The Royal Commission into the collapse of HIH has not yet been finalised, with Prime Minister John Howard indicating on Sunday that it will be up and running well before the end of the year.

The Royal Commission is expected by the industry to take over from ASIC the entire investigation into the collapse, but for now the regulator is pressing ahead with its $5 million investigation program. Some Canberra insiders believe the ASIC investigation will be allowed to continue in parallel with the Royal Commission – a move that would allow the Government to go slower in setting it up. This would minimise any possible political fallout in the lead up to the Federal election.

“The Government didn’t want a royal commission; it was forced into it by the states,” one source said. “No one knows what the Royal Commission will turn up, but it could be embarrassing to the Government. It set up APRA and ASIC, and they’ll be found wanting in some areas.”

When it finally sits, the Royal Commission is expected to have very carefully crafted terms to minimise the political dangers. Besides that, the commission’s findings won’t be reached until well after a federal election.

With at least one leading market economist predicting that the collapse will hold down economic growth in the June quarter by about 0.25 percentage points, provisional liquidator Tony McGrath has estimated the company’s total deficiency as somewhere between $2.7 million and $4 million. However, some pundits are predicting a total loss exceeding even that figure.