Welcome to Edition 84 of Boardroom Brief.

This is a service specifically targeted at the needs of busy non-executive directors. We aim to give you a “heads up” on the things that matter for NEDs in the week ahead – all in two minutes or less.

YOUR KEY BOARDROOM BRIEF

Government announces plans to introduce fast-track tax relief for small and medium businesses. On 11 October 2018, Treasurer of the Commonwealth, the Hon Josh Frydenberg, confirmed in a media release the Government’s intention to introduce legislation during the next session of Parliament for fast-tracking tax relief for small and medium-sized businesses (SMBs). This means SMBs with a turnover below $50 million can expect to face a tax rate of 25% in 2021-22 rather than from 2026-26. The measure is part of the Coalition Government’s commitment to deliver tax relief five years earlier than planned. It is expected to benefit over three million SMBs and trigger greater investment, more jobs and higher wages. 

Treasury releases working paper on Australia’s experience with economic reform. On 12 October 2018, the Treasury released a working paper for the purposes of informing an officials level workshop at the IMF and World Bank Annual Meetings (to be held in Bali this month) about Australia’s experience with economic reform. The paper identifies key factors and circumstances that have influenced Australia’s economy over the past 40 years with a focus on the aspects unique to Australia as a commodity exporting country, geographically remote with a relatively small population.

ASIC releases updated guidance on short selling. On 8 October 2018, ASIC issued its new Short Selling Instrument and updated Regulatory Guide 196 in relation to short selling. ASIC’s media release summarises the new relief and modifications, which cover relief for ETF market makers, deferred settlement trading, IPO sell downs and an option for global firms to calculate their short positions as at a global end calendar time. The new instrument will overcome a lot of the needless complexities arising from the application of the naked short selling prohibition.

THE WEEK AHEAD

ASIC Commissioner to give keynote address at the ISDA Industry and Regulators Forum. On 23 October 2018, ASIC Commissioner Cathie Armour will give the keynote address at the International Swaps and Derivatives Association (ISDA) Industry and Regulators Forum on key global regulatory and market developments. Regulators worldwide will be keeping a close eye on recent market gyrations for sign of systemic stresses. Much of the blame for the GFC was lobbed at the feet of regulators and ratings agencies accused of failing to anticipate the looming crisis. Australia’s response to the crises was generally seen as an exemplar.

Housing finance approvals continue to decline. Attention is turning to declining auction clearance rates in Sydney and Melbourne after data showed housing finance approvals continuing to decline (see chart below supplied by Westpac). Increasing finance costs combined with macro prudential policy is likely to continue to put pressure on housing prices in the medium term with the big unknown being the impacts on consumer confidence and spending - the so-called “wealth effect”.