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Legislative Assembly for the ACT: 2001 Week 6 Hansard (15 June) . . Page.. 1961 ..

MR KAINE (continuing):

I said that the government has said, "Trust us." If we pass this bill tonight, that is exactly what we are doing. We are trusting the government to put in place sufficiently rigid constraints on the traders-who will be trading our money out there in a very risky area of investment-to protect and, to use their word, "enhance" the product. I am not totally convinced that we can get that outcome. It is a concern to me that we are abandoning a 10-year long practice and no good reason has been put forward to tell us why we should do it.

MR HUMPHRIES (Chief Minister, Minister for Community Affairs and Treasurer) (11.45): In light of the lateness of the hour, I am not going to speak several times on this amendment. I am going to make one pitch and, if I am not convincing in that space of time, I will give up.

I confess that I do not know the details of how derivatives work, either. They are extraordinarily complicated. They rely on someone projecting what the value of a particular asset might be in the future and taking calculated risks based on what they expect that value to be. I confess to that, and I hope there are people in the building who know more about this than Mr Quinlan or I do. My Treasury advisers are sitting out there. They know all about it, so I hope that what Mr Kaine said is not exactly true.

However, I am not moving for the government to have the option of using derivatives because I read about it in a magazine and I think it is a good idea. We have used a very careful and thorough process to make this decision, which has led us quite inexorably and firmly to this point.

Members will recall that, some time ago, we commissioned Mr Bernie Fraser to conduct a review of ACT investment strategies and he recommended that we should establish an investment advisory board. We appointed an investment advisory board last year. It consists of three eminent figures in the Australian investment scene. I do not have the names of those people here, but members have seen those names before. The Finance and Investment Advisory Board has very strongly advised the government to include the use of derivatives in its range of investment strategies because it is now a widely accepted and commonly used form in Australia of investment.

Mr Kaine said that derivatives are generally considered to be unsafe, but the ACT government is the only government in Australia that does not use derivatives in its investment strategy-the only government.

Mr Kaine: We haven't had any money to risk-that's why.

MR HUMPHRIES: Actually, we have lots of money; we have over $1 billion worth of investments. We have plenty of money to invest. Furthermore, 86 per cent of superannuation funds use derivatives to protect their assets. Of course it is risky, but all investments, other than putting money into a bank, are risky.

Mr Berry: Which bank? It all depends which bank.

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