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Wednesday, 6 June 2001
Page: 27478

Mr HOCKEY (Minister for Financial Services and Regulation) (10:40 AM) —in reply—I take the opportunity to thank my colleague the member for Curtin for her contribution to this debate on the Corporations Bill 2001 and cognate bills. I understand that the member for Wills spoke a little earlier, and I thank him for his contribution. This is indeed a historic occasion because this package of legislation will finally deliver, with certainty, a single national corporate regulation framework for more than one million Australian companies.

The bills address the legal uncertainties created by recent decisions of the High Court. These court decisions and current legal challenges have cast doubt on the constitutional framework which supports the current scheme of corporate regulation. The result is a serious threat to the national corporate regulation framework and to business confidence.

Under the scheme of corporate regulation which has been in force since 1991, the Corporations Law is contained in an act of the Commonwealth parliament which was enacted as a law for the Australian Capital Territory. Separate laws of each state and the Northern Territory applied the Corporations Law of the Australian Capital Territory as laws of that state or the Northern Territory. As a result, changes made from time to time to the Corporations Law have automatically applied throughout Australia. Until various successful High Court challenges to the scheme, it operated in a seamless fashion as a single national scheme, even though it is actually a system of Commonwealth, state and territory laws that applies in each state and the Northern Territory as a law of that state or territory.

The Commonwealth law is administered generally by a Commonwealth body, ASIC, the Australian Securities and Investments Commission, established under the act of 1989. Each state and the Northern Territory have passed legislation applying relevant provisions of that act and also conferring functions relating to the administration and enforcement of the Corporations Law on, among others, the Commonwealth Director of Public Prosecutions and the Australian Federal Police.

As I have indicated, High Court decisions, starting with the case re Wakim: ex parte McNally in 1999, have invalidated the cross-vesting legislation involving the conferral of state jurisdiction on federal courts. The High Court held, by a majority, that chapter 3 of the Commonwealth Constitution does not permit state jurisdiction to be conferred on federal courts. Effectively, that removed the ability of the Federal Court and most states and territories to resolve Corporations Law matters. In the second case, R v. Hughes, the High Court held that the conferral of a power coupled with a duty on a Commonwealth officer or authority by a state law must be referrable to a head of power under the Commonwealth Constitution.

The decision in Hughes has significant implications for the Corporations Law scheme and is likely to have an adverse impact upon its orderly administration and enforcement. The result is a serious threat to the national corporate regulation framework and to business confidence. Mr Deputy Speaker, you need only consider significant events such as the recent collapse of HIH and One.Tel to see how important it is that the Commonwealth and Australian business be given certainty in a fully referred Corporations Law, and that ASIC be provided with the certainty associated with these currents bills.

The bills being debated today are designed to overcome the difficulties associated with the High Court decisions and the problems with cross-vesting. Therefore, we have relied on the good will of the states to refer their power to the Commonwealth. At the same time, the Commonwealth has been very mindful of the fact that Australia's position in the global marketplace needs to be resolved through certainty in relation to the Corporations Law and also that it is very important that the states provide that certainty from the perspective of their own jurisdictions.

Therefore, Mr Deputy Speaker, the corporations agreement will specifically prohibit the use of referred powers for the purposes of regulating industrial relations, the environment or any other matter unanimously agreed on by the parties to the agreement. There are also provisions that provide for four states to be able to reject an amendment that they agree is for a purpose outside the scope of the reference. We have put in place the appropriate measures to address the concerns of the states.

When I introduced the first two bills in this package into parliament on 4 April, I was able to report that New South Wales and Victoria had commenced their legislative process, Queensland and Western Australia had agreed in principle to follow, and negotiations were continuing with South Australia and Tasmania. I am pleased to be able to advise the parliament today that all six states have either completed or are in the process of undertaking the necessary legislative steps to refer power to the Commonwealth, and it is currently anticipated that all states will have these processes completed by 1 July. Mr Deputy Speaker, I would like to express my thanks to the governments of all the states for their support for this process. I believe it is clearly to the benefit of all governments and Australian business generally that the new system operates on a national basis.

Mr Deputy Speaker, may I also at this juncture take the opportunity to thank a number of people who deserve to have their efforts recorded in this parliament for their contribution to the referral of powers from the states to the Commonwealth, and the putting into place of a single national regulatory environment for corporations. In particular, I would like to thank the officers in my office—Andrew Lumsden, Mathew Abbott, Rose Webb and Kerstin Wijeyewardene—who have endured all the difficulties of negotiating with a large number of parties and have come through with good humour. I also particularly thank the Attorney-General, as I did in the second reading speech, and the officers in his office—Nick Grono, Simone Burford, Catherine Fitzpatrick and Karen Moore—who worked very closely with me and our officers to get us through the negotiation process.

I would like to take a moment to particularly thank Jim Faulkner and Ian Govey in the Attorney-General's Department; and in the Treasury Veronique Ingram, Andrew Sellers and Scott Rogers. The quality of the people in our departments is outstanding. They certainly worked very long hours to ensure that all the concerns of the states were addressed. I would also like to thank a person I have known for a very long time, Stephen Yen, who is an officer of ASIC. He was asked to come to Canberra for a couple of months to assist with the drafting process, and one year later he is still working on finalising this process. He deserves substantial credit for the enormous amount of work that has been involved in getting what has been the largest referral of power from the states to the Commonwealth in certainly a number of generations.

Finally, there has been an enormous effort put in by everyone concerned. It is no easy matter asking states for a major referral of power. It has not happened for many years in Australia. For all the states to come together to refer to the Commonwealth power in relation to the governance of 1.2 million corporations is indeed a historic event.

Mr Sciacca —A good Labor government.

Mr HOCKEY —I thank governments of all persuasions.

Mr Sciacca —Come on. Give us credit.

Mr HOCKEY —I thank governments of all persuasions. As history will judge, the turning point was when the Prime Minister asked the premiers of New South Wales and Victoria to meet him in Sydney just a few days before Christmas last year. After four meetings of state attorneys, the Attorney-General and me, we had hit an impasse—to put it lightly. The fact that Premiers Carr and Bracks were prepared to see commonsense and understood the needs of the hundreds of thousands of businesses in their states and worked with the Prime Minister to resolve outstanding issues is a credit to them.

Finally, great credit is due to the Prime Minister, who has successfully negotiated the referral of the Corporations Law powers from the states to the Commonwealth. It is yet again more evidence that we are focusing on delivering results for Australians and Australian businesses. Rather than simply talking about it, we are focusing on how we can deliver real results that give certainty to business and investors and that, at the end of the day, benefit all Australians.

Question resolved in the affirmative.

Bill read a second time.

Message from the Governor-General recommending appropriation announced.

Ordered that the bill be reported to the House without amendment.