Paul Fletcher (Bradfield, Liberal Party) Share this | Hansard source

by leave—I am pleased to rise to make some brief comments in relation to the report of the Parliamentary Joint Committee on Corporations and Financial Services into the provisions which were previously to be schedules 3 and 4 of the Tax Laws Amendment (2013 Measures No. 2) Bill.

This is yet another episode of a disorganised government in a desperate scramble to get legislation through before a deadline which it has known has existed for three years. Indeed, this is also another inglorious episode where the government's standards of consultation with industry have been highly deficient. The only reason that this inquiry into this bill was held was that the coalition pointed out some of the serious flaws in the schedules to the bill as they were going through the House of Representatives a couple of weeks ago. The government reluctantly agreed to excise the schedules and allow time for a committee inquiry by the corporations and financial services committee.

Coalition members of the committee have only had our concerns increased through the consultation that we have done through the committee process. It is our view that the burden of proof, which the government would need to discharge if it were to demonstrate that it is prudent to rush ahead with the provisions in their current form, should be adopted. That burden of proof has not been discharged. We are in the unfortunate position where there are now less than two weeks to go before the changes proposed by the government, which would move financial advisers into the Tax Agent Services Act regime, and yet there remain some very serious questions about the provisions of the legislation.

I will briefly highlight some of the most serious of those concerns. The first is that there has been insufficient consideration by and consultation with industry. Although it is now more than three years since the Tax Agent Services Act took effect, for much of that period there has been very little consultation occurring. A time line provided by the Financial Planning Association showed that no material consultation occurred in either 2011 or 2012. Draft legislation was exposed for the first time for consultation in February 2013, but it was only when the schedules were tabled in the bill before parliament on 29 May 2013 that industry participants were able to see key provisions, including a definition setting out the scope of the advice which would be the subject of the regulatory regime that would take effect by reason of the passing of this legislation.

It is uncontested by witnesses with different perspectives that there remains considerable work to be done before the details of this legislation are nailed down. For example, Mr Drum of CPA Australia said to the committee last week:

Some of the matters raised here quite rightly identify that every issue has not been—

The chair intervened at that point to offer the words 'perfectly resolved'—

Mr Drum responded:

Correct. There are still a lot of unanswered questions.

In the coalition's view, if there are a lot of unanswered questions that raises very serious issues about proceeding with the bill in its present form.

We were equally concerned that there does not appear to have been an adequate cost-benefit analysis conducted of these measures. One group of stakeholders, the Financial Services Council, informed the committee that they were not aware of any Treasury cost-benefit analysis being conducted, and they had not been asked to contribute to such analysis. Treasury officials, when appearing before the committee, were asked whether there had been a cost-benefit analysis. Oddly, they indicated that there had been and that we could find it on the Department of Finance and Deregulation website. It also became clear in the exchange with witnesses from the Treasury that the kinds of cost components which the Treasury had thought appropriate to include in the cost-benefit analysis excluded a number of cost categories that industry members were very concerned about. That is perhaps not surprising if the cost-benefit analysis was conducted without consultation with industry participants.

Another reason my coalition colleagues and I are very concerned about the provisions of this legislation—and we have made our concerns clear in our minority report, our dissenting report—is that this bill, if it were to pass into law in its proposed form, would impose extra cost burdens on the financial sector at a time when very substantial additional costs have already been imposed on this sector thanks to the torrent of regulations which the present government has introduced, much of it done in a chaotic, disorganised and last-minute fashion. Regrettably, this is all too consistent with this government and this minister, who I am confident did not, when he was at school at Melbourne's exclusive Xavier College, rejoice under the nickname of 'Details Shorten'. I very much doubt that that was his nickname.

Another concern to coalition members is that no evidence was persuasively presented that there would be any particular adverse consequences if this legislation were not to proceed in its present form. Witnesses who were arguing that legislation should proceed—and there were one or two of them—were given the opportunity to explain the dangers which they believed were present if the legislation did not go ahead with effect from 1 July 2013 in its present form. Their explanations, I have to report to the House, were unpersuasive.

Concerns were also raised about the breadth of the present definition in the bill. Industry participants, pleasingly, informed the committee that they had worked together to come up with another definition, and that has been agreed upon by the Financial Services Council, the Tax Institute and a range of other participants. That is a very impressive piece of work by the industry. Coalition members and senators on the committee certainly encourage the government and the Treasury to consult carefully with industry on the amended definition which so many stakeholders have come together to prepare.

In conclusion, the view of coalition members and senators of the corporations and financial services committee is that it does not make sense to allow passage of these schedules into law at this time. A much better course of action, and the course of action which we recommend, is that the current exemption which financial planners and advisers enjoy from the Tax Agent Services Act—an exemption which has been in place for three years—should be extended by a further 12 months so that the work can be done of properly analysing these provisions, taking account of the recommended changes to the definition and getting the job done right rather than rushing it at the very last minute.

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