Chris Pearce (Aston, Liberal Party, Shadow Minister for Financial Services, Superannuation and Corporate Law) Share this | Hansard source

I shall take a few minutes in the parliament this morning to make some remarks on the report from the Parliamentary Joint Committee on Corporations and Financial Services into the statutory oversight of the Australian Securities and Investments Commission, otherwise known as ASIC. I am a member of this particular committee. This recent inquiry and report covered some key issues in our financial services market. I will touch on some of those key issues this morning.

The first major issue is that of short selling. Madam Deputy Speaker Moylan, you know that this has been an ongoing and significant issue within our financial markets over recent times. I believe that short selling is a legitimate and important dynamic of Australia’s financial services market. The issue that was raised at the hearings and in the report relates to the government’s approach to short selling and, through the government, the approach of ASIC to the bans in relation to short selling it has been implementing in recent months. The bans and the approach the government has been taking culminated with the introduction and passage of the Corporations Amendment (Short Selling) Bill in December last year. At that time, I took the opportunity to raise in the parliament the very real need for the bill and the government to provide some certainty in the marketplace with regard to short selling. In that debate, I raised the issue that, regrettably, none of the regulations surrounding the issue of short selling were included in the bill.

I regret to say that here we are, almost three months later, and still the regulations surrounding short selling in our market have not been defined by the government. Only last night, I had the opportunity to have dinner with some of the key stakeholders in our financial markets, and they highlighted to me the problems caused by the fact that these regulations still have not been designed or put out for consultation. There is a great need for certainty and clarity in this regard so that our financial markets can get on and do their business. I take the opportunity to call on the government: please bring forward these regulations as a matter of haste, because all market participants require certainty in this regard.

Another issue that was brought to the attention of the committee and discussed at the hearing was that of the freeze on redemptions from mortgage funds and cash management trusts. The report says:

ASIC reported that the freeze on mortgage trust redemptions had been widespread: ‘something in the order of 52 or so mortgage trusts have frozen redemptions, which affects about $30 billion of the $32 billion of that market’.

This is a significant issue. Today, 270,000 people still have their funds frozen through these mortgage trusts. Why are their funds frozen? Because of the bungled bank guarantee approach of the government. That is what has done this. Because the government bungled that approach, it dislocated our financial and banking system and, as a result of that, these funds have been frozen. Over a quarter of a million people are unable to get their money from the funds that have been frozen. I think the most concerning thing that came out of the hearings, and which continues to be obvious in the marketplace, is that there is still no solution whatsoever from the government for this very important issue.

Another issue that was considered was the strategic review that ASIC has been undertaking. The report notes that there has been some very good progress made in this regard by ASIC. I commend ASIC for the work that they have done. I commend Tony D’Aloisio, the Chairman of ASIC. Mr D’Aloisio was, of course, appointed by the former government, and the strategic review was commenced under the former government. I think that ASIC has been doing well in that regard.

Superannuation was also discussed at the hearing. Madam Deputy Speaker, you would of course know that, right now, many Australians are finding life very difficult as a result of the decline in the markets and the impact that that has had on superannuation investments. The issue about superannuation funds being able to give members an indication of their end benefit was discussed at the hearing. The committee’s report says:

The fact that the law does not facilitate superannuation funds offering projections to individual fund members hampers the likelihood of them making informed decisions about their superannuation contributions.

And that is the key point about this: the law needs to be changed. The government needs to change the law so that superannuation funds can provide end benefit statements to their members. Again, I think this is a very important matter, particularly at these times when the markets are down and superannuation fund members need certainty and advice.

Finally, I would like to touch on the issue of financial literacy. This was also canvassed during the inquiry and it is in the report as well. The previous coalition government had a very strong commitment to financial literacy. Unfortunately, this government has changed the Financial Literacy Foundation from being a stand-alone body to being a unit within ASIC. I have no problem with ASIC—I have a great deal of respect for ASIC—but I feel strongly that the issue of financial literacy amongst all Australians, young Australians as well as older Australians, is very important. Governments have a key role to play in educating people about how to manage their finances going forward, and it is a deep shame that the Financial Literacy Foundation has been merged into ASIC and has therefore lost a lot of its emphasis, a lot of its focus, as an important stand-alone foundation. Again, I call on the government to ensure that this merger with ASIC in no way undermines any of the great work that the foundation was doing in supporting Australians of all ages to improve their understanding of finances throughout their lives.

I commend the report to the parliament and I also take the opportunity to thank all of those people in the secretariat for their fine work.

See this speech in context