Chris Bowen (Prospect, Australian Labor Party, Minister for Financial Services, Superannuation and Corporate Law) Share this | Hansard source

I thank the members for Oxley and Cowper for their contributions to this debate on the Corporations Amendment (Corporate Reporting Reform) Bill 2010. A robust financial reporting framework is an essential component of an efficient market. Appropriate financial reporting and audit requirements enhance the accuracy of financial information, ensure transparency and comparability, and promote confidence.

While Australia has a well-regarded financial reporting framework, opportunities do exist to cut red tape in several areas, and this bill does that. We are very mindful of the regulatory burden facing Australian businesses. The amendments contained in this bill will ensure Australia’s financial reporting framework remains strong and in line with world best practice. The bill establishes a tailored, three-tiered financial reporting regime, as the member for Oxley outlined. We will be moving a minor amendment to the prohibition on companies limited by guarantee paying dividends to members to ensure the prohibition will apply only to companies incorporated on or after the commencement of the bill. This avoids prejudicing any existing arrangements such companies may have.

The bill also streamlines parent entity reporting, relieving parent entities of the requirement to prepare financial statements for both the parent entity and the consolidated group. Additionally, the bill relaxes the statutory requirement that companies may only pay dividends from profits, replacing the profits test with a more flexible solvency based requirement. In doing so, the government has been careful to ensure that the wording of the new provision continues to protect shareholders and creditors.

I do acknowledge the contribution of the member for Cowper and the concerns he raised in this regard. He raised concerns that have been raised by the Australian Institute of Company Directors. I should note that the Institute of Company Directors support this bill and call for it to be passed, but they do have concerns about this particular element. I should also note that that is not a unanimous view amongst the accounting bodies in Australia and, as I understand, the position of the National Institute of Accountants is that they support the framing of this bill and do not share the concerns that have been expressed by the Australian Institute of Company Directors.

It is also the case that we have taken the advice of the Australian Securities and Investment Commission, ASIC, who are very strongly of the view that the framing of the bill is appropriate. It is not surprising that there is a divergence of views on this matter, but it is important this bill be passed. The government, of course, will continue to monitor the situation and is more than happy to talk to the Australian Institute of Company Directors, but it is important that I note for the House that their concerns are not unanimously held amongst accounting groups.

The bill also facilitates an easier change of a company’s balance date, reducing the burden on companies and their auditors particularly during peak reporting periods. Finally, the bill implements a number of important refinements to the corporate regulatory framework that will improve the usefulness of financial information provided to users. The bill underwent a two-month public consultation period and stakeholders were very supportive of the reforms that it delivers.

In summary, this bill improves Australia’s corporate reporting framework by reducing unnecessary red tape, a regulatory burden on companies, improving disclosure requirements and implementing a number of other important refinements to the corporate regulatory framework. I welcome the support of the opposition and the comments from the member for Cowper. I thought the first half of his speech was well constructed. The second half left something to be desired when he misrepresented the position of superannuation funds and the resource super profits tax, but that is a debate for another day. I commend this bill to the House.

Question agreed to.

Bill read a second time.

See this speech in context