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Wednesday, 24 September 2008
Page: 5499


Senator ELLISON (2:38 PM) —My question is to the Minister for Superannuation and Corporate Law, Senator Sherry. Does he remember saying yesterday in the Senate:

What I have said on many occasions is that the government would not legislate to control short selling.

I refer the minister also to the first line of his press release, issued yesterday, which said:

Senator Nick Sherry, Minister for Superannuation and Corporate Law, has today released the Government’s draft legislation to require the disclosure of covered short sale transactions on Australian financial markets.

In view of the conflicting statements, I ask the minister: did he mislead the Senate with his answer yesterday or did he simply not know that he was about to release draft legislation doing the exact opposite of what he had said in the Senate?


Senator SHERRY (Minister for Superannuation and Corporate Law) —Unfortunately, there was obviously no-one listening on the opposite side to the answer that I have just given or, indeed, to the answer I gave yesterday on this matter. As I said yesterday in response to a question, I have said on many occasions in speeches, publicly, at various meetings over the last six months, the government has no intention of legislatively banning covered short selling in this country.


Senator Abetz —You said ‘controlling’.


Senator SHERRY —We have no intention of banning it.


Senator Abetz interjecting—


The PRESIDENT —Order! Interjections are disorderly.


Senator Abetz —We know what controlling means.


The PRESIDENT —Order, Senator Abetz! There is a time to debate these things at the end of question time, if you like. You continually interject. It is disorderly.


Senator SHERRY —There is a clear distinction—and I would have thought that even the opposition could understand this—between a legislative ban, which we do not support, and legislative amendments to disclose covered short selling. As I have just explained—and, unfortunately, given that question, I have to explain it again—there is a very important distinction between the government saying, and as I have said on many occasions: we will not legislatively ban short selling.


Senator Abetz —Mr President, I rise on a point of order on relevance. We know that the minister may have on many occasions said that the government would not ban short selling, but on page 17 of yesterday’s Hansard the minister is quoted as saying:

... the government would not legislate to control short selling.

We are not talking about the word ‘banning’; we are talking about controlling and that is substantially different. I would invite you, Mr President, to ask Senator Sherry to be relevant to the question that was actually asked, not the one that he was hoping he might be asked.


The PRESIDENT —On the point of order, there is no point of order. As you know, Senator Abetz, I cannot direct the minister how to answer the question or what to say in answering the question. I can draw the minister’s attention to the question that was asked and to being relevant to the question.


Senator SHERRY —I would argue that, notwithstanding the intervention by Senator Abetz, the intention of the legislation that I released yesterday is to disclose covered short selling.


Senator Abetz —It’s a control mechanism.


Senator SHERRY —The control of short selling in this country is exercised by the independent regulator, ASIC. ASIC has the ability and has exercised that, and it is a power that your government gave ASIC to control and ban—to control the way in which it is utilised in the market and to ban it if it wished. ASIC has chosen to impose an interim temporary ban on short selling. It is controlling it. What I have indicated through my press release yesterday and in previous comments is that this government are going to act on a gap left in the Corporations Act by the previous Liberal government in respect of the disclosure of covered short selling and the transactions in the Australian financial markets. We want open disclosure of these transactions in order to ensure a fair, transparent and competitive market.

The Corporations Amendment (Short Selling) Bill which I have released for a four-week exposure period is in preparation for possible future removal by ASIC, the independent regulator, of the current halt on most types of covered short selling—ban or control, however the opposition wants to have it—that was put in place. It is ASIC that has put in place an interim temporary ban and controls on covered short selling in this country.

In recent days our key regulators, both the independent regulator, ASIC, and I might say, the ASX when it comes to naked short selling, on Friday evening put prohibitions, temporary bans—interim controls, if you like—on covered short selling. That has been carried out independently. That is something that I have said time and time again is not within this government’s power, and we have no intention of legislating in respect of it. What we do intend to legislate on is the disclosure. I had already outlined this yesterday. I outlined it in an earlier question. Unfortunately there is a lot of conversation and debate about short sales and the opposition are just showing that they believe a short sale is a summer sale at David Jones. (Time expired)

Honourable senators interjecting—


The PRESIDENT —When there is quiet, Senator Ellison, I will give you the call. Order! Senator Ellison.


Senator ELLISON —Mr President, I ask a supplementary question. The minister has mentioned the short-selling ban imposed by ASIC over the past few days. Does he support those actions, and does ASIC still have his confidence as a result of those actions?


Senator SHERRY (Minister for Superannuation and Corporate Law) —This may be your last question, so all the best to you, Senator Ellison.

Opposition senators interjecting—


Senator SHERRY —I am just extending a courtesy—


The PRESIDENT —Senator Sherry, address the issue.


Senator SHERRY —and I am happy to extend a courtesy to a colleague who is leaving after a long period of service. As I have indicated on many occasions, both publicly and here, ASIC and the ASX acted in respect of naked short selling on Friday. Then, in terms of the international developments by other regulators around the world, they proceeded to a full ban on covered short selling. It is an interim ban, and ASIC will reassess that ban in 30 days in respect of non-financial stocks on the ASX. I have welcomed that ban. Given market circumstances, the turmoil and the uncertainty we have seen, I welcome that ban, that prohibition, that control, if you like. This government will ensure, quite properly, that we will close the gap in respect of disclosure. (Time expired)