Productivity growth remains critical to improving economic growth and living standards in Australia. Higher productivity increases national income.
The Treasury continued work on a range of initiatives to enhance productivity and ensure well‑functioning markets, including in relation to the financial system, foreign investment, competition, broader structural reform policy and supporting innovation.
The Treasury continues to lead the implementation of key responses to the Financial System Inquiry and other financial sector reforms. This reform agenda has required significant legislative and regulatory change with a view to improving the overall productivity, stability and accountability of the financial sector, as well as directly addressing areas of concern in relation to consumer outcomes and lack of competition. A well-functioning financial system that is resilient and provides services of value to households and the real economy is an important contributor towards productivity in the rest of the economy, facilitating investment, saving, consumption and risk mitigation choices, and providing a payments system infrastructure.
Several key areas of the financial sector reform priorities have either been consulted on or have passed Parliament, including the Corporate Collective Investment Vehicle Bill, the Open Banking Review, the Banking Executive Accountability Regime and the Comprehensive Credit Reporting reforms. These reforms support financial markets and systems to become more productive, efficient and consumer-focused.
The Treasury also assisted in the establishment of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry (the Royal Commission), and has provided a number of background papers on specific matters and submissions to the Royal Commission.
The Treasury continues to work to maintain and improve general business frameworks to create stronger corporations and greater trust and confidence in the corporate sector. This supports the productivity of Australian enterprise and directly impacts everyone from investors and creditors to business operators and company directors. This work has included reforms to combat illegal phoenixing activity, increasing transparency of share ownership (beneficial ownership), providing additional protections for whistleblowers and structural changes to the fees set by the Australian Securities and Investment Commission (ASIC).
In the 2018-19 Budget, the Government announced that it will modernise the Australian Business Register and ASIC business registers. Throughout 2017-18, the Treasury has been working with ASIC, the ATO and the Department of Industry, Innovation and Science to develop a detailed business case for government consideration. The Treasury led public consultation on how modernising business registry services could improve the way business interacts with government.
Further to assisting in the establishment of the Royal Commission, major work for the Treasury includes considering the implications of any recommendations of the Royal Commission for corporate governance in Australia and the role and effectiveness of ASIC.
Policy responsibility for small business moved to the Department of Jobs and Small Business as a result of the Machinery of Government changes announced by the Prime Minister in December 2017. The Treasury worked to increase productivity and workforce participation by supporting small business.
The Commonwealth is providing the states up to $300 million if they implement sufficiently ambitious regulatory reforms that assist small business. The Treasury assisted the Treasurer to finalise the Small Business Regulatory Reform Agenda (SBRRA) project agreement with all jurisdictions except Queensland, as well as the first SBRRA bilateral schedules with New South Wales and Victoria. The Treasury will assist the Treasurer to finalise bilateral agreements with other jurisdictions in 2018-19.
Work in 2017-18 also included supporting the Australian Small Business Advisory Services (ASBAS) program to enhance small business effectiveness.
Consumer protections are a key element of efficient markets by reducing information asymmetries, sending signals to suppliers and driving competition between firms. The Treasury has conducted formal public consultation on a number of matters including Consumer Guarantees, Fees for Paper Bills, Ticket Onselling, Gift Cards, Design and Distribution Obligations, Product Intervention Power, Small Amount Credit Contracts and the Fair Entitlements Guarantee.
Foreign investment underpins increased productivity in the economy through, among other things, increasing the supply of capital. The Treasury has worked closely with the Attorney‑General’s Department and the Department of Home Affairs’ Critical Infrastructure Centre to develop coordinated, whole-of-government national security risk assessments to support decision-making on foreign investment review proposals. The Treasury also worked closely with stakeholders in the development of a new online system for foreign investment that will deliver a number of improvements to facilitate easier lodgement of foreign investment applications, improving efficiencies for businesses engaging with the foreign investment framework.
The Treasury led the implementation of significant parts of the Government’s response to the Competition Policy Review, including misuse of market power, cartel conduct, merger authorisations and access to significant infrastructure. Legislation implementing these initiatives commenced on 6 November 2017.
The Treasury is working with the Australian Competition and Consumer Commission and the Commonwealth Scientific and Industrial Research Organisation (CSIRO) to implement the Government’s commitment to a Consumer Data Right, prioritising its roll out in the banking (Open Banking), energy and telecommunications sectors.
The Treasury portfolio reduced annual regulatory compliance costs by $772.9 million. The Treasury also contributed significantly to the Government’s regulatory reform agenda. Through the Regulatory System Renewal program, the Treasury has progressed regulatory reform related to Open Banking and technological innovation, worked to improve service delivery for businesses through the modernisation of business registers and continues to investigate measures to simplify various areas of the tax system.
The Treasury worked with the Government to task the Productivity Commission with an inquiry into Australia’s productivity performance, which reported in October 2017. The intent is to undertake a similar inquiry every five years to ensure an ongoing focus on productivity.
Energy issues remained prominent in 2017-18 and the Treasury provided advice to the Government on energy reliability, affordability and sustainability throughout the year. The Treasury led the cross-government team that worked on the negotiation to purchase 100 per cent of Snowy Hydro Limited from the New South Wales and Victorian Governments. The transaction will support productivity enhancing investment in a fiscally sustainable manner.
In 2017-18, an independent review was conducted of the Australian National Contact Point for the Organisation for Economic Co-operation and Development (OECD) Guidelines for Multinational Enterprises. The report was published in December 2017. The Treasury is considering the report’s findings in consultation with other agencies.
The Treasury continued to support the work of the Takeovers Panel in ensuring efficient, competitive and informed markets for corporate control. The Australian Government Actuary also provided actuarial and related policy advice primarily to Australian Government departments and agencies, to assist them to quantify risks and make informed decisions.