Legislative Assembly for the ACT: 2001 Week 6 Hansard (15 June) . . Page.. 1959..
Bill agreed to in principle.
Leave granted to dispense with the detail stage.
Bill agreed to.
Financial Management Legislation Amendment Bill 2001
Debate resumed from 13 June 2001.
Bill, by leave, taken as a whole.
MR QUINLAN (11.35): I seek leave to move together the amendments circulated in my name.
MR QUINLAN: I am moving these amendments [see schedule 9 at page 1996] because we are talking, in the bill, about empowering our administration to invest in derivatives for both the protection and the enhancement of investments. I fully subscribe to the desire to protect investors with such vehicles as hedging, although I am a little bit concerned about enhancement, which implies to some extent the possibility of speculation. We should remember that it was derivatives that gave the world the Barings Bank disaster. I would like to see the Financial Management Act expanded, not just through guidelines but by an actual provision in the act that makes sure we limit ourselves to protecting our investments by the use of derivatives as opposed to protecting and enhancing them.
I have discussed it off-line with the Treasurer and understand that guidelines will be coming forward between now and the winter recess. Once we have got hold of those, we will be happy to look at re-amending the act, if necessary, to do fancy things like index tracking. I am trying to learn about them really quickly, and I am sure the Treasurer is trying to do the same. I commend my amendments to the house.
MR KAINE (11.38): Mr Speaker, it is a pity in a way that this bill has come up in the detail stage and for final endorsement by the Assembly at this time of night, when people are tired, because I am not certain that most people in this place understand what this bill is about.
I agree with Mr Quinlan. I am not too sure if what the government has proposed here enhances anything, and I have great concerns about what is proposed here. It is proposed that this bill remove a prohibition of the use of financial derivative instruments for investment purposes. We have had a prohibition for nearly 10 years on investing public money in the form of derivatives and the like, and there has been good reason for that. When he tabled this, the Chief Minister said that we need it to assist in balancing risk and return objectives. He tells us that financial derivatives are an integral part of the funds management industry. That is true, but it is only true in certain limited and circumscribed circumstances, and the Chief Minister has not