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Thursday, 24 June 2004
Page: 31629

Mr ROSS CAMERON (Parliamentary Secretary to the Treasurer) (10:57 AM) —I move:

That the further amendments made by the Senate be agreed to.

Today represents a significant milestone in the government's corporate law economic reform program. Students of the West's prosperity regard as a great step forward in our history the placing of the wealth of the community in the hands of a class of professional managers and directors who owed fiduciary obligations to shareholders, rather than the wealth being held in the hands of nepotistic, family based enterprises. But that separation of owners and managers created also the pot-ential for a conflict of interest between the professional class of managers and directors and the owners of a company.

Neoclassical economics rests on an assumption of perfect information, which is never achieved in practice. While we do not achieve perfection it is important, if we are to maintain the trust and confidence of shareholders in those who run their enterprises, that there should be the greatest possible transparency and the highest levels of independence in the creation of economic data and that directors and executives ought to be very directly and immediately accountable to their shareholders. The confidence and trust upon which our financial system and Australian free enterprise rest, have suffered at various times from major corporate collapses here with HIH, OneTel and Ansett—as we have seen in other parts of the world with companies like Enron and Parmalat.

This bill before us today is the next iteration of the government's Corporate Law Economic Reform Program, dealing specifically with disclosure, enhanced auditor independence and improved enforcement arrangements for corporate misbehaviour. It is a major reform package which will set Australia at the forefront of international practice in corporate governance. The bill implements a number of the recommendations of the HIH Royal Commission and represents the government's response to Professor Ian Ramsay's report Independence of Australian company auditors.

As honourable members would know, however, the bill is much broader than audit regulation and financial reporting; it contains significant measures to promote accountability of company directors to their shareholders in the area of remuneration. It also contains a mech-anism for infringement notices to be issued by ASIC for breaches of the continuous disclosure requirements. Continuous disclosure is described by Karen Hamilton at the ASX as `the jewel in the crown' of the Australian Stock Exchange, guaranteeing that there is no gulf in knowledge between insiders and outsiders and that all investors have access to the same information at the same time.

A number of amendments were made by the non-government parties in the Senate last night which relate to disclosure requirements regarding executive and dir-ector remuneration, questions to auditors at company annual general meetings, changes to the disclosure requirements regarding the true and fair view and the disclosure of company secretary qualifications in annual reports. The government did not oppose these amend-ments. While the government consider that some of them were unnecessary, and we really stand behind the unamended bill, the changes do not undermine the overall policy of the bill and they reflect the principles of disclosure and accountability. We ought to acknowledge that no-one has 20/20 vision in the area of corporate governance; it is an evolving science. None of us have a perfect view, and probably in a decade we will look back and think that we may have been acting imperfectly today, but the government are very proud of this series of measures and we want to thank those in the other place who have cooperated in its passage.

The bill has been the product of extensive consultation, and it has been one of the pleasures for me in this job as Parliamentary Secretary to the Treasurer to work with a truly motivated, professional, thoughtful, reflective and constructive financial services industry. The bill has benefited greatly from the input of so many members of that industry. In particular, I want to thank the members of the Business Regulation Advisory Group, who have been involved in the development of not only the technical aspects of the bill but also the broad policy. They had been invaluable in giving a practical business perspective to the measures contained in the bill. (Extension of time granted) I know that the Parliamentary Joint Committee on Corporations and Financial Services have made a number of recommendations relevant to the bill. The government intends to respond to the committee as soon as possible. The government will also consider recommendations arising from the second part of their report and will advance appropriate recommendations in the first available legislative vehicle.

The DEPUTY SPEAKER (Hon. I.R. Causley)—The question is that the amendments be agreed to.

Question agreed to.