Clare O'Neil (Hotham, Australian Labor Party, Shadow Minister for Justice) Share this | Link to this | Hansard source

by leave—I move amendments (1) and (4) on sheet 1 as circulated in my name together:

(1) Schedule 1, item 117, page 54 (lines 17 to 24), omit paragraph 1317G(4) (c), substitute:

(c) 10% of the annual turnover of the body corporate for the 12 month period ending at the end of the month in which the body corporate contravened, or began to contravene, the civil penalty provision.

[removing cap on civil penalties]

(2) Schedule 2, item 8, page 97 (lines 19 to 26), omit paragraph 12GBCA(2) (c), substitute:

(c) 10% of the annual turnover of the body corporate for the 12 month period ending at the end of the month in which the body corporate contravened, or began to contravene, the civil penalty provision.

[removing cap on civil penalties]

(3) Schedule 3, item 7, page 128 (lines 22 to 29), omit paragraph 167B(2) (c), substitute:

(c) 10% of the annual turnover of the body corporate for the 12 month period ending at the end of the month in which the body corporate contravened, or began to contravene, the civil penalty provision.

[removing cap on civil penalties]

(4) Schedule 4, item 4, page 166 (lines 19 to 26), omit paragraph 75D(2) (c), substitute:

(c) 10% of the annual turnover of the body corporate for the 12 month period ending at the end of the month in which the body corporate contravened, or began to contravene, the civil penalty provision.

[removing cap on civil penalties]

Labor is moving two amendments to this bill which will be moved and voted on separately, but for the purposes of having a constructive debate in the chamber I think some of the speakers will refer to both amendments as we discuss, so we can have two divisions at the end. For the convenience of the House I want to outline in broad terms what both of those amendments cover. Then other members can refer to both in their contributions.

The first amendment that Labor is moving for this bill is to remove the cap of one million penalty units from the 10 per cent of turnover limb in the new civil penalties regime created by the bill. The second amendment that I will move shortly will increase the maximum penalties for the most serious corporate crimes that are described in the bill from 10 years, as it has been drafted, to 15 years. The crimes that have been essentially defined as the most serious are those that involve dishonesty and fraud. The ASIC Enforcement Review Taskforce has agreed, and adopted essentially, that these are of that description.

I will return to the first amendment, which is the removal of the one million penalty units cap in the 10 per cent of turnover limb in the new civil penalties regime. It's quite a mouthful but a very important part of what will become law very shortly. For reasons that aren't clear to Labor, the government has decided to effectively undermine the fairness of the cap on civil penalties of 10 per cent of turnover, by effectively reducing the exposure of larger institutions. I want to be really clear, firstly, that Labor supports the 10 per cent of turnover limit for penalties. We don't support the additional restriction of one million penalties cap in the bill. This amendment is so important to Labor because it's very out of step with other pecuniary penalties handed down in Australia and overseas. It is out of step with the contemporary reality of financial service providers and banks, and it creates a regime that's not effectively futureproofed as our financial institutions continue to grow in size.

I want to note that the Consumer Action Law Centre was very strong on this point when they made a submission to the ASIC enforcement reviews processes. I'm going to quote a little bit from their submission. They said, 'We are not convinced that theirs is a strong policy justification for introducing a maximum limit on civil penalties of one million penalty units, that's currently $210 million. Setting a maximum does not recognise that there are large differences in size of banks, insurers and superannuation funds and that a penalty in excess of this amount may be appropriate in the context of very large corporations.'

I'll finish the quote there, because I want to talk in really plain English about what the government is proposing and how that differs from Labor. This bill is really coming out of an enforcement review that was done prior to the royal commission. What the royal commission has shown us, if there's any one thing, is that the current framework for criminal law and civil law—indeed, for corporate malfeasance and its enforcement—is not working to deter the types of crimes that we're so concerned about in this chamber. Setting a limit of $210 million in fines, which is effectively what the government is doing here by imposing a cap, is really saying that an institution that could be many billions of dollars in turnover is going to have its fines restricted in a way that wouldn't happen to a smaller company. I think if you sat down with Australians and talked to them about this they would see that it's very consistent with the approach to penalising criminal wrongdoing that we've seen on the other side of the chamber. We know this is a government that voted 26 times against a royal commission. The Prime Minister, who sits opposite us in the chamber, voted 26 times. He called it a 'populist whinge'. Here we again have the government seeking to curtail the ability of courts to give appropriate sized penalties for incredibly serious wrongdoing.

We on this side of the chamber have a very different approach to corporate wrongdoing. I don't think it matters if you break the law and you're wearing a suit or you're not wearing a suit. When you break the law, you break the law, and you need to be punished appropriately. So the amendments Labor is moving will strengthen this bill, we believe, in important ways. They're thoughtful amendments that we have consulted on with a variety of bodies. I'll be pleased to see the House vote and support them.

Stuart Robert (Fadden, Liberal Party, Assistant Treasurer) Share this | Link to this | Hansard source

Let me thank the shadow minister opposite for her goodwill in seeking to punish those who would do wrong. The bill we've put forward, the Treasury Laws Amendment (Strengthening Corporate and Financial Sector Penalties) Bill 2018, seeks to raise penalties across a range of areas of the corporations law, covering a range of areas of offence: everything from AFSL through to misrepresentation and failure to put forward the best interests of consumers. We have consulted widely across all jurisdictions, states and territories to bring alignment of the penalties regime. In many instances, penalties have doubled. Some have increased three times. Some have increased five times. We're talking penalties that have increased to up to 10 years. We've looked at areas of recompense, including where recompense would have to happen up to three times in dollar terms.

The penalties we've put forward are strong, are significant and are designed to be a deterrent. This debate cannot be allowed to be a race to the bottom on who can be tougher, because that's not what this should be about. This shouldn't be about who is the strongest when it comes to penalty regimes. To take penalties 500 per cent forward, up to 10 years, sends a message that this government will not abide by those who seek to do wrong by their fellow Australians. Now, I will take it at face value that those opposite are coming at this with goodwill, that those opposite are seeking to back us in bringing penalties forward. But goodwill starts to get interesting when those opposite are saying that we need a 700 per cent increase in penalties because 500 per cent is not sufficient. That starts to look a bit like a stunt to say they're tougher than the government.

So let's be clear about what the government is seeking to do here. We are seeking a stronger penalty framework to ensure that consumers are protected from misconduct. Under this legislation, the imprisonment penalties for some of the most serious criminal offences under the Corporations Act are being increased substantially. Criminal penalties are being increased fourfold. Perhaps in a different environment those opposite would criticise us for being too harsh or too strong, but a fourfold increase apparently is not strong enough for those opposite. Let's be serious about what's happening here. These are significant penalties. This is not a race to see who can be the toughest or the hardest. This is about sensible regulation and harmonisation across laws, jurisdictions, states and territories.

Under these reforms, the maximum civil penalty for individuals will increase from $200,000 to be the greater of $1 million or five times or three times the benefit gained. I can't think of a single time in modern political history where a government has moved forward with a strengthening of a penalty regime anything like this. That those opposite think that a 500 per cent increase on civil penalties and a 400 per cent increase on criminal penalties somehow isn't enough—

Clare O'Neil (Hotham, Australian Labor Party, Shadow Minister for Justice) Share this | Link to this | Hansard source

It's not enough!

Stuart Robert (Fadden, Liberal Party, Assistant Treasurer) Share this | Link to this | Hansard source

It's not enough, the shadow minister says, demonstrating that those opposite are now the big, tough cops on the beat. I would take those opposite a little more seriously if, in August 2013, the now Leader of the Opposition was not on the record saying how marvellous our financial services were—34 days before those opposite lost. That, apparently, our 400 per cent and 500 per cent increases for penalties aren't enough is simply a joke. It's a stunt, and frankly those opposite should be ashamed of themselves for seeking to make light of this and to score political points on this particular issue.

Adam Bandt (Melbourne, Australian Greens) Share this | Link to this | Hansard source

I rise to support the amendments and to make a few brief comments. When the matter comes to the other place, Senator Peter Whish-Wilson, who has had carriage of this for us for quite some time now, will be making some further comments. In rising to speak in support of the amendments and some of the measures taken in respect of the Treasury Laws Amendment (Strengthening Corporate and Financial Sector Penalties) Bill 2018, I do want to note that a pattern emerges in this place. In many instances, the Greens put forward a proposal, it's initially ignored by the others, then it's ridiculed, then they fight against it and then they adopt it. That has been the case here as well. We took a very comprehensive policy to the last election, much of which we are now finding reflected in the bills and amendments before the House. We think it's no surprise that our election policy with respect to penalties and with respect to the criminal offences—we wanted penalties to be included with reference of three times the benefit gained, and all of a sudden we find a very similar measure included in the bill. We argued for increasing the range of administrative penalties that were available to regulators so that they could more easily penalise those who have done wrong, including having on-the-spot fines available for smaller offences. Lo and behold, that's also what we find in the bill. When going to the election, we also proposed making it easier for regulators to pursue the recovery of ill-gotten gains, through the introduction of a disgorgement power, and now we have relinquishment orders popping up in this bill.

So, the pattern here is very similar to what we saw with the banking royal commission, where we pushed and pushed in the teeth of opposition from Liberal and Labor. Eventually Labor came on board and others came on board and then finally the government had to relent. Now we find the government coming up with a bill that suggests that someone within the minister's office didn't necessarily have many great ideas of their own and decided to spend a lot of time reading Greens election policy and turning some of that into bits in the legislation.

This is a bill that can be improved and for that reason we support the amendments and we support the opposition in moving them. We will have more to say about this if the bill proceeds to the Senate.

Bert Van Manen (Forde, Liberal Party) Share this | Link to this | Hansard source

It is a pleasure to see that the member for Burt also wishes to speak on this very important bill, the Treasury Laws Amendment (Strengthening Corporate and Financial Sector Penalties) Bill 2018. As I look at the proposals put by those opposite, I acknowledge that the revelations of the royal commission are of enormous concern. As somebody who used to work in the banking industry, I find it very disappointing that we have a situation where those who are entrusted to look after other people's money have been found to fall short of the expectations of our community in that space. That is why I think the bill before us and the penalties proposed in the bill, as outlined by the government, have enormous merit.

Importantly, in increasing those penalties what we are seeking to do is ensure that there is adequate deterrent against people doing the wrong thing by the people who have trusted them to look after their financial resources, in whatever case it may be—whether it is their superannuation funds, their bank accounts, or provision of finance and lending facilities. We can all in this place elicit a number of stories from those in our electorate who have suffered as a result of the many things that have been brought to the fore in the royal commission. I don't for one minute defend the people who have done the wrong thing. But, as the minister has rightly pointed out, a race to the bottom—in terms of 'our stick is bigger than yours', to use a phrase that is rather popular in this place at the moment—is not going to resolve the matter. The penalties have to be of a sufficient level to deter people from doing the wrong thing. It is sad that we even need to have a discussion about having penalties in place to deter people from doing the wrong thing. I would much prefer to stand in this place not because people have done the wrong thing but because people are doing the right thing and we can reduce or remove regulation. But that, sadly, is not the case. Much of the time, we spend our time in this place strengthening regulations or putting in place new regulations, because people are doing the wrong thing.

But I think, if we look at the balance of what's proposed in the government's bill, with the more than fivefold increase in penalties from $200,000 to $1.03 million, or three times the benefit gained, it's an enormously significant increase in the penalties being proposed. In the civil financial penalty space for corporations, it's a more than tenfold increase, from $1 million to $10.5 million, or three times the benefit gained, or 10 per cent of annual turnover capped at $210 million, whichever is the greatest.

The bill provides a very significant increase in penalties in addition to other measures that we have already taken, such as the Banking Executive Accountability Regime. Those opposite want to go even further just to prove they're tougher. I don't think that serves any useful purpose in ensuring that the legislation and the penalties we enact do the job that needs to be done, which is to deter these people from doing the wrong thing by the people whose money they're entrusted to look after. Equally, I say to the executives in the banking and financial services sector: it is time for you to stand up and do the right thing by the people you are entrusted to look after. At the end of the day, the most important thing that can occur is that those people step up to the mark and do the things necessary to engender and rebuild trust with the Australian people.

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

As I was remarking during the second reading debate on this bill, so many of the issues that are addressed in this piece of legislation, which we are now seeking to improve through these amendments, are things that have come out of the banking royal commission. The banking royal commission has turned the attention of the country to these issues in a way that's never happened before.

The minister tried to impugn members on this side of the House by asserting that our hearts aren't in these amendments. He was in some way trying to suggest that these are politically motivated amendments. But what this is about—why we support this legislation but have moved amendments to it, and why I support these amendments—is that this is just part of a raft of things that need to be done to fix corporate and financial services regulation in this country and to address the misconduct that has come out time and time again through the royal commission and was known about before it.

It was only yesterday that we heard from the acting chief executive officer of AMP that apparently their financial advisers didn't have the education not to charge people for services that weren't provided. Not just is the royal commission exposing malpractice, misconduct and malice; it's actually showing up moronic behaviour. Who actually needs to be educated in that? Why do you need to be told that you shouldn't charge fees for something you're not doing? We've even had instances where someone has tried to mount a defence of the banks' practice of charging for advice provided to people who are already dead. That is despite the fact that, only weeks earlier, bank CEOs tried to tell us they didn't need a royal commission to tell them they shouldn't have been charging fees to dead people. Regardless, they were doing it, and then they tried to defend it. So it is important that this parliament and the government send a very strong message to the banking and financial services sector that enough is enough.

The real shame of this is that recommendations to increase the penalties, like we are seeing here, came out of a Senate report back in 2014. The minister tries to besmirch members of the previous Labor government, when the recommendations to do this came during the coalition's term in government. Following that report, the government, after taking months and months to finally respond to those recommendations, said they would consider them. Years later they conducted another review, which said yes, we should increase these penalties. A year later again, and the government finally gets around to introducing some legislation. And now, finally, we're starting to debate that legislation.

But, as we have seen from conduct that has come up before committee inquiries and the royal commission, the reality is that, if the government had pulled its finger out and got around to doing these things back when they were originally recommended, some of the conduct that we have seen come before the royal commission would have already had these penalties apply to them at the time and maybe, just maybe—in fact, it is highly likely—the people who were running those banks and financial institutions would have thought more strongly about what they were doing.

One of the fundamental issues that has come out here is that of culture. There are issues with the government's BARE regime, which members of the government have mentioned, and no doubt I will have an opportunity to address those in further remarks. But culture comes down to changing the behaviour of the senior individuals in those banks, and part of that is understanding what penalties may be imposed upon them individually but also on their bank. What we know is that the penalties that have been available to date have been woefully inadequate.

The minister speaks about the fact that the new penalties that they propose are many multipliers more than the penalties that were there before, but then they go and impose artificial caps in some of these amendments. What is the point of a one-million-penalty-unit cap when you think about that as a proportion of the money that the banks have been making out of their misconduct—not their total revenue, but the money they have made out of this misconduct? We need to ensure that the penalty does not effectively merely amount to a licence. Can I just point out: it is also just terribly drafted. In the penalty provision they have drafted, they have imposed 'the greater of a 50,000 penalty unit cap, or a multiplier of revenue, but no more than 1 million penalty units'. If that is the case, you don't need the 50,000 unit cap in the first place. This is terribly drafted legislation. Why would you do that? That goes to the point that the government has not thought this through properly and that is why we are here moving amendments to make sure— (Time expired)

Stuart Robert (Fadden, Liberal Party, Assistant Treasurer) Share this | Link to this | Hansard source

For the benefit of the young Padawans opposite, the longevity of history is actually a little useful when it comes to this debate. I was here during the post-GFC reforms. I was here for the post-GFC banking inquiries, set up by those opposite in government. I was here for the post-GFC MIS inquiries set up by those in government. I was there for the FoFA inquiry by the parliamentary joint committee, and I was there negotiating with Bernie Ripoll on the 11 recommendations that were bipartisan recommendations out of the FoFA committee that brought on the FoFA reforms. Out of all of that, out of the $65 billion to $70 billion that was wiped out during the GFC, and out of all of the post-GFC banking inquiries and post-MIS inquiries, after going through TimberCorp and shining the light at the malfeasance and the poor behaviour by financial institutions, let me tell you—let me tell those opposite—exactly how much they increased the penalties against banks and financial institutions, after all of those reports, after all of those inquiries, after all of that work. The answer is: a big fat zero.

So do not come in here lecturing on a high horse in a degree of self-righteousness of biblical proportions, of pharisaical proportions, saying, 'Oh, it is terrible what the royal commission has shown. The government's 400 per cent increases are not sufficient,' and, 'It must be 15 years, not 10 years', when, after everything that came out of those parliamentary joint committees over two, three and four years, those opposite did nothing on penalty regimes. Well, the tide is out, and those opposite are not particularly wearing trousers right now. If there was any substance, any substance at all, to the arguments of those opposite—and, frankly, the shadow minister opposite should know better—then these amendments would have been done by those in government after all of the malfeasance that was shown after the GFC and after all of those parliamentary inquiries.

We are acting. The royal commission hasn't reported yet, but we are acting. The full result of what Hayne is looking at hasn't come down yet, but we are acting. Those opposite had years and years and years, report, report, report, and post-GFC inquiry after post-GFC inquiry. I spent a couple of years doing the post-GFC banking stuff and heard all of the dismal stuff and the malfeasance that came out, and those opposite did nothing. But now that we are acting for a 500 per cent increase on civil penalties, now that this government is acting for a 400 per cent increase in criminal penalties, apparently now, oh, no, these are not harsh enough, even though, for the six years they were in government, after all of the destruction of the post-GFC and after all of the reports of those committees that those opposite had majority on, there was no move at all on penalties, none at all. Apparently none were needed. But now that the government is acting with such severity not seen in modern political history, apparently it is not enough for those opposite. Well, forgive me if I think this is a rolled-gold stunt, because it is. Those opposite know it is. I know it is. The Australian people know it is. Those opposite did nothing in the post-GFC banking inquiries. We are now dealing with a royal commission, another banking inquiry as it is, and we are acting before the conclusion of it. Those opposite couldn't even bother to act at the conclusion of multiple inquiries that they chaired. Give us all a break.

Ross Hart (Bass, Australian Labor Party) Share this | Link to this | Hansard source

We have received a sermon from the minister regarding a failure to act but, if any party in government has failed to act, it is the coalition. This is a government which, time and time again, talk a big game in regulation but absolutely fail in regulation. We saw them fail in regulation with respect to the empowerment of ASIC, the funding of ASIC and the enforcement powers of ASIC. They opposed a royal commission into banking misconduct. The now Prime Minister dismissed the calls for a royal commission and voted against a royal commission 26 times. The government speak of ASIC. At the time, they dismissed the call for the appointment of a royal commission as being a 'tough cop on the beat'. But it wasn't a tough cop on the beat at all. That much is perfectly clear in the revelations in the royal commission.

This government failed to properly fund its regulators. It is clear to me that it was captured and continues to be captured by big business. All of us have been shocked by the revelations of the royal commission, notwithstanding that we are aware of the substance of the misconduct alleged. It is important that we do consider the fact that we were all aware of the substance of what was being alleged. You would have to be sleeping under the proverbial rock to not be aware of it. What did this government do? It said it was giving additional powers to ASIC, powers that have never been exercised, powers that have never been used to prosecute any offenders with respect to malfeasance.

More can be done. This bill is a good start. More should be done, even if this government have done in this bill only what they thought they can get away with. What did they think they can get away with? The minimum. Perhaps not a light touch because they have increased the penalties, but certainly lighter than what the community demands as an appropriate and proportionate response. After all, this is a delayed response.

The bill increases penalties. It should do so. Those increased penalties, as my friend the shadow minister said, are inadequate. This bill, in implementation of the ASIC enforcement review task force, is delayed. The recommendations that this bill is based upon are now completely out of date. The bill implements the recommendations of that task force report which was released in December 2017, a time before the establishment of the royal commission and certainly before the royal commission received any of the evidence which has so shocked Australian families and has shocked everyone in this place.

The proposed amendments are to increase maximum jail terms for the most serious corporate crimes. It's completely inappropriate for this minister to get on his high horse and accuse Labor of using this for political purposes when what we are doing is completely proportionate. We are doing what the public expects when we introduce the regulation which, clearly, the public expects to see our legislators arguing for. We on this side of the House are certainly prepared to stand up to this government in arguing for increased penalties. Any talk of a race towards the bottom regarding these penalties is absolute nonsense. That is an attempt by those opposite to deflect their longstanding culpability in opposing for over 300 days the establishment of the royal commission and seeking to deflect the royal commission with the assertion that ASIC would be the tough cop on the beat.

We know that more needs to be done and that more can be done, and this side of the House is prepared to ensure that appropriate penalties are established in this legislation.

Peter Khalil (Wills, Australian Labor Party) Share this | Link to this | Hansard source

We are considering the Treasury Laws Amendment (Strengthening Corporate and Financial Sector Penalties) Bill 2018. Looking at where it falls short, which we have heard much of from a number of speakers who have gone before me, we would think that this government, after all we've seen in the royal commission and all that's been revealed, still and deliberately doesn't have the interests of the Australian people in mind. Rather, it seems that deliberately it just has the interests of their corporate big bank buddies in mind.

We've seen the Abbott-Turnbull-Morrison governments dragged kicking and screaming to agree to a banking royal commission after years of public pressure from whistleblowers, consumer groups, Labor and others, including some of the crossbench and even some National MPs. Mr Turnbull made the decision for the commission in the face of open revolt by some National MPs, including the member for Dawson, the member for Wide Bay and Senator Barry O'Sullivan. That's what it took for the government to actually relent—some of its own to break ranks. And still Mr Turnbull characterised the decision as 'regrettable but necessary'. What an insult to the Australian people! What an insult to the people who have suffered the indignity of the big banks taking their rights away.

Labor agrees that the royal commission was absolutely necessary. But regrettable? Hardly. It is actually regrettable that the banks discovered it was highly profitable to sell their customers financial advice that consisted of purchasing their financial products so that they would enjoy a profitable feedback loop—a business model called vertical integration. It looked at the quality of financial advice being offered by the two largest financial advice licensees owned or controlled by the Commonwealth Bank, ANZ, Westpac, National Australia Bank and the AMP.

It's regrettable that an ASIC report scrutinising the practice of vertically integrated institutions and conflicts of interest found that the financial advisers from those banks—Commonwealth Bank, ANZ Banking Group, Westpac National Australia Bank and AMP—had failed to comply with the best interests of customers in 75 per cent of advice files reviewed. The report concluded that there was an inherent conflict of interest arising from banks providing personal financial advice to retail clients while also selling them financial products.

It's regrettable that these banking and financial service providers were found to be charging dead customers for these services, in one case in the Commonwealth Bank for more than a decade. It's regrettable that, as Treasurer, the Prime Minister, the member for Cook, labelled Labor's push for a banking royal commission as nothing more than 'a populist whinge'. It is regrettable, indeed. In fact, it is more than just regrettable; it's shameful. Those on the opposite side have many things to be ashamed about, and their lack of will or wilful ignorance is right up there as one of the biggest reasons they should be ashamed. It is shameful that Australia had to witness the Abbott-Turnbull-Morrison government resisting consistent calls for a banking royal commission after a string of damaging reports and scandals right across the financial services industry. If anybody opposite over there on the government benches has any shred of integrity or sense of right and wrong they should know they owe Australia an apology for dragging their feet for so long. It's as simple as that.

While Labor are generally supportive of this bill, as we have heard, we want to see stronger penalties for corporate misconduct because the recommendations that this bill was based on are now out of date. We know that the bill would increase penalties for corporate and financial sector misconduct, diversify regulatory options for ASIC and introduce a new disgorgement remedy and a priority in the legislation for consumer remediation over penalties. That is all good. But it still falls short. The bill implements recommendations of the report of the ASIC enforcement review task force, released in December 2017. So why does it fall short? Since this report was released, the banking royal commission has uncovered widespread and systematic misconduct across the financial services industry. The interim report of the royal commission found that, when misconduct was revealed, either it went unpunished or the consequences did not meet the seriousness of what had been done. So, after what we have seen in the royal commission, Labor believe the parliament must make it crystal clear to banks and financial institutions that corporate misconduct will no longer be tolerated. That is why the shadow minister, the member for Hotham, has moved these amendments. Increase the jail terms and remove the $210 million penalty cap for big business.

Milton Dick (Oxley, Australian Labor Party) Share this | Link to this | Hansard source

I am proud to support these amendments moved by the member for Hotham, and we are yet to hear an excuse or reason from the government about why they are not supporting them. We have heard a lot of comments from the minister at the table that this is a stunt or that six years ago Labor didn't introduce penalties, but we haven't actually heard an argument as to why they don't think the penalties should be increased from 10 to 15 years. Or is it the case, by their silence, that they think it's enough? I can tell you who don't think it's enough: the tens of thousands of people who have been ripped off by the banks in this country.

I am sick and tired of members of the government talking in nice language today about 'not meeting community standards' or 'falling below where we should be'. If the government weren't so busy ripping themselves apart, worrying about who is defecting next or doing over each other, they would actually have a look at these amendments. The first is a sensible and, I think, prudent way to send a very clear message to the industry that what they are doing and what they want to do is simply unacceptable. I know increasing those penalties from 10 to 15 years sends the strongest possible signal. I don't understand why the minister thinks it's unreasonable to go from 10 to 15 years. What is the excuse? What is the reason why they think 10 years is somehow enough? It doesn't meet community standards. I say to the minister: it doesn't meet the community standards of the victims that I spoke to in my office with the shadow minister and the Leader of the Opposition. We gave those people a voice through our round table and they made it clear they want the harshest penalties given and not for the government to simply come into this parliament and make some ridiculous argument that six years ago Labor didn't take action. Those people want action and, today, we as a parliament can deliver that with one voice and send the strongest possible message. We get lots of lectures about being tough on crime from those opposite. We just had a Victorian election about jailing gangs which failed spectacularly. I will tell you what people want. They want banks to be held to account. That is exactly what they want.

The second amendment I want to focus on is removing the $210 million penalty cap, because what the government is doing is rejecting that today. I say very clearly to the government that the bill from the government falls well short with a cap of $210 million. I just want to quickly read this into the record. Yesterday we found that the AMP have profited from almost $1 billion in fees charged for no service. This just shows that a cap of $200 million is mere small fry. They haven't spoken about that amendment at all. They haven't—through you, Mr Deputy Speaker—mentioned that one bit. For the minister, who perhaps needs a refresher, I can help him with some internet issues around this: I can tell you right now that that does not anywhere near meet community standards.

These are important amendments. These are critical amendments to make sure that victims get justice and see this parliament taking firm action, and we can do this tonight. We can finally draw a line in the sand to make sure that the victims are given justice.

Bob Katter (Kennedy, Katter's Australian Party) Share this | Link to this | Hansard source

I'm supporting Labor on these amendments. The honourable member who spoke before me was right in his contention about the $200 million. Companies turning over $4 billion or $5 billion a year would pay it over two or three years. It's hardly a line item in their annual report. On the banking inquiry: we had legislation drawn up, and Mr Turnbull gazumped us. Well, congratulations to him. He put out a pathetic inquiry which, quite frankly, is achieving virtually nothing.

That inquiry, as with these amendments, needs to talk about redress to the people who've been taken to the cleaners improperly by the banks. There should be redress. I'm not one for punishment. I've never advocated punishment. But those decision-makers who were responsible for making those decisions should be taken out of working in the financial field forever.

Look at the Goldman Sachs example in the United States. Here was a company that precipitated the GFC, and it was running the American economy straight afterwards. The immortal words of Barack Obama were that those people responsible for what happened had five of the 11 most powerful positions in the nation. He said, 'When I become President, that will change.' And it did. It wasn't five out of 11; it became eight out of 11! Not only were they not punished, but the person who was supposed to punish them rewarded them. They took over eight of the 11 positions.

So we are watching. The only reason we did not have a GFC collapse here was that the banks here have recourse lending, so if you can't make the repayments—

Opposition Members:

Opposition members interjecting—

Bob Katter (Kennedy, Katter's Australian Party) Share this | Link to this | Hansard source

Mr Deputy Speaker, it's hard for me to hear myself, and it's a very interesting speech I'm giving.

Andrew Gee (Calare, National Party) Share this | Link to this | Hansard source

Yes, I'd ask members to just show some professional respect and courtesy to the member for Kennedy, thank you.

Bob Katter (Kennedy, Katter's Australian Party) Share this | Link to this | Hansard source

I was taught that it is rude to speak while someone else is speaking. There is obviously something lacking in their education.

Andrew Gee (Calare, National Party) Share this | Link to this | Hansard source

Please proceed.

Bob Katter (Kennedy, Katter's Australian Party) Share this | Link to this | Hansard source

I'll move on. The reason the GFC did not extend over here—and the history books will say this, but the work by Kevin Rudd and by Wayne Swan has never ever been acknowledged—was the very expeditious and aggressive action taken by those people. There was a second reason, and that is that Australian banks have recourse lending. If you can't make the repayments on your house—and I'd say probably 30 per cent or 40 per cent of Australians can't make the repayments on their house—the banks take the house from you and sell it up, and, because it falls short of the amount that they're owed, they can pursue you for the rest of your life. If you have a half-million-dollar home and you've got a debt of $300,000, if they sell it up for $200,000, you carry that debt until the day that you die. You are a debt slave to the banks forever.

We are virtually the only country on earth that has recourse lending. Every other country has non-recourse lending. In America they call it jingle mail: 'I can't make the repayments. Here's the key to the house. See you later, alligator.' And the banks share the loss. Yes, this bloke has lost the house. He's lost the repayments he's made on the house, but the banks also take a loss. Surely a young tradesman, a first-year-out apprentice or whatever he might be, who borrows a million dollars for a house—which is actually happening, as we all know—can't possibly make those repayments. The bank knows that he can't; he's only a young kid. He doesn't know that he can't, but the bank knows that he can't. So who should take the blame: the bank or him? In every other country on Earth, they have said, 'At the least, we'll share the blame,' but not in Australia. The enormous power of financial institutions in Australia has been reflected here with a piece of wet-lettuce legislation. It needs to be bolstered up. Whilst I'm very sympathetic to the government, I am backing the opposition on these amendments.

Patrick Gorman (Perth, Australian Labor Party) Share this | Link to this | Hansard source

I would like to endorse the comments of the member for Kennedy, when it comes to the lessons to be learnt from Labor's very effective management during the global financial crisis. I think some of the member for Kennedy's words should be listened to very carefully by every member of this place.

Simply, Labor's amendments meet the expectations of the Australian people. They send a clear message to those engaged in misconduct, and they hold our standards amongst the highest in the world—something we should, of course, aspire to. They also support a fair business environment. If you're starting a business or if you're conducting an ethical, well-run business in the financial services sector, why should anyone be allowed to cheat the rules and just do a financial model that allows them to analyse and go, 'Oh, well, if we do this, but we've got this much cash in the bank, we're okay'? It's a disgrace.

Removing that cap is a very well-thought-through amendment from the shadow minister for financial services, and I commend her for it. I also commend her for spending 2½ hours with me at the Alexander Library in Perth, listening to victims of misconduct in the banking sector. The Alexander Library is named after Fred Alexander. He was a historian and someone who cared passionately about the roles of our institutions and the value of the Commonwealth as an institution itself. He wrote From Curtin to Menzies and After: Continuity or Confrontation? He would be pleased with the debate we're having today not only about how do we appropriately punish but also about how do we appropriately make sure that we reward good conduct. Ultimately, punishment is also about saying: 'If you do not do good conduct, you should be punished. If you do well, you should be rewarded.'

I'm aware that some members are keen to get on with this. I won't give you the full rundown of the Ernst & Young report Corporate misconduct—individual consequences, but it's well worth a read. I'll finish with some comments about the minister's reference to 'a big, fat zero'. He mentioned a big, fat zero. If you're thinking about a big, fat zero, let's also remember that there are a few other big, fat zeros flying around this building: a big, fat zero when it comes to payday lending action; a big, fat zero when it comes to funding for three-year-olds in preschool; a big, fat zero when it comes to legislation coming to this parliament to create an anticorruption commission; and a big, fat zero of sittings of this parliament in March 2019. One last big, fat zero that I think is inexcusable: there was a big, fat zero of hearings of the royal commission in Western Australia. That was unacceptable.

Stuart Robert (Fadden, Liberal Party, Assistant Treasurer) Share this | Link to this | Hansard source

Let me provide some context for those opposite who question how we arrived at a regime of increasing civil penalties by 400 per cent and criminal penalties by 500 per cent. The current enforcement regime available to ASIC clearly needs to be strengthened. Everyone understands that, hence the government's move to substantially increase penalties.

The ASIC Enforcement Review Taskforce extensively reviewed this entire regime between October 2016 and December 2017. It was a substantial review across all jurisdictions, across states and territories and through different government departments. It made 50 recommendations to government to seek to address the substantial issues. On 18 April the government announced reforms to strengthen ASIC's penalty framework to combat misconduct and improve community confidence in the corporate and financial sector in response to the task force report. There is a substantial body of work that was done here to ensure that all of this was put together. This wasn't something that the government just pulled out of its hat and decided to pass amendments on. This was a considered piece of work.

That's why, in response to that task force, the government moved the substantial penalty regimes that it has. Civil penalty regimes increased fivefold—in fact, higher than fivefold, going from $200,000 to $1.05 million or three times the benefit gained, whichever is greater. And they increased for corporations by more than tenfold, with a 1,000 per cent increase from a million dollars to $10.5 million—an extraordinary increase in penalties—or, indeed, a 10 per cent turnover capped at $210 million.

At the same time, the government committed to expand the types of offences available to ASIC—for example, by expanding the number of provisions that were subject to the civil penalty—and two other reforms to modernise ASIC's enforcement regime, for example, by allowing the courts to strip contraveners of their ill-gotten gains.

There is no doubt that ASIC has been criticised publicly for not using the full extent of its powers and its penalties. There is no question about that at all. The Hayne royal commission has brought out some of the issues of the lack of enforcement power by our regulators, who sought to do a deal, as it were, rather than to prosecute and use the full power of the law. Well, the full power of the law is now being increased—substantially increased in a way not seen before, with a fivefold increase for civil penalties, a fourfold increase for criminal penalties, and, when it comes to penalties for corporations, by over tenfold. That is over 1,000 per cent—10 times the penalty.

Those opposite, whilst well-meaning, simply cannot say that the government is not acting with very strong force in increasing these penalties. We are ensuring that the penalty regime throughout the Corporations Act is extraordinary, that it's tight and that it's tough. Penalties for the most serious white-collar crimes are now bringing our penalties in strong alignment with leading global jurisdictions. That is the work that ASIC has done to get alignment across jurisdictions nationally and across jurisdictions globally.

Courts, in fact, will be empowered to consider even greater penalties where the profits from misconduct are high or where a company's annual turnover exceeds $105 million. That is a further step up again in the penalty regime. And, of course, courts will have the power to strip people of their ill-gotten gains to ensure that contraveners can no longer profit from their misconduct.

This bill includes important reforms that put consumers first. In addition to this extraordinarily strong penalty framework, the Corporations Act will be amended to ensure that courts prioritise compensating victims over collecting penalties from offenders. This is putting the compensation of victims front and centre. The Legislative and Governance Forum on Corporations was consulted on this bill. Again, the consultations by ASIC over so many months with the Legislative and Governance Forum on Corporations were front and centre in putting these substantial reforms together.

Andrew Gee (Calare, National Party) Share this | Link to this | Hansard source

The question is that the amendments be agreed to. All of that opinion say aye.

Opposition members: Aye!

I think the noes have it. The member for Watson?

Mr Tony Burke (Watson, Australian Labor Party, Manager of Opposition Business (House)) Share this | Link to this | Hansard source

Mr Deputy Speaker, I rise on a point of order. To call it for the noes, someone needs to call out no. It's not complicated. Nobody called out no in that vote—not one. If you want to take the vote again, take it again. It is not within the right of the chair to invent noises that are not made.

Andrew Gee (Calare, National Party) Share this | Link to this | Hansard source

All right, I thank the member for Watson. The question is that the amendment be agreed to.

Opposition members: Aye!

To the contrary, no.

Stuart Robert (Fadden, Liberal Party, Assistant Treasurer) Share this | Link to this | Hansard source

No!

Andrew Gee (Calare, National Party) Share this | Link to this | Hansard source

A division is required.

Tony Smith (Speaker) Share this | Link to this | Hansard source

The question is that opposition amendments (1) to (4) on sheet 1 be agreed to.

Clare O'Neil (Hotham, Australian Labor Party, Shadow Minister for Justice) Share this | Link to this | Hansard source

by leave—I move amendments (1) to (19) on sheet 2, as circulated in my name, together:

(1) Schedule 1, item 140, page 63 (table item dealing with subsection 184(1), column headed "Penalty"), omit "10", substitute "15".

[increasing term of imprisonment to 15 years]

(2) Schedule 1, item 140, page 63 (table item dealing with subsection 184(2), column headed "Penalty"), omit "10", substitute "15".

[increasing term of imprisonment to 15 years]

(3) Schedule 1, item 140, page 63 (table item dealing with subsection 184(3), column headed "Penalty"), omit "10", substitute "15".

[increasing term of imprisonment to 15 years]

(4) Schedule 1, item 140, page 68 (table item dealing with subsection 344(2), column headed "Penalty"), omit "10", substitute "15".

[increasing term of imprisonment to 15 years]

(5) Schedule 1, item 140, page 70 (table item dealing with subsection 601FD(4), column headed "Penalty"), omit "10", substitute "15".

[increasing term of imprisonment to 15 years]

(6) Schedule 1, item 140, page 70 (table item dealing with subsection 601FE(4), column headed "Penalty"), omit "10", substitute "15".

[increasing term of imprisonment to 15 years]

(7) Schedule 1, item 140, page 72 (table item dealing with subsection 601UAA(1), column headed "Penalty"), omit "10", substitute "15".

[increasing term of imprisonment to 15 years]

(8) Schedule 1, item 140, page 72 (table item dealing with subsection 601UAB(1), column headed "Penalty"), omit "10", substitute "15".

[increasing term of imprisonment to 15 years]

(9) Schedule 1, item 140, page 74 (table item dealing with subsection 727(1), column headed "Penalty"), omit "10", substitute "15".

[increasing term of imprisonment to 15 years]

(10) Schedule 1, item 140, page 74 (table item dealing with subsection 728(3), column headed "Penalty"), omit "10", substitute "15".

[increasing term of imprisonment to 15 years]

(11) Schedule 1, item 140, page 80 (table item dealing with subsection 952D(1), column headed "Penalty"), omit "10", substitute "15".

[increasing term of imprisonment to 15 years]

(12) Schedule 1, item 140, page 80 (table item dealing with subsection 952D(2), column headed "Penalty"), omit "10", substitute "15".

[increasing term of imprisonment to 15 years]

(13) Schedule 1, item 140, page 80 (table item dealing with subsection 952F(2), column headed "Penalty"), omit "10", substitute "15".

[increasing term of imprisonment to 15 years]

(14) Schedule 1, item 140, page 80 (table item dealing with subsection 952F(3), column headed "Penalty"), omit "10", substitute "15".

[increasing term of imprisonment to 15 years]

(15) Schedule 1, item 140, page 80 (table item dealing with subsection 952F(4), column headed "Penalty"), omit "10", substitute "15".

[increasing term of imprisonment to 15 years]

(16) Schedule 1, item 140, page 80 (table item dealing with subsection 952L(1), column headed "Penalty"), omit "10", substitute "15".

[increasing term of imprisonment to 15 years]

(17) Schedule 1, item 140, page 82 (table item dealing with subsection 993B(3), column headed "Penalty"), omit "10", substitute "15".

[increasing term of imprisonment to 15 years]

(18) Schedule 1, item 140, page 83 (table item dealing with subsection 1021D(1), column headed "Penalty"), omit "10", substitute "15".

[increasing term of imprisonment to 15 years]

(19) Schedule 1, item 140, page 83 (table item dealing with subsection 1021D(2), column headed "Penalty"), omit "10", substitute "15".

[increasing term of imprisonment to 15 years]

Very briefly, so members understand the effect of the amendments Labor is proposing: the government's bill, the Treasury Laws Amendment (Strengthening Corporate and Financial Sector Penalties) Bill 2018, takes about a dozen offences that exist in the law today, that are the most serious offences, and applies a sentence to them of an increase of five to 10 years. The amendments that Labor are moving would increase the maximum sentence to 15 years. The offences we're talking about here are very serious and significant offences. They involve fraud, they involve abuse of position and they involve failure to comply with the most serious obligations that we put on people in positions of trust.

There is a very good and very simple reason why it's appropriate to increase penalties above and beyond what was advised in the ASIC Enforcement Review. The ASIC Enforcement Review occurred in 2017. It was before the banking royal commission. I don't think there's a person in this chamber who has not been disgusted and shocked by the things that have come out of that royal commission. It is abundantly obvious that the way that criminal law is framed at the moment at the federal level is not preventing people from engaging in what are breathtaking breaches of the law.

We need to make a statement as a parliament, and I think we should be speaking with one voice about how seriously we regard these offences. There's a real question here about what government members are going to do. Are they going to do what they did 26 times, when they came into the chamber and voted against a royal commission and, instead, sided with the big banks, or are they going to side with the Australian people this time?

Stuart Robert (Fadden, Liberal Party, Assistant Treasurer) Share this | Link to this | Hansard source

I'll be brief. The government's bill, the Treasury Laws Amendment (Strengthening Corporate and Financial Sector Penalties) Bill 2018, increases criminal penalties by 400 per cent. We have moved substantially to deal with this issue. I believe the government has moved a substantial way forward on this. We've got a very decent balance. It's in line with global jurisdictions. The government's particularly satisfied with the harshness of the penalties it's putting forward.

Tony Smith (Speaker) Share this | Link to this | Hansard source

The question is that the amendments moved by the member for Hotham be agreed to.