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Thursday, 19 May 1960

Sir GARFIELD BARWICK (PARRAMATTA, NEW SOUTH WALES) - As no other honorable member has risen to speak, I shall now take my second period. As I have said, if you were in a position to exercise control of two licences, you could not have an agreement with respect to the management of a third. Nor could you have an agreement under which you could provide or select the programmes of the1 third. However, there must be some exceptions to the latter part of the proposed new section to protect genuine, honest, commercial transactions which are not directed towards giving control. Those exceptions are contained in proposed new section 92a (2.).

There is the case of the advertiser who makes an agreement that his programme will go on the air at a particular time. He can stipulate that it shall not be used by the station at any other time or, perhaps, not used at all for some time to allow the advertiser to receive the full benefit of that for which he has paid. Then there is the case of the person who sells programmes. The station manager might approach the programme salesman seeking to buy certain programmes. An agreement is made as to when the programmes are to be made available and when they are to be used. A person can exercise the rights granted under a contract created, bona fide, in the ordinary course of business for the purpose only of protecting his own business, and not for the purpose of getting control of the other business. I should have thought that that was both fair and reasonable. It points to the width of proposed new section 92a which seeks to ensure that persons do not breach the existing section 91. There has been no change in fundamental policy. The proposed new section quite clearly strikes at de facto control and not merely control de jure.

I was asked about dummies. In an endeavour to prevent dummying, we have provided that only a company can get a licence. The idea behind that is that companies must have a memorandum and articles. Then you begin to provide what the articles and memoranda must contain. Proposed new section 92g makes it clear that the agreement which is constituted by the articles must contain certain provisions. One is that the person seeking to become the holder of shares is required to state whether he holds them beneficially and, if he does not, who is the owner. There must be provisions in the articles to enable the company to require its shareholders to keep that information up to date. Then, at the end of each year, an officer of the company must certify on oath to the Minister that throughout the past period, to the best of his knowledge and belief, the shareholding of the company has not been used to breach the provisions of this act. That is a statement of the position in a simple direct form.

Some people might breach this requirement of disclosure of the beneficial interest, and proposed new section 92j in an endeavour - a pretty strong endeavour too - to prevent dummying in an undisclosed way.

Proposed new section 92j states that if a shareholder on the register is not the legal and beneficial owner and the trust under which he holds the shares has not been notified the trust is invalid for all purposes; so the chap who has been dummying puts himself entirely at the mercy of the trustee, who can say, " It is very nice, my friend, but you do not get them back ". That is a tremendous risk and the sort of risk that people who indulge in dummying do not like to take. If anything in this act is an earnest of how serious this Governmen is about this matter, proposed new section 92j is, because it provides that the trust will be void for all purposes. Honorable members know very well that the decisions of the High Court with respect to broadcasting place it on the telecommunications power, but there has never been a decision yet as to whether any form of control of television is within the telecommunications power. That is a completely undecided question. But the existing section 91 has been in the statute unchallenged since 1955 or 1956.

This measure will do nothing more in relation to the constitutional power than does the existing section 91, with the possible exception of proposed new section92J, which makes void the trust instrument for all purposes. One offers an opinion in these areas with a great deal of humility, because it is as hard to be right as it is easy to be wrong. But, for what it is worth, I think the whole of the provisions are good and will hold water and, if this Government wants me to, I will be pleased to stand up for them in the court if they are challenged. I have not troubled to go through the detail as to the various other things which are required to be in the articles of the company, but with that explanation I think honorable members can follow that this portion of the bill is an endeavour to put teeth in section 91 which is repeated as clause 92 in the bill. It is an endeavour to prevent control de facto, through voting power or by any other means, such as contracts, or arrangements or even a nod of the head or anything from which it can be concluded that control in fact exists. It is an endeavour to prevent control through common directorates, or dummying or through any manner of agreement or arrangement, legal or otherwise, whereby the management of a station may fall under the hands of a person, or the selection of programmes and so on.

Mr Reynolds - Would you say it provides tighter control than the Australian Industries Preservation Act does?

Sir GARFIELD BARWICK - I think it does.

Mr Reynolds - That act has only been invoked once - unsuccessfully - as a safeguard against monopolies.

Sir GARFIELD BARWICK - There are other difficulties in that act which are not present in this. The Leader of the Opposition (Mr. Calwell) mentioned section 92 of the Constitution. I have not been inexperienced in that section and with the best flight of imagination I do not think I could fetch it into this subject at all. If some one offered me that brief I think it would be a pretty dry piece of bread.

Finally, one has to bear in mind always that people can get into situations unwittingly not intending to breach a statute. So it is provided in proposed new section 92k that the person who is prosecuted for being in control of three stations can defend himself by proving that he came into that situaion unwittingly and that as soon as he found out he got out-

Mr Ward - That is the escape clause.

Sir GARFIELD BARWICK - /There-, is no escape at all, because the onus is on him and he has to establish two material things - that he got into the situation blindly - I do not see how he could - and that he got out of it as soon as he found out.

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