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Tuesday, 18 June 2013
Page: 6146

Mr FLETCHER (Bradfield) (19:53): I am very pleased to rise to speak this evening on the Banking Amendment (Unclaimed Money) Bill 2013. The purpose of this bill is to make certain amendments to the Banking Act 1959. The reason that this bill is necessary is an earlier, extremely ill-judged, badly designed and sloppily implemented set of measures introduced by the Rudd-Gillard government. Under the legislation as it stands today, authorised deposit-taking institutions, or ADIs, are required to report and hand across to the government all unclaimed moneys based upon the status of an account as at an assessment date. As I will come to speak about later, as a consequence of changes made by the Rudd-Gillard government some time ago, the point at which the long arm of government extends into the bank accounts of Australians has been brought forward so that it now occurs within an unreasonably short time. As a result of these arrangements now being in place, it has emerged that there are some serious technical and operational flaws in the legislation that currently applies.

The first of those, as I have mentioned, is that authorised deposit-taking institutions are required to report and hand across all unclaimed moneys, and the status of an account is determined at a particular assessment date—that is, at that date the authorised deposit-taking institution is required to determine whether it is an account which contains unclaimed moneys. But this is where it gets really curious. As the law presently stands—this ill-judged, badly drafted, rushed, poorly implemented, poorly thought-through piece of legislation which has now been in place for some time—in circumstances where, as at the assessment date, the account satisfies the definition of containing unclaimed moneys, even if subsequent to that date a transaction occurs on the account, the ADI is under a legal obligation to collect the moneys in that account and to hand them to the Commonwealth. That obligation exists once the status has been determined as at the assessment date even if, as I say, after that date the account holder transacts on the account. That is clearly a nonsensical and illogical result and it reflects poor drafting and poor implementation by a chaotically disorganised government that was so desperate in its grab for cash that it did not take the time to think through the implications of how the legislation was drafted.

The consequence of the provisions operating as they do in the way that I have explained is that authorised deposit-taking institutions are placed in a remarkably invidious position in circumstances where the assessment date has arrived, as at the assessment date the account satisfies the definition such that the moneys within it are considered to be unclaimed moneys, and subsequent to that date but before the ADI hands the money across to the Commonwealth there is a transaction on that account. In those circumstances, the ADI is in an invidious position because it faces a choice between two unsatisfactory alternatives: either it must commit an offence of not transferring all unclaimed moneys to the Commonwealth or it must close the account—even though, to the certain knowledge of the ADI, that account has in fact been reactivated and the moneys in it therefore are not in substance unclaimed moneys—and transfer the contents of the account to the Commonwealth. This is a choice between two equally unattractive options. At this point I want to particularly acknowledge my year 8 English teacher, Mr Cody, who repeatedly informed his year 8 English class that the true definition of 'dilemma' is a choice between two equally unattractive options. ADIs, in the circumstances I have described, face a true dilemma. Mr Cody, who was a stickler for the definition of 'dilemma', would absolutely agree that the circumstances I have described present ADIs with a dilemma.

How have ADIs chosen to deal with this dilemma? In some circumstances, some ADIs have chosen to keep the reactivated account active, to retain the customer's balance in the account and then to pay the amount which by law is required to go to the Commonwealth from the ADI's own funds. That is clearly an undesirable state of affairs from the point of view of an ADI, and it creates this particular further problem: the Commonwealth, under the law as presently drafted, does not, in the circumstances I have described, have the legal power to return the money which has been paid to the ADI. That is so, because the way the legislation has been drafted does not contemplate the scenario I have just described in which the ADI makes payment to the Commonwealth; it assumes the payment always comes directly out of the account holder's account.

That is the backdrop against which the House is considering the bill which is before us this evening. The bill contains provisions which would, firstly, allow ADIs to exclude accounts from being treated as containing unclaimed moneys in circumstances where, as at the assessment date, they met the test. That is to say there had been no transactions on the account for the specified period of time, but subsequent to the assessment date there had then been at least one transaction. That is the first measure relevantly within the bill.

The second measure would allow the Commonwealth, in the circumstances I have described, to repay the amounts that had been paid to the Commonwealth and to repay those amounts not to the account holder but to the ADI, where it is the ADI that has paid out of its own funds to the Commonwealth.

The coalition is of the view that these amendments are necessary to correct patent, glaring and obvious errors in the poorly drafted act, which is presently on the statute books, by reason of this government's ill-judged and chaotic grab for cash.

I want to make three of brief points. Firstly, the whole reason this bill is necessary and the whole reason that there is an issue to be addressed is that the Rudd-Gillard government has made a desperate grab for cash in the Treasury Legislation Amendment (Unclaimed Money and Other Measures) Act, an act which has been on the statute books for sometime now. Secondly, the poor drafting of that act has given rise to an unnecessary burden and extraordinary difficulties for ADIs. Thirdly, I make the point that it is unacceptable that, yet again, this parliament is spending valuable time fixing mistakes in legislation which should not have been made and which were made as a consequence of this government's rushed chaotic approach to introducing and passing legislation.

I turn to the proposition that the underlying issue this bill addresses arises as a result of the government's desperate and unseemly grab for cash. Legislation was introduced following a measure included in the 2012-13 Mid-Year Economic and Fiscal Outlook. The effect of that legislation, which, as I have indicated, has been passed into law for sometime now, is that the time periods before which a bank account can be treated as unclaimed moneys has been shortened from seven years to three years. There have also been changes regarding life insurance and superannuation accounts. This was a desperate grab for cash which will net the government nearly $900 million over the four-year period to 2015-16, but the ethics of this approach are highly questionable. It calls to mind the image of a desperate parent who has so mismanaged the household finances that he or she is reduced to breaking open their child's bank account to scrabble for some coins to try to deal with the chaotic situation of the family budget.

As other speakers from the coalition have articulately pointed out this evening, there has been a storm of community protest about these extraordinary provisions. I quote from a constituent:

I am writing to inform you that today I went to my bank account to complete a transaction where I was informed my account had been closed and my money had been sent to the government.

As my member of parliament, I would like you to ask the government why it believes it has the right take my money from my account just because I haven't transacted during a certain period.

The bank is the only safe place I have to keep my money—money that I wish to keep for a time when I decide I need it. I needed money today. I had money in my account, yet, when I went to get it, I learned the government had taken it.

Another comment I have received from a constituent in West Pymble states:

I am just writing to say that I am appalled at the Labor Party's grab on inactive accounts after 12 months. My four children have a small super fund and a savings account in that super fund which holds a small balance under $1,000.

There has been no activity in this account for 12 months, and now the government has absconded with their funds and we are faced with what will undoubtedly be an administrative nightmare just to get our own money returned to us. This is a hassle we do not need and bitterly resent.

It is bad enough paying thousands in taxes every year without the government stealing money from our bank accounts. We understand the principles behind remitting funds in inactive accounts to a government agency and have no argument with the basic objectives, but the new 12-month rule is just a nightmare and an extremely inconvenient government intrusion into our personal affairs for no useful purpose.

We feel we have been mugged and our money stolen. It is an absolute disgrace.

I think my two constituents, who I have quoted, have put this matter very well.

The second point I put this evening is that authorised deposit-taking institutions have been put into a very difficult position in needing to comply with this legislation. For example, the Australian Bankers' Association had this to say:

The ABA believes there is no benefit for consumers from the changes. The banking industry did not support the changes to the law.

Since the new law has been introduced, the ABA has been working with the Treasury to address unintended consequences and to ensure necessary technical amendments are made.

Banks must comply with these new laws. Banks have faced legal and technical issues trying to implement a new unclaimed monies regime without sufficient time or adequate rules to support the implementation of the new regime.

Isn't that just the constant chorus from every stakeholder dealing with this government: 'without sufficient time' and 'without adequate rules to support the implementation'?

In the brief time remaining I want to turn to my third point, which is that the whole reason this bill is necessary tonight is to correct grave and gaping errors in the act that presently sits on the statute book and which was passed into law only quite recently. This occurred because the government rushed it through. When the bill was before the House we urged the government to slow down and we urged it to take time to address the issues carefully, rather than rushing the bill through in a disorderly and chaotic way. Of course, yet again, the hopelessly chaotic, disorganised and unprofessional Rudd-Gillard government failed to accept that advice. As a result, they have created an extraordinary mess and it has now been necessary to pass this additional piece of legislation to correct the mess. This bill makes necessary changes, but to a very bad underlying piece of legislation.