Senator MURRAY(1.47 p.m.) —by leave—I move:

(1)   Schedule 1, item 39, page 16 (after line 23), at the end of section 33K, add:

   (6)   If a share in a company vests in a person under this section, the company must register the person as the holder of the share.

   (7)   Subsection (6) has effect despite anything in the Corporations Law.

(2)   Schedule 1, item 39, page 16 (after line 23), after section 33K, insert:

33KA Special provisions relating to shares in the Australian Submarine Corporation

(1)   If an AIDC body is the holder of legal or beneficial interests in shares in the Australian Submarine Corporation, the Minister for Finance must:

   (a)   make such a declaration under section 33K as will result in the Australian Industry Development Corporation becoming the holder of those interests before 1 September 1997; or

   (b)   make such a series of successive declarations under section 33K as will result in the Australian Industry Development Corporation ultimately becoming the holder of those interests before 1 September 1997 as a consequence of one or more interposed transfers to other AIDC bodies.

(2)   If the Australian Industry Development Corporation becomes the holder of those interests as a result of the declaration or any of those declarations, this Act does not prevent those interests from being subsequently sold or transferred.

(3)   If the Australian Industry Development Corporation becomes the holder of those interests as a result of the declaration or any of those declarations, the Australian Industry Development Corporation must not subsequently sell or transfer those interests to a foreign person (within the meaning of the Foreign Acquisitions and Takeovers Act 1975 ) unless:

   (a)   immediately before the commencement of this section, the foreign person had an entitlement to acquit those interests; and

   (b)   immediately before the commencement of this section, the foreign person was a registered shareholder in the Australian Submarine Corporation; and

   (c) that entitlement:

      (i)   arises out of a shareholders' agreement; or

      (ii)   relates, directly or indirectly, to the foreign person's capacity as a registered shareholder in the Australian Submarine Corporation; and

   (d)   the sale or transfer:

      (i)   gives effect to that entitlement; or

      (ii)   would have given effect to that entitlement if it were assumed that AIDC bodies and the Australian Industry Development Corporation were the same entity.

(4)   For the purposes of this section, a person is entitled to acquire any thing if the person is absolutely or contingently entitled to acquire it, whether because of any constituent document of a company, the exercise of any right or option or for any other reason.

(5)   In this section:

      Australian Submarine Corporation means Australian Submarine Corporation Pty Limited.

Senator Campbell was quite right in his remarks, because no government—I am referring to the previous government—negotiates a pre-emptive right with a commercial institution without having a potential sale in its mind. Quite clearly, the previous government kept that option open. The fact is that the Swedish consortium, Kockums, was given that right by Labor, has that right and has the entitlement to exercise it if it so wishes.

I want to say something in reaction to Senator Sherry's remarks. Labor has a long history of the sale of public assets. It has a committed history of economic rationalism. I stood in this chamber and heard the best possible speech I have ever heard against the sale of airports from Senator Bob Collins. Then Labor trooped over to the other side and flogged off yet another set of our assets. When I hear you—again, to use Senator Campbell's words—coming the pious on us, I look forward to the days when Labor finally gives up its old record of economic rationalism.

Let us look at my amendments and where we agree with and differ from Labor. Labor quite rightly referred the bill to the Senate Finance and Public Administration Commit tee. That committee, again quite rightly, raised serious issues which were pursued further by Labor and by us. When we had a look into it, we established that AIDC Ltd's principal asset at the moment is the Australian Submarine Corporation. So far that corporation has produced one out of five submarines. When that contract has finished, the effect will be that unless the ASC continues with other work or in some other form, that will be the end of it. It will have a residue of depreciated assets, some intellectual property and the overhang of government investment in it over the years.

Labor and the Democrats were both concerned to see that the ASC was not immediately sold off with AIDC Ltd, and that it be transferred into the AIDC. We both achieved that result. We were both concerned that it was not sold to foreign interests, except with regard to the pre-emptive right that Kockums has. Once again, we have both achieved that result. However, we have taken the view that the only way in which government can deal with this issue is by having its hands relatively untied. For us the most important thing is that the jobs and the investment and the contracts which matter so much to South Australia are preserved and do continue. We have the government's assurance that they are going to make sure that that happens. In fact, they are contractually bound to make sure that that happens.

Our amendments followed a briefing discussion with the Minister for Finance. We thank you for the courtesy accorded us. Therefore, we put together our amendment to the AIDC Sale Bill, which would achieve a number of objectives. These were: firstly, to oblige the minister to transfer their ASC shareholding to the Australian Industry Development Corporation, which is a statutory authority and is not subject to sale; secondly, to require AIDC Ltd to follow the minister's direction to transfer shares, which was vital from a legal point of view; thirdly, to preclude the transfer of the shareholding in any subsequent sale of the shares to a foreign person; and, fourthly, to use the Foreign Acquisition and Takeovers Act 1975 to establish the meaning of a foreign person.

When the bill was considered by the Senate Finance and Public Administration Legislation Committee, of which I am a member, the ALP members issued a minority report proposing an amendment which required the transfer of the shares to the corporation. This also prevented those shares being sold in the future. That proposed amendment was drafted as a stand-alone section of the bill.

The amendment responding to the Democrats' concerns has been prepared to be consistent with and take advantage of the powers provided by other sections of the bill. It is to be inserted immediately after section 33K to take advantage of the power provided by 33K which enables the minister to vest the shares without the need for conveyance and this minimises the risk of triggering any pre-emptive rights held by the shareholders in the Australian Submarine Corporation.

The drafting uses the term `AIDC body', defined elsewhere in the bill as `the corporation or a wholly owned subsidiary of the corporation'. This is important, as the minister is only obliged to move the shares following the acquisition of AIDC Ltd shares from the two minority shareholders in that company, which again were a hangover from previous re-acquisitions. Transfer of the ASC shares prior to that action could give rise to problems in relation to minority shareholders' rights.

The utilisation of 33K powers by the minister ensure that the powers provided elsewhere in the bill oblige AIDC Ltd to follow the minister's direction. Division 11 of the bill provides a series of injunctive powers. A date has been inserted to provide comfort that the move of the shares will take place in a reasonable time and that provides sufficient flexibility to ensure that the Office of Asset Sales and its advisers have had the opportunity to ensure that related issues concerning rights and obligations associated with the shareholding are properly addressed at the time the move takes place.

AIDC Ltd holding the shares in a subsidiary company and intercompany arrangements associated with the shareholding will need to be addressed. AIDC Ltd has certain rights as a principal shareholder which will need to be transferred to the corporation when their shares are moved, possibly involving negotiation with the other principal shareholder, the 48½ per cent shareholder, Kockums. The ASC shares are held through a series of subsidiary companies, AIDC Defence Holdings, which is 100 per cent owned by AIDC Investments, which in turn is 100 per cent owned by AIDC Limited. Section 33KA(l)(b) allows the shares to be moved through the companies if that fits with the intercompany relationships.

The Foreign Acquisitions and Takeovers Act 1975 provides for a range of circumstances in determining a foreign person covering direct shareholdings, substantial interests, associations, trust arrangements and residency issues. Subsections 33KA(3)(a) to (d) are included to ensure that the amendment does not constitute an appropriation of existing shareholders' rights that the other parties may have. Without this, it would be necessary to provide for compensation to the other existing shareholders or the legality of the move of the ASC shareholding could be in question. The shareholder rights that would be protected would only be those that existed at the commencement of the bill. Any other regulatory requirements that would apply to those shareholder rights, such as satisfying the normal provisions of the Foreign Acquisitions and Takeovers Act, would not be removed. Subsections 33KA(4) and (5) are included for the purpose of clarifying the meaning of certain references in the section.

We think that our amendment meets the needs of the Senate. It meets the needs of the FPA committee, as expressed in their report. It meets many of the concerns of Labor. It certainly meets most of the concerns of the Democrats and therefore we commend the amendment to the House.