Craig Thomson (Dobell, Australian Labor Party) Share this | Link to this | Hansard source

My question is to the Prime Minister. Will the Prime Minister outline the government’s plans for financial services and credit reform in Australia.

Kevin Rudd (Griffith, Australian Labor Party, Prime Minister) Share this | Link to this | Hansard source

The government is committed to responsible economic management. It is committed to working out how we can assist working Australians, working families and those who are doing it tough and are under financial pressure right now and how we can plan for Australia’s long-term economic future. Part of planning for our long-term economic future means moving forward on the whole regulatory agenda. If there was one loud and clear signal which came forward from the 2020 Summit from those in the business community it was this: they want Australia to move in the direction of a seamless national economy. They are expecting leadership from the national government on moving in the direction of a seamless national market.

One of the areas where we can make progress is the financial services sector. My colleague the Minister for Small Business, Independent Contractors and the Service Economy who has responsibility for deregulation, together with the Minister for Finance and Deregulation, is currently working with the states and territories on 27 items of legislation in order to deal with the regulatory complexity which currently confronts businesses operating in multiple state and territory jurisdictions and, as a consequence, to do what we can to reduce the compliance burden and to reduce the overall cost therefore of running a business across the country.

I draw the House’s attention in particular to the green paper on financial services and credit reform released today by the Treasurer and Minister Sherry, because this is an important step forward in a critical area of necessary regulatory reform—that is, improving the regulation of financial services and credit and also seeking to target unscrupulous practices and to promote competition. For example, right now, under our existing regulatory arrangements, some consumers receive poor or inadequate advice in areas such as mortgage brokering, which may lead to them overextending themselves into debt, paying extortionate fees or being sold an unsuitable product for their circumstances. That is one example. Secondly, some consumers are unknowingly playing Russian roulette when they buy certain financial products like margin loans, because how you purchase a product determines how it is regulated. With such products becoming more mainstream, this is simply not good enough. The problem we have—

Wilson Tuckey (O'Connor, Liberal Party) Share this | Link to this | Hansard source

Mr Tuckey interjecting

Kevin Rudd (Griffith, Australian Labor Party, Prime Minister) Share this | Link to this | Hansard source

and I note some of the interjections from those opposite—is that, when they say this is a problem for the states, the problem is that we have such uneven regulation across the states. This is why we have found it necessary to move in the direction of this important green paper which will have its conclusion through the Council of Australian Governments as a necessary national reform. Right now, current regulation is duplicated, patchy and confusing. In fact, it is a complete dog’s breakfast. It is time we had some decent, long-term economic reform to ensure that this sector is also provided a proper pathway to the future.

Of course, one of the contentious matters which will arise in the debate on this financial services reform green paper is how we cover the extent of the financial services market. Do we simply include the mortgage credit or do we include the entire extent of consumer credit as well? This is a legitimate matter for debate with the financial services sector, and that is why this green paper will now become the subject of discussion and negotiation with the financial services sector over the months ahead. We will then move to deliberation of a decision with the Council of Australian Governments. This is a necessary step forward if we are to move towards our national objective of a seamless national economy and a seamless national market. It is very necessary if Australia is to maintain its long-term global competitiveness.

If you go to what people in the sector are saying you can see that it is pretty important to see where the business community is coming from. Luke Lawler, a senior advisor from Abacus, the Association of Building Societies and Credit Unions, has said, ‘The exclusion from the Corporations Act of credit is a kind of arbitrary division. It is not really logical why credit is not there.’ The Consumer Credit Legal Centre has said something similar. Gordon Renouf, head of policy at CHOICE, also said something similar. In fact, we had this statement from another individual in the middle of last year:

... we would say to the States that if they want to refer powers to us, then we would be willing to step in and take their powers and to legislate in this area.

That was Peter Costello on 19 August 2007.

The challenge here is to make practical steps forward to achieve a uniform national market. When it comes to consumer credit and mortgage credit, I think both Australian consumers and the business community across the nation have a realistic expecta-tion of government that we can achieve enduring, lasting national reform in this area. After 12 years, those opposite achieved no outcome on this.

We are advocating a program of reform here through cooperative endeavour with the states and territories. Once the green paper reaches its conclusion through the Council of Australian Governments, the government will be bringing forward significant reforms in this area because we are committed to long-term economic reform, long-term microeconomic reform and long-term regulatory reform in order to create a seamless national market in this nation.