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Thursday, 21 June 2012
Page: 7505


Mr KELVIN THOMSON (Wills) (14:59): My question is to the Minister for Employment and Workplace Relations, and Minister for Financial Services and Superannuation. Will the Minister explain the importance of the government's future financial advice reforms, which passed the Senate yesterday?

Mr SHORTEN (MaribyrnongMinister for Financial Services and Superannuation and Minister for Employment and Workplace Relations) (14:59): I thank the member for Wills for his question. It has been a big week in the Senate this week. Not only have we seen the budget progressing, not only have we seen the schoolkids bonus that is going out; we have after a long 11 years seen the first fair dinkum reforms to the provision of financial advice in Australia.

Ms O'Dwyer interjecting

The DEPUTY SPEAKER ( Ms AE Burke ): The member for Higgins is warned!

Mr SHORTEN: What we will see, courtesy of these reforms passed yesterday in the Senate, is a trifecta of improvements in the provision of financial advice in Australia. First of all we will see greater protection for consumers and people going to financial advisers. If only these changes had come in 11 years ago. I am indebted to the work of the member for Robertson and, in a rare moment of bipartisanship, assisted by the member for Bradfield. Recently in the Trio inquiry they revealed that, in that terrible matter where people lost literally millions of dollars, one of the reasons people invested in the Trio funds was that because they were induced into it by planners who were receiving conflicted commissions from product providers. What a shame. If only we could turn the clock back.

What we are doing now is making sure that we eliminate conflicted commission structures in financial planning so that people can feel confident. But also in this trifecta of reasons why what we have done in the Senate is such a good idea is it builds upon the other changes we have made to superannuation. On the Labor side of this House we believe in the great good of a comfortable retirement through increasing super from nine per cent to 12 per cent. But what is the point of increasing compulsory super if on the way while it is being managed in investment we see the money for superannuants being frittered away in excessive fees, charges and commissions? Labor has dealt with that so there will be more money for people when they retire.

The third thing in the trifecta of advantages of what happened in the Senate yesterday is that we will see the expansion of advice. We will see the provision of scaled advice. We will see restoration in the confidence of financial planning as a tool for wealth management for people in the future. Let me put on the record that most financial planners do an excellent job. What we are doing in supporting the professionalisation of financial planning is rebuilding confidence in that profession and seeing greater opportunities for it to expand in the future.

So there you have it, members of the House—better protection, more wealth, greater use of financial planners. But I do wish we could turn the clock back to 2001, because at that time the current shadow Treasurer had an opportunity to introduce a best interests duty and he did not. At that time he had the chance to eliminate conflicted remuneration and he did not. Unfortunately, he was just too slow and too late to help those people at Trio.