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Wednesday, 1 December 1971
Page: 3921


Mr CREAN (Melbourne Ports) - This Bill comes to us via the Senate because the present Attorney-General (Senator Greenwood) resides in the Senate and not in the House of Representatives. The legislation that we have before us arises because of a decision which was given in the High Court of Australia in what was known as the Rocla Pipes case - that is a short description - or, correctly, as Strickland v Rocla Concrete Pipes Ltd. Section 51 of the Constitution states that:

The Parliament shall, subject to this Constitution, have power to make laws for the peace, order and good government of the Commonwealth with respect to:

The section then lists 39 areas of jurisdiction. Placitum (xx.) states:

Foreign corporations, and trading or financial corporations formed within the limits of the Commonwealth.

Several years ago the Parliament enacted laws with regard to restrictive trade practices. Restrictive trade practices legislation is an admission that whilst competition is desirable it is prevented from operating reasonably in considerablesections of industry. 1 am fortified to some extent by a lecture given in Tasmania by the former Attorney-General, the honourable member for Berowra (Mr Hughes) on 10th October 1970. He said:

The Act-

That is, the Act that was held invalid in Strickland v. Rocla Concrete Pipes Ltd - is founded upon the position that competition in business is, generally speaking, desirable for economic and social reasons. While competition can be uncomfortable for those affected by it, its pressure tends to restrain costs and prices and constitutesa continuing inducement to businesses to improve their efficiency.

He said much more but at least he indicated -I think it is a view which is held particularly by honourable members opposite -that we live in what is described as a competitive free enterprise economic system. Nevertheless, in Australia we often have some difficulties in this field because, as a result of the scale at which economic activity is conducted and in relation to our population, it must be acknowledged that perhaps one or two and certainly often less than 3 firms can be preponderant in a particular field. When the legislation was declared invalid by the High Court the reason given was that had it been founded on the power that I have quoted, namely, the power of the Commonwealth with regard to corporations, perhaps it would not have been invalid. The AttorneyGeneral said that the present Bill is designed to close what might be described as drafting loopholes. My colleague, Senator Murphy, who led this debate in the other place said that the new legislation might be described as: . . a model of impotency, a monument to the Government's determination to put the interests of big business, monopolies and multi-national corporations before the interests of the public.

At least the Australian Labor Party is greatly interested in what might be called the public interest. Section 52 of this proposed Bill attempts to define what is the public interest. It indicates some of the difficulties that confront us in trying to define public interest. The Bill is inadequate in many respects and my colleague, the honourable member for Cunningham (Mr Connor) who is experienced in the law relating to this subject, will delineate better thanI am able to do our objections to this legislation. My colleague, Senator Murphy, described the public interest clause as:

.   . a glaring loophole for those wishing to frustrate the spirit of the Act.

If an attempt were made to define the spirit of this Act, I should think that there would be considerable ideological debate on the matter. What we come up against the power of corporate activity in the modern economy. I do not think that anybody denies that the sort of economic activity that is indulged in in most modern economies nowadays could not occur except via what we describe as companies or what other countries call corporations. When the word 'company' is used, 1 point out that there may be great disparities in the size of companies. In our law we have a kind of broad recognition of the difference in scope. We divide companies into what are described sometimes as private companies and sometimes as public companies. Statistics supplied by the Commissioner of Taxation undoubtedly would show that the majority of what are described as companies in our system are registered as private companies, but there is also no doubt that the most significant form of operation in Australia is the public company or, for want of a better term, the public corporation. Some of them, in relation to the total economy, are quite gigantic in their operations and, unfortunately, many of them are now inter-meshed with other corporations which have their headquarters outside of Australia.

One of the circumstances bedevilling Australia at the moment -I think that to some degree, this was touched on during the debate on the economy this afternoon - is that more and more we see in Australia that the biggest operators in the corporate field are companies whose shares are owned entirely overseas or companies which are dominated considerably by either direct or indirect control of their operations. One need only mention such an enterprise as General Motors-Holden's Pty Ltd, which builds in Australia a product that still has a distinctively Australian name- the Holden motor car - but whose ownership is entirely outside of Australia. This is pretty true of the whole of the automotive industry in Australia, which is highly significant to this country. It is true that once it is here it is entrapped by reason of the fact that its assets are here and its activities are here. We occasionally raise difficulties about what are called export franchises. There is some inability on the part of General Motors in Australia to sell in places such as Singapore or Malaysia, and to some extent that position in conditioned by the fact that enterprises similar to General Motors in Australia operate in places such as Singapore and Malaysia as well. It is understandable enough, I suppose, that they lessen the degree of competition by dividing the areas to which vehicles can be expoited. Nevertheless this is a significant factor in corporate activity.

When this legislation that we are now refining was contemplated its architect was Sir Garfield Barwick, now Chief Justice of the High Court of Australia. He had within the confines of his Jaw provisions that would have covered what are described these days as mergers or takeovers. When my colleague in the other place was debating this matter - I commend his speech to honourable members on both sides - he referred to some statistics that have been compiled by Professor Wheelright, the associate professor of economics at the University of Sydney, whom he described as one of Australia's authorities in this field. He said that Professor Wheelright had estimated that there now are 2 takeovers a week on average in this country. He went on further to say that Professor Wheelright's estimate is that over recent years foreign takeovers have averaged one every 3 weeks. Somehow we have to put these 2 sets of statistics together. Senator Murphy went on:

Often, he says, these arein an unrelated field, the latest being the buying out of old established vineyards--

I think he means firms like Lindemans and Orlando Wines in South Australia and I think another one in the Hunter Valley - by a large foreign owned paper making company, a tobacco company and a food processing com pany.

These are all indications of what has happened. Already successfully established industries have been subject to takeover by interests outside Australia. There is not any doubt that following the decision in Strickland v. Rocla Concrete Pipes Ltd this Parliament has power to legislate with respect to trading and financial corporations formed within the limits of the Commonwealth and also with respect to foreign corporations.

We are a bit sceptical about the claims by the Government both in this House and in another place that the Bill that is before us is only a holding operation and that the Government has in prospect more comprehensive legislation. I think that the Minister for Foreign Affairs (Mr N. H. Bowen) himself indicated that the matter had been the subject of a departmental inquiry. He said:

I should like to stress the holding character of this Bill.

He went on to say that the Government is currently reviewing this legislation with a view to strengthening it. Yet oddly enough although my. Party had inserted in the Bill in another place provisions which it believed strengthened this Bill Government supporters in this House are now proposing to take them out. The powers inserted in the Bill in the Senate dealt with 2 subject matters - predatory pricing and monopolisation and something described as discriminatory dealing. We find it a bit odd that the Minister should claim on the one hand that the Government wants to strengthen the Bill and yet, certain provisions having been inserted in it in another place, the Government now wants to take them out. After all the Bill originated in the Senate. Whatever honourable members may believe, in relation to all measures with the exception of money Bills, the Senate has identical powers with those of this House. It can initiate as it did in this measure, it can amend or. can negate if it wants to. A majority of the Senate decided on certain proposals being inserted and now the Government wants to take them out.

I presume that we will have to bow to the majesty of numbers in this place and that those clauses inserted in the Senate will be deleted and that the Bill will have to go back to the Senate in the manner that we often receive Bills from the Senate - with a message that the Senate has agreed to the Bill with amendments. Presumably this measure which is described as a holding measure will go back to the Senate with a similar kind of message saying that the House of Representatives has concurred in the Restrictive Trade Practices Bill with amendments. An interesting proposition is: Where do we go from here and what is the consequence if the Senate insists, as it is entitled to insist, upon retaining what is in the Bill? Will the Government drop the measure and leave this country without any defensive mechanisms to deal with restrictive trade practices?

I think all parties accept the inadequacy of present measures, although the Prime Minister (Mr McMahon) and the former Prime Minister this afternoon commented favourably on certain measures that had been taken. Reference was made to one in this Bill relating to what is called resale price maintenance. If it be said that those amendments were accepted with grace by the Government, I think it is a travesty of the description that they were conceded in the long run because there was public pressure to include them. I think, with all respect to the former Prime Minister, that most of the economic measures that he listed as having been achievements of his Government in recent times were reluctantly conceded after pressure both from the Opposition here and from forces outside the Parliament.

The Postmaster-General (Sir Alan Hulme), who is indicating his disagreement, is one who bows to the winds when they blow, particularly when they are cold enough. All I am saying at the moment is that there is no doubt that the Government will marshal the numbers to execute what it desires. I would ask those honourable gentlemen on the other side of the House who believe that some sort of restrictive trade practices legislation is necessary whether they think the Bill is weakened by the inclusion of the proposals from the Senate. If they do I will be interested to hear their arguments as to why that is. I think we are getting a little sceptical to say the least. The Government has been in office for about 20 years and it has had this legislation in force for about 6 years. When the validity of this legislation was challenged in court the Government had to bow to the decision of the court, and it now says that it has in mind strengthening the Act.


Mr N H Bowen (PARRAMATTA, NEW SOUTH WALES) - The honourable member will recall that that announcement was made before the court case.


Mr CREAN - I am asking the Minister to adjudicate on the merits of the amendments which were inserted in the Bill in the Senate for the purpose of putting teeth into the force of the legislation and which the Minister now proposes to take out. In fact, the Minister brushed them aside fairly skilfully in his second reading speech. He said: T will not argue about them. I do not think that they ought to be in the Bill. I do not propose to say anything about them'.


Mr N H Bowen (PARRAMATTA, NEW SOUTH WALES) - I gave my reasons.


Mr CREAN - With all respect, I do not think that the Minister gave very adequate reasons. I ask the other section of the Government coalition whether it is pleased with the scope of corporate activity in Australia and the kinds of things that have occurred in recent times concerning takeovers, mergers and the like. What kind of teeth should be inserted in this legislation? Those on my side of the Parliament have asserted for a long time that restrictive practices legislation with effective teeth was required. I hoped that this debate might deal with the kinds of teeth required. All I suggest with all respect to the Minister is that in this legislation the Government wants false teeth that it can take out when the situation suits it. I am sure that this is not what the Australian public wants. A great deal of public concern exists about what is described as the domination of overseas interests in Australia. These interests are getting into the basic economic development of this country. I have mentioned the automotive industry as one example. That is one of the earlier phase. The later phase that has occurred is in relation to such things as oil refining, oil exploration, natural gas development, mineral development and so on. In these instances, the magnitude of the capital expenditure required is such that on one or two occasions we have had to say: 'We do not think that we can encompass this in Australia'.

All I am suggesting is that the Rocla concrete pipes case opened up some interesting developments as far as the potentialities of this matter are concerned. I do not know why there was any kind of scepticism in Australia about our powers constitutionally over what are described in placitum 51 (x.\) of the Commonwealth Constitution as foreign corporations. It goes further and says 'trading or financial corporations'. It was suggested by my Party that banking had substantially changed in its character and that much of what is called 'financial activity' is conducted now not directly by banks but by something which, by deficiency of definition, falls between banks at the one extreme, finance corporations in the middle and something else called merchant banks at third remove. If was argued that we had no power to operate in this field, lt was suggested from our side that we would treat this sort of thing as though it was within the scope of the constitutional power. I would concede that we tended to suggest that we would regard il as falling within the banking power. The decision in the High Court was that no longer should there be any impediment to legislating in Australia in respect of financial corporations.

Sometimes 1 must confess as a layman to being a li tie bewildered by the kind of precision lawyers will have about circumstances until a case is decided. One of the astonishing things in the Strickland v. Rocla Concrete Pipes Ltd case was that although so much had been assumed as being beyond the power of the Commonwealth this seemed to be resolved almost overnight. Lawyers basically may be conservative gentlemen. I think that unfortunately for the most part they are. Occasionally at least parliaments ought to begin to think of the role of the corporation in modern society This is an untapped field in Australia. It is one which is awakening a great deal more interest in the United States of America and Canada. Again 1 commend the speech made by Senator Murphy in which he referred to cer ain legislation that had recently been passed in our sister dominion of Canada. He said: 'The Canadian legislation stands beside the Australian Act like a tiger beside a kitten'.


Mr N H Bowen (PARRAMATTA, NEW SOUTH WALES) - That was rather windy rhetoric.


Mr CREAN - Well, we are pretty used to windy rhetoric in this place. I think that, occasionally, we ought to let the winds blow out and listen to the still small voice. The still small voice would suggest that nobody loves the big corporation.


Sir Atan Hulme - That is not right.


Mr CREAN - The Postmaster-General says that that is not true. Perhaps it is misguided, but 1 do not think that it is untrue.


Sir Alan Hulme - You said that nobody likes the corporation.


Mr CREAN - 1 said that nobody loves the big corporation. 1 would concede to the Minister part of his point. We must live with the big corporation. We must do so in Australia. But we must do something to restrain the predatory power of the big corporation. At least we are reaching the situation in Australia where we are becoming concerned about such problems as pollution, the size of the corporate undertaking and things that we loosely describe as bureaucratic power.

Let mc express my hope concerning this projected legislation to the Minister who represents the Attorney-General. The Minister was Attorney-General himself at one time. I. regarded him as an Attorney of some distinction. That may be placatory after some of the comments that I have made. The Minister has indicated that an inter-departmental inquiry into these matters has taken place. I hope there is a little more realisation in Australia: I cannot see any reason for the need in the existing Act of provisions such as the secrecy of the register. Why should these things need to be secret when, for the most part, they are concerned with companies that like to claim that they are public companies? If they are public companies, why do they not wish to divulge the extent of their activities?

I would like to see the provisions of the onus of proof clause reversed. My colleague, the honourable member for the Australian Capita! Territory (Mr Enderby), will say more about this matter later. Why should the whole process be bogged down, as the present Chairman of the Tribunal, Mr Bannerman, suggests, simply because thousands of agreements can be registered and these must be investigated apparently, technically, one by one? Why should not all these agreements be presumed to be obstructive in the first place or be presumed to be against the public interest so that proof to the contrary would lie with the person registering the agreement instead of reversing what .seems' to be the pattern which is followed in the legislation in Great Britain and in the United States and in the now projected legislation in Canada. If companies want the protection of limited liability and certain other rights in the community and want the right to be called public companies, I think that they are under the duty to expect some son of public restraint on their operations. This seems to me to be' what the ambit of restrictive trade practices ought to be. The presumption ought to be that if you are big your interests may be against the general interest and you should have to prove that is not the case rather than the onus lying the other way. 1 hope that when the Government is contemplating its substantial amendments they will be the kinds of things it wilt look aL ] hope that it will look at the role of corporate power which, if wc are not careful, can be one of the forces which overwhelms the reality of democracy in a modern economy.







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