Capital Markets Policy

Reform Capital Raisings and Securities Trading on the ASX and Energy Markets

Accelerated capital raising rules are being exploited.

Capital raisings on the ASX, particularly for smaller listed companies are being undermined by the 15 per cent accelerated capital raising rules.  This rule allows company boards to issue up to 15 per cent of new shares to non-shareholders every year, greatly diluting existing shareholders equity interests.  The issue of new capital should be offered to existing shareholders on a pro-rated basis. 

Short Selling to be banned

Stock lending is stock selling.

Shorting shares is speculation and not in the interests of shareholders. It is only available to large shareholders, and they can use their holdings to move the share price. This information alone should be considered insider information, and as such it creates an uneven playing field between large and small investors.

Superannuation Funds must Elect their Boards

Fund members must be given a say.

Not only were Australians never given a choice as to whether they wanted 12 per cent of their wages taken from them, they have never been allowed to vote on who controls their capital once it has been taken from their wages. This process is undemocratic and lacks transparency. Industry and retail superannuation funds have nearly $3 trillion in funds under management and this expected to more than double by 2050.

It is therefore imperative that the managers of such huge sums of money are held accountable for their performance. It is worth noting that by controlling such large sums of capital, the managers of superannuation funds exert a large degree of influence on industry and the economy. In a country that upholds democratic principles of accountability, it is only to be expected that managers of capital be held to account.

Agents should not vote at AGMs without Shareholder Consent

Fund managers will not be given the authority to vote without obtaining proxies from their members. 

The owners of capital must not be separated from the decisions on how their capital is allocated. Yet this is exactly what superannuation does. Not only are board members not elected, once appointed they can cast votes as to who to appoint onto the boards of the companies they hold shares in. They can also vote on other resolutions put forward by companies including executive remuneration. They do not need to seek the approval of fund members for any of the decisions they make at company AGMs. This is not capitalism, it is communism, and the process of decision making in capital markets needs to be more democratic.

Tighten Capital Controls on Foreign Purchases and Lending

Banks need to limit the amount for Foreign Debt they can use.

House prices have been artificially inflated thanks to generous lending by the banks.

In 1985, the four majors had approximately $8 billion in foreign debt.  By 2008, it was closer to $800 billion.  Most of this money was lent against housing contributing to house prices at least doubling relative to incomes.  As a result, Australians are taking longer to repay their mortgages and have less disposable income.  Furthermore, generous tax concessions to the foreign bondholders are resulting in tax base erosion and the leakage of wealth offshore.  

Australian banks need to tighten their lending criteria to help suppress the unsustainable rise in house prices.  Overinflating house prices is taking much needed capital away from other sectors of the economy which is ultimately hollowing out Australia’s skill base and productive capacity.  It is leading to a lower standard of living amongst working class Australians.  

Require Multinationals to Publicly Disclose Related Payments by Country

Profit gouging must end. The amount and source of profits being transferred offshore needs to be disclosed to enable a better understanding of just how much profit leaves Australia’s shores every year.

Currently there is very little transparency about the flow of offshore profits. Related party payments are not disclosed publicly which facilitates the flow of capital offshore without proper transparency.

Ban Foreign Ownership of Infrastructure, Farmland and Housing

Key assets such as land and infrastructure must remain Australian owned.

The sale of Australia’s infrastructure has weakened both Australia’s sovereignty and economic prosperity. Both Australian and foreign rent seekers are gouging rents from Australia’s infrastructure, making it harder for business to remain profitable and competitive. Foreign ownership also erodes Australia’s tax base.

Energy Wholesale Market to be Reformed

Energy prices are being gamed by short term speculators. Short term pricing in the wholesale energy market is enabling speculators to gouge energy consumers. It is driving energy prices higher, causing pain to both consumers and businesses who rely on cheap energy for production. Rules around energy trading will change so that energy is sold in 24 hour lots not 5-30 minute lots. 

Real Estate agents must disclose all foreign transactions and withhold a portion of rental income.