Andrew Leigh (Fenner, Australian Labor Party, Shadow Assistant Treasurer) Share this | Link to this | Hansard source

Today we are debating two bills that, at least in terms of intent, are uncontroversial. Labor will support schedule 1 of the Treasury Laws Amendment (2017 Measures No. 5) Bill 2017 and the ASIC Supervisory Cost Recovery Levy Amendment Bill 2017 without hesitation. Labor remains concerned about the manner in which indigeneity is defined in schedule 2 of the Treasury Laws Amendment (2017 Measures No. 5) Bill 2017, and I will address that matter in due course.

Turning first to the ASIC measures, schedule 1 of the Treasury Laws Amendment (2017 Measures No. 5) Bill makes amendments to the Corporations Act 2001 to strengthen protections against manipulation of financial benchmarks. It will make manipulation of all financial benchmarks used in Australia a specific criminal offence and subject to civil penalties. Individuals will be liable to fines up to the greater of three times the benefit they gained or 4,500 penalty units, currently $945,000. Body corporates will be liable to fines up to the greater of 45,000 penalty units—$9.45 million in current terms—three times any benefits from the manipulation or 10 per cent of the entity's turnover in the previous year. Civil penalties will also apply. Currently manipulation of financial benchmarks is enforced using existing laws relating to market manipulation, false trading and market rigging.

Second, these measures will also establish a new licensing regime requiring administrators of certain designated significant financial benchmarks to obtain a new 'benchmark administrator licence' from the Australian Securities and Investments Commission. Administration of financial benchmarks, at present, does not require a licence and is not a regulated activity under current law. ASIC will have the power to designate significant financial benchmarks with the consent of the minister. Financial benchmarks can be so designated if the benchmark is systematically important, could cause instability or would materially impact Australian investors if the availability or integrity of the benchmark were disrupted.

Third, the bill will give ASIC powers to make rules imposing a regulatory framework for licensed benchmark administrators and related matters. This framework will reflect a set of principles released by the International Organization of Securities Commissions. This bill will give ASIC the power to compel market participants to make submissions to ensure the continued generation of financial benchmarks during times of financial market stress. This is naturally a power of last resort. The ASIC Supervisory Cost Recovery Levy Amendment Bill 2017 supports this regime by adding benchmark administrator licensees to the list of entities from which ASIC may recover its regulatory costs under the ASIC supervisory costs recovery levy. Labor supports these measures, as they strengthen our laws against the manipulation of financial benchmarks.

We've seen cases of manipulation of financial benchmarks around the world. In Australia, legal action against Westpac, NAB and ANZ regarding alleged manipulation of the bank bill swap rate is ongoing. As ASIC has noted, the manipulation of the bank bill swap rate is not a victimless act. There are winners and losers. Just as insider trading harms certain market participants, so too does manipulation of the bank bill swap rate. It impacts financial products used by many Australian businesses to manage their financial affairs, and it undermines the confidence that investors have in the market itself. Manipulation of rates causes other market participants to pull out, just as insider trading decreases the trading volume. We support these measures.

I turn now to the Productivity Commission reforms. Schedule 2 of the Treasury Laws Amendment (2017 Measures No. 5) Bill provides for the appointment of a commissioner with extensive skills and experience in dealing with policies and programs that have an impact on Indigenous persons and experience in dealing with one or more communities of Indigenous persons. The new law increases the number of commissioners, not including the chair, from 11 to 12.

In his Closing the Gap statement to parliament on Valentine's Day of this year, the Prime Minister announced a new role for the commission in Indigenous policy evaluation and the expansion of the commission to include a new commissioner to oversee this work. According to the explanatory memorandum:

A number of high profile reports have highlighted the need for more evaluation of policies and programs that have an impact on Indigenous persons, including the Commission’s Overcoming Indigenous Disadvantage Report 2016. This report included case studies of programs that are making a difference as 'things that work', but the report found that only a relatively small number have been rigorously evaluated. There is a pressing need for further evaluation to better understand which policies and programs are effective in improving outcomes for Indigenous persons.

Labor share this concern. We are worried that the quality of evaluation has not been as high as it should have been. Improving the evidence base in Australia is absolutely critical, and there is no area in which that is more vital than Indigenous policy. The Productivity Commission has been at the forefront of making this argument. To the extent that we can increase the quality of evaluation, perhaps even implement a greater number of randomised policy trials in this field, that would be a very good thing. Labor support the inclusion of a Productivity Commissioner with expertise and remit to policy matters relating to Aboriginal and Torres Strait Islander people. So that goal enjoys bipartisan support.

But there is a significant issue that concerns us. That goes to the definition of 'Indigenous person' in this bill. In the bill the definition of 'Indigenous person' is an old-fashioned one. It is based on race and descent rather than the standard updated definition which uses a three-part notion—descent, identification and acceptance in the community. According to the Australian Bureau of Statistics and the Australian Law Reform Commission, among others, the most widely adopted definition of Aboriginal and Torres Strait Islander, what they call the 'Commonwealth working definition', is:

… Aboriginal or Torres Strait Islander is a person of Aboriginal or Torres Strait Islander descent, who identifies as being of Aboriginal or Torres Strait Islander origin and who is accepted as such by the community with which the person associates …

In practice, the 'descent, identification and acceptance' definition is the one used by Commonwealth departments. I referred to it as the modern definition. But what I call this modern definition echoes Justice Gerard Brennan's words from the 1992 Mabo judgement which noted Indigeneity as being a combination of:

… biological descent from the indigenous people and … mutual recognition of a particular person’s membership by that person and by the elders or other persons enjoying traditional authority among those people.

So this modern definition has at least a quarter-century of jurisprudence behind it. This three-part definition was also used by the former Aboriginal and Torres Strait Islander Commission to determine eligibility to vote and stand in ATSIC regional and national councils. When various elections were challenged, this three-part definition—this updated, modern definition, known these days as the Commonwealth working definition—was tested a number of times in the courts. So it is not as though the three-part definition has not been before the courts in the past.

Labor argued in a Senate Select Committee on Strengthening Multiculturalism report that it was necessary to move away from race based terminology in legislation and policy. I want to read to the House the Labor senators' comments in the Senate multiculturalism report:

1.1 The question of 'race' as a 'concept' and 'term' is used widely in parliamentary language, legislation and in the construction of entities with 'race' as part of their nomenclature. The issue of 'race' is a concern to Labor.

1.2 The use of the term 'race' has the capacity to reinforce negative perceptions of others from different cultures. This matter ought to be seriously considered by us and we ought to consider ways by which the leadership of the parliament could begin to change attitudes around the use of the term race in our multicultural society.

1.3 The Australian Labor Party notes that, in the 2012 Final Report of the Expert Panel on Recognising Aboriginal and Torres Strait Islander Peoples in the Constitution, the Expert Panel proposed the removal of s. 51(26) and s. 25 of the Australian Constitution because of their reliance upon 'race' as an 18th Century concept, and the embedded racist thinking that governs their construction.

1.4 Race is used in other applications and has been the basis or cause of much discrimination in Australia as a consequence. The constitutional changes recommended by the previous Expert Panel … have not been proceeded with so the Australian Constitution remains racist.

It is indeed true that the existing definition, the one that the government brings forward in the bill today, has been used in legislation in the past. It is indeed true, as the government has put to us, that it is part of Commonwealth legislative drafting guidelines. But just because it was done in the past doesn't mean it should be done in the future. As our Labor senators have noted, it is not the 18th century. It's time to demonstrate leadership on how Australia can change attitudes around the use of the term 'race'. It is time to use an updated, modern definition to include the Commonwealth working definition of Aboriginal and Torres Strait Islander in this bill. That is not a matter of semantics; it is a matter that is important for reconciliation. It's important for multiculturalism. It's important for egalitarianism.

I should note that, as we have sought to pursue this matter, we've done so in good faith through discussions between offices. We were hopeful that this matter could have been resolved by the government without us needing to raise it in the House. The Treasurer's office did indeed engage in good faith. We approached them shortly after this bill was introduced. We explained our concerns and we proposed an amendment which was based on the Commonwealth working definition of Aboriginal and Torres Strait Islander. So I don't want to criticise the Treasurer's office for the way in which they have dealt with this. What we have been concerned about, though, is the way in which this matter has been handled by the Prime Minister's office.

Following weeks in which Labor had not had our calls returned, we opened the Weekend Australian on 24 February to read an article clearly planted by the government quoting Senator Scullion saying that the delay in passing the bill was Labor's fault. The government wasn't returning our calls, wasn't engaging with us in good faith, but instead was simply seeking to background The Australian newspaper. But I have to say that that article in The Australian makes some interesting historical points. It quotes the words of Justice Brennan that I noted earlier. And, when detailing Senator Scullion's suggestion that a Labor amendment would require further consultation, the reporter, Steven Fitzpatrick wrote:

Asking an actual indigenous Australian for legislative advice? Well, there’s a ruling on that, too. In a 1998 Federal Court case on indigenous identity, Justice Ron Merkel said it was a shame the matter had been 'left by a parliament that is not representative of Aboriginal people to be determined by a court which is also not representative of Aboriginal people.' Perhaps one day, he mused, such a ruling 'might be made by independently constituted bodies or tribunals which are representative of Aboriginal people'.

It is notable that we are dealing with this issue, with these problems, and with the way in which the Prime Minister's office has handled this issue at the very same time that the government is failing to listen to and embrace the Statement from the Heart at Uluru. As the Opposition Leader said in response to the Closing the gap report:

This has to include a meaningful say for the First Australians in the decisions that affect their lives—a Voice to parliament.

Labor will legislate one should we win government. The Prime Minister has ruled the voice out.

And it appears that the Prime Minister is also reluctant to accept Labor's amendments to move away from an old-fashioned definition of Indigenous people in our bill. Labor has consulted on this issue. We have the benefit of three Indigenous members of the Labor caucus. Labor's Aboriginal and Torres Strait Islander caucus was attuned to the issue. We have sought expert advice. We are not going out on a limb here.

The use of our proposed definition is not even unprecedented in legislation in Australia. Commonwealth legislation has indeed used the standard, old-fashioned, outmoded definition, but in the New South Wales Aboriginal Land Rights Act 1983 the definition is:

Aboriginal person means a person who:

(a) is a member of the Aboriginal race of Australia, and

(b) identifies as an Aboriginal person, and

(c) is accepted by the Aboriginal community as an Aboriginal person.

The Commonwealth working definition, the three-part definition, finds existence in New South Wales law but not, ironically, in Commonwealth law. The government claims that moving to the new, modern, three-part definition—putting the Commonwealth working definition in statute—might cause constitutional problems. Those experts we have consulted say this is a claim which is shaky at best. The three-part definition was upheld by the High Court as giving meaning to the expression 'aboriginal race', formerly within section 51(xxvi) of the Constitution, by Justice Deane in Commonwealth v Tasmania 1983. If there was a constitutional concern, it surely would have been tested by now.

Constitutional lawyer Professor Megan Davis has been commenting on the matter publicly over the last week. Indeed, she did so in response to the story in The Australian. Professor Davis's concerns are about the use of the two-part race based definition in the legislation and how such race based definitions deny Indigenous communities sovereignty over their identity. Her comments do not go to the issue of a constitutional challenge.

Labor will facilitate passage of the bills in the House. As I have noted before, they are, in their broad substance, issues which we support on this side. But in the Senate we will proceed with our detailed amendment to the definition of 'Aboriginal and Torres Strait Islander person'. We trust that the government will return our calls and engage with us in good faith, not choose to play games on this sensitive and important issue but, instead, recognise the desire of many in the Indigenous community to use an updated, modern definition of Indigeneity, to move away from race based language and to use the Commonwealth working definition—the descent, identification and acceptance definition—in this bill. It ought not be a bridge too far. It is time to update the way in which we define Indigeneity in Commonwealth legislation. This bill is the right place to start. I urge the government to get on board, to do the right thing and to engage with decency and good faith, as Labor has done.

Lucy Wicks (Robertson, Liberal Party) Share this | Link to this | Hansard source

I rise to speak on the Treasury Laws Amendment (2017 Measures No. 5) Bill 2017 and the ASIC Supervisory Cost Recovery Levy Amendment Bill 2017, and commend them to the house. What we're debating today aims to implement two government measures—firstly, a new regulatory regime for financial benchmarks used in Australia and, secondly, the appointment of a new Indigenous policy commissioner to the Productivity Commission. I'd like to commend the Treasurer for his work on these measures, which demonstrate the importance of safeguarding our economy and ensuring that we are focused on our key commitments to the Australian people. It's also important so that families and businesses, including in my electorate of Robertson, on the Central Coast, can have certainty about the integrity, resilience and fairness of the financial system.

Our commitment is to do everything that we can to better protect Australians from the possible abuse and manipulation of financial markets that can happen through the work of sophisticated financial institutions. Financial benchmarks are used to value trillions of dollars of financial products, yet we've seen many cases now, both in Australia and around the world, where the regulation of these financial benchmarks has caused significant issues. The Treasurer, in his second reading speech, made mention of some of the special cases which in total add up to penalties for misconduct of around $25 billion as of August last year.

A manipulation of the market has also been found to happen here, and, when this government was elected, there appeared to be evidence of abuse for many years. For example, in 2016, the Australian Securities and Investments Commission commenced formal court proceedings against three of our biggest banks for alleged manipulation of the bank bill swap rate. This legislation acts to ensure that we have market integrity and investor confidence, and reflects the action taken overseas in places like the UK, the EU, Japan and Canada. As the Treasurer said, without similar reforms in Australia, investors will lose confidence in our markets, and Australian businesses, including the four major banks, would likely not be able to issue or trade securities linked to Australian benchmarks in key foreign markets, including the EU.

So, in line with the advice provided to the government from the Council of Financial Regulators, these bills will make important changes in key areas. We will require administrators of significant benchmarks to hold a benchmark administrator licence and also to comply with a range of rules aligned to international best practice and enforceable by ASIC. We're making the manipulation of any financial benchmark or a product used to generate such a benchmark a specific criminal and civil offence. I should note that legitimate business activity not intended to set a financial benchmark at a particular level is explicitly outside the scope of these new provisions. But there is a real resolve to stamp out benchmark manipulation, as seen in some of these penalties, including up to 10 years imprisonment for an individual and, for a body corporate, fines of almost $10 million, three times any benefits derived from the manipulation or 10 per cent of the entity's turnover in the previous year.

The government believes this will give ASIC the power it needs to be a tough cop on the beat and to crack down on attempts to manipulate a financial benchmark. There are cost recovery measures, including that licensed benchmark administrators will be required to pay an annual supervisory levy. This levy, thankfully, stops the costs going back onto taxpayers, who I know don't want to bear the brunt of financial sector mismanagement. I also note the Treasurer's comments that, by only requiring the administrators of significant benchmarks to obtain a licence, we have appropriately balanced the need to ensure the integrity of Australia's financial system against the burden of extra regulatory costs seen in the more heavy-handed approach to licensing.

I should say at this point that this does build on many other measures that this government has taken to protect Australians in this space. This includes a boost of $127.2 million to enhance ASIC's powers, its data analytics and surveillance capabilities, and to allow ASIC to take more surveillance and enforcement action. We're also launching a comprehensive review of ASIC's enforcement regime to help deter misconduct and grow consumer confidence. There's also the implementation of a new banking executive accountability regime, which will strengthen the Australian Prudential Regulation Authority's powers. Together, these reforms will help ensure continued confidence in Australia's financial system now.

I'd also like to speak briefly on the second part of this legislation, the Indigenous policy and program evaluation. I spoke recently in this place about the latest Closing the gap report. As one of the co-chairs of the Parliamentary Friends of Closing the Gap, I noted the hard work and commitment of the Prime Minister and the Minister for Indigenous Affairs and Minister for Indigenous Health on the progress of our commitments to close the gap. I spoke of how, on the Central Coast, we've got some real success stories, such as at The Glen rehabilitation centre. Joseph Coyte, CEO of The Glen, told me an extraordinary story about how they have used the government's initiatives like the Indigenous Procurement Policy, IPP, to kickstart social enterprises that directly help our community. This has helped create jobs, opportunity and a clear future direction.

The government has also created a role for the Productivity Commission in Indigenous policy evaluation. This involves the expansion of the commission to include a new commissioner. As the Treasurer has outlined, a number of high-profile reports have shown the need for more evaluation of policies and programs that have an impact on Indigenous Australians. The commission's Overcoming Indigenous disadvantage report in 2016 found that only a small number had been rigorously evaluated. This part of the legislation is about trying to see more success stories like we are seeing on the Central Coast and about improving our capability to better understand which policies and programs are most effective in improving outcomes for Indigenous Australians. The focus, quite simply, is on what works.

By making amendments to the Productivity Commission Act 1998, this bill will increase the number of commissioners, other than the chair, to a maximum of 12. We will require that one commissioner has extensive skills and experience in dealing with policies and programs affecting Indigenous Australians, including dealing with Indigenous communities. Importantly, the commissioner will be expected to have a strong understanding of the diversity of Aboriginal and Torres Strait Islander peoples and strong links with communities.

In closing, I want to comment on the remarks by the member for Fenner and Labor about definitions. It is the government's view that the parliament should retain the legislative definition of an 'Indigenous person' as currently drafted in schedule 2 to the Treasury Laws Amendment (2017 Measures No. 5) Bill 2017. This is because it is consistent with the standard Commonwealth legislative definition used across the statute book. The current legislative definition has been established through longstanding bipartisan use. If there is an interest in changing the standard definition, a debate on this bill is not the appropriate process for such a change. Consideration of how to define Indigenous status is a significant matter—I agree with that—and a full and proper discussion with Indigenous Australians about these issues and their implications is required; however, any delay to the passing of this legislation will prevent the Productivity Commission from commencing its important new functions. I commend this bill to the House.

Andrew Giles (Scullin, Australian Labor Party, Shadow Assistant Minister for Schools) Share this | Link to this | Hansard source

I'm pleased to be able to make a very brief contribution to this debate on the Treasury Laws Amendment (2017 Measures No. 5) Bill 2017 and the ASIC Supervisory Cost Recovery Levy Amendment Bill 2017. I was pleased to have been here for the contribution of the shadow minister, the member for Fenner, and, in large part, my comments on this bill echo his remarks and confirm our position that we are not seeking to frustrate the passage of the bill. I'm also pleased to have been in the chamber for the contribution of the previous speaker, and I note that she touched on the issue of greatest concern to members of my party, the Australian Labor Party, which goes to the government's view of how we should approach definitions of indigeneity.

Like the member for Fenner, I think it's very difficult to see this outside of the wider context within which this debate is playing out. Like the member for Robertson, I, too, contributed to the parliamentary debate on Closing the Gap. That is an occasion where the parliament comes together to recognise some of our wider and multipartisan responsibilities towards our first Australians. I'm very pleased to hear of the progress being made in the member for Robertson's electorate. I was also very pleased to highlight some achievements of first-nations Australians in Melbourne's northern suburbs. But those achievements can't derogate from some of the fundamental and hard truths all of us have to acknowledge about the ongoing impacts of intergenerational trauma. These are issues of deep concern to me, the communities I represent and more broadly. While there may well be other opportunities to debate these issues—I'm sure there will be—the questions of definition cannot lightly be set aside, nor can the views of people like Professor Megan Davis, a very prominent constitutional lawyer and very prominent and effective Indigenous activist. I note the contribution of my colleague the member for Fenner in that regard.

When we think about the broad range of measures contained in the Treasury Laws Amendment (2017 Measures No. 5) Bill and the government's commitment to strengthen financial regulation and to deal with issues that may go to potential abuses and manipulation of financial markets by sophisticated financial institutions at the expense of ordinary Australian consumers, we can't divorce that from these very significant issues which go to the heart of how Australians generally deal with the concerns of Indigenous Australians.

When we are talking about this bill, the wider regulatory issues are obviously of great significance, but I think it is impossible to understate the significance of the appointment of a new Indigenous policy commissioner to the Productivity Commission. That is something of enormous significance, and that is why the member for Fenner and other Labor members have been setting out these concerns. These are concerns of not just members of the Australian Labor Party but the vast majority of first-nations Australians who have expressed views on this matter. These are matters that can't be brushed over. They can't be set aside for another time. They require all of us in this place to reflect not only on the significance of this particular proposal, this significant appointment, but also on the wider issues that were touched upon so effectively by the member for Robertson in her contribution.