What does it say when the party of business is far more vocal about the need for much more stringent regulation of business than the party of labour?
Peter Dutton’s embrace this week of company break-up powers, at least for the retail sector, is less surprising when you realise where he is from. Dutton is a Queensland Liberal-National leading the Liberal Party — meaning the Liberals look a lot more like the Nationals on his watch (thus the big-government nuclear idea, which is the ultimate National Party boondoggle).
I mean, hello — who, exactly, did Liberals feeling “ambushed” over the supermarkets issue think they were electing as leader in 2022? Yet another Sydney Liberal?
This feeling that Dutton isn’t quite the real deal as a Liberal, which began the first day he was elected leader when he hit out at big business, may yet prove a real problem within the Coalition, but the recent history of the Liberal Party suggests liberal “Liberals” tend just to whine to the media and otherwise roll over to whatever the right of the party and the Nationals demand. But it’s certainly a source of anguish for Graeme Samuel (“This is not the Coalition I used to support”), Kate Carnell and Jeff Kennett, not to mention business lobby groups and the Financial Review, which is having conniptions (and expressing approval that supermarkets might use profits from urban consumers to subsidise regional consumers).
Labor continues to deride break-up powers as communist, possibly unaware that the US has had much wider break-up powers for 130 years without capitalism somehow collapsing there. But free-market Liberals should realise that divestiture powers, by adding to the arsenal of competition regulators and the fears of corporate executives, in fact strengthen markets, undermining the tendency to concentration that leads to lower investment, productivity and innovation.
And if supermarket break-ups is a case of the National tail wagging the Liberal dog, that’s not the case with Andrew Bragg’s proposal to strengthen that eternal whipping boy of all politicians, the Australian Securities and Investments Commission (ASIC). Bragg suggests consideration be given to splitting it in two and allowing it to keep more of the fines it secures as a way of improving its woeful record of law enforcement against corporations.
“Corporate law is underenforced in Australia,” Bragg wrote in the Senate economics committee’s report on ASIC investigation and enforcement. “ASIC’s response to most reports of alleged misconduct is to take no further action and only a fraction of reports are investigated. For the matters where ASIC proceeds to take enforcement action, the civil penalties imposed are often at odds with the scale of the offending, and few criminal sanctions are achieved.”
Labor senators — this was a references committee, so it was chaired by a non-government senator — were unimpressed with Bragg, complaining that he lobbed his proposal, which lacks any details, on them with just 24 hours to respond. But while Bragg has form in trying to show off as some sort of financial regulation genius, it’s hard not to agree with his conclusion that ASIC just isn’t doing its very large job effectively. Calls for more regulation aren’t just “cheap anti-business populism” as the pro-business crowd insist, it seems.
One statistic Bragg points to is particularly telling: “ASIC’s referrals to the CDPP [Commonwealth Director of Public Prosecutions] are in decline too. In 2022–23, ASIC made 41 referrals to the CDPP, down from 86 referrals made in 2018–19.” And he singles out ASIC’s failures in relation to the collapse of Dixon Advisory:
In September 2020, ASIC commenced civil proceedings against Dixon … It took ASIC two years to settle its case against Dixon, and the company was penalised $7.2 million. However, ASIC has said this fine is unlikely to ever be paid. Moreover, no criminal charges have been brought in relation to Dixon, despite total claims in the case exceeding $386 million. In September 2023, three years after its initial enforcement action, ASIC brought civil proceedings against a former director of Dixon for alleged breaches of directors’ duties. This trial had its first hearing on June 17, 2024 and is ongoing.
By way of contrast, Bragg noted that the US Securities and Exchanges Commission got cryptocrook Sam Bankman-Fried locked up for a quarter of a century within 18 months.
Putting aside the sick sense that we may never get decent corporate regulation in Australia, this leaves us at an intriguing ideological juncture in federal politics: the party of business has been dragged by historic circumstances and the sheer extent of corporate misconduct to backing a much greater level of corporate regulation than Labor, which has turned into a party one part economic managerialism and two parts nostalgia-based industry policy. Dutton may end up being a more interesting leader than expected, not just if he can force Labor into minority government — now the best bet for the next term of Parliament — but if he can drag the government toward a more traditionally Labor attitude to corporations.
Should Labor change its tune and support corporate break-up powers? Let us know your thoughts by writing to letters@crikey.com.au. Please include your full name to be considered for publication. We reserve the right to edit for length and clarity.
