Sydney, 16 August, 2006: The Australian Bankers’ Association (ABA) welcomes the Federal Government’s final response on ‘Rethinking Regulation: Report of the Taskforce on Reducing Regulatory Burdens on Business.’

The ABA viewed the Taskforce’s report, chaired by Mr Gary Banks, as a potential watershed in the direction of regulation in Australia as it recommends the adoption of sound regulatory processes as the basis of decision-making going forward. 

The ABA is pleased that the Federal Government remains committed to reducing the red tape burden and, in particular, is seeking to address the underlying causes of overregulation.

The ABA supports the Federal Government’s adoption of the Taskforce’s list of six principles of sound process (see over: Notes for editors).

David Bell, Chief Executive of the ABA, said: “We are pleased to see that Federal Government is committed to undertake a rigorous cost-benefit analysis of regulatory options before proceeding to make new laws. In particular, that the Council of Australian Governments (COAG) has agreed to enhance analysis of regulatory options and we hope that this will improve the consistency and robustness of regulatory decision-making across all jurisdictions.”

“The ABA welcomes the Government’s adoption of the recommendation to tighten the ‘gate-keeping’ requirements which means regulatory proposals cannot proceed to Cabinet, or other decision makers, unless a Regulatory Impact Statement (RIS) has been undertaken.

“For major regulatory matters, the production of a policy green paper and exposure draft will certainly assist industry provide its views to the Government. Testing complex matters with business, especially the financial services sector, has been successful in the Government’s development of the approach to Anti-Money Laundering and Counter-Terrorist Financing draft legislation. We are pleased that the Federal Government intends to continue this approach.” 

Other key areas include:

Labour market regulation
The ABA is pleased that the Federal Government has acknowledged that there are inconsistencies in occupational health and safety (OH&S) legislation that can create unnecessary compliance costs for business and unnecessary risks for workers. It is important that duty of care provisions are harmonised. We note the Australian Safety and Compensation Council (ASCC) is due to develop strategies to improve the development and uptake of national OH&S standards. The Workplace Relations Ministerial Council is due to report to COAG by the end of 2006.

Consumer-related regulation
The ABA believes an independent review of the consumer policy framework by the Productivity Commission could help ensure that consumer regulation is based on sound research into market failures, is proportionate and subjected to robust cost-benefit assessment so that consumers' interests are best served.
The Government’s response confirms and should add impetus to the planned regulation of finance brokers and for the need for a more consistent treatment of privacy-related regulation between the States and the Commonwealth.   

Financial market regulation
The ABA is disappointed that decisions by the Reserve Bank of Australia which relate to the payments system will not be subject to an administrative review on their merits. Decisions relating to the payments system can have a considerable impact on market efficiency and competition across the banking and finance sector.

The ABA is pleased that the Federal Government is committed to consulting with the financial services industry on further refinements to the Financial Services Regulation (FSR). We look forward to working with the Government on identifying areas in financial services and corporate regulation where regulators could allow greater flexibility to tailor requirements to accommodate differing circumstances without compromising the intent of the law. The ABA is also pleased with the commitment by the Federal Government to develop a mechanism for rationalising legacy financial products.

The banking industry awaits the release of the Treasurer's Statement of Expectations that will contain guidance for regulators in meeting good practice. Treasury and the Australian Securities and Investments Commission (ASIC) are applauded for committing to improve the accessibility of financial services regulation.

Superannuation regulation
The ABA acknowledges the Federal Government for its commitment to simplify and streamline superannuation.

Principles of good regulatory process
The ABA acknowledges the Federal Government for its commitment, set out in its interim response, to implement more rigorous business impact assessments, including establishing best practice regulation through thorough cost-benefit analysis, as well as, enhancing the role of the Office of Regulation Review (ORR). COAG has also agreed to enhance cost-benefit analysis of regulatory options, such as through the use of the Business Cost Calculator. The ABA looks forward to providing input into ways to improve regulatory decision making and assessment of compliance costs.

Notes for editors

Six principles of sound process identified by the Taskforce:

• Government should not act to address ‘problems’ through regulation unless a case for action has been clearly established. This should include evaluating and explaining why existing measures are not sufficient to deal with the issue.
• A range of feasible policy options – including self-regulatory and co-regulatory approaches – need to be assessed within a cost-benefit framework (including analysis of compliance costs and, where relevant, risk).
• Only the option that generates the greatest net benefit for the community, taking into account all the impacts, should be adopted.
• Effective guidance should be provided to regulators and regulated parties to ensure that the policy intent of the regulation is clear, as well as what is needed to be compliant.
• Mechanisms such as the sunset clauses or periodic reviews need to be built in to legislation to ensure that regulation remains relevant and effective over time.
• There needs to be effective consultation with regulated parties at the key stages or regulation-making and administration.

For further information:

Heather Wellard
Director, Public Relations
Phone: 02 8298 0411
Mobile: 0409 830 439

ENDS