Planned sale of ASIC's corporate registry a body blow to Latrobe Valley

Under threat: ASIC Traralgon, set up to offset job losses from power generator closures, may be sold.
Under threat: ASIC Traralgon, set up to offset job losses from power generator closures, may be sold.

In a nondescript office building in the quiet back streets of Traralgon in Gippsland, the financial documents of every registered company in Australia, big and small, are filtered, processed and filed away.

Until a company passes through this outpost of the Australian Securities and Investments Commission, digitally or on paper, it does not exist.

The processing centre, originally set up in the coal-rich Latrobe Valley to replace thousands of jobs lost from power generator closures in the early 1990s, now faces an uncertain future. In last week's federal budget, the government outlined plans to hive off the registry business from ASIC through a sale.

The move is part of a push to privatise a number of state-owned assets initially flagged by Treasurer Joe Hockey's Commission of Audit.

Canberra will spend nearly $12 million this year on a scoping study for the sale of the corporate registry, as well as Australian Hearing, Defence Housing Australia and the Royal Australian Mint.

Estimates of the value of the corporate registry range between $3 billion and $6 billion.

A potential sale of the business comes at a time when the corporate regulator is facing severe budget cuts, with $120 million being wiped from its funding over the next five years as the Abbott government moves to ''reduce the footprint'' of the public sector.

Now, policy experts warn a sale of the registry could affect the regulator's ability to do its job, raising questions about access, privacy and transparency.

And the union has raised concerns any job cuts would severely hit an already fragile centre.

While most of Tony Abbott's planned public service job cuts will come from Canberra and the capital cities, the registry business is heavily reliant on its Traralgon workforce of about 250. Latrobe has an unemployment rate far higher than the national average, with 8.3 per cent of men and 7.9 per cent of the total population out of work.

Ironically, it was job cuts in the area resulting from privatisation that led ASIC's Traralgon office to open its doors in the first place.

The sale of the Victorian State Electricity Commission (SEC) saw 7000 jobs axed and prompted efforts by the state and federal governments to find emergency employment options.

More than 20 years later, the Community and Public Sector Union says the area is no less fragile.

"If the registry is privatised and the jobs go, the effects on the Latrobe Valley economy and community could be devastating," CPSU deputy secretary Alistair Waters says.

He says a sale would also throw the transparency and accountability of the registry into doubt.

''The registry is an important part of Australia's system of corporate regulation and accountability. It provides the community with oversight of Australian companies which are not subject to market disclosure,'' he says.

''Given the profitability of the registry, a prospective buyer would be purchasing, in effect, a licence to print money. There are no guarantees that privatisation would not lead to increased search fees, thereby limiting transparency.''

The distinction between ASIC's enforcement arm and its corporate filings, now largely paperless, has long made the registry ripe for sale.

As well as being separate from ASIC's headquarters in Sydney, the registry also operates with distinct management teams.

It is also enticing to private buyers. Last financial year, it generated $680 million in revenue on a cost base of $142 million.

Credit agencies such as Dun & Bradstreet and Veda, have been named by analysts as potential buyers. Others include IBIS and Computershare.

But a sale of the business to the private sector raises a number of questions, including whether the monopoly business - the single source of truth on Australian companies and directors - is safe in private hands.

David Richardson, a research fellow at policy think tank the Australia Institute, says a private operator could lift prices and restrict access for its own gain.

''If it's attractive for anyone to buy, it's going to be attractive because they can put up prices and charge monopoly prices and use that database to generate new businesses,'' he says.

A private operator could also slow down any enforcement action by the regulator and raise questions around government access. ''It's in a contractor's interests to do the minimum work possible. If there are laggards in pulling together the company database, that can interfere with corporate enforcement and chasing down shonky players.''

An alternative to a sale would be a merger with another agency. This could occur with the Tax Office, which runs the Australian Business Register, or the Australian Financial Security Authority, which runs the Personal Property Securities Register. Given the government is the main user of ASIC's corporate filings, there would also need to be guarantees about continued access.

Mr Richardson said a scoping study would also need to assess whether confidential documents, such as liquidity filings, would be compromised if the business was outsourced.

''The companies that would be most tempted are those that have other reasons for using that database,'' he says. ''It gives you the home addresses of all the directors in Australia, company secretaries - there are privacy implications.''

In the past, the government has tried to maintain control over prices from the sale of monopoly assets, such as Telstra, which is heavily regulated by the ACCC.

CPSU's Mr Waters questioned the rationale for privatisation, and warned that young people in particular would be vulnerable to cuts. ''These are quality jobs with decent pay and conditions, in an area of high unemployment.''

This story Planned sale of ASIC's corporate registry a body blow to Latrobe Valley first appeared on The Sydney Morning Herald.