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Tuesday, 9 May 1989
Page: 2098


Senator COONEY(8.12) —The Opposition's opposition to this package of Corporations Bills is based on its view that they are not constitutionally viable. I understand that the Opposition is happy with the rest of the issues that are before the Senate. In other words, the general thrust of the legislation, so far as the Opposition is concerned, is good. Honourable senators opposite say simply that it should be left to the Ministerial Council for Companies and Securities, that the Ministerial Council has all the wisdom in the world, that there is nothing wrong with it, that it is a group of reasonable men and women who go round interested in only one thing: cooperation and getting ahead with administering the corporate sector of this community-a most important sector indeed.

It was all very interesting when the Senate Select Committee on Corporations Legislation that looked into this Bill was going round Australia and talking to all sorts of people. It was accompanied by Mr Brian O'Callaghan, who is in the chamber at the moment. He gave the Committee considerable help. We discussed the issue of cooperation with various Attorneys-General. During those discussions the Attorney-General for South Australia, Mr Sumner, and the Attorney-General for Victoria, Mr McCutcheon, said that the cooperative system could be, and should be, maintained on the basis of more power being given to the Commonwealth, and that if the Commonwealth could not come to an agreement with the States on such issues as mergers and takeovers, the Commonwealth would prevail-but only after discussions with the general Ministerial Council. That seemed a very reasonable proposition. Indeed, some of us on the Committee thought that perhaps it was the way we ought to go. If we had had Senator Durack's assurance that all these men-I think that they are all men-are reasonable people, perhaps that is the way we could have gone.

But what happened? When this suggestion was put to the Attorney-General of New South Wales he moved back several feet, metaphorically speaking, and said, `No, we can't have that sort of movement'. Anyone looking at the track record on this issue will see that the sorts of agreements that one might want for a perfect, or near perfect, system are lacking, and one does not get the sort of agreement that has been lauded so much today by honourable senators opposite.

This reminds me very much of how the Co-operative Scheme Legislation Amendment Bill 1989 comes before us. It is a very thick Bill indeed, going to 160 pages. Of course, legislation which should have been passed long ago was forthcoming only when the threat of Federal legislation was seen. In other words, the Co-operative Scheme Legislation Amendment Bill 1989 finds its way into this chamber in the context of the Commonwealth wanting to move and, as I will indicate later, move properly to bring some better sense and some better effect to the law governing corporations in this country.

Let us look at what has happened with the Ministerial Council and at what happens with the States. There is reason for concern that the cooperative scheme would not have worked as well as it has been suggested today it would have worked in the past. Indeed, when the Senate Committee on Constitutional and Legal Affairs considered the role of parliament in relation to national companies schemes, that Committee, which began its work in 1986, was very ably-indeed brilliantly-chaired by Senator Michael Tate and then by Senator Bolkus. It had before it evidence about the cooperative scheme. Criticism of the cooperative scheme came from the then chairman of the Australian Stock Exchange Ltd, Mr Ian Roach, who said this:

There is only one market for securities in Australia and it is part of the global market . . . it is essential that we pool our resources and one united stock exchange . . .

Indeed, that has happened: there is one stock exchange in Australia, operating in all States. Mr Henry Bosch, Chairman of the National Companies and Securities Commission (NCSC), had this to say:

1985-86 saw a number of striking developments. Perhaps the most remarkable were the steps towards the internationalisation of the financial community. Links between stock markets and futures markets were created and strengthened, Australian shares and financial instruments were traded in increasing volumes on foreign markets. Many financial institutions established or developed branches or connexions overseas. Flows of information and funds have become almost instantaneous and financial markets are becoming increasing interdependent.

Mr Robert Gardini, who represented the Confederation of Australian Industry, tabled letters before the Committee. One of those commented:

It would be accepted that the regulation of companies whose business transcends State borders can only be satisfactorily achieved through Commonwealth legislation . . .

There are other quotes to that effect. The reality is that times have moved, technology has moved, and the stock market has moved. It is now not only national but international, and it is proper that the Government which represents Australia in the international field-the Commonwealth Government-has the carriage of the legislation which will affect the law governing corporations. Indeed, that is hardly a new idea. The Opposition has come into this chamber and said, `Look, this mad move towards Commonwealth legislation is all revolutionary'. What is the situation? One should go back to the National Australasian Convention debates, between the founding fathers, which took place in Sydney from 2 March to 9 April 1891 and look at the contribution by Mr Munro on 3 April 1891. When talking about the suggested words to be put into the Constitution, which read `the status in the Commonwealth of foreign corporations and of corporations formed in any State or part of the Commonwealth', he said this:

We have agreed to subclause 13, dealing with the incorporation of banks, and I do not see why a similar provision should not be made in regard to the incorporation of companies. Why should they not be under control of federal offices? At the present time the law as to incorporation is different in different colonies, and the result is extremely unsatisfactory in many cases. I do not see why we should not make the same provision in regard to the incorporation of companies as we have made in regard to the incorporation of banks.

That statement was made 98 years ago. Unfortunately, the Opposition seems to be living back then-or even before then, because if it had been living 98 years ago it would have seen the merit of Mr Munro's statements. So it must have been living at a time prior to that; well over 100 years ago. Sir Samuel Griffith, a great jurist, cavilled at that a bit. He said he did not think that the suggestion put forward by the previous speaker, Mr Munro, should be accepted in its full sense. He said:

I do not think we should. There are a great number of different corporations. For instance, there are municipal, trading, and charitable corporations, and these are all incorporated in different ways according to the law obtaining in the different states.

He said:

What is important, however, is that there should be a uniform law for the recognition of corporations.

Sir John Bray went on in the same debate to say:

If it is desirable to entrust legislation as to the incorporation of banks to the federal government, there is no reason why we should not say that the registration of financial companies doing all the business of banks should be dealt with in the same manner.

There are a few things arising out of that. One is that it was certainly in the thoughts of the founding fathers of the Commonwealth that companies should be dealt with. They certainly expressed the desire 98 years ago that there should be uniform laws. The period of 98 years since then has shown more and more just how sensible our founding fathers were. However, when an attempt is made to incorporate into the legislation a Bill which will solve the problems they were talking about then there is great opposition. As I understand the Opposition's proposition, it is really that this Bill has been put forward, as Senator Short has said, for the sole reason of giving some sort of memorial to the Attorney-General, Mr Lionel Bowen.


Senator Bishop —He tried with the referendum.


Senator COONEY —Senator Bishop has now given away the approach the Opposition takes in relation to this. She has said, `Mr Lionel Bowen brought forward some referendum Bills simply to make himself a monument. We have defeated them. Since we won on that occasion, we will oppose this Bill'. That is the rationale of the Opposition to this Bill, as I understand it.


Senator McKiernan —Is she front bench material?


Senator COONEY —I think she is. Given the quality of the material on the Opposition benches, Senator Bronwyn Bishop is more than front bench material. She is leadership material.


Senator Tate —Prime ministerial material.


Senator COONEY —Prime ministerial material.


The ACTING DEPUTY PRESIDENT (Senator Crichton-Browne) —Senator Cooney, might I beg your indulgence to pass your remarks through the Chair.


Senator COONEY —I apologise, Mr Acting Deputy President, with great sincerity. I unintentionally strayed from what I should have been saying. Through you, Mr Acting Deputy President, let me say it seems to me to be extraordinary that the Opposition opposes this Bill because it had a big win, as it sees it, on the referendum Bills and now it wants a big win on this. I would have thought that there would have been a more highly elevated reason for opposing this measure-perhaps the claim that State rights should be protected, or some other basis. But certainly there should be a higher basis for opposing this Bill than simply that the Opposition has had a win on the referendum Bills and could possibly score another win here. While I am on the subject of the Attorney-General, this is his last session in this Parliament. He has been subject to some criticism. In my view, he has adorned the office. I think he has struggled with great endeavour.


Senator MacGibbon —Did you say he adorned the office?


Senator COONEY —Yes, adorned the office.


Senator MacGibbon —He achieved nothing. He was hanging on the wall, was he?


Senator COONEY —I will tell the Senate why he has adorned the office. He has struggled hard to bring about much-needed reform in this country. Let me explain that. A country moves with its history and history produces needs as it goes along. Great governments and great Ministers seek to meet those needs. The Attorney-General, Mr Lionel Bowen, has seen the needs-and his vision will be borne out as time goes by-and has moved to meet them. I have no doubt that if this package of Bills is defeated, similar ones will be back before this Parliament within a fairly short span of years. They will go through unanimously, because with the development of world trade, with the development of electronic gadgetry, with the need for laws to be made quickly and to be changed quickly at times, there is a need for a decisive government to be at the centre of these things and the Federal Government is the appropriate one for that.

There is much talks about the difficulty to be faced before the High Court of Australia. People say, `Look, because there might be a challenge to the High Court, we ought to abandon any scheme to regulate companies properly'. If that were the situation, we may as well give the federal system away. We ought to at least have a centralised government or go back to six or seven separate countries, or colonies. Of course there will be disputes before the High Court. That is exactly what the founding fathers envisaged. That is why they set up chapter 3 of the Constitution. That is why they set up a system of law. That is why they set up the judicature. That is why the Judiciary Act has been passed, to provide a mechanism whereby the issues arising between States and between the States and the Commonwealth can be resolved. After all, it is not the most frightful thing in the world to go before the High Court. If one went up to the library and saw the number of volumes that learned judges have filled over the years, one would see that many a person and many a government on many an occasion have gone before the High Court and come out alive. Therefore, to simply say that there are going to be High Court challenges seems not to meet the point.


Senator Bishop —It's uncertain.


Senator COONEY —Somebody has said it will leave a great deal of uncertainty in the breasts of companies. That may or may not be the situation, but the reality is that if a better system is to be achieved, it has to be done through a scheme such as this. If a period of gestation is needed while the process is being worked out, so be it.


Senator Bishop —It was very painful to give birth to that one.


Senator COONEY —Of course it would be difficult to give physical birth to a statute and its commentaries of that size. But size is not what counts. Whether it is a Commonwealth or a cooperative scheme, there will still be the same amount of paper to carry around. The Commonwealth scheme is in volume 1 of the CCH and, of course, CCH has published more than one volume on company law. We have to go beyond the fact that this legislation is an alleged monument to the Attorney-General and that it is big. No matter what happens, the legislation will be big and we must get down to the question of who is to run the scheme. It may be a tremendous idea to have a parliamentary committee to oversee the future development of company law, but what effect will a parliamentary committee have on the Ministerial Council? We can have either a Ministerial Council and no effective parliamentary committee or an effective parliamentary committee with the legislation on companies being put through one parliament, namely, the Federal Parliament. It would have been a more democratic way of going about things to have it before the Federal Parliament because in reality, with the corporate scheme, there is no way that any parliamentarian-and we are all parliamentarians here except Senator Tate, who is a member of the Executive and likely to remain so for a long time-will have a say. If Senator Bishop wants to have a say in this legislation as a parliamentarian, she had best vote for this Bill because she will not get that ability through the cooperative scheme.

The founding fathers contemplated that the Commonwealth would play a central role in company law. Later there was a decision of the High Court of Australia at the time of the reserve powers doctrine which unfortunately put back the development of this area for some time until the Rocla Pipes case in which the High Court repudiated what had gone before and helped lead on to the present situation. In my view, the legislation is worthy of passage through this Parliament. It should be passed. The difficulties that arise in terms of uncertainty or in terms of disputes that have to be resolved by the High Court become peripheral when balanced against what will be gained. The central point is that we will have very good legislation to help the corporate sector develop along with Australia's economic development in future. If we are to be a vibrant and vigorous economic entity we need a vibrant and vigorous corporate sector, and we are more likely to have that and have it in greater abundance under this scheme than under the cooperative scheme.

I now turn to the report of the Joint Select Committee on Corporations Legis- lation and to the setting up of a panel which will have the power to make declarations of unacceptable conduct. At present that is done by the NCSC. Under the Bill, the Australian Securities Commission (ASC) will have the ability to collect evidence and having collected it to put it before the panel. The majority of the Committee, on a casting vote, said that the ASC should also have the ability, in addition to collecting evidence the panel and to its other powers, to make declarations. I heard Senator Alston speak on this subject and I agree with him that matters of propriety, civil liberties and tradition require that the investigative and the prosecuting functions be separated out from the judging function. It is appropriate that I quote the Vice-Chancellor, Sir Knight Bruce, in Pearse v. Pearse when he said:

Truth, like all other good things, may be loved unwisely-may be pursued too keenly, may cost too much.

The submission made, I think by the NCSC, that the proposed ASC should have the power to make a declaration failed to take note of the warning given by the Vice-Chancellor on that occasion.

I say finally that a good deal of the material that is in the Bill came from the report of the Senate Committee on Constitutional and Legal Affairs. It is good to see that recommendations from reports by parliamentary committees do at times find their way into legislation. Some of the recommendations were: the use of plain English, and there has been an attempt to do that in this Bill; that comprehensive Commonwealth legislation be enacted and that has happened; and that the administration of company law be looked at, and that has also been done in the Bill.

I reiterate that this Bill ought to be passed. If it is not passed now it certainly will be passed in similar form in the future. As I understand the Opposition's approach, the constitutional power is its one major objection to the legislation. If it were constitutional and if it were appropriate for the Commonwealth to administer it, it would, in the opinion of the Opposition, be good legislation. All that is stopping its passage is this very timid approach to constitutional power. In those circumstances, it is a pity that a little more courage could not be shown to allow this very important legislation to be enacted so that the economy of this country and the administration of the corporate sector which is so essential to it could go from strength to strength.