Ed Husic (Chifley, Australian Labor Party, Shadow Parliamentary Secretary to the Shadow Treasurer) Share this | Hansard source

Let's be clear about one thing: the people of this country should be furious about what this bill represents. This bill represents repayment of an IOU to the biggest financial interests in this country—interests which did not want to be accountable for the way they provided advice to mum and dad investors. The Liberal Party was trawling around, creating fundraising dollars for itself, making the nod and the wink to big business, saying, 'You give us the money and we'll make sure that we do the right thing on FoFA' and trampling along the way, in the rush towards those dollars, upon the interests of the welfare of some people who would be their constituency. Some people would actually be their supporters.

Small business owners, for example, invest their money and want to make sure that, after all their hard work, they would be able to have a retirement that would leave them comfortable. And what happens? The Liberal Party goes ahead and decides that it will put in place a series of reforms—or they would deform the type of reforms we put on the table—and would weaken the type of financial advice that is put forward to people and see those small businesses potentially lose out on the financial advice or the return that they would get. They would see people line their pockets at the big end of town at the expense of smaller people. It is absolutely scandalous.

What is absolutely happening here is that these reforms that are being dressed up as improvements to the act do nothing of the sort. As the member for Griffith rightly pointed out, they were put forward a few days before Christmas because the government did not want to have any scrutiny of what they were doing. They then expected people, as the member for Griffith pointed out, to respond over January; and then, if they were not going to get it through, they would try to just ram it through as regulations instead of accountable legislation. Why? Because they did not want to have on full public display the fact that there was this grubby operation designed to repay the huge fundraising effort that you saw the now Minister for Finance and Arthur Sinodinos as the Assistant Treasurer attending. We know they were going to a lot of fundraisers, and I would be interested in knowing what type of commitments were given then in terms of what would happen on financial advice.

It is a truism of the modern Liberal Party that they soak in the dollars from the big end of town, harvest the votes of small business, sit on the loot and do not do anything to repay the trust that was given unless you are a big business or big interest. They do not care who gets burnt along the way.

If you have a person like Alan Jones, who is no friend of Labor, expressing the view publicly on his program that he has serious doubts about what is being put forward by the Liberal Party in terms of the moves to de-form the future of financial advice reforms, then you have got to be worried. You seriously have to question what is being put on the table and whether or not it represents a fair deal for people—because it certainly does not. People on the other side of the chamber are worried that once every two years you would be required to get an update—to re-sign a contract. They say that this is onerous: that once every 730 days you might go back to your financial adviser and be required to look at how you are travelling and whether or not you re-sign. They say that this is heinous. They say that this is outrageous.

Those on the other side of the chamber weigh things up. They look at a person who has lost their life savings as a result of poor financial advice and then they look at a person who has to go back once every two years to their financial adviser. And they think, no, the paperwork is worse. It is worse to have to fill out more paperwork. It does not matter that that person, who is expecting in their senior years to rely on a decent level of income and savings, has nothing—that they are left destitute, that they are have to live with relatives or friends, and that they are denied the dignity of being able to enjoy their later years and to reflect on what they have done. No, the worst thing is the paperwork; that is what those opposite concentrate on.

People are doing this all the time. People out in the broader community are re-signing contracts every two years, all the time. If you go and get a mobile phone, you are re-signing a contract every two years. The general public do not have a problem with that. Having to re-sign a contract has not stopped the progress of this great nation. But these people opposite seem to think that it will threaten the absolute financial foundations of the country if we make people go back to their financial advisers to make sure that everything is on track, and re-sign their arrangements.

It is simply absurd that that is what the government is putting forward. They are saying that this is going to create a bulk of red-tape weight on the nation. I will tell you what I would rather stick up for. And I know every person on this side of the chamber would rather stick up for the fact that someone can live in dignity and have the income they rightly deserve in retirement, than be worried about whether or not they have to go back every couple of years to see their financial adviser, or to test the type of advice that is being put forward.

In the place of Labor's reforms, we have here the Liberal Party basically running to the bell that is being rung by big banks, who did not want to have to justify why it was okay for a bank teller—I do not dispute for one minute the knowledge of most bank tellers, who are trying to do the right thing—to give financial advice. You would want to have someone specialised, who would be able to give you the proper advice, who could account for their advice in the breadth and complexity of financial products, and who would be able to answer questions and give advice in the best interests of the consumer. What is wrong with that?

What is wrong with asking that someone who is giving you advice is doing it in your interests and not in terms of their interests or in their employer's interest. Yet this simple proposition seems to be the most devastating of all to those opposite. They think this is crushing. Again, I restate the point that on this side of the chamber we would rather have protections in place that are looking after people. They are not onerous. I would rather have them in place than what we have at the moment, which is simply a grubby payback for donations that were made for the sake of getting people elected. Those opposite benefit in terms of their election, but the people who depend on a decent financial retirement are denied that.

Look at the type of reforms we put forward: the best-interest duty, which I reflected on a few moments earlier; the opt-in mechanism requiring advisers to get their clients to opt-in to receive ongoing service every two years; the annual disclosure; and the conflicted remuneration provisions that we put forward. All of these are as a result of seeing, one after the other, the terrible situations where people lost millions of dollars. In particular, our reforms arose out of the terrible circumstances of Storm Financial.

I have also sat with people who have been affected by the collapse of Timberland Financial Group and the types of rorts that occurred there. Those poor people said to me that they would never have believed that they would, after having had a relatively prosperous life, at the tail end of it feeling like they were going to live like paupers. Again, these people are being told, 'We don't want to protect you from that type of circumstance.' That is what the coalition is telling these people. The government could not care less that these people had been put in this terrible position where they lost their life savings. I would not want to look someone in the eye and say, 'I could not have gone the extra mile to protect you, and in particular to protect your financial security in later life,' simply because those opposite had collected a great fund-raising kick prior to the last election and had made this commitment that they would water down these reforms.

I have already reflected upon the fact that the government were trying to usher in these reforms just before Christmas. They were trying, during the January break, to get people's reactions to them. They were trying to make these changes by regulation rather than legislation. Then, if you look at the contortions that they went through to avoid scrutiny before we rose at the winter session you will see the way they have gone. You can clearly tell that they are trying to do everything they can to avoid scrutiny and to confront the justifiable anger that exists in lots of people over what is being done here, and the type of things that are being put forward. Look at the reaction of CHOICE, who represent consumers, for instance. They said:

When the wind back of consumer protections is explained, it is clear it will hurt consumers. CHOICE's nationally representative research found 81 per cent of consumers were concerned that bank tellers would be able to sell complex financial products like superannuation without assessing customers' personal needs and that they would earn a commission for doing so.

If, for example, you look at the comments of Mark Randall, who is the Chief Executive Officer of the Financial Planning Association of Australia, he says:

… the FPA strongly opposes any possible reintroduction of commissions for financial product advice on superannuation or investment products. There are several risks which are associated with commissions for general advice.

That association outlines at great length its concerns at what was being put forward by the coalition.

Mr Richard Webb, Policy and Regulatory Analyst, Australian Institute of Superannuation Trustees said:

Mums and dads expect advice from advisers and they expect sales from sales people. Investors have an understanding of the difference between those two terms. We note that the Cooper review wrestled with this and concluded that:

"… commissions should be banned on all insurance products in super, including group risk and personal insurance."

Ms Josephine Root, National Policy Manager, Council of the Ageing Australia said:

We believe the cumulative effect of these changes is to seriously weaken the reforms, giving less consumer protections and ultimately undermining confidence in the financial advice sector. We are concerned that people will opt out of getting financial advice and, therefore, not get the maximum benefits that they could and in the long term be a cost on the taxpayer and government because they will move to not having sufficient funds in retirement.

This was the whole process of devising the national pool of savings that were represented in superannuation. In terms of what you see with the growth of self-funded retirees there would be a pool of savings that could deal with this demographic wave of an ageing nation that we are all confronted with, regardless of your politics. We simply cannot afford to have all of those people on a pension, and they would be better served by having a strong retirement income which provided an adequate return, and making sure that they had decent super, as the shadow minister rightly points out, then the cost would not be transferred to the taxpayer.

What happens in the instances where people do lose considerable millions of dollars? We talked about Storm Financial, Timberland, Westpoint and a number of others that had fallen over. All we will see is a shift from having private funds, private savings. When those people lose that where do they go? Naturally, they will turn to the government with the expectation that they should be able to. And they will have to as they will have no income and no other way of supporting themselves, and the government will have to foot the bill. So, as a result of the Liberal Party getting its great little fundraising stash, weakening these financial laws, the taxpayer is forced to ultimately foot the bill as a result of these reforms. It is simply disgraceful, and it is why I keep going back to the point that people in the general populous, the general public, are rightly upset about this. The more they realise what this means and that this is not in their best interests, the angrier they will get, and they should be even more angry when they realise what the longer term ramifications of this will be, not just on the individual, but on the taxpayers as well, given what is being put forward and what we are expected to rubber stamp in this parliament. I mentioned the fact that the coalition tried to ram this through at a time when the general public would not be expected to engage fully in consultation.

Also, along the way, we lost an Assistant Treasurer, and the responsibilities for this job went to the finance minister. This is the finance minister who tells us that there is a budget emergency and then the Treasurer tells us there is not one. The Assistant Treasurer's spot is left vacant, and we do not have a person with their full attention on one of the most significant reforms that people will face in their later lives. At what point will they appoint an Assistant Treasurer to fill the spot that has been vacated by the departure of Senator Arthur Sinodinos and have that person usher through and be cognisant of all the complex facets of this debate? Instead they leave it to a finance minister who is juggling two roles. Actually he is juggling three roles—he is doing the work of the Treasurer, plus his own role, plus the Assistant Treasurer's role. He is the 'Super Treasurer'. Given that the Attorney-General has the terrible case of reverse Midas, where everything he touches turns to dust, no wonder they want him. (Time expired)

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