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Thursday, 14 June 2007
Page: 171
Senator BRANDIS (Queensland —Minister for the Arts and Sport) [7:32 PM] —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—

CORPORATIONS LEGISLATION AMEND-MENT (SIMPLER REGULATORY SYSTEM) BILL 2007

The Government is delivering on reducing the regulatory burden for Australians. Australia is experiencing one of the most successful periods of economic growth since Federation. The current unemployment rate is at a 32 year low of 4.4 per cent; business investment continues to be strong, and both business and investor confidence is high. This is evidenced, for example, in the growth of the managed funds industry, which recently increased to $1.1 trillion in consolidated assets.

These results have not been coincidental. The management of the Australian economy over the last 11 years has involved consistently sound decision-making and prudent judgement. The Government has focused on the three policy levers of productivity, population and participation as the key elements to forging this success.

We, in the Howard Government, have determined that cutting red tape is one of the most important investments we can make in enhancing productivity gains. One of the ways I believe we can do this is by looking at options to allow business to get on with conducting business.

The Government recognised the importance of this in commissioning the Banks Taskforce to identify practical options to reduce regulatory burdens on business. In response to the Taskforce’s recommendations, the Government has implemented a number of initiatives, including improved regulation-making and as part of that, an expanded role for the new Office of Best Practice Regulation to ensure objective, comprehensive analysis of compliance costs and competition impacts of all regulatory proposals.

Further, the Government is also focusing on its commitments under the regulatory reform stream of the COAG National Reform Agenda to reduce the regulatory burden imposed by all three levels of government, and is developing an annual red tape reduction agenda, informed by annual reviews of regulation undertaken by the Productivity Commission.

Today I introduce a package of measures that will further deliver on the Government’s commitment to reducing red tape. This Bill will make the corporate and financial services regulatory system simpler.

By contributing to greater business efficiency and productivity, the Bill will, in turn, contribute to economic growth and better living standards for all Australians.

The Bill is the culmination of extensive consultation with stakeholders. It shows that when this Government sets out to reduce red tape, it delivers.

Despite some suggestions to the contrary, the feedback from the community has shown that there are no easy solutions when dealing with the important balance between maintaining investor protections, and enhancing business productivity. This Government has tackled these issues though, and is committed to simpler regulation.

The outcome of the consultative process with the business and investor community is a package of 32 measures to simplify and streamline Australia’s corporate and financial services laws.

The Bill will reduce the burden of regulation in the areas of:

  • financial services regulation;
  • fundraising;
  • company reporting obligations;
  • auditor independence;
  • corporate governance,
  • takeovers; and
  • general compliance.

The provisions in this Bill will achieve better disclosure outcomes, enhance auditor independence and improve enforcement arrangements in the event of corporate misbehaviour.

The Bill will amend various provisions of the Corporations Act 2001 and related Acts, to improve the efficiency of corporate and financial services regulation. The majority of these provisions are based on the proposals outlined in the Corporate and Financial Services Regulation Review Proposals Paper, which I launched in November last year.

Over one hundred submissions were received in response to this paper, which emphasises the significant interest that both industry and consumer representatives have in progressing these reforms. The Bill, importantly, includes some additional measures to address issues which arose during consultations.

The Bill will also implement the Government’s response to several recommendations relevant to corporate and financial services regulation, which were made in the Rethinking Regulation report of the Banks Taskforce.

The second intergenerational report clearly indicates that our future prosperity depends on the policy decisions that we make now: The establishment of the Future Fund and the reform of the superannuation industry are examples of how this Government is setting the foundations for long-term economic prosperity, rather than solely concentrating on short-term financial gains. This Bill builds on these reforms by facilitating improved access for investors to sound and affordable financial advice.

In this way, the Bill also complements the policies being progressed through this Government’s superannuation reforms, by improving all Australians’ ability to plan effectively for their financial futures by growing their superannuation assets.

Financial services regulation

As individuals and households accumulate greater wealth and are looking to fund their futures, there is a growing need for them to get access to appropriate financial advice.

A key measure in this Bill will improve the ability of all Australians to access financial advice. It will do this by making the provision of advice in relation to smaller investment amounts more cost effective. This will be achieved by enabling financial advisers to provide clients with a Record of Advice, where the investment amount is under a prescribed threshold, rather than a full Statement of Advice.

A Record of Advice is a more concise document, and is easier to produce for advice in relation to smaller investment amounts. It is also more appropriate where the cost of producing a full Statement of Advice is otherwise likely to make financial investment advice beyond the reach of many Australians.

The proposed threshold will be set at $15 000 under regulations that will support the Bill. This targeted measure will therefore provide better incentives for Australians to seek the advice they need about their investment decisions.

In an environment which provides Australians with choice of super fund, this measure can be expected to enhance the ability of investors to consolidate existing superannuation amounts up to the prescribed limit, and thereby assist them to fulfil their financial aspirations.

However, let me be clear. Whether an investor received a Record of Advice or a Statement of Advice, the financial advice given must be made on a reasonable basis, having regard to the client’s circumstances.

Fundraising

In the International Monetary Fund’s ‘World Competitiveness Yearbook 2006’, Australia ranked 3rd of 61 countries for the protection of shareholder rights and share market financing.

This Bill will assist in maintaining Australia’s excellent international reputation in this area.

I recognise that corporate entities in our financial markets need to raise funds quickly and at a low cost if they are to expand their business activities within and outside Australia.

This Bill includes initiatives to facilitate corporate fundraisings by streamlining regulatory processes. This will be achieved through various measures, including by aligning certain disclosure requirements and removing inconsistencies between different parts of the law. At the same time, the relief provided is made subject to conditions in order to maintain an appropriate level of Investor protection.

The Government seeks to encourage employee ownership of companies through employee share schemes, given the many benefits it is recognised as bringing to the wider economy. The Bill will increase the opportunities for unlisted companies to establish employee share schemes by removing certain restrictions without diluting important protections.

Through this Bill, the Government is also reducing the cost of raising funds by corporate entities through various means, in particular, by removing some burdensome disclosure requirements. The Bill will ensure that sensible conditions are maintained such that all material information is provided to the market before the issue can proceed.

Company reporting obligations

Australian companies should not suffer under the weight of excessive reporting obligations. Feedback received in response to my November 2006 paper suggested that company reporting could be reduced, without compromising the need for the Australian public to have access to important company information.

In line with the Banks’ recommendations, the Bill will simplify company reporting obligations.

Importantly, the Bill will increase the thresholds used to define a ‘large proprietary company’, which will result in a reduction in the number of proprietary companies required to lodge audited financial reports. The amendments, which will increase the current operating revenue and assets thresholds by 150 per cent, ensure that only economically significant proprietary companies are required to lodge such reports. This measure will result in cost savings for 33 per cent of companies currently required to report.

In this way, the Government is addressing the concerns of smaller business enterprises that reporting obligations should be proportionate to the size of their operations. To ensure that the monetary thresholds keep pace with economic growth, the Bill also allows future changes to the thresholds to be prescribed under regulations.

The Government recognises the importance to companies of being able to choose how best to communicate with shareholders in an effective and timely manner.

Australians are increasingly making use of the internet and in recognising this, the Bill brings the corporate law into the modern age by allowing companies to make annual reports available on the internet, and only require hard copies to be sent to shareholders who request them.

This will result in significant costs savings to business but importantly, shareholders will continue to have the opportunity to elect to receive hard copy annual reports free of charge. These amendments are also expected to deliver environmental benefits for the broader community.

The Bill also reduces compliance costs through: streamlined executive and director remuneration disclosures; simplified notifications to ASIC; more flexible payment arrangements for annual company fees; and improved company deregistration procedures.

Auditor independence

In the global economy, it is important that the independence of auditors is appropriately regulated.

The Bill will implement a number of improvements and reduce complexity in this area following from comments on my November paper and the results of the recent comparative review of Australia’s auditor independence requirements.

Corporate governance

Australia has a robust corporate governance regulatory framework. This Bill further balances the needs of business to operate efficiently while upholding shareholder expectations about company behaviours and operational standards.

The rules regarding related party transactions are an important check on the powers of the board to manage a public company. However, obtaining member approval for every related party transaction imposes a disproportionate compliance expense on companies in cases where the value of the transaction is relatively low.

This Bill will remove the requirement for member approval for such transactions that are at or below a prescribed minimum level, aggregated over a financial year. This rule will strike a better balance between measures to guard members from improper conduct, and excessively burdensome procedural requirements.

Takeovers

Experience has shown that telephone monitoring during takeover bids and 85 per cent notices impose onerous obligations without demonstrated investor benefits.

The Bill will, therefore, repeal these requirements. Compliance

The Bill enhances regulatory processes in various other ways including by allowing companies to register company charges electronically, thereby making that process more efficient.

Consultation processes

The Bill has been developed following extensive consultations on the proposals and the Government appreciates the participation of stakeholders in the process.

Under the Corporations Agreement between the Commonwealth and the States and Territories, certain elements of the Bill needed to be considered by the Ministerial Council for Corporations. The Ministerial Council has approved those provisions.

The Bill is another significant instalment in the Government’s overall objective of reducing red tape for the benefit of all Australians.

To ensure that the Australian community can lake the earliest possible advantage of the Bill’s red tape reductions, it is my desire that the Bill be passed as soon as possible by the Parliament.

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


CORPORATIONS (FEES) AMENDMENT BILL 2007

The Corporations (Fees) Amendment Bill 2007 supports the Corporations Legislation Amendment (Simpler Regulatory System) Bill 2007.

The Bill makes a minor amendment to the Corporations (Fees) Act 2001 to allow a fee to be charged in respect of some additional market supervision functions which the main Bill will vest in the corporate regulator.

The Bill shows that the Government recognises the Importance of maintaining confidence in financial markets and anticipating the needs of all market participants.

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


CORPORATIONS (REVIEW FEES) AMEND-MENT BILL 2007

The Corporations (Review Fees) Amendment Bill 2007 supports the Corporations Legislation Amendment (Simpler Regulatory System) Bill 2007.

The Bill will amend the Corporations (Review Fees) Act 2001 to provide companies with the option of paying their annual review fees up front to cover a period of 10 years. The reform will reduce transaction costs for companies that take up this option, complementing other reforms that remove the need for companies to interact with the corporate regulator annually.

In particular, this measure recognises the importance of businesses to interact with government authorities more effectively. The Bill also responds to the need to enhance the efficiency with which businesses can comply with their corporate law obligations.

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


FAMILIES, COMMUNITY SERVICES AND INDIG-ENOUS AFFAIRS LEGISLATION AMENDMENT (CHILD CARE AND OTHER 2007 BUDGET MEASURES) BILL 2007

The primary purpose of this bill is to give effect to the Government’s two key child care measures from the 2007 Budget.  These measures are a substantial part of the extra $2.1 billion investment which focuses on helping Australian families with their child care costs.  The extra investment will take the total projected expenditure in child care over the next four years to $11 billion.  Parents will have more choice about participating in the workforce and children will have more opportunities for quality child care.

The first measure provides for a 10 per cent increase in the rate of child care benefit from 1 July 2007, over and above the normal CPI indexation increase that will apply from that date.  The total increase for families eligible for child care benefit will be more than 13 per cent of their current rate.  Depending on families’ incomes, this means up to an extra $20.50 per child per week towards their child care fees.

Over 730,000 families should benefit from the increase, and the Family Assistance Office will adjust families’ entitlements automatically.  If a family receives child care benefit as a fee discount, their child care service will pass the increase on through reduced fees.  A family that receives the benefit as a lump sum will get a bigger payment after lodging their 2007-08 tax return.

The second child care measure in this bill will improve and speed up families’ access to the child care tax rebate by converting it to a direct payment by the Family Assistance Office.

The child care tax rebate is currently delivered through the tax system as a reduction in a family’s tax liability.  It allows families to claim up to 30 per cent of their out-of-pocket child care expenses, up to a value of $4,000 per child per year, indexed annually.  However, to ensure families received an accurate payment, they have had to wait up to two years to claim their rebate through the tax system.  In addition, families with low or no tax liability may not have been able to claim their full child care tax rebate entitlement.

From 1 July 2007, the rebate will be delivered to families directly by the Family Assistance Office - at the end of each financial year in which the families have incurred the child care expenses (following lodgement of tax returns), and to all families who are eligible for the child care tax rebate, regardless of tax liability.

If a family paid for child care in both the 2005-06 and 2006-07 financial years, they could receive two child care tax rebate payments after 1 July 2007 - one through the tax system and one from the Family Assistance Office, potentially up to $8,000 per child.  For 2005-06 child care costs, families will still need to keep receipts and claim them in their 2006-07 tax return.  However, for any child care costs incurred after 1 July 2006, the Family Assistance Office will pay the child care tax rebate annually directly into bank accounts after tax returns have been lodged.

The new arrangement will make a big difference to families in managing their child care expenses.

The final measure in this Budget bill is to help young people with disabilities and severe medical conditions, by extending to them the benefits of the health care card.  About 25,000 full-time students aged between 16 and 25, who used to be carer allowance (child) care receivers, may now be eligible for a health care card in their own right.

Carer allowance (child) provides a health care card in the name of the young care receiver.  However, access to the health care card stops when the young person turns 16 and, unless they qualify for a low income health care card, or they have access to a concession card through their qualification for an income support payment such as disability support pension, they will no longer have a concession card.

This $19.3 million initiative will help students with a disability or medical condition and their families in managing their ongoing medical costs.  This, in turn, will help them to continue their education, enhancing the future contributions they can make to the Australian economy in the long term.

The new health care card will be valid for 12 months and young people will need to reapply for it each year, confirming their full-time student status.


MIGRATION (SPONSORSHIP FEES) BILL 2007

The Migration (Sponsorship Fees) Bill will validate the past collection of certain sponsorship fees between 1 May 1997 and 23 May 2007.

It is a criterion for the grant of certain temporary visas that the applicant be sponsored.  For example, sponsorship is a requirement for visiting sports people, entertainers, religious workers and academics.

Persons and organisations who wish to sponsor such a person approach the Department of Immigration and Citizenship for approval as a sponsor. If they are successful, the visa applicant then lodges their visa application.  Doing things in this order ensures that visa applicants do not have to pay a visa application charge if their sponsor is not approved, as their visa application would have no chance of success.

Regulation 5.38 of the Migration Regulations prescribes a fee for sponsorship for these visas, currently set at $260. Sponsors pay this fee when seeking approval from the Department.

Regulation 5.38 specifies certain conditions for when the fee is payable.  One of these was that the fee was payable only where the visa application was lodged by the sponsor. Another part of regulation 5.38 implied that the sponsorship fee was payable only after the visa application was lodged.  These conditions did not reflect the sensible practice which had arisen over the years of visa applicants making their own applications, after the sponsorship had been approved.

This divergence between the strict words of regulation 5.38, and the normal practice for applying for these visas, has meant that the sponsorship fee has been collected in cases where it was not strictly payable.

In addition to this, sponsorship fees were not technically payable under regulation 5.38 for another reason.

Regulation 5.38 provided that if no visa application fee was payable, then no sponsorship fee was payable either. This reflected the fact that certain visa applications can be made at no charge, and it would be inappropriate in these cases to levy a fee for sponsorship.

The concept of a visa application charge was introduced into the Migration Act and Regulations in May 1997 to replace visa application fees.  A technical amendment should have been made to regulation 5.38 at the time, to provide that where no visa application charge or fee is payable, no sponsorship fee is payable.

Due to an oversight however, this amendment was not made.  Regulation 5.38 continued to provide that where a visa application is not subject to a fee, no sponsorship fee is payable.  As visa applications have not been subject to fees since 1997 strictly speaking the sponsorship fee was not payable, even though a visa application charge was required.

Regulation 5.38 was amended on the 13th of April this year to make the technical amendment regarding visa application charges which should have been made in 1997. These amendments, and further amendments made on the 23rd of May this year, also ensure that regulation 5.38 reflects the processing arrangements whereby visa applicants lodge their applications after their sponsor has been approved. These amendments to the Regulations provide that, from the 24th of May this year, the sponsorship fee can be lawfully collected.

The purpose of this bill, therefore is to validate the past collection of the sponsorship fee.  It does so by providing that where a fee was purportedly paid under regulation 5.38, the fee is taken to have been payable when it was paid. This will validate payments of the fee which were made before the visa application was lodged by the visa applicant, and where the visa application was subject to a visa application charge but not a fee.

The bill will validate only those fees paid in connection with visa applications made between 1 May 1997 and 23 May 2007. The reason for the 1 May 1997 date is that this is the date upon which the visa-application-charge concept began, and it was clearly an oversight that the technical amendment to regulation 5.38 was not made on that date to reflect the new concept.

The bill will therefore validate fees paid up until the 23rd of May 2007, when further regulation amendments were made, ensuring that regulation 5.38 works in the way in which it was intended.

Debate (on motion by Senator Brandis) adjourned.

Ordered that the Corporations Legislation Amendment (Simpler Regulatory System) Bill 2007, Corporations (Fees) Amendment Bill 2007 and the Corporations (Review Fees) Amendment 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.