John Williams (NSW, National Party) Share this | Hansard source

I rise to contribute to this debate on the Banking Laws Amendment (Unclaimed Money) Bill 2015. I would like to put a bit of history in here. I congratulate the Assistant Treasurer, the Hon. Josh Frydenberg, for bringing forward this legislation to right the wrong put on the Australian people by the previous government. It is important to note that since around 1911 this country has had provisions to allow the transfer of unclaimed funds to the government. That is how long it has been around. These provisions stop accounts being eroded by fees and charges. Even after they are transferred, the funds still remain the property of the rightful owner. For 100 years the rule existed that the accounts must have been inactive for at least seven years before funds could be transferred to the Commonwealth.

Let me expand on the matter of the account being inactive. If, for example, you had $500 in a bank account, when interest was paid in each month or fees and charges were taken out each month and there was no other transaction, then the account would still be inactive. You must actually put some money into the account or withdraw some money out of the account every seven years.

In 2011-12, when inactive accounts were transferred only after seven years, only $70 million in unclaimed funds were transferred to ASIC. In 2012-13, after the previous government reduced the required period of inactivity from seven years down to three years, 156,000 accounts, worth around $550 million, were transferred to ASIC—up from $70 million. In 2013-14 almost 40,000 accounts, worth around $145 million, were transferred to ASIC. In 2014-15 a further estimated $162 million was transferred to ASIC. Without change to the required period of inactivity, Treasury had assumed that an approximately equal number and value of accounts would be transferred to the government each year.

The rapid growth in the number of unclaimed accounts highlighted problems with the treatment of children's' accounts and foreign currency accounts. Accounts that had been set aside for a child to access when they turned 18 were being transferred to the government and therefore the account was not accruing interest—except that when the government did get the money you received the bond rate when you claimed it back, a very low rate of interest. Take a young couple, both of them working away. They have two young children. Let's say they get a tax return of $5,000, and they say, 'We'll put this $5,000 away in a fixed deposit account for the children's education, when they get older.' After seven years, under the previous rules, they would have had to either add some more money to it or take some money out of it. As I said, the interest accrued or the fees taken out do not mean that the account is active; it is still inactive. Wouldn't it be great! After about eight years they go to their accountant—that is how the law used to be—and their money would have gone to ASIC, and they would have to get it back.

But the previous government reduced that to three years. I know for a fact; I was handling my late mother's money then, with power of attorney. A thankyou to Westpac: my mother had a fixed account of some $8,000 or $9,000 and Westpac wrote to me and said, 'You must put some money in this account by such-and-such a date, or remove some money from the account, or the money will disappear.' Thank you, Westpac, for that notification. I went and deposited a small bit of money in my mother's account, and that kept me going for another three years without having to worry about it. However, I should not have had to do that. It should be a seven-year period.

It is amazing. This was brought in by the previous government, and for what reason? The reason was simple: to get money into the coffers of Treasury. And of course the then Treasurer was Mr Swan, alongside his finance minister, Senator Wong, and the then assistant finance minister, one Mr Bill Shorten MP. What a crazy situation, that you have to steal the money off the Australian people after three years if the account has laid idle, to help fix the bottom line of your budget. As I said, it was about $70 million in active accounts, taken out after seven years so that the fees did not erode the account down to zero. That climbed to around $550 million. This was wrong in all principle. I remember Senator Bushby asked the question of Senator Cormann, the finance minister, a few months ago: why are we doing this? Are we doing this to take it back to the status quo, as it has been for over 100 years, since 1911, since the formation of the Commonwealth Bank? That had not been a situation whereby if you leave your account idle for three years and then if you go to it there is nothing there.

I had pensioners come to me. They had some money in a fixed deposit. They phoned my office and said: 'The money's gone. What do I do? Where did it go?' We had to tell them to go through the process. When I raised this in the joint party room some time back I said that this is wrong, that it goes against all the principles of what we in the coalition believe in, that you must rely on stealing the money—and I underline 'stealing'; that is what it is—off people in Australia to help the bottom line of your budget. Mr Russell Matheson MP made another good point while we discussed this in the party room. He said that there is an industry that has started up, an industry that will go out there and say: 'Oh, you lost your money; it's been taken. Pay me $2,000 and I'll get your money back.' People were preying on pensioners' and kids' accounts to make money out of it. That is wrong. It is against everything we believe in.

So I was very pleased to hear the announcement that this would be changed back so that when people put money in their accounts they at least have seven years. I encourage all the banks—and I am sure most of them or perhaps all of them do this—when the accounts have been idle for some time to write to their customers to inform them of the situation. Once again, I thank Westpac for doing exactly that: writing to me about the management of my mother's accounts.

The Information Commissioner raised concerns about the potential for identity theft by using currently published information. For example, some businesses are also using this information to charge fees as high as 25 per cent to reunite people with their own money. That was the industry, as I was saying, that kicked off. By removing the requirement for ASIC to publish the unclaimed money gazette and introducing secrecy provisions in this bill to restrict freedom of information requests generally to an individual's own details, this bill will better protect the privacy of those with unclaimed accounts.

The bill will generate regulatory savings of approximately $36 million a year. I will repeat that: the money this bill will save in regulatory savings will be about $36 million a year. This legislation will ensure that only funds that are truly forgotten are transferred to ASIC, not those that might be set aside for three years. And it will ensure that if an account holder alerts their financial institution to the fact that they are aware of their account in any way prior to their funds being transferred to ASIC then that transfer will no longer occur.

An article in June last year indicated that several Labor shadow ministers were privately embarrassed about the policy Mr Shorten introduced. In fact, one Labor frontbencher reportedly compared the bank-siphoning policy with the Gillard government's wrong decision to cut welfare payments for thousands of single mothers.

In 2013 National Seniors received numerous emails from members regarding the changes to the time frame after which accounts are deemed to be inactive. Grave concerns for the vulnerable elderly residents in aged-care facilities and for those with neurological degenerative diseases were expressed.

In a submission to a consultation paper—and you will be very interested in this, Mr Acting Deputy President Whish-Wilson—the Australian Bankers' Association said:

… the current period of inactivity, being three years, is inappropriate and has caused substantial disruption for banks and their customers.

I repeat: 'banks and their customers'. They go on to say:

In our experience, the ABA believes that a period of inactivity of seven years is appropriate and better meets customer expectations and reduces costs and inefficiencies for the banking industry and ASIC. Many accounts tend to no longer be inactive after seven years, and therefore, this is better aligned with the way customers tend to operate their accounts.

The ABA said that:

According to industry estimates, when the regime reduced the period of inactivity from seven to three years, complaints increased by 300%.

Complaints each year increased by 300 per cent. They said:

The impact of the change was felt across the customer base, including individual, business and institutional banking customers.

The ABA told the Financial System Inquiry that reverting to seven years would halve the number of claims. The inquiry recommended that the government should act to ensure bank accounts and life insurance policies are deemed unclaimed after seven years of inactivity and that these moneys be held in a separate trust account.

In summary, I totally support this bill and I am glad those opposite do as well. I am disappointed that the previous speaker from the Greens seemed to be saying that the Greens will not support it. I do not support governments stealing money off Australian people, and that is exactly what was happening after three years under the previous government. If you left your account idle, three years later it had disappeared. It was gone. So what do you do? What do elderly pensioners do, especially the ones who are in aged-care facilities who perhaps are relying on family members to monitor their accounts like my mother was with me? Do you go in search of it? Where do they start to search? What are they going to get back? It is a very low bond rate.

As Senator Cormann, in response to a question from Senator Bushby, asked: who was at the scene of the crime when this stealing started? The finance minister, Senator Wong, the Treasurer, Mr Wayne Swan, and the current opposition leader, Mr Bill Shorten. They were the trio seen running from the scene of the crime. This is wrong on all levels. Each and every Australian should believe that a government has no right to steal their money after three years. We should put it back to what the status quo was since 1911—that is, seven years—and give people more time.

As I said, I commend those institutions that notify, ring, write or email those customers to warn them by saying, 'Hey, your term is now getting close to the expiry date on an inactive account, which will mean that your money will be taken away.' Then the hunt starts to get it back. As I said, the businesses kicked off, saying, 'She'll be right, mate! Give me $2,000. I will get your money back.' It is an easy $2,000 for a bit of paperwork. But instead of giving the $5,000 back to the customer they only give $3,000. The smart businessman or businesswoman has taken $2,000 out of it. An industry kicked off to go out and siphon money off those people who had their money stolen in that period.

I commend this legislation. I again thank those opposite for supporting it. At the end of this year it is going to be back to how it was for more than 100 years prior to the ridiculous changes that the previous government made in an effort to try and bring their budget bottom line somewhere towards a surplus, which is something we have never ever seen. That has been the case all my life whenever the Labor Party is in government. We have seen the history of their financial management.

I welcome this bill. I welcome this legislation. I commend my colleagues, especially Assistant Treasurer Frydenberg, with the support of Senator Cormann and Treasurer Joe Hockey, for the work that they have done on this. I look forward to the passing of this bill and to getting things back to how they were for more than 100 years.