Mark Bishop (WA, Australian Labor Party) Share this | Link to this | Hansard source

My question is to the acting Assistant Treasurer, Senator Cormann. I refer the minister to the collapse of Westpoint where 4,300 people, including many Western Australians, lost $310 million after receiving conflicted financial advice. Given that the government remains committed to bringing back commissions and conflicted remuneration, what will stop another Westpoint happening?

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

Thank you. Firstly I completely reject the assertion that the government is bringing back conflicted remuneration. We are not.

After the collapse of Storm Financial and various other events, such as the one Senator Bishop mentions, there was a bipartisan parliamentary inquiry, colloquially referred to as the 'Ripoll inquiry'. It was a very good inquiry and indeed the recommendations that came out of that inquiry received bipartisan support. Principally, the recommendations were that there should be a fiduciary best-interest duty imposed on financial advisers, something we support; that there should be additional disclosure requirements, something we support; and that there should not be conflicted remuneration for financial advisers, something we support and something we maintain.

The mistake Labor make is that, under the cover of these sorts of events, they have tried to shove in a whole range of competition-distorting initiatives that they have long had in their bottom drawer, imposing unnecessary additional red tape, pushing up the cost of advice beyond what was appropriate to improve consumer protection arrangements. Minister Bowen and then Minister Shorten pursued a naked commercial vested-interest agenda for their friends in the union-dominated industry funds.

The truth of the matter is that when you try and fix a problem you need to make sure that whatever you do actually makes things better and not just more complex and more expensive. You need to make sure that the changes you make are proportionate and that the costs they impose are proportionate to the additional improvements they deliver. Minister Shorten cannot have been very confident of his changes, because Labor had a regulatory impact assessment requirement—a cost-benefit impact requirement—and guess what: Minister Shorten sought and received from then Prime Minister Gillard an exemption from that process, because he knew that it would fail the cost-benefit analysis that was a requirement of their own government.

Mark Bishop (WA, Australian Labor Party) Share this | Link to this | Hansard source

Mr President, I ask a supplementary question. It is indeed rich to talk about conflicted commercial considerations when Minister Cormann acts on behalf of four banks and one finance house.

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

Order! Just ask the question.

Mark Bishop (WA, Australian Labor Party) Share this | Link to this | Hansard source

However, Minister Cormann, won't the watering down of the best-interest test and the return of conflicted remuneration mean that under this government consumers will bear the brunt of future collapses?

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

I again completely reject the assertion that is at the basis of that question. We are committed to ensuring that there are appropriate levels of consumer protection, but we are balancing that with also ensuring that consumers continue to have affordable access to high-quality advice.

Honourable Senators:

Honourable senators interjecting—

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

Order! The discussion going across the chamber is disorderly. Senator Bishop is entitled to hear the answer that Senator Cormann is giving.

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

I completely reject the assertion that Senator Bishop has made. What we are doing is restoring some balance. We are making sure that our financial advice laws facilitate the most efficient, the most transparent and the most competitive financial services system possible, where consumers can have confidence in the quality of the advice they are receiving and where consumers can get access to that advice at the most affordable price possible. That is because—guess what—the consumer interest goes beyond just the mere focus on imposing additional red tape. The consumer interest actually goes into people saving for their retirement having access to quality, affordable advice. (Time expired)

Honourable senators interjecting—

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

Order! Senator Bishop is on his feet.

Mark Bishop (WA, Australian Labor Party) Share this | Link to this | Hansard source

I have a final question to the minister, Mr President. Isn't the only reason the minister is putting a freeze in place to hold off on these retrograde changes until after the results of the Western Australian Senate by-election?

Honourable Senators:

Honourable senators interjecting—

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

Order! I will give you the call when there is silence, Senator Cormann.

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

That is a ridiculous suggestion. The Labor Party are engaged in the politics of this debate and good luck to them. But as to the timing, as Senator Bishop would well know, I took responsibility for this part of government policy in the middle of last week. Having come into this new, I needed to satisfy myself about exactly what was on the table to implement our election commitments.

I can again confirm that the government is totally committed to the speedy and efficient implementation of our election commitments, but while the legislation is going through an inquiry through the Senate Standing Committees on Economics it was quite appropriate to pause the implementation of the related regulations. While that is taking place, I will conduct some further consultations with key stakeholders. That is a good process and that is what this government does. When the Senate inquiry has reported, there will be an opportunity for the chamber to have a debate on the merits of all of this. (Time expired)