Chris Pearce (Aston, Liberal Party, Shadow Minister for Financial Services, Superannuation and Corporate Law) Share this | Link to this | Hansard source

I move:

Schedule 3, page 6 (line 2) to page 12 (line 6), omit the schedule.

The opposition is moving an amendment to the Corporations Amendment (Short Selling) Bill 2008 to amend schedule 3 of the bill. We are doing that because we do not believe, and nor do by far the vast majority of Australia’s financial services stakeholders, that schedule 3 is an appropriate schedule to be in this bill as it currently stands. I have indicated in my speech in the second reading debate that the opposition supports the government in relation to schedule 1 and schedule 2 of the bill. The issues that surround schedule 3 go to certainty, clarity and substance for the market. Despite what the minister just articulated in his remarks, it is the industry and various other stakeholders that have an issue with the government’s bill, in addition to the opposition of course.

I think it is interesting to reflect on some of the comments that were presented as evidence in the inquiry of the Senate Standing Committee on Economics. I have to say that, regrettably, this was a very rushed inquiry and unfortunately, outside of ASIC and the ASX, only two other organisations were granted permission to appear before the inquiry, despite the requests of many organisations. They were not given the opportunity to appear before the Senate Standing Committee on Economics. The representative from IFSA, Mr O’Reilly said:

Regulations are essentially there to fill in some of the detail and put flesh on a skeleton. The law itself should have the fundamental and basic requirements and give direction on what should be in regulations. Obviously, the House has the ability to change legislation, whereas when it comes to regulations, unfortunately, they are presented to the House and can be disallowed in whole but cannot be amended, which cuts down the level of debate on appropriate provisions which could be in the regulations.

He continued:

Certainly our preferred position is that a disclosure regime for short selling is a fundamental and very important structure for our industry and those features should be in the legislation, not in the regulations.

That is a quote from a senior representative of one of the most senior organisations of Australia’s financial services. I think that goes to the heart of the issue. What is an interesting question—and I would be very interested in the minister’s response—is: why is it that the government has not been able to put the necessary detail into the bill? The government released an exposure draft of the bill back in September and yet, in their own explanatory memorandum, they acknowledge that the details are not in the bill and therefore cannot be costed in the regulation impact statement. The EM says that the details regarding implementation and the like are yet to come by way of regulation. It is an important question and I will be interested in the minister’s response. Why is it that after several months the government has been unable to incorporate into the legislation any of the detail that our financial services stakeholders in Australia need and require in order to have the certainty and the clarification so that they can go through with implementation? There has been consultation over a long period of time and yet there is no substance in the bill.

The bill outlines a skeleton or, if you like, a shell legislative framework. The opposition absolutely supports greater disclosure and transparency, but schedule 3 in this bill will not achieve that. It does not achieve it. The problem that we have and the reason why we feel obliged to highlight this to the parliament is that the work has not been done or, if it has been done, it certainly has not been incorporated into the schedule. That leads us to having this level of concern and to sharing the level of concern that the broader industry has. (Time expired)

Chris Bowen (Prospect, Australian Labor Party, Assistant Treasurer) Share this | Link to this | Hansard source

Of course the honourable gentleman is deliberately misrepresenting the government’s position. As I made clear in my closing remarks to the Corporations Amendment (Short Selling) Bill 2008, the government has the view that it is an appropriate balance for the framework to be set out in the legislation and for the detailed implementation to be set out in the regulations to allow the government to respond flexibly on the advice of regulators to emerging and fluid situations, which is entirely appropriate in the circumstances. The government has thought long and hard about this and believes that the right level of detail is set out in the legislation and that it is appropriate that further details be set out in the regulations.

Chris Pearce (Aston, Liberal Party, Shadow Minister for Financial Services, Superannuation and Corporate Law) Share this | Link to this | Hansard source

Contrary to what the minister has just said, the vast majority of people in the industry do not agree with the government, clearly. Minister, if you go through the transcript of all the evidence presented to the Senate Standing Committee on Economics, you will see that the overwhelming amount of evidence highlights the issues that I am highlighting in relation to this schedule. I think there are a couple of other interesting points here.

The minister may not know that at the Senate economics committee inquiry hearing the other day, a representative of the Treasury acknowledged—it is in Hansardthat the bill and the approach that the government is taking are less than ideal. There is another question I would like to ask the minister, although he did not answer my first question, but I will have another go: why has the Treasury not made public the submissions to the exposure draft? There have been several submissions provided to the government in relation to the exposure draft and none of the submissions have been made public. There must be a reason why the government would not release the submissions. As it so happens we have obviously received a number of copies of the submission ourselves, so we know what is in the majority of submissions.

I think the problem here is that the minister at the table is refusing to acknowledge not so much what we are saying but what we are saying on behalf of the industry and the concerns that we are expressing about the enormous lack of substance and detail that is in this bill. So, Minister, if the Treasury says that the approach is less than ideal and the government has not released the submissions to the exposure draft, they clearly have not taken on board the comments from the stakeholders in the industry. I would like to ask the minister at the table why it is that he is not open to the opportunity of allowing schedules 1 and 2 to go through, which we think are important and—whilst the intent of schedule 3 is important—allowing some more time so that the government can do the work that is needed, because clearly there is more work to do. The government acknowledges that. There is a lot of work to do in relation to getting the regulations right. The minister knows the impact that that will have on the system. The government has said that they are going to consult on the regulations. So this is nonsense about this bill being urgent—the regulations are most likely months away. It cannot take effect until the regulations are tabled and put into effect. The minister knows that the current ASIC undertaking can continue. The current ASIC undertaking is there. It can continue. He knows that. There is no uncertainty in the marketplace.

Why won’t the government entertain the idea of going back to some of the submissions, going back to the stakeholders, consulting with them and putting the detail that is needed into the bill? Then we can all support a bill that provides clarity and certainty. I am appealing to the minister at the table, who is representing the government on this matter, to consider allowing schedules 1 and 2 to go through. The opposition is giving the government the opportunity to go back and do the work that is needed. We are providing you with that opportunity. I would like to ask the minister why it is that he will not entertain that request.

Chris Bowen (Prospect, Australian Labor Party, Assistant Treasurer) Share this | Link to this | Hansard source

The shadow minister raised a number of issues. Firstly, he misrepresented the position of the Treasury and mischaracterised the evidence given by the Australian Treasury to the Senate, which is very unfortunate. Secondly, he asked why the government is determined to proceed with this bill. This is something which has been covered extensively in the debate. The passing of this bill allows the making of the regulation. With the passing of this bill the Treasury can consult, in conjunction with the government, on the detailed implementation of the regulations. Until this bill is passed, those regulations cannot be made.

The honourable member may or may not be aware that this is the second-last sitting week of the year. This bill must be passed through both Houses of the parliament or we will have a temporary arrangement in place over Christmas and into the new year until the parliament resumes in February, with no penalty regime in place. The honourable gentleman appears completely relaxed about a regime which says: ‘This is what you shall do and this is how you will disclose—but if you do not do it, no problem. It is fine with us; the opposition does not care.’ That is not acceptable to this side of the House.

Chris Pearce (Aston, Liberal Party, Shadow Minister for Financial Services, Superannuation and Corporate Law) Share this | Link to this | Hansard source

The minister is misrepresenting the opposition’s position and particularly my words. I am disappointed that the minister would take such a tactic and line. I really am disappointed in that. I can remember the situation being quite reversed on a number of occasions during the last term of the last parliament. I can remember the now minister, who is at the table, serving it up to the then government quite strongly. The minister really should not take the position of the pot calling the kettle black, should he?

The minister is failing to recognise that the ASIC order and bans currently exist. The market is currently operating under those orders and they can continue to exist. As a matter of fact, the ban on the short selling of financials is currently in place until towards the end of January. If, for some reason, ASIC needed to extend that, the minister knows they can do that very easily. So there is a regime that is in place and that argument is a nonsense. Clearly, the government have not done their work. The industry—and I am only echoing the concerns of the industry—is obviously very concerned and distressed about this. If it goes through as it is, it will create even more uncertainty. I would have thought that the government and the minister may have been open to our proposal, given the dislocation and the enormous impacts that the government’s policy on the bank guarantee has had. I would have thought that the government may have learnt their lesson—that they are not particularly good at this sort of thing. They have got it wrong before, and what we were seeking to do was provide a legitimate opportunity for the government to actually do it properly and go about it in a proper way.

Question put:

That the amendment (Mr Pearce’s) be agreed to.