Andrew Bragg (NSW, Liberal Party, Shadow Assistant Minister for Home Ownership) Share this | Link to this | Hansard source

I rise to present the report of the Senate Economics References Committee inquiry into the Australian Securities and Investments Commission investigation and enforcement and to make some remarks in relation to the inquiry. This is a committee of inquiry which has run for almost 20 months. The reason this committee inquiry was established was to get to the bottom of why ASIC had not been a successful corporate regulator. I was very concerned that people in Australia were not getting the services of the corporate cop they should have been getting and that too many corporate crimes were going unpunished.

In establishing this inquiry, there was a significant amount of interference from the agency itself, which had sought to influence the vote the Senate took to establish this inquiry, which was quite improper. Nonetheless the Senate decided to establish this inquiry, and I thank the crossbench for their support in establishing this important inquiry, which I think anyone who has a reasonable view on things would say has unearthed a lot of very good evidence, which the committee secretariat has put together.

We tried to look at the way in which ASIC goes about its business through looking at cases, looking at the culture of the organisation and looking at its structure. The government and ASIC filed a lot of public interest immunity claims, which hampered the Senate's ability to do its work. I would say that ASIC went out of its way to obstruct the inquiry, and there was no reason for ASIC not to provide redacted case files so we could see their investigative methods. Professor Alan Fels, who gave evidence to our committee, made the point that there is nothing secret about the investigative methods that ASIC is using. He made the point that, if ASIC was a particularly good regulator, maybe there would be something secret. But there was nothing secret to be hidden. I think ASIC, in the main, just wanted to obstruct the Senate's work.

ASIC really has one job, and that job is to be a law enforcement agency. We come to Canberra, we pass laws—corporate laws, financial services laws and the like—and we expect that the regulator will try and enforce those laws by pursuing civil and criminal cases, building a brief of evidence and winning a conviction in the court. Sadly, that is not the case in Australia, and that is why I believe that Australia has become, in many respects, a haven for white-collar crime.

There are so many cases that could have been catalogued in our committee report, but we decided to look at a few cases: Dixon Advisory, Nuix, Kalkine and Courtenay House. In all these cases, ASIC was given multiple opportunities to enforce the law quickly. We saw the US agencies moving very quickly on the FTX collapse, and they were able to build a brief of evidence and put someone away for many years. ASIC seems to take months and months—sometimes years—to respond to complaints. Often the complaints have been made by insiders—whistleblowers. Whistleblowers are treated appallingly in this country. So many opportunities to stop what was a very bad situation with Dixon, Courtenay House, Nuix and Kalkine slipped out of ASIC's hands. Kalkine is still happening as we speak. The real impact in the community is that fair-minded people who think they're living in a country where financial services laws and consumer protection laws are enforced are, frankly, getting destroyed financially in many cases because of the inaction and the slow pace.

When it comes down to it, the investigation that we undertook looked at the culture, the leadership and the structure. In terms of culture, through our inquiries, we were able to discover the staff survey of ASIC, and it found that staff motivation was at 20 per cent. Staff satisfaction was below 20 per cent. It's a very sick agency. We also, unfortunately, had to spend a lot of time looking at the massive dysfunction at the commission level. Commissioners were at war with one another, leaking to the media and engaging in all sorts of unsavoury business and activity. Unfortunately, there were also secret investigations into commissioners which weren't made known to the public and which were covered up by ASIC. I think the culture of the organisation from top to bottom is extremely sick.

In terms of structure—and I don't want to be too unfair on ASIC—the structure that it has been given by this parliament means that it can't be successful. Since the Wallis inquiry of the mid-nineties, ASIC has been given more and more things. We started out with two peaks in a 'twin peaks' model: APRA, which was given prudential supervision by the Reserve Bank, and then ASIC, which was supposed to be focused on consumer protection. But, since 1997, every time there's been a problem in Canberra, it's been given to ASIC, and ASIC is now a monolith. It is so big that it can't possibly be successful as a sprawling financial services regulator and as a companies regulator. It does the registration of businesses. It looks after market integrity, derivatives, insurance, liquidators, investment banks, private equity and takeovers. It is far too big, which is why we have recommended a new structure for corporate law enforcement in Australia, which would mean a splitting-up of ASIC and the creation of two new bodies: one, a companies regulator and the other, a financial services enforcement agency. There would be two separate bodies, one focused on companies and the enforcement of the corporate law, and one focused on financial services regulation. We think that is a very important structural change.

Secondly, there needs to be much more transparency around how complaints are handled. Where there are convictions recorded against people or organisations and criminal or civil penalties, there should be a searchable register. People should be able to see what has happened in the past. I believe that we should be rewarding whistleblowers who take risks—often risking their own lives—to call out appalling conduct in corporate and financial services in Australia, so we've made strong recommendations not only in relation to whistleblower protection but also in relation to whistleblower rewards.

In terms of the structure of the new agencies, if they are adopted by this parliament, I think the idea of a commission structure is dead. There are too many opportunities for buck-passing, and, in the future, there should be a statutory appointment of a CEO of each of these new agencies, which can be held to account by parliament and stakeholders more easily. In relation to the funding for these new bodies, we ought to find a way to lighten the load on small business. Small businesses, particularly in the financial sector, are paying enormous levies to ASIC, and I think that there is a better way that we can do that.

I want to make two final points before I sit down. This is the third such Senate inquiry into ASIC in the last few decades. There was one in the early nineties, which was done by Chris Ellison, and there was another one done by the Labor senator Mark Bishop about 10 years ago. They both made what I would say were 'deck chairs on the Titanic' style recommendations. We have gone for a complete change here—to new agencies and the end of ASIC—because I don't think it can be fixed culturally or structurally. That's why we have made this perhaps controversial recommendation. But I think it's the only way you can fix the situation.

This has been a process which has asked a lot from a lot of people who didn't have to engage with the parliamentary process. But they have, often for no personal benefit other than to make sure that we could catalogue the evidence. The evidence is that, when ASIC receives complaints and warnings, it doesn't act. I want to thank all the people who have bravely come forward: whistleblowers, insiders, people who've been wronged. Your voice has been heard, and your voice has now been put into what I believe are very strong recommendations, which have been adopted in large part by the government and by the Greens, because there are no dissenting reports. This is a report of the Senate with some qualifications from government senators, but, largely speaking, I believe we have done the job here which the public expects: we've tried to work together to find common ground. I want to thank the secretariat very much for the huge body of work that they've done here. They are such fantastic public servants, who make us look really good. I want to close by thanking all the people that came forward to put on record their very concerning evidence. I seek leave to continue my remarks later.

Leave granted; debate adjourned.