Chapter 1Overview and views on the bill
Referral of the inquiry
1.1The Treasury Laws Amendment (2023 Law Improvement Package No. 1) Bill 2023 (the bill) was introduced into the House of Representatives and read a first time on 14 June 2023.
1.2On 22 June 2023, the Senate referred the provisions of the bill to the Senate Economics Legislation Committee (the committee) for inquiry and report by 24July 2023.
1.3On 27 June 2023, the committee tabled a progress report seeking an extension of time for reporting until 28 July 2023.
Background and purpose of the bill
1.4The bill proposes to make amendments to several Acts to implement broad ranging measures contained in six schedules:
Schedules 1 to 3—Australian Law Reform Commission (ALRC) recommendations;
Schedule 4—Insurance;
Schedule 5—Rationalisation of ending Australian Securities and Investments Commission (ASIC) instruments; and
Schedule 6—Minor andtechnical amendments.
1.5The overall intent of the bill was explained by the Assistant Treasurer and Minister for Financial Services, the Hon Stephen Jones MP, on 14 June 2023. The Assistant Treasurer stated that the bill contains measures designed to maintain and improve Treasury portfolio legislation to ensure that it remains current and fit-for-purpose.
1.6Details of each of the measures contained in the six schedules are outlined below.
Schedules 1 to 3—Australian Law Reform Commission recommendations
1.7On 11 September 2020, the former government asked the ALRC to inquire into the simplification of laws that regulate financial services in Australia through the Review of the Legislative Framework for Corporations and Financial Services Regulation. The review formed part of the former government’s response to the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry released in February 2019.
1.8The ALRC tabled its first interim report (Interim Report A) on 30November2021, which contained 13 recommendations, 24 proposals and questions in relation to the reform of corporations and financial services legislation.
1.9A second interim report (Interim Report B) was tabled in Parliament on 30September 2022 and contained recommendations that relate to technical improvements that would simplify corporations and financial services legislation. The Interim Reports’ recommendations were designed for immediate implementation, in advance of the release of the ALRC’s final report in November 2023.
1.10In November 2022 the government introduced the Treasury Laws Amendment (Modernising Business Communications and Other Measures) Bill 2022 which contained a first tranche of amendments to implement recommendations from Interim Report A.
1.11Schedules 1 to 3 of the bill seek to implement a further two recommendations from Interim Report A to improve the readability of the law by:
creating a single glossary of defined terms in section 9 of the CorporationsAct2001 (Corporations Act) (recommendation 5); and
‘unfreezing’ the Acts Interpretation Act 1901 (AIA Act) as it applies to the Corporations Act and the Australian Securities and Investments Commission Act 2001 (ASIC Act), so the most current version of the AIA Act applies to both Acts (recommendation 7).
1.12The bill also seeks to partially implement three recommendations from Interim Report B to:
repeal definitions that are no longer used, cross-references to repealed provisions and other redundant provisions (recommendation 14);
amend the law to address unclear or incorrect provisions (recommendation16); and
simplify unnecessarily complex provisions, with a particular focus on terms defined as having more than one meaning and definitions containing substantive obligations (recommendation 17).
1.13The proposed amendments are expected to facilitate a more adaptive, efficient, and navigable legislative framework to ensure that the legislative intent is met.
Schedule 4—Insurance
1.14In 2022, the Department of the Treasury (Treasury) undertook a thematic review of the following regulations (the Insurance Instruments) that are due to sunset on 1 October 2023 to determine whether they are still necessary and fit for purpose:
Insurance Acquisitions and Takeovers (Notices) Regulations 1992 made under the Insurance Acquisitions and Takeovers Act 1991 (IAT Act).
Insurance Acquisitions and Takeovers Act 1991—Decision-Making Principles IDM 1/1992 made under the IAT Act.
Life Insurance Regulations 1995 made under the Life Insurance Act 1973 (LifeInsurance Act).
Insurance Regulations 2002 made under the Insurance Act 1972 (InsuranceAct).
1.15As part of Treasury’s thematic review, a number of provisions in the enabling legislation and Insurance Instruments were identified as inoperative, spent, or necessary to clarify in order to ensure that the law operates as intended.
1.16The purpose of the Acts under which the above regulations are made is to protect policyholders by regulating the types of persons that may carry on insurance businesses and prescribe standards to ensure the prudent management of the insurance industry.
1.17Schedule 4 to the bill primarily seeks to amend the IAT Act, Life Insurance Act and Insurance Act to implement relevant findings of the thematic review of the Insurance Instruments that are due to sunset on 1October 2023, including:
Repealing the enabling provisions for the Decision-Making Principles in the IAT Act and replacing it with the ability for the Minister to determine, by legislative instrument, matters relevant to the public interest test.
Clarifying the decisions in Parts 3 and 4 of the IAT Act that require the Minister to consider the public interest test.
Giving the Minister, the Australian Prudential Regulation Authority (APRA) or ASIC the power to prescribe the manner and form of applications and notices in the IAT Act and Life Insurance Act, rather than have forms prescribed in regulations.
Clarifying that the prohibition on the investment of assets of a statutory fund of a life company in a subsidiary of that life company always applies at which an asset is invested, and clarifying the kinds of subsidiaries and related entities that an asset of the subsidiary must not be invested in under the Life Insurance Act.
Including a new offence for a life company failing to comply with the existing requirement to notify APRA of changes in the address at which the company stores its financial records.
Moving certain provisions in the Insurance Instruments into the primary law to reflect the hierarchy of laws more appropriately, including modifications relating to friendly societies in the Life Insurance Act.
Updating certain provisions in the IAT Act, Life Insurance Act and Insurance Act in accordance with modern drafting practices.
Repealing certain obsolete or spent provisions.
Schedule 5—Rationalisation of ending ASIC instruments
1.18Schedule 5 of the bill seeks to make amendments to the Corporations Act and the National Consumer Credit Protection Act 2009 to transfer longstanding and accepted matters currently contained in three ASIC made legislative instruments into primary law.
1.19Class orders or legislative instruments that notionally amend the primary law or regulations, may cause unnecessary complexity which can undermine the law’s accessibility and cause difficulties for entities to identify and understand the law as it applies to them.For a long time, ASIC has relied on its exemption and modification powers under the enabling Acts to update the law for changing circumstances. Moving notional amendments and other matters out of ASIC made legislation through this package goes towards addressing these concerns.
1.20The key objective of the proposed legislative changes is to improve navigability of the law and provide industry and consumers with greater certainty and clarity when interacting with Treasury laws.
Schedule 6—Minor and technical amendments
1.21Schedule 6 of the bill seeks to make several minor and technical amendments to Treasury portfolio legislation by:
correcting typographical and numbering errors;
fixing incorrect legislative references;
addressing unnecessary red tape;
addressing unintended outcomes;
adopting modern drafting practices;
enhancing readability and administrative efficiency;
repealing redundant and inoperative provisions; and
making other technical changes.
1.22The overall objective of the proposed amendments was explained by the Assistant Treasurer as follows:
Schedule 6 to the bill amends various laws in the Treasury portfolio to ensure those laws operate in accordance with policy intent, make minor changes to improve administrative outcomes and remedy unintended consequences, as well as correcting technical and drafting errors.
Relevant inquiries
Senate Economics Legislation Committee inquiry into the Treasury laws Amendment (Modernising Business Communications and Other Measures) Bill 2022 [Provisions]
1.23On 24 November 2022, the Senate referred the provisions of the Treasury Laws Amendment (Modernising Business Communications and Others Measures) Bill 2022 to the committee for inquiry. The inquiry received nine submissions and a report was tabled by the committee on 3 March 2023.
1.24As outlined above, the bill proposes to implement a number of measures that have been developed through Treasury’s Law Improvement Program to ensure the long-term structural functionality, usability and quality of Treasury portfolio legislation.
Consultation
Improvements to Corporations and Financial Services Law
1.25A consultation process for Schedules 1 to 3 of the bill was undertaken by Treasury on exposure draft legislation and accompanying explanatory material to reduce the complexity of Australia’s corporations and financial services laws. The consultation process was held between 12December2022 and 15January2023.
Review of sunsetting insurance regulations
1.26In relation to Schedule 4 of the bill, a consultation process was undertaken by Treasury between 11 and 26April2023 on the exposure draft and explanatory material to remake Insurance Instruments that are still required and make other updates to the instruments and related primary legislation to ensure that they remain fit for purpose. The Insurance Instruments include:
Insurance Acquisitions and Takeovers (Notices) Regulations 1992;
Insurance Acquisitions and Takeovers Act 1991—Decision-Making Principles IDM 1/1992;
Life Insurance Regulations 1995; and
Insurance Regulations 2002.
Rationalisation of ending ASIC Instrument Measures
1.27Treasury sought feedback from stakeholders on the proposed Schedule 5 of the bill to move matters in legislative instruments made by ASIC into primary law and regulations.
1.28A public consultation process on the exposure draft legislation and accompanying explanatory materials was undertaken between 16 February and 16 March 2023.
Miscellaneous Amendments to Treasury Portfolio Laws 2023
1.29In relation to Schedule 6 of the bill, a consultation process was undertaken by Treasury on the exposure draft and accompanying explanatory materials pertaining to miscellaneous amendments that seek to ensure that Treasury portfolio laws operate as intended by correcting technical or drafting defects, removing anomalies, and addressing unintended outcomes. A public consultation process was undertaken from 15 March to 4 April 2023.
Commencement
1.30The various schedules of the bill come into effect as outlined in the table below:
Table 1.1Commencement information
| |
Schedules 1 to 3 | The later of the start of the 30th day after the bill receives Royal Assent and immediately after the commencement of Schedule 2 to the Treasury Laws Amendment (Modernising Business Communications and Other Measures) Act 2023. |
Schedule 4 | Items 1 to 121 and 123 to 136 commence on a day fixed by proclamation. However, if any of the provisions do not commence within the period of 6 months beginning on the day of Royal Assent, they commence on the day after the end of that period. Item 122 commences on the later of the commencement of items 1 to 121 and immediately after the commencement of item 114 of Schedule 1. |
Schedule 5 | The day after Royal Assent. |
Schedule 6 | Division 1 and 2 in Part 1 commence on the day after the bill receives Royal Assent. Division 3 in Part 1 commences immediately after the commencement of the provision in Divisions 1 and 2 in Part 1. Part 2 commences on the first 1 January, 1 April, 1 July or 1 October to occur after the day the bill receives Royal Assent. |
Source: Explanatory Memorandum, pp. 7–10.
Financial impact
1.31According to the EM, the measures within the bill are estimated to have the following financial impact over the forward estimates period:
Table 1.2Financial impact of measures per schedule ($)
| |
Schedules 1 to 3 | Nil. |
Schedule 4 | Nil. |
Schedule 5 | Nil. |
Schedule 6 | Nil or minimal financial impact. |
Source: Explanatory memorandum pp. 7–10.
Legislative scrutiny
1.32At the time of tabling this report, the Senate Standing Committee on the Scrutiny of Bills had not reported its findings on the bill.
Human rights implications
1.33As discussed in the bill’s overarching Explanatory Memorandum, the Statement of Compatibility with Human Rights states that the bill is compatible with human rights and freedoms recognised in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2022, and thus does not raise any human rights concerns.
1.34At the time of tabling this report, the Parliamentary Joint Committee on Human Rights had not reported its findings on the bill.
Regulatory impact statements
1.35The bill’s Explanatory Memorandum offers no discussion about a Regulatory Impact Statement for each of the Schedules within the bill.
Conduct of the inquiry
1.36The committee advertised the inquiry on its website and wrote to relevant stakeholders and interested parties inviting written submissions by 5 July 2023.
1.37The committee received seven submissions (and one supplementary submission) which are listed at Appendix 1.
Acknowledgements
1.38The committee thanks all individuals and organisations who assisted with the inquiry, especially those who made written submissions.
Views on the bill
1.39Submitters to the inquiry made comments and suggestions in relation to the following aspects of the bill:
Schedules 1 to 3: Australian Law Reform Commission recommendations;
Schedule 4: Insurance; and
Schedule 5: Rationalisation of ending ASIC instruments.
1.40The committee received evidence articulating the rationale for the proposed measures in Schedules 1 to 3 of the bill, and the need to implement recommendations from the ALRC Review of the Legislative Frameworks for Corporations and Financial Services Regulation. The evidence broadly supported in principle the proposed amendments to simplify the Corporations and Financial Services Regulations to lead to better outcomes for industry stakeholders and consumers. For example, CPA Australia submitted:
…we are concerned with the complexity of the financial services law, particularly the multiple definitions, exemptions and modifications contained in existing legislation… The provisions will simplify and improve the navigability of the law…
1.41The Australian Restructuring Insolvency & Turnaround Association (ARITA) argued that the bill ‘requires further amendment to rectify errors which remain unresolved since 2016’.
1.42Alongside recommendations to the committee to support the passage of the Schedules 1 to 3, CPA Australia suggested that the government consider implementing the remaining findings from the ALRC Review through the Treasury Law Improvement Package.
1.43The Council of Australian Life Insurers Limited (CALI) expressed its support for the proposed amendments within Schedule 4 of the bill submitting:
The related changes to the legislation are minor and in most cases are the result of moving obligations from the legislative instruments to the primary legislation. The life insurance industry was consulted during the review and in relation to the draft legislation and instruments. CALI has no further recommendations for modification of the bill in relation to the amendments it contains.
1.44In relation to Schedule 5 of the bill, the Australian Retail Credit Association (ARCA) considered that the government should undertake a review of how credit documents can be given. ARCA suggested that such review should be conducted with a view to making it easier to give credit documents electronically; and better align the giving of credit documents with the way that Australian Financial Service licensees can give documents under the Corporations Act to their customers (including electronic means).
Committee view
1.45The committee welcomes the broad support for the measures proposed by the bill to maintain and improve Treasury portfolio legislation to ensure that it remains current and fit-for-purpose.
1.46The translation of recommendations from Interim Reports A and B from the Australian Law Reform Commission’s Review of the Legislative Framework for Corporations and Financial Services Regulation has been warmly welcomed. The committee notes the support for these reforms through the Australian Law Reform Commission’s review process and welcomes further the next round of recommendations and views put forward by submitters in relation to the Review’s findings. The committee is of the view that these technical amendments and corrections in Schedules 1 to 3 of the bill will help simplify the law and improve its navigability and expand the government’s work on facilitating modern business communication practices.
1.47The committee welcomes the support for Schedule 4 of the bill and considers that the proposed amendments to the Insurance Acquisitions and Takeovers Act 1991, Life Insurance Act 1995 and Insurance Act 1973 will help to ensure that the sunsetting insurance instruments are up to date and fit-for-purpose so that policyholders are protected.
1.48With respect to Schedule 5, the committee believes that the proposed amendments to transfer longstanding and accepted matters currently contained in Australian Securities and Investments Commission legislative instruments into primary law will improve the navigability of the law and provide industry and consumers with greater certainty and clarity when interacting with Treasury laws.
1.49The committee is of the view that the number of minor and technical amendments proposed in Schedule 6 will ensure that Treasury laws operate in accordance with their policy intent, improve administrative outcomes, remedy unintended consequences as well as correct technical and drafting defects. The committee believes that these amendments will reduce the complexity of the relevant laws and demonstrate the government’s commitment to maintaining Treasury portfolio legislation.
1.50The committee recommends that the bill be passed.
Senator Jess Walsh
Chair
Senator for Victoria