Doug Cameron (NSW, Australian Labor Party, Shadow Minister for Human Services) Share this | Hansard source

Today we debate two bills that at least in terms of intent are uncontroversial. In fact, Labor will support schedule 1 of the Treasury Laws Amendment (2017 Measures No. 5) Bill 2017 and the ASIC Supervisory Cost Recovery Levy Amendment Bill 2017 without hesitation. Schedule 2 of the Treasury Laws Amendment (2017 Measures No. 5) Bill 2017 provides for the appointment of a productivity commissioner with extensive skills and experience in dealing with policies and programs that have an impact on Indigenous persons and experience with dealing with one or more communities of Indigenous persons. Personally, I am always very happy to get some good people into the Productivity Commission. However, Labor has raised concerns about the manner in which indigeneity is defined in schedule 2 of the Treasury Laws Amendment (2017 Measures No. 5) Bill 2017. We'll have more to say about this in the committee stage of the bill; however, we will support the bill with the amendment that the government has circulated to address this issue.

Turning to the details of the Treasury laws amendment bill, schedule 1 makes amendments to the Corporations Act 2001 to strengthen protections against manipulation of financial benchmarks. Firstly, schedule 1 of the bill will make manipulation of all financial benchmarks used in Australia a specific criminal offence and subject to civil penalties. Individuals will be liable for fines of up to greater than three times the benefit they gain, or $945,000, which is 4,500 penalty units. A body corporate will be liable to fines of up to the greater of $9.45 million—that is, 45,000 penalty units—three times any benefit from manipulation or 10 per cent of the entity's turnover in the previous year. Civil penalties will also apply. Currently, manipulation of financial benchmarks is enforced using existing laws relating to market manipulation, false trading and market rigging.

Secondly, schedule 1 to the Treasury Laws Amendment (2017 Measures No. 5) Bill 2017 will establish a new licensing regime requiring administrators of certain designated significant financial benchmarks to obtain a new benchmark administrator licence from the Australian Securities and Investments Commission. Administration of financial benchmarks at present does not require a licence and is not a regulated activity under current law. ASIC will have the power to designate significant financial benchmarks with the consent of the minister. Financial benchmarks can be so designated if the benchmark is systemically important, could cause instability or would materially impact Australian investors if the availability or integrity of the benchmark were disrupted.

Thirdly, the bill will give ASIC powers 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. The bill will also give ASIC the power to compel market participants to make submissions to ensure the continued generation of a financial benchmark during times of financial market stress. This is a power of last resort. The ASIC Supervisory Cost Recovery Levy Amendment Bill 2017 supports this regime by adding benchmark administrator licences to the list of entities from which the ASIC may recover its regulatory costs under the ASIC supervisory cost recovery levy.

The ASIC industry funding model is based on the principle that ASIC's regulatory costs should be borne by the entities that benefit from or cause the need for this activity. ASIC's regulatory costs are apportioned each year between subsectors according to the amount of ASIC's regulatory activity that they account for. Regulations provide methods and formulas for how ASIC's regulatory costs are to be apportioned across the various sectors and subsectors that it regulates.

The ASIC Supervisory Cost Recovery Levy Amendment Bill 2017 makes amendments to the ASIC cost recovery levy that corresponds to the new regulatory requirements in schedule 1 to the Treasury Laws Amendment (2017 Measures No. 5) Bill 2017. Labor will support these measures which strengthen our laws against the manipulation of financial benchmarks. We have seen cases of manipulation of financial benchmarks around the world. In Australia, ASIC legal action regarding alleged manipulation of the bank bill swap rates by banks continues. Settlements with NAB and ANZ regarding attempted manipulation of the bank bill swap rate were struck with ASIC last year. Justice Jagot of the Federal Court is reported to have said that the conduct of traders was a gross departure from basic standards of commercial decency, honesty and fairness and that the Australian public had a right to be shocked and disgusted at what took place. These are very serious matters. As ASIC has noted, manipulation of the bank bill swap rate is not a victimless crime. There are winners and losers, and those winners and losers move around depending on whether the rate is moved up or down artificially. The bank bill swap rate impacts Australian businesses because it impacts financial products used by many Australian businesses to manage their financial affairs. We welcome the change in schedule 1 to this bill to strengthen protections against the manipulation of financial benchmarks.

We also welcome the corresponding changes in the ASIC Supervisory Cost Recovery Levy Amendment Bill 2017. However, we note the poor record of those opposite when it comes to consumer protections in the financial sector. This is from a government that ignored the need for a royal commission into the banks. By contrast, Labor has a proud record of standing up against misconduct in the financial services sector. The previous Labor government introduced the National Consumer Credit Protection Act 2009. This was a single, standard and nationally consistent regime for consumer credit regulation and oversight. There was also Labor's enactment of the Future of Financial Advice reforms. The coalition voted against FOFA in the House. They voted against FOFA in the Senate. When they got into government, they tried to do everything they could to wind back the Future of Financial Advice reforms. They tried to hollow them out. They tried to gut them by legislation and then by regulation. Labor fought hard to protect FOFA.

Increasingly in 2016 ASIC found that FOFA requirements specifically opposed by the coalition helped to bring to light the massive fees-for-no-service scandal. The October 2016 ASIC report into the scandal showed that Australia's big four banks and AMP had spent years charging customers fees for services they did not receive. ASIC's report estimated that they were going to have to pay back nearly $180 million, excluding interest, to over 200,000 customers. In May 2017 these figures were revised upwards. The government ignored a range of examples like that for over 600 days—600 days when they stubbornly resisted the urgent need for a royal commission into the banks.

I will move to the Productivity Commission reforms. Schedule 2 of the Treasury Law Amendment (2017 Measures No. 5) Bill 2017 provides for the appointment of a commissioner with extensive skills and experience in dealing with policies and programs that have an impact on Indigenous persons and experience in dealing with one or more communities of Indigenous persons. The new law also increases the maximum number of commissioners, not including the commission chair, from 11 to 12.

In his Closing the gap report statement to parliament on 14 February 2017, the Prime Minister announced a new role for the commission in Indigenous policy evaluation and the expansion of the commission to include a new commissioner to oversee this work. According to the explanatory memorandum:

A number of high profile reports have highlighted the need for more evaluation of policies and programs that have an impact on Indigenous persons, including the Commission's Overcoming Indigenous Disadvantage Report 2016. This report included case studies of programs that are making a difference as 'things that work', but the report found that only a relatively small number have been rigorously evaluated. There is a pressing need for further evaluation to better understand which policies and programs are effective in improving outcomes for Indigenous persons.

Labor supports the inclusion of a Productivity Commissioner with expertise and remit for policy matters relating to Aboriginal and Torres Strait Islander people. There is, however, a significant issue that concerns Labor regarding the definition of 'Indigenous person' in the legislation. In the legislation as introduced, the definition of 'Indigenous person' is based on race and descent rather than the standard three-part definition based on descent, identification and acceptance in the community. We note that the government has circulated an amendment with regard to this definition, which Labor will support. As I've said, we'll have more to say about this issue in the committee stage of the bill.

In conclusion, Labor will support schedule 2 of the Treasury Laws Amendment (2017 Measures No. 5) Bill 2017, with the amendment that the government has circulated. Labor supports the changes in schedule 1 to the Treasury Laws Amendment (2017 Measures No. 5) Bill 2017 to strengthen the rules against manipulation of financial benchmarks. We support the associated changes to the ASIC supervisory cost recovery levy in the ASIC Supervisory Cost Recovery Levy Amendment Bill 2017. However, we note that these changes regarding financial benchmarks come from a government that has a record of turning a blind eye to misconduct in the banks and the financial sector. They come from a government that will always back the big end of town over ordinary Australians. Nothing could epitomise more the backing of the big end of town against ordinary Australians than this government's determination not to have a royal commission inquiry into the banks and this government's determination to give those selfsame banks something like $8 billion in tax cuts under its tax cut policies. This is a government that does whatever it can to minimise the impact of decency on banks. This is a government that regretfully announced a royal commission after the public were determined, with the support of the Labor Party, to have a banking royal commission. These bills are important.

The Productivity Commission has done some good work and some pretty ordinary work over a long period of time. If we're going to have an Indigenous commissioner, that Indigenous commissioner should be supported by the Productivity Commission, ensured proper resources in the Productivity Commission and be welcomed into the Productivity Commission, which seems to be a closed shop for those with highly conservative ideas and policy proposals on most of the issues that they deal with—not all, but most of them—and the Productivity Commission has to ensure that this Indigenous commissioner has the resources and the framework to deal with the issues of importance to Indigenous Australians.

This bill also goes to some of the worst aspects that we've seen of the banks' misbehaviour. The rorting that goes on by banks justifies what we have always argued for: a banking royal commission.