Tuesday, 27 November 2012
Treasury Legislation Amendment (Unclaimed Money and Other Measures) Bill 2012; Second Reading
As I was saying, this is an extra tax grab of $900 million. Basically, it is the government with its hands in the pockets of Australians. This is Robin Hood in reverse. While it may be understandable to some that a government and a Treasurer that have totally lost control of their fiscal policy would be desperate to rip every dollar that they can out of the pockets of Australians, the fact that they attempt to hide it through this bill is what frustrates and angers the community and certainly leads them to not trust the duplicitous actions of this government. More than half the Gillard government's promised surplus 2012-13—and I said 'promised'—is to be achieved through the increased revenue from this bill. This is the sole purpose of the government removing this money from your accounts. This is what the government is doing.
Its addiction to spending has left it unable to balance its budget. The government will, as it has so often previously, resort to negative comparisons to somehow justify this incompetence and its wasteful spending. How often have we had to listen to the Treasurer basically gloating that Australia's debt position is not nearly as bad as that of other nations? It is an absolute nonsense argument: 'We might be in a bad way, but others are worse, so that makes it fine.' This government is saying that, although they have propelled Australia down a hole, we are not as deeply down that hole as perhaps somewhere like Greece or other at risk nations, so that should give us some comfort. That is a farce perpetrated on us all by a Labor government in a desperate state. And they are looking at walking away from that budget surplus promise—just watch this space.
Australia was in a good financial position. The previous Liberal government left the current one with a budget surplus, no net debt and billions of dollars invested in savings. The Labor government did what Labor governments do: they spent all the money and wasted so much of it. They are now gorging on debt. Through our amendments, the coalition is seeking to fix what is just the latest legislative debacle from this government. Our amendments seek to redefine the appropriate timeframes needed for fairness in this process. For example, the three-year inactivity threshold for bank accounts is far too short. I have articulated any number of reasons why your account may not have been active over that period. That definitely should be reviewed. The most appropriate period needs to be reassessed. There also needs to be a better explanation as to why the first homeowner account is included. It is just an extraordinary inclusion. Many aspiring homeowners struggle to attain that much-needed deposit. They are working so hard and we should be encouraging such people, not making it harder for them, not having them live in fear: 'If you don't make a contribution to that account, then the government will take it.'
There are also questions about the range of accounts captured by this legislation. It remains the position of the opposition that the new rules should apply only to accounts that earn very low or zero interest, typically at-call accounts.
The coalition also believe that accounts should be grouped under account holders so that if someone has one or more active accounts which are currently in use, then any inactive accounts should not be claimed by the government. They are working their accounts; it is how they are working their financial affairs. In such circumstances, the account holder is obviously known to the banking institution and their account is not lost; it is simply inactive. And that is okay and should be okay with this government. It is not okay for the government to take your funds in that instance.
The government has already acknowledged that this latest piece of legislation is flawed. I wonder why the government cannot get its work done right the first time. Why can't it do the work that is necessary to get this type of legislation right? The Parliamentary Secretary to the Treasurer has put out a media statement outlining a months delay in implementing the bill, which will now come into effect on 31 May next year.
This is just another example of the government's incompetence. We also know that further delays will almost be inevitable, as the government struggles to get its act together. The government also needs to tell the House and the banking sector how these amendments will change the financial impact of the bill over the forward estimates. We need to know more about this and so do the people of Australia. Let us hope that the government actually tries to improve this legislation and bring it into this House in the form it should have brought it in in the first place.
The amendments that the coalition are proposing certainly deserve support.
I am pleased to speak on the Treasury Legislation Amendment (Unclaimed Money and Other Measures) Bill 2012. Let us be clear about what this bill is about. For those listening out there in the wider Australian audience, this is about a government that is trying to legitimise the ability to put its hand in the pockets of everyday Australians and take moneys out of superannuation accounts, home saver accounts and a whole range of accounts that have been inactive for some time. As the member for Forrest just explained to us, the problem is that the government has reduced the time thresholds.
Having an inactive account is not a sin, it is not illegal and it is not wrong. There are a whole range of reasons why you might have an inactive account. But the government, because they need to prop up the bottom line, because they know that they are in financial trouble—they have this fascination with a $1.1 billion surplus, which they know is just a fantasy—but to make it look good they are rushing this legislation through the parliament today, without industry consultation and without proper scrutiny by the Senate's Parliamentary Joint Committee on Corporations and Financial Services. The joint committee wanted to examine this bill and it has not been given the opportunity and time to do so in any meaningful way. So it has been rushed through today because, at the MYEFO update only weeks ago, Treasurer Wayne Swan said he wanted to grab this money to prop up the government's bottom line.
This government has financial problems; it is running out of money. The fact that it is borrowing $100 million a day from China is not enough. It now wants to raid the bank accounts, the superannuation accounts and home saver accounts of ordinary Australians who are out there in the wider community. So we are going to reserve our position on this bill until the outcome of a further Senate inquiry, at a date to be announced. This is desperate legislation and it is quite unseemly that it would be in this place today. This year the amount of unclaimed money held by ASIC has risen to $677 million and the Treasurer, Wayne Swan, is licking his lips in anticipation because he wants to get this money—after squandering the money he had been given through the taxation system. This bill seeks to reduce the length of time unclaimed money sits in an account before it can be transferred to government coffers. In other words, it would expedite this government getting their hands on money which Australians are entitled to.
Imagine if we had made such a money grab. Imagine if Peter Costello had done this. You would have heard a hue and cry: 'What are you doing to the workers of Australia? What are you doing to the ordinary mums and dads of Australia? You are raiding their bank accounts. You are raiding their home saver accounts. You are raiding their superannuation accounts.' We would have been, in the words of those on the other side, the ultimate Tory thieves helping ourselves to Australians' moneys. But, as the Prime Minister says, 'This is the Labor way.' It is the Labor way today—helping themselves to this money.
This bill was introduced the last time we met—three weeks ago. It was introduced, I understand, on the Tuesday night. I happened to be on duty in the chamber on the Wednesday morning when it was brought to this House. The shadow Treasurer, Joe Hockey, was here ready to speak on this bill and he was furious because he had only received notification that it was coming into this House the night before. There had been no opportunity to consult with industry. Given the complexities and the significant implications associated with the bill, the coalition sought to have the bill referred to the Parliamentary Joint Committee on Corporations and Financial Services. A meeting of that committee was called immediately and at that meeting it was decided that the bill should be referred to the committee for review. As I said, on the Wednesday that decision was respectfully overturned by the Speaker and it became clear that the government wanted the bill passed that week.
Thank you, Madam Speaker, but I did happen to be in the chamber at the time. I will leave it there. Given the consequences of this legislative amendment, it would have been wise for this bill to have been carefully examined before a vote was held. Given the Labor government's desperation to secure more revenue, however, I can see why such scrutiny was bypassed.
There are many Australians who would be affected by this proposed legislative amendment. An article titled 'The quest for buried treasure', written by Lesley Parker and published in the Sydney Morning Herald on 14 November, shows that the average parcel of unclaimed funds in Western Australia is the highest in the country at $791. I do not know why that is, but our state—I happen to be a member from Western Australia—seems to be leading the charge in quite a few areas. While there are many inactive accounts which have only very small amounts of unclaimed money sitting in them, there are many examples where significant sums of money rest in an account without the knowledge of the account holder. In Western Australia, for example, there is an account with an unclaimed balance of almost a million dollars. The government has decided, through this proposed legislation, that this money should be redirected to federal coffers as a matter of urgency. Anyone in this place who takes even a cursory glance at this proposal will know that it warrants further scrutiny—especially given the number of Australian account holders who will be impacted by this bill.
Many thousands of my constituents in the Canning electorate would, because they are superannuants or self-managed superannuation fund holders, demand that parliament investigate the implications of a tier of government claiming money from Australians before we rush ahead with such a proposal. As I will come to later, this bill has unintended consequences—for example, where there is health insurance linked to a superannuation fund. This is a sadly accurate reflection of the disregard the Gillard government have for taxpayers' money. It is apparently not enough for them to recklessly waste the money which, as I said, is given to them through our taxation system and through the revenue the Commonwealth attracts; now they wish to rush through a process which will result in additional money being effectively placed in trust with the government—I emphasise the word 'trust'. It will be handed over to the government and held, but the government have a terrible track record with the responsibility of handling public funds. With the speed at which it is being rushed through the parliament, the coalition objects to this legislation.
This bill will have major implications for unclaimed bank accounts, life insurance policies, which I did not mention earlier, a range of superannuation accounts, home savers accounts and unclaimed company moneys. It seeks to allow the government to gain control of moneys in people's inactive accounts after three years. Currently it is seven years. So after three years they are coming for you. It also allows the government to gain control of workers' unclaimed superannuation money where an account has been inactive for 12 months—12 months, rather than five years. What if you have been up north on a contract and you just have not got around to tending to your self-managed superannuation fund, for example?
An opposition member: Goneski.
You return to Perth and look to get your account going again because you have come back with a pocketful of money. Sorry, it is not there. The federal government has taken your account because you have been out of circulation for 12 months. It increases the limit of lost super funds it can raid from just $200 to $2,000—in other words, a multiple of 10.
Inactive First Home Saver Accounts and life insurance funds are also under attack by the Gillard government. What about parents who establish a First Home Saver Account for their children? Have they thought of this unintended consequence? Parents with a bit of money who want to do the right thing by their young child so that they can get into the home mortgage market later in life may put it into a home saver account. Unfortunately, as things go on and bills get bigger, they may not put any money into this home saver account for their child and it may go inactive for several years because of financial circumstances. Goodness me, the government has come and got it!
What about people who travel overseas for a period of time? Dare I say, I have some missionaries in my electorate who go to Africa and other parts of the world offering their time almost free of charge. They do this for two or three years. They will come back to Australia and find that, because their account was inactive and they were working almost in a charitable fashion, not earning, they have been hit. What about soldiers sent overseas? I am not talking about soldiers in Afghanistan or on peacekeeping missions but those who go away to other areas where they might sign on for a longer period of time. When they come back after 12 months: goneski—not the Gonski that most people know but the goneski that will happen to their account.
So we can see that this bill will have major ramifications for many Australians. It is incumbent upon this parliament to rigorously explore the implications of the bill rather than rush it through both houses, as is the apparent intention of the government today. We often hear about the new era of transparency, with this 'rainbow coalition' that was cobbled together in 2010. Dare I refer to the time I sat in this chamber three weeks ago, when the member for Lyne was occupying the chair? He wanted to leave the chair because he was not happy with the bill and wanted to contribute to debate. We helped facilitate it. The Greens member for Melbourne said the Greens were not happy with this bill because it had suddenly been thrust upon them as well and they had not seen the detail. Obviously, in recent times they always protest and then eventually roll over and have their tummies scratched by this government and go along with it.
It is a good analogy. Legs in the air, getting a tummy scratch by the Prime Minister, because they fall in line with her all the time. They have never really voted against anything that would cause this government any grief.
The coalition opposes this bill because we do not want this to be added to the growing list of embarrassing examples where transparency has been discarded for political expediency. And we know what they are: the formulation of the Minerals Resource Rent Tax; and the failure of the Labor government to deliver on the single promise with the country Independents to introduce spatial accounting, to help understand federal expenditure in the regions of Australia. I will just briefly expand on that, because this is part of the transparency. With great fanfare the Independent members said that, along with Minister Crean, they would involve themselves in what is called spatial accounting, so that we could see where the money was spent in each electorate in the regions. We have asked the questions now, and they cannot do it. I think it is that they do not want to do it. And how about the bungling of the Australia Network tender; the reversal on the carbon tax floor price; and the ongoing deals with the Greens to maintain power. It is all part of a shambolic government, and this legislation is part of that.
In addition, yesterday I spoke with industry people and industry sources about this issue and they are deeply concerned about the speed with which this bill has been rushed through the parliament without proper scrutiny. One of the unintended consequences raised with me was the implication involving insurance policies associated with superannuation funds. Many Australians with superannuation accounts have health insurance policies connected their super policies. A client's ability to lodge a claim through their policy would be taken away if their account were claimed by the Commonwealth after remaining inactive for several years. The fact that it is inactive does not mean to say that the health funds still could not come out of funds that were in there. This has massive implications for many Australians, and the government should respect the fact that their suggested legislative amendments need to be adequately scrutinised to ensure their actions do not lead to negative outcomes for Australians. (Time expired)
I rise to speak on the Treasury Legislation Amendment (Unclaimed Money and Other Measures) Bill 2012. The bill before the House seeks to enact various changes to unclaimed money measures, which were flagged in the government's 2012-13 Mid-Year Economic and Fiscal Outlook.
The bill makes amendments in five areas: the Banking Act 1959; the First Home Saver Accounts Act 2008; the Life Insurance Act 1995; the Superannuation (Unclaimed Money and Lost Members) Act 1999; the Australian Securities and Investments Commission Act 2001; and the Corporations Act 2001. The bill effectively brings forward the time at which money is recognised under the relevant law as lost or unclaimed, which will in turn have the effect of moving approximately $700 million into the federal government's general consolidated revenue fund for the 2012-13 financial year and beyond. Make no mistake, these bills are merely a cover-up for this disastrous Gillard Labor government. They are designed to cover up $172 billion of accumulated deficits—record deficits—with more deficits likely to come in the 2012-13 financial year and beyond.
The changes in today's bill are one of many so-called saving measures announced by the Treasurer in the Mid-Year Economic and Fiscal Outlook. As we know, the vast majority of what the Treasurer referred to as a saving was merely taking more money away from Australian taxpayers and businesses—and taking it away sooner than the government did previously.
The bill was referred to the Senate Standing Committee on Economics, after which stakeholders had five working days to make a submission to the committee. As Labor does with so many important pieces of legislation, similar to the rushed implementation of their Future of Financial Advice rules, they rammed their measures through parliament without any regard to the intended and unintended consequences of their legislation. In this case, for a measure to be worth potentially up to $760 million, there were only 18 days between referral to the committee and the committee's report being released. This is simply not enough time for those interested—consumers, business groups and industry associations—to consider the consequences of these changes. The coalition senators of that committee released a dissenting report which highlights many of the bill's problems. They made two recommendations: firstly, that the government withdraw the bill in order to facilitate further consultation and that the explanatory memorandum be revised to be clear about how the legislation is intended to work; secondly, if the government does not withdraw the bill—which it has not done—that the bill be amended to delay implementation until at least 31 December 2013 for Schedules 1 and 2 and that there be further delay for Schedule 4.
More recently, the government announced just yesterday afternoon significant changes to the bill in response to many of the concerns noted by the coalition senators' dissenting report. It takes seven paragraphs into the media release of the Parliamentary Secretary for the Treasurer, the member for Oxley, for the government to admit that it is making significant changes to the original legislation and to then admit that it is changing the implementation date to 31 May 2013. What it does not say is that the original date in the legislation was 30 April 2013. So all organisations affected by this legislation will be given a total of just one extra month to implement costly reforms and introduce compliance regimes. As I have noted, the coalition believes that one month is not enough. Authorised deposit-taking institutions—ADIs—first-home saver account providers, life insurers and superannuation funds need and want at least a year. However, this Labor government does not listen to stakeholders. It pays lip service to their concerns by giving them one extra month to significantly alter system-wide processes.
This is a symptom of what the coalition has been saying all along about this legislation. The government has abused process with the manner in and timing with which this bill was introduced into parliament. Most fundamentally, the government must update the explanatory memorandum and be upfront about the impact this legislation and its subsequent changes will have over the forward estimates. The government has not yet done so. It is more interested in rushing through the legislation, making hurried changes and leaving it to the industry and consumers to worry about the consequences afterwards. This hurried process did not have to happen. From the outset, Australian authorised deposit-taking institutions told the committee that the government should delay implementation. The coalition senators noted the response of the Australian Bankers' Association, which acknowledged that:
…the proposed timing for implementation and a commencement of 31 December 2012 is unrealistic, being in less than 2 months and falling during a period when banks implement freezes on any technology or IT systems changes. It is estimated that banks and other ADIs will require at least 6 months to make all the necessary changes, inform customers in a legally compliant manner, and meet compliance requirements.
I turn now to look at the individual sections of the bill. Firstly, Schedule 1 of the bill amends section 69 of the Banking Act 1959 to provide for new arrangements for unclaimed moneys held by Australian authorised deposit-taking institutions. These changes will reduce the period before an amount payable by an ADI is treated as unclaimed money from seven years to three years. The test of engagement the government has chosen in determining whether an account is to be treated as unclaimed money is whether a transaction has occurred in the account for that period of time. What is even more alarming is that until yesterday the inactivity test would have been applied at the account level, not the customer level. So we could have ended up with the situation where an active customer with a pre-existing relationship with an ADI had several accounts but might have had one account that they were not using. For that one single account, the money would have been deemed 'inactive' and transferred to consolidated revenue, despite their being an active customer. This change had potential widespread consequences for many Australians.
As the shadow Treasurer has highlighted to the House, there might be many examples of an Australian worker who has been offered a post overseas for three years, who has money sitting in a bank account, who leaves their money in that account accumulating interest and who does not make any further deposits or withdrawals in that period. For the purposes of this bill, their deposit is treated as unclaimed funds and therefore is able to be transferred into consolidated revenue. The coalition still has deep reservations as to the potential unintended consequences that this legislation may have for many Australians with untouched funds in bank accounts.
Secondly, Schedule 2 to of this bill amends the First Home Saver Accounts Act 2008 to provide for new arrangements for unclaimed moneys held by first-home saver account providers. The new law amends sections 17A and 51C of the FHSA Act to change the unclaimed funds period from seven years to three years. Since the introduction of First Home Save Accounts in the 2008-09 budget, the Australian economy has continued to grapple with the effects of the global financial crisis. Many Australians may have started up a first-home saver account and then been affected by economic circumstances such as rising cost-of-living pressures, and therefore they may not have been able to make contributions. Today's bill means that some of these accounts are at risk of being claimed by the government.
Thirdly, schedule 3 of the bill amends section 216 of the Life Insurance Act 1995 to provide for the new arrangements for unclaimed life insurance funds. Unclaimed moneys include sums payable on the maturity of a policy which are not claimed within seven years after the maturity date of the policy. The new arrangements will reduce the period from seven years to three years before life insurance funds are treated as unclaimed.
Fourthly, schedule 4 of the bill amends the Superannuation (Unclaimed Money and Lost Members) Act 1999 to change arrangements for the transfer of lost member accounts to the tax office and to provide for the payment of interest on unclaimed superannuation money. Lost superannuation with balances of less than $2,000 will be deemed inactive after only three years; currently it is seven years. The coalition's dissenting report notes that this has the potential to make worse off those already vulnerable in our community—that is, those who take the most time to accumulate anywhere close to $2,000 in a superannuation account. We are talking about young people, low-income earners and new earners.
I was very concerned about the reduction in the time of inactivity from five years to only 12 months. Yesterday afternoon, the government acknowledged this problem in their legislation and announced that accounts which are active but where the member is uncontactable will not be transferred to the ATO. This is an embarrassing turnaround from the government. I am glad that they finally acknowledged the concerns relating to the nature of superannuation accounts.
Many young people and low-income earners will have multiple jobs and multiple super funds. The immediate pay packet of someone earning a low wage might be more pressing in terms of updating addresses and other contact information. Yet, if they then move house—and even if their super account is still receiving contributions—their account can be deemed lost if communication has been attempted twice. Therefore, to assist in protecting active but lost accounts, the Australian Institute of Superannuation Trustees and the Financial Services Council recommended a minimum two-year period before an account can be deemed lost, and that the two-year clock be reset when a member receives a contribution or any form of contact has occurred.
This is a very reasonable proposition which would add a safeguard for Australian superannuation accounts. I reiterate my gratitude that the Labor government has at least listened to the concerns from industry and consumers so that active accounts will not be transferred to the ATO unnecessarily.
Fifthly, schedule 5 of the bill amends the Corporations Act 2001 and the Australian Securities and Investments Commission Act 2001. We should consider today's bill in the wider context of tax reform—more precisely, the complete lack of fundamental tax reform over the last five years. The Rudd Labor government first commissioned the Henry tax review, which began in 2008. The review received more than 1,500 submissions, cost more than $10 million and finally delivered a report over 1,300 pages long. The report included 138 recommendations to the government, the vast majority of which have not been appropriately considered by the government. Instead, we have a record of no real reform and all we see is new taxes and tax increases.
Successive Labor governments have introduced an additional 20,900 regulations and only repealed 104. Labor promised that they would follow a strict 'one in, one out' approach to the growth of regulation. Instead, for every regulation removed, 200 regulations have been added. While the Treasurer wants to rush this unclaimed money bill through parliament, they do have form when it comes to rapidly raising taxes in Australia. Among many other things, in 2008 they increased the alcopops tax and raised the luxury car tax from 25 to 33 per cent. They have attacked superannuation on numerous occasions. They attacked the medical expense tax offset and abolished the entrepreneur tax offset, and their most recent reform was to force large businesses to pay their pay-as-you-go instalments to the government every month instead of every quarter. This measure is supposed to net the government $5.5 billion in the next financial year.
Mining companies were slugged with a mining tax that has, to date, not raised a single dollar in revenue. With the mining tax, Australian businesses were supposed to see a cut in the company tax rate of 30c to 29c and then to 28c per dollar. The company tax rate today still stands at 30c, and Labor has completely abandoned reform in this area. As a result, the government has amended the net debt ceiling limit four times in the last five years. It first increased the limit in 2008 to $75 billion, then again in 2009, 2011 and 2012, with the limit now standing at $300 billion. As a consequence we have a government that then has to introduce measures in today's Treasury legislation amendment bill—a short-term fix to raise more than $760 million to smooth over the budget figures.
However, these changes have been rushed and ill-considered. The last 24 hours has seen the Labor government confess that it has introduced deeply flawed legislation, something it does not admit to very often, although there are countless examples of legislation passed by the Labor government which should not have been introduced, let alone passed, and which has required significant revision after its passage. With this Treasury bill, the government must at the very least delay the implementation of the bill and listen to the concerns of all stakeholders before imposing unnecessary and additional compliance cost.
The shortcomings that I and my coalition colleagues have outlined, both in the Senate dissenting report and in parliament, must be addressed in the form of further consultation. Despite the changes announced yesterday, this bill is still a bad bill. I therefore strongly oppose today's bill in its current form.
I rise to speak on the Treasury Legislation Amendment (Unclaimed Money and Other Measures) Bill 2012. As the shadow Treasurer has said, this bill should not be called the 'unclaimed money bill'; it should be called the 'government claims your money bill'. I guess you could also call it 'use it or lose it'. Anyone with a bank account should rush out and put in 10c to make sure the account is active. For one of my accounts I will probably have to do that because it is a family trust declared account. It is on my register of interests. It has been sitting there and earning interest for the family trust but it has not been activated or used for four years. That means it will be claimed by the government. This is another typical example of a government putting up a bill when it does not understand the consequences; it does not think through any of the legislation. If there is one thing that the business community knows it is that the government does not understand the knock-on consequences of a lot of the bills that are introduced and how they affect business.
Essentially this bill is an attempt to manufacture a paper surplus for this current financial year in the face of predictions from analysts around the country that there is going to be no budget surplus. In fact, more than half of the Gillard government's promised surplus for 2012-13 is supposed to be achieved through increased revenue from this bill. The government is clearly worried that it will break yet another political commitment that has been repeated time and time again by the Treasurer and the Prime Minister. Those opposite are desperate for cash.
We all support getting the budget back to surplus, but the coalition wants a real surplus, not a paper surplus. The context of the legislation is the four largest deficit budgets in Australia's history, remarkably coming after four of the largest surpluses at the end of the prosperous Howard era. The rushing of this legislation will impose costs which will be borne by the account holders and consumers, and we must consider the interests of consumers who are the holders of bank accounts, superannuation accounts and insurance accounts while we assess the merits of this bill. On the other side of the coin are the account providers: banks, super funds, insurance companies or other financial institutions which are having the ill-considered measures imposed upon them without warning or consultation. We heard the Assistant Treasurer at a recent function in Melbourne talk about the Labor government and how much consultation it undertakes with business, but this bill is typical and it shows that the government does not consult with people when bringing in bills. Inadequate warning or consultation is stated in the coalition's dissenting report to the Senate inquiry. The stated objectives of this legislation are sound: to prevent erosion of small, lost or inactive account balances from fees and charges and to reunite unclaimed balances with their owners. However, as with many Labor bills, the substance of the bill does not match the objectives. We had the same problem with the Australian Charities and Not-for-profits Commission Bill, which I spoke about in September—a bill with stated intentions that no-one could disagree with but with consequences that almost everyone disagreed with. This bill has the same problem.
However, while it was possible to conclude that the charities legislation debacle was just another example to add to the list of incompetence in the Labor Party, with the pink batts and the school halls, this legislation is more of a deliberate attempt to mislead. It is a grab for cash; there can be no doubt about that. The costs imposed on account providers from this legislation, which will be far greater due to the rushed nature of the introduction of the legislation, will inevitably be passed on to consumers—and I think the last thing Australians will want to see at the moment is higher bank charges.
The coalition will move amendments to introduce more realistic implementation time frames, and if these amendments are successful we will not oppose the bill. There may well be some elements in this bill that have merit, but these are largely wiped out by the rushed, ill-considered and disorderly manner in which they are being pursued. Specifically, given the number of problems raised concerning the legislation, the coalition senators of the Economics Committee determined that the sensible decision would be to undertake further consultation and, failing that, the implementation dates for schedules 1, 2 and 4 should be delayed.
I understand that at the eleventh hour the member for Oxley, the Parliamentary Secretary to the Treasurer, who is in the chamber at the moment, has flagged changes that push back the reporting and transfer deadlines by a month for both banks and superannuation funds. While it is positive that the government has recognised one of the elements of concern with the legislation, this does not appropriately address the concerns that were raised by industry. From the outset we say that the government needs to explain, in an updated explanatory memorandum to this bill, how these changes will impact the key dates as outlined in the explanatory memorandum for changes in schedules 1, 2, and 4. The government also needs to inform the House, in an updated explanatory memorandum, how these amendments will change the financial impact of the bill over the forward estimates. These last-minute changes give an air of chaos and, by their very nature, limit time for consideration. I am the last speaker on this bill, and many have spoken over the last two sitting weeks. To rush through these changes at the end, without giving people a chance to digest them, analyse them and see what the impact is on the budget, is poor.
This bill seeks to make significant amendments to the Banking Act 1959, the First Home Saver Accounts Act 2008, the Life Insurance Act 1995, the Superannuation (Unclaimed Money and Lost Members) Act 1999, the Australian Securities and Investments Commission Act 2001 and the Corporations Act 2001. The bill makes various cut-and-paste amendments to existing acts that give effect to the unclaimed moneys measures announced in the 2012-13 MYEFO. These amendments will impact arrangements relating to the transfer of unclaimed moneys to ASIC for bank accounts and life insurance policies, lost member accounts to the ATO for the superannuation, and unclaimed moneys for company moneys. This bill will bring forward the time at which money is recognised under the relevant law as lost or unclaimed, leaving Australians everywhere vulnerable to this government's greedy reach.
This bill affects many financial institutions and many different kinds of assets held by Australians. Schedule 1 of this bill amends section 69 of the Banking Act 1959 to provide for new arrangements for unclaimed moneys held by Australian deposit-taking institutions, or ADIs. These changes will reduce the period before an amount payable by an ADI is treated as unclaimed moneys from seven years to a period of only three years. If this bill passes, money held in ADIs will be deemed as unclaimed if a transaction has not occurred in the account for that period of time. This excludes payment of interest accrued. This change has mammoth potential widespread consequences for many Australians. For instance, say an Australian worker who has been offered a post overseas for the next four years decides to leave a sizeable amount of money in a high-interest bank account to accumulate interest. This person, who for whatever reason has chosen not to make any further deposits or withdrawals for that period of time, will, under this bill, have their deposit treated as unclaimed moneys. These funds will be moved to the government's own account, known as the consolidated revenue fund, and used to pad out the bottom line of that financial year's budget. In the Senate report a number of concerns were raised, which were shared by coalition senators, about the reduction by four years in the inactivity test period. The senators concluded that the three-year inactivity test for bank accounts is too short and needs to be reviewed to consider whether five years would be a more appropriate duration. Accounts which might be affected include those of Australians being posted overseas and accounts owned by children or set up for children's savings but without a contribution during the three years. In the case of a first home saver account, hard times can mean that contributions are not made for at least three years. Can you imagine the number of people that might be affected by an arbitrary three-year test? I imagine that is why the government is so keen to act this financial year.
The coalition dissenting report also pointed out that many account types should be excluded. A submission from the Commonwealth Bank of Australia stated:
A high level analysis by CBA indicates that the majority of account balances at CBA which would be impacted by the proposed changes to unclaimed monies currently receive an interest rate higher than the CPI linked rate which the Bill proposes to be paid on those balances once transferred to unclaimed monies.
So, a three-year requirement would be detrimental to a large number of Australians. Another recommendation from the coalition Senate report was that inactivity should be tested at the account holder level. If an inactive account is held by a consumer with one or more accounts at the bank, strongly suggesting that the customer is still alive and engaged with the bank, then the balance of the inactive account should not be deemed unclaimed and transferred to consolidated revenue. As such, where a customer holds multiple accounts with the bank, the inactivity test should be elevated to the level of the customer to help avoid unintended consequences.
The government also plans to appropriate funds from first home saver accounts by amending the First Home Saver Accounts Act 2008 to provide for new arrangements for unclaimed monies held by the first home saver account providers. This is outlined in schedule 2. Once again, the bill before the parliament today would amend section 17A and 51C of the FHSA Act to change unclaimed monies for the period from seven years to three years as with the changes to the ADIs.
The government announced the introduction of first home saver accounts in its own 2008-09 budget to assist parents in saving for their children's future. Many parents have established these accounts for their children but may not have been able to make contributions recently for a variety of factors, be it the ever rising cost of living that this government does not acknowledge or a temporary lack of disposable income. Some of these accounts have a very real risk of being claimed by the government, particularly when holders of these accounts have not been able to afford to contribute to their deposits over the past three years or have not been in contact with the bank which holds these deposits. The coalition considers that this four-year reduction also increases, unreasonably, the risks of unintended consequences and we suggest that this bill be delayed a year to allow sufficient time for consultation.
This bill will amend the Life Insurance Act 1995 as per schedule 3 to provide for new arrangements for unclaimed life insurance monies. Life insurance companies are required to report on and pay unclaimed monies to the Commonwealth. Unclaimed monies include sums payable on the maturity of a policy which are not claimed within seven years after the maturity date of the policy. The new arrangements outlined in this bill will reduce the period before life insurance monies are treated as unclaimed from seven to three years. It is, again, not clear how these provisions will apply to contemporary life insurance products or policies, and this confusion has arisen because the government has not had time to properly develop the legislation.
Schedule 4 to the bill amends the Superannuation (Unclaimed Money and Lost Members) Act 1999 to change the circumstances in which small lost member accounts and accounts of unidentifiable members must be transferred to the ATO to provide for the payment of CPI interest on unclaimed superannuation money. Again, the coalition recommends that the proposed amendments in schedule 4 of the bill be delayed for a full year to 31 December 2013 to address the critical issues raised since the announcement of this measure. Lost superannuation accounts with balances of less than $2,000 that have up until now been inactive for only three years—currently this is set at seven years—and accounts of identifiable members that have been inactive for 12 months will now be required to be paid to Australian Taxation Office. It is not clear how legislative change will apply to people who have moved jobs and have multiple superannuation accounts, spent time overseas or moved residences. The Australian Institute of Superannuation Trustees noted in its submission that the problem of transferring such active accounts to consolidated revenue was that it was most likely to impact new employees, young people and low-income earners as these contributing members typically take the most time to accumulate account balance over $2,000.
This bill seeks to amend longstanding pillars of our financial services industry. Changes to these acts must never be made lightly, and the coalition will not facilitate a government that is acting out of self-interest as opposed to properly considered public policy. The coalition has advocated for a wide range of review measures to ensure that this bill has had due assessment to ensure that there were no unintended consequences. This is a bill that this government has concocted out of desperation to save its crumbling budget bottom line.
The coalition senators reached three recommendations, which include various parts of the schedules 1, 2 and 4, and the amendments to be moved by the shadow Treasurer this afternoon will reflect this. I urge the government to support them for the benefit of both consumers and industry who have been caught unawares by this rushed legislation. One of the other unintended consequences is for people who develop dementia. What will be done with their accounts? Will the government take money from people who are getting ill? Is that right? You have said they will keep their money; will they?
Mr Ripoll interjecting—
I stand today to speak to the Treasury Legislation Amendment (Unclaimed Money and Other Measures) Bill 2012. From the outset, let me say that I have real concerns with the speed at which this bill has been brought to this House. I understand from the government's perspective why it needs to introduce this bill, which will bring $700 million into consolidated revenue and some $886 million into consolidated revenue over the forward estimates. This consolidated revenue benefit is designed to do nothing more than prop up the budget in an attempt to produce a surplus to make the government look good. This is not earnings by government. This is taking the money which individuals or corporations own and that is in bank accounts, life insurance and superannuation policies that actually belong to someone. Your excuse is that this money does not belong to someone, so therefore it belongs to the government, and therefore the government can use it to prop up its ineptitude in managing a budget. I have real concerns with the speed.
These concerns have been expressed in dissenting reports put down in the Senate. In particular, one of the things that really concerns me is in relation to superannuation, and the fact that the government will deem an account lost or inactive if there has been no action within 12 months. There are a large number of people, particularly young Australians who, when they leave school and start work might have a multitude of jobs; might amass a lot of small amounts of superannuation which they have not consolidated into one account. They might go travelling or they might go overseas for 12 months as a rite of passage as they explore offshore opportunities. Indeed, they might even go bush for 12 months and jackaroo or work up in Cairns in the tourism industry and be deemed non-contactable. Therefore, their hard earned money will go into consolidated revenue for this government. It is true that when it is claimed back they will be able to get an interest supplement from the government at the lowest rate.
Well, Parliamentary Secretary, let's be honest about it: this is about a cash grab to line up the bottom line of your budget and nothing more. That is why it is being done with this speed. And those young children sitting up in the gallery watching you would say, 'What are you doing to my future earning capacity when you have designed a scheme that now, within 12 months of deemed inactivity, by criteria set down by you and your colleagues that will take that money away?'
I have real concerns, and I believe that this bill before the House is going to be supported by Independents because there was a deal done. And that deal is the poker machines legislation which will be brought into this House tonight, which the government previously said would not work—in fact, Minister Macklin said on a number of occasions that the voluntary precommitment would not work. But, such is the demand from perhaps the member for Denison that he wants his bill through, and the government needs his support on this bill to get it through to prop up the bottom line. This government is selling out the hotel and the club industries for the purposes of getting this bill through. I will have more to say on that tonight, when I speak to the gambling reforms legislation.
I want to say that I feel very uncomfortable with this bill. I am glad that the shadow Treasurer will be moving a number of regulatory changes to make sure that it conforms more with sound, sensible responses—particularly at the time in which this will all come together. But I want to say I feel uncomfortable, because it is clear that this bill does nothing more than raid the bank accounts and superannuation funds of people to prop up the government's bottom line. Be honest about it.
I'm not making it up, Parliamentary Secretary. Here you are, with your forward estimates, your schedules to the bill—schedules 1, 2 and 3: banking, first home saver account, life insurance this year will deliver you $93.4 million as you raid it off people; schedule 4: superannuation, $513.5 million; schedule 5: companies and corporations, $94 million; $700 million to your bottom line. So it is not true revenue, it is not income, it is not money the government has earned—it is money you are taking out of the accounts of everyday Australians to prop up your financial position to make you look like you could be somewhat of a responsible financially accurate government. You are not: you are robbing Peter to pay Paul, and it is not your money.
I am not going to speak any further on this bill. I will be opposing it. I think it is wrong. I think the delivery method is wrong. I think the speed and access are wrong. And in particular I feel that the fact that this bill has brought other bills into action because of deals and swaps and a need for votes is going to do immeasurable harm to Australia.
With the Treasury Legislation Amendment (Unclaimed Money and Other Measures) Bill 2012 the government yet again travels down a well-worn path, with another blatant cash grab of Australians' hard-earned income. I have no hesitation in opposing this bill, because of the haste with which this government has chosen to introduce this legislation. Gone is sufficient time to assess the impact and unintended consequences, replaced with a desperate dash to the next budget—framed by creative accounting towards a non-paper surplus.
Again, the people of Tangney and all other Australians are left disregarded by a shambles of naive legislation and ignorant policy. Reforms to the Banking Act 1969 make new arrangements for unclaimed moneys held in deposit-taking institutions. The coalition had sought to refer the bill to the Joint Standing Committee on Corporations and Financial Services for prudent and measured assessment. Why this government has not sent this bill to the parliamentary inquiry lends itself to the question: what are the members of this Labor government seeking to achieve? And do they fully understand the potential implications for Australians? Instead, this bill has been rushed to the House for debate because Labor sees opportunity to profit from those who can least afford it. We are three days from this place rising for 2012. It is quite apparent the government is bent on rushing this and a swathe of other bills to a vote to temper current debt of $252.9 billion. In addition to the Banking Act 1969, this bill also seeks to amend unclaimed money measures which were flagged in the government's 2012-13 MYEFO, to the First Home Savers Account Act 2008, the Life Insurance Act 1985, the Superannuation (Unclaimed Money and Lost Members) Act 1999, the Australian Securities and Investments Commission Act 2001 and the Corporations Act 2001—the focus: arrangements relating to the transfer of unclaimed moneys to the Australian Securities and Investments Commission for bank accounts and life insurance policies, lost members' accounts at the Australian Taxation Office for superannuation, and unclaimed moneys for companies' moneys.
Similar to most of the economic policies of the current Treasurer, this legislation will bring forward to 2012-13 a significant sum of money that the legislation will recognise as unclaimed, lost or abandoned. This figure is forecast to be $762 million. To do this, changes will reduce the period before an amount payable by an Australian deposit-taking institution is treated as unclaimed moneys from seven years to three.
Let me be clear. If a worker who has money sitting in a bank account accumulating interest and does not make any further deposits or withdrawals for that period of time, at the three-year mark they will have their deposit treated as unclaimed moneys. These funds will then be moved to consolidated revenue. It is towards Orwellian that government would come in and just pluck money from a private account because it has not been active for three years. This is the reverse Robin Hood. It means that 'small' Australians—not the big end of town but the small end of town that Labor purports to support—will be robbed by the biggest institution in the land, the Australian government. This is from the Labor Party, which prides itself on fighting for the little guy. Some fight!
How can an Australian government head down this path—to tap into private funds just because Australians rightly chose to leave money in a particular account? This is not the type of government I want. This is not the type of government the people of Tangney want—and they are telling me just that. Should this bill pass this place, I imagine many people, young and old, will step back 50 years and stuff their money under the mattress—better having it stagnant and not interest bearing than losing the money all together. This policy is archaic, deceptive and impractical.
Schedule 2 of this bill amends the First Home Saver Accounts Act 2008—an amendment to a bill introduced by this government relatively recently to provide for new arrangements for unclaimed moneys held by the first home saver account providers. Amendments change, once again, the unclaimed moneys period from seven years to three years. Again, this schedule makes us question Labor's due diligence when introducing legislation it has drafted, with amendments after just a few years because the government has seen fiscal opportunity and seen fit to amend legislation for government gain at the cost of the individual citizen.
Surely there is a better way to balance the budget—even after this government has produced four of the biggest budget deficits in Australia's history. Prudent, fiscally responsible and competent government should always strive for higher productivity and higher standards of living for all Australians. Pinching $2,000 here and $3,000 there, while unjust, is also bureaucratically implausible. The cost of administering this poorly developed policy surely outweighs the net gain to the government.
Now I go to schedule 3, concerning life insurance. Currently life insurance companies are required to report on and pay unclaimed moneys to the Commonwealth. Unclaimed moneys include sums payable on the maturity of a policy which are not claimed within seven years after the maturity date of that policy. The new arrangements will reduce the period before life insurance moneys are treated as unclaimed moneys from seven to—you guessed it—three years. Once again, we see a reduction in the time frame, and it will allow the government to step in and take that money. If someone legitimately choses to have a bank account and leave money in there for more than three years, and not wish to add to it and not wish to subtract from it, surely they have the right to do that and not be worried that a government is going to step in and appropriate the money.
Schedule 4 of the bill amends the Superannuation (Unclaimed Money and Lost Members) Act. Lost super accounts with balances of less than $2,000 that have until now been active for only three years—currently this is seven—and accounts of unidentifiable members that have been inactive for 12 months are now to be paid to the Australian Taxation Office. Note the figure of less than $2,000. Once again, we are not talking about the big end of town. Schedule 5 deals with the Corporations Act. Once again, the government seeks to move the goalposts so it is easier to get hold of private citizens' money.
This bill just beggars belief. It changes the pillars of our financial services industry. It is clear that the rushed time lines and implementation of this bill have been driven by nothing more than a Treasurer pretending that he can deliver a surplus, a surplus that is at risk without the passing of this bill. The coalition and I will not support or facilitate a government that acts on political interest with disregard for properly considered public policy. Good government is the goal of all members in this place, Labor and Liberal, and it saddens me that the Labor Party have sold what was left of their dignity to manufacture a superficial surplus.
The Leader of the Opposition's team have left this government naked. The bill exposes the wanton greed and lust for power endemic in tired and troubled Labor. This bill generates $762 million, which is a very convenient sum when the surplus is expected to be a wafer thin $1.077 billion. There is no way around it. The Treasurer is robbing not only Peter but also Paul. The only people getting paid are Labor cronies in unions and backroom boys.
In the final analysis, it is difficult to understand not the bill itself but where it is coming from, who is driving it. Is it the Australian Bankers Association? No, because they remain sceptical of its necessity and of the transitional administrative arrangements. Is it the lobby groups and/or academic groups? No, because they point to the lack of any evidence to suggest that three years is the optimal time to take a person's money. The job of a government should be to safeguard and protect the properties of people, not to meander into their bank accounts and confiscate their hard earned treasure. This bill goes to prove the point that the Leader of the Opposition and I have made, time and time again: a government big enough to give you everything you want is big enough to take everything you have.
I thank all members who have spoken and contributed to this debate. I can understand that there is some confusion, although I find it difficult to understand why that is the case. We have clearly articulated exactly what this bill does—and the amendments to this bill—in protecting people's savings and superannuation, protecting their money and, for the first time, ensuring that people's lost accounts are not eroded away by fees and charges, and that for the first time they also have an opportunity to continue to earn interest. These are good for consumers and good for the country. The bill is certainly not what has been described by a number of members opposite. In fact, it is the case that the rules on how unclaimed moneys are dealt with, with ASIC and the ATO, are in currently place. They currently exist. In that effect there are no changes. The changes are to when it takes place. It will happen more quickly, but that is a really good thing for consumers because the earlier it happens the earlier their lost accounts can be reconnected and the quicker they can re-access their funds.
The interesting part about the different elements that have been raised is that the reason the accounts are lost in the first place is people have for whatever reason become disconnected and they have no mechanism to reconnect with their lost account in whatever form. No method exists. If it is with the bank it is not in the bank's interests to put forward that you reconnect with your funds and take them out, but it is in the government's interest that ordinary people are reconnected with their funds, that the fees and charges stop being taken out and eroding a person's savings, and that savings are added to by giving people CPI interest—yes, at the lowest rate, but interest so that the value of their money maintains value over time. These are really good, sensible changes.
I am prepared to have debates and arguments over time frames—whether it is seven years or three or whatever other time frame—but that does not change the principle. The principle we have before us is that we are trying to save people's money by giving them interest for the first time, to stop the erosion of the value of their money by having fees and charges taken out for the first time, and to make sure that the government, through the Australian Taxation Office and the Australian Securities and Investments Commission, actively reconnects people with their money. Right now, what happens in the absence of these very good changes we are putting forward is that those unclaimed moneys go on for not three years or seven years but 10 or 15 years because people do not know. The reason they are unclaimed is a lot of people do not know they exist, or they are overseas, or whatever the case may be. The faster we can reconnect people the better it is.
There is a whole range of other issues that have been raised by opposition members trying to confuse this area—that the government is somehow reaching into people's accounts. That is not the case at all. This is an amendment to existing laws about things that currently happen, and this is an improvement to what we have seen in the past. This bill is directly intended to do exactly what it does, which is re-unite Australians with their lost moneys faster and to protect that lost money from inflation and fees. I am astonished that anyone in this place would oppose it.
We have made a number of technical amendments and we have clarified a range of areas—because there are a lot of technical issues in some of these matters—and this now means it is clear for banks and for consumers. We have given the appropriate time frames for organisations to be able to implement these new measures. Contrary to the suggestions from the opposition, this bill does not introduce a new regime for lost moneys. Rather, the bill will deliver better outcomes for consumers by making a small number of refinements to the existing regime. This is the disingenuous element of some of what has been said in this debate.
These are laws that existed under the Howard government. What we have done and what we continue to do in government is take those laws and make them better. Following consultation with the industry the government will move amendments to the bill that will provide industry with more time to implement the changes. There is no argument from industry about whether this is right or wrong, because it is currently being done. We are giving industry a little bit more time to be able to properly—
We get laughter from the opposition. More time—isn't that what they were saying? Isn't that what they wanted? That is exactly what we have done—we have given them a little bit more time. It will happen in good time because the faster these changes happen the better it is for consumers. If we used the principle that the opposition brings to the table there would be no time, because they could never find the time in 12 years in government—there was never any time. There was never any time to make any good changes. We will take the time and we will do it.
Specifically, we have also authorised for deposit-taking institutions, First Home Saver Account providers and life insurers to be required to make supplementary assessment and transfer by 31 May 2013. That is sufficient time for the changes to be adopted, adapted and implemented so that people can be earlier reconnected with their money. This provides an extra five months for these institutions to identify lost accounts and an extra two months to transfer them, as requested by industry groups such as Abacus. We agree with them. Let us give them a little bit more time. Let us make these changes. But the faster we get there the quicker people will be reconnected. All the evidence is on the table. All you have to do is go through the evidence from history. Have a look at what happened with unclaimed moneys in each previous year. There were more and more of them over time and no effort was made—nothing was done—to reconnect people. As soon as this Labor government started to make an effort, we saw a change. We saw people who had lost accounts being reconnected with their accounts. We are seeing people with lost super being reconnected with their super. We are seeing the things that this bill intends to do working.
We have had more evidence recently. There has been a bit of media activity around this issue, including on the radio. The government and ASIC have promoted the fact that people ought to go and use the free search tool at ASIC or the ATO to look for their lost accounts. A whole drift of people have gone there to reconnect for the first time. This bill will assist people to do that.
This is the key that the opposition needs to understand. Most people have no way of knowing that they have lost money. Even if you thought you had, where would you look? It is lost. Where would you start? But as soon as it transfers from the institution—the bank or wherever it might be—to ASIC or the ATO you can search for it. It does not matter how long you wait. You can search it now or you can search it in 10 years and your money will still be there. It will not have been eroded by fees and charges. The real value of your money will have been maintained because you will get interest. For the first time, you will get interest. How could you oppose that? In 10 years time, somebody who lost their money will be able to reconnect with their funds. Under this mob's rule, what happened was that it just stayed lost. That is what they want: they want the money to stay lost. They want the lost accounts to stay lost. They want to make an amendment all right: one to take the time period from the old seven years to forever, because they are not interested in reconnecting people with their funds. We are and that is exactly what we are doing.
Consultation with industry has identified some areas in which the intent of the amendments can be clarified. These issues can and will be dealt with through regulations, as per my press release yesterday.
These reforms will ensure that more Australians are reunited with their lost moneys. They will also ensure that this happens faster. That is the whole point. Why wait any longer? If somebody has a lost account—lost moneys in either their life insurance policy, superannuation, bank accounts or even property—why should they have to wait any further? Let us reconnect people with their money and let us do it now.
There were a range of issues raised by speakers on the other side. I will make a few points to clarify things. The principles in the existing legislation will not be changed. The principles remain exactly the same. At some point in time, be it seven years or three years, that money will be transferred—and this was done during the Howard era—from an account that is lost, unidentifiable or inactive to the ATO or to ASIC. What we are doing is making that happen faster so that you can reconnect with your funds faster. The principles have not changed. When those opposite say that the government is taking your money, that is not the case, because that is the existing law—it is exactly what happens now; it is exactly what happened during the Howard era. We did not hear them at that point in time saying that they were taking that money. The key principle differences are that it stops your money being eroded through fees and charges for the first time and that you get interest for the first time.
The other concern from the opposition revolves around speed: it is all too fast, according to them. We may be moving too quickly for the opposition, but we can walk, chew gum and breathe at the same time and introduce good amendments. This is not too fast. This is appropriate. It is about time that people are reconnected with their funds in a more timely manner. Whether that lost money is in superannuation, life insurance policies or bank accounts, the settings that we are putting in place are appropriate—and particularly for super. There is a complexity to super, particularly for young people with multiple accounts. In fact, superannuation is one of the areas in which there is an enormous amount of lost money. The shorter the time period, the quicker it moves across, the faster that you will be able to identify and reconnect with your superannuation. That is great for consumers. It means that they can get their money faster.
The issues that have been raised have been more than amply dealt with. The amendments that we have put forward, after good consultation with the industry about implementation periods, are sensible and appropriate. The government commends this bill to the House, because it is good for consumers and good for reconnecting people with their lost moneys.
Question agreed to.
Bill read a second time.