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Senator KOVACIC (New South Wales) (15:52): I rise today to speak on the Anti-Money Laundering and Counter-Terrorism Financing Amendment Bill 2024. Before I proceed, it is important to state on the record that the coalition supports efforts to combat money laundering. In fact, we always have. The AML/CTF Act is a Howard government initiative post September 11. This bill seeks to expand existing money-laundering and counterterrorism financing obligations to include tranche 2 employees, like accountants, real estate agents and lawyers. As my colleague Senator Scarr noted, these are primarily small businesses, family businesses, organisations that don't have vast and deep resourcing.
This bill is filled with inconsistencies and errors that need to be dealt with. There are legitimate concerns with respect to the regulatory cost burden of this bill, which falls squarely at the feet of Australia's small businesses. It is estimated to be some $13.9 billion over the next 10 years. There is no discussion of the details in the impact analysis released by the Attorney-General's Department. This cost burden is far too large for small businesses, which will subsequently need to pass their costs onto consumers. The government must seek to eliminate or reduce these costs.
There are various impacts on the legal, accounting and real estate professions. Senator Scarr has outlined some of those in quite significant detail. The Law Council has been clear in their position that legal practitioners owe a paramount duty of care to their client and to the court. This bill drastically impinges upon a fundamental component of the legal system, which is the power of privileged information between a lawyer and their client. This bill would undermine this trust by legally compelling lawyers to inform on their clients, eroding the foundational confidence clients place in their legal representatives. It is clear that legal practitioners should be excluded from the application of mandatory suspicious-matter-reporting requirements of this bill.
Further, in relation to the real estate and accounting professions, the Real Estate Institute of Queensland recommended that there should be a platform solution which enables tranche 2 entities to share and rely on information in the most effective way. Again, Senator Scarr spoke to this. There are multiple reporting obligations, based on the current structure of this bill, on one transaction. That doesn't make any sense whatsoever for an individual or a couple purchasing a home to have to meet the requirements three times in the purchase of a home—once to their lawyers, once to their bank and perhaps once to their accountants if they're having some assistance in relation to that matter. Finally, there should be amendments to the explanatory memorandum to erase ambiguity about conjunction agreements, and to exclude residential side agreements and land leases.
There a number of deficiencies which were identified in the Senate inquiry, and I will go through those briefly. Noting the considerable concern with respect to cost and regulatory burden, and how reforms would interact with professional responsibilities, it's disappointing that the processes for this have not been adequate. The Law Council of Australia has raised concerns with respect to the adequate time provided for it, as the peak body representing the Australian legal profession, to make submissions and engage in this process. While there are circumstances where bills are required to be introduced and passed as a matter of urgency for reasons outside of the control of the executive, this bill deals with matters which have been the subject of discussion for quite some time and which should have been open to broader consultation.
In its additional comments, the coalition have a number of recommendations, the first of which is that the Senate note the inappropriateness of the abbreviated timeline for consideration of the Anti-Money Laundering and Counter Terrorism Financing Amendment Bill, particularly given the importance of the legislation, the cost burden of that same legislation, the failure of the government to circulate an exposure draft of the bill, and the inclusion in the bill of matters which were not subject to prior consultation, including the schedule 9 powers.
Concerns were also noted with respect to the regulatory cost, and I've noted some of those already. I note that there are estimated regulatory costs of $13.9 billion over 10 years. There is no discussion of the qualifications contained in that report regarding that cost estimation. There is no discussion of the estimates of cost provided by the tranche 2 entities, legal professionals, real estate agents and accountants that were submitted as part of this committee inquiry process, and that in itself is quite a staggering omission. The AGD impact analysis estimated that the upfront cost for the provision of legal services to comply with the new regime would be $429 million, with ongoing costs of $2.454 million. Over a 10-year period, that cost, calculated on a net present value upon those providing legal services which are designated services, is estimated to be $2.833 billion, a significant impact on the industry and its many small-business owners.
There is also a cost impact on real estate agents, who are primarily small businesses. The analysis estimated that the upfront costs for the provision of real estate services to comply with the new regime would be just under $1 billion at $989 million, with ongoing costs of $4.903 million. Over a 10-year period, that total cost, calculated on a net present value basis upon those providing real estate services which are designated services, is estimated to be $5.892 billion. Again, this has a significant impact on the real estate industry and its many small business owners.
The impact analysis estimated that the upfront cost for provision of accounting services to comply with the new regime would be some $562 million, with ongoing costs of $3.12 million. Over a 10-year period, that total cost, calculated on a net present value basis upon those providing accountancy services which are designated services, is estimated to be $3.82 billion. Again, this has a significant impact on the accounting industry and its many small and family business owners. The second recommendation from the coalition on the inquiry was that, before the bill is passed, the government must address the cost burden imposed by the legislation on small business. The $13.9 billion cost is a burden far too large, and these costs, as we know, will be passed on to families and customers.
There are many issues relating to this, but, in conclusion, this bill does not have the support of small businesses, real estate agents or lawyers—the very people it will burden the most. COSBOA has criticised the lack of consultation and warned of the cost, confusion and compliance headaches it will create. Evidence from overseas paints an even grimmer picture. This bill is fundamentally flawed and needs to go back to the drawing board, and we must ensure any reforms are practical, effective and fair.
Debate adjourned.
