The Parliamentary Secretary to the Treasurer, the Hon Ross Cameron, MP, has stressed the need for the States and Territories to do more to protect consumers from real estate related 'get rich quick' schemes and take seriously their responsibility to regulate real estate investment advice.
Mr Cameron stated that "the direct regulation of real estate agents is a long standing and traditional responsibility of State and Territory Governments, as is the regulation of many other activities relating to real estate within their jurisdictions".
"The States and Territories collect substantial revenue from the property industry, for example through taxes such as stamp duty and land tax. In 2003 04, the States and Territories collected around $10.4 billion through stamp duty and $3 billion through land taxes".
In addition, according to latest estimates, the Government's program of tax reform will provide the States and Territories with a GST windfall of $1.6 billion in 2004 05, growing to over $2.9 billion by 2007 08.
"Despite collecting substantial revenue from the property industry, and being on track to receive a large GST windfall, the States and Territories appear unwilling to address issues for which they have direct responsibility. Instead, they have focused resources on trying to blame the Australian Government for their problems."
The Australian Government lacks the constitutional power to directly regulate many aspects of the real estate investment advice industry.
This is reflected in the limited mandates of the Australian Securities and Investments Commission (ASIC) and the Australian Competition and Consumer Commission (ACCC). ASIC's consumer protection powers only apply to financial products. Real estate is not a financial product. The ACCC has broader consumer protection powers but only in relation to conduct involving corporations, territories and interstate trade.
ASIC and the ACCC have been active in pursuing 'get rich' scheme promoters within the limits of their statutory powers.
- ASIC presently has more than 30 investigations into 'get rich quick' schemes involving financial products, many of which are illegal and most of which promise investors unrealistically high returns. In the last financial year, ASIC acted against 43 illegal schemes involving more than $200 million.
- On 27 July 2004, ASIC took action to ensure that people who attend John Burley's wealth creation seminars in Sydney in July and August 2004 do not receive unlicensed advice about financial products.
- On 20 and 21 July 2004, the ACCC had the organisers and presenter of the Robert Allen Millionaire Matrix Seminar, agree to consent orders in the Federal Court relating to the correction of promotional misrepresentations.
These agencies were recently granted additional budget funding to assist them to carry out their consumer protection responsibilities.
The extent of the enforcement action taken by ASIC and the ACCC against 'get rich quick' scheme promoters and property spruikers can be contrasted with the relative inactivity of State and Territory fair trading agencies. This is despite the fact that these agencies are not subject to the constitutional constraints that apply to their Commonwealth counterparts.
Through ASIC and the ACCC, the Australian Government will remain vigilant and take action against 'get rich quick' promoters where it can. However the States and Territories must also step up to the mark and do their bit to protect Australians from rogues.