The PRESIDENT (Senator the Hon. Scott Ryan) took the chair at 10:00, read prayers and made an acknowledgement of country.
DOCUMENTS
Tabling
The Clerk: I table documents pursuant to statute and returns to order as listed on the Dynamic Red.
Details of the documents also appear at the end of today ' s Hansard.
COMMITTEES
Meeting
The Clerk: Proposals to meet have been lodged as follows:
Select Committee on the Future of Work and Workers—18 Sept 2018
Parliamentary Joint Committee on Human Rights—today
Legal and Constitutional Affairs References Committee—today
Joint Standing Committee on the National Broadband Network—19 Sept 2018
Rural and Regional Affairs and Transport References Committee—19 Sep 2018
The PRESIDENT (10:01): I remind senators that the question may be put on any proposal at the request of any senator.
DOCUMENTS
Future Submarine Project
Order for the Production of Documents
Senator PAYNE (New South Wales—Minister for Foreign Affairs) (10:01): I set out the government's position on behalf of the then Minister for Defence Industry in relation to the documents sought in order 862 in my letter to the President of the Senate of 25 June 2018. The final cost estimate template that DCNS, now Naval Group, submitted in response to the Future Submarine Competitive Evaluation Process, the CEP, is of a commercially sensitive nature. The release of the pricing details would severely undermine Naval Group's ability to do business, to tender for further submarine work and to maintain a competitive edge in a commercial marketplace. The offer which was made by Naval Group had the support and the backing of the government of France. Releasing these details would not only undermine Naval Group's competitive position in the marketplace but has the potential to damage our international relationship with France.
I note that the movers of the motion also sought access to this information under FOI and that the decision-maker denied access to the information under sections 47C and 47G of the FOI Act. This information remains sensitive and not for public disclosure. The documents that are sought in order 862 contain material commercially confidential to Naval Group. It includes fee and price details. It includes special terms unique to the Future Submarine program. I also note that sensitive commercial negotiations are still underway between the Australian government and Naval Group, and those negotiations go directly to the documents sought in order 862. Those negotiations are still underway. The release of these documents at this time has the potential to prejudice those ongoing negotiations and to prejudice the Commonwealth's commercial position in this important program. For that reason, and for those other reasons I've already mentioned, I am advised by the Minister for Defence Industry that the government maintains its public interest immunity claim.
It is also important to note that the acquisition costs of the Future Submarine program included more than the design and construction of the Future Submarine. As is stated on page 89 of the 2016 Defence integrated investment program, the acquisition cost of the Future Submarine capability is estimated at greater than $50 billion out turned, which includes: the cost of designing and constructing the fleet of 12 submarines; the cost of designing and integrating the combat system in each of the 12 submarines; the investment in science and technology that will be required; the delivery of logistics support, including documentation and initial sparing; and the design and construction of the submarine yard and other land-based test facilities—for example, wharves, the training centres, crew facilities and so on.
The initial estimate of the sustainment costs of the Future Submarines is approximately $50 billion, constant over the life of the Future Submarine fleet, which will extend to around 2080. Both the acquisition and sustainment cost estimates for the program will continue to be refined as design of the Future Submarine continues. Estimates are developing over time, and with more information they'll become more accurate and will be available after critical design review, which is scheduled to take place in 2022.
As a senator and a minister in this place I absolutely understand and appreciate the concerns, views and perspectives which those opposite, who moved the motion, bring to this discussion. It's not the first time we have engaged in these exchanges—it's most certainly not the first time in this chamber and we also have significant engagements in the estimates process.
I do think it is important to note that we are at a very sensitive point in time. The commercial negotiations are still underway. The material which is being sought is of a commercially sensitive nature. As I said in my earlier remarks, the release of the pricing details would ultimately severely undermine the Naval Group's ability to tender for further submarine work and its ability to maintain a competitive edge in a commercial marketplace.
Most of all, I don't understand the approach which would see the position of the Commonwealth government compromised in the process of commercially sensitive negotiations, which is the position the government is concerned the release of these documents would leave us in, given the timing. I'm advised, as I said, by the Minister for Defence Industry, who I represent in this place, that the government maintains its public interest immunity claim.
Senator PATRICK (South Australia) (10:07): I move:
That the Senate take note of the statement.
The minister's response to this OPD is totally unacceptable. The idea that the Senate is not permitted to have visibility to basic cost information is totally ludicrous. We are dealing with a $100 billion project. The public interest lies in disclosure at the very least of basic information. I will describe to the chamber what number is being sought here. It's not a number of a submarine that might be sold into another market. It's not even a real submarine; it's a preconcept design—that is, it is an indicative design to set very top level requirements. Since DCNS, now Naval Group, won the CEP, the Commonwealth has paid $143 million to Naval Group France and another $42.7 million to Naval Group Australia to advance a detailed design. As the minister has indicated, Admiral Sammut has testified to the Senate at estimates that we will not know the price of the Future Submarine until 2022 when the submarine's critical design review is conducted. The number the Senate has sought in this OPD is not a commercial number.
The refusal by the minister of this non-commercially sensitive number being tabled is made more offensive by the fact that the Commonwealth Procurement Rules make explicit reference to the fact that, whilst the need to maintain confidentiality is important, it must always be balanced against the public accountability and transparency requirements of the Australian government. The Commonwealth Procurement Rules state that officials should include provisions in request documentation and contracts that alert the potential supplier to the public accountability requirements of the Australian government, including disclosure to the parliament and its committees.
The minister talked about negotiations that are underway. Yes, we are in negotiations. We are negotiating a strategic partnering arrangement with DCNS of France, but there is no number in there. There's no build number in that particular negotiation, because we will not, as the minister stated, know the cost of these submarines until 2022.
The Future Submarine project is an important project. It's important both for national security reasons and for industrial economic reasons. Our Future Submarines are critical to our defence. They have capabilities that are ever more important in a day and age where almost anything can be seen by satellites and other remote-sensing equipment. Peacetime roles for submarines include basically having the deterrent so that we don't ever have to go to war but also getting ready for war: making sure our sailors can go to sea and train, making sure they can develop tactics for their submarines and making sure that they can keep an eye on neighbours through intelligence-gathering exercises or operations. They also can be used for policing activities, for counterterrorism roles, for fisheries patrols and also for Special Forces operations. That's just in peacetime. In wartime, we crank that up to antisubmarine warfare, antishipping warfare, mining and Special Forces operations. The Future Submarine is an important capability. It's also important from an industrial perspective. It's part of the government's naval-shipbuilding program, which is an important program and one that Centre Alliance supports. We can't get this wrong.
However—moving to the costs—at the start of this project, back in 2009, the number being bandied around for everything was $50 billion. That was for everything. The Defence 2016 Integrated Investment Program indicated that the Future Submarine design and build would be $50 billion on an 'out-turned price basis', meaning that things such as inflation were built in. On 20 May this year, Defence gave evidence to estimates that the Future Submarine design and build cost would be $50 billion in constant dollars, as the minister has just reiterated. To make sure everyone's clear: that's for acquisition. There's still another $50 billion being set aside for sustainment.
On 6 June this year, the Australian Strategic Policy Institute indicated that the figures provided at estimates equated to a design and build cost of $79 billion and a sustainment cost of $124 billion in out-turn dollars. Let everyone be very clear. We're talking about a program that is worth close to $200 billion. We spend lots and lots of time in this chamber debating personal tax cuts, corporate tax cuts and a whole range of cuts to expenditure, and yet this $200 billion program has almost gone unnoticed. We've got a project that started off at $50 billion and has doubled, and the Senate is blind as to the reasons.
As I revealed in question time on 20 June, the German submarine builder TKMS wrote to then Minister Payne reaffirming their offer for the design and construction of twelve 100-per-cent-Australian-built Future Submarines. Their letter stated that they would have built 12 submarines that would have met Australia's requirements, in Australia, for a maximum of no more than $20 billion for the project. It's off the back of that that I want to know what the French number was. We have an acquisition cost of $50 billion in constant dollars. The submarines should be less than $20 billion. Where's the additional money being spent?
The minister has indicated that there are additional things that need to be factored in: the cost of the design; the cost of the investment in science and technology; the delivery of logistic supports, including spares; the design and construction of a submarine yard down at Henderson, in Western Australia; wharves; training centres; crew facilities; land based test facilities, including test sites for mechanical component testing before components are installed into the submarine; a propulsion land based test facility; combat system and integration facilities; and so forth.
But I've been around submarines for a long, long time, and the numbers don't add up. For a project of such value, we need much more oversight. It's not unreasonable for us to understand what the basic cost was that DCNS offered when they won the CEP, and I will point out that I, under FOI, have managed to obtain the final number that Lurssen presented in respect of the OPV program. The minister is right: I have FOIed this number, and it is still before the Information Commissioner, but we're going to be in a situation—as I will talk about later—where the Senate is ordering the production of documents, the minister is refusing, and then I get them under FOI. That's an almost unbelievable situation.
After receiving some answers, or responses, last week, I'm feeling even more concerned about this project. We seem to be building the most expensive submarine on the planet but designing in old technologies. For example, most modern submarines are moving to lithium-ion main batteries, with their much greater energy density—the same sorts of batteries we find in our iPads and mobile phones. They pack much more punch for their size and weight. They are at sea on Japanese Soryu class submarines, and my understanding is that the Singaporeans will put them on to their Type 218SG submarines.
Defence has advised the Senate that the first Australian future submarine will have a lead acid cell. Most modern submarines have air-independent propulsion capabilities, which improve the time a submarine can spend under water without coming up to use its snorkel to recharge its batteries. Australia, in contrast to most navies, will not be getting air-independent propulsion in its future submarines. It will, however, be getting a pump jet. Other than two trial submarines, one on a French submarine and one on a Russian submarine, conventional submarines do not have pump jets. They are inefficient at low speed, which is where conventional submarines spend most of their time, relying on that ever-so-important battery, and so are only found operationally on nuclear-powered submarines, where they have an unlimited energy source. The economics committee has heard compelling evidence from Mr Aidan Morrison, an expert in the field, that suggests that the pump jet is inappropriate for a conventional submarine, and he has done so through a very detailed paper.
Defence have a method for categorising the maturity of a technology—a scheme referred to as technology readiness levels. In an answer provided to me by Defence last week, they were unable to provide a technology readiness level for the pump jet. I find that totally amazing. It doesn't matter if it's 1, which is really just an idea, or 9, which is operationally proven—they couldn't give me a number.
So we have a submarine with a mix of dated technologies and completely new and unproven technologies—perhaps inappropriate technologies. More questions need to be asked and answered.
Moving to schedule, at best we will have a new submarine in the water in 2032, as the minister stated. A well-respected naval magazine I was reading on the weekend suggested it's more likely to be 2034. All the while, we have Russian warships venturing back into the Coral Sea, Chinese submarines regularly deploying into the Indian Ocean and talks of foreign naval bases being established in the Pacific. Yet we're designing a unique submarine that will get us to the South China Sea in the late 2030s. All the while, we have the Chinese coming to us. We have the Chinese operating their military assets in our waters today. Yet we are pitching for a high-risk, high-cost submarine that may or may not be delivered in good working order two decades from now.
We need to revisit what we're doing. This HMAS Turnbull class submarine needs to go the way of its namesake.
Finally, I wish to draw the presiding officer's attention to the list of OPDs that the minister has ignored. On 9 November 2016, this chamber requested documents related to the future submarine design and mobilisation contract. Only after an FOI released some of that information was it made available to the Senate, and then the Senate didn't accept some of the intellectual property claims that were being made by the government—that they have been left unanswered.
On 4 September, this chamber asked for the future frigate tender documentation. We were denied that documentation, under a claim of public interest immunity by the minister; but the documents were later released to former Senator Xenophon under FOI.
On 12 February, documents relating to the Australian Industry Capability Plan, submitted by DCNS to the Department of Defence in response to the Future Submarine CEP, were again denied to the chamber. Eventually, they were made available—once again, to former Senator Xenophon under FOI, after which the minister then tabled them in the Senate.
Now, in this OPD, we're simply asking: what was the cost of the pre-concept design submarine that was offered up to Australia to help us make our decision about who our partner would be? The Senate cannot and should not stand by the contempt that we are seeing in respect of OPDs. At some stage, the Senate needs to enforce its orders. It's a very important oversight mechanism, and we let ourselves down by simply letting the minister, over and over again, ignore the will of the Senate.
Senator KIM CARR (Victoria) (10:21): This matter of this particular OPD is of particular significance. I think that the government's right to claim executive privilege or public interest immunity in respect of parliamentary proceedings has a long history. It has to be acknowledged that, as a former minister, I don't believe I've ever had to claim it. Going from memory, I don't personally recall doing so. But I do want to state that the principle is one that I think we do have to consider very, very carefully. I do acknowledge that there are circumstances where any government will claim executive privilege and will claim the right to withhold documents for very sound reasons. I think it's been demonstrated that no government can operate without a degree of secrecy. There are negotiations and there are matters in which public servants have to provide advice to government, and they have to be confident that the advice will be frank and fearless. There are occasions when there are genuine commercial matters that need to be considered. As a former minister who had a bit of responsibility for commercial secrets, I acknowledge that things do exist in such a form that they are of benefit to competitors and, if released in the wrong way, can be seriously disadvantageous. There are genuine security questions in which the nation's genuine national interest can be affected by the release of information. So the principle of secrecy in government is one that we have to acknowledge is genuine and legitimate when one considers the actual operations of public policy. There are many occasions when I think the national interest can genuinely be adversely affected if matters that ought to remain confidential are in fact released.
Then, of course, there is the question of the proper accountability mechanisms in a parliamentary democracy. There has to be a proper balance in terms of the responsibilities of this parliament to ensure that governments do act in the public interest and that politicians are actually preserving confidentiality in the interests of the public, not in their own interests—for instance, to provide a shield to stop criticisms of their actions.
We have to keep those two propositions firmly in balance when considering our responsibilities, particularly in this chamber. I think the Senate has a particular role in regard to accountability in terms of ensuring that governments meet their obligations for the national interest. On the other hand, I think it has to be also acknowledged that, as politicians, we are more than capable of pursuing our own agendas in such a way as to present criticisms that are in fact unfair and unreasonable, and it may well be that we don't get the balance right. I think we have to acknowledge that as well when we're considering these questions.
These are matters of such importance that I remind senators that we are now in the circumstance where there has been some change in these questions. In my time here, I've noticed a significant change. This principle of providing that balance between the rights of government towards genuine public interest confidentiality, if I might call it that—commercial secrets, for instance—and the right for the public to know and for parliamentary accountability has shifted. Since 2009, all our proceedings in Senate estimates and the like have commenced with a statement. The chairs of the various estimates committees are required to read out a statement to officers so that they understand that the simple fact that they don't like answering a question and they claim that questions are within public interest immunity is not sufficient. The very fact that a government claims it is in itself not sufficient. It's up to this chamber to assess that claim. To make the assertion is not in itself sufficient.
We notice that that too often is the case, even today, despite the change that's occurred. No matter how many times these statements are read at the various parliamentary proceedings, there are still officers and there are still ministers who presume that their assertion is sufficient in itself. I can recall the circumstance within this government where the minister—the current Prime Minister, in fact, as immigration minister—made claims for public interest immunity and asserted that there were matters in regard to immigration questions that should not be made available in public for documents that he himself had not actually read. He simply made the statement to a committee—in that sort of arrogant, bombastic way that he does—that he was familiar with the documents; he didn't have to have actually read them before he made any declarations of public interest immunity.
We know that responsible ministers are more than capable of making quite cavalier statements about these issues. This is particularly significant for House of Representatives ministers. In my experience, it's all too common that representative ministers are obliged to make statements on behalf of House of Representatives ministers who are contemptuous of the Senate, are contemptuous of their parliamentary responsibilities and pay no regard to resolutions of this chamber, because in the House of Representatives they're just not familiar with the simple proposition that they are required to be responsive to the parliamentary procedures in the way in which governments are in the Senate. It's a simple fact of life because no government here is likely to command a majority. In fact, in my time here, it's only happened once, and that turned out to be a complete disaster for the government because it pursued industrial relations matters, when it had its head, which tended to prove to people what its real intentions were and undermined public confidence more quickly than it could possibly have imagined.
We have a situation in this parliament alone where there have been 124 occasions where this government has refused to respond to requests for documents. This has occurred 124 times. I haven't actually looked at the detail, but my guess is that most of those would be House of Representatives ministers. My guess is that's the case. I could suggest that Minister Pyne is a minister who could be categorised as probably the greatest exponent of contemptuous behaviour when it comes to parliamentary procedures, especially on matters that originate in the Senate, so that does put Minister Payne in the somewhat difficult position of representing him here; I acknowledge that. She's required to carry out the advice that he's provided, in the most flimsy of circumstances. We have a situation where there have been four sets of documents requested on the basis of returns to orders that have been rejected. On two of them, to date, the commissioner for freedom of information has overturned the government's assertion that they were matters of state security or commercial in confidence or whatever claims were made as to the proposition that the information should be withheld, and the third matter is still before the commission. So we have to recognise the pretty sorry history, in that regard, when it comes to these particular matters.
As to that circumstance, we have to say that the government's assertion that it must operate in secrecy has been undermined by the changes to the FOI laws that have occurred in recent times. The FOI requirements and the commissioner's requirements do mean that there will be a different set of criteria by which a minister cannot just automatically assert that he or she does not want to see this information made public. This is despite the fact that this government has cut the funding to the FOI office, has cut the capacity of the FOI commissioner and has reduced the number of commissioners who are available to do the work. Of course, the FOI commissioner—one commissioner now—is finding it particularly difficult to cope with the workload in these circumstances. This is the way in which governments respond to these difficulties. Rather than dealing with the substantive question of whether or not information should be made available, governments seek to retain information for themselves—not for genuine issues of national security or commercial in confidence but because they want to protect themselves from public criticism. That, to me, puts governments in an entirely different category altogether.
Let me deal with this particular matter. I do note that the minister, the Minister for Defence as she was then, representing the Minister for Defence Industry as he was then, did produce a letter to the President of the Senate on 26 June outlining the case as to why the government's position on the statement of public interest immunity should be upheld. Of course, it was nowhere near as substantive a proposition in that letter as the one the minister outlined today. I don't blame her directly for this because it was the sort of letter that I think was probably drafted in Minister Pyne's office. It's the sort of contemptuous proposition that we see time and time again, where the minister representing the minister is obliged to table a letter which doesn't actually argue the position very well at all. One has to look to the newspapers. In this case, if you turn to the Financial Review on 21 August—so, from 26 June, when the minister's statement is tabled, we have to go to 21 August to the Financial Review—we see quite a detailed report as to the state of negotiations between the Australian government and the French government and between the Australian defence department and the French authorities in regard to the contract discussions towards the development of what is called the 'strategic partnering agreement'. It's not good enough to provide this Senate or a committee of this Senate with important information about the state of play with regard to the expenditure of $50 billion, but it is good enough to provide it to the Financial Review. So matters of national security can't be provided to the Senate, but they can be provided to the Financial Review.
This article has all the hallmarks of a ministerial briefing, to the point where it's actually said, 'The minister has full confidence in the negotiators.' In particular, it says there are military officers who are conducting the negotiations. And here we have a statement where the minister is saying:
… I throw my complete support behind Rear Admiral Sammut in making sure the government holds firm on getting the right terms and conditions in the Strategic Partnering Agreement.
The article points out that the problems with French officials with regard to the contractual negotiations go to the issue of warranty—that is, warranty in terms of the new submarines that are being built—and go to the issue of the cannibalisation of the existing Collins class submarine workforce.
Then there is the question about the sale or the merger of Naval Group, and in particular the problem that emerges when the government has sought to treat this as a government-to-government negotiation, which is stated here as one of the reasons why the government considers the release of the template 'may adversely affect our international relations'. Of course, what they mean by that is the French naval company may be sold to an Italian company. So instead of dealing with the French government, we may be dealing with a company that's going to be owned by the Italian government.
Now, if this is the critical issue, why can't this Senate be advised? We don't have any intent to break national security; we don't have any intent to bust open the negotiating position of the Australian government. And surely, if this chamber can't be advised, a Senate committee can be advised as to what the details are. A number of Senate committees have looked at this question of this quite important naval contract. Remember, this is the government that couldn't find $200 million to keep the car industry going in South Australia, but can find up to $100 billion to keep the shipbuilding industry going. I don't begrudge the importance of maintaining an Australian capability with regard to naval shipbuilding—in fact, I think that's incredibly important. I just note that this is a minister whose preoccupation is not with a genuinely national naval shipbuilding program; it's with a national marginal seats campaign for the Liberal Party. And you would have thought that if they were genuinely concerned about this national project that will take us through to 2080, engagement with the parliament more broadly would have been a matter of higher priority for this government.
And so it is in this context that I think there is a more fundamental question here about the approach that this government takes to this important—very, very important—naval shipbuilding project. This is a project that will go way beyond the life of this government, no matter how limited this government's life would appear to be. By any imagination, there will be a turn in the political cycle. It is important that there be a proper discussion about these important contractual discussions that are going on at the moment. The opposition is entitled to know what is actually happening. This parliament is entitled to know what the engagements are. We should not have to read about it in the Financial Review. We should be able to have direct access to this information.
We want to know basic things. What will the level of local content be? What will the operations in terms of the Naval Shipbuilding College be? What will the skills acquisition process be? We are entitled to know exactly what's going on when the government once was willing to accept the assessment that there would be 90 per cent local content but now won't tell us what the local content arrangements are going to be. Isn't it ironic when none other than Dr Hewson, former leader of the Liberal Party, says there should be transparency in Defence procurement and says, about the government's claims of commercial-in-confidence, 'Quite frankly, that's nonsense.' We are entitled to have a much higher level of engagement with the parliament. While I accept what the minister is saying with regard to the direct negotiations right now, the way in which this has been handled is nothing short of appalling.
Senator HANSON (Queensland) (10:41): I compliment Senator Patrick on bringing this issue before parliament. It is a very important issue to be spoken about. I raised the issue of the submarines in Senate estimates earlier this year. I am greatly horrified at the thought this government has continued with its secrecy over the purchase of French submarines that haven't been proven or tested and yet come with a combined price tag of possibly $100 billion or even as high as $200 billion if they're not adequate, if they don't work properly. Who knows? It could go a lot higher than $100 billion. Down the track, we might be looking at a cost as high as $200 billion. How do we know? With the Collins class, we had nothing but trouble. It cost us billions of dollars in ongoing costs. Let me remind the people. We're not buying a fleet of Commodores anymore, kids. This is $100 billion-plus.
It's taken a while for some of the facts to surface. I need to take my hat off to Senator Patrick for his tenacity on this matter. We know now the Adelaide submarine fleet cost breakdown is $50 billion for the build and a further $50 billion for sustainment. We also know the project is struggling to find qualified Australian workers to do this project. As the CEO of French firm Naval Group said, it's one thing to train people, but people confuse education with experience. That was his worry. Now this project needs 1,500 highly specialised workers by the end of the decade. If you're thinking this is a great employment opportunity, think again. At a price of $100 billion, that works out at over $66 million for each employee. Some of you might say that's it's a bit rough to divide the $100 billion by 1,500 employees, but that's all we've got to work with from this government. Where is the information?
What other options do we have? There are conventional subs from Germany and Japan that will cost us around $20 billion to build. No doubt the sustainment costs will be equal to that figure over their lifetime. But we also have nuclear subs that we should be discussing—off-the-shelf technology from countries like the United States or France, for that matter. But no; we want to reinvent the wheel and go with an unproven, untested new diesel-electric model that even the French didn't have confidence in when I spoke to them. If you are unaware, I went on a delegation to France earlier this year, in June, and I asked them about the submarines. I said, 'Have they been proven or tested?' They didn't answer my question. They just said that the companies that are dealing with it are very reliable companies. It was quite interesting to listen to Senator Carr today saying that those companies may not be around and might be sold to Italian companies. We don't know what's going to happen such a long period down the track and whether that is going to be the company. I think we need to have answers now.
The Australian people have had a gutful of government waste, and I can see the headlines now for 2032-34—whenever the first delivery is going to be. The papers will read, '$100 billion lemon'. The Prime Minister in 2032-34 will have demands placed on him or her for yet another royal commission as to how this disaster occurred. It's time that this government came clean and delivered answers to the questions being asked here today and during this parliament.
My suggestion would be to scrap the agreement—it hasn't been signed as yet with Naval Group Australia—and to start talking with the Germans and Japanese about off-the-shelf models we can both afford and have in the water in a few years, rather than in an unknown time frame. Let's make this quite clear: yes, we do—and I do—support all the defence services in having decent equipment for our security and around Australia. It is important that we do have submarines, especially with what is happening in the South China Sea and with the Chinese. But was this done in the last election as a shore-up for Christopher Pyne's seat in South Australia? Or anyone else's seat? It was an election issue. We have not heard about the true figures. And how much will it cost us to get out of the contract once signed? What will happen from the delivery of the first sub that is unsuitable, outdated or inferior? Do we buy the other 11 over the next 15 years, and at what cost?
These questions must be answered. Australians are sick and tired of governments having agreements with contractors and having yet another government come in and pull out of that contract. How do we know where Labor stand on this? Are Labor going to continue it? If this contract is signed prior to the next election, will Labor pull out of this contract? Is there a clause in there about it and how much is it going to cost the Australian people? We need to know this. And how much? As I said: how much is it going to cost us to get out of it if we have lemons delivered to us by 2032-34?
Another thing I must ask is: can South Australia deal with it? They're flat out now dealing with their companies and electricity. The whole state is falling into turmoil because they can't deliver decent electricity to run the state. And if they think that they're going to run this on renewables, I'll tell them absolutely different: it's not going to happen. So that's an important matter to discuss as well. Why I'm talking about the cost and the blowout is because didn't we have the same happen thing with the NBN? What it's cost us has completely blown out, we have an inferior product and it's not delivering what we need for the Australian people. We had this happen with the pink batts as well. That was an absolute blowout and a disaster, with lives lost. There was also the building schools program. And we had the Collins class submarines.
How many times have we seen contracts entered into that haven't been fully investigated to ensure that we have the right product at the right price? I'm sick of governments who have signed off on these to big-note themselves in the eyes of the public. There's no costing and they're not answerable to the public. They just change over: who's the next one? Then they'll actually have to put bandaid solutions over it.
The Centre Alliance and One Nation took a very measured approach in not supporting the corporate tax cuts, which were going to cost the taxpayers an extra $45 billion. But that was seven to eight years down the track. My reasoning was: could we afford it? I don't believe we can. We can't leave it to making decisions that far down the track. Where is the money going to come from for this? That's why I can't see the benefit of even $100 billion—and it may even be a lot more than that—for submarines that will possibly be inferior.
I call on the Labor Party: I want to know your policies. The people need to know what you intend to do about this if the contract is signed? Do you intend to pull out of it or do you intend to go ahead with it? And no matter what the costs might be, we have to know how much it's going to cost us to get out of this. We're talking about submarines being delivered in about 14 or 16 years down the track. The Barracuda submarine is diesel powered. These submarines don't perform as well as nuclear submarines do. I understand that we need to have nuclear plants here in Australia, but we are moving forward so fast that we need to talk about all this. Will we go nuclear? Will it be better for us in the expanse of oceans that we have around us? We need a submarine that is going to be up to doing the job at the time.
I fully support Senator Patrick calling this to the attention of the parliament. We need to ask these questions. We need to put pressure on the government because we're leading into an election. I want to know the answers and I'm sure the public of Australia want to know the truth.
Senator BERNARDI (South Australia) (10:50): It's worth reflecting that we're in this position and are having this discussion today because Labor failed to do anything about submarine procurement when they were in government. We know that was five or so years ago, but perhaps it was the most irresponsible decision because it has left perhaps the most irresponsible minister in the history of this place in charge of procuring some very important strategic weapons. We know Minister Pyne has not only a cavalier disregard for ministerial responsibilities but absolutely zero concern for the public purse. As long as it can deliver a political outcome for him, he doesn't care what the cost is. The political outcome of course was to save the seat of Sturt in the last election, so a promise was made for the procurement of tens of billions of dollars worth of submarines. There are enormous questions still to be answered.
As a relative neophyte to the submarine discussion, I have taken it upon myself to get substantial briefings from people who do know about submarines about what is important for Australia and what is value for money. I find it extraordinary that I could tell you pretty much what it would cost to buy a German submarine off the shelf and to have it built entirely in South Australia. That is relatively public information. Similarly, I could tell you what it would cost to buy a submarine and have it built in Australia by the Japanese designers.
Senator Patrick is asking a very legitimate question: what is the documentation and what is the early assessment cost of the decision the government has taken in this respect? It is the early cost. It's not secret. It doesn't talk about capacity. It's not going to tell us anything. It's just a headline figure. I can go to the Germans and buy an appropriate class of submarine—one of the suite of submarines that they manufacture—and have it built in South Australia. It's going to cost me $1 billion or $2 billion. Why is it that we're not entitled to have that information on behalf of the successful tenderer? I'll tell you why. Because how this determination took place stinks to high heaven. The contractual arrangements that have seen the decision made to use the French tenderers for construction of our submarine project stink to high heaven.
I have huge concerns about the design of these submarines—not simply because they are retrofitting a nuclear submarine with diesel; they're trying to make a submarine be all things in all circumstances. Anyone with a working knowledge of submarines knows that there are different subs for different purposes. Senator Hanson quite rightly talked about the potential for nuclear submarines. Nuclear submarines are wonderful things if you're operating in deep water and in a covert capacity for a very long time. They're not appropriate for a lot of the other work that Australia does in surveillance and counterintelligence and the other mission-ready stuff that takes place in relatively shallow waters. We know that nuclear submarines can go along at very high speeds for a very long period of time, but they also put out a signature that is sometimes more easily detected than a diesel-electric submarine running on batteries. We also know that diesel-electric submarines running on batteries can run at very high speeds for very short periods of time. But, once again, they have their limitations. There are horses for courses. Yet, we seem to have decided that we are going to build a new Seasprite that will be an amalgam of all of these different things and then end up with a perfect scenario.
I have grave concerns about it. I have grave concerns about how that was conceived. I have grave concerns about the break costs attached to this. We don't know what we're up against. I suspect that there is no dollar figure about the break cost in the event that we don't proceed down this path. It is, as in many contractual arrangements, led by people who have very little commercial understanding or very little commercial experience and are motivated more by electoral outcomes than good defence outcomes for the country. I suspect that this is a bottomless pit of compensation if we don't proceed down this path.
As a South Australian, I make no bones about the fact that I'm happy to see submarines and defence work take place in our state. It is very important for the future of our state. But, equally, as an Australian senator, as a taxpayer and as someone who is deeply concerned about the future of this country for every other Australian, I also want to see value for money. I am unconvinced that the submarine contract and procurement process is delivering Australians value for money. The headline figure was $50 billion for these submarines. And then there's another $50 billion, potentially, for ongoing maintenance and running costs. Senator Patrick has suggested, via the estimates process, that that figure could be virtually double that. If you really wanted to go down the path and procure a range of off-the-shelf German submarines and a few nuclear submarines, you could probably do the same for about $50 billion. I reckon that in the end I could probably tick a few boxes in that regard and say, 'Yes, this would help us here, here, here and here, and we'll have a better submarine fleet that is more reliable and more appropriate to the range of circumstances in which Australia engages in tactical undersea warfare and surveillance than is the case now.'
But, in the absence of information, the Australian people can't really make that judgement. In the absence of information, the Senate cannot really identify whether taxpayers have been given value for money, whether there has been some sort of misrepresentation, whether there has been some sort of malfeasance in the procurement process, or whether this was hastily cobbled together as a political fixer. It will have enormous implications, both financial and defence related, for decades to come.
So, with the limited knowledge that I have, both from a personal sense and point of view, but more importantly, with the information that has been provided to me by strategic briefings that I spent virtually a day undertaking with people who are experts in this matter—with due deference to someone who is not my natural political ally in Senator Patrick, but someone who does have a diligent approach to this matter and a great deal more technical expertise and specialist knowledge in this space than I ever will ever have, no matter how many briefings I get—I find myself absolutely in support of this motion for the production of documents. I don't buy, quite frankly, the statement that the minister has put forward today. But I do regret, and I put on the record, that this is the Minister for Foreign Affairs who is representing in a capacity. A brief would have been provided to her, and she has done her duty in this place. I have some questions about whether the minister should be held to account in the manner that some are proposing.
The ACTING DEPUTY PRESIDENT ( Senator Gallacher ): Senator Whish-Wilson?
Senator Whish-Wilson: I understand that Senator Bernardi has the call, but I was wondering if it would be possible for you to make a statement to the chamber that debate expires in seven minutes and fifty seconds and there are a number of senators who still haven't had a chance to speak.
Senator BERNARDI: I consider myself reminded of that, and that Senator Whish-Wilson would like to have a few words. In the interests of being a generous Senate citizen, I will put on the record that I'll be supporting Senator Patrick's motion should it come forward.
Senator FAWCETT (South Australia—Assistant Minister for Defence) (10:59): I will make sure I allow Senator Whish-Wilson a couple of minutes, as he's requested, at the end. I have a range of information here that I was planning to present if I'd had 20 minutes. Unfortunately, I only have about three minutes, so I'm just going to focus on the fact that the arguments that have been presented here today have contradicted themselves in their internal logic. Senator Carr started off really well with a whole bunch of information about government, executive government and the transparency required to the parliament. But he finished at about the same point that Senator Hanson and Senator Bernardi started off at, which was with a political point which actually underlines the motivation behind why they are supporting this motion.
Senator Carr said this was all about marginal seats and work occurring in marginal seats. Well, in South Australia, the submarines are being built in the seat of Port Adelaide, or what will be the seats of Hindmarsh and Spence, which happen to be two very safe Labor seats. Senator Bernardi has made the point that this is all about Mr Pyne protecting his own seat and letting a contract and yet has made the point, as have other senators, that there were other bids, for example from the Germans and the Japanese, who came out saying that their bids could be cheaper. If it was all about getting something built in South Australia, and if, as Senator Bernardi said, the minister doesn't care about the capability or the cost, then surely he would have taken the cheapest bid to get built in South Australia and then used the money for some other political purpose. What those comments highlight is that there is a political motivation behind the attacks on the government in this process when, as Senator Carr quite rightly pointed out before, the executive actually has the obligation in the national interest to conduct deliberations and to conduct negotiations with commercial partners in an environment where both parties can trust each other.
The very basis of the first principles review recommendation that Defence industry should be seen as a fundamental input to capability is so that we get value for money over the whole life cycle of a piece of equipment so that the Defence industry partner will be prepared to invest more in its facilities, in its people and in its processes, but that requires trust. If the information is just given willy-nilly to the public via the parliament because somebody decides that they would like that information—and I look through the Notice Paper here at the number of times that information has been requested not just for this program but also for a number of programs. Essentially what's being proposed here is government by a committee in the parliament, as opposed to the Westminster system, which is that we elect a government—an executive—to actually control the functions of government. If the taxpayers are unhappy, then, in a three-year cycle, you can have a change of government. That's how the Westminster system works. Senator Carr quite correctly highlighted that governments of all persuasions have, for reasons of confidentiality and maintaining that trust with a commercial partner, worked with information that has not been given in its entirety to either committees or to the whole parliament.
I do note that, where it is important for a committee representing the parliament to have information, committees like the Parliamentary Joint Committee on Intelligence and Security have received classified briefings so that, on behalf of the parliament, they can make decisions. But we see a similar request from people sitting on the cross bench—that they want to be part of that committee too. They're saying, 'Why should somebody have the information and not us?' It's about layers of trust, and some things are held by the executive. Many things are shared with committees like PJCIS, but there are many things which are not shared with the entire parliament for a very good reason.
Senator Patrick: This is not a sensitive number!
Senator FAWCETT: Senator Patrick is interjecting there saying that it's not a sensitive number, but he has made a number of requests of a similar format—seeking information that traditionally has been the domain of the executive to work on behalf of the Commonwealth.
There are other comments that have been made here about the Collins class and its capability and about nuclear submarines. Again, Collins class has actually been a good capability, and I'm on the record as saying that I think then Minister Beazley was poorly treated by history because the Collins class has appropriate support to make sure that through life it has come back to having four or five out of six submarines available. I was in Hawaii recently where we saw very good capability being delivered by HMAS Rankin. There are comments that Senator Hanson made about the South China Sea. She said that we need a submarine that can do all these things and yet has said we should buy one off the shelf from Europe. Everyone knows—the Germans have said, the Swedes have said, the Spanish when they're in competition have said and the French have said—that none of their existing designs would meet the purpose. All of those countries have said that they had to redesign their production boats in order to meet the objectives that the Australians had. So the arguments that have been presented here (a) show that it's a political attack and (b) demonstrate very clearly why we should never allow the executive to cede its role to the parliament when it comes to these kinds of information.
Senator Kim Carr: On a point of explanation: we are not supporting the foreshadowed motion.
Senator WHISH-WILSON (Tasmania) (11:05): This is a classic example, to use a submariner's term, of silent running. 'Silent running' is used to describe submarines in their stealth mode of operation; an operation deliberately designed to evade discovery and remove or eliminate superfluous noise. That is what this is. This doesn't just apply to a $200 billion submarine program; this applies to military spending in this country full stop. Silent running is a stealth mode of operation designed to evade discovery.
Two hundred billion dollars—that's 10 Gonskis. That's six National Disability Insurance Schemes. That's enough money to fund an infrastructure revolution around this country and fill the infrastructure gap that has been identified by this Senate. That's enough to fix homelessness in Australia. That's enough to do so many things we need for our nation, and we can't get simple answers to simple information requests. This is a critically important issue. The Greens will be supporting this motion today because it's so powerfully symbolic of what is wrong with the scrutiny around the military apparatus in this country.
If you want to read a good essay about this, I recommend you read James Brown's 'Firing line', which was published in 2016 in the Quarterly Essay, which I was lucky enough to provide a response to. It is about how we need whole new processes in this place to scrutinise not just military spending in parliament but the military industrial complex and a number of decision-making processes around how the executive makes decisions in sending ADF personnel to foreign deployments, especially to active deployment. We will be supporting this motion today. I'd like to have talked a lot more about exactly what the Greens think about the Future Submarine program but I don't have time.
Question agreed to.
Senator PATRICK (South Australia) (11:08): I seek leave to move a motion relating to the minister's explanation and the enforcement of an order for the production of documents.
The ACTING DEPUTY PRESIDENT ( Senator Gallacher ): Leave is not granted, Senator Patrick.
Senator PATRICK: Pursuant to contingent notice of motion, I move—
The ACTING DEPUTY PRESIDENT: Senator Patrick, please resume your seat. Senator Cormann.
Senator Cormann: If I might assist the Senate, the government is prepared to give leave.
Senator PATRICK: by leave—I move:
That—
The Senate resolves that until such time as the Senate by resolution is satisfied that the order for the production of documents relating to the submarine project (No. 862) has been complied with, the Minister representing the Minister for Defence Industry shall be prohibited from sitting in the front bench seats reserved for Ministers and be allocated a seat by the President in another seat.
The PRESIDENT: The question is that the motion moved by Senator Patrick relating to seating arrangements in the chamber be agreed to.
The Senate divided. [11:13]
(The President—Senator Ryan)
BILLS
Productivity Commission Amendment (Addressing Inequality) Bill 2017
Second Reading
Consideration resumed of the motion:
That this bill be now read a second time.
Senator URQUHART (Tasmania—Opposition Whip in the Senate) (11:17): I rise to speak on the Productivity Commission Amendment (Addressing Inequality) Bill 2017. I introduced the bill last year in Senator McAllister's absence, and I make it clear to the Senate that Senator McAllister will be closing the debate on this bill, not me. Without doubt, economic inequality is the major issue people are coming to talk to us about at the moment, whether it is equality of opportunity for people to live their dreams or equality of outcomes in terms of a happy and healthy life for people and their families. Economic inequality is biting in this country. We need governments that are serious about identifying the causes and putting in place policies to address them. Since the great reforms after the Second World War, all Australians have had the chance to dream big, to work hard and to achieve their goals. Social mobility has been within reach of all of us. Australia's society has been defined by the fair go for all, where people have both an equality of opportunity and an equality of outcomes across a range of measures.
But this fair go is slipping. The Chifley Research Centre has done some great work identifying the facts on inequality. Labour earnings are the largest component of income for most Australians and, therefore, the most important driver of income inequality. The labour earnings share of national income has been steadily declining since the 1980s, and average wages today are growing more slowly than productivity, which is contributing to inequality in the short term and threatening future productivity growth in the long term. It means slower growth for all and stagnant living standards for all.
Worse, time and time again our rural, remote and regional areas are ignored by this government. It is a government that makes countless promises for the regions but whose actions are completely out of step with what regional Australia needs. It is a government that talks big about supporting the regions but which fails to make headway in improving the lives of workers in regional Australia.
In my home region, the north-west and west coasts of Tasmania, our people have access to the most fertile soils, the cleanest airs, predictable seasons, rich mineral resources and the most picturesque coastline. It should be a place where people live an honest life, work hard, earn a decent wage, afford a home and raise a family in safety and comfort, and where their children can dream big and achieve those dreams. While this is still the case for many, there is a rising number for whom this is getting out of reach. While it's a beautiful place for many, they're trapped and isolated. Our services are stretched, education and health outcomes are low, wage growth is low, unemployment is high, casualisation of the workforce is high and people face difficulties securing a home, securing a place to live and somewhere to base their family. This leads to unimaginable stress entrenching inequality and disadvantage, making our homes and communities less safe and less happy.
So what do we do? First of all, we must acknowledge the problem. We must be firm that tackling inequality is a priority for our society and we must get to work, understanding what drives inequality and what can be done to reduce it—not to take more off some but to ensure that, when the pie grows, everyone has a chance to get more. We heard Prime Minister Morrison, when he was Treasurer, saying that inequality isn't getting worse, despite his chief macroeconomic adviser, the Governor of the Reserve Bank, saying the exact opposite. Time and time again, ideology over outcome prevails for the Liberals and Nationals; political expediency over people. In this case, it is a blind allegiance to trickle-down free market economics, an ideology that hurts working people, is bad for economic growth and is bad for our standard of living going forward. The Reserve Bank Governor was clear. When asked if he thought inequality was rising or getting better in Australia, Dr Lowe said, 'Well, it's risen,' and Dr Lowe addressed the critical issue: the Chifley Research Centre has also identified that wealth inequality has become more pronounced in the last few years. People who own certain assets have seen their value shoot up, while those with little or no assets effectively fall behind.
What we saw in the recent Braddon by-election should be a wake-up call to Prime Minister Morrison: support this bill, support working Australians and stop prioritising the big end of town. The debate of the by-election was between a Shorten Labor Party that pledged greater investment in our hospitals, schools and TAFEs, greater support for pensioners and greater support for our communities, compared to the Liberals and Nationals whose priority was a $17 billion taxpayer funded handout to the big banks at the expense of working people and retirees. While the Liberals and Nationals are prepared to just fob off inequality as something that doesn't matter, Labor is interested in actually identifying the problems and working across the community to identify pathways to fixing them. Instead of working together, Prime Minister Morrison just turns his back at a problem we all know is getting worse—a problem about which we know we need more data. At present, despite the countless reports reams of economic analysis published every year, there isn't one body in Australia charged with examining economic inequality and its impacts on our community. Without collating and analysing such data from an inequality perspective, governments will struggle to respond effectively and the community may remain unaware of the extent of the problems. This bill will fix that.
The five-yearly inequality report will do three things. First, it will lead to the establishment of measures for economic inequality. Second, it will assess the effects of economic inequality on the economy and on individuals. Finally, the report will assess the effect of existing government programs on economic inequality. This is a critical part of the policy development cycle. Simply, are the programs reducing or increasing in equality and are the programs creating any unintended circumstances?
Which body should conduct this analysis? This bill proposes the Productivity Commission do so. Currently, the Productivity Commission Act includes a set of policy guidelines that the commission must have regard to. This includes a wide variety of social, environmental and economic considerations. I want to stress that, given the political nature of the concept of inequality, this bill doesn't prescribe a specific definition. We don't need to be exclusive in our definition here. The proposed inequality report should consider matters relating to both inequality of opportunity and inequality of outcome.
The Productivity Commission must take a holistic approach and examine a range of measures and a range of factors in their research and analysis. If the government can take the time to understand that, perhaps they could agree to support this bill, because surely they are hearing the same concerns from the Australian public: that inequality is on the rise and that government must support further understanding of both the causes and outcomes associated with inequality. Instead of the divisive politics of fear, why not try the inclusive politics of hope? Instead of marginalising some of the most vulnerable in our community and instead of attacking whole ethnic and religious minorities, why not try to build connections? Why start with hate? The Longman and Braddon by-elections demonstrated that the current rhetoric from the Liberals and Nationals isn't working. It does them no good and it definitely does our communities no good.
Senator STOKER (Queensland) (11:26): Oh, the irony! Labor proposes the Productivity Commission Amendment (Addressing Inequality) Bill 2017 to do what it says will help address inequality in this nation while simultaneously opposing the measures this government has been fighting for. The measures are all about getting people who are doing it tough a much better deal. Labor do it with a straight face, citing the statistics from the partisan Chifley Research Centre, an arm of the Labor movement.
Mr Shorten, peddling the lie that is the heart of envy and division, just will not cut it with Australians. It's a sad reflection of how Labor has fallen. In the 1980s, under Hawke and Keating, Labor focused on market based reform to grow Australia's economic pie. But today all that interests Labor is dividing that pie up and tearing others down.
Inequality has become something of an obsession for the current Labor Party. The consultation draft for Labor's national platform mentions the word 'inequality' some 49 times. It mentions inequality more than twice as often as other important themes such as living standards, wages or electricity prices. Under Mr Shorten's leadership, Labor has started singing from the same songbook as Mr Sanders in the United States or Mr Corbyn in the United Kingdom, peddling the politics of division and envy. Mr Shorten has nominated inequality as one of Labor's top economic priorities, should it win office next year, but the logic that underpins this plan is clear and scary. Put simply: it's that the path to making society fairer and more equal is to pull people down rather than lift everyone up. This regressive tax grab is not a positive plan. The outlook that animates this philosophy isn't optimistic; it's decidedly downcast. It's hard to see anything positive about a philosophy that's about punishing success rather than rewarding merit. To my mind, Labor's notion, that the best way we can improve the lot of others in life is through the heavy hand of government redistribution, is incredibly disempowering. When Mr Shorten says that inequality is creating a sense of powerlessness or is killing hope, what he's really saying is that Australians would be better off as dependents of a welfare state.
This bill is about entrenching the victim mentality that inequality in Australia is endemic. Listening to our Labor representatives when they are interviewed or when they speak in the chamber, you'd be forgiven for thinking that life in Australia has never been worse. Maybe all of those people lining up to migrate to Australia should be getting a warning about how bad it is here. Of course, we know that's not true. Australia is one of the best countries in the world to live. Interest in coming and living here from people overseas shows that it is a great place to make home. Often I'm asked by constituents about how I can help bring family members to this country, qualified always with the comment that this is the best country in which to live.
However, our capacity to remain the destination of choice for many people, and for all Australians, is dependent on our capacity to maintain a high standard of living and services that support a First World economy. The challenge for Australia is to maintain a high level of economic growth—growing our gross domestic product and creating jobs in the process. We live in a society that values personal endeavour and entrepreneurialism. It's this feature that leads to a growing economy and job creation.
The reciprocal of inequality, or the flip side of the coin, is equality. But what does it mean, and what is suggested to achieve it without killing off the incentive for personal endeavour? Some people in our society are going to become wealthy, but these people are the serious drivers of wealth creation for everyone. Their ability to identify opportunities and create jobs benefits all of us. It lifts all of us up. And, if some people think that taking money off some and giving it to others works, then they haven't studied a thing about the failures of socialism. Perhaps they need to compare the economic position and the quality of life of those in the former East Germany and West Germany. There's a reason people risked death to escape the east and its socialist paradise: it's because it doesn't work.
Labor seeks to, under Mr Shorten, take from those who create jobs, impose higher taxes and kill off the job-creating capacity of those who would otherwise invest in us. But it's worse than that: this pillaging of income is not restricted to the perceived wealthy. They also have their hand in the pocket of self-funded retirees and ordinary Australian families who have an aspiration to make a life that is better for themselves—to back themselves, to take a risk, to start a small business or to take on a local person as an employee. Once productivity is reduced and the incentive to improve your lot is removed, you'll see growth but it's inequality.
In any market based economy, sure, there will always be differences in what some people have and don't have. But let's get serious about the facts of the situation. What is the real level of inequality in Australia? And let's go to some real data, not the Mickey Mouse statistics cooked up by the intellectual arm of Labor Party and the Chifley centre. The HILDA Survey, the Household, Income and Labour Dynamics in Australia survey, produced by an arm of the respected University of Melbourne, that was released in July 2018 found that relative poverty is at the lowest point in the history of the survey while absolute poverty is close to record lows. From 2001 to 2016, the percentage of Australia's population in absolute poverty decreased not by a little but by approximately 70 per cent—down from 12.6 per cent to 3.6 per cent—while the percentage in relative poverty, with the poverty line set at 50 per cent of median income, fell from 12.6 per cent to 9.4 per cent.
All of the recent data supports the notion that income inequality measures in Australia have stabilised since the GFC. According to the ABS, the Gini coefficient, which many will know is regarded as the most reliable income inequality measurement—it represents the income or wealth distribution among a nation's residents and it's the most commonly cited measure of inequality for people within one country—fell from 0.333 in 2013-14 down a point in the 2015-16 year. The HILDA survey estimates there has been little net change in inequality from 2001 to 2016 with the Gini coefficient remaining stable. In 2016, the Gini coefficient reached its lowest level since 2005.
Here's another uncomfortable or inconvenient fact for those opposite: in 2015-16, 3.6 million Australian households received more in government payments than they contributed. That means 40 per cent of Australian households do not pay any net tax once you take into account the benefits they have received. By contrast, in 2015-16 the top 10 per cent of taxpayers paid 45 per cent of all personal income tax.
So now that we know that the situation is not the fake class war envy picture that's been painted by those opposite, let's get down to the practical stuff. The Coalition has a plan to strengthen our economy, which will continue to improve the quality of life for people who are at the rougher end of the equality spectrum. But it's not about taking from the top. This plan is about creating the right environment to lift everyone up, to help all Australians reach their full potential. Let's talk about some of the features of this plan. Australia has a progressive tax system, a broad social safety net and a welfare system that is one of the most well targeted in the world. It's worth noting that it's also the largest expense our nation's budget faces each year. This need to target our support well is part of the reason why we have reformed our aged pension system to give more to people who are living on the lowest incomes after a lifetime of contributing to our economy. We know that the best way to help Australians to get ahead is to ensure that every Australian who can work is able to get a decent job. That's why all our efforts are directed at growing the economy, getting more Australians into work and tightening the labour market to increase incomes for all right across the country. In contrast, Mr Shorten believes that for some to do better others have to do worse; others have to be punished. He wants to punish the job-creating parts of the economy.
The main thing we're doing to improve income equality is to generate jobs, because nothing helps people quite like going from not having a job to having good, stable work. The fact that 400,000 people have got a job in the last year for the very first time helps a great deal. This has been acknowledged by the Reserve Bank of Australia. A million jobs have been created—more than that—since this government came to office. In contrast, Labor has little to offer. It's abandoned any pretence of fairness or taking any real action to reduce the levels of poverty in Australia in favour of catchy slogans, political expedients and convenience. A party that once claimed to believe in needs based school funding now rejects the implementation of true Gonski based funding models in favour of a sequence of special deals that aren't fair and that cut different terms for different places. The Labor Party has no plan to grow the economy; rather, it wants to tax it to death, introducing new taxes on retirees, housing, investment, income for family businesses and savings. All businesses, small, medium and large, will pay, with the consequence that they won't be able to create as much opportunity for all of us. The Labor Party wrecks and resists, every step of the way, this strong economic plan to repair the budget, grow the economy and create jobs. It was Labor who opposed our tough measures to crack down on multinational tax avoiders when they opposed the 2015 multinational anti-avoidance legislation. Their great shame is to have voted for leaving $2 billion in the pockets of multinationals instead of supporting our efforts to deliver it to the budget bottom line to fund essential services for hardworking Australians. It's Labor who opposed our efforts to boost investment, to increase earnings and to grow the economy by their decision to vote against the Enterprise Tax Plan. It's a crazy thing, because Labor know, deep down in their heart, that all of those good things would be achieved if the enterprise tax plan could be implemented, because they've said it themselves time and time again. Mr Shorten said:
Reducing the corporate tax rate sees more capital flowing into our domestic economy, which will flow on to workers in the form of higher wages, thereby improving the standard of living.
Yet he did all he could to stop that improvement in the standard of living for Australians. How about the member for McMahon? He said:
It's a Labor thing to have the ambition of reducing company tax, because it promotes investment, creates jobs and drives growth.
And yet he too stands in the way of this opportunity-driving plan. The member for Rankin said last year:
Australia would go well out of a lower company rate than it is right now.
And he said:
You're right that Bill said that in the medium term it would be a good aspiration to have a lower company rate.
I could keep going on and on, but I don't think I need to.
The plan, they have made very clear, is one about which we should all be quite disturbed. It's a plan to reverse the legislated tax cuts for small and medium sized businesses and it's a plan to continue to deny the reductions in tax that we know will only deliver more opportunity for Australian people. It's Labor's plan that will involve higher taxes, higher deficits and a huge risk to the growth that has been seen in the economy in recent years. At the 2016 election, the Parliamentary Budget Office confirmed that Labor's election commitments would have resulted in higher deficits to the tune of $16.5 billion. Higher taxes, higher debt and higher deficits are the worst prescription you could write for the Australian economy. Labor are a AAA threat to our AAA credit rating. They do not have a single policy that would help a single business to invest a single dollar or create a single job.
On housing, Labor's plan is only for higher taxes, but we all know higher taxes don't build houses, they don't get young people into work and they don't encourage small business to take on a young person, give someone an apprenticeship or perhaps buy some equipment from a local business. Labor's plan is simply to tax more so that they can dole out more for the many more people who will require welfare because of their failure to grow this country. They've got no plan to address housing supply so that more hardworking Australians can own their home; no plan to help Australians fulfil their aspirations.
Our achievements in implementing a national economic plan stand in stark contrast to those opposite, who show no sign of waking up to the economic challenges facing hardworking Australian families and businesses. This bill needs to be rejected because it would entrench into the work of the Productivity Commission the kind of ideological nonsense that must be fought against, and that is the idea that we must think of Australians perpetually as victims and that we must be focused always on the politics of envy and division in thinking about equality and inequality when the real game is in growing opportunity and providing wealth and choice to all Australians.
Senator CAROL BROWN (Tasmania) (11:44): In Senator Stoker's own words: let's get serious. After that contribution, I'm sure that anyone listening to this debate would be completely mystified as to what the actual bill before us sets out to do. The Productivity Commission Amendment (Addressing Inequality Bill) 2017 asks that the Productivity Commission takes into account, in the exercise of its functions, regularly reporting on the extent of inequality in Australia. That's what it seeks to do. It's not about the politics of envy. It's not about, as Senator Stoker said in her contribution, pulling people down. It's about the Productivity Commission looking at, in their work, inequality. That's what it does.
Senator Stoker asks the Labor Party to get behind the government's proposals. Well, we didn't back the cash handouts to the big four banks, and we're not going to. We didn't back the billions of dollars cut from education, and we're not going to. We didn't back the hundreds of millions of dollars taken out of the health system, and we're not going to. So I would just like to say that I'm very proud to speak in support of this bill, because it attempts to raise awareness of one of the defining issues of the life of this parliament. Senator Stoker, in her contribution, also said that the issue around inequality was one that only the Chifley centre has been raising. What that tells me is that Senator Stoker certainly has not been listening, which means that she's like the rest of the Liberal senators and members—they're just not listening.
I want to explain to those listening exactly what this bill seeks to do. The Productivity Commission is more than just an advisory body. Its work sets out the national agenda and it provides a basis for substantial change. The Productivity Commission is not required to take inequality into account, although its enabling legislation currently requires it to have regard to a wide variety of factors, such as the need to promote regional development or to ensure development is ecologically sustainable, but there is no reference to inequality.
This bill raises the issue of inequality and requests that the Productivity Commission takes it into consideration in its work. Unfortunately, this bill is needed because inequality has been increasing in Australia. Perhaps the only silver lining to this growing problem is that inequality has now reached the point where this parliament can no longer ignore it. In fact, almost 75 per cent of Australians agree with the statement: 'Differences in income are too high.' Australians want to see something done about this. Behind the land of the fair go, it's only natural that Australians expect a certain level of equality. It's a part of our way of life. We believe that Australia shouldn't be a land of extremes; it should be a land where anyone has a chance of achieving happiness and prosperity. But that's the insidious thing about inequality: it erodes our opportunities and restricts our chances of achieving happiness. It undermines the very economic system that we seek to build in our free society.
That's why even conservative economic institutions such as the IMF and the OECD are all acknowledging the negative impact that inequality is having on economic growth, and they're acknowledging the threat that it poses to our standard of living. In a fiscal monetary report released last year, the IMF said that Australia has experienced amongst the highest growth in income inequality in the world over the past 30 years. Not only this, but the Director of Fiscal Affairs, Vitor Gaspar, went further and warned, 'Income inequality tends to be highly correlated with wealth inequality, inequality of opportunity and gender inequality.' Inequality of opportunity and gender inequality—at precisely the time when Australia is working to build a fairer, more open society that encourages equality across genders and across socioeconomic groups. Disparities in wealth and income threaten to harm the very gains that we are making in these areas.
Doubtless, that's why those opposite are against this bill. It's also why I commend Senator McAllister for bringing this bill before the chamber. It's also why I commend Senator McAllister for bringing this bill before the chamber. It shows a true appreciation for the nature of this issue and the tools that we have to address it. It shows an understanding of the need to act now and to use the resources that we have before are us to do what we can to fight against inequality.
As one of our leading economic analysis agencies, the Productivity Commission is an agency that performs a critical role looking at a range of different issues and the impact that these can have on industry and productivity more broadly. Indeed, in my own portfolio of disability and carers and the portfolio of the shadow cabinet minister, Linda Burney, it was the Productivity Commission that laid much of the economic foundation for the NDIS. It's the same Productivity Commission that has looked at markets and resourcing in this sector. It's this organisation that made a case for adequately resourcing the Public Service, rather than relying upon outdated principles such as the arbitrary staffing cap on the Public Service. It appreciates that a well-resourced public sector delivers highly effective public services and that it's public services that is can create a more productive and cohesive society. It's these public services that ensure that no Australian is left behind, that every Australian can rely on the basic social safety nets, so if they lose their job or they need access to essential medicines or live with disabilities, that we will be a society that will ensure that we have an adequate safety net.
That's why much of the Productivity Commission's work already looks at matters that counteract inequality, and that's why placing inequality at the core of what the commission considers is not only important but also a logical and achievable next step in the work of the commission. In last year's five-year productivity review, the commission called for reforms that promote 'the non-market economy and rebuilding confidence in public institutions'. The report argued that, and I quote:
… limiting inequality extends beyond its intrinsic value to the desirability of avoiding too great a dispersion in incomes, given evidence that this can, in its own right, adversely affect productivity growth. Public support is also more likely for reforms that offer benefits to the bulk of people.
It's clear that the commission already appreciates the importance of inequality and of acting now to limit its impact on society.
It's clear that, unlike the claims of those opposite, this bill would not lead to the imposition of an onerous burden of one of our leading economic institutions. Instead it would simply ensure that inequality would be a cross-cutting consideration for future analysis done by the commission. It would ensure that future commission reports would not just consider inequality but also propose real actions that current and future governments can take to address this problem. As the report noted:
Public support is also more likely for reforms that offer benefits to the bulk of people.
This bill would help governments develop a reform agenda that is not only sensible and important but also well supported in the public. With more than 15 per cent of Australians living in the lowest income quintile with three or more chronic illnesses compared to only six per cent of those living in the highest quintile, Australians understand the pervasive effects of inequality and they expect political leaders to address this.
Certainly, economic growth is important. It's a necessary but not sufficient step for addressing some of the challenges that we face. As Australia continues into its 27th year of uninterrupted growth, it unfortunately continues a 75-year high for inequality as wealth at the top grows more rapidly elsewhere in society. It's not enough to simply note that this is a problem. It's not enough even to write reports that acknowledge and assess the scale of the challenge. But, without beginning, at least at this point, how will governments know where to begin? This bill grants the commission licence to delve deeply into the matters of inequality. If we look at the topics assessed currently, we see that so many of these are challenges that are only exacerbated by inequality.
Currently, the commission has inquiries being undertaken across the fields of disability, superannuation, veterans affairs and transport. In literally every single one of these areas, inequality ensures that challenges faced by Australians are particularly difficult for the less advantaged Australians. Those opposite would argue that this is no problem—that, to counter this, all we need to do is focus on jobs and on economic growth. But that's to miss the point entirely. Without addressing inequality, one cannot solely focus on jobs or on growth. We've seen how, despite 27 years of economic growth, incomes for those at the bottom have almost entirely stagnated, with earnings for the top 10 per cent rising nearly four times faster than for those in the bottom 10 per cent. That's why ignoring inequality isn't just a bad idea—it's self-defeating.
To try and create good jobs and create equality of opportunity means necessarily working to fix the issue of inequality. Labor has long been a party that calls for exactly the kinds of policies that work to close the gap on inequality. I'm proud to be part of a party that brought Australia Medicare and the NDIS and that supports universal education. I'm proud that Labor members and senators have already been advocating for policies that fight against inequality for many years. That's why this bill is the continuation of a long and proud policy tradition.
This bill seeks to extend the research base and the economic foundations of much of what we do. It seeks to ensure that our public institutions place this topic at the centre of their policy development and work towards a more equal Australia. This bill acknowledges that, without fighting inequality, much of what we seek to do in this parliament is made more difficult. It acknowledges the critical work of our public institutions and seeks to build on the work of the Productivity Commission to ensure that its work remains relevant to the evolving challenges that we face in the 21st century. I commend this bill to the chamber, and I'm proud to be able to vote in support of this bill.
Senator BROCKMAN (Western Australia) (11:57): There were so many straw men from Senator Urquhart and Senator Brown that I was wondering whether we were in Oz rather than Australia. There are a couple of real fallacies in the proposition that those opposite have put forward in this bill, and I'll address them both. One is the issue of inequality and equality itself. There are some real fallacies around that. There's some real cherrypicking of the data, some deliberate misunderstanding of the economics of equality and inequality and a misuse, politically, of those, which is why Senator Stoker was exactly right when she described this as just more of the politics of envy from those opposite.
The other serious fallacy we have here is that the Productivity Commission is in any way constrained in looking at these issues. In fact, the Productivity Commission has looked at these issues very recently and in great detail. The Productivity Commission was central to the creation of the NDIS. At the core of the Productivity Commission report was the issue of equality and access to services in our economy by people with a disability. The idea that the Productivity Commission is hamstrung in any way is such a nonsense that it reveals what is at the core of this bill and what the reason is that this bill is being put forward by those opposite. That reason is that it plays into their very tired narrative of class warfare, of trying to create divisions in society and of trying to present themselves in a certain way as defenders of the poor when, in actual fact, what this government knows, and what this government has acted on very clearly, is the clear knowledge that opportunity is vital. Jobs and work are a source of opportunity and dignity for people, and creating jobs is the most valuable thing that an economy can do for all its citizens.
So what does the Productivity Commission do? The Productivity Commission is tasked to:
… conduct public inquiries at the request of the Australian Government on key policy or regulatory issues bearing on Australia's economic performance and community wellbeing.
Community wellbeing is what the Productivity Commission is tasked to look at. The idea that the Productivity Commission does not look at issues of equality and inequality when looking at economic issues is a blatant effort to mislead. It's just a nonsense, as I've said. The Productivity Commission has a long and proud track record of tackling issues that have proven to be very difficult. It has cast light on serious economic inefficiencies in our society and has given governments of all colours a chance to address serious issues about the economic structure of Australia— to improve that structure to give more people an opportunity and to give more people the chance to get a job and live their lives to their maximum potential. The Productivity Commission should not be interfered with in a political way, as this bill seeks to do. It pushes a particular line that is currently the flavour of the month with the Labor Party but adds very little to the debate on the future of the Australian economy—the future of helping the most people make the most out of their lives.
One of the key points that's been missed here—and I believe it was Senator Brown who talked about this—is that Australia is not a land of extremes. I agree with that. Australians in the main take a very middle-of-the-road approach to these things. But, in that light, it's important to always remember that the top 10 per cent of taxpayers actually pay 45 per cent of the income tax collected. I've said it before in this place, and I'll repeat it: the top 10 per cent of taxpayers pay 45 per cent of the income tax collected. We have a highly redistributive economy from those who can to those who need the assistance. After taking into account government benefits, 45 per cent of households do not pay any net tax. We have a highly redistributive system that enables a society that is fair and that gives people opportunity, and that is something that all Australians value. But if you listened to those opposite, you'd think the opposite was the case; you'd think that the top 10 per cent of taxpayers pay 10 per cent of income tax when, in actual fact, the pay 45 per cent.
Those on this side understand that the quickest way to equality of opportunity, to people realising the most out of their lives, is to be able to get off welfare and get into a job. That's why we've done things like reinvigorate the Work for the Dole program. There are 71,000 participants. That's why we've trialled things like the cashless welfare card, trying to assist people in breaking cycles of dependency—welfare dependency, alcohol dependency, drug dependency, potentially gambling dependency—to be able to get their lives to some semblance of order so they can move into the workplace, get a job and get the dignity that flows from being at work as well as, obviously, the income.
We recently passed the cashless debit card trial expansion bill, which added the Bundaberg and Hervey Bay region as our fourth trial site and expanded the total number of participants up to 15,000. That's a wonderful opportunity to look at something new in a space that has proven to be very intractable and to try to make some positive change. These are trials. They will be evaluated. Nobody has pretended that cashless debit cards are a silver bullet, but initial reports from the trial sites where it has been ongoing have been positive. I've been to the trial site in the Goldfields a number of times over the past 12 months, and we continue to get very positive reports on the ground. I look forward to seeing the full evaluation of those trial sites in the future. In Bundaberg and Hervey Bay, this is particularly important because it's targeting a younger cadre of people, who are exactly the sort of people we do not want to get locked into a cycle of welfare dependency. It is the most destructive cycle that families can enter, being dependent on welfare for multiple generations. It reduces their opportunities, it reduces their potential for the future and it is a cycle that we need to break, and this government has done some remarkable work in breaking it. Let's just go briefly to the job figures.
When this government came into power, we said we had a goal of creating a million new jobs within five years. In fact, we delivered that, with the economy creating, as of September 2018, 1,144,500 jobs. Over half of these were full-time jobs and the vast majority of all these jobs were in the private sector. These are real jobs for real people that have taken people off welfare, given them hope, given them opportunity, reduced their risk of ongoing welfare dependency and generational welfare dependency, which is so clearly proven to be such a destructive thing for families and individuals. Those one million-plus jobs represent hundreds of thousands of families that now have an opportunity they did not have before those jobs were created.
In 2017 alone, 412,000 more jobs were created, the most jobs created in any calendar year on record. Recent ABS figures show 95,000 jobs for the 15 to 24-year-old age group being added in the year to June 2018—again, the strongest result for a financial year since 1989. This is a track record of really addressing inequality by giving people opportunities, by giving people a chance to change their lives, to get into the workforce. The unemployment rate has declined to 5.3 per cent—the lowest level since 2012, below the levels inherited from the Labor government in September 2017. Youth unemployment is at its lowest level in over six years. Again this is down on the level we inherited in September 2013. We would all love both these rates to be lower. We would all love to see particularly more young people in work. But the fact is that these are very positive numbers and particularly add to a positive trend of creating jobs, getting people off welfare and getting people into work. Senator Brown also talked about gender inequality, but in actual fact recently released statistics show that the gender pay gap continues to narrow, particularly for graduates, so we're seeing clear progress on that area.
I think one of the key things about tackling intergenerational dependency, particularly with at-risk groups, is it not only changes lives—a job changes a family's future—but it also significantly impacts the budget bottom line, which, in turn, frees up money for important things that the government does need to spend money on, and it also frees up money for very important tax cuts to make sure our economy remains efficient.
The latest data released in July 2018 revealed the reduction in the number of people accessing welfare payments has led to a $43 billion decrease in Australia's total future lifetime welfare costs. And I will repeat that number—a $43 billion decrease in total future lifetime welfare costs because of the trajectory that this government has created in our welfare roles. By putting people back into work, we've obviously taken people off welfare and that in turn flows into a budget bottom line improvement of, in this particular area, $43 billion in total lifetime welfare costs. That is a significant amount of money. But it's not just the money that matters. What really matters is the fact that that $43 billion decrease in total future lifetime welfare costs represents individuals and families who have now got a chance in the economy that they did not have before. They've got a chance to break out of the cycle of generational welfare dependency to get them and their families back into a position where they're have much more control over their own lives and are able to play an active part in economic life. That is a very positive thing, and there's plenty of evidence to show that one of the most important things you can have for health, mental health and future opportunities is to be in the workforce.
When we're talking about inequality, it is important again to recognise the fact that Labor are running what is a highly political line in this area. So, they can't pretend they come to this with clean hands and, 'Oh, it's just about giving the Productivity Commission the power to look at inequality, a power that clearly it already has.' They are running a highly political line trying to reinvent and reinvigorate class warfare and the politics of envy that, quite frankly, I thought had been relegated to the long-distant past.
The fact that we're back having the same debates that were had in the 1970s is almost too hard to believe, but that's where we are with the current Labor Party. We are pretending that the current level of redistribution in the economy isn't there when, I'll say it again: 10 per cent of taxpayers pay 45 per cent of income tax. We're trying to pretend that we don't have an economy that is heavily geared towards giving people a chance for support while they get their lives back in order and get a job. We ignore the fact that this government's created a million jobs-plus, giving people opportunity and hope by doing so. Instead, we play the class warfare card; we play the politics of envy.
The McKell Institute and the ACTU have both recently released reports about rising inequality in Australia. The McKell report claims that inequality in Australia is at a 75-year high, and I believe that statistic was quoted by one of the senators opposite earlier today. Again, this is a completely meaningless indicator of outcomes—a 75-year high. When my dad was a boy, and I talked about this last week, he rode a horse to school. There was no electricity on the farm. What there was we generated ourselves. The idea of having an electric refrigerator was something that was a dream well into the future. Go back 10 generations and a very large part of society was actually growing the food they needed to live.
How do you judge equality or inequality in a society where one person theoretically owns or controls everything in that society, which is exactly what you had under absolute monarchs and was the norm not that many generations ago. The idea that a simple measure of equality of income which takes into account nothing to do with standard of living and nothing to do with access to goods and services in society—like Medicare, a free education system, access to health, access to many services in society that we all support—we all take for granted to some degree. But we have to factor these things in when we're talking about equality. We cannot simply look at basic measures of income which reveal nothing about the way people live their lives. It's only 20 years ago that none of us had a mobile phone to use in the way that we use them today. It's extraordinary to think how things have changed just in the last 20 to 30 years. If you go back even—we're talking about the McKell report—75 years, it was a completely differently structured economy and a completely different level of opportunity and standard of living. That is not taken into account by this rhetoric of envy, this rhetoric of class warfare or this rhetoric of the haves and the have-nots and the big end of town. The methodology involved in these kinds of reports ignores non-monetary transfers, provision of health care, provision of education and provision of infrastructure. This government is investing $75 billion into infrastructure. It completely ignores that and all the other services that are provided by government.
What are some of the other lines that are being run? One is that the minimum wage is declining. That is demonstrably false. Since 1998 the minimum wage has increased by more than 20 per cent in real terms. In fact, Australia has the second-highest minimum wage in the OECD. There's also plenty of data that says that wealth inequality in Australia is not rising. There's a recent report from Credit Suisse saying that Australia has the third-most equal distribution of wealth in the developed world, behind only Japan and Belgium. I said this last week and I will say it again: this is hardly a crisis. The facts do not support the conclusion that inequality is on the rise in Australia. This bill is just another signalling attempt from those opposite to try and raise these issues to try and raise an ugly class-warfare mentality back into the Australian political debate which, I think, we'd all hoped had been well and truly relegated to the past.
Senator DEAN SMITH (Western Australia—Deputy Government Whip in the Senate) (12:14): I'm also—'delighted' might be too strong a word—interested in making a contribution this morning on this private senator's bill, the Productivity Commission Amendment (Addressing Inequality) Bill 2017. This bill seeks to do a number of things. It seeks to utilise the excellent resources at the Productivity Commission to bring attention to what is an important issue in our country—no-one is denying that—which is the issue, or suggestion, of rising levels of inequality.
My contribution is brief, but I look forward to continuing this when we next debate the private senator's bill. It is an interesting bill. I don't doubt Senator McAllister's motivation with regard to this, but there are a number of important points. Firstly, the bill is technically flawed—I'll come to that in a moment. Secondly, the bill is thematically flawed. Thirdly, it's interesting that none of the contributions from the Labor senators this morning have drawn attention to the very recent work—in just the last few weeks—and findings of the Productivity Commission on the issue of inequality. It's very interesting that none of them have sought to draw attention to the work the Productivity Commission publically released only a few weeks ago on the issue of inequality in our country, or, importantly, that none of them have sought to draw attention to the very clear findings that the Productivity Commission made.
That report, released in the last few weeks by the Productivity Commission, was called Rising inequality? A stocktake of the evidence.What that Productivity Commission led report sought to do was put light on some of the myths that have been allowed to abound in what has become a very significant and important political campaign. Indeed, we heard from Senator Brown that the issue of inequality is a campaign priority. It's a campaign emphasis of Bill Shorten's, the Leader of the Opposition's, attempts to get into the Lodge and win the next election.
What was it that that Productivity Commission report actually said? It said five important things. The first was that, over the last three decades, inequality has risen only slightly in Australia. Secondly, it's said that sustained growth has delivered significantly improved living standards for the average Australian in every income decile. Thirdly, it said Australia's progressive tax and highly targeted transfer system substantially reduced inequality in our country. Fourthly, it said that economic mobility is high in Australia, with almost everyone moving across the income distribution over the course of their lives. Fifthly, it said some Australians do experience entrenched economic disadvantage.
Debate interrupted.
BUSINESS
Consideration of Legislation
Senator SESELJA (Australian Capital Territory—Assistant Minister for Treasury and Finance) (12:20): by leave—I move:
That the provisions of paragraphs (5) to (8) of standing order 111 not apply to the Tobacco Plain Packaging Amendment Bill 2018, allowing it to be considered during this period of sittings.
I also table a statement of reasons justifying the need for this bill to be considered during these sittings, and seek leave to have this statement incorporated in Hansard.
Leave granted.
The document read as follows—
STATEMENT OF REASONS FOR INTRODUCTION AND PASSAGE IN THE 2018 SPRING SITTINGS
TOBACCO PLAIN PACKAGING AMENDMENT BILL 2018
Purpose of the Bill
The purpose of the Bill is to widen the scope of persons that can be appointed as authorised officers under subsection 81(1) of the Tobacco Plain Packaging Act 2011 (the Act).
Under subsection 81(1) of the Act, the Secretary of the Department of Health (Secretary) may appoint the following persons as authorised officers:
a. a person who is appointed or engaged under the Public Service Act 1999 (PS Act);
b. a member or special member of the Australian Federal Police.
Under subsection 81(2) of the Act, the Secretary may appoint these persons as authorised officers under subsection 81(1) of the Act only if the Secretary is satisfied that the person has suitable qualifications, training or experience.
The proposed Bill would enable other persons with suitable qualifications, training or experience in addition to those currently listed in subsection 81(1) of the Act, to be appointed as authorised officers by the Secretary if needed and agreed. This would extend the persons who the Secretary may appoint as authorised officers to:
a. a person appointed or engaged other than under the PS Act, by the Commonwealth or a Commonwealth entity (within the meaning of the Public Governance, Performance and Accountability Act 2013);
b. a person appointed or employed by a state or territory with responsibilities in relation to health matters or compliance and enforcement in tobacco control matters;
c. state and territory police officers; and
d. local government officials with responsibilities in relation to health matters or compliance and enforcement in tobacco control matters.
Reasons for Urgency
Passage of the Bill in the Spring 2018 sitting period will provide administrative certainty for staff affected by potential organisational and administrative changes and will provide more immediate flexibility in responding to potential non-compliance with the Act should it be required.
(Circulated by authority of the Minister for Regional Services, Sport, Local Government and Decentralisation)
Question agreed to.
BILLS
Treasury Laws Amendment (Black Economy Taskforce Measures No. 1) Bill 2018
Second Reading
Consideration resumed of the motion:
That this bill be now read a second time.
to which the following amendment was moved:
At the end of the motion, add:
", but the Senate:
(1) notes:
(a) the explanatory memorandum to the Anti-Money Laundering and
Counter-Terrorism Financing Bill 2006 forecast a second tranche of legislation that would regulate real estate agents, jewellers, and a range of non-financial transactions provided by accountants and lawyers;
(b) in April 2016 the government released the statutory review of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 that contained a recommendation for the government to develop options for regulating lawyers, conveyancers, accountants, high-value dealers, real estate agents and trust and company service providers under the Act;
(c) the government commenced consultation on the regulation of lawyers, conveyancers, accountants, high-value dealers, real estate agents and trust and company service providers under the Act, and submissions to this consultation closed in January 2017;
(d) the Financial Action Task Force's April 2015 Mutual Evaluation Report on Australia's measures to combat money laundering and terrorist financing stated that Australia is an attractive destination for foreign proceeds of crime, particularly corruption-related proceeds flowing into real estate;
(e) the December 2017 OECD Phase 4 Report on Australia's implementation of the OECD Anti-Bribery Convention recommended that Australia address the risk that the real estate sector could be used to launder the proceeds of foreign bribery; and
(2) calls upon the government to introduce legislation that would address money laundering through real estate."
Senator SESELJA (Australian Capital Territory—Assistant Minister for Treasury and Finance) (12:21): Before I sum up, I thought I would to take the opportunity to respond to the Greens' second reading amendment, which the government will be opposing. This amendment calls upon the government to introduce legislation by the end of 2018 to regulate lawyers, conveyancers, accountants, high-value dealers, real estate agents and trust and company service providers under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006. The amendment does not directly relate to the measures contained in the bill. The government will be opposing the Greens' amendment, and I will go into some of those reasons before I sum up.
Australia has a strong and effective regime for combatting money laundering and terrorism financing, but there is more work to be done to strengthen our ability to prevent, disrupt and prosecute this and other criminal activity. The effectiveness of our regime was supported by findings of the 2015 FATF mutual evaluation, which found we have strong institutional frameworks and an overall effective regime. The statutory review of the AML/CTF Act tabled in 2016 contained 84 recommendations to improve the regime, including recommendations to create a more efficient and effective regulatory framework. These recommendations were aimed in part at addressing feedback from industry through the consultation process that the existing regime is complex, which can make it difficult for some regulated businesses to understand their obligations.
The government is committed to working closely with industry to make the regime as efficient as possible while continuing to meet Australia's international AML/CTF obligations. The government has commenced implementing the statutory review recommendations on a phased basis to ensure time for proper consultation with industry and other stakeholders, and to avoid regulatory fatigue. It would not be a sensible approach to extend the current regime to new sectors while the regime is undergoing reform. The government passed the first phase of reforms to Australia's AML/CTF regime in December 2017, which saw the expansion of the regime to regulating cryptocurrency exchanges in response to the high money-laundering and terrorism risks inherent to the sector.
The next phase of reform is scheduled for introduction late in the current sittings of parliament. It is proposed these reforms will include provisions to enable non-regulated entities, including tranche 2 entities, and members of the public to provide 'suspicious matters' reports to AUSTRAC. They will provide greater flexibility for industry to rely upon customer identification and verification procedures undertaken by a broader range of Australian and foreign entities, thereby enabling industry to reduce some of the associated regulatory cost. And they will include a rewrite of the complex and cumbersome provisions governing access to and use of AUSTRAC's financial intelligence. The Australian government is committed to ensuring that Australia has a robust AML/CTF regime to support our law enforcement and national security agencies in the fight against money laundering, terrorist financing and other serious and organised crime. So, for all of those reasons, the government will not be supporting the Greens' second reading amendment.
In summing up debate on the bill, I want to again thank senators for their contribution to this debate. These measures are very much about addressing the growing economic and social problem of the black economy, as established in the Black Economy Taskforce interim report as part of the 2017-18 budget. When we're talking about the black economy, we are talking about activities and transactions which happen outside the usual tax and regulatory regime. These activities might include cash-in-hand jobs that have the purpose of avoiding tax; not reporting or underreporting income; underpayment of wages; money laundering; counterfeit goods; illegal phoenixing; and identity fraud.
The Black Economy Taskforce was established in 2017 to examine the operations of the black economy in Australia and develop a forward-looking, multipronged policy response, recognising—and this is a very important point—that these issues cannot be tackled by traditional tax enforcement measures alone. As important as they are, we need a special and particular response to this challenge. The task force estimates that the black economy could have doubled since 2012, to now represent up to $50 billion in 2015-16 dollars. That's $50 billion in the black economy which isn't subject to the usual taxation arrangements, and therefore is being cheated from the Australian public, which could be offered for tax relief and offered for the delivery of services in other areas.
This represents not only a loss of revenue to the government but also a penalty on Australians who do the right thing and pay their taxes and don't avoid taxes in this way. It penalises them because it creates an uneven playing field for business, because unscrupulous businesses operating in the black economy can undercut their competitors who are following the rules. That has a negative impact on the viability of those businesses doing the right thing and on the livelihoods of the people who run them as they struggle to remain profitable and compete with those who are cheating the system.
The black economy undermines community trust in the tax system, gives some businesses an unfair advantage, puts pressure on the margins of honest businesses, and often includes the exploitation of vulnerable employees through the underpayment of wages and the loss of entitlements. The underpayment of wages and loss of entitlements are elements of the black economy that are a particular concern. Too often vulnerable employees are taken advantage of by people who are trying to dodge the system, and that can have profound consequences for those employees. This bill directly addresses two of those key concerns: firstly, avoiding tax by hiding income and, secondly, helping employees in certain sectors by ensuring their payments are reported to the Australian Taxation Office.
Schedule 1 to this bill bans the manufacture, distribution, possession, use or sale of sales suppression technology. This technology has no legitimate use and allows businesses to hide their income—and we don't apologise for the very stiff penalties that are attached to some of these offences. These tools remove transactions from electronic record-keeping systems. They change transactions to reduce the amount of each sale and they can modify GST taxable sales to non-GST taxable sales. In all instances, no audit trail of the changes made exist. The fact is that this technology is used solely for the purposes of tax evasion, and we are introducing new offences that are subject to heavy penalties to deter their use. These new offences will restore integrity to the tax system.
Schedule 2 to this bill extends the taxable payments reporting system to contractor payments in the high-risk courier and cleaning industries. This will ensure that payments made to contractors are reported to the Australian Taxation Office. From 1 July 2018, businesses in the courier and cleaning industries will be required to give an annual report to the ATO regarding the payments they make to businesses for them to provide courier or cleaning services. The reporting obligation will apply from the 2018-19 income year and reports will be required by 28 August 2019. The measure is estimated to result in tax receipts of $132 million over the forward estimates.
Implementation of a taxable payments reporting system in the building and construction industry resulted in improved contractor tax compliance and reporting of income. The government is extending this reporting system to other high-risk industries. The ATO has prepared guidance material to assist businesses in the courier and cleaning industries to comply with their reporting requirements, and these amendments will bolster the integrity of Australia's tax system. They are important steps in dealing with the unique problems posed by the black economy and will be vital to improve our tax system. We in the coalition believe in lower and fairer taxes, but we don't believe that paying tax is an optional extra. We believe everyone should pay their legal requirement and their fair share.
These measures also build on action we've already taken, such as the work done with states and territories to combat illegal gambling and the introduction of strong new penalties that apply to employers who dodge their obligation to pay the superannuation guarantee for their employees. We also legislated against GST fraud in both the precious metals industry and the new residential premises construction sector. We understand in the coalition that combatting the black economy is a big job that requires long-term reform and it is reform that needs the support of the wider community. We will continue to work with all of the relevant stakeholders in addressing this very significant issue. I hope that this bill will pass this chamber and we can take this big step forward in combatting the black economy. I want to once again thank senators for their contribution. I commend the bill to the Senate.
The PRESIDENT: The question is that the second reading amendment moved by Senator Whish-Wilson be agreed to.
The Senate divided. [12:36]
(The President—Senator Ryan)
In Committee
Bill—by leave—taken as a whole.
Senator POLLEY (Tasmania) (12:40): On behalf of Senator Cameron, I move the opposition amendment on sheet 8442:
(1) Page 2 (after line 11), after clause 3, insert:
4 Review of operation of amendments
(1) The Minister must cause a review of the operation of the amendments made by Schedule 1 of this Act.
(2) The review must start as soon as practicable after 2 years after Royal Assent.
(3) The Minister must cause a written report about the review to be prepared.
(4) The Minister must cause a copy of the report to be tabled in each House of the Parliament within 15 sitting days of that House after the day on which the report is given to the Minister.
(5) The report is not a legislative instrument.
Labor is moving this amendment due to some relatively minor concerns about enforceability of measures in schedule 1. We believe a post-implementation review is warranted. Some stakeholders have raised concerns about defence provisions and strict liability for administrative penalties, including for people who may reasonably be in complete ignorance. Whereas criminal offences have overarching general defences for genuine mistakes, administrative civil penalties do not. However, in practice, the Commissioner of Taxation is only likely to impose civil penalties in genuinely gross cases. The Commissioner of Taxation has scope to remit penalties in cases of genuine mistakes.
Stakeholders have also raised concerns about the ATO's ability to enforce the provisions. The Treasury has said that the commissioner is presently undertaking live investigations into alleged sales suppression software. Neither Treasury nor the ATO have estimates on how prolific such software is. As Senator Cameron noted in his speech on this bill, the expansion of the TPRS and the rise of contractors and gig-economy work warrant greater inspection of the interaction effects of the measures of schedule 2.
As the amendment Labor is putting forward states, Labor would like a review of the operation of the amendments in this bill. The amendment requires:
(1) The Minister must cause a review of the operation of the amendments made by Schedule 1 of this Act.
(2) The review must start as soon as practicable after 2 years after Royal Assent.
(3) The Minister must cause a written report about the review to be prepared.
(4) The Minister must cause a copy of the report to be tabled in each House of the Parliament within 15 sitting days of that House after the day on which the report is given to the Minister.
(5) The report is not a legislative instrument.
This is a responsible amendment that strikes the right balance between evidence based policymaking transparency and ensuring that the measures before us are passed by parliament in a timely fashion.
Senator SESELJA (Australian Capital Territory—Assistant Minister for Treasury and Finance) (12:42): I thank Senator Polley. The government doesn't believe that this amendment is necessary, though it will be supporting it to facilitate the passage of this bill and this very important legislative change. The amendment as outlined by Senator Polley would, of course, force a review after two years and cause the minister to cause a written report about the review to be prepared and tabled in each house of parliament within 15 sitting days of the report being given to the minister. We will be supporting the amendment, though, as I mentioned, we don't believe that this review is necessary as there is no legitimate reason to possess and use sales suppression software. However, we do want to see the important measures in this bill go through.
We thank the opposition for its support of the bill as a whole. In order to make sure that what is a very important bill is able to go through, with very important measures for dealing with the black economy and ensuring that we don't have people able to simply dodge taxes or, in some cases, use very sophisticated means to dodge taxes through sales suppression technology, we will be supporting this amendment. We look forward to the hopeful passage of this bill.
Senator IAN MACDONALD (Queensland) (12:44): I have a slightly different approach to this than the minister. I appreciate the minister's contribution to the debate. Can I congratulate Senator Polley on one of the more useful and positive speeches that I've heard from the opposition for some time. Senator Polley has a very sensible approach and I think that qualifies her for greater things and perhaps she should be part of Australia's delegation to some international forums, where she could make an equally positive contribution. But the idea of having a review after a couple of years, I think, is a very valid one because not always does legislation get it 100 per cent right. As I understand the amendment—and I want to ask some questions about that shortly—the review proposed has some merit in letting the parliament have a look at it again, having an independent group look at it and make recommendations.
It is pleasing to see support across the chamber for this approach to dealing with the black economy. Over my long years, I have seen examples of people trying to avoid paying taxation, people thinking they're clever in somehow avoiding tax by being part of the black economy. Whilst those who participate in it might consider themselves clever and, indeed, fortunate—and a lot of people, I suspect, would think that they're beating the system so therefore it has to be good—of course, what that means is that the rest of us who pay tax religiously, on time and without any sort of reduction, end up paying those additional taxes which the black economy deprives the country of. And while, like death, tax is inevitable, we do need taxes to actually make Australia work the way we want it to.
We'd never have a National Disability Insurance Scheme if we didn't have sufficient taxes to pay for that scheme. I'm conscious that when the Labor Party first thought of the NDIS, they had no idea of how it was going to be paid for and, fortunately, a change of government brought forward a government that not only endorsed the National Disability Insurance Scheme but actually started work for the first time on how the nation would pay for it and that's an important part of the process. It's alright having great ideas if there's no suggestion of how it's going to be paid for, and you see that all too often. Dare I say, with some political parties in this chamber, you see politicians making these grandiose promises that look good to the average voter. They might say, 'Yes, that sounds like what we want,' but, unfortunately, very often the ordinary voter doesn't understand that these promises, whilst they're fine, have to be paid for by someone and the only way that you can pay for them is by increasing taxes or by deferring payments to other very worthwhile projects. We have lots of examples of that. I know, in North Queensland, Mr Shorten breezes in there on a FIFO visit, announces some grandiose policy that is populist, will be immediately accepted and will get a headline in the local paper, but rarely does he ever say where the money is going to come from and, regrettably, some of the minor parties are very much like that as well. If you read some of the Greens political party policies—and you'd only do that if you were suffering insomnia—you'd see that whilst, superficially, they're not bad and they would attract some populist support, when you ask the question: 'Well, how are we going to pay for that?' Rarely, do you get a sensible answer. You do get an answer, which is, 'Tax everybody more.' But that's said by a party who will never be in government and will never have the responsibility of actually paying for the promises they make.
I must say, just diverting ever so slightly, up my way we have a former parliamentarian, Mr Palmer, in and around the north at the moment, and very often—like every five or six minutes on a TV ad in the local TV media in Townsville—he's talking about a couple of things, one of which is a zone taxation policy. I always say that repetition and plagiarism is a great form of complement, and I'm delighted that Mr Palmer is talking about a zone tax system after I've raised it quite a number of times in this chamber. I've made a very detailed submission to the Prime Minister and the Treasurer about upgrading the zone tax rebate scheme. But Mr Palmer has a proposal, which he does in a very clever 10-second grab in an advertisement. He wants a zone tax payment so that everybody who lives more than 200 kilometres from a capital city pays 20 per cent less tax. That's a great initiative. I have to say, lest my words be misconstrued at some time in the future, that I say that cynically and ironically. Twenty per cent less tax for people living, for example, in Noosa, a beach resort north of Brisbane in my home state. It was a very interesting thing. Of course, it's easy to say to all Australians who live more than 200 kilometres from a capital city, 'Your tax is going to be 20 per cent less.' It sounds like a great policy. Why wouldn't you vote for a man who was promising that? But then the question remains: who pays for it? Does that mean that people who live within the 200 kilometre radius that Mr Palmer is currently talking about pay 20 per cent more? Or do we cut back on our defence forces? Do we cut back on our border security? Do we limit the National Disability Insurance Scheme? Do we limit some of the extensive taxpayer contributions that have gone into developing northern Australia? Do we limit the contribution the Commonwealth government is making to the Rookwood Weir near Rockhampton? All of these questions come up. We have to ensure that the revenue is protected and that the revenue authorities get what is justly and lawfully theirs.
That brings me back to this bill, which is an attempt by the government, with the support of the Labor Party, I see, to try to address the black economy to make sure that all those that are paying tax or that should be paying tax do actually pay tax on their earnings. Having said that, I do want to ask Senator Polley about the idea of the review. I don't have the amendment in front of me, unfortunately, but the review, as I understand it, was to be by an independent group. I'm wondering if Senator Polley might be able to explain to the Senate what the Labor Party has in mind? Will it be one of the major finance firms? Will it be a departmental investigation? Will it be an independent investigation? Who will the people be? As I say, I think the idea is a good one, but I'm wondering what the implementation process of this review might be? Will submissions be sought from the Australian public and from particular stakeholders?
How will this actually happen? I repeat: I think it's a good idea, but I would just like a little bit more information on how Senator Polley suggests that the review might be conducted. Who will be consulted and what sort of professional or technical input will be made into the review?
Senator POLLEY (Tasmania) (12:55): It's envisaged that there will be the normal sorts of processes that would be determined around a review like this. We haven't gone into the detail as to who would undertake that review, but we do see it as being advantageous to ensure that there is a review after a two-year period. I would expect that the government would carry out that review with somebody independent, as they normally do in ascertaining who would be best served to do that review.
Senator ANNING (Queensland) (12:55): I rise today to argue against the Treasury Laws Amendment (Black Economy Taskforce Measures No. 1) Bill 2018. This bill creates a new offence relating to so-called electronic sales suppression tools, by which the government means hardware and software which can be used to falsify electronic sales records. Specifically, these new offences are for the production, supply, possession or use of these devices.
The TEMPORARY CHAIR ( Senator McCarthy ): Excuse me, Senator Anning. Just to remind you, we're actually on the amendment that's been moved.
Senator ANNING: I know that. It's an amendment to an amendment. But, after the division, I won't have a chance to speak on it.
The TEMPORARY CHAIR: Go ahead.
Senator ANNING: I do not oppose this bill because Katter's Australia Party disagrees with the government seeking to clamp down on the black economy. We fully support the government's right to do this. I oppose this bill because the philosophical approach that it takes to the problem is wrong and runs roughshod over the rights of innocent people. This bill is bad because it removes the assumption of innocence for owners of software by imposing a strict liability associated with mere possession of something which can be used to break a law. Once again, this government shifts the line of criminality away from a criminal act to the capacity for a criminal act. I'm afraid to say that this kind of 'deemed offence' is becoming a hallmark of governments in recent times. Deeming people to be guilty simply because they have the capacity to do something unlawful makes for sloppy policing, because, instead of actually having to prove that an offence has occurred, you can just round up everyone who might do so in the future.
This is presumably the reason that the government has framed the legislation this way. However, this lazy approach to an easy enforcement has a cost, which is to criminalise otherwise innocent people who had no intention of subsequently committing a crime. Apparently unwittingly, just to make lazy law enforcement easy, the government is undermining the rights of the innocent. Like assigning collective guilt, the deeming of guilt of those who have taken no action for which they could be charged was a hallmark of the oppressive Soviet justice system, and its increasing incidence in Australia is alarming. In the Soviet legal system, the subject of deemed offences was central, because once accepted as a principle technically anyone might do anything, and, thus, the arrest of anyone in society is justified. That was, of course, exactly what the Communist government wanted.
Today in Australia, in creating deemed offences, this bill will represent a totally unnecessary, draconian measure that has a whiff of totalitarianism about it. I urge the government to appreciate the insidious nature of deemed offences, such as those created by the bill, and desist from the practice of creating these in future. Instead of this bill, I urge the government to commit more resources to law enforcement and to crack down on those who have actually broken the law and evaded taxes.
In addition to the insidious list of deemed offences and the discarding of the need to establish criminal intent, the cornerstone of our legal system is being undermined. Because of this, the government needs to understand that this bill isn't simply cracking down on the black economy; it is actually following the same oppressive principles as the former Soviet justice system. What this means is, in the words of Joseph Stalin, 'If you only punish the guilty, what will the innocent have to fear?'
Senator SESELJA (Australian Capital Territory—Assistant Minister for Treasury and Finance) (12:59): I might just briefly respond to Senator Anning's contribution. Senator Anning, the government and I obviously disagree with a number of the points that you are making. It is disappointing that you won't be supporting what I think is a very important piece of legislation.
What you are seeking to address, as I understand it, is in relation to particularly the strict liability offences that are contained within the bill. Senator Anning, you would be well aware that strict liability is used in a number of cases where it is reasonable to assume that a person has a duty, and knows that they have a duty, to comply with the law. For instance, it's used in all sorts of offences. It's used in things like traffic offences where, even though we may not have meant to go 90 in that 80 zone, we had a responsibility to make sure we stayed under the speed limit. It is used in a range of key regulatory areas where the idea of proving the mental or default element would be particularly difficult. If you look at the black economy and what is identified, there are some existing provisions about tax avoidance and the like. However, in many cases being able to prove the mental or the fault element, as it's known, is actually quite challenging. So, if we look at things like sales suppression software, it is difficult to mount an argument as to why someone would have sales suppression software installed for any other purpose other than to avoid paying their fair share of tax.
So, while I understand the arguments you are making, Senator Anning, I think it is an incorrect conclusion, and to use some of the language that you used in your contribution, when what we are talking about is getting to the heart of what is a very, very dangerous thing and a growing part of the economy, the black economy. We're talking estimates of around $50 billion. Things like sales suppression software could potentially facilitate a significant expansion of the black economy. The government's view is that, where it is very, very difficult to mount an argument as to what possible circumstances—other than for the purposes of avoiding tax—anyone would have for possessing or distributing this kind of technology, a strict liability offence isn't reasonable in those circumstances.
I would also make the point, Senator Anning, that strict liability offences of course are not absolute liability. There are defences where there is a reasonable excuse—for example, where software was uploaded without someone's knowledge or consent—but strict liability offences place an evidentiary burden on the individual who is faced with the claims or the charges being brought against them, and if that evidentiary burden can be met then the prosecution has to respond to that.
I understand, philosophically, strict liability offences have been with us for a long time. I think they are used cautiously, but in this case, where we are looking at the proliferation of technology which has the potential to rip off Australian taxpayers to the tune of billions—perhaps tens of billions of dollars—over time and dealing with technology where it would be very difficult to design a circumstance where someone would have it innocently other than in circumstances where there is some form of sabotage which, of course, strict liability offences enable someone to make that argument, I think that this is a very reasonable use of strict liability offences. I don't agree with your assertions, and I think that what this will fundamentally be doing is ensuring that a class of people who are very difficult to prosecute at the moment—those who are deliberately and systematically rorting the tax system—would be captured in this net. Strict liability offences are one very legitimate way of doing that.
Senator ANNING (Queensland) (13:04): I'm not sure you understood what I was saying. There are many things that you could possess that you could use to break the law, but that doesn't mean you have broken the law. Making a person guilty for possessing such an item is infringing on individual rights. I think a law has to be broken before that person is found guilty and he should not have to prove his innocence just because he possesses that particular piece of equipment, the hardware or the software. Just like a baseball bat could be used to bash somebody in the head, if the person hasn't used it for that purpose, he can't be found to have possessed an item and be guilty before he is proven innocent.
Senator SESELJA: Thank you, Senator Anning. I will respond in a moment, but, if you go to the details of the bill, you find that if the person does produce, supply or provide a service providing such a tool, they will not commit an offence if they can show they have made an honest mistake of fact, satisfying the requirements under the defence under section 9.2 of the Criminal Code. That is the way that the Criminal Code is established.
But to respond specifically to your point, if we compare the baseball bat, as you say, which of course could be used to commit an offence—but in most cases a baseball bat of course has the very legitimate use of being used for baseball—that is a very different thing from technology that effectively only has one purpose, and the one purpose is to avoid Australia's taxation laws. If it were for simply the possession of something which, in and of itself is lawful and has a legitimate use—as per your example of the baseball bat, and I'm sure you could come up with many, many other examples—I think I would be in agreement with you, Senator Anning, on how this could be an unjust law.
But what we are talking about here is technology that is developed simply for the purposes of avoiding Australian law. Because of the very nature of the thing that is being possessed, the software in this case, we have to have laws against it because, if we don't, it will make it very, very difficult to deal with this problem. But, from a justice point, as I say, a person innocently possessing something which may or may not be used to breach other laws—such as your example of a baseball bat—is categorically different to something that is specifically designed to breach the law, to get around laws and to facilitate the rorting of potentially billions of dollars over time. I think that is categorically different and I think it should be seen as different. I think it's important that we have debates around things like strict liability, but I think this is a very clear-cut case of where strict liability is just and right—and, of course, there are legitimate defences for where a person has acted honestly and there is an honest mistake involved.
Senator PATERSON (Victoria) (13:08): I didn't get an opportunity to make a contribution to the second reading debate on this bill, the Treasury Laws Amendment (Black Economy Taskforce Measures No. 1) Bill 2018, but I would have liked to; so I want to take the opportunity while we are considering Senator Polley's amendment now before the committee to share a few reflections and observations about the bill. Firstly, I think it's important that we reflect on why it is important that we address the black economy. Particularly following Senator Anning's contribution, I think that's an important question to consider. Some might argue that it is self-evident why a black economy is a bad thing and it's obvious why this should be tackled, but I don't think any question should go unexamined. So I think it's worth stepping through carefully why it is that the government is taking the action that it is to address the black economy.
The first and most obvious reason that a black economy is of concern to any government is the impact that it has on taxation revenue. I and all my Liberal and National colleagues strongly and passionately believe in lower taxation and less taxation for Australian businesses and citizens, and we've demonstrated that very strongly in recent times with a series of initiatives to reduce the tax burden on small business, on medium-sized business—on all businesses—and of course on individuals.
As other colleagues of mine have observed in this debate, what we don't believe in is a self-help approach to reducing the taxation burden. It is not up to individual businesses or individual citizens to go outside and go around the law to reduce their own personal taxation burden in a way that is not consistent with the law. We don't believe in, don't support, don't endorse and don't encourage avoiding lawful taxation. The black economy and the growth of the black economy is a big problem from the point of view of tax revenue. If Australians are illegally evading taxation, then they are, in effect, helping themselves to a lower personal or company tax rate that is not afforded to their fellow citizens and their fellow businesses. That is obviously unfair, and we don't want to encourage that kind of risk-taking behaviour.
The second reason why governments seek to crackdown on the black economy is on the question of corruption. Globally, Australia ranks very high on transparency indexes and on anticorruption indexes. We are a relatively corruption-free jurisdiction. But no jurisdiction is completely free from corruption, and the existence of the black economy is something which contributes to the potential for corruption in any jurisdiction. The greater and larger the economic incentives that exist in a black economy, the greater the risk that government officials and representatives of police forces or other arms of the state will become implicated and involved in that black economy. So keeping the size of the black economy as small as practical limits the opportunity and limits the risks for corruption.
Finally, and I think in some ways most importantly, tackling the black economy is in part about fairness. It's about ensuring that, as far as the law is concerned, all businesses and all individuals have operated on a level playing field and have an equal opportunity to compete. Let's think about if we were a small business operator in an industry where there are problems of the black economy and where people do illegally evade their taxation obligations as just one example. What are the kinds of incentives that that puts in place for an ethical and honest small-business operator who wants to pay the tax that they're required to pay, who wants to pay their employees the pay that they're entitled to receive and who wants to abide by and comply with the law? They're faced with an unenviable situation. Some of their competitors are not as honest and not upstanding citizens like they are, and they are taking advantage of an opportunity to break the law, which will give them an unfair competitive advantage over their honest competitors.
That gives those honest participants in the market a very bad set of incentives. They're encouraged, too, to participate in the black economy and to evade the law, whether it is on the question of taxation or whether it's on the question of a lawful rate of pay for their employees. It encourages good people to do bad things in order to stay competitive, and we don't want that to be the case. We don't want people to prosper by breaking the law. We don't want good people to suffer by abiding by the law. So it is the duty of the government not just to pass laws, have them on the books and hope that all citizens comply with them but also to ensure that those laws are rigorously, appropriately and evenly enforced and that reported instances of evasion of that law are aggressively prosecuted to ensure that there is that fair and equal playing field.
The evidence is that the black economy in Australia, regrettably, is large and that it has been growing in recent years. In 2012, the Australian Bureau of Statistics estimated that the black economy equated to about 1½ per cent of GDP. That was not including the illicit drug trade, which added an estimated further 0.4 per cent of GDP, taking the total black economy, by the ABS's measure in 2012, to 1.9 per cent. My advice is that this estimate is now out of date, and it is considered, in fact, that the black economy could be as large as three per cent of GDP, equating to roughly $50 billion, today.
That's a very significant growth. That's a very significant size of the black economy in Australia, and it's broken down into a number of different categories that were identified by the Black Economy Taskforce report, which was delivered in October 2017. They identified, on the one hand, illicit activities, like drug trade, to be between $7 billion and $10 billion; identity fraud to be approximately $2.2 billion; motor vehicle fraud to be about $300 million; the underpayment of GST, including GST fraud, to be about $3.8 billion; border crime to be up to $1 billion; and money laundering to be up to $16 billion. On the other hand, it also identified understated business income in the range of $10 to $20 billion; the payment of wages in the form of cash, to avoid taxation obviously, at $8.5 billion; illicit tobacco at $4 billion, and this has been a particular concern and a growing concern; unregulated offshore gambling at an astonishing $2 billion; counterfeit goods, $2 billion; phoenixing, $3 billion; and the underpayment of wages and superannuation at $3 billion. So it's very clear. As the report itself says, the black economy is a significant, pervasive, damaging and growing economic and social phenomenon. I think it demonstrates very clearly why action by this government is necessary and why this government takes the issue of the black economy as seriously as it does.
Turning now to the bill that the committee is considering, the government have obviously responded to the Black Economy Taskforce's interim report and we did so in the 2017-18 budget. We announced a range of measures to address this growing economic and social problem. Firstly, as we've heard, this bill bans the manufacture, distribution, possession, sale and use of sales suppression technology. This is the technology which allows businesses to unlawfully conceal their income. We're extending the taxable payments reporting system to two industries that present particular tax-compliance risks, and that includes the cleaning industry and the courier industry. The purpose of this is to ensure that payments made by businesses to contractors in these industries are reported to the Australian Taxation Office, as they should be. Effectively, this bill delivers on our 2017-18 budget decisions. They are obviously part of a much broader suite of reforms that the government is progressing through our response to the taskforce's final report that I mentioned earlier.
Electronic sales suppression tools are banned under schedule 1 of this bill. This schedule creates new offences for the manufacture, distribution, possession, sale and use of electronics sales suppression tools for the purpose of not disclosing business income. That's important: 'for the purpose of not disclosing business income'. The truth is that there is no legitimate reason for possessing these tools; there's no legitimate purpose for using these tools. All that they do is remove transactions from electronic record-keeping systems. They change transactions to reduce the amount of each sale and they can even modify GST taxable sales to GST non-taxable sales. In all instances, as we've heard already in this debate, no audit trail of the changes made can exist. I think it very clearly demonstrates the nefarious intent of these software tools and the fact that there isn't a legitimate purpose to use them. The government is introducing offences that are subject to strict liability, as we've heard from the minister, and significant penalties to deter the use of such technology across the software supply chain. The technology is used solely for the purpose of tax evasion, and the new offences will help restore some integrity to the tax system.
Recent reports from the OECD have highlighted that this software is in fact spreading globally and its use has been identified in a number of jurisdictions, including Canada, the United States, Germany and Sweden, and many of these jurisdictions have, in response to the proliferation of this technology, implemented measures to address this risk, as Australia is now doing. The ATO has in fact already uncovered instances of this software in operation in Australia.
Schedule 2 of the bill relates to third-party reporting. From 1 July 2018, businesses in the courier and cleaning industries will be required to give an annual report to the ATO regarding the payments they make to businesses for them to provide courier or cleaning services. That is, the reporting obligation will apply from 2018-19 income year and the reports will be required by 28 August 2019. This measure is estimated to result in a gain in taxation receipts of $132 million over the forward estimates period. Business-to-business payments for courier and cleaning services are within the scope of this reporting requirement. Implementation of the taxable payments reporting system in the building and construction industry resulted in improved contractor tax compliance and reporting of income. What the government is effectively doing with this measure is extending this reporting system to other industries which have been identified as high-risk, in the same way that the building and construction industry had been previously identified.
The ATO has prepared guidance material to assist businesses in these industries to comply with their new reporting requirements. The information reported to the ATO will be used for the pre-filling of tax returns or activity statements, which should actually make it easier for contractors to lodge their individual income tax returns, and also used for data-matching purposes to ensure that contractors comply with their tax obligations, such as correctly lodging their income tax returns and BAS obligations.
In the time remaining, I want to turn briefly to the OECD report on electronic sales suppression and the reason why it presents a threat to tax revenues globally. Modern cash registers in the retail sector effectively operate as a comprehensive sales and accounting system. They often use standard business software and they are relied on as effective business accounting tools for managing the whole enterprise. They're not simply there to take payments from customers. Consequently, they are expected to contain the original data, which tax auditors need to inspect, including those auditing value-added sales tax—like our GST—compliance. What's now apparent is the fact that such systems can be manipulated to permit skimming of cash receipts, just as manual systems like a cashbox or operating two tills have in the past. Once equipped with sales suppression software, they facilitate far more elaborate frauds through the ability to reconstitute records that match the skimming activity. What this means is that the sales suppression software allows businesses to effectively automatically cook the books without needing any significant accounting expertise, and it's one of the reasons why this software is of such concern to the government.
Internationally, it's been an issue that other jurisdictions have tackled. Revenu Quebec in Canada, for example, has estimated that they've had tax losses of C$417 million in the 2007-08 year because of the use of such software. In Sweden, they were able to recover €115 million in over 2,000 audits over four years. From 2006 to 2010, Sweden carried out 2,000 audits. The audits covered restaurants, hairdressers, clothing stores and food stores. The audits showed that between 20 to 40 per cent of the turnover was underreported. What that amounted to was effectively €150 million lost in income taxes, VAT and employment taxes. This underreported turnover is feeding the grey or underground economy and, in some areas, also supporting organised crime. Other jurisdictions like South Africa identified a single case of €22 million being expatriated. In Norway, a single case involved €7 million underreported. These are significant global problems the OECD has identified as a growing issue internationally, and it's entirely appropriate that the Australian government is responding in kind to address this issue.
Senator SESELJA (Australian Capital Territory—Assistant Minister for Treasury and Finance) (13:23): To add to my earlier answer to Senator Anning's contribution—and it does follow on slightly from earlier contributions as well—on the rationale for strict liability, it's worth briefly extracting a little bit from the explanatory memorandum. To follow on from Senator Patterson, the issue around organised crime is an important part of the context for the necessity of strict liability offences. We are increasingly dealing with pretty sophisticated crime networks, and this is one of the tools that can be used. This is from the explanatory memorandum:
Currently, the taxation law contains a variety of offences as well as civil and administrative penalties relating to record keeping and tax evasion. These include penalties for providing false or misleading information to the Commissioner … and incorrectly keeping records with the intent of misleading the Commissioner …
Although these offences may apply to entities that use electronic sales suppression software to incorrectly keep records, the current maximum penalties for the offences under the TAA 1953 are not high enough to adequately reflect the seriousness of using a tool with a principle function of misrepresenting an entity's tax position.
It goes on:
The Criminal Code contained in Schedule 1 to the CCA 1995 also contains offences relating to forgery and providing false documents to the Commonwealth. The manufacture of electronic sales suppression tools may be captured by the Criminal Code under the offence for possessing, making or adapting a device for making forgeries …
However these provisions require either an intention that the device will be used to commit an offence of forgery or only apply to Commonwealth documents. These requirements can be difficult to satisfy in the case of electronic sales suppression tools.
Just finally, from the explanatory memorandum, Senator Anning, even where an electronic sales suppression tool was developed overseas to falsify records that are kept for Australian tax purposes, it may be difficult to demonstrate the tool was made or supplied specifically with the intention of defrauding the Commonwealth rather than other jurisdictions. So it is just a further piece of evidence as to the background: (1) you're dealing with organised crime; (2) you're dealing with very sophisticated areas; (3) currently, there could be someone who clearly had malicious intent but you're still not able to prove it because of the complexity of some of these crimes. Therefore I would say to you again, Senator Anning, that the use of strict liability in these circumstances is absolutely justified.
Senator IAN MACDONALD (Queensland) (13:25): Minister, I'm wondering if you could tell us what this suppression software is and who would be creating it, who would be distributing it, not necessarily by name of the individual person or company, but I am curious as to the type of people or groups. Is it the criminal elements that you have just been speaking about around the world or within Australia? Are there any Australian entities that we know are involved in the manufacture—I don't think 'manufacture' is the right word—but the creation of the software and its distribution? Bikie groups are often referred to when it comes to illegal activities and drugs elsewhere. But I am somewhat curious just as to how this software came into existence. Was it ever legal? Was it ever available for a purpose that was not illegal? I'm just curious as to the background of all this and I'm sure many Australians would be.
Senator SESELJA (Australian Capital Territory—Assistant Minister for Treasury and Finance) (13:27): Just briefly, before I answer the more detailed part of your question, you asked at the outset what it is. Simply, it is a device or program or other thing capable of manipulating or destroying records that an entity is required to keep or make by taxation law. The primary function for sales suppression software is to understate a business's income and facilitate the non-compliance of businesses to their tax obligations. As I stated earlier, there is no legitimate use for this technology, as it is used solely for the understatement of income, leading to the purposes of tax evasion, and this new offence would restore integrity to the tax system.
But it is worth, in addition, pointing out that—and part of this is in the explanatory memorandum—a critical element of each of the new offences and administrative penalties is the term 'electronic sales suppression tools'. So the starting point for the definition of electronic sales suppression tools is a device, software program, or other thing or any part or combination of such things. For example, the modification to a device or standard business software can fall within the definition of 'electronic sales suppression tool' even if the device or program as a whole is not. So in such cases a modification is a tool for the purposes of the amendments, and prohibited conduct undertaken into relation to the modification can constitute an offence, even though the overall software or device may also function to complete normal business reporting activity. So the tool must be capable—this is very important—of:
… falsifying, manipulating, hiding, obfuscating, destroying, or preventing the creation of a record that:
(i) an entity is required to keep or make by a taxation law;
Importantly also for the defences:
Although 'capability' is a necessary condition, for a tool that has such capability to be an electronic sales suppression tool, a reasonable person must be able to conclude that one of the tool's 'principal functions' is to 'falsify, manipulate, hide, obfuscate, destroy, or prevent' the creation of certain records.
There is an example that's given where there are modifications. It's an important example. It's an example in the explanatory memorandum that uses a hypothetical where there is an individual operating a restaurant who uses a standard POS software to record her sales transactions. Each transaction is stored in a database and is automatically allocated a sequence number. The software has a pre-installed training mode and transactions made in training mode are stored in a separate database. The individual uses a training mode to teach new staff how to enter sales transactions into the POS system and modify or delete transactions that are inadvertently made in error.
The individual contacts a local software supplier to enquire about upgrading her POS software. The supplier offers her two versions of the same software. One is the standard software upgrade developed by the manufacturer, while the other has an additional function which allows the individual to modify or delete sales transactions data from the main database, without trace, by rearranging the sequence numbers.
In this case, the additional function to delete and resequence sales transactions can be isolated from the standard POS software program and a reasonable person would conclude that its principal function is to manipulate and hide sales transaction records and under declared income. As such, this additional function is an electronic sales suppression tool. It could be the software that's designed specifically for this or, in addition, it could be a specific modification that is made specifically for that purpose, which a reasonable person would look at and say, 'This is for the purpose of falsifying records so that you can understate income so that you don't have to pay your fair share of tax.' Therefore, it would fall within the legislation.
Senator PATERSON (Victoria) (13:32): I have two questions from the point of view of a business which might be affected by this legislation. First of all, I'm interested in how they will become aware of the passage of this legislation and how the new offences may apply to them. Second of all, I'm interested in what the penalties are, or will be, for these businesses, should this legislation be passed and should they contravene the new law.
Senator SESELJA (Australian Capital Territory—Assistant Minister for Treasury and Finance) (13:32): In terms of how businesses would become aware of new offences, I'm advised that the ATO has prepared guidance material. I understand that is ready to go, but, obviously, it can't go out until this legislation is passed through the Senate. It is ready to go. I'd encourage businesses, after the passage of this bill, to consult the ATO website. They can get an understanding of whether it would apply to them in the cleaning and courier industries and of the thresholds that would apply to them. I understand that will be available as soon as the legislation is passed. Obviously, if there is any need for assistance, the ATO will be able to assist.
In terms of the penalties, there is a rationale. We've had some discussion with Senator Anning about the strict liability nature of those offences, and I won't go over that ground, but they are very high penalties. The maximum is 5,000 penalty units. There are other offences that have lower penalties, including 1,000 penalty units for another offence. For those 5,000 penalty units, if you look at the wrong that we are seeking to counter and the potential for massive fraud upon the Commonwealth and therefore the taxpayer, I would say, and the government believes, that those very strong penalties are justified. When you are dealing with a $50 billion black economy and it's potentially, if we don't get hold of it, a growing black economy, there are some people who make an amazing amount of money from their activities in that black economy. The incentives against wrongdoing and the incentives against people to facilitate some of this wrongdoing—through, for instance, developing this type of software—need to be very, very strong in order to send the message. The disincentives need to be very, very strong. So, yes, 5,000 penalty units, at $210 a penalty unit, is a very significant penalty.
We do see other areas where there are very strong penalties. For instance, we know that under division 290 of the act the promoters of tax exploitation schemes attract a civil penalty of 5,000 penalty units as well. And we know that penalties in the range of 4½ thousand penalty units are imposed on breaches of directors' duties under the Corporations Act 2001. And the Criminal Code Act also imposes a 10-year maximum term of imprisonment for the offence of manufacturing devices for the creation of making forgeries. Again, that would be a very similar act. It is done for very, very similar purposes, so obviously when the government looks and does its consultation and goes through its processes and looks at other similar penalties, it obviously looks at similar offences and what types of penalties they have. We consider the deterrence effect that is needed, and when you are talking about the billions of dollars that are washing around in the black economy then it is very important that we have pretty substantial penalties for dealing with that wrongdoing.
Senator PATERSON (Victoria) (13:36): Thank you, Minister; I appreciate that comprehensive answer to my question. Given that we're considering an amendment from Senator Polley, I wanted to take the opportunity to reflect on an amendment that was moved in the House of Representatives. The government moved an amendment to the legislation—this is to schedule 2 of the act—and, in doing so, it was acting on the concerns raised by stakeholders that a mixed business that provides perhaps some courier or some cleaning services might be disproportionately affected by the compliance burden in this legislation, because the provision of those services are merely a small part of their overall activity of the business. They might provide a range of services, including courier and cleaning services, but it might not be the principle purpose of their business and they could effectively be caught by this legislation when, in fact, they're quite a small player in those industries that we've identified as being higher risk industries, along with the building and construction industry that was addressed by previous legislation.
In response to concerns raised by stakeholders, the government moved an amendment in the House of Representatives to our legislation, which imposed a threshold test. That means that businesses that receive payments for courier or cleaning services that are less than 10 per cent of the business's overall GST turnover for the reporting period will be exempt from reporting the payments they make to contractors commissioned to complete their services.
I think this is a really important amendment, and it's worth reflecting more broadly on why these sorts of amendments are necessary. In dealing with a very important issue like the black economy, and seeking to address it, we also have to be mindful that, in doing so, we don't create an unnecessary or excessive red tape burden. This is a lesson that applies in a very general way to all legislation that government seeks to enact: stakeholders and community groups and experts raise concern about a social or economic ill, and they call on the government to address it. The government actually has limited tools to address these sorts of problems. If it is the government to solve this problem then it can do it with a tax, it can do it with a regulation, it can do it with a law: it can do it with a very limited number of tools. And while we are going about addressing these very serious issues—indeed, the black economy is a serious issue—we don't want, in doing so, to raise the burden of red tape on the economy, raise the red-tape burden on businesses and on individuals, because we know the corrosive impact that red tape has on our economy and on our society.
The truth is that in recent decades governments of all political persuasions have quite often passed legislation to address very genuine and serious issues, but, in doing so, have created what is a very excessive red-tape burden. Just an example of that: in 1915 the Commonwealth parliament passed just 112 pages of legislation, but 50 years later, in 1965, the Commonwealth parliament passed 1,357 pages of legislation. You can see the exponential growth in just 50 years. And, by 2012, the parliament passed 8,150 pages of new legislation. In fact, in an amusing sidenote, the Gillard government promoted this statistic as evidence of their success. They were proud of the fact that they were passing so much legislation, but that's legislation that every citizen has to comply with, that every business has to comply with. That's a very serious burden for them to comply with.
There's very good evidence that there is economic and social harm as a result of red tape burden. For example, the 2017-18 World Economic Forum's Global competitiveness report ranked Australia at 80th out of 137 countries in the world for the burden of government regulation. Now, Australia should be aspiring to be in a much better position on that list. We want to have the least burden possible. To be only 80th out of 137 countries in the world is a disturbing statistic. The OECD has ranked Australia only 20 out of 47 countries for barriers to entrepreneurship, and that report considers the regulatory burden to be licences and the protection of incumbents. Again, we should be aspiring to be a country that is very conducive and welcoming of entrepreneurs, not to discourage them.
The Institute of Public Affairs, which, as senators know, is a former employ year of mine, has estimated that $176 billion is the annual cost of red tape on the Australian economy. That equates to $19,300 per household—almost $20,000 per household. And, if red tape were in industry—if we measured it alongside other industries as a proportion of our economy—it would be larger than the mining industry, the manufacturing industry and the agriculture industry. Red tape should not be an industry in Australia. It should certainly not be an industry larger than some of our largest industries. One of the potential effects of that has been the declining rates of entrepreneurship in recent years in Australia. For example, between 2003-05 and 2012-14, small business start-ups as a percentage of all small businesses actually declined by 40 per cent; and the percentage of Australians in that key entrepreneurial age group—typically, aged between 25 and 49—has declined from 38 per cent to 35 per cent and will reach just 30 per cent by 2065. So we want to give those remaining in that age group as much encouragement as possible to be involved in entrepreneurship.
This government over its five years in office has recognised very seriously the evidence and the concern with red tape with not just the amendment to this bill but a range of measures. Prior to the 2013 election, senators might recall that the coalition made a promise that it would reduce the red tape burden by at least $1 billion every year in office. And, in just our first three years, between September 2013 and December 2016, decisions taken by the government to reduce the red tape burden amounted to about $5.8 billion—so, far exceeding the promise of the $1 billion a year. But, of course, we know that there is much more work to be done in this area.
I'm pleased that the government listened to stakeholders that identified the serious issue of the potential regulatory burden on businesses that only play a small role in the cleaning and courier industries and has established a threshold test to carve out those businesses which only participate in the industry in a small way. I want to follow up that contribution with a question to the minister about the threshold: why, in your view, is the threshold test necessary; and is it possible for the threshold test to be changed?
Senator CAMERON (New South Wales) (13:43): I move:
That the question be put.
The TEMPORARY CHAIR ( Senator Marshall ): The question is that the question be now put.
The committee divided. [13:48]
(The Temporary Chair—Senator Marshall)
The TEMPORARY CHAIR ( Senator Marshall ) (13:51): The question is that the amendment moved by Senator Polley on behalf of Senator Cameron on sheet 8442 be agreed to.
Question agreed to.
Senator IAN MACDONALD (Queensland) (13:51): I have some questions of the minister.
Senator Bernardi: As a point of order, I didn't hear what the result of that prior division was. I'm not sure if it was announced or not?
The TEMPORARY CHAIR: I have handed the sheets over, but, from memory, there were 38 ayes and 30 noes. I thought I did call it. Was the microphone not on?
Honourable senators interjecting—
The TEMPORARY CHAIR: Okay—thank you. Senator Macdonald.
Senator IAN MACDONALD: Mr Chairman, either you had an uncharacteristically soft voice today or the microphone wasn't on, and I suspect it was the latter. I had some other questions I wanted to ask. I did want to ask some of Senator Polley, and I know my colleague Senator Paterson did too. But, in this day and age, it's typical of the Labor Party and their hypocrisy. Do you remember a couple of weeks ago when we had all this confected outrage about gagging debate when the government didn't actually gag debate; it just put some sensible time limits on the debate? There was outrage from the Labor Party and the Greens, and yet, as we've just seen today, when it suits the Labor Party and the Greens, they'll gag anyone from speaking. Particularly in a case such as this where it is quite a complex bill and senators do have serious questions to ask about the complexity of these bills, the Labor Party and the Greens, again, join to curtail debate.
Of course, it reminds me of the time a few years ago when, regrettably, we were in opposition and the Labor Party and Greens political party were in charge of the government of the land. We had, if I remember correctly—what was it?—57 gags in one week on bills that the then Labor-Greens government wanted to promote. That's bad enough, but what really concerns me is the confected outrage when the government, which is trying to deal with important legislation that it has to get through, puts a time limit on bills. We had motion after motion and points of order after points of order from the Labor Party and the Greens political party about that time management, and yet, with the ultimate hypocrisy, they now move gags and suddenly all of their moral indignation seems to disappear.
I divert myself from the bill just to express my concern at the hypocrisy of the Labor Party and the Greens political party when it comes to curtailment of debate. I expect that sort of thing from the Labor Party. The Greens are always so morally outraged when that happens when it's the government time managing the bill, but they seem to lose that moral high ground when it comes to the question of the Greens and the Labor Party trying to curtail debate on something that other senators want to inquire further.
I wanted to ask the minister why it is that this sales suppression software hasn't already been banned. I think the minister answered in a question from my colleague Senator Paterson earlier about the existence of the software that it cannot be used for anything else but to falsely indicate what income an entity is making.
I did ask the minister previously—although I'm not sure if you answered, Minister—about what types of people were propagating, distributing and retailing this software. They may be questions that you don't have the answers to, Minister, but it's certainly fascinating to think on whether they are bikie gangs or whether they're some of the more radical unions who some allege are involved in criminal activities. I don't know whether that's right, but I do see that alleged at times. I was wondering if you did have any information on that.
I'm also curious as to the cost of this sort of software—again, you may not have this information, Minister—and whether the software itself was patented in such a way that whoever discovered, manufactured or wrote the software was the only person able to do that or whether others could do it. But they're perhaps side issues.
Minister, my principle question to you is: why wasn't the sales suppression software banned previously? Has it not been known of previously? Or is this just a recent phenomenon?
Senator SESELJA (Australian Capital Territory—Assistant Minister for Science, Jobs and Innovation) (13:57): Thank you, Senator Macdonald. There are a number of aspects to the question, but in response to that specific part of the question, the current penalties are confined to just the taxpayer for minimising their taxes and not keeping proper records. The current law does not explicitly penalise any part of the supply chain for the possession or use of this software. The new offences target each stage of the software supply chain—that is, the manufacture and production, supply and use of electronic sales suppression tools—and they do impose severe penalties.
To answer the second part of your question in relation to why it wasn't been banned, it is a relatively new phenomenon. Obviously the government is acting through this task force and through the response to the task force. It's worth highlighting that it is part of a pretty significant overall response, and this is one very, very important part that we are debating today. The government's response to the Black Economy Taskforce's final report provides the first ever whole-of-government blueprint for tackling black economy activities.
In addition to what we're debating here, it will expand the taxable payments reporting system to security providers and investigative services, road freight transport and computer system design and related services starting on 1 July 2019. It will introduce an illicit tobacco package target to target the three main sources of illicit tobacco: smuggling, warehouse leakage and domestic production. It will modernise business registers and consult on reforms to the Australian business number system. It will introduce an economy-wide cash payment limit of $10,000 for payments made to businesses for goods and services from 1 July 2019. It will remove tax deductibility of non-compliant payments from 1 July 2019. This will mean businesses will no longer be able to claim a tax deduction for employee wages where the business has failed to withhold. It will increase the integrity of the Commonwealth procurement processes by requiring all businesses tendering for Commonwealth government contracts over $4 million to provide a statement—
The TEMPORARY CHAIR ( Senator Marshall ): Order! It being 2 pm, the committee will report progress.
Progress reported.
Australian Labor Party
Senator WONG (South Australia—Leader of the Opposition in the Senate) (14:00): by leave—I inform the chamber that Senator Watt has been elected Deputy Opposition Whip, as of Tuesday 11 September, replacing Senator McAllister, who, as I previously advised the chamber, is now a shadow assistant minister. I apologise for the delay in advising the chamber.
QUESTIONS WITHOUT NOTICE
Aged Care
Senator JACINTA COLLINS (Victoria—Manager of Opposition Business in the Senate) (14:00): My question is to the Minister representing the Minister for Senior Australians and Aged Care, Senator Scullion. I refer the minister to the 2016-17 budget papers, which bear the name of then Treasurer Morrison. In particular I refer the minister to page 101 of Budget Paper No. 2, which states:
The Government will achieve efficiencies of $1.2 billion over four years through changes to the … Aged Care Funding Instrument …
Can the minister confirm that, in his first budget as Treasurer, Prime Minister Morrison cut $1.2 billion from aged care?
Senator SCULLION (Northern Territory—Minister for Indigenous Affairs and Leader of The Nationals in the Senate) (14:01): I can categorically confirm that that is not the case. The leader of the opposition in this place is pointing to the budget paper. Not only can I categorically say that that is not the case but that the first budget of Mr Morrison's spent an additional $1 billion. This is too important an issue for our senior Australians to get involved in the partisan rubbish that we sometimes get involved in. I can assure you that that isn't going to be happening from us. Not only in that budget but in sequential budgets for the last five years, around $1 billion year on year on year—every year is an increase of $1 billion.
Senator Wong: It says minus!
Senator SCULLION: That's upside down, Penny! Every year is an increase of $1 billion, so it's completely spurious to say that.
Since the last budget, I can confirm that we have delivered 20,000 new home care packages, 13,500 residential aged-care packages and 775 short-term restorative packages. Funding for aged care by this coalition government is at absolutely record levels. Over the next five years it will grow by $5 billion to $23.6 billion—something that every Australian should be very proud of.
The PRESIDENT: Senator Collins, a supplementary question.
Senator JACINTA COLLINS (Victoria—Manager of Opposition Business in the Senate) (14:03): Yesterday the Prime Minister claimed that he is:
… committed to providing older Australians with access to care that supports their dignity …
How is cutting $1.2 billion from aged-care funding—
Honourable senators interjecting—
Senator JACINTA COLLINS: in his first budget as Treasurer, as clearly outlined in budget statement No. 2, consistent with the Prime Minister's claim?
Honourable senators interjecting—
The PRESIDENT: Order! I will insist upon silence while the question is being asked.
Senator SCULLION (Northern Territory—Minister for Indigenous Affairs and Leader of The Nationals in the Senate) (14:04): As I've categorically indicated, there has not been a cut. There has been an increase of $1 billion year on year till now. Those opposite talk about what a harsh Prime Minister we've got.
Senator Cormann interjecting—
Senator Jacinta Collins interjecting—
The PRESIDENT: Order, Senator Cormann and Senator Collins!
Senator SCULLION: We have increased funding year on year. But it's not only the total funding that we've increased. There have been an awful lot of things that we have done to ensure that our senior Australians get the very best deal. For those who were paying attention just last week in this place, you would note that we took through the Aged Care Quality Standards which, from 1 July 2019, will apply to 2,700 aged care homes, 366,000 staff. And the Aged Care Quality and Safety Commission will lead to unannounced visits, better policed quality and will boost specialist responses for complaints, audits and compliance. We are very much focused on this sector. We made huge investments in this sector, and senior Australians— (Time expired)
The PRESIDENT: Senator Collins, a final supplementary question.
Senator JACINTA COLLINS (Victoria—Manager of Opposition Business in the Senate) (14:05): None of this denies the cuts. Yesterday, when asked about his cuts to aged care as Treasurer, Prime Minister Morrison said, 'No, I didn't.' How can the Prime Minister expect older Australians to trust him with aged care when he refuses to take responsibility for the harm caused by his own billion-dollar cut?
Senator Wong interjecting—
Senator Cormann interjecting—
The PRESIDENT: Order! Senator Cormann. Senator Wong. It helps if leaders lead by example on interjections during questions.
Senator SCULLION (Northern Territory—Minister for Indigenous Affairs and Leader of The Nationals in the Senate) (14:05): So, for the third time, Mr President—I know you heard me—I know anyone who's listening to this debate would know that I have said that is categorically wrong. There was an increase. And you can wave budget papers around all you like. There was a billion-dollar increase, not only in the first year, but an increase on that in the second—
The PRESIDENT: Order! Senator Hinch, on a point of order.
Senator Hinch: Mr President, I'm closer to Senator Scullion than you are and I can't hear him.
The PRESIDENT: It's only 6½ minutes in to a week of question time, senators. If we could actually have the courtesy of allowing our colleagues to hear the answers. Senator Scullion, continuing his answer.
Senator SCULLION: Year on year on year, it is a billion-dollar increase. That's a $5 billion increase to now from when we took the Treasury benches. It's as simple as that—$5 billion more, no matter how you cut it. I think Crikey referred to it as a 'bald-faced lie'. So if you want to get into the business of partisan politics about those people who have built this nation, you're welcome to that space all on your own.
The PRESIDENT: Order, Senator Scullion. Senator Wong on a point of order.
Senator Wong: I seek leave to table page 101 of the budget papers showing a $1.2 billion 'savings'—in the government's own words. You won't table your own budget paper.
The PRESIDENT: Senator Wong, please resume your seat.
Aged Care
Senator DEAN SMITH (Western Australia—Deputy Government Whip in the Senate) (14:07): My question is to the Minister representing the Prime Minister, Senator Cormann. Will the minister outline why the Morrison government is establishing a royal commission into aged care quality and safety?
Senator CORMANN (Western Australia—Minister for Finance and the Public Service, Vice-President of the Executive Council and Leader of the Government in the Senate) (14:07): I thank Senator Smith for his question. We're supporting senior Australians by making sure they're provided with access to care which supports their dignity and recognises the contribution that they have made to Australian society. Yesterday, the Prime Minister along with the Minister for Health and the Minister for Senior Australians and Aged Care, announced the establishment of a royal commission into the aged care sector. This is an important initiative. We know that our aged care sector providers provide some of the best care in the world and we are looked at as a leader in the field, to the point that aged care is now an important export industry for Australia. But we need to make sure that everyone is up to scratch.
The royal commission into the aged care sector will primarily look at the quality of care provided in residential aged care and in-home aged care for senior Australians. We will also look at younger Australians living with disabilities in residential aged care environments. Australians rightly expect high standards for the safety and quality of aged care services, and the Morrison government shares these expectations.
This royal commission will be about proactively determining what we need to do in the future to ensure these expectations can be met. There are thousands of extraordinary operators—facilities, care providers, nursing and other clinical staff, volunteers, cleaners, cooks, and therapists—working hard to improve the lives of senior Australians every day. But the best teams will always want to do better, and we need to be honest about the performance of the sector as a whole. At the royal commission, we'll look at the aged care sector as a whole without bias or prejudice. It will make findings on the evidence and as a government, as a parliament, it will be our job to act on these findings in the interests of all Australians. The terms of reference will be determined through consultation with the community, including residents and their families and aged care providers.
The PRESIDENT: Senator Smith, a supplementary question?
Senator DEAN SMITH (Western Australia—Deputy Government Whip in the Senate) (14:09): Can the minister explain how the government, through measures like the royal commission, is standing by senior Australians?
Senator CORMANN (Western Australia—Minister for Finance and the Public Service, Vice-President of the Executive Council and Leader of the Government in the Senate) (14:10): The Morrison coalition government knows that backing senior Australians is critical if we are to keep our economy strong. In addition, jobs growth, including for older Australians, has been strong under our government. Around a third of the more than 300,000 jobs created in the past year were for Australians over the age of 55. In our 2018-19 budget, we also expanded the pension work bonus to allow more age pensioners to earn up to $300 per fortnight in income without reducing their pension payments, including self-employed Australians. We also expanded the Pension Loans Scheme to give everyone of age-pension age the option to draw on equity in their own home. We provided more time for Australians aged 65 to 74 with less than $300,000 in super to boost their retirement savings by introducing an exemption from the superannuation work test. Around 4.8 million pensioners and allowance recipients will receive an increase in their payments on 20 September 2018. Since the Liberal-National government was elected, pensions have increased by $107.90 per fortnight for singles—
The PRESIDENT: Order, Senator Cormann. Senator Smith, a final supplementary question.
Senator DEAN SMITH (Western Australia—Deputy Government Whip in the Senate) (14:11): Can the minister explain what the government has already done to ensure that senior Australians get the respect and dignity they deserve?
Senator CORMANN (Western Australia—Minister for Finance and the Public Service, Vice-President of the Executive Council and Leader of the Government in the Senate) (14:11): I thank Senator Smith for that question. I'm happy to say that funding for aged care is at record levels. In 2017-18, aged-care spending is estimated to reach $18.6 billion. That's of course appropriate, because governments should look after senior Australians where they're not able to look after themselves. Labor keeps spreading this lie that somehow there's been a cut to aged-care funding under the government, but nothing could be further from the truth. In Labor's last budget, aged-care funding in 2016-17 was forecast to be $10.1 billion. Of course, the actual expenditure by our government was nearly a billion dollars more—$10.9 billion—and that rose to $11.4 billion in the year that's just ended. As Bernard Keane, hardly an apologist for a Liberal-National government, quite rightly pointed out in Crikey:
The claim that the Coalition cut funding from aged care is a bald-faced lie, and one that points to the problems with a royal commission into the sector.
I table the article for the reference of Labor senators, who clearly don't know how to read the budget papers. (Time expired)
Aged Care
Senator CAMERON (New South Wales) (14:12): My question is to the Minister representing the Minister for Senior Australians and Aged Care, Senator Scullion. The Abbott/Turnbull/Morrison government cut $110 million from the dementia supplement paid to nursing homes for people who are living with dementia. Can the minister explain how this cut has contributed to the crisis Australia now faces in aged care?
Senator SCULLION (Northern Territory—Minister for Indigenous Affairs and Leader of The Nationals in the Senate) (14:13): I'll have to take the particular details of that on notice. But I should say that I've just spent some time—in fact, the last question and two supplementaries—correcting an erroneous statement from those opposite that was the premise to the question. So, whilst I'll have to take this on notice, I have a fair bit of cynicism around whether or not the assertion behind the question is absolutely correct.
The PRESIDENT: Senator Cameron, a supplementary question.
Senator CAMERON (New South Wales) (14:14): The Abbott/Turnbull/Morrison government cut around half a billion dollars from aged care in the 2015 MYEFO. Can the minister explain how these cuts to aged care have contributed to the crisis Australia now faces in aged care?
Senator SCULLION (Northern Territory—Minister for Indigenous Affairs and Leader of The Nationals in the Senate) (14:14): The Australian government provides in excess of $50 million every year for dementia specific programs that seek to improve the lives of people living with dementia and their carers. I would add that one of the elements of the terms of reference of the royal commission deals specifically with the issue of dementia. In the 2018 budget, a further $5.3 million has been committed over four years to ensure that we pilot the improvements to care for people living with dementia with an emphasis on the use of innovative technologies. We've committed over five years $200 million to 2019 to boost Australia's research into the prevention, the diagnosis, the treatment and the cure of dementia, and this includes the establishment of the National Health and Medical Research Council National Institute for Dementia Research.
The PRESIDENT: Senator Cameron, a final supplementary question.
Senator CAMERON (New South Wales) (14:15): Given that the Abbott-Turnbull-Morrison government cut $110 million from the dementia supplement, cut half a billion dollars from aged care in the 2015 MYEFO and cut $1.2 billion from aged care in the 2016-17 budget, will Prime Minister Morrison now take responsibility for the cuts he made as Treasurer that are now impacting on the care of older Australians?
Senator SCULLION (Northern Territory—Minister for Indigenous Affairs and Leader of The Nationals in the Senate) (14:16): That's a really easy one to answer. We've already established that we have not cut half a billion dollars from aged care. There is nowhere in any budget over that period of time that you can point to in any way that is different to the fact that we have improved our funding to aged care and to our senior Australians by a billion dollars every year, increasing year-on-year. Since we took over the Treasury benches there has an increase of over $5 billion, and we can expect there to be an increase of the around the same amount over the next five years. So, again, there is no point asking a question when the premise of that question is erroneous. Please don't confuse our senior Australians about what is happening.
Opposition senators interjecting—
Senator SCULLION: You can wave around all the books you like. We know that the premise of that question was incorrect.
Aged Care
Senator MARTIN (Tasmania) (14:17): My question is to the Minister representing the Minister for Senior Australians and Aged Care, Senator Scullion—whilst he's on a roll correcting the misinformation from the other side. Following the coalition government's decisive action to call a royal commission into the quality of the aged care sector and the safety of Australians within it, could the minister advise what investment it is government making in the aged scare sector?
Senator SCULLION (Northern Territory—Minister for Indigenous Affairs and Leader of The Nationals in the Senate) (14:17): Thank you, Senator Martin, for that very important question and for your very strong advocacy on behalf of senior Tasmanians. The Morrison government is committed to providing older Australians with access to care that supports their dignity and recognises the huge contribution that they have made to our nation. Investment in aged care is at record levels. In the last year alone, aged-care spending is estimated to reach about $18.6 billion. Moving forward over the next four years, as I've indicated, funding will grow by $5 billion to $23.6 billion.
We're investing $4.5 billion more than Labor provided in their last budget. On this argument, those opposite don't have a leg to stand on. We have provided $1.6 billion to create an additional 20,000 high-needs home care places since last December and, by 2020-21, over 74,000 high-level home care places will be eligible. That is an increase of 86 per cent on 2017-18. We've worked through the 2017 legislative review of aged care and we've responded in the 2018 budget with the More Choices for a Longer Life package, which encourages active ageing and provides an extra $1.6 billion in care.
Our aged-care sector in Australia provides some of the best care in the world, and we're rightly looked to as a leader in the field. There are thousands of extraordinary operators, facilities, care providers, nursing and other clinical staff, volunteers, cleaners, cooks and therapists out there improving the lives of senior Australians every day. They do this out of love and a deep professional commitment. Even the best teams will want to do it better. If you care about aged care, which those who work in the sector do, you want it to be at its very best—and I know that you will all welcome the strong measures, including the royal commission, that the Morrison government has announced.
The PRESIDENT: Senator Martin, a supplementary question.
Senator MARTIN (Tasmania) (14:19): Can the minister advise what new measures the government introduced in the recent 2018-19 budget for senior Australians?
Senator Cameron: Not much!
Senator Polley: Not one new dollar!
Senator SCULLION (Northern Territory—Minister for Indigenous Affairs and Leader of The Nationals in the Senate) (14:20): Thank you, Senator, for that question. Our older Australians deserve to be cared for with love, respect and dignity, and that is what is driving everything that we are doing as a government. By establishing a new independent Aged Care Quality and Safety Commission we're giving older Australians and their families the confidence that they will be properly protected in the system that should care for them.
Senator Polley interjecting—
Senator SCULLION: We're investing $50 million for the Quality Care Fund to assist residential aged-care providers to transition to this new aged-care quality standard. We're delivering greater transparency; we're delivering greater accountability in the quality of aged care through our investment in robust risk profiling of aged-care providers and the introduction of a performance-rating system against those quality standards, with a user-friendly provider comparison tool on the My Aged Care website. And can I say to the interjections of those opposite: this is something you never did when you were in government.
The PRESIDENT: Senator Martin, a final supplementary question.
Senator MARTIN (Tasmania) (14:21): Can the minister advise how the government is promoting new options in retirement for our senior Australians through the Healthy Ageing Campaign?
Senator SCULLION (Northern Territory—Minister for Indigenous Affairs and Leader of The Nationals in the Senate) (14:21): Thank you, Senator. We also want to support Australians prepare better for their older years. They want access across the key areas of health, different skills and finance. We, too, want to give them the greatest opportunities to remain independent and socially connected as they age. We've introduced a new $23 million program to support sporting and non-government organisations roll out local community-based activities to promote physical activity and to keep older Australians connected to their communities.
Our new $8.2 million Healthy Ageing Campaign celebrates the fact that Australians are living longer and therefore have more choices and opportunities ahead. The campaign encourages Australians aged 45 and over to think about ageing in a positive way. The campaign website longliveyou.gov.au connects older Australians to a range of useful links, and I encourage all older Australians to visit the website. (Time expired)
Disability Services
Senator STEELE-JOHN (Western Australia) (14:22): My question is to the Minister representing the Prime Minister, Senator Cormann. Yesterday the Prime Minister announced an aged-care royal commission ahead of the ABC's Four Corners tonight. The Prime Minister was social services minister during a 2015 Senate inquiry into violence, abuse and neglect of disabled people in institutional and residential settings that recommended an urgent royal commission—something that the government has repeatedly refused to undertake. There have subsequently been 500 complaints to the national disability abuse hotline. Given the widespread violence, abuse and neglect of disabled people that is ongoing, why does this urgently needed royal commission not extend to disabled people?
Senator CORMANN (Western Australia—Minister for Finance and the Public Service, Vice-President of the Executive Council and Leader of the Government in the Senate) (14:23): I thank the senator for his question. As responsibility for specialist disability services shifts from the states and territories to a national system through the NDIS, the Commonwealth government has established new, significant and comprehensive—
Senator Steele-John: Point of order!
The PRESIDENT: Point of order from Senator Steele-John.
Senator Steele-John: The quality and safeguards framework only covers 10 per cent—
The PRESIDENT: Senator Steele-John, please come to a point of order—
Senator Steele-John: of the disability community.
The PRESIDENT: Senator Steele-John! Are you raising a point of order or matter of debate?
The PRESIDENT: Relevance, Mr President.
The PRESIDENT: The minister has been speaking for 12 seconds. I am not a position to rule on relevance before he has completed a single sentence.
Senator CORMANN: The coalition government takes the abuse and neglect of people with disability very seriously, and is engaging in real, immediate and substantial reform to improve the treatment of people with disability, including those in residential settings, most of whom will be eligible for the National Disability Insurance Scheme. There have already been multiple inquiries looking into issues of abuse and neglect of people with disability at both the federal and the state levels which have clearly identified the issues. As responsibility for specialist disability services shifts from the states and territories to a national system through the NDIS, the Commonwealth government has established new significant and comprehensive safeguards to prevent abuse and neglect of people with a disability under the NDIS. The Commonwealth has established the NDIS Quality and Safeguards Commission and continues to provide the National Disability—
The PRESIDENT: Order, Senator Cormann. Senator-Steele John on a point of order?
Senator Steele-John: A point of order on relevance. The Quality and Safeguarding Framework does not cover—
The PRESIDENT: Senator Steele-John, that is a point of debate. It is not a point of order with respect to relevance. With respect, I think the minister is being directly relevant to the question asked.
Senator Steele-John: No, he's not, Mr President!
The PRESIDENT: Really?
Senator Steele-John: He is not!
The PRESIDENT: Senator Steele-John, the minister, in my view, is being directly relevant. I can't control how he answers, I cannot direct how he answers, but I believe he's being directly relevant to the lengthy question that you asked and/or part of it. There is a time after question time for debating the matter of ministers' answers.
Senator CORMANN: As I was saying, the Commonwealth has established the NDIS Quality and Safeguards Commission and continues to provide to the National Disability Abuse and Neglect Hotline. The royal commission to investigate the quality of care provided in residential and home based aged-care services announced by the Prime Minister yesterday will complement the action the government is already taking in the disability area, including for younger people with disability in residential aged-care facilities.
The PRESIDENT: Senator Steele-John, a supplementary question.
Senator STEELE-JOHN (Western Australia) (14:26): Given the extensive media reports into violence, abuse and neglect of disabled people in institutional and residential settings, including four Lateline reports and a Four Corners report, why won't the Prime Minister acknowledge the shared horror of the experience of disabled people—my people—and older Australians and broaden the proposed commission's terms of reference to include them?
Senator CORMANN (Western Australia—Minister for Finance and the Public Service, Vice-President of the Executive Council and Leader of the Government in the Senate) (14:27): Well, as I've already indicated, the coalition government does take abuse and neglect of people with disability very seriously. The terms of reference of the royal commission that the Prime Minister announced yesterday will be determined through consultation with the community, including residents and their families and aged-care providers.
The PRESIDENT: Senator Steele-John, a final supplementary question.
Senator STEELE-JOHN (Western Australia) (14:27): Why is the Prime Minister willing to sweep the violence, abuse and neglect of thousands of disabled Australians under the rug by not broadening the terms of reference of this commission? The time for justice is now!
Senator CORMANN (Western Australia—Minister for Finance and the Public Service, Vice-President of the Executive Council and Leader of the Government in the Senate) (14:27): I don't accept the premise of the question.
Aged Care
Senator O'NEILL (New South Wales) (14:27): My question is to the Minister representing the Minister for Senior Australians and Aged Care, Senator Scullion. I refer to the government's own home-care package wait list. Can the minister confirm that, as of March 2018, more than 108,000 older Australians are waiting for their home-care package?
Senator SCULLION (Northern Territory—Minister for Indigenous Affairs and Leader of The Nationals in the Senate) (14:28): In terms of those people who are on the wait list for, generally, levels 2, 3 or 4—most of the level 2 packages are dealt with—
Senator Siewert: Levels 3 and 4.
Senator SCULLION: That's what I've indicated—almost half of those in the queue are receiving interim care. Offering them high-level packages through the release of additional high-level packages will free up their existing packages for someone else. And we already indicated, in an earlier answer, that we've made some investments in additional high-level packages. We've invested in 20,000 new, high-level home-care packages, as I've indicated. As you move to a higher home-care package, then others can take their place.
The PRESIDENT: Order, Senator Scullion! Senator O'Neill on a point of order?
Senator O'Neill: On relevance. Can the minister confirm that more than 108,000 Australians are waiting?
The PRESIDENT: Senator O'Neill, at least make the point of order addressed to the President. It's not simply an opportunity to restate the question. On the point of order, I believe the minister is being directly relevant to the question asked. I cannot instruct him how to answer the question. He is addressing the topic of the question asked. I'm listening very carefully.
Senator SCULLION: There are now also more people than ever before receiving home care packages. That was before the announcement of an additional 20,000 packages. The number of people in care has increased by 13.5 per cent over the year from 68,657 on 31 December 2016 to 77,918 on 31 December 2017. Wait times for individuals differ according to whatever package level they have, their priority for care and the due date they were approved for care. We're currently expecting the maximum wait time for the person's first home care level to be one and three months for most people who are entering the queue.
The PRESIDENT: On a point of order, Senator O'Neill?
Senator O'Neill: My point of order goes to relevance. There was one question. It asked if the minister could confirm that there are 108,000 Australians waiting.
The PRESIDENT: Senator O'Neill, the minister is directly addressing the topic of your question. It is not up to me. I am not able to direct the minister how to answer the question, but he is being directly relevant to the question.
Senator SCULLION: As I've indicated, we remain committed to older Australians and to keeping them at home. (Time expired)
The PRESIDENT: Senator O'Neill, on a supplementary question?
Senator O'NEILL (New South Wales) (14:31): I again refer to the government's own home care package waitlist. Can the minister confirm that, as of March 2018, around 54,000 older Australians aren't receiving any home care packages at all?
Senator SCULLION (Northern Territory—Minister for Indigenous Affairs and Leader of The Nationals in the Senate) (14:31): As I've indicated, significantly more Australians enter into the area where they're going to require an aged-care package. There are many more receiving support services through our record $5.5 billion investment in the Commonwealth Home Support Program, which assists about—
The PRESIDENT: Order, Senator Scullion!
Senator Wong: Mr President, I rise on a point of order on direct relevance. I am mindful of the ruling you made earlier, but, if I may submit an entirely different matter, the question goes to how many people aren't receiving it, so it cannot possibly be directly relevant to talk about the people who are.
The PRESIDENT: Senator Wong, with respect, I don't agree with that particular interpretation to require it to be directly relevant. I'll read something I have pulled out from the past, which is a ruling by Senator Beahan, as President, when he referred to President Baker.
Senator Wong interjecting—
The PRESIDENT: It is. Senator Wong, I'm going to that. He ruled:
… relevance means relevance to the subject matter under consideration. A speech, amendment or answer is relevant to a motion, bill or question if it deals with the same subject matter. Thus, if a question concerns the state of the economy, a minister's answer is relevant if it refers to the state of the economy.
The insertion of the word 'directly' narrowed that interpretation, so it is not as broad as was ruled in that case, but the ruling goes on to say:
… there is a tendency to confuse relevance and responsiveness. An answer can be relevant to a question—that is, it can deal with the same subject matter—without necessarily being responsive to the question.
I'm listening very carefully to Senator Scullion, and I do not believe that the minister, in the first 22 seconds of an answer outlining how many people do receive care, is not directly relevant to a question asking about how many do not receive care. But I am listening very carefully to the minister's answer. Senator Wong.
Senator Wong: Mr President, we have listened to your reference to Senator Beahan's ruling. I don't propose to take up question time for a longer discussion, but I do flag that the opposition's view is that that was substantially altered by the changes to the standing orders and the lengthy discussion—as someone who was here during that period—that accompanied the change to direct relevance, which, in fact, went to some of the issues that President Beahan raised. I want to flag, now, that your indication from the chair is something we would like the opportunity to make submissions on, if you propose to take that approach. I maintain my point of order that it cannot possibly be directly relevant to talk about the number of people who are receiving care when the only question that has been asked of this minister is to confirm a number of those who are not.
The PRESIDENT: Last week there was an extensive discussion on this, and I will be coming back to the chamber in writing. I invited submissions last week, and a number of people have made them. I'll be coming back to the Senate prior to the next period of sitting. I read out that ruling from President Baker to reinforce what I said last week—
Senator Jacinta Collins: Beahan.
Senator Wong: Beahan.
The PRESIDENT: I read out the ruling from President Beahan, which refers to a ruling from President Baker—he was the first one, I think. Senators will recall I did address the importance of the insertion of the word 'directly' last week. That substantially narrows that. I'm happy to take submissions, but, as I said, in the first 22 seconds of the answer from the minister, I do not believe outlining how many people do receive something is not directly relevant to answering a question about how many do not. But I'm listening carefully. The minister has 38 seconds remaining. Senator Scullion.
Senator SCULLION: Mr President, I think it was in February of 2017 that we indicated that we have a new home-care system which gives older Australians more choice. The demand for home care, which is quite correct, particularly in levels 3 and 4, is a reflection of people's indication that more and more people wish to stay at home. And so we have invested an additional $1.6 billion in—
The PRESIDENT: Senator Collins, on a point of order?
Senator Jacinta Collins: On a point of order, Mr President: the difficulty with the minister's answers on relevance is that we all know—the Australian public at large know—that there is a growing number of older Australians. Relying on that to avoid answering a question about the number of older Australians that—
The PRESIDENT: Senator Collins, please direct your point of order to me.
Senator Jacinta Collins: can't access services is not appropriate.
The PRESIDENT: When ministers are asked a question, they are granted the opportunity to provide some context. The first point of order was 22 seconds into the answer. Senator Scullion, you've been reminded of the exact nature of the question. One does need to be directly relevant to it, which does narrow the scope of what extraneous material can be directly relevant. Senator Scullion.
Senator SCULLION: Thank you, Mr President. I think the important point that those opposite missed is that it's actually in the level 3 and 4 care which is the most important, and we'll be investing in the vast majority— (Time expired)
The PRESIDENT: Senator O'Neill, a final supplementary question?
Senator O'NEILL (New South Wales) (14:37): I hope that the minister can be responsive as well as relevant this time. Some older Australians have been waiting for more than two years without any care. How much longer does the Morrison government expect older Australians to wait for this care? Can the minister explain to older Australians and their families and loved ones how the government's rushed announcement of a royal commission into aged care will help them get the care they need now?
Senator SCULLION (Northern Territory—Minister for Indigenous Affairs and Leader of The Nationals in the Senate) (14:37): They say, 'What would happen under our government; we're doing these things and those things,' to make a direct comparative, I suppose, of what they will do or have done. In 2010-11, it was the Labor Party that ripped money out of residential aged care and failed to reinvest all of those dollars—so it was a $9 million cut. Of course, you can look at Budget Paper No. 2 from 2010-11. In the next year, that wasn't enough. They said, 'We decided to rip $200 million out of residential aged care so we're leaving those most vulnerable without the support that they need.' Again, you can look at Budget Paper No. 2 from 2011-12. Then we move on to 2012-13, where there was another cut of $135 million. Again, the source is Budget Paper No. 2 from 2012-13. Under Labor's Living Longer Living Better reforms, the ratio sets were inadequate and severely underestimated, so I don't really appreciate the nauseating lectures from the failures opposite. (Time expired)
Dairy Industry
Senator HANSON (Queensland) (14:38): My question is to the minister representing the Minister for Agriculture and Water Resources, Senator Canavan. Fodder shortages caused by drought will lead to an increase in food prices, but the price of home-brand supermarket milk will not rise because Coles and Woolworths control 80 per cent of the domestic dairy market. It's not a monopoly but a duopoly. These two companies buy fresh milk below the cost of its production by threatening milk processors with the removal of their other products from supermarket shelves—products like cheese and yoghurt. In a cynical move, Coles has pledged interest-free loans to farmers and Woolworths is spending $1.5 million supporting the Buy a Bale initiative. But, at the same time, these two giant companies undermine dairy farmers by not paying a fair price for fresh milk. Will the government refer the conduct of Coles and Woolworths to the ACCC on the basis of their anticompetitive conduct in the dairy industry?
Senator CANAVAN (Queensland—Minister for Resources and Northern Australia) (14:39): I thank Senator Hanson for that question. It is a very important question about the plight of dairy farmers in this nation. The short answer to Senator Hanson's question is that the government has already conducted an ACCC inquiry into the dairy industry. We've received those recommendations back. The most significant of the recommendations is the establishment of a mandatory code of conduct for the dairy industry. The government is currently considering that recommendation. We are moving forward with it. I thank and congratulate the Australian Dairy Farmers organisation for, I think in the last week or two, coming behind and supporting that mandatory code of conduct. So we will be acting soon on the recommendations of that report.
I would also like to take this opportunity to point out the number of other things the government has been doing to assist Australian dairy farmers in recent years. We've provided significant direct assistance to the dairy industry, both in response to the crisis in Victoria in recent years, when milk contracts—
The PRESIDENT: Senator Hanson, on a point of order?
Senator Hanson: My question was to refer the conduct of Coles and Woolworths to the ACCC because of their anticompetitive conduct in relation to threats to the dairy farmers to take their products from the shelves. There was no reference to that whatsoever.
The PRESIDENT: Senator Hanson, that was the end of a very long question. As long as the minister is directly relevant to part of the question asked, I am not in a position to instruct him how to answer the question. I've been listening carefully to the minister. You've reminded him of the end of your question. I believe he is being directly relevant to the question. Do you want to make another submission, Senator Hanson?
Senator Hanson: Yes, I do. My question was the relevance of the conduct of Coles and Woolworths to the ACCC on the basis of anticompetitive behaviour.
The PRESIDENT: I have ruled. Please resume your seat. You had a lengthy introduction to that question leading up to that part at the end of it. As long as the minister is directly relevant to part of your question asked, he is in order.
Senator CANAVAN: We have conducted an ACCC inquiry into the dairy industry, but it's not the only thing that we've been doing, because we do think that some of the issues faced in the dairy industry require more immediate action. That's why we've provided $579 million of assistance through the Dairy Support Package. We've also provided drought assistance to 600 dairy farmers across Australia. We've conducted the ACCC inquiry. Also, in terms of the anticompetitive conduct issues that Senator Hanson has raised, we have strengthened the Competition and Consumer Act through the addition of the effects test, which is something that the Queensland Dairyfarmers' Organisation specifically asked for and fought for, and I recognise their work for that. Greater action is able to be taken against processors or retailers in the sector thanks to the government's actions in strengthening competition laws.
The PRESIDENT: Senator Hanson, is there a supplementary question?
Senator HANSON (Queensland) (14:42): Dairy farmers in Queensland now have less than three months of feed in their sheds. What additional financial support will the government provide to make sure that not one single dairy family has to send its whole herd to the slaughterhouse, given the government has looked the other way while Coles and Woolworths used their market power to destroy the dairy farming sector?
Senator CANAVAN (Queensland—Minister for Resources and Northern Australia) (14:43): I fundamentally reject that suggestion from Senator Hanson that the government has looked the other way. We have not looked the other way. As I mentioned in my first answer, the effects test that the government introduced was fought tooth and nail by Coles and Woolworths, who have teamed up with the Labor Party to try and stop it. Big business was all over there on that side of the chamber; the big telecommunication companies, the big banks, Coles and Woolworths were all opposed to that. It was over on this side that we stood up for small businesses and farmers of this country to strengthen our competition laws and get the effects test through, and that happened. It was one of the most significant changes to competition laws in this place for decades, and it's something that this government put in place. So that is fundamentally wrong.
In terms of the fodder storage, the government has allowed for immediate deduction depreciation on fodder storage for farmers, including dairy farmers. We are providing a substantial $1.8 billion worth of assistance to drought affected farmers, including the 600 dairy farmers I mentioned earlier as well.
The PRESIDENT: Senator Hanson, is there a final supplementary question?
Senator HANSON (Queensland) (14:44): In Queensland, we have gone from 1,500 dairy farms to about 385 since the year 2000. It costs about 58 cents a litre to produce a litre of milk in Queensland, and in Victoria the break-even cost is about 42 cents. What are the reasons which prevent the government regulating the dairy industry to guarantee a minimum farm gate price for fresh milk, a price paid to farmers to at least guarantee the cost of milk production plus a small profit?
Senator CANAVAN (Queensland—Minister for Resources and Northern Australia) (14:44): As I've mentioned, what we believe on this side is that we have strong competition to allow small businesses and farmers to get a fair return for the work they do. That includes making sure that larger businesses cannot act in a repetitive and strong anti-competitive way, so we have strong competition laws to do that. That's why we've referred these matters to the ACCC, it's why we're moving a mandatory code of conduct forward and it's also why we established the effects test under competition laws. It's also why the agriculture minister is open-minded to the suggestion of having a temporary levy to help dairy farmers. We have spoken to retailers about this. If retailers are supportive of a levy, and we're having constructive discussions, the Minister for Agriculture has indicated he would potentially take that forward to provide temporary relief to farmers. But the best thing we can do for farmers is have strong competition in the marketplace to provide them a good return over time.
Pensions and Benefits
Senator GICHUHI (South Australia) (14:45): My question is to the Minister representing the Minister for Families and Social Services, Senator Fifield: Will the minister update the Senate how the Morrison government is supporting senior Australians through our social security system?
Senator FIFIELD (Victoria—Manager of Government Business in the Senate and Minister for Communications and the Arts) (14:46): The government does offer strong support for senior Australians through our social services and our welfare system. Since this government was elected, pensions have increased by $99.20 per fortnight for singles and by $149.40 per fortnight for couples combined. As Minister Cormann mentioned, pension payments, including the age pension and the disability support pension, will be rising for singles and couples. We're also supporting elderly Australians by providing greater certainty around our age pension system. It was announced on 5 September by the Prime Minister that the proposed increase to the qualification age for the age pension to 70 will no longer proceed. For Australians who want to retire at 67, the pension is there for them. The government can do this because of our strong economic management and because of the comprehensive work we've done in improving the sustainability and resilience of our welfare system.
In the most recent budget, we announced a comprehensive package of measures to help Australians live longer, healthier and more active lives. These decisions build on other measures to support Australians, including retaining the energy supplement. Prudent budgetary management since 2013 allows us to offer certainty to seniors without compromising the viability of the age pension payment. The age pension is currently available to eligible Australians from the age of 65½, with the eligibility age raising to 67 by 2023 under legislation which was passed by the previous Labor government. I should also indicate that the energy supplement to eligible individuals will also be included.
Senator Watt interjecting—
The PRESIDENT: Senator Watt, you're blessed with a large voice. It shouldn't be louder than the minister speaking. Senator Gichuhi, on a supplementary question.
Senator GICHUHI (South Australia) (14:48): Can the minister advise the Senate as to how the recent budget measures have assisted senior Australians in living longer, healthier and more active lives?
Senator FIFIELD (Victoria—Manager of Government Business in the Senate and Minister for Communications and the Arts) (14:48): In this year's budget, the government announced a package of measures to help Australians to live longer, healthier and more active lives. This includes extending and expanding the pensioner work bonus to include self-employed pensioners and an increase in the bonus from $250 to $300 per fortnight, with the maximum accrual increasing from $6,500 to $7,800. Opening the pension loan scheme is another element—that's to all older Australians with securable real estate owned in Australia, including full-rate pensioners of age pension age and self-funded retirees—so a pensioner couple on maximum rate can boost their retirement income by up to $17,786.60 without impacting their eligibility for the pension or other benefits.
The PRESIDENT: Senator Gichuhi, a final supplementary question.
Senator GICHUHI (South Australia) (14:49): Can the minister advise the Senate as to how this government is ensuring that social services payments that senior Australians rely on are sustainable into the future?
Senator FIFIELD (Victoria—Manager of Government Business in the Senate and Minister for Communications and the Arts) (14:50): Thanks, Senator Gichuhi. A sustainable welfare system is a fair welfare system. Often, having a good economic policy and a good social policy will be presented by some in this place as alternatives: you either have to choose a good economic policy or a good social policy. The fact is that they're two sides of the one coin—that you need a good economic policy to sustain and support a good social policy; that, when you're talking about good economic policy and good social policy, it's a little bit like breathing in and breathing out: breathing in is good economic policy; breathing outside good social policy. What this government has demonstrated since 2013—since it was elected—is that the way to ensure a good social policy for all Australians is to make sure that you have a good economic policy, and that's what this government's doing.
Aged Care
Senator POLLEY (Tasmania) (14:51): My question is to the minister representing the Minister for Senior Australians and Aged Care, Senator Scullion. In an interview for the Four Corners program to be broadcast tonight, the minister said:
A royal commission, after two years and maybe $200 million being spent on it, will come back with the same set or a very similar set of recommendations …
When was the minister first advised of the change in the government's policy? Was it before or after his interview with Four Corners?
Senator SCULLION (Northern Territory—Minister for Indigenous Affairs and Leader of The Nationals in the Senate) (14:51): The exact nature of the timing of that meeting I'm quite sure someone listening will provide me with. I understood that it was earlier in the week that the minister made a statement of a similar ilk. I didn't realise it was to Four Corners—I'd read his comments about he'd much rather invest much of these funds that potentially could be for a royal commission into the sector. I think we'd all acknowledge that since then he's made another statement, but I think certainly most Australians would acknowledge that—
Opposition senators interjecting—
Senator SCULLION: Well, because there are some things that have come to light since then. The gigglers from the other side: it's a very serious matter. Some additional information has to come light that has shown—
Senator Kim Carr: Were you aware the Prime Minister had changed his mind? You read a poll.
The PRESIDENT: Order on my left! Senator Carr.
Senator SCULLION: There is, quite clearly, some information that has come to light on the Four Corners report. There is some additional information that the minister has been looking at. He now has indicated in a statement, particularly after looking at the terms of reference, that he would support a royal commission. The reason he will support a royal commission is that, wherever we have our senior Australians, , whose care is not the best care we can offer, where the quality of that care is not the best care that we can provide—
Senator Polley: A point of order on relevance—the question was: when was the minister advised of the change in the government's policy?
The PRESIDENT: Thank you, Senator Polley. Senator Scullion, Senator Polley has reminded you of the specific nature of the question. Senator Scullion, you have 37 seconds remaining.
Senator SCULLION: On the point of order, Mr President—my indication was that she asked me whether or not the minister knew before or after the Four Corners report. I said I didn't know, and I said I will get back to you on notice. I was then proceeding with the remainder of the question, Mr President.
The PRESIDENT: You are allowed to add information as long as the other information added is directly relevant to the question. The senator reminded you of that. You have 37 seconds remaining. Senator Scullion.
Senator SCULLION: Thank you very much. It is absolutely essential that we are able to ensure the quality and safety of our most treasured Australians. And so a royal commission will be able to outline a confidence for families, with relatives and with friends that we'll throw a light on it in so much as parliament—not government, but parliament—can provide those matters. And, can I say, it was pretty interesting about people being confused about their position. The quote 'I don't know if one is needed' on Tuesday was in fact from Bill Shorten.
The PRESIDENT: Senator Polley, a supplementary question.
Senator POLLEY (Tasmania) (14:55): Who made the decision to change the government's position and finally accept the need for a royal commission?
Senator SCULLION (Northern Territory—Minister for Indigenous Affairs and Leader of The Nationals in the Senate) (14:55): We are a cabinet government, and the decision was made by cabinet. But I would indicate that I don't accept the premise of the question where the indications are that we somehow changed our position. We came to a conclusion when there was significant new material. We looked carefully at a number of reports of inquiries into this matter in addition to the material that was provided by Four Corners. The government considered that information, as they do, in the normal way, and we made a decision that this would be in the interests of senior Australians, and that's why we've moved on this matter. I don't think that should be a particular surprise. We are absolutely committed to ensuring that the most senior Australians have the very best care and the very best safety, and we have their very best interests at heart.
The PRESIDENT: Senator Polley, a final supplementary question.
Senator POLLEY (Tasmania) (14:56): Will the minister now apologise to older Australians, their families and their loved ones for dismissing warnings about the state of the aged-care sector and delaying real action to address this crisis?
Senator SCULLION (Northern Territory—Minister for Indigenous Affairs and Leader of The Nationals in the Senate) (14:56): Senator Polley may have been confused when I was referring to Mr Shorten's statement, 'I don't know if one is needed', and I can't really apologise on his behalf, Mr President.
The PRESIDENT: Senator Polley, on a point of order.
Senator Polley: It’s a point of order on relevance. The light-hearted way that this minister has responded reflects the government's inaction on this issue.
The PRESIDENT: Senator Polley, that is not a point of order on direct relevance. The minister's been speaking for 11 seconds. I am listening to his answer. He has 49 seconds remaining.
Senator SCULLION: Thank you for that, Mr President. Again, there seems to be a move towards partisanship on this most important issue. We will not get dragged into that sorry mess. We're about fixing something. We're about doing something that the previous government never did. We will not be dragged into politicising the outcomes. We are working to fix this. We have made significant investments. As I've indicated, we'll be making an investment of an additional $5 billion over the next five years. We've increased investment by $5 billion over the past five years. A $10 billion increase in investment in care and safety of our most treasured Australians is a great record from this government.
Employment
Senator HUME (Victoria—Deputy Government Whip in the Senate) (14:57): My question is to the minister representing the Minister for Jobs, Industrial Relations and Women, Senator Payne. Can the minister update the Senate on how the Morrison government is helping to support older Australians who want to engage in the workforce?
Senator PAYNE (New South Wales—Minister for Foreign Affairs) (14:58): I thank Senator Hume very much for her question. The Morrison government believes that, if you want work, you should be able to access it. As we're now living healthier and longer lives, active ageing presents great opportunities for older Australians to keep participating in the workforce and to better prepare for a sustainable future and a fulfilling retirement. Aside from the obvious financial benefits that that brings, it also works to help improve health outcomes and contribute to self-esteem and has significant social and emotional benefits—and we all see those in our communities.
That's why the government is helping to support mature-age workers who want to work to find and retain employment through a number of programs. For instance, in an Australian first, we are providing comprehensive intensive support to mature-age jobseekers through the Career Transition Assistance program trial, which builds participants' competitiveness in the local jobs market. That program will be rolled out nationally from next year. We're also providing funding for upskilling opportunities for mature-aged workers who are identified as being at risk through the Skills and Training Incentive. We're expanding the Entrepreneurship Facilitators program to 20 additional locations to encourage entrepreneurship and self-employment amongst mature-age Australians. And we're providing Restart wage subsidies up to $10,000 to encourage business to hire and retain eligible mature-age employees. This is, of course, in addition to the many other measures contained in the government's More Choices for a Longer Life Package, which was announced in the most recent budget.
Our Australian economy benefits from the experience, skills and work ethic of mature-age workers, just as our communities and our families benefit from their contributions more broadly
The PRESIDENT: A supplementary question, Senator Hume.
Senator HUME (Victoria—Deputy Government Whip in the Senate) (15:00): Can the minister advise how the government's approach is translating to more jobs for mature-age workers?
Senator PAYNE (New South Wales—Minister for Foreign Affairs) (15:00): That's a very good supplementary question because, as I alluded to in my previous answer, the government is making a strong investment through the More Choices for a Longer Life Package, which we announced in the 2018-19 budget, to help people prepare for a long life which is independent, healthy and connected, and which enables them to work for longer as they wish.
Under the More Choices for a Longer Life Package we are investing $189.7 million in a range of jobs and skills measures to help mature-age Australians to find the right job, to stay in the workplace, to have flexibility in their later worker years and, importantly, to retire with security. This action and the job growth flowing from this government's stewardship of the economy has extended to the employment of mature workers. There was an increase of 73,000 mature-age workers in the workforce over the past 12 months. The participation rate also increased over the past 12 months to sit at almost 70 per cent, which was above the overall participation rate recorded for all persons, at 65.7 per cent. It's part of more than a million jobs created by this government.
The PRESIDENT: Senator Hume, a final supplementary question.
Senator HUME (Victoria—Deputy Government Whip in the Senate) (15:01): Is the minister aware of any risks to the government's approach?
Senator PAYNE (New South Wales—Minister for Foreign Affairs) (15:01): Unfortunately I am, because the reckless high-taxing approach that those opposite would adopt, which would see them with their hands in the pockets of older Australians, will actually impact on them with $200 billion worth of taxes. They want to hike taxes on close to one million small businesses, just for example. Can you imagine how hard that will hit Australia's job market? Businesses spending more on taxes means they have less to spend on workers. The approach of those opposite is just further evidence that they can't be trusted to run the country's economy or to help older Australians find and retain employment.
In contrast to those opposite, the Morrison government is focused on delivering those jobs. As last week's labour force figures show, there are more Australians in work than ever before and more Australians in full-time work than ever before. It's clear that only this government, the Morrison government, has a plan to deliver more jobs for all Australians, including older Australians.
Senator Cormann: Mr President, I ask that further questions be placed on the Notice Paper.
QUESTIONS WITHOUT NOTICE: TAKE NOTE OF ANSWERS
Aged Care
Senator POLLEY (Tasmania) (15:03): I move:
That the Senate take note of the answers given by the Minister for Indigenous Affairs (Senator Scullion) to questions without notice asked by Opposition senators today relating to aged care funding.
What an extraordinary question time when a minister can't even confirm the figures that the government itself has released. Today we witnessed a minister who could not even confirm the figures given out by the government's own department relating to 108,000 older Australian whose are awaiting home care packages. We also saw the budget document which confirms that Treasurer Morrison cut half a billion dollars from the aged-care sector, and then, following on from that, he cut $1.2 billion out of the aged-care sector. And they are wondering why we need to have a royal commission! We have a minister who has 14 reports sitting on his desk, gathering dust, all pointing to the crisis that has been experienced in the aged-care sector over the last five years. What we've also seen today is a government trying to run 100 miles away from the responsibility it has to show leadership in the aged-care sector.
It is not just the Labor opposition calling the government out for their lack of attention and lack of capacity to run this department; it is the sector themselves. On Friday I was with Bill Shorten, the Leader of the Opposition, and Julie Collins, the shadow minister for ageing. We had a roundtable in Melbourne that was made up of consumer groups, providers to the aged care sector, people that have developed public policy in this area. They all acknowledged that this government has failed—failed older Australians, failed to deliver on the Living Longer Living Better reforms that the last Labor government set in place.
We've had three ministers over the last four years, and not one of those ministers has had any real interest in the aged care sector. If Mr Abbott and Mr Turnbull and Mr Morrison had any concern at all for older Australians, they would have a minister for ageing in the cabinet. A minister who is in the outer ministry does not have the same influence over a government as one that sits around that cabinet table. We have an ageing population in this country and a rise in dementia, and what we've seen from this government is a fail. On 26 June 2014 the then minister, Senator Fifield, came into this chamber and, without any consultation whatsoever with the sector or within any of the organisations that deliver the services, cut the dementia supplement by $110 million. That was an enormous blow, and that was the beginning of this spiralling out of control of the lack of funding in the aged care sector.
The sector has spoken to the government. We've been out around this country—I have, over the last five years—visiting aged care centres, talking to providers, talking to COTA, and the same issue has been raised with us over and over again. This government has been hell-bent on cutting money out of this sector. We should be investing. They come in here and deny that, out of their own budget papers, the then Treasurer, now Prime Minister, who is crying crocodile tears for older Australians, cut $1.2 billion. And they expect that the providers can provide the same care and support. We know that there's a huge hole in the supply of aged care workers in this country. We know that they've run down and cut funding from the TAFE system, which has the responsibility for training aged care workers. We know that there is so much competition for disability workers that we need to invest to have better training. We need to have more workers. We have heard the calls from the nursing federation wanting more nurses in this sector. We need to include the GPs. We need more GPs providing health care to older Australians. And what have we seen in question time? A failed attempt, just like this government has failed to protect and look after the most vulnerable people in our community. They come in here and talk about older Australians building this country. Each and every one of them should be ashamed of themselves. This Prime Minister can cry crocodile tears, but he was the Treasurer who cut the funding. He was the one who started with almost $2 billion in funding cuts. (Time expired)
Senator IAN MACDONALD (Queensland) (15:08): I really do not know why we bother with question time. Questions are asked of ministers, factual answers are given, and then the questioner completely ignores the answer, makes up some other facts that might suit their political approach, but simply doesn't want to know the truth. I ask the previous speaker, was she one of those that went around the nursing homes before the last election telling people that Medicare was going to be privatised? I ask any of the Labor speakers who might participate in this debate next to answer that question. Were they among those who went around telling people in nursing homes and hospitals that Medicare was going to be privatised? As we all know, that was then, was always and is now the biggest lie going. It's part of the Labor approach these days. Labor have abandoned any real debate on policy issues. All they do is get some of the clever people in the back room to pick a subject and say, 'Let's tell enough lies about that and people will start to believe it.'
Senator Watt interjecting—
Senator IAN MACDONALD: Senator Watt interjects. Were you one of those, Senator Watt, who went around and told the ultimate lie that Medicare was going to be privatised?
The ACTING DEPUTY PRESIDENT ( Senator Gallacher ): Senator Macdonald, would you resume your seat? I would like to remind you of standing order 193(3), which says that ' all imputations of improper motives and all personal reflections on those Houses, members or officers shall be considered highly disorderly.' I'd like you to reflect on that with your continued stance in respect to improper activity on the other side of the chamber.
Senator IAN MACDONALD: Thanks, Mr Acting Deputy President Gallacher. For a moment, I thought you were going to call Senator Watt to order for continuing to try to bully me and shout me down when I'm speaking. If I've cast an imputation on Senator Watt, it doesn't seem to have worried him, because he has laughed all the way through it. So I ask him again—through you, of course, Mr Acting Deputy President—whether he was one of those who went around and deliberately told the untruth to the Australian public that Medicare was going to be privatised. I thought that Senator Watt readily admitted that he was, that he went around and told what we all know now to be the ultimate lie—one of the biggest I've seen since I've been in politics. Remember that before the last election there were newspaper ads and how-to-vote cards being handed out—
Opposition senators interjecting—
The ACTING DEPUTY PRESIDENT: Order! Senator Macdonald, you are entitled to be heard in silence.
Senator IAN MACDONALD: Senator Watt, have you had your moment of glory now?
Senator Wong interjecting—
Senator IAN MACDONALD: You seem to think question time is all about Penny and that, if the focus is not on Senator Wong, question time has failed—but, quite clearly, question time does fail because answers are given. The minister stated the facts, which the previous speaker just chose to ignore completely. Funding for aged care is at record levels. In 2017-18 alone aged-care care spending is estimated to reach $18.6 billion. Over the next five years, funding will grow by $5 billion to $23.6 billion. Compare Labor's record, where they would continually cut funding to aged care—and many other things as well, I might say—with this government's record of increases of $5 billion over the next five years. In addition, $1.6 billion has been provided to create an additional 20,000 higher-need home care packages since last December. In excess of $50 million is being provided every year for dementia specific programs. A further $5.3 million has been committed over four years to pilot improvements to care for people living with dementia, with an emphasis on the use of innovative technologies.
These are actual facts. These aren't lies. These aren't thought bubbles. These don't come from the Labor Party's campaign promoters about what might appeal to Australian voters. These are actual facts. What Senator Polley has indicated—and no doubt Senator O'Neill will do this shortly—
An opposition senator interjecting—
Senator IAN MACDONALD: Make up any lie you like. Follow the normal Labor program and make up any lie give any misstatement of fact. They hope that if they say it often enough, the Australian public will believe it. It worked for Medicare.
Opposition senators interjecting—
Senator IAN MACDONALD: It did work for Medicare, and I guess this is the next Mediscare campaign. They talk about aged people with facts that are not true and hope that some of it sticks for political purposes. (Time expired)
Senator O'NEILL (New South Wales) (15:14): What we saw with that contribution is what we see typically from this Liberal government—a denial of the reality facing Australians. Senator Macdonald stood here today and started talking about lies. We are talking about 108,000 Australians today. Some of them might be related to you. Many of them are in the area where I live on the Central Coast—750 of them being very poorly represented by the member for Robertson, Lucy Wicks. They need a change of government to address the fact that 108,000 Australians—on the figures provided by this government's health department—are waiting for an aged-care package. Do you know what that means? It means 108,000 people today are waiting for somebody to come and give them a hand, maybe to have a shower; to help them clean the linen on their bed; to take them to the shops. There are 54,000 Australians on that list who have absolutely nothing. Yet this government is pretending that they are the new friend of the aged.
We know that this is a big con job because last week, not surprisingly, the new Prime Minister, Mr Morrison—if you can keep up with the quick changes that are going on over there—decided that he needed to have a break from the bad image that the Liberals have. So he has decided, 'There is going to be a Four Corners report out on Monday. What can I do to keep those aged people on my side?' So he has decided to call a royal commission, ignoring the fact that this government is sitting on 13 reports—as they sit there in question time, ignoring the issue every single day when they come here—13 reports that tell us they have to invest properly in health and particularly in aged care places. Prime Minister Morrison wants to blame Tony Abbott and say, 'Yes, he wasn't such a great leader. Turnbull has gone. I'm so much better; I'm going to look after aged Australians.' But he can't deny the fact that he is the uniting force behind those two former prime ministers. He was the Treasurer who took $1.2 billion out of aged care. It's not a big shock to the rest of us who live in the real world, who understand what it means when you don't get somebody to come and help you with a shower, who understand what it means when your ill health in the aged period of your life turns into dementia, and after having worked your whole life you're sitting on a waiting list for two years to get a response.
The insult that this government adds to the injuries that they've already inflicted is that they've played a game where they've pulled money out of aged care, against some people in residential aged care, and they created 14,000 places for aged care packages at home. I'm all for supporting the people who want to live at home. I'm all for people getting the care that they need. But don't play the game of pitting one part of the sector against the other. That's what they did. They did the little double shuffle—pulling the money from here and giving it over there. That's no money going into the sector at all. Remember, $1.2 billion in their budget was what they took out of aged care, and now they want to pretend that they're friends of the sector.
You've seen the media responses and the stories that we have heard today. When this royal commission kicks off, which Labor has been calling for for some time, we'll hear horrendous stories. The reality is that we've got level 3 and level 4 care packages that are needed right now today. If this government thinks that as opposition we are going to sit back and let them say, 'It's all okay. We're going to a royal commission'—it's not okay. It's not enough, because today there are 108,000 people waiting for an aged care package. Today there are 54,000 Australians who have absolutely no help coming into their homes, despite the fact that they're trying to stay there. The reality is, sadly, that we have seen the consequences of leaving aged people without care. When it really gets to the pointy end, it means that some Australians will die in their homes. That is just the reality. We talk about politics sometimes like it doesn't matter in our lives, but it matters for these aged people. They should be telling the truth to Australians. Have a royal commission, yes, but do it properly. (Time expired)
Senator WILLIAMS (New South Wales—Nationals Whip in the Senate) (15:19): I find it quite amazing that Senator O'Neill says, 'They should be telling the truth.' Just like Labor was telling the truth at the last election about privatising Medicare? Is that the sort of truth you want to talk about, Senator O'Neill? They were telling complete furphies to the Australian people, saying, 'A coalition government will privatise Medicare.' What rot!
I tell you what is the truth, Mr Acting Deputy President Gallacher, these words:
… remains unconvinced a royal commission into the sector is warranted—
into the aged-care sector of course. Who said that? Mr Bill Shorten in June 2018—remains unconvinced a royal commission is necessary. Of course, there's a change of heart now—always a change of heart into royal commissions from those opposite. In 2014 when the Greens moved a motion here to have a royal commission into the banking and finance sector, where was Labor? Over there opposing it. That's for sure. Yes, Senator Cameron, they were. I was over there with the Greens supporting it.
Senator Cameron interjecting—
Senator WILLIAMS: I was over there supporting it; You were opposing it. Just like we recommended a royal commission when Senator Bishop handed down his economics committee report. Labor opposed it. Thank goodness it's going now. Thank goodness we've got it up and running, and let's hope it sorts the sector out.
I have no doubt whatsoever that tonight's Four Corners story will show some very damning evidence of the care in aged-care facilities, but those opposite will say, 'Oh, it started in September 2013 when the coalition was elected. It was all perfect up till then.' That's what they'll say. No, it's never been all perfect, and no doubt there will be problems put to the public tonight and they'll be very concerned by what we see on television.
Senator Polley said the government's shown no leadership about getting this issue fixed and putting a spotlight on it. Let me tell you, Mr Acting Deputy President: as a result of the increased audit work we commissioned as a government to deal with this problem, the Department of Health has closed almost one aged-care service per month since Oakden with an increasing number, I understand, to improve the quality of care. So almost one a month has been closing after we commissioned the inquiry into the problems, and the Department of Health have acted ever since. So to say we've shown no leadership is absolute rot.
This is simply a political game being played. I'm with Senator Macdonald: what do we ever get out of question time? A waste of taxpayers' money. Perhaps the money that we're wasting here on question time and taking note of answers should be put into aged-care facilities. That'd be a good idea. We'd stop wasting time, stop wasting taxpayers' money and the aged would be looked after better.
Those opposite are very concerned about the aged—yeah, right. Those self-funded retirees who've retired and are ageing—you want to tax them twice on their dividends, the shares they've invested in. Fully franked shares—these people are on $30,000 or $35,000 a year, and you want to tax them again. That's really looking after them. Just cut their budget—they're living on a shoe string budget now.
To say we've cut spending—Senator Scullion made it quite clear: we've increased spending to the aged-care sector by a billion dollars every year since we've been in government with another $5 billion on the way. This is going to be a political football, and it shouldn't be. Everyone in this building, on all sides of politics and on the crossbenches, should work together so that the necessary aged-care changes are brought in. A good start is a royal commission to have a good look at the whole industry. Of course it's expensive.
Of course you need nurses, carers, people and domestic staff working in aged care. My mother was in an aged-care facility in Inverell for many years, and I thought overall they did a very good job looking after her—I was only with her probably an hour or two before she died, and the staff were simply wonderful. I have heard of neglect and abuse in facilities around New South Wales. People probably get frustrated, angry—that's where they've got to learn to be a little tolerant with the aged, especially those suffering dementia, Alzheimer's, all sorts of memory loss and you name it. Sadly, one in two Australians aged 80 and over will suffer some sort of memory loss, dementia, in one way or another. Sure, you've got to be tolerant, and it's 24-hour work in aged-care facilities, day and night—GPs visiting, volunteers visiting. Thank goodness for the many volunteers who visit the elderly to comfort them, give them some hope and some friendship—that's another vital thing we should look at. But to see the politics being played out now about aged care and how it's all our fault—this has all just happened since we've been in government; it was all perfect before then—is absolute rot. Let's hope we get it right in the future.
Senator DAVID SMITH (Australian Capital Territory) (15:24): I also wish to take note of answers given by the minister representing the Minister for Senior Australians and Aged Care, Senator Scullion. For a long time, Labor has been saying that there is a crisis in our aged-care system, and finally the government has recognised this and that the crisis is of sufficient magnitude to announce a royal commission. The quality standards and reporting system clearly isn't working. There aren't enough aged-care workers and they aren't given enough pay, respect or support. As Gerard Hayes said earlier today, it's right that a royal commission must go beyond simply asking what's happening and get to the bottom of why it's happening and how it can be fixed. That means tackling the issue of financial sustainability so that aged-care providers can afford to provide the level of care that Australians deserve while also providing appropriate pay and conditions for staff.
Over 1.3 million older Australians receive aged-care services every year, including 240,000 people receiving permanent residential aged care. As our population ages, and particularly as the number of Australians aged over 85 grows, the number of Australians in need of aged-care services will continue to grow. I've experienced the challenges of this system firsthand with my father moving to care over the last 18 months. As Treasurer, the current Prime Minister cut nearly $2 billion out of the aged-care system. He can't hide from this behind a lapel pin. Initially, these cuts were to be achieved by changing the scoring matrix for aged-care funding subsidies. This was supposedly justified by claims that some aged-care providers were claiming a higher level of subsidy than was warranted by the needs of residents. This government's initial claim that this was due to unsupported growth in aged-care funding claims was blown out of the water by their own changes which spread the impact of cuts across the aged-care sector, pausing relevant indexation for 2017-18 to ensure that the amount of savings was maintained. Clearly, these were funding cuts driven by the need to find savings for things like tax giveaways to the banks and multinationals rather than any concerns for improving the aged-care system.
We shouldn't be surprised that this system is in crisis. To provide quality of life to older Australians and their families, we need our aged-care system to deliver accessible, affordable and quality aged care. However, what this government has done falls way short of that. I've spoken to dozens of aged-care workers across the Australian capital region and their message is pretty clear. You simply can't impose cuts of this magnitude on a sector like aged care and not expect it to have an impact on the quality and availability of care for older Australians and to put more stress on a workforce that is already under pressure to provide quality care for those in need. More than 108,000 Australians are now waiting for a home-care package and around 88,000 are waiting for a high-level package. Without additional funding, these Australians will have to continue to wait for an adequate level of care. Over 53,000 of these older Australians on the waiting list are receiving no support at all.
This government has been on notice about the need to address the crisis in aged-care funding for some time, not just in residential care but in home-care support. The December 2017 data showed that over 104,000 Australians were waiting for that package, but what was the government's response? A mere 14,000 extra packages delivered over four years. Furthermore, they delayed the release of the March 2018 figures, which showed the waiting list had grown further since the start of the year. Older Australians being made to wait for home-care packages is a problem affecting all areas of Australia. Here in the ACT, the December 2017 figures show that 1,593 older Australians were waiting for a home-care package. Two-thirds of them were waiting for the highest level of support, level 4. As the Our Turn To Care campaign has put it, when the Prime Minister took away the time that aged-care workers had to help older Australians with their arthritis, their blood pressure, their pain management and even applying the most basic bandages and dressings, he took away the time that older Australians had to enjoy their retirement; he took away the time they could relax with their families and see their grandchildren grow; he took away the time they had to enjoy the days they spent their whole lives working for. It's critical the Prime Minister— (Time expired)
Question agreed to.
Disability Services
Senator STEELE-JOHN (Western Australia) (15:29): I move:
That the Senate take note of the answer given by the Minister for Finance and the Public Service (Senator Cormann) to a question without notice asked by Senator Steele-John today relating to the abuse and neglect of people with disability.
Earlier in this chamber, I expressed a frustration which has been building within me for over a year. I have, since entering this place under the most unexpected circumstances, worked relentlessly to try to get this issue on the political agenda. I have had behind-the-scenes conversations. I have spoken with three subsequent social services ministers. I have asked nicely. I have asked firmly. I have put forward argument after argument after argument, pleading with this government to give me a satisfactory answer as to why the violence against, abuse of and neglect of disabled people in this nation is not worthy of a royal commission.
Today, for the fourth time, the government could summon no better answer than that which I have received three times in the past. Senator Cormann comes into this place and suggests to this chamber that the existence of the quality and safeguards regime under the NDIS makes the need for a royal commission unnecessary. I would ask Senator Cormann to reflect upon the fact that the aged-care sector is currently under almost an identical quality and safeguard regime. So then why is that a reason for disabled people to be denied their opportunity to make their voices heard when it is not the case for aged care?
We have seen investigation after investigation reveal again and again to this government that there is a systemic, a profound, issue in this nation. Thousands of disabled people suffer daily in this country and are subject to horrors which I am sure Senator Cormann cannot conceive of, and yet there is nothing but silence from this government. There is nothing but useless, repeated excuses. The human rights and dignity of disabled people in this country apparently mean nothing to this government. Your response is that my people can suffer, their screams stifled by your profound inability to conceive of their humanity, to take action that would safeguard their rights. Your godforsaken inability to get to grips with this issue, your apparent comfort to allow years to elapse, casts a long and disgraceful shadow over this parliament and over this Prime Minister, who in 2015 received the very report which should well have informed him of what is continuing to occur under his nose, his government.
Scott Morrison would like us to believe that he is a different kind of politician, that he is a different kind of leader. But all I see in his silence is the same deadpan politics which I have fought against from the moment I arrived—the same cold, uninterested, mechanical governance which so drives the frustration and hatred that the Australian people hold in their hearts for our so-called leaders.
This is a moment in time where there is an opportunity before this government to act, to do justice, to absolve itself of the sin of inaction. It must take it. (Time expired)
Question agreed to.
NOTICES
Presentation
Senator RUSTON (South Australia—Assistant Minister for International Development and the Pacific) (15:35): I give notice that on the next sitting day I shall move:
That the provisions of paragraph (5) to (8) of standing order 111 not apply to the Treasury Laws Amendment (Supporting Australian Farmers) Bill 2018, allowing it to be considered during this period of sittings.
I also table a statement of reasons justifying the need for this bill to be considered during the sittings and seek leave to have the statement incorporated in Hansard.
Leave granted.
The statement read as follows—
STATEMENT OF REASONS FOR INTRODUCTION AND PASSAGE
IN THE 2018 SPRING SITTINGS
TREASURY LAWS AMENDMENT (SUPPORTING AUSTRALIAN FARMERS) BILL 2018
Purpose of the Bill
The Treasury Laws Amendment (Supporting Australian Farmers) Bill 2018 forms part of the Government's Drought Relief Package and allows primary producers to claim an immediate deduction for expenditure on fodder storage assets.
Reasons for Urgency
In order to provide certainty to primary producers and to allow the ATO to make necessary system changes ahead of Tax Time 2019, passage by the end of the 2018 Spring sittings is required.
(Circulated by authority of the Assistant Treasurer)
NOTICES
Presentation
Senator Williams to move 15 sitting days after today:
No. 1—That the Australian Radiation Protection and Nuclear Safety Amendment (2018 Measures No. 1) Regulations 2018, made under the Australian Radiation Protection and Nuclear Safety Act 1998, be disallowed [F2018L00850].
No. 2—That the Australian Radiation Protection and Nuclear Safety (Licence Charges) Amendment (2018 Measures No. 1) Regulations 2018, made under the Australian Radiation Protection and Nuclear Safety (Licence Charges) Act 1998, be disallowed [F2018L00851].
No. 3—That the Financial Framework (Supplementary Powers) Amendment (Education and Training Measures No. 2) Regulations 2018, made under the Financial Framework (Supplementary Powers) Act 1997, be disallowed [F2018L00839].
No. 4—That the Financial Framework (Supplementary Powers) Amendment (Foreign Affairs and Trade Measures No. 1) Regulations 2018, made under the Financial Framework (Supplementary Powers) Act 1997, be disallowed [F2018L00841].
Senator Anning to move on the next day of sitting:
That the Senate—
(a) notes:
(i) the past comments made by Minister Dutton supporting the plight of the white South African farmers and suggesting that they be given priority for humanitarian visas, and
(ii) Australia's acceptance of an additional 12,000 Syrian and Iraqi refugees between 2015 and 2017 to address displacement caused by the Syrian civil war and the fight against Islamic State;
(b) recognises the current situation of white South Africans is dire as a result of state-sanctioned persecution, resulting in racially motivated murders;
(c) as a matter of principle, strongly condemns any and all calls for the killing, marginalisation, persecution, victimisation and targeting of any racial minority group in the Republic of South Africa by any of its officials, past or present; and
(d) calls on the Government to immediately implement a humanitarian visa program, similar to the Syrian visas, for white South Africans.
Senator Anning to move on the next day of sitting:
That the Senate—
(a) notes that Australians are increasingly fearful of the violent thuggish behaviour seen running rampant, particularly on the streets of Melbourne;
(b) recognises that the tough job our police force have will only get more burdensome as our social cohesion breaks down due to massive third world immigration;
(c) recognises the right to self-defence as an inalienable right, which should not be limited or curtailed by government intervention; and
(d) supports in principle 'Stand Your Ground' self-defence laws which:
(i) remove the duty to retreat, and
(ii) presumes that the defendant had genuine fear for their life.
Senators Wong, McAllister and Singh to move on 20 September 2018:
That the Senate—
(a) welcomes the arrival of the Nobel Peace Ride to Canberra at the end of its 900 km bicycle journey from Melbourne;
(b) notes that the ride is touring the Nobel Peace Prize medal awarded to the International Campaign Against Nuclear Weapons (ICAN), and raising awareness of the United Nations Treaty on the Prohibition of Nuclear Weapons;
(c) acknowledges that civil society and non-government organisations in Australia and internationally, who form the global movement to secure a ban on nuclear weapons, including ICAN, do important work; and
(d) recognises that, as a non-nuclear armed nation and a good international citizen, Australia can make a significant contribution to promoting disarmament, the reduction of nuclear stockpiles, and the responsible use of nuclear technology, and has historically done so, including through the Canberra Commission in 1995 and the International Commission on Nuclear Non-Proliferation and Disarmament (ICNND).
Senators Steele-John and Siewert to move on the next day of sitting:
That the Senate—
(a) notes that:
(i) on 16 September 2018, the Prime Minister announced a royal commission into Australia's aged care system, ahead of the Australian Broadcasting Corporation's Four Corners report on the treatment of older Australians in aged care homes,
(ii) the media has extensively reported on violence, abuse, and neglect against people with disability,
(iii) the Community Affairs References Committee held an inquiry into violence, abuse, and neglect against people with disability in institutional and residential settings during the 44th Parliament,
(iv) on 25 November 2015, the Community Affairs References Committee tabled its report containing 30 recommendations, the headline recommendation calling for a royal commission into the issue,
(v) on 2 March 2017, the Government responded to the recommendations in this report, where it refused to commit to a royal commission,
(vi) in May 2017, more than 120 academics from around Australia signed an open letter urging the Prime Minister to act on the headline recommendation of the Senate inquiry, and a civil society statement from Disabled People's Organisations Australia and endorsed by 163 organisations and groups and over 380 individuals called for a royal commission, and
(vii) on 4 December 2018, the Senate passed a motion calling on the Government to reconsider its decision and commit to a royal commission into violence, abuse, and neglect of people with disability in institutional and residential settings; and
(b) calls on the Government to extend the Royal Commission into Aged Care Quality and Safety to include violence, abuse, and neglect against people with disability in institutional and residential settings. (general business notice of motion no.1065)
Senator Patrick to move on the next day of sitting:
That the Senate directs that the Legal and Constitutional Affairs Legislation Committee, in relation to its inquiry into the provisions of the Federal Circuit and Family Court of Australia Bill 2018 and a related bill must only conduct public hearings after submissions to the inquiry have closed on 23 November 2018 and before 15 April 2019.
Senator Hinch to move on the next day of sitting:
That the Senate—
(a) acknowledges that the Government's recent announcement of a royal commission into aged care is a necessary and appropriate response to evidence of systemic problems within the sector;
(b) notes that:
(i) since 2009 there have been 10 federal inquiries into the aged care sector, as well as a number of state parliamentary inquiries,
(ii) reports have consistently recommended increasing staffing levels to ensure that there are enough nurses and other qualified professionals on duty to provide a minimum standard of care,
(iii) international research suggests that higher registered nurse staffing levels, higher total staffing levels and a high skills mix (ratio of registered nurses to other nursing staff) are associated with better quality care, and
(iv) as it stands, the Department of Health's published list of anticipated terms of reference for the upcoming royal commission does not mention staffing levels; and
(c) calls on the Government to:
(i) amend existing accreditation standards to include a requirement for providers of aged care services to publish their staff-to-resident ratios in the interests of greater transparency, and
(ii) include in the royal commission's terms of reference a direction to examine the impact of staffing levels on quality of care.
Senators O'Neill, Ketter and Di Natale to move on the next day of sitting:
That the Senate—
(a) notes:
(i) that the fear of insurance implications has been shown to deter the uptake of potentially life-saving clinical genetic testing and research participation,
(ii) the unanimous report into the life insurance industry tabled by the Parliamentary Joint Committee on Corporations and Financial Services on 27 March 2018, which revealed that genetic data is not presently sufficiently accurate or reliable, particularly in relation to the increasingly popular direct to consumer genetic testing, for a duty to disclose to be appropriate,
(iii) that the Committee was unanimously of the view that a ban on the use of predictive genetic test results in life insurance underwriting be implemented, at least in the medium term, in a form similar to the United Kingdom moratorium,
(iv) that there are concerns that the current self-regulation model applied to use of genetic data by the life insurance industry is conflicted and a co‑regulatory approach would strike an appropriate balance between safeguarding against the improper use of genetic information by the life insurance industry, while still allowing it to operate efficiently,
(v) that the Government was due to respond to the unanimous report three months after it was tabled, and
(vi) that the Government is yet to respond to the unanimous report; and
(b) calls on the Government to respond to the report, particularly around genetic information.
Senator Storer to move on the next day of sitting:
That the Senate—
(a) notes that:
(i) the Newstart payment has barely increased in real terms in the past 24 years,
(ii) nearly half of Newstart recipients have been on their respective payments for at least two years, and more than 15% for at least five years,
(iii) the Business Council of Australia has stated that 'we need a robust and targeted welfare safety net that ensures displaced workers don't fall into poverty while finding their feet. This could include increasing the inadequate Newstart allowance', and
(iv) a report released in September 2018 by Deloitte Access Economics, commissioned by the Australian Council of Social Service, found that increasing a range of allowance payments, including Newstart, by $75 a week would:
(A) increase the size of the economy by $4 billion a year from an initial injection of $3 billion a year, this being a conservative appraisal of the size and life of the prosperity dividend flowing from the increase,
(B) see the lowest quintile receive 28 times the relative boost to its disposable incomes, providing a tightly targeted fairness impact, with the bulk of relative improvements in disposal incomes overwhelmingly going to Australia's lowest income families, and
(C) increase regional income per head to the least well-off districts across Australia, meaning that regional communities most in need of help would receive it; and
(b) urges the Government to immediately increase Newstart by $75 a week to generate the above prosperity and fairness impacts.
Senators Hanson-Young and Whish-Wilson to move on the next day of sitting:
That the Senate:
(a) notes that the International Whaling Commission (IWC) has rejected Japan's bid to overturn a long-standing ban on commercial whaling;
(b) notes further that Japan has threatened to withdraw from the IWC and indicated its intention to continue hunting for 'scientific' purposes; and
(c) calls on the Government to:
(i) commit to sending a vessel to patrol the Southern Ocean this summer, and
(ii) investigate Australia's legal options under international law.
Senator Waters to move on the next day of sitting:
That the Senate:
(a) notes:
(i) that on 17 September 2018, the Guardian Australia launched a series of damning articles about the practices of lobbyists in the Australian Parliament,
(ii) that the article states that 'Big business is gaining almost unfettered access to the corridors of Australia's Parliament owing to an oversight regime that is weak, unenforced, opaque and unable to keep track of the revolving door between lobbying and government', and
(iii) high profile cases, such as former Resources Minister Mr Ian MacFarlane taking up a job as head of the Queensland Resources Council almost immediately after quitting politics, and Mr Bruce Billson, former Minister for Small Business, being employed by the Franchise Council of Australia (FCA) in March 2016, before actually leaving the Parliament; and
(b) calls on the Government to
(i) urgently tighten the ministerial code of conduct to preclude ministers from taking up jobs as lobbyists within 5 years of leaving Parliament, and
(ii) ensure that meaningful penalties are put in place for former ministers who breach the code of conduct.
Senator Ruston to move on the next day of sitting:
That the provisions of paragraphs (5) to (8) of standing order 111 not apply to the Treasury Laws Amendment (Supporting Australian Farmers) Bill 2018, allowing it to be considered during this period of sittings.
BUSINESS
Leave of Absence
Senator BUSHBY (Tasmania—Chief Government Whip in the Senate) (15:35): by leave—I move:
That leave of absence be granted to Senator McGrath from 17 September to 20 September 2018 for personal reasons.
Question agreed to.
Senator URQUHART (Tasmania—Opposition Whip in the Senate) (15:35): by leave—I move:
That leave of absence be granted to the following senators for today:
(a) Senator Kitching, for personal reasons; and
(b) Senator Lines, on account of parliamentary business.
NOTICES
Withdrawal
Senator LEYONHJELM (New South Wales) (15:36): The New South Wales government has become aware of the Liberal Democratic Party's campaign on fishing lockouts and has dropped its proposal. Therefore I withdraw notice of motion 1058 standing in my name.
Postponement
The Clerk: Postponement notifications have been lodged as follows:
Business of the Senate notice of motion no. 1 standing in the name of Senator Whish-Wilson for today, proposing a reference to the Environment and Communications References Committee, postponed till 19 September 2018.
Business of the Senate notice of motion no. 2 standing in the name of Senator Urquhart for today, proposing a reference to the Environment and Communications References Committee, postponed till 18 September 2018.
COMMITTEES
Reporting Date
The Clerk: Notifications of extensions of time for committees to report have been lodged in respect of the following:
Economics References Committee—Non-conforming building products, extended to 27 November 2018.
Environment and Communications References Committee—
Australian content on broadcast, radio and streaming services, extended to 4 December 2018.
Gaming micro-transactions, extended to 17 October 2018.
Regulatory framework governing water use, extended to 17 October 2018.
The PRESIDENT: I remind senators that question may be put on any proposal at the request of any Senator.
BUSINESS
Leave of Absence
Senator GEORGIOU (Western Australia) (15:37): by leave—I move:
That leave of absence be granted to Senator Georgiou from 10 September to 13 September for personal reasons.
Question agreed to.
COMMITTEES
Allocation of Departments and Agencies
Senator RUSTON (South Australia—Assistant Minister for International Development and the Pacific) (15:38): I move:
That the order of the Senate agreed to on 31 August 2016, as amended on 12 February and 15 February 2018, relating to the allocation of departments and agencies to legislative and general purpose standing committees, be amended to read as follows:
Community Affairs
Health and Aged Care
Social Services, including Human Services
Economics
Industry, Innovation and Science
Treasury
Education and Employment
Education and Training
Jobs and Small Business
Environment and Communications
Communications and the Arts
Environment and Energy
Finance and Public Administration
Finance
Parliament
Prime Minister and Cabinet
Foreign Affairs, Defence and Trade
Defence, including Veterans' Affairs
Foreign Affairs and Trade
Legal and Constitutional Affairs
Attorney-General
Home Affairs
Rural and Regional Affairs and Transport
Agriculture and Water Resources
Infrastructure and Transport.
Question agreed to.
MOTIONS
Great Barrier Reef Foundation
Senator PATRICK (South Australia) (15:38): I move:
(1) That the Senate notes that:
(a) on 21 August 2018, the Senate agreed to an order for the production of documents directed at the Minister representing the Minister for the Environment and Energy for documents relating to the grant of $444 million to the Great Barrier Reef Foundation (the Foundation), including documents demonstrating due diligence was carried out on the Foundation;
(b) on 10 September 2018, the duty minister tabled the index to a due diligence report prepared by the Australian Government Solicitor but did not table the body of the report, making a public interest immunity claim of legal professional privilege;
(c) to the extent that the report fulfils a due diligence task, it cannot be characterised as legal advice and, therefore, cannot attract the privilege – it is noted the document comprised largely information that is available online free of charge or for a nominal fee, such as company details, insolvency notice search results, media searches, ASIC personal name search results, and AUSTLII case searches;
(d) the Senate does not accept legal professional privilege as a basis for a claim of public interest immunity unless it is established that there is some particular harm to be apprehended by the disclosure of the information;
(e) in Egan v Chadwick, Chief Justice Spigelman held that "in performing its accountability function, the Legislative Council may require access to legal advice on the basis of which the Executive acted, or purported to act...access to such advice will be relevant in order to make an informed assessment of the justification for the Executive decision. In my opinion, access to legal advice is reasonably necessary for the exercise by the Legislative Council of its functions"; and
(f) as a country that upholds the rule of law, the Government must not rely on conventions, no matter how longstanding, that are contrary to established principles in law.
(2) That the Senate does not accept the public interest immunity claim made by the then Minister representing the Minister for the Environment and Energy (Senator Birmingham) in relation to the due diligence report prepared by the Australian Government Solicitor, and requires the Minister representing the Minister for the Environment to table the due diligence report, in accordance with the order for the production of documents agreed to by the Senate on 21 August 2018, with any appropriate redactions where there is some particular harm to be apprehended, accompanied by a properly made out claim for public interest immunity identifying the harm.
Senator RUSTON (South Australia—Assistant Minister for International Development and the Pacific) (15:39): I seek leave to make a short statement.
The PRESIDENT: Leave is granted for one minute.
Senator RUSTON: The due diligence report constitutes legal advice. The government did not claim public interest immunity on the basis of legal professional privilege, but on that basis there is public interest in the government's legal advice remaining confidential. This is based on the longstanding practice of successive Australian governments. There is a significant public interest in government having access to confidential legal advice for the purposes of policy development and decision-making. The government sees no reason to depart from this principle in this case.
The PRESIDENT: The question is that motion No.1050 moved by Senator Patrick be agreed to.
The Senate divided. [15:43]
(The President—Senator Ryan)
Female Genital Mutilation
Senator WATERS (Queensland) (15:46): I, and also on behalf of Senator McKim, move:
That the Senate:
(a) notes:
(i) that, on 12 September 2018, it was reported that in June 2018, lawyers representing the Department of Home Affairs argued in court against bringing to Australia a pregnant woman suffering female genital mutilation (FGM) in detention on Nauru for a surgical abortion,
(ii) that whistleblower allegations, reported in August 2017, that Australian Border Force (ABF) impliedly facilitated a change in policy to require requests for abortion to be referred to the Nauruan Overseas Medical Referral (OMR) committee and the Republic of Nauru Hospital, which have opposed all abortion referrals since, and
(iii) the specific medical needs of women in detention with unwanted pregnancies, including the associated post-traumatic stress and physical risks for women suffering FGM; and
(b) calls on the Federal Government to:
(i) reverse the recently introduced process which requires all requests for terminations to go before the OMR and the Republic of Nauru Hospital,
(ii) require ABF to take decisions which are underpinned by Australian medical standards, and
(iii) stop arguing in court to prevent pregnant women needing specialised medical attention from receiving that attention in Australia.
I seek leave to make a short statement.
The PRESIDENT: Leave is granted for one minute.
Senator WATERS: In June 2018 lawyers representing the Department of Home Affairs argued in court against bringing a pregnant refugee, suffering female genital mutilation in detention on Nauru, to Australia for an abortion. The court found that the specific medical needs of women who had undergone FGM were so specialised that they could not be met in Taiwan, and that the woman should be brought to Australia for appropriate medical treatment.
The case highlights the ongoing inhumanity of our border protection policies. This Somali refugee should have already been living in this country and should not have been detained indefinitely in an offshore hellhole trying desperately to avoid an unwanted pregnancy. The government is trying to wash its hands of its responsibility for the health care of innocent people seeking our nation's protection. Border Force decisions must be underpinned by Australian medical standards, and never again should taxpayer funds be used to argue in court against a pregnant woman needing specialised medical attention getting that attention here. This motion urges the minister to take responsibility for the medical requirements, particularly of pregnant women— (Time expired)
Senator RUSTON (South Australia—Assistant Minister for International Development and the Pacific) (15:47): I seek leave to make a short statement.
The PRESIDENT: Leave is granted for one minute.
Senator RUSTON: Health care is provided by international health and medical services to all transferees at the regional processing centre. Decisions about medical transfers are made on a case-by-case basis according to clinical need in consultation with the contracted health services provider and following advice from medical officers of the Commonwealth.
Question agreed to.
First Nations Media
Senator SIEWERT (Western Australia—Australian Greens Whip) (15:48): I, and also on behalf of Senator McCarthy, move:
That the Senate:
(a) notes that First Nations Media visited Parliament House in August this year to brief members of Parliament on their culturally significant programing and services;
(b) acknowledges that First Nations Media organisations provide First Nations people with a voice through ownership of their own media and economic opportunities through provision of local jobs, and is a primary and essential service carrying relevant news, music and information content in language and in culturally appropriate forms;
(c) acknowledges that First Nations Media provides opportunity for meaningful professional development in regions where there are often very limited employment opportunities;
(d) expresses deep concern that volunteers at First Nations Media services and organisations cannot count this meaningful work towards their Commonwealth Development Program (CDP) obligations;
(e) calls on the Federal Government to ensure that all CDP and 'work for the dole' placements are meaningful opportunities that assist with improving education and training, and ensure that those in regions subjected to the CDP are able to have their volunteer time at First Nations Media recognised as part of their mutual obligation requirements; and
(f) urges the Federal Government to implement First Nations Media's nine calls for action and fund them appropriately.
Senator RUSTON (South Australia—Assistant Minister for International Development and the Pacific) (15:48): I seek leave to make a short statement.
The PRESIDENT: Leave is granted for one minute.
Senator RUSTON: The Community Development Program supports strong engagement and job outcomes for remote jobseekers, supporting people into around 27,000 jobs since 2015. The government does not support this motion as Community Development Program jobseekers can already meet their mutual obligation requirements through a broad range of activities, including placements with employers such as First Nations Media.
Question agreed to.
Uyghur People
Senator DI NATALE (Victoria—Leader of the Australian Greens) (15:49): I ask that general business notice of motion No. 1059, standing in my name for today, relating to Uyghurs in China, be taken as a formal motion.
The PRESIDENT: Is there any objection to the motion be taken as formal?
Senator Ruston: Yes.
The PRESIDENT: There is an objection.
Senator DI NATALE: In lieu of suspending standing orders, I seek leave to make a one-minute statement.
The PRESIDENT: Leave is granted for one minute.
Senator DI NATALE: Yet again we see members of the government blocking the will of the Senate. They see a motion it doesn't like and deny formality yet again.
Like many Australians, the Greens are appalled by the reports of the persecution of the Uyghur people in China. We are seeing images of mass internment camps where more than one million people are reportedly imprisoned. We have seen pictures of surveillance devices tracking ordinary citizens' everyday movements. We've heard Uyghur Muslims have been banned from going to mosque and from praying. We're also hearing reports that mosques are being destroyed.
Thus far, the Morrison government has meekly asked our consular officials to raise concerns behind closed doors, but that is no longer good enough. We must call out publicly these human rights abuses, and we must use our position on the Human Rights Council to advocate for the protection of the human rights of the Uyghur people in China.
Senator RUSTON (South Australia—Assistant Minister for International Development and the Pacific) (15:50): I seek leave to make a short statement.
The PRESIDENT: Leave is granted for one minute.
Senator RUSTON: In line with the government's longstanding view, motions that cannot be debated or amended should not deal with complex foreign affairs matters. The government is concerned about the situation in China and the use of detention facilities. Officials have raised these concerns with China on numerous occasions, including on 11 September in a national statement at the Human Rights Council in Geneva. We will continue to seek opportunities to express our concerns.
MATTERS OF PUBLIC IMPORTANCE
Abortion
The PRESIDENT (15:51): I inform the Senate that, at 8.30 am today, six proposals were received in accordance with standing order 75. The question of which proposal would be submitted to the Senate was determined by lot. As a result, I inform the Senate that the following letter has been received from Senator Siewert:
Pursuant to standing order 75, I give notice that today I propose to move that, in the opinion of the Senate, the following is a matter of public importance:
The need for Australian governments to recognise that abortion should not be regulated by antiquated criminal laws crafted in the 1800s, which penalise a woman's decisions over her own body—especially in Queensland and New South Wales.
Is the proposal supported?
More than the number of senators required by the standing orders having risen in their places—
The PRESIDENT: I understand that informal arrangements have been made to allocate specific times to each of the Senators in today’s debate. With the concurrence of the Senate, I shall ask the clerks to set the clock accordingly.
Senator FARUQI (New South Wales) (15:52): It is absolutely shameful that in my home state of New South Wales and in the state of Queensland abortion still sits in the Crimes Act. As a woman, as a mother of a young woman, and as someone who has campaigned for years to decriminalise abortion in New South Wales, I cannot and I will not accept this situation. Mr President, the existence of these laws actually exposes the misogyny and the influence of the religious far Right on our politics. Neither my religion nor yours should be allowed to deny women their rights and choices. You cannot impose your beliefs on others. You have no authority over the rights of individuals who make different choices. We have every right to complete bodily autonomy, and no-one can tell us otherwise. Abortion must be decriminalised, provided in public hospitals and covered by Medicare, and safe access zones should be mandated across all of Australia.
We know that a vast majority of Australians support the unambiguous legal right to bodily autonomy. We must be able to make our own health choices without the burden of criminality hanging over our heads, just because some politicians still have their heads buried in the year 1900. This isn't an academic question either. These archaic laws have real effects on real people. Women and all people needing access to abortion in New South Wales and their doctors are doing so under a legal grey area, in the shadow of criminality. They remain vulnerable to the full force of the law, including facing over a decade in jail for attempting to perform or procure an abortion. Many doctors actually do not perform pregnancy termination due to the fear of prosecution and persecution. Abortions are not routinely provided in public hospitals either.
In New South Wales parliament I brought on the first ever bill in the history of New South Wales to decriminalise abortion and create safe access zones. Abortion laws had not been touched in that state for over 100 years. Why? Because politicians are so completely out of touch with the community. Eighty-seven per cent of people in my state support the right to abortion, and this support runs across party lines—LNP, Labor and the Greens. The number is even higher in rural and regional New South Wales, where people are actually on the frontline of your ideological attacks on the right to reproductive health.
How can governments be so out of touch? When my bill was debated there was a concerted campaign similar to the one we are witnessing now in Queensland, riddled with myths and mistruths about abortion and backed by the decidedly patriarchal view that women should not be fully in control of their own bodies. One of the myths constantly peddled by the antichoice lobby is that if abortion were decriminalised all of a sudden women would start having late-term abortions. To suggest that women will carry a pregnancy to term only to then terminate on spurious grounds is offensive in the extreme, and has absolutely no grounding in fact. Just last month, in this very chamber, Senator O'Sullivan peddled the exact same myth. These are nothing but unfounded ideological opinions that are fundamentally disrespectful to women. It is incredible, it is shameful and it is embarrassing that such ideas are still alive and well in federal and state parliaments.
Is even the concept of women having rights alien to those who are so single-mindedly antichoice? Will they believe and perpetuate anything, no matter how damaging it is? We know that the criminality of abortion has led to completely unnecessary shame and stigma. Access is limited mainly to big cities. It is privatised and it is expensive, making it much harder to access for people in rural and regional areas and in Aboriginal and migrant communities. Those who say that decriminalising abortion is not necessary deliberately ignore the stories and lived experiences of women.
What these debates on abortion have often told us is that those who so vehemently oppose legalising abortion do so not on any evidence or merit; they do it on antichoice grounds. They have a sexist view that women cannot be trusted to make decisions about their own bodies—that they should not be allowed to make decisions about their own bodies.
Senator CANAVAN (Queensland—Minister for Resources and Northern Australia) (15:57): It's a great privilege to contribute to this debate. I'd like to recognise up-front the very personal and difficult issues that this debate does confront individual senators and people in the public with. I would like to place on record, up-front, that I always would recognise the difficult decision that any individual mother or father has to make in these matters. They are very, very tough decisions, but it is important on an issue of life and an issue of humanity that we do discuss them in a way which really does consider the latest science and information about the formation of human life, including from its earliest days.
This debate often is clouded in a veil of confusion. This motion, for example, seeks to focus on only one aspect of this debate around the criminalisation of it, and seeks to therefore hide the true consequences of some of the proposed changes to laws at state levels that we are seeing in parliaments around the country. Senator Faruqi mentioned that 87 per cent of people—apparently, I don't have the context of the poll—supported decriminalisation. Senator Faruqi—through you, Mr Acting Deputy President Ketter—86 per cent of people in Queensland at least, in my home state, are against late-term abortions as well. Yet there is a bill there before the parliament right now which would allow late-term abortions. The legislation says, 'A medical practitioner may perform a termination on a woman who is more than 22 weeks.' The bill is very lax in terms of the restrictions and requirements beyond 22 weeks, because a doctor at that time only has to consider a range of factors, including the social circumstances of the mother. They only have to consider those factors. There are no penalties associated with not considering them. I don't think that bill at all reflects the vast will of Queenslanders, which is to not allow the legalisation of late-term abortions.
As I said, science is on the side of life here. New science is indicating how human a baby is, particularly at that age. At that age, at 20 weeks, a baby in the womb can clasp his or her hands, they can hiccup, they can suck their thumb, and they cover their ears when a loud sound is emitted close to them. They are human in all fundamental respects. In fact, they also, most significantly, feel pain. In modern fetal surgery where surgery is conducted to save a fetus, pain relief is provided to the fetus beforehand. My understanding is that, under this proposed Queensland legislation, there will be no requirement to issue or administer pain relief to a fetus before his or her termination, notwithstanding the fact that some of the practices at that age are quite brutal. I will not go through them right here, but they would clearly administer enormous amounts of pain to that fetus and no pain is usually or normally administered at that time. As I said, this is a complex, personal debate, but it is often clouded by rhetoric without going through those details.
I would like to place on record my own personal circumstances. As the very lucky father of five children, every time I feel, for the first time, a kick or movement in my wife's stomach, I am moved considerably at the miracle that is human life. There is not much more important thing than we have to cherish in our society and in our culture but the nurturing and protection of human life, particularly those lives that are most vulnerable. We are fortunate to live in a society where we protect the most vulnerable in our society, and there is no human being more vulnerable than the unborn.
While these issues are complex, those lives at that age—which, as I said, can feel pain, can laugh and can hiccup—deserve more than an overly simplistic and superficial debate where insults are traded across the chamber from people who have different personal experiences and different views. Those vulnerable lives deserve proper protection, proper discussion, proper debate and there should be a proper reflection of the general people's will on these very important matters.
Senator McALLISTER (New South Wales—Deputy Opposition Whip in the Senate) (16:02): I know that abortion is an issue on which there is a spectrum of views represented in this chamber. For many, if not most, people in this chamber, those views are a product of deeply held convictions about what is right and what is wrong. For my part, I am deeply committed to a woman's right to choose. I have been since the beginning of my involvement in organised politics—in Queensland in fact—and I don't believe that the issue has become any less important over the intervening years. I am here as a senator for New South Wales. It is our most populous state and it is still illegal for a woman to have an abortion.
Laws of this kind are not just legacies or things which sit on the statute books with no real effect. Just a few years ago, a Brisbane couple were prosecuted for purchasing drugs to induce a termination. Even in jurisdictions where abortion is legal, women often face difficulties in accessing it. For instance, just this year we've heard tragic stories that arose from the lack of service providers in Tasmania. Women in rural and regional Australia struggle with ongoing challenges in accessing and receiving appropriate care. This is despite the fact that abortion is one of the most common medical procedures for Australian women to seek over the course of their life. One in three pregnancies in Australia is unwanted and one in five is terminated.
Women seek assistance with an unwanted pregnancy for a wide variety of reasons. No woman does so thoughtlessly; no woman does so without carefully reflecting on her own circumstances. Over 70 per cent of terminated pregnancies are the result of failed contraceptives. Others have found themselves in a more complicated situation. One-third of women who contacted Children By Choice for pregnancy options counselling were at that time experiencing domestic violence. One-fifth of women were the subject of reproductive coercion. I say all of this to make the following point: abortion law reform is not merely academic. Abortion law reform is an issue that has real and significant consequences for the lives of Australian women. It deserves and needs to be handled in a serious, considered and deliberate manner.
Abortion law reform has succeeded where a Labor government—and it always has been a Labor government—works with advocates to build a coalition for change around a well-developed policy proposal. In Victoria, for instance, the Brumby government declined to proceed with a private member's bill in 2008. Instead, the government tasked the Law Reform Commission to provide advice on options to modernise and clarify the law and reflect current community standards without altering current clinical practice. It then built one of those options up into a detailed and functional piece of legislation and garnered the necessary support. The bill eventually passed unamended.
Likewise, the legislation tabled in Queensland this year to decriminalise abortion came after an extensive and detailed process that included a referral to the state Law Reform Commission. What these state governments have in common, a decade apart, is a real commitment to achieve meaningful progress on abortion reform. That was a pattern repeated when the Northern Territory Labor government decriminalised abortion in 2017, when the Tasmanian Labor government decriminalised abortion in 2013, when the ACT Labor government decriminalised abortion in 2002, when the WA government decriminalised abortion in 1998, and even when the South Australian Liberal government liberalised abortion way back in 1969. That is how you create change on an issue as contentious and difficult as this. You take work with advocates and the community to build a broad coalition of support. You spend time to develop a properly thought-out and detailed proposal that reflects the community's view and is capable of being supported in the parliament. You reach across the aisle to generate majority support. It is a delicate and involved process. It is the difference between Penny Sharpe and New South Wales Labor successfully legislating for safe access zones in New South Wales this year and the unsuccessful attempt at decriminalisation led by a minor party in New South Wales last year.
A motion such as the one before us today represents a very different approach to the careful work that I have described. Today's debate concerns a high-level statement of principle about abortion law, not a proposal for change. The absence of detail in a debate of this kind makes it much easier for opponents to argue against a straw man rather than deal with the circumstances most commonly faced by Australian women.
In a debate of this kind in this chamber, there is little opportunity or reason for the participants in the debate to be lobbied, to talk, to deliberate or to change their minds of their own accord. After all, this is not even a jurisdiction which has legislative responsibility for criminal law as it relates to terminations. In a debate of this kind, there is no real opportunity to build relationships between stakeholders or to build a campaign to change. There are some risks though, if few benefits, because failure is not benign. There is a view sometimes in politics that says, 'Keep knocking and eventually the door will open.' That works on some issues, but for an issue like this there are real costs to unsuccessful attempts for reform.
I do want to speak briefly about some of the things that we can do at a Commonwealth level to ensure that women's reproductive rights are respected and supported. We need to improve reproductive freedom through decent sex education. Young people need to learn informed by science and knowledge and through discussions about relationships on how to have fun, healthy, respectful relationships when they're ready. Through Medicare, we need to ensure that people are able to access effective contraception and we need to ensure that all across our country vulnerable women can access health care when they need it.
If you are pregnant or trying to become pregnant, you ought to be supported. If you wish to avoid pregnancy, you ought to be supported. If you wish to end a pregnancy, you ought to be supported. A strong public health system needs to take responsibility for supporting women in their choices. Our systems need to ensure that women are not subjected to violence at home, that they not subjected to coercion, that their choices take place in an environment of genuine freedom.
Labor women understand that, to support women, these are the tools available to us in the Commonwealth parliament. We have unfinished business here. There are things that we can do. I say to my colleagues: this is an area where we ought to proceed carefully and that success is dependent on hard work, on community work and on collaborative work in the context of the parliament.
Senator WATERS (Queensland) (16:12): The Australian Greens support a woman's right to choose what happens to her own body. Abortion has been around since women have been bearing children. Women have been dealing with unwanted pregnancies since time immemorial, especially those with the financial means to pay for safe abortions. The Greens advocate for free, legal and safe abortions in public hospitals because we want to make sure that all women, regardless of their financial means, don't die because of unsanitary and unsafe terminations. This is especially important for women in rural and regional locations.
In the 1970s, Australia brought in universal health care in the form of Medicare, yet all of these years later access to health care, reproductive care, is still based on your postcard and, sadly, your bank balance. We're in the 21st century now and we need our laws to live up to our aspirations for the future. We want to see a future where the state guarantees the rights for all people, where society respects the rights of women and where religious ethics stay well away from the lives of people who do not subscribe to any faith—or as our former senator for the Greens Kerry Nettle once famously said to the then member for Warringah Tony Abbott, 'Get your rosaries off my ovaries.'
Queensland, sadly, has the worst laws on abortion—the most restrictive. Abortion is considered a crime in my home state of Queensland and it's governed by criminal laws that were drafted in 1899. That is somewhat out of date. Case law has established that abortions are generally regarded as lawful if it prevents serious danger to the woman's physical or mental health, but it is still on our criminal law books. The urgent need to clean the law books from unfair, sexist legislation that criminalises women for deciding what is best for their body and themselves is a matter of public importance, and I'm proud that we're debating it in this chamber today. We are certainly in the majority on this one. A poll of 1,200 Queenslanders taken in February 2017 by Fair Agenda found that 82 per cent of people agree that it should be legal for a woman to terminate her pregnancy—every child wanted.
Over the course of the 21st century, most Australian states and territories have re-examined and reformed their laws to varying degrees, starting with South Australia in 1969, leaving Queensland, as I said, with the most restrictive abortion laws in the whole country. Queensland's abortion laws date back to two centuries ago, but attitudes about women's bodies have moved on, and it's time our laws got on with the times too. It's a matter of public importance that, in my home state of Queensland, rape and incest are not even considered grounds for lawful abortion unless a woman's physical or mental health is concerned.
Every Australian state that has initiated legislation to reform sexual and reproductive rights has ended up passing legislation to legalise abortion to one degree or another. This shows that there is demand and support from the community for fairer access to this simple medical procedure that medical professionals say is safer than a colonoscopy.
Victoria, Tasmania and the ACT have removed abortion from their crimes acts. In the ACT abortion is legal as long as it's provided by a medical doctor, with all abortion laws fully repealed in 2000. In Victoria, abortion is legal for up to 24 weeks with the woman's consent and after 24 weeks with the additional consent of two doctors under decriminalisation legislation that was introduced 10 years ago. In Tasmania, a decriminalisation bill passed in 2013, which made abortion legal on request for up to 16 weeks and, after that, with the approval of two doctors. Also in Tasmania are those fantastic exclusion zones to prevent protesters outside abortion clinics on a matter that is a medical privacy issue.
Women are 51 per cent of the world's population. Despite much progress, our society still has gendered expectations about what form people's lives should take. Women are expected to be nurturing mothers, yet they're punished in the workplace for their decision to pursue maternity or they're criminalised when they make decisions about what's best for their lives, their bodies or their families, such as a decision not to carry a pregnancy to term. As has been said in this place previously, no woman takes a decision to have an abortion lightly. If you are against abortion, then don't have an abortion and kindly refrain from interfering with other women's choices.
On the matter of access, Queensland Health estimates that only one per cent of pregnancy terminations performed in Queensland are provided in public health facilities. The rest are provided through private clinics, day surgeries and a small number of GPs. These services are of high quality and are offered by experienced clinicians, but they have out-of-pocket costs which can make access very difficult for some women. The cost can be anywhere from $250 to $4,000, depending on a woman's gestation and location. In addition to the high cost barriers for Queensland women, women in rural and remote areas often face long travel distance to get to an abortion provider. Although medical abortion is now available through some GPs, there is no public list of certified prescribers, so finding a general practice that offers medical abortion can be very difficult.
I urge the government to use the COAG meetings that are coming up in just a few weeks time to advocate for free, safe and legal abortions accessible in public hospitals so that no woman is disadvantaged because she lives in a rural or regional part of the country. I would like to place on record my immense pride for the work that's been done by Dr—now Senator—Mehreen Faruqi in the New South Wales parliament on this issue; by Shane Rattenbury, our Greens member of the ACT parliament; and our now first elected member in Queensland state parliament, Michael Berkman, for the seat of Maiwar.
We would also like to see reform so that there is transparency in advertising services so that Commonwealth funding is strictly spent on unbiased counselling. In some Australian states, women are forced to undergo counselling before they can terminate a pregnancy. Of course we support all medical procedures coming with informed consent, but each woman is the best and most knowledgeable expert about her own life, including the decision on whether she needs additional counselling. Counselling should be made available to all who request it but should not be imposed on anyone who prefers to keep their own counsel. Likewise, it should not be a smokescreen for pushing an agenda that is not one that simply places the woman's needs and rights at the forefront.
The only way to reduce abortion is to invest in sex education to prevent unwanted pregnancies and to urgently address the epidemic of rape that threatens people in their homes, in their university campuses, in parks and on the streets at night. Without us, there is no production and there is no reproduction, and I urge the Senate to work to protect the rights of all people to safe, free and legal abortion in all Australian jurisdictions. And I'd like to flag that this is an issue that I feel particularly personally strongly about. How dare the state tell us what we can do with our own bodies? I would urge every woman in this place—indeed, every person in this place—to reflect on the state of mind of women. We are perfectly able to make our own decisions. We should have the legal right to make our own decisions about our own bodies. It is repulsive to me that the state can still dictate what we can and cannot do with our own bodies in this day and age, particularly in Queensland, which is governed by laws drafted in 1899. You can bet there was not a single woman in the parliament when those laws were passed.
It is long past time that we reform these laws. I'm so pleased to see progress has been made in many state parliaments around the country. Queensland has been lagging behind, despite the fact that we have a Labor administration who say that they are sympathetic to this issue but have still done nothing for decades. I welcome that there are moves afoot now to address this issue. I note that our Greens bill before the Queensland parliament would help. It certainly would decriminalise abortion and would help address those access issues and those issues of unbiased counselling.
I will be continuing to talk about this issue in this place because we have a strong role here in the federal parliament to ensure access to legal, safe and free health care for women, and that is an important role that the federal Senate, I think, should be playing. I would urge people who have strong religious views on this issue to hold those views themselves but to not impose those on others. I look forward to the rest of the debate. I'd like to thank the contributors to the debate for the modicum of civility that has occurred; it's not always the case. But I would urge people to listen to the views of women and to empower us to make our own decisions about our own bodies.
Senator WILLIAMS (New South Wales—Nationals Whip in the Senate) (16:21): This is a sensitive and delicate issue. It probably doesn't surprise you, Mr Acting Deputy President Ketter, that I do not support abortion. However, there are situations where I think abortion should be considered—as Senator Waters said: rape, incest or a situation where the lady's life is at threat. They would be considerations I could certainly accept. Senator Waters encourages everyone to think like her. That's pretty common here in this chamber by the Greens. We do have various opinions in this chamber, and my opinions are very much different Greens' on most respects. Yes, it is a woman's decision, but I'm alarmed to hear of the after effects when a woman does decide to have a termination of a pregnancy—the psychological effects on that lady. To many, there may not be any effects, and hopefully that's the case, but some go through emotional effects such as regret, depression and even anger and guilt.
This is my argument: whatever happens between a man and a woman, and if a pregnancy results, it is not the kid's fault. It is not the kid's fault; the kid had no say in it. So my attitude is: why kill the kid? They're pretty harsh words, I know, but the thing is: I've seen over my life so many people and so many couples who could not have children and would have loved to adopt children. Back in the sixties and seventies, if a young lady fell pregnant, of course they would not have an abortion. They made it secret, went off somewhere to another town, had the baby, put the baby up for adoption and returned back to their hometown to save themselves from shame and guilt. That's how society was in those days. Of course, in the seventies, when I was a young fellow, if a girl fell pregnant, you simply had to marry her. That was the situation. In the small country town of about 1,500 or 1,600 where I grew up—where everyone knew everyone—if a girl fell pregnant, she simply got married. The marriage didn't always last, of course. But my sympathy is with the unborn child. As I said, it is not the kid's fault.
I find it appalling that there are gender abortions. A couple living together, who may be married or may not be married, might have two daughters and would like a son. So the lady falls pregnant, they have the test and it's another girl. 'We don't want another girl,' is the discussion. So they terminate the pregnancy, because they want a boy. I think that is wrong. I think to take the unborn life of their little one because they are the wrong sex is simply wrong. I do not condone that one bit. It is a sensitive issue and there is a lot of debate about it. The states, of course, make these decisions. I think later on in the pregnancy, at 22, 24, 26 weeks—there is even talk now of full-term abortions—is cruel, and I think the little ones should be given a go. If the parents do not want the child or the woman is in a situation where she has fallen pregnant through—and the situation is obvious, of course—lack of knowledge and education on contraception or whatever, then let the child live. Put the child up for adoption, because that child more than likely will have a happy life. Especially being adopted by good people, good parents, they would go ahead in life to have a good education and probably end up being a good Australian—a very good Australian, with the right education, the right upbringing and the right parenting.
I cannot see how termination of pregnancies because they are the wrong gender is acceptable. As I said, it's not the kid's fault. Give the kid a go. The kid had no say in it. I've been through a lot of these experiences, talking to constituents who've have come to me with problems and so on. My final word to them is, 'It's your decision, but just remember: it's not the kid's fault. The kid had no say; don't blame them. Give them a chance in life.' I know it's a sensitive topic, and I do understand sympathy in situations like incest, rape or threat to a lady's life.
Senator ANNING (Queensland) (16:26): Firstly I would like to say that I'm stunned at Senator Faruqi's claim that her religion cares for women. This is a religion that has probably the worst history of abuses of women that I've ever heard of, including genital mutilation and stoning, and every woman is a second-class citizen.
However, I rise to speak on the MPI that abortion not be regulated by laws which penalise a woman's decision over her own body. How wrong can anyone be? Again and again we hear the claim that abortion is about a woman's rights over her own body, as though the child that is the subject of the action did not exist. This is simply an outright lie. The life of the unborn is a sacred trust, not an inconvenience to be disposed of. Today in Queensland the Labor Party is introducing new laws to regulate abortion of babies up to 22 weeks old, effectively as a routine means of contraception. At 22 weeks, a stillborn in Queensland gets a birth certificate, a death certificate and a funeral, which would indicate that the state believe this is a person. Babies much older than 22 weeks would also be able to be terminated with medical support. Let us be clear, what is being legislated here is nothing less than state sanctioned murder. A baby at 22 weeks is a fully-formed person and, although premature, is capable of growing to an adult and living a full and normal life. James Elgin Gill was born in Ontario, barely more than 21 weeks old, and he still survived to adulthood. In most US states if a woman was 22 weeks pregnant and was run down by a drunk driver, the drunk driver would be charged with the killing of two people, not one.
No-one disputes a woman's right to decide what happens to her body, only to decide what happens to someone else. Just because an unborn cannot speak for themselves, they are still entitled to the same rights as anyone else. Even if you've conceived them, no person should be able to own another. If the plantation owner in Antebellum South having the power of life and death over his slaves was wrong, so too is a woman having the power of life and death over a child within her body. When you choose to conceive a child, you have made a choice that endures forever.
Today in Queensland the socialist Palaszczuk government is trying to force doctors to commit abortions on babies against their own conscience. Doctors who morally object to their involvement in abortion will only be legally permitted to refuse if they can find another doctor who agrees. In compelling doctors to undertake abortions, this law by the Queensland state government actually contravenes the Hippocratic oath, which includes the phrase:
I will use treatment to help the sick according to my ability and judgment, but never with a view to injury and wrong-doing. Neither will I administer a poison to anybody when asked to do so, nor will I suggest such a course. Similarly I will not give to a woman a pessary to cause abortion. But I will keep pure and holy both my life and my art.
Dating back 2,050 years, the earliest known expression of medical ethics, the Hippocratic oath, has survived the millennia only to be extinguished by the laws of the Palaszczuk government.
Why murder of the innocent is being legalised in Queensland is beyond my understanding, but I can only conclude that the state's new abortion laws are a direct result of the influence of the hard Left on the current Palaszczuk regime. I and my party condemn this immoral action by the Queensland government in the strongest terms. I pledge that if the Katter party gain the balance of power after the next Queensland election, we will insist that these heinous abortion laws are repealed. Abortion should be regulated, because the killing of the unborn is not a woman's right to choose but simply murder.
Senator STOKER (Queensland) (16:31): The Greens will tell you that this motion, which makes reference to the pending Queensland abortion bill, is just about taking abortion out of the Criminal Code, to make it a health issue. There could not be a more dishonest smokescreen for the most radical liberalisation of abortion laws in this country. And here's why it's dishonest. There are many reasonable people who would agree with the notion that this is a sensitive issue that shouldn't be dealt with as a crime. But those same people would abhor the full reality of this bill if they were told the whole truth. That very unpalatable truth is that this bill facilitates abortion, not just in the early stages of pregnancy and not just when it's necessary to save a mother's life but all the way up to a child's due date. It facilitates the termination of children capable of survival outside of the womb. Even the most liberal-minded Queenslanders would be horrified by that prospect. But framing the matter as mere decriminalisation gives barbarism the cloak of civility.
As a society, we, quite rightly, pour resources and expertise into ensuring the viability of babies that arrive prematurely. If this bill passes it will allow termination of children well beyond that gestation point; in fact, right up to full term. It defies logic. Right-thinking Queenslanders are horrified by this prospect. So let's not pretend this is simply about moving this out of the Criminal Law. No woman has been convicted under the Queensland law for decades. Abortion is already available in circumstances of physical or medical need in Queensland. In truth, this bill is a palatable Trojan Horse inside which is hidden the most brutal abortion laws in this country.
The Queensland bill provides for abortion on demand, which means without the need for explanation, justification or medical need, up to 22 weeks gestation. But for pregnancies after 22 weeks, the sign-off of two doctors will be required, only one of which needs to see the mother in person. The doctors must determine the mother's physical, psychological or social interests. You'll note that the needs of the child are irrelevant. How can they properly determine the mother's physical, psychological or social interests? One can only imagine what constitutes a situation adverse to one's social interests. It would be a tragedy to see children losing their lives in favour of a parent's right to socialise. Clearly, the considerations made by the doctors are not merely the health of the mother, balanced against the health of a child.
Further, this bill provides no protections against abortion coercion—a manifestation of domestic violence in which a woman is forced to terminate a pregnancy by a family member. The Greens speak loudly against domestic violence in other contexts, but why not in this one? The bill doesn't allow any cooling-off period for a woman or a couple that seeks an abortion. It makes no requirement for a mother to undergo counselling before making a decision of this nature, despite the substantial body of evidence that demonstrates that, in some circumstances, serious psychological harm is inflicted by abortion upon mothers and fathers, particularly in circumstances where it is late term.
If we were really serious about women's empowerment, we would be offering a real choice to women and full information about the options available with time and counselling to support that choice—support to raise a child, even in unplanned circumstances; and support to deliver a child for adoption to one of the thousands of Australian families seeking to adopt in circumstances of their own infertility.
The bill will also enable abortion for the purposes of sex selection. It smacks of a repugnant treatment of children as accessories for adults rather than lives with their own inherent value. Further, there are no protections for the child, not even pain relief for the child being terminated, despite the abundance of evidence that late-term abortions are excruciating for the child. You want to talk about antiquated practices: well, to me, this sounds antiquated.
If we're going to talk about antiquated concepts, then let's talk about the criminal regulation of our fundamental right to free speech, religious freedom and conscientious objection that the Queensland bill will introduce. It harks back to pre-enlightenment days. The Queensland bill would establish a 150-metre exclusion zone around abortion clinics in which it would be an offence for a person to engage in conduct that relates to terminations or could reasonably be perceived as relating to a termination. Such a loose description of what is to constitute prohibited conduct puts at risk a fundamental human right to engage in free speech. For instance, prohibited conduct would not be limited to what might be seen as something reasonable like stopping harassment, abusive speech or demonstration; it would also include benign actions such as respectful conversation, provision of an information leaflet or silent prayer.
More concerning yet is that the proposed 150-metre exclusion zone would be subject to extension at the discretion of the minister. I'm deeply concerned about a minister being given unfettered discretion to declare zones the size of their choosing around abortion clinics that threaten to criminalise even the most respectful of debates around this theme. How many turned-back mothers, as they're sometimes called, would be at risk of never knowing their child under such a change? If you wanted evidence that freedom of speech was under fire in this country, you don't need to look any further.
It's ironic that these changes have been put forward under the guise of complying with international human rights obligations. Since when has it been a norm of international human rights to declare speech on a controversial topic squashed in favour of a confected human right to readily access abortion clinics? Some further try to say that abortion is a matter of women's human rights as though somehow the right to terminate a child would make us more liberated. What a false promise that is. It's about time people started thinking about what the real human rights at stake are. The fundamental human right to life is set out in article 6 of the International Covenant on Civil and Political Rights, the most important of human rights laws, and it is very clear:
Every human being has the inherent right to life. This right shall be protected by law.
Yet, further impinging on the freedom of Queenslanders would be the draft bill's effective abolition of medical practitioners' right to conscientious objection. While a doctor retains the right to refuse to perform such a procedure, they are nevertheless obliged and forced to refer a patient to another practitioner who is willing to do so. One would wonder if a doctor were to advise against an abortion yet be compelled to refer a matter on, would they be at risk of breaching the zone of silence if their practice is located in the same hospital or facility as an abortion clinic? Doctors who refuse to so refer in other jurisdictions have been referred for disciplinary action by their profession. It will disproportionately impinge upon the freedom to conscientiously object against doctors in rural and regional areas too, because there are fewer doctors available for referral.
We invest years training our doctors, teaching them to heal and save lives. Then these laws would ask them to kill babies and end their careers if they refuse.
I leave you with this thought: when we believe in a woman's right to control her body and that she deserves this right no matter where she lives, we must give her that right, even if she's still living inside her mother's womb. This is not progress and it is neither pro woman, pro child, pro family or pro freedom.
Senator RICE (Victoria) (16:40): I'm proud and pleased to be here today speaking about women's rights to control their own bodies, speaking about women's rights to decide for themselves whether an abortion is right for them in their own unique circumstances and speaking about the rights of all women in Australia to be able to access free, legal and safe abortions, and for abortions to be accessible in public hospitals and for abortions to be accessible for every woman who needs one. And it's my privilege to be in this place to support my colleagues, Senator Waters and Senator Faruqi, who spoke so eloquently before me, and to feel supported by them in the face of some of the most hurtful, awful, divisive, revolting rhetoric from the other side.
I speak as someone who has had an abortion, a late-term abortion. Hearing myself being accused of being a murderer by both Senator Anning and Senator Stoker hits me pretty hard. You could imagine that it's not something that is easy to take, but I know that my late-term abortion was done in a position where I was very privileged. It was supported by my medical practitioners and supported by my family. I had the privilege of being in a capital city at the best hospital. I had the privilege of having my family supporting me, and I am an empowered woman, which means that I'm used to having my rights and speaking up for them. I know that many other women don't have those rights. In this debate today, they are the women whom we need to listen to. Hearing the contributions from the senators in this place, they are not listening to women. They have their very, very strong religious views that they are imposing on women.
If you listen to women and you think about the lives and the experiences of women throughout the ages, you would know that women don't have abortions lightly. They don't do them without thinking. They think about the consequences. They think about whether it is right for them and then they make that decision. In times gone by and in states where abortion is still is not decriminalised, regardless of what the law says the women who have decided that having an abortion is what they need to do will proceed to have one. Abortions will continue to occur and that is what we need to realise in any debate about abortion. Abortions will continue to occur and it's our role, as legislators, to make sure that they occur and that women have the opportunity to have the discussion and the support of the people around them to decide whether it is right for them to choose an abortion. To the people who have strong religious convictions and say that, because of those religious convictions, they think abortion is not right, it's their choice not to have an abortion, but they should not impose that choice upon other people. Even worse, they should not impose their religious views on other people and then demonise women for having abortions.
There have been contributions going to the issues of late-term abortions and gender selection, saying that the Queensland laws will make that occur. Anybody who wants to look at the facts about late-term abortions will see that a woman having a late-term abortion has gone through a huge thought process, discussion and consideration of whether it's the right thing to do. Most of the late-term abortions are because there are issues with the development of the fetus, and that was certainly the case for mine, and yet Senator Anning and Senator Stoker are willing to stand here in this place and call me a murderer. Yes, this is a difficult issue; yes, this is a personal issue, but we need to listen to women. We need to know that abortion is something that all women should have access to if it is right for them. It is important for us in this place and in all of our state parliaments to do the legal reform that's currently going on in Queensland and that Senator Faruqi tried to make happen in New South Wales, so that all women can have access to free, legal, safe and accessible abortions.
The ACTING DEPUTY PRESIDENT ( Senator Bernardi ): The time for the discussion has expired.
DOCUMENTS
Commonwealth Environmental Water Holder
Order for the Production of Documents
Senator FAWCETT (South Australia—Assistant Minister for Defence) (16:45): I table a document relating to the order for the production of documents concerning the Commonwealth Environmental Water Holder.
BILLS
Veterans' Entitlements Amendment Bill 2018
Explanatory Memorandum
Senator FAWCETT (South Australia—Assistant Minister for Defence) (16:45): I table an addendum to the explanatory memorandum relating to the Veterans' Entitlements Amendment Bill 2018. The addendum responds to concerns raised by the Scrutiny of Bills Committee.
Treasury Laws Amendment (Black Economy Taskforce Measures No. 1) Bill 2018
In Committee
Consideration resumed.
Senator SESELJA (Australian Capital Territory—Assistant Minister for Treasury and Finance) (16:46): When I was cut off, I was responding to questions from Senator Macdonald and also Senator Paterson. In responding to Senator Macdonald, I pointed out that, in fact, the response to the Black Economy Taskforce was one very important part of the debate in the committee stage of the Treasury Laws Amendment (Black Economy Taskforce Measures No. 1) Bill 2018 and more broadly. It is part of a broader suite of measures which include: expanding the taxable payments reporting system; introducing an illicit tobacco package to target the three main sources of illicit tobacco—smuggling, warehouse leakage and domestic production; modernising business registers and consulting on reforms to the Australian business number system; introducing an economy-wide cash payment limit of $10,000 for payments made to businesses for goods and services from 1 July 2019; removing tax deductibility of noncompliant payments from 1 July 2019, which will mean business will no longer be able to claim a tax deduction for employee wages where the business has failed to withhold; and increasing the integrity of the Commonwealth procurement process by requiring all businesses tendering for Commonwealth government contracts over $4 million to provide a statement from the ATO certifying that they are generally compliant with their tax obligations.
To specifically answer one of the questions that was put forward by Senator Paterson in relation to the amendments that were made in the House of Representatives, this bill does require businesses offering cleaning or courier services to report payments they make to other businesses providing those services. The government, in responding to this, acted on stakeholder advice that it is important to relieve businesses from reporting where the payment to be reported represents only a small part of the overall activity of the business. The amendments exempt a business from reporting where payments to cleaners or couriers are less than 10 per cent of the total GST turnover of the business.
Senator Paterson made some remarks about the overall red tape burden. I obviously agree with much of his contribution, where he pointed to the fact that the former government was very much pointing almost as if to a KPI as to how many pieces of legislation they had passed. Many of those pieces of legislation added a regulatory burden for business, particularly small- and medium-sized enterprises. Senator Paterson talked about some of the great work the IPA has done to reduce red tape, which is in line with the government's approach that, yes, there are times when this kind of regulation is very important. I commend this regulation to the Senate. We have listened to those stakeholder concerns but, as Senator Paterson pointed out, we have a long record of looking where we can, where it is appropriate. Where this red tape and this regulation is unnecessary, we have taken the approach that we will do all we can to mitigate it. Yes, there is all sorts of important regulation, including of the black economy, but where we can mitigate it we do. In this case, to answer Senator Paterson's question, we very much listened to stakeholder concerns and came to the conclusion that the amendments to exempt a business from reporting where payments to cleaners or couriers are less than 10 per cent of the total GST turnover of the business is the appropriate balance to be struck.
Senator CAMERON (New South Wales) (16:50): I'm interested in this issue of cleaners and couriers and the gig economy and the issues that this leads to. Working people in this country are now subjected to probably the worst industrial laws that there have been for some time. Getting paid properly is absolutely essential. Getting to a position where workers have got some rights is absolutely essential. This bill is about ensuring that people are paid properly and people are meeting the requirements of the law. We have indicated earlier that we support an amendment. That amendment has been picked up. The issue that we're facing now is that this government has got so little legislation on hand, so little idea about where they're going that a bill that should now be totally uncontroversial is being debated out, on and on and on, for no other reason than that this government—the government that their own Prime Minister calls the muppets—the muppets are on their feet trying to delay this bill, trying to keep talking on things that don't need to be talked about because both the government and the opposition have agreed that this bill should be passed.
All we have at the moment is what's described as a filibuster. They are not prepared to go on further in legislation. The government would have had amendments here, even to their own bill, if there were still some issues or problems that they wanted to deal with. That is not the case that we have at the moment. What we need to do is try and move things along in this chamber to make sure that when we have got an uncontroversial bill like this bill, we don't have Senator Paterson on his feet trying to just keep this bill running and Senator Seselja bringing back answers that have all been worked out just to try and keep this chamber debating this bill. I use the word 'debating' very loosely, because there is no debate about the bill. The opposition supports the bill. The opposition have an amendment that the government have indicated they support. This bill should be passed. That is the bottom line here.
What we're seeing now is a chaotic government, a government that is now into its third Prime Minister. They didn't learn the lessons from Labor, when we were last in government, that there are huge transactional costs in making a Prime Minister. They have now done it on at least two occasions. Who knows how long this current Prime Minister will last, even if he can get to May next year, when they say they're going to have an election. We really should get to an election in this country. I think what we're witnessing here is exactly the problem you have with a government that's got no direction and no capacity to bring forward policies that are in the interests of working people in this country; a government that is ideologically driven, where the extremists have got control of the government. It doesn't matter who the Prime Minister is; there are groups within the coalition that want to disrupt the government and want to ensure that the government cannot deliver on any issue, especially on issues such as climate change that are so important to our kids and grandkids and the future of this country.
We have a government that are so solely focused internally that they do not have any idea about how they look from outside or what they should be doing to actually deal with the real issues. Every time there's a crisis now, they're in there trying to pre-empt one crisis after another. It was clear yesterday. Even though it was clear that there are huge problems in aged care, they were out yesterday trying to pre-empt a Four Corners program tonight. This is just how lax this government is. This government is hopeless. This government cannot actually deal with the issues effectively. I am of the view that what we need now is for this matter to be dealt with. There is no need to continue any further discussions on this. Everyone's agreed.
Senator KETTER (Queensland—Deputy Opposition Whip in the Senate) (16:56): I move:
That the question be put.
The TEMPORARY CHAIR ( Senator Bernardi ) (17:00): The question is that the motion be put.
The committee divided. [17:00]
(The Temporary Chair—Senator Bernardi)
The TEMPORARY CHAIR ( Senator Bernardi ) ( 17:02 ): The question is that the bill as amended be agreed to.
Bill, as amended, agreed to.
Bill reported with an amendment; report adopted.
Third Reading
Senator SESELJA (Australian Capital Territory—Assistant Minister for Treasury and Finance) (17:03): I move:
That this bill be now read a third time.
Question agreed to.
Bill read a third time.
Treasury Laws Amendment (Enhancing ASIC's Capabilities) Bill 2018
Second Reading
Consideration resumed of the motion:
That this bill be now read a second time.
Senator O'NEILL (New South Wales) (17:04): I rise to speak on the Treasury Laws Amendment (Enhancing ASIC's Capabilities) Bill 2018. I say at the outset that Labor supports this bill. This bill will require ASIC, the Australian Securities and Investments Commission, to consider the effects that the performance of its functions and the exercise of its power will have on competition in the financial system. The ASIC Act includes specific objects that ASIC must strive towards in performing its functions and exercising its powers. These include, amongst other things, promoting the confident and informed participation of investors and consumers in the financial system; maintaining, facilitating and improving the performance of the financial system and entities within that system in the interests of commercial certainty, reducing business costs, increasing efficiency and developing the economy; taking whatever action it can take and is necessary in order to enforce and give effect to the laws of the Commonwealth that confer functions and powers on it.
The bill would mean that, without limiting these existing elements, ASIC must also consider the effects that the performance of its functions and the exercise of its power also have on competition in the financial system. The financial system inquiry recommended that the government consider the inclusion of competition in ASIC's mandate. This recommendation was accepted by the government, and this bill will require ASIC to take competition into account among a number of other elements in performing its functions and exercising its powers.
The bill before us today will also remove the requirement for ASIC staff to be engaged under the Public Service Act 1999. This change would align ASIC with APRA and the Reserve Bank of Australia. The change implements recommendation of the ASIC capability review. We would encourage the government and ASIC to ensure appropriate transitional arrangements are in place for existing staff. In particular, we note that ASIC has assured the Senate Economics Legislation Committee that current ASIC staff will remain in their current superannuation arrangements under the CSS and PSS schemes and will be able to remain PSSap members and that ASIC employees will retain the same entitlements to maternity leave that they currently have.
Given the shocking evidence presented to the royal commission so far, it's clear that we need strong and effective financial regulators. Yet it was this government that actually cut ASIC's funding by a staggering $120 million in the 2014 budget. At the Senate estimates after the 2014 budget, the then ASIC chairman Greg Medcraft explained how ASIC would deal with those cuts. Among other things, he said:
In particular, our proactive surveillance will substantially reduce across the sectors we regulate, and, in some cases, it will stop.
Mr Medcraft also said:
Some examples of the changes in our consumer cluster are the deposit takers, credit and insurance team. There will be reduced proactive surveillance. As a result, they will focus on activity by entities that have the greatest market impact at the expense of smaller entities that have a smaller customer basis.
The government only moved to restore funding to ASIC after Labor began calling for a royal commission in 2016. But the impact of these cuts to ASIC cannot be undone so easily. These were cuts to the capability of the corporate regulator and, in fact, they were a free pass to the financial sector misconduct.
This government has certainly been asleep at the wheel when it comes to regulating the financial sector. The change to ASIC's mandate provided for in this bill was accepted by the government in its response to the financial system inquiry back in October 2015. It was foreshadowed then to be completed by the end of 2016. Yet here we are considering this bill in September 2018—over 1½ years later than was promised. The government's response to the financial system inquiry in October 2015 also committed to updating the ASIC statement of expectations. The statement of expectations is an important document that sets out the government's expectations of how ASIC will fulfil its important mandate. Despite the significance of ASIC's role as a financial regulator, it took until 2018, this year, for the government to announce that it had finally settled on a new statement of expectations for ASIC.
Unfortunately, the government's failures in financial services don't stop there. Another change that the government has promised, but is failing to deliver on, is payday lending reform. Since 2016 the government has been promising laws to give ASIC important powers to crack down on dodgy payday lending practices and consumer-leasing rip-offs. But to date, in 2018, as we stand here, it has yet to introduce any such legislation. In February 2017, the member for Higgins said that the bill to implement payday lending reforms would be introduced into parliament 'at the earliest opportunity' and declared 'it will pass this year'. In October 2017, the member for Riverina said the government 'will introduce legislation this year'. But 2017 came and went and there was no legislation. In February 2018, Treasury officials stated that they expected legislation would be introduced 'in the autumn sittings'. It's not really a big surprise that that didn't happen either. And at Senate estimates in May this year, Treasury officials couldn't provide an answer about whether this vital legislation would be introduced, stating that much trotted-out answer, 'It was a matter for government.'
The chaos, division and dysfunction in this government have led to paralysis on this issue, and it is vulnerable consumers who are paying the price for this government's inaction. Households that resort to using payday loans face skyrocketing fees and interest rates, with some as high as 200 per cent. We all know the impact that inappropriate lending can have on vulnerable consumers, yet this government is so divided and so dysfunctional that it's only focusing on itself and its own survival, rather than protecting consumers.
In contrast, Labor has a record of standing up for consumers. In fact, it was Labor that introduced the Future of Financial Advice reforms. The FoFA reforms were to improve the quality of financial advice provided to consumers of financial services. They acted to reduce conflicts of interests and to better align the interests of the financial advisers and the consumers. Significantly, Labor's reforms included the introduction of a best interests obligation that requires financial advisers to act in the best interests of their clients when giving personal advice. That's a legal obligation for financial advisers to do the right thing by the customer. Labor's reforms also included a ban on conflicted remuneration—including commissions, volume payments and soft-dollar benefits—when financial advisers provided advice to retail clients. These changes included a requirement that providers of financial advice obtain client agreement to ongoing advice fees, and enhanced disclosure of fees in the services associated with ongoing fees.
We should never forget the government's attempts to wind back these reforms. In opposition, those opposite voted against the FoFA reforms. In government, they tried to wind it back, first by legislation and then by regulation. It was Labor and the Senate that stopped them from proceeding with this. It was also Labor that recognised the need for a royal commission. We had seen that there were far too many retirees who had their retirement savings gutted, families losing hundreds of thousands of dollars, small business owners who lost everything and life insurance policyholders just denied justice. And what did this government do? True to its nature, it defended the big end of town. Mr Morrison fought tooth and nail against a royal commission, and this government ran a protection racket for the banks for more than 600 days. Mr Morrison has previously said about having a royal commission:
… I think it is a reckless distraction that puts at risk confidence in the banking system …
Of the need for a royal commission, Mr Morrison said:
It is nothing more than a populist whinge from Bill Shorten.
Once the royal commission had commenced and we started seeing some of the shocking evidence of misconduct, Mr Morrison changed his tune and said he was 'not surprised' by what had come out. This is, frankly, a government so out of touch with Australians, so focused on supporting the big end of town, that even its new Assistant Treasurer believes that banking scandals are inevitable.
It is reported that Mr Robert has vowed to 'resist left-wing pressure to crack down on banking conduct'. Instead he is going to be backing self-regulation, which has completely failed to protect the many Australians who have come forward to the royal commission so far, with courage, to tell their stories of massive exploitation at the hands of the banks, financial advisers and insurance companies.
The royal commission has exposed appalling rorts and rip-offs right across the financial services sector. There has been evidence about the systemic cheating of customers, banks charging fees for no service—even to dead people—and lenders duping people into inappropriate loans. First Nations communities have suffered from appalling predatory conduct. Lawyers for the royal commission have even recommended that the National Australia Bank and the Commonwealth Bank face criminal charges over their treatment of superannuation customers.
That the new Assistant Treasurer believes that these kinds of scandals are inevitable is just plain appalling. Mr Morrison and this government never wanted the royal commission. They cannot be trusted to implement its recommendations. They cannot be trusted to crack down on banking misconduct. This government's priority will always be protecting the big end of town, not the victims, families and communities harmed by this atrocious misconduct. The government even believed that it should give the banks a $17 billion tax cut—that is $17 billion that could be put towards improving the education and the health of Australians. This government can't help itself. It is hopelessly divided, out of touch with Australians and just about protecting the interests of the big end of town.
Labor will continue to fight for ordinary, hardworking Australians. We will fight for fair funding for the schools that educate our kids, for fair funding for the hospitals that look after our families and for fair rules for a financial sector on which almost every Australian person and business rely. We are the party that will do the right thing by consumers. We'll stand up to the banks and the big end of town.
In conclusion, Labor supports this bill. I want to make a comment about the second reading amendment that has been circulated by Senator Whish-Wilson. Labor will not be supporting this amendment today. The roles and accountabilities of Australia's financial regulators is a serious issue and one that's worthy of proper consideration. It is possible that the royal commission will make findings in relation to the financial regulatory architecture. If so, these findings will be a critical input into any future consideration of the roles and mandates of our regulator.
Senator BROCKMAN (Western Australia) (17:18): I, too, rise to speak on this bill. Before I start, I will just pick up on a couple of things that Senator O'Neill said. She talked about retirees having their savings gutted in the GFC. I will point out that Labor's current policy on double taxation is to gut the retirement incomes of pensioners—self-funded retirees on very modest earnings. One particular example that comes to my mind is of a chap I know well down in Albany in Western Australia. He is a self-funded retiree—a schoolteacher all his life—with a very modest superannuation balance, and he will have his take-home income slashed by 30 per cent under Labor's double taxation policy.
When Senator O'Neill stands up and talks about retirement savings being gutted, I think she should look behind her and look to her own side on what Labor's current policy is going to do to the retirement incomes of people who have done the right thing and done exactly what society asked them to do—work and strive to put money away to fund their own retirement. They don't look to the taxpayer in terms of funding a pension. Instead, they have enabled themselves to have a very small, modest income. In the case I'm thinking of, an income of around $30,000 per annum will be slashed by $10,000 to $20,000 per annum. This is apparently the Labor Party's idea of fairness. That's a very sad reflection on those opposite.
I do rise to speak on the Treasury Laws Amendment (Enhancing ASIC's Capabilities) Bill 2018. This bill builds on a very strong track record in this space by this government. The bill implements a series of enhancements to the capabilities of the Australian Securities and Investment Commission, ASIC. It enables key recommendations from the Financial System Inquiry and the ASIC capability review. It is further evidence of the government's commitment to strengthening ASIC and commitment to ensure our financial system does deliver for all Australians—delivers fair outcomes for all Australians. That's the key to what we're trying to see here. The regulators are a very important part of that, and it builds on key steps taken by this government to improve ASIC's performance. They are steps such as providing ASIC with a stronger funding base through the introduction of an industry funding model to ensure the cost of regulation is borne by those that have created the need for it rather than the Australian public, who too often bear the cost of financial sector misconduct.
Other changes by this government would be the implementation of other recommendations from the Financial System Inquiry to provide new tools and powers to ASIC, including the power to intervene in the sale and distribution of financial products where there is a risk of significant consumer detriment. A third example is reviewing the recommendations of the ASIC Enforcement Review Taskforce, established by the Liberal government in October 2016 to assess the suitability of the existing regulatory tools available to ASIC. I will later go through some of the other changes made by this government in the recent past, but firstly I'll deal with this bill.
The bill contains two schedules. Schedule 1 relates to the changes to competition in the financial system, and schedule 2 contains amendments relating to the engagement of ASIC staff. Dealing with schedule 1 first, this is related to competition in the financial system. The government considers that competition, not regulation, is the best means of ensuring consumers get value for money in the financial services. Schedule 1 of this bill amends the Australian Securities and Investment Commission Act 2001, the ASIC Act, to maintain that the Australian Securities and Investment Commission must 'consider the effects that the performance of its functions and the exercise of its powers will have on competition in the Australian financial system'.
The explicit reference to take competitions issues into account will require ASIC to consciously consider how its regulatory decisions will impact on competition in the financial system. Both consumers and financial services firms, particularly new entrants, will benefit from a more competitive financial system. This measure fulfils the government's commitment to implement recommendation 30 of the Financial System Inquiry. This recommendation stated that the government should include consideration of competition in ASIC's mandate. It is in response to the FSI that the government committed to develop legislation to introduce an explicit reference to consider competition in ASIC's mandate. This measure complements other key initiatives undertaken by the government to support competition, including tasking the Productivity Commission with a review of competition for Australia's financial system and funding to the ACCC to undertake in-depth inquiries into specific financial system competition issues.
This schedule in particular has undertaken significant consultation. The Financial System Inquiry itself received over 6,800 submissions and took hundreds of stakeholder meetings, including with financial institutions of course but also with markets, participants and the regulators themselves. The government undertook significant consultation on this measure following the receipt of the final report. Stakeholders, including people like the Financial Services Council of course but also CHOICE, the Customer Owned Banking Association and obviously the Australian Banking Association. They were all generally supportive of the stronger focus on competition in the financial system, including amending ASIC's mandate to include consideration of competition. In addition, there has obviously been significant consultation with ASIC as part of the finalisation of this amendment.
The Financial System Inquiry found that competition is generally adequate in the financial system, but there needs to be a stronger focus on competition in the financial sector. In particular, the FSI was concerned that regulators' mandates adopted an inconsistent approach to competition, with ASIC lacking an explicit competition mandate. Accordingly, the FSI did recommend that the ASIC mandate should include a specific requirement to take competition issues into account as part of its decision-making process. Particularly in light of current events coming out of the royal commission, I think it is very clear that we need to introduce more competition into our banking and financial services sector. We don't want to see any winnowing away of competition in that sector, because that will only lead to a further concentration and further potential for problems when they do arise to cause significant harm to a greater number of people. A broad and diverse financial sector is of course going to deliver the best outcome in terms of protecting the most people possible when these sorts of incidents do occur.
What outcome do we hope for from this legislative change? An explicit reference in ASIC's mandate to take competition issues into account would oblige ASIC to more consciously consider how its regulatory decisions may impact on competition in the financial system. Some of the specific aspects of competition that ASIC may have regard to include: whether a decision will create a barrier to entry, making it more difficult or impossible for new firms to enter the industry, whether the decision will create regulatory advantages for some firms over others competing in the same sector or across the whole industry; whether the decision disproportionately impacts small entities, for example by imposing obligations on them that do not appropriately scale the regulatory risk presented by such entities, and the impact that this will have on competition; and whether alternative competitive-neutral approaches can be identified. This amendment is not intended to limit the scope of ASIC's regulatory responsibility, nor expand its powers by making it a competition regulator. The ACCC would remain the competition regulator across the economy.
Once again, particularly on this side, we want a competitive, open economy. We want as many players in the economy as possible, players that are doing the right thing, playing by the rules and following the law. Having as many players as possible in the sector will protect most people by giving them as many options as possible—for our business sector and for individuals—to gain access to the financial services products they require.
The schedule 2 amendments relate to the engagement of ASIC staff. Schedule 2 of the bill amends the ASIC Act to remove the requirement for ASIC to engage staff under the Public Service Act. Consequential amendments are also made to the Business Names Registration Act 2011, the Corporations Act 2001 and the Mutual Assistance in Business Regulation Act 1992. Removing the requirement for ASIC to employ people under the Public Service Act will promote greater operational flexibility, bringing ASIC into line with Australia's other financial regulators, the Australian Prudential Regulation Authority and the Reserve Bank of Australia. To be able to perform their roles effectively in accordance with their legislative mandate, financial regulators need to be able to attract and retain suitably skilled and experienced staff. In ASIC's case, this means recruiting staff with knowledge of financial markets and financial services. ASIC is therefore often competing against the private sector, as opposed to other public sector agencies, when recruiting staff. Regulators face challenges in recruiting and retaining staff, given that regulatory staff remuneration falls short of salaries in the industry they regulate and against whom they compete for personnel.
Unlike ASIC, neither APRA nor the RBA are subject to the PSA. The objective of removing the requirement for ASIC to employ people under the Public Service Act is to achieve greater operational flexibility, bringing ASIC into line with those other two regulators. The inflexibility involved in Australian Public Service employment under the PSA can make it difficult for ASIC to shape the workforce and culture that it requires to meet the organisation's priorities. These include such things as: classification and remuneration of staff; the length of employment of temporary staff; management decisions affecting staff; and the terms and conditions of any enterprise agreement.
Removing the obligations for ASIC to engage staff under the Public Service Act means that ASIC will be able to compete more effectively for suitable staff. It will also allow ASIC to tailor management and staffing arrangements to suit its needs, ensuring it is fit for purpose to deliver effectively on its mandate. This measurement fulfils the government's commitment to implement recommendation 24 of the ASIC capability review report. This recommendation stated that the government should remove ASIC from the Public Service Act as a matter of priority to enable them to have more effective recruitment and retention strategies.
A similar finding was also found in the context of the financial systems inquiry. Again, there was significant consultation over schedule 2. It was more targeted, obviously, given the nature of the change. Targeted consultation on the exposure draft legislation occurred from December 2017 to January 2018 with the Department of Finance, the Department of Jobs and Small Business, the Department of the Prime Minister and Cabinet, the Australian Public Service Commission and, of course, ASIC itself. There are also transitional provisions. Transitional provisions are in place to ensure that existing conditions, rights and contracts continue to apply to ASIC staff as they transition out of the PSA to engagement under the ASIC Act. ASIC staff employed under a written agreement immediately prior to the commencement of the bill will continue to be employed under the written agreement. Staff employed under the PSA immediately on and from the commencement of the bill will cease to be engaged under the PSA, will be employed by ASIC under written agreement and will be employed on the same terms and conditions, with the same approved benefits, and will maintain their continuity of service with ASIC. These changes to ASIC's engagement of staff will not affect any promotions, performance management or disciplinary actions commenced before 1 July 2019 and will not give rise to any entitlements or benefits because an ASIC staff member is no longer employed under the PSA.
In conclusion, this bill ensures that Australia's financial services sector stays competitive. We believe that competition in the financial services system puts strong discipline on business to lower costs associated with the delivery of their products and services. Further, it encourages innovation and deployment of new technology and delivers more choice for consumers at lower prices. The effects of stronger competition in the financial system are felt well beyond financial markets. They flow through to all parts of the economy. A strong and effective financial system is a precursor to a strong and efficient economy. We all need to remember that as we look at the potential flow-on impacts from the royal commission.
Importantly, the bill further ensures that Australia has strong and effective regulators governing our financial system. Our financial system has done a good job in meeting the needs of Australia. Those on this side are as shocked and disappointed as anyone in some of the things that have come out at the royal commission, but we need to remember that Australia has been served well by its financial system and we do have a very robust and competitive environment, but it can be improved upon and that is very clear. The measures contained in this bill are part of that.
In the few minutes I have left, I will talk briefly about how the measures in this particular bill play into an ongoing theme of this government about the need for reform in this area and what we have delivered. A few months ago, the then minister, Kelly O'Dwyer, announced a significant package of reforms to make sure that ASIC is fit for purpose. These included such measures as $26 million to accelerate and increase the intensity of ASIC's enforcement activities and enhance its capacity to pursue actions for serious misconduct against well funded litigants through the Enforcement Special Account; $9.4 million to boost supervision of the superannuation sector by strengthening audit and enforcement action to improve transparency and outcomes for superannuation members; $8 million to implement a new supervisory approach with respect to Australia's five largest financial institutions by, for the first time, embedding dedicated staff in these institutions to monitor compliance actions; $6.8 million to establish a dedicated taskforce which will conduct a proactive, targeted and thematic review into corporate governance to identify and pursue failings in large listed companies, including deploying staff to conduct new on-site surveillance and investigations; $6.6 million to implement the government's reforms to whistleblower protection laws so that ASIC can better receive, assess, triage and address whistleblower disclosures about misconduct; and $6 million to promote Australia as a world leader in the development and adoption of regulatory technology solutions in the financial services industry. So we see that this bill under consideration today is not a standalone bill. In fact, the bill we've just passed, the Treasury Laws Amendment (Black Economy Taskforce Measures No. 1) Bill 2018, is also clearly to do with the improvement of the regulatory framework under which all businesses must operate in this space. We have to improve the regulator and we have to improve the regulator's actions. The government has had a long-term commitment to doing that and is following through in this bill today.
The measures that were announced a few months ago build on the measures in this bill and build on the very strong series of actions undertaken by this government to ensure we have strong consumer outcomes and a strong regulatory environment. For example: $121.3 million in additional funding in 2016 to bolster ASIC's investigative and surveillance capacities; strengthening of civil and criminal penalties by increasing terms of imprisonment and fines; increasing the maximum civil penalties to be imposed by court; allowing ASIC to strip wrongdoers of profits illegally obtained, again strengthening the regulatory toolkit; improving search warrant powers and providing access to telecommunications intercepted materials, again improving the regulatory toolkit; and an industry funding model, which we talked about earlier, to ensure that those entities who create the need for further regulation actually pay for it instead of taxpayers, again a very important change undertaken by this government; undertaking consultation on a new product intervention power to enable ASIC to intervene in the sale of harmful products to retail consumers; legislating to improve the employment arrangements, which is part of this bill; and appointing a second deputy chairperson with a focus on enforcement—the person appointed brings significant enforcement experience to that role.
In conclusion, clearly this government has a strong commitment and a strong track record in bolstering ASIC's capacity to play the legitimate role it plays in the economy. This particular bill, which is aimed at improving competition, is a very important step in making sure we have the best regulatory framework possible.
Senator WILLIAMS (New South Wales—Nationals Whip in the Senate) (17:37): Can I say first of all, Mr Acting Deputy President Whish-Wilson, that both you and I have given ASIC a bit of stick over the years in the 10 years I have been here. If you'd asked me a few years ago, 'What is the definition of frustration?' I would say, 'ASIC.' I remember when I launched an inquiry into liquidators and insolvency practitioners years ago, there were unanimous recommendations. Sadly, for years the Labor government did absolutely nothing about bringing those regulations in and changing the laws and the responsibilities of liquidators, receivers or administrators. Thankfully, we got them changed, and September last year was the finalisation of those changes.
The situation is that with a majority vote in favour of the creditors, a committee can sack a liquidator with one vote. That is a very powerful thing. Normally, prior to that, to get rid of a liquidator you'd have to go to the courts. It'd be going on and on, dragging on for years, with huge costs, et cetera, and that money would not be going to the creditors, where it should have been going. I've found that I get on very well with ASIC members these days—the boss, James Shipton, and many of the commissioners—and I work closely with them. But it is still frustrating.
For example, a Mr Cowper, whose breach was reported by NAB in 2010, just a couple of months ago was scrubbed out of the industry. He went on to AMP after being sacked by NAB, if I remember rightly. Why does it take eight years to scrub out a financial planner?
I remember well being in Senate estimates and asking Mr Kell, 'Why did it take you 16 months to respond to the whistleblowers from Commonwealth financial planning? His answer was: 'Senator, we got a great result; we got an enforceable undertaking.' I said, 'That is not the question I asked you. I asked you why it took so long.' Mr Kell went on to say: 'Well, we got a result.' Former Labor Senator Mark Bishop was the chair of the Economics Committee. I turned to the chair and I said to Senator Bishop, 'How do you get these people to answer a question?' One of Senator Cameron's staffers said to Senator Cameron, 'I think Wacka is getting a hard time up there in estimates,' and Senator Cameron came in and put some pretty powerful questions to ASIC. Senator Cameron then said to me, 'Why don't we have an inquiry into ASIC?' I said, 'What a great idea.' So we launched an inquiry into ASIC, and out of that, came the financial planning rorts, scandals et cetera—and this year ASIC banned 46 financial planners in 12 months.
Senator O'Neill talked about the funding for ASIC. Yes, it is true that years ago we cut the funding for ASIC and then it was reinstated. In this budget there's a cut of $13 million. But Senator O'Neill is missing one thing: we're putting in a system of user-pays. A couple of years ago we had the situation where ASIC would spend $30 million a year policing and investigating financial planners but would collect just $2.8 million in licensing fees. They spent $10 million a year on oversight of the insolvency practitioners industry, but collected just $40,000 in registration fees for liquidators. That is now changing, and that funding gap will be more than filled by those two industries contributing with their licences and paying a fee to ASIC to fill that gap, as they should. Why should the taxpayers of Australia pay all the costs for ASIC to do its job when it is looking at the financial planning industry and the insolvency practitioners industry? So let's hope that ASIC has the funding, the powers and the courage to go after these people who are doing the wrong thing in the corporate world and in the financial sector world and bring those who do the wrong thing to account.
The royal commission has even surprised me—even though I've asked for it for about eight years or nine years in this place, and I'm glad to see that everyone is on board now. I'm even surprised at what's coming out. But, as I said here recently, when Paul Keating introduced superannuation, there were no criminal charges or fines or laws for people stealing our superannuation. We saw through the royal commission that many are doing the absolutely wrong thing by our super. Super is there for people's retirements—wholly and solely for that. Of course, group life insurance is involved in that as well. Billions have been taken out. There have been terrible returns, with people who might have their money in cash, in super, and getting one per cent or less. You get three per cent in any of the big banks. If you wanted to put a couple of hundred thousand in for two or three years, you'd get three per cent. Why are they only getting one per cent in their super?
Legislation on this issue came into the Senate in September last year. You know how this place works, Mr Acting Deputy President: if you don't have the numbers, the legislation gets pulled. When that legislation came here to bring in criminal punishments—$420,000 and up to five years jail—for people doing the wrong thing with our superannuation, Labor and the Greens opposed it. I hope when it comes back—and I hope it comes back soon—you don't oppose it, given what the royal commission has brought forward.
I would add that I think Commissioner Hayne is wonderful. I think he is going a great job. He's very direct, and he doesn't take any prisoners in the way he asks question—along with Ms Orr, who has become a household name. When the royal commission reports—and at the end of this month we will get the interim report and at the end of February the other report—I think the regulators are going to get a bit of a touch-up. I'm seeing what is going on and I think APRA and ASIC have a lot of questions to answer. I would ask: are they big enough to do their job; do we have to treble their funding; and do we have to treble their size to see that the corporate crooks are taken out of our country? It will be very interesting to read that report from Commissioner Hayne. As I said, I think he's doing a marvellous job. I like his attitude and I like the way he asks questions—and I get a bit of a laugh. When I had a hip replaced about nine weeks ago, I had a week in hospital, and I must say I enjoyed every minute of being at home. I did some exercises the physio told me to do, but watching the royal commission was very entertaining, I can assure you, with what was coming out.
It's clear that ASIC is going to have to play a major role in the future of our whole financial sector. This bill is about competition in ASIC, as we believe that in the competition and financial sector that competition keeps prices down; monopolies don't. You often question whether that's always the case in the financial sector. Just in the last couple of weeks we saw one bank raise its interest rates slightly—I think about 14 or 15 basis points—and people said, 'Well, won't be long, and the rest will follow.' Two others did follow: Commonwealth and ANZ. Westpac led the rise. But NAB didn't—pleased to see that.
I understand the cost of funds are going up for banks. Wholesale funds from overseas are creeping up. Interest rates will creep a bit and the cost will go up a bit, so they'll pass those costs on to their customers. Being frank, they've got a fair bit of leverage in the profit they were making to perhaps give some relief. They are giving some relief, and I must make a comment here a bit off the track: I commend ANZ Bank—they are giving a one per cent discount on their interest rates to farmers in drought.
The banks have a somewhat different attitude now, because of the royal commission. Previously, when you missed a payment with the bank, you defaulted. What would happen? You'd get hit with penalty rates. You might be on seven per cent. What are penalty rates? They might go to 17 per cent. There are no penalty rates for farmers in drought, which I think's a very good thing and a good change of attitude. In fact, most of the big banks are giving holidays for making payments. They realise that the future of agriculture's very, very strong.
When you're on the land—and I'd imagine the four generations of my family preceding me did this—you use your one commodity pretty well. It might be wool, for example. When wool's good, you can bet your life cattle is bad, fat lambs aren't that flash, mutton prices are down, and wheat and barley prices are ordinary. But now we have a situation on the land where all the prices are good. The banks are seeing that. We've got record wool prices. Lamb prices are breaking records—up to $300 a head—and that's making it very expensive for the average family to have a leg of lamb these days, I can assure you. Cattle prices have come up because of the drought, but they've been very strong as well. Wheat prices are the highest I've seen in my life, because of demand and supply and the drought et cetera. The banks realise that agriculture has a great future, and I do commend them for being sympathetic towards those who are doing it tough in this drought.
Back to this bill, the government considers competition, not regulation, is the best means of ensuring consumers get value for money in the financial services. Schedule 1 of this bill amends the Australian Securities and Investment Commission Act 2001, the ASIC Act, to mandate that the Australian Securities and Investment Commission must consider the effects that the performance of its functions and the exercise of powers will have on competition in the financial system. The measures fulfil the government's commitment to implementing recommendation 30 of the Financial System Inquiry, tasking the Productivity Commission with the review of competition in Australia's financial system and funding the ACCC to undertake in-depth inquiries into specific financial systems competition issues.
Also, removing the requirements for ASIC to employ people under the Public Service Act is very important. They might need specialist people in specialist fields. However, it'll mean when they employ those people, they've got to compete with the private sector, so they may have to bid up pretty well with their wages. So, recruiting staff with the knowledge of financial markets and services, and competing against the private sector, will allow that very issue.
ASIC has a lot of powers, a lot of strength and a lot of finance put into them. But, clearly, the royal commission will show they are falling behind in many areas and have to lift their game. Of the bill's amendments relating to competition in the financial system, you might ask the question: what are the benefits of this measure? I already talked about the competition issues. So why is competition in the financial system so important? 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 choice for consumers at lower prices.
The effects of stronger competition in the financial system are felt well beyond financial markets and into the other parts of the economy. Increased competition can benefit the economy as a whole by improving to productivity and economic growth. I must commend the former Labor government. I don't do this often, because I saw the mess they made of many things, but at least they did away with establishment fees and exit fees. If you have a home loan and you are not getting the best deal, you can walk, free of cost. If you go back many years, to establish a home loan for $200,000, they would say it is a $5,000 establishment fee. And then if you wished to get out of that bank and go to another institution, they may charge you a $5,000 to 10,000 exit fee. It is good to see the charges are gone and that brings real competition back to the system.
Under this bill, there are more issues. Why is the government changing ASIC's mandate to only be required to consider competition rather than promote competition? ASIC has a critical role to play as the conduct regulator of Australia's financial system. The government considers that it is important for ASIC to consider the competition impacts of its decisions. However, it is not necessary for ASIC to go beyond this and look at using its powers to proactively promote competition. This is because Australia's competition regulator, the ACCC, is best placed to promote competition in the financial system by regulating anti-competitive behaviour.
Further, the government provided the ACCC with $13.2 million as part of the 2017-18 budget for the ACCC to undertake inquiries into the financial system competition issues. The government's proposals for ASIC to consider competition is in line with the recommendation of the financial system inquiry. The FSI did not envisage that ASIC would be required to promote competition.
If you ask the question: how does this amendment relate to the Productivity Commission inquiry into competition in the financial system currently underway? The amendment is consistent with the Productivity Commission's draft report on competition in the Australian financial system. The draft report proposes that ASIC could be a competition champion in the context of giving careful consideration to the impact of regulatory decision making for competition in the financial system. Should the government wait for the completion of the royal commission and the Productivity Commission inquiry into competition into the financial systems before implementing these recommendations? My answer is no. This measure is implementing a recommendation of the FSI inquiry, consistent with the Productivity Commission's draft report.
The financial systems inquiry received over 6,800 submissions—that is a hell of a lot of submissions. It undertook hundreds of stakeholder meetings including with financial institutions, market participants and regulators. The government undertook consultation on this measure following receipt of the final report. Stakeholders the government consulted included the Financial Services Council, Choice, Customer Owned Banking Association and the Australian Bank Association. They were generally supportive of a stronger focus on competition in the financial system, including amending ASIC's mandate to include consideration of competition. In addition, there have been significant discussions with ASIC as part of the finalisation of this amendment, so it's more power to ASIC. It is encouraging competition in the financial sector, which we desperately need, not just through loans but through investments as well, through financial planning and through managed funds and superannuation.
I think one of the biggest problems we have in this country is education systems. Our education system is hugely lacking when our year 12s leave school. Many go to university. They will eventually get a job after they are qualified, hopefully. When people go out to work, do they know they have life insurance with their superannuation? Millions wouldn't. Do they know if they change jobs, if they don't change the super fund, it will dwindle away and the superannuation fund will take it? That's why we are bringing in changes for under 25s to opt in for life insurance in their super. Even though ASIC does a lot of educating through the schools, I'd like to see a couple of semesters of school devoted wholly and solely to financial management—warning them about super, where they invest their super; if they change jobs, make sure they have one fund only; warn them of the dangers of credit cards. You get a young mechanic, a rev-head like I was in my young day, and next thing they get a pretty cheap car and a credit card with a $2,000 limit. Well, in the boot goes the big speakers and the big sound system. He goes down the street, and you can hear the 'boom, boom, boom' coming down the street and you think, 'Young fella, you're going to be deaf by the time you're 40 and probably half the people on the street as well.' He's very proud of his car and his big music system, until he realises it will probably take him four or five years to pay the credit card off at a 17, 18 or 19 per cent interest rate compounding. What do we do to educate our kids about this? I think there are huge improvements that can be made in education about finance to teach our people—our youngsters—when they get out in the big wide world of work and are earning their own money: don't leave your superannuation in a fund and say, 'It'll be right, mate.' It won't be right. And, as I said, if you change funds, you'll dwindle your life savings and your retirement fund will just dwindle away.
There are many things we can do about life insurance as well. I think the royal commission has done a great job on life insurance and done a great job all up. I'll say this now: I hope the royal commission is extended, and I hope it looks at insolvencies, receivers and liquidators. I know, for the farmers who appeared at an inquiry we had last year, there were some terrible situations. I remember one case where 3,600 sheep had to be shifted 400 kilometres. Now, being an old livestock carrier, I thought: '3,600 sheep is six six-decker B-doubles. At 100 a deck, that's 600, so 6 B-doubles. Give them $6 a kilometre, and 400 kilometres is roughly $2½ thousand dollars.' For those six trucks, they should have charged about $15,000, but the receiver charged in excess of $90,000, and I question why—even for something like $20,000 to have security there the day they loaded the sheep. This is money that could go back to the creditors and to the banks. I've encouraged the banks: 'Please do not send receivers into family farms.' You can in the corporate world—with corporate farms, the management's retained.
There are many things we need to do, and education, I think, is going to play a major role in the situation. We'll be benefiting future Australians in a big way if we were to have year 10s, for example, spending half the year being trained on financial management and if we take a bit of pressure off ASIC so ASIC can do their job—going out there as a corporate cop and scrubbing the crooks out of the industry. And hopefully, with the support of Labor and the Greens when those bills come back here, those who commit criminal offences can face the proper music when they actually steal. I commend the bill to the Senate.
Senator DUNIAM (Tasmania) (17:57): I, too, am delighted to be speaking on the Treasury Laws Amendment (Enhancing ASIC's Capabilities) Bill 2018. I was very pleased to hear a couple of the points made there by Senator Williams with regard to educating younger Australians about financial literacy and personal responsibility, but I'll come to those a little later on.
I think everyone in this place would agree that having confidence in the integrity of our financial services sector and having faith in the capacity of our financial service regulators, like ASIC, as we're discussing in this bill, is of utmost importance for Australians. I think having faith that things are being done in accordance with the law—that people aren't being ripped off and that their best interests are being looked after—is something that Australians want us to focus on.
Competition, which is something Senator Williams and I'm sure other contributories to this debate have spoken about, is an incredibly important part of this, and enabling entities like ASIC to not only do the work that they need to do but also have further functions, as outlined in this legislation, is important when it comes to ensuring, as I say, we have that integrity, that Australians have that faith in the financial services industry—all the major players and all the smaller entities—and that we do have that competition being promoted within the sector as well.
Obviously, when confidence is undermined, and when people lose faith in the financial services sector and those who regulate it—the government entities that are designed, geared up and resourced to regulate this industry—it has far-reaching consequences. We only have to turn our mind back a very short 10 years to recall what happened in the US and then the flow-on ramifications through the global financial crisis felt here in Australia. As a consumer of financial products—I expect like nearly everyone in this place, be it a credit card, a home loan or personal loan or as someone who makes contributions to superannuation or who has life insurance—it is important that we have faith in those who are tasked with making sure that government institutions have the appropriate powers and resources in order to give effect to the laws they uphold.
As I'm sure others have noted in this legislation, the bill puts in place and sets up key recommendations from the Financial System Inquiry and the ASIC capability review. I'll have a quick look at both of these documents shortly, but it is very much about ensuring that ASIC has the capacity to do its job properly and that we deliver fair outcomes for all Australians, including young Australians, who perhaps are the least financially literate in this day and age.
It is important to note that there has been a fair degree of work that has been gone through in order to get to this point. It wasn't just a case of the government randomly coming up with a few key areas to look at with regard to ASIC's functions and roles. Indeed, it has been a lot of work. I've already mentioned the Financial System Inquiry that was undertaken, with the final report being released at the end of 2014. There was the ASIC capability review, which was done in 2015. Complementing all of that, we have the Productivity Commission's Competition in the Australian financial system report—with some interesting recommendations that we'll have a look at—which was released just a couple months ago. We could go to all of these areas of competition and how we can best set up things so that people do well out of them.
Looking firstly at the Financial System Inquiry, for which I was able to locate some of the documents online, the inquiry made 44 recommendations relating to Australia's financial system. The recommendations reflect the inquiry's judgement based on evidence received by the inquiry. The inquiries test has been of public interest—the interests of individuals, business, the economy, taxpayers and governments. It was a broad-ranging inquiry looking at a whole host of areas. It points to a number of themes within the financial services sector. They look at things like the resilience of the sector, superannuation, retirement incomes, innovation—which, of course, this bill does touch on—consumer outcomes and the regulatory system. Those last two are very important areas. In consumer outcomes, the most important part, as it states at the head of the overview to the Financial System Inquiry report, is to 'enhance confidence and trust by creating an environment in which financial firms treat customers fairly'.
As Senator Williams touched on just a little while ago, there has been a great degree of reporting around negative experiences consumers have when it comes to financial institutions, particularly with big banks. We're hearing a bit more about insurers. I echo the comments of Senator Williams that it would be great to see the royal commission extended to insolvency practitioners, administrators, liquidators and receivers. I'm sure anyone who runs an open-door electorate office gets people coming in to make complaints about people in that sector who haven't been aboveboard or fair with their consumers. That's not to say all practitioners in the field are not obeying the law, but there are certainly some, and it would be remiss of us not to ensure the royal commission included that part of the industry.
Turning to the issue of competition whilst still looking at the Financial System Inquiry final report, it said on page 5:
Although the Inquiry considers competition is generally adequate, the high concentration and increasing vertical integration in some parts of the Australian financial system has the potential to limit the benefits of competition in the future and should be proactively monitored over time.
That points to the need to be future looking, to be proactive, to ensure that the regulatory entities—in this case, ASIC—are set up and geared towards the future so that they can be dynamic and can respond to what is a fast-changing environment. There's been a lot of commentary around the way in which products are sold to consumers and the way products are set up.
The financial system inquiry's approach to encouraging competition is to seek to remove impediments to its development, the report says. It further says the inquiry has made recommendations to amend the regulatory system, including narrowing the differences in risk rates in mortgage lending, considering a competitive mechanism to allocate members to more efficient superannuation funds and ensuring regulators are more sensitive to the effects of their decisions on competition, which of course is what this bill is largely about. International competitiveness and the free flow of capital, and in particular the state of competition in the financial system, should be reviewed every three years, including assessing changes in barriers to international competition. And of course it would be silly for us to think that we are isolated here in Australia and that our economy, and indeed the sector we are talking about, is completely independent of impacts flowing from overseas.
In the area of innovation, with the emergence of new business models and products and substantial investment in areas such as mobile banking and cloud computing and payment services, there's a need to make sure that regulation and regulatory authorities are keeping up with that. In particular, the financial system inquiry recommended to facilitate innovation aiming to encourage industry and government to work together to identify innovation opportunities and emerging network benefits where governments may need to facilitate industry coordination and action. I think it's important to note that it is about industry coordination and action, because they're the ones that are in the field. They're the experts; they know what they're doing; they know what works and what doesn't. Of course government oversight is important so as to prevent bad things from happening, and we've seen outlined in the royal commission what happens when oversight isn't properly there.
The financial system inquiry also recommended to strengthen Australia's digital identity framework through the development of a national strategy for a federated style model of trusted digital identities, remove unnecessary regulatory impediments to innovation—I think that is an excellent recommendation—particularly in the payment system and in fundraising for small businesses. And in the area of innovation, it recommended to enable the development of data-driven business models through holding a Productivity Commission inquiry into the costs and benefits of increasing access and improving the use of private and public sector data.
It then goes on to look at consumer outcomes, which is all about the fair treatment of consumers. This is to make sure their rights are protected, the outcomes they receive are ones that are in their interests, and the concept that financial products and services should perform in the way that consumers expect, or at least are led to believe when they are purchasing a product, when they are signing up for something. They want to make sure they get the outcome they were told they would.
The biggest problem identified in this report related to the shortcomings in disclosure and financial advice, which meant some consumers are sold financial products that are not suited to their needs and circumstances. I think Senator Williams touched on a few of those things, and it comes down to financial literacy—people being able to understand exactly what they're signing up for. How many people know that their superannuation policy has life insurance in it, that they don't need to go and purchase another one at extreme expense? How many people know that they need to roll their super over into a new fund when they commence employment? Any regime shouldn't be expected to prevent all consumer losses. Sadly, no regime will ever be able to do that, but self-regulatory and regulatory changes are needed to strengthen financial firms' accountability, which is something we can't echo strongly enough.
Turning to the regulatory system, obviously we need to make sure that our regulatory entities are strong, are independent and are well-resourced, which is what this bill does actually go to. On that, moving to the ASIC capability review that commenced in July 2015, when the government established an expert panel to review the capabilities of ASIC, interestingly it did say in the capability review that ASIC's regulatory capabilities are 'in line with' global best practice. But it was acknowledged that additional measures were required to support ASIC in delivering on its mandate of ensuring it is fit for the future. Again, it's that point about being geared up, ready for a dynamic and changing financial environment with new entities, new ways of doing business and making sure that, most importantly, consumers are protected from any harm that may otherwise be done to them.
There were a number of recommendations made through this particular review, the capability review undertaken by the expert panel, that are being acted on today. The review went to areas like issues of ensuring we have enhanced data analysis. It highlighted the critical role that sophisticated analytics and risk assessment processes can play in identifying and mitigating conduct risk. In response, the government has already committed over $61 million to enhance ASIC's data analytics and surveillance capabilities, as well as to modernise ASIC's data management systems, which ensures ASIC will be able to take advantage of emerging analytical technologies, and, most importantly, better detect emerging financial sector misconduct.
There was also a boost to surveillance funding, with the government providing ASIC with an additional $57 million for surveillance and enforcement on an ongoing basis. That's a great piece of news with regard to what, again, we've heard coming out of the royal commission. To have extra resources available for ASIC to undertake its job is something consumers and business should have great confidence in.
There are new powers that ASIC will have and there is a commitment of an extra $9.2 million in funding for ASIC and the Treasury to consider a whole range of issues. Most importantly, though—as we've heard other say in this bill—we're turning this into a user-pays model. I think that's important, because, really, the reason ASIC and entities like it are in place is to regulate an industry that needs regulating. It's not the consumer's fault that banks or insurance providers or any other entity, for that matter, need regulating. Therefore, it's not too much to ask for these businesses, these entities and these sectors to pay for a service that regulates them. It's not the consumers' role to do so, so I'm pleased to see that we are putting the onus on industry in that respect.
Finally, I'll turn to the Productivity Commission report, Competition in the Australian financial system, which was released at the end of June this year. The report examines the market and looks specifically at the power, the market share, of the big four banks as a starting point. It also examines the role of regulators and then, importantly, how consumers can be better served and how to get there, and it makes a whole host of recommendations around that. In talking about the big four banks, interestingly—and I think it's important to put some of these things in context when we start pointing the finger at where problems are—the Productivity Commission report said:
High market concentration does not necessarily indicate that competition is weak, that community outcomes will be poor or that structural change is required. Rather, it is the way market participants gain, maintain and use their market power that may lead to poor consumer outcomes.
So, rather than it being a circumstantial thing, that we have four major banks with a whole heap of entities trading in areas like institutional banking, retail banking, insurance and wealth management et cetera, it's more a case of making sure, through our regulatory bodies, that these large entities are operating in the best interests of consumers and, of course, in accordance with the law. The report went on to say:
… reforms that alter incentives of Australia's banks, brokers, insurers, and advisers, aimed directly at bolstering consumer power in markets, and reforms to the governance of the financial system, should be the prime focus of policy action.
I'm pleased to say that what we are debating here today is exactly that.
It was interesting to note the exact breakdown of the four major banks that, of course, are looked after and regulated by ASIC. The Commonwealth Bank controls 23 per cent of the market while Westpac controls 20 per cent, ANZ controls 21 per cent and NAB controls 18 per cent. On page 7 of the report is a very interesting diagram which shows how many of these large banks are structured, which gives us a good insight into exactly how the financial services industry in Australia is working between these four major providers.
At the end of the Productivity Commission report, there are a great many recommendations—quite a few going across a whole range of areas which I think are very important. As I say, I'm pleased to see that the government has taken a lot of these things very seriously—things like data access to enable consumer choice, which is common sense; making sure that broker reporting accords with consumer choice as well; more transparency around broker commission structures; the idea of a principal integrity officer at Australian credit licensee and financial service licensee entities; and the list goes on. So, as I said, a huge amount of work has gone into the preparation of this bill and the integrity of the financial services sector. Consumers' faith in this area is incredibly important, but I think, as Senator Williams said as he finished his contribution, there is a need in this community, in this country, to ensure that young Australians in particular are educated with regard to financial literacy.
In the Productivity Commission report, it talks about a blizzard of like products and people not being able to differentiate between this product or that product. I'm not an economist—I don't have a commerce degree and I've never worked in a bank—so, when I look at a lot of these things, I can read and discern what's good and what's bad, but I think it would be helpful for our education system to help gear up people for the future. Indeed, families should take some responsibility as well, if they have the capacity to do so, to educate their children about how to save, how to manage their money and the pitfalls of taking out a credit card. There's the scary prospect of people being able to get a personal loan through their iPhone—for instance, through their CommBank app. Within a matter of 24 hours, through whatever they've done on their iPhone, they might be $50,000 richer. It's very easy to gain access to credit, and we need to make sure that if people need to do that they can, but the appropriate safeguards need to be in place that our financial institutions are doing the right thing by consumers. Education is a key part of that.
It was an absolute delight to speak on this piece of legislation this evening. I think it is a sign of the commitment by the Morrison government to ensure that the future is bright in the financial services sector. I commend the bill to the Senate.
Senator IAN MACDONALD (Queensland) (18:17): I, like everyone else here, enjoyed Senator Duniam's contribution. It's good to hear debate in this chamber when someone actually knows what they're talking about, and Senator Duniam clearly has intimate knowledge of this bill and the work that ASIC does. These amendments that we are debating today implement a series of enhancements to the capabilities of the Australian Securities and Investments Commission. They're important. ASIC does wonderful work around Australia within the context of business and finance, and we are indeed fortunate in Australia in having a financial system and a regulatory system that assists business and assists people to operate in the corporate sector in the appropriate way. That's important because we are a nation that relies upon private industry to create the jobs that are necessary to keep Australia going, and that means providing work for Australians. We do that very well as a country, and we have for a long time. Indeed, one of the prouder things of this Liberal-National government over the last five or six years has been that we have been able to create jobs—not government created jobs, as happened under the Labor Party, but jobs created by private enterprise principally.
Mr Acting Deputy President Whish-Wilson, you will be aware that, since the Liberal-National government came to power, we have created over a million new jobs, with 400,000 in the last year. When I say 'we've created them', that's perhaps not correct; it's not we, the government, that have created them but we, the government, have provided the parameters and the background for the private industry to expand, and that means jobs are created.
This bill that we're debating today, as I say, implements a series of enhancements to the capability of the Australian Securities and Investments Commission. That commission, as senators know, is about making sure our corporate entities 'do the right thing', to perhaps put it in the vernacular. Senators know that ASIC is Australia's integrated corporate market and financial service, and a consumer credit regulator. It's an independent Commonwealth government body that was set up in 2001. Importantly, this bill enacts some key recommendations from the financial services inquiry and the ASIC capability review. It is further evidence of the government's commitment to strengthening ASIC and to ensuring that the financial system delivers fair outcomes for all Australians.
The government has been working to improve ASIC's performance, and this bill will add to that. What the government has done in the past is provide ASIC with a stronger funding base through the introduction of an industry funding model. This will ensure that the cost of regulation is borne by those who have created the need for it—and isn't that fair? That's the Australian way.
ASIC was created because there was a need. Entities did activities and actions that needed a regulator. They created the need for a regulator like ASIC, and, accordingly, those that create the need pay for it. It's important that those people who benefit from it and who caused, if one might say, the need for it pay for it rather than the Australian public. Regrettably, in Australia, it is very often the Australian public who bear the cost of financial sector misconduct. What we've done as a government means that those who have caused the need for increased regulation are paying for it.
That reminds me of, dare I mention it, the Storm Financial scandal that, I'm ashamed to say, emanated out of a business entity in the city of Townsville, where I have my base office, where many people lost a lot of money. Admittedly, they initially made a lot of money but subsequently lost a lot of money through the misconduct of those involved with the management of their money. ASIC was very involved in the investigations into the Storm Financial situation. Some of the work that ASIC did resulted in some justice for those who invested in good faith in the schemes that Storm were proposing and lost a lot of money. Whilst the work ASIC did in the Storm Financial case is not without its critics, ASIC did by and large take action that resulted in some people recovering some of the money they lost.
This bill provides new tools and powers for ASIC, including the power to intervene in the sale and distribution of financial products where there is a risk to significant consumer detriment. Previous speakers have gone into that in greater detail.
The ASIC Enforcement Review taskforce, which was established, again, by a Liberal-National government, in October 2016, made some recommendations assessing the suitability of the existing regulatory tools that were available to ASIC, and this bill has two schedules which deal with some of those recommendations. As senators who are following this debate will know, schedule 1 to the bill amends the act to mandate that ASIC must consider the effects that the performance of its function and the exercise of its powers will have on competition in the financial system. An explicit reference to take competition issues into account will require ASIC to conscientiously consider how its actions may impact on competition in the financial system.
That's in line with the government's philosophy on matters relating to business and finance. We believe that competition, not regulation, is the best means of ensuring that consumers get value for money in financial services, and we have a longstanding history of support for competition. This is not just for competition sake. We believe, and I think history has proved, that competition is the best form of regulator and that consumers get better results from a competitive situation than from governments coming in and trying to use the big stick to regulate activities of businesses in Australia.
This measure complements other key initiatives undertaken by the government to support competition, including tasking the Productivity Commission to review competition in Australia's financial system and funding the ACCC to undertake in-depth inquiries into specific financial system competition measures. This measure fulfils the government's commitment to implement recommendation 30 of the Financial System Inquiry. The recommendation stated, as senators will well know, that the government should include consideration of competition in ASIC's mandate.
I did want to go on and discuss at length schedule 2 to the bill, which amends the ASIC Act to remove the requirement for ASIC to engage staff under the Public Service Act, and senators will know that consequential amendments are also made to the Business Names Registration Act, the Corporations Act and the Mutual Assistance in Business Regulation Act. Removing the requirement of ASIC to employ people under the Public Service Act promotes greater operational flexibility and brings ASIC into line with Australia's other financial regulators who have that flexibility. They are, as you know, the Prudential Regulation Authority and the Reserve Bank. I did want to say a few more words on that, but, unfortunately, I think time is going to beat me. Suffice to say, I think this is a good bill. It heads in the right direction and, again, I would urge my colleagues in the Senate to support this bill. I think it is good for Australia.
Sitting suspended from 18:29 to 19:30
Senator DEAN SMITH (Western Australia—Deputy Government Whip in the Senate) (19:30): I rise this evening to make a brief contribution to the Treasury Laws Amendment (Enhancing ASIC's Capabilities) Bill 2018. The government considers that competition, not regulation, is the best means of ensuring consumers get value for money in financial services. A primary purpose of this bill is to amend the Australian Securities and Investments Commission Act 2001 to mandate that the Australian Securities and Investments Commission must consider the effects the performance of its functions and the exercise of its powers will have on competition in the Australian financial system. An explicit reference to take competition issues into account will require ASIC to consciously consider how its regulatory decisions will impact on competition in the financial system.
It's the view of the coalition government that both consumers and financial services firms, particularly new entrants, will benefit from a more competitive, more robust financial system. Importantly, this measure fulfils the coalition government's commitment to implement recommendation 30 of the financial system inquiry, or the FSI. Recommendation 30 stated the government should include consideration of competition in ASIC's mandate. The measure also complements other key initiatives undertaken by this government to support competition, including initiatives such as tasking the Productivity Commission with a review of competition in Australia's financial system and funding the ACCC to undertake in-depth inquiries into specific financial system competition issues.
In supporting this recommendation, the government is conscious this measure was consulted on quite extensively through the financial services inquiry. The Senate will recall this inquiry made recommendations on five specific themes including: strengthening the economy by making the financial system more resilient, lifting the value of the superannuation system and retirement incomes, driving economic growth and productivity through settings that promote innovation, enhancing confidence and trust by creating an environment in which financial firms treat customers fairly, and enhancing regulatory independence and accountability and hopefully minimising the need for regulation over the medium and longer terms.
The inquiry received more than 6,800 submissions and undertook hundreds of stakeholder meetings, including with financial institutions, market participants and regulators. The government undertook consultation on this measure following receipt of the final report. Stakeholders, including the Financial Services Council, CHOICE, Customer Owned Banking Association and the Australian Banking Association, are generally supportive of a stronger focus on competition in our financial system. This includes, of course, amending ASIC's mandate to include consideration of competition issues. In addition, there's been a significant discussion with ASIC as part of the finalisation of this particular amendment.
Giving legislative effect to this recommendation by way of explicit reference in ASIC's mandate to take competition issues into account would oblige ASIC to more consciously consider how its regulatory decisions may impact on competition in the financial system. Some of the specific aspects of competition that ASIC may have regard to include: whether a decision will create a barrier to entry, making it more difficult or impossible for new firms to enter the industry; whether a decision will create regulatory advantages for some firms over others, competing in the same sector or across the whole industry, and whether the decision disproportionately impacts small entities—for example, by imposing obligations that do not appropriately scale the regulatory risks presented by such entities and the impact this would have on competition; and, finally, whether alternative competitive neutral approaches can be identified. It's worth noting this amendment is not intended to limit the scope of ASIC's regulatory responsibilities, nor expand its powers by making it a competition regulator. The ACCC would remain the competition regulator across the Australian economy.
A second important element of this bill is to amend the ASIC act to remove the requirement for the ASIC to engage staff under the Public Service Act 1999. This bill also contains consequential amendments to be made to the Business Names Registration Act 2011, the Corporations Act 2001 and the Mutual Assistance in Business Regulation Act 1992. Removing the requirement for ASIC to employ people under the Public Service Act will promote greater operational flexibility, bringing ASIC into line with Australia's other financial regulators such as the Australian Prudential Regulation Authority and the Reserve Bank of Australia. To be able to perform their roles effectively in accordance with legislative mandate, financial regulators need to be able to attract and retain reliably skilled and experienced staff. In the particular case of ASIC, this means recruiting staff with knowledge of financial markets and financial services. ASIC is therefore often competing against the private sector as opposed to other public sector agencies when recruiting suitable and professional staff.
Removing the obligation for ASIC to engage staff under the Public Service Act means ASIC will be able to compete more effectively for suitable staff. Attracting suitable professional staff will also allow ASIC to tailor-make its staffing arrangements to suit its needs, ensuring it is fit for purpose to deliver effectively on its mandate. This measure fulfils the government's commitment to implement recommendation 24 of the ASIC capability review report. Recommendation 24 stated the government should remove ASIC from the Public Service Act as a matter of priority to support more effective recruitment and retention strategies. A similar finding was also found in the context of the financial systems inquiry. This measure has also been the subject of intensive consultation. As part of the government's own consultation, the Financial Services Council and the government's Institute of Australia have indicated support for ASIC staff to be employed outside the Public Service Act. There was also stakeholder engagement on this measure as part of the ASIC capability review, of course. This included engagement with ASIC itself, private sector businesses regulated by ASIC, peak bodies and consumer representatives. Unlike ASIC, neither APRA nor the RBA are subject to the requirements of the Public Service Act. The objective of removing the requirement for ASIC to employ people under the PSA is to achieve greater operational flexibility, bringing ASIC in line with APRA and the Reserve Bank of Australia.
The inflexibilities involved in Australia Public Service employment under the PSA can make it difficult for ASIC to shape the workforce and the culture that it requires to meet the organisation's priorities. These include classification and remuneration of staff, the length of employment of temporary staff, management decisions affecting staff and the terms and conditions of any enterprise agreement.
In conclusion, it's worth reiterating why competition in the financial sector is important. This coalition government believes competition in the financial system puts strong discipline on businesses to lower costs associated with the delivery of products and services. And the experience of competition more than adequately demonstrates that it further encourages innovation and deployment of new technologies 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 into other parts of the Australian and indeed the global economy. Increased competition can benefit the economy as a whole via improvements to productivity and economic growth. These initiatives build on a strong record of achievement by this coalition government in promoting competition in the financial system. Competition, not regulation, is the best means of ensuring consumers get value for money in our financial services system.
To support competition, the coalition's already tasked the Productivity Commission to review competition in Australia's financial system and report to the government on its findings by the middle of this year. The Productivity Commission released its draft report on the competition in Australia's financial system on 7 February 2017, making 25 draft recommendations focusing on retail banking, mortgage brokers, new entrants and innovation, general insurance and regulatory responsibilities for promoting competition. In addition to this review, the coalition's tasked the Australian Competition and Consumer Commission to undertake regular in-depth inquiries into specific financial system competition issues through a new dedicated unit. This coalition government is also mandating comprehensive credit reporting, which will open up the lending market to new players by enabling them to better assess the credit risk of customers and, at the same time, reduce their exposure to defaults. And the coalition is implementing the open-banking regime to empower Australian customers to seek out banking products better suited to their individual or business needs. This is a bill that makes a timely and important contribution to the evolution of Australia's financial system and deserves the support of the Senate.
Senator WHISH-WILSON (Tasmania) (19:40): It's a very important time for this chamber to be considering legislation on, indeed, the regulation in our financial services industry, and it's a very important and opportune time to be reflecting on the roles of our regulators and the track record of our regulators in achieving the objectives which we empower them towards. I wanted to take off where Senator Williams left off and reflect, initially, on some of his comments in his contribution to the Senate tonight about the royal commission. That's because the reason it's such an opportune time to be considering the Treasury Laws Amendment (Enhancing ASIC’s Capabilities) Bill now is because of the financial services royal commission which is currently underway and, as has been stated already, is due to deliver its interim report shortly.
Senator Williams talked about the Senate inquiry into ASIC—into the Australian Securities and Investments Commission—back in 2013-14. He outlined a couple things that I wasn't aware of tonight, and that was that his journey started by asking questions in estimates around some scandals he'd heard about at Commonwealth Bank. Senator Cameron joined him in that questioning and urged Senator Williams to consider supporting a Senate inquiry into ASIC. This is where I chimed in. Senator Williams approached me on more than one occasion to join that committee. He was aware that I'd worked in the financial services industry—I was an economist and I'd been a banker—and he wanted me to be involved in that committee. So I did join that inquiry, and, of course, it was a very, very important milestone. When you look at a lot of the legislation that's gone through this place and the other place in the last four or five years, I can tell you that a lot of it stemmed from that initial inquiry.
The committee made nearly 70 recommendations after a very long inquiry—it was extended several times—and I can tell you that there was a real strong feeling in that committee that we needed to see significant structural change in our regulation of the financial services industry. There was even the concept of disbanding ASIC—that was very seriously discussed by senators when we were looking at making recommendations and delivering those. It never ended up happening. But what we saw, in fact, was that the committee's focus turned from the role of the regulator to the scandal at Commonwealth Bank, which, in the end, led to a half, I would say, recommendation or a weak recommendation into the Senate considering the potential for a royal commission into Commonwealth Bank—so not into the financial services industry but into Commonwealth Bank. Unfortunately, I think, the chair of that committee, Mr Mark Bishop, who was Senator Bishop at the time, would have liked to have made that recommendation a lot stronger. When he left the Senate, of course, he went public that he believed, because there had been a number of other scandals following his resignation, that we did need a royal commission into the financial services industry in this country.
I took that concept of a royal commission to my party room because I needed to get their support if we were going to campaign on that, and I got the support of the Greens party room. The next two years were really important. We had the FOFA debate in this place, which was a critical debate also, where we managed to claw back a weakening of financial regulation that this Liberal government had put up. We also had a number of other really big inquiries that went for nearly three years, including into the scrutiny of financial advice and, one that was near and dear to my heart, into the collapse of forestry management investment schemes.
At that point, I worked as hard as I could on getting Labor to support a royal commission into banks and financial services. Senator Williams had his heart in it, and he was consistent all the way through. He even crossed the floor to support Greens motions on this. But it took a couple of years for the Labor Party to get on board. It's a big ship and sometimes it's hard to turn, but, if it hadn't been for the Greens and our campaigning, that would never have happened. We got Labor to support the royal commission going to the double-dissolution election. I received a text from someone very senior in Labor, the day that Labor announced it, saying, 'Congratulations, Wishy, you've won.' Labor announced that afternoon that they would call for a royal commission into banks and financial services. Of course, they didn't get elected. The Turnbull government were re-elected. We realised we had no chance of getting a royal commission in that term of government. The Greens built a legislative instrument—I suppose you could describe it as building it—but I like to think it was more of a Trojan Horse, a parliamentary commission of inquiry—in other words, a royal commission that reported to the executive. It had only been done once in this place and, I must say, if it hadn't been for the advice of the previous Clerk, Rosemary Lang, we probably would never have got it to the chamber. She gave us some preliminary advice that, while it would be very difficult and it would face many obstacles, it was possible. That was questioned by some constitutional lawyers in this country and it was supported by others. Nevertheless, that bill was a Trojan Horse. It got through the Senate with support from the full crossbench and, of course, the Labor Party, and it bounced around in the other place for some time like a piece of polonium that nobody wanted to touch. Eventually, with us working across all parties, including especially with the National senators, we got a lot of support for it in the other place. It wasn't until Senator O'Sullivan took our parliamentary commission of inquiry and virtually identical terms of reference and handed it to the Prime Minister that the Prime Minister faced a no-confidence motion and he called a royal commission.
That's the very short version of what will be a long-and-winding-road story told one day. If a good journalist doesn't get on it, research it and go back over the various steps, I'll probably write it myself. I think it's very important not to lose that corporate knowledge in this place. It started with an investigation into ASIC, and here tonight we find ourselves, once again, reviewing legislation and regulations around the powers, the performance and the functions of the Australian Securities and Investment Commission.
I have two sets of amendments tonight to this bill. The first are second reading amendments, which I will move in a second, and I have committee-of-the-whole amendments to oppose schedule 1 of this bill, which effectively gives ASIC a competition mandate. Labor has made it clear that they won't support the Green's amendments in committee or the second reading amendments because they want to wait for the outcomes of the royal commission. I strongly suspect this will be looked at very seriously by the royal commission—these kinds of structural reform recommendations. But I would say to the chamber that, by giving ASIC these powers, you can say it came from the Murray financial services inquiry. It is doing exactly the same thing. Why are we considering this now if the royal commission hasn't released their recommendations and we're going to use them to inform our future legislation? We believe very strongly that, when ASIC was set up, we got it wrong. We're not the only ones who are saying that. I'll get to that in a minute. I would like the chamber, when we go in committee, to consider in a bit of detail the Greens' amendments.
I move:
At the end of the motion, add, "but the Senate—
(1) notes:
(a) the Productivity Commission Inquiry Report into Competition in the Australian Financial System recommended that to "address gaps in the regulatory architecture related to lack of effective consideration of competitive outcomes in financial markets, the ACCC should be given a mandate by the Australian Government to champion competition in the financial system";
(b) clause (g) of the terms of reference of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry requires it to "consider the effectiveness and ability of regulators of financial services entities to identify and address misconduct by those entities", and that;
(i) the Royal Commission will submit an interim report by 30 September 2018 identifying policy related issues arising from the first four rounds of hearings,
(ii) the closing submissions of the Royal Commission to the fifth round of hearings on superannuation:
(A) identify policy issues related to superannuation,
(B) submit that "the case studies suggest that the approach of neither APRA nor ASIC to regulation of superannuation entities is sufficient to achieve specific or general deterrence," and
(C) cite two examples of ASIC's approach "which raise questions as to whether it has struggled to date to act as an effective conduct regulator"; and
(2) calls upon the government to:
(a) give in principle support for the recommendation of the Productivity Commission that the ACCC be appointed 'competition champion'; and
(b) await the interim report of the Royal Commission, which is due on 30 September 2018, before seeking to make any changes to the regulatory structure for banking, superannuation and financial services."
These amendments respond to what has become apparent through the royal commission. They respond to what some wise heads, who have been watching this space very closely, have known for some time and respond to what the Productivity Commission concluded about regulations in the financial sector. It interests me that Senator Smith just quoted their draft report. That's actually what I'm basing this on. They very clearly want to see an increased mandate for the ACCC, hence us moving on this.
The response is pretty simple and, unfortunately, it's that the Australian Securities and Investments Commission is not up to the job. In fact, in the words of the royal commission, 'There appears to be a collapse of ASIC's regulatory authority.' That's a powerful conclusion in what appears to be a fairly straight-shooting commissioner and it's why the Senate should not support this bill. For those who were following the royal commission, it made me laugh listening to Senator Williams saying he was in his hospital bed and on his recovery bed at home watching the royal commission in its detail. A lot of Australians aren't necessarily watching it in that kind of detail. We read in the papers about some terrible scandals—some of the kinds of things that we have been listening to as senators when we fronted the numerous inquiries with the witnesses of financial crime. It's actually the stuff that you read between the lines that's really important for me in the royal commission and the kinds of comments that are made by the commissioners and the QCs. They make some very perceptive comments about future regulatory directions.
The issue that I have with ASIC is fundamentally this—and I want to say that I've always been a supporter of ASIC. This is a decision that's taken me a while to get to; it's taken me nearly five years to get to this point. ASIC's problem is that they have in inherently conflicted mandate, which, interestingly enough, Senator Smith also quoted tonight. Their problems stem beyond mere performance and funding—something that I've fought very hard for in this place, as have a number of senators, because they have been under resourced and they haven't had the powers they've needed. Nevertheless, I don't believe their culture has been one of prosecuting the bad guys, to put it simply. Through a number of failed high-profile court cases previous to the 2013 Senate inquiry, I felt they became very timid in their pursuit of white-collar crime. I initiated another Senate inquiry, which a number of senators participated in. It looked at white-collar crime and what kinds of penalties would be needed to change behaviour and change culture.
I believe that ASIC's structure is fundamentally flawed. It's something that the royal commission has also pointed out. To give you an idea, the objects of the ASIC Act are to provide for ASIC's functions and powers in business, which in other words is enforcing laws, including those to protect consumers. The second part of the act says:
In performing its functions and exercising its powers, ASIC must strive to:
(a) maintain, facilitate and improve the performance of the financial system and the entities within that system in the interests of commercial certainty, reducing business costs, and the efficiency and development of the economy …
In other words, to once again use some fairly simple language, they have a clear trade-off in their mandate between going after bad guys—and spanking them really hard—and not rocking the boat too much.
Mr James Shipton, the new head of ASIC, in answering a question that I asked Mr Peter Kell at the last Senate estimates, said:
Our aim when we're exercising … discretion … is to get to a point whereby Australians have confidence in the integrity, the efficiency, the strength and the fairness of the financial system …
When we are presented with the misconduct that we're seeing very clearly through the prism of the royal commission … we are exercising professional regulatory judgement in relation to the particular cases and the particular circumstances, again with the ultimate goal of that efficient, fair and strong financial system.
I asked Mr Shipton why he's not throwing more white-collar criminals in jail, why the average Australian goes, 'Why aren't these guys getting thrown in the slammer?' They're ripping people off for not just thousands of dollars but tens of millions of dollars. Why aren't they going to jail? If I hack into someone's account, steal a thousand bucks and do it a couple times, I'll go to jail. Why are we seeing this kind of systemic misconduct and fraud but no-one is being jailed? That was Mr Shipton's answer—he basically said: 'I have a conflicted mandate. I have trade-offs I have to take into account in my job.' That's the way it is, and I don't hold that against him, nor do I hold it against the previous chair of ASIC, Mr Greg Medcraft, who I have a lot of time for, as I do for all the people at ASIC. I think they're good people. I think they've been under a lot of pressure. They've been under resourced. They have had powers, but they haven't wanted to use them—or so it seems from the royal commission.
Don't just take my word for this. For example, the royal commission's closing submissions on superannuation clinically dissected ASIC's performance. This was only a few weeks ago. The commission starts by submitting:
… the case studies suggest that the approach of neither APRA nor ASIC to regulation of superannuation entities is sufficient to achieve specific or general deterrence.
It then goes on:
Two examples of ASIC’s approach raise questions as to whether it has struggled to date to act as an effective conduct regulator.
First, the refusal of NAB over a lengthy period of time … to undertake a proper review of whether it had provided contracted services in exchange for the fees it had collected from customers suggests a lack of respect for the regulator and a lack of authority on the part of ASIC. ASIC has not commenced any civil penalty proceedings in respect of fees for no service.
No action taken on fees for service—incredible! The commission explains just why this is a problem:
A fundamental purpose of the imposition of a civil penalty is, "the punishment must … not … be regarded by that offender or others as an acceptable cost of doing business …
In other words, ASIC have failed to take action that the banks would consider to be anything other than the cost of doing business. Secondly:
… the approach of ASIC to dealing with ANZ and CBA in relation to their conduct … suggests an approach that is not conducive to the development of an industry-wide compliance culture.
Specifically, in relation to CBA:
… it might be thought that if the largest company in Australia … is negotiating with ASIC on the premise that it could seek to persuade ASIC to issue a media release rather than insisting upon an enforceable undertaking, after ASIC has provided a document outlining the contraventions that ASIC believed CBA had engaged in, that suggests the collapse of ASIC’s regulatory authority.
And, again, in relation to ANZ:
… it might be thought that if ASIC has drafted a document in support an originating process required to commence a Federal Court proceeding, said in unequivocal terms to ANZ that it will commence that proceeding on a particular date and invited admissions, and then refrained from commencing a proceeding after a polite email asking for the opportunity to discuss was received from the general counsel of ANZ, that reinforces an absence of regulatory authority. It may also send a message to the regulated population that ASIC lacks authority.
These are the words of the commissioner.
The commissioner then asked some salient questions: 'Is the present allocation of regulatory roles appropriate?' 'Are either of the regulators best placed to carry the responsibility to protect consumers?' Most relevantly to this bill, the commissioner said:
Treasury has observed that '[o]ver the past twenty years the remit of ASIC has expanded considerably … That may suggest that it would be preferable that another regulator be tasked with ensuring good consumer outcomes in superannuation by enforcing compliance.
In other words, the commission is openly questioning whether ASIC should remain the conduct regulator, let alone be given any more powers. I believe the commissioner when the commissioner is suggesting that ASIC's failed, but we'll get their draft report soon.
Who else has waded into this debate? None other than Mr Allan Fels. Again, don't take it from me—here's Allan Fels on ABC radio last month:
This issue about ASIC ineffectiveness has been going for twenty five years and it's got no better over time, and the latest revelations just confirm that we have to do something more fundamental.
It's not feared, unlike the ACCC. It has a culture, it's had a long running culture of not vigorous, without fear or favour law enforcement.
On the ACCC becoming the conduct regulator, he said:
This was very seriously considered in the late nineties after the Wallis inquiry, and it was only because of fierce lobbying by the financial services sector that the ACCC did not get given coverage—
of the financial services industry. In other words, ASIC was a creature that the financial services industry wanted constructed. Mr Fels continued:
Even at that point, it was obvious that ASIC was not up to the job and nothing has changed.
Alex Erskine, the former chief economist at ASIC is saying similar things: 'Put the ACCC in charge.' Even Mr Ian Harper, a member of the 1998 Wallis inquiry, which recommended the construction of ASIC, and now a member of the Board of the Reserve Bank, is questioning the wisdom of taking conduct responsibilities off the ACCC and giving them to ASIC. In fact, he said: 'We got it wrong. We thought we were doing the right thing, but, even back when we took those powers off the ACCC and constructed ASIC, we were concerned about regulatory capture'—concerned about regulatory capture all the way back then. That is what the royal commission is showing clear as daylight. You can read Mr Harper's comments, but he said:
I have already said that with the benefit of hindsight we were wrong about several things. We placed too much faith in the efficient market hypothesis and in light touch regulation …
Senator Smith probably wouldn't be too happy with that, coming from such a well-known economist—light touch regulation has failed the financial services industry. Anyway, there's plenty more on record from people who are coming out and suggesting that we need to not only restructure our financial services companies by breaking up the banks—something the Greens have recently suggested in policy—but also look at regulators.
Lastly, I've already mentioned the Productivity Commission, but you might want to consider the findings of the commission who this month released their draft report, Competition in the Australian financial system—which is the very subject of this bill. They concluded:
To address gaps in the regulatory architecture related to lack of effective consideration of competitive outcomes in financial markets, the ACCC should be given a mandate by the Australian Government to champion competition in the financial system, including in decisions taken by regulators that have or may have the outcome of restricting competition.
The conclusions are simple, Senators. The royal commission is saying that ASIC has flunked it. Allan Fels is saying that ASIC has flunked it. And the Productivity Commission, which looked into the very specific issue of competition in the financial sector, is saying the ACCC should be the competition regulator for consumer outcomes. So what's the point of the inquiries if we are not going to listen? Why should this Senate feel so compelled to pass this bill today when we haven't actually got the final report for the Productivity Commission? For those fans of ASIC in this place, just remember what has been suggested here is that consumer outcomes be have taken off ASIC. It will still have a very big mandate around institutional markets and around professional markets, an enormous mandate in fact. Leave the consumer outcomes, competition outcomes to the regulator that is named the Australian Competition and Consumer Commission.
Senator STOKER (Queensland) (20:00): I rise to speak in support of the Treasury Laws Amendment (Enhancing ASIC’s Capabilities) Bill 2018. Responding to the recommendations of the financial system inquiry and the ASIC capability review report, this bill makes two important changes to the ASIC act that will help provide a more competitive financial system overseen by a more effective regulator. Australia has one of the best financial systems in the world, with a well-considered balance between the need for regulation but at the same time the need not to over burden the system so it negatively impacts on the ability of businesses to get on with doing their business.
The government believes that competition, not regulation, is the best means of ensuring consumers get value for money in financial services. This has always been a feature of coalition governments in Australia. When one takes it to its extreme, the ultimate form of regulation is nationalisation and, of course, this level of control has demonstrably failed everywhere it has been implemented. There needs to be a careful balance between what needs to be controlled and the freedom to get on with the enterprise that has contributed so much to Australia's success. Greater competition leads to greater innovation, and that is what grows economies, and creates jobs and wealth for its citizens. Regulatory reform is also necessary to create that balance because unmitigated competition has its downsides. In pursuing regulatory reform, care needs to be given to designing it in a manner that minimises the risk of failure and to ensure that it doesn't create suboptimal results for business and the regulators themselves.
So why is competition superior to regulation in most circumstances? Over regulation can demonstrably leave a large number of people with reduced real income and a lower living standard. Additionally, regulation can leave costs on society through its establishment and administration. It can have a distorting effect on efficiency and, potentially, a time and cost impost in the reduction of over regulation. In situations of over regulation, it can be shown that deregulation results in the reduction of costs to consumers and substantial improvement in quality and service delivery. A review in the United States into the deregulation of natural gas, long-distance communication, airlines and the trucking and rail industries reported that real prices dropped by 25 per cent and sometimes close to 50 per cent within 10 years of those industries being deregulated. How important, though, is this to an economy?
Over the longer term, it results in a growth in productivity, because competition enhances innovation, which leads to more jobs, a growth in living standards and an overall increase in GDP. Measured provision of regulation is also necessary but certainly not over regulation. Let's think about what are the benefits of measured regulation. One benefit is the provision and the prevention of market failure. Australia has demonstrated, over many years, it's capacity to provide a balanced and well-tuned business environment. Regulation is largely not only balanced to protect the public interest but more importantly to assist in the transition to a competitive market. For competition to be successful in a market, there must, of course, be competitors, and over regulation can result in monopoly like situations where entry into the market is just so difficult that it deters the entry of competitors who, by their presence, will make the market more effective and efficient.
Broadly speaking, Australia has an effective regulatory environment for business, but the absence of balance in the consideration of competition as a factor is a shortcoming that this bill is designed to correct. These sorts of results demonstrate the criticality with this bill of ensuring competition gets equal billing with regulation in any work that ASIC undertakes. That's why schedule 1 amends the ASIC Act to require ASIC to consider the impact of its actions on competition.
The financial services inquiry, or the FSI, found that competition is generally adequate in the financial system but noted that there needs to be a stronger focus on competition in the financial sector. In particular, the FSI was concerned that regulators' mandates adopted an inconsistent approach to competition, with ASIC lacking an explicit competition mandate. The FSI recommended that the ASIC mandate should 'include a specific requirement to take competition issues into account' as part of its decision-making, and that's what this bill seeks to do.
Schedule 1 of the bill amends the ASIC Act 2001 to mandate that ASIC must consider the effects that the performance of its functions and the exercise of its power will have on competition in the financial sector. This will provide ASIC with certainty by obliging it to take into account competition issues when considering the impact of its regulatory decisions. This will no doubt lead to more competition and better outcomes for consumers in the financial system. For instance, some of the specific aspects of competition that ASIC may have regard to include barriers to entry; regulatory advantages for some firms over others; and the imposition of disproportionate obligations on smaller-sized entities.
There are many measures that this government has taken to promote competition in the financial system. For instance, the government has tasked the Productivity Commission to review competition in Australia's financial system, focusing on retail banking, mortgage brokers, new entrants and innovation, general insurance and regulatory responsibilities for promoting competition. We've also tasked the ACCC to undertake regular in-depth inquiries into specific financial system competition issues, through a new and dedicated unit. The government is also mandating comprehensive credit reporting, which will open up the lending market to new players by enabling them to better assess the credit risk of customers and, at the same time, reduce their exposure to defaults. Further, the government is implementing the open banking regime, to empower Australian customers to seek out banking products better suited to their needs. In addition, the government has provided the Australian Competition and Consumer Commission with $13.2 million to undertake inquiries into financial system competition issues. Schedule 1 of this bill complements this suite of measures, which will ultimately ensure a more competitive financial system. That's good for both consumers and financial services firms, particularly new entrants.
Furthermore, the ASIC capability review report recommended that the government remove ASIC from the Public Service Act as a matter of priority to support more effective recruitment and retention strategies, and to increase operational efficiency. Schedule 2 of the bill seeks to fulfil this recommendation. Let's unpack this. Why does it need to occur? To be able to perform their roles effectively, in accordance with their legislative mandate, these regulators need to be able to attract and retain suitably skilled and experienced staff. Regulators such as ASIC face challenges in doing so, because of the inflexibilities of the Public Service Act. These inflexibilities include the classification and remuneration of staff, the length of employment of temporary staff, management decisions affecting staff, and the coverage of any enterprise agreement.
It's important that ASIC has the capability to recruit staff with in-depth knowledge of financial markets and financial services. The current inflexibilities inhibit this process and place ASIC in direct competition with the private sector, and it's difficult for them at times to compete. As such, schedule 2 of this bill amends the ASIC Act to remove the requirement for ASIC to engage staff under the Public Service Act; thereby removing the constraints that make it difficult for them to compete with the private sector. Consequential amendments are also made to the Business Names Registration Act, the Corporations Act and the Mutual Assistance in Business Regulation Act. This measure will also bring ASIC into line with other financial regulators such as APRA and the RBA, who are also not required to engage staff pursuant to the Public Service Act. Removing the obligation for ASIC to engage staff under the Public Service Act means ASIC will be able to compete more effectively for suitable staff. It will allow ASIC to better tailor its management in staffing arrangements, ensuring that it is fit for purpose and more operationally efficient.
Both schedule 1 and schedule 2 of this bill will go a long way to providing a more competitive financial system overseen by a more effective regulator. I support the provisions of this bill, which will contribute to improving Australia's economy and the competitiveness of Australia's financial system.
Senator FAWCETT (South Australia—Assistant Minister for Defence) (20:10): I rise to make a couple of short comments on the Treasury Laws Amendment (Enhancing ASIC's Capabilities) Bill 2018. I do so having been, in the past—as you'd be aware—the chair of the Parliamentary Joint Committee on Corporations and Financial Services, which oversaw ASIC, and also having been a member of the Economics References Committee inquiry into the performance of the Australian Securities and Investments Commission in 2014. Some of the issues that we're discussing tonight in this bill have been afoot for some time.
As previous speakers have said, there are a couple of areas here. One is schedule 1, looking at amendments to the system. The other is schedule 2, looking at the ability to employ people from outside the Public Service Act. Going to the first point around competition: competition is useful. We see it working at the moment in things like the electricity market where, when people recognise that they have a choice to switch between providers. When providers are required to actually disclose the basis of their pricing—and that goes to recommendation 30 from the ACCC report, which is a mechanism that the government will use to give transparency around pricing, which means people can then make their decisions about where they place their business—that has the net effect of driving pricing down. That is what the Morrison government is committed to.
We see that operating in a number of areas, including, for example, around home loans. People are given the choice to move more freely between different products. When they see that they have an opportunity to get a lower interest rate, they will move, so the pressure is there for financial services to provide a better service at a better cost. Competition definitely has a place, in terms of making sure that consumers get value for money in financial services. Schedule 1 of the bill amends the Australian Securities and Investments Commission Act 2001 to mandate that ASIC must consider the effects the performance of its functions and the exercise of its powers will have on competition in the financial system. This comes out of recommendation 30 of the Financial System Inquiry. As such, it's welcome.
There have been a range of inquiries and measures over the years to highlight what reforms we can make in the financial services sector. Indeed, I think, Mr Acting Deputy President, Senator Williams, you were on the committee with me at the time when we looked into the professional and educational standards of financial advice. What we saw there was that, as part of this providing of competition, regulation and competition actually work in tandem. We went back to James Reason's accident causation theory, which comes from my background in aviation, and we applied it to the financial services sector and we asked, 'What are the things that lead to the failures in the system that cause financial harm to the consumer?' We put in place a number of measures around the education and the professional conduct of financial advisors. That goes to things like ongoing professional development and the oversight not only of ASIC but also of professional bodies that hold it to account. It was the professionalism.
One of the keys in there was having a register whereby somebody's qualifications and any conduct or misconduct by them is freely available to the consumer, so that the consumer, at the point of choosing who they're going to entrust their financial future to, has the ability to essentially compete. They can look at somebody who has performed well and somebody who has had misdemeanours recorded against them and choose where to put their money. Competition is important, but it works hand in glove with an appropriate amount of regulation, as we saw during that inquiry and the changes that have subsequently been put in place by then Minister O'Dwyer to raise the educational and professional standards for the financial advice service. As I said, this implements recommendation 30 of the financial systems inquiry and complements other key initiatives taken by the government, including tasking the Productivity Commission with a review of competition in Australia's financial system, as well as funding the ACCC to undertake in-depth inquiries into specific financial system issues.
Schedule 2 goes to the issue around how ASIC can engage their staff. It amends the ASIC Act to remove the requirement for ASIC to engage staff under the Public Service Act 1999, and there is a range of consequential amendments to the Business Names Registration Act, the Corporations Act 2001 and the Mutual Assistance in Business Regulation Act 1992. Removing that requirement to employ people under the Public Service Act will promote greater operational flexibility, bringing ASIC into line with Australia's other financial regulators, such as APRA and the Reserve Bank of Australia.
It notes the fact that, to the able to perform its functions properly, ASIC needs to have people who are suitably skilled and experienced. That takes me back to the 2014 report of the Economics References Committee that I was a participating member in. In the appropriate section of that, which is chapter 16, one witness noted:
… much of the work ASIC is undertaking to improve its ability to act effectively on complaints or reports of corporate wrongdoing was 'all around the mechanics and particularly the legal processes'. He understood that ASIC receives a lot of information from different sources but 'they are not joining up the dots as quickly as they should'.
Another witness backed that up, saying:
ASIC needs to credibly reconnect with professionals who are its best early warning system for the identification of domestic threats to Australia's economy.
As the chapter goes on, it highlights that ASIC needs to have:
… the right individuals, in the right positions, who are experienced and know what to do if something crosses their desk.
The next paragraph says:
Often ASIC complaint staff are inexperienced in both commercial matters and understanding evidential issues. ASIC receives thousands of complaints and generally undertakes a perfunctory assessment resulting in the sending out of a standard letter which does not address the issues.
So whether it's the complaints staff or the people who are interfacing with industry or doing the audits, the very clear message here is that regulators need to have people who are appropriately skilled and experienced, so that they don't just rely on process to deliver the result, but they use process to inform their decisions and use their life experience and experience in the sector to know where to look for the issues.
We see this in things like the CASA, for example, the Civil Aviation Safety Authority. There have been many reviews highlighting that you need appropriately skilled people who understand the industry sector they are coming from so that their regulations, their application of regulations, their decisions around that and their ability to know where to look to find the issues, are informed by appropriate and recent industry experience as opposed to just process. Process is all well and good—it's one of mankind's attempts to capture corporate knowledge and make sure we don't repeat the mistakes of the past—but, at the end of the day, process should be a decision aid and it should help experienced people gather all the information they need to make an appropriate decision; it shouldn't replace people having appropriate experience or insights into the industry that they are dealing with.
What schedule 2 seeks to do is to free up ASIC to actually employ people who have the current skill sets and experience they need to add the value in that part of their roles. It means recruiting staff with a knowledge of financial markets and financial services. If you think about the professions that that involves, those people who have that relevant experience are attractive to both the large, vertically-integrated organisations and to the smaller either family-run or partnership-type organisations that are working in the financial services sector. If ASIC is to be able to attract those people, often the remuneration they'll receive in the vertically-integrated, large organisations or the smaller ones will be more than the public service can pay.
We've seen, throughout history with government, a range of ways that governments have sought to retain experience or attract experience. Even in my own background as a military pilot, at times when the airlines were recruiting people and seeking to pay them substantially more than the Defence Force could, the Defence Force brought in schemes like specialist aircrew schemes, retention bonuses or ways to actually encourage people to remain working for the government so that the government was able to utilise the skills and experience they had, as opposed to seeing it go off to the private sector. We've had the same issues with submariners in the past during the mining boom in Western Australia and various programs designed to encourage people to work within the public service, or for the government, as opposed to going to the private sector. This change is not novel or new. It's a way of saying, 'How can we get people with the requisite skill sets and experience to work for the government?'
Specifically, the measure fulfils the government's commitment to implement recommendation 24 of the ASIC capability review report. That recommendation stated that the government should remove ASIC from the Public Service Act as a matter of priority to support more effective recruitment and retention strategies, and a similar finding was also made in the context of the Financial System Inquiry.
In conclusion, I will be supporting this bill. Having been involved since 2013-14 and onwards with committees looking at ASIC and then chairing the Parliamentary Joint Committee on Corporations and Financial Services, I'm aware that we need to be able to take measures to shape the environment to allow ASIC to be effective so that we don't see the failures that have been highlighted in the recent royal commission. These two schedules around making sure that ASIC are aware of competition and the effect that their decisions have on competition, as well as giving them the ability to recruit the staff that they need with the requisite skill sets, are just two important enablers to making ASIC the tough cop on the beat that our financial services sector needs in order to protect the legitimate interests of Australian consumers.
Senator SESELJA (Australian Capital Territory—Assistant Minister for Treasury and Finance) (20:23): First, I'd like to very much thank those senators who have contributed to this debate. Strong and effective financial regulators go hand in hand with a strong and effective financial system. We've been working hard during our term of government to strengthen ASIC to ensure it has the resources and powers it needs to combat misconduct in the financial services industry and across all corporations for the protection of Australian consumers and the ongoing health of our financial system.
The Treasury Laws Amendment (Enhancing ASIC’s Capabilities) Bill continues that great work, and it's worth taking a moment to mention some of the things that we've done already. We injected a further $70.1 million into ASIC to boost its enforcement capabilities and address other regulatory priorities in addition to $121.3 million in additional funding in 2016 to bolster ASIC's investigative and surveillance capabilities. We also appointed Daniel Crennan QC as a new deputy chairperson who has a key focus on enforcement action. And we announced the strengthening of criminal and civil penalties by increasing terms of imprisonment and fines, increasing the maximum civil penalties that can be imposed by courts, and allowing ASIC to strip wrongdoers of profits illegally obtained or losses avoided from contraventions of the law. These measures have strengthened the enforcement powers of ASIC, which of course we knew needed to be done and which we acted on.
But ASIC also has a role, a very important role, in fostering a strong, overall financial system that helps Australians thrive and prosper. For this reason, since coming into power this government has commissioned two fundamental but very important reviews: first, the financial system inquiry in 2013 and, second, the capability review of the Australian Securities and Investments Commission in 2015. Both of these reviews resulted in recommendations to strengthen ASIC, the corporate markets, financial services and consumer credit regulator. This bill implements recommendations from both these reviews.
I would like to briefly reflect on these two reviews as they are important to understanding exactly where we are today and how we have gotten here. The financial system inquiry of 2013 came 16 years after the previous inquiry into the system. While the system has worked to some extent, there was no question that forces—domestic and international economic and financial crises, a substantial regulatory reform agenda, the growth in superannuation, changes in industry structure, new competitive dynamics, technology, innovation and broader macroeconomic trends—have changed the landscape and made this review absolutely vital to ensure the financial system continues to serve Australians well. After all, that is what the financial system is about. It's about supporting a vibrant economy that improves the standard of living for all Australians.
The inquiries set out three goals for the financial system if it is to be effective. Those are: that it is efficient, resilient and fair. However, the inquiry found there were two key areas where there was scope to improve the functioning of the financial system. Firstly, the core function of the Australian financial system is to facilitate the funding of sustainable economic growth and enhance productivity in the Australian economy. The inquiry identified a number of distortions that impede the efficient market allocation of financial resources, including taxation, information imbalances and unnecessary regulation. Secondly, the inquiry focused on competition and competitive markets. The inquiry took the approach that these two factors were the primary means of supporting the financial system's efficiency.
The inquiry made a number of recommendations to improve and encourage competition in the system, one of which was to strengthen the focus on competition in the financial system. Specifically, recommendation 30 said there was a need to:
Review the state of competition in the sector every three years, improve reporting of how regulators balance competition against their core objectives, identify barriers to cross-border provision of financial services and include consideration of competition in the Australian Securities and Investments Commission's mandate.
That last point there, to ensure consideration of competition is part of ASIC's mandate, is one of the key elements of this bill. Schedule 1 to this bill amends the Australian Securities and Investments Commission Act 2001 to mandate that ASIC must consider the effects of the performance of its functions and the exercise of its powers will have on competition in the financial system.
Competition in the financial system is critical to ensuring the system delivers good outcomes for Australia. Competition puts strong discipline on businesses to lower costs associated with the delivery of products and services, engenders faster innovation and deployment of new technology, and delivers more choice for consumers and lower prices. The effects of stronger competition in the financial system are felt well beyond financial markets and into other parts of the economy. Increased competition can benefit the economy as a whole via improvements to productivity and economic growth. An explicit reference to take competition issues into account will empower ASIC to more consciously consider how its actions may impact on competition in the financial system. As I said earlier, this measure fulfils the government's commitment to implement recommendation 30 of the Financial System Inquiry. This recommendation stated the government should include consideration of competition in ASIC's mandate.
Earlier I mentioned the second inquiry relevant to this bill, and I'd like to speak a little more on that. That was the capability review into ASIC, which resulted in a report to government in 2015 entitled Fit for the future. The review was required to consider how ASIC uses its current resources and powers to deliver statutory objectives and assess ASIC's ability to perform as a capable and transparent regulator. The capability review was asked to examine and make recommendations on how efficiently and effectively ASIC operates to achieve its strategic objectives.
The expert panelled chaired by Miss Karen Chester, Mr David Galbally and Mr Mark Gray consulted extensively with ASIC, private sector businesses regulated by ASIC, peak bodies, regional and consumer representatives and other stakeholders. The panel found that, while there was some good in how ASIC operated:
There are a number of changes that are needed to ensure that ASIC is sufficiently well governed, skilled, agile and responsive to meet the challenges of the future, both those that are already becoming apparent, as well as those that as yet remain unknown.
In chapter 4 of the report, the panel discussed ASIC's workforce capabilities and management. They noted:
Some ASIC staff lack sufficient professional confidence in their roles to credibly challenge regulated entities and develop and defend independent judgements The workforce also faces gaps in relation to a number of critical skill sets that will become increasingly important in the future (for example, big data, digital disruption, and behavioural economics).
In response, the panel recommended the government remove ASIC from the Public Service Act as a matter of priority to support effective recruitment and retention strategies.
Schedule 2 to this bill amends the ASIC Act to remove the requirement for ASIC to engage staff under the Public Service Act 1999. Consequential amendments are also made to the Business Names Registrations Act 2011, the Corporations Act 2001 and the Mutual Assistance in Business Regulation Act 1992. In order to be effective, ASIC needs to recruit staff with knowledge of financial markets and financial services. ASIC is therefore often competing against the private sector as opposed to other public sector agencies when recruiting suitable staff. Removing the obligation for ASIC to engage staff under the Public Service Act means that ASIC will be able to compete more effectively for suitable staff. This measure will bring ASIC into line with the other financial regulators, APRA and the RBA, who also are not required to hire under the Public Service Act.
As I said, consistent with the findings in the Financial System Inquiry, recommendation 24 of the ASIC capability review report recommended:
Government to remove ASIC from the PSA as a matter of priority, to support more effective recruitment and retention strategies.
The government agreed with this recommendation and indicated it would remove ASIC from the Public Service Act to support ASIC to more effectively recruit and retain staff and positions requiring specialist skills. I should note that this is not a reflection on the many expert professional public servants who work at ASIC or, indeed, across government. As a Canberran, I can attest to the great work that the public service does for our nation. However, this change is about treating like with like. It is ensuring that ASIC can operate much like other bodies in the financial system and recruit accordingly.
This measure fulfils the government's commitment, and this bill as a whole forms part of our ongoing work in improving the financial system. We also have the Productivity Commission review into competition, which has just recently reported to the government in July this year, and the Australian Competition and Consumer Commission have been tasked with undertaking regular in-depth inquiries into specific financial system competition issues through a new dedicated unit. We have, of course, the royal commission into the banking sector which is ongoing and will no doubt have findings that will feed into improving our financial system in due course. It's important to note in that context that this bill has no bearing on future recommendations of the royal commission and the government will be able to consider whatever findings emerge in due course.
In conclusion, this bill will strengthen ASIC's capabilities to ensure it is an effective regulator. It builds on other key initiatives undertaken by this government to ensure ASIC has the powers it needs to promote trust and confidence in the financial system. These include providing ASIC with a stronger funding base for implementing the industry funding model; undertaking a review to assess the suitability of the existing powers and regulatory tools available to ASIC; and appointing a new ASIC chairman, James Shipton, who brings vast international experience to the role. The coalition will continue to ensure ASIC is equipped with the resources and powers it needs to effectively detect, deter and punish those who do the wrong thing to improve community confidence and outcomes for consumers and investors in the financial services and corporate sectors. This bill is a key component of that ongoing work. It clarifies ASIC's focus on competition and allows it to recruit competitively from the financial sector. I commend this bill to the Senate.
Question negatived.
Original question agreed to.
Bill read a second time.
In Committee
Bill—by leave—taken as a whole.
Senator WHISH-WILSON (Tasmania) (20:37): 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.
Senator O'NEILL (New South Wales) (20:41): 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—
Senator Whish-Wilson: Shame!
Senator O'NEILL: 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.
Senator SESELJA (Australian Capital Territory—Assistant Minister for Treasury and Finance) (20:43): 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.
The TEMPORARY CHAIR ( Senator Williams ): The question is that schedule 1 stand as printed.
The committee divided. [20:49]
(The Temporary Chair—Senator Williams)
Third Reading
Senator SESELJA (Australian Capital Territory—Assistant Minister for Treasury and Finance) (20:52): I move:
That this bill be now read a third time.
Question agreed to.
Bill read a third time.
Senator WHISH-WILSON (Tasmania) (20:53): by leave—I ask that it be recorded that the Greens voted no on the third reading, but we won't be dividing.
BUSINESS
Rearrangement
Senator SESELJA (Australian Capital Territory—Assistant Minister for Treasury and Finance) (20:53): I move:
That government business order of the day No. 3, Treasury Laws Amendment (2018 Measures No. 4) Bill 2018, be postponed until the next day of sitting, and that intervening business be postponed until after consideration of the government business order of the day relating to the Tobacco Plain Packaging Amendment Bill 2018.
Question agreed to.
BILLS
Tobacco Plain Packaging Amendment Bill 2018
Second Reading
Consideration resumed of the motion:
That this bill be now read a second time.
Senator O'NEILL (New South Wales) (20:54): I rise this evening to make a contribution to the debate on the Tobacco Plain Packaging Amendment Bill 2018. Worldwide, tobacco is the leading cause of preventable death and kills at least five million people every year. In Australia, smoking still kills between 15,000 and 20,000 people each year. The economic and social cost of smoking is estimated at $31.5 billion a year. By any measure, and despite all of the progress we have achieved over many decades, it remains a massive health issue. It's an issue that requires political leadership and eternal vigilance.
Labor has shown consistent leadership on this issue, even when it's been politically difficult. We've stood up to big tobacco, despite their formidable resources and significant campaign abilities. Despite their willingness to use dirty tricks and to take legal action, we took them on. It was Labor that introduced and fought for the world-leading plain packaging legislation that, along with other policies, has helped to drive smoking rates to record lows. I well recall former minister Nicola Roxon and her battle to achieve that outcome, and what a mountain it was to climb. She showed that incredible leadership that is so common amongst the women in the Labor Party who make such a contribution to public policy in this country.
The legislation before us today makes some minor technical changes to Labor's laws, and we will, of course, support it. Put simply, the amendments expand the range of people who can be authorised to undertake plain-packaging compliance activities. You will find no objections from us with regard to that. But we know that, deep down, many on the other side would actually like to tear up Labor's legislation altogether. On this, as on so many things, they're hopelessly divided. Despite the clear evidence that our legislation has worked and has clearly saved lives, many on the other side still think that this is a 'nanny state' policy. It shows that they do not understand public health policy or evidence based policy. But, as we know, this is what the Liberals and the Nationals so often do; they put big business before the wellbeing of the Australian people.
Thanks in part to Labor's groundbreaking policy work, the prevalence of daily smoking in Australia is now at just 12 per cent and continuing to decline. I know for a fact that for Australians like me and senators on the other side of the chamber, as we travel around the world, it's quite shocking sometimes to enter into other contexts and see the amount of public smoke consumption by comparison to what we have become accustomed to, with that remarkable reduction to 12 per cent. Happily, that figure is continuing to decline.
It has to be said, however, that we have hit a point where that decline has slowed. That's because, for the last five years, we've not had a government that actually cares about tobacco control. It has zero credibility on this issue. For five years it has been missing in action. As Professor Mike Daube, of Curtin University, recently wrote:
We should have reinforced and capitalised on the early impact of plain packaging and reinforced the impacts of tax increases … but action over the past 6 years has stalled, at a time when it should have accelerated.
… … …
First, crucially and inexplicably, there have been no national media campaigns since 2012. The federal government gets more than $11 billion a year in revenue from tobacco taxes. Spending $40 million on media campaigns would be less than 0.4% of this.
For its entire time in office, this government has not bothered to launch any antitobacco campaigns, even though it knows, and evidence proves, that they are highly effective. From our point of view, we consider this to be a shameful dereliction of duty. We need more major, hard-hitting media campaigns, which we know is one of the most effective weapons in our arsenal.
Professor Daube goes on to point out that, over the last five years, there has been a complete absence of new evidence-based measures to tackle smoking—nothing at all on the watch of the Abbott-Turnbull-Morrison government, despite the fact that we continue to see 15,000 to 20,000 people die each year from smoking-related illness. Professor Daube also talks about the fact that there have been no curbs on tobacco industry efforts to influence public policy. He mentions the twin evils of lobbying and political donations from the big tobacco industry. It has now been 14 years since Labor announced we would no longer take political donations from big tobacco. It took nearly 10 years for the Liberals to match us on that, but, shamefully, the Nationals still haven't done the right thing. They still receive donations from big tobacco. Scott Morrison must explain why he thinks it's okay that his coalition partner fills its coffers with money from companies that profit from putting Australians in coffins. The Liberals should restore Australia's global leadership on this issue, and, if they don't, Labor certainly will.
Senator ABETZ (Tasmania) (21:00): Plain packaging of cigarettes has been seen as one part of the manifold strategy in deterring people from smoking, a practice that clearly leads to exceptionally bad health outcomes and, indeed, death. Therefore, anything that is capable of reducing the smoking levels within our nation ought to be considered. I confess that I for one remain to be fully convinced as to the efficacy of plain labelling, but I am willing to agree to the Tobacco Plain Packaging Amendment Bill 2018, which is designed to enforce the law with regard to the plain packaging strategy.
This bill will, as the explanatory memorandum outlines, provide greater flexibility for enforcement, with more people in authority empowered to help enforce the law. The bill will enable the government to respond more flexibly to noncompliance with the tobacco plain packaging legislation. The bill will provide the Department of Health with access to a wider pool of officers eligible for appointment as authorised officers, providing greater flexibility to respond to any organisational or administrative changes which may occur in the future. Importantly, the bill does not change the plain packaging requirements and will not impact the obligations of tobacco manufacturers, distributors or retailers.
In fighting the scourge of cigarettes, I encourage the government and all law enforcement bodies to take a considered approach. Regrettably, despite all the approaches that we have taken within the community, the rate of smoking in Australia is in fact still increasing. This is despite the ever-increasing taxation burden, the ongoing education programs and the banning of the plain packaging labelling.
In relation to taxation, I make the observation that I believe we are getting to a stage—if the threshold has not already been reached—whereby the ever-increasing taxation has now allowed tobacco to be able to be used as a profitable subject for the black market. As the price increases, so the smuggling of the tobacco increases and becomes more profitable. We have seen, from our neighbourhood within this region, the ever-increasing importation of illegal tobacco products, and, indeed, the growing of illegal tobacco in Australia, which is often referred to as 'chop-chop'. I believe not only does it place an unfair burden often on people who can least afford it but it does lend itself to a black market, which, in turn, assists criminal gangs, money laundering and things of that nature. I would invite the government, in considering its strategy in relation to lowering the rates of smoking, to give due consideration to the perverse effect the ever-increasing tax regime actually has on the marketing of tobacco products in the black market.
I would encourage all authorities to work together, and can I express my concern and disappointment that the ACCC did not support the tobacco companies in their bid to work with law enforcement agencies to try to expose and ban the selling of illegal tobacco products through various outlets. The suggestion that these tobacco companies would 'be colluding' seems to me a bizarre suggestion and outcome by the ACCC, which, as I understand it, was largely informed by the medical authorities who took this view that any tobacco is bad, therefore tobacco companies are bad, whereas I have proffered the view that sometimes the enemy of my enemy can in fact be my friend. In these circumstances, I would encourage the authorities to actually work with the tobacco companies to help stamp out the sale of illegal tobacco. That's because, make no mistake, as the regular price of tobacco increases, courtesy of the ever-increasing taxation regime, the profits from the black market similarly increase.
Given that this bill is part of the strategy to reduce smoking and its terrible cost to individuals and the health budget, I want to take this opportunity to encourage the government to give more consideration to the legalisation of vaping or e-cigarettes. I understand that, as part of this proposal, the state governments would have to come on board, as they control the poisons schedules, and nicotine is listed, quite rightly, as a poison. As a nonsmoker, I dare not presume as to why people smoke, but people allegedly enjoy smoking for the nicotine hit, beside the mistaken belief of a perceived sophistication or social acceptance. No matter what one's reason, the inhaling of tobacco smoke is detrimental because of the tars, additives and smoke, besides the nicotine, which is inhaled. Health advice suggests that the nicotine, which provides the double-edged hit and craving, is in fact the least injurious aspect of smoking.
Into this space comes the innovative idea of e-cigarettes, or vaping, which allows people to satisfy their nicotine craving without the tar, without the additives and without the smoke—surely a good thing, yet it remains illegal to sell these products. E-cigarettes are cigarette-shaped electronic mechanisms that allow the inhaling of nicotine through metered doses. Given we don't live in a perfect world, which would see neither smoking nor vaping, it makes good sense to seek to wean smokers onto vaping. Many smokers tell me they would switch if given the opportunity. Many have, in fact, told me that they engage in it illegally, it would seem, with much praise for the benefits, including better health outcomes.
It's a bit like refusing to legislate low-alcohol beer because we don't like the impact of alcohol in society. Most of us accept that, no matter what your view on alcohol, low-alcohol beer is preferable to full strength. So it is and should be with e-cigarettes. Research tells us that those who have switched to vaping have their nicotine craving satisfied whilst reporting improvements in their general health. The European research in particular bears this out. Suggestions that vaping is injurious to health, of course, is not questioned, but, as a substitute for smoking, it is preferable, which is something recognised in many other countries. Most health experts analysing e-cigarettes are of the view that they are 95 per cent less harmful than inhaling tobacco smoke. UK officials believe the e-cigarette has assisted thousands of people to quit the smoking habit altogether.
Reluctance to introduce another smoking type product to the market is understood, but such reluctance needs assess whether the new product is as bad or worse than the current product. Fear that e-cigarettes may encourage young people to smoke has not been borne out by the European experiences, which suggest it is not 'cool', if I can use that term, to smoke them and serves as a reminder to young people of the difficulty of giving up the habit. If so, it would be wise to restrict it, but, when the product is so overwhelmingly better, it is difficult to understand the current rationale. This issue is worthy of pursuit to assist the health of the individual—indeed, the health budget, the individual private good and social public good wrapped into one. It is my view that the time for legalising e-cigarettes, or vaping, has come. In making this contribution, I commend the bill to the Senate.
Senator BUSHBY (Tasmania—Chief Government Whip in the Senate) (21:11): I also rise to contribute to the Tobacco Plain Packaging Amendment Bill 2018. Tobacco use is the leading cause of preventable and premature death and disability in Australia and contributes to and compounds existing health and social inequalities. Tobacco use is the only risk factor shared by all four main categories of non-communicable disease—namely, cardiovascular disease, cancer, chronic respiratory diseases and diabetes. The most recently available estimate showed that the social and economic cost of smoking, including health costs, in Australia was $31.5 billion in 2004-05. I imagine that, since then, that cost has only increased. In 2001, tobacco use killed almost 19,000 people in Australia and was responsible for nine per cent of the total burden of disease and injury, making it the most burdensome risk factor.
On 1 June 2007, the Australian Institute of Health and Welfare released the National Drug Strategy household survey 2016 key findings which showed that the decline in smoking prevalence rates among daily smokers aged 14 years and over in Australia slowed in 2016, only declining slightly from 12.8 per cent in 2013 to 12.2 per cent, which is not in itself statistically significant. In 2016, those living in remote or very remote areas were approximately twice as likely to report being daily smokers compared to those living in major cities. Daily smoking rates among those living in regional areas were also 40 per cent to 70 per cent higher compared to those living in major cities over the same period. The 2014-15 National Aboriginal and Torres Strait Islander Social Survey shows that in 2014-15 the proportion of Indigenous people aged 15 years and over who were daily smokers was 38.9 per cent, which is down from 44.6 per cent in 2008 and 48.6 per cent in 2002. The AIHW report, Burden of cancer in Australia: Australian burden of disease study 2011, shows that tobacco was the largest risk factor that contributed to the burden of cancer. Tobacco contributed to 11 different types of cancer and was responsible for almost twice as many cancer disability adjusted life years in males than females. Almost one quarter, 22 per cent, of the total cancer burden can be attributed to tobacco use. In 2016, it was estimated that lung cancer would be the leading cause of cancer death in both females and males: 3,720 females and 5,120 males.
It's pretty clear from those statistics that smoking prevalence in Australia is not a good thing and reasonable measures to assist in the reduction of the prevalence of smoking in Australia is a good thing. Over the past several decades the Australian government has implemented a broad range of tobacco control measures, including: excise increases on tobacco—and I acknowledge the contribution of Senator Abetz about some of the consequences of doing so; education programs and campaigns; plain packaging of tobacco products; labelling of tobacco products with updated and larger graphic health warnings; prohibiting tobacco advertising, promotion and sponsorship; and providing support for smokers to quit. It is claimed and believed by many that this multifaceted approach to tobacco control and the collaboration between the Commonwealth, the states and territories and non-government organisations has been instrumental in achieving the decline in smoking that has been recorded.
One perverse consequence of tobacco control, is, of course that it increases the likelihood that those who are addicted to tobacco—and Senator Cameron noted that that is what nicotine does; it does actually create a very strong addiction—will look to alternative, illegal methods of obtaining their nicotine. So, one of the things that the government is doing is also improving its ability to deal with illicit tobacco sales. The Department of Health has policy responsibility for illicit tobacco in relation to its work under the World Health Organization Framework Convention on Tobacco Control, its work on the development of the National Tobacco Strategy and, broadly, its work to reduce smoking prevalence rates.
Although the department takes a significant interest in illicit tobacco and the market drivers that influence illicit trade, it does so from a health perspective, ensuring that consumers are provided with a full suite of government strategies aimed at reducing tobacco consumption rates in Australia. The department is proactively engaging with other agencies on the issue of illicit tobacco to increase cooperation and collaboration. It is concerned about the illicit trade in tobacco products, because it impacts directly on the effectiveness of price based public health policies, and smokers accessing illicit products may not benefit from other public health measures, including tobacco plain packaging and graphic warnings. In the end, balance is needed between measures that incentivise people to use illicit tobacco and control measures, which lead to a decrease in smoking in some, but lead others to look for their tobacco hit elsewhere.
Turning now to the specifics of this bill, as mentioned, tobacco use is a leading cause of preventable and premature death and disability in Australia, which is why the government is committed to reducing the number of smokers. Australia is a world leader in tobacco control, and tobacco plain packaging is an important element of Australia's tobacco control measures. This measure was introduced under the last government—a measure I had real reservations about and, if truth be told, still do. Those reservations stem from my belief that so long as a product is legal to be sold, governments should be cautious about how they interfere with the rights of producers of those products, including how they deal with the rights associated with trademarks and their rights to market their legal trademarks to those who would choose to purchase them. Of course tobacco, although legal, is different from many other products because it is clearly a product whose use is highly detrimental to the health of its users and which is highly addictive once use has started, and also because the negative health consequences of its use have a broader impact than just on the smokers and their families, with the cost to the taxpayer that flows from smoking-related health treatment and other issues, as noted, estimated to be in the many billions.
As such, there is clearly the broader policy issue of the impact it has on taxpayer funded resources, and not just on an individual's right to choose whether to smoke and to personally accept the consequences. The question for me was whether the specific nature of smoking and the public resource consequence outweighed the principle that private property rights should not be infringed by government without compensation. There is no doubt government should do all that it can and that is right to reduce smoking rates, as achieving that outcome is an undeniable public good. A government, in my view, should also be a fierce guarantor and protector of property rights and individual freedoms. In this case, it seemed to me these two desirable public aims, at least to some extent, came into conflict.
In the end, I remained troubled. But, nonetheless, plain packaging was legislated and is now the law. Although there is some conflicting interpretation of the statistics since, it does appear that the incidence of smoking in Australia has fallen, an unarguably good thing on all fronts and something which is absolutely required, as a result of the legislation, in order to justify the imposition of the burden the law placed on affected entities. The role plain packaging played in that fall in smoking incidence is also hard to calculate. Let's hope it is a significant factor and, on that basis, look forward. This bill is intended to ensure the plain packaging law works as well as possible.
Under the Tobacco Plain Packaging Act 2011, plain packaging compliance and enforcement activities are undertaken by authorised officers. Authorised officers must be persons appointed or engaged under the Public Service Act 1999 or a member or special member of the Australian Federal Police. A person is appointed as an authorised officer in writing by the Secretary to the Department of Health. The bill proposes to expand the range of persons who can be appointed as authorised officers. The bill will allow the secretary to appoint as authorised officers, Commonwealth officers not appointed or engaged under the Public Service Act 1999, state and territory police officers and state and territory officers and local government officials with responsibilities in relation to health matters or tobacco control compliance and enforcement.
The bill will enable the government to respond more flexibly to noncompliance with the tobacco plain packaging legislation. It will provide the Department of Health with access to a wider pool of officers eligible for appointment as authorised officers, providing greater flexibility to respond to any organisational or administrative changes which may occur in the future. This will also provide more opportunities for authorised officers to cooperate and respond to potential noncompliance. Importantly, the bill does not change the plain packaging requirements, do not make them any more stringent and will not impact the obligations of tobacco manufacturers, distributors or retailers.
Consultation with each relevant state and territory agency has been undertaken. This is important as their officers will be impacted. At the conclusion of the consultation, no agencies opposed the amendment. Some state and territory agencies emphasised that their support was provided specifically on the basis that their officers would only be appointed as authorised officers where there is a formal agreement in place. Negotiations indicated that, for these agencies to be comfortable with the impact this bill would have on it passing, a clause needed to be included providing that the appointment would only be by agreement with the relevant state or territory.
So what is the purpose of the bill? As mentioned the Tobacco Plain Packaging Amendment Bill 2018 is primarily intended to allow for the ongoing appointment of National Measurement Institute officers as authorised officers. The National Measurement Institute, a division of the Commonwealth Department of Industry, Innovation and Science, currently undertakes compliance and enforcement activities on behalf of the department under the act. The structure of the NMI may change in the future in such a way that NMI officers may no longer be engaged under the Public Service Act. Under the law as it stands, authorised officers must be persons appointed or engaged under the Public Service Act or a member or special member of the Australian Federal Police. In addition, the Secretary to the Department of Health must be satisfied that the person has suitable qualifications, training or experience. The inclusion of relevant state and territory health officers, state and territory police officers and local government officers is to provide future flexibility and increased cooperation to respond to noncompliance with the act should it be needed and agreed at some point down the track.
I've already mentioned the consultation with states and territories and given a summary of their approach to the proposed changes. Just what are the implications for state and territory health departments or local government? The proposed changes place no obligation on state and territory agencies or local government entities to be appointed as authorised officers unless and until there is a desire to enter into an arrangement and there is an agreement on the proposed arrangements and funding by the Commonwealth. The inclusion of relevant state and territory health officers, state and territory police officers and local government officers is to provide future flexibility and increased cooperation to respond to noncompliance with the act should it be needed and agreed. For example, relevant state or territory health officers may be able to be appointed, if agreed, to assist National Measurement Institute or departmental officers with inspections and enforcement activity as appropriate and to respond to localised areas of noncompliance. Accordingly, the proposed amendment provides a mechanism for greater collaboration and coordination on enforcement activities with the states, territories and local government bodies if needed and agreed in the future.
Who will the bill affect? As flagged earlier, one of the intentions of the bill is to ensure that NMI officers are still able to be appointed as authorised officers should the NMI undergo organisational changes. The bill, if passed, will allow the appointment of the following as an authorised officer under the act: a person appointed or engaged other than under the Public Service Act 1999 by the Commonwealth or a Commonwealth entity—within the meaning of the Public Governance, Performance and Accountability Act 2013; a person appointed or employed by a state or territory with responsibilities in relation to health matters or compliance and enforcement in tobacco control matters; state and territory police officers; and local government officials with responsibilities in relation to health matters or compliance and enforcement in tobacco control matters. State and territory police officers and local government officers will only be appointed with the agreement of the relevant state and territory.
I have already touched on the consultation undertaken in the preparation of this bill. Initial consultation was undertaken with jurisdictional representatives on the National Expert Reference Group on Tobacco. Follow-up consultation with each state and territory, health department, police force and local government representative body occurred from October 2017 to March 2018. In New South Wales comment was sought from the New South Wales Department of Premier and Cabinet as requested by New South Wales Health. The National Measurement Institute was, of course, also consulted. As mentioned, some agencies initially expressed concern in relation to the potential for their officers to be appointed as authorised officers, either because their view was it did not fall within their remit or due to resourcing concerns. After further discussion, these agencies were able to support the amendment on the basis that any appointment of authorised officers would be after a formal agreement had been made. The bill reflects an requirement for an agreement to be in place.
Finally, what are the financial impacts of the amendment? The amendment will not result in any further financial impact on the Commonwealth above the current costs associated with tobacco plain packaging compliance and enforcement activities undertaken by the Department of Health. As such, the measure is designed as one to better ensure that the law, if enacted, can be properly enforced. As discussed, despite the issues I see relating to the plain packaging legislation itself, this bill is a measure that is clearly one aimed at improving health outcomes for Australians and should be supported.
Senator HUME (Victoria—Deputy Government Whip in the Senate) (21:26): I rise this evening also to speak on the Tobacco Plain Packaging Amendment Bill 2018. When the plain packaging bill was first introduced in 2011, I will admit to you now, I hated it. I think it was the inner libertarian in me that was so fervently opposed to this particular restriction. I really wasn't confident that prima facie, at least, just changing the colour of a cigarette packet was the most effective way to deter people from smoking. However, the jury is in, and it works. Tobacco remains a leading cause of preventable deaths and disability in Australia, and smoking is estimated to kill almost 19,000 Australians every year, with a total annual cost to the nation of $31.5 billion. This government remains committed to tobacco plain packaging as a legitimate public health measure that is consistent with Australia's international legal obligations. Such a measure has contributed to reducing smoking rates substantially over the past decade. And despite a noticeable slowing in the decline of smoking prevalence rates among daily smokers aged 14 and over, significant progress has been made among Aboriginal and Torres Strait Islander people, which is very good to note. Ongoing tobacco interventions are critical to ensuring the prevalence of smoking in Australia continues to decline. So as part of their comprehensive and strategic approach to reducing the take-up and the continued use of tobacco products, plain packaging is just one very effective weapon in the arsenal. And Australia has built that arsenal up over a very long period of time.
You might remember, Acting Deputy President Leyonhelm, that before Australia adopted some of the strictest smoking regulations in the world, advertising of cigarettes was very big business, and ad agencies had long sought clients that had the biggest budgets. From the fifties right through to the seventies, the clients with the biggest budgets were selling tobacco. They set out and they succeeded in convincing Australians that smoking was suave, sexy and a sophisticated thing to do. You might remember that slim cigarettes were tailored for the feminine hand. Craven, you might recall, was 'the clean cigarette that's kind to your throat'. Benson & Hedges were available to you 'when only the best would do'.
But one campaign was so successful in Australia that it actually backfired and prompted the backlash that ultimately saw Australia ban tobacco advertising altogether. By the early 1970s there were already warning signs, you may recall, about the risks to consumers' health, but teenagers remained a very lucrative market, and one brand in particular resonated with that market: Winfield. A fellow named Allan Johnston was the new creative director of Sydney agency Hertz-Walpole, and he was asked to come up with an idea for Winfield, which was then owned by the tobacco company Rothmans. He said they came up with this crazy idea to put Paul Hogan in a dinner suit and to have him take the mickey out of other cigarette ads. On the day of the shoot, apparently, none of the regular advertising executives turned up because they were absolutely terrified this wasn't going to work; they thought it was going to be a disaster. Hoges turned up in his tuxedo and the Sydney Symphony Orchestra were playing in the background and they were brought in. In his most ocker drawl, Hogan began: 'G'day. I've been asked to talk to you and, being a suave and sophisticated man about town'—and then he went on.
Australians loved it, but particularly the kids loved it. After the first week on air, Rothmans' chairman, whose name was Sir Ronald Irish, ordered the 'uncouth bloke' be taken off air. But he was reminded that the company were now selling one million cigarettes a day in Australia. You will remember that, 'Anyhow, have a Winfield' became part of Australia's vernacular. It wasn't long after that that Winfield overtook Marlborough as Australia's No. 1 selling cigarette. The popularity of Paul Hogan and his Winfield ads amongst teenagers was a worrying development. Winfield became the preferred brand for teenagers, and Hogan's powerful resonance with this particular market saw kids take them up at a growing rate.
Health campaigners and public sentiment were getting more and more vocal, and the link between tobacco and lung disease could no longer be ignored. By the mid-1970s, there was an increase in pressure on government to act. I'll pay credit where it's due here: it was in fact the Whitlam government that pledged extra funds to state health departments, so that they could engage in the very medium that had propelled these tobacco products and tobacco companies into people's lives in the first place, and the antismoking television advertisements began. You might remember this one, Acting Deputy President: it started, 'The human lung is like a sponge—a sponge designed to soak up air, but some people use it to soak up smoke.' You will remember the lungs squeezed and the tar squeezed out of them. It was a very powerful advertising campaign. Tobacco advertising was officially banned on Australian radio and television in 1976, although it actually remained legal, you will recall, on billboards right up until 1993.
The industry commonly claims that its promotional activities were not intended to influence and have no impact on children. In contrast, however, numerous academic reviews have identified tobacco advertising as a key influence on youth, particularly those who initiate smoking. Youth exposed to tobacco advertising hold positive attitudes towards tobacco use. The industry argues that in the absence of causal proof that advertising directly induces children to smoke, there is insufficient evidence to justify banning tobacco advertising at all. However, research examining the impact of the UK's Tobacco Advertising and Promotion Act on youth smoking found that the advertising ban actually reduced adolescent smoking intentions by signifying smoking to be less normative and socially unacceptable.
I hope that my children aren't working now, because I'm about to confess something to the chamber: I took up smoking when I was 16.
Senator Molan: No!
Senator HUME: It's true. I know it's hard to believe. Butter wouldn't melt in my mouth now, but at the time, I tell you, I was a wild child. I took up smoking when I was 16. I vividly remember the influence of the brands and advertising. My first cigarette—I will never forget it—was a Sterling Smooth. It had a beautiful silver packet—remember those! It was shared with me by a girlfriend. I thought that she was super cool, and that was why I wanted to try it. The first one made me so sick. By the second one, I began to work out what I was doing. By the third one, that was it—I was hooked. I was an expert. I looked cool; I was a 16 year old and I looked super cool—I looked Sterling-Smooth cool! But then I realised as a teenager that, as cool I was, I was still desperate to be kissed and I really needed that minty freshness, so I switched to Alpine. I switched to menthols because they gave me that minty freshness.
Senator Molan interjecting—
Senator HUME: 'Fresh as Alpine'—I don't know whether you remember that, Senator Molan. But then I matured somewhat. That desire for the freshness remained, but I was a bit more mature, a bit more sophisticated, so I moved to St Moritz. That was the cool menthol brand. That was the menthol of choice for your mature young woman—except when I went to the Guns N' Roses concert in 1993, and then of course I reverted right back to the Winnie Blues in the shoulder, under the sleeve. Do you remember those? Guns N' Roses and Winnie Blues! When I settled into adulthood, there I was still smoking, still influenced by those brands, but I was a mature and far more professional person, so Benson & Hedges extra mild was my brand of choice. To tell you the truth, if I were going to pick up a cigarette this evening, it'd be Benson & Hedges extra mild all the way. So advertising does make a difference; I still remember those brands.
This bill aims to expand the categories of persons who can be appointed as authorised officers empowered to undertake plain packaging compliance activities under this act. Specifically, it will allow for more authorised individuals to enforce that plain packaging legislation to ensure that others aren't influenced the same way I was. Over the past several decades, the Australian government has implemented a broad range of tobacco control measures, including an excise increase on tobacco; education programs and campaigns such as the ones I spoke of earlier; plain packaging of tobacco products; labelling tobacco products with updated and larger graphic health warnings of horrible things like rotting teeth and gangrene; prohibiting tobacco advertising, promotion and sponsorship; and providing far more support for smokers to quit. This multifaceted approach to tobacco control and collaboration between the Commonwealth, the states and territories and the non-government organisations has been instrumental to achieving the decline in smoking that we have seen.
It is important to do because the effects of smoking are very clear. Despite that decline in smoking in Australia, we remain firmly committed to continuing the efforts of previous governments to support and build on Australia's great success in tobacco control. Tobacco use is the leading cause of preventable and premature death in Australia and both contributes to and compounds existing health and social inequalities.
In 2011, the Australian burden of disease study demonstrated that tobacco was the largest risk factor that contributed to the burden of cancer. Tobacco use is attributed to 11 different types of cancer. Almost ¼ of the total cancer burden is attributed to tobacco use. In 2011, tobacco use killed almost 19,000 people in Australia and was responsible for nine per cent of the total burden of disease and injury, making it the most burdensome risk factor. The 2014-15 National Aboriginal and Torres Strait Islander Social Survey showed that the proportion of Indigenous people aged 15 and over who were daily smokers was just shy of 39 per cent. While this is significantly down from the 48.6 per cent who identified as daily smokers in 2002, it still remains an unacceptable statistic. In 2016, those living in remote or very remote communities were approximately twice as likely to report being daily smokers compared to those living in major cities. Daily smoking rates among those living in regional areas was also 40 to 70 per cent higher compared to those living in major cities over the same period. In fact, in 2016, it was estimated that lung cancer will be the leading cause of death for both females and males. It's for these reasons that it's crucial that the government continue its stance to minimise and, where it can, avoid preventable death and disability in Australia.
Quitting smoking, as we know, is one of the most positive actions that anyone can take for themselves and for their family's health. Tobacco smoking continues to be the leading because of preventable death and disability. In 2017 alone, there were 19,000 deaths—I think I've used that 19,000 three times now; it is a very important statistic.
The Morrison coalition government continues to sustain world-leading antismoking initiatives. We do not have a one-method approach; we embrace a suite of methods to minimise preventable illness in Australia as a result of smoking, and one of those methods is plain packaging. There are others: those health warnings and the numerous health marketing campaigns.
This particular amendment is an extension and a continuation of our good work in that health sector. It's important to note that the amendment that's before us tonight and the continuation of the plain-packaging laws under this government are not the only means of ensuring that we minimise and avoid preventable illness in Australia. They are only one part of the suite of products.
Health awareness and cognisance campaigns, such as the recent Don't Make Smokes Your Story campaign have contributed significantly to reducing the smoking rates over the last few years. Other coalition government awareness campaigns, which have been reported to be extremely successful, include the Quit For You, Quit For Two campaign. This campaign targeted pregnant women and those planning to have children and their partners. The campaign provided information about the health harms associated with smoking during pregnancy and the support available to women on their journey to quit smoking.
We don't stop here. The coalition government has been taking a far more targeted approach, continuing our commitment to minimise preventable illness in Australia. Advertisements were developed for culturally and linguistically diverse communities and diverse audiences to ensure that that message is tailored for specific communities. Translated versions of health warnings were developed for Arabic; Chinese, both Mandarin and Cantonese; Korean; and Vietnamese audiences and specifically focused on smokers between the ages of 18 and 40 years.
In 2017, statistics for the number of daily smokers aged 18 and over was 14.7 per cent nationally. This was a decrease from 16.3 per cent in 2007 and 22.3 per cent in 2001. It's an illustration that our health measures are working. On 6 May 2018, the government announced new budget measures to tackle the illicit tobacco trade. The government has introduced a comprehensive new framework to provide the Australian Border Force and the Australian Taxation Office, the ATO, with strengthened enforcement measures and additional resources to deter those who profit from illicit tobacco. The excise increases announced in the 2015-16 budget were firmly based on the evidence that they too will help further reduce smoking.
The panel report concerning Australia's tobacco plain-packaging measure was published on 28 June this year, and all substantive findings were in favour of this program in Australia. The department has reviewed its enforcement policy for undertaking compliance and enforcement activities under the Tobacco Plain Packaging Act 2011 and released that update in May this year.
The findings from a new Australian study found that major health and productivity gains could be achieved from further tobacco control measures in Australia. The study, in fact, predicted that smoking was estimated to result in an excess of 400,000 deaths among Australians currently between the ages of 20 and 69, who are followed up to the age of 70. This equated to a loss of more than three million years of life over the productive working age of current Australian smokers and $388 billion lost in GDP.
Ongoing tobacco interventions are critical to ensuring that the prevalence of smoking in Australia continues to decline. Evidence from Australia and from overseas shows that when tobacco control efforts stall, so does the decline in smoking prevalence. It is incorrect to assume that the rate of reduction of smoking prevalence can be maintained without consistent and additional tobacco control efforts.
For much of today and last week, we debated the black economy. The black economy is certainly not absent from a discussion about tobacco. The Department of Health has policy responsibility for illicit tobacco in relation to its work under the World Health Organization framework, the development of the National Tobacco Strategy and broadly in its work to reduce smoking prevalence rates. The department has recognised issues that extend beyond health and is proactively engaging with other agencies on this issue of illicit tobacco to increase cooperation and collaboration. The department is also concerned about the illicit trade in tobacco products because it impacts directly on the effectiveness of price-based public health policies aimed at decreasing smoking rates. And smokers accessing illicit products may not benefit from other public health measures, including such things as tobacco plain packaging and those graphic health warnings.
As I detailed earlier, tobacco use is the leading cause of preventable death. Australia is a world leader in this particular field, and tobacco plain packaging is an important element of our control measures. Under the Tobacco Plain Packaging Act 2011, plain packaging compliance and enforcement activities are undertaken by 'authorised officers'. Authorised officers must be persons appointed or engaged under the Public Service Act 1999, or a member or special member of the Australian Federal Police. A person appointed as an authorised officer is appointed in writing by the secretary of the Department of Health. This bill aims to expand the range of persons that can be appointed as officers. It will allow the secretary to appoint Commonwealth officers not appointed or engaged under the Public Service Act 1999, state and territory police officers, and state and territory officers and local government officials with responsibilities in relation to health matters or tobacco control, compliance and enforcement. It doesn't necessarily change the plain packaging requirements and won't impact the obligations of tobacco manufacturers, distributors or retailers.
As someone who was originally opposed to the plain packaging legislation, which passed before my time in the Senate, I can say that since my initial opposition I have become confident that regulation in this area has benefits and that there is in fact a case for it. I recommend this bill to the chamber.
Senator COLBECK (Tasmania—Assistant Minister for Agriculture and Water Resources) (21:46): I note at the outset that I won't be closing the debate on the Tobacco Plain Packaging Amendment Bill 2018. I suppose I should start with my personal confessions on smoking, not that there's much of a story. I'm one of those very lucky people who really haven't smoked all that much during their life. Although Senator Hume took us through a bit of a brand expose of her experiences with cigarettes, mine's limited to one packet. In 1973 I bought a packet of Escort 10s, which cost 27c. That's probably less than the excise on one cigarette these days! I'm still not sure that mum knows today that I bought that packet of smokes. I smoked four of those and I hated it, and I'm eternally grateful that that was my reaction to it. When I'd had a big night at the footy club, occasionally the boys would pass round a packet of cigarettes. If I took one, they would know that I'd an exceptional evening and a cheer would go up. Of course, during those years I consumed a lot of secondary smoke just through the atmosphere I was living in, but I count myself as someone who's very lucky not to have smoked, because we've heard through this debate already the statistics and the impacts of cigarette smoke.
In the couple of minutes before adjournment, I would like to address a couple of matters that were raised by the opposition, particularly by Senator O'Neill in her contribution. She talked about the fact that there had been no new campaigns. I remember when Prime Minister Rudd was in office, we were going to have a 'shock and awe' campaign against smoking. Well, we're still waiting for it. I never saw a shock and awe campaign coming from Labor. Yes, there were some anti-smoking ads, just as there are campaigns that are being run now. One current campaign, 'Don't make smokes your story', is targeting specific parts of the community. It's particularly targeting Torres Strait Islanders and Indigenous people. The 'Quit for you Quit for two' campaign is targeting pregnant women and their partners to stop smoking.
We're down to a small proportion of the community that are still smoking, and that's often when it's the hardest, when you get to that scale, to make those last few increments. We've seen the rate of reduction slowing over recent years. In fact, the latest figures I have seen show only a very small reduction, from 13.3 per cent to 12.8 per cent, so effectively it's static. It's very hard to start breaking down those last elements. The point I would make is that targeted campaigns and a range of measures are going to make the difference when you get down to those last few numbers, and it's important that the government continues to work in this space.
Debate interrupted.
ADJOURNMENT
The ACTING DEPUTY PRESIDENT ( Senator Leyonhjelm ) (21:50): Order! I propose the question:
That the Senate do now adjourn.
Foreign Investment
Senator MOLAN (New South Wales) (21:50): I wish to speak in this adjournment debate to an issue of tremendous importance to Australian interests. Last week, the ACCC gave clearance to CKI, a Hong Kong based investment fund, to acquire APA Group. APA Group is one of the nation's most important energy infrastructure assets. It owns and operates Australia's largest network of gas pipelines, including the principal means of moving gas along the eastern seaboard. Its pipelines transport more than half of the gas used in Australia. Having gained ACCC approval, the proposal will now be examine by the Foreign Investment Review Board and put before Treasurer Frydenberg.
In this time of strategic uncertainty and increasing great power rivalries, we need to be extremely wary of foreign efforts to attain control over Australia's infrastructure assets. We have recently made significant changes to the rules surrounding foreign investments in vital infrastructure, including the establishment of the Critical Infrastructure Centre to scrutinise the national security implications of foreign investment proposals. This is an overdue change. For too long, we have had a single-minded focus on the economic dimensions of foreign investment proposals. We have deferred to the views of economists, who can be so fixated on balance sheets that they may not see other important factors involved in foreign investment proposals of this kind. This nation is far more than just an economy. We are a people, a culture, a way of life and a set of values. If we sacrifice every value, every bit of sovereignty and independence we have for the economy, then one day we might wake up and find that there is not much left. When it comes to foreign investment in critical infrastructure, we need to get beyond a focus on economics and consider other important factors in context. CKI's bid to acquire APA Group is part of a larger recent pattern of Chinese organisations seeking to gain control over Australia's critical energy infrastructure. We have already seen Chinese interests purchase stakes in Jemena, Electronet and AusNet. Should CKI be permitted to acquire APA Group, it would represent a significant increase in China's stake in our nation's energy sector.
Energy security is one of my principal concerns as a senator. As a consequence, I'm compelled to oppose CKI's efforts to purchase APA Group. My concerns are threefold: they relate to concentrations of ownership, the potential for espionage and the potential for sabotage. First, approval of the sale would see an unhealthy concentration of ownership that could impact prices, levels of service and future investment. Although the ACCC has given a green light to the proposal, it has done so because, rightly, the terms of its review were strictly focused on competition, which it deemed would not be affected. ACCC's chairman, Rod Sims, has often criticised APA Group's market power, revealing that concerns about ownership concentrations are certainly appropriate.
There are clear economic problems that can result from excessive ownership concentrations in a single asset, as we are seeing now in the energy sector. This is of particular relevance to gas because gas is likely to continue to grow in importance in the future, especially for the provision of baseload power. Approval of the deal would also lead to an alarming level of Chinese ownership of our national energy infrastructure. Should it proceed, Chinese interests would dominate electricity and gas transmission and distribution in most states. This is not an outcome that most Australians would welcome. The implications of permitting a single nation to exercise such a preponderant influence over Australia's energy assets are huge, especially when we consider China's demonstrated willingness to interfere in Australia's internal affairs.
Second, permitting the CKI proposal to proceed would carry clear risks in relation to espionage and the transmission of sensitive information overseas. In practice, it is nigh impossible to prevent the transmission of sensitive information and customer data to the owners of assets. Foreign owners can insert their preferred executives into management roles and control appointments and remuneration. Under such circumstances, it is effectively impossible to prevent sensitive information and data being transferred to overseas owners.
Third, permitting the acquisition to proceed would also increase our vulnerability to infrastructure sabotage. By deploying malware into the digital systems that control the networks, a hostile actor could wreak havoc. With the nature of 21st century digital systems, this could be done from outside Australia. We have already seen examples of this elsewhere in the world. In December 2015, Russia was able to disable part of the Ukraine's electricity grid through a cyberattack. A similar incident could disrupt our ability to transport gas along the eastern seaboard, interfering with the security of the nation's energy supply. In the worst case scenario, a cyberattack could even cause physical damage to the pipeline network.
It's because of these risks that CKI should not be permitted to acquire APA Group. We cannot be comforted that CKI is a private firm from Hong Kong. We have seen the steady accumulation of Communist Party influence over Hong Kong since the handover in 1997 and companies in Hong Kong are increasingly subject to the dictates of the party. Furthermore, CKI's considerable business activities on the Chinese mainland mean it is obliged to maintain a good relationship with the party. As a consequence, CKI is subject to the influence and coercive control of the Communist Party. Furthermore, under Beijing's National Intelligence Law 2017, any business is obliged to follow directions from China's intelligence agencies—and we already know that there is an active Chinese intelligence-gathering campaign targeting Australia.
In these strategically uncertain times, we should aspire to ensure Australian ownership of our nation's critical infrastructure assets. Australian ownership and control is the best way too ensure that we are not exposed to unacceptable security risks. There is no shortage of domestic capital that could be used to acquire APA Group, such as, in our superannuation funds. Australian super funds are projected to increase from $2.5 trillion today to more than $8 trillion in 20 years time. This represents an ample pool of domestic capital that could be invested in our nation's critical infrastructure. The model that could be followed is Australia's largest energy network, Ausgrid. In 2016, then Treasurer, Scott Morrison, advised by the Foreign Investment Review Board, rejected a Chinese bid to acquire Ausgrid. It is now owned by Australian superannuation funds.
Keeping critical infrastructure, such as APA Group, under Australian ownership would yield considerable benefits to the national interest. It would avoid the security risks inherent in foreign ownership. Furthermore, it would guarantee that the nation's critical assets remain in Australian hands for the ultimate benefit of the Australian people. The time where foreign investment in critical infrastructure can just sail through approval purely with reference to the economic merits of a proposal is at an end. We are living in a time of increasing strategic uncertainty and an unprecedented level of foreign interference in Australia's internal affairs. We need to take these circumstances into consideration when considering foreign investment decisions, particularly in critical infrastructure.
It is the government's obligation to ensure that Australia's interests are protected, and it's for that reason I consider it of utmost importance that CKI's bid to acquire APA Group should be rejected. It's imperative that we put Australia's national security interests first when evaluating the prospect of foreign investment in critical infrastructure.
Coalition Government
Senator McALLISTER (New South Wales—Deputy Opposition Whip in the Senate) (21:59): I want to talk this evening to some of the people who this government has forgotten; people who live up and down the east coast of New South Wales in places like Lismore, Casino, Batemans Bay and Nowra. These people live far away from the petty issues that have preoccupied the Liberal Party and the National Party over the last months, and they live far too close to the real issues, like wage stagnation, that this government has completely ignored.
Why is it that the government has ignored these issues, despite the community clamouring for action? Well, for as long as anyone can remember, the government has been busy fighting itself. It has been in chaos. Just this month we have seen the Liberals' newest Prime Minister kill the National Energy Guarantee, leaving the government with no energy policy at all in its fifth year of government. Mr Morrison has confirmed his support for funding cuts to schools and hospitals, and he has completely failed to provide strong leadership in response to allegations of bullying in the Liberal Party. This government is falling apart before our eyes. The coalition is up to its third Prime Minister in five years, and its MPs are resigning and defecting publicly.
This evening the Liberal member for Gilmore, Ann Sudmalis, made an extraordinary speech in the other place. She described the 'bullying, betrayal and backstabbing' inflicted on her by her state colleague, Gareth Ward, in what she has called an act of 'narcissistic revenge'. She has alleged that senior Liberals leaked material against her to the media, that there has been branch-stacking and that supporters on her local federal council were rolled. She has announced that she will not be recontesting her seat at the next federal election and, given what she says she has been subjected to, that is entirely understandable. This is on top of the Nationals member for Page, Kevin Hogan, half-heartedly joining the crossbench in a vain attempt to distance himself from the madness that is engulfing the coalition.
While the government is busy thinking about itself, its antics have real-life consequences for people in this country and people in seats like Page and Gilmore. When the government cut $256,000 from Gerringong Public School, it made it more difficult in concrete ways for the teachers of that school to help our kids learn and grow. When the government cut the penalty rates of workers in Nowra, it made it harder for parents to put food on the table for their families. Because of these cuts to penalty rates, workers in Gilmore are $77 a week worse off. When the government cut funding to hospitals, it made it tougher for older Australians in Lismore to access the medical treatment that they need. When the government scrapped the National Energy Guarantee, it abandoned the only proposal it had come up with in five years to decrease power prices for Australian households.
A new Liberal Party or National Party candidate in these electorates will not change this. Only a Labor government can ensure that everyday Australian people get access to the services that they need. Labor is fully committed to fair funding for schools like Gerringong Public School. We've committed to restoring every dollar of the $17 billion that the Liberals have cut from schools. Every child, regardless of where they live, should have the option of attending a great public school, where they can make strong progress each and every year.
Labor takes working people seriously, like the hardworking people of Lismore, many of whom work weekends and public holidays to make ends meet. Labor believes that our hospitals ought to be property funded, and that the strain on our public hospitals is having a detrimental effect on doctors, nurses and patients. Labor believes that, regardless of whether you live in the regions or in the city, access to health care is a right. Rising power prices are putting stress on our community, and that is why we have a plan to transition our energy system to renewable energy, which is cheaper and creates more jobs.
These policies can only become a reality when we elect representatives with the knowledge and the experience to enact change—representatives like Patrick Deegan, Labor's candidate in Page, a social worker who wants the same opportunities for his kids that he had when he was growing up to access education, apprenticeships and secure work. It's also why I back Labor's candidate for Gilmore, Fiona Phillips, who was raised on the South Coast and is now raising her kids in the local area.
The people in Page and Gilmore—and, indeed, across this country—deserve strong, stable leadership and a local member who cares about their needs. Instead, they have been subjected to five years of cuts and chaos. And what is all this about? In the words of one participant who is in a position to know, Ann Sudmalis:
Certainly not the people who elected me. It was about ego-driven ambition, bullying and betrayal …
Enough is enough. People deserve better than this.
Senate adjourned at 22:04
DOCUMENTS
Tabling
The following documents were tabled by the Clerk:
Competition and Consumer Act 2010—Competition and Consumer (Airservices Australia Prices Surveillance) Declaration 2018 [F2018L01013]—Replacement explanatory statement.
Commissioner of Taxation—Public Ruling—Taxation Determination—Notice of Withdrawal—TD 2012/14.
Corporations Act 2001—ASIC Corporations (Amendment) Instrument 2018/697 [F2018L01281].
Federal Financial Relations Act 2009—Federal Financial Relations (General Purpose Financial Assistance) Determination No. 114 (August 2018) [F2018L01282].
Remuneration Tribunal Act 1973—Remuneration Tribunal (Members' Fees and Allowances) Amendment Regulations 2018 [F2018L00706]—Replacement explanatory statement.
Sydney Airport Curfew Act 1995—Dispensation Report—10/18.
Therapeutic Goods Act 1989—Medical Device Standards Order (Endotoxin Requirements for Medical Devices) 2018 [F2018L01280].
The following documents were tabled pursuant to standing order 61(1)(b):
Document presented by the President
Restoring Territory Rights (Assisted Suicide Legislation) Bill 2015—Remonstrances from—
1. Australian Capital Territory Legislative Assembly [agreed to on 16 August 2018].
2. Parliament of the Northern Territory [agreed to on 23 August 2018].
3. Vacancy in the representation of Queensland—Certificate of the choice by the Parliament of Queensland of Ms Larissa Waters, dated 10 September 2018 [original].
Committee reports pursuant to reference from the Selection of Bills Committee presented out of sitting
2. Legal and Constitutional Affairs Legislation Committee—Criminal Code and Other Legislation Amendment (Removing Commonwealth Restrictions on Cannabis) Bill 2018—Report, dated September 2018, Hansard record of proceedings, additional information and submissions. [Received 14September 2018].
Returns to order—
Indexed lists of departmental and agency files—Environment and Energy portfolio
Entity contracts—Defence portfolio