Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
 Download Current HansardDownload Current Hansard    View Or Save XMLView/Save XML

Previous Fragment    Next Fragment
Monday, 20 August 2018
Page: 7805


Mr HUSIC (Chifley) (18:44): It is a pleasure to follow the member for Hotham on this legislation, the Treasury Laws Amendment (Financial Sector Regulation) Bill 2018. The legislation was characterised by the member for Hotham as being microsteps. There is no better term—if I can say that through you, Deputy Speaker, to the member for Hotham—to describe some of these. They are released with a flurry and they're announced as a big move, but you need to look at it in the context of all the other things that have been promised and not delivered. This is the problem with the government at its most critical juncture: it is addicted to announcement and deficient on delivery, regularly, particularly in the fin-tech space. On the fin-techs, as was pointed out by the member for Hotham, the fact is that we do need greater competition. Labor has argued that, in the financial services sector, having more options for customers and greater transparency, as the member for Hotham indicated, is vital. Ultimately, I might add—coming to another point that the member for Hotham raised—what is critical at this point is the need for greater trust.

Consumers clearly feel that they are not getting the best deal possible. They do expect better from their financial services system and particularly from the larger institutions. I dare say that this is why, in terms of Australia's fin-tech community, this community is so big. The reason is that—as has been seen with disruption elsewhere to industry sectors, where smaller firms apply technology in a smarter, truer way—they are going for sectors that are bloated, slow to change and not providing the services that are required or wanted or desired by consumers. Where the profit margins are so large, the smaller firms go in, and that's why the fin-tech community here has had so much initial success. But, having said that, what they are confronted with is obviously, through the disruption, a need for us to change our regulatory frameworks. The tremor that is felt through that reaches here in the form of all these new laws that have to be considered by the parliament.

This isn't the only bill. In my contribution I want to reflect on a number of pieces of legislation that have been touted by the government as taking a big step forward with respect to fin-tech reform and helping the local community. A number of pieces of legislation are out there, but, before they even get to this place, there's consultation round after consultation round after a draft item of legislation is put forward. In particular, industry bodies that have been formed, especially to represent the fin-tech community in Australia—notably FinTech Australia—have to consult with the Treasury, have to put in submissions and have to put in their argument for a financial regulatory framework that is much more amenable to the smaller firms.

I went to FinTech Australia's website just to see the list of submissions. They put in a submission to the Attorney-General on anti-money-laundering and counterterrorism regulations; a submission to the consultation paper regarding digital currencies under the AML/CTF regime; supplementary submissions to ASIC papers on regulating digital financial advice; and submissions on equity crowdfunding, and we know how long that's taken to amble its way through the parliamentary chambers, but whether it gets through is another question. They also had to provide a submission on a discussion paper on the GST treatment of digital currencies; a submission on the exposure draft legislation on GST treatment of digital currencies; an initial submission to the Productivity Commission report on data availability and use; a submission to the ACCC regarding collective bargaining with Apple; a submission to the draft Productivity Commission report on data availability and use; a submission to the Australian Treasury on the open banking inquiry; a submission on screen scraping to the Australian Treasury open banking inquiry; a submission on opening banking implementation earlier this year; a submission on non-ADI lender rules, which we are discussing now; and a submission by them and some others on changes in relation to skilled migration use. I could go on. I won't detain the House further, but that is the list of submissions that have been put forward. They're doing a huge amount of work. They expect the legislation to get through and what happens?

I mentioned equity crowdfunding. The second group of laws that were put forward in relation to that were introduced to this place in September last year by the Treasurer to fix up a set of laws that we urged him not to put through because they would be too cumbersome. He didn't do it. He put those first laws through and then came back, only mere months later, to put another set of laws through to change equity crowdfunding, as a way to help smaller businesses and start-ups get access to capital. He hasn't even had the wherewithal, despite regular needling by the opposition, to put it on for debate in the Senate. It won't even go to the Senate this week. What'll happen is we'll come back in September to debate laws that were introduced last September. That's fin-tech reform Scott Morrison-style—the Treasurer's style.

In terms of the regulatory sandbox arrangements to allow fin-techs to explore the development of new products and services without the heavy regulatory approach that is normally accustomed or expected in the delivery of these financial services products, when the initial arrangements were announced in 2016, in a blaze of glory, they discovered that they weren't such a smash hit. In fact, only four fin-techs used the arrangements. The government was then forced to reform those arrangements in legislation brought to this place earlier this year. Where's that legislation? Again, it's stuck in the Senate. It is not being debated this week, and we'll come back in September to debate it.

We also had, for instance, the comprehensive credit reporting arrangements stuck for ages, in terms of consultation. There was no end in sight to the consultation process. Then, suddenly, it's brought in, and the government fails to acknowledge that a separate piece of work in relation to the Attorney-General's review on hardship provisions—which is pretty important in terms of credit history and those people who may have suffered poor credit history because of hardship that they've experienced, and how that would be contemplated within a new regime—hasn't been finished, this area of review by the Attorney-General's Department. We are then pressured to support a regime absent hardship provisions, because the government can't do its homework properly in relation to that element of reform. Again, it is very important to the fin-tech community that this comes through and, again, it was stuffed up by the government—addicted to announcement, deficient with delivery. We often get this in this space.

The other thing that has been raised with me is that announced with a flourish earlier this year was a UK-Australia fin-tech bridge that's supposed to allow for greater cooperation between the UK and Australia in supporting the activities of fin-techs in our respective nations. On paper, that sounds like a great idea. But what's happening now is that fin-tech firms are raising with me their concerns that this is ushering in a period of what they have characterised as 'digital recolonisation'. The fin-tech arrangements in the UK are very well established, and the firms are growing very strongly. In our case we haven't had either time for local fin-techs to mature or a supportive regulatory framework to encourage maturation. What will likely happen is that, if we harmonise our arrangements with the UK, particularly in terms of open banking—and I understand, for instance, that there are key officials in Data61 that are guiding the development of our own open banking arrangements—

Mr Wood: Data61!

Mr HUSIC: Data61, yes. We've got officials who had been working on the establishment of open banking standards in the UK who have been deployed here in Australia for our open banking arrangements. The concern is that you've basically got an uneven playing field insofar as you've got firms that have become accustomed to a framework on the other side of the country coming in here, where we haven't even had time for our own people to see the framework put in place or have time to adjust to it. Again, all these announcements have been made and yet the government doesn't follow through to make sure that what it's doing will be delivered upon in a timely way, in the period in which they were announced.

This legislation, on its face, is quite good, lifting the permissible ownership stake in smaller financial services firms, particularly start-ups. While capital is flowing better to a lot of these start-ups now, and the issue of capital drought is not as evident now as it was a couple of years ago, there are still instances where it may be hard to get a number of investors to back firms in this area that would be capital-intensive and need a lot of support. If you can find an investor who is prepared to back you, and you can provide some leeway through the legislative ideas that are being advanced through this particular proposition that we are debating now, that is a good thing. There's no doubt about it. As the member for Hotham, the shadow minister, indicated, we are happy to support it. My question is: when are we actually going to see this eventuate? We have said we are not going to oppose the bill, but, when it goes to the other place, will it even get on the legislative program to be passed?

As I said, if you look at equity crowdfunding, if you look at the fin-tech regulatory sandbox, if you look at CCR and if you look at this, all of these are reforms that are put forward and they all get logjammed. As I have previously said, I think the Treasurer is the faux friend of fin-tech. Despite all his claims that he supports the sector, he doesn't deliver for them. And he had the temerity to say to the fin-tech community a few weeks ago on open banking reform: 'I have put forward all these great ideas. Don't stuff them up'—as if they are accountable for his stuff-ups, as if they are accountable for the quality of his ideas or his homework. That is a ridiculous proposition. There is no way the fin-tech community in this country should be held accountable, wholly and solely, for the Treasurer's work—poor work or otherwise. The Treasurer should be accountable for the quality of the work that is being done and doing it in a timely way. He likes to create publicity for himself. He has put together a fin-tech advisory group. He brought a lot of people with serious clout onto that advisory committee. Look at the range of people who are members of that committee. He consults with them and they must be scratching their heads. They come to these meetings with the Treasurer and put their ideas forward expecting to see legislative reform that makes it easier for fin-techs to deliver new products and services to inject serious competition into financial services in this country—and it goes nowhere because ScoMo is on the go-slow. He won't put these pieces of legislation through. We get this piece of legislation we are debating now, and you've seriously got to wonder whether it will see the light of day this calendar year. If they are going to be serious about this, they need to make sure that, once it has gone through the House, it actually gets onto the Senate legislative agenda and gets passed and gets implemented as quickly as possible.

The other big fear is that, in the meantime, you don't know what is going to happen on that side of the House. There are all sorts of questions about whether we are going to have fundamental changes in the face of the government. So you would have to wonder whether the legislation logjam will get worse. So they should get on with it, stop using the fin-tech community for publicity purposes, do the right thing by them and make sure the regulatory framework in this country is fit for purpose, modernised, up to date and allows the emergence of a sector that can provide real competition, alternative products, better services and, ultimately, as I made reference to in my submission earlier, a rebuilding of trust that is so badly needed in this sector given some of the things that have been reflected upon in the contribution by the member for Hotham.