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Thursday, 13 November 2008
Page: 10863


Mr OAKESHOTT (10:35 AM) —I also rise to support these Economic Security Strategy bills in globo and acknowledge the efforts of the government in what are broadly recognised as some pretty difficult economic times. I represent a community on the mid North Coast of New South Wales which has a very large elderly population. There are a lot of people on fixed incomes within the mid North Coast community. Therefore, the 8 December Christmas ham package in particular is one that many households within my region will certainly welcome. The Social Security and Other Legislation Amendment (Economic Security Strategy) Bill 2008 will amend the social security law, the family assistance law, the Veterans’ Entitlements Act and the tax law to provide for payments to pensioners, seniors, people with disabilities, carers, veterans and families with dependent children, as announced by the government on 14 October as part of an overall $10.4 billion economic strategy. The payments will provide financial support during what are, as I said before and as everyone has said, some very difficult global financial times.

The payments and cards attracting the Economic Security Strategy payment include the following: the age pension, the disability support pension, the wife pension, the widow B pension, the service pensions, the income support supplement, the carer payment, the partner allowance, the widow allowance, the bereavement allowance, the parenting payment, the special benefit, the Austudy payment, the Abstudy payment, the Commonwealth seniors health card and the Veterans’ Affairs gold card. It is a substantial range of investments being made by the government and I think a great number of people on the mid-North Coast will receive a payment in the lead up to Christmas. This package is a bit of a double-edged sword. It recognises that it is time to bunker down and that we are entering some very difficult financial times, but at the same time, as a response to that, it is something that will be welcomed by many.

My reason for wanting to speak on the Social Security and Other Legislation Amendment (Economic Security Strategy) Bill 2008 and cognate bills is to raise several points. One is that I hope the response by government is about not only an immediate stimulus package of $10.4 billion but also a process of review and reflection about corporate governance within the public sector—local, state and federal—in Australia today. I mention the public sector in particular because we are putting together a stimulus package on the back of a period where, from the point of view of a taxpayer or ratepayer, a fair contribution has been made to government over the last decade to deliver services throughout council areas, state areas and across Australia. Yet here we are at a time when financial systems around the world are feeling the pinch and catching many of these public sector agencies with exposure. I have a local council on the mid-North Coast, for example, that has an exposure through investments of $25 million; that is almost one quarter of its investment strategy. It does raise substantial public sector corporate governance questions about how this could happen.

Likewise, there are other councils affected—not only in New South Wales but also right throughout Australia. I understand there is one in Western Australia with some exposure that is close to $80 million. It again raises that corporate governance question of how on earth this could happen. In New South Wales there are corporate governance questions about what has happened with state trading arms and state agencies, and their levels of exposure. Have they stuck to the guidelines from Treasury corps at a state level and, if they have, how were those guidelines so wrong? If they have not, what on earth has gone wrong to allow various trading arms to not stick to the guidelines?

I would hope there is a process of review that can be driven by the Commonwealth, because this is an all of public sector corporate governance question that needs to be answered. This should not only be about delivering a Christmas present for many homes in response to the financial situation we are in; it should also be about minimising the chance of this happening again in the future, particularly within the public sector, where all of us have a level of control and authority. For the exposure of the three tiers of government within the Australian public sector to be unknown—anecdotally in the hundreds of millions of dollars—should be of great concern to many. This is the people’s money—no-one else’s. People have been paying taxes and rates to the three tiers of government, and doing it in good faith, yet, due to questionable investment strategies by those three tiers of government at various times, those moneys are certainly exposed and potentially lost within this financial meltdown that we are seeing throughout the world. I hope the government considers the role it has of taking a lead on a review of the past and a review of the corporate governance standards within the public sector—not to hang people from trees and throw stones at particular people or particular governments but to make sure that we have in place a set of public sector corporate governance standards that can minimise any loss of ratepayers’ or taxpayers’ money into the future.

I also think there should be a period of review, reflection and recommendation in regard to private sector corporate governance standards within Australia. We went through a period about two years ago with various collapses of private companies, which failed gloriously in various countries, particularly in the US. HIH was probably the standout one in Australia. There was a government response: there were the Sarbanes-Oxley laws, which were brought into the US; there were the UK companies bills and we flirted with the CLERP 9 laws. Surely all of those and how they have stood up in testing times are now under question. I think there is also a role for government to play in a period of reflection and in making recommendations as to how those various responses to company collapses several years ago have stood up in the current climate and financial issues before us. If we were all honest about it, there are still holes in the prudential standards, the accountability standards and the corporate governance standards within Australian company law, and we can do better.

This is particularly the case with company directors, for example. One of the key roles for company directors in Australia today would be to protect the reputation of the company that they are a director of, yet the words ‘confidence’ and ‘reputation’ are very similar and the issue in this current climate is confidence as much as anything else, and so there has been a failure to protect confidence within certain companies, in the roles that they have played, for example, in delivering products—and, focusing on the subprime issues, delivering questionable products—to the market. There is a question of the reputations of those companies being exposed by the activities of those selling. Therefore, if we are following the chain of command back to who has actually allowed this to happen within Australia and within financial markets around the world, we as a country need to start to shoot home some questions to the various companies involved, and the directors of those companies, as to how the confidence of the market and the reputations of the companies involved were allowed to be exposed in the way they have been. Again, I think that is a valuable role for government to take leadership in. I hope someone within the ranks of government is listening and will consider that.

This is a welcome package—there is no question about that. The only final point I would like to make is a question about the bank guarantee. I was hoping some detail on that may be within this in globo package. Certainly a guarantee has been put to market. It has been put to many homes throughout Australia that we have an ironclad guarantee. I would like to see some details on that guarantee as to how, in a legislative way, that ironclad guarantee stands up on appropriations, for example, and on the question of impacts on consolidated revenue and therefore impacts on service delivery by government. I may have missed it, but in my readings of the three bits of legislation before us I could not see anything answering those questions for me. Again, whichever minister responds, I hope that question is answered—whether we are going to see later legislation or whether we have to take the government on trust that this guarantee is ironclad for the market. I would certainly like to hear more details on that.

As far as the many households on the mid North Coast are concerned, they will certainly look forward to the first week of December. We have just seen the state government deliver some pretty hard knocks to many hip pockets on the mid North Coast, so it is not only about global issues. In our area we have had three mortgage funds go into receivership. There are a lot of nervous local residents on the mid North Coast of New South Wales. Any help is welcome. If we get a fair slice of this $10.4 billion package, I think there will be some happy people.