Craig Laundy (Reid, Liberal Party) Share this | Hansard source

I acknowledge the bipartisan nature of the member for Oxley's comments. On the night of 7 September last year, the Prime Minister famously said that Australia, once again, was open for business.

He has made no secret since that day that deregulating the nature of government is key. How did he do that? He appointed his Parliamentary Secretary, the honourable member for Kooyong, Josh Frydenberg, and put him in charge of driving this agenda. Not long after that, Josh made contact with me and asked me to give him a hand. I acknowledge today that I have this honour. I acknowledge the member for Bass and the member for Pearce who he did the same for. I had the honour of listening to stories from right around New South Wales, as I know the member for Bass did in Tasmania and the member for Pearce did in Western Australia. Josh picked different people in different states to be the front men, if you like, and to come back to him with all sorts of ways that we can drive this agenda.

Since that time, we are two omnibus repeal days down—$2.1 billion of red-tape in the first year, when the aim was $1 billion. I acknowledge the hard work and advocacy of my fellow members of parliament, and especially the member for Kooyong, for doing such a great job. I acknowledge the Prime Minister and the smarts of the PM to put this in his own portfolio, given that Josh's role crosses ministerial boundaries. It was a sensible thing to do and a logical place to put it. When your mantra is, rule 1, that we need to be open for business, it is the right way to do it.

Why do we need to be open for business? We need to be open for because, with MYEFO fast approaching and commodity prices and terms of trade at levels now far lower than they were on 7 September, there is no doubt that the engine room of this economy is the small and medium business sector—a sector which, sadly, has been lacking acknowledgement by government for a long time. I have had the honour of standing in this place many times but on few such occasions have I not advocating on their behalf. Why do I do that? I do that because I come from that sector. It employs 70 per cent of the people in this country.

In the last six years under a Labor government, in that small business sector alone we lost 519,000 employees. That is not good enough. We need to do better. The best way to do that is by understanding that government is a partner in business, not just a regulator. That has been the key to what the Prime Minister said that night and what the member for Kooyong has taken since that day and rolled forward into a number of pieces of legislation. Tonight, is quite clearly a continuation of that, and so I will speak about the Corporations Legislation Amendment (Deregulatory and Other Measures Bill 2014).

As a summary, the government has introduced a package of reforms to the corporations law that reduces the regulatory burden imposed on Australian businesses to improve their productivity and competitiveness. The reform package that we are talking about today saves compliance costs of around $14 million a year. The bill also contains measures to improve the efficiency of government processes, reflecting the government's commitments to seeking opportunities to improve efficiencies in all spheres.

The measures contained in this bill will, in no certain order, better balance the rights of shareholders to raise issues with a company and the costs to companies of being required to call and hold a general meetings; improve and reduce remuneration reporting requirements; clarify the circumstances in which a financial year may be less than 12 months; exempt certain companies limited by guarantee from the need to appoint or retain an auditor; and improve the operation of the Takeovers Panel.

Firstly, I will turn to the abolition of the 100-member rule. I acknowledge that the member for Oxley went into this in some detail. We are removing the requirement for directors of a company to hold a general meeting on the request of 100 shareholders—hence the name. This seeks to strike a better balance between the interests of minority shareholders and shareholders as a whole. In large corporations the 100-member rule allows groups holding less than one per cent of voting shares to force a company to incur the significant costs of holding a general meeting. There are significant historical examples of this. In 2012, the 100-member rule was used by GetUp! to force Woolworths into an annual general meeting which cost that company and ultimately shareholders $2 million. Ultimately it cost government their taxation revenue from what would have been an increased bottom line had this $2 million not been spent. It is a flow-on effect. That is why this is sensible policy.

Whilst saying this, small shareholders will continue to be able to have their voices heard, but in a way that does not impose an unreasonable cost on the company or other shareholders. One hundred shareholders will continue to be able to put a resolution on the agenda of a general meeting and circulate a statement to other shareholders.

In addition, shareholders with at least five per cent of the votes that may be cast at a general meeting will continue to be able to require that directors hold a general meeting. This measure is supported by industry stakeholders such as the Australian Institute of Company Directors, the Governance Institute of Australia and the Business Council of Australia as well as shareholder groups such as the Australian Shareholders Association. This measure alone is estimated to save business around $1.5 million a year in compliance costs.

Secondly, with regard to remuneration reporting, the government is improving the disclosure of executive remuneration information in Australia by ensuring that the information provided is useful for shareholders and investors. This measure removes the requirement for unlisted disclosing entities to prepare a remuneration report. This measure alone is estimated to save unlisted disclosing entities around $8.5 million in compliance costs. The remuneration report is simply not relevant for unlisted disclosing entities—for example, unlisted companies, unlisted debenture issuers such as Banksia, and unlisted managed investment schemes. Unlike listed entities, they are not required to have their remuneration report adopted by shareholders through a non-binding resolution and are not subject to the 'two-strikes' test. Australia's 'two strikes' rule allows shareholders to vote to 'spill' the board if the remuneration report receives a 'no' vote of 25 per cent or more, two years in a row. This measure also improves the usefulness of information on options granted to key management personnel. It has been informed by feedback from users of remuneration reports. Rather than reporting the value of lapsed options, this will be replaced with a requirement to disclose the number of lapsed options and the year in which the lapsed options were granted.

Thirdly, with regard to changing financial year end dates, the government is clarifying when entities—companies, registered schemes and disclosing entities—can change their year end dates. Put simply, this measure will put beyond doubt the conditions under which directors can determine that a financial year is to be shorter than 12 months by more than seven days. The bill clarifies but does not change the legal operation of the existing law.

Fourthly, with regard to auditor appointment requirements, this government is removing the nonsensical requirement for certain companies limited by guarantee that are not required to undertake an audit to appoint an auditor. Currently, all public companies are required to appoint an auditor even if they are not required to conduct a full audit of their financial reports. This unnecessary burden imposes a $4 million compliance cost on business per year. This change is expected to predominately benefit companies that have a not-for-profit focus—for example, sports and recreation related organisations, community service organisations, education-related institutions and religious organisations. It is a win, I am sure, for every member of parliament but definitely in Reid, where there is a prevalence of all those listed organisations. This measure will ensure that these organisations can focus on providing services for the community, rather than wasting money and time on needless red tape.

Fifthly, with regard to extending the remuneration tribunal jurisdiction, this measure gives the Remuneration Tribunal the authority to set the remuneration of the chair and members of the Financial Reporting Council, the Australian Accounting Standards Board and the Auditing and Assurance Standards Board. The Remuneration Tribunal is an independent body that has specialist skills in reviewing and determining remuneration. This measure will bring the setting of remuneration of those office holders into line with the remuneration setting of public offices more broadly and improve the efficiency of government processes.

Finally, with regard to improving the efficiency of the Takeovers Panel, this measure will allow Takeovers Panel members to perform functions while overseas. It seems like common sense, but that ability has not been provided before. This removes an outdated procedure and reflects the reality that the vast majority of panel members are engaged in employment separate to their Takeovers Panel commitments, which can include a significant amount of overseas travel. This will likely have a positive impact on business through the more efficient resolution of applications being considered by the Takeovers Panel.

I speak in support of this bill. I keep going back to the words mentioned on the night of 7 September by the Prime Minister in his first address after winning the election: 'Australia is open for business.' If you look at the $14 million that this bill saves, in reality a third to 49 per cent of that is ours, depending on the structure of the company involved. At a time when the revenue side of our budget is under extreme stress, through no fault of our own, through world trading situations, we need to do things like this and keep this agenda real and live, because the sooner we can get out of the expense side of the profit and loss statement of every business in this country, irrespective of size, the more that profit will flow to the bottom line, the bigger our share will be and the more that we as a government will able to reinvest in such vital services that our communities and our electorates need. I commend the bill to the House.

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