Mr BROADBENT (McMillan) (18:40): The government’s Banking Laws Amendment (Unclaimed Money) Bill 2015 is another important piece of legislation to reverse the chaotic policy implementation of the former Labor government. Changes to laws surrounding unclaimed funds introduced by the previous government showed a careless disregard for people’s welfare, with many stripped of their valuable savings. It also shook people’s confidence in the Labor government, especially in regards to the banking sector. This measure was too harsh. Moreover, Labor’s reckless decision to change unclaimed many laws in 2012 after more than a century of smooth workability was just another example of unnecessary mess we have been left to clean up.
A functioning democracy is one where the people tell their elected representatives what they want. The elected representative goes back to their party or party room and speaks on the people’s behalf. The late US senator, Arlen Specter, once said the essence of a democracy is a free electorate—that is, an electorate free to speak its mind, an electorate free to storm the offices of backbenchers just like me. The actions of the previous government were so reprehensible when it chose to take early possession of people’s savings that it was little wonder so many from across my electorate did storm my office and those of other backbenchers across the nation. It was little wonder we were deluged with demands of people imploring us to act. They told us ‘just change it back to the way it was’. They told us ‘we are not happy with the Labor Party changing the law so that they can snatch our savings away’. They told us ‘we want our money back’. We took their demands to the party room and the Treasurer. The party room and the Treasury listened and agreed to act.
Between 1911 and 2012, accounts must have been inactive for at least seven years before accounts could be touched by the government. In late 2012, Labor, in its infinite wisdom, reduced the required period of inactivity to just three years. This resulted in more than half a billion dollars from thousands of accounts being transferred to the Commonwealth. People were well aware of their account’s existence and yet found them stripped of all savings when they tried to access them. This placed many Australians in a position of financial hardship.
The government’s Banking Laws Amendment (Unclaimed Money) Bill 2015 is another important piece of legislation to reverse the chaotic policies of the former Labor government. If the truth be known, we could have continued netting billions of dollars of public money—it was certainly a nice little earner for the Labor Party. Labor used these welcome funds to help address their disastrous financial mismanagement and we could certainly have used it to help with the disaster they left in their wake. But in the end, as I said, we are servants to the people. It is their will and wishes we must honour.
Changes to laws surrounding unclaimed funds introduced by the previous government showed a careless disregard for people’s welfare, with many stripped of their valuable savings. It shook people’s confidence in the Labor government and in the banking sector. As I said before, this measure was far too harsh and a bridge too far. I dare say, for backbenchers in the Labor Party, whose officers were also contacted, it would have been like storming the Bastille, with throngs of angry constituents demanding their elected representatives stop fleecing them of their savings. Sadly, they did not act. Labor’s reckless decision to change unclaimed money laws in 2012 after more than a century of smooth workability was just another example of a party in chaos, devoid of direction and devoid of its founding principles.
Australia has had provisions to effect the transfer of unclaimed funds to government since at least the introduction of the Commonwealth Bank Act 1911. Returning the required period of inactivity to seven years is expected to reduce the number of accounts transferred to government each year by up to 50 per cent and reduce the regulatory burden on the community by $36 million a year. More importantly, as a result of these reforms, thousands of Australians will no longer need to locate their missing funds and apply to their bank or their life insurance provider for their return. Similarly, banks and life insurers will no longer need to unnecessarily transfer millions of dollars of Australians’ savings to government and then process thousands of requests for money to be returned, often in the same year that those funds were transferred in the first place.
The government’s bill will ensure that if you signal to your bank in some way that you were aware of your account before it was transferred to government, even by checking your balance online or over the phone, the account will remain in your control.
This will be the case even if your account had been declared unclaimed. The unclaimed moneys provisions exist to protect Australians’ forgotten savings and life insurance policies from being eroded by fees and charges over time. This is all about ensuring people are not disadvantaged. In 2013, approximately $550 million was transferred from account holders to the government. This compares to $70 million transferred to the government in the previous year. As was reported in Fairfax newspapers on 10 June last year:
Pensioners and others saving for a rainy day have reported trying to access their savings only to discover their money had been seized by the government because it had been dormant for three years or more.
Canberra has collected more money from inactive bank accounts under the three-year rule than the total amount captured in the past five decades combined.
Now, only after an account has been inactive for seven years will the funds in that account be transferred to the government where they will grow at the rate of the consumer price index, tax free. No matter what, these funds continue to belong to their rightful owner and can be reclaimed at any time through contact with either ASIC or their financial institution. There is no fee charged for this service. The government’s changes are due to take effect from 31 December 2015. This means that no funds should be assessed as unclaimed until at least 2019 and no unclaimed funds should be transferred to the government until at least 2020. In addition, the government will exempt children’s accounts from any unclaimed moneys provisions.
We know that many Australians set money aside for their children’s future and trust that this money will continue to grow in value and be available for their children when they turn 18. This could well be money for university, money for a car or money to move in search of work. I could rightly argue that such funds are more important to young people in rural electorates like McMillan, where the practical need for university funds, a car or money to move in search of work is more acute. For many young people in rural electorates, where the tyranny of distance is all too common a concept, a small nest egg is essential if they are to seize future opportunities. Robbing them of it would be almost criminal. In recognition of this fact and to reward not punish those Australians working hard to contribute to their family’s future, funds from children’s accounts will never be transferred to the government.
We know the people want the system essentially changed back to the way it was. The proponents of this bill have done a commendable job in overturning legislation that was designed to take from the community rather than give. The government will always do its best to empower people to fulfil their full potential. Siphoning off their savings flies in the face of that. People should always know their money is secure and that it will not be raided by governments looking for easy revenue, though I can understand why that would have been a temptation for the previous government.
This government will always do its best to put the nation on a firm financial footing. This legislation will not only help relieve the stresses of those who would otherwise have been forced to knock on the door of government to get their own money back; it will clear another expensive layer of regulatory red tape. I commend this legislation for its important and welcome changes to the way we treat unclaimed funds and, more than that, for the way we treat the account holders of unclaimed funds. The people have spoken in a loud, united voice and the members of this coalition government have listened and delivered. Yes, the essence of a democracy is a free electorate, but a free electorate is defined by many things. A free electorate is one that has the ear of its local representative. A free electorate is one that can challenge one political party to fix the mistakes of another. In this wonderful democracy, the electorate is free and soon its unclaimed funds will be too.