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Friday, 3 November 1905

Senator KEATING (Tasmania) (Honorary Minister) . - I move -

That the Bill be now read a second time.

This Bill deals with a matter that has engaged the attention of the people of the Commonwealth, more particularly during the past twelve months or so. But although it has only recently occupied the attention of the public very largely, it has been the subject of considerable discussion in the old country, where some of the evils which, the measure seeks to remedy have been in operation to a. much greater extent. The Senate will remember that some time ago the Victorian Government appointed a Commission to inquire into the butter industry. That Commission's inquiries, in the opinion of many persons in the community, necessitated an extension of its scope. Consequently the Prime Minister of the day, Mr. Watson, gave the Commission a Commonwealth scope and function, by making it a Commonwealth Royal Commission. The Commission reported some time ago, and copies of its report were circulated amongst both Houses of this Parliament. On page 32 of the report, reference is made to some revelations made before the Commission during the progress of the inquiry. The effect is that it was disclosed that there have been many cases of men acting as agents who received not only a commission from their own principals in connexion with transactions, but" that they also received payments from the persons with whom they were in contractual relations on behalf of their principals.

Senator Givens - This Bill would not make those Commissions illegal if they were not secret-

Senator KEATING - That is so. It. is not necessary for me to burden the Senate by quoting extracts from the

Royal Commission's report, but I may remark that most of the passages which are germane to the subject will be found on pages 30 and 32, and more particularly under the heading of "Secret Payments to Directors and Officers." The- object of this Bill is to make illegal the receipt by any agent of such a commission - that is to say, a commission from a person other than his principal, and with whom his principal is in contractual relations through the agent's action. The Bill does not make it illegal for an agent to receive such a commission if he does it with the knowledge and consent of his principal. Many people were very much shocked at the revelations before the Butter Commission-, and some went to the length of expressing a strong opinion as to the commercial morality of the community. But I think that it can be said that the commercial morality of the community in Australia is at the very least as high as the commercial morality in any part of the world.

Senator Givens - That does not say much for it. either.

Senator KEATING - I say that, putting it on the very lowest ground, and I am not saying that in an apologetic sense, because I believe that the revelations, which were regarded as scandalous, characterized not the general body of agents or of the commercial community, but the exceptions. It is for that reason that a Bill of this kind is necessary in connexion with Inter-State transactions, and agencies and commissions arising out of them, and also in connexion with external trade transactions, and agencies and commissions arising out of them.

Senator Macfarlane - Why is it confined to trade and commerce ?

Senator KEATING - Because the Constitution limits the scope of our legislative functions to trade and commerce with other countries and among the States. The Bill is not expressly confined to trade and commerce, because it also applies to that class of cases where persons may be acting on behalf of the Government in one or other of its instrumentalities. The object of the Bill, therefore, is to prevent a recurrence of pernicious practices for the protection of a large body of men in the commercial community - agents and others - who have been considerably prejudiced by the practices of those who have been responsible for grave scandals. If it is possible ir? many instances, say where a party is acting as agent, to receive a commission on both sides, then it is obvious that, in the long run, the consumer - that is, the general public - has to pay for the additional commission. So that the Bill is for the protection of the public, as well as for the protection of the large body of the trading community, who are desirous of being honest, but who have found1 that in acting honestly they have been acting largely to their own pecuniary detriment by comparison with those whose practices and actions we desire to make illegal. Commissions of this character, I repeat, will not be illegal if they are made with the full knowledge and consent of the agent's principal. The evidence given before the Butter Commission revealed that in many instances these commissions - whether by way of payment of money, entertainment, or otherwise - were given secretly. There was also an unwillingness on the part of the recipients when before the Butter Commission to admit having received them ; and in instances where money had passed there was evidence to show that they were' very careful to avoid taking or passing any document in the nature of a receipt. All these circumstances tended to show that there was a consciousness on the part of the parties to the transactions that they were doing a thing which, if not strictly legally wrong, was undoubtedly morally wrong. In these circumstances, it is desired to prevent this corrupt practice, and the Bill, I think, will attain that object. It will be noticed that in the definition clause " agent " includes corporations and firms, and persons belonging to corporations or firms acting in the capacity of agents, partners, factors, brokers, servants, trustees, or directors; in other words, persons acting in a fiduciary capacity.

Senator de Largie - Will lawyers come within that definition?

Senator KEATING - If they are in the position of agents, undoubtedly. Then, "'consideration" is given an extensive definition, which provides that it shall not merely include payment of money, but also cover cases of discounts, commissions, rebates, bonuses, deductions, and percentages, as well as employment, because that may be a consideration extended to a man which may have as its object and its effect the inducing of him to be false to his principal. Definition is also given to "full knowledge." Clause 4 provides that any person who accepts or obtains or agrees or offers to accept or gives or agrees to give, or offers to an agent any gift or consideration as an inducement or reward to, in fact, be false to his principal, shall be guilty of an indictable offence, and a penalty is provided therefor. Then in the case of false accounts given to or received or used by agents, it is provided that it shall also be an indictable offence, and a penalty is provided which will cover the case of either an individual or a corporation. Another class of cases which has been met is that of an agent who is commissioned by a principal to sell goods, but who sells them to himself, and then deals with his principal as if he had sold them to a third person undisclosed. It is quite competent, of course, for an agent who has received a commission from a principal to sell or buy goods to or from a third person, whose name is undisclosed, unless the principal desires that it shall be disclosed. But if an agent, so far as his principal is concerned sells to or buys from a third person undisclosed, when, as a matter of fact, that person is himself, and he receives and accepts a commission in fraud of his principal, it is provided that that also shall be an indictable offence, punishable as stated.

Senator Macfarlane - Will it apply to transactions in stocks and shares?

Senator KEATING - It will apply to any Inter-State trade and commerce within the limit of our legislative power. According to clause 2 -

This Act applies to trade and commerce with other countries and among the States, and to agencies of and contracts with the Commonwealth or any Department or officer thereof.

What the term " trade and commerce " may include will, I submit, for a long time, in accordance with the development of ordinary transactions between man and man, remain a question which cannot be accurately defined. I do not think that any one, either here or elsewhere, can precisely delimit what is ordinarily known as "trade and commerce."

Senator Dobson - Would it include a land agent?

Senator KEATING - I am not prepared to enter into a consideration of such questions. The Bill exercises to the full extent the power which we enjoy under the Constitution.

Senator Matheson - The Minister said just now that it applies to merchandise only.

Senator KEATING - No ; I said that it applies to trade and commerce with other countries and among the States. We adopt the words of our legislative power under the Constitution, and exercise the power to its fullest extent. Where trade and commerce ends and transactions of another character begin will always be a matter for determination by the Court, according to the particular cases which may arise. A very important provision is made in regard to secret gifts to agents - that is to say, gifts given without the knowledge of the principal. In the case of transactions where an agent is acting for the principal, the latter can recover the amount or the money value thereof from either the former or the donor. It is also provided that no conviction or acquittal of an agent in respect of the illegal practice of which that gift is the pledge shall be any bar to proceedings on the part of the principal to recover the gift or its money equivalent. It is provided that no person shall be excused in any civil or criminal proceeding from answering any question, or from making any discovery of documents, on the ground that it would tend to criminate him; in other words, that he shall not be protected from answering questions which have for their object the eliciting of information which would go to show that he has received a secret commission in contravention of the Act. It is also provided that if a man does give an answer which would ordinarily tend to criminate himself, it shall not be admissable in evidence against him in any criminal proceeding other than a prosecution for perjury. It is obviously necessary that there should be an exception made in the case of perjury, because a witness might make a false answer, and in order to prove its falsity it would have to be put in evidence. He is not protected from giving answers that would criminate him, but, so far as his answers are concerned, they cannot be given in evidence against him, except in a case of perjury. If he were prosecuted, the thing which he admitted would have to be proved by independent testimony. Clause 9 provides that in any civil or criminal proceeding under the Act, it shall not be lawful for evidence to be brought forward to show that the receipt of a commission or gift is customary in the tr-de. The ordinary provision 'is made for making aiders and abettors practically guilty of the offences which they have aided and abetted, and every information has to be on oath. The Bill will be found to be very comprehensive. It deals with all classes of commissions, monetary or otherwise. It deals not only with commissions given directly to an agent, but also with commissions given in contravention of the law to some other person at the request of an agent. In many instances an agent may not directly receive the commission, whether it be money, or employment, or discount, or rebate, or bonus. It may be given to his wife, or to his father, or to his child. In order that he shall not escape from liability, it is provided that that act shall be just the same as the giving of a commission directly to an agent. I think it will be found that the Bill gives effect to the principles which were decided upon at the Premiers' Conference, held in Hobart in February last, when it was resolved that the different States should introduce legislation to deal with secret commissions.

Senator Millen - How many of the States have legislated?

Senator KEATING - So far as I know, only Victoria has legislated. A discussion on this matter is reported at page 120 of the proceedings of the Conference. Mr. Swinburne said -

I desire to bring under notice the advisableness of legislation being enacted by the Federal Government to deal with secret commissions. I understand that a Bill is being prepared in England in reference to this subject, but it has not yet become law, and the urgency for such legislation is disclosed by the revelations made by the recent Butter Commission.

After a discussion, in which Mr. Carruthers, Sir George Turner, and Mr. Reid took part, it was agreed -

That each State Government bring in a Bill dealing with secret commissions, and that the Premier of Victoria be asked to draft such Bill.

To cover cases which may not come within the jurisdiction of any individual State, this Bill deals with agencies and commissions in respect of Inter-State and external commerce. If the other States follow the example of Victoria and pass legislation on the lines agreed to at the Conference, the evil, so far as it exists in Australia, will be remedied. I ask the Senate to give the Government every assistance in passingthe Bill into law.

Question resolved in the affirmative.

Bill read a second time.

In Committee:

Clauses 1 anr] 2 agreed to.

Clause 3 -

In this Act - " Agent " includes any corporation, firm, or person employed by or acting ... on behalf of any other corporation, firm, or person, whether as agent, partner, factor, broker, servant, trustees, director, or in any other capacity. . . .

Senator MACFARLANE(Tasmania).Will the word "agent" include a stock and share broker who purchases stocks and shares for a client in another State?

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