Matt Thistlethwaite (Kingsford Smith, Australian Labor Party, Shadow Parliamentary Secretary for Foreign Affairs) Share this | Hansard source

The ASIC Supervisory Cost Recovery Levy Bill 2017 and related bills implement the Australian Securities and Investments Commission's industry funding model. Under the model, from the 2017-18 financial year, ASIC's regulatory costs will be recovered from the corporate sector and the financial services sector instead of being borne by the taxpayer. The costs are anticipated to be $240 million in 2017-18. The cost recovery levy is similar to the arrangements that are currently in place for funding of the Australian Prudential Regulatory Authority. Entities that are regulated by ASIC will be required to pay a levy that will recover ASIC's regulatory costs for the financial year from entities that were regulated in that financial year.

The amounts payable each year will be set through a combination of regulations and legislative instruments, and the regulations will set out the methods or formulas that will be used to apportion ASIC's regulatory costs. ASIC will issue a legislative instrument that will set out what its regulatory costs were in relation to the financial year as well as information about how those costs are apportioned across leviable entities. After the levy amounts have been determined for a financial year, ASIC will then issue the notices to entities setting out the amount of the levy and when it is due and payable. The explanatory memorandum explains that that levy will be sent out in the year following the year in which the levy was determined. Failure to pay the levy by this date will attract a late payment penalty at a rate of 20 per cent per annum unless ASIC has granted the entity an extension. The increased regulatory burden arises because around 7½ thousand entities will have to establish new reporting systems to provide ASIC with additional data and around 55,000 entities will have to provide additional data to ASIC each year.

Labor is supportive of these reforms. We have said from the beginning that we are supportive of this ASIC industry funding model. And we support the principle that ASIC's regulatory costs should be borne by those entities that it regulates. But—forgive me for being cynical—at the heart of this the government is really not fair dinkum about this reform. It is not something they believe in. It definitely goes against this Liberal philosophy of reducing regulation within markets and freeing up markets. It is not something that ordinarily a Liberal government—let alone the Turnbull government—would put to the parliament as a reform that is necessary in financial services. This is evidenced by the fact that in the government's 2014 budget they actually slashed ASIC's funding by $120 million. It was a massive free pass to corporate and financial sector misconduct. Of course, as a result, there was a devastating loss of staff and expertise, which has had a significant effect on the ability of the corporate and financial service regulator to address misconduct.

Really, the only reason they have come to this policy—developing this policy and putting it to the parliament—is because of Labor's calls for a royal commission. In the wake of the scandal-ridden banking sector—financial services, wealth management, in particular, and insurance—these issues have been highlighted through numerous parliamentary inquiries and also through the media. The government really was forced to do something about it. They have taken the approach of, 'We'll do anything but a royal commission.' We have seen in the recent budget they have announced the new bank tax. That legislation was introduced today, finally. Finally we will be able to get a look at what the government is proposing. And, of course, we have reforms such as this.

Despite the depth of the cuts and their massive impact, the government took zero action to partially unwind those cuts until Labor began its calls for a royal commission into the big banks. It has long been Labor's strongly held position that the only way to restore trust in the banking system and the only way to restore integrity to the banking sector and financial services in Australia is through a royal commission. It is a policy Labor has had since the last election. It is a policy that has garnered well over 70 per cent support of the Australian public through published opinion polls. It is a policy that anyone who has been involved in these financial scandals with the banks supports. It is a policy that many small businesses in Australia support. It is a policy, clearly, that the Australian finance and banking sector needs.

It has been made abundantly clear through the House of Representatives economics inquiry into the banks that there is a need for a royal commission in Australia. Simply calling the banks down to Canberra once a year for 20 minutes worth of questions from this committee, in which we cannot delve in depth into particular scandals and issues on behalf of victims, is not sufficient. It is not going to cut it and it is not going to remove the wish of the public and the calls for a royal commission. They are not going to die down because of the measures the government is introducing here or because of the bank levy.

In fact, it was Labor that first proposed a levy on the banks to fund the implicit guarantee they had in the wake of the global financial crisis to ensure the banks in Australia do not fail. It was Labor, based on the advice of the regulators and of the Reserve Bank, that proposed an initial levy on banks to set up a special fund for a rainy day, if you like, when there may be a situation in future downturns where a bank may fail and the government may need to ensure depositors' finance with that bank. Let's never forget what those on the opposite side did: when Labor proposed it, they opposed it. In fact, we all recall the member for Warringah calling it a 'trouser tax' and saying that this was Labor's attempt to get their hands into people's hip pockets with respect to their bank accounts. Here we are, a couple of years later, and that is exactly what the government is going.

They are saying it is regulated on deposits above a certain level with commercial institutions and that the banks are not going to pass it on. Deputy Speaker, I think you would have to be living in a dream world to think the banks will not find a way to pass this on to the customer.

The other point to make is that no Australian worth their salt believes the government when they say the banks will not pass this on—in fact, people probably wonder who these fools are in Canberra, in cabinet, who are running this policy when they can propose something like this, try and make it different from what Labor is proposing, and think that it will not be passed on by the banks. We will wait and see how they are going to do that, and hopefully some of that information will be contained in the proposal that has finally been released today in the form of legislation.

I mentioned earlier the Economics Committee inquiry. In hearings over the last couple of years we have heard about the scandals and the rip-offs that are continuing in the banking industry. They are not exceptional—they have become, unfortunately, the norm in the Australian banking sector. That is why the public are wholeheartedly sick of it and want a royal commission. The government's budget was nothing more than a misdirected attempt to protect the big banks in Australia—a bit of smoke here and a well-placed mirror there. Unfortunately, nothing in the budget will obviate the need for a royal commission into the banking and financial services sector in Australia.

ASIC has had a very difficult time of it over recent years because of the cuts that I mentioned earlier that the government initially undertook in the 2014 budget but that they have sought to reverse in recent years because of all the scandals and because of Labor's call for a royal commission. Through its wealth management project, ASIC has been investigating financial advisers and as a result it has issued temporary and permanent banning orders against multiple financial planners in each of the banks. I will not go through them at length, but they include CBA wealth management licensees—15 advisers were terminated in October 2015 and October 2016, with a further 20 advisers terminated; NAB had 21 planners dismissed for conflicts of interest, bad advice and compliance issues in 2014; there have been temporary and permanent banning orders against at least three ANZ financial planners in recent times; and there have been banning orders against two Westpac financial planners. In September 2016 ASIC announced that ANZ had refunded $29 million to hundreds of thousands of accounts for failing to disclose certain periodical payment fees, and also in September 2016 ASIC announced that Westpac had refunded $9.2 million in bank fees that should have been waived in one case and $20 million in credit card foreign transaction fees in another. In October 2016 ASIC announced that CBA would repay $105 million to customers who had been charged for financial advice that was never provided.

We have seen the poor way in which the government has treated the financial regulator in the past, and one of the things that a royal commission would look into is whether or not regulators are best equipped to deal with the financial crimes that have been occurring in this industry and to tackle and try to prevent some of the scandals we have seen in recent years. The government is proposing this bank tax, but the one group of people it has ignored through all of this are the victims of bank fraud. The victims of the bank fraud are voiceless when it comes to the Turnbull government, and they are the ones who want the royal commission and the opportunity to put their case and be heard and who want an independent arbiter to make suggestions to government about ensuring that these things do not occur again. This legislation is no substitute for getting to the bottom of what has gone on in the banking sector and the financial services sector more broadly. The only way to do that is through a royal commission, and only Labor will give the Australian public the royal commission that they deserve into the banks.

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