Treasury Laws Amendment (Financial Reporting System Reform) Bill 2026
Senator DARMANIN (Victoria—Deputy Government Whip in the Senate) (12:48): I rise to participate in the debate on the Treasury Laws Amendment (Financial Reporting System Reform) Bill 2026 and add a view as well. A strong economy is one that people feel confident to invest in and this confidence is reflected in various ways. It's institutions are transparent, its markets have integrity, it is ready to adapt to domestic and international developments as they arise, and it is both fair and honest.
This bill delivers measures that will enable those qualities of a strong economy. It streamlines Australia's financial reporting bodies and it strengthens the integrity, adaptability and accountability of our economic institutions. These measures are necessary.
Let's consider for a moment the economic environment that our government inherited when it came to office: huge deficits, higher inflation, falling real wages and falling living standards. It's an environment that is felt acutely by everyday working Australians doing their household budgets at the kitchen table. The Albanese government has worked diligently and consistently to turn this around—and we will keep going.
We're continuing to deliver help with the cost of living, like the working Australians tax offset and two more tax cuts for every Australian, with one this year and one next year—practical, direct, ongoing help. And we're strengthening the standards that build our economy; when our economy lacks integrity and when investors lack confidence to invest, that is felt by workers.
Perhaps these standards aren't as flashy as the headline decisions, but the institutional settings that underpin our markets are just as important for economic management that is responsible—institutional settings that are stable, are reliable and underpin economic confidence for our country, for our national approach. These settings make sure Australia has systems that investors, businesses, workers, public sector agencies and the broader community can rely on.
They can rely on those systems because this bill ensures that information disclosed to markets is consistent, credible and useful. That is why integrity in our markets matters. When people trust the system to be fair and honest, they are more willing to invest, innovate and plan for the future.
That confidence underpins a stronger economy for everyone. It supports better decision-making. It supports accountability.
It helps ensure that capital is directed efficiently and that our institutions operate with transparency. That is the big picture, but let's get into some of the detail. This bill delivers on this goal of integrity by creating External Reporting Australia—or ERA.
It's a new, more adaptable and accountable standard-setting body that will bring together the existing standard-setting functions of the Australian Accounting Standards Board, the Auditing and Assurance Standards Board and the Financial Reporting Council. ERA will be responsible for accounting, auditing and assurance, and sustainability standards—and on this side of the chamber, we think that sustainability is important and that ESG is important.
In doing so, it will establish a clearer, more coordinated framework for external reporting in Australia. ERA will be a one-stop shop for standard setting while preserving the technical expertise and specialist focus that is essential to high-quality standards, because reporting standards are important. It will be led by a governing council, which will be the accountable authority of ERA, with an oversight role covering ERA's full remit.
The governing council will be allowed to act collectively. This setting is about promoting confidence in the council itself and confidence that no standard can be overly influenced by one member's perspective or the interests of any particular group or individual outside—and that is important. The expertise of the council will be bolstered by the contributions of non-voting associate members.
These members would be appointed by the minister and would bring valuable experience and expertise to the decision-making process. The bill empowers the minister to make these appointments, and it also provides them with a new obligation—that is, to have regard to ensuring the governing council has an appropriate level of representation of persons who are, or are seen to be, independent from Australian auditors.
This obligation is important for accountability, which we are seeking to improve with this bill as a whole. It recognises that, as auditors must comply with auditing standards set by the ERA, there is a risk of actual or perceived conflicts arising for appointees who work in the industry applying auditing standards. The governing council will create, appoint and oversee internal standard-setting boards authorised to make specialised standards.
This begins with boards for each of the three categories of standards currently set by the Australian Accounting Standards Board and the Auditing and Assurance Standards Board—those being accounting, auditing and assurance, and sustainability standards. This bill is also about ensuring that our economy is dynamic to future challenges and opportunities. As such, it empowers the minister to confer additional functions on ERA, like the responsibility for formulating a new kind of standard.
This will ensure that any future standard setting is efficiently and effectively addressed by leveraging ERA's standard-setting expertise and governance structure—a standard-setting expertise which is already a strength and that we want to build on. Our standard setters play a crucial role in supporting the integrity of markets, enhancing investor confidence and ensuring accountability in the public sector institutions.
The standards that they develop shape the information businesses and institutions provide to investors, regulators and the public. They influence how financial performance is reported, how audits are undertaken and how emerging areas such as sustainability reporting are incorporated into Australia's regulatory architecture. Good standards support good decisions.
They help investors to understand risk, they help companies communicate to clearly and they help regulators and the public to scrutinise conduct and performance. And they help maintain Australia's reputation as a stable, transparent and well-regulated economy. The establishment of ERA has been guided by three principles: flexibility, preserving what works and strengthening accountability.
First, on flexibility, external reporting does not stand still. The expectations of investors, businesses, regulators and the community continue to evolve. International developments are moving quickly, particularly in areas such as sustainability reporting, climate related disclosure and assurance.
Australia needs institutional arrangements that can respond to these developments in a global investment world and a global investment market without unnecessary barriers or duplication. In the future, when the need arises for further standard setting—and we all know that it will—these new arrangements will be able to accommodate that. The second principle is around preserving what works.
These new arrangements seek to maintain the benefits of the existing structure and, indeed, to build upon them. Technical expertise enables high-quality standard setting. The previous system employed that technical expertise well.
The new arrangements seek to continue that practice. These standards are complex. They require careful consultation, rigorous analysis and a strong understanding of both domestic and international practice.
The legislation provides for the establishment of technical standard setting boards within ERA. This includes a dedicated board for developing and maintaining standards for sustainability reporting. By embedding this capability within ERA, the bill ensures sustainability standards can be developed in a coherent framework alongside accounting, auditing and assurance standards.
That supports consistency, reduces fragmentation and gives Australia a stronger platform to engage with international developments while meeting domestic needs. The third principle, of course, is about strengthening accountability. Good governance requires clear responsibility.
Good governance also requires workable arrangements, appropriate oversight and the ability to respond to issues when they arise. The bill is designed to align responsibility for ERA's performance with the capacity to address problems while also managing conflicts of interest. Establishing a new body is a significant task.
ERA will need to begin operations with clarity, continuity and the right technical ability. This is enabled in part by this bill's transitional provisions, which provide certainty and continuity between the existing arrangements and the new arrangements. These provisions are designed to ensure External Reporting Australia can begin operations from the day the amendments establishing the new arrangements take effect.
They also maintain the validity of any existing standards issued by current bodies. That is important for businesses. It's important for auditors, investors, regulators and public sector institutions.
No-one benefits from uncertainty about whether existing standards continue to apply. The transitional arrangements ensure continuity, minimise disruption and support confidence in the reform process. That careful approach reflects the government's broader economic method—responsible, practical and focused on outcomes.
We are not interested in reckless disruption. We are interested in reform that works, and that is an important contrast with those opposite. The Liberal and National parties have shown time and again that they are reckless with the economy.
They are divided and dangerous, and it is Australians who pay for their dysfunction. They are more focused on themselves than they are on the cost of living. They have consistently voted against policies that would take pressure off ordinary Australians because they are more interested in their politics than in people and families.
They vote against tax cuts for working Australians. They do not care to see the pay and conditions of workers in this country improve. They stand for higher taxes, lower wages, bigger deficits and more debt.
And they are focused on themselves. This government has no time for that. We are focused on building a stronger economy in every way that we can, including through these tax bills, providing practical cost-of-living relief and ensuring Australia's institutions are fit for the future.
This bill forms part of that important work. It is technical reform, but technical reforms have real-world consequences. A modern economy needs reporting standards that are clear, credible and responsive.
It needs institutions who can deal with new forms of risk and disclosure. It needs arrangements that avoid unnecessary duplication and make the best use of specialist expertise. ERA is designed to provide exactly that.
By combining standard-setting functions in one body, the bill strengthens coordination. By maintaining technical boards, it preserves expertise. By giving ERA the capacity to take on additional functions in the future, it strengthens flexibility.
And, by clarifying governance and accountability, it supports important public trust. The bill balances continuity and change. It recognises what's worked in the existing system, but it also recognises that the system must evolve.
It provides a structure that can support Australia now and into the future. Finally, as Chair of the Economics Legislation Committee, which conducted the inquiry into this bill, I thank all of those submitters who took the time to make written submissions and provide their perspectives on this bill for their important participation in the inquiry process. I commend the bill to the Senate.