Senator ABETZ (Special Minister of State) (12:23 PM) —The James Hardie (Investigations and Proceedings) Bill 2004 will facilitate a thorough and effective investigation by the Australian Securities and Investments Commission, ASIC, of matters arising out of the James Hardie Special Commission of Inquiry in New South Wales. It will also enable proceedings that may arise from these investigations to be brought by either ASIC or the Commonwealth Director of Public Prosecutions, the DPP. It is expected that many crucial documents will be subject to claims of privilege by James Hardie.

Honourable senators, in their contributions during the second reading debate, have gone through the detailed provisions of the bill, some of the High Court history—the decisions that have been made—and the reasons behind this bill, so I will not canvass those issues. Senator Wong and Senator Murray raised a number of queries and I will deal with those now. Senator Wong queried whether this bill should also apply to the ACCC. In this regard, I emphasise the government is very conscious of the fact that legal professional privilege is an important common-law right that should only be abrogated if there is a clear public interest in doing so. ASIC is the lead regulator in the investigation of matters raised by the James Hardie Special Commission of Inquiry. ASIC will work closely with the ACCC where this is appropriate. While it is important that no areas of potential action be overlooked, we should avoid a duplication of investigations. Such duplication would waste resources and, more importantly, could impede a quick resolution of the issues raised.

ASIC has broad powers to recover civil damages. For example, section 50 of the ASIC Act allows ASIC to begin a civil proceeding on behalf of a third party for the recovery of damages for fraud, negligence, default, breach of duty or other misconduct in the public interest. I understand that New South Wales yesterday passed legislation enabling the ACCC to use the documents from the Special Commission of Inquiry into James Hardie. If it had chosen to, New South Wales could have removed legal professional privilege in respect of those documents. For some reason, it chose not to do so. Whilst the Commonwealth believes that a full range of remedies is available to ASIC, it will consider advice from ASIC on whether other agencies have a role to play or require additional power to play such a role. In the meantime, it is important that ASIC, as the lead regulator, be allowed to get on with its investigation.

Another issue raised by Senator Wong was whether the bill abrogates legal professional privilege in relation to claims of privilege by James Hardie officers. The answer to that question is yes. Subclause 4(1) of the bill abrogates all legal professional privilege in relation to James Hardie material for the purposes of a James Hardie investigation or a prosecution. Legal professional privilege is abrogated regardless of who is making the claim. This will ensure that ASIC has access to the information that is required for a comprehensive investigation of the James Hardie group, its directors and officers and its advisers. Subclauses 4(2), 4(3) and 4(4) have been included to avoid any doubt that legal professional privilege in relation to James Hardie material does not prevent ASIC or the DPP exercising their powers to obtain material or admitting it as evidence for a James Hardie investigation or proceeding.

The issue of ASIC's funding and its adequacy was also raised by Senator Wong. The government is committed to ensuring that the corporations regulator is sufficiently funded to discharge all of its responsibilities. It has an annual budget of about $200 million and spends about a third of that on enforcement matters. ASIC's current funding level is the highest it has ever been, with funding increased by more than $60 million across four years in the 2004-05 budget. The government will consider any additional funding requirements in the context of the budget processes and make any announcements in due course.

Another relevant issue Senator Wong raised was the enforcement of judgments overseas. The Australian government has been advised by Dutch and US authorities that, in general, Australian court judgments can form the basis of legal action in their respective jurisdictions. As such, it is the government's position that treaties are not required. The government has been involved in communications with Dutch and US authorities regarding procedures for the enforcement of Australian judgments in those countries.

Senator Murray raised an issue in relation to the James Hardie letter. Senator Murray noted concerns raised by James Hardie in correspondence dated 8 December 2004. This correspondence was tabled in the Senate on the same day, which was yesterday. The key question this letter raises is whether the existing bill goes too far in abrogating legal professional privilege. The government does not agree that the bill goes too far. The bill is appropriately targeted by limiting the abrogation to material for the purposes of, or in connection with, a James Hardie investigation or related proceeding. James Hardie investigations are tightly defined in the legislation, covering those matters that were identified by the special commission of inquiry as involving possible misconduct by the James Hardie group. Restricting the current definition could exclude important material.

It is also important to note that the bill does not expand ASIC's investigation powers under part 3 of the ASIC Act. Rather, it allows ASIC to examine material that would otherwise be subject to legal professional privilege. This is not unprecedented. Indeed, it confirms a longstanding interpretation of ASIC's powers dating back to the 1991 decision of the High Court in the Yuill case, which was only called into question recently.

Finally, I would like to address the second reading amendment moved by Senator Murray on behalf of the Democrats. The government will not support paragraphs (b) and (c) of Senator Murray's amendment. The abrogation of legal professional privilege is very serious, and any consideration of abrogating this important common law right in other circumstances should be carefully considered. Today we are here to abrogate legal professional privilege to allow ASIC to conduct a comprehensive investigation into the James Hardie group, its directors and officers and its advisers.

In conclusion, I would emphasise that the government places great store in ethical behaviour by corporations. It does not condone or support companies that restructure their affairs to avoid their legal liabilities to the victims of their products. That sort of behaviour is unconscionable and should be prosecuted to the full extent of the law. The government remains of the view that James Hardie should honour its obligation to compensate those victims who have a legitimate claim against the company for asbestos related diseases. I thank honourable senators for their contributions to this debate.

Senator Wong —Is it possible for paragraphs (a), (b) and (c) of the second reading amendment to be put in seriatim?

The ACTING DEPUTY PRESIDENT (Senator Moore)—There being no objection, that is possible. The question is that paragraph (a) of the amendment moved by Senator Murray be agreed to.

Question agreed to.

The ACTING DEPUTY PRESIDENT —The question is that paragraph (b) of the amendment moved by Senator Murray be agreed to.

Question negatived.

The ACTING DEPUTY PRESIDENT —The question is that paragraph (c) of the amendment moved by Senator Murray be agreed to.

Question negatived.

Original question, as amended, agreed to.

Bill read a second time.