John Williams (NSW, National Party) Share this | Hansard source

I must make some comments about Senator Whish-Wilson's contribution on this MPI. He talked about donations to political parties. I want to again put on the record that, when the former Greens leader, Senator Bob Brown, was here and there was debate on the Triabunna mill in Tasmania, he wanted reforms. He wanted changes. He wanted this done and that done. Then a short time after—I was listening to it on radio—we heard the declaration of the largest donation to any political party in Australia's history—$1.58 million. I will repeat the number: $1.58 million. It was donated to the Greens by Mr Graeme Wood, the owner of Wotif. All of sudden, the Greens were batting for the business and interests of Mr Graeme Wood. Now we hear all of the holier than thou Greens saying: 'These donations are terrible.' Come on, get off the cat's tail! This is hypocrisy at its greatest level. It was a $1.58 million donation.

I have just listened to Senator Stephens's contribution on this MPI. I was on the Parliamentary Joint Committee on Corporations and Financial Services inquiring into the Storm Financial crash. In fact, I started this job on 1 July 2008, and in January 2009, seven months later, I went to Redcliffe. I was the first politician out of the 226 politicians in Canberra who went to meet with the Storm Financial victims up there in Redcliffe in order to see what I could do to help them and to get a parliamentary inquiry into the Storm Financial crash.

Of course the Greens like tree planting. The managed investment schemes of Timbercorp and Great Southern involved buying farmland and claiming the purchase of that land off their tax. The farmer cannot do that, but those managed investment schemes could do it on the basis of planting trees. Of course Timbercorp and Great Southern went belly up—and there were other big crashes. But as far as Senator Stephens's comments go, she has missed one point: the products on the market were wrong. Storm Financial was destined to fail—full stop. People were so heavily geared, so leveraged with debt, that, once the stock market turned down, they went down. This is where it is ASIC's job to see that financial products on the market, that are out there for people to purchase, are strong, solid and viable. It is why there is an ASIC inquiry at the moment. I am pushing for ASIC to have stronger powers in order to call for a stock-loss audit so that they can phone up a financial planner and say: 'From this minute you are no longer a financial planner. You can go to the AAT'—the Appeals Tribunal—'and appeal our decision against you, if you wish.' That is what I want to see put in place so that, when financial planners do the wrong thing, they are simply struck off in the instant of one phone call.

I have some concerns, I admit, with any changes to FoFA, but then I had a good look at the detail of the proposed legislation. The first recommendation, which was a unanimous one by the committee which I was part of, was that the interests of the client must come first. We are simply making a small adjustment to section 961B(2) so that legal uncertainty for advisers will be removed. So 961B remains and 961J clearly states that the interests of the client will come first—and, if it does not, I want to see ASIC with the powers to just kick that financial planner straight out of business so that people get good, strong, solid advice that is in their best interests. This is exactly what we are doing.

There is the opt-in test. We received more than 400 submissions at the PJC inquiry and only one suggested the opt-in test. Guess who it was? It was Industry SuperFunds. Guess who they are in bed with? The Australian Labor Party. It is why the opt-in was put forward. It is why the opposition are defending the opt-in test. Treasury is projecting $190 million costs a year, with a further $90 million savings a year. I want to make this point to the chamber: if you add costs to how financial planners do their job, who is going to pay for it? I tell you who is going to pay for it—the client, the person seeking the advice. If it gets too expensive then people are not going to seek advice, and that is a real worry. When we have almost $1 trillion in superannuation funds, with almost 30 per cent of those being self-managed, we need good, strong, solid advice to protect the best interests of the clients—and that is what we will get.

I commend Senator Cormann for the work he has done on this. The opposition have done what is expected. The Ripoll report went further than what the committee agreed on. At that time, the coalition, then in opposition, put in a dissenting report. We made it quite clear before the election and after the election that we were going to introduce the recommendations made in the dissenting report. That is the reason we are pursuing this line.

To say that the commissions and the remunerations will be put back in place is simply wrong. That is not the case. With respect to personal advice, that cannot be the case. Senator Cormann has made that quite clear. There is nothing worse than seeing people who have worked hard all the lives lose their money. I was the first politician to meet with Storm Financial victims. The whole program was destined to fail. My colleague Senator Macdonald joined us in Townsville, and Senator Brett Mason was involved in the hearing as well.

It was a sad story. Let's say you have an expensive house, worth $1 million. You borrow half a million dollars against your house and use that for a deposit on a marginal loan and buy another $2 million worth of shares. You would have $2½ million worth of shares. The dividends on those shares are supposed to pay the interest on the $2½ million and give you $50,000 or $60,000 a year on which to live. You cannot do it. The capital growth in the share market might help you for a few years but when the share market turns down—history shows that it always does at some stage—then you are gone. The Storm Financial product was destined to fail. I feel so sorry for those people who went through so much, fearing that they would lose their houses.

ASIC did come to the fore. They put a lot of money into fighting court cases to see if an unregistered managed investment scheme was being promoted. Unfortunately, the court never made a decision. ASIC made settlements. They told me at Senate estimates that they spent that money to pursue settlements. I will go to my grave believing that it is not ASIC's job to pursue settlements in financial discrepancies and disagreements. It is ASIC's job to enforce corporate law, and they should get a judgement. Whichever way the mop flops, people can determine what they do after that.

Senator Bilyk interjecting—

We will not go into mops, Senator Bilyk. The point I was making was that ASIC should have pursued judgements. There have been settlements and some people are a bit happier than they were, but these changes to FoFA are to get rid of the costs so that people can afford to get good advice. The rules will be in place; they will not be removed. The clients' interests will come first and foremost. To say that anything will change is simply wrong. There has just been a big scare campaign from those opposite as far as these changes go.