Arthur Sinodinos (NSW, Liberal Party) Share this | Hansard source

It is a pleasure and a privilege to follow Senator McGrath in this debate—a great senator from the great state of Queensland. In my remarks I want to do a number of things. I want to talk a bit about an aspect of history relating to the Banking Laws Amendment (Unclaimed Money) Bill 2015. It goes back to the period when I was Assistant Treasurer. I went on a radio program—I think it was on 2GB—and was being interviewed by Jason Morrison. I went on to talk about some legislative issues current at the time, but he immediately got into me on the issue of unclaimed moneys and the fact that in 2012 the former government had reduced the period before funds could be transferred to the Australian Securities and Investments Commission from seven years to three years, which had resulted in a large number of effectively active accounts being transferred to ASIC, and that left many Australians financially stressed. I was quite surprised at the strength of his feeling on this subject. It registered with me. It was also raised in the coalition party room and the Treasurer, Joe Hockey, undertook to examine the matter. This bill is the fruit of that consideration. I commend the Treasurer and the Assistant Treasurer, Josh Frydenberg, for following through with this particular bill.

When you have worked in government over a long period, as I have, you come across a lot of savings options. I suppose you could get to the point where you sometimes think that one savings option is as good as another, but you must never underestimate the public reaction to these things. There is no doubt that this particular measure struck a chord with a lot of people, and that of course was then reflected in the comments of media commentators, such as Jason Morrison and others. So, in one sense, you could say that this is the Jason Morrison bill. I am sure he will be chuffed that I say that about him. I do not think he is working in media any longer, but that shows the influence that people can have in setting some of these agendas, and I recognise his contribution on this particular bill.

This bill does a number of things. It implements a decision in the 2015-16 budget that, effective from 31 December this year, there would be a number of changes to the unclaimed moneys provisions in the Banking Act 1959 and the Life Insurance Act 1995. The bill amends the Banking Act and the Life Insurance Act to specify that funds in bank accounts and life insurance policies cannot be deemed to be unclaimed and therefore be transferred to the Commonwealth until they have been inactive for at least seven years. The bill will also introduce secrecy provisions into the Banking Act and the Life Insurance Act to ensure that, even under a freedom of information request, the particulars of the amount of unclaimed money or the person to whom the money is payable cannot be released to anyone other than the account holder or an agent acting on their behalf.

The bill also amends the Banking Act to exempt funds held in a foreign currency from the unclaimed moneys provisions. It exempts funds held by or on behalf of an individual under the age of 18 from the unclaimed moneys provisions. It ensures that, if an account holder or their agent notifies an approved deposit-taking institution, or ADI, any time prior to the funds being transferred to the Commonwealth that they would like their account to remain active, the account does not have to be transferred. It removes the requirement to publish an unclaimed moneys gazette while still ensuring that the Treasurer can make the details of those unclaimed accounts publicly available in such a manner as the Treasurer determines.

The unclaimed moneys provisions exist to protect Australians' forgotten savings and life insurance policies from being eroded by fees and charges over time. So the public policy intent behind the original measures is fair enough and sensible. After an account has been inactive for seven years, the funds in that account will be transferred to the government, where they will grow at the rate of the consumer price index, tax-free. No matter what, these funds continue to belong to their rightful owner and can be reclaimed at any time through contact with either ASIC or their financial institution. There is no fee charged for this service.

As I alluded to earlier, Australia has had provisions to effect the transfer of unclaimed funds to the government since at least the introduction of the Commonwealth Bank Act in 1911. Between 1911 and 2012 accounts must have been inactive for at least seven years before accounts could be transferred. In late 2012 the previous government reduced the required period of inactivity to three years. This resulted in half a billion dollars from thousands of accounts—that in many cases their owners were aware of—being transferred to the Commonwealth. This placed many Australians in a position of financial distress. Returning the required period of inactivity to seven years is expected to reduce the number of accounts transferred to the government each year by up to 50 per cent and reduce the regulatory burden on the community by $36 million each year. As I noted earlier, the changes are due to take effect from 31 December 2015. This means that no funds should be assessed as unclaimed until at least 2019 and no unclaimed funds should be transferred to the government until at least 2020.

There are, as I mentioned earlier, a number of exemptions. For example, many Australians set money aside for their children's future and trust that this money will continue to grow in value and be available for the children when, say, they turn 18. In recognition of this fact and to reward, not punish, those Australians working hard to contribute to their family's future, funds from children's accounts will never be transferred to the government. This is sensible. People putting the money away—normally the parents or perhaps the grandparents—clearly have a stake or an interest in those funds being properly invested and growing in value over time and therefore they are likely to keep an eye on those accounts. It is not a matter in such cases, I believe, of people potentially forgetting that those accounts exist. So this is a sensible provision for exemption.

Why is the government exempting foreign currency accounts from the unclaimed moneys provisions? Again, this is a sensible change. Accounts in a foreign currency are primarily used by sophisticated consumers to settle complex international transactions. Not only does transferring these accounts to the government potentially disrupt these processes; it also exposes the account holder to a loss, as their funds must be converted to Australian dollars at the prevailing exchange rate. So, as I said before, this was initially a budget savings measure, but we have to have equity and equity involves taking due account of the needs of the community, and the community have spoken loudly on this measure.

Finally, may I say that the red tape agenda is served by this bill as well, with a regulatory saving of $36 million per year. The federal government has shown its commitment to its deregulation agenda by the fact that it is prepared to incur a fiscal cost to reduce the fiscal balance by $158 million over four years from 2015-16 to implement this commitment. That shows genuine commitment to the regulatory process. On that basis, I complete my remarks.