Pat Conaghan (Cowper, National Party, Shadow Assistant Treasurer) Share this | Link to this | Hansard source

The Treasury Laws Amendment (Financial Reporting System Reform) Bill 2026 proposes a significant restructuring of Australia's accounting and auditing standard setting system. This bill would abolish the longstanding audit and accounting standard setting bodies that have served Australia for decades and implement a new centralised bureaucracy. Fundamentally, the bill proposes to reform a system that is not broken. It is a system that has been operating for a long time and is serving Australians well. Our audit and accounting standard setting bodies are respected and internationally aligned, and they function well. For decades, these bodies have underpinned our financial credibility.

There has been no collapse. There have been no international credibility issues. There has been no demonstrated governance failure, and the government has not produced evidence of a systemic breakdown. So why, we have to ask, are extensive structural reforms of a system that already work necessary? The coalition can't support this bill in its form at this time. We are not convinced that the changes will improve the current system or deliver better outcomes. Stakeholders have raised significant concerns about independence, governance and concentration of power under this bill, and those concerns deserve proper scrutiny. That is why we will seek examination of this legislation through the Senate Economics Legislation Committee.

Any changes to institutions that underpin our financial system must be made carefully and only when the case is clear. That brings me to this government's priorities. There is plenty of work for the government to do in financial services instead of trying to fix an institution that isn't broken. Take insurance, for example. Over the past five years, home insurance premiums have risen about 51 per cent. Families in disaster-prone and regional areas, such as mine in Cowper, are being priced out of insurance coverage altogether. Small businesses are facing enormous premium hikes and are asking whether or not they can afford to keep operating.

These are the immediate and real pressures affecting household businesses and employers today. This is not to mention that at least eight parliamentary inquiry reports on financial services have been tabled since 2024 that the government still hasn't found time to address. They include insurance affordability, regional banking access, financial abuse and consumer protections. The government have not responded to them, because they say there's not enough time and they don't have the capacity. But Labor have time for a structural overhaul of our accounting standards bodies that are working perfectly fine. You have to ask why is this the government's priority?

More than a year ago, the government promised to reform education standards for financial advisers. That reform has not been delivered. We were told that there aren't enough legislative drafting resources. That means young finance graduates today are deciding whether to take on additional study—and additional debt, might I add—or keep waiting on the government to see them as a priority. They deserve better. To add to that, the Delivering Better Financial Outcomes reforms have stagnated for months. The reforms were designed to make financial advice more affordable for everyday Australians. Those reforms were supported across the sector by superannuation funds, by advice professionals and by the banking industry, and yet they remain on hold. We're again told there are not enough drafting resources. This excuse is repeated far too regularly, but somehow there are sufficient resources for this reform, which fixes institutions no-one has demonstrated are broken.

This bill abolishes three longstanding statutory bodies—the Financial Reporting Council, the Australian Accounting Standards Board and the Auditing and Assurance Standards Board—and it replaces them with a new consolidated body called External Reporting Australia. Under the current framework, there is a deliberate structural separation: the AASB sets accounting standards; the AUASB sets auditing standards; the FRC provides oversight. Each has an independent role. The oversight body does not write technical standards, and that separation is very intentional. It creates internal checks and balances, provides institutional distance and protects the independence of technical experts. This bill seeks to remove that structural separation. Instead of three independent statutory bodies, there will be one consolidated entity governed by a single board. Whilst technical boards will sit beneath it, they will not be independent statutory bodies in their own right. It is a fundamental redesign, and, without demonstrated failure, it demands careful scrutiny.

Accounting and auditing standards may not always attract public attention, but they matter enormously. They determine how companies report profits and losses, how assets and liabilities are recognised and how risks are disclosed. They give investors confidence in the reported financials of companies, so, when investors decide to invest, they rely on the credibility of those standards. Australia's reputation as a stable, rules based economy has been built over decades. That reputation rests on strong, independent, standard-setting institutions.

One of the central concerns by stakeholders with this bill is the concentration of power. Currently, authority is distributed across three bodies. That distribution acts as a safeguard and as a separation of powers. It creates institutional distance between oversight and technical decision-making. This bill will consolidate authority into a single entity, and that is extremely concerning. Stakeholders have also raised concerns about reduced separation between oversight and technical standard-setting, risk to the independence of technical experts and expanded governing-board influence. Appointments to the governing council will continue to be made by the minister, as is currently the case for the FRC and heads of the technical boards. But, under this new model, the governing council will have greater potential influence over technical standard-setting functions. The coalition cannot support a governance framework that increases the risk or even the perception of politicisation of accounting and auditing standards, because, once confidence is weakened, it is very difficult to restore.

This bill also enables the minister to confirm additional reporting functions by legislative instrument. Under the existing framework, expanding core standard-setting responsibility would typically require the primary legislation and full parliamentary scrutiny. This Labor government seems to take the opportunity whenever it can to reduce parliament scrutiny and oversight. That should concern every member of this parliament. It is important to note that these accounting standards do not only apply to private companies; they also affect the public sector accounting for Commonwealth entities.

The standards governing transparency in public reporting must themselves be insulated from undue influence, particularly in areas that have become politically sensitive. We have seen in recent years, as the government has added sustainability and climate related issues to financial disclosures, which have now become increasingly contested, how climate risks are recognised, how supply chain emissions are disclosed and how international sustainability standards are interpreted. These are technical matters, but they will sit within a politically charged environment. Precisely for that reason, technical decision makers must be structurally protected from political pressure. The current system has ensured protection from political pressure for decades, and this bill weakens those protections.

But let us return again to the central question: what failure justifies abolishing three longstanding institutions? What systemic breakdown has occurred? In the January 2025 consultation process, stakeholders were told that views were not being sought on the merits of abolishing the three bodies and establishing a single entity. That is not only remarkable; it is extremely concerning. If the case for reform is strong, it should withstand scrutiny. If the benefits are clear, stakeholders should be invited to test them. At present, this appears to be institutional reform without institutional failure, and that should give parliament concern.

This bill is not time critical. There are no urgent regulatory emergencies. There is no immediate crisis requiring structural overhaul. The Senate Economic Legislation Committee should examine governance safeguards, independent protections, appointment processes and limits on ministerial intervention. The government should demonstrate examples of failure under the current structure that demand reform. It should make clear the case for reform and invite stakeholders to provide their views on the merits. The government should welcome that scrutiny.

Australians expect this parliament to focus on the pressures they are feeling now. In financial services, that means insurance affordability, access to banking in regional communities, protection from financial abuse and scams, and affordable financial advice. Instead, this government has prioritised restructuring institutions that have operated effectively for decades. Before dismantling this proven system, the government must answer three simple questions: What has failed? What will materially improve? Why is this urgent? Those answers have not been clearly provided. For those reasons, the coalition cannot support this bill at this time. We will seek proper scrutiny through the Senate Economics Legislation Committee, because the coalition protects our longstanding institutions. We believe in good governance and transparency, and the government simply has not made the case for reform.

Debate adjourned.