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Tuesday, 28 April 1987
Page: 1875


Senator BOLKUS —On behalf of the Senate Standing Committee on Constitutional and Legal Affairs I present the report on the role of Parliament in relation to the national companies scheme, together with the transcript of evidence.

Ordered that the report be printed.


Senator BOLKUS —by leave-I move:

That the Senate take note of the report.

As a background to the inquiry, on 17 April 1986 the Senate resolved that the Standing Committee on Constitutional and Legal Affairs should examine the role of the Parliament in relation to the Ministerial Council for the Companies and Securities Commission and in relation to the operation and effectiveness of companies and securities legislation. At the time the so-called `co-operative scheme' was the object of extensive criticism by members and senators of all political persuasions and by business organisations such as the Confederation of Australian Industry. The reference of this matter to this Standing Committee of the Senate reflected the Senate's collective concern, and the desire that this dissatisfaction with the co-operative scheme should be investigated.

During May 1986 the Committee advertised the reference nationally. In addition, we wrote to all the relevant Federal, State and Territory Ministers, business groups and organisations, academics and other individuals who were known to have an interest in the problems of companies and securities regulation. The Committee received 37 submissions. One of the submissions came from the Commonwealth Attorney- General's Department, one came from each of the governments of South Australia, Victoria and Tasmania, one from the Western Australia Corporate Affairs Commission with endorsement of the Western Australian Attorney-General, and one from each of the New South Wales Corporate Affairs Commissions and one from the Northern Territory Corporate Affairs Office. Further, the Committee also received a submission from the New South Wales Legislative Council's Committee on Subordinate Legislation.

The Committee then embarked upon a course of public hearings. We held six public hearings; three in Melbourne, and one each in Adelaide, Canberra and Sydney. The Attorneys-General of South Australia and Victoria appeared at these hearings, and I would like to place on record the Committee's appreciation for their appearance to assist the Committee in its deliberations. In addition to the anticipated criticism of the co-operative scheme, the Committee received some evidence that, under difficult circumstances, the scheme had performed exceptionally well.

I now turn to the Committee's conclusion. The Committee has concluded that the co-operative scheme has outlived its usefulness. Accordingly, the Committee has unanimously recommended that the Commonwealth Parliament should enact comprehensive legislation covering the field currently regulated by the co-operative scheme. The Committee was particularly concerned by the inability of the co-operative scheme to respond to parliamentary criticism or to accommodate suggestions for reform moved on the floor of the Parliament. In addition, the Committee received evidence from a number of organisations indicating that there is some dissatisfaction about the diffuse decision-making structure which characterises the scheme. Evidence suggested that practitioners and business representatives are uncertain about who, or which government, should be approached when problems arise. In addition, there is a tendency for the scheme to produce what the Chairman of the Ministerial Council, Mr Terry Sheahan, Attorney-General of New South Wales, referred to as `lowest common denominator decisions'.

For reasons which are discussed in some detail in chapter 4 of the report, the Committee rejects the `split scheme' alternative which was proposed by the Commonwealth Attorney-General's Department. According to that proposal, some of the matters currently regulated under the co-operative scheme would be removed from the scheme, and placed under the sole jurisdiction of the Commonwealth's Parliament. The Committee is of the view that the Attorney-General's Department's proposal fails to address the inherent defects in the co-operative scheme. It would leave the remaining areas under the co-operative scheme and would not solve the problems that currently exist. The Committee therefore considers that the Commonwealth Parliament should assume total responsibility for all of the matters covered by the co-operative scheme. It was evident from much of the evidence received by the Committee that a number of business groups and individuals regard the enactment of comprehensive Commonwealth legislation as the next step in a natural progression.

I turn to the scope of constitutional power. The Committee received an opinion from the former Commonwealth Solicitor-General, Sir Maurice Byers, QC. Sir Maurice concludes that the Commonwealth Parliament possesses the necessary constitutional power to regulate all except a relatively small number of non-trading, non-financial companies.

I finally turn to the Committee's recommendation. The Committee has unanimously recommended that the Commonwealth Parliament should enact comprehensive legislation covering the field currently regulated by the co-operative scheme. I commend this report to the Senate. I seek leave to continue my remarks later.

Leave granted; debate adjourned.