At Kevin Rudd's 2020 Summit over the coming weekend, the handpicked participants can be guaranteed to praise the government for its foresight, its sagacity and its wisdom. Participants will glow in the knowledge that they've been designated by the Labor government as being among Australia's thousand ''best and brightest'' people. Perhaps some of the more thoughtful summiteers will ponder whether in fact they've been selected because they can be relied upon to agree with the government's policies.
Summit-mania has swept through the Canberra press gallery, the national parliament, and the federal bureaucracy. Thankfully it doesn't yet appear to have engulfed the whole of the Labor ministry. At least one minister appears to be more interested in doing his job than planning how to be photographed standing next to Cate Blanchett.
In the midst of the hysteria surrounding the collapse of stocklenders Opes Prime and Lift Capital, Nick Sherry, the Minister for Superannuation and Corporate Law, has so far been the voice of common sense. As thousands of investors complain about the hundreds of millions of dollars they've lost, it would have been easy for Sherry to blame the previous government, order a royal commission, promise more regulation, and vow that stocklenders would never again go broke. To his credit he's done none of these things.
He's resisted the temptation to grab media attention and play politics. Instead what he has done is calmly and quietly state the facts about Australia's system of financial regulation. He's emphasised that he won't be rushed into making any drastic or sudden changes. He's acted exactly the way a minister for superannuation and corporate law should behave.
Sherry has spent the past few weeks pointing out that by and large financial regulation in this country works well. And he's right. It's not obvious that the failures of Opes Prime or Lift Capital were the result of inadequate regulation. If you're searching for the cause of the companies' problems, you don't need to look too far beyond the collapse of the sharemarket. If there has been some sort of management failure at the Australian Securities Exchange in enforcing its rules, then it isn't the regulations that failed. It might be that the regulations have not been properly administered. So far there's been nothing to justify a wholesale rewriting of the rules for the Australian Securities and Investments Commission and the ASX. If investors' funds have been lost because of fraud, different or better regulation would not necessarily have stopped it happening.
Likewise, Sherry has taken a sensible approach to another issue that has been dominating the headlines. He's said that some ''relatively minor surgery'' might be needed to the Corporations Act in relation to the disclosure of short selling. Thankfully, he seems to be contemplating making the least possible regulatory changes. This is a big difference from what politicians normally do, which is to attempt to change the largest possible number of things in the shortest possible space of time.
It's been interesting to watch Labor's ministers in the midst of the global market turmoil. Because they are still relatively new and trying to establish their economic credentials they are probably more reluctant to advocate new regulation than if coalition ministers had been in power. Perhaps there are benefits to changing the government after all.
The refreshing attitude of Nick Sherry has even been extended to private equity. In a speech last week he said he was broadly satisfied with the regulations covering the operations of private equity firms, and he saw no pressing need forchange. He even acknowledged that ''private equity investors are an important element of dynamic and efficient capital markets ... they contribute significantly to the market objective of ensuring that capital is allocated to the most productive purposes''. And just to make sure no one misunderstood him, Sherry went on to say: ''Indeed, the potential for the investment of private equity funds in publicly owned companies should encourage company directors and management to remain focused on maximising returns on invested capital''. This isn't a quote from Friedrich Hayek or Milton Friedman -- it is from a minister in the federal Labor government.
Labor hasn't always had such a welcoming approach to private equity. In December 2006 Labor was in opposition, and private equity firms were trying to buy Qantas. Labor in effect opposed the takeover and Labor MPs talked of nothing other than the potential job losses of its union members. After 15 months and an election victory, times have certainly changed.
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