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Thursday, 17 October 2002
Page: 5405

Senator WONG (3:05 PM) —My question is to Senator Coonan, the Minister for Revenue and Assistant Treasurer. Is the minister aware of the duty of directors under section 300A of the Corporations Act to disclose in the directors' report the board's policy for determining the nature and amount of executive remuneration and the relationship between that policy and the performance of the company? Why, then, have there been numerous reputable studies, including those by the university of technology and by the Australian Council of Superannuation Investors, showing that directors of Australian listed companies are not complying with their duties under section 300A?

Senator COONAN (Minister for Revenue and Assistant Treasurer) —I thank the senator for her question. The situation in relation to the Corporations Law and the duties of directors is clear. It is one of the factors why the CLERP 9 report has in fact not taken up in anything other than a measured way that the expensing of options, the reporting of directors and the expensing in accounts are to be pursued by way of further consultation rather than by way of a prescriptive approach taken by the government.

The report that the senator refers to is in no way definitive. There is no suggestion, other than in the report and of course in some of the matters that have been reported in the press—about which I cannot comment because obviously I am going to have to make some response once the HIH royal commission brings in its report—that the duties of directors are not well specified under the Corporations Law. Apart from the processes that are being undertaken and the CLERP reform program, there is no other proposal from the government to do anything other than ensure that the Corporations Law is understood and enforced where appropriate, both by ASIC and APRA. In those circumstances the report to which the senator refers is not something that the government is going to be reacting to by way of a knee-jerk reaction.

Senator WONG —Mr President, I ask a supplementary question. Minister, why has no action been taken by the government or ASIC against directors who have defied these requirements in the Corporations Act? Is it the case that directors feel that under this government they can simply defy these requirements with impunity, or are they merely unaware of these duties?

Senator COONAN (Minister for Revenue and Assistant Treasurer) —I thank Senator Wong for the supplementary question. The annual report of ASIC—I think it was tabled a day or so ago—goes into great detail on the effectiveness of the enforcement mechanisms being undertaken by ASIC. The number of prosecutions are in fact spelled out in the report—I think it is in the order of over 100. There is no suggestion that ASIC is underfunded or doing anything other than carrying out its duties in accordance with its charter. It is an agency that I think has reacted very quickly in relation to prosecutions that have unfortunately become necessary in recent times. There is no reason for there to be any lack of confidence that ASIC will take whatever enforcement action necessary when it is appropriate.