Andrew Leigh

I spoke in parliament yesterday on a private members' motion moved by Bob Katter on the ASX/SGX.

Banking Amendment (Delivering Essential Financial Services) Bill 2010
Australian Securities Exchange
22 November 2010

Australia has a strict and comprehensive regulatory process in place to ensure that decisions on proposals like this are always taken in our national interest. The government also has a strong commitment to build Australia as a finance centre and a regional hub for financial services. Of course, this means preserving the market integrity of the ASX and continuing to boost Australia’s reputation as one of the most attractive investment destinations in the world.

A proposal of this type is subject to extensive regulatory consideration under both Australia’s foreign investment policy and the Corporations Act. Australia applies a rigorous national interest test to all proposals for foreign government investment and significant foreign private investment. This particularly applies to a transaction of this scale and importance. The screening process to consider the proposal will be undertaken by the Foreign Investment Review Board in the normal way. FIRB will seek advice from other government agencies, including ASIC and the Reserve Bank, on whether the proposal is contrary to the national interest. The government always has taken—and always will take—these decisions in Australia’s national interest. This is the overriding consideration for foreign investment proposals.

As members may be aware, on 1 August 2010 the government transferred supervision of Australia’s financial markets to ASIC. These reforms will enhance the integrity of Australia’s financial markets and help promote Australia as a financial services hub in our region. Australia’s financial regulators put their world-class reputation beyond doubt during the crisis. Our financial system came through with flying colours. Australia’s financial system has performed better than any other during the global financial crisis and these reforms will ensure that Australia’s regulatory arrangements remain among the best in the world. The ASX is an important part of financial system’s architecture. The government will continue to consider all transactions with an objective of carefully and methodically building Australia’s reputation as a financial services hub in the national interest.

Australia’s foreign investment framework is longstanding and reflects strong bipartisan support over a number of decades. It balances the need to ensure Australia’s economy can benefit from foreign investment with the need to ensure that investment is in the national interest. The government examines all foreign government investment proposals and significant private investment proposals on a case-by-case basis to ensure they are in the national interest. This means assessing the impact on the economy, the community, national security and revenue.

But federal Labor has also made important improvements to the foreign investment framework. We released national interest principles to improve transparency around how the national interest test is applied. In June of this year we released the easy-to-read version of the policy to further improve transparency of the regime. Our approach maximises investment flows, grows regional communities and creates job opportunities right across Australia, while protecting our national interests.

In conclusion, I draw the House’s attention to the findings of the Johnson report earlier this year, which noted that economic research demonstrates a well-established causal link between financial sector development and economic growth. Having an open, efficient, well-regulated and competitive financial sector is thus in the interests of all Australians.