Anne Ruston (SA, Liberal Party, Assistant Minister for Agriculture and Water Resources) Share this | Hansard source

I move:

That these bills be now read a second time.

I seek leave to have the second reading speeches incorporated in Hansard.

Leave granted.

The spee ches read as follows

This bill continues to deliver on the Government's commitment to strengthen the Australian Securities and Investments Commission (ASIC) and better protect Australian consumers.

The financial system touches the lives of every Australian family and business and the Turnbull Government recognises that our financial institutions have not always lived up to community standards.

That is why we are working every day to ensure that our regulators are tough cops on the beat, with the resources and powers that they need to proactively address misconduct and to prosecute those that do the wrong thing.

Introducing an industry funding model for ASIC will make industry more accountable for its behaviour and make ASIC a stronger regulator. It is a critical component of our plan to improve outcomes in the financial services sector and builds on other Government measures including:

Industry funding of ASIC will more closely align ASIC's funding model with that of the Australian Prudential Regulation Authority's (APRA's), as well as a number of international financial sector regulators including the Financial Conduct Authority in the United Kingdom and the Securities and Exchange Commission in the United States.

It will also have significant benefits for all Australians. It will:

Let me now go through these benefits in detail.

Improve Equity in Tax Collection

Industry funding of ASIC will mean that, from 1 July 2017, those entities that create the need for that regulation will pay for it, as opposed to Australian taxpayers, who too often bear the cost of financial sector misconduct.

Further, because each regulated subsector will only ever pay an amount equal to its costs of supervision, industry funding will promote equity between different regulated entities. This is because certain industry subsectors will no longer cross-subsidise the costs of the regulation of other sectors.

Create a culture of compliance

In addition to enhancing equity, industry funding will also help to embed a culture of compliance within Australia's corporate and financial services sectors.

By creating clear and transparent price signals, industry funding will provide regulated entities with an incentive to improve their conduct. This is because industry sectors with a record of good behaviour require fewer ASIC resources and will face lower annual charges than those sectors that continue to pose unacceptable risks to Australian consumers.

Improve ASIC's Resource Prioritisation

These reforms, however, go beyond the mere introduction of levies and charges. Critically, the passage of these bills will help make ASIC a stronger regulator.

These bills will provide ASIC with new powers to collect more granular data from regulated entities on the services that they provide—such as the actual amount of credit provided—to support the calculation of the levies payable by each institution.

The benefits of this data, however, will extend well beyond ensuring that ASIC's costs are allocated correctly. This new, rich, dataset—made possible by the $61.1 million that the Government has invested in enhancing ASIC's data analytics and surveillance capabilities—will also allow ASIC to better identify emerging risks, better prioritise its resources and better ensure compliance with regulatory requirements.

This will make ASIC a more agile and adaptable regulator and drive better outcomes for Australian consumers.

The Government recognises, however, that these benefits must be balanced against additional red-tape costs for industry. For that reason, this bill provides checks and balances to ensure that requests for data are reasonable and proportionate.

Enhanced Transparency

Industry funding will also dramatically increase ASIC's transparency. From 2017-18, ASIC will be required to annually explain its regulatory priorities, outline its plan to address them, and provide a detailed account of how well it delivered on its objectives—including justification for the money that it spent and the regulatory tools that it elected to use.

These new reporting requirements will significantly enhance ASIC's accountability to the entities that it regulates. This will force ASIC to ensure that its expenditure is as efficient as possible and will encourage a greater investment in the ongoing assessment of its performance, as recommended by the ASIC Capability Review. This is an important outcome and a key driver behind the Government's decision to adopt an industry funding model.

Ensuring Compliance with Industry Funding

The success of the industry funding model relies on industry having confidence that everyone is paying their fair share.

That is why, in addition to outlining the broad framework for ASIC's industry funding model, this bill includes a number of measures to ensure that regulated entities do not shirk their responsibilities to the Australian public.

ASIC will be empowered to collect all supervisory levies that would have been payable from any entity that is caught operating without the appropriate license or authorisation. This will be in addition to any other enforcement action that ASIC deems appropriate.

For those entities that simply try to avoid paying their dues, ASIC will be permitted to impose a late payment penalty of 20 per cent per annum on any amounts outstanding. To ensure compliance, this financial penalty will be supplemented by the threat of ASIC administrative action including, in severe cases, the suspension or cancellation of an entity's license.

The Government is confident that these measures will provide industry with the certainty it needs to build further support for the industry funding model.

Consultation and Next Steps

Developing this legislation, and the industry funding model more broadly, has benefited from the input of many stakeholders.

Across two separate consultation periods the Government received more than 300 submissions and met with nearly 50 organisations. And we're not done yet.

On behalf of the Minister for Revenue and Financial Services, I would like to take this opportunity to thank everyone that made a submission for their contribution so far and to assure industry that the Government will soon be releasing a draft version of the regulations for comment. These regulations will outline the specific levy mechanisms, and I encourage all interested parties to make a submission.

Closing

This bill delivers on the Government's promise to strengthen ASIC and better protect Australian consumers.

This bill is further evidence of the Turnbull Government's utmost commitment to holding the corporate and financial sectors to account for their behaviour and will result in a fairer system, will further incentivise good conduct, and will create a more efficient, agile, and innovative ASIC.

Full details about this bill are contained in the Explanatory Memorandum.

The ASIC Supervisory Cost Recovery Levy (Collection) Bill 2017 forms part of a package of bills to introduce an industry funding model for the Australian Securities and Investments Commission (ASIC).

To ensure that the industry funding model is equitable, this bill requires all entities regulated by ASIC to pay a levy to offset their regulatory costs.

These levies are to be paid after the end of the relevant financial year and any unpaid levy attracts penalty interest at the rate of 20 per cent per annum.

To ensure that ASIC's costs are distributed appropriately, this bill also requires all ASIC regulated entities to report to ASIC on their actual activities throughout the financial year. This will also assist ASIC to better identify financial sector risks and prioritise its resources to best protect Australian consumers.

To buttress this reporting obligation, failing to report when required will be an offence. Further, a failure to report honestly will result in a shortfall penalty equal to two-times the levy avoided being imposed.

These measures are necessary to ensure ongoing confidence in the ASIC industry funding model.

Full details of the measure and the ASIC industry funding model are contained in the explanatory memorandum for the ASIC Supervisory Cost Recovery Levy Bill 2017.

The ASIC Supervisory Cost Recovery Levy (Consequential Amendments) Bill 2017 forms part of a package of bills to introduce an industry funding model for the Australian Securities and Investments Commission (ASIC).

To provide industry with confidence that ASIC is an efficient regulator, the bill requires ASIC to publish information on all of its regulatory costs for the previous financial year as soon as practicable after 31 October each year.

To provide industry with confidence that everyone is paying their fair share, this bill empowers ASIC to take administrative actions against entities that have failed to pay their levy, late payment penalty, or shortfall penalty within a year.

To simplify existing funding arrangements and ensure that no industry pays more than their regulatory costs, this bill also abolishes the existing market supervision cost recovery regime. From 1 July 2017, ASIC's costs in this sector will be recovered under the new industry funding model.

Full details of the measure and the ASIC industry funding model are contained in the explanatory memorandum for the ASIC Supervisory Cost Recovery Levy Bill 2017.

Debate adjourned.