Louise Pratt (WA, Australian Labor Party) Share this | Link to this | Hansard source

I have a question this afternoon for the Minister for Superannuation and Corporate Law, Senator Sherry, and I would like to note the extreme daily volatility on our stock markets, which seems to be driven by low levels of confidence and low levels of certainty. I would like the minister outline to the Senate why now more than ever the role of responsible government and independent regulators is to deliver as much certainty as possible to Australian financial markets. I would also like the minister to outline if he is aware of any regulatory gaps in the market, and, if so, why the previous government might have failed to act on these after more than 11 years in government. Also, can the minister outline how the Rudd government has taken decisive action aimed at providing certainty to our financial markets during these uncertain times?

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

It is a very important and timely question, given the volatility and the general downward trend we have seen in the Australian markets over the last year. Of course, this is a consequence of the global financial crisis and its onflowing economic impacts. Whilst Australia is better placed than other countries, it is not immune to this crisis. As global conditions deteriorate, the task for the government becomes tougher and tougher. As the Prime Minister indicated yesterday, the global financial crisis continues to evolve in unpredictable ways. But the government will do everything in these difficult conditions to support our economy and our financial system. It requires strong leadership and decisive action to assist in restoring business and consumer confidence.

One of the vital areas in which to restore confidence is the area of the stock market; confidence in this area has been lacking in recent times. This has been a flow-on consequence of the US subprime crisis. There has been significant price volatility in the markets. There has been a significant debate around what is known as short selling. The government has acted. It has introduced legislation to close a regulatory gap that has existed since 2001 under the former government. The former Liberal government left a gap—

Mitch Fifield (Victoria, Liberal Party) Share this | Link to this | Hansard source

So this is all our fault?

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

No, it is not all your fault, but I am just pointing out that you left a regulatory gap.

Opposition Senators:

Opposition senators interjecting—

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

Senator Sherry, ignore the interjections; they are disorderly. Address your comments to the chair.

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

The government have acted decisively to close this regulatory loophole, which the previous Liberal government left unplugged for some seven years. We will ban naked short selling. We intend to boost the powers of ASIC so it can act when it needs to do in these volatile times, and we intend to put in place a regulatory regime to ensure world’s best practice in respect of transparency and disclosure to the market of covered short selling. (Time expired)

Louise Pratt (WA, Australian Labor Party) Share this | Link to this | Hansard source

Mr President, I ask a supplementary question. Can the minister outline any timing sensitivities that might need to be taken into consideration when implementing the government’s plan? Also, does the minister anticipate any possible threat to being able to take decisive, responsible and timely action to ensure certainty in our markets?

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

As I have said, we have acted to restore confidence in the market. Certainly, it is particularly important. With the lifting of the recent temporary ban on covered short selling in respect of non-financial stock, the regulator has introduced an interim disclosure regime in respect of covered short selling, but it needs legislative support. It needs a legislative framework. Therefore, we presented legislation to the parliament that will come into the Senate next week. But, unfortunately, there is a threat to ensuring certainty around this legislative framework. The Liberal opposition, after three inquiries, have indicated that they are going to remove the disclosure requirements—the reporting requirements—and the penalties in respect of nondisclosure of covered short selling. After a year and three inquiries, including one they initiated, the Liberal opposition cannot make up their mind. (Time expired)

Louise Pratt (WA, Australian Labor Party) Share this | Link to this | Hansard source

Mr President, I ask a further supplementary question. Can the minister to outline the views of the regulator ASIC and the ASX with regard to the government’s decisive plan? Is he aware of any alternative views to those that oversee Australia’s financial markets? Also, can the minister outline to the Senate just how damaging any delays to setting up a legislative regime to require disclosure of covered short selling would be to Australia’s financial reputation?

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

As I have indicated, the government have acted decisively. We have concluded consultations in respect of the best way to ensure effective disclosure of covered short selling. The Liberal opposition, after a year and three inquiries and after ignoring the issue for seven years, still cannot make up their mind. The government is acting on the advice of the independent regulator ASIC and the Stock Exchange. They are the two expert bodies that have provided advice as to the detail of the regime to ensure the integrity of the markets in respect of covered short selling. But the Liberal opposition still cannot make up their mind one year on. We have had three inquiries, including one they initiated. They were against inquiries, apparently. On these vital issues of confidence and of the regulation and supervision of the share market in this country, we have acted on the advice of ASIC and the Stock Exchange.