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Thursday, 11 February 1999
Page: 2461


Mr McGAURAN (Arts and the Centenary of Federation) (10:00 AM) —I move:

That the bill be now read a second time.

As most, if not all members are fully aware, the year 2000 computer problem is a large and complex issue for many businesses and government agencies because of its capacity to disrupt services and cause financial loss and possible injury. If not addressed in a comprehensive and timely fashion, it has the potential to cause significant disruption across the entire economy. Inadequate remediation could cause services to fail. Insufficient information concerning the extent of any risk could cause the community to undertake unnecessary and costly contingency measures (such as the hoarding of cash and foodstuffs) with detrimental economic and social effects.

This bill addresses this concern by providing a framework to encourage the voluntary disclosure and exchange of information about year 2000 computer problems, remediation efforts and compliance.

At present, statements made in good faith for the purpose of sharing information on year 2000 readiness issues can, under certain circumstances, expose a person to legal liability. Legal risk could relate to:

. negligent misstatement—where statements that are relied upon cause loss or injury;

. defamation—where statements have the effect of injuring a business or personal reputation; or

. breach of contract—where consumers choose either to purchase a product, or elect to terminate a contract with a supplier, as a result of a year 2000 statement.

The most likely circumstances in which liability for a year 2000 statement may arise are under section 52 of the Trade Practices Act 1974 (dealing with conduct that is misleading and deceptive) and section 53 of that act (relating to false representation of the standard of goods).

The threat of legal liability is often cited by organisations (including governments) as a significant reason for their reluctance to reveal information about their year 2000 preparedness to other bodies, or assist other organisations to achieve early compliance.

The year 2000 computer date issue is much more than an information technology problem. It is a whole of business management problem. Preparing for the year 2000 problem requires organisations to address not only their internal systems, but also the year 2000 preparedness of their suppliers, service providers and customers upon whom they rely.

The lack of accurate and relevant information is hindering the ability of organisations to check thoroughly these supply chains. It is also impacting on, and adding significantly to the costs of, developing appropriate contingency plans.

Large organisations need to be encouraged to provide remediation advice to small businesses, thereby helping to minimise the risk of small business failure. Availability of reliable information to the public will lessen the potential for unnecessary concern and uninformed reaction which itself could have adverse social and economic consequences.

Australia is acknowledged internationally as a world leader in addressing the year 2000 problem. The government has been active since 1997 remediating its own systems with the aim of maintaining service continuity, and promoting awareness of the year 2000 problem to business and the wider community. In the 1998-1999 budget, as an incentive to business to address the problem, the government announced that most year 2000 related software expenditures would be immediately deductible for taxation purposes.

However, a considerable cooperative effort is still required if Australia is to be fully prepared for the potential impacts of the date change. If incentives are not provided to encourage disclosure and information sharing on year 2000 processing, it is unlikely that there will be any major increase in current levels of activity.

This bill demonstrates the government's leadership and ongoing commitment to respond to the challenges presented by the year 2000 problem by providing an environment in which organisations are encouraged to act responsibly.

The bill will provide greater certainty to those organisations that wish to make statements to clients and the public concerning their levels of year 2000 preparedness. It will encourage organisations to be more open about their level of year 2000 readiness. This will assist organisations to check their supply chains and target their contingency planning more effectively at areas of real risk. It will also assist large companies to assist the remediation efforts of smaller firms—the so-called `good Samaritan' effect.

The bill will not impose direct costs on business or impose administrative burdens. The strictly voluntary nature of any year 2000 disclosure statement will allow business to control any costs associated with the making of such a statement.

In addition, the removal of some risks for governments and business in providing publicly available information on year 2000 preparedness will assist in addressing community concerns about the possible risks or otherwise of service failures.

The bill has many parallels with the Year 2000 Information Readiness Disclosure Act introduced in the United States Congress in October 1998.

The bill will, under certain circumstances, protect a person from civil liability arising out of the making of a year 2000 disclosure statement. The scope of the protection will be narrow and will apply for a limited period.

Protection from civil liability for a year 2000 statement will be limited to clearly identified and authorised written disclosure statements that relate to year 2000 processing. Apart from dealing with year 2000 processing problems, these statements will be able to deal with planned activities to mitigate the consequences of potential problems relating to year 2000 processing. Protection will also extend to a person republishing an original year 2000 disclosure statement.

Importantly to note, the bill will not provide protection from civil action in relation to:

. year 2000 disclosure statements which were made recklessly, or known to be materially false or misleading;

. actions instituted by consumers in relation to goods or services which they had purchased following inducements provided by a year 2000 disclosure statement, such as where a product or service fails as a result of a year 2000 service failure;

. year 2000 disclosure statements made in the context of entering into a contract;

. year 2000 disclosure statements made in the context of obligations imposed by a contract or a Commonwealth, state or territory law; or

. proceedings, or the exercise of regulatory or enforcement power, by a regulator or enforcement body.

A year 2000 disclosure statement will not be taken to amend a contract unless the parties agree otherwise. Provisions of the bill will not alter any intellectual property rights. The bill ensures that arrangements for the disclosure and exchange of year 2000 information between competitors in an industry are exempt from section 45 of the Trade Practices Act 1974. Section 45 prohibits certain arrangements which have the effect of substantially lessening competition.

The range of exceptions in the bill maintains the capacity of regulators to carry out their statutory roles to act in the public interest, and ensures that the rights of consumers, as set out in the Trade Practices Act 1974, will be unaffected. By maintaining the rights of consumers, and the rights of individuals to take action in the event of year 2000 product or service failure, the bill will not weaken incentives for government and business to continue remediation work.

The government intends to monitor the operation of the bill following its enactment to ensure that its aims are not being frustrated. Should any abuses come to light, the government will act swiftly to move appropriate amendments.

The bill will have implications for state and territory law, including in the areas of tort and defamation law. However, the government considers that the unique circumstances of the year 2000 problem warrant such action, which should not be treated as a precedent. The provisions of the bill are time limited, with all effects ceasing on 1 July 2001.

The states and territories will be free to enact their own year 2000 information disclosure legislation. Any such legislation will be able to operate to the extent to which it is consistent with the bill.

Where a self-governing territory, such as the ACT, Northern Territory or Norfolk Island, enacts its own year 2000 information disclosure legislation, regulations will be able to be made to limit the application of the bill to that territory.

Conclusion

This bill, by significantly reducing barriers to disclosure and information sharing by industry and governments, will help accelerate the rate of year 2000 remediation progress.

The bill provides the opportunity for Australia to enhance its position as a world leader in tackling the year 2000 computer date problem. Any increase in the level of Australia's year 2000 readiness will obviously have positive effects on Australia's international competitiveness. I present the explanatory memorandum to this bill.

Debate (on motion by Mr Horne) adjourned.