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Wednesday, 3 May 1989
Page: 1704


Senator SCHACHT(4.49) —I just want to make a few remarks about the interim report of the National Companies and Securities Commission (NCSC) to the Ministerial Council on Companies and Securities that has been tabled. I make it quite clear that, as far as I am concerned, in any walk of life, whether it is in the Australian Labor Party, the Liberal Party of Australia or any other party, whether in government or in opposition, no-one is above the law of the land and above investigation to ensure that functions are carried out. If that means embarrassment to the Labor Government in Western Australia, so be it. Some of my Labor Party colleagues have made public their views on some aspects of what has happened recently in Western Australia and the way in which the Western Australian Government became involved in some of these arrangements. The report of the National Companies and Securities Commission deals in part with some of those arrangements. So far as I am concerned as to the consequences of what has happened, I do not think anyone can justify defending actions which subsequently may prove to be outside the laws of the land. The old saying is `Let the dominoes fall where they shall'. People take that responsibility and that is what being in public office is all about.

Senator Alston got quite excited when speaking on this report. He made the blunt suggestion that Supply in Western Australia should be stopped to bring down the Government and force an election. We all understand the political motive behind Senator Alston and other members of the Liberal and National parties in wishing to defeat the Labor Government in Western Australia. It came as a terrible shock to the Opposition earlier this year that Premier Dowding was able to lead the Australian Labor Party to a third successive victory. One must remember that the Opposition parties in Western Australia made the affairs of Rothwells the major plank in their election campaign, but they were still unable to win that election. That campaign took place only in the early part of the year, and it seems remarkable now that Senator Alston and others salivate at the thought that they can force an election by using their numbers in the upper House in Western Australia. I trust that in future Senator Alston will be consistent.

What was Senator Alston's view in the late 1970s when a whole list of scandals regarding land deals enveloped the Victorian Liberal Government? Ministers in the Hamer Government had to resign, public officials were charged and some actually went to gaol. It was a whole sorry story of public moneys being wasted and deals being done to benefit particular private people. I do not know whether Senator Alston, then a senior member of the Liberal Party in Victoria, called for the upper House in Victoria to stop Supply to force the Hamer Government or the Thompson Government to an early election. I suspect he did not do so. Despite the sorry spectacle of revelations from the Fitzgerald Commission of Inquiry into Possible Illegal Activities and Associated Police misconduct, no member of the Opposition parties has called for an immediate election in that State. That has not happened, even though evidence has been tabled pointing to the most sorry kind of corruption in that State, with former Government Ministers admitting that they were misusing public funds. I have not heard Senator Alston calling for Supply to be stopped in Queensland in the Parliament to force an early election. Therefore, if Senator Alston or other members from Western Australia intend to go down that track, I hope that they will maintain their consistency and look back to other sorry circumstances which have come to light and which at times have embarrassed the Liberal and National parties.

There is another aspect of this report which Opposition members have not raised, although I appreciate that they have had only 15 minutes in which to develop their arguments. I would emphasise that this report deals not just with the Western Australian Government's involvement in the so-called rescue of Rothwells, but also with aspects of the operation of public and private companies in Western Australia. In view of the information identified by NCSC, it is clear that in the near future this Parliament, and indeed other parliaments, will have to look seriously at introducing amendments to legislation to ensure that the operation of companies is more rigorously tested. I draw the Senate's attention to chapter 10 of the report which deals with audit responsibility. There is no doubt that if the Australian public is to have confidence in investing in companies, it must have confidence in the fact that annual financial reports published by companies and certified by auditors are true and accurate. Chapter 10 contains severe criticism of the audit procedures carried out by the auditors of Rothwells and associated companies. I believe that this area must be seriously looked at. We shall have to demand more vigorous attention by auditors, otherwise people will not have the confidence to invest in the future. I quote from paragraph 10.03:

Thus, the provision for doubtful debts was reduced from the original assessment by the auditors of $127 million to $70 million. The auditors then signed off the report without qualification.

I am sure everyone would agree that a reduction of $57m in doubtful debts is a significant figure, but that amount was signed off by the auditors without qualification. That is part of the problem we shall have to face up to. I quote from paragraph 10.07:

Rothwells published the consolidated financial statements for the half year ending 31 January 1988 in March. The statements provided no information on the build up of interest receivable or the difference between interest recognised as income and that actually received. Without such information it was impossible to assess the quality of the earnings and assets as reported. The implication in the document that interest income was actually received (as opposed to `receivable') was, in the circumstances, quite mischievous and misleading to those who relied upon it.

Again, weaknesses in the audit provisions have been exposed, which further emphasises my point. Finally, I quote from paragraph 10.10:

In particular, it is astonishing that the auditors had no suspicions about the nature of the transactions which occurred on 31 July 1987. Nor did they look behind them or endeavour to establish whether the transactions were bona fide, properly secured, in breach of the Code and correctly documented.

It can be seen from other chapters in the report that in regard to the running of Rothwells, I would suggest that if a bunch of five-year-old school kids ran a pie table at the local bazaar in the same way in which Rothwells ran its accounts, the teacher would keep them in after school. Accounts were kept in a sorry state, to the detriment of Rothwells itself. Those senators who have read the report will see that some loans were made and were not documented; there was not a proper register of share certificates and of assets held in shares. I believe that Parliament and the Government will have to examine the procedures of companies as a result of this report.

Although the Opposition may be salivating that this document is extremely embarrassing for the Western Australian Labor Party and to the Labor Party generally, we do not escape that responsibility. We do not draw back from the fact that this matter has to be debated and that people who have been responsible for these decisions will have to face the consequences, whatever they may be. This report should also be taken as a basis for understanding that amendments have to be made, for the protection of Australian investors, to the way Australian public companies operate, so that we can have an Australian stock market that is not some variation of the local Totalisator Agency Board gambling operation; so that investors do not face the same sort of risk they face when having a bet on the races. When people are investing money in the stock exchange and public companies with the caveat of buyer beware they should know that the information on which they are basing their decisions has been properly published and documented and audited by public auditors and so on.

I will conclude on those points. I am sure that some members of the Opposition will be looking forward to further reports on this matter. I certainly will follow this matter with interest, as I believe the Australian public should.