Senator FORSHAW (2:21 PM) —My question is—

Honourable senators interjecting—

The PRESIDENT —Senator Forshaw, resume your seat. We will not proceed until there is silence.

Honourable senators interjecting—

The PRESIDENT —Senators Faulkner, Carr and Bernardi, there is an appropriate time to debate this across the chamber at the end of question time.

Senator FORSHAW —My question is to Senator Sherry, the Minister for Superannuation and Corporate Law. Can the minister update the Senate on how Australia’s regulators are responding to events in global financial markets? How is the government supporting them in their role?

Senator SHERRY (Minister for Superannuation and Corporate Law) —Those in the Senate chamber and, I am sure, those in the public would be well aware that in the last two weeks we have seen extremely difficult conditions for global financial markets, characterised by extremely volatile—

Honourable senators interjecting—

Senator SHERRY —I hear members of the opposition saying, ‘So what?’ These are very important issues that the Liberal opposition appears to believe are insignificant. They are very important issues. We are confronting the most challenging global financial circumstances in a quarter of a century; some have said that this is a once in a century event. Share market volatility globally has been very significant in recent weeks, sparking possible US government intervention to the tune of some US$700 billion and possibly over US$1 trillion.

Overnight, the US Congress has been working through the details of the proposals with the Secretary of Treasury, Hank Paulson, to basically buy up all of the subprime assets which have infected their financial system. In a reversal of 70 years of regulation, the last two remaining independent investment banks, Goldman Sachs and Morgan Stanley, have been given approval by the Federal Reserve to formally become banks—that is, deposit-taking institutions. In further market developments, reports indicate that Japanese bank Mitsubishi UFJ looks likely to be about to purchase up to a quarter of Morgan Stanley.

The point that I would make and that the Liberal opposition appear do not what to even consider is that this is a very fast moving situation. Every day—indeed, every hour—brings a major new development in the global financial markets. The Prime Minister, the Treasurer and other senior economic ministers are in regular communication with Australia’s regulators. The Treasurer and I met with the full Council of Australian Regulators at length last Friday.

As I informed the Senate yesterday, last week we saw the independent regulators ASIC and, in this case, the ASX take steps on short selling. ASIC took decisive action on Friday and with the ASX banned naked short selling here in Australia and put some additional clarity around what exactly a covered short sale is. These are both important steps in ensuring ongoing market confidence. After that decision, the US SEC moved again with an additional emergency order, completely banning all short sales, naked or covered, on their financial services companies.

After the Australian declaration by ASIC and ASX, Ireland, Germany, France and Ontario, all major financial jurisdictions, took additional action over the weekend. As a result, to ensure that the Australian market was not hit by a wall of short selling funds on Monday morning, ASIC took further action and temporarily halted most forms of short selling of Australian stocks on Sunday evening. In uncertain times like this, we cannot afford to have offshore funds, particularly hedge funds, attacking our market.

I would like to take this opportunity to highlight some comments made by John O’Shaughnessy, Deputy CEO of the Investment and Financial Services Association, who said, ‘If there is a moratorium in the US and UK, it makes sense that Australia follows suit.’ He went on to say, ‘The moves on Friday night were understandable and we’re not surprised they’ve extended them today.’ (Time expired)

Senator FORSHAW —Mr President, I ask a supplementary question. Can the minister point to alternative approaches to dealing with our very well respected regulators?

Senator SHERRY (Minister for Superannuation and Corporate Law) —Unfortunately, in these uncertain times the Liberal opposition have lost complete control of their response to these financial conditions. Yesterday we saw the appalling situation and display of the Leader of the Opposition and the shadow Treasurer attacking the independent market regulator, ASIC. The Liberal opposition, when in government, created the independent regulator; they gave it its powers of independence; they created and appointed the three independent commissioners. Here we have the Liberal opposition attacking a creation of their own and attacking commissioners that they appointed. ASIC is an independent regulator that has responded appropriately in the current situation.

Senator Coonan interjecting—

Senator SHERRY —You should know, Senator Coonan, as I am sure that you approved the appointment of those commissioners. They are independent. In these circumstances, they have behaved very appropriately in cracking down on short selling and stopping market manipulation. You should support them, not criticise them. While you are at it, pass the budget. (Time expired)