Interview with Hamish MacDonald on RN Breakfast

Hamish Macdonald

The Federal Government is pressing ahead with changing the rules governing financial advice in the superannuation sector. But for the time being, they're ignoring recommendations to make similar changes in the banking and insurance sectors. The government will accept 14 of the 22 recommendations made by the Quality of Advice Review, chaired by Allen's Partner, Michelle Levy. Speaking on our RN Breakfast, the Minister for Superannuation and Financial Services, Stephen Jones, defended the decision to focus only on super.

Stephen Jones

Nobody's been able to convince me that there's a critical shortage of Mortgage Advisors. In fact, the overwhelming majority of new mortgages that are being written in Australia today are advised by a Mortgage Advisor. That system is working well, and I see no reason to want to upset those arrangements.

Hamish Macdonald

Andrew Bragg is a Liberal Senator. He joins me now from our Parliament House Studios. Good morning to you.

Senator Bragg

Hamish.

Hamish Macdonald

Michelle Levy had made the case publicly, in fact, that the package needed to be taken as a whole, that it would benefit consumers broadly. What's your reaction to what the government has announced?

Senator Bragg

Well, I think competitive neutrality is an important principle in policy making, and I don't understand why the Minister has cherry picked certain sectors over others. The major issue here is that Australians can't afford good financial advice. And the Minister has taken 12 months to get to this point to make a policy, and he's proposing to take another 12 months to deal with any legislation. So in the interim, Australians are facing very high costs if they want to receive any financial advice.

Hamish Macdonald

Can Australians trust financial institutions like super funds or even banks or insurers to provide good advice?

Senator Bragg

Well, we have very strong laws. The issue has been that there hasn't been good enough law enforcement in the past. I would say that there are issues with ASIC, which is the subject of a separate Inquiry into its law enforcement capability. But overall, I think a lot of the bad apples have been moved out of the financial advice sector. And the major issue now is that we don't have enough advisors and we don't have enough accessibility. And therefore, people are retiring with a large amount of super and not able to receive good financial advice.

Hamish Macdonald

The Minister explained to us on this program yesterday that the reason for the focus on super was that there is an urgency given so many Australians are either, are retired or moving towards retirement, and that the same urgency does not apply in the banking sector and the insurance markets. Do you accept that argument?

Senator Bragg

I don't think that's right. I mean, for many Australians, their biggest asset will be their house. So receiving good financial advice about their assets, be they a house and their super and insurances, it's all part of their personal balance sheet. And therefore, receiving comprehensive financial advice is going to be in their best interest. But unfortunately, this Minister has prioritised interests over his favourite sectoral interests, in this case, super funds, over the interests of the people.

Hamish Macdonald

What do you mean by favourite sectoral interests?

Senator Bragg

Well, I mean, this Minister has demonstrated in the 12 months he's had in the job that he is obsessed with working through the laundry list of the issues that are important to the super funds. And the first thing he did as a Minister was to strip transparency from the disclosure arrangements which require super funds to show how much they've paid unions. That was disallowed in the Senate. So this is a pattern of behaviour, frankly, from this Minister.

Hamish Macdonald

What are you alleging here?

Senator Bragg

I just think he's too close to these sectoral interests. And his job is to be the Minister for all Australians, not to be the Minister for the super funds.

Hamish Macdonald

Isn't it wise not to rush into loosening the rules around financial advice, though? The Royal Commission into the banking sector is not long in people's memories.

Senator Bragg

I think it's important that the consumer protections remain in place. But it's also important that Australians can afford to get financial advice, and the balance is not right at the moment. That's what Levy has said. And I think it is ridiculous to say that it's going to take another 12 months to legislate these changes. I mean, the costs are baked into the Corporations Act. That's why it is so expensive to receive financial advice. And at this stage, we'll be lucky to see any legislation in this Parliament.

Hamish Macdonald

Can you understand why many consumers, though, would just not trust whatever advice is given to them by a super fund or by a bank? Because ultimately, they're trying to sell their own product, aren't they?

Senator Bragg

Yes, I do. I do understand that. But the law enforcement agencies have got to be effective here. And I think it's a complete cop out to say that we're not going to progress something because we don't think that we can do it safely. I mean, the reality is that we have clear laws on the books. No one is proposing that the consumer protections be stripped away, and it's ASIC's job to enforce the law. So I just think he should get on with delivering on the rest of the Levy recommendations.

Hamish Macdonald

But wouldn't you be talking in that circumstance about a totally different version of ASIC with much greater resources and capabilities?

Senator Bragg

Well, it has significant resources now, but it hasn't been very good at securing prosecutions. I mean, all the litany of financial advice scandals were not prosecuted. People have not been put in jail. And I don't think that ASIC has been strong enough, which is why we're running an 18 month Inquiry into the organisation.

Hamish Macdonald

If we can talk about another issue for a moment. This week, there's been some fairly interesting polling, I suppose, on the Voice to Parliament for the yes campaign tipping below 50 % support for the first time. What do you think? You're a supporter of the yes vote. Why do you think that is?

Senator Bragg

I'm worried about the product here. I think that people are turning away from it because they feel that some of the issues have not been addressed. I would have thought that a better process... Look, to cut to the chase, I think a better process here would have helped build some centre ground. I don't think there's enough center ground here, and I'm worried that soft yeses are becoming hard noes.

Hamish Macdonald

How is it possible to find that centre ground? Is it still possible, or is it too late, given that the wording has been agreed?

Senator Bragg

Well, the government have not wanted to focus on building centre ground. The committee process we had was a joke. It did not provide a proper opportunity to improve the wording. I mean, the idea that this wording is perfect, I think, is intellectually insincere. The Voice has been drafted in dozens of different ways over the past few years. And I think a couple of tweaks would have made a big difference here. But their intransigence and their refusal to engage, I think, has damaged the whole agenda.

Hamish Macdonald

And is there time in your mind to rescue it?

Senator Bragg

Well, that's up to the government. If the government want to build centre ground, then they can do that. I mean, they have the numbers in the House to do that. The Bill is currently before the Senate, so the Senate would have to amend it and send it back to the House. So it's really up to the government. I mean, people have tried to build centre ground here, but have been rebuffed. And I think that is hugely regrettable.

Hamish Macdonald

And finally, you were in the Senate yesterday. Finance Minister Katy Gallagher made her statement in relation to what she'd said previously. I note your colleague, Jane Hume, has also said that Brittany Higgins private messages should never have been made public. Do you agree with Jane Hume?

Senator Bragg

Look, I think this whole thing has been a tawdry affair, and it is hugely regrettable how it's played out publicly. I don't know how these messages have been put into the public domain. I expect that there will be a proper investigation into that because, I mean, why would anyone come forward with allegations of assault if this is the result?

Hamish Macdonald

So you believe there should be a formal police investigation?

Senator Bragg

Well, there needs to be an inquiry into how this has happened. I mean, this can't happen again. This is supposed to be a country which values the rule of law and proper process.

Hamish Macdonald

And watching this all unfold in the Senate, what's it like briefly?

Senator Bragg

Very ugly. Very ugly.

Hamish Macdonald

Senator Andrew Bragg, thank you very much.

Senator Bragg

Thanks, Hamish. See you.

[Ends]