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Thursday, 22 August 2002
Page: 5509


Ms JULIE BISHOP (4:08 PM) —I have been fascinated by the opposition's speeches, particularly the speech from the member for Fraser. The opposition are obsessed by the Treasurer; they are mesmerised by him. I do not blame them for that. On this side of the House, indeed throughout Australia and the international community, people are mesmerised by his remarkable successes as Treasurer of this nation: his deft handling of the economic fortunes of this country in the face of global downturns; his capable, commanding and compelling performance as the No. 1 finance minister of this country; and his presiding over a period of one of Australia's strongest economic performances in living memory. Here the opposition are, their leadership in more trouble than Mandrake, and they are focusing on the Treasurer's performance. Come to think of it, I think this obsession is just plain, old-fashioned envy. Bob McMullan, you are no Peter Costello—dream on!

The opposition have dressed up their deep-seated envy of the Treasurer's ability with an MPI that charges the government with the `failure to adequately protect the investments and retirement savings of Australians'. This charge can be refuted totally on any number of grounds but, for the purposes of this debate, I will concentrate on two areas. The first one, which the opposition have failed to mention, is the state of this nation's economy and the government's role in the current state of that economy. The second is the state of corporate and prudential regulation in this country and this government's role in modernising corporate and financial laws and introducing world's best practice in the business sector and in the regulation of the investment environment.

The opposition has chosen to ignore the state of our economy. That is a matter of considerable importance to investors—mums and dads and shareholders alike. It is churlish to not at least give a balanced account of what does impact upon investments and retirement savings. But perhaps this is an indication of the slender intellectual, indeed rhetorical, resources that the opposition is able to draw upon within its own ranks when it comes to questions of economic management. Investments and retirement savings are affected by the state of the economy. It is no coincidence that, under this government, Australia now has the highest rate of share ownership in the world. Australia has one of the strongest economies in the world; it is more competitive, more open and more vibrant than ever before. Within our comprehensive economic policy framework, we have pursued numerous policy reforms most vigorously to ensure that we have a sound, stable and competitive institutional structure that provides certainty to business, to investors and to those with retirement savings.

This government's policies and leadership have ensured that Australia's economy continues to grow, averaging around four per cent in the years of the Howard government. The Economist magazine forecasts Australia to be the strongest growing economy in the developed world in both 2002 and 2003. I suggest to members opposite that investors and those with retirement savings elsewhere in the developed world will be looking with considerable interest at a country whose economy has performed so extraordinarily over the past five years—a country tipped to be the fastest growing economy this year and next year, with growth around four per cent. Australia's buoyancy is the subject of many glowing assessments, particularly during the global slowdown, and that is why Labor is so envious of our Treasurer's record.

I enjoy reading the Economist, particularly its enthusiasm for Australia's current achievements. It was not so long ago—I think it was in about 1994—that I read an article in the Economist comparing the Australian economy with that of Mexico, and this was in the wake of Mexico's financial crisis. It concluded that Australia—this is Australia under the Keating government, and a number of members from that government remain in this House, sitting there on the shadow benches—had many of the same symptoms that Mexico displayed before its economy collapsed. It mentioned particularly a large current account deficit and an unacceptable debt burden. We have heard the members opposite come up with any number of lame excuses for the state of the economy under Labor, along the lines of `the dog ate my homework'. But today, after six years of coalition government, our current account deficit has dropped to about 2½ per cent of GDP—that was last year—and this is a watch point for investors. The coalition also has masterfully repaid much of the massive Labor debt legacy.

The state of the economy depends not only on global factors but also on the domestic policies of the national government, and Australia's resilient economy has delivered low inflation. You will recall that Labor gave us high inflation rates, and the real purchasing power of your investment is affected by the high prices that follow high inflation. We have delivered low interest rates. Households' interest burden today is a lower share of their income than it has ever been, or certainly in the last 30 years. In fact, the International Monetary Fund in its latest world economic outlook, in providing another glowing assessment of Australia's performance, highlights Australia's low interest rates and also highlights this government's first home owners grant as two of the key factors for our continuing growth.

The IMF also notes that our solid economic growth is not expected to generate significant price pressures: inflation will remain stable at around 2.3 per cent. Moreover, the IMF expects the current account deficit to be around 2.7 per cent of GDP and notes that these strong macro-economic fundamentals are expected to lead to a reduction in the unemployment rate. This government has delivered, and it is has delivered consistently, in terms of healthy budgets. A surplus budget would have been quite a novelty to the member for Fraser. When he was part of the ALP leadership and in government, the likelihood of Labor delivering a surplus budget would have been like finding a unicorn in your sock drawer.

The subject of all that green-eyed envy, the member for Higgins, ought to have tribute paid to him and I do so for the past seven budgets that he has delivered—budgets that have supported our healthy, growing, productive economy. These were wise, prudent budgets with regard to the future of this country, a future that bodes well for those investing in it. So a healthy budget position, a healthy economy—it sounds like a pretty healthy environment in which to invest. That is why our share market has performed well compared with other markets. But that is not the whole equation. Let us turn to the prudential regulatory environment, the corporate regulatory environment.

This government has placed great emphasis on the protection of superannuation and retirement income policy. We are committed to assisting Australians to build financial self-reliance in retirement and this includes enhancing the overall attractiveness, accessibility and security of superannuation. A key element of the government's strategy to address the long-term consequences of our ageing population so competently portrayed in the Intergenerational Report delivered by the Treasurer with this year's budget is superannuation. It is imperative that the community has full confidence that the prudential regulatory framework applying to superannuation is strong and robust and that the trustees of super funds meet the highest standards in carrying out their responsibilities for the viability and prudent operation of super funds. And the government is ever vigilant. Last October, we released an issues paper entitled Options for improving the safety of superannuation, which sets out certain proposals that would impact on the supervision and governance of superannuation entities. A working party was set up. It has recently reported to the government and we are considering its recommendations.

In terms of investor confidence in Australian companies, I point out that we have already achieved significant regulatory change in the area of financial reporting through the Corporate Law Economic Reform Program. This is an incredibly comprehensive program of reform. It began in 1996. It is a credit to this government and these reforms have been applauded and, in some cases, emulated overseas. It has put Australia at the forefront of world's best practice in a number of key areas. But in keeping with this government's commitment to ongoing reform, work in this area is continuing and the government will be releasing a further policy proposal paper shortly as part of the Corporate Law Economic Reform Program—it will be known as CLERP 9. It is about quality disclosure to shareholders. It will address the recommendations of the Ramsay report on auditor independence as well as broader corporate disclosures issues.

The Ramsay report was commissioned prior to the recent US corporate fiascos—ENRON, Global Crossing, WorldCom and others—which have focused the minds of the US Congress and that administration on reforms to auditing and accounting standards. We are ahead of the US in that the government will release the CLERP 9 policy paper at the end of August, seek comments by mid-October and release exposure draft legislation for further public comment in December. The government plans to introduce legislation into parliament in 2003. It will allow final implementation to take account of any relevant recommendations of the HIH Royal Commission and work currently being undertaken by the Joint Committee of Public Accounts and Audit, and further developments overseas, particularly some of the ideas that are being hatched in the US, including a public accountability board, compulsory rotation of auditors and the like.

This MPI demonstrates yet again that this government has already introduced reforms to the prudential and corporate regulatory regimes. We have been and we remain mindful of the need to do whatever we can as a government to protect investments and retirement savings of all Australians. We are in many instances leading the world in our reforms. We are taking a long-term view of our regulatory framework, we have incorporated regulatory flexibility and we have avoided unnecessarily prescriptive approaches. We have been mindful of changes in technology, business practices and community expectations. We have placed investor confidence in companies and in retirement funds as a high priority in our reforms. (Time expired)


The DEPUTY SPEAKER (Hon. I.R. Causley)—Order! The discussion is now concluded.