Mathias Cormann (WA, Liberal Party, Shadow Assistant Treasurer) Share this | Hansard source

The coalition cannot support the Corporations Amendment (Future of Financial Advice) Bill 2012 and the Corporations Amendment (Further Future of Financial Advice Measures) Bill 2012 in their current form. This government has run a highly conflicted and highly ideological anti small business agenda in the financial services space. Not only has this Labor government delivered $174 billion worth of accumulated deficits and $145 billion worth of government net debt; this is of course a government that has choked business in significant additional red tape and pursued a conflicted and self-serving ideological anti small business agenda in the financial services space. If this legislation were to be put to a vote in the Senate in its current form, we on the coalition side of this chamber would not be able to support it, because we stand up both for business and consumers and for sensible, well-balanced, good public policy. When this government is presented with an opportunity to impose more red tape, more complexity and more costs on both business and consumers they will always go that way, in particular if they can help to promote the vested interests agenda of their friends in the union-dominated industry super funds movement, which of course is right behind all the contentious aspects of this legislation.

If passed in their current form, these FoFA bills would unnecessarily increase red tape and the cost of advice for consumers, and they would also reduce consumer choice and competition. In our view the legislation before us today is unnecessarily complex and in large parts unclear. It is expected to cause job losses in the financial services industry. Even according to the government's own explanatory memorandum to this legislation, about 6,800 jobs in the financial services industry will go as a direct result of this legislation. Industry estimates are more in the range of 25,000 to 35,000. According to conservative industry estimates, it is also likely to cost about $700 million to implement and a further $350 million per annum to comply with the legislation. Mr Acting Deputy President Fawcett, you would think that a piece of legislation that will have this impact on an important industry like the financial services industry would have gone through a proper and rigorous policy development process, that the government would comply with their own internal process requirements in assessing the impact that that regulation will have on both the industry and consumers and that the government would properly assess the cost-benefit equation. But of course the government has not done that. The government has failed to assess. The government has failed to go through its own proper processes in assessing the merits or otherwise and in assessing the cost-benefit equation in this legislation.

I repeat: this is legislation which the government itself told us in the explanatory memorandum to this bill will cost about 6,800 jobs in the financial services industry and it is a piece of legislation which conservative industry estimates indicate will cost about $700 million to implement and a further $350 million to $375 million a year to comply with after. If you do not run a proper regulatory impact assessment on a piece of legislation like this, what legislation do you run a regulatory impact assessment on? If you throw your processes out the window for a piece of legislation like this, that process is quite frankly not worth the paper that it is written on.

In pursuing regulatory change, the parliament must focus on making things better, not just more complex and more costly for everyone. The parliament must avoid regulatory overreach where more red tape increases costs for both business and consumers for little or no additional consumer protection benefit. Parliament also needs to be mindful that the bills before us today have already caused an increased concentration of advice providers, driving an entirely undesirable reduction in competition and choice for consumers. The coalition supports sensible reforms which increase trust and confidence in Australia's financial advice and financial services industry by increasing transparency, choice and competition; however, any reforms in this area do need to strike the right balance between appropriate levels of consumer protection and the need to ensure the ongoing availability, accessibility and affordability of high-quality financial advice.

This deeply conflicted and highly ideological anti small business government has failed to achieve the right balance with by FoFA, because it failed to comply with its own most basic internal process requirements around best practice regulation. And of course it was none other than the government's own Office of Best Practice Regulation that made the very damning assessment that these bills do not comply with the government's own best practice regulation requirements. This is highly unsatisfactory, given the complexity and costs associated with, in particular, the contentious parts of the proposed FoFA changes. The coalition recommends that the parliament insist on a proper regulatory impact statement that complies with the government's own best practice regulation requirements. This is why, on behalf of the coalition, I will be moving a second reading amendment that requires the government comply with its own processes in relation to best practice regulation assessments and regulatory impact statements before the Senate considers these bills any further.