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Monday, 2 March 2015
Page: 1656


Ms BUTLER (Griffith) (16:10): I rise to oppose the Australian Securities and Investments Commission Amendment (Corporations and Markets Advisory Committee Abolition) Bill 2014. Labor opposes the abolition of the Corporations and Markets Advisory Committee for some very important reasons. Why would a government that purports to be pro-business abolish CAMAC? That is the question that must be on everyone's mind.

CAMAC has long enjoyed bipartisan support, and has provided support and advice to governments of both political persuasions. There has been an independent-based reform body for corporations and financial markets since 1978, starting with the Companies and Securities Law Review Committee, and followed by the Companies and Securities Advisory Committee, in 1989, which became CAMAC, in 2002. The event that precipitated CAMAC coming into existence you will recall, Mr Deputy Speaker, was the High Court decision in Re Wakim, which caused a rethink of all of the cooperative corporations law regulation and the way in which the Commonwealth would have the power to ensure that there was cooperative and consistent corporations legislation across the nation. The states, of course, referred their corporations powers to the Commonwealth to allow for that to occur on the heels of that decision.

As the Law Council of Australia's Business Law Section points out, part of the national compact, and part of the deal under which the states agree to refer their corporations law regulation powers to the Commonwealth is that the states, among other things, get to have input into the selection of members for CAMAC. The states recognise that, in referring those powers—and it is a significant decision to refer, of course—the need for ongoing, constructive, independent, disinterested, expert advice to the Commonwealth on ongoing corporations law reform.

Mr Deputy Speaker, as you know, corporations form part of the economic fabric of our society. The way that corporations and markets run affects every household in Australia. It is a fact that if corporations and markets are run in a way that is poor or inappropriate, then that has real consequences for the people around the kitchen tables in Australian households. It has real consequences for families and individuals. So, there has long been a strongly held view that we need to have ongoing review and reform of corporations law in this country. We have seen the consequences of that through the work that has been done by CAMAC, amongst other organisations.

CAMAC has produced dozens of reports. There are some that would be very familiar to members in this place: reports in respect of continuous disclosure obligations, an issue with which I am obviously very interested, because of the consumer and shareholder protection aspects of continuous disclosure; company restructuring to avoid liquidation; executive remuneration and directors' liability.

In asking ourselves why a government that likes to hold itself out as being pro business would want to abolish CAMAC, we have to remember that CAMAC is such a highly regarded organisation because it has such integration in the business and professional community. Practitioners are involved in CAMAC. Appointments are made by the minister, following consultation with the states and territories, and made on the basis of people's knowledge of or experience in business, the administration of companies, the financial markets, financial products and financial services, law, economics or accounting. The chairperson of ASIC is also a member of CAMAC. So it is clear that the persons involved in CAMAC are very well placed to provide—from a practitioner perspective, from an expert perspective and from a disinterested, independent perspective—strong and rigorous advice to governments about corporations regulation.

So to me it seems odd that, even this government, as unpredictable and irrational as it can sometimes be, would move to abolish CAMAC. But, if you look at the Law Council of Australia's Business Law Section submission, which repeats a number of the arguments made to that organisation by Senator Cormann, two of those arguments are particularly revealing—firstly, that the government can source independent advice from Treasury and regulators; and, secondly, that business does not need a taxpayer funded body through which to express itself, that business is able to express its own views without that.

Those two things are revealing for a couple of reasons. Advice from Treasury and regulators is deeply important, but it is different from and complementary to the type of advice that can be provided by practitioners and experts who have been engaged in corporations and markets throughout their professional lives. They are different sources of advice, and one does not replace the other. More concerning is the idea that somehow CAMAC is just there to push a business barrow. CAMAC is a disinterested committee that acts in the national interest. Businesses—and this point is made by the Law Council of Australia in its submission—are perfectly able to make their own arguments from a lobbying perspective, from an advocacy perspective, to promote their commercial interests. But CAMAC serves a different role; it serves the national interest and the public interest in appropriate and ongoing reform of the law in so far as it relates to corporations and markets.

Those are some of the points made by submitters—and it is very difficult to find submitters who are in favour of abolishing CAMAC. The Australian Institute of Company Directors, an organisation of which I am a former member, expressed dismay in their 24 October submission. They said:

The Australian Institute of Company Directors …is dismayed that the Federal Government has expressed an intention to continue with the abolition of … CAMAC …

And why wouldn't they be? The submission went on:

Company Directors strongly opposes the abolition of CAMAC and we recommend that the proposed abolition not proceed.

They say that, though the government is seeking 'to remove inefficient and complex structures':

CAMAC epitomizes the high quality, effective and cost conscious approach the Government is trying to achieve.

In other words, in abolishing CAMAC, the government is achieving the very opposite of its stated aims. AICD say:

As the Government tries to reduce red tape, we are of the view that the Government's decision to dismantle CAMAC is likely to increase red tape in the long term. This is because there will no longer be a cost effective, highly experienced and independent body considering improvements to the corporate law in Australia.

Therein lies part of the problem with this bill, because, although it has been couched in terms of red-tape reduction and savings, it will have the opposite effect on both counts. It is a point that ought not be lost on members opposite. As the Australian Restructuring Insolvency & Turnaround Association said in their submission:

For an operating cost of less than $1 million per annum since 1998, CAMAC has delivered sophisticated and important advice and reports to policy makers and industry. Indeed, CAMAC's work continues to be instructive for much of the work we do.

Of course, any organisation and its members that deal with insolvency with a view to keeping businesses in operation and getting businesses out of financial trouble so that they can continue to contribute to the economy and provide employment is going to have something to say about the decision to abolish an expert body of the nature of CAMAC. As ARITA pointed out, there have been a number of valuable reports by CAMAC, such as Managed investment schemes, Guidance for directors, Members' schemes of arrangement and others that have gone directly to that issue of companies that are in trouble. They went on to say of CAMAC:

… it was the epitome of efficient government, with deep connections into industry.

They also said:

… we think it is counter-intuitive for Government to pursue the abolition of CAMAC in the name of more efficient government. CAMAC has delivered real value to the efficient and robust operation of corporations, financial markets and the economy as a whole and we urge the Government to reconsider its position.

As the House has heard, the Chief Executive of the Governance Institute of Australia was also very critical of the decision to abolish CAMAC. One of the great strengths that he pointed out in their submission is CAMAC's ability to engage with stakeholders, fulfilling an important role. He said:

CAMAC is respected by all stakeholders for the quality of its in-depth research and stakeholder consultation. Stakeholders also view the independence of CAMAC as a great strength. Governance Institute is of the view that such independence cannot be transferred to a government agency charged with implementing government policy.

He lists as three examples of the value of CAMAC the recommendations on related party financial transactions in respect of conflicts of interest; the introduction of a statutory derivative action that removed obstacles to shareholders in bringing litigation, which is important in ensuring that shareholders maintain appropriate levels of power within companies and can hold directors and companies to account; and enhancements to the requirement that directors and senior executives of a listed entity disclose any trading by them in the securities of that listed entity, meaning that trading by directors did not undermine market fairness and efficiency. He said:

All of these reforms have greatly strengthened corporate governance in this country.

Just those three examples underscore the value of CAMAC and really serve to reinforce the short-sightedness of the decision to abolish it. The suggestion that saving under $1 million a year is what is of paramount importance here is the government making the usual mistake that it makes of confusing saving in the short term with value in the long term. The question is not just, 'What is the cost?' but, 'What is the benefit?' What is the benefit? What is the return on the investment? That is the real question, not, 'What is the saving in the short term?'

There are so many submissions from serious and respected organisations expressing dismay at the government's decision to abolish CAMAC. If those submissions are accepted—and why shouldn't they be?—the government is likely to find that this so-called reform will cost more money than it saves and will lead to more problems and more red tape, as the AICD pointed out.

I mentioned the submission from the Law Council of Australia, which strongly objected to winding up CAMAC, as the government knows. The submission said that the Law Council of Australia wished to draw the attention of the minister:

… to the importance of maintaining confidence in the national system of corporate and securities market regulation, underpinned by referral of powers by the States to the Commonwealth, in which CAMAC plays a vital role;

That consideration ought to be taken into account as a very serious consideration, because a serious concern along with the integrity of the regulation of corporations in this country is whether people have confidence that corporations are operating appropriately and that the law is keeping up with changes in the market. The Law Council made the point:

… the Government would have no significant grounds for doubting the excellent contribution that CAMAC has made to the cause of sound corporate and market law reform.

They said:

That is no doubt a result of the combination of the quality of the full-time lawyers engaged by CAMAC, and the practical and expert business and legal input systematically achieved both through CAMAC's committee structure and the submissions received through the consultation process.

Again, the importance of the practical expertise is highlighted. They give the example of the crowdsourcing reference. We heard the member for Chifley speak today about this issue. It is something about which he has intimate acknowledge. He drew on CAMAC's work in preparing his excellent discussion paper in respect of crowdsourcing. The fact is that this is an issue that needs to be continually discussed: how do you leverage the new opportunities for corporations? As the Law Council said:

CAMAC was able to produce an internationally applauded report through a combination of thorough research and practical inputs—

into this new phenomenon. That is one of many examples of the importance and value of CAMAC. The Law Council also talked about the recent report in respect of industry innovation and competitiveness in serving to underscore the value and the importance of CAMAC and noted that the government had in that report acknowledged the importance of CAMAC, notwithstanding that, many months before, the government had announced its decision to abolish it. Doesn't that just demonstrate how odd this decision has been.

One of the concerns of the Law Council that I would echo is that if you abolish CAMAC you abolish an organisation that operates transparently. Perhaps that is part of the reason why this government dislikes CAMAC, because it is transparent, because it is disinterested, because it does look at the national and public interest. But this sort of ideological urge to get rid of everything that the government does not understand ought to be resisted when it comes to this organisation. It is an organisation that runs at under $1 million per annum yet provides such value to policymakers and industry in the ongoing need to ensure that our corporations laws are appropriate.