Sue Boyce (Queensland, Liberal Party) Share this | Link to this | Hansard source

On behalf of the Parliamentary Joint Committee on Corporations and Financial Services, I present two reports of the committee as listed at item 7 on today’s Order of Business, and seek leave to move a motion in relation to the reports.

Leave granted.

I move:

That the Senate take note of the reports.

As Deputy Chair of the Joint Corporations and Financial Services Committee I am pleased to speak to these two reports. The first was the committee's report into access for small and medium business to finance and the second was the committee's report on the statutory oversight of the Australian Securities and Investments Commission. On 25 November last year, the House of Representatives referred to the committee an inquiry into small and medium business's access to finance. The report was presented to the Speaker out of session on 28 April, and I am pleased that I can now present that report to the Senate.

As senators know, access to finance from lending institutions is crucial to the ongoing productivity and growth of the small- and medium-business sector. While Australia came through the GFC relatively well, the crisis continues to leave its mark on our economy, particularly in the area of small and medium business, who are facing a perfect tsunami of problems relating to their ability to conduct business. This was no more evident than in the small- and medium-business finance sector. The committee heard evidence that, due to be GFC initially, lending competition decreased while the cost of providing finance increased. Small and medium businesses could access finance, however on less favourable terms and on less favourable conditions than prior to the crisis. Also those who were successful often had to wait longer, which stifles innovation, the keystone of small business.

In a unanimous report our committee made four recommendations to help improve the financial environment for Australia's small and medium businesses. We recommended that the government assess the value of developing uniform definitions of micro-, small and medium business to be applied for data gathering, policy develop­ment and analysis by Commonwealth and state agencies. That might sound like a minor change, but in fact it is not because across the ABS, the ATO, ASIC and a dozen other regulatory organisations and a dozen or more lending institutions different definitions are used all the time as to what constitutes micro-, small and medium business. The impost on many businesses is huge. We also recommended that the Reserve Bank of Australia specifically track the impact of the introduction of Basel III on the cost of small and medium business finance and residential mortgages. We recommended that the Code of Banking Practice and the Mutual Banking Code of Practice be amended to include a standardised notice period for notifying business borrowers of changes to loan terms and conditions that may be materially adverse for borrowers. This issue was raised with us often by small and medium bus­inesses who were given varying amounts of notice about changes to their loan conditions. We recommended that the government undertake further work to explore policy measures that may strengthen the mutual sector as a fifth pillar of the banking system and therefore promote competition. I turn now to the second report, tabled in the House of Representatives on 23 May 2011, on the committee's statutory oversight of ASIC. This is a requirement under the ASIC Act. ASIC is charged with monitoring and promoting market integrity and consumer protection in Australia's financial system. The relevance of ASIC's responsibilities to the ethical performance of this nation's financial system cannot, in my view, be overstated. The committee's oversight of ASIC provides an opportunity for the parliament to be assured that the regulator is operating effectively and to identify opportunities for improvement. The com­mittee would like to direct parliament's attention to several areas, including ASIC's complaints-handling practices, compliance with the Legal Services Directions, and measures to promote financial literacy. We will continue to engage with ASIC to identify areas for improvement.

In preparing the report, the committee held a hearing on 11 March with ASIC officials, the Office of Legal Services Coordination and the Australian Securities Exchange. We would like to thank ASIC for their continuing cooperation and assistance, and the representatives from the Office of Legal Services Coordination and the ASX for the additional insights they provided. This is going to be a new direction that the Joint Committee on Corporations and Financial Services will take. We will hold four statutory oversight hearings into ASIC each year and we intend to broaden the number of people that we speak to about ASIC and its operations, partly to inform our work but also to inform ASIC's work and to develop a better level of communication between the financial sector, ASIC and academics working in this field, and to establish a sense of where we sit in the international framework on our regulation of ASIC. I am very hopeful that this will deepen our ability to provide assurance to this parliament on the workings of ASIC.

I also take this opportunity to thank the former chairman of ASIC, Mr Tony D'Aloisio, for his work with and his assistance to the committee. We found his reports to us always insightful and informa­tive. And I would like to welcome the new chairman, Mr Greg Medcraft. I seek leave to continue my remarks later.

Leave granted; debate adjourned.