Bernie Ripoll (Oxley, Australian Labor Party) Share this | Hansard source

It is a pleasure for me to speak on the Corporations (Fees) Amendment Bill 2011. I appreciate that the opposition have said that they are supporting the bill, for obvious reasons: it is a good bill, it needs to happen and there is broad agreement on not only what this bill intends to do but also what it actually does. While I accept the comments, in part, by the member for Casey, you could attribute them to any bill that has ever come before the parliament. He did not actually specify any particular area where there were concerns or issues. The comments could have applied to absolutely any bill. I would have been interested to hear what those issues and concerns were and what the industry was saying. Maybe he could have put on the record what some of those things were, but there was a lack of detail. I am the one who is concerned. In fact, I am concerned as to whether we are speaking about the same bill.

This bill, which the opposition supports and agrees with, is a good bill. It amends the chargeable matters under the Corporations (Fees) Act. The bill amends the entities that may be charged fees for performance by ASIC in its financial market supervision function. This is the right path to take; this is the right direction to go. Currently, in the way the system is structured, only market operators can be charged fees by ASIC. This is not in keeping with the way the market has changed, the way communities have changed or, in fact, the way that ASIC's responsibilities have changed. This amendment will allow for fees to be levied on market participants—for example, people such as stockbrokers and derivatives traders. It provides a wider scope, it provides a fairer distribution and I think it properly recognises the fact that all of those who use the market, profit from the market or operate from the market ought to in some way pay a fee for that access and for the functions that ASIC rightfully performs to ensure that we have a properly operating, efficient and effective market. Therefore, it is only right that people who profiteer from it ought to pay fees for that use.

In exchange for payment of those fees, the operators within the market get certainty about the operation of the market. They get to participate in a proper, credible and efficient market that is regarded very highly right across the world. In fact, only recently it was the subject of a merger bid by the Singapore stock exchange, because of the quality of our market and the depth and liquidity that it presents. So I am more than happy to support what this bill does, and I think it provides a justifiable position in terms of who gets charged fees by expanding the definition of those who can be charged under the act.

The bill also amends the list for those who are liable to be charged a fee, including those who participate in a licensed market, and that will take effect from 1 January next year. So we are moving quickly. There was consultation and there were different views, as you would find in any consultation process. But in the end we all came to the same conclusion: that this is the right way to go. I see that my colleagues on the other side are nodding their heads and agreeing, because this is the right course of action for the government. This is not done exclusively in this area; it is done in a whole range of other areas where fees and charges are levied, and that is the proper course of action.

I will give some context and history on why this is important right now. In March last year the government announced support for more competition amongst markets for trading in listed shares in Australia. The government announced at that time its in-principle support for Chi-X to have an Australian market licence to operate. This would provide a direct competitor to the Australian Stock Exchange platform and the way it operates, and provide a whole new pool of liquidity and a different operator. The mere fact that the government supported competition and looked at the possibility of further competition in this particular market drove prices down. It has already had the outcome that the Australian Stock Exchange is looking at ways to better compete. All that means for ordinary people is that they get better value out of the stock exchange. Regardless of who they are—mum and dad investors, stockbrokers or day traders—they get more competition, more liquidity and a better operating market. Of course, we have to do that with the right licensing arrangements and the proper licensing of all who participate.

After a lengthy application process it is anticipated that Chi-X will commence trading and provide competition to the Australian Stock Exchange later this year. That is good news for a lot of people. Currently, shares listed on the Australian Stock Exchange can only be traded on that exchange. But, with the coming of competition, shares listed on the ASX will also be able to be traded on alternative markets, and that is a good thing for investors. This type of competition is common and it is effective. It works very well in Europe, Canada and the United States. In international markets competition has delivered lower transaction charges and it has increased innovation. That is something Australia has always prided itself on, and we ought to continue to make amends and changes to ensure that that continues in the future.

In August last year ASIC took over market supervision from the market operator itself. That was another good move and another step forward that this government initiated to ensure that we have properly functioning markets and proper supervision and that we do not rest on our historical laurels of having a twin-peak regulatory system that operates effectively—and we saw that effectiveness and efficiency during the global financial crisis—but continually improve our market regulatory powers. What this did was allow a single entity to undertake whole-of-market supervision. That is an important safeguard in terms of market integrity and it was supported by all participants.

These amendments will also allow the government to recover the extra costs incurred by ASIC in performing market supervisory functions. The recovery of fees from the beneficiaries of independent supervised markets will allow this amendment to be budget neutral. Again, that is a good step forward and well-positioned in terms of budget neutrality.

I will give some further context on why this amendment is important and on where we have been taking financial services in the four short years that we have been in government. We have committed to do a number of things—in particular, reform in the area of financial advice and financial services, in market regulation and the performance of regulators, in the integrity of the market and in competition. We have also focused in particular on positioning Australia as a financial services hub, because we feel there is a natural synergy with our neighbours in this region and we can play a much bigger role.

But for that to ever come to fruition—for that to ever be a reality in this country—you need a government that has some vision; you need a government that has a forward outlook in terms of where we can be in the future. It is not good enough to just pay lip service to the sector about how good it is and the quality of Australian financial services and the quality of people who work in it—the expertise and quality of management—unless you are prepared to do something about it. And we have. Over a period of years, we have moved strongly to position Australia as a financial service hub. I am very confident about the future of financial services as a growing service provider not only in terms of funds under management but also as a provider of employment in that particular sector. If you look at the combination of the changes and reforms that we have made, there is a very bright and healthy outlook for people who work in that sector. It is a very large provider of jobs, it is a very large and important part of our economy and it is an important contributor to wealth in this country.

We have the fourth largest pool of funds under management—approximately $1.8 trillion. That is in no small part due to former Labor governments in terms of superannuation and the superannuation guarantee. I will not go through all the history, but we all understand and acknowledge just how important those early years were in terms of financial reform in this country and also the setting up of the superannuation guarantee and how that has placed us globally compared to OECD countries. We have the ability to withstand global financial shocks and there is also capacity for people in this country to have a decent and independent financial retirement future. And today we heard the Assistant Treasurer, Bill Shorten, talking about superannuation and further reforms and changes this government will be putting in place.

Importantly for us, that $1.8 trillion represents the largest chunk of funds under management in the region. Our economy is ranked as the most resilient in the Asia-Pacific, and much of that financial experience and expertise I talked about earlier is actually here on our shores. It is Australians that are providing that expertise. Not only can we do that for our own superannuation funds and our own industry; we can be a service provider to the region. It will be a long time before we can compete with the likes of Singapore or Hong Kong or London. I do not pretend that with these small but good changes that we will be there in a short few years. But unless we take the right steps forward, unless we make amendments like these to fees and charges, unless we can reform our system to ensure that there is enough funding to continue the proper market integrity role that the regulator has, we will be gravely in error.

There are many opportunities for Australian companies in emerging financial markets. We should exploit those for all they are worth and ensure that we continue to grow the sector here. I have talked about this in many different forums, whether here in Parliament House or to financial services conferences or in other places. I really believe that the work that we are doing will set up a whole new generation in a growing sector that will be much more professional than it is today. It will be much more highly regarded and will see itself as an even bigger contributor to our economy and grow even further.

Recently the Minister for Trade, Dr Emerson, launched the China-Australian Chamber of Commerce—AustCham—financial services working group paper on Australian financial services business in China, something that is very important and close to my heart. Domestically, Australia is getting the balance right between financial oversight, transparency and innovation. We can sell that expertise. We can particularly trade in that expertise in countries like China, who seek out Australians for our knowledge. Investment barriers are being kept low by this government. We have already made a number of changes to encourage investment. We want people to invest in Australia. We want to make sure that the barriers to investment are as low as possible. We have already carried out many changes and there are more to come.

This government has also released draft legislation that will bring our investment management regime more closely in line with other financial services and centres globally. This clarifies how certain income of foreign funds—particularly for 2010-11 and prior years—are to be taxed. It also clarifies the treatment of foreign funds where the returns or gains are being treated as being attributable to a permanent establishment in Australia. Currently our taxation of foreign managed funds is not consistent with other centres such as those in the US, the UK or Singapore, so we are making changes—and have made changes—to ensure that is no longer the case. We remove those barriers completely where possible and we transition over a period of time to ensure that we can compete and we can be the facilitator of investments. These changes will help Australia retain the $57 billion that is already invested here by foreign funds.

The bill will also take us one step further in establishing Australia as a financial services centre, but only in a small way in terms of the fees that are contained in this amendment. But as I often say here, it is part of a package deal. Here you are getting another tranche of a global package that we are providing in the financial services sector which, together, will set us on a new path and provide for a whole new generation of growth in that market.

The bill also allows ASIC to recover fees from both market operators and participants in relation to its market supervision roles, something that ASIC ought to be able to do. It is essential to the implementation of a fair, transparent and efficient market supervision framework. This framework is essential in supporting innovation and effective, efficient equity markets in Australia. It will ensure that Australia is well placed to respond to an ever-changing marketplace. Being in this place with a minority government, where there is regularly only negativity and opposition, it is refreshing—even on small matters from time to time—to have the opposition give support and be only slightly critical on something they actually support. I commend the bill to the House.

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