Steve Irons (Swan, Liberal Party) Share this | Hansard source

I rise to speak on the Treasury Legislation Amendment (Unclaimed Money and Other Measures) Bill 2012. As the shadow Treasurer has said, this bill should not be called the 'unclaimed money bill'; it should be called the 'government claims your money bill'. I guess you could also call it 'use it or lose it'. Anyone with a bank account should rush out and put in 10c to make sure the account is active. For one of my accounts I will probably have to do that because it is a family trust declared account. It is on my register of interests. It has been sitting there and earning interest for the family trust but it has not been activated or used for four years. That means it will be claimed by the government. This is another typical example of a government putting up a bill when it does not understand the consequences; it does not think through any of the legislation. If there is one thing that the business community knows it is that the government does not understand the knock-on consequences of a lot of the bills that are introduced and how they affect business.

Essentially this bill is an attempt to manufacture a paper surplus for this current financial year in the face of predictions from analysts around the country that there is going to be no budget surplus. In fact, more than half of the Gillard government's promised surplus for 2012-13 is supposed to be achieved through increased revenue from this bill. The government is clearly worried that it will break yet another political commitment that has been repeated time and time again by the Treasurer and the Prime Minister. Those opposite are desperate for cash.

We all support getting the budget back to surplus, but the coalition wants a real surplus, not a paper surplus. The context of the legislation is the four largest deficit budgets in Australia's history, remarkably coming after four of the largest surpluses at the end of the prosperous Howard era. The rushing of this legislation will impose costs which will be borne by the account holders and consumers, and we must consider the interests of consumers who are the holders of bank accounts, superannuation accounts and insurance accounts while we assess the merits of this bill. On the other side of the coin are the account providers: banks, super funds, insurance companies or other financial institutions which are having the ill-considered measures imposed upon them without warning or consultation. We heard the Assistant Treasurer at a recent function in Melbourne talk about the Labor government and how much consultation it undertakes with business, but this bill is typical and it shows that the government does not consult with people when bringing in bills. Inadequate warning or consultation is stated in the coalition's dissenting report to the Senate inquiry. The stated objectives of this legislation are sound: to prevent erosion of small, lost or inactive account balances from fees and charges and to reunite unclaimed balances with their owners. However, as with many Labor bills, the substance of the bill does not match the objectives. We had the same problem with the Australian Charities and Not-for-profits Commission Bill, which I spoke about in September—a bill with stated intentions that no-one could disagree with but with consequences that almost everyone disagreed with. This bill has the same problem.

However, while it was possible to conclude that the charities legislation debacle was just another example to add to the list of incompetence in the Labor Party, with the pink batts and the school halls, this legislation is more of a deliberate attempt to mislead. It is a grab for cash; there can be no doubt about that. The costs imposed on account providers from this legislation, which will be far greater due to the rushed nature of the introduction of the legislation, will inevitably be passed on to consumers—and I think the last thing Australians will want to see at the moment is higher bank charges.

The coalition will move amendments to introduce more realistic implementation time frames, and if these amendments are successful we will not oppose the bill. There may well be some elements in this bill that have merit, but these are largely wiped out by the rushed, ill-considered and disorderly manner in which they are being pursued. Specifically, given the number of problems raised concerning the legislation, the coalition senators of the Economics Committee determined that the sensible decision would be to undertake further consultation and, failing that, the implementation dates for schedules 1, 2 and 4 should be delayed.

I understand that at the eleventh hour the member for Oxley, the Parliamentary Secretary to the Treasurer, who is in the chamber at the moment, has flagged changes that push back the reporting and transfer deadlines by a month for both banks and superannuation funds. While it is positive that the government has recognised one of the elements of concern with the legislation, this does not appropriately address the concerns that were raised by industry. From the outset we say that the government needs to explain, in an updated explanatory memorandum to this bill, how these changes will impact the key dates as outlined in the explanatory memorandum for changes in schedules 1, 2, and 4. The government also needs to inform the House, in an updated explanatory memorandum, how these amendments will change the financial impact of the bill over the forward estimates. These last-minute changes give an air of chaos and, by their very nature, limit time for consideration. I am the last speaker on this bill, and many have spoken over the last two sitting weeks. To rush through these changes at the end, without giving people a chance to digest them, analyse them and see what the impact is on the budget, is poor.

This bill seeks to make significant amendments to 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 makes various cut-and-paste amendments to existing acts that give effect to the unclaimed moneys measures announced in the 2012-13 MYEFO. These amendments will impact arrangements relating to the transfer of unclaimed moneys to ASIC for bank accounts and life insurance policies, lost member accounts to the ATO for the superannuation, and unclaimed moneys for company moneys. This bill will bring forward the time at which money is recognised under the relevant law as lost or unclaimed, leaving Australians everywhere vulnerable to this government's greedy reach.

This bill affects many financial institutions and many different kinds of assets held by Australians. Schedule 1 of this bill amends section 69 of the Banking Act 1959 to provide for new arrangements for unclaimed moneys held by Australian deposit-taking institutions, or ADIs. These changes will reduce the period before an amount payable by an ADI is treated as unclaimed moneys from seven years to a period of only three years. If this bill passes, money held in ADIs will be deemed as unclaimed if a transaction has not occurred in the account for that period of time. This excludes payment of interest accrued. This change has mammoth potential widespread consequences for many Australians. For instance, say an Australian worker who has been offered a post overseas for the next four years decides to leave a sizeable amount of money in a high-interest bank account to accumulate interest. This person, who for whatever reason has chosen not to make any further deposits or withdrawals for that period of time, will, under this bill, have their deposit treated as unclaimed moneys. These funds will be moved to the government's own account, known as the consolidated revenue fund, and used to pad out the bottom line of that financial year's budget. In the Senate report a number of concerns were raised, which were shared by coalition senators, about the reduction by four years in the inactivity test period. The senators concluded that the three-year inactivity test for bank accounts is too short and needs to be reviewed to consider whether five years would be a more appropriate duration. Accounts which might be affected include those of Australians being posted overseas and accounts owned by children or set up for children's savings but without a contribution during the three years. In the case of a first home saver account, hard times can mean that contributions are not made for at least three years. Can you imagine the number of people that might be affected by an arbitrary three-year test? I imagine that is why the government is so keen to act this financial year.

The coalition dissenting report also pointed out that many account types should be excluded. A submission from the Commonwealth Bank of Australia stated:

A high level analysis by CBA indicates that the majority of account balances at CBA which would be impacted by the proposed changes to unclaimed monies currently receive an interest rate higher than the CPI linked rate which the Bill proposes to be paid on those balances once transferred to unclaimed monies.

So, a three-year requirement would be detrimental to a large number of Australians. Another recommendation from the coalition Senate report was that inactivity should be tested at the account holder level. If an inactive account is held by a consumer with one or more accounts at the bank, strongly suggesting that the customer is still alive and engaged with the bank, then the balance of the inactive account should not be deemed unclaimed and transferred to consolidated revenue. As such, where a customer holds multiple accounts with the bank, the inactivity test should be elevated to the level of the customer to help avoid unintended consequences.

The government also plans to appropriate funds from first home saver accounts by amending the First Home Saver Accounts Act 2008 to provide for new arrangements for unclaimed monies held by the first home saver account providers. This is outlined in schedule 2. Once again, the bill before the parliament today would amend section 17A and 51C of the FHSA Act to change unclaimed monies for the period from seven years to three years as with the changes to the ADIs.

The government announced the introduction of first home saver accounts in its own 2008-09 budget to assist parents in saving for their children's future. Many parents have established these accounts for their children but may not have been able to make contributions recently for a variety of factors, be it the ever rising cost of living that this government does not acknowledge or a temporary lack of disposable income. Some of these accounts have a very real risk of being claimed by the government, particularly when holders of these accounts have not been able to afford to contribute to their deposits over the past three years or have not been in contact with the bank which holds these deposits. The coalition considers that this four-year reduction also increases, unreasonably, the risks of unintended consequences and we suggest that this bill be delayed a year to allow sufficient time for consultation.

This bill will amend the Life Insurance Act 1995 as per schedule 3 to provide for new arrangements for unclaimed life insurance monies. Life insurance companies are required to report on and pay unclaimed monies to the Commonwealth. Unclaimed monies 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 outlined in this bill will reduce the period before life insurance monies are treated as unclaimed from seven to three years. It is, again, not clear how these provisions will apply to contemporary life insurance products or policies, and this confusion has arisen because the government has not had time to properly develop the legislation.

Schedule 4 to the bill amends the Superannuation (Unclaimed Money and Lost Members) Act 1999 to change the circumstances in which small lost member accounts and accounts of unidentifiable members must be transferred to the ATO to provide for the payment of CPI interest on unclaimed superannuation money. Again, the coalition recommends that the proposed amendments in schedule 4 of the bill be delayed for a full year to 31 December 2013 to address the critical issues raised since the announcement of this measure. Lost superannuation accounts with balances of less than $2,000 that have up until now been inactive for only three years—currently this is set at seven years—and accounts of identifiable members that have been inactive for 12 months will now be required to be paid to Australian Taxation Office. It is not clear how legislative change will apply to people who have moved jobs and have multiple superannuation accounts, spent time overseas or moved residences. The Australian Institute of Superannuation Trustees noted in its submission that the problem of transferring such active accounts to consolidated revenue was that it was most likely to impact new employees, young people and low-income earners as these contributing members typically take the most time to accumulate account balance over $2,000.

This bill seeks to amend longstanding pillars of our financial services industry. Changes to these acts must never be made lightly, and the coalition will not facilitate a government that is acting out of self-interest as opposed to properly considered public policy. The coalition has advocated for a wide range of review measures to ensure that this bill has had due assessment to ensure that there were no unintended consequences. This is a bill that this government has concocted out of desperation to save its crumbling budget bottom line.

The coalition senators reached three recommendations, which include various parts of the schedules 1, 2 and 4, and the amendments to be moved by the shadow Treasurer this afternoon will reflect this. I urge the government to support them for the benefit of both consumers and industry who have been caught unawares by this rushed legislation. One of the other unintended consequences is for people who develop dementia. What will be done with their accounts? Will the government take money from people who are getting ill? Is that right? You have said they will keep their money; will they?

Mr Ripoll interjecting—

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