Lucy Wicks (Robertson, Liberal Party) Share this | Hansard source

I rise to speak on the Treasury Laws Amendment (2017 Measures No. 5) Bill 2017 and the ASIC Supervisory Cost Recovery Levy Amendment Bill 2017, and commend them to the house. What we're debating today aims to implement two government measures—firstly, a new regulatory regime for financial benchmarks used in Australia and, secondly, the appointment of a new Indigenous policy commissioner to the Productivity Commission. I'd like to commend the Treasurer for his work on these measures, which demonstrate the importance of safeguarding our economy and ensuring that we are focused on our key commitments to the Australian people. It's also important so that families and businesses, including in my electorate of Robertson, on the Central Coast, can have certainty about the integrity, resilience and fairness of the financial system.

Our commitment is to do everything that we can to better protect Australians from the possible abuse and manipulation of financial markets that can happen through the work of sophisticated financial institutions. Financial benchmarks are used to value trillions of dollars of financial products, yet we've seen many cases now, both in Australia and around the world, where the regulation of these financial benchmarks has caused significant issues. The Treasurer, in his second reading speech, made mention of some of the special cases which in total add up to penalties for misconduct of around $25 billion as of August last year.

A manipulation of the market has also been found to happen here, and, when this government was elected, there appeared to be evidence of abuse for many years. For example, in 2016, the Australian Securities and Investments Commission commenced formal court proceedings against three of our biggest banks for alleged manipulation of the bank bill swap rate. This legislation acts to ensure that we have market integrity and investor confidence, and reflects the action taken overseas in places like the UK, the EU, Japan and Canada. As the Treasurer said, without similar reforms in Australia, investors will lose confidence in our markets, and Australian businesses, including the four major banks, would likely not be able to issue or trade securities linked to Australian benchmarks in key foreign markets, including the EU.

So, in line with the advice provided to the government from the Council of Financial Regulators, these bills will make important changes in key areas. We will require administrators of significant benchmarks to hold a benchmark administrator licence and also to comply with a range of rules aligned to international best practice and enforceable by ASIC. We're making the manipulation of any financial benchmark or a product used to generate such a benchmark a specific criminal and civil offence. I should note that legitimate business activity not intended to set a financial benchmark at a particular level is explicitly outside the scope of these new provisions. But there is a real resolve to stamp out benchmark manipulation, as seen in some of these penalties, including up to 10 years imprisonment for an individual and, for a body corporate, fines of almost $10 million, three times any benefits derived from the manipulation or 10 per cent of the entity's turnover in the previous year.

The government believes this will give ASIC the power it needs to be a tough cop on the beat and to crack down on attempts to manipulate a financial benchmark. There are cost recovery measures, including that licensed benchmark administrators will be required to pay an annual supervisory levy. This levy, thankfully, stops the costs going back onto taxpayers, who I know don't want to bear the brunt of financial sector mismanagement. I also note the Treasurer's comments that, by only requiring the administrators of significant benchmarks to obtain a licence, we have appropriately balanced the need to ensure the integrity of Australia's financial system against the burden of extra regulatory costs seen in the more heavy-handed approach to licensing.

I should say at this point that this does build on many other measures that this government has taken to protect Australians in this space. This includes a boost of $127.2 million to enhance ASIC's powers, its data analytics and surveillance capabilities, and to allow ASIC to take more surveillance and enforcement action. We're also launching a comprehensive review of ASIC's enforcement regime to help deter misconduct and grow consumer confidence. There's also the implementation of a new banking executive accountability regime, which will strengthen the Australian Prudential Regulation Authority's powers. Together, these reforms will help ensure continued confidence in Australia's financial system now.

I'd also like to speak briefly on the second part of this legislation, the Indigenous policy and program evaluation. I spoke recently in this place about the latest Closing the gap report. As one of the co-chairs of the Parliamentary Friends of Closing the Gap, I noted the hard work and commitment of the Prime Minister and the Minister for Indigenous Affairs and Minister for Indigenous Health on the progress of our commitments to close the gap. I spoke of how, on the Central Coast, we've got some real success stories, such as at The Glen rehabilitation centre. Joseph Coyte, CEO of The Glen, told me an extraordinary story about how they have used the government's initiatives like the Indigenous Procurement Policy, IPP, to kickstart social enterprises that directly help our community. This has helped create jobs, opportunity and a clear future direction.

The government has also created a role for the Productivity Commission in Indigenous policy evaluation. This involves the expansion of the commission to include a new commissioner. As the Treasurer has outlined, a number of high-profile reports have shown the need for more evaluation of policies and programs that have an impact on Indigenous Australians. The commission's Overcoming Indigenous disadvantage report in 2016 found that only a small number had been rigorously evaluated. This part of the legislation is about trying to see more success stories like we are seeing on the Central Coast and about improving our capability to better understand which policies and programs are most effective in improving outcomes for Indigenous Australians. The focus, quite simply, is on what works.

By making amendments to the Productivity Commission Act 1998, this bill will increase the number of commissioners, other than the chair, to a maximum of 12. We will require that one commissioner has extensive skills and experience in dealing with policies and programs affecting Indigenous Australians, including dealing with Indigenous communities. Importantly, the commissioner will be expected to have a strong understanding of the diversity of Aboriginal and Torres Strait Islander peoples and strong links with communities.

In closing, I want to comment on the remarks by the member for Fenner and Labor about definitions. It is the government's view that the parliament should retain the legislative definition of an 'Indigenous person' as currently drafted in schedule 2 to the Treasury Laws Amendment (2017 Measures No. 5) Bill 2017. This is because it is consistent with the standard Commonwealth legislative definition used across the statute book. The current legislative definition has been established through longstanding bipartisan use. If there is an interest in changing the standard definition, a debate on this bill is not the appropriate process for such a change. Consideration of how to define Indigenous status is a significant matter—I agree with that—and a full and proper discussion with Indigenous Australians about these issues and their implications is required; however, any delay to the passing of this legislation will prevent the Productivity Commission from commencing its important new functions. I commend this bill to the House.

See this speech in context