Mark Arbib (NSW, Australian Labor Party) Share this | Link to this | Hansard source

Mr President, my question is to the Minister for Superannuation and Corporate Law, Senator Sherry. Can the minister inform the Senate of the government’s approach to ensuring that Australia remains a global leader in financial markets and how this stands to help our economy?

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

Congratulations, Mr President, on your election and congratulations to Senator Ferguson on his election as Deputy President. I thank Senator Arbib for his first question in the Senate. I welcome Senator Arbib to the Senate. He comes here with a particularly strong interest in economic issues and financial markets, and he is a well-known fiscal conservative, I am proud to say—unlike the fiscal vandals we have on the other side of the chamber.

The Rudd Labor government decided early on in its term to make sure that the Australian economy was globally oriented and at the very centre of world’s best practice when it comes to financial markets and capital markets, particularly at a time of global financial market turmoil caused by what is known as the US subprime meltdown, which has obviously had a very significant impact on world financial markets, including Australia’s. We have not just said this; we have acted in a number of ways to improve Australia’s regulatory and supervisory presence, not just in this country but internationally.

I was very proud to represent Australia at a recent signing of an agreement between the United States and Australia in Washington DC earlier this week. On behalf of the Australian government, I signed a world-leading agreement between Australia and the US. It went to a mutual recognition arrangement between the Australian Securities and Investments Commission—ASIC—and the United States Securities and Exchange Commission, which are the prime financial regulator in the United States, that will pave the way for easier access by investors and financial markets to each other’s financial systems. Mr Tony D’Aloisio, the ASIC chairman, and Mr Christopher Cox, the SEC chairman and a former Republican leader of congress of some 18 years, were the signatories to this historic agreement, which was made at the SEC’s head office in Washington on Monday US time, Tuesday Australian time.

The events on Monday act on an agreement by the Prime Minister, Mr Kevin Rudd, and Chairman Cox in March of this year which declared that both countries were to begin negotiations on mutual recognition arrangements. To deliver the agreement so quickly is a testament to all of the staff involved in ASIC, Treasury and the Australian embassy. I want to pay tribute to the great work that they have done.

Mutual recognition enables entities from a foreign jurisdiction to operate in a host jurisdiction on the basis of compliance with regulations in their home jurisdiction. As a sign of confidence in Australia’s regulatory system, the US chose Australia to be the very first jurisdiction globally in which to participate in such an agreement. Australia was selected by the US on the basis of the quality of our regulation and the effectiveness of both ASIC and SEC relationships and Australian Treasury and US Treasury relationships.

In addition to this framework agreement, the SEC and ASIC have entered into new, strengthened enforcement, supervision and surveillance arrangements to enable better coordination and cooperation to secure investor protection and market integrity under the arrangement. This is particularly important given the current global financial crisis and the volatility on Australian markets. The mutual recognition arrangement will provide greater access to US markets for Australian investors, while maintaining strong investor protection and ensuring market integrity. (Time expired)

Mark Arbib (NSW, Australian Labor Party) Share this | Link to this | Hansard source

Mr President, I ask a supplementary question. Can the minister please update the Senate on how the new agreement has been received by the financial sector?

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

I thank Senator Arbib for his first supplementary question. As I was saying, the agreement will also make Australian markets more attractive and accessible to investment from the United States. It will mean that retail investors in Australia will be able to access the US market directly through Australian brokers and enjoy Australian regulatory protection. It effectively removes an additional set of compliance and red-tape steps and reduces the costs for market trading. It also improves market liquidity and investment flows. That is very important, given the current financial crisis around the world.

The response from the financial sector has been very supportive. In a show of support, the CEO of the Australian Investment and Financial Services Association, Mr Gilbert, was in Washington to view the signing of the agreement. The Australian Financial Markets Association, AFMA, stated that this arrangement will boost the government’s initiative to maximise Australia’s potential for generating income, another fine example of this government acting to strengthen our financial markets. (Time expired)