Christopher Back (WA, Liberal Party) Share this | Hansard source

I rise to contribute to this debate, as disappointing as it is that we have to conduct it.

Senator Wong interjecting—

In answer to Senator Wong's question, no. Earlier, I simply spoke on a procedural motion.

I want to examine a number of things this afternoon. The first, of course, is the motivation of the Labor Party in trying to bring forward this disallowance. I want to comment on the good order of the parliament and the opportunity for the full Senate complement to debate the issue. I want to comment a little bit on ASIC provisions and on commitments that were given to Senator Muir and to the members of the Palmer United Party at that time. I also want to comment on the coalition's contribution.

Through you, Acting Deputy President, I make this comment to Senator Muir: this all goes back to 2012-13, when a review was undertaken of industry super and superannuation generally. Following that, the then minister decided that he would go well beyond the recommendations of what we already regarded as a very biased report. Through you, Mr Acting Deputy President, to Senator Muir, one of those outcomes was that legislation was introduced so that, under the Fair Work Commission process, industry super funds would become the default funds. In other words, if someone did not make a declaration at all as to what their preference was for superannuation, they were immediately to go into an industry super fund or, in the case of the public sector, to a public sector super fund. We violently objected to that because we thought that there should be the opportunity for competition and for the investor—the employee or worker—to actually be involved in that decision-making process. Once we came into government, we reversed it.

What was the motivation attending that legislation? I am glad that Senator Dastyari is in the chamber; the main incentive was to boost the industry and public sector superannuation funds. Senator Muir, I am not aware of whether or not you realise that, in terms of the decision you have made to actually change your position on the regulation that is before us, which Minister Cormann introduced and which had passed twice in this place.

This today, colleagues, is not about the small investor. It is not about the small investor, Senator Madigan—through you, Acting Deputy President. This is about protecting the interests of the industry and public sector superannuation funds. Senator Cameron made a comment about the big banks. Let me make this point: it was through the coalition government that Mr David Murray—obviously an eminent person in the banking and financial sector—was asked to undertake an inquiry into aberrations and failures of the banking system as it relates to advice to investors et cetera. That inquiry is about to be presented. We are eagerly awaiting the outcome of that inquiry, which, of course, has been the subject of an enormous amount of speculation. So the distraction, which Senator Cameron brought to this place this afternoon, about the big banks is totally irrelevant.

In the few moments of my earlier contribution during what should have still been question time—when Senator Day and others from the crossbench should have had their opportunity—I was able to draw to the Senate's attention the gross anomaly and hypocrisy that has gone on in this place. What is that to do with? One of the provisions that are now being argued by Senator Dastyari and others is the opt-in provision—the provision that financial advisers, be they big banks or whoever, should have to ensure that their investors opt in on a regular basis. Only now have we come to the understanding that the one group who are exempted from the need for the opt-in provisions are the industry and public sector superannuation funds. 'Who is that protecting?' I ask Senator Muir. Is that protecting the small investor? No, it is certainly not.

The second point that is of interest is fee disclosure. Financial advisers must disclose fees; the big banks, as providers of financial advice, must disclose their fees. I ask: what about the industry and public sector superannuation funds? Do they have to disclose their fees to their members? The answer to the rhetorical question is: no, they do not have to do that.

The third point is that industry super fund managers alone can change fees whenever they like, without consulting their members, and can actually charge for advice whether given or not. That is what we are talking about here: whether given or not. If time permits, I intend to come back in this discussion to some of the other anomalies that I see in the industry and public sector superannuation funds. I do not want to get into the controversy or the argument that went on earlier when Senator Seselja was making his contribution—Senator Cameron was inviting him to make his comments outside and Senator Wong was objecting. All I want to do is to actually get to information that is not in dispute regarding industry and public sector superannuation funds.

In the meantime—through you, to Senator Muir—what I want to do now is move on to the question of the good order of the running of this parliament and, particularly, the running of this Senate. As Senator Cormann has said, on two occasions already this matter has been dealt with by this chamber and it has been passed. Senator Muir, when he makes his contribution, can contradict me if he wants to, but it is my understanding—as a result of the dialogue between the minister, Senator Cormann, and Senator Muir—that whatever requests were made were met. I understand that there was a particular request that there be established a register of financial advisers; that has been done. If I am wrong, I am sure that Senator Cormann will correct me. Not only has it been done but it has been done at a cost to the advisers on a per-transaction basis. It is my further understanding that commitments that were made to the Palmer United Party have been met in the activities that Senator Cormann has brought.

I will not belabour the point as to why we have to have this debate this afternoon. The matter could be dealt with on Thursday next week. We have until that time. There would be opportunity for all 76 of us to contribute. Those who are not here this week because they have made other arrangements, because we had not planned to meet this week, will be denied the opportunity to contribute. I can think of Senator Reynolds, Senator Birmingham and Senator Edwards on our side, and I know there are others. All of us would want to make a contribution to this critically important debate. All of us have the interests of small investors, ourselves, our families and our friends in mind. Which of us do not have the interests of ourselves, our families, our associates and our constituents in mind? Which one of us is not looking after the interests of each of these people?

No-one has a mortgage on an interest in probity, ethics and honesty when it comes to the small investor. Senator Williams made the point—and I will agree with Senator Cameron—that the small investor must be protected. But this motion is not about the small investor, as I have already commented. Senator Cameron believes it is about the big banks. I have addressed the question of the big banks and financial advice. I believe that this is an extension, through Senator Dastyari and his motion, of protecting the large super funds, who are uniquely exempted in so many areas. Let me remind senators that, as of March 2013, the industry and public sector super funds were holding about one-third, about $350 billion, of the superannuation pool.

One of my colleagues gave me an assurance that ASIC has the power to introduce what I will call a patch for a period of up to six months to allow the industry to make an adjustment. If that is the case, if ASIC has that power, then what is the reason for us not allowing all senators to contribute to this debate?

Senator Whish-Wilson interjecting—

If indeed ASIC can introduce that—to Senator Whish-Wilson through you, Mr Acting Deputy President Sterle—where is the problem associated with allowing a full debate by the Senate, so that all of us have the opportunity for input? Senator Xenophon mentioned the coalition of common sense. I say let us have the common sense of full opportunity. Let us have the coalition of full democracy as it relates to this place.

Mr Acting Deputy President, your associate Bernie Ripoll, from the other place, a person for whom I have high regard, chaired an inquiry following the Storm Financial collapse. The recommendations of that inquiry had unanimous support. But in introducing its legislation the former Labor government went well beyond the recommendations of the Ripoll inquiry, particularly in relation to opt-in provisions. I do not know who can tell me how a small investor's interests, security or safety are protected by an opt-in provision. I do not know. It is not something I understand. But if an opt-in provision is so valuable, colleagues—through you Mr Acting Deputy President to Senator Dastyari—if it is so important for the protection of small investors, why have the industry and public sector superannuation funds been exempted from it? Are they the only ones who do not need to be protected? Is that the rationale? There isn't any rationale. There is no logic. If the opt-in provision protects small investors then why are the industry funds, which represent one-third of the pool, exempted? I cannot understand the logic of it.

Somebody in discussion across the chamber this afternoon, or perhaps this morning, made the observation that people are at risk of losing their homes. Nothing I have seen in what we are debating in any way affects whether a person might or might not lose their home. Mr Acting Deputy President Sterle, we have all had harrowing representations from people who have lost money through crooks and criminals in the managed investment schemes which you and I have some knowledge of in the agricultural sector, but nothing that Senator Cormann has proposed or that Senator Dastyari is trying to disallow has any impact at all on that matter. They are dealt with in different forums.

What is of interest, of course, is a comment that was made to an inquiry by Mr Greg Medcraft, from ASIC. He said that only about one in five Australians are seeking financial advice at the moment. He said that is dangerous and inadequate, and that we should be aiming for one in two. So what will happen if this regulation is disallowed? Where will we find the small investor? Senator Cormann told us this morning about the estimate that the red-tape he has attempted to eliminate by way of his legislation will cost some $750 million up-front, if my record is correct, with additional compliance costs of $375 million.

Senator Whish-Wilson interjecting—

As Senator Whish-Wilson and I both know, having been consultants and advisers and having provided services to people, those costs are paid for not by Father Christmas and not by the Easter Bunny, but by whom? They are paid for by the investor. They flow down to the small investor.

The big banks? They will be able to pick up these administrative costs. No problem. But what about the small financial advisers. One, from Rockingham, just near HMAS Stirling, wrote to me. I have known the person for many years. In fact, I know he has written to several of our colleagues telling us that his 36-year business is now at risk, as are the jobs of the people he employs. Many of his clients are Navy personnel from HMAS Stirling, both present and those who have stayed with him as they have moved on. He objects violently—through you, Acting Deputy President, to Senator Dastyari, if he is there, who I think chose his words in a very callous and cruel way. This fellow has actually repeated them. He says: 'I am not a crook and do not deserve to be treated as one by my national parliament. I object to Labor's solution to controlling a few poor advisers, because it treats all of us as criminals, undermines our capacity to continue doing good work for our clients and communities, and risks our capacities to support our families and those of our employees.' That is what we are about here—'those of our employees'.

We know that when the then Labor government introduced the legislation, they did something that used to be most unusual prior to Labor being in government—that is, the Prime Minister excused them from undertaking a regulatory impact statement, which would have required a cost-benefit analysis, when the opt-in and other legislation was brought into place. The simple fact of the matter is that the reason for not doing a cost-benefit analysis is that I think they had a fairly good idea that the costs would far outweigh the benefits.

With respect, Senator Lambie, Senator Muir and Senator Madigan, through you Acting Deputy President, I think you have been duped in this area, because nothing that is being proposed today is going to improve or increase protection to small investors. What it is going to do is put at risk the small financial advisers. It is going to do nothing to improve the lot of small investors. As has been put as a result of the Ripoll inquiry, the coalition made it clear prior to July, when Senator Cormann brought this matter into this place, that we supported sensible financial advice reforms that increase access to affordable, high-quality advice, as well as transparency, consumer choice and competition.

Secondly, we explicitly supported the introduction of a statutory best-interest duty for financial advisers, and the ban on conflicted remuneration or commissions that distort investment advice. That is in there. And we expressed our concern that investors receiving financial advice would face more red tape, increased costs and reduced choice. As Senator Bushby said so often in the discussion this morning whilst we were going through the procedural motions, all this is doing is removing equality in the sense that large investors will be able to afford the advice that will be required under those red tape provisions. It is the small investor, who so often desperately needs that advice, who will be funded and costed out of the process.

So I ask you to give some thought and consideration to what are the obvious motives, in my belief, of Senator Dastyari in moving this disallowance motion. Through you Acting Deputy President, if it was a level playing field, Senator Madigan, Senator Xenophon, Senator Whish-Wilson, Senator Lambie and Senator Muir, if all of them were on the same level playing field, I would have a little bit of interest in it. But when one player, representing a third of the size of the oval, has a significant advantage—they do not have to comply with opt-in, or worry about advising fees, and do not have to comply with corporate law in relation to a majority of independent directors, and have only just recently had to declare what fees are paid to their directors and executives, only as a result of a few weeks ago—I am saying to you that this is not a level playing field. I am saying to you that there are players in this game who are getting an advantage, and I have to say that, unfortunately, I think you have been taken advantage of. You need to give that some careful thought. We can debate this with the full Senate by next Thursday.