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Wednesday, 21 August 2002
Page: 3486


Senator IAN CAMPBELL (Parliamentary Secretary to the Treasurer) (4:20 PM) —Senator Conroy has sought to mislead the Senate in relation to a number of key issues. I would like to address them first. In a desperate grasp for relevance in this debate, Senator Conroy has shown in recent weeks that he is prepared to undermine the credibility of the regulator at a time when the credibility of the regulator is crucial. He has tried to misrepresent ASIC's enforcement role and he has also, for the first time in Australian corporate and political history, sought on three occasions to interfere in the accounting standard setting process. Today we have seen him back up threats made outside the parliament to interfere in the accounting standard setting process by saying, `Why wait until you have an international standard on the treatment of share options? Why not legislate instead?' It shows a fundamental disregard and lack of knowledge of the importance of having an independent accounting standards setter.

One of the great problems that was the cause of the Enron debacle in the United States was that politicians like Senator Conroy chose to interfere in the accounting standards setting process. Big business people went up to Capitol Hill and said, `We want this accounting standard.' In this place only a few years ago, Senator Conroy, with the support of a majority, disallowed an accounting standard for the first time in Australian history. Senator Conroy has now said that he wants to pre-empt the international accounting standards process to come up with thorough international accounting standards in relation to options and legislate. In other words, he wants to supplant the international accounting standards setting process and the role of the independent expert—the Australian Accounting Standards Board—and substitute a Labor politician, with the support of some people on the crossbenches.

I put it to you, Mr Deputy President, that you could not have a greater recipe for a disaster in corporate affairs than having politicians writing accounting standards. You would have corporate people coming up the hill to take Labor people out to lunch, give campaign donations and say, `This is how we want to treat things within our accounts.' It is the sort of corruption of process which led to the collapse of the Enron Corporation in the United States of America; it was because politicians were involved in the process. Can I make one plea to the Australian Democrats and to people in the Australian Labor Party who think carefully about policy—and that clearly does not include the shadow spokesman—that when we address accounting standards reforms, as we will later this year under the CLERP 9 process, we work very hard to ensure politicians cannot interfere in the process. It is a crucial part of good corporate regulatory policy.

In Australia we have had a government that has been more active in the past six years on improving corporate governance and building a sound regulatory framework than any other at any time in Australian history. Through the corporate law economic reform process, we have brought the most significant reforms to virtually every area of the Corporations Law. There is only one group in the entire corporate world across the globe that seeks to undermine the corporate regulatory work of building a better law, building a better regulator and funding a stronger regulator that has been built up by this parliament, and that is the Australian Labor Party who, for cheap political purposes, seek to undermine people's faith in the corporate regulatory system.

Mr Deputy President, you know very well that in the wake of the Enron collapse, the WorldCom collapse and the Global Crossing collapse the marketplace scoured the details of corporations in Australia thoroughly to find similar accounting treatments. If those analysts and investors and institutions had been able to find even a sniff of what went on in the United States of America, then the Australian market would have suffered a similar fate to what happened on the New York Stock Exchange. Of course, that did not happen here because the law in Australia has been reformed by this government, and the regulator has been given the resources it needs by the parliament—repeated oft by successive chairmen of the Australian Securities and Investments Commission.

What is Labor's response? For the past four years, Senator Conroy has been saying, `You are underfunding the regulator. You need to give them more.' Do you know what? Last October, we had an election and, under the charter of budget honesty, the Australian Labor Party was able to put their money on the table. They could not just come to an estimates hearing or to the Senate and make glib statements about the underfunding of the Australian Securities and Investments Commission. They had to come up with a policy. Senator Conroy just had 15 minutes to come up with a policy on corporate governance. He again failed to do so. There is no new policy. I think because we have repeated so often over the last few days how we have responded to ASIC's resourcing needs that he has given up criticising on that. But last October they had to go to the people and put down a document which had to be costed by Treasury on where a future Beazley government would spend money on corporate regulation. Do you know what Labor promised? An increase of $1.5 million a year. I think that is roughly less than one per cent.

Within a few weeks of coming back into government, this government increased ASIC's funding by some millions to resource them for their involvement in the HIH royal commission and other investigations. In the current budget, we increased their annual funding by a further $23 million; in fact, we increased it by over $90 million over the next four years. When Labor had the opportunity to put their money where their mouth was and to act instead of talking, they failed. They have had the opportunity every day since the election to give to the Australian people some alternative proposal for Corporations Law reform in this country, and they have not done it. What they have done is fallen into the trap of successive Labor governments—that is, to ignore Corporations Law as an ongoing part of economic policy in this country until there is a failure.

I commend an article by Professor Bob Baxt—the former head of the ACCC's predecessor—in a book called Collapse Incorporated, published by CCH, as a fine history of corporate regulation in Australia. To paraphrase Professor Baxt, Corporations Law in this country has tended to be a reaction by politicians to the political heat created by collapses. He eloquently describes the course of previous company collapses in Australia as being akin to Shakespearean tragedies, except that the players involved are usually less skilled.

The Labor Party has done it again this time. Instead of looking at policy in a coherent way and asking, `What are the fundamentals we are trying to achieve? How do we build a better company law? How do we ensure shareholders get quality information?' they say, `Let's have a knee-jerk reaction to the latest headline.' The government has an alternative approach. That is the approach shown under the Corporations Law Economic Reform Program, where we have consulted shareholders, investment groups and the institutions who manage the money of the mums and dads—the money on which they will rely in their retirement. We have developed reforms in a cohesive way, and that is how we will respond to the challenges facing the corporate world at the moment. We will not be rushed into a knee-jerk reaction. We will come up with sound policy that serves Australia for the decades ahead and not the short-term political requirements of an opposition without policy, direction or, most importantly, any philosophical framework.

We will ensure that Australia has improved auditor independence laws, that analyst independence is promoted by the law, and that the modern technology of information transfer through the Internet will enable investors to be more involved in their companies and receive better information in real time, and we will do so in a way that involves the business community. We will not slam through a piece of black-letter law and then have to wait two years for the Australian Accounting Standards Board to come up with an accounting standard.

The government support executive remuneration disclosure, but you need to do it in a way that is going to create good disclosure, not throw a new clause into the law and then say, `We will leave it to someone else to enforce it.' You do it in a considered way, and, if it means that you have to have a review to do it, then you should do so. You should involve the community in discussions about how you build a better Corporations Law in Australia. The government make no apologies for that. We will continue with our current stance on corporate law reform in this country. (Time expired)