Annette Hurley (SA, Australian Labor Party) Share this | Link to this | Hansard source

My question is to the Minister for Superannuation and Corporate Law, Senator Sherry. Can the minister outline to the Senate the importance of certainty to financial markets, particularly during this period we are experiencing, with the global financial crisis causing significant turmoil on Australian and international markets? Can the minister outline any critical measures—

Opposition Senators:

Opposition senators interjecting—

John Hogg (President) Share this | Link to this | Hansard source

Order! Senator Hurley, because of the noise across the chamber I could not hear the question. I ask you to repeat the question, please. Because people are now taking points of order on relevance of answers, I need to hear the question.

Annette Hurley (SA, Australian Labor Party) Share this | Link to this | Hansard source

Can the minister outline to the Senate the importance of certainty to financial markets, particularly during this period we are experiencing, with the global financial crisis causing significant turmoil on Australian and international markets? Can the minister outline any critical measures that the Rudd government has taken to provide such certainty and plug gaps left in the regulation of our markets by the former government? Does the minister foresee any threat to responsible, timely and decisive action that will ensure such certainty is delivered before the parliament ends its final session for 2008?

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

As I am sure all senators and the broader community are aware, we are facing a global economic and financial challenge of massive proportions, and everything that a government should do in order to underline certainty in the current market circumstances needs to be done. We only have to look at the recent bailout of Citibank, in the last day, to illustrate that. Certainty and concerns over confidence are among the key missing ingredients in the global stock market today, and one key area, in which we inherited from the former Liberal government a gap in regulation and supervision, relates to what is known as short selling. Those on the other side of the chamber did nothing about ensuring adequate disclosure of short selling in almost 12 years in government. In that three-month period after the issue of short selling and the inadequate regulatory and supervisory regime, we acted in the national interest to consult with a wide range of players in the Australian market to develop a short selling amendment bill that will do three things: it will, firstly, ban naked short selling—

David Bushby (Tasmania, Liberal Party) Share this | Link to this | Hansard source

What about the regulations?

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

It is regulation; spot on. It is regulation and supervision that is entirely necessary in the current market circumstances. We are going to ban short selling. We are going to boost the powers of ASIC to ensure that the corporate watchdog has the necessary powers, and we are going to put in place the world’s best practice disclosure regime—that is if those opposite will allow us to, because what they are proposing to do is to defer for three months this vital bill to underpin confidence in the Australian stock market. They are going to defer this bill, on a motion to come to the Senate later today, for a further three months. Let me be very, very clear. Every day that the legislative gap remains open on disclosure— (Time expired)

Annette Hurley (SA, Australian Labor Party) Share this | Link to this | Hansard source

Mr President, I ask a supplementary question. Can the minister detail what kind of consultation with industry, with stakeholders and with the broader community has been held on the government’s package to better regulate short selling by requiring its transparent disclosure, by banning the questionable practice of naked short selling and by boosting the corporate watchdog’s powers? What new threats are there to bringing this comprehensive process to a conclusion which is in the national interest of the Australian economy?

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

As I was saying, drafting this vital measure to underpin confidence in the Australian share market has involved extensive consultation over the past nine months. Treasury met with industry starting in March of this year to scope the requirements on short selling. It met with nine stakeholders. Treasury has been in regular contact with the Reserve Bank; with the regulator, ASIC; and the ASX. On 23 September I released a draft bill for four weeks exposure. Submissions closed on 21 October. Of course, we received a second round of submissions. The bill was introduced into the House of Representatives on 13 November 2008, and still the Liberal opposition, who want to defer this vital measure for another three months at least, cannot make up their mind.

Annette Hurley (SA, Australian Labor Party) Share this | Link to this | Hansard source

Mr President, I ask a further supplementary question. Whilst undisclosed covered short selling and all naked short selling can damage mum and dad retail investors, can the minister outline the damage to Australia’s reputation that a delay in setting up a legislative regime to require disclosure of covered short selling would cause, and would Australia stand to lose—

Opposition Senators:

Opposition senators interjecting—

John Hogg (President) Share this | Link to this | Hansard source

Senator Hurley, resume your seat. I do not know whether there is a problem with your microphone but I am having difficulty hearing the question. But there is also quite a deal of noise in the chamber. It is important during question time that I am able to hear the questions. Senator Hurley, please start again.

Annette Hurley (SA, Australian Labor Party) Share this | Link to this | Hansard source

Whilst undisclosed covered short selling and all naked short selling can damage mum and dad retail investors, can the minister outline the damage to Australia’s reputation that a delay in setting up a legislative regime to require disclosure of covered short selling would cause, and would Australia stand to lose its current global leadership role in dealing with this problem?

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

Thank you for that very important further supplementary question. Unfortunately, there is a potential delay in the passage of this legislation for at least a further three months. This particular piece of legislation, as I have outlined, provides vital regulatory framework that is important to the supervision of and the confidence in the Australian share market, and this is to be delayed, on resolution of the opposition, for a further three months. One of the great difficulties in this approach—aside from the fact the Liberal opposition obviously cannot make up their mind about this particular issue after one year’s debate and consultation, following a gap in the law that they left for 12 years—is that the regulator is actually trying, after lifting a temporary ban on short selling, to implement a covered short selling regime and a total ban on naked short selling. Unfortunately, it does not have the regulatory powers that it needs to underpin the regime that it is in fact trying to implement at the present time in current, very difficult market circumstances. (Time expired)