ASIC chairman Greg Medcraft has received an 18-month extension to his contract and a $127.2 million funding increase, with the regulator set to move to a 'user pays' funding model from the second half of 2017.
The federal government funding boost for ASIC represents the Coalition's response to the ASIC Capability Review commissioned in July 2015.
Of the total $127.2 million, $61.1 million will go to enhancing ASIC's data analytics and surveillance capabilities; $57 million will help beef up ASIC's surveillance and enforcement activities; and $9.2 million will be made available to ASIC and Treasury to implement legal and regulatory reforms.
In a significant win for Mr Medcraft, and as recommended by the Financial System Inquiry, the regulator will move to a fully 'user pays' funding model from the second half of 2017.
The move means ASIC will be funded via a levy imposed on the companies it regulates, bringing it into line with the funding model of the prudential regulator, APRA.
Speaking at a press conference yesterday, Mr Medcraft said he has been "pushing for a user pays funding model for a long time".
The ASIC levy will be imposed on sectors on an 'as needed' basis – which means that if one part of the financial services sector requires more attention from the regulator, it will pay more.
"I think it’s very good internal controls to make your system work, and to be more resilient, frankly," Mr Medcraft said.
The ASIC boss was reluctant to weigh into the current debate about the need for a royal commission into the banking sector, but he argued that 'user pays' would incentivise the banks to comply with the law.
"Why should taxpayers be funding a market regulator? It should be the people who are benefiting from that regulation," Mr Medcraft said.
Pressed on whether his tenure as ASIC chairman would continue beyond his renewed 18 month contract, Mr Medcraft was circumspect.
"The announcement’s been made, we’ve just got to get on with the job," he said.
"[The government] has lifted the amount of resilience [within ASIC]. The government is giving us more money – we will invest that in more surveillance and more enforcement and that should deliver a high level of trust and confidence in Australians," Mr Medcraft said.
Opposition leader Bill Shorten, who has been pushing for a royal commission into the banking sector, rejected the extra $127.2 million in ASIC funding as "hush money".
"You are not going to get answers, solutions, relief out of what the government's put today," Mr Shorten said.
"Do you really seriously believe that the Turnbull Government, in the absence of a royal commission being proposed by Labor, would have magically stumped up $120 million to help get answers to the type of problems and the type of pressures that the people we've met today have faced and thousands of others across the country? The answer is no.
"What he has delivered today is not a solution, it's a political Band-Aid and it's not good enough and frankly the only thing that is going to cut it now is a royal commission," Mr Shorten said.