Bernie Ripoll (Oxley, Australian Labor Party) Share this | Hansard source

It is a pleasure to speak on the Financial Sector Legislation Amendment (Prudential Refinements and Other Measures) Bill 2010, and it is always a pleasure to follow the member for Cowper and to listen to his contributions and to hear what he has to say, in representing the opposition in this place, about the very good reform agenda program that we have—hearing him admit that we do have a reform agenda and that we are getting on with the business and the job of reforming many parts of the financial services sector which the former government failed to do for 12 very long years. These are matters and issues which the opposition could have dealt with. These are pressing matters and they are being supported by the opposition—and they should be supported by the opposition—but they should be supported in the light of the fact that they could not bring themselves in those 12 very long years to make these changes and reforms themselves.

Some of these issues are more complex than others; they involve some extensive consultation with the sector and an extensive review of a number of bills. This bill in particular is quite involved and deals specifically with prudential regulation and making certain that there are some refinements and some other measures in the legislation which assist industry. This particular bill continues the legislative amendments that were made by the government to improve the efficiency and operation of a range of financial sector legislation. The bill itself contains amendments to 17 different acts and repeals five redundant acts. In a previous contribution a member of the opposition was talking about more regulation and more burden when in fact this government is removing or repealing, wherever it can, redundant acts and getting rid of regulation where it is not necessary. More important than having a debate over ‘more’ or ‘less’, the debate in this place ought to be about ‘appropriate’. That is what this place ought to be about—appropriate regulation, not more or less regulation. That is what this particular amendment bill is about.

The bill covers five particular key areas of reform. The first is the amendment of the prudential regime by strengthening APRA’s powers to prevent potential concerns arising and to address them as they do arise. Secondly, it amends the financial claims scheme to facilitate APRA’s administration of the scheme and improve the scheme’s operation. It also amends the Financial Sector (Collection of Data) Act 2001 to promote the harmonisation and flexibility of the data collection and publishing regime and APRA’s role as a central repository for the collection of financial data. It also amends the financial sector levies framework to improve the methodologies governing the determination of levies. Finally, the amendment bill repeals—very importantly—five redundant acts as part of the government’s commitment to continuously cleaning up red tape. We spoke in this place a little earlier today and had an amendment about cutting red tape for companies limited by guarantee. That is more good work in the financial services sector in terms of reform and ensuring any unnecessary compliance, red tape and other cost barriers to business are removed.

These amendments are largely the result of a review of the prudential regulatory framework by APRA and also by the Treasury. Both of these organisations have been working very closely to bring about an extensive consistent reform agenda in line with the government’s policies, and they ought to be applauded for their work. These amendments are consistent with developments happening overseas in countries such as the United Kingdom and the United States. We have sought to review and strengthen our financial regulatory frameworks and make reference to those in other countries with economies similar to our own economy. At this point it is important to note that both the UK and the US and others are turning to Australia to look at our regulatory framework, particularly looking at our twin peaks model between ASIC, the Australian Securities and Investments Commission, as a regulator and APRA as the prudential regulator. That speaks volumes about the sound regulatory framework that we have in this country. The amendments and the changes and the strengthening that we are putting in place are consistent with what is happening in other jurisdictions around the world.

Schedule 1 of the amendment is in relation to the Banking Act 1959 and deals specifically with a range of changes. Schedules 1 to 3 of the bill are aimed at ensuring the quality of the financial institution system for identifying, measuring and managing the various risks to reduce the risk of failure, and that where failure does occur the public still has confidence in the financial system that we have in this country—making sure that confidence is maintained while any failure is properly and appropriately managed. This bill amends the Banking Act 1959 and a number of other acts to ensure there is consistency in the prudential laws and the approach that we take across the board.

There are also significant changes to the Insurance Act 1973. Again these amendments are largely a result of an extensive review of the prudential regulatory framework by APRA and Treasury. The review identified that amendments were necessary to strengthen APRA’s ability to effectively fulfil its mandate. This is consistent with what is happening in other similar jurisdictions, notably in the United Kingdom and the United States. These amendments are in schedules 1 to 3 of the bill.

The bill also amends the Life Insurance Act 1995. These amendments are also a result of the review of the prudential regulatory framework by APRA and Treasury. That review identified that amendments were necessary to strengthen APRA’s ability to effectively fulfil its mandate. As a result of that, we have these amendments before us today. This is consistent with the developments in the other jurisdictions that I mentioned before.

We are also amending a range of other acts so that there is consistency. We are ensuring that the prudential laws are appropriate and consistent across a range of areas. The amendments in schedule 4 of the bill are aimed at promoting the harmonisation and flexibility of the data collection and publishing regime and APRA’s role as the central repository for the collection of financial data, including enabling APRA to collect data to assist the minister in formulating financial policy. The amendments in schedule 4 also ensure that APRA has powers to address prudential concerns at a general or a life insurer via compulsory transfer of business. Lastly, the amendments in schedule 4 enhance the regime for the provision and protection of information under the prudential laws.

There are a range of other amendments. This is quite a significant amendment bill in that it does alter quite a number of acts. As I said at the outset, it amends 17 separate acts and repeals five redundant acts. Further to that, on 1 July 2008 the then Assistant Treasurer announced an examination of the methodologies governing the determination of financial sector levies. This was in response to industry views on the methodologies and the fact that the methodologies had not been considered for quite some time. That was part of the consultation process that took place between industry, parts of the sector, Treasury and APRA as the review was being carried out.

The review of the levies methodologies was undertaken by Treasury and APRA together. As a result of that work the team recommended legislative changes to the Assistant Treasurer. Out of that review the drafting error in the Financial Institutions Supervisory Levies Collection Act will be corrected. Also the levy date for new starters under the Superannuation Supervisory Levy Imposition Act 1998 will be amended so as to bring it into line with the other imposition acts. The bill will also amend the imposition acts to provide more flexibility by enabling a valuation basis other than assets to be used on a case-by-case basis in the annual determinations.

It is necessary that these amendments be passed by 1 July 2010 so that the collection of levies based on the recommendations can commence properly in the 2010-11 financial year. These are sound amendments. They are supported by both sides of the House. While I have other comments to make on this, I seek leave to continue my remarks later.

Leave granted; debate adjourned.

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