$420m for federal business registers shows PM-level backing for regtech platforms


The federal government has announced an $800 million Digital Business Plan to make it easier to start businesses and interact with government.

Most of the funding will go towards upgrades of government platforms. These include business registers and the federated myGovID identity system as part of the government’s digital transformation agenda. The upgrades are now also being highlighted as part of its economic stimulus program under the “JobMaker” brand.

The largest single component of the package is $419.1 million for the consolidation of 30-plus business registers overseen by the Australian Securities and Investments Commission (ASIC). This program has been in planning and early implementation stages for two years, and this new funding injection marks a dramatic acceleration as the government scrambles to set up digital enablers to stimulate business growth and protect a revenue base that will be heavily eroded by the impact of COVID-19.

From back burner to front burner

The program to modernise business registers was first funded in the 2018-19 Budget, which gave the ATO $16.6 million to finalise a business case for the upgrade. At the time, the rhetoric was less about making business owners’ lives easier, and more about the project’s explicit goal of protecting government revenue and combatting the black economy. ASIC and the Department of Industry, Innovation and Science also received more than $1 million each to make the necessary adjustments to their own systems.

The next step was the “New Deregulation Agenda” introduced in the 2019-20 MYEFO: $156 million in total over four years to make government interaction with business simpler (Intermedium estimates that around half that sum was government ICT funding). While this funding was spread across more than a dozen agencies, the single biggest slice of the pie was a $50 million allocation to the ATO. As the presumptive lead on the program, its role was to consolidate existing business registers into a single platform operated by the Australian Business Register. In addition, the ATO received $15.2 million to implement a system that would assign unique identifiers to company directors to prevent “phoenix activity” (where banned directors create new corporate entities to use as cover). At this stage, the rhetoric surrounding the program began to change from ‘protecting government revenue’ to ‘making it easier to do businesses’ though both elements are clearly still present in the program.

The September 2020 announcement of the JobMaker Digital Business Plan did not include detailed funding breakdowns. However, it is likely the ATO will gain the lion’s share of the funding once again, with lesser sums being allocated to Treasury and other orbiting entities such as ASIC or the Australian Trade and Investment Commission to ensure cross-compatibility and data sharing. It is expected that more information will be forthcoming in next week’s budget.

The message delivered alongside the announcement is now unambiguously on the side of economic growth. It is intended to stimulate the economy by making it easier to start a business and reduce the stress, time and overheads associated with dealing with government.

From bean counters to political heavyweights

The central theme of the imminent 2020-21 Budget will be job creation, to the extent that government fiscal goals will be explicitly tied to the unemployment rate. This will involve a reprioritisation of ICT spending in which agencies will have to justify any policy proposal funding in terms of its impact on the economy or (given collapsing revenue rates) the government’s bottom line.

Since the onset of the COVID-19 crisis, Intermedium has suggested (through the monthly federal Executive Compass, for example) that funding for revenue protection measures is likely to be increased rather than diminished in response to the pandemic’s depressing effect on government coffers. This has become more apparent over the past month through announcements of the expansion of data matching efforts to monitor apprentices and welfare recipients by comparing their declared income to reports from the now-active Single Touch Payroll platform. In that regard, the planned upgrade to the national system of business registers was always likely to go ahead.

Now, however, the Digital Business Plan has been given the Prime Ministerial imprimatur as an active arm of the government’s jobs program. Its function is not only to deliver improved services but to have a positive impact on the Australian business ecosystem in fulfilment of the government’s core political narrative. The plan is backed at the senior political level, which all but assures continued funding as well as a firmer hand to ensure the reforms are completed successfully and their promised outcomes are realised rather than being swallowed up by agency business-as-usual practice (often emphasised by Intermedium in its Digital Government Readiness Reports).

From ‘cutting red tape’ to regtech

This new emphasis on using technology to facilitate interaction between business and government also marks a pivot by the government. Until recently, it has been the unambiguous philosophy of (particularly) economically centre-right political parties to reduce the raw number of legal restrictions and bureaucratic transactions imposed on businesses. US President Donald Trump famously signed an executive order in 2017 requiring all US federal agencies to cut two existing regulations for every new regulation introduced. In Australia, the Department of Finance was called the Department of Finance and Deregulation until 2013, emphasising its role in reducing transactional barriers to doing business through the blunt instrument of repealing existing regulatory obstacles.

However, the emergence of integrated government platforms has created an environment in which it is possible to reduce regulatory burden without necessarily reducing regulatory complexity. Australian governments are increasingly looking to regtech (its most vocal proponent is NSW Minister for Customer Service Victor Dominello) as an alternative. Just as the Single Touch Payroll system is used to simplify business interaction with government and revenue agencies, the consolidation of business registers through the Digital Business Plan could make it easier to establish new businesses without reducing regulatory oversight.

 
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