Ed Husic (Chifley, Australian Labor Party) Share this | Hansard source

Over 10 years ago, a bloke in a black skivvy strode onto a stage and declared to the world that the company he headed up would be releasing a new product that consumers would never have witnessed before, and that was this—the iPhone. At that point in time, there was a lot of excitement about what this new device would do but not much conception of how it would transform, in many respects, the way we live our lives and do business.

I'm thinking a lot about this example, about not knowing how the introduction of one method might lead to a multiplicity of new ways of doing things. I'm thinking about how that emerges, particularly in reference to what we're discussing today and opening up the use of data. In the banking sector, in the first instance, what might that do? A lot of people will be thinking about what parliament is considering today and they will wonder what it all means. This opens up all that data that used to sit in your major financial institution. It's not just about being able to select a product between big banks. It's smaller, more innovative firms, thinking of ways they can come up with a better deal or a better financial product or service, as opposed to what has been offered by a major financial institution. The way they can do that is by analysing your transaction data and coming up with a better solution, something that might benefit you more significantly than you've been accustomed to in the past.

There are people who look at this reform and wonder whether or not it's worth it, and it is a lot of money. From what I recall from the explanatory memorandum when this legislation was first introduced to the parliament in the last term, the compliance cost is somewhere near $100 million for our major financial institutions. This is a reform that does not come cheap for those major banks. There are some issues, potentially, for those banks in being able to upgrade older IT legacy systems, and this has been reflected upon by people such as Wayne Byres, the head of APRA. But, in spite of the costs and concerns, it is a reform whose time has well and truly come.

It has taken a bit to get here. There are a number of reasons for that. I think it is important, firstly, to recognise Scott Farrell, who did the opening banking report. I recall an article by James Eyers in the Financial Review that referred to Treasury officials saying that Scott Farrell's work was some of the most professional and well thought through work that had been done. The Farrell report was also recognised by Australia's fintech sector as being well thought through. It was also recognised as being gutsy in part, in that it was standing up to big interests that wanted to set things up, in terms of open banking, in a particular way. Farrell had the courage to stand up and say no, and he went counter to industry interests. He suggested, for example, much bigger roles for regulators such as the ACCC. I think the Farrell report is a terrific reflection on Scott Farrell. This report was brought down and put into the government's lap to respond to some time ago.

It has taken a bit to get here and I make two reflections. One is something, I think, should be sheeted home to the government. Another is something that's happening more broadly in society when it comes to people's appetite for the use of their data by bigger firms. The government has had three cracks at the legislation that we are discussing today. In consultation with stakeholders, when I was the shadow minister, around the shape of this legislation, one of the prevailing criticisms that came through from a number of stakeholders was that the government had attempted a number of times to put out draft forms of legislation—and I do commend them on it; they were up-front about it—but what I think a lot of people were critical of was that the government did not listen adequately, deeply, in a considered way, to some of the concerns that were being raised. That is what prompted us, in Labor, to argue that this needed to go to a Senate inquiry.

Although the government put the legislation out for public comment in a number of instances, it then finally decided, regardless of the criticisms, that it would—and off the top of my head, it brought it into the parliament in around late October or November last year—just put it through nonetheless. That's not the way that this legislation should be managed, given the impact. To be frank about this, I think that the Senate process strengthened this legislation that is now before the House. I understand that, as a result of some of the changes that have been made, consumer groups like CHOICE have now said that they are quite comfortable with what is being put forward. But that certainly wasn't the case through the course of last year.

This could have been done quicker if the government had actually taken on board some of the concerns. We're talking about consumers having control over their banking data and being able to authorise someone who will be accredited to obtain that from a data holder and then analyse it and come up with a product that would best suit consumers. But there was a point in time that the government actively contemplated allowing for a situation where data holders, major institutions, would be able to charge consumers for accessing that data, which is quite simply unacceptable, because a lot of that data could be easily transported over at the request of a consumer to get a better deal. In fact, the ACCC had specifically indicated in earlier versions of their rules framework that this would be a situation, the charging for the use of data, that they would not be comfortable with. I understand this is no longer going to be the case and the government, from what I am led to believe, will not have this type of thing occur. But, again, these are the types of things that people had been raising on a number of instances with the government and had been saying that this needed to be fixed, and the government took their time to fix it. It is good that we've got to a stage where, as a result of people being able to express their views about the shape of the government legislation, the government have finally responded and we have seen some changes as a result of that.

But there is something broader that's happening in the community, where there is a greater concern starting to emerge about the way in which data has been gathered by big firms and the way it's being used. The Labor opposition has, through the second reading amendment put forward by the shadow minister, rightly pointed out concerns around privacy. While it has been considered deeply in the development of this process, this will still be a system where people will be concerned that very sensitive data relating to peoples' financial circumstances may go somewhere inappropriately or not be dealt with. The big challenge for business and government is to demonstrate respect for data—respect in the way that it's captured, respect in the way that it's stored and respect in the way that it's used. Organisations like businesses and governments that fail to demonstrate a respect for data should face very forthright public criticism about that. Sometimes in some jurisdictions where open banking reforms have been undertaken you have seen big financial institutions suddenly discover a respect for data that didn't seem to exist previously. I would hate to think that some of the big institutions would use privacy and cybersecurity as ways to slow down open banking reform, but in some jurisdictions they have.

To be honest, it is not just smaller firms. Smaller accredited firms under this system will need to make absolutely sure and be confident that they are storing data in a secure way and to the confidence of the public. But that is not to say that just because you're a smaller firm you can't store data well. We have seen major data breaches that have affected major financial institutions. Most recently, with the NAB there were, I think, 13,000 people affected as the result of a recent breach. Size does not matter in this but respect for data does, and making sure you've got robust cybersecurity systems in place to protect data is very important. When setting up frameworks like open banking, it is certainly a lot more incumbent on government and businesses, either as data holders or accredited providers—or accredited firms in this case—to go above and beyond to demonstrate that their cybersecurity systems are at a grade where consumers can have utter confidence that their data is being treated well.

One of the two tests, in terms of what we're looking at with the open banking system, is awareness. In other jurisdictions where open banking has been rolled out, awareness has not necessarily met the effort that's been applied to put these systems in place. The result is: if people aren't aware that they can get a benefit out of an opening banking system, and it's not used, we're likely to spend $100 million on compliance effort, in the Australian context, for a system that may not necessarily be utilised by the broader consumer population. So that is an issue.

The other big test of this is: this cannot be a reform that just benefits high-net-worth individuals. For this open banking reform to be successful, it needs to demonstrate that it will benefit not just high-net-worth individuals but all consumers. I think this is a challenge particularly for the fintech sector, which I know has been champing at the bit to get access to this. It has been using some systems, which are reflected in the second reading amendment, such as screen scraping. Screen scraping had to be used by the fintech sector because we did not have an open banking regime in place. It should not have to be used if open banking becomes a reality. It is a practice that should become a relic of a bygone era. These are the types of practices that had to exist because there wasn't a system in place. Certainly we hope that the broader fintech community can demonstrate that this will be a reform that will generate benefit for not just wealthy people but lower income groups as well.

I want to reflect on the point that was made by the member for Kingsford Smith in relation to low-socioeconomic groups. For some time the RBA has been charting that cash is being relied upon less, in terms of currency, and that cashless and electronic systems, some of which will be promoted under this regime, are being used more and more. I do not think we are thinking deeply about the transition to a cashless society and its impact on lower income groups and, in particular, older citizens.

In the UK, it is being considered by the UK parliament. In fact, the Treasury Committee is starting to look at the impact of cashless societies on particularly vulnerable groups as we move towards using payWave, Apple Pay and Android Pay. Some people will be able to embrace that payment mechanism quite well. Others rely on cash and ATMs. As ATMs start to be withdrawn, what will happen to the older person, or the person who doesn't necessarily rely upon a credit card or an automated system to access their cash? If the UK parliament's considering it, I would strongly urge the House of Representatives Standing Committee on Economics to look at the issue of the impact of a cashless society on lower-income people and the older people in our community who still use those mechanisms to get access to their cash.

I've seen it in my own community in Shalvey, where a local facility that had been provided by the Commonwealth Bank was withdrawn. People were still using bankbooks and passbooks to get access to cash. When the CBA withdrew that facility, it had a big impact on older Australians in my area. So, again, while we are thinking of great new things and technological advances that are being unleashed as a result of some of the regimes that are being introduced here, we should also be taking time to think about those who may not necessarily get swept up in the technological revolution that we're all experiencing and enjoying and ensure that we have a system that is fit for many, not just for some on the basis of technology. We should be considering that digital divide.

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