INTHEBLACK August 2024 - Flipbook - Page 45
“The large entities who used to have financial
advisers – and by those I suppose I am referring
to the banks most specifically – have left
the industry, leaving the cost recovery
to the entities that have remained.”
RICHARD WEBB, CPA AUSTRALIA
The charges are levied as a tax, but they differ
from general taxation because they are meant
to be earmarked to fund activities provided
to the group that pays the levy.
However, CPA Australia superannuation
lead Richard Webb says that lack of
transparency has been a criticism for some time.
“We have been consistent about the
fact that there are guidelines from the
Department of Finance around cost recovery,
and cost recovery does include things like
industry-funded levies,” Webb says.
“Those guidelines require regulators to
publish a Cost Recovery Implementation
Statement, which should be published ahead
of any consultation on the levies each year,
so that we know in advance what they are
going to be.
“In recent times, the regulators have
interpreted that as publishing before
the amounts of levies become due.
I guess you could interpret the guidelines
that way in the Department of Finance’s
cost recovery guidelines, but I do not
think it is in the spirit of that very much.”
Webb also says that ASIC’s IFM
remains flawed because of its retrospective
charging nature.
In a 2022 submission to Treasury on
the ASIC funding model, CPA Australia
noted that current industry participants
are required to pay for past regulatory and
enforcement activities relating to participants
who may have been unlicensed, unregulated
or are no longer part of the sector.
“When the IFM was initially imposed,
it was intended that, as an industry-funded
model, it would mean that theoretically
the licensees who were creating the biggest
regulatory mess would likely be the ones
incentivised by larger and larger levies
to clean up their mess,” Webb says.
“However, what has happened since then
is that the large entities who used to have
financial advisers – and by those I suppose
I am referring to the banks most specifically
– have left the industry, leaving the cost
recovery to the entities that have remained.”
Independent economist Saul Eslake says
that in many cases, where industry levies
have not been implemented, various industry
activities are funded out of tax receipts.
“My instinct is that where an activity
is undertaken that primarily benefits
an industry and the industry wants it to be
undertaken, then a levy is an appropriate
way of funding it,” Eslake says.
“The alternative, assuming that you want
these things to be done, is that they are
funded out of income tax or some other
source of government revenue, which
would in turn mean either that those
taxes have to be higher or something else
does not get done.”
However, Eslake adds, “there would be
other occasions when the industry does not
necessarily want what is funded by a levy”.
BIOSECURITY PROTECTION LEVY
A major issue with industry levies is the
prospect of overlaps between new levies
and existing levies – which essentially
becomes a form of double taxation.
The Department of Agriculture, Fisheries
of Forestry (DAFF) states on its website that,
each year, it distributes about A$800 million
to 18 levy recipient bodies, comprising about
A$500 million in levies and charges, and
A$300 million in Commonwealth-matching
payments for eligible research and
development activities.
Currently, more than 50 Acts and legislative
instruments underpin the agricultural levy
system alone.
Biosecurity activity levies are already
collected to fund industry member
contributions to Plant Health Australia and
Animal Health Australia, while biosecurity
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2024
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