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Tuesday, 5 December 2017
Page: 9755

Senator KETTER (Queensland) (19:02): It's a pleasure to follow Senator Williams in this contribution. I acknowledge his longstanding interest and advocacy in this area, but, I must say, I can't share his confidence in the new authority that's been set up as a result of this bill. Whilst I hope that it does work for consumers, there are some signs here that we are going to see some difficulties.

I rise to make a contribution on the debate on the Treasury Laws Amendment (Putting Consumers First—Establishment of the Australian Financial Complaints Authority) Bill 2017. I want to put on the record, at the outset, my disappointment about the real reason we are debating this bill today. It's because the Prime Minister, for so long, resisted Labor's call for a royal commission into the banks. After 601 days of pressure from the Australian community and from Labor, the government has finally accepted the reality that there needs to be a banking royal commission. The Prime Minister has been dragged, kicking and screaming, to that conclusion at the behest of the banks. He has even described it as a 'regrettable' outcome. If the Prime Minister had listened to us earlier, we might now be discussing the findings of a royal commission, which could have been running for the last couple of years. We could have been looking at the findings today instead of debating another part of the piecemeal approach, which has been used as a foil against a royal commission, which is his attempt to look at consumer protection in the financial sector.

It's not just the Prime Minister's legislation agenda that is in pieces, as we close out 2017. We can see from the events of last week, in the wake of the LNP's dismal performance in the Queensland state election, that this coalition is deeply divided. As Senator Canavan keeps pointing out, they keep separate party rooms and have separate meetings. Now we hear the Queensland Nationals want to run a separate campaign in the Sunshine State. They do not want the Prime Minister anywhere near them. I see that the federal member for Flynn is on board with that strategy. The Gladstone The Observer reported, on 29 November, Mr O'Dowd as saying:

I can see us becoming irrelevant if we keep heading down the path we're headed.

It seems he also agrees with Liberal Senator Ian Macdonald that the Prime Minister isn't representing regional Queenslanders, saying:

We're becoming, in the eyes of the public, more city-orientated than rural and regional.

So there is something that they agree on, but the divisions run deep—so deep that the news headlines last week proclaimed an LNP divorce. Again I refer to the federal member—

The ACTING DEPUTY PRESIDENT ( Senator McCarthy ): Senator Ruston, on a point of order. What's your point of order?

Senator Ruston: My point of order is that I don't believe the senator is actually addressing the matter before the chamber. There is no relevance at all to his comments to the bill.

The ACTING DEPUTY PRESIDENT: There is latitude with the bill, Senator.

Senator KETTER: To assist, I will come back to the issue. These were important scene-setting comments to be made in relation to my contribution. Even though the Prime Minister has now finally seen sense and announced a banking royal commission, he still wants to keep running this protection racket for the banks. Let's not consult the banking victims on the draft terms of reference and let's try to distract from the conduct of the big banks by targeting industry super funds. How predictable it is that this government, which has for so long acted at the behest of the major banks, would find it irresistible to take the opportunity to get square with the banks' major competitors in the occupational superannuation space.

The fact that the union and worker reps are participating equally with employers on the boards of industry super funds and that those funds are outperforming the major banks with returns and lower fees doesn't stop the government's ideological war on unions and its slavish support for the big banks. It's little wonder that on 1 December the Gladstone Observer reported the member for Flynn as 'remaining cautious about whether he will back the establishment of a $75 million royal commission into the banking sector'. It's clear to me that National Party members have given up on the Liberal Party because they know deep down that the government wants to stand up for the big banks, not ordinary Australians. The ad hoc, piecemeal legislative approach by this government has been heavy on politics but light on policy, with no real outcomes for banking victims.

Now, we have a royal commission. We need to make sure we get the terms of reference right. The government needs to stop running its protection racket for big banks. We know that the Australian public are sick of hearing about the big banks' huge profits and million-dollar bonuses for CEOs, while the little people get ripped off. In fact, the Prime Minister all but acknowledged this when he said on radio last year:

We will get a low-cost, speedy tribunal to deal with these types of consumer complaints, customer complaints against banks, and this will be real action.

But it seems that this statement was more about paying lip-service to his backbench, trying to hold off the inevitable, and less about new action. In fact, rather than establishing a new tribunal to deal with consumer complaints, through this bill the government is actually proposing to scrap the tribunal that we do have.

We need a fair dinkum royal commission to provide a transparent, thorough investigation into the banking sector, a process that the public can have confidence in. That's why we have been calling so long for a royal commission. We want to see action and recompense for consumers who have been ripped off. I know Senator Williams has been at a number of the hearings that I have been at, where too many times we heard examples of ordinary people being mistreated by the major banks and their subsidiaries. But, all the while, we've seen the Prime Minister coming up with thought bubbles to deal with this pressing public policy issue.

I talked last week about the Prime Minister's thought bubbles on a range of issues—things that pop up out of the Prime Minister's head—and then he backs away from them, and they disappear without a trace. We all remember the propositions of states levying income tax, Commonwealth funding for Catholic and private schools but state funds for state schools, increasing the GST, reining in negative gearing excesses. The Prime Minister floated all of these propositions and backed away from them. I encourage the Prime Minister now to see sense and back away from scrapping the Superannuation Complaints Tribunal.

In September this year this bill was referred to the Senate Economics Legislation Committee, of which I am the deputy chair. The committee examined the Ramsay review in detail, along with another 31 written submissions. We heard evidence from stakeholders at two public hearings, on 9 and 10 October in Canberra and Sydney. In its report tabled in October the committee was in agreement that parts of the AFCA bill have merit, and I will come back to that. However, Labor strongly disagree with the government when it comes to the abolition of the SCT. We are seeking amendments to the bill to ensure that the tribunal and its important functions are retained.

First, let's just recap briefly why the government has introduced this bill, apart from the obvious reason of trying to quell demand for a royal commission. The government acknowledges that consumer protection in the banking and financial sector is a mess. The current system offers two different ombudsman services: the Financial Ombudsman Service and the Credit and Investments Ombudsman, both overseen by ASIC. Unfortunately, after myriad minimergers and reforms, the system has broken down to the detriment of consumer protection in the financial services industry. Currently the funding model is not working properly. Consumers are confused about where to go for dispute resolution. Financial providers are confused about which dispute resolution service they should be a member of—some are so confused they have joined both. Other providers—namely, debt management schemes—are not members of either. Further, the financial threshold at which claims can be brought by consumers is outdated, because the average mortgage has grown considerably in recent years, and the current threshold precludes many small businesses accessing free dispute resolution because the value of their claims falls just outside the limits.

For these reasons the bill proposes to merge the FOS and the CIO into a one-stop-shop for consumer complaints. On the face of it Labor have no problem with this element of the bill. Our dissent relates to the SCT. The committee's inquiry has clearly shown that the new one-stop-shop authority will not have any new or additional powers that the existing dispute resolution bodies don't already have. Remember the Prime Minister trumpeted that there would be real action for consumers. The truth is that, in relation to non-superannuation disputes, this bill is really just a rebranding exercise. The committee noted concerns from submitters and those who gave evidence at hearings that amalgamating the ombudsman services would lead to bigger organisations taking control and affordability issues for small operators. I take the opportunity here to acknowledge constituents in Queensland and local businesses who wrote to my office about this aspect of the AFCA bill. While Labor does not oppose the merger of the ombudsman services, I do encourage those constituents who have contacted me to take every opportunity to provide their input again when any new arrangements are reviewed in the future.

As I've just said, despite the way that the government has wasted time and resources going about this, Labor is not opposed to the government's rebranding exercise. It's clear that the Nationals are putting a lot of effort into rebranding at the moment, so perhaps the Prime Minister could get some advice from them about that and the rebranding of the dispute resolution procedures. But, as I said, what we're strongly opposed to is the proposal to abolish the SCT as part of this bill. The tribunal was legislated by the Keating government following the Labor government's historic introduction of a superannuation guarantee in the early 1990s. In my first speech to this parliament I pointed to our world-class occupational superannuation system as a crowning achievement of Labor's industrial and political wins and I pledged to continue supporting improvements to enhance the capacity of Australian workers to retire with financial security and dignity.

Today we fight to stop the government from taking us backwards through abolishing the key consumer protection body for free dispute resolution of superannuation complaints. Instead of strengthening consumer protection for superannuation complaints and getting real action, the government wants to water it down by lumping it in with the ombudsman merger. As it stands, the Superannuation Complaints Tribunal is a statutory body and it operates with a couple of key differences to the ombudsman model. The funding, for example, comes through the government rather than directly through industry. The types of disputes put before the tribunal are often complicated and require a high degree of specialist technical knowledge to resolve. The tribunal also has regard for the legality of disputes, not just fairness.

In making the case to tear apart the tribunal, the government points to the findings of the Ramsey review: that it is chronically underfunded, it's outdated, inflexible and takes too long to resolve disputes. These are some of the conclusions. These findings should come as no surprise, though, since, under the Abbott-Turnbull governments, the tribunal has seen its funding cut and staffing levels slashed. It is no wonder the timeliness of resolutions has suffered as a result and this is at a time as one of our biggest cohorts, the baby boomers, are entering their retirement phase and about to start drawing down on superannuation funds. You would now think it's about time to invest in consumer protection measures around superannuation, not to destroy them. It's not just the baby boomers who are interacting more with their superannuation funds.

The Ramsey review identified that over 14.8 million Australians have at least one superannuation account, with assets across the system totalling $2.2 trillion. With most super funds offering members opportunity to track their super balances online these days, consumer understanding about superannuation products is likely to grow and with it complaints and the need for dispute resolution. We need to encourage consumers to take an active part in the superannuation system and their individual fund or funds. This includes education about when to question a product's validity. If we don't have a clear-cut complaints process for superannuation to stand alone, we risk decreasing consumer understanding and thus access to free advice and dispute resolution services.

The tribunal, as it stands, also deals with complaints about superannuation related life insurance, which can be particularly emotive where complaints are concerned. In these cases, the tribunal not only draws on its technical expertise but on the sensitivity of the issues as understood by the experts and its enshrined confidentiality provisions around the hearing and collection of evidence. I have had some experience in my former life in this area of disputes in relation to superannuation, particularly life insurance entitlements. As an alternative director of the REST Industry Super, we came across many heart-wrenching cases of young members of the superannuation fund who tragically passed away in motor vehicle accidents, for example. With separated families, we found there was contest over who was to be the beneficiary of the life insurance policy held by the deceased member of the superannuation fund. So these are highly complicated matters and they're very much emotive issues.

If this tribunal is abolished and superannuation complaints are directed to the one-stop shop, it's likely that the specialist knowledge of the tribunal model will be lost or, at best, diluted. There is absolutely no guarantee that confidentiality will be respected in the same way. Merging the tribunal into a non-statutory ombudsman service also strips it of other features, namely the enshrined appeal rights for both process or administrative issues and judgements. Only judgements would be able to be appealed under the government's proposal, leaving consumers no recourse if their case was refused for hearing in the first instance. The tribunal can compel parties currently to attend hearings and produce documents. The tribunal can also attach a third party to a dispute.

The government says it will take some of these powers and give them to AFCA for use only in superannuation matters, effectively saying, 'This is a one-stop shop; hang on, actually, a third of it operates differently.' Surely, it would be simpler to leave the tribunal as it is and start funding it properly. The government's argument for merging the FOS and CIO is that consumers are confused about where to go for help. To be fair, we did hear from the consumer organisation Choice, who did offer some support for that proposition. I argue that this works in reverse, though, where superannuation is concerned. It is much more difficult for a consumer to figure out they should present their superannuation complaint to something called the Australian Financial Complaints Authority than—

Debate interrupted.