Thursday, 18 June 2020
Australian Prudential Regulation Authority Amendment (APRA Industry Funding) Bill 2020, Authorised Deposit-taking Institutions Supervisory Levy Imposition Amendment Bill 2020, Authorised Non-operating Holding Companies Supervisory Levy Imposition Amendment Bill 2020, General Insurance Supervisory Levy Imposition Amendment Bill 2020, Life Insurance Supervisory Levy Imposition Amendment Bill 2020, Retirement Savings Account Providers Supervisory Levy Imposition Amendment Bill 2020, Superannuation Supervisory Levy Imposition Amendment Bill 2020; Second Reading
I rise to speak on behalf of the opposition in support of this package of bills which provide for the funding of the Australian Prudential Regulation Authority, APRA, through industry levies. I note that the bills are supported by industry stakeholders and are broadly designed to enable APRA to more fairly distribute the burden of levies across the entities it regulates. They will address current circumstances that result in larger entities paying less as a percentage of APRA's costs and smaller entities paying more. In particular, the current situation disproportionately affects customer owned banks. The levies collected from entities are used to fund activities including supporting the integrity and efficiency of markets and promoting the interests of consumers in markets.
APRA holds a critical place in our financial regulatory system. No more has this been seen than through the evidence provided to the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry. I remind the Senate that this is the banking royal commission that the government opposed so strongly that it voted against it 26 times. The evidence provided to the commission was overwhelming. Commissioner Hayne noted that members of the public submitted over 10,000 complaints about financial services entities by using the commission's web form. In addition, there had been many thousands of telephone calls and emails to the office of the royal commission. Only a few of these complaints could be fully examined by the commission, and so it undertook the significant task of choosing a selection of cases deemed to be reasonably illustrative of the kinds of conduct about which members of the public had complained.
The conduct identified and described by the commission included conduct by many entities that had taken place over many years, causing substantial loss to many customers but yielding substantial profits to the entities concerned. Very often the commissioner found that the conduct had broken the law or, at the very least, had fallen short of the kind of behaviour the community expects, and is entitled to expect, of financial services entities. The commission found selfishness, avarice and greed, often aided and abetted by institutionalised incentives for such behaviour. Consumers were kept in the dark about what was being done with their money, obscured by the complexity of the system and the conduct, with none of these actors looking after the interests of the consumer. These are the same consumers the government sought to disregard by opposing the banking royal commission in the first place.
Crucially, Commissioner Hayne found financial services entities that broke the law were not properly held to account. APRA is one of the critical bodies charged with holding our financial services industry to account. It must be well funded, and these bills ensure that it has an ongoing source of funding from the entities it regulates. But there is no point funding a regulator if it does not have the tools it needs to do the job. Labor was highly disappointed by the government's decision to further delay implementation of the banking royal commission's recommendations, in an announcement that has all the hallmarks of what we've come to expect in recent weeks—shoved out on a Friday afternoon after the Prime Minister has disappeared from view.
It is a failing of the Morrison government that the banking royal commission recommendations were not implemented in full before the COVID-19 crisis. The only reason they have not been implemented is the government has dragged its feet. After receiving the banking royal commission's final report, the Prime Minister and the Treasurer, Mr Josh Frydenberg, took six months to release an implementation timetable. One year after the report landed on their desks, the government has only completed six of the 76 recommendations made by Commissioner Hayne. The Australian public also have expectations that the banking royal commission recommendations will be implemented.
Labor supports a strong banking system, in the knowledge of the role the banks are playing in the current crisis to put measures in place. With almost half the workforce on JobKeeper or jobseeker, consumers need to be sure they are protected from financial misconduct. We join with consumer groups in holding the government to account until it keeps its promise to implement the recommendations, and we call for delays in implementing the royal commission recommendations to be limited to no more than six months. This will enable regulators like APRA to do their job with the legislative tools they need to protect consumers. Labor supports the bills.
I want to thank Senator Brown for that thoroughly well thought through and very well researched contribution today. It never ceases to amaze me how on top of her brief Senator Brown is with regard to the legislation we deal with at this point on a Thursday. As a fellow Tasmanian, it makes me proud to see her really shine in here and present the opposition's point of view. Thank you, Senator Brown, for your contribution today.
It is a pleasure to rise and make a contribution in summing up the debate on the seven pieces of legislation before us, the Australian Prudential Regulation Authority Amendment (APRA Industry Funding) Bill 2020 and associated bills. As Senator Brown has indicated, the package we're dealing with here is broadly supported by industry. There has been a great degree of consultation undertaken in preparing this legislation and in the work that has led up to the creation of this package of bills. The bills we are debating here will ensure that there is a legislative framework for financial institutions' supervisory levies, and that they keep up with what is a fast-paced and ever-evolving industry. We have seen over recent years, through the royal commission and other associated Senate inquiries, just how much this industry changes, how dynamic it is and how swiftly things move in this place. It is important that we have a legislative framework and, indeed, support for regulators that does keep up with those fast-paced changes and events.
It is important to point out how much the recent events we have experienced in this country, and indeed globally, have highlighted how important larger institutions are in the financial services sector—I think you would agree, Mr Acting Deputy President—and that it's absolutely critical that the amount of regulation applied here reflects the importance of those institutions. Through addressing legislative impediments, which is something I'm very, very passionate about—making sure we in this chamber don't impose regulation unnecessarily—we streamline what we do here, in order to unlock economic potential and investment and to create jobs. Particularly in regional communities like Tasmania, as Senator Brown would agree, we have to make sure legislative impediments and red tape—any regulatory burden—are only so much as they need to be, not any more, and not undue in their application.
By removing the legislative impediments, the bills will enable even the largest institutions to be levied their fair share of APRA's costs, which I think is right, to make sure that we get the balance right in relation to this. The bills will also ensure that there are no more deferrals of levies on those institutions that create the greatest regulatory burden. In turn, our country will see its prudential regulator appropriately funded in continuing to address financial stability, in protecting the Australian community. We need to make sure that there are appropriate resources available for this very important work, to ensure that those who need protection and the services of this regulatory authority do receive them. We need to make sure they are well resourced and they can act swiftly—going back to my initial comments about how dynamic this environment is, how fast changing it can be, and that they are able to keep up. So, appropriate resourcing is required, but, of course, striking a balance to ensure that we are not unduly burdening any entity, large or small, with too great a cost. Ensuring that these entities continue to operate is important, so the balance is important. It is only fair that all sizes of institutions pay their proportionate amount of the costs associated with running the entity we're talking about here.
As stated, industry has supported the changes that are being made through these bills. The amendments will provide certainty for many institutions during this very, very unfortunate and unprecedented coronavirus crisis. I think that's an important point to reflect on here. Industry is best placed to give us advice on how best we can proceed and how we can ensure that the future is clear for them. They can make decisions about how they operate and the costs associated with doing that. They can provide certainty to those entities they interact with—certainty is key and this legislation provides precisely that.
As the financial sector continues to evolve, the nature of regulation will also need to keep up the pace. Therefore, regulatory activities in regard to prudentially regulated institutions are required to be adept. This is the point I've been making through this contribution: we need to be nimble and agile. We can't wait years to respond to whatever set of circumstances it is that this sector is dealing with. We need to be able to respond swiftly to head off at the pass unintended consequences or things that may have an adverse impact on one part of the economy or another. The amendments will ensure the costs of regular regulatory activities, which the Commonwealth collects through APRA, can continue to be collected in a dynamic regulatory environment. Again, I commend Senator Brown for her thoroughly well-thought-through contribution to this debate and for her support of the bill, and indeed the opposition's support of the bill. I commend the bill to the Senate.
Question agreed to.
Bills read a second time.