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Tuesday, 4 December 1973
Page: 4237

Mr LYNCH (Flinders) - The Companies (Foreign Take-overs) Bill 1973 seeks to extend the operations of the Companies (Foreign Take-overs) Act 1972 until 31 December 1974. The Act was established following a very detailed White Paper on foreign investment prepared by the Treasury and a major policy statement on overseas investment in Australia delivered in this House by the former Prime Minister on 26.September 1972. The legislation, as was made clear at that time, is interim legislation designed to permit the Government to prevent particular takeovers determined to be contrary to the national interest. The policy underpinning the legislation is a firm recognition that Australia has vital interests at stake in foreign takeovers and the ownership and control of Australian industry and that those rights should be protected. The policy also recognises that the interests of Australian investors should not be prejudiced except where, in unusual cases, the national interest may require it. It was the intention of the former Government to introduce a complementary Bill this year to establish an independent authority to advise the Government in determining which takeover proposals were contrary to the national interest and ought to be subject to government veto.

The Opposition is concerned at the Government's failure to make any progress toward establishing the type of independent authority originally contemplated. We are equally concerned that the Government has failed to put forward a public review of the legislation following its first year of operation. The speech of the Treasurer (Mr Crean) on the Bill failed completely to indicate whether the existing legislation requires certain improvements in the light of experience, whether the Government proposes to establish an independent advisory authority and, importantly, what the general effects of the legislation have been during the period in which it has been in operation. This, of course, is a quite extraordinary omission in view of the Treasurer's comments during the debate on this legislation in October 1972. The Minister for Minerals and Energy (Mr Connor), who exhibits more paranoia and jingoism than his colleague, referred at that time to the legislation in these terms:

This legislation is an outrage and it deserves the contempt of every decent honest Australian.

The Government's intention to extend the operation of the Act for a further year does not lie easily with that observation. In fact, an article in today's 'Australian Financial Review' entitled '1973 - The Year Foreigners Got Out of the Takeover Business', states:

In the 12 months or so since the foreign takeovers legislation has been effective - it has had a quite dramatic effect in reducing the level of overseas portfolio investment in Australia.

The Treasurer (Mr Crean) made no assessment of the effects of the Act in his second reading speech, but statistical information made available by the Treasury does provide some indication. From 5 December last to 31 October, 301 cases have come to the notice of the Government in the administration of the Act. Final orders prohibiting takeover proposals have been made in 12 cases. Naturally, the number of proposals which have not been proceeded with because the existence of the Act has deterred the companies involved is not quantifiable. In addition it can be concluded from the wording of public announcements by the Treasurer that a number of takeovers have proceeded to which the present Government has held an objection but where no action was possible under the Act.

I asked the Treasurer on notice which proposals were subject to objection but not to restraining action because such action was not possible under the Act. The Treasurer answered in the following way:

In the administration of the Companies (Foreign Takeovers) Act, the first test applied in the consideration of a proposal coming within the ambit of the Act is whether action can be taken under the Act to prevent the takeover from proceeding. If such action cannot be taken, the question of examining the merits of the proposal does not arise.

It is true that the Act does not formally require all foreign takeovers to be notified, but in these circumstances it is possible for the Government to draw conclusions as to both the incidence and the nature of those proposals which are proceeded with and which cannot be revoked under the Act. The Act embraces most of the takeover situations as outlined by the former Prime Minister on 26 September 1972 - but not all.

The former Prime Minister said in introducing this legislation:

.   . certain other types of takeovers are not covered by the Bill. These takeovers will continue to be controlled administratively under the departmental machinery. They will be provided for in the Bill to be introduced next year.

Our concern is that this Government, in spite of its previous criticism, proposes to continue what is essentially interim legislation which would have been augmented by us during the course of this year. It is equally a matter of concern that it proposes to take this course of action without explanation in the House and without any indication of the type of review now being undertaken. Our primary concern is that the legislation should meet the objectives which were set for it. We are aware that foreign takeovers result in control as well as ownership passing out of Australian hands and that this, in a number of instances, has deleterious consequences.

I have already outlined to the House the nature of guidelines which we would put down to govern the operation of foreignowned companies in Australia. Equally, we would be concerned to ensure that the Bill now subject to debate is in fact an effective measure for legislation in this House. We would, as a minimum requirement, examine the further proposals which were intended to accompany the Bill and review its initial operations. I ask the Treasurer to outline, during the course of this debate, the nature of any assessment which may have been made or, as a minimum requirement, to give an undertaking to provide the Opposition Parties with a detailed analysis of the operation of the Act in the near future. In other words, this is a very vital area for the Parliament and the Australian people. We seek the further information so that we may better assess the present legislation, and that which the Government foreshadows will be brought down in due course.

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