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Thursday, 23 September 1999
Page: 10371

Mr KELVIN THOMSON (12:23 PM) —Labor will not be opposing the package of bills under consideration. However, we will be moving a second reading amendment setting out Labor's concerns about the levy process—that is, if the second reading amendment arrives in time; things have been moving fairly quickly here.

The reason these bills are before the House today is principally due to government incompetence. On the one hand, we have the Treasurer saying that he is in the middle of one of the biggest tax reform processes Australia has ever seen and, on the other hand, we find the department cannot get right what we would regard as pretty simple matters. I have to say that this is somewhat typical of this government. You get plenty of froth and bubble on the surface but a lot of problems in terms of following through with the detail. What we have seen is a procedural error which casts into doubt the validity of the imposition of levies on industries in the financial sector.

I will detail the history of this matter. The measures for the collection of supervisory levies are contained in the Financial Institutions Supervisory Levies Collection Act 1998. Under section 50(2) of the APRA Act, for each financial year, the Treasurer must determine from the levy money received during the year the amount that is necessary to cover the costs to the Commonwealth of providing market integrity and consumer protection functions for prudentially regulated institutions. This amount is retained in the consolidated revenue fund until allocated to the Australian Securities and Investments Commission and the Australian Taxation Office, which perform these functions. The balance of the levy money, after taking out the amount for consumer protection functions for prudentially regulated institutions, is to be paid to APRA under section 50(1) of the APRA Act. The total levy receivable for the financial year 1998-99 was estimated at $40 million, and $70 million is estimated in 1999-2000.

On 11 August last year, the Treasurer made determinations that imposed a levy on certain industries in the financial sector with a general public announcement through the Commonwealth Gazette of 13 August. However, the government failed to meet the requirement of subsection 48(2) of the Acts Interpretation Act 1901 because the determinations were to take effect from 1 July 1998, which was earlier than the public announcement of 13 August 1998. These determinations were therefore made invalid by the Acts Interpretation Act. To correct its own error, the government has been forced to introduce the bills being debated in the House now to override the retrospectivity provisions of the Acts Interpretation Act and validate the determinations on the imposition of levies.

There are a range of levies imposed. For general insurance companies, the levies raised range from $5,000 to $55,000. For authorised non-operating holding companies, the amount of levy payable is $10,000. For life insurance companies, the levy ranges from $5,000 to $148,000. In addition, retirement savings account providers face a levy of between $5,000 and $8,500. Superannuation entities pay between $200 and $39,000.

There is general industry acceptance of the need to contribute to the running costs of APRA, ASIC and the tax office. But, displaying its usual flair, the government has even managed to shake this support. We have had industry groups expressing serious concern at the levels at which the levies have been imposed. The Association of Superannuation Funds of Australia, ASFA, for example, considered the levy amounts to be unfair and inequitable and more than is necessary to cover the costs of efficient regulators. As a consequence of the strong representations from the financial sector, the Minister for Financial Services and Regulation announced on 3 August this year a review of these supervisory levies. A report on the review is expected in early October 1999.

Labor will certainly not be opposing the bills before the House. We do, however, condemn the government for the incompetence displayed in its handling of this issue.

Mr Hockey interjecting

Mr KELVIN THOMSON —It is not a difficult issue, Minister. Heaven help us when we need to implement the more difficult GST and the business tax reforms that emerge from the Ralph review. As foreshadowed, I move:

That all words after "That" be omitted with a view to substituting the following words:

"whilst not declining to give the Bill a second reading, the House condemns the Government for:

(1) its sloppy administration in relation to the setting of the levy limits;

(2) the lack of transparency displayed in the determination of the levy; and

(3) its failure to adequately consult with industry participants".

Mr Hockey interjecting

Mr KELVIN THOMSON —I was to close at this point, but the minister scoffed. I do need to bring him back to the point that the government's handling of the issue of regulatory levies has been less than satisfactory. Quite a number of industry funds and other bodies have expressed concerns about the way in which levies have been imposed with a lack of consultation. They have certainly not delivered on the government's suggestions throughout the Wallis reform process that this would lead to lower costs of regulation and, by implication, lower levies.

As I pointed out to the House, it is quite clear that, in announcing in August that the minister would have a review of the levies, he is responding to industry pressure and clearly there are signs that the government has not handled this issue as well as it might. We will be very interested in the review of the levies. We also wait to see the Wallis process flowing through in terms of lower regulatory levies. That is something that the industry has been led to expect would come out of this process. It will be very interesting indeed to see whether this occurs in due course.

Mr DEPUTY SPEAKER (Hon. I.R. Causley) —Order! Is the amendment seconded?

Mr O'Connor —I second the amendment and reserve my right to speak.