Nicolle Flint (Boothby, Liberal Party) Share this | Hansard source

Before being elected to this place, I had several stages to my career. The first was here in Canberra as a policy adviser and director of corporate relations for the Australian Chamber of Commerce and Industry. I was privileged to spend four years working with Dr Peter Hendy, Greg Evans and Peter Anderson and learning from them. They all had extensive economic, business, industrial relations and policy reform experience. From them, from our state and territory chambers of commerce members, from our industry association members, like the Master Builders, the Hotels Association and the Printing Industries Association, and from the individual businesspeople who gave their time as volunteers on the ACCI board and on their committees, I learnt firsthand about the impact government regulation has on businesses.

Government regulation costs businesses of all sizes time and money. It means they are less productive, less profitable and less able to focus on expansion and innovation. Government regulation is imposed by local councils, by state governments and by the federal government. As a newspaper columnist before my election to this place, I regularly wrote about the impact government regulation has on business. As a lifelong Liberal, I know that it's my duty to be true to the principles our party and our members hold dear: small government, low taxes, low regulation and letting business get on with business. As our Liberal Party constitution says, we look 'primarily to the encouragement of individual initiative and enterprise as the dynamic force of progress'. For all of these reasons, I am speaking on this bill today.

Since 2013 Australia's financial sector has been the subject of no fewer than 24 reviews, reports and inquiries, including three by ASIC, three by the Productivity Commission, one by APRA, three by departments and statutory authorities, one by a House committee and seven by Senate committees. Our national financial institutions are subject to almost 40 regulations of varying degrees at any one time, from state governments, the Commonwealth and industry associations. The compliance cost burden on each of our financial institutions can run into the hundreds of millions of dollars per year. These costs are shifted straight onto consumers, who are hardworking Australians, their families and the businesses that they run and are working hard to maintain and grow. Since 2013 there have been 11 changes to the Banking Act and five changes to the APRA Act, further increasing the compliance burden borne by businesses and, ultimately, their customers.

Australians expect us as their representatives to establish and maintain laws that reflect community expectations. We must make laws that send a clear message to the banking sector as to what we expect from it, but equally these laws must be effective and efficient in maintaining ethical standards. The long list of reviews, reports, inquiries, active regulators and legislative tinkering over the past five years alone suggests that these laws have been anything but efficient. The establishing of a banking, superannuation and financial services royal commission and the general discontent in the community suggest they have been anything but effective.

Our job is to protect Australians—individuals, families and businesses. Another inquiry, another report and an expensive royal commission are not necessarily going to give redress to anyone who has been wronged. While the Banking Executive Accountability Regime reflects community expectations, the regime in and of itself is also not going to right wrongs.

The coalition government has a strong track record of cutting red and green tape for employers and wealth creators, particularly small and medium businesses. We've saved the economy billions per annum in regulatory costs. Now, as the nation's most responsible party for economic management, we must concentrate our attention on effective and efficient regulation in this area. As a fiscally responsible government, we cannot fall into the dangerous bank-bashing mob mentality which, while potentially politically beneficial in the short term, will hurt Australian businesses, their shareholders and employees and, most importantly, their customers in the long term. We must remember that around 210,000 people are employed in the finance industry, comprising 1.7 per cent of total employment in Australia. Of these 210,000 people, around 150,000 are employed by banks, with the rest working at credit unions, building societies and the Reserve Bank of Australia.

Australia must look to successful financial sectors for the world's best practice when it comes to effective regulation. It's clear that financial centres such as Singapore and Hong Kong have the balance right in terms of regulation, and they enjoy a strong financial services sector because of this. This means jobs; this means businesses. I'm contributing to this debate because I fear we are not adhering to world's best practice when it comes to regulating our financial sector. The Banking Executive Accountability Regime adds yet another layer of regulation to the ever-growing compliance burden faced by our financial institutions, adding another detractor to our competitiveness relative to those international sectors I mentioned earlier. It does this having only been subjected to a three-week consultation paper on the idea of the regime, followed by a one-week consultation period on the draft legislation itself.

Of primary concern is that the regime creates a vague obligation for accountable persons to take reasonable steps to prevent the institution's reputation or prudential standing being adversely affected. The wording of 'reasonable steps' has been adopted from the United Kingdom's own version of this legislation. However, it speaks about reasonable steps to avoid breaching specific regulations. The obligations created by our legislation are particularly nondescript, and, even though APRA have provided some examples to the sector, their list is by no means exhaustive. For example, what is considered reasonable where a decision taken by an executive might preserve the institution's prudential standing but damage its reputation? What is an accountable person to do in this situation?

Similarly, the BEAR bill proposes joint liability where two or more accountable persons share obligations within the institution. This means that an accountable person who shares obligations will be liable for a breach by the other person. While having bank executives look over each other's shoulders will help ensure compliance, executives need to know what compliance means. These two measures in particular have potential to slow a financial institution's decision-making process, and with it the potential to slow Australia's economic growth. While the parliament must hold bank executives to account, we need to get the legislation right the first time.

The condensed time frame that the BEAR has had to be considered by both the industry and the parliament is of concern. On the timeframe for implementing the BEAR bill, I note that it has been consistently raised, both in submissions on consultations and by the Senate economic committee's report on the legislation, that the start date of the regime on 1 July 2018 leaves very little time for institutions to adequately comply. This particularly disadvantages smaller institutions, who don't have as much capacity to absorb new regulations as larger institutions might, and I note the comments of the previous speaker on this very point. The Senate committee recommended that the implementation of the regime be delayed to begin not less than 12 months after the legislation passes. I believe the government should not be burdening smaller players in the financial sector, especially at a time when we want to see a more diverse and competitive industry so that lower costs and more competitive terms and conditions can be provided to consumers. I'm concerned about the burden we're placing on financial institutions, our global competitiveness and, potentially, our economic growth.

To reiterate, Australians expect us as their representatives to establish and maintain laws that reflect community expectations. We must make laws that send a clear message to the banking sector as to what we expect from them, but equally these laws must be effective and efficient in maintaining appropriate ethical standards. Our job here is to protect Australians, whether they're individuals, families or businesses. Equally, our job is to ensure we have the most competitive and thriving businesses in the world in the banking and financial services sectors—and businesses more generally—who generate income for our nation and employ millions of Australians each and every year.

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