It makes sense that governments should act ethically and in the best interests of their citizens – we voted them into power, after all. However, governments are prone to getting caught up in opposition politics when developing policies, rather than ensuring policies are apolitical and evidence based, and may miss important – and perhaps unintended – outcomes.

One of Chartered Accountants Australia and New Zealand’s key roles in society is to provide an expert perspective and advocate boldly in the public interest, representing the profession and the wider community on relevant issues. In order to do that, the Australian and New Zealand advocacy teams measure proposed policies against five principles, which guide the organisation’s position and response.

Principle 1: fairness

The concept of fairness underpins the integrity of our tax systems, our regulatory frameworks and our legal systems. Most people and businesses will follow the rules and pay their dues if they feel that the requirements make sense and that the rules apply fairly. If policies, regulations or legislation unfairly penalise certain groups, CA ANZ will advocate for changes that are fair to current and future stakeholders.

Our work in Australia on the self-managed super fund (SMSF) non-arm’s length income (NALI) restrictions is a case in point. People who use their professional skills for the benefit of their SMSF and don’t charge, or charge a ‘mate’s rate’, risk having a 45% penalty tax rate applied on every contribution to their super fund. Non-professionals who do the same work are exempt from these penalties. Tradies, solicitors, real estate agents – and accountants – risk running afoul of rules that were designed to prevent borrowing arrangements that have been outlawed since 2016. Clearly, the NALI restrictions don’t pass the proverbial ‘pub test’ and we are working with other associations to have government fix this.

Another example is our longstanding advocacy to increase and support workforce participation, which has resulted in the Australian Government introducing legislation to make paid parental leave more accessible, fair and flexible, and to accelerate employer action to close the gender pay gap. Related to this, we are continuing to advocate with the government in Australia to replace the annual super contributions cap with a lifetime cap. This would make it fairer for people with broken and irregular working patterns, who are only able to contribute more to super later in their working lives.

Principle 2: efficiency

Policies also need to work simply and effectively for the common good. Bad design and unclear wording can lead to excessive red tape, collateral damage and costly mistakes – in business and in the courts. In many instances, our submissions seek to clarify how a policy will be applied in the real world, or to outline a better way to achieve an objective.

The accounting profession has been severely impacted by the ongoing talent shortage, which has been widespread across many countries and industries. Some of our most extensive and successful advocacy work has resulted in changes to skilled immigration policy, to achieve more efficient migration and recruitment. Thanks to that work, auditors are now on the New Zealand Green List straight-to-residency pathway. In Australia, in response to our advocacy the government has increased permanent skilled migration program places and provided extra funding, which has almost halved the visa processing backlog.

We’re continuing to advocate for migration system reform in Australia and New Zealand, for a long-term solution.

Principle 3: transparency

Good policies are also transparent: it should be clear what the objectives are, who the policies apply to (and why), and what the desired outcomes are. Transparency helps everyone understand whether or not a policy is fair and also whether it will work as planned.

As pressure increases on businesses to report more rigorously on their environmental, social, and governance (ESG) activities, CA ANZ is doing a lot of work with governments and regulators on mandatory climate-related disclosures (CRD) – taking effect in New Zealand this year – and Australia’s climate-related disclosure framework. Our local frameworks need to align with decisions made by the International Sustainability Standards Board and the implementation of the first two International Financial Reporting Standards sustainability disclosure standards.

One area of focus for us in New Zealand is CRD assurance practitioner licensing, because this goes to the heart of transparency in sustainability reporting. CA ANZ is advocating for robust assurance settings, building in the ability to go beyond just climate reporting to broader sustainability reporting.

Principle 4: certainty

We believe that, if you follow the rules, you should be able to feel certain and confident in your choices. There shouldn’t be any unpleasant ‘surprises’ five, 10 or 20 years down the line. We also don’t support policies that impose retrospective taxes, or that penalise decisions made in line with the regulations and legislation in place at the time. Individuals and businesses that do the right thing deserve certainty.

That’s why we’re advocating against the recent Australian Government proposal to tax super earnings on balances over A$3 million at 30%, instead of the current 15%. Essentially, it penalises a group of people who took the government at their word.

Without certainty, people will be unwilling to take advantage of tax concessions and other incentives that might encourage saving or upskilling or investing in their business. And, on the flipside, others may take risks and ignore regulations, hoping for a change-of-mind down the track. Both outcomes can undermine the integrity of our tax, regulatory and legal systems.

Principle 5: prosperity

One of the biggest barriers to boosting productivity and achieving long-term prosperity and wellbeing for our nations is unnecessary complexity and regulatory burden. If a policy is too complicated or too costly to implement, it is doomed to fail. That’s true for the businesses and individuals navigating red tape, and governments and regulators enforcing the rules. Consequently, if it becomes clear a policy is unworkable, we will advocate for change.

A good example in New Zealand was our advocacy for a specific anti-money laundering (AML) exemption for tax transfers. The exemption ensures that the compliance costs borne by practices and their clients are commensurate with the level of AML risk.

In Australia, the Quality of Advice Review comes to mind. Australians deserve access to good quality, affordable and professional financial advice, but that’s hard to provide if compliance and administrative burden push up the time and costs from the outset. CA ANZ and others have advocated for change and we welcome the recent package of reforms, which should remove some of the main barriers to providing good-value financial advice.

Ultimately, we ground CA ANZ’s advocacy in member input and the public interest. This strong foundation – and our five guiding principles – ensure that the profession is heard by  the right people, at the right time.

Keep up to date with advocacy

This is the first in a new series of columns covering CA ANZ’s advocacy, so you can see behind the scenes. We will be exploring other advocacy initiatives in future editions of Acuity magazine. Look out for an update on CA ANZ’s advocacy work in the August/September issue, or visit: charteredaccountantsanz.com/advocacy to access policy submissions online.

Simon Grant FCA

CA ANZ group executive, advocacy and international development, is a fellow of the Association of Chartered Certified Accountants, a graduate of the Australian Institute of Company Directors and completed the Asialink Business Leaders program in 2018.

Peter Vial FCA

CA ANZ group executive, New Zealand and the Pacific, is a chartered member of the New Zealand Institute of Directors, and a barrister and solicitor of the High Court of New Zealand.

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