Peter Whish-Wilson (Tasmania, Australian Greens) Share this | Link to this | Hansard source

My question is to Senator Cormann, in his capacity as acting or temporary Assistant Treasurer. Reserve Bank Assistant Governor Malcolm Edey recently made the following comment regarding risk management to help avoid another global financial crisis:

For regulators, that means holding financial players to better standards of probity and prudence than prevailed in the past.

This was backed by comments from Charles Littrell, the executive manager of APRA, who said:

If you show me a country where the politicians listen to bankers more than they listen to regulators, I will show you a country which is guaranteed to have a banking crisis.

Is this Liberal-National government still pursuing Senator Sinodinos's unpopular amendments to the future of financial advice legislation, supported only by the big banks in the financial services industry, by removing protection for consumers and subjecting them to more risk in financial investment?

Mathias Cormann (WA, Liberal Party, Minister for Finance) Share this | Link to this | Hansard source

I thank Senator Whish-Wilson for that question. With all due respect to the senator, he is mixing up a whole series of different concepts that are actually in different buckets. Let me just make a first point. Regulators like regulating, and if you leave regulators to their own devices they will always find a way to make things more stable and more safe. In the end, it will be so safe that none of us will move. Of course, in an economy that we want to grow, it is a matter of getting the balance right. You have got to make sure that you get the balance right between sensible regulation and making sure that economic activity can continue to happen in an efficient way. Of course, the banks, our financial institutions and so on play very important roles as facilitators in the economy, and it is fair to say, in the context of the global financial crisis, that the banking sector and the financial services sector in Australia actually performed very well.

When it comes to the future of financial advice changes, Labor, when in government, used the cover of the global financial crisis and the Storm Financial collapse to pursue a whole range of vested interest agendas that were very close to the heart of the union-dominated industry funds to essentially impose excessive, costly, unnecessary red tape, which makes—

Opposition Senators:

Opposition senators interjecting—

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

Senators on my left, order! It is Senator Whish-Wilson's question. He is entitled to hear the answer without your interjections.

Mathias Cormann (WA, Liberal Party, Minister for Finance) Share this | Link to this | Hansard source

Our commitment in relation to financial services is to ensure that we get the balance right between appropriate levels of consumer protection and making sure that access to high-quality financial advice remains available and affordable. We said in opposition that Labor went too far and imposed too much costly red tape, pushing up the cost of doing business and pushing up the cost of advice for consumers, which led to increased concentration and lessening of competition in the financial services sector. These are all things that are not in the public interest. We are restoring some balance in the regulatory arrangements for the financial services— (Time expired)

Peter Whish-Wilson (Tasmania, Australian Greens) Share this | Link to this | Hansard source

In reflecting on whether we got the balance right in this country, Senator Cormann—

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

You need a question.

Peter Whish-Wilson (Tasmania, Australian Greens) Share this | Link to this | Hansard source

Considering that some financial advisers who recommended investments in collapsed forestry MI schemes received commissions of up to 10 per cent on each investment and that the structure of forestry MISs has been described as encouraging a type of Ponzi scheme where this year's fees are being used to pay last year's expenses, how will the government ensure that the repeal of the FoFA legislation does not revive the Liberal-National Party's systemic failed model of managed investment schemes in this country and especially in Tasmania's forestry and agricultural sectors?

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

Order! That is not the way I will respond to anything. It is disorderly.

Mathias Cormann (WA, Liberal Party, Minister for Finance) Share this | Link to this | Hansard source

Again, Senator Whish-Wilson is mixing up a whole series of different concepts here. Let me make the general point up front that the most stringent regulation is not going to eliminate criminal or fraudulent activity across Australia. You cannot regulate for a perfect world. If you are going to try to regulate for a perfect world, nobody is going to do anything. The second point I would make is that, for example, the so-called opt-in requirement legislated by Labor, forcing people to re-sign contracts on a regular basis with their financial advisers, would have done nothing to prevent the Storm Financial collapse. Storm Financial clients were actively engaged with their financial services provider but they were getting bad, inappropriate advice. The costly imposition of additional red tape on business and additional red tape on consumers, leading to increased concentration in the financial services market, would not actually improve the situation. Change is only good when it makes things better. (Time expired)

Peter Whish-Wilson (Tasmania, Australian Greens) Share this | Link to this | Hansard source

Mr President, I ask a further supplementary question. The National Farmers' Federation has stated:

… current MIS structures do not promote sound investment decisions in rural and regional areas, and as such have created a distortion of land values and/or commodity markets.

Minister, in light of this will you reconsider the tax engineering and dodgy Liberal-National Party industry development plans that underlie these schemes, beginning with a full review of MISs and the legislation surrounding them in the promised taxation white paper?

Mathias Cormann (WA, Liberal Party, Minister for Finance) Share this | Link to this | Hansard source

What I would advise Senator Whish-Wilson to do is to expand on his question with a submission to the tax reform white paper process. We will consider all of these sorts of suggestions among all of the submissions that are made.