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Monday, 10 February 2020
Page: 592

Senator CICCONE (VictoriaDeputy Opposition Whip in the Senate) (20:29): I want to rise tonight to make a couple of remarks about the bill that's before the Senate this evening obviously in relation to the fintech industry. There's no mistaking the significance of this bill—and I know Senator Bragg mentioned this as well—and what it means for modern Australia. As other senators have also well articulated in the debate so far, it's important that Australia supports a domestic fintech industry. It supports those who want to try something new—and, dare I say, to have a go—and, more importantly, be supported by government in that endeavour. These days we call those who want to have a go entrepreneurs and we call their businesses start-ups. Some may claim that the Labor Party isn't the natural home for these types, but I must say I claim that Labor is the party for them.

In considering this bill, I want to make sure that the Senate does take note that it is important that we do our bit to ensure that this piece of proposed legislation provides enough avenues to support those who are trying to do something new, and this is what this bill seeks to achieve. It also seeks to establish what often is termed a sandbox and to provide regulatory relief to innovators. This relief, this exemption from the ordinary burdens of red tape, allows these enterprising individuals to create innovative products and services, and fast-track their delivery to the market. In allowing such concessions, however, it is important that we are carefully balancing them with the needs to safeguard consumers. These ordinary Australians for whom these products and services may have the potential to profoundly benefit their lives deserve our support as well, and it is these people whom we must also consider as we debate the merits of this particular bill in the Senate.

It is important that, in speaking on these matters, we are clear about exactly what we mean. For instance, the term sandbox, as I mentioned before, is a convenient term that is frequently used to describe the outcome of the provisions of this bill, but what exactly is a sandbox? In this context, it is really a closed test environment designed for experimenting with web or software projects. In the example of the Treasury Laws Amendment (2018 Measures No. 2) Bill 2019, these web or software projects are financial products or services. A sandbox provides an important level of flexibility in relation to regulatory standards that otherwise would not be available.

Financial technology is already a significant industry in Australia. A recent report by Ernst & Young found that almost 60 per cent of Australians are digitally active and are already using some form of financial technology in their lives. And Australians really are at the forefront of these products. We're the early adapters of many IT-innovative programs and apps on mobile phones. Australian fintech firms span across five different areas, including transfers and payments; budgeting and planning; savings and investments; borrowing and lending; and insurance. These are widely disparate areas, but Australians welcome innovation where it leads to better outcomes in all of these.

In December 2016 the Australian Securities and Investment Commission launched Australia's very first sandbox. It wasn't quite the success that we had hoped for, and since then only seven companies are using them. There were 15 in the pipeline, sure, but still only seven were in the space making the most of it. To provide some context to this number, in a similar period the United Kingdom had 50 entities making use of its regulatory exceptions; Singapore had 30; and there were nine in Hong Kong. Clearly, the settings we've got right now aren't working. Clearly, we're not where we need to be. This is why Labor supports the bill and the spirit of this bill, but we need to do a much better job and get ourselves at the front of the pack.

Labor want to see a flourishing and expanding financial technology sector in Australia. We support the establishment of a fintech sandbox to provide some regulatory relief when needed to allow for innovative products and services to be brought to the market. Nonetheless, while accepting this, we cannot allow consumers to be negatively impacted; they must have the kind of protections that they would expect and we would expect from us as politicians and as their representatives on this matter. Any framework that we seek to establish should be used by start-ups who are genuinely seeking to deliver something that is innovative and that seeks to provide a clear consumer benefit. Whilst innovation can produce great benefit, we must bear in mind that not every innovation is necessarily in the consumer's best interest. This is especially so in some financial services—a naturally complex market where bad products or service design can have disastrous consequences for individuals. Sandboxes should be for those who are seeking to make genuine innovation, not just those who are seeking to skirt the law. Labor's amendments will require companies accessing regulatory relief through the fintech sandbox provided for by this bill to show that they are using it for products and services that are generally innovative and will benefit consumers. We want innovation and we are the party of innovation, and our amendments will ensure that we have the regulatory relief that is necessary without compromising on protections for ordinary Australians.

Before concluding, I would also like to recognise the important work that is being done by members of the select committee, with Senator Bragg as the chair and Senator Smith as deputy chair. The fintech committee is looking at these kinds of challenges and the opportunities this bill seeks to address. I particularly would like to acknowledge all the senators for their work to date and look forward to their report in this place.