Tony Smith (Casey, Liberal Party, Deputy Chairman , Coalition Policy Development Committee) Share this | Link to this | Hansard source

As I was saying just prior to question time, the coalition agrees with and supports the principle of cost recovery. However, the concern that has been quite rightly expressed, not just by us but also by a number of those who follow these matters closely, particularly within the industry, is about the manner in which the government has moved in this regard, without allowing adequate preparation or warning. I highlight that point. As I said at the outset, we will not be opposing this bill. As I also said, the bill was introduced back in August and was subject to an economics committee inquiry. Many of the witnesses before that committee made the points that the government had rushed to introduce the bill, there had not been adequate discussion about the regulations that would apply and much of the detail upon which the new regime would operate was missing when the government introduced the bill.

First of all, I will highlight a couple of contributions that were made during that inquiry. In fact, the view that I have been expressing on behalf of the coalition was echoed by a number of participants. Mrs Mitchell from RBS Morgans said:

... The timing of the bill was unusual, given there was so much still to be settled.

We suggest that a consultation process should see its natural course before this bill is passed—

by the parliament. I note that the government, since the introduction of the bill, has begun to move at snail's pace. There has been a consultation period. I also note that the closing date for submissions on the exposure draft was Monday of this week. That is my understanding.

We just say that the government should heed the warnings that were aired during the inquiry. We have to say that the track record and the field evidence in this regard is that government does not get the detail right when it comes to these matters—rushing, not getting the detail right and not listening to the sorts of concerns that have been raised. We raise that here and we make that point. The government needs to be cognisant of that. If it transpires that the regulations themselves are defective in any way, the government will not be able to say that these issues had not been raised.

As I said at the outset, we are not opposing this bill. We support the principle of cost recovery, but we want to make sure that, as that principle is enacted, it is done in a way that does not cause an unnecessary burden to industry through lack of preparation and warning on some of the detail. We will not be opposing the bill. On behalf of the opposition, I commend it to the House.

Bernie Ripoll (Oxley, Australian Labor Party) Share this | Link to 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.

Scott Buchholz (Wright, Liberal Party) Share this | Link to this | Hansard source

I rise to speak on the Corporations (Fees) Amendment Bill 2011. I want to draw to the attention of the House that during the debate I will do my very best to highlight the opposition's concerns about the bill—even though we support it.

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

Come on, give us the good stuff.

Scott Buchholz (Wright, Liberal Party) Share this | Link to this | Hansard source

If you stick around, you will hear the concerns of not only the opposition but also the peak bodies of the industry. The Australian Financial Markets Association and the Stockbrokers Association of Australia raised some concerns about this bill, which hopefully I will outline. But in saying that, the opposition does see merit in this bill and I will also speak to that.

This bill forms a legislative basis for the Australian Securities and Investments Commission to levy cost-recovery fees from participants of licensed financial markets. This marks a quite dramatic change from the current arrangements under which ASIC only levies fees from market operators, not from market participants. Prior to 2009 the supervisory responsibility was transferred from the ASX to ASIC. The transfer took effect in August 2010.

Previously, the supervision of the financial markets in Australia had been co-regulatory in nature, with financial market operators, such as the ASX and IMB Ltd, being responsible for supervising market participants and listed entities, while ASIC was responsible for ensuring that market operators met their statutory obligations. With Chi-X starting trading this week, we now have two exchanges operating in Australia. Sure, the volumes traded on Chi-X for the first week were symbolic, and the range of stocks traded was limited, but we are still talking around $4 million worth of shares changing hands. Tellingly, trading prices on the ASX fell almost immediately. That, ultimately, is what this bill was designed for.

On this side of the House we are big fans of competition within the markets. We believe that the government ought to encourage even more competition in the financial services market. Indeed, competition among financial markets is consistent with the approach recommended in 2009 in a report to government by the Australian Financial Centre Forum. However, these amendments mark a fairly significant change in the way ASIC recovers the costs of fulfilling its duties. As we know, if there is one thing that markets hate, it is uncertainty. Market participants deserve clarity from a government on how much these new fees will be and how they will be levied. Obviously, we feel it is vital that the new cost-recovery regime not be a burden on business. With Chi-X already having undergone a soft launch, the need for certainty is becoming increasingly urgent. The coalition agrees with the need for a single market supervisor; however, this supervisor should provide certainty for business, not uncertainty. We feel that the government would have done better to have had Treasury complete their consultation and release draft regulations outlining a final cost model and an assessment of its impact on market participants before bringing the legislation into this place for a final vote. And I stress that we would have loved to have seen the detail of the regulation before this bill was being put to a vote.

Instead what we have ended up with is a typically slapdash, 'suck it and see' approach. This bill was referred to the House Standing Committee on Economics, of which I am a member, back in September. At the time the coalition's dissenting report recommended:

… that the House of Representatives not pass the … Bill … until the House of Representatives has had an opportunity to also consider the regulations that give effect to the Bill.

Unsurprisingly, the government chose to push ahead regardless—in defiance, it must be said, of what was a completely logical and reasonable course of action. This is a decision the government will ultimately have to live with.

Stakeholders in the industry were generally supportive of the cost-recovery model in the legislation, but they are concerned that it will add to the existing layers of corporate legislation placed on business in Australia, particularly on stockbrokers. In its submission to the House of Representatives committee, the Australian Financial Markets Association noted that their principal concern was with the 'overall ad hoc nature of the cost recovery process across the financial system and the cumulative effect that a multiplicity of new regulation is having on the efficiency of Australia's financial markets'. They also went on to say:

New government regulation and charges that increase friction in conducting financial transactions affect how business views the competitive environment and the relative attractiveness of doing business in Australia compared to other jurisdictions.

The Stockbrokers Association of Australia provided a submission to the committee stating that the amendments would constitute:

… a new cost impost on stockbrokers, which has not been levied before. The proportion of the fees to be borne by brokers—

estimated at around 84 per cent—

and the total dollar amount are, in our submission, excessive and inequitable.

I repeat the point that the Australian Financial Markets Association and the Stockbrokers Association of Australia made. These two peak bodies that have jurisdiction over this bill raised considerable concern that the regulations are currently not on the table. There are currently 83 firms which will be classified as 'participants' under this legislation. On average each firm will be faced with a cost burden of around $310,000. On the face of it, that does not sound unreasonable. But the problem with averages is that they often hide the real story and, indeed, in this case the reality is that the larger brokers who process the lion's share of the turnover are likely to be faced with new fees of several million dollars a year. There may be flow-on costs to customers as a result of that, or there may not. Only time will tell. I would just like to say that I sincerely hope that the decrease in trading fees is not simply absorbed by increased commissions, leaving us in the position of having simply robbed Peter to pay Paul. Peter Stepek from the Stockbrokers Association put it this way:

If the government is intent on pursuing cost recovery, then so be it, but we would like to see a methodology that does not place brokers in an invidious position of having to shoulder fees of this level and possibly then act in ways which defeat government policy in other areas.

The Stockbrokers Association also suggested that fines raised through ASIC enforcement should be applied to the cost of the organisation's supervisory functions in order to reduce the amount that needs to be recovered from institutions through fees.

During committee hearings RBS Morgans raised its own concerns about the compliance burden placed on market participants as opposed to shadow brokers. It seems likely that the fee model of this legislation excludes shadow brokers, effectively placing them at a competitive advantage and rewarding them for being outside the tent.

There are pre-existing concerns about the role of shadow brokers in the Australian financial services sector as well. A recent review by the Australian Securities and Investments Commission found that one in three shadow brokers is already failing to meet the existing regulatory standards required by the Australian Financial services licence. For the benefit of the House, a shadow broker is an organisation that works as an agent underneath a principal operator. That review found that 12 out of 33 significant shadow brokers visited by the Australian Securities and Investments Commission had poor compliance processes—a poorly maintained breaches register, poor risk management, and the provision of inappropriate advice and products. In some instances, licences have been granted to individuals known to have been associated with catastrophic financial losses. Shadow broking operations have been involved in some of the most significant collapses of the GFC including Opes Prime, Lift Capital, Sonray and Chartwell, all of which went out of business owing hundreds and hundreds of millions of dollars.

The number of shadow brokers has increased dramatically in recent years with about 200 significant businesses and 650 in total. These firms basically piggyback their traders on the more highly regulated market participants like RBS Morgans, Macquarie and UBS, and use those market participants to execute, clear and settle client trade-offs on their behalf. The firms have to follow market integrity rules—rules that do not apply to shadow brokers—as well as fulfilling capital adequacy requirements. Current regulations allow the holders of nearly 5,000 Australian financial services licences to basically 'sublet' them to an unknown number of small firms who are then entitled to run financial planning or shadow broking businesses. In a very real sense these shadow broking firms are simply 'renting' their licences. The Sydney Morning Herald recently reported the case of one firm who was subletting its licence to 82 separate individuals and entities. It seems highly likely that this sector of the financial services industry will require significantly closer scrutiny in the near future.

Moving on, while the coalition supports the cost-recovery model contained in this bill in principle, we remain concerned that a great deal of the detail required to effect the objects of the bill will be contained in regulations that are yet to be drafted. It should be noted that, after the bill was introduced, Treasury issued a consultation paper to design an appropriate fee structure. We believe that the consultation should have occurred prior to the bill being introduced to the House. It should further be noted that we are not alone in this view. RBS Morgans are on the record as saying that the timing of the bill was 'unusual, given there was so much still to be settled'.

It might sound like I am being pedantic, but this has the potential to flare up into a real problem. If there is one thing we know about this government, it is that it is fundamentally incapable of getting the right deal. It does not matter if we are talking about pink batts, border protection, or live cattle exports: the 'suck it and see' mentality prevails and we frequently end up with all sorts of unintended consequences. So why, given their track record, would they insist on bringing the bill forward before working through the detail in the regulations?

What the opposition would like to see is appropriate checks and balances to ensure that fees will only be levied to the extent necessary to cover costs; effective governance and accountability arrangements put in place to ensure cost-recovery measures are contained over the long term; and, finally, an undertaking from the government to consider the cumulative effect that the multiplicity of new regulation is having on the efficiency of Australia's financial markets. To me, this would seem an entirely sensible course of action. Unfortunately, the government disagrees. For that reason, the responsibility for any adverse consequences of this legislation will be the government's and the government's alone. However, in saying that, we will not be opposing this bill.

Andrew Leigh (Fraser, Australian Labor Party) Share this | Link to this | Hansard source

I rise to speak on the Corporations (Fees) Amendment Bill 2011, an important piece of legislation that accompanies the shift to exchange competition. As things currently stand, only market operators can be charged fees for the performance by ASIC of its functions under part 7.2 of the Corporations Act. This legislation puts in place amendments that will allow for the government to recover the costs incurred by ASIC in performing market supervisory functions in a way that places the costs as directly as possible on the beneficiaries of independently supervised financial markets. That cost spread will, as it is envisaged, involve 16 per cent of the costs being recovered from operators and 84 per cent from market participants. This is a complicated issue but an important one for the wellbeing of Australian households.

The House Standing Committee on Economics, of which I am privileged to be a member, held an inquiry into the bill on 12 September 2011. We heard witnesses from the Treasury, ASIC, the Australian Securities Exchange, Chi-X, the Stockbrokers Association of Australia, RBS Morgans, the Australian Shareholders Association and the Australian Financial Markets Association. The inquiry was a comprehensive one and went to the overall goal, which is to make Australia a financial centre.

A report conducted by the Australian Financial Centre Forum reported in November 2009:

The Forum’s general position with respect to exchange traded products—as with all other aspects of the financial markets—is that openness to new entrants is an essential condition for competition, efficiency and innovation. Evidence from other countries where traditional exchanges are now competing with new trading platforms suggests that competition has resulted in innovation and generally lower transaction costs.

The Forum thus strongly supports the Government’s announcement and the introduction of competition between market operators.

Another report looked internationally at the trading costs in Australia relative to other countries. Treasury's consultation paper concluded, in figure 1.1, that the total costs of trading for institutional investors, expressed as basis points in the average trade size, in Australia were around 20 basis points. That is certainly cheaper than the costs in a range of developed countries, such as Indonesia, Brazil and China, but it is more expensive than the trading costs in most developed countries, such as France, Sweden, Denmark, Italy, New Zealand and Canada. A similar result comes if one compares the brokerage and exchange fee costs faced by institutional investors. Again, Australia's performance is better than that of the average developing country in the comparison but not better than that of the average developed country.

The Treasury consultation paper estimated the potential benefits from reductions in exchange fees. It estimated that, if there were no growth in turnover in the Australian exchanges, that benefit would be around $100 million from financial year 2011 to financial year 2015. With growth in turnover, that benefit would rise to $160 million. A reduction in bid-ask spreads is another substantial benefit of exchange competition. The same report estimated that a reduction in bid-ask spreads, if there were no growth in turnover—a pretty extreme assumption—would be in the order of $166 million, but, if there were growth in turnover, that reduction in bid-ask spreads would see a benefit to the Australian economy of $265 million.

Those are substantial benefits, and they accrue to market participants. Those market participants include, of course, mums and dads who indirectly are market participants through their superannuation funds. Reducing the amount of superannuation that is lost through high bid-ask spreads or through trading costs flows through to higher retirement savings for Australian mums and dads and flows through to benefits for individual shareholders. It ensures that there is more investment in the Australian economy.

My friends in the financial markets might not like this, but the trading costs and bid-ask spreads are what economists would regard as deadweight costs. That is money that is not available to be invested in new businesses. It is money that is not available to create new jobs. So reducing those transaction costs and reducing those bid-ask spreads puts in place big benefits for the Australian economy.

There are four chief reasons why we are imposing the costs in the way in which we are in this bill. The first is fairness. Opening Australia's financial markets to competition carries the challenge of supervising multiple markets in an environment of high-speed and complex trading. To recover the fees in this way is in line with the government's cost recovery framework, in which costs are recovered from those entities that create the need for the supervision.

The second reason is that the benefits of competition significantly outweigh the costs imposed under the cost recovery regime. I have spoken about the reductions in trading fees and the narrowing of the bid-ask spreads. That benefit flows through to all Australian shareholders, and in turn to Australian companies which create many of the jobs in the economy.

The third reason for the bill being structured in this way is the expressed preference. Brokers have not been charged fees for supervision in the past, but they paid indirectly through the fees charged by market operators. In previous submissions and in their consultations, industry groups such as the Stockbrokers Association of Australia have expressed preference for the more transparent model of cost recovery by ASIC as opposed to monopoly charging for supervision through higher fees. Competition is expected to increase the pressure on the ASX to pass through cost savings in the transfer of supervision.

The fourth rationale is lower barriers for entry. If we charge only market operators for the increased costs of supervising a multi-operator environment, that would decrease the incentives for participants to sign up to new trading venues. It would lock in an advantage for the incumbent ASX, since that exchange is larger and might be better able to absorb supervision fees than a new entrant such as Chi-X. This is consistent with evidence that was put to the House of Representatives Standing Committee on Economics on this issue.

Where do the coalition stand on this issue? They appear to stand in the same place that they do on so many economic questions today. It is not clear whether they are supporting or opposing—whether they are in favour of delaying or putting off. But the consistent economic message from the coalition is 'just say no'. When economists suggest that the most efficient way of dealing with the dangerous scourge of climate change is to put a price on carbon pollution, the response of those opposite is to abuse academics. The Leader of the Opposition, when asked why he could not find a single economist to back his direct action plan, responded that that said something about the quality of Australian economists. What a disgrace!

On the minerals resource rent tax we have clear economic evidence flowing from the Henry review, and many studies before that, that higher taxes on immobile tax bases are the right thing to do—that a profits based tax is more efficient than a royalty regime. Of course we have seen this historically through the petroleum resource rent tax, which has allowed that sector to grow so rapidly over the recent decades. This is why market operators such as Esso were so keen in the early 1990s to move from royalties to a profits based petroleum tax. I cannot help mentioning that even Sarah Palin supports profit-based petroleum and minerals taxation, yet those opposite do not. This puts them in the unusual position of being less economically literate than Sarah Palin.

We held a tax forum recently in which there was a deep and substantive debate and which included representatives from the government, from unions, from business and from the academic sector. That was an important discussion of the big tax issues facing Australia. There were discussions around an allowance for corporate equity, discussions around mineral taxation and discussions around carbon pricing. The coalition, as with so many economic reforms, were missing in action. They had an invitation to attend the tax forum if they were willing to contribute constructively, but they were—not surprisingly—unwilling to make that contribution.

Of course, though, we have seen from time to time thought bubbles being floated on tax reform by those opposite. The members for Wentworth and Kooyong apparently want a sovereign wealth fund—that is their new tax reform idea. A sovereign wealth fund, of course, is really a piggy bank held in overseas currency. So if you want a sovereign wealth fund the natural question is: what are you planning to put in your piggy bank? Unfortunately, the members for Wentworth and Kooyong have been—

Opposition Members:

Opposition members interjecting—

Sid Sidebottom (Braddon, Australian Labor Party) Share this | Link to this | Hansard source

Order! There is a lot of noise going on at the table, and I think they are concerned that you are straying a little bit from the topic of the legislation. I am too, and I do admire your knowledge; but would you mind sticking to the legislation. And can I please hear the speaker?

Andrew Leigh (Fraser, Australian Labor Party) Share this | Link to this | Hansard source

I was speaking about the broad context of economic reform in which this legislation is being debated. This is a context in which we on this side of the House are keen to bring market discipline to the area of stock exchanges. We on this side of the House recognise that competition is important. We recognise that markets work well. Those on the opposite side of the House, however, are unable to grapple with markets in so many areas. They are running away from big economic reforms such as carbon pricing, minerals resource rent taxation and even the fuel tax reforms introduced into this place by then Treasurer Peter Costello in 2003, which are now opposed by the Liberal and National parties.

This legislation is important for Australian families. It will boost investment; it will boost superannuation reforms; and it recognises that exchange competition has benefits that will flow onto Australian households. Even though this is complicated financial legislation, it is underpinned by the straightforward concept that competition at the exchange level brings benefits to households, just as competition does in other markets. I commend the legislation to the House.

Bill Shorten (Maribyrnong, Australian Labor Party, Assistant Treasurer) Share this | Link to this | Hansard source

In summing up, the government would like to thank those honourable members who have taken part in the debate on the Corporations (Fees) Amendment Bill 2011 and I note the opposition have just indicated that they will not be opposing this bill.

The amendments in this bill will provide the legislative basis to allow the government to recover the costs of financial supervision from industry in a more efficient and equitable way, given the emergence of competition between financial market operators in Australia. I agree with the member for Fraser that the government's longstanding commitment to competition in financial services will help facilitate innovation, efficiency and reduce costs, ultimately improving the Australian financial market and benefiting Australian investors.

Competition in Australian financial markets will deliver better returns for investors by giving them more choice and better prices. This is expected to attract new players, new trading strategies and new liquidity. The benefits of competition have started being realised through Chi-X's announcement of a competitive trading fee schedule and its launch into competition with the ASX on Monday, 31 October.

While this bill makes minor changes to the Corporation Act 2001, its purpose is to allow for regulations to be made which reflect a post-competition cost recovery arrangement. The Corporations (Fees) Regulations 2001 will be amended to prescribe the fee amounts and the method for calculating fees to apply from 1 January 2012. Public consultation is currently underway regarding a proposed structure for these fees.

The opposition has unfortunately alleged that the government has not undertaken a proper consultation process. Let me set the record straight. The government issued a detailed consultation paper in August this year for a four-week consultation period. The government received 13 submissions to this. The government also undertook direct discussions with some stakeholders, including both market operators and significant market participant representatives. In addition, the government further issued draft regulations for a two-week consultation period; this ended on 31 October. We received a total of two submissions in response to this.

By allowing market participants as well as market operators to share the costs for the provision of supervisory services by ASIC, the bill enables the costs of market supervision to be borne by those to whom the costs directly relate in accordance with the cost recovery principles endorsed by this government and previous governments. The alignment of the costs with the entities which have caused the need for these costs will allow for independent and self-funding supervision of Australian financial markets to continue and maintain the quality and independence of Australia's financial market regulatory oversight. I commend the bill to the House.

Question agree to.

Bill read a second time.