George Brandis (Queensland, Liberal Party, Shadow Attorney-General) Share this | Link to this | Hansard source

by leave—I move opposition amendment (1) on sheet 7095, relating to the collection bill; and opposition amendment (1) on sheet 7096, relating to the consequential amendments bill:

(1)   Clause 2, page 2 (table item 2), omit the table item, substitute:

(1)   Page 3 (after line 5), after clause 3, insert:

4 Review of operation of AUSTRAC cost recovery levy

(1)   The Minister must cause an independent review of the operation of the levy imposed by the Australian Transaction Reports and Analysis Centre Supervisory Cost Recovery Levy Act 2011 to be undertaken as soon as possible after the second anniversary of the commencement of section 3 of that Act.

(2)   The person who undertakes the review must give the Minister a written report of the review within 6 months after the second anniversary of the commencement of section 3 of the Australian Transaction Reports and Analysis Centre Supervisory Cost Recovery Levy Act 2011.

(3)   The Minister must cause a copy of the report of the review to be tabled in each House of Parliament within 15 sitting days of receiving it.

(4)   A report prepared under subsection (1) must include but is not limited to:

  (a)   a review of the levy calculation methodology;

  (b)   consultation with industry participants including small and micro businesses about the impact of the levy and the costs of complying with the Australian Transaction Reports and Analysis Centre Supervisory Cost Recovery Levy Act 2011;

  (c)   whether the definition of small business that is to be used (of a business employing less than 5 employees) should be amended to the definition of small business currently used by the Australian Bureau of Statistics (a business employing less than 20 employees).

In reliance upon the advice of the clerks, the substantive amendment takes the form of an amendment to the Australian Transaction Reports and Analysis Centre Supervisory Cost Recovery Levy (Consequential Amendments) Bill 2011. But, because of the interlinking of the different bills in the suite of legislation, it will give effect to the operation of the scheme established by the principle bill—that is, the Australian Transaction Reports and Analysis Centre Supervisory Cost Recovery Levy (Collection) Bill 2011—as we are advised.

The amendment, as I have indicated, which gives effect to the opinion of the Liberal senators in the committee would mandate a statutory review of the operation of the levy and the methodology for the calculation of the levy within two years or as soon as practicable after the second anniversary of the commencement of the legislation. I note the minister's comment that the legislation provides that there may be a review, depending on the circumstances, after five years. There are two reasons why that is not sufficient from the opposition's point of view. First of all, there is no guarantee of a review after five years. The opposition's amendment would mandate that there be a review and so remove any element of contingency. Secondly, for a new scheme—which, as both opposition senators and Senator Xenophon have pointed out, imposes an uncertain but potentially very significant regulatory cost, especially on small business—it is the view of the opposition that five years is way too long for there not to be a review of its operation.

If this were an adjustment of an existing scheme of regulation, that might be fair enough. But as there is no scheme of calculating a levy and compliance with these statutory requirements at the moment, and therefore the way in which it will impact, particularly on small business, is unknow­able. For that reason, we believe having a review after two years is appropriate. Nobody can seriously suggest that the features or characteristics of the operation of this levy will not be able to be ascertained within two years of its operation. Nobody could seriously maintain that, if there are problems experienced in the operation of the levy, particularly in relation to regulatory burden, it should take five years before there is an opportunity to review and correct them. For that reason, as I have said, we favour a mandatory review as soon as practicable after the second anniversary of the com­mencement of the act. As indicated in subsection (4) of our proposed section 4 of the Australian Transaction Reports and Analysis Centre Supervisory Cost Recovery Levy (Consequential Amendments) Bill 2011, the report would review the levy calculation methodology; conduct consul­tation with industry participants, including small and micro businesses, about the impact of the levy and the costs of complying with the levy; and consider whether the definition of small business that is used—that is, of a business employing fewer than five employees—should be amended to agree with the definition of a small business currently used by the Australian Bureau of Statistics: a business with fewer than 20 employees.

As I have said, we support the principle of the legislation and we support the legislation itself, but this is, let me urge the government, a sensible measure. If there is reason for concern about the way in which the collection and the calculation of this levy impinges on small business, it is unthinkable that small businesses so affected should have to wait for five years for a review of its operation. A mandatory levy after two years is the opposition's recommendation to the chamber.

Nick Sherry (Tasmania, Australian Labor Party, Minister Assisting the Minister for Tourism) Share this | Link to this | Hansard source

We generally have agree­ment and sympathy with the points you raise, Senator. You might consider and take a moment to discuss the following with your adviser. We can accept the amendments you move, but there is one concern, and that relates to amendment (1)(4)(c) on sheet 7096, which begins 'whether the definition of small business that is to be used'. Our concern is not with the definition as such but with actually putting it in the legislation. I am advised that that will already occur by ministerial determination. To put it in the bill would mean that a range of other changes to the legislation would be necessary. If you do not proceed with that part of your amendment, we are happy to accept all the rest.

George Brandis (Queensland, Liberal Party, Shadow Attorney-General) Share this | Link to this | Hansard source

All of those people listening on the wireless will be hearing democracy in action as we have this negotiation across the chamber. Minister, what you say—and I acknowledge your depth of experience in this field—we accept at face value. So, in consideration of the government's support for the balance of our amendment, I seek leave to withdraw so much of the circulated amendment, on sheet 7096, as appears in subsection (4)(c).

Leave granted.

Guy Barnett (Tasmania, Liberal Party) Share this | Link to this | Hansard source

I thank Senator Sherry and Senator Brandis for that dialogue across the chamber. I am pleased that the minister is willing to accept those amendments put by the coalition.

During his second reading speech, the minister referred to the number of small businesses affected. He said there would be 6,800 entities paying $284 a year in the first year. The advice I have from AUSTRAC is that they have estimated that in that first year there will be 8,512 leviable entities subject to the base component. Clearly there is a difference of 1,712 small business entities between your advice and the advice provided by AUSTRAC. For the record, I think we should get clarity around how many entities are likely to be required to pay that base component.

You suggested that we said there had not been adequate consultation, but we did not say that. I did not say that; I said there had been consultation. What we were supporting in our recommendation was an education and information effort by the government going forward, bearing in mind this is starting on Friday next week, 1 July. I ask the govern­ment to positively consider a proper education campaign going forward. Of course there has been consultation, and there was a discussion paper. I make the point that the cost recovery model did change earlier this year. Here we are in June; it changed in January or February or thereabouts. So you cannot just say that business across the board is totally up to date with exactly where we are. There have been changes along the way. AUSTRAC knows this and the government knows this, and that is why businesses need to be advised of the latest developments and changes and exactly how they will be affected.

The minister also said in his second reading speech that there would be no late payment penalty for the first three months. We recommended that it be extended for at least six months through to the end of this year because the first three months is not adequate—it should be six months.

I thank the minister for agreeing to Senator Brandis's recommendations and the coalition's amendments and look forward to his feedback on the number of entities that will be subject to the base component.

Nick Sherry (Tasmania, Australian Labor Party, Minister Assisting the Minister for Tourism) Share this | Link to this | Hansard source

Senator, I have some rough figures, which is the best I can do in the circumstances. Approximately 17,000 businesses are affected by the AML/CTF Act. There are 6,000 small businesses, known as affiliates, that are exempt because of their status as affiliates. They are small businesses and microbusinesses. There are a further 3,000 microbusinesses that are specifically exempt because of their microbusiness status. That gives us a figure of approximately 8,000. I am advised that the number affected on the volume of activity is 8,512. I can only give you approximate numbers other than that last number. If I gave an earlier figure that was incorrect, I stand corrected, but they are the approximate figures and the way in which we reached that total.

Russell Trood (Queensland, Liberal Party) Share this | Link to this | Hansard source

The question is that opposition amendment (1) on sheet 7095 and opposition amendment (1) on sheet 7096, as amended, be agreed to.

Question agreed to.

Nick Xenophon (SA, Independent) Share this | Link to this | Hansard source

I move the amendment standing in my name on sheet 7079:

(1)   Schedule 1, page 4 (after line 8), after item 1, insert:

  1A At the end of subsection 43(1)

     Add:

     ; or (c)   in the case of an eligible gaming machine venue—a person cashes in winnings of more than $1,000.

I indicate, as foreshadowed in my second reading contribution, that this is a very important issue. It relates to very serious concerns about money laundering at poker machine venues. I refer to reports in the Sydney Morning Herald that say that nationally $2 billion has been laundered through poker machines and gambling chips at hotels, clubs and casinos—as much as 40 per cent of that amount in New South Wales alone. There are also reports that certain venues are known by crime gangs as LLs, or local laundries. This is an important issue.

The current position is that venues are required by statute to pay certain winnings by cheque— as I understand it, in Victoria it is $1,000—so there is a record or a money trail, if you like. In New South Wales it is $2,000. My understanding is that in South Australia it is in the vicinity of $1,500. I cannot be absolutely certain of that, but it is in that order. The fact is that there are not too many jackpots of more than $1,000 each day at a venue. It is not onerous. It is quite reasonable that these transactions be monitored. If the reports in the Sydney Morning Herald are correct—that we are talking about $2 billion being laundered this way—and we want to tackle the issue of organised crime and money laundering, this amendment should be passed.

I must say that I have had my run-ins—and I will continue to have my run-ins—with the hotel, club and casino industries in this country, but I accept that they would not in any way countenance this sort of behaviour. I urge them to support this measure. I am sure that people such as Anthony Ball, the head of Clubs Australia, would be horrified at any suggestion that there is money laundering occurring at Australian clubs, poker machine venues or, indeed, hotels. That is something that I think they would have genuine concerns about. I think it is important. We have an opportunity to strengthen this legislation. If we did not include these amendments, it would mean a weakened piece of legislation. It would ignore the very significant amounts of money that are being laundered through poker machine venues by virtue of what I indicated earlier: you go in, load up a machine with up to $10,000 in some jurisdictions, play the machine for a while, lose $200 or $300, press the cash-out button and go to the cashier—and at the moment it is not a reportable transaction. To require it to be a reportable transaction would be a very powerful tool in dealing with those organised crime syndicates that use poker machine venues to launder money.

Nick Sherry (Tasmania, Australian Labor Party, Minister Assisting the Minister for Tourism) Share this | Link to this | Hansard source

We have only just been presented with this amendment. I accept the time constraints that Senator Xenophon has been working under. Senator Xenophon, I do accept your concern. Whether or not this is an issue to the extent you or some in the media have identified, I simply do not know. I do not have advice on that. I accept the concern that you have expressed about gaming related activities, although I do not necessarily agree with at least some of the points you make. The amendment you are suggesting would have some significance. Our concern is, firstly, whether or not it is a justifiable response, given what we are informed of at this late stage—whether it would be justifiable in the context of the concern you have. It is very, very late to be raising an amendment of this nature.

The objective of the AML/CTF Act relates to the deterrence of money laundering and to hardening reporting entities against terrorism financing. The regulation of gaming venues—of course, we have heard a lot about this in recent times—and their oversight for other purposes is undertaken at a state or territory level. There is a whole set of other proposals and they are controversial, depending on your perspective. All the states and territories other than Tasmania, I am advised, have limits on the amount of cash that can be paid out in winnings from poker machines. The maximum amount that can be paid out is $2,000. Interestingly, my home state of Tasmania bans the use of note acceptors, which means that winnings in that state tend to be lower, because they do not have the facilities of note acceptors—

Nick Xenophon (SA, Independent) Share this | Link to this | Hansard source

And South Australia.

Nick Sherry (Tasmania, Australian Labor Party, Minister Assisting the Minister for Tourism) Share this | Link to this | Hansard source

Yes, and South Australia. Under the AML/CTF Act, any payments made by gaming venues which are suspicious give rise to the obligation of the reporting entity to lodge a suspicious matter report with AUSTRAC. In addition, state and territory gaming regulators centrally monitor payouts from gaming machines. So, even if the current arrangements are not sufficient to meet your concerns, Senator Xenophon, you have raised the issue at this late point in time. I understand the constraints you work under. For that reason we are not going to support this amendment. We think it would have significance. For example, you referred to Mr Ball—whom I know—the CEO of the gaming industry, not wanting the sort of behaviour that you and some in the media claim is occurring. I suspect that is indeed the case, but I also suspect that Mr Ball and the club industry would be somewhat surprised to see an amendment of this significance moved to this legislation very late in the day. The government is willing to examine the claims that you make, but we are not willing to support an amendment of this type at this point in time.

George Brandis (Queensland, Liberal Party, Shadow Attorney-General) Share this | Link to this | Hansard source

I indicate on behalf of the opposition that our conclusion is similar to the government's conclusion. We of course accept entirely Senator Xenophon's concern, bona fides and deep study of this field. But in the time that has been made available to us—and, as the minister said, this reflects no criticism of Senator Xenophon, who has been operating under a lot of pressure lately and I am well aware of that—we just have not had time to properly assess what would be the consequences for clubs in particular and other venues also, of lowering the threshold of the reporting requirement, in effect, to $1,000. I am instructed that at the moment the threshold is $10,000, and for there to be a tenfold reduction of the threshold would, it seems to me without professing any specialist knowledge of the area, be potentially a highly consequential restraint upon the operation of those businesses. No clear evidence, I am bound to say, has been demonstrated to us that the correct balance between the efficacy of what you are seeking to do and the cost of compliance will be struck by lowering the threshold from $10,000 to $1,000. So the opposition concurs with the government's reluctance to adopt this amendment at this late stage of the debate.

The other point I would make, Senator Xenophon, is that the opposition's amendments mandating a review of the legislation after two years have now been accepted, and that review, although it specifies certain matters which must be undertaken as part of the review, can address other matters as well. If at the time of that review two years hence there is a body of evidence assembled to show that the threshold for the reporting requirements should be lowered to the level you say or to some other lower level than exists currently, then that is a matter that could perhaps be considered by the review. We have had not had time to consider this in detail. I think it is bad legislative practice to adopt an amendment at a late stage simply because it sounds like it might be a good idea and without considering the impact it will have upon those affected by it. For those reasons, and with no disrespect to you, Senator Xenophon, the opposition feels unable to accept this amendment.

Nick Xenophon (SA, Independent) Share this | Link to this | Hansard source

Madam, Acting Chair, somehow I do not think I have the numbers for this amendment! The sheer arithmetic tells me it is the case, but I want to put some things on the record. I do appreciate the way that both the government and the opposition have given this some consideration. It has been at late notice, but I will put this up as a private senator's bill. It is something that is worth investigating.

I want to put on record a couple of things about this issue. The report that was in the Sydney Morning Herald on 21 October 2010 headed 'Dirty laundry' sets out in considerable detail what goes on, according to this investigative report, in the poker machine industry. In response to Senator Sherry's comments, I want to make it clear that I do not say that Anthony Ball, who I have had many dealings with—I think they have been involuntary for both of us, given our debate on the poker machine issue—would necessarily support this move, but I do say that I think I know him well enough to say that he would be horrified to have any organised crime involvement, through money laundering, in the poker machine industry. I say that as a compliment to Mr Ball; I believe he is genuinely concerned about organised criminal elements. It is a positive reflection on Mr Ball, rather than anything else.

Money laundering through poker machines is big business in hotels and clubs. It is a real issue, and what has been described in this investigative piece in the Sydney Morning Herald is that, after they enter a hotel, the launderers do a reconnaissance of the gambling venue to check if there are any prospective muggers. A money belt would be an obvious choice to carry the cash, but they shun those. They wear a jacket rather than carry a bag. Professional launderers are almost exclusively male, and they do this as a full-time job. During the initial visit they will play a small amount of cash through a machine and then reserve it, going back to their car to collect up to $10,000 in $100 notes. They often make several trips to their car to collect more cash and then return to the same machine. Unlike other automated cash machines, such as ticket dispensers, poker machines are not fussy about gamb­lers, who can clean $10,000 in just minutes by feeding $100 notes before the reel starts spinning, just a few seconds apart. The gambler then gets a clean cheque from the hotel, and that is the way that the money laundering takes place.

The report states that as much as $2 million passes through the poker machines in a week at each of the state's top poker machine venues. It produces a net profit of $160,000 a week, or $8.3 million a year. I think they are talking about some specific venues. Money launderers do not even need to play the machines; they just feed in the dirty cash and then press the 'win' button and receive a cheque. Some hoteliers say that some public sector in Sydney are well known to criminals as local laundries. An estimated $2 billion is laundered on an annual basis, and this is a large slice of the $14 billion fed through the nation's poker machines in pubs and clubs each year. This method is favoured because it is a relatively quick and easy way to convert funds, and we need to bear this in mind. The Australian Transaction Reports and Analysis Centre has been sending out formal questionnaires for months, asking hoteliers to declare who their big winners are, and, as I understand it, they are not happy with the response that they have received. AUSTRAC is working with the Australian Crime Commission, but no hotels or clubs have been prosecuted, despite the fact that there are harsh penalties including jail and fines of $1 million for each offence.

I think money laundering using poker machines is an issue that needs to be dealt with. I appreciate that this amendment was moved at short notice, but there will be a private senator's bill to deal specifically with the issue of money laundering. This is a significant issue. Mr Ball and others can give their evidence, as is appropriate, at such a Senate committee, and I hope that the Senate will not stand in the way of such a bill being considered appropriately. Money laundering using poker machines is the elephant in the room for many in the poker machine industry and is an issue that has not been approp­riately addressed. I am grateful to the investigative journalists who have reported on this issue and grateful to experts such as Dr Charles Livingstone from Monash University, who has raised this issue previously. I would like to think that this parliament will have an opportunity to deal with the issue of money laundering sooner rather than later, and I foreshadow that I will be moving a private senator's bill. I accept that it is lost on this occasion, but, because of the short notice they were given, I criticise neither the government nor the opposition. I hope it is understood that this is an issue that will not go away. I hope that this is considered fully in the coming months.

Question negatived.

Bills, as amended, agreed to.

Bills reported with amendments; report adopted.