Luke Simpkins (Cowan, Liberal Party) Share this | Hansard source

Although I am not a member of the Parliamentary Joint Committee on Corporations and Financial Services, I would still like to make some comments regarding this report. I do so because there is an opportunity to talk about some important things for the electorate of Cowan and for people not just in Cowan but, I think, across the country.

With regard to the statutory oversight of the Australian Securities and Investments Commission, I will begin by saying that ASIC, as we know it, was created on 1 July 1998, with responsibilities for consumer protection in superannuation, insurance, deposit taking and, from 2002, credit. This report relates to the oversight hearing of 17 June 2009. I would like to speak on this because over the last 30 years there have been a number of failed investment schemes in Australia. I recall particularly, because it affected my family somewhat, the Estate Mortgage Trust collapse in 1990. That was one. I noticed that in the report, although it is not further commented upon at this point, there is also the very recent collapse of Storm Financial. I note that there were some 400 written submissions taken by the joint committee that relate to financial products and services, and the majority of those relate to Storm Financial. The committee will be doing another report on that particular inquiry in the future.

When you look back on the history of financial collapses and particularly these investment schemes, you see that the result of that was the former government’s interest in bringing before the House the Managed Investments Bill 1997, which was specifically designed to look at these sorts of things, particularly the fallout from the Estate Mortgage Trust collapse and the impact that that had, particularly on pensioners and other very small investors. Of course, that was also an influence on the establishment of ASIC and the changes that have come since that.

In this report there is a section which speaks of investor education and the creation of programs in schools. Obviously we all applaud that, and I would like to mention that one of my constituents, Samantha Hockaday, raised this very point with me and has raised it with me in the past. I know that there is interest from the state government in Western Australia in looking at exactly these sorts of programs, so I am very happy that we have people in Western Australia thinking these things through and thinking ahead.

The main comment I would like to make with regard to managed investment funds and the failures that have occurred over time throughout Australia is that, while there is the need for investor education, there is also the need for quite a deal of common sense to be shown as well. The buyer needs to be aware. I recall very clearly that in the late 1980s, when we had the Estate Mortgage people advertising across the country, they were talking about returns of 20 per cent a year. Of course, even with the superannuation boom that we have had in fairly recent years, 20 per cent was pretty ambitious even for some of those superannuation funds. It was clear that that sort of return from Estate Mortgage would not be able to be held up over a period of time. Nevertheless, people were drawn in by those sorts of advertisements. They were drawn in by the offer of easy cash. They wanted to see certainty. But the reality is that these sorts of things are not sustainable and you need to do your homework. I think that is as correct today as it was back in the 1980s and the 1990s. That is why the requirement for individuals to personally assess and to do quite an examination of what these organisations are offering in their investment schemes is so important. People have to take personal responsibility and to make sure that when they sign up for these schemes and invest their money they know they are taking risks. The higher the returns that are offered, the higher the risk. If your bank is offering you two per cent, there is not a whole lot of risk. But, if someone is saying that they can give you 20 per cent, they are living on the edge. That is the history of some of these failed investment schemes in Australia.

There are some people in Australia who are always looking for these sorts of quick-dollar opportunities. That is why, as surprising as it is, with these emails that we all get from someone in Africa asking you for your bank account details so they can transfer $20 million through your account and give you a 10 per cent cut, exactly those sorts of people get picked up and taken advantage of. Sadly, they are likely to be the same sorts of people who are going to be drawn to high-risk investment schemes with big returns. The reality is as it has always been. There are no guarantees in these things, the risks are always there and we should always be on our guard against them.

I have taken the opportunity today to speak on these matters as they relate to the report from the Joint Standing Committee on Corporations and Financial Services, and I appreciate the opportunity to do so. As members of parliament we should always encourage our constituents to show due care and due attention and to make sure they understand what they are getting into and that there are no guarantees for the returns that these organisations might be offering. I think that is as true for investment schemes as it is for other organisations that offer quick fixes, such as medical cures for this or that. All people should be very careful about what they sign up for and what they commit their funds to, because there are high-risk things out there. If it looks too good to be true then it certainly is too good to be true.

I will conclude by urging ASIC to continue to work hard to protect Australian consumers in superannuation, insurance, deposit taking and investments. I also encourage the Australian people to show that sense of personal responsibility and to make sure that they accept responsibility for the decisions they make with due care and attention.

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