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Monday, 4 May 1987
Page: 2254


Senator WATSON(8.21) —I move:

That the Senate take note of the paper.

Honourable senators will recall that an agreement was reached on 22 December 1978 between the Commonwealth and each of the States to establish a National Companies and Securities Commission. The report of the Commission for the year 1985-86 draws our attention to the fact that, over recent years, there has been a significant transformation in the market for financial services. For example, technical developments associated with computers and satellites have contributed in the move towards the internationalisation of the financial community.

While many unprincipled operators have taken advantage of the opportunities provided by deregulation and internationalisation, parliaments have been slow to recognise the dangers that have been inherent in those changes. The report notes that, during the year, the volatility of exchange and interest rates caused great pressures on the stock market. Throughout the financial sector, there has been a surge of entrepreneurial activity, and that has combined with changes in patterns of savings and superannuation to produce a rapid growth of collective investments.

It should be noted, however, that that entrepreneurial enthusiasm, which has become such a feature of the Australian and international financial markets, is not confined to the honest and scrupulous. The speed with which changes are taking place has meant that opportunities for finding loopholes in the law have been exploited at the cost of the uninformed. For example, Australian citizens have been sold worthless foreign shares, and a number of sophisticated and questionable, although technically legal, initiatives have been developed and have proven very profitable for some people. Over the past year, there has been a marked increase in litigation generated from takeover bids, and a number of legal actions were initiated between commercial adversaries and against the National Companies and Securities Commission.

It is indeed regrettable that the Commission and its Chairman, Mr Henry Bosch, have come under considerable criticism from some quarters, although that is not surprising given the huge sums of money that are tied up in today's stock and share markets. The growth of monopoly power, which is becoming obvious in Australia, is reason for some concern. Over the past several years, there has been a spate of unhealthy takeovers by people not really interested in the well-being of the companies they acquire, but only in quick financial gain. However, not all takeovers are successful. I commend those companies that have successfully fought off takeover attempts. In recent months, the board of Humes Ltd warded off a takeover by Mr Gary Carter of Unity APA, which subsequently experienced a drop in the price of its shares after the failure of its bid. That is an indication that such organisations may be stretching themselves too far in the takeover processes. Since that report, there has been another case worthy of mention-the Fairfax acquisition of HSV7. The new management has come to realise that it paid too much for the station and, consequently, has been forced into harmful staff reductions to recoup its initial costs.

Only last week, newspapers carried articles relating to the concentration of wealth in Australia. Data compiled by Mr John Piggott of the University of Sydney's economics department shows that one-tenth of the population owns 60 per cent of all wealth in Australia. That is contrasted with the fact that some two million Australians live below the poverty line. Either section 46 of the Trade Practices Act, which deals with the misuse of market power, does not have enough teeth, or the Government is not serious about containing monopolies.

I suggest, first, that our taxation laws have the effect of encouraging takeovers and, secondly, that insufficient attention is paid to the ways in which the current trend to manipulate the stock market at the cost of the viability of many companies can be reversed. The valuable work that is undertaken by the National Companies and Securities Commission should command far more of the Government's attention, and I therefore commend this report to the Senate.