Peter Dutton (Dickson, Liberal Party, Minister for Revenue and Assistant Treasurer) Share this | Link to this | Hansard source

I move:

That this bill be now read a second time.

This bill introduces measures to enhance the mechanisms for reviewing prudential decisions under financial sector legislation. It builds on the government’s efforts to simplify regulation of the financial sector, while ensuring that the broader objectives of prudential regulation are met.

The report of the Taskforce on Reducing Regulatory Burdens on Business, Rethinking regulation, found that ‘Australia’s financial and corporate sectors, and the associated regulatory structures, are highly regarded internationally’ but that there was scope to improve the regulatory framework in some areas.

The government accepted all the recommendations in Rethinking regulation relevant to prudential regulation. However, there were a number of issues on which the government decided to undertake further public consultation and these have been included as measures in this bill.

The measures will ensure that the Australian Prudential Regulation Authority (or APRA) is able to act decisively to address risks in the financial system, while ensuring that individuals and entities have appropriate recourse to review of the regulator’s decisions. In doing so, the measures also continue the government’s process of refining and updating the prudential acts to make them more consistent with each other and with related legislation, such as the Corporations Act 2001.

Schedule 1 to this bill amends the Banking Act 1959, the Insurance Act 1973, the Life Insurance Act 1995, the Retirement Savings Accounts Act 1997 and the Superannuation Industry (Supervision) Act 1995 to introduce a court based process for the disqualification of individuals from responsible officer roles with APRA-regulated entities.

This measure will replace the current administrative approach to disqualification, involving a determination by APRA, with a court based process similar to that followed by the Australian Securities and Investments Commission under the Corporations Act. A court based process will improve the transparency of the disqualification regime.

The disqualification regime will apply to all responsible persons across all prudentially regulated industries. This measure will give the court the flexibility to specify relevant aspects of a disqualification, including the period of disqualification and the types of positions the disqualified person is banned from holding. The court would also have the power to vary or revoke a disqualification.

The Australian Taxation Office will retain the power to disqualify people in relation to self-managed superannuation funds, due to the different regulatory environment to that of the larger, APRA-regulated entities.

Schedule 2 to this bill amends the prudential acts to clarify APRA’s powers to issue directions to regulated entities to address prudential issues.

This measure will introduce a general and more consistent direction power into the prudential acts. It will consolidate APRA’s direction powers under each of the acts, reducing complexity and providing greater certainty as to the scope of APRA’s powers. It will also clarify the reviewability of APRA directions while ensuring that APRA is able to act decisively where financial interests or the stability of the financial system are at risk.

Schedule 3 to this bill amends the prudential acts to remove the requirement for ministerial consent for certain APRA decisions which do not involve broader policy issues.

These measures implement the government’s response to recommendation 22 of the HIH Royal Commission report, to remove ministerial consent from APRA decisions where these did not involve wider policy issues and enhance the operational independence of the regulator. The measures will also be consistent with the recommendation of the IMF in its Financial system stability assessment of Australia to establish clearly the independence of APRA.

Certain ministerial powers under these acts are to be retained, such as in relation to decisions where ministerial involvement is considered to be a more appropriate review mechanism than the Administrative Appeals Tribunal. These relate to national interest matters and where broader policy considerations are involved.

Schedule 4 to this bill amends the prudential acts to expand the availability of merits review for decisions by APRA and the ATO.

These measures implement the government’s response to recommendation 5.7 of Rethinking regulation and recommendation 23 of the HIH Royal Commission report with respect to ensuring that APRA administrative decisions are subject to administrative review on their merits. These measures have been developed consistent with guidelines established by the Administrative Review Council.

In applying merits review to the regulator’s decisions, the government is also aiming to ensure that merits review does not unintentionally constrain the regulator from taking prompt and decisive action to deal with prudential concerns. This is consistent with a recommendation by the IMF in its Financial system stability assessment of Australia.

In particular, certain directions issued by APRA would be subject to merits review unless they are given on a limited set of prescribed grounds.

Merits review is to be available to all decisions which affect natural persons and to administrative decisions which affect a particular person.

The measures will improve the transparency and accountability of APRA and the ATO in their decision-making.

The measures in this bill ensure that APRA has appropriate independence and accountability. They also ensure, where the prudential acts are being altered to provide greater independence or accountability, that APRA’s ability to undertake its functions as prudential regulator is maintained.

There is support within the industry for these measures. The measures have been subject to extensive consultation through the release of a proposals paper and a further detailed consultation paper. The government has listened to the views of the industry and, as a result of the consultation process, revisions were made to the detail of the proposals to provide greater certainty and clarity in regulation for business.

Full details of the amendments are contained in the explanatory memorandum. I commend the bill to the House.

Debate (on motion by Ms Plibersek) adjourned.