Thousands of private companies won’t have to lodge financial reports with Australia’s corporate regulator under a Morrison government plan to cut “red tape” for business.
The treasurer, Josh Frydenberg, said the Coalition had decided to reduce the reporting “burden” for small and medium businesses by changing the definition of what constituted a large proprietary company.
He said it would reduce the regulatory cost on affected businesses by $81.3m annually, because the average cost of preparing and auditing financial reports was roughly $36,950 per company, per year.
Currently, large private companies are required to prepare and lodge a financial report, a director’s report and an auditor’s report with the Australian Securities and Investments Commission (Asic) each financial year.
But Frydenberg said from 1 July 2019 thousands of companies would no longer have to do so – they would only have to keep written financial records, and might be required to prepare audit or financial reports if directed by Asic or by 5% or more of their shareholders.
He said a third of large proprietary companies (2,200 out of roughly 6,600) would no longer be required to comply with financial reporting and audit requirements because he would change the definition of what a “large” company was.
At the moment, private companies are considered “large”, for the purposes of Asic reporting requirements, if they meet any two of three thresholds: $25m revenue, $12.5m in assets, or 50 or more employees.
Under the government’s plan, those thresholds would be doubled to $50m revenue, $25m in assets, or 100 or more employees.
Frydenberg said it would save affected companies more than $300m over the next four years.
The government is also announcing $51.5m in extra funding for the federal court of Australia and the commonwealth director of public prosecutions (CDPP) to enable more prosecutions of criminal misconduct by banks and other financial institutions.
Frydenberg and the attorney general, Christian Porter, said after providing an extra $70m in funding to Asic to help it increase its enforcement activity, they expect there will be more prosecutions by the CDPP and more civil corporate misconduct cases before the federal court.
They are providing an extra $41.6m to the CDPP over eight years, with the flow of funds starting this year, to help it consider more prosecutions put forward by Asic and hire additional prosecutors to manage the increased caseload.
A further $9.9m will also be provided to the federal court over four years to fund the appointment of additional resources, including two new judges to support civil cases.
The government has also asked the attorney general’s department to conduct a review of whether the federal court’s criminal jurisdiction should be expanded to include corporate crime, to be completed in January.
It said criminal prosecutions for misconduct by banks and other financial institutions were currently heard in state courts where they have to compete with state cases for resources and scheduling.
It said the creation of an additional criminal jurisdiction in the federal court would allow some prosecutions to be prioritised and penalties for breaches of the law to be handed out faster.
The government will also establish a “committee of regulatory enforcement strategy”, to be chaired by the attorney general’s department.
It will comprise officials from financial regulators, and will meet regularly to discuss enforcement matters in the financial services sector and provide feedback to the government on regulatory and civil enforcement policy.