Treasury Laws Amendment (Financial Reporting System Reform) Bill 2026

Senator CANAVAN (Queensland—Leader of the Nationals) (12:33): The Treasury Laws Amendment (Financial Reporting System Reform) Bill 2026 is a little bit of a confusing bill, particularly at a time right now when people are struggling and doing it difficult—doing it tough. Our financial system certainly doesn't seem to be working for average people. There are lots of issues in that sector.

We've got the highest interest rates in the developed world, for a start. We've had lots of misbehaviour from our banks. We've got banks closing in regional areas, where I am, and they're now closing even in the cities too.

It's very, very tough. There are lots of issues to deal with in our financial sector. But I suppose it shows something of the priorities of this government that they bring forward this bill which, in one line, seeks to consolidate accounting reporting or accounting standards into one body.

It's quite an arcane topic for people. It's hardly a kitchen table topic when there are plenty of financial issues around the kitchen table. So why is the government putting so much effort in here to abolish three bodies through this bill?

They're abolishing the Financial Reporting Council, the Australian Accounting Standards Board and the Auditing and Assurance Standards Board—all very technical and dry institutions made up of accountants but very important ones. They're abolishing them all and replacing them with this new body called External Reporting Australia. The first question that the Liberal and Nationals side of this chamber has about this bill is: why?

Why are the government doing this? Why are the government doing this at a time of a cost-of-living crisis for Australian families? Why are the government doing this when there hasn't been any identifiable real issue identified with the three bodies I just mentioned and their development of accounting standards?

It seems to me that time after time the bureaucrats and public servants in this town have to, I suppose, do something, so abolish these bodies and create a new one. It keeps everyone busy. New roles for people are being created.

But what is that actually going to achieve? Why are we wasting the Senate's time on this? Accounting standards is not a topic that's brought up with me regularly, if ever.

As I described, I think we're generally seen to have some of the best accounting standards in the world. We've had particular issues with accounting firms, which I'll get to. The standards themselves seem to be world leading and not really at any kind of crisis point.

So why is the government doing this? It's our central question. Generally speaking, on this side of the chamber, if we can't answer that 'why', if we don't have a strong reason to do something—create more laws, more business or more work that don't need to be there—we don't support it.

If there's not a good 'why'—if there's not a good reason—let's not do it. For one, let's leave a system that's currently working alone. If it's not broken, you don't need to go around trying to fix, particularly in this place.

When people from this town turn up and say, 'I'm from Canberra; I'm here to help,' often the outcome is not a forward-moving one. Why don't we just let sleeping dogs lie? It seems fine as it is.

We do not see and have not been convinced of a good reason. The second question we've got here is: will this actually make things worse? We're a little bit worried about that because, as I said, the government doesn't seem to have a clear agenda about why it's doing this—why it needs to create a whole new body and replace three institutions.

There's nothing really on the public record that we can see that indicates what exactly this is about. That does give us some pause and makes us worry that maybe if there's not a public agenda there is in fact a hidden agenda of making what are quite radical changes to bodies that themselves are not very radical but pretty conservative state institutions. Why do all this?

Maybe there's something else here. The concern I have is that fundamentally this change takes what are expert-level, pretty dry—should I say boring—institutions and insert politics into the heart of them. I'm concerned about that for a reason I'll come to, but that's what this is doing.

Previously, under this tripartite framework, the Financial Reporting Council I mentioned did have its members appointed by a minister through a political process. But that body was simply an oversight body. It didn't itself set the standards.

It set general guidelines and oversaw the other bodies. But the Australian Accounting Standards Board and the Auditing and Assurance Standards Board were separate bodies outside the political process and staffed by experts—people in the accounting field who were rather dry, stayed out of politics and did their job as you want an accountant to do. You don't go to an accountant for his or her political bent; you go to an accountant because you want a job done.

You want the facts and the details to have been gotten right. These bodies are so that they get things right. They're generally seen as world leading.

But now, because the government is abolishing these three bodies and replacing them with one—to be called External Reporting Australia—that body will cover all these areas. They'll provide that oversight. They'll set the accounting standards, which used to be set by the Australian Accounting Standards Board, that all accountants have to follow.

The External Reporting Australia body will also be responsible for implementing those standards, overseeing and administrating them and making sure people adhere to them. Because that body will be appointed by a minister, the government will have a lot more control over accounting standards directly through appointments into one body. We don't see the need for politics to interfere with these dry accounting frameworks that have worked well, and that's why we can't support this.

We don't think there's a need for change, the case hasn't been made and this will unnecessarily risk politicising what has been an independent, arms-length, well-working process. It does raise the question: why would the government want to politicise this—why would something so dry and arcane need to have politics inserted into it? There has been, in recent years, an unfortunate creep of politics through to accounting standards, which I would argue is a diversion from what is necessary in accounting towards what is seen to be the priorities of particular sides of politics.

In particular, there's been a rise of this concept some may have heard of called environmental, social and governance, so-called ESG, standards. ESG reporting has been the latest fad, if you like, that's overtaken what was accounting reporting but is now, really, in that field, a political reporting exercise to justify certain political stances on the environment, whether they're related to climate or other environmental standards.

This is related to what is seen as governance, which is seen to be a good thing, but it generally involves the pushing of activist political exercises—things like the Aboriginal and Torres Strait Islander Voice that we're told we're terrible people if we don't support. That all gets rolled into this orwellian umbrella of ESG standards. Many parts of the Western world that have adopted these standards have ended up shutting down lots of their industry that is not seen as worthwhile or good for the environment and the like, and they've become dependent on other countries.

And that's led to the sharp rebuttal of ESG with the question: what does ESG actually stand for? The proponents of it say it's 'environmental, social and governance' standards. I think, actually, the lived experience with ESG would indicate the letters stand for something else.

ESG has, really, in effect and in practice, come to mean 'extreme shortages guaranteed'. That's what ESG actually stands for, because everywhere these standards have taken over—particular corporations, governments—they have run out of things, run out of the production of things and become vulnerable and dependent on other countries. The most stark example is right before our eyes right now.

We adopted these ESG standards in areas like energy and, particularly, fertiliser production. We no longer make urea in this country because it's come to be seen to be evil or terrible for banks, insurance companies and the government itself to support the development of fertilisers from natural gas production. It just so happens, though—it would be an inconvenient truth for those pushing this line—that, in fact, almost all fertilisers that are used by farmers come from natural gas, particularly something called urea, which, roughly speaking, accounts for about half the world's food production.

Urea is made from natural gas. When our banks, our insurance companies and our government agencies employ these ESG standards, they often come with the idea, 'Well, we won't support gas, because it's terrible and evil, of course, and we don't do terrible, evil things any more, because we're good people and we support ESG.' Then gas production shuts down, people can't get finance, we lose the ability to supply gas to our last urea plant, on Gibson Island, at an affordable price and then it shuts down.

In early 2022, our last urea manufacturing plant in Australia shut down, and we don't produce it anymore. By the time that the Iran crisis began, a few months ago, we were getting 67 per cent of our urea needs met by the Middle East—a bit of a problem! When that war kicked off and the Strait of Hormuz, which we've all come to know, was shut, we effectively couldn't feed ourselves as a country.

The government's had to rush around madly and sign blank cheques all around the world to have urea fertiliser turn up to our country, and they've succeeded. Usually, when you go out with a blank cheque, you do alright. We're all paying for it, though.

We supported laws in this place to allow them to do that. But why have we put ourselves—our country—in this position where we have all these natural resources, we have a great farming industry and we can't be independent? We can't be because these ESG standards have taken over.

I worry that this bill is a backdoor to further these ESG standards with the government politicising the bodies that write these standards. It will be used as another tool by which to discourage and disincentivise—even ban in some circumstances—the finance of industrial production that relates to the use of fossil fuels, such as the production of fertilisers that feed us all.

A lot of the people who impose these standards are completely ignorant of all this. They are well-meaning, they are good-natured—the path to ruin is often paved with good intentions, and there are lots of good intentions—but lots of people doing this, a lot of the accountants and people at the top of these corporations, have no idea, when they go to the fancy steak restaurant at the end of the day, the food on their plate actually wouldn't be there without fossil fuels.

It would not be there. They have no idea about it. They are completely ignorant.

Yet again, we are rushing to do these sorts of things. We're leaping before we look properly at what we need to do to run a functioning, prosperous, modern economy. My concerns are even more heightened with this bill because the government is rushing this and ramming this through in another deal with the Greens.

They did a deal last week to jack up taxes. The Greens have never met a tax they haven't wanted to make higher. That went through.

Now we have another deal with the Greens to get this bill through, which I think is a trojan horse for a Green agenda to shut us all down. The deal in this case, notionally, doesn't look terrible. Apparently, the deal between the government and the Greens is to ban anyone who has received compensation from a big four accounting firm in the last six months from being on this new body, External Reporting Australia.

Okay, the big four accounting firms are in hot water at the moment. I'll put on the record that I am a former employee of KPMG—it was many moons ago—but there are lots of fine people who work for these institutions. It does seem passing strange to me that, of all the parties, the Greens in particular would apply the principles of collective guilt on everybody.

There are thousands of people who work for these organisations, thousands of people, and many of them are just good, hardworking people who happen to be, let's face it, the very people who have the expertise to set accounting standards. A lot of CPAs and CAs in this country work for some of these firms. The amendment the government has agreed to here effectively locks out—presumably, probably—the best accounting minds in our country from setting our accounting standards.

It's crazy. I get that this wasn't the government's idea, I recognise that, but they rolled over and agreed to this. It's a form of collective punishment.

Sure, let's clamp down on anyone who has done the wrong thing in these organisations as they deserve the full force of the law—I'm happy to ban those people—but there are a lot of innocent people who are going to be captured by this. And by going ahead with this overreaction, this knee-jerk response, we are putting at risk the setting of accounting standards that have otherwise been without scandal, without problem.

There are plenty of other speakers, so I ask: where are the problems with the current accounting standards process that requires such radical action, kicking people off who otherwise have done nothing wrong? We do risk making what is a good situation into a bad one, and that's the first thing we should avoid doing in this place. Don't make a problem where there isn't one to begin with.

We've got enough problems to face at the moment. Let's get back to focusing on them.