Senator BARTLETT (Leader of the Australian Democrats) (2:28 PM) —My question is to Senator Coonan, the Minister for Revenue and Assistant Treasurer. The minister would be aware that Henry Kaye's National Investment Institute has collapsed. Among other practices, Henry Kaye heavily promoted deposit bonds and led thousands of Australians into speculative property investment. Is the minister aware of the concerns of the Reserve Bank of Australia, expressed in a submission to the Productivity Commission, that deposit bonds are fuelling property price growth and the overdevelopment of inner city rental units? In light of this collapse and the effects caused by deposit bonds, what will the minister do to respond to the Reserve Bank's concerns and to the Senate's resolution yesterday calling for improved regulation of the deposit bond industry?

Senator COONAN (Minister for Revenue and Assistant Treasurer) —I thank Senator Bartlett for a very good question. There is no doubt that the issues surrounding property investment schemes are a matter of concern. I can confirm to the Senate that the National Investment Institute was placed into both administration and receivership following the appointment of an administrator to Mr Kaye's organisation by its directors and the appointment of a receiver by group corporate services to a company connected to Mr Kaye. The ACCC and ASIC recently launched a number of Federal Court proceedings against Mr Kaye. The ACCC has alleged that Mr Kaye has undertaken misleading and deceptive conduct in claiming that he can make ordinary Australians into `property millionaires with no money down, no equity, no debt and a price protection guarantee'. If those claims are made, a matter of great concern is whether they misled Australians who participated in some of these schemes. ASIC is pursuing Mr Kaye over his earlier undertaking to ASIC to pay compensation to people who signed up for his seminars on the false belief that they were ASIC approved. The undertakings required Mr Kaye's company to compensate consumers who paid for training courses based on the mistaken belief that they were approved by ASIC.

I do not want to go any further into the ins and outs of this investigation, because it would not be appropriate, but I can make a couple of other comments about ASIC's role in this. However, before I do, I should acknowledge that some of the concerns about these schemes were part of the government's motivation to ask the Productivity Commission to inquire generally into a broad range of issues on the affordability of housing and particularly in relation to practices such as deposit bonds. It was with these matters in mind that the government asked the Productivity Commission to evaluate all of the components of the cost and price of housing, including new and existing housing for those wanting to get into their first home, and the practice of deposit bonds and the dangers in that.

Importantly, the commission does need to examine impediments to first home ownership and to provide assessments on the feasibility of reducing or removing those impediments. I am aware of the submission by the Reserve Bank, and there are a number of matters there to consider. Obviously this government wants to see what the Productivity Commission says about these matters. You can be assured that these matters will be weighed up very carefully in the whole of the circumstances looked at by the Productivity Commission.

I should also say to the Senate, because it is a very important matter, that the regulation of real estate agents is a longstanding and traditional area of responsibility of the states and territories, as is the regulation of a number of other aspects of real estate in their jurisdictions. Queensland and New South Wales have both introduced legislation that seeks to regulate the activities of property marketeers, but there are some problems because interstate property is unaffected by this regulation. Queensland claims that marketeering has been exported to other states and to New Zealand, so it is important that the ministerial council looks at these matters and that this government takes a leadership role to ensure that, whilst we do not directly regulate operators of property investment schemes, both ASIC and the ACCC have general consumer protection in their jurisdictions. (Time expired)

Senator BARTLETT —Mr President, I ask a supplementary question. I thank the minister for the answer. Could the minister confirm that the investigations by ASIC are solely to do with misleading conduct rather than the issue of the use of deposit bonds, which is obviously far more widespread than just Henry Kaye? Does the minister believe that the property investment industry and the use of deposit bonds has contributed to an unsustainable housing boom, leaving many Australians dangerously debt exposed and putting unnecessary upward pressure on interest rates? If so, will the government commit to addressing that problem?

Senator COONAN (Minister for Revenue and Assistant Treasurer) —Thank you for the supplementary question, Senator Bartlett. It would be inappropriate for me to comment about the ins and outs of the specific case that is currently being investigated by ASIC. That will obviously run its course, as will the Productivity Commission inquiry. The matters that have been raised in relation to deposit bonds are serious matters, and they deserve a serious airing. It would be tempting to think they had some effect that they may otherwise not have had when you look at all the evidence. This government wants to see what the Productivity Commission makes of it, taking into account all of the submissions.