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Accountability in Regulatory Reform: Australia's Superannuation Industry Paradox

Published online by Cambridge University Press:  01 January 2025

Sue Taylor ,
Anthony Asher  and
Julie Anne Tarr
Sue Taylor
Affiliation:
Queensland University of Technology, PhD (Melbourne), MBus (QUT)
Anthony Asher
Affiliation:
University of New South Wales, PhD (Witwatersrand), BBusSc (Cape Town) FIAAust, FASSA
Julie Anne Tarr
Affiliation:
Queensland University of Technology, PhD (Qld), LLM. (Monash) JD (Cornell)
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Abstract

The Australian Superannuation Industry is generally seen as very strong and successful by global standards. However, three decades of legislative reform in the Australian superannuation industry have created a paradox: ongoing reforms but continuing dissatisfaction with areas of governance and outcomes. These include high levels of administrative and investment fees, and systematic problems around a culture of conflicted investment advice.

In seeking to further elaborate and then resolve this paradox, this article draws upon an extensive research project conducted by the authors within the Australian superannuation industry, including three voluntary and anonymous surveys of superannuation trustees/licensees. This research has revealed that fund members are vulnerable to significant and expanding private-interest rents generated by the financial services sector. This may be explained by regulatory capture mechanisms variously described as statutory, agency, corrosive and intellectual capture.

The article examines ways to better achieve public interest outcomes, and at a time when public sector integrity remains an area of particular attention, how more can be done to blunt the force of private interest rent seeking.

Type
Article
Information
Federal Law Review , Volume 45 , Issue 2 , June 2017 , pp. 257 - 289
Copyright
Copyright © 2017 The Australian National University

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References

1 Australian Prudential Regulation Authority (APRA), Quarterly Superannuation Performance, August 2016, 5 <http://www.apra.gov.au/Super/Publications/Documents/2016QSP201606.pdf>.

2 Macquarie Investment Management, Trends in Superannuation and Some Implications, (December 2011), 4 <http://www.macquarie.com.au/dafiles/Internet/mgl/au/mfg/mim/docs/mim-investment-perspectives/ip-superannuation-1213.pdf>; Australian Bureau of Statistics, Trends in Superannuation Coverage Series 4102.0 (March 2009) <http://www.abs.gov.au/AUSSTATS/abs@.nsf/Lookup/4102.0Main+Features70March%202009>.

3 Willis Towers Watson, Global Pensions Asset Study 2017 (January 30, 2017), 6 <https://www.willistowerswatson.com/en-AU/insights/2017/01/global-pensions-asset-study-2017>.

4 Department of the Treasury, Financial System Inquiry, Interim Report, July 2014, <http://fsi.gov.au/publications/interim-report/03-funding/superannuation/#P408_85520\

5 Willis Towers Watson, above n 3, 3. The study covered 22 major pension markets, which totalled USD 36,435 billion in pension assets and account for 62.0% of the GDP of these economies.

6 These are defined in the SIS Act ss 16–18.

7 SIS Act s 62.

8 Kevin, Davis, ‘Financial reform in Australia’ in Maximilian, Hall (ed), The International Handbook on Financial Reform (Edward Elgar Publishing, Cheltenham UK, 2003), 1–30Google Scholar.

9 Scott, Donald et al, ‘Too connected to fail: the regulation of systemic risk within Australia's superannuation system’ (2016) 2 Journal of Financial Regulation 56–78, 62Google Scholar.

10 APRA, Annual Superannuation Bulletin (June 2016) <http://www.apra.gov.au/Super/Publications/Documents/2017ASBEXCEL201606%20-%20PDF.pdf> 11.

11 Malcolm Farr, ‘Australian banks top global list as Labor persists in demands for a royal commission’, News.com.au (online), 5 August 2016 http://www.news.com.au/finance/economy/australian-economy/australian-banks-top-global-list-as-labor-persists-in-demands-for-a-royal-commission/news-story/aefa72c371555ced47804f9604c25c7c

12 Michael Janda, ‘Australian Banks are Too Big for the Nation's Good’, ABC News (online), 31 August 2016 <http://www.abc.net.au/news/2016-08-31/janda-aus-banks-are-too-big/7789830>.

13 Financial Services Council and UB Asset Management, State of the Industry Report ( 2017) Financial Services Council <https://www.fsc.org.au/_entity/annotation/e4439f6c-c103-e711-80d3-00155dea4d00>.

14 Australian Bankers Association, About Us, Doing it Tough? <http://www.doingittough.info/About-ABA/About-ABA>.

15 That is, Australia's retail and wholesale funds management businesses, superannuation funds, life insurers, financial advisory networks and licensed trustee companies, Financial Services Council <http://www.fsc.org.au/>.

16 Financial Services Council, About the Financial Services Council (2017) <http://www.fsc.org.au/about-us/about-the-financial-services-council.aspx>.

17 Australian Institute of Superannuation Trustees, Who are we? (2017) <http://www.aist.asn.au/about/who-are-we.aspx>.

18 Australian Superannuation Funds Association <https://www.superannuation.asn.au/>.

19 John Dawkins, ‘Statement to the House of Representatives during the Second Reading of the Superannuation Guarantee (Administration) Bill 1992., House of Representatives Official Hansard, No. 183, Thursday, 2 April 1992, THIRTY-SIXTH PARLIAMENT, FIRST SESSION—FIFTH PERIOD, HOUSE OF REPRESENTATIVES, Canberra, 1763.

20 John Dawkins, ‘Security in Retirement—Planning for tomorrow today’, Statement by the Honourable John Dawkins MP, Treasurer of the Commonwealth of Australia, 30 June 1992, 1–33; Michael E Drew and John D Stanford, ‘A Review of Australia's Compulsory Superannuation Scheme After a Decade’ (Discussion Paper No 322, University of Queensland School of Economics, 2003) 4.

21 Department of the Treasury, Financial System Inquiry, Final Report (March 1997) <http://fsi.treasury.gov.au/content/FinalReport.asp>.

22 See SIS Act s 6.

23 They are all listed entities under the Public Governance, Performance and Accountability Act 2013 (Cth) s 12.

24 Powers are granted under the SIS Act (APRA and the ATO) and the Corps Act (ASIC) to make ‘Legislative instruments’ under the Legislation Act 2003 (Cth).

25 See, eg, Greg Medcraft, Australian Securities and Investment Commission, ‘Speech to Australian Prudential Regulation Authority leadership team’ (Speech delivered at the Australian Prudential Regulation Authority leadership team meeting, 30 June 2011) <http://download.asic.gov.au/media/1347368/Speech-to-APRA-leadership-team-1.pdf>.

26 Explanatory Memorandum, Financial Services Reform Bill 2001 (Cth) 1.

27 APRA, ‘Regulation Impact Statement—Superannuation Prudential Standards’ (2012) <http://www.apra.gov.au/Policy/Documents/Prudential-Standards-RIS.pdf> 3–4.

28 R Clare, ‘Super Licensing: The Industry Challenge’ (May 2005) http://www.tved.net.au/index.cfm?SimpleDisplay=PaperDisplay.cfm&PaperDisplay=http://www.tved.net.au/PublicPapers/May_2005,_Sound_Education_in_Super,_Super_Licensing___The_Industry_Challenge.html> (emphasis added).

29 Calculated from the APRA Annual Report 2001, 11 and APRA Annual Report 2016, 30.

30 Attorney-General's Department, Stronger Super, Government's Response to the Australian Super System Review, 2010, 1.

31 Jeremy, Cooper, ‘Super for Members: A New Paradigm for Australia's Retirement Income System’ (2010) 3 Rotman International Journal of Pension Management, 8Google Scholar, 8.

32 Attorney-General's Department, above n 30, 7.

33 Australian Securities and Investment Commission, Regulatory Guide 97 (March 2017) <http://download.asic.gov.au/media/4200654/rg97-published-29-march-2017.pdf>.

34 These reforms were introduced through the Corporations Amendment (Future of Financial Advice) Act 2012 (Cth) and the Corporations Amendment (Further Future of Financial Advice Measures) Act 2012 (Cth), (‘the FOFA Acts’) which amended the Corporations Act 2001 (Cth).

35 As elaborated by the ASIC, FOFA—Guidance, and including Regulatory Guide 98 Licensing; Administrative action against financial services providers (RG 98) which reflected the ASIC's expanded powers to cancel or suspend an AFS licence and ban representatives; ASIC, FOFA—ASIC Guidance (20 October 2014) <http://asic.gov.au/regulatory-resources/financial-services/future-of-financial-advice-reforms/fofa-asic-guidance/#powers>.

36 ASIC, FOFA - Background and Implementation (20 October 2014) <http://asic.gov.au/regulatory-resources/financial-services/future-of-financial-advice-reforms/fofa-background-and-implementation/>.

37 Most of these changes were implemented through the Corporations Amendment (Streamlining Future of Financial Advice) Regulation 2014 (the Streamlining FOFA Regulation) which commenced on 1 July 2014. Changes to the Statement of Advice (SOA) requirements were also implemented through the Corporations Amendment (Statements of Advice) Regulation 2014 (‘SOA Regulation’), which was to commence on 1 January 2015.

38 ASIC, FOFA—Background and Implementation, above n 36.

39 Department of the Treasury, Better regulation and governance, enhanced transparency and improved competition in superannuation, Discussion Paper 28 (November 2013) <http://www.treasury.gov.au/ConsultationsandReviews/Consultations/2013/Better-regulation-and-governance>.

40 Corps Act ss 1017BA; 1017BB.

41 Australian Government, Financial System Inquiry, Final Report: Executive Summary (2014), xviii.

42 Ibid xiii.

43 Ibid xviii.

44 The issue was however raised forcefully in at least one submission to the Inquiry. See The Australia Institute, Submission to The Financial Services Review (March 2014) <http://fsi.gov.au/files/2014/04/The_Australia_Institute.pdf>. The absence of comment in the Inquiry also did not entirely escape notice at the time: see UNSW Centre for Law Markets and Regulation, Innovating Regulatory Capture (9 December 2014) <https://clmr.unsw.edu.au/article//innovating-regulatory-capture>.

45 Productivity Commission, How to Assess the Competitiveness and Efficiency of the Superannuation System - Study Report (2016) <http://www.pc.gov.au/inquiries/current/superannuation/competitiveness-efficiency/report>.

46 Australian Government, Financial System Inquiry—Interim Report (2014), ch 4.

47 Productivity Commission, How to Assess the Competitiveness and Efficiency of the Superannuation System, above n 45, iv.

48 Productivity Commission, Identifying and Evaluating Regulation Reforms—Research Report (2011) xi.

49 See, eg, Jeremy Cooper, Super System Review Final Report—Part One: Overview and Recommendations (CSSSR), (30 June 2010), [3.2.2]; See also Office of the Life Insurance Commissioner, Annual Report (1980); Annette Sampson, ‘Hop on Board the Gravy Train That Never Stops’, The Age (online), 8 May 2010 <http://www.smh.com.au/business/hop-on-board-the-gravy-trainthat-never-stops-20100507-ujkw.html>.

50 APRA, Insight Issue One, 2012, 18; APRA, Insight Issue One, 2014.

51 Survey One: 114/500 (23%); Survey Two: 69/241 (29%); Survey Three: 48/151 (32%).

52 Adam Butt et al, ‘The Superannuation System and its Regulation: Views from Fund Executives’ (Working Paper 030/2014, Centre for International Finance and Regulation, July 2014) 2.

53 AIST & BNP Paribas Securities Services, What will the superannuation industry be like in 2025? (13 March 2015) Australian Institute of Superannuation Trustees <http://www.aist.asn.au/media/14258/2015_03_13_media_aist_bnpparibas_research_preview.pdf>.

54 Sue Taylor, ‘The $200 Million/Year Price Tag for Superannuation Fund Governance: A Case Study of Fund Member Loss’, (Paper Presented at the AFAANZ Conference, Gold Coast, July 2007).

55 APRA, Stakeholder Survey—2015 Regulated institutions and knowledgeable observers (2015) <http://www.apra.gov.au/AboutAPRA/Publications/Documents/ASR-2015-SS-RI-and-KO.pdf>.

56 ASIC, Stakeholder Survey (11 September 2013) <http://download.asic.gov.au/media/1311529/ASIC-stakeholder-survey-2013-1.pdf?_ga=1.17959345.906067860.1453164185>.

57 Ibid 112.

58 Butt et al, above n 52, 8.

59 AIST & BNP Paribas Securities Services, above n 53, 1.

60 World Economic Forum, The Global Risks Report 2015, 11th Edition (2016) <https://www.weforum.org/reports/the-global-risks-report-2016>.

61 Reserve Bank of Australia, Submission to the Financial System Inquiry (March 2014) <http://fsi.gov.au/files/2014/04/Reserve_Bank_of_Australia.pdf> 29.

62 APRA, Annual Superannuation Bulletin, above n 10, 19.

63 APRA, Insight Issue One (2012) <http://www.apra.gov.au/Insight/Documents/12-Insight-issue-1.pdf> 54.

64 Ibid.

65 Australian Bureau of Statistics, 5204.0 Australian System of National Accounts, Table 5. Gross Value Added (GVA) by Industry <http://www.ausstats.abs.gov.au/ausstats/ABS@Archive.nsf/0/11C6681E4D26E070CA258059000EE9D4/$File/5204005_gva_by_industry.xls> Sheet ‘Data1’, cell AI67.

66 Ibid Sheet ‘Data1’, cell DY67.

67 APRA, Annual Superannuation Bulletin, above n 10, Table 4, 12. The figure is obtained by adding the investment and administration and operational costs.

68 Anthony Asher, ‘Conflicted Super Structures: Are Australian Investors Being Short-changed?’ in John Evans, Michael Orszag and John Piggott (eds), Pension Fund Governance (Edward Elgar Publishing, 2008) 61–97, table 4.4, 86.

69 See APRA, Annual Superannuation Bulletin, above n 10, 17 (Table 9) for the difference, which is the average over the past five years. The calculations are the authors’, and assume 45 years of contribution to a superannuation fund, and 22 years of drawdown—with real investment returns of 3.1% and 5% respectively.

70 Table 9 (APRA, Annual Superannuation Bulletin, above n 10, 17) reports a difference between the 25th and 75th quartiles as about 2% in 2016. If this is typical, and the distributions are normal, there is a more than 99% probability that the underlying difference between the funds exceeds 1.3% per annum.

71 See Anthony, D F Coleman, Neil, Esho and Michelle, Wong, ‘The impact of agency costs on the investment performance of Australian pension funds’ (2006) 5 Journal of Pension Economics and Finance 299Google Scholar; Adam, Clements, Gemma, Dale and Michael, E Drew, ‘Australia's retail superannuation fund industry: structure, conduct and performance’ (2006) 12 Accounting, Accountability & Performance 1Google Scholar; Thi Thuy, Chi Nguyen, Monica, Tan and Marie-Anne, Cam, ‘Fund Governance, Fees and Performance in Australian Corporate Superannuation Funds: A Non-Parametric Analysis (2012) 11 Journal of Law and Financial Management 2Google Scholar; and Kevin Liu and Bruce R Arnold, Australian Superannuation Outsourcing: Fees, Related Parties and Concentrated Markets (12 July 2010) <http://www.apra.gov.au/AboutAPRA/Documents/SA_WP_ASOFRP_072010_complete.pdf>. There is, however, limited evidence elsewhere. See Krzysztof, Jackowicz and Oskar, Kowalewski, ‘Crisis, Internal Governance Mechanisms and Pension Fund Performance: Evidence from Poland’ (2012) 13 Emerging Markets Review, 493Google Scholar; and Manuel Ammann and Christian Ehmann, ‘Is Governance Related to Investment Performance and Asset Allocation? Empirical Evidence from Swiss Pension Funds’ (Working Papers on Finance No 2016/23, Swiss Institute of Banking and Finance, University of St. Gallen, September 2016) .

72 Asher, Conflicted Super Structures, above n 68, 86.

73 Organisation for Economic Cooperation and Development (‘OECD’), Pension Markets in Focus (2015) <http://www.oecd.org/daf/fin/private-pensions/Pension-Markets-in-Focus-2015.pdf> 9.

74 Grattan Institute, Super Sting—How to Stop Australians Paying Too Much for Superannuation, (April 2014) <https://grattan.edu.au/wp-content/uploads/2014/04/811-super-sting.pdf> 8.

75 Ibid 7.

76 Grattan Institute, Super Savings (April 2015) <https://grattan.edu.au/wp-content/uploads/2015/04/821-super-savings2.pdf> 2.

77 Ibid 3.

78 Deloitte, ‘International superannuation & pension fund fees’, 2009, Prepared for IFSA, 44 and 60.

79 Alexander D. Beath, Value Added by Large Institutional Investors between 1992‐2013 (January 2015) <http://www.cembenchmarking.com/Files/Documents/Research/Total_Fund_Value_Added_Final_Feb9.pdf>.

80 David R Gallagher, Tim Gapes and Geoff Warren, ‘In-House Investment Management: Making and Implementing the Decision’ (Working Paper No 094/2016, Centre for International Finance and Regulation, March 2016).

81 See Asher, Conflicted Super Structures, above n 68, 84 ff.

82 For the banks’ response to these allegations, see Banks in denial about cash scam (March 3 2017) Michael West <http://www.michaelwest.com.au/banks-in-denial-about-cash-scam/>.

83 It does not seem possible to estimate the extent of these costs, but the order or magnitude is given by the $908m turnover of the Australian Securities Stock Exchange. See Australian Securities Exchange, ASX Limited Annual Report 2016 (2016)<http://www.asx.com.au/documents/investor-relations/2016AnnualReport.pdf> 38. The same source gives the annual turnover of shares alone at over $1 trillion (28). One might speculate that stockbroker charges are at least that of the ASX revenue and that the superannuation funds bear half.

84 Academics are puzzled as to why US merchant banks can charge 7% for raising capital and hedge funds can charge 2% of assets plus 20% of outperformance. See Mark Abrahamson, Tim Jenkinson and Howard Jones, ‘Why Don't U.S. Issuers Demand European Fees for IPOs?’ (2011) 66 The Journal of Finance, 2055; and Gaurav Amin and Harry M. Kat, ‘Hedge Fund Performance 1990–2000: Do the “Money Machines” Really Add Value?’ (2003) 38 Journal of Financial and Quantitative Analysis 251.

85 Adair Turner, ‘Speech by Chairman, FSA’ (Speech delivered at the City Banquet, The Mansion House, London’, September 22 2009, <http://www.fsa.gov.uk/pages/Library/Communication/Speeches/2009/0922_at.shtml>.

86 Ibid.

87 Ibid.

88 Oliver Denk and Boris Cournede, ‘Finance and Income Inequality in OECD Countries’ (Working Paper No 1224, OECD Economics Department, 25 August 2015) <https://ssrn.com/abstract=2649944>; Oliver Denk, ‘Financial sector pay and labour income inequality.’ (Working Paper No 1225, OECD Economics Department) OECD Publishing, Paris, <http://dx.doi.org/10.1787/5js04v5wjw9p-en>.

89 See Janda, above n 12.

90 Joanne K Earl, Paul Gerrans and Anthony Asher, When Cognitive Functioning Meets Financial Literacy and Judgment in Older Age: Advising Those Self-Managing Retirement Savings (2015) <https://ssrn.com/abstract=2562239>.

91 Adrian M Raftery, The size, cost, asset allocation and audit attributes of Australian self-managed superannuation funds. (PhD thesis, University of Technology, Sydney, 2014) 137.

92 APRA, above n 10, Excel version, <http://www.apra.gov.au/Super/Publications/Documents/2017ASBEXCEL201606.xlsx>, table 4a.

93 J, Glover, ‘Conflicts of interest in a corporate context’ in G, Acquaah-Gaisie (ed), Corporate Crime Workshop (Monash University, Department of Business Law an Taxation, 2002), 39–57Google Scholar, 46 quoting from Bray v Ford [1896] AC 44, 51.

94 Asher, above n 68, 75.

95 Ibid.

96 Explanatory Memorandum, Corporations Amendment (Further Future of Financial Advice Measures) Bill 2011 (Cth), 3.

97 Senate Economics Legislation Committee, Parliament of Australia, Corporations Amendment (Streamlining of Future of Financial Advice) Bill 2014 [Provisions] (2014) 7 [2.1]–[2.1] (citations omitted) <http://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Economics/FOFA/Report/index>.

98 Industry Super Australia, ‘ISA submission to the Exposure Draft of Corporations Amendment (Streamlining of Future of Financial Advice) Bill 2014’ <https://futureofadvice.treasury.gov.au/content/consultation/fofa_amendments/submissions/Industry_Super_Australia.pdf>, 11 referring to Rice Warner Actuaries, ‘The financial advice industry post FoFA’ (, prepared for Industry Super Australia, July 2013), <http://www.industrysuperaustralia.com/assets/Reports/Rpt-The-financial-advice-industry-post-FoFA-2013.pdf.

99 Rice Warner Actuaries, Consumer costs of FoFA amendments (May 2014) <http://www.industrysuperaustralia.com/assets/Reports/Rpt-Consumer-costs-of-FoFA-amendments-ISA-21052014.pdf>.

100 Commsec Adviser Services, <http://www.investing.commsecadviserservices.com.au/fofamadeeasy/fofa-overview/>.

101 Financial Services Council Submission No 27 to Senate Standing Committees on Economics, Inquiry into the Corporations Amendment (Streamlining of Future of Financial Advice) Bill 2014 [Provisions], 5 May 2014, 5–6.

102 Australian Bankers’ Association Submission, Senate Standing Committee on Economics, 2014 <http://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Economics/FOFA/Submissions>.

103 Commonwealth, Public Hearings on the Corporations Amendment (Streamlining of Future of Financial Advice) Bill 2014, Senate Economics Legislation Committee, 22 May 2014, Ms Robbie Campo, Deputy Chief Executive, Industry Super Australia, 56.

104 Parliamentary Joint Committee on Corporations and Financial Services, Inquiry into Financial Products and Services in Australia, 2009.

105 ASIC, ‘12-55MR ASIC releases full report on retirement advice shadow shopping research’ (Media Release, 27 March 2012) <http://asic.gov.au/about-asic/media-centre/find-a-media-release/2012-releases/12-55mr-asic-releases-full-report-on-retirement-advice-shadow-shopping-research/>.

106 ASIC, REP413 Review of retail life insurance advice (2014) <http://www.asic.gov.au/regulatory-resources/find-a-document/reports/rep-413-review-of-retail-life-insurance-advice/>.

107 ASIC, REP 444 ASIC enforcement outcomes: January to June 2015 (2015) <http://asic.gov.au/regulatory-resources/find-a-document/reports/rep-444-asic-enforcement-outcomes-january-to-june-2015>.

108 Choice, ‘CONbank’ says sorry but consumer protections must go’ (Media Release, 3 July 2015) <http://www.investing.commsecadviserservices.com.au/fofamadeeasy/fofa-overview/https://www.choice.com.au/about-us/media-releases/2014/july/conbank-says-but-consumer-protections-must-go>.

109 One example is that superannuation funds have not been sure whether they were entitled to provide obviously useful benefit illustrations to members. See Actuaries Institute Submission to Treasury, ‘Product Disclosure Statement For Superannuation Funds’, 26 February 2009, <https://archive.treasury.gov.au/documents/1812/PDF/Institute_of_Actuaries_of_Australia.pdf> 63.

110 Refer to the seminal publications: Barry, M Mitnick, The Political Economy of Regulation (Columbia University Press, 1980)Google Scholar; Douglas, Needham, The Economics and Politics of Regulation: A Behavioural Approach, (Little, Brown and Company, 1983)Google Scholar; Richard, A Posner, ‘Theories of Economic Regulation‘ (1974) 4 The Bell Journal of Economics and Management Science 335Google Scholar.

111 George, J Stigler, ‘The Theory of Economic Regulation‘ (1971) 2 Bell Journal of Economics and Management Science 3Google Scholar.

112 Mancur, Olson, The Logic of Collective Action (Harvard University Press, 1965)Google Scholar.

113 See, more broadly, Eric, A Posner, ‘Controlling Agencies with Cost-Benefit Analysis: A Positive Political Theory Perspective’ (2001) University of Chicago Law Review 1137Google Scholar; Sam, Peltzman, ‘Towards a More General Theory of Regulation’ (1976) 19 Journal of Law and Economics, 211–240Google Scholar; Gary, S Becker, ‘A Theory of Competition among Pressure Groups for Political Influence’ (1983) 98 Quarterly Journal of Economics 371Google Scholar.

114 Sue, Taylor, ‘Captured Legislators and Their Twenty Billion Dollar Annual Superannuation Cost Legacy’ (2011) 58 (3) Australian Accounting Review 268Google Scholar.

115 Daniel, Carpenter and David, A Moss, Preventing Regulatory Capture: Special interest influence and how to limit it (The Tobin Project, Cambridge University Press, 2014)Google Scholar.

116 Ibid 16–17.

117 Ibid 17.

118 Stefano, Pagliari, Making good financial regulation: Towards a policy response to regulatory capture (Grosvenor House Publishing, 2012) 10–11Google Scholar, citing Olson, above n 112.

119 Steven Rares J, ‘Competition, Fairness and the Courts’ (2014) 28(3) Commercial Law Quarterly: The Journal of the Commercial Law Association of Australia 17.

120 Kristian Brunt-Seymour, Trustees warn DC governance changes have not benefited members (19 January 2016) Professional Pensions <http://www.professionalpensions.com/professional-pensions/news/2442379/trustees-warn-dc-governance-changes-have-not-benefitted-members#>.

121 UK Office of the Parliamentary Counsel, When laws become too complex (16 April 2013) Cabinet Office <https://www.gov.uk/government/publications/when-laws-become-too-complex/when-laws-become-too-complex>.

122 UK academic John Kay suggests that regulatory capture needs to be explained by more than self-interest: ‘That is … regulators come to see the industry through the eyes of market participants rather than the end users they exist to serve, because market participants are the only source of the detailed information and expertise this type of regulation requires. This complexity has created a financial regulation industry—an army of compliance officers, regulators, consultants and advisers—with a vested interest in the regulation industry's expansion.’ John Kay, ‘Finance needs stewards, not toll collectors’, Financial Times (London) 22 July 2012, <http://www.johnkay.com/2012/07/22/finance-needs-stewards-not-toll-collectors>.

123 Pagliari, above n 118, 15–16.

124 Ibid 16.

125 For a detailed discussion of RIS, see Sue, Taylor, Anthony, Asher and Julie-Anne, Tarr, ‘Australia's Flawed Regulatory Impact Statement Process’ (2016) 44 Australian Business Law Review 361Google Scholar.

126 Paul Rose and Christopher J Walker, The Importance of Cost-Benefit Analysis in Financial Regulation, Report for U.S. Chamber of Commerce (March 2013).

127 River and Harbour Act of 13 June 1902, 1079 USC, § § 361–362 (1902).

128 See Cass R Sunstein, ‘The Cost-Benefit State: The Future of Regulatory Protection’ (Working Paper No 39, Coase-Sandor Institute for Law & Economics, 1996) 33.

129 OECD, Guiding Principles for Regulatory Governance and Performance (2005).

130 OECD, Government at a Glance 2015 (2015).

131 OECD, OECD Reviews of Regulatory Reform: Australia—Towards a Seamless National Economy, (2010) 15.

132 Rose and Walker, above n 126, 7.

133 Ibid.

134 Deloitte Access Economics, ‘Familiarization of the cost benefit analysis framework’ (Report prepared for the Business Council of Australia, 2012) 2.

135 Eric, Posner and E, Glenn Weyl, ‘Speculation, Insurance and Financial Regulation: Benefit-Cost Analysis for Financial Regulation’ (2013) 103 American Economic Review: Paper and Proceedings 393Google Scholar.

136 Rose and Walker, above n 126, 9.

137 Commonwealth of Australia, Department of the Prime Minister and Cabinet (2014) 4.

138 Ibid 9.

139 Ibid 56–8.

140 Where a Prime Minister's exemption is granted, agencies are still required to quantify the cost of the regulation and identify offsets and provide those costings to the OBPR within three months of the decision. Once costings are agreed they should be sent to the relevant portfolio Minister and the Prime Minister. The OBPR will also publish the costing information on the OBPR's website together with the fact that a Prime Minister's exemption was granted.

141 OBPR, Post-Implementation Reviews Guidance Note (2014) 1 <https://www.dpmc.gov.au/sites/default/files/publications/017_Post-implementation_reviews_0.pdf>.

142 See, eg, Ric, Simes, Ian, Harper and Hugh, Green, ‘Implementing Best Practice Regulation in a Dynamic Market Place: Consultation and Accountability’ (2008) 27 Economic Papers 24Google Scholar.

143 Posner, above n 113, 1.

144 ALRC and CSAC, Collective Investment Schemes: Superannuation, Report No 59 (March 1992).

145 Productivity Commission, Review of the Superannuation Industry (Supervision) Act 1993 and Certain Other Similar Legislation, Inquiry Report No 18 (10 November 2001).

146 Productivity Commission, How to Assess the Competitiveness and Efficiency of the Superannuation System, Draft Report (August 2016), 16.

147 Explanatory Statement, Superannuation Industry (Supervision) Amendment Regulations (Cth) 2004 (No 3) 2004 No 113.

148 APRA, Above n 27, 17.

149 Ibid 9.

150 Ibid 7–8.

151 Department of the Treasury, Future of Financial Advice Amendments—Details-stage Regulation Impact Statement (19 March 2014) Department of the Prime Minister and Cabinet <http://ris.pmc.gov.au/2014/03/19/future-financial-advice-amendments-%E2%80%93-details-stage-regulation-impact-statement-%E2%80%93>.

152 This estimate of industry saving is consistent with the previously published annual savings of $187.5 million per year estimated by RWA, above n 99.

153 This issue is further elaborated in Taylor, Asher and Tarr, above n 125.

154 RWA, above n 99.

155 Department of the Treasury, Future of Financial Advice Amendments—Options-stage Regulation Impact Statement, 2013; See Appendix B in RWA above n 99; Rainmaker Information, ‘Commissions Revenue Report 2010’ (Report prepared for Industry Super Australia, August 2011) ; Rice Warner Actuaries, ‘Transformation of the Financial Advice Industry’ (Report, March 2010).

156 Jill E Fisch, ‘The Long Road Back: Business Roundtable and the Future of SEC Rulemaking (2013) 36 Seattle University Law Review, 695, 744.

157 Australian Government, Best Practice Regulation Handbook (2010), 1.

158 See, eg, Daniel Weight, ‘Government's approach to policy development criticised in formal review’ (Parliamentary Library, October 2012) <http://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Library/FlagPost/2012/October/Governments_approach_to_policy_development_criticised_in_formal_review>.

159 David Borthwick and Robert Milliner, Independent Review of the Australian Government's Regulatory Impact Statement Process, Review for the Minister for Finance and Deregulation (2012).

160 Ibid 9.

161 Weight, above n 158, 4.

162 Ibid 1.

163 OBPR, Best Practice Regulation Reports 2013–14 (2014); OBPR, Best Practice Regulation Reports 2012–13 (2013); OBPR, Best Practice Regulation Reports 2010–2011 (2011).

164 Carpenter and Moss, above n 115, 16–17.

165 Ibid 467, quoting Democrat Senator Sheldon Whitehouse and Jim Leach, a former Republican Congressman.

166 Productivity Commission, Regulatory Impact Analysis: Benchmarking, Research Report (2012) 62–63.

167 Taskforce on Reducing Regulatory Burdens on Business, ‘Rethinking Regulation’, (January 2006) i–ii <http://www.pc.gov.au/research/supporting/regulation-taskforce/report/regulation-taskforce2.pdf>.

168 See Taylor, Asher, and Tarr, above n 125.

169 See Productivity Commission, above n 166, 195.

170 Carpenter and Moss, above n 115, 473.

171 Pagliari, above n 118, 24.

172 As detailed on the OBPR site, <https://ris.govspace.gov.au/files/2012/04/03-PIR-Table-Required-2014-15_22072015.pdf> as at 30th June 2015, there were a total of 90 post-implementation reviews (PIR) required. Of the 90 PIRs, in 57 cases the regulation has been implemented, whilst in 4 instances the regulation has not been implemented and 29 PIRs were completed and published. Eight PIRs were non-compliant for not having been completed in the required timeframe.

173 Posner and Weyl, above n 135.

174 Borthwick and Milliner, above n 159, 11.

175 Productivity Commission, above n 166, 236.