Denham Sadler
April 18, 2019

Data rights delay as laws stranded

Policy

Data rights delay as laws stranded

Prorogued: The election has delayed programs like open banking and the Consumer Data Right

Government’s failure to pass the Consumer Data Right legislation before the May election could lead to further delays to the rollout of the open banking scheme.

When both houses of Parliament rose for the last time before the federal election in early April, a number of “game-changing” pieces of tech-focused legislation were left behind.

If there is a change of government in May, the fate of the Consumer Data Right, the changes to the research and development tax incentive, and amendments to the encryption laws remain up in the air.

Parliament had been scheduled to sit next week. But with the parliament now prorogued after Prime Minister Scott Morrison last week called the election for May 18 it is now not likely to sit before June, and potentially much later.

The government did not pass the Consumer Data Right legislation, labelled a “game-changer” by Treasurer Josh Frydenberg, despite a government-led senate committee giving it the green light.

The CDR paves the way for the open banking scheme, which is meant to kick off properly next year and be closely followed by the energy and telco sectors.

“The consumer data right is a fundamental structural reform that will drive competition and improve the flow of information around the Australian economy,” Mr Frydenberg said in February when the legislation was introduced to Parliament.

There are now concerns that this could lead to further delays to the launch of open banking in Australia, which has already been pushed back to early next year, FinTech Australia general manager Rebecca Schot-Guppy said.

“We are disappointed that the legislation did not progress through the Senate, despite our ongoing consultations with policy makers on this. This mishap, in combination with an uncertain political landscape, could cause further delays to the planned roll-out of open banking in February 2020,” Ms Schot-Guppy told InnovationAus.com.

“Australia has a rare world-leading position on this policy agenda, but we risk losing it should we continue to delay.”
A pilot program for open banking is believed to be going ahead as planned from July this year.

The Consumer Data Right bill was quickly passed by the lower house in February and handed up to the senate, where it was referred to the economics committee.

Its report recommended the legislation be passed as is, despite acknowledging the wide range of concerns that surround it.

But it was not brought for debate in the senate in the last sitting week of the 45th Parliament. Labor has pledged to make a series of amendments to the legislation, and is likely be able to do so if it wins government in May.

Labor’s core issues with the legislation centre on privacy, consumer protection, sectoral coverage and the rushed process behind it, but it is yet to outline what exact changes it will make.

The CDR legislation joins the much-vaunted Mandatory Comprehensive Credit Reporting Bill, which was introduced to Parliament in March 2018, but is still yet to be passed. The credit reporting regime was also meant to be beneficial for the FinTech sector.

Labor’s promised changes to the government’s controversial Assistance and Access encryption bill have also been left languishing in Parliament over the election campaign. 

After caving to the government and passing the legislation, which gave new powers to authorities to compel tech companies to provide access to encrypted communications, Labor promised to make a series of amendments in the small number of sitting days before the election.

Some of these amendments were introduced to the Senate, but were barely debated and not brought on again by the government before the senate rose.

The Opposition has now promised to require judicial oversight for the issuing of technical assistance notices and technical capability notices, and a review of the economic impact of the legislation, if it wins the upcoming election.

“A majority of the senate voted for those amendments but the government, which still maintains that this rushed legislation is perfect, has shut down debate on those amendments and so, regrettably, we will not be able to pass them before the election,” shadow attorney-general Mark Dreyfus said.

Contentious changes to the research and development tax incentive (RDTI), amounting to a $2.4 billion cut, were also stranded in Parliament after they were put on hold by a government-led senate committee.

Earlier this year a senate committee recommended the government “defer consideration” on the bill until “further examination and analysis of the impact is undertaken”.

Specifically, the committee called for a rethink of the changes applying retrospectively to companies making less than $20 million a year, and to the “intensity measure” applied to work out the refund for larger firms.

The government agreed to put the legislation on hold, but is yet to confirm how it plans to proceed with the changes. The Opposition has criticised the government for the process and a drop in spending on R&D, but is also yet to confirm how it would proceed with the legislation, if at all.

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