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Wednesday, 12 October 2011
Page: 11561

Ms OWENS (Parramatta) (10:43): On behalf of the Standing Committee on Economics I present the committee's report entitled Advisory report on the Corporations (Fees) Amendment Bill 2011, incorporating a dissenting report, together with the minutes of proceedings.

In accordance with standing order 39(f) the report was made a Parliamentary Paper.

Ms OWENS: by leave—The Corporations (Fees) Amendment Bill 2011 is a very simple piece of legislation that allows ASIC to charge market participants, such as stockbrokers, fees to support its supervision of exchange markets. The fees will be set in regulations to be gazetted after the bill becomes law. The bill is part of a wider government policy to improve Australia's position as a financial centre. Previous government reforms have enabled other firms to operate exchanges in addition to the ASX. As a result, Chi-X Australia will commence operating a market for cash equity shares later in the year, subject to a number of conditions being met. This threat of competition has brought down ASX costs to market participants by approximately $20 million annually with the potential for further reductions. The ASX has also introduced a wider range of services for market participants.

There are several key reasons to support the bill. In particular it complies with the government's cost recovery guidelines which were developed by the previous government in 2005. Simply, the finance industry is receiving a direct significant benefit from ASIC's supervision of markets. Stockbrokers are responsible for a significant portion of the time and effort that ASIC expends on supervision. Asking stockbrokers to pay for supervision also presents the complications that occur if ASIC charges market operators a loan, and those operators then pass on the cost to stockbrokers. Brokers may be reluctant to give some of their business to new operators entering the market if the pass-through of costs affected the new entrants' competitiveness. Charging stockbrokers also prevents incumbent market operators from cross-subsidising the parts of their business that are subject to new competition.

Another important issue in the inquiry is the fees that ASIC will charge under regulations. This is currently the subject of Treasury consultation. Treasury has issued a comprehensive consultation paper which will serve as an appropriate basis for designing the fee structure. Industry raised legitimate concerns about proposals in the consultation paper, but the committee anticipates that Treasury will respond to these concerns either through further explaining its position or by making appropriate changes.

The bill should pass because it is an appropriate way of funding ASIC's market supervision activities. It is not the centrepiece of the shift to competition but it is informed by competition principles and will be an important part of the competition infrastructure. I would like to thank the organisations that assisted the committee during the inquiry through their submissions or by participating in the hearing in Canberra. I also thank my colleagues on the committee for their contribution to the report and the secretariat for the work they have done. I commend the report to the House.