CHAPTER 1

INTRODUCTION

Background

1.1        The Australian Transaction Reports and Analysis Centre Supervisory Cost Recovery Levy Bill 2011, the Australian Transaction Reports and Analysis Centre Supervisory Cost Recovery Levy (Collection) Bill 2011, and the Australian Transaction Reports and Analysis Centre Supervisory Cost Recovery Levy (Consequential Amendments) Bill 2011 were introduced into the House of Representatives on 12 May 2011 by the Hon Brendan O'Connor MP, Minister for Home Affairs and Justice (minister).[1] On the same day, on the recommendation of the Selection of Bills Committee, the Senate referred the provisions of all three bills to the Legal and Constitutional Affairs Committee (committee) for inquiry and report by    16 June 2011.[2] On 16 June 2011, the Senate granted an extension of time for reporting until 20 June 2011.

The bills

1.2        This suite of bills will give effect to a 2010-11 Federal Budget announcement that the Australian Transaction Reports and Analysis Centre (AUSTRAC) would be given the authority to recover the costs of its business-as-usual regulatory activities, including the regulation of activities to ensure compliance with the Anti-Money Laundering and Counter-Terrorism Financing Act 2006.[3] That announcement detailed that the fees would be imposed from 1 July 2011. It is expected that the introduction of the supervisory levy will collect $118.3 million over the forward estimates period (2011-15).[4]

1.3        The introduction of a supervisory levy to recover the costs of these activities follows consultation with industry concerning how AUSTRAC should recover its regulatory costs.[5] A discussion paper on the proposed cost recovery model was released for public comment on 12 November 2010.[6] An exposure draft of the Cost Recovery Impact Statement (CRIS) for the measure was released on 11 February 2011.[7] In response to concerns raised as a result of the consultation undertaken, AUSTRAC amended the CRIS and released the current (final) CRIS on 12 May 2011, the day on which the bills were introduced into parliament.

1.4        As a result of that consultation, the formula for recovering costs has changed significantly from the proposal in the 2010-11 budget papers. As a result, the levy will not be paid by around half of the businesses regulated by AUSTRAC.  Those exempt from the levy will include micro businesses, small remitters (eg post office agents and newsagents) and gaming venues with a small number of gaming machines. 

1.5        On introducing the bills the Minister explained the need for a levy citing that:

[i]t is appropriate that industry meet the costs of regulatory systems that ensure the integrity of their operating environment.[8]

1.6        The AUSTRAC levy measures contained in the bills are consistent with past practice and the need for cost recovery to protect Australia's financial system.

Scrutiny of Bills report

1.7        The Scrutiny of Bills Committee (Scrutiny Committee) released its Alert Digest No. 5 of 2011 on 15 June 2011. In that Digest the Scrutiny Committee made comment in respect of both the Levy Bill and the Collection Bill. They made no comment on the Consequential Amendments Bill.

1.8        In respect of the Levy Bill, the Scrutiny Committee has raised a concern that although assurance is given that over-collection will be adjusted in future years that assurance is not reflected in the legislation. As a result the committee has sought the Minister's advice:

...as to whether consideration has been given to including a safeguard in the legislation to provide that any over-collection will be adjusted.[9]

1.9        The Scrutiny Committee also drew attention to the retrospective application of Clause 7 in the Collection Bill which provides that cost recovery will apply from the 2011-12 financial year. In respect of this provision the Scrutiny Committee notes that:

[t]he clear intention of the bill is that a levy imposed may be charged to cover a period that precedes the commencement of the relevant legislation.[10]

1.10      Concerning this matter, the Scrutiny Committee recommends that:

the appropriateness of this provision be left to the Senate as a whole. [11]

Conduct of the inquiry

1.11      The committee advertised the inquiry in the national press (The Australian) on 25 May 2011, and on its website; and also wrote to a number of stakeholders inviting submissions. Details of the inquiry, the bill and associated documents were made available on the committee's website.

1.12      The committee received 12 submissions, which are available on the committee's website. A list of submitters to the inquiry is set out in Appendix 1. There were no public hearings for this inquiry.

Acknowledgement

1.13      The committee thanks all those organisations who made submissions to the inquiry.

Scope of the report

1.14      Chapter 2 provides an outline of the bills, their key provisions and discusses the issues raised in submissions received by the committee.

Note on references

1.15      References in this report are to individual submissions as received by the committee, not to a bound volume.

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