Dave Sharma (NSW, Liberal Party) | Hansard source

This piece of legislation is another attack by the Albanese Labor government on small business. It's the only way you can describe the Anti-Money Laundering and Counter Terrorism Financing Amendment Bill 2024. This is at a time when small business is already struggling. We heard in the chamber here earlier this week that the insolvency rate is now 5.04 per cent. That is one in 20 businesses in Australia failing in a given year. That's a rate that's 25 per cent higher than prior to the pandemic. We've heard from the Council of Small Business Organisations Australia, COSBOA, the umbrella group, that small businesses are under colossal pressure. They're complaining, rightly so, about increasing costs in energy, about increasing costs of insurance, about higher interest rates, about complex industrial relations changes, about declining household disposable income and, now, about this—a growing regulatory burden.

The Attorney-General's Department, in its own analysis of this bill, assesses the regulatory burden, the compliance costs, of this piece of legislation to be $13.9 billion over the next 10 years, which works out to be $33,000 per year per small business, with a turnover of up to $2 million in compliance costs. The firms that are going to be hit by this are accountants, small law firms and real estate agents—some of the small businesses that collectively employ over five million Australians and also form the life blood of many communities and the heart of many small towns, cities and suburban shopping centres.

The impact of this bill is quite colossal and especially for the benefits, which are unclear and in many respects specious. There will be, on the department's own estimates, $84 million in extra costs for the financial services sector; $99 million in extra costs for the gambling services sector; $136 million in total in extra cost for bullion traders, digital currency exchanges, remitters and gemstone dealers; $1.36 billion in extra costs for providers of trust and company services; an extra $2.8 billion in costs for legal service providers, which includes small sole practitioners and small law firms; an extra $3.6 billion in costs for accountants; and, staggeringly, an extra $5.9 billion in costs for the real estate sector. This is a colossal impost to be putting on small business at a time when the economy is weak, when small business is already struggling with the burdens of complexity in industrial relations, higher input prices and weak consumer demand.

The purpose of anti-money-laundering and counterterrorism financing legislation is sound, and fundamentally the regime that we're talking about amending today was a response to the September 11 terrorist attacks of 2001. It was a Howard government initiative which has its roots in the international cooperative efforts to stem the flow of terrorist financing in the wake of that al-Qaeda terrorist attack. In every term of coalition government since those attacks, we've worked to improve our anti-money-laundering and counterterrorism financing architecture to make sure that we crack down on areas where this sort of financing can still be accessed and where loopholes can be exploited. It was the coalition government in 2002 that criminalised terrorist financing as part of the Criminal Code and moved money-laundering offences into the Criminal Code. It was the coalition government in 2006 that introduced and passed the AML/CTF Act, conferring on AUSTRAC, the regulatory agency, the significant and far-reaching powers that it enjoys today. It was the coalition government in 2015 that led Australia through our last mutual evaluation process. And it was the coalition government that last upgraded this particular piece of legislation, in 2017, to implement the first suite of changes to that process, the mutual evaluation process.

But here the case for urgency is not made, and the court process that has underpinned the consideration of this legislation needs to be revisited. The committee process was truncated; it was abbreviated. The Senate has not had time to properly consider the implications of these changes or to consult with stakeholders. This bill has been introduced and it's now being requested that it be passed as a matter of urgency, but the bill deals with matters that have been the subject of discussion for some time. It's hard to make the case that, in this last sitting day of this last sitting fortnight of the year, this bill should be making the guillotine.

Given the size of the imposition that is being proposed here and the significant compliance burden, uncertainty and impact it will have on many small businesses across Australia, you would have thought that a higher degree of consultation and stakeholder management was warranted, but we have not had that in this case. The stakeholder reactions we have heard, though, have been uniformly negative. COSBOA, the organisation I mentioned before, which represents small business and has said that small business is under colossal pressure, said that the Attorney-General's failure to follow best practice leaves the door open to cost confusion and compliance headaches for small business. The Real Estate Institute of Australia, whose members will be significantly impacted by this change, referred to the experience in New Zealand, where real estate agents have been hit with additional costs between $30,000 and $60,000 in exchange for a public benefit that is diffuse at best and unquantified at worst. The Real Estate Institute of Queensland have expressed significant concerns that the legislation is too complex, that it imposes a disproportionate burden on real estate agents and that ultimately it will add to the transaction costs of buying and selling a property. The Law Council of Australia, the peak law body of Australia, noted the legal profession is already the most extensively regulated profession in Australia and dual regulation of legal services remains an ongoing issue for the legal profession, not least because the increases in regulatory costs inevitably put upward pressure on the cost of legal services.

This will be an impost on small business, but ultimately who is going to pay? It will be the consumer of those services. It will be the family who are buying or selling a house. It will be the person who needs legal advice to deal with a civil matter, a commercial matter, a challenged will, a negligence case—whatever it may be. Ultimately, these costs are going to be passed on to them.

Small firms in particular are likely to bear the brunt of this. They are the ones that do not have large compliance departments, that usually have the sole proprietor or the family that owns them doing the books, accounting, compliance and whatnot. They are likely to feel the impost of this, and many of these small businesses are often owned by people who are at or approaching retirement age, like in the accounting professions and the legal services professions, and they are quite likely to think this is all becoming too hard.

In terms of the impact of this, and how to assess it, we have seen, and the government has argued, that this impost on businesses is necessary to avoid the risk of greylisting. 'Greylisting' is a term which means enhanced monitoring and scrutiny by the Financial Action Task Force, the FATF, the international body that monitors money-laundering and terrorism-financing standards. FATF puts a country under enhanced monitoring where it considers there are strategic deficiencies in its money-laundering and terrorist-financing framework. Greylisting is a serious concern, and Australia should take it seriously; I certainly take it seriously. But the government has not made the case for the risk, the imminence or the likelihood of greylisting. The government asserts greylisting may be the outcome if we don't regulate tranche 2 entities—those entities that are being proposed to be regulated under this bill. But how do we assess the risk of Australia being greylisted? The government has been clear in its own analysis that the likelihood of being greylisted cannot be determined on the available evidence—so it has no idea about the likelihood.

If greylisting happens, there are a whole number of different scenarios the government looked at—and that's provided it happens. They assess the costs of those different scenarios ranging from between $560 million, half a billion dollars, up to $10.7 billion—so there is a spread of $10 billion in variation, if greylisting happens at all. But we know the costs of this regulatory burden are going to be at least $14 billion; that's been assessed. The risks of greylisting are unknown, and the cost to us of greylisting is significantly less than the regulatory burden that's likely to be imposed.

When you've got a situation like this where the costs of regulation are clear and will be concentrated—

I wish I could understand the joke, Senator Ayres.