In the last fortnight the Government has ticked one of its boxes for next year's election, launching policies to tackle over-regulation. And Treasury Secretary Martin Parkinson was reported as intimating that more regulation was needed to address risks posed by Australia's DIY super.
The contrast between minimising regulation 'in general' while expanding it in particular illustrates Lord Acton's dictum about rowing as a preparation for public life enabling one to face in one direction while travelling in the other.
The Government is imposing stronger disciplines for regulators to perform regulatory impact analysis (RIA) before regulating. But we've been strengthening compliance on RIAs for two decades now.
And it doesn't work. Years ago the British Chambers of Commerce diagnosed the problem in its publication 'Deregulation or Déjà Vu?'
Both Conservative and Labour administrations approach deregulation with apparent enthusiasm, learn little or nothing from previous efforts and have little if anything to show from each initiative.
Our model of regulation review was a noble try at its birth late last century as Western governments rationalised the detritus of decades of ad hoc political favouritism and regulatory capture. But it failed even then. Bureaucracy and politics rewards 'can do' types, so regulatory impact analysis became a box ticking exercise, obeyed in the letter, but not in spirit.
Today with much of the purely deregulatory work done with governments vacating the regulation of airline schedules and shopping hours the quality and responsiveness of regulation matters more than its quantity. But regulating well involves finessing the micro-detail as does running a business or building software and economists' cost/benefit or regulatory impact analysis doesn't and can't stoop to the micro-detail. Neither does business or political advocacy against over-regulation.
Take the Treasury Secretary's concerns on DIY super. He's right: allowing unsophisticated investors largely free rein in managing their investment portfolio is a time bomb. Ask 34-year-old paraplegic, Alison Cook, whose story was reported this weekend. Her DIY super fund lost two thirds of her accident compensation payout nearly half a million dollars through ridiculously risky investments that earned her advisor juicy commissions.
Yet DIY super isn't too lightly regulated. It's too heavily regulated. It's only a time bomb because it's exquisitely badly regulated.
Most self-managed super funds (SMSFs) comprise a diversified pool of 'vanilla' assets shares, bonds and cash managed by families for their retirement. So, unsurprisingly, most are sensibly self-managed. But incredibly, the regulation governing DIY funds is a cut down version of that governing multi-billion dollar funds.
To establish a DIY fund one first needs a Trust Deed usually purchased from a city law firm (mine runs to 64 pages and sits, unread, on file). And while Mum and/or Dad go trustee and manage their own portfolio, their accountant manages 'compliance', drafting resolutions that trustees bemusedly sign. Then another professional firm audits the fund to comply with the Superannuation Industry (Supervision) Act 1993 and regulations.
For simple 'vanilla' funds all this could be handled at a fraction of the cost, as our taxes are, via self-assessment subject to risk targeted random auditing by the ATO. At the very least shouldn't we accept Recommendation 30 of a 2007 Joint Parliamentary Committee, that where funds consistently comply, they revert to five yearly rather than annual auditing? One report signatory, Penny Wong, now finds herself the Minister for Finance and (ahem) . . . Deregulation.
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