Australasian Political Studies Association Conference 2003
Hosted by the School of Government
University of Tasmania

Australian and New Zealand Politics Stream

Governance in Financial Supervision: The Australian Experience in the 1990s

Canir Bakir
Monash University

Abstract

Following the recommendations of the Wallis Inquiry, Australiaís focus on institutionally-based supervisory arrangements shifted towards a functionally-based regime with new prudential and disclosure supervisors. This paper is about the role of the Australian state in financial governance during the Wallis era (1996-97). The arguments of this paper are threefold. First, financial policy network did not play a pivotal role in the policy change. In fact, the governmentís policy preferences did not correspond to the wishes of its supervisory agencies and some of the key private sector a! ctors. Second, although the assessment of state capacity was pointing to a weak state, Australian state and its government played a leadership role in providing direction in the financial supervisory change during this period. It also addressed the ëdecision trapí problem through the establishment of new prudential supervisor and disclosure supervisors while abolishing some of the then existing supervisors and taking prudential supervisory powers from the Reserve Bank of Australia. This is also an example of the stateís capacity to create new networks to make, implement or influence public policy decisions. Third, ëgoverning with governmentí in financial services industry may be a function of political entrepreneurialism and skill rather than the degree of centralisation of the state apparatus.