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The Commonwealth Bank has yet again made the case for a Royal Commission into the banking and financial services sector, with the bank releasing an update list of the costs of current rip offs and scandals under the cloak of the resignation of the Chief Executive Officer.
Today under the cover of the announcement regarding Ian Narev’s impending resignation and in the wake of the allegations of more than 53,000 breaches of money laundering and counter terrorism financing laws, the Commonwealth Bank has itself provided more reasons to support Labor’s call for a Royal Commission – with examples of insurance rip-offs, employee entitlement rip-offs, credit card overcharging and continued ASIC investigations.
Today the Commonwealth Bank has reported:
- It will repay more than $10 million to 65,000 customers who were sold consumer credit insurance they would never be able to claim against because they did not meet the appropriate employment criteria
- A sharp increase in the amount of superannuation payments owed to part-time staff from around 7,000 staff to 36,000 totalling $13.8 million plus interest
- ASIC is investigating cases where CBA customers were ripped off with inflated home loan protection insurance premiums
- ASIC is investigating claims that customers were receiving personal advice rather than general advice during the sale of Essential Super
- The Bank will refund up to $5 million in credit card charges on disputed transactions.
Last week the Treasurer said that “all options” were on the table when it came to the Commonwealth Bank but that ‘tough talk’ has been shown now to be nothing more than empty rhetoric. It’s clear that the only option left to the Turnbull Government is a Royal Commission.
It’s time for the Prime Minister and Treasurer to stop protecting their banker mates and instead stand up for banking customers.
What will it take for Malcolm Turnbull to show some leadership and join with Labor, the majority of the Senate cross-bench and members of his own backbench and establish a Royal Commission immediately.
This is a joint media release with Matt Thistlethwaite MP, Labor's Shadow Assistant Minister for Treasury.
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The Senate today passed Labor’s access to justice policy, which will help small businesses take cases of anti-competitive behaviour to court.
Currently, small businesses are less likely to take up private litigation against anti-competitive behaviour.
This is because big businesses have deep pockets and armies of lawyers, so the risk of small businesses being bankrupted by legal fees is a significant disincentive to taking action against anti-competitive conduct.
But this bill will allow a small business request a ‘no adverse costs order’ early in a court case. If the judge decides that the case is in the public interest, the small business will not have the risk of paying the other side’s costs if they lose.
The bill will now return to the House of Representatives, where Malcolm Turnbull has the chance to show whose side he’s on – small business or multinational goliaths.
This reform is based on evidence of what works. Now it just needs the Turnbull Government to stand up for the little guys.
THURSDAY, 10 AUGUST 2017
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The Turnbull Government needs to get serious about reforms to consumer protection laws in the wake of an announcement today by the corporate watchdog that QBE will refund $15.9 million to 35,000 customers who were sold add-on insurance that they didn’t need.
Today’s announcement by ASIC is clear evidence that consumers continue to get a bad deal under current laws and reforms need to be made to improve consumer protections against junk insurance.
ASIC has found that QBE Guaranteed Asset Protection (GAP) insurance:
- was sold where there was unlikely to be a gap between the insured value of the car and the loan balance, for example because the customer paid a large deposit
- duplicated existing cover held by consumers
- provided consumers with more insurance than they needed
ASIC also found that QBE Consumer Credit Protection (CCI) insurance was sold to young people who had no dependents and who were unlikely to need the cover.
According to ASIC: “CCI has long been associated with poor consumer outcomes in Australia and overseas, including consumers being unaware that they have purchased CCI and consumers being ineligible to make a claim on their CCI policy.”
In April 2016 the Government announced that it would bring forward draft legislation by the middle of this year on the product intervention power which would afford the regulator the powers to ban products such as these altogether.
To-date we have seen no legislation and Treasury officials confirmed recently that drafting of the laws had not yet begun.
The longer the Government drags its heels, the higher the number of vulnerable consumers who will be signed up to insurance products they don’t need and be ripped off.
Reforms to protect against add-on insurance look like going the same way as the Turnbull Government’s much hyped but not delivered credit card and small amount credit contract reforms.
This Government is pretty quick to make promises when it wants a headline but then does nothing to deliver much needed reforms.
The Turnbull Government is more focused on division and disunity internally rather than doing the job they are elected to do and which, when it comes to junk insurance, would be delivering reforms which protect consumers.
WEDNESDAY 2 AUGUST 2017
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Debt management or "credit repair" services can make some alluring promises to those with financial problems. They say they can silence the phone, turn away the debt collectors, wipe away black marks from your credit record - and make those money woes go away.
But so often these promises are not met. In too many cases, people in financial trouble can end up in an even worse position after paying hundreds of dollars to these operators for very little, if anything, in return.
When are you eligible for a repair, replacement or a refund? The Australian Consumer Law gives you more rights than you might know.
One of the things debt management firms promise is to help those in financial hardship to manage their budget. This might include paying money into the firm's bank account and letting it handle your creditors and repayments. While a single repayment sounds convenient, too often the debt management firms will take a big cut in fees. There are even stories of firms remembering to take their fees on time but forgetting to pay your bills, and so the debt collectors keep calling.
Some firms spruik "credit repair services" and promise to remove negative listings on your credit record – of course for a handsome fee. An investigation by ASIC found that debt firms charge high upfront fees of anywhere between $495 and $1095 for this service and these fees do not even wipe your credit record clean. These are payments just to remove one listing.
Debt management firms never tell their clients that it's actually impossible to remove negative credit listings unless there is an error in the listing and the fees are the same regardless of whether or not they are successful in getting the negative listing wiped.
This precise scenario happened to Ben (not his real name) who called a credit repair company after seeing an ad on TV promising to wash his credit history clean.
The salesperson called back with good news – they would be able to fix his credit history. They promised to send him a booklet, forms to return, and to assign him a case manager to help him as long as he was able to pay $1000 immediately, otherwise they'd have to start the process all over again.
But as Ben discovered, they were more than happy to take the money, but they did not provide the service. In fact, Ben didn't have any defaults or incorrect listings to "fix". The credit repairer hadn't bothered to check his credit report.
Ben's repeated requests for a refund were ignored until consumer advocacy organisation, Consumer Action Law Centre got involved and helped him sort it out.
It's a pretty shady place these firms get to hang out in to recruit new customers, in some cases looking to find new clients by trawling through court records to find the names of people with debt judgments against them.
Given the financial vulnerability of their client base, it's deeply concerning that these firms are able to charge hundreds of dollars upfront to financially stressed people with the vague and often undelivered promise of helping them to manage their debt. It's not uncommon for these firms to offer new lines of credit to clients to "help them" manage their way out of debt.
A 2016 report by ASIC found that debt management firms had "opaque" fees, costs were "often high and heavily front loaded" and the quality of advice was patchy where "some firms had a poor understanding of the relevant law" and little information was given about risks to clients.
ASIC has recently fined some of these firms for misleading statements when they have claimed they were backed by the federal government or by big banks, when they were not.
However, ASIC is very limited in the oversight it has of debt management firms.
This is because debt management firms live in a regulatory void – they're not regulated as financial advisers nor are they regulated under the consumer credit framework.
In a sense they operate in the financial services equivalent of no-man's land and it's time this changed.
For a start debt management firms should be required to act with integrity and in the interests of their clients. They should be required to provide appropriate advice and they should have to ensure that their employees are trained to provide assistance to people in financial hardship. They should be forced to sign up to an ombudsman scheme so that people who have complaints can access a quick and free external dispute service.
Debt management firms should also have to disclose the fees they charge and be required to tell clients about the availability of free alternatives to help them, including, ombudsman services, community legal services and financial counsellors.
It's time that people struggling to manage their debts are given appropriate consumers protections when it comes to dealing with these firms. Consumer groups are on board, community legal centres are on board, as are the banks.
If debt management firms are to operate, they need to be regulated like every other financial service. They cannot be allowed to prey, like vultures, in an unregulated environment on vulnerable people who are often facing the most difficult time of their lives.
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The Commonwealth Bank must do all it can to make its new EFTPOS machines accessible to blind and vision impaired Australians.
It is completely unacceptable that the Commonwealth Bank’s 75,000 new touchscreen terminals do not have a tactile keypad, meaning blind people cannot use them.
It is discriminating against 350,000 blind and vision impaired Australians and impacting the way they control their finances.
It is unrealistic to expect people to hand over their personal pin numbers so a transaction can be completed.
This is a matter of accessibility and it is clear that these new EFTPOS terminals are denying blind and vision impaired Australians access to many shops and restaurants that are using these machines.
I urge the bank to listen to the concerns of Blind Citizens Australia and work to make their machines accessible for everyone.
FRIDAY, 28 JULY 2017
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Thank you to the Melbourne Institute and The Australian newspaper for the invitation to speak today.
I would like to acknowledge the traditional owners of the land on which we are gathered and pay my respects to their Elders both past and present.
It's an honour to join the list of speakers that have been presenting to you over the past two days.
The topic of this year’s conference – New Directions in an Uncertain World is a very appropriate theme to focus on.
Right now it seems that uncertainty has never been more certain.
We are living in a time of massive technological change and opportunity but also a time of rising inequality, stagnant real wages, growing job insecurity and escalating costs of living.
It’s timely to take stock of where we are.
To evaluate our policy successes and failures and to explore new directions towards a more inclusive and prosperous nation.
Today I will outline the reasons behind Labor’s call for a Royal Commission into the banking and financial services system.
I will do so against a background that acknowledges the critical role that banks play across our economy and our community.
Labor believes that the strengths of our banks and our regulatory system has served Australia well, particularly in the tough times, but we cannot be complacent.
Every Australian uses a bank.
We all rely on the strength, stability and integrity of our banking system.
Australian families trust banks with their home loans, small businesses count on them for capital, and older Australians depend on banks for securing their retirement savings.
A strong and profitable banking system is in our national interest and critical to supporting our continued economic growth.
It provides finance to keep the economy functioning by funding vital services, infrastructure, private assets and businesses and we need to look no further than the Global Financial Crisis to appreciate the close linkages between the financial system and the broader community.
I remember that time clearly as I had only recently been appointed to the Treasury portfolio in the ACT Government. As a new Treasurer, I had been comforted by the words of my boss that all I needed to focus on was my first budget which wasn't due for another eight months or so. Plenty of time to get across the detail.
That was in November 2008, about the same time that global financial systems went into meltdown.
Kevin Rudd as Prime Minister and Wayne Swan as Treasurer reacted to these global events quickly and confidently.
They were keen to ensure that Australians were protected from the very real effects of a financial meltdown that were being experienced overseas.
Through COAG meetings and Treasurers’ forums that I attended, I witnessed first-hand the sweeping response from the Federal Government. The usual “blame game” politics that infiltrated most Commonwealth/State meetings, particularly when it came to questions of expenditure disappeared entirely.
One of the other standouts for me from that time was the way in which the banks worked with, and alongside, the Government of the day to protect and support the Australian community.
It was a very clear example of the Government and the banking system working together to instill much needed trust and confidence across the community.
It was in each other's interest of course, but most importantly – it was in the national interest as well.
Labor wants Australia‘s banking and financial system to be strong, profitable but also one that works for consumers.
I think we can all agree that the banks are strong, and this week the prudential authority has provided its assessment of what is required to make them “unquestionably strong” and ensure protection against any future global shocks.
And we know they are certainly profitable.
Last year saw combined profits for the big four reach $30 billion.
So the question that remains is, are the banks working for customers?
But before I get to this question I would like to reflect briefly on Labors position on the Four pillars policy as well as vertical integration.
The four pillars policy is a policy that Labor supports.
It has been supported by Labor in government and in opposition.
As Shadow Treasurer Chris Bowen said in February 2014, “Labor built the four pillars; Labor will defend the four pillars. The last thing the Australian banking system needs is less competition.”
The Murray Financial Services Inquiry also found that the four pillars policy should be preserved.
We do not want to see any lessening of competition in the banking system.
The FSI also noted that while competition in the financial system generally appears adequate, the high concentration and degree of vertical integration in some parts of the system has the potential to limit the benefits of competition in the future.
It recommended that competition should be should be proactively monitored and this is something that Labor strongly agrees with.
Consistent with the FSI’s recommendation, the Government has recently commissioned the Productivity Commission (PC) to review competition in the Australian Financial System, with a report due next year.
The terms of reference for the PC review include looking at issues such as the degree of vertical and horizontal integration along with implications for competition and consumer outcomes.
This is very important work and one which Labor will closely monitor.
There is no doubt that the size and reach of the banks beyond the retail sector and into wealth management, insurance and super has certainly contributed to some of the poor consumer outcomes across the sector in recent times.
Under Labor‘s approach the business structures of banks, including vertical integration, will be a matter for the Royal Commission to consider – to review the body of evidence and provide recommendations for a banking system that works for Australian consumers.
Now to return to the question of whether Australia’s financial system is working for its customers.
Any assessment of the system over the past decade can not ignore the fact that the sector has been plagued with examples of;
- illegal activity,
- unethical practices,
- irresponsible and dodgy lending,
- poor advice,
- fraudulent activity,
- unfair contracts,
- inappropriate cross-selling of products,
- the targeting of whistleblowers
- a workplace culture that rewards aggressive sales techniques and, a sector that appears to prioritise profit and the protection of market share at any cost.
These things can't simply be attributed to fall-out from the GFC.
Over the past 18 months alone there have been more than $300 million in fines imposed or compensation paid to customers by the banks.
These were for:
- bad credit limit practices,
- breaching consumer protections,
- unclear fee disclosures,
- fees for no service provided,
- failing to waive bank account fees for eligible customers,
- conduct in wholesale spot foreign exchange businesses,
- wrongly charging fees to superannuation fund members, and,
- wrongly denying insurance claims.
And this isn't even a complete list.
But while this list on its own is important, so too is appreciating the enormous toll on people when the financial system lets them down.
Late last year, I met with a couple without a cent to their name but who had managed to travel across the country to tell me their story.
They turned up to Parliament House without any ID so they weren't allowed into the escorted areas and so this proud and dignified couple told me their story whilst we huddled on a bench in one of the public galleries.
This was a ‘normal’ Australian couple – the kind of people who live next door to you. They could be your aunt or uncle.
In 2012 they were door knocked by a person spruiking investment properties in Queensland.
This person seemed professional; they knew what they were doing; They had all of the information and it seemed like a good deal.
The couple in their early 50s at this point, and already worried about funding their retirement believed the opportunity sounded right for them.
So after going through all the paperwork they bought an investment property, after their bank approved the loan.
They were comforted by the banks agreement to lend the money and incorrectly (as it turns out ) believed that this approval legitimised the investment property strategy for them.
Financially, things got a bit tougher for this couple when one of them got sick and the other lost their job.
Realising that they couldn’t cope with meeting the loan repayments on the property they started preparing to sell it.
But it turned out that the property was worth a lot less than what they had paid for it. If they sold at this price, there were going to be left with a significant debt to the bank, which they couldn’t pay off - as they were by this stage totally dependent on the pension.
To their shock they found out that their bank had known this before they even signed on to the loan. The valuation done for the bank during the loan application stage found that the property was worth significantly less than the amount that they were borrowing to pay for the property. The loan documents processed by the broker also inflated their income and didn’t truly reflect the cost of their expenses.
This was not known by the couple at the time of loan approval – and the bank and the broker never told them.
There was a further problem. Under the nature of their loan, the monthly repayments were set to increase further to be double their original amount by 2017.
So now they were stuck, struggling to meet the cost of their loan payments – but they couldn’t sell.
The bank’s advice was to meet their loan repayments by re-mortgaging their family home. That is – borrow more.
Luckily they didn't do that.
The only option it seemed to them was to sell their investment property and the family home to pay off the debt.
This would leave them renting, on a pension and without any retirement savings.
Two lives spent working hard jobs, hard physical jobs, to save for a better life in retirement and left like this - innocent victims of a system designed to serve other interests, certainly not theirs.
This example, and the thousands just like it, give a little taste of the powerlessness that people face when they encounter problems in the financial system.
There is no doubt the financial system is geared towards the experts and the professionals.
Complex products, clever and targeted selling, capitalising on people’s financial insecurity about the future and definitely the knowledge imbalance.
It’s not just greedy people who are affected. It’s everyday Australians. People whose only desire is to be financially secure.
The rules are not working to protect ordinary consumers.
Some are ashamed to come forward.
Some don’t have any confidence that they will be believed.
Others seek recourse or justice – which is often long, stressful and mostly fruitless.
For many, the system seems geared against the consumer at every step.
Many will try to resolve with the bank before moving onto external resolution though a body such as the Financial Ombudsman Scheme. While some problems are resolved there, often the difficult or complex cases can remain unresolved and others awarded compensation through this channel know they will never see the money.
Another option is the courts. But taking legal action can be a very costly and time consuming thing to do.
Even in the most egregious of cases where there is no dispute who was at fault ̶ it can take years of legal wrangling, reluctance to hand over documents, blame-shifting and the general wearing down of the complainants before agreement is final reached, terms settled, compensation paid and confidentiality agreements agreed too.
Often people choose to give up and get on with their lives – knowing that there has been an injustice but also that they are powerless to do anything else. Others keep fighting, but with an increasing toll on their physical and mental health.
Labor announced its decision to support a Royal Commission into the banking and financial system back in April 2016.
It wasn't a decision taken lightly or without serious assessment of all of the issues involved.
Although it was before my time in this role, speaking with colleagues who were involved, this decision was taken after many warnings to the banks to lift their game and after promises from the banks to improve and respond to consumers ̶ were not delivered.
For Labor, as parliamentary inquiry after parliamentary inquiry found failures, scandals, illegal and unethical conduct and as constituents contacted their MP’s around the country with story after story of mistreatment, of bankruptcy, of life savings lost.
You could only conclude from this that there was something fundamentally wrong here.
The single stories of financial devastation, of family breakdown, of businesses lost, and in some cases of lives lost weave together to form a much bigger picture ̶ of a banking and financial system that has clearly lost sight of its customers.
I don't need to persuade you on this. This is all a matter of public record.
The politicians know it; the community knows it; and perhaps most tellingly the banks know it – the CEO‘s admitting as much when they come to Canberra.
Trust and confidence ̶ essential pillars of a well-functioning financial system ̶ have been repeatedly shaken.
And perhaps for those who don't yet agree with a Royal Commission - put yourself in my shoes where during my short 12 months in this portfolio, I've been approached almost on a daily basis with stories of everyday Australians who for a variety of different reasons - (most commonly poor advice and inappropriate or fraudulent lending) have had their lives destroyed by our financial system and the way it operates.
Elderly people returning to work as they have lost their superannuation savings because of bad financial advice;
People reduced to living in caravans on the lawns of their friends because they have had their house repossessed and no-where else to go;
Low income earners facing a lifetime of debt with nothing to show for it because a shonky adviser convinced them they could borrow more money than they could afford and the bank went on and approved it;
Farms and generations of hardwork lost when the bank called in the debts without much notice;
Investors, left with big debts and nothing to show for it, following liquidation processes which lock them out of deals with banks and lawyers.
It's these stories, these experiences – not one, but hundreds and hundreds of them which have led to Labor taking the position we have about the Royal Commission.
Bill Shorten and I have met with people from right across Australia who have been left devastated by our financial system and the way it works.
They, very reasonably, want answers to what went wrong and they want someone to take responsibility.
I do acknowledge the work underway across the sector to respond to areas where banks and other financial service providers have let customers down ̶ this is all worthy work, but let’s not pretend for a moment that it's independent, transparent or that it has the powers of a Royal Commission.
Take the ABA‘s six point plan as an example ̶ the plan certainly has merit and whilst efforts have been made to garner trust in the processes, at the end of the day every report and every response to that report is controlled and paid for by the very institutions whose business strategies have led to these poor consumers outcomes in the first place.
The six point plan is not a Royal Commission.
Over the past year the Government has responded to increasing political pressure to “do something about the banks” and has made various piecemeal announcements which will do nothing to restore the trust and integrity necessary for a healthy banking sector.
If I just take two announcements from the last budget as an example,
I’m you remember the discussion about the big T little T tribunal - to fend off rising backbench anger at the banks the Prime Minister committed to a new tribunal saying that:
“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.”
The budget announced a new body to be called the Australian Financial Complaints Authority.
On closer inspection, this is simply a merging and rebadging of existing the two financial ombudsman services and the Superannuation Complaints Tribunal, with higher thresholds but with no new or additional powers than the existing dispute resolution bodies don’t already have.
We also have the budget announcement about the Banking Executive Accountability regime. The Treasurer lauded these reforms, and I note he has done so again at this conference, saying that:
“… that those holding senior executive positions, if they do the wrong thing, they will be deregistered and we’ll claw back their bonuses.”
At Senate Estimates in May, I asked APRA about the poor behaviour that would lead to someone being reported through this regime.
APRA confirmed that the scheme will be limited purely to poor prudential outcomes - this limitation will not, necessarily, prevent the scandals or penalise the behaviour that has seen such detrimental impact on consumers.
And don't tell me that any attempt to “claw back bonuses“ won’t be managed by the industry by simply increasing, already extremely high base salaries for banking executives.
Labor believes the Governments response to date has been confected and piecemeal. There is a lot of emphasis placed on looking like something is being done when in reality not much is changing at all.
Finally I would just like to mentioning three areas where I believe prompt action is required to immediately strengthen consumer protections across the financial sector.
Credit card reform is one.
We know that Australians own close to 17 million credit cards which collectively owe a whopping $52 billion in debt – that's an average bill of over $,500 per card holder.
We also know that 77% of customers have their primary credit card with one of the big four banks or their subsidiaries despite many other competitors providing better terms and interest rates.
Simple reforms which have been on the table for over a year and which have bi-partisan support should just be done.
The Government promised last year to improve protections for credit cards, including requiring banks to provide online cancellation options, prohibiting unsolicited credit limit increase offers and standardising the application of interest.
It’s been more than a year since the Government promised to move on these reforms and still we haven't seen any legislation.
There is no excuse for these delays ̶ because the longer it takes the more money the banks will make through unfair charging and the more it will cost everyone else with a credit card.
Secondly, lack of consumers protections for Debt management firms are currently leaving people exposed to financial abuse.
These firms promise to clear up your credit history and help you manage your debts ̶ but all for a hefty upfront fee and some will even lend you money should you need to get into more debt to service your current debt.
At the moment these firms are largely unregulated ̶ despite them selling services to some of the most vulnerable people in the community.
Debt management firms currently live in a regulatory void – they’re not regulated as financial advisers nor are they regulated under the consumer credit framework.
In a sense they operate in the financial services equivalent of no-man’s land and its time this changed.
Debt management firms should be regulated, they should be required to sign up to an financial ombudsman scheme like other financial services firms do, they should be required to disclose their fees and be compelled to inform clients about the availability of free alternatives such as community legal centres and financial counsellors.
Failure to respond here will leave vulnerable customers open to financial abuse.
Finally, improving corporate whistleblower protections is also on our agenda.
It's clear that there are major gaps in whistleblower protections in the private sector.
One only needs to mention the name Jeff Morris and read about his experience to understand the need to get cracking on serious reform.
No one should have to go through what he did in the pursuit of the common good ̶ he paid a huge personal price for trying to do the right thing and protect others but in the end had no protections for himself.
There are other high profile examples like 7-11 and with CommInsure as well.
There is a Parliamentary Joint Committee inquiry underway into whistleblower protections which is due to report in August.
We will look carefully at these recommendations handed down then but our starting point will be for much stronger protections in this area.
This should include:
- corporate whistle-blower protections extending to protect former employees (as well as current ones), directors and officers, contractors and others connected to the business;
- protection for whistleblowers who make anonymous disclosures;
- a broader application to cover disclosures of conduct that is unlawful or unethical;
- avenues for disclosure to the media and a right to consult a lawyer for advice;
- access to low cost alternatives to legal action to pursue compensation for whistleblowers ̶ including loss of future potential earnings;
- Much stronger protections against reprisals, and,
- the consideration of how a rewards scheme along could operate.
Today I have laid out the case for a Royal Commission into Australia’s banking and financial services system..
But at the same time, I have not sought to over dramatise or simplify the issues facing our financial system.
Our financial system weathered the Global Financial Crisis well and it has been further strengthened since then.
But we should not be complacent, and as economic and financial circumstances continue to change over time we must be willing to continually assess whether our financial system architecture and governance is as strong as it can be.
My colleague Chris Bowen will have more to say on this soon.
Whilst the banks may not agree with our position on a Royal Commission we continue to work with them, in opposition as we have when in government, and we enjoy a positive dialogue with them despite our policy differences.
We understand that the relationship between a Federal Government and Australia‘s banks is an important one but like most relationships its one that can only work effectively when there is trust, confidence and respect between the two partners.
Establishing a Royal Commission into Australia’s banking and financial system will remain Labor policy because we firmly believe that it’s the only way to have the forensic examination that is required to keep our banking system strong and most importantly one that works for customers.
FRIDAY 21 JULY 2017
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Today marks another Scott Morrison stuff up, this time over the First Home Super Saver Scheme which has not even been introduced to Parliament yet.
The Australian Tax Office (ATO) has today sounded a warning to those who might contribute money into their super accounts in the absence of any supporting legislation, despite Scott Morrison at the same time urging potential first home buyers to start using the scheme.
“Both measures are to commence on 1 July 2018. For the FHSSS, voluntary contributions made from 1 July 2017 will be eligible for withdrawal (provided all criteria are met) from 1 July 2018.”
– Scott Morrison, Press Release, July 21, 2017.
Despite Sco-Mo’s encouraging words, the Government is still not able to answer simple questions about how it will operate and under what circumstances money will be released from the scheme.
The ATO – who are due to implement the scheme - have been quoted as saying: "we are unable to comment on policy that is yet to be enacted by Government" and, that:
"If you are contemplating participating in this measure, you should remember that the proposal is yet to be legislated, and as such, should ensure that you are fully aware of the implications of this before making any financial decisions. You may wish to seek advice from a licensed financial adviser."
– Australian Tax Office spokesperson, Huffington Post, July 25, 2017.
This is the another fail for a Scheme that won’t fix the housing affordability crisis but will undermine superannuation.
Labor will not support it.
Rather than encouraging a raid on superannuation savings the Government should be supporting first home buyers by introducing policies that will actually work like reforming negative gearing and capital gains tax concessions.
The First Home Super Saver Scheme was a policy failure from the start – and the Government just keeps on stuffing it up.
TUESDAY 25 JULY 2017
This is a joint media release with Senator Doug Cameron (NSW).
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Seven months of doing nothing on unpaid super, despite a detailed report sitting on the minister’s desk for that entire time, has resulted in a media release from the Turnbull Government which only promises to take action on one aspect of the issue at some point later this year.
In a response that can only be described woefully inadequate the Minister’s "announcement" doesn’t go anywhere near far enough to protect workers who will continue to miss out on billions of dollars in unpaid super payments each year.
Unpaid super in a $5.6 billion problem which affects around 2.7 million workers across Australia, many of whom are on low incomes and are missing out on as much as $2000 each year which should be going into their retirement savings.
In the time that Kelly O’Dwyer could have actually done something to address this super rip-off, a Labor instigated Senate Inquiry into unpaid super made 32 recommendations, one of which was to deal with the loophole which allows employers to reduce their compulsory super contributions when employees salary sacrifice into super.
What's lacking from today's announcement is a comprehensive strategy to address unpaid super across the board including responding to the other 31 recommendations made by the Senate report released back in May.
Labor is particularly concerned by recommendation 7 of this working group report, which in its application would reduce penalties for employers who do the wrong thing and not meet their super guarantee obligations.
The Abbott/Turnbull Government tried to water down these penalties once before and it needs to immediately rule out adopting this recommendation which would make it easier for employers to do the wrong thing.
The Minister needs to get serious about unpaid super and ensure that working people get paid the superannuation they have earnt so that it can maximise their retirement savings and relieve future pressure on the aged pension.
Liberals can’t be trusted on super. Labor created super and it is something that we will always fight to protect.
FRIDAY, 14 JULY 2017
This is a joint release with Senator Chris Ketter, Chair of the Senate Economics References Committee.
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Despite failing to meet her own deadline to respond to the Northern Australia Insurance Premiums Taskforce (NAIP) Report by more than one year, Minister O'Dwyer is now attempting to shift the blame for her own failures and "do-nothing" approach to escalating insurance premiums in Northern Australia by blaming state governments and the insurance industry.
The Minister received the Taskforce Report back in November 2015 and promised to “provide a detailed response by 30 June 2016.” (Kelly O’Dwyer media release 4 March 2016).
The response has never been provided despite the serious impact that escalating premiums are having on households and businesses in cyclone prone Northern Australia. In some cases people have had increases in their premiums of over 300 per cent.
The Taskforce report found that over the past twenty years losses from cyclones in northern Australia totalled $2.4b, or $115 million dollars per year and that future losses could be as much as $285 million dollars per year due to the risk of much larger catastrophes.
Despite the Turnbull Government being fully aware of the risks and costs of cyclones including the impact that rising insurance costs are having on households and businesses in cyclone prone Northern Australia they continue to ignore the sensible recommendations of the Taskforce.
Straight forward recommendations included such as increased investment for household mitigation strategies, further research into mitigation, education campaigns and the possibility of targeted assistance for low income households to undertake mitigation works are all recommendations that the Turnbull Government could be progressing.
But instead of providing the promised response to the Taskforce report the Turnbull Government chose to point the finger squarely at the insurance industry and commissioned yet another review into the costs of Northern Australia Insurance premiums.
Last week the Minister sought to broaden out the blame to not include not only the insurance industry but the state governments of northern Australia as well.
It’s well past time for the Minister to step up and take some responsibility here and focus on how best to help homeowners and businesses meet the costs of protecting themselves during natural disasters like cyclones instead of the petty finger pointing the Minister is currently engaging in.
As a first suggestion, maybe the Minister could provide the Turnbull Government’s response to the Taskforce's report that is now more than twelve months overdue?
MONDAY, 10 JULY 2017
This is a joint media release with Labor's Shadow Minister for Resources and Northern Australia Jason Clare MP.
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Labor is growing increasingly concerned of reports Government changes to superannuation legislation will adversely impact a number of veterans.
Labor has sought an urgent briefing from the Government on the Treasury Laws Amendment (Fair and Sustainable Superannuation) Regulations 2017 and its expected impact on veterans.
Whilst the Government advised during Senate estimates there were no military pensioners taking their pension as a lump sum at the time the change was announced, it is clear they have not taken into consideration how this change would impact those veterans’ who have since elected for this tax treatment and the financial circumstances which they now find themselves facing.
Labor has previously expressed its concerns over the lack of clear information made available and the consequences of the Government’s disallowable instrument for veterans and ex-service personnel.
It is clear this issue is causing distress in the veterans and ex-service community, with the government failing to address their concerns.
We do not want to see our veterans left worse off by the Turnbull Government.
It is incumbent on the Government to address these issues and provide clarity and transparency on this issue.
The Government must engage in proper consultation with the veterans and ex-service community to work through these unintended consequences.
This is a joint release with Labor's Shadow Minister for Veterans' Affairs Amanda Rishworth MP.