Andrew Nikolic (Bass, Liberal Party) Share this | Hansard source

I am very pleased to make a contribution to the Corporations Legislation Amendment (Deregulatory and Other Measures) Bill 2014, which once again highlights this government's commitment to get rid of unnecessary legislation and regulation and, in so doing, increase Australia's productive capacity.

As Tasmania's representative on the coalition's deregulation committee, as the member for Reid mentioned, there is certainly a spring in my step every time I make my way to the member for Kooyong's s office to sit down with my colleagues—the member for Reid here, the member for Pearce, the member for Deakin, the member for Ryan and the member for Hindmarsh—and talk about real world issues. If there is one thing that has occupied the thinking of people in my community during my period as a full-time candidate for 2½ years, it is to try and take away the binding coils of regulation that impinge on their ability to run their businesses. So to now be in a position with my colleagues, having brought something to the table, to see it appear during a repeal day and then to be able to report to my community 'Here is something that we have done to make a meaningful difference in your business' is satisfying indeed.

There is a spring in my step when I go to the member for Kooyong's office not just because he is great company but because, as I said, we are seeing reward for effort. There is some degree of regulation that is no doubt both necessary and desirable in establishing efficient markets, but excessive red tape, as we saw during the six years of Labor and then the Labor-Greens governments, detracts from productivity and, ultimately, has a close correlation to lower living standards. So what we do here has a meaningful impact on people's lives. I know in my community and around the rest of the country, as I have gone to various places for committee meetings and so on, industries, peak bodies and stakeholders across the country have welcomed our deregulation efforts. What it demonstrates not just in this area of public policy but in so many other areas of public policy is that this government has the resolve to make the changes that have that meaningful impact on people's lives.

The member for Reid talked about our aspiration to achieve $1 billion in cuts every year when it comes to our deregulation efforts. Indeed, in our last repeal day in October, we removed nearly 1,000 pieces and more than 7,200 pages of legislation and regulation. That built on our last repeal day of last March, where the government removed more than 10,000 pieces and 50,000 pages of legislation and regulation—on that occasion cutting more than $700 million in compliance costs. The combined effects of our two repeal days in 2014 is a doubling of our commitment. As the member for Reid said, $2.1 billion cut in compliance costs—making that a meaningful difference in the lives of businesses around the country. That is 400 new measures to cut red tape across all agencies.

When it comes to red tape, the coalition government is getting on with doing what we said we would do. In the future that means the continued designation of two parliamentary sitting days each year as repeal days to continue this work. We are going to incrementally build on this until we have stripped away those binding coils of regulation and legislation. What the coalition's approach will do, if we truly believe in effects based policy making, will result in more efficient government and more productive business and not-for-profit sectors. That means higher competitiveness, support for new jobs and the lowering of household and business costs.

I listened very carefully to the member for Oxley and his very good remarks and his support for this bill. I only wish that that the member for Oxley in the 43rd Parliament had had more influence, because, in contrast to what we have achieved in just 14 months, in six years under Labor we saw the imposition of another 21,000 pieces of regulation. I used to be a senior public servant and formerly a senior Army officer, but I remember sitting there looking at cabinet submissions in early 2008 and I think the Rudd government got off on the right foot. What they were saying about the deregulatory impacts in cabinet submissions was absolutely right. Mr Rudd had a one-on, one-off promise. Indeed, as we wrote our cabinet submissions in the department, there were regulatory impact statements, but the problem was—like so many policy developments of the former government—there was a long distance between aspiration and delivery. That is why that undertaking never really saw its way through the next six years and that is why we ended up with 21,000 additional regulations. It was, to put it mildly, a forgettable period in our political history, because the government's solution was always more intervention—a little bit more Kevin would solve pretty much every problem!

That is where the layers of regulation we have today originate from. You might remember that old Sara Lee approach—the layer upon layer commercial. That is exactly what happened when it came to regulation—layer upon layer of regulation that hurt productivity, deterred investment and innovation and cost jobs. Those opposite may not believe me, but perhaps they should listen to the Productivity Commission, which has looked at this matter closely. They have estimated that regulation compliance costs could amount to as much as four per cent of Australia's GDP, unless we act to remove the unnecessary regulation that binds our multifactor productivity. So I congratulate the member for Kooyong and I congratulate those members of our deregulation committee, who are present here this evening, on the thoughtful and purposeful approach to real change when it comes to red tape. But I do not want to praise the member for Kooyong too much, because it is ultimately the portfolio ministers who have had to put their shoulders to the wheel to look within their departments and find the savings that underpin that $2.1 billion in deregulatory savings that we have found just in the last 14 months—minister after minister cutting six years of stifling red tape from their portfolios.

This bill we are considering this evening is no different, and I congratulate the Minister for Finance and Assistant Treasurer on this package of reforms to the corporations law that reduces the regulatory burden imposed on Australian business. This one package alone will save $14 million in compliance costs. That does not sound a lot, but a million here and a million there and pretty soon you are talking about serious money. And so $14 million being cut is impressive in this bill.

The bill also contains measures to improve the efficiency of government processes. As to the specific measures contained in the bill, they will achieve some important effects, and some of them have been touched on, but I would like to put some of the more prominent ones on the record. There are six things I would like to talk about: the achievement of a better balance between the rights of shareholders to raise issues with a company and the attendant costs to the company and other shareholders that is required to call and hold a general meeting; the bill improves and reduces remuneration reporting requirements; it clarifies the circumstances in which a financial year may be less than 12 months; it exempts certain companies that are limited by guarantee from the need to appoint or retain an auditor; it improves the operation of the Takeovers Panel; and it extends the Remuneration Tribunal's remuneration-setting responsibility to include certain statutory bodies I will deal with each of these measures in turn.

When it comes to the '100-member rule', the government is removing the requirement for directors of a company to hold a general meeting on the request of 100 shareholders—ergo, the name the '100-member rule'. We believe that that strikes a fairer and better balance between the interests of minority shareholders and the larger shareholder group. In large corporations, the 100-member rule allows groups holding less than what can be one per cent of voting shares to hold a company to ransom by forcing an expensive general meeting. What history tells us—and I am someone who has completed the company director's course—is that resolutions that are proposed by these very small activist groups of shareholders generally receive little support. My colleague, the member for Reid, talked about that infamous case study—the Woolworths case, where they spent nearly $2 million to hold a general meeting at the behest of just over 200 shareholders, or 0.05 per cent of the total shareholders of Woolworths, which has some 417,000 shareholders. When that general meeting was held, the actual resolution that was being proposed by this small activist group of GetUp sponsored shareholders, 97 per cent of the company did not support the resolution. That demonstrates clearly the linkage between the cost versus the benefit of a particular case being put in large companies. I am not for one moment saying that small shareholders should not have their voices heard—they should and will continue 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 can still require that directors hold a general meeting. But it sets that bar high to ensure a more reasonable accommodation between the numbers of shareholders and the costs involved in a company in acceding to their demands.

This measure is supported by both 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. Again, a million here, a million there—this will save businesses around $1.5 million per annum in compliance costs.

The government is also 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, which will save some $8.5 million in compliance costs. The remuneration report is simply not relevant for unlisted disclosing entities—and the member for Reid listed some of those before—because, 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, which 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.

In this bill, the government also clarifies when entities—companies, registered schemes and disclosing entities—can change their year-end dates. This measure puts beyond doubt the conditions under which directors can determine that a financial year is to be shorter than 12 months. The bill clarifies but does not change the legal operation of the existing law.

Notably, the bill also removes auditor appointment requirements for certain companies limited by guarantee that are not required by law to undertake an audit. It simply fails the common-sense test to impose an audit requirement on a company that is not, by law, required to undertake an audit. This imposes a $4 million compliance cost burden on business, which will be saved—and you can see these savings adding up as I talk through these provisions. It imposes that burden particularly on organisations like not not-for-profits. In my community of Northern Tasmania, for example, this includes sports clubs, community service organisations like my Lions club, education related institutions and religious organisations.

A further measure in the bill is to give 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, bringing the setting of remuneration of those office holders into line with the remuneration-setting of public officers more broadly and improving the efficiency of government processes.

A further measure will improve the efficiency of the Takeovers Panel by allowing members to perform panel functions while overseas. 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.

In conclusion, this bill is yet more evidence of this government's resolve and purposeful implementation of our vital deregulation agenda. That there is so much red tape in our community that even well-meaning volunteers are dedicating too much of their precious time and effort to navigate their way through a maze of government rules shows us just how bad the situation has become. This bill is but one contribution to this government's bonfire of bureaucracy—but an important step nevertheless on the long road to sensible economic reform.

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