body for the 2021-22 fiscal year. Legislation to create the Commission has undergone consultation but has not yet been tabled in Parliament. Governance Institute will continue to monitor this and other key budget measures and participate in any relevant consultation processes.
As noted above, the new Digital Economy Strategy was a key measure of the Federal Budget. It included:
- Over $100 million for a new pilot program for work‑based digital cadetships that offer a flexible way for workers to build digital skills, investments in the cyber workforce, and scholarships for emerging technology graduates.
- Enhancing government services through a $501.9 million investment to overhaul and improve myGov and My Health Record.
- Building Australia’s capability in Artificial Intelligence with $124.1 million in initiatives, including a National Artificial Intelligence Centre led by CSIRO Data 61, supported by a network of AI and Digital Capability Centres to drive adoption of AI across the economy.
- Helping SMEs build their digital capacity through investment of $28 million.
- $111.3 million to accelerate the rollout of the Consumer Data Right in banking, energy and telecommunications.
- Over $50 million to enhance cyber security in government, data centres and future telecommunications networks.
Governance Institute will make a submission to the Digital Technology Taskforce overseen by the Department of the Prime Minister and Cabinet. Our submission will characterise the budget’s initiatives as worthwhile but note that longer-term planning and sustained policy development and investment will be necessary to fully deliver on the government’s digital ambitions by the year 2030. An example is that while the budget invests in digital support for small and medium enterprises (SMEs) it does not provide support for NFPs, which face similar digital capability challenges. The budget may also have been a missed opportunity to address digital inequality among vulnerable groups of Australians. Governance Institute’s submission identifies the priority areas where members believe government should focus attention to the end of the decade in 2030, including:
- Agile and responsive regulatory frameworks.
- Action to address digital inequality and poverty.
- Promoting digital capability across all sectors, especially SMEs and NFPs.
- Sufficient investment in digital infrastructure.
- Promoting digital trust in government.
The submission will guide our continued advocacy in the digital policy area.
Proxy advice reforms
Treasury has proposed reforms to increase the transparency and accountability of proxy advice. Proxy advice to investors is an area where Governance Institute has demonstrated thought leadership over many years. We have advocated that issuers and proxy advisers both have responsibilities to each other to ensure investors and the market are well-informed. Treasury has issued a consultation paper that proposes reform options to require:
- proxy advisory firms to obtain an Australian Financial Services Licence for the provision of proxy advice.
- proxy firms provide their research and voting recommendations to the company that is the subject of their report at least five business days before providing it to their clients.
- proxy firms to notify their clients how to access the company’s response to the report.
- proxy firms to be independent from any superannuation funds to which they provide advice.
- superannuation funds to make publicly available more detailed information on their voting record, including whether a vote was consistent with any proxy advice received.
- superannuation funds to outline how they exercise independent judgement in the determination of their voting positions.
Governance Institute has engaged with Treasury to discuss the consultation and will make a submission to ensure the views of members on the proposed changes are taken into consideration. We will adopt a policy position that recognises the important role of proxy advisers in Australia’s governance landscape while supporting appropriate and measured reforms that enable issuers to correct factual inaccuracies and engage with shareholders in a timely manner when proxy advice is not in line with the boards’ recommendations. We will continue to update members on this important matter.
Modernising the Corporations Act
Governance Institute is making a second submission to Parliament in support of modernising the Corporations Act 2001 to make it more technology neutral. We will also give evidence to the Senate Economics References Committee in early June. As previously advised to members, legislation to provide further temporary relief on virtual AGMs, digital shareholder communications, and electronic document execution remains stalled in the upper house. The Senate Committee is reviewing the legislation and is not due to report until 30 June 2021. This is the second time the legislation has been referred to a committee for an inquiry since it was tabled in Parliament. The legislative delay has had negative impacts for members in all sectors. Governance Institute is continuing to engage with Parliamentary parties and industry stakeholders to advocate for a resolution to the uncertainty and a satisfactory regulatory outcome.
Financial Market Infrastructure Regulatory Reforms
The Federal Budget also contained a Financial Market Infrastructures Regulatory Reform Package to give regulators new powers and access to funding to intervene in the event of a market failure. Under the changes, the Reserve Bank of Australia (RBA) would be given the ability to manage a failure at a clearing and settlement facility such as the ASX and Chi-X. In the event of a crisis, the RBA would be able to draw on up to $5 billion as a last resort measure to ensure continued market operation, with funding to be recovered when the crisis is resolved. The RBA and ASIC would also get stronger supervisory and licensing powers. The proposals have a long history beginning around 2011 when the Council of Financial Regulators was tasked with a review of the regulatory framework of Australia’s financial market infrastructure after the Global Financial Crisis. The Financial System Inquiry, chaired by David Murray, recommended stronger crisis management powers. Governance Institute contributed to a consultation in early 2020 and we will continue to engage with government and regulators on this initiative.