James McGrath (Queensland, Liberal National Party, Assistant Minister to the Prime Minister) 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 speeches read as follows—

IMPORTED FOOD CONTROL AMENDMENT BILL 2017

SECOND READING SPEECH

Australia has a world-class food safety management system. Our exported food is highly sought after internationally due to our world-class food safety reputation. This benefits our farmers, our economy, and our nation as a leading exporter of high quality safe food. It is essential that we ensure food being brought into Australia is safe. As globalisation changes how food is traded around the world, we need to strengthen our laws to meet the changing landscape.

Australia imports food for a variety of reasons. In 2015-16, we imported $16 billion worth of food. In the same period, Australia exported $40 billion worth of food. Some food is imported into Australia as ingredients to be used in manufacturing of food, some of which is consumed in Australia and some is exported, contributing to our prosperity. For both our economic prosperity through exports, and for the safety of Australians, ensuring all food brought into Australia is safe is a must.

The hepatitis A outbreak in 2015 linked to imported frozen berries highlighted the limitations in our imported food safety management system in identifying and responding to new food safety risks and ensuring importers are accountable for importing safe food across their supply chain. This Bill will address these limitations to modernise the system ensuring we continue to have a robust world-class food safety management system.

Food safety management systems are based on science. Some food risks you can't see. We know for some food, such as raw milk cheese, scientific testing alone of the final product does not guarantee the food is safe to eat. As our farmers know, ensuring every step of the production process, from the grass the cow eats, to the water the cow drinks, to the cleanliness of the dairy, the conditions the cheese is made in, to finally the way the cheese is packaged and transported are all critical. To address these concerns for food where at-border testing alone is insufficient to assure safety, this Bill will introduce a requirement that for certain ready to eat or minimally processed foods, importers will need an internationally recognised food safety management certificate that assures the food's production has been managed safely.

One or two times a year there are circumstances where we strongly suspect a problem with an imported food but the scientists are still working out what tests will best show if the problem exists in that particular batch. This was the case with the frozen berries, and we were able to work with the importer to voluntarily hold the food. However, this is reliant on the importer being cooperative. This Bill addresses that weakness by introducing new capacity to hold food at the border until the scientific testing approach is being finalised or the extent of the problem is understood. This capacity will only be utilised for a short period until the scientific testing approach is finalised, then we will use the existing provisions.

Under the current system, if we have some information about an emerging risk but the scientific evidence is incomplete, the system is unable to increase the surveillance of that food. This Bill introduces the ability to increase the level of surveillance to monitor the risk for a limited period and gather scientific evidence to conduct a reassessment of that food. This will enable us to better respond to emerging risks proactively before a food safety incident occurs.

Australia is a big exporter of food. Our agricultural exports contributed $38.3 billion to the Australian economy in 2015-16. This government has worked tirelessly to develop new markets for our exports. As part of this work we have identified foreign countries who have food safety management systems that are equivalent to our own. Where there are equivalent food safety management systems between Australia and another country, this Bill introduces the capacity to recognise the systems and to reduce intervention at the border. This will benefit both countries, enabling the easier flow of trade between Australia and that country.

We are serious about ensuring Australia continues to have a world-class food safety management system. Part of ensuring this is having the necessary tools in place for when somebody tries to break the rules. This Bill brings the enforcement tools available to the department up to modern standards and introduces new penalties to make sure when somebody breaks the law they are dealt with appropriately. That's why we're introducing a full range of penalties, ranging from strict liability offences to up to ten years in gaol and fines greater than $100,000.

The Australian Government only has regulatory responsibility for food as it comes over our border. We need to make sure the expectation we have on Australian Businesses is the same as expectations on importers. Australian food businesses have excellent systems in place to be able to trace food, which is essential if a recall is required. To make sure importers are able to do the same, this Bill introduces requirements for importers to be able to quickly identify who they bought food from and who they sold it to in Australia. This will strengthen our ability to respond to a food incident.

The food safety management system in Australia is a cooperative system where the states, territories, local governments and Australian Government have shared responsibilities. To enable information to be used easily within Australia for food regulation, we have improved our information sharing abilities with the states and territories. The states, territories and local governments play an essential part in Australia's domestic food safety management system, and the Australian Government will be able to share information to support jurisdictions to effectively perform their role in food safety management.

Another limitation with current imported food safety management practices is how foods can be specified. Despite the knowledge in 2015 that only berries from a specific location were of concern in relation to that incident, all frozen berries were required to be tested under current legislation. This Bill introduces the flexibility to specify food in a detailed way. For example, we will be able to narrow holding orders to specific foods from specific locations or even specific factories. This will reduce the burden on importers at the border as we will be able to target the specific food causing concern, and not all food of that type.

The changing global marketplace of food supply presents new challenges for managing the risks associated with imported food. As the world's population grows, ensuring a safe food supply is critical. This Bill introduces the ability of Australia to share information with our international trading partners about any food safety issues identified in food arriving at Australia's border. This will a enable safer food supply chain worldwide.

Australia enjoys a world-class food safety management system. Through these changes we will strengthen our system, enabling Australians to continue to enjoy a wide range of food from around the world. Our food manufacturers will be able to continue to produce high quality and safe food, which is highly sought after internationally. This benefits our farmers, our economy, and our nation as a leading exporter of high-quality safe food.

A strong food safety management system at the border is essential for our nation.

MIGRATION AMENDMENT (PROHIBITING ITEMS IN IMMIGRATION DETENTION FACILITIES) BILL 2017

SECOND READING SPEECH

In 2013, 99 per cent of people in immigration detention were Illegal Maritime Arrivals. Our immigration detention facilities were flooded by the 50,000 people who arrived on 800 boats under Labor.

Since coming to Government, the Coalition has been able to get people out of detention, including every child, and we have been able to close 17 detention centres.

At the same time we have strengthened section 501 of the Migration Act to better protect the Australian community from foreign nationals who commit serious crimes. These changes have allowed us to cancel the visas of more than 2,800 foreign nationals who thought they could flout our laws and commit crimes against Australians.

Since these changes were enacted, we have cancelled the visas of 54 murderers, 223 child sex offenders and 150 organised crime figures. This action has resulted in a significant increase in criminals in our immigration detention facilities.

Immigration detention is necessary for strong border control. Foreign nationals who present an unacceptable risk to the Australian community will have their visas cancelled and they will be detained while their status is resolved, or they are removed from the country.

Today, around 50 per cent of the detention population are non-citizens who have had their visas cancelled. And while IMAs now only make up around 25 per cent of the detention population, this cohort is complex and includes people with criminal histories or other security concerns which present a risk to the Australian community.

This means that more than half of the detainee population consists of high-risk cohorts. These cohorts have significant criminal histories, like child sex offences or links to criminal gangs, such as outlaw motorcycle gangs and other organised crime groups, or represent an unacceptable risk to the Australian community otherwise.

These criminals often have serious behavioural issues and pose a critical threat to the health, safety, security and order of the detention network.

I will not tolerate behaviour that is illegal, or that threatens the stability of detention facilities, placing my officers, visitors or detainees at risk.

At the moment, the existing arrangements are inadequate to manage the increasing risk of contraband in detention, such as narcotic drugs and the use of mobile phones for the commission of criminal activity.

Mobile phones in detention are enabling criminal behaviour. Examples of their use include:

drug distribution within detention facilities

maintenance of criminal enterprises in and out of detention facilities

commodity of exchange or currency – currently, Illegal Maritime Arrival detainees are not permitted mobile phones, but all other detainees are – so mobile phones are now being used as a type of currency in the facilities

owners of mobile phones are also being subjected to stand-over tactics (including theft of the phone)

facilitation of threats between detainees

accessing child pornography

The Australian Border Force Commissioner advised in Budget Estimates that one detainee arranged a contract killing on another detainee while in immigration detention. Thankfully, my officers prevented this heinous crime from occurring but I will not stand by and allow this behaviour to continue.

We have also seen the use of mobile phones to coordinate internal disturbances and escapes. Two coordinated disturbances, one on Christmas Island and one at Yongah Hill, resulted in riots. This synchronised effort of disruption is threatening the order of the detention facilities and is placing all those who work or reside there at risk.

The Migration Amendment (Prohibiting Items in Immigration Detention Facilities) Bill 2017 enables the Department to provide a safe and secure environment for people accommodated at, visiting or working at an immigration detention facility.

The Bill will strengthen search and seizure powers, including the use of detector dogs, in order for authorised officers to restrict things from immigration detention facilities that might pose a risk. These things include mobile phones, SIM cards, narcotic drugs and child pornography.

Specifically, the Bill amends the Act to insert new definitions under subsection 5(1), to define detention centres and alternative places of detention, collectively as 'immigration detention facilities', and to define a 'prohibited thing'.

A new section, 251A will be inserted to enable the Minister to determine, by legislative instrument, things to be prohibited, in relation to persons in detention and immigration detention facilities.

These things will include illegal things, specifically narcotic drugs and child pornography, and things that might be a risk within immigration detention facilities, such as mobile phones and SIM cards.

The Government is also proposing amendments to the search and seizure provisions in the Act, specifically sections 252, 252AA, 252A, 252B, 252BA, 252BB, 252C, 252CA and 252G, in order to ensure that we are able to effectively deal with such items.

In addition, the Government is proposing to add the ability to use a detector dog to screen for some of these items under sections 252AA, 252BA and 252G of the Act.

Even with the removal of mobile phones from detention facilities, detainees will continue to have reasonable access to communication avenues. This includes landline phones, internet access and visitors, in order to maintain contact with their support networks. Migration Agents or legal representatives will also continue to be able to contact their clients.

This Bill will ensure our officers can carry out their responsibilities properly, minimising unacceptable risks to the health, safety and security of persons in immigration detention facilities, and to the order of these facilities.

TREASURY LAWS AMENDMENT (BANKING MEASURES NO. 1) BILL 2017

SECOND READING SPEECH

In this year's Budget, the Government announced a series of measures that will deliver a stronger, safer financial system, with better competition and consumer outcomes for Australians.

The Treasury Laws Amendment (Banking Measures No. 1) Bill 2017 continues the work of implementing these commitments by further strengthening our financial system.

Schedules 1 and 2 to the Bill provide APRA with a new reserve power to make rules in relation to non-bank lenders, called 'non-ADI lenders'. This will provide APRA the necessary flexibility to address risks to financial stability if they emerge. This measure also enhances APRA's ability to gather data to monitor non-ADI lenders.

Importantly, this new rule making power is not a new 'peacetime' regulation of non-ADI lenders. These lenders are a vital source of competition in the lending market, and they do not rely on ordinary Australian depositors for their funding. Given non-ADI lenders have no depositors to protect, it is appropriate that they continue to run their businesses without being subject to ongoing prudential supervision by APRA.

The Government supports this important sector and the competition it provides for customers.

However, international experience has demonstrated that risks can emerge from the non-ADI lender sector that threatens the stability of the financial system. It is appropriate for APRA to have the power to move decisively to curb these risks should they ever arise.

Having such rules in place should strengthen the non-ADI lender sector, by signalling to market that the sector is well regulated and stable.

The Government has often spoken of the need to approach financial stability risks with a scalpel rather than a chainsaw – these powers will provide APRA a new scalpel to deal with risks to financial stability that are specific to non-ADI lenders.

Schedule 3 of the Bill lifts the prohibition on the use of the term 'bank', so that all banking businesses with an ADI licence can now use the term.

This will encourage competition in the sector by allowing all ADIs to enjoy the benefit of describing themselves as a bank when they offer banking services to Australian customers.

This will prompt innovation in the sector by opening the door to new banking entrants who will no longer be subject to the systemic barrier to entry of not being able to call themselves a bank when offering banking services.

Schedule 4 of the Bill seeks to modernise the Banking Act by incorporating a reference to the importance of APRA considering 'geographic and sectoral' considerations where appropriate. Government is putting APRA's powers and responsibilities to take account of these considerations - in line with its prudential mandate - beyond doubt.

Schedule 5 of the Bill implements a package of reforms to reduce the incidence of consumers building up unsustainable credit card debt and to improve competition in the credit card market.

Too many Australians are burdened with excessive credit card debt and incur substantial credit card interest. More than 30 per cent of credit card holders in the lowest income quartile carry interest-bearing debt from period to period. For these consumers, inadequate competition on ongoing interest rates and insufficient protection in the current regulatory framework can contribute to real hardship.

Schedule 5 of the Bill implements reforms to ensure consumers can afford credit card contracts, to reduce the barriers consumers face when switching credit cards, and to align the calculation of credit card interest with consumers' expectations.

I will now provide more detail on these measures.

Since December 2014, APRA has taken a series of steps to address emerging financial stability risks by reinforcing the lending practices of banks and other ADIs, particularly in relation to residential home loans.

While these measures are effective in mitigating financial stability risks, the tightening of credit from ADIs creates room for non-ADI lenders to fill in the gap.

Although their current share of lending is relatively small, these non-ADI lenders may expand rapidly and their lending activities could potentially pose material risks to financial stability – risks that ultimately fall on the broader Australian community.

The global financial crisis showed us how costly these risks can be when left unaddressed.

However, APRA does not have power over these lending activities, even where they materially contribute to financial stability risks.

Schedule 1 to the Bill will provide APRA with these powers.

APRA will be able to make rules relating to lending practices of non-ADI lenders, where it considers that their lending activities materially contribute to financial stability risks.

These new rules will be backed by appropriate enforcement mechanisms. If a non-ADI lender fails to comply with a rule, it can be compelled by APRA to comply. If it ignores an APRA direction, the non-ADI lender will face appropriate penalties.

Schedule 2 to the Bill enhances APRA's ability to collect data from non-ADI lenders, so it can better monitor the non-ADI lender sector and determine if and when to use its new rulemaking power.

In making this determination, APRA will use its independent judgement. However, it is likely APRA will consider a number of factors including: the size of the sector; the nature of activities of non-ADI lenders; and the impact of non-ADI lenders on ADIs.

Before it makes a rule, APRA must consult ASIC, and will also ordinarily consult with the other members of the Council of Financial Regulators.

The rulemaking power is a reserve power that would only be used when APRA considers that the lending activities of non-ADI lenders are materially contributing to risks of financial instability. In other words, the Government is providing APRA with a new 'tool on the shelf' – rather than requiring the day to day operations of these entities to be regulated by APRA.

The Government believes that non-ADI lenders are not currently materially contributing to financial stability risks and therefore the Government does not expect APRA to use these powers on day one.

Schedule 3 helps innovative new banking entrants bring new product offerings into the Australian banking system. New entrants to the Australian banking market currently face a significant obstacle – the prohibition on the use of the word 'bank'.

At present, only ADIs with at least $50 million in capital are permitted to use the term 'bank'.

This has two undesirable effects:

- it discourages innovative new players from entering the sector, because they are unable to benefit from the advantages of being able to use the term 'bank' in the critical early phase of their development; and

- it may lead the public to mistakenly believe that small ADIs differ from larger players in terms of regulatory protection.

In fact, all ADIs are subject to APRA's prudential framework.

And deposits at all ADIs are protected by the Government's Financial Claims Scheme guarantee.

By lifting the prohibition on the use of the word 'bank', Schedule 2 to this Bill will allow the advantages associated with the term 'bank' to flow to all banking businesses with an ADI licence, especially new Fintech entrants.

It breaks the vicious cycle for new entrants, where currently they need $50m to describe themselves as a bank, but must describe themselves as a bank in order to grow.

Nothing improves the customer experience like robust competition in a market, particularly from innovative new entrants.

Competition in banking drives down interest rates for borrowers, drives down fees, increases interest rates for savers, and leads to advancements in the overall customer experience.

This measure will also ensure that there are no misconceptions about the regulatory safeguards that apply to all ADIs in Australia's financial system.

Schedule 3 will also reinforce APRA's discretion over whether or not to permit the use of 'bank' outside of the ADI sector, ensuring that this term is limited to APRA regulated entities except in very unusual cases.

Schedule 4 modernises the Banking Act by inserting an 'objects' provision. This clarifies APRA's mandate under the Act, clearly setting out APRA's objectives to protect financial stability and depositors. It also makes clear that APRA can consider geographic and sectoral sources of system risks issues as appropriate and respond appropriately.

Recent conditions have highlighted the fact that the Australian economy differs considerably from region to region. APRA has broad and flexible powers, but there is no clear statement in the Banking Act that APRA has a responsibility to take account of geographic or sectoral issues where appropriate. Government is putting APRA's powers and responsibilities to address these issues - in line with its prudential mandate - beyond doubt.

Schedule 5 of the Bill implements a number of reforms to the credit card market to improve competition in the credit card market and protect vulnerable consumers from building up unsustainable credit card debts.

There are many benefits to the use of credit cards for consumers. However, for some consumers very high interest rates and a pattern of over-borrowing and under-repayment can cause them to incur persistently high credit card interest charges. These consumers are often in households with low levels of income, with the lowest income households having credit card debt equal to four per cent of their annual disposable income, compared to two per cent for those in the highest income category.

For these consumers, inadequate competition on ongoing interest rates and insufficient protection in the current regulatory framework can contribute to substantial hardship.

Currently, credit card providers are only required to assess a credit card contract as unsuitable if the borrower cannot repay the loan without substantial hardship. This means that some credit card providers only assess whether a consumer can meet the minimum repayments when determining if a consumer can afford a credit limit. As a result, consumers can be granted excessive credit limits which can lead to cycles of debt.

In addition, the calculation of credit card interest can be overly complex and often does not match consumers' expectations or understanding.

Consumers can also face substantial barriers to switching credit cards or lowering credit limits due to onerous processes imposed by banks. These barriers have a substantial impact on competition in the credit card market.

Schedule 5 of this Bill addresses these problems by implementing a reform package to reduce the incidence of consumers building up unsustainable credit card debt and to improve competition in the credit card market.

This is consistent with the Government's commitment to implementing the first phase of reforms outlined in the Government's response to the Senate Inquiry into the credit card market.

Firstly, Schedule 5 will tighten responsible lending obligations for credit card providers by requiring affordability assessments to be based on whether a consumer can repay the full credit limit within a reasonable period. The Bill will provide the Australian Securities and Investments Commission with the power to determine that reasonable period by legislative instrument.

This reform is not intended to unduly reduce consumers' access to credit. As such, ASIC is required to balance the need to prevent consumers from being in unsuitable credit card contracts with the need to ensure that reasonable access to credit is maintained when determining the reasonable period.

Secondly, Schedule 5 will prohibit all unsolicited credit limit increase invitations including where a consumer has previously opted in to receiving these invitations.

The definition of a credit limit increase invitation has also been expanded to include all forms of communication (rather than only written communication) to prevent credit card providers from circumventing the law and making unsolicited offers by phone or over an online portal.

Schedule 5 will also put an end to the unfair and complex way that interest is calculated on credit cards and make it easier for consumers to understand and compare how credit card interest is calculated.

Credit card providers will no longer be able to charge backdated interest or interest on the balance that has already been repaid if a consumer does not fully repay their outstanding balance.

Finally, Schedule 5 will require credit card providers to have online options for consumers to initiate a credit card cancellation or lower a credit limit. Consumers can face substantial barriers when trying to cancel a credit card and this reduces competition and limits how consumers can manage their credit card debt.

Schedule 5 requires credit card providers to facilitate any requests to cancel a credit card or lower a credit limit and prevents them from employing tactics to dissuade or impede consumers from cancelling a credit card or lowering a credit limit.

These reforms are a necessary and important step in reducing the incidence of consumers building up unmanageable credit card debts and improving competition in the credit card market.

Full details of the measure are contained in the explanatory memorandum.

Debate adjourned.

Ordered that the bills be listed on the Notice Paper as separate orders of the day.