Alex Gallacher (SA, Australian Labor Party) Share this | Link to this | Hansard source

Order! The committee is considering the Treasury Laws Amendment (2017 Measures No. 5) Bill 2017 and a related bill, and amendment (1) on sheet KA126, moved by Senator Cormann. The question is that item 1 of schedule 2 in the Treasury Laws Amendment (2017 Measures No. 5) Bill 2017 stand as printed.

Question negatived.

Peter Georgiou (WA, Pauline Hanson's One Nation Party) Share this | Link to this | Hansard source

On behalf of Pauline Hanson's One Nation, I move amendment (1) on sheet 8383:

(1) Page 45 (after line 26), after Schedule 2, insert:

Schedule 3—Amendments relating to the appointment of receivers and valuers in the AFCA regime

Corporations Act 2001

1 After paragraph 1051(2 ) ( a)

Insert:

(aa) the membership of the scheme is open to every person who is appointed to act in the capacity of a receiver and manager, investigative accountant or a valuer, of an entity mentioned in paragraph (a); and

2 Application

The amendment made to the Corporations Act 2001 by this Schedule applies in relation to the appointment of receivers, investigative accountants or valuers made after the commencement of the item.

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

Labor will not be supporting this amendment. This amendment would amend the legislation regarding the Australian Financial Complaints Authority. When the Treasury Laws Amendment (Putting Consumers First—Establishment of the Australian Financial Complaints Authority) Bill 2017 was debated, Labor noted that the bill would unfortunately not make much difference in relation to the way banking disputes were handled. The average banking customer would not see much difference between the Financial Ombudsman Service and the government's Australian Financial Complaints Authority once it is established. We noted that, in relation to banking disputes, the bill was basically a rebadging exercise and the name 'authority' was a misnomer. This amendment seeks to include valuers, investigating accountants and receiver managers in the AFCA scheme. However, stakeholders, including the Institute of Public Accountants, in their reply to the Ramsey review, raised a number of technical issues with regard to including such third parties in the AFCA framework. While we cannot support this amendment today, we acknowledge concerns about the conduct of banks, which is why we have fought so hard for a royal commission.

Peter Georgiou (WA, Pauline Hanson's One Nation Party) Share this | Link to this | Hansard source

This amendment includes valuers, investigating accountants and receiver managers in the Australian Financial Complaints Authority, AFCA, scheme. Bank appointed valuers, investigating accountants and receiver managers act in a largely unsupervised environment. Misconduct in this sector has been raised in numerous past government and Senate inquiries. The Australian Small Business and Family Enterprise Ombudsman has recommended changes, and so have various other inquiries.

If we are serious about stopping white-collar and banking misconduct in Australia, we should support these changes, and we call for your support to do this with us. The problem is that the new AFCA, in its current form, will not investigate misconduct by bank appointed valuers, investigating accountants and receiver managers. The Financial Ombudsman Service, FOS, will not investigate cases of misconduct by valuers or accountants or receivers, even when the bank is aware that there has been misconduct. AFCA will be the same under the existing proposals. So, in some respects, it is a toothless tiger. As an example, I have a letter from FOS showing they will not investigate because, once the receiver is appointed, the receiver acts as an agent for the company and not the person who appointed it. In other words, the bank could appoint the most corrupt and incompetent receiver and be aware of misconduct and yet be totally unaccountable. The ombudsman cannot help unless the bank gives the regulator permission to investigate the crime. In the example submitted, Bankwest informed FOS that it is not prepared to waive the issues that may exist to enable a fresh dispute to be considered by FOS. So, if the bank wants to prevent an investigation, it can do so with a loophole in the legislation.

To add insult to injury, if the damage caused by the misconduct is greater than the limit of FOS, it can fall outside the jurisdiction. This limit could encourage greater misconduct. To avoid investigation, a bank or the agent has to ensure that they create a level of damage above the limit. With the banking royal commission now underway and further cases of misconduct being exposed, now is the time to strengthen legislation and regulate this troubled industry. The Australian Small Business and Family Enterprise Ombudsman has confirmed in discussions that there is very little regulation on these banks and appointed entities. They admit that, in some cases, receivers just refuse to provide details of their work to the owners of companies they are appointed over. They often charge hundreds of thousands or millions of dollars for their work, with no accountability for what they have done. We have seen cases where receivers have employed the same lawyers the banks employed and then they act for the companies they are the receiver over—a conflict of interest in itself—and then they refuse to disclose to the owners and companies what the lawyers have done.

I refer to a letter from the Australian Small Business and Family Enterprise Ombudsman to Senator Jane Hume, Chair of the Senate Economics Legislation Committee, dated 29 September 2017. It reads: 'Despite the welcome step of establishing AFCA, we believe there are important considerations which are still missing from the jurisdiction of the proposed authority, namely the role of third party agents such as valuers, investigating accountants and receivers.' The ombudsman's inquiry report into small-business loans dated 12 December 2016 made a series of recommendations, including recommendation 13 that:

External dispute resolution schemes must be expanded to include disputes with third parties that have been appointed by the bank, such as valuers, investigative accountants and receivers …

Current state

(a) between a small business and a third party such as valuers, investigative accountants and receivers appointed by the bank

…   …   …

The only alternative for small business in these cases is the court system, yet:

Recommended change

That the independent EDR—

external dispute resolution

one-stop-shop—

that is, AFCA—

have jurisdiction to consider disputes between small businesses and banks, where disputes relate to the conduct of third parties appointed by banks.

This clearly indicates that our amendments need to be supported. The Australian small business ombudsman said:

The Australian small business ombudsman would support legislative changes to the AFCA to make banks responsible for the conduct of their appointed valuers, investigative accountants and receivers.

The LNP have argued that these changes are unconstitutional. However, the Senate Procedure Office have said they can't see any constitutional problems with this amendment and they believe it is compatible with corporations law. Also under section 51, heads of power, banks, financial institutions and service providers are covered federally. We have run this by the Parliamentary Library. They have advised that our amendment is a solution to the issues raised by the ombudsman and they cannot see any constitutional reason why it can't work. The government objects to this amendment on the basis that it is unconstitutional. We have repeatedly asked the government to identify any reasons that this amendment may be unconstitutional and they have failed or refused to clarify these reasons. The only explanation can be that this amendment in fact is constitutional.

This amendment needs to be supported if we want to help those affected by bank misconduct. Given the bank and receiver misconduct covered by numerous past government inquiries and the misconduct now being revealed by the banking royal commission, we request the Senate support the proposed constructive changes to bring this largely unregulated sector under control. This chamber should take the word of the Parliamentary Library, the ombudsman and the Senate Procedure Office ahead of a government who would rather protect their banking mates.

Concetta Fierravanti-Wells (NSW, Liberal Party, Minister for International Development and the Pacific) Share this | Link to this | Hansard source

The government will not be supporting this amendment. Valuers and accountants are regulated under state and territory based professional conduct frameworks. Receivers and liquidators are registered with and directly overseen by ASIC, the companies regulator. They are subject to the regulatory framework contained in the Insolvency Law Reform Act. The new AFCA scheme provides an out-of-court dispute resolution scheme for consumers who are in dispute with a licensed financial product or service provider. Valuers, accountants and receivers are not licensed providers of financial products or services to retail clients.

Pauline Hanson (Queensland, Pauline Hanson's One Nation Party) Share this | Link to this | Hansard source

Everyone has been calling for a royal commission into the banking sector, and the coalition government have actually instigated that. Labor say they've been calling for a royal commission into the banking sector, as have the Greens and One Nation and, I believe, Senator Hinch and others, and we were very pleased to see it happen. Now we are talking about the valuers and liquidators involved in this. In the Senate inquiry that One Nation had last year, it came out that they played a very big role in the devastation that shut down a lot of people in the farming sector who lost their properties, yet nothing was done about it.

We are now proposing an amendment to include those people in this bill. We have confirmation that it can be done under this bill. If Labor are so much for all the battlers out there, why don't they want some accountability to ensure that these people are taken to task for their actions? Why aren't Labor prepared to stand up for this? This is an amendment that calls for accountability, so that they cannot just do what they want to do and destroy people's lives. The government, from the minister's office, is saying that this is unconstitutional. We have asked: which part of the Constitution? Absolute silence! Nothing has come back to us. They can make a comment like that, but they can't back it up with evidence.

They come under the Corporations Act—and that's fine—but there is no reason why either side cannot pass this amendment. Do you really want to stand up and ensure accountability in this country from the banking sector? They hire these liquidators and receivers. They don't pay for them, though; it's the people who are going under who have to pay the bills for this. They rack up hundreds of thousands of dollars, and that's why people lose their properties. But you sit here in deafening silence and you're not prepared to make them accountability to the public. You sit there and say that you're for the battlers and you call for a royal commission into the banking sector. Is this Labor? Is this what you really want?

Labor constantly accuses One Nation of being out there grandstanding and not being prepared to stand up for the battlers and the farmers. Yet, here we are, moving an amendment to legislation that is going to be so beneficial to people in this country. It will make them accountable, and Labor just sits there and does absolutely nothing about it. You know who's really fighting for the people of this country, the battlers. It's One Nation.

Alex Gallacher (SA, Australian Labor Party) Share this | Link to this | Hansard source

The question is that the amendment of Pauline Hanson's One Nation party, on sheet 8383, be agreed to.

Patrick Dodson (WA, Australian Labor Party, Shadow Minister for Indigenous Affairs and Aboriginal and Torres Strait Islanders (Senate)) Share this | Link to this | Hansard source

I just want to note that the opposition will not be proceeding with amendment (1) on sheet 8382, dealing with the question of indigeneity. The government has wisely made the decision to omit the definition of 'Indigenous person' in the bill, on the basis that the administrative definition, as it's known, is the one that's widely used. I don't think there's much more I need to say in relation to that.

On the longer-term question of how Indigenous peoples want to be defined and how they want to be known—this is a matter that we should be consulting First Nations peoples about, rather than retaining the colonial process of attributing definitions to First Nations peoples that go way back to the old 'stud book', as it was called, or the various other ways in which derogatory language was used in relation to First Nations people. I'm not going to embark on a history lesson in relation to that tonight, but, as my colleague Senator Macdonald said earlier, there is a need for us as a parliament to come to terms with this and to engage with First Nations peoples on how they wish to be identified. Secondly, we have to remove the concept of race. It's a big exercise—I understand that—and a huge legacy, but, as a mature nation that seeks to uphold international standards, we ought to be moving further towards a recognition of the common nature of our humanity, rather than distinguishing people on the basis of race.

Treasury Laws Amendment (2017 Measures No. 5) Bill 2017, as amended, agreed to; ASIC Supervisory Cost Recovery Levy Amendment Bill 2017 agreed to.

Treasury Laws Amendment (2017 Measures No. 5) Bill 2017 reported with an amendment; ASIC Supervisory Cost Recovery Levy Amendment Bill 2017 reported without requests; report adopted.