Thank you Max,
Good afternoon ladies and gentlemen.
I would like to thank NIBA for inviting me to speak at your 17th National Conference.
Now, I am sure you are all pleased to see a politician at work on a Sunday. However, if the truth be told, the fact we are all here on a weekend is another example of the increasingly demanding nature of modern business.
The technology revolution that we are experiencing doesn't have a closing time. Tools such as mobile telephones and the internet have delivered us a truly "24/7" business week.
For the financial sector this means stock exchanges that never close, a customer base that could span the globe, and the almost constant emergence of new businesses and products.
These developments present both challenges and opportunities to the financial sector.
The challenge is to compete for business with service providers that may come from across the globe and not just around the corner.
The opportunity to expand your business across borders, across oceans and across languages.
In my view the financial service providers who will be best-placed to capitalise on the opportunities of the new millennium will be those who can offer superior products and services, those who can quickly respond to changing consumer demands, and those who can harness the power of new technologies.
And the Government is committed to supporting Australian business in these endeavours. We have put in place economic and regulatory foundations that the financial services industry can confidently build on.
Foundations, I stress, that are universally recognised as world's best practice.
The major thrust of our financial sector reform is to maintain a sustainable economic framework, and carry out targeted structural reform.
The Budget strategy implemented by the Government establishes a fundamentally sound and forward-looking policy framework.
It has involved a $24 billion reduction of Government debt in just three years. And a Commonwealth Budget surplus since 1997-98.
And this sort of fiscal probity has borne real dividends for Australia.
Inflation is at its lowest level since man walked on the moon.
Falling interest rates have seen average mortgage repayments at half the level of 1996.
These conditions have also stimulated record levels of economic growth.
Growth that has seen nearly 500,000 new jobs created since this Government came into Office, giving us the lowest unemployment rate in over nine years.
And let's not forget that this was during the worst recession in Asia's history.
It is only against this robust fiscal backdrop that it has been possible to drive forward our wide-ranging reform programme.
It's no surprise that taxation reform has dominated the spotlight in recent times.
I believe that over the next two years, with a little co-operation from the Senate, this Government will give Australia the best tax system in the world.
A system that is not only more efficient and equitable, but a system that will stimulate economic growth and provide incentive to all Australians.
Taxation aside, the area of structural reform of most relevance to NIBA members concerns the reform of the financial system, particularly the Corporate Law Economic Reform Program.
As the name suggests the purpose of CLERP is to modernise Australia's corporate law and give it an economic focus.
I expect that you will have following its progress and I will now "exclusively" update you with the latest news.
(You see, it is worth coming to work on a Sunday after all!!)
The CLERP reforms have been undertaken in several stages.
The CLERP Bill, covering stages 1-4, implements change in the areas of takeovers, fundraising, directors duties and accounting standards.
The House of Representatives passed the Bill in June this year. And I anticipate that the Senate will consider the Bill this coming week.
The second stage of the reforms goes under the moniker, CLERP 6.
In March, I released the CLERP 6 consultation paper - the reform initiative that aims at building a regulatory framework for the financial services industry.
Since the paper was released, we've received over 117 submissions from a range of industry participants.
I might add, your association NIBA, has been especially helpful in commenting on the reforms from the broker perspective. I would like to thank Noel Pettersen and his team for their hard work in this area.
We've also discussed CLERP 6 with other industry associations, major financial institutions and individual intermediaries.
Having considered all the submissions, I anticipate that draft legislation to implement CLERP 6 will be released before Christmas for a 3-month public exposure period.
And I am mindful of the other issues you have on your plates at the moment including Y2k, Leap Year 2000, the ANTS package and Ralph business tax review. My timetable responds to businesses concern about their existing and prospective workload over the next 12 months.
After comments have been received, we will look to introduce the Bill into the Parliament in the first half of next year.
After that it is up to the parliamentary process. I have previously stated my intention that CLERP 6 starts from January 2001. This timeframe is necessary to allow some time between when CLERP 6 is enacted and when it actually commences.
So, what does the CLERP 6 regime mean for the finance sector, particularly insurance brokers?
Firstly, it means streamlined and efficient regulation.
CLERP 6 should see fewer overlaps in regulation. For you, this means less compliance costs. It should also boost competition by reducing unwarranted barriers for current participants to trade across new products.
To achieve this, we are proposing a single licensing regime for service providers.
So insurance industry participants who currently offer a range of insurance and securities products will only have to obtain one licence.
However I stress that insurance brokers who become licensees under the new regulatory framework will still have flexibility in the way they structure their business either natural person or corporate structure.
A single licensing regime will deliver immediate benefits for any adviser who is now trying to comply with the raft of legislative and other requirements for instance, the Corporations Law, the Agents and Brokers Act; the Good Advice regulations and the Life Code of Practice.
The replacement of multiple licences by a single licence will deliver major benefits to your industry.
In a similar vein, there will be consistent disclosure about financial products at point of sale.
The CLERP 6 framework will give certainty for industry players, while being flexible enough to cater to a range of existing products and future developments.
The framework will set out minimum requirements that all players will have to meet.
This brings me to the second point that I want to emphasise today - the new regime's flexibility.
Ladies and gentlemen, I am convinced that flexibility is the key to creating regulation that can stand the test of time, and be workable even though the industry may develop in ways that we cannot foresee today.
But the CLERP 6 proposals are certainly not a 'one size fits all' solution. The differences between financial products must be recognised and cannot be ignored.
While CLERP 6 will require, for example, consistent and comparable disclosure, I fully recognise that the application of the disclosure requirements will vary according to the product being offered.
Flexibility was one of the principles of regulation listed by the Wallis Committee - flexibility, competitive neutrality, cost effectiveness, transparency and accountability.
Having set these minimum requirements, more detailed guidance on compliance can be provided in ASIC policy statements, regulations or industry codes of conduct.
These mechanisms will set standards for complying with the law. In addition I envisage that industry codes of conduct will be able to flesh out requirements in areas not covered by the Law.
I consider that this approach will benefit the industry and will also bring major benefits to the ultimate users of financial products Australian consumers.
This brings me to my third point - empowerment of consumers.
The purpose of the legislation is to give consumers adequate information and avenues of redress, so that they can make informed decisions about how to handle their finances.
I know one issue, that you as insurance brokers are particularly interested in that is commission disclosure on standalone risk products. The Government remains committed to full up front disclosure of commissions on all financial products, including risk insurance.
Commission disclosure is one of the key objectives of the CLERP 6 reforms and in my view is a critical factor for consumers when comparing products.
While I have agreed to a modified approach to commission disclosure for standalone risk insurance products under the Superannuation Choice of Fund (Consumer Protection) Bill (previously known as the LICD Bill), I have clearly stated that this concession in no way prejudiced the approach to be adopted in CLERP 6.
I remain reluctant to compromise on the principle of full up front commission disclosure.
Full transparency in financial transactions is essential if we are to create an environment in which consumers are confident participants.
The aim is not to cosset consumers, the aim is to empower them.
CLERP 6 will give consumers consistent and comparable information about the services and products offered by financial service providers.
It will also ensure that when consumers deal with service providers they are confident of their competence and that they at least meet minimum standards of conduct.
We will also foster consumer sovereignty by making sure that if something goes wrong consumers have access to an easy-to-use complaints resolution mechanism.
I have pointed to 3 themes in the CLERP 6 reforms streamlined regulation, flexibility and empowerment of consumers.
In short, we want to build on the existing solid foundations and foster a financial sector that is well regarded by Australian consumers, and a system in which they have confidence.
Over the next 5 years the Australian financial services industry faces immense challenges in the form of globalisation, technological developments and greater consumer demands.
Some may be daunted by these challenges.
I'm not.
I see that with the challenges come the opportunities and that the Australian financial services industry is well placed to reap the rewards of these opportunities.
Because of our buoyant economy, our first class regulatory framework and our renowned love affair with new technologies, we are in a strong position domestically and internationally.
And you don't necessarily have to be big to be effective in this type of environment.
I believe that the rewards are there for the small as well as the big operators; the rewards are there for those who can recognise opportunities that exist, even on a small scale.
The rewards are there for the professional who can define the market niche in which they want to operate and provide competent, reliable, ongoing service to their clients.
And in my view, the fact that you are here today, willing to put time into consolidating your existing skills, and putting time into planning for your future, means that you and your clients are well on the way to reaping the future rewards of Australia's strong financial system.
And that will benefit all Australians.
Thank you