Jane Prentice (Ryan, Liberal Party) Share this | Hansard source

I rise to speak on the Treasury Legislation Amendment (Unclaimed Money and Other Measures) Bill 2012. The bill before the House seeks to enact various changes to unclaimed money measures, which were flagged in the government's 2012-13 Mid-Year Economic and Fiscal Outlook.

The bill makes amendments in five areas: the Banking Act 1959; the First Home Saver Accounts Act 2008; the Life Insurance Act 1995; the Superannuation (Unclaimed Money and Lost Members) Act 1999; the Australian Securities and Investments Commission Act 2001; and the Corporations Act 2001. The bill effectively brings forward the time at which money is recognised under the relevant law as lost or unclaimed, which will in turn have the effect of moving approximately $700 million into the federal government's general consolidated revenue fund for the 2012-13 financial year and beyond. Make no mistake, these bills are merely a cover-up for this disastrous Gillard Labor government. They are designed to cover up $172 billion of accumulated deficits—record deficits—with more deficits likely to come in the 2012-13 financial year and beyond.

The changes in today's bill are one of many so-called saving measures announced by the Treasurer in the Mid-Year Economic and Fiscal Outlook. As we know, the vast majority of what the Treasurer referred to as a saving was merely taking more money away from Australian taxpayers and businesses—and taking it away sooner than the government did previously.

The bill was referred to the Senate Standing Committee on Economics, after which stakeholders had five working days to make a submission to the committee. As Labor does with so many important pieces of legislation, similar to the rushed implementation of their Future of Financial Advice rules, they rammed their measures through parliament without any regard to the intended and unintended consequences of their legislation. In this case, for a measure to be worth potentially up to $760 million, there were only 18 days between referral to the committee and the committee's report being released. This is simply not enough time for those interested—consumers, business groups and industry associations—to consider the consequences of these changes. The coalition senators of that committee released a dissenting report which highlights many of the bill's problems. They made two recommendations: firstly, that the government withdraw the bill in order to facilitate further consultation and that the explanatory memorandum be revised to be clear about how the legislation is intended to work; secondly, if the government does not withdraw the bill—which it has not done—that the bill be amended to delay implementation until at least 31 December 2013 for Schedules 1 and 2 and that there be further delay for Schedule 4.

More recently, the government announced just yesterday afternoon significant changes to the bill in response to many of the concerns noted by the coalition senators' dissenting report. It takes seven paragraphs into the media release of the Parliamentary Secretary for the Treasurer, the member for Oxley, for the government to admit that it is making significant changes to the original legislation and to then admit that it is changing the implementation date to 31 May 2013. What it does not say is that the original date in the legislation was 30 April 2013. So all organisations affected by this legislation will be given a total of just one extra month to implement costly reforms and introduce compliance regimes. As I have noted, the coalition believes that one month is not enough. Authorised deposit-taking institutions—ADIs—first-home saver account providers, life insurers and superannuation funds need and want at least a year. However, this Labor government does not listen to stakeholders. It pays lip service to their concerns by giving them one extra month to significantly alter system-wide processes.

This is a symptom of what the coalition has been saying all along about this legislation. The government has abused process with the manner in and timing with which this bill was introduced into parliament. Most fundamentally, the government must update the explanatory memorandum and be upfront about the impact this legislation and its subsequent changes will have over the forward estimates. The government has not yet done so. It is more interested in rushing through the legislation, making hurried changes and leaving it to the industry and consumers to worry about the consequences afterwards. This hurried process did not have to happen. From the outset, Australian authorised deposit-taking institutions told the committee that the government should delay implementation. The coalition senators noted the response of the Australian Bankers' Association, which acknowledged that:

…the proposed timing for implementation and a commencement of 31 December 2012 is unrealistic, being in less than 2 months and falling during a period when banks implement freezes on any technology or IT systems changes. It is estimated that banks and other ADIs will require at least 6 months to make all the necessary changes, inform customers in a legally compliant manner, and meet compliance requirements.

I turn now to look at the individual sections of the bill. Firstly, Schedule 1 of the bill amends section 69 of the Banking Act 1959 to provide for new arrangements for unclaimed moneys held by Australian authorised deposit-taking institutions. These changes will reduce the period before an amount payable by an ADI is treated as unclaimed money from seven years to three years. The test of engagement the government has chosen in determining whether an account is to be treated as unclaimed money is whether a transaction has occurred in the account for that period of time. What is even more alarming is that until yesterday the inactivity test would have been applied at the account level, not the customer level. So we could have ended up with the situation where an active customer with a pre-existing relationship with an ADI had several accounts but might have had one account that they were not using. For that one single account, the money would have been deemed 'inactive' and transferred to consolidated revenue, despite their being an active customer. This change had potential widespread consequences for many Australians.

As the shadow Treasurer has highlighted to the House, there might be many examples of an Australian worker who has been offered a post overseas for three years, who has money sitting in a bank account, who leaves their money in that account accumulating interest and who does not make any further deposits or withdrawals in that period. For the purposes of this bill, their deposit is treated as unclaimed funds and therefore is able to be transferred into consolidated revenue. The coalition still has deep reservations as to the potential unintended consequences that this legislation may have for many Australians with untouched funds in bank accounts.

Secondly, Schedule 2 to of this bill amends the First Home Saver Accounts Act 2008 to provide for new arrangements for unclaimed moneys held by first-home saver account providers. The new law amends sections 17A and 51C of the FHSA Act to change the unclaimed funds period from seven years to three years. Since the introduction of First Home Save Accounts in the 2008-09 budget, the Australian economy has continued to grapple with the effects of the global financial crisis. Many Australians may have started up a first-home saver account and then been affected by economic circumstances such as rising cost-of-living pressures, and therefore they may not have been able to make contributions. Today's bill means that some of these accounts are at risk of being claimed by the government.

Thirdly, schedule 3 of the bill amends section 216 of the Life Insurance Act 1995 to provide for the new arrangements for unclaimed life insurance funds. Unclaimed moneys include sums payable on the maturity of a policy which are not claimed within seven years after the maturity date of the policy. The new arrangements will reduce the period from seven years to three years before life insurance funds are treated as unclaimed.

Fourthly, schedule 4 of the bill amends the Superannuation (Unclaimed Money and Lost Members) Act 1999 to change arrangements for the transfer of lost member accounts to the tax office and to provide for the payment of interest on unclaimed superannuation money. Lost superannuation with balances of less than $2,000 will be deemed inactive after only three years; currently it is seven years. The coalition's dissenting report notes that this has the potential to make worse off those already vulnerable in our community—that is, those who take the most time to accumulate anywhere close to $2,000 in a superannuation account. We are talking about young people, low-income earners and new earners.

I was very concerned about the reduction in the time of inactivity from five years to only 12 months. Yesterday afternoon, the government acknowledged this problem in their legislation and announced that accounts which are active but where the member is uncontactable will not be transferred to the ATO. This is an embarrassing turnaround from the government. I am glad that they finally acknowledged the concerns relating to the nature of superannuation accounts.

Many young people and low-income earners will have multiple jobs and multiple super funds. The immediate pay packet of someone earning a low wage might be more pressing in terms of updating addresses and other contact information. Yet, if they then move house—and even if their super account is still receiving contributions—their account can be deemed lost if communication has been attempted twice. Therefore, to assist in protecting active but lost accounts, the Australian Institute of Superannuation Trustees and the Financial Services Council recommended a minimum two-year period before an account can be deemed lost, and that the two-year clock be reset when a member receives a contribution or any form of contact has occurred.

This is a very reasonable proposition which would add a safeguard for Australian superannuation accounts. I reiterate my gratitude that the Labor government has at least listened to the concerns from industry and consumers so that active accounts will not be transferred to the ATO unnecessarily.

Fifthly, schedule 5 of the bill amends the Corporations Act 2001 and the Australian Securities and Investments Commission Act 2001. We should consider today's bill in the wider context of tax reform—more precisely, the complete lack of fundamental tax reform over the last five years. The Rudd Labor government first commissioned the Henry tax review, which began in 2008. The review received more than 1,500 submissions, cost more than $10 million and finally delivered a report over 1,300 pages long. The report included 138 recommendations to the government, the vast majority of which have not been appropriately considered by the government. Instead, we have a record of no real reform and all we see is new taxes and tax increases.

Successive Labor governments have introduced an additional 20,900 regulations and only repealed 104. Labor promised that they would follow a strict 'one in, one out' approach to the growth of regulation. Instead, for every regulation removed, 200 regulations have been added. While the Treasurer wants to rush this unclaimed money bill through parliament, they do have form when it comes to rapidly raising taxes in Australia. Among many other things, in 2008 they increased the alcopops tax and raised the luxury car tax from 25 to 33 per cent. They have attacked superannuation on numerous occasions. They attacked the medical expense tax offset and abolished the entrepreneur tax offset, and their most recent reform was to force large businesses to pay their pay-as-you-go instalments to the government every month instead of every quarter. This measure is supposed to net the government $5.5 billion in the next financial year.

Mining companies were slugged with a mining tax that has, to date, not raised a single dollar in revenue. With the mining tax, Australian businesses were supposed to see a cut in the company tax rate of 30c to 29c and then to 28c per dollar. The company tax rate today still stands at 30c, and Labor has completely abandoned reform in this area. As a result, the government has amended the net debt ceiling limit four times in the last five years. It first increased the limit in 2008 to $75 billion, then again in 2009, 2011 and 2012, with the limit now standing at $300 billion. As a consequence we have a government that then has to introduce measures in today's Treasury legislation amendment bill—a short-term fix to raise more than $760 million to smooth over the budget figures.

However, these changes have been rushed and ill-considered. The last 24 hours has seen the Labor government confess that it has introduced deeply flawed legislation, something it does not admit to very often, although there are countless examples of legislation passed by the Labor government which should not have been introduced, let alone passed, and which has required significant revision after its passage. With this Treasury bill, the government must at the very least delay the implementation of the bill and listen to the concerns of all stakeholders before imposing unnecessary and additional compliance cost.

The shortcomings that I and my coalition colleagues have outlined, both in the Senate dissenting report and in parliament, must be addressed in the form of further consultation. Despite the changes announced yesterday, this bill is still a bad bill. I therefore strongly oppose today's bill in its current form.

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