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Wednesday, 8 December 2004
Page: 122


Senator WONG (6:05 PM) —I rise to speak on the James Hardie (Investigations and Proceedings) Bill 2004. If we were to document Australian corporate history, it is highly likely the most alarming and unethical chapter would concern James Hardie Industries Ltd. For decades the health risks of asbestos have been known and, in spite of this knowledge, James Hardie continued to produce asbestos until 1987. Thousands of Australians have fallen ill and many have died as a result of asbestos related diseases. These illnesses are painful and terminal. The victims have not just been those who suffered and suffer from diseases like mesothelioma—the James Hardie workers—but also their families. These were the victims' loved ones, the people for whom the workers were trying to build a better life. Now they are left with little; they have lost what is most important and they are left to fight for compensation. James Hardie has gone to considerable and unethical lengths to avoid paying this compensation. Indeed, it appears that if James Hardie had taken as much care of its workers as it has in avoiding its liabilities we might be thinking of them in a better light.

The ALP have been doing everything in our power to support James Hardie's victims and to pressure James Hardie to do the right thing. Some months ago Mark Latham decided that Labor would not accept the donation from James Hardie to the party and, instead of giving the money back to James Hardie, he gave the money to sufferers of asbestos diseases. It is interesting to note that during the election campaign, two weeks from election day, the Prime Minister finally jumped on this bandwagon and decided that he should not accept the money from James Hardie either.

The newly elected member for Parramatta has also been a key player in putting this issue in the public eye. She has worked with local families in her community, lobbying, agitating and doing all the things a local champion should. With the Construction, Forestry, Mining and Energy Union, she helped organise a council boycott of James Hardie products, with over a dozen councils now participating. It is interesting to contrast the actions and position taken by the ALP and the member for Parramatta with those taken by the member for O'Connor. Last night we saw an extraordinary contribution to the House of Representatives—an extraordinary defence of James Hardie. Indeed, one might say the member for O'Connor is in the smallest club in the nation: he is the sole shareholder and director of the James Hardie fan club. His comments likening Hardie victims to `ambulance chasers' were offensive and completely lacking in compassion. I call on him to apologise to James Hardie workers and to asbestos victims, sufferers and their families for his comments.

The Australian Council of Trade Unions have also been at the centre of the victims' struggle. The ACTU have been with the Hardie victims all along, negotiating, organising and leading the public movement to stop the injustices. This is the same ACTU that this government would prefer did not exist and will be trying to dismantle over the next three years. I congratulate the ACTU on their work, a fine example of the collective spirit that underpins the trade union movement. I also acknowledge the fine and courageous work of the victims, their families and their supporters in their campaign for justice for asbestos disease sufferers. Currently negotiations are continuing between James Hardie, the Medical Research and Compensation Foundation, and the ACTU on behalf of claimants, for additional funds to be paid to the foundation by James Hardie. Legislation like this before the chamber is strongly supported by our community as a necessary measure to pressure Hardie and to ensure that justice is done.

The actions of James Hardie in relation to victims of asbestos related diseases are reasonably well known. The company engaged in a complex corporate restructure, separating subsidiary companies with liabilities and transferring assets offshore to a Dutch-registered legal entity. The company also established the Medical Research and Compensation Foundation, ostensibly to deal with the claims of all victims of asbestos related diseases against the various companies comprising James Hardie. Despite the clear public assurances of James Hardie officers that the foundation was sufficiently funded to meet its liabilities, it has become clear that a substantial funding shortfall exists, currently estimated to be in excess of $1.5 billion. In addition, the financial state of the foundation was debilitated by the cancellation of partly paid shares by the former parent company subsequent to the corporate restructure being authorised by the New South Wales Supreme Court. The cancellation effectively removed an additional potential funding source for the foundation and occurred despite the existence of the shares being relied on in the court proceedings to approve the corporate restructure.

The New South Wales government has provided pivotal support for Hardie victims from the beginning. Premier Carr and Attorney-General Debus have applied pressure on Hardie management and used whatever means at their disposal to force its hand. The New South Wales government established the Jackson special commission of inquiry, in which adverse findings were made against various Hardie executives. Subsequently the Australian Securities and Investments Commission announced it would fully investigate these matters. The New South Wales government has liaised extensively with ASIC to assist it in carrying out its investigations. It passed a bill providing for the statutory transfer of all records produced for or created by the special commission. However, the New South Wales bill does not abrogate legal professional privilege or confidentiality in the records for the purposes of ASIC's civil or criminal proceedings. This was identified by ASIC as a potential limitation and ASIC sought that this legal professional privilege be abrogated by the New South Wales government. That government rightly took the view that it was not appropriate for a state government to seek to pre-empt Commonwealth decision making on ASIC's powers, which could effectively put the regulator in a more favourable position under New South Wales legislation than it would be under its own Commonwealth act.

Some weeks ago, the New South Wales Attorney-General wrote to the federal Treasurer, requesting his urgent consideration of this shortcoming in ASIC's powers. As a result of this initiative, we now have this bill. Given this background, it is disappointing that the Treasurer sought to imply, both in the parliament last week and in a subsequent media statement, that the bill arose out of the failure of the New South Wales government to act appropriately or swiftly in respect of Hardie. A cynical person might question the Treasurer's motives in making such an implication. Certainly we would hope that he is not seeking to play politics on such a sensitive issue. We on this side of the chamber support this legislation and its speedy passage through the parliament. We believe the circumstances of asbestos victims and the conduct of James Hardie justify the legislation.

The bill significantly enhances the ability of ASIC or the Director of Public Prosecutions to undertake investigations and take proceedings against corporate bodies that are part of the James Hardie group, its officers, employees or advisers. The bill expressly abrogates legal professional privilege in relation to certain materials, permitting their use in these investigations or proceedings. Materials include records used in the special commission, as well as materials requested by ASIC or the DPP in relation to their investigations. The investigations and proceedings for which privilege is abrogated are limited to the circumstances of the restructure I described earlier, including Hardie's ability to meet its liabilities. The bill effectively removes any uncertainty as to whether ASIC's powers to require the provision of materials can be obstructed by a claim of legal professional privilege. Whilst there is broad support for this bill in the community, in parliaments around the country—with the exception of the member for O'Connor—and amongst those who are supporting the cause of Hardie victims, some concern has been expressed by the Law Council and in legal circles about the implications of this bill.

It is indeed a serious matter to abrogate legal professional privilege. We on this side do not take lightly any move of this kind and would see that this is not a precedent. However, the investigation of these important issues may be impaired if ASIC or the DPP were unable to obtain and rely upon materials before the Jackson inquiry, on the basis of a claim of legal professional privilege. In particular, the subject matter of many of the things which require investigation include complex transactions. Materials documenting relevant advice may offer critical evidence as to the purpose of these transactions and the intention of James Hardie officers, which would otherwise be extremely difficult to establish. Without the measures provided for in this bill, we may not be able to establish the knowledge and intention of James Hardie officers. We believe not only that there is a public interest in establishing these things but also that they are likely to be critical in determining whether any breaches of the law have occurred.

There are many alarming findings of the Jackson inquiry which require further investigation by ASIC. Adverse conclusions were made against Peter Macdonald and Peter Shafron, as chief executive officer and chief financial officer respectively. Commissioner Jackson also found that Mr Macdonald and possibly James Hardie Industries Ltd may have been in breach of section 1309 of the Corporations Law and that their decision to send a media release asserting that liabilities were covered to the Australian Stock Exchange on 16 February 2001 contravened section 995(2) of the Corporations Law. It is fundamental to the public interest that these allegations be investigated and tested.

The opposition will be supporting the legislation. However, we do flag a number of issues on which we request some advice, and I will indicate them to the minister: why there was a decision not to extend to the ACCC similar provisions to those extended to ASIC, and whether or not personal legal professional privilege will be retained by Hardie's officers. This bill is specifically intended for Hardie, and it is intended to facilitate justice for its victims, who have been undermined, mistreated and misled. This bill has no wider application, but if it were to have any wider effect I hope it would be simply to discourage corporate misbehaviour of this kind in the future. I know that many good Australian corporate citizens have been shocked and horrified by Hardie's actions.

Of course, for ASIC's investigation to be effective it needs to have not only the information required but also the necessary funds. It was particularly disturbing to see on Business Sunday two weeks ago ASIC's Chairman, Mr Jeffrey Lucy, indicating that the organisation needed further funds to fully investigate Hardie. We call on the Treasurer to guarantee in no uncertain terms that the government will provide immediately the funds required for ASIC to fully investigate James Hardie. The opposition want a full, prompt and thorough investigation by ASIC, and any wrongdoing to be addressed as soon as possible. This matter has dragged on for far too long for too many innocent Australians.

I would like to turn to one other issue arising out of the Jackson inquiry. The New South Wales government has announced legislation which seeks to enable asbestos victims to take action against related corporations, including the Dutch-registered entity. The Commonwealth has indicated support for this legislation. However, there is a lack of clarity as to the enforceability of any judgments under this legislation in the Netherlands. In particular, the Jackson inquiry queried whether laws that were retrospective and Hardie specific would be enforceable in the Netherlands in the absence of a treaty. The legislation proposed by the New South Wales government and endorsed by state and Commonwealth attorneys-general is specifically directed at Hardie and is retrospective. Therefore, a treaty would appear necessary. However, when commenting in favour of the New South Wales legislation, the Commonwealth Attorney-General claimed that Dutch authorities had advised that, in general, it was not necessary to set up a treaty with the Netherlands for conventional Australian court judgments. But this is not what the New South Wales legislation is likely to deliver. Previously, the Attorney-General indicated that the government would consider pursuing a treaty. We call on the Attorney-General to table the advice he has received as to whether a treaty is necessary. Victims and their families deserve certainty. They need to know that any court proceedings and charges that are successfully prosecuted will have the full force of the law behind them. They need to know that no sanctuary and no succour can come from the change of address on Hardie's letterhead.

The financial state of the foundation remains parlous. Its directors recently sought the appointment of a provisional liquidator and have indicated that without further cash injections by James Hardie the foundation will have to be liquidated. This process was temporarily averted by a last-minute cash injection of $88 million by the former James Hardie parent company, and these proceedings have now been adjourned until late January next year. The potential liquidation of the foundation has ramifications not only for future and current unpaid claimants but potentially also for those persons who have received payments to date. In this parliament we need to do all that we can to see justice prevail for Hardie's victims. More than anything, however, we need to see James Hardie take its seat at the table and negotiate in good faith to see this matter resolved. James Hardie must immediately agree upon a fully funded settlement arrangement for asbestosis victims.

I want to briefly comment on the second reading amendment which Senator Murray has flagged with me. I indicate that the Labor Party would be very happy to support paragraph (a) of that second reading amendment. It is entirely consistent with the strong position we have taken for a number of months, including during the election campaign, against James Hardie's actions and its callous disregard for the victims of asbestos related diseases. However, we are not in a position to support paragraphs (b) and (c), which deal directly with tobacco companies. I indicate that the Labor Party have also taken a strong position in relation to tobacco companies. Unlike the government, we have indicated that we would no longer take political donations from tobacco companies. We hoped that the government would engage in some bipartisanship on that issue and we challenged them to do the same thing.

We also, in our previous election commitments, indicated a substantial increase to funding for antismoking campaigns and antismoking programs. We are not soft on tobacco companies; we have taken an extremely strong position. However, we think tacking that aspect of public policy onto this legislation is not appropriate. The issue of the abrogation of legal professional privilege is a difficult matter. It is justified in the circumstances of James Hardie, where we have had the Jackson inquiry and where we have the information to demonstrate that that is the case. If such legislation were mooted in relation to tobacco companies, we would obviously examine it in light of our previous policy commitments to support antismoking campaigns and to refuse to take political donations from the companies. However, we are not prepared to support the second part of Senator Murray's second reading amendment.

In closing, I emphasise again that bipartisanship—except for the member for O'Connor—across parliaments around this country to pressure James Hardie to fund an appropriate settlement fund for asbestos victims is welcome. This parliament does call on James Hardie to do the right thing. The community calls on James Hardie to do the right thing. What they have engaged in has been unethical. It has not been in accordance with the standards of ethical behaviour we do expect from Australia's corporations. Hardie's victims and their families deserve far better than the company have provided to date. They must immediately agree to fully funded settlement arrangements for asbestosis victims.