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Company directors urge Australian government to extend Covid-19 regulatory relief

<span>Photograph: Lukas Coch/AAP</span>
Photograph: Lukas Coch/AAP

Company directors have called on the federal government to extend temporary Covid-19 regulatory relief including weaker personal responsibility for trading while insolvent and market disclosure requirements.

The Australian Institute of Company Directors (AICD) wrote to the treasurer, Josh Frydenberg, on Friday ahead of a meeting of federal, state and territory treasurers to decide what forms of temporary deregulation should be extended as the coronavirus recession continues with a second phase of infections in Melbourne and Sydney.

The AICD also called for an extension of jobkeeper wage subsidies, which the prime minister, Scott Morrison, and Frydenberg have both signalled is likely when the government announces the future of income support beyond September on 23 July.

Morrison on Friday said the national cabinet had, on the recommendation of the Productivity Commission chair, Michael Brennan, asked treasurers to identify “time-based deregulations” that could be “extended out further and potentially even extended indefinitely” to help speed economic recovery.

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Morrison cited “state government approval processes and business regulation processes” as examples. State governments such as Victoria have enabled delivery of food and other goods at any time of day to ease supply chain issues and taken many government processes online, including planning panel meetings, tribunal hearings and even regulatory audits.

The treasurers will discuss which elements of deregulation to retain at a meeting of the Council of Federal Financial Relations on Friday.

The AICD chief executive and managing director, Angus Armour, said the Covid-19 crisis is “far from over” with a resurgence of cases in Victoria and warnings in New South Wales highlighting “the day-to-day uncertainty of this health crisis and the damage that uncertainty does to the economy”.

“The federal government was quick to take critical steps to provide relief but the impacts from this pandemic will continue beyond the original six-month reprieve,” he said.

The federal government in March announced temporary relief from any personal liability for trading while insolvent for directors, and increased the threshold at which creditors can issue a statutory demand on a company and the time companies have to respond.

The AICD has called for the insolvent trading measure to be extended until the end of 2020, along with the ability for companies to hold virtual annual general meetings and amendments that reinsert a fault element into continuous disclosure laws.

Superannuation investors have warned the continuous disclosure changes could undermine market integrity and class action lawyers argued they provide a “green light for company directors to hide information from the people who actually own a company”.

But in its letter to Frydenberg, the AICD said the measure helped prevent “opportunistic securities class actions” and asked for similar provisions to prevent claims based on “misleading and deceptive conduct … which operate on a no-fault basis”.

The AICD said that dropping personal liability had helped 12% of AICD members decide to trade through the crisis, rising to 16% among directors in small and medium enterprises.

Armour said insolvent trading changes are “not about supporting businesses with no viable future” because directors still have to abide by general duties to act in the best interest of the company and creditors, and to consider whether additional liabilities are prudent.

AICD said that 81% of its members would prefer to see a cautious phasing out of stimulus policies such as jobkeeper.

“It’s encouraging to see the government considering a more tailored, sectoral approach to financial support going forward,” Armour said. “This is critical in preventing a rapid deterioration in overall economic conditions.”

Despite confirming income support will continue in some form, the government has been tight-lipped about details – even blocking queries from the Covid-19 Senate inquiry about how many people are earning more on jobkeeper than their usual pay.

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The government response to the review is expected to trim the payment so workers cannot receive more than their ordinary pay, and require businesses to periodically requalify for the subsidy rather than rely on the revenue downturn they experienced at the start of the pandemic.

In addition to the state and territory review of deregulation, the federal government has proposed extending industrial relations flexibility, such as allowing employers to reduce workers’ hours and cutting environmental approval times.

It is yet to release the interim results of Graeme Samuel’s once-in-a-decade review of the Environment Protection and Biodiversity Conservation Act, now expected early next week.

On Tuesday, the Australian Council of Trade Unions secretary, Sally McManus, said there were “fair enough arguments” to make businesses requalify for jobkeeper, signalling that unions would not oppose that change. The ACTU has expressed scepticism about the need for ongoing industrial relations flexibility, however.

A Victorian government spokesman told Guardian Australia “the coronavirus pandemic has forced us to do many things differently and in some cases has meant we’ve made changes for the better”.

While the Victorian government will “take a good look at whether it’s beneficial for [those changes] to remain in place going forward” its focus is currently “on slowing the spread of coronavirus and keeping Victorians safe”, the spokesman said.