"... we know the importance of integrity and proper governance to the broader economy. At its foundation, the national economic environment requires effective laws, effective regulation and confidence in our governance—confidence in this place. We want an economy that works for all in the community. We want growth in the economy that is inclusive."

Address to the House of Representatives - BILLS - Treasury Laws Amendment (2023 Measures No. 3) Bill 2023 - Second Reading

Tuesday 1 August 2023

I also speak on the Treasury Laws Amendment (2023 Measures No. 3) Bill 2023. We know the importance of integrity, in proper governance, to the broader economy. At its foundation, the national economic environment requires effective laws and regulation, and confidence in our governments and in this place. We want an economy that works for all in the community, an economy where no-one is held back and no-one is left behind. We want growth in the economy that is inclusive.

As the OECD notes, on the importance of inclusive growth, we want growth that is 'distributed fairly across society and creates opportunities for all'. We also know that a safe, well-regulated consumer market for credit products is a core element of a strong and inclusive economy. Credit products do have a role to play. We want people to feel more motivated and involved with the benefits of economic growth. We are making our tax systems fairer and more effective. We are creating a business environment that improves our communities and helps repair our biodiversity deficit.

Although the items in this legislation can seem a touch dry, they are important. That is why the Albanese government has introduced long-overdue reforms to the regulation of payday lending and consumer leases through the Financial Sector Reform Act 2022. This act implemented the Albanese government's response to the 2016 review of small amount credit contract laws, which included a recommendation to address avoidance behaviour by entities using business models not regulated by the credit act.

Anti-avoidance provisions are aimed at reducing the risk of consumer harm from predatory lenders who modify their business models to avoid the application of consumer protections in the credit act and other financial services legislation. The provisions in the Financial Sector Reform Act 2022 also extended to the Australian Securities and Investments Commission product intervention orders made under the National Consumer Credit Protection Act 2009, the credit act.

This bill packages together four separate policy measures that aim to improve the regulation of Australia's financial industries. Schedule 1 of the bill prohibits activities that are designed to avoid the application of product intervention orders that relate to a credit facility. Schedule 2 delivers the government's election promise to recognise the experience of veteran financial advisers as equivalent to tertiary qualifications. Schedule 3 gives additional powers to ASIC and the ACCC for the purpose of facilitating competition in the provision of clearing and settlement services for Australian cash equities. Schedule 4 makes technical amendments to improve the flexibility of the First Home Super Saver Scheme.

As noted in the Bills Digest, five consumer advocacy groups made a joint submission to the Treasury in support of the draft bill. They recommended that the government should finalise and present the draft bill to the parliament as a matter of priority. I am sure that these consumer groups would welcome that this debate is progressing today.

I will work through the schedules in more detail. Schedule 1 to this bill ensures that anti-avoidance provisions also apply to ASIC product intervention orders relating to credit products that are made under the Corporations Act2001. ASIC has identified credit products that it has said cause significant detriment and harm, especially to vulnerable consumers, and it has issued several product intervention orders, or PIOs, to address this harm. These product intervention orders were made by ASIC under the Corporations Act 2001—and not the Credit Act—to help ensure that the avoidance behaviour of predatory lenders is adequately captured by the law. But the anti-avoidance provisions in the Financial Sector Reform Act 2022 do not apply to these PIOs. These changes will ensure that anti-avoidance provisions do apply to PIOs made under corporations law. As I said, predatory credit products take advantage of people who are already financially vulnerable and charge them excessive and unreasonable fees and interest. The Albanese government wants to reduce this risk of harm and limit the operation of predatory lenders who are engaged in avoidance behaviours. As noted earlier, we want a safer market for credit products.

Schedule 2 works to recognise the experience in the financial advice industry. The government is committed to an advice industry with strong professional standards that gives Australians access to high-quality financial advice. However, as implemented, the education requirements fail to appropriately recognise the lived experience of financial advisers. The current requirements do not properly balance the desire to professionalise the industry with the benefits of retaining an experienced, skilled workforce. This schedule also delivers an election commitment to ease the education requirement for veteran financial advisers who have at least 10 years experience and an unblemished disciplinary record. If enacted, it will allow veteran advisers to access the experienced provider pathway by making a self-declaration confirming that they meet all the criteria to be an experienced financial advice provider.

We know that since 2019 over 10,000 financial advisers have left the industry, particularly many experienced advisers with no history of misconduct. This serves only to reduce access to quality financial advice. Experienced advisers also make a valuable contribution to the financial advice industry. They play an integral role supervising new entrants during their professional year and sharing their knowledge and experience more broadly across the profession. Importantly, for an inclusive economy, this bill ensures that consumers will continue to have access to quality advice by removing a significant disincentive for experienced advisers to stay in the industry, ensuring instead that a pool of advisers to mentor, supervise and upskill new entrants will remain available. Consumers can be sure of receiving quality advice as those experienced advisers affected by the amendments must have a clean record and pass the financial advisory exam. This is in addition to the broader work of the Albanese government, which will take steps through its Delivering Better Financial Outcomes package to ensure that the five million Australians who are at or near retirement can access quality financial advice. This is important now more than ever.

The success of the superannuation system means that Australians are retiring with more wealth than ever before. The average Australian now has a superannuation balance of around $200,000 at retirement. However, the high cost of providing advice and the declining number of financial advisers means that it's becoming increasingly difficult for all Australians to access helpful information and advice that could make a meaningful difference to their quality of life. Labor will always put the consumer first in financial services. We are the party of the future of financial advice reforms and the party that called for the banking royal commission. This is the focus that we bring to improving access to financial advice.

Schedule 3 covers competition in the clearing and settlement of cash equities. Schedule 3 of the bill implements recommendations made by the Council of Financial Regulators to strengthen regulatory powers and facilitate competitive outcomes in the market for the clearing and settlement of cash equities traded in Australia. The ASX group has a monopoly over these services. The reforms will have significant benefits for businesses, particularly those that rely on ASX's monopoly on clearing and settlement services. Delays in being able to access these systems, and a lack of transparency around a fair price for these services, can increase costs and stall innovation. The reforms will enable ASIC to write rules relating to governance of clearing and settlement facilities, including rules related to board composition and user input to governance. This will have the additional benefit of allowing ASIC to make rules which apply to the governance of the ASX's CHESS replacement project, the delay of which has resulted in significant cost to the wider industry.

If a competitor does emerge in the provision of cash equities clearing and settlement, ASIC will be able to ensure that competition is safe and effective—for example, by making rules with respect to interoperability between competing clearing and settlement facilities. If a competitor does not emerge, rules will ensure competitive outcomes can still be achieved, by allowing ASIC to make rules regarding the activities, conduct and governance of clearing and settlement facility licensees. This is intended to ensure these services are provided on fair, reasonable, transparent and non-discriminatory terms. Where clearing and settlement services are provided by an entity which enjoys a monopoly or significant market power, arbitration for industry participants that rely on access to clearing and settlement services will be available to resolve any disputes about the terms and conditions of their access, including price. This is intended to be a final but efficient backstop where good-faith commercial negotiation breaks down. It has largely been based on the national access regime in part IIIA of the Competition and Consumer Act 2010, with some changes to improve the efficiency of the arbitration process and provide timely outcomes for all parties.

Schedule 4 deals with First Home Super Saver Scheme changes. As background: the First Home Super Saver Scheme helps boost savings for a first home by allowing an individual to build a deposit inside superannuation, giving them a tax cut. Under the scheme, prospective first home buyers can make personal contributions to superannuation of up to $15,000 a year. Up to $50,000 of these contributions can then be withdrawn to finance a first home. Should an individual decide not to buy a home, personal contributions can be withdrawn, but the person is liable for additional tax to compensate for contributions being made at a concessional rate of tax. Individuals who chose to save for a house deposit via this program have been able to withdraw their deposit from the scheme since 1 July 2018. Problems with the administration of the scheme developed due to the inflexibility in the governing legislation.

On this side of the chamber we know the value of superannuation and the importance of maintaining the integrity of super. The parliament, therefore, needs to make a number of improvements to the operation of the scheme to ensure that it works better for first home buyers. As referenced above, currently the legislation is inflexible and can occasionally result in a poor user experience, which has included some people who have made an error in the application process having their savings locked in superannuation until retirement. These changes will increase the discretion of the Commissioner of Taxation to amend and revoke applications and will allow individuals to withdraw or amend applications prior to release.

Transitional provisions will ensure the technical changes apply to eligible applications made from 1 July 2018. Transitional provisions extend the flexibility provided by the amendments to users who have previously applied to have funds released under the scheme and have since started holding a relevant interest in real property or land. This will provide greater flexibility for first home buyers using the scheme and will help ensure their savings are released.

In conclusion, as I noted at the top of my contribution, we know the importance of integrity and proper governance to the broader economy. At its foundation, the national economic environment requires effective laws, effective regulation and confidence in our governance—confidence in this place. We want an economy that works for all in the community. We want growth in the economy that is inclusive. This bill is about giving confidence to Australian consumers to ensure people are protected from predatory practices and can better access financial advice when they need it.

I commend the bill to the House.