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Friday, 12 June 2020
Page: 4080


Mr THISTLETHWAITE (Kingsford Smith) (10:58): The Australian Prudential Regulation Authority Amendment (APRA Industry Funding) Bill 2020 provides for funding of APRA through industry levies. The government learnt the hard way about the importance of adequately funding our regulators that look after financial services in this country when in the 2014 budget, we all know, they cut the funding of ASIC, the Australian Securities and Investments Commission, which meant that there were staff losses and a lot of expertise, a lot of prosecutorial expertise in that particular regulator were lost. Then we had the wealth management scandal hit the Commonwealth Bank, followed by CommInsure and a number of insurers, which resulted in the banking royal commission. In that royal commission, we saw just what damage was done to regulation of financial services by those cuts that were undertaken by the Abbott government in 2014. So the government learnt the hard way, but it's pleasing to see that the regulators, in the wake of that, have been given additional funding. This bill provides for industry levies to ensure that there is adequate funding for the work of important regulators, particularly APRA.

The levy imposition amendment bill changes schedules, increasing the statutory limits on the amount of levies that APRA can collect from the entities it prudentially regulates. The bill also makes amendments to how indexation factors are used to index the statutory upper limit. These changes will allow the levies to be more fairly distributed. This is an issue that has been particularly identified by some of the smaller banks. The current upper limits result in large entities paying less as a percentage of APRA costs and smaller entities paying more. Many of those smaller banks have been disproportionately affected.

This bill will allow for a wider range of APRA activities to be funded through industry levies as well. That includes the costs incurred in connection with supporting the integrity and efficiency of markets in which leviable bodies operate, the costs incurred in connection with promoting the interests of consumers in markets in which leviable bodies operate and the costs relating directly or indirectly to regulation of leviable bodies. All industry funding levies charged by APRA are set out in the legislative instruments approved annually by the regulators.

It's important that we have adequately funded regulators in financial services. The royal commission that we recently had proved that. But it's also important given that many of these regulators oversee what was the fourth-largest pool of investment funds anywhere in the world, in our wonderful superannuation system. Unfortunately, we've seen the government fail to heed both the advice of experts and the warnings Labor issued in respect of the measures that they've put in place regarding the early release of superannuation to deal with COVID. Of course we know that, under the early release scheme, people can apply in two lots for up to $10,000 for the early release of their superannuation.

There are two points that Labor made about these changes when they were proposed. The first is that people should seek financial advice. Seek independent financial advice before you dip into your pool of superannuation savings. We also warned the government that this scheme may be subject to fraud because it had been rushed and the checks and balances hadn't been put in place for people to adequately have a look at whether or not some people were rorting the system. The government has ignored both those concerns. We've had some of their MPs and senators actually encouraging people to withdraw money from their superannuation.

On 16 April, Senator Bragg sent an email to constituents saying that, if you need super, 'you should apply for it'. I was alerted to this by one of my constituents when she sent me a copy of the email that she received from Senator Bragg. This person said to me: 'It's highly inappropriate to receive financial advice from an unlicensed senator.' I completely agree with the constituent who sent me that email. Senator Bragg should not be giving financial advice to vulnerable Australians during this difficult time, firstly because he's not licensed to and doesn't hold an Australian financial services licence. But he should not be using Australian workers and potentially risking their retirement savings because of his ideological crusade against industry superannuation—

Mr Tim Wilson interjecting

Mr THISTLETHWAITE: a crusade which I suspect is shared by the member for Goldstein, who's rudely interrupting over there. The correct advice is to advise Australians to seek advice from a registered financial adviser and assess whether or not accessing your superannuation early is the right thing for you to do.

We've seen what has occurred with this early release scheme and the fraudulent activities that have been uncovered by the AFP and the ATO. Some $100,000 worth of people's superannuation savings has allegedly been stolen from 150 superannuation accounts. Labor warned the government about the potential for fraud in this scheme. We wrote to the Assistant Minister for Superannuation, Financial Services and Financial Technology, Senator Hume, on 1 May and asked her to put in place measures to ensure rigorous checking to combat potential fraud. The very day that the minister sent a letter out to the industry superannuation funds assuring them that there was no fraud and saying, 'Substantial checks are in place to guard against fraud,' the AFP was notified that more than $100,000 had been stolen from people's superannuation accounts. Senator Gallagher uncovered in the Senate, through the COVID committee hearings, that at least three government ministers had done nothing about that alleged fraud. We say to government MPs and senators: this is an extremely difficult time for many Australians, and you need to be on your game. Many programs have suffered from poor planning and poor execution by this government, and the early release superannuation scheme is one of those.

On 1 June, a couple of weeks ago, AlphaBeta, a consultancy firm, released some analysis of real-time bank transaction data and a sample of 13,000 Australians who had accessed their superannuation early through the early release scheme. That data, and what it uncovered, was quite startling, but it was also quite horrifying, because the sample of 13,000 people showed that 64 per cent of them had spent their early release superannuation on discretionary items like furniture, alcohol and, worryingly, gambling. I think 10 per cent of that expenditure had gone on online gambling. Forty per cent of those who had accessed their superannuation had not actually suffered a drop in their income so far due to COVID-19, and that's the startling statistic—that 40 per cent of those people didn't actually suffer a drop in their incomes as a result of COVID-19. That's the reason why Labor and financial planners were saying to Australians, 'Make sure you get independent advice before you dip into your superannuation.' It appears, based on the AlphaBeta analysis, that the money was being used for lifestyle reasons rather than for necessities and to get by.

What does that mean? The effect of that is that this scheme will weaken the ability of Australians to save for their retirement. As a result of this, we're going to see many more Australians retire with inadequate savings in their superannuation accounts. It's going to reduce superannuation balances. We all know the compounding effect of withdrawing money from your superannuation account now and what that can do to superannuation balances at retirement age, particularly, unfortunately, for those who have breaks from the workforce, and most notably it's women in those situations. Again, this is another policy from this government that detrimentally affects women compared to men. We've seen that with the announcements that they made this week regarding the withdrawal of childcare support in this country, and it's a shame that the same effect is going to be prevalent in this early release superannuation scheme because more women are going to be affected by withdrawing money from their superannuation accounts than men, simply by dint of the fact that they have smaller balances and they take breaks from the workforce.

You're also going to see in the future, as a result of this, more Australians relying on the age pension because they won't have an adequate retirement income. In the context of trying to get the budget back into a sustainable position, we all know that the budget deficit coming out of the COVID-19 pandemic is going to be substantial. When you're talking about trying to stabilise the budget, the worst thing you can do is ensure that more Australians have to rely on income support through the pension into the future, but that is exactly what this government's policy will end up doing.

It's also a great shame that this policy's effect will be to reduce the pool of investment savings that exist in Australia into the future to spur business investment and to provide funding for infrastructure investment in this country, which is going to be crucial to ensuring that we get the economy back on a growth trajectory, get productivity moving again and ultimately have the national income to reduce some of that budget deficit into the future. We've seen what's happened to business investment in this country under this government. Basically, since 2013, when this government was elected, business investment has fallen off a cliff in Australia because of this government's policies and its failure to attract and incentivise business investment in this country. Reducing the pool of investment savings by having less in people's superannuation accounts won't help spur business investment into the future but will simply prolong the recovery of the Australian economy.

All in all, what we have seen from this government's management of policies relating to COVID-19 is their incompetence writ large. It basically proves that this government are not good administrators. They are not good at delivering policies that are meant to help Australians deal with the COVID-19 situation. We have seen with JobKeeper that they overestimated the number of people who would be accessing JobKeeper to the tune of $60 billion. They found $60 billion down the back of the couch, because of their incompetence in managing this scheme. We've seen their incompetence writ large with robodebt: 370,000 Australians have been affected by the administrative blunders of this government and are $721 million worse off because of this government's incompetence. Now we are seeing through the fraud related to the superannuation early release scheme and the reductions in the pool of investment funds that this government are not good administrators.

The government are not good at managing government policy on behalf of the Australian people. It's unfortunate that it's the Australian people who will suffer into the future and that the Australian economy will be prolonged in its recovery and weakened into the future.