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Monday, 2 March 2015
Page: 1654

Mr THISTLETHWAITE (Kingsford Smith) (16:00): This is a classic example of this government getting rid of what is a very efficient and effective body in a move that will end up costing Australian taxpayers much more money. The Corporations and Markets Advisory Committee advises ASIC and costs $1 million a year. It has three staff and costs $1 million a year. That is it. Yet, the Abbott government is abolishing it and the result will be that the work that was performed by CAMAC for $1 million a year will now be contracted out to private organisations to undertake. There is no doubt at all that those organisations will charge much more than $1 million for the reports that they prepare for the government over many years to come in respect of corporations and market advice. So here we have another example of the great rhetoric of the Abbott government, saying that they are reducing regulation and saving taxpayers' money, when in actual fact this bill will cost Australian taxpayers much more.

Since 1984 the Commonwealth has had an independent research based reform body focused on corporations and financial markets. Since its inception, CAMAC has delivered sound, balanced, well-researched and market oriented law reform proposals. It has been widely acknowledged that CAMAC's role and advice has provided invaluable guidance to multiple governments on subjects from managed investment schemes to shareholder claims against insolvent companies and corporate voluntary administration.

For its work CAMAC has received high praise from key interest groups and commentators such as the editor of the Australian Journal of Corporate Law, Professor Neil Andrews, who described CAMAC's expertise as:

… unmatched in the technical details of corporate and securities law and in sustaining the manners gentle style of Australian business regulation.

The Governance Institute of Australia, too, had very positive things to say about CAMAC. They said it is:

… a lean, efficient and highly-regarded organisation that has improved our corporate institutions over the past two decades and continues to have a vital role to play in the decades ahead.

But recognition of the good work CAMAC has done over the years has not just emanated from key stakeholders and commentators; the Abbott government, too, has expressed its appreciation for the committee. In its industry innovation and competitiveness agenda document of last October, the government praised CAMAC's study of crowd sourced equity funding, describing the committee as 'a government advisory body with strong financial market experience'.

Unfortunately, as has become clear on many topics, this government thinks it knows better than the experts and has decided to press on with scrapping this eminent committee which, as Judith Fox from the Governance Institute of Australia says:

… punches well above its weight and delivers economic benefits that greatly outweigh its funding costs …

'Economic benefits that greatly outweigh funding costs' is the best way to describe CAMAC in one sentence.

Let's look at that for a moment. CAMAC is supported by three staff and costs $1 million a year. That is it—$1 million. But this government wants to close the book on the committee that has advised on almost every chapter in modern Australian corporate history, a decision that simply beggars belief from a supposedly pro-business government. This disastrous bill is proof the government has firmly planted its fingers in its ears as it pursues its bloody-minded ideological agenda. The shadow Treasurer hit the nail on the head when he said:

I can only assume the government, in its ideological drive to abolish organisations, just didn't look at what CAMAC does.

It would not surprise me if the minister who introduced this bill has no idea about the work of CAMAC.

The irony of this bill has not gone unnoticed. Speaking to The Sydney Morning Herald in June 2014, a longstanding member of CAMAC, Professor Ian Ramsay of the University of Melbourne law school, agreed that the government's decision to abolish the committee ran counter to its supposed commitment to business in Australia. He said:

It cuts directly against the government's own philosophy and position about facilitating business.

One of the great strengths of CAMAC is its independence. Members are appointed on the basis of their knowledge and experience in business, finance and law not on favour with the particular government of the day.

Unfortunately, CAMAC's absorption into Treasury, a government department that is charged with implementing government policy, threatens that independence. This outcome has been of concern to many stakeholders. In June 2014 the chief executive of the Governance Institute of Australia, Tim Sheehy, lamented the loss of this independence, citing research into the struggling annual general meeting which had been removed from CAMAC and handed to Treasury—research that still remains outstanding. This removal of independence, however, is hardly surprising given the government's aversion to independent advice.

You only need look at what happened in estimates last week and the approach that this government has taken in reaction to the Australian Human Rights Commission's recent report into children in detention to see that this government does not like independent, expert advice. They do not like independent, expert advice that is critical of its policies. What is their approach? In this case, on markets advisory and corporations, it is to shut the body down, even though it only costs $1 million a year. That function will be absorbed into Treasury. What is the approach that Treasury will take when it comes to getting expert, independent advice on matters to deal with law reform in this area? They will contract it out to the private sector at a cost of millions of dollars. We have all seen these reports before. They come up in estimates when governments ask private organisations to undertake research and independent reports on their behalf, and the costs of those are sometimes astronomical. They are well into the multiple millions of dollars. Yet, they are going to get rid of a body that only costs $1 million to administer, with three staff; a body that is generally lauded throughout the community, and provides expert advice on markets and corporations.

Duplication is another excuse that the government has given for the abolition of the committee, and again doubt has been cast as to what duplication, if any, this bill will resolve. In fact, a number of submissions to Treasury questioned this justification. In its submission, the Australian Institute of Company Directors expressed its misgivings, stating:

… we are of the view that dismantling CAMAC is contrary to the Government's own objectives as set out in the Smaller andMore Rational Government reforms … CAMAC epitomizes the high quality, effective and cost conscious approach the Government is trying to achieve.

Labor opposes this bill for the simple fact that there is no efficiency gain. The abolition of a highly regarded committee will have a detrimental impact on the quality of advice being received by this government and, ultimately, the quality of law reform that is undertaken in the corporations and financial services space by this government, and by governments of the future.

What has been made abundantly clear by this government, lurching from policy failure to captain's picks to captain's call, is that it can ill-afford to dispense with high-quality independent advice for a very, very efficient and cost effective means. That is what CAMAC has provided—a million dollars to operate on an annual basis, but the value to government in terms of its independent advice, on law reform concerning corporations and financial markets has been exponentially greater than the million dollar cost for which it is run. Once again, this is an example of this government cutting off its nose to spite its face. This will cost Australian taxpayers more. It will ensure that private organisations get contracts that will cost Australian taxpayers multiple millions of dollars, all because of this government's misguided approach to reducing regulation and, apparently, being pro-business.