Katy Gallagher (ACT, Australian Labor Party) Share this | Hansard source

Labor will be supporting the Treasury Laws Amendment (2016 Measures No. 1) Bill 2016. The bill contains five measures. Schedule 1 relates to Australia's terrorism insurance scheme. Australia's terrorism insurance scheme was established to minimise the wider economic impacts that flowed from the withdrawal of terrorism insurance in the wake of the terrorist attacks in the United States of America on 11 September 2001. The scheme was established under the Terrorism Insurance Act 2003 to ensure continued provision of terrorism insurance coverage for commercial property and associated business interruption losses and public liability claims.

The act requires that, at least once every three years, the minister must prepare a report that reviews the need for the act to continue in operation. Since its establishment in 2001, the terrorism insurance scheme, including the review process, has received bipartisan support. Labor will support this measure, which will put beyond doubt that the scheme applies in relation to losses attributable to declared terrorist attacks using chemical, biological or other similar means. This is in line with the scheme's original intent.

I now move to schedule 2, the public availability of employee share scheme documents. Labor will support this measure. However, in doing so, I note that the member for Chifley has raised concerns in the other place about how aspects of this measure will work.

I also note that his measure was originally announced as part of the government's so-called National Innovation and Science Agenda. It is worth remembering that, when Malcolm Turnbull replaced Tony Abbott as Prime Minister in September 2015, he adopted the term 'innovation' as a catchphrase. But in less than 12 months, when the nation voted in July last year, his innovation talk had fizzled out. The truth is that the Prime Minister was never really clear what he meant by it.

To take just one example that is especially pertinent in the week after we had the 'Science meets Parliament' events, the relationship the government envisages between its innovation goals and research policy is alarmingly short-sighted. We have seen this emphasis on commercialisation in the government's inept handling of the CSIRO. Under two prime ministers and four industry and science ministers, there has been a consistent preference for research outcomes that turn a quick dollar. This is not conducive to the outlook and practice of science. If you abandon basic research, you will diminish your ability to do applied research effectively. The history of science is full of examples. To cite one of the best known: the technology that gave the world wi-fi was developed by CSIRO astronomers studying black holes. A government that understood innovation, research and the relationship between them would have recognised that this narrow focus is self-defeating.

Schedule 3 adds six organisations as specifically listed deductible gift recipients. This ensures that gifts of $2 or more to these organisations will be tax deductible.

Schedule 4 of the bill extends tax exemptions on disaster relief payments to New Zealanders working in Australia on a special category visa who receive these disaster relief payments. The Australian government makes certain payments to eligible Australians to assist when a major disaster happens and these payments are exempt from income tax, or an income tax rebate is available. The government may extend these payments and the equivalent tax treatment to New Zealand special category visa holders on an ex gratia basis. This bill ensures that, going forward, the exemption from income tax and the income tax rebate are similarly available on these ex gratia payments provided to these New Zealanders residing in Australia.

The New Zealand special category visa is a temporary visa allowing New Zealand citizens to reside, work and study indefinitely in Australia as long as they remain New Zealand citizens. New Zealand citizens arriving in Australia are generally eligible for a New Zealand special category visa, subject to meeting other eligibility criteria. New Zealand special category visa holders generally pay Australian tax because they are Australian residents for tax purposes. Tax relief for those in need is rare from a government eager to hand a $50 billion tax cut to multinational companies and large banks.

Schedule 5 amends the Corporations Act 2001 to provide greater protection for retail client money and property held by financial services licensees in relation to over-the-counter derivatives products. Client money is money paid to a financial services licensee—in this case, the broker—by the client for a financial service. It remains the client's own money, although it is held by the licensee. Typically, Australian financial services licensees are required to keep client moneys in designated client money accounts to which a statutory trust is applied by virtue of the client money regime.

This schedule will close an exception to this for retail clients in relation to derivatives. That exception means that, currently, client money or property held in connection with a product or financial service that is, or relates to, a dealing in a derivative may be used for the purpose of meeting obligations incurred by the licensee in connection with margining, guaranteeing, securing, transferring, adjusting or settling dealings in derivatives by the licensee, including dealings on behalf of people other than the client. The restrictions imposed on the use of derivative retail client money and property do not apply to derivatives cleared through a clearing and settlement facility.

Labor will support these measures on the basis that they will improve the protection for consumers. They will improve protection for retail investors who may not be able to assess the risks of their money being used by the financial services licensee to meet other obligations of the licensee.

While Labor supports sensible measures that improve the protection of consumers in the financial services sector, such measures, on their own, are insufficient. There is more to be done to resolve the issues surrounding culture and practice in the banking and financial services sector.

Just recently we had a report from ASIC in relation to how large institutions oversee their financial advisers. Key findings of the report include: failure to notify ASIC about serious non-compliance concerns regarding adviser conduct; significant delays between the institution first becoming aware of the misconduct and reporting it to ASIC; inadequate background and reference-checking processes; and inadequate audit processes to assess whether the advice complied with the best-interest duty and other obligations.

ASIC also noted:

… many of the institutions we reviewed did not ensure that their internal processes consistently supported the value of 'doing what is right' for the customer. Many of the failings we identified led, or had the potential to lead, to poor outcomes for customers.

Labor believe that the only investigation that can to get to the bottom of issues like these is a royal commission, and that is why we will continue to argue for one. We believe that any systemic issues need to be investigated in a thorough and transparent way. We need to give victims a chance to be heard, and we need to give Australians the confidence that these scandals will not continue to occur. So we will support this bill, including this measure that will improve protections in relation to retail clients for over-the-counter derivatives, while noting that there is a lot more to do.