Wednesday, 26 May 2021
Financial Regulator Assessment Authority Bill 2021, Financial Regulator Assessment Authority (Consequential Amendments and Transitional Provisions) Bill 2021; Second Reading
If ASIC and APRA are the police, who will police the police? The answer is: the Financial Regulator Assessment Authority, which will be added to the list, in addition to the House Economics Committee, which currently oversees ASIC and APRA—and does, I might say, an outstanding job. I say that because it is important to make sure that there is proper pressure on regulators to do their job.
You may not be aware, Deputy Speaker, but the way these committees work is we have regular inquiries into the annual reports of ASIC and APRA, we have references of inquiries—on which we then issue reports—and then there is the opportunity for members of the government and the opposition to ask ASIC, APRA, the ACCC and the Reserve Bank questions. So, while the member for Whitlam argues that we are not carrying out our role, because he wants to score some cheap, pathetic, poor-landing argument, the reality is that we've actually held lots of inquiries and we've actually delivered lots of reports—and, frankly, some of them have been scathing, particularly the committee's report on ASIC late last year. But, of course, he's also condemning the members of the opposition. If he's saying that the committee isn't doing its work, he's saying that the opposition aren't asking the questions, either.
I'll rise in defence of the deputy chair, the member for Fraser and even the member for Dunkley in saying that they do ask APRA and ASIC questions. They do drive forward issues that are important to the committee. They do make sure substantive issues are on the agenda. They may not always be the questions that I would ask, but that's the point of the parliamentary committees. So, member for Whitlam, I will defend the right of opposition members to continue to do their role. He thinks it's some sort of cheap slight at me or the coalition members of the committee. I can assure you that's not the case and, of course, we have the Marxist member for Melbourne on the committee too.
At every point ASIC and APRA have seen oversight. We have given scrutiny to their work and we will continue to do so. But prior to my elevation to chair of the House Economics Committee, APRA and ASIC were scrutinised and criticised by the Hayne royal commission. There was a recommendation for a financial regulator assessment authority to be established. I have to say that I question the merit of this because I think there's outstanding parliamentary oversight, but we're here nonetheless and we took it to the last election. I actually think ASIC and APRA are moving in the right direction. I do believe there was a legitimate reason for criticism of them and whether they were doing their roles. But we've actually seen that, since the House Economics Committee in this term of parliament has been pursuing issues and making recommendations to them, they are taking up those recommendations.
We, through a series of questions during our inquiry, asked questions about things like insider trading within superannuation funds throughout the first-half of last year, particularly in that period around the start of the COVID-19 pandemic when there was no re-evaluation of unlisted assets, but there was in reflections of the price of equities. We discovered that a number of directors and funds had engaged in forms of insider trading, where money was moved between different accounts and funds to manipulate the market, seemingly to the benefit of the few. Of course, we have sent that to ASIC and APRA, and ASIC and APRA, following our hearings, are now investigating it, and I encourage them to do so. But these matters wouldn't be done if the House Economics Committee wasn't on the ball and focused on all of the issues.
The member for Whitlam is expert at one thing. He's expert at running interference for the fund manager mates and funds that he likes and demonising their competition. That's how he operates at every step of the way. I can understand he's very angry with ASIC right now. They have launched investigations into REST, the major superannuation fund, for its conduct, and are pursuing it in the courts. I can understand the member for Whitlam is very angry with ASIC because of a similar pursuit of Statewide Super. It's entirely reasonable, when you have so much of the financial interests of the party you represent and the power it seeks to control in the structures of our superannuation system and particularly in industry super funds. When the regulators turn their attention to the misconduct that they engage in and that you benefit from, it's hardly a surprise that you don't like the regulators. But that's why they have to be independent from government. If you ever saw the Labor Party on this side of the chamber and the regulators weren't independent, we know that the regulators would be used and manipulated, not through the persuasion of argument or evidence but to pursue bloody minded agendas in the interests of the Labor Party at the expense of the community.
The House Economics Committee has found many other things throughout this term of parliament, let alone what we discovered in the last term of parliament, while the Labor Party shouted down and hounded down anybody who said, 'Yes, I'm going to be pushed below the poverty line if there's a retiree tax introduced with the removal of refundable franking credits.' Before the last election, the Labor Party said that it wouldn't have that impact, that people would be exempt and it would only hit those who were well off. Yet we found time and time again that single mothers and retirees and people with disabilities who got additional assistance from their deceased parents relied on refundable franking credits to be able to survive and to have an income. The only response of the Labor opposition at that time was to shout and hound down anybody who dared tell the truth.
Make no mistake, during my chairmanship I made no apology that I was going to give those people a voice come hell or high water, and we did. Funnily enough, there are a lot of people affected that Labor wanted to turn a blind eye to, and, funnily enough, it did have a mild impact on how they voted, because they were going to have a third of their income removed overnight if there were a Labor government elected.
I do understand why the Labor Party has a big problem with that, because their ultimate objective is to empower themselves at the expense of Australians, and, when Australians are empowered, they can stand up to those people who want to rob them of their future. I make no apology for doing that, and all of the criticisms targeted at the committee and myself, as chair, and anybody else: bring it on, because we will stand proud and firm and back the Australian people against vested interests. And it does not matter who they are, what type of super fund they are, what type of bank they are, what type of regulator they are or whether they're members of the Australian Labor Party, because that is who we are. We are on the side of Australians today, tomorrow and as part of securing Australia's recovery.
The Labor Party, of course, would also be angry with the operations and the oversight the Economics Committee has provided of ASIC and APRA, because we exposed other misconduct in the banking sector. It wasn't just up to the Hayne royal commission. Frankly, Commissioner Hayne had a blind spot to a lot of the issues that this House committee has consistently exposed in the superannuation funds in addition to the millions of dollars that they're spending on advertising and needless marketing in a compulsory system, the $400-odd million that it has spent over the past five years that didn't get any criticism or any comment, let alone the money that is laundered by super funds through their own fund, called IFM Investors, paying bonuses of up to $36 million to individual fund managers. If a bank did that, members of the Labor Party on the other side of this chamber would be screaming that this is Australian shareholders and deposits and that that deserves to be condemned and held accountable. But, when it's the industry super funds, it's let rip—take the money out of average Australians bank accounts and funnel it and launder it through to the profit-making of their mates, and it is wrong. We will call it out, we will investigate it and we will never stop until we get to the bottom of it. And, whatever interference the Labor Party wants to run, let them do it, because it only exposes their commitment to stand by themselves at the expense of Australians.
My hope is that this new body, the Financial Regulator Assessment Authority, might start to make sure that ASIC and APRA do the same, because it shouldn't just be up to a very active chair and committee to make sure that ASIC and APRA do their job and follow through and get the evidence and hold financial institutions to account. My hope is that this body will make sure that they are the police that polices the police.
It isn't just those examples which I've outlined earlier. As I outlined earlier, we have our regular hearings with the big four major banks as well as small banks, which are coming up shortly. But we also held hearings into small banks like ME Bank, which used to be owned by industry super funds, and through our consistent focus on their various forms of conduct have identified things like there were serious and systemic breaches of the banking code. We also identified where they were adjusting people's balances and not giving people forward notice in return.
The Labor Party, of course, didn't like those hearings—we just need to make it clear. Why? Because ME Bank was owned by their industry fund mates and, as a consequence, it devalued its sale price and ultimately led to the former CEO Jamie McPhee to have to resign. This is scandalous—the intricate relationship between the Labor Party and these funds—and that's why they don't like the regulators, that's why they don't like oversight bodies, that's why they don't like the economics committee, because at every point we have kept the focus where it should belong, in making sure misconduct is focused on, a bright light is shone in the dark crevices and we ask the questions that they don't want to ask. My hope is that maybe one day they'll start to put the Australian people first in their decision-making. My hope is that one day the Labor Party might understand, about decisions made by financial institutions, whatever their financial relationships and power relationships with them are, how critical it is to get these types of laws and this type of accountability and oversight right—because there are very serious issues that were not covered in the Hayne royal commission. There are many examples of questionable conduct which we have identified and continue to identify that leads to legislative change.
Let's not ignore the fact that we had industry super funds taking money out of low-balance inactive accounts, which they were legally—legally—obliged to give over to the Australian Taxation Office to conserve people's balances, and they were rolling them into a fund that they owned called AUSfund. And, when they rolled that money, those low-balance inactive accounts that often represented the super savings of some of the poorest and lower income Australians were reactivated so the super funds could mine them for fees and insurance premiums that underwrote the balances and bonuses of fund managers. It literally took the economics committee to expose this deception, this manipulation, this misconduct, which has now led to a change in the law. If we want to talk about fees for no service, there is absolutely misconduct by the retail service sector and the banking sector. They got up to this behaviour and should be held to account and are being held to account.
But, funnily enough, when it comes to the industry super sector doing the same thing, the position of the Labor Party is not just to turn a blind eye, though they did—they weren't the ones that asked questions about how low-income Australians were being ripped off by industry super funds; that was up to the coalition members—but to then run interference to try and stop this misconduct being highlighted. They tried to run interference to try and keep people's hands in the tills and in the pockets of low-income Australians to deny them their super savings. It's no surprise that Labor would take this approach. At every point, they have prioritised super interests ahead of Australians and their ambitions to be empowered and financially secure.
We see that not just in these issues of misconduct in the superannuation sector; it's in Labor's very philosophy of prioritising superannuation over homeownership. You saw it in the opposition leader's budget speech the other night. In a choice between empowered owners or indentured renters, he wants a nation of indentured renters, of people who have large superannuation balances while they're working, so his fund manager mates can fiddle with them at the expense of the realisation of empowered Australians of owning their own home.
There can be no mistake about which side I am on: home first, super second. Homeownership is the most important financial decision that Australians can make. The second most important is their retirement savings. To prioritise their second most important in favour of their first is a form of economic social engineering designed only for one benefit, and it ain't Australians. It's designed to prioritise the interests of super funds, at the expense of Australians, and I won't stand idly by. It should be home first, super second.