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Thursday, 22 August 2002
Page: 5507


Ms BURKE (3:58 PM) —Seeing as this matter is so important, I am not going to honour the minister's remarks, because they were so off the point that they were irrelevant. It is a pleasure to have the opportunity to speak on this matter of public importance but, at the same time, it is profoundly disturbing and disappointing that there is such a need. The investments and retirement savings of all Australians should be sacrosanct, yet we know they are not. This government has sat on its hands and done little more than pay lip-service to protecting the retirement savings of all Australians. The minister's speech just demonstrated the complete lack of concern this government has.

The lack of government protection of retirement savings in relation to both corporate governance and superannuation regulation is reducing the security that all Australians should have in this system. Well-managed, profitable corporations and a regulatory system that ensures that both the market as a whole and individual investors can have confidence in it are essential. High-profile and high-cost corporate collapses have shaken community confidence in the government's regimes in these areas; look at HIH, One.Tel, Ansett—the list goes on.

I have often spoken in this place about the regulation of corporate governance. Most notably, I have been fairly critical of APRA on matters that have been raised by the committee of which I am deputy chair. But the Treasurer has ignored all these warnings. As the Treasurer, the member for Higgins, has shown continually over the last five years, he will side with big business against the interests of all Australians. Indeed, this government's attitude on corporate crooks is just inertia.

All working Australians and the majority of retired Australians have a direct interest in corporate governance principles. Their superannuation and other investments are intrinsically linked to the integrity and performance of the market. The reason for this is that about 46 per cent of the superannuation savings—and it is thanks to the ALP that there are superannuation savings—of ordinary Australians are invested in Australian companies and unit trusts. I remember in the last parliament, the previous speaker—the former Minister for Financial Services and Regulation—was the man getting up and saying that it was fantastic that the mums and dads all had shares, that Australians were the greatest shareholders in the world. But the government have done nothing to protect that nest egg.

The operation of corporate regulation has an impact on nearly half of the dedicated retirement savings of Australians. An article in the Sydney Morning Herald yesterday reported:

One in four of the country's top 100 companies are offering lucrative share option deals to their directors and executives but not fulfilling their legal duty to disclose the details to their shareholders.

... ... ...

Corporate law requires companies to disclose the value of share option plans but the Australian Securities and Investment Commission (ASIC) has found it difficult to enforce, many companies arguing—on legal advice—that the legislation contains no such requirement.

It was interesting to hear the Treasurer's comments today. The Treasurer was again asked about this today, but he is not even prepared to enforce his own legislation.

Then we have the case of APRA, which Mr Costello has, on numerous occasions, referred to as the world's best practice regulator. Commercial Nominees is a good case to note. Last year, Senator Watson—a Liberal senator, by the way—said in the Senate that he had raised in Senate estimates:

... some problems about the oversight of Commercial Nominees Australia Ltd, often referred to as CNAL, by the regulators ASIC and APRA.

What came across my desk this afternoon is an interesting insight. It has been alleged that a former director of Commercial Nominees, who was a director in the early 1990s and until the middle 1990s, has potentially absconded with funds from certain investment entities with the Commercial Nominees group ... Reportedly, this director had funds transmitted to him whilst in New York for the purposes of making investments on behalf of the trust company or its entities in companies listed on the Nasdaq.

One particular director allegedly left substantial hotel bills to be paid by Commercial Nominees for his stay in New York and failed to return to Australia. It is believed that he is now residing in Nicaragua with the sister of a lap dancer that he picked up in a New York nightclub.

That is corporate governance at work! Those members of Commercial Nominees now have no super funds. And to compound the problem, the government have actually refused to fully compensate the victims of this collapse, citing `moral hazard'. There was a moral hazard, but he was over in New York; it was not the investors of Commercial Nominees. They are being penalised for the failure of this government to act.

That being said, I believe the majority of Australian companies do act with integrity. I believe that the major companies respect the Corporations Law that they must act under. But confidence in the market as a whole has taken a shake because of the Treasurer's failure to act. He has failed to put in place regulations that will stop the crooks, stop the rip-off merchants and stop those who place their interests above those of shareholders. The government is more prepared to unfairly punish families who have incurred family payment debts, even when they have properly informed Centrelink of changes to their incomes, than it is to take any action against corporate rip-offs.

What makes Australians really mad is the greed and the arrogance that the worst side of corporate Australia displays. We are getting some fascinating insights into corporate Australia through the HIH royal commission. The Weekend Australian reported:

Dr Raymond Reginald Williams AM—

note that: Dr Ray Williams AM—

he suggested, was a man who loved his honoraries and donated no end of HIH cash to secure them. Monash University, to which he channelled a good share of the HIH millions, bestowed the honorary doctorate. The Order of Australia came with a citation acknowledging his boundless generosity, but not HIH's role in underwriting it.

Anyone in Williams's sights—client, servant or otherwise—was liable for summary reward. Swiss watches worth $10,000 a piece were the standard thankyou for 15 years' service at HIH. An invoice for 38 of them arrived on January 9, 2000, the same day staff were told to stop processing claims because of cashflow problems.

There were baubles and trinkets for all—including high-end jelly beans.

So that is where the money was going: it was going on jelly beans, not into your super funds. Then we have the previous doyen of the Liberal Party, Mr Elliott. The Age reported that Mr Elliott:

... devised an executive share purchase and superannuation scheme that bumped up his personal holdings to more than $40 million and attracted the attention of the then NCSC, the corporate watchdog of the day.

Then, of course, he spent a small fortune fighting legal challenges to get out of all this. But it has all come home to roost on the poor Mr Elliott.

Where has this government been in respect of these corporate criminals? I am assuming that all Australians and all members of this House find these behaviours outrageous, but what is the government doing? During this week the Treasurer has used the royal commission into HIH as an excuse for not implementing regulations that will actually strengthen corporate governance. Professor Ian Ramsay, who knows a thing or two about this subject, has taken a different view—a view based on improved standards, not on backing crooks and protecting improper practices, as the government appears to do. Professor Ramsay is reported in yesterday's Age as saying:

There are some things the government could do in the meantime on issues of auditor independence. At the end of the day, the HIH Royal Commission is an investigation into one corporate collapse involving one audit firm involving a small number of individuals and directors.

My report looked broadly across issues of auditor independence both in Australia and internationally, and wasn't focused upon a specific collapse.

He recognised that the conduct of the HIH royal commission does not preclude the government from taking action now. The government could act on his report, which has been languishing in the Treasurer's drawer for almost 12 months. But this lack of action is symptomatic of the government's approach: do nothing that may cause offence to major donors, even at the expense of the broader Australian community. There was a letter in the Financial Review today that sums it up beautifully:

The swift response from the Howard Government over revelations from the Cole royal commission into the construction industry ... is amazing, given the lack of government interest in clamping down on big business, and on dishonest disclosure, director benefits and share options, and other corporate governance issues revealed from the One.Tel and HIH Insurance inquiries.

The government still has not ensured that workers' entitlements are protected and fully payable when companies go bust, except if the company happens to be run by the prime minister's brother.

But it is obvious why unions should cop the backlash. They don't donate funds to the Liberal Party like big business does.

That was written by Brad Hinton from New South Wales. The government will not attack the goose that is providing its golden egg. The opposition has put forward a series of improvements to the corporate regulation environment. The regulation changes, as proposed by the Leader of the Opposition, will work. They will not hamper the growth and prosperity of well-managed companies. What they will do is increase disclosure, treat corporate criminal actions with the severity they deserve and protect the retirement incomes of all Australians. (Time expired)