Katy Gallagher (ACT, Australian Labor Party) Share this | Hansard source

I rise to speak on the Corporations Amendment (Auditor Registration) Bill 2016. I thank the chamber for the opportunity to outline Labor's position with respect to the bill, which is one that we will be supporting. The bill, as presented, is worthy of the support of the Senate. Although it did not reach this chamber in time, the bill enjoyed Labor’s support when it was initially introduced in the House of Representatives late in the 44th Parliament, before lapsing when the parliament was prorogued in April to allow the federal election to take place. While this bill’s contents are narrowly focused and highly technical in nature, Labor is always acutely interested in any issues that go to ensuring that Australians are able to enjoy, and have faith in, a robust and stable financial system. The successful passage of this bill will be a small but prudent contribution to that effort.

As is appropriate, the federal government imposes regulatory requirements on the conduct of registered company auditors, whether individuals or firms, in an effort to safeguard investors and to improve the integrity and stability of our financial system and the broader economy. This is done by ensuring that the financial reports produced by auditors comply with minimum quality standards that follow recognised auditing standards. This bill seeks to assist in those efforts by addressing the legal consequences of not registering, in contravention of the Legislation Act 2003, the approval by the Australian Securities and Investments Commission in November 2004 of one these auditing competency standards.

In November of 2004, ASIC approved an auditing competency standard—the CPA/ICAA standard—produced by Chartered Practising Accountants Australia, and what is now known as Chartered Accountants Australia and New Zealand. The Legislation Act 2003 required that legislative instruments made in 2004 were registered on the Federal Register of Legislative Instruments. In the case of the aforementioned CPA/ICAA standard, this did not occur, and the failure to lodge the instrument has had the effect that the CPA/ICAA standard is taken to have been repealed.

In practical terms, this has meant that from 2 December 2005 the legal validity of auditors registered in reliance on the standard has been uncertain. The bill we are considering today remedies this uncertainty by retrospectively validating the registration of auditors registered under that auditing standard. It achieves this by amending the Corporations Act to retrospectively ensure that the Legislation Act has always had effect, as if approval of the CPA/ICAA competency standard had been lodged and registered immediately after it was given, and that all other requirements of the Legislation Act are taken to have been met. The retrospective effect of the amendments is necessary to ensure that decisions and actions taken by auditors, the regulator and business which relied upon the enforceability and integrity of the legislative instrument are valid. We acknowledge that legislating in a retrospective manner is not an ideal circumstance; however, we do note that the parliament has previously enacted retrospective legislation of this nature to deal with the failure to properly register other legislative instruments.

In a broader consideration, the intent of this bill and its practical effects are consistent with Labor’s desire to see a sound financial system that works for the benefit of the whole Australian community. We are satisfied that the key issues and provisions contained within this legislation have been sufficiently vetted by the processes of the parliament, and that adequate consultation with interested parties and stakeholders has been conducted. I commend the bill to the Senate.