Wednesday, 19 June 2013
Banking Amendment (Unclaimed Money) Bill 2013; Second Reading
I rise to speak on the Banking Amendment (Unclaimed Money) Bill 2013 currently before the House. But before I do I would like to place on the public record, being a new member in this House, that I had the privilege of witnessing three excellent, outstanding valedictory statements by men who have served not only this parliament but our nation very honourably. I would like to associate myself with their kind words. It steels me to be a better man in this place. By all standards, they are gentlemen to model oneself on. I compliment them on their efforts in the House and wish them well in whatever their endeavours may be into the future.
An honourable member: I thank the member for Wright.
It is one of the more chivalrous duties undertaken. Now we are back to the business of bashing each other up again—the job at hand.
The bill currently before the House, the banking act, seeks to transfer funds of unclaimed money from bank accounts back to the Commonwealth, with refunds to authorised deposit-taking institutions—ADIs—if money is collected unnecessarily. Some background on the bill: it is an attempt by the government, in its 2012 MYEFO, to find savings to bolster their now-defunct commitment of delivering surpluses in the 2013 budget. The government announced an array of changes relating to unclaimed monies in bank accounts, life insurance accounts, superannuation accounts and corporations, which I will go to and break up as to where the pots of money are.
In basic summary, what this bill seeks to do is to allow this government—as an unintended consequence of delivering the sixth biggest deficit for this nation, of not being able to balance the books and of reckless fiscal management—to now sink to a low. It allows them to sink to a low where, as a measure to try to strengthen the financial position of this nation, we are going into the bank accounts and the savings accounts of hard-working, decent Australians and taking that money if it has lain dormant for a period of time which I will outline in my speech. They are taking that so-called 'unaccounted for' money and relocating it to the government coffers to try to bolster their financial position. Shame on this government, I say; shame.
The changes they seek to bring forward relate to the time at which the money is recognised under the relevant law as lost or unclaimed. These will be the provisions which this government will use in order to activate parts of this bill. The time periods for accounts to be treated as unclaimed monies will be significantly shortened by these amendments by the government. For bank accounts, it will be reduced from seven years back to three. If you have a bank account sitting there ,which had not had any activity in it for seven years, that would be picked up. I myself, as a holder of many accounts and having employed over 100 men and with 14 transports, had accounts that were taken under that seven-year rule. It was not a lot of money. At that time, you probably could have bought a car with the amount of money that was taken from my bank accounts. I can advise the House that the difficulties in trying to get that money back through the system, through the provisions that provide for that, are somewhat tiresome and clumsy. I had a team of internal accountants that worked for me full-time and it took virtually the entire dedicated team of my staff, that I paid, to try to get that money back. I lost some over that seven-year period, but this bill seeks to shorten that seven-year period to three years.
One of the unintended consequences of this bill, again, is that it mistakenly catches someone like a grandparent, an average grandparent, who may have the capacity to put some money away to help a grandchild or to bestow some money on a person later in life—a loved one. I am starting to get traffic now coming through my office—people are coming in and saying, 'Listen, I had $30,000 sitting in a bank account and it's gone! The government has taken it and it's sitting in a consolidated revenue account.' It is happening now. My offices are starting to raise these concerns. I say as a diligent member of this House: surely we have not fallen, as a parliament, to trying to prop ourselves up financially by raiding the bank accounts of our grandparents. It is a disgrace. Have we, as a nation with the wealth, the education, the great skills and resources we have, now fallen to a new low, in a way somewhat similar to Cyprus? When they raided the bank accounts of their population it was condemned. Their action was condemned by the Prime Minister in this House at that very dispatch box. The actions of Cyprus were condemned, but behind the scenes they knew a bill was coming before the House with which this government would do exactly the same thing—where they would take unclaimed money.
But they are not just going to pull up at having a crack at your bank accounts. Life insurance money, previously treated as unclaimed money after seven years, could also be claimed after a reduced three-year period. Superannuation accounts with balances of less than $2,000 or accounts of unidentifiable members that have been inactive for 12 months will be required to be transferred to the Commissioner of Taxation as well. The theory behind that is that one person might have had a couple of jobs. There was a period of time—a generation—where when you got a job, that was the job you served at for life. When you look at the demographics of our younger workforce, today we have a far more fluid workforce, where it is not unfeasible that one would have maybe five or six employers—serious employers—over the lifespan of one's capacity to work and contribute to the nation.
Superannuation accounts that are not collectively joined and no longer have contributions paid into them will by default meet the definition of dormant. These become a great revenue base for this government to prop up their fiscal inabilities. The period of time for inactive superannuation accounts and those of unidentifiable members before they are transferred to the Australian tax office will be reduced from five years to 12 months.
Then there is the unclaimed property of corporations. The unclaimed property of a corporation could be assets held like artwork, paintings and other chattels. Those assets may not be owned by a single person or they may be left after creditors and others are paid when a corporation becomes defunct. Those assets also come under the auspices of this bill. Unclaimed property of corporations is now to be recognised directly in the Commonwealth Consolidated Revenue Fund upon receipt by the Australian Securities and Investments Commission as opposed to in the companies and unclaimed moneys special account.
I am going to share with you now the breakdown of the money. It totals roughly $886 million, which for this purpose I will round up to $900 million. That is the projected revenue that this bill intends to pick up. Firstly I talked about the dormant bank accounts. They will roughly come in at $92 million. If this is going to raise around $900 million and the cash component is just under $100 million, then the real bulk of this money is going to come from dormant superannuation funds. That is around $675 million over the forward estimates, with most of that being in the first 12-month period, 2012-13. The forecast for those funds is $513.5 million.
When you have a government that makes poor financial decisions you can see how they affect everyone. I want to share with the House the story of a friend of mine who has no political interest in the world whatsoever. Often we would get to the point of speaking about politics and he once said: 'It doesn't matter who is in government. It doesn't really affect me because I get paid the same whether Labor or Liberal are in.' I suggest that no-one can escape bills like this one. You will not be prejudiced on this if you have an allegiance to Labor or Liberal. If you have a dormant bank account or a dormant superannuation account, you are going to get caught in this, irrespective of your political persuasion. So superannuation contributors are the big losers.
Try to be proactive. My advice to the nation, to my electors in Wright, to mums and dads and to people who work in the electorate I represent is: if you have any dormant superannuation accounts, consolidate them into one single account which you are continually contributing to and that will keep that superannuation account at arms-length of being deemed to be dormant. I encourage you to do that pronto, with haste.
Before this bill got to this place there was a government-controlled Senate economics committee inquiry held into this bill. The government recommended that the bill be passed. The coalition members of the Senate economics committee gave a fairly scathing dissenting report on this bill before it came to this House. The coalition moved a series of amendments which sought to delay the implementation of both schedules 1 and 2, which are the cash and the superannuation components relating to bank accounts and the first home saver accounts. We wanted to delay those for a full year. We wanted to delay those until 31 December to give people time. We wanted to raise awareness so that they could get out in front. We wanted to save them the heartache of finding out that their money had been taken from their bank accounts.
The coalition also sought to delay schedule 4, which relates to superannuation accounts, for a full year to align with the deadline of the autoconsolidation necessary under the previous announcements of the SuperStream reforms that are due to commence on 1 January 2014. So we would have had them aligned with legislation that was already planned. This government gave over 300 commitments—some will argue it was over 500—to deliver a surplus. Because the desire of the government to deliver a surplus was so intense, bills like this had to be brought forward so the revenue could be counted in this reporting period. The government could not afford to wait, so those amendments were disregarded.
The bill we are dealing with today is a result of the unintended consequences of a government that has lost its way, by its own definition. The fiscal management of this government will be a legacy that will haunt them for many years. This does not serve the interests of every Australian. This is a bad bill. It has been badly thought out. The procedures and processes for this bill have been rushed. I condemn this bill for the intended heartache it will cause Australians.
In addressing my observations about the Banking Amendment (Unclaimed Money) Bill 2013 I will cite three examples that have been brought to my attention and that I think are relevant to this bill. But I also want to discuss this bill in context. The context is this: it had been thought in the past that if money had remained in bank accounts unclaimed, if those accounts had been dormant for some seven years, that the legitimate holder may no longer be aware that those funds were there—they may have died; there may be any number of explanations—then that money should not be left in an account available to essentially benefit the institution that holds it, but the government should take it on trust.
Provisions have been included in the legislation to enable the money, if it has been found to be missing by the person who was the owner, to be able to reclaim it. And seven years seemed not unreasonable. What the government has sought to do is to reduce that period to three years. You ask yourself: what are the policy reasons for doing that? Given that seven years was there and it deals with the situation where people may have lost track of the funds, why does it need to be reduced to a period of three years? What is the logical reason for doing so? I cannot think of any logical reason for doing so, other than the government—not because they are putting the money into a trust account available for the person to whom it belongs to be able to reclaim at a later date and holding it in trust for them, that is not is what is happening; what is happening is the money is being paid into consolidated revenue—is taking the money that is unclaimed and, in effect, spending it. That is what is happening.
It may be that if the government is not broke at some later period people can claim it back—maybe—but the government needs to be in pretty good odour for that to happen. What we have is a government that has billions of dollars—$340 billion or $350 billion—worth of debt. This money is about taking the funds of Australians, ostensibly on the basis that they have been lost or unclaimed, and using it for the government's use. In any other situation it would be called theft. I make the point that it may not be unreasonable when there is a fairly long period of time, but what is the reason for reducing the time? The reason for reducing the time is it is going to put money into consolidated revenue and reduce the debt.
It seems to me that when people have not claimed funds for seven years, it may reasonably be the case that nobody is going to turn up and claim them. But I suspect, with the period being three years, there are going to be a lot of people anxious about that situation and wanting to get it back. I do not know the extent to which Treasury have tried to understand the nature of those claims and to take it into account and to put it as a contingency. I hope they have done that. And you might find that if they made that study and it was a contingency, then the $100 million that they are expecting to benefit is illusory.
I want to deal with some of the circumstances that do arise. The honourable member who spoke before me, the member for Wright, mentioned accounts that grandparents and others might establish in the names of grandchildren—maybe for school fees, maybe to help them when they get engaged or married—but, if they fall on some hard times, they may not be able to add any money to the account. That there has been no transaction for three years may not be an unreasonable period but, because there has been no transaction—an additional amount added or money taken out—these funds will be forfeited to the Crown. That is essentially what is happening. You have to ask yourself: is that likely to happen? I think it is likely to happen quite frequently. My wife does this for our grandchildren, and as long as we are in a position to be able to afford to contribute it may well be that we are not going to be affected by this. But if you do not know that you have to make a transaction every year on that account, or at least every three years, you will suddenly find that the funds that you expected have been stripped away.
I have had a number of people raising this matter with me. One was an 86-year-old lady whom I know very well. She has something like $8,000 deposited in an account. She is a pensioner; she has not been able to add or subtract from that account. The money was set aside for her funeral costs and that has been stripped away. She is alarmed at the prospect that that is happening in her case.
I have had a real estate agent talk to me. He runs a business of letting properties. In relation to the tenants, he takes a bond to guarantee that if the tenant vacates the property and leaves it damaged, there can be restitution. But if there is no damage at the end of the lease, or when the tenant leaves, the funds are paid out. He has been in the situation where he has hundreds of accounts for each separate deposit. It is not a large trust account; he has to keep them separately. So he put the funds separately in an account for those tenants but if the tenants stay in the property for over three years the bond is lost. How reasonable is that? In his case, there are hundreds potentially.
When you go through it and look at what is required you are surprised, as I was, by the nature of the bureaucracy that we are implementing in relation to these matters where, to get your hard-earned cash back, you have to search ASIC's MoneySmart website to find out that your unclaimed money has been taken. If the search discloses that it is there, you have got to take the OTN, the original transaction number, and then you have got to contact your bank and, in addition, with the original transaction number you may be required to provide proof of identification, so people are then asked to provide bank statements, passports, drivers licences. When the bank is satisfied that it has a claim from the rightful owner, it informs ASIC and the funds may then be returned.
This is a bureaucratic procedure that is being put in place because the government wants to deal ostensibly with its deficit and what it is essentially doing is taking the funds of Australians and appropriating them for the government's purpose. If you did that as a private person, so you expropriated somebody's account on the basis that they had not been using it, it would be fraud—but in this case it is the government. As I have said, there were arrangements that were in place. There is no suggestion they were not working appropriately. I do not think there is any evidence that there was a need for change and I have not heard any evidence of the need for change. What I have heard is that the government thinks it has found a way by which to obtain money for consolidated revenue by taking the bank accounts and the superannuation funds and the other deposits that have been identified for its purposes—a little over $900 million—and I suspect that the government will find that it will get far more claims from people that have had funds taken after a shorter period of three years and that this will not address the substantial issue which the government has advanced as being the reason for this measure.
In my view, there is no justification for it and it is appropriate to oppose the measure. I will continue to draw the attention of my constituents to the way in which this matter is being done, because I think that it is occasioning a very considerable anxiety amongst people who should not be losing their funds in these circumstances.
I find it rather amusing that here we are yet again in this House amending one of the government's own bills, amending a bill that they rushed through as part of a $900 million money grab, with a hand deep into the pocket of Australian workers and taxpayers to grab their money. I would have thought that if you were a hung government you would have actually done a lot more homework on your legislation that was introduced, to make sure that you were not put in this position of having to go back to a hung parliament yet again to amend your own legislation.
By way of background as to this bill that we are talking about, the Banking Amendment (Unclaimed Money) Bill 2013, what this government did, in seeking to prop up its bottom line because of its own mismanagement of economic affairs, was reduce the time frame by which the government could access Australian people's money in bank accounts. For bank accounts it reduced the period from seven to three years. For life insurance moneys, previously treated as unclaimed after seven years, the period was reduced to three years. Superannuation accounts with balances of less than $2,000 and the accounts of unidentifiable members that had been inactive for 12 months were required to be transferred to the Commissioner of Taxation Office. It was reducing from five years to 12 months the period of inactivity before which the superannuation accounts of unidentifiable members were transferred to the ATO and the unclaimed property of corporations was now to be recognised directly in the Commonwealth Consolidated Revenue Fund—impacting the underlying cash position of the Commonwealth—upon receipt by the Australian Securities and Investments Commission, as opposed to the companies and unclaimed moneys special account. As I said, this is nothing short of in essence a fraudulent, rapid, expedition of accessing Australians' cash in accounts. There was nothing wrong with the time frames that were there. This is purely a measure to gain access in particular in the 2012-13 year to some $700 million to prop up the bottom line.
In one area in particular, as was so eloquently put by my colleague the member for Berowra, there are people who put money aside before they retire for a long-term purpose, thinking about the days ahead. Perhaps one of the saddest things would be a person, particularly a pensioner, who may now be living on their own because their partner is deceased and, as my colleague the member for Berowra said, they have put aside money for their funeral fund, not wishing to pre-purchase their funeral but making sure their affairs were in order. They might have lived beyond the three-year period but they have had the money in the account without any activity.
I was informed that the addition of interest to the account still does not make that account an active account. How hard would it be for the family of a person who has passed away to then access money that the government has taken to prop up its financial position? What process and paperwork would they have to go through to find this account, identify this account and recover the moneys from that account to pay for funeral plans? These are issues that have not been thought through by this government.
One of the other areas, as put by many members in this House, is where grandparents—indeed, parents—on the arrival of a child or grandchild have put away money in an account for that person. Quite often it is to be for them when they turned 18 or when they turned 21, hoping it was an investment that would grow and be there for that person. If that account has not been added to by the parent or grandparent—indeed, anyone else—now after three years that account becomes inactive and the government gets direct access to that money. It is not that this money is held in a trust account by the government; it actually goes straight off the bottom line of consolidated revenue.
I would ask the minister in his summing up to advise the House what the cost of bureaucracy will be in going through and processing these claims for payments. Will it outweigh the benefit that you would have received after seven years in relation to a bank account as against three years? The cost of bureaucracy is becoming something that is unsustainable in this government. I think what you have added to is the cost to government.
Another area I wish to talk about in particular is superannuation. I have been on the record congratulating the Keating government for introducing compulsory superannuation for people to look after their long-term affairs. But in the beginning, particularly in relation to the tourism industry, people moved from one job to another job to another job and each of those employers might have had separate superannuation funds. In the early days people could not actually move from one fund to another fund and therefore a lot of those accounts would have had under $2,000 in them. Those have now been consumed if they were inactive for 12 months. Young people, in particular, might have been transient or moving around or taken the overseas holiday for 12 months or two years. They come back and they find that all this money has been consumed. In relation to superannuation, where it might have been earning higher than the government approved rate, what will the government do to compensate people for the loss of earnings on that superannuation money? Nothing.
This bill would never have been under consideration if the government had been able to manage the financial affairs of this nation properly and adequately. This set of amendments would never have been before the House today if the government had put enough thought into what was going to happen when people started claiming money back. In fact, the purpose of this amendment is to amend the act to exempt reactivated accounts from being reported and transferred to the Commonwealth as unclaimed money and to allow the Commonwealth to provide refunds to authorised deposit-taking institutions if the money is collected unnecessarily.
It is good, but the minister should have actually put some forethought into this before rushing in here with legislation, because so urgent was it to grab this money, particularly the $700 million in the financial year 2012-13 to prop up the bottom line accounts.
I do not intend to hold the House up any further on this other than to say that we will be supporting these amendments because they are common sense. But I think the bill as a whole, even though it was passed, stinks, because it is the wrong thing to do to Australians to rapidly access their money when there was nothing wrong with the time frames that were there originally. This government need to get a little better at their housekeeping if they want to be the government they purport to be and the financial managers they purport to be. The record has shown that they have not been.
I want to thank honourable members who have contributed to this debate on the Banking Amendment (Unclaimed Money) Bill 2013. The bill exempts reactivated accounts from being reported and transferred to the Commonwealth. These are accounts that technically meet the current definition of unclaimed moneys or where there has been a recent transaction to indicate that the account is not unclaimed. Under current legislation banks are required to report or transfer to the Commonwealth all accounts that are unclaimed as at the applicable assessment date. In some cases banks, building societies and credit unions may have allowed customers to transact on accounts after the assessment date. This bill ensures that, where an account holder has reactivated an account by making a transaction after being assessed as unclaimed, the account will not be transferred to the Commonwealth unnecessarily. By reducing the number of accounts transferred to the Commonwealth, these changes will allow the government to focus its resources on reuniting accounts with their rightful owners, where the accounts are genuinely lost.
The bill also allows the government to return funds to a financial institution if the institution has inappropriately transferred an account to the Commonwealth or if the institution has reimbursed the account holder prior to a refund request being processed. This bill will assist the government to achieve its objective to reunite more Australians with their moneys and protect their money from erosion by fees and charges. I commend this bill to the House.
Question agreed to.
Bill read a second time.
Message from the Administrator recommending appropriation announced.