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‘Shrouded in secrecy and trickery’: Proxy showdown looms

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A prospective Labor government would strike out Treasurer Josh Frydenberg’s proxy advice reforms – if Parliament doesn’t do it first.

The proxy advice reforms will in be Labor’s crosshairs as Parliament resumes, with shadow minister for financial affairs Stephen Jones calling them “one of the worst policies I have seen in my 10 years in Parliament” – and promising that, if the senate doesn’t dump the reforms, a Labor government will.

“The path to where we are headed is shrouded in secrecy and trickery,” Jones said in a speech prepared for the Australian Institute of Superannuation Trustees. “Instead of introducing a bill into parliament – the normal course for a major reform – (Frydenberg) waited until parliament had adjourned for Christmas and introduced the changes by regulation.”

“No warning. No debate. The actions of a second-rate, tin pot despot.”

It’s an opinion that seems to be shared across the financial services, though perhaps not in such language. The overwhelming feeling is instead one of confusion. When the reforms were first introduced in early 2021, they were considered at best a bad joke and at worst a miscalculated overreach that would never make it through the senate. After the agree-in-principle of Your Future Your Super, the industry was presented with an utter headscratcher: an attempt to impose stringent regulations on an industry that nobody seemed to have complained about.

The proposed reforms vanished from public view shortly after they were introduced, apparently shelved after a flurry of media attention. Then they returned, just in time for Christmas, when Frydenberg used regulations powers to ram them through.

“You don’t make our financial system stronger by making accountability weaker,” Jones said. “You can’t build a world-class financial system ready for the challenges of tomorrow by going back to the past. And you can’t tell the world Australia’s open for business if you tilt the playing field in favour of those who manage an enterprise and against those who own it. These regulations are rotten to the core.”

Cross-bencher Rex Patrick will make an attempt to disallow the regulations on Thursday (February 10), but the co-operation of other cross-benchers – who are understandably distracted by the other problems that Australia faces – is not guaranteed. Liberal senator Concetta Fierravanti-Wells, head of the standing committee for the scrutiny of delegated legislation, has also issued Frydenberg with a “please explain” and warned that the regulations might be disallowed if one isn’t received.

“It is not a time to shrink from transparency and the basic foundations on which our success as a financial services hub rest,” Jones said. “Protecting company directors from the scrutiny of shareholders is a step backwards.

“It takes our financial services system on the path back to the bad old days when Australia’s financial capital was controlled by the old-school-tie club with a wink and a nod and a certain look in the eye. I’m sorry to break it to the Treasurer, but those days are long ago gone.”

Jones also doubled down on election promises to the broader financial services, promising “stability and certainty” and an end to disruptive legislation like the proxy advice reforms and YFYS.

“As the current parliament nears its end, I want to acknowledge your efforts in producing such strong outcomes for your members against a backdrop of profound uncertainty,” Jones said. “And I want to assure you that, from Labor’s perspective, it’s time to digest these changes and focus on member returns in an uncertain future.”

“Should Labor prevail at the next election there will be no major overhaul of the system. There will need to be a review of the impact of legislative changes to ensure they deliver a better return to members. The benchmarking system is a case in point.”




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