Beyond the Sea of Red Tape, the Repeal of the FOFA Changes Delayed

While the second instalment of the Federal Government's  burial of items of legislation already effectively dead for years continues today (26 March 2014), there is some substantive legislation news on the Repeal Day front. As the ABC reports:

Future of Financial Advice (FOFA) Changes delayed

The changes to the FOFA legislation would eventually remove the catch-all provision stipulating that financial advisers must act in the best interests of their client. Apart from the change of Minister with carriage of the proposed changes, media reports indicate that consumer groups, industry superannuation funds and the Financial Planning Association  have all raised concerns that the changes proposed by the Federal Government could see even call-centre workers and bank tellers receive commissions for giving general financial advice. While not indicating that pressure from these sources caused a rethink, the Finance Minister Mathias Cormann is reported as saying that the decision to delay the process was to "enable [him] to consult in good faith with all relevant stakeholders before pressing the go button on [the] changes, . . ."

Nature of the Changes to FOFA

As we have previously reported, the changes to FOFA were a key area of change the Federal Government was attempting to push through in the current "red tape repeal season" on the grounds that such changes will reduce red tape for business (savings the government claims an estimated $190 million a year). A move that even before it was tabled was being criticised as lacking "proper detailed analysis on the consumer impact" and "smack[ing] of policy on the run".

By proceeding with the FOFA reforms, as was reported in the SMH, the Federal Government was being advised it was risking more collapses of financial advice businesses like that of Storm Financial, Opes Prime and Westpoint. Since 2006 there have been more than $6 billion of financial advice collapses, affecting more than 120,000 Australians.

As for the Rest of Red Tape Repeal Day

Today's The Conversation in its lead article shows where the Federal Government has sourced its idea of a Repeal Day and the surrounding pitch to sell it as something that is valuable to business, from, namely:

It is interesting to ponder, as The Conversation does, the fact a government needs to repeal some 10,000 Acts and Regulations, for indeed it seems to suggests that past governments have failed to undertake inventories of their legislation and regulations, or to review which items should stay or be dispensed with. Further, as the SMH suggests: "It's easy to slash red tape when it changes nothing".

To claim that axing 10,000 Acts and Regulations  will help a local newsagent, dry cleaner, baker or butcher is a bit of a stretch and as the SMH suggests ". . . it's more likely they won't notice . . ." - and - "That's because, for the most part, nothing will change".

A good example of what most of the Red Tape Repeal changes (at least 90 percent of them) are like is that cited by SMH  with respect to the Flags Act 1954  (Cth) which is abolished during the Red Tape Repeal Day process. That Act amended the Flags Act 1953 (Cth) by shrinking the size of the seven-point star that sits in the bottom-left quarter of the Australian flag from its previous three-eighths of the width of the flag to three-tenths. The effect of abolishing the 1954 amending Act won't increase the size of the star because the Flags Act 1953 has already been amended. Thus repealing the already redundant amendment changes nothing and improves nothing.

What Benefits From Repealing Laws Effectively Long Dead?

This question was reportedly answered by members of the Federal Government, saying it would become easier for researchers to sort through government legislation. But given that consolidated legislation already exists and that even inoperative source material has a research value (see extrinsic materials in the Acts Interpretation Act 1901 (Cth) for example) it might be queried by some legislation researchers that even that claim is suspect. It might be that Red Tape Repeal is worth doing as an administrative exercise but as the SMH says it is "not worth overselling".

There are, however, changes in this milieu of statutory redundancy that are important to dry cleaners, bakers, butchers and even legislative researchers namely, the FOFA changes discussed above and it is at least a good start to see them "paused" for further consideration.

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• Repeal day an exercise in deregulation smoke and mirrors (The Conversation - 26 March 2014)
• Taking an axe to acts will change little for man on the street (SMH - 20 March 2014)
• Government to delay Future of Financial Advice overhaul after Arthur Sinodinos stands aside (ABC News - 25 March 2014)
• 'Best interest' FoFA repeal suffers unspecified delay (Insurance Business - 25 March 2014)