Good policy, good politics – why don't politicians push for better corporate governance?

This last suggestion is the most contentious one, but is one that I am prepared to defend. Criminal laws in the US have enabled authorities to perp-walk handcuffed Adelphia and WorldCom executives through the streets. Why aren't we perp-walking their Australian equivalents into the back of a divvy van in Martin Place or Collins Street? Gaol time would send out the clear message that we do not tolerate fraud, corruption or systemic incompetence. It is zero tolerance for the big end of town. After all, when it comes to pinching other people's money the misuse of information can be no less a source of aggravation than the threat of violence. Indeed, it is often more effective and is almost always more dishonest. If equality before the law is to mean anything, those guilty of daylight robbery should share a cell with those guilty of armed robbery.

None of these reforms would in any way fetter the ability of directors to make decisions. They merely strengthen the hand of shareholders and regulators to hold them responsible for these decisions. They extend the principles of mutual obligation beyond the welfare system and into corporate governance.

The ASX and ASIC

Something should also be done about the conflict of interest caused by the incorporation and listing of the ASX. The Chairman of ASIC has noted that the ASX is a "for profit" corporation, which sits uncomfortably alongside its regulatory responsibility. He notes that unlike the NYSE, Nasdaq, Toronto Stock Exchange and the Stock Exchange of Hong Kong, the ASX has "specifically disavowed any intention to endorse best corporate governance practices". One solution would be to force it to take on another more appropriate form or, as in the UK, to hand its listing responsibility over to ASIC. Certainly ASIC should be given more power to monitor audits and an big increase in funding.

Better corporate governance requires better public governance

George Bush, Dick Cheney and many of their mates have been caught with their hands in the cookie jar so many times that it is difficult to distinguish man from jar. Their long careers as successful crony capitalists (but failed free-market capitalists) would make a South-east Asian autocrat blush. Yet even they have managed, under great public pressure, to shove the Sarbanes-Oxley Act through Congress. It goes to show that good corporate governance, like good public governance, requires an active strong-minded public.

The US is catching up with earlier Australian reforms, but they are also going further. While some of these measures address issues specific to the US and may be imperfect given the haste with which they were enacted, there is something to be said for being in sync with world's best practice, particularly when that practice is set by the US. Keith Houghton, a professor of accounting at Melbourne University, estimates that 20 to 30 per cent of Australian audit services will be directly affected by the changes to US law. Australian law makers need to respond with something a little more profound than cooing about self regulation.

People who, in hope of prosperity, release their capital into the market directly or through their superannuation are one of the wellsprings of our economic system. They deserve a regulatory regime that encourages them, or their representatives, to take commercial risks without the added and unnecessary risk of being shafted by a venal, unscrupulous or comically incompetent management. They don't deserve to be told that a debate concerning their ability to hold such people to account is less important than the residual afterglow of Commonwealth Gold.