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Monday, 25 June 2018
Page: 6180

Mr THISTLETHWAITE (Kingsford Smith) (15:42): Labor supports these bills, the Corporations Amendment (Asia Region Funds Passport) Bill 2018 and the Corporations (Review Fees) Bill 2018. Labor believes that our financial services sector should be innovative, profitable, responsive and well regulated, and financial services should support Australians and businesses in critical areas such as banking, borrowing, insurance and superannuation. It's a sector that provides important job opportunities for Australians. In fact, it's Australia's largest employer in terms of raw numbers of people working in this industry.

The Asia Region Funds Passport will allow for eligible funds to be offered across Australia, Japan, Korea, New Zealand, Thailand and future signatory economies. It does this with limited additional regulatory requirements and a common set of rules. The Asia Region Funds Passport had its origins in the Johnson report, which was actually commissioned by the previous Labor government in 2008. The Johnson report recognised the opportunities for growing financial services exports to our region with benefits in jobs and growth. The report noted the comparative advantages of Australia's financial services sector, including our sophisticated funds management industry, and it recognised that, noting the significance and size of the financial services sector domestically, more could be done to promote financial services exports.

Australia has one of the largest pools of investment funds of any nation in the world. That is thanks to the innovation and the foresight of the Hawke and Keating governments, which of course established our compulsory superannuation system. It's led to the development of the third-largest investment fund in the world, which provides great opportunities for investment in the domestic economy but also internationally.

In 2010, the Labor government announced its support for the concept of an Asia Region Funds Passport. We introduced it as an exploratory policy initiative within the Asia-Pacific Economic Cooperation Finance Ministers' Process. This started a process that culminated in the signing of a memorandum of cooperation for the passport in 2016. Australia, Japan, Korea, New Zealand and Thailand are currently signatories. Under the MOC, further economies may join the passport at a later stage.

We should not miss opportunities to harness our expertise in financial services and wealth management to grow our economy and to provide more job opportunities in the sector. It's something that Labor is very proud to have initiated as a means of policy development that we are debating here today to ensure greater connectivity between Australia and our Asian partners, who are growing at rapid rates and who have large numbers of their population moving out of poverty and into the middle classes. When people and nations do that, they tend to grow in terms of their need for, particularly, quality agricultural products but also services, particularly health, education and financial services. Given Australia's maturity as an economy in opening up in the 1980s and allowing competition into our domestic market around the provision of such services, particularly in financial services, we have quite a mature, well-organised, well-regulated, efficient and highly effective financial services sector. That's something that we should not be afraid to promote within our region, and we should use it to seek greater opportunities of engagement with other nations.

Something that this Labor opposition is acutely aware of at the moment is the opportunities that may come to our nation through the development of a greater middle class in the Asian area. That's why, in 2017, we announced our FutureAsia policy framework, one of the most comprehensive policies for engagement with Asia on the economic front in recent years. It's unfortunate that really the Turnbull government is simply relying on good luck when it comes to our engagement with Asia. There's no plan. There's no actual road map for greater engagement with Asia, particularly in those economies that are growing at rapid rates, the emerging economies. We all know the strength of China, but there are also the emerging economies of Indonesia, India, Malaysia Singapore and some of those other nations in South-East Asia that are growing at rapid rates and are seeing quite a large number of people move from poverty into the middle classes. Australia doesn't have an actual economic plan to engage with these nations and to improve investment opportunities and export markets in many of these countries. A Shorten Labor government will fix this. We've outlined two stages to our FutureAsia policy framework that was initially announced by the shadow Treasurer back in September 2017, when he said:

A Shorten Labor Government will embrace a new, comprehensive and holistic policy approach to a deeper Asian engagement called 'FutureAsia', a policy framework for Australia which will build Asia relevant capabilities and foster greater regional collaboration.

Of course, Australia's economic relationship with Asia has been a key part of our growth trajectory, particularly in the years following the global financial crisis. We all know that Australia benefited from that closeness with Asia in terms of our ability to withstand some of the external shocks that buffeted our economy in the wake of the global financial crisis. But, while Asian economies are changing, Australia simply isn't keeping up. We're not keeping up with other nations—particularly some of the European nations, led by Germany, I might add—in our approach to and our engagement with Asia and seeing it as an opportunity for greater economic benefits and for deeper engagement that will grow our economy and create jobs. If we're serious about maintaining our nation's track record of economic growth, and if we still want a place for Australia in the G20 in decades to come, then it's crucial that we significantly improve our trade, investment, education and cultural links with Asia. The FutureAsia framework will support a significant change in our nation's engagement within our region. It's not about tinkering at the edges or a gradual approach to change; it's an approach that looks to bring about a fundamental whole-of-government—indeed a whole-of-nation—change in our efforts of deepening and broadening our overall engagement with Asia.

One example of our policies under the framework that is relevant to the export of financial services is a program to help empower an Australian diaspora in Asia by working with the Australian Institute of Company Directors to facilitate more Australians with Asian business experience onto our boards. There's a woefully low number of Australians who are in decision-making positions, in top companies in Australia, who actually have any on-the-ground experience in doing business in Asia—let alone any of the communication skills such as a background in an Asian language. One of our major potential advantages in Australia is the significant Asian diaspora that we have and that have made Australia home. China and India are now Australia's largest source of permanent migrants. This provides our nation with an invaluable pool of people with an understanding, with links and with language skills that can help deepen our ties in the Asian economic framework.

As part of our FutureAsia framework, such an approach will help to address the significant shortfall in the current levels of Asian business literacy in the senior ranks of Australian businesses. We need more board members and executives of Australia's leading companies to have a knowledge of, and experience in, Asian markets. Of course, while this is primarily for the private sector to fix, the government can still play an important role. Indeed, the government can set the tone, set the framework and influence our education system when it comes to developing a greater understanding at a cultural and linguistic level and a business level of doing business within Asia, and some of the advantages that can come from that. Just as government and the private sector have worked together to try and address the gender imbalance on company boards, we should also look to work together to get more people with Asian literacy and experience onto our boards.

The Australian financial services sector has undergone a rigorous and wholehearted process of review in recent times. It's clear that the financial services industry touches the lives of nearly every Australian and every business. We're currently seeing this in the evidence that's coming out of the royal commission into financial services in Australia. Labor's vision for a strong financial services sector includes recognising the importance of trust and confidence in the sector. The sector supports the economic and financial transactions of millions of Australians on a daily basis, both in their personal lives and in their business dealings. This includes ensuring that, where misconduct has occurred, we get to the bottom of it. That's why Labor led the way in calling for a royal commission into the banking and financial services in this country. It wasn't a knee-jerk reaction. It was something Labor thought thoroughly and carefully about before we decided that we would publicly advocate for a royal commission. It should never be forgotten by the Australian public that for 600 days the Turnbull government opposed a royal commission into banking and finance in Australia. Led by the Prime Minister, who comes from a banking background, they withstood the calls of industry and the calls of the victims—most predominantly Australian small businesses, farmers, industry groups and financial service providers and their advocacy groups, in particular those who advocate on behalf of victims of financial fraud—for a royal commission into banking and financial services. It was only because the banks finally rolled over and agreed that they would have a royal commission that they wrote to the Prime Minister and said: 'You know what? It's okay. You can now agree.' That's exactly what the Prime Minister did. After the big four banks wrote to the Prime Minister, he finally relented and agreed to a royal commission. And hasn't the Labor Party been vindicated in the evidence that has come forward from the royal commission?

There are shocking cases of manipulation by financial advisers, of predatory lending by the big four banks and of practices that really represent frauds on a lot of small businesses and Australian families that have been practised by many in this industry for too long. And they have been able to get away with it. A lot of the evidence that's come forward in the royal commission, unfortunately, would not have been illegal if this government had its way, because we all know that they opposed the Future of Financial Advice reforms when Labor proposed them—the insertion of section 961B into the Corporations Act, which, of course, outlines a best-interest duty, the interest that a financial adviser has to act in the best interests of their customer.

The Liberal Party, then in opposition, opposed that. When they got to government, they actually tried to water that legislation down and remove the catch-all provision that exists as the final step in the best-interest duty that a financial adviser is obliged to undertake when they're dealing with a client. In fact, a lot of the behaviour would not have been illegal if it weren't for the Labor Party; that behaviour would simply be a bad look if the Liberal Party had their way. They've even shut down calls for action amongst their own backbench. That's how out of touch they've been on this issue of financial services regulation.

Millions of Australians have been let down by this government, none more so than the victims of those financial scandals. The royal commission is an important part of helping restore trust and confidence in Australia's financial sector, where things have been going wrong for some years now.

The Corporations (Review Fees) Amendment Bill 2018 would make consequential amendments to the Corporations (Review Fees) Act which are required due to the eventual operation of the Corporations Amendment (Asia Region Funds Passport) Act. Labor will support this bill. The amendments allow regulation to prescribe fees in relation to the review dates for notified foreign passport funds.

Finally, in terms of the Corporations Amendment (Asia Region Funds Passport) Bill and the government's amendments, Labor will support these amendments. We understand they make minor and consequential technical amendments to various acts to ensure that the provisions of the regional funds passport operate effectively. They also make consequential amendments relating to the review fees for notified foreign passport funds to provide that the review fees imposed are due two months after the review date. In light of those amendments and my comments in particular, Labor is very proud to see this initiative brought to fruition after it was started by a Labor government when in office some years ago.