Second Reading Speech
Dr CHALMERS (Rankin - Treasurer)I move:
That this bill be now read a second time.
Today I introduce legislation that implements two important reforms: new mandatory climate reporting requirements for large businesses, and a new regime to protect our financial market infrastructure in the event of a crisis.
Collectively, these two reforms will help modernise our economy, maximise the economic opportunities in the decades ahead and build a stronger financial system.
We know we need significant and well-targeted investment to grasp the benefits of the net zero transformation and manage the challenges of climate change.
Australian businesses and investors see the potential to harness demand for renewable energy to broaden and deepen our industrial base, while at the same time maximising our traditional economic strengths as well.
But to enable this, and to give investors more clarity, we need a robust way to measure progress and manage risk and opportunity.
To make the big, economy-defining improvements we want to see, we need to help investors make the right calls.
And to make the right calls, they need the right information.
That's why today we're introducing legislation mandating corporate climate reporting in Australia.
Our new climate reporting requirements will help Australia maximise the economic opportunities of cleaner, cheaper and more reliable energy, and better manage climate risks in our economy.
These changes introduce standardised reporting requirements for businesses to ensure they're making high-quality climate related financial disclosures.
This will support Australia's reputation as an attractive destination for international capital especially when it comes to investment in our energy transformation, and it will bring us in line with international standards.
The new climate reporting requirements will commence from 1 January 2025 for Australia's biggest listed and unlisted companies and financial institutions. And other large businesses will then be phased in over time.
We do acknowledge that for some, making climate disclosures for the first time will be challenging.
These lead times and this staggered approach gives companies time to build internal capability and expertise to make high-quality climate risk disclosures.
The government will also provide limited relief from private litigation for a three-year transitional period.
But ASIC can still take action for breaches of the reporting requirements during this period.
These changes will establish Australia's climate risk disclosure framework, give investors and companies the transparency, clarity and certainty they need to invest in new opportunities as part of the net zero transformation, and ensure our economy is working to attract and deploy capital where it's most needed.
We have consulted extensively with industry, investors, academics and regulators to ensure we take a balanced approach to mandatory climate disclosure requirements.
And there is broad industry support.
This legislation is part of our broader sustainable finance agenda, and it shows that the Albanese government is responding to the challenge of climate change by maximising the economic opportunities which come from cleaner, cheaper, more reliable energy.
Today, I also introduce legislation to strengthen the regulatory arrangements for Australia's financial market infrastructure.
This legislation gives the RBA the power to step in and quickly resolve crises impacting critical financial market infrastructure and it strengthens the RBA and ASIC's regulatory powers.
These powers were first recommended by the Council of Financial Regulators in 2015.
The gap in emergency powers should have been addressed years ago to ensure continuity of clearing and settlement services in the face of a crisis.
It took the previous government six years to agree to the recommendations - and they never got around to implementing them.
As is the case in so many areas, we are delivering where the former government failed.
We are acting to implement these important and longstanding recommendations.
This regime has three key elements.
The first one is giving the RBA the power to ensure stability of clearing and settlement services when a crisis occurs, as well as giving them the regulatory powers to help prevent a crisis in the first place.
This will help maintain critical market functions and protect Australia's financial stability.
While our financial system is resilient, the failure of a clearing and settlement facility would cause significant disruption to Australia's financial markets.
That's why it's important that the Reserve Bank has appropriate powers to act quickly and decisively to resolve a crisis.
The bill contains a range of supporting powers to ensure that the Reserve Bank can exercise its crisis powers as effectively as possible, but only when one or more conditions for resolution are met.
These conditions clearly define the triggers for intervention and draw a distinction between the RBA's crisis powers and its day-to-day regulatory oversight and risk mitigation function.
The bill also gives the RBA the power to provide up to $5 billion in support to ensure continuity of critical clearing and settlement services if a facility faces a crisis event.
The funds are only intended to be used as a last resort, where a financial failure threatens the stability of the financial system.
The funds allow the Reserve Bank to step in to resolve the business of the clearing and settlement service; the funds would be recovered after the event, and they'd only be used with the approval of the Treasurer of the day and the Minister for Finance. That's the first set of changes.
The second set of changes are aboutproviding greater licensing and supervision powers to ASIC and the RBA to strengthen clearing and settlement facility standards.
Our reforms enhance the regulatory powers of ASIC and the RBA, giving them the tools that they need to take decisive action to monitor, mitigate, and reduce risks in our markets.
The new powers include notification requirements, the power to issue directions and rule-making powers for clearing and settlement facilities. It also gives them the power to ban people when they are not fit or proper or competent, and ensures that changes in control of any financial market infrastructure must be approved by either the minister or ASIC. That's the second set of changes.
The third one is about transferring existing ministerial powers for licensing and supervision to ASIC and the RBA.
The majority of these powers are already delegated to ASIC and the RBA.
These changes would ensure that the day-to-day supervisory powers sit with the regulators, while the minister will retain broader strategic and governance powers.
This will create a coherent, complete suite of regulatory powers that support strong financial markets.
We urge the House to support the climate disclosure and financial market infrastructure reforms we are introducing today.
These reforms will make it easier for businesses to make decisions about investing in the energy economy, and they will modernise and strengthen Australia's financial system.
If we don't act, we risk missing out on capturing the investment opportunities of the transition, and leaving our financial system exposed to potential crises with a less effective way of responding to that.
So we ask that honourable members support these sensible measures which come after a long period of collaboration and consultation.
Full details of the measure are contained in the explanatory memorandum.
Debate adjourned.