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Thursday, 22 March 2012
Page: 4090

Mr TONY SMITH (Casey) (10:29): I join with my colleagues in speaking on the Corporations Amendment (Future of Financial Advice) Bill 2011, being debated cognately with the Corporations Amendment (Further Future of Financial Advice Measures) Bill 2011, and in opposing the bills in their present form. I start by pointing out to the House that what we are witnessing here today from the government, amazingly, is yet another episode in legislative rush, which we have seen has led to grief in so many other portfolio areas over their period in government. This shines a light on this government's incompetent legislative processes. The way they go about trying to legislate in this area is so similar to what we have seen in other areas where there has been policy failure and policy catastrophe.

As speakers on our side of the House have outlined over the past 24 hours, the legislation in its present form cannot be supported. A range of reasons for that have been articulated throughout the course of the debate, but also over many weeks and months. Despite this, the government will stubbornly press ahead. They will do so while many on their back bench know full well that this is flawed legislation and that, as my colleague who spoke before me pointed out, it will cost jobs and choice. If this legislation succeeds it will make Australia the world champions of red tape in the financial services industry.

It is a shame because, despite the incompetence of the ministers bringing this legislation forward, those on Labor's back bench in their party room—or their caucus, as they call it—would know that this is damaging legislation. Yet they are prepared to support it. It is not just a reflection on the failure of senior ministers—and what a failure it has been, as speakers on our side of the House have outlined—but it is also a massive reflection on the failure of those in the caucus. Some have been very involved, for a number of years, in the parliamentary inquiry that I have been on. They have seen this legislation evolve in the past few weeks and they would know full well, as the previous speaker pointed out, that it will cost jobs, that it will cost choice, that it will increase red tape and that it will be bad legislation.

Our side of the House has outlined that we will move a number of amendments. If these amendments were to be supported, this legislation would be what it should be. But, at present, as we have outlined, it is unnecessarily complex. It will, as I have just said, cost jobs. It will enshrine an unlevel playing field amongst providers and favour a government-friendly business model. As just pointed out, it will cost $700 million to implement and $350 million a year to comply with—and those are conservative industry estimates. I point out at the outset that the criticisms the coalition brings forward are echoed right throughout the industry by so many of those within it. That is why the coalition has put forward its views on amendments. Those views have not just been put forward throughout the course of this debate. Importantly, what these amendments embody has been very much part of the public discussion throughout the course of inquiries, including the inquiry by the joint committee of which I am a member. Unfortunately the government has done what it has done on so many occasions when it is seeking to bring in a change: it has refused to listen and it is stubbornly pressing ahead.

I want to briefly take some of the House's time to outline the areas in which we are seeking critical amendment on this legislation. Firstly—and you would think it would be an uncontested fact—the government should be required by parliament to table a regulatory impact statement on these reforms as compiled by the government's own Office of Best Practice Regulation. That is contestable. It in itself says so much about the government's approach. According to the government's own office the government did not have adequate information before it to assess the impact of these changes on business and consumers and to assess the cost-benefit of any proposed changes. That is not an assessment that coalition members and senators made; that is an assessment that the government's own Office of Best Practice Regulation has made.

Secondly, the government's proposal for an opt-in is an illustration of the chaotic policymaking on that side. Back in 2009, I think it was—and Mr Deputy Speaker Windsor, you would recall this, because I know you follow these issues—we had the Ripoll inquiry. It was a significant inquiry into financial services. If this legislation passes, the proposal for opt-in imposes a mandatory requirement on consumers to re-sign contracts with their financial advisers on a regular basis.

Mr Ramsey: You can get your drivers licence for 10 years.

Mr TONY SMITH: That is right. And they have to go through that process each year—having to sign a form every single year. You would think that after the government had had the Ripoll inquiry they would take notice of that proposal in this legislation. It was never part of the initial Ripoll inquiry recommendations, and here it is in this legislation.

Thirdly, we have here a retrospective application of additional annual fee disclosure requirements. We think that should be removed. We think the drafting of the best-interest test should be improved, and speakers on our side have outlined that in some detail. This legislation's treatment of the issue of risk insurance inside superannuation has been a confused and ever-changing position on the part of the government that again reflects their chaotic decision making in so many ways. We think that needs to be refined. Again, the Ripoll inquiry did not make any recommendations to ban commissions paid for risk insurance products. Coalition committee members support the banning of conflicted remuneration structures—I was one of those—such as product commissions et cetera. But again, the fact that they had the Ripoll inquiry, the fact they have ignored and gone down another route, you have to ask yourself why? I think the previous speaker on our side, the member for Grey, hit the nail on the head and it was a sensitive point with the member opposite, point which is why it needs to be hammered home: the opt-in provision which I spoke of earlier. The opt-in was not part of the initial Ripoll inquiry recommendations, and in this context it is important to note that the industry super network provided the only submission to the original Ripoll inquiry arguing in favour of opt-in.

Each of these areas I have run through is illustrative of the government's change of position in so many respects and it leads to the final area of proposed amendment and that is the simple proposition, you would think for those who are rushing: that the timetable for implementation is clearly unrealistic in the legislation. Members have argued on this side of the House that the government should have at least aligned the implementation of any changes it proposes to make. We would still hope, as faded a hope it is, that just once after so many policy catastrophes in so many areas on that side of the House, just once, common sense might prevail. If this happens, you would think government backbenchers would say, 'Hey, we are rushing into another policy train wreck here and what we should do is'—and hopefully they would accept our amendments. If you are going to implement major change, and our amendments would improve that, have a realistic time frame and align it with the proposed MySuper changes and implement it in July next year, rather than this year.

What I predict is that the government, after stubbornly ignoring every argument that has been put forward, at the last minute will propose some of their own amendments. That seems to be the way. My colleague the member for Cowper next to me has experienced this so many times. Here we are on that last day of sitting before budget day. The House will sit until 5 pm today, and the government is madly rushing to ram through significant changes that it has not thought through properly—and we will assume the minister responsible is ignorant; but I would not make the claim. I would never make the claim that every single member of the Labor caucus is ignorant. Let me just state for the record that the member opposite said he is ignorant. But, even to help him out, I will disagree with him.

I would not say that every single member of the Labor caucus is ignorant, and they are culpable. Today they will vote for something many of them know will be bad legislation. They will vote for it today and rush it through before budget day. They will do so in the full knowledge that they are following in the footsteps of so many other bad decisions by this government. But we have hope, slight hope, that one thing might happen inside the Labor caucus and that is that someone stands up and says, 'Let's get a policy right'.