Deborah O'Neill (NSW, Australian Labor Party) Share this | Hansard source

Before I make my contribution to the debate on the Treasury Laws Amendment (2018 Measures No. 2) Bill 2019, I have to remark on hearing the close of Senator Rennick's speech and the speeches of so many of those on the other side. They get to the end and they give you this little three-line patter about how they are doing this and they're doing that—and the great PR machine of the government rolls on!

At the end of every speech you get a little signal of it. The problem is that the gap between the rhetoric and the reality is growing by the day.

Sadly, as much as they talk about innovation, as much as they talk as though they're able to support businesses, this is a government that have been in for three terms, and this bill's coming to us because they haven't been able to get the job done right. They have not been able to create the context in which innovation booms in the way that they've proclaimed it would, just by them showing up and becoming the government.

I take great interest in this bill, the Treasury Laws Amendment (2018 Measures No. 2) Bill, particularly given my former role as shadow assistant minister for innovation. I think we would all agree that we should and indeed must do everything we can to support Australians nascent start-up industry. This bill creates a regulatory sandbox that would allow—at least in principle—fintech companies to develop new financial products without traditional regulatory constraints and makes minor changes to the venture capital and angel investor tax arrangements.

Schedule 1 of the bill has been described by some of my colleagues, and I concur that it changes regulations which will allow ASIC to grant conditional exemptions to the Australian financial services licence or an Australian credit licence requirement for the purpose of testing financial and credit service products. Schedule 1 also empowers ASIC to decide when the exemption starts and ceases to apply, as well as the discretion to enforce specific conditions to the exemption. Schedule 2 of the bill amends the Income Tax Assessment Act 1997 to change tax concession provisions regarding venture and early-stage investor capital. This measure is one that Labor supports as it addresses gaping holes previously left in the government's Tax Laws Amendment (Tax Incentives for Innovation) Act 2016. I think that proves my opening remarks: this government has got it wrong on so many occasions across the three terms that it has been elected to serve this nation.

The bill under discussion at this point of time here in the Senate broadly attempts to allow the Australian fintech industry greater freedom from the current regulatory regime at the very beginning of a product's conception. I accept and we understand that this is a development stage element that's crucial in the eventual development of technology and it's important to allow innovation in areas that would not traditionally be possible. Fintech is a growing and important industry, with almost 58 per cent of Australians who are digitally active using some form of technology that automates some aspect of financial services. As more and more of our society and industry becomes digitised, the provision of financial services through technology will become even more crucial in our everyday lives.

The financial services industry in Australia is a huge export industry worth almost $4.6 billion. We are a global leader in the industry. To remain on top, we must also be on top of new and emerging technologies. Fintech—already worth around $1 billion despite the inefficient regulatory regime that has lagged far behind the market's development, needs better care. The introduction of a regulatory sandbox—the idea of a temporary exemption from certain regulations to stimulate innovation in a risk-free environment—is one that should be carefully considered given the current regulations are designed to protect consumers from predatory financial institutions. I need to remind no member of this chamber or anyone who might be here visiting parliament today or, indeed, those who might be listening to the broadcast, of the pernicious dangers of financial institutions, which were all too clearly revealed to a horrified public through the course of the banking royal commission. We must always remember that regulations exist for a reason and we should only alter them under the most careful of circumstances. Labor is a great supporter of innovation. We are also energetic supporters of the fintech industry. Labor backs entrepreneurs who create with their minds as much as we want to support tradesmen who create with their hands. That's why Labor will be supporting this bill but with certain amendments. To ensure that safety of consumers is embedded in this legislation, our efforts will be to try and correct what we think is bad about this legislation, to better give it viability.

New fintech services allow small and medium businesses access to financial services and to circumvent the monopolies that some of the larger businesses in the financial and insurance industries have on particular products that we all might want as consumers. We absolutely support greater competition in the industry through interesting and affordable technologies, but we must also make sure that our regulatory regime keeps up and is not lapped by sneaky and malicious actors. I've been very vocal in this house, and only last year I spoke about the need to cut down on the capacity that there seems to be for scammers to exploit our citizenry, particularly by using schemes that reach into our pockets and into our lives through our phones. This bill should not be a green light for wannabe con artists who want to get their hands on Australian people's money through technology that is not properly contained and regulated to a degree that gives people safety and certainty in their interaction with it. There should be the relevant protections. There's a public interest, and the exemption that the bill will provide for should be able to be used only by those whose motives and methods seek to advance the common good.

We've often heard from those opposite about the need for innovation. Was it not erstwhile Prime Minister Malcolm Turnbull who called for an Australian ideas boom? Remember? It would last and go on forever. That was what he said. It was going to provide us with jobs and growth—one of those phrases that we have all become familiar with hearing but, sadly, not experiencing. The reality is that that gap between the rhetoric and the reality is emerging more and more, because, while this government talks as though it supports innovation and would have people believe that it supports business and opportunity, it is presiding over the erosion of the opportunities for Australians to get the skills they need for an innovative economy. Our STEM standards continue to fall as this government pulls money out of schools hand over fist and walks away from equitable, genuine needs based funding. The TAFE sector across this country, particularly in my state of New South Wales, is a shadow of its former self—a broken thing. The sector of TAFE continues to shrink, and arrogant LNP governments are taking away the opportunity for young people and people who seek to retrain through TAFE to access the new knowledge that they need to participate in a genuinely innovative economy.

We can't just relax our regulatory regime to ensure Turnbull's fabled ideas boom happens. It's hard to have a go when you can't get a go—as the Prime Minister often wants to tell us— and if you cannot get proper education or access training for the roles that innovation offers up. When the government fails, that means long-term suffering for Australian people—for young people and people who find themselves in industries that no longer need their services and who want to retrain. Long-term unemployment is what this government constructs a recipe for. It's wasting the most precious resource of this country: the Australian people.

When the government last introduced this regulatory sandbox, it was such a failure that only three businesses applied. Compare this with 146 in the UK and 30 in Singapore, after only one year of operation. That's what happens when the government actually does its day job properly and gets the settings right. It's happening in other countries. It's just that we've got an incompetent government at the helm. We need more than just the lifting of regulations to ensure the future success of our fintech innovation. Labor absolutely supports the creation of a sandbox to help genuinely innovative and helpful products be developed and delivered. But we will not turn away and ignore the reality that this government hasn't got a good track record of protecting Australians from those who would misuse their intellect and create things that would be of little economic or social value and perhaps even become profoundly exploitative. That's why Labor will be moving an amendment to this bill.

Labor's amendment, applying to schedule 1 of the bill, introduces a requirement for companies accessing the fintech sandbox exemptions that are created under this bill to submit a notice outlining the details of their service or product and give a sound and fulsome justification as to why the exemption that they seek is likely to benefit the public. Under Labor's amendment, ASIC will have the power to remove a company's access to the fintech sandbox exemption if ASIC decides they're not satisfied that the new service or product is actually innovative or likely to benefit the public. We need to send a message: you can't just use this as a fast track to get around all the rules and regulations that protect Australian consumers; you have to satisfy the Australian Securities and Investments Commission that it's for the common good, that it's to the advantage of all Australians and that it's a fair and ethical product.

This test is not new. It's actually common in other jurisdictions. It could've been in the government's legislation at least a term ago. But they miss the details, too often. As I said, this test is common in other jurisdictions. It's supported by consumer groups such as CHOICE, the Financial Rights Legal Centre and the Consumer Action Law Centre, and the local fintech sector has also endorsed a move for a public-interest test. FinTech Australia, in their submission to this bill, called for an official review test to ensure that only appropriate companies can be exempted from the regulations. It's a commonsense measure. If a company or entity wishes to suspend consumer protection laws, they should provide a crystal-clear and ironclad reason for doing so, and that reason must clearly meet the public-interest test.

Labor supports innovation and a smart economy which will sustain Australia well into the future and which will create the jobs that will give such satisfaction to Australians into the future. However, while this government continues to govern we will do everything we can to make sure that Australians are protected from this government's failure to do its job properly. We will ensure that consumers are protected and that vulnerable Australians are not preyed upon by people who are more interested in making money than doing the right thing, people who should not be exempted from government regulation.

More needs to be done to support our education sector so that we can produce the kinds of skilled people who will staff these start-ups and come up with the brilliant ideas that will make our lives less cluttered, more efficient and more enjoyable. If I had a dollar for every request from leaders in the innovation field for us to change how we invest in education! So many great start-ups are looking overseas to get their graduates because this government has our whole education sector running on the smell of an oily rag. It's just not good enough. The minds of our future generation are the most renewable resource that we have. We see success in places like Silicon Valley and the start-up industries in Israel. Australia should be right up there with them. The guts, the brains and the can-do attitude of the Australian spirit is fertile soil for the brilliant ideas of tomorrow to grow. I move:

The amendment was unavailable at the time of publishing.