Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Hansard source

I will get to Storm issues in a moment, because I do have concerns. I will get to the details in a second, because you have asked about the issue. We have given a guarantee. Unlike the US and the UK and a number of other European countries, we have not given a bailout to any Australian financial institution, thank goodness. We have not had to pass over hundreds of billions of dollars from our budget to any financial institution in Australia, thank goodness. Earlier a senator—and I forget who—accused the government of reflecting a socialist approach in its bailout package. If you want to look at socialism in action, go to the United States, where a conservative government—the Bush administration—ended up nationalising, forceably merging and taking over a number of banks. That occurred in the UK, in Iceland and in some other countries. It was an understandable response to the collapsing world financial system. I think it is important to put these things on the record.

The other point I would make about the guarantee is that it has its origins in Australia, as distinct from the legislative action the government took coming from the HIH royal commission when it was observed that Australia, unlike most other countries, did not have a guarantee for its ADIs. These are important points to make.

To come to the issue which Senator Macdonald raised about the approach of the banks in respect of clients of Storm Financial, I would express it this way. The words are not the same as those made by the Treasurer, Mr Swan, in the Four Corners interview, but the sentiment and the message I would convey are. He rightly observed that, yes, Australian ADIs, including our four big banks, have received benefits as a result of the guarantee and they should deal—these are not his precise words but I share the sentiment and would make the same commentary—with great consideration, sympathy and concern with anyone, including the victims of the Storm Financial crisis, who faces foreclosure of their home, for example, an asset in many cases that was used to underline margin arrangements, and they should not be precipitous in respect of any foreclosure against persons in those circumstances. I would indicate the same message.

As to Storm Financial, the financial planning institution that provided the margin loans, Senator Macdonald quite appropriately has indicated that he did not want to go to specific questions about the ASIC investigation. I would point out that there is a formal investigation in respect of issues involving Storm Financial, the entity. I cannot provide information about what is an operational matter—it is an investigation. What I can say is that there is one area of ASIC action which is on the public record because it took place in the courts last week. ASIC secured a court order barring the owners of Storm Financial, the Cassimatis, from dealing with a $2 million dividend payment which they effectively gave themselves in late 2008. I understand that, as a consequence of the ASIC action, that $2 million dividend payment is effectively frozen. I can inform Senator Macdonald that I have spoken to ASIC about issues relating to Storm Financial. I cannot go to operational matters but they have indicated to me that they will be providing as much detail as they can, without going to operational investigations, at the Senate estimates. I have indicated that this is a matter of considerable and obvious interest to many thousands of investors. Also, it is an important matter of public interest. ASIC will be giving an update at the estimates without going to the details of operational matters because that may go to legal actions at some future date and we would not want to jeopardise that. There is a whole range of issues in relation to the Storm investment strategy.