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Tuesday, 7 December 2004
Page: 124


Dr EMERSON (10:21 PM) —I point out that on the speakers list tonight there are a number of Labor members wishing to contribute to the debate—to the advancement of knowledge about this very unfortunate saga—yet only two members of the coalition, the member for Cook and the member for O'Connor, have even bothered to come into the parliament to make an argument about this legislation.

Labor supports the James Hardie (Investigations and Proceedings) Bill 2004. Some of the points raised in the debate are quite illuminating. It is true that in an ideal world we would be debating legislation not specific to James Hardie but that dealt with this kind of unacceptable behaviour across corporate Australia. So I do understand that there is merit in the argument that we should not be legislating specifically for an individual company. As the member for Batman has pointed out, the reality is that James Hardie has forced the hand of the Commonwealth parliament. We are in an extraordinary situation where the will of the people, as expressed through this parliament, is such that James Hardie must be brought to account.

I urge corporate Australia to get behind this legislation and understand that, when you have such appalling behaviour by an individual company, corporate Australia at large should condemn it. Otherwise, if the member for O'Connor and others in the debate had their way, corporate Australia would be subject to exactly the same legislation—about which, no doubt, it would be indignant and would express outrage. But you cannot have it both ways. When a company behaves in this way then there is an obligation on other companies to declare that this behaviour is unacceptable. Otherwise we will be confronted by company specific legislation again and again and again. Alternatively, the parliament will be fed up with it and will apply this sort of legislation across the board, and no doubt corporate Australia would be very upset about that.

Like the member for Batman, I am outraged at the assertions made by the member for O'Connor that this legislation involves ambulance-chasing. For him to suggest that the death of a 70-year-old is in some way fundamentally different from the death of, say, a 50-year-old, in that a 70-year-old would have no offspring who legitimately should be the beneficiaries of compensation, is appalling. In the world of the member for O'Connor, it is all right for compensation to be paid for a 50-year-old with relatively young dependent children who dies of a disease caused by the negligence of a company, but if you are 70 then there is no case and it constitutes ambulance-chasing.

The tragic reality of mesothelioma is that it takes about 37 years in order for that disease to become a reality after the first infection. So the truth of the matter is that it is more likely to be a disease that occurs among people in their 60s and 70s. Does that make it all right? Does that make the disease acceptable and the case for compensation weaker, because it is such an insidious disease with such a long gestation period? I say no. I say that a company that is involved in activities where it knowingly has jeopardised, endangered, the health of its employees and of others should be brought to account. That is why we had the Jackson inquiry.

The government is very fond of condemning the union bosses of Australia, of condemning the trade union movement in this country and of condemning people like Greg Combet for some sort of unacceptable behaviour that in some way is unethical and against the national interest. But I say this: Greg Combet, his colleagues in the ACTU and his colleagues in individual unions brought this scandal to light. I assert to you, Mr Deputy Speaker Wilkie, and to the parliament, that we would not be debating this legislation if it were not for the efforts, the diligence and the persistence of Greg Combet, the ACTU and all the relevant unions.

When we have a debate, as we did in the federal election campaign, about the role of trade unions in this country, we should remember, through the James Hardie saga, that trade unions bring to light outrageous behaviour on the part of companies and individuals. We would be much the poorer as a country if we did not have the trade union movement performing that role. So when the Minister for Employment and Workplace Relations, at the behest of the Prime Minister of Australia, stands up here in parliament, day in, day out, week in, week out, condemning the union bosses, it might just be wise for both the minister for workplace relations and the Prime Minister to pause and ponder the fact that, without the unions, this tragedy and this negligence on the part of James Hardie would not have been brought to light, would not have received the public attention that it has, might not have resulted in a commission of inquiry in New South Wales and certainly would not have resulted in the legislation that we are debating tonight. As always, I will defend the role of the trade union movement in this country in bringing to light these sorts of outrages.

It is worth discussing for a moment the consequences of the negligence of James Hardie. Mesothelioma is a cancer caused by the inhalation of asbestos. It causes extreme pain. It causes breathlessness. The lung is effectively collapsed by the weight of the tumour. Within nine to 12 months of diagnosis, a person who is afflicted with mesothelioma dies. It is a shocking disease and there are no cures for it. That is not the only asbestos related disease. Asbestos has also been implicated in other malignancies, particularly lung cancer. It is implicated in other respiratory diseases, non-malignant diseases, but the worst of it is that there are no cures.

Australians were into asbestos like no other country. We loved our asbestos. I am from the country, from a small country town called Baradine, in north-western New South Wales. The member for Batman referred to the `Fibros' in Sydney Rugby League, in the contests of the 1970s—Les Boyd for the `Fibros', the western suburbs, playing the `Silvertails' in Manly. The fibros were the cheap houses of the western suburbs, built from asbestos cement. And so it was in the town where I grew up. If you had a brick house, you had a castle. All the houses were built of fibro. Do you know what we used to do? We used to get the fibro, smash it up and put it on fires. We would light a fire out on the back block, build it up, get it hot, put the fibro on and watch it pop.

Someone with some medical expertise said to me that you need only one fibre of asbestos to lodge in your lung and you can get this shocking disease. As kids, we did not know that. Working people of this country did not know that. Low-income people of this country did not know that. As a consequence of not knowing the impact of fibro and other uses of asbestos, so many people are dying. These are the figures. About every third domestic dwelling built in Australia before 1982 is thought to contain asbestos, mostly in the form of fibro. We have the highest per capita incidence of mesothelioma in the world. Already 7,500 people have been reported as dying from mesothelioma in Australia, and it is being contracted by around 500 more Australians every year. By 2020 it is expected that 18,000 Australians will have died of mesothelioma, and the peak of it is yet to come. The peak of it is expected in six years time, in 2010.

If you compare the road toll to the toll from asbestos related diseases, you get a shocking comparison. Asbestos related diseases, most particularly mesothelioma, are right up there. The scariest thing about this—it is a shocking disease—is that the average gestation period is around 37 years. Who was the biggest manufacturer of asbestos containing products in Australia? James Hardie was. And there is, as the member for Batman has pointed out, some evidence demonstrating that James Hardie knew of the dangers of asbestos from at least the 1930s, and yet it took decades for all of this to come to light and even longer for this legislation to come before the parliament.

In early 2001 James Hardie established the Medical Research and Compensation Foundation but put in it a grand total of $293 million of assets. The James Hardie CEO, Peter Macdonald, stated at the time that the trust fund was fully funded—that there were adequate funds to compensate all the victims of James Hardie's activities. Yet in October 2001 James Hardie gained approval from the Supreme Court of New South Wales for a scheme of arrangement that involved the establishment of a new Netherlands based parent company and the transfer of $1.9 billion from James Hardie to that company.

Let us just put this through the commonsense test. Why would James Hardie enter into an arrangement where it transferred $1.9 billion of assets to the Netherlands? What is so special about the Netherlands? Do they produce lots of fibro houses? I do not think so. Do they have a love for asbestos? I do not think so. The Netherlands is one of only two countries in the world with whom Australia does not have a treaty for the enforcement of civil action. So, on the evidence, James Hardie knew exactly what it was doing. It was not chasing asbestos related markets in the Netherlands; it was shifting assets to the Netherlands so that they could not be accessed by the victims of asbestos related diseases.

So that scheme of arrangement was approved, $1.9 billion was sent off to the Netherlands, and James Hardie's solicitors assured Justice Kim Santow that Australian asbestos creditors would suffer no prejudice from this due to a lifeline of partly paid shares. Come forward to March 2003, and James Hardie separated JHIL from the James Hardie group, creating the ABN 60 Foundation, and cancelled the partly paid shares, thereby cutting the lifeline.

James Hardie indemnified the Netherlands parent against any claims arising from or connected with past asbestos liabilities and, by the way, did not alert the Supreme Court, the New South Wales government or the Australian Stock Exchange about the cancellation of those shares. One of the central objectives of the separation and restructure was to place the assets of James Hardie beyond the reach of asbestos victims. I now want to refer to some of the findings of the commission of inquiry. I quote a brief summary of the report:

At the time of separation JHIL announced that the Foundation was “fully funded”, that its establishment would bring certainty to asbestos claimants and shareholders and that the level of funding required by the Foundation had been determined by the directors of JHIL with the benefit of expert advice from firms including PricewaterhouseCoopers and Access Economics ... In my view each of those statements was untrue ... I have also formed the view that in publishing the Media Statements in question JHIL and its Chief Executive Officer, Mr Macdonald, engaged in conduct which was, or was likely to be, misleading and deceptive in terms of s 995 of the then Corporations Law, and that there is evidence on which it could be found that Mr Macdonald had contravened ss 1309 and 999 of the Corporations Law...

It goes on to say that the provision made for the asbestos liabilities was manifestly inadequate: the assets were $293 million but the liabilities for claims in future years would be not less than $1.5 billion in present value terms. Compare the assets of $293 million and the liabilities of not less than $1.5 billion—and others suggest that it could be much, much greater. There was a cash flow model that was used to test and verify the adequacy of this $293 million. The commission found:

The cash flow model ... worked on the assumption that the funds available from time to time for investment—

by two of the associated companies—

would be able to earn income at a constant rate of 11.7 per cent per annum for 50 years ... I formed the view that the 11.7 per cent was selected because it would achieve the result that the model would show significant surpluses over its life ...

That is, it was a convenient selection of an expected rate of return to produce the desired result.

This legislation is warranted. It is true that, in an ideal world, it should not be applied simply to James Hardie. But James Hardie has gone out and behaved in a completely irresponsible way. If other companies behave in the same way then I fear and believe that this legislation may well spread to those other companies. That is why I urge corporate Australia to understand the implications of one company behaving in such an irresponsible way. Personally, I would not like this legislation necessarily to apply to all companies. But if particular companies are going to behave in this way without sanction then, of course, parliament will speak on behalf of the Australian people.

The bill enhances the ability of ASIC and the Director of Public Prosecutions to mount investigations and undertake proceedings against corporate bodies that are part of the James Hardie group and officers, employees or advisers of the James Hardie group. The bill expressly abrogates legal professional privilege in relation to certain materials, permitting their use in these investigations or proceedings. So, as a result of the passage of this legislation, those materials will be able to be used in those investigations and proceedings, and I welcome it. Certainly James Hardie has behaved in an appalling fashion. That is why we are debating this legislation.

I want to finish where I started: this scandal would not have been brought to light if it were not for the work of Greg Combet, the ACTU and the affiliated unions. We must always remember that unions have a great role to play in defending the public interest and in defending victims, whether they are 70 years old or not. I commend the bill to the House.