Alex Hawke (Mitchell, Liberal Party) Share this | Link to this | Hansard source

Since starting my contribution in the Federation Chamber, I am glad to say that I have updated myself on what the government's current position is. In the time it took me to get from the Federation Chamber to the House of Representatives, there has been substantive change to this woeful legislation. I am sorry to say that that change is not necessarily for the better. An announcement from the government has come out saying:

Following consultations, the Government will amend the Bill to provide authorised deposit-taking institutions, First Home Savers Account providers, life insurers and superannuation funds more time for implementation. They will now have until 31 May 2013 to report on and transfer lost accounts and other lost moneys to Australian Securities and Investments Commission or the ATO as appropriate.

That change, which has been brought in during the time it has taken for me to get here from the Federation Chamber, is a change in the deadline—for the entire finance and banking industry—of one month. It is one more month than in the original legislation.

One of two things is going on here. Either the government is so cheap that it thinks that one month is going to be enough to make a substantive difference to the problem we have been highlighting in this legislation, or this is a typo and it should say 'one year'. The opposition's amendments called for a minimum of an extra year to give the banks and other organisations in the sector a reasonable chance to get a handle on it. One month simply does not cut it. Assuming this is not a typo or an error—and that is a big assumption with this government—what is going on? Why are they rushing through changes just to move this deadline by one month? In fact, this is even more revealing of the government's real agenda—that is, that they are still trying to grab, simply for inactivity, the money of ordinary Australians.

The press release goes on to say:

To improve certainty for industry, the Government will also clarify a number of technical issues through regulation—

I will leave aside, for a moment, the misnomer 'improve certainty for industry—

To avoid capturing accounts unintentionally, the Government will introduce regulations so that children's accounts will still need to be inactive for seven years before being treated as lost.

That is incredibly generous. They have finally realised they were taking money off the kids—so now they are going to give the money back to the kids. I am not sure that amounts to a whole lot of money, but they have finally realised they were taking money off children. No wonder the members for Lyne, New England and Melbourne are getting very nervous about the provisions of this bill. They are right to be nervous. They are right to listen to the opposition's concerns. It is not only these children's accounts which were at risk of being raided by this money hungry government but also there are other types of accounts which should not be caught by this legislation. There are other accounts which may be inactive for valid reasons.

The government's press release also says:

In addition, regulations will specify that First Home Saver Accounts will be excluded until the requirement to make a deposit in four years has been met.

Hallelujah! Without knowing it, I was being prophetic when I spoke in the Federation Chamber about the problems with first home saver accounts. But this is supposed to improve certainty in the industry. This is supposed to provide confidence to the economy and the sector that the government knows what it is doing.

They are rushing to get their hands on any available cash out there in the financial sector, even legitimate accounts. They are rushing around making last minute changes on the pretext of improving certainty. It does not stack up. The reason it does not stack up is that we have not seen an update from the government, in the explanatory memorandum or anywhere else, about how this will affect the bottom line. That is what we really need to know. How will this change the financial impact of the bill over the forward estimates? That is the question of the day, the question we ought to be discussing here right now. Again, there is no government member in this chamber to stand up and say: 'Here is the glorious vision of the Gillard government. We are going after unclaimed super for consolidated revenue. But we have protected the kids. We will not take those Commonwealth Bank piggy banks away from them. We are going to give them back.' How generous of the government.

It is revealing that there is no update to the forward estimates. What is the government's real intention with these changes? These changes are designed to trick the members for Lyne, New England and Melbourne into thinking that this government has done something. They are trying to look as if they have responded to the issues we have been highlighting. But actually there is no change. Moving the deadline one month is purely a symbolic change. Giving the children their inactive accounts back—that is not all that generous. That is not really a big change. Does anyone think that there are hundreds of millions of dollars in children's accounts?

We come back to the point that we all know what is going on with this bill. We all know what is going on with the government's changes. They are trying to look as if they are doing something for the Independents and crossbenches in order to secure their support. I say to the members for Lyne, New England and Melbourne: 'Please do not be fooled by these superficial changes. This bill is still bad legislation.' It is bad because it makes unreasonable, rash and unnecessary changes to so many Commonwealth acts in order to claim moneys of ordinary citizens that ought not to be claimed by government in this way. The rush has produced so many detail problems that it is impossible for me to outline them all in the time remaining.

The press release put out late this afternoon by the Parliamentary Secretary to the Treasurer is silent on critical issues, including the identification of, and the deeming deadline for, unclaimed accounts and money. That deadline is currently 31 December 2012. It appears this has not been changed. This is very problematic for banks and superannuation account providers. That is the point we have been making from the beginning. The government is simply trying to look as if it has done something—in order to secure the political support of the crossbenches—without actually doing anything substantive to improve the quality of this bill to avoid serious consequences for the sector and to govern this country effectively.

Paul Fletcher (Bradfield, Liberal Party) Share this | Link to this | Hansard source

I am pleased to speak on the Treasury Legislation Amendment (Unclaimed Money and Other Measures) Bill 2012. This government's desperate grab for cash is a dismaying and unedifying spectacle. Having lost control of its finances, it is casting around furiously looking for any possible opportunity to scrabble together what in the context of the Commonwealth government budget is a relatively small amount of money but in the context of individual Australians whose money is now to be gathered up and captured by government without them realising is a large amount of money. It is truly a dismaying and unedifying spectacle. It brings to mind the example of parents who have so lost control of the family finances that they are reduced to smashing open their child's piggy bank to pull out the coins saved so carefully.

In substance, what we have in the bill before the House is the elected government of this nation going into the bank accounts, the superannuation accounts, the life insurance policies and other places where citizens of this nation have sought to accumulate savings and using a technical and an artificial and a strained definition of unclaimed moneys to gather up moneys as quickly as possibly and apply them to consolidated revenue. We are told that this is in the interests of citizens; we are told that the only motivation for this high-minded government introducing these measures is to protect citizens against the ravages of high fees and other impacts on their accumulated savings. We on this side of the House are deeply sceptical. We are unpersuaded, despite the government's assertions, that its motives have anything to do with protecting citizens against high fees. In our view, the government's motivations are transparently clear—this is a desperate grab for revenue by a government which has produced deficit after deficit and is now looking for any way possible to achieve its promised surplus.

As a number of speakers have advised the House this evening, there are provisions in this bill which vary the unclaimed moneys regime applying to different kinds of accounts and assets. There are five essential sets of measures. One deals with bank accounts and reduces from seven years to three the minimum period after which moneys can be treated as unclaimed. Another deals with first home saver accounts, although we are told in the press release from the Parliamentary Secretary to the Treasurer this afternoon that there will be some relaxation of those provisions. Another deals with life insurance, another deals with superannuation accounts and the last deals with unclaimed moneys in the case of corporations.

In the brief time I have available I want to make three points. The first is that what we are seeing here is a truly terrible public policy process driven by this government's desperate scrabbling around for cash; its desperate scrabbling around to find additional sources of revenue. The second point is that serious technical and policy problems run through many of the changes to the five different regimes I have spoken about. In view of the seriousness of those technical and policy problems time ought to be taken to carefully address those issues with a view to resolving them. If the government were proceeding in good faith, it would take extra time to ensure those matters were resolved. The coalition has amendments to give effect to what we see as the sensible way forward, and that is the third point: what needs to be done to fix up this mess?

Let me turn to the truly terrible public policy process we are seeing here. We are told these measures will raise $760 million between the end of December 2012 and 30 June 2013. That is a very important period if you happen to be a government desperate to achieve a surplus in the 2012-13 financial year. As it happens, that is precisely what we have—we have a government which is desperate to achieve such a surplus and is therefore rushing this bill through in a disorderly and chaotic process. If reforms are to be made in this area—and the coalition is not close-minded to the merits of change—the paramount interest which should be considered is the interest of Australians whose money is held in savings accounts, whose money is held in superannuation accounts, whose money is held in life insurance policies, whose money is held in accounts and assets of the various kinds this bill deals with by way of material changes to the unclaimed money laws.

It is patently clear that the interests of account holders come a very long way down the list of the considerations which this government regards as important in rushing this bill through, and they fall a long way behind the government's desperate desire to raise revenue so as to achieve the surplus which it has promised for 2012-13—a surplus which is completely at odds with the proven character and behaviour of this government, which has delivered the four largest deficits in the history of Australian public finance, racking up accumulated deficits of $172 billion. But, because of this government's haste and its politically motivated desire to grab revenue wherever it can, fundamentally important policy considerations going to the basic rights of Australians who set aside money for the future are being disregarded. That is a dismaying thing to see in a government.

I turn to some of the technical problems which the various measures in this bill present. I will speak, firstly, about the changes to the inactivity test in section 69 of the Banking Act. The deadline proposed for the implementation of these changes is 31 December this year. As a consequence of the press release from the Parliamentary Secretary to the Treasurer this afternoon, we know that the date on which the banks need to hand over the cash has moved from the end of April 2013 to the end of May 2013, but it does not in any material way change the fundamental unreasonableness of the timing being imposed on the banks. Here is what the Australian Bankers' Association had to say in its submission to the Senate Economics Committee:

… the proposed timing for implementation and a commencement of 31 December 2012 is unrealistic, being in less than 2 months and falling during a period when banks implement freezes on any technology or IT systems changes.

More fundamental than the technical problems of implementation is the policy question of whether it is reasonable to treat as 'unclaimed' money sitting in an account which has not been touched for a period of three years. There are a whole host of very good reasons why a citizen might choose to put money into an account and not touch it for three years—not make a deposit into the account or a withdrawal from the account. It may well be that this citizen is spending some time overseas, and a job posting of three years is by no means unusual. It may well be that a grandparent has set aside some money for a grandchild. As I said, there are a whole host of reasons why citizens might choose to put money aside and leave it in a bank account, untouched, for three years. It is just the most extraordinary proposition that three years of inactivity is enough for the government to be able to say, 'Oh, well, that money must be unclaimed. We'll get our hands on that, thanks very much.'

One of the other material concerns is what might happen to citizens who put money into an account which was paying interest. By the operation of this legislation, they would find the money removed from that account and handed over to consolidated revenue. The government assures us that citizens need not be concerned, because if they can prove they have a claim to that money they will get it back—but at what interest rate? That is the critical point, and here I quote from the submission made by the Commonwealth Bank of Australia to the Senate committee:

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 citizens who, for perfectly good reasons, chose to put money into a bank account and conducted no transactions on that bank account for a mere three years, and who may have done so on the assumption that they were being paid a certain rate of interest by the bank, will find themselves in the situation—should this bill pass into law—where the money can be removed from that account and handed over to the Commonwealth; and if, as they quite reasonably should, they put up their hand and say, 'Hang on; that's actually my money and I want it back,' they will get it back but at a lower interest rate than the one the bank was paying them. That seems to be an extraordinary intervention on the part of the state in the affairs of citizens.

Turning to superannuation, the technical and policy consequences of the changes that are proposed in this ill-considered and badly-thought-through piece of legislation are troubling in the extreme. One consequence is that the threshold for a superannuation account to trigger the unclaimed moneys provision will rise from today's level of $200 to a level of $2,000. This means that the funds in a much wider range of accounts could be treated as unclaimed. There is also the very real likelihood that accounts which are in substance active will be artificially treated by this legislation as inactive, and the moneys will be removed from the superannuation account in which they sit and paid into consolidated revenue.

This is particularly going to hit, I might add, those with lower balances—those with balances under $2,000. It will disproportionately hit the young, who are relatively early in their careers and relatively early in the accumulation of superannuation balances, and it will disproportionately hit the low paid. It is an indication of this government's desperation to gather revenue to achieve its politically motivated budgetary position that it would do so at the expense of young workers and low-paid workers. It is noteworthy that the Australian Institute of Superannuation Trustees and the Financial Services Council—two organisations that are not always aligned when it comes to superannuation policy matters—have jointly recommended that the regulations set a minimum two-year membership period before an account is treated as lost.

One of the other concerns when it comes to superannuation is the inconsistency between the measures contained in the bill before the House this evening and the measures imposed under the SuperStream set of reforms, which funds are required to comply with, and have arrangements in place to do so, from 1 January 2014. Now there is this new set of changes which is required to be complied with earlier. The Association of Superannuation Funds told a parliamentary committee that this overlap was likely to lead to moneys being transferred from superannuation account providers to the Australian Taxation Office and then, very likely, transferred back again. It is an absolutely crazy outcome and an indicator of the chaotic process through which this legislation has been developed.

The third point I briefly want to make is that there needs to be a fundamental review of these provisions. The coalition has moved amendments to give that result, and if our amendments are not accepted we will be opposing this legislation.

Kelly O'Dwyer (Higgins, Liberal Party) Share this | Link to this | Hansard source

It is not a surprise to me as I rise to speak on the Treasury Legislation Amendment (Unclaimed Money and Other Measures) Bill 2012 that there is nobody on the opposite side of the chamber who is actually willing to speak in favour of this bill. Why would they? Why would they speak on a bill that is designed to take money away from Australian citizens through their bank accounts, their First Home Saver Accounts, their life insurance policies, their superannuation and, finally, through, ultimately, various corporations and companies. It does not surprise me that there is nobody who is prepared to put their name to this, because this is the most blatant cash grab that we have seen even from this government in its short period in office.

Minister Shorten I think is trying to make himself even more infamous than that very famous bushranger Ned Kelly, who was very famous for his snatch and grab. Minister Shorten's record, if this bill passes, will definitely rival his. One can only question whether he has been somewhat inspired by the culture—and we have heard a little in this chamber today and in previous weeks on various unions that have created this culture—in some unions where elected officials feel that it is perfectly fine to use the money of their members for their own personal benefit. It is a culture that has come under serious scrutiny in the AWU, and it is a culture that we have heard an awful lot about in the HSU where, again, members' money has been used not for their benefit but for the benefit of others.

So what is the benefit here? The benefit if this bill passes will be, indeed, to the government, because they will get an extra $760 million in additional revenue from this bill—money they so desperately need to try and disguise their financial incompetence during the short period of time that they have been in office, which has seen our fiscal position radically altered from a position where previously a coalition government regularly delivered budget surpluses—during the last budget, a $20 billion surplus—where there was no net debt and where the government's $96 billion of debt had been paid off. We have seen this position reversed, with this government's incompetence, waste and mismanagement. We have seen four budget deficits delivered, to an accumulated amount of $172 billion, and net debt of over $147.3 billion. Yet this government is trying to maintain the fiction that, come the next budget, they will have a surplus of $1.1 billion. How is it that they say they are going to achieve this? Well, one needs only to look at this bill to try and work it out. When you look at only one portion, the superannuation measures, of this bill, you will see that, of that fictional surplus of just over $1 billion that the government maintain they will have, around $555 million would come from that one measure.

It is important that in the time remaining I turn my attention to what the government is specifically proposing to do, because it would shock most Australians to hear this. Let me first turn to schedule 1. The government will amend section 69 of the Banking Act to make new arrangements for unclaimed moneys, to reduce the period for which people can have inactive bank accounts from seven years to three years before the government wants to come in and take the money and put it into consolidated revenue. There is no limit on the amount of this money; it is not capped. It could be $20; it could be $200,000; it could be $2 million. If it has been inactive for a period of three years, under this bill the government is proposing that that money should go to consolidated revenue if it is unclaimed. The test is whether or not money has gone into or gone out of that account. That is it.

Yet we know that there would be very many reasons for which people may have accounts that sit inactive for a period of time. I can think of occasions—for instance, on the birth of grandchildren, grandparents may decide to set aside some money as a bit of a start-up for a child's first bank account. They may put some money into that account and then that money may not move for many, many years—certainly well above three years. Under the government's proposal, this money could potentially be transferred into consolidated revenue. I can think of other occasions: for example, somebody who is elderly decides that they need additional care and that they want to go into an aged care facility; they decide to sell up the family home and then put that money into an account, where it will be safe, in a bank; they do not want to touch that money for a period of time, and it sits there for one, two, three, four, five or more years.

Under the government's proposal, this money, again, is money that could be transferred through to consolidated revenue. There are multiple examples of people travelling overseas or people with mortgage offset accounts. Despite the fact that the government has rushed out a press release claiming that offset accounts will not be included in this legislation and that they will make good on this promise through regulation, there is nothing in the legislation that could give us any comfort around this fact.

So it concerns us greatly. It concerns us greatly that there will be people out there in the community doing entirely the right thing—saving, preparing for their future and preparing for their children's future—and yet with this change all of that could be eroded because the government, as I said, could claim the money in a great smash and grab in order to try to maintain this fiction of a budget surplus going into next year.

But it does not end there because there are other ways that the government would like to take your money. There is the first home saver account, which is part of schedule 2 of this bill. Schedule 2 amends the First Home Saver Accounts Act to provide for new arrangements for unclaimed money held by FHSA providers. It amends this so that again the period is shortened. It is truncated from seven years to three years. While it says in the legislation that if money is in fact taken from people and put into consolidated revenue and it is then found that people come back years into the future to claim that money back they will provide some level of interest for the money that was taken, there is absolutely no certainty around that. In fact, the committee that looked deeply into this issue heard a number of submissions that said there were grave concerns that the appropriate interest rate would not be paid. Again, this was part of the motivation of the government so as to ensure they had more money for consolidated revenue.

The third schedule that the government has in this bill is about life insurance. It amends section 216 of the Life Insurance Act to provide, again, for new arrangements for unclaimed life insurance moneys. Again, it is using this arbitrary time period of three years to be able to sweep in more quickly to take this money.

The fourth schedule is around superannuation. At least with the changes the government are proposing to superannuation here they say they are going to put a cap on the amount of money that they are looking to take from people's superannuation accounts at $2,000. This attack on superannuation is the latest in a long line of attacks, despite the fact that we have heard previously from the minister what a great friend he is to the superannuation system. In fact, it was not all that long ago that he said on the ABC's Q&A program that the government are the strongest defenders of the Australian superannuation system. He said: 'We are the ones who constantly build and keep building it.' When you look at the facts, that is, frankly, a complete joke.

Let me remind the House that these latest cash grabs in this bill targeting superannuation come on top of the $7.8 billion in increased taxes and charges on superannuation that we have seen in Labor's previous budgets. The Labor government has already increased taxes on voluntary savings by reducing concessional contribution caps from $50,000 and $100,000 down to $25,000 across the board. Anyone who wants to save more than $25,000 per annum, which includes their compulsory superannuation contribution, has to pay more tax.

The decision that they have taken in this bill to go after more lost super more quickly is expected to raise an extra $555 million in the six months from 31 December 2012 to 30 June 2013. You need only look at the quantum that the government hopes to reap from these changes to know that there will be many millions of Australians who will be affected by this bill.

The government have a litany of challenges before them because, through their waste and mismanagement, they have spent all the money that was saved by the previous coalition government and they are now making a number of unfunded promises for the future. Those unfunded promises have now hit over $120 billion. That is on top of the debt that they have to pay back of $147.3 billion. That is on top of the interest bill that they are obviously paying on the debt of over $8 billion. You can now add onto that $120 billion in unfunded promises—the black hole that the government desperately needs to fill.

We know that there is only one way that they can achieve that. That is by increasing taxes and by slugging the Australian people even more. So it causes us great concern that the government have brought in a very rushed piece of legislation, one that does not bear much scrutiny at all before you realise that there are significant deficiencies, so much so that the government have already made a number of changes to the legislation while we have been debating this bill.

Instead, we say the government should take the bill off the table. The government should give it the proper scrutiny it deserves. The government should be honest with the Australian people, not try and pass this bill through the dead of night this evening and pass it through the Senate this week so that it can go on its cash grab. We think that the government should set it aside, be honest, start again and take responsibility for its poor financial decisions rather than making the Australian people pay. (Time expired)

Nola Marino (Forrest, Liberal Party) Share this | Link to this | Hansard source

In my years in this House I have never seen a more duplicitous document than the explanatory memorandum for this bill, the Treasury Legislation Amendment (Unclaimed Money and Other Measures) Bill 2012. In fact, it is an underhanded bill. It is a bill that will enable this government to get its hands on Australians' money. It is that simple. The money that the government is going to get its hands on is long-term unclaimed money found in bank accounts, perhaps including first home owner accounts and retirement savings accounts, insurance policies and superannuation accounts—your money.

For some time the government has been able to claim money to the credit of an account that has not been operated on by either deposit or withdrawal for a period of not less than seven years. But the bill before the House reduces the period for such money to be claimed by this government to just three years. Obviously this is a windfall for a very desperate government, a government that we know cannot balance its budget or rein in its spending. It is one more way that the Labor government has its hands in Australians' pockets.

In addition, superannuation accounts holding less than $200 are currently able to be raided by the government. The bill will raise this to $2,000—another government windfall. In addition, it will shorten the time frame for activity that labels a superannuation account inactive from five years to just one year. Do we really need any further proof that the government has both of its hands deep into the pockets of the Australian people? There could be many, many reasons why an account is inactive for those periods. During that time the government is going to take that money.

The audacity of the wording in the explanatory memorandum, however, really should outrage all Australians. In an attempt to sugar-coat a very bitter pill, the bill purports and pretends to save account holders by claiming that they are more likely to get their money back under the new regime. Specifically, the memorandum states:

The Bill will bring forward the time at which money is recognised under the relevant law as lost or unclaimed, helping to reunite people with their money earlier, and will protect superannuation account balances transferred to the Australian Taxation Office (ATO) from erosion by fees and charges.

From this statement, perhaps the reader could reasonably infer that more money will be returned to account holders, reuniting people with their money earlier. The reality in fact is absolutely the reverse, and this is amply demonstrated if you just go a bit further down in the memorandum. Under the heading 'Financial impact', we read:

Measures in Schedules 1, 2 and 3 are estimated to provide savings to the Budget—

and a saving to the budget is a cost to an Australian—

of $92.3 million over the forward estimates period …

So there we see that money will be taken from Australians. The government will reap an additional $92.3 million by taking it from Australian citizens whose accounts have been inactive.

It may be a small bank account they have. It might be a holiday savings account. We are heading into Christmas. Maybe it was set up originally as a Christmas treat, to save for that overseas trip. You may not have contributed to or moved funds in and out of that account. Or perhaps it could be a forgotten life insurance policy that has matured but not been converted. This happens in the community. It may be a savings account started by grandparents or parents for their children. These can sit inactive for some time. It might well be the account of someone on an overseas posting who may well take more than three years to return. Or it might be that people are not using their accounts because they are suffering from an extended period of illness.

The figure of $92 million also includes first home owner accounts and retirement savings accounts. Many of these can be left untouched for years, especially when a family or an individual is facing hardship. They may not be able to contribute further for a time, but they are often resistant to taking money out until it is really needed. It is an absolute last resort, or it is their nest egg for when things get better and they can make good decisions in their lives. People need to be careful that the Treasurer's own last resort is going to come before their own—that $1.1 billion surplus that he is chasing, based on the fact that he has wasted so much of taxpayers' funds. The money will be taken by the government before the owner of that money finally hits that last desperate state and goes looking for it to find it is not there. Perhaps at a time when you need it most and count on it most, thinking that it is in that account, no, it will not be. This Treasurer will have it.

However, the first three schedules represent a relatively small saving. It is sort of stealthy and sleight of hand, if you will. By comparison, the memorandum states:

… measures in Schedule 4 are estimated to provide savings to the Budget of $675.2 million over the forward estimates period …

Therefore, claiming superannuation at one year instead of five and for amounts of up to $2,000 instead of $200 will rake in two-thirds of a billion dollars of your money for this government. So, while there has been some support for an increase in the threshold, the impacts really do need to be assessed.

Schedule 5 sees an additional impost on business which is estimated to provide savings to the budget of $118.5 million over the forward estimates period. That is a total impost, an extra tax grab—call it what it is—on Australian citizens of nearly $900 million.

Debate interrupted.