Michaelia Cash (WA, Liberal Party, Assistant Minister for Immigration and Border Protection) Share this | Hansard source

I move:

That these bills be now read a second time.

I seek leave to have the second reading speeches incorporated in Hansard.

Leave granted.

The speeches read as follows—

AUSTRALIAN TRANSACTION REPORTS AND ANALYSIS CENTRE COST RECOVERY LEVY AMENDMENT BILL 2014

The Australian Transaction Reports and Analysis Centre Cost Recovery Levy Amendment Bill 2014, in conjunction with the Australian Transaction Reports and Analysis Centre Cost Recovery Levy (Collection) Amendment Bill 2014 alter the current arrangement for industry contribution to the Australian Transaction Reports and Analysis Centre (AUSTRAC).

The bills transition AUSTRAC from its current cost recovery arrangements, which apply only to its regulatory function, to a model that enables an industry contribution to AUSTRAC's dual role as Australia's AML/CTF regulator and financial intelligence unit.

The Government recognises that money laundering and terrorism financing pose a significant threat to Australia's security and prosperity. We are determined to protect the Australian community and businesses from the economic, social and national security impacts of terrorism and organised crime.

A robust anti-money laundering and counter-terrorism financing regime is essential for Australian businesses to remain competitive in the global market and to ensure financial integrity and stability.

AUSTRAC's purpose is to protect the integrity of the financial system and contribute to the administration of justice through its expertise in countering money laundering and the financing of terrorism. This purpose is achieved through the exercise of its two interdependent functions – as a regulator and as Australia's financial intelligence unit.

As a regulator, AUSTRAC works with the businesses it regulates to enhance the level of understanding of anti-money laundering and counter-terrorism financing obligations, and supervise compliance with the requirements of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 .

Regulated businesses provide services that are vulnerable to exploitation for money laundering and terrorism financing purposes, creating the need for regulation by AUSTRAC. It is appropriate therefore that industry meet the costs of regulatory systems that ensure the integrity of their operating environment.

As Australia's financial intelligence unit, AUSTRAC collects and analyses financial data to produce high quality financial intelligence.

This financial intelligence is then provided to state, territory and Commonwealth law enforcement, security, social justice and revenue agencies as well as certain international counterparts. The information can assist AUSTRAC's partner agencies to investigate and prosecute criminal and terrorist enterprises in Australia and overseas. Whilst the use of the information is predominantly by partner agencies, it serves to strengthen the integrity of Australia's financial system, creating a secure and stable operating environment for Australian business to operate and thrive.

This bill, together with the Australian Transaction Reports and Analysis Centre Supervisory Cost Recovery Levy (Collection) Amendment Bill 2014, implements the new industry contribution arrangements announced by Government as part of the 2014 budget.

The bills replace the existing 'Supervisory Cost Recovery Levy' which currently funds AUSTRAC's regulatory activities. The new industry contribution model outlined in these bills will fund both the regulatory and financial intelligence unit functions of AUSTRAC.

The new industry contribution regime provides a number of efficiency and deregulatory benefits for business, particularly small businesses. The new arrangements reduce red tape as they are considerably simpler for reporting entities to understand than the complex 'cost recovery' arrangements currently in place. This in turn reduces costs as the industry contribution model is more streamlined for AUSTRAC to administer.

Approximately 3000 reporting entities will no longer be required to pay the AUSTRAC Industry Contribution levy. The number of reporting entities required to pay the industry contribution is estimated to be less than 900 entities. This represents a meaningful step in reducing the burden on small business.

The bills also set out a number of safeguards to ensure that over-recovery does not occur. Despite the industry contribution model, AUSTRAC will not be able to determine its own budget. AUSTRAC's budgeted appropriation will continue to be set by Parliament through the budget process. The contribution will then be invoiced based on AUSTRAC's budget for the upcoming financial year, as set out in the budget papers. Any subsequent Government appropriation throughout the financial year will form a component of the industry contribution by way of a further instalment from reporting entities.

The bill sets out that the amount of the contribution is capped at twice the budgeted appropriation for AUSTRAC in a financial year. While the goal is to match the amount of contribution to the budgeted appropriation for each year, appropriations late in a financial year may necessitate allowing payment in the next financial year to ensure regulated business have sufficient time to pay. For this reason the statutory cap is not matched exactly to the budget appropriation.

Under the arrangements set out in the 2014 Budget, the industry contribution will be calculated as a percentage of AUSTRAC's operating costs, at a rate of 70% in this financial year (2014-15), moving to 90% over the next two financial years (2015-16 and 2016-17), and finally reaching 100% from the 2017-18 financial year onwards.

These amounts will be set each year via a ministerial determination which also sets out the calculation model. The calculation model will be set with reference to the number of businesses liable for the payment, and the budget allocated by Parliament to AUSTRAC.

An independent review of the calculation methodology is required after four years. The review will be conducted in close consultation with industry.

This bill will ensure that AUSTRAC continues to provide a regulatory and intelligence environment that maintains community confidence in financial flows, and minimises the risk to business of exploitation for money laundering or terrorism financing.

AUSTRALIAN TRANSACTION REPORTS AND ANALYSIS CENTRE COST RECOVERY LEVY (COLLECTION) AMENDMENT BILL 2014

The Australian Transaction Reports and Analysis Centre Cost Recovery Levy (Collection) Amendment Bill 2014 (the Collection Bill), in conjunction with the primary bill, the Australian Transaction Reports and Analysis Centre Cost Recovery Levy Amendment Bill 2014, alters the current arrangement for industry contribution to the Australian Transaction Reports and Analysis Centre (AUSTRAC).

The bills implement the new industry contribution arrangements announced by Government as part of the 2014 budget, and transition AUSTRAC from its current cost recovery arrangements, which apply only to its regulatory function, to an industry contribution model that enables an industry contribution to AUSTRAC's role as a financial intelligence unit.

The bill sets out a number of operational arrangements necessary to administer the industry contribution. This includes: creating the liability for a leviable entity for a given financial year to pay the industry contribution levy in that financial year; allowing the AUSTRAC CEO to specify the date for payment of instalments of the levy; and setting out late payment penalties.

The bill also sets out the requirement for an independent review of the operation of the levy as soon as possible after the fourth anniversary of the commencement of the Collection Act. This review, to be undertaken in close consultation with industry, will ensure that the operation of the new industry contribution, including the methodology used to calculate instalments of the levy and the impact of the levy on industry, is appropriately evaluated. It will also provide the opportunity for improvements to the arrangements, if warranted.

This bill, together with the Australian Transaction Reports and Analysis Centre Cost Recovery Levy Amendment Bill 2014, will ensure that AUSTRAC continues to provide a regulatory and intelligence environment that maintains community confidence in financial flows, and minimises the risk to business of exploitation for money laundering or terrorism financing.

Ordered that further consideration of the second reading of these bills be adjourned to the 27 October 2014, in accordance with standing order 111.