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Wednesday, 10 May 1989
Page: 2149


Senator ALSTON(11.00) —Why is that the case in view of the concerns expressed, in particular, by the Law Institute of Victoria? In a submission given in evidence to the Committee, it said:

It seems clear that the question of whether a company is a trading corporation or a financial corporation as required under the Constitution paragraph 51 placitum XX will need to be determined on a case by case basis, even though the buyers opinion concedes that the ambit would not extend to recreational, scientific educational or charitable companies.

Further, its submission argued:

The proposition contained in the Byers opinion that a law which makes provision for the incorporation within the Commonwealth of trading and financial corporations is not necessarily one with respect to trading and financial corporations formed within the limit of the Commonwealth.

In other words, the Law Institute is saying that it is a dubious proposition to suggest that simply because a law makes provision for something, it is a law with respect to something. That might ultimately turn out to be the case, but I suggest that in many ways it is a novel proposition. It is one that needs to be tested. It is taking the definition to its extreme and I would have thought that the Government would certainly need the comfort of a second opinion.

In view of that submission from a respected body such as the Law Institute of Victoria, why has the Government not since sought a second opinion? The Law Institute submission became available only towards the end, and it is quite clear that it was a dead cat in the ring as far as the Government was concerned. I think it deserves an adequate answer. It needs a detailed response. It raises matters which are of genuine concern about the constitutional validity of a whole range of provisions which the Government would hope to be able to enact. After all, if one is talking about trading and financial corporations, one is talking about the vast bulk of companies operating in this country.

In its movements around Australia, the Committee heard evidence, in particular in Western Australia, about the very real concerns about what constitutes a trading and financial corporation. What happens when a dormant company is activated? What happens if a trading corporation becomes dormant? What happens to family companies that extend their activities? What happens if a company moves from a low level of passive investment to actively pursuing a range of commercial activities? It is not a simple matter to ascertain what constitutes a trading and financial corporation.

At what level does a company trade? If a company sells one item, is that trading? I recall, for example, appearing many years ago in a drug trafficking case in Victoria. My client had bought only $10 worth of marijuana for one of his friends, by request; he had not sought out the potential purchaser. He simply went to a hotel and got $10 worth and made no profit on the transaction, which was entirely isolated. His action was held to be trafficking. I find that a fairly radical proposition. If that is the case, one wonders what constitutes a trading activity of a corporation? Is it constituted by one isolated transaction? Does a company need a certain minimum level of financial activity before it is engaged in trading? What happens if it is a trading corporation and then ceases to trade? What happens if it becomes technically insolvent? Those are all matters which go to the heart of the concept of trading and financial corporations. To say that because a law deals with something it is a law with respect to it, is drawing a long bow. In effect, it would enable a government to pass any laws it liked simply because it touched on the subject matter. That simply cannot be so.

The Rocla Pipes case went a long way to establishing the extent of corporations power, but it clearly could not ever have intended that because a corporation was mentioned it should somehow come within the ambit of the power. One of the very real doubts in this area is what happens to companies that are formed within the limits of the Commonwealth. The States have always maintained that the Commonwealth jurisdiction would apply only once the company is up and running. That is why the States have been so keen to hang on to their ability to tax, by way of company registration fees and the like, new company registrations.

It simply cannot be the case that because a law deals with corporations it comes within the ambit of the power. Those propositions have been well established over a considerable period. If that is the case, I ask the Minister: why is it that when the Law Institute of Victoria raises a doubt about a central proposition of the Byers opinion the Government has not seen fit to seek a second opinion? Is the real answer that the Government is determined to push ahead with what the Minister chooses to describe as an accountability arrangement when, in fact, it is a grab for power, an attempt to ensure that the Government is in a position to dictate areas of responsibility? In other words, the Government objects to the diffusion of power. Those members of the Select Committee who issued a minority report regarded as very healthy the arrangement whereby the Ministerial Council was able to reflect a wide and diverse range of political opinions and to ensure that it was not possible for one Minister to make a decision-a decision that might well have been made on political grounds.

We have seen what happened in respect of the Commonwealth Attorney-General, Mr Lionel Bowen, in the lead-up to the last Western Australian election. He made pious and what I would describe as disingenuous suggestions that, somehow, it was a matter for the States to exercise the power to conduct a special investigation into the affairs of Rothwells, when the Minister knew well that the State Government of Western Australia had nothing further from its mind in the lead-up to that election. Clearly there are very real dangers when a power is vested in one government-one level of government-one individual, one department. I find it a matter of great concern that Senator Bolkus should be arguing that, somehow, so long as it is all within the control of one Minister, that is all that needs to be done.

In a sense, it is an extension of the Government's intellectual arrogance that it seems to have chosen not to seek further opinion when the Law Institute of Victoria makes it abundantly clear that that is a matter which deserves early resolution. Will the Minister now take account of that late submission from the Law Institute of Victoria and, indeed, address the matters raised by that body-matters which have not been raised even by Sir Maurice Byers himself by way of rebuttal? No doubt, that course has been open to the Government. No doubt, other opinions have been floating around in the public domain, as opposed to opinions commissioned by the Government, which could well have been re-presented to Sir Maurice who, no doubt, would be happy to turn his mind to those matters and rebut them as best he could. On the other hand, of course, he might concede that there were some matters to which he had not given proper consideration. In the interests of fairness and balance, it is highly desirable that the Government take account of all other respectable opinions and deal with them. After all, that is the nature of the game. When one is going to court one does not want the first quote one gets; one wants the best advice one can get. The Government has unlimited resources, when it chooses to use them, so its best course would be to go off and get a second opinion. If it chooses not to do so, the very least it can do is go back to the person expressing the first opinion and give him the opportunity to reconsider it. Will the Minister exercise either or both of those options and take account of some of the very real concerns that have been raised?