SENATOR KATY GALLAGHER
SHADOW MINISTER FOR FINANCE
SHADOW MINISTER FOR THE PUBLIC SERVICE
CHAIR OF THE SENATE SELECT COMMITTEE ON COVID-19
SENATOR FOR THE AUSTRALIAN CAPITAL TERRITORY
STEPHEN JONES MP
SHADOW ASSISTANT TREASURER
SHADOW MINISTER FOR FINANCIAL SERVICES
MEMBER FOR WHITLAM
THURSDAY, 7 MAY 2020
SUBJECTS: Senate Select Committee into COVID-19; Super early access scheme fraud; JobKeeper.
SENATOR KATY GALLAGHER, CHAIR OF SENATE SELECT COMMITTEE ON COVID-19: Okay. Thanks everyone for coming. Just want to make a few comments coming out of the Select Committee’s hearing today. Obviously there was a big focus on the fraud investigation that's being undertaken into the Super fraud, which I'll let my colleague Stephen Jones comment on, but a couple of other things I think that we'll be keeping an eye on going forward in our Inquiry is around the speed and urgency of the economic responses and how they're getting rolled out the door. And we heard today that in terms of JobKeeper, about a billion dollars of the $130 billion program has made its way out the door and this is seven weeks after some of those significant shutdowns which resulted in so many people being laid off or stood down or having their working lives affected. So I think there is a concern around that.
Still, private savings from superannuation – $9 billion – constitutes the largest single program that's supporting our funds into the economy at the moment. It far exceeds the cashflow boost in JobKeeper and even payments to households through the $750. So that again is something that we'll continue to sort of push to the Government around the speed and urgency. We know people are really finding it tough at the moment. Are these funds getting out the door fast enough? The second area is around JobKeeper and JobKeeper eligibility. We know in the shocking and devastating and very really confronting numbers that were released by the ABS today or sorry, the ABS this week that we've seen about a million jobs lost, you know, one in three in the food and accommodation, one in four in recreation and around retail. These are there and lots of, for young people, you know, one in five young people losing their jobs.
These are very confronting numbers. We know that it's around those highly casualised industries that have really felt the full, you know, attack of I guess the social restrictions that were being put in place and needed to be put in place. And we've supported that. But for many of those who've lost their jobs, eligibility for JobKeeper, you know, is, is not available to them. And I think we are concerned about that. Why were those industries that were most significantly affected by the shutdowns, the ones with the most short term casuals who were actually going to miss out on keeping that employment link. We want to make sure unemployment is as low as it can be. We know how hard it is to get people back into jobs if they lose them. And so we've been urging the Government to consider the Treasurer using his pen, showing a bit of compassion, particularly in light of those numbers we saw this week and addressing some of those eligibility criteria.
But today again, the Treasury has confirmed that the Government isn't considering any changes to that. And in a sense, while they're a million under-subscribed for JobKeeper, which some in the Government have seemed to be touting as its success of the program. We see a million more trying to get JobKeeper on the unemployment queue. And Labor would say that's not a, that's not a fair go for anyone and we'll continue to push this and push the Government to reconsider that approach and make sure as many young people, as many of those in short term casual positions actually get access to some jobs support and keep that employment relationship with their employer.
On the ATO fraud, the super fraud. I'll hand over to my colleague Stephen Jones to provide comments.
STEPHEN JONES MP, SHADOW ASSISTANT TREASURER: Thanks very much Katy. Well, today it was confirmed by the AFP that they've got at least 150 cases of individual fraud that they are investigating arising out of the Government's early release Superannuation scheme. Right from the get go, Labor expressed its concern about the design of this scheme. We drew the Government's attention to the potential for fraud. We drew the Government's attention to the fact that the system that they have put in place, which is largely an automated system, very little human checking involved, creates a system very susceptible to fraud. And that's been revealed today. It's been highlighted that this is exactly what's happened. We tried to get the Minister to be interested in this. In fact, the industry has tried to get the Minister to be interested in this and they've rejected it. In fact, on the very same day that the AFP opened its investigation into 150 instances of fraud, the Minister wrote this letter to industry bodies saying there is absolutely no concern about fraud in the Government’s early release superannuation scheme.
Well clearly the ministers have been asleep on the job. We want to see more action. We want to ensure that people who have a need, who have hardship are able to get access to their money, but we don't want to see that money end up in the wrong pockets into the pockets of criminals and better processes need to be put into place. One of the most extraordinary things about this is it wasn't picked up by the Tax Office itself. It was picked up by worker inside the fund on the basis of the evidence today. So the very same time as certain Senators and indeed the Minister herself has been criticising the funds for not getting the money out the door fast enough. We're seeing that some of that caution, some of those checkings that are occurring inside the funds are, are the last backstop against this sort of serious fraud occurring. This is worker’s money that is at stake. On the Government's own estimates $27 billion worth of money and as Katy explained today, it's the majority of the stimulus that's in the economy at the moment. So I want to see the Government take this seriously. We want better protections in place so that workers who are already doing it hard don't have their life savings exposed to this sort of fraud.
JOURNALIST: [inaudible] what do you want to see from the Government [inaudible] in terms of these fraudulent attempts and people gaining access to money.
JONES: We want to ensure that there are better systems in place to pick up those mistakes before they happen. It's great that the AFP is on the job. We wish them all the best. I have great confidence in their investigative ability, but we'd like to see the frauds prevented before they occur. And all of the security agencies that are available to the Commonwealth Government can be brought to bear on this task. We've got a lot of capacity within many of the Government agencies to bring to bear on this task, but it doesn't appear at the moment that that is occurring.
The second thing that we want to say occur is that if a fraud does occur and that fraud arises as a result of the Government's own lax procedures, we don't want to see the funds, fund members or individuals have to bear the price of that. So there should be a compensation scheme in place to ensure that individuals or the funds’ members as a whole aren’t paying the price of Government incompetence.
JOURNALIST: Okay. Can I ask National Cabinet will meet tomorrow, there's very clear mood that the Prime Minister wants restrictions to be eased right across the country already though we’re seeing the states of Victoria and New South Wales indicate they won’t move at all this week. Should they be moving to a national approach to how we get out of this and are you comfortable with the states moving at their own pace?
GALLAGHER: Well, I think what we've seen with the National Cabinet, really right back to when the first decisions were made around the social restrictions being put in place, that it wasn't perhaps a uniform view of the Federal Government with, it was states and territories, pushing that particularly Victoria and New South Wales. I think there has been an acknowledgement that states are at different places and stages and Territories and that they, you know, in a sense, are operational managers of those jurisdictions and they make those decisions. So I think, you know, the National Cabinet or it's essentially COAG, let's face it, it's COAG working as COAG should work, should be working. I think there's bipartisanship and unity until there's not, and there's quite a bit where the states have to look after their own interests and make sure that they're making those decisions because they are answerable to the people.
And I think the Prime Minister has to make sure that he's acknowledging that and not pushing or demanding things that I think the states are wary about these are real balancing acts. I think people are genuinely worried about, you know, going too fast. And at the same time people are also wanting to get people back to work, kids to school. I mean there isn't in a sense of a perfect answer, it's a balance, but I would urge the prime minister rather than, you know, front pages and payoffs to particular sections of the education community, some of those tactics we've seen in the last couple of weeks, that working with the states, and taking what they're saying seriously is perhaps a better way to proceed.
JOURNALIST: One of the other things we learned from the AFP Commissioner during that Committee was an update on some of the disciplinary action they've taken against their own cadets and staff that were involved in a party of the AFP’s college here in Canberra. How disappointing as a Senator for the ACT, is it that some of your own constituents, ordinary Canberrans are effectively having to police the police?
GALLAGHER: Yeah. Look, I think, you know, all of us and Canberrans, you know, I've been very parochial and local here have done an amazing job in flattening the curve here to the point where I think we're in a really good position now. And thankfully our hospitals aren't full of really sick people. You know, the health system is coping. It's ready to not just care for COVID patients, but for others who are sick as well. You know, my take on the Commissioner’s evidence was that the police did take it seriously, that those people were held to account for their actions. I imagine if I, when I was listening to it, I was thinking if I was one of those kids and I had to answer the Police Commissioner, it would, you know, you know, I'd be pretty scared to be honest and maybe never make a mistake like that again. But you know, at, on a fairness level, I thought the police looked like they'd taken it seriously and all of those involved had been sanctioned. And I think it's a really important message. Nobody should be treated any differently, regardless of who you are, what age you are, whether you're a policeman, whether you're a student, whether you're a politician. The success of the response to COVID-19 has because the majority of us have all done what we were told to do.
JOURNALIST: Just on the success of the response to COVID-19. Given the numbers of the ACT, do you think that, and given the size of it is proportionate to the rest of the states and territories do you think it's in a position - the ACT government is in a position to be able to lead on the way out? To show as an example how you can get out of this crisis?
GALLAGHER: Well, the ACT always leads on these, on a whole range of matters. You, you'd understand. I'd have to say that as a former Chief Minister, we're used to being at the front. But I would also have a bit of caution there. I mean the ACT is an island in the sea of New South Wales. We can't close our borders like other jurisdictions. We have done well. Our population, our low population has certainly helped there. And also people just abiding by the restrictions. But we are very dependent on what happens around our borders. And so I think people remain very cautiously optimistic. But I think the Chief Minister's made some comments about schools going back. That's the single biggest issue being raised with me at the moment, is when can my kids go back? And it's not just me raising that, cause I'm raising it as well, but other families. And I think there seems to be some move on that and I think that will help, but we've got to remain guarded until you know, there's a vaccination or antiviral treatment. It's going to be, you know, something that jurisdictional leaders have to manage for the next 12 months.
JOURNALIST: Given the health advice from AHPPC has been school are okay to be open provided there's certain limitations in place. Do you think the ACT government has been too slow in sending kids back to school? Given the case numbers here in the ACT.
GALLAGHER: Look I think they've done a pretty good job in terms of getting kids back to online learning. Like, let's face it, you know, you're running, you know, 80 odd schools, you've got a whole range of kids from preschool to year 12. You've got you know, the demographics of the workforce in the ACT tend to be older. So there would be more teachers that would fall into perhaps some of those vulnerable categories around you know, COVID-19 and the impacts of that. So I think there's a range of issues which the ACT government has had to weigh up shutting in a sense, shutting the schools and then getting them open again isn't just a matter of switching a light on and opening the door. There is quite a lot of work that goes into making sure they've got the staff in place, you know, that kids can be at school safely. I think there is, I think the important thing was to pave out a way forward because that's what parents were wanting. How long are we going to be basically school teachers and workers at the same time. And you know, I think that was what was getting to people, but now that there's a way forward, I think that'll be welcomed. And again, I think we all have to stand ready for the fact that some of these schools may close over time depending on what happens with particular outbreaks. But you know, I think there's been a huge shift in the ability of education systems, you know, cause they are slow to change at times to actually go from classroom teaching to online education programs and then back open again. I think they've done a pretty good job.
JOURNALIST: Mr. Jones, just on the superannuation issue one more question, correct me if I'm wrong, but I think some of the testimony we heard today was that the super funds themselves be on the hook for reimbursing the people who had their super taken out of their accounts fraudulently. Do you think that's fair considering it's this process that takes into account all these government applications as well.
JONES: Under the existing arrangements there's a capacity for the minister to authorise fund members at large to compensate an individual fund member in the case of a fraud. But what the law doesn't contemplate is where a fraud has occurred because of a government action. And I think what we have here is a classic case of a fraud occurring because of a government designed scheme. And I think in those circumstances, I think in those circumstances it's incumbent on the government to ensure that the fund and the members aren't worse off.
JOURNALIST: But wasn't the, one of the issues here was that this was an external breach. There was no internal breach at the ATO as in it was pretty similar to just retail examples of fraud that had happened in the community?
JONES: There's nothing retail about a million people inside a three week period making an application for early access to their superannuation. That is about 3000 times the normal application rate under the existing, under the pre-existing arrangements. So there's nothing normal about this. There is nothing retail. This is nothing garden variety around the existing scheme. The Government designed a scheme to enable people to access their superannuation in great sways, in a short period of time. And in doing that they've created a backdoor for fraud to be able to be perpetrated. We want to say that back door closed, but we also want to ensure that individual fund members and individuals that have been subject to that fraud aren't any worse off and the government can fix both of those things.
JOURNALIST: So we know which funds are involved?
JONES: I don't know which funds are involved with, I'm sure the government does and I'm sure the AFP does.
JOURNALIST: Should they make it public?
JONES: I think, I think there will be a request for further information. The sorts of things that we are focused on at the moment, the systemic issues. And one thing, there's quite clear, it was actually a worker inside a fund who picked up the fraud in this instance. It wasn't the government system it was a worker inside the fund who said something doesn't look right here and they have a word with AUSTRAC and systems have kicked in. I think that's remarkable in an environment where everyone from the minister to several senators, Government senators around this place have been criticising individual funds for not paying as soon as a message has gone from the ATO to the individual fund. This is a perfect example. Where the last line of defence is a very important line of defence. We will need to take a bit of a [inaudible] and a lie down and ensure that a system designed to provide some relief to hardship does not become a honeypot for fraud.
JOURNALIST: Aside from your criticisms of the Government and the processes here, do you think that this incident would serve as a wake up call to tax agents, to financial advisors who might hold that information about their clients on their books and are now seeing that it could be vulnerable to hacking or other ways of getting that information and misusing it?
JONES: This has got to stand as a general warning to everyone in the community to take particular care for your personal data, but an additional responsibility is imposed upon the Government when they've designed the scheme which has led to this fraud occurring in the first place. An additional responsibility falls upon the Government when they've put in place a scheme, which is all about fast tracking and not about careful checking.
JOURNALIST: Thank you