Dennis Jensen (Tangney, Liberal Party) Share this | Link to this | Hansard source

I wish to outline my concern regarding the corporations amendment financial market supervision legislation tabled last Wednesday, 10 February 2010. The global economy has just seen a market driven wrecking ball put through its collective GDP and financial sectors. It comes as some surprise to me, then, that the government is rushing to reform a corporate regulator and hand it further supervisory roles.

The government’s plan for the Australian Stock Exchange to hand over regulatory responsibilities to the Australian Securities and Investments Commission is an interesting move when you consider the past performance of the corporate regulator and add to it additional responsibilities. ASIC will replace the ASX as the day to day market operations regulator, upholding corporate legislation across all market venues. The government has asked for submissions on the proposed amalgamations, and, while I am sure that many useful comments will be tabled as to how this transfer of responsibilities can enhance our market regulation and increase competition, I am more interested in how two organisations, one private and one public, are going to collate seamlessly without creating a dereliction of duties. I know that both organisations currently have a good working relationship but, as they say, living together is harder than dating.

My submission is quite simply for more time and investigation to be put into these amendments. Given ASIC’s past struggles to responsibly manage its own regulatory responsibilities, I call on the government to refer the corporations amendment to the relevant Senate committee for further discussion. This will ensure that any changes made to the regulatory framework do not erode investor confidence or business as usual market operations. While I am in favour of having the market regulated by a single corporate body, the sheer lack of credibility displayed by ASIC makes me think that we need to create both safeguards and minimum standards for the regulator to adhere to before we hand over the daily responsibility of our financial markets. Taking the time to get things right is of vital importance to the market. We survived the financial crisis because our prudential banking regulator did an excellent job maintaining confidence in the banking sector—a Howard government legacy. But ASIC does not have the same impressive track record as APRA. Thus, in-depth questioning through a Senate committee would allow the government to plan for all possible contingencies. It would also provide more time for external consultation, market input and stakeholder business.

Currently the government is looking at changing over the responsibilities in the third quarter of this year. With an election to be called in roughly the same time frame, I can only imagine the government will try to rush this legislation through before the election is called. Again, I urge caution. Remember, this is the same ASIC which oversaw the collapse of One.Tel, Westpoint and HIH, to name a few. It is not often that you hear ‘ASIC’ and ‘market confidence’ in the same sentence. High profile cases like those mentioned erode the market’s confidence in an organisation that has too many law graduates and not enough real market experience.

I also urge the government to consider the recommendations and concerns of the ASX itself. The ASX has raised concerns in its submission about the transitional arrangements at the time of transfer. This includes the potential breach and enforcement matters which may be compromised because of the transfer. The aim of this merger should be to bring about regulatory cohesion, but with the potential for a new carbon credit market to come on line and projected growth in the resources and commodity markets it is imperative that ASIC is prepared not only for changes but for rapid growth. This legislation has been in the pipeline for a number of years and the marketplace has resigned itself to the knowledge that a competent regulator, the ASX, will no longer be in charge. The market is looking for the government to provide a strong sign that these changes are well thought through and will be in the best interests of the market and its stability. I ask for caution by the government in moving forward its merger plans and strongly urge it to move the amendments to a Senate committee for further discussion.