Mr HOCKEY (Financial Services and Regulation) (5:13 PM) —I move:

That the amendments be agreed to.

The Corporate Law Economic Reform Program Bill 1998 is part of the government's corporate law economic reform program. The objective of the program is to provide efficiency in the Australian economy, while facilitating market integrity and providing appropriate investor protection mechanisms.

The reforms contained in the bill mark a significant change in the regulation of fundraising, takeovers, accounting standards and directors' duties under the Corporations Law. The reforms modernise the regulation of business in Australia and will ensure that Australia's corporate laws meet the challenges of the present and future market in a forward thinking, responsible and innovative way. In addition, the reforms contained in the bill are integral to the government's broader objective of boosting Australia's international competitiveness and building Australia as a centre for global financial services. The reforms send a clear message to the business community that this government is serious about reform and serious about making Australia a leading financial centre.

I am very pleased that the bill is now in its final stages of passing through this parliament. A number of amendments were made to the bill in the Senate. The government is a little disappointed that some of these amendments have been made, particularly in light of the extensive program of public consultation and discussion which was a hallmark of the development of these reforms. Nevertheless, the central reforms proposed by the bill are largely intact. Whilst the government would have preferred that the bill not be amended, it believes it is preferable to pass the bill as amended by the Senate rather than delay the implementation of these valuable reforms any further.

I will now turn to the details of the amendments. The Senate amendments include a number of amendments which address the recommendations of the report into the bill by the Parliamentary Joint Committee on Corporations and Securities. These amendments will include the implementation of almost all of the recommendations of the majority report and a number of the recommendations contained in the supplementary report. The committee's recommendation that rollover relief from capital gains tax be provided in relation to turnovers and compulsory acquisition was not implemented. Instead, that recommendation is being dealt with in the context of the review of business taxation where it has been recommended that, subject to certain conditions, capital gains tax rollover relief should be allowed for scrip for scrip transactions allowing takeovers. The government has accepted that recommendation.

The government also took the opportunity to make additional amendments to the CLERP Bill in the Senate which will facilitate the effective operation of the Corporations and Securities Panel. The amendments are in keeping with the government's previously stated policy objectives of making the panel the primary forum for the speedy resolution of takeover disputes during the takeover bid period. For example, the amendments will introduce an internal appeal process within the panel. As the panel is to become the sole forum for resolving takeover disputes, it is appropriate that an appeal process is available to any party who is not satisfied with a panel decision.

The amendments will also give the panel a rule making power, enabling it to make rules which would apply in addition to the takeover provisions. The rules will be subject to ministerial disallowance. The rules must not be inconsistent, obviously, with the Corporations Law or its regulations. The government also took the opportunity to make a number of minor technical amendments to the CLERP Bill in the Senate.

The bill was subject to a number of amendments by the Labor Party and the Australian Democrats. I must say that I am disappointed at the Labor Party's continued opposition to the CLERP reforms which have, by and large, been very well received with almost unqualified support from the business and investor communities. On the other hand, the Democrats were very constructive in the discussions and in the debate. I reiterate my thanks to Senator Murray for his constructive role in this process.

The government's position has always been that the bill represented a balanced package of reforms. We were therefore very reluctant to see amendments to the bill without the benefit of consultation. However, we considered that the bill contains reforms which both the business and investor communities have been waiting for since the plan was first flagged in 1996. (Extension of time granted) Therefore, we accepted that it would be better to accept the bill in its amended fashion rather than pulling the bill totally.

The Democrats' reforms to the compulsory acquisition provisions will require the Australian Securities and Investments Commission to nominate experts to be used in valuing securities and will require a company to notify its shareholders when a person is reaching a position where they may become a 90 per cent holder capable of compulsorily acquiring the remaining securities. Whilst the government considers that these changes are unnecessary, it is pleased to see that compulsory acquisition reforms come to fruition, particularly in light of the very extensive consulta tion process which accompanied the development of these provisions. Similarly, Democrat amendments to the sophisticated investor exemption in the fundraising provisions and to the accounting standards provisions while considered unnecessary by the government will not significantly alter the basic thrust of the reforms in these areas.

One final point I would emphasise is that the removal of the mandatory bid rule from the takeover provisions of the bill by the Democrats and the Labor Party is deeply disappointing. Neither the Democrats nor the Labor Party has been able to convince the government that the mandatory bid rule does not deliver significant benefits to investors and to the market as a whole. The mandatory bid rule would have provided an additional avenue for takeover activity in Australia. It was subject to a number of safeguards designed to ensure that all target companies shareholders had an opportunity to sell their shares at a fair price and to benefit from the control premium that a bidder places on the securities. The mandatory bid was to be an additional means of ensuring that Australia has a competitive market for corporate control. A competitive market for corporate control places pressure on managers of all corporations to perform at the highest standards, thus benefiting all shareholders. The government will be pursuing the implementation of the mandatory bid proposal, and I will be referring it to the parliamentary joint committee for further consideration.

Finally, this bill was the result of an extended period of consultation, and there are a number of people I would like to thank. Firstly, I would like to thank the Treasurer, Peter Costello, who set down in 1996 the guidelines for the development of the Corporate Law Economic Reform Program and who as shadow minister for corporate law had a significant hand in a lot of the policy issues and developments that are the background to this bill. This is as much his bill as anyone else's, and I commend him for it. Similarly, I commend Senator Ian Campbell in the other place for his vast amount of work in developing this bill. He conducted the consultations right around Australia. I congratulate him for all his efforts and thank him for guiding this bill through the other place.

I would also like to thank the parliamentary Joint Standing Committee on Corporations and Securities and, in particular, Senator Grant Chapman, the chair of that committee. The committee took a very constructive approach to this bill. I would also like to thank the members of the Business Regulation Advisory Group, which is chaired by Catherine Walter and includes Peter Barnett, Leigh Hall, Rohan Jeffs, Jeffrey Lucy, John Murray, Robert Nottle, Malcolm Starr and my friend Les Taylor.

Similarly, I would like to thank the Treasury officers who have put in an extended amount of work in this area. Jim Murphy, with Senator Ian Campbell, travelled Australia on the consultations and, whilst no longer in Treasury, made a substantial contribution, as did Jennifer Wells, who has gone on to greener pastures after being my DLO for some period of time. I would like to thank the current unit—Michael Willcock, Veronique Ingram, Phillip Lynch, Emma Armson, Sandra Patch, Les Pascoe—and the other members of the Financial Markets Division and the Corporate Governance and Accounting Policy Division in Treasury. Finally, I would like to particularly thank Kersten Wijeywardena from my office, who has done an absolutely outstanding job during this very extensive and very draining debate. It gives me enormous pleasure to commend the amendments to the House.