Senator CORMANN (Western Australia—Minister for Finance) (10:32): This is not about proper process. This is about putting a gun to the head of the Senate and a gun to the head of a very important industry for Australia and for Australians. The Labor Party in government introduced changes to our financial advice laws which went well beyond what was recommended by the bipartisan committee chaired by Bernie Ripoll. Where it went beyond what was recommended by that committee, it was at the behest of the industry fund movement in pursuit of their base commercial interests. Of course, the cost of implementation of those changes was conservatively estimated at $750 million up-front and $375 million in additional costs ongoing to implement the additional compliance burden that Labor imposed through its legislation. Labor in government had this process called a regulatory impact statement, where there ought to be a cost-benefit analysis to ensure that any additional regulatory burden is proportionate in terms of the cost it imposes and the additional benefit it delivers to consumers. Of course, the previous government gave themselves an exemption from that process. The previous government never assessed the cost benefit of that particular legislative change, because they knew it would fail. They knew they went beyond what was reasonable. They knew they went beyond what was sensible. They knew that they were imposing costs on families across Australia saving for their retirement and managing financial risks through life. They were imposing costs on them that were not appropriate. Every time you impose an additional bit of red tape it does come at a cost. Our objective as policymakers ought to be that we get the balance right, with appropriate levels of consumer protection, by making sure that access to high-quality advice remains affordable for all Australians. We need to ensure that we have a robust but efficient regulatory system in place. Senator Dastyari talked about victims of bad financial advice. He talked about some instances in the past where people were hurt by bad financial advice. That is terrible. Whenever something bad happens, it is very important for us as policymakers to take a step back, consider what happened and why and consider how the policy framework can be improved, but we need to ensure that whatever change we impose makes things better and not just more complex and more costly, or reduces competition, which of course is important for consumers in the final analysis. The changes that Labor made to our financial advice laws went too far. To the extent they went too far, they imposed additional costs that were not necessary, they lessened competition and they never went through a proper process to assess their impact. We went to the last election very openly and transparently putting out there for all to see what our policy would be to improve those financial advice laws. We said very openly and transparently we would keep the good bits and get rid of the bad bits. That is something that we have supported all the way through. The good bit was that, as a result of the Ripoll inquiry, this parliament introduced a statutory requirement for financial advisers to act in the best interests of their client. That statutory requirement remains. It remains after our changes. We also supported—and this remains in place—a ban on conflicted remuneration for financial advisers, because we agree that it is not appropriate that remuneration arrangements should conflict with the advice that is given. However, what we did say is that we did not think it was appropriate to force people across Australia saving for their retirement to re-sign contracts with their advisers on a regular basis. That is not something that was recommended by the Ripoll inquiry. Out of 400-plus submissions to the Ripoll inquiry there was only one submission that recommended this change. Guess who recommended that change out of more than 400 submissions? It was the Industry Super Fund Association—the Industry Super Network, as it was then. It was the only submission out of more than 400 that recommended that particular change. The Ripoll inquiry did not pick it up. But guess who picked it up? The then minister, Bill Shorten. Why did he pick it up? Because wherever he had the opportunity he was acting at the behest of the best interests of the union movement. He was advancing the commercial interests of the union movement. The Labor Party over the last four months has been working flat out to help protect the vested commercial interests of the union movement. That is what this is all about. We are talking here about a time management motion of sorts. We are talking about a change to the order of business today which has the effect of conclusively dealing with this disallowance today. The first we heard of this was at seven o'clock last night. This is actually a very significant industry for Australia. This is an industry which is one of the largest employers across Australia. This is an industry which is very important nationally. Of course, here we are, within 24 hours—without any notice whatsoever, without any sort of debate—changing the law of the land. Whatever you think of the substance of the changes, there is actually no need to deal with this today, because under the ordinary processes of the Senate this disallowance motion can be resolved by 27 November—that is, Thursday next week. So there is actually time to deal with this in an orderly and methodical fashion. We have to remember that this is an issue that has come before the Senate twice before over the last 12 months. The Senate has voted twice in support of those improvements to our financial advice laws. The Senate has voted twice over the last 12 months in support of these laws, so small business financial advisers across Australia and their clients had the reasonable expectation that this was the law of the land and that it would stand and that the $190 million a year in savings, which reduce the cost of accessing financial advice for clients across Australia—that those changes would stand. To come into this chamber with an ambush today and say we now have to conclusively deal with this today so that the effect is that these changes that have been the law of the land for the last four months have been abolished is quite reckless and quite irresponsible, particularly because the opportunity is there to press the pause button and to have another conversation between now and next Thursday to see what else can be agreed. I would have thought that that is a sensible way to go. I would just invite the Labor Party to reflect on this, because the Labor Party rushed some of these legislative changes through when they were in government. They have acknowledged since then that some of this stuff was actually not all that well drafted. There were some serious technical issues which were addressed in the regulations that came into effect on 1 July this year, in particular in relation to grandfathering arrangements. The changes that we have made in our regulations address that. Of course, the Labor Party in the past he said that, yes, that needed to be addressed. So the government has made improvements to the FoFA grandfathering provisions to address unintended consequences and to facilitate competition in the financial advice industry by enabling advisers to move licensees with their clients whilst continuing to receive grandfathered remuneration. The Labor Party said that that was something that needed to be done. If the course of action that has been set in train by various crossbenchers, the Labor Party and the Greens today goes to its conclusion, as it currently looks like today, then all of these changes, all of these fixes of issues, disappear. And without any notice whatsoever. We have to be very clear on those consequences. Senator Conroy: Sit down and let's talk about it. Senator CORMANN: I think it would be sensible and I think it would be responsible— Senator Conroy: Sit down and let's talk about it—actually have a debate. Senator CORMANN: Well, we are talking about it. Senator Conroy: No, this is— The ACTING DEPUTY PRESIDENT ( Senator Bernardi ): Order! Senator CORMANN: It would be sensible not to proceed with this, what is effectively a time management motion, because it is a motion which seeks to deal with this issue conclusively today. What I am saying is that that is very reckless and very irresponsible. Senator Xenophon will not mind me saying that he has indicated to me that he has consistently been opposed to this particular change. Opposition senators interjecting— Senator CORMANN: I do not think that Senator Xenophon can hear my contribution, Mr Acting Deputy President, because there is a bit of noise in the aisles. I think Senator Xenophon will not mind me saying that he has indicated to me that he has been consistently opposed to the improvements we have made to our financial advice laws. Senator Xenophon: I think Senator Cormann has fundamentally misrepresented what I have said. He has said I have been opposed— The ACTING DEPUTY PRESIDENT: What is your point of order? Senator Xenophon: The point of order is that the minister is verballing me by saying that I have been consistently opposed to 'improvements' in financial advice laws. I never said the word 'improvement', so I have been verballed. I would be grateful if he would withdraw that. The ACTING DEPUTY PRESIDENT: Senator Xenophon, resume your seat. That is a debating point; it is not a point of order. Senator CORMANN: I certainly did not intend to verbal Senator Xenophon. I readily concede that the characterisation of our changes as improvements is my characterisation and that Senator Xenophon has consistently indicated to me that he was not supportive of those changes. But, be that as it may, from a process point of view, the Senate has voted on these changes—what we would say are improvements—twice now over the last 12 months. There is a reasonable expectation out in the marketplace across the financial services industry and across those saving for their retirement that this is the law of the land. Senator Xenophon then indicates to me, 'Well, after this is voted down we can then have a conversation how we can put together a better package.' The problem is that this puts the industry in a terrible position, because it makes them essentially noncompliant with the law as of whenever this passes. Senator Kim Carr: Let's get on with it! Senator CORMANN: That is exactly what I am suggesting we should not do. We should not get on with it today because, remember, the Labor changes, which we have effectively amended and improved as a result of our regulations, imposed $750 million in additional costs up front on the financial services industry, which ultimately have to be carried by people across Australia saving for their retirement. It imposed $375 million in ongoing additional compliance costs, which ultimately have to be carried by people across Australia saving for their retirement and managing their investments. Of course, if we now pass this regulation today, that is the law that comes back into effect, and all these institutions across Australia will have to scramble, in some chaos and facing unnecessary uncertainty while we are trying to work something out over the next week or so, to comply with a law that we are already saying we want to amend. It would be much more sensible, given that this particular disallowance motion does not have to be dealt with until 27 November and will remain on the Notice Paper until 27 November, to have those conversations now—that is what I would say to Senator Xenophon—than to impose chaos and uncertainty on an important industry, to force them into a position to comply with a law which should not be the law of the land, which forces them, essentially, to incur expenses which they should not have to incur, given that the Senate is— Senator Cameron: They have got some expenses—people lose their homes! The ACTING DEPUTY PRESIDENT ( Senator Bernardi ): Order! Senator CORMANN: This is the big deceit. Senator Cameron: What about priorities? Senator CORMANN: I take that interjection. This goes to the heart of the deceit that the Labor Party are perpetuating on the Australian people. They are suggesting that, because somebody loses some money, imposing additional red tape will necessarily help prevent that. Honourable senators interjecting — The ACTING DEPUTY PRESIDENT: Order! Senator CORMANN: That is actually not true. That is actually not true! The Storm Financial collapse—and I know that Senator Macdonald took a very close interest in this—would not have been prevented by the imposition by Mr Shorten of a requirement to keep re-signing contracts. The clients of Storm Financial, for better or for worse, had signed all the paperwork you needed to sign. They kept re-signing paperwork all of the time. The fee arrangements were very transparent. That was not the problem. The problem was that they were being badly advised. They were not given advice that was appropriate to their circumstances. Of course, these are all things that have been addressed and will continue to be addressed as a result of the sensible recommendations that came out of the Ripoll inquiry. The debate we are having here is really a debate at the margins, but it is a debate at the margins about something that is imposing significant additional costs on people across Australia saving for their retirements. I would say to the Senate that, if there is now a majority in the Senate that is inclined to revisit the previous two votes, there is a more sensible way to go about it than the way that is now being proposed today. It is not sensible to ram this through today without any proper notice to an important industry across Australia. This is not the sensible way to go. If the Labor Party were interested in doing things in a responsible way and in the public interest, rather than trying to ram something through while they think they might be able to hold a coalition of votes together, then they would allow this to be dealt with in a more orderly and methodical fashion between now and next Thursday. I very strongly urge the Senate to very carefully consider what we are doing here. We are putting very important institutions, very important businesses, very important consumers— Senator Cameron: And donors to the Liberal Party. Senator CORMANN: This has got nothing to do with donors to the Liberal Party, Senator Cameron. This has got nothing to do— Senator CAMERON: We know what it is about. Senator CORMANN: Let me tell you very clearly that our only motivation here is the public interest. Let me tell you something that has always been true and that will always be true. The people that like red tape are the bigger businesses because they actually can deal with it. The big banks do not mind red tape. The big banks have got the capacity to deal with it and to work around it. It is the smaller businesses that struggle with additional red tape. It creates a barrier to entry; it creates increases in concentration; it creates a lessening of competition—all things that are against the public interest. The public interest is to ensure that we have a financial services system which is as efficient, as transparent and as competitive as possible, which has high corporate governance standards, which has high professional standards and where people across Australia can have access to high-quality advice that they can trust but which is also affordable. If we continue to add more and more burdens that only add marginal additional consumer protection benefit, then we are forcing people to pay more for their advice then they should have to. We are forcing them to accept lower retirement savings and lower retirement income ultimately than they should be able to achieve if we had a more sensible arrangement. I am disappointed that it has come to this point because the government did negotiate an agreement with the Palmer United Party and the Australian Motoring Enthusiast Party. We did agree to a whole range of changes as part of that process, changes that we have given effect to in amendments to the substantive legislation which has already been circulated and which indeed has already been assessed for a second time now by the Senate Economics Legislation Committee. Indeed, the Senate Economics Legislation Committee has conducted two inquiries into this legislation. Both of those inquiries have recommended its passage. I would say specifically in relation to Senator Muir that, as part of the negotiations with the Palmer United Party and the Australian Motoring Enthusiast Party, Senator Muir said that for him to support our improvements he needed the government to progress implementation of a public register of financial advisers to provide more transparent information about the credentials and the status of financial advisers in the industry—who they work for, what their qualifications are, what their relevant past history is and so on. The government has delivered on all those commitments 100 per cent. We have delivered 100 per cent on every part of the agreement that we have committed to. On that basis the Palmer United Party, including Senator Lambie, and also Senator Muir, on behalf of the Motoring Enthusiasts Party, agreed to vote against any disallowance and to support our FoFA legislation as amended to give effect to the additional measures in the letter to Mr Palmer as representing the Palmer United Party and the Australian Motoring Enthusiasts Party in that negotiation. It is very disappointing for the government in those circumstances. We understand that now good public policy is getting caught up in internal party infighting. Senator Conroy: Good public policy? Senator Kim Carr: You're ripping people off! The PRESIDENT: Order on my left! Senator CORMANN: Good public policy is, sadly, now getting caught up in political infighting inside the Palmer United Party. That is disappointing. It is disappointing for people across Australia, who deserve better—people across Australia who are saving for their retirements, managing financial risks through life and deserve access to a robust but efficient regulatory system which is competitively neutral and which will provide access to high-quality advice in a way that is also affordable.