NO.053

ADDITIONAL BUDGET FUNDING FOR ASIC

The Australian Securities and Investments Commission (ASIC) will receive an

additional $13.4million in funding over four years in this year’s Budget.

The additional funding will be for the James Hardie Taskforce, the continuation

of two enforcement actions and the implementation of the United States (US)-Australia

Audit Regulation Programme.

ASIC will receive $3.1 million in 2005-06 to fund fully the dedicated James

Hardie Taskforce, which was established in late 2004 to investigate matters

arising out of the James Hardie Special Commission of Inquiry. The funding will

facilitate an early and comprehensive investigation of the complex issues that

have been raised in this case. Initial funding of $4.3 million for this purpose

was provided to ASIC in 2004-05 through Additional Estimates.

ASIC will also receive $4 million in 2005-06 to continue the investigation

and litigation work relating to One-Tel and Offset Alpine Printing, without

adversely affecting its broader enforcement programme. Initial funding of $3.2

million for this purpose was provided to ASIC in 2004-05 through Additional

Estimates.

In both these cases, well-resourced defendants have initiated costly appeals

and challenges to ASIC’s powers and processes. These tactics may have

been adopted with a view to ‘pricing out’ the regulator. Failure

to proceed with these matters could have an adverse impact on community confidence

in administration of the national corporations scheme, and lead to a perception

that wealthy defendants may avoid sanctions under the Corporations Act 2001.

ASIC will be provided with $6.3 million over three years

to implement the US-Australia Audit Regulation Programme. The programme will

ensure that Australian auditors that are registered with the US Public Company

Accounting Oversight Board (PCAOB) and their Australian audit clients that are

registered with the US Securities and Exchange Commission can be regulated,

as far as possible, solely by ASIC in relation to the audit requirements under

the Australian and US regimes.

This will reduce the regulatory burden and eliminate duplicated processes relating

to audit inspections, thereby facilitating access to US capital markets.

The programme will require some amendments to the Australian Securities

and Investments Commission Act 2001 to support the proposed cooperative

audit arrangements between ASIC and the PCAOB. This funding will be subject

to review in the 2007-08 Budget.

CANBERRA

10 May 2005