Nick Sherry (Tasmania, Australian Labor Party, Shadow Minister for Banking and Financial Services) Share this | Hansard source

Like my colleague Senator Wong I want to make a few comments about Audit report No. 18. As Senator Wong has noted, the findings in the ANAO report of a decline in investigations from 7.5 per cent to one per cent is, prima facie, of significant concern. This is a matter that I am sure ASIC are expecting that we will be subjecting to some attention. We will also direct some scrutiny to ASIC at estimates next week, and I am sure that will not come as a surprise to them. By way of background, we have in financial services generally what is known as twin peaks regulation: APRA and ASIC. They both provide in different capacities, but with some overlap, important safeguards to our financial services system. When we have a decline in evaluation of this significance, it raises alarm bells about the overall performance of ASIC and its role in protecting Australian consumers with regard to financial services.

We have seen recently the Westpoint financial scandal, with some $400 million lost as a result of Westpoint property schemes—the mezzanine property scandal. Between 2,000 and 3,000 Australians lost substantial amounts of money. ASIC in my view has been rightly criticised for failing to act earlier in this particular case. The Westpoint case was of such a significant size and so widespread that it rightly begs some fundamental questions about the role of ASIC and whether it should have acted earlier—and, I might say, acted earlier when there were complaints from no less than the Western Australian government and the Western Australian department of consumer affairs with respect to the activities of the Westpoint subsidiary property companies involved.

I will say, however, that while I have criticised ASIC for its lack of investigation and action in this regard, it is not just ASIC that I have concerns about. The substantial proportion of the assets—probably 30 or 40 per cent—in the case of Westpoint were invested through self-managed superannuation funds. They are regulated—or are supposed to be regulated—by the Australian Taxation Office. I have been very concerned about the lack of regulatory activity by the ATO with respect to self-managed superannuation funds. It has been an issue that I have raised constantly with the ATO for a number of years now. We are finally seeing the ATO target and focus more on the problems in the self-managed superannuation area. Self-managed superannuation funds are the fastest growing area of superannuation investment. There are more than 300,000 of them. That presents some difficulties regarding regulation. There has been significant focus on the growth of superannuation assets in Australia, assets which are a shade short of $1 trillion. The parliament will be dealing with some important changes to superannuation initiated by this government in the House of Representatives next week, and the Labor Party will be supporting that package of changes. There is a great deal more focus on superannuation, and there has been for the last 20 years.

When you are dealing with some $1 trillion in assets—and I think there will be a strong growth in those assets for the foreseeable future—it is very important that safety surrounding superannuation is maximised. As is well known, superannuation is compulsory in this country. It is long term. It is for retirement. It is complex. It is not easily understood by the majority of Australians; therefore, there needs to be a higher bar applied to regulation around superannuation. I have met some of the victims of Westpoint. It is pretty depressing when you hear the stories. I think it highlights the importance of regulatory activity by ASIC, the ATO and APRA in this area.

Debate interrupted.