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Labor's business regulation policy

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M U S S & I E I L [ E A $ [ E 8/83 THE SENATE

EMBARGO 12 NOON 24 February, 1983


"Labor will regulate business activity only where the regulation

can be clearly and specifically justified in the public interest",

Shadow Attorney-General, Senator Gareth Evans said today.

He was launching Labor's business regulation policy in conjunction

with the Shadow Minister for Business and Consumer Affairs,

Mr John Brown, at a business luncheon in Canberra.

The policy (attached) deals with companies and securities

industry law, trade practices, consumer protection, price

surveillance, petroleum industry pricing, insurance regulation,

and the basic principles and criteria Labor will apply in

determining whether or not to support particular forms of


Senator Evans said that Labor would be guided by three basic


"Our first priority will be to ensure that existing authorities

and legislation operate effectively and efficiently.

"We will pay particular attention here to adequately funding

the National Companies and Securities Commission, improving

the resources available to the Trade Practices Commission and

removing some of the restrictions on its activity directed

by the Fraser Government, and ensuring that the Petroleum

Products Pricing Authority operates effectively.

"The second principle is that further regulation will only be

undertaken in order to deal with clearly defined needs.

"New regulatory activity which we contemplate here includes

national legislation governing insurance agents and brokers,

as recommended by the Australian Law Reform Commission, and

the establishment of a price surveillance authority as part

of our prices and incomes policy.



"The third principle is that in all regulation of business,

emphasis will be given to uniformity of legislation throughout

Australia, this to be achieved - where the Federal Government

has insufficent power - through coordination with the States

and the drafting of model laws based on these consultations.

"Uniform legislation is particularly crucial - and very much

in demand by business itself - in the area of consumer protection,

particularly in relation to the packaging and labelling of goods

and safety standards.

"Not everything, however, can be achieved satisfactorily by

Federal-State cooperation, and we remain pessimistic about the

long-term viability of the i present embersome and fragile national

companies and securities scheme.

"The only sensible long term solution for a nationally organised

economy like Australia's is for the Commonwealth to occupy the

whole legislative field in the area of companies and securities






Policy Launched by

Senator Gareth Evans

Shadow Attorney-General


Mr John Brown M.P.

Shadow Minister for Business

and Consumer Affairs

Canberra, 24 February 1983












1 .

A Labor Government has no interest in regulating business

for the sake of regulation. We do however believe that it

is the role of government to create the conditions in which

business can operate effectively and to ensure that the economic

system does not treat individuals unfairly.

The unregulated market, even if it were the mythical "perfect"

market, can threaten social demands for fairness and industrial

security and damage broader social and economic objectives.

Further, it has now been recognised throughout the business

community that the very failure of the Fraser Government to

create effective regulation in a number of areas of the economy

has h a d , and will continue to have, a substantial negative

effect on business operation.


In considering business regulation issues, a Labor Government

will be guided by three principles:

. First priority will be placed on ensuring that

existing authorities and legislation operate

effectively and efficiently;

. Further regulation will only be undertaken in

order to deal with clearly defined needs; and

. In all regulation of business, emphasis will

be given to uniformity of legislation throughout

Australia, this to be achieved, where the Federal

government has insufficient power, through

coordination with the States and the drafting

of model laws based on these consultations.

Specifically, a Labor Government will regulate a particular

area of activity of business only where we are satisfied


The social or economic objective of the regulation

can be clearly identified and articulated;

2 .

The objective is compatible with the Government's

other social and economic objectives;

The regulatory process is capable of operating

in a straightforward w a y , with clear procedures able

to be understood and utilised by the business and

other interests affected;

The regulatory agency can balance the need for

consistency on the one hand with flexibility

on the other;

There is adequate expertise available to staff the

regulatory agency and any review tribunal;

While maintaining the necessary independence,

maximum communication and consultation can be

achieved between the regulatory body, and the

interests affected by its decisions.

The case for regulation or deregulation is not one that

can usefully be carried on in the abstract. What is

necessary is clear headed case-by-case analysis of specific

objectives, and the costs and benefits respectively involved.

That will be Labor's approach.

3 .


In a modern commercial environment there are few matters

of regulation which are of such fundamental importance

as the regulation of the activities of companies. In the

Australian market, which increasingly operates as a single

economic unit, it has become imperative that efficient

regulation of companies and the securities industry take

place at a national level. The existing so-called

"cooperative" companies and securities scheme is cumbersome

and fragile. The useful further development of modern

business organisation can only be hampered by the resulting-

uncertainties .

The existing scheme is open to a number of major criticisms:

. Inflexibility due to the need to place proposals

for reform before the Ministerial Council of State

and Federal Ministers.

• Resultant "lowest common denominator" level of reform,

since only the more innocuous reforms are likely to

receive approval.

• The scheme is not in the hands of any single

responsible body, so that no single parliament or

government is accountable for its failings.

. Fragility, since the operation of the scheme relies

on all State and Federal governments continuing to

perceive the scheme as being in their own constituents'

best interests.

• Failure to achieve its initial aim of creating a

national companies register, since it is still, for

example, not possible to reserve a single company name

in all States without having to make separate application

to each State companies office.

Labor is committed :

. In the short term, to retaining the cooperative scheme

while it demonstrates progress in the achievement of

its aims.

. In the longer term, to a national system of companies

and securities regulation administered by the national


4 .

Acknowledging the constitutional and other difficulties

likely to be encountered in moving immediately to unilateral

Commonwealth legislation in this area, a Labor Government

will focus its intention initially on making the present

system work better. Thus we will:

. Adequately fund the National Companies and

Securities Commission, to ensure that it is

capable of fulfilling its role as a national

regulatory body.

■ Move quickly to create the Companies and

Securities Law Review Committee. This

Committee is designed to have the ongoing

coordinating role in law reform as an

advisory body to the Ministerial Council. It

was specifically provided for under the 1978 Maroochydore Agreement,which established the

cooperative companies and securities scheme,

and has significant support from both business

and academic sectors. It is inexcusable that

the committee has not yet been established;

Labor will ensure that it is quickly established,

and on a basis which enables it to fully and

systematically review the whole of the law in

this area.

Create an Accounting Standards Review Board

representing the accounting profession, the NCSC

and other community interests in a balanced and

mutually satisfactory manner. The establishment

of this body is too important and urgent a priority

to be further delayed.

Pursue proposals to create a computer based national

companies register.

Present difficulties with this proposal include the

tendency of individual States to take little account

of the need for compatibility of computer systems. A

Labor Government would consider making a substantial

contribution to the funding of this proposal. This

would speed document registration and recovery and

reduce the administrative burdens on both companies and regulatory bodies.

5 .

Institute review by the Companies and Securities

Law Review Committee of major issues in the law

relating to companies and the securities industry,

including -.. the availability of incorporation and legitimate

uses of the corporate form;

.. limited liability and the obligation to make

public disclosure;

. . statutory directions to courts to "lift the

corporate veil" and affix individual liability

in appropriate cases;

.. sanctions against corporations and company


.. means of protecting creditors, including

proposal for minimum paid-up capital;

.. means of protecting employees affected by

company liquidations and takeovers;

.. the effectiveness of the Takeover Code as

a market regulator;

.. appropriate mechanisms for review of decisions

by the National Companies and Securities


6 .


The introduction of the Murphy Trade Practices Act in

1974 meant that for the first time in Australia, competition

and market behaviour were regulated in a manner accepted

long ago in the U.S.A. and Europe. The consumer and traders

have come to value the protection of the Act.

The Trade Practices Commission should be one of the most

important influences in the regulation of the Australian

market place. The Commission should function as a guardian

of the small against possible oppression by stronger but

less competitive rivals; bringing together business, legal

and economic expertise in order to safeguard the interests

of the consumer and society as a whole. The Fraser Government

has reduced the resources of the Commission to such an

extent that it no longer functions as an effective check

on corporate behaviour.

This is particularly worrying in the current economic climate.

At present, corporate profitability is under great pressure.

It appears that the economy is undergoing a considerable

structural change. It is of the utmost importance that it

should be the efficient businesses which survive in this

environment. It should not be possible for more powerful,

but less efficient competitors to force innovative and

efficient firms out of business through abuse of market


Labor will reverse the approach of the Fraser Government a n d :

. Provide adequate funding and adequate staff to

enable the Trade Practices Commission to effectively

safeguard the Australian market place from anti­

competitive distortions, and

. Revoke those ministerial directions which presently

prevent the Trade Practices Commission from operating

effectively, e.g. that which prevents the Commission

from initiating consumer protection enquiries except

on the basis of external complaint;

7 .

The damage done by the Fraser Government to trade practices

regulation in Australia goes further than the debilitation of

the Trade Practices Commission. In the seven years of

Fraser Government, the Trade Practices Act itself has been

abused and neglected to such an extent that many of its

restrictive trade practices provisions require amendment

to ensure they perform their intended function.

Labor will:

. Review the presently ineffective price discrimination

provisions of the Act.

To protect small business from anti-competitive behaviour,

Labor will consider changes to s .49 of the Act (

removing the "substantiality" requirements of s.49„ while

retaining the requirement that the discrimination occur

in a single market.)

. Legislate to outlaw abuses of market power,

by revising s .46 of the Act to replace the concept

of "control" with a lesser standard of influence;

• Ensure that corporate mergers are effectively regulated

from a competition viewpoint by revising s .50 of the Act

to prohibit those mergers which significantly lessen

competition without adequate offsetting public benefits.

• Revise the enforcement provisions of the Act

to ensure they are effective, including the extension

of limitation periods within which "prosecutions may be

commenced. The Act was amended in 1977 to remove

imprisonment as a penalty under Part V of the Act.

This has the effect that prosecutions can now only be

instituted within one year of commission of an

offence, in contrast to the six years available in

which to commence proceedings under Part IV.

8 .


The reduction of funding for the Trade Practices Commission

over the last 7 years has immensely weakened the ability of

the Commission to protect the interests of consumers and in

particular to enforce Part V of the Trade Practices Act. An

insufficiency of coordination of State and Federal regulation

in this important area has also weakened the position of the

Australian consumer.

To remedy the inadequacies of existing consumer protection

and further develop the proposals set out in the comprehensive

policy document "Consumerism and the ALP", a Labor Government

will :

• Rely more fully on the National Consumer Affairs

Advisory Council and increase funding to it and to the Australian Federation of ConsumerOrganisations in order to improve Federal/State coordination on consumer protection:

Actively seek the development of uniform national

legislation to govern consumer credit, food standards

and other matters of immediate interest to consumers,

as the present regulation in these areas is causing

both expense and inconvenience to commerce and the


Provide the Trade Practices Commission with adcquate funding

and powers to exercise its role as the chief Federal consumer

protection agency, in particular by encouraging it to fully

perform its functions under s .28 of tfte Act.

Amend the Trade Practices Act to broaden the definition of

"consumer" and to include relief to consumers from

"unconscionable" conduct or practices. This is no new

proposal. The remedies have been provided by Australian

law in this area for many years by hire purchase and

moneylenders laws and by s .88F of the New South Wales

Industrial Arbitration Act. More recently relief has

been made available specifically to consumers, notably

in New South Wales. A Federal remedy was recommended by

the Swanson Committee in 1976 and is now well overdue.

9 .

Generally review the consumer protection provisions

of the Trade Practices Act with a view to improving

their enforceability and the possibility of permitting

courts to make orders for compensation of consumers

not parties to the particular proceedings; and

Recognising the utility of the existing franchise

legislation for the protection of petroleum retailers,

explore the benefits of creating general franchise

legislation to protect the enormous number of small

businesses operating under this type of arrangement.



As part of its prices and incomes policy, Labor in government

will, as stated in the Policy Speech delivered on 16 February,

"establish after full consultation with industry, a streamlined

pricing surveillance authority to assess price rises sought

by the strategic price setters and public authorities within

the national jurisdiction."

The way in which the proposed system will work was spelt out

further in the Prices and Incomes Accord reached with the

ACTU on 21 February.

"A pricing authority will be established which will be given

legislative criteria by which it must assess the viability or

otherwise of price rises sought by corporations and the public

authorities within its jurisdiction.

It is considered unnecessary to attempt to regulate prices

of all corporations if the large corporations which are

general price-setters in their industry, are subject to

price surveillance.

The legislative criteria will be designed to ensure that

enterprises do not earn profit beyond levels

necessary for the maintenance and expansion of the enterprise,

that real wages of employees are protected and that unnecessary

cost increases are not reflected in higher prices.

In this regard the amount by which wages may increase

beyond that warranted by an increase in prices and national

productivity will not normally be allowable as the basis

of a price rise.

The pricing authority will operate in a less regulatory

manner than the former PJT so that costs to the corporations

concerned, and the timing involved in processing price

rise applications, will be less than those which previously


Setting up an appropriate pricing authority will be one of

our first tasks in Government. In devising the machinery for

the authority, the criteria to be applied by it and the

sanctions available to it, we will obviously be paying

very close attention to the experience of the former

Prices Justification Tribunal, and making a fresh evaluation

of its strengths and weaknesses, but we have a quite open

mind at this stage as to how to best go about the task.

No implementation action will be taken without close

consultation with the representatives of all relevant

interest groups.

1 1 .


1 2 .


The petroleum industry is particularly prone to control

by the major petroleum suppliers, and care needs to be

taken that the public is protected from arbitrary overpricing

of petroleum and that the many small businesses operating in

the area are not subject to unfair or undue influence form

their major company suppliers.

A Labor Government will:

• Review the powers and operation of the Petroleum

Products Pricing Authority to reintroduce consistent

and realistic national pricing decisions, based on

adequate research into the petroleum wholesaling and

retailing process. The failure of this body to

operate effectively has encouraged the proliferation

of State pricing authorities operating on widely

differing bases.

. Revise the Petroleum Retail Marketing Franchise Act.

The Act is presently difficult to interpret, and is causing

difficulties for the small businesses it is intended to

benefit. The Fraser Government has been in the course

of modifying the Act since its introduction, but has made

no substantial headway.

• Seek ways to implement uniform 50/50 legislation

throughout Australia.

This would provide all franchised petroleum retailers

with the right to seek supply of petroleum from

secondary sources, up to a specified limit.

• Restrict the involvement of the major oil companies

in the retail petroleum market.

While there are price competition advantages in permitting

the majors to have some share of the retail market, the

involvement of these corporations must be restricted to

protect small businesses operating in the market.

Labor in Government will closely monitor the process of

divorcement now occuring under the Petroleum Retail

Marketing Sites Acxt to ensure that a satisfactory balance

is struck and maintained between the interests of both

consumers and service station franchisee and owner-operators.

1 3 .


Despite the clear existence of Commonwealth constitutional

power and despite the strong support shown by commercial

and consumer interests, the Fraser Government has failed

utterly to implement its undertaking, first given in 1976,

to improve the legal regulation of the insurance industry in

the interests of policy holders and the industry itself.

A Labor Government will:

. Enact the Insurance (Agents & Brokers) Bill 1981

The insurance industry and other interests have

supported this proposal which has already been passed

by the Senate. Piecemeal State by State measures

are no substitute for effective national action.

The Bill, the result of extensive research and

consultation by the Australian Law Reform Commission,

was passed with strong cross-Party support in the Senate

last year.

. Regulate the form and effect of insurance contracts.

The Australian Law Reform Commission has recently

drafted a comprehensive report on this area of the

law. Labor will give immediate priority to the

consideration of this Report with a view to the

early implementation of its major recommendations.

1 4 .


In addition to the measures summarised in this document, Labor

has announced policies in a number of other areas which will have

implications for business. Their detailed implementation will

be subject to the application of the same general principles set

out at the beginning of this paper.

Such policies include:

. Development of a comprehensive national system of no-fault

accident compensation, to progressively replace present

motor vehicle, workers' compensation and other piecemeal

compensation systems now operating (Law and Justice Policy).

. Development of detailed occupational health and safety

measures, involving in particular the establishment of an

Occupational Health and Safety Commission to monitor and

develop uniform national standards (Health Policy).

. Enactment of national Sex Discrimination legislation, with

certain affirmative action provisions, governing amongst other

things discrimination in employment (Women's Policy).

. Setting in place a comprehensive national environment policy,

involving amongst other things greater use of the Environment

Protection (Impact of Proposals) Act (Environment Policy).