Wednesday, 4 August 2021
Financial Sector Reform (Hayne Royal Commission Response — Better Advice) Bill 2021; Second Reading
It's a privilege to be able to speak in support of the Financial Sector Reform (Hayne Royal Commission Response—Better Advice) Bill 2021 in its original form. Rather that than the elite signalling of members of the opposition, who like to move amendments to government legislation so that they can say some things are good or some things are bad, mostly for their own indulgence and their ego, and to demonstrate that they're actually doing something in their jobs as shadow ministers.
Of course, we do need to give them credit: sometimes they do need to demonstrate some relevance to the public because at the moment they can't see that—both in terms of the coronavirus pandemic, where they're directly undermining the vaccine rollout, or in the policy debates that inform the future direction of this country generally. When it comes to the financial advice space and the financial services sector, we see the Labor Party at its hubristic worst. They seek to continue to demonise and dominate, and there are their alliances with their friends in the superannuation fund sector, who get bonuses paid up to $35 million paid out without any criticism. In fact, the other day we had an Economics Committee public hearing with the superannuation sector. We had the megafund investor on behalf of the superannuation funds, IFM Investors, appear before the committee. The simple question was asked, as has been asked many times before, of its CEO, 'Do you think that payments of up to $35 million in bonuses to fund managers are excessive?' I have made it quite clear that I believe they are. And, to his credit, the CEO of IFM Investors—eventually, after prodding and having to ask the question in about 10 different ways—also conceded that it was. What was the response of the Labor Party when we asked that question? It was to run interference and to try to shout me, as the chair, down from asking the question.
If you want to see the extent of the relationship, where the modern Labor Party wants to run interference and protect the interests of their mates in the superannuation sector at the expense of average Australians, superannuants, retirees and individual investors, just go and watch that clip—and watch the clips all the times when we bring superannuation funds before the House Economics Committee and ask questions of them which might put them in a negative light, or where they might have to admit something that they don't want to disclose to the parliament and, by its nature, to the people of Australia. The response from the deputy chair, the member for Fenner, is to try to silence us and shut us down.
In this inquiry, which has run throughout the term, we have seen, literally, super funds who keep saying they were exonerated by the Hayne royal commission—exonerated! They have nothing to hide, they've done nothing wrong, nobody is criticising them and they're fantastic, 'Just look at our returns.' They literally, deliberately and maliciously undermined the superannuation savings of Australian retirees by reactivating low-balance inactive accounts so that they could harvest them for fees and insurance premiums. That was so much so that we in this chamber had to change the law to stop their mismanagement and their behaviour. But they've got nothing to hide; everything is fine! Nobody dares raise any criticism or concern. The reality is that this government shines a bright light into the problems in the financial services sector wherever they exist. Industry super, retail, financial advice—it doesn't matter, because we know that we're on the side of one group of people, and one group of people only: the Australian people. It's consumers, their freedom to choose and their freedom not to be ripped off. If, one day, the opposition wants to join us in that crusade we'll welcome their support and their participation. But all I have seen as chair of the Economics Committee, and in this parliament, is their constant efforts to undermine, interfere and run interference against that core task because they would rather favour the interests of the few and their friends at the expense of the Australian people.
That is one of many reasons why they sit on the opposition benches. To hear the arrogance that comes from the member for Whitlam, to dare say that this government is doing anything to undermine Australian superannuants! I have never heard such an absurd and fantastical statement in this chamber—and, trust me, we all hear a few! In the lead-up to the last election it was the member for Whitlam and his other fellow members on the opposition benches who deliberately introduced and proposed a policy that would destroy the retirement savings of millions of Australians through a retiree tax. They would literally have shoved down the financial stairs 80-year-old single women because they had sacrificed and saved to be independent in their retirement. Their solution was to deny them their income and to push their heads below the water of the poverty line. I have never seen a more despicable act than this act by the members opposite, who continue to rationalise it at every step of the way.
We held public hearings and exposed Labor's plans directly to the Australian people. Labor continued to say: 'Oh no, those campaigns were misleading, and they deceived people.' How could you say that when the people who were speaking were describing exactly the impact it was going to have on them personally—when those people were talking about how they personally were going to be undermined, and be pushed down the financial stairs, and have their heads held below the water of the poverty line? You're calling them liars when you say that. You're not calling members of the government liars; you're calling those people liars—the Australian people. It's because you wouldn't listen, and you wouldn't learn the lesson, and you wouldn't understand or show any empathy for the impact it was going to have, that you found yourself on the opposition benches. This amendment, and all the positions of the Labor Party in the Economics Committee since, have shown us that Labor have not learned that lesson. They still will not listen, and they pay a huge political price.
Many Australians continue to live in fear of what would happen if there were a change of government. Many Australians sit there every day and think: 'If there's a change of government, is Labor going to come after me because they can't manage themselves? They can't manage the government finances. Will they ultimately come for my hip pocket, when they've wasted all their money?' We all know it's true: it doesn't matter what the issue, Labor can't manage money. When they run out of money, they come after yours. The current Leader of the Opposition excels in this space. No Australian believes that he has any economic credibility or any capacity to lead this country. Not even his own Labor members do—to their credit, I might add. The question is why they continue to follow someone who's going to send them off the political cliff. Even tawdry amendments like those made to this bill are a classic demonstration of why.
The Financial Sector Reform (Hayne Royal Commission Response—Better Advice) Bill 2021 is trying to fix up many of the problems that have been faced in the financial advice sector to enable financial advisers to go on supporting their clients and customers with confidence, and to make sure that there are proper mechanisms in place, where people who do wrong are held accountable for it. The establishment of a single disciplinary body is an incredibly important step, not just to correct some of the issues just arose out of FASEA and the obligations it put on financial advisers that made it harder for advisers to operate but also to consolidate it so that financial advisers have a body that they trust and understand that they play a critical part in fixing the system.
Now, I do have reservations about this bill. Members may know I have ongoing concerns about the operations of ASIC, and we hope that under its new leadership it will fulfil its function properly. But some of the functions of FASEA have gone into ASIC to make sure that it can operate successfully in the best interests of financial advisers. But in doing so ASIC needs to make sure that it's backing financial advisers, not undermining them. Last week the Economics Committee again heard directly from financial adviser representative bodies as well as the financial advisers themselves about the harrowing, increasing costs of ASIC fees and how these are undermining their business. Let's not pretend otherwise—when financial advice fees to ASIC for financial advisers go up, the cost is paid by customers through higher costs over time. Increases in cost hurt the capacity for Australians to access financial advice at the stage of life when they need it. It increases the cost of financial advice in comparison to the capital they have saved. It eats into the capital they have saved to invest for their future. So ASIC should look very clearly at what its conduct is doing to financial advisers and whether it's going to have an impact on the number of operators in the system. We know what the cost is of higher financial costs and higher costs to access financial advice. It means the rich get the advice, and the poor don't. The frugal who want to save and get ahead are denied, while those with trusts and wealth—hereditary or earned—are able to compound their growth and their opportunity.
Financial advice is a critical part of making sure that Australians can get ahead, and we need to make sure that financial advice is accessible to them so they can get ahead, because we don't want a system that entrenches the interests of the few and the privileged who can afford high upfront costs. I have previously raised in public my concerns around some of the recommendations of the Hayne royal commission, including, as part of that, the obligation to shift towards an 'upfront fee for service' model, because what happens when you do that is it creates a barrier for younger people, those who are saving and those who want to grow their savings to their being able to access financial advice to grow their wealth. The rich can afford it. The wealthy can afford it. Those on high incomes can afford it; they can take the upfront hit. But those who are frugally saving from their modest salaries and may not come from means are the first to say: 'This is too costly for me.' So it compounds the impact and compounds the wealth conservation and the wealth growth that the rich get, and that's incredibly dangerous. We know that the opposition's first position on the Hayne royal commission was to accept the recommendations without even seeing them, which shows the scant regard they have for the wealth creation opportunities of the next generation of Australians.
There have been amendments and I will continue to raise my concerns as other members in this parliament do. I see some outstanding members, like the member for Forde, who has never been afraid to stand up for financial advisers being able to deliver for their clients. He has always been the friend of the consumer and has been prepared to stand up for the wealth-creating opportunities of every Australian. Let's face it: if we actually believe in the wealth creation of every Australian, we would actually talk about why homeownership is the biggest financial decision that Australians can make and superannuation is the second. But, between the collusion of the Labor Party and their mates in the industry super fund sector, they constantly try and put superannuation ahead of homeownership—so much so that they'll literally run interference to keep super funds being able to buy homes at the expense of young Australians. There is no more despicable act that I can think of in terms of public policy than the deliberate effort to socially engineer and to empower big capital and big super to own homes, denying young Australians their chance at their dream, But the members on the other side of this chamber somehow argue that they know best and that they know how to make financial decisions for others better than young Australians are able to make them for themselves.
There's a day of reckoning coming for the members on the other side of this chamber because 'home first, super second' is absolutely building a movement. With 'home first, super second', there is an absolute understanding that people are looking at how they can utilise their super to be able to buy their own home, because Australians know, like when they access financial advice, that doing so advantages their creation for wealth. They know that homeownership is not just the best mechanism for people to create wealth—though that is true—but it's also the best foundation to build security for your economic future, your family and the whole of your working life, as well as your retirement. Homeownership is critical to the economic and democratic distribution of wealth in this nation. Homeownership is the foundation on which people build the success of their life for themselves and others—the investment in the status quo and the principal economic institution that leads to the creation of a strong community and strong citizens as the foundation for a strong nation. That's why we back, and will always defend, young Australians being able to buy their own home. That's why our order of priority is always Australians first. That's why we'll continue to support homeownership and we'll also support financial advisers so that people can take control of their own financial future.