Ms Catherine King (Ballarat, Australian Labor Party, Shadow Parliamentary Secretary for Treasury) Share this | Hansard source

The Corporations (NZ Closer Economic Relations) and Other Legislation Amendment Bill 2007 improves economic relations with Australia and New Zealand by giving effect to the treaty ‘Agreement between the Government of Australia and the Government of New Zealand in relation to the Mutual Recognition of Securities Offerings’ signed by both Australian and New Zealand ministers on 22 February 2006 and tabled in both houses of the Australian parliament on 28 March 2006. This is consistent with the Memorandum of Understanding on the Coordination of Business Law between Australia and New Zealand.

This bill continues the work which Labor initiated on the Australia-New Zealand Closer Economic Relations Trade Agreement in the early 1980s, an agreement that has been of enormous economic and social benefit to our two countries. Amendments to the Corporations Act 2001 will allow for the mutual recognition of the issue of securities and interests in managed investment schemes and provide for the mutual recognition of companies. This will reduce the compliance costs of business and encourage more business activity across both jurisdictions. Labor will support this legislation as it will increase opportunities for Australian businesses in the New Zealand market by reducing compliance costs without compromising Australian corporate standards.

Amendments will also be made to the Trade Practice Act 1974 with regard to the Australian Competition and Consumer Commission’s disclosure of information. These are consistent with recommendations made by the Productivity Commission report of 16 December 2004, Australian and New Zealand competition and consumer protection regimes.

Essentially the bill has four initiatives. Firstly, the bill will allow for mutual recognition of securities offerings. Currently, for security, Australian and New Zealand issuers cannot use their home jurisdiction offer documents when making a trans-Tasman offer of securities or managed investment scheme interests. Instead, issuers must comply with the relevant requirements in the host jurisdictions unless the issuer is operating under an exemption in the host jurisdiction. In New Zealand, relevant provisions are found under the Securities Act 1978. In Australia, offers of securities must comply with provisions under chapter 6D of the Corporations Act 2001.

Compliance costs for businesses that operate in both jurisdictions relate to legal and corporate advisory fees and the preparation, filing and disclosure of documents. Effects of the current system include the increased cost of raising funds—the ASX estimates that the cost of providing offer documents by Australian offerers to New Zealand investors averages between $10,000 and $30,000—and the decision by the offerer not to extend the offer to other countries, thereby reducing their access to potential investors. The objective in this part is to allow for mutual recognition arrangements to reduce the regulatory barriers faced by issuers of securities and managed investment scheme interests operating in New Zealand and Australia.

Three options for mutual recognition were proposed and the one adopted by this bill is supported by Labor, in light of a range of factors. The most significant of these include: the benefits of overcoming mutually exclusive regulatory requirements; providing regulatory outcomes which are consistent with the host jurisdiction; the impact on national and parliamentary sovereignty; and the extent of regulatory complexity. The option adopted requires compliance with substantive requirements of domestic law. It allows offers to be made in a host country in the same manner and with the same offer documents, provided that entry requirements are satisfied and the offerer complies with the ongoing requirements.

Lodgement requirements for certain foreign companies carrying on business in Australia will be reduced. Companies will no longer have to lodge information or documents with ASIC if they have been lodged with an equivalent authority in their home country. However, the bill will not remove the requirement for recognised companies to register with ASIC to operate in Australia.

Information-sharing between the Australian Competition and Consumer Commission and other agencies, bodies and persons will be improved. Disclosure of information by the ACCC is enhanced through amendments proposed in schedule 3 of the bill. This will allow the Australian Competition and Consumer Commission to share information with governments and other agencies, including the New Zealand Commerce Commission.

Finally, there will be additional protection of certain information which is given to or obtained by the ACCC, including information given to a foreign government body. ACCC officials will only be authorised to disclose protected information in the performance of their duties or functions or as consistent with the provisions of the Trade Practices Act.

The amendments made though this bill may also provide a basis for strengthening economic relationships with other countries in a similar way.

Labor supports initiatives to enhance economic relationships between Australia and New Zealand. This bill achieves this objective by allowing for the mutual recognition of the issue of securities offerings and companies to reduce costs associated with doing business. Labor also believes that provisions amending the role of the ACCC in terms of disclosure and protection of certain information are important to build the capacity to cooperate across the Tasman.

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