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Wednesday, 8 December 2004
Page: 126

Senator MURRAY (6:22 PM) —As I understand the procedures for the James Hardie (Investigations and Proceedings) Bill 2004, because there are no amendments we will not be going into committee stage. I have received a copy of a James Hardie letter which has been addressed to, amongst others, the Treasurer, the Minister for Finance, Deputy Leader of the Government in the Senate, Leader of the Opposition, Minister for Defence, Leader of the Government in the Senate, Leader of the Opposition in the Senate, Deputy Leader of the Opposition in the Senate, Leader of the Australian Greens and Leader of the Australian Democrats. This copy of mine is with the Deputy Leader of the Australian Democrats. There may be many other people who have copies of this letter. Because we are not going into committee stage, I would suggest that the contents of this letter are such that they should be on the record. I am going to ask if I can give this letter to the attendant so that the whips of either side can have a look at it and be satisfied that this can be tabled at the end of my remarks, if that meets with your approval, Mr Acting Deputy President.

The ACTING DEPUTY PRESIDENT (Senator Brandis)—You do that, Senator Murray. I assume that you will at the appropriate time seek leave to table or incorporate the letter, subject to what the whips say.

Senator MURRAY —I will at the end of my remarks.

The ACTING DEPUTY PRESIDENT —I am advised by the Clerk that, if you request it, the Senate can go into committee in these circumstances.

Senator MURRAY —I am not asking that it go into committee. That is why I would rather short-cut the procedure.

The ACTING DEPUTY PRESIDENT —You can proceed with that course you have foreshadowed, Senator Murray.

Senator MURRAY —Thank you for your forbearance. The James Hardie (Investigations and Proceedings) Bill 2004 abrogates legal professional principle from the James Hardie Group and their advisers in respect of the investigations surrounding the James Hardie restructure. My notes from the Joint Standing Committee on Corporations and Financial Services, of which I am a member, say that the James Hardie bill seeks to remove legal professional privilege from material arising out of the James Hardie special commission of inquiry in New South Wales, otherwise known as the Jackson inquiry, in order to facilitate investigation and instigation of legal proceedings by ASIC and the Commonwealth DPP.

In its Bills Digest the Parliamentary Library has identified several issues raised by the bill. The main issue is whether the bill, in particular proposed section 4(4), could be interpreted as being contrary to the constitutional principle of separation of powers since it contains a possible direction to courts conducting James Hardie proceedings to disregard any claim of legal professional privilege. The Bills Digest notes that this area of law is unsettled in Australia and that there is no fully accepted test for when legislation will constitute an impermissible interference with judicial functions. The pertinent issue is whether the proposed legislation or a provision within that proposed legislation constitutes a direction to courts in a pending or prospective case rather than a substantive change to the law.

The position taken by the Privy Council in Liyanage v. The Queen, where a piece of Ceylonese legislation aimed at securing the conviction of alleged conspirators in a coup attempt was found to be a usurpation of judicial power, has received a mixed reception by Australian courts. Some Australian cases have indicated that without such direct intervention in the judicial process there will be no breach of the doctrine of separation of powers, but in recent decisions courts have been reluctant to fully adopt the approach in Liyanage. In some cases the approach has been at least partially endorsed by Australian courts. Those notes from the Joint Standing Committee on Corporations and Financial Services capture the likelihood of a legal challenge. But the likelihood of legal challenge is low, in my opinion, because of wide community and political outrage at the behaviour of the James Hardie Group with respect to their failure to meet their obligations to asbestos victims.

The muted adverse reaction to the announcement of the removal of legal professional privilege for James Hardie does not conceal the fact that some of the legal fraternity are concerned about the precedent. Undermining the principle of legal professional privilege has its attractions in moral circumstances like these surrounding the asbestos claims scandal. This bill does increase the probability that directors and managers at James Hardie will be properly punished for their behaviour. That is its plus. Its minus is that to do so requires the removal of a legal protection that has until now been available to all. And if the whips are happy to have that James Hardie letter tabled they will see that that group is concerned about unintended consequences.

I am also assisted, apart from by the Bills Digest and my notes from my corporations committee, by the Scrutiny of Bills Committee, which tabled its report this afternoon. In that Alert Digest—which a number of people would perhaps not have had a chance to access because it was tabled only this afternoon—the committee does make the point that any abrogation of legal professional privilege:

... trespasses on the rights of those affected, and the Committee will always draw such provisions to the attention of the Senate.

It goes on to say:

The Committee also notes the retrospective effect of the legislation, which would abrogate legal professional privilege in respect of records produced to, or created by, the James Hardie Special Commission of Inquiry and transferred from the NSW Government to ASIC, as well as relevant material obtained after the commencement of the bill.

The Committee considers that, while clause 4 clearly trespasses on the rights of the James Hardie Group of companies (to the extent that the group can be considered to enjoy such rights)—

and of course they distinguish individual rights as opposed to entity rights—

the question of whether it does so unduly is a matter for the Senate as a whole.

Further on, the Scrutiny of Bills Committee says that it considers that one of the issues we should be cognisant of is the use in the bill and its accompanying memoranda and second reading speech of criteria such as `higher public policy interests' which, as it says:

... are not susceptible to objective definition, to justify the intrusion on such rights. The Committee considers that, if such an approach is to be adopted in the future, the criteria should be better developed and defined, and seeks the Treasurer's advice on the development of this approach.

In the absence of a better developed definition of criteria such as `higher public policy interests', the Committee does not consider that the bill provides a useful precedent for future legislation intended to abrogate legal professional privilege.

One of the reasons that I am going to be moving my second reading amendment is to signal to the Senate that there are moral circumstances, which might be regarded as approximating these, in which the government has sought to set aside a standard legal protection. If that is so and if this bill is to prove a precedent for future action then it does behove the Treasurer and his officers to develop a better defined set of criteria whereby the corporate veil will be ripped away in certain circumstances. I do think it important that the Senate is aware of past history where for the first time something is introduced and then later on it is repeated in other bills, with the first introduction used as a precedent. This is an important issue because there are other areas which properly are moral circumstances worthy of being treated in this manner.

The Democrats will support any measure that may increase the chance of justice being obtained for the many victims of asbestosis that accords with good process and rights. Our question is: why stop at these victims? If such laws are good enough for James Hardie, they are good enough for the churches and the tobacco companies too. What about the vastly greater number of victims of child sexual assault or the vastly greater number of victims of tobacco poisoning? I am sure senators can come up with other classes of victims as well. If legal professional privilege deserves to be lifted for particular moral circumstances, that principle needs to be properly developed for all appropriate moral circumstances and it also needs to be properly circumscribed.

In the past three years, the Democrats have participated in over 60 parliamentary reports and committee inquiries aimed at ensuring Australia has the toughest possible rules regulating corporate responsibility. The conduct of companies like HIH and James Hardie illustrates that, given the opportunity, some businesspeople do try to bend laws and do try to avoid their full moral obligations. By maintaining and toughening corporate governance rules and corporate governance law the Democrats have contributed, with other parties in the Senate, to minimising the opportunities for corporations to avoid their responsibilities. Tough and responsible laws that ensure Australian companies and their directors are kept honest never do get as much publicity as they deserve, but in so many ways they are much more important in the long term than any public grandstanding or random corporate bashing.

The Democrats have affirmed that we would support any changes to federal or state laws that were identified by the report of the commission of inquiry into James Hardie as being necessary. Our intention is to assist in providing full political and parliamentary support for the victims of James Hardie to ensure they receive the fullest compensation and the best process of justice that they can. We do have a very strong record of trying to lift the standards for corporate responsibility and of trying to keep the rogue elements of the business community in check without creating unnecessary constraints on the vast majority of businesses who do the right thing. We used our links with the Netherlands parliament and government to increase the pressure over there on James Hardie Industries to meet its obligations to the many workers affected by asbestosis. We did that by having questions asked by a member of the Democrat family in the Netherlands.

Companies like James Hardie and others manufactured most of the asbestos products that have been used in thousands of commercial and private buildings in Australia. Regardless of what is said in the face of prospective litigation, all know about the effect these products have on the health of employees and on members of the wider community. Unfortunately, James Hardie shirked their corporate and social responsibilities. James Hardie defended their first asbestosis death case in Sydney in the 1930s. However, it was not until 1978—years after other companies had done so—that James Hardie finally put a warning on its asbestos products. The Democrats will be supporting the bill and will introduce a second reading amendment. I seek leave of the Senate to table that letter from James Hardie.

Leave granted.

Senator MURRAY —I move the second reading amendment standing in my name:

At the end of the motion, add “but the Senate:

(a) notes and strongly condemns the conduct of the James Hardie Group as identified in the Jackson Inquiry;

(b) also notes that over the past 50 years tobacco companies have knowingly supplied and promoted a deadly product that kills over 15 000 Australians a year; and

(c) calls on the Government to consider abrogating legal professional privilege for tobacco companies in respect of civil disputes”.