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Thursday, 1 March 2007
Page: 36


Senator COONAN (Minister for Communications, Information Technology and the Arts) (10:38 AM) —I move:

That these bills be now read a second time.

I seek leave to have the second reading speeches incorporated in Hansard.

Leave granted.

The speeches read as follows—

AVIATION TRANSPORT SECURITY AMENDMENT (ADDITIONAL SCREENING MEASURES) BILL 2007

Aviation security is a high priority for this Government and is under constant review to ensure that the regulatory framework is responsive to changing threats to the Australian aviation industry.

On 9 August 2006, United Kingdom security services interrupted a terrorist operation involving planned attacks against international aviation targets. The foiled plot revealed vulnerability in the technical capability of aviation security screening points with respect to liquid explosive detection. This vulnerability has prompted the United States, Canada and the European Union to introduce restrictions on the amount of liquids, aerosols and gels that can be carried on board international outbound and domestic flights.

The Australian Government has also moved to deal with these risks.  On 8 December 2006, the Deputy Prime Minister and Minister for the Department of Transport and Regional Services announced that from 31 March 2007 there would be enhanced security measures to limit the amount of liquids, aerosols and gels that can be taken through an international screening point by people who are flying to or from Australia.

This bill makes the amendments to the Aviation Transport Security Act 2004 that are necessary to better manage this vulnerability. The bill amends the power to make regulations to cover liquids, aerosols and gels.  As a necessary enhancement the Act is also amended to allow for appropriate frisk searches at screening points. 

Overall this bill facilitates screening for liquids, aerosols and gels to protect Australians and the Australian aviation industry.


CORPORATIONS AMENDMENT (TAKEOVERS) BILL 2007

Takeovers serve a crucial role in supporting efficient dynamic share markets.  The potential exposure to takeovers encourages companies and their managers to be efficient.  It promotes sound management, better returns for investors and a more efficient allocation of resources.  For takeovers to perform this role, they need to operate efficiently and in an informed market.  

The vigorous takeover activity in Australia in recent years shows that the takeovers provisions in the law have worked well.  There is a dynamic, competitive market for control of companies in Australia.  The Takeovers Panel has played a key part in achieving such a market.

Recent court cases have thrown doubt on the Panel’s ability to keep performing its role as well as it has done.  This Bill will amend the Corporations Act 2001 to ensure that the Takeovers Panel can continue to perform its part in ensuring takeovers are conducted legally, properly and fairly.

Chapter 6 of the Corporations Act 2001 deals with takeovers.  Its aims are set out in section 602.  In particular, one of those aims is that the acquisition of control over voting shares should take place in an efficient, competitive and informed market.

The Takeovers Panel is fundamental to achieving those aims.

The Takeovers Panel was constituted in its present form in March 2000.  Until then, there was a great deal of tactical litigation associated with takeovers.  The Panel was designed to minimise tactical litigation and to replace the courts as the principal forum for resolving takeover disputes during bids.  It was not a judicial body but a panel of experts.  It was to apply its specialist expertise to give fast, informal decisions, having regard to the spirit of the takeover rules in section 602.

The Panel has fulfilled those expectations.  It has operated successfully for some years in the way intended.  The Panel’s processes are as simple as possible.  Applications are determined in an average of 14 days.  Disputes have been resolved faster and tactical litigation has been reduced.

For the first time since it was reconstituted, the Panel was taken to court in 2005, and again in 2006, by a company dissatisfied with the Panel’s decision.  The Court twice considered the Panel’s powers and ruled that they were narrower than the Panel had thought.

Those cases raised concerns that the current law does not give the Panel the powers and jurisdiction it needs to perform effectively the role envisaged for it by Parliament.  The Bill will ensure the Panel has the powers and jurisdiction it needs. 

There are three main changes in the Bill.

The first relates to the definition of ‘substantial interest’.

One large part of the Panel’s power to intervene relies on there being circumstances which affect the acquisition, or proposed acquisition, of a substantial interest in a company.  The court interpreted the phrase ‘substantial interest’ more narrowly than the Panel had done.

The new definition of ‘substantial interest’ in the Bill will mean that phrase is not confined to a narrow set of rights and interests.  It will also allow for regulations to specify that particular interests will not, or may constitute substantial interests. 

Takeovers is an area where new techniques and structures are constantly evolving.  Allowing for regulations will give some flexibility to cover future situations and allow the law to react promptly to new developments where necessary.

The second major change will mean that the Panel can act where it is clear that circumstances will produce certain effects, or are likely to do so.  It need not wait until those effects, and the consequent harm, have actually occurred.

The Panel can presently intervene where it considers circumstances are unacceptable for one of two reasons.  Circumstances could be unacceptable either because of a contravention of the law or else having regard to their effect on the control or potential control of a company or on the acquisition or proposed acquisition of a substantial interest in a company.

The third major change gives the Panel the power to intervene in a third situation: where circumstances are unacceptable having regard to the purposes of the law, as set out in section 602.  The intention is to give the Panel the power to act in order to give effect to the spirit of the law.  For example, it might be that particular circumstances have the effect of causing a control block of voting shares to be traded in an uninformed market.  The Panel could intervene in that situation under the new provision if they considered the circumstances were unacceptable.

The Bill also addresses minor machinery concerns.  For example, it provides that the time-limit for concluding a review of a Panel decision will date from the time of the application for review, not from the earlier decision.

The Panel needs to have adequate powers to perform the role envisaged for it.  The Bill is designed to ensure that it has those powers so it can continue to act as the main forum to resolve takeover disputes, and that it can do so efficiently and effectively.


OFFSHORE PETROLEUM AMENDMENT (GREATER SUNRISE) BILL 2007

Mr President, the purpose of the Offshore Petroleum Amendment (Greater Sunrise) Bill 2007 is to incorporate into the Offshore Petroleum Act 2006 (OPA) the Greater Sunrise Unitisation Agreement which gives effect to the Agreement between Australia and the Democratic Republic of Timor-Leste relating to the Unitisation of the Sunrise and Troubadour Fields.  The Agreement was signed by Australia and Timor-Leste in Dili on 6 March 2003.

The Agreement was incorporated into the Petroleum (Submerged Lands) Act 1967 (PSLA) in April 2004, however due to unforseen circumstances and competing priorities it was not included when the PSLA was rewritten and renamed the Offshore Petroleum Act in 2006.

Mr President, you will recall that in 2004 the policy on this issue was fully debated and agreed to for incorporation into the PSLA.  This exercise today is a matter of formality to have the same details incorporated into the OPA.

The Agreement has been considered by the Joint Standing Committee on Treaties.  The Committee supported the Agreement and recommended that binding Treaty action be taken.

The Agreement provides the framework for development and commercialisation of the petroleum resources in the Sunrise and Troubadour fields, which are collectively known as Greater Sunrise, as a single unit.  This resource straddles the border between the Joint Petroleum Development Area, which is the area of shared jurisdiction between Australia and Timor-Leste established by the Timor Sea Treaty, and an area of Australian jurisdiction.

The Bill puts into place the administrative arrangements for the unit development of the Greater Sunrise petroleum resource.  In practice, this means that Australian regulators and regulators of the Joint Petroleum Development Area will be able to ensure, jointly, that administration of the Greater Sunrise petroleum operations is co-ordinated, and that recovery operations are conducted in accordance with good oil field practice.  To the extent appropriate, the administrative arrangements will mirror those that apply elsewhere under Australian regulatory control. 

There are, however, some aspects of the agreed arrangements that will be specific to administration of the Greater Sunrise petroleum resource.  For example, the process for approving the development plan and the unit operator will be Greater Sunrise specific.  This reflects matters agreed between Australia and Timor-Leste and has no application outside the Greater Sunrise resource.

Mr President, to ensure consistency of administration of development of this resource, the arrangements that usually apply in the Northern Territory adjacent area will be modified to enable the responsible Commonwealth Minister to exercise statutory powers, rather than the Commonwealth Minister working in concert with the counterpart Northern Territory Minister, or instead of the Northern Territory Minister working alone.  In practice, the Australian Government will work with the Northern Territory Government on the day to day administration of the Greater Sunrise resource.

The Agreement includes a mechanism for adjusting the initial petroleum production apportionment between the Joint Petroleum Development Area and Australia if new geological evidence indicates that a revision is needed.

For the purposes of taxation, the part of the petroleum production from Greater Sunrise attributed to the Joint Petroleum Development Area will be taxed in accordance with the arrangements under the Timor Sea Treaty whereby Timor-Leste has title to 90 percent of production and Australia to 10 percent.  The part of production from Greater Sunrise attributed to Australia will be taxed in accordance with Australia's domestic taxation arrangements. 

The Greater Sunrise Unitisation Agreement which was concluded in March 2003 will be replaced by the provisions of the new Treaty between Australia and the Democratic Republic of Timor-Leste on Certain Maritime Arrangements in the Timor Sea (CMATS) when it is ratified by Timor-Leste. CMATS, which was signed on 12 January 2006, will set aside maritime boundary claims for 50 years and lift Timor-Leste’s share of Greater Sunrise revenues from under 18 percent to 50 percent.

I understand that the Timor-Leste will shortly be ready to bring the treaties into force.

Mr President, Greater Sunrise is a world class resource estimated to contain some 8.4 trillion cubic feet of natural gas and 295 million barrels of condensate.  Development of Greater Sunrise has the potential to deliver significant benefits to both Australia and Timor-Leste.  These benefits include investment and employment as well as export revenue.  In addition, development of Greater Sunrise will stimulate increased investment in petroleum exploration and development in the Timor Sea which will be in the interest of Australia and particularly Timor-Leste.  In relation to Australia its development could result in revenues in the order of $10 billion over the life of the field.

Mr President, it is clearly in the national interest of Australia, as well as Timor-Leste, that this Bill be approved.  I reiterate that the issues around this matter were debated in detail upon its introduction the first time in 2004.  Matters between Australia and Timor-Leste have progressed substantially since that time and it is in no party’s interest to delay it any further, particularly as the provisions of the Bill are already in effect under the PSLA.  Their incorporation here is a matter of formality. 


CUSTOMS TARIFF AMENDMENT (GREATER SUNRISE) BILL 2007

Mr President, the Customs Tariff Amendment (Greater Sunrise) Bill 2007 contains amendments that change any references to the Petroleum (Submerged Lands) Act 1967 in the Customs Tariff Act 1995 to the new Offshore Petroleum Act 2006.

This Bill is cognate with the Offshore Petroleum Amendment (Greater Sunrise) Bill 2007 which incorporates into the Offshore Petroleum Act 2006 the Greater Sunrise Unitisation Agreement that gives effect to the Agreement between Australia and the Democratic Republic of Timor-Leste relating to the Unitisation of the Sunrise and Troubadour Fields.

The Agreement was signed by Australia and Timor-Leste in Dili on 6 March 2003 and provides a framework for the development and exploitation of the petroleum resources in the Sunrise and Troubadour fields, collectively known as the Greater Sunrise petroleum resource.

The Agreement was incorporated into the Petroleum (Submerged Lands) Act 1967 in April 2004 and the required consequential amendments were made to the Customs Tariff Act 1995 the same time.  

However due to unforseen circumstances and competing priorities the Agreement was not included when the Petroleum (Submerged Lands) Act 1967 was rewritten and renamed the Offshore Petroleum Act in 2006.

The policy on Greater Sunrise was fully debated and agreed to in 2004.  This exercise today is a matter of formality to have minor amendments reflecting the Offshore Petroleum Act 2006 incorporated into the Customs Tariff Act 1995.


TAX LAWS AMENDMENT (2007 MEASURES No. 1) BILL 2007

This Bill amends various taxation and superannuation laws to implement a range of changes and improvements to Australia’s taxation system.

Schedule 1 amends the tax secrecy and disclosure law to allow the Commissioner of Taxation to disclose certain taxpayer information to officers in the Project Wickenby taskforce.  It also allows this disclosure of information for similar taskforces that may be established in the future.  Project Wickenby is a multi-agency taskforce addressing tax avoidance and evasion involving the use of off-shore entities.  The amendments will enable agencies to better share information to aid concerted law enforcement, without compromising the general protection of taxpayer privacy.

As part of the 2006-07 Budget, I announced that the ATO’s responsiveness to superannuation guarantee inquiries would be improved. 

Schedule 2 to this Bill amends the Superannuation Guarantee (Administration) Act 1992 to allow the Commissioner of Taxation to provide information to an employee in response to a complaint that an employer has not complied with its superannuation guarantee obligations.  For example, this will allow employees to obtain more information on the progress of their inquiries about the non-payment of superannuation guarantee contributions.

These changes are aligned with the findings and recommendations of both the Royal Commission into the Building and Construction Industry, and the Senate Select Committee on Superannuation and Financial Services.

Schedule 3 amends the Income Tax Assessment Act 1936 and other taxation Acts to extend the employee share scheme concessions to certain stapled securities. The amendments relate to stapled securities consisting of an ordinary share and another security that is attached or stapled to the share, provided the stapled security is listed for quotation on the official list of the Australian Securities Exchange.  It also extends related capital gains tax and other relevant provisions.

Currently, when an employer does not have any unstapled ordinary shares on issue, it is difficult to provide employees with access to the employee share scheme concessions.  This is because the components of a stapled security must be treated separately for certain taxation purposes — the share under the employee share scheme provisions, and the other security, such as a unit in a trust, under the fringe benefits tax provisions.

Full details of the measures in this Bill are contained in the explanatory memorandum.

Ordered that further consideration of the second reading of these bills be adjourned to the first sitting day of the next period of sittings, in accordance with standing order 111.

Ordered that the Offshore Petroleum Amendment (Greater Sunrise) Bill 2007 and the Customs Tariff Amendment (Greater Sunrise) Bill 2007 be listed on the Notice Paper as one order of the day, and the remaining bills be listed as separate orders of the day.