Mr LATHAM (11:30 AM) — The Financial Sector Legislation Amendment Bill (No. 2) 2002 gives additional powers to the Australian Prudential Regulation Authority to monitor and supervise companies associated with deposit-taking institutions. This follows the collapse of HIH and the controversy now affecting APRA. The bill seeks to avoid the contagion effect, where the collapse of one company could adversely affect other parts of the corporate sector, such as authorised deposit-taking institutions. Clearly, the government should have acted earlier to avoid the collapse of HIH. This is the point of the damages suit now being brought against the government by the HIH liquidator. It is the issue that underscores this particular legislation.

I draw to the House's attention the words of the Parliamentary Secretary to the Minister for Finance and Administration, Mr Slipper, who presented this bill to the House. He pointed out that an amendment to the Insurance Act was required so that insurance companies must notify APRA of any breach of prudential standards, including any material developments which are detrimental to their financial position. He further said that this will allow APRA to deal earlier with potentially troubled institutions—that is, HIH. It is very clear from the second reading speech of the parliamentary secretary that the government is acting to respond to the collapse of HIH by giving extra powers to APRA to deal with these contingencies in the future.

It does raise the very important issue of why the government did not act earlier to prevent the collapse of HIH. Why didn't it intervene to stop the shonky sale to HIH of FAI—the Trojan Horse that ultimately destroyed the main company? The answer? This was a Liberal insiders' job from the beginning to the end. The then Minister for Financial Services, Mr Hockey, failed to intervene because he did not want to cross his Liberal Party mates Rodney Adler and Malcolm Turnbull. In fact, the problem goes back a long way. The Palmer report, on which the HIH liquidators are now relying, points out that John Howard, as Treasurer in the Fraser government, ignored the concerns of the insurance regulator in 1978 to reissue FAI with a licence. There is a long history of Liberal government preferment for FAI because of the involvement of the Adler family as party members and multimillion dollar donors to Liberal campaigns. This is why this bill is necessary today; it is why this bill has been introduced to the House of Representatives: to cover up the internal preferment and corruption of the Sydney Liberal Party establishment. Indeed, the HIH collapse has Liberal fingerprints all over it. I noticed a report by the well-connected Glenn Milne in the Australian on 30 September, where he wrote that the Prime Minister:

This was code for saying that Mr Hockey, then serving as the financial services minister, would have known from his association with Turnbull and Adler that HIH was going down but he was too lazy and self-serving to do anything about it. As I mentioned earlier, this was an insiders' job from beginning to end. So there is no doubt, even in the assessment of the Prime Minister, that if his then Minister for Financial Services, Mr Hockey, had acted on the information that was available in the Sydney business community—the information that clearly was available within the New South Wales division of the Liberal Party—then HIH may not have collapsed and this legislation before us would not have had the urgency that it has today.

The amendments to the legislation are trying to increase the powers of APRA to give it the capacity to access information that is detrimental to the financial position of insurance companies and to deal with potentially troubled institutions. I think it is wise, and the opposition supports the idea of giving APRA additional powers to intervene, to gather information, to act pre-emptively to ensure that we never again in this country have an HIH type collapse. It is an important piece of legislation but, just as importantly, the House needs to learn from the recent experience.

I have previously expressed my concern about Malcolm Turnbull's involvement in the collapse of HIH. He knew from his involvement with Project Firelight that FAI was a lemon, yet he was prepared to sell it on to HIH for $300 million. The FAI purchase came with liabilities unknown to HIH, including $100 million in bad reinsurance contracts. It was the Trojan Horse that ultimately destroyed HIH and sent the Australian insurance industry into crisis. This is the contagion effect that is mentioned in this legislation that the government is now trying to prevent in the future. But we need to look at the contagion of the immediate past. The responsibility for the collapse extends beyond Adler and Ray Williams. Turnbull is also culpable; indeed, damned by his silence. At every stage, he and Adler covered up the truth. If Turnbull had been up-front and honest with the FAI board and said what he knew to be true—that is: `I was involved in an attempt to privatise the company and, in any case, you are only worth $20 million'—he would never have been appointed. More-over, the board would have included this information in its part B statement and disclosed it to the Stock Exchange. The sale to HIH would never have taken place, Australia's largest corporate collapse would have been avoided and, I think it is also fair to say, the legislation now before the House would not have been so pressing.

Not only is Turnbull damned by his silence; documents were presented at the royal commission showing how he actively deceived the FAI board. On 28 September, for instance, he wrote to Mr Landerer talking of how he was on a `learning curve' in respect of FAI—that is, pretending that he had no prior knowledge of the company's finances. The bottom line? Turnbull failed in his duty of care out of greed. It is as simple as that. He gave a higher priority to pocketing $1.5 million in fees than to the principles of truth and public decency. Maybe this is why the Liberal Party has made him its federal treasurer—the bagman who can walk both sides of the street, look after his party mates and turn $20 million into $300 million. In truth, his disgraceful role in the collapse of HIH tells us as much about the Liberal Party as it does about Malcolm Turnbull. They preach responsibility for society's poor, but they never practise these things themselves.

It is very clear that the government is scrambling with this legislation to cover up and make up for the failings of administration that led to the collapse of HIH. This is scrambling legislation. We cannot, unfortunately, unscramble the egg of the collapse of HIH. It is better late than never to do these things, but the government should learn at ministerial level about the inaction that caused the collapse of HIH. These are serious matters. Indeed, yesterday's news of a damage suit against the government could cost the taxpayer further. It has been a very expensive exercise for the Australian taxpayer: the multimillion dollar expense of the royal commission into HIH, the public expense of now having to change the statute and the possibility of a multibillion dollar payout in the damages suit that is being brought by the HIH liquidators.

It is clear that Turnbull acted improperly; he may have acted illegally as well. Section 995 of the Corporations Law states that in dealings with securities a person must not engage in conduct that is misleading or deceptive or is likely to mislead or deceive. Section 999 establishes a criminal offence for making a false statement or disseminating false information in connection with the sale or price of securities. At a minimum, Turnbull is also bound to face civil proceedings; indeed, these were foreshadowed yesterday. Documents provided to the royal commission show that, following its appointment in September 1998, Goldman Sachs undertook to draw `a very clear picture of the company (FAI) and identify all problem assets' and to bring these to the attention of potential buyers. Turnbull reneged on this commitment and led HIH down the garden path. Moreover, the HIH takeover was conditional on there being no adverse change in FAI's financial position or prospects—a condition that Turnbull breached by failing to disclose the bad insurance contracts, the loan write-downs plus his earlier $20 million valuation of the company. As Turnbull admitted to the royal commission, his involvement with FAI was `market sensitive information' that should have been included in the part B statement. Once again, Turnbull knew what was going on. With respect to the `no adverse change' condition, he told the commission: `I was aware of that condition, yes.' When the royal commission finishes sometime next year, the HIH liquidator and creditors are likely to seek compensation for these breaches, just as—as it was announced yesterday—they will be seeking compensation from the federal government for the slack role of APRA, for the inaction of Minister Hockey and for the bad decision of Treasurer Costello in allowing the merger of FAI and HIH to proceed.

The HIH collapse exposes the two faces of Malcolm Turnbull: the FAI buyer who overnight became its notorious seller. In fact, Turnbull has had more facelifts than Phyllis Diller. In the space of 12 months he has become a born-again Liberal, a born-again Catholic and a born-again preselection candidate. Earlier this year I was surprised to receive a call at home from Mr Turnbull asking me about the reading he should undertake to say things publicly about community issues and social capital. It seemed a strange thing to do: a senior Liberal calling a Labor frontbencher for research advice. Indeed, Turnbull came across as quite awkward, as if he were engaged in a `dial an issue' approach to public life: it was not so much the issues that mattered but rather the chance to lift his profile and have something to say—almost anything to say—at any cost. Since then Turnbull has had something to say on almost everything. His favourite subjects have been families and fertility: lecturing people on the virtues of marriage and babies. In truth, few people have done more to damage family and community life in this country in recent times than has Malcolm Turnbull. His role in the collapse of HIH triggered a public liability crisis, leaving hundreds of thousands of Australians without the insurance cover they need to participate in family and community events.

It was this crisis that prompted the government to take this legislative action. If these things had not happened in the past we would not even be debating this bill today—I am absolutely certain of that; this legislation would not be before the House of Representatives. But the fact that we are here, the fact that the legislation is now necessary and the fact that the government has given it priority in its legislative program proves a very important point. It teaches a very important lesson: this is what happens when someone puts personal financial gain ahead of public interest. This is why greed is such a corrosive force in our society. Instead of lecturing families, Turnbull should be apologising to them. When families find out that their school fete has been cancelled due to the rising cost of public liability insurance, they should ask for an apology and compensation from Malcolm Turnbull. When families find out that the local council has closed the playground at the end of the street, they should ask for an apology and compensation from Malcolm Turnbull. When people find out that their family doctor has been unable to access malpractice insurance, they should ask for an apology and compensation from Malcolm Turnbull. They should ask for their share of the $1.5 million he took out of FAI as he sold the lemon to HIH, knowing full well this would threaten the viability of Australia's insurance industry. Turnbull described his time before the royal commission as a `very embarrassing one', yet he has the $1.5 million to hide his embarrassment. The families hurt by the HIH collapse and the contagion that followed have nothing.

In financial circles Turnbull is known as the `fee catcher'. He caught a fee all right, while families and communities across the country caught nothing but misery and suffering from his greedy alliance with Rodney Adler. Throughout his evidence to the royal commission Turnbull came across as confused and evasive, often displaying a selective memory, particularly about events where he had been caught out. When it comes to examining the sale of FAI, the legal system has a lot more work to do. Not only do we need this legislative change; we need more work in the legal system. If there is any fairness in this country, Turnbull will be brought to justice in either the criminal or the civil courts, or in both.

Mr Entsch —Mr Deputy Speaker, I raise a point of order. I ask that you ask the member to come back to the bill that we are discussing here at the moment. He is way out of order on this.

The DEPUTY SPEAKER (Mr Mossfield)—I will listen carefully. At this stage I do not think there is a point of order. I will, nevertheless, listen carefully to the speaker.

Mr LATHAM —The point of this bill is of course to give extra power to APRA. Why does APRA need extra power? Because of the collapse of HIH. Why did HIH collapse? Because of the notorious role of Malcolm Turnbull. These are important matters, well within the context of this legislation. This is an important issue that deserves the close examination of the House. I for one look forward to the report of the HIH royal commission. The government has established the commission, and we look forward to the commission's recommendations concerning Malcolm Turnbull. I would advise the government to take this matter seriously—not just this legislation but also the history that resulted in this bill being brought before the House. The Minister for Employment and Workplace Relations, Mr Abbott, has established a royal commission into the building industry that increasingly looks like a damp squib. If the government wants to do something about the crooks and spivs in this country it ought to examine the HIH evidence and clean out its own ranks, especially Turnbull and Adler. Bob Menzies would be rolling in his grave, knowing that the finances of his party are now in the hands of a shyster like Turnbull.

Mr Cadman —Mr Deputy Speaker, I raise a point of order. These matters can be debated but they are before a royal commission and I think that a great deal of care needs to be taken. The member is making statements to the effect that the government ought to clean out certain things when the royal commission is still in progress. I think there is a sub judice concern here and that these matters are best left until the report is brought down.

Mr LATHAM —Mr Deputy Speaker, on the point of order: by the logic expressed by the member for Mitchell, this whole bill is sub judice. The government has brought this bill here because of the collapse of HIH and the need to give additional powers to APRA. It is nonsensical for the member for Mitchell to suggest the matter is sub judice when the government has brought legislation before the House. I refer him to the second reading speech by the Parliamentary Secretary to the Minister for Finance and Administration, Mr Slipper, on 26 June, where he clearly referred to the need for APRA to deal earlier with potentially troubled institutions—that is, HIH. There is no doubt that my comments are in order. The bill is here; it deserves to be debated in the proper context.

Mr Cadman —Mr Deputy Speaker, further to the point of order: I understand what the member is saying, but this bill applies to all insurance and all banking institutions. It is not totally generated by the failure of HIH and it certainly has nothing to do with the royal commission. The royal commission is looking at sheeting blame home to individuals. That should be left to one side and the substance of the bill dealt with.

The DEPUTY SPEAKER —Order! On the point of order, I have some advice for the information of members. I do not think the parliament can be deprived of the opportunity to debate this particular issue. It is in order to refer to the evidence that is before the royal commission, but it would be out of order to put any construction on that evidence which might appear to influence the royal commission. I am relying on some information I have been given on that matter from House of Representatives Practice.

Mr Cadman —Mr Deputy Speaker, I am not questioning your ruling, except to point out that the member has made statements drawing conclusions from the evidence and is saying that the government should take certain action against individuals when the commission has not made a finding. Therefore, I believe he is contravening your ruling.

The DEPUTY SPEAKER —Order! It would be out of order if any member put a construction on any evidence that is before the royal commission with a view to influencing that royal commission decision. I ask members on both sides to be careful of that sub judice rule.

Mr LATHAM —I am very mindful of the sub judice rule, as I am sure the parliamentary secretary was when he brought this legislation before the House. The truth is that Project Firelight lit a fire under Turnbull's political career and has turned his credibility to soot. I would argue that Malcolm Turnbull is unfit for public life in this country. Nonetheless, the ALP is going to support this legislation. The legislation does respond to the HIH collapse. It provides additional powers to APRA to intervene to gather information to deal with potentially troubled institutions and, most importantly, avoid the collapse of those institutions and the contagion that would flow to other parts of the financial sector.

The government is really trying to repair things that in some respects are unrepairable. We are not going to re-establish HIH, but we need to learn from the experience. I am sure if he had his time again Treasurer Costello would not have approved the merger of FAI and HIH. He would not have approved the dirty deal that led to the merger of those two companies. I am sure the Treasurer is thinking that, if he had his time again, he would not approve the merger and as a result would not now be subject to a damages suit brought by the HIH liquidator. I am sure the Treasurer is rueful about these things. He needs to learn the lesson: stop looking after your mates, stop being involved in insider jobs. This is the same Treasurer who appointed his mate Michael Kroger to the board of the ABC, the same Treasurer who has tried to appoint his mate Graeme Samuel as deputy to the ACCC.

Mr Entsch —Mr Deputy Speaker, I rise on a point of order. I ask that you direct the member for Werriwa to come back to the issue we are debating, the Financial Sector Legislation Amendment Bill (No. 2) 2002. His comments have nothing whatsoever to do with the bill before the House.

The DEPUTY SPEAKER —There is no point of order.

Mr LATHAM —There is a serious lesson for the government, and that is to avoid insider jobs. I think it is a legitimate point to make. There is a pattern of the Treasurer being involved in insider jobs, of appointing his mates to key positions and, in this case, not stopping the merger of FAI and HIH because two of his mates, Rodney Adler and Malcolm Turnbull, were involved in the dirty deal. The Treasurer needs to learn that lesson. I am sure if you ask him here today, in an honest moment he would say that he wished he had not done it and that he was not subject to a damages suit by the HIH liquidator. So they are important lessons.

Quite frankly, in the history of this matter, from Mr Howard's involvement in 1978 to the present, they have all been in it: Howard, Costello, Hockey, Turnbull and Adler. It has been a dirty insider job by the Liberal Party. I think this is deeply regrettable. I look at these matters and at the members who are taking points of order today. They are as bad as Janet Albrechtsen, a skanky ho who will die in a ditch to defend the Liberal Party. It is her and the other dancing bears who are most likely to defend these dirty deals, but I think as time passes—and we see this day by day—it is indefensible. It is a matter that cannot be defended in any terms as good public policy. The legislation is way too late. Most importantly, the government is just trying to cover up something that it should have prevented a long time ago.