Matthew Canavan (Queensland, Liberal National Party) | Link to this | Hansard source

The Treasury Laws Amendment (Financial Reporting System Reform) Bill 2026 is a little bit of a confusing bill, particularly at a time right now when people are struggling and doing it difficult—doing it tough. Our financial system certainly doesn't seem to be working for average people. There are lots of issues in that sector. We've got the highest interest rates in the developed world, for a start. We've had lots of misbehaviour from our banks. We've got banks closing in regional areas, where I am, and they're now closing even in the cities too. It's very, very tough. There are lots of issues to deal with in our financial sector.

But I suppose it shows something of the priorities of this government that they bring forward this bill which, in one line, seeks to consolidate accounting reporting or accounting standards into one body. It's quite an arcane topic for people. It's hardly a kitchen table topic when there are plenty of financial issues around the kitchen table. So why is the government putting so much effort in here to abolish three bodies through this bill? They're abolishing the Financial Reporting Council, the Australian Accounting Standards Board and the Auditing and Assurance Standards Board—all very technical and dry institutions made up of accountants but very important ones. They're abolishing them all and replacing them with this new body called External Reporting Australia. The first question that the Liberal and Nationals side of this chamber has about this bill is: why? Why are the government doing this? Why are the government doing this at a time of a cost-of-living crisis for Australian families? Why are the government doing this when there hasn't been any identifiable real issue identified with the three bodies I just mentioned and their development of accounting standards?

It seems to me that time after time the bureaucrats and public servants in this town have to, I suppose, do something, so abolish these bodies and create a new one. It keeps everyone busy. New roles for people are being created. But what is that actually going to achieve? Why are we wasting the Senate's time on this? Accounting standards is not a topic that's brought up with me regularly, if ever. As I described, I think we're generally seen to have some of the best accounting standards in the world. We've had particular issues with accounting firms, which I'll get to. The standards themselves seem to be world leading and not really at any kind of crisis point.

So why is the government doing this? It's our central question. Generally speaking, on this side of the chamber, if we can't answer that 'why', if we don't have a strong reason to do something—create more laws, more business or more work that don't need to be there—we don't support it. If there's not a good 'why'—if there's not a good reason—let's not do it. For one, let's leave a system that's currently working alone. If it's not broken, you don't need to go around trying to fix, particularly in this place. When people from this town turn up and say, 'I'm from Canberra; I'm here to help,' often the outcome is not a forward-moving one. Why don't we just let sleeping dogs lie? It seems fine as it is. We do not see and have not been convinced of a good reason.

The second question we've got here is: will this actually make things worse? We're a little bit worried about that because, as I said, the government doesn't seem to have a clear agenda about why it's doing this—why it needs to create a whole new body and replace three institutions. There's nothing really on the public record that we can see that indicates what exactly this is about. That does give us some pause and makes us worry that maybe if there's not a public agenda there is in fact a hidden agenda of making what are quite radical changes to bodies that themselves are not very radical but pretty conservative state institutions. Why do all this? Maybe there's something else here.

The concern I have is that fundamentally this change takes what are expert-level, pretty dry—should I say boring—institutions and insert politics into the heart of them. I'm concerned about that for a reason I'll come to, but that's what this is doing. Previously, under this tripartite framework, the Financial Reporting Council I mentioned did have its members appointed by a minister through a political process. But that body was simply an oversight body. It didn't itself set the standards. It set general guidelines and oversaw the other bodies. But the Australian Accounting Standards Board and the Auditing and Assurance Standards Board were separate bodies outside the political process and staffed by experts—people in the accounting field who were rather dry, stayed out of politics and did their job as you want an accountant to do. You don't go to an accountant for his or her political bent; you go to an accountant because you want a job done. You want the facts and the details to have been gotten right. These bodies are so that they get things right. They're generally seen as world leading.

But now, because the government is abolishing these three bodies and replacing them with one—to be called External Reporting Australia—that body will cover all these areas. They'll provide that oversight. They'll set the accounting standards, which used to be set by the Australian Accounting Standards Board, that all accountants have to follow. The External Reporting Australia body will also be responsible for implementing those standards, overseeing and administrating them and making sure people adhere to them. Because that body will be appointed by a minister, the government will have a lot more control over accounting standards directly through appointments into one body. We don't see the need for politics to interfere with these dry accounting frameworks that have worked well, and that's why we can't support this. We don't think there's a need for change, the case hasn't been made and this will unnecessarily risk politicising what has been an independent, arms-length, well-working process.

It does raise the question: why would the government want to politicise this—why would something so dry and arcane need to have politics inserted into it? There has been, in recent years, an unfortunate creep of politics through to accounting standards, which I would argue is a diversion from what is necessary in accounting towards what is seen to be the priorities of particular sides of politics. In particular, there's been a rise of this concept some may have heard of called environmental, social and governance, so-called ESG, standards. ESG reporting has been the latest fad, if you like, that's overtaken what was accounting reporting but is now, really, in that field, a political reporting exercise to justify certain political stances on the environment, whether they're related to climate or other environmental standards. This is related to what is seen as governance, which is seen to be a good thing, but it generally involves the pushing of activist political exercises—things like the Aboriginal and Torres Strait Islander Voice that we're told we're terrible people if we don't support. That all gets rolled into this orwellian umbrella of ESG standards.

Many parts of the Western world that have adopted these standards have ended up shutting down lots of their industry that is not seen as worthwhile or good for the environment and the like, and they've become dependent on other countries. And that's led to the sharp rebuttal of ESG with the question: what does ESG actually stand for? The proponents of it say it's 'environmental, social and governance' standards. I think, actually, the lived experience with ESG would indicate the letters stand for something else. ESG has, really, in effect and in practice, come to mean 'extreme shortages guaranteed'. That's what ESG actually stands for, because everywhere these standards have taken over—particular corporations, governments—they have run out of things, run out of the production of things and become vulnerable and dependent on other countries.

The most stark example is right before our eyes right now. We adopted these ESG standards in areas like energy and, particularly, fertiliser production. We no longer make urea in this country because it's come to be seen to be evil or terrible for banks, insurance companies and the government itself to support the development of fertilisers from natural gas production. It just so happens, though—it would be an inconvenient truth for those pushing this line—that, in fact, almost all fertilisers that are used by farmers come from natural gas, particularly something called urea, which, roughly speaking, accounts for about half the world's food production. Urea is made from natural gas.

When our banks, our insurance companies and our government agencies employ these ESG standards, they often come with the idea, 'Well, we won't support gas, because it's terrible and evil, of course, and we don't do terrible, evil things any more, because we're good people and we support ESG.' Then gas production shuts down, people can't get finance, we lose the ability to supply gas to our last urea plant, on Gibson Island, at an affordable price and then it shuts down. In early 2022, our last urea manufacturing plant in Australia shut down, and we don't produce it anymore. By the time that the Iran crisis began, a few months ago, we were getting 67 per cent of our urea needs met by the Middle East—a bit of a problem! When that war kicked off and the Strait of Hormuz, which we've all come to know, was shut, we effectively couldn't feed ourselves as a country.

The government's had to rush around madly and sign blank cheques all around the world to have urea fertiliser turn up to our country, and they've succeeded. Usually, when you go out with a blank cheque, you do alright. We're all paying for it, though. We supported laws in this place to allow them to do that. But why have we put ourselves—our country—in this position where we have all these natural resources, we have a great farming industry and we can't be independent? We can't be because these ESG standards have taken over.

I worry that this bill is a backdoor to further these ESG standards with the government politicising the bodies that write these standards. It will be used as another tool by which to discourage and disincentivise—even ban in some circumstances—the finance of industrial production that relates to the use of fossil fuels, such as the production of fertilisers that feed us all. A lot of the people who impose these standards are completely ignorant of all this. They are well-meaning, they are good-natured—the path to ruin is often paved with good intentions, and there are lots of good intentions—but lots of people doing this, a lot of the accountants and people at the top of these corporations, have no idea, when they go to the fancy steak restaurant at the end of the day, the food on their plate actually wouldn't be there without fossil fuels. It would not be there. They have no idea about it. They are completely ignorant. Yet again, we are rushing to do these sorts of things. We're leaping before we look properly at what we need to do to run a functioning, prosperous, modern economy.

My concerns are even more heightened with this bill because the government is rushing this and ramming this through in another deal with the Greens. They did a deal last week to jack up taxes. The Greens have never met a tax they haven't wanted to make higher. That went through. Now we have another deal with the Greens to get this bill through, which I think is a trojan horse for a Green agenda to shut us all down. The deal in this case, notionally, doesn't look terrible. Apparently, the deal between the government and the Greens is to ban anyone who has received compensation from a big four accounting firm in the last six months from being on this new body, External Reporting Australia.

Okay, the big four accounting firms are in hot water at the moment. I'll put on the record that I am a former employee of KPMG—it was many moons ago—but there are lots of fine people who work for these institutions. It does seem passing strange to me that, of all the parties, the Greens in particular would apply the principles of collective guilt on everybody. There are thousands of people who work for these organisations, thousands of people, and many of them are just good, hardworking people who happen to be, let's face it, the very people who have the expertise to set accounting standards. A lot of CPAs and CAs in this country work for some of these firms.

The amendment the government has agreed to here effectively locks out—presumably, probably—the best accounting minds in our country from setting our accounting standards. It's crazy. I get that this wasn't the government's idea, I recognise that, but they rolled over and agreed to this. It's a form of collective punishment. Sure, let's clamp down on anyone who has done the wrong thing in these organisations as they deserve the full force of the law—I'm happy to ban those people—but there are a lot of innocent people who are going to be captured by this. And by going ahead with this overreaction, this knee-jerk response, we are putting at risk the setting of accounting standards that have otherwise been without scandal, without problem.

There are plenty of other speakers, so I ask: where are the problems with the current accounting standards process that requires such radical action, kicking people off who otherwise have done nothing wrong? We do risk making what is a good situation into a bad one, and that's the first thing we should avoid doing in this place. Don't make a problem where there isn't one to begin with. We've got enough problems to face at the moment. Let's get back to focusing on them.

Lisa Darmanin (Victoria, Australian Labor Party) | Link to this | Hansard source

I rise to participate in the debate on the Treasury Laws Amendment (Financial Reporting System Reform) Bill 2026 and add a view as well. A strong economy is one that people feel confident to invest in and this confidence is reflected in various ways. It's institutions are transparent, its markets have integrity, it is ready to adapt to domestic and international developments as they arise, and it is both fair and honest.

This bill delivers measures that will enable those qualities of a strong economy. It streamlines Australia's financial reporting bodies and it strengthens the integrity, adaptability and accountability of our economic institutions. These measures are necessary. Let's consider for a moment the economic environment that our government inherited when it came to office: huge deficits, higher inflation, falling real wages and falling living standards. It's an environment that is felt acutely by everyday working Australians doing their household budgets at the kitchen table. The Albanese government has worked diligently and consistently to turn this around—and we will keep going. We're continuing to deliver help with the cost of living, like the working Australians tax offset and two more tax cuts for every Australian, with one this year and one next year—practical, direct, ongoing help. And we're strengthening the standards that build our economy; when our economy lacks integrity and when investors lack confidence to invest, that is felt by workers.

Perhaps these standards aren't as flashy as the headline decisions, but the institutional settings that underpin our markets are just as important for economic management that is responsible—institutional settings that are stable, are reliable and underpin economic confidence for our country, for our national approach. These settings make sure Australia has systems that investors, businesses, workers, public sector agencies and the broader community can rely on. They can rely on those systems because this bill ensures that information disclosed to markets is consistent, credible and useful. That is why integrity in our markets matters. When people trust the system to be fair and honest, they are more willing to invest, innovate and plan for the future. That confidence underpins a stronger economy for everyone. It supports better decision-making. It supports accountability. It helps ensure that capital is directed efficiently and that our institutions operate with transparency.

That is the big picture, but let's get into some of the detail. This bill delivers on this goal of integrity by creating External Reporting Australia—or ERA. It's a new, more adaptable and accountable standard-setting body that will bring together the existing standard-setting functions of the Australian Accounting Standards Board, the Auditing and Assurance Standards Board and the Financial Reporting Council. ERA will be responsible for accounting, auditing and assurance, and sustainability standards—and on this side of the chamber, we think that sustainability is important and that ESG is important. In doing so, it will establish a clearer, more coordinated framework for external reporting in Australia.

ERA will be a one-stop shop for standard setting while preserving the technical expertise and specialist focus that is essential to high-quality standards, because reporting standards are important. It will be led by a governing council, which will be the accountable authority of ERA, with an oversight role covering ERA's full remit. The governing council will be allowed to act collectively. This setting is about promoting confidence in the council itself and confidence that no standard can be overly influenced by one member's perspective or the interests of any particular group or individual outside—and that is important. The expertise of the council will be bolstered by the contributions of non-voting associate members. These members would be appointed by the minister and would bring valuable experience and expertise to the decision-making process.

The bill empowers the minister to make these appointments, and it also provides them with a new obligation—that is, to have regard to ensuring the governing council has an appropriate level of representation of persons who are, or are seen to be, independent from Australian auditors. This obligation is important for accountability, which we are seeking to improve with this bill as a whole. It recognises that, as auditors must comply with auditing standards set by the ERA, there is a risk of actual or perceived conflicts arising for appointees who work in the industry applying auditing standards. The governing council will create, appoint and oversee internal standard-setting boards authorised to make specialised standards. This begins with boards for each of the three categories of standards currently set by the Australian Accounting Standards Board and the Auditing and Assurance Standards Board—those being accounting, auditing and assurance, and sustainability standards.

This bill is also about ensuring that our economy is dynamic to future challenges and opportunities. As such, it empowers the minister to confer additional functions on ERA, like the responsibility for formulating a new kind of standard. This will ensure that any future standard setting is efficiently and effectively addressed by leveraging ERA's standard-setting expertise and governance structure—a standard-setting expertise which is already a strength and that we want to build on.

Our standard setters play a crucial role in supporting the integrity of markets, enhancing investor confidence and ensuring accountability in the public sector institutions. The standards that they develop shape the information businesses and institutions provide to investors, regulators and the public. They influence how financial performance is reported, how audits are undertaken and how emerging areas such as sustainability reporting are incorporated into Australia's regulatory architecture. Good standards support good decisions. They help investors to understand risk, they help companies communicate to clearly and they help regulators and the public to scrutinise conduct and performance. And they help maintain Australia's reputation as a stable, transparent and well-regulated economy.

The establishment of ERA has been guided by three principles: flexibility, preserving what works and strengthening accountability. First, on flexibility, external reporting does not stand still. The expectations of investors, businesses, regulators and the community continue to evolve. International developments are moving quickly, particularly in areas such as sustainability reporting, climate related disclosure and assurance. Australia needs institutional arrangements that can respond to these developments in a global investment world and a global investment market without unnecessary barriers or duplication. In the future, when the need arises for further standard setting—and we all know that it will—these new arrangements will be able to accommodate that.

The second principle is around preserving what works. These new arrangements seek to maintain the benefits of the existing structure and, indeed, to build upon them. Technical expertise enables high-quality standard setting. The previous system employed that technical expertise well. The new arrangements seek to continue that practice. These standards are complex. They require careful consultation, rigorous analysis and a strong understanding of both domestic and international practice. The legislation provides for the establishment of technical standard setting boards within ERA. This includes a dedicated board for developing and maintaining standards for sustainability reporting. By embedding this capability within ERA, the bill ensures sustainability standards can be developed in a coherent framework alongside accounting, auditing and assurance standards. That supports consistency, reduces fragmentation and gives Australia a stronger platform to engage with international developments while meeting domestic needs.

The third principle, of course, is about strengthening accountability. Good governance requires clear responsibility. Good governance also requires workable arrangements, appropriate oversight and the ability to respond to issues when they arise. The bill is designed to align responsibility for ERA's performance with the capacity to address problems while also managing conflicts of interest.

Establishing a new body is a significant task. ERA will need to begin operations with clarity, continuity and the right technical ability. This is enabled in part by this bill's transitional provisions, which provide certainty and continuity between the existing arrangements and the new arrangements. These provisions are designed to ensure External Reporting Australia can begin operations from the day the amendments establishing the new arrangements take effect. They also maintain the validity of any existing standards issued by current bodies. That is important for businesses. It's important for auditors, investors, regulators and public sector institutions. No-one benefits from uncertainty about whether existing standards continue to apply. The transitional arrangements ensure continuity, minimise disruption and support confidence in the reform process.

That careful approach reflects the government's broader economic method—responsible, practical and focused on outcomes. We are not interested in reckless disruption. We are interested in reform that works, and that is an important contrast with those opposite. The Liberal and National parties have shown time and again that they are reckless with the economy. They are divided and dangerous, and it is Australians who pay for their dysfunction. They are more focused on themselves than they are on the cost of living. They have consistently voted against policies that would take pressure off ordinary Australians because they are more interested in their politics than in people and families. They vote against tax cuts for working Australians. They do not care to see the pay and conditions of workers in this country improve. They stand for higher taxes, lower wages, bigger deficits and more debt. And they are focused on themselves.

This government has no time for that. We are focused on building a stronger economy in every way that we can, including through these tax bills, providing practical cost-of-living relief and ensuring Australia's institutions are fit for the future. This bill forms part of that important work. It is technical reform, but technical reforms have real-world consequences. A modern economy needs reporting standards that are clear, credible and responsive. It needs institutions who can deal with new forms of risk and disclosure. It needs arrangements that avoid unnecessary duplication and make the best use of specialist expertise. ERA is designed to provide exactly that. By combining standard-setting functions in one body, the bill strengthens coordination. By maintaining technical boards, it preserves expertise. By giving ERA the capacity to take on additional functions in the future, it strengthens flexibility. And, by clarifying governance and accountability, it supports important public trust. The bill balances continuity and change. It recognises what's worked in the existing system, but it also recognises that the system must evolve. It provides a structure that can support Australia now and into the future.

Finally, as Chair of the Economics Legislation Committee, which conducted the inquiry into this bill, I thank all of those submitters who took the time to make written submissions and provide their perspectives on this bill for their important participation in the inquiry process. I commend the bill to the Senate.

Barbara Pocock (SA, Australian Greens) | Link to this | Hansard source

I rise to speak to the Treasury Laws Amendment (Financial Reporting System Reform) Bill 2026 . The Greens support reform that strengthens Australia's financial reporting systems and improves public confidence in our markets. This bill merges the Financial Reporting Council, the Australian Accounting Standards Board and the Auditing and Assurance Standards Board into a single entity called External Reporting Australia. External Reporting Australia will have responsibility for accounting, auditing, assurance and sustainability standards. The Greens have consistently argued that strong institutions are one of the foundations of a healthy democracy. Whether we're talking about anticorruption bodies, environmental regulators or financial reporting standards, independence matters in all of those cases, and, while the Greens generally support the merging of these financial bodies, the new External Reporting Australia should be stronger, not weaker, than its predecessors.

That is why I'm proud to say that the Greens secured valuable amendments in negotiation with the government to strengthen the new ERA. The Greens are moving amendments to strengthen the independence of External Reporting Australia—the new body—and its sub-bodies, and this bill establishes those bodies to set auditing and accounting standards. As drafted by the government, the bill does not adequately prevent representatives of the large auditing and consulting firms from sitting on External Reporting Australia's governing council or its standard-setting boards. It does not keep the fox out of the henhouse. This is a significant conflict of interest. These are the very firms whose conduct is shaped by the standards being set. Our amendments introduce the concept of an External Reporting Australia eligible representative. An eligible representative is not a big-four fox with a financial interest in a firm covered by these standards. The amendments define who may be appointed to these governance bodies by explicitly excluding current partners and directors of major auditing firms and former partners or directors who continue to receive material benefits from or are holding shares in those firms.

This is the same principle that the Greens successfully applied to the Tax Practitioners Board, where we secured amendments to minimise conflicts of interest by restricting the appointment to the TPB of individuals with direct financial ties to consulting firms like the big four. Regulators and standard setters must be genuinely financially independent of the industries they oversee. This is very important in a regulator like the Tax Practitioners Board, which currently has an investigation into the unethical behaviour of KPMG. The current Chair of the TPB, Mr Peter de Cure, was, for 25 years, a partner in KPMG and, of course, should not have any role in an investigation of his old firm.

Accountability in financial reporting starts with the integrity of the institutions responsible for setting the rules. I'll note that the government insisted that our amendment, if it was to pass, must include a carve-out to this new eligibility criteria for the New Zealand cross appointment to External Reporting Australia. The current Chair of the External Reporting Board, XRB, in New Zealand is Mr John Kensington, who is also a financial services audit partner at KPMG in Auckland. Because of Labor's lack of courage, he will be the New Zealand appointment to External Reporting Australia—a New Zealand fox from KPMG will enter this henhouse by that means. This is a real concern given KPMG Australia and KPMG International's numerous ethical failures in misusing confidential client information to win lucrative audit contracts and to fail to attend to—indeed, to isolate and punish—the brave whistleblower who brought their misdemeanours to our attention. I'm deeply disappointed that we couldn't keep New Zealand partners, and former partners, with ongoing financial interests in the big four out of these new standard-setting institutions, but we can at least rest easy at night knowing the Australian appointments will not have these conflicted ties to the big four from within our country.

If you wouldn't let a poker player cut the deck, you shouldn't let the big four write the rules they're audited against. It's a simple rule. It passes every pub test. The Labor chaired Parliamentary Joint Committee on Corporations and Financial Services consulting inquiry report stated that there is 'potential for the big four audit firms' to 'exert undue influence' over the three bodies that are being merged by this bill. It must be prevented. Evidence from Associate Professor Corinne Cortese to that inquiry showed that at the time of the inquiry, incredibly, 40 per cent of Financial Reporting Council members and 50 per cent of Australian Accounting Standards Board members had ties to the big four firms and that six of the 11 Australian Audit and Assurance Standards Board members were partners in the big four firms. Despite this clear conflict of interest being raised years ago, measures to prevent this undue influence when merging these three bodies into the new External Reporting Australia are not included in this bill.

The Labor chaired committee also recommended that this new entity 'not include individuals with a current financial interest in entities under the direct governance of the body'. It's very simple. Don't give membership of the regulator itself, or the standard setter itself, to people with a financial interest in what is being regulated. Despite this recommendation being agreed by Labor, the Liberals, the Greens, everyone in this chamber and members of the committee, Labor did not make this a requirement in this act. Why ever not? The government should have learned the lessons from the consulting inquiries when designing the appointment criteria for the ERA.

The Greens have also secured an amendment to the bill that adds ethics to the list of fields that the minister is satisfied that appointees to the Governing Council and standards-setting boards have. They have to have shown evidence that they know how to behave ethically. This is something that was raised by stakeholders throughout the inquiry process. In the wake of the evidence of unethical behaviour exposed by the two parliamentary committee inquiries following the PwC scandal and, now, the KPMG audit scandal, there is no doubt about the need to put in place structures, standards and processes that will lift the ethical standards of tax advisers, auditors, accountants and consultants.

We've also secured an amendment to ensure a public interest consideration when adopting international standards. As drafted, External Reporting Australia is required to act in the best interests of the public and private sectors of the Australian economy, but not in the public interest as well, which goes beyond considerations that just benefit the economy. Stakeholders observed that External Reporting Australia should also be required to act in the public interest. When I asked Treasury, in estimates, whether they considered requiring the new body to act in the public interest, their response showed that the government was focused on consolidating existing frameworks but not improving them. These three amendments have helped strengthen this bill, but there remains much more to do.

I listened to Senator Canavan's defence of his old firm, KPMG, and I remain unconvinced. As we stand here debating this bill, the KPMG audit scandal rolls on. It is the senior leadership of KPMG which have let down the thousands of people who work in KPMG. Many of them are good people. It is their senior leadership which has contaminated the reputation of people in KPMG, including people like you, Senator Canavan, who've worked in KPMG. KPMG's name is now viewed differently by the Australian public because of repetitive examples of ethical failure, of cheating on exams, of using confidential audit information to generate other audit business. These are indefensible errors by the leadership of KPMG, which is in receipt of over $640 million of public sector money. It is a firm that last year brought in $2.3 billion of revenue. It deserves to be accountable. Its senior leadership need to be accountable. Senior partners used confidential information to win very, very lucrative audit work. They breached audit independence, a central pillar of our financial system. There are multiple instances of massive cheating by KPMG workers, who are in a culture which encourages and permits that cheating.

We know that they've lied to the Senate. They've lied to us about power mapping of opportunities in the public sector. They stood in our Senate committee and told us they didn't do it, and then we had numerous examples of very specific mapping of relationships, which they farm to win further contracts. So there's lying to the Senate about power mapping, and then, on 19 June, lying to a Senate committee, a parliamentary committee, about the fact that they had conducted so-called investigations in relation to the current whistleblower. There were no such investigations underway; there was simply legal advice sought by KPMG, which they wanted to masquerade as investigations, and meanwhile they isolated and punished the whistleblower.

We've seen overcharging in Defence, with many, many, many millions and indeed billions of dollars being raked in by KPMG and their mistreatment and harassment of multiple whistleblowers. These are patterns of behaviour in KPMG; they are not bad apples. We've seen them attempting to use legal professional privilege to obscure the work of this parliament and not notifying the Department of Finance of recent developments and incidents as required by their contractual obligations. These are not one-off events. These are multiple events over years. They infect KPMG, and they no doubt cause great dismay to the good people within that firm. There are too many people affected by a very poor culture at the most senior level.

This is the same morally bankrupt KPMG who are continuing to run ethics and leadership training for senior public servants. KPMG could run a great leadership class in unethical leadership—how to monetise confidential information, how to cover things up, how to isolate and harass a whistleblower. Our most senior public sector leaders should not be undertaking any form of training, let alone on ethics and leadership, from a firm that has, by its own admission, breached the most basic ethical values and whose leadership has failed, whose leadership has departed, whose leadership will no doubt suffer further losses. Labor must give us what we need here, which is the real change that meets the outrage of ordinary Australians.

I want to conclude by going to some significant reform areas that we must see. We need to see the implementation of all of the recommendations of the previous parliamentary inquiries which reform the auditing, assurance and consulting sectors. That is why I am moving a second reading amendment to this bill, reminding this parliament of the work that still needs to be done. I move:

At the end of the motion, add ", but the Senate:

(a) notes that:

(i) this Parliament has united in condemning the countless ethical failures shown through the PricewaterhouseCoopers tax leaks and KPMG audit scandals,

(ii) it has almost been two years since two parliamentary committees published tripartisan recommendations to reform the auditing, assurance and consulting sectors, and most of those recommendations have not yet been implemented, and

(iii) Australians demand action to prevent scandals like these from happening again; and

(b) calls on the Government to:

(i) properly regulate partnerships and the auditing, assurance and consulting sectors, and provide increased protection to whistleblowers, and

(ii) act on all 52 tripartisan recommendations in the Parliamentary Joint Committee on Corporations and Financial Services report on 'Ethics and Professional Accountability: Structural Challenges in the Audit, Assurance and Consultancy Industry' and the Finance and Public Administration References Committee report on 'Management and assurance of integrity by consulting services'".

These reports gave the government a comprehensive blueprint for action, with clear recommendations on lowering partnership caps, requiring large entities like the big four to meet the same tax, transparency and insurance obligations as big corporations; requiring separation of audit from non-audit consulting services; improving whistleblower protections; and not allowing PwC or KPMG to tender for government work until all ongoing investigations have concluded.

This Labor government needs to stop dragging its feet with endless reviews and consultation and decisively act on broader sector reform. This is what we need. This is what the Australian people expect. We have the evidence, we have the recommendations, and we have the agreement across this outraged parliament that we need to meet the moment. Labor must meet this moment.

The Greens have five key priority areas for reforming these broken sectors: closing the regulatory gap, breaking up these very big firms, banning unethical contractors from government work and increasing penalties—the penalties suffered by these firms and the individuals within them, who have behaved appallingly, are trivial relative to their income, so we need to increase the penalties for egregious bad behaviour and ethical failures—and an ethical and legal regime around contracting. We need to support and protect whistleblowers. There is no argument that we need to make sure all entities are required to meet the whistleblowing protections of the Corporations Act 2001.

We must establish, most importantly, a whistleblower authority that backs in the brave individuals who put themselves, their families, their incomes and their whole reputations on the line to bring forward their issues, as in this most recent case, to the Senate. They should not have to do that. They should have leadership in place in their firms that listens to whistleblowers, understands the obligations of a very large firm and, indeed, meets the requirements of the Corporations Act. That is what we need. We need a basket of reforms that go to the structural questions before us.

We thank the government for their constructive engagement on this bill. It's been a really interesting, long discussion, but the fight doesn't stop there. We are going to keep pushing for real reforms, transparency and accountability in audit, consulting and accounting sectors. There are many things this parliament needs to do. The mountain of evidence is there. We must properly regulate these marauding cowboys, ban unethical contractors, structurally separate audit from non-audit, increase penalties and protect whistleblowers. That is our task now. Bills like this should reflect it, and further bills must come forward to do the work that remains before us.

Susan McDonald (Queensland, National Party, Shadow Minister for Resources and Northern Australia) | Link to this | Hansard source

I suspect I'm one of the few certified practising accountants or chartered accountants in the parliament currently. As a CPA, there is a small part of me that reflects on the concept of accountants being described as 'cowboys', 'marauding' or anything vaguely interesting as probably good for our reputation! I want to reflect on the work that has been done by so many people in the Senate and the House across this. I think the work has been important, particularly the whistleblower work. I think that is important. I want to congratulate Senator Pocock, Senator O'Neill and others for making this their life's work.

Deborah O'Neill (NSW, Australian Labor Party) | Link to this | Hansard source

And Senator Scarr.

Susan McDonald (Queensland, National Party, Shadow Minister for Resources and Northern Australia) | Link to this | Hansard source

And Senator Scarr; thank you very much, Senator O'Neill.

I do want to flag, though, that because accountancy is an incredibly complex and highly professionalised area, I'm very concerned that there is a misunderstanding that you can take out the complexity. Though, I do acknowledge the increased complexity that's been introduced by the Labor government under this budget. It becomes increasingly impossible for Australians to be able to manage their own tax affairs and financial management affairs thanks to the introduction of more complexity as legislated by the government. But it takes an incredibly complex profession, with complex standards and requirements, and seeks to somehow mush it all together. Senator Pocock herself just spoke about the structural separation of audit standards from others.

And yet, this legislation seeks to do the opposite. We have the Financial Reporting Council, the Australian Accounting Standards Board and the Auditing and Assurance Standards Board, all of whom do incredibly separate work. There is deliberate structural separation. And yet this legislation will seek to merge those bodies. The oversight body does not seek to write technical standards. That is a separation that enforces and provides independence. I think that this is a lack of understanding of the way legislation is constructed and the way that the technical nature of the separation of duties within accountancy firms works. This legislation, I think, seeks to solve a problem of individuals by legislating for a much broader outcome. There is a common expression out in the real world: 'To a man with a hammer, the whole world looks like a nail.' I'm afraid that this is a piece of legislation that is looking for a solution rather than an outcome that would be more practical.

I'm not sure if the Senate is aware of the crisis that is happening in the accounting profession in Australia currently, with the introduction of the government's massive overreach into scope 2 and 3 reporting. The expansion of ESG reporting has meant that there is such a shortage of practical accountants in the business that we have now offshored a huge amount of our accounting work to other countries. Every accountancy business around Australia will tell you, if pressed, that they are outsourcing a significant amount of work to other jurisdictions. I think this is a terrible shame. Young Australians who should be involved in what is, in my experience, incredibly interesting and constructive work in being an accountant, particularly in a business, are now losing that opportunity because they are being soaked up into these meaningless reporting areas. I should say that these are well-paid jobs that suck them out of small business and medium-sized business. Instead, we are outsourcing those roles.

I reflect on how in the 1990s, following the Enron scandal, the collapse of Arthur Andersen saw young Australians miss out on professional years on jobs—28,000 people lost their jobs as a result of that closure. I think this Senate and this parliament would do well to reflect on interfering in sectors of the economy that they are not well experienced to make decisions on and to write legislation on. I think this legislation is incredibly heavy handed. It will not force the outcomes that are sought by the government. Of course, once again, we have a deal with the Greens that means that we see structural changes to things like the self-managed super funds and their ability to borrow to invest in the property market—things that have not been well examined by either the House of Representatives or the Senate, because they are rushed through as part of these deals. I think that that will, in itself, reduce the number of houses that are available to Australians. We know that that would impact the construction of approximately 4,000 new homes, which will be removed under the Greens-Labor deal.

We all share concerns about the big four accounting firms, especially the recent conduct of KPMG, but that does not mean that we should launch a political purge of a sector that is already in real distress. I cannot emphasise that enough. We will look forward to seeing what further deals are done with the Greens that allow the government to progress more complexity of accounting regulation and probably more tax changes. I expect that we'll see a tax on the family home. We're going to see more inheritance taxes and death duties. Certainly, fuel tax credits are something that we are constantly watching to ensure that the government doesn't do a deal with the Greens, something that would devastate Australian fishers, farmers and miners.

In summary, I think that the government has got the wrong priorities for this financial services reform. Australians are facing real pressure—real living pressure—in financial services. We know that home insurance premiums are up around 50 per cent over the last five years. We're seeing regional bank closures. We're seeing a rise in financial scams and failures that ASIC, the regulator, is failing to stop, including First Guardian, Shield, Lion Property Group and Australian Fiduciaries. There have been at least eight parliamentary inquiry reports into this sector, on financial services, that have been tabled since 2024, yet the government has not responded to any of them. We're told there's not enough capacity to respond to these, yet there is capacity to legislate—and, as I've already flagged, with unintended consequences and with poor outcomes for Australians and also for an important financial sector in this economy.

Kerrynne Liddle (SA, Liberal Party, Shadow Assistant Minister for Health and Aged Care) | Link to this | Hansard source

The coalition strongly opposes the Treasury Laws Amendment (Financial Reporting System Reform) Bill 2026 because it tells Australians what they already know about this government's priorities. We know what its record is like because we've seen it in the last few weeks. Here's another Treasury bill, another sham. Australians are battling cost-of-living pressures, choosing between food and health care, while government spending sits at a 40-year high outside of a recession, and Labor has focused its resources on creating more bureaucracy. Labor is not focused on productivity. It's not focused on the real generators of jobs, and it's not the public sector. It should never be the public sector. It should be a private sector working to employ, to exchange money with people who work hard in return for it and who get to choose what they do when they earn that money. More bureaucracy, more red tape—that's the story of this Labor government and its time in government.

Australians rightfully want a government focused on the real pressures hitting households and small businesses. Day in, day out, they're working hard, but we're not seeing that in this place. We see legislation coming into this place rushed through without the proper oversight, without any regard for getting the most appropriate experts into the room and giving them the time to unpack, to consider, to apply and to reflect on the implications. Instead, what we have in here is legislation that comes through and changes—changes upon changes made after it's been brought into this place. If that's how you're running legislation, Australians should know how you're running the country. It was surely on show in the last few weeks.

Households are under pressure, and the government is busy creating bureaucracy while older Australians are weighing up whether they can afford their next insurance premium after the government strips away their private health insurance rebates. Again, these are older people who've planned for their future, who've thought hard about this, and Labor just comes in and says, 'Nah, we just think we might do this instead,' or, worse, they say, 'We're not going to do this,' and they do it anyway. That's not helping Australia, that's not helping Australians, and it's not helping those hardworking Australians who relied on themselves to plan for their future, to plan for their safety and to plan for the unexpected. The only thing unexpected is what government does to them, and you haven't even given them the time to plan sufficiently for that. It's hard to imagine how a government can become so disconnected from the very people it purports to represent.

Let's talk about financial services. Australians expect this parliament to focus on the real pressures hitting households and small businesses every day: insurance affordability, regional and suburban bank closures, protection from scams and access to affordable financial advice. Instead, what we see is the finance minister in this place coming in here and complaining about me not being in this chamber to speak. Well, I'm speaking now about your sham inquiry and your sham legislation. What you should be talking about is not individuals, but you, yourselves, and what you're doing to this country, to this economy and to people who've planned for their futures. None of that is reasonable and none of that's okay.

We heard expert after expert talking about and providing advice—

Paul Scarr (Queensland, Liberal Party) | Link to this | Hansard source

Now, Senator Liddle, it being 1.30, we'll proceed to two-minute statements, and you'll be in continuation when debate resumes.

Debate interrupted.