Timbercorp Hearing

The effects of recent major financial advice scandals have been catastrophic, resulting in consumers losing $5.7 billion in funds, losing their homes, losing their financial security in retirement.

I know first-hand in my electorate of Wills a number of constituents who have been affected adversely as result of poor advice or management by their financial advisor.

People have lost their homes, hundreds of thousands of dollars, their Self-Managed Super Funds, their share portfolios and their health etc because of poor advice and management.

Clients in share portfolios and managed investments schemes including Timbercorp and other agribusinesses, were not aware of the Agribusiness loans and in particular the loan conditions were either misrepresented or not disclosed. These loans effectively resulted in some clients being geared twice over.

Where gearing was disclosed clients were assured that the margin loans would never exceed 50%. In fact, the margin loans exceeded 200%, resulting in clients losing their entire share portfolio and other assets. Investors were explicitly assured their homes were safe.

In some instances clients were asked just to sign the rear page, which were not witnessed in their presence. Asset, liability and income details were often left blank or were completed after the client had signed the application (as they were told their office needed to finalise details on their behalf). Some of the loan documents recently obtained from Timbercorp Finance show that these details were never completed, or had liability details erased, or included incorrect client information.

Timbercorp management/maintenance/insurance fees and other agribusiness fees were disguised by being rolled into refinancing of debt.

Timbercorp increased the level of commission paid to Financial Advisors to promote their geared investments as the GFC began to impact.

A number of clients were pressured to increase their level of investment in Timbercorp even when the product was failing.

Undisclosed incentives were provided in relation to the recommending of Timbercorp products (for instance, the provision of overseas trips and possibly the granting of equity in Timbercorp companies). Given that Timbercorp were required to disclose all incentives they might pay to advisers distributing their products, this was an apparent breach of the requirements of the Corporations Act.

The significant omissions and potential fraud in respect to loan documentation should be investigated and all debts frozen and recovery action ceased by the respective creditors. ANZ, CBA, Macquarie Bank and other credit providers should explain their involvement and why such significant breaches of lending practices were permitted and should waive debts that would not have arisen but for their negligence.

The ANZ recently announced a record full year profit of $7.3 billion, up 15 per cent on a year ago, while the Commonwealth Bank posted a full-year cash profit of $8.7 billion, a record for an Australian lender. There is clearly the capacity for some debt forgiveness here. I remind the ANZ of ‘forgiveness’ taxpayers extended major financial institutions during the GFC when government action guaranteed the banks survival.

The relevant regulators, APRA and ASIC should independently investigate the arrangements and when fraud and other lending anomalies are established, they should explore grounds to award compensation to clients affected.

It is important for Australian investors to come forward with their experiences and evidence to inform the Parliament on further regulatory changes that may be necessary in this sector.

For its part, Labor will take to the next election a firm commitment to proceed with the broad thrust of its Future of Financial Advice reforms – important changes that the current government has dismantled.

Stooging a Generation

I have often expressed concern in the last few years that my baby boomer generation has pursued policies such as rapid population growth which have damaged the chances of the next generation.

Recently I have referred to the Axis of Financial Evil confronting our children – student debt, job insecurity, and housing unaffordability.

Support for this concern comes from a report released yesterday by the Foundation for Young Australians. The report expressly says that today's young people face very different prospects from their parents: higher unemployment, large education debts and even larger housing debts, which will put home ownership out of the reach of many.

We are experiencing a new baby boom. Foundation Chief Executive Jan Owen says that over the next forty years Australia will experience a 50 per cent increase in the number of young people, who will rise from the present 4.3 million under the age of 24 to 6.3 million under the age of 24, making it the largest cohort of young people Australia has ever had.

But today's young people graduating from University will start their careers with over $24,000 more in student debt than their parents. Over 25 per cent of young people who do gain qualifications do not use those qualifications in their job. They are taking on three times as much debt as their parents did to buy their first home – houses are six times more expensive than they were in 1985. More than 38 percent of 18 to 24 year olds are overweight.

Jan Owen says we have a situation where the next generation could be worse off in many areas, and that we have a shrinking window of opportunity to ensure young people don't become the first generation of Australians to do worse than their forbears.

Labor Will Protect the Great Barrier Reef from Dredge Spoil

Congratulations to Mark Butler for Labor's commitment to ban the dumping of dredge spoil in the Great Barrier Reef World Heritage Area. This commitment will be implemented if Labor is elected in 2016. The Great Barrier Reef has been subjected to a range of environmental pressures, and the world’s greatest coral reefs are not in as good as condition as they used to be. The situation is sufficiently serious that the World Heritage Committee is presently considering whether to place the reef on the "in danger" list, and is due to decide this matter in June next year.

The dumping of dredge spoil from big construction projects in the waters of the Great Barrier Reef World Heritage Area potentially damages the reefs. The Federal Government approved a plan to dump about 3 million cubic metres of dredge spoil, caused by the expansion of the Abbot Point coal port, in the reef's marine park. But strong community opposition to the plan has caused a rethink and hopefully that spoil will now not be dumped offshore.

But there are still very large proposals being considered for dumping dredge spoil at sea - 5 million cubic metres in Cairns as part of a shipping development project, 5.7 million cubic metres as part of the Townsville port expansion, 13 million cubic metres as part of the Dudgeon Point coal facility expansion and another 12 million cubic metres at the Port of Gladstone.

Given this troubling setting Federal Labor's announcement of a clear ban on dredge spoil dumping is very welcome.

Do Private Training Colleges Deserve a Pass?

It is completely unacceptable that three out of four private training colleges have given students sub-standard training or questionable assessments.

This finding from the Australian Skills Quality Authority clearly indicates that we need to rethink the wisdom of supporting private training colleges at the expense of TAFE. First, State Governments should rethink their push to privatise vocational training.

Secondly, as suggested by TAFE Directors Australia, the Federal Government should delay extending public funding to private colleges for at least three years.

At present the Federal Government wants to extend funding to students at private colleges from 2016, but this should not happen until concerns about the regulation of the sector are resolved.

As Pat Forward, the Australian Education Union's Federal TAFE Secretary, has said:

"Allowing private providers to receive government funding to provide vocational training has led to for-profit operators getting rich from taxpayers' money, while delivering shoddy education to students... For many students, the training they receive from these private providers will be their once-only chance to receive a government subsidy for their training, so it is crucial that it meets quality standards.”

         

The Australian Skills Quality Authority (ASQA) audit found 75 per cent of training colleges were unable to demonstrate compliance with the core standard for quality training and assessment. Even after being granted 20 days to rectify the problems, one in five colleges still could not comply, according to Natasha Bita writing in The Australian.

Examples of sub-standard training outlined by ASQA include private training companies issuing safety white cards for the construction industry after half an hour of online training rather than the recommended six hours, and some trainers offering three-week Aged Care Certificate 3 for courses which take six months at a TAFE College.

Australia's young people need and deserve high quality training. They deserve protection from exploitation, and neither they nor their parents should be fitted up with fees for courses that won't deliver the skills they need to find secure work.

Action Needed to Save Our Migratory Shorebirds

The migratory shorebirds are now returning to Australia to spend the summer with us. Their annual flights from Siberia and other parts of the Northern Hemisphere along the East-Asian Australasian Flyway are nothing short of astonishing.

But there are fewer of them than ever before. Many of these shorebirds have suffered massive population declines in the last 30 years. The population of the Curlew Sandpiper has declined by up to 80 per cent since the 1980s. Our largest shorebird, the magnificent Eastern Curlew, has crashed by almost 50 per cent in the same time.

All along the Flyway shorebirds are being hit by habitat destruction for ports, industry and housing. They are also suffering from recreational activities on beaches, such as off-road driving, off-leash dogs, and suffering from climate change.

The Australian Government, in response to alarm expressed by Birdlife Australia and other environmental groups, released a draft Wildlife Conservation Plan for Migratory Shorebirds in August. But the plan has some major flaws.

It does not commit Australia to no net loss of important habitat. It fails to take into account cumulative losses, that is, the collective impacts of multiple threats to our shorebirds. It does not provide for updated migratory shorebird population estimates or the identification of important sites. We need more accurate information. And most importantly, it will not increase international co-operation to protect migratory shorebird habitat. We need to do more to get China and Korea in particular to better protect the shorebirds stopover points in the Yellow Sea.

The Wildlife Conservation Plan for Migratory Shorebirds is open for public comment on the Department of the Environment website until 3 December 2014. I encourage people who care about these unique and brave little birds to comment on the Plan.

Are We Better Off Now?

The right of politics can't work out whether we're better off now or better off in the past. The Prime Minister describes the Menzies era as a golden age of prosperity, saying "These years of low unemployment, low interest rates and strong social cohesion are the gold standard by which all governments will be judged". He describes this period as one of expanding Universities, the building of Canberra, and home ownership being brought within reach of most families.

The Institute of Public Affairs, on the contrary, titled a recent report "Things are Getting Better All the Time", and claims that life has improved dramatically for Australians in terms of earnings and work and economic changes.

They should try and explain this to our young people, who are today caught in an Axis of Financial Evil – student debt, job insecurity, and housing unaffordability.

We would be better placed to judge whether life is improving or not if we produced more accurate performance indicators than the deeply flawed and inadequate GDP, and adopted in Australia, as other countries and States of the USA have done, a Genuine Progress Indicator (GPI).

Death of Gough Whitlam

Gough Whitlam was a towering figure in Australian public life. I think he was the greatest man to ever grace the Australian Labor Party, and the most influential Australian Prime Minister of the past fifty years. He did this after enlisting during the Second World War with the RAAF. This was of course a very dangerous thing to do - my father's older brother John, after whom I have my middle name, did this too, but did not return.

I was a year twelve student in 1972, and had a bright orange It's Time sticker on my school bag. I remember that after he won the election one of my schoolmates said to me that while he was keen for Gough to win, Gough would not be able to put an end to Australia's involvement in Vietnam, and to conscription, any time soon. I was crestfallen by this, and delighted when only a day or two later Gough's two-man Cabinet did precisely that.

His leadership and vision for Australia was one of the key things that inspired me to join the Australian Labor Party, which I did in 1974. It was against the run of play, as Gough's government was thrown out comprehensively at the end of the next year.

But his legacy has proved to be so longstanding that I think he can rightly claim to be the most influential Prime Minister of the past 50 years. It was such a monumental body of work that I cannot do justice to it, but there are a number of features of it which I want to single out. The introduction of free tertiary education. It made such a difference to the lives of so many. The more I look at it, the more I think it was a mistake to move away from that.

Medibank, which was of course the predecessor of Medicare. It gave Australia quite possibly the best health care system in the world, where everyone, rich and poor alike, has access to high quality health care.

The protection of the environment. Gough took the National government into the area of environment protection, preventing drilling of the Great Barrier Reef, ratifying the World Heritage Convention, the RAMSAR Convention, and passing the National Parks and Wildlife Conservation Act.

Indigenous Affairs. Gough passed legislation to abolish discrimination against aboriginal people, and granted land rights to indigenous people, and returned lands in the Northern Territory to the Gurindji people.

People will always draw on the aspects of someone's legacy that are consistent with their own views, and I am no different. In that vein I point out that in 1974 he wrote that traditional forms of democratic government are under challenge, and listed population growth as first among these. Later in that article he said “I do not envisage any dramatic increase in our present population, and indeed I would not wish to see one". I think he was absolutely right in that assessment. And indeed he cut migration numbers during his time as Prime Minister, which is perhaps not widely known.

I had a number of conversations with him, and there are two that stick in my mind. The first is when I rang him as a young Member of Parliament with an interest in fixed-term Parliaments and knowledge that Gough had championed this cause, including a proposal for simultaneous Federal and State elections. I was pleased that my call was put through, and astonished that Gough was able to rattle off, without any forewarning of my call and in the days before the Internet and Google, the electoral arrangements for many of the states of the USA.

Later on I won an afternoon tea with Gough in a Labor Party raffle. This time he did know I was coming, but it was 2002 and he was by then 86. I was again astonished to see that at the ripe old age of 86 he had gone to the trouble of looking me up on the Internet and coming to the afternoon tea extremely well informed about my background and interests.

No doubt Gough made mistakes. But the fact is that anyone in public life makes decisions every day, and it is unreasonable to expect every one of those decisions to be correct. And a Prime Minister makes hundreds, even thousands of decisions. Yes he was defeated decisively after three years, but that should be understood in the context of coming to power after a 23 year absence for Labor, and bumping into a world which had been shaped by and was dominated by his political opponents. After the change of government Malcolm Fraser acknowledged the need to make the Senate more representative and sponsored a referendum to require State Parliaments to fill Senate casual vacancies with the nominee of the Party the Senator had belonged to. And it should also be understood that Gough was newly in power when the OPEC oil shock of 1974 hit - this generated inflation and unemployment, and most Western governments unfortunate enough to be in power at the time did not last for long.

Gough's struggle with Malcolm Fraser was titanic. I remember United States commentators at the time remarking on the ability of the two men, and wondering why American politics was not throwing up leaders of comparable calibre.

The best thing we can do to honour Gough's monumental legacy is to protect it. Whether it is tertiary education, or health, or environment protection, or indigenous affairs, we should honour and protect his legacy. Most of all I hope we remember his commitment to politics as an honourable profession. It is unthinkable to imagine Gough taking on a job as a corporate lobbyist or company director in a post political career. The idea of using a parliamentary career as a stepping stone to a cushy corporate job would have been anathema to him.

I hope his life and example continues to inspire Australians to undertake public service, and to believe in the capacity of the political process to produce good outcomes, to make people’s lives better, for many years to come.