In focus this month — working with a new government, APRA regulatory reforms and a rethink of university governance.
The AICD has congratulated the Albanese government on its historic election victory and looks forward to working with the incoming government on governance issues. We welcome the announcement that Treasurer Jim Chalmers will continue to lead the Treasury portfolio in the second term. The AICD looks forward to continuing our strong engagement with the Treasurer and his office on key corporate governance matters.
The AICD has an active government relations and stakeholder engagement program and we look forward to continuing to work with relevant ministers and across portfolios on issues of relevance and importance to Australian directors.
With its increased majority, a second-term Albanese government has a clear mandate and significant authority to focus on long-term challenges and opportunities for the nation. The AICD will be encouraging the government to take a long-term view on productivity and international competitiveness, including through championing fit-for-purpose and simplified regulation.
We were heartened to hear the Treasurer on election night flag the government’s ambitions for productivity growth. This is a key concern for Australian directors and one where the AICD will seek to make positive and constructive contributions.
We will continue to advocate for sound governance regulation in our engagement with the new government, including in our annual Canberra delegation with senior directors later this year.
University governance in the spotlight
University governance has been in the headlines for a variety of reasons, with commentary about vice-chancellor salaries among them. In January, the government formed an expert council to develop new “University Governance Principles and Recommendations” and report back to education ministers in 2025.
The AICD is represented on the council by AICD General Manager Engagement Jenny West GAICD. We have also lodged a submission drawing on feedback from members and stakeholders. In our submission, we highlighted that universities are subject to a range of complex regulation and operate within significant externally imposed governance constraints.
Many highly experienced AICD members serve on university councils — typically without remuneration — and the sector benefits from the perspective they bring from other complex industries.
We emphasised that the representative board structures typically engrained in legislation — while having strengths — can pose challenges in terms of managing directors’ duties and conflict management, and the ambitions of a skills-based board.
The AICD has cautioned against increasing the level of prescription for the appointment of university council members, arguing that new principles should apply on an “if not why not” basis. Ultimately, university councils are best positioned to determine the appropriate composition for their governing body, while respecting the legislative requirements of students, staff and government to elect and appoint their representatives.
FY25 regulatory priorities
The AICD advocates for balanced, fit-for-purpose regulations that support diligent directors to govern for growth. Our regulatory priorities are:
- Cyber regulation that supports effective board oversight
- Balanced policy and liability settings that reflect disclosure complexity
- Fit-for-purpose digital regulation that supports sound governance
- Long-term, coordinated policy approaches that strengthen national governance, reduce regulatory complexity and promote economic growth.
APRA’s governance reforms
The AICD continues to engage with the Australian Prudential Regulation Authority’s (APRA)consultation on changes to its governance standard and fit-and-proper person requirements for executives and board members.
The changes are aimed at modernising the framework applicable to insurers, ADIs (authorised deposit-taking institutions) and superannuation funds — and to lift practice in areas of regulator concern. In many aspects, the proposals would see the regulator set more prescriptive requirements if implemented.
APRA’s governance standard has not been updated in well over a decade. The regulator’s proposals at a principle level reflect what is AICD teaching and guidance on good governance practice.
However, the devil is always in the detail and the proposals suggest a prescriptive approach that risks regulatory over-reach in a number of areas. For example, the AICD agrees with the principle that after 10 years’ service on a board, independent directors should be prepared to justify how their independence is maintained.
We appreciate APRA’s concern about long-serving directors (20-plus years) in some prudentially regulated sub-sectors and the regulator’s desire to lift the focus on board succession planning and tenure. But the answer to this challenge is not imposing a “hard limit” of 10 years’ lifetime tenure across all prudentially regulated entities, reliant on explicit regulator approval for a two-year extension.
Members have also raised concerns about proposals relating to intra-group board composition, with the AICD engaging widely on these and other issues — including with our APRA-Regulated Entities Advisory Forum, comprising directors from prudentially regulated entities.
We are continuing to speak with APRA at senior levels to ensure that the right balance is struck between setting a strong baseline for the governance in the sector and not undermining the fundamental role and accountability of the board.
This article first appeared under the headline 'Policy and Leadership' in the June 2025 issue of Company Director magazine.
Practice resources — supporting good governance
AICD’s Policy team supports members with guidance on governance issues, including:
- Cyber Security Governance Principles
- Aged Care Director Guide
- AI Fluency for Directors Sprint
- Directors’ “Best Interests” Duty in Practice
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