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Legislative Assembly for the ACT: 2001 Week 6 Hansard (13 June) . . Page.. 1696 ..

MS TUCKER (continuing):

The potential high returns on investment in derivatives are an indication of the level of risk, but the promise of high returns also encourages speculative investment. While it may be acceptable to give our fund managers more flexibility, I do not want them to put our funds at risk for the sake of seeking the highest possible investment return.

I assume that the government would argue that its turnaround of position on derivatives is based on the view that there are now tighter controls on investments. I should point out that this was not always the case. We just have to remember the Bruce Stadium fiasco and the fact that the financial management guidelines were only made a disallowable instrument after this.

The issue of where we invest the territory's money is very important. It is important from the point of view of not only the security of taxpayers' money but also ethical questions. I have raised before in this Assembly the Greens' view that the government should lead the way in promoting so-called ethical investment. I think serious consideration needs to be given to directing at least a proportion of our superannuation funds into investments which promote the development of clean, green industries and away from companies which promote environmentally damaging, unhealthy or destructive products or services. From memory, I think Mr Humphries had a reasonably favourable response to a recommendation that came out of the report on that matter in the first phase of the draft budget. I do hope that we see it picked up in some meaningful way by this government or other governments.

I will not be opposing this bill, but I do want to express my caution about the use of derivatives. I assume that further details of the use of derivatives will be added to the financial management guidelines in the future so that the Assembly will have the chance to revisit this issue if necessary at that time.

I also have an amendment here from Mr Quinlan which we have not had time to look at in detail. I understand Mr Humphries also wants more time. I think that is perfectly reasonable. I understand that we will adjourn debate on the detail stage and deal with that later.

MR MOORE (Minister for Health, Housing and Community Services) (6.43): Ms Tucker raised the issue of the debate in 1993. At that time I was very involved in the debate and raised the issue of investments by the government that at that time were considered quite risky. There is no doubt that the futures market at that time was considered a very risky part of investment. In the eight years since that time we have gained a much greater understanding of derivatives and how they are used within the market and how we use them in order to counter risk in other investments. I think it is important to recognise that there has been a significant advance in our understanding of this sort of market. When this matter came before cabinet and I raised the same issues that I raised in 1993, I felt more satisfied that we were in a better position now to be able to keep checks and balances in place, but to expand the prerogatives within those checks and balances.

I still think with regard to derivatives that we do need to be particularly careful. We do need to have appropriate checks in place, but I believe the legislation we have before us does leave in place the appropriate checks and balances suitable to 2001, with our greater understanding of what we are dealing with than we had in 1993. Mr Speaker, for this

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