Mitch Fifield (Victoria, Liberal Party, Assistant Minister for Social Services) Share this | Hansard source

There was a late flurry of interest towards the end of yesterday in relation to this bill, but it would seem that the interest has been satisfied. As no other colleagues wish to speak, I will sum up the debate. I thank colleagues for their contribution to the debate.

In 2012 the previous government reduced the required period of inactivity to three years before funds in bank accounts and life insurance policies could be transferred to the Australian Securities and Investments Commission. As a result the value of unclaimed money transferred to ASIC grew more than eightfold in a single year. Much of this money, however, was not what you might call 'truly unclaimed' and the previous government's changes left many Australian families in a position of financial distress. It also imposed a large red-tape cost on industry, which had to transfer accounts to and then reclaim them from ASIC on behalf of their customers, often in the same year. The government is strongly of the belief, as evidenced by this legislation, that this situation must not continue.

The policy is a personal legacy of the Leader of the Opposition Bill Shorten who was the financial services minister at the time of the change. At the time Mr Shorten pretended that he was doing a favour to people who had forgotten the existence of their saving accounts, and he perversely described the seizures as a 'windfall' for anyone who might later recover their lost money and go looking for their misplaced money. I will just remind you, Mr President, in case you have forgotten, of what he said:

It's actually surprisingly easy to misplace money, through a simple mistake like forgetting to update your address when you move.

And he added:

It's likely that some proportion of that windfall belongs to people living in Melbourne's western suburbs, and my electorate of Maribyrnong.

The reality was that Mr Shorten's bank account seizure legislation was blind as to the memory or intentions of people who held the accounts that were being confiscated. It is quite normal for people to deliberately hold over savings undisturbed, whether for a rainy day or for a major expense like a house deposit or as an inheritance for their children. There are thousands of Australians who were horrified to find that their accounts had been emptied out by Mr Shorten at the very time that they needed to access their funds. To recover their funds, they had to pass through red tape, as I have mentioned, and delay. This red tape was particularly difficult in some family situations where the account holder had moved overseas or where they had passed away and willed their money to relatives and other beneficiaries of their estate.

But why did Labor really change the law in 2012? It is not really a rhetorical question—I am not expecting a response from you, Mr President—but let me answer. Immediately before Labor imposed the three-year rule, they were claiming that they would deliver a $1.5 billion surplus for 2012-13, but they knew—I think we all knew—that they were in serious trouble to achieve that target. It is no coincidence that Labor came up with the cash grab after they had pinned their reputations on a surplus. The panicked cash grab was just about stringing out an illusion of a surplus, an illusion that ultimately proved to be false by a very long way. The Labor measure was a cash grab conceived purely for political reasons rather than sincere policy reasons. When the coalition government announced that we would scrap this Labor policy, Mr Shorten stood by his policy on unclaimed savings, pitching it as a consumer protection measure. He argued at the time, 'This is about protecting people's savings to ensure it's not eroded by bank fees and charges.' Several Labor Party members told The Sydney Morning Herald that they were privately embarrassed about the policy.

This bill sets things right. In order to protect account holders and industry, this bill returns the required period of inactivity before funds can be transferred from bank accounts or life insurance policies to seven years—that is, once they are truly unclaimed. This bill further bolsters the government's commitment to only receiving truly unclaimed accounts by also making changes to the notification requirements to ensure that, even after seven years of inactivity, if an account holder lets their financial institution know that they are aware of those funds in any way prior to their transfer to ASIC, such as by checking the balance online, they will remain in the control of the account holder.

In recognition of how Australians use different financial products, this bill will also exempt children's accounts and foreign currency accounts from the unclaimed moneys provisions entirely. Foreign currency accounts are primarily used by sophisticated consumers to settle complex business transactions. However, transferring foreign currency accounts to ASIC not only risks disrupting these processes but also risks exposing the account holder to a loss, as their funds must be converted to Australian dollars at the prevailing exchange rate before they can be transferred. In line with the government's commitment to protect Australian businesses from excessive red tape, these types of products should rightfully be exempt from the unclaimed moneys provisions. In addition, many Australians set money aside for their children's future and they trust that this money will continue to grow in value and be available for their children when they are ready. In line with how the community uses these products and to ensure that parents can be sure that their investment in their family's future remains safe, children's accounts will never again be transferred to ASIC.

Finally, this bill introduces new privacy protections for those Australians with unclaimed accounts. To protect account holders from exploitation or even identity theft, this bill introduces secrecy provisions to restrict freedom of information requests generally to an individual's own details and removes the requirement for ASIC to publish an unclaimed moneys gazette. This bill contributes to the government's promise to reform the unclaimed moneys provisions and the government's promise to reduce red tape by a billion dollars each and every year.

It was only this week, when the bill was debated in the House of Representatives, that Labor recanted its position and admitted that it had got things wrong. Dr Leigh, the shadow assistant Treasurer, said:

It is important to get the balance right, …

…   …   …

… what we are debating here is the correct duration after which unclaimed money should be moved into ASIC.

Dr Leigh sought to make it sound like a minor clerical error, that Labor had more than halved the period before the government seizes the hard-earned earned savings of its citizens. He ignores the other safeguards that we have added into this bill, which I have outlined. These reforms are about much more than lengthening time frames.

This is not the first Labor assault on the savings of Australians that we have overturned. Last week the Prime Minister and Treasurer also confirmed that we will be dumping Labor's bank deposit tax. This decision not to proceed with implementing the bank deposit tax adopts a key recommendation of the financial system inquiry and comes after extensive consultations with stakeholders and the community. Labor's proposed bank deposit tax would have imposed costs of $1.5 billion on Australians with bank savings. It would have damaged competition in the banking sector by putting regional and community banks at a disadvantage relative to the big four banks and further disadvantage hardworking Australians.

The Labor Party announced the bank deposit tax on the eve of the last election. Then Treasurer, Chris Bowen, booked the revenue with a start date of 1 January 2016 but failed to legislate the change. Labor's bank deposit tax would have been yet another cash grab that penalised Australians for being financially responsible. I think we know on this side of the chamber that these sorts of Labor habits do die hard.

Our action in today's bill and in the announcement of last week reflects the government's determination to deliver lower, simpler and fairer taxes. We have scrapped the carbon tax—I think that bears repeating; we have scrapped the mining tax—I think that bears repeating; and we have delivered the biggest tax cut ever to small business, which was extremely well received after the last budget. The government has also dumped Mr Shorten's raid on inactive bank accounts, the matter we are discussing today. In total we have reduced the overall tax burden on Australians by nearly $7 billion since coming to office.

A stable, well-regulated financial system is critical to our economic confidence and prosperity. The Australian Prudential Regulation Authority is taking steps to strengthen the Australian banking sector by bolstering bank capital levels, reducing the risk of failure and mitigating the costs if a failure does occur. I think we can and should be very proud of the prudential arrangements that we do have in Australia. The government remains committed to guaranteeing deposits up to $250,000 per account holder per financial institution as well.

This bill is an important reform. It is fair and it is responsible. It reverses a cash grab by the opposition that was done purely for cosmetic purposes, to help Labor claim that it was heading towards a fictional surplus. The bill, as I have outlined, provides for red-tape savings for business of $36 million by extending the period of inactivity to seven years. In addition, there will be red-tape savings for an estimated 19,982 account holders each year. There are countless stories of how Labor's legislation left many Australians financially stressed. As a result of today's changes, many Australians will no longer have to come cap in hand to the government and fill out onerous paperwork to reclaim what was theirs in the first place.

This bill puts an end to bad policy and adds important safeguards into the unclaimed money laws. This is an important piece of legislation and I commend it to the Senate.

Question agreed to.