Today I introduce a Bill to facilitate a thorough and effective investigation by the Australian Securities and Investments Commission—ASIC—in relation to matters arising out of the James Hardie Special Commission of Inquiry in New South Wales. The Bill will also facilitate proceedings that may arise from these investigations, which may be brought by ASIC or the Commonwealth Director of Public Prosecutions—the DPP.

There is considerable community concern about the conduct of James Hardie across a number of years and particularly in relation to the separation of subsidiary companies with liabilities via a group restructure, the transfer of key assets offshore in that restructure and the subsequent underfunding of obligations to compensate those victims who have a legitimate claim against James Hardie for asbestos-related diseases.

These obligations have recently been estimated at approximately $1.5 billion. However, the figure could be as high as $2 billion as the number of victims identified increases. This figure may increase further as the second and third waves of people who have been exposed to asbestos products manufactured by James Hardie contract asbestos-related diseases.

The Government remains of the view that James Hardie should honour its obligation to compensate those victims who have a legitimate claim against James Hardie for asbestos-related diseases.

In addition, a thorough investigation of the conduct of James Hardie, with proceedings brought where misconduct is found, is essential to maintaining community confidence in the Australian corporate regulatory regime.

Mr President it is the Government's view that ASIC must conduct a comprehensive investigation into the conduct of the James Hardie Group, its directors and officers, and its advisers. The investigation of possible contraventions of the Corporations Act may be impaired if ASIC and the DPP cannot obtain and use material obtained by the Special Commission which is subject to claims of legal professional privilege.

It is expected that many crucial documents will be subject to claims of privilege by James Hardie. The transactions that will be the subject of investigation are of a complex nature, and were the subject of extensive legal advice and assistance. Materials documenting this advice may offer critical evidence as to the purpose and nature of certain transactions. Such evidence may be unavailable from any other source.

To address this concern, the Bill will expressly abrogate legal professional privilege in relation to certain materials, allowing their use in investigations of James Hardie and any related proceedings. This means that authorised persons, including ASIC and the DPP, will be able to obtain materials that would otherwise be subject to legal professional privilege and use them for the purposes of James Hardie investigations and proceedings.

The Bill will confirm a longstanding interpretation of ASIC's investigative and enforcement powers which was cast into doubt by the decision of the High Court in 2002 in the Daniels case. That case created some uncertainty as to whether the 1991 decision of the High Court in the Yuill case would be followed today if a request by ASIC to produce material subject to legal professional privilege was to be challenged.

In the Daniels case, the High Court found that legal professional privilege is not merely a rule of substantive law but an important common law right that cannot be abrogated by statute without express words or an unmistakeable implication. Nevertheless, there are situations in which its abrogation is justified in order to serve higher public policy interests. One such situation is the effective enforcement of corporate regulation.

The Bill addresses a number of limitations of recent NSW legislation that provided for the transfer to ASIC of all records produced to or created by the NSW Special Commission of Inquiry. Even though ASIC requested it, the NSW Act did not address the legal impediments to the use of those records by ASIC and the DPP in investigations or proceedings. As a result, the Commonwealth Parliament will be asked to pass this law to remedy the situation.

In accordance with the Corporations Agreement, I have notified the relevant State and Territory Ministers about the Bill.

The Government shares the community's concern about the difficulties faced by the victims of asbestos disease and their families and wishes to ensure that they are treated fairly. We also place great store in ethical behaviour by corporations. We do not condone or support companies that restructure their affairs to avoid their legal liabilities to those people whose suffering is very great and whose lives are shattered by horrible disease. That sort of behaviour is unconscionable and should be prosecuted to the full extent of the law.

I commend the Bill to the Senate.