Monday, 17 September 2018
Treasury Laws Amendment (Enhancing ASIC's Capabilities) Bill 2018; In Committee
by leave—I move Greens amendments (1) and (2) on sheet 8508:
(1) Title, page 1, (lines 2 and 3), omit "in relation to competition in the financial system,"
(2) Clause 2, page 2 (table item 2), omit the table item.
We also oppose schedule 1 in the following terms:
(3) Schedule 1, page 3 (lines 1 to 9), to be opposed.
It's pretty simple. The bill that we've just debated in the second reading has two schedules. We're opposing schedule 1 and we're quite comfortable with schedule 2. I've explained in my speech on the second reading that we don't believe we should be giving anything to ASIC at this stage. It's premature. The royal commission hasn't delivered its findings yet. There's plenty of evidence that suggests we should be looking at fundamentally restructuring our regulation of the financial services industry, given the consumer or the retail aspect of ASIC's mandate to the ACCC. It'll be interesting to see what the royal commission recommends in this regard. Now is the time to be forward thinking about structural change.
ASIC has been given a fair go over the years. As I read in my speech on the second reading, there are a number of very high-profile critics about its performance. I think the revelations in the royal commission have shocked just about every Australian, including some of the harshest critics of having a royal commission in the first place. I think the message is fairly clear. From the Greens' point of view, we don't believe we should be giving these extra powers to ASIC at this stage. I do note, Deputy Chair Williams, when you spoke, you distinguished between what's at stake here. They're not compelling a competition mandate with ASIC; they're saying they need to consider it in relation to decisions. If you think about their conflicted mandate, which I outlined in my speech in the second reading, there are things they already have to give consideration to; this is just another thing that they have to consider when going after the bad guys. I think it is overly complicating matters.
We've had the coalition senators in here all night talking about the importance of competition and light-touch regulation. I think the evidence from the royal commission so far is very clear that light-touch regulation doesn't work. I think that is what has dropped us in the hot water. I agree we need competition, absolutely. What the Greens are saying in this amendment before us and what I said in my second reading speech is let's have a regulator that has got a track record in the retail consumer area. Whether you agree or not, certainly the perception is that ASIC has been captured by the industry. The ACCC, would you say the same thing about them? I very much doubt that. When a critic of ASIC was asked about the ACCC in comparison, as to why they wouldn't be captured, he said, 'Well, they are off busting the airlines, they are off busting power companies, they are off busting supermarkets, they don't have time to stop and they are not specifically purpose-built to work with one industry. The ACCC will look at all consumer outcomes.' I think I have made my point clear. I would ask that the Senate consider the Greens' amendment before us.
Labor does not support this amendment today. The amendment will remove the changes in the bill that will require ASIC to consider the effects of the performance of its functions and exercise of its powers will have on competition in the financial system. Labor does not oppose requiring ASIC to take competition into account in exercising its powers. Labor is also on the record as saying that the time is right for a proper, considered and comprehensive examination of our institutional arrangements of the financial architecture. In recent years there has been a blurring of the lines of institutional capabilities with regard to our financial regulators and this is in fact a very serious issue, one that is worthy of proper and careful consideration. It is possible that the royal commission will make findings in relation to the financial regulatory architecture and, if so, these findings will be critical as an input into future consideration of the roles of mandates of our regulators. We should note that in the 2014-15 budget, this government reduced the resources at ASIC's disposal by $120.1 million over five years. We do know that the current leader of the Liberal Party for the moment, Mr Morrison, opposed the royal commission on 26 occasions. Despite the context—
Thank you very much, Senator Whish-Wilson. However, we don't think it is necessary to block this bill at this time and we do await with considerable interest the report of the royal commission.
The government will be opposing this amendment. The amendment, as set out, removes the first schedule of the competition mandate provisions from the bill. This means that the status quo would prevail, and ASIC would not be required to consider competition in the financial system when it exercises its powers or functions. So what are the benefits of including the first schedule, as we would support an explicit requirement to take competition issues into account will require ASIC to consider how the exercise of its functions and powers may impact on competition in the financial system. This will provide ASIC with certainty. Competition should be a factor in its decision-making processes, which should lead to a more competitive financial system.
Competition in the financial system puts strong discipline on businesses to lower costs associated with the delivery of products and services. It further encourages innovation and deployment of new technology and delivers more choices for consumers at lower prices. The effects of stronger competition in the financial system are felt well beyond financial markets and in other parts of the economy. Increased competition can benefit the economy as a whole via improvements to productivity and economic growth. For all of these reasons, we won't be supporting the Greens' amendment.