Jacinta Collins (Victoria, Australian Labor Party, Shadow Cabinet Secretary) Share this | Link to this | Hansard source

The Abbott government has announced as part of the 2014-15 budget that it will increase the AUSTRAC supervisory levy, which is an annual charge on reporting entities to pay for the costs of AUSTRAC's regulation. AUSTRAC's purpose is to protect the integrity of the financial system. It also deals with countering money laundering and the financing of terrorism. It does this through being a regulator and a financial intelligence unit. The industry contribution will fund both the regulatory and financial intelligence unit functions of AUSTRAC.

I can indicate Labor will be supporting these bills, but I would also like to take this opportunity to point out an inconsistency with the comments Minister Keenan made in opposition. In opposition, Minister Keenan said:

It is not reasonable for the government to recoup the costs of running every government agency if that government agency is providing a public service rather than providing direct services to the people who are being asked to pay for them.

He went on to say:

AUSTRAC does provide a very valuable service but we believe that it is not reasonable to come back and to ask the 199 largest users to cover the costs of its running …

So we have a government who are going back on what they stated in opposition. They criticised the Labor government at the time for recovering these costs and they are now increasing the number of entities who will need to pay—199 entities were paying this levy; this bill increases that to 1,029 entities.

In government Labor was committed to fighting organised crime. Organised crime needs to be challenged at every opportunity. These bills will help in that cause and Labor will support them.

David Leyonhjelm (NSW, Liberal Democratic Party) Share this | Link to this | Hansard source

I rise to speak against these two AUSTRAC supervisory cost recovery levy bills. Once again, it is telling that Labor and the coalition deem these dogs of bills to be 'noncontroversial', to be waved into law over lunch with no divisions and next to no-one in the chamber. For the benefit of those watching at home, let me explain what these bills do. They increase a tax on around 1,000 financial institutions, increasing revenue by around $80 million over four years. The tax increase will fund the collation of financial data for child support, tax, law enforcement and security agencies. The level of taxes will rise in line with the operating costs of the collating agency, called AUSTRAC.

The current tax on financial institutions only funds activities that assist financial system integrity—namely, regulations that counter money laundering and terrorist financing. That is not an issue. The government says it is replacing a 'cost recovery levy' with an 'industry contribution', but what it is really doing is introducing a new tax. This is the same government that said that:

… there should be no new tax collection without an election.

This is the government that said:

What you'll get under us are tax cuts without new taxes.

With these bills, the government is singling out financial institutions to pay for general activities—such as the management of child support—which seek to create benefits that fall outside the financial system. So these bills are the first step towards the policy of the Greens—a general purpose tax targeted at the banks. I am surprised so few senators from the Greens are here to cheer on this bank bashing and to claim victory in their crusade against the banks. But perhaps they feel they do not need to be here because the government is doing their bidding.

An extraordinary feature of this new tax is that it will be set at whatever level is required to fund the government agency. This is a recipe for agency inefficiency. Each year AUSTRAC will put in their budget bids for more money and the government will have little incentive to scrutinise these bids, knowing full well that any increased spending will automatically be funded by an increased tax on financial institutions.

The tax is poorly designed. Part of it comprises a tax on earnings, involving a number of arbitrary thresholds. If an institution increases its earnings beyond one of these thresholds, its increased earnings can be more than wiped out through increased tax.

Another aspect of this is a tax on the number and value of transactions. That makes it a stamp duty. It is a stamp duty like the ones the coalition sought to abolish with the introduction of the GST. Stamp duties are widely recognised as the most inefficient of taxes as they discourage voluntary transactions that make people better off. In this instance, this is a stamp duty that discourages an efficient amount of borrowing and lending in the economy. For this reason, the Henry tax review recommended the abolition of stamp duties, and the forthcoming government white paper on taxation will probably repeat this recommendation.

Of course, these recommendations will not stop the Greens from supporting stamp duties on financial institutions, referred to among economists as 'Tobin taxes'. Previous coalition and Labor governments have recognised the madness of Tobin taxes and have rejected calls from the Greens for their introduction. It is of great concern that the coalition's current approach to getting things through the Senate is to adopt the policy of the Greens. To anyone who is listening, please know that I, alone, in this almost empty chamber, oppose the otherwise untrammelled passage of these dogs of bills.

Scott Ryan (Victoria, Liberal Party, Parliamentary Secretary to the Minister for Education) Share this | Link to this | Hansard source

As Senator Leyonhjelm mentioned in his contribution, this debate on the Australian Transaction Reports and Analysis Centre legislation is part of the Senate business program to deal with non-controversial legislation. So, I am not equipped to answer the issues he raised. I will endeavour to make contact with him next time we sit so that I can ensure that I am apprised of the issues he wishes to raise and am in a position to address them. This is quite a complex issue, as was explained in the second reading speech in the other place. I commend the bills to the Senate.

Cory Bernardi (SA, Liberal Party) Share this | Link to this | Hansard source

The question is that these bills be now read a second time.

Question agreed to.

Bills read a second time.