Bruce Billson (Dunkley, Liberal Party, Shadow Minister for Small Business, Competition Policy and Consumer Affairs) Share this | Hansard source

I rise to support the very eloquent comments of my colleagues who have covered many of the issues that I will touch on. One of the reasons that I was keen to make a contribution to this debate is that, in my travels as the shadow minister for small business, financial advisory businesses right across the continent have expressed outrage at the nature of some of the changes proposed in the Corporations Amendment (Future of Financial Advice) Bill 2011 and related legislation. Their input in consultation processes has been ignored at best and, in some cases, the government has chosen a pathway that directly opposes the considered advice that the small business financial advising community has provided to government. Another point is that, wearing my hat as the shadow minister for consumer affairs, while these bills masquerade as being of advantage to consumers they actually provide a number of risks for consumers that the government has not properly considered or evaluated.

The idea about proper evaluation and assessment is an excellent starting point for a debate on this legislation. The government proclaims widely that it has outstanding regulatory impact processes. I have listened to and read carefully the accounts of world's best practice, which is the statement made by the department of finance and its officials involved in the Office of Best Practice Regulation. Some of the action steps that agencies and departments are expected to go through seek to address what the legitimate alternatives are for addressing that public policy problem, and evaluate how effective alternative courses of action would be and what the costs are in implementing those changes. That is a worthwhile decision support framework. It is such a shame that this whole package of measures has progressed without any great connection to that very worthwhile decision support framework.

At the heart of the coalition's objection to these bills is that there has not been a proper impact analysis, a regulatory impact statement, tabled for these bills. They have not been evaluated against the Office of Best Practice Regulation benchmarks and requirements as compliant. For those reasons alone this legislative package is poorly conceived. It has not been properly considered. It appears to many, me included, as a knee-jerk reaction to the very devastating impact of the collapse of particular investment vehicles—Storm and Opes Prime are some that are regularly referred to—where in reaction to the financial losses that many incurred the government seems to think it has carte blanche to do whatever it might think it wants to do.

What it thinks it wants to do seems to be overwhelmingly skewed to advance the interests of union controlled industry superannuation funds. There appears to be no other justification for some of the measures that are contained in this bill. Even, as my colleague the previous speaker referred to, in the consultation process absolutely nobody was advocating for some of the measures that are in this bill except for the MySuper industry superannuation group. Apparently, on the strength of just one self-interested advocacy group, the government thought that was a good enough reason to go with what they wanted and ignore all the other submissions about why some of the proposals they are contemplating are not well conceived and actually run against the interests not only of the consumers and investors but also many of the small business advisory firms that have established a very positive reputation amongst their clients and that know that, if they are not providing value for money, the clients will go somewhere else. So I do not know why we are here debating things such as the opt-in requirement, one of the most pointless bureaucratic interventions that no-one thinks is a good idea, save and except the superannuation industry network. Not even the government controlled Ripoll inquiry thought it was a good idea.

I hope Mr Ripoll, who is now the Parliamentary Secretary to the Treasurer, has some influence within Treasury over the direction of these changes and that the so-called future of financial advice is grounded in the considered work of his committee and the very sound recommendations that earned bipartisan support. I say that for a number of reasons. Firstly, they were well thought through. They were not contrived to advantage a particular sector of the financial advice industry—that is, the industry superannuation funds. They were also tested by a rigorous process of committee inquiry, of hearings, of evaluation, where the parliament as a whole could bring forward a bipartisan report that would give confidence to people involved in this industry that there was not going to be some unilateral change to the arrangements under which they operate.

By going down the pathway the government has with this legislation, they are far from building confidence and certainty in the financial services sector because they are actually pursuing changes that no-one else seems to think are a good idea. At some point down the track either Mr Ripoll in his new role within Treasury or, if there is a change of government, an enlightened, pragmatic, evidence based evaluation of these changes is likely to see them changed again because they are not well developed and they have not been properly evaluated.

Look at some of the things that have happened.. Let us look at the global financial crisis. There were some very high-profile cases of investment vehicles hitting the wall and that represented extreme financial hardship for those investors. A number of those investment vehicles were by their very nature more vulnerable to the changes in the global economy and the impacts of the GFC than others because they were offering returns at rates more attractive than other investment options and the risk-return ratios were understood by most. But when hardship arises that is a very difficult time for all involved. My heart goes out to those people who have seen their life savings and their investment nest eggs dissolve through the GFC.

Overwhelmingly, the Australian financial services and advice industry stood up very well during the GFC. It stood up very well because of the changes that the previous Howard government had put in place. So you look at the carnage in investment value and in wealth destruction that happened around the world and, whilst we had some setbacks, they were nothing of the scale experienced by virtually any developed Western market in the world.

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