ASIC’s data – the sale is off; now for some decisions….

The government has announced that it is not proceeding with the private sector bids to upgrade and operate ASIC’s registry functions. The bids were said not to have delivered “a net financial benefit for the Commonwealth”. Indeed, though how the government measured that benefit in the first place is problematic.

This outcome was expected in light of a build-up of concerns about the importance of ASIC data, many of these being highlighted on Murrays Legal. While I said that “history sadly suggests that sometimes short term commercial gains will win over the financial and resource commitment that needs to be given to ensure long term infrastructure returns”, I did express hope that a “careful and thoughtful decision [would] be made”.  A decision has been made, though the thought and care behind it is rather opaque. 

Various issues influencing the decision

A number of issues reported here no doubt influenced the decision, and should now prompt the government to act on various recommendations already made to better use ASIC data, for example, to counter unlawful phoenix activity and money laundering and promote general corporate transparency and regulation. 

Information about the true ownership of Australian companies, comparable with the United Kingdom’s national register of beneficial ownership, is required, as recommended by the 2015 Senate Committee Report on Insolvency in the Australian Construction Industry, which also recommended the introduction of a Director Identification Number (DIN) verified by ASIC. The DIN is also supported by the Productivity Commission’s Report 75 of 2015, and by the first report of the Senate Committee inquiry into corporate taxation, and also by an inquiry in New Zealand. 

Most significantly, that Senate Committee recommended that ASIC provide access to its company register free of charge, as is the case in the UK through ASIC’s equivalent, the UK Companies House.

The need for greater corporate transparency was raised in the 2014 FSI Report which then led to the Productivity Commission’s current inquiry into Access to Data, with its final report due by March 2017. 

Then there is the need to reconcile ASIC’s and the ATO’s concerns about illegal phoenix activity, and its impact on tax revenue and corporate conduct. I have reported on the difficulties of the government funded Melbourne University Phoenix Team itself obtaining basic and consistent data on the “cost, incidence, and enforcement of laws dealing with illegal phoenix activity”, with the Team obliged to trawl through ASIC media releases for its “data”.  Whatever others had reported, the Team found that accurate quantification of phoenix activity was “impossible”. Reliance on poor data results in poor funding and resource decisions. The same types of difficulties in information access were also encountered by submissions to the Productivity Commission.

Some final pointer as to the government’s decision came in the recent House inquiry into ASIC’s 2015 annual report, on 14 October 2016, where questions were asked about the ASIC tender proposal, seeking to confirm that the government would retain ownership of the data. 

The 21st century’s recognition of the importance of good legal and business infrastructure

As I commented at the time, all of these issues should cause the government to revisit the tender for the ASIC registry. Given the “21st century’s recognition of the economic importance of access to and usage of a country’s data”, the government’s focus should be on resourcing “legal and business infrastructure”, just as any infrastructure spending can produce benefits many times over.

The government now having deciding to re-think its approach, it should re-direct its focus on the many recommendations for more productive uses of ASIC’s data. The private sector may still have a role. Just as the government may not have the capacity to itself build bridges and roads and ports, expert input may be needed to build good corporate and legal infrastructure. 

Any response, including from the government, is welcome.

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