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Thursday, 4 April 2019
Page: 14832

Mr ROBERT (FaddenAssistant Treasurer) (12:14): I present the explanatory memorandum to this bill and move:

That this bill be now read a second time.

The Treasury Laws Amendment (Mutual Reforms) Bill 2019 amends the Corporations Act to enable mutual and cooperative firms—in particular, mutually owned financial institutions—to raise the capital they need to compete with investment owned banks, insurers and other competitors. Cooperatives, mutuals and member-owned firms have a proud history across the country of providing generations of Australians with customer and community focused alternatives to profit-driven business. The oldest member-owned firms even predate the Commonwealth, with some tracing histories that extend back to decades before Federation. Over 14 billion people, or nearly two in three Australians, were members of these organisations in 2017.

Yet despite their value to customers and the community, mutuals and cooperatives in Australia have long been underappreciated and ignored by our federal laws. They face a number of barriers preventing them from growing to their full potential, placing them at a disadvantage. Recognising that our federal laws were effectively forcing mutuals and cooperatives to compete with one arm tied behind them, in 2017 the then Treasurer—now Prime Minister—Scott Morrison commissioned Greg Hammond to advise the government on regulatory and legislative changes that could remove the barriers facing the sector. The government accepted all 11 of the Hammond report recommendations and we have been working with the mutuals, the legal community and regulators to develop the bill. The government has consulted with the Legislative and Governance Forum on Corporations in relation to the bill, which has approved them as required under the Corporations Agreement 2002. It is an immense credit to the Prime Minister, who, as Treasurer, pushed these reforms forward. Frankly, he deserves to be acknowledged as these reforms now come before the parliament.

This bill will introduce a definition of 'mutual entity' into the Corporations Act for the first time. It will remove the uncertainty around demutualised provisions in disclosure requirements that have prevented mutual authorised deposit-taking institutions, otherwise known as mutual banks, from raising capital in the past. And it will create a new bespoke instrument called a 'mutual capital instrument', which allows mutuals to raise equity through a specialised capital instrument. The bill also provides a simple standardised process for mutuals to amend their constitutions to take advantage of the introduction of mutual capital instruments should they wish to do so.

With this legislation the government will finally ensure that cooperatives and mutuals are recognised in our federal laws. Our reforms will mean more opportunities for mutual organisations by allowing them to raise the funds they need to make long-term investments for the benefit of their members and to compete effectively with shareholder owned companies to the benefit of all Australians. Full details are contained in the explanatory memorandum.

Leave granted for second reading debate to continue immediately.