Introduction
I acknowledge the Gadigal people of the Eora Nation, the traditional custodians of this land, and pay my respects to the Elders past, present and emerging.
I reiterate the Albanese Government’s commitment to the Uluru Statement from the Heart and a voice to Parliament.
I acknowledge any First Nations Australians with us today and thank them for their contribution.
Thanks to Chairman Joe Longo and your team for pulling this event together.
It is a pleasure to join you here today to speak at the 25th ASIC Annual Forum – the first since 2019.
I want to acknowledge the great work that ASIC staff have done – in conjunction with other regulators ‑ in steering Australia, and in particular its capital markets – through the pandemic.
Our capital markets have performed well … and in large part the regulator played an incredibly important role in that.
ASIC stepped in to help listed companies raise capital quickly and at low cost by giving temporary relief to allow ‘low doc’ capital raising offers to be made to investors. This helped Australian listed companies to raise more than $53 billion of equity capital in 2020.
New Government – New energy
This is a new government with new energy.
In the first 5 months of Government we have set a cracking pace:
- Legislating our climate change targets
- Providing working families with more access to childcare
- Implementing the recommendations of the Aged Care Royal Commission
- Legislating for a federal anti‑corruption commission
- Convening a Jobs and Skills Summit, leading to an increase in skilled migration
- Boosting TAFE places by 180,000 places and increasing University places by 20,000.
Last week we delivered our first Budget – which set the scene for the type of Government we will be.
Open and honest about the challenges.
Disciplined and responsible in responding to them with spending that prioritises an economic return.
No razzamatazz, no wedge politics, just responsible government.
Our predecessors talked a big game on economic management but never followed through.
They left us a $1 trillion debt legacy with little to show for it.
Servicing that debt is now the fastest‑growing expense in the budget.
Next year we will spend as much on interest as we do on the pharmaceutical benefits scheme.
We confront the budget and inflation challenge under a darkening cloud for the global economy.
It is now likely our major trading partners such as the US and Europe will slide into recession.
Our biggest trading partner, China, continues to pursue a COVID‑zero policy that is a drag on their economic growth and our supply chains.
Treasury’s global growth forecast has been downgraded by ¾ of a percentage point in 2022.
1 percentage point in 2023.
And a ½ a percentage point in 2024.
We start from a stronger position, but we are not insulated from these developments.
High global energy prices and floods mean Treasury expects inflation to peak at 7¾ per cent in the December quarter 2022, before moderating gradually over the next 2 years.
A downturn in global growth along with high and rising inflation makes our disciplined budget approach all the more important.
Is this the time for reform?
The Albanese Governments primary focus is on reducing the impact of worsening economic conditions on Australian families and businesses.
We could look at these challenges and conclude that managing them is enough.
Or, we can seize the opportunity and say – this is exactly the moment consumer focussed reform is needed.
People are doing it tough and there are still some bumpy times ahead.
We know people will be looking to access quick and easy sources of credit.
Access to credit is important, but we don’t want to see an explosion in debt traps.
So, we’ve made some changes to the Consumer Credit Law to ensure that the settings are more consumer focussed and safeguard against predatory lending.
So, we've implemented the recommendations of the 2016 Small Amounts Credit Contract Review.
Putting some sensible safeguards around the use of SACCs and Consumer Lease products.
And we’re looking into the regulation around Buy Now Pay Later, to see what credit settings should be applied there too.
These are all critical reforms.
Appropriately balanced consumer protections lead to better markets and more productive workplaces.
But – there’s a bigger job of work in the consumer protection space. And that’s addressing activity that’s happening outside the law.
We all know economic adversity brings out the opportunists and the scammers.
Over the last few months, we’ve seen a spate of data breaches.
These have left consumers vulnerable.
And undermined public trust in the transmission system of modern commerce – digitised information.
The cost of not getting it right is unfathomable.
Scams
Fraud and scams are costing Australians over $2 billion a year – and that’s just the reported figure.
We’ve seen a sharp rise in investment scams, which are of particular concern.
According to Scamwatch, losses to investment scams are up 150 per cent from last year after increasing 135 per cent in 2021.
Scams often effect our most vulnerable, with low reporting levels ‑ a result of victims feeling humiliation or not knowing where to go for help.
Scam losses overall are significantly higher for people over 65.
CALD groups, first nations peoples, and people with a disability also report disproportionately higher losses.
Collectively, we are losing billions. Let’s call this what it is – economic crime.
Recently I visited Westpac’s new Finance Crime Hub in Paramatta.
Like many banks they have stood up large anti‑fraud facilities.
Westpac has gathered over 500 financial crime specialists in a dedicated fraud prevention centre.
These specialists deal with the most common investment scams on a daily basis.
I saw examples of Bank customers attempting to complete transactions worth hundreds of thousands of dollars.
The Bank had strong reason to believe that fraud was afoot.
They warned customers – but to no avail.
In the two examples I saw, millions of dollars were lost.
It gave me good insights about how difficult it is to turn somebody around who has fallen victim to a confidence scam.
This is why a more comprehensive approach is needed.
One that looks at every link in the chain.
Our policy
Company directors have an obligation to act responsibly in the interest of their customers.
Directors and company executives must consider appropriate protections within their operations to safeguard consumers and their business.
A collaboration between business and government.
There are four key limbs to it.
1. The first limb is about limiting the information flow at source:
Across the economy we need to ask questions about the extent of data that is requested and required for a basic transaction.
Does my local barista really need my email address, age and postcode when I order coffee?
Then, we need to ask questions about how that data is stored, shared, and protected.
- Cybersecurity is in Clare O’Neil’s portfolio.
- This is about preventing the theft of data from Government and business.
- Clare will soon be releasing a new Cyber Security Strategy, setting out the path to achieve a more secure online world for Australian businesses and individuals.
It is also about frustrating the ability of economic criminals to market to their victims.
- This is in Michelle Rowland’s space.
Looking forward, industry codes of practice for the telecommunications industry and social media platforms are critical, as is identifying and taking down known scams and illegal promotions.
2. The second limb involves rapid identification and response to scams and frauds as they emerge.
We are about a decade behind on this.
The experience in the UK and Canada shows a collaborative approach bringing together the resources of business and government works best.
- The UK ‘fusion cell’ model was established in 2013 and shows the benefits of rapid – appropriately safeguarded – sharing of intelligence between regulators, government, and relevant institutions.
So, last week, in the Budget, we provisioned an initial investment of $12.6 million over 4 years to combat scams and online fraud.
3. The third limb is business‑to‑business transactions
Payment redirection scams are the most common type of scam effecting business.
Small and micro businesses are especially vulnerable, accounting for more than half of payment redirection scam reports.
That’s why the government has leaned into E‑invoicing.
Getting an invoice over email is not secure and it’s not smart.
E‑invoicing is a dedicated, encrypted, exchange‑based system that only passes information between registered users.
It’s safe, reliable and the best defence these businesses have against scammers.
Voluntary take‑up must be accelerated, and I encourage everyone here to talk to their clients and partners about using it.
4. The final limb is rectification.
When personal data is compromised, the damage can be ongoing.
People should be able to reclaim a stolen identity quickly to reduce harm – this is why the recent budget increased funding for existing ID recovery services.
We’re also working across agencies to streamline the replacement of government‑issued identity documents like passports and drivers’ licenses.
There has also been debate about who is liable when scams occur.
Some people are suggesting that the banks should always be liable.
I don’t support this approach … there should be a high bar on what is expected by all of our institutions – but if they meet all of their obligations it doesn’t seem right that they are liable.
If banks always pay the net result creates a honey pot for scammers.
What has all this got to do with Economic Reform?
It’s about expanding our thinking on productive, efficient systems, to include safety and consumer confidence.
Fast and safe.
Consumers and businesses need to have confidence in the systems they are using.
Director ID
Before I conclude just a few words on the Director ID program which is being rolled out by the ATO and ASIC.
- It will help prevent the use of false and fraudulent director identities.
- Director ID will also help identify and stop unlawful behaviours like illegal phoenix activity.
- 2.5 million company directors need to have obtained their Director ID by 30 November this year – to date 1.1 million directors have already signed up.
The role of ASIC
The Albanese Government is a big believer in strong and independent regulators.
Currently our regulators are well overseen by five or six different oversight bodies.
We have at least two separate oversight bodies arising from the Banking Royal Commission.
In addition to that we have the House Economics Committee, the regular senate estimates process and the Parliamentary Joint Committee on corporations.
The Government strongly supports the role of Parliament to scrutinise the operation of the regulator.
It is right, it is proper, it is necessary.
If Parliament is going to be focussing on the activities of the regulator, I only ask that we do it effectively and efficiently.
I’m going to be reaching out across the aisle to see if we can get to an efficient way of ensuring the necessary scrutiny of ASIC is done properly.
That we don’t have parallel reviews going on, particularly where ASIC is conducting sensitive criminal and covert operations.
The last thing that we need to be doing is compromising some of those investigations, albeit through well‑meaning intentions.
We have a good model here.
The National Security Committee has worked for many decades in a bipartisan way.
I’d like to see that any oversight committee that looks at the work of ASIC is conducted in a responsible way with tough, efficient scrutiny.
Conclusion
These are uncertain times for Australians.
They’re watching every dollar they spend.
And they’re worried their money’s not going to a legitimate business.
We must work together to address these concerns.
Difficult economic times lie ahead, perhaps more difficult than those in which we already find ourselves.
But the right approach we will get us to the other side.
The Albanese Government will do our part with responsible management of the budget and appropriate regulatory settings for our markets.
And we look forward to working with everyone here to build the confidence and security we will need as a nation to face down the coming challenge.