CLASS ACTIONS AUSTRALIA is warning that Federal Treasurer Josh Frydenberg’s intention to water down Australia’s stock market disclosure laws would weaken the economy by making it easier for company directors to "act poorly and dodge accountability".

Mr Frydenberg has announced the government’s intention to permanently relax stock market disclosure laws. The Treasurer had originally introduced the changes as a temporary measure to respond to the Covid-19 crisis.

“Funny how the pandemic crisis has apparently abated enough to stop JobKeeper, but is still serious enough to warrant permanently watering down corporate responsibility,” Class Actions Australia spokesperson Ben Hardwick said.

“The ASX is about to hit an all-time high, and the Treasurer thinks it’s important to offer extra shields to company directors to avoid accountability. It’s madness.

“Australia’s robust stock market disclosure laws mean investors can operate from a position of knowledge," he said. "Australian directors know they have to be open with the market or they might be accountable to their investors through a class action. Josh Frydenberg is apparently uncomfortable with this situation.

“His plan to water down continuous disclose laws would advantage powerful company directors over mum and dad investors.”

Mr Hardwick said he thought it was unlikely the government’s new laws would make it through the Senate, because they were "not just morally wrong, but economically irresponsible".

“Robust disclosure requirements and class actions are our economy’s best friend,” Mr Hardwick said.

“If you truly believe in markets then you’ll consider transparency and accountability to be good things, because they allow investment to flow rationally. If, however, you prefer crony capitalism and protecting corporations from consequences then you’ll take a different view.

“Josh Frydenberg has revealed his hand with this decision, but I suspect the Senate crossbench may have greater integrity when it comes to defending the true interests of investors and our markets.

“The last thing we should want is for Australia to develop an international reputation as a jurisdiction that’s soft on corporate misbehaviour. That’s a surefire way to dry up investment.”

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THE Joint Standing Committee on Trade and Investment Growth has commenced an inquiry into the prudential regulation of investment in Australia’s export industries. 

The inquiry will investigate the potential impact on investment opportunities for Australian exporters of changes in practices by banks, insurers and superannuation funds, as well as the advice and guidance provided by financial regulators which affects the investment opportunities for Australian exporters. Submissions from interested individuals, businesses and organisations are invited by Wednesday, March 31, 2021.

The committee chair, George Christensen MP, said that, given the importance of exports to Australia’s economy, the inquiry would be an opportunity to examine an issue which could have significant ramifications for the country’s economic recovery from COVID-19 and beyond.

"Exports from sectors such as agriculture, resources, and Defence manufacturing generate billions of dollars for the Australian economy and attract a significant amount of investment. If there are changes in the financial services sector which impact on Australia’s exporting industries, particularly those in regional areas, the Parliament must take an interest," Mr Christensen said.

The committee deputy chair, Ged Kearney MP, said, "The inquiry will consider the possible opportunities and challenges that could arise for Australian exporters from any changes in financial services sector practices."

More information about the inquiry, including the full terms of reference and details on how to lodge a submission, is available on the committee’s webpage. The preferred method of receiving submissions is by electronic format lodged online using a My Parliament account.

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THE Australian Small Business and Family Enterprise Ombudsman, Kate Carnell said while small businesses were relieved the state-wide lockdown is lifting, the Victorian Government is still yet to announce any support measures for the sector.

“It is fantastic news that small businesses can open their doors again tomorrow, however I am disappointed the Victorian Government has not yet announced what it will do to support the thousands of small businesses forced to shut up shop for five days with next to no notice,” Ms Carnell said.

“The Victorian Government needs to urgently compensate small businesses impacted by this snap lockdown, such as florists and restaurants that had their storage rooms packed with supplies ahead of Valentine’s Day and Lunar New Year celebrations.

“Many Victorian small businesses are understandably shattered by the latest sudden lockdown, given they were expecting their busiest weekend of trade in months. Many restaurants were fully-booked all weekend and were not given time to cancel the delivery of their additional supplies," Ms Carnell said.

“It’s for this reason the Victorian Government needs to immediately announce a compensation package for affected small businesses who have lost stock such as perishable food and fresh flowers.

“The compensation should also cover all other costs associated with running a business including staff wages and rent.

“We know a lot of small businesses have lost thousands of dollars worth of stock through no fault of their own," she said.

“It is unreasonable to expect these small businesses to shoulder the cost of this snap lockdown, given the nightmarish 12 months these cash-strapped small businesses have already been through.                         

“It’s absolutely critical these small businesses have the support and certainty they need from the Victorian Government to recover from this.”

www.asbfeo.gov.au

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THE OVERWHELMING majority of Australia’s top economists and housing experts agree Australian governments pay too little attention to housing system impacts on productivity and growth, according to a new survey.

In the UNSW City Futures Centre study, led by honorary professor Duncan Maclennan and commissioned by the Housing Productivity Research Consortium, formed by a group of private sector and non-profit stakeholders, 84 percent of respondents agreed with the statement: 'Australian governments have paid too little attention to how housing outcomes also affect productivity and growth'.

And 80 percent agreed that 'Rising mortgage debt poses an economic stability risk to Australia'.

Only 12 percent of respondents agreed with the statement: 'Over-expensive housing for low-income renters has little impact on economic productivity'.

The survey analysed attitudes of 47 leading economists and 40 senior experts from government, industry and academia.

Speaking for the research team, UNSW City Futures Research Centre professor Bill Randolph said the study highlighted worries about over-reliance on ultra-low interest rates for housing, employment and productivity.

“The vast bulk of housing experts and economists surveyed are concerned that ongoing Treasury dependence on ‘cheap money’ policy will further ratchet up house prices and widen the gap between rich and poor,” Prof. Randolph said. “From a purely economic perspective, the informed expert view is that this will undermine productivity and economic growth.

“Among the best ways to broaden Australia’s economic recovery strategy would be a large-scale national social housing program. Minimal construction for most of the past 25 years means that national social housing supply has effectively halved since the 1990s .”^[1]

The survey found a strong preference to direct Commonwealth stimulus to social rather than private housing. Almost seven in 10 (69 percent) of respondents agreed that 'Coming out of COVID, stimulating housing is best achieved through social/affordable housing investment rather than private market'.

Only one in 10agreed that 'In its 2020 Budget, the Federal Government rightly resisted calls for inclusion of social housing investment in its recovery stimulus package'.

Even in the past year, public housing waiting lists have grown another four percent, while high need applications have surged 11 percent. 

Everybody’s Home, a national advocacy campaign to end homelessness, said a powerful social and economic dividend was available if the Commonwealth chose to invest in social and affordable housing.

“A $7 billion dollar investment in social and affordable housing would unlock more than $18 billion in economic expansion, creating more than 18,000 jobs a year over four years, and making a serious dent in homelessness,” Everybody’s Home national spokesperson, Kate Colvin said.

“Longer term this would also boost productivity, by allowing people better access to jobs. Social housing can lift people out of poverty and put them on a path to prosperity.

“A better-balanced housing system is the right thing to do. It also happens to be the smart thing to do.”

Survey respondents were drawn from academic, industry and government sectors. The majority were trained economists, at least 15 of whom were members of The Conversation’s Economics Panel convened by the Economics Society of Australia. Respondents were mainly employed in senior positions such as Professor, Partner or CEO.

Further details are provided in the published UNSW research report.

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