Mr SAWFORD (1:12 PM) —A couple of parliaments ago, the House of Representatives Standing Committee on Employment, Education and Workplace Relations, of which I was deputy chair, reported to the parliament on employee share ownership plans. I remember beginning that inquiry with probably a similar view to that of the member for Flinders—and the member for Rankin, who will speak later in this debate. But as the committee got into the nitty-gritty of the inquiry, it became clear that encouraging employees to participate in employee share ownership in family, private or unlisted companies was fraught with danger and was very poor financial and investment advice. There are very sound financial reasons why this is the case. In private unlisted companies, employee share ownership can be attractive to company owners, directors and executives, limiting their taxation liabilities, but as far as employees on the floor are concerned, it has little to offer. Commonsense tells us that, if an employee receives the major part of their income from wages and salaries, it would be foolish to invest savings in the same company. No financial adviser would advise a client to put all their eggs in one basket.

The aim of share ownership is to supplement income from wages and salaries. What is likely to occur with employee share ownership in private unlisted companies is income substitution rather than income supplementation. If share ownership is the goal—and there is nothing wrong with that—workers would be wiser to invest in the top 50 or 100 Australian companies. That would be safer. There is little or no flexibility in the transportability of shares when employees, as many do these days, shift their employment 10 or 15 times during their working lifetimes. The same employee share ownership in publicly listed companies causes no such difficulty. During the parliamentary inquiry, the enthusiasts for employee share ownership were overwhelmingly marketers of the schemes. Certainly there were enthusiastic company owners and executives, but not as many as you might think. As far as employees were concerned, I detected almost no genuine enthusiasm at all; in fact, they displayed sound commonsense. If they were interested in a share portfolio, they wanted their investment to be varied and to be in the top publicly listed companies—and, of course, they were right to want that.

In part 2 of his motion, the member for Flinders notes the failure of Corporations Law in this country. That is a far more complex issue, requiring more than merely noting that the existing legislative and regulatory regime is inhibiting the spread of ESOPs. In part 3 of the motion, the member acknowledges that tax provisions favour only token employee ownership. Again, he is correct, but have we asked the wrong question? The question should be: who is advantaged by the current provisions? Clearly, it is the marketers of schemes and executives, not employees. Part 4 of the motion encourages the partnership in business between owners and employees. That is good, but ESOPs are not necessarily the right or the only mechanism. The most effective incentives are related to income and time, not investment policy.

In parts 5 and 6, the member's motion encourages the spread of ESOPs and states that they belong to a spectrum of pre-retirement vehicles largely undeveloped in Australia. The member's enthusiasm for employee share ownership is admirable. However, any financial adviser worth their salt would steer employees interested in share ownership away from investment in a company in which they work. Sensible advice would be to vary the portfolio, not limit it, and to invest in the top 50 or top 100 publicly listed companies rather than private concerns. You do not have to be a rocket scientist to be involved in the stock market.

Part 8 of the member's motion, which calls for adequate disclosures and investor protection, is fine. But it is difficult enough to achieve that in the public arena, let alone in private companies. Part 9 of the motion, calling for the introduction of new pre-retirement savings vehicles for employees who cannot benefit from ESOPs, has considerable merit and is worthy of further investigation by a parliamentary committee. As to whether that vehicle should be modelled on Britain's Individual Savings Account, I have not yet developed a view. Although I have a very negative view of ESOPs in private listed companies, I congratulate the member for Flinders for bringing it forward in private members' business. It is an important debate and it needs to be further explored. Perhaps it could be explored by asking the Treasurer about it instead of the nonsense he trotted out last week.

There is a lack of savings in the country. You could just raise that superannuation levy up to 15 or 20 per cent. That would be a good move. You could legislate to stop those sharks in superannuation funds taking a third of the growth of an investment in superannuation in fees and legislate to cut that down to 0.2 per cent instead of the current two per cent. That would then protect workers' entitlements and workers' pre-retirement savings. There should be none of this nonsense about fiddling at the edges. Let us get to the guts of the issue, which is to increase the superannuation levy to at least 15 and maybe 20 per cent and stop the rorting of superannuation funds. (Time expired)