Peter Slipper (Fisher, Liberal Party) Share this | Link to this | Hansard source

I remind honourable members that it is the wish of the House to debate this bill concurrently with the Australian Transaction Reports and Analysis Centre Supervisory Cost Recovery Levy (Collection) Bill 2011 and the Australian Transaction Reports and Analysis Centre Supervisory Cost Recovery Levy (Consequential Amendments) Bill 2011.

Debate resumed on the motion:

That this bill be now read a second time.

Michael Keenan (Stirling, Liberal Party, Shadow Minister for Justice, Customs and Border Protection) Share this | Link to this | Hansard source

I rise to speak on the Australian Transaction Reports and Analysis Centre Supervisory Cost Recovery Levy Bill 2011 and related bills. What we see with these bills is a lazy piece of policy making that is designed to recoup the costs that are associated with Labor's failed economic management. The purpose of these bills is to fulfil Labor's 2010-11 budget commitment to recover the costs of AUSTRAC's supervisory activities from 1 July this year. I could not characterise the Australian Transaction Reports and Analysis Centre Supervisory Cost Recovery Levy Bill 2011 any better than it was characterised by the Association of Superannuation Funds of Australia, ASFA, when they said that this bill was akin to asking the Australian Taxation Office to charge taxpayers a fee to lodge their returns.

The bills place a large burden on reporting entities, depending on how much they earn. The initial proposal from the government was to charge all reporting entities to recover the costs of running AUSTRAC, but, after a lot of those entities voiced their opposition—and rightly so because they were to be levied $500 at a time—the government revised their proposal, so now this levy is only going to apply to larger entities. I understand that only 199 of the largest reporting entities will be taxed. Those large entities will obviously be places like banks and casinos and people who you might say are able to pay the levy, but, at the end of the day, somebody always pays when the government levies a new tax. This is not a large amount of money in the scheme of things, but, regardless, this is still poor policy-making.

As we know, a Senate committee is looking into the bills and is due to report on 16 June. In a submission to the committee inquiry, the Law Council of Australia noted their concerns about the bills and about their profession falling under the reporting obligations. The Law Council said:

If law practices become subject to AML/CTF—

that is, anti-money-laundering and counterterrorism financing—

reporting obligations and consequently the cost recovery regime, the Law Council would have particular concerns about the impact on smaller firms.

…   …   …

The proposed cost recovery levy, which would apply other than beyond a legal practice's compliance costs, would almost certainly lead, in the Law Council's opinion, to an increase in the cost of legal services, making such services less affordable.

The Law Council makes a valid point which would no doubt be of concern to many businesses and institutions across Australia. There are also concerns that the levy will place Australia and its financial institutions at a substantial competitive disadvantage. This is what happens when you levy new taxes that are not levied on other players within our region. Citigroup wrote in their submission to the committee that the levy will have unintended consequences in relation to Australia's ability to compete in the Asia-Pacific region, given the additional significant costs that the levy will impose on Australian financial institutions. They said:

We recommend that the composition of the levy be reassessed to ensure a more equitable distribution reflective of the designated services that AUSTRAC monitors and supervises.

The government's rationale for basing the large-entity component of the levy on the earnings of the entity group is that AUSTRAC incurs greater expenses in regulating larger entities because larger entities have more customers and usually provide more complex products. However, this calculation does not take into account the extent to which a leviable entity's earnings are related to the provision of designated services.

Due to this, an entity with high earnings may incur a large-entity component even though the entity only provides a small volume of designated services. There is a potential that the levy will have a disproportionate effect on those large entities which only provide designated services as an incidental part of their businesses.

I have already stated what some of the industry associations have been saying about these bills. I particularly like ASFA's way of characterising it. I also note that the Australian Bankers Association director Tony Burke said that the government's clear objective was to recover costs rather than provide any benefit to those subject to the regulation. He is quoted in an article:

"As the paper currently stands, the potential cost of compliance would be high," he said. "Charge-backs to internal groups and agencies would add significant overheads in tracking costs and reconciling payments."

The same article goes on:

Institute of Chartered Accountants executive general manager Lee White said members already incurred significant costs in supporting AUSTRAC's regulatory aims, and it was unreasonable to ask them to bear more.

"Our members provide legitimate services to clients who overwhelmingly are law-abiding individuals and businesses," he said.

"If these legitimate services are exploited by criminals, it is these wrong-doers who create the need for regulation and who should contribute to the costs through the confiscated proceeds of their crimes."

I think those comments from industry really go to the heart of this bill. The services that AUSTRAC provide are not necessarily services direct to the reporting entities that have been charged under this legislation. As I said, it is not a large sum of money so you will not find an enormous public outcry but that does not mean that it does not represent bad policy making. It is not reasonable for the government to recoup the costs of running every government agency if that government agency is providing a public service rather than providing direct services to the people who are being asked to pay for them.

AUSTRAC does provide a very valuable service but we believe that it is not reasonable to come back and to ask the 199 largest users to cover the costs of its running, particularly when really this is all about filling the budget black hole that Labor have created for themselves from their enormous wasteful spending up to this point.

We will not be opposing the bill in the House, although we do reserve the right to move amendments in the Senate based on the outcome of the Senate committee report.

Bernie Ripoll (Oxley, Australian Labor Party) Share this | Link to this | Hansard source

It is a pleasure for me to speak in relation to the Australian Transaction Reports and Analysis Centre Supervisory Cost Recovery Levy Bill 2011 and cognate bills, the Australian Transaction Reports and Analysis Centre Supervisory Cost Recovery Levy (Collection) Bill 2011 and the Australian Transaction Reports and Analysis Centre Supervisory Cost Recovery Levy (Consequential Amendments) Bill 2011. They all relate to the Australian Transaction Reports and Analysis Centre supervisory cost recover matter.

Listening to that previous speaker and others from the opposition, I think they will be supporting these bills but that they are waiting to hear what the Senate committee report has to say on these matters. I will pick up on one of the issues that was raised by the previous speaker. Essentially, the member was saying there is no need to have organisations and businesses that carry out supervisory activities paying a fee in terms of providing that information. The reality is that this happens across a lot of areas. There is a cost, and cost recovery in any government department or any agency is a normal process. It is something that goes on. The previous speaker also mentioned that it is the case that it is not a lot of money. The cost recovery is in the order of about $89 million for the period 2011 to 2014 and represents those people involved in activities paying a fee in the process of having those activities properly recorded.

I want to briefly say how important AUSTRAC is. AUSTRAC does an enormous job. It does a great job and it provides a great community benefit, particularly against organised crime. It is estimated that it saves the community something like $15 billion a year. Organised crime, as we know, is a significant national security threat and it is a growing challenge. I think people ought to understand that.

The Commonwealth, through the Organised Crime Strategic Framework, is ensuring that Commonwealth intelligence, policy, regulatory and law enforcement agencies all work together in partnership to prevent, disrupt or investigate and prosecute organised crime in whatever form it takes. These bills ensure that there is proper financing and access so that AUSTRAC can do its job properly. AUSTRAC intelligence has a number of very important roles, specifically to detect drug and chemical precursor transactions and to prevent people smuggling, corruption, card skimming, Ponzi schemes, tax evasion, fraud and a whole range of other activities. It is there to protect the community; it is there to protect business; it is there to protect the Commonwealth and ordinary people. It has a very good track record. In fact, for the 2009-10 financial year, information that was provided by AUSTRAC brought about 3,700 cases conducted by the Australian Federal Police with other agencies, more than 1,800 cases for the Australian Taxation Office, which resulted in recovery of evaded taxes in excess of $272 million, and more than 1,200 cases involving Centrelink, leading to a recovery of more than $7 million per year.

So I think we can all agree about the great work that is done in this area. The case for the justification of cost recovery is as strong as it is easy to make: quite simply, it is good policy and it is policy of recent governments that entities which have created the need for government regulation should bear the cost of that regulation. Other regulators such as APRA already recover the cost of their regulatory activities from the entities they regulate. This happens in a number of areas. Rather than being a burden or merely a cost, it is actually an assistance to business. It prevents international crime, fraud and a whole range of other activities from being perpetrated on Australian business and, therefore, Australian consumers as well. It has a larger benefit to all those involved.

This is a comprehensive package of three bills that reduce the burden on small business. The government is committed to reducing the regulatory burden on small business and, as a result, small business entities of a certain type will not have to pay this levy. Affiliates of registered remittance networks are excluded on the basis that AUSTRAC's primary regulatory relationship will be with the registered remittance networks rather than individual affiliates. This removes a range of small businesses such as licensed post offices and newsagents from the operation of the levy.

The government is committed through these bills and, of course, through its broader policy to proper governance and ensuring that organised crime, people smuggling, fraud, card skimming, money laundering and all of those illegal financial activities do not occur and that, where they do, they are detected, there is proper reporting, there is proper funding and that funding can be created via cost recovery through the agency. I commend the bills to the House.

Rob Mitchell (McEwen, Australian Labor Party) Share this | Link to this | Hansard source

I rise in support of the government's Australian Transaction Reports and Analysis Centre Supervisory Recovery Bill, the Australian Transaction Reports and Analysis Centre Supervisory Cost Recovery (Collection) Bill and the Australian Transaction Reports and Analysis Centre Supervisory Cost Recovery (Consequential Amendments) Bill. These bills are a legislative package that will ensure that AUSTRAC cost recovery is implemented effectively. The levy bill will establish a legislative structure that will allow AUSTRAC to reclaim the costs of its regulatory functions from the businesses that it regulates and, in turn, is part of the Gillard government's ongoing commitment to protect Australians from the social and economic impacts of organised crime.

I am pleased to speak on these bills as it gives me the opportunity to talk about the importance of AUSTRAC in protecting our financial system and how, in turn, it combats organised crime, money laundering, financing of terrorism, including people smuggling, and tax evasion. AUSTRAC is a significant body in Australia. It is a vital agency—an anti-money-laundering and counterterrorism financing regulator and specialist intelligence unit which works with Australian industries and businesses to provide information about potential criminal activity to our law enforcement agencies. It is at the forefront of the fight against transnational organised crime.

AUSTRAC's strategic directions statement as outlined in the 2011-12 budget states:

In its regulatory role, AUSTRAC oversees compliance with reporting obligations under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act) and the Financial Transactions Reports Act 1988 for approximately 18,000 businesses across diverse industry sectors that include financial services providers, the gambling industry and other specified 'regulated entities'. As Australia’s financial intelligence unit, AUSTRAC collects and analyses financial information provided by regulated entities to assist Australian law enforcement, national security, social justice and revenue agencies and certain international counterparts in the investigation and prosecution of serious criminal activity, including terrorism financing, organised crime and tax evasion.

In 2011–12, AUSTRAC will continue to improve and supplement its systems to enhance all aspects of its dealings with its diverse regulated population. AUSTRAC will also review the way in which it provides guidance to regulated entities on their obligations.

As Australia’s financial intelligence unit, AUSTRAC disseminates financial intelligence to Commonwealth, state and territory partner agencies and international counterparts. In 2011–12, AUSTRAC will continue to strengthen its support to whole-of-government initiatives and priorities focused on combating organised crime, tax evasion and threats to Australia’s security. As part of this commitment, AUSTRAC will also continue to provide critical financial intelligence support to national investigations and taskforces.

AUSTRAC also plays a key role in identifying the methods and techniques used by criminals and this in turn is pivotal in catching and combating fraud and other serious crimes. AUSTRAC then outlines these techniques in its reports and tracks emerging techniques like card skimming, early release super schemes, Ponzi schemes, boiler room scams, and internet, lottery and sweepstake scams. AUSTRAC continues to uphold the integrity of Australia's financial system and assists to safeguard and protect Australians from serious organised crime.

This package of bills enables AUSTRAC to collect the levy and deal with the related administrative matters such as invoicing, late payment penalties and review mechanisms. It makes it a requirement for reporting entities to enrol with AUSTRAC. Currently reporting entities are encouraged to enrol with AUSTRAC. Only enrolled entities can lodge reports with AUSTRAC electronically. Over 18,000 entities have enrolled with AUSTRAC to date.

Organised crime is a growing challenge that the Gillard government is committed to fight and deter, and the passage of this legislation will go to strengthening our stance against organised crime in Australia. The impacts of organised crime are far-reaching and have severe consequences for our economy and society, as it is estimated to cost the community $15 million per year. Therefore, monitoring money flows—which is, in essence, the lifeblood of organised crime—is critical.

The Parliamentary Joint Committee on the Australian Crime Commission conducted an inquiry into the future impact of serious and organised crime on Australian society back in 2007. The inquiry found that technological developments like the internet have increased opportunities which enable organised crime groups to pursue new types of crime—things like electronic piracy, counterfeiting and forgery, credit card fraud, money laundering and denial-of-service attacks. The committee's inquiry into the legislative arrangements to outlaw serious and organised crime groups stated that the impact of organised crime in Australia is significant. The Australian Crime Commission found that in 2008 organised crime's financial impact on Australia was roughly $10 billion. These impacts include: loss of legitimate business revenue, loss of tax revenue, expenditure fighting organised crime through law enforcement and regulatory means, and expenditure managing social harms caused through criminal activity.

Last year, AUSTRAC's annual report highlighted the importance of financial intelligence in combating serious crimes. The report illustrated the significant role AUSTRAC had played in assisting the detection and persecution of a wide range of offences such as money laundering, fraud and the importation of drugs. In 2009-10 AUSTRAC received over 21 million financial transaction reports from businesses in the financial, money remittance, bullion and gambling sectors. This included almost 50,000 reports motivated by suspicious matters. The report highlighted the increase in organised crime with a record number of reports received during that year. Last year, AUSTRAC played a vital role in investigating a major money-laundering case which resulted in the imprisonment of a Sydney woman who pleaded guilty to laundering over $1.9 million through her money transfer business over a 2½ month period from November 2007 to January 2008. It was reported that the woman had divided the money into amounts of less than $10,000, which was then transferred to beneficiaries in Vietnam using a series of false names. The woman will serve at least 3½ years before being eligible for parole. This case and the sentencing will deter others who are thinking about breaking Australia's laws.

In the 2009-10 financial year AUSTRAC information contributed to more than 3,700 cases conducted by the Australian Federal Police and other partner agencies; more than 1,800 cases conducted by the Australian Taxation Office, resulting in recovery of evaded taxes in excess of $272 million; and more than 1,200 cases involving Centrelink, leading to a total of more than $7 million in savings per year.

It has been reported that last year organised criminals were ripping more than $15 billion a year out of the Australian economy. As I mentioned earlier, there has been an increase in organised crime with the use of new and emerging technologies and the internet, giving these criminals additional avenues. Therefore it is not surprising that there has been a 50 per cent jump in organised crime since 2008, and we are working to combat this. This government are committed to tackling organised crime. We have spent $14.5 million on a Criminal Intelligence Fusion Centre to provide new capabilities to prevent and detect organised crime. The fusion centre provides in-depth criminal intelligence and analysis and boosts the capability of law enforcement agencies to identify high-risk cash flows, patterns of crime and the individuals, businesses and corporations that may be involved in criminal enterprises in Australia and abroad.

AUSTRAC is an important agency upholding the integrity of Australia's financial system by making businesses resilient to money laundering, tracking and discovering the techniques used by serious organised criminals. I therefore support the measures in these bills to allow AUSTRAC to recover the cost of its supervisory activities from businesses which it regulates under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006.

Janelle Saffin (Page, Australian Labor Party) Share this | Link to this | Hansard source

I rise to speak in support of the Australian Transactions Reports and Analysis Centre Supervisory Cost Recovery Levy Bill 2011, the collection bill and the consequential amendments bill. Firstly, I would like to thank the Minister for Home Affairs and Minister for Justice for considering at the outset the operations of small businesses in general and particularly in rural and regional areas. In some cases if the legislation had been applied in a blanket way, it could have adversely affected the operations of those small businesses and particularly those small businesses in rural and regional areas. I know from conversations with the minister and from consultations, which he was able to ensure happened around Australia, that we have got a good outcome. The minister took the time to listen to MPs and backbenchers. That was good, because backbenchers sometimes know a thing or two and are engaged on the ground. Ministers are backbenchers too, so they hear views from their electorates as well.

These bills provide exemptions from levy arrangements and businesses can claim if they fall into those exemption categories or will be exempted—as I read it—as of right if they are in certain categories. I am not sure of the mechanism by which they will exercise that but it seems that there are two parts in place for that. I am getting nods around the chamber, so I must have read that bit correctly.

The bills give effect to sensible recommendations announced in the 2010-11 budget that, from this financial year, 2011-12, will allow AUSTRAC to recover the cost of its supervisory activities from businesses regulated by the Anti-Money Laundering and Counter-Terrorism Financing Act. Those activities have their genesis or their national legislation but they also give effect to part of the package of the counterterrorism conventions—and there are about 13 that we are obligated or mandated by the Security Council to put in place. Indeed, we want to at a national level for reasons that are self-evident but are worthy of reiteration. The minister has quoted the figures—as I think most people in this place have done. The Australian government figures show that organised crime—where a lot of money laundering and financing of terrorism activities do take place and can take place and not just here but also internationally—costs Australia about $15 billion a year. I take it that that $15 billion figure would mean cost by commission and omission.

The cost recovery that is inherent in these three bill is not new. In this area, the cost-recovery guidelines of 2002 lay out that approach. Its essence is simple. It is that entities that have created the need for government regulation should bear the cost of that regulation. People may argue that they do not allow any irregular activities that could facilitate crime and the things that we are talking about—and that may be so. But, when you are setting up a regulatory framework, it is like setting up your rates at local government level—we all have to bear that cost in a collective, coordinated way. It is no different when we are doing it nationally. It is the same cost-recovery model. If you are a beneficiary or are in a business that could cause some of that harm, even inadvertently, we all have to participate in paying in that way. The framework starts with the general and then it deals with the particular—in this case, the particular as well as that category of exemptions.

That brings me back to the small businesses and the rural and regional area and where the government is making sure that we have a coherent and cogent regulatory framework while, at the same time, making sure that small business does not have to bear the burden in a disproportionate way. This legislation is very mindful of that. It proposes that affiliates of registered remittance networks will not have to pay the levy. Affiliates are excluded on the basis that AUSTRAC's primary regulatory relationship will be with the registered remittance network rather than with individual affiliates. This removes a range of small businesses such as licensed post offices and newsagents from the operation of the levy. That is really important in my seat of Page and I know it would be in other seats. It was really important that that was one of the considerations that the minister and those in the department involved in preparing the legislation were able to turn their minds to.

For pubs and clubs in rural and regional areas, I understand that AUSTRAC is currently consulting on a draft rule around that area—again, looking at those venues where there are a certain number of gaming machines. That will be the benchmark for where the exemption is able to be had. It is also proposed to remove non-employing entities, such as sole proprietors and partnerships without employees—which are often run by families—and microbusinesses which employ fewer than five people. That is an ABS definition. They will be able to be exempt from the base component levy. That is rather sensible.

I understand that these three bills will recover $88.9 million in the period 2011-14. That is important, because part of governing is spending. I know that I like spending in my seat of Page and I am always asking ministers for money. But, as responsible members of parliament, we also have an obligation to talk about those bills that allow government to recover moneys and we have some responsibility to be mindful, particularly in terms of such a critical where the costs of organised crime do cost us as a community—that $15 billion a year.

I know that sometimes people think that these sorts of bills are not the bills that necessarily attract a lot of people champing at the bit to speak about them and that cost recovery, white collar crime and things like that might seem a bit pedestrian, but they are really fundamental to the way our criminal justice system operates and to good government. With those comments, I commend the bills to the House.

Brendan O'Connor (Gorton, Australian Labor Party, Minister for Home Affairs) Share this | Link to this | Hansard source

I thank the member of Page and the members for McEwen, Stirling and Oxley for their contributions. The member for Page is quite right; the government did consider the impacts upon small businesses, took submissions from representative bodies and took submissions from members of parliament, who raised the potential adverse impacts of this levy upon organisations within their own constituencies, particularly smaller businesses and businesses in those regional areas that we would not want to impose on unnecessarily. I believe, through the process of engagement with the sector, with members of parliament and with people who are advocating on behalf of those who are involved in this sector, we have come up with a very good balance indeed.

I note that the member for Stirling did indicate that the opposition would support this bill unamended through the House. Of course, we will wait to see whether in fact the opposition will support this bill unamended in the other place. However, I say to the opposition that, if we are looking at ensuring we are sufficiently resourced to have very strong, rigorous regulations to protect the interests of our financial system and indeed protect us against organised crime and other threats to this country, there needs to be a solution. If there is just criticism of a mechanism enclosed within a number of bills, that in itself is not enough. I do implore the member for Stirling to keep that in mind. It is important that we get this right. A lot of work has gone into this and a lot of engagement with the sector, and I do believe that we have struck the right balance.

Organised crime, as has been said by all of the speakers in this debate, is a significant national security threat and challenge for Australia. Through the Commonwealth Organised Crime Strategic Framework, the government is ensuring that Commonwealth intelligence, policy, regulatory and law enforcement agencies are working together to prevent, disrupt, investigate and prosecute organised crime. AUSTRAC plays a critical role in the fight against organised crime. Through its regulatory activities, AUSTRAC helps to mitigate the risk of Australian businesses being used for money laundering, terrorism financing and other organised crime. This legislative package is necessary to give effect to the 2010 budget commitment that, consistent with the government's cost recovery guidelines, AUSTRAC will recover the costs of its regulatory activities from 1 July this year.

The levy bill imposes a levy on entities regulated by AUSTRAC under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006. It provides that the amount of levy payable for each financial year will be determined by legislative instrument and cannot exceed a statutory limit of $33 million indexed. The collection bill enables AUSTRAC to collect the supervisory cost recovery levy and establishes the necessary framework for administering the levy, including matters relating to collection, invoicing and dealing with late payments. The collection bill also introduces administrative review of a decision by the AUSTRAC CEO to waive a levy or late payment penalty. Significant consultation has occurred with industry around the structure of AUSTRAC's supervisory levy. Through this process the government has, as I said earlier, listened to the concerns of business and made significant adjustments to lessen the burden, particularly on small business.

The third bill in this package, the consequential amendments bill, amends the Anti-Money Laundering and Counter-Terrorism Financing Act to introduce compulsory enrolment for all reporting entities regulated by AUSTRAC. This formalises current arrangements where AUSTRAC encourages entities to voluntarily enrol. Mandating this requirement will mean that AUSTRAC can better identify its regulated population for the purposes of calculating and applying the AUSTRAC cost recovery levy. The consequential amendments bill also amends the current infringement notice scheme to allow for the issuing of notices for failure to enrol and failure to appropriately maintain enrolment details. I commend this legislative package to the House and, in doing so, I also table a correction to the explanatory memorandum in relation to all three bills.

Question agreed to.

Bill read a second time.