Matt Thistlethwaite (Kingsford Smith, Australian Labor Party, Shadow Assistant Minister for Treasury) Share this | Link to this | Hansard source

The purpose of this bill is to introduce a new regulatory regime for administrators of financial benchmarks. This input includes providing ASIC, the regulator, with new supervisory powers, introducing a licensing regime for financial benchmark administrators and making manipulation of financial benchmarks and offence subject to civil penalties. It is something that labour has been committed to for many, many years—strengthening our regulators and the laws and powers that they have to combat financial benchmark manipulation.

Over recent years, in particular the last decade, it's been an issue of significance in international financial markets. There have been a number of scandals and allegations in recent years around the manipulation of financial benchmarks by financial institutions. The most prominent and widespread of those was the case of the LIBOR, the London Interbank Offer Rate, the reference rate for about $300 billion of loans worldwide, which implicated a number of major international banks.

In Australia, we haven't been immune to this phenomenon, with cases actually going on at the moment. They have been taken by ASIC predominantly against the big four banks in respect of manipulation of the bank bill swap rate. There were actions taken against the NAB and ANZ; those actions have been settled by the parties. Westpac chose to fight the litigation, and the litigation has recently proceeded in the Federal Court, and we're awaiting a decision on that. Now the Commonwealth Bank, CBA, has been dragged into this as well, with allegations of bank bill swap rate manipulation against its traders now being made by ASIC, and no doubt that will potentially lead to further litigation against the CBA into the future.

ASIC's noted that manipulation of the bank bill swap rate is not a victimless act. There are implications for Australian businesses by affecting financial products that they use to manage their financial affairs, and the losses to those victims are potentially in the hundreds of millions of dollars. That's why it's important that the regulations are strong enough to combat and deter these activities and, indeed, that our regulators, most notably ASIC, have the powers to investigate, prosecute and deal with people alleged to have undertaken manipulation of financial derivatives.

Schedule 1 of this bill makes amendments to the Corporations Act to strengthen protections against manipulation of financial benchmarks. Currently, rules against manipulation of financial benchmarks are enforced using existing laws relating to market manipulation, false trading and market rigging. Schedule 1 will make manipulation of financial products used in an Australian context a specific criminal offence and subject to civil penalties. It will also establish a new licensing regime requiring administrators of certain designated financial benchmarks to obtain a new benchmark administrator licence from ASIC.

If you give the regulator these new powers, you must supply it with the resources to police them. It's no secret that this government has been woefully incompetent when it comes to ensuring that ASIC has the necessary powers and resources to do its job and to police such activity in financial markets. This government slashed ASIC's funding by $120 million in the 2014 budget, and of course that resulted in job losses. ASIC admitted as much to inquiries of the House and Senate economics committees—that there were job losses associated with this cut to its funding. Given the problems that we've had in Australia in financial regulation and in financial services, particularly in wealth management and insurance and predominantly around the big four banks, you'd think it would be completely the wrong approach for a government to be cutting the resources of the body that's tasked with policing what's been going on in this area.

When those cuts were made, the Labor Party opposed them strongly. Despite the depth of the cuts and the massive impact that the government took to unwind those cuts, it unfortunately took all of the scandals being uncovered in the banking industry—the scandals uncovered through a number of Senate inquiries, as well as the wealth management scandal at the Commonwealth Bank and the CommInsure scandal, again with the Commonwealth Bank—for all of the big four banks to have to review their wealth management practices and back-pay hundreds of millions of dollars to clients who'd been wronged in the scandals. In recent times, the Commonwealth Bank has been prosecuted by AUSTRAC for potential or alleged breaches of Australia's anti-money-laundering and terrorism financing laws. You need to arm the regulator, the body responsible for making sure that bad decisions aren't made and that people don't lose money in the financial markets in Australia. You need to give them the resources to do that, and those cuts have had an effect. It was only when these issues were highlighted and Labor started calling for a royal commission into banking and financial services that the government backed down and returned some of that money to ASIC, but, in many respects, the damage had been done.

On broader financial management issues, it's well known that Labor has led the way when it comes to ensuring that our laws are up to date with some of the challenges and risks associated with consumer credit, financial market regulation, and ensuring that financial planners and banking industry and insurance industry representatives are operating in the best interests of their customers. It was Labor that introduced reforms such as the National Consumer Credit Protection Act, which introduced the first single standard and nationally consistent regime for consumer credit regulation and oversight in this country.

It should be noted that the government also opposed Labor's future of financial advice reforms when they were initially proposed by the previous Labor government. These, of course, were the reforms that introduced a best interest test for the giving of financial advice by financial planners in Australia. The reforms introduced a licensing regime, ensured that a staged test had to be undertaken by financial planners before they could offer advice and removed a lot of the trailing commissions that had existed in some of these products and how they were sold. These reforms came on the back of scandals like Trio Capital and Storm Financial, where hundreds of Australians lost millions and millions of dollars, their life savings, because of financial scams.

When Labor introduced those reforms, the coalition members, kicking and screaming, said that they were intrusive, that it was overregulation and that they weren't necessary. Then, of course, we got the scandals, we got the rip-offs in the banking sector and we got the calls for a royal commission—which, by the way, came out of a bipartisan committee report from the Senate where members of the National Party initially supported the call for a royal commission into banking and financial services. What did the Abbott and Turnbull governments do? They resisted it. They resisted that call for 600 days. For 600 days, the Prime Minister, Malcolm Turnbull, said there was no need for a royal commission into banking and financial services, despite the evidence from numerous inquiries and committees. I think at one stage there were 21 inquiries into banking and financial services in this country, in a parliamentary sense, in a regulator sense and in an industry sense. They were all uncovering all the problems that existed in wealth management, in insurance and in banking generally, but the government chose to do nothing about it.

Then the CEOs of big four banks got together and wrote a letter to the Prime Minister that said: 'Look, we're getting reputational damage from the calls for a royal commission to look at all these scandals that keep coming up. We'll now agree to a royal commission.' What did the Prime Minister do the next day? He did a massive backflip, and suddenly the coalition were offering a royal commission. The royal commission, thankfully, has begun proceedings this week. We support what's going on there and we eagerly await the outcomes of their interim report in September and their final report later on. Labor listened to the victims, the customers, the clients and, importantly, the workers who work in these industries, about the shortcomings and had been calling for a royal commission for two years.

This bill will also 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 known as the power of last resort. The ASIC Supervisory Cost Recovery Levy Amendment Bill supports this regime by adding benchmark administrator licences to the list of entities from which ASIC may recover its regulatory costs under the ASIC supervisory cost recovery levy.

The related bill, the Treasury Laws Amendment (2017 Measures No. 5) Bill 2017, also facilitates the Productivity Commission appointing an additional commissioner with extensive experience in dealing with Indigenous policy areas and Indigenous communities to oversee the PC's work in evaluating Indigenous policies and programs.

Labor remains concerned about the definition that this government is adopting of an Indigenous person, which is based on race and descent, rather than on the standard definition based on a three-part definition of descent, identification and acceptance in a community. Labor has argued for some time now and in the Senate multiculturalism report that it is necessary to move away from a race based terminology in legislation and policy. That is something that we hope to see the government adopt. Labor stands with Aboriginal and Torres Strait Islander peoples to recommit to delivering them a greater say in issues affecting their lives. This is a big issue that has been identified in this report coming on the back of that Productivity Commission, and it's something that Labor says is very, very serious. We'll work with Aboriginal communities to adjust, and we call on the government to do a similar thing. Based on those comments, I commend the bill to the House.

Matt Keogh (Burt, Australian Labor Party) Share this | Link to this | Hansard source

The Treasury Laws Amendment (2017 Measures No. 5) Bill 2017 and the related bill will strengthen protections against manipulation of financial benchmarks and provide for the appointment of a Productivity Commissioner with extensive skills and experience in dealing with policies and programs that will have an impact on Indigenous persons. Labor largely supports these changes.

While some benchmarks are calculated by the administrator using regulated and publicly available data, others rely on submissions from banks and other market participants. Examples of these include the London interbank offered rate—commonly known as LIBOR—and Australia's bank bill swap rate, the Standard & Poor's ASX 200 index, the ASX bond features settlement price, the cash rate and the consumer price index. If we look at these sorts of benchmarks, globally there have been many cases of market misconduct regarding their determination. As of August last year, penalties paid by financial institutions in relation to such manipulation had reached around A$25 billion. In Australia, ASIC commenced formal court proceedings in 2016 against the ANZ, NAB and Westpac for alleged market manipulation and unconscionable conduct in relation to the bank bill swap rate. Later, ASIC expanded the rate-rigging case to also include the Commonwealth Bank. These cases continue to proceed now.

The purpose of the bank bill swap rate is to provide an independent and transparent reference rate for the pricing and revaluation of Australian dollar derivatives and securities. It's an important benchmark because it impacts financial products used by many Australian businesses to manage their financial affairs, in particular their borrowings. Artificially moving the bank bill swap rate can have some very clear winners—often the banks—and plenty of victims, the Australian business community. So rate-rigging is a serious crime—well at least it should be. In fact, it already is. The Corporations Act already criminalises market manipulation and misleading or deceptive conduct. But, as I can tell you, as a former prosecutor that specialised in corporate crime, the existing provisions are very difficult to prosecute. They are complex. So new and, in particular, clearer laws in this area are well overdue. Indeed, given how long ago the manipulations of the LIBOR and the BBSW were, it is concerning that it has taken the government so long to get around to fixing these things.

In government, the coalition made massive cuts to ASIC's capability as the corporate regulator—a massive free pass for corporate misconduct. The government only moved to restore that funding when Labor called for a banking royal commission. So I'm glad that ASIC is finally getting some positive attention from this government, a government that appeared to play favourites with its financial regulators, favouring APRA in many cases even where ASIC would be the more appropriate regulator.

But what will these laws specifically do? Schedule 1 will establish a new licensing regime, requiring administrators of designated significant financial benchmarks to obtain a new benchmark administrator licence from ASIC. ASIC will have the power to designate significant financial benchmarks, subject to one or more specified criteria being met. It will also give ASIC power 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, IOSCO. And it will make manipulation of these financial benchmarks a criminal offence and subject to civil penalties with appropriate penalties attached. In addition, the ASIC Supervisory Cost Recovery Levy Amendment Bill adds benchmark administrator licensees to the list of entities from which ASIC may recover its regulatory costs.

While we welcome these bills, we are not blind to the Turnbull government's poor record on consumer protection in financial services. In the face of growing misconduct by the big banks and mounting consumer discontent, this government refused to establish a banking royal commission. While the banks eventually saw the writing on the wall and had to come and ask the government for a royal commission, it just goes to show where the loyalties of this government lie—with the banks and not the Australian people. The banks, indeed, wrote the terms of reference almost entirely themselves. This is, I think one can admit, a Clayton's banking royal commission. It's the sort of royal commission you have when you're not having a royal commission. And, as we have seen, the timing allowed for this royal commission is woefully inadequate. The scope is broad but specifically excluding dealing with the regulatory regime in which banks operate.

What this can be contrasted against of course is Labor's record in managing financial services and, in particular, protecting consumers. It was the previous Labor government that made landmark reforms like the introduction of the National Consumer Credit Protection Act in 2009. This was the first single, standard and nationally consistent regime for consumer credit regulation and oversight. It gave oversight to consumer credit including home loans and credit cards to the national regulator, ASIC. It included what are proving to be some very important and responsible lending obligations. We should also not forget Labor's enactment of the Future of Financial Advice reforms, the FOFA reforms, which the coalition indeed voted against. ASIC's Fees for no service report recently revealed that the big four banks and AMP had spent years taking fees from customers for financial advice services that in fact they never provided. A number of financial advisors engaged by the big banks were also charged for giving dodgy financial advice to consumers. The coalition's opposition to FOFA now looks incredibly embarrassing, and they should indeed be embarrassed by it. ASIC has stated that FOFA requirements that were passionately opposed by those opposite helped to bring to light the massive fees-for-no-service scandal.

Turning to schedule 2 of the legislation, it provides for the appointment of a productivity commissioner with experience and expertise working in Indigenous communities and with Indigenous people to oversee the work of the Productivity Commission in relation to the evaluation of policies and programs that have an impact on Indigenous persons. Labor stands with Aboriginal and Torres Strait Islander peoples to recommit to delivering a greater say in issues that affect their lives, such as this. However, there are factors in this bill that we have concern with. The definition of 'Indigenous person' is based on race and descent rather than the more standard definition, which is based on a three-part test of descent, identification and acceptance in the community. Labor has argued in the Senate multiculturalism report that it was necessary to move away from a race based terminology in legislation and policy. Labor will conduct further consultation in respect of schedule 2 in relation to this language and the definition in the bill and the issue of the new Productivity Commissioner being a non-identified person.

The use of the term 'race' has the capacity to reinforce negative perceptions of others from different cultures. The descent, identification, acceptance definition has been adopted by all Commonwealth agencies, which raises the question: why hasn't it been used in this legislation? In a multicultural society such as ours, terms like 'race' serve only to divide. I can think of another document where the term 'race' is also used quite liberally, the Australian Constitution. The Joint Select Committee on Constitutional Recognition of Aboriginal and Torres Strait Islander Peoples actually proposed the removal of sections 51(xxvi) and 25 of the Constitution because of their reliance upon race as an 18th century concept and the embedded racist thinking that governs their construction.

So why is the term being used here? This government likes the Constitution just the way it is, which is why, of course, it also rejected the Uluru statement. The voice to parliament, constitutional or legislated, was widely regarded as a modest change. Instead of a judicially enforced mere prohibition on racial discrimination, the body would be designed to provide active participation in the democratic life of the state. Although Indigenous people enjoy full equality in the electoral arena, their position as an extreme numerical minority makes it difficult for them to be heard by government, all the while holding a unique place in our society and history as this land's first inhabitants and its custodians.

In a media statement, the government said a referendum on a voice to parliament would have 'absolutely zero chance of success'. How do they know this? The Minister for Indigenous Affairs' explanation was:

I don't need evidence ... we have done a lot of polling, not on this particular … matter, but on other matters.

Well, that makes complete sense, apparently. I am glad that the government are proposing to have an Indigenous voice within the Productivity Commission, but they do need to get it right.

Finally, I would like to make some notes to the drafters. What is with these opaque and misleading legislative titles? Firstly, there is not one but two measures in this bill. At the very least, it would have made far more sense to have called this bill 'Treasury Laws Amendment (2017 Measures No. 5 and No. 6)'. But really, and I say this on behalf of every law student in the country, if not for others who struggle to understand our legal system: could you not have had two amendment bills: the 'Corporations Amendment Benchmark Regulation Bill' and the 'Productivity Commission Indigenous Commissioner Bill'? That would have made much more sense. We talk often about transparency and accountability in government. Maybe we could take just one small step in that direction in the way that we label our legislation.

Terri Butler (Griffith, Australian Labor Party, Shadow Assistant Minister for Preventing Family Violence) Share this | Link to this | Hansard source

It is really a pleasure to be here to speak in respect of the Treasury Laws Amendment (2017 Measures No. 5) Bill 2017 and the ASIC Supervisory Cost Recovery Levy Amendment Bill 2017. I do note the member for Burt's criticisms of the naming of the bills, and I agree with him that it is important to be transparent about exactly what we're debating.

Having made those remarks, I would like to talk about the contents of the bills and to specifically go to just a few issues in respect of each of the substantive parts of the legislation. Mr Deputy Speaker, as you well know, the Australian Securities and Investments Commission plays an incredibly important role in the context of our economy, as Australia's markets corporate and financial services regulator. I have to say that there is a lot of scepticism out there about whether or not it's even possible in our system, given the power that banks have, for a regulator to do anything to affect their conduct or to hold them to account. We certainly would say on our side that it is important that there be a banking royal commission and that it be a genuine banking royal commission that will look at holding these industry participants to account. I note that the government has instituted its own royal commission, after being dragged kicking and screaming to doing so. It took a long time for the government to acknowledge even the possibility of having a royal commission. Labor has made some criticisms of the conditions under which the royal commission has been established, and I won't repeat them here. But suffice it to say, our nation is in need of some good, strong scrutiny into the practices of Australia's banks. It is taking a royal commission to do that. At the same time, there needs to be an ongoing strong regulator that can be Australia's financial services regulator, that can hold the banks to account and, most importantly, that can enforce Australia's laws.

So you would be aware, Mr Deputy Speaker Mitchell, because of the interest that you take in financial services matters, that there has been some recent litigation brought by the Australian Securities and Investments Commission in respect of manipulation of the bank bill swap rate against Australia's four big banks. Two of those proceedings have settled, with each of the two settling banks paying tens of millions of dollars in fines as a consequence of their conduct in respect of the bank bill swap rate. One did not settle, but it has concluded in terms of hearings and a decision is awaited. The fourth, in relation to the Commonwealth, has really only just kicked off. We've only just this week seen the detailed allegations being made against the Commonwealth Bank in that case. I'm sure we will all be following it with great interest.

It is important to reflect on what we expect of a regulator like ASIC when it comes to litigation. This is a point that I raised with the new chair, James Shipton, and I might use this opportunity to welcome him to the chairmanship of the Australian Securities and Investments Commission. He is filling big shoes. I do hope he will take a very, very robust approach to enforcement of the law and to consumer protection and making sure that ASIC's responsibilities in respect of consumer protection are discharged. I put to him quite recently in a committee hearing that there are some thorny issues for ASIC in terms of how they go when they prosecute companies, particularly banks, or bring civil proceedings against them. That is this: if they win all their cases, does that show they are successful and invincible as a regulator? The concept of apparent regulatory invincibility is an important one. Market participants need to feel that if there are proceedings pursued against them they are likely to cause real difficulty in the event that the participant has engaged in unlawful conduct. Or does a high success rate mean that the regulator is pursuing only the easy cases and not the hard cases? In other words, a high success rate can be interpreted in very different ways when it comes to litigation.

In this case, I think we can be confident that these cases that ASIC is bringing in respect of the manipulation of the bank bill swap rate would not be considered to be easy cases. We will wait and see what outcomes arise once the courts hand down their decisions, particularly in respect of the matter that has concluded its hearings but hasn't yet been finalised and in respect of the new Commonwealth Bank matter, the other two having settled. But we should be wary and cautious, whatever the outcome, that we do not inadvertently, by our responses, put pressure on the regulator to stop bringing hard cases and to stop taking on issues that are complex and involve breaches of different aspects of the law.

Having said that, the existing provisions that ASIC is using to pursue these particular cases in respect of financial benchmarks manipulation are important but clearly insufficient in terms of future work in this area. So it's quite pleasing that this bill is bringing forward additional regulation and the establishment of criminal offences in respect of financial benchmarks manipulation. The bill will make manipulation of all financial benchmarks used in Australia a specific criminal offence as well as being subject to civil penalties. Individuals will be liable to fines of up to the greater of three times the benefit they gain or $945,000, which is 4,500 penalty units. Of course penalty units continue to grow as they are adjusted. A body corporate, on the other hand, will be liable to fines of up to the greater of $9.45 million—which is 45,000 penalty units—three times any benefits from the manipulation, or 10 per cent of the entity's turnover in the previous year.

These are meaningful penalties. That's what we need in this country. We do need there to be a big stick in the wings so that there are incentives for industry participants to conduct themselves according to the law. Often the existence of these provisions is enough to deter unlawful conduct. I'm certainly not saying that ASIC should be doing nothing but bringing legal proceedings. Of course they need to have a multidimensional and multifaceted approach to encouraging willing compliance, seeking undertakings, seeking civil remedies where appropriate and ultimately being able to seek criminal penalties as well. That's a hierarchy of different approaches to the regulation of industry, and it's a judgement call as to which part of that hierarchy should be used at any one time. I certainly don't mean to suggest that there should be nothing but criminal prosecutions. Having said that, the availability of criminal prosecutions is crucial to ensure that there are incentives in both senses—both positive and adverse incentives—for the industry participants to comply with the law.

The manipulation of financial benchmarks has real life consequences for people—for people sitting around the household table, for people in their businesses trying to work out what to invest. If there's manipulation of benchmarks then that can put up the cost of borrowing and that can damage the confidence that our society has in our financial markets and in financial services provision. Of course, anything that damages confidence makes investment more difficult, makes loan decisions more difficult and makes economic activity more difficult. So it is important that, in seeking to maintain confidence and regulation of our financial services sector, these criminal offences are introduced and there are strong laws incentivising good behaviour in the financial services sector.

Secondly, this bill will establish a new licensing regime requiring administrators of certain designated significant financial benchmarks to obtain a new benchmark administrator licence from ASIC. Again this regulation will assist in promoting confidence in the financial services sector, so I welcome it. These bills also go to the supervisory cost recovery levy. Deputy Speaker, you'll recall that the new supervisory cost recovery levy was introduced last year and started taking effect from 1 July 2017. The government introduced a user-pays model, where those being regulated make a contribution to the cost of regulating them. The formulae that have been set up are aimed at allocating the costs to those who require the most regulation, so it's a complex set of formulae.

When we spoke about this move to having the industry pay for the operations of ASIC we noted that that might give some opportunities in respect of some of ASIC's other work. I specifically want to mention the shadow minister's speech of 15 June 2017. She did note the complexity in the way that the industry cost model has been created and indicated that we would be watching that closely, which remains the case. We also accept that it's important that ASIC be properly resourced so that it can be a good, strong law enforcement focused regulator. Of course, the government's own conduct hasn't always been consistent in sending that message to ASIC. You'll recall the $120 million cut to ASIC in the 2014 budget. I spoke against that particular component of the 2014 budget at the time. I thought it was reckless to take away funding from one of our important white-collar crime regulators.

Anyone who's read the 2014 statement of expectations of the government towards ASIC would find it fairly light on when it comes to consumer protection. There's a lot of quite warm language in there about encouraging compliance, but you don't see from this government a really full-voiced robust demand that the regulator really focus on consumer protection. I hope that will be taken into account when the government drafts the next statement of expectations for ASIC, in the event that there is another one coming down the pipeline now that there is a new chair.

The shadow minister also in her speech on the original ASIC industry cost-recovery legislation noted that, as part of the government's process of developing that bill, there had been submissions calling for additional funding for financial counselling services, including from Financial Counselling Australia and the consumer group CHOICE. The shadow minister said:

Given the importance of financial counsellors to those in financial trouble, and their importance to the functioning of the financial sector, we think that these issues warrant further consideration from the Government.

I do hope that the government has taken that on board.

My interest in financial counselling, apart from the general interest that anyone in this place would have, arises from my role as the shadow assistant minister for preventing family violence. That is because there is an important need for financial counselling for women leaving violent relationships. It's a time of great risk of poverty and, accordingly, it is important to note that the shadow minister, in addressing the previous bill, talked about the arguments that had been made in the context of the industry funding model that there should be consideration given as to how that might support further or better resourcing for financial counselling in this country. I make no further comment on that other than to draw the attention of the House to those remarks that the shadow minister made at the time.

The other part of this bill that can't really go without comment is the Productivity Commission reform. This reform will, or is at least intended to, set up a regime with a view to ensuring that Indigenous perspectives are included in the Productivity Commission's consideration of policy measures. There has been, I think, a lot of concern raised about the definition of Indigeneity contained in this legislation. I hope that the government will take on board the criticisms that have been made. We do not need to go backwards in the way that we recognise Indigeneity in this nation. We don't need, in something that's purportedly designed to improve outcomes for Indigenous people, to inflict upon them old-fashioned and outdated thinking in respect of definitions of Indigeneity, and I certainly hope that this is a matter that will be able to resolved by consent, once this legislation heads to the Senate. I'm sure that the member for Lingiari, who will be speaking in respect of this legislation soon, will have many more things to say about the definition of Indigeneity in the legislation.

It is important to say in the context of this that I acknowledge that the Turnbull government is seeking to create in the Productivity Commission a specific focus on the impact of policies that are created purportedly for the benefit of Indigenous people. But it's another thing altogether to actually listen to Indigenous people themselves through a mechanism that provides them with a real voice to parliament as was anticipated by the Uluru Statement from the Heart. I call on the Prime Minister to rethink his opposition to supporting the Uluru Statement from the Heart. I hope that he will listen to Indigenous people and make good on his commitment to do things with people, not to them.

Warren Snowdon (Lingiari, Australian Labor Party, Shadow Assistant Minister for External Territories) Share this | Link to this | Hansard source

I thank the member for Griffith for her outstanding contribution, as usual, and her demeanour, especially in this chamber, given—sometimes—the atmosphere in the place.

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

Lovingly peaceful, Warren!

Warren Snowdon (Lingiari, Australian Labor Party, Shadow Assistant Minister for External Territories) Share this | Link to this | Hansard source

Lovingly peaceful, as we all are! I just want to remind the House that this bill, the Treasury Laws Amendment (2017 Measures No. 5) Bill, contains two schedules. Schedule 1 amends the Corporations Act 2001 to introduce a new regulatory regime for administrators of financial benchmarks, and schedule 2 amends the Productivity Commission Act to enable the appointment of an additional commissioner with Indigenous policy responsibility. Schedule 1 of the Treasury laws amendment bill contains three parts. I won't go through them, and I won't comment in detail on the bill. That's been done with a great deal of aplomb by the member for Griffith previously and by the shadow minister sitting at the table, the member for Fenner, who knows far more about these matters than I do, I have to say.

But I did want to just in passing make the comment, given that we're talking about Treasury here, that yesterday we saw in the Northern Territory an announcement by the Territory government that it was unveiling a response to a wide-ranging alcohol review commissioned by the former NT Supreme Court Chief Justice Trevor Riley. It announced very courageously in my view, and, very importantly, that it would introduce a floor price on alcohol. It will be $1.30. It won't affect the price of beer, but it will make a great deal of difference to cheap wine and see wine cost less than a bottle of water, effectively making it no longer available and certainly not available at $3 or $4, or $4 or $5; that bottle of wine will now be $9 or $10.

It's very important that we understand what motivated this. This is to deal with the problem drinking of alcohol by some residents of the Northern Territory, and it's in concert with the demands of the Public Health Association of Australia for us to address broadly, across this country, issues to do with alcohol consumption.

One of the issues often raised is the strength of the argument for the Commonwealth government to take action in this regard as well and introduce a volumetric tax on alcohol. I'm a great advocate for that. I know that I'm at odds with some in my own party but I think it's extremely important as a public health measure that this government—or the next Labor government if this government doesn't do it—has the guts, courage, strength and commitment to the Australian community to introduce a volumetric tax on alcohol. This is an issue that has been at the front of my mind for almost two decades. I have not stopped arguing for it, and I will not stop arguing for it until it is in place.

I want to commend the Northern Territory government. They often wear brickbats, but they deserve a giant bouquet for the measures they announced yesterday to deal with the abuse of alcohol in the Northern Territory. Last week and the week before, we saw tragic episodes around Tennant Creek publicised for the nation to see. I hope the nation understands that the measures announced yesterday by the Northern Territory government will have a significant impact upon the amount of alcohol consumed by those people identified in the press over recent weeks. I commend the Northern Territory government for its courage. In particular, I commend the Northern Territory minister responsible for this, Natasha Fyles, for the work that she has been doing.

I say to the government that we do have an opportunity in this place to address issues without interventions of the type we have seen previously in the Northern Territory but by considered and coherent policy development in partnership with the Northern Territory government. In this case, in the context of alcohol, with the broader Australian community in mind, we need to understand that public health experts in this country have for a long time been advocating a volumetric tax on alcohol. We should understand the importance of that argument. We hear the alcohol industry say it is 'death by a thousand cuts' and 'the end of the world'. The problem is that we have a huge public health problem in this country around alcohol consumption and we need to address it.

Over recent years, we have seen the emergence of arguments about FASD. If the broader Australian community doesn't appreciate the impact of alcohol abuse on the fetus and on the development of young children then it needs to. We need to ensure that all measures are properly taken to address alcohol education, the abuse of alcohol and the consumption of alcohol. In the context of FASD, we need to get pregnant women not to drink; that would be a great start, because that is how it happens.

Having dealt with the first aspect of the legislation, I will now go to the second aspect, which is the Productivity Commission. We support the inclusion of a Productivity Commission with expertise and a remit to policy matters relating to Aboriginal and Torres Strait Islander people but it raises an issue which is worth discussing. We have heard the Prime Minister lambasting the idea of an Indigenous voice in this parliament. He says he would not support under any circumstances the idea of an Indigenous voice being legislated, let alone being considered as part of constitutional reform. He wants to make it an issue at the forthcoming federal election, whenever that might be—this year or next year. You might ask: what dimwit would have that view, and why would he have it? Well, he has it because he sees it as a point of division, and the dog whistling that he's doing around it does him and his government no credit. Australians across this country deserve better than we're getting from this Prime Minister in relation to advancing the cause of discussion around the developments from the Uluru Statement of the Heart, including proper consideration of a voice and what a voice might look like.

It's in that context that we're considering this legislation about the Productivity Commission. I want to make this observation. The Prime Minister's not here, but let's imagine he is. Prime Minister, do you recall ATSIC? The Prime Minister presumably will say, 'Yes, I recall ATSIC.' Do you recall that it was an elected body elected by only Aboriginal and Torres Strait Islander people? 'Yes, I do.' Do you recall that it was set up by legislation by this federal parliament? 'Yes, I do.' Did you see it as anathema then? 'No, I didn't.' So why is it anathema now? Absurd!

Let's just take the Prime Minister's mind a bit away from the dog whistling and talk about the potential for such a structure and what it may or may not look like. Again, you might say it could be a regional structure that might have regional representatives elected to a central body, which would elect the chair of something, whatever it's called—the ATSI Voice, for the purpose of this discussion. Why would you not give it functions like those that we're giving the Productivity Commission today? Why would you not? Would there be a difficulty with that? No. I would think not. You're setting up a body that would report to the parliament, and you give it powers. One of the powers you could give it would be the role you're giving the Productivity Commission today through this legislation. Why wouldn't you? Well, you should. You should contemplate it at least.

So, imagining the Prime Minister sitting opposite me, I say: Prime Minister, will you recant and understand the opportunity and the possibilities that present themselves from setting up a voice of that description, a body which is an advisory body to parliament and which may have some deliberative functions, legislated for by this parliament—a body whose purposes are decided by this parliament? Mr Deputy Speaker, I'm sure even you can contemplate that—no, I beg your pardon. I know you can contemplate that.

An honourable member: Reflecting on the Speaker!

I don't want to reflect badly upon you. But it appears that the Prime Minister is incapable of doing it. That is simply sad. It is sad. Why wouldn't you come to the party and say, 'Let's have a proper discussion around the community without the dog-whistling and see what might emerge as a result of discussion, whether it's a body of the type I've described or something different'? Why wouldn't you do it?

We're setting up a joint parliamentary committee which has terms of reference which, I understand, include the possibility of the consideration of a voice. Imagining the Prime Minister sitting opposite me, I say: can you and have you put aside your inane description of a voice and your dog-whistling, and will you consider in a temperate way the recommendations that might come from a joint parliamentary committee without prejudging the outcomes? I can imagine him sitting there thinking to himself: 'Oh, what do I do here? We're setting up a parliamentary committee which I've agreed to. I've already said that I don't want an outcome that says there'll be a voice, but the terms of reference for this joint parliamentary committee will have the voice in them. What am I to do?' Well, Prime Minister, get off your bloody high horse and accept the proposition that it's a valid thing to do to go and consult with the people of Australia around a voice and what a voice might look like, to come back and make recommendations to the parliament, and to endorse the recommendations made to the parliament by a properly constituted committee of the parliament. I think that should be something even this Prime Minister should be able to understand. I know that he referred to my friend Joel Fitzgibbon, the member for Hunter, as a bush lawyer. I'm not sure how to describe the Prime Minister. He's not even a bush lawyer, really, even though he's a QC. I suspect he thinks he's very good, but he's not that flash.

That brings me to the issue which is of importance to us here in the Labor Party around the way this legislation seeks to define an Indigenous person. We've heard the shadow minister give a very good speech in this regard, relaying why it's important that we deal with this question. We are very much of the view that we should not be using a race based definition. We are very much of the view that we should be using the administrative definition that has so long been used across this country, even by government agencies today. That is: an Aboriginal or Torres Strait Islander is a person of Aboriginal or Torres Strait Islander descent who identifies as being of Aboriginal and Torres Strait Islander origin and who is accepted as such by the community with which that person associates. It's very simple. It should not be an issue. It should not be a question which is exercising the minds of the government. They should see the merits of what has been proposed by the Labor Party. They should agree to these propositions. They should understand that it's within their province to be able amend the legislation. We will be proposing an amendment in the Senate. We will look forward to the government accepting that amendment and saying to the Australian people, 'We think we should be following the administrative definition and not a definition based on race.'

Linda Burney (Barton, Australian Labor Party, Shadow Minister for Human Services) Share this | Link to this | Hansard source

I rise to join with my colleagues in making comments about the Treasury Laws Amendment (2017 Measures No. 5) Bill 2017 and ASIC Supervisory Cost Recovery Levy Amendment Bill 2017. I completely endorse the comment made by the shadow minister and by my colleagues who have spoken in the debate so far. I've listened carefully to what they have had to say and I completely endorse their comments. In particular, I have just listened at length to the member for Lingiari and his comments around the actions of the Prime Minister and the importance of a first-nation voice in this parliament and the reasons why it should happen. I completely endorse what he has said.

The shadow minister has outlined clearly what Labor's position is on this piece of legislation. As we have said, we will support this bill in the House but reserve our right to put forward amendments in the other place. We do not have any issue with schedule 1 of the Treasury laws amendment bill. I think that that has been outlined clearly. But, as Labor speakers have clearly outlined, our issue is with schedule 2 of the bill. Schedule 2 goes to some extremely important, straightforward issues that I thought had been resolved. For some reason I understand that the Prime Minister's office has decided to take issue with what has been, as the member for Lingiari said, the administrative definition of aboriginality that has existed since the 1980s within the Commonwealth, in state instrumentalities, in Aboriginal organisations and also in many instrumentalities, including universities, across this country. I know this because I have been involved in these discussions, particularly with land councils in New South Wales that have the responsibility of providing certificates of aboriginality. I can assure the advisers in the box and I can assure the government that those certificates of aboriginality, which are often required by government, are based on the administrative definition—that is, the three-part definition that my colleagues have spoken about. That three-part definition is: (a) that you are of Aboriginal descent; (b) that you identify as an Aboriginal person—in a sense, self identification; and (c) most importantly—and what's been left out of this, incredulously, and, I understand, accepted by the Treasurer's office and not by the Prime Minister's office—that you're accepted as an Indigenous person by the Aboriginal community. In a moment, I will explain why that third part is so important.

By way of background, schedule 2 provides for the appointment to the Productivity Commission of a commission who possesses extensive skills and experience in assessing policies and programs that have a particular impact on first nations people. This proposed commissioner would review the decisions and actions of government, non-government and private sector policies and programs. So it is an incredibly important position. It will review and evaluate not only initiatives or measures that specifically target first nations Australians but would also assess those which while not necessarily designed to affect first nation Australians affect first nation Australians nevertheless.

We should be asking what is working and what isn't. Moreover, this proposed commissioner would have experience in dealing with one or more communities of first nation peoples. The schedule will increase the maximum number of commissioners, not including the commission chair, from 11 to 12. That's all by way of background, but let me go to the heart of why the definition that's being used is race based, which is one of the arguments why there should be changes to the Australian Constitution—which, in this day and age, has race based definitions in it. But I will leave that aside for a discussion for another day.

Labor does support the inclusion of a Productivity Commissioner with the expertise and role that I have already outlined. As the explanatory memorandum to this bill and this schedule acknowledges, there is a clear and established need for greater evaluation of the impact that policies, programs and initiatives have on first nations people. I have served in other parliaments, I have been the director-general of a government agency and I've run non-government organisations I have followed very intimately the reports of the Productivity Commission and I understand very clearly the impacts those reports have in terms of describing what the situation is for first nations people and others, but also, of course, the way in which those issues are used for governments to set agendas, to set targets and set policies. So we understand the importance of that position, and I'm sure the member for Fenner would agree with me.

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

Yes.

Linda Burney (Barton, Australian Labor Party, Shadow Minister for Human Services) Share this | Link to this | Hansard source

But the remarkably stupid thing—if I can pick up on the comments from other speakers—is that the definition being used is a race based definition. Schedule 2 defines an Indigenous person as a member of the Aboriginal race of Australia or a descendant of an Indigenous inhabitant of the Torres Strait Islands. This is so far removed from the accepted definition that has been around, as I said, from the 1980s and which is used by universities, government agencies, the Commonwealth, the Aboriginal community and, in particular, land councils to provide certificates of aboriginality. So there is quite a serious edge to this, and I want to make sure that people understand.

Another problem that we have with this definition is its preoccupation with race and descent. Labor notes that the most widely accepted definition is about descent, identification and acceptance. This is also internationally accepted. I have participated, as other members have as well, in forums within the United Nations specifically to do with first nations people, and this is the definition that is used. That makes this one of the most ridiculous arguments I think I've heard in this place. There should be no issue at all with the government accepting its own definition. Why it's digging its heels in about this suggests to me nothing other than wedge politics and a waste of people's time. Maybe there is nothing else the government has time to spend time on. Oh, that's right—drug testing! We'll talk about that down the track.

The definition defines an Aboriginal and Torres Strait Islander as a person of Aboriginal and Torres Strait Islander descent who identifies as being from Aboriginal or Torres Strait Islander origin and who is accepted by the community. The member for Jagajaga's in the chamber. If there's anyone in this place, along with the member for Lingiari, who understands the importance of this it's the member for Jagajaga. One of the things that very much engages the discussion is people who claim Aboriginality but are not accepted by the community and, in fact, in some cases, are not Aboriginal people. That is why that third part of this definition is so important—that the person is recognised by the community as someone of first nations descent.

We're not trying to make problems here. We're trying to fix up a potential problem that the government is making for itself that it actually doesn't have to have. There's absolutely no controversy about this. I think the wise thing for the government to do would be to take a breath and, particularly for the men and women sitting in the advisers' box, to listen to what we're saying. I don't want to have a fight about this. It shouldn't be a fight. It is the accepted definition. So just go back and fix it up—it's really easy—and you'll have no problem from the Labor Party in relation to that.

The focus on and preoccupation with race and biology is particularly backwards, and I think other people have outlined that. The old view of how we thought about multiculturalism and social inclusion is reflected in this race based definition. It is not reflected in what everyone in this chamber who has an interest in this believes. If I said to most people in this chamber, 'Tell me what the definition of Aboriginality is,' they would tell me the three-part definition. They wouldn't tell me the two parts that are part of this legislation.

The race powers featured in sections 51(xxvi) and 25 of the Constitution are reflected here, and the so-called race powers are underpinned by strong racial connotations. That is another consideration that I would like people to think about. This is taking us backwards 40 years, and there is just absolutely no need for it. I really urge the government to reconsider its definition and to consider what the conventional definition is when we proceed with our detailed amendments to the Senate. I cannot see what the problem with that is. There would be no fallout at all if the government has a look at that and redefines what it's actually putting forward.

Other members have talked about the Indigenous space, the first nations space, that we seem to be moving into policy-wise in relation to the Commonwealth. I hear other members reiterating in this debate the principles of self-determination and the principles of first nations people choosing for ourselves and also, in relation to working with this parliament, having a voice to the parliament. The idea of bipartisanship and trying to preserve that notion of bipartisanship is being sorely tested by the government, and that is a dangerous space for us to be getting into in 2018. It is not something I have ever contemplated in the 40 years that I have been involved in Aboriginal affairs—that there would not be a bipartisan approach to looking at the issues facing the most disadvantaged group of people within our community. Aboriginal people are saying: 'Come walk with us. We want to share what is an amazing story, and it is everyone's inheritance of 60,000 years. It is something we should be celebrating.' If we don't have bipartisanship, if we don't have an agreed way forward, then they are the things that are at stake.

The losers will not be people in this chamber. The losers will be people out in the broader community, and, more specifically, in the Indigenous community. So, in light of schedule 2, we ask the government to take the step towards giving bipartisan support to the voice in the parliament, but also bipartisan support to what is the conventional, administrative and accepted definition of Aboriginality. It just seems remarkable to me that we're even having this particular discussion.

I will finish up by saying to the government that we welcome, in principle, the purpose and function of schedule 2, but the way it is drafted now is not acceptable. We are simply saying: let's be sensible about it and redraft it. I finish up by saying, once again, that Labor is committed to bipartisanship, but it has to be a two-way process and it is not a race to the bottom.

Michael Sukkar (Deakin, Liberal Party, Assistant Minister to the Treasurer) Share this | Link to this | Hansard source

Firstly, I would like to take this opportunity to thank those members who have contributed to this debate. In summing up, schedule 1 to this bill delivers on the government's commitment to strengthen financial regulation and better protect Australians from the possible abuse and manipulation of financial markets by sophisticated financial institutions at their expense. Financial benchmarks are used to help value trillions of dollars of financial products and have proven to be a weak spot in the international system of financial regulation. There have been many cases of market misconduct regarding the determination of the financial benchmarks, such as Libor and all around the world. As of August 2017, penalties paid by financial institutions globally had reached around 25 billion in Australian dollar terms.

We're seeing this play out in Australia as well. ASIC has commenced formal court proceedings against all four major banks for alleged market manipulation and unconscionable conduct in relation to the bank bill swap rate, Australia's most important interest rate benchmark. This case is ongoing. In 2015, in response to these issues and regulatory developments, the Treasurer directed the Council of Financial Regulators to consult on options for reform. Following a lengthy and detailed policy development process, the CFR broadly recommended that: administrators of benchmarks that are critically important to the operation of Australia's financial system be required to hold a benchmark administrator licence and comply with ASIC rules; that ASIC be empowered to compel submissions to significant benchmarks in the case that other calculation mechanisms fail, ensuring that, even in times of financial stress, this critical part of the financial system's plumbing continues to function; and, finally, that the manipulation of any financial benchmark or any product used to determine a financial benchmark in Australia be made a specific criminal and civil offence with hefty penalties of up to 10 years imprisonment for an individual, to effectively deter misconduct.

These reforms, which are embraced by the government, will enhance the robustness of these critical components of our market architecture and improve the integrity, resilience and fairness of Australia's financial systems. They will also align our regulatory regime with international best practice, including with regimes in the UK, the EU, Japan, Singapore and Canada. This is not only necessary to reduce the risk of regulatory arbitrage that could arise for the gaps in the implementation of global standards ; without change, Australian businesses and individuals would likely lose the ability to fully participate in global markets. It's the view of the government that this would be an unacceptable outcome and would run contrary to our goals for the continued growth of the financial sector.

Schedule 2 to this bill makes minor amendments to the Productivity Commission Act to appoint an additional commissioner, with experience in dealing with policies and programs affecting Indigenous Australians and involvement with Indigenous communities, to the Productivity Commission. This will ensure that the commission has a specialist commissioner with the necessary skills and experience to oversee the commission's important work in Indigenous policy evaluation and will allow us to better understand which policies and programs are effective in improving outcomes for Indigenous Australians. It's therefore been disappointing to see this bill delayed as a result of Labor's insistence to change the definition of an Indigenous person contained in the act. This definition has been contained in numerous acts enacted by the parliament, including under the previous Labor government. So, if the opposition's interested in changing the standard definition of an Indigenous person, a parliamentary amendment to this bill is clearly not the appropriate way to do it. Adopting an administrative definition, of which there is currently no common form, could set a precedent for future legislation and have significant legal implications. Consideration of how to define 'Indigenous' is a significant matter which we believe is well above politics, and it should be considered in a separate and far more thorough process. The opposition's approach to this matter is only delaying the passage of this legislation and, sadly, preventing the Productivity Commission from commencing its important new functions in the area of Indigenous affairs. Therefore, I commend this bill to the House.

Question agreed to.

Bill read a second time.