ASIC assets in line for $1bn sale

Corporate regulator’s register of companies sized up for sale by the govt.

The corporate regulator’s register of companies is being sized up for sale by the federal government as part of a plan that could provide a $1 billion cash injection to commonwealth coffers.

The Australian understands that the government is considering the privatisation of the Australian Securities & Investments Commission’s corporate register, which has come into sale calculations after the regulator’s chairman, Greg Medcraft, expressed the view that it was not a core function and was a “technology business”.

The government has already announced the sale of the health insurer Medibank Private, which could raise $4bn, and the Commission of Audit delivered to the Coalition last month will produce further targets for asset sales.

The ASIC registry generates about $535 million in reporting fees, earns more than $90m a year from business names and searches for corporate details, and carries annual costs of about $140m.

It is understood that the ­Coalition is in favour of an upfront payment from a private buyer for the rights to operate the registry and an annual licence fee paid to the government.

Private sector registries, merchant banks or major financial markets operators would be expected to be interested in registry.

Cabinet would face backbench pressure to control what would be a monopoly private operator through regulations limiting its fees and guaranteeing the security of the data.

The price for the registry will depend on what sections of the operation are offered for sale.

ASIC’s corporate register lists company directors, company names, auditors, liquidators, ­credit representatives and financial services licence-holders.

Searches can also be made for banned and disqualified directors, securities representatives and auditors.

A sale could spark a restructure of fees that might produce savings for small businesses, which mostly register their details with ASIC, paying an annual fee. Large financial services and credit providers could be charged on a user-pays basis for ASIC’s services.

News of the sale plans emerged as cabinet’s expenditure review committee yesterday met in Canberra with senior ministers, including Tony Abbott and Joe Hockey, to examine detailed proposals ahead of the May 13 budget. The budget deliberations come as the government finalises its response to the Commission of Audit, which is expected to be released next week.

The Treasurer at the weekend warned that the pension age may eventually have to be raised to 70 and the government’s razor gang is examining pension indexation rules as well as income and assets tests as it seeks to make the pension “sustainable’’.

Mr Hockey warned at the weekend that the burden of repairing the budget would have to be borne by all sectors of society. “The budget is not going to target any one particular group — every Australian is going to be asked to contribute to the budget repair, including politicians.’’

In February, Mr Medcraft told a Senate estimates hearing the fundamental mandate of the organisation was “confident and informed investors, fair and ­efficient markets’’.

“Basically what we are is a ­financial services and market regulator,’’ he said. He said “in terms of our operations I think the corporate registry is, frankly, a technology business. It is not ­really a regulatory business’’.

Last year, ASIC paid $717 million to commonwealth consolidated revenue from fees and charges.

Mr Medcraft said the registry business had huge opportunities in terms of economies of scale. Business names and self-managed super funds were contained on a Siebel computer system that has six million names on it. ASIC favours moving the whole corporate register on to the system but lacks the capital.

In the US, telecommunications company Verizon had some 70 million customers on the same system.

“So I think there are huge benefits in actually separating out that registry business and merging it with other government registries to leverage the economies of scale from the Siebel management system,” Mr Medcraft told the estimates hearing. “Basically it has enormous capacity.

“What that also means from a consumer perspective is that you end up with a one-stop shop for financial services and even other registry things you go to. If you want to update, you want to go to one place etc.

“And you have to think about the massive opportunity for extracting revenue from the metadata that actually comes from that.’’

Mr Medcraft said most of the additional cost of running ASIC, which receives an appropriation of about $350m a year, came from overseeing the financial services industry and credit, which had been taken over from the states in 2010.

Mr Medcraft said there were two issues: “One is that those that generate the need for regulation should pay for that regulation. Also I think a system of user-pays is far more transparent.’’

In 2012-13, ASIC generated $34m in fees from the registration of business names, and more than $57m from fees paid for searches.

ASIC also received $535m from fees and charges for mandatory reporting requirements under the Corporations Act such as lodgement of annual financial returns. This compared with costs for regulating corporations of $142m.

Eighty per cent of ASIC’s revenue came from small businesses, which paid an annual fee of $219 for business registration.