This is a further step that has been taken by the Government today to ensure that the regulations and legislation, the protections that are in our laws, are being enforced in our community, particularly when it comes to banking and financial institutions and corporates more generally. It's one thing to have laws, it's one thing to have regulations but what you have to have is a cop on the beat who can give the community confidence that those laws and those regulations are being respected and implemented in all of these organisations.
I think there has been a growing challenge on our regulators to be able to have the right culture, the right approach and the resources to get about that job. As a cop on the beat, you need to walk softly and carry a big stick. Last time Kelly and I were talking about these issues, we were announcing those tougher penalties, a million dollars for individuals and even more so for institutions. Those penalties and enforcement arrangements are significant and we have been building them now for years as the Government has continued, ever since the Financial System Inquiry, through to now, taking action and getting on with the job. Today, we are announcing new arrangements, new resources, new support, to effectively back the plan of the new Chair of ASIC, James Shipton, to get on with the job of ensuring that his organisation is right up to the mark. He has put this plan to us. It has been carefully considered and calibrated to do the job that his experience and his officers' experiences, have taught them what they need to do. And the Government today, with myself and Kelly and, of course, the Prime Minister and the entire Cabinet, are backing in this plan to make the changes that enable them to get about the job. I'll leave it to Kelly and James to talk more specifically about each of those measures, but they do involve ensuring that the litigations can be proceeded with, and Dan Crennan is a major part of that plan and to have the resources to bring these matters to a conclusion.
We want to see results earlier for people to have their matters resolved. We don't want to see them having been dragged on, years and years. It's important that these issues get resolved more promptly and the package deals with that. Two other areas that I wanted to highlight, though. There is specific funding in here to support ASIC to be in there ensuring that the regulations work better for small businesses. And that small businesses have an active cop on the beat, which is ensuring that they're getting a fair go. Small businesses are out there having a go and it's important that they get a fair go. And this package and supporting ASIC in the areas that they work in in small business is critical to that job. And the other one is about an exciting new area which is called RegTech. This is about ensuring regulations actually do their job better.
Regulation isn't just putting together an encyclopedia, a phone book of regulation. That rarely helps anyone. Regulation are supposed to help institutions, help companies, help customers and better understand what their obligations are, and what their rights are, and what their protections are. RegTech is a way of simplifying the morass of regulation which is out there which can just confuse people and or make it harder for companies to actually comply with. And I know that the culture that James is bringing to this organisation is one about engaging with the business and financial community to make sure that they can stay within the lines. The best ref – whatever code you follow – is the one that you hear the whistle from the least. But all the players respect the ref and they stay within the lines. That's what we have in ASIC under James' leadership, and that's why we're very happy to back in his plan. Kelly?
Thank you very much, Treasurer, and it's great to be here at ASIC with the new chair of ASIC, James Shipton and also the new Deputy Chair, Dan Crennan QC and also John Price, one of our commissioners here at ASIC. And there's been a massive changing of the guard at ASIC. As the Treasurer mentioned, when we first came into Government, we conducted a full Financial System Inquiry that looked at our financial system. Two of the major findings were – one – that we needed to conduct a full capability review of the regulator, which we did. And there were improvements that we were asked to make in order to ensure that our conduct regulator could be even more
effective. Not only at following up misconduct when it occurred, but actually preventing that misconduct in the first place. And one of the key things that we discussed when James first came on board as the new Chair of ASIC, was how we can better triage and how we can better ensure
that misconduct can be prevented. And he has done a strategic review and the strategic review has said that they need better resources to be able to ensure that their supervisory approach can be much more part of the day-to-day activities of some of our biggest financial institutions.
So, for the first time, we're going to see ASIC actually having ASIC people in our top four banks, our big banks, and also AMP, as our five biggest financial institutions in this country. That will mean that there is a greater ability for the regulator to be able to prevent misconduct, but one of the other great findings that came from the Financial System Inquiry was also to ensure that ASIC had the right powers as well to be able to have the right criminal penalties in place. And we put a taskforce in place to be able to announce those penalties, which the Treasurer touched on, which can see disgorgement, of course, of any particular gains made through financial misconduct, or, in fact, in certain circumstances, with civil and criminal penalties, 10 per cent of the turnover of a financial institution in certain circumstances. And we're delighted that we have been able to make those changes that will provide people with additional confidence. And that's working its way through the parliamentary process right now.
But I wanted to go into a little more detail around the announcement today. Over $70 million of new funding for ASIC over a two year period, and as the Treasurer has said, it will focus very specifically on being able to ensure that ASIC can actually match the big financial institutions and their financial fire power when it comes to litigation by giving them additional funds for the Enforcement Special Account. Making sure that there is increased supervision in relation to superannuation. We know that superannuation is a $2.6 trillion industry, and every hardworking Australian has got a superannuation account. In fact, we know that they've got multiple accounts and we want to make sure that their money is protected and it is there for them in their retirement, which is why they have had 9.5 per cent of their wages taken out for their retirement income into the future, and it needs to be protected. So giving them an additional $9.4 million will, in fact, make a significant difference in that regard.
As we said, having ASIC embedded in these financial institutions is also key, and it brings us into line with regulators overseas, and it's not lost on me that this is clearly something James did in his time when he was a regulator in Hong Kong, but it's also something that we have seen in the US and in the UK as well, and it's a very successful approach. Making sure that we can have better corporate governance arrangements for the large listed companies and better supervision of that, and the Government, of course, is making significant changes with whistleblowing laws to make it easier for whistleblowers to come forward and blow the whistle on misconduct and be protected in the process. ASIC will be provided additional funding so that when those laws come into place, and it's passed through the Parliament, which we encourage our parliamentary colleagues across the aisle to support, they will have the ability to provide such protections.
And finally, as the Treasurer has mentioned, to make sure that we are a leader in RegTech. We know that we are ahead of the game when it comes to our data analytics in this country, but we need to make sure that we stay ahead of the game, and this funding will make a significant difference. So over to you, James, to talk a little bit more in some detail about how you will use the money. Thank you.
Thank you. Firstly, let me thank the Treasurer and the Minister and the Government for their support of our strategic initiatives and planning. This is great news for ASIC, but above all, it is great news for the community and the financial services sector because we are implementing a plan that I have been working on with my fellow commissioners and senior leaders at ASIC for quite some time to put us on an strategic and agile footing. We have been working very hard to give life and breathe life to our new strategic vision, which is a vision of a fair, strong and efficient financial system for all Australians. And to implement that vision, we have been applying new strategic initiatives in our planning processes, which has resulted in this plan that we have presented to the Government and now present to you. It is all around three main themes.
Firstly – accelerating our enforcement initiatives and capabilities. We know that there is an expectation by the community for us to quickly resolve outstanding issues. We also understand that there is an important message to be sent to the financial sector that misbehaviour and misconduct will not be tolerated. Deterrence capability is front of mind. We are also pre-preparing now for those tools, those penalties and the enhanced tool kit that the minister just mentioned about. We want to pre-position ourselves so that we are ready to go to implement these rules, implement these tools, use these new penalties, to maximise our regulatory effectiveness. And I'd also like to welcome Daniel Crennan QC to our leadership team, because he will add great strategic leadership when it comes to our enforcement capabilities.
We are also announcing as a second strand, new supervisory approaches. As the Minister and the Treasurer mentioned, we will be going onsite. We will now have more physical presence when it comes to financial institutions. We will have supervisory officers embedded for significant periods of time inside these large financial institutions because I know it makes a difference to the way that they behave. I know it makes a difference to the way decisions are made. I know that it will make real, positive outcomes, when it comes to the way financial institutions should treat customers – and that should be fair. We are also going to be doing supervisory approaches, supervisory engagement models in the important area of superannuation. As the Minister and the Treasurer mentioned, every single adult Australian is in superannuation. Every single adult Australian. More adult Australians are in superannuation than have a mortgage. It is absolutely vital that this area be a regulatory focus for us, and this is something that we will be working very closely, in close coordination with our colleagues at APRA, to execute on.
We also will have a conflicts of interest taskforce and we're going to be looking at conflicts of interest in the financial advice industry. We're going to be looking at conflicts of interest in corporate leadership and in the corporate governance community, and we're also going to be looking across-the-board at corporate governance, particularly where remuneration structures disrupt and mean that the outcome is not as positive for the consumer and the community.
And then, finally, as the Treasurer and the Minister mentioned, we want to invest our energies and our resources in promoting regulatory technology solutions. Not just because they are good supervisory tools for a regulatory agency like ours, but also because these regulatory tools should be adopted by the financial sector, because the enormity of the task of avoiding misconduct and having fair, efficient and strong systems is not just a human response alone. It needs to have a technological solution, and we stand ready with this additional support and this additional funding to work with industry to develop these regulatory technology solutions so that we can have positive outcomes for the financial sector, but above all, for the community. Thank you.
Thank you very much for that, James, and I think that you can see from that that ASIC is in very good hands and the appointment that Kelly has recommended in James, and happily supported by the Prime Minister and I. Can I also commend you also, Kelly, in working together with ASIC to see this package come together. Together with APRA, we have some very fine leaders of our regulators, Wayne Byres at APRA and of course, James here at ASIC, they have our very strong confidence and that confidence is no better expressed by backing the measures and plans and giving them the resources and the tools that they need. Happy to take questions.
Treasurer, do you have a sense of how this would work in practice? Will regulators get their own office at the banks? Will they be able to drop into board meetings and come into the coffee room?
I'll leave those things to James. Our job is to make sure that they have the tools and the resources to do the job. The policing is a matter for the cops. So I'll let James speak to that.
Absolutely. And the Treasurer is absolutely right. We need to make decisions as regards to our strategic deployment of our tools every day. But in answer to the question – what we will be doing is having a team of up to 20 people in our close continuing monitoring team for banks. They will be spending significant amounts of time inside financial institutions. That may be days, may be weeks, may be months, depending on the project at hand, depending on the task at hand and depending on the harm that we're trying to solve for. In answer also to the question about their engagement, they will be engaging at every single point in a financial institution to provide that effective regulatory coverage. That could be the CEO, it could be the chair, all the way through to the men and women who are in the particular business unit. We will calibrate our response depending on the challenge at hand and the task that is before us. But we will be initially starting, very soon, in the weeks ahead, with a particular focus on governance structures and a particular focus on breach reporting. I mentioned in public, not so long ago, that we were about to report, as part of a public report, that we'd be conducting of twelve financial institutions about the time it takes for the financial institutions to discover misconduct and then report that misconduct. On average, it took four years for financial institutions to discover this misconduct and then, on average, 123 days for that misconduct then to be reported. That's too long. That's going to be an initial focus for us.
At the risk of labouring the sporting analogy with the ref, which I know you'll forgive me for, but a good ref talks to the players on the field all the time. They have in their ruck, they're clearly communicating their decisions before they blow whistles and that is what this is really about. This is about the regulator getting in there and being a part of the community in which they're regulating. It's not unlike effective community policing in a completely different context. You've got to have that rapport, that relationship, that engagement, that connection to have effective enforcement. The best cops are the ones that prevent crimes from happening and misconduct in the first place. Not just dealing with it once it's occurred and this is why we're so supportive of this plan. It's proactive. We want to stop things from happening, not just deal with those who have done the wrong thing after it happens.
Treasurer, can I ask, if it will work, can it be extended to other sectors, like mining companies, insurance companies, super funds you heard are problematic too?
We have an open mind on all of these things. Take the Banking Executive Accountability Regime. I've flagged very clearly that we're keen to extend that into other sectors once we've stood up the model and it's working well which as you know is already legislated for our major banks and we have a timetable to roll it out for the other banks. The Consumer Data Right which is going to completely transform the Australian economy, and transform in particular our financial sector. And I make no secret of the plan that once we stand it up there in our Open Banking Regime, it's coming to energy, it's coming to utilities, it's coming to telcos. Because strong enforcement from the regulators, rather than more regulation, competition that actually drives cultural change and a focus on the customer, accountability that comes through things like the executive accountability regime and a change in board culture and governance that is being driven through these processes. That all adds to a stronger economy and better outcomes for the customer.
Do you think that there will be resistance from banks to ASIC employees being there?
I don't believe so. James or Kelly can talk through the process that they've been going through. But in any of these types of arrangements, you engage. The whole purpose is to engage, to get the right outcomes. James, you might want to talk a little bit about the process, or Kelly, on that as well?
Thank you Treasurer, we have been engaging with the financial sector on this. We have informed them that this is a strategic plan that we've been working on. And I have also put to the financial institutions, particularly the senior most leadership, that the best practice that they could employ and apply in these situations is a culture of engagement with the regulator, a culture of no surprises with the regulator, and in addition to informing the financial institutions of this plan, we have also encouraged them to develop a strategy of their positive and productive engagement with regulatory agencies, us, amongst others, because that's important. That's important to create a positive culture inside financial institutions, but I also think that it creates a positive culture towards doing the right thing – having a culture where the customer comes first. Having a culture where fairness, strength and efficiency of the financial system is front of mind. So we've been engaging with the financial sector and we'll continue to do so in this regard.
Treasurer, can I ask you, in line with the revelations that have come out of the banking royal commission, is the Government ready to admit that it should have called one sooner?
The Government has been acting on the issues in the banking and financial sector from the day we were elected in 2013. There have been no cans kicked down the road by this Government when it comes to addressing misconduct, lack of competition, accountability in the banking and financial system. The Royal Commission has formed part of that. But it was never the Government's policy to kick anything down the road. We have been taking action from the start. The very issues that you're talking about, we're talking about today, are the product of things that preceded the Royal Commission. And that is true whether it's the enforcement powers that we did through the task force that we reported on last time. Minister Kelly O'Dwyer has also pointed out that the capability review into ASIC, this preceded all of these things. So the Royal Commission will have its role and it will provide its report. But let not kid ourselves. The action that the Government has been taking, we've been taking from day one, and we've been doing it for years. Over two years ago, we put an extra $120 million into ASIC and increased their powers then. So this is a topic on which we have never rested. It's a topic on which we've always applied ourselves fully. We've been very aware of the issues that we need to address and we have not sat back in taking action. That has been our focus. That will continue to be our focus and whatever comes forward from the Royal Commission can be incorporated into that. I think at the end of the day, the public simply wants you to take action and that's what we've done since September 2013. Did you want to add to that Kelly?
If I can make one additional point. One of the key issues that people raise when they raise concerns about misconduct with financial institutions is the fact that it can be very hard to resolve their complaint, and if they can't resolve their complaint, it can be very, very hard to get access to compensation. Well, we, as a Government, set about straight away changing all of that. Having a one-stop-shop for financial complaints, and from the first of November this year, as a result of our action that we took straight away on coming into Government, we have set up the Australian Financial Complaints Authority. That will mean that people will be able to get access to up to $2 million in compensation payments, where appropriate. They won't be charged to actually go to the complaint authority. They will be able to go there to resolve their financial complaint and it will be resolved in a timely manner and it will be binding on financial institutions, now of course if they want to take further action, they can go through the court system. They won't be bound. But it will create a very significant practical change for individuals who want to get on with their lives, and particularly for small businesses that want to get on with their small business activities, farmers, whoever it might be. They will have access now to a one-stop-shop. This is a very significant change, as well as the other changes that the Treasurer has spoken about.
And Labor's policy on this area could have, should have, would have. They didn't actually do it. Let's remember that Storm happened on Labor's watch. CBA took BankWest under Labor's watch. All of the misconduct we're largely seeing dealt with in the Royal Commission was happening on Labor's watch. What did they do, when Bill Shorten was actually the minister responsible, as was Chris Bowen. Could have, should have, would have. That's Labor's approach to everything and when they have the opportunity to do something, they do nothing. They talk a big game, but when it comes to delivering – an absolute peanut.
Treasurer, is there clarity about who supervises and super funds? Is it ASIC, APRA or someone else?
I'll let you talk to that.
So, James might talk to the recent paper that was put out a couple of days ago between both ASIC and APRA. But certainly, there are prudential responsibilities and conduct responsibilities held by both APRA and also ASIC. Our sole focus, as a Government, is to make sure that the retirement savings of Australians is protected. That we have appropriate governance arrangements in place. That the regulators have the appropriate powers that they need to see if misconduct is occurring, and take action if, in fact, that has happened. We want to make sure that people are not defaulted into multiple funds throughout their life, which can mean that they have their retirement savings taken down to zero through high insurance premiums that is they either don't want or don't need, or through high administration and investment fees and it is one of the reasons that the Government made a significant number of announcements in the most recent Budget, which will see people reunited with their own retirement savings, $6 billion worth, as a result of the changes that we have announced. It's why we will not see young people in particular paying high insurance premiums that they don't want or don't need, unless if they make the decision to do so, and again, for those people with low balance accounts and people under the age of 25 or people who have not made an active payment to a superannuation fund within a 13-month period. They have the potential to also be reunited with $3 billion of their own money in one year alone. These are significant measures. There were a number of people who said to us that there was no need to include the superannuation industry in a Royal Commission that looked at our financial system. Well, it's $2.6 trillion and we will make no apology for protecting the interests of every hardworking Australian and the money that we force them to put aside for their retirement savings. These compulsory measures have been in place for 26 years, first introduced under the Keating Government. There has been very little oversight in that regard, and it is timely and it is good that there is a light being shone on this particular issue right now.
So yes, is the answer to your question.
Just on a slightly different matter, Australia's population is hitting 25 million. Do you support, your colleagues call for a population inquiry?
What we support and what we're doing is investing $75 billion in delivering the infrastructure, together with states and territories, that Australia needs to support the growth in our population. That's what we need to do. State and territory governments, also, obviously have a significant role to play around infrastructure, housing development, land release, planning and zoning, transport links, all of this. It's about planning for growth and delivering the infrastructure. In this year's Budget, the single biggest infrastructure commitment was to Victoria. Obviously spearheaded by the Tulla Rail which Kelly has been the lead advocate for here in Victoria. But not just there. The Baxter to Frankston line. Right across the board, we are now investing so much in infrastructure all around the country that the feedback we're now get from industry is that we really are starting to hit our heads on the ceiling. The capacity to actually roll this infrastructure out now is putting real pressures in the construction industry, and we are seeing that flow through in the prices. We are seeing it flow through in the wage outcomes in the construction sector and the capacity constraints that are beginning to emerge. I mean, we have put the pedal down on infrastructure development as a government, like no government before us at a Commonwealth level. That's the answer. You've got to manage your population growth wisely. The indications that you're getting a very clear message from, and Minister Tudge was talking about this this morning. You have got to manage the issues in terms of trying to get, wherever possible, people moving out into areas where there are, frankly, population growth problems. I.e. it's not strong enough. We're seeing a lot of people in Sydney and in Melbourne, and I can tell you, population growth in Melbourne and in Victoria more broadly, is actually also being affected by interstate migration. Last year, there was some 16,000 people who came into Victoria from other states. In Queensland, it's more than 20,000. In Queensland, the increase in their population is more driven by interstate migration and natural increase than overseas migration. So the population picture is different wherever you go in the country.
In some places like in South Australia and Tasmania and in Western Australia in particular, and
the Northern Territory, they're asking for more people. In the north of Australia, they're asking for more people. In Sydney and Melbourne, there are real congestion pressures. That's why we announced the billion-dollar congestion fund in this year's Budget. Our infrastructure spending is congestion-busting infrastructure. That's what a good government does and it works with the states and territories to achieve that. The permanent intake last year was at 162,000 – well below the 190,000 target. But we are still seeing very strong growth in the numbers for education visas into Australia and also in longer term tourist as into Australia.
Skilled work visas temporary into Australia, in the last financial year, and the figures most recently available, are down 31 per cent on the previous year. There are 20 per cent less people here today on short-term skilled visas than were here in 2013 when Labor left office. So I think it's important when we talk about population, as Minister Tudge was saying this morning, to break it down. Break it down, look at the impacts across the country and plan for the future. When Peter Costello initiated the intergenerational report all those years ago, an excellent initiative, it was about providing a tool to better plan, and for us, that means investing in infrastructure that busts congestion and supports the growth that is there, because at the end of the day, it's the growth in our economy, that pays for hospitals, pays for schools, pays for aged care, pays for the pension, pays for affordable medicines. That is important and we need to ensure that we keep a strong economy to achieve that. Anything else? Great, thank you very much for your time. And congratulations, James.